Online banking scrapped as Zurich Financial Services cuts 4,500 jobs

Zurich Financial Services has confirmed that it's scrapping its fledgling online banking operation as it cuts 4,500 jobs.

Zurich Bank will close next spring as part of a new focus on core insurance markets in the US, UK and continental Europe.

The group, which launched the online banking business in January and attracted 70,000 formal applications, says it will endeavour to re-deploy staff.

Normal services will continue for existing customers until next spring, but Zurich will no longer accept new business from today.

Customers will receive a goodwill payment of at least €314 to cover potential inconvenience.

A spokesman for Europe's third-largest insurer, which owns the Allied Dunbar and Eagle Star, says it's likely that 2,000 positions will go in the UK and Asia division by the end of 2004 - mostly through the non-replacement of staff.

Roger Lyons, general secretary of Amicus, claims: "They have decided to slash and burn instead of standing back and looking at the longer term picture."

The job losses were announced as Zurich reported bottom-line losses of $2bn (€2bn), compared with profits of $861m (€861m) a year earlier.

The group took a one-off hit of $2bn (€2bn) to bolster reserves affected by stock market turbulence, and a further exceptional charge of $954m (€954m) to cover write-offs on the value of certain investments.