Co-op finance arm cuts 1,000 jobs

The Co-op has made large job cuts before

The financial arm of the Co-op is to make about 1,000 staff redundant this year as it tries to cut costs.

Co-operative Financial Services (CFS) has not set out where the losses will take place, but Manchester is expected to bear the brunt of job losses.

However, customer-facing roles - in call centres and bank branches - will not be affected, it said.

Analysts say that CFS has lost ground amid competition from supermarkets and online insurers.

'Not taken lightly'

CFS, which has about 6.5 million UK customers, is among Manchester's largest private employers. It includes the Co-operative Bank and online bank Smile.

It said it hoped to save £100m in annual operational costs by June 2008.

At the same time, it intended to spend £250m on developing its retail and corporate banking, as well as its general insurance business, it said.

"Decisions taken which lead to a reduction in colleague numbers are not taken lightly and consultation is underway with all the relevant trades unions," said CFS chief executive David Anderson.

He added that the changes to the business would support "a clear business strategy that will see our customer and membership base grow significantly in the coming years".

The Co-operative Bank has both High Street and internet banking and offers current accounts, credit cards and loans.

Co-operative Insurance provides stakeholder pensions, unit trusts and insurance, as well as independent financial advice.

In 2004, CFS made 2,500 workers redundant as it looked to cut costs.

Greater Manchester Chamber of Commerce chief executive Angie Robinson said that, after job losses at MyTravel, the news was a "great blow" for the region.

"Greater Manchester is the home of the Co-operative Society and the firm remains one of the largest employers in the area," she said.

"While details are still being released as to the need to make these job cuts, we are all aware of the competitive nature of today's financial services sector."