Bankers are hungry for new types of assets to package and sell to investors and peer-to-peer (P2P) loans are an attractive prospect as sales of more traditional securitizations — such as mortgage-backed securities — remain subdued after the housing bust, the Financial Times reported today. Peer-to-peer lenders, also known as marketplace lenders, use internet technology to directly connect borrowers with lenders. To date, the sector has focused on smaller consumer loans to high-quality borrowers, but lenders are expanding rapidly in size and style thanks to an influx of professional cash. While the industry initially started with the goal of disintermediating banks, the biggest P2P players are now far more likely to team up with Wall Street than eschew it. About 80 percent of the loans originated through Prosper and Lending Club — the two largest P2P lenders — are estimated to be bought by big institutional investors rather than the individual retail investors that once dominated.
