Enhanced Notes Cash-Maximiser (SGD) Notes issued by Macquarie Bank Limited Denominated in SGD, 100% principal protected at maturity HSBC's authorised sales staff must go through this document with you once you have decided to place your funds in these Notes. This document is prepared to assist you in understanding these Notes. We recommend that you keep this document for future reference. Product description Cash-Maximiser (SGD) Notes (the Notes ) are short-term debt instruments issued by Macquarie Bank Limited which provide investors with the potential of enhanced yields and the added benefit of principal protection. The principal protection feature is only applicable where the Notes are held to maturity. The Notes provide Noteholders with regular coupon payments based on the sum of a fixed amount (Spread) and the prevailing 3-month SGD SOR rate as at each coupon Fixing Date. At maturity, Noteholders may receive a Bonus, if any, based on the performance of the MSCI Singapore Index since the Trade Date. The Notes have a tenor of 2 years. Information on the Issuer Macquarie Bank Limited, part of the Macquarie Group, provides specialist investment, advisory and financial services in select markets around the world, with over 11,000 employees located in 24 countries. Macquarie Bank Limited has a long term credit rating of A from Standard and Poor s and A1 from Moody s. Page 1 of 9
Indicative Term Sheet for Cash-Maximiser (SGD) Notes Issuer Macquarie Bank Limited Arranger Macquarie Securities (Singapore) Pte Limited Trade Date 29 November 2007 Settlement Date 6 December 2007 Maturity Date 7 December 2009 If such day is not a Business Day, the next following Business Day shall be the Maturity Date subject to any Market Disruption Events Currency Minimum Placement Nominal Amount per Note SGD S$200,000 S$10,000 Bonus Amount Floating Rate 2.00% x Nominal Amount (payable only if Bonus Event occurs) 3-Month USD/SGD SOR (Swap Offered RATE) published by the Association of Banks in Singapore (ABS) in REUTERS (Page: ABSIRFIX01) (as those terms are defined in 2006 ISDA Definitions) Protected Amount Underlying Index 100% of the Nominal Amount per Note MSCI Singapore Cash Index (Bloomberg Code: SGY Index) Index Sponsor Morgan Stanley Capital International Inc. Initial Index Reference Level Means the closing level of the Underlying Index as published by the Index Sponsor on the Trade Date On each Payment Date the Noteholder will be entitled to receive the Amount Schedule Period Fixing Date Payment Date 1 4 December 2007 6 March 2008 2 4 March 2008 6 June 2008 3 4 June 2008 8 September 2008 4 4 September 2008 9 December 2008 5 4 December 2008 6 March 2009 6 4 March 2009 8 June 2009 7 4 June 2009 7 September 2009 8 3 September 2009 7 December 2009 Page 2 of 9
Amount For each Period, an amount equal to: Nominal Amount per Note x (Floating Rate + Spread) x Day Count Basis Where, the Floating Rate will be fixed on the Fixing Date for each Period. The Issuer may adjust the Fixing Date in its sole discretion. Spread Period Spread 1 0.10% 2 0.10% 3 0.10% 4 0.10% 5 0.15% 6 0.15% 7 0.15% 8 0.15% Day Count Basis Actual/365 between Payment Dates Business Day Singapore Business Day Convention Modified Following Modified Following Payment at Maturity In respect of any date, means the following day which is a Business Day unless that day falls into the next calendar month in which case that date will be the first preceding day that is a Business Day If a Bonus Event has occurred, the Noteholder will, on the Maturity Date, receive an amount equal to: Nominal Amount per Note + Bonus Amount If no Bonus Event has occurred, the Noteholder will, on the Maturity Date, receive an amount equal to: Nominal Amount per Note Bonus Event Bonus Trigger Level A Bonus Event occurs if the Closing Price of the Underlying Index on the Valuation Date is greater than or equal to the Bonus Trigger Level. 150% of the Initial Index Reference Level Closing Price Valuation Date Means the closing level of the Underlying Index on any Business Day as published by the Index Sponsor 2 December 2009 (Maturity Date - 3 Business Days) Page 3 of 9
Secondary Market Settlement Listing Trade Date + 3 Business Days Unlisted Governing Law English Law Calculating Agent Macquarie Securities (Singapore) Pte Ltd (in respect of Singapore) Historical performance of MSCI Singapore Index and 3-month SGD SOR Please note that the charts below are for illustrative purpose only, they are not indicative of the likely or future performance of the MSCI Singapore Index or the 3-month SGD SOR respectively. MSCI Singapore Index 600 500 400 300 200 100 0 02-Jan-02 02-May-02 02-Sep-02 02-Jan-03 02-May-03 02-Sep-03 02-Jan-04 02-May-04 02-Sep-04 02-Jan-05 02-May-05 02-Sep-05 02-Jan-06 02-May-06 02-Sep-06 02-Jan-07 02-May-07 02-Sep-07 3-month SGD SOR 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 02-Jan-02 02-May-02 02-Sep-02 02-Jan-03 02-May-03 02-Sep-03 02-Jan-04 02-May-04 02-Sep-04 02-Jan-05 02-May-05 02-Sep-05 02-Jan-06 02-May-06 02-Sep-06 02-Jan-07 02-May-07 02-Sep-07 Source: Bloomberg as at 15 October 2007 Page 4 of 9
