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British bank HSBC is planning to cut 8,000 jobs in the UK as it tries to reduce costs and simplify its business.
Europe’s biggest bank has 48,000 workers in the UK and will make cuts in both its retail and investment banking operations.
A total of 25,000 jobs could be axed worldwide, meaning close to 10% of HSBC’s 266,000 workers will go.
HSBC will also ring-fence its UK operations and sell businesses in Turkey and Brazil, it said on June 9.
The news comes ahead of a presentation that HSBC CEO Stuart Gulliver will give to investors and analysts in his second major strategy plan since taking up the role in 2011.
In a statement, Stuart Gulliver said: “We recognize that the world has changed and we need to change with it. That is why we are outlining the following… strategic actions that will further transform our organization.”
The 10-point plan aims to cut costs by up to $5 billion and increase investment in Asia – particularly in China.
Stuart Gulliver: “Asia [is] expected to show high growth and become the centre of global trade over the next decade.
“Our actions will allow us to capture expected future growth opportunities.”
HSBC’s Hong Kong-listed shares rose almost 1% following the announcement, but remain down 9% over the past 12 months.
The bank said it would make a decision on whether to move its headquarters out of the UK by the end of the year.
There has been speculation that HSBC may relocate its headquarters to Hong Kong since it announced the review in April.
Indian rupee and stocks have jumped a day after the country’s new central bank chief Raghuram Rajan took charge and promised tough action to boost growth.
The Indian currency, one of the world’s worst performers this year, rose 2.3% against the US dollar.
India’s main stock index, the Sensex, rose 2.3% in early trade on Thursday.
On Wednesday, Raghuram Rajan unveiled a series of measures aimed at propping up the currency and liberalizing the country’s banking sector.
“To a certain extent, the recent rupee tumble and instability in the financial markets has been a crisis of confidence,” said Radhika Rao, an economist with DBS Bank.
“To that end, the path of action provided by the new governor and the stress on keeping communications predictable and consistent will be a welcome move.”
One of the biggest issues facing the Indian economy has been the sharp decline in the rupee.
Raghuram Rajan unveiled a series of measures aimed at propping up the currency and liberalizing India’s banking sector
The Indian currency has dipped nearly 20% against the US dollar since May, as international investors pulled out money from the country.
The pull-out has been triggered by a range of factors, including slowing economic growth and a lack of key reforms. At the same time, a recovery in the US economy has also made India a less attractive option for investors.
India’s central bank has taken some steps to try to maintain the rupee’s value and also shore up confidence in the economy.
However, these measures, which include increasing duty on gold, imposing capital controls and raising short-term interest rates, have failed to have any significant impact.
When he took charge, Raghuram Rajan announced that some of the actions that he would take to tackle the issue “will not be popular”.
“The governorship of the central bank is not meant to win one votes or Facebook <<likes>>. But I hope to do the right thing, no matter what the criticism, even while looking to learn from the criticism,” he said.
Raghuram Rajan’s statement has helped to restore confidence, with the Indian currency rising more than 2% to 65.53 rupees against the US dollar on Thursday.
He also unveiled steps aimed at opening up the country’s banking sector.
Under the new rules, Indian banks will no longer have to seek the central bank’s approval for each branch they want to open.
However, the banks will be obliged to open branches in rural areas – in proportion with their expansion in the cities – in order to extend financial services to all areas of the country.
The central bank will also issue new banking licences, beginning next year.
Raghuram Rajan added that the central bank would also look at easing the requirement for banks to invest in government bonds, to free credit for productive parts of the economy.
Analysts said the moves indicated that Raghuram Rajan would take concrete steps to tackle the issues facing the country.
Swiss National Bank has announced a loan it granted to bail out troubled bank UBS in 2008 has been repaid.
The development means UBS can now buy back the once-toxic assets taken out of the bank at the height of the financial crisis.
The assets, worth $38.7 billion at the time of the bailout, have since become profitable.
UBS, Switzerland’s biggest bank, has already said it plans to buy them back.
It described the buy-back as an “important step which will close this chapter in the firm’s history with a positive outcome”.
Swiss National Bank has announced a loan it granted to bail out troubled bank UBS in 2008 has been repaid
It would mark a significant milestone in the recovery of the bank, and Switzerland’s wider banking sector, following the banking crisis during which UBS came close to collapse.
In later 2008, the Swiss National Bank (SNB) was forced to set up a stabilization fund into which illiquid assets could be transferred.
The SNB said the price UBS will pay for the assets will be determined by a valuation from independent agents.
The fund’s equity amounted to $5.5 billion at the end of 2012.
Banks in Europe and the US are still recovering from the financial crisis, with bailout money still to be repaid and many governments still heavily invested in their banking sectors.
