HSBC to review US position as part of cost-cutting moves

The group also confirmed it will exit Russia and focus on wealth management and retail banking in newer markets such as Mexico, Brazil and Turkey.

In the UK, HSBC said it will evaluate its position once the final decision of the Independent Commission on Banking is published, which could force it to ring fence its retail business.

HSBC has struggled to keep costs under control over the past 18 months and on Monday revealed its key ratio of costs-to-income surged to over 60 per cent in the first three months of 2011.

The plans announced yesterday will save the bank between 2.5 to 3.5 billion US dollars (£1.5 to £2.1bn) and bring that ratio down to within its target range of 48-52 per cent by 2013, Mr Gulliver said.

The bank currently operates in 87 countries and employs nearly 300,000 people.

HSBC signalled that the review could lead to a sale of the credit cards business and closure of some of its 475 branches in the United States.

It acquired its US credit cards business when it bought sub-prime lender Household in 2003. It paid 15.5 billion US dollars for Household, now called HSBC Finance, but the business stopped lending in 2009 after huge losses on sub-prime mortgage loans.

“This is not about shrinking the business but about creating capacity to re-invest in growth markets and to provide a buffer against regulatory and inflationary headwinds,” Mr Gulliver added.

“Half of the statement stated things they should be doing anyway,” said Brown Shipley fund manager John Smith.

“What is radical for HSBC is just not that radical for outsiders looking in,” said Simon Maughan, analyst at MF Global in London.

HSBC will focus its wealth management business on 18 of the most relevant economies, and limit retail banking to markets where it can achieve profitable scale, it said.

“They’re having to cut costs because they’re operating in an environment where revenue growth will be hard to come by,” Brown Shipley’s Mr Smith said.