HSBC

Banks are threatening to bring in annual charges on current accounts and credit cards. HSBC has made clear charging is 'inevitable' in what is seen as a move to protect profits as it revealed its own profits rise 18% to £6.7 billion in the first six months of its financial year. Total profits for the big five banks for this period are expected to top £18 billion, more than £1,100 for every second.

The big banks are looking for new ways to raise money following efforts by the Office of Fair Trading (OFT) to clamp down on penalty charges. HSBC is proposing to charge fees on virtually all customers, regardless of whether they go into the red. HSBC's chief executive, Dyfrig John, pointed to the intervention of the OFT and said, "It is clear that we have to look at our relationship with our customers fundamentally. They want more transparency and that means inevitably moving towards a fee-based product."

Moves by the banks to invent new charges to compensate for an end to rip-offs has been dubbed the 'waterbed effect'. Doug Taylor of consumer group Which? said, "Consumers won’t sign a blank cheque on future bank charges. Consumers will want to be reassured that any changes in charging do not introduce a new level of unfairness or are simply a way of making consumers pay more overall."

The Independent Banking Advisory Service(IBAS), a consumer body, condemned the idea of annual fees. Founder Eddy Weatherill said, "This is totally cynical. They are finally forced to end one rip-off after many years of delaying tactics and manoeuvring, so they switch to another one."

The Lib-Dem Shadow Chancellor, Vince Cable MP, said, "There is a serious question mark about the level of profits in the banking sector. With soaring profits seemingly unrelated to the standard of customer service, whether it be overdraft charges or cheque clearing times, there will be increasing pressure for a windfall tax on banks." HSBC defended its profits and stressed that more than 80% come from its many businesses overseas, as well as corporate and investment banking. (Source: Mail on Sunday, Jul/06)

HSBC bank is axing 3,500 UK jobs, including an unspecified number from Derby and the surrounding area and shifting hundreds to India. The bank, which has five branches in Derby and at least 15 more in the surrounding area, plans to cut 800 back office positions from branches.

The other 2,700 jobs will go from paper processing centres at Cardiff, Leeds and Surrey. In 2003 it axed a total of 5,400 jobs from around the country. The move has angered Unifi, the biggest union for bank workers, which only found out about the plan from worried staff.

HSBC did not make a formal announcement until after news had broken, at which point it said it would be creating 1,000 new "customer facing" posts in branches across the country. The down-sizing has been instigated by Michael Geoghegan, head of UK banking, who has been reviewing operations since taking up the post in January. He concluded that costs in the country are too high, relative to revenues.

Britain makes 25% of the bank's money but accounts for 33% of its cost base. HSBC spokesman Richard Beck said the bank hoped some of the back office staff would retrain for the customer facing positions but said he realised some would not want to and others might not make the grade.

He was unable to shed any light on the number of job losses likely at HSBC branches at Derby, Alfreton, Belper, Castle Donington, Ilkeston, Long Eaton, Matlock, Melbourne, Mickleover or Ripley. He said, "I have figures for the areas where there will be significant losses but not for Derby. But I would say that in Derby and the north Midlands generally I would expect the total number of employees to rise, not fall."

But he accepted that there would be some job losses from local branches. Mr Beck said HSBC has had a big presence in India for 150 years and Indian staff made fewer paper processing errors than British staff. He also said the bank, which made £6.8bn pre-tax profit last year, had earmarked £2m for retraining staff.

HSBC bank amassed £7.7billion before tax in 2003 and is equal to £125 for every man, woman and child in the UK. Profits are up 37% on 2002, which was then a record year and top bosses creamed off large slices for themselves as it was revealed five of the bank’s chiefs shared £32MILLION in pay and bonuses between them.

The profits announcement came after the bank decided to shed nearly 5,000 jobs, some of which are being transferred abroad. The Independent Bank Advisory Service said customers were losing out. Chief executive Eddie Weatherill stormed, “The profits are obscene. There must be overcharging of the customer base and we want to see the Government do something about it instead of sitting on their hands.”

HSBC said most of the increase was down to its purchase of US lending firm Household International. Other big banks are making vast profits. The Royal Bank of Scotland raked in £6.16billion, Barclays made £3.85billion and Halifax owners HBOS made £3.77billion. One unnamed HSBC director was paid £12.6million while another got £10.5million. Chairman Sir John Bond received £4.25million.

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