Alt Lending Week Ending 8th April 2022
Where the Tabloids meet Fintech
Selman Turk who founded failed Fintech startup Selman AI. Is an ex Goldman Sachs employee who has now been referred to as a “Fraudster” by the Daily Mail. This is based on the fact that Mr. Turk apparently arranged a payment of some £ 750k to the black sheep of the British Royal family Prince Andrew, son of the Queen. What is rather strange is that this payment was received only nine days after Mr. Turk won an award at pitch@palace a dragons den look alike arranged by the Prince. Apparently Prince Andrew took no part in the judging and he has now repaid the £ 750k but overall a total of £ 1.1m. was received. Let’s just say that the circumstances around this all look a little odd. Apparently Selman AI solved some kind of everyday financial problem and would make its users lives easier. Strangely however nobody seems to know what problem he was solving. Apparently Turk was financial adviser to a very rich Turkish lady called Nebahat Isbilen who is now suing Mr. Turk for some £ 40milion which she claims has disappeared. Does the FCA know anything about this? There are a lot of hustlers out there relying on out of date business cards. No suggestion that Mr. Turk is one of them.
JP Morgan in Law Suit over Interest Rate Swap mis-selling allegations
Interest rate swaps have always been contentious although for the life of me I don’t know why..They are in essence quite simple: an arbitrage between the risk price for the same borrower in different markets. I think that they became popular as a hedging instrument in the 1980’s. In those days many borrowers only had access to the floating markets where competition was strong and margins squeezed. Fixed rate markets on the other hand were only available to borrowers with ratings. In any case they were very useful instruments. I can’t say that I have followed their progress since 2008 and the subsequent slide of both fixed and floating rates towards zero but their ability to attract controversy has always been the same. The banks are accused of mis-selling and the borrowers are aggrieved in some way. In the current case the borrower is an Italian Regional government authority and the Bank JPM. No one is commenting but I suspect that it is six of one and half a dozen of another. Only the lawyers will win.
Lenders Beware a Recession is on the way at least Deutsche thinks so.
Watch out the inverted yield curve is back. Such an inversion has preceded every recession in the US for the last 50 years so it should be taken seriously. For lenders particularly the new guys in the market this will be uncharted territory but it always leads to a sharp reduction in credit quality as bad debts start to creep up. The article focuses on the politics particularly as sleepy Joe’s poll ratings are already dire but it also points out that a US recession will push the EU in to stagnation by early 2024. Not good news for European lenders particularly as the banking sector has enough to contend with already. I would expect an already squeezed market to become even more stingy over the next year and a half. Looks like the Chinese curse “ may you live in interesting times” looks appropriate again.
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Howard Tolman is a well-known banker, technologist and entrepreneur in London,We have a self imposed constraint of 3 news stories per week because we serve busy senior Fintech leaders who just want succinct and important information. For context on Alt Lending please read the Interview with Howard Tolman about the future of Alt Lending and read articles tagged Alt Lending in our archives.
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