HSBC Cuts More Jobs as Credit Crunches Asia

Macquarie Group, Australia's biggest investment bank, became the latest regional lender to announce a sharp fall in profits, but relief as it said it would not tap investors for more cash sent its shares soaring.

CNBC.com Credit Crisis

While most banks in the region avoided the initial impact of the crisis caused by the U.S. subprime mortgage meltdown, subsequent shockwaves shutting off access to credit, hitting asset values and punishing equity markets have taken a toll.

Shareholders have seen their investments plummet, governments have had to step in to offer support and employees are now increasingly in the firing line, with Citigroup overnight announcing plans to cut 52,000 jobs globally. HSBC Holdings added to the employment gloom on Tuesday, saying it would cut a further 500 staff in Asia, mostly in Hong Kong, due to deteriorating economic conditions and caution about next year.

The crisis has also shaken up bank ownership around the world, with Bank of America on Monday taking the opportunity to increase its stake in China Construction Bank.
    
Investors Cheer Macquarie

Amid such turmoil, Macquarie's results provided a rare cause for optimism.

Although the investment bank announced a 43 percent fall in first-half profits and more than $750 million in writeoffs on its global asset portfolio, its shares surged as much as 26 percent after it doused fears it needed to raise capital.

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"It's a relief. There'd been some concern about an equity raising in the profit announcement today. That didn't eventuate and the numbers were not too far away from forecasts," said Leigh Gardner, head of distribution at ABN AMRO.

Macquarie reported April-September net profit of A$604 million ($396 million), down from A$1.06 billion a year earlier, but in line with market forecasts. 

"While the extreme market conditions have led to a number of writedowns and one-off costs in the latest half year, the underlying performance of the Macquarie business has been solid," Chief Executive Nicholas Moore said in a statement.

The group said its balance sheet was strong, holding capital more than 40 percent above the minimum regulatory requirement.

"We would only look to raise capital if we found a really good use and really good need for capital ... we have got a lot of capital already going forward," Moore told an analyst briefing.

Earlier this month, Australia's largest lender, National Australia Bank, announced a capital raising of up to $2 billion, while Japan's Mitsubishi UFG Financial Group, which reports results later on Tuesday, last month said it plans to raise as much as $10.6 billion to shore up its
capital.

South Korea's No.4 banking group, Hana Financial Group, will raise around $710 million in bonds, the Maeil Business Newspaper reported on Tuesday, citing an unnamed Hana official.

Macquarie, known locally as the "millionaire factory", was also able to make big savings in operating expenses, mostly by cutting employee bonuses. 

The company was vague on any potential job losses that have swept through the industry.

On Monday, Citigroup said it planned to axe 52,000 jobs worldwide in the coming months as it combats mounting debt losses and slowing economies.

Its U.S. rival, Bank of America, stepped up its plans to expand during the crisis, by announcing it would increase its stake in China Construction Bank, the country's third-largest lender, to 19.1 percent from 10.75 percent.

CCB shares fell 5 percent in a weak Hong Kong market. Analysts were unconvinced the stake-build removed the risk that Bank of America might still cut its holding in the coming quarters to bolster its own capital.

In July, Bank of America paid $2.5 billion for Countrywide Financial Corp, the largest U.S. mortgage lender.

It expects by year-end to complete its acquisition of Merrill Lynch , the Wall Street investment bank and brokerage, in an all-stock transaction originally worth $50 billion.

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