HSBC warns of 30,000 job losses

HSBC is currently in the process of reducing its headcount by 5,000 but chief executive Stuart Gulliver warned the cuts were set to go deeper, although he stressed the 30,000 figure excludes HSBC’s future expansion plans.

The updated restructuring plan comes despite better-than-expected results for the six months to June after profits improved 3% to 11.5 billion US dollars (£7 billion), with the company’s Asian business again the driving force.

In the UK, where the company has 1,290 branches and around 52,000 staff, profits rose 29% to £843 million.

HSBC’s move reflects tougher times for the investment banking arms of the big banks that has seen widespread redundancies announced at rivals Credit Suisse and UBS in the past week.

Uncertainty over tougher regulation, the eurozone crisis, rising bad debts and, in the UK, the possible impact of the Independent Commission on Banking report have all affected the mood among banking firms.

HSBC employs around 335,000 people worldwide.

Mr Gulliver said the job cuts would be targeted at back office, head office and support operations in a bid to reduce overheads.

The 30,000 reduction is a gross figure and there will be additions in regions such as Asia and Latin America, where HSBC saw the strongest revenue growth in the first half.

HSBC has a staff turnover of between 10% and 15% and Mr Gulliver said the cuts would reflect this rate of attrition.

Weak revenue growth in Western Europe and the UK reflected the tough economic situation in the region, HSBC added. UK revenue fell slightly to £2.82 billion from £2.84 billion.

HSBC said 5,000 of the planned job cuts had already taken place, which included 700 in the UK that were announced in June as a result of regulatory changes to the way financial advice is allowed to be given.

Bank workers union Unite called for HSBC to clarify what impact the additional cuts announced today will have on UK staff.

David Fleming, Unite national officer, said: “It is now necessary for the bank to confirm to its UK workforce how this news will impact on them.”

HSBC added it is on course to meet its targets for business lending agreed with the Government under Project Merlin, having lent £22.7 billion, but the group was behind on small firm lending with £5.6 billion advanced in the first six months against a full year goal of £11.7 billion.

Mortgage lending rose by 35% to £6.7 billion with HSBC’s share of the UK mortgage market at a record of nearly 11%.

Shares in the bank rose by 4% as analysts said the figures were an impressive start to the week’s bank reporting season.

Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, said: “HSBC has set the bar high for those that follow, beating market expectations and planning to streamline its business further.”

He added that HSBC’s global diversification is not necessarily matched by the other UK banks while the bad loan figures have reduced impressively.