HSBC, the UK’s biggest bank, yesterday blamed rising national insurance costs and increasing government regulation for 1,400 job cuts - the first at the company for a decade.

The bank, which employs more than 40,000 people in the UK, said the losses would affect its London headquarters and regional offices at Southampton, Birmingham and Sheffield. HSBC said it expected half the job cuts to go as a result of natural wastage and the rest to occur through redundancies.

Bill Dalton, the chief executive of HSBC’s UK bank division, cited the recent increase in employer NI contributions and the Government’s decision to force banks to pay interest on accounts for small businesses for the move. He said: “This is a painful decision for any business, but one we have to make to ensure our future competitiveness.”

HSBC said that interest payments to small business customers would add an extra £80 million to total costs each year. The Government forced HSBC and its rivals to pay interest to businesses after a two-year investigation into the competitiveness of banking in the small business sector. The total cost to all UK banks has been estimated at more than £500 million a year.

The bank also cited the increase in employers’ national insurance costs as another reason for the job cuts. From April, companies have to pay an additional 1 per cent for each of their employees; a measure that will hit the UK’s biggest employers the hardest. A spokesman for HSBC refused to quantify the expected increase in costs for the bank but pointed out that it was spending £1.5 million on giving counselling to those employees it was making redundant.

The banking union, Unifi, gave warning yesterday that other banks would follow suit. Rob O’Neill, its national secretary, who is the lead negotiator with HSBC, said: “It is unlikely that HSBC will act in splendid isolation. There has to be a concern that this will set off another round of cuts.”

HSBC also said yesterday that it would be forced to make further payments into its pension scheme in the UK because of the weak state of the markets. It believes that the pension scheme will need an additional £80 million but further payments could follow.

Mr O’Neill said that Unifi had been informed that the cull would occur principally among managerial staff. He said that there would be little impact on workers who deal with customers face-to-face.

He added that the job cuts were not part of an attempt by HSBC to outsource its operations to India, where it has a large presence. Banking unions fear that thousands of UK jobs will move to cheaper centres offshore, as banks continue a drive to cut overheads.

Mr O’Neill said: “HSBC has said that these jobs would not ‘pop up’ again in India.” Recent research has shown that as many as two million jobs could move to cheaper centres within the next decade.

Mr Dalton and other banking chief executives faced a hostile reception from MPs on the Treasury Select Committee last year over their plans to offer interest to small businesses. The banking executives told MPs that they did offer small businesses good services and gave warning about the impact of the price controls, coupled with other government measures, that would increase their costs.

HSBC staff were told of the decision through a series of meetings with senior managers. They have been offered careers counselling and advice on financial planning services.