HSBC BANK plc - Malta Financial Services Authority...2008/01/18 · HSBC BANK plc (a company incorporated with limited liability in England with registered number 14259) Issue of

A08872413/2.0/18 Jan 2008

Prospectus

HSBC BANK plc

(a company incorporated with limited liability in England with registered number 14259)

Issue of up to EUR 30,000,000

5 Year Principal – protected Notes Linked to the HSBC Global Multi-Asset Alpha Index 29 due 28 March 2013

(the “Notes”) This document (which expression shall include this document as amended and supplemented from time to time and all documents incorporated by reference herein) comprises a prospectus relating to the Notes and has been prepared for the purpose of providing disclosure information with regard to the Notes and has been approved by the United Kingdom Financial Services Authority (the “FSA”), which is the United Kingdom competent authority for the purposes of Article 5.4 of Directive 2003/71/EC (the “Prospectus Directive”) and relevant implementing measures in the United Kingdom, as a prospectus (as from time to time supplemented, the “Prospectus”) in connection with a Programme for the Issuance of Notes and Warrants (the “Programme”) under which notes (the “Notes”) and warrants (the “Warrants”) may be issued by the Issuer under the base prospectus dated 2 August 2007 and the Supplemental Prospectuses dated 8 August 2007, 6 September 2007, 29 November 2007 and 8 January 2008 (together, the “Base Prospectus”).

In relation to the Notes, this Prospectus must be read together with all documents which are deemed to be incorporated herein by reference (see “Documents Incorporated by Reference” below). This Prospectus shall be read and construed on the basis that such documents are so incorporated and form part of this Prospectus.

Application will be made to admit the Notes to listing on the Official List of the FSA (in its capacity as competent authority for the purposes of Part VI of the Financial Services and Markets Act 2000 (the “FSMA”) (the “UK Listing Authority”)), and to trading on the regulated market of the London Stock Exchange plc (the “London Stock Exchange”), which is a regulated market for the purposes of Directive 2004/39/EC (the Markets In Financial Instruments Directives).

Prospective purchasers of Notes should ensure that they understand the nature of the relevant Notes and the extent of their exposure to risks and that they consider the suitability of the Notes as an investment in the light of their own circumstances and financial condition. It is the responsibility of prospective purchasers to ensure that they have sufficient knowledge, experience and professional advice to make their own legal, financial, tax, accounting and other business evaluation of the merits and risks of investing in the Notes and are not relying on the advice of the Issuer, the Trustee or the Dealer in that regard. See “Risk Factors” below.

The Notes have not been and will not be registered under the Securities Act or under any U.S. state securities laws and, unless so registered, may not be offered or sold within the United States or to, or for the benefit of a “U.S. person” (as defined in Regulation S (“Regulation S”) under the Securities Act) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable U.S. state securities laws.

Arranger and Dealer HSBC

18 January 2008

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IMPORTANT NOTICES

The Issuer accepts responsibility for the information contained in this Prospectus. To the best of the knowledge of the Issuer, which has taken all reasonable care to ensure that such is the case, the information contained in this Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information. The Issuer does not intend to provide post issuance information.

No dealer for the Notes (each a “Dealer”) has separately verified the information contained herein. Accordingly, no representation, warranty or undertaking (express or implied) is made and no responsibility or liability is accepted by the Dealer as to the accuracy or completeness of the information contained in this Prospectus or any other information provided by the Issuer in connection with the Programme or the Notes or their distribution. The statements made in this paragraph are made without prejudice to the responsibility of the Issuer under the preceding paragraphs.

No person is or has been authorised to give any information or to make any representation not contained in or not consistent with this Prospectus and, if given or made, such information or representation must not be relied upon as having been authorised by the Issuer or the Dealer.

Neither this Prospectus nor any further information supplied in connection with the Programme or the Notes (i) is intended to provide the basis of any credit or other evaluation or (ii) should be considered as a recommendation or as constituting an invitation or offer by the Issuer or the Dealer that any recipient of this Prospectus or any other information supplied in connection with the Programme or the Notes should subscribe for or purchase any Notes. Each investor contemplating subscribing for or purchasing any Notes should make its own independent investigation of the affairs, and its own appraisal of the creditworthiness, of the Issuer. Neither this Prospectus nor any other information supplied in connection with the Programme or the Notes constitutes an offer by or on behalf of the Issuer or the Dealer to subscribe for or purchase any Notes.

The distribution of this Prospectus and the offer, distribution or sale of the Notes may be restricted by law in certain jurisdictions. None of the Issuer or the Dealer represents that this document may be lawfully distributed, or that the Notes may be lawfully offered, or assumes any responsibility for facilitating any such distribution or offering, in any such jurisdiction. In particular, action may be required to be taken to permit a public offering of the Notes or a distribution of this document in any jurisdiction. Accordingly, no Notes may be offered or sold, directly or indirectly, and neither this Prospectus nor any advertisement or other 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 Notes come must inform themselves about, and observe, any such restrictions. For details of certain restrictions on the distribution of this Prospectus and the offer or sale of Notes in the European Economic Area, the United Kingdom, the United States, Japan, France, Hong Kong, Italy, The Netherlands, Switzerland and Spain, see “Subscription and Sale of Notes” section in the Base Prospectus.

All references in this document to “Euro”, “euro”, “EUR” and “€” refer to the lawful currency of the member states of the European Union that have adopted or adopt the single currency in accordance with the Treaty establishing the European Communities, as amended by the Treaty on European Union (the “Treaty”).

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INCORPORATION BY REFERENCE

The following documents shall be deemed to be incorporated in, and to form part of, this Prospectus:

(a) the Base Prospectus dated 2 August 2007 and the Supplemental Prospectuses dated 8 August 2007, 6 September 2007, 29 November 2007 and 8 January 2008 relating to the Programme (with the exception of any documents incorporated by reference therein);

(b) the registration document (with the exception of any documents incorporated by reference therein) relating to the Issuer dated 30 May 2007 and filed with the UK Listing Authority pursuant to Article 11 of the Prospectus Directive (the “Registration Document”); and

(c) the audited consolidated financial statements of the Issuer and its subsidiary undertakings for the year ended 31 December 2006 and for the year ended 31 December 2005 (including the auditors’ report thereon) submitted to and filed with the UK Listing Authority on 5 March 2007 and 6 March 2006, respectively and the abridged unconsolidated interim financial statements for the period ending 30 June 2007, submitted to and filed with the UK Listing Authority on 8 August 2007,

save that any statement contained herein or in a document which is deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purpose of this Prospectus to the extent that a statement contained in any such subsequent document which is deemed to be incorporated by reference herein expressly or impliedly modifies or supersedes such earlier statement. These documents can be accessed by investors at HSBC Bank plc’s premises at 8 Canada Square, London E14 5HQ.

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Table of Contents

IMPORTANT NOTICES ................................................................................................................................... 2

INCORPORATION BY REFERENCE.............................................................................................................. 3

SUMMARY ....................................................................................................................................................... 5

RISK FACTORS ................................................................................................................................................ 8

GENERAL INFORMATION........................................................................................................................... 12

FINAL TERMS - TERMS AND CONDITIONS OF THE NOTES ................................................................ 13

PART B OTHER INFORMATION.................................................................................................................. 18

PART C PROVISIONS RELATING TO THE UNDERLYING PERFORMANCE ........................................ 20

ANNEX A THE REFERENCE INDEX........................................................................................................... 21

ANNEX B THE INDEX RULES..................................................................................................................... 31

ANNEX C ADDITIONS AND VARIATIONS TO THE CONDITIONS ........................................................ 36

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SUMMARY

This summary must be read as an introduction to this Prospectus and any decision to invest in the Notes should be based on a consideration of the Prospectus as a whole, including the documents incorporated by reference. No civil liability in respect of this summary will attach to the Issuer in any Member State of the European Economic Area in which the relevant provisions of the Prospectus Directive have been implemented unless this summary, including any translation thereof, is misleading, inaccurate or inconsistent when read together with the other parts of this Prospectus. Where a claim relating to the information contained in this Prospectus is brought before a court in such a Member State, the plaintiff may, under the national legislation of that Member State, be required to bear the costs of translating the Prospectus before the legal proceedings are initiated.

Description of the Issuer

HSBC Bank plc (the “Bank” or the “Issuer”) is a public limited company registered in England and Wales under registration number 14259. The liability of its members is limited. It has its registered and head office at 8 Canada Square, London, E14 5HQ; telephone number +44 20 7991 8888. The Bank was constituted by Deed of Settlement on 15 August 1836, registered under the Companies Act 1862 as an unlimited company and re-registered under the Companies Acts 1948 to 1980 as a public limited company.

The Bank is a wholly owned subsidiary of HSBC Holdings plc.

