Not content with his paper profits and livid over what he holds to be the utter mismanagement of pay schemes and strategies at the bank, Eric Knight, CEO of fund manager Knight Vinke, is vowing to undertake a long-term battle. Inside the face off that promises to become a veritable breeding ground for fresh activist-investor tactics.

Knight Vinke, the activist investor, vowed to remain a thorn in HSBC's side for the next five years as it prepared to confront executives at the banking group's annual general meeting today with fresh demands for reforms of pay and strategy.

Eric Knight, Knight Vinke's chief executive, is expected to confront HSBC with questions about plans to deal with its troubled American business.

HFC has cost the banking group $60 billion (£30 billion) since its acquisition in 2002 and continues to haemorrhage cash on its loans to poor Americans.

Retail shareholders are likely to use today's meeting in London to barrack HSBC's top managers about a new £120 million executive pay scheme, which will be voted on by investors.

The bank has already been criticised by two influential investor bodies over its compensation plan, which would allow Michael Geoghegan, the bank's chief executive, a pay packet of up to £12 million a year.

Bank insiders were yesterday surprised that Knight Vinke had not pre-empted today's meeting with an aggressive advertising campaign or released any communications with HSBC's executives - a favourite method of attracting attention to its campaign - but were preparing for an onslaught from the fund manager at the meeting.

Yesterday, however, Mr Knight said that he was ready for a long haul on HSBC and would increase Knight Vinke's shareholding in the company, currently thought to be less than 0.3per cent, if necessary. “If it takes us three to five years, we'll do it,” he said.

The fund manager, which bought into HSBC at slightly above 800p a share, has already made a paper profit on its stake. Shares in the bank closed flat at 847p.

Mr Knight said yesterday that he was confident of convincing the bank of his arguments.

He said: “We've never failed yet. The odds were against us on Shell and Suez [targets of previous activist campaigns] as well. On this one, we're on track.”

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