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HSBC Bank plc
Annual Report and Accounts 2024
Registered number - 00014259

HSBC Bank plc Annual Report and Accounts 2024 | 1

Contents
| Strategic Report
3 | Key financial metrics
4 | About HSBC Group
4 | Purpose and strategy
6 | Our Global Businesses in 2024
7 | ESG Overview
10 | Key Performance Indicators
12 | Economic background and outlook
13 | Financial summary
19 | Risk overview
| Risk
21 | Our approach to risk
23 | Top and emerging risks
29 | Our material banking and insurance risks
| Corporate Governance Report
94 | Directors
96 | Directors’ emoluments
97 | Board committees
| Financial statements
107 | Independent auditors’ report to the members of HSBC Bank plc
115 | Financial statements
126 | Notes on the financial statements

Presentation of Information
This document comprises the Annual Report and Accounts 2024 for
HSBC Bank plc (‘the bank’ or 'the company') and its subsidiaries
(together ‘the group’). ’We’, ‘us’ and ‘our’ refer to HSBC Bank plc
together with its subsidiaries. It contains the Strategic Report, the
Report of the Directors, the Statement of Directors’ Responsibilities
and Financial Statements, together with the Independent Auditors’
Report, as required by the UK Companies Act 2006. References to
‘HSBC’, 'HSBC Group' or ‘Group’ within this document mean HSBC
Holdings plc together with its subsidiaries.
HSBC Bank plc is exempt from publishing information required by The
Capital Requirements Country-by-Country Reporting Regulations
2013, as this information is published by its parent, HSBC Holdings
plc. This information is available on HSBC’s website: www.hsbc.com.
Pillar 3 disclosures for the group are also available on www.hsbc.com,
under Investors.
Contents of the linked websites are not incorporated into this
document.
All narrative disclosures, tables and graphs within the Strategic Report
and Report of the Directors are unaudited unless otherwise stated.
Our reporting currency is £ sterling.
Unless otherwise specified, all $ symbols represent US dollars.

Cautionary Statement Regarding
Forward-Looking Statements
This Annual Report and Accounts 2024 contains certain forward-
looking statements with respect to the company’s financial condition;
results of operations and business, including the strategic priorities;
financial, investment and capital targets; and the company’s ability to
contribute to the HSBC Group’s environmental, social and governance
(‘ESG’) ambitions, targets and commitments described herein.
Statements that are not historical facts, including statements about
the company’s beliefs and expectations, are forward-looking
statements. Words such as ‘may’, ‘will’, ‘should’, ‘expects’, ‘targets’,
‘anticipates’, ‘intends’, ‘plans’, ‘believes’, ‘seeks’, ‘estimates’,
‘potential’ and ‘reasonably possible’, or the negative thereof, other
variations thereon or similar expressions are intended to identify
forward-looking statements. These statements are based on current
plans, information, data, estimates and projections, and therefore
undue reliance should not be placed on them. Forward-looking
statements speak only as of the date they are made. The company
makes no commitment to revise or update any forward-looking
statements to reflect events or circumstances occurring or existing
after the date of any forward-looking statements. Written and/or oral
forward-looking statements may also be made in the periodic reports
to the US Securities and Exchange Commission, offering circulars and
prospectuses, press releases and other written materials, and in oral
statements made by the company’s Directors, officers or employees
to third parties, including financial analysts. Forward-looking
statements involve inherent risks and uncertainties.
Readers are cautioned that a number of factors could cause actual
results to differ, in some instances materially, from those anticipated
or implied in any forward-looking statement. These include, but are
not limited to:
– changes in general economic conditions in the markets in which
the company operates, such as new, continuing or deepening
recessions, prolonged inflationary pressures and fluctuations in
employment levels and the creditworthiness of customers beyond
those factored into consensus forecasts; the Russia-Ukraine war
and the conflict in the Middle East and their impact on global
economies and the markets where the company operates, which
could have a material adverse effect on (among other things) the
company’s financial condition, results of operations, prospects,
liquidity, capital position and credit ratings; deviations from the
market and economic assumptions that form the basis for the
company’s ECL measurements (including, without limitation, as a
result of the Russia-Ukraine war and the conflict in the Middle East
and inflationary pressures and commodity price changes); changes
and volatility in foreign exchange rates and interest rates levels;
volatility in equity markets; lack of liquidity in wholesale funding or
capital markets, which may affect the company’s ability to meet its
obligations under financing facilities or to fund new loans,
investments and businesses; geopolitical tensions or diplomatic
developments, both in Europe and in other regions such as Asia,
producing social instability or legal uncertainty, such as the Russia-
Ukraine war or the conflict in the Middle East (including the
resurgence, continuation or escalation thereof) and the related
imposition of sanctions and trade restrictions, supply chain
restrictions and disruptions, sustained increases in energy prices
and key commodity prices, claims of human rights violations and
diplomatic tensions between China and the US, which may extend
to and involve the UK and the EU, alongside other potential areas
of tension, which may adversely affect the group by creating
regulatory, reputational and market risks; the efficacy of
government, customer, and the company’s and the HSBC Group’s
actions in managing and mitigating ESG risks, in particular climate
risk, nature-related risks and human rights risks, and in supporting
the global transition to net zero carbon emissions, each of which
can impact the company both directly and indirectly through its
customers and which may result in potential financial and non-
financial impacts; illiquidity and downward price pressure in
national real estate markets; adverse changes in central banks’
policies with respect to the provision of liquidity support to
financial markets; heightened market concerns over sovereign
creditworthiness in over-indebted countries; adverse changes in
the funding status of public or private defined benefit pensions;
societal shifts in customer financing and investment needs,
including consumer perception as to the continuing availability of
credit; exposure to counterparty risk, including third parties using
the company as a conduit for illegal activities without the
company’s knowledge; the discontinuation of certain key Interest
rate benchmark reform ('IBOR') and the transition of the remaining
legacy Ibor contracts to near risk-free benchmark rates, which
continues to expose the company to some financial and non-
financial risks; and price competition in the market segments that
the company serves;

2 | HSBC Bank plc Annual Report and Accounts 2024

Strategic Report | Key financial metrics

– changes in government policy and regulation, including trade and
tariff policies, as well as monetary, interest rate and other policies
of central banks and other regulatory authorities in the principal
markets in which the company operates and the consequences
thereof (including, without limitation, actions taken as a result of
changes in government following national elections in the markets
where the group operates); initiatives to change the size, scope of
activities and interconnectedness of financial institutions in
connection with the implementation of stricter regulation of
financial institutions in key markets worldwide; revised capital and
liquidity benchmarks, which could serve to deleverage bank
balance sheets and lower returns available from the current
business model and portfolio mix; changes to tax laws and tax
rates applicable to the company, including the imposition of levies
or taxes designed to change business mix and risk appetite; the
practices, pricing or responsibilities of financial institutions serving
their consumer markets; expropriation, nationalisation, confiscation
of assets and changes in legislation relating to foreign ownership;
the UK’s relationship with the EU, particularly with respect to the
potential divergence of UK and EU law on the regulation of
financial services; changes in government approach and regulatory
treatment in relation to ESG disclosures and reporting
requirements, and the current lack of a single standardised
regulatory approach to ESG across all sectors and markets;
changes in UK macroeconomic and fiscal policy, which may result
in fluctuations in the value of the pound sterling; general changes
in government policy (including, without limitation, actions taken
as a result of changes in government following national elections
in the markets where the group operates) that may significantly
influence investor decisions; the costs, effects and outcomes of
regulatory reviews, actions or litigation, including any additional
compliance requirements; and the effects of competition in the
markets where the company operates, including increased
competition from non-bank financial services companies; and
– factors specific to the company and the HSBC Group, including the
company’s success in adequately identifying the risks it faces,
such as the incidence of loan losses or delinquency, and managing
those risks (through account management, hedging and other
techniques); the company’s ability to achieve its financial,
investment, capital targets and the HSBC Group’s ESG ambitions,
targets and commitments, which may result in the company’s
failure to achieve any of the expected outcomes of its strategic
priorities; evolving regulatory requirements and the development
of new technologies, including artificial intelligence, affecting how
the company manages model risk; model limitations or failure,
including, without limitation, the impact that high inflationary
pressures and rising interest rates have had on the performance
and usage of financial models, which may require the company to
hold additional capital, incur losses and/or use compensating
controls, such as judgemental post-model adjustments, to address
model limitations; changes to the judgements, estimates and
assumptions the company bases its financial statements on;
changes in the company’s ability to meet the requirements of
regulatory stress tests; a reduction in the credit ratings assigned to
the company or any of its subsidiaries, which could increase the
cost or decrease the availability of the company’s funding and
affect its liquidity position and net interest margin; changes to the
reliability and security of the company’s data management, data
privacy, information and technology infrastructure, including
threats from cyber-attacks, which may impact its ability to service
clients and may result in financial loss, business disruption and/or
loss of customer services and data; the accuracy and effective use
of data, including internal management information that may not
have been independently verified; changes in insurance customer
behaviour and insurance claim rates; the company’s dependence
on loan payments and dividends from subsidiaries to meet its
obligations; changes in the HSBC Group’s reporting framework
and accounting standards, which have had and may continue to
have a material impact on the way the company prepares its
financial statements; the company’s ability to successfully execute
planned strategic acquisitions and disposals; the company’s
success in adequately integrating acquired businesses into its
business; our ability to successfully execute and implement the
announced strategic reorganisation of the HSBC Group; changes in
the company’s ability to manage third-party, fraud, financial crime
and reputational risks inherent in its operations; employee
misconduct, which may result in regulatory sanctions and/or
reputational or financial harm; changes in skill requirements, ways
of working and talent shortages, which may affect the company’s
ability to recruit and retain senior management and an inclusive
and skilled workforce; and changes in the company’s ability to
develop sustainable finance and ESG-related products consistent
with the evolving expectations of its regulators, and the
company’s capacity to measure the environmental and social
impacts from its financing activity (including as a result of data
limitations and changes in methodologies), which may affect
HSBC Group’s ability to achieve its ESG ambitions, targets and
commitments, and increase the risk of greenwashing. Effective
risk management depends on, among other things, the company’s
ability through stress testing and other techniques to prepare for
events that cannot be captured by the statistical models it uses;
the company’s success in addressing operational, legal and
regulatory, and litigation challenges; and other risks and
uncertainties that the company identifies in ‘Risk – Risk Overview’,
‘Risk – Managing Risk’ and ‘Risk – Top and Emerging Risks’ on
pages 19 to 28 of the Annual Report and Accounts 2024.
This Annual Report and Accounts 2024 contains a number of
graphics, text boxes and credentials which aim to give a high-level
overview of certain elements of our disclosures and to improve
accessibility for readers. These graphics, text boxes and credentials
are designed to be read within the context of the Annual Report and
Accounts 2024 as a whole.

HSBC Bank plc Annual Report and Accounts 2024 | 3

Key financial metrics

| 2024 | 2023 | 2022
For the year (£m) |  |  |
Profit/(loss) before tax | 2,068 | 2,152 | (1,199)
Net operating income before change in expected credit losses and other credit impairment charges 1 | 7,473 | 7,506 | 4,304
Profit/(loss) attributable to the parent company | 1,253 | 1,703 | (563)
At 31 December (£m) |  |  |
Total equity attributable to the parent company | 26,895 | 24,359 | 23,102
Total assets | 727,330 | 702,970 | 716,646
Risk-weighted assets 2,6 | 112,251 | 107,449 | 113,241
Loans and advances to customers (net of impairment allowances) | 82,666 | 75,491 | 72,614
Customer accounts | 242,303 | 222,941 | 215,948
Capital ratios (%)2,6 |  |  |
Common equity tier 1 | 19.5 | 17.9 | 16.3
Tier 1 | 23.0 | 21.5 | 19.7
Total capital | 36.8 | 34.6 | 31.3
Leverage ratio (%)3 | 5.5 | 5.1 | 5.4
Performance, efficiency and other ratios (%) |  |  |
Return on average ordinary shareholders’ equity 4,7 | 4.5 | 7.4 | (4.0)
Return on average tangible equity 7 | 4.6 | 7.3 | (3.9)
Cost efficiency ratio 5 | 70.4 | 68.5 | 122.0
Ratio of customer advances to customer accounts | 34.1 | 33.9 | 33.6

1 Net operating income before change in expected credit losses and other credit impairment charges is also referred to as revenue.
2 Unless otherwise stated, regulatory capital ratios and requirements are based on the transitional arrangements of the Capital Requirements Regulation in force at
the time. These include the regulatory transitional arrangements for IFRS 9 'Financial Instruments'. References to EU regulations and directives (including
technical standards) should, as applicable, be read as references to the UK's version of such regulation and/or directive, as onshored into UK law under the
European Union (Withdrawal) Act 2018, and as may be subsequently amended under UK law.
3 Leverage metrics exclude central bank claims in accordance with the Prudential Regulation Authority's (‘PRA‘) UK leverage framework.
4 The return on average ordinary shareholders’ equity is defined as profit attributable to shareholders of the parent company divided by the average total
shareholders’ equity.
5 Cost efficiency ratio is defined as total operating expenses divided by net operating income before change in expected credit losses and other credit impairment
charges.
6 From November 2023, we reverted to the onshored UK version of closely correlated currency list (CIR(EU) 2019/2091) from the previously applied EBA list
(CIR(EU) 2021/249). Comparative data have been represented.
7 Definitions and calculations of alternative performance measures are included in our ‘Reconciliation of alternative performance measures’ on page 18.

4 | HSBC Bank plc Annual Report and Accounts 2024

Strategic Report | About HSBC Group | Purpose and strategy

About HSBC Group
With assets of $3.0tn and operations in 58 countries and territories at
31 December 2024, HSBC is one of the largest banking and financial
services organisations in the world. Approximately 41 million
customers bank with the HSBC Group and the HSBC Group employs
around 211,000 full-time equivalent staff.

Purpose and strategy
HSBC's purpose and ambition
Guided by the HSBC Group's purpose of 'O pening up a world of
opportunity', HSBC's ambition is to be the preferred international
financial partner for its clients.

HSBC's business focus and strategic
priorities
During 2024, HSBC continued to implement its strategy, aligned to its
purpose, values and ambition.
In 2024, the HSBC Group served its customers through three global
businesses (Wealth and Personal Banking, Commercial Banking and
Global Banking and Markets) which focused on delivering growth in
areas where the HSBC Group has distinctive capabilities and
significant opportunities. Our 2024 operating segment results are
presented on this basis.
On 22 October 2024, HSBC Holdings plc announced that the HSBC
Group would simplify its organisational structure to help accelerate
delivery against its strategic priorities.
Effective 1 January 2025, the HSBC Group will operate through four
new businesses:
– Hong Kong
– UK
– Corporate and Institutional Banking ('CIB')
– International Wealth and Premier Banking ('IWPB')
HSBC's priorities
– Focus on our customers, delivering high satisfaction;
– Drive long-term growth by focusing on our strengths, increasing
our leadership and market share in the areas where we can
generate attractive returns;
– Simplify our structure and operating model. Reshape and
rationalise our portfolio, to meet the needs of a fast-changing
world.

HSBC's values
HSBC's values help define who we are as an organisation and are key
to our long-term success.
– We value difference
– We succeed together
– We take responsibility
– We get it done

HSBC in Europe
Europe is an important part of the global economy, accounting for
roughly 40% of global trade and one-quarter of global Gross Domestic
Product (UNCTAD, IMF 2024). Europe is the largest trading region in
the world and Asia is Europe’s biggest and fastest growing external
trading partner (UNCTAD, IMF 2024).
HSBC Bank plc helps facilitate trade within Europe and between
Europe and other jurisdictions where the HSBC Group has a
presence. HSBC Bank plc exists to open up a world of opportunity for
our customers by connecting them to international markets. We are
well positioned to capitalise on this opportunity and play a pivotal role
for the HSBC Group.
With assets of £727bn at 31 December 2024, HSBC Bank plc is one
of Europe’s largest banking and financial services organisations. We
employ around 10,700 people across our locations. HSBC Bank plc is
responsible for HSBC’s European business, apart from UK retail and
most UK commercial banking activity which, post ring-fencing, is
managed by HSBC UK Bank plc.
HSBC Bank plc is present in 18 markets and operates as one
integrated business with two main hubs in London and Paris 1.
The London hub consists of the UK non-ring-fenced bank, which
provides overall governance and management for the Europe region
as a whole and is a global centre of excellence for wholesale banking
for the HSBC Group.
HSBC Continental Europe ('HBCE') is the dedicated Intermediate
Parent Undertaking (‘IPU’) for the region and comprises our Paris hub,
its EU branches (Belgium, Czech Republic, Germany, Ireland, Italy,
Luxembourg, Netherlands, Poland, Spain and Sweden) and
subsidiaries in Malta and Luxembourg (PBLU).
HSBC Bank plc also operates a small universal bank in Bermuda, as
well as branches in Israel, Switzerland, and South Africa. Other
entities comprise our WPB-led operations in the Channel Islands and
Isle of Man ('CIIOM'), a Western hub for International Expatriate
clients, as well as HSBC Private Bank (Suisse) SA ('PBRS').
1 Full list of markets where HSBC Bank plc has a presence: Belgium,
Bermuda, Channel Islands and Isle of Man, Czech Republic, France,
Germany, Ireland, Italy, Israel, Luxembourg, Malta, Netherlands, Poland,
South Africa, Spain, Sweden, Switzerland and the UK.

HSBC Bank plc's strategy and
progress on our 2024 commitments
Our ambition in Europe is to be the leading international transaction
and financing bank for corporates and institutions supporting our
clients' cross-border needs, complemented by a targeted wealth
business, with an efficient operating model and a robust control
framework (see our global businesses on page 6).
Further information regarding how we support and engage with our
stakeholders can be found on page 8.
Reshaping and focusing
We have continued to work on optimising our operating model and
participation choices in support of our ambition. We have built a
leaner, simpler bank with a sharper strategic focus and have
redesigned our franchise around the needs of our international clients.
On 1 January 2024, HBCE completed the sale of its French retail
banking operations. In accordance with the terms of the sale, HBCE
retained a portfolio of home and other loans. During the fourth quarter
of 2024, HBCE began to actively market this retained portfolio for
sale.

HSBC Bank plc Annual Report and Accounts 2024 | 5

In February 2024, HSBC Bank plc completed the acquisition of
HSBC’s private banking entity in Switzerland, PBRS.
On 6 February 2024, following a strategic review of our operations in
Armenia, HSBC Europe BV (a wholly-owned subsidiary of HSBC Bank
plc) reached an agreement for the sale of HSBC Bank Armenia to
Ardshinbank. The transaction completed on 29 November 2024.
On 30 May 2024, we successfully completed the sale of our Russia
business with the sale of HSBC Europe BV’s wholly-owned subsidiary
HSBC Bank (RR) (Limited Liability Company) to Expobank.
On 23 September 2024, HBCE reached an agreement to sell its
private banking business in Germany to BNP Paribas. This sale, which
remains subject to governmental approvals and works council
consultation, is expected to be completed in the second half of 2025.
On 25 September 2024, we reached an agreement to transfer the
business of the HSBC Bank plc branch in South Africa to FirstRand
Bank Ltd. The transaction, which is subject to regulatory and
governmental approvals, is expected to complete in the second half
of 2025.
In September 2024, HSBC Bank Malta p.l.c. (‘HSBC Malta’) informed
its Shareholders that HSBC Holdings plc had informed the Board of
Directors of HSBC Malta that it will undertake a strategic review of its
indirect 70.03% shareholding in HSBC Malta. The review is at an early
stage and no decisions have been made.
On 20 December 2024, following a strategic review of its French
Insurance business, HBCE signed a Memorandum of Understanding
with Matmut Société d'Assurance Mutuelle for the planned sale of
life insurance business in France. The planned sale is subject to the
finalisation of information and consultation processes with the parties'
respective employees’ works councils. Completion of the planned
sale would be subject to obtaining relevant regulatory and competition
approvals and is expected to occur in the second half of 2025.
For further details on the planned disposal of our life insurance business in
France, our retained home and other loan portfolio in France, our private
banking business in Germany and our operations in South Africa please see
Note 34: 'Assets held for sale and liabilities of disposal groups held for sale',
for further financial information on the transaction on page 193.
Improving operational excellence
The HSBC Group is transforming its operations to enhance customer
experiences through the use of using artificial intelligence ('AI') and
automation to deliver faster, personalised, and more seamless
services. The HSBC Group is working to ensure that we balance the
opportunity AI presents to accelerate delivery of our strategy with the
need to ensure appropriate controls are in place to mitigate the
associated risks.
Within Global Trade Solutions (‘GTS’) Europe, we aim to help make
trade easier, faster, and safer, while seeking to deliver sustainable
and profitable growth. During 2024, we deployed enhancements to
our digital channel HSBCnet and our Application Programming
Interface (‘API’) driving automation and embedded finance solutions.
We continue to support our clients opting to use bank agnostic
platforms that provide trade finance solutions. At the end of 2024,
91% of trade transactions across all channels within HSBC Europe
were conducted digitally and we continue to see an increase in clients
adopting digital solutions.
Our ambition in Global Payments Solutions ('GPS') is to be the world’s
leading international cash management and payments provider,
bringing the whole of HSBC’s network seamlessly to our clients. We
are focused on modernising and future-proofing solutions as well as
digitising our service. In 2024, GPS Europe continued to make
improvements to HSBCnet including SEPA ('Single Euro Payments
Area') track payments in France and central bank account validation
(‘C-BAV’) across the region, a llowing clients to more easily identify the
recipient of a payment. In 2024, SEPA instant payments were
introduced in Germany, Spain, Belgium and Italy.
Within Global Banking and Markets ('GBM'), we continued to invest in
building capabilities in digital assets and currencies via our digital
asset platform, HSBC Orion. Deloitte awarded HSBC Orion ‘Platform
Enabler of the Year’ in March 2024. In November 2024, HSBC Orion
was connected to the Banque de France’s DL3S platform, enabling
settlement of digital bonds using wholesale central bank digital
currency.
Within Markets & Securities Services ('MSS'), HSBC AI Markets
delivered a range of market insights and continues to help facilitate
informed execution. HSBC’s clients and staff are increasingly using
HSBC AI Markets to access AI or machine learning powered
solutions, including to find optimal hedging strategies. In 2024, the
average daily usage of HSBC AI Markets increased 125% compared
to 2023. We intend to roll out more AI capabilities in 2025 across
MSS strategic platforms.
Within the Channel Islands and Isle of Man ('CIIOM'), Wealth and
Personal Banking (‘WPB’) continued to drive a mobile first proposition.
We built out our core capabilities including secondary product opening
(including investments and term deposits), changing personal details,
innovating in payments and onboarding, and improving fraud and
money laundering controls. This will continue into 2025.
Private Banking remains committed to enhancing our digital offering,
and client facing digital capabilities to support the delivery of excellent
client service. In Switzerland, Luxembourg and CIIOM, a number of
service improvements have been delivered including client access to
on-demand client consolidated statements for improved experience.
From an ESG and sustainability perspective, we have sought to
integrate our clients’ preferences into HSBC Prism Advisory, our
Institutional portfolio-based advisory service.
In the second quarter of 2024 we implemented the Dynamic Risk
Assessment (‘DRA’) tool in Malta, France and Bermuda. The DRA tool
is a key part of our Financial Crime control framework, enabling more
precise detection of financial crime through the use of AI and machine
learning. In the fourth quarter of 2024, we deployed the Global Social
Network Analytics (‘GSNA’) tool in Ireland, Malta, Poland and Spain.
GSNA is replacing HSBC’s former correspondent banking transaction
monitoring detection system. Further DRA and GSNA deployments
are scheduled for 2025.

6 | HSBC Bank plc Annual Report and Accounts 2024

Strategic Report | Our Global Businesses | ESG Overview

Our Global Businesses in 2024
In 2024, we served our customers through three global businesses:
Global Banking and Markets; Commercial Banking; Wealth and
Personal Banking, as well as the Corporate Centre (comprising:
certain legacy assets, central stewardship costs, and interests in our
associates and joint ventures). Our 2024 operating segment results
are presented on this basis in 'Analysis of reported results by global
business' on page 14.

Business segments
During 2024 our operating model had the following material
segments: a GBM business which is further split into three reportable
segments: MSS, GB and GBM Other (each as defined below), CMB,
WPB and a Corporate Centre. These segments are supported by
Digital Business Services and global functions.
Markets & Securities Services (‘MSS’)
Profit/(loss) before tax £121m (2023: £(144)m); (2022:
£509)
Markets & Securities Services is a product group that serves
customers of all global businesses, including retail, corporate and
institutional clients, globally. We offer our clients a range of services
and capabilities including trading, financing and securities services
across asset classes and geographies, supported by dedicated sales
and research teams.
Our European business supports the needs of our global client base,
providing access to the suite of MSS products, connecting emerging
and developed markets, and collaborating with other global
businesses to provide clients across the HSBC Group with
commoditised and bespoke solutions that seek to support their
growth ambitions.
Global Banking (‘GB’)
Profit before tax £1,122m (2023: £988 m); (2022: £486 m)
Global Banking delivered tailored financial solutions to corporate and
institutional clients worldwide opening up opportunities through the
strength of our global network and capabilities. We provided a
comprehensive suite of services including capital markets, advisory,
lending, trade services and global payments solutions.
Our European teams took a client-centric approach bringing together
relationship and product expertise to deliver financial solutions
customised to suit our clients’ growth ambitions and financial
objectives. We worked closely with our business partners including
MSS, WPB and CMB, to provide a range of tailored products and
services that seek to meet the needs of international clients across
HSBC. Global Banking Europe operated as an integral part of the
global business and contributes significant revenues to other regions,
particularly Asia and the Middle East, through our European client
base.
GBM Other
Loss before tax £(215)m (2023: £(266)m); (2022:
£(517)m)
GBM Other primarily comprised Principal Investments and GBM’s
share of HSBC’s Markets Treasury function. The Principal
Investments portfolio selectively made commitments to funds which
align with HSBC’s strategic priorities. The day-to-day management of
the portfolio was undertaken by HSBC Asset Management on GBM’s
behalf.
Commercial Banking (‘CMB’)
Profit before tax £743m (2023: £1,000 m); (2022: £716 m)
CMB connected our European customers to our global network of
relationship managers and product specialists to help support their
growth ambitions internationally, and we supported global
multinationals with growing their European subsidiaries through our
European relationship managers and product specialists. Commercial
Banking contributed significant revenues to other regions through our
European client base and drew benefit from the client network
managed outside Europe.
Our product range facilitated tailoring solutions to help meet clients’
requirements across lending and transactional banking, supported by
strong collaboration with GBM to deliver expertise in markets and
investment banking products. Our Global Payments Services and
Global Trade teams also provided treasury and trade finance solutions
to Global Banking clients.
Wealth and Personal Banking (‘WPB’)
Profit/(loss) before tax £653m (2023: £457m); (2022:
£(1,273)m)
In Europe, Wealth and Personal Banking served customers through
Private Banking, Retail Banking, Wealth Management, Insurance and
Asset Management. Our core retail proposition offered personal
banking, mortgages, loans, credit cards, savings, investments and
insurance services. WPB offered propositions such as Premier, as
well as wealth solutions, financial planning and international services.
In the Channel Islands and Isle of Man, we served local and
international customers, the majority of whom are customers of
HSBC in other markets, through our HSBC Expat proposition. Our
Private Banking proposition served high net worth and ultra-high net
worth clients with a relationship balance greater than $2m. Services
available to Private Banking clients included investment management,
Wealth Solutions and bespoke lending.
Private Banking hosted a ‘Next Generation’ programme of events to
support our clients’ next generation in building and retaining the
wealth within the family.

HSBC Bank plc Annual Report and Accounts 2024 | 7

ESG Overview
Our approach to environmental, social and governance is rooted in
creating long term value for our customers and the economies that
we serve.

Our approach
The HSBC Group’s approach to ESG is focused on creating long term
value for our customers and wider stakeholders. We focus our efforts
on three areas: the transition to net zero, building inclusion and
resilience and acting responsibly.
Good outcomes
We are focused on running a strong and sustainable business that
puts the customer first, values good governance, and gives our
stakeholders confidence in how we do what we do.
Since July 2023, FCA Consumer Duty rules and guidance have
required firms to consider the needs, characteristics and objectives of
their customers at every stage of the customer journey. Regular
reporting is made available to HSBC Bank plc executives and the
HSBC Bank plc Board to help ensure we operate in an environment in
which good outcomes for customers are considered when doing
business.
Conduct
In 2024, 98% of HSBC Bank plc staff completed conduct training 1.
Our conduct approach helps to guide us to do the right thing and to
focus on the impact we have on our customers and the financial
markets in which we operate. Details on our Conduct Framework are
available at www.hsbc.com/Conduct. Our section 172 statement,
detailing our Directors’ responsibility to stakeholders, can be found on
page 8.
1 The completion rate shown relates to the ‘Conduct Matters’ training module
that was launched in December 2023 and concluded in 2024, and covers
permanent and non-permanent employees (where legally permissible to
assign training).
Our colleagues
We aspire to open up a world of opportunity for our colleagues and
build an inspiring, dynamic culture where the best talent wants to
work. We value difference and continue to build an inclusive
workforce representative of the communities we serve. We set and
report on progress made against the HSBC Group-wide gender and
ethnicity ambitions. Understanding the experience of colleagues is
central to our efforts. Through the HSBC Group employee Snapshot
survey, we capture our colleagues’ views on topics such as hybrid
working and well-being. Developing the skills of colleagues is critical
to energising our organisation. We foster a learning culture through
various resources, providing colleagues with educational materials
and development opportunities.

Responsible business culture
We have a responsibility to help protect our customers, our
communities and the integrity of the financial system.
E mployee matte rs
Empowering our organisation and energising our employees is critical
to HSBC Bank plc's success and remains a key focus.
The annual Snapshot survey provides all HSBC employees the
opportunity to share their experiences of working at the organisation.
The HSBC Bank plc survey had a 73% response rate in 2024 (vs 62%
in 2023), with positive trends across all the measured indices in the
survey. The Employee Engagement index was 61% at the end of
2024, an increase of 7 points compared with 2023 1. The Inclusion
Index saw a 2-point increase to 73%, 7 points above the Europe
Financial Services benchmark.
We are opening up a world of opportunity for our colleagues through
building an inclusive organisation that values difference, takes
responsibility and seeks different perspectives. We enable our
colleagues to self-identify their ethnicity data where legally
permissible. At a European level, we can collect and report ethnicity
data in: UK, Channel Islands, Bermuda, the Isle of Man, and South
Africa.
We aspire to be an organisation that is representative of the
communities which we serve. We have focused on increasing
representation of under-represented groups, specifically, women and
Black heritage colleagues in senior leadership roles. Our current
representation of Black heritage colleagues in senior leadership roles
in the UK is 2.9%, up from 2.8% in 2023. In 2024, senior leadership
roles held by women remained static at 25.3% vs 2023, in part due to
organisational restructures.
We continue to focus on the development of people managers who
enrich the experience and the skills of our colleagues. We have
developed a suite of leadership programmes aimed at our Managing
Directors ('MDs') to build their strategic clarity, alignment,
community, and capability. In 2024, 141 MDs across Europe
registered for one or more of the leadership programmes.
Additionally, we have an Accelerating into Leadership program for
Global Career Band 3 ('GCB') managers, and the uGrow program for
GCB4 managers.
There may be times when our colleagues need to speak up about
behaviours in the workplace and in the first instance, we encourage
colleagues to speak to their line manager. HSBC Confidential is a
global whistleblowing channel, allowing our colleagues past and
present to raise concerns confidentially and, if preferred,
anonymously (subject to local laws). Our colleagues tell us (via the
HSBC Bank plc Snapshot survey) that 70% feel confident using HSBC
Confidential without fear of reprisals or retaliation. Additionally, the
employee Snapshot index measuring colleagues’ confidence in
speaking up is at 73% in 2024 and shows an increase from 2023.
In 2024, HSBC in France, Germany, Italy, Luxembourg, Poland, and
Spain was recognised as a Top Employer by the Top Employers
Institute, recognising excellence in Human Resources practices.
1 The Employee Engagement Index is our headline measure of how
employees feel about HSBC. HSBC Bank plc's score is lower than the HSBC
Group’s. However, the level of engagement is consistent with findings in
Gallup's 2023 State of the Global Workplace Report, which showed
significant regional variations in Employee Engagement across all sectors
and industries globally, and we remain above the Europe external
benchmarking scores.
Social matters
The HSBC Group aims to help provide people and communities with
the skills and knowledge needed to thrive through the transition to a
sustainable future.
In 2024, examples of the social programmes in HSBC Bank plc
included:
– HSBC Continental Europe collaborated with Junior Achievement
Europe to launch the Climate Resilience Programme, which aims
to provide educational opportunities related to innovations in
climate resilience for young people in France, Italy and Malta.
– In Switzerland, PBRS continued to support the activities of J’aime
ma planète – Eco Schools, a non-profit organization that educates
school children on the protection of the environment and the
transition to sustainable lifestyles.
– In France, we continued our work with CRESUS, an NGO which
supports financial and banking inclusion in France, and helped roll
out their financial education programme in Malta.

8 | HSBC Bank plc Annual Report and Accounts 2024

Strategic Report | ESG Overview

– We supported disaster relief agencies in response to the
humanitarian needs caused by the floods in Spain and Eastern
Europe.
HSBC Bank plc’s charitable giving in 2024 was £1.8m and was further
supported by our employees' contribution of volunteer hours to
community activities during work hours.
Human rights
As set out in the HSBC Group's Human Rights Statement, we
recognise the role of business in respecting human rights. The HSBC
Group's approach is guided by the UN Guiding Principles on Business
and Human Rights (‘UNGPs’) and the Organisation for Economic Co-
operation and Development ('OECD') Guidelines for Multinational
Enterprises on Responsible Business Conduct. The HSBC Group's
Human Rights Statement and annual statements under the UK
Modern Slavery Act are available on https://www.hsbc.com/who-we-
are/esg-and-responsible-business/esg-reporting-centre.
Anti-corruption and anti-bribery
We are required to comply with all applicable anti-bribery and
corruption laws in every market and jurisdiction in which we operate
while focusing on the spirit of relevant laws and regulations to
demonstrate our commitment to ethical behaviours and conduct as
part of our environmental, social and corporate governance.
Environmental matters
In 2020, HSBC Group set out an ambition to provide and facilitate
$750bn to $1tn of sustainable finance and investment by 2030 to
support our customers in their transition to net zero and a sustainable
future.
Since 2020, HSBC Bank plc has provided and facilitated $172.6bn of
sustainable finance and investment, as defined in the HSBC's Group's
Sustainable Finance and Investment Data Dictionary 2024.
More information about the HSBC Group's assessment of climate risk
can be found in the HSBC Holdings plc Annual Report and Accounts
2024.
Non-financial information statement
Disclosures required pursuant to the Companies, Partnerships and
HSBC Groups (Accounts and Non-Financial Reporting) Regulations
2016 can be found on the following pages:

Environmental matters | Page 8
The company’s employees | Pages 7 to 9 and 102 to 103
Social matters | Page 7
Respect for human rights | Page 8
Anti-corruption and anti-bribery matters | Page 8
Business segments | Page 6
Principal risks | Page 19

More information about the HSBC Group's appr oach to environmental
matters, customers, employees and governance can be found in the
HSBC Holdings plc Annual Report and Accounts 2024.

Section 172(1) statement
This section 172(1) statement, set out on pages 8 to 10, describes
how the Directors had regard to the matters set out in section 172(1)
(a) to (f) of the Companies Act 2006 (the 'Act') when performing their
duty to promote the success of the company during the year.
The Board recognises the importance of engaging with stakeholders
effectively to ensure their interests and priorities are understood and
given due consideration in Board discussions and decision-making.
Throughout the year, the Board considered a range of factors when
making decisions, and was supported in the discharge of its duties
and responsibilities by (for example):
– an induction programme and ongoing training for Directors to
provide an understanding of our business and financial
performance and prospects;
– management processes which help ensure that proposals
presented to Board and committee meetings for decision include
information relevant to determine the action that would most likely
promote the success of the bank, and involve engagement with
stakeholders where relevant, to support appropriate decision
making;
– agenda planning for Board and committee meetings to provide
sufficient time for the consideration and discussion of key matters;
and
– engagement with key stakeholders which allows the Board to gain
valuable insight on various perspectives, and in turn, inform their
deliberations and decision making in Board and committee
meetings.
When making decisions, the Board continues to be mindful of the
likely long-term consequences of those decisions, and of the
desirability of the bank maintaining its reputation for high standards of
business conduct.
Stakeholder Engagement
The Board understands the importance of effective engagement with
its six key categories of stakeholders, namely customers, employees,
shareholders and investors, regulators and governments, suppliers,
and communities. T he outcomes from such stakeholder engagement
feed into Board discussions and decision making. This approach
allows the Board to better understand the impact of the bank's
actions on its stakeholders, both over the short term and the long
term, and to take those impacts into account when responding to the
opportunities and challenges facing the bank. The relevance of each
stakeholder group to an issue considered by the Board varies
depending on the specific decision being taken by the Board. Not
every decision the Board makes will necessarily result in a positive
outcome for all stakeholders.
The two examples provided below of principal discussions and
decisions taken by the Board in 2024 show how the Directors and
Board respectively discharged their individual and collective
responsibility for promoting the long-term success of the bank and
took different stakeholder considerations into account in reaching a
decision or forming a view.
For further details regarding the role of the Board, including key activities
during 2024, please see page 96.
Customers
As one of Europe’s largest banking and financial services
organisations, our corporate and institutional customers are at the
core of the bank's business model: without customers there would
be no bank. Our ambition in Europe is to be the leading international
transaction and financing bank for corporates and institutions
supporting our clients' cross-border needs, complemented by a
targeted wealth business. The Board strives to ensure it has a broad
understanding of the bank’s customers and to give consideration to
them when its approval is sought on significant matters such as
material acquisitions, disposals, investments and large-scale change
or transformation programmes. How we have served and supported
our customers during 2024 is covered in the 'Our Global Businesses
in 2024' section on page 6 in the Strategic Report.
To better understand customer issues and difficulties and how the
bank can respond to them, the Board has been provided with
customer feedback and key performance indicators, such as net
promoter scores, customer complaints and digital satisfaction survey
results.
The Board schedule for 2024 also included Commercial Banking,
Wealth and Personal Banking, Global Banking and Markets and Digital
strategy overview sessions which incorporated discussions on
customer interactions, customer surveys, complaints feedback and
product developments to meet customers’ needs.

HSBC Bank plc Annual Report and Accounts 2024 | 9

Employees (Workforce Engagement)
Employees are critical to the success of the bank, its sustainability
and long-term future. Understanding employee sentiment and how
we are addressing feedback is a key area of Board focus. During the
year, the Board received regular updates from senior management on
the progression of our people priorities covering various employee-
focused initiatives across culture, leadership, talent, skills, inclusion,
wellbeing and colleague experience. These allowed the Board to
understand employee sentiment, health and well-being throughout
2024. Further information on people priorities can be found under
Employees at pages 102 to 103.
Feedback from employees is gathered via various mechanisms
including surveys and 'speak up' channels which are reported to the
Board. The Board is also presented annually with the bank's results of
the Snapshot survey, which runs every September and gives all HSBC
employees the opportunity to share their experiences of working at
the organisation, and a culture dashboard which has been developed
to track progress in embedding a positive and inclusive culture across
the business. Board focus on employees continued to remain
heightened throughout 2024 due to the ongoing transformation
programme and the need for continuing consideration of the impact
on employees when making Board decisions.
During 2024, individual Board members also met with representatives
from our Employee Resource Groups to discuss the challenges and
opportunities faced by our diverse employee population.
Shareholders and Investors
The bank is a wholly-owned subsidiary of HSBC Holdings plc and, as
such, the Board took into account the likely implications of its
decisions for its shareholder, HSBC Holdings plc, and its debt security
investors, over both the short term and the long term. The Board
regularly engaged with its shareholder and considered the interests of
its shareholder and debt investors throughout the year. For example:
– the Board Chair and Committee Chairs engaged with HSBC Group
counterparts and attended Group forums and Group committee
meetings, together with Executive Directors, to engage on
common issues and strategic priorities;
– the Board reviewed and approved bank-specific components of
Group programmes;
– the Board considered the strength of the balance sheet to ensure
that the ability to make distributions to HSBC Holdings plc, in
accordance with its dividend policy, and to pay principal or interest
on its debt securities in accordance with prescribed terms was not
at risk; and
– the Board engaged with HSBC Holdings plc Board members to
showcase the bank’s business and its people, thus enabling the
HSBC Holdings plc Board members to develop a deeper
understanding of the bank to inform their own Group-level
decision-making going forward.
Regulators and Governments
During the year, the Directors met regularly with regulators both in
the UK and Europe. It is central to the success of the bank that it has
constructive relationships with regulators and governments and that
there is a mutual understanding of expectations and challenges and
their impact on customers, the business model and the bank’s
strategy.
The Board receives regular updates on how HSBC interacts with
regulators globally and at the European level. Understanding
regulators’ views and priorities shapes and influences Board
discussions and decision making. Board engagement with regulators
during 2024 also included participation by Directors in industry and
regulator forums and round table events.
Suppliers
Suppliers are critical to supporting the infrastructure and operations of
the business and we work with suppliers to ensure mutually
beneficial relationships. It is key for the Board to understand the
Group’s supply chain and how suppliers’ operations are aligned to our
purpose and values.
During the year, the Board's Transformation, Operational Resilience,
and Technology Committee ('TRT') received regular third-party risk
management and operational resilience reporting, which provided an
overview of the bank's ability to operate within its impact tolerances
to meet the PRA's operational resilience SS1/21 expectations by
March 2025.
Further detail on third party risk management is included in the Risk Review
on page 28.
Communities
We have a long-standing commitment to support the communities in
which we operate. The bank is conscious of the need to manage the
societal and environmental impact of its business when making
decisions. During the year, the Board received regular updates on
matters spanning human rights and environmental and climate issues.
For further details regarding the role of the bank in supporting communities,
please see page 7.
Principal Decisions
To provide some examples of how the Directors have exercised their
statutory duties under section 172(1) of the Companies Act 2006 in
relation to matters of strategic importance during 2024, set out below
are overviews of two of the principal decisions made by the Board
during 2024 and some of the matters the Board took into account in
taking such decisions.
Sale of HSBC Bank Armenia CJSC (‘HBAM’)
Although HBAM had been operating in Armenia since the 1990s,
initially as a Joint Venture, in recent years the Armenian operation has
been a non-core business and it was considered that a sale would be
aligned with HSBC’s ambition to redeploy capital from less strategic
businesses to higher-growth opportunities. The proposal was first
endorsed at the Group Executive Committee for further consideration
and decision making by the Board. The Board considered the
alternative option of a run-down of the business. This was viewed to
be less attractive economically as well as carrying greater risk in
terms of staff attrition, residual control, and regulatory risks during a
protracted run-down period. The Board constructively engaged with
management to consider the financial and regulatory implications and
the likely consequence of the proposal on the bank’s key
stakeholders, as appropriate.
The implications of the transaction for key stakeholders were
considered. Management planned engagement with customers
together with migration plans to minimise detriment to customers.
The Board also considered the implications of the transaction for
employees and noted safeguards to retain staff during the transition
period.
Associated engagement with regulators resulted in no objections
being raised in respect of the transaction.
In reaching its decision, and mindful of the long-term consequences
of decisions and their impact on operations, the Board acknowledged
the strategic rationale for the proposal and the financial and capital
impacts on the bank. Having taken all these and other factors into
account, the Board concluded that proceeding with the transaction
was most likely to promote the success of the bank for the benefit of
its shareholder, and, accordingly, approved the transaction.
Sale of the Private Banking Business in
Germany
The Board considered a proposal for the bank to sell the private
banking business in Germany, which provides a wide range of
financial and banking services in Germany to high net worth and ultra-
high net worth individuals, personal investment companies, operating
companies and family trusts. In considering the sale proposal, the
Board noted that the business lacked scale and its systems and
infrastructure were largely bespoke and would continue to require
customized investment which would require significant expenditure
which was not aligned with the bank’s strategic priorities.

10 | HSBC Bank plc Annual Report and Accounts 2024

Strategic Report | ESG Overview | Key Performance Indicators

Management therefore had undertaken an exercise to seek a buyer
who could support growth in the business. The proposal was first
endorsed at the Group Executive Committee for consideration and
approval by the Boards of the bank and its direct subsidiary, HSBC
Continental Europe.
The Board considered t he terms of the offers received from potential
buyers and the recommendation put forward by management to
conclude the transaction with one of the parties. In reaching its
decision, the Board constructively engaged with management to
consider the financial and regulatory implications and any impacts on
the bank’s key stakeholders, as appropriate. Factors considered
included the risk of client attrition and safeguards to manage a
smooth client experience and seamless migration. In addition, the
Board also considered the impact of the transaction on employees,
the commitments given to safeguard terms and conditions of
employment and the business opportunity offered to transferring
staff.
In reaching its decision, and mindful of the long-term consequences
of decisions and their impact on operations, the Board acknowledged
the strategic rationale for the proposal and the financial and capital
impacts on the bank. Having taken all these and other factors into
account, the Board concluded that proceeding with the transaction
was most likely to promote the success of the bank for the benefit of
its shareholder, and, accordingly, approved the transaction.
Tax
Our approach to tax
We are committed to applying both the letter and the spirit of the law
in all territories where we operate, and have adopted the UK Code of
Practice for the Taxation of Banks. As a consequence, we seek to pay
our fair share of tax in the countries in which we operate. We
continue to strengthen our processes to help ensure our banking
services are not associated with any arrangements known or
suspected to facilitate tax evasion.
HSBC continues to apply global initiatives to improve tax transparency
such as:
– the US Foreign Account Tax Compliance Act (‘FATCA’);
– the Organisation for Economic Co-operation and Development
('OECD') Standard for Automatic Exchange of Financial Account
Information (also known as the Common Reporting Standard);
– the CRD IV Country by Country Reporting;
– the OECD Base Erosion and Profit Shifting (‘BEPS’) initiative; and
– the UK legislation on the corporate criminal offence (‘CCO’) of
failing to prevent the facilitation of tax evasion.

Key Performance Indicators
The Board of Directors tracks the group’s progress in implementing
its strategy with a range of financial and non-financial measures or key
performance indicators (‘KPIs’). Progress is assessed by comparison
with the HSBC Group strategic priorities, operating plan targets and
historical performance. The group reviews its KPIs regularly in light of
its strategic objectives and may adopt new or refined measures to
better align the KPIs to HSBC’s strategy and strategic priorities.

Financial KPIs

| 2024 | 2023 | 2022
Profit/(Loss) before tax (£m) | 2,068 | 2,152 | (1,199)
Cost efficiency ratio (%) | 70.4 | 68.5 | 122.0
Return on average tangible equity (%) | 4.6 | 7.3 | (3.9)
Common equity tier 1 capital ratio (%) | 19.5 | 17.9 | 16.3

Profit before tax in 2024 was £2,068m, a decrease of £84m
compared with 2023. This decrease was driven by the impact of one-
off items relating to the disposals of our retail banking operations in
France, our entities in Armenia and Russia, and the non-repeat of a
prior year gain on the sale of the Private Bank Guernsey branch.
These were partly offset by the favourable impact of the restructuring
of our legal entities comprising the acquisitions of PBLU, PBRS
(including Private Bank Guernsey branch) and HSBC Bank Bermuda
Limited ('HBBM') from within the HSBC Group. In addition, profit
before tax increased reflecting higher revenue and income from
associates.
Revenue of £7,473m was £33m lower in 2024 compared with 2023.
Revenue was lower due to the impact of entity disposals. Revenue in
2023 included the impact of a gain of £156m on the classification of
our retail banking operations in France, which were sold in 2024, as
held-for-sale. In addition, there were losses associated with the sale
of our subsidiaries in Russia and Armenia, which were also sold in
2024.
These revenue reductions were partly offset by the impact of the
restructuring of our legal entities which included the acquisition of
entities from within HSBC Group. This included increased revenue
following the acquisitions of PBLU, PBRS (including Private Bank
Guernsey branch) and HBBM. These increases were partly offset by
lower revenue as 2023 included a gain of £285m on the transfer of
our Private Bank Guernsey branch to PBRS.
In addition, revenue was higher in MSS, partly offset by lower
revenue in GPS.
Expected credit losses and other credit impairment charges ('ECL')
were a net charge of £163m, £6m lower than 2023. In both years,
ECL primarily comprised stage 3 charges.
Operating expenses were higher by £118m. This reflected higher
costs from the acquisitions of PBLU, PBRS (including Private Bank
Guernsey branch) and HBBM. Expenses were also higher due to
Technology spend on strategic investments to support our growth
initiatives and on regulatory programmes. These increases were partly
offset by lower expenses following the sale of our retail banking
operations in France, a lower UK Bank levy charge and a lower Single
Resolution Fund (‘SRF’) levy in 2024.
Cost efficiency ratio was 70.4%, 1.9 percentage points higher
compared with 2023 driven by lower revenue and higher operating
expenses. Revenue decreased by 0.4% and operating expenses
increased by 2%, mainly driven by the factors mentioned above.
Return on average tangible equity (‘RoTE’) is computed by
adjusting profit attributable to ordinary shareholders by excluding
impairment of goodwill and other intangible assets, divided by
average tangible shareholders' equity excluding goodwill and
intangibles for the period. The adjustment to reported results and
reported equity excludes amounts attributable to non-controlling
interests.
We provide RoTE as a way of assessing our performance, which is
closely aligned to our capital positions.
RoTE has reduced from 7.3% in 2023 to 4.6% in 2024. This was
driven by an increase in the tax charge, up by £358m in 2024.

