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Monday, August 1, 2011
BAD NEWS FROM EUROPE: HSBC to Cut 30,000 Jobs by 2013 as Costs Rise!
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By Howard Mustoe and Gavin Finch, http://www.bloomberg.com / Aug 1, 2011 7:05 PM GMT+0530.
HSBC Holdings Plc (HSBA), Europe’s largest bank, plans to cut 30,000 jobs by the end of 2013, about 10 percent of the total, to stem costs driven higher by rising salaries. The shares jumped.
The bank’s costs in relation to revenue rose to 57.5 percent in the first half from 50.9 percent a year earlier, because of higher staff numbers, wage inflation and other costs, HSBC said as it reported a 36 percent increase in first-half profit. Costs are still higher than its 48 to 52 percent target range, the London-based lender said in a statement today.
“The market is likely to interpret the job cuts in a positive way,” said Neil Smith, a banking analyst at WestLB AG in London. “HSBC need to keep their costs under control.”
HSBC is cutting jobs and closing offices to reduce costs by as much as $3.5 billion over the next two years as it tackles wage inflation in faster-growing economies and prepares for stricter capital rules. The bank follows Credit Suisse Group AG, UBS AG, Bank of America Corp. and Goldman Sachs Group Inc. in eliminating roles as investment banking revenue declines. European banks have cut 230,000 jobs since the start of the financial crisis in 2007, according to Bloomberg Industries.
HSBC gained as much as 5.1 percent to 624.9 pence and traded up 4 percent to 618.4 pence at 1.53 p.m. in London, the biggest riser in the Bloomberg Europe 500 banks index, giving it a market value of about 110 billion pounds ($180 billion).