TIDMHSBA

RNS Number : 5168B

HSBC Holdings PLC

21 September 2018

HSBC HOLDINGS PLC

ISSUANCE OF PERPETUAL SUBORDINATED CONTINGENT CONVERTIBLE SECURITIES

On 28 September 2018 (the "Issue Date"), HSBC Holdings plc (the "Company") intends to issue GBP1,000,000,000 5.875% Perpetual Subordinated Contingent Convertible Securities (Callable September 28, 2026 and Every Five Years Thereafter) (or up to GBP1,100,000,000 if the over-allotment option is exercised in full) (ISIN XS1884698256) (the "Securities").

The Securities are expected to be admitted to the Official List and to trading on the Global Exchange Market (the "GEM") of The Irish Stock Exchange plc trading as Euronext Dublin ("Euronext Dublin") within 30 days of the Issue Date. The denominations of the Securities will be GBP200,000 and integral multiples of GBP1,000 in excess thereof.

The Securities are issued pursuant to an indenture dated 1 August 2014 (as supplemented and amended from time to time), as supplemented and amended by an eighth supplemental indenture (the "Securities Indenture"), which is expected to be entered into on the Issue Date. The Company has filed with the Securities and Exchange Commission (the "SEC") a registration statement on Form F-3 (filed on 23 February 2018), which includes a prospectus dated 23 February 2018 (the "Base Prospectus"), and a prospectus supplement dated 20 September 2018 (the "Prospectus Supplement") in connection with the offering of the Securities. Descriptions of the terms of the Securities are qualified in their entirety by the Base Prospectus and the Prospectus Supplement, each of which is available on the SEC's website at http://www.sec.gov.

Subscription

Placing agents

HSBC Bank plc (the "Sole Structuring Adviser and Book Running Manager")

ABN AMRO Bank N.V.

Banca IMI S.p.A.

Banco Santander, S.A.

Bank of Montreal, London Branch

Citigroup Global Markets Limited

Commerzbank Aktiengesellschaft

Credit Agricole Corporate and Investment Banking

ICBC Standard Bank Plc

Lloyds Bank Corporate Markets plc

Nomura International plc

Skandinaviska Enskilda Banken AB (publ)

(together with the Sole Structuring Adviser and Book Running Manager, the "Managers")

Securities Terms Agreement

The Company and the Sole Structuring Adviser and Book-Running Manager (on behalf of the Managers) have entered into a Terms Agreement (which incorporates by reference an Underwriting Agreement - Standard Provisions) dated as of 20 September 2018 in relation to the Securities (the "Securities Terms Agreement"). Pursuant to the Securities Terms Agreement and subject to fulfilment of the conditions set out below in the section headed "Conditions precedent to the purchase", the Managers have agreed severally and not jointly to purchase the respective amounts of Securities set forth in Schedule II of the Securities Terms Agreement, to be issued by the Company on the Issue Date in an aggregate principal amount of GBP1,000,000,000.

The Company has agreed to grant the Sole Structuring Adviser and Book Running Manager, on behalf of the Managers, an option to purchase up to an additional GBP100,000,000 principal amount (representing an increase of up to 10% of the aggregate principal amount) of Securities (together, the "Over-allotment Securities") at the public offering price solely to cover over-allotments, if any. This over-allotment option is exercisable, at the discretion of the Sole Structuring Adviser and Book Running Manager, on behalf of the Managers, once only, in whole or in part, prior to the Issue Date. If any Over-allotment Securities are purchased, the Managers will severally purchase such Over-allotment Securities in approximately the same proportion as set forth in Schedule II of the Securities Terms Agreement. Over-allotment Securities issued or sold under the option will be issued and sold on the same terms and conditions as the Securities.

Conditions precedent to the purchase

The Managers' obligations to purchase and pay for the Securities on the Issue Date are subject to the satisfaction of a number of conditions as of the time of payment of the Securities (the "Closing Time"), including:

(a) the absence of any stop order suspending the effectiveness of the Company's registration statement on Form F-3 (or pending or contemplated proceeding for such purpose);

(b) the absence of any material adverse change in the financial condition, earnings or general affairs of the Company and its subsidiaries;

(c) the Company's compliance in all material respects with all agreements, and satisfaction of all conditions, pursuant to the Securities Terms Agreement and the Securities Indentures;

(d) the accuracy in all material respects of the representations and warranties of the Company contained in the Securities Terms Agreement as of the Closing Time;

(e) the absence of a downgrade in the rating accorded to the Securities by certain rating agencies;

(f) the absence of any change in United States ("US") or United Kingdom ("UK") taxation directly and materially adversely affecting US purchasers of the Securities or the imposition of exchange controls by the US or the UK directly and materially affecting the Company's ability to pay interest or dividends in US dollars; and

(g) the timely filing of certain required disclosure documents with the SEC.

Subscribers

The Company intends to offer and sell the Securities to no less than six independent placees (who will be independent individual, corporate and/or institutional investors). To the best of the knowledge, information and belief of the directors of the Company, save as described in the immediately following sentence, each of the placees (and their respective ultimate beneficial owners) will be third parties independent of the Company and are not connected with the Company and its connected persons (as defined in the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "SEHK") (the "Hong Kong Listing Rules")). Pursuant to a waiver granted by the SEHK from strict compliance with certain requirements of the Hong Kong Listing Rules (which waiver is described in an announcement by the Company dated 10 January 2017 and which is available on the Company's website), the Sole Structuring Adviser and Book Running Manager and HSBC Securities (USA) Inc. may hold Securities from time to time for the purposes of market-making transactions.

Principal terms of the Securities

The principal terms of the Securities are summarised as follows:

 
 
 
 
 Issuer                  The Company 
 
 Aggregate principal     GBP1,000,000,000 (or up to GBP1,100,000,000 
  amount                  if the Managers' over-allotment 
                          option is exercised in full). 
 
 Maturity date           Perpetual 
 
 
 
 
 
 
 Issue price     100% of the aggregate principal 
                  amount 
 
 
 
 
 
 
 Interest                          Interest on the Securities will 
                                    be a rate per annum equal to (i) 
                                    5.875%, from (and including) the 
                                    Issue Date to (but excluding) 28 
                                    September 2026 and (ii) the sum 
                                    of the applicable Mid-Market Swap 
                                    Rate on the relevant Reset Determination 
                                    Date and 4.276% (the "Margin"), 
                                    from (and including) each Reset 
                                    Date to (but excluding) the next 
                                    following Reset Date. 
 
