See "Risk Factors" below for certain information relevant to an investment in the Covered Bonds to be issued under the Programme.

Transcription

1 HSBC SFH (France) (duly licensed French specialised credit institution) 8,000,000,000 COVERED BOND PROGRAMME for the issue of Obligations de Financement de l'habitat Under the Covered Bond Programme described in this Base Prospectus (the "Programme"), HSBC SFH (France) (the "Issuer"), subject to compliance with all relevant laws, regulations and directives, may from time to time issue covered bonds (obligations de financement de l'habitat) to be governed either by French law or German law (respectively, the "French law Covered Bonds" and the "German law Covered Bonds" and together, the "Covered Bonds"). The Issuer is licensed as a specialised credit institution (établissement de crédit spécialisé) with the status of société de financement de l'habitat ("SFH") by the Autorité de contrôle prudentiel et de résolution (the "ACPR"). All Covered Bonds will benefit from the statutory privilège over all the assets and revenues of the Issuer created by Article L of the French Monetary and Financial Code (Code monétaire et financier) (the "Privilège"), as more fully described herein. The aggregate nominal amount of the Covered Bonds outstanding will not at any time exceed 8,000,000,000 (or its equivalent in other currencies) at the date of issue. Application will be made in certain circumstances for Covered Bonds (except the German law Covered Bonds) to be issued under the Programme to be listed and admitted to trading on Euronext Paris and/or any other regulated market situated in a Member State of the European Economic Area ("EEA") as defined in the Directive 2004/39/EC on financial instruments markets, as amended (each such market being a "Regulated Market"). The Covered Bonds (except the German law Covered Bonds) issued under the Programme may also be unlisted or listed and admitted to trading on any other stock exchange, including any other Regulated Market in any Member State of the EEA. The relevant Final Terms (a form of which is contained herein) in respect of the issue of any French law Covered Bonds (the "Final Terms") will specify whether or not such Covered Bonds will be listed and admitted to trading on any stock exchange and, if so, the relevant market. The German law Covered Bonds will not be admitted to trading nor listed on any stock exchange. This Base Prospectus has been submitted to the Autorité des marchés financiers ("AMF") which has granted visa no to it on 23 November This Base Prospectus replaces and supersedes the base prospectus dated 24 November 2016 and shall be in force for a period of one year as of the date of its approval by the AMF. Covered Bonds will be issued on a continuous basis in series (each a "Series") having one or more issue dates and (except in respect of the first payment of interest) on terms otherwise identical, the Covered Bonds of each Series being intended to be interchangeable with all other Covered Bonds of that Series. Each Series may be issued in tranches (each a "Tranche") on different issue dates. The specific terms of each Series (which will be supplemented where necessary with supplemental terms and conditions) will be set forth in the Final Terms. French law Covered Bonds may be issued either in dematerialised form ("Dematerialised Covered Bonds") or in materialised form ("Materialised Covered Bonds") as more fully described herein. Dematerialised Covered Bonds will at all times be in book entry form in compliance with Articles L et seq. of the French Monetary and Financial Code (Code monétaire et financier). No physical documents of title will be issued in respect of the Dematerialised Covered Bonds. Dematerialised Covered Bonds may, at the option of the Issuer, be (i) in bearer form (au porteur) inscribed as from the issue date in the books of Euroclear France (acting as central depositary) which shall credit the accounts of the Account Holders (as defined in "Terms and Conditions of the French law Covered Bonds - Form, Denomination, Title and Redenomination") including Euroclear Bank S.A./N.V. ("Euroclear") and Clearstream Banking, S.A.("Clearstream"), or (ii) in registered form (au nominatif) and, in such a latter case, at the option of the relevant Bondholder (as defined in "Terms and Conditions of the French law Covered Bonds - Form, Denomination, Title and Redenomination"), in either fully registered form (au nominatif pur), in which case they will be inscribed in an account maintained by the Issuer or by a registration agent (appointed in the relevant Final Terms) for the Issuer, or in administered registered form (au nominatif administré) in which case they will be inscribed in the accounts of the Account Holders designated by the relevant Bondholder. Materialised Covered Bonds will be in bearer materialised form only and may only be issued outside France. A temporary global certificate in bearer form without interest coupons attached, (a "Temporary Global Certificate") will initially be issued in relation to Materialised Covered Bonds. Such Temporary Global Certificate will subsequently be exchanged for definitive Materialised Covered Bonds with, where applicable, coupons for interest or talons attached (the "Definitive Materialised Covered Bonds"), on or after the fortieth (40 th ) day after the issue date of the Covered Bonds (subject to postponement as described in "Temporary Global Certificate in respect of Materialised Covered Bonds") upon certification as to non-u.s. beneficial ownership as more fully described herein. Temporary Global Certificates will (a) in the case of a Tranche intended to be cleared through Euroclear and/or Clearstream, be deposited on the issue date with a common depositary for Euroclear and Clearstream, and (b) in the case of a Tranche intended to be cleared through a clearing system other than or in addition to Euroclear and/or Clearstream or delivered outside a clearing system, be deposited as agreed between the Issuer and the Relevant Dealer(s) (as defined below). The Covered Bonds will be in such denomination(s) as may be specified in the relevant Final Terms, save that the minimum denomination of each Covered Bond will be such amount as may be allowed or required from time to time by the relevant central bank (or equivalent body) or any laws or regulations applicable to the relevant specified currency. Covered Bonds issued under the Programme are expected on issue to be rated Aaa by Moody s Investors Service Ltd ("Moody's") and AAA by Standard & Poor's Credit Market Services France S.A.S. ("S&P", and together with Moody s, the Rating Agencies ). Each of the Rating Agencies is established in the European Union, registered under Regulation (EC) No 1060/2009, as amended (the "CRA Regulation") and included in the list of registered credit rating agencies published by the European Securities and Markets Authority on its website ( in accordance with CRA Regulation. A rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, change or withdrawal at any time by the assigning rating agency. The credit ratings address the likelihood of full and timely receipt by any of the relevant Bondholders of interest on the Covered Bonds and the likelihood of receipt by any relevant Noteholder of principal of the Covered Bonds by the relevant Maturity Date. This Base Prospectus and any supplement to this Base Prospectus will be published on the websites of (i) the AMF ( and (ii) HSBC France ( See "Risk Factors" below for certain information relevant to an investment in the Covered Bonds to be issued under the Programme. ARRANGER HSBC PERMANENT DEALER HSBC

