Alt Lending Week Ending July 15th 2022

Destruction of value in Fintech stocks gives us all a lesson to learn

The rapid destruction of values in fintech stocks over the past year is salutary. History it seems keeps on repeating itself and nobody seems to learn anything in the process. Klarna is a particular case in point but there are plenty of others who are suffering the same characteristics. In case you haven’t noticed it BNPL lender Klarna has raised £ 800million on a valuation of $ 6 billion. Not bas for a start up you might say but when you consider that the last raise valued the company at $ 46billion it is a down round extraordinaire. OK so the market has changed but not by nearly 90% investors in the last round look very stupid indeed. What is the point in paying top dollar for analysts when they make mistakes of this magnitude? There is much more of this to come.

The Perils of Sovereign Lending

The financial and political news from Sri Lanka is truly dire. The country owes $ 41 billion to overseas creditors and only has $ 45 million to pay them. Hence it  is has run out of petrol. The problem with the third world is that they need more money than most to modernize their economies but don’t have the wherewithal to pay  for it. I am aware of a recent transaction in the low hundreds of millions for a Sri Lankan project which was agreed by a regulated European finance house earlier this year. The project in itself would have been very useful to the country but I very much doubt that it will go ahead now. What shocks me is that this lender couldn’t see the disaster it was going to get into. I wax lyrical every week about the lack of proper credit expertise within Europe’s tottering banking sector. I am afraid that we might be all in for some very big shocks.

Signs of Innovation in the UK mortgage sector  

I suppose that anything helping first time buyers get onto the property ladder is welcome so Beverley Building society’s new addition to the product set following other similar offerings from various smaller players in the UK housing market is a hopeful sign. The 100% mortgage offering is contingent on a family member putting up 20% of the equity through a charge on their own property. It suits only a very specific type of borrower and I am not sure what the inheritance tax and other government interference might have but nevertheless it might just remove a road block and help get things moving again.

 

Howard Tolman is a well-known banker, technologist and entrepreneur in London,  We have a self imposed constraint of 3 news stories per week because we serve busy senior  Fintech leaders who just want succinct and important information. For context on Alt Lending please read the Interview with Howard Tolman about the future of Alt Lending and read articles tagged Alt Lending in our archives. Daily Fintech’s original insight is made available to you for US$143 a year (which equates to $2.75 per week). $2.75 buys you a coffee (maybe), or the cost of a week’s subscription to the global Fintech blog – caffeine for the mind that could be worth $ millions.

 

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