Subscription
Placing agents
HSBC Securities (USA) Inc. (the
'Sole Structuring Adviser and Book
Running Manager')
ABN AMRO Capital Markets (USA)
LLC
Academy Securities, Inc.
Apto Partners, LLC
Bancroft Capital, LLC
Barclays Capital Inc.
BBVA Securities Inc.
BofA Securities, Inc.
BMO Capital Markets Corp.
Cabrera Capital Markets
LLC
CaixaBank, S.A.
CastleOak Securities L.P.
Citigroup Global Markets
Inc.
Commerz Markets LLC
Credit Agricole Securities (USA)
Inc.
Danske Markets Inc.
Drexel Hamilton, LLC
Erste Group Bank AG
Goldman Sachs & Co.
LLC
Independence Point Securities
LLC
Intesa Sanpaolo IMI Securities
Corp.
Lloyds Bank Corporate Markets
plc
Loop Capital Markets LLC
Mischler Financial Group,
Inc.
Natixis Securities Americas
LLC
Nordea Bank Abp
Penserra Securities LLC
Rabo Securities USA, Inc.
RBC Capital Markets, LLC
Roberts & Ryan, Inc.
Santander US Capital Markets
LLC
SMBC Nikko Securities America,
Inc.
Tigress Financial Partners
LLC.
Wells Fargo Securities,
LLC
(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
24 February 2025 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 US$1,500,000,000.
The Managers have agreed to purchase
all of the Securities sold pursuant to the Securities Terms
Agreement if any of the Securities are not sold. If a Manager
defaults, the Securities Terms Agreement provides that the purchase
commitments of the non-defaulting Managers may be increased or the
Securities Terms Agreement may be terminated.
The Company has agreed to indemnify
the several Managers against certain liabilities, including civil
liabilities under the Securities Act of 1933, or contribute to
payments the Managers may be required to make in respect
thereof.
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 receipt of (i) certain
specified opinions of counsel to the Company and counsel to the
Managers, (ii) specified certificates of authorized directors or
officers of the Company, and (iii) a letter from the auditor to the
Company;
(c) the absence of any
material adverse change in the financial condition, earnings or
general affairs of the Company and its subsidiaries;
(d) 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 Indenture;
(e) 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;
(f) the absence of a
downgrade in the rating accorded to the Securities by certain
rating agencies;
(g) 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
(h) 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 Bank plc
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:
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Issuer
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The Company
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Securities offered
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US$1,500,000,000 aggregate principal
amount.
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Maturity date
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Perpetual
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Issue price
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100% of the aggregate principal
amount of the Securities.
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Interest
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From (and including) the Issue Date
to (but excluding) 27 February 2032 the interest rate on the
Securities will be 6.950%
per annum. From (and including) each Reset Date to (but excluding)
the next following Reset Date, the applicable per annum interest
rate will be equal to the sum of the applicable Reference Rate on
the relevant Reset Determination Date and 2.635%.
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Reset Date
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27 February 2032 and each fifth
anniversary date thereafter (each such date, a 'Reset Date').
Each period from (and including) a
Reset Date to (but excluding) the following Reset Date will be a
'Reset
Period'.
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Reset Determination Dates
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The second business day immediately
preceding a Reset Date (each, a 'Reset Determination Date').
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Reference Rate
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The 'Reference Rate' means, with respect to
any Reset Period for which such rate applies:
(1) the rate per annum (expressed as
a decimal) equal to the yield which represents the average for the
week immediately prior to the related Reset Determination Date in
the most recent H.15, (a) under the caption 'Treasury Constant
Maturities' and (b) for the maturity of five years;
(2) if such release (or any
successor release) is not published during the week immediately
prior to the related Reset Determination Date or does not contain
such yields, the Reference Treasury Rate for such Reset Period;
or
(3) if the Reference Rate cannot be
determined, for whatever reason, as described under (1) or (2)
above, 'Reference Rate' means the rate per annum (expressed as a
decimal) equal to the yield on US Treasury securities having a
maturity of five years as set forth in the most recent H.15 under
the caption 'Treasury constant maturities' for the maturity of five
years at 5:00pm (New York City time) on the last available date
preceding the related Reset Determination Date on which such rate
was set forth in such release (or any successor
release).
