LendingClub has reached an agreement to acquire a $1.05bn loan portfolio from Japanese bank Mitsubishi UFJ Financial Group (MUFG).

For LendingClub, the loan portfolio is expected to support its growing revenue stream of recurring net interest income.

The acquired assets consist of personal loans originated by San Francisco-based LendingClub, which sold them to the Japanese firm while retaining the servicing rights.

The loan portfolio became available after US Bancorp completed the acquisition of Mufg Union Bank’s core regional banking operations from MUFG in a stock and cash deal valued at $8bn.

Through the deal, Tokyo-based MUFG exited the US retail banking market and acquired a minority stake of around 3% in US Bancorp.

LendingClub CEO Scott Sanborn said: “LendingClub utilised its strong balance sheet to support marketplace liquidity while mitigating a slowdown in marketplace revenue by adding a high-quality loan portfolio that will generate attractive returns.

“This portfolio was acquired through a competitive bidding process and exemplifies a mutually beneficial transaction.”

The derecognition of the associated servicing asset will be the main expense connected with the acquisition, which is anticipated to cost around $4m, LendingClub said.  

However, this expense will eventually be more than offset by interest revenue from the loan portfolio, it added.

The transaction is expected to complete by the end of 2022

LendingClub owns and operates the LendingClub Bank, a digital marketplace bank, which allows members to access a variety of financial products and services.