Knight Vinke, run by Dutchman Eric Knight, has accused HSBC management, led by its chairman, Stephen Green, of misleading the market by not writing down another US$30bn worth of mortgage-backed assets, US$23bn of which would come from HSBC Finance Corporation (HFC) in the US.
Yesterday, on Monday, when HSBC reported first quarter profit, which was up because of higher growth in Asia and emerging markets, the bank announced a US$3.2bn first quarter writedown related to the US sub-prime market, and another US$2.6bn on other bad credit investments.
That pushed HSBC's sub-prime exposure to US$25bn.
Knight Vinke is also calling once again for HSBC to sell its US business, because it does not believe the US property market will pick up again anytime soon.
HSBC's finance director, Douglas Flint, however said: “Customer loans are accounted for differently to trading assets. We wouldn't be permitted by current rules to account for our loan book in the way Knight Vinke suggests we should.”
Source: Thomson Merger News