Wonga Group will remain as Newcastle United sponsor until at least 2017, despite a major restructuring and cost reduction programme that will see it shed half of the workforce supporting its UK arm.
The company has announced a strategic refocus on its consumer business, which will see its UK headcount drop from 650 to 325 as its alters its business model in light of the rapidly changing short-term credit market.
A spokesman confirmed that all marketing is under review as part of the process.
However, he added:
“As far as Newcastle United is concerned, we have a contractual obligation until 2017.”
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.
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.
Wonga will immediately launch a formal 30 day consultation period for those at risk of redundancy and expects all changes to be complete within 12 months.
Andy Haste, who was appointed group chairman in July, 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.”
As part of the restructuring plan, Wonga – which has also agreed to sell its small business lending brand Everline to Orange Money Ltd – will now focus on its core consumer businesses in the UK and overseas.
It has likewise filed an application for authorisation with the Financial Conduct Authority in the UK, beginning a regulatory process that can last up to a year.
Source – Newcastle Evening Chronicle, 24 Feb 2015