Morgan Stanley, Ally, and LendingClub Stoke M&A; FinTech Financing Records
By Tito Donis
February 23, 2020
Deal | Why? | Sector Impact |
Morgan Stanley Buys E-Trade for $13 Bn | Press Release
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Lending Club & Radius Bank | Press Release
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Ally Buys Card Works for $2.65 Bn | Press Release
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- Radius Bank is a Massachusetts chartered digital bank
- Offerings: check deposit, bill pay, card management, and a personal financial management dashboard, as well as open APIs to offer "Banking-as-a-Service" (BaaS) functionality to leading FinTechs.
- FinTech Customers: Brex, Nerd Wallet, and others.
- Profile: Has $1.2 Bn in deposits, $1.4 Bn in assets, $126 MM in bank equity capital, and ROE of 5.4%.
- LendingClub must seek regulatory approval to modify Radius Bank charter to execute against its stated goals.
- Deal price of $185 MM and a price-to-book ratio of 1.7.
- Regulatory approval may take another 12 to 15 months.
- How exactly will LendingClub update the Radius Bank charter to enjoy Federal preemption?
- Is LendingClub now in the “Banking-as-a-Service” business? This term was referenced in the press release, however, it’s hard to imagine LendingClub building a national consumer brand and also being a behind-the-scenes infrastructure provider.
- What happens to Radius Bank’s legacy business? Will they continue to serve FinTechs such as Brex, MaxMyInterest, NerdWallet, Aspiration, etc., that have no connection to LC’s core mission?
- Did LendingClub share its business plan with regulators and address Section 23A of the Federal Reserve Act (Lending to Affiliates)? Said another way, is there a clear path to LendingClub using the deposits of Radius Bank to fund LendingClub loans?
- What are the initial new products that we should expect from LendingClub? (LendingClub plans to launch a bank savings account later this year.)

Source: American Banker, PeerIQ, The Companies.
FinTech Financings are Heating up FT Partners published the 2019 FinTech Almanac - a nice slide deck summarizing deal activity. Here are the highlights:- 2019 was the most active year ever for FinTech Financing, M&A, and IPOs
- In 2019, there were over 100 financing rounds of $100 million or more, which is the most ever by a significant margin.
- The two hottest areas of FinTech financing activity during the year were Challenger Banks and Real Estate Tech.
- 35 Challenger Banks each raised $20 million+ in financing in 2019 across 14 countries (see more on Challenger Banks in FT Partners' recently published in-depth report).
- Five of the six largest FinTech M&A transactions ever happened in 2019.
- YieldStreet announced a partnership with the world’s biggest asset manager, BlackRock.
- The partnership is specifically with BlackRock’s Global Fixed Income Group. In the past, YieldStreet investors had to invest in individual deals, spanning unique assets from shipping containers to litigation finance.
- YieldStreet has now created the YieldStreet Prism Fund, a closed-end fund which includes YieldStreet investments alongside corporate and sovereign debt managed by BlackRock.
- According to the landing page, the fund targets a 7% distribution rate (dividends paid quarterly) and requires a $20,000 minimum investment. There is an option for limited liquidity within approximately 15 months and management fees are set at 1.5%.
- Morgan Stanley Is Buying E*Trade, Betting on Smaller Customers (WSJ, 02/20/2020) Morgan Stanley to acquire E*Trade for $13 billion.
- LendingClub Buys Radius Bank for $185 Million in First FinTech Takeover of a Regulated US Bank (CNBC, 02/18/2020) LendingClub acquires Radius Bank and is the first FinTech company to acquire a bank.
- How Millennials Could Make the Fed’s Job Harder (New York Times, 02/17/2020) Millennials retiring early could leave the Fed with less room to cut interest rates.
- Why the Fed is Taking an Incremental Approach to Faster Payments (American Banker, 02/13/2020) The Fed will release FedNow in incremental stages, with an initial offering coming in 2023 and 2024.
- FT Partners 2019 FinTech Almanac (FT Partners, 02/01/2020) Slide deck from FT Partners 2019 FinTech Almanac.
- Core Banking Technologies Are Changing. Here’s What That Means For You. (Forbes, 02/12/2020) Financial institutions are considering modernizing their core banking technologies.
- The Humbling of Goldman Sachs (Financial Times, 02/19/2020) Fears that nothing would change after the financial crisis turned out to be untrue.
- YieldStreet Creates New Fund with BlackRock as Sub-Adviser (Lend Academy, 02/18/2020) YieldStreet partners with BlackRock to roll out YieldStreet Prism Fund.
- LendingClub Continues Quest to Reimagine Banking with Radius Bank Acquisition (Lend Academy, 02/19/2020) LendingClub CEO, Scott Sanborn, said that the acquisition of Radius Bank is a “marriage of two digital innovators.”
- LendingClub Deal Could Spur More FinTech-Bank Mergers (American Banker, 02/20/2020) LendingClub’s deal with Radius Bank might influence more fintechs to scout for other banks to buy.
- CardWorks Announces Acquisition by Ally Financial. (PR Newswire, 02/18/2020) Ally Financial acquires CardWorks in a transaction valued in excess of $2.65 billion.
- Scientists Find a Wild Salamander That Hasn't Moved from its Spot For 7 Years (Science Alert, 02/20/2020) Like the guy with the red stapler in the cult-hit “The Office,” scientists have discovered a Salamander that has remained in the same spot for 2,569 days.