Banks cut staff in Europe and US

More European and US banks joined the growing list of institutions to cut staff in the wake of the financial crisis.

HSBC will eliminate 500 positions in the UK, having already made 500 redundancies in its Asian operations last month. The bank declined to comment on which of its businesses would be slimmed-down, other than confirming that customer-facing staff in branches and call centres would not be affected.

"We consider it essential to ensure our business is operating as efficiently as possible and that we are best placed to deal with the economic downturn," said Paul Thurston, UK managing director of HSBC.

Credit Suisse, which, unlike domestic rival UBS, turned down an offer from the Swiss government to purchase some of its more illiquid assets, will also trim 650 personnel from its UK operations. The Swiss bank reported third-quarter losses of Sfr3.2 billion in its investment banking business.

In an email statement, Gavin Sullivan, head of communications for Europe, the Middle East and Africa (EMEA) at Credit Suisse, explained the cutbacks were "due to market conditions".

Bank of America (BoA), which acquired Merrill Lynch on the eve of Lehman Brother's collapse in September, has implied that it will make cutbacks following the merger of the two banks, but stopped short of giving precise details.

"We are following the same review process to evaluate staffing levels used in every merger transition, and we have nothing to announce at this time," said Liz Wood, a vice-president in BoA's press office for EMEA.

BayernLB, Germany's second-largest Landesbank, confirmed yesterday that it will be "extensively restructured and downsized", with a staff reduction of around 5,600, 29% of its current workforce, over the next five years.

The state of Bavaria - which owns half of the bank's shares - will inject €10 billion into the bank. BayernLB has also applied for €15 billion of debt guarantees from the German Financial Market Stabilisation Fund (SoFFin), on top of the €5.4 billion it requested in October to strengthen its capital base.

The bank will cease its Asian operations, closing branches in Hong Kong, Shanghai, Beijing, Tokyo and Mumbai. The London and New York offices are to be "streamlined considerably", while the Milan office will close, as the bank looks to focus on the Bavarian region and reinforcing its alliances with savings banks.

BayernLB reported a preliminary third-quarter loss of €1 billion, and has estimated €3 billion losses for the year, largely as a result of the plunge in value of its €24 billion asset-backed securities portfolio.

JP Morgan, which bought Washington Mutual (WaMu) for $1.9 billion in September, will cut 9,200 jobs from the latter's operations, according to Christine Holevas in JP Morgan's press office. The layoffs amount to 21% of WaMu's workforce, which stood at 43,198 at the end of the second quarter.

The redundancies will be non-branch staff, although Holevas declined to comment on which businesses would be most affected. No decisions have been reached regarding branch closures, but Holevas conceded "we anticipate some".

As of 14:45 GMT, Credit Suisse's shares were trading at Sfr30.24, dropping from yesterday's closing price of Sfr30.60. HSBC's share price had fallen to 686p from 700p last night. BoA's share price had risen from $12.86 last night to $13.19, while JP Morgan's shares had gained $0.05, reaching $26.17.

Many financial institutions have announced redundancies this year. In May, UBS revealed it would cut 5,500 jobs after sustaining heavy losses through its exposure to US subprime mortgages. Calyon, an investment bank owned by Crédit Agricole, axed 500 jobs in September. Barclays Capital is in the process of shedding approximately 4,000 jobs in its US offices, after acquiring Lehman Brothers' North American operations in September.

Goldman Sachs announced an across-the-board 10% cut in October, which would see 3,200 people losing their jobs worldwide. Morgan Stanley plans to cut a total of 2,000 jobs globally from its institutional securities and asset management business.

When Commerzbank acquired a 60% controlling stake of Dresdner Bank in September, 9,000 positions were eradicated from the merged entity. Local rival Deutsche Bank will layoff approximately 900 from its global operations, a cut of 12%. Prior to its US government bail-out last month, Citi axed 52,000 jobs. Finally, RBS has confirmed it will streamline its operations, laying off approximately 3,000 employees.

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