GLOBAL - Knight Vinke Asset Management and its institutional shareholder supporters have renewed calls for HSBC to dispose of its Household International (HFC) business, responsible for some of its $17.2bn losses over 2007.
Knight Vinke released a statement on Friday predicting HSBC would report losses due to its acquisition of HFC which operated in the sectors.
The statement also said Goldman Sachs estimated HSBC would have to write off at least $10bn of goodwill associated with the purchase of HFC, the effects of which would bring about up to a further $15bn in loan impairment charges.
The asset manager called HSBC's decision to enter the sub-prime market 'a strategic error' and estimated the bank's share price would have been £2-3 (US$4-6) higher had it not bought HFC.
Knight Vinke proposed three solutions to ring fence the 'toxic sub prime business' which would result in HSBC's management being less distracted by the issue.
The Californian Public Employees' Retirement System (CalPERS) and Californian State Teachers' Retirement System (CalSTRS) have thrown their weight behind Knight Vinke's campaign.
On 25 January the asset manager and its institutional backers sent a letter to HSBC's group chairman and senior independent director expressing concerns over the aspects of the bank's governance, strategy and stock market performance, related to the holding in HFC.
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