HSBC profit slumps 70%, 6,100 US jobs cut

Europe's biggest bank, HSBC, reported yesterday a 70 per cent slump in annual net profits as bad debts surged to almost €20 billion, causing it to launch a record British rights issue.

The British banking group said it planned to raise €14.2 billion and would axe 6,100 jobs in the US by shutting most of its HFC and Beneficial branches.

HSBC said net profits tumbled to €4.5 billion last year compared to €15 billion in 2007 as the global financial crisis took its toll. "In this difficult environment, we missed our profitability targets," HSBC chairman Stephen Green said in the group's earnings statement.

"The coming twelve months will be difficult. We expect parts of Asia, the Middle East and Latin America to continue to outperform western economies, but to be constrained by the global downturn."

Meanwhile HSBC will announce plans to scale back its US consumer finance operations as it launches a €13.4 billion rights issues to boost its capital base, the Financial Times reported.