A recent announcement to cut jobs in northern Indiana may not have been a significant event for international banking giant HSBC (NYSE: HBC), but it caused a minor stir locally.
On Tuesday, HSBC announced it was cutting 600 jobs at its Carmel location, just north of Indianapolis. The news was surprising and somewhat ironic, as there are no local HSBC branches anywhere in Indiana. Not surprisingly, though, the cuts are in the bank's mortgage unit, which is suffering along with the overall mortgage industry thanks to some serious subprime woes. The decision follows similar moves from the likes of Capital One Financial (NYSE: COF) and National City (NYSE: NCC) to reduce or completely shutter their respective mortgage divisions.
The move is clearly not overly meaningful to HSBC, which employs 312,000 individuals in 83 countries, with around 60,000 in the United States. However, HSBC is seeing plenty of ill effects from residential-housing turmoil, and the development was front-page news in Indy, since it represents one of the bigger hits to Carmel since the Conseco (NYSE: CNO) debacle a few years ago.
The mayor of Carmel was interviewed for a local article and took the news in stride, calling the job losses "regrettable" (this is one of the largest layoffs Carmel has seen at one time), but saying that "this is the nature of our system" and adding that new jobs are already on the way from a couple of local firms. Plus, a number of large local players such as Eli Lilly (NYSE: LLY), WellPoint (NYSE: WLP), and Simon Property Group (NYSE: SPG) constantly serve to anchor the Indy job market. And, of course, there's Steak n Shake to keep everyone fed.
In any case, the news was noteworthy, because it demonstrates that current residential housing challenges are having far-reaching consequences. Indiana largely avoided the housing boom and subsequent bust currently hitting states such as Florida, California, and Nevada, but as this news shows, ripple effects from large financial institutions can hit just about anywhere these days.
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Fool contributor Ryan Fuhrmann currently resides in Carmel and has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.
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