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 leviathon 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.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
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 dreadul 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 "stated" issue now may be the Independent Commission on Banking's proposed reforms but really the issue is that HSBC is a massive player in Asia. As more growth and profits come from emerging markets, so the temptation to be headquartered in the East grows (although that won't stop Paris or Frankfurt having a crack either).
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.
BS
-
Ticket scam warning ahead of major summer eventsA total of £6.7 million was lost to ticket scams last year. With the Taylor Swift Eras tour and Glastonbury Festival coming up, we explain how to stay safe when buying tickets
-
GDP: UK economy exits recessionThe latest GDP figures reveal the UK economy grew by 0.6% in the first three months of the year, officially exiting recession. We look at what households and investors can expect next.
