Wonga Group (Wonga) today announces a strategic refocus on its consumer businesses, including a restructuring and cost reduction programme that is expected to lead to the loss of around 325 jobs that support its UK consumer business.
The company will immediately launch a formal, collective consultation period for all individuals who are at risk of redundancy, which will run for 30 days, with the full transition expected to be complete in 12 months.
The announcement comes as Wonga evolves its business model in a rapidly changing market for short-term credit. On his appointment as Chairman in July last year, Andy Haste said the Group would become smaller and less profitable in the near-term as it introduces changes to ensure it always lends fairly and responsibly.
Commenting on today’s announcement, Mr Haste said: “Our focus is on creating a business that meets the demand for short-term credit sustainably and responsibly, resulting in good customer outcomes. We’ve already made significant changes, including appointing a new leadership team, implementing a new risk decision engine and tightening our lending criteria.
“However, Wonga can no longer sustain its high cost base which must be significantly reduced to reflect our evolving business and market. Regrettably, this means we’ve had to take tough but necessary decisions about the size of our workforce. We appreciate how difficult this period will be for all of our colleagues and we’ll support them throughout the consultation process.”
It is expected the phased reduction in roles will primarily impact teams that support the UK business from London, Dublin, Cape Town and Tel Aviv, eventually leaving Wonga with a UK-related workforce of around 325 people. The remaining roles are expected to be based in London and Cape Town, with plans to close the Tel Aviv office by mid-2015 and the Dublin office by mid-2016.
As part of the restructuring plan, Wonga will now focus on its core consumer businesses in the UK and overseas. The Group today confirms that, following discussions over several months, it has agreed to sell Everline, its small business lending brand, to Orange Money Ltd, an SME-focused lending business trading as Ezbob.
Wonga also announces the appointment of Simon Allen as an independent non-executive director (INED). He joins both the Board of its UK regulated consumer loans business and the Wonga Group Board.
Mr Allen has over 25 years’ experience in financial services, in executive and Board positions. He will join a UK Board of five, to include Group CFO Paul Miles and UK CEO Tara Kneafsey, plus two further INED positions for which searches are underway.
At the same time, Robin Klein has stepped down from the Group Board. Mr Klein was an early-stage Wonga investor and previously served as Chairman. He has been on the Board for eight years and has supported the changes that Wonga is making as it works towards full FCA authorisation. The company confirms that it has filed its application for authorisation with the Financial Conduct Authority in the UK, beginning a regulatory process that can last up to 12 months.
• Wonga Group currently employs c.950 people, c.650 of which support the UK business from offices in the UK (c.280), Ireland (c.175), South Africa (c.185) and Israel (c.10) • The Group anticipates a reduction of around 325 UK-related jobs over the course of the year, leaving a workforce of approximately 325 supporting the UK business, and c.625 in total across the Group • The Group will also continue to operate BillPay, its German payments business, providing retail credit services to consumers in Germany, Austria, Switzerland and the Netherlands. BillPay employs c.130 people and there is no impact on these jobs following today’s announcement • The Group will no longer operate in the UK’s SME credit market, but will continue to offer short-term consumer loan products in the UK, South Africa, Poland, Spain and Canada • The Group is aiming to achieve overall cost savings of at least £25m over the next two years, including the headcount reduction relating to the UK regulated business