U.K. challenger banks Monzo and Starling are furloughing some employees as the two banks cope with the economic impact of the coronavirus pandemic.
The digital banks are taking advantage of the U.K. government’s coronavirus job retention scheme, which allows employers to claim 80% of a furloughed employee's monthly wage, up to £2,500 a month.
Monzo co-founder and CEO Tom Blomfield told the bank’s 1,500 staff members that he will forgo his salary for the next year, and the bank’s senior management and board volunteered to take a 25% pay cut, according to an internal memo seen by TechCrunch.
Monzo, which has around 4 million accounts, is allowing employees to volunteer for the furlough program and is accepting up to 175 furlough applications in customer support, and up to 120 from other parts of the business, according to TechCrunch.
The challenger bank is seeing less revenue from interchange fees because of a reduction in customer card spend at home and abroad, the publication reported. New account signups have also slowed.
Monzo did not share how much Blomfield earns. However, accounts show the company’s highest-paid director made £117,000 last year, according to Yahoo Finance. It’s not clear who that was.
Blomfield is not the only bank executive to forgo pay in response to the pandemic.
Spanish bank Santander announced in a press release last week that Chairman Ana Botín and CEO José Antonio Alvarez have each taken a 50% cut to their salary and bonus this year and are contributing the forgone pay to a €25 million fund the bank is creating to buy medical equipment to help fight the virus.
Botín was paid €10 million last year and has a pension worth about €48 million, according to the Financial Times.
Starling, which is also using the U.K. government’s job retention program, said it was furloughing 41 staff members and is topping their salaries to ensure they get 100%, the bank’s founder, Anne Boden, told TechCrunch.
"Most of these employees are relatively new to the bank and have not completed their training, so are unable to work from home," she said. "The remainder are facilities staff who are not required at the moment. The rest of Starling’s customer service team remains busy."
Boden said the bank is "well-funded," and "still growing fast," adding new business and customers every day.
"It’s business as usual and no one is taking a pay cut," she said.
Revolut, another U.K. challenger bank that recently launched in the U.S., told TechCrunch it has no plans to furlough employees.