TrustBuddy to Apply for license to become a Credit Market Institution
Stockholm, 2012-11-21 15:58 CET --
Summary of the Process
TrustBuddy International AB's subsidiary, TrustBuddy AB, (jointly "TrustBuddy" or the "Company") is today announcing its move towards becoming a modern European finance institution by applying for a license with the Swedish Financial Supervisory Authority (Sw: Finansinspektionen) (the "SFSA") to conduct activities as a Swedish Credit Market Institution (Sw: kreditmarknadsbolag). The resolution to move forward with an application filing to the SFSA was made today. A preliminary filing request has previously been sent to the SFSA, to evaluate whether or not TrustBuddy's proposed future structure and business model (see further below) will meet the various criteria for being considered as a Swedish Credit Market Institution. Such preliminary evaluation response from the SFSA has returned positive, however the ultimate approval for TrustBuddy will be ultimately depending on the SFSA's decision to approve TrustBuddy as such Credit Market Institution. Such final approval is at this time anticipated to be made by the SFSA during spring or early summer 2013. Until then, TrustBuddy's business, as currently conducted, will continue as in its ordinary course.
It is TrustBuddy’s opinion that the Company meets all the legal requirements for a full banking license, however the Company is limiting the application to become a Credit Market Institution (Sw: kreditmarknadsbolag), the second most regulated entity within the European Union (the highest being a bank).
Purpose and Motivation
TrustBuddy’s line of business has so far been focused on P2P lending with a highly successful business model, entailing less than a 1 % ultimate default rate whilst at the same time yielding an average 16 % to its P2P lenders. Even with such solid figures, TrustBuddy recognizes that there is a demand for product development and possibilities to provide for in-house debt purchase and debt collection of defaulted debts generated through the Company's P2P lending business.
A part of the P2P lending business involves already today a portion of such debt purchase and debt collection, although by third parties. With a license as a Credit Market Institution, TrustBuddy will be able to purchase and collect the defaulted debts itself and thereby control the full credit chain – from the initial P2P lending to an ultimate debt purchase and collection of such debts. This will entail a more transparent process and a better control of the debt purchase and collection, which will highly benefit both the P2P lenders as well as the P2P borrowers. The license will further bring the possibilities for TrustBuddy to participate in P2P lending with deposited funds.
Recognizing the very high potential for improved revenues, TrustBuddy has therefore decided to broaden its key area of business to include downstream integration of services. This will entail debt purchase, participating in P2P lending and other related services.
To fully meet future demand, and to further develop the Company, a (full) banking license may become a necessity for the Company to hold at a future point in time. However, to maintain control of operational costs and to facilitate a careful organizational integration of the new services and future products, TrustBuddy has decided to at this point apply for the license as a Credit Market Institution, which the Company deems sufficient at this time to be able to meet the demand for the current need for business development. Such license will retain less capital, whereas it has substantially the same requirements from a risk management perspective as a full banking license has and can, therefore, be upgraded without any larger regulatory or organizational demands in the future. TrustBuddy is experiencing a continuous strong growth, and expects to benefit strongly from having a license as a Credit Market Institution.
The duration of the process to receive the license is expected to be approximately six months from today. However, this is a process highly depending on the SFSA and not by TrustBuddy and the Company will therefore be updating the market on the continued process from time to time.
For additional information, please contact:
Jens Glasø, CEO, TrustBuddy International AB (publ)
+47 40 40 47 50, email@example.com
About TrustBuddy International AB (publ)
TrustBuddy International AB (publ) is one of the first in the world to focus on arranging loans and capital provision between buddies in Scandinavia in an organised manner. The company is listed at NASDAQ OMX First North in Stockholm. Mangold Fondkommission AB is TrustBuddy International AB (publ):s Certified Adviser and market maker, contact number: +46 8-503 015 50.