Latvian online marketplace lender Twino announced on Thursday (Dec. 1) that it will soon list Russian subprime loans on the company website. This marks the first time in history a peer-to-peer lending facilitator in Europe has listed Russian loans.
Twino was founded in 2009 and currently sells loans from Georgia, Latvia, Denmark, Estonia and Poland. Twino’s business model operates more like a payday loan operator than a classic peer-to-peer lender. The company makes loans and then resells them to investors on its website, generating revenue by taking a cut of the interest payments.
The company’s portion of the cut depends on the interest charged on the loan. The new Russian loans will pay out about 14 percent annual interest to investors. Borrowers in Russia will reportedly pay over 100 percent in interest.
Twino Chief Executive Jevgenijs Kazanins was quoted as saying: “It’s becoming more and more important for investors to diversify their portfolio.”
Low interest rates have been the norm in the global lending market for the past few years. Investors are seeking out exotic investments to boost returns. Likewise, marketplace lenders are expanding their borrowers and investors by expanding their global reach.
Kazanins said that the 2014 sanctions against Russia for annexing Crimea were a big opportunity for Twino. Russian banks retrenched lending in response to the sanctions. Customers looking for loans were forced outside the bank market.
In response to the sanctions, Russia created a new national payment system as a means to lessen its reliance on Western systems after Visa and Mastercard stopped providing services. Russia is currently working with China to make their payments systems mutually compatible.
Twino estimates it has raked in €350 million ($371 million) in loans since its founding. Along with the recent addition of Russia, Twino is reportedly looking to expand its international reach into the Mexican loan market.