Updated: 4 November
Mintos have disclosed how much they expect investors to lose on defaulted loans
Mintos recently hosted an ‘ask me anything’ event with Dmitry Amelin, their Debt Collection Manager, and Janis Pranevics, their Head of Loan Originator Partnerships. A replay is available on Youtube, which we have linked to opposite.
For the first time (that we are aware of), Mintos has provided recovery forecasts for many of the loans that are in default. They also provided significantly more information about the status of many key loans in default, such as Finko (Varks), Cashwagon, and Monego.
We have provided below a summary of the key information made available on the call, as we think it will be of interest to many investors, and it has not been published on the Mintos site. If there is sufficient interest, we may keep this page updated in the future once new defaults emerge and more information becomes available (let us know in the comments below).
Overview of Mintos loans in default
| Loan originator | Exposure at default €m | Recovered €m | Status | Mintos recovery forecast | Assumed recovery | Assumed loss €m | Final payment expected | Comments |
|---|---|---|---|---|---|---|---|---|
| Capital Service | 19 | 0.5 | Repayment plan agreed | <100% | 70% | 5.7 | 2026-28 | An initial repayment plan has been agreed but full recovery will require further negotiations |
| ExpressCredit | 5.3 | 1.9 | Negotiations | 100% | 75% | 4.0 | Dec 21 | Mintos says it is hoping that other members of the ExpressCredit group will provide support. 100% recovery seems optimistic |
| Monego | 9.5 | 2.4 | Liquidation | ? | 50% | 4.7 | ? | Mintos has guided towards a 70% recovery but we expect less. There is a large potential tax bill, and recovering loans will be difficult due to the loss of licence by Monego. In addition, operating costs and administrator's bills will cut into the proceeds paid to investors |
| Akulaku | 20.8 | 10 | Repayment plan agreed | 100% | 100% | 0 | 2021 | The Akulaku default was not expected. It has since been making repayments and is expected to repay all amounts due by the end of 2021 |
| GetBucks ZM | 3.7 | 0 | Negotiations | ? | 50% | 1.8 | Dec 21 | GetBucks Group is attempting asset sales to raise funds to repay Mintos investors. However the situation seems to be extremely distressed and have doubts that a full recovery will happen |
| GetBucks BW | 7.4 | 1.7 | Negotiations | 100% | 50% | 3.7 | ? | Mintos says that the company is 'cash strapped' and they are seeking to negotiate a payment schedule |
| Kredit24 | 0.4 | 0.2 | Wind down | 100% | 100% | 0 | May 21 | An orderly wind down is expected to result in a full recovery for investors |
| Eurocent | 0.2 | 0 | Insolvency | 0% | 0% | 0.2 | ? | Mintos have not explained why zero recovery is expected, but it is not a surprise |
| Aforti | 2.2 | 0.3 | Litigation | ? | 75% | 0.5 | ? | Recovery is likely to take several years unless Aforti management agree to negotiate a restructuring plan |
| Rapido Finance | 0.4 | 0 | Liquidation | 0% | 0% | 0.4 | ? | Mintos has not explained why zero recovery is expected. |
| Cashwagon VN | 6.4 | 1.4 | Liquidation | 40% | 40% | 3.8 | ? | Company was closed down by Vietnam authorities. Likely to take a long time to recover funds |
| Cashwagon PH | 1.9 | 0.2 | Wind down | 20% | 20% | 1.5 | ? | Being wound down after failing to find secure new investment into the group |
| Cashwagon ID | 1.1 | 0.4 | Wind down | 40% | 40% | 0.6 | ? | Being wound down after failing to find secure new investment into the group |
| Finko UA | 16.8 | 5.3 | Wind down | 100% | 80% | 3.4 | ? | Ukraine companies are being wound down. Difficult conditions in the country. Mintos is hoping to receive 'extra security' from members of the Finko group. A full recovery seems optimistic but possible |
| Finko AM (Varks) | 27.4 | 10.5 | Administration | 70% | 70% | 8.7 | Dec 22 | Extremely messy situation. War in Armenia has impacted collections. Recovery rate has been cut from 100% to 70% by Mintos. Would not be surprising to see it cut further |
| Dziesiątka Finanse | 1 | 0.4 | Restructuring | 100% | 100% | 0 | 2021 | Has now agreed a repayment plan with Mintos |
| Alex Credit | 4.4 | 0.1 | Workout | <25% | 20% | 3.5 | 2022 | A collection agency has been appointed to recover payments |
| Total | 128.1 | 35.3 | 42.5 |
What caused the defaults?
