Correction: Fitch Affirms HSBC at 'AA-'; Outlook Stable

Wed Jul 10, 2013 9:31am EDT

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(The following statement was released by the rating agency) PARIS/LONDON, July 10 (Fitch) This announcement corrects the version published on 16 May 2013 to include disclosure language relating to Thierry Moulonguet that was missing from the previous version. Fitch Ratings has affirmed the Long-term Issuer Default Rating (IDR) of HSBC Holdings plc (HSBC or HSBC Group) at 'AA-' with a Stable Outlook and its Viability Rating at 'aa-'. At the same time, Fitch has affirmed the ratings of HSBC's core subsidiaries HSBC Bank Plc (HSBC Bank, 'AA-'/'a+') The Hongkong and Shanghai Banking Corporation Limited (HKSB, 'AA-'/'aa-') and HSBC USA Inc ('AA-'/'a-'). The agency has also affirmed the Viability Rating of Hang Seng Bank (HSB) at 'a+' and the support-driven IDRs of certain other group entities. A full list of the rating actions is at the end of this rating action commentary. The rating action on HSBC was taken in conjunction with Fitch's Global Trading and Universal Bank (GTUB) periodic review. Fitch's outlook for the industry is stable. Positive rating drivers include improved liquidity, funding, capitalisation and more streamlined businesses, all partly driven by regulation. Offsetting these positive drivers are substantial earnings pressure, regulatory uncertainty and heightened legal and operational risk. RATING ACTION RATIONALE The affirmation of HSBC's ratings reflects the continuous strength of the group's global operations and in particular the sound financial profile of HKSB. HSBC Holding's VR is primarily derived from its key entities' VRs to take account of the group's business model which centres around maintaining self-sufficient subsidiaries. The standalone blend is combined with an assessment of the group's quantitative and qualitative resources which Fitch believes to be material. In Fitch's view soft factors such as the group's conservative risk appetite, common policies, consistent procedures, stringent monitoring and refinancing capacity contribute to lower default risk for the group. The equalised IDRs of HSBC Holdings and HSBC Bank, HKSB and HSBC USA reflect Fitch's view that the group will be mutually supportive during periods of stress due primarily to operational and strategic integration and management along four global business lines. At the HSBC Holdings level, the equalisation of the ratings also reflects Fitch's opinion that structural subordination is mitigated by prudent liquidity management. The trend of increasing double leverage came to a halt with the adjusted common equity double leverage ratio as calculated by Fitch stabilising below 120%. HSBC HOLDINGS RATING DRIVERS - VR & IDRs The VR and IDRs capture HSBC Group's resilient intrinsic strength, characterised by good liquidity and a low overall risk appetite. The group's global reach remains a competitive advantage for business generation as it reinforces the HSBC franchises. Related diversification benefits are, however, declining and increasingly offset by de-facto regulatory ring-fencing. Being active in numerous markets keeps HSBC exposed to complexity and litigation risk. Fitch believes that the group's profitability will rely on volume growth, cost containment and moderate loan impairment charges. Further restructuring in the US and Europe and the accelerated wind-down of its considerable legacy assets will continue to hurt profit over the next 3-5 years but this should ultimately lead to a more robust performance. Strong competition and maintaining high liquidity in the low interest rate environment remain headwinds. Fitch expects HSBC to continuously draw strength from its operations in Hong Kong experiencing solid equities performance, strong momentum in financing cross-border trade with China and steady growth in domestic mortgage loans. Fitch views it positively that the group temporarily slowed-down its China expansion. Substituting its exposure in Chinese associates with organic on-shore growth improves HSBC's risk control. Fitch estimates that the group's Mainland China exposures