Description of the Notes

The Notes will be offered to investors in Malta by HSBC Bank Malta p.l.c. (the “Distributor”) from and including 21 January 2008 to and including 15 March 2008 (the “Offer Period”).

Application will be made to list the Notes on the London Stock Exchange, but there is no assurance as to the liquidity of the Notes.

The Notes are direct, unsecured, unsubordinated obligations of the Issuer, the return on which is primarily linked to the Underlying Performance and with a principal protection element (see “Protected Amount”). On the Initial Index Investment Date, an amount equal to the Initial Index Investment Amount, together with an amount equal to 3.75% of the Aggregate Nominal Amount borrowed from the Account Operator, will be notionally invested in the Reference Index and credited to the Account. The remaining issue proceeds shall be applied by the Issuer in payment of certain issue costs. The Reference Index initially is fully invested in the Global Multi-Asset Alpha Index 8 and will remain fully invested unless an allocation to fixed income assets is required to ensure payment on the Maturity Date of the Protected Amount. In the event where the full amount is switched from the Global Multi-Asset Alpha Index 8 to the fixed income assets, there will be no opportunity to benefit from any future increase in performance of the Global Multi-Asset Alpha Index 18.

Performance Payments may be payable annually on the Notes, up to an amount per Note per annum equal to 10 per cent.of the Denomination. Any such payment will be dependent on increases in the Index Value in the preceding twelve months, and such payments (if made) will reduce the Index Value and therefore the Underlying Performance and the amount payable on redemption of the Notes.

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Unless previously redeemed, or purchased and cancelled, each Note will be redeemed on its Maturity Date (as defined in this Prospectus and subject to any Valuation Disruption Event) at an amount equal to:

(i) the greater of the Underlying Performance or the Protected Amount

less

(ii) any Early Redemption Fee payable if the Notes are redeemed prior to the third anniversary of the Trade Date.

where:

“Early Redemption Fee” means, in the case of redemption prior to the first anniversary of the Issue Date, two per cent. of the Protected Amount, and/or following the first anniversary but prior to the third anniversary of the Issue Date, one per cent. of the Protected Amount, and thereafter zero.

“Final Index Value” means the Index Value of the Reference Index for the Index Valuation Date falling on the applicable Redemption Valuation Date.

“Final Participation” means the number of Units in the Reference Index corresponding to the relevant Note as at the Redemption Valuation Date.

“Protected Amount” is 100 per cent. of the Denomination per Note.

“Underlying Performance” means an amount equal to the Final Participation multiplied by the Final Index Value.

“Units” has the meaning specified in the Index Rules.

Therefore the value of the Notes at any time up to and including the Maturity Date is dependent on the performance of the Reference Index.

The Reference Index

The Reference Index tracks the performance of a principal protected “Global Multi-Asset Alpha” investment. The trading strategy is implemented through the Account, which is operated and managed by the Account Operator appointed in accordance with the terms of the Account Operator Agreement. Initially the Reference Index will be fully invested in The Global Multi-Asset Alpha 16 Index as described in Annex A, but in the event of a fall in Index Value allocations, may be switched to fixed income assets to ensure payment of the Protected Amount on the Maturity Date.

The Account shall be notionally divided into Units and the value of the Reference Index reflects the per Unit value of the Account as determined in respect of an Index Valuation Date by the Index Calculation Agent.

The Noteholder does not have any actual interest in the Reference Index or the Account.

Index Rules The rules for the Reference Index and the sub-indices (the “Index Rules”) are set out in Annex B. The publisher of the Index Rules is HSBC Bank plc and the calculation agent in respect of each Index is HSBC Bank plc or its designate (the “Index Calculation Agent”).

Non-publication of Index In certain circumstances, there may be disruption events that prevent the Index Calculation Agent from accurately determining the value of an Index or which mean that the value of one or more Components of

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such Index cannot be determined. As a result, the determination of the Index Value and hence the relevant Redemption Amount may be subject to Valuation Disruption Events. Such events may result in estimates being used to value the Index or any Redemption Amount and, in addition, may result in a delay to the redemption of the Notes, as described further in the Conditions of the Notes.

Risk factors

The investment return on the Notes (whether positive or negative) will depend on the performance of the Reference Index. The Issuer makes no guarantee or representation of any kind as to the performance of any Index or the Components thereof, the value of which may go down as well as up. A Noteholder has no interest in any Index, any Component or any Account and may not control the actions of the Index Calculation Agent or the Account Operator.

An investment in the Notes should be viewed as a long-term investment and the Protected Amount only applies in respect of the Final Redemption Amount due on the Maturity Date. In respect of payment of amounts due on redemption, whether on the maturity date or early redemption, Noteholders areexposed to credit risk in respect of the Issuer.

Investment suitability In view of the risks summarised above, the Notes may not be suitable for all investors and prospective Noteholders should make their own assessment in this regard.

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RISK FACTORS

Prospective investors in the Notes should read this Prospectus and the Base Prospectus, in particular the “Risk Factors” section therein, including any Supplements thereto. Words and expressions defined in the “Final Terms – Terms and Conditions of the Notes” below or elsewhere in this Prospectus have the same meanings in this section. Investing in the Notes involves certain risks. Prospective investors should consider, among other things, the following:

General

1 Investment Suitability

Based on an independent review and such professional advice as it deems appropriate, a prospective investor must determine that its acquisition of the Notes:

(a) is fully consistent with its or, if it is acting as a fiduciary, the beneficiary’s financial needs, objectives and condition;

(b) complies and is fully consistent with all investment policies, guidelines and restrictions that are applicable to it or, if it is acting as a fiduciary, to the beneficiary; and

(c) is a fit, proper and suitable investment for it or, if it is acquiring Notes as a fiduciary, for the beneficiary,

notwithstanding the risks inherent in investing in the Notes.

2 Compliance with Applicable Laws

The Issuer is not responsible for the lawfulness of the acquisition of the Notes by a prospective investor nor for compliance by that prospective investor with any law, regulation or policy applicable to it. A prospective investor may not rely on the Issuer when making determinations in relation to these matters.

3 Non-Public Information

The Issuer may have or acquire non-public information with respect to any Index or the Components (defined below) that will not be provided to Noteholders.

4 Investment Return

The investment return on the Notes (whether positive or negative) will depend on the performance of the Reference Index. The Issuer makes no guarantee or representation of any kind as to the performance of any Index or the Components thereof, the value of which may go down as well as up. The Notes are also subject to both actual and perceived measures of the creditworthiness of the Issuer and there is no assurance of protection against a default by the Issuer in respect of its repayment obligations.

Increases in the value of the Reference Index may lead to Performance Payments being made on the Notes, but there is no certainty that any Performance Payments will be payable and any Performance Payment in any year will be capped at ten per cent. of the Denomination per Note. The amount of any such payment will reduce the Index Value and the amounts payable on redemption of the Notes.

5 Long-term Investment

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An investment in the Notes should be viewed as a long-term investment and the Protected Amount only applies in respect of the Final Redemption Amount due on the Maturity Date. Investors who transfer or assign their interest in the Notes before the Maturity Date may therefore receive an amount less than such Protected Amount and/or the initial amount invested.

6 Liquidity

Although an application will be made to admit the Notes to listing on the Official List of the Financial Services Authority and to trading on the regulated market of the London Stock Exchange, investors should note that there can be no assurance as to the liquidity of any trading market for the Notes or that an active public market will develop.

The Indices

7 Index Calculation Agent Disclaimer

In addition to the disclaimers set out in the Index Rules, Noteholders should be aware that the Index Calculation Agent (in its capacity as such) has no obligation to take into account the interests of the Noteholders in constructing, determining or calculating any Index. The Index Calculation Agent shall not be liable, other than for gross negligence or fraud, to any person for any error in any Index or under any obligation to advise any person of any error therein. The Index Calculation Agent does not guarantee the accuracy or completeness of any Index.

8 No Interest in any Index or the Components of any Index

The Notes are debt obligations of the Issuer, the return on which (positive or negative) depends, amongst other things, on the Underlying Performance (as defined in the Summary of this Prospectus). A Noteholder has no interest in any Index, any Component or any Account and may not control the actions of the Index Calculation Agent or the Account Operator. In order to offset (whether in whole or in part) its liability under the Notes, the Issuer or a third party may own an interest (directly or indirectly) in one or more Components or an Account, however, there is no requirement that it must maintain such an interest or as to the size of any such interest.

9 Valuation Disruption Events

Payments in respect of the Notes subject to Valuation Disruption Events may be delayed or calculations may need to be made on an estimated basis as a result of such Valuation Disruption Events.

