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American Express, the largest U.S. credit card company, has halted its contributions to employees' pension plans in the United States and the U.K., as part of a restructuring process to slash costs amid mounting credit losses.
The company said on Wednesday it told employees in February that the suspension of matching and conversion contributions into the Retirement Savings Plan (401K) accounts of U.S. workers would be effective from March 30.
American Express also halted U.K. employees contributions from July 1.
"The decision was made to help control our costs in an extremely challenging economic environment," spokeswoman Joanna Lambert said, adding the company intended to resume the contributions "as soon as economic and business conditions allow".
American Express [AXP
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] was the fastest growing credit card company during the credit boom of 2003-07, but the company paid a heavy price when the bubble burst last year.
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Mounting credit losses sent its earnings spiraling lower and a paralysis in short-term funding markets forced the firm to seek U.S. government funds.
Since then, American Express has been slashing lending, trimming expenses by $2.5 billion — including 11,000 job cuts — and divesting to shore up its balance sheet.
The firm also repaid the $3.4 billion in Troubled Asset Relief Fund (TARP) money it received during the financial meltdown.
It is also the only one credit card company that did not cut its dividend and the only that remains profitable, according to quarterly reports.
Data is a real-time snapshot *Data is delayed at least 15 minutes