Bloodbath of the bank jobs: thousands of staff to be axed

The bank employs 52,000 people in the UK of whom 15,000 are based in the capital. HSBC said it will cut one in 12 of its global workforce - potentially 5,000 jobs in the UK - despite a three per cent rise in profits to £7billion.

Barclays, Lloyds and Royal Bank of Scotland could all add to the job cuts when they announce profit figures this week. Lloyds has already announced 15,000 job cuts while RBS has axed 28,000 posts since it was nationalised in 2009.

David Fleming of the Unite union said: "The employees being hit by these extensive cuts were in no way responsible for the banking crisis. Yet these staff, many of whom are low paid, are having to pay for the bank's recovery."

John Mann, a member of the Treasury select committee, condemned the banks for the cutbacks which he said would leave businesses and customers with a poorer service.

"What we are seeing is the big banks exiting the high street and letting down small businesses as they go." There was a further blow to the economy with news that manufacturing has gone into reverse for the first time since May 2009.

The UK purchasing managers index fell to 49.1 which is well below the 50 plus needed to reflect growth. Howard Archer, chief economist at IHS Global Insight, said: "This is a pretty horrible survey which does not bode at all well for third-quarter growth prospects.

"While manufacturing output only accounts for 12.8 per cent of GDP, it has until recently been the bright spot of the UK economy."

After the financial crisis of 2008 and last year, banks cut back on staff. But in the last two years they have been on a hiring spree particularly in investment banking where profits have fallen sharply in the last three months.

Tougher regulation is costing the banks as they have to set aside more capital to try to prevent another global crisis. The possible impact of the Independent Commission on Banking report has also affected the mood among banking firms.

HSBC employs around 335,000 people worldwide. Its UK high street profit from its 1,290 branches rose 29 per cent to £843 million in the first six months of the year.

It said it had more than matched its increased lending targets to small and medium-sized businesses.

Mortgage lending rose by 35 per cent to £6.7 billion with HSBC's share of the UK mortgage market at a record of nearly 11 per cent.

Shares in the bank rose by four per cent as analysts said the figures were an impressive start to the week's bank reporting season.

Stockbroker Richard Hunter said: "HSBC has set the bar high for those that follow, beating market expectations and planning to streamline its business further."

Mr Fleming of Unite added: "Following speculation the worst fears of HSBC staff have been confirmed. It is now necessary for the bank to confirm to its UK workforce how this news will impact on them."