The European Central Bank said on Friday that banks would return a further 654 million euros in crisis loans issued in 2011 and 2012.
More than 1trillion euros was lent out by the bank, and more than a quarter has so far been repaid.
Known for its highly secretive banking sector, Luxembourg would now consider a greater transparency in banks activity to help curb tax evasion, Finance Minister Luc Frieden has told a German newspaper.
In an interview published on Sunday, Luc Frieden said he wanted to “strengthen co-operation with foreign tax authorities”.
Germany is among the countries who say it is being used by foreign customers as a tax haven.
Speaking to Germany’s Frankfurter Allgemeine Sonntagszeitung newspaper, Luc Frieden acknowledged that other countries were increasingly demanding more information on what their citizens were doing with their money in foreign banks.
Finance Minister Luc Frieden said Luxembourg would consider a greater transparency in its banking sector
“The international trend is going toward an automatic exchange of bank deposit information. We no longer strictly oppose that,” he said.
On Friday Germany signed a tax evasion treaty with Switzerland – another European banking centre known for its secrecy.
The treaty is designed to allow Germany to claw back taxes from German depositors hiding money in Swiss banks.
Luxembourg is a country of only 500,000 people, but its banks and other financial institutions have assets worth more than 20 times the country’s economic output.
Despite its heavy reliance on financial services, Luc Frieden insisted Luxembourg “does not rely on clients who want to save on their taxes”.
The finance minister has previously said he wants banking customers to be attracted to Luxembourg by the quality of its banking services, rather than it secrecy.
Calls for more transparent banking sectors have grown louder in Europe in recent years, as governments seek to raise more taxes to support their finances amid a global recession.
The recent bailout of Cyprus has also raised particular concerns about the risks posed by small European states with over-sized financial sectors.
According an independent audit, Spain’s banks will need an injection of 59.3 billion euros ($76.3 billion) to survive a serious downturn.
The amount is broadly in line with market expectations of 60 billion euros, and follows so-called stress tests of 14 Spanish lenders.
Much of the money is expected to come from the eurozone rescue funds, the current EFSF and the future ESM.
Spain said in July that it would request eurozone support for its banks.
The Spanish banking sector has been in difficulty since the global financial crisis of 2008, and the subsequent bursting of the country’s property bubble and deep recession.
Spain’s banks will need an injection of 59.3 billion euros to survive a serious downturn
The European Commission welcomed the announcement, saying in a statement that it “is a major step in implementing the financial-assistance programme and towards strengthening the viability of, and confidence in, the Spanish banking sector”.
It added: “The necessary state aid provided to Spanish banks will be determined in the coming months.”
The Commission also said that it expected the first Spanish banks to start receiving the loans “by November.”
Christine Lagarde, managing director of the International Monetary Fund, praised the independent valuation of Spain’s banks, saying it had been “thorough and transparent”.
She added: “Public funding of the banks’ actual capital needs, which are expected to be lower than the amounts identified in the stress tests, can be financed comfortably under the recapitalization programme supported by Spain’s European partners.”
The audit calculation that Spain’s banks will need 59.3 billion euros is a worst-case scenario, and does not take into account any future plans by the lenders themselves to raise their own capital.
The country’s economy minister Fernando Jimenez Latorre indicated that it may need to borrow about 40 billion from the eurozone rescue funds.
Bankia was found to be the bank most in need of additional capital, requiring 24.7 billion euros. It was followed by Catalunya Bank (10.8 billion euros), Novagalicia (7.2 billion euros), Banco de Valencia (3.5 billion euros), Banco Popular (3.2 billion euros), Banco Mare Nostrum (2.2 billion euros), and Ibercaja-Liberbank-Caja (2.1 billion euros).
Seven Spanish banks have no need for extra capital – Santander, BBVA, Caixabank, Kutxabank, Sabadell, Bankinter, and Unicaja.
The audit was also based on a number of assumptions, including that Spain’s economy will contract by 6.5% between 2012 and 2014.
The Open Europe think tank suggested many of these were overly optimistic, however.
“These tests do look to be more intense than the previous ones but ultimately the optimistic assumptions do instantly raise questions over their credibility,” the group said.
“The prediction that unemployment will peak at 27.2% seems optimistic given that there is plenty more austerity and internal devaluation to come while the structural labor market reforms are yet to take effect.”
It added that a worsening economic situation would also increase the number of loans which are defaulted on and hit the value of the foreclosed properties which banks own.
The bigger question remains whether the Spanish government will have to follow Greece, Portugal and the Republic of Ireland and request a full international bailout, involving loans that have to be paid off by the state, as well as close monitoring of its economy by its international creditors.
