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Boston-based Radius Bank plans to move forward with its acquisition by LendingClub despite the California-based fintech’s reorganization this week due to the effects of the coronavirus pandemic.
In an SEC 8-K report on April 21, LendingClub announced it would terminate president Steven Allocca and lay off 460 employees. The layoffs represents about 30 percent of Lending Club’s staff.
“Decisions like these are never easy,” a statement from Radius Bank said. “While no one predicted the economic impact the virus has caused, LendingClub is adjusting its business model to respond to these events.”
LendingClub signed a deal in February valued at $185 million to acquire Radius Bank, a move that would give the online lender a bank charter. The transaction was expected to take 12 to 15 months to close.
Radius Bank said that LendingClub’s actions this week would have no impact on the deal.
“The strategic rationale for our combination is as strong as ever,” Radius Bank’s statement reads. “We remain on track to complete the deal and are focused on serving our clients at the highest level.”
LendingClub said in the SEC report that the effects of COVID-19 on consumers, small businesses and the broader economy, including the credit markets, had reduced “platform investor demand for personal loans.”
“In response, the company has undertaken a number of initiatives to support its borrowers, protect investor returns, and preserve capital and liquidity,” LendingClub said in the SEC report. “These initiatives better position the company to navigate and serve members through today’s economic environment and over the longer-term as the need for the Company’s services grows.”
In addition to the layoffs and terminating Allocca, who will leave on May 12, LendingClub will also temporarily reduce executive officers’ base salaries by 25 percent and CEO Scott Sanborn’s by 30 percent. The base cash retainer for non-employee members of the board will also be reduced by 30 percent.