HSBC Bank plc Annual Report and Accounts 2024 | 11

CET1 capital ratio represents the ratio of common equity tier 1
capital to total risk-weighted assets ('RWA'). CET1 capital is the
highest quality form of capital comprising shareholders’ equity and
related non-controlling interests less regulatory deductions and
adjustments.
The group seeks to maintain a strong capital base to support the
development of its business and meet regulatory capital requirements
at all times.
The CET1 capital ratio of 19.5% in 2024 increased by 1.6% from
2023, mainly due to an increase in capital reflecting capital generation
through profits and share issuances, partly offset by an increase in
RWAs.

Non-financial KPIs
We monitored a range of non-financial KPIs focused on customers,
people, culture and values, including customer service satisfaction,
employee engagement, diversity and sustainability.
For details on customer service and satisfaction please refer below; for the
remaining non-financial KPIs, refer to the Non-financial information
statement on page 8 and Corporate Governance section on pages 94 to
104.
Customer service, awards and
satisfaction
In 2024 our global businesses were committed to providing an
excellent customer experience and continued to strive towards
improving our propositions to meet client needs.
MSS
In 2024, MSS won numerous awards including at the Euromoney
Awards for Excellence, where we received the UK Best Bank for
Corporates and Western Europe’s Best Bank for Transaction Services.
At the Risk Awards (for FX) we received the Best Prime Broker, we
received the 2024 SRP Award for Deal of the Year: HSBC Auto-
callable Reload – HSBC EMEA and in Extel Survey 2024 ranking
number one for Developed Europe: Multi Asset Research, UK (large
cap) Overall Broker.
GB
In the Euromoney Awards for Excellence, HSBC Europe won the UK’s
Best Bank and the UK’s Best Bank for Corporates. In the Euromoney
Cash management survey, we were awarded Best Bank for Cash
Management Product & Technology in France, Client Service in the
UK and Corporate Cards in Western Europe.
CMB
CMB measured several operational metrics on customer service
levels and gathered direct customer feedback to help ensure our
solutions and channels remained relevant and fit for our customers’
digital needs. Our centralised booking model in Paris for our pan-
European customers enabled us to regionally cover and manage
customers through a consistent and streamlined level of service. This
also ensured our Relationship Managers could support and cover
customers using a common toolkit.
HSBC was awarded Market Leader and Best in Service for Trade
Finance in four European markets, a testament to our continuous
efforts to develop our solutions, technology and customer service.
HSBC has also been recognised as the Western Europe’s Best bank
for transaction services by Euromoney which helps demonstrate how
strategies in both GPS and GTS provided HSBC’s clients with tools to
operate their business more effectively.
WPB
WPB monitored customer experience through a number of
satisfaction metrics known as Net Promoter Scores, which cover
customer services across various channels including branches,
contact centres and digital. One example is the iNPS ('Interactions
Net Promoter Score') which measured interactions with our
customers digitally both online and on mobile. The Channel Islands
and Isle of Man business received separate scores for its domestic
‘Islands’ business and its international ‘Expat’ business. The ‘Islands’
business scored 33.5 for online, 3.5 behind plan, and 43.7 for mobile,
against a target of 37. The Expat proposition scored 15.3 against a
target of 15 for online. Additionally, Journey NPS (‘jNPS’) was a
customer experience metric used to review customer journeys, with
a score of 33 for payments, 7 points behind target, and 61 for term
deposit savings, 11 points ahead of target. We recognise the
importance of customer feedback and continued to enhance our
insights to gain a better understanding of our clients to provide a
more personalised and relevant service.

12 | HSBC Bank plc Annual Report and Accounts 2024

Strategic Report | Economic background and outlook | Financial Summary

Economic background and outlook
UK
Soft growth, slowly improving
inflation picture
Following a return to growth in the first half of 2024, UK economic
activity broadly stagnated over the second half of the year, with GDP
growth of zero in the third quarter and 0.1% in the fourth quarter
(Office for National Statistics, ‘ONS’). Household incomes are growing
in inflation-adjusted terms and Bank of England interest rates are
gradually declining, which should provide some support to the
economy. However, consumer and business sentiment remain
subdued. In part, this reflects uncertainties surrounding the impact of
changes in fiscal policy announced in the UK government’s 2024
Budget, and also the extent to which productivity can pick up from
recent low growth rates. Uncertainty about potential changes in global
trade policies also affects the UK economic outlook.
That said, the inflation backdrop has become more settled over the
past few months. Having peaked at 11.1% in October 2022, and
having started 2024 at 4.0%, the annual rate of consumer price
inflation ended 2024 at 2.5% (ONS). This easing in the headline
inflation rate rather reflects gradual fall in service price inflation, which
is an important gauge of domestic price pressures. However, wage
numbers still indicate a degree of persistence in labour cost pressures
– the annual rate of average regular pay growth remained elevated
5.6% in the three months to November 2024 (ONS).
Past falls in inflation have opened the door to gradual interest rate
reductions from the Bank of England ('BoE'). Having raised Bank Rate
from 0.1% to 5.25% between 2021 and 2023, the Monetary Policy
Committee ('MPC') has cut rates three times since August 2024, with
the rate now standing at 4.50%. In its February 2025 policy
statement, the BoE's Monetary Policy Committee said it will be
'careful' in deciding by how much and when to cut Bank Rate further.
Eurozone
Mixed performance amid prospects
for further rate cuts
Eurozone economic activity was subdued at the end of 2024, with
GDP growth slowing from 0.4% in the third quarter, to zero in the
fourth quarter (Eurostat). However, different growth trends have been
observed across regions. For example, in the fourth quarter,
Germany’s economy contracted by 0.2%, with notable headwinds
from weak industrial output. On the other hand, Spain’s economy
grew by 0.8%, reflecting a continuation of robust service sector
demand and a growing workforce. Notwithstanding these differences,
consumer spending could be a key common growth driver, supported
by lower inflation and interest rates. However, prospects for business
investment and exports are more subdued, partly reflecting
uncertainty in the global trade environment.
Regarding inflation, having peaked at an all-time high of 10.6% in
October 2022, the annual rate of eurozone consumer price inflation
stood at an annual rate of 2.5% in January (Eurostat, 'flash' estimate).
While this is a much-improved backdrop, the headline rate remains
slightly above the European Central Bank’s ('ECB’s') 2% target.
Additionally, past disinflation in goods prices has now ceased while
annual service price inflation remains elevated, at 3.9% in January
(Eurostat, 'flash' estimate).
However, even as some inflation pressures persist, material concerns
surround the growth outlook with a number of business surveys –
including the Purchasing Managers’ Index ('PMI') survey – pointing to
little or no growth in economic activity. Against that backdrop, the
ECB reduced policy rates in 2024 and early 2025, with the key deposit
rate having been reduced from its 4.00% peak, to 2.75%. ECB
officials have signalled an intention to reduce interest rates further
while not “pre-committing” to a particular path.

HSBC Bank plc Annual Report and Accounts 2024 | 13

Financial summary
Use of alternative performance measures
Our reported results are prepared in accordance with International
Financial Reporting Standards ('IFRS Accounting Standards'), as
detailed in the Financial Statements starting on page 115.
In measuring our performance, we use financial measures which
eliminate factors that distort period-on-period comparisons. These are
considered alternative performance measures. All alternative
performance measures are described and reconciled to the closest
reported financial measure when used. The global business
segmental results are presented in accordance with IFRS 8 ‘Operating
Segments’, as detailed in ‘Basis of preparation’ in Note 9: ‘Segmental
analysis’ on page 154.

Summary consolidated income statement for the year ended
| 2024 | 2023 | 2022
| £m | £m | £m
Net interest income | 985 | 2,151 | 1,904
Net fee income | 1,275 | 1,229 | 1,295
Net income from financial instruments measured at fair value | 5,998 | 4,784 | 1,750
Gains less losses from financial investments | 22 | (84) | (60)
(Losses)/gains recognised on Assets held for sale 1 | (100) | 296 | (1,947)
Insurance finance (expense)/income | (984) | (1,184) | 1,106
Insurance service result | 171 | 124 | 121
Other operating income | 106 | 190 | 135
Net operating income before change in expected credit losses and other credit impairment charges 2 | 7,473 | 7,506 | 4,304
Change in expected credit losses and other credit impairment charges | (163) | (169) | (222)
Net operating income | 7,310 | 7,337 | 4,082
Total operating expenses | (5,260) | (5,142) | (5,251)
Operating profit/(loss) | 2,050 | 2,195 | (1,169)
Share of profit/(loss) in associates and joint ventures | 18 | (43) | (30)
Profit/(loss) before tax | 2,068 | 2,152 | (1,199)
Tax (charge)/ credit | (785) | (427) | 646
Profit/(loss) for the year | 1,283 | 1,725 | (553)
Profit/(loss) attributable to the parent company | 1,253 | 1,703 | (563)
Profit attributable to non-controlling interests | 30 | 22 | 10

1 In relation to the sale of our retail banking operations in France, we recognised a £1.7bn impairment loss in 3Q22 on initial classification of the business as held-
for-sale. In 1Q23, we reversed the £1.7bn impairment loss as the sale became less certain. On subsequent re-classification of the business as held-for-sale in
4Q23, we recognised a £1.5bn impairment loss.
2 Net operating income before change in expected credit losses and other credit impairment charges is also referred to as revenue.

Reported performance
Profit before tax of £2,068m was £84m lower than in 2023. This
decrease was driven by the impact of one-off items relating to the
disposals of our retail banking operations in France, our entities in
Armenia and Russia, and the non-repeat of a prior year gain on the
sale of the Private Bank Guernsey branch. These were partly offset by
the favourable impact of the restructuring of our legal entities
comprising the acquisitions of PBLU, PBRS (including Private Bank
Guernsey branch) and HBBM from within HSBC Group. Excluding
these, profit before tax increased, reflecting higher revenue and
higher income from associates.
Revenue was £33m lower in 2024 compared with 2023. This
reflected the impact of entity disposals and the restructuring of our
legal entities partly offset by the acquisition of entities from within
HSBC Group and business performance.
The impact of disposals reduced revenue by £458m. This included
lower revenue following the sale of our retail banking operations in
France, and the sale of our business in Armenia and Russia. The
reduction in revenue also included the impact of a gain in 2023 of
£156m in respect of the classification of our retail banking operations
in France as held-for sale, in addition to losses in 2024 associated
with the sale of our subsidiaries in Russia and Armenia.
The impact of the restructuring of our legal entities increased revenue
by £303m. This included an increase in revenue in 2024 following the
acquisitions of PBLU, PBRS (including Private Bank Guernsey branch)
and HBBM. This was partly offset by lower revenue as 2023 included
a gain of £285m on the transfer of the Private Bank Guernsey branch
to PBRS.
In addition to these items, revenue was higher in MSS, mainly in
Equities and Securities Financing. This was partly offset by lower
revenue in GPS.
ECL of £163m in 2024 were £6m lower compared with 2023. In both
years, ECL primarily comprised stage 3 charges.
Operating expenses of £5,260m increased by £118m compared with
2023. The increase primarily reflected higher costs from the
acquisitions of PBLU, PBRS (including Private Bank Guernsey branch)
and HBBM (£391m). This was partly offset by lower costs following
the sale of our retail banking operations in France (down £221m).
Net interest income (‘NII’) decreased by £1,166m or 54% compared
with 2023. This included lower net interest income in Corporate
Centre due to increased funding costs associated with the funding of
our Markets business in MSS, generating trading income. These
funding costs were up £1,072m reflecting growth in net trading
assets. Excluding this, NII was down by £94m. This reflected lower
NII in Corporate Centr e (down £171m) driven by a higher cost of
funding the portfolio of retained retail loans in France, and in CMB
(down £151m), mainly in GPS reflecting lower margins. NII was also
lower in Global Banking (down £98m), in GPS due to lower margins
reflecting the impact of new strategic hedges, product mix and
repricing, partly offset by higher balances, and NII was lower in Credit
& Lending ('C&L') due to muted client demand. These reductions
were offset by MSS (up £358m) including in Securities Financing due

14 | HSBC Bank plc Annual Report and Accounts 2024

Strategic Report | Financial summary

to the impact of interest rate increases, in Commodities due to higher
balances, and reflecting an increase in the allocation of NII on central
funds from Corporate Centre.
Net fee income increased by £46m or 4% compared with 2023. This
increase in WPB (up £76m) driven by the acquisition of PBRS was
partly offset by the sale of our retail banking operations in France.
There was also higher fee income in Global Banking (up £47m) mainly
in Investment Banking (up £30m) reflecting increased market activity,
and in GPS (up £16m) driven by continued strategic growth initiatives.
In addition, net fee income in CMB increased (up £15m) mainly from
the acquisition of HBBM. This was partly offset by lower net fee
income in MSS (down £108m) including higher brokerage and clearing
house fees reflecting business growth.
Net income from financial instruments measured at fair value
increased by £1,214m or 25% compared with 2023, primarily related
to trading activities in MSS (up £1,088m), for which the associated
funding costs are reported in net interest income. In addition, net
income from financial instruments measured at fair value was higher
in CMB (up £93m), which included a gain on the sale of a preference
shares in Visa. This was partly offset by a reduction in WPB (down
£58m). WPB included a decrease in insurance manufacturing (down
£222m), driven by lower returns on financial assets supporting
insurance contracts where the policyholder is subject to part or all of
the investment risks. The adverse movement resulted in a
corresponding movement in liabilities to policyholders, reflecting the
extent to which policyholders participate in the investment
performance of the associated assets. This offsetting movement is
recorded in ‘Insurance finance income/(expense)'. The decrease in
WPB was partly offset by increases following the sale of our retail
banking operations in France and the acquisition of PBLU, PBRS and
HBBM (together £105m), and a gain on the sale of preference shares
in Vi sa (£54m).
Gains less losses from financial investments of £22m in 2024
increased by £106m compared with a loss of £84m in 2023. The loss
in 2023 was mainly driven by losses on the disposal of bonds held at
fair value through other comprehensive income ('FVOCI') in Markets
Treasury.
(Losses)/gains recognised on Assets held for sale of £(100)m
decreased by £396m from 2023, mainly driven by the non-repeat of a
gain recognised in 2023 relating to the sale of our retail banking
operations in France which were sold in 2024 of £156m. The
decrease also reflected the reversal in 2023 of a previously
recognised loss associated with the sale of our subsidiary in Russia of
£159m. Also, in 2024 we recognised a loss on the disposal of our
subsidiary in Armenia of £68m.
Insurance finance (expense)/income reduced from an expense of
£(1,184)m to an expense of £(984)m, a decrease of £200m. This was
primarily in insurance manufacturing in WPB. This reflected the
impact of lower investment returns on underlying assets and
therefore on the value of liabilities to policyholders. This moves
inversely with ‘net income from financial instruments measured at fair
value.
Insurance service result increased by £47m or 38% due to
favourable market movements.
Other operating income of £106m decreased by £84m or 44%
compared with 2023. The decrease was driven by the non-repeat of
items booked in 2023 comprising a gain of £285m on the transfer of
our Private Bank Guernsey branch to PBRS, partly offset by a
provision to reflect restrictions impacting the recoverability of assets
in Russia of £186m.
In addition, 2024 included net foreign exchange translation losses of
£44m mainly associated with the sales of our entities in Armenia and
Russia. This was partly offset by higher intercompany recharge
recoveries from other entities within the HSBC Group.
ECL of £163m in 2024 were £6m lower compared with 2023. ECL in
2024 included stage 3 charges and a net release in respect of stage 1.
Total operating expenses increased by £118m or 2%. Costs
increased in 2024 due to the restructuring of our legal entities (up
£391m), the introduction of a new Bank of England levy (up £16m)
and the non-recurrence of a reversal of an historical value-in-use
impairment of £52m in 2023. These increases were partly offset by
savings associated with the sale of our retail banking operations in
France (down £221m), a lower UK bank levy charge (down £33m) and
a lower SRF levy (down £99m). In addition, the remaining operating
expenses growth was driven by higher t echnology costs, reflecting
ongoing strategic investments to support our growth initiatives and
spend on regulatory programmes.
Share of profit/(loss) in associates and joint ventures was a profit
of £18m, an increase of £61m compared with 2023, largely due to an
impairment of an investment in an associate in 2023.
Tax charge was £785m in 2024, giving an effective tax rate (‘ETR’) of
38.0 % compared with a 19.8% ETR in 2023. The ETR for 2024 of
38.0% was increased by the partial derecognition of deferred tax on
French tax losses incurred in prior years and the non-recognition of
deferred tax on French tax losses arising in the current year (7.1%)
and charges in respect of prior year (7.1%), in particular in the UK.
Excluding these items, the tax rate for the year would have been
23.8%.
The effective tax rate of 19.8% in 2023 was reduced by the
recognition of a deferred tax asset for prior period excess expenses in
HSBC Life (UK) (3.8%) and the non-taxable gain arising on the transfer
of the Guernsey branch to PBRS (3.4%) and increased by non-
deductible UK and European bank levy expenses (3.6%) and charges
in respect of prior periods (2.7%). Excluding these items, the tax rate
for the year would have been 20.7%.

Analysis of reported results by global
business
Markets and Securities Services
Profit before tax was £121m compared with a loss before tax of
£144m in 2023, a increase of £265m. This was driven by higher
revenue.
Revenue increased by £263m or 13%, mainly in Securities Financing
(up £226m) driven by organic growth including the on-boarding of new
clients, coupled with financing opportunities with institutional clients.
Revenue was also higher in Equities (up £151m) as 2024 reflected
normalised market sentiment and strong demand for wealth products,
whereas 2023 reflected weaker performance across all products due
to low volumes and low volatility. This was offset by lower revenue in
Global Foreign Exchange (down £60m) driven by low market volatility
and market compression and lower revenue in Securities Services
(down £49m) driven by a reduction in average balances, client exits
and repricing impacts.
Operating expenses were broadly flat to prior yea r (up £3m or 0%).
Global Banking
Profit before tax was £1,122m, an increase of £134m compared with
2023, mainly reflecting ECL releases in 2024.
Revenue decreased by £11m or 1%, including the positive impact of
the acquisition of the Group’s operations in Bermuda by the bank (up
£43m). Excluding this, revenue was down £54m, primarily in GPS
(down £71m) driven by lower margins, reflecting the impact of new
strategic hedges, product mix and repricing, partly offset by continued
growth in fee income and balances. Revenue also reduced in C&L
(down £55m) reflecting continued muted client demand. This was
partly offset by higher revenue in Investment Banking (up £36m),
driven by increased market activity supported by the recovery in
global capital markets. In addition, there was an increase in the
allocation of NII on central funds from Corporate Centre resulting from
the benefit of structural hedges moving to higher interest rates.

HSBC Bank plc Annual Report and Accounts 2024 | 15

ECL were a net release of £66m, £157m lower compared with a net
charge in 2023. The net release in 2024 was primarily driven by a
single stage 3 release, as well as a combined net release of stage 1
and stage 2 ECL.
Operating expenses were £12m or 1% higher compared with 2023,
mainly driven by an increase in technology costs reflecting the impact
of strategic investments, largely offset by lower legal and litigation
costs (down £58m).
Global Banking and Markets Other
Loss before tax was £(215)m, an improvement of £51m compared
with 2023. This was largely driven by higher revenue, partly offset by
higher operating expenses.
Revenue increased by £94m, primarily from higher revenue allocated
from Markets Treasury (up £75m) reflecting the non-recurrence of
disposal losses on repositioning activities in 2023, as well as higher
revenue from Principal Investments (up £21m) driven by higher
valuation gains.
Operating expenses increased by £40m compared with 2023
reflecting the non-recurrence of a credit in 2023 relating to
amortisation and impairments, and the release of a severance accrual
in 2023. Expenses in 2024 included additional costs relating to
strategic initiatives, higher r esearch costs and higher technology
charges. This was partly offset by a lower UK bank levy as 2023
included adjustments relating to prior years.
Commercial Banking
Profit before tax was £743m, a decrease of £257m compared with
2023. This was mainly driven by higher ECL and operating expenses.
Revenue decreased by £28m or 2% compared with 2023. Revenue
increased reflecting the acquisition of the Group's operations in
Bermuda (up £90m). Revenue was also higher, reflecting a gain on
the sale of Visa preference shares (£39m). These increases were
more than offset by lower revenue in GPS (down £158m) driven by
lower margins, reflecting repricing and changes in product mix. This
was partly offset by continued growth in fee income from cross-
border payments and pricing actions, as well as revenue growth in
other products.
ECL were £143m higher compared with 2023, mainly driven by higher
stage 3 charges.
Operating expenses increased by £86m compared with 2023 driven
by higher t ech nology costs to support new capabilities and volume
growth, in addition to higher costs from newly acquired entities.
Wealth and Personal Banking ('WPB')
Profit before tax was £653m in 2024 compared with a profit before
tax of £457m in 2023, an increase of £196m. The increase reflected
the sale of our retail banking operations in France (up £113m), and the
acquisition of PBLU, PBRS (including Private Bank Guernsey branch),
and HBBM (together, up £88m) from within HSBC Group.
Revenue increased by £162m. A decrease in revenue from entity
disposals (down £281m), mainly reflecting the sale of our retail
banking operations in France, was more than offset by higher revenue
from the acquisition of entities from within HSBC Group (PBLU,
PBRS, HBBM, together increasing revenue by £431m). In addition,
revenue increased driven by UK Life tax fees due to positive
market performance (up £38m) and a gain on the sale of Visa
preference shares (£54m) partly offset by less favourable market
movements in France Insurance (down £33m), a loss associated with
the planned sale of our insurance business in France (£15m) and a
decrease in the Channel Islands driven by margin compression (down
£11m).
ECL were a net release of £7m compared with a net release of £12m
in 2023.
Operating expenses reduced by £39m. This reflected the sale of our
retail banking operations in France (down £376m) partly offset by the
acquisition of entities from within HSBC Group (PBLU, PBRS and
HBBM), together increasing costs by £342m). Expenses also
increased in r etail (up £21m) driven by higher technology expenses
offset by lower costs in insurance (£11m).
Corporate Centre
Loss before tax of £(356)m in 2024 compared with a profit before tax
of £117m in 2023. This was mainly driven by lower revenue and
higher operating expenses.
Revenue decreased by £513m. This included £99m of negative
revenue associated with the portfolio of retained retail loans which
transferred from WPB to Corporate Centre following the completion
of the sale of our retail banking operations in France. There was also a
valuation loss of £62m relating to a legacy portfolio. Revenue was
also lower reflecting the impact of the restructuring of our business in
Europe. This included an increase in losses associated with the
completed disposal of our business in Russia (up £31m from 2023), a
loss on the sale of our subsidiary in Armenia (£36m) and a gain in
2023 relating to the transfer of the Private Bank Guernsey branch to
PBRS of £285m. These decreases were partly offset by interest
income relating to a VAT refund of £23m.
ECL were £5m higher compared with 2023, mainly driven by losses in
the retained retail loan portfolio.
Operating expenses increased by £16m, largely driven by the costs
incurred in the retained retail loan portfolio in 2024 following the sale
of our retail banking operations in France.
Shares of profit/(loss) in associates and joint ventures was a
profit of £18m, an increase of £61m compared with a l oss of £43m in
2023, mainly due to an impairment of an investment in an associate.

Dividends
The consolidated reported profit for the year attributable to the
shareholders of the bank was £1,253m.
In 2024, the company paid to the parent company dividends on
ordinary share capital of £312m, and coupon payments on additional
tier 1 instruments of £223m.
Further information about the results is given in the consolidated income
statement on page 115.

16 | HSBC Bank plc Annual Report and Accounts 2024

Strategic Report | Financial summary

Review of business position

Summary consolidated balance sheet at 31 December
| 2024 | 2023
| £m | £m
Total assets | 727,330 | 702,970
– cash and balances at central banks | 119,184 | 110,618
– trading assets | 116,042 | 100,696
– financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 9,417 | 19,068
– derivatives | 198,172 | 174,116
– loans and advances to banks | 14,521 | 14,371
– loans and advances to customers | 82,666 | 75,491
– reverse repurchase agreements – non-trading | 53,612 | 73,494
– financial investments | 52,216 | 46,368
– assets held for sale | 21,606 | 20,368
– other assets | 59,894 | 68,380
Total liabilities | 700,277 | 678,465
– deposits by banks | 26,515 | 22,943
– customer accounts | 242,303 | 222,941
– repurchase agreements – non-trading | 40,384 | 53,416
– trading liabilities | 42,633 | 42,276
– financial liabilities designated at fair value | 37,443 | 32,545
– derivatives | 197,082 | 171,474
– debt securities in issue | 19,461 | 13,443
– insurance contract liabilities | 3,424 | 20,595
– liabilities of disposal groups held for sale | 23,110 | 20,684
– other liabilities | 67,922 | 78,148
Total equity | 27,053 | 24,505
Total shareholders’ equity | 26,895 | 24,359
Non-controlling interests | 158 | 146

Total assets were £24.4 bn or 3.5% higher than at 31 December 2023.
The group maintained a strong and liquid balance sheet with the ratio
of customer advances to customer accounts remaining below 35%.
We have assessed the impact of climate risk on our balance sheet
and have concluded that there is no material impact on the financial
statements for the year ended 31 December 2024.
Assets
Cash and balances at central banks increased by £8.6 bn or 7.7%.
Trading assets increased by £15.3 bn or 15.2% due to growth in
Securities Financing (in the Prime business) and Global Debt Markets
('GDM') in 2024.
Financial assets designated at fair value decreased by £9.7 bn or
50.6% due to the planned sale of France life insurance business
(£11.6bn).
Derivative assets increased by £24.1 bn or 13.8% due to a change in
market conditions, with increased volatility in the second half of 2024.
Loans and Advances to customers increased by £7.2 bn or 9.5%,
mainly due to the acquisition of PBRS in February 2024 from HSBC
Group.
Non-trading reverse repos decreased by £19.9 bn or 27.1% primarily
due to changes in market conditions. These were also partly driven by
a business decision to re-balance the portfolio towards the Prime
business in Securities Financing.
Financial investments increased by £5.8 bn or 12.6% as a result of the
purchase of debt securities, treasury and other eligible bills to benefit
from higher yield curves and enhance our hedging activities on net
interest income. The increase was across both debt instruments held
at fair value through other comprehensive income and instruments
held at amortised cost.
Assets held for sale increased by £1.2 bn or 6.1% reflecting the
reclassification to held-for-sale of the France Life Insurance business
(£19.3bn), the private banking business in Germany (£1.8bn) and the
South Africa business (£0.5bn). In 2023, the retail banking operations
in France were classified as held-for-sale.
Liabilities
Customer accounts increased by £19.4 bn or 8.7%, which included
the acquisition of PBRS (£14.2bn), partly offset by a decrease of
£(4.3)bn due to reclassifications to held-for-sale of the private banking
business in Germany and the South Africa business. The remaining
increase is consistent with our funding strategy to grow customer
deposits and increase stable funding.
The total of trading liabilities and financial liabilities designated at fair
value balances increased by £5.3 bn or 7.0% due to increase in
issuance of structured bonds.
Debt securities in issue increased by £6.0 bn or 44.8% in line with our
funding strategy.
Non-trading repos decreased by £13.0 bn or 24.4% reflecting the fall
in reverse repo business as a result of market activities. This decrease
is less than the decrease in non-trading reverse repos reflecting the
use of repos to fund business growth in MSS.
Derivative liabilities increased by £25.6 bn or 14.9%. This is in line with
derivative assets as the underlying risk is broadly matched.
Insurance contract liabilities decreased by £17.2 bn or 83.4% primarily
due to reclassification to held-for-sale of the France Life Insurance
business.
Equity
Total shareholder's equity increased by £2.5 bn or 10.4% from 2023,
including an increase in share premium of £2.6bn to support both the
acquisition of PBRS in the first quarter of 2024 and support a CET1
injection into HBCE.

HSBC Bank plc Annual Report and Accounts 2024 | 17

Net interest margin
Net interest margin is calculated by dividing net interest income as reported in the income statement by the average balance of interest-earning
assets. Average balances are based on daily averages for the principal areas of our banking activities with monthly or less frequent averages are
used elsewhere.

Net interest income
| 2024 | 2023 | 2022
| £m | £m | £m
Interest income | 19,414 | 17,782 | 6,535
Interest expense 1 | (18,429) | (15,631) | (4,631)
Net interest income | 985 | 2,151 | 1,904
Average interest-earning assets | 372,966 | 388,644 | 371,971
| % | % | %
Gross interest yield 2 | 5.20 | 4.55 | 1.53
Less: gross interest payable 2 | (5.16) | (4.60) | (1.23)
Net interest spread 3 | 0.04 | (0.05) | 0.30
Net interest margin 4 | 0.26 | 0.55 | 0.51

1 Interest expense includes the funding cost of Market business which is reported in 'net interest income' with an equal and offsetting income in 'net income from
financial instruments held for trading or managed on a fair value basis'.
2 Gross interest yield is the average annualised interest rate earned on average interest-earning assets (‘AIEA’). Gross interest payable is the average annualised
interest cost as a percentage of average interest-bearing liabilities.
3 Net interest spread is the difference between the average annualised interest rate earned on AIEA, net of amortised premiums and loan fees, and the average
annualised interest rate payable on average interest-bearing liabilities.
4 Net interest margin is net interest income expressed as an annualised percentage of AIEA.

Summary of interest income by asset type
| 2024 | 2023 | 2022
| Average balance | Interest income | Yield 1 | Average balance | Interest income | Yield 1 | Average balance | Interest income | Yield 1
| £m | £m | % | £m | £m | % | £m | £m | %
Short term funds and loans and advances to banks | 118,687 | 4,700 | 3.96 | 139,997 | 4,993 | 3.57 | 144,826 | 1,115 | 0.77
Loans and advances to customers | 86,152 | 4,532 | 5.26 | 88,161 | 4,076 | 4.62 | 91,882 | 2,177 | 2.37
Reverse repurchase agreements – non-trading 2 | 66,444 | 5,840 | 8.79 | 71,974 | 4,691 | 6.52 | 56,144 | 1,099 | 1.96
Financial investments | 55,324 | 2,364 | 4.27 | 41,178 | 1,509 | 3.66 | 37,875 | 633 | 1.67
Other interest-earning assets | 46,359 | 1,959 | 4.23 | 47,334 | 2,426 | 5.13 | 41,244 | 686 | 1.66
Total interest-earning assets | 372,966 | 19,395 | 5.20 | 388,644 | 17,695 | 4.55 | 371,971 | 5,710 | 1.54

1 Interest yield calculations include negative interest on assets recognised as interest expense in the income statement.
2 The average balances for repurchase and reverse repurchase agreements include net amounts where the criteria for offsetting are met, resulting in a lower net
balance reported with a higher yield and cost of funds.

Summary of interest expense by type of liability and equity
| 2024 | 2023 | 2022
| Average balance | Interest expense | Cost 1 | Average balance | Interest expense | Cost 1 | Average balance | Interest expense | Cost 1
| £m | £m | % | £m | £m | % | £m | £m | %
Deposits by banks | 25,854 | 1,076 | 4.16 | 23,512 | 911 | 3.87 | 31,930 | 55 | 0.17
Customer accounts | 201,908 | 8,449 | 4.18 | 185,731 | 6,893 | 3.71 | 164,681 | 1,742 | 1.06
Repurchase agreements – non-trading 2 | 48,710 | 4,923 | 10.11 | 45,337 | 3,518 | 7.76 | 31,898 | 680 | 2.13
Debt securities in issue – non-trading | 37,313 | 1,984 | 5.32 | 30,627 | 1,534 | 5.01 | 29,385 | 589 | 2.00
Other interest-bearing liabilities | 42,796 | 1,978 | 4.62 | 52,560 | 2,688 | 5.11 | 50,301 | 739 | 1.47
Total interest-bearing liabilities | 356,581 | 18,410 | 5.16 | 337,767 | 15,544 | 4.60 | 308,195 | 3,805 | 1.23

1 Interest payable calculations include negative interest on liabilities recognised as interest income in the income statement.
2 The average balances for repurchase and reverse repurchase agreements include net amounts where the criteria for offsetting are met, resulting in a lower net
balance reported with a higher yield and cost of funds.

18 | HSBC Bank plc Annual Report and Accounts 2024

Strategic Report | Financial summary | Risk overview

Reconciliation of alternative performance measures
Return on average ordinary shareholders’ equity and return on average
tangible equity
Return on average ordinary shareholders’ equity (‘RoE’) is computed
by taking profit attributable to the ordinary shareholders of the parent
company (‘reported results’), divided by average ordinary
shareholders’ equity (‘reported equity’) for the period. The adjustment
to reported results and reported equity excludes amounts attributable
to non-controlling interests and holders of preference shares and
other equity instruments.
Return on average tangible equity (‘RoTE’) is computed by adjusting
reported results for impairment of goodwill and other intangible
assets (net of tax), divided by average reported equity adjusted for
goodwill and intangibles for the period.
We provide RoTE ratio in addition to RoE as a way of assessing our
performance, which is closely aligned to our capital position.

Return on average ordinary shareholders’ equity and return on average tangible equity
| Year ended
| 31 Dec 2024 | 31 Dec 2023 | 31 Dec 2022
| £m | £m | £m
Profit/(loss) |  |  |
Profit/(loss) attributable to the ordinary shareholders of the parent company 1,2 | 980 | 1,489 | (753)
Profit/(loss) attributable to the ordinary shareholders, excluding other intangible assets impairment | 980 | 1,489 | (753)
Equity |  |  |
Average total shareholders’ equity | 25,571 | 24,180 | 22,888
Effect of average preference shares and other equity instruments | (3,928) | (3,930) | (3,889)
Average ordinary shareholders’ equity | 21,643 | 20,250 | 18,999
Other adjustments (net of tax) | (276) | 33 | 89
Average tangible equity | 21,367 | 20,283 | 19,088
| % | % | %
Ratio |  |  |
Return on average ordinary shareholders’ equity | 4.5 | 7.4 | (4.0)
Return on average tangible equity | 4.6 | 7.3 | (3.9)

1 The effective tax rate for 2024 was 38% (2023: 19.8%, 2022: 53.9%) which reflects the mix of profits and losses in different jurisdictions and is increased by the
£124m derecognition of prior year deferred tax on French tax losses, charges for withholding taxes and also includes £50m tax charges arising from the Pillar 2
global minimum tax rules. For further details on tax see 'Tax' on page 151.
2 Profit attributable to the ordinary shareholders of the parent company excludes coupons payable to preference shareholders on perpetual subordinated
contingent convertible securities and other foreign exchange difference.

HSBC Bank plc Annual Report and Accounts 2024 | 19

Risk overview
The group continuously identifies, assesses, manages and monitors
risks. This process, which is informed by its risk factors and the
results of its stress testing programme, gives rise to the classification
of certain financial and non-financial risks. Changes in the assessment
of these risks may result in adjustments to the group’s business
strategy and, potentially, its risk appetite.
Our banking risks include credit risk, treasury risk, market risk, climate
risk, resilience risk (including cybersecurity risk), regulatory
compliance risk, financial crime risk and model risk. We also incur
insurance risk.
In addition to these banking risks, we have identified top and
emerging risks with the potential to have a material impact on our
financial results, our reputation and the sustainability of our long-term
business model.
The exposure to our risks and risk management of these are
explained in more detail in the Risk section on pages 21 to 93.
Our suite of top and emerging risks is subject to regular review by
senior governance forums. We continue to monitor closely the
identified risks and we aim to ensure management actions are in
place, as required.

Risk |  | Description
Externally driven
Geopolitical and macroeconomic risk | ~ | Our operations and portfolios are subject to risks arising from political instability, civil unrest and military conflict, which could lead to disruption of our operations, physical risk to our staff and/or physical damage to our assets. We are also subject to cyclical and idiosyncratic macroeconomic risks. We are monitoring the impacts of government changes seen across a number of our key markets, including in France and in the UK. Among the key risks to the economic outlook is the prospective recalibration of economic and trade policies following elections in the US and other markets in 2024. This could prove disruptive to the global economy impacting the group’s businesses and its customers.
Credit risk | } | We remain focused on assessing and managing the impacts of the evolving geopolitical and macroeconomic environment, including the Russia Ukraine war, the potential conflict resurgence or escalation of the conflict in the Middle East and the US- China trade relationship, with our early warning indicators helping us to identify segments that we believe may be at risk. We regularly undertake detailed reviews of our portfolios and proactively manage credit facilities to customers and sectors likely to come under stress. Particular emphasis is maintained on higher risk sectors such as Automotives, Chemicals, Commercial Real Estate, Construction, Leveraged Finance and Retail, all of which remain subject to dedicated reviews. In addition, the portfolio is monitored through stress testing with the refinance profile of the book also regularly reviewed.
Cyber threat and unauthorised access to systems | ~ | There is an increased risk of service disruption or loss of data resulting from technology failures or malicious activities, by internal or external threats. We seek to continue to monitor changes to the threat landscape, including those arising from geopolitical events, and the impact this may have on third party risk management. We operate a continuous improvement programme to help protect our technology operations and to counter a fast-evolving cyber threat environment.
Evolving regulatory environment risk | } | The regulatory and compliance risk environment remains complex and is set against continued geopolitical risk and regulatory focus on ensuring good customer outcomes, orderly and transparent operation of financial markets, operational resilience, financial resilience, model risk, financial crime, and risk management practices. The group is progressing the implementation of Basel 3.1 standards to various timescales, and the governmental and regulatory focus on improving growth is driving legislative and regulatory change. There also continues to be intense regulatory focus across our key markets on ESG matters, including on ‘green’ products and sustainable financing.
Financial crime risk | ~ | We are exposed to financial crime risk from our customers, staff and third-parties engaging in criminal activity. The financial crime risk environment is heightened due to increasingly complex geopolitical challenges, the macroeconomic outlook, the complex and dynamic nature of sanctions and export controls compliance, evolving financial crime regulations, rapid technological developments, an increasing number of national data privacy requirements and the increasing sophistication of fraud. As a result, we will continue to face the possibility of regulatory enforcement and reputational risk.
Environmental, social and governance risk | ~ | We are subject to ESG risks, including in relation to climate change, nature and human rights. These risks have increased owing to the pace and volume of regulatory developments globally, signs of diverging national agendas, the increasing frequency of severe weather events which require careful monitoring, alongside stakeholders placing more emphasis on actions and investment decisions in respect of ESG matters. Failure to meet these evolving expectations may result in financial and non-financial risks, including reputational, legal and regulatory compliance risks.
Digitalisation and technological advances | ~ | Developments in technology and changes in regulations continue to enable new entrants to the banking industry as well as new products and services offered by competitors. This challenges us to continue to innovate with new digital capabilities and evolve our products to attract, retain and best serve our customers. Along with opportunities, new technology, including generative AI and quantum computing, can introduce risks and disruption. We seek to ensure technology developments are understood and managed with appropriate controls and oversight.

20 | HSBC Bank plc Annual Report and Accounts 2024

Strategic Report | Risk overview

Risk |  | Description
Internally driven
People risk | ~ | Our businesses, functions and geographies are exposed to risks associated with employee retention and talent availability, changing skill requirements of our workforce, and compliance with employment laws and regulations. Attrition across the group was on a downward trend in 2024, however failure to manage these risks may impact the delivery of our strategic objectives or lead to regulatory sanctions or legal claims, and the risks are heightened during the current period of fundamental organizational change. The risk will continue to be reviewed and assessed to identify challenges and implement relevant actions.
IT systems infrastructure and operational resilience | } | We continue to monitor and improve our IT systems and network resilience, both on our premises and on the Cloud to minimise service disruption and improve customer experience. We operate a continuous improvement programme and continue to seek to reduce the complexity of our technology estate to help protect our technology operations.
Execution risk | } | Delivering change effectively is critical to achieving our strategy and enables us to meet rapidly-evolving customer and stakeholder needs. We seek to deliver complex change in line with established risk management processes, prioritising sustainable outcomes and understanding the associated risks. We focus on meeting industry and regulatory expectations and fulfilling our obligations to customers and clients.
Model risk | ~ | Model risk arises whenever business decision making includes reliance on models. We use models in both financial and non- financial contexts, as well as in a range of business applications. Evolving regulatory requirements are driving material changes to the way model risk is managed across the banking industry, with a particular focus on capital models. We continue strengthening the dialogue with regulators within the region to aim to ensure our deliverables meet their expectations. New technologies, including AI and generative AI, are driving a need for enhanced model risk controls.
Data risk | } | We use data to serve our customers and run our operations, often in real-time within digital experiences and processes. If our data is not accurate and timely, our ability to serve customers, operate with resilience or meet regulatory requirements could be impacted. We seek to ensure that non-public data is kept confidential, and that we comply with the regulations that govern data privacy and cross-border movement of data.
Third-party risk | } | We procure goods and services from a range of third parties. Due to the current macroeconomic and geopolitical climate, the risk of service disruption in our supply chain remains heightened. We continue to strengthen our controls, oversight and risk management policies and processes to select and manage third parties, including our third parties’ own supply chains, particularly for key activities that could affect our operational resilience.

~ | Risk has heightened during 2024
} | Risk remains at the same level during 2024

On behalf of the Board
Kavita Mahtani
Director
18 February 2025
Registered number 00014259

HSBC Bank plc Annual Report and Accounts 2024 | 21

Risk

Contents
21 | Our approach to risk
21 | Our risk appetite
22 | Risk management
22 | Stress testing
22 | Key developments and risk profile
22 | Key developments in 2024
23 | Top and emerging risks
23 | Externally driven
27 | Internally driven
29 | Our material banking and insurance risks
31 | Credit risk
73 | Treasury risk
82 | Market risk
84 | Climate risk
86 | Resilience risk
87 | Cybersecurity Risk
87 | Regulatory compliance risk
88 | Financial crime risk
89 | Model risk
89 | Insurance manufacturing operations risk Overview

Our approach to risk
Our risk appetite
We recognise the importance of a strong risk culture, which refers to
our shared attitudes, values and standards that shape behaviours
including those related to risk awareness, risk taking and risk
management. All our people are responsible for the management of
risk, with the ultimate accountability residing with the Board. Our risk
appetite defines the level and types of risk that we are willing to take,
while informing the financial planning process and guiding strategic
decision making.
Enterprise-wide application
Our risk appetite is expressed holistically through various risk
management mechanisms and activities, in both quantitative and
qualitative terms. The Board reviews and approves the group's risk
appetite regularly to make sure it remains fit for purpose. The group's
risk appetite is considered, developed and enhanced following these
principles:
– alignment with our strategy, purpose, values, external risk
environment, reputational and customer needs;
– compliance with applicable laws, regulations and regulatory
priorities;
– forward looking insights into future risk exposure;
– sufficiency of available capital, liquidity and balance sheet leverage
to absorb the risks;
– capacity and capabilities of people to manage the risk landscape;
– functionality, capacity and resilience of available systems to
manage the risk landscape;
– effectiveness of the applicable control environment to mitigate
risk; and
– internally and externally disclosed commitments.
Our Risk Management Framework
We aim to use a comprehensive risk management approach across
the organisation and across all risk types, underpinned by our culture
and values. This is outlined in our risk management framework,
including the key principles and practices that we employ in managing
material risks, both financial and non-financial. The framework fosters
continuous monitoring, promotes risk awareness and encourages a
sound operational and strategic decision-making and escalation
process. It also supports a consistent approach to identifying,
assessing, managing and reporting the risks we accept and incur in
our activities, with clear accountabilities. We actively review and
enhance our risk management framework and our approach to
managing risk, through our activities with regard to: people and
capabilities; governance; reporting and management information;
credit risk management models; and data.
The implementation of our business strategy remains a key focus. As
we implement change initiatives, we actively manage the execution
risks. We also perform periodic risk assessments, including against
strategies, to help ensure retention of key personnel for our continued
safe operation.
Our Risk Committee focuses on risk governance and seeks to ensure
a forward-looking view of risks and their mitigation. The Risk
Committee is a committee of the Board and has responsibility for
oversight and advice to the Board on, amongst other things, the
bank’s risk appetite, tolerance and strategy, systems of risk
management, internal control and compliance. Additionally, members
of the Risk Committee attend meetings of the bank’s Nomination,
Remuneration and Governance Committee at which the alignment of
the reward structures to risk appetite is considered.
In carrying out its responsibilities, the Risk Committee is closely
supported by the Chief Risk Officer, the Chief Financial Officer, the
Head of Internal Audit and the Head of Compliance, together with
other business functions on risks within their respective areas of
responsibility.
Responsibility for managing both financial and non-financial risk,
including regulatory compliance and financial crime related risks, lies
with our people. They are required to manage the risks of the
business and operational activities for which they are responsible. We
maintain oversight of our risks through our various specialist risk
stewards and the collective accountability held by the Chief Risk
Officer.
We have continued to strengthen the control environment and our
approach to the management of risk, as set out in our risk
management framework. Our ongoing focus is on helping to ensure
more effective oversight and better end-to-end identification and
management of financial and non-financial risks. This is overseen by
the Enterprise Risk Management function, headed by the group Head
of Enterprise Risk Management.
We recognise that the primary role of risk management is to help
protect our customers, business, colleagues, shareholders and the
communities that we serve, while ensuring we are able to support
our strategy and provide sustainable growth. This is supported
through our three lines of defence model as described below.
Three lines of defence
All our people are responsible for identifying and managing risk within
the scope of their roles. Roles are defined using the three lines of
defence model, which takes into account our business and functional
structures.

22 | HSBC Bank plc Annual Report and Accounts 2024

Risk

To create a robust control environment to manage risks, we use an
activity-based three lines of defence model, whereby the activity a
member of staff undertakes drives which line they reside within. This
model delineates management accountabilities and responsibilities for
risk management and the control environment.
The model underpins our approach to risk management by clarifying
responsibility, encouraging collaboration and enabling efficient
coordination of risk and control activities.
The three lines are summarised below:
– The first line of defence owns the risks and is responsible
for identifying, recording, reporting and managing them in line with
risk appetite, and helping to ensure that the right controls and
assessments are in place to mitigate them.
– The second line of defence challenges the first line of defence on
effective risk management, and provides advice and guidance and
assurance of the first line of defence to ensure it is managing risk
effectively.
– The third line of defence is our Internal Audit function, which
provides independent assurance that the group’s risk management
approach and processes are designed and operating effectively.
Risk appetite
We formally articulate our risk appetite through our risk appetite
statement ('RAS'), which is approved by the Board on the
recommendation of the Risk Committee. Setting out our risk appetite
helps ensure that we agree a suitable level of risk for our strategy. In
this way, risk appetite informs our financial planning process and
helps senior management to allocate capital to business activities,
services and products.
The RAS consists of qualitative statements and quantitative metrics,
covering financial and non-financial risks. It is fundamental to the
development of business line strategies, strategic and business
planning and senior management balanced scorecards. Performance
against the RAS is reported to the Risk Management Meeting
('RMM') to support targeted insight and discussion on breaches of
risk appetite and any associated mitigating actions. This reporting
allows risks to be promptly identified and mitigated, and informs risk-
adjusted remuneration to drive a strong risk culture.

