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American Express to cut 10% of staff worldwide

Text by AFP

Latest update : 2008-12-09

US financial institution American Express announced it would cut 10% of its worldwide workforce amid efforts to slash costs and save around 1.8 billion dollars in 2009. The credit card giant also ruled out management-level pay rises.

American Express said Thursday it was slashing 10 percent of its worldwide workforce and cutting spending to cope with worsening economic conditions.

The new initiatives are expected to produce cost savings of approximately 1.8 billion dollars in 2009 as the company reduces staffing and pay, cuts operating costs and trims investment spending, the credit card and finance giant said in a statement.

The company will take a restructuring charge of 370-440 million pre-tax dollars in the fourth quarter, mainly due to the elimination of some 7,000 jobs or about 10 percent of the workforce.

Most of the job cuts will occur in management and other areas that do not interact directly with customers.

American Express said it was suspending management-level salary increases for 2009 and launching a hiring freeze.

It will cut expenses, including spending on consulting and other professional services, travel and entertainment, and scale back investment spending on technology, marketing and business development.

The company signaled it would raise prices to generate "significant" additional revenue next year.

"The reengineering program we announced today will help us to manage through one of the most challenging economic environments we've seen in many decades," Kenneth Chenault, American Express chairman and chief executive, said in a statement.

"It will also put us in position to ramp-up investment spending as economic conditions improve so that we can take advantage of the substantial opportunities that will be available to us over the medium to long term."

Date created : 2008-10-30

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