While Madrid continues to publicly deny this, the markets consider it only a matter of time.
On Thursday, the Spanish government announced its latest austerity budget. Against a backdrop of violent protests, it outlined new spending cuts, but protected pensions.
Spain is struggling with a shrinking economy and 25% unemployment.
Comments from its central bank earlier this week indicated that the country’s recession deepened in the past three months.
As tax revenues fall and benefits payments rise in a recession, this will make it even harder for Spain to get its finances under control.
Depositors in Vietnam have withdrawn hundreds of millions of dollars from Asia Commercial Bank, one of the country’s largest banks, after the arrest of tycoon Nguyen Duc Kien, one of its founders.
Nguyen Duc Kien, one of Vietnam’s richest businessmen, was arrested in Hanoi on Monday on suspicion of “economic violations”.
Shares in Asia Commercial Bank (ACB) slid as a result, causing depositors to panic.
The Central Bank has pumped millions into the bank to reassure depositors.
Large crowds of customers have gathered outside branches of ACB in Ho Chi Minh City and Hanoi.
Depositors in Vietnam have withdrawn hundreds of millions of dollars from Asia Commercial Bank after the arrest of tycoon Nguyen Duc Kien
The government has said that Nguyen Duc Kien, who owns just under a 5% stake in ACB, is not involved in the day-to-day running of the bank.
Nguyen Duc Kien, whose family is the fifth richest in Vietnam, co-founded ACB in the 1990s. He is seen as a politically well-connected tycoon.
The allegations against him concern other investment companies that he owns, but there is also concern about the whereabouts of ACB’s chief executive officer Ly Xuan Hai.
Some reports say it is widely believed that Ly Xuan Hai is also under arrest or may have resigned.
Ly Xuan Hai’s deputy, Do Minh Toan, has been quoted as telling state media that depositors withdrew about 5 trillion dong ($240 million) from ACB on Wednesday.
The bank run has also put pressure on the dong and has led to an increase in the price of gold – traditionally seen as a safe-haven investment at times of economic instability.
Since Wednesday the Central Bank has injected 17 trillion dong into Vietnam’s commercial banking sector in an effort to mollify depositors and the market.
Nguyen Duc Kien’s sudden arrest has prompted speculation about a power struggle in communist-run Vietnam, and a suspected plot to curb the power of Prime Minister Nguyen Tan Dung, to whom Kien has close ties.
ACB faced a run on its deposits in 2003 after rumors, which were later proved false, spread about the arrest of one of its executives at the time.
Nguyen Duc Kien is also a shareholder in other commercial banks, including Kien Long Commercial Joint Stock Bank and the Vietnam Export-Import Commercial Joint Stock Bank
He has also invested heavily in Vietnam’s professional football league.
Police in Spain have fired rubber bullets to clear demonstrators in Madrid as a day of nationwide protests against spending cuts ended in unrest.
Protesters set alight rubbish bins as riot police charged them in the city centre, near the parliament building.
Seven people were arrested and at least six injured, officials said.
Earlier, tens of thousands of people held largely peaceful protests across Spain against the latest government austerity measures.
Public sector workers crowded the streets of Madrid, Barcelona and several other cities, chanting slogans against government “robbery”.
Tens of thousands of people held largely peaceful protests across Spain against the latest government austerity measures (Photo: Reuters)
Among those protesting were firefighters and police officers, as well as health and education workers.
“We have lived through bad times, but this takes the biscuit,” fireman Francisco Vaquero, 58, told the Reuters news agency.
The new 65 billion-euro ($80 billion) package of public sector wage cuts and tax rises were announced last week by Prime Minister Mariano Rajoy.
He said it was part of a deal with eurozone leaders to help rescue Spain’s troubled banks. Parliament ratified the measures on Thursday.
Earlier in the day, Germany’s parliament voted in favor of the 100 billion-euro bailout for Spain’s debt-laden banking sector.
Government austerity measures aimed at cutting Spain’s large deficit have prompted frequent protests, including one by miners against subsidy cuts last week.
At a debt auction on Thursday, Spain managed to raise 2.98 billion euros on the financial markets, but at the cost of sharply higher interest rates compared to an auction last month.
Eurozone finance ministers have decided to lend Spain 30 billion Euros ($37 billion) this month to help its troubled banks.
It will be the first installment of a bailout of up to 100 billion Euros, which was agreed in June.
The ministers will need to get approval from their own parliaments and hope to make the payment by the end of July.
The eurozone finance ministers also agreed to extend the 2013 deadline for Spain to cut its budget deficit to the EU limit of 3% by one year.
The yield on Spanish bonds rose sharply on Monday ahead of the meeting, with many fearing that little concrete action on Spanish banks would be reached.
