HSBC shares were today battered on the stock market, falling 13% despite the bank publishing a strong rebuke to claims that it was in need of an urgent injection of funds.

The bank's statement came after investors accused HSBC of having a "substantial" shortfall.

The Asset Protection Scheme of the Government's latest rescue plan for the finance sector paves the way for taxpayers to take shares in British banks, including HSBC, to insure the banks against hundreds of billions of pounds of losses on toxic loans.

But HSBC said: "HSBC has not sought capital support from the UK Government and cannot envisage circumstances where such action would be necessary. HSBC has long been one of the world's most strongly capitalised banks and is committed to maintaining this position."

Nevertheless, HSBC shares slumped 68¾p to 467p.

HSBC's statement is widely regarded as a reaction to more than the Government's latest bailout plan.

Activist shareholder Knight Vinke Asset Management yesterday warned the bank may be forced to make an expensive rights issue. Managers at the fund have been long-term critics of the HSBC board, but this is their first attack since the financial crisis began.

Knight Vinke chief executive Eric Knight demanded that the bank should allow Household International, its US subprime bank, to go bankrupt to protect its own capital.

"There can be little doubt HSBC will need substantial additional capital if Household is not restructured," said Knight, who called Household "an unmitigated disaster". He said letting it go to the wall would save HSBC £23.75 billion.

Banking analysts believe if the bank did make a cash call, it could top £13 billion. "The group remains very exposed to subprime and to the continued deterioration in economic growth," said Jonathan Jackson, an analyst at Killik.

Brokers at Morgan Stanley forecast HSBC will have to halve its dividend and raise significant capital in 2009.