HSBC to cut 500 UK jobs in credit crisis

Pa
Friday 26 September 2008 07:01
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Will people start rushing to HSBC for their mortgage?
Will people start rushing to HSBC for their mortgage?

About 500 UK jobs are being axed at HSBC as part of a worldwide cull within its investment banking division, the group confirmed today.

The UK's biggest bank is cutting about 1,100 posts across its global banking and markets division - 4% of the operation's total workforce - as it comes under pressure amid the credit crisis.

UK staff affected are largely based in HSBC's Canary Wharf office in London, where the division is headquartered.

The news follows yesterday's announcement from mortgage bank Bradford & Bingley that it was axing 370 jobs to save money.

There are also fears over thousands of UK jobs at collapsed investment bank Lehman Brothers, despite the sale of the bulk of its European operations to Japanese bank Nomura.

HSBC said it was making the cuts as a result of the tough market conditions and its cautious outlook for 2009.

The group's investment banking division was hit by 3.9 billion US dollars (£2bn) in write-downs from mortgage-backed investments affected by the credit crunch in the first six months of the year alone.

Its first-half pre-tax profits plunged by 28 per cent to 10.25 billion dollars (£5.6bn).

But the bank's broad geographic spread - including a heavy focus on the fast growing emerging markets in Asia - have helped it weather the storm better than many of its rivals.

It remained profitable in all regions except North America in the first half of the year.

Today's news of more investment banking job woes comes as US officials are scrambling to secure the all-clear for a 700 billion dollar (£381bn) bail-out plan for banks to stabilise financial markets.

But tense overnight negotiations in Washington have faltered, threatening to throw markets into turmoil once again.

Talks are set to resume later today.

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