Eurozone finance ministers have decided to lend Spain 30 billion Euros this month to help its troubled banks
“We are aiming at reaching a formal agreement in the second half of July, taking into account national parliamentary procedures, allowing for a first disbursement of 30 billion Euros by the end of the month to be mobilized as a contingency in case of urgent needs in the Spanish banking sector,” Eurogroup President Jean-Claude Juncker said.
“There will be specific conditions for specific banks, and the supervision of the financial sector overall will be strengthened,” he added.
The exact amount that Spain needs for the bailout of its banks may not be known until September.
Jean-Claude Juncker also said that Madrid should implement measures needed to bring its public finances into line with EU norms.
On Saturday, Spanish Prime Minister Mariano Rajoy announced that he would take further steps soon to cut the country’s public deficit.
In a news conference at the end of Monday’s marathon meeting, a number of appointments were also announced.
The ministers reappointed Jean-Claude Juncker as their chairman and picked German Klaus Regling to head the permanent bailout fund, the European Stability Mechanism, which is due to come into force this month.
The conclusions of the finance ministers from the 17 countries that use the euro will be submitted to a meeting of all 27 EU finance ministers later on Tuesday.
On Monday, the yield on Spanish 10-year bonds, which are taken as a strong indicator of the interest rate the government would have to pay to borrow money, had risen above 7%, while Italian bond yields had reached to 6.1%.
Yields above 7% are considered to be unsustainable in the long term.
Cyprus has told the European authorities that it intends to apply for financial assistance.
Cyprus is the fifth eurozone member to do so.
It said it needs help to shore up its banks, which are heavily exposed to the Greek economy.
The announcement came on another day of nervousness about the single currency.
Shares in Italy, Spain and Greece fell sharply amid concerns that an EU summit this week will again fail to produce a deal to shore up the euro.
The Spanish prime minister called for Thursday’s European Union summit to “dispel doubts” about the euro.
The Italian and Spanish indexes both closed about 4% down. The fall on Spain’s Ibex index was exacerbated by a Reuters report that the Moody’s credit rating agency is planning to downgrade Spain’s banks.
Earlier, Spain formally requested a bailout loan for its banking sector, expected to be for up to 100 billion Euros ($125 billion).
The country needs to find about 1.8 billion Euros over the next few days to recapitalize its second largest lender, Cyprus Popular Bank.
Cyprus has told the European authorities that it intends to apply for financial assistance
In a short statement, the government said that it required assistance following “negative spillover effects through its financial sector, due to its large exposure in the Greek economy”.
A government spokesman, Stefanos Stefanou, said the amount of European aid would be subject to negotiations in the coming days.
He said that despite the request, the Cypriot government would continue negotiations for a possible loan from a country outside the EU, such as Russia or China.
The country has already borrowed 2.5 billion Euros from Russia, whose business people are important customers of Cyprus’s relatively large offshore financial sector which offers low tax rates.
Its banks have lost large amounts on Greek government bonds. They are also facing big losses on loans made to businesses in Cyprus, which have been hard hit by the deep recession in neighboring Greece, its biggest trading partner.
Credit ratings agency Fitch said the country, which has a population of one million, would need 4 billion Euros to support its banks, the equivalent of almost a quarter of its GDP, or economic output, last year.
Earlier, it cut the Cypriot government’s credit rating to junk status, making it even harder for the country to raise the funds itself.
Fears are building that this week’s two-day European Union summit could prove inconclusive.
“We must dispel doubts over the eurozone,” said Spain’s prime minister Mariano Rajoy.
“The single currency is, must be, irreversible,” he said.
In another indication of the conflicts between European nations on the best way forward, Angela Merkel reiterated her opposition to calls to pool eurozone debt, which would make it cheaper for eurozone economies to borrow.
“There has to be a balance between guarantees and controls,” she said.
IG Index analyst Chris Beauchamp blamed Chancellor Merkel’s reluctance to share liability for eurozone debts for the share price falls.
“This was, is and will remain the fundamental issue in the crisis – Germany is understandably not keen on taking on the burden of debts built up by (as it sees it) spendthrift countries,” he said.
The problems facing Europe’s banks will be on the agenda at the summit of European leaders on 28 and 29 June.
Draft documents prepared for the meeting, which have been reported by news agencies, detail proposals for a single European banking supervisor and a common scheme for guaranteeing bank deposits.
There would also be a central fund to wind down bad banks.
Options for the regulator include having one body, possibly the European Central Bank, to oversee the continent’s biggest banks, while another watchdog supervises the day-to-day operations of all the banks.
The proposals also include closer fiscal union, with the prospect of eurozone countries sharing debt raised again.