We have seen several consistent reasons behind why loan originators have defaulted. While COVID-19 is an obvious one, it should only be attributed in some cases. Other frequent reasons include regulatory breaches, sub-scale operations and the introduction of local laws that damaged the business models of some businesses. We think that analysing past failures can be a good way of avoiding ones in the future. To help with that we have provided a summary below of what the key reasons were behind each default.
| Loan originator | COVID19 impact | Regulation breach | Subscale operations | Weak financial position | Unexplained factors | Poor management | Country specific issues |
|---|---|---|---|---|---|---|---|
| Capital Service | X | X | X | X | |||
| ExpressCredit | X | X | X | ||||
| Monego | X | ||||||
| Akulaku | X | X | |||||
| GetBucks | X | X | |||||
| Kredit24 | X | X | |||||
| Eurocent | X | X | X | ||||
| Aforti | X | X | X | ||||
| Rapido Finance | X | X | |||||
| Cashwagon | X | X | |||||
| Finko - Varks | X | ||||||
| Finko - Ukraine | X | X | X | ||||
| Peachy | X | ||||||
| Dziesiątka Finanse | X | X | |||||
| Alex Credit | X | X |
16% of loans outstanding are defaulted
The total amount of loans classified by Mintos as being in default is just under €100m. That’s over 16% of loans outstanding. Unsurprisingly, many investors are not happy with this situation. There are many situations now where Mintos has very little control over the outcome, because the companies are now controlled by regulators or insolvency administrators. Varks and Monego are two messy situations where we think there is considerable risk that recoveries will be lower than expected, and will take significantly longer than expected.
On October 30 Mintos announced that two ‘unregistered creditors’ had confirmed receiving funds from the Monego administrator. These funds had been sourced from borrower repayments (presumably some of this cash is contractually owed to Mintos investors). This disclosure raises a lot of unanswered questions. Who received the payments? How big were they? What were the payments for? Is the administrator following the law? This highlights again that there are significant risks in these situations, particularly in countries such as Kosovo that are not renowned for having reliable legal, regulatory and political processes.
The two situations with the most urgent and important outstanding negotiations are Capital Service, and Akulaku. Both situations are interesting. Capital Service made a ridiculously bad restructuring proposal to Mintos investors – will they accept the Mintos counter-proposal, or will they keep delaying and playing for time? Akulaku has never properly explained the reason for its difficulties repaying Mintos investors. It had huge cash reserves less than 12 months ago, and Indonesia was less impacted by COVID-19 than in many other countries.
What can we learn?
It is important to learn from failures. LO’s, investors and Mintos itself will need to consider how they can come through the next crisis in a better position. We’ve listed below some of the more glaring problems that have emerged this year below. We would love to hear from you in the comments below what other failures you think we can learn from the experience of 2020.
Mintos failures:
- Slow and passive approach toward recoveries in too many cases, such as Aforti and Capital Service
- Allowed too many weak and poorly managed LO's onto the platform
- Poor communication about recovery efforts and strategy (although now improving)
- Poor disclosure of relationships between various LO's and the shareholders of Mintos
- Group guarantees found to have no real value in many cases
Loan originator failures:
- Too careless towards compliance with local rules and legislation, leading to loss of licences
- Weak balance sheets left them unable to cope with a stress event such as COVID-19
- Too much exposure to currency fluctuations, particularly for African LO's
- Lacked access to additional equity and funding when needed
- Over-reliance on P2P funding
Investor failures:
- Many failed to analyse the risks of each LO, and identify the best ones
- Used Mintos automatic investment tools that created high risk portfolios
- Failure to understand that a buyback guarantee is only as strong as the loan originator who provides it
- Lacked diversification across P2P platforms, many of which have performed well during 2020
Guys I am reading the documents from Crowdcube regarding the fundraising from Mintos. I share with you what I found out.
