HSBC cutting 3,500 jobs

HSBC is to cut 3,500 jobs in processing and regional management at its head office but create 1,000 new jobs in its high street branches, the banking giant said today.

The company said the changes were intended to cut bureaucracy, streamline costs and "refocus the retail bank on changing customer needs".

The announcement has echoes of Barclays' decision earlier this month to cut 800 jobs from its back office and appoint 1,000 new "customer-facing" branch staff in an attempt to reduce queues and boost customer service.

Yesterday the mortgage bank Alliance & Leicester said it was closing another 46 branches, with possible job losses. Some 310 staff work in the branches that will close.

HSBC said the changes were designed to improve the productivity of the group's UK banking operations, which represent a quarter of the group's profits but 33% of its costs. The UK bank accounts for 25% of the group's staff but 30% of its salary bill.

It said costs in the UK were rising almost as fast as revenues. Between 2001 and 2003, income increased by 9.8% while costs rose 8.4%.

HSBC said the redeployment and removal of some roles would simplify the group's management structure and strip out unsustainable costs. The only way to secure jobs in the long term was to keep the bank efficient and competitive.

HSBC had earmarked ?2m for career and financial counselling and would seek to redeploy staff into roles across the UK, it added.

"We must make decisions now, however difficult, to manage for the future," said Michael Geoghegan, HSBC's chief executive.

"We also fully understand that these changes will create uncertainty for staff in the areas affected. They have my personal commitment that we will manage this process carefully and sensitively."

In March HSBC reported the highest profits ever recorded by a British bank - ?7.8bn. But it has come under fire from powerful City critics who claim that its ?9bn acquisition of Household, a US consumer finance group, in 2002 has been a commercial failure.

Analysts at Citigroup, the world's largest investment banking and broking house, said Household's underlying revenue was down, costs were soaring and profits were flat.

Shareholder concerns about Household centre largely on the nature of its business, which involves lending money at high interest rates to people with a poor credit history. Household was fined for misselling in 2002.