Medieval cartographers oriented their maps by putting Jerusalem at the top. HSBC’s drafters have done something similar with Beijing. Europe’s largest bank will shift resources to fast-growing Asia. Chief executive Noel Quinn is on the right track. But he must do more. He should give serious consideration to spinning off a UK unit worth about £13bn.
Quinn’s plans for $6bn additional investment in Asia in coming years makes sense. Asia accounted for most of HSBC’s global revenue and 146 per cent of its profit last year. Opportunities are proliferating in wealth management there.
Despite having the right strategies, HSBC’s profits before tax fell 34 per cent to $8.8bn last year. The lender has given up on achieving a return on tangible equity of 10 to 12 per cent. Instead, it is aiming for 10 per cent over the medium term, defined as three to four years.