10 Early Redemption by Issuer

The Issuer may terminate the Notes prior to the Maturity Date for (a) taxation reasons, (b) due to discontinuance of the Reference Index, or (c) if, as a result of compliance by the Issuer with any applicable present or future law, rule, regulation, judgment, order or directive of any governmental, administrative, legislative or judicial authority or power or any change in the interpretation thereof, the Issuer has determined in good faith that (i) the performance of its obligations or any arrangement made to hedge its obligations thereunder has or will become unlawful, illegal or otherwise prohibited in whole or in part or (ii) the continued operation of the Reference Index has or will become materially uneconomically viable to the Issuer or materially detrimental to the interests of any investor in respect of the Reference Index. In such circumstances, the Issuer shall pay an amount in respect of each Note as set out in paragraph 26 of the “Final Terms - Terms and Conditions of the Notes” set out below.

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11 Index Value

Any Index Value will be determined net of any Account Operator fees and other expenses levied in respect of the Account, together with all fees and expenses relating to each Component comprised in the Account, including transaction costs.

12 Risk Factors relating to an Index

The principal risk factors to which an Index is subject are as follows:

Past Performance Past performance of an Index or a Component cannot be considered a guarantee of, nor necessarily a guide to, future performance.

Return Each Index Value will be determined with respect to one or more different Components and the value of each Index may, therefore, be materially affected by the performance of a particular Component, exchange rate fluctuations, market fluctuations, possible restrictions on the convertibility of currencies comprised in such Index and also by political and economic developments impacting on the relevant currencies or investments.

Limited Operating History Any Index may have a limited operating history, with no proven track record in achieving the investment objectives of the stated trading strategy.

Investment in Emerging Markets An Index may consist of or include Components invested in currencies or investments in emerging market countries. These involve special risks not associated with the currencies or investments of more established economies and include risks attributable to currency devaluation, foreign exchange control, political, social or diplomatic instability or governmental restrictions. The markets in such countries are generally more volatile than comparable markets in more developed economies.

Short Positions, Use of Derivative Instruments and Leveraging A Component may involve taking short positions in investments, through the use of short selling. This may represent significant investment risk as borrowed securities must be replaced by purchases at current market prices in order to close out a short position, and any appreciation in the value of the investments concerned will result in losses, as well as stock borrowing costs being incurred and may be only suitable for investors who understand the risks involved in trading in sophisticated and volatile markets. In addition, a trading strategy may involve trading in futures, options, forward exchange contracts and other derivative instruments and may also involve leveraged trading positions. As a result, relatively small price movements may result in substantial losses or gains.

Performance of the Account Operator Investment decisions in respect of the Account are made by the Account Operator (which may be the Issuer, if acting as the Account Operator). The loss of the Account Operator or key individuals of the Account Operator may jeopardise the performance of the Account, the relevant Index and hence the performance of the Notes.

No assurance can be given that the Account Operator will out-perform or match industry averages.

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The expected benefits from retaining the Account Operator to manage the Account actively may not be realised. The Account Operator has complete discretion in the management of the Account, subject only to ensuring such investments are consistent with the Account Operator Agreement.

Some of the trading strategies may involve investments in currencies other than the currency in which the Notes are denominated, and exchange rate fluctuations against such currencies could adversely affect the value of the Notes.

In the event of adverse performance of the Reference Index, the Account Operator may notionally allocate assets away from currency, equity or other market components and into fixed income investments with a view to preserving the Index Value at not less than the NPV of the Protected Amount. While this would reduce the risk of losses, it may reduce the opportunity for increases in the Index Value at times when equity markets increase in value.

13 Conflicts of Interest

The Issuer may be the Account Operator in respect of any Index. The Issuer’s market-making desk may be the counterparty to all transactions effected for the Account. The Issuer may provide additional funding for the Account or withdraw funds from the Account at any time. The Issuer will also act as the Index Calculation Agent.

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GENERAL INFORMATION

The Issuer will, at its registered office, the office of the Distributor and at the specified offices of the Paying Agents, make available for inspection during normal office hours, free of charge, upon oral or written request, a copy of this Prospectus and any document incorporated by reference in this Prospectus. Written or oral requests for such documents should be directed to the Distributor or to the specified office of any Paying Agent.

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FINAL TERMS - TERMS AND CONDITIONS OF THE NOTES

Except as set out below, the Notes will be subject to the general Conditions set out in the Base Prospectus as supplemented, amended and/or varied by the terms set out in Annex C, and also to the following terms (which shall constitute “Final Terms” for the purposes of the Base Prospectus):

1 (i) Issuer: HSBC Bank plc

(ii) Arranger(s): HSBC Bank plc

2 (i) Series number: NWP 3898

(ii) Tranche number: 1

3 Currency or currencies:

(i) of denomination: Euro

(ii) of payment: Euro

4 Aggregate Principal Amount

(i) Series: Up to 30,000,000 Euro

(ii) Tranche: Up to 30,000,000 Euro

5 Issue Price: 100.00 per cent. of the Denomination

6 Denomination(s):

(Condition 1(b))

Euro 2,500

7 (i) Issue Date: 26 March 2008

(ii) Interest Commencement Date Not Applicable

8 Maturity Date:

(Condition 6(a))

28 March 2013

9 Interest basis:

(Conditions 3 to 5)

Variable Coupon Amount as set out in Annex C paragraph 2

10 Redemption basis:

(Condition 6)

Index-Linked (See paragraph 23 below)

11 Change of interest or redemption basis: Not Applicable

12 Put/Call options: Not Applicable

13 Status of the Notes:

(Condition 2)

Unsubordinated, unsecured Notes

14 Method of distribution: Non-syndicated

Paragraphs 15 to 20 shall be “Not Applicable” for the purposes of the Notes.

Provisions relating to Redemption

21 Issuer’s optional redemption (Call):

(Condition 6(c))

Not Applicable

22 Noteholder’s optional redemption (Put): Not Applicable

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(Condition 6(d))

23 Final redemption amount of each Note:

(Condition 6(a))

Each Note shall be redeemed on the Maturity Date for an amount equal the greater of the Underlying Performance or the Protected Amount.

Paragraphs 24 and 25 shall be “Not Applicable” for the purposes of the Notes.

26 Early redemption amount:

(i) Early redemption amount (upon redemption for taxation reasons) (Condition 6(b))

Determined in accordance with Annex C paragraphs 4, 5 and 7.

(ii) Other redemption provisions (Condition 6(i))

Annex C paragraphs 4, 5 and 7. The provisions in Annex C paragraph 7 will apply.

General Provisions Applicable To The Notes

27 Form of Notes: (Condition 1(a))

(a) Form of Notes: Bearer

(b) Bearer Notes exchangeable for Registered Notes:

No

28 New Global Note: No

29 If issued in bearer form:

(i) Initially represented by a Temporary Global Note or Permanent Global Note:

Temporary Global Note

(ii) Temporary Global Note exchangeable for Permanent Global Note and/or Definitive Notes and/or Registered Notes: (Condition 1(a))

Temporary Global Note exchangeable for a Permanent Global Note which is exchangeable for Definitive Notes in the limited circumstances set out in the Permanent Global Note.

(iii) Permanent Global Note exchangeable at the option of the bearer for Definitive Notes and/or Registered Notes:

No

(iv) Coupons to be attached to Definitive Notes:

Yes

(v) Talons for future Coupons to be attached to Definitive Notes:

Yes

(vi) (a) Definitive Notes to be security printed:

Yes

(b) if the answer to (a) is yes, whether steel engraved plates will be used:

Yes

(vii) Definitive Notes to be in ICMA or successor’s format:

Yes

(viii) Issuer or Noteholder to pay costs of security printing:

Issuer

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30 Exchange Date for exchange of Temporary Global Note:

Not earlier than 40 days following the Issue Date

31 Payments: (Condition 8)

As provided in Condition 8

32 Partly Paid Notes (Condition 1):

Not Applicable

33 Redenomination (Condition 9):

Not Applicable

34 Other Final Terms: See Annexes

Provisions Applicable to Index-Linked Notes, Cash Equity Notes and Equity-Linked Notes

Paragraphs 35 -37 shall be “Not Applicable” for the purposes of the Notes.

38 Provisions for Index-Linked Notes Applicable

(i) Index(ices): See Part C and Annexes

(ii) Index Sponsor: See Annexes

(iii) Exchange(s): Not Applicable

(iv) Related Exchange(s): Not Applicable

(v) Initial level: See Annexes

(vi) Strike Date: Not Applicable

(vii) Cash Settlement Payment Date: Not Applicable

(viii) Adjustment to Indices: Condition 21(f) does not apply. See Annexes.

(ix) Additional Disruption Event: Not Applicable

39 For Equity-Linked and Credit-Linked Notes: Not Applicable

40 Valuation Date(s): Not applicable

41 Valuation Time: Not Applicable

42 Averaging Dates: Not Applicable

43 Other terms or special conditions relating to Index-Linked Notes, Cash Equity Notes or Equity-Linked Notes:

See Annexes

Paragraph 44 shall be “Not Applicable” for the purposes of the Notes.

