October 30, 2008

American Express lays off 7,000 staff

American Express announced today that it would cut nearly 10 per cent of its workforce as it seeks to reduce costs by $1.8 billion next year.

The cuts, which amount to about 7,000 staff, come ten days after the credit card group announced a 24 per cent drop in its third-quarter profits as the financial crisis prompted American Express’ affluent customers to spend less.

Kenneth Chenault, the group’s chairman and chief executive, said: "The re-engineering programme will help us to manage through one of the most challenging economic environments we’ve seen in many decades."

The company will take a restructuring charge of between $370 million and $440 million in the fourth quarter to cover the redundancies. American Express shares rose 6 per cent to $26.72 after it announced the job cuts.

The American Express job losses emerged shortly after Canaccord Capital, Canada’s largest independent brokerage, announced plans to cut about 10 per cent, or 160, of its staff worldwide.

About 10 job losses are expected to fall in the UK, where the group’s capital markets business employs 120 staff, with the remaining redundancies from the US and Canada.

Canaccord also announced it would cut the salaries of its senior executives by up to 20 per cent as it looked to counter declining revenues.

Paul Reynolds, chief executive, said: "We are making some difficult changes to our business, resulting from both a comprehensive strategic review and as a consequence of the rapid deterioration in the global capital markets."

"These revised staffing levels represent the right sizing of our operations to meet current market conditions," Mr Reynolds added.

CLSA, an Asia-Pacific brokerage, asked a third of its staff earlier this week to take pay cuts of up to 25 per cent in an attempt to avoid redundancies.

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