                                    The "Mid-Market Swap Rate" means 
                                    the Mid--Market Swap Rate Quotation 
                                    that appears on Reuters page "ICESWAP4" 
                                    (or such other page as may replace 
                                    such page on Reuters or such other 
                                    information service, in each case, 
                                    as may be nominated by the person 
                                    providing or sponsoring the information 
                                    appearing on such page for purposes 
                                    of displaying comparable rates) 
                                    (the "relevant screen page") as 
                                    of approximately 11:00 a.m. (London 
                                    time) on the relevant Reset Determination 
                                    Date, all as determined by the calculation 
                                    agent; provided, however, that if 
                                    no such rate appears on the relevant 
                                    screen page for a five--year term, 
                                    then the Mid--Market Swap Rate will 
                                    be determined through the use of 
                                    straight--line interpolation by 
                                    reference to two rates, one of which 
                                    will be determined in accordance 
                                    with the above provisions, but as 
                                    if the relevant Reset Period were 
                                    the period of time for which rates 
                                    are available next shorter than 
                                    the length of the actual Reset Period 
                                    and the other of which will be determined 
                                    in accordance with the above provisions, 
                                    but as if the relevant Reset Period 
                                    were the period of time for which 
                                    rates are available next longer 
                                    than the length of the actual Reset 
                                    Period; provided further that if 
                                    on any Reset Determination Date 
                                    the relevant screen page is not 
                                    available or the Mid--Market Swap 
                                    Rate does not appear on the relevant 
                                    screen page, subject to the first 
                                    proviso in the definition of Mid-Market 
                                    Swap Rate Quotation below, the calculation 
                                    agent will request the principal 
                                    office in London of four major banks 
                                    in the swap, money, securities or 
                                    other market most closely connected 
                                    with the relevant Mid--Market Swap 
                                    Rate (as selected by the Company 
                                    on the advice of an investment bank 
                                    of international repute) (the "Reference 
                                    Banks") to provide it with its Mid--Market 
                                    Swap Rate Quotation as of approximately 
                                    11:00 a.m. (London time) on the 
                                    relevant Reset Determination Date. 
                                    If two or more of the Reference 
                                    Banks provide the calculation agent 
                                    with Mid--Market Swap Rate Quotations, 
                                    the interest rate for the relevant 
                                    Reset Period will be the sum of 
                                    the Margin and the arithmetic mean 
                                    of the relevant Mid--Market Swap 
                                    Rate Quotations, as determined by 
                                    the calculation agent. If only one 
                                    or none of the Reference Banks provides 
                                    the calculation agent with a Mid--Market 
                                    Swap Rate Quotation, the interest 
                                    rate will be determined to be the 
                                    rate of interest as of the last 
                                    preceding Reset Date or, in the 
                                    case of the initial Reset Determination 
                                    Date, the Initial Interest Rate. 
 
                                    The "Mid-Market Swap Rate Quotation" 
                                    means a quotation (expressed as 
                                    a percentage rate per annum) for 
                                    the mean of the bid and offered 
                                    rates for the fixed leg payable 
                                    semi--annually (calculated on the 
                                    basis of the actual number of days 
                                    in the relevant period from (and 
                                    including) the date on which interest 
                                    begins to accrue to (but excluding) 
                                    the date on which it falls due divided 
                                    by 365) of a fixed--for--floating 
                                    interest rate swap transaction in 
                                    pounds sterling which transaction 
                                    (i) has a five--year term commencing 
                                    on the relevant Reset Date, (ii) 
                                    is in an amount that is representative 
                                    for a single transaction in the 
                                    pounds sterling swap rate market 
                                    at 11:00 a.m. (London time) with 
                                    an acknowledged dealer of good credit 
                                    in the swap market and (iii) has 
                                    a floating leg based on six--month 
                                    LIBOR (calculated on the basis of 
                                    the actual number of days in the 
                                    relevant period from (and including) 
                                    the date on which interest begins 
                                    to accrue to (but excluding) the 
                                    date on which it falls due divided 
                                    by 365); provided that, notwithstanding 
                                    the second proviso in the definition 
                                    of Mid-Market Swap Rate, if the 
                                    Company (in consultation with the 
                                    calculation agent) determines that 
                                    the Mid-Market Swap Rate has ceased 
                                    to be published on the relevant 
                                    screen page as a result of LIBOR 
                                    ceasing to be calculated or administered 
                                    for publication, the Company will 
                                    use reasonable efforts to appoint 
                                    an Independent Financial Adviser 
                                    to determine the Alternative Base 
                                    Rate and the Alternative Screen 
                                    Page by no later than five business 
                                    days prior to the Reset Determination 
                                    Date (the "Reset Determination Cut-off 
                                    Date"). If the Company is unable 
                                    to appoint an Independent Financial 
                                    Adviser, or if the Independent Financial 
                                    Adviser fails to determine the Alternative 
                                    Base Rate and the Alternative Screen 
                                    Page prior to the Reset Determination 
                                    Cut-off Date, the Company will determine 
                                    the Alternative Base Rate and the 
                                    Alternative Screen Page for the 
                                    Reset Period. In either case, the 
                                    Mid-Market Swap Rate Quotation will 
                                    then be the quotation for the mean 
                                    of bid and offered rates determined 
                                    as provided above but as if the 
                                    reference to LIBOR was a reference 
                                    to the Alternative Base Rate on 
                                    the Alternative Screen Page with 
                                    any required Calculation Changes. 
                                    Notwithstanding the foregoing, if 
                                    the Company does not determine the 
                                    Alternative Base Rate and the Alternative 
                                    Screen Page prior to the Reset Determination 
                                    Date, the interest rate will be 
                                    determined to be the rate of interest 
                                    as of the last preceding Reset Date 
                                    or, in the case of the initial Reset 
                                    Determination Date, the Initial 
                                    Interest Rate. 
 
                                    If the Independent Financial Adviser 
                                    or the Company determines the Alternative 
                                    Base Rate, the Independent Financial 
                                    Adviser or the Company, as applicable, 
                                    may also, following consultation 
                                    with the calculation agent, make 
                                    changes to the day count fraction, 
                                    the business day convention and 
                                    the definition of business day, 
                                    in each case in order to follow 
                                    market practice, as well as any 
                                    other changes (including to the 
                                    Margin) that the Calculation Agent, 
                                    following consultation with the 
                                    Independent Financial Adviser (if 
                                    appointed), determines in good faith 
                                    are reasonably necessary to ensure 
                                    the proper operation of the Alternative 
                                    Base Rate or the Mid-Market Swap 
                                    Rate, as well as the comparability 
                                    of the interest rate determined 
                                    by reference to the Alternative 
                                    Base Rate to the interest rate determined 
                                    by reference to LIBOR (the "Calculation 
                                    Changes"). 
 
