HSBC suffered a fresh blow to its ambitious growth plans in Asia after Steve Wallace, the head of investment banking, quit the bank less than a month after Michael Smith, the chief executive for Asia, left to run the Australian bank ANZ.

It is understood that Mr Wallace, who had been head of investment banking for Asia at HSBC since 2005, will be joining Citigroup, where he will run mergers and acquisitions for the region.

An internal memo from the bank confirmed his departure and named Tou Chen Chang as his replacement.

Asia has become a priority for HSBC after it suffered damaging setbacks in the United States over the unfolding sub-prime mortgage crisis.

Investment banking was a product line at HSBC under Frank Slevin, the high-powered head of global banking brought in about three months ago from Citigroup.

One banking source close to HSBC speculated that Mr Wallace quit in the wake of the arrival of Mr Slevin.

When Mr Smith quit last month, the bank brought in the 33-year veteran Sandy Lockhart as his replacement and was forced to deny speculation that it had considered spinning off the business.

Mr Smith, who had been at HSBC for 29 years, was regarded as a candidate for the chief executive's job before it was won by Michael Geoghegan.

HSBC makes almost 40 per cent of its annual profits in Asia. Mr Flockhart wants to increase that to 50 per cent.

Mr Chang, who also joined HSBC three years ago and was previously head of South-East Asian investment banking, will report to Mr Slevin but remain in Singapore.

The Hong Kong-based Mr Wallace was brought in three years ago by John Studzinski, HSBC's co-head of investment banking, who earmarked the region for expansion with his co-head Stuart Gulliver.

However, although HSBC made strides in some areas of investment banking under the expansion, profits at the unit fell by 7 per cent last year, when rivals such as Morgan Stanley and Goldman Sachs were reporting record performances.

Mr Studzinski, nicknamed "Studs", left HSBC last year to join private equity group Blackstone as an adviser.

Mr Wallace joined from Goldman Sachs in 2004.

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