UBS has maintained a 'neutral' stance on HSBC ahead of the bank's strategy update on 9 June, saying that management is unlikely to deliver what is needed.HSBC has already signalled that its strategic update will be evolutionary rather than revolutionary, but UBS reckons that it is probably the latter that is required."With the benefit of hindsight, it could be argued that HSBC strategic path of geographic diversification through acquisition of the past 30 years is responsible for burdening current management with organisational complexity and sub-par returns," UBS said."Consideration of HK domicile should, we think, lead to a strategic reappraisal of what the group is about rather than just being a tactical response to reduce the burden of the UK bank levy."HSBC's Asian franchise is the bank's "jewel in the crown", UBS said, utilising 40% of tangible equity but representing 80% of the group's valuation.Nevertheless, it said that the Hongkong Bank Asia-Pacific (HBAP) business faces substantial challenges over the next few decades as Hong Kong integrates into the Greater China financial system."The challenge will be for HBAP to build up its regional Chinese presence to provide offset to losing Hong Kong market share to domestic Chinese banks - a task that management needs to be focussed on, rather than the legacy strategic problems from geographic diversification that the group as a whole is facing," UBS said."In our view, rather than the whole group returning to Hong Kong, a quicker route to value creation could be a demerger of HBAP to shareholders."UBS kept a 625p target price for HSBC, which was trading flat at 625.6p by 11:08.