2 This Base Prospectus (together with all supplements thereto from time to time), constitutes a base prospectus for the purposes of Article 5.4 of the Directive 2003/71/EC, as amended (the "Prospectus Directive") and contains or incorporates by reference all relevant information concerning the Issuer which is necessary to enable investors to make an informed assessment of the assets and liabilities, financial position, profit and losses and prospects of the Issuer, as well as the base terms and conditions of the Covered Bonds (except the German law Covered Bonds) to be issued under the Programme. The terms and conditions applicable to each Tranche not contained or incorporated by reference herein (including, without limitation, the aggregate nominal amount, issue price, redemption price thereof, and interest, if any, payable thereunder) will be determined by the Issuer and the relevant Dealer(s) at the time of the issue and will be set out in the relevant Final Terms. This Base Prospectus is to be read and construed in conjunction with any supplement that may be published from time to time and with all documents and/or information incorporated herein by reference (see "Documents incorporated by Reference" below) as well as, in relation to any Tranche of Covered Bonds, with the relevant Final Terms. This Base Prospectus (together with all supplements thereto from time to time) may only be used for the purposes for which it has been published. To the best of the Issuer's knowledge (having taken all reasonable care to ensure that such is the case), the information relating to the Issuer contained or incorporated by reference in this Base Prospectus is in accordance with the facts and contains no omission likely to affect its import. To the best of HSBC France's knowledge (having taken all reasonable care to ensure that such is the case), the information relating to HSBC France, the HSBC entities and the Home Loans contained or incorporated by reference in this Base Prospectus is in accordance with the facts and contains no omission likely to affect its import. The Arranger and the Dealers have not separately verified the information contained or incorporated by reference in this Base Prospectus. Neither the Arranger nor the Dealers make any representation, express or implied, or accepts any responsibility, with respect to the accuracy or completeness of any of the information in this Base Prospectus. Neither this Base Prospectus nor any other information supplied in connection with the Programme (including any information incorporated by reference) is intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by any of the Issuer, the Arranger or the Dealers that any recipient of this Base Prospectus or any other information supplied in connection with the Programme should purchase the Covered Bonds. Each prospective investor in the Covered Bonds should determine for itself the relevance of the information contained or incorporated by reference in this Base Prospectus and its purchase of Covered Bonds should be based upon such investigation as it deems necessary. Neither the Arranger nor the Dealers undertake to review the financial condition or affairs of the Issuer during the life of the arrangements contemplated by this Base Prospectus nor to advise any investor or prospective investor in the Covered Bonds of any information that may come to the attention of the Dealers or the Arranger. No person is or has been authorised to give any information or to make any representation other than those contained or incorporated by reference in this Base Prospectus in connection with the issue or sale of the Covered Bonds and, if given or made, such information or representation must not be relied upon as having been authorised by the Issuer, the Arranger or the Dealers (as defined in "Summary of the Programme"). Neither the delivery of this Base Prospectus nor any sale made in connection herewith shall, under any circumstances, create any implication that there has been no change in the affairs of the Issuer since the date hereof or the date upon which this Base Prospectus has been most recently supplemented or that there has been no adverse change in the financial position of the Issuer since the date hereof or the date upon which this Base Prospectus has been most recently supplemented or that any other information supplied in connection with the Programme is correct as of any time subsequent to the date on which it is supplied or, if different, the date indicated in the document containing the same. The distribution of this Base Prospectus and the offering or sale of Covered Bonds in certain jurisdictions may be restricted by law. The Issuer, the Arranger and the Dealers do not represent that this Base Prospectus may be lawfully distributed, or that any Covered Bonds may be lawfully offered, in compliance with any applicable registration or other requirements in any such jurisdiction, or pursuant to an exemption available thereunder, or assume any responsibility for facilitating any such distribution or offering. In particular, no action has been taken by the Issuer, the Arranger or the Dealers which is A