Risk management
Stress testing
Stress testing is an important tool that is used by banks, as part of
their internal risk management, and by regulators to assess
vulnerabilities in individual banks and/or the financial banking sector
under hypothetical adverse scenarios. The results of stress testing are
used to assess banks’ resilience to a range of adverse shocks and to
assess their capi tal and liquidity adequacy.
HSBC Bank plc is subject to regulatory stress testing in several
jurisdictions. These requirements are increasing in frequency and
granularity. They include the programmes of the BoE, Prudential
Regulation Authority (‘PRA’) and the European Banking Authority
(‘EBA’). Assessment by regulators is on both a quantitative and
qualitative basis, the latter focusing on our portfolio quality, data
provision, stress testing capability and capital planning processes.
A number of internal macroeconomic and event-driven scenarios
specific to the European region were considered and reported to
senior management during the course of the year. The selection of
stress scenarios is based upon the output of our top and emerging
risks identified and our risk appetite. The results help the Board and
senior management to set our risk appetite and confirm the strength
of our strategic and financial plans. Our risk appetite is set at a level
that enables the group to withstand future stress impacts.
The macroeconomic internal stress tests, conducted throughout
2024, considered combinations of various potential impacts as
identified in our top and emerging risks. These included the impact of
severe banking sector instability including a significant reduction in
the ability of businesses and consumers to borrow money; the
impacts from a major slowdown in China's economic activity leading
to a worsening economic outlook; and escalation of geopolitical
tension (US-China, Middle East, Russia-Ukraine) leading to global
supply side shocks, amplifying shocks to market confidence and
leading to reduced global demand. Further themes that were
considered included interest rate shocks and a deep recession, supply
chain disruption and operational risk.
We also conduct reverse stress tests each year for HSBC Bank plc
and, where required, at subsidiary entity level to understand potential
extreme conditions that would make our business model non-viable.
Reverse stress testing identifies potential stresses and vulnerabilities
we might face, and helps inform early warning triggers, management
actions and contingency plans designed to mitigate risks.
Recovery and resolution plans
Recovery and resolution plans form part of the integral framework
safeguarding the group's financial stability under severe stress. The
recovery plan, together with stress testing, helps us identify credible
recovery options that can be implemented under a range of
idiosyncratic and market-wide stress scenarios. The aim is to mitigate
the potential shortfall in capital and liquidity pressures. The Group
continues to develop its recovery and resolution capabilities, including
in relation to the Resolvability Assessment Framework.
Climate Risk
In 2024, we have considered five bespoke scenarios that were
designed to articulate our view of the range of potential outcomes for
global climate change. The scenarios explore a wide range of physical
and transition risks that could materialise under certain technological,
behavioural and political assumptions: Below 2°C, a scenario where
orderly climate action becomes more stringent over time and
warming is kept under 2°C; the Current Commitments scenario,
which assumes that climate action is limited to the current
governmental commitments and pledges; the Delayed Transition
scenario, which assumes that climate action is delayed until 2030; the
Downside Physical Risk scenario, which assumes muted climate
action limited to current governmental policies; and a Short-Term
scenario, which combines severe climate events with macro-
economic impacts.
We consider our Current Commitments scenario as the most likely
scenario to transpire over the next five years. Under the Current
Commitments scenario, we expect mild levels of losses relating to
transition risk. Based on this scenario the potential impact on
expected credit losses is not considered material over the next five
years, as the impacts of climate risk will emerge later in the following
decades.

Key developments and risk profile
Key developments in 2024
In 2024, we have continued to manage risks related to
macroeconomic and geopolitical uncertainties and develop risk
management capabilities through the continued enhancement of the
risk management framework. We also retained our focus on risk
transformation and financial crime and continued to assess the
group’s operational resilience capability whilst prioritising the most
significant enterprise risks. We made progress with and continue to
develop capabilities to address key risks. More specifically, we sought
to enhance our risk management in the following areas:
– We are advancing on our comprehensive initiative aimed at
strengthening our regulatory reporting processes and making them
more sustainable. This multifaceted programme includes
enhancing data, consistency and controls.
– We remain focused on our financial reporting controls, particularly
given the ongoing transformation, to support our strategic
objectives.
– We continue to maintain a focus on our technology and
cybersecurity controls to improve the resilience and security of our
technology services in response to the heightened external threat
environment.

HSBC Bank plc Annual Report and Accounts 2024 | 23

– We have improved the quality of our strategic change investment
processes and associated control monitoring and are seeking to
transition to a more agile approach to delivery of complex
transformation portfolios and initiatives.
– We continue to enhance our model risk framework in response to
changes in regulation and external factors. AI and machine learning
models remain a key focus. Progress has been made in enhancing
governance activity in this area with particular focus on generative
AI due to the pace of technological change and regulatory and
wider interest in adoption and usage.
– We enhanced our processes, framework and controls to improve
the oversight of our material third parties. We have strengthened
our due diligence and monitoring capabilities, with respect to the
financial stability of our third parties to better manage our supply
chain and operational resilience. We will continue to assess and
manage our operational resilience.
– Through our climate risk programme, we made progress on
embedding climate considerations throughout our organisation,
including through risk policy updates. We also developed risk
metrics to monitor and manage exposures, and further enhanced
our internal climate scenario analysis. We continue to implement
our climate risk programme to complete our annual materiality
assessment and make changes to our policies, processes and
capabilities to better embed climate considerations throughout our
organisation.
– We deployed advanced technology and analytics capabilities into
new markets to improve our ability to identify suspicious activities
and prevent financial crime. We will continue to evaluate
technological solutions to improve our capabilities in the detection
and prevention of financial crime.
– We continued to embed our regulatory management systems
focusing on forward-looking analysis, regulatory mapping, and
regulatory content for our inventory.
– We continued to enhance our frameworks, policies and
governance processes to embed regulatory requirements.

Top and emerging risks
We use a top and emerging risks process to provide a forward-looking
view of issues with the potential to threaten the execution of our
strategy or operations over the medium to long term.
We proactively assess the internal and external risk environment, as
well as review the themes identified across the European region and
the group's businesses, for any risks that may require escalation. We
update our top and emerging risks as necessary.
Our current top and emerging risks are as follows.
Externally driven
Geopolitical and macroeconomic risk
Elections and subsequent changes to government during 2024 have
created uncertainty as domestic and foreign policy priorities have
shifted. Of our main markets both the United Kingdom and France
held elections in 2024 resulting in a change in government. The US in
particular is expected to continue to bring about changes to economic
and foreign policy that will have broad economic and geopolitical
implications.
Key economic and financial risks are monitored closely. Both Europe
and the UK saw modest economic growth in 2024. The outlook for
2025 remains uncertain as the new US administration intends to
enact a significant change in economic and foreign policies that could
have an uncertain impact on global growth, inflation and interest
rates. In particular, the prospect of additional US tariff rates and
retaliatory actions on trade has started to weigh on economic growth
forecasts and has raised future inflation expectations. Consequently,
markets now expect that major central banks will adopt a more
cautious approach to lowering policy interest rates during the course
of 2025.
The prospective impact on individual economies from the imposition
of higher US tariffs will depend on the breadth and level of the
increases and the dependence of the relevant countries’ exports on
US import demand. Within the group, the country and sector
implications of changing global trade policies remains an area that is
closely monitored.
Markets continue to finance high public deficits, but debt
sustainability remains a risk when set against a backdrop of more
uncertain global growth prospects and a higher interest rate
environment. Debt levels continue to rise in major markets as
demands grow on government budgets from rising social welfare
costs, defence and climate transition. We are monitoring the fiscal
and market implications of recent government changes, including in
the UK and the US, where election pledges are ambitious relative to
already stretched fiscal positions. As global yields have increased,
government bond prices have become increasingly sensitive to
differences in growth and inflation expectations between markets, as
well as the perception of fiscal and funding risks. A loss of investor
confidence could drive a rise in yields, raise funding costs for
governments and lead to tax increases and expenditure cuts that are
negative for growth. For HSBC, the risks of a sharp rise in funding
costs in our key markets relate both to the credit and refunding risks
of our customers, market pricing risks of assets held for sale, and
risks to net interest margins.
The Israel-Hamas conflict may resurge. While a 42-day ceasefire was
agreed in January 2025, the durability of the ceasefire remains
uncertain. The regional economic impact of this conflict was relatively
limited throughout 2024. The US and UK imposed additional sanctions
on Iran in 2024 in response to Iran’s activities and the increase in
tensions between Israel and Iran. Further sanctions may be imposed
and could increase the risk within our operations.
While supply chains have largely adapted to the Russia-Ukraine war
and the conflict in the Middle East, the disruption of key logistical
routes, particularly through the Red Sea continues to impact global
supply cost. Escalation or resurgence of, or other changes in, the
Russia-Ukraine war and the conflict in the Middle East and ongoing
geopolitical instability could have implications for the group and its
customers by impacting economic activity for a prolonged period
which, in turn, could have a material adverse effect on the group’s
business, financial condition, results of operations, prospects,
liquidity, capital position and credit ratings. The group actively
monitors and responds to financial sanctions and trade restrictions
that have been adopted in response to the conflicts.
The sanctions and trade restrictions imposed by the US, the UK, and
the EU, as well as other countries, as a result of the Russia-Ukraine
war, remain complex, far-reaching and evolving. The US has
expanded the reach of its secondary sanctions regime, which includes
broad discretion to impose severe sanctions on non-US banks that are
knowingly or even unknowingly engaged in certain transactions or
services directly or indirectly involving Russia’s military-industrial
base, including certain third-party activities that are difficult to detect
or beyond our control. The imposition of such sanctions against any
non-US HSBC entity could result in significant adverse commercial,
operational and reputational consequences for HSBC. In response to
such sanctions and trade restrictions, as well as asset flight, Russia
has implemented certain countermeasures, including the
expropriation of foreign assets.
Following a strategic review in 2022, HSBC Europe BV (a wholly-
owned subsidiary of HSBC Bank plc) entered into an agreement to
sell its wholly-owned subsidiary HSBC Bank Russia (RR) (Limited
Liability Company), which was completed in May 2024.
Challenges remain in the UK-EU relationship following the UK's
withdrawal from the EU. Over the medium to long term, the UK’s
withdrawal from the EU may continue to adversely impact the terms
of EU market access for our UK based clients. We are monitoring the
situation closely, including the potential impacts on our customers.
Our business could also be adversely affected by economic or political
developments in regions of the world outside Europe. This reflects
our extensive business links, through members of the HSBC Group
and other entities, in Asia and elsewhere. Tensions between China

24 | HSBC Bank plc Annual Report and Accounts 2024

Risk

and the US, which may extend to and involve other countries, and
developments in Hong Kong, Taiwan and the surrounding maritime
region, may adversely affect the group.
To date, the US, the UK, the EU and other countries have imposed
various sanctions and trade restrictions on Chinese persons and
companies, and there is a continued risk of additional sanctions and
trade restrictions or tariffs being imposed in relation to, among other
things, alleged human rights abuses or advances in certain sensitive
technologies. China, in turn, imposed a number of its own sanctions
and trade restrictions that target, or provide authority to target, foreign
individuals or companies as well as certain goods such as rare earth
minerals and metals, and technology and services, and these or other
retaliatory measures may continue to be imposed against certain
countries, businesses and individuals. Strategic competition with
China has the potential to impact HSBC Group operations and global
supply chains remain vulnerable to a deterioration in the relationship
between China and other countries. For example, the EU is
considering a programme restricting certain outbound investments in
sensitive technology areas that may affect China. In addition, during
2024, both the US and the EU raised the rate at which they levy tariffs
on a range of Chinese imports, including electric vehicles. These have
been imposed on the basis of unfair competition, where the Chinese
government is accused of providing unfair subsidies to industry.
Existing and additional sanctions, trade restrictions, counter-sanctions
and other retaliatory measures relating to the foregoing or other
geopolitical tensions may adversely affect the group, its customers
and the markets in which the group operates by creating regulatory,
reputational and market risks, including additional inflationary
pressures, and a more complex operating environment.
Provisioning against credit loss is conducted under the IFRS 9
‘Financial Instruments’ (IFRS 9) calculations of ECL, which use
forward-looking scenarios that incorporate the economic and financial
risks detailed above.
Key considerations in our calculation of ECLs included inflationary
pressures, interest rates and changes to economic and financial
policies. In the fourth quarter of 2024, to address heightened policy
uncertainty following the US election and to overcome any lags in
consensus forecasts, an adjustment factor based on more recent
views of expected tariffs and other policy changes was modelled and
then applied to each of the economic scenarios. The effect was to
lower growth expectations in our major markets, while the impact on
inflation and interest rates was varied.
Following the adjustment, the Central scenario continues to be
assigned the highest probability weighting across all of our major
markets. Outer scenarios have incorporated more adverse tariff
escalations and the escalation of key geopolitical risks.
There remains uncertainty regarding the adequacy of our models to
reflect credit losses under emerging risks which are not captured
under the historical loss experience of our models, or to adequately
distinguish risks for specific sectors or portfolios.
The above risks could also have an impact on our customers and we
continue to closely monitor the potential impacts and offer support to
our customers in line with regulatory, government and wider
stakeholder expectations.
For further details of our Central and other scenarios, see ‘Measurement
uncertainty and sensitivity analysis of ECL estimates’ on page 42.
Mitigating actions
– We closely monitor geopolitical and economic developments in
our key markets and sectors, and undertake scenario analysis
where appropriate. This helps us to take actions to manage our
portfolios where necessary, including through enhanced
monitoring, amending our risk appetite and/or reducing limits and
exposures.
– We continue to monitor the EU’s relationship with the UK, and
assess the potential impact on our people, operations and
portfolios.
– We apply management judgemental adjustments where modelled
ECL does not fully reflect the identified risks and related
uncertainty, or to capture significant late-breaking events.
– We continue to seek to manage sanctions and trade restrictions
through the use of reasonably designed policies, procedures and
controls, which are subject to ongoing testing, auditing and
enhancements.
– We have taken steps, where necessary, to enhance physical
security in geographical areas deemed to be at high risk from
terrorism and military conflicts.
Credit risk
Despite ongoing macro-economic and geopolitical challenges,
predominantly driven by the Russia-Ukraine war and the potential for
resurgence of the conflict in the Middle East, our overall credit profile
remains stable and resilient with no material industry concentration
risk. Potential downside risks remain though which may elevate
Credit Risk within the group, including supply chain dynamics driven
by changes in trade tariffs and the US-China trade relationship.
Sectors such as Manufacturing, Real Estate, Retail and Wholesale
could be negatively impacted as a result.
Mitigating actions
– Reviews of key credit portfolios are undertaken regularly to seek
to ensure that individual customer or portfolio risks are understood
and our management of the level of facilities offered through the
economic cycle is appropriate.
– We continue to monitor high risk wholesale industry sectors
closely through quarterly industry risk appetite reviews and in 2024
we also undertook specific reviews of higher risk sectors such as
Automotives, Chemicals, Commercial Real Estate, Construction
and Building Materials, Leveraged Finance and Retail. Standalone
reviews for Private Capital and Insurance have also been
completed.
– Detailed performance monitoring is reviewed on a monthly basis,
which includes early warning indicators and a view of
concentration risks. Portfolio limits and exposures are re-assessed
and reductions implemented where appropriate.
– We stress test portfolios of particular concern to identify
sensitivity to loss under a range of scenarios, with management
actions being taken to seek to rebalance exposures and to manage
risk appetite where necessary.
Cyber threat and unauthorised access to
systems
Like other organisations, we continue to operate in an increasingly
complex cyber threat environment. These threats include potential
unauthorised access to systems including access to customer data,
whether ours or that of our third-party suppliers. These threats require
ongoing investment in business and technical controls to defend
against them.
Mitigating actions
– Our cyber intelligence and threat analysis team continually
evaluate threat levels for the most prevalent cyber-attack types
and their potential outcomes (see page 87 – cross-reference to
Cybersecurity), and we continue to seek to strengthen our controls
to help reduce the likelihood and impact of advanced malware,
data leakage, exposure through third parties and security
vulnerabilities.
– We continue to seek to enhance our cybersecurity capabilities,
including Cloud security, identity and access management, metrics
and data analytics, and third-party security reviews and to invest in
mitigating the potential threats of emerging technologies.

HSBC Bank plc Annual Report and Accounts 2024 | 25

– We regularly report and review cyber risk and control
effectiveness at executive level across our businesses and
functions, as well as at non-executive Board level to help ensure
there is appropriate visibility and governance of the risk and its
mitigating actions.
– We participate globally in industry bodies and working groups
working together to seek to prevent, detect and defend against
cyber-attacks on financial organisations.
– We respond to attempts to compromise our cybersecurity in
accordance with our cybersecurity framework. To date, none of
these attacks have had a material impact on our business or
operations.
– Our cyber intelligence and threat analysis team continually
evaluate threat levels for the most prevalent cyber-attack types
and their potential outcomes (see page 87), and we continue to
seek to strengthen our controls to help reduce the likelihood and
impact of attacks including advanced malware, data leakage,
exposure through third parties and security vulnerabilities.
Evolving regulatory environment risk
We aim to keep abreast of the emerging regulatory compliance and
conduct risk agenda. Current focus areas include but are not limited
to: Operational Resilience, ESG agenda developments, particularly
managing the risk of ‘greenwashing’; ensuring good customer
outcomes; addressing customer vulnerabilities; enhancements to
regulatory reporting controls; employee compliance including the use
of e-communication channels; and developments in legal principles or
conduct requirements (including in relation to the risk of such
developments in one part of the financial industry being construed as
applying to other parts of the financial industry, which could lead to
legal or regulatory proceedings).
The competitive landscape in which the group operates may be
impacted by future regulatory changes and government intervention
including changes driven by governments adopting a pro-business
growth agenda.
Mitigating actions
– We monitor regulatory developments to understand the evolving
regulatory landscape, and seek to respond with changes in a
timely manner.
– We continue to support work that is focused on the
implementation of UK Consumer Duty requirements.
– We engage with governments and regulators, and respond to
consultations with a view to help shape regulations that can be
implemented effectively.
– We hold regular meetings with relevant authorities to discuss
strategic contingency plans, including those arising from
geopolitical issues.
– Our purpose-led conduct approach aligns to our purpose and
values, in particular the value ‘we take responsibility’.
Financial crime and fraud risk
Financial institutions remain under considerable regulatory scrutiny
regarding their ability to detect and prevent financial crime. In 2024,
these risks continued to be exacerbated by rising geopolitical tensions
and ongoing macroeconomic factors. These challenges require
managing conflicting laws and approaches to legal and regulatory
regimes, and implementing increasingly complex and less predictable
sanctions and trade restrictions.
Amid cost of living pressures, we continue to face increasing
regulatory expectations with respect to managing internal and
external fraud and protecting customers. The accessibility and
increasing sophistication of generative AI brings additional financial
crime risks. While there is potential for the technology to support
financial crime detection, there is also a risk that criminals use
generative AI to perpetrate fraud, particularly scams.
The digitisation of financial services continues to have an impact on
the payment's ecosystem, with an increasing number of new market
entrants and payment mechanisms, not all of which are subject to the
same level of regulatory scrutiny or regulations as banks.
Developments around digital assets and currencies have continued at
pace, with an increasing regulatory and enforcement focus on the
financial crimes linked to these types of assets.
The intersection of ESG issues and financial crime continues to pose
risks related to potential ‘greenwashing’, human rights issues and
environmental crime, as our organisation, customers and suppliers
transition to net zero. In addition, climate change itself could heighten
risks linked to vulnerable migrant populations in countries where
financial crime is already more prevalent.
We also continue to face increasing challenges presented by national
data privacy requirements, which may affect our ability to manage
financial crime risks across markets.
Mitigating actions
– We continue to seek to manage sanctions and trade restrictions
through the use of reasonably designed policies, procedures and
controls, which are subject to ongoing testing, and enhancements.
– We continue to develop our fraud controls and invest in
capabilities to fight financial crime through the application of
advanced analytics and AI, while monitoring technological
developments and engaging with third parties.
– We continue to assess the impact of a rapidly changing payments
ecosystem, as well as risks associated with direct and indirect
exposure to digital assets and currencies, in an effort to maintain
appropriate financial crime controls.
– We regularly review our existing policies and control framework so
that developments relating to ESG are considered and the related
financial crime risks are mitigated to the extent possible.
– We engage with regulators, policymakers and relevant
international bodies, seeking to address data privacy challenges
through international standards, guidance and legislation.
Environmental, social and governance ('ESG')
risk
We are subject to financial and non-financial risks associated with
ESG-related matters. We are subject to financial and non-financial
risks associated with ESG-related matters, such as climate change,
nature-related and human rights issues. These can impact us both
directly and indirectly through our business activities and
relationships.
– We may face credit losses if climate-related regulatory, legislative
or technological developments impact customers’ business
models or if extreme weather events disrupt or interrupt
customers’ operations, resulting in financial difficulty for
customers and/or stranded assets, and impacting their ability to
repay their debts. Our customers may find that their business
models fail to align to a net zero economy or face disruption to
their operations or deterioration to their assets as a result of
extreme weather.
– Trading losses may arise if climate change results in changes to
macroeconomic and financial variables that negatively impact our
trading book exposures.
– We may also be exposed to liquidity impacts in the form of deposit
outflows due to changes in customer behaviours driven by
impacts to profitability/wealth, or from reputational concerns
relating to the progress we make towards the HSBC Group’s
climate-related ambitions and targets.
– We may face impacts to our real estate portfolios due to changes
to the climate, the increase in the frequency and severity of
extreme weather events and the chronic shifts in weather
patterns, which could impact both property values and the ability
of borrowers to afford their mortgage payments and lead to
reduced availability or increased cost of insurance, including
insurance that protects property pledged as collateral of HSBC
mortgages, including collateral of the group’s mortgages.
– Operational risk may arise if extreme weather events impact
critical operations and premises.

26 | HSBC Bank plc Annual Report and Accounts 2024

Risk

– We may face regulatory compliance risk resulting from the
increasing pace, breadth and depth of climate-related regulatory
expectations, including on the management of climate risk, and
variations in climate-related reporting standards, requiring
implementation in short timeframes across multiple jurisdictions.
– Conduct risk may arise in association with the increasing demand
for "green" or "sustainable" products where there are differing and
developing standards or taxonomies.
– We may face reputational risks arising from how we decide to
support our customers in high-emitting sectors in their transition to
net zero, the preferences of different stakeholders in relation to
our approach to the transition to net zero, and if we make
insufficient progress in achieving the HSBC Group's climate-
related ambitions and targets.
– We may also be exposed to model risk, as the uncertain and
evolving impacts of climate change as well as data and
methodology limitations present challenges to creating reliable and
accurate model outputs.
– Reputational, regulatory compliance and legal risks may increase
as we make progress towards the HSBC Group’s ESG-related
ambitions and targets, with stakeholders likely to place greater
focus on our actions, such as the development of ESG-related
policies, our disclosures and financing and investment decisions
relating to the HSBC Group’s ESG-related ambitions and targets.
We may face additional risks if we fail to:
– make sufficient progress towards the HSBC Group’s ESG-related
ambitions and targets;
– set adequate plans to execute those plans or adapt those plans to
changes in the external environment;
– manage the risks associated both with meeting and not meeting
the HSBC Group's ESG-related ambitions and targets; and
– meet evolving regulatory expectations and requirements on the
management of ESG risks.
We may face additional risks if we knowingly or unknowingly make
inaccurate, unclear, misleading, or unsubstantiated claims regarding
sustainability to our stakeholders.
We may face climate and broader ESG-related litigation and regulatory
enforcement risks, either directly if stakeholders think that we are not
adequately managing climate and broader ESG-related risks, or
indirectly, if our clients and customers are themselves the subject of
litigation, potentially resulting in the revaluation of their assets.
Requirements, policy objectives, expectations, views or market and
public perceptions and preferences in connection with the transition
to a net zero economy and ESG-related matters may vary by
jurisdiction and stakeholder, particularly in light of the differing
perspectives of stakeholders in different markets, including the UK,
the US, the EU and other markets regarding climate impacts and the
nature of the appropriate responses to climate change. We may be
subject to potentially conflicting approaches to ESG matters in certain
jurisdictions, which may impact our ability to conduct certain business
within those jurisdictions or result in additional regulatory compliance,
reputational, political or litigation risks. For example, our reputation
and client relationships may be damaged as a result of our decision to
participate, or not to participate, in certain projects perceived to be
associated with causing or exacerbating climate change, as well as
any decisions we make to continue to conduct or change our
activities in response to considerations relating to climate change,
including the transition to net zero. These risks may also arise from
divergence in the implementation of ESG, climate policy and financial
regulation across the countries in which we operate, including
initiatives to apply and enforce policy and regulation with
extraterritorial effect.
We may face financial reporting risk in relation to our climate and ESG
disclosures, as data remains of limited quality and consistency,
exposing us to the risk of using incomplete and inaccurate data and
models which could result in sub-optimal decision-making.
Methodologies, data, scenarios and industry standards that we have
used may evolve over time in line with market practice, regulation or
developments in science, where applicable. Any such developments
in methodologies and scenarios, and changes in the availability,
accuracy and verifiability of data over time and our ability to collect
and process such data, exposes us to financial reporting risk in
relation to our climate and ESG disclosures and could result in
revisions to our internal measurement frameworks as well as
reported data going forward, including on financed emissions,
meaning that such data may not be reconcilable or comparable year
on year. We may also have to re-evaluate our progress towards the
HSBC Group’s ESG-related ambitions and targets in the future.
We may also be exposed to nature-related risks beyond climate
change. These risks arise when the provision of ecosystem services,
such as water availability, air quality and soil quality, is compromised,
primarily by the five key drivers of nature loss: changes in land/
freshwater/sea-use; climate change; pollution of air, water and soil;
over-exploitation of natural resources; and invasive alien species. They
can manifest themselves in a variety of ways for the group, HSBC and
their respective customers, including through macroeconomic,
market, credit, reputational, regulatory compliance and legal risks.
Regulation and disclosure requirements in relation to human rights are
increasing. Businesses are expected to be transparent about their
efforts to identify and respond to the risk of adverse human rights
impacts arising from their business activities and relationships. Failure
to manage this risk may negatively impact people and communities,
which in turn may result in reputational, regulatory compliance and
legal risks for the group and HSBC.
Mitigating actions
– A dedicated Environmental Risk Steering Meeting provides
oversight of environmental risk and the risk of greenwashing for
the HSBC Group.
– A dedicated Europe Environmental Risk Forum provides oversight
of environmental risk and the risk of greenwashing for HSBC Bank
plc.
– Our climate risk programme continues to follow the HSBC Group’s
programme to support the development of our climate risk
management capabilities across four key pillars: governance and
risk appetite, risk management, stress testing and scenario
analysis, and disclosures.
– We continue to enhance our approach to managing and mitigating
the risk of greenwashing.
– We implement the HSBC Group’s sustainability risk policies which
form part of the HSBC Group’s broader risk management
framework and are important mechanisms for managing risks,
including delivering the HSBC Group’s net zero ambition. HSBC
Group’s sustainability risk policies focus on mitigating reputational,
credit, legal and other risks related to our customers’
environmental and social impacts.
– We are developing our understanding of nature-related impacts,
risks and opportunities in line with European regulatory
expectations, initially focusing on HSBC Continental Europe.
– In 2024, the HSBC Group focused on its approach to human rights
risk management relating to the services the HSBC Group
provides to business customers and the goods and services the
HSBC Group purchases from third parties.
– The scope of the HSBC Group’s financial reporting risk framework
includes oversight of the accuracy and completeness of climate
and ESG disclosures. Our risk appetite statement aligns to the
HSBC Group risk appetite statement and references our climate
and ESG disclosures. Our internal controls incorporate
requirements for addressing the risk of misstatement in climate
and ESG disclosures. To support this, the HSBC Group have
developed a framework to guide control implementation over
climate and ESG disclosures, which includes areas such as
process and data governance, and risk assessment.

HSBC Bank plc Annual Report and Accounts 2024 | 27

– We continue to engage with our customers, investors and
regulators proactively on the management of climate and ESG
risks. The HSBC Group also engage with initiatives, including the
Climate Financial Risk Forum, Task Force on Climate-related
Financial Disclosures and CDP (formerly the Carbon Disclosure
Project) to help drive best practice for climate risk management.
For further details of our approach to climate risk management, see ‘Climate
risk’ on page 84.
Digitalisation and technological advances risk
Developments in technology and changes to regulations are enabling
new entrants to the industry, particularly with respect to payments.
This challenges us to continue innovating to address evolving
customer requirements, drive efficiency and adapt our products to
attract and retain customers. As a result, we may need to increase
investment in our business to adapt or develop products and services
to respond to our customers’ evolving needs. We also aim to ensure
that new digital capabilities do not weaken our resilience or wider risk
management capabilities.
New technologies such as generative AI, large language models,
blockchain, and quantum computing offer both business opportunities
and potential risks for HSBC. As with the use of all technologies, we
aim to maximise their potential while seeking to ensure a control
environment is in place to help manage the inherent risks.
Mitigating actions
– We continue to monitor this emerging risk and advances in
technology, as well as changes in customer behaviours, to
understand how these may impact our business.
– We assess new technologies to help develop appropriate controls
and maintain resilience.
– We closely monitor and assess financial crime risk and the impact
on payment transparency and wider payment infrastructure.
– We continue to make improvements to our related policies and to
our control framework in order to enhance the end-to-end
management of risks from new technology innovations.
Internally driven
People risk
While the overall trend in employee turnover has been improving,
certain markets in the European region are still facing higher turnover
rates and labour market complexities. We remain exposed to people
risks including challenges to retain, develop and attract leaders and
high-performing employees in key labour markets, the changing skills
requirements of our workforce and compliance with employment
laws and regulations. Failure to manage these risks may have an
impact on the delivery of our strategic objectives. It could also result
in poor customer outcomes or a breach of employment laws and
regulations, which may lead to regulatory sanctions or legal claims.
Mitigating actions
– We seek to promote an inclusive workforce and provide health and
wellbeing support. We continue to build our speak-up culture
through active campaigns.
– We monitor hiring activities and levels of employee attrition, with
each business and function putting in place plans to help ensure
they have effective workforce forecasting to meet business
demands.
– We monitor people risks that could arise due to organisational
restructuring, seeking to ensure that we manage redundancies
sensitively and support impacted employees. We encourage our
people leaders to focus on talent retention at all levels, with an
empathetic mindset and approach, while ensuring the whole
proposition of working at HSBC is well understood.
– Our Future Skills curriculum aims to provide skills that enable
employees and the group to be successful in the future.
– We develop succession plans for key management roles, with
oversight from the group's Executive Committee.
IT systems infrastructure and operational
resilience
We operate in an extensive and complex technology landscape. We
need to remain resilient in order to support customers and the
markets where we operate. Risks arise where technology is not
understood, maintained, or developed appropriately. We remain
committed to investing in the reliability and resilience of our IT
systems and critical services, including the simplification of our
technology estate to reduce complexity and costs. The group does so
in order to help protect its customers, affiliates and counterparties,
and to help ensure they do not receive disruption to services that
could result in reputational, legal and regulatory consequences.
Mitigating actions
– We continue to invest in transforming how software solutions are
developed, delivered and maintained to improve system resilience.
– We continue to upgrade many of our IT systems, simplify our
service provision and replace older IT infrastructure and
applications.
– We manage implementation risks arising from the simplification of
our technology estate continuously through oversight of these
risks at all levels of the programme and reporting up to our Risk
Committee.
Execution risk
In order to deliver our strategic objectives and meet mandatory
regulatory requirements, it is important for the group to maintain a
strong focus on change execution risk. Change execution risk remains
elevated driven by the current scale, complexity and pace of the
group's strategic and regulatory change initiatives. This requires
robust management of significant resource and time sensitive
programmes that are expected to be executed in 2025. The
embedding of structural changes throughout the HSBC Group, arising
as part of the reorganisation of its businesses announced in October
2024, is expected to enable the HSBC Group's strategy to be
executed more efficiently but may elevate the level of change
execution risk across HSBC, including in respect of the group, in the
near to medium term.
Mitigating actions
– Change execution risk is part of our risk taxonomy and control
library so that it is defined, assessed, managed, reported and
overseen in the same way as our other material risks.
– Our change framework provides colleagues across all levels of the
group who deliver on strategic and organisational initiatives with a
common and consistent understanding of their role in achieving
value and outcomes.
– The group's Change Oversight Governance function oversees the
prioritisation, strategic alignment and management of change
execution risk for our Change portfolios and initiatives.
Model risk
Model risk arises whenever business decision making includes
reliance on models. We use models in both financial and non-financial
contexts, as well as in a range of business applications such as
customer selection, product pricing, financial crime transaction
monitoring, creditworthiness evaluation and financial reporting.
Assessing model performance is a continuous undertaking including
both regular monitoring of the model’s performance and more
fundamental reviews of the model construct and data.
We continued to prioritise the redevelopment of internal ratings-based
(‘IRB’), internal model approach (‘IMA’) and internal model methods
(‘IMM’) models, as part of the IRB repair, Basel 3.1 and Fundamental
Review of the Trading Book programmes with a key focus on
enhancing the quality of data used as model inputs. A new suite of
IRB models for local corporates used in France has been approved by
the European Central Bank (‘ECB’) and it is pending approval from the
Prudential Regulation Authority (‘PRA’). A comprehensive
development and application plan of key regulatory capital models has
been submitted to both regulators and has been designed to help
ensure that HSBC meets both the PRA and ECB increased
expectations on model risk management.

28 | HSBC Bank plc Annual Report and Accounts 2024

Risk

Model risk remains a key area of focus given the regulatory scrutiny in
this area, with local regulatory exams taking place across the group
and the PRA’s supervisory statement 1/23 (SS1/23) coming into
effect. This provided detailed principles-based guidance on how
model risk should be managed, and material developments in policy
and model risk controls are progressing in line with the commitments
made with the regulator. Further developments in policy are also
expected from other regulators.
Mitigating actions
– We are investing in the redevelopment of our IRB models used in
our wholesale businesses to enhance our modelling capability and
help ensure we fully meet regulatory expectations for the adoption
of Basel 3.1 requirements.
– We updated our Model Risk Management (‘MRM’) framework to
meet the requirements of the PRA’s SS1/23, with a programme of
work is in progress to implement these changes across our model
landscape.
– We completed a review of model tiering, assessing the materiality
and complexity of all models live in the group and assigning a new
tier which will drive the level of oversight required at model level.
– We introduced a new framework to govern and manage the risks
associated with Deterministic Quantitative Methods. These are
complex and material calculators, which although not technically
models, still present similar risks.
– Model Risk Governance committees at the group, business and
functional levels continue to provide oversight of model risk.
– Model Risk Management works closely with businesses to help
develop IRB/IMM/IMA/IFRS9/stress testing models to meet risk
management, pricing, capital management, and credit risk
measurement needs.
– Additional assurance work is performed by the model risk
governance teams, which act as second lines of defence. The
teams test whether controls implemented by model users comply
with model risk policy and if model risk procedures are adequate.
– Models using AI or generative AI techniques are reviewed by the
relevant risk teams and monitored by the businesses to help
ensure that identified risks have adequate oversight and review. A
framework to manage the range of risks that are generated by
these advanced techniques, and to recognise the multidisciplinary
nature of these risks, has been developed.
Data risk
We use multiple systems and growing quantities of data to support
our customers. Risk arises if data is incorrect, unavailable, misused, or
unprotected. We need to meet external regulatory obligations and
laws that cover data, such as the Basel Committee on Banking
Supervision’s 239 guidelines and the General Data Protection
Regulation (‘GDPR’).
Mitigating actions
– Through our data management framework, we monitor the quality,
availability and security of data that supports our customers and
internal processes. We work towards resolving any identified data
issues in a timely manner.
– We have made improvements to our data policies. We are
implementing an updated control framework to help enhance the
end-to-end management of data risk.
– We aim to protect customer data through our data privacy
framework, which establishes practices, design principles and
guidelines that enable us to demonstrate compliance with data
privacy laws and regulations.
– We seek to continue to modernise our data and analytics
infrastructure through investments in Cloud technology, data
visualisation, machine learning and artificial intelligence.
– We educate our employees on data risk and data management.
We deliver regular mandatory training on how to protect and
manage data appropriately.
Third Party risk
We use third parties to provide a range of goods and services. It is
critical that we seek to have appropriate risk management policies,
processes and practices over the selection, governance and oversight
of third parties and their supply chain, particularly for key activities
that could affect our operational resilience.
Any deficiency in the management of risks associated with our third
parties could affect our ability to support our customers and meet
regulatory expectations.
Mitigating actions
– We continuously seek to improve our control framework for the
use of third-party providers to help ensure risks associated with
these arrangements are understood and managed effectively by
our businesses and functions across the group.
– We continue to enhance the management of our intra-group
arrangements and external third-party arrangements.
– We are implementing the changes required by new regulations as
set by our regulators.

HSBC Bank plc Annual Report and Accounts 2024 | 29

Our material banking and insurance risks
The material risk types associated with our banking and insurance manufacturing operations are described in the following tables.

Description of risks – banking operations
Risks | Arising from | Measurement, monitoring and management of risk
Credit risk (see page 31) |
The risk of financial loss if a customer or counterparty fails to meet an obligation under a contract. | Credit risk arises principally from direct lending, trade finance and leasing business, but also from certain other products such as guarantees and derivatives. | Credit risk is: – measured as the amount that could be lost if a customer or counterparty fails to make repayments; – monitored using various internal risk management measures and within limits approved by individuals within a framework of delegated authorities; and – managed through a risk control framework that outlines clear and consistent policies, principles and guidance for risk managers; and by setting limits and appetite across geographical markets, portfolios or sectors.
Treasury risk (see page 73) |
The risk of having insufficient capital, liquidity or funding resources to meet financial obligations and satisfy regulatory requirements, including the risk of adverse impact on earnings or capital due to structural and transactional foreign exchange exposures and changes in market interest rates, and including the financial risks arising from historic and current provision of pensions and other post employment benefits to staff and their dependants. | Treasury risk arises from changes to the respective resources and risk profiles driven by customer behaviour, management decisions or the external environment. | Treasury risk is: – measured through risk appetite and more granular limits, set to provide an early warning of increasing risk, minimum ratios of relevant regulatory metrics, and metrics to monitor the key risk drivers impacting treasury resources; – monitored and projected against appetites and by using an operating plan based on strategic objectives together with stress and scenario testing; and – managed through control of resources in conjunction with risk profiles, strategic objectives and cashflows.
Market risk (see page 82) |
The risk of an adverse financial impact on trading activities arising from changes in market parameters such as interest rates, foreign exchange rates, asset prices, volatilities, correlations and credit spreads. | Exposure to market risk is separated into two portfolios: – trading portfolios; and – non-trading portfolios. Market risk exposures arising from our insurance operations are discussed on page 90. | Market risk is: – measured using sensitivities, value at risk (‘VaR’) and stress testing, giving a detailed picture of potential gains and losses for a range of market movements and scenarios, as well as tail risks over specified time horizons; – monitored using VaR, stress testing and other measures, including the sensitivity of net interest income and the sensitivity of structural foreign exchange; and – managed using risk limits approved by the group's RMM and the RMM in various global businesses.
Climate risk (see page 84) |
Climate risk relates to the financial and non-financial impacts that may arise as a result of climate change and the move to a net zero economy. | Climate risk can materialise through: – physical risk, which arises from the increased frequency and severity of weather events; – transition risk, which arises from the process of moving to a low-carbon economy; – net zero alignment risk may arise, impacting HSBC Bank plc, where the HSBC Group fails to meet its net zero commitments or to meet external expectations related to net zero; and – the risk of greenwashing, which arises from the act of knowingly or unknowingly making inaccurate, unclear, misleading or unsubstantiated claims regarding sustainability to stakeholders. | Climate risk is: – measured using risk metrics and stress testing; – monitored using risk appetite statements; and – managed through adherence to risk appetite thresholds and through specific policies, enhancements to processes and the development of tools including the development of product market controls to manage the risk of greenwashing.
Resilience risk, including cybersecurity risk (see page 86 and 87) |
Resilience risk is the risk of sustained and significant business disruption from execution, delivery, physical security or safety events, causing the inability to provide critical services to our customers, affiliates, and counterparties. | Resilience risk arises from failures or inadequacies in processes, people, systems or external events. | Resilience risk is: – measured through a range of metrics with defined maximum acceptable impact tolerances, and against our agreed risk appetite; – monitored through oversight of enterprise processes, risks, controls and strategic change programmes; and – managed by continuous monitoring and thematic reviews.

30 | HSBC Bank plc Annual Report and Accounts 2024

Risk

Description of risks – banking operations (continued)
Risks | Arising from | Measurement, monitoring and management of risk
Regulatory compliance risk (see page 87) |
Regulatory compliance risk is the risk associated with breaching our duty to clients and other counterparties, inappropriate market conduct (including unauthorised trading) and breaching related financial services regulatory standards. | Regulatory Compliance risk arises from the failure to observe relevant laws, codes, rules and regulations and can manifest itself in poor market or customer outcomes and lead to fines, penalties and reputational damage to our business. | Regulatory compliance risk is: – measured by reference to risk appetite, identified metrics, incident assessments, regulatory feedback and the judgement and assessment of our regulatory compliance teams; – monitored against the first line of defence risk and control assessments, the results of the monitoring and control assurance activities of the second line of defence functions; and – managed by establishing and communicating appropriate policies and procedures, training employees in them and monitoring activity to help ensure their observance. Proactive risk control and/or remediation work is undertaken where required.
Financial crime risk (see page 88) |  |
Financial crime risk is the risk that the group's products and services will be exploited for criminal activity. This includes fraud, bribery and corruption, tax evasion, sanctions and export control violations, money laundering, terrorist financing and proliferation financing. | Financial crime risk arises from day-to-day banking operations involving customers, third parties and employees. | Financial crime risk is: – measured by reference to risk appetite, identified metrics, incident assessments, regulatory feedback and the judgement of, and assessment by, our regulatory compliance teams; – monitored against the first line of defence risk and control assessments, and the results of the monitoring and control assurance activities of the second line of defence functions; and – managed by establishing and communicating appropriate policies and procedures, training employees in them and monitoring activity to help ensure their observance. Proactive risk control and/or remediation work is undertaken where required.
Model risk (see page 89) |  |
Model risk is the risk of the potential for adverse consequences from model errors or the inappropriate use of modelled outputs to inform business decisions. | Model risk arises in both financial and non- financial contexts whenever business decision making includes reliance on models. | Model risk is: – measured by reference to model performance tracking and the output of detailed technical reviews and regulatory feedback, with key metrics including model review statuses and findings; – monitored against model risk appetite statements, and insight from the independent validations completed by the model risk management team; and – managed by creating and communicating appropriate policies, procedures and guidance, training colleagues in their application, and supervising their adoption to help ensure operational effectiveness.

Our insurance manufacturing subsidiaries are regulated separately
from our banking operations. Risks in our insurance entities are
managed using methodologies and processes that are subject to
g roup oversight. Our insurance operations are also subject to
some of the same risks as our banking operations, and these are
covered by the group’s risk management processes. There are
though specific risks inherent to the insurance operations as noted
below.

Description of risks – insurance manufacturing operations
Risks | Arising from | Measurement, monitoring and management of risk
Financial risk (see page 89) |
For insurance entities, Financial risk includes the risk of not being able to effectively match liabilities arising under insurance contracts with appropriate investments and that the expected sharing of financial performance with policyholders under certain contracts is not possible. | Exposure to financial risks arises from: – market risk affecting the fair values of financial assets or their future cash flows; – credit risk; and – liquidity risk of entities not being able to make payments to policyholders as they fall due. | Financial risk is: – measured for credit risk, in terms of economic capital and the amount that could be lost if a counterparty fails to make repayments; for market risk, in terms of economic capital, internal metrics and fluctuations in key financial variables; and for liquidity risk, in terms of internal metrics including stressed operational cash flow projections; – monitored through a framework of approved limits and delegated authorities; and – managed through a risk control framework that outlines clear and consistent policies, principles and guidance. This includes using product design and asset liability matching and bonus rates.
Insurance risk (see page 89) |
The risk that, over time, the cost of insurance policies written, including claims and benefits, may exceed the total amount of premiums and investment income received. | The cost of claims and benefits can be influenced by many factors, including mortality and morbidity experience, as well as lapse and surrender rates. | Insurance risk is: – measured in terms of life insurance liabilities and economic capital allocated to insurance underwriting risk; – monitored through a framework of approved limits and delegated authorities; and – managed through a risk control framework that outlines clear and consistent policies, principles and guidance. This includes using product design, underwriting, reinsurance and claims-handling procedures.

HSBC Bank plc Annual Report and Accounts 2024 | 31

Credit risk
Credit risk is the risk of financial loss if a customer or counterparty
fails to meet an obligation under a contract. Credit risk arises
principally from direct lending, trade finance and leasing business, but
also from certain other products such as guarantees and derivatives.
Credit risk management
Key developments in 2024
There were no material changes to the policies and practices for the
management of credit risk in 2024. We continued to apply the
requirements of IFRS 9 ‘Financial Instruments’ within the Credit Risk
sub-function.
We actively managed the risks related to macroeconomic
uncertainties, including interest rates, inflation, fiscal and monetary
policy, broader geopolitical uncertainties and conflicts.
For further details, see ‘Top and emerging risks’ on page 23.
Governance and structure
We have established HSBC Group-wide credit risk management and
related IFRS 9 processes. We continue to assess the impact of
economic developments in key markets on specific customers,
customer segments or portfolios. As credit conditions change, we
take mitigating actions, including the revision of risk appetites or limits
and tenors, as appropriate. In addition, we continue to evaluate the
terms under which we provide credit facilities within the context of
individual customer requirements, the quality of the relationship, local
regulatory requirements, market practices and our local market
position.
Credit Risk sub-function
(Audited)
Credit approval authorities are delegated by the Board to the Chief
Executive together with the authority to sub-delegate them. The
Credit risk sub-function in Risk is responsible for the key policies and
processes for managing credit risk, which include formulating credit
policies and risk rating frameworks, guiding the appetite for credit risk
exposures, undertaking independent reviews and objective
assessment of credit risk, and monitoring performance and
management of portfolios.
The principal objectives of our credit risk management are:
– to maintain across HSBC a strong culture of responsible lending
and a robust risk policy and control framework;
– to both partner and challenge global businesses in defining,
implementing and continually re-evaluating our risk appetite under
actual and scenario conditions; and
– to ensure there is independent, expert scrutiny of credit risks, their
costs and their mitigation.
Key risk management processes
IFRS 9 ‘Financial Instruments’ process
The IFRS 9 process comprises three main areas: modelling, data and
forward economic guidance; implementation; and governance.
Modelling, data and forward economic guidance
The HSBC Group has established IFRS 9 modelling and data
processes in various geographies, which are subject to internal model
risk governance including independent review of significant model
developments.
We have a centralised process for generating unbiased and
independent global economic scenarios. Scenarios are subject to a
process of review and challenge by a dedicated central team, and
individually for each region. Each quarter, the scenarios and probability
weights are reviewed and checked for consistency with the economic
conjuncture and current economic and financial risks. These are
subject to final review and approval by senior management in a
forward economic guidance global business impairment committee.
Implementation
A centralised impairment engine performs the expected credit losses
calculation using data, which is subject to a number of validation
checks and enhancements, from a variety of client, finance and risk
systems. Where possible, these checks and processes are performed
in a globally consistent and centralised manner.
Governance
Management review forums are established in order to review and
approve the impairment results. Regional management review forums
have representatives from Credit Risk and Finance. Required
members of the forums are the heads of Wholesale Credit, Market
Risk, and Wealth and Personal Banking Risk, as well as the global
business Chief Financial Officers and the Chief Accounting Officer.
Concentration of exposure
(Audited)
Concentrations of credit risk arise when a number of counterparties or
exposures have comparable economic characteristics, or such
counterparties are engaged in similar activities or operate in the same
geographical areas or industry sectors so that their collective ability to
meet contractual obligations is similarly affected by changes in
economic, political or other conditions. The group uses a number of
controls and measures to minimise undue concentration of exposure
in the group’s portfolios across industry, country and customer
groups. These include portfolio and counterparty limits, approval and
review controls, and stress testing.
Credit quality of financial instruments
(Audited)
Our risk rating system facilitates the internal ratings-based approach
under the Basel framework adopted by the HSBC Group to support
the calculation of our minimum credit regulatory capital requirement.
The five credit quality classifications encompass a range of granular
internal credit rating grades assigned to wholesale and retail
customers, and the external ratings attributed by external agencies to
debt securities.
For debt securities and certain other financial instruments, external
ratings have been aligned to the five quality classifications based upon
the mapping of related Customer Risk Rating (‘CRR’) to external credit
rating.
Wholesale lending
The CRR 10-grade scale summarises a more granular underlying
23-grade scale of obligor PD. All corporate customers are rated using
the 10- or 23-grade scale, depending on the degree of sophistication
of the Basel approach adopted for the exposure.
Each CRR band is associated with an external rating grade by
reference to long-run default rates for that grade, represented by the
average of issuer-weighted historical default rates. This mapping
between internal and external ratings is indicative and may vary over
time.
Retail lending
Retail lending credit quality is based on a 12-month point-in-time
probability-weighted PD.

