Disgraced Payday Lender Wonga Sells SMB Business To Orange Money, Cuts 325 Jobs

More unravelling for Wonga, the UK-based online lender that last year had to write down £220 million ($340 million) in unpaid loans. The company announced today that it would lay off 325 staff, and it has also sold Everline, its small-business lending arm, to Orange Money (trading as Ezbob). On top of that, former Wonga chairman Robin Klein of Index Ventures has stepped down from the board of the company.

Index itself is not an investor in Wonga, which has raised more than $145 million since opening for business in 2007. Investors include Accel, Balderton, Greylock and others.

The moves come after a scandalous period for Wonga. The company — along with other online payday loan businesses — was investigated by the UK’s Competition and Markets Authority over its lending practices. The investigation, which was started in June 2013, published its final report just today — we’re embedding it below.

Wonga has been under fire for how well (or badly, as the case may be) it rates the suitability of candidates for loans, and also for the practices it used to collect bills. One of its (now-discontinued) tactics was to send letters impersonating legal firms to intimidate customers into paying up.

In all, Wonga had employed around 950 people across the UK, Ireland, South Africa and Israel prior to the layoff announcement. The aim is to continue with a restructuring through 2015.

“Wonga can no longer sustain its high cost base which must be significantly reduced to reflect our evolving business and market,” said Andy Haste, Wonga’s chairman, in a statement. The restructuring should save the company £25 million over the next two years, he added.

It is unclear what this downsizing will mean for Wonga’s bigger ambitions. In 2013, before the investigations and write-downs took their toll, the company had acquired a startup in Germany called BillPay to expand deeper into Europe and also move into payments.

Klein’s place on the board will be taken by Simon Allen. He’s joining a board that also includes Wonga’s CTO Paul Miles, UK CEO Tara Kneafsey, and two additional non-executive directors yet to be appointed, the company says.

The financial terms of the sale of Everline have not been disclosed, but it is a small portion of Wonga’s overall business. Orange Money — no relation to France Telecom’s Orange — says that together the two have lent over £54 million ($83 million) since 2012, covering about 5,000 businesses.

The services both use online algorithms to assess the creditworthiness of a potential borrower, not unlike Kabbage out of the U.S. (Kabbage, Kreditech and other online loans businesses use an algorithm that incorporates “signals” from variety of sources like online bank accounts, e-commerce histories, social media and more to determine how likely a borrower may pay back or default on a loan.) Now Orange Money will use the combined power to raise the ceiling on loan amounts, which can now be as high £150,000 on 18-month terms, versus £50,000 on 12-month terms. Rates will also be coming down, the company says.

“Collectively we are now the biggest business e-lender in the UK and remain focused on providing more businesses with the finance they need to fuel and sustain growth,” said Tomer Guriel, CEO, Orange Money Ltd, in a statement. “Our market leading technology platform complements Everline’s well-positioned brand – the combination of the two will accelerate our growth, which has already been more than doubling year on year for each brand since launch.”

The company will be keeping on Russell Gould, who had been the MD of Everline, as the new COO of Orange Money.