Lending Club Taps New CEO, Cuts 179 Jobs as Revenues Weigh

Lending Club has chosen a new CEO to help guide it out of a lackluster 2016 fiscal year thus far.

Lending Club (NYSE:LC), a peer-to-peer (P2P) lender, has shaken up its operations after the company navigated some dire straits over the past couple months – the strategy will see the installment of new CEO, along with 179 job cuts to its business in a bid to help rekindle its outlook and profit.

The decision comes during a time when share prices have been diving over the past few months, inflicting a series of blows on the P2P lender as it struggles with slower than expected growth expectations. After scoring a 52-week high of $17.52, shares of Lending Club have now settled at just $4.30 as of yesterday’s close.

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The man tasked with reversing Lending Club’s fortunes is Scott Sanborn, a company mainstay, having served with the group for the past six years – he steps into the interim CEO role with immediate effect, following a snap resignation of the previous incumbent and founder Renaud Laplanche.

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Scott Sanborn, Interim CEO, Lending Club
Scott Sanborn, Interim CEO, Lending Club

Mr. Laplanche’s rapid fall from grace was instigated by an internal review that unearthed upwards of $22 million in near-prime loans that were sold to institutional investors that did not want them, consequently drawing a US Justice Department probe into the running of the company’s loans book. In addition, Lending Club will be jettisoning 179 jobs, though did not specify what channel the cuts were relegated to.

According to a recent Lending Club statement on the job cuts: “In light of lower loan volumes in the second quarter and recognizing that fully restoring investor confidence may take time, the company has decided to reduce 179 positions in the organization.”

Finally, Lending Club portended its loan originations in Q2 2016 to be lower than Q1 2016, which it hopes will see mitigated share reactions, already operating close to a 52-week low. For its part, the group has earmarked $15-$20 million of additional expenses related to the review and restructuring however, though investors are hoping that Sanborn will right the ship in the interim.

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