About Secondary Market suspensions of lending companies on Mintos

29.04.2020

mintosblog

With a suspension of a particular lending company on the Secondary Market, we aim to protect investors on Mintos from making uninformed investment decisions. We have received many questions regarding the suspensions and would like to share answers to the most common questions in this blog post. 

How does a suspension work?

Suspension occurs when Mintos intervenes in the market to stop investing due to concerns about a lending company’s operations. Once suspended, new investments cannot occur until the suspension is lifted.

Why do we suspend the Secondary Market?

We may come across information that undermines the lending company’s ability or willingness to honor its obligations by passing on payments received from borrowers to investors, and/or executing buyback guarantees. By suspending a certain lending company from the Secondary Market, we intend to protect investor interests by preventing investments in loans originated by the lending company, as there is a higher likelihood of a potential loss.

What is negative information available for the public and not yet available for the public?

– Negative information available for the wider public – such negative information in publicly available news outlets which has come to the attention of Mintos that significantly undermines the lending company’s ability or willingness to honor its obligations towards investors. In this case, suspension serves as a means to inform all investors who might not be aware of this information and prevent the less informed investors from further investing in loans issued by this lending company. An example of such information is an announcement of revocation of a lending company’s licence. 

– Negative information not yet available for the wider public information we see in our monitoring, during discussions with lending companies, and other internal means of risk mitigation, for example, conclusions we make during a lending company’s risk assessment based on which Mintos has decided to take measures (restructuring of existing payment schedule or legal action) against a lending company that has shown significant negative signals to Mintos about its ability or willingness to honor its obligations.

When is the lift of a suspension possible?

A suspension of the Secondary Market can be lifted when we see that the initially identified situation highlighted by the public or non-public information does not give sufficient doubt about honoring obligations or has been resolved in a manner where it is reasonable to expect the lending company will make further payments in full amount. In cases when payments had been previously stopped by a lending company, we would need to see that such payments had been resumed. 

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