                                    The Company will promptly give notice 
                                    of the determination of the Alternative 
                                    Base Rate, the Alternative Screen 
                                    Page and any Calculation Changes 
                                    to the trustee, the paying agent, 
                                    the calculation agent and the securityholders; 
                                    provided that failure to provide 
                                    such notice will have no impact 
                                    on the effectiveness of, or otherwise 
                                    invalidate, any such determination. 
                                    "Alternative Base Rate" means the 
                                    rate that has replaced LIBOR in 
                                    customary market usage for determining 
                                    floating interest rates in respect 
                                    of bonds denominated in pounds sterling 
                                    or, if the Independent Financial 
                                    Adviser or the Company (in consultation 
                                    with the calculation agent and acting 
                                    in good faith and a commercially 
                                    reasonable manner), as applicable, 
                                    determines that there is no such 
                                    rate, such other rate as the Independent 
                                    Financial Adviser or the Company 
                                    (in consultation with the calculation 
                                    agent and acting in good faith and 
                                    a commercially reasonable manner), 
                                    as applicable, determines in its 
                                    or the Company's sole discretion 
                                    is most comparable to LIBOR. 
                                    "Alternative Screen Page" means 
                                    the alternative screen page, information 
                                    service or source on which the Alternative 
                                    Base Rate appears (or such other 
                                    page, information service or source 
                                    as may replace the alternative screen 
                                    page, information service or source, 
                                    in each case, as may be nominated 
                                    by the person providing or sponsoring 
                                    the information appearing on such 
                                    page for purposes of displaying 
                                    comparable rates). 
                                    "Independent Financial Adviser" 
                                    means an independent financial institution 
                                    of international repute or other 
                                    independent financial adviser experienced 
                                    in the international capital markets, 
                                    in each case appointed by the Company 
                                    at its own expense. 
                                    "LIBOR" means the interest rate 
                                    benchmark known as the London interbank 
                                    offered rate, which is calculated 
                                    and published by a designated distributor 
                                    (currently Thomson Reuters) in accordance 
                                    with the requirements from time 
                                    to time of ICE Benchmark Administration 
                                    Limited (or any other person which 
                                    takes over the administration of 
                                    that rate) based on the estimated 
                                    interbank borrowing rate for sterling 
                                    that is provided by a panel of contributor 
                                    banks. 
 
 Agreement with respect     By its acquisition of the Securities, 
  to the alternative         each securityholder (which, for 
  base rate                  these purposes, includes each beneficial 
                             owner) (i) will acknowledge, accept, 
                             consent and agree to be bound by 
                             the Independent Financial Adviser's 
                             or the Company's determination of 
                             the Alternative Base Rate, the Alternative 
                             Screen Page and any Calculation 
                             Changes, including as may occur 
                             without any prior notice from the 
                             Company and without the need for 
                             the Company to obtain any further 
                             consent from such securityholder, 
                             (ii) will waive any and all claims, 
                             in law and/or in equity, against 
                             the trustee, the paying agent and 
                             the calculation agent for, agree 
                             not to initiate a suit against the 
                             trustee, the paying agent and the 
                             calculation agent in respect of, 
                             and agree that none of the trustee, 
                             the paying agent or the calculation 
                             agent will be liable for, the determination 
                             of or the failure to determine any 
                             Alternative Base Rate, any Alternative 
                             Screen Page and any Calculation 
                             Changes and any losses suffered 
                             in connection therewith and (iii) 
                             will agree that none of the trustee, 
                             the paying agent or the calculation 
                             agent will have any obligation to 
                             determine any Alternative Base Rate, 
                             any Alternative Screen Page and 
                             any Calculation Changes (including 
                             any adjustments thereto), including 
                             in the event of any failure by the 
                             Company to determine any Alternative 
                             Base Rate, any Alternative Screen 
                             Page and any Calculation Changes. 
 
 Reset date, reset          28 September 2026, and each fifth 
  determination date         anniversary date thereafter (each, 
  and reset period           a "Reset Date"). 
 
                             The "Reset Determination Dates" 
                             shall be the second London banking 
                             day immediately preceding a Reset 
                             Date. 
 
                             Each period from (and including) 
                             a Reset Date to (but excluding) 
                             the following Reset Date shall be 
                             a "Reset Period". 
 
 Interest payment           Semi-annual on each 28 March and 
  dates                      28 September, commencing 28 March 
                             2019, subject to cancellation or 
                             deemed cancellation as described 
                             in the Prospectus Supplement. 
 
 Interest cancellation      The Company will have sole and absolute 
                             discretion at all times and for 
                             any reason to cancel (in whole or 
                             in part) any interest payment that 
                             would otherwise be payable on any 
                             interest payment date. In addition, 
                             the terms of the Securities restrict 
                             the Company from making interest 
                             payments in certain circumstances, 
                             including where the Company's distributable 
                             items or the maximum distributable 
                             amount is exceeded or the Company 
                             would not be solvent at the time 
                             of such interest payment or the 
                             Relevant Regulator orders the Company 
                             to cancel (in whole or in part) 
                             the interest otherwise payable on 
                             such interest payment date, in which 
                             case the interest payment will be 
                             deemed to have been cancelled. 
 
 Automatic conversion       If a Capital Adequacy Trigger Event 
                             occurs, then an Automatic Conversion 
                             will occur without delay (but no 
                             later than one month following the 
                             date on which it is determined such 
                             Capital Adequacy Trigger Event has 
                             occurred). 
 
                             An "Automatic Conversion" is the 
                             irrevocable and automatic release 
                             of all of the Company's obligations 
                             under the Securities in consideration 
                             of the Company's issuance of the 
                             Conversion Shares to the Conversion 
                             Shares Depository (or to the relevant 
                             recipient in accordance with the 
                             terms of the Securities) (on behalf 
                             of the securityholders) on the date 
                             on which the Automatic Conversion 
                             will take place, or has taken place, 
                             as applicable (such date, the "Conversion 
                             Date"), all in accordance with the 
                             terms of the Securities and the 
                             Securities Indenture. 
 
                             After a Capital Adequacy Trigger 
                             Event, subject to certain conditions, 
                             the Company expects the Conversion 
                             Shares Depository to deliver to 
                             the securityholders on the settlement 
                             date (as determined pursuant to 
                             the terms of the Securities Indenture) 
                             either (i) Conversion Shares or 
                             (ii) if the Company elects, in its 
                             sole and absolute discretion, that 
                             a Conversion Shares Offer be made, 
                             the Conversion Shares Offer Consideration. 
 
                             "Conversion Shares Depository" means 
                             a financial institution, trust company, 
                             depository entity, nominee entity 
                             or similar entity to be appointed 
                             by the Company on or prior to any 
                             date when a function ascribed to 
                             the Conversion Shares Depository 
                             in the Securities Indenture, is 
                             required to be performed, to perform 
                             such functions and which, as a condition 
                             of such appointment, such entity 
                             will be required to undertake, for 
                             the benefit of the securityholders, 
                             to hold the Conversion Shares (and 
                             any Conversion Shares Offer Consideration) 
                             on behalf of such securityholders 
                             in one or more segregated accounts, 
                             unless otherwise required for the 
                             purposes of the Conversion Shares 
                             Offer and, in any event, on terms 
                             consistent with the Securities Indenture. 
 