32 | HSBC Bank plc Annual Report and Accounts 2024

Risk

Credit quality classification
| Sovereign debt securities and bills | Other debt securities and bills | Wholesale lending and derivatives | Retail lending
| External credit rating | External credit rating | Internal credit rating | 12-month Basel probability of default % | Internal credit rating | 12 month probability- weighted PD %
Quality classification 1,2 |  |  |  |  |  |
Strong | BBB and above | A- and above | CRR1 to CRR2 1 | 0 – 0.169 | Band 1 and 2 | 0.000 – 0.500
Good | BBB- to BB | BBB+ to BBB- | CRR3 | 0.170 – 0.740 | Band 3 | 0.501 – 1.500
Satisfactory | BB- to B and unrated | BB+ to B and unrated | CRR4 to CRR5 | 0.741 – 4.914 | Band 4 and 5 | 1.501 – 20.000
Sub-standard | B- to C | B- to C | CRR6 to CRR8 | 4.915 – 99.999 | Band 6 | 20.001 – 99.999
Credit impaired | Default | Default | CRR9 to CRR10 | 100 | Band 7 | 100

1 Customer risk rating (‘CRR’).
2 12-month point-in-time probability-weighted PD.

Quality classification definitions – ‘Strong’ exposures demonstrate a strong capacity to meet financial commitments, with negligible or low probability of default and/or low levels of expected loss. – ‘Good’ exposures require closer monitoring and demonstrate a good capacity to meet financial commitments, with low default risk. – ‘Satisfactory’ exposures require closer monitoring and demonstrate an average-to-fair capacity to meet financial commitments, with moderate default risk. – ‘Sub-standard’ exposures require varying degrees of special attention and default risk is of greater concern. – ‘Credit-impaired’ exposures have been assessed as described in Note 1.2(i) to the financial statements.

Forborne loans and advances
(Audited)
Forbearance measures consist of concessions towards an obligor that
is experiencing or about to experience difficulties in meeting its
financial commitments.
We continue to class loans as forborne when we modify the
contractual payment terms due to having significant concerns about
the borrowers’ ability to meet contractual payments when they were
due. The group definition of forborne captures non-payment-related
concessions, such as covenant waivers.
For details of our policy on forbearance, see Note 1.2(i) in the
financial statements.
Credit quality of forborne loans
For wholesale lending, where payment-related forbearance measures
result in a diminished financial obligation, or if there are other
indicators of impairment, the loan will be classified as credit impaired
if it is not already so classified. All facilities with a customer, including
loans that have not been modified, are considered credit impaired
following the identification of a payment-related forborne loan. For
retail lending, where a material payment-related concession has been
granted, the loan will be classified as credit impaired. In isolation, non-
payment forbearance measures may not result in the loan being
classified as credit impaired unless combined with other indicators of
credit impairment. These are classed as performing forborne loans for
both wholesale and retail lending.
Wholesale and retail lending forborne loans are classified as credit
impaired until there is sufficient evidence to demonstrate a significant
reduction in the risk of non-payment of future cash flows, observed
over a minimum one-year period, and there are no other indicators of
impairment. Any forborne loans not considered credit impaired will
remain forborne for a minimum of two years from the date that credit
impairment no longer applies. For wholesale and retail lending, any
forbearance measures granted on a loan already classed as forborne
results in the customer being classed as credit impaired.
Forborne loans and recognition of expected credit losses
(Audited)
Forborne loans expected credit loss assessments reflect the higher
rates of losses typically experienced with these types of loans such
that they are in stage 2 and stage 3. The higher rates are more
pronounced in unsecured retail lending requiring further
segmentation. For wholesale lending, forborne loans are typically
assessed individually. Credit risk ratings are intrinsic to the
impairment assessments. The individual impairment assessment
takes into account the higher risk of the future non-payment inherent
in forborne loans.
Impairment assessment
(Audited)
For details of our impairment policies on loans and advances and financial
investments see Note 1.2(i) on the financial statements.
Write-off of loans and advances
(Audited)
Under IFRS 9, write-off should occur when there is no reasonable
expectation of recovering further cash flows from the financial asset.
This principle does not prohibit early write-off, which is defined in
local policies to ensure effectiveness in the management of
customers in the collections process.
Unsecured personal facilities, including credit cards, are generally
written off at between 150 and 210 days past due. The standard
period runs until the end of the month in which the account becomes
180 days contractually delinquent. However, in exceptional
circumstances, to avoid unfair customer outcomes, deliver customer
duty or meet regulatory expectations, the period may be extended
further.
For secured facilities, write-off should occur upon repossession of
collateral, receipt of proceeds via settlement, or determination that
recovery of the collateral will not be pursued. Where these assets are
maintained on the balance sheet beyond 60 months of consecutive
delinquency-driven default, the prospect of recovery is reassessed.
Recovery activity, on both secured and unsecured assets, may
continue after write-off.
Any unsecured exposures which are not written off at 180 days past
due ('DPD'), and any secured exposures which are in ‘default’ status
for 60 months or greater but are not written off, are subject to
additional monitoring via the appropriate governance forums.

HSBC Bank plc Annual Report and Accounts 2024 | 33

Credit risk in 2024
At 31 December 2024, gross loans and advances to banks and
customers of £98bn increased by £7.1bn on a reported basis
compared with 31 December 2023. This included total adverse
foreign exchange movements of £2.4bn. Excluding foreign exchange
movements, balance of personal gross loans and advances to
customers increased by £7.5bn, this was mainly driven by the
acquisition of HSBC Private Bank (Suisse). Increase of £1.7bn in
wholesale gross loans and advances to customers (of which £1.3bn
related to acquisition of HSBC Private Bank (Suisse)) and increase in
gross loans and advances to banks by £0.3bn.
At 31 December 2024, the allowance for ECL excluding foreign
exchange movements in relation to gross loans and advances to
customers decreased by £201m from 31 December 2023.
This was attributable to:
– a £207m decrease in wholesale loans and advances to customers,
of which £28m was driven by stages 1 and 2, £191m by stage 3
offset by £12m increase in POCI.
– a £6m increase in personal loans and advances to customers, of
which decrease of £3m was driven by stages 1 and 2 and £9m
increase by stage 3.
The ECL charge for 2024 was £163m, inclusive of recoveries.
Summary of credit risk
The following disclosure presents the gross carrying/nominal amount
of financial instruments to which the impairment require ments in
IFRS 9 are applied and the associated allowance for ECL. The
allowance for ECL decreased from £1,217m at 31 December 2023 to
£925m at 31 December 2024.
The allowance for ECL at 31 December 2024 comprised of £867m
(2023: £1,159m) in respect of assets held at amortised cost; £58m
(2023: £58m) in respect of loans and other credit related
commitments, and financial guarantees; £22m (2023: £23m) in
respect of debt instruments measured at FVOCI.

Summary of financial instruments to which the impairment requirements in IFRS 9 are applied
(Audited) |  |  |  |
| 31 Dec 2024 | 31 Dec 2023
| Gross carrying/ nominal amount | Allowance for ECL 1 | Gross carrying/ nominal amount | Allowance for ECL 1
The group | £m | £m | £m | £m
Loans and advances to customers at amortised cost | 83,524 | (858) | 76,579 | (1,088)
Loans and advances to banks at amortised cost | 14,524 | (3) | 14,372 | (1)
Other financial assets measured at amortised cost | 237,475 | (6) | 273,728 | (70)
– cash and balances at central banks | 119,184 | — | 110,618 | —
– reverse repurchase agreements – non-trading | 53,612 | — | 73,494 | —
– financial investments | 12,226 | — | 8,861 | —
– assets held for sale 2 | 2,591 | (3) | 21,796 | (64)
– prepayments, accrued income and other assets 3 | 49,862 | (3) | 58,959 | (6)
Total gross carrying amount on-balance sheet | 335,523 | (867) | 364,679 | (1,159)
Loans and other credit-related commitments | 121,764 | (49) | 125,616 | (42)
Financial guarantees 4 | 2,876 | (9) | 2,401 | (16)
Total nominal amount off-balance sheet 5 | 124,640 | (58) | 128,017 | (58)
| 460,163 | (925) | 492,696 | (1,217)
| Fair value | Memorandum allowance for ECL 6 | Fair value | Memorandum allowance for ECL 6
| £m | £m | £m | £m
Debt instruments measured at fair value through other comprehensive income ('FVOCI') | 46,649 | (22) | 37,427 | (23)

1 The total ECL is recognised in the loss allowance for the financial asset unless the total ECL exceeds the gross carrying amount of the financial asset, in which
case the ECL is recognised as a provision.
2 For further details on gross carrying amounts and allowances for ECL related to assets held for sale, see ‘Assets held for sale’ on page 39.
3 Includes only those financial instruments that are subject to the impairment requirements of IFRS 9. ‘Prepayments, accrued income and other assets’ as
presented within the consolidated balance sheet on page 117 comprises both financial and non-financial assets, including cash collateral and settlement
accounts. It also includes 'Items in course of collection from other banks' which was presented separately in 2023.
4 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
5 Represents the maximum amount at risk should the contracts be fully drawn upon and client's default.
6 Debt instruments measured at FVOCI continue to be measured at fair value with the allowance for ECL as a memorandum item. Change in ECL is recognised in
‘Change in expected credit losses and other credit impairment charges’ in the income statement.

34 | HSBC Bank plc Annual Report and Accounts 2024

Risk

Summary of financial instruments to which the impairment requirements in IFRS 9 are applied (continued)
(Audited) |  |  |  |
| 31 Dec 2024 | 31 Dec 2023
| Gross carrying/ nominal amount | Allowance for ECL 1 | Gross carrying/ nominal amount | Allowance for ECL 1
The bank | £m | £m | £m | £m
Loans and advances to customers at amortised cost | 31,308 | (392) | 32,800 | (357)
Loans and advances to banks at amortised cost | 12,731 | (1) | 11,670 | —
Other financial assets measured at amortised cost | 165,387 | (3) | 174,304 | (3)
– cash and balances at central banks | 78,250 | — | 61,128 | —
– reverse repurchase agreements – non-trading | 34,394 | — | 56,973 | —
– financial investments | 14,217 | — | 12,029 | —
– assets held for sale 2 | 532 | (3) | 91 | —
– prepayments, accrued income and other assets 3 | 37,994 | — | 44,083 | (3)
Total gross carrying amount on-balance sheet | 209,426 | (396) | 218,774 | (360)
Loans and other credit-related commitments | 34,994 | (21) | 34,799 | (22)
Financial guarantees 4 | 1,143 | (3) | 1,106 | (9)
Total nominal amount off-balance sheet 5 | 36,137 | (24) | 35,905 | (31)
| 245,563 | (420) | 254,679 | (391)
| Fair value | Memorandum allowance for ECL 6 | Fair value | Memorandum allowance for ECL 6
| £m | £m | £m | £m
Debt instruments measured at fair value through other comprehensive income ('FVOCI') | 19,978 | (3) | 16,307 | (5)

1 The total ECL is recognised in the loss allowance for the financial asset unless the total ECL exceeds the gross carrying amount of the financial asset, in which
case the ECL is recognised as a provision.
2 For further details on gross carrying amounts and allowances for ECL related to assets held for sale, see ‘Assets held for sale’ on page 39.
3 Includes only those financial instruments that are subject to the impairment requirements of IFRS 9. ‘Prepayments, accrued income and other assets’ as
presented within the consolidated balance sheet on page 117 comprises both financial and non-financial assets, including cash collateral and settlement
accounts. It also includes 'Items in course of collection from other banks' which was presented separately in 2023.
4 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
5 Represents the maximum amount at risk should the contracts be fully drawn upon and client's default.
6 Debt instruments measured at FVOCI continue to be measured at fair value with the allowance for ECL as a memorandum item. Change in ECL is recognised in
‘Change in expected credit losses and other credit impairment charges’ in the income statement.
The following table provides an overview of the group’s and bank's
credit risk by stage and industry, and the associated ECL coverage.
The financial assets recorded in each stage have the following
characteristics:
– Stage 1: These financial assets are unimpaired and without
significant increase in credit risk on which a 12-month allowance
for ECL is recognised.
– Stage 2: A significant increase in credit risk has been experienced
on these financial assets since initial recognition for which a
lifetime ECL is recognised.
– Stage 3: There is objective evidence of impairment, and the
financial assets are therefore considered to be in default or
otherwise credit impaired on which a lifetime ECL is recognised.
– Purchased or originated credit-impaired ('POCI'): Financial assets
that are purchased or originated at a deep discount are seen to
reflect the incurred credit losses on which a lifetime ECL is
recognised.

HSBC Bank plc Annual Report and Accounts 2024 | 35

Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector at 31 December 2024
(Audited)
| Gross carrying/nominal amount 2 | Allowance for ECL | ECL coverage %
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total
The group | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | % | % | % | % | %
Loans and advances to customers at amortised cost | 75,844 | 5,546 | 2,096 | 38 | 83,524 | (56) | (107) | (677) | (18) | (858) | 0.1 | 1.9 | 32.3 | 47.4 | 1.0
– personal | 18,733 | 955 | 259 | — | 19,947 | (14) | (19) | (79) | — | (112) | 0.1 | 2.0 | 30.5 | — | 0.6
– corporate and commercial | 41,386 | 4,375 | 1,628 | 38 | 47,427 | (35) | (85) | (454) | (18) | (592) | 0.1 | 1.9 | 27.9 | 47.4 | 1.2
– non-bank financial institutions | 15,725 | 216 | 209 | — | 16,150 | (7) | (3) | (144) | — | (154) | — | 1.4 | 68.9 | — | 1.0
Loans and advances to banks at amortised cost | 14,457 | 67 | — | — | 14,524 | (2) | (1) | — | — | (3) | — | 1.5 | — | — | —
Other financial assets measured at amortised cost | 237,375 | 59 | 41 | — | 237,475 | (4) | — | (2) | — | (6) | — | — | 4.9 | — | —
Loan and other credit- related commitments | 116,787 | 4,812 | 162 | 3 | 121,764 | (14) | (24) | (11) | — | (49) | — | 0.5 | 6.8 | — | —
– personal | 1,149 | 4 | 2 | — | 1,155 | — | — | — | — | — | — | — | — | — | —
– corporate and commercial | 58,281 | 3,775 | 146 | 3 | 62,205 | (12) | (22) | (10) | — | (44) | — | 0.6 | 6.8 | — | 0.1
– financial | 57,357 | 1,033 | 14 | — | 58,404 | (2) | (2) | (1) | — | (5) | — | 0.2 | 7.1 | — | —
Financial guarantees 1 | 2,763 | 69 | 44 | — | 2,876 | (2) | (1) | (6) | — | (9) | 0.1 | 1.4 | 13.6 | — | 0.3
– personal | 130 | 1 | — | — | 131 | — | — | — | — | — | — | — | — | — | —
– corporate and commercial | 1,288 | 43 | 43 | — | 1,374 | (2) | (1) | (5) | — | (8) | 0.2 | 2.3 | 11.6 | — | 0.6
– financial | 1,345 | 25 | 1 | — | 1,371 | — | — | (1) | — | (1) | — | — | 100.0 | — | 0.1
At 31 Dec 2024 | 447,226 | 10,553 | 2,343 | 41 | 460,163 | (78) | (133) | (696) | (18) | (925) | — | 1.3 | 29.7 | 43.9 | 0.2

1 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
2 Represents the maximum amount at risk should the contracts be fully drawn upon and client's default.
Unless identified at an earlier stage, all financial assets are deemed to
have suffered a significant increase in credit risk when they are
30 DPD and are transferred from stage 1 to stage 2. The following
disclosure presents the ageing of stage 2 financial assets by those
less than 30 DPD and greater than 30 DPD and therefore presents
those financial assets classified as stage 2 due to ageing (30 DPD)
and those identified at an earlier stage (less than 30 DPD).

Stage 2 days past due analysis at 31 December 2024
(Audited) |  |  |  |  |  |  |  |  |
| Gross carrying amount | Allowance for ECL | ECL coverage %
|  | of which: | of which: |  | of which: | of which: |  | of which: | of which:
| Stage 2 | 1 to 29 DPD 1,2 | 30 and > DPD 1,2 | Stage 2 | 1 to 29 DPD 1,2 | 30 and > DPD 1,2 | Stage 2 | 1 to 29 DPD 1,2 | 30 and > DPD 1,2
The group | £m | £m | £m | £m | £m | £m | % | % | %
Loans and advances to customers at amortised cost | 5,546 | 81 | 48 | (107) | (3) | (1) | 1.9 | 3.7 | 2.1
– personal | 955 | 74 | 19 | (19) | (3) | (1) | 2.0 | 4.1 | 5.3
– corporate and commercial | 4,375 | 6 | 28 | (85) | — | — | 1.9 | — | —
– non-bank financial institutions | 216 | 1 | 1 | (3) | — | — | 1.4 | — | —
Loans and advances to banks at amortised cost | 67 | — | — | (1) | — | — | 1.5 | — | —
Other financial assets measured at amortised cost | 59 | — | — | — | — | — | — | — | —

1 Up-to-date accounts in stage 2 are not shown in amounts presented above.
2 The days past due amounts presented above are on a contractual basis.

36 | HSBC Bank plc Annual Report and Accounts 2024

Risk

Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector at 31 December 2023 (continued)
(Audited)
| Gross carrying/nominal amount 2 | Allowance for ECL | ECL coverage %
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total
The group | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | % | % | % | % | %
Loans and advances to customers at amortised cost | 66,356 | 7,881 | 2,310 | 32 | 76,579 | (75) | (125) | (882) | (6) | (1,088) | 0.1 | 1.6 | 38.2 | 18.8 | 1.4
– personal | 11,447 | 1,370 | 214 | — | 13,031 | (20) | (17) | (71) | — | (108) | 0.2 | 1.2 | 33.2 | — | 0.8
– corporate and commercial | 42,982 | 5,981 | 1,773 | 32 | 50,768 | (48) | (98) | (673) | (6) | (825) | 0.1 | 1.6 | 38.0 | 18.8 | 1.6
– non-bank financial institutions | 11,927 | 530 | 323 | — | 12,780 | (7) | (10) | (138) | — | (155) | 0.1 | 1.9 | 42.7 | — | 1.2
Loans and advances to banks at amortised cost | 14,256 | 116 | — | — | 14,372 | (1) | — | — | — | (1) | — | — | — | — | —
Other financial assets measured at amortised cost | 272,557 | 989 | 182 | — | 273,728 | (5) | (8) | (57) | — | (70) | — | 0.8 | 31.3 | — | —
Loan and other credit- related commitments | 118,242 | 7,197 | 174 | 3 | 125,616 | (13) | (21) | (8) | — | (42) | — | 0.3 | 4.6 | — | —
– personal | 1,246 | 27 | 3 | — | 1,276 | — | — | — | — | — | — | — | — | — | —
– corporate and commercial | 58,225 | 4,815 | 155 | 3 | 63,198 | (11) | (17) | (7) | — | (35) | — | 0.4 | 4.5 | — | 0.1
– financial | 58,771 | 2,355 | 16 | — | 61,142 | (2) | (4) | (1) | — | (7) | — | 0.2 | 6.3 | — | —
Financial guarantees 1 | 2,078 | 251 | 72 | — | 2,401 | (2) | (1) | (13) | — | (16) | 0.1 | 0.4 | 18.1 | — | 0.7
– personal | 32 | 2 | — | — | 34 | — | — | — | — | — | — | — | — | — | —
– corporate and commercial | 1,057 | 68 | 71 | — | 1,196 | (1) | (1) | (13) | — | (15) | 0.1 | 1.5 | 18.3 | — | 1.3
– financial | 989 | 181 | 1 | — | 1,171 | (1) | — | — | — | (1) | 0.1 | — | — | — | 0.1
At 31 Dec 2023 | 473,489 | 16,434 | 2,738 | 35 | 492,696 | (96) | (155) | (960) | (6) | (1,217) | — | 0.9 | 35.1 | 17.1 | 0.2

1 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
2 Represents the maximum amount at risk should the contracts be fully drawn upon and client's default.

Stage 2 days past due analysis at 31 December 2023 (continued)
(Audited) | Gross carrying amount | Allowance for ECL | ECL coverage %
|  | of which: | of which: |  | of which: | of which: |  | of which: | of which:
| Stage 2 | 1 to 29 DPD 1,2 | 30 and > DPD 1,2 | Stage 2 | 1 to 29 DPD 1,2 | 30 and > DPD 1,2 | Stage 2 | 1 to 29 DPD 1,2 | 30 and > DPD 1,2
The group | £m | £m | £m | £m | £m | £m | % | % | %
Loans and advances to customers at amortised cost | 7,881 | 234 | 298 | (125) | (4) | (1) | 1.6 | 1.7 | 0.3
– personal | 1,370 | 183 | 87 | (17) | (3) | (1) | 1.2 | 1.6 | 1.1
– corporate and commercial | 5,981 | 51 | 207 | (98) | (1) | — | 1.6 | 2.0 | —
– non-bank financial institutions | 530 | — | 4 | (10) | — | — | 1.9 | — | —
Loans and advances to banks at amortised cost | 116 | — | 10 | — | — | — | — | — | —
Other financial assets measured at amortised cost | 989 | 14 | 9 | (8) | — | — | 0.8 | — | —

1 Up-to-date accounts in stage 2 are not shown in amounts presented above.
2 The days past due amounts presented above are on a contractual basis.

HSBC Bank plc Annual Report and Accounts 2024 | 37

Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector at 31 December 2024
(Audited)
| Gross carrying/nominal amount 2 | Allowance for ECL | ECL coverage %
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total
The bank | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | % | % | % | % | %
Loans and advances to customers at amortised cost | 29,149 | 1,503 | 619 | 37 | 31,308 | (12) | (24) | (338) | (18) | (392) | — | 1.6 | 54.6 | 48.6 | 1.3
– personal | 2,009 | 586 | 20 | — | 2,615 | (3) | (1) | (2) | — | (6) | 0.1 | 0.2 | 10.0 | — | 0.2
– corporate and commercial | 16,316 | 786 | 384 | 37 | 17,523 | (6) | (21) | (182) | (18) | (227) | — | 2.7 | 47.4 | 48.6 | 1.3
– non-bank financial institutions | 10,824 | 131 | 215 | — | 11,170 | (3) | (2) | (154) | — | (159) | — | 1.5 | 71.6 | — | 1.4
Loans and advances to banks at amortised cost | 12,696 | 35 | — | — | 12,731 | (1) | — | — | — | (1) | — | — | — | — | —
Other financial assets measured at amortised cost | 165,328 | 31 | 28 | — | 165,387 | (1) | — | (2) | — | (3) | — | — | 7.1 | — | —
Loan and other credit-related commitments | 33,110 | 1,827 | 54 | 3 | 34,994 | (6) | (12) | (3) | — | (21) | — | 0.7 | 5.6 | — | 0.1
– personal | 338 | 1 | 2 | — | 341 | — | — | — | — | — | — | — | — | — | —
– corporate and commercial | 16,154 | 817 | 38 | 3 | 17,012 | (5) | (10) | (2) | — | (17) | — | 1.2 | 5.3 | — | 0.1
– financial | 16,618 | 1,009 | 14 | — | 17,641 | (1) | (2) | (1) | — | (4) | — | 0.2 | 7.1 | — | —
Financial guarantees 1 | 1,111 | 24 | 8 | — | 1,143 | — | — | (3) | — | (3) | — | — | 37.5 | — | 0.3
– personal | — | 1 | — | — | 1 | — | — | — | — | — | — | — | — | — | —
– corporate and commercial | 558 | 2 | 7 | — | 567 | — | — | (2) | — | (2) | — | — | 28.6 | — | 0.4
– financial | 553 | 21 | 1 | — | 575 | — | — | (1) | — | (1) | — | — | 100.0 | — | 0.2
At 31 Dec 2024 | 241,394 | 3,420 | 709 | 40 | 245,563 | (20) | (36) | (346) | (18) | (420) | — | 1.1 | 48.8 | 45.0 | 0.2

1 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
2 Represents the maximum amount at risk should the contracts be fully drawn upon and client's default.

Stage 2 days past due analysis at 31 December 2024
(Audited) | Gross carrying amount | Allowance for ECL | ECL coverage %
|  | of which: | of which: |  | of which: | of which: |  | of which: | of which:
| Stage 2 | 1 to 29 DPD 1,2 | 30 and > DPD 1,2 | Stage 2 | 1 to 29 DPD 1,2 | 30 and > DPD 1,2 | Stage 2 | 1 to 29 DPD 1,2 | 30 and > DPD 1,2
The bank | £m | £m | £m | £m | £m | £m | % | % | %
Loans and advances to customers at amortised cost | 1,503 | 19 | 8 | (24) | — | — | 1.6 | — | —
– personal | 586 | 18 | 8 | (1) | — | — | 0.2 | — | —
– corporate and commercial | 786 | 1 | — | (21) | — | — | 2.7 | — | —
– non-bank financial institutions | 131 | — | — | (2) | — | — | 1.5 | — | —
Loans and advances to banks at amortised cost | 35 | — | — | — | — | — | — | — | —
Other financial assets measured at amortised cost | 31 | — | — | — | — | — | — | — | —

1 Up-to-date accounts in stage 2 are not shown in amounts presented above.
2 The days past due amounts presented above are on a contractual basis.

38 | HSBC Bank plc Annual Report and Accounts 2024

Risk

Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector at 31 December 2023 (continued)
(Audited)
| Gross carrying/nominal amount 2 | Allowance for ECL | ECL coverage %
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total
The bank | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | % | % | % | % | %
Loans and advances to customers at amortised cost | 28,806 | 3,229 | 740 | 25 | 32,800 | (15) | (47) | (289) | (6) | (357) | 0.1 | 1.5 | 39.1 | 24.0 | 1.1
– personal | 1,809 | 817 | 13 | — | 2,639 | (2) | (2) | (2) | — | (6) | 0.1 | 0.2 | 15.4 | — | 0.2
– corporate and commercial | 17,611 | 2,026 | 421 | 25 | 20,083 | (10) | (38) | (151) | (6) | (205) | 0.1 | 1.9 | 35.9 | 24.0 | 1.0
– non-bank financial institutions | 9,386 | 386 | 306 | — | 10,078 | (3) | (7) | (136) | — | (146) | — | 1.8 | 44.4 | — | 1.4
Loans and advances to banks at amortised cost | 11,644 | 26 | — | — | 11,670 | — | — | — | — | — | — | — | — | — | —
Other financial assets measured at amortised cost | 174,271 | 24 | 9 | — | 174,304 | — | (1) | (2) | — | (3) | — | 4.2 | 22.2 | — | —
Loan and other credit-related commitments | 30,672 | 4,109 | 15 | 3 | 34,799 | (7) | (14) | (1) | — | (22) | — | 0.3 | 6.7 | — | 0.1
– personal | 330 | 1 | 2 | — | 333 | — | — | — | — | — | — | — | — | — | —
– corporate and commercial | 14,891 | 1,884 | 5 | 3 | 16,783 | (5) | (10) | — | — | (15) | — | 0.5 | — | — | 0.1
– financial | 15,451 | 2,224 | 8 | — | 17,683 | (2) | (4) | (1) | — | (7) | — | 0.2 | 12.5 | — | —
Financial guarantees 1 | 896 | 184 | 26 | — | 1,106 | (1) | — | (8) | — | (9) | 0.1 | — | 30.8 | — | 0.8
– personal | — | 1 | — | — | 1 | — | — | — | — | — | — | — | — | — | —
– corporate and commercial | 518 | 9 | 25 | — | 552 | — | — | (8) | — | (8) | — | — | 32.0 | — | 1.4
– financial | 378 | 174 | 1 | — | 553 | (1) | — | — | — | (1) | 0.3 | — | — | — | 0.2
At 31 Dec 2023 | 246,289 | 7,572 | 790 | 28 | 254,679 | (23) | (62) | (300) | (6) | (391) | — | 0.8 | 38.0 | 21.4 | 0.2

1 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
2 Represents the maximum amount at risk should the contracts be fully drawn upon and clients default.

Stage 2 days past due analysis at 31 December 2023 (continued)
(Audited) | Gross carrying amount | Allowance for ECL | ECL coverage %
|  | of which: | of which: |  | of which: | of which: |  | of which: | of which:
| Stage 2 | 1 to 29 DPD 1,2 | 30 and > DPD 1,2 | Stage 2 | 1 to 29 DPD 1,2 | 30 and > DPD 1,2 | Stage 2 | 1 to 29 DPD 1,2 | 30 and > DPD 1,2
The bank | £m | £m | £m | £m | £m | £m | % | % | %
Loans and advances to customers at amortised cost: | 3,229 | 157 | 78 | (47) | (1) | — | 1.5 | 0.6 | —
– personal | 817 | 157 | 78 | (2) | (1) | — | 0.2 | 0.6 | —
– corporate and commercial | 2,026 | — | — | (38) | — | — | 1.9 | — | —
– non-bank financial institutions | 386 | — | — | (7) | — | — | 1.8 | — | —
Loans and advances to banks at amortised cost | 26 | — | — | — | — | — | — | — | —
Other financial assets measured at amortised cost | 24 | — | — | (1) | — | — | 4.2 | — | —

1 Up-to-date accounts in stage 2 are not shown in amounts presented above.
2 The days past due amounts presented above are on a contractual basis.
Stage 2 decomposition
The following table presents the stage 2 decomposition of gross
carrying amount and allowances for ECL for loans and advances to
customers and banks. It also sets out the reasons why an exposure is
classified as stage 2 and therefore presented as a significant increase
in credit risk at 31 December 2024.
The quantitative classification shows gross carrying amount and
allowances for ECL for which the applicable reporting date probability
of default ('PD') measure exceeds defined quantitative thresholds for
retail and wholesale exposures, as set out in Note 1.2 'Summary of
material accounting policies', on page 127.
The qualitative classification primarily accounts for customer risk
rating (‘CRR’) deterioration, watch-and-worry and retail management
judgemental adjustments.
A summary of our current policies and practices for the significant
increase in credit risk is set out in ‘Summary of material
accounting policies’ on page 127.

HSBC Bank plc Annual Report and Accounts 2024 | 39

Loans and advances to customers and banks 1
| At 31 Dec 2024
| Gross carrying amount | Allowance for ECL
| Loans and advances to customers |  |  | Loans and advances to customers |  |
| Personal | Corporate and commercial | Non-bank financial institutions | Loans and advances to banks at amortised cost | Total stage 2 | Personal | Corporate and commercial | Non-bank financial institutions | Loans and advances to banks at amortised cost | Total stage 2
The group | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
Quantitative | 776 | 2,135 | 126 | 64 | 3,101 | (18) | (37) | (2) | — | (57)
Qualitative | 174 | 2,225 | 89 | 3 | 2,491 | (1) | (48) | (1) | (1) | (51)
of which: forbearance | — | 422 | — | — | 422 | — | (3) | — | — | (3)
30 DPD backstop | 5 | 15 | 1 | — | 21 | — | — | — | — | —
Total stage 2 | 955 | 4,375 | 216 | 67 | 5,613 | (19) | (85) | (3) | (1) | (108)
ECL coverage % | 2.0 | 1.9 | 1.4 | 1.5 | 1.9 |  |  |  |  |
The bank |  |  |  |  |  |  |  |  |  |
Quantitative | 418 | 478 | 86 | 35 | 1,017 | (1) | (9) | (2) | — | (12)
Qualitative | 167 | 308 | 45 | — | 520 | — | (12) | — | — | (12)
of which: forbearance | — | — | — | — | — | — | — | — | — | —
30 DPD backstop | 1 | — | — | — | 1 | — | — | — | — | —
Total stage 2 | 586 | 786 | 131 | 35 | 1,538 | (1) | (21) | (2) | — | (24)
ECL coverage % | 0.2 | 2.7 | 1.5 | — | 1.6 |  |  |  |  |

| At 31 Dec 2023
The group |  |  |  |  |  |  |  |  |  |
Quantitative | 820 | 3,589 | 423 | 91 | 4,923 | (12) | (56) | (8) | — | (76)
Qualitative | 547 | 2,186 | 103 | 15 | 2,851 | (5) | (42) | (2) | — | (49)
of which: forbearance | 3 | 260 | 1 | — | 264 | — | (2) | — | — | (2)
30 DPD backstop | 3 | 206 | 4 | 10 | 223 | — | — | — | — | —
Total stage 2 | 1,370 | 5,981 | 530 | 116 | 7,997 | (17) | (98) | (10) | — | (125)
ECL coverage % | 1.2 | 1.6 | 1.9 | — | 1.6 |  |  |  |  |
The bank |  |  |  |  |  |  |  |  |  |
Quantitative | 321 | 1,801 | 386 | 26 | 2,534 | (1) | (21) | (7) | — | (29)
Qualitative | 496 | 225 | — | — | 721 | (1) | (17) | — | — | (18)
of which: forbearance | 1 | 6 | — | — | 7 | — | — | — | — | —
30 DPD backstop | — | — | — | — | — | — | — | — | — | —
Total stage 2 | 817 | 2,026 | 386 | 26 | 3,255 | (2) | (38) | (7) | — | (47)
ECL coverage % | 0.2 | 1.9 | 1.8 | — | 1.4 |  |  |  |  |

1 Where balances satisfy more than one of the above three criteria for determining a significant increase in credit risk, the corresponding gross carrying amount
and allowance for ECL have been assigned in order of categories presented.
Assets held for sale
(Audited)
At 31 December 2024, the most material balances held for sale arose
from our business in South Africa and our private banking business in
Germany.
Disclosures relating to assets held for sale are provided in the
following credit risk tables, primarily where the disclosure is relevant
to the measurement of these financial assets:
– 'Maximum exposure to credit risk' (page 41); and
– 'Distribution of financial instruments by credit quality at
31 December' (page 58).
Although there was a reclassification on the balance sheet, there was
no separate income statement reclassification. As a result, charges
for changes in expected credit losses and other credit impairment
charges shown in the credit risk disclosures include charges relating
to financial assets classified as 'assets held for sale'.
'Loans and other credit-related commitments', 'financial guarantees'
and ‘Debt instruments measured at fair value through other
comprehensive income’ as reported in credit disclosures, also include
exposures and allowances relating to financial assets classified as
‘assets held for sale’.

Loans and advances to customers and banks measured at amortised cost
(Audited) |  |
| Total gross loans and advances | Allowance for ECL
| £m | £m
As reported | 98,048 | (861)
Reported in ‘Assets held for sale’ | 887 | (3)
At 31 Dec 2024 | 98,935 | (864)
As reported | 90,951 | (1,089)
Reported in ‘Assets held for sale’ | 21,512 | (64)
At 31 Dec 2023 | 112,463 | (1,153)

40 | HSBC Bank plc Annual Report and Accounts 2024

Risk

At 31 December 2024, gross loans and advances of our business in
South Africa were £526 m and the related allowance for ECL was
£3 m. Gross loans and advances of our private banking business in
Germany were £246 m and of our French life insurance business were
£115 m, both with negligible allowance for ECL.
Lending balances held for sale continue to be measured at amortised
cost less allowances for impairment and, therefore, such carrying
amounts may differ from fair value.
These lending balances are part of associated disposal groups that are
measured in their entirety at the lower of carrying amount and fair
value less costs to sell. Any difference between the carrying amount
of these assets and their sales price is part of the overall gain or loss
on the associated disposal group as a whole.
For further details of the carrying amount and the fair value at 31 December
2024 of loans and advances to banks and customers classified as held for
sale, see Note 34 on the financial statements.

Gross loans and allowance for ECL on loans and advances to customers and banks reported in ‘Assets held for sale’
(Audited) |  |  |  |
| South Africa | German Private Banking Business | French Life Insurance Business | Total
Gross carrying amount | £m | £m | £m | £m
Loans and advances to customers at amortised cost | 526 | 246 | — | 772
– personal | — | 104 | — | 104
– corporate and commercial | 467 | 15 | — | 482
– non-bank financial institutions | 59 | 127 | — | 186
Loans and advances to banks at amortised cost | — | — | 115 | 115
At 31 Dec 2024 | 526 | 246 | 115 | 887
Allowance for ECL |  |  |  |
Loans and advances to customers at amortised cost | (3) | — | — | (3)
– personal | — | — | — | —
– corporate and commercial | (3) | — | — | (3)
– non-bank financial institutions | — | — | — | —
Loans and advances to banks at amortised cost | — | — | — | —
At 31 Dec 2024 1 | (3) | — | — | (3)
| Retail banking operations in France | Other Total |
| £m | £m £m |
Loans and advances to customers at amortised cost | 13,319 | 90 | 13,409
– personal | 10,916 | — | 10,916
– corporate and commercial | 2,362 | — | 2,362
– non-bank financial institutions | 41 | 90 | 131
Loans and advances to banks at amortised cost | 8,103 | — | 8,103
At 31 Dec 2023 | 21,422 | 90 | 21,512
Allowance for ECL |  |  |  |
Loans and advances to customers at amortised cost | (64) | — | (64)
– personal | (61) | — | (61)
– corporate and commercial | (3) | — | (3)
– non-bank financial institutions | — | — | —
Loans and advances to banks at amortised cost | — | — | —
At 31 Dec 2023 | (64) | — | (64)

1 The table above does not include disposal completed during 2024 including the sale of our Retail banking operations in France completed on 1 January 2024. For
more details, please refer to business disposals as disclosed in Note 34 on the financial statements.
The table below analyses the amount of ECL charges arising from assets held for sale and assets not held for sale.

Changes in expected credit losses and other credit impairment
(Audited) |  |
| 2024 | 2023
| £m | £m
ECL charges arising from: |  |
– assets held for sale | — | 5
– assets not held for sale | 163 | 164
Year ended 31 Dec | 163 | 169

HSBC Bank plc Annual Report and Accounts 2024 | 41

Credit exposure
Maximum exposure to credit risk
(Audited)
This section provides information on balance sheet items and their offsets as well as loan and other credit-related commitments.

‘Maximum exposure to credit risk’ table The following table presents our maximum exposure before taking account of any collateral held or other credit enhancements (unless such enhancements meet accounting offsetting requirements). The table excludes trading assets, financial assets designated and otherwise mandatorily measured at fair value through profit and loss, and financial investments measured at fair value through other comprehensive income as their carrying amount best represents the net exposure to credit risk. Equity securities are also excluded as they are not subject to credit risk. For the financial assets recognised on the balance sheet, the maximum exposure to credit risk equals their carrying amount and is net of the allowance for ECL. For financial guarantees and other guarantees granted, it is the maximum amount that we would have to pay if the guarantees were called upon. For loan commitments and other credit- related commitments, it is generally the full amount of the committed facilities. The offset in the table relates to amounts where there is a legally enforceable right of offset in the event of counterparty default and where, as a result, there is a net exposure for credit risk purposes.

However, as there is no intention to settle these balances on a net basis under normal circumstances, they do not qualify for net presentation for accounting purposes. No offset has been applied to off-balance sheet collateral. In the case of derivatives, the offset column also includes collateral received in cash and other financial assets.

Other credit risk mitigants
While not disclosed as an offset in the following ‘Maximum exposure
to credit risk’ table, other arrangements are in place that reduce our
maximum exposure to credit risk. These include a charge over
collateral on borrowers’ specific assets, such as residential properties,
collateral held in the form of financial instruments that are not held on
balance sheet and short positions in securities. In addition, for
financial assets held as part of linked insurance/investment contracts
the credit risk is predominantly borne by the policyholder. See Note
28 on the financial statements for further details of collateral in
respect of certain loans and advances and derivatives.
Collateral available to mitigate credit risk is disclosed in the 'Collateral
and other credit enhancement' section on page 67.

Maximum exposure to credit risk |  |  |
(Audited) | 2024 | 2023
| Maximum exposure | Offset | Net | Maximum exposure | Offset | Net
The group | £m | £m | £m | £m | £m | £m
Loans and advances to customers held at amortised cost | 82,666 | (8,897) | 73,769 | 75,491 | (9,322) | 66,169
– personal | 19,835 | — | 19,835 | 12,923 | — | 12,923
– corporate and commercial | 46,835 | (7,942) | 38,893 | 49,943 | (8,570) | 41,373
– non-bank financial institutions | 15,996 | (955) | 15,041 | 12,625 | (752) | 11,873
Loans and advances to banks at amortised cost | 14,521 | — | 14,521 | 14,371 | (6) | 14,365
Other financial assets held at amortised cost | 256,736 | (4,082) | 252,654 | 272,558 | (15,283) | 257,275
– cash and balances at central banks | 119,184 | — | 119,184 | 110,618 | — | 110,618
– reverse repurchase agreements – non-trading | 53,612 | (4,082) | 49,530 | 73,494 | (15,283) | 58,211
– financial investments | 12,226 | — | 12,226 | 8,861 | — | 8,861
– assets held for sale | 21,606 | — | 21,606 | 20,368 | — | 20,368
– prepayments, accrued income and other assets | 50,108 | — | 50,108 | 59,217 | — | 59,217
Derivatives | 198,172 | (195,301) | 2,871 | 174,116 | (173,718) | 398
Total on-balance sheet exposure to credit risk | 552,095 | (208,280) | 343,815 | 536,536 | (198,329) | 338,207
Total off-balance sheet | 150,262 | — | 150,262 | 153,695 | — | 153,695
– financial and other guarantees | 22,305 | — | 22,305 | 21,908 | — | 21,908
– loan and other credit-related commitments | 127,957 | — | 127,957 | 131,787 | — | 131,787
At 31 Dec | 702,357 | (208,280) | 494,077 | 690,231 | (198,329) | 491,902

The bank | £m | £m | £m | £m | £m | £m
Loans and advances to customers held at amortised cost | 30,916 | (8,884) | 22,032 | 32,443 | (9,310) | 23,133
– personal | 2,609 | — | 2,609 | 2,633 | — | 2,633
– corporate and commercial | 17,296 | (7,942) | 9,354 | 19,878 | (8,570) | 11,308
– non-bank financial institutions | 11,011 | (942) | 10,069 | 9,932 | (740) | 9,192
Loans and advances to banks at amortised cost | 12,730 | — | 12,730 | 11,670 | — | 11,670
Other financial assets held at amortised cost | 165,481 | (3,077) | 162,404 | 174,413 | (14,733) | 159,680
– cash and balances at central banks | 78,250 | — | 78,250 | 61,128 | — | 61,128
– reverse repurchase agreements – non-trading | 34,394 | (3,077) | 31,317 | 56,973 | (14,733) | 42,240
– financial investments | 14,217 | — | 14,217 | 12,029 | — | 12,029
– assets held for sale | 527 | — | 527 | 160 | — | 160
– prepayments, accrued income and other assets | 38,093 | — | 38,093 | 44,123 | — | 44,123
Derivatives | 183,658 | (183,655) | 3 | 153,765 | (153,744) | 21
Total on-balance sheet exposure to credit risk | 392,785 | (195,616) | 197,169 | 372,291 | (177,787) | 194,504
Total off-balance sheet | 43,444 | — | 43,444 | 43,740 | — | 43,740
– financial and other guarantees | 7,914 | — | 7,914 | 8,491 | — | 8,491
– loan and other credit-related commitments | 35,530 | — | 35,530 | 35,249 | — | 35,249
At 31 Dec | 436,229 | (195,616) | 240,613 | 416,031 | (177,787) | 238,244

42 | HSBC Bank plc Annual Report and Accounts 2024

Risk

Concentration of exposure
We have a number of businesses with a broad range of products. We
operate in a number of markets with the majority of our exposures in
the UK and France.
For an analysis of:
– financial investments, see Note 15 on the financial statements;
– trading assets, see Note 10 on the financial statements;
– derivatives, see page 69 and Note 14 on the financial statements;
and
– loans and advances by industry sector and by the location of the
principal operations of the lending subsidiary or by the location of
the lending branch, see page 65 for wholesale lending and page 70
for personal lending.
Credit deterioration of financial instruments
(Audited)
A summary of our current policies and practices regarding the identification,
treatment and measurement of stage 1, stage 2, stage 3 (credit impaired)
and POCI financial instruments can be found in Note 1.2(i) on the financial
statements.
Measurement uncertainty and
sensitivity analysis of ECL estimates
(Audited)
The recognition and measurement of ECL involves the use of
judgement and estimation. We form multiple economic scenarios,
apply these forecasts to credit risk models to estimate future credit
losses, and probability weight the results to determine an unbiased
ECL estimate.
Management assessed the current economic environment, reviewed
the latest forecasts and discussed key risks before selecting the
appropriate economic scenarios and their weightings.
The Central scenario is constructed to reflect the latest
macroeconomic expectations. Outer scenarios incorporate the
crystallisation of economic and geopolitical risks.
In the fourth quarter of 2024, the four economic scenarios were
modified to reflect heightened policy uncertainty following the US
election and to overcome any lags in consensus forecasts. An
adjustment factor based on more recent views on expected tariffs
and other policy changes was modelled and then applied to each of
the economic scenarios. The effect was to lower growth expectations
in our major markets, while the impact on inflation and interest rates
was varied.
Management judgemental adjustments are used where modelled
ECL does not fully reflect the identified risks and related uncertainty,
or to capture significant late-breaking events.
At 31 December 2024, there was an overall reduction in management
judgemental adjustments compared with 31 December 2023 as
modelled outcomes better reflected the key risks at 31 December
2024.
Methodology
At 31 December 2024, four scenarios were used to capture the latest
economic expectations and to articulate management’s view of the
range of risks and potential outcomes. Each scenario is updated with
the latest economic forecasts and distributional estimates every
quarter.
Three scenarios, the Upside, Central and Downside, are drawn from
consensus forecasts, market data and distributional estimates of the
entire range of economic outcomes. The fourth scenario, the
Downside 2, represents management’s view of severe downside
risks. Consensus estimates are deployed as conditioning variables in a
proprietary expansion of the scenario variables.
The Central scenario is deemed the ‘most likely’ scenario, and usually
attracts the largest probability weighting. It is created using
consensus forecasts, which is the average of a panel of external
forecasts.
The outer scenarios represent the tails of the distribution and are less
likely to occur. The consensus Upside and Downside scenarios are
created with reference to forecast probability distributions for select
markets that capture economists’ views of the entire range of
economic outcomes. In the later years of these scenarios, projections
revert to long-term consensus trend expectations. Reversion to trend
expectations is done with reference to historically observed quarterly
changes in the values of macroeconomic variables.
The fourth scenario, the Downside 2, represents management’s view
of severe downside risks. It is a globally consistent, narrative-driven
scenario that explores a more extreme economic outcome than those
captured by the consensus scenarios. In this scenario, variables do
not, by design, revert to long-term trend expectations and may
instead explore alternative states of equilibrium, where economic
variables move permanently away from past trends.
The consensus Downside and the consensus Upside scenarios are
each constructed to be cons istent with a 10% probability. The
Downside 2 is calibrated to a 5% probability. The Central scenario is
assigned the remaining 75%. Th is weighting scheme is deemed
appropriate for the unbiased estimation of ECL in most
circumstances. However, management may depart from this
probability-based scenario weighting approach when the economic
outlook and forecasts are determined to be particularly uncertain and
risks are elevated.
For the fourth quarter of 2024, we assessed that consensus forecasts
and distributional estimates did not adequately reflect the
consequences of the US election on the global economic outlook.
Due to the lag in forecasts there was increased uncertainty as to how
tariffs would be implemented and economic policy would change. As
such, scenarios have been constructed using the described standard
methodology and an adjustment – to account for policy changes –
applied. The adjustment was based on a modelled update to the
Central scenario and incorporated a detailed narrative of US economic
policy proposals, including specific tariff rates. The modelled results
were then layered onto the Central scenario, which resulted in
changes to most variables. To quantify the impact, the adjustment
reduces GDP growth in our key markets by an average of 30bps and
50bps respectively, in the first two years of the Central scenario
forecast. Outer scenarios were adjusted in parallel.
The scenario adjustment entailed no change in scenario probability
weights, which remained in-line with our Forward Economic Guidance
('FEG') framework. Uncertainties relating to the policy outlook have
been addressed in the scenarios directly. Measures of dispersion and
uncertainty have remained low but may reflect lags in the consensus
economic forecasting process.
Scenarios produced to calculate ECL are aligned to HSBC’s top and
emerging risks.
Description of economic scenarios
The economic assumptions presented in this section have been
formed by HSBC with reference to external forecasts and estimates,
specifically for the purpose of calculating ECL.
Forecasts may change and remain subject to uncertainty. Outer
scenarios are designed to capture the potential crystallisation of key
economic and financial risks and alternative paths for economic
variables.
In our key markets, the Central scenario incorporates potential
impacts from anticipated changes to US economic and trade policy,
including higher tariffs. The overall effect of the adjustment in our key
markets is to lower GDP and raise inflation and unemployment
estimates, relative to the consensus. Consequently, GDP growth and
unemployment forecasts have deteriorated in the fourth quarter of
2024, compared with the fourth quarter of 2023. With regards to
monetary policy, the expected path for interest rates in many of our
markets is based on market futures. Interest rate expectations have

HSBC Bank plc Annual Report and Accounts 2024 | 43

increased relative to the fourth quarter of 2023, with fewer rate cuts
forecast.
At the end of 2024, risks to the economic outlook included a number
of significant geopolitical issues. Within our Downside scenarios, the
economic consequences from the crystallisation of those risks were
captured by higher commodity and goods prices, the re-acceleration
of inflation, a further rise in interest rates and a global recession.
The scenarios used to calculate ECL are described below.
The consensus Central scenario
HSBC’s Central scenario reflects expectations for slower growth and
high inflation and unemployment across many of our key markets.
Expectations of lower GDP growth during 2025 are driven by the
assumed effects of higher tariffs, which impede trade flows, weaken
consumption and deter investment. In the scenario, the US applies
tariffs on key trading partners. As a direct consequence of tariffs,
trade growth is expected to be lower, which in turn weighs on GDP
growth. Tariffs, or the threat of them, increases uncertainty, leading
to lower confidence and reduced investment.
Higher inflation is expected due to currency depreciation. The higher
projected rates of inflation ensure that central banks are expected to
slow the pace of interest rate reductions.
Global GDP is expected to grow by 2.5% in 2025 in the Central
scenario, and the average rate of global GDP growth is forecast to be
2.6% over the five-year forecast period. This is below the average
growth rate over the five-year period prior to the onset of the
pandemic of 2.9%.
The key features of our Ce ntral scenario are:
– GDP growth rates across the majority of our main markets are
expected to slow in 2025 and 2026, due to the implementation of
higher tariffs as well as underlying structural weaknesses in some
economies. The most significant slowdowns in activity are
expected to occur in the markets with the highest trade
dependence with the US. Elevated interest rates and higher price
levels are also expected to continue to weigh on some consumer
and corporate segments.
– In most markets, unemployment is forecast to rise moderately in
2025 as economic activity slows, although it will remain low by
historical standards.
– Inflation is forecast to increase in several of our main markets, as a
result of tariffs, even as services price inflation is expected to ease
as wage growth moderates. However, inflation largely remains
within central banks’ target ranges from 2025.
– Housing market conditions remain mixed, with more muted price
growth in the UK and France.
– Challenging conditions are also forecast to continue in certain
segments of the commercial property sector in a number of our
key markets. Structural changes to demand in the office segment
in particular have driven lower valuations.
– Policy interest rates in key markets are forecast to gradually
decline further in 2025. In the longer term, they are expected to
remain at a higher level than i n recent years.
– The Brent crude oil price is forecast to average around $69 per
barrel over the projection period.
The Central scenario was created with forecasts available in late
November and reviewed continually until the end of December 2024.
In accordance with HSBC’s scenario framework, a probability weight
of 75% has been assigned to the Central scenario for the UK and
France.

