Job losses at HSBC

| November 9, 2007

Following the problems in the sub-prime mortgage crisis across the Atlantic, HSBC said it would cease trading repackaged American mortgages and cut 120 jobs, 20 of which are in the City.

The banking giant’s foray into the US sub-prime mortgage market resulted in its first ever profits warning this year. In September, it announced that it would cut over 750 jobs at its Decision One unit, which packaged up sub-prime loans and sold them on.

Pierre Goad, a spokesperson for HSBC, said the grounds for having this mortgage-backed securities desk is no longer there, it’s regrettable but it was simply a business decision.

The desire for high-risk debt has disappeared as mortgages advanced to families who cannot afford payments default at record rates.

HSBC aren’t the only bank affected, Morgan Stanley announced it had racked up £1.8 billion of losses in two months because of its exposure to the market.

HSBC and other UK banks are yet to disclose the scale of any write-downs in their portfolios of sub-prime related loans. So far, the biggest victim has been Northern Rock.

It is feared the doom and gloom in the credit market will worsen. Banks around the world may have to mark down up to £250 billion of assets due to the problems in the US said the Royal Bank of Scotland.

Josef Ackermann, CEO of Deutsche Bank, said that the turbulence in the global markets was the worst crisis he has seen in 30 years.

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