The Federal Deposit Insurance Corp. plans to cut 10 to 12 percent of its staff through buyouts, retirements and layoffs, the agency has told employees.

The FDIC, which has about 5,300 employees, hopes to make most of its staff reductions by the end of next year and complete them in 2006, according to a memo sent to employees by the agency's chief operating officer, John F. Bovenzi.

In some parts of the FDIC, Bovenzi said, the agency probably will have to lay off employees in order to reach its downsizing goals. About half of the staff cuts will fall on employees in Dallas and in Washington who work in the division that handles failed banks, an agency spokesman said.

Bovenzi, in his memo, said the downsizing has been prompted by bank consolidations and by internal changes, such as improved use of technology, that have made the FDIC more efficient. "I recognize the anxiety and discomfort many of you may be experiencing while reading this message," Bovenzi wrote. "The notion of undergoing another round of downsizing is troubling to everyone."

The FDIC, which insures deposits in banks and thrifts for up to $100,000, has been reducing its workforce steadily since 1999 but has usually minimized layoffs through the use of buyouts and job transfers. The job cuts will affect employees in bank oversight, administrative support, technology, budget and legal offices.

Colleen M. Kelley, president of the National Treasury Employees Union, which represents about 4,300 FDIC employees, said: "We are disappointed that they did not work with us on their workforce planning activities. Instead of working with us and the employees, they issued this memo."

She faulted Donald E. Powell, the FDIC chairman, for failing to reach out to the union and ask for advice on ways to avoid layoffs. "Because we don't have any detailed information, we are not convinced that this move is necessary," Kelley said. "They could have done the buyouts and seen what results they were going to get before announcing reductions in force."

Bovenzi sent an e-mail to employees in August to tell them that industry trends "point to a smaller FDIC with a somewhat different mix of skills in the future." The banking industry is changing rapidly and some regulatory duties are migrating to other federal agencies, he said.

In a Tuesday memo, Bovenzi warned employees that some agency divisions no longer have a workload that justifies their staff sizes. For example, the agency spokesman said, about 12 banks fail, on average, each year, not enough to justify having 515 employees work on receiverships.

As a result, Mitchell Glassman, director of the Division of Resolutions and Receiverships, has informed his employees that staffing levels will be reduced from 515 positions to 240. That probably means that 37 of the jobs will be cut in Washington and the rest in Dallas, an agency spokesman said.

For the downsizing, the FDIC plans to offer incentives such as buyouts equal to 50 percent of salary, exemptions to repay certain relocation costs and packages that combine buyouts with regular or early retirement. But some parts of the FDIC also will need to use layoffs, agency memos indicated.

Last week, the FDIC announced that it would start a "corporate employee program" that would train employees to work in different divisions and place some new hires in rotational assignments. The idea is to provide employees with skills to address changes in workload and to retain historical knowledge of procedures used to handle bank failures.