44 | HSBC Bank plc Annual Report and Accounts 2024

Risk

The following tables describe key macroeconomic variables in the consensus Central scenario.

Consensus Central scenario 2025–2029 (as at 4Q24)
| UK | France
GDP (annual average growth rate, %) |  |
2025 | 1.2 | 0.9
2026 | 1.3 | 0.9
2027 | 1.8 | 1.4
2028 | 1.6 | 1.5
2029 | 1.6 | 1.4
5-year average 1 | 1.5 | 1.2
Unemployment rate (%) |  |
2025 | 4.9 | 7.5
2026 | 4.7 | 7.3
2027 | 4.5 | 7.2
2028 | 4.3 | 7.0
2029 | 4.3 | 7.0
5-year average 1 | 4.5 | 7.2
House prices (annual average growth rate, %) |  |
2025 | 1.4 | 2.1
2026 | 3.8 | 4.4
2027 | 4.6 | 4.4
2028 | 3.5 | 3.8
2029 | 2.7 | 3.1
5-year average 1 | 3.2 | 3.6
Inflation (annual average growth rate, %) |  |
2025 | 2.4 | 1.2
2026 | 2.1 | 1.6
2027 | 2.1 | 2.0
2028 | 2.0 | 2.3
2029 | 2.0 | 2.2
5-year average 1 | 2.1 | 1.9
Central bank policy rate (annual average, %) |  |
2025 | 4.2 | 2.1
2026 | 3.9 | 1.8
2027 | 3.8 | 2.0
2028 | 3.7 | 2.0
2029 | 3.7 | 2.1
5-year average 1 | 3.9 | 2.0

1 The five-year average is calculated over a projected period of 20 quarters
from 1Q25 to 4Q29.

Consensus Central scenario 2024–2028 (as at 4Q23)
| UK | France
GDP (annual average growth rate, %) |  |
2024 | 0.3 | 0.8
2025 | 1.2 | 1.5
2026 | 1.7 | 1.6
2027 | 1.6 | 1.5
2028 | 1.6 | 1.5
5-year average 1 | 1.3 | 1.4
Unemployment rate (%) |  |
2024 | 4.7 | 7.5
2025 | 4.6 | 7.3
2026 | 4.3 | 7.0
2027 | 4.2 | 6.8
2028 | 4.2 | 6.8
5-year average 1 | 4.4 | 7.1
House prices (annual average growth rate, %) |  |
2024 | (5.5) | (1.0)
2025 | 0.1 | 2.4
2026 | 3.5 | 4.0
2027 | 3.0 | 4.4
2028 | 3.0 | 4.0
5-year average 1 | 0.8 | 2.8
Inflation (annual average growth rate, %) |  |
2024 | 3.2 | 2.7
2025 | 2.2 | 1.8
2026 | 2.2 | 1.7
2027 | 2.3 | 1.9
2028 | 2.3 | 2.1
5-year average 1 | 2.4 | 2.0
Central bank policy rate (annual average, %) |  |
2024 | 5.0 | 3.6
2025 | 4.3 | 2.8
2026 | 3.9 | 2.6
2027 | 3.8 | 2.6
2028 | 3.7 | 2.7
5-year average 1 | 4.1 | 2.9

1 The five-year average is calculated over a projected period of 20 quarters
from 1Q24 to 4Q28.

HSBC Bank plc Annual Report and Accounts 2024 | 45

The graphs compare the Central scenario at the year end 2023 with
economic expectations at the end of 2024.
GDP growth: Comparison of Central scenarios
UK

4Q23 Central 5Y Average: 1.3%
4Q24 Central 5Y Average: 1.5%
Note: Real GDP shown as year-on-year percentage change.
France
4Q23 Central 5Y Average: 1.4%
4Q24 Central 5Y Average: 1.2%

Note: Real GDP shown as year-on-year percentage change.
The consensus Upside scenario
Compared with the Central scenario, the consensus Upside scenario
features stronger economic activity in the near term, before
converging to long-run trend expectations. It also incorporates a faster
fall in the rate of inflation than in the Central scenario.
The scenario is consistent with a number of key upside risk themes.
These include only limited increases in tariffs and a faster fall in the
rate of inflation that allows central banks to reduce interest rates
more quickly. The Upside scenario would also be consistent with a
de-escalation in geopolitical tensions, where the Russia-Ukraine war
moves quickly towards a conclusion, tensions in the Middle East
subside and there is an improvement in the US-China relations
become more cordial.
The following tables describe key macroeconomic variables in the
consensus Upside scenario.

Consensus Upside scenario 2025-2029 (as at 4Q24)
| UK | France
GDP level (%, start-to-peak)1 | 11.3 | (4Q29) | 8.9 | (4Q29)
Unemployment rate (%, min)2 | 3.5 | (3Q26) | 6.4 | (4Q26)
House price index (%, start-to-peak)1 | 24.2 | (4Q29) | 22.8 | (4Q29)
Inflation rate (YoY % change, min)3 | 1.4 | (1Q26) | 0.1 | (4Q25)
Central bank policy rate (%, min)2 | 3.6 | (4Q25) | 1.4 | (3Q25)

1 Cumulative change to the highest level of the series during the 20-quarter
projection.
2 Lowest projected unemployment or policy interest rate in the scenario.
3 Lowest projected year-on-year percentage change in inflation in the
scenario.

Consensus Upside scenario 2024-2028 (as at 4Q23)
| UK | France
GDP level (%, start-to-peak)1 | 10.8 | (4Q28) | 10.4 | (4Q28)
Unemployment rate (%, min)2 | 3.1 | (4Q24) | 6.2 | (4Q25)
House price index (%, start-to-peak)1 | 13.0 | (4Q28) | 19.6 | (4Q28)
Inflation rate (YoY % change, min)3 | 1.3 | (2Q25) | 1.5 | (3Q24)
Central bank policy rate (%, min)2 | 3.7 | (3Q28) | 2.6 | (2Q26)

1 Cumulative change to the highest level of the series during the 20-quarter
projection.
2 Lowest projected unemployment or policy interest rate in the scenario.
3 Lowest projected year-on-year percentage change in inflation in the
scenario.
Downside scenarios
Downside scenarios explore the intensification and crystallisation of a
number of key economic and financial risks. These include a more
material escalation of tariff policies and geopolitical tensions, which
disrupt key commodity and goods markets, causing inflation and
interest rates to rise, and creating a global recession.
As the geopolitical environment remains volatile and complex, risks
include:
– an increase in protectionist policies, as countries that impose
tariffs are met with retaliatory actions. This lowers investment,
complicates international supply chains, and impedes trade flows;
– broader and more prolonged conflicts in the Middle East and
between Russia and Ukraine, which further disrupt energy and
food supplies; and
– continued differences between the US and China, which could
affect economic confidence, and the global goods trade and supply
chains for critical technologies.
High inflation and higher interest rates also remain key risks. Should
tariffs increase significantly and geopolitical tensions escalate, energy
and food prices could rise and increase pressure on household
budgets and firms’ costs. Higher inflation and labour supply shortages
could also trigger a wage-price spiral and put sustained pressure on
household incomes and corporate margins. In turn, it raises the risk
that central banks react by raising interest rates, leading to higher
defaults and an economic recession.

46 | HSBC Bank plc Annual Report and Accounts 2024

Risk

The consensus Downside scenario
In the consensus Downside scenario, economic activity is weaker
compared with the Central scenario. In this scenario, GDP declines,
unemployment rates rise, and asset prices fall. The scenario features
an increase in tariffs over and above those assumed in the Central
scenario and an escalation of geopolitical tensions, which causes a
rise in inflation, as supply chain constraints intensify, and energy
prices rise. The scenario also features a temporary increase in interest
rates above the Central scenario, before the effects of weaker
consumption demand begin to dominate and commodity prices and
inflation fall again.
The following tables describe key macroeconomic variables in the
consensus Downside scenario.

Consensus Downside scenario 2025-2029 (as at 4Q24)
| UK | France
GDP level (%, start-to-trough)1 | (1.0) | (4Q26) | (0.6) | (1Q26)
Unemployment rate (%, max)2 | 6.1 | (4Q25) | 8.3 | (3Q25)
House price index (%, start-to-trough)1 | (4.5) | (1Q26) | (0.3) | (1Q25)
Inflation rate (YoY % change, max)3 | 3.4 | (4Q25) | 2.6 | (3Q25)
Central bank policy rate (%, max)2 | 5.0 | (1Q25) | 3.2 | (1Q25)

1 Cumulative change to the lowest level of the series during the 20-quarter
projection.
2 The highest projected unemployment or policy interest rate in the scenario.
3 The highest projected year-on-year percentage change in inflation in the
scenario.

Consensus Downside scenario 2024-2028 (as at 4Q23)
| UK | France
GDP level (%, start-to-trough)1 | (1.0) | (2Q25) | (0.3) | (2Q24)
Unemployment rate (%, max)2 | 6.4 | (1Q25) | 8.5 | (4Q24)
House price index (%, start-to-trough)1 | (12.0) | (2Q25) | (1.2) | (3Q24)
Inflation rate (YoY % change, max)3 | 4.1 | (1Q24) | 3.8 | (2Q24)
Central bank policy rate (%, max)2 | 5.7 | (1Q24) | 4.2 | (1Q24)

1 Cumulative change to the lowest level of the series during the 20-quarter
projection.
2 The highest projected unemployment or policy interest rate in the scenario.
3 The highest projected year-on-year percentage change in inflation in the
scenario.
Downside 2 scenario
The Downside 2 scenario features a deep global recession and
reflects management’s view of the tail of the economic distribution. It
incorporates the crystallisation of a number of risks simultaneously,
including significant increases in tariffs globally. A further escalation of
geopolitical crises is also assumed, which creates severe supply
disruptions to goods and energy markets.
In the scenario, as inflation surges and central banks tighten monetary
policy further, consumer and business confidence falls. However, this
impulse is assumed to be short-lived, as recession takes hold, causing
a fall in demand, leading commodity prices to correct sharply and
global price inflation to fall.
The following tables describe key macroeconomic variables in the
Downside 2 scenario.

Downside 2 scenario 2025-2029 (as at 4Q24)
| UK | France
GDP level (%, start-to-trough)1 | (9.1) | (2Q26) | (7.9) | (2Q26)
Unemployment rate (%, max)2 | 8.4 | (2Q26) | 10.4 | (1Q27)
House price index (%, start-to-trough)1 | (27.2) | (4Q26) | (14.0) | (2Q27)
Inflation rate (YoY % change, max)3 | 10.1 | (2Q25) | 7.6 | (2Q25)
Central bank policy rate (%, max)2 | 5.5 | (1Q25) | 4.2 | (1Q25)

1 Cumulative change to the lowest level of the series during the 20-quarter
projection.
2 The highest projected unemployment or policy interest rate in the scenario.
3 The highest projected year-on-year percentage change in inflation in the
scenario.

Downside 2 scenario 2024-2028 (as at 4Q23)
| UK | France
GDP level (%, start-to-trough)1 | (8.8) | (2Q25) | (6.6) | (1Q25)
Unemployment rate (%, max)2 | 8.4 | (2Q25) | 10.2 | (4Q25)
House price index (%, start-to-trough)1 | (30.2) | (4Q25) | (14.5) | (2Q26)
Inflation rate (YoY % change, max)3 | 10.1 | (2Q24) | 8.6 | (2Q24)
Central bank policy rate (%, max)2 | 6.0 | (1Q24) | 5.2 | (1Q24)

1 Cumulative change to the lowest level of the series during the 20-quarter
projection.
2 The highest projected unemployment or policy interest rate in the scenario.
3 The highest projected year-on-year percentage change in inflation in the
scenario.
The following graphs show the historical and forecasted GDP growth
rate for the various economic scenarios in the UK and France.
UK

France

Scenario weighting
Scenario weightings are calibrated to probabilities that are determined
with reference to consensus probability distributions. Management
may then choose to vary weights if they assess that the calibration
lags more recent events or does not reflect their view of the
distribution of economic and geopolitical risk. Management’s view of
the scenarios and the probability distribution takes into consideration
the relationship of the consensus scenario to both internal and
external assessments of risk.
In assessing the economic environment and the level of risk and
uncertainty, management has considered both global and country-
specific factors.
In the fourth quarter of 2024, key considerations around uncertainty
focused on:
– US import tariffs and bilateral tariff escalations globally, and the
impact to trade and manufacturing supply chains;

HSBC Bank plc Annual Report and Accounts 2024 | 47

– the implications of changes to monetary policy expectations on
growth and employment;
– estimation and forecast uncertainty for UK unemployment given
ongoing methodology updates at the Office for National Statistics;
and
– risks of an asset price correction given elevated valuations across
different asset classes.
Although these factors are significant, management assessed that
following the tariff-based adjustment, the Central scenario reflected
the most likely future economic outcome and that outer scenarios
were sufficiently well calibrated to address the crystallisation of more
severe risks.
This led management to assign scenario probabilities that are aligned
to the standard scenario probability calibration framework in all major
markets. The Central scenario was assigned a 75% probability
weighting. The consensus Upside scenario was assigned a 10%
weighting, and the consensus Downside scenario was given 10%.
The Downside 2 was assigned a 5% weighting.
In the UK, tariffs have a small direct impact on GDP growth forecasts
in the Central scenario, but indirect effects would be larger through
weaker trade and lower global growth. The outlook also remains weak
given the only partially offsetting impacts from measures announced
in the 2024-2025 Budget and higher US interest rates.
In France, recent domestic political uncertainty is the main factor
weighing on reduced growth prospects, and as with other European
markets, there are also assumed to be negative impacts stemming
from higher US tariffs.
The following tables describe the probabilities assigned in each
scenario.

Scenario weightings, %
| Standard weights | UK | France
4Q24 |  |  |
Upside scenario | 10 | 10 | 10
Central scenario | 75 | 75 | 75
Downside scenario | 10 | 10 | 10
Downside 2 scenario | 5 | 5 | 5
4Q23 |  |  |
Upside scenario | 10 | 10 | 10
Central scenario | 75 | 75 | 75
Downside scenario | 10 | 10 | 10
Downside 2 scenario | 5 | 5 | 5

At 31 December 2024, the consensus Upside and Central scenarios
for all markets had a combined weighting of 85%, unchanged as at
31 December 2023. Weightings assigned to downside scenarios also
remained unchanged.
Critical estimates and judgements
The calculation of ECL under IFRS 9 involved significant judgements,
assumptions and estimates at 31 December 2024. These included:
– the selection and configuration of economic scenarios, given the
constant change in economic conditions and distribution of
economic risks; and
– estimating the economic effects of those scenarios on ECL, where
similar observable historical conditions cannot be captured by the
credit risk models.
How economic scenarios are reflected in ECL
calculations
Models are used to reflect economic scenarios in ECL estimates. As
described above, modelled assumptions and linkages based on
historical information could not alone produce relevant information
under the conditions experienced in 2024, and management
judgemental adjustments were still required to support modelled
outcomes.
We have developed globally consistent methodologies for the
application of forward economic guidance into the calculation of ECL
for wholesale and retail credit risk. These standard approaches are
described below, followed by the management judgemental
adjustments made, including those to reflect the circumstances
experienced in 2024.
For our wholesale portfolios, a global methodology is used for the
estimation of the term structure of PD and loss given default (‘LGD’).
For PDs, we consider the correlation of forward economic guidance to
default rates for a particular industry in a country. For LGD
calculations, we consider the correlation of forward economic
guidance to collateral values and realisation rates for a particular
country and industry. PDs and LGDs are estimated for the entire term
structure of each instrument.
For impaired loans, allowance for ECL estimates are derived based on
discounted cash flow (‘DCF’) calculations for internal forward-looking
scenarios specific to individual borrower circumstances (see page
131). Probability-weighted outcomes are applied, and depending on
materiality and status of the borrower, the number of scenarios
considered will change. Where relevant for the case being assessed,
forward economic guidance is incorporated as part of these scenarios.
LGD-driven proxy and modelled estimates are used for certain less
material cases.
For our retail portfolios, the models are predominantly based on
historical observations and correlations with default rates and
collateral values.
For PD, the impact of economic scenarios is modelled for each
portfolio, using historical relationships between default rates and
macroeconomic variables. These are included within IFRS 9 ECL
estimates using either economic response models or models that
contain internal, external and macroeconomic variables. The
macroeconomic impact on PD is modelled over the period equal to
the remaining maturity of the assets.
For LGD, the impact is modelled for mortgage portfolios by
forecasting future loan-to-value profiles for the remaining maturity of
the asset, using national level house price index forecasts and
applying the corresponding LGD expectation relative to the updated
forecast collateral values.
For unsecured retail portfolios historically observed recovery rates are
leveraged to measure loss. For both mortgages and unsecured, a
limited number of portfolios utilise a macroeconomic dependent
stressed LGD applied to the Downside 2 scenario.
Management judgemental adjustments
In the context of IFRS 9, management judgemental adjustments are
typically short-term increases or decreases to the modelled allowance
for ECL at either a customer, segment or portfolio level where
management believes allowances do not sufficiently reflect the credit
risk/expected credit losses at the reporting date. These can relate to
risks or uncertainties that are not reflected in the models and/or to
any late-breaking events with significant uncertainty, subject to
management review and challenge.
This includes refining model inputs and outputs and using
adjustments to ECL based on management judgement and
quantitative analysis for impacts that are difficult to model.
The effects of management judgemental adjustments are considered
for both balances and allowance for ECL when determining whether
or not a significant increase in credit risk has occurred and are
allocated to a stage where appropriate. This is in accordance with the
internal adjustments framework.
Management judgemental adjustments are reviewed under the
governance process for IFRS 9 (as detailed in the section ‘Credit risk
management’ on page 31). Review and challenge focuses on the
rationale and quantum of the adjustments with a further review
carried out by the second line of defence where significant. For some
management judgemental adjustments, internal frameworks establish
the conditions under which these adjustments should no longer be
required and as such are considered as part of the governance

48 | HSBC Bank plc Annual Report and Accounts 2024

Risk

process. This internal governance process allows management
judgemental adjustments to be reviewed regularly and, where
possible, to reduce the reliance on these through model recalibration
or redevelopment, as appropriate.
The drivers of management judgemental adjustments continue to
evolve with the economic environment and as new risks emerge.
In addition to management judgemental adjustments there are also
'Other adjustments', which are made to address process limitations
and data/model deficiencies and can also include, where appropriate,
the impact of new models where governance has sufficiently
progressed to allow an accurate estimate of ECL allowance to be
incorporated into the total reported ECL.
'Management judgemental adjustments' and 'Other adjustments'
constitute the total value of adjustments to modelled allowance for
ECL. For the wholesale portfolio, defaulted exposures are assessed
individually, and management judgemental adjustments are made
only to the performing portfolio.
Management judgemental adjustments made in estimating the
s cenario-weighted reported allowance for ECL at 31 December 2024
are set out in the following table.

Management judgemental adjustments to ECL at 31 December 2024 1
| Retail | Wholesale 2 | Total
| £m | £m | £m
Modelled ECL (A)3 | 125 | 154 | 279
Banks, sovereigns, government entities and low-risk counterparties | — | — | —
Corporate lending adjustments | — | 25 | 25
Inflation related adjustments | — | — | —
Other credit judgements | 9 | (13) | (4)
Total management judgemental adjustments (B)4 | 9 | 12 | 21
Other adjustments (C)5 | (15) | — | (15)
Final ECL (A+B+C)6 | 119 | 166 | 285

Management judgemental adjustments to ECL at 31 December 2023 1,7
| Retail | Wholesale 2 | Total
| £m | £m | £m
Modelled ECL (A)3 | 173 | 246 | 419
Banks, sovereigns, government entities and low-risk counterparties | — | — | —
Corporate lending adjustments | — | 10 | 10
Inflation related adjustments | 8 | — | 8
Other credit judgements | 9 | (63) | (54)
Total management judgemental adjustments (B)4 | 17 | (53) | (36)
Other adjustments (C)5 | (14) | — | (14)
Final ECL (A+B+C)6 | 176 | 193 | 369

1 Management judgemental adjustments presented in the table reflect
increases or (decreases) to allowance for ECL, respectively.
2 The wholesale portfolio corresponds to adjustments to the performing
portfolio (stage 1 and stage 2).
3(A) refers to probability-weighted allowance for ECL before any adjustments
are applied.
4(B) refers to adjustments that are applied where management believes
allowance for ECL does not sufficiently reflect the credit risk/expected credit
loses of any given portfolio at the reporting date. These can relate to risks or
uncertainties that are not reflected in the model and/or to any late-breaking
events.
5(C) refers to adjustments to allowance for ECL made to address process
limitations and data/model deficiencies and can also include, where
appropriate, the impact of new models where governance has sufficiently
progressed to allow an accurate estimate of ECL allowance to be
incorporated into the total reported ECL.
6 As presented within our internal credit risk governance (see page 31).
7 31 December 2023 includes the retail banking operations in France.
Management judgemental adjustments at 31 December 2024 were
an increase to allowance for ECL of £21 m (31 December 2023: £36 m
decrease).
At 31 December 2024, wholesale management judgemental
adjustments were an increase to allowance for E CL of £12 m
(31 December 2023: £53 m decrease). Corporate lending adjustments
were made to reflect heightened uncertainty to exposures in
automotive and industrial sectors in Germany. Other credit
judgements were due to reduction in BAU adjustments as a result of
modelled outcomes better reflecting the key risks at 31 December
2024.
At 31 December 2024, retail management judgemental adjustments
were an immaterial increase to allowance for ECL £9 m (31 December
2023: £17 m increase). Other adjustments are £15 m decrease to
allowance for ECL as of 31 December 2024 (31 December 2023:
£14 m decrease). These adjustments are due to model limitations and
country-specific risks related to future macroeconomic conditions not
fully captured by the modelled outpu t.
Economic scenarios sensitivity analysis of
ECL estimates
Management considered the sensitivity of the ECL outcome against
the economic forecasts as part of the ECL governance process by
recalculating the allowance for ECL under each scenario described
above for selected portfolios, applying a 100% weighting to each
scenario in turn. The weighting is reflected in both the determination
of a significant increase in credit risk and the measurement of the
resulting allowances.
The allowance for ECL calculated for the Upside and Downside
scenarios should not be taken to represent the upper and lower limits
of possible ECL outcomes. The impact of defaults that might occur in
the future under different economic scenarios is captured by
recalculating allowances for loans at the balance sheet date.
There is a particularly high degree of estimation uncertainty in
numbers representing tail risk scenarios when assigned a 100%
weighting.
For wholesale credit risk exposures, the sensitivity analysis excludes
allowance for ECL and financial instruments related to defaulted
(stage 3) obligors. The measurement of stage 3 ECL is relatively more
sensitive to credit factors specific to the obligor than future economic
scenarios, and therefore the effects of macroeconomic factors are not
necessarily the key consideration when performing individual
assessment of allowances for obligors in default. Loans to defaulted
obligors are a small portion of the overall wholesale lending exposure,
even if representing the majority of the allowance for ECL. Due to the
range and specificity of the credit factors to which the ECL is
sensitive, it is not possible to provide a meaningful alternative
sensitivity analysis for a consistent set of risks across all defaulted
obligors.
For retail mortgage exposures the sensitivity analysis includes
allowance for ECL for defaulted obligors of loans and advances. This
is because the retail ECL for secured mortgage portfolios, including
loans in all stages, is sensitive to macroeconomic variables.
Wholesale and retail sensitivity
The wholesale and retail sensitivity tables present the 100%
weighted results. These exclude portfolios held by the insurance
business and small portfolios, and as such cannot be directly
compared with personal and wholesale lending presented in other
credit risk tables. In both the wholesale and retail analysis, the
comparative period results for Downside 2 scenarios are also not
directly comparable with the current period, because they reflect
different risks relative to the consensus scenarios for the period end.
The wholesale and retail sensitivity analysis are stated inclusive of
management judgmental adjustments, as appropriate to each
scenario.
For both retail and wholesale portfolios, the gross carrying amount of
financial instruments are the same under each scenario. For
exposures with similar risk profile and product characteristics, the
sensitivity impact is therefore largely the result of changes in
macroeconomic assumptions.

HSBC Bank plc Annual Report and Accounts 2024 | 49

Wholesale analysis

IFRS 9 ECL sensitivity to future economic conditions 1,2,3
| UK | France
| £m | £m
At 31 December 2024 |  |
Reported allowance for ECL | 39 | 64
Consensus Central scenario allowance for ECL | 35 | 63
Consensus Upside scenario allowance for ECL | 24 | 55
Consensus Downside scenario allowance for ECL | 49 | 76
Downside 2 scenario allowance for ECL | 284 | 99
Reported gross carrying amount | 139,207 | 145,484

IFRS 9 ECL sensitivity to future economic conditions
| UK | France
| £m | £m
At 31 December 2023 |  |
Reported allowance for ECL | 67 | 78
Consensus Central scenario allowance for ECL | 55 | 81
Consensus Upside scenario allowance for ECL | 38 | 72
Consensus Downside scenario allowance for ECL | 87 | 99
Downside 2 scenario allowance for ECL | 276 | 112
Reported gross carrying amount | 144,215 | 142,389

1 Allowance for ECL sensitivity includes off-balance sheet financial
instruments. These are subject to significant measurement uncertainty.
2 Includes low credit-risk financial instruments such as debt instruments at
FVOCI, which have high carrying amounts but low ECL under all the above
scenarios.
3 Excludes defaulted obligors. For a detailed breakdown of performing and
non-performing wholesale portfolio exposures, see page 65.
Retail analysis

IFRS 9 ECL sensitivity to future economic conditions 1
| UK | France
| £m | £m
At 31 December 2024 |  |
Reported allowance for ECL | 2 | —
Consensus Central scenario allowance for ECL | 2 | —
Consensus Upside scenario allowance for ECL | 2 | —
Consensus Downside scenario allowance for ECL | 2 | —
Downside 2 scenario allowance for ECL | 4 | —
Reported gross carrying amount | 1,979 | —

IFRS 9 ECL sensitivity to future economic conditions 1
| UK | France 2
| £m | £m
At 31 December 2023 |  |
Reported allowance for ECL | 2 | 74
Consensus Central scenario allowance for ECL | 2 | 74
Consensus Upside scenario allowance for ECL | 2 | 72
Consensus Downside scenario allowance for ECL | 3 | 75
Downside 2 scenario allowance for ECL | 4 | 78
Reported gross carrying amount | 1,925 | 17,187

1 Allowance for ECL sensitivities exclude portfolios utilising less complex
modelling approaches.
2 Included balances and allowance for ECL which have been reclassified from
‘loans and advances to customers’ to ‘assets held for sale’ in the balance
sheet at 31 December 2023. This also included any balances and allowance
for ECL which continue to be reported as personal lending in ‘loans and
advances to customers’ that are in accordance with the basis of inclusion
for retail sensitivity analysis. Disposal of our Retail banking operations in
France completed on 1 January 2024.

Reconciliation of changes in gross carrying/nominal amount and allowances
for loans and advances to banks and customers including loan commitments
and financial guarantees
The following disclosure provides a reconciliation by stage of the
group’s gross carrying/nominal amount and allowances for loans and
advances to banks and customers, including loan commitments and
financial guarantees.
In addition, a reconciliation by stage of the group’s gross carrying
amount and allowances for loans and advances to banks and
customers and a reconciliation by stage of the group’s nominal
amount and allowances for loan commitments and financial
guarantees were included in this section following the adoption of the
recommendations of the Disclosures on Expected Credit Losses
('DECL') Taskforce's third report.
Movements are calculated on a quarterly basis and therefore fully
capture stage movements between quarters. If movements were
calculated on a year-to-date basis they would only reflect the opening
and closing position of the financial instrument.
The transfers of financial instruments represent the impact of stage
transfers upon the gross carrying/nominal amount and associated
allowance for ECL. The net remeasurement of ECL arising from
transfer of stage represents the increase or decrease due to these
transfers, for example, moving from a 12-month (stage 1) to a lifetime
(stage 2) ECL measurement basis. Net remeasurement excludes the
underlying customer risk rating (‘CRR’)/PD movements of the financial
instruments transferring stage. This is captured, along with other
credit quality movements in the ‘changes in risk parameters – credit
quality’ line item.
Changes in 'Net new and further lending/repayments' represents the
impact from volume movements within the g roup’s lending portfolio
and includes ‘New financial assets originated or purchased’, ‘assets
derecognised (including final repayments)’ and ‘changes to risk
parameters – further lending/repayment’.

50 | HSBC Bank plc Annual Report and Accounts 2024

Risk

Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees 1
(Audited)
| Non-credit impaired | Credit impaired |
| Stage 1 | Stage 2 | Stage 3 | POCI | Total
| Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL
The group | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
At 1 Jan 2024 | 162,228 | (91) | 15,445 | (147) | 2,556 | (903) | 35 | (6) | 180,264 | (1,147)
Transfers of financial instruments | 2,460 | (42) | (3,223) | 47 | 763 | (5) | — | — | — | —
– transfers from stage 1 to stage 2 | (7,440) | 8 | 7,440 | (8) | — | — | — | — | — | —
– transfers from stage 2 to stage 1 | 10,182 | (48) | (10,182) | 48 | — | — | — | — | — | —
– transfers to stage 3 | (390) | 1 | (649) | 13 | 1,039 | (14) | — | — | — | —
– transfers from stage 3 | 108 | (3) | 168 | (6) | (276) | 9 | — | — | — | —
Net remeasurement of ECL arising from transfer of stage | — | 29 | — | (22) | — | — | — | — | — | 7
Net new and further lending/ repayments | 10,816 | 7 | (1,409) | 3 | (635) | 322 | 6 | (7) | 8,778 | 325
Changes to risk parameters – credit quality | — | 23 | — | (31) | — | (504) | — | (5) | — | (517)
Changes to models used for ECL calculation | — | (1) | — | 17 | — | — | — | — | — | 16
Assets written off | — | — | — | — | (257) | 255 | — | — | (257) | 255
Credit-related modifications that resulted in derecognition | — | — | — | — | — | — | — | — | — | —
Foreign exchange | (4,916) | 2 | (345) | 2 | (83) | 24 | — | — | (5,344) | 28
Others 2 | 6,588 | (1) | 26 | (2) | (42) | 117 | — | — | 6,572 | 114
At 31 Dec 2024 | 177,176 | (74) | 10,494 | (133) | 2,302 | (694) | 41 | (18) | 190,013 | (919)
ECL income statement change for the period |  | 58 |  | (33) |  | (182) |  | (12) |  | (169)
Recoveries |  |  |  |  |  |  |  |  |  | 2
Others |  |  |  |  |  |  |  |  |  | 13
Total ECL income statement change for the period |  |  |  |  |  |  |  |  |  | (154)

Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees 1 (continued)
(Audited)
| At 31 Dec 2024 | 12 months ended 31 Dec 2024
| Gross carrying/ nominal amount | Allowance for ECL | ECL charge
| £m | £m | £m
As above | 190,013 | (919) | (154)
Other financial assets measured at amortised cost | 237,475 | (6) | (6)
Non-trading reverse purchase agreement commitments | 32,675 | — | —
Performance and other guarantees not considered for IFRS 9 |  |  | (2)
Summary of financial instruments to which the impairment requirements in IFRS 9 are applied/Summary consolidated income statement | 460,163 | (925) | (162)
Debt instruments measured at FVOCI | 46,649 | (22) | (1)
Total allowance for ECL/total income statement ECL change for the period | N/A | (947) | (163)

1 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
2 Includes the period on period movement in exposures relating to other HSBC Group companies. As at 31 December 2024, these amounted to £(0.77)bn and
were classified as stage 1 with no ECL.

HSBC Bank plc Annual Report and Accounts 2024 | 51

Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees 1 (continued)
(Audited)
| Non credit – impaired | Credit – impaired |
| Stage 1 | Stage 2 | Stage 3 | POCI | Total
| Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL
The group | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
At 1 Jan 2023 | 168,371 | (71) | 18,059 | (200) | 2,536 | (962) | 3 | — | 188,969 | (1,233)
Transfers of financial instruments: | 690 | (56) | (1,336) | 89 | 646 | (33) | — | — | — | —
– transfers from stage 1 to stage 2 | (14,106) | 11 | 14,106 | (11) | — | — | — | — | — | —
– transfers from stage 2 to stage 1 | 15,023 | (66) | (15,023) | 66 | — | — | — | — | — | —
– transfers to stage 3 | (247) | — | (551) | 39 | 798 | (39) | — | — | — | —
– transfers from stage 3 | 20 | (1) | 132 | (5) | (152) | 6 | — | — | — | —
Net remeasurement of ECL arising from transfer of stage | — | 48 | — | (26) | — | — | — | — | — | 22
Net new and further lending/ repayments | 4,626 | (1) | (1,916) | 22 | (442) | 125 | 33 | — | 2,301 | 146
Changes to risk parameters – credit quality | — | (1) | — | (28) | — | (305) | — | (6) | — | (340)
Changes to model used for ECL calculation | — | (3) | — | 18 | — | — | — | — | — | 15
Assets written off | — | — | — | — | (248) | 246 | — | — | (248) | 246
Credit related modifications that resulted in derecognition | — | — | — | — | (94) | 75 | — | — | (94) | 75
Foreign exchange | (2,398) | 2 | (231) | 2 | (49) | 17 | — | — | (2,678) | 21
Others 2 | (9,061) | (9) | 869 | (24) | 207 | (66) | (1) | — | (7,986) | (99)
At 31 Dec 2023 | 162,228 | (91) | 15,445 | (147) | 2,556 | (903) | 35 | (6) | 180,264 | (1,147)
ECL income statement change for the period |  | 43 |  | (14) |  | (180) |  | (6) |  | (157)
Recoveries |  |  |  |  |  |  |  |  |  | 5
Others |  |  |  |  |  |  |  |  |  | (12)
Total ECL income statement change for the period |  |  |  |  |  |  |  |  |  | (164)

Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees 1 (continued)
(Audited)
| At 31 Dec 2023 | 12 months ended 31 Dec 2023
| Gross carrying/ nominal amount | Allowance for ECL | ECL charge
| £m | £m | £m
As above | 180,264 | (1,147) | (164)
Other financial assets measured at amortised cost | 273,728 | (70) | —
Non-trading reverse purchase agreement commitments | 38,704 | — | —
Performance and other guarantees not considered for IFRS 9 |  |  | (7)
Summary of financial instruments to which the impairment requirements in IFRS 9 are applied/ Summary consolidated income statement | 492,696 | (1,217) | (171)
Debt instruments measured at FVOCI | 37,427 | (23) | 2
Total allowance for ECL/total income statement ECL change for the period | N/A | (1,240) | (169)

1 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
2 Includes the period on period movement in exposures relating to other HSBC Group companies. As at 31 December 2023, these amounted to £(1.64)bn and
were classified as stage 1 with no ECL.

52 | HSBC Bank plc Annual Report and Accounts 2024

Risk

Reconciliation of changes in gross carrying amount and allowances for loans and advances to banks and customers
(Audited)
| Non-credit impaired | Credit impaired |
| Stage 1 | Stage 2 | Stage 3 | POCI | Total
| Gross carrying amount | Allowance for ECL | Gross carrying amount | Allowance for ECL | Gross carrying amount | Allowance for ECL | Gross carrying amount | Allowance for ECL | Gross carrying amount | Allowance for ECL
The group | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
At 1 Jan 2024 | 80,612 | (76) | 7,997 | (125) | 2,310 | (882) | 32 | (6) | 90,951 | (1,089)
Transfers of financial instruments | 579 | (33) | (1,402) | 38 | 823 | (5) | — | — | — | —
– transfers from stage 1 to stage 2 | (3,332) | 7 | 3,332 | (7) | — | — | — | — | — | —
– transfers from stage 2 to stage 1 | 4,244 | (38) | (4,244) | 38 | — | — | — | — | — | —
– transfers to stage 3 | (365) | 1 | (571) | 13 | 936 | (14) | — | — | — | —
– transfers from stage 3 | 32 | (3) | 81 | (6) | (113) | 9 | — | — | — | —
Net remeasurement of ECL arising from transfer of stage | — | 22 | — | (17) | — | — | — | — | — | 5
Net new and further lending/ repayments | 4,724 | 11 | (799) | 7 | (664) | 308 | 6 | (7) | 3,267 | 319
Changes to risk parameters – credit quality | — | 21 | — | (17) | — | (493) | — | (5) | — | (494)
Changes to models used for ECL calculation | — | (3) | — | 6 | — | — | — | — | — | 3
Assets written off | — | — | — | — | (257) | 255 | — | — | (257) | 255
Credit-related modifications that resulted in derecognition | — | — | — | — | — | — | — | — | — | —
Foreign exchange | (2,143) | 2 | (209) | 2 | (74) | 23 | — | — | (2,426) | 27
Others 1 | 6,529 | (2) | 26 | (2) | (42) | 117 | — | — | 6,513 | 113
At 31 Dec 2024 | 90,301 | (58) | 5,613 | (108) | 2,096 | (677) | 38 | (18) | 98,048 | (861)
ECL income statement change for the period | — | 51 | — | (21) | — | (185) | — | (12) | — | (167)
Recoveries |  |  |  |  |  |  |  |  |  | 2
Others |  |  |  |  |  |  |  |  |  | 12
Total ECL income statement change for the period |  |  |  |  |  |  |  |  |  | (153)

1 Includes the period on period movement in exposures relating to other HSBC Group companies. As at 31 December 2024, these amounted to £(0.68)bn and
were classified as stage 1 with no ECL.

Reconciliation of changes in gross carrying amount and allowances for loans and advances to banks and customers (continued)
(Audited)
| Non-credit impaired | Credit impaired |
| Stage 1 | Stage 2 | Stage 3 | POCI | Total
| Gross carrying amount | Allowance for ECL | Gross carrying amount | Allowance for ECL | Gross carrying amount | Allowance for ECL | Gross carrying amount | Allowance for ECL | Gross carrying amount | Allowance for ECL
The group | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
At 1 Jan 2023 | 80,347 | (55) | 8,230 | (166) | 2,289 | (922) | 3 | — | 90,869 | (1,143)
Transfers of financial instruments | (98) | (42) | (500) | 78 | 598 | (36) | — | — | — | —
– transfers from stage 1 to stage 2 | (7,192) | 10 | 7,192 | (10) | — | — | — | — | — | —
– transfers from stage 2 to stage 1 | 7,301 | (51) | (7,301) | 51 | — | — | — | — | — | —
– transfers to stage 3 | (226) | — | (465) | 39 | 691 | (39) | — | — | — | —
– transfers from stage 3 | 19 | (1) | 74 | (2) | (93) | 3 | — | — | — | —
Net remeasurement of ECL arising from transfer of stage | — | 36 | — | (22) | — | — | — | — | — | 14
Net new and further lending/ repayments | 3,230 | (9) | (923) | 15 | (401) | 94 | 30 | — | 1,936 | 100
Changes to risk parameters – credit quality | — | 1 | — | (10) | — | (289) | — | (6) | — | (304)
Changes to models used for ECL calculation | — | 2 | — | 4 | — | — | — | — | — | 6
Assets written off | — | — | — | — | (248) | 246 | — | — | (248) | 246
Credit-related modifications that resulted in derecognition | — | — | — | — | (94) | 75 | — | — | (94) | 75
Foreign exchange | (1,264) | 1 | (148) | 1 | (48) | 17 | — | — | (1,460) | 19
Others 1 | (1,603) | (10) | 1,338 | (25) | 214 | (67) | (1) | — | (52) | (102)
At 31 Dec 2023 | 80,612 | (76) | 7,997 | (125) | 2,310 | (882) | 32 | (6) | 90,951 | (1,089)
ECL income statement change for the period | — | 30 | — | (13) | — | (195) | — | (6) | — | (184)
Recoveries |  |  |  |  |  |  |  |  |  | 5
Others |  |  |  |  |  |  |  |  |  | (20)
Total ECL income statement change for the period |  |  |  |  |  |  |  |  |  | (199)

1 Includes the period on period movement in exposures relating to other HSBC Group companies. As at 31 December 2023, these amounted to £(1.17)bn and
were classified as stage 1 with no ECL.

HSBC Bank plc Annual Report and Accounts 2024 | 53

Reconciliation of changes in nominal amount and allowances for loan commitments and financial guarantees 1
(Audited)
| Non-credit impaired | Credit impaired |
| Stage 1 | Stage 2 | Stage 3 | POCI | Total
| Nominal amount | Allowance for ECL | Nominal amount | Allowance for ECL | Nominal amount | Allowance for ECL | Nominal amount | Allowance for ECL | Nominal amount | Allowance for ECL
The group | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
At 1 Jan 2024 | 81,616 | (15) | 7,448 | (22) | 246 | (21) | 3 | — | 89,313 | (58)
Transfers of financial instruments | 1,881 | (9) | (1,821) | 9 | (60) | — | — | — | — | —
– transfers from stage 1 to stage 2 | (4,108) | 1 | 4,108 | (1) | — | — | — | — | — | —
– transfers from stage 2 to stage 1 | 5,938 | (10) | (5,938) | 10 | — | — | — | — | — | —
– transfers to stage 3 | (25) | — | (78) | — | 103 | — | — | — | — | —
– transfers from stage 3 | 76 | — | 87 | — | (163) | — | — | — | — | —
Net remeasurement of ECL arising from transfer of stage | — | 7 | — | (5) | — | — | — | — | — | 2
Net new and further lending/ repayments | 6,092 | (4) | (610) | (4) | 29 | 14 | — | — | 5,511 | 6
Changes to risk parameters – credit quality | — | 2 | — | (14) | — | (11) | — | — | — | (23)
Changes to models used for ECL calculation | — | 2 | — | 11 | — | — | — | — | — | 13
Foreign exchange | (2,773) | — | (136) | — | (9) | 1 | — | — | (2,918) | 1
Others 2 | 59 | 1 | — | — | — | — | — | — | 59 | 1
At 31 Dec 2024 | 86,875 | (16) | 4,881 | (25) | 206 | (17) | 3 | — | 91,965 | (58)
ECL income statement change for the period | — | 7 | — | (12) | — | 3 | — | — | — | (2)
Recoveries |  |  |  |  |  |  |  |  |  | —
Others |  |  |  |  |  |  |  |  |  | 1
Total ECL income statement change for the period |  |  |  |  |  |  |  |  |  | (1)

1 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
2 Includes the period on period movement in exposures relating to other HSBC Group companies. As at 31 December 2024, these amounted to £(0.10)bn and
were classified as stage 1 with no ECL.

Reconciliation of changes in nominal amount and allowances for loan commitments and financial guarantees 1
(Audited)
| Non-credit impaired | Credit impaired |
| Stage 1 | Stage 2 | Stage 3 | POCI | Total
| Nominal amount | Allowance for ECL | Nominal amount | Allowance for ECL | Nominal amount | Allowance for ECL | Nominal amount | Allowance for ECL | Nominal amount | Allowance for ECL
The group | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
At 1 Jan 2023 | 88,024 | (16) | 9,829 | (34) | 247 | (40) | — | — | 98,100 | (90)
Transfers of financial instruments | 788 | (14) | (836) | 11 | 48 | 3 | — | — | — | —
– transfers from stage 1 to stage 2 | (6,914) | 1 | 6,914 | (1) | — | — | — | — | — | —
– transfers from stage 2 to stage 1 | 7,722 | (15) | (7,722) | 15 | — | — | — | — | — | —
– transfers to stage 3 | (21) | — | (86) | — | 107 | — | — | — | — | —
– transfers from stage 3 | 1 | — | 58 | (3) | (59) | 3 | — | — | — | —
Net remeasurement of ECL arising from transfer of stage | — | 12 | — | (4) | — | — | — | — | — | 8
Net new and further lending/ repayments | 1,396 | 8 | (993) | 7 | (41) | 31 | 3 | — | 365 | 46
Changes to risk parameters – credit quality | — | (2) | — | (18) | — | (16) | — | — | — | (36)
Changes to models used for ECL calculation | — | (5) | — | 14 | — | — | — | — | — | 9
Foreign exchange | (1,134) | 1 | (83) | 1 | (1) | — | — | — | (1,218) | 2
Others 2 | (7,458) | 1 | (469) | 1 | (7) | 1 | — | — | (7,934) | 3
At 31 Dec 2023 | 81,616 | (15) | 7,448 | (22) | 246 | (21) | 3 | — | 89,313 | (58)
ECL income statement change for the period | — | 13 | — | (1) | — | 15 | — | — | — | 27
Recoveries |  |  |  |  |  |  |  |  |  | —
Others |  |  |  |  |  |  |  |  |  | 8
Total ECL income statement change for the period |  |  |  |  |  |  |  |  |  | 35

1 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
2 Includes the period on period movement in exposures relating to other HSBC Group companies. As at 31 December 2023, these amounted to £(0.47)bn and
were classified as stage 1 with no ECL.