Question: No controlling shareholder of the Company has been the controlling shareholder of a connected company that has had its regulatory licence revoked?
Answer: There is an equity shareholder overlap for the Company and some loan originators on the Mintos platform, including in the following companies: Monego Shpk: On 6 December 2019 the Central Bank of Kosovo issued a decision revoking the licence of the Monego Shpk (a financial institution providing unsecured consumer loans). The Central Bank of Kosovo has appointed a liquidator and initiated liquidation proceedings. The liquidation is not based on the insolvency of the company. The decision has been appealed and a final decision in relation to these proceedings has not been issued yet.
My biased coclusion is that someone (equity shareholder overlap) took the money that should have been transferred to investors and now Mintos fooling us that the Liquidator transferred these money to 2 unregistered creditors. I know it is a biased conclusion with no concrit facts but I am very pissed off with the Monego case.I truly believe that Mintos handled other cases very good but this one not.
Hi George. I think the bigger question on Monego is how and why the regulator shut them down, when they were reporting a strong balance sheet position. Also whether the regulator gave the shareholders an opportunity or not to inject more capital, and whether or not they refused to do so. None of this has been explained properly up to now. Once the liquidator has been appointed, it’s unlikely that the shareholders will have much control over their actions.
Thank you for the article and tremendous work you put in!
My point for takeaways form investor side is that COVID-19 rose the risk for loan originators significantly and we should have foresee the effects coming down to borrowers not being able to pay back. I myself started the exit from various P2P platforms by end of March 2020 (https://www.investingsmall.eu/2020/03/29/why-am-i-selling-off-for-now/).
Though as many of readers got some Finko AM loans in my portfolio, breaking my overall investment returns barely positive.
A highly appreciated article, this and the whole site is of full valuable information. Unfortunately I came to it too late. After 2 years with Mintos my income is the same amount as the defaulted LO’s I have still in my pocket….
Thanks for your generous comments Joachim. Hopefully we can help you make it back safely in future years!
Mintos does 0 due diligence. Even when investors point to problems, they waste time assuring investors that we are wrong and everything is fine. I have seen this time and again, the latest being Cashwagon. Many investors who got wind of it sold their loans ASAP, while Mintos took days to react and suspend Cashwagon Vietnam and even more days to suspend the rest. Even the dumbest investor knew that Cashwagon cannot survive without Vietnam-its cashcow.
I think its unfair that you are blaming investors for lack of due diligence. Its unfair that you blame the failed LOs for over-reliance on P2P. Both these failures are Mintos failures, it was their job. They should have never allowed such bad LOs. Or they should have made their rating system transparent. Remember that they take a huge commission, which should have been invested in doing LO due diligence and investor awareness. You are being gentle on Mintos criticism.
Alas, finally they have made their rating system transparent so now investors will have a better idea- this simple thing will go a long way in making investors aware of the risks. I only hope that they periodically update, otherwise its again pointless.
Lastly, I read this somewhere but this is the apt description of buyback guarantee “Buyback guarantee is as good as LOs whim”. Certain LOs are doing well but they simply have no desire to honor their commitments and Mintos has no spine to enforce it either. I suspect the agreements are very weak to hold up in court (the “unexplained factors” is probably this, and Mintos doesn’t want to admit this). Many LOs are weak and yet they continue to honor buyback guarantees.
Thank you very much for the article, an important help.
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I don’t know if you have seen this from the mintos update on suspended and defalted LO. Terrible news.