amounted to about USD116bn or 4% of assets at end-2012. HKSB's and HSBC Bank's reliance on customer funding is a critical positive ratings attribute. Centrally and locally held liquidity compares well with peers' and the group's wholesale funding is well-diversified. A group level loan-to-deposit ratio of 73.3% at end-March 2013 and strong equivalent ratios in major banking subsidiaries differentiates it from its lower rated GTUB peers. RATING SENSITIVITIES - VR & IDRs HSBC Holding's VR and IDRs are sensitive to a material decline in capitalisation. Its Basel 3 compliant consolidated CET1 ratio of 9.7% at end-March 2013, after deducting for immaterial holdings, is within the range for the lower rated GTUB peer group and below leading European 'AA' peers'. Management targets a ratio in excess of 10% which Fitch considers acceptable in light of HSBC's stable earnings. Additional downside risks stem from greater-than-cyclical asset deterioration and sustained falls in earnings as a result of persisting macroeconomic pressures in Europe and UK, increasing concentrations or a larger-than-expected impact from a material slowdown in China. The ratings are also sensitive to any damage to and eroding confidence in the HSBC franchise as the latter is essential to preserving access to core funding and offering international connectivity. HSBC's Long-term IDR is likely to be constrained at the level of the VR of the highest material operating entity unless the group significantly increases its capital surplus at the holding level. A materially widening gap between HSBC's and key entities' VRs is unlikely as this would contradict Fitch's view that HSBC is a cohesively managed group where the subsidiaries' VRs benefit from ordinary support. The VR and IDRs of HSBC Holdings are also sensitive to a change in factors affecting holding company notching, specifically to maintaining double leverage below 120%. RATING DRIVERS - SUPPORT RATING & SRF HSBC Group's Support Rating of 5 and Support Rating Floor (SRF) of 'No floor' reflect Fitch's opinion that UK sovereign support cannot be relied upon for a holding company. SUBORDINATED DEBT & OTHER HYBRID SECURITIES Subordinated debt and other hybrid capital securities issued by the holding company are notched down from its VR to reflect varying degrees of loss severity and incremental non- performance risk under Fitch's "Assessing and Rating Bank Subordinated and Hybrid Securities" criteria, dated 5 December 2012. They are primarily sensitive to any change in HSBC's VR. HSBC Bank PLC RATING DRIVERS - VR HSBC Bank's VR reflects its strong core UK retail and commercial banking franchise, solid capitalisation, its sound liquidity and strong funding profile, with little reliance on the wholesale markets to fund core lending operations. The VR also reflects the profitability headwinds facing UK banks in terms of conduct and regulatory risk, as well as the focus of its business in Europe which continues to suffer from negative macroeconomic pressures. The impact on the bank from high unemployment in the region as well as falling asset prices has been mitigated by the low interest rate environment, which has boosted affordability thus far, as well as a relatively conservative appetite for risk. Nonetheless, it is Fitch's view that given the expected prolonged negative pressures, asset quality and performance are likely to deteriorate or at best stay muted over the medium-term. Fitch notes that HSBC Bank has a disproportionately large exposure to global markets and international corporate business, whether booked in the UK or in France, which has rendered its performance volatile. While this volatility has recently been caused by the Eurozone crisis, volatility will remain as long as such a large portion of the Global Banking and Markets business of the HSBC Group is booked at the bank. The bank's VR remains amongst the highest in Europe and the bank's sound liquidity profile and strong funding franchise are key reasons for this. The loans to deposit ratios in most of the countries it operates in is below 100% and the quality of its liquidity portfolio is strong. RATING SENSITIVITIES - VR Downside