54 | HSBC Bank plc Annual Report and Accounts 2024

Risk

Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees 1
(Audited)
| Non-credit impaired | Credit impaired |
| Stage 1 | Stage 2 | Stage 3 | POCI | Total
| Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL
The bank | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
At 1 Jan 2024 | 67,478 | (23) | 7,548 | (61) | 781 | (298) | 28 | (6) | 75,835 | (388)
Transfers of financial instruments | 3,097 | (17) | (3,516) | 23 | 419 | (6) | — | — | — | —
– transfers from stage 1 to stage 2 | (3,020) | 2 | 3,020 | (2) | — | — | — | — | — | —
– transfers from stage 2 to stage 1 | 6,386 | (20) | (6,386) | 20 | — | — | — | — | — | —
– transfers to stage 3 | (271) | 1 | (153) | 5 | 424 | (6) | — | — | — | —
– transfers from stage 3 | 2 | — | 3 | — | (5) | — | — | — | — | —
Net remeasurement of ECL arising from transfer of stage | — | 13 | — | (6) | — | — | — | — | — | 7
Net new and further lending/ repayments | 4,895 | (1) | (610) | 2 | (444) | 108 | 12 | (7) | 3,853 | 102
Changes to risk parameters – credit quality | — | 7 | — | (15) | — | (202) | — | (5) | — | (215)
Changes to models used for ECL calculation | — | 1 | — | 21 | — | — | — | — | — | 22
Assets written off | — | — | — | — | (50) | 50 | — | — | (50) | 50
Credit-related modifications that resulted in derecognition | — | — | — | — | — | — | — | — | — | —
Foreign exchange | (76) | 1 | (13) | — | (4) | 1 | — | — | (93) | 2
Others 2 | (3,118) | — | (20) | — | (21) | 3 | — | — | (3,159) | 3
At 31 Dec 2024 | 72,276 | (19) | 3,389 | (36) | 681 | (344) | 40 | (18) | 76,386 | (417)
ECL income statement change for the period |  | 20 |  | 2 |  | (94) |  | (12) |  | (84)
Recoveries |  |  |  |  |  |  |  |  |  | 1
Others |  |  |  |  |  |  |  |  |  | 4
Total ECL income statement change for the period |  |  |  |  |  |  |  |  |  | (79)

Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees 1 (continued)
| At 31 Dec 2024 | 12 months ended 31 Dec 2024
| Gross carrying/ nominal amount | Allowance for ECL | ECL charge
| £m | £m | £m
As above | 76,386 | (417) | (79)
Other financial assets measured at amortised cost | 165,387 | (3) | (6)
Non-trading reverse purchase agreement commitments | 3,790 | — | —
Performance and other guarantees not considered for IFRS 9 |  |  | 1
Summary of financial instruments to which the impairment requirements in IFRS 9 are applied/ Summary consolidated income statement | 245,563 | (420) | (84)
Debt instruments measured at FVOCI | 19,978 | (3) | —
Total allowance for ECL/total income statement ECL change for the period | n/a | (423) | (84)

1 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
2 Includes the period on period movement in exposures relating to other HSBC Group companies. As at 31 December 2024, these amounted to £(2.58)bn and
were classified as stage 1 with no ECL.

HSBC Bank plc Annual Report and Accounts 2024 | 55

Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees 1 (continued)
(Audited)
| Non-credit impaired | Credit impaired |
| Stage 1 | Stage 2 | Stage 3 | POCI | Total
| Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL
The bank | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
1 Jan 2023 | 78,523 | (33) | 6,099 | (73) | 1,016 | (358) | — | — | 85,638 | (464)
Transfers of financial instruments: | (171) | (20) | 104 | 20 | 67 | — | — | — | — | —
– transfers from stage 1 to stage 2 | (8,257) | 5 | 8,257 | (5) | — | — | — | — | — | —
– transfers from stage 2 to stage 1 | 8,085 | (25) | (8,085) | 25 | — | — | — | — | — | —
– transfers to stage 3 | (1) | — | (137) | 3 | 138 | (3) | — | — | — | —
– transfers from stage 3 | 2 | — | 69 | (3) | (71) | 3 | — | — | — | —
Net remeasurement of ECL arising from transfer of stage | — | 19 | — | (15) | — | — | — | — | — | 4
Net new and further lending/ repayments | (5,964) | 7 | 1,247 | 24 | (178) | 54 | 28 | — | (4,867) | 85
Changes to risk parameters – credit quality | — | 3 | — | (34) | — | (107) | — | (6) | — | (144)
Changes to model used for ECL calculation | — | (3) | — | 19 | — | — | — | — | — | 16
Assets written off | — | — | — | — | (37) | 37 | — | — | (37) | 37
Credit related modifications that resulted in derecognition | — | — | — | — | (89) | 75 | — | — | (89) | 75
Foreign exchange | (142) | 1 | (9) | — | (1) | — | — | — | (152) | 1
Others 2 | (4,768) | 3 | 107 | (2) | 3 | 1 | — | — | (4,658) | 2
At 31 Dec 2023 | 67,478 | (23) | 7,548 | (61) | 781 | (298) | 28 | (6) | 75,835 | (388)
ECL income statement change for the period |  | 26 |  | (6) |  | (53) |  | (6) |  | (39)
Recoveries |  |  |  |  |  |  |  |  |  | —
Others |  |  |  |  |  |  |  |  |  | (12)
Total ECL income statement change for the period |  |  |  |  |  |  |  |  |  | (51)

Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees 1 (continued)
| At 31 Dec 2023 | 12 months ended 31 Dec 2023
| Gross carrying/ nominal amount | Allowance for ECL | ECL charge
| £m | £m | £m
As above | 75,835 | (388) | (51)
Other financial assets measured at amortised cost | 174,304 | (3) | —
Non-trading reverse purchase agreement commitments | 4,540 | — | —
Performance and other guarantees not considered for IFRS 9 |  |  | 4
Summary of financial instruments to which the impairment requirements in IFRS 9 are applied/ Summary consolidated income statement | 254,679 | (391) | (47)
Debt instruments measured at FVOCI | 16,307 | (5) | (2)
Total allowance for ECL/total income statement ECL change for the period | n/a | (396) | (49)

1 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
2 Includes the period on period movement in exposures relating to other HSBC Group companies. As at 31 December 2023, these amounted to £(1.9)bn and were
classified as stage 1 with no ECL.

56 | HSBC Bank plc Annual Report and Accounts 2024

Risk

Reconciliation of changes in gross carrying amount and allowances for loans and advances to banks and customers
(Audited)
| Non-credit impaired | Credit impaired | Total
| Stage 1 | Stage 2 | Stage 3 | POCI
| Gross carrying amount | Allowance for ECL | Gross carrying amount | Allowance for ECL | Gross carrying amount | Allowance for ECL | Gross carrying amount | Allowance for ECL | Gross carrying amount | Allowance for ECL
The bank | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
At 1 Jan 2024 | 40,450 | (15) | 3,255 | (47) | 740 | (289) | 25 | (6) | 44,470 | (357)
Transfers of financial instruments | 668 | (11) | (1,065) | 17 | 397 | (6) | — | — | — | —
– transfers from stage 1 to stage 2 | (1,298) | 1 | 1,298 | (1) | — | — | — | — | — | —
– transfers from stage 2 to stage 1 | 2,218 | (13) | (2,218) | 13 | — | — | — | — | — | —
– transfers to stage 3 | (254) | 1 | (148) | 5 | 402 | (6) | — | — | — | —
– transfers from stage 3 | 2 | — | 3 | — | (5) | — | — | — | — | —
Net remeasurement of ECL arising from transfer of stage | — | 8 | — | (4) | — | — | — | — | — | 4
Net new and further lending/ repayments | 3,106 | 2 | (628) | 2 | (444) | 102 | 12 | (7) | 2,046 | 99
Changes to risk parameters – credit quality | — | 6 | — | (2) | — | (200) | — | (5) | — | (201)
Changes to models used for ECL calculation | — | (1) | — | 10 | — | — | — | — | — | 9
Assets written off | — | — | — | — | (50) | 50 | — | — | (50) | 50
Credit-related modifications that resulted in derecognition | — | — | — | — | — | — | — | — | — | —
Foreign exchange | (9) | — | (4) | — | (3) | 1 | — | — | (16) | 1
Others 1 | (2,370) | (2) | (20) | — | (21) | 4 | — | — | (2,411) | 2
At 31 Dec 2024 | 41,845 | (13) | 1,538 | (24) | 619 | (338) | 37 | (18) | 44,039 | (393)
ECL income statement change for the period |  | 15 |  | 6 |  | (98) |  | (12) |  | (89)
Recoveries |  |  |  |  |  |  |  |  |  | 1
Others |  |  |  |  |  |  |  |  |  | 4
Total ECL income statement change for the period |  |  |  |  |  |  |  |  |  | (84)

1 Includes the period on period movement in exposures relating to other HSBC Group companies. As at 31 December 2024, these amounted to £(1.83)bn and
were classified as stage 1 with no ECL.

Reconciliation of changes in gross carrying amount and allowances for loans and advances to banks and customers
(Audited)
| Non-credit impaired | Credit impaired | Total
| Stage 1 | Stage 2 | Stage 3 | POCI
| Gross carrying amount | Allowance for ECL | Gross carrying amount | Allowance for ECL | Gross carrying amount | Allowance for ECL | Gross carrying amount | Allowance for ECL | Gross carrying amount | Allowance for ECL
The bank | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
At 1 Jan 2023 | 48,219 | (23) | 2,741 | (57) | 941 | (340) | — | — | 51,901 | (420)
Transfers of financial instruments | 280 | (9) | (396) | 11 | 116 | (2) | — | — | — | —
– transfers from stage 1 to stage 2 | (3,380) | 4 | 3,380 | (4) | — | — | — | — | — | —
– transfers from stage 2 to stage 1 | 3,659 | (13) | (3,659) | 13 | — | — | — | — | — | —
– transfers to stage 3 | (1) | — | (135) | 2 | 136 | (2) | — | — | — | —
– transfers from stage 3 | 2 | — | 18 | — | (20) | — | — | — | — | —
Net remeasurement of ECL arising from transfer of stage | — | 10 | — | (12) | — | — | — | — | — | (2)
Net new and further lending/ repayments | (4,431) | 1 | 810 | 24 | (192) | 51 | 25 | — | (3,788) | 76
Changes to risk parameters – credit quality | — | 1 | — | (18) | — | (110) | — | (6) | — | (133)
Changes to models used for ECL calculation | — | 2 | — | 5 | — | — | — | — | — | 7
Assets written off | — | — | — | — | (37) | 37 | — | — | (37) | 37
Credit-related modifications that resulted in derecognition | — | — | — | — | (89) | 75 | — | — | (89) | 75
Foreign exchange | (172) | 1 | (7) | — | (3) | — | — | — | (182) | 1
Others 1 | (3,446) | 2 | 107 | — | 4 | — | — | — | (3,335) | 2
At 31 Dec 2023 | 40,450 | (15) | 3,255 | (47) | 740 | (289) | 25 | (6) | 44,470 | (357)
ECL income statement change for the period |  | 14 |  | (1) |  | (59) |  | (6) |  | (52)
Recoveries |  |  |  |  |  |  |  |  |  | —
Others |  |  |  |  |  |  |  |  |  | (12)
Total ECL income statement change for the period |  |  |  |  |  |  |  |  |  | (64)

1 Includes the period on period movement in exposures relating to other HSBC Group companies. As at 31 December 2023, these amounted to £(2.1)bn and were
classified as stage 1 with no ECL.

HSBC Bank plc Annual Report and Accounts 2024 | 57

Reconciliation of changes in nominal amount and allowances for loan commitments and financial guarantees 1
(Audited)
| Non-credit impaired | Credit impaired |
| Stage 1 | Stage 2 | Stage 3 | POCI | Total
| Nominal amount | Allowance for ECL | Nominal amount | Allowance for ECL | Nominal amount | Allowance for ECL | Nominal amount | Allowance for ECL | Nominal amount | Allowance for ECL
The bank | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
At 1 Jan 2024 | 27,028 | (8) | 4,293 | (14) | 41 | (9) | 3 | — | 31,365 | (31)
Transfers of financial instruments | 2,429 | (6) | (2,451) | 6 | 22 | — | — | — | — | —
– transfers from stage 1 to stage 2 | (1,722) | 1 | 1,722 | (1) | — | — | — | — | — | —
– transfers from stage 2 to stage 1 | 4,168 | (7) | (4,168) | 7 | — | — | — | — | — | —
– transfers to stage 3 | (17) | — | (5) | — | 22 | — | — | — | — | —
– transfers from stage 3 | — | — | — | — | — | — | — | — | — | —
Net remeasurement of ECL arising from transfer of stage | — | 5 | — | (2) | — | — | — | — | — | 3
Net new and further lending/ repayments | 1,789 | (3) | 18 | — | — | 6 | — | — | 1,807 | 3
Changes to risk parameters – credit quality | — | 1 | — | (13) | — | (2) | — | — | — | (14)
Changes to models used for ECL calculation | — | 2 | — | 11 | — | — | — | — | — | 13
Foreign exchange | (67) | 1 | (9) | — | (1) | — | — | — | (77) | 1
Others 2 | (748) | 2 | — | — | — | (1) | — | — | (748) | 1
At 31 Dec 2024 | 30,431 | (6) | 1,851 | (12) | 62 | (6) | 3 | — | 32,347 | (24)
ECL income statement change for the period |  | 5 |  | (4) |  | 4 |  | — |  | 5
Recoveries |  |  |  |  |  |  |  |  |  | —
Others |  |  |  |  |  |  |  |  |  | —
Total ECL income statement change for the period |  |  |  |  |  |  |  |  |  | 5

1 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
2 Includes the period on period movement in exposures relating to other HSBC Group companies. As at 31 December 2024, these amounted to £(0.75)bn and
were classified as stage 1 with no ECL.

Reconciliation of changes in nominal amount and allowances for loan commitments and financial guarantees 1
(Audited)
| Non-credit impaired | Credit impaired |
| Stage 1 | Stage 2 | Stage 3 | POCI | Total
| Nominal amount | Allowance for ECL | Nominal amount | Allowance for ECL | Nominal amount | Allowance for ECL | Nominal amount | Allowance for ECL | Nominal amount | Allowance for ECL
The bank | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
At 1 Jan 2023 | 30,304 | (10) | 3,358 | (16) | 75 | (18) | — | — | 33,737 | (44)
Transfers of financial instruments | (451) | (11) | 500 | 9 | (49) | 2 | — | — | — | —
– transfers from stage 1 to stage 2 | (4,877) | 1 | 4,877 | (1) | — | — | — | — | — | —
– transfers from stage 2 to stage 1 | 4,426 | (12) | (4,426) | 12 | — | — | — | — | — | —
– transfers to stage 3 | — | — | (2) | 1 | 2 | (1) | — | — | — | —
– transfers from stage 3 | — | — | 51 | (3) | (51) | 3 | — | — | — | —
Net remeasurement of ECL arising from transfer of stage | — | 9 | — | (3) | — | — | — | — | — | 6
Net new and further lending/ repayments | (1,533) | 6 | 437 | — | 14 | 3 | 3 | — | (1,079) | 9
Changes to risk parameters – credit quality | — | 2 | — | (16) | — | 3 | — | — | — | (11)
Changes to models used for ECL calculation | — | (5) | — | 14 | — | — | — | — | — | 9
Foreign exchange | 30 | — | (2) | — | 2 | — | — | — | 30 | —
Others 2 | (1,322) | 1 | — | (2) | (1) | 1 | — | — | (1,323) | —
At 31 Dec 2023 | 27,028 | (8) | 4,293 | (14) | 41 | (9) | 3 | — | 31,365 | (31)
ECL income statement change for the period |  | 12 |  | (5) |  | 6 |  | — |  | 13
Recoveries |  |  |  |  |  |  |  |  |  | —
Others |  |  |  |  |  |  |  |  |  | —
Total ECL income statement change for the period |  |  |  |  |  |  |  |  |  | 13

1 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
2 Includes the period on period movement in exposures relating to other HSBC Group companies. As at 31 December 2023, these amounted t o £0.2bn and were
classified as stage 1 with no ECL.

58 | HSBC Bank plc Annual Report and Accounts 2024

Risk

Credit quality
Credit quality of financial instruments
(Audited)
We assess the credit quality of all financial instruments that are
subject to credit risk. The credit quality of financial instruments is a
point-in-time assessment of the PD, whereas stages 1 and 2 are
determined based on relative deterioration of credit quality since initial
recognition for most portfolios. Accordingly, for non-credit-impaired
financial instruments, there is no direct relationship between the
credit quality assessment and stages 1 and 2, although typically the
lower credit quality bands exhibit a higher proportion in stage 2.
The five credit quality classifications provided below each encompass
a range of granular internal credit rating grades assigned to wholesale
and personal lending businesses and the external ratings attributed by
external agencies to debt securities, as shown in the table on page
32.

Distribution of financial instruments by credit quality at 31 December 2024
(Audited)
| Gross carrying/notional amount | Allowance for ECL/ other credit provisions | Net
| Strong | Good | Satisfactory | Sub- standard | Credit impaired | Total
The group | £m | £m | £m | £m | £m | £m | £m | £m
In-scope for IFRS 9 ECL |  |  |  |  |  |  |  |
Loans and advances to customers held at amortised cost | 41,588 | 17,843 | 19,698 | 2,261 | 2,134 | 83,524 | (858) | 82,666
– personal | 16,984 | 1,433 | 1,209 | 62 | 259 | 19,947 | (112) | 19,835
– corporate and commercial | 16,976 | 12,162 | 14,548 | 2,075 | 1,666 | 47,427 | (592) | 46,835
– non-bank financial institutions | 7,628 | 4,248 | 3,941 | 124 | 209 | 16,150 | (154) | 15,996
Loans and advances to banks held at amortised cost | 13,029 | 724 | 762 | 9 | — | 14,524 | (3) | 14,521
Cash and balances at central banks | 119,184 | — | — | — | — | 119,184 | — | 119,184
Reverse repurchase agreements – non- trading | 39,233 | 12,426 | 1,952 | 1 | — | 53,612 | — | 53,612
Financial investments | 11,236 | — | 990 | — | — | 12,226 | — | 12,226
Assets held for sale | 1,933 | 363 | 278 | — | 17 | 2,591 | (3) | 2,588
Other assets | 48,187 | 670 | 975 | 6 | 24 | 49,862 | (3) | 49,859
– endorsements and acceptances | 69 | — | 1 | — | — | 70 | — | 70
– accrued income and other | 48,118 | 670 | 974 | 6 | 24 | 49,792 | (3) | 49,789
Debt instruments measured at fair value through other comprehensive income 1 | 46,733 | 262 | 1,076 | 71 | — | 48,142 | (22) | 48,120
Out-of-scope for IFRS 9 ECL |  |  |  |  |  |  |  |
Trading assets | 31,137 | 9,983 | 8,075 | 1,723 | 32 | 50,950 | — | 50,950
Other financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 606 | 1,854 | 928 | 1 | — | 3,389 | — | 3,389
Derivatives | 173,222 | 20,632 | 4,163 | 146 | 9 | 198,172 | — | 198,172
Assets held for sale | 2,406 | — | — | — | — | 2,406 | — | 2,406
Total gross carrying amount on balance sheet | 528,494 | 64,757 | 38,897 | 4,218 | 2,216 | 638,582 | (889) | 637,693
Percentage of total credit quality (%) | 82.8 | 10.1 | 6.1 | 0.7 | 0.3 | 100.0 |  |
Loans and other credit-related commitments | 73,726 | 28,582 | 17,150 | 2,141 | 165 | 121,764 | (49) | 121,715
Financial guarantees | 1,348 | 794 | 660 | 30 | 44 | 2,876 | (9) | 2,867
In-scope: Irrevocable loan commitments and financial guarantees | 75,074 | 29,376 | 17,810 | 2,171 | 209 | 124,640 | (58) | 124,582
Loans and other credit-related commitments | 3,159 | 2,217 | 809 | 50 | 7 | 6,242 | — | 6,242
Performance and other guarantees | 9,787 | 5,784 | 3,518 | 240 | 135 | 19,464 | (26) | 19,438
Out-of-scope: Revocable loan commitments and non-financial guarantees | 12,946 | 8,001 | 4,327 | 290 | 142 | 25,706 | (26) | 25,680

1 For the purposes of this disclosure, gross carrying amount is defined as the amortised cost of a financial asset, before adjusting for any loss allowance. As such,
the gross carrying amount of debt instruments at FVOCI as presented above will not reconcile to the balance sheet as it excludes fair value gains and losses.

HSBC Bank plc Annual Report and Accounts 2024 | 59

Distribution of financial instruments by credit quality at 31 December 2023 (continued)
(Audited)
| Gross carrying/notional amount | Allowance for ECL/ other credit provisions | Net
| Strong | Good | Satisfactory | Sub- standard | Credit impaired | Total
The group | £m | £m | £m | £m | £m | £m | £m | £m
In-scope for IFRS 9 ECL |  |  |  |  |  |  |  |
Loans and advances to customers held at amortised cost | 32,567 | 18,634 | 19,627 | 3,409 | 2,342 | 76,579 | (1,088) | 75,491
– personal | 8,702 | 2,612 | 1,388 | 115 | 214 | 13,031 | (108) | 12,923
– corporate and commercial | 18,044 | 12,815 | 14,876 | 3,228 | 1,805 | 50,768 | (825) | 49,943
– non-bank financial institutions | 5,821 | 3,207 | 3,363 | 66 | 323 | 12,780 | (155) | 12,625
Loans and advances to banks held at amortised cost | 13,247 | 415 | 710 | — | — | 14,372 | (1) | 14,371
Cash and balances at central banks | 110,570 | — | 48 | — | — | 110,618 | — | 110,618
Reverse repurchase agreements – non- trading | 57,144 | 13,183 | 3,128 | 39 | — | 73,494 | — | 73,494
Financial investments | 8,840 | — | 21 | — | — | 8,861 | — | 8,861
Assets held for sale | 19,461 | 1,232 | 852 | 95 | 156 | 21,796 | (64) | 21,732
Other assets | 57,012 | 652 | 1,225 | 44 | 26 | 58,959 | (6) | 58,953
– endorsements and acceptances | 224 | 6 | 20 | — | — | 250 | — | 250
– accrued income and other | 56,788 | 646 | 1,205 | 44 | 26 | 58,709 | (6) | 58,703
Debt instruments measured at fair value through other comprehensive income 1 | 35,513 | 2,241 | 760 | 82 | — | 38,596 | (23) | 38,573
Out-of-scope for IFRS 9 ECL |  |  |  |  |  |  |  |
Trading assets | 34,923 | 8,555 | 6,378 | 820 | — | 50,676 | — | 50,676
Other financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 2,439 | 965 | 1,536 | 5 | — | 4,945 | — | 4,945
Derivatives | 155,106 | 15,499 | 3,457 | 46 | 8 | 174,116 | — | 174,116
Assets held for sale | 101 | — | — | — | — | 101 | — | 101
Total gross carrying amount on balance sheet | 526,923 | 61,376 | 37,742 | 4,540 | 2,532 | 633,113 | (1,182) | 631,931
Percentage of total credit quality (%) | 83 | 10 | 6 | 1 | 0 | 100.0 |  |
Loans and other credit-related commitments | 83,907 | 27,038 | 13,012 | 1,482 | 177 | 125,616 | (42) | 125,574
Financial guarantees | 1,270 | 530 | 503 | 26 | 72 | 2,401 | (16) | 2,385
In-scope: Irrevocable loan commitments and financial guarantees | 85,177 | 27,568 | 13,515 | 1,508 | 249 | 128,017 | (58) | 127,959
Loans and other credit-related commitments | 3,269 | 2,091 | 806 | 42 | 5 | 6,213 | — | 6,213
Performance and other guarantees | 9,582 | 5,357 | 3,917 | 484 | 208 | 19,548 | (25) | 19,523
Out-of-scope: Revocable loan commitments and non-financial guarantees | 12,851 | 7,448 | 4,723 | 526 | 213 | 25,761 | (25) | 25,736

1 For the purposes of this disclosure, gross carrying amount is defined as the amortised cost of a financial asset, before adjusting for any loss allowance. As such,
the gross carrying amount of debt instruments at FVOCI as presented above will not reconcile to the balance sheet as it excludes fair value gains and losses.

60 | HSBC Bank plc Annual Report and Accounts 2024

Risk

Distribution of financial instruments by credit quality at 31 December 2024
(Audited)
| Gross carrying/notional amount | Allowance for ECL/other credit provisions | Net
| Strong | Good | Satisfactory | Sub- standard | Credit impaired | Total
The bank | £m | £m | £m | £m | £m | £m | £m | £m
In-scope for IFRS 9 ECL |  |  |  |  |  |  |  |
Loans and advances to customers held at amortised cost | 19,827 | 7,293 | 3,166 | 366 | 656 | 31,308 | (392) | 30,916
– personal | 1,777 | 249 | 566 | 3 | 20 | 2,615 | (6) | 2,609
– corporate and commercial | 10,390 | 4,207 | 2,187 | 318 | 421 | 17,523 | (227) | 17,296
– non-bank financial institutions | 7,660 | 2,837 | 413 | 45 | 215 | 11,170 | (159) | 11,011
Loans and advances to banks held at amortised cost | 12,114 | 598 | 11 | 8 | — | 12,731 | (1) | 12,730
Cash and balances at central banks | 78,250 | — | — | — | — | 78,250 | — | 78,250
Reverse repurchase agreements – non-trading | 23,020 | 9,497 | 1,876 | 1 | — | 34,394 | — | 34,394
Financial investments | 14,217 | — | — | — | — | 14,217 | — | 14,217
Assets held for sale | 137 | 244 | 134 | — | 17 | 532 | (3) | 529
Other assets | 37,736 | 151 | 94 | 2 | 11 | 37,994 | — | 37,994
– endorsements and acceptances | 68 | — | — | — | — | 68 | — | 68
– accrued income and other | 37,668 | 151 | 94 | 2 | 11 | 37,926 | — | 37,926
Debt instruments measured at fair value through other comprehensive income 1 | 19,394 | 50 | 1,001 | — | — | 20,445 | (3) | 20,442
Out-of-scope for IFRS 9 ECL |  |  |  |  |  |  |  |
Trading assets | 18,004 | 9,797 | 7,809 | 1,718 | 29 | 37,357 | — | 37,357
Other financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 507 | 1,818 | 860 | 1 | — | 3,186 | — | 3,186
Derivatives | 160,423 | 19,755 | 3,360 | 120 | — | 183,658 | — | 183,658
Assets held for sale | 8 | — | — | — | — | 8 | — | 8
Total gross carrying amount on balance sheet | 383,637 | 49,203 | 18,311 | 2,216 | 713 | 454,080 | (399) | 453,681
Percentage of total credit quality (%) | 84.5 | 10.8 | 4.0 | 0.5 | 0.2 | 100 |  |
Loans and other credit-related commitments | 23,083 | 8,578 | 2,797 | 479 | 57 | 34,994 | (21) | 34,973
Financial guarantees | 517 | 316 | 302 | — | 8 | 1,143 | (3) | 1,140
In-scope: Irrevocable loan commitments and financial guarantees | 23,600 | 8,894 | 3,099 | 479 | 65 | 36,137 | (24) | 36,113
Loans and other credit-related commitments | 245 | 250 | 57 | 6 | — | 558 | — | 558
Performance and other guarantees | 4,964 | 1,423 | 378 | 3 | 6 | 6,774 | (1) | 6,773
Out-of-scope: Revocable loan commitments and non- financial guarantees | 5,209 | 1,673 | 435 | 9 | 6 | 7,332 | (1) | 7,331

Distribution of financial instruments by credit quality at 31 December 2023
The bank | £m | £m | £m | £m | £m | £m | £m | £m
In-scope for IFRS 9 ECL |  |  |  |  |  |  |  |
Loans and advances to customers held at amortised cost | 20,450 | 6,782 | 4,140 | 663 | 765 | 32,800 | (357) | 32,443
– personal | 1,782 | 179 | 658 | 7 | 13 | 2,639 | (6) | 2,633
– corporate and commercial | 11,468 | 4,572 | 2,941 | 656 | 446 | 20,083 | (205) | 19,878
– non-bank financial institutions | 7,200 | 2,031 | 541 | — | 306 | 10,078 | (146) | 9,932
Loans and advances to banks held at amortised cost | 11,275 | 339 | 56 | — | — | 11,670 | — | 11,670
Cash and balances at central banks | 61,128 | — | — | — | — | 61,128 | — | 61,128
Reverse repurchase agreements – non-trading | 43,053 | 11,008 | 2,873 | 39 | — | 56,973 | — | 56,973
Financial investments | 12,029 | — | — | — | — | 12,029 | — | 12,029
Assets held for sale | 91 | — | — | — | — | 91 | — | 91
Other assets | 43,833 | 136 | 100 | 5 | 9 | 44,083 | (3) | 44,080
– endorsements and acceptances | 221 | 6 | — | — | — | 227 | — | 227
– accrued income and other | 43,612 | 130 | 100 | 5 | 9 | 43,856 | (3) | 43,853
Debt instruments measured at fair value through other comprehensive income 1 | 16,094 | 56 | 504 | — | — | 16,654 | (5) | 16,649
Out-of-scope for IFRS 9 ECL |  |  |  |  |  |  |  |
Trading assets | 22,987 | 8,386 | 6,077 | 818 | — | 38,268 | — | 38,268
Other financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 473 | 908 | 1,505 | 2 | — | 2,888 | — | 2,888
Derivatives | 136,081 | 14,639 | 3,009 | 36 | — | 153,765 | — | 153,765
Assets held for sale | — | — | — | — | — | — | — | —
Total gross carrying amount on balance sheet | 367,494 | 42,254 | 18,264 | 1,563 | 774 | 430,349 | (365) | 429,984
Percentage of total credit quality (%) | 85.4 | 9.8 | 4.2 | 0.4 | 0.2 | 100 |  |
Loans and other credit-related commitments | 24,980 | 6,929 | 2,394 | 478 | 18 | 34,799 | (22) | 34,777
Financial guarantees | 649 | 218 | 209 | 4 | 26 | 1,106 | (9) | 1,097
In-scope: Irrevocable loan commitments and financial guarantees | 25,629 | 7,147 | 2,603 | 482 | 44 | 35,905 | (31) | 35,874
Loans and other credit-related commitments | 226 | 160 | 70 | 15 | — | 471 | — | 471
Performance and other guarantees | 5,669 | 1,157 | 517 | 49 | 3 | 7,395 | (1) | 7,394
Out-of-scope: Revocable loan commitments and non-financial guarantees | 5,895 | 1,317 | 587 | 64 | 3 | 7,866 | (1) | 7,865

1 For the purposes of this disclosure, gross carrying amount is defined as the amortised cost of a financial asset, before adjusting for any loss allowance. As such,
the gross carrying amount of debt instruments at FVOCI as presented above will not reconcile to the balance sheet as it excludes fair value gains and losses.

HSBC Bank plc Annual Report and Accounts 2024 | 61

Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation
(Audited)
| Gross carrying/notional amount | Allowance for ECL | Net
| Strong | Good | Satisfactory | Sub- standard | Credit impaired | Total
The group | £m | £m | £m | £m | £m | £m | £m | £m
Loans and advances to customers at amortised cost | 41,588 | 17,843 | 19,698 | 2,261 | 2,134 | 83,524 | (858) | 82,666
– stage 1 | 41,150 | 17,227 | 16,555 | 912 | — | 75,844 | (56) | 75,788
– stage 2 | 438 | 616 | 3,143 | 1,349 | — | 5,546 | (107) | 5,439
– stage 3 | — | — | — | — | 2,096 | 2,096 | (677) | 1,419
– POCI | — | — | — | — | 38 | 38 | (18) | 20
Loans and advances to banks at amortised cost | 13,029 | 724 | 762 | 9 | — | 14,524 | (3) | 14,521
– stage 1 | 12,983 | 708 | 758 | 8 | — | 14,457 | (2) | 14,455
– stage 2 | 46 | 16 | 4 | 1 | — | 67 | (1) | 66
– stage 3 | — | — | — | — | — | — | — | —
– POCI | — | — | — | — | — | — | — | —
Other financial assets measured at amortised cost | 219,773 | 13,459 | 4,195 | 7 | 41 | 237,475 | (6) | 237,469
– stage 1 | 219,771 | 13,432 | 4,170 | 2 | — | 237,375 | (4) | 237,371
– stage 2 | 2 | 27 | 25 | 5 | — | 59 | — | 59
– stage 3 | — | — | — | — | 41 | 41 | (2) | 39
– POCI | — | — | — | — | — | — | — | —
Loans and other credit-related commitments | 73,726 | 28,582 | 17,150 | 2,141 | 165 | 121,764 | (49) | 121,715
– stage 1 | 73,328 | 26,774 | 15,172 | 1,513 | — | 116,787 | (14) | 116,773
– stage 2 | 398 | 1,808 | 1,978 | 628 | — | 4,812 | (24) | 4,788
– stage 3 | — | — | — | — | 162 | 162 | (11) | 151
– POCI | — | — | — | — | 3 | 3 | — | 3
Financial guarantees | 1,348 | 794 | 660 | 30 | 44 | 2,876 | (9) | 2,867
– stage 1 | 1,348 | 785 | 626 | 4 | — | 2,763 | (2) | 2,761
– stage 2 | — | 9 | 34 | 26 | — | 69 | (1) | 68
– stage 3 | — | — | — | — | 44 | 44 | (6) | 38
– POCI | — | — | — | — | — | — | — | —
At 31 Dec 2024 | 349,464 | 61,402 | 42,465 | 4,448 | 2,384 | 460,163 | (925) | 459,238
Debt instruments at FVOCI 1 |  |  |  |  |  |  |  |
– stage 1 | 46,694 | 262 | 1,072 | — | — | 48,028 | (7) | 48,021
– stage 2 | 39 | — | 4 | 71 | — | 114 | (15) | 99
– stage 3 | — | — | — | — | — | — | — | —
– POCI | — | — | — | — | — | — | — | —
At 31 Dec 2024 | 46,733 | 262 | 1,076 | 71 | — | 48,142 | (22) | 48,120

Loans and advances to customers at amortised cost | 32,567 | 18,634 | 19,627 | 3,409 | 2,342 | 76,579 | (1,088) | 75,491
– stage 1 | 31,644 | 17,295 | 16,071 | 1,346 | — | 66,356 | (75) | 66,281
– stage 2 | 923 | 1,339 | 3,556 | 2,063 | — | 7,881 | (125) | 7,756
– stage 3 | — | — | — | — | 2,310 | 2,310 | (882) | 1,428
– POCI | — | — | — | — | 32 | 32 | (6) | 26
Loans and advances to banks at amortised cost | 13,247 | 415 | 710 | — | — | 14,372 | (1) | 14,371
– stage 1 | 13,220 | 414 | 622 | — | — | 14,256 | (1) | 14,255
– stage 2 | 27 | 1 | 88 | — | — | 116 | — | 116
– stage 3 | — | — | — | — | — | — | — | —
– POCI | — | — | — | — | — | — | — | —
Other financial assets measured at amortised cost | 253,027 | 15,067 | 5,274 | 178 | 182 | 273,728 | (70) | 273,658
– stage 1 | 252,841 | 14,788 | 4,843 | 85 | — | 272,557 | (5) | 272,552
– stage 2 | 186 | 279 | 431 | 93 | — | 989 | (8) | 981
– stage 3 | — | — | — | — | 182 | 182 | (57) | 125
– POCI | — | — | — | — | — | — | — | —
Loans and other credit-related commitments | 83,907 | 27,038 | 13,012 | 1,482 | 177 | 125,616 | (42) | 125,574
– stage 1 | 81,341 | 25,083 | 10,962 | 856 | — | 118,242 | (13) | 118,229
– stage 2 | 2,566 | 1,955 | 2,050 | 626 | — | 7,197 | (21) | 7,176
– stage 3 | — | — | — | — | 174 | 174 | (8) | 166
– POCI | — | — | — | — | 3 | 3 | — | 3
Financial guarantees | 1,270 | 530 | 503 | 26 | 72 | 2,401 | (16) | 2,385
– stage 1 | 1,269 | 483 | 322 | 4 | — | 2,078 | (2) | 2,076
– stage 2 | 1 | 47 | 181 | 22 | — | 251 | (1) | 250
– stage 3 | — | — | — | — | 72 | 72 | (13) | 59
– POCI | — | — | — | — | — | — | — | —
At 31 Dec 2023 | 384,018 | 61,684 | 39,126 | 5,095 | 2,773 | 492,696 | (1,217) | 491,479
Debt instruments at FVOCI 1 |  |  |  |  |  |  |  |
– stage 1 | 35,473 | 2,241 | 722 | — | — | 38,436 | (9) | 38,427
– stage 2 | 40 | — | 38 | 82 | — | 160 | (14) | 146
– stage 3 | — | — | — | — | — | — | — | —
– POCI | — | — | — | — | — | — | — | —
At 31 Dec 2023 | 35,513 | 2,241 | 760 | 82 | — | 38,596 | (23) | 38,573

1 For the purposes of this disclosure, gross carrying amount is defined as the amortised cost of a financial asset, before adjusting for any loss allowance. As such,
the gross carrying amount of debt instruments at FVOCI as presented above will not reconcile to the balance sheet as it excludes fair value gains and losses.

62 | HSBC Bank plc Annual Report and Accounts 2024

Risk

Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation (continued)
(Audited)
| Gross carrying/notional amount | Allowance for ECL | Net
| Strong | Good | Satisfactory | Sub- standard | Credit impaired | Total
The bank | £m | £m | £m | £m | £m | £m | £m | £m
Loans and advances to customers at amortised cost | 19,827 | 7,293 | 3,166 | 366 | 656 | 31,308 | (392) | 30,916
– stage 1 | 19,595 | 7,003 | 2,387 | 164 | — | 29,149 | (12) | 29,137
– stage 2 | 232 | 290 | 779 | 202 | — | 1,503 | (24) | 1,479
– stage 3 | — | — | — | — | 619 | 619 | (338) | 281
– POCI | — | — | — | — | 37 | 37 | (18) | 19
Loans and advances to banks at amortised cost | 12,114 | 598 | 11 | 8 | — | 12,731 | (1) | 12,730
– stage 1 | 12,094 | 583 | 11 | 8 | — | 12,696 | (1) | 12,695
– stage 2 | 20 | 15 | — | — | — | 35 | — | 35
– stage 3 | — | — | — | — | — | — | — | —
– POCI | — | — | — | — | — | — | — | —
Other financial assets measured at amortised cost | 153,360 | 9,892 | 2,104 | 3 | 28 | 165,387 | (3) | 165,384
– stage 1 | 153,358 | 9,886 | 2,083 | 1 | — | 165,328 | (1) | 165,327
– stage 2 | 2 | 6 | 21 | 2 | — | 31 | — | 31
– stage 3 | — | — | — | — | 28 | 28 | (2) | 26
– POCI | — | — | — | — | — | — | — | —
Loans and other credit-related commitments | 23,083 | 8,578 | 2,797 | 479 | 57 | 34,994 | (21) | 34,973
– stage 1 | 22,957 | 7,657 | 2,163 | 333 | — | 33,110 | (6) | 33,104
– stage 2 | 126 | 921 | 634 | 146 | — | 1,827 | (12) | 1,815
– stage 3 | — | — | — | — | 54 | 54 | (3) | 51
– POCI | — | — | — | — | 3 | 3 | — | 3
Financial guarantees | 517 | 316 | 302 | — | 8 | 1,143 | (3) | 1,140
– stage 1 | 517 | 315 | 279 | — | — | 1,111 | — | 1,111
– stage 2 | — | 1 | 23 | — | — | 24 | — | 24
– stage 3 | — | — | — | — | 8 | 8 | (3) | 5
– POCI | — | — | — | — | — | — | — | —
At 31 Dec 2024 | 208,901 | 26,677 | 8,380 | 856 | 749 | 245,563 | (420) | 245,143
Debt instruments at FVOCI 1 |  |  |  |  |  |  |  |
– stage 1 | 19,394 | 50 | 997 | — | — | 20,441 | (2) | 20,439
– stage 2 | — | — | 4 | — | — | 4 | (1) | 3
– stage 3 | — | — | — | — | — | — | — | —
– POCI | — | — | — | — | — | — | — | —
At 31 Dec 2024 | 19,394 | 50 | 1,001 | — | — | 20,445 | (3) | 20,442

Loans and advances to customers at amortised cost | 20,450 | 6,782 | 4,140 | 663 | 765 | 32,800 | (357) | 32,443
– stage 1 | 19,730 | 5,933 | 2,860 | 283 | — | 28,806 | (15) | 28,791
– stage 2 | 720 | 849 | 1,280 | 380 | — | 3,229 | (47) | 3,182
– stage 3 | — | — | — | — | 740 | 740 | (289) | 451
– POCI | — | — | — | — | 25 | 25 | (6) | 19
Loans and advances to banks at amortised cost | 11,275 | 339 | 56 | — | — | 11,670 | — | 11,670
– stage 1 | 11,268 | 339 | 37 | — | — | 11,644 | — | 11,644
– stage 2 | 7 | — | 19 | — | — | 26 | — | 26
– stage 3 | — | — | — | — | — | — | — | —
– POCI | — | — | — | — | — | — | — | —
Other financial assets measured at amortised cost | 160,134 | 11,144 | 2,973 | 44 | 9 | 174,304 | (3) | 174,301
– stage 1 | 160,131 | 11,137 | 2,964 | 39 | — | 174,271 | — | 174,271
– stage 2 | 3 | 7 | 9 | 5 | — | 24 | (1) | 23
– stage 3 | — | — | — | — | 9 | 9 | (2) | 7
– POCI | — | — | — | — | — | — | — | —
Loans and other credit-related commitments | 24,980 | 6,929 | 2,394 | 478 | 18 | 34,799 | (22) | 34,777
– stage 1 | 23,092 | 5,754 | 1,657 | 169 | — | 30,672 | (7) | 30,665
– stage 2 | 1,888 | 1,175 | 737 | 309 | — | 4,109 | (14) | 4,095
– stage 3 | — | — | — | — | 15 | 15 | (1) | 14
– POCI | — | — | — | — | 3 | 3 | — | 3
Financial guarantees | 649 | 218 | 209 | 4 | 26 | 1,106 | (9) | 1,097
– stage 1 | 648 | 172 | 76 | — | — | 896 | (1) | 895
– stage 2 | 1 | 46 | 133 | 4 | — | 184 | — | 184
– stage 3 | — | — | — | — | 26 | 26 | (8) | 18
– POCI | — | — | — | — | — | — | — | —
At 31 Dec 2023 | 217,488 | 25,412 | 9,772 | 1,189 | 818 | 254,679 | (391) | 254,288
Debt instruments at FVOCI 1 |  |  |  |  |  |  |  |
– stage 1 | 16,094 | 56 | 499 | — | — | 16,649 | (3) | 16,646
– stage 2 | — | — | 5 | — | — | 5 | (2) | 3
– stage 3 | — | — | — | — | — | — | — | —
– POCI | — | — | — | — | — | — | — | —
At 31 Dec 2023 | 16,094 | 56 | 504 | — | — | 16,654 | (5) | 16,649

1 For the purposes of this disclosure, gross carrying amount is defined as the amortised cost of a financial asset, before adjusting for any loss allowance. As such,
the gross carrying amount of debt instruments at FVOCI as presented above will not reconcile to the balance sheet as it excludes fair value gains and losses.

HSBC Bank plc Annual Report and Accounts 2024 | 63

Credit‑impaired loans
(Audited)
The group determines that a financial instrument is credit impaired
and in stage 3 by considering relevant objective evidence, primarily
whether:
– contractual payments of either principal or interest are past due for
more than 90 days;
– there are other indications that the borrower is unlikely to pay,
such as when a concession has been granted to the borrower for
economic or legal reasons relating to the borrower’s financial
condition; and
– the loan is otherwise considered to be in default. If such
unlikeliness to pay is not identified at an earlier stage, it is deemed
to occur when an exposure is 90 days past due. Therefore, the
definitions of credit impaired and default are aligned as far as
possible so that stage 3 represents all loans which are considered
defaulted or otherwise credit impaired.
Forbearance
The following table shows the gross carrying amount and allowance
for ECL of the group’s holdings of forborne loans and advances to
customers by industry sector and by stages.
A summary of our current policies and practices for forbearance is set out in
'Credit risk management' on page 32.

Forborne loans and advances to customers at amortised cost by stage allocation
| Performing forborne | Non-performing forborne | Total forborne
| Stage 2 | Stage 3 | POCI | Total
The group | £m | £m | £m | £m
Gross carrying amount |  |  |  |
Personal | 78 | 111 | — | 189
– first lien residential mortgages | 50 | 105 | — | 155
– guaranteed loans in respect of residential property | 26 | 4 | — | 30
– other personal lending which is secured | — | 1 | — | 1
– credit cards | 1 | — | — | 1
– other personal lending which is unsecured | 1 | 1 | — | 2
Wholesale | 1,122 | 1,114 | 34 | 2,270
– corporate and commercial | 1,118 | 1,111 | 34 | 2,263
– non-bank financial institutions | 4 | 3 | — | 7
At 31 Dec 2024 | 1,200 | 1,225 | 34 | 2,459
Allowance for ECL |  |  |  |
Personal | (4) | (36) | — | (40)
– first lien residential mortgages | (3) | (35) | — | (38)
– guaranteed loans in respect of residential property | (1) | (1) | — | (2)
– other personal lending which is secured | — | — | — | —
– credit cards | — | — | — | —
– other personal lending which is unsecured | — | — | — | —
Wholesale | (25) | (316) | (18) | (359)
– corporate and commercial | (25) | (316) | (18) | (359)
– non-bank financial institutions | — | — | — | —
At 31 Dec 2024 | (29) | (352) | (18) | (399)

The group |  |  |  |
Gross carrying amount |  |  |  |
Personal | 88 | 127 | — | 215
– first lien residential mortgages | 66 | 120 | — | 186
– guaranteed loans in respect of residential property | 19 | 6 | — | 25
– other personal lending which is secured | 1 | — | — | 1
– credit cards | 1 | — | — | 1
– other personal lending which is unsecured | 1 | 1 | — | 2
Wholesale | 1,545 | 788 | 24 | 2,357
– corporate and commercial | 1,510 | 778 | 24 | 2,312
– non-bank financial institutions | 35 | 10 | — | 45
At 31 Dec 2023 | 1,633 | 915 | 24 | 2,572
Allowance for ECL |  |  |  |
Personal | (4) | (39) | — | (43)
– first lien residential mortgages | (4) | (39) | — | (43)
– guaranteed loans in respect of residential property | — | — | — | —
– other personal lending which is secured | — | — | — | —
– credit cards | — | — | — | —
– other personal lending which is unsecured | — | — | — | —
Wholesale | (15) | (267) | (6) | (288)
– corporate and commercial | (14) | (263) | (6) | (283)
– non-bank financial institutions | (1) | (4) | — | (5)
At 31 Dec 2023 | (19) | (306) | (6) | (331)

64 | HSBC Bank plc Annual Report and Accounts 2024

Risk

Forborne loans and advances to customers at amortised cost by stage allocation (continued)
| Performing forborne | Non-performing forborne | Total forborne
| Stage 2 | Stage 3 | POCI | Total
The bank | £m | £m | £m | £m
Gross carrying amount |  |  |  |
Personal | 3 | 11 | — | 14
– first lien residential mortgages | 1 | 10 | — | 11
– credit cards | 1 | — | — | 1
– other personal lending which is unsecured | 1 | 1 | — | 2
Wholesale | — | 259 | 34 | 293
– corporate and commercial | — | 259 | 34 | 293
At 31 Dec 2024 | 3 | 270 | 34 | 307
Allowance for ECL |  |  |  |
Personal | — | (1) | — | (1)
– first lien residential mortgages | — | (1) | — | (1)
– credit cards | — | — | — | —
– other personal lending which is unsecured | — | — | — | —
Wholesale | — | (162) | (18) | (180)
– corporate and commercial | — | (162) | (18) | (180)
At 31 Dec 2024 | — | (163) | (18) | (181)

The bank |  |  |  |
Gross carrying amount |  |  |  |
Personal | 1 | 8 | — | 9
– first lien residential mortgages | — | 7 | — | 7
– credit cards | 1 | — | — | 1
– other personal lending which is unsecured | — | 1 | — | 1
Wholesale | 125 | 265 | 24 | 414
– corporate and commercial | 125 | 265 | 24 | 414
At 31 Dec 2023 | 126 | 273 | 24 | 423
Allowance for ECL |  |  |  |
Personal | — | (1) | — | (1)
– first lien residential mortgages | — | (1) | — | (1)
– credit cards | — | — | — | —
– other personal lending which is unsecured | — | — | — | —
Wholesale | (4) | (126) | (6) | (136)
– corporate and commercial | (4) | (126) | (6) | (136)
At 31 Dec 2023 | (4) | (127) | (6) | (137)

HSBC Bank plc Annual Report and Accounts 2024 | 65

Wholesale lending
This section presents further disclosures related to wholesale lending.
It provides details of the major countries, industries and customer
classification that are driving the change observed in wholesale loans
and advances to banks and customers.
Further granularity is also provided by stage, with data for our main
countries presented for gross loans and advances to banks and
customers, loan and other credit-related commitments and financial
guarantees.
The table below provides a breakdown by industry sector and stage of
the group’s gross carrying amount and allowances for ECL for
wholesale loans and advances to banks and customers.
Counterparties or exposures are classified when presenting
comparable economic characteristics, or engaged in similar activities
so that their collective ability to meet contractual obligations is
uniformly affected by changes in economic, political or other
conditions. Therefore, the industry classification does not adhere to
Nomenclature des Activités Économiques dans la Communauté
Européenne (‘NACE’), which is applicable to other financial regulatory
reporting.