The Reference Rate shall be
calculated by the calculation agent.
'H.15' means the weekly statistical
release designated as such and published by the Board of Governors
of the United States Federal Reserve System, or any successor or
replacement publication that establishes yields on actively traded
US Treasury securities adjusted to constant maturity, and 'most
recent H.15' means the H.15 published closest in time but prior to
5:00pm (New York City time) on the applicable Reset Determination
Date.
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Reference Treasury
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'Reference Treasury' means, in respect
of a Reset Period, the US Treasury security or securities selected
by the Company (following, where practicable, consultation with an
investment bank or financial institution determined to be
appropriate by the Company (which may be the calculation agent))
(i) with a maturity date on or about the last day of such Reset
Period and (ii) that would be utilized, at the time of selection
and in accordance with customary financial practice, in pricing new
issues of corporate debt securities denominated in US dollars and
having a maturity of five years.
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Reference Treasury Rate
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'Reference Treasury Rate' means, with
respect to any Reset Period, the rate per annum (expressed as a
decimal) equal to the yield to maturity (on the relevant day count
basis) of the Reference Treasury, assuming a price for the
Reference Treasury (expressed as a percentage of its principal
amount) equal to the Reference Treasury Price on the relevant Reset
Determination Date.
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Reference Treasury Price
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'Reference Treasury Price' means, with
respect to any Reset Determination Date, (i) the arithmetic average
of the Reference Treasury Dealer Quotations for such Reset
Determination Date, after excluding the highest quotation (or, in
the event of more than one highest quotation, one of the highest)
and lowest quotation (or, in the event of more than one lowest
quotation, one of the lowest), or (ii) if fewer than five but more
than one such Reference Treasury Dealer Quotations are received,
the arithmetic average of all such quotations, or (iii) if only one
such Reference Treasury Dealer Quotation is received, then such
quotation; each as quoted in writing to the calculation agent by a
Reference Treasury Dealer.
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Reference Treasury Dealer
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'Reference Treasury Dealer' means, with
respect to any Reset Determination Date, each of up to five banks
selected by the Company (following, where practicable, consultation
with an investment bank or financial institution determined to be
appropriate by the Company (which may be the calculation agent)), or the affiliates
of such banks, which are (i) primary US Treasury securities
dealers, and their respective successors, or (ii) market makers in
pricing corporate bond issues denominated in US dollars.
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Reference Treasury Dealer Quotation
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'Reference Treasury Dealer Quotation'
means, with respect to each Reference Treasury Dealer and any Reset
Determination Date, the arithmetic average, as determined by the
calculation agent,
of the bid and offered prices for the applicable Reference
Treasury, expressed in each case as a percentage of its principal
amount, quoted by the applicable Reference Treasury Dealer at
11:00am (New York City time), on such Reset Determination
Date.
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Interest payment dates
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Interest on the Securities, if any,
will be payable in arrear on 27 February and 27 August of each
year, beginning on 27 August
2025.
Each payment of interest is subject
to cancellation or deemed cancellation as described in the
Prospectus Supplement.
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Discretionary interest payments
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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 (the 'Discretionary Interest Payment Right').
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Restrictions on interest payments
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In addition to the Discretionary
Interest Payment Right, 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 that is applicable to the Company is exceeded,
the Company would not be solvent at the time of such interest
payment, or the Relevant Regulator (as defined below) 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.
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Optional redemption
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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 Company's option in its sole
discretion on any business day during any Optional Redemption
Period, 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.
'Optional Redemption Period' means the
period commencing on the date falling six calendar months prior to
a Reset Date and ending on such Reset Date (both dates
inclusive).
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Special event redemption
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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 for the Securities will be equal to 100% of
their 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 with respect to the Securities 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 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 regulatory
capital of the Company together with its subsidiary undertakings
(the 'HSBC Group')
(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.