risk to the bank's VR would most likely result from adverse external factors as an increase in risk appetite is improbable. It would be most likely to arise due to a sharper and more drawn-out than anticipated deterioration in the economic and operating environment and the ensuing asset quality deterioration the bank would face. A particularly disruptive or expensive and extended reputational or litigation event could also create downside risks. RATING DRIVERS - Support Rating, SRF, IDRs & Senior Debt HSBC Bank's IDRs, and senior debt are in line with those of its parent, HSBC. Although HSBC Bank is expected to first look to its parent for support in case of need, its Support Rating and SRF reflect the bank's systemic importance to the UK, which implies a strong probability that ultimately, support from the UK authorities would likely be forthcoming if needed. Although on a weakening trend, Fitch expects the UK authorities' propensity to support HSBC to remain high until measures designed to weaken the implicit support for banks, both UK-specific and at an EU level, can be practically implemented. RATING SENSITIVITIES - Support Rating, SRF, IDRs & Senior Debt Apart from specific holding company considerations, HSBC Bank's IDRs are sensitive to the same factors as HSBC's IDRs. The Support Rating and the SRF are sensitive to a change in Fitch's assumptions about the availability of sovereign support for the bank. There is a clear political intention to ultimately reduce the implicit state support for systemically important banks in Europe and the US, as demonstrated by a series of policy and regulatory initiatives aimed at curbing systemic risk posed by the banking industry. This might result in Fitch revising SRFs downward in the medium term, although the timing and degree of any change would depend on developments with respect to specific jurisdictions. Until now, senior creditors in major global banks have been supported in full, but resolution legislation is developing quickly and the implementation of creditor "bail-in" is starting to make it look more feasible for taxpayers and creditors to share the burden of supporting large, complex banks. SUBORDINATED DEBT & OTHER HYBRID SECURITIES Subordinated and other hybrid debt issued by HSBC Bank is notched down from the VR of HSBC in accordance with Fitch's criteria for rating hybrid debt within groups. Their ratings are primarily sensitive to any change in HSBC Holding's VR. The Hongkong and Shanghai Banking Corporation Limited RATING DRIVERS - VR & IDRs HKSB's VR captures the bank's robust liquidity, strong franchise and prudent risk control which in Fitch's opinion compensate for concentrations on China and exposure to a cyclical domestic property market. Fitch believes that benefits from HKSB's wide geographic reach will likely be offset by increasing demands to adhere to different regulatory regimes. Loan demand from outside Hong Kong -- China in particular -- will be the dominant factor in future growth. Increasing China exposures are a key risk, ahead of property related lending (USD145bn of which 64% relates to Hong Kong) and single-borrower concentrations. Fitch expects the bank to improve the quality and oversight of its China activities as it refocuses on its own subsidiary and its investment in Bank of Communications. Fitch remains comfortable with HKSB's real estate exposures as loan/value ratios (LTVs) remain low (32% for the domestic portfolio) and historical peak losses were manageable. Capital management in HKSB is one area where the HSBC Group's ability and willingness to redistribute group resources becomes evident. HKSB benefits from preference shares issued to its direct parent HSBC Asia. The agency expects that they will be converted into common equity over time and as such Fitch includes them at 100% without cap in Fitch eligible capital. The ratio stood at 12.6% or 11.4% if property revaluation reserves were excluded. HKSB's VR reflects that it would be self-sufficient to fund expansion being a strong earnings generator. However, the bank is tightly integrated and capital is managed centrally with dividends reinvested as necessary to support