HSBC to cut another 25,000 jobs despite rise in profits

August 2nd, 2011 - 1:09 am ICT by BNO News  

LONDON (BNO NEWS) — Banking giant HSBC announced on Monday that it will eliminate up to 25,000 jobs by 2013 and exit operations in 20 countries as part of a major cost-cutting drive, despite reporting a rise in profit.

The announcement came as the bank reported a 3 percent rise in pre-tax profits to 11.5 billion dollars for the first half-year. The bank had already announced 5,000 job cuts worldwide, 700 of which are in the United Kingdom, for this year.

The up to 30,000 job cuts equate to about 10 percent of HSBC’s total workforce. The banking company, however, stressed it will also be recruiting staff by 2013. “The net number will be a lot smaller than the 30,000,” HSBC Chief Executive Stuart Gulliver said, as cited by the BBC.

In addition, Europe’s largest bank said it is closing its retail banking operations in Russia and Poland and selling three insurance businesses as part of pre-announced plans to save $2.5 billion to $3.5 billion by 2013. It had already announced on Sunday the sale of 195 non-strategic branches, principally in upstate New York, to First Niagara Bank for about $1 billion, according to the BBC.

HSBC also reported a first-half revenue of $35.7 billion, with double-digit growth in Hong Kong, the rest of Asia Pacific and Latin America. However, U.S. revenues fell. The bank was profitable in all global regions, helped by a sharp reduction in charges due to bad loans, particularly in the US, which fell to $5.3 billion from $7.5 billion a year earlier.

Gulliver expressed optimism on emerging markets, saying they “expect a soft landing in China and we believe Hong Kong is well-equipped to mitigate overheating pressures.” He said “continued growth” is expected in the rest of Asia-Pacific and Latin America, adding that the outlook in the Middle East is also positive.

Gulliver, however, said in a statement that “growth in the U.S. and Europe is likely to remain sluggish as long as the impact of high debt levels and government budget cuts weigh on economic activity.”

The bank was also cautious in its outlook for the coming months. “The global economy appears to be losing momentum in its recovery. Financial markets globally will likely be volatile over the rest of this year and into 2012,” it said.

HSBC is the first of the UK’s major banks to publish its half-year results, with Lloyds Banking Group, Royal Bank of Scotland and Barclays all reporting later this week.

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