LendingClub Talking With Citigroup About Loan Purchases

LendingClub Corp. is in talks with Citigroup Inc. about the New York bank buying or providing financing for future loans made by the online platform, people familiar with the discussions said.

The talks show one way that LendingClub is seeking to reassure its existing investors while finding new commitments from them to buy loans following the forced resignation of its chief executive, Renaud Laplanche. The resignation came after LendingClub's board discovered that employees had falsified data on some loans sold to an investment bank, Jefferies.

"We are productively engaged with LendingClub on a number of fronts," a spokeswoman for Citigroup said.

Citigroup and LendingClub announced a separate agreement last year in which the New York banking giant would buy loans from the platform to help it meet community lending requirements.

The bank also was a big buyer until earlier this year of the loans from rival online lender Prosper Marketplace Inc. That relationship broke down after the Citigroup sale of those loans in a securitization bond priced poorly, The Wall Street Journal previously reported.

LendingClub also has been working with two banks that were part of securitization deals that stalled when Mr. Laplanche left. LendingClub and its lawyers are discussing commitments with funds that already buy loans; Jefferies is advising on that process, the people said.

The Journal reported earlier this month that Goldman Sachs Group Inc., which also was involved with a LendingClub securitization, had been working with the firm to help it determine the best way to access capital markets in the wake of Mr. Laplanche's resignation announcement. LendingClub has been exploring its options for the securitization deal, including private loan sales to outside investors, in the event that buyers would be interested.

Meanwhile, rival Prosper is fielding inquiries from large investors and private-equity firms that are seeking to buy loans, according to people familiar with the discussions. The firm is working with bankers at boutique advisory firm Financial Technology Partners and J.P. Morgan Chase & Co. to advise on the discussions, the people said. Reuters reported the involvement of the two banks earlier.

Prosper executives also are presenting loan performance information to investors, the people said.

Said Aaron Vermut, Prosper chief executive: "We're having some productive conversations with potential loan buyers."

"Prosper is talking to banks solely for the purpose of helping us coordinate and work with investors who are interested in buying loans on our platform," said Mr. Vermut.

Write to Telis Demos at [e-mail] and Peter Rudegeair at [e-mail]

(END) Dow Jones Newswires

May 26, 2016 20:45 ET (00:45 GMT)

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