In the meantime, Mintos has obtained information that the administrator has violated the law by making two payments to unregistered creditors in the Monego case, using funds of Monego issued loans borrowers’ repayments. Mintos has also received a confirmation from the two creditors of them receiving these payments. We have made inquiries to the administrator, as well as the CBK and are working towards informing the Finance Ministry of Kosovo state. We will inform investors as soon as we have more information.
Thanks George we have updated the page to include this development. We did say that there was a lot of risk surrounding Monego recoveries, did not expect those risks to become so clear so quickly…
Your Mintos LO ratings saved me a lot of money. Thank you so much for that! Is there a way to -virtually – buy you a beer?
No need MK! Glad to hear we have helped you, it’s nice to get that feedback.
Excellent article. Excellent site. I read your articles on your site with sheer admiration. You really provide useful information in straight-forward and simple manner.
Congratulations and big thank you for your work.
A good overview and very interesting, thank you very much!
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Thank you for the article. Provides an excellent overview without having to watch the whole video from Mintos. Future updates of the article would be greatly appreciated.
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Excellent article for me too! Keep on informing on defaulted companies.
So think about and notice the following facts !:
1 / as early as 10/2019, we warned the CEO of Mintos that their reassignments are odd and incorrect and do not correspond to the facts – what about Mintos … basically continued to launch a number of low-quality companies into the platform, we could see it from summer 2019 when companies fell as flies after the rain
2 / as soon as companies began to associate and fragment Vark pod Finko and others, very confusing situations began to arise for investors about the real quality of groups – what about Mintos (instead of requiring their risk menegment audits and tightening conditions based on my initiatives, for example by raising the skin) on the market and others) began to confuse people and present group guarantees …
3 / when the perpetrators started to fall Mintos did not immediately start actively and does not do so now actively and emphatically defend the interests of investors and recover receivables (for example, 3 months ago CEO Mintos pointed out that the liquidator Monego did not work properly … Mintos took three months, before he mentioned the same and started reporting on the change of law firm after 3 months!)
Mintos does not defend the interests of investors, it is no secret that the real owner of Mintos and Finka is one and the same person, so why would Mintos strongly enforce claims on both Ifnek and others, such as bankruptcy proposals and so on, preferring to start telling investors that it is better for them wait and wait and wait and enough a few cents for a month …
4 / Mintos, for example, in the Czech Republic only recently applied to the Czech National Bank for a license on the basis of my criminal reports to Mintos, even though he knew that he had been promoting Mintos and offering loans in the Czech Republic for a long time, and if he did not know all the more unprofessionalism.
5 / It is claimed that Mintos has 45% of the P2P market I do not know how in the world, but in our country 40% of the market has to intervene, regulate and control the antitrust regulatory authority and what happens in the case of Mintos, paradox and paradox again when the company , which shows the above asks for a financial license, if it receives it is just another proof of the farce paradox in the industry
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Excellent article as usual from you guys. Keep up the superb work – you are an invaluable resource for investing on Mintos and the p2p world in general. Thanks
Thanks Philippe for your kind words. Oscar.
I believe it was a step forward by Mintos the Specific event. Investors need more disclosures and clarifications and to feel protected. Otherwise P2P will die in the next few years if not upgraded.
I hope you are wrong about Varks taking more than end-2022 🙂 but i agree the situation is messy there..
In Mintos’ failures i would add one regarding risks disclosure (in particular for I&A aka ‘strategies’!). Main audience of mintos are individuals with in average a low financial understanding (as in the general population overall). This goes hand-to-hand with the first 3 investors failures listed in the article.
In highly regulated activities like banking and insurance you have a dedicated set of regulation with specialized supervisors controlling this (ads, speech done by sellers directly to clients, etc..) and even there it’s far from perfect and they try as much as possible to make things look nicer and less risky than reality.
Very much agree and more often than not investors are influenced by so called influencers, who more often than not earn money just by promoting specific sites.
I’m sometimes very surprised with questionable decisions made or how in general people invest especially big sums. But I guess everyone has to learn from their own mistakes.
Excellent article!