Terms and conditions of the Offer

Offer Period

Offer Price:

From and including 21 January 2008 to and including 15 March 2008

Within the range of 95.00 to 100.00 per cent.

Conditions to which the offer is subject: Not Applicable

Description of the application process: A prospective investor should contact the Distributor during the Offer Period. A prospective investor will subscribe for the Notes in accordance with the arrangements existing between the Distributor and its customers relating to the subscription of securities generally and not directly with the Issuer or the

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Dealer.

Persons interested in purchasing Notes should contact their financial adviser. If an investor in any jurisdiction other than Malta wishes to purchase Notes, such investor should (a) be aware that sales in the relevant jurisdiction may not be permitted; and (b) contact its financial adviser, bank or financial intermediary for more information.

Description of possibility to reduce subscriptions and manner for refunding excess amount paid by applicants:

Subscriptions in excess of the maximum issue size will not be accepted by the Distributor and therefore this does not arise.

Details of the minimum and/or maximum amount of application:

No minimum or maximum, subject only to overall size of offer.

Details of the method and time limits for paying up and delivering the Notes:

Prospective Noteholders will be notified by the Distributor of their allocations of Notes and the settlement arrangements in respect thereof. The Notes will be issued on the Issue Date on a delivery against payment basis.

Manner in and date on which results of the offer are to be made public:

The final size will be known at the end of the Offer Period and a notice pursuant to UK Prospectus Rule 2.3.2(2) confirming the final amount will be (i) sent to the document viewing facility to be filed with the Financial Services Authority in the UK and (ii) published on or about the Issue Date in accordance with the method of publication set out in Prospectus Rule 3.2.4(2).

Procedure for exercise of any right of pre-emption, negotiability of subscription rights and treatment of subscription rights not exercised:

Not Applicable

Categories of potential investors to which the Notes are offered and whether tranche(s) have been reserved for certain countries:

The Notes are to be offered to retail investors in Malta.

Process for notification to applicants of the amount allotted and the indication whether dealing may begin before notification is made:

At the end of the Offer Period, the Distributor will proceed to notify the prospective Noteholders as to the amount of their allotment of the Notes.

Off-market dealings may commence prior to such notification of allotment being made.

Amount of any expenses and taxes specifically charged to the subscriber or purchaser:

Not applicable

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Name(s) and address(es), to the extent known to the Issuer, of the placers in the various countries where the offer takes place.

HSBC Bank Malta p.l.c.

233, Republic Street, Valletta, Malta

Entities agreeing to underwriting and when underwriting agreement will be reached:

This offer is not underwritten

CONFIRMED HSBC BANK PLC

By: Authorised Signatory

Date: ....................................................................

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PART B OTHER INFORMATION

1 Listing

(i) Listing Application will be made to admit the Notes to listing on the Official List of the Financial Services Authority. No assurance can be given as to whether or not such application will be granted.

(ii) Admission to trading Application will be made for the Notes to be admitted on to trading on the regulated market. No assurance can be given as to whether or not such application will be granted.

2 Ratings

Ratings: The long term senior debt of HSBC Bank plc has been rated:

S&P: AA

Moody’s: Aa1

The Notes have not specifically been rated.

3 Interests of Natural and Legal Persons involved in the Issue

So far as the Issuer is aware, no person involved in the offer of the Notes has an interest material to the offer.

4 Reasons for the offer, estimated Net Proceeds and Total Expenses

(i) Reasons for the offer: Information not disclosed

(ii) Estimated net proceeds: Information not disclosed

(iii) Estimated total expenses relating to the admission to trading:

Information not disclosed

5 Yield Not Applicable

6 Historic Interest Rates Not Applicable

7 Operational Information

ISIN Code: XS0342163804

Common Code: 034216380

New Global Note intended to be held in a manner which would allow clearing system eligibility:

No

Any clearing system(s) other than Euroclear and Clearstream, Luxembourg and the relevant identification number(s):

None

A12.4.1.1

A08872413/2.0/18 Jan 2008 19

Delivery: Delivery against payment

Settlement procedures: Medium Term Note

Additional Paying Agent(s) (if any): None

Common Depositary: Not Applicable

Calculation Agent/Agent Bank: HSBC Bank plc

– is Calculation Agent to make calculations? Yes

– if not, identify calculation agent: Not Applicable

Notices: (Condition 13) Condition 13 is applicable

City in which specified office of Registrar to be maintained: (Condition 14)

Not Applicable

Tradeable Amount: Denomination

Other relevant Terms and Conditions: See Annex C

Other Final Terms: See Annex C

ERISA Considerations: No

A08872413/2.0/18 Jan 2008 20

PART C PROVISIONS RELATING TO THE UNDERLYING PERFORMANCE

1 Reference Index: Global Multi-Asset Alpha Index 29 (see Annex A)

2 Initial Index Investment Amount: EUR 2406.25 per Note.

3 Initial Index Units: 24.0625 per Note.

4 Initial Index Investment Date: 26 March 2008

5 Base Currency of Reference Index: Euro

6 Index Calculation Fee: Not Applicable

Provisions Relating to Principal Protection

7 Protected Amount: 100% of the Denomination per Note.

A08872413/2.0/18 Jan 2008 21

ANNEX A THE REFERENCE INDEX

The return on the Notes is linked to the performance of the Global Multi-Asset Alpha 29 Index. Subject to any allocation to fixed income investments to ensure payment of the Protected Amount on the Maturity Date, this Index tracks the performance of the Global Multi-Asset Alpha 8 Index, which in turn tracks the performance of the Global Multi-Asset Alpha 04 Index but with active hedging back to EUR.. The Global Multi-Asset Alpha 04 Index comprises allocations to a number of Components: (i) the Global Currency Basket 10 Index, (ii) the Global Fixed Income 11 Index (iii) the Global Equity Basket 01 Index and (iv) the Global Money Market 11 Index. The detailed mechanics are set out below. The following indices are the relevant Sub-Indices (each, a “Sub-Index”) for the purposes of Annex B:

• the Global Multi-Asset Alpha 8 Index;

• the Global Multi-Asset Alpha 04 Index;

• the Global Currency Basket 10 Index;

• the Global Fixed Income 11 Index;

• the Global Equity Basket 01 Index; and

• the Global Money Market 11 Index.

1 The Global Multi-Asset Alpha 29 Index (the “Reference Index”)

The Reference Index tracks the performance of a principal protected “Global Multi-Asset Alpha” investment.

1.1 Trading Strategy

The initial Trading Strategy is for the Reference Index to be fully invested in the Global Multi-Asset Alpha 8. The Trading Strategy is implemented by the Account Operator through an Account established in respect of the Reference Index.

In addition, the strategy looks to achieve the Protected Amount on maturity of the Notes. If the value of the Reference Index should fall significantly, the allocation to the Global Multi-Asset Alpha 8 Index Reference Index will be reduced and an allocation to fixed income investments will be made instead.

Closing prices are published daily to Reuters on page HSGMAI and Bloomberg on page HSMT6.

1.2 Base Currency of the Reference Index

Euro

1.3 Index Commencement

On the index commencement date, 26 March 2008, the minimum account value was 100.00

1.4 Account Operator Fees

1.4.1 Fixed Fee

The Account Operator shall be entitled to receive a fee (the “Account Operator Fixed Fee”) that will be deducted from the value of the Account for the purposes of determining the Aggregate

A08872413/2.0/18 Jan 2008 22

Account Value. The Account Operator Fixed Fee shall be equal to 0.5 per cent. per annum of the Aggregate Account Value before deduction of any accrued Account Operator Fixed Fee and accrued Account Operator Performance Fee. The Account Operator Fixed Fee shall accrue daily and shall be calculated as at the last Reference Index Valuation Date in respect of each calendar quarter (each an “Account Operator Period”). The first Account Operator Period will be the period commencing on the Index Commencement Date.

1.4.2 Performance Fee

In order to avoid duplication in respect of Account Operator Fees no such fee will be charged to the Reference Index.

2 The Global Multi-Asset Alpha 8 Index (the “GMA” Index)


The strategy tracks the performance of the Global Multi-Asset Alpha 04 Index (the “GMA04 Index”).

As the base currency of the GMA04 Index is denominated in US Dollars, the value of the notional investment will actively be hedged back to Euro, the Base Currency of the Global Multi-Asset Alpha 8 Index.

Closing prices are published daily to Reuters, Bloomberg.

2.2 Base Currency

Euro




No such fees are payable.

3 The Global Multi-Asset Alpha 04 Index (the “GMA04” Index)


The strategy tracks the performance of a portfolio of investments in managed currency, interest rate and equity indices.

