U.K. digital bank Monzo will cut 120 jobs due to the impact of the coronavirus, Reuters reports.
The news came from an internal note from the bank seen by the news outlet. The bank, which was founded in 2015, started off 2020 optimistic about new funding and planned to hire 500 new employees earlier this year.
But the pandemic, which has sidelined businesses' plans worldwide amid financial distress, will now cause Monzo to make cuts from its head office and operations teams. The cuts might overlap with the workers who volunteered to be furloughed in March, though it is not certain yet. The cuts amount to around 8 percent of Monzo's work force.
An unnamed source told Reuters that the government “has been clear the furlough scheme should not be abused if redundancies are planned anyway. This was based on our understanding of the impact of the crisis."
Reports in mid-May said discussions were ongoing regarding a funding round for between £70 million and £80 million as the company has seen a drop in valuation from £2 billion last year to around £1.25 billion during the pandemic. Reuters said those funding discussions are still ongoing.
The funding would help Monzo make it through the second half of 2021 on its feet, and it expects to be turning a profit by that time.
Monzo CEO Thomas Blomfield has said he will give up his salary for the next year, while other senior executives take pay cuts of 25 percent, according to an internal memo. Blomfield made $99,744 in 2018.
The report said that the decision was made as the firm offered a number of employees the opportunity to volunteer to take a two-month furlough as the country fought to contain the coronavirus.
Right as the pandemic hit the Western world in mid-March, Monzo had released its new business banking accounts, which offer free basic accounts as well as tools for taxes and invoicing included in a separate Business Pro paid account.