Just how hard will HSBC's investment bank be hit by the planned 30k job cuts?

HSBC has kick-started what is likely to be another bleak week for banking job prospects by saying that it's cutting 5,000 jobs this year (700 in the UK) and another 25,000 by 2013 as it looks to save $2.5-3bn in costs.

This is around 10% of the bank's current headcount.

In some ways, this is expected. Aside from the barrage of headlines this weekend suggesting the bank was likely to slash 10,000 when it released its interim results this morning, it also unveiled the cost saving plan during its strategy day in May.

At the time, the bank said it was primarily to reduce its branch network, back office, finance and IT functions to reach these coast savings.

Similarly, Stuart Gulliver's assertion that the bank wants to focus on commercial and investment banking in "some countries" should reassure some that its global banking and markets won't be hit too hard.

"What we're talking about is removing a lot of back, functional head office support staff where we believe we have created an unnecessary bureaucracy in this firm over a number of years," he said in a conference call this morning.

There are, however, reasons for concern within GBM. Pre-tax income fell to $4.8bn in the first half, a 16% decline on the $5.5bn at this point last year.

Costs, meanwhile, continued to increase. The cost efficiency ratio in the division rose 6% to 50.2% in the first half. This was down to a combination of increased headcount, dwindling revenues and deferred bonuses from 2009 being paid out.

And the fact that one of its "strategic directions" for the division is to "focus on business re-engineering to ensure the efficiency of our platform" is hardly reassuring.

The good and the bad...

Perhaps not surprisingly, HSBC's rates and (particularly) credit teams have had a bad time. Credit revenue slipped by nearly 50% year-on-year to $530m, while its rates business fell by around 12% to $1.3bn. If cuts were to occur, these divisions seem like obvious targets.

On the flip side, HSBC has been hiring in equities, prime services and foreign exchange and has seen some improvement in revenues year-on-year. Its equities trading revenues increased by 23% to $612m, securities services by 14%, while FX saw a nominal rise.

Similarly, capital markets revenues also increased by around 15%.

If investment bank was downsized, sadly it seems that Europe and the US are likely to feel the most pain. The bank says that Asia and Latin America has been driving growth across equities, securities services and capital markets.

Demand from Europe and North America is comparatively weak. Gulliver insists, however, that GBM remains "highly profitable" in Europe.