Eric Knight, the activist investor, will ramp up his campaign against HSBC with renewed calls for the troubled banking group to dump its struggling US loans business amid fears that write-downs for 2008 could balloon to $20bn or more. Even with more huge write-downs HSBC plans to pay bonuses to some, as HSBC chief executive Michael Geoghegan is believed to be in line for a bonus of more than $2 Million.

It is understood that Knight wants HSBC to put Household into Chapter 11 bankruptcy protection, a move he believes will end the erosion of HSBC’s capital position. “It is getting worse every quarter,” he said.

Sources suggested that HSBC would be forced to write down the value of troubled assets by substantially more than the $20bn already predicted by analysts. “$25bn would not be a surprise to anyone,” one source said.

Final estimates show HSBC with about $28 billion in total profits, after $20 billion in losses, and no bonuses or raises for US employees are Beneficial and HFC. Thus Geoghegan thinks he earned a $2 million bonus. These are estimates, but 2008 year-end reports will be out in a week. Meanwhile the Brits are reporting this:

HSBC’s bonus pool has been slashed by more than a third, but there will still be big payouts, including to the directors. Geoghegan, who earned a total of £3.5m last year, including a £1.9m cash bonus, is expected to receive a cash-and-shares payout. Finance director Douglas Flint is thought to be in line for a cash bonus.

HSBC’s chairman, Stephen Green, received £3m last year, including a £1.75m bonus paid entirely in shares. He is expected to get a bonus this year, although he has committed to being paid in shares that are tied up for several years.