strategic investments. HSBC provided HKSB with HKD28.8bn of new share capital in 2012 to fund two capital injections into HSBC Bank (China), the subscription of new shares in Bank of Communication and the redemption of certain HKSB's preference shares. In turn, dividend for the year amounted to HKD42.5bn. RATING SENSITIVITIES - VR & IDRs A downgrade of the VR may result from severe asset deterioration to levels worse-than-cyclical as a result of greater concentrations (sector/geography) or a larger-than-expected impact from a material slowdown in China. Sustainably strong and above-trend earnings retention could become a positive driver for the VR and potentially its IDR if HKSB maintains market leadership in Hong Kong and low risk appetite, simplifies its network, and enhances its competitive position. Fitch views HKSB as the strongest entity within the HSBC Group. Absent material improvements in other major core group subsidiaries a downgrade in HKSB's VR would very likely result in a downgrade of its IDR and the equalised IDRs of HSBC Group. RATING DRIVERS - Support Rating & SRF The Support Rating of '1' indicates an extremely high probability of support, in case of need, from HSBC. The SRF of 'A-' reflects Fitch's view that the Hong Kong authorities would also provide support, in case of need, given HKSB's domestic systemic importance. RATING SENSITIVITIES - Support Rating & SRF The SRF is sensitive to a change in Fitch's assumptions around the ability or propensity of the Hong Kong government to provide support to HKSB if needed. Hang Seng Bank Limited RATING DRIVERS - VR & IDRs HSB's IDRs and VRs reflect its sound liquidity and strong profitability. Its widening margins benefit from the bank's growing Mainland activities. Lending follows strict underwriting standards and reserves and collateral are maintained at adequate levels. Capital is satisfactory relative to risks. The IDRs are underpinned by an extremely high probability of support from its 62% owner, HKSB and ultimately HSBC. Fitch reduced the support notching of HSB's IDR relative to HSBC Group to one notch from previously two notches. This reflects HSB's strategic importance to HSBC due to its sizeable 9% deposit market share in Hong Kong, a strong level of integration and likely spill-over effects to HKSB in the event support was not forthcoming. Notwithstanding this reassessment, Fitch anticipates that HSB will continue to maintain a considerable amount of autonomy in pursuing its lending and funding activities. The banks compete in the domestic market, in particular for residential mortgages, where HSB maintained a strong 15% of system-wide mortgages at end-2012. Various back-office functions including HSB's risk management are, however, aligned with those of HKSB. The bank's capitalisation is lower than that of peers, which Fitch considers a weakness relative both to the current rating level and to its concentrated exposures to China (USD28bn or 24% of HKSB's at end-2012) and the domestic property market. Its strong profitability, however, provides mitigation and supports the current rating levels. HSB's mainland activities add scale and diversification to those of the HSBC group as HSB's customer base is more granular and includes less multi-national corporates. RATING SENSITIVITIES - VR & IDRs HSB's VR could come under pressure if it were to loosen underwriting standards for its China exposures. In addition, a significant decline in the bank's capitalisation and earnings generation would be negative for its VR. Fitch considers HSB's capital base vulnerable to declines in property values as revaluation gains amounted to 19% of Fitch Core Capital at end-2012. There is also the risk that risk-weighted assets may increase as borrower quality weakens in an economic downturn. A downgrade in HSB's VR would only be mirrored in a downgrade of its IDR if HSBC Group's IDRs or the propensity to support were to weaken. RATING DRIVERS - Support Rating Fitch classifies HSB as 'strategically important' to the HSBC Group to reflect HSB's retained autonomy which results in limited integration and brand recognition. RATING SENSITIVITIES - Support Rating HSB's Support