Peer-to-peer lender Zopa is close to securing £130m (€152m, $168m) in funding to become a bank, just hours before its deadline tomorrow.

Zopa is in advanced talks to secure vital funds from an entity linked to existing investor Silverstripe, the British arm of American venture firm IAG Capital.

Sky News was told the funding was negotiated at a steep discount to Zopa’s recent capital raising in 2018. The new cash injection would give IAG Capital a majority stake in the company.

Britain’s oldest peer-to-peer lender was granted a conditional banking licence by the Financial Conduct Authority in December 2018. It was the first first P2P lender to be granted a licence, marking a turning point for the industry.

Zopa was given a year to raise regulatory capital and prove it was financially strong enough to become a bank.

If the deal goes through Jaidev Janardana, Zopa chief executive, hopes to become a “major force” in retail banking. Plans include a fixed-term savings account, credit card and new money management app.

IAG Capital is already a small shareholder in Zopa, which was founded in 2004. Since then, the online lender has issued about £5bn in loans – with more than £1bn lent last year.

It is one of Britain's biggest fintech companies, with 500 employees.

Zopa’s move into banking comes amid increasing investor caution over the P2P industry. Since 2018 FundingSecure, Lendy and Collateral have collapsed.

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