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Capital Adequacy Trigger Event
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A 'Capital Adequacy Trigger Event' will
occur if at any time the non-transitional 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.
'Capital Instruments
Regulations' means any regulatory
capital rules, regulations or standards which are applicable to the
Company at any time (on a solo or consolidated basis and including
any implementation thereof or supplement thereto by the PRA from
time to time) as then in effect in the UK, 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) including as may be required by (i) UK CRR and/or (ii) the
Relevant Rules and all other UK law which implemented CRD
immediately before 11:00 p.m. on 31 December 2020, 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) (in each case as
they form part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018, as amended
(the 'EUWA')
or as implemented in UK law, as appropriate) in
each case as amended, supplemented or replaced from time to
time.
'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 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 (Transitional
Provisions, Reports, Reviews and Amendments) of UK 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 the Capital Instruments Regulations as interpreted and
applied in accordance with the Relevant Rules then applicable to
the HSBC Group or by the UK Prudential Regulation Authority (or any
successor entity) (the 'PRA') or any successor entity
primarily responsible for the Company's prudential supervision (the
'Relevant Regulator').
'CRD' means Directive 2013/36/EU on
access to credit institutions and the prudential supervision of
credit institutions and investment firms, as amended or
supplemented before IP Completion Day (including, without
limitation, by Directive (EU) 2019/878).
'IP Completion
Day' means 11:00 p.m. on December
31, 2020.
'non-transitional 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.
'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 the Capital
Instruments Regulations or the UK Banking Act 2009 and any
regulations, requirements, guidelines and policies relating to
capital adequacy adopted by the Relevant Regulator applicable to
the Company 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 its holding or subsidiary
companies or any subsidiary of any such holding company), in each
case as amended, supplemented or replaced from time to time.
'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 UK 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 applicable to the Company as
of such date.
'UK
CRR' means
Regulation (EU) No. 575/2013 on prudential requirements for credit
institutions and investment firms of the European Parliament and of
the Council of 26 June 2013, as amended or supplemented, as it
forms part of domestic law in the UK by virtue of the
EUWA.
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Automatic Conversion upon a Capital Adequacy Trigger
Event
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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 on behalf of the securityholders (or to the relevant
recipient in accordance with the terms of the Securities) 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, and under no circumstances
will such released obligations be reinstated.
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.
The Securities will not be
convertible into Conversion Shares at the option of the
securityholders at any time.
'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, 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.
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Conversion Shares and Conversion Price
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'Conversion
Shares' means the Company's ordinary shares
(the 'Ordinary Shares') to be issued to the Conversion Shares Depository on behalf
of the securityholders (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 then outstanding immediately prior to the Automatic Conversion on
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 US$3.4147 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
approximately 439,277,243.
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Ranking of Conversion Shares
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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.
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Conversion Shares offer
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The Company may elect, at its sole
and absolute discretion and following the occurrence of an
Automatic Conversion, 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 £2.70 per Conversion
Share and is subject to certain
anti-dilution adjustments as described below.
On the Issue Date, the Conversion
Shares Offer Price and the Conversion Price will be equal (based on
an exchange rate of £1.00 = US$1.2647).
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Conversion Shares Offer Consideration
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'Conversion Shares 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 attributable
to such Security converted from pounds
sterling (or any such other currency in which the Company's
Ordinary Shares are denominated) into US dollars pursuant to the
Securities Indenture (less the pro rata share of any foreign
exchange transaction costs) (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 on behalf of the securityholders (or the relevant
recipient in accordance with the terms of the Securities) in order
for the Conversion Shares Depository (or to the relevant recipient
in accordance with the terms of the Securities) to conduct the
Conversion Shares Offer.
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Adjustments to the Conversion Price and the Conversion Shares
Offer Price
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The Conversion Price and Conversion
Shares Offer Price will be adjusted upon the occurrence of the
following 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 (as defined in the
Prospectus Supplement) or (v) a Qualifying Takeover Event (as
defined in the Prospectus Supplement), 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.
'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.
