750 people are facing the axe as Capital One decides to cut jobs in its UK head office. The office which currently has 1,750 members of staff is located in Nottingham. It has been the US companies headquarters since opening in 1998. It has been announced that the cuts will mostly affect call centre, account servicing and support staff. Most of these positions will be outsourced to India and other countries.
Nottingham City council has said that although the cuts are bad news Capital One will still be a big player in Nottingham and that this at least, is a good thing.
In a Business Week article an excerpt from an email which Srini Gopalan, UK company head, sent to employees was quoted: "I am confident that the business model we are moving towards will allow us greater opportunity to bring our costs in line with our competitors so that we are able to compete more effectively and efficiently in the U.K. credit card market." The credit card firm has promised to help those who have been made redundant to find new positions.
Following the other job cuts which the company has planned, the credit card giant expects to have just 27,000 employees worldwide. The purposes cited for cutting so many jobs is one of economic competitiveness. However, these cuts come at a time when the economy is in crisis and large investment banks are also making job cuts. Mortgages are being pulled off the market and redundancy statistics are high.
The American parent company of the credit card firm has reportedly set aside huge amounts of money to cover bad assets in the swell of the credit crisis. Nevertheless, in an article on the This Is Nottingham website a member of staff from the operations department said: "This is not about the credit crunch, this is about continuing to deliver great products and services and keeping us cost competitive."
In the same article it was revealed that: “When the company, reported its earnings for the final quarter of 2007, they showed a substantial increase in money set aside for worldwide losses on loans - up to 1.2bn dollars from 595m dollars the previous quarter.” Regardless of whether the cuts are to improve the companies competitiveness in the market or to help the firm deal with bad assets, staff at the firm who are facing redundancy will have a 3 month consultation process which Capital One hopes will help them to move on successfully.
In a BBC article Srini Gopalan, head of Capital One Bank (Europe) plc, said: "Whilst this was a difficult decision for the UK management team, it is recognised that this is part of the ongoing effort to ensure the business framework is in a place that supports an overall competitive strategy in the UK market."
Nottingham City’s council leader Jon Collins also said: "Nottingham City Council, with our partners, will work with Capital One to provide additional support that will help affected employees find their way into appropriate, alternative employment as soon as possible."
Capital One is not the first financial firm this year to cut jobs and as credit problems go unresolved and house prices plummet chances are it will not be the last.
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