Citi strikes deal with Lending Club to provide cheap financing

[NEW YORK] Online credit provider Lending Club and Citigroup announced a US$150m venture on Tuesday to provide affordable credit to low-to-moderate income borrowers.

The deal, funded by Citi, will help the US bank meet Community Reinvestment Act (CRA) guidelines set up by Congress in 1977 to help communities where they are chartered.

Borrowers will get a subsidized interest rate versus what Lending Club would traditionally charge.

"It's a call to action to keep innovating," said Lending Club CEO Renaurd Laplanche, speaking at the LendIt USA conference in New York on Tuesday.

Mr Laplanche said it is not clear whether Citigroup would securitize these loans.

All qualifying loans will be issued by WebBank, a Utah-chartered Industrial Bank, and purchased by Varadero Capital through a credit facility provided by Citigroup.

REUTERS