UK Votes Leave – Robert Stafler, CEO of Fintex Capital, Shares His Thoughts
Robert Stafler, Chief Executive of Fintex Capital, anticipates a shift towards conservatism, at the expense of growth:
“Sadly, the outcome of the EU referendum is bad news for the UK economy as a whole. This country now faces a difficult period of economic uncertainty and possibly some political instability, and it is not clear for how long this environment of uncertainty will prevail. With this in mind, investors on UK p2p marketplaces should be prudent and diligent, since certain asset classes and originators will be more default-prone than others in a weaker economic environment. As such, there should now be a flight to quality.”
“Platforms with riskier assets will have to think carefully to what extent they wish to adjust their credit models to de-risk their originations to ensure they can continue to deliver performance in the weaker economy that is now expected. This may come at the expense of some desired growth. In some cases this will be necessary to ensure long-term viability.”
“The good news for the p2p sector is that we can expect interest rates to remain lower-for-longer. The outcome of the EU Referendum is likely to keep us in a low interest rate environment for a while. This means that the meaningful spread between the net yields available on leading UK p2p marketplaces on the one hand, and base rates on the other, is likely to prevail for longer. Over the past years, yield has been hard to come by in the wider market. Attractive yields should remain available on those p2p platforms that are focused on safer loans, and also on those savvy enough to adjust their models at this point in time.”
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Adam Marks
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