HSBC cuts 1,000 jobs amid sub prime mortgage misery

26 September 2008 / by Rachael Stiles
Noone is safe from the credit crisis, it seems, as HSBC has announced it will be cutting more than 1,000 jobs from its worldwide offices.

The banking giant was forced to write-off $14billion in bad debts and asset write-downs this year as the sub prime mortgage crisis wreaked havoc on the global markets, causing the bank's half year profits to fall almost 30 per cent to $10.2billion.

Around 335,000 people are employed by HSBC around the world; most of the cuts will affect back office jobs, with at least half the losses reportedly taking place in the UK, at its London Office on Canary Wharf.

An HSBC spokesman blamed the decision to reduce its workforce on "market conditions and the economic environment, and our cautious outlook for 2009", the BBC reported.

Many other banks around the world have been affected by the ensuing credit crisis, as mortgage approvals grind to a halt and house prices fall.

Earlier this year, the UK Government saw fit to nationalise mortgage lender Northern Rock, which suffered huge losses as a result of sub prime lending, and in the US, government-backed lenders Fannie Mae and Freddie Mac have had to be rescued.

Many governments have had to step in and inject billions into their economies in order to boost the money markets, and an increasing number of companies are needing to be bailed out.

In Washington, talks of a $700billion bailout package which would have seen the US government buying distressed mortgage assets from flailing banks, have fallen apart today, something which President Bush previously remarked could bring the American economy down, the New York Times reported.

© Fair Investment Company Ltd