This is achieved through a notional investment in the Global Currency Basket Index, Global Fixed Income Index, the Global Equity Basket Index and the Global Money Market Index. The sum of the allocation to these three indices may be greater then the value of the GMA04 index; this is achieved using leverage. The allocation is rebalanced periodically in accordance with changes in the return and volatility of these components to maintain an optimal return / risk (volatility) relationship.

Excess cash balances are allocated to the Global Money Market 11 Index.


3.2 Components

The Components comprise an allocation to one or more of the following instruments/sub-indices:

(A) OTC deposits, loans, UCITS III liquidity funds

A08872413/2.0/18 Jan 2008 23

(B) Global Currency Basket 10 Index

(C) Global Fixed Income 11 Index

(D) Global Equity 01 Index

3.3 Base Currency

US Dollar


On the index commencement date, 5 October 2007, the minimum account value was 100.00


3.5.1 Account Operator Fixed Fee.

In order to avoid duplication in respect of Account Operator Fees no such fee will be charged to the GMA04 Index.

3.5.2 Account Operator Performance Fee

In order to avoid duplication in respect of Account Operator Fees no such fee will be charged to the GMA04 Index.

4 The Global Currency Basket 10 Index (the “GCB10” Index)


The strategy looks to take advantage of the yield differential available in a basket of long and short currency positions. These positions are actively managed and periodically rebalanced / adjusted to reflect changes in short term yields, target the optimal yield differential between long and short positions and target increased return and reduced portfolio volatility. This is done, in part, by observing changes in the market sentiment towards risk taking or risk aversion by using the price action of currency, equity, money market and major and emerging fixed income markets, as an input signal into the risk management process.

Currencies traded comprise:

Australian Dollar

British Pound Sterling

Canadian Dollar

Czech Koruna

Danish Krone

Euro

Hong Kong Dollar

Japanese Yen

Hungarian Forint

New Zealand Dollar

Norwegian Krone

A08872413/2.0/18 Jan 2008 24

Mexican Peso

Polish Zloty

Singapore Dollar

Swedish Krona

Swiss Franc

South African Rand

Thai Baht

Turkish Lira

US Dollar

Contracts traded comprise:

Spot Foreign Exchange

Forward Foreign Exchange

Deposits and loans

UCITS III liquidity funds

Purchased Currency Options

OTC Index Units

OTC Indices traded comprise:

Global Money Market Index 11

Pricing:

Daily closing prices published to Reuters, Bloomberg.

Tick Size 0.01 US Dollars per Index Unit.

4.2 Components


(A) Foreign Exchange contracts

(B) Global Money Market Index

(C) OTC deposits, loans, UCITS III liquidity funds

(D) OTC currency options

4.3 Base Currency

US Dollar


On the index commencement date,9 August 2007, the minimum account value was 100.00

A08872413/2.0/18 Jan 2008 25


4.5.1 Account Operator Fixed Fee

The Account Operator shall be entitled to receive a fee (the “Account Operator Fixed Fee”) that will be deducted from the value of the Account for the purposes of determining the Aggregate Account Value. The Account Operator Fixed Fee shall be equal to 1.0 per cent. per annum of the Aggregate Account Value before deduction of any accrued Account Operator Fixed Fee and accrued Account Operator Performance Fee. The Account Operator Fixed Fee shall accrue daily and shall be calculated as at the last GCB10 Index Valuation Date in respect of each calendar quarter (each an “Account Operator Period”). The first Account Operator Period will be the period commencing on the GCB10 Index Commencement Date.


The Account Operator shall be entitled to receive a fee (the “Account Operator Performance Fee”) that will also be deducted from the value of the Account for the purposes of determining the Aggregate Account Value. The Account Operator Performance Fee shall accrue daily based on the number of Units into which the Account is notionally divided as at the last GCB10 Index Valuation Date in respect of any Account Operator Period and calculated as follows:

For each Account Operator Period, the Account Operator Performance Fee per Unit will be equal to 20 per cent. of the appreciation in the GCB10 Index Value on the relevant GCB10 Index Valuation Date over the Benchmark Money Market Return (defined below).

The “Benchmark Money Market Return” is the sum of:

(i) the GCB10 Index Value of the last GCB10 Index Valuation Date of the previous Account Operator Period; and

(ii) the product of:

(a) the GCB10 Index Value on the last GCB10 Index Valuation Date of the previous Account Operator Period;

(b) the three-month BBA Libor rate on the last GCB10 Index Valuation Date of the previous Account Operator Period; and

(c) 0.25.

For the avoidance of doubt, the Account Operator Performance Fee in respect of each Account Operator Period will be calculated by reference to the Aggregate Account Value before deduction of any accrued Account Operator Fixed Fee and accrued Account Operator Performance Fee.

Notwithstanding and without prejudice to the generality of the foregoing, an amount representing the Account Operator Performance Fee will be taken into account in the calculation of the Aggregate Account Value of each GCB10 Index Valuation Date of an Account Operator Period in accordance with the method described above, as if each such GCB10 Index Valuation Date was the final GCB10 Index Valuation Date in such Account Operator Period.

5 The Global Fixed Income 11 Index (the “GFI11” Index)

A08872413/2.0/18 Jan 2008 26


The strategy trades a number of short term interest rates markets to take advantage of potential yield pick-up opportunities in the shape of the yield curve and seek excess returns arising from the volatility in the short-term interest rate markets. This is implemented by borrowing and lending at pre-determined points between 3 months and 24 months on the forward curve. Once a significant signal has been identified, a position is entered into, with the aim of capturing a sizeable move in the rates.

The decision of when and which maturity to trade is determined by two indicators: an economic indicator and a price-behaviour indicator. The economic indicator acts as a filter on potential trading positions and is derived from economic fundamental data including unemployment data and consumer confidence. The price-behaviour indicator monitors raw price data of the different interest-rate markets and identifies relevant trading information from short-term market noise.

Currencies traded comprise:

British Pound Sterling

Euro

US Dollar


Spot Foreign Exchange

Forward Foreign Exchange

Interest Rates Futures

Deposits and loans

UCITS III liquidity funds

OTC Index Units



Pricing:



5.2 Components


(A) OTC deposits, loans, UCITS III liquidity funds

(B) Foreign Exchange contracts

(C) Global Money Market Index

(D) Interest Rates Futures

5.3 Base Currency

US Dollar

A08872413/2.0/18 Jan 2008 27


On the index commencement date, 11 December 2006, the minimum account value was 100.00



The Account Operator shall be entitled to receive a fee (the “Account Operator Fixed Fee”) that will be deducted from the value of the Account for the purposes of determining the Aggregate Account Value. The Account Operator Fixed Fee shall be equal to 1.0 per cent. per annum of the Aggregate Account Value before deduction of any accrued Account Operator Fixed Fee and accrued Account Operator Performance Fee. The Account Operator Fixed Fee shall accrue daily and shall be calculated as at the last GFI11 Index Valuation Date in respect of each calendar quarter (each an “Account Operator Period”). The first Account Operator Period will be the period commencing on the GFI11 Index Commencement Date.


The Account Operator shall be entitled to receive a fee (the “Account Operator Performance Fee”) that will also be deducted from the value of the Account for the purposes of determining the Aggregate Account Value. The Account Operator Performance Fee shall accrue daily based on the number of Units into which the Account is notionally divided as at the last GFI11 Index Valuation Date in respect of any Account Operator Period and calculated as follows:

For each Account Operator Period, the Account Operator Performance Fee per Unit will be equal to 20 per cent. of the appreciation in the GFI11 Index Value on the relevant GFI11 Index Valuation Date over the Benchmark Money Market Return (defined below).


(i) the GFI11 Index Value of the last GFI11 Index Valuation Date of the previous Account Operator Period; and

(ii) the product of:

(a) the GFI11 Index Value on the last GFI11 Index Valuation Date of the previous Account Operator Period;

(b) the three-month BBA Libor rate on the last GFI11 Index Valuation Date of the previous Account Operator Period; and

(c) 0.25.


Notwithstanding and without prejudice to the generality of the foregoing, an amount representing the Account Operator Performance Fee will be taken into account in the calculation of the Aggregate Account Value of each GFI11 Index Valuation Date of an Account Operator Period in accordance with the method described above, as if each such GFI11 Index Valuation Date was the final GFI11 Index Valuation Date in such Account Operator Period.

6 The Global Equity Basket 01 Index (the “GEB01” Index)

A08872413/2.0/18 Jan 2008 28


The strategy is a statistical arbitrage hedged-equity strategy. It takes both long and short positions in large diversified portfolios in each of the three major equity markets (being the European Economic Area, the U.S. and Japan). The strategy looks to take advantage of the short-term volatility in equity prices and the long-term persistence of the correlation between equity prices in the same market.

