Troubled marketplace lender Lending Club has appointed a new CEO and announced plans to axe 179 jobs - representing 12% of its workforce - as it bids to revive its fortunes following a turbulent two months.
The new man at the helm is Scott Sanborn, a six-year veteran of the company who assumed the CEO role on an interim basis in the wake of the resignation of previous incumbent and founder Renaud Laplanche. Laplanche's departure followed an internal review which found that $22 million in near-prime loans were sold to an institutional investor that did not want them, prompting a Justice Department probe into the running of the company's loans book.
The company says it expects loan originations in the second quarter of 2016 to be roughly one third lower than in the first quarter of 2016. it has also earmarked $15-$20 million of additional expenses related to the review and restructuring and plans write-down of between $20-$40 million owing to slower growth expectations for patient financing offshoot Springstone.
Ina statement announcing the job cuts, the company says: "In light of lower loan volumes in the second quarter and recognising that fully restoring investor confidence may take time, the company has decided to reduce 179 positions in the organisation."
Lending Club shares edged up slightly to $4.39 before the bell, still some way off a previous year-high watermark of $15.14.