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Agreement with respect to the exercise of UK bail-in
power
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By its acquisition of the
Securities, each securityholder (which, for 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 in relation to any Securities
that (without limitation) 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
Securities 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 and unpaid interest, including any
Additional Amounts, 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) 'UK bail‑in
power' means the powers under the UK
bail-in legislation to cancel, transfer or dilute shares issued by
a person that is a bank or investment firm or affiliate of a bank
or investment firm, to cancel, write-down, transfer, reduce, modify
or change the form of a liability of such a person or any contract
or instrument under which that liability arises, to convert all or
part of that liability into shares, securities or obligations of
that person or any other person, to provide that any such contract
or instrument is to have effect as if a right had been exercised
under it or to suspend any obligation in respect of that
liability;
(c) 'UK bail-in
legislation' means Part I of the
Banking Act and any other law or regulation applicable in the UK
relating to the resolution of unsound or failing banks, investment
firms or other financial institutions or their affiliates
(otherwise than through liquidation, administration or other
insolvency proceedings); and
(d) 'relevant UK resolution
authority' means any authority with
the ability to exercise a UK bail‑in power.
For the avoidance of doubt, the
potential conversion of the Securities into shares, other
securities or other obligations in connection with the exercise of
any UK bail-in power by the relevant UK resolution authority is
separate and distinct from an Automatic Conversion following a
Capital Adequacy Trigger Event.
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Transfers after Suspension Date
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On the 'Suspension Date' (as determined
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 DTC specifying whether to conduct the Conversion Shares
Offer), DTC will block all positions
relating to the Securities, which will suspend all clearance and
settlement of transactions in the Securities through DTC. As a
result, the securityholders will not be able to settle the transfer
of any Securities through DTC 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 settle after the Suspension Date will be rejected by DTC and
will not be settled through DTC. 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.
'DTC' means the
Depository Trust Company.
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Form of Securities
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The Securities will be issued in the form
of one or more global securities registered
in the name of the nominee for, and deposited with,
DTC.
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Trading through DTC, Clearstream Luxembourg and
Euroclear
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Initial settlement for the
Securities will be made in immediately available funds. Secondary
market trading between DTC participants will occur in the ordinary
way in accordance with DTC's rules and will be settled in
immediately available funds using DTC's Same‑Day Funds Settlement
System. Secondary market trading between Clearstream Banking S.A.
('Clearstream Luxembourg')
customers and/or Euroclear Bank SA/NV ('Euroclear') participants will occur in
the ordinary way in accordance with the applicable rules and
operating procedures of Clearstream Luxembourg and Euroclear and
will be settled using the procedures applicable to conventional
eurobonds in immediately available funds.
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Subordination
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The Securities will constitute the
Company's direct, unsecured and subordinated obligations, ranking
equally without any preference among themselves. The rights and
claims of the securityholders in respect of, or arising from, 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.
'Parity Securities' means, (i) the most
senior ranking class or classes of preference shares in the
Company's capital from time to time and any other of our securities
ranking, or expressed to rank, pari passu with the Securities
and/or such senior preference shares in the Company's winding up or
administration and/or (ii) any securities issued by any other
member of the HSBC Group where the terms of such securities benefit
from a guarantee or support agreement entered into by the Company
which ranks or is expressed to rank pari passu with the Securities
and/or such senior preference shares in the Company's winding up or
administration.
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Listing
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Application has been made to
Euronext Dublin for the approval of the Prospectus Supplement as
listing particulars. Application has been made to Euronext Dublin
for the Securities to be admitted to the Official List and to
trading on the Global Exchange Market, which is an
exchange-regulated market of Euronext Dublin (the 'GEM'). The GEM is not a regulated
market for the purposes of the Directive 2014/65/EU (as amended, 'MiFID II') or Regulation (EU)
No 600/2014 as it forms part of UK domestic law by virtue of the
EUWA.
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Calculation Agent
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HSBC Bank USA, National Association,
or its successor appointed by the Company, pursuant to a
calculation agent agreement expected to be entered into on the
Issue Date.
