National Bank to buy loans on U.S. fintech platform

National Bank of Canada has made a deal to deploy up to $1.3 billion through the loan platform of the San Francisco-based fintech firm LendingClub Corp. over the next year.

The arrangement involves the Montreal-based bank’s U.S. subsidiary Credigy, purchased in 2006, which started in delinquent credit card recoveries and now specializes in consumer finance.

In a statement Monday, LendingClub chief executive Scott Sanborn said the program will add “funding visibility and stability,” and will make the fintech lender more resilient in various market conditions.

Brett Samsky, chief executive of Credigy, said his firm was drawn to LendingClub — which matches borrowers and lenders including retail investors, banks and asset managers in what’s known as peer-to-peer lending — because it is a clear leader in providing unsecured consumer credit.

“Based on LendingClub’s track record of loan performance and our extensive review, we are excited to establish this purchase program and invest on the platform," Samsky said.

In the United States, LendingClub made an early splash in the fintech sector with a technology platform that operates at a lower cost than the loan operations of traditional banks.

The new business model has drawn scrutiny from regulators, particularly since May when LendingClub’s founder and chief executive Renaud Laplanche resigned following an internal review. The review revealed issues with “data integrity and contract approval monitoring and review processes,” and Laplanche’s departure prompted queries from governmental and regulatory authorities, LendingClub said in subsequent regulatory filings.

The fintech firm said it was cooperating with requests for information from the authorities.

Claude Breton, a spokesman for National Bank, said Monday that the Canadian bank does not intend to disclose the business terms behind the arrangement with LendingClub, including how the two companies will be compensated.

“We are buying prime loans on the Lending Club auction platform. We are not making any loans to Lending Club nor are we investing in LendingClub,” he said in an emailed statement.

“We won’t detail the specifics.”