Ring-fencing Transfer Scheme (RFTS) Remaining Commercial Customer Guide

Ring-fencing Transfer Scheme (RFTS) Remaining Commercial Customer Guide

2 Customer Guide Contents Page General Information 3 Our Products and Services (Frequently Asked Questions) 7 What s this guide for? This guide is to help you understand more about the Ring-fencing Transfer Scheme, what is happening, why it s happening, and how the changes might affect you. In the FAQ we have included cross references to the summary of the Scheme Report which sets out an independent analysis of adverse effects and cross refers to the Scheme Report. Both of these documents are referred to in the section below headed What does this mean for me? and are available on our website www.hsbc.co.uk/ ringfencedbank. This guide addresses some frequently asked questions on our services and our products related to the Ring-fencing Transfer Scheme. If you have any questions after reading this guide, please contact us using the details listed on page 6.

3 General Information What is HSBC UK Bank plc (HSBC UK)? HSBC UK Bank plc (HSBC UK) is the new ring-fenced bank. Currently, all Commercial Banking (CMB) customers are part of HSBC Bank plc. Following the transfer, the majority of CMB customers will move to the ringfenced bank, however your account or product will remain with HSBC Bank plc, which will become the non ring-fenced bank. Both HSBC UK Bank plc and HSBC Bank plc will continue to be part of the HSBC Group. They are both authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the UK. For further information about the HSBC Group, please visit www.hsbc.com Who will be a customer of the non ring-fenced bank? The following customers will remain with HSBC Bank plc, the non ring-fenced bank: } All of our Global Banking and Markets customers } All of our customers in the Channel Islands and Isle of Man Who will be a customer of the ring-fenced bank? The following customers will become part of HSBC UK: } All HSBC personal customers in the UK } Our other UK retail brands M&S Bank and first direct } UK Private Bank clients } Most Commercial customers in the UK, including UK Business Banking customers categorised as Non-Bank Financial Institutions (see exceptions below) Marks & Spencer Financial Services plc (MSFS) and HSBC Private Bank (UK) Limited (PBGB) will be subsidiaries of HSBC UK and they will also be ring-fenced banks. } Our commercial banking customers who are managed by the Non Bank Financial Institutions NBFI team (including Relevant Financial Institutions)

4 Why is this happening? You might have heard that after the global economic crisis, the UK Government put new rules in place to protect the economy and taxpayers in case something similar happens again. This means we must separate our retail banking operations from any wholesale and investment banking divisions. This is sometimes called ringfencing. We re changing the way we re structured in the UK, and creating a new ring-fenced bank, HSBC UK. When is this happening? The rules require the changes to be completed before 1 January 2019. We intend to complete the changes ahead of this deadline. We need the approval of the High Court before we can transfer UK personal and most of UK commercial products from HSBC Bank plc to HSBC UK. The key stages in getting the Court s approval are: } 22 January 2018 a Directions Hearing was held at the High Court to seek approval for our application for the court process to begin. This application was accompanied by a Scheme Report setting out an independent analysis of the terms on which the transfer will take place and the impacts of the transfer; } 27 April 2018 the Representation Date is the date for statements of representations to be served and filed if you wish to participate in the court process. If you miss this date the High Court may take this into account when considering your written statement. Details of how to participate in the court process are available on our website www.hsbc.co.uk/ringfencedbank; } 21 and 22 May 2018 a Sanction Hearing for the High Court to consider the terms of the transfer and any concerns, and approve the transfer; and } 01 July 2018 the currently scheduled date of the transfer, if the transfer is approved. If there are any changes in the court dates, we ll post details on the website www.hsbc.co.uk/ringfencedbank What does this mean for me? You ll continue to be a customer of the HSBC Group and we ll continue to provide you with the same products and services that you currently use. We anticipate minor and technical changes to our terms and conditions for products and services that will be provided by the HSBC UK group. There ll be no change to the day-to-day operation of your products and services (unless we ve notified you separately).

5 If you already have one, you ll continue to have a Relationship Manager. A copy of the Scheme Report, which sets out an independent analysis of the transfer and what it means for customers and other persons, together with a summary of it, are available on our website www.hsbc.co.uk/ringfencedbank Do I need to do anything? No, unless after reading this customer guide, you still have any concerns. Can I opt to move to the ring-fenced bank? If you are a Relevant Financial Institution, the legislation prohibits you from receiving a range of banking products and services from the ring-fenced bank. For all other customers, we have determined that either you, or a company that is in the same Group as you, meet one or more of the qualifying criteria to remain a customer of HSBC Bank plc. If you were to move to the ringfenced bank, you would lose access to relationship management and dedicated services provided by our NBFI team that are not available to customers of HSBC UK. What should I do if I have concerns? Visit our website Details about the progress of the transfer, including any changes in the court dates, will also be posted on the website. The website will help you understand if the transfer may adversely affect you and if so the further steps you may wish to take, including how to make a written statement to the High Court if you should choose to do so. Written statements should be received by the High Court, and served on the Prudential Regulation Authority, by 27 April 2018. If you miss this date the High Court may take this into account when considering your written statement. Detailed guidance on the process for making written statements is on the website or is available from us in hard copy free of charge. If you still have any questions or concerns after visiting our website and reading this guide, please: } call or write to us using the details below; or } details of how to participate in the court process are available on our website www.hsbc.co.uk/ringfencedbank; or } contact your Relationship Manager to share your concerns and ask any questions.