 
 
 
 
 
 Conversion shares            "Conversion Shares" means the Company's 
  and conversion price         ordinary shares (the "Ordinary Shares") 
                               to be issued to the Conversion Shares 
                               Depository (or to the relevant recipient 
                               in accordance with the terms of 
                               the Securities) following an Automatic 
                               Conversion, which Ordinary Shares 
                               will be in such number as is determined 
                               by dividing the aggregate principal 
                               amount of the Securities outstanding 
                               immediately prior to the Conversion 
                               Date by the Conversion Price rounded 
                               down, if necessary, to the nearest 
                               whole number of Ordinary Shares. 
 
                               The "Conversion Price" is fixed 
                               initially at GBP2.70 per Conversion 
                               share and is subject to certain 
                               anti-dilution adjustments as described 
                               below. 
 
                               Assuming that there is no adjustment 
                               to the Conversion Price, the maximum 
                               number of Ordinary Shares that may 
                               be issued upon an Automatic Conversion 
                               of the Securities is 370,370,370 
                               (or up to 407,407,407 Ordinary Shares 
                               if the Managers' over-allotment 
                               option is exercised in full). 
 
 Ranking of conversion        The Conversion Shares issued following 
  shares                       an Automatic Conversion will in 
                               all respects rank pari passu with 
                               the fully paid Ordinary Shares in 
                               issue on the Conversion Date, except 
                               in any such case for any right excluded 
                               by mandatory provisions of applicable 
                               law, and except that the Conversion 
                               Shares so issued will not rank for 
                               (or, as the case may be, the relevant 
                               securityholder will not be entitled 
                               to receive) any rights, distributions 
                               or payments, the entitlement to 
                               which falls prior to the Conversion 
                               Date. 
 
 Capital adequacy             A "Capital Adequacy Trigger Event" 
  trigger event                will occur if at any time the End-point 
                               CET1 Ratio is less than 7.0%. Whether 
                               a Capital Adequacy Trigger Event 
                               has occurred at any time will be 
                               determined by the Company, the Relevant 
                               Regulator or any agent of the Relevant 
                               Regulator appointed for such purpose 
                               by the Relevant Regulator. 
 
                               "End-point CET1 Ratio" means, as 
                               of any date, the ratio of CET1 Capital 
                               to the Risk Weighted Assets, in 
                               each case as of such date, expressed 
                               as a percentage. 
 
                               "CET1 Capital" means, as of any 
                               date, the sum, expressed in US dollars, 
                               of all amounts that constitute common 
                               equity tier 1 capital of the Company 
                               together with its subsidiary undertakings 
                               (the "HSBC Group") as of such date, 
                               less any deductions from common 
                               equity tier 1 capital required to 
                               be made as of such date, in each 
                               case as calculated by the Company 
                               on a consolidated basis and without 
                               applying the transitional provisions 
                               set out in Part Ten of the CRR (or 
                               in any successor provisions thereto 
                               or any equivalent provisions of 
                               the Relevant Rules which replace 
                               or supersede such provisions) in 
                               accordance with the Relevant Rules 
                               applicable to the Company as of 
                               such date (which calculation will 
                               be binding on the trustee, the paying 
                               agent and the securityholders). 
                               For the purposes of this definition, 
                               the term "common equity tier 1 capital" 
                               will have the meaning assigned to 
                               such term in CRD IV (as the same 
                               may be amended or replaced from 
                               time to time) as interpreted and 
                               applied in accordance with the Relevant 
                               Rules then applicable to the HSBC 
                               Group or by the PRA (or any successor 
                               entity primarily responsible for 
                               the Company's prudential supervision 
                               (the "Relevant Regulator"). 
 
                               "Risk Weighted Assets" means, as 
                               of any date, the aggregate amount, 
                               expressed in US dollars, of the 
                               risk weighted assets of the HSBC 
                               Group as of such date, as calculated 
                               by the Company on a consolidated 
                               basis and without applying the transitional 
                               provisions set out in Part Ten of 
                               the CRR (or in any successor provisions 
                               thereto or any equivalent provisions 
                               of the Relevant Rules which replace 
                               or supersede such provisions) in 
                               accordance with the Relevant Rules 
                               applicable to the Company as of 
                               such date (which calculation will 
                               be binding on the trustee, the paying 
                               agent and the securityholders). 
                               For the purposes of this definition, 
                               the term "risk weighted assets" 
                               means the risk weighted assets or 
                               total risk exposure amount, as calculated 
                               by the Company in accordance with 
                               the Relevant Rules. 
 
                               "CRD IV" means, taken together, 
                               (i) the CRR, (ii) the CRD and (iii) 
                               the Capital Instruments Regulations. 
 
                               "CRR" means regulation (EU) No 575/2013 
                               of the European Parliament and of 
                               the Council of June 26, 2013 on 
                               prudential requirements for credit 
                               institutions and investment firms 
                               and amending regulation (EU) No 
                               648/2012, as amended, supplemented 
                               or replaced from time to time and 
                               (where relevant) any applicable 
                               successor EU or UK legislation. 
 
                               "CRD" means Directive 2013/36/EU 
                               of the European Parliament and of 
                               the Council of June 26, 2013 on 
                               access to the activity of credit 
                               institutions and the prudential 
                               supervision of credit institutions 
                               and investment firms, amending Directive 
                               2002/87/EC and repealing Directives 
                               2006/48/EC and 2006/49/EC as amended, 
                               supplemented or replaced from time 
                               to time, and (where relevant) any 
                               applicable successor EU or UK legislation. 
 
                               "Capital Instruments Regulations" 
                               means any regulatory capital rules, 
                               regulations or standards which are 
                               applicable at any time to the Company 
                               (on a solo or consolidated basis 
                               and including any implementation 
                               thereof or supplement thereto by 
                               the UK Prudential Regulation Authority 
                               (or any successor entity) (the "PRA") 
                               from time to time) and which lay 
                               down the requirements to be fulfilled 
                               by financial instruments for inclusion 
                               in the Company's regulatory capital 
                               (on a solo or consolidated basis) 
                               as may be required by (i) the CRR 
                               and/or (ii) the CRD, including (for 
                               the avoidance of doubt) any delegated 
                               acts and implementing acts made 
                               by the European Commission (such 
                               as regulatory technical standards 
                               and implementing technical standards) 
                               and European Banking Authority guidelines 
                               all as amended from time to time 
                               and as implemented in the UK. 
 
