HSBC
Bank plc (the 'Lead
Manager');
|
|
ABN
AMRO Bank N.V.
Merrill
Lynch International
Banca
IMI S.p.A.
Banco
Santander, S.A.
Banco
Bilbao Vizcaya Argentaria, S.A.
BNP
Paribas
CIBC
World Markets plc
Citigroup
Global Markets Limited
Danske
Bank A/S
ING
Bank N.V.
Landesbank
Baden-Württemberg
Lloyds
Bank plc
Nordea
Bank AB (publ)
Swedbank
AB (publ)
UBS
Limited
(the
'Joint Lead Managers');
and
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|
Banca
Akros S.p.A. Gruppo Banco BPM
BANKIA
SA
Bank of
Montreal, London Branch
Commonwealth
Bank of Australia
Commerzbank
Aktiengesellschaft
Crédit
Agricole Corporate and Investment Bank
KBC
Bank NV
Mizuho
International plc
Natixis
Coöperatieve
Rabobank U.A.
Raiffeisen
Bank International AG
RBC
Europe Limited
The
Royal Bank of Scotland plc (trading as NatWest
Markets)
Skandinaviska
Enskilda Banken AB (publ)
SMBC
Nikko Capital Markets Limited
Société
Générale
Wells
Fargo Securities, LLC
Westpac
Banking Corporation ABN 33 007 457 141 (the 'Co-Managers' and together with the Lead
Manager and the Joint Lead Managers, the 'Managers').
|
|
The
Managers' obligations to subscribe and pay for the Securities are
subject to the satisfaction of a number of conditions,
including:
|
|
(1)
the truth and correctness of certain representations and
warranties of the Company contained in the Dealer Agreement on the
Issue Agreement Date and on the Issue Date;
(2)
there not having been any significant new factor, material
mistake or inaccuracy relating to the information contained in the
Offering Memorandum, information in respect of which would have
been required to have been included in the Offering Memorandum had
such matter arisen prior to the date of the Offering Memorandum and
which is material in the context of the issue of the relevant
Securities;
(3)
there having been, since the Issue Agreement Date, in the
opinion of the Managers, no change in financial, political or
economic conditions or currency exchange rates that would be likely
to prejudice materially the placement, distribution or sale of the
Securities or dealings in the Securities in the secondary market;
and
(4)
the Securities being admitted to listing on the Official
List of the Irish Stock Exchange and trading on its Global Exchange
Market, subject only to the issue of the Securities, on or before
the Issue Date.
|
|
|
|
Such
conditions may be waived in whole or in part by any Manager (except
for the Company's representation that the aggregate principal
amount of the Securities issued under the Programme will not exceed
US$50,000,000,000 (or such greater amount as may be permitted by
the terms of the Dealer Agreement)).
|
Issuer
|
|
The
Company
|
|
|
|
Principal amount
|
|
EUR1,250,000,000
(the 'Firm Securities') and, subject to whether and
to the extent the Managers exercise the Option, up to and
additional EUR125,000,000 (the 'Optional Securities')
|
|
|
|
Maturity date
|
|
Perpetual
|
|
|
|
Issue price
|
|
100% of
the aggregate principal amount
|
|
|
|
Interest
|
|
Initially
4.75%. On each Resettable Security Reset Date, the interest payable
in respect of the Securities will be reset by reference to a
mid-market swap rate and a spread of 3,844 bps.
|
|
|
|
Resettable Security Reset Dates:
|
|
4 July
2029 and at 5 yearly intervals thereafter.
|
|
|
|
Interest payment dates
|
|
4
January and 4 July in each year commencing on 4 January
2018.
|
|
|
|
Cancellation of interest payments
|
|
On any
date for payment of interest, the Company may at its discretion,
and in some circumstances will, cancel any payments of interest
which would otherwise have been due on such date. Any interest so
cancelled will not be due and will not accrue.
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|
|
|
Conversion
|
|
If the
Company, the United Kingdom Prudential Regulation Authority or
other entity primarily responsible for the prudential supervision
of the Company, or its agent appointed for such purpose, determines
that a Capital Adequacy Trigger has occurred, the Securities will
be converted into ordinary shares of the Company ('Ordinary Shares') at the relevant
conversion price on a date falling not more than one month from the
determination that a Capital Adequacy Trigger has
occurred.