Illustration of coupon calculation for the SGD Note The following worked examples will explain some of the terms highlighted above and provide investors with illustrations of Amounts under several different scenarios. Figures used in the scenarios below are for illustrative purposes only and are no guarantee or indication of future performance. Assumptions Principal Amount : S$200,000 The Notes are held to the Maturity Date Initial Index Reference Level : 473.18 Bonus Trigger Level : 709.77 (150% of the Initial Index Reference Level) 90 days in each Period with Day Count Basis as Actual/365. The 3-month SGD SOR will change during the term of the Notes and may be below the illustrated rate. The current 3-month SGD SOR as quoted on Reuters on 17 October 2007 is 2.72087% p.a. Using the illustrated Floating Rate indicated in 3-month SOR (A) below and assuming an investment amount of SGD200,000, Noteholders could expect to receive the following Amounts: Period (% p.a.) % Amount Floating Rate (3-month SGD SOR % p.a.) Spread Fixing Date (A) (B) (A+B) (A+B)x(90/365) ( % x Nominal Amount) Payment Date 1 25-Oct-07 2.72251% 0.10% 2.82251% 0.69596% $1,391.92 29-Jan-08 2 25-Jan-08 2.61523% 0.10% 2.71523% 0.66951% $1,339.02 29-Apr-08 3 25-Apr-08 2.54553% 0.10% 2.64553% 0.65232% $1,304.64 29-Jul-08 4 25-Jul-08 2.62565% 0.10% 2.72565% 0.67208% $1,344.16 29-Oct-08 5 27-Oct-08 2.85565% 0.15% 3.00565% 0.74112% $1,482.24 29-Jan-09 6 27-Jan-09 2.95856% 0.15% 3.10856% 0.76649% $1,532.98 29-Apr-09 7 27-Apr-09 3.15620% 0.15% 3.30620% 0.81523% $1,630.46 29-Jul-09 8 27-Jul-09 2.95585% 0.15% 3.10585% 0.76583% $1,531.66 29-Oct-09 Total s $11,557.08 Best Case: Bonus Event occurs If on the Valuation Date the Underlying Index closes at or above the Bonus Trigger Level then Noteholders would have received: 1. The Amounts in the table above during the term (total of S$11,557.08); and 2. On the Maturity Date, a Bonus of S$4,000 (S$200,000 x 2.0% = S$4,000) and their Principal Amount of S$200,000 Worst case: No Bonus Event occurs If on the Valuation Date the Underlying Index closes below the Bonus Trigger Level then Noteholders would have received: 1. The Amounts in the table above during the term (total of S$11,557.08); and 2. On the Maturity Date, their Principal Amount of S$200,000 Page 5 of 9
Investor commitment You should regard these Notes as a 2-year investment and should make sure you have sufficient liquid emergency funds to meet any unforeseen circumstances. You should avoid excessive investment in a single type of investment, in regards to its total proportion of your overall portfolio, in order to guard against overexposure to any investment risks. This investment is likely to may be suitable for you if you accept that the Bonus Amount is not guaranteed. The minimum investment amount is S$200,000 Other Information Closing date and time 29 November 2007, 2 pm (Singapore time) Non-acceptance HSBC reserves the right, in its sole discretion, on or before the Issue Date, to reject your application wholly or partially. Selling Restrictions This document together with the Global Instrument (as defined below) has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, the Global Instrument and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of Notes may not be circulated or distributed, nor may Notes be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the SFA ), (ii) to a relevant person (which includes an accredited investor), or any person pursuant to Section 275, and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. Acknowledgement HSBC is not the Issuer of the Notes and hereby expressly disclaims any liability in relation thereto. The indicative terms set forth above are a summary only and are subject to the global instrument issued by Macquarie Bank Limited as Issuer relating to the Notes (the Global Instrument ). Copies of the Global Instrument containing the Terms and Conditions of the Notes, are available to you upon request. In issuing the Notes, Macquarie Bank Limited as Issuer is not making, and has not made, any representation whatsoever as to the underlying asset(s). Noteholders will also confirm that they understand (i) that the Issuer and the Calculation Agent are both Macquarie Bank Limited and (ii) Macquarie Bank Limited, as Issuer and Calculation Agent, owes no obligations to Noteholders to take any action other than those prescribed by the Terms and Conditions in the Global Instrument relating to the Notes. This document contains purely factual information and is not an expression of opinion or recommendation. It does not constitute financial product advice and should not be relied on as such. None of the information takes into account your personal objectives, financial situation or needs and you must determine whether the information is appropriate in terms of your particular circumstances. Macquarie Bank Limited, as Issuer, its agents and affiliates, are dealing with you exclusively on the basis that you have sufficient knowledge, experience and/or professional financial, tax, legal and other advice to undertake your own assessment of the information. You acknowledge that companies in the Macquarie Group may have an interest in the products Page 6 of 9
