FINANCIAL services companies are likely to shed more jobs this year as they continue to cut costs, the CBI has warned.

Business volumes fell last quarter for the sector which covers banks, building societies, insurers and stockbrokers.

Financial services is Bournemouth's biggest industry in terms of GDP - worth more than £600 million a year to the town.

The latest CBI data comes just weeks after Zurich-owned Eagle Star announced it would be closing its Bournemouth call centre on March 31 with the loss of all 400 jobs.

Of the 103 companies surveyed across the UK by the CBI, 21 per cent said the volume of business was up during the three months, while 31 per cent said it was down.

That gives a balance of minus 10 per cent on the CBI's scale, compared with zero in the first and third quarters and plus 43 per cent in the second.

CBI chief economist Ian McCafferty said: "2002 was a difficult year for many parts of the financial services industry, especially those affected by the performance of the stock market."

PricewaterhouseCoopers UK banking leader John Hitchins said: "The industry ended 2002 in a worried frame of mind, reflecting growing concerns about a slowdown in personal sector business and specific fears on the state of the housing market.

"More jobs are likely to be lost in 2003 as firms grapple with their cost bases in the face of uncertain income prospects."

Bournemouth Borough Council's head of economic development John Wicks said: "What we are determined to do, jointly with Poole, is to support the financial services sector whenever we can.

"We will encourage financial services companies to relocate here and stay here. The cost base is so much more competitive in the conurbation," he added.

Yesterday life assurer Britannic became the latest casualty in the financial services downturn.

Britannic shares dived 49 per cent as it warned that it may defer annual bonus policy payments and cut shareholder dividends. Britannic said it was taking a "precautionary" step, given the worst stock market conditions for almost 30 years.