Displaying items by tag: lending

There has been extensive coverage as to the number of new loans issued being tied to ESG factors, namely greenhouse gas emissions and environmental sustainability, but there is a new dimension as to which companies are securing funding—gender equity. Many companies are signing loans that are tied to increasing women’s share of a company’s workforce from entry-level jobs all the way to executive and board positions. BloombergNEF estimates that these loans make up $19 billion of the market this year, already more than quadrupling 2020’s numbers. Companies improving diversity have better retention, collaboration, decision-making, and a broader talent pool according Tania Smith, leader of a bank authorizing these new loans. If companies fail to meet the diversity criteria they can face interest rate penalties much like the ESG market. Gender equity and diversity loans are a fraction of the total ESG market of $231 billion, yet they are a quick growing segment that will aim to improve gender equity in the corporate world.

FINSUM: This gives companies a new avenue to secure credit at a discount, much like ESG. If companies meet this criterion they can have an edge over competitors in terms of rates and access.

(Silicon Valley)

Crypto and other Fintechs have blown up in mainstream popularity in the last couple of years, but Mark Cuban sees another…see the full story on our partner Magnifi’s site

(New York)

Over the last few years, Goldman Sachs has undertaken one of the biggest bets in its history. It is trying to change its DNA as a pillar of high finance to become a broad financial services company that includes a large consumer-facing business. This led to the launch of its new business, Marcus, which is a consumer investment and lending unit. So far, the results have not been pretty. The bank has lost about $1.3 bn from investing in Marcus, and the default rates on its loans have been much higher than average, causing it to pull back from the space somewhat. It has also caused a lot of internal tension at the bank, with many senior partners leaving as the company completely overhauls itself. On the positive side, the bank has pulled in $50 bn in consumer deposits, which is a new source of funding it never thought it would have access to.

FINSUM: Goldman’s stock is still at 2014 levels. That says it all.

(Beijing)

Bloomberg has published a very interesting article arguing that China’s economy and financial system might be on the edge of implosion. The publication mentions that the government’s bailout of Baoshang Bank last month has put money markets on edge, and for the first time, short-term lending between big institutions has started to freeze up. For the first time in decades, lenders are facing the prospect of defaults and haircuts on loans to other financial institutions. This has led funding costs for companies to shoot higher.

FINSUM: As is the norm with China, we have little direct insight into this. However, if you take a step back and look at the overall pressure on the economy from the trade war and combine it with the data above, it does sound like something very nasty could be brewing.

(New York)

If you have been paying attention to the mortgage market, you will see that some of the most worrying lending activities from the pre-Crisis era are returning. For instance, there has been a sharp recent rise in loans to non-traditional borrowers, or those who have trouble proving their income. The amount of such loans looks to have almost quadrupled in 2018 versus the year before. So far these loans look to be healthy, but there are concerns that in a downturn such mortgages could deteriorate quickly.

FINSUM: These loans are subject to more stringent regulatory standards than back before the Crisis, but this is certainly something to keep an eye on.