Transforming the credit market
CrossLend connects originators such as banks with investors such as insurance companies and pension funds. Originators can offload loans on a single loan basis from their balance sheets. CrossLend makes these available as a flexible asset to investors via 1:1 securitisation (one loan – one security, no pooling). “We have created a new European bridge between banks and investors to help bring the European Capital Markets Union to life,” says Oliver Schimek, Founder and CEO at CrossLend.
Established in 2014, CrossLend’s founders originally set about developing a European cross-border, peer-to-peer lending platform for private investors to access consumer loans. However, Europe’s changing economic fortunes and the regulatory pressure on banks that is forcing them to shrink their balance sheets, seeing them able to lend less, gave Schimek and his team an opportunity to push the company in a new direction.
This new direction would see CrossLend introduce its peer-to-peer model directly to the back offices of banks, giving them a flexible instrument for refinancing their lending operations. “Our concept lets them keep the customer relationship, monetise it and service the loan without the full balance sheet implications. In that sense we make banks peer to peer capable,” explains Schimek. “At the core of our approach is a new way of securitising loans where instead of issuing a bond against pools of loans, CrossLend securitises single loans with single bonds, translating the loan receivable into tradable securities with the advantage of full transparency.”
“Our original idea alleviated a symptom of the sub-optional lending environment that existed in Europe,” says Schimek. “Our new idea reflects the times and we think that our new solution can solve the root of the problem.”
A sign of the times
“Europe is in trouble and we want to stabilise its backbone, which is the financial system,” says Schimek. “Politicians and regulators have been working on the concept of a Capital Markets Union (CMU), linking savings and growth to improve conditions for savers and investors. Their action plan says we need to connect institutional and retail capital to the lending side of the economy, preferably via securitisation. Compare that to our business plan and it’s basically a one-to-one match. Banks would need many years to start such a platform and it would not be independent. We are the speedboat in this market.”