The banking sector was hit by another round of job cuts on Monday as Credit Suisse, the investment bank, announced it was axing about 650 employees on the same day that HSBC said it was cutting 500.
Credit Suisse is trimming about 10 per cent of its UK workforce after credit writedowns led to two quarters of losses this year. Most of the job cuts are in its investment banking and support functions. Switzerland’s second-biggest bank said that it was reacting to “market conditions and projected staffing levels required to meet client needs”.
HSBC said it planned to reduce its UK workforce by about 500 at its headquarters in Canary Wharf and other locations following a review of business and “current economic conditions”.
The latest wave of job losses come after thousands of posts have already been lost in the banking industry in the past three months.
HSBC, the UK’s largest bank, is shedding more than 5 per cent of its head office staff in areas including finance and legal services. The bank, which employs about 8,000 people at its headquarters, said the cuts were in response to a review intended to reduce duplication. HSBC has weathered the credit crunch in much better shape than its peers owing to operations in fast-growing Asian markets. It has, however, been hit by subprime losses in the US. It did not need to take part in the recent UK government banking bail-out and is seen as strongly capitalised.
Michael Geoghegan, chief executive, said recently that the government-sponsored rescues in effect risked rewarding management teams for failure. “There is no question that guarantees have been given to failed managements,” he said.
Derek Simpson, joint general secretary of the union Unite, called the job cuts a “disgrace”.
“The union has seen no business rationale for these job losses. As far as we can see HSBC is simply using the economic downturn as an excuse to make job losses. The bank has again this year reported an increase in half-yearly profits and continues to do very well,” he said.
Last month HSBC announced that it would cut 500 jobs in Asia as part of a shake-up of its global banking and markets division.
Last month Citigroup, the US bank which has a big presence at Canary Wharf, announced it was shedding 52,000 staff worldwide.
Royal Bank of Scotland, now almost 60 per cent-owned by taxpayers, plans to cut about 3,000 jobs in its investment banking division. The job losses are equivalent to about 15 per cent of staff at RBS’s investment banking division.
There are also expected to be thousands more job losses next year when Lloyds TSB takes over HBOS, the UK’s biggest mortgage lender. Lloyds has not said how many jobs will go, although Sir Victor Blank, chairman has said reports of 40,000 job losses are “ridiculous”.
Big lenders unlikely to follow RBS on repossessions
Britain’s banks were last night examining their policies on home repossessions after Royal Bank of Scotland promised to give six months’ grace to customers having trouble repaying their mortgages, write Peter Thal Larsen and Jane Croft.
None of the largest mortgage lenders – including HBOS, Lloyds TSB and Abbey – was prepared to match the promise made by RBS, which has just 7 per cent of the mortgage market. However, executives stressed most banks viewed repossession as a last resort.
Consumer groups welcomed RBS’s move, which doubles the minimum grace period recommended by the government. However, analysts said the pledge would have limited financial impact on RBS because it had a relatively small mortgage book and avoided lending to buy-to-let landlords or customers with poor credit records during the boom. RBS does not publish the statistics, but the number of homes repossessed as a proportion of its loan book is well below the industry average.
The move comes days after the government, in effect, took control of RBS by buying a 58 per cent shareholding.
Northern Rock, which is fully owned by the government, said it had no plans to change its policy.