REG - HSBC Holdings PLC - Change in tier 2 & MREL recognition of securities

HSBC HoldingsAnnouncement

19/02/2025 07:15

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RNS Number : 6368X  HSBC Holdings PLC  19 February 2025

19 February 2025

 

 

HSBC HOLDINGS PLC

CHANGE IN OWN FUNDS AND MREL RECOGNITION OF CERTAIN DEBT SECURITIES

 

HSBC Holdings plc ('HSBC') has in issue certain legacy New York law-governed
subordinated debt securities (the 'Legacy Tier 2 Securities') and one legacy
New York law-governed senior debt security (the 'Legacy Senior Security'),
each of which do not contain a contractual recognition of UK bail-in powers
('CROB clause') within their respective terms and conditions. The Legacy Tier
2 Securities were grandfathered as tier 2 capital instruments until 28 June
2025 and the Legacy Senior Security was permanently grandfathered as eligible
liabilities, in each case pursuant to UK CRR 1 . Details of the relevant
securities are set out in the table below.

HSBC announces that from today it will no longer count the Legacy Tier 2
Securities as tier 2 capital instruments for UK CRR purposes. Furthermore,
HSBC will also not count the Legacy Tier 2 Securities and the Legacy Senior
Security towards its minimum requirement for own funds and eligible
liabilities ('MREL') 2 .

The action to no longer count the Legacy Tier 2 Securities is intended to
avoid the loss of tier 2 capital eligibility for HSBC's other remaining
non-legacy tier 2 securities pursuant to UK CRR, which would otherwise have
occurred at the end of the grandfathering period in June 2025.

The action to no longer count the Legacy Senior Security towards HSBC's MREL
has been taken in order to be consistent with its treatment of the Legacy Tier
2 Securities and in recognition of the Bank of England's position on
securities governed under non-UK law without a CROB clause (as set out in its
recent consultation paper 3 ).

These actions would have reduced HSBC's MREL as a percentage of risk-weighted
assets by 54 basis points and its total capital ratio by 46 basis points had
they been taken at the end of the financial year ended 31 December 2024.There
is no impact on the total capital ratio excluding transitional arrangements of
the UK CRR.

 Tier                    ISIN          Currency  Amount outstanding  Maturity date
 Legacy Tier 2 Security  US404280AF65  USD       263,654,000         17/05/2032
 Legacy Tier 2 Security  US404280AE90  USD       124,748,000         27/11/2032
 Legacy Tier 2 Security  US404280AG49  USD       1,430,811,000       02/05/2036
 Legacy Tier 2 Security  US404280AH22  USD       1,514,640,000       15/09/2037
 Legacy Tier 2 Security  US404280AJ87  USD       961,295,000         01/06/2038
 Legacy Senior Security  US404280AM17  USD       750,000,000         14/01/2042

 

 

 

Investor enquiries to:

 

Greg Case                    +44 (0) 20 7992
3825                 investorrelations@hsbc.com
(mailto:investorrelations@hsbc.com)

 

Media enquiries to:

 

Press Office                 +44 (0) 20 7991
8096                 pressoffice@hsbc.com
(mailto:pressoffice@hsbc.com)

 

 

Note 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.

 

 

 1  Regulation (EU) No. 575/2013, as it forms part of domestic law in the UK
by virtue of the European Union (Withdrawal) Act 2018, as amended.

 2  HSBC's MREL requirements are set pursuant to (i) UK CRR and (ii) the Bank
of England's Statement of Policy entitled 'The Bank of England's approach to
setting a minimum requirement for own funds and eligible liabilities (MREL)'
(December 2021).

 3   The Bank of England's Consultation paper entitled 'Amendments to the
Bank of England's approach to setting a minimum requirement for own funds and
eligible liabilities (MREL)' published on 15 October 2024.

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