HSBC shareholder 'bidding to oust bank chief'

An activist shareholder calling for a shake-up of HSBC bank is reportedly looking to oust chairman Stephen Green from his executive role, it emerged today.

Knight Vinke, which last week wrote to the bank calling for a fundamental review of its strategy, is understood to have called for Mr Green to step back to become a non-executive, according to newspaper reports.

HSBC has a history of promoting its chief executives to become executive chairman, despite the policy breaching corporate-governance rules in recent year, the Sunday Times said.

Mr Green was the bank’s chief executive prior to taking over as chairman last year.

Knight Vinke chief Eric Knight told the Sunday Times: “Continuity of management is all very well, but it can also result in paralysis – which is what has happened here.”

He is urging for a new chairman to be appointed from outside the company – a move which could win support from fellow investors who raised concerns when Mr Green took on the role of chairman in 2006.

He is also understood to be pressing for changes to the firm’s remuneration polices, which he believes are too generous and do not set tough enough performance targets for senior managers, according to the Observer.

It added that analysts estimate the bank has the potential to return around $25bn (€18.1bn) to shareholders by way of a share buy back or special dividend that could help cushion it against the recent attacks by Knight Vinke.

But Knight Vinke is said to be pressing for a fundamental change to the group’s strategy and has criticised the bank for underperforming since moving its headquarters from Hong Kong to the UK in 1992.

HSBC said last week that it hoped to enter into discussions with Knight Vinke and pointed out that it had a “clear and well understood strategy that in the first half delivered record profits”.

Neither company was immediately available for comment.

The attack comes 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.

New York-based Knight Vinke’s criticisms have prompted a mixed reaction from analysts, many of whom have highlighted HSBC’s recently improved performance.

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.