Capital One plans layoffs to cut costs

RICHMOND (AP) — Capital One Financial Corp. said yesterday it plans to reduce costs primarily through layoffs, outsourcing and attrition.

Capital One spokeswoman Tatiana Stead said the company would make its reductions over the next 18 months to two years, but that the number of job cuts had not been determined.

“In order to fuel sustained growth and success at Capital One, we’ve undertaken a corporatewide assessment of our investments and operating costs,” Miss Stead said.

The Richmond Times-Dispatch reported that layoffs would come over the next 18 months and likely be concentrated in the Richmond area, which could lose 2,550 jobs.

“We are not going to comment on rumor and speculation,” said Miss Stead. She said the company has yet to determine how many employees will be affected.

In a message to employees obtained by the Associated Press, Capital One Chairman and Chief Executive Officer Richard D. Fairbank said the company’s costs are running 20 percent above that of key competitors, including Citibank, JP Morgan Chase/Bank One and American Express.

“The competition among the elite players is fierce and … they won’t cut us any breaks,” said Mr. Fairbank, adding that the company needs to reduce operating costs, which primarily consist of employee compensation and benefits.

Each of the McLean financial services company’s business segments will be affected differently by the cost-cutting measures, Mr. Fairbank said.

The credit-card and information technology divisions expect to reduce their costs primarily through sending work outside the company, along with improving efficiency and implementing targeted job cuts.

The Times-Dispatch said 600 to 800 information technology workers could lose their jobs.

Capital One, Richmond’s largest private employer, had 17,760 workers in 2003, down from 18,757 in the previous year and 21,648 in 2001, Miss Stead said. The company said it had let go poor individual performers, but former and present employees say the reason was to cut expenses.

The company’s outsourced work force includes nearly 10,000 people, the majority of whom work in the United States, Miss Stead said.

“As much as possible, we will let the normal course of attrition do its work,” Mr. Fairbank said. “We can still actively recruit and bring down costs by simply hiring fewer people than are leaving.”

Continued reductions are expected in human resources and corporate real estate, Mr. Fairbank said.

Software development and database software and testing will be outsourced to India, where the pay is much lower, the Times-Dispatch said.