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|
|
|
Capital Adequacy Trigger
|
|
'Capital
Adequacy Trigger' means at any time that the Company's
Common Equity Tier 1 Capital Ratio (on a consolidated basis and
without applying the transitional provisions set out in Part Ten of
the CRD IV Regulation) is below 7.00%
For
these purposes:
'Applicable
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 United Kingdom (whether or not such requirements, guidelines or
policies are applied generally or specifically to the Company
and/or any member of its group);
'CET1
Capital' means, as at any date, the sum, expressed in US
dollars of all amounts that constitute Common Equity Tier 1 Capital
of the Company together with its consolidated subsidiaries (the
'HSBC Group') as at such
date, less any deductions from Common Equity Tier 1 Capital (as
defined in the Applicable Rules as interpreted and applied in
accordance with the Applicable Rules or by the United Kingdom
Prudential Regulation Authority) of the HSBC Group 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 of the CRD IV Regulation (or in any
successor provisions thereto or any equivalent provisions of the
Applicable Rules which replace or supersede such provisions), in
accordance with the Applicable Rules as at such date;
'Common
Equity Tier 1 Capital Ratio' means, as at any date, the
ratio of the CET1 Capital as at such date to the Risk Weighted
Assets as at the same date, expressed as a percentage and on the
basis that all measures used in such calculation shall be
calculated without applying the transitional provisions set out in
Part Ten of the CRD IV Regulation (or in any successor provisions
thereto or any equivalent provisions of the Applicable Rules which
replace or supersede such provisions);
'CRD
IV' means Directive 2013/36/EU on access to the activity of
credit institutions and the prudential supervision of credit
institutions and investment firms, as amended, supplemented or
replaced from time to time (the 'CRD IV Directive') and 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, supplemented or replaced
from time to time (the 'CRD IV
Regulation'); and
'Risk
Weighted Assets' means, as of any date, the aggregate
amount, expressed in US dollars, of the risk weighted assets of the
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 the CRD IV Regulation (or in any successor
provisions thereto or any equivalent provisions of the Applicable
Rules which replace or supersede such provisions), in accordance
with the Applicable Rules.
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|
|
|
Conversion price
|
|
The
conversion price per Ordinary Share for the Securities is
EUR3.05451. Therefore, assuming that there is no adjustment to the
conversion price and that all the Optional Securities are issued,
the maximum number of Ordinary Shares which may be issued upon
conversion of the Securities is 450,154,034.
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|
|
|
Adjustments to the conversion price
|
|
The
conversion price will be adjusted upon the occurrence of the
following events: (i) a consolidation, reclassification,
redesignation or subdivision of the Ordinary Shares, (ii) an
issuance of Ordinary Shares in certain circumstances by way of
capitalisation of profits or reserves, (iii) an extraordinary
dividend or (iv) an issue of Ordinary Shares to shareholders as a
class by way of rights, in each case only in the situations and to
the extent provided in the Offering Memorandum. There is no
requirement that there should be an adjustment for every corporate
or other event that may affect the value of the Ordinary
Shares.
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|
|
|
Conversion Shares Offer
|
|
If a
Capital Adequacy Trigger occurs despite recovery actions having
been taken, the Company may, at its discretion, give existing
shareholders of the Company the opportunity to purchase the
Ordinary Shares issued on conversion or exchange of any of the
Securities on a pro rata basis, where practicable and subject to
applicable laws and regulations. This would be at a price of
GBP2.70 (which is the conversion price translated into GBP at an
exchange rate of GBP1.00 = EUR1.13130).
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|
|
|
Ranking of conversion shares
|
|
The
conversion Ordinary Shares to be issued upon conversion of the
Securities will rank pari
passu in all respects with the Ordinary Shares then in issue
on the relevant conversion date.
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|
|
|
Redemption at the option of the Company
|
|
The
Securities may be redeemed in whole (but not in part) at the option
of the Company on any Resettable Security Reset Date at a
redemption price equal to 100% of the principal amount plus any
accrued, unpaid and not cancelled interest to (but excluding) the
date of redemption.
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|
|
|
Redemption for taxation reasons
|
|
The
Securities may be redeemed in whole (but not in part) at the option
of the Company upon the occurrence of certain events relating to
taxation listed in Condition 6(b) of the terms and conditions of
the Securities, at a redemption price equal to 100% of the
principal amount plus any accrued, unpaid and not cancelled
interest to (but excluding) the date of redemption.
