There is still hope despite the 1,100 fired by HSBC

This week was HSBC's turn to cut down its costs. 1,100 employees were fired from its investment banking department due to the worlwide slump of the financial markets. This cut equals 4% of HSBC's total employees worldwide in the investment baking division.

Of the 1,100 employees, including both front and back office, 500 were based in London. The other 700 were based in Europe and the US.

In the past two years HSBC has made a few changes in its investment banking operations, concentrating mainly on providing financing and other risk management to companies.

Since the credit crisis started, HSBC had been rumoured as one of the possible buyers for some of its rivals facing serious problems such as Bear Stearns, Lehman Brothers and more recently Morgan Stainly. Executives however, have denied any interest in the acquisitions in the investment banking business.

This news however comes in no shock as HSBC's global banking and markets division has seen its profits decrease from $4.16bn in the first half of 2007 to $2.69bn during the same period of 2008. There is little sign of recovery in the economy so predictions for 2009 are worrying. This left them with no other option but to lower its costs as fast as possible. They now plan to invest in emerging markets sucks as Asia and the Middle East where there is more potential for future growth and therefore higher profits.

There is still hope however as the U.S.A. is deciding the best way to use the $700bn.

“We haven’t gotten agreement,” said Richard Shelby, the senior Republican member of the senate banking committee, after emerging from the White House meeting. “There’s still a lot of different opinions. Mine is it’s flawed from the beginning.”

This will definately have a huge impact in the markets, hopefully allowing everything to get back on track. All we can do now is wait to see how the US will use this amount.