HSBC to axe 30,000 jobs after bumper profits

1st August 2011, Comments 0 comments

HSBC will slash 30,000 jobs worldwide over the next two years as part of a major cost-cutting drive aimed at refocussing on Asia, the global banking giant announced Monday as it posted 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, but new boss Stuart Gulliver revealed that the cost-cutting plans would go deeper.

"There will be further job cuts," he told journalists on 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 added.

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 across the globe, more than a third of which work in Asia.

The job cuts are part of the group's already-announced plans to slash costs by up to $3.5 billion (2.4 billion euros) within two years.

HSBC is the latest global banking giant to announce a round of heavy cuts. In recent weeks, Italy's Intesa Sanpaolo and Switzerland's Credit Suisse have both unveiled thousands of job losses.

The British lender meanwhile, 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.

Gulliver, who took the reins in January, aims to re-invest the enormous 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 HSBC revealed that its net profit soared to $8.9 billion (6.2 billion euros) in the first half on lower tax charges.

Pre-tax profits rose 3.3 percent to $370 million in the reporting period, while total revenues edged ahead to $35.7 billion.

HSBC's share price rallied 4.22 percent to 619.60 pence in midday deals on London's FTSE 100 index, which was up 1.49 percent at 5,901.98 points on relief over a US debt deal.

"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."

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 meanwhile facing potential 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 about the effect of the ICB report, replied that it "may result in more or less jobs. We just don't know."

© 2011 AFP

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