Amex to cut costs and 7,000 jobs

American Express has suffered from the slowdown in consumer spending

Credit card firm American Express has unveiled plans to cut 10% of its workforce - about 7,000 jobs - and freeze some salaries, to reduce costs.

The moves are part of the company's plans to cut its costs by $1.8bn (£1.1bn) by the end of 2009.

Next year's management pay rises have been suspended and no new staff will be taken on in that period, Amex said.

The credit card issuer said the changes were due to "the most challenging economic conditions in decades".

Official figures released on Thursday underlined the consumer slowdown in the US, where the Commerce Department said consumer spending had shrunk at an annual rate of 3.1% between July and September, the first contraction since 1991.

'Re-engineering'

American Express said most of the jobs would go at management level or in areas which did not deal directly with customers.

"The re-engineering programme... will also put us in a position to ramp-up investment spending as economic conditions improve," said Amex chairman and chief executive Kenneth Chenault.

However, the plans will cost the company up to $440m in the fourth quarter, it said, mostly due to redundancy payments.