WebBank

WebBank (est. 1997) is a Utah-based industrial bank, with headquarters in Salt Lake City, Utah.[1] [2] As an industrial bank, it is regulated and overseen by the Utah Department of Financial Institutions and the FDIC.[3] WebBank is a wholly owned subsidiary of Steel Partner Holdings, L.P, which is listed on the New York Stock Exchange with symbol SPLP.[4]

WebBank has become known for frequently partnering with online-lending platforms, which are sometimes also referred to as peer-to-peer lending platforms, marketplace lending platforms or fintech companies. Consumer-focused lending platforms that have active partnerships with WebBank include LendingClub, Prosper,[5] [6]and Avant.[7] WebBank is also active in the commercial lending space through partnerships with CAN Capital[8], Square and PayPal.[9]

The heavy focus on this strategic partnership business model has been highly profitable for the WebBank, allowing it to realize higher profit-per-employee and return on equity figures in 2014 than bulge bracket banks like JP Morgan Chase and Goldman Sachs were able to achieve.[10] in 2014, WebBank's return on equity was 44%,[10] while for 2019, the company realized a return on equity of 32%.[1]

Over the last few years, partnerships between banks and online lending platforms have received increasing regulatory scrutiny. Opponents of the business model sometimes refer to it as “rent a charter” or “rent a bank” setup[11] and allege that the bank's involvement in these setups is only superficial. They argue that the primary intent of these setups is the evasion of state laws such as usury laws.[12] Proponents on the other side argue that the banks are directly and highly involved in setting policies and procedures for the programs, and program oversight,[5] and that these partnerships provide more access to credit and increase financial inclusion.[13]

References
  1. "FDIC: BankFind Search Details". research2.fdic.gov. Retrieved 2020-05-25.
  2. "Financial Institutions". Utah Department of Financial Institutions. Retrieved 24 May 2020.
  3. Rudegeair, Telis Demos and Peter (2015-12-13). "Behind the Boom in Online Lending: A Tiny Utah Bank". Wall Street Journal. ISSN 0099-9660. Retrieved 2020-05-25.
  4. "Steel Partners Holdings - 10Q". NASDAQ SECFILINGS. Retrieved 24 May 2020.
  5. Rudegeair, Aruna Viswanatha and Peter (2015-12-09). "House Committee Raises Questions About Lender Role in San Bernardino Shooting". Wall Street Journal. ISSN 0099-9660. Retrieved 2020-05-25.
  6. Garret, Olivier. "The 4 Best P2P Lending Platforms For Investors In 2017 -- Detailed Analysis". Forbes. Retrieved 2020-05-25.
  7. Kruse, Jan (2019-11-18). "FDIC/OCC Proposal Would Encourage Rent-a-Bank High-Cost Predatory Lending". National Consumer Law Center. Retrieved 2020-05-25.
  8. Rudegeair, Aruna Viswanatha and Peter (2015-12-09). "House Committee Raises Questions About Lender Role in San Bernardino Shooting". Wall Street Journal. ISSN 0099-9660. Retrieved 2020-05-25.
  9. Frankel, Robin Saks. "Need A Loan Now That The Paycheck Protection Program Is Running Again? Try These Nonbank Lenders". Forbes. Retrieved 2020-05-25.
  10. "Where Peer-to-Peer Loans are Born - WebBank provides the money that gets it all started". Bloomberg. Retrieved 24 May 2020.
  11. Rudegeair, Telis Demos and Peter (2016-08-22). "Greater Scrutiny Looms for 'Rent-a-Charter' Deals". Wall Street Journal. ISSN 0099-9660. Retrieved 2020-05-25.
  12. "Amicus Brief" (PDF). National Consumer Law Center. Retrieved 24 May 2020.
  13. S, Troutman; Butler, ers LLP-Timothy; Lamb, Chelsea. "Foolishness Versus Fintech: Foolishness Wins Again | Lexology". www.lexology.com. Retrieved 2020-05-25.
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