HSBC faces new onslaught from activist investor James Doran in New York The Observer
Sunday 22 February 2009 Article history Eric Knight, the activist investor, will ramp up his campaign against HSBC with renewed calls for the troubled banking group to dump its struggling US loans business amid fears that write-downs for 2008 could balloon to $20bn or more.
Knight, who has campaigned for sweeping changes at HSBC since 2007, is planning a fresh campaign to coincide with the banking group's full-year earnings announcement, scheduled for next Monday. In the past, Knight has called for the removal of HSBC's executives and for it to close down Household, its struggling US home loans arm.
Knight, who owns a swathe of HSBC shares through his Monaco-based Knight Vinke Asset Management - which has close connections to the California Public Employees Retirement System (Calpers), the world's biggest pension fund - said: "There is a time to be quiet and a time to be active, and this is a time to be active."
It is understood that Knight wants HSBC to put Household into Chapter 11 bankruptcy protection, a move he believes will end the erosion of HSBC's capital position. "It is getting worse every quarter," he said.
Sources suggested that HSBC would be forced to write down the value of troubled assets by substantially more than the $20bn already predicted by analysts. "$25bn would not be a surprise to anyone," one source said.
Knight, who is travelling in China, is expected to complete his latest analysis of HSBC's performance by the end of this week. A spokesman for HSBC declined to comment about Knight's plans but indicated the bank had no plans to put Household into bankruptcy.
The bank is one of the few in the world not to have sought capital from investors or governments since the credit crunch began.