                               "Relevant Rules" means, at any time, 
                               the laws, regulations, requirements, 
                               guidelines and policies relating 
                               to capital adequacy (including, 
                               without limitation, as to leverage) 
                               then in effect in the UK including, 
                               without limitation to the generality 
                               of the foregoing, as may be required 
                               by CRD IV or Directive 2014/59/EU 
                               establishing a framework for the 
                               recovery and resolution of credit 
                               institutions and investment firms, 
                               as amended, supplemented or replaced 
                               from time to time ("BRRD"), or any 
                               applicable successor legislation, 
                               or any delegated or implementing 
                               acts (such as regulatory technical 
                               standards) adopted by the European 
                               Commission and applicable to the 
                               Company from time to time and any 
                               regulations, requirements, guidelines 
                               and policies relating to capital 
                               adequacy adopted by the Relevant 
                               Regulator from time to time (whether 
                               or not such requirements, guidelines 
                               or policies are applied generally 
                               or specifically to the Company or 
                               to the Company and any of the Company's 
                               holding or subsidiary companies 
                               or any subsidiary of any such holding 
                               company). 
 
 Conversion shares            The Company may elect, at its sole 
  offer                        and absolute discretion, that the 
                               Conversion Shares Depository make 
                               an offer of all or some of the Conversion 
                               Shares issued in connection with 
                               the Securities to all or some of 
                               the Company's ordinary shareholders 
                               at a cash price per Conversion Share 
                               equal to the Conversion Shares Offer 
                               Price, subject to certain conditions. 
 
                               The "Conversion Shares Offer Price" 
                               is fixed initially at GBP2.70 per 
                               Conversion Share and is subject 
                               to certain anti-dilution adjustments 
                               as described below. 
 
 Conversion shares            "Conversion Shares Offer Consideration" 
  offer consideration          means in respect of each Security 
                               (i) if all the Conversion Shares 
                               are sold in the Conversion Shares 
                               Offer, the pro rata share of the 
                               cash proceeds from such sale in 
                               sterling (the "pro rata cash component"), 
                               (ii) if some but not all of the 
                               Conversion Shares are sold in the 
                               Conversion Shares Offer, (x) the 
                               pro rata cash component and (y) 
                               the pro rata share of the Conversion 
                               Shares not sold pursuant to the 
                               Conversion Shares Offer attributable 
                               to such Security rounded down to 
                               the nearest whole number of Conversion 
                               Shares, and (iii) if no Conversion 
                               Shares are sold in a Conversion 
                               Shares Offer, the relevant Conversion 
                               Shares attributable to such Security 
                               rounded down to the nearest whole 
                               number of Conversion Shares, subject 
                               in the case of (i) and (ii)(x) above 
                               to deduction from any such cash 
                               proceeds of an amount equal to the 
                               pro rata share of any stamp duty, 
                               stamp duty reserve tax, or any other 
                               capital, issue, transfer, registration, 
                               financial transaction or documentary 
                               tax that may arise or be paid as 
                               a consequence of the transfer of 
                               any interest in the Conversion Shares 
                               to the Conversion Shares Depository 
                               (or the relevant recipient in accordance 
                               with the terms of the Securities) 
                               in order for the Conversion Shares 
                               Depository (or the relevant recipient 
                               in accordance with the terms of 
                               the Securities) to conduct the Conversion 
                               Shares Offer. 
 
 Adjustments to the           The Conversion Price and Conversion 
  conversion price             Shares Offer Price will be adjusted 
  and the conversion           upon the occurrence of the following 
  shares offer price           events: (i) a consolidation, reclassification 
                               or subdivision of the Ordinary Shares, 
                               (ii) an issuance of Ordinary Shares 
                               in certain circumstances by way 
                               of capitalisation of profits or 
                               reserves, (iii) certain issues of 
                               rights for the Ordinary Shares, 
                               (iv) an Extraordinary Dividend or 
                               (v) a Qualifying Takeover Event, 
                               in each case only in the situations 
                               and to the extent provided in the 
                               Securities Indenture. 
 
                               Adjustments are not required for 
                               every corporate or other event that 
                               may affect the market price of the 
                               Conversion Shares and an Independent 
                               Financial Adviser may make modifications 
                               as it determines to be appropriate. 
 
 Optional redemption          The Securities will not be redeemable 
                               at the option of the securityholders 
                               at any time. The Securities may 
                               be redeemed in whole (but not in 
                               part) at the option of the Company 
                               in its sole discretion on any Reset 
                               Date at a redemption price equal 
                               to 100% of the principal amount 
                               plus any accrued and unpaid interest 
                               to (but excluding) the date of redemption 
                               (which interest will exclude any 
                               interest that is cancelled or deemed 
                               to have been cancelled), subject 
                               to certain conditions described 
                               in the Securities Indenture. 
 
 Special event redemption     The Securities may be redeemed in 
                               whole (but not in part) at the option 
                               of the Company in its sole discretion 
                               upon the occurrence of a Tax Event 
                               or a Capital Disqualification Event, 
                               subject to certain conditions described 
                               in the Securities Indenture. In 
                               each case, the redemption price 
                               will be equal to 100% of the principal 
                               amount plus any accrued and unpaid 
                               interest to (but excluding) the 
                               date of redemption (which interest 
                               will exclude any interest that is 
                               cancelled or deemed to have been 
                               cancelled). 
 
                               A "Tax Event" will be deemed to 
                               have occurred if at any time the 
                               Company determines that certain 
                               detrimental tax events have occurred 
                               (as specified in the Securities 
                               Indenture) as a result of a change 
                               in, or amendment to, the laws of 
                               the UK or any political subdivision 
                               or taxing authority thereof or therein 
                               that has the power to tax, including 
                               any treaty to which the relevant 
                               taxing jurisdiction is a party, 
                               or a change in an official application 
                               or interpretation of those laws 
                               or regulations on or after the Issue 
                               Date, including a decision of any 
                               court or tribunal that becomes effective 
                               on or after the Issue Date. 
 
                               A "Capital Disqualification Event" 
                               will be deemed to have occurred 
                               if the Company determines, at any 
                               time after the Issue Date, there 
                               is a change in the regulatory classification 
                               of the Securities that results or 
                               will result in either their (i) 
                               exclusion in whole or in part from 
                               the HSBC Group's regulatory capital 
                               (other than as a consequence of 
                               an Automatic Conversion); or (ii) 
                               reclassification in whole or in 
                               part as a form of the HSBC Group's 
                               regulatory capital that is lower 
                               than additional tier 1 capital. 
 