Rating is sensitive to changes around HSBC's ability and propensity to provide support. HSBC USA Inc. RATING DRIVERS - VR & IDRs HSBC USA's IDRs are supported by HSBC, primarily reflecting its core operations to the HSBC Group. As such, HSBC USA's IDRs will move in tandem with those of HSBC. HSBC USA's VR reflects its franchise strength, strong risk-adjusted capital levels and robust liquidity. The VR is constrained by the company's asset quality and relatively weak earnings profile. As a result of its affiliation with the HSBC group, Fitch considers HSBC USA to have strong brand recognition in the niche market of internationally minded retail and commercial clients. Fitch positively views its renewed focus on this key credit strength, as the company executes on strategic initiatives that have resulted in divestiture from its credit card business and non-key US markets. HSBC USA's balance sheet is flush with liquidity, with a low loan-to-deposit ratio and a fairly sizable low-risk investment portfolio. Loans-to-deposits averaged around 50%, while its agency concentrated investment portfolio made up almost 35% of the asset base at YE12. The company has also been successful in de-risking its balance sheet over the last several quarters, and Fitch considers its capital levels to be strong. HSBC USA's risk averse and liquid balance sheet has had a clear impact on the company's earning profile, resulting in a weak NIM and overall earnings profile. Adding to this are elevated operational costs resulting from regulatory agreements. Fitch anticipates the company to reach a more normalized expense structure in 2014-2015. Asset quality in the loan portfolio has generally been considered to be improving, however HSBC USA's residential loan portfolio, which accounts for a third of the total loan book, continues to report elevated levels of NPAs and delinquencies. Fitch expects the residential loan portfolio to continue to be a drag on asset quality in the medium term. RATING SENSITIVITIES - VR & IDRs Fitch believes potential upward movement on HSBC USA's VR to be limited, and any significant deterioration in earnings and/or asset quality could put further pressure on the VR. RATING DRIVERS - Support Rating Fitch considers HSBC USA to be a core operating entity of the HSBC Group, and as such considers institutional support from its ultimate parent to be extremely high. In determining HSBC USA's importance, Fitch viewed its strategic initiatives to be in line with those of its parent, potential for disposal from its parent to be extremely limited and reputational risk to HSBC resulting from default by the US unit to be high. RATING SENSITIVITIES - Support Rating HSBC USA's Support Rating is sensitive to changes around HSBC's ability and propensity to provide support. SUBORDINATED DEBT & OTHER HYBRID SECURITIES Subordinated debt and hybrid capital instruments issued by HSBC USA are notched down from the IDR. The ratings of subordinated debt and hybrid securities are typically sensitive to any change in the bank's VR. However, given the high level of institutional support, issue ratings are notched from HSBC USA's IDR as support from the parent is presumed. HSBC Finance Corporation RATING DRIVERS - IDRs HSBC Finance's IDRs are supported by HSBC, primarily reflecting its importance to the HSBC Group. As such the IDRs will move in tandem with HSBC. RATING SENSITIVITIES - IDRs Although not anticipated, HSBC Finance's IDRs are highly sensitive to any changes in its ownership structure. RATING DRIVERS - Support Rating Fitch views HSBC Finance to be strategically important to HSBC and considers institutional support from HSBC to be extremely high. HSBC Finance maintains some characteristics that can be considered core, as well as some that indicate limited importance to HSBC. The unit's character as a core operating entity is primarily reflected through reputation risk to the HSBC group in the event of default, and high level of capital injections over the last several years. However, the entity is in run-off. RATING SENSITIVITIES - Support Rating HSBC Finance's Support Rating is sensitive to changes around HSBC's ability and propensity