3 intended to permit a public offering of any Covered Bonds or distribution of this Base Prospectus in any jurisdiction where action for that purpose is required. Accordingly, no Covered Bond may be offered or sold, directly or indirectly, and neither this Base Prospectus nor any offering material may be distributed or published in any jurisdiction, except under circumstances that will result in compliance with any applicable laws and regulations. Persons into whose possession this Base Prospectus or any Covered Bonds may come must inform themselves about, and observe, any such restrictions on the distribution of this Base Prospectus and the offering and sale of Covered Bonds. In particular, there are restrictions on the distribution of this Base Prospectus and the offer or sale of Covered Bonds in the United States of America, Japan and the European Economic Area (including France, Germany, Italy, the Netherlands and the United Kingdom). IMPORTANT EEA RETAIL INVESTORS If the Final Terms in respect of any Covered Bonds include a legend entitled Prohibition of Sales to EEA retail Investors, the Covered Bonds are not intended, from 1 January 2018, to be offered, sold or otherwise made available to and, with effect from such date, 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 Directive 2014/65/EU ( MiFID II ); (ii) a customer within the meaning of Directive 2002/92/EC ( IMD ), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in the Prospectus Directive. Consequently, no key information document required by Regulation (EU) No 1286/2014 (the PRIIPs Regulation ) for offering or selling the Covered Bonds or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Covered Bonds or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPS Regulation. The Covered Bonds have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons as defined in Regulation S under the Securities Act ("Regulation S"). The Covered Bonds may include Materialised Covered Bonds in bearer form that are subject to U.S. tax law requirements. Subject to certain exceptions, the Covered Bonds may not be offered or sold or, in the case of Materialised Covered Bonds in bearer form, delivered within the United States or, in the case of certain Materialised Covered Bonds in bearer form, to, or for the account or benefit of, United States persons as defined in the U.S. Internal Revenue Code of 1986, as amended. The Covered Bonds are being offered and sold outside the United States of America to non-u.s. persons in reliance on Regulation S. For a description of these and certain further restrictions on offers, sales and transfers of Covered Bonds and on distribution of this Base Prospectus, see "Subscription and Sale". This Base Prospectus does not constitute an offer of, or an invitation by or on behalf of the Issuer, the Arranger or the Dealers to subscribe for, or purchase, any Covered Bonds. Prospective purchasers of Covered Bonds should ensure that they understand the nature of the relevant Covered Bonds and the extent of their exposure to risks and that they consider the suitability of the relevant Covered Bonds as an investment in the light of their own circumstances and financial condition. Covered Bonds involve a high degree of risk and potential investors should be prepared to sustain a total loss of the purchase price of their Covered Bonds. For more information, see "Risk Factors". None of the Arranger, the Dealers or the Issuer makes any representation to any prospective investor on the Covered Bonds regarding the legality of its investment under any applicable laws. Any prospective investor in the Covered Bonds should be able to bear the economic risk of an investment in the Covered Bonds for an indefinite period of time. A

4 TABLE OF CONTENTS SUMMARY OF THE PROGRAMME... 5 RESUME EN FRANCAIS DU PROGRAMME (FRENCH SUMMARY OF THE PROGRAMME) RISK FACTORS STRUCTURE DIAGRAM PRINCIPAL PROGRAMME PARTIES DOCUMENTS INCORPORATED BY REFERENCE SUPPLEMENT TO THE BASE PROSPECTUS USE OF PROCEEDS TERMS AND CONDITIONS OF THE FRENCH LAW COVERED BONDS TEMPORARY GLOBAL CERTIFICATES IN RESPECT OF FRENCH LAW COVERED BONDS WHICH ARE MATERIALISED COVERED BONDS THE ISSUER THE BORROWER AND THE BORROWER FACILITY AGREEMENT THE BORROWER COLLATERAL SECURITY ASSET MONITORING CASH FLOW ORIGINATION OF THE HOME LOANS TAXATION SUBSCRIPTION AND SALE FORM OF FINAL TERMS FORM OF FINAL TERMS GENERAL INFORMATION INDEX OF DEFINED TERMS PERSON RESPONSIBLE FOR THE INFORMATION GIVEN IN THE BASE PROSPECTUS A