6 When is the Court Hearing? The Court Hearing to approve the transfer is due to take place on 21 and 22 May 2018 at Rolls Building, 7 Rolls Buildings, Fetter Lane, London, EC4 1NL in the Business and Property Courts of England and Wales (Chancery Division). If there is a change in the court date, we ll post details on the website. To find out more As always, we re here to support you and help answer any questions you may have. Please either: } call us on 0800 085 2491 or dial the international number +44 (0)1753 907300 you will need your unique reference number shown in the top right hand corner of the letter we sent you about this*; or } write to us at Ring-Fencing Transfer Scheme, HSBC, 8 Canada Square, London, E14 5HQ * Lines are open Monday Sunday 8am to 10pm (UK time) including public holidays. A full copy of the Scheme Report which sets out an independent analysis of the transfer is available on our website (www.hsbc.co.uk/ringfencedbank) and details about the progress of the transfer will also be posted there. The summary of the Scheme Report is also available on our website. If you would like a printed copy of any of the Key Scheme Documents on our website, please contact us using the details above and we ll be happy to send this to you.

7 Our Products and Services (Frequency Asked Questions) Q1. Will there be any changes to my existing products, services or the way my account is managed? No. Unless we have contacted you separately your existing products, services and day to day banking will remain unchanged by the transfer. The way you bank with us and the service you receive won t be affected. Q2. Will there be any changes to my interest rate on my products? No. There ll be no change as a result of the transfer. Q3. Will I still be able use all HSBC branches? After the transfer date, you will not to be able to use HSBC UK branches to purchase new products as they are not a part of HSBC Bank plc. However you can still use these branches for their full services including depositing and withdrawing cash and cheques as well as access to travel money services. Access to new products will be available through Relationship Managers, over the phone or online. For more information on how you may be adversely affected refer to paragraph 9.2 of the summary of the Scheme Report. Q4. Will the transfer impact the Financial Services Compensation Scheme? No, the FSCS protects certain deposits held with a UK bank up to a limit of 85,000 per depositor. Ring-fencing does not affect this. Q5. What happens if I am involved in a complaint or litigation? The complaint or litigation will be unaffected. Q6. What is the difference between a ring-fenced bank and a non ringfenced bank in terms of depositor preference? If any bank becomes insolvent, deposits are classified as preferred or non-preferred, with preferred deposits having a higher level of protection. This classification of deposits is the same across all UK banks. In the unlikely event of an insolvency of either HSBC Bank plc or HSBC UK, it is not possible for us to predict the likely return to any creditor or depositor. For more information on how you may be adversely affected refer to paragraph 17.3 of the summary of the Scheme Report.

8 Q7. Will there be any changes to my Terms and Conditions? We only anticipate minor and technical changes to our terms and conditions for products and services that will be provided by the HSBC UK group. For more information on how you may be adversely affected refer to paragraph 5.2 of the summary of the Scheme Report. Q8. What will the future credit rating of HSBC Bank plc be? Fitch and S&P have each affirmed for HSBC Bank plc a credit rating of AA- that takes ring-fencing into account. On 27 September 2017, Moody s applied a one notch downgrade to HSBC Bank plc, and gave it a rating of Aa3, but they are yet to issue a rating that takes ring-fencing into account. Current credit ratings of HSBC Bank plc are available on our website at: www.hsbc.com/investor-relations/fixedincome-investors/credit-ratings#hsbc. In the Scheme Report, the skilled person acknowledges the AA-/Aa3 ratings, but recognises that there is a risk that the actual ratings of HSBC Bank plc, when available, could be lower than AA-/ Aa3. Therefore, for the purposes of his assessment he has assumed a worst reasonable case scenario arising from the impact of the transfer of a two notch downgrade from AA-/Aa3. Q9. Where can I get more information? Please call our helpdesk on: 0800 085 2491 or dial the international number +44 (0)1753 907300. Alternatively, you can visit the ring-fencing section of our website: www.hsbc.co.uk/ringfencedbank. The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) have also published some information explaining more about ring-fencing at: FCA: www.fca.org.uk/consumers/ring-fencing PRA: www.bankofengland.co.uk/publications. Q10. I am concerned that all these changes increase the risk of fraud on my account, what is being done to protect me? At HSBC, protecting our customers from fraud is a key priority for us. We deploy market leading fraud detection systems which routinely monitor fraudulent activity.

9 We also try to minimise the amount of times we contact customers as they go about their everyday spending and banking activities. We d like to remind customers to take five and stop to think : 1. Never disclose security details, such as your PIN or your full password. No one genuine will call you and ask for these details. As part of our ring-fencing changes, we will NEVER ask you to move your money between accounts. If you have any concerns at all, please contact one of our help desks. For more information on the take five campaign, please visit www.takefive-stopfraud.org.uk 2. Don t assume a text, e-mail request or caller is genuine. 3. Don t be rushed: a genuine bank or organisation won t mind waiting to give you time to stop and think or ask questions. 4. Listen to your instincts: if something feels wrong, pause and question it. 5. Stay in control and have the confidence to refuse or ignore unusual requests for information. hsbc.co.uk Issued by HSBC Bank plc Customer Information: PO Box 6201, Coventry CV3 9HW PO Box 14, St Helier, Jersey JE4 8NJ PO Box 31, St Peter Port, Guernsey GY1 3AT PO Box 20, Douglas, Isle of Man IM99 1AU LIT02037 MCP49197 01/18 HSBC Bank plc 2018. All Rights Reserved.