Total wholesale lending for loans and advances to banks and customers by stage distribution
| Gross carrying amount | Allowance for ECL
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total
| £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
Corporate and commercial | 41,386 | 4,375 | 1,628 | 38 | 47,427 | (35) | (85) | (454) | (18) | (592)
– agriculture, forestry and fishing | 178 | 44 | 17 | — | 239 | — | (1) | (4) | — | (5)
– mining and quarrying | 785 | 1 | 203 | — | 989 | (1) | — | — | — | (1)
– manufacture | 8,649 | 711 | 254 | — | 9,614 | (7) | (25) | (61) | — | (93)
– electricity, gas, steam and air- conditioning supply | 1,060 | 103 | 50 | — | 1,213 | (1) | (2) | (1) | — | (4)
– water supply, sewerage, waste management and remediation | 262 | 40 | — | — | 302 | — | — | — | — | —
– construction and real estate | 4,003 | 426 | 194 | 34 | 4,657 | (5) | (13) | (30) | (18) | (66)
– wholesale and retail trade, repair of motor vehicles and motorcycles | 7,549 | 645 | 193 | 1 | 8,388 | (3) | (6) | (85) | — | (94)
– transportation and storage | 2,071 | 833 | 206 | — | 3,110 | (1) | (5) | (152) | — | (158)
– accommodation and food | 792 | 14 | 15 | — | 821 | (3) | — | (4) | — | (7)
– publishing, audiovisual and broadcasting | 2,622 | 166 | 13 | — | 2,801 | (1) | (2) | (4) | — | (7)
– professional, scientific and technical activities | 4,972 | 662 | 261 | 3 | 5,898 | (5) | (15) | (56) | — | (76)
– administrative and support services | 4,588 | 397 | 174 | — | 5,159 | (5) | (4) | (51) | — | (60)
– public administration and defence, compulsory social security | 3 | — | — | — | 3 | — | — | — | — | —
– education | 20 | 7 | — | — | 27 | — | — | — | — | —
– health and care | 44 | 15 | 4 | — | 63 | — | — | (2) | — | (2)
– arts, entertainment and recreation | 162 | 7 | 1 | — | 170 | (1) | — | — | — | (1)
– other services | 1,648 | 194 | 2 | — | 1,844 | (1) | (2) | (1) | — | (4)
– activities of households | — | — | — | — | — | — | — | — | — | —
– extra-territorial organisations and bodies activities | — | — | — | — | — | — | — | — | — | —
– government | 1,963 | 99 | 41 | — | 2,103 | (1) | — | (3) | — | (4)
– asset-backed securities | 15 | 11 | — | — | 26 | — | (10) | — | — | (10)
Non-bank financial institutions | 15,725 | 216 | 209 | — | 16,150 | (7) | (3) | (144) | — | (154)
Loans and advances to banks | 14,457 | 67 | — | — | 14,524 | (2) | (1) | — | — | (3)
At 31 Dec 2024 | 71,568 | 4,658 | 1,837 | 38 | 78,101 | (44) | (89) | (598) | (18) | (749)
By geography |  |  |  |  |  |  |  |  |  |
UK | 35,755 | 851 | 529 | 37 | 37,172 | (10) | (21) | (309) | (18) | (358)
France | 24,593 | 2,602 | 899 | 1 | 28,095 | (21) | (31) | (159) | — | (211)
Other countries 1 | 11,220 | 1,205 | 409 | — | 12,834 | (13) | (37) | (130) | — | (180)
At 31 Dec 2024 | 71,568 | 4,658 | 1,837 | 38 | 78,101 | (44) | (89) | (598) | (18) | (749)

1 Other countries include HSBC Germany Branch which was presented separately in 2023.

Total wholesale lending for loans and other credit-related commitments and financial guarantees by stage distribution 1
| Nominal amount | Allowance for ECL
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total
| £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
Corporate and commercial | 59,569 | 3,818 | 189 | 3 | 63,579 | (14) | (23) | (15) | — | (52)
Financial | 58,702 | 1,058 | 15 | — | 59,775 | (2) | (2) | (2) | — | (6)
At 31 Dec 2024 | 118,271 | 4,876 | 204 | 3 | 123,354 | (16) | (25) | (17) | — | (58)
By geography |  |  |  |  |  |  |  |  |  |
UK | 31,941 | 1,829 | 29 | 3 | 33,802 | (6) | (12) | (5) | — | (23)
France | 74,201 | 1,954 | 56 | — | 76,211 | (4) | (4) | (9) | — | (17)
Other countries 2 | 12,129 | 1,093 | 119 | — | 13,341 | (6) | (9) | (3) | — | (18)
At 31 Dec 2024 | 118,271 | 4,876 | 204 | 3 | 123,354 | (16) | (25) | (17) | — | (58)

1 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
2 Other countries include HSBC Germany Branch which was presented separately in 2023.

66 | HSBC Bank plc Annual Report and Accounts 2024

Risk

Total wholesale lending for loans and advances to banks and customers by stage distribution (continued)
| Gross carrying amount | Allowance for ECL
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total
| £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
Corporate and commercial | 42,982 | 5,981 | 1,773 | 32 | 50,768 | (48) | (98) | (673) | (6) | (825)
– agriculture, forestry and fishing | 299 | 7 | 28 | — | 334 | (1) | — | (9) | — | (10)
– mining and quarrying | 584 | 157 | 162 | — | 903 | (1) | (3) | — | — | (4)
– manufacture | 8,267 | 1,465 | 348 | — | 10,080 | (6) | (17) | (123) | — | (146)
– electricity, gas, steam and air- conditioning supply | 1,254 | 98 | 69 | — | 1,421 | (2) | (1) | (6) | — | (9)
– water supply, sewerage, waste management and remediation | 359 | 42 | 5 | — | 406 | — | — | (4) | — | (4)
– construction | 4,470 | 464 | 192 | 26 | 5,152 | (11) | (11) | (55) | (6) | (83)
– wholesale and retail trade, repair of motor vehicles and motorcycles | 9,118 | 689 | 186 | 1 | 9,994 | (5) | (6) | (107) | — | (118)
– transportation and storage | 2,085 | 969 | 151 | — | 3,205 | (2) | (7) | (101) | — | (110)
– accommodation and food | 758 | 174 | 38 | — | 970 | (2) | (5) | (11) | — | (18)
– publishing, audiovisual and broadcasting | 3,400 | 262 | 28 | — | 3,690 | (3) | (15) | (16) | — | (34)
– professional, scientific and technical activities | 4,841 | 844 | 322 | 5 | 6,012 | (6) | (12) | (157) | — | (175)
– administrative and support services | 5,032 | 358 | 115 | — | 5,505 | (6) | (7) | (56) | — | (69)
– public administration and defence, compulsory social security | 4 | — | — | — | 4 | — | — | — | — | —
– education | 23 | 3 | 1 | — | 27 | — | — | — | — | —
– health and care | 91 | 4 | 5 | — | 100 | — | — | (2) | — | (2)
– arts, entertainment and recreation | 61 | 36 | 3 | — | 100 | — | (1) | (1) | — | (2)
– other services | 1,196 | 289 | 70 | — | 1,555 | (3) | (2) | (23) | — | (28)
– activities of households | 1 | — | — | — | 1 | — | — | — | — | —
– extra-territorial organisations and bodies activities | 1 | — | — | — | 1 | — | — | — | — | —
– government | 1,123 | 109 | 50 | — | 1,282 | — | — | (2) | — | (2)
– asset-backed securities | 15 | 11 | — | — | 26 | — | (11) | — | — | (11)
Non-bank financial institutions | 11,927 | 530 | 323 | — | 12,780 | (7) | (10) | (138) | — | (155)
Loans and advances to banks | 14,256 | 116 | — | — | 14,372 | (1) | — | — | — | (1)
At 31 Dec 2023 | 69,165 | 6,627 | 2,096 | 32 | 77,920 | (56) | (108) | (811) | (6) | (981)
By geography |  |  |  |  |  |  |  |  |  |
UK | 32,334 | 2,229 | 648 | 25 | 35,236 | (11) | (45) | (258) | (6) | (320)
France | 24,264 | 2,669 | 1,148 | 6 | 28,087 | (27) | (40) | (447) | — | (514)
Other countries 1 | 12,567 | 1,729 | 300 | 1 | 14,597 | (18) | (23) | (106) | — | (147)
At 31 Dec 2023 | 69,165 | 6,627 | 2,096 | 32 | 77,920 | (56) | (108) | (811) | (6) | (981)

1 Other countries include HSBC Germany Branch which was presented separately in 2023.

Total wholesale lending for loans and other credit-related commitments and financial guarantees 1 by stage distribution (continued)
| Nominal amount | Allowance for ECL
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total
| £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
Corporate and commercial | 59,282 | 4,883 | 226 | 3 | 64,394 | (12) | (18) | (20) | — | (50)
Financial | 59,760 | 2,536 | 17 | — | 62,313 | (3) | (4) | (1) | — | (8)
At 31 Dec 2023 | 119,042 | 7,419 | 243 | 3 | 126,707 | (15) | (22) | (21) | — | (58)
By geography |  |  |  |  |  |  |  |  |  |
Europe | 119,042 | 7,419 | 243 | 3 | 126,707 | (15) | (22) | (21) | — | (58)
– of which: UK | 27,612 | 4,704 | 13 | 3 | 32,332 | (5) | (14) | (1) | — | (20)
– of which: France | 81,739 | 1,405 | 77 | — | 83,221 | (5) | (3) | (7) | — | (15)

1 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.

HSBC Bank plc Annual Report and Accounts 2024 | 67

Collateral and other credit enhancement
(Audited)
Although collateral can be an important mitigant of credit risk, it is the
g roup ’s practice to lend on the basis of the customer’s ability to meet
their obligations out of cash flow resources rather than placing
primary reliance on collateral and other credit risk enhancements.
Depending on the customer’s standing and the type of product,
facilities may be provided without any collateral or other credit
enhancements. For other lending, a charge over collateral is obtained
and considered in determining the credit decision and pricing. In the
event of default, the group may utilise the collateral as a source of
repayment.
Depending on its form, collateral can have a significant financial effect
in mitigating our exposure to credit risk. Where there is sufficient
collateral, an expected credit loss is not recognised. This is the case
for reverse repurchase agreements and for certain loans and
advances to customers where the loan to value (‘LTV’) is very low.
Mitigants may include a charge on borrowers’ specific assets, such as
real estate or financial instruments. Other credit risk mitigants include
short positions in securities and financial assets held as part of linked
insurance/investment contracts where the risk is predominantly borne
by the policyholder. Additionally, risk may be managed by employing
other types of collateral and credit risk enhancements, such as
second charges, other liens and unsupported guarantees. Guarantees
are normally taken from corporates and export credit agencies.
Corporates would normally provide guarantees as part of a parent/
subsidiary relationship and span a number of credit grades. The export
credit agencies will normally be investment grade.
Certain credit mitigants are used strategically in portfolio management
activities. While single name concentrations arise in portfolios
managed by Global Banking and Corporate Banking, it is only in Global
Banking that their size requires the use of portfolio level credit
mitigants. Across Global Banking, risk limits and utilisations, maturity
profiles and risk quality are monitored and managed proactively. This
process is key to the setting of risk appetite for these larger, more
complex, geographically distributed customer groups. While the
principal form of risk management continues to be at the point of
exposure origination, through the lending decision-making process,
Global Banking also utilises loan sales and credit default swap (‘CDS’)
hedges to manage concentrations and reduce risk.
These transactions are the responsibility of a dedicated Global
Banking portfolio management team. Hedging activity is carried out
within agreed credit parameters, and is subject to market risk limits
and a robust governance structure. Where applicable, CDSs are
entered into directly with a central clearing house counterparty.
Otherwise, our exposure to CDS protection providers is diversified
among mainly banking counterparties with strong credit ratings.
CDS mitigants are held at portfolio level and are not included in the
expected credit loss calculations. CDS mitigants are not reported in
the following tables.
Collateral on loans and advances
Collateral held is analysed for other corporate, commercial and
financial (non-bank) lending. The following table includes off-balance
sheet loan commitments, primarily undrawn credit lines.
The collateral measured in the following table consists of charges
over cash and marketable financial instruments. The values in the
table represent the expected market value on an open market basis,
actual values realised are a function of market conditions. No
adjustment has been made to the collateral for any expected costs of
recovery. Marketable securities are measured at their fair value.
Other types of collateral such as unsupported guarantees and floating
charges over the assets of a customer’s business are not measured
in the following table. While such mitigants have value, often
providing rights in insolvency, their assignable value is not sufficiently
certain and they are therefore assigned no value for disclosure
purposes.
The LTV ratios presented are calculated by directly associating loans
and advances with the collateral that individually and uniquely
supports each facility. When collateral assets are shared by multiple
loans and advances, whether specifically or, more generally, by way
of an all monies charge, the collateral value is pro-rated across the
loans and advances protected by the collateral.
For credit-impaired loans, the collateral values cannot be directly
compared with impairment allowances recognised. The LTV figures
use open market values with no adjustments, actual values realised
are a function of market conditions. Impairment allowances are
calculated on a different basis, by considering other cash flows and
adjusting collateral values for costs of realising collateral as explained
further on page 131.
Other corporate, commercial and financial (non-bank) loans
and advances
Other corporate, commercial and financial (non-bank) loans are
analysed in the following table, which focuses on the countries
containing the majority of our loans and advances balances. For
financing activities in other corporate and commercial lending,
collateral value is not strongly correlated to principal repayment
performance.
Collateral values are generally refreshed when an obligor’s general
credit performance deteriorates and we have to assess the likely
performance of secondary sources of repayment should it prove
necessary to rely on them.

68 | HSBC Bank plc Annual Report and Accounts 2024

Risk

Wholesale lending – other corporate, commercial and financial (non-bank) loans and advances including loan commitments by level of collateral for key countries/territories (by stage)
(Audited)
| Gross carrying/nominal amount | ECL coverage
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total
| £m | £m | £m | £m | £m | % | % | % | % | %
Not collateralised | 125,338 | 7,660 | 1,254 | 4 | 134,256 | — | 1.0 | 42.8 | — | 0.5
Fully collateralised by LTV ratio | 11,789 | 762 | 109 | — | 12,660 | 0.1 | 1.2 | 10.1 | — | 0.2
– less than 50% | 5,211 | 289 | 17 | — | 5,517 | 0.1 | 1.4 | 23.5 | — | 0.2
– 51% to 75% | 2,298 | 143 | 13 | — | 2,454 | — | 0.7 | 30.8 | — | 0.2
– 76% to 90% | 1,139 | 34 | 3 | — | 1,176 | 0.1 | 2.9 | 33.3 | — | 0.3
– 91% to 100% | 3,141 | 296 | 76 | — | 3,513 | — | 1.0 | 2.6 | — | 0.2
Partially collateralised (A): LTV > 100% | 4,056 | 755 | 469 | — | 5,280 | — | 1.9 | 6.8 | — | 0.9
– collateral value on A | 3,230 | 419 | 147 | — | 3,796 |  |  |  |  |
Total at 31 Dec 2024 | 141,183 | 9,177 | 1,832 | 4 | 152,196 | — | 1.1 | 31.7 | — | 0.5
of which: UK |  |  |  |  |  |  |  |  |  |
Not collateralised | 47,979 | 2,314 | 544 | 3 | 50,840 | — | 1.3 | 56.4 | — | 0.7
Fully collateralised by LTV ratio | 4,838 | 169 | 3 | — | 5,010 | — | 0.6 | 66.7 | — | 0.1
– less than 50% | 1,521 | 79 | — | — | 1,600 | — | 1.3 | — | — | 0.1
– 51% to 75% | 894 | 88 | 1 | — | 983 | — | — | — | — | —
– 76% to 90% | 502 | — | — | — | 502 | — | — | — | — | —
– 91% to 100% | 1,921 | 2 | 2 | — | 1,925 | — | — | 100.0 | — | 0.1
Partially collateralised (B): LTV > 100% | 113 | 2 | 4 | — | 119 | — | — | 25.0 | — | 0.8
– collateral value on B | 76 | — | 1 | — | 77 |  |  |  |  |
Total UK at 31 Dec 2024 | 52,930 | 2,485 | 551 | 3 | 55,969 | — | 1.2 | 56.3 | — | 0.6
of which: France |  |  |  |  |  |  |  |  |  |
Not collateralised | 58,509 | 3,513 | 322 | 1 | 62,345 | — | 0.8 | 38.2 | — | 0.3
Fully collateralised by LTV ratio | 3,430 | 171 | 83 | — | 3,684 | 0.1 | 0.6 | 2.4 | — | 0.1
– less than 50% | 1,904 | 107 | 3 | — | 2,014 | 0.1 | 0.9 | — | — | 0.1
– 51% to 75% | 1,037 | 44 | 4 | — | 1,085 | 0.1 | — | 25.0 | — | 0.2
– 76% to 90% | 238 | 15 | 2 | — | 255 | — | — | 50.0 | — | 0.4
– 91% to 100% | 251 | 5 | 74 | — | 330 | — | — | — | — | —
Partially collateralised (C): LTV > 100% | 2,858 | 643 | 406 | — | 3,907 | — | 0.3 | 5.2 | — | 0.6
– collateral value on C | 2,239 | 394 | 111 | — | 2,744 |  |  |  |  |
Total France at 31 Dec 2024 | 64,797 | 4,327 | 811 | 1 | 69,936 | — | 0.7 | 18.0 | — | 0.3

HSBC Bank plc Annual Report and Accounts 2024 | 69

Wholesale lending – other corporate, commercial and financial (non-bank) loans and advances including loan commitments by level of collateral for key countries/territories (by stage) (continued)
(Audited)
| Gross carrying/nominal amount | ECL coverage
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total
| £m | £m | £m | £m | £m | % | % | % | % | %
Not collateralised | 115,898 | 10,983 | 1,617 | 6 | 128,504 | — | 1.0 | 43.8 | — | 0.7
Fully collateralised by LTV ratio | 8,709 | 908 | 101 | — | 9,718 | 0.1 | 1.2 | 23.8 | — | 0.4
– less than 50% | 2,221 | 342 | 41 | — | 2,604 | 0.2 | 1.5 | 24.4 | — | 0.7
– 51% to 75% | 1,830 | 196 | 29 | — | 2,055 | 0.1 | 1.0 | 20.7 | — | 0.4
– 76% to 90% | 336 | 149 | 13 | — | 498 | — | 0.7 | 38.5 | — | 1.2
– 91% to 100% | 4,322 | 221 | 18 | — | 4,561 | — | 1.8 | 22.2 | — | 0.2
Partially collateralised (A): LTV > 100% | 3,709 | 821 | 404 | 1 | 4,935 | 0.1 | 0.5 | 12.1 | — | 1.1
– collateral value on A | 2,963 | 595 | 135 | 1 | 3,694 |  |  |  |  |
Total at 31 Dec 2023 | 128,316 | 12,712 | 2,122 | 7 | 143,157 | — | 1.0 | 36.8 | — | 0.7
of which: UK |  |  |  |  |  |  |  |  |  |
Not collateralised | 42,157 | 5,901 | 622 | — | 48,680 | — | 0.9 | 38.7 | — | 0.6
Fully collateralised by LTV ratio | 4,464 | 168 | 11 | — | 4,643 | — | — | 27.3 | — | 0.1
– less than 50% | 654 | 119 | 6 | — | 779 | — | — | 16.7 | — | 0.1
– 51% to 75% | 1,031 | 47 | 3 | — | 1,081 | — | — | — | — | —
– 76% to 90% | 33 | — | 2 | — | 35 | — | — | 100.0 | — | 5.7
– 91% to 100% | 2,746 | 2 | — | — | 2,748 | — | — | — | — | —
Partially collateralised (B): LTV > 100% | 229 | 19 | 7 | — | 255 | — | — | 42.9 | — | 1.2
– collateral value on B | 150 | — | 2 | — | 152 |  |  |  |  |
Total UK at 31 Dec 2023 | 46,850 | 6,088 | 640 | — | 53,578 | — | 0.9 | 38.6 | — | 0.6
of which: France |  |  |  |  |  |  |  |  |  |
Not collateralised | 59,349 | 2,634 | 715 | 6 | 62,704 | — | 1.1 | 53.8 | — | 0.7
Fully collateralised by LTV ratio | 2,110 | 341 | 26 | — | 2,477 | 0.1 | 1.2 | 15.4 | — | 0.4
– less than 50% | 1,047 | 146 | 12 | — | 1,205 | 0.1 | 0.7 | 16.7 | — | 0.3
– 51% to 75% | 614 | 115 | 4 | — | 733 | 0.2 | 0.9 | 25.0 | — | 0.4
– 76% to 90% | 87 | 19 | 8 | — | 114 | — | — | 12.5 | — | 0.9
– 91% to 100% | 362 | 61 | 2 | — | 425 | — | 3.3 | 50.0 | — | 0.7
Partially collateralised (C): LTV > 100% | 3,038 | 787 | 390 | 1 | 4,216 | — | 0.4 | 10.0 | — | 1.0
– collateral value on C | 2,418 | 583 | 129 | 1 | 3,131 |  |  |  |  |
Total France at 31 Dec 2023 | 64,497 | 3,762 | 1,131 | 7 | 69,397 | — | 1.0 | 37.8 | — | 0.7

Other credit risk exposures
In addition to collateralised lending, other credit enhancements are
employed and methods used to mitigate credit risk arising from
financial assets. These are described in more detail below:
– Some securities issued by governments, banks and other financial
institutions benefit from additional credit enhancements provided
by government guarantees that cover the assets.
– Debt securities issued by banks and financial institutions include
asset-backed securities ('ABSs') and similar instruments, which
are supported by underlying pools of financial assets. Credit risk
associated with ABSs is reduced through the purchase of credit
default swap (‘CDS’) protection.
– Trading loans and advances mainly consist of reverse repos and
stock borrowing, which are by their nature collateralised.
– Cash collateral is posted to satisfy margin requirements. There is
limited credit risk on cash collateral posted since in the event of
default of the counterparty this would be set off against the
related liability.
Collateral accepted as security that the group is permitted to sell or repledge
under these arrangements is described on page 171 of the financial
statements.
The group’s maximum exposure to credit risk includes financial
guarantees and similar contracts granted, as well as loan and other
credit-rela ted commitments. Depending on the terms of the
arrangement, we may use additional credit mitigation if a guarantee is
called upon or a loan commitment is drawn and subsequently
defaults.
For further information on these arrangements, see Note 30 on the financial
statements.
Derivatives
We participate in transactions exposing us to counterparty credit risk.
Counterparty credit risk is the risk of financial loss if the counterparty
to a transaction defaults before satisfactorily settling it. It arises
principally from over-the-counter (‘OTC’) derivatives and securities
financing transactions and is calculated in both the trading and non-
trading books. Transactions vary in value by reference to a market
factor such as an interest rate, exchange rate or asset price.
The counterparty risk from derivative transactions is taken into
account when reporting the fair value of derivative positions. The
adjustment to the fair value is known as the credit valuation
adjustment (‘CVA’).
For an analysis of CVAs, see Note 11 on the financial statements.

70 | HSBC Bank plc Annual Report and Accounts 2024

Risk

The International Swaps and Derivatives Association (‘ISDA’) master
agreement is our preferred agreement for documenting derivatives
activity. It is common, and our preferred practice, for the parties
involved in a derivative transaction to execute a credit support annex
(‘CSA’) in conjunction with the ISDA master agreement. Under a CSA,
collateral is passed between the parties to mitigate the counterparty
risk inherent in outstanding positions. The majority of our CSAs are
with financial institutional clients.
We manage the counterparty exposure on our OTC derivative
contracts by using collateral agreements with counterparties and
netting agreements. Currently, we do not actively manage our general
OTC derivative counterparty exposure in the credit markets, although
we may manage individual exposures in certain circumstances.
We place strict policy restrictions on collateral types and as a
consequence the types of collateral received and pledged are, by
value, highly liquid and of a strong quality, being predominantly cash.
Where a collateral type is required to be approved outside the
collateral policy, approval is required from a committee of senior
representatives from Markets, Legal and Risk.
See Note 28 on the financial statements for details regarding legally
enforceable right of offset in the event of counterparty default and collateral
received in respect of derivatives.
Personal lending
This section presents further disclosures related to personal lending.
It provides details of the countries and products that are driving the
change observed in personal gross loans and advances to customers.
Further product granularity is also provided by stage, with
geographical data presented for gross loans and advances to
customers, loan and other credit-related commitments and financial
guarantees.

Total personal lending for loans and advances to customers at amortised cost by stage distribution
| Gross carrying amount | Allowance for ECL
| Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total
| £m | £m | £m | £m | £m | £m | £m | £m
By portfolio |  |  |  |  |  |  |  |
First lien residential mortgages | 6,725 | 770 | 188 | 7,683 | (5) | (16) | (62) | (83)
– of which: interest only (including offset) | 777 | 193 | 35 | 1,005 | — | — | (10) | (10)
– affordability (including ARMs) | 195 | 5 | — | 200 | — | (1) | — | (1)
Other personal lending | 12,008 | 185 | 71 | 12,264 | (9) | (3) | (17) | (29)
– guaranteed loans in respect of residential property | 5,080 | 137 | 14 | 5,231 | (1) | (2) | (2) | (5)
– other personal lending which is secured | 6,662 | 41 | 47 | 6,750 | (6) | — | (8) | (14)
– credit cards | 121 | 4 | 1 | 126 | (1) | (1) | — | (2)
– other personal lending which is unsecured | 114 | 2 | 8 | 124 | (1) | — | (7) | (8)
– motor vehicle finance | 31 | 1 | 1 | 33 | — | — | — | —
At 31 Dec 2024 | 18,733 | 955 | 259 | 19,947 | (14) | (19) | (79) | (112)
By geography |  |  |  |  |  |  |  |
UK 1 | 5,359 | 586 | 32 | 5,977 | (6) | (1) | (4) | (11)
France | 5,381 | 143 | 39 | 5,563 | (1) | (2) | (16) | (19)
Switzerland | 4,502 | 40 | 42 | 4,584 | (4) | — | (9) | (13)
Other countries | 3,491 | 186 | 146 | 3,823 | (3) | (16) | (50) | (69)
At 31 Dec 2024 | 18,733 | 955 | 259 | 19,947 | (14) | (19) | (79) | (112)

1 Includes primarily first lien residential mortgages in Channel Islands and Isle of Man.

Total personal lending for loans and other credit-related commitments and financial guarantees 1 by stage distribution
| Nominal amount | Allowance for ECL
| Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total
| £m | £m | £m | £m | £m | £m | £m | £m
UK | 422 | 2 | 2 | 426 | — | — | — | —
France | 4 | — | — | 4 | — | — | — | —
Switzerland | 438 | — | — | 438 | — | — | — | —
Other countries | 415 | 3 | — | 418 | — | — | — | —
At 31 Dec 2024 | 1,279 | 5 | 2 | 1,286 | — | — | — | —

1 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.

HSBC Bank plc Annual Report and Accounts 2024 | 71

Total personal lending for loans and advances to customers at amortised cost by stage distribution (continued)
| Gross carrying amount | Allowance for ECL
| Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total
| £m | £m | £m | £m | £m | £m | £m | £m
By portfolio |  |  |  |  |  |  |  |
First lien residential mortgages | 4,915 | 1,029 | 193 | 6,137 | (14) | (15) | (63) | (92)
– of which: interest only (including offset) | 820 | 292 | 27 | 1,139 | — | (1) | (11) | (12)
– affordability (including ARMs) | 221 | 4 | — | 225 | (1) | (1) | — | (2)
Other personal lending | 6,532 | 341 | 21 | 6,894 | (6) | (2) | (8) | (16)
– guaranteed loans in respect of residential property | 5,497 | 314 | 11 | 5,822 | — | — | — | —
– other personal lending which is secured | 756 | 19 | 1 | 776 | (1) | — | — | (1)
– credit cards | 121 | 4 | 1 | 126 | (2) | (1) | (1) | (4)
– other personal lending which is unsecured | 129 | 3 | 8 | 140 | (3) | (1) | (7) | (11)
– motor vehicle finance | 29 | 1 | — | 30 | — | — | — | —
At 31 Dec 2023 | 11,447 | 1,370 | 214 | 13,031 | (20) | (17) | (71) | (108)
By geography |  |  |  |  |  |  |  |
UK 1 | 1,810 | 818 | 13 | 2,641 | (2) | (2) | (3) | (7)
France | 5,811 | 356 | 37 | 6,204 | — | (1) | (15) | (16)
Other countries 2 | 3,826 | 196 | 164 | 4,186 | (18) | (14) | (53) | (85)
At 31 Dec 2023 | 11,447 | 1,370 | 214 | 13,031 | (20) | (17) | (71) | (108)

1 Includes primarily first lien residential mortgages in Channel Islands and Isle of Man.
2 Other countries include HSBC Germany Branch which was presented separately in 2023.

Total personal lending for loans and other credit-related commitments and financial guarantees 1 by stage distribution (continued)
| Nominal amount | Allowance for ECL
| Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total
| £m | £m | £m | £m | £m | £m | £m | £m
UK | 330 | 2 | 2 | 334 | — | — | — | —
France | 517 | 24 | 1 | 542 | — | — | — | —
Other countries | 431 | 3 | — | 434 | — | — | — | —
At 31 Dec 2023 | 1,278 | 29 | 3 | 1,310 | — | — | — | —

1 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
Collateral on loans and advances
The following table provides a quantification of the value of fixed
charges we hold over specific assets where we have a history of
enforcing, and are able to enforce, collateral in satisfying a debt in the
event of the borrower failing to meet its contractual obligations, and
where the collateral is cash or can be realised by sale in an
established market.
The collateral valuation excludes any adjustments for obtaining and
selling the collateral and, in particular, loans shown as not
collateralised or partially collateralised may also benefit from other
forms of credit mitigants.

72 | HSBC Bank plc Annual Report and Accounts 2024

Risk

Personal lending – residential mortgage loans including loan commitments by level of collateral for key countries/territories by stage
(Audited)
| Gross carrying/nominal amount | ECL coverage
| Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total
| £m | £m | £m | £m | % | % | % | %
Fully collateralised by LTV ratio | 6,858 | 759 | 137 | 7,754 | 0.1 | 1.7 | 21.9 | 0.6
– less than 50% | 2,869 | 403 | 57 | 3,329 | — | 1.0 | 14.0 | 0.4
– 51% to 70% | 2,885 | 257 | 49 | 3,191 | 0.1 | 1.6 | 20.4 | 0.5
– 71% to 80% | 796 | 59 | 9 | 864 | 0.1 | 3.4 | 33.3 | 0.7
– 81% to 90% | 261 | 29 | 11 | 301 | — | 6.9 | 36.4 | 2.0
– 91% to 100% | 47 | 11 | 11 | 69 | — | 9.1 | 45.5 | 8.7
Partially collateralised (A): LTV > 100% | 32 | 12 | 51 | 95 | — | 25.0 | 64.7 | 37.9
– collateral value on A | 23 | 11 | 29 | 63 |  |  |  |
Total at 31 Dec 2024 | 6,890 | 771 | 188 | 7,849 | 0.1 | 2.1 | 33.5 | 1.1
of which: UK |  |  |  |  |  |  |  |
Fully collateralised by LTV ratio | 2,703 | 585 | 27 | 3,315 | — | — | 11.1 | 0.1
– less than 50% | 1,025 | 311 | 13 | 1,349 | — | — | 7.7 | 0.1
– 51% to 70% | 1,040 | 209 | 13 | 1,262 | — | — | 15.4 | 0.2
– 71% to 80% | 440 | 44 | 1 | 485 | — | — | 10.9 | —
– 81% to 90% | 173 | 18 | — | 191 | — | — | — | —
– 91% to 100% | 25 | 3 | — | 28 | — | — | — | —
Partially collateralised (A): LTV > 100% | 5 | — | — | 5 | — | — | — | —
– collateral value on B | 1 | — | — | 1 |  |  |  |
Total UK at 31 Dec 2024 | 2,708 | 585 | 27 | 3,320 | — | — | 11.1 | 0.1
of which: France |  |  |  |  |  |  |  |
Fully collateralised by LTV ratio | 273 | 4 | 6 | 283 | — | 3.3 | 13.3 | 0.4
– less than 50% | 107 | 1 | 4 | 112 | — | 2.5 | — | 0.1
– 51% to 70% | 125 | 1 | 2 | 128 | — | 4.5 | 27.5 | 0.5
– 71% to 80% | 26 | 2 | — | 28 | — | 2.5 | — | —
– 81% to 90% | 12 | — | — | 12 | — | — | — | —
– 91% to 100% | 3 | — | — | 3 | — | — | — | —
Partially collateralised (A): LTV > 100% | 5 | — | 12 | 17 | — | — | 66.7 | 47.1
– collateral value on C | 5 | — | — | 5 |  |  |  |
Total France at 31 Dec 2024 | 278 | 4 | 18 | 300 | — | — | 44.4 | 2.7
of which: Switzerland |  |  |  |  |  |  |  |
Fully collateralised by LTV ratio | 1,165 | — | 4 | 1,169 | 0.1 | — | 50.0 | 0.3
– less than 50% | 400 | — | 4 | 404 | — | — | 50.0 | 0.5
– 51% to 70% | 703 | — | — | 703 | — | — | — | 0.1
– 71% to 80% | 62 | — | — | 62 | — | — | — | —
– 81% to 90% | — | — | — | — | — | — | — | —
– 91% to 100% | — | — | — | — | — | — | — | —
Partially collateralised (A): LTV > 100% | — | — | — | — | — | — | — | —
– collateral value on D | — | — | — | — |  |  |  |
Total Switzerland at 31 Dec 2024 | 1,165 | — | 4 | 1,169 | 0.1 | — | 50.0 | 0.3

HSBC Bank plc Annual Report and Accounts 2024 | 73

Personal lending – residential mortgage loans including loan commitments by level of collateral for key countries/territories by stage (continued)
(Audited)
| Gross carrying/nominal amount | ECL coverage
| Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total
| £m | £m | £m | £m | % | % | % | %
Fully collateralised by LTV ratio | 5,019 | 1,011 | 125 | 6,155 | 0.3 | 1.2 | 22.4 | 0.9
– less than 50% | 2,320 | 448 | 59 | 2,827 | 0.2 | 0.9 | 15.3 | 0.6
– 51% to 70% | 1,753 | 352 | 28 | 2,133 | 0.2 | 1.1 | 21.4 | 0.7
– 71% to 80% | 594 | 121 | 11 | 726 | 0.5 | 1.7 | 27.3 | 1.1
– 81% to 90% | 271 | 59 | 15 | 345 | 0.7 | 1.7 | 33.3 | 2.3
– 91% to 100% | 81 | 31 | 12 | 124 | 1.2 | 3.2 | 41.7 | 5.6
Partially collateralised (A): LTV > 100% | 77 | 19 | 68 | 164 | — | 15.8 | 52.9 | 23.8
– collateral value on A | 33 | 16 | 54 | 103 |  |  |  |
Total at 31 Dec 2023 | 5,096 | 1,030 | 193 | 6,319 | 0.3 | 1.5 | 33.2 | 1.5
of which: UK |  |  |  |  |  |  |  |
Fully collateralised by LTV ratio | 1,752 | 814 | 10 | 2,576 | — | — | 10.0 | —
– less than 50% | 863 | 354 | 9 | 1,226 | — | — | 11.1 | 0.1
– 51% to 70% | 559 | 295 | 1 | 855 | — | — | — | —
– 71% to 80% | 179 | 96 | — | 275 | — | — | — | —
– 81% to 90% | 102 | 48 | — | 150 | — | — | — | —
– 91% to 100% | 49 | 21 | — | 70 | — | — | — | —
Partially collateralised (B): LTV > 100% | 9 | 1 | — | 10 | — | — | — | —
– collateral value on B | 3 | 1 | — | 4 |  |  |  |
Total UK at 31 Dec 2023 | 1,761 | 815 | 10 | 2,586 | — | — | 10.0 | —
of which: France |  |  |  |  |  |  |  |
Fully collateralised by LTV ratio | 280 | 36 | 6 | 322 | — | — | 16.7 | 0.3
– less than 50% | 108 | 17 | 5 | 130 | — | — | — | —
– 51% to 70% | 126 | 15 | — | 141 | — | — | — | —
– 71% to 80% | 30 | 3 | — | 33 | — | — | — | —
– 81% to 90% | 14 | 1 | — | 15 | — | — | — | —
– 91% to 100% | 2 | — | 1 | 3 | — | — | 100.0 | 33.3
Partially collateralised (C): LTV > 100% | 4 | — | 14 | 18 | — | — | 64.3 | 50.0
– collateral value on C | 4 | — | 14 | 18 |  |  |  |
Total France at 31 Dec 2023 | 284 | 36 | 20 | 340 | — | — | 50.0 | 2.9

Treasury risk
Overview
Treasury risk is the risk of having insufficient capital, liquidity or
funding resources to meet financial obligations and satisfy regulatory
requirements, including the risk of adverse impact on earnings or
capital due to structural and transactional foreign exchange
exposures, as well as changes in market interest rates, together with
pension risk and insurance risk.
Treasury risk arises from changes to the respective resources and risk
profiles driven by customer behaviour, management decisions or the
external environment.
Approach and policy
(Audited)
Our objective in the management of treasury risk is to maintain
appropriate levels of capital, liquidity, funding, foreign exchange and
market risk to support our business strategy, and meet our regulatory
and stress testing-related requirements.
Our approach to treasury management is driven by our strategic and
organisational requirements, and considers the regulatory, economic
and commercial environment. We aim to maintain a strong capital and
liquidity base to support the risks inherent in our business and invest
in accordance with our strategy, to meet regulatory requirements at
all times.
Our policy is underpinned by our risk management framework. The
risk management framework incorporates a number of measures
aligned to our assessment of risks for both internal and regulatory
purposes. These risks include credit, market, operational, pensions,
structural and transactional foreign exchange risk, and interest rate
risk in the banking book.
For further details, refer to our Pillar 3 Disclosures at 31 December 2024.
Treasury risk management
Key developments in 2024
– We completed the sale of our retail banking operations in France in
January 2024.
– De-risking remained a focus for our defined benefit plans over
2024 and we have worked with the fiduciaries of the plans to
progress a number of de-risking strategies over the year. This
includes the transfer of the payroll and administration of one of our
smaller plans to an insurer and transitioning of assets to lower risk
investment strategies providing further protection to future market
movements.
– The bank continues its delivery efforts against regulatory
commitments, including enhancements to regulatory reporting and
the implementation of prudential policy changes. We continue to
assess the impact of Basel 3.1 following the PRA announcement
to delay the implementation until 1 January 2027.
– We have significant progress in improving our recovery and
resolution capabilities in line with the Group’s preferred resolution
strategy and regulatory expectations, including the Bank of
England’s (‘BoE’) Resolvability Assessment Framework (‘RAF’).
– We further stabilised our banking net interest income through
extending the average duration of our structural hedge.
Governance and structure
The Chief Risk Officer is the accountable risk steward for all treasury
risks. The Chief Financial Officer is the risk owner for all treasury
risks, with the exception of pension risk which is co-owned with the
regional heads of Performance & Reward.
Capital risk, liquidity risk, interest rate risk in the banking book,
structural foreign exchange risk and transactional foreign exchange
risk are the responsibility of the Executive Committee and the Risk

74 | HSBC Bank plc Annual Report and Accounts 2024

Risk

Committee. Treasury actively manages these risks on an ongoing
basis, supported by the Asset and Liability Management Committee
(‘ALCO’) and local ALCOs, overseen by Treasury Risk Management.
Pension risk is overseen by the Pension Risk Management Meeting.
Capital, liquidity and funding risk
management processes
Assessment and risk appetite
Our capital management approach is underpinned by a Global Capital
Risk Policy and supporting frameworks for Resolution Planning and
Stress Testing. The policy sets out our approach to determining key
capital risk appetites including CET1, total capital, minimum
requirements for own funds and eligible liabilities (‘MREL’), and the
leverage ratio. Our internal capital adequacy assessment process
(‘ICAAP’) is an assessment of the g roup’s capital position, outlining
both regulatory and internal capital resources and requirements
resulting from our business model, strategy, risk profile and
management, performance and planning, risks to capital, and the
implications of stress testing. Our assessment of capital adequacy is
driven by an assessment of risks. These risks include credit, market,
operational, pensions, insurance, structural foreign exchange, interest
rate risk in the banking book and group risk. Climate risk is also
considered as part of the ICAAP, and we are continuing to develop
our approach. The group’s ICAAP supports the determination of the
capital risk appetite and target ratios, as well as enabling the
assessment and determination of capital requirements by regulators.
Subsidiaries prepare ICAAPs in line with global guidance, while
considering their local regulatory regimes to determine their own risk
appetites and ratios.
HSBC Holdings provides our MREL, including equity and non-equity
capital. These investments are funded by HSBC Holdings’ own equity
capital and MREL-eligible debt. MREL includes own funds and
liabilities that can be written down or converted into capital resources
in order to absorb losses or recapitalise a bank in the event of its
failure. In line with the HSBC Group's existing structure and business
model, HSBC has three resolution groups – the European resolution
group (of which HSBC Bank plc forms part), the Asian resolution
group and the US resolution group.
We aim to ensure that management has oversight of our liquidity and
funding risks at group and entity level through governance
arrangements, in line with our risk management framework. We
manage liquidity and funding risk in accordance with globally
consistent policies, procedures and reporting standards.
We are required to meet internal minimum requirements and any
applicable regulatory requirements at all times. These requirements
are assessed through our internal liquidity adequacy assessment
process ('ILAAP'), which ensures that we have strategies, policies,
processes and systems for the identification, measurement,
management and monitoring of liquidity risk over an appropriate set of
time horizons, including intra-day. The ILAAP informs the setting of
risk appetite. It also assesses our capability to manage liquidity and
funding effectively. These metrics are set and managed locally but are
subject to global review and challenge to ensure consistency of
approach and application of the HSBC Group’s policies and controls.
Planning and performance
Capital and RWA plans form part of the annual financial resource plan
that is approved by the Board. Capital and RWA forecasts are
submitted to the ALCO on a monthly basis, and capital and RWAs are
monitored and managed against the plan. The responsibility for global
capital allocation principles rests with the HSBC Group Chief Financial
Officer, supported by the HSBC Group Capital Management Meeting.
This is a specialist forum addressing capital management, reporting
into Holdings ALCO.
Through our internal governance processes, we seek to strengthen
discipline over our investment and capital allocation decisions, and to
ensure that returns on investment meet management’s objectives.
The Group allocates financial resources to businesses and entities to
support the execution of our strategy and to meet their regulatory and
economic capital needs. We evaluate and manage business returns
by using a return on average tangible equity measure and a related
economic profit measure.
Funding and liquidity plans also form part of the financial resource
plan. The Board-level appetite measures are the liquidity coverage
ratio (‘LCR’) and net stable funding ratio (‘NSFR’), together with an
internal liquidity metric. In addition, we use a wider set of measures
to manage an appropriate funding and liquidity profile, including legal
entity depositor concentration limits, intra-day liquidity, forward-
looking funding assessments and other key measures.
Risks to capital and liquidity
Outside the stress testing framework, other risks may be identified
that have the potential to affect our RWAs, capital and/or liquidity
position. Downside and Upside scenarios are assessed against our
management objectives, and mitigating actions are assigned as
necessary. We closely monitor future regulatory developments and
continue to evaluate the impact of these upon our capital and liquidity
requirements, particularly those related to the UK’s implementation of
the outstanding measures to be implemented from the Basel III
reforms (‘Basel 3.1‘).
Regulatory developments
The Prudential Regulation Authority (‘PRA‘) published the second part
of its near-final rules on the UK’s implementation of Basel 3.1 on
12 September 2024. On 17 January 2025, the PRA revised the
implementation date to 1 January 2027 to allow greater clarity
regarding implementation in the United States. The Risk Weighted
Asset (RWA) output floor is now subject to a three-year transitional
provision, ensuring that the date for full implementation remains
1 January 2030. We continue to assess the impact of Basel 3.1
standards on our capital, including the recent release of more
beneficial PRA near-final rules, developments in the US and
associated implementation challenges (including data provision).
Regulatory reporting processes and controls
We are advancing a comprehensive initiative aimed at strengthening
our global regulatory reporting processes and making them more
sustainable. This multifaceted programme includes enhancing data,
consistency and controls. This remains a top priority for both HSBC
management and regulatory authorities.
While this programme continues, there may be further impacts on
some of our regulatory ratios, such as the CET1, LCR and NSFR, as
we implement recommended changes and continue to enhance our
controls across the process.
Stress testing and recovery planning
The group uses stress testing to inform management of the capital
and liquidity needed to withstand internal and external shocks,
including a global economic downturn or a systems failure. Stress
testing results are also used to inform risk mitigation actions, input
into global business performance through tangible equity allocation,
and recovery and resolution planning, as well as to re-evaluate
business plans where analysis shows capital, liquidity and/or returns
do not meet their target.
In addition to a range of internal stress tests, we are subject to
supervisory stress testing by the PRA and BoE. Our subsidiaries may
also be subject to supervisory stress tests, including by the European
Banking Authority and the European Central Bank. The results of
regulatory stress testing and our internal stress tests are used when
assessing our internal capital and liquidity requirements through the
ICAAP and ILAAP. The outcomes of stress testing exercises carried
out by the PRA and other regulators inform the setting of regulatory
minimum ratios and buffers.
We maintain recovery plans for the group and material entities, which
set out potential options management could take in a range of stress
scenarios that could result in a breach of capital or liquidity buffers.
They also set out the framework and governance arrangements to
support restoring the group to a stable and viable position, and so
lowering the probability of failure from either idiosyncratic company-
specific stress or systemic market-wide issues. Our recovery plans
provide detailed actions that management would consider taking in a
stress scenario should our position deteriorate and threaten to breach
risk appetite and regulatory minimum levels. This is to help ensure

HSBC Bank plc Annual Report and Accounts 2024 | 75

that we can stabilise our financial position and recover from financial
losses in a stress environment.
The HSBC Group, including HSBC Bank plc, also has capabilities,
resources and arrangements in place to address the unlikely event
that HSBC might not be recoverable and would therefore need to be
resolved by regulators. In August 2024, the Group and the BoE
publicly disclosed the status of HSBC’s progress against the BoE’s
Resolvability Assessment Framework ('RAF'). The BoE acknowledged
the significant progress made by HSBC in enhancing its resolvability
capabilities.
Overall, our recovery and resolution planning helps safeguard the
group’s financial and operational stability. HSBC has a programme of
continuous improvement to maintain and enhance its recovery and
resolution capabilities, ensuring it continues to meet the BoE’s
expectations and RAF requirements.
Measurement of interest rate risk in the
banking book processes
Assessment and risk appetite
Interest rate risk in the banking book ('IRRBB') is the risk of an
adverse impact to earnings or capital due to changes in market
interest rates or changes in expected interest rate repricing of client
products that impact banking book positions. It is generated by our
non-traded assets and liabilities, specifically loans, deposits and
financial instruments that are either not held for trading intent or in
order to hedge positions held with trading intent.
Our Global IRRBB Risk Management Framework is designed to
ensure that all material sources of IRRBB are identified, measured,
managed, and monitored with policies and frameworks in place.
Our interest rate risk in the banking book is measured and managed
using a combination of economic value and earnings-based measures
to ensure that the balance between stabilising earnings and
generating value sensitivity is managed appropriately. These metrics
measure IRRBB risks across the banking book, to support the overall
monitoring against risk appetite, including:
– Banking Net Interest Income ('BNII') Sensitivity; and
– Economic Value of Equity ('EVE') Sensitivity.
Banking net interest income sensitivity
BNII sensitivity captures the risk to earnings generated from the
Banking Book from changes in interest rates over a 12-month period
using static rolling balance sheet assumptions.
The static rolling balance sheet assumption is in place to ensure that
IRRBB management actions are focused on risks which can be
managed within Treasury. A notable exception to this is related to the
price sensitivity of certain interest-bearing non-maturity deposits,
where we apply dynamic assumptions to help ensure we capture any
potential margin widening or compression over the corresponding
shock horizon and rate scenario.
Economic value of equity sensitivity
EVE measures the present value of our banking book assets and
liabilities excluding equity, based on a run-off balance sheet. EVE
sensitivity measures the impact to EVE from a movement in interest
rates, including the assumed term profile of non-maturing deposits
having adjusted for stability and price sensitivity. It is measured and
reported as part of our internal risk metrics, regulatory rules (including
the Supervisory Outlier Test) and external Pillar 3 disclosures.
Other Risks
Structural foreign exchange exposures
Structural foreign exchange exposures arise from capital invested or
net assets in a foreign operation. A foreign operation is defined as a
subsidiary, associate, joint arrangement or branch where the activities
are conducted in a currency other than that of the reporting entity. An
entity’s functional reporting currency is normally that of the primary
economic environment in which the entity operates.
Exchange differences on structural exposures are recognised in other
comprehensive income (‘OCI’). We use the pound sterling as our
presentation currency in our consolidated financial statements.
Therefore, our consolidated balance sheet is affected by exchange
differences between the pound sterling and all the other functional
currencies of underlying foreign operations.
Our structural foreign exchange exposures are managed with the
primary objective of ensuring, where practical, that our most
constraining capital ratio is largely protected from the effect of
changes in exchange rates. For capital efficiency reasons, we rely on
net investment hedges held at HSBC Holdings plc to manage our
structural foreign exchange positions.
For further details of our structural foreign exchange exposures, see page
79.
Transaction foreign exchange exposures
Transactional foreign exchange risk arises primarily from day-to-day
transactions in the banking book generating profit and loss or FVOCI
reserves in a currency other than the reporting currency of the
operating entity. Transactional foreign exchange exposure generated
through profit and loss is periodically transferred to Markets and
Securities Services with the exception of limited residual foreign
exchange exposure arising from timing differences or other reasons.
Transactional foreign exchange exposure generated through OCI
reserves is managed by Markets Treasury business within approved
appetite.
Non-trading Value at Risk
Non-trading portfolios comprise positions that primarily arise from the
interest rate management of our retail and commercial banking assets
and liabilities, financial investments measured at FVOCI or amortised
cost, debt instruments measured at amortised cost, and exposures
arising from our insurance operations.
The following table summarises the main business areas where non-
trading market risks reside, and the market risk measures used to
monitor and limit exposures.

| Non-trading risk
Risk types | – Interest rates – Credit spreads
Risk measure | Value at risk | Sensitivity | Stress testing

Value at risk (‘VaR’) of non-trading portfolios is a technique for
estimating potential losses on risk positions as a result of movements
in market rates and prices over a specified time horizon and to a given
level of confidence. The use of VaR is integrated into the market risk
management of non-trading portfolios to have a complete picture of
risk, complementing risk sensitivity analysis.
Our models are predominantly based on historical simulation that
incorporates the following features:
– historical market rates and prices, which are calculated with
reference to interest rates, credit spreads and the associated
volatilities;
– potential market movements that are calculated with reference to
data from the past two years; and
– calculations to a 99% confidence level and using a 10-day holding
period.
Although a valuable guide to risk, VaR is used for non-trading
portfolios with awareness of its limitations. For example:
– The use of historical data as a proxy for estimating future market
moves may not encompass all potential market events, particularly
those that are extreme in nature. As the model is calibrated on the
last 500 business days, it does not adjust instantaneously to a
change in market regime.
– The use of a 10-day holding period for risk management purposes
of non-trading books is only an indication of exposure and not
indicative of the time period required to hedge or liquidate
positions.

