The new initiative aims to reduce operating expenses and improve the competitive position of the company. Action has already taken place during the second quarter of 2007 in the company’s US card, mortgage banking and UK businesses, as well as savings associated with cost synergies from the acquisition of North Fork Bank.
Many of the planned actions leverage the capabilities of recently completed infrastructure projects in several of the company’s businesses. The scope and timing of the expected cost reductions are the result of an ongoing, comprehensive review of operations within and across the company’s businesses, which began several months ago.
The initiative is expected to reduce the operating expense structure of the group by approximately $700 million pre-tax, with a further $400 million realized in 2008, and an additional $300 million realized in 2009. The company expects to record one-time charges of around $300 million pre-tax over the course of the cost restructuring initiative.
Around half of the 2,000 planned jobs to be eliminated have already occurred, with the impacted associates having already been notified, the company has stated. Capital One expects to achieve additional savings from attrition and the elimination of selected positions that are currently vacant, as well as from reduced spending on suppliers and vendors, and reduced facilities costs.
