British digital bank Monzo has decided to axe up to 120 jobs as the ongoing Covid-19 pandemic begins to hurt its business, Reuters reported citing a memo.

The layoff accounts for 8% of the company’s total workforce and will mainly affect Monzo’s Head Office staff and operations teams.

In the memo, Monzo said: “Unfortunately we haven’t been able to achieve the goal of preventing the risk of redundancy at this time. It’s genuinely heartbreaking to share the news.”

These redundancies will not include the employees that have volunteered to be furloughed albeit, with some overlap, the report added citing a source familiar with the matter.

The source said: “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.”

Launched last year in the US, the bank has incurred severe losses and exhausted all its cash in fuelling its growth by onboarding more than four million users.

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The source added that talks are ongoing with investors over a fundraising round of £70-80m.

Founded in 2015, Monzo previously planned to hire around 500 people this year to continue its growth.

However, the Covid-19 pandemic made the outlook worse for the bank since then.