Dive Brief:
- LendingClub plans to cut its workforce by 14%, or 225 employees, the company said Thursday.
- The fintech, which has a bank charter from its 2020 acquisition of Radius Bank, expects to incur $5.7 million in pretax charges from the move, it said. About $4.4 million of that will be included in the company’s fourth-quarter earnings, which will be released Jan. 25.
- The cuts come in response to “reduced marketplace revenue” in the wake of last year’s series of interest rate increases by the Federal Reserve, the company said. “These measures enable us to more closely align our expense structure to loan volume and revenue, while ensuring effective execution against our strategic priorities and long-term vision,” CEO Scott Sanborn said in a statement.
Dive Insight:
LendingClub is hardly the first company in banking or an adjacent space to announce layoffs in this young year. Goldman Sachs reportedly began a reduction Wednesday that was set to encompass up to 3,200 employees. BNY Mellon will let go of roughly 1,500 employees this year — a notion that surfaced as the bank released its fourth-quarter earnings Friday.
Other reductions are tied tightly to a particular segment of the market. Crypto-heavy Silvergate Capital said this month it would lay off 40% of its workforce. Crypto brokerage Genesis said it would trim its ranks by 30%. And crypto exchange Coinbase announced it would cut its workforce by 20%, or 950 employees.
LendingClub expects to save roughly $25 million to $30 million in compensation and benefits annually from the cuts, the company said Thursday. It also estimated its fourth-quarter revenue to land between $260 million and $263 million, and that it would count $21 million to $24 million in fourth-quarter profit. Those figures include the impact of the company’s December purchase of a $1.05 billion personal loan portfolio from MUFG Union Bank, the company said.
