London-based HSBC, whose profit is mainly from Asia, said it plans to revamp its USA and European business and shed $100 billion in assets to improve its profitability.
HSBC's total workforce will fall from 235,000 to about 200,000 as the bank reduces costs and builds "a simpler, more efficient and empowered organization", interim chief executive Noel Quinn said.
London-traded shares in HSBC, Europe's biggest bank by market value, tumbled as much as 7% to 549.50 pence, wiping out its gain so far in 2020.
In the United States, where the bank has underperformed for years, HSBC said it would close around a third of its 224 branches and target only global and wealthier clients. HSBC's workforce includes about 40,000 people in the United Kingdom, another 40,000 in India, 31,000 in Hong Kong and 10,000 in the US.
Even in Hong Kong, which was battered by months of seething pro-democracy protests previous year, the banking giant posted a five per cent increase in adjusted pre-tax profit to US$12.1 billion.
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HSBC has put in place a drastic plan to save $4.5bn a year and dispence with $100bn of underperforming assets by the end of 2022.
However, its London-based investment banking business is thought to be vulnerable. HSBC had been forecast to report adjusted pretax profit of $21.8 billion, according to analysts.
The strategy overhaul comes as economic growth is slowing in HSBC's major markets.
The first attempt to remodel the bank began about 10 years ago and accelerated soon after a money-laundering scandal that resulted in $1.9 billion in fines. But he said that some of the reductions would come from attrition as opposed to outright cuts.
The bank said it planned to achieve a reduced adjusted cost base of US$31 billion or below in 2022, underpinned by a new cost reduction plan of US$4.5 billion, and return of tangible equity in the range of 10 per cent to 12 per cent in the same period. It warned that the outbreak of coronavirus had caused "significant disruption" for the business, and might push down lending and transactions in the China/Hong Kong region, which could reduce its revenue.
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HSBC didn't specifically comment on the business of its private-banking arm in Switzerland.
"Parts of our business are not delivering acceptable returns", Quinn said in a statement as part of its full-year earnings on Tuesday. It also expects to incur restructuring costs of about $6 billion, the bulk of it in this year and the next.
"We are intending to exit a lot of domestically-focused customers in Europe and the USA on the global banking side", Chief Financial Officer Ewen Stevenson said in a Bloomberg Television interview.
Quinn has been caretaker manager for six months but bizarrely HSBC says it could be another six to 12 months before it makes a full-time appointment.
Adjusted profit before tax in Asia past year was up six per cent to US$18.6 billion.
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