Knight calls for strategic review at HSBC

Source: Stock Market Digital

Date :07/09/2007 12:27:24

A minority shareholder activist is pressuring the world’s fourth largest bank to re-examine its corporate governance.

New York based Knight Vinke Asset Management, which holds a less than one percent share of HSBC,has written to the bank's board "requesting that it undertake a fundamental review of the group's strategy in consultation with shareholders."

Knight is expected to make a public announcement today calling on shareholders to back its demands, which follow meetings with the bank’s top management over the last month.

The minority shareholder is seen as punching well above its weight in the market, following high profile interventions in global companies, including its successful campaign in 2004 to force Royal Dutch Shell to scrap its dual British-Dutch corporate structure. More recently the company, under its CEO and Chief Investment Officer Eric Knight mounted an attempt to prevent the recently announced merger of Gaz de France and Suez.

His company now says it intends "to engage in a constructive dialogue" with the HSBC board and other institutional shareholders in the bank over its "future direction and governance". In view of dissatisfaction over HSBC’s exposure to the sub-prime crisis in the USA, the position that Knight Vinke has taken seems certain to generate closer scrutiny on the part of HSBC’s shareholders – he has written to board members requesting further meetings to discuss the as yet unidentified issues he has with the bank’s strategy.

This morning, The Times reports Michael Geoghegan, HSBC chief executive, as saying: “The key investors we speak to understand and support the strategy we have set for HSBC. And it’s working. We need to join up, not break up. The break-up debate neglects the unique opportunity available to HSBC through its global franchise.”