 Agreement with respect       By its acquisition of the Securities, 
  to the exercise              each securityholder (which, for 
  of UK bail-in power          these purposes, includes each beneficial 
                               owner) will acknowledge, accept, 
                               consent and agree, notwithstanding 
                               any other term of the Securities, 
                               the Securities Indenture, or any 
                               other agreements, arrangements or 
                               understandings between the Company 
                               and any securityholder, to be bound 
                               by (a) the effect of the exercise 
                               of any UK bail-in power by the relevant 
                               UK resolution authority that may 
                               include and result in any of the 
                               following, or some combination thereof: 
                               (i) the reduction of all, or a portion, 
                               of the Amounts Due; (ii) the conversion 
                               of all, or a portion, of the Amounts 
                               Due into the Company's or another 
                               person's ordinary shares, other 
                               securities or other obligations 
                               (and the issue to, or conferral 
                               on, the securityholder of such ordinary 
                               shares, other securities or other 
                               obligations), including by means 
                               of an amendment, modification or 
                               variation of the terms of the Securities 
                               or the Securities Indenture; (iii) 
                               the cancellation of the Securities; 
                               and/or (iv) the amendment or alteration 
                               of the redemption date of the Securities 
                               or amendment of the amount of interest 
                               payable on the Securities, or the 
                               interest payment dates, including 
                               by suspending payment for a temporary 
                               period; and (b) the variation of 
                               the terms of the Securities or the 
                               Indenture, if necessary, to give 
                               effect to the exercise of any UK 
                               bail-in power by the relevant UK 
                               resolution authority. No repayment 
                               or payment of Amounts Due will become 
                               due and payable or be paid after 
                               the exercise of any UK bail-in power 
                               by the relevant UK resolution authority 
                               if and to the extent such amounts 
                               have been reduced, converted, cancelled, 
                               amended or altered as a result of 
                               such exercise. Moreover, each securityholder 
                               (which, for these purposes, includes 
                               each beneficial owner) will consent 
                               to the exercise of any UK bail-in 
                               power as it may be imposed without 
                               any prior notice by the relevant 
                               UK resolution authority of its decision 
                               to exercise such power with respect 
                               to the Securities. 
 
                               For these purposes, (a) "Amounts 
                               Due" are the principal amount of, 
                               and any accrued but unpaid interest, 
                               including any Additional Amounts 
                               (as defined in the Prospectus Supplement), 
                               on, the Securities. References to 
                               such amounts will include amounts 
                               that have become due and payable, 
                               but which have not been paid, prior 
                               to the exercise of any UK bail-in 
                               power by the relevant UK resolution 
                               authority; (b) a "UK bail-in power" 
                               is any write-down, conversion, transfer, 
                               modification, or suspension power 
                               existing from time to time under, 
                               and exercised in compliance with, 
                               any laws, regulations, rules or 
                               requirements in effect in the UK, 
                               relating to the transposition of 
                               the BRRD or otherwise, including 
                               but not limited to the UK Banking 
                               Act 2009 and the instruments, rules 
                               and standards created thereunder, 
                               pursuant to which (i) any obligation 
                               of a regulated entity (or other 
                               affiliate of such regulated entity) 
                               can be reduced, cancelled, modified, 
                               or converted into shares, other 
                               securities, or other obligations 
                               of such regulated entity or any 
                               other person (or suspended for a 
                               temporary period); and (ii) any 
                               right in a contract governing an 
                               obligation of a regulated entity 
                               may be deemed to have been exercised. 
                               A reference to a "regulated entity" 
                               is to any BRRD Undertaking as such 
                               term is defined under the PRA Rulebook 
                               promulgated by the PRA, as amended 
                               from time to time, which includes 
                               certain credit institutions, investment 
                               firms, and certain of their parent 
                               or holding companies, or any comparable 
                               future definition intended to designate 
                               entities within the scope of the 
                               UK recovery and resolution regime; 
                               and (c) the "relevant UK resolution 
                               authority" is any authority with 
                               the ability to exercise a UK bail-in 
                               power. 
 
 Transfers after              On the "Suspension Date" (as determined 
  Suspension Date              pursuant to the terms of the Securities 
                               Indenture and which will be no later 
                               than 38 business days after the 
                               delivery of the Company's notice 
                               to the Clearing Systems specifying 
                               whether to conduct the Conversion 
                               Shares Offer), each of the Clearing 
                               Systems will block all positions 
                               relating to the Securities, which 
                               will suspend all clearance and settlement 
                               of transactions in the Securities 
                               through such Clearing System. As 
                               a result, the securityholders will 
                               not be able to settle the transfer 
                               of any Securities through such Clearing 
                               System following the Suspension 
                               Date, and any sale or other transfer 
                               of the Securities that a securityholder 
                               may have initiated prior to the 
                               Suspension Date that is scheduled 
                               to match or settle after the Suspension 
                               Date will be rejected by such Clearing 
                               System and will not be matched or 
                               settled through such Clearing System. 
                               Moreover, the Securities may cease 
                               to be admitted to Euronext Dublin's 
                               Official List and to be traded on 
                               the GEM after the Suspension Date. 
 
                               "Clearing Systems" means Clearstream 
                               Banking S.A. and Euroclear Bank 
                               SA/NV. 
 
 Form and denominations       The Securities will be issued in 
                               the form of one or more global securities 
                               registered in the name of the common 
                               depositary for, and deposited with, 
                               Clearstream Banking S.A. and/or 
                               Euroclear Bank SA/NV. 
 
                               The denominations of the Securities 
                               will be GBP200,000 and integral 
                               multiples of GBP1,000 in excess 
                               thereof. 
 
 Status                       The Securities will constitute the 
                               Company's direct, unsecured and 
                               subordinated obligations, ranking 
                               equally without any preference among 
                               themselves. The Securities will 
                               be subordinated to the claims of 
                               Senior Creditors. 
 
                               "Senior Creditors" means the Company's 
                               creditors (i) who are unsubordinated 
                               creditors; (ii) whose claims are, 
                               or are expressed to be, subordinated 
                               to the claims of the Company's unsubordinated 
                               creditors but not further or otherwise; 
                               or (iii) whose claims are, or are 
                               expressed to be, junior to the claims 
                               of the Company's other creditors, 
                               whether subordinated or unsubordinated, 
                               other than those whose claims rank, 
                               or are expressed to rank, pari passu 
                               with, or junior to, the claims of 
                               the securityholders in a winding-up 
                               occurring prior to a Capital Adequacy 
                               Trigger Event. For the avoidance 
                               of doubt, holders of any of the 
                               Company's existing or future Tier 
                               2 capital instruments will be Senior 
                               Creditors. 
 
 Listing                      Application is expected to be made 
                               to Euronext Dublin for the Securities 
                               to be admitted to the Official List 
                               and to trading on the GEM. The GEM 
                               is not a regulated market for the 
                               purpose of the Directive 2014/65/EU. 
 

Waiver granted by the SEHK and specific mandate for the issuance of the Securities

The Company announced on 5 March 2018 that it had applied for, and the SEHK had granted, a waiver from strict compliance with the requirements of Rule 13.36(1) of the Hong Kong Listing Rules pursuant to which the Company was permitted to seek (and, if approved, utilise) an authority (the "Mandate") to issue Contingent Convertible Securities ("CCSs") (and to allot Ordinary Shares into which they may be converted or exchanged) in excess of the limit of the general mandate of 20% of the Company's issued share capital.

