The Euro debt crisis appears to be forcing banks to accelerate efficiency savings as profits from investment banking dwindles.
The Telegraph reports on job cuts at two of the UK’s leviathan banks, HSBC and RBS.
HSBC has long made it clear that thousands of jobs would go, now according to the Telegraph we’re seeing the axe fall in the firm’s Global Banking and Markets division.
Certainly in it’s interim management statement this week HSBC reiterated its intention of cutting costs by between $2.5bn and $3.5bn. It also said that the number of full time employees had been reduced by 5000 since the start of the year.
This action comes at the same time as the drama over whether the firm will quit the UK drags on.
Yesterday Stuart Gulliver, HSBC’s chief executive, said he was prepared to wait until 2013 to make the decision based, he said, on how the UK government implements banking reform. The key is whether HSBC will be forced to raise more debt to cover potential losses.
Meanwhile, at the 83% state owned Royal Bank of Scotland we’re hearing that around 2,000 staff at the Investment Banking arm are to be handed their P45s, in some departments this will translate to 20% of staff.
So what does this all mean for UK PLC? Well, job cuts are dreadful for those going through them but they are hardly a new part of the economic landscape and Britain’s finance sector is relatively nimble at re-absorbing talented people who may temporarily have fallen on hard times.
The HSBC threat to leave the UK has been going on for years.
The danger for the UK is not only that it could lose a very handy tax stream, it is also that HSBC may be the thin end of the wedge. If it goes, then Standard & Chartered could follow and the power of London as a financial centre could evaporate.