The boss of challenger bank Zempler privately told staff he would lay off around five per cent of its workforce on Monday, just as the company publicly announced a jump in profit in its latest financial year, City AM can reveal.
In an email to staff, seen by City AM, the digital bank’s chief executive, Richard Wagner, said the fintech lender would be putting “fewer than 20 roles at risk” as part of a plan to “improve the efficiency and profitability” of the company.
The number of potential redundancies amounted to “less than five per cent” of its total workforce, Wagner added.
“We have focused on creating clearer accountabilities and a simpler structure,” he told the fintech lender’s roughly 400 employees. ”As such, the plans include some changes to our organisation that will result in several roles being put at risk.”
Wagner, who founded the bank in 2005 as Cashplus, said Zempler was also on the hunt for a new investor, while its chief marketing officer had left the business because of a decision to shelve a “large-scale awareness campaign”.
The announcement is said to have angered some staff as they were informed of the redundancies on the same day the company reported it had boosted profit to £3.3m from £3.2m in its latest financial year to March.
In an announcement of its results in the year to March, Wagner said that despite investing in a customer service operation last year it had “reported an increase in profits”, which highlighted the “strength of our business model and product economics”.
Zempler, which caters to ‘microbusiness’ customers, joins a host of banks looking to rejig their operations as interest rates come down and the amount of cash banks make on customer deposits eases.
Insiders say it is the second round of cost-cutting measures this year after the bank pushed through an initial round of cutbacks over the summer. As part of those plans, a number of its international contractors were let go, including 20 developers based in Ukraine, a person familiar with the matter told City AM.
Those developers are understood to have been hired to help the lender build its ‘Business Credit Builder’ and ‘Business Credit Card’ products with £5m funding from the Banking Competition Remedies body, a pot of public cash set up after RBS was bailed out in 2008.
The contracts ended after the projects were completed.
A Zempler spokesperson said: “We would not comment on specifics, but we are operating in a fast-moving and evolving market, and, like many firms, we regularly review our organisation to ensure we have the best structure in place to best support our customers and to enable the growth and future success of the business.”