At the 2018 annual general meeting of the Company held on 20 April 2018, the shareholders of the Company approved the Mandate allowing the Company to allot Ordinary Shares or grant rights to subscribe for, or to convert any security into, Ordinary Shares in connection with the issue of CCSs up to an aggregate nominal amount of US$1,999,610,418, equivalent to approximately 20% of the Company's issued ordinary share capital as at 20 February 2018 without first offering them to existing shareholders. The Mandate is effective until the Company's annual general meeting in 2019 or the close of business on 30 June 2019, whichever is the earlier, and is in addition to any general mandate granted by the shareholders at any annual general meeting of the Company to allot Ordinary Shares (for example, in the 2018 annual general meeting, the Company sought, and received from shareholders, a separate authority to allot new Ordinary Shares (or rights to Ordinary Shares) of up to an aggregate nominal amount of US$6,665,368,060, representing approximately two-thirds of the Company's issued ordinary share capital in total as at 20 February 2018, subject to certain limitations as described in the notice of the 2018 annual general meeting of the Company dated 7 March 2018). For further details, please refer to the notice of the 2018 annual general meeting of the Company dated 7 March 2018 and the announcement of the Company dated 20 April 2018 disclosing the poll results of such meeting.

As of the date of this announcement, the aggregate nominal amount of the Ordinary Shares which may be issued upon conversion of all the CCSs issued by the Company prior to the date of this announcement pursuant to and out of the Mandate (assuming there is no adjustment to the Conversion Price) (including the Singapore Dollar Issuance, as defined below) is US$77,149,699, with a remaining headroom under the Mandate of US$1,922,460,719. Assuming that there is no adjustment to the Conversion Price for the Securities, the aggregate nominal amount of the Ordinary Shares which may be issued upon conversion of all the Securities is US$185,185,185 (or up to US$203,703,703.50 if the Managers' over-allotment option is exercised in full). Accordingly, the Securities are being issued pursuant to and out of the Mandate and the issuance of the Securities is not subject to approval by the shareholders of the Company.

Application for listing

If a Capital Adequacy Trigger Event occurs, and Ordinary Shares are issued pursuant to the conversion of the Securities, application will be made by the Company to (i) the UK Listing Authority and to the London Stock Exchange for the Ordinary Shares to be admitted to the Official List and to trading respectively, (ii) the SEHK for the listing of, and permission to deal in, the Ordinary Shares, and (iii) the New York, Paris and Bermuda stock exchanges for listing of the Ordinary Shares.

Reasons for the issuance of the Securities and use of proceeds

The Company intends to use the net proceeds from the sale of the Securities for general corporate purposes and to further strengthen the Company's capital base pursuant to requirements under CRD IV.

The aggregate gross proceeds from the issuance of the Securities are expected to be GBP1,000,000,000 (or up to GBP1,100,000,000 if the Managers' over-allotment option is exercised in full). The net proceeds from the issuance of the Securities, after the deduction of the commission to the Managers, are expected to be GBP990,000,000 (or up to GBP1,089,000,000 if the Managers' over-allotment option is exercised in full).

Fund raising activities in the past 12 months

The Company has not carried out any issue of equity securities during the 12 months immediately preceding the date of this announcement, save and except:

   (1)      the issue of Ordinary Shares by the Company pursuant to the Scrip Dividend Scheme; 
   (2)      the Issuances of Ordinary Shares to Employees; 

(3) the issue of the US$2,350,000,000 6.250% Perpetual Subordinated Contingent Convertible Securities as disclosed in the announcements of the Company dated 20 March 2018 and 23 March 2018, which are available on the Company's website. The proceeds for such securities were intended to be used for general corporate purposes and to further strengthen the Company's capital base pursuant to requirements under CRD IV, and they have been applied in full as intended;

(4) the issue of the US$1,800,000,000 6.500% Perpetual Subordinated Contingent Convertible Securities as disclosed in the announcements of the Company dated 20 March 2018 and 23 March 2018, which are available on the Company's website. The proceeds for such securities were intended to be used for general corporate purposes and to further strengthen the Company's capital base pursuant to requirements under CRD IV, and they have been applied in full as intended; and

(5) the expected issue of the S$750,000,000 5.000% Perpetual Subordinated Contingent Convertible Securities, which transaction is expected to settle on 24 September 2018 (the "Singapore Dollar Issuance") as disclosed in the announcement of the Company dated 20 September 2018, which is available on the Company's website. The proceeds for such securities are intended to be used for general corporate purposes and to further strengthen the Company's capital base pursuant to requirements under CRD IV.

For these purposes, "Scrip Dividend Scheme" means the scrip alternative scheme of the Company for shareholders of the Company to elect to receive dividends wholly or partly in the form of new fully-paid Ordinary Shares instead of in cash, and "Issuances of Ordinary Shares to Employees" means the issuances by the Company of Ordinary Shares to certain of its directors and employees pursuant to or in connection with the grant of share awards, share option schemes, or share saving schemes of the Company.

Effects on shareholding structure of the Company

In the event an Automatic Conversion occurs,

(1) assuming full conversion of the Securities (but assuming none of the Over-allotment Securities are issued) at the initial Conversion Price takes place, the Securities will be convertible into approximately 370,370,370 Ordinary Shares representing, as at 17 September 2018, approximately 1.86% of the issued share capital of the Company and approximately 1.83% of the issued share capital of the Company as enlarged by the issue of such Conversion Shares; or

(2) assuming full conversion of the Securities (and assuming all of the Over-allotment Securities are issued) at the initial Conversion Price takes place, the Securities (including all Over-allotment Securities) will be convertible into approximately 407,407,407 Ordinary Shares representing, as at 17 September 2018, approximately 2.05% of the issued share capital of the Company and approximately 2.01% of the issued share capital of the Company as enlarged by the issue of such Conversion Shares.

The Conversion Shares issued following an Automatic Conversion will in all respects rank pari passu with the fully paid Ordinary Shares in issue on the Conversion Date, except in any such case for any right excluded by mandatory provisions of applicable law, and except that the Conversion Shares so issued will not rank for (or, as the case may be, the relevant securityholder will not be entitled to receive) any rights, distributions or payments, the entitlement to which falls prior to the Conversion Date.

