Capital One to lose 7% of staff

Credit card companies want to expand their lines of business

Capital One has said it expects to eliminate 2,000 jobs - about 7% of its workforce - as it battles rising competition from rival card companies.

The US firm, one of the UK's biggest credit card providers, said the job losses would help Capital One achieve annual savings of $700m (£350) by 2009.

They will be part of a broader cost-cutting programme that will cost Capital One $300m to introduce.

These charges are expected to dent 2007 profits by 33 cents per share.

The job cuts, which will affect the company's US credit card, mortgage banking and UK businesses, are the result of a review that started several months ago, Capital One said, adding that about half of the planned redundancies have already occurred and the affected employees have been notified.

'Improving efficiency'

Other savings will come through attrition and the elimination of selected positions that are currently vacant, it added.

"Improved operating efficiency will help us drive sustained earnings growth, especially as we navigate the current interest rate cycle," said Richard D Fairbank, Capital One chairman and chief executive.

Capital One also hinted that it was struggling with the integration of US bank North Fork, which it bought last year, and said that its 2007 forecast earnings could be even less than expected.