The strategy looks to exploit the short-term opportunity of selling equities, which are relatively over priced or buying equities that are relatively under priced. In the longer-term, it is expected that the price spread relationship will revert and realise a trading profit.

A proprietary HSBC Quantitative model is used to select the optimal portfolio to trade within each market and to ensure that the portfolio is market neutral. This is done by considering the risk factors driving the market returns. The strategy is actively traded and as such, trading volumes are relatively high. Transaction cost modelling, liquidity and market capitalisation constraints ensure portfolio-rebalancing costs are controlled.


Long equity contracts listed on exchanges of the European Economic Area, the United States of America and Japan

Short equity contracts listed on exchanges of the European Economic Area, the United States of America and Japan

Cash deposits, loans, spot and forward foreign exchange contracts in the following currencies: Euro, US Dollar, Japanese Yen



Pricing:



6.2 Components


(A) Long Equity Contracts

(B) Short Equity Contracts

(C) OTC deposits, loans, UCITS III liquidity funds

(D) Global Money Market Index

6.3 Base Currency

US Dollar



A08872413/2.0/18 Jan 2008 29



The Account Operator shall be entitled to receive a fee (the “Account Operator Fixed Fee”) that will be deducted from the value of the Account for the purposes of determining the Aggregate Account Value. The Account Operator Fixed Fee shall be equal to 1.0 per cent. per annum of the Aggregate Account Value before deduction of any accrued Account Operator Fixed Fee and accrued Account Operator Performance Fee. The Account Operator Fixed Fee shall accrue daily and shall be calculated as at the last GEB01 Index Valuation Date in respect of each calendar quarter (each an “Account Operator Period”). The first Account Operator Period will be the period commencing on the GEB01 Index Commencement Date.


The Account Operator shall be entitled to receive a fee (the “Account Operator Performance Fee”) that will also be deducted from the value of the Account for the purposes of determining the Aggregate Account Value. The Account Operator Performance Fee shall accrue daily based on the number of Units into which the Account is notionally divided as at the last GEB01 Index Valuation Date in respect of any Account Operator Period and calculated as follows:

For each Account Operator Period, the Account Operator Performance Fee per Unit will be equal to 20 per cent. of the appreciation in the GEB01 Index Value on the relevant GEB01 Index Valuation Date over the Benchmark Money Market Return (defined below).


(iii) the GEB01 Index Value of the last GEB01 Index Valuation Date of the previous Account Operator Period; and

(iv) the product of:

(a) the GEB01 Index Value on the last GEB01 Index Valuation Date of the previous Account Operator Period;

(b) the three-month BBA Libor rate on the last GEB01 Index Valuation Date of the previous Account Operator Period; and

(c) 0.25.


Notwithstanding and without prejudice to the generality of the foregoing, an amount representing the Account Operator Performance Fee will be taken into account in the calculation of the Aggregate Account Value of each GEB01 Index Valuation Date of an Account Operator Period in accordance with the method described above, as if each such GEB01 Index Valuation Date was the final GEB01 Index Valuation Date in such Account Operator Period.

7 The Global Money Market 11 Index (the “GMM11” Index)


The strategy looks to provide a money market return through a portfolio of short-term OTC deposits.

A08872413/2.0/18 Jan 2008 30


7.2 Components


(A) Cash deposits and loans due within one week

(B) Cash deposits and loans due with a maturity of greater than one week and less than one year

7.3 Base Currency

US Dollar


On the index commencement date, 1 June 2006, the minimum account value was 100.00


No such fees are payable.

A08872413/2.0/18 Jan 2008 31

ANNEX B THE INDEX RULES

The following Index Rules apply in respect of the Reference Index and, where one or more Components of the Reference Index involves an allocation to an index (a “Sub-Index”) (and, where applicable, if any such Sub-Index includes one or more Components which is another Sub-Index), to each such Sub-Index as well, and for the purposes of these Rules “Index” shall be construed as meaning the Reference Index and/or as the case may be each Sub-Index.

1 Definitions

“Account” means the trading book through which the Trading Strategy adopted for the Index is implemented.

“Account Operator” means the person appointed from time to time to operate the Account pursuant to the Account Operator Agreement.

“Account Operator Agreement” means the agreement governing the operation of the Account and made between HSBC and the Account Operator.

“Component” means any product specified as such in respect of the relevant Index and “Components” shall be construed accordingly.

“Index Business Day” means each day in respect of which commercial banks are open for general business (including dealing in foreign exchange and foreign currency deposits) in London.

“Index Calculation Agent” means HSBC Bank plc or its designate.

“Index Rules” means the rules applying to the Index as set out in this Annex, as amended or replaced from time to time.

“Index Valuation Date” means each Index Business Day.

“Index Value” means the value of the Index from time to time, as determined by the Index Calculation Agent in accordance with these Index Rules; and

“Trading Strategy” means the strategy specified as such in respect of the relevant Index.

“Unit” means a notional individual unit of the Account (including fractions thereof), the value and number of which is determined in accordance with Section 2.1 of these Index Rules and “Units” shall be construed accordingly.

2 The Account

2.1 Establishment of the Account An individual Account in respect of the Index will be opened with HSBC Bank plc (“HSBC”) and transactions effected by the Account Operator will be carried out through the Account in accordance with the Trading Strategy for the relevant Index.

The Account shall be notionally divided into Units. The value of a Unit on any Index Business Day shall be the net value after deducting any applicable fees, as determined by the Index Calculation Agent, of the Account divided by the number of Units into which that Account is notionally divided.

A08872413/2.0/18 Jan 2008 32

Any increase of funds into, or withdrawal of funds from, the Account shall take place on any Index Business Day as set out below.

The Index Calculation Agent shall divide the amount of funds to be paid in or withdrawn by the value of the Units as determined by the Index Calculation Agent as at close of business in London on that Index Business Day and the Index Calculation Agent shall, prior to opening of business on the next Index Business Day, notionally increase or decrease, as the case may be, the number of Units by that amount.

HSBC may, at its discretion, (i) provide additional funds to the Account at any time, but shall have no obligation to do so and (ii) withdraw funds from the Account at any time, provided that any such addition or withdrawal will have no material effect on the value of the applicable Units. For the avoidance of doubt, all assets credited to the Account from time to time are assets owned by HSBC and in respect of which no third party (including any investor in any product linked wholly or in part to the Index) has any legal or beneficial interest.

2.2 Transactions for the Account The Account Operator shall, in accordance with the Account Operator Agreement, conduct transactions for the Account (“Transactions”) on arm’s length terms. Transactions may be effected in which the Account Operator (and HSBC if it is not the Account Operator) or an affiliate thereof may have an interest, relationship or arrangement that is material. In particular, HSBC’s market-making desk may be the counterparty to all or any Transactions effected for the Account. Furthermore, the Account Operator may:

(i) deal in a currency, an investment, a related investment, or a derivative linked to a currency or an investment, as principal;

(ii) deal with or use the services of an intermediate broker or other agent who may be an affiliate;

(iii) match (e.g. by way of a cross) a transaction for the Account with that of a customer by acting on his behalf as well as for the Account;

(iv) buy from the Account and sell immediately to a customer, or vice versa;

(v) hold a position (including a long or short derivative position) in the currency or investment concerned, in a related investment, or currency or asset underlying an investment;

(vi) quote prices to the market in the currency, the investment, a related investment or currency or asset underlying an investment; or

(vii) when trading for its own account, or advising and providing other services to affiliates or customers, follow a trading strategy which may be in conflict with that followed for the Account.

The Account Operator shall not be obliged to disclose any material interest referred to above or otherwise.

The Account Operator may exercise any voting and other rights relating to a Component in such manner as it shall determine, acting in its sole and absolute discretion.

The Account Operator is entitled to deduct from the Account all transaction charges arising in connection with transactions effected for the Account, including, but not limited to, brokerage costs, stock borrowing costs and any other fees, commissions, taxes and exchange levies, and the Account

A08872413/2.0/18 Jan 2008 33

Operator (and HSBC if it is not the Account Operator) and any affiliate thereof may retain any charges earned by it on transactions for the Account.

3 Valuation

3.1 Index Valuation Dates The Index Value shall be determined by the Index Calculation Agent on each Index Valuation Date as of the close of business in London on the preceding Index Business Day. Without prejudice to the generality of the foregoing provisions, the Index Value to be published by the Index Calculation Agent from time to time will be expressed as the value of a single Unit at such time.

3.2 Calculation Methodology The Index Value shall be calculated as an amount equal to the Aggregate Account Value (as defined below) divided by the number of Units into which the Account is notionally divided.

