Activist Investor Increases Pressure on HSBC

Oct.16.07 | About: HSBC Holdings (HSBC)

Activist HSBC investor Knight Vinke Asset Management stepped up its campaign against the bank's management Tuesday, urging it to consider "radical solutions" such as liquidating the majority of its investment banking unit. In an open letter to shareholders published in UK newspapers, Knight Vinke said, "The Emperor needs to be told that he is not wearing any clothes: there are almost no synergies associated with being the 'world's local bank'," adding it thought the company was obsessed with diversification, and had failed to achieve scale in both retail and investment banking. After calling for HSBC to revamp its strategy on September 6, Knight Vinke said it has since made its case to 40 of the bank's largest shareholders. "The responses we received were far more supportive than we had been led by HSBC to expect," it said. "Most... agreed that there are real areas of concern to be addressed by the board concerning strategy, execution and/or governance." HSBC said previously its board backs its strategy, and that it is already increasing its focus on Asia and emerging markets. Knight Vinke has a stake of about 0.3% in HSBC. HSBC shares have gained just 3% over the past year.

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