HSBC yesterday took the unusual step of issuing a statement defending its executive chairman, Stephen Green, and casting doubt on the credibility of an attack by one of its biggest shareholders.

The bank’s rebuff followed an outburst from Michael Taylor, the outgoing head of equities at Threadneedle Investments, who described Mr Green as being asleep on the job.

Mr Taylor said how unimpressed Threadneedle had been by Mr Green when the HSBC chairman paid a recent visit to the fund management firm, which owns £840 million of HSBC shares.

Mr Taylor is reported to have said: “We had Stephen Green in here two weeks ago, and, cor, he was asleep on the job is how I would describe it. He’s just not up for it.”

HSBC issued its own statement in response, saying: “We were astonished by Michael Taylor's comments, not least as he wasn’t in the meeting he describes with our group chairman.

“In Stephen Green we have a world-class chairman who we are enormously proud of.”

Threadneedle attempted to damp down the row, saying that it supported HSBC’s strategy and management and that Mr Taylor’s comments were “his personal view, not the house view”.

Mr Taylor had made the remarks, in which he also attacked HSBC’s move into sub-prime lending in the US, just before his retirement, which took place yesterday.

“HSBC have turned their backs on Asia and are doing trailer park deals in the States,” Mr Taylor said, referring to the sub-prime business, where bad debts are soaring.

Asked whether Mr Taylor was or was not in the crucial meeting, a Threadneedle spokeswoman said: “It’s not a level of detail I can say anything about.”

In defending Mr Green, HSBC yesterday boasted that he had made a total return for shareholders of 154 per cent since becoming chief executive in June 2003.

However, this was immediately seized on by another institutional investor, who pointed out that it was one of the worst performances of any UK bank. “It’s nothing to be proud of,” he said.

Every British bank except Royal Bank of Scotland has produced a better return. Standard Chartered, which shares much of HSBC’s Asian heartland, was the top performer.

The shareholder, who declined to be named, said that he was concerned by HSBC’s performance, but not the personnel. Mr Green’s cerebral, chairman-like approach was well balanced by the more aggressive character of his chief executive, Michael Geoghegan.

Mr Green’s elevation from chief executive to chairman this year breached corporate governance best practice, but was accepted by most shareholders.

Mr Green, an Anglican lay preacher and a lover of Russian poetry, has made a low-key start to the job, sometimes overshadowed by the more outgoing Mr Geoghegan.

Mr Taylor’s remarks were unusual for institutional fund managers, who prefer to express criticisms of the companies they invest in anonymously, if at all. He claimed that HSBC had been tarnished by the acquisition of Household, the US sub-prime lender, saying: “It’s been dreadful.”

HSBC paid £9 billion for Household International in 2004, by far its largest acquisition, but the strains have just begun to show in the last trading statement, when it admitted that some borrowers were defaulting on secondary mortgages within six months of taking them out.

Household, which specialises in lending to the poor of America and those with impaired credit histories, paid $500 million to settle allegations of predatory pricing just before HSBC bought it.

An exchange of unpleasantries

‘We had Stephen Green in here two weeks ago, and, cor, he was asleep on the job is how I would describe it. He's just not up for it’

— Michael Taylor, retiring head of equities, Threadneedle Investments

‘We were astonished by Michael Taylor’s comments, not least as he wasn’t in the meeting he describes with our group chairman. In Stephen Green we have a world-class chairman who we are enormously proud of’

— HSBC

Mr Green’s record seems strong . . .

‘In the three years since Stephen became chief executive, total shareholder return is 154 per cent’

— HSBC spokeswoman

. . . but is that borne out by the facts?

Standard Chartered £2,313

Barclays £1,961

HBOS £1,799

Northern Rock £1,716

Alliance & Leicester £1,645

Bradford & Bingley £1,623

Lloyds TSB £1,620

HSBC £1,512

Royal Bank of Scotland £1,424

Value of £1,000 invested in each bank’s shares on June 1, 2003, with all dividends reinvested and assuming no dealing costs

Source: Datastream