May 28, 2015

Marketplace lending transactions set to outpace 2014 levels

With the number of first quarter 2015 deals surpassing the 2014 full-year total, BNY Mellon Corporate Trust sees growing interest in new lending platforms.

BNY Mellon’s Corporate Trust business has already participated in as many marketplace lending deals during the first quarter of 2015 as it did in all of 2014.

Marketplace lending refers to online lending platforms that connect prospective borrowers to interested lenders, typically in market segments that are underserved by traditional banks.  With institutional capital now flowing into the space, securitization of these loans has grown, along with the need to administer the new securities.

In 2014, marketplace lending was cited by American Banker as the innovation of the year.

“We expect to see continued gains in the second quarter, as we carry on discussions with existing and potential new clients about additional securitizations,” said Jim Maitland, Executive Vice President of Corporate Trust.  “BNY Mellon’s Corporate Trust group has a long history of providing critical value-added services to the financial intermediaries arranging collateralized transactions.  These services are now extending beyond the boundaries of traditional banking to include financial instruments securitized in marketplace lending.”

Services provided during the pre-securitization phase include loan verification, custodial services and master servicing.  Following market issuance, BNY Mellon serves as trustee and paying agent, processing interest and principal payments to investors.  

Maitland added, “Just as with traditional bond issuers, our clients, who are focused on the opportunity within marketplace lending, appreciate the infrastructure and expertise that BNY Mellon’s Corporate Trust group brings as an independent administrator that fully understands the roles that these transactions require.”