The “Aggregate Account Value” is determined by the Index Calculation Agent, in its sole and absolute discretion, as the aggregate value of each of the Components comprised in the Account, adopting the following methodology, after deducting the Account Operator Fixed Fees and Account Operator Performance Fees:

(i) positions shall be valued at their mark-to-market valuations or, to the extent that a mark-to-market valuation of a position cannot be readily determined, positions shall be valued on the basis of the most recently published valuation information and any other relevant market information;

(ii) the net value (after deduction of applicable taxes) of any dividends paid or other distributions made (in the form of cash or otherwise) in connection with a Component in respect of which a long equity position is held shall be credited to the Account;

(iii) the amount of any stock borrowing fees and manufactured dividends payable in connection with a Component in respect of which a short position is held shall be debited from the Account;

(iv) all applicable transaction charges that could reasonably be expected to arise in liquidating open positions and converting proceeds into the Base Currency of the Index shall be deducted from the aggregate value of the Components; and

(v) all currencies shall be converted into the Base Currency at the exchange rates prevailing on the Index Valuation Date.

For the purpose of determining the Aggregate Account Value, if a Component is valued in a currency other than the Base Currency, its value shall be converted into the Base Currency at the then prevailing exchange rates, as determined by the Index Calculation Agent in its sole and absolute discretion.

3.3 Publication of Index Values

3.3.1 Publication HSBC shall use all reasonable endeavours to ensure that information pertaining to the value of the Index from time to time is available to investors. Publication of any such information may be effected through an official Index website established by HSBC, or through page HSGMA on Reuters, page HSMT on Bloomberg or other distributors of electronic information and/or by

A08872413/2.0/18 Jan 2008 34

such other means as may be provided by HSBC from time to time. HSBC will not and shall not be required to publish the aggregate value of the Account or the value of any transaction that may notionally or actually be effected for or by the Account pursuant to the Trading Strategy from time to time, nor the number of units into which such Account may notionally be divided from time to time.

3.3.2 Notice of Non-Publication If at any time due to an event beyond the control of the Index Calculation Agent it is not practicable for the Index Calculation Agent to value the Index in accordance with these Index Rules, the Index Calculation Agent shall as soon as possible publish notice of this fact in accordance with the publication procedure set out in Section 3.3.1 of these Index Rules, above.

4 General Terms

The following terms shall apply to the Index.

4.1 The Index Calculation Agent HSBC or its designate will act as calculation agent in respect of the Index (the “Index Calculation Agent”). The Index Rules shall be applied by the Index Calculation Agent in a reasonable manner and according to the information made available to it, however, the Index Calculation Agent shall be the final authority on the Index and the interpretation of the Index Rules.

The Index Calculation Agent (which term includes for this purpose the officers, employees and delegates of the Index Calculation Agent, shall not be under any liability to any person on account of any loss suffered by such person (howsoever such loss may have occurred) in connection with anything done, determined or selected (or omitted to be done, determined or selected) in good faith by the Index Calculation Agent in connection with the Index. In particular (but without limitation) the Index Calculation Agent shall not be liable for any loss suffered by any party as a result of any determination or calculation which it may make (or fail to make) in relation to the construction or the valuation of the Index or any Component thereof and, once made, the Index Calculation Agent shall not be under any obligation to revise any determination or calculation made by it for any reason.

4.2 Amendments to the Rules Notwithstanding that these Index Rules have been formulated to be as clear and comprehensive as possible, situations may arise that these Index Rules do not address, or where the interpretation of these Index Rules is unclear. The Index Calculation Agent will resolve such matters acting reasonably and in good faith and may do so by an amendment to these Index Rules, which will be effective on publication of the amendment or such later date as may be specified in such amendment publication.

4.3 Notice and Disclaimer These Index Rules have been prepared solely for information purposes. The methodology contained in these Index Rules is not an offer to buy or sell any investments or currencies or adopt any trading strategy.

HSBC and its affiliates make no express or implied warranties or representations with respect to the information contained in these Index Rules or results that are obtained by the use of such documentation. HSBC and its affiliates hereby disclaim all warranties of accuracy, completeness, merchantability, or fitness for a particular purpose with respect to any of this information. HSBC and

A08872413/2.0/18 Jan 2008 35

its affiliates shall have no liability for direct or indirect, special, punitive or consequential or any other damages including lost profits even if notified of the possibility of such damages.

It is planned that HSBC and its affiliates will offer either direct or structured products such as options, swaps, certificates and notes that are linked to the return on the Index and/or a Index. It should be recognised that the Index has been developed with a view to offering such products and to facilitate hedging by HSBC of its exposure under such products, as key commercial elements of the Index. Accordingly, it should be assumed that the Index Rules have been and will be analysed from this commercial point of view.

The Index Rules, the Index Values, the values of any Components and any other information contained in these Index Rules may not be reproduced or redisseminated in any form without prior written permission from HSBC. No-one is permitted to use any of the information in these Index Rules, any information contained herein, any Index Value or the value of any Component of an Index in connection with the writing, trading, marketing, or promotion of any financial instruments or products or to create any indices.

4.4 Governing Law These Index Rules shall be governed by, and construed in accordance, with English law.

A08872413/2.0/18 Jan 2008 36

ANNEX C ADDITIONS AND VARIATIONS TO THE CONDITIONS

The terms and conditions of the Notes as set out in the Base Prospectus dated 2 August 2006 as supplemented, varied and/or amended by any supplement thereto shall be supplemented, amended and/or varied in accordance with the terms and conditions set out below. To the extent that there is any conflict between the terms and conditions of the Notes as set out in the Base Prospectus and the terms and conditions as set out below, the latter shall prevail. Capitalised terms used but not otherwise defined herein shall have the meanings given to them elsewhere in this Prospectus.

Index Linked Notes

1 Index Participation

1.1 On the Initial Index Investment Date, an amount equal to the Initial Index Investment Amount shall be notionally invested by the Issuer in the Index and credited to the Account in respect of the Index.

1.2 Any remaining proceeds of the issue of the Notes not applied in connection with the Initial Index Investment Amount shall be applied by the Issuer to enable it to pay the Protected Amount (if any) on the Maturity Date and in payment of the Issue Costs.

1.3 The initial per Note participation of a Noteholder in the Index as of the Initial Index Investment Date, shall be represented by such number of Units in the Index as shall be determined by the Calculation Agent by dividing the Initial Index Investment Amount by the Index Value at the close of business on the Initial Index Investment Date.

2 Variable Coupon Amounts

The Issuer shall pay annually in respect of the Notes an amount of interest equal to the greater of zero and Index Valuet – Index Valuet-1

The Performance Payment payable in any year in respect of a Note shall not exceed 10% of the Denomination. The calculation period (“Calculation Period”), and the payment date, in respect of each Performance Payment, shall be as follows:

Calculation Period Payment Date

Start End

26 March 2008 25 March 2009 1 April 2009




26 March 2012 21 March 2013 28 March 2013

If a Performance Payment is made the amount notionally allocated to Units of the Reference Index will be reduced in an amount equivalent to the payment made.

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3 Early Redemption

3.1 Illegality The Issuer may terminate the Notes if, as a result of compliance by the Issuer with any applicable present or future law, rule, regulation, judgement, order or directive of any governmental, administrative, legislative or judicial authority or power, or any change in the interpretation thereof (“Applicable Law”), the Calculation Agent has determined in good faith that (i) the performance of the Issuer’s obligations thereunder or that any arrangement made to hedge the Issuer’s obligations thereunder has or will become unlawful, illegal or otherwise prohibited in whole of in part or (ii) the continued operation of the Index has or will become materially uneconomically viable to the Issuer or materially detrimental to the interests of any Noteholder. In such circumstances, the Issuer shall, if and to the extent permitted by Applicable Law, pay or cause to be paid in respect of each Note held by a Noteholder an amount equal to the Early Redemption Amount of such Note determined on the date falling immediately prior to the date of such termination (subject to the occurrence of any Valuation Disruption Event) (ignoring such unlawfulness, illegality or, as the case may be, other prohibition). Payment of the Early Redemption Amount shall be made in such manner as shall be notified to the Noteholders in accordance with the Conditions.

3.2 Discontinuation of the Index If the Index shall cease to exist or be published in any form, due to events affecting one or more underlying Indices (other than a Market Disruption Event which continues for less than eight consecutive Business Days (as determined by the Calculation Agent in its sole and absolute discretion) then the Issuer may, but shall not be obliged to, declare that the Notes shall fall due for early redemption in whole and, in such circumstances, the Notes shall be redeemed at their Early Redemption Amount. Payment of the Early Redemption Amount shall be made in such manner as shall be notified to the Noteholders in accordance with the Conditions.

4 Early Redemption Amount

On early redemption of the Notes in accordance with the Conditions, each Note will be redeemed at an amount equal to of the greater of:

(i) the Underlying Performance

or

(ii) the NPV of the Protected Amount .

less

(iii) any Early Redemption Fee payable if the Notes are redeemed prior to the third anniversary of the Trade Date.