referred to herein and that companies within the Macquarie Group may profit by any investment made by you in such product. Macquarie Bank Limited does not carry on a banking business in Singapore and does not hold a licence under the Banking Act, Chapter 19 of Singapore and therefore is not subject to the supervision of the Monetary Authority of Singapore. Macquarie Securities (Singapore) Pte Limited (Registration No 198702912C) is a holder of a capital markets services licence under the Securities and Futures Act, Chapter 289 of Singapore. Macquarie Securities (Singapore) Pte Limited is not an authorised deposit-taking institution for the purposes of the Banking Act (Cth) 1959, and Macquarie Securities (Singapore) Pte Limited s obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542. Macquarie Bank Limited does not guarantee or otherwise provide assurance in respect of the obligations of Macquarie Securities (Singapore) Pte Limited. Investments in this product are not deposits with Macquarie Bank Limited or HSBC or their respective related bodies corporate, affiliates, associates or officers of any of the above entities and are subject to investment risk, including possible delays in repayment and loss of income. Important Notes This term sheet contains indicative terms only. Please re-confirm the final terms with your relationship manager at HSBC. Macquarie Bank Limited, HSBC and/or any members of their respective Groups may trade for its own account as principal, may have underwritten an issue within the last 36 months or, together with its directors, officers and employees, may have a long or short position in securities or Notes or in any related Note mentioned in this document. Brokerage or fees may be earned by any member of the HSBC Group or persons associated with them in respect of any business transacted by them in all or any of the securities or Notes referred to in this document. The information contained in this document is not to be construed as an offer to sell or a solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal and the information is derived from sources believed to be reliable but which have not been independently verified by HSBC or the Issuer, Macquarie Bank Limited. HSBC, members of the HSBC Group and the Issuer, Macquarie Bank Limited, make no guarantee of its accuracy and completeness and is not responsible for errors of transmission of factual or analytical data, nor is it liable for any direct or consequential damages arising out of any person s reliance upon this information. All charts and graphs are from publicly available sources or proprietary data. The opinions in this document are made in good faith but are subject to change without notice. All expenses incurred by the Issuer, including legal fees, listing fees, will be for the account of Macquarie Bank Limited as Issuer. This document is not intended for distribution in the United States of America, Australia and Canada or to citizens and residents of US, and Canada and residents of Australia. This document is intended to be distributed in its entirety. Unless expressly stated, the information contained in this document is current as at 13 November 2007. Risk disclosure Specific investment objectives, personal situation and particular needs of any specific persons have not been taken into consideration in this term sheet. Investors may wish to seek advice from a financial adviser before making a commitment to invest in the Notes. In the event that an investor chooses not to seek advice from a financial adviser, the investor should consider whether the Notes are suitable for him/her. This document also does not aim to notify you of any possible risks, direct or indirect, in undertaking such a transaction including possible delays in repayment and loss of income and principal invested. Any performance figures quoted are no guarantee or indication of the future performance of the Underlying. Potential investors must make their own assessment of the Underlying. Page 7 of 9
