(Reuters) - Capital One Financial (COF.N) will stop issuing mortgage and home equity loans and cut some 1,100 jobs amid rising interest rates that have pushed away borrowers and slowed loan growth at many U.S. regional banks.
The McLean, Virginia-based lender said on Wednesday it would continue to service its existing home loans portfolio, as it evaluates options for its home loans servicing business.
“The challenging rate environment and marketplace ... do not allow us to be both competitive and profitable for the foreseeable future,” Sanjiv Yajnik, the president of financial services at Capital One, said in an internal memo on Tuesday.
Several regional lenders in the U.S. have struggled to boost loan growth as interest rates come off historic lows and increase the cost of borrowing for consumers. The U.S. Federal Reserve has raised rates three times since the second quarter of 2016, with the latest hike coming this June.
Cleveland-based KeyCorp (KEY.N), for instance, trimmed its 2017 expectations for total loans last month, after reporting a lower-than-expected profit for the third quarter.
Capital One’s job cuts will affect about 950 employees in Texas, and 155 workers in Minnesota and New York. The company had about 50,400 employees at the end of September.
Its stock was down 1.1 percent at $89.12 on the New York Stock Exchange in afternoon trading.
(This version of the story corrects sixth paragraph to remove reference to job cuts being mainly at the company’s customer contact center in Texas)
Reporting By Aparajita Saxena in Bengaluru; Editing by Sai Sachin Ravikumar