HSBC should consider returning its head office to Hong Kong and beefing up its board with more heavyweight Asians, the activist fund manager Knight Vinke Asset Management said yesterday. In a ten-page critique of Britain’s biggest bank, Knight Vinke suggested that HSBC had made a strategic blunder in expanding aggressively into Europe and North America while neglecting its oriental roots.

HSBC was regarded by many shareholders as a disparate collection of poorly connected businesses trying to be all things to all people, Knight Vinke said in the letter to Stephen Green, the HSBC chairman.

It also claimed that Douglas Flint, HSBC’s finance director, had mooted in a private conversation with Knight Vinke swapping the 40 per cent stake in the Hong Kong-based Hang Seng Bank for assets elsewhere. “This would be a very dangerous strategy,” Knight Vinke said, arguing that HSBC should take full control of Hang Seng. At the very least, it should relocate more senior managers to the former British territory.

HSBC quit Hong Kong in 1992 as a condition of being allowed to buy the old Midland Bank in the UK, but it is thought to be unlikely that regulators would prevent it leaving Britain today.

“In our view, HSBC needs to demonstrate a much greater commitment to going back to its Chinese roots if it is to realise its true potential,” Knight Vinke said.

Speaking to The Times, Eric Knight, founder of Knight Vinke, said that HSBC had been poor at winning business from the Chinese and contrasted its record with banks such as Morgan Stanley. “John Mack [Morgan Stanley’s chief executive] is out there every day making sure he gets those mandates. Is Stephen Green?”

Knight Vinke said that its concerns were shared by other institutional investors, with ten having contacted it asking for a meeting or more details of its case since it announced its campaign on Friday. Knight Vinke and CalPERS together own £192 million of HSBC stock, together with options over a further 13.2 million shares.

HSBC responded yesterday: “London is a crossroads of the world. We review the location of our HQ from time to time, but there is no immediate chance of making a change.” On Hang Seng, it said, “That was a hypothetical question, which Douglas Flint made every effort to answer honestly . . . but not one that reflects our plans.”

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive