HSBC axes 30,000 jobs in cost-cutting drive

HSBC will slash 30,000 jobs worldwide over the next two years as it looks to slash costs, the global banking giant announced Monday after also unveiling bumper profits.

Europe's biggest lender said in a statement that it was cutting 5,000 workers in Latin America, the United States, Britain, France and the Middle East while new boss Stuart Gulliver revealed that the cost-cutting plans would go deeper.

"There will be further job cuts," he told a conference call after the group announced a 35-percent jump in net profits.

"Another 25,000 roles will be eliminated in addition to the 5,000 already announced," he said.

The cuts represent about 10 percent of HSBC's global workforce but Gulliver stressed that the bank would also be recruiting staff by 2013.

"The net number will be a lot smaller than the 30,000," he told reporters. The group currently employs around 300,000 staff, more than a third of which work in Asia.

HSBC, founded in Hong Kong and Shanghai in 1865, sees Asia as its most important region although it remains headquartered in London.

The bank announced on Sunday plans to sell 195 retail branches, primarily in upstate New York, to First Niagara Bank for an estimated $1 billion.

The British lender, which survived the 2008 crisis without state aid unlike many of its rivals, announced in a strategic review earlier this year plans to save $2.5-3.5 billion in costs by 2013.

HSBC is the latest global banking giant to announce a round of heavy job cuts, after Italy's Intesa Sanpaolo and Switzerland's Credit Suisse, which are shedding thousands of positions.

Gulliver, who took the reins at HSBC in January, aims to re-invest the cost savings into fast-growing markets around the world, notably Asia.

"We will end up continuing to grow our headcount in emerging markets," he said on Monday as the bank revealed that its net profit soared to $8.9 billion (6.2 billion euros) in the first half on lower bad debt and tax charges.

Pre-tax profits rose 3.3 percent to $370 million compared with the first six months of 2010, while total revenues edged ahead to $35.7 billion.

HSBC's share price jumped 2.19 percent to end the day at 607.50 pence on London's FTSE 100 index, which fell 0.70 percent to 5,774.43 points.

"The company continues to benefit from a global diversification which is not necessarily matched by the other UK banks," said Richard Hunter, an analyst at Hargreaves Lansdown stockbrokers.

"Cost cutting and prudent growth management through its retail and commercial operations have been contributors to the upward surprise, whilst the bad loan figures have reduced impressively."

Banking rival Barclays publishes its latest numbers on Tuesday, followed by Standard Chartered a day later. Results from state-rescued Lloyds Banking Group and Royal Bank of Scotland are due on Thursday and Friday respectively.

Britain's banking sector is facing potential costly reform in the wake of the devastating 2008 global financial crisis.

The Independent Commission on Banking, set up by the government last year to consider possible reforms, has called for a "ring-fencing" of retail businesses to stop investment division losses sinking the banks. The ICB will issue its final report on September 12.

Gulliver, when asked Monday about the effect of the ICB report, replied that it "may result in more or less jobs. We just don't know."

--

Did you know that you can get stories like this on the Yahoo mail app?
Download it here.
Loading...

Latest News