Man from Monaco set to renew assault on HSBC management

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The Independent Online


Rebel HSBC shareholder Eric Knight is set to step up his campaign against Europe's biggest bank, despite what sources close to his company suggest was a cordial and helpful meeting between the two parties last week.

Mr Knight, founder of the Monaco-based hedge fund Knight Vinke, began his assault against HSBC last September. However, he has recently become tight-lipped following an initial onslaught against Europe's biggest bank, which involved taking out full-page adverts in national newspapers criticising the underperforming share price of HSBC and its corporate governance structure.

Knight Vinke's biggest investor, the California Public Employees' Retirement System (Calpers), is believed to be pushing it to restart the campaign, which is thought to have garnered little support among HSBC's institutional shareholders.

"They [Knight Vinke] have some good ideas but they couldn't have got their timing more wrong if they'd tried," one shareholder told The Independent on Sunday. "I think the campaign is dead in the water."

HSBC reports full-year figures on 3 March, making it the last of the UK's five major retail banks to issue numbers during the banking season.

Supporters of Knight Vinke claim the hedge fund has already played a key role in prompting a number of changes at HSBC.

"Since Knight came in, we've seen HSBC's board, at last, admit underperformance, while for the first time in 14 years they've stopped banging on about diversification," said one supporter.

Critics of Knight Vinke suggest that tactics now employed by the bank's management, such as a refocusing on core emerging markets, were already in train before its campaign began.

It is now nearly a year since HSBC became the first big UK bank to reveal losses linked to problems in the American sub-prime mortgage market. Its £5.3bn write-off was the first in the bank's 142-year history.

Over the past year, shares in HSBC have fallen by 17 per cent, although it remains the best performing of the UK's retail banks, comparing favourably with the like of HBOS and Barclays, which have both slumped by around 37 per cent.

Meanwhile, attempts by Knight Vinke to open up a new front targeting four European energy companies are believed to have been stymied by rival hedge funds looking to piggyback on any new campaigning and corresponding increases in share prices.

The premature divulging of Knight Vinke's so-called Project Adriatica by Calpers in its third-quarter December investment report is thought to have delayed the announcement of the four companies' names and the start of a new plan of attack.

A number of European companies have been mooted as likely targets for Knight Vinke, including Total and Statoil.

A spokesman for the hedge fund declined to comment.

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