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May 11, 2011    

HSBC unveils cost-cutting measures

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by Kay Murchie

HSBC has today revealed it will embark on a massive cost-cutting exercise, just two days after it unveiled its first quarter results.

The bank, which is Europe’s largest, is looking to save up to $3.5 billion (£2 billion) by streamlining its IT operations and cutting back on its wealth management and retail divisions.

However, the number of job losses was not disclosed.

In a statement, chief executive Stuart Gulliver, said: “We have launched a programme to target US$2.5-3.5bn of cost saves to reach our cost efficiency ratio target of 48-52 percent.

“This is not about shrinking the business but about creating capacity to re-invest in growth markets and to provide a buffer against regulatory and inflationary headwinds,” he added.

On Monday, the bank said net profits grew 58% to $4.153 billion in the three months to 31 March on lower taxes and bad debt charges.

However, the bank said the group’s pre-tax gains were driven down by rises in other exceptional costs – such as the £269 million it has set aside in compensation for customers who were mis-sold the controversial payment protection insurance (PPI).

HSBC, which operates in 87 markets and has a workforce of more than 287,000, is one of the few banks not to ask for help during the financial crisis.

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