Britain's biggest payday lender Wonga Group said on Tuesday it would close its Dublin office as the company announces plans to shed a third of its workforce in a restructuring as the UK tightens rules on short-term lending.
The controversial lender, which charges interest at a rate of as much as 5,000 per cent on so-called “pay day” or short-term loans, said it will cut 325 jobs as part of a strategic refocus on its consumer businesses, including a restructuring and cost reduction programme. The company currently employs about 950 people.
The bulk of the job cuts will be sustained at offices which support the UK business in London, Dublin, Cape Town and Tel Aviv, eventually leaving Wonga with a UK-related workforce of around 325 people.
"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." chairman Andy Haste said.
The company said that its Dublin office on Sir John Rogerson’s Quay, which employs about 175 people, will close by mid-2016, along with the company’s office in Tel Aviv, Israel. The office first opened in summer 2011 and houses the company’s largest technology team as well as a customer services operation. Wonga does not have a lending operation in Ireland.
A spokesman for Wonga said the company has not given a time-line on redundancies for the Irish office, but that it expects to maintain a “significant presence” in Ireland over the next 12 months.
Wonga is backed by Balderton Capital, the private equity firm founded by Irish businessman Barry Maloney.
Wonga was hit by a number of scandals last year. In June, it agreed to pay £2.6 million in compensation to 45,000 customers after sending them bogus letters from non-existent law firms that threatened legal action. In October, it wrote down the debt of around 330,000 customers worth about £220 million after being forced to overhaul its lending practices by the UK financial regulator.
Wonga had until late last year advertised a representative annual interest rate of 5,853 per cent on its website. Under new rules this year, payday loans have to be capped at a daily rate equating to an annual limit of 292 per cent.
The company also announced on Tuesday that former chairman and early-stage investor Robin Klein is stepping down from the group’s board.
(Additional reporting Reuters)
