Bank giant HSBC axes 1,100 jobs

Bank giant HSBC axes 1,100 jobs

HSBC hopes the cuts will allow it to weather the storm on financial markets

Banking giant HSBC is to axe 1,100 jobs worldwide, blaming the current financial turmoil for the decision.

About half of the cuts, which will affect back room jobs at its global banking and markets operation, will take place in the UK.

HSBC employs about 335,000 people around the world.

Last month, HSBC said half year profits fell 28% to $10.2bn (£5.2bn), as it was forced to write-off $14bn from bad debts in the US and asset write-downs.

Meanwhile, pre-tax profits fell 35% to $2.1bn during the same period.

An HSBC spokesman said the firm had opted to reduce its workforce, “because of market conditions and the economic environment, and our cautious outlook for 2009”.

Many of the job-losses will be at the headquarters of HSBC’s investment banking division, which are in London’s Canary Wharf.

Banks around the world have been coming under increased pressure from the credit crisis currently affecting financial markets.

The problems have forced governments to step in and boost money markets as well as bail out a number of companies.

Earlier this year, the UK government had to buy mortgage lender Northern Rock, while in the US lenders Fannie Mae and Freddie Mac have been rescued as well as insurer AIG and investment bank Lehman Brothers filed for bankruptcy.

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Bush scrambles to save $700B bailout plan

Bush scrambles to save $700B bailout plan

President George W Bush has said that legislators will “rise to the occasion” and pass the Wall Street rescue plan.

In a statement he said that are still disagreements because, “the proposal is big and the reason it’s big is because it’s a big problem”.

President Bush is expected to resume talks with Congressional leaders later on Friday to try to reach an agreement.

He wants to pass a $700bn (£380bn)rescue package to buy mortgage-backed assets from US banks.

‘Shouting match’

He added that, “there is no disagreement that something substantial must be done”.

Talks to agree the huge bail-out of the financial industry ended in a “shouting match” on Thursday.

After several hours of discussions with President Bush, a group of Republican members of Congress blocked the government plan.

The proposal would have seen the government buy bad debts from US banks to prevent more of them collapsing.

The leader of the Democrats in the House of Representatives, Nancy Pelosi, told ABC News that she “hoped” a bailout plan could be agreed within 24 hours, because “it has to happen”.

Financial markets are gummed up because banks do not know exactly how much bad debt they hold and are therefore reluctant to lend to businesses, consumers and each other.

The fall-out of this credit crunch continues to have a huge impact:
The United States suffered its largest bank failure yet, when regulators moved in to close down Washington Mutual and then sold it to US rival JP Morgan Chase for $1.9bn
In a co-ordinated move the European Central Bank, the US Federal Reserve, the Bank of England, Bank of Japan and the Swiss National Bank announced new short-term loans to the banking sector worth tens of billions of dollars
Banks continued to cut costs, with UK banking giant HSBC saying it would axe 1,100 jobs
Shares in UK bank Bradford & Bingley fell another 20% to 17 pence before recovering slightly.

‘Full throated discussion’

On Thursday, Democrat and Republican legislators appeared to have struck a deal.

A group of Democrats and Republicans even made a public statement, with Senator Christopher Dodd, chairman of the Senate Banking Committee, announcing that they had reached “fundamental agreement” on the principles of a bail-out plan.

But after the White House meeting, the top Republican on the committee, Richard Shelby, told reporters: “I don’t believe we have an agreement.”

The intense discussions reportedly saw US Treasury Secretary Henry Paulson literally down on one knee, begging Ms Pelosi to help push through the bail-out package.