5 SUMMARY OF THE PROGRAMME Summaries are made up of disclosure requirements known as Elements the communication of which is required by Annex XXII of Regulation (EC) No 809/2004 of 29 April 2004, as amended. These Elements are numbered in Sections A E (A.1 E.7). This summary contains all the Elements required to be included in a summary for this type of securities and for HSBC SFH (France) (the Issuer ). Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements. Even though an Element may be required to be inserted in the summary because of the type of securities and Issuer, it is possible that no relevant information can be given regarding such Element. In this case a short description of the Element is included in the summary and marked as Not applicable. This summary is provided for purposes of the issue by the Issuer of the Covered Bonds of a denomination of less than 100,000 which are offered to the public or admitted to trading on a Regulated Market of the European Economic Area (the EEA ). The issue specific summary relating to this type of Covered Bonds will be annexed to the relevant Final Terms and will comprise (i) the information below with respect to the summary of the Base Prospectus and (ii) the information below included in the items "issue specific summary". A.1 General disclaimer regarding summary the A.2 Information regarding consent by the Issuer to the use of the Prospectus Section A - Introduction and warnings This summary must be read as an introduction to this Base Prospectus. Any decision to invest in the Covered Bonds should be based on a consideration by any investor of the Base Prospectus as a whole, including any documents incorporated by reference and any supplement approved from time to time. Where a claim relating to information contained in this Base Prospectus is brought before a court, the plaintiff may, under the national legislation of the Member State of the EEA where the claim is brought, be required to bear the costs of translating this Base Prospectus before the legal proceedings are initiated. Civil liability attaches only to those persons who have tabled the summary, including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of this Base Prospectus or it does not provide, when read together with the other parts of this Base Prospectus, key information in order to aid investors when considering whether to invest in the Covered Bonds. Capitalised word and expressions not defined in this summary shall have the meaning ascribed to them in the other sections of this Base Prospectus. In the context of any offer of Covered Bonds in France and/or any jurisdiction of the European Union to which this Base Prospectus has been passported from time to time (the Public Offer Jurisdiction ) that is not within an exemption from the requirement to publish a prospectus under the Prospectus Directive, as amended, (a Public Offer ), the Issuer consents to the use of this Base Prospectus and the relevant Final Terms (together with the Base Prospectus, the Prospectus ) in connection with a Public Offer of any Covered Bonds during the offer period specified in the relevant Final Terms (the Offer Period ) and in the Public Offer Jurisdiction(s) specified in the relevant Final Terms by any financial intermediary duly authorised designated in such Final Terms (each an Authorised Offeror ). The consent referred to above relates to Offer Periods (if any) ending no later than the date falling 12 months from the date of the approval of the Base Prospectus by the Autorité des marchés financiers. The Terms and Conditions of the Public Offer shall be provided to investors by that Authorised Offeror at the time of the Public Offer. Neither the Issuer nor any of the Dealers or other Authorised Offerors has any responsibility or liability for such information. References in this Base Prospectus to Permanent Dealers are to the persons listed as Dealers and to such additional persons that are appointed as dealers in respect of the whole Programme (and whose appointment has not been terminated) and to Dealers are to all Permanent Dealers and all persons appointed as a dealer in respect of one or more Tranches. A

6 Issue specific Summary: [In the context of the offer of the Covered Bonds in [ ] ( Public Offer Jurisdiction[s] ) which is not made within an exemption from the requirement to publish a prospectus under the Prospectus Directive, as amended (the Public Offer ), the Issuer consents to the use of the Prospectus in connection with such Public Offer of any Covered Bonds during the period from [ ] until [ ] (the Offer Period ) and in the Public Offer Jurisdiction[s] by [ ] / [any financial intermediary] (the Authorised Offeror[s] ). [The Authorised Offeror[s] must satisfy the following conditions: [ ]]] The Terms and Conditions of the Public Offer shall be provided to Investors by that Authorised Offeror at the time of the Public Offer. Neither the Issuer nor any of the Dealers or other Authorised Offerors has any responsibility or liability for such information.]/ [Not applicable]] B.1 Legal and commercial name of the Issuer B.2 Domicile and legal form of the Issuer, the legislation under which the Issuer operates and its country of incorporation B.4b Description of any known trends affecting the Issuer and the industries in which it operates B.5 A description of the Issuer s Group and the Issuer s position within the Group Section B Issuer HSBC SFH (France) (formerly known as HSBC Covered Bonds (France)). The Issuer is a limited liability company (société anonyme) incorporated under French law and duly licensed as a French specialised credit institution (établissement de crédit spécialisé) with the status of société de financement de l'habitat (SFH) delivered by the Autorité de contrôle prudentiel et de résolution (ACPR) on 28 March Not Applicable. The outlook of the Issuer has not been affected since the date of its last published financial statements. HSBC SFH (France) is a subsidiary of HSBC France. On the date of this Base Prospectus, per cent of the Issuer's share capital is held by HSBC France. HSBC France is a specialised credit institution approved by the Autorité de contrôle prudentiel et de résolution (ACPR). Its role is to provide support for the activities of HSBC SFH (France) as a servicer, as defined by the regulations that apply to sociétés de financement de l habitat, in particular within the meaning of Article L of the French Monetary and Financial Code (Code monétaire et financier) (the French Monetary and Financial Code ). HSBC SFH (France) and HSBC France have entered into a facility agreement (the Borrower Facility Agreement ) setting out the terms and conditions according to which HSBC SFH (France), as lender (in such capacity, the "Lender"), shall use the proceeds from the issuance of the Covered Bonds to fund advances (each a "Borrower Advance") to be made available to HSBC France, as borrower (in such capacity, the "Borrower"). The Borrower Facility Agreement is secured by a collateral security agreement (the Borrower Collateral Security Agreement ) pursuant to which HSBC France shall, as security to its financial obligations, grant, as collateral security with full title transfer (remise en pleine propriété à titre de garantie) pursuant to Articles L to L of the French Monetary and Financial Code (Code monétaire et financier) to the benefit of HSBC SFH (France), home loans complying with the eligibility criteria provided for by Article L of the French Monetary and Financial Code (Code monétaire et financier) and other eligible assets within the meaning of the French legal framework applicable to sociétés de financement de l habitat. The issued capital of HSBC France is 337,189,135 and consists of 67,437,827 A

