Rebel shareholder demands HSBC strategy review

HSBC is facing calls from an activist shareholder for a group-wide shake-up of the banking giant, it emerged today.

New-York based investor group Knight Vinke, which holds a stake of less than a 1% in HSBC, wrote to the bank to express its dissatisfaction with the firm’s performance, according to the Financial Times.

Knight Vinke urged HSBC to “undertake a fundamental review of the group’s strategy in consultation with shareholders”, the FT reported.

HSBC said: “We take feedback from all investors, big or small, seriously and we will look at the points made by Knight Vinke and hope to have a meaningful discussion with them.

“We do have a clear and well understood strategy that in the first half delivered record profits for our shareholders.”

It is understood that the latest action follows a letter to HSBC chairman Stephen Green in May and a meeting with finance director Douglas Flint in New York in June.

Knight Vinke, which is run by investor Eric Knight, has yet to make its demands public.

The move come less than a year after HSBC issued its first profits warning in the bank’s recent history due to greater than expected losses from its exposure to the US sub-prime mortgage market.

Knight Vinke’s proposals have confounded analysts, who pointed to HSBC’s recently improved performance.

Cazenove analyst Paul Measday said: “It is unclear what the fund is proposing.

"Recently HSBC’s operational performance has improved, the strategy has refocused on Asia and emerging markets, management is addressing the credit exposure in US sub-prime mortgages and seeking to exit the correspondent business and the share price has performed relatively well in more difficult market conditions.”

Knight Vinke has a history as an activist investor and in 2004 it led a group of shareholders that forced Royal Dutch Shell to abandon its dual Dutch-British corporate structure.