In a bid to cut $3.5 billion in costs and revive flagging profits, the new boss of HSBC will be cutting back in retail banking and may sell its U.S. credit card arm.

Chief Executive Stuart Gulliver said the biggest bank of Europe faces an urgent need for action as over two-fifths of its businesses are not delivering their cost of capital.

From news.yahoo.com:

Retreating from high street services in some countries and savings ranging from IT cuts to reducing paperwork would help trim costs as a share of revenue to 48-52 percent by 2013 from 61 percent in the first quarter.

Many banks, including HSBC, have seen this ratio rise sharply, partly through competition for staff in fast-growing Asian markets.

By comparison, rival Standard Chartered’s cost/income ratio was 56 percent last year. But others have done more to keep costs below 50 percent, such as Spain’s Santander, where it was 43 percent last year.

“We clearly have a cost problem,” Gulliver said in a presentation to explain his strategic overhaul on Wednesday.

“We’ve added $3 billion in costs over the last few years with no revenue to show for it,” said the 51-year-old CEO, who took the top job at the start of the year after a damaging boardroom struggle last year.

HSBC shares dipped 0.8 percent to 651 pence at 1150 GMT as investors and analysts were unimpressed by the plan.