LendingClub buys a bank for $185 million
It is nearly four years since the largest US marketplace lending platform LendingClub had suffered a scandal that resulted in the departure of its founder and CEO. Now, the firm has just bought a bank.
LendingClub has acquired digital challenger Radius Bank, becoming the first U.S. fintech to snap up a bank.
Radius is an online-only bank, founded in 1987, based in Boston. It has more than $1.4bn in assets current accounts as well as open APIs to offer “banking-as-a-service” functionality to leading fintechs like Brex, Nerdwallet, and NorthOne, among others.
LendingClub, one of the pioneers of marketplace lending, says it facilitated more than $12.3bn in loans in 2019, an increase of 13 per cent on 2018. The firm says that by buying Radius it will increase and diversify earnings by attracting new customers through the addition of banking services.
A reduction in th use of high-cost warehouse lines, and generating additional and recurring net interest income will also boost the bottom line, LendingClub says.
Regulators will need to approve the transaction, which the firm expects “will take 12-15 months”.
“This is a transformational transaction that allows us to reimagine banking in a way that is free from legacy practices and systems and where the success of LendingClub is aligned with the success of our customers,” said Scott Sanborn, CEO of LendingClub. “By combining with Radius, we will create a category-defining experience for our members that will dramatically enhance the resilience and earnings trajectory of our business.”
“LendingClub has always been a fintech innovator, and I look forward to leveraging the strengths of both of our talented teams as we usher in a new era in banking,” said Mike Butler, Radius’ President and CEO.
“We are excited for our employees to operate our virtual banking platform with more resources and for our clients to gain access to an industry-leading lending product. This is a perfect marriage, with LendingClub bringing the leading digital asset generation platform, and Radius contributing a leading online deposit gathering platform, to position the combined company for long-term success.”