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Minimum Denominations
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The Securities will be issued only
in registered form in minimum denominations of US$200,000 and in
integral multiples of US$1,000 in excess thereof.
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Business Day
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A day on which commercial banks and
foreign exchange markets settle payments and are open for general
business (including dealings in foreign exchange and foreign
currency deposits) in London, England, and in New York City, United
States.
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Governing Law and Jurisdiction
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The Securities Indenture and the
Securities will be governed by, and construed in accordance with,
the laws of the State of New York, except that the subordination
provisions of the Securities Indenture and the Securities and the
waiver of set-off provisions of the Securities Indenture and the
Securities will be governed by, and construed in accordance with,
the laws of England and Wales. Any legal proceedings arising out
of, or based upon, the Securities Indenture or the Securities may
be instituted in any state or federal court in New York City,
United States.
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Waiver granted by the SEHK and specific mandate for the
issuance of the Securities
The Company announced on 20 March
2024 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 2024 annual general meeting
of the Company held on 3 May 2024, 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$1,905,105,226, equivalent to
approximately 20% of the Company's issued ordinary share capital as
at 7 March 2024 without first offering them to existing
shareholders. The Mandate is effective until the Company's annual
general meeting in 2025 or the close of business on 30 June 2025,
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, at the 2024 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$6,350,350,753, representing approximately two-thirds of the
Company's issued ordinary share capital in total as at 7 March
2024, subject to certain limitations as described in the notice of
the 2024 annual general meeting of the Company dated 22 March 2024
(the 'AGM
Notice'). For further details,
please refer to the AGM Notice and the announcement of the Company
dated 3 May 2024 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) is US$513,468,929, with a
remaining headroom under the Mandate of US$1,391,636,297. 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$219,638,621. 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 Financial Conduct 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
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 maintain or further strengthen its capital base
pursuant to requirements under the Capital Instruments
Regulations.
The aggregate gross proceeds from
the issuance of the Securities
are expected to be US$1,500,000,000. The net proceeds from
the issuance of the Securities, after the deduction of the
commission to the Managers, are expected to be
US$1,485,000,000.
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
for:
(a) the Issuances of Ordinary
Shares to Employees;
(b) the issuance of the
SGD1,500,000,000 5.250% Resettable Perpetual Subordinated
Contingent Convertible Securities as disclosed in the Company's
announcement dated 14 June 2024. The proceeds for such securities
were intended to be (i) for general corporate purposes, and (ii) to
maintain or further strengthen its capital base pursuant to
requirements under the Capital Instruments Regulations, and they
were applied in full as intended; and
(c) the issuance of the
USD1,350,000,000 6.875% Perpetual Subordinated Contingent
Convertible Securities and USD1,150,000,000 6.950% Perpetual
Subordinated Contingent Convertible Securities as disclosed in the
Company's announcement dated 5 September 2024. The proceeds for
such securities were intended to be (i) for general corporate
purposes, and (ii) to maintain or further strengthen our capital
base pursuant to requirements under the Capital Instruments
Regulations, and they were applied in full as intended.
For these purposes, '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, assuming full conversion of the Securities at the initial
Conversion Price takes place, the Securities will be convertible
into approximately 439,277,243 Ordinary
Shares representing, as at 24
February 2025,
approximately 2.46% of the issued share
capital of the Company and approximately 2.41% 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 (by reference to the
information on shareholdings as at 24
February 2025 (being the latest practicable date prior to the
release of this announcement) and assuming
full conversion of the Securities):
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As at 24 February
2025Note 1
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Assuming the Securities are
fully converted into Ordinary Shares at the initial Conversion
Price
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Number of Ordinary
Shares
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% of total issued Ordinary
Shares
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Number of Ordinary
Shares
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% of the enlarged issued
Ordinary Shares
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Subscribers of the
Securities
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0
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0.00%
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439,277,243
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2.41%
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Other public Shareholders
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17,824,985,413
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100.00%
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17,824,985,413
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97.59%
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Total Issued Ordinary Shares
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17,824,985,413
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100.00%
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18,264,262,656
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100.00%
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Note:
1. 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.
