LC Partnership with Citi and Varadero Capital

LendingClub continues to ink partnerships with community banks to expand its origination business, which currently make up over 90% of their revenues. In this three-way partnership between LendingClub, Citi Community Capital, and Varadero Capital, they look to generate $150 million in personal loans.

 

Key Players and Roles

LendingClub – Provides the originations and servicing responsibilities for loans. In return, they take a cut off the origination and investor fees.

Citi Community Capital – Offers loans through its community bank branches to low and moderate income families using LendingClub’s platform.

Varadero Capital – Provides the 100% of the capital to invest into the loans through the LendingClub platform. This would be a $150 million commitment.

 

Importance

Win-Win for All – Lending Club continues to expand its lending business through partnerships with lending institutions since LendingClub’s technology platform is markedly more efficient than a traditional bank. There likely is some origination fee sharing between the two. Varadero Capital would be on the side of the equation by providing the capital for lending as an investor and benefiting from the relatively high returns.

Partnership Expansion – Over time, once the $150 million in loans are fulfilled and business executes as expected, it would be reasonable to expect the trio to expand its business to increase the loan amounts and offer new types of loans(Small business, student, or medical).