General Risks: Following are some of the general risks associated with investing in the Notes: General economic conditions in the United States and other jurisdictions; The occurrence of an unforeseen event or force majeure that has a significant effect on the operation of financial markets; Interest rates, inflation and currency exchange rates; Changes in government, monetary policy and other laws; Changes in the taxation laws relating to the payment of interest and principal which could be adverse to Noteholders; Liquidity and the credit risk of the Issuer Other risks associated with investing in the Notes include: Return risk: Investors may receive no Bonus Amount at maturity, for example, if the MSCI Singapore Index is below is Bonus Trigger Level at maturity Noteholders will only receive the Nominal Amount per Note. Market risk: Changes in the level of the Underlying Index can be unpredictable, sudden and large. Noteholders should be prepared to accept that no Bonus may be payable. Secondary Market risk: The Notes are not trading instruments. There will not be a liquid secondary market in the Notes. On request the Issuer may but is not obliged to purchase the Notes from the holder at a price determined by the Issuer by reference to current market conditions. Prior to maturity, the value the Notes is influenced by various factors including but not limited to: volatility, interest rates, dividends and time remaining to maturity. Credit risk: The obligations of the Issuer under the Notes are unsecured contractual obligations of the Issuer and no other entity. The holder of a Note is relying on the creditworthiness of the Issuer and no other person. Hedging risk: The market price of the Underlying Index may depend upon the hedging transactions of the Issuer or any of its affiliates which in turn will depend upon market conditions at the time of such hedging. The market may be affected by such hedging. Potential conflict of interest: One or more of the Issuer or any of its affiliates may from time to time engage in transaction involving constituent security or securities in the Underlying Index, for their proprietary accounts and for other accounts under their management. Such trading may influence the value of the Underlying Index and therefore the value of the Note. Foreign exchange risk: A non-sgd account holder will be subject to fluctuations in exchange rates, which could affect the non-sgd account holder s return either negatively or positively upon conversion into local currency received. Re-investment risk: Where the Notes are redeemed early, investors need to consider their ability to re-invest their redemption proceeds in other suitable products with similar returns and tenors. Corporate Actions: Other risks may impact on the value of the Notes, for example any change in the way the Underlying Index is calculated. In certain circumstances the Issue has discretion as to the adjustments that it makes, if any, for such events, following certain extraordinary events. Early redemption by investor: The Notes are fully protected if held to maturity and cannot be sold or transferred to a third party. If investors wish to redeem them prior to maturity, they may do so by submitting a request to the Bank on the 15th or last day of every month. The amount received will depend on the early termination price, which factors in costs, losses and damages which the Issuer incurred in discharging the related hedging or other arrangement related to the Notes. Should the Notes be redeemed early by the investor it is possible they will not receive 100% of the principal amount back due to early break costs incurred and market movements. Early redemption of the Note: The Issuer has the discretion to redeem the Notes early if certain major events occur, for example a Termination Event (as defined in the Global Instrument) occurs. In such event the early redemption amount of the Notes will be determined by the Issuer and the investor may not receive the Nominal Amount back at that time. Market Risk - Many factors can affect the movement of the Spot Exchange Rate of the underlying currencies, including the political and economic environment, business conditions, investor sentiment and confidence. Re-investment Risk - You need to consider your ability to re-invest the principal investment amount plus the interest (if paid) in other suitable products with similar returns and tenors, where the Notes have been terminated early. Page 8 of 9
In addition to the Declaration in the International Bonds Transaction Form, I/we confirm that I/we have read and accepted the above terms and risks of the Cash-Maximiser (SGD) Notes issued by Macquarie Bank Limited. In addition to the Declaration in the International Bonds Transaction Form, I/we confirm that I/we have read and accepted the above terms and risks of the Cash-Maximiser (SGD) Notes issued by Macquarie Bank Limited. In addition to the Declaration in the International Bonds Transaction Form, I/we confirm that I/we have read and accepted the above terms and risks of the Cash-Maximiser (SGD) Notes issued by Macquarie Bank Limited. Signature Name: Date: Signature Name: Date: Signature Name: Date: For bank use only: Signature verified by: Issued by The Hongkong and Shanghai Banking Corporation Limited, which is incorporated in the Hong Kong SAR with limited liability. Page 9 of 9