7 B.9 Profit forecast or estimate B.10 Qualifications in the auditors report B.12 Selected historical key financial information (audited) A shares with a par value of 5 each. HSBC France share capital and voting rights are held at per cent by HSBC Bank plc, headquartered in London. HSBC Bank plc is a wholly-owned subsidiary of HSBC Holdings plc, the holding company for the HSBC Group, one of the world s largest banking and financial services organisations, listed in London, Hong Kong, New York, Paris and Bermuda. Not Applicable. The Issuer does not disclose any amount in relation to profit forecast or estimate. Not Applicable. The statutory auditors audit reports on the financial statements of HSBC SFH (France) for the years ended 31 December 2016 and 31 December 2015 do not contain any qualifications. The statutory auditors limited review report on the financial statements of HSBC SFH (France) for the six-month period ended 30 June 2017 does not contain any qualifications. The tables below set out summary information extracted from the Issuer s interim financial statements as at 30 June 2017 reviewed by the auditors and from the Issuer's audited financial statements as at 31 December 2016 and 31 December 2015: in euros 30/06/ /12/ /12/2015 ASSETS INTER-BANK TRANSACTIONS AND SIMILAR - Cash and central banks - Government paper and similar securities - Receivables - credit institutions 3,758,088,864 5,959,449,618 5,287,053,349 CUSTOMERS TRANSACTIONS - Current accounts in debit - Commercial receivables - Other customer loans, and lease transactions and similar BONDS, SHARES, OTHER FIXED-INCOME AND FLOATING-RATE SECURITIES - Bonds and other fixedincome securities - Equities and other floating-rate securities INVESTMENTS, HOLDINGS IN RELATED COMPANIES AND OTHER SECURITIES HELD ON A LONG-TERM BASIS - Equity investments and other long-term holdings in securities - Holdings in related companies TANGIBLE AND INTANGIBLE FIXED ASSETS - Intangible assets - Property, plant and equipment ACCRUALS AND SUNDRY ASSETS - Other assets 222, , ,873 - Accruals 8,998,704 10,063,595 13,829,990 TOTAL 3,767,310,156 5,969,872,161 5,301,132,212 LIABILITIES

8 INTER-BANK TRANSACTIONS AND SIMILAR - Central banks - Payables - credit institutions 0 668,519,783 0 CUSTOMERS TRANSACTIONS - Special savings accounts - Customer current accounts in credit - Other customer liabilities DEBT REPRESENTED BY A SECURITY - Savings bonds - Inter-bank market securities and negotiable debt securities - Bonds and similar items Other debt represented by a security 3,651,512,131 5,185,800,697 5,182,457,987 ACCRUALS AND OTHER LIABILITIES - Other liabilities , ,949 - Accruals 2,174,665 1,164,611 1,079,381 PROVISIONS SUBORDINATED DEBT GENERAL BANKING RISK FUND (GBRF) EQUITY ATTRIBUTABLE TO THE OWNERS OF THE PARENT (EXCLUDING FRBG) - Subscribed capital 113,250, ,250, ,250,000 - Issue and transfer premiums - Reserves 247, , ,666 - Regulated provisions and investment subsidies - Retained earnings 67, ,267 2,338,975 - Profit (loss) for the period 58, ,682 1,639,255 TOTAL 3,767,310,156 5,969,872,161 5,301,132,212 There has been no material adverse change in the prospects of the Issuer since the date of its last published audited financial statements. There has been no significant change in the financial or trading position of the Issuer since the end of the last financial period for which interim financial information has been published. A The tables below set out summary information extracted from the Issuer s interim financial statements as at 30 June 2017 and as at 30 June 2016 reviewed by the auditors and from the Issuer's audited financial statements as at 31 December 2016 and 31 December INCOME STATEMENT 30/06/17 31/12/16 30/06/16 31/12/15 Interest and similar income 32,405, ,581,185 55,490, ,421,495 Interest and similar expense - -31,896, ,874,678-54,659, ,939,815 Commission income 731,524 1,395, ,851 1,821,137 Commission expense 0-256, Gains or losses on trading -1,668 1, ,043

9 account securities Other banking income (charges) NET OPERATING INCOME ,239,253 2,846,912 1,554,828 3,484,860 General operating expenses -965,231-1,735,019-1,135,870-1,020,340 GROSS OPERATING INCOME 274,022 1,111, ,958 2,464,520 OPERATING PROFIT 274,022 1,111, ,958 2,464,520 NET OPERATING PROFIT BEFORE TAX 274,022 1,111, ,958 2,464,520 Exceptional items Income tax -215, , , ,265 NET INCOME 58, , ,530 1,639,255 The table below sets out the principal elements of the cash flow statements of the Issuer (see The Issuer - Cash flow statements (first semester 2017 and fiscal years 2016 and 2015 audited) ) In Thousand Euros 30/06/17 31/12/16 31/12/15 TOTAL NET CASHFLOW FROM OPERATING ACTIVITIES TOTAL NET CASHFLOW FROM INVESTMENTS ACTIVITIES TOTAL NET CASHFLOW FROM FINANCING ACTIVITIES NET VARIATION OF CASH OR CASH EQUIVALENT 1,534,724-9, , ,202, , , , ,754 4,319 B.13 Recent material events relevant to the evaluation of the Issuer s solvency B.14 Extent to which the Issuer is dependent upon other entities within the Group B.15 Principal activities of the Issuer A Not Applicable. There are no events particular to the Issuer which are to a material extent relevant to an evaluation of its solvency. Please refer to item B.5 for the Group and the Issuer's position within the Group. In accordance with its by-laws, HSBC SFH (France) s exclusive purpose is to: grant or finance home loans (prêts à l habitat) and hold eligible securities and instruments; grant to any credit institutions (including HSBC France) loans guaranteed by