“Early Redemption Fee” means, in the case of redemption prior to the first anniversary of the Issue Date, two per cent. of the Protected Amount, and on or following the first anniversary but prior to the third anniversary of the Issue Date, one per cent. of the Protected Amount, and thereafter zero

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5 Redemption Amount of the Notes

Calculation and payment of the Final Redemption Amount and Early Redemption Amount of the Notes in accordance with this Prospectus shall, except in the circumstances set out in paragraph 6 below, be subject to the following provisions:

5.1 Valuation Disruption Events 5.1.1 If a Valuation Disruption Event has occurred such that the Index Value is unavailable on the

Redemption Valuation Date for the purposes of determining the Redemption Amount payable on the Redemption Date, save as set out in 5.1.2 below, the determination of the Redemption Amount shall be deferred until the earlier of (i) the Business Day immediately following the date of cessation of the Valuation Disruption Event or (ii) the Valuation Disruption Cut-off Date.

5.1.2 If a Valuation Disruption Event occurs in respect of any Component or Components affecting the valuation of the Index and such Component or Components comprise 5 per cent. or less of the Index by aggregate weight at any one time, the value of the applicable Component or Components shall be determined by the Calculation Agent (in its sole and absolute discretion) as its good faith estimate (taking into account prevailing market conditions) of the value of the Component or Components by reference to the last available valuations of such Component or Components.

5.1.3 If, on the Valuation Disruption Cut-off Date, any Valuation Disruption Event occurring on the Redemption Valuation Date is still continuing, the Calculation Agent shall, to the extent necessary to perform calculations in respect of the Notes, in good faith determine the Index Value for the relevant Index Valuation Date based on such method of valuation as the Calculation Agent may determine in its sole and absolute discretion (acting in good faith and taking into account prevailing market conditions) and which will be based on the most recently available, as of the date on which the Valuation Disruption Event occurred, performance information in respect of the Components comprising the Index.

5.2 Deferred Redemption Date The Issuer shall notify the Noteholders of the applicable Redemption Amount as soon as possible on or after the date of determination of the Index Value in accordance with paragraph 5.1 above (the date of such determination, the “Determination Date”). Payment of the applicable Redemption Amount shall be made to Noteholders within five days of the Determination Date.

5.3 No Interest for Deferred Redemption No interest shall be payable on the Notes in respect the period from the applicable Redemption Date to the date of payment of the Redemption Amount.

6 Correction of Index

If the level of the Index published or announced on a given day and used or to be used by the Calculation Agent in any calculation is subsequently corrected and the correction (“Corrected Level”) is published by the Index Calculation Agent or any successor thereof prior to the Redemption Date or, if later, the Valuation Disruption Cut-off Date and within five days of original publication, then the Calculation Agent shall re-determine the Index Value using the Corrected Level and any applicable redemption amounts shall be calculated by reference to the Corrected Level of the Index.

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7 Calculations and Determinations

The Issuer and/or the Calculation Agent shall have no responsibility for good faith errors or omissions in any calculations and determinations as provided in the Conditions, whether caused by negligence or otherwise. The calculations and determinations of the Issuer and/or the Calculation Agent shall be made in accordance with the Conditions in good faith and in a commercially reasonable manner having regard in each case to the criteria stipulated herein and (where relevant) on the basis of information provided to or obtained by employees or officers of the Issuer and/or Calculation Agent responsible for making the relevant calculation or determination and shall, in the absence of manifest error, be final, conclusive and binding on Noteholders.

8 Purchases of Notes by Issuer

The Issuer may, but is under no obligation, from time to time at the request of a Noteholder, offer a price at which it would purchase Notes from the Noteholder. Such price will not necessarily be calculated in the same manner as an Early Redemption Amount, and may take into account the costs to the Issuer of unwinding hedging arrangements, such other costs as may be incurred by the Issuer in connection with the purchase, and include a dealing spread. The price offered by the Issuer may be less than the Protected Amount, the NPV of the Protected Amount and/or the initial amount invested.

9 Definitions

“Account Operator” has the meaning set out in Annex B.

“Component” has the meaning set out in the Index Rules.

“Conditions” means the terms and conditions of the Notes set out in the Base Prospectus of the Issuer dated 2 August 2007 as supplemented, varied and/or amended by any supplement thereto and by the terms set out in this Prospectus and the Annexes.

“Early Redemption Amount” means the redemption amount payable per Note by the Issuer on an early redemption of the Notes, as determined in accordance with this Prospectus.

“Final Index Value” means the Index Value for the Index Valuation Date falling on the applicable Redemption Valuation Date.

“Final Participation” means the number of Units (including fractions thereof) in the Index corresponding to the relevant Note as at the Redemption Valuation Date.

“Final Redemption Amount” means the redemption amount payable per Note by the Issuer on the Maturity Date of the Notes (subject to any deferral of such date in accordance with the Conditions) as determined in accordance with this Prospectus.

“Index” means the Index established in accordance with the Index Rules.

“Index Business Day” has the meaning set out in the Index Rules.

“Index Calculation Agent” means HSBC Bank plc or its designate.

“Index Rules” means the Index Rules as set out in Annex B.

“Index Valuation Date” means each Index Business Day.

“Index Value” means the value of the Index on any Index Valuation Date, as determined by the Index Calculation Agent.

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“Index Valuet” means the value of the Index on the Index Valuation Date at the end of a Calculation Period as determined by the Index Calculation Agent.

“Index Valuet-1” means in respect of any Index Valuation Date falling at the end of a Calculation Period the value of the Index on the Index Valuation Date falling at the beginning of the Calculation Period, as determined by the Index Calculation Agent.

“Initial Index Investment Amount” is the amount per Note set out in this Prospectus.

“Initial Index Investment Date” means the date set out in the Supplemental Terms.

“Issue Costs” means all costs and expenses incurred by the Issuer in connection with the Issue of the Notes.

“Market Disruption Event” means any of the following events:

(i) when, as a result of political, economic, military or monetary events, or any other circumstances outside the control of the Issuer and/or the Account Operator, (a) dealings in assets comprising one or more of the Components representing 20 per cent. or more of the relevant Index, or (b) the exchange of the currency of denomination of a Component for the Base Currency of the relevant Index, would not be reasonably or normally practicable without being seriously detrimental to the value of the Account;

(ii) where one or more stock exchanges, foreign exchange markets, money markets or other financial markets used in relation to any Component is or are closed otherwise than for ordinary holidays or if trading thereon is restricted or suspended; or

(iii) there is a breakdown in the normal means of communication used for the valuation by the Index Calculation Agent of the Index Value in accordance with the Index Rules.

“NPV of the Protected Amount” means, in respect of each Note, an amount equal to the value of the Protected Amount reduced by a factor which reflects the then prevailing time value of money, such factor to be determined by the Calculation Agent in good faith but otherwise in its sole and absolute discretion. In making such determination, the Calculation Agent may, without limitation, make reference to the bid side interest rate swap market for undoubted credits (interpreted and adjusted as it thinks fit), futures prices and market rates for deposits.

“Protected Amount” means, in respect of each Note, an amount equal to 100 per cent. of the Denomination.

“Redemption Amount” means, in respect of each Note, as the case may be, the Early Redemption Amount or the Final Redemption Amount.

“Redemption Valuation Date” means the Index Business Day falling five days prior to the applicable Redemption Date.

“Redemption Date” means the Maturity Date, or other date fixed for redemption of the Notes as determined in accordance with the Conditions.

“Underlying Performance” means, in respect of each Note, an amount equal to the Final Participation multiplied by the Final Index Value.

“Unit” has the meaning set out in the applicable Index Rules.

“Valuation Disruption Cut-off Date” means the date falling 30 calendar days after the Redemption Date.

“Valuation Disruption Event” means any event preventing the determination of the Index Value by the Index Calculation Agent in respect of an Index Valuation Date, including a Market Disruption Event.

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REGISTERED AND HEAD OFFICE OF THE ISSUER

HSBC Bank plc 8 Canada Square London E14 5HQ

DEALER HSBC Bank plc 8 Canada Square London E14 5HQ

PRINCIPAL PAYING AGENT, ISSUE AGENT, REGISTRAR, TRANSFER AGENT AND

AUTHENTICATION AGENT HSBC Bank plc 8 Canada Square London E14 5HQ

CALCULATION AGENT

HSBC Bank plc 8 Canada Square London E14 5HQ

LEGAL ADVISERS TO THE ISSUER AND THE DEALER as to English law Linklaters LLP One Silk Street

London EC2Y 8HQ United Kingdom

AUDITORS OF THE ISSUER

KPMG Audit Plc 8 Salisbury Square

Blackfriars London EC4Y 8B