to provide support. SUBORDINATED DEBT & OTHER HYBRID SECURITIES Subordinated debt and hybrid capital instruments issued by HSBC Finance are notched down from the IDR. Fitch does not maintain a VR on the unit, as we do not view the company as a stand-alone entity. OTHER SUBSIDIARY AND AFFILIATED COMPANY KEY RATING DRIVERS The IDRs, SRs and (where relevant) senior debt ratings of HSBC's other subsidiaries listed at the end of this rating action comment are either equalised with HSBC (where Fitch considers them to be 'core') or notched down from HSBC's IDR (depending whether Fitch considers them to be strategically important or of limited importance). In the case of HSBC Bank (RR) LLC, the Long-term IDR also captures Russian country ceiling constraints. OTHER SUBSIDIARY AND AFFILIATED COMPANY RATING SENSITIVITIES A change in Fitch's view around HSBC's ability and propensity to provide support could impact the subsidiaries' IDRs, SRs and (where relevant) senior debt ratings. In the case of HSBC Bank (RR) LLC, so could a change in Russia's Country Ceiling. The rating actions are as follows: HSBC Holdings plc Long-term IDR: affirmed at 'AA-'; Outlook Stable Short-term IDR and debt: affirmed at 'F1+' Viability Rating: affirmed at 'aa-' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' Senior debt: affirmed at 'AA-' Lower tier 2 subordinated debt: affirmed at 'A+' Preference shares (US4042806046): affirmed at 'BBB' Other preference shares and capital securities (XS0110560835, XS0110560165, USG4637HAB45, US40427LAB09, XS0178404793, US4042807036, US4042808026, US40429Q2003, XS0188853526, USG463802037): affirmed at 'BBB+' Subsidiaries classified by Fitch as Core: HSBC Bank plc Long-term IDR: affirmed at 'AA-'; Outlook Stable Short-term IDR and debt: affirmed at 'F1+' Viability Rating: affirmed at 'a+' Support Rating: affirmed at '1' Support Rating Floor: affirmed at 'A' Senior debt: affirmed at 'AA-' Market linked securities: affirmed at 'AA-emr' Subordinated debt: affirmed at 'A+' Upper Tier 2 notes (GB0005902332) affirmed at 'A-' Other capital securities (XS0189704140, XS0179407910) affirmed at 'BBB+' HSBC Latin America Holdings (UK) Limited Long-term IDR: affirmed at 'AA-'; Outlook Stable Support Rating: affirmed at '1' HSBC Trinkaus & Burkhardt AG Long-Term IDR: affirmed at 'AA-'; Outlook Stable Short-Term IDR: affirmed at 'F1+' Viability Rating: 'a', unaffected Support Rating: affirmed at '1' HSBC France Long-Term IDR: affirmed at 'AA-'; Outlook Stable Short-Term IDR: affirmed at 'F1+' Viability Rating: 'bbb+', unaffected Support Rating: affirmed at '1' Commercial paper: 'F1+' Senior debt: 'AA-' HSBC Bank Middle East Limited Long-Term IDR: affirmed at 'AA-'; Outlook Stable Short-Term IDR: affirmed at 'F1+' Viability Rating: 'bbb', unaffected Support Rating: affirmed at '1' Senior debt: 'AA-' / 'F1+' The Hongkong and Shanghai Banking Corporation Limited Long-term IDR: affirmed at 'AA-'; Outlook Stable Short-Term IDR: affirmed at 'F1+' Viability Rating: affirmed at 'aa-' Support Rating: affirmed at '1' Support Rating Floor: affirmed at 'A-' HSBC USA Inc. Long-Term IDR: affirmed at 'AA-'; Outlook Stable Short-Term IDR: affirmed at 'F1+' Viability Rating" affirmed at 'a-' Support Rating: affirmed at '1' Commercial paper: affirmed at 'F1+' Preferred stock: affirmed at 'BBB+' Senior debt: affirmed at 'AA-' Subordinated debt: affirmed at 'A+' HSBC Bank USA National Association Long-Term IDR: affirmed at 'AA-'; Outlook Stable Short-Term IDR: affirmed at 'F1+' Viability Rating" affirmed at 'a-' Support Rating: affirmed at '1' Long-term deposits: affirmed at 'AA' Market linked securities: affirmed at 'AAemr' Senior debt: affirmed at 'AA-' Short-term deposits: affirmed at 'F1+' Subordinated debt: affirmed at 'A+' Republic New York Corporation Subordinated debt affirmed at 'A+' Republic New York Capital I Preferred stock affirmed at 'BBB+' HSBC Americas Capital Trust I Preferred stock affirmed at 'BBB+' HSBC Americas Capital Trust II Preferred stock affirmed at 'BBB+'. Classified by Fitch as Strategically Important: Hang Seng Bank Limited Long-Term IDR: affirmed at 'A+'; Outlook Stable Short-Term IDR: affirmed at 'F1' Viability