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|
|
|
Redemption upon Capital Disqualification Event:
|
|
The
Securities may be redeemed in whole (but not in part) at the option
of the Company if a Capital Disqualification Event occurs at a
redemption price equal to 100% of the principal amount plus any
accrued, unpaid and not cancelled interest to (but excluding) the
date of redemption.
|
|
|
|
Capital Disqualification Event:
|
|
A
Capital Disqualification Event occurs if the Company determines at
any time after the Issue Date, that there is a change in the
regulatory classification of the Securities that results in or will
result in:
(1)
their exclusion in whole from the regulatory capital of the HSBC
Group; or
(2)
reclassification in whole as a form of regulatory capital of the
HSBC Group that is lower than Additional Tier 1 Capital (which term
has the meaning given to it by the United Kingdom Prudential
Regulation Authority or other entity primarily responsible for the
prudential supervision of the Company).
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|
|
|
Condition to payments
|
|
Payments
of interest or redemption amounts in respect of the Securities are
subject to the Company remaining solvent after having made such
payment.
|
|
|
|
Covenants
|
|
Whilst
any Security remains outstanding, the Company shall (if and to the
extent permitted by the Applicable Rules from time to time and only
to the extent that such covenant would not cause a Capital
Disqualification Event to occur), save with the approval of an
extraordinary resolution of holders of the Securities:
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|
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|
(1)
not make any issue, grant or distribution or take or omit to take
any other action if the effect thereof would be that, on
conversion, Ordinary Shares could not be legally issued as fully
paid;
(2)
use all reasonable endeavours to ensure that the Ordinary Shares
issued upon conversion are listed on the London Stock Exchange (or
if the Ordinary Shares are no longer listed on the London Stock
Exchange at the time of conversion, the principal stock exchange or
securities market on which the Ordinary Shares are then
listed);
(3)
at all times keep available for issue, free from pre-emptive or
other preferential rights, sufficient Ordinary Shares to enable
conversion of the Securities to be satisfied in full;
(4)
use all reasonable endeavours to
appoint any agents or advisers that it is required to appoint under
the terms and conditions applicable to the Securities.
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|
|
|
Transfers after Suspension Date:
|
|
Transfers
of beneficial interests in the Securities where such Securities are
represented by a temporary global security or a permanent global
security, will not be registered by the clearing systems after the
date specified as the 'Suspension Date' in a notice given by the
Company to holders of Securities after the occurrence of a Capital
Adequacy Trigger.
|
|
|
|
Form and Denomination
|
|
The
Securities will be represented by a temporary global security
exchangeable for interests in a permanent global security in the
circumstances specified in the temporary global
security.
|
|
|
|
Status
|
|
The
Securities will constitute direct, unsecured and subordinated
obligations of the Company, ranking equally without any preference
among themselves.
|
|
|
|
Listing
|
|
Application
will be made to admit the Securities to listing on the Official
List of Irish Stock Exchange and to trading on the Global Exchange
Market of the Irish Stock Exchange on or around the Issue Date. No
assurance can be given as to whether or not, or when, such
application will be granted.
|
(1)
|
|
the issue of
Ordinary Shares by the Company pursuant to the Scrip Dividend
Scheme;
|
(2)
|
|
the Issuances of
Ordinary Shares to Employees;
|
(3)
|
|
the issue of the
US$3,000,000,000 6.000% Perpetual Subordinated Contingent
Convertible Securities as disclosed in the announcements of the
Company dated 16 May 2017 and 22 May 2017. The proceeds from such
securities were intended to be used for general corporate purposes
and to further strengthen the Company's capital base pursuant to
requirements under CRD IV, and they have been applied in full as
intended; and
|
(4)
|
|
the issue of the
SGD1,000,000,000 4.70% Perpetual Subordinated Contingent
Convertible Securities as disclosed in the announcements of the
Company dated 6 June 2017 and 8 June 2017. The proceeds from such
securities were intended to be used for general corporate purposes
and to further strengthen the Company's capital base pursuant to
requirements under CRD IV, and they have been applied in full as
intended.
|
(1)
|
|
assuming full
conversion of the Securities (assuming none of the Optional
Securities are issued) at their initial conversion prices takes
place, the Securities will be convertible
into
approximately 409,230,940 Ordinary Shares representing
approximately 2.01% of the issued share capital of the Company as
at the date of this announcement and approximately 1.97%
of the issued share capital of the Company as enlarged by the issue
of such conversion Ordinary Shares.
