International peer-to-peer payday lender opens its doors to Russia
Latvian lender TWINO has announced it will list Russian subprime loans in its marketplace.
A peer-to-peer lender that facilitates loans across country borders in Europe has announced it will expand its investment offerings to Russian subprime loans. TWINO, which has been in the lending space since 2009, already sells loans made to borrowers in Latvia, Georgia, Estonia, Poland and Denmark.
While peer-to-peer lending is becoming more common in Australia, TWINO works in a very different way to lenders here. Instead of pairing borrowers and investors, it makes the loans itself and then sells them to investors on its platform.
The focus in Russia will be primarily on the subprime loans, making TWINO's product more of a payday loan than a traditional peer-to-peer lender. This may also explain the high rates being charged to Russian borrowers, which are in excess of 100% of the amount borrowed. This will make returns lucrative for European investors, with rates sitting around 14%.
Speaking to the Wall Street Journal, TWINO's chief executive Jevgenijs Kazanins said the investment opportunity was good for European investors.
"It's becoming more and more important for investors to diversify their portfolios," he said.
While TWINO had already been lending online in Russia, the company had not resold the loans. After losing money in this venture the lender was forced to rethink its lending model. Kazanins said international sanctions placed on Russia after the invasion of Crimea in 2014 made it hard for Russians to access finance, making the non-bank market in high-demand.
The portfolio is a risky one for investors, who receive little to no information about who they are lending to, but the high interest rates charged to subprime borrowers mean any defaults will be able to be covered. The double-digit returns investors make may also be enough to overlook the quality of the borrower.