Rating: affirmed at 'a+' Support Rating: affirmed at '1' HSBC Finance Corporation Long-Term IDR: affirmed at 'A+'; Outlook Stable Short-Term IDR: affirmed at 'F1' Support Rating: affirmed at '1' Commercial paper: affirmed at 'F1' Senior debt: affirmed at 'A+' Subordinated debt: affirmed at 'A' HFC Bank Ltd Long-Term IDR: affirmed at 'A+'; Outlook Stable Short-Term IDR: affirmed at 'F1' Support Rating: affirmed at '1' Senior debt: affirmed at 'A+' Senior Debt E-Medium Term Notes affirmed at 'A+' Senior Debt Medium Term Notes affirmed at 'A+' Beneficial Corporation Senior Debt affirmed at 'A+' HSBC Finance Capital Trust IX Preferred Stock affirmed at 'BBB' HSBC Bank Oman SAOG Long-Term IDR: affirmed at 'A+'; Outlook Stable Short-Term IDR: affirmed at 'F1' Viability Rating: 'bb', unaffected Support Rating: affirmed at '1' Classified by Fitch as of Limited Importance: HSBC Bank (RR) LLC Long-Term IDR: affirmed at 'BBB+'; Outlook Stable Short-Term IDR: affirmed at 'F2' Local Currency Long-Term IDR: affirmed at 'BBB+'; Outlook Stable National Long-Term Rating: affirmed at 'AAA(rus)'; Outlook Stable Support Rating: affirmed at '2' Contact: Primary Analyst (HSBC Holdings plc, The Hongkong and Shanghai Banking Corporation Limited, Hang Seng Bank Limited) Sabine Bauer Senior Director +852 2263 9966 Fitch (Hong Kong) Limited 2801, Tower Two, Lippo Centre 89 Queensway, Hong Kong Primary Analyst (HSBC Bank plc, HSBC Latin America Holdings (UK) Limited) Matthew Clark Director +44 20 3530 1225 Primary Analyst (HSBC USA Inc., HSBC Bank USA National Association, HSBC Finance Corporation, HFC Bank Ltd) Christopher Wolfe Managing Director +1 212 908 0771 Primary Analyst (HSBC Trinkaus & Burkhardt AG) Patrick Rioual Director +49 69 768076 123 Primary Analyst (HSBC France) Alain Branchey Senior Director +33 1 44 29 91 41 Primary Analyst (HSBC Bank Middle East Limited) Redmond Ramsdale Director +971 4 424 1202 Primary Analyst (HSBC Bank Oman SAOG) Mahin Dissanayake Director +44 203 530 1618 Primary Analyst (HSBC Bank (RR) LLC) Evgeny Konovalov Analyst +7 495 956 9932 Secondary Analyst (HSBC Bank plc, Latin America Holdings (UK) Limited) Claudia Nelson Senior Director +44 20 3530 1191 Secondary Analyst (HSBC Holdings plc) Matthew Clark Director +44 20 3530 1225 Secondary Analyst (The Hongkong and Shanghai Banking Corporation Limited, Hang Seng Bank Limited) Joyce Huang Director +852 2263 9595 Secondary Analyst (HSBC USA Inc., HSBC Bank USA National Association, HSBC Finance Corporation, HFC Bank Ltd) Sarim Khan Associate Director +1 312 368 5459 Secondary Analyst (HSBC Trinkaus & Burkhardt AG) Markus Schmitt Associate Director +49 69 76 80 76 129 Secondary Analyst (HSBC France) Julien Noizet Analyst +44 20 3530 1351 Secondary Analyst (HSBC Bank Middle East Limited) Philip Smith Senior Director +44 20 3530 1091 Secondary Analyst (HSBC Bank Oman SAOG) Laila Sadek Director +44 20 3530 1308 Committee Chairperson Gordon Scott Managing Director +44 20 3530 1075 Media Relations: Hannah Huntly, London, Tel: +44 20 3530 1153, Email: hannah.huntly@fitchratings.com. Additional information is available on www.fitchratings.com Thierry Moulonguet, independent director of Fitch Inc. and Fitch Ratings Ltd. and a member of its board, is also a member of the board of HSBC France. Mr. Moulonguet does not participate in any Fitch rating committees, including that of HSBC France. Applicable criteria,"Global Financial Institutions Rating Criteria", dated 15 August 2012, "Rating FI Subsidiaries and Holding Companies", dated 10 August 2012, "Assessing and Rating Bank Subordinated and Hybrid Securities", dated 5 December 2012, "National Ratings Criteria", dated 19 January 2011, "Country Ceilings", dated 13 August 2012 and "Evaluating Corporate Governance", dated 13 December 2011 are available at www.fitchratings.com. Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here Rating FI Subsidiaries and Holding Companies here Assessing and Rating Bank Subordinated and Hybrid Securities here National Ratings Criteria here Evaluating Corporate Governance here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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