|
(2)
|
|
assuming full
conversion of the Securities (assuming all of the Optional
Securities are issued) at their initial conversion prices takes
place, the Securities (including all Optional
Securities) will be convertible into approximately 450,154,034
Ordinary Shares representing approximately 2.21% of the issued
share capital of the Company as at the date of this
announcement and approximately 2.16% of the issued share capital of
the Company as enlarged by the issue of such conversion Ordinary
Shares.
|
|
As at 28 June
2017
|
(a) Assuming the Securities (excluding all Optional Securities) are
fully converted into Ordinary Shares at the respective initial
conversion prices
|
(b) Assuming the Securities (including all Optional Securities) are
fully converted into Ordinary Shares at the respective initial
conversion prices
|
||||
Name of
Shareholders
|
Number of Ordinary
Shares
|
% of total issued Ordinary
Shares
|
Number of Ordinary
Shares
|
% of the enlarged issued
Ordinary Shares
|
Number of Ordinary
Shares
|
% of the enlarged issued
Ordinary
Shares
|
|
|
|
|
|
|
|
|
|
JPMorgan
Chase & Co. Note 1
|
861,098,439
|
4.22
|
861,098,439
|
4.14
|
861,098,439
|
4.13
|
|
BlackRock,
Inc. Note
2
|
1,443,694,562
|
7.09
|
1,443,694,562
|
6.95
|
1,443,694,562
|
6.93
|
|
|
|
|
|
|
|
|
|
Subscribers
of the Securities
|
0
|
0
|
409,230,940
|
1.97
|
450,154,034
|
2.16
|
|
Other
public Shareholders
|
18,071,030,915
|
88.69
|
18,071,030,915
|
86.94
|
18,071,030,915
|
86.77
|
|
Total Issued Ordinary Shares
|
20,375,823,916
|
100
|
20,785,054,856
|
100.00
|
20,825,977,950
|
100.00note
|
1.
|
Based on a
disclosure of interest filing made by JPMorgan Chase & Co. to
the Company on 25 May 2017, as per the long position as at 22 May
2017.
|
2.
|
Based on a
disclosure of interest filing made by BlackRock, Inc. to the
Company on 29 June 2017, as per the long position as at 26 June
2017.
|
3.
|
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.
|
4.
|
Not an arithmetic
aggregation due to rounding differences.
|
Investor enquiries to:
|
|
UK -
Richard O'Connor
|
|
Hong
Kong - Hugh Pye
|
Tel: +852 2822 4908
|
Media enquiries to:
|
|
UK -
Heidi Ashley
|
Tel:
+44 (0) 20 7992 2045
|
Hong
Kong - Gareth Hewett
|
Tel:
+852 2822 4929
|
(i)
|
it is not a retail
client in the EEA (as defined in the applicable PI
Rules);
|
(ii)
|
whether or not it
is subject to the MR Rules, it will not (A) sell or offer the
Securities (or any beneficial interests therein) to retail clients
in the EEA or (B) communicate (including the distribution of the
Offering Memorandum 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 EEA (in each case within the
meaning of the PI Rules), in any such case, other than (1) in
relation to any sale of or offer to sell Securities (or any
beneficial interests therein) to a retail client in or resident in
the United Kingdom, in circumstances that do not and will not give
rise to a contravention of the applicable PI Rules by any person
and/or (2) in relation to any sale of or offer to sell Securities
(or such beneficial interests therein) to a retail client in any
EEA member state other than the United Kingdom, where (a) it has
conducted an assessment and concluded that the relevant retail
client understands the risks of an investment in the Securities (or
such beneficial interests therein) and is able to bear the
potential losses involved in an investment in the Securities (or
any beneficial interests therein) and (b) it has at all times acted
in relation to such sale or offer in compliance with MiFID to the
extent it applies to it or, to the extent MiFID does not apply to
it, in a manner which would be in compliance with MiFID if it were
to apply to it; and
|
(iii)
|
it will at all
times comply with all applicable laws, regulations and regulatory
guidance (whether inside or outside the EEA) relating to the
promotion, offering, distribution and/or sale of the Securities (or
any beneficial interests therein), including (without limitation)
any such laws, regulations and regulatory guidance relating to
determining the appropriateness and/or suitability of an investment
in the Securities (or any beneficial interests therein) by
investors in any relevant jurisdiction.
|
HSBC
Holdings plc
|
|
|
|
|
By:
|
|
Name:
Ben J S Mathews
|
|
Title:
Group Company Secretary
|
|
|
|
Date:
30 June 2017
|