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Lending Club Snaps Up Radius Bank for $185 Million

When Lending Club was founded in 2007, the startup aimed to serve as a place to help borrowers avoid dealing with banks. In a somewhat ironic move today, that same startup is becoming a bank itself.

The move is made possible through Lending Club’s acquisition of Radius Bank, an online-only community bank founded in 1987 with more than $1.4 billion in assets.

It’s a logical purchase. Both Lending Club and its U.S. competitor Prosper have struggled with the classic chicken and egg conundrum– they can’t lend money to borrowers without investors ready and willing to lend, and they can’t find people willing to lend without enough qualifying borrowers. By becoming a bank, Lending Club has now adopted a pool of borrowers while having access to customer deposits to lend to those borrowers.

The deal is subject to regulatory approval and is expected to close in 12 to 15 months.

Radius President and CEO Mike Butler called the acquisition “a perfect marriage.” He added that, “with LendingClub bringing the leading digital asset generation platform, and Radius contributing a leading online deposit gathering platform,” they are set up for “long-term success.”

“This is a transformational transaction that allows us to reimagine banking in a way that is free from legacy practices and systems and where the success of LendingClub is aligned with the success of our customers,” said Scott Sanborn, CEO of LendingClub.

Lending Club isn’t the only alternative lender with aspirations to become a bank. U.K.-based P2P lender Zopa is currently working on launching a bank of its own and small business lender On Deck Capital plans to seek out a bank charter this year.