HSBC management is slammed for poor performance by investors

19 October 2007
HSBC has recently come under fire from its investors for 'casually dismissing' serious concerns about performance and corporate governance.

Asset Management company, Knight Vinke, and more recently, the California State Teacher’s Retirement Fund (Calstrs) has been heading the call for a shake-up in governance of the banking giant by publicly critisising the current leadership.

In its statement, Knight Vinke said: “In light of recent guidance published by the FSA, Knight Vinke Asset Management wishes to inform the market that it intends to engage in a constructive dialogue with the Board and other institutional shareholders of HSBC Holdings plc over the future direction and governance of the Group.”

The statement went on to say that the firm wanted HSBC to “undertake a fundamental review of the Group's strategy in consultation with shareholders.”

Knight Vinke concerns centre on HSBC’s reputedly poor shareholder returns, the lack of independence show by its board and its tendency to invest in Europe and the US rather than concentrating in new Asian markets where returns enjoy a far better forecast.

In a move to back-up Knight Vinke, Calstrs, who has so far invested approximately £150m ($300m) in HSBC's equity and $1.5bn in its corporate bonds, has also written to HSBC head office to show its disapproval at the bank’s lack of concern in addressing the criticisms levied by Knight Vinke.

By going public, the hope is that other shareholders who feel the same will step forward to force HSBC to take the concerns seriously.

According to reports, other investors are also critical of HSBC's compensation scheme for senior management. HSBC currently refutes the critisims.

© Fair Investment Company Ltd