- The Washington Times - Tuesday, April 14, 2009

NEW YORK (AP) - Discover Financial Services said Tuesday it plans to cut 500 jobs next month, or 4 percent of its work force, to help it weather the ongoing economic slump.

Cuts will be made across all departments, the credit card company said, with the majority taking place at its Riverwoods, Ill.-based headquarters, just outside of Chicago.

“Discover must take these additional, difficult steps to manage through this unprecedented environment and put our business in the strongest possible position going forward,” said Chairman and Chief Executive David Nelms in a statement.

Discover has been trying to shore up capital in recent months to help it manage rising loan losses. Nearly all lenders are seeing more customers stop making their monthly payments as the economy falters and unemployment surges.

The company managed to remain profitable in the fiscal first quarter, thanks to a payment from a lawsuit settlement. Without that gain, the lender would have booked a loss due to increased defaults and delinquencies.

In March, the company reduced its quarterly dividend to 2 cents from 6 cents, which will help it save about $80 million a year.

Discover received a $1.2 billion investment from the Treasury Department last month, joining hundreds of financial-services companies _ including rival American Express Co. _ that have garnered government capital during the financial crisis.

Discover shares fell 88 cents, or 10.4 percent, to close earlier at $7.57.

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