10 B.16 Extent to which the Issuer is directly or indirectly owned or controlled B.17 Credit ratings assigned to the Issuer or its debt securities the remittance, the transfer or the pledge of the receivables arising from home loans; acquire promissory notes issued by credit institutions which represent receivables arising from home loans; issue obligations de financement de l'habitat (such as the Covered Bonds) and raise other sources of financing which benefit from the Privilège in order to finance these assets; issue ordinary bonds or raise other sources of financing which do not benefit from the Privilège, including promissory notes (billets à ordre) which represent receivables arising from home loans; carry out temporary transfers of securities, pledge a securities account and pledge or transfer all or part of the receivables held by it in accordance with the applicable provisions of the French Monetary and Financial Code (Code monétaire et financier). The receivables or securities thus transferred or pledged are not included in the cover pool defined in Article L of the French Monetary and Financial Code (Code monétaire et financier) (assiette du Privilège) and are not taken into account for the calculation of the Legal Cover Ratio; and in order to hedge its interest and currency risks on loans, exposures, obligations de financement de l habitat and other sources of financing benefiting from the Privilège, or to manage or hedge the global risk on its assets, liabilities and off balance sheet, exposures, use derivative instruments as defined in Article L of the French Monetary and Financial Code (Code monétaire et financier). Any amounts due by the Issuer pursuant to these financial instruments, after applicable netting, benefit from the Privilège. However, HSBC SFH (France) is not entitled to hold any equity interest (participations) in any entity in accordance with Article L IV of the French Monetary and Financial Code (Code monétaire et financier). HSBC SFH (France) is a subsidiary of HSBC France. On the date of this Base Prospectus, per cent of the Issuer's share capital is held by HSBC France. HSBC Bank plc, headquartered in London, holds per cent of HSBC France share capital and voting rights. HSBC Bank plc is a 100 per cent subsidiary of HSBC Holdings plc, the holding company for the HSBC Group, one of the world's largest banking and financial services organisations. Covered Bonds issued under the Programme are expected on issue to be rated Aaa by Moody's and AAA by S&P. The rating of the Covered Bonds will be specified in the relevant Final Terms. As of the date of this Base Prospectus, each of the Rating Agencies is established in the European Union, registered under Regulation (EU) No. 1060/2009, as amended (the "CRA Regulation") and included in the list of registered credit rating agencies published by the European Securities and Markets Authority on its website ( in accordance with CRA Regulation. A rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, change or withdrawal at any time by the assigning rating agency. Issue specific summary: Credit ratings: [Not applicable/the Covered Bonds to be issued [have been/are expected to be] rated: [S&P: [ ] Moody's [ ]] A

11 C.1 Type, class and identification number of the Covered Bonds Section C Securities Up to 8,000,000,000 (or the equivalent in other currencies at the date of issue) (the Programme Limit ) aggregate nominal amount of Covered Bonds may be outstanding at any one time (the Programme ). The Covered Bonds will be issued on a syndicated or non-syndicated basis. The Covered Bonds will be issued in series (each a Series ) having one or more issue dates and on terms otherwise identical (or identical save as to the first payment of interest), the Covered Bonds of each Series being intended to be interchangeable with all other Covered Bonds of that Series. Each Series may be issued in tranches (each a Tranche ) on the same or different issue dates. The specific terms of each Tranche (including, without limitation, the aggregate nominal amount, issue price, redemption price thereof, and interest, if any, payable thereunder) will be set out in the relevant final terms to this Base Prospectus (the Final Terms ). French law Covered Bonds (obligations de financement de l habitat) may be issued either in dematerialised form ("Dematerialised Covered Bonds") or in materialised form ("Materialised Covered Bonds"). Dematerialised Covered Bonds may, at the option of the Issuer, be issued in bearer form (au porteur) or in registered form (au nominatif) and, in such latter case, at the option of the relevant holder, in either fully registered form (au nominatif pur) or administered form (au nominatif administré). No physical documents of title will be issued in respect of Dematerialised Covered Bonds. Materialised Covered Bonds will be in bearer form only. A Temporary Global Certificate will initially be issued in respect of each Tranche of Materialised Covered Bonds. Materialised Covered Bonds may only be issued outside France. German law Covered Bonds will be issued in materialised registered form. They will not be admitted to trading nor listed on any market or stock exchange. The Covered Bonds have been accepted for clearance through Euroclear France as central depositary in relation to Dematerialised Covered Bonds and, in relation to Materialised Covered Bonds, Clearstream and Euroclear or any other clearing system that may be agreed between the Issuer, the Fiscal Agent and the relevant Dealer(s). The International Securities Identification Number (ISIN) and a common code will be specified in the relevant Final Terms. A Issue specific summary: Series Number: [ ] Tranche Number: [ ] Aggregate Nominal Amount: [ ] Series: [ ] Tranche: [ ] Form of Covered Bonds: [Dematerialised Covered Bonds / Materialised Covered Bonds]. [If the Covered Bonds are Dematerialised Covered Bonds: Dematerialised Covered Bonds are [in bearer dematerialised form (au porteur) / in registered dematerialised form (au nominatif)]. [If the Covered Bonds are Materialised Covered Bonds: Materialised Covered Bonds will be in bearer form only] ISIN: [ ] Common Code: [ ]