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 not deposit
liabilities of the Company and are not covered by the United
Kingdom Financial Services Compensation Scheme or insured by the
U.S. Federal Deposit Insurance Corporation or any other
governmental agency of the United Kingdom, the United States or any
other jurisdiction.
The Securities discussed in this
document are complex financial instruments. They are not a suitable
or appropriate investment for all investors, especially retail
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. Potential
investors in the Securities 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).
a.
In the UK, the Financial Conduct Authority ('FCA') Conduct of Business Sourcebook ('COBS') requires, in summary,
that the Securities should not be offered or sold to retail clients
(as defined in COBS 3.4, and each, a 'retail
client') in the UK.
b.
Some or all of the underwriters are required to comply with
COBS.
c.
By purchasing, or making or accepting an offer to purchase, any
Securities (or a beneficial interest in such Securities) from the
Company and/or the underwriters, each prospective investor
represents, warrants, agrees with and undertakes to the Company and
each of the underwriters that:
i. it
is not a retail client in the UK; and
ii. it will
not sell or offer the Securities (or any beneficial interests
therein) to retail clients in the UK or communicate (including the
distribution of the Prospectus Supplement or the Base Prospectus)
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 client
in the UK.
d.
In selling or offering Securities or making or approving
communications relating to the Securities, each prospective
investor may not rely on the limited exemptions set out in
COBS.
e.
Potential investors in the Securities should also 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).
The obligations above are in
addition to the need to comply at all times with other applicable
laws, regulations and regulatory guidance (whether inside or
outside the European Economic Area (the 'EEA') or the UK) relating to the promotion, offering,
distribution and/or sale of the Securities (or any beneficial
interests therein), whether or not specifically mentioned in the
Prospectus Supplement or the Base Prospectus, including (without
limitation) any requirements under MiFID II or the FCA Handbook as
to determining the appropriateness and/or suitability of an
investment in the Securities (or any beneficial interests therein)
for investors in any relevant jurisdiction. By purchasing, or
making or accepting an offer to purchase, any Securities (or a
beneficial interest in such Securities) from the Company and/or the
underwriters each prospective investor represents, warrants, agrees
with and undertakes to the Company that it will comply at all times
with all such other applicable laws, regulations and regulatory
guidance.
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 underwriters the
foregoing representations, warranties, agreements and undertakings
will be given by and be binding upon both the agent and its
underlying client.
PRIIPs Regulation-Prohibition of
sales to EEA retail investors - 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 Directive (EU) 2016/97, 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
Regulation (EU) No 1286/2014 (as amended, 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.
UK PRIIPs Regulation-Prohibition of
sales to UK retail investors - 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 UK. For these purposes, a retail investor means a person who is
one (or more) of: (i) a retail client as defined in point (8) of
Article 2 of Regulation (EU) No 2017/565 as it forms part of UK
domestic law by virtue of the EUWA; or (ii) a customer within the
meaning of the provisions of the Financial Services and Markets Act
2000, as amended (the 'FSMA') and any rules or
regulations made under the FSMA to implement Directive (EU)
2016/97, where that customer would not qualify as a professional
client, as defined in point (8) of Article 2(1) of Regulation (EU)
No 600/2014 as it forms part of UK domestic law by virtue of the
EUWA. Consequently, no key information document required by the
Regulation (EU) No 1286/2014 as it forms part of UK domestic law by
virtue of the EUWA (the 'UK PRIIPs
Regulation') for offering or selling
the Securities or otherwise making them available to retail
investors in the UK has been prepared and therefore offering or
selling the Securities or otherwise making them available to any
retail investor in the UK may be unlawful under the UK PRIIPs
Regulation.
For and on behalf of
HSBC
Holdings plc
Aileen Taylor
Company Secretary
Notes to editors:
HSBC Holdings plc
HSBC Holdings plc, the parent
company of HSBC, is headquartered in London. HSBC serves customers
worldwide from offices in 58 countries and territories. With assets
of US$3,017bn at 31 December 2024, HSBC is one of the world's
largest banking and financial services organisations.
ends/all