The following table summarises the potential effects on the shareholding structure of the Company as a result of the issuance of the Securities and the Over-allotment Securities (by reference to the information on shareholdings as at 17 September 2018 (being the latest practicable date prior to the release of this announcement) and in each case assuming: (a) full conversion of the Securities, assuming no Over-allotment Securities have been issued; and (b) full conversion of the Securities, assuming all Over-allotment Securities have been issued):

 
 
                                                      (a) Assuming the Securities            (b) Assuming the 
                                                     (excluding the Over-allotment         Securities (including 
                          As at 17 September             Securities) are fully              all Over-allotment 
                                 2018                   converted into Ordinary               Securities) are 
                                                         Shares at the initial                fully converted 
                                                           Conversion Price                into Ordinary Shares 
                                                                                         at the initial Conversion 
                                                                                                   Price 
                   ------------------------------  -------------------------------  -------------------------------- 
 
      Name of          Number of       % of total       Number of        % of the        Number of        % of the 
    Shareholders        Ordinary         issued         Ordinary         enlarged         Ordinary        enlarged 
                         Shares         Ordinary         Shares           issued           Shares          issued 
                                         Shares                          Ordinary                         Ordinary 
                                                                          Shares                           Shares 
-----------------  ---------------  -------------  ----------------  -------------  -----------------  ----------- 
 
 Ping An 
  Asset 
  Management 
  Co., Ltd. 
  (Note 1)          1,253,254,972    6.29           1,253,254,972     6.18           1,253,254,972      6.17 
 BlackRock, 
  Inc. (Note 
  2)                1,335,163,793    6.71           1,335,163,793     6.58           1,335,163,793      6.57 
 Subscribers 
  of the 
  Securities        0                0.00           370,370,370       1.83           407,407,407        2.01 
 Other public 
  Shareholders      17,318,365,788   87.00          17,318,365,788    85.41          17,318,365,788     85.25 
 Total Issued 
  Ordinary 
  Shares            19,906,784,553   100.00         20,277,154,923    100.00         20,314,191,960     100.00 
 
 

Note:

1. Based on a disclosure of interest filing made by Ping An Asset Management Co., Ltd on 13 February 2018, as per the long position as at 9 February 2018.

2. Based on a disclosure of interest filing made by BlackRock, Inc. on 22 August 2018, as per the long position as at 17 August 2018.

3. The information in the above table is for illustrative purposes only, and it only shows the potential effects on the shareholding structure of the Company in connection with the Securities (but not any other securities issued or to be issued by the Company). The number of Ordinary Shares shown for holders of the Securities relates only to those Ordinary Shares that are or will be held by them as a result of their holding the Securities.

 
 Investor enquiries to: 
 UK - Greg Case           Tel: +44 (0) 20 7992 
                           3825 
 Hong Kong - Hugh Pye     Tel: +852 2822 4908 
 
 
   Media enquiries to: 
 UK - Ankit Patel         Tel: +44 (0) 20 7991 
                           9813 
 HK - Vinh Tran           Tel: +852 2822 4924 
 

Disclaimers

The distribution of this announcement in certain jurisdictions may be restricted by law. Persons into whose possession this announcement comes are required to inform themselves about and to observe any such restrictions.

This announcement does not constitute an offer or an invitation to subscribe or purchase any of the Securities. No action has been taken in any jurisdiction to permit a public offering of the Securities where such action is required other than in the US. The offer and sale of the Securities may be restricted by law in certain jurisdictions.

The Securities are complex financial instruments and are not a suitable or appropriate investment for all investors. In some jurisdictions, regulatory authorities have adopted or published laws, regulations or guidance with respect to the offer or sale of securities such as the Securities to retail investors. In particular, in June 2015, the UK Financial Conduct Authority (the "FCA") published the Product Intervention (Contingent Convertible Instruments and Mutual Society Shares) Instrument 2015, which set out certain rules and took effect from 1 October 2015 (the "PI Rules"). In addition, (i) on 1 January 2018, the provisions of Regulation (EU) No 1286/2014 (as amended, the "PRIIPs Regulation") on key information documents for packaged retail and insurance-based investment products became directly applicable in all European Economic Area ("EEA") member states and (ii) MiFID II was required to be implemented in EEA member states by 3 January 2018. Together, the PI Rules, the PRIIPs Regulation and Directive 2014/65/EU (as amended, "MiFID II") are referred to as the "Regulations".

The Regulations set out various obligations in relation to (i) the manufacturing and distribution of financial instruments and (ii) the offering, sale and distribution of packaged retail and insurance-based investment products and certain contingent write-down or convertible securities, such as the Securities.

Potential investors should inform themselves of, and comply with, any applicable laws, regulations or regulatory guidance with respect to any resale of the Securities (or any beneficial interests therein), including the Regulations.

The Company and some or all of the Managers are required to comply with the Regulations. By purchasing, or making or accepting an offer to purchase (including by an indication of interest), any Securities (or a beneficial interest in such Securities) from the Company and/or the Managers, each prospective investor represents, warrants, agrees with and undertakes to the Company and its affiliates and each of the Managers and their affiliates that:

   (1)           it is not a retail investor in the EEA; 

(2) it will not (A) sell, offer or recommend the Securities (or any beneficial interest therein) or otherwise make them available to retail investors in the EEA or (B) communicate (including the distribution of the Prospectus or the Prospectus Supplement) or approve an invitation or inducement to participate in, acquire or underwrite the Securities (or any beneficial interests therein) where that invitation or inducement is addressed to or disseminated in such a way that it is likely to be received by a retail investor in the EEA; and

(3) it will at all times comply with all applicable laws, regulations and regulatory guidance (whether inside or outside the EEA) relating to the promotion, offering, distribution and/or sale of the Securities (or any beneficial interests therein), including (without limitation) any such applicable laws, regulations and regulatory guidance relating to determining the appropriateness and/or suitability of an investment in the Securities (or any beneficial interests therein) by investors in any relevant jurisdiction, having regard to the target market assessment for the Securities.

For these purposes, a "retail investor" means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of MiFID II; or (ii) a customer within the meaning of Directive 2002/92/EC (as amended, the "IMD"), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II.

Where acting as agent on behalf of a disclosed or undisclosed client when purchasing, or making or accepting an offer to purchase, any Securities (or any beneficial interests therein) from the Company and/or the Managers the foregoing representations, warranties, agreements and undertakings will be given by and be binding upon both the agent and its underlying client. For the avoidance of doubt, the restrictions described above do not affect the distribution of the Securities in jurisdictions outside the EEA, such as the US, provided that any distribution into the EEA complies with the PI Rules.

The Securities are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the EEA. For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of MiFID II; or (ii) a customer within the meaning of the IMD, where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II. Consequently, no key information document required by the PRIIPs Regulation for offering or selling the Securities or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Securities or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation. The expression "Prospectus Directive" means Directive 2003/71/EC (and amendments thereto, including Directive 2010/73/EU), and includes any relevant implementing measure in any Member State.

For and on behalf of

HSBC Holdings plc

B J S Mathews

Group Company Secretary

Notes to editors:

1. HSBC Holdings plc

HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 3,800 offices in 66 countries and territories in Europe, Asia, North and Latin America, and Middle East and North Africa. With assets of US$2,607bn at 30 June 2018, HSBC is one of the world's largest banking and financial services organisations.

2. The Board of Directors of HSBC Holdings plc as at the date of this announcement is:

Mark Tucker*, John Flint, Kathleen Casey , Laura Cha , Henri de Castries , Lord Evans of Weardale , Irene Lee , Iain Mackay, Heidi Miller , Marc Moses, David Nish , Jonathan Symonds , Jackson Tai and Pauline van der Meer Mohr .

* Non-executive Group Chairman

Independent non-executive Director

ends/all

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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September 21, 2018 02:00 ET (06:00 GMT)

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