Capital One Announces Job Cuts

Shares in US credit card giant Capital One Corp fell 1% on Wednesday 27th June following the news that the company is to do away with about 2,000 jobs, that's just over 6% of it's workforce.  The move is part of a cost-cutting program designed to save US $700 million by 2009.

The restructure is predicted to cost the company around $300 million in pre-tax charges. The restructure charges are expected to reduce after-tax profit by 15 cents per share this quarter, and 33 cents per share in 2007.

Approximately half of the planned job eliminations have already occurred and the affected employees have been notified, the company said. Other cuts will come through attrition and the elimination of selected positions that are currently vacant by the end of next year.

Capital One currently has about 32,000 employees.  The company has expanded over the past decade into a household name and has diversified its range of products from just credit cards to a wide range of banking and financial products.

The company said it expects the restructure to produce around $400 million of pre-tax savings in 2008, and a further $300 million in 2009.
Capital One chairman Richard D. Fairbank said "Improved operating efficiency will help us drive sustained earnings growth, especially as we navigate the current interest rate cycle and normalizing consumer credit trends".

Many of the positions have already gone and most will be arranged through voluntary redundancies.