The Wall Street Journal is out with a report, suggesting that The Lending Club aka internet hoax gone bad, is in talks with Citi to get financing or some other type of tie up, in order to reassure investors.
That’s funny, since I have an article on my desk, dated May the 20th, 2016, that explicitly says the opposite.
Citigroup told US regulators last week it was not willing to support troubled marketplace lender Lending Club after its CEO stepped down following a botched sale of loans.
In a May 12 memo seen by IFR, Citigroup said it had declined a request from Jefferies, an investment bank, to back Lending Club after CEO Renaud Laplanche resigned three days earlier.
“Jefferies has requested that Citi be supportive of Lending Club in order to calm the markets,” said the memo, which further said the bank was temporarily freezing exposure to online lenders.
“While Citi believes that overall due diligence and lending quality of Lending Club is good, it is … investigating the situation and is not yet prepared to do this,” it said.
It was not specifically clear from the memo, which recorded the minutes of a call with the Office of the Comptroller of the Currency, a US banking regulator, what kind of support Jefferies was seeking from Citigroup.
According to the memo, Citigroup told the OCC that it believed Lending Club “has sufficient liquidity to carry it through the next few weeks”.
Calls and voicemail left by IFR for the Citigroup bankers were not answered. The OCC declined to comment on behalf of the OCC staff. Citigroup, Jefferies and the OCC declined to comment on the content of the memo. The SEC also declined to comment.
In a statement to IFR, acting Lending Club CEO Scott Sanborn said the company was in a “strong financial position” with US$900m in cash and a US$120m line of credit.
“Our platform continues to operate with existing investors and more returning each day,” he said.
Parlour tricks. Smoke with mirrors. Beware of the Wall Street funhouse.
Shares of LC are down 76% over the past 12 months, yet another VC lauded fail.
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I had some loans tied in this company. When I saw the news a few weeks ago, I immediately put in sell orders to sell all my notes at a 5% discount.
I find the situation ironic.