12 C.2 Currencies of the Covered Bonds C.5 Description of any restrictions on the free transferability of the Covered Bonds C.8 Description of rights attached to the Covered Bonds A Central Depositary: [ ] Any clearing system(s) other than Euroclear [Not applicable]/[give name(s) Bank S.A./N.V. and Clearstream Banking, S.A. and number(s) [and and the relevant identification number(s): address(es)]] Subject to the compliance with all relevant laws, regulations and directives, Covered Bonds may be issued in Euros, U.S. dollars, Canadian dollars, pounds sterling, Japanese Yen, Swiss Francs and, subject to prior Rating Affirmation, in any other currency agreed between the Issuer and the relevant Dealer(s). Issue specific summary: The currency of the Covered Bonds is: There are restrictions on the offer and sale of Covered Bonds and on the distribution of offering material in various jurisdictions. [The Issuer is Category 1 for the purposes of Regulation S under the Securities Act.] Arranger The arranger in respect of the Programme (the Arranger ) is HSBC France. Dealers under the Programme The dealer in respect of the Programme (the Dealer ) is HSBC France. The Issuer may from time to time terminate the appointment of any Dealer under the Programme or appoint additional dealers either in respect of one or more Tranches or in respect of the whole Programme. References in this Base Prospectus to "Permanent Dealer" are to the person listed above as Dealer and to such additional persons that are appointed as dealers in respect of the whole Programme (and whose appointment has not been terminated) and references to "Dealers" are to the Permanent Dealer and all persons appointed as a dealer in respect of one or more Tranches. Issue price Covered Bonds may be issued at their nominal amount or at a discount or premium to their nominal amount. Specified Denomination Covered Bonds shall be issued in the Specified Denomination(s) set out in the relevant Final Terms, save that the minimum denomination of each Covered Bond listed and admitted to trading on a Regulated Market in a Member State of the European Economic Area (an EEA State ) or offered to the public in an EEA State in circumstances which require the publication of a Base Prospectus under the Prospectus Directive (given that any exemption regime, as set out in the Prospectus Directive, could apply in contemplation of the relevant issue) will be at least such amount as may be allowed or required from time to time by the relevant central bank (or equivalent body) or any laws or regulations applicable to the relevant Currency. Covered Bonds having a maturity of less than one year, in respect of which the issue proceeds are to be accepted in the United Kingdom, will constitute deposits for the purposes of the prohibition on accepting deposits contained in section 19 of the Financial Services and Markets Act 2000, unless they are issued to a limited class of professional investors and they have a denomination of at least 100,000 (or its equivalent in any other currency). Dematerialised Covered Bonds shall be issued in one Specified Denomination only. Status of the Covered Bonds Subject to the Priority Payment Orders, the Covered Bonds, and, where appropriate, any related Coupons and Receipts will constitute direct, unconditional, unsubordinated and privileged obligations of the Issuer and will rank pari passu without any preference among themselves. Privilège The Bondholders benefit from the privilège (priority right of payment) created by Article L of the French Monetary and Financial Code (Code monétaire et financier). [ ]

