Nov. 17 (Bloomberg) -- HSBC Holdings Plc, Europe's largest bank by market value, said it has cut 500 jobs in Asia, citing deteriorating economic conditions and a ``cautious outlook.''

Some 90 percent of the losses will fall in Hong Kong. The layoffs represent about 2 percent of the bank's total workforce in the city, Hong Kong-based spokesman Gareth Hewett said today. Two months ago, HSBC fired another 1,100 workers in its global banking and markets division.

``Such decisions are always exceptionally difficult to make and are a result of organizational changes in a number of areas as well as the deteriorating economic conditions and our cautious outlook for 2009,'' Executive Director Peter Wong said in a letter to employees obtained by Bloomberg News.

Banks and brokerages worldwide have cut 158,000 jobs and announced $709 billion of writedowns and credit losses since the subprime-mortgage market collapsed last year. Morgan Stanley, Goldman Sachs Group Inc., Royal Bank of Scotland Group Plc and UBS AG have all announced redundancies in response to waning client demand.

HSBC's Asian cuts will affect all customer groups and some back office functions, Wong said. The bank will ``make every effort'' to seek redeployment opportunities for the affected employees, both within the bank or externally.

As the global financial crisis cut exports and spending has cooled, Hong Kong's economy entered its first recession since 2003 when the deadly severe acute respiratory syndrome, or SARS, epidemic struck. The Hong Kong government has been forced to lower its full-year growth forecast to between 3 percent and 3.5 percent.

HSBC, the first European bank to report losses on U.S. subprime assets, has set aside $42.3 billion for bad loans since the start of 2006. Still, business in Asia is resilient and the bank won't cut the dividend or seek government help to raise capital, Chief Executive Officer Michael Geoghegan said on Nov. 11 after the bank announced its third-quarter profit.

To contact the reporter on this story: Chia-Peck Wong in Hong Kong at cpwong@bloomberg.net

Last Updated: November 17, 2008 07:15 EST