500 London jobs to go as HSBC axes back-room staff to cut costs

Banking giant HSBC is axeing more than 500 London jobs.

The redundancies are part of a worldwide programme of cut-backs in its global banking and market division.

About 1,100 mainly back-office jobs will go - half of them at the bank's Canary Wharf headquarters. They represent about four per cent of the bank's global wholesale banking workforce.

It is one of the biggest single job shake-outs in the City since the start of the credit crunch. Many other banks have been shedding staff but generally on a smaller scale.

HSBC spokesman Gareth Hewett said: "We're taking these steps in the light of the current global business and economic environment and our cautious outlook for 2009.

"Markets continue to be challenging and difficult, but our strategy leaves us well-positioned for the next wave of global growth, when it comes."

The Asia-focused bank is faring better than many in the crisis but even so last month reported its steepest profit decline since 2001 on subprime mortgage losses.

Even before the latest stage of the crisis, which saw Lehman Brothers hit the wall, the City has been shedding jobs in increasing numbers.

Before the Lehman collapse and the proposed bail-out of the rest of Wall Street, estimates for job losses in London financial services over the next year were up to 40,000.

Last month Commerzbank planned to axe whole departments at Dresdner Kleinwort as part of its e9 billion (£7.3 billion) merger with Dresdner Bank. In the past year, some 120,000 jobs in the industry have been lost around the world.

This year, Citigroup has cut more than 14,000 jobs and posted three straight quarters of losses. UBS of Switzerland has shed 7,000 employees as writedowns led to losses in the past four quarters.

HSBC was one of the first banks to flag big losses on US mortgages, with a $10.6 billion (£5.78 billion) writedown early last year. In total it has reported $27.4 billion (£14.9 billion) of writedowns in the crisis.

At the time of its first announcement, the bank warned that loan-loss provisions would exceed analyst expectations.

By September last year it said it was closing down its Decision One subprime mortgage unit and eliminating 750 jobs.

The early admission of losses has helped HSBC in that it is suggested as a potential buyer of distressed banks in the US.

It had been thought a contender for Washington Mutual, assets of which were sold to JP Morgan Chase last night.

HSBC has raised $5.1 billion (£ 2.77billion) of capital since the beginning of 2007.

Bradford & Bingley yesterday cut 300 jobs at its mortgage processing office in Borehamwood, Hertfordshire.

In total tens of thousands of jobs are expected to be lost in the financial services industries of the City and Canary Wharf during the downturn.

However, many are being told that work is available in the Middle East and Far East, which have been less badly affected by the credit crunch.

Jonathan Prynn & Bill Condie, Evening Standard