13 Negative pledge Except in accordance with the Programme Documents, the Issuer will not create or permit to subsist any privilège, mortgage, charge, pledge or other form of security interest (sûreté réelle) upon any of its assets or revenues, present or future, to secure any Relevant Undertaking of, or guaranteed by, the Issuer. A "Relevant Undertaking" means any present or future (i) indebtedness for borrowed money or (ii) undertaking in relation to interest or currency swap transactions. Events of default, including cross default Subject to the legal framework applicable to an SFH, if an Issuer Event of Default (as defined in the Terms and Conditions of the French law Covered Bonds) occurs in respect of any Series of French law Covered Bonds, the Representative (i) may, at its discretion, or (ii) shall, if so directed by the Majority Bondholders or if such Issuer Event of Default is a Covered Bonds Cross Acceleration Event, upon written notice (an "Issuer Enforcement Notice") to the Fiscal Agent and the Issuer (with copy to the Administrator and to the Rating Agencies) given before all defaults have been cured, cause the principal amount of all Covered Bonds of such Series to become due and payable (but subject to the relevant Payment Priority Order), together with any accrued interest thereon, as of the date on which such notice for payment is received by the Fiscal Agent. Withholding tax 1. All payments of principal and interest by or on behalf of the Issuer in respect of the Covered Bonds, Receipts or Coupons shall be made free and clear of, and without withholding or deduction for, any taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within France or any authority therein or thereof having power to tax, unless such withholding or deduction is required by law. 2. Payments of interest and other revenues made by the Issuer with respect to the Covered Bonds other than Covered Bonds (described below) which are assimilated (assimilables) and form a single series with Covered Bonds issued before 1 March 2010 having the benefit of Article 131 quater of the French General Tax Code (Code général des impôts) are not subject to the withholding tax set out under Article 125 A III of the French General Tax Code (Code général des impôts) unless such payments are made outside France in a non-cooperative State or territory (Etat ou territoire non coopératif) within the meaning of Article A of the French General Tax Code (Code général des impôts) (a "Non-Cooperative State"). If such payments under the Covered Bonds are made in a Non-Cooperative State, a 75% withholding tax is applicable (subject to certain exceptions and to the more favourable provisions of any applicable double tax treaty) by virtue of Article 125 A III of the French General Tax Code (Code général des impôts). Furthermore, according to Article 238 A of the French General Tax Code (Code général des impôts) interest and other revenues on such Covered Bonds are not deductible from the Issuer's taxable income, if they are paid or accrued to persons established or domiciled in a Non-Cooperative State or paid to a bank account opened in a financial institution in such a Non- Cooperative State (the "Deductibility Exclusion"). Under certain conditions, any such non-deductible interest and other revenues may be recharacterised as constructive dividends pursuant to Articles 109 et seq of the French General Tax Code (Code général des impôts), in which case such non-deductible interest and other revenues may be subject to the withholding tax set out under Article 119 bis 2 of the French General Tax Code (Code général des impôts), at a rate of 30% or 75% (subject to the more favourable provisions of any applicable double tax treaty). Notwithstanding the foregoing, neither the 75% withholding tax set out under Article 125 A III of the French General Tax Code (Code général des impôts) nor, to the extent the relevant interest or other revenues relate to genuine transactions and are not in an abnormal or exaggerated amount, the Deductibility Exclusion and therefore the withholding tax set out under

14 A Article 119 bis 2 of the French General Tax Code (Code général des impôts) that may be levied as a result of such Deductibility Exclusion, will apply in respect of a particular issue of Covered Bonds if the Issuer can prove that the principal purpose and effect of such issue of Covered Bonds was not that of allowing the payments of interest or other revenues to be made in a Non-Cooperative State (the "Exception"). Pursuant to the French tax administrative guidelines (BOI-INT-DG , n 550 and 990, BOI-IR-DOMIC , n 10 and BOI-RPPMC- RCM , n 70 and 80, an issue of Covered Bonds will benefit from the Exception without the Issuer having to provide any proof of the purpose and effect of such issue of Covered Bonds, if such Covered Bonds are: (i) offered by means of a public offer within the meaning of Article L of the French Monetary and Financial Code (Code monétaire et financier) or pursuant to an equivalent offer in a State other than a Non-Cooperative State. For this purpose, an "equivalent offer" means any offer requiring the registration or submission of an offer document by or with a foreign securities market authority; or (ii) admitted to trading on a French or foreign regulated market or multilateral securities trading system provided that such market or system is not located in a Non-Cooperative State, and the operation of such market is carried out by a market operator or an investment services provider, or by such other similar foreign entity, provided further that such market operator, investment services provider or entity is not located in a Non-Cooperative State; or (iii) admitted, at the time of their issue, to the operations of a central depositary or of a securities payment and delivery system operator within the meaning of Article L of the French Monetary and Financial Code (Code monétaire et financier), or of one or more similar foreign depositaries or operators provided that such depositary or operator is not located in a Non-Cooperative State. 3. Payments of interest and other revenues with respect to Covered Bonds which are assimilated (assimilables) and form a single series with Covered Bonds, issued (or deemed issued) outside France as provided under Article 131 quater of the French General Tax Code (Code général des impôts), before 1 March 2010, will continue to be exempt from the withholding tax set out under Article 125 A III of the French General Tax Code (Code général des impôts). Covered Bonds issued before 1 March 2010 and whose maturity date was not extended as from that date, whether denominated in Euro or in any other currency, and constituting obligations or titres de créances négociables under French law, or other debt securities issued under French or foreign law and considered by the French tax authorities as falling into similar categories within the meaning of the French tax administrative guidelines (BOI-RPPM-RCM ), are deemed to be issued outside the Republic of France for the purpose of Article 131 quater of the French General Tax Code (Code général des impôts), in accordance with the aforementioned administrative guidelines. In addition, interest and other revenues paid by the Issuer on Covered Bonds which are to be assimilated (assimilables) and form a single series with Covered Bonds issued before 1 March 2010 will be subject neither to the Deductibility Exclusion nor to the withholding tax set out in Article 119 bis 2 of the French General Tax Code (Code général des impôts) solely on account of their being paid in a Non-Cooperative State or accrued or paid to a bank account opened in a financial institution to persons established or domiciled in a Non-Cooperative State. 4. Pursuant to Article 125 A of the French General Tax Code (Code général des impôts), subject to certain limited exceptions, where the paying agent (établissement payeur) is established in France, interest and other assimilated income received by individuals fiscally domiciled (domiciliés fiscalement) in France are subject to a 24% withholding tax, which is