payments system

Peter DaSilva for The New York TimesRenaud Laplanche of Lending Club said the company wanted to reshape the financial system.

A fast-growing marketplace for peer-to-peer loans, Lending Club, has attracted a prominent investor: Google.

Lending Club plans to announce on Thursday that Google led a $125 million deal to buy a stake in the company from existing investors. Foundation Capital, a current shareholder, also participated in the transaction. The latest investment values Lending Club at $1.55 billion, nearly triple the valuation of the last fund-raising round that closed last summer.

Google has made a number of investments in start-ups both directly and through its venture capital arm, but it has not dabbled much in the banking industry. Google Wallet, a mobile payments system, may be its most prominent financial offering to date.

The technology company will own a stake of less than 7 percent in Lending Club. And the senior Google executive who led the talks over the investment, David Lawee, vice president for corporate development, will sit as an observer on the start-up’s board.

“We’re really excited about partnering with Google,” Renaud Laplanche, Lending Club’s chief executive, said in a telephone interview. “We’re trying to be the good guys of finance and banking, and Google has a reputation of being the good guys of technology.”

Google’s arrival signals another significant partner for Lending Club, ahead of a potential initial public offering that could come as soon as next year.

The company essentially connects investors with people seeking money after screening the credit histories of potential borrowers. The average FICO credit score of a Lending Club borrower is about 706, while the average loan is about $13,076.

Lending Club claims that its operations provide a lower cost for personal loans, with an average annual percentage rate of about 6.78 percent, below a national average of 9.06 percent. And it estimates that most of its investors have made a profit from the loans.

Lending Club, a six-year-old start-up, has emerged as one of the biggest members of the peer-to-peer lending industry. It originated about $780 million in loans last year, and Mr. Laplanche estimated that it was on pace to issue $2 billion this year.

Among its backers are venture capital heavyweights like Kleiner Perkins Caufield Byers, Norwest Venture Partners and Union Square Ventures. Its directors include John J. Mack, the former chairman of Morgan Stanley, Lawrence H. Summers, the former Treasury secretary, and Mary Meeker, the prominent Internet analyst turned venture capitalist.

Despite what Mr. Laplanche said was a steady stream of calls from hedge funds and private equity firms seeking to invest in the company, Lending Club was not looking to raise new equity for fear of diluting existing shareholders.

But Mr. Lawee of Google was initially eager to discuss ways to collaborate, tapping into Lending Club’s online loan market.

“When he reached out, his mind went immediately into all the cool stuff we can do together,” Mr. Laplanche said. “We didn’t talk about valuation or investment amount for many weeks. It was almost like two engineers meeting.”

As Mr. Lawee began making regular phone calls and treks to the company’s headquarters in San Francisco — about eight to 10 calls and meetings in all — Mr. Laplanche began to consider bringing Google on as a shareholder.

The companies eventually settled on a secondary transaction in which some existing investors would sell less than 20 percent of their holdings to Google and Foundation Capital, realizing investment gains while still staying involved with Lending Club.

At the heart of the discussions, Mr. Laplanche said, was a sense that the financial industry was due for a shake-up. Each company thinks that Lending Club could eventually replace some of the banks’ branch networks with a lower-cost alternative.

“Lending Club is using the Internet to reshape the financial system and profoundly transform the way people think of credit and investment,” Mr. Lawee said in a statement. “We are excited to be a part of it.”

A version of this article appeared in print on 05/02/2013, on page B3 of the NewYork edition with the headline: Lending Web Site Gains A Shareholder in Google.

Article source: http://dealbook.nytimes.com/2013/05/02/google-to-invest-in-lending-club/?partner=rss&emc=rss

PARIS — The French central bank is going on strike.

More than 1,500 employees were demonstrating Tuesday in Paris, union officials said, in a protest against a restructuring of the Banque de France that is expected to result in the loss of about 2,500 jobs by 2020. The bank currently employs around 13,000 full-time workers.

The bank did not respond immediately to a request for comment.

With France a member of the euro zone, it might seem an anomaly that the country even has a separate central bank. The European Central Bank, based in Frankfurt, does much of the heavy lifting for the 17-nation currency area, including setting monetary policy. And it is the Bundesbank, the German central bank, that is mainly responsible for operating the internal euro payments system for big money transfers.

Still, the E.C.B. employs only 1,810 people, and has to rely on the national central banks for support in economic research and market operations, as well as the physical task of ensuring that coins and bills are circulating properly.

The Banque de France has already cut about 25 percent of its work force since the physical euro came into being in 2002, according to a report last year from the French Court of Auditors. But its 13,0000-strong work force is larger than that of the Bundesbank, even though Germany is a larger country. The Bundesbank has cut its staff by 35 percent since 2002, to about 10,000 workers.

The French central bank says that many of the tasks that workers now are employed to do should be automated. It wants to reduce its network in France to 105 branches, from the current 127, and reduce the number of currency processing centers to 32 from 72.

Both Germany and Italy have moved more aggressively than France to reduce central bank overhead since the euro was born.

The Banque de France workers argue that the French central bank’s situation is not directly comparable to that of other euro zone central banks, as it has responsibilities in areas like credit mediation not shared elsewhere. A consulting firm hired by the workers on Tuesday presented a critique questioning the economic justification of the restructuring plan.

This being France, no one is to be fired outright. Rather, operating according to the auditor’s recommendations, the bank will simply not replace half of the 5,000 employees it expects to retire over the next seven years.

Jack Ewing contributed from Frankfurt.

Article source: http://www.nytimes.com/2013/01/30/business/global/30iht-banque30.html?partner=rss&emc=rss

DealBook: Lending Web Site Gains a Shareholder in Google

A version of this article appeared in print on 05/02/2013, on page B3 of the NewYork edition with the headline: Lending Web Site Gains A Shareholder in Google.

French Central Bank Workers Strike Over Job Cut Plans

Recent News

Partners