76 | HSBC Bank plc Annual Report and Accounts 2024

Risk

– The use of a 99% confidence level by definition does not take into
account losses that might occur beyond this level of confidence.
Non-trading VaR includes non-trading financial instruments held in
portfolios managed by Treasury.
Non-trading portfolios
Value at risk of the non-trading portfolios
(Audited)
The non-trading VaR in 2024 was driven by interest rate risk in the
banking book arising from Markets Treasury and ALCM book
positions. The non-trading VaR averaged £120.7m this year, with the
high in 2Q24 at £216.3m and low of £54.8m coming in 3Q24.
Markets remained volatile throughout 2024 driven by geopolitical
events, persistent levels of inflation and economic growth concerns
that delayed the pace of central bank interest rate cuts. Non-trading
VaR trended upwards in the first half of 2024 as yields moved higher
as inflation data delayed the rate cut cycle and the Markets Treasury
business increased G3 sovereign bond holdings on an outright basis,
reaching a peak in the non-trading VaR of £216.3m. As expectations
of economic conditions improved and central banks began their first
rate cuts, yields fell and Markets Treasury positions were reduced in
3Q24 bringing the VaR down to the low of £54.8m. Towards the end
of the year, bond yields increased again on fiscal and political
developments and outright positions increased again, finishing the
year at a VaR of £133.7m.

Daily VaR (non-trading portfolios), 99% 10 day (£m)

Dec-23 | Jan-24 | Feb-24 | Mar-24 | April-24 | May-24 | Jun-24 | Jul-24 | Aug-24 | Sep-24 | Oct-24 | Nov-24 | Dec-24

The group’s non-trading VaR for the year is shown in the table below.

Non-trading VaR, 99% 10 day
(Audited)
| Interest rate ('IR') | Credit spread ('CS') | Portfolio diversification 1 | Total 2
| £m | £m | £m | £m
Balance at 31 Dec 2024 | 101.0 | 41.1 | (8.4) | 133.7
Average | 114.4 | 38.0 | (31.6) | 120.7
Maximum | 202.3 | 57.7 |  | 216.3
Minimum | 41.5 | 29.1 |  | 54.8
Balance at 31 Dec 2023 3 | 101.1 | 23.9 | (21.5) | 103.5
Average | 91.0 | 26.1 | (25.5) | 91.6
Maximum | 126.5 | 42.0 |  | 118.3
Minimum | 45.8 | 19.3 |  | 53.4

1 Portfolio diversification is the market risk dispersion effect of holding a portfolio containing different risk types. It represents the reduction in unsystematic
market risk that occurs when combining a number of different risk types, for example, interest rate, equity and foreign exchange, together in one portfolio. It is
measured as the difference between the sum of the VaR by individual risk type and the combined total VaR. A negative number represents the benefit of
portfolio diversification. As the maximum occurs on different days for different risk types, it is not meaningful to calculate a portfolio diversification benefit for this
measure.
2 The total VaR is non-additive across risk types due to diversification effect.
3 From 1Q24, we adopted a methodology change to measure non-trading VaR over a 10 day holding period as opposed to 1 day in order to better reflect longer
average time horizons in the management of non-trading portfolios compared with trading portfolios. Comparative data at 31 December 2023 has been restated
on a 10 day basis accordingly, using a scalar approach that results in restated numbers being approximately three times higher than previously reported 1 day
basis numbers.

HSBC Bank plc Annual Report and Accounts 2024 | 77

Pension risk management processes
HSBC provides future pension benefits on a defined contribution
basis from many of its European operations. However, there remain
future defined benefit pensions provided in the region.
Pension plans are run by local fiduciaries in line with local legislative
requirements. The largest pension plan is the HSBC Switzerland
Pension Plan which is regulated by Swiss Federal law.
In defined contribution pension plans, the contributions that HSBC is
required to make are known, while the ultimate pension benefit will
vary, typically with investment returns achieved by investment
choices made by the employee.
While the market risk to HSBC of defined contribution plans is low, it
is still exposed to operational and reputational risk.
In defined benefit pension plans, the level of pension benefit is
known. Therefore, the level of contributions required by HSBC will
vary due to a number of risks, including:
– investments delivering a return below that required to provide the
projected plan benefits;
– the prevailing economic environment leading to corporate failures,
thus triggering write-downs in asset values (both equity and debt);
– a change in either interest rates or inflation, causing an increase in
the value of the plan liabilities; and
– plan members living longer than expected (known as longevity
risk).
Pension risk is assessed using an economic capital model that takes
into account potential variations in these factors.
The impact of these variations on both pension assets and pension
liabilities is assessed using a 1-in-200-year stress test. Scenario
analysis and other stress tests are also used to support pension risk
management.
To fund the benefits associated with defined benefit plans,
sponsoring group companies, and in some instances employees,
make regular contributions in accordance with advice from actuaries
and in consultation with the plan’s fiduciaries where relevant. These
contributions are normally set to ensure that there are sufficient funds
to meet the cost of the accruing benefits for the future service of
active members. However, higher contributions are required when
plan assets are considered insufficient to cover the existing pension
liabilities. Contribution rates are typically revised annually or once
every three years, depending on the plan.
The defined benefit plans invest contributions in a range of
investments designed to limit the risk of assets failing to meet a
plan’s liabilities. Any changes in expected returns from the
investments may also change future contribution requirements. In
pursuit of these long-term objectives, an overall target allocation of
the defined benefit plan assets between asset classes is established.
In addition, each permitted asset class has its own benchmarks, such
as stock market or property valuation indices or liability
characteristics. The benchmarks are reviewed at least once every
three to five years and more frequently if required by local legislation
or circumstances. The process generally involves an extensive asset
and liability review.
Capital risk in 2024
Capital overview

Capital adequacy metrics
| At
| 31 Dec 2024 | 31 Dec 2023
Risk-weighted assets ('RWAs') (£m) |  |
Credit risk | 61,456 | 61,983
Counterparty credit risk | 18,228 | 17,066
Market risk | 18,519 | 15,525
Operational risk | 14,048 | 12,875
Total RWAs | 112,251 | 107,449
Capital on a transitional basis (£m) |  |
Common equity tier 1 ('CET1') capital | 21,896 | 19,230
Tier 1 capital | 25,828 | 23,124
Total capital | 41,306 | 37,131
Capital ratios on a transitional basis (%) |  |
Common equity tier 1 | 19.5 | 17.9
Total tier 1 | 23.0 | 21.5
Total capital ratio | 36.8 | 34.6
Leverage ratio (fully phased-in) |  |
Tier 1 capital (£m) | 25,828 | 23,124
Total leverage ratio exposure measure (£m) | 468,557 | 455,852
Leverage ratio (%) | 5.5 | 5.1

References to EU regulations and directives (including technical
standards) should, as applicable, be read as references to the UK's
version of such regulation and/or directive, as onshored into UK law
under the European Union (Withdrawal) Act 2018, and as may be
subsequently amended under UK law.
Capital figures and ratios in the previous table are calculated in
accordance with the regulatory requirements of the Capital
Requirements Regulation and Directive, the CRR II regulation and the
Prudential Regulation Authority (‘PRA’) Rulebook (‘CRR II’).
Leverage ratios are calculated using the end point definition of capital
and the IFRS 9 regulatory transitional arrangements.

78 | HSBC Bank plc Annual Report and Accounts 2024

Risk

Own funds

Own funds disclosure
(Audited) |
|  | At
|  | 31 Dec 2024 | 31 Dec 2023
Ref* |  | £m | £m
| Common equity tier 1 (‘CET1’) capital: instruments and reserves^ |  |
1 | Capital instruments and the related share premium accounts | 4,379 | 1,801
| – ordinary shares | 4,379 | 1,801
2 | Retained earnings 1 | 24,328 | 23,969
3 | Accumulated other comprehensive income (and other reserves)1 | (6,448) | (6,083)
5 | Minority interests (amount allowed in consolidated CET1) | 89 | 77
5a | Independently reviewed interim net profits net of any foreseeable charge or dividend | 716 | 742
6 | Common equity tier 1 capital before regulatory adjustments | 23,064 | 20,506
28 | Total regulatory adjustments to common equity tier 1 | (1,168) | (1,276)
29 | Common equity tier 1 capital | 21,896 | 19,230
36 | Additional tier 1 capital before regulatory adjustments | 3,932 | 3,941
43 | Total regulatory adjustments to additional tier 1 capital | — | (47)
44 | Additional tier 1 capital | 3,932 | 3,894
45 | Tier 1 capital | 25,828 | 23,124
51 | Tier 2 capital before regulatory adjustments | 15,835 | 14,403
57 | Total regulatory adjustments to tier 2 capital | (357) | (396)
58 | Tier 2 capital | 15,478 | 14,007
59 | Total capital | 41,306 | 37,131

*The references identify the lines prescribed in the template, that are applicable and where there is a value.
^Figures have been prepared on an IFRS 9 transitional basis. At 31 December 2024, the IFRS 9 add-back to CET1 capital and the related tax have not been applied
as they were immaterial.
1 We have updated the classification between components of shareholders’ equity to present ‘Retained Earnings’ separately in Row 2 and ‘Accumulated other
comprehensive income (and other reserves)’ in Row 3. The comparatives have been aligned accordingly.
At 31 December 2024, our common equity tier 1 ('CET1') capital ratio
increased to 19.5% from 17.9% at 31 December 2023. The key
drivers of the increase in our CET1 ratio were:
– a 2.8 percentage point increase from a new capital issuance and
capital generation through profits net of dividends;
– a (0.9) percentage point decrease driven by higher RWAs, mainly
due to an increase in balance sheet exposures, primarily in foreign
exchange, SFTs and corporate lending. This was further
supplemented by model updates;
– a (0.3) percentage point decrease from unfavourable FX
movement and other movements in own funds.
Throughout 2024, we complied with the PRA's regulatory capital
adequacy requirements, including those relating to stress testing.
Risk-weighted assets

RWA movement by key driver
| Total RWAs
| £m
RWAs at 1 Jan 2024 | 107,449
Asset size | 4,019
Asset quality | 231
Model updates | 764
Methodology and policy | 111
Acquisitions, disposals and transfers | 778
Foreign exchange movement | (1,101)
Total RWA movement | 4,802
RWAs at 31 Dec 2024 | 112,251

RWAs increased by £4.8 bn during the year. Excluding foreign
currency translation differences of £(1.1)bn, RWAs rose by £5.9bn,
mainly due to:
Asset size
The £4.0bn increase in Asset size is mainly driven by:
– £2.2bn rise in Market Risk RWAs due to higher foreign exchange
exposures and incremental risk charge from higher positions.
– £1.0bn rise in Operational Risk RWA due to higher average
revenue in the annual recalculation of operational risk;
– £0.7bn rise in Counterparty Credit Risk RWA driven by the
increase in cash exposures and the Securities Financing
Transactions portfolio; and
– £0.1bn rise in Credit Risk driven by the increase in corporate
lending and sovereign exposures.
Asset quality
The £0.2bn increase in RWAs is mainly attributed to changes in the
mix of our portfolio.
Model updates
The £0.8bn rise in RWAs is primarily attributable to a revision in the
definition of default in our Probability of Default (‘PD’) models for
exposures to financial institutions.
Methodology and policy
The £0.1bn increase in RWAs is primarily due to updates in
methodology for securitisation positions in Market risk.
Acquisitions and disposals
The £0.8bn increase in RWAs is driven by acquisition of HSBC Private
Bank (Suisse) SA, partly offset by sale of our retail operations in
France.
Leverage ratio
Our leverage ratio was 5.5 % at 31 December 2024, up from 5.1% at
31 December 2023. The increase in Tier1 capital led to a rise of 0.6
percentage points in the leverage ratio. This was offset by a fall of 0.2
percentage points due to rise in leverage exposure driven by balance
sheet growth.
At 31 December 2024, our UK minimum leverage ratio requirement of
3.25% was supplemented by a countercyclical leverage ratio buffer of
0.40%. The leverage ratio is expressed in terms of Tier1 capital, but
these buffers translated to CET1 capital values of £1.9bn. We
exceeded these leverage requirements throughout 2024.

HSBC Bank plc Annual Report and Accounts 2024 | 79

Leverage ratio |
| At
| 31 Dec 2024 | 31 Dec 2023
| £bn | £bn
Tier 1 capital | 25,828 | 23,124
Total leverage ratio exposure | 468,557 | 455,852
| % | %
Leverage ratio | 5.5 | 5.1

Pillar 3 disclosure requirements
Pillar 3 of the Basel regulatory framework is related to market
discipline and aims to make financial services firms more transparent
by requiring publication of wide-ranging information on their risks,
capital and management. Our Pillar 3 Disclosures at 31 December
2024 is published on our website, www.hsbc.com/investors.
Structural foreign exchange exposures
The group’s structural foreign currency exposure is represented by
the net assets or capital investments in subsidiaries, branches, joint
arrangements or associates, the functional currencies of which are
currencies other than the sterling.
For our policies and procedures for managing structural foreign
exchange exposures, see page 75 of the ‘Risk management’ section.

Net structural foreign exchange exposures
| 2024 | 2023
| £m | £m
Currency of structural exposure |  |
Euro | 11,804 | 10,117
US Dollars | 1,053 | 1,482
Swiss Franc | 843 | 85
South African Rand | 306 | 287
Israeli New Shekel | 133 | 107
Polish Zloty | 129 | 86
Others, each less than £100m | 31 | 139
At 31 Dec | 14,299 | 12,303

Liquidity and funding risk in 2024
Liquidity metrics
At 31 December 2024, all of the group material operating entities
were above the required regulatory minimum liquidity and funding
levels. Each entity maintains sufficient unencumbered liquid assets to
comply with local and regulatory requirements. Each entity maintains
a sufficient stable funding profile and is assessed using the NSFR or
other appropriate metrics.
In addition to regulatory metrics, we use a wide set of measures to
manage our liquidity and funding profile.
Liquidity coverage ratio
The LCR aims to ensure that a bank has sufficient unencumbered
high-quality liquid assets ('HQLA') to meet its liquidity needs in a 30-
calendar-day liquidity stress scenario. HQLA consist of cash or assets
that can be converted into cash at little or no loss of value in markets.

LCR 1
| At
| 31 Dec 2024 | 31 Dec 2023
| % | %
HSBC Bank plc | 148 | 148

Net stable funding ratio
The Net Stable Funding Ratio (‘NSFR’) requires institutions to
maintain sufficient stable funding relative to required stable funding,
and reflects a bank’s long-term funding profile (funding with a term of
more than a year).

NSFR 1
| At
| 31 Dec 2024 | 31 Dec 2023
| % | %
HSBC Bank plc | 115 | 116

Depositor concentration and term funding
maturity concentration
The LCR and NSFR metrics assume a stressed outflow based on a
portfolio of depositors within each depositor segment. To ensure the
validity of these assumptions in the sense that the deposit base is
sufficiently diversified, the depositor concentration is monitored on an
ongoing basis.
In addition to this, operating entities monitor the term funding
maturity concentration metric to ensure they are not overly exposed
to term funding concentration of wholesale market counterparts by
the current maturity profile in any defined period.
Liquid assets
The table below shows the weighted liquidity value of assets
categorised as liquid, which is used for the purposes of calculating the
LCR metric. This reflects the stock of unencumbered liquid assets at
the reporting date, using the regulatory definition of liquid assets.

Liquid assets |
| At Estimated liquidity value | At Estimated liquidity value
| 31 Dec 2024 | 31 Dec 2023
| £m | £m
HSBC Bank plc |  |
Level 1 | 108,284 | 88,678
Level 2a | 6,881 | 8,699
Level 2b | 4,812 | 6,051

1 The LCR and NSFR ratios presented in the tables are based on average
value. The LCR is the average of the preceding 12 months. The NSFR is the
average of preceding quarters. Prior period numbers have been restated for
consistency.
Sources of funding
Our primary sources of funding are customer current accounts, repo
and wholesale securities. We issue secured and unsecured wholesale
securities to supplement customer deposits, meet regulatory
obligations and to change the currency mix, maturity profile or
location of our liabilities.
The following ‘Funding sources’ and ‘Funding uses’ tables provide a
view of how our consolidated balance sheet is funded. In practice, all
the principal operating entities are required to manage liquidity and
funding risk on a stand-alone basis.
The tables analyse our consolidated balance sheet according to the
assets that primarily arise from operating activities and the sources of
funding primarily supporting these activities. Assets and liabilities that
do not arise from operating activities are presented as a net balancing
source or deployment of funds.

80 | HSBC Bank plc Annual Report and Accounts 2024

Risk

Funding sources and uses for the group
| 2024 | 2023
| £m | £m
Sources |  |
Customer accounts | 242,303 | 222,941
Deposits by banks | 26,515 | 22,943
Repurchase agreements – non-trading | 40,384 | 53,416
Debt securities in issue | 19,461 | 13,443
Cash collateral, margin, settlement accounts and items in course of transmission to other banks | 44,569 | 55,210
Liabilities of disposal groups held for sale | 23,110 | 20,684
Subordinated liabilities | 16,908 | 14,920
Financial liabilities designated at fair value | 37,443 | 32,545
Insurance contract liabilities | 3,424 | 20,595
Trading liabilities | 42,633 | 42,276
– repos | 12,468 | 7,929
– stock lending | 2,568 | 2,190
– other trading liabilities | 27,597 | 32,157
Total equity | 27,053 | 24,505
Other balance sheet liabilities | 203,527 | 179,492
At 31 Dec | 727,330 | 702,970

| 2024 | 2023
| £m | £m
Uses |  |
Loans and advances to customers | 82,666 | 75,491
Loans and advances to banks | 14,521 | 14,371
Reverse repurchase agreements – non-trading | 53,612 | 73,494
Cash collateral, margin, settlement accounts and items in course of collection from other banks | 45,707 | 54,268
Assets held for sale | 21,606 | 20,368
Trading assets | 116,042 | 100,696
– reverse repos | 9,275 | 8,510
– stock borrowing | 4,474 | 8,713
– other trading assets | 102,293 | 83,473
Financial investments | 52,216 | 46,368
Cash and balances with central banks | 119,184 | 110,618
Other balance sheet assets | 221,776 | 207,296
At 31 Dec | 727,330 | 702,970

Contingent liquidity risk arising from committed lending facilities
The group provides customers with committed facilities such as
standby facilities to corporate customers and committed backstop
lines to conduits sponsored by the group. All of the undrawn
commitments provided to conduits or external customers are
accounted for in the LCR and NSFR in line with the applicable
regulations.
This ensures that under a stress scenario any additional outflow
generated by increased utilisation of these committed facilities by
either customers or the group’s sponsored conduits is appropriately
reflected in our liquidity and funding position.
In relation to commitments to customers, the table below shows the
level of undrawn commitments outstanding in terms of the five
largest single facilities and the largest market sector.

The group’s contractual exposures at 31 December monitored under the contingent liquidity risk limit structure
| 2024 | 2023
| £bn | £bn
Commitments to conduits |  |
Multi-seller conduits 1 |  |
– total lines | 1.9 | 3.6
– largest individual lines | 0.2 | 0.2
Securities investment conduits – total lines | 0.8 | 1.0
Commitments to customers |  |
– five largest 2 | 4.2 | 3.5
– largest market sector 3 | 14.1 | 14.4

1 Exposures relate to the Regency multi-seller conduit. This vehicle provides funding to group customers by issuing debt secured by a diversified pool of customer-
originated assets.
2 Represents the undrawn balance for the five largest committed liquidity facilities provided to customers, other than those facilities to conduits.
3 Represents the undrawn balance for the total of all committed liquidity facilities provided to the largest market sector, other than those facilities to conduits.
Asset encumbrance and collateral management
An asset is defined as encumbered if it has been pledged as collateral
against an existing liability and, as a result, is no longer available to the
group to secure funding, satisfy collateral needs or be sold to reduce
the funding requirement. Collateral is managed on an operating entity
basis consistent with the approach to managing liquidity and funding.
Available collateral held in an operating entity is managed as a single
consistent collateral pool from which each operating entity will seek
to optimise the use of the available collateral. The objective of this
disclosure is to facilitate an understanding of available and
unrestricted assets that could be used to support potential future
funding and collateral needs. The disclosure is not designed to
identify assets which would be available to meet the claims of
creditors or to predict assets that would be available to creditors in
the event of a resolution or bankruptcy.

HSBC Bank plc Annual Report and Accounts 2024 | 81

Summary of assets available to support potential future funding and collateral needs (on- and off-balance sheet)
| 2024 | 2023
| £m | £m
Total on-balance sheet assets at 31 Dec | 727,330 | 702,970
Less: |  |
– reverse repo/stock borrowing receivables and derivative assets | (265,533) | (264,834)
– other assets that cannot be pledged as collateral | (27,827) | (59,134)
Total on-balance sheet assets that can support funding and collateral needs at 31 Dec | 433,970 | 379,002
Add: off-balance sheet assets |  |
– fair value of collateral received in relation to reverse repo/stock borrowing/derivatives that is available to sell or repledge | 229,236 | 224,836
Total assets that can support future funding and collateral needs | 663,206 | 603,838
Less: |  |
– on-balance sheet assets pledged | (110,418) | (97,077)
– re-pledging of off-balance sheet collateral received in relation to reverse repo/stock borrowing/derivatives | (172,606) | (175,100)
Assets available to support funding and collateral needs at 31 Dec | 380,182 | 331,661

Interest rate risk in the banking book in 2024
Banking net interest income sensitivity
Banking NII Sensitivity analyses the sensitivity of our banking net
interest income to interest rate shocks. This metric, which was
introduced in our Annual Report and Accounts 2023, includes the
sensitivity coming from banking book liabilities which is funding
trading book assets, as well as the currency impacts of vanilla foreign
exchange swaps to optimise cash management across the Group.
Banking NII Sensitivity is therefore a more comprehensive measure
than NII Sensitivity which was disclosed previously and is aligned with
the presentation of banking net interest income as an alternative
performance measure intended to approximate the Group’s banking
revenue that is directly impacted by changes in interest rates.
The sensitivities shown represent a hypothetical simulation of the
base case banking NII, assuming a static balance sheet (specifically
no assumed migration from current account to term deposits), and no
management actions from Global Treasury. This also incorporates the
effect of interest rate behaviouralisation, hypothetical managed rate
product pricing assumptions, prepayment of mortgages and deposit
stability. The sensitivity calculations exclude pensions, insurance
exposures, and our interest in associates.
The sensitivity analysis performed in the case of a down-shock does
not include floors to market rates, and it does not include floors on
some wholesale assets and liabilities. However, floors have been
maintained for deposits and loans to customers where this is
contractual or where negative rates would not be applied.
As the market and policy rates move, the degree to which these
changes are passed on to customers will vary based on a number of
factors, including the absolute level of market rates, regulatory and
contractual frameworks, and competitive dynamics. To aid
comparability between markets, we have simplified the basis of
preparation for our disclosure and have used a 50% pass-on
assumption for major entities on certain interest-bearing deposits. Our
asset pass-on assumptions are largely in line with our contractual
agreements or established market practice, which typically results in a
significant portion of interest rate changes being passed on.
An immediate interest rate rise of 100bps would increase projected
banking NII by £52m. An immediate interest rate fall of 100bps would
decrease projected banking NII by £52m.
The sensitivity of banking NII for 12 months as at 31 December 2024
decreased by £44m in the plus 100bps parallel shock and by £44m in
the minus 100bps parallel shock, when compared with 31 December
2023. The key drivers of the reduction in banking NII sensitivity are
the increase in stabilisation activities in line with our strategy.

Banking NII sensitivity to an instantaneous change in yield curves
| +100bps parallel | -100bps parallel | -100bps parallel
| £m | £m | £m | £m
| Year 1 (Jan 2025 to Dec 2025) | Year 2 (Jan 2026 to Dec 2026) | Year 3 (Jan 2027 to Dec 2027)
Based on balance sheet at 31 Dec 2024 | 52 | (52) | (44) | (110)
| Year 1 (Jan 2024 to Dec 2024) | Year 2 (Jan 2025 to Dec 2025) | Year 3 (Jan 2026 to Dec 2026)
Based on balance sheet at 31 Dec 2023 | 96 | (96) | (142) | (214)

82 | HSBC Bank plc Annual Report and Accounts 2024

Risk

Market risk
Overview
Market risk is the risk that movements in market factors, including
foreign exchange rates and commodity prices, interest rates, credit
spreads and equity prices will reduce the group’s income or the value
of its portfolios.
Exposure to market risk is separated into two portfolios.
Trading portfolios comprise positions arising from market-making and
warehousing of customer-derived positions.
Non-trading portfolios including Markets Treasury comprise positions
that primarily arise from the interest rate management of the group’s
retail and commercial banking assets and liabilities, financial
investments designated as held-to-collect-and-sale (‘HTCS’), and
exposures arising from the group’s insurance operations.
Key developments in 2024
There were no material changes to our policies and practices for the
management of market risk in 2024.
Market risk governance
(Audited)
The following diagram summarises the main business areas where
trading market risks reside, and the market risk measures used to
monitor and limit exposures.

Risk types | Trading risk
| – Foreign exchange and commodities – Interest rates – Credit spreads – Equities
Risk measure | Value at risk | Sensitivity | Stress testing

Where appropriate, we apply similar risk management policies and
measurement techniques to trading portfolios. Our objective is to
manage and control market risk exposures to optimise return on risk
while maintaining a market profile consistent with our established risk
appetite.
Market risk is managed and controlled through limits approved by the
group Chief Risk Officer. These limits are allocated across business
lines and to the group and its subsidiaries. The majority of HSBC’s
total VaR and almost all trading VaR reside in GBM. Each major
operating entity has an independent market risk management and
control sub-function, which is responsible for measuring, monitoring
and reporting market risk exposures against limits on a daily basis.
The Traded Risk function enforces the controls around trading in
permissible instruments approved for each site as well as following
completion of the new product approval process. Traded Risk also
restricts trading in the more complex derivative products to offices
with appropriate levels of product expertise and robust control
systems.
Market risk measures
Monitoring and limiting market risk exposures
Our objective is to manage and control market risk exposures while
maintaining a market profile consistent with the group’s risk appetite.
We use a range of tools to monitor and limit market risk exposures
including sensitivity analysis, VaR, and stress testing.
Sensitivity analysis
Sensitivity analysis measures the impact of individual market factor
movements on specific instruments or portfolios, including interest
rates, foreign exchange rates, credit spreads and equity prices, such
as the effect of a one basis point change in yield. We use sensitivity
measures to monitor the market risk positions within each risk type.
Sensitivity limits are set for portfolios, products and risk types, with
the depth of the market being one of the principal factors in
determining the level of limits set.
Value at risk
VaR is a technique that estimates the potential losses on risk
positions as a result of movements in market rates and prices over a
specified time horizon and to a given level of confidence. The use of
VaR is integrated into market risk management and is calculated for
all trading positions regardless of how the group capitalises those
exposures. Where there is not an approved internal model, the group
uses the appropriate local rules to capitalise exposures.
The VaR models for trading portfolios are predominantly based on
historical simulation. The VaR is calculated at a 99% confidence level
for a one-day holding period. Where we do not calculate VaR
explicitly, we use alternative tools like Stress Testing.
The VaR models derive plausible future scenarios from past series of
recorded market rates and prices, taking into account inter-
relationships between different markets and rates such as interest
rates and foreign exchange rates. The models also incorporate the
effect of option features on the underlying exposures.
The historical simulation models used incorporate the following
features:
– historical market rates and prices are calculated with reference to
foreign exchange rates and commodity prices, interest rates,
equity prices and the associated volatilities;
– potential market movements utilised for VaR are calculated with
reference to data from the past two years; and
– VaR measures are calculated to a 99% confidence level and use a
one-day holding period.
The nature of the VaR models means that an increase in observed
market volatility will most likely lead to an increase in VaR without any
changes in the underlying positions.
VaR model limitations
Although a valuable guide to risk, VaR should always be viewed in the
context of its limitations. For example:
– the use of historical data as a proxy for estimating future events
may not encompass all potential events, particularly those which
are extreme in nature;
– the use of a holding period assumes that all positions can be
liquidated or the risks offset during that period. This may not fully
reflect the market risk arising at times of severe illiquidity, when
the holding period may be insufficient to liquidate or hedge all
positions fully;
– the use of a 99% confidence level by definition does not take into
account losses that might occur beyond this level of confidence;
and
– VaR is calculated on the basis of exposures outstanding at the
close of business and therefore does not necessarily reflect intra-
day exposures.
Risk not in VaR framework
Other basis risks which are not completely covered in VaR are
complemented by our risk not in VaR (‘RNIV’) calculations, and are
integrated into our capital framework.
Risk factors are reviewed on a regular basis and either incorporated
directly in the VaR models, where possible, or quantified through the
VaR-based RNIV approach or a stress test approach within the RNIV
framework. The outcome of the VaR-based RNIV is included in the
VaR calculation; a stressed VaR RNIV is also computed for the risk
factors considered in the VaR-based RNIV approach.
Stress-type RNIVs include a deal contingent derivatives capital charge
to capture risk for these transactions and a de-peg risk measure to
capture risk to pegged and heavily managed currencies.

HSBC Bank plc Annual Report and Accounts 2024 | 83

Stress testing
Stress testing is an important procedure that is integrated into our
market risk management tool to evaluate the potential impact on
portfolio values of more extreme, although plausible, events or
movements in a set of financial variables. In such scenarios, losses
can be much greater than those predicted by VaR modelling.
Stress testing is implemented at legal entity, regional and overall
HSBC Group levels. A standard set of scenarios is utilised
consistently across all regions within the HSBC Group. Scenarios are
tailored to capture the relevant events or market movements at each
level. The risk appetite around potential stress losses for the group is
set and monitored against referral limits.
Market risk reverse stress tests are undertaken on the premise that
there is a fixed loss. The stress testing process identifies which
scenarios lead to this loss. The rationale behind the reverse stress
test is to understand scenarios which are beyond normal business
settings that could have contagion and systemic implications.
Stressed VaR and stress testing, together with reverse stress testing
and the management of gap risk, provide management with insights
regarding the ‘tail risk’ beyond VaR for which the group's appetite is
limited.
Trading portfolios
Back-testing
We routinely validate the accuracy of our VaR models by back-testing
the VaR metric against both actual and hypothetical profit and loss.
Hypothetical profit and loss exclude non-modelled items such as fees,
commissions and revenue of intra-day transactions. The hypothetical
profit and loss reflects the profit and loss that would be realised if
positions were held constant from the end of one trading day to the
end of the next. This measure of profit and loss does not align with
how risk is dynamically hedged, and is not therefore necessarily
indicative of the actual performance of the business. The number of
hypothetical loss back-testing exceptions, together with a number of
other indicators, is used to assess model performance and to
consider whether enhanced internal monitoring of a VaR model is
required. We back-test our VaR at set levels of our HSBC Group entity
hierarchy.
Defined benefit pension plans
Market risk also arises within the Bank’s defined benefit pension
plans to the extent that the obligations of the plans are not fully
matched by assets with determinable cash flows. Refer to the
Pension risk management processes section on page 77 for additional
information.
Market risk in 2024
2024 was a busy year on the political agenda, with the November US
election being the main event. Geopolitics remained prominent amid
conflict in the Middle East and the Russia-Ukraine war. Major central
banks began their easing cycles in 2024, with the US Federal Reserve
cutting its policy rate by 1% since September, while the ECB and
some other European central banks implemented rate cuts starting in
June. In contrast, the Bank of Japan raised its overnight rate, marking
the end of a prolonged period of negative interest rates and
abandoning yield curve control in March.
Throughout the year, government bond yields generally trended
upward, except during the third quarter, largely driven by volatile
inflation figures and shifting central bank expectations. In Europe, the
yield spread between France and Germany widened amid
uncertainties surrounding French fiscal policy following local
legislative elections. Global equities reached multiple record highs in
the US and Europe, buoyed by strong corporate earnings and positive
sentiment in the technology sector. Global markets rebounded from a
short period of volatility in August, triggered by the unwinding of carry
trades due to rising Japanese government bond yields, US recession
concerns, and equity market valuations. In foreign exchange markets,
the trend of a strengthening US dollar continued against most
developed and emerging market currencies. The Euro approached
parity with the US dollar, while the Yen weakened to multi-decade
lows. Credit markets performed positively throughout the year, with a
more pronounced tightening of high-yield credit spreads compared to
investment-grade spreads, despite a broad widening of spreads in
August.
Trading portfolios
Value at risk of the trading portfolios
(Audited)
The Trading VaR predominantly resides within Markets Securities
Services where it amounted to £21.8m as of 31 December 2024
compared with £25.4m as of 31 December 2023. The Trading VaR
peaked at £37.2m in February mostly owing to the sensitivity of the
trading book to interest rates. Throughout the year, the Var was quite
volatile and while it started at relatively elevated levels during the first
half of the year, it decreased during the last quarter when Central
banks began their easing cycles.

Daily VaR (trading portfolios), 99% 1 day (£m)

84 | HSBC Bank plc Annual Report and Accounts 2024

Risk

The group’s trading VaR for the year is shown in the table below.

Trading VaR, 99% 1 day
(Audited)
| Foreign exchange ('FX') and commodity | Interest rate ('IR') | Equity ('EQ') | Credit Spread ('CS') | Portfolio Diversification 1 | Total 2
| £m | £m | £m | £m | £m | £m
Balance at 31 Dec 2024 | 6.9 | 11.2 | 12.6 | 4.6 | (13.5) | 21.8
Average | 8.3 | 17.5 | 10.4 | 6.5 | (16.5) | 26.2
Maximum | 14.8 | 27.8 | 13.4 | 9.3 |  | 37.2
Minimum | 4.2 | 7.8 | 8.1 | 4.1 |  | 18.5
Balance at 31 Dec 2023 | 6.2 | 20.1 | 11.0 | 5.2 | (17.0) | 25.4
Average | 11.4 | 25.8 | 10.0 | 9.2 | (24.1) | 32.3
Maximum | 17.2 | 50.2 | 14.7 | 12.7 |  | 55.4
Minimum | 5.6 | 13.8 | 7.8 | 5.2 |  | 19.0

1 Portfolio diversification is the market risk dispersion effect of holding a portfolio containing different risk types. It represents the reduction in unsystematic
market risk that occurs when combining a number of different risk types, for example, interest rate, equity and foreign exchange, together in one portfolio. It is
measured as the difference between the sum of the VaR by individual risk type and the combined total VaR. A negative number represents the benefit of
portfolio diversification. As the maximum occurs on different days for different risk types, it is not meaningful to calculate a portfolio diversification benefit for this
measure.
2 The total VaR is non-additive across risk types due to diversification effect and it includes VaR RNIV.
Back-Testing
In 2024, HSBC Bank plc did not experience any back-testing
exceptions against the Hypothetical P&L and Actual P&L.

Climate Risk
Overview
Our climate risk approach identifies two primary drivers of climate
risk:
– physical risk, which arises from the increased frequency and
severity of extreme weather events, such as hurricanes and
floods, or chronic gradual shifts in weather patterns or rises in the
sea level; and
– transition risk, which arises from the process of moving to a net
zero economy, including changes in government policy and
legislation, technology, market demand, and reputational
implications triggered by a change in stakeholder expectations,
action or inaction.
In addition, we have also identified the following thematic issues
related to climate risk, which are most likely to materialise in the form
of reputational, regulatory compliance and litigation risks:
– net zero alignment risk, which arises from the risk of HSBC Group
failing to meet its net zero ambition or failing to meet external
expectations related to net zero, impacting HSBC Bank plc;
– the risk of greenwashing, which arises from the act of knowingly
or unknowingly making inaccurate, unclear, misleading or
unsubstantiated claims regarding sustainability to our
stakeholders.
Approach
We recognise that the physical impacts of climate change and the
transition to a net zero economy can create significant financial risks
for companies, investors and the financial system. HSBC Bank plc
may be affected by climate risks either directly or indirectly through
our relationships with our customers, which could result in both
financial and non-financial impacts.
Our climate risk approach aims to effectively manage the material
climate risks that could impact our operations, financial performance
and stability, and reputation. It is informed by the evolving
expectations of our regulators.
We remain aligned with the HSBC Group in developing our climate
risk capabilities across our businesses, by prioritizing sectors,
portfolios and counterparties with the highest impacts, and recognise
that this is a long-term iterative process. This includes increasing
coverage and incorporating more mature data, climate analytics,
frameworks and tools, and responding to emerging industry best
practice and climate risk regulations, as well as reflecting on how
climate risk continues to evolve in the real world, and improving how
the HSBC Group embeds climate risk factors into strategic planning,
transactions and decision making across the Group's businesses.
Our climate risk approach is aligned to the Group-wide risk
management framework and three lines of defence model, which
sets out how we identify, assess and manage our risks. For further
details of the three lines of defence framework, see page 21.
The table below provides an overview of the climate risk drivers and
thematic issues considered within the HSBC Group’s climate risk
approach:

HSBC Bank plc Annual Report and Accounts 2024 | 85

Climate risk – risk drivers | Details | Potential impacts | Time horizons
Physical | Acute | Increased frequency and severity of weather events causing disruption to business operations. | – Decreased real estate values or stranded assets. – Decreased household income and wealth. – Increased costs of legal and compliance. – Increased public scrutiny. – Decreased profitability. – Lower asset performance. | Short term Medium term Long term
| Chronic | Longer-term shifts in climate patterns (e.g. sustained higher temperatures, sea level rise, shifting monsoons or chronic heat waves).
Transition | Policy and legal | Mandates on, and regulation of products and services and/or policy support for low-carbon alternatives. Litigation from parties who have suffered loss and damage from climate impacts.
Technology | Replacement of existing products with lower emissions options.
End-demand (market) | Changing consumer demand from individuals and corporates.
Reputational | Increased scrutiny following a change in stakeholder perceptions of climate-related action or inaction.

Climate risk – thematic issues
Net zero alignment risk | Net zero ambition risk | Failing to set or adapt HSBC Group’s net zero ambition and broader business strategy in alignment with key stakeholder expectations, latest scientific understanding and commercial objectives.
Net zero execution risk | Failing to meet HSBC Group’s net zero ambition due to taking insufficient or ineffective actions, or due to the actions of clients, suppliers and other stakeholders or due to other external factors.
Net zero reporting risk | Failing to report emissions baselines and targets, and performance against these accurately due to data, methodology and model limitations.
Risk of greenwashing | Firm | Making inaccurate, unclear, misleading, or unsubstantiated claims in relation to HSBC Group’s sustainability commitments and targets, as well as the reporting of our performance towards them.
Product | Making inaccurate, unclear, misleading or unsubstantiated claims in relation to products or services offered to clients that have stated sustainability objectives, characteristics, impacts or features.
Client | Making inaccurate, unclear, misleading or unsubstantiated claims as a consequence of HSBC Group’s relationships with clients or transactions we undertake with them, where their sustainability commitments or related performance are misrepresented or are not aligned to HSBC Group’s own commitments.

HSBC Group’s annual global climate risk materiality assessment helps
us to understand how climate risk may impact across HSBC Bank
plc’s risk taxonomy. The assessment considers short-term (up to
2026), medium-term (2027-2035) and long term (2036-2050) periods.
In addition to this assessment, we also consider climate risk in our
emerging risk reporting and scenario analysis (for further details, see
‘Top and Emerging Risks’ on Page 23).
The table below provides a summary of how climate risk may impact
a subset of HSBC Group’s principal risks.

Climate risk drivers | Credit risk | Traded risk | Reputational risk 1 | Regulatory compliance risk 1 | Resilience risk | Other financial and non- financial risk types
Physical risk | u | u |  |  | u | u
Transition risk | u | u | u | u | u | u

1 Our climate risk approach identifies thematic issues such as HSBC net zero alignment risk and the risk of greenwashing, which are most likely to materialise in
the form of reputational, regulatory compliance and litigation risks.
Climate risk management
Key developments in 2024
Our climate risk programme continues to support the development of
our climate risk management capabilities. The following outlines key
developments in 2024:
– The HSBC Group has started to enhance its approach to managing
net zero alignment risk in wholesale portfolios, through developing
portfolio steering capabilities and revenue assessments.
– HSBC Bank plc is aligned with HSBC Group in enhancing the
Group's approach to assessing the impact of climate change on
capital, focusing on credit, market and operational risk.
– We enhanced our internal climate scenario analysis, aligned with
HSBC Group, including through improvements to input data and
models (e.g. for the power generation and utilities sector).
– HSBC Group enhanced its approach for managing and mitigating
the risk of greenwashing.
– HSBC Group developed climate risk guidelines for relationship
managers to further embed climate risk considerations into credit
risk assessments.
While HSBC Group have made progress, further work remains,
including the need to develop additional metrics and tools to measure
the Group's exposure to climate-related risks.

86 | HSBC Bank plc Annual Report and Accounts 2024

Risk

Governance and structure
The Group's Board takes overall responsibility for our ESG strategy,
overseeing executive management in developing the approach,
execution and associated reporting.
HSBC Bank plc aligns to the HSBC Group in that the HSBC Bank plc
Chief Risk Officer is the senior manager responsible for the
management of climate risk under the UK Senior Managers Regime,
which involves holding overall accountability for the HSBC Bank plc
climate risk programme.
The HSBC Group ESG Committee has oversight of ESG strategy,
policy, material commitments and external disclosure. It is co-chaired
by the Group Chief Executive Officer and the Group Chief
Sustainability Officer.
A dedicated Environmental Risk Steering Meeting provides oversight
of environmental risk and the risk of greenwashing for the Group.
The Europe Reputational Risk Committee provides recommendations
and advice on significant reputational risk matters with impacts across
HSBC Bank plc (or the HSBC Group).
The Europe Environmental Risk Forum (formerly the Environmental
Risk Oversight Forum) provides oversight of environmental risk and
the risk of greenwashing for HSBC Bank plc.
The Group’s Risk Management Meeting and the Group Risk
Committee receive regular updates on our climate risk profile and
progress of our climate risk programme through the equivalent HSBC
Bank plc's Risk Management Meeting.
Risk appetite
Aligned to HSBC Group, our climate risk appetite forms part of HSBC
Bank plc’s risk appetite statement and supports the business in
delivering our net zero ambition effectively and sustainably.
Our climate risk appetite statement is approved and overseen by the
Board. Climate risk indicators are reported on a quarterly basis for
oversight by the HSBC Bank plc Risk Management Meeting and the
HSBC Bank plc Risk Committee.
Policies, processes and controls
Aligned with HSBC Group, HSBC Bank plc continues to integrate
climate risk into policies, processes and controls across many areas of
our organisation, and we will continue to update these as our climate
risk management capabilities mature over time.
Challenges
Key challenges include:
– the diverse range of internal and external data sources and data
structures needed for climate-related reporting, which introduces
data accuracy and reliability risks;
– data limitations on customer assets and supply chains, and
methodology gaps, which hinder our ability to assess physical risks
accurately;
– industry-wide data gaps on customer emissions and transition plan
and methodology gaps, which limit our ability to assess transition
risks accurately; and
– limitations in our management of net zero alignment risk due to
known and unknown factors, including the limited accuracy and
reliability of data, emerging methodologies, and the need to
develop new tools to better inform decision making.
Resilience Risk
Overview
Resilience risk is the risk of sustained and significant business
disruption from execution, delivery, physical security, or safety
events, causing the inability to provide critical services to our
customers, affiliates, and counterparties. Resilience risk arises from
failures or inadequacies in processes, people, systems, or external
events.
Key developments in 2024
During the year, we carried out a number of initiatives to seek to keep
pace with geopolitical, regulatory and technology changes and to
strengthen the management of resilience risk:
– We continued to recognise that our customers were impacted by
service disruptions, responded to these urgently and aimed to
recover with minimum delay. We continued to initiate post-
incident review processes to prevent recurrence. Where we
identify that investment is required to further enhance the group’s
operational resilience capabilities, findings are fed into the group’s
financial planning, helping to ensure we continue to meet the
expectations of our customers and our regulators.
– We continued to monitor markets affected by the Russia-Ukraine
war and the conflict in the Middle East, as well as other
geopolitical events, for any potential impact they may have on our
colleagues and operations.
– We provided analysis and easy-to-access risk and control
information and metrics to enable management to focus on non-
financial risks in their decision making and appetite setting.
We prioritise our efforts on material risks and areas undergoing
strategic growth, aligning our location strategy to this need. We also
remotely provide oversight and stewardship, including support of
chief risk officers, in territories where we have no physical presence.
Governance and structure
The Enterprise Risk Management target operating model provides a
globally consistent view across resilience risks, strengthening our risk
management oversight while operating effectively as part of a
simplified non-financial risk structure.
We view resilience risk across seven sub-risk types related to: third
party risk; technology and cyber security risk; transaction processing
risk; business interruption and incident risk; data risk; change
execution risk; and facilities availability, safety and security risk.
Risk appetite and key escalations for resilience risk are reported to the
group's Risk Management Meeting, chaired by the Europe Chief Risk
Officer, with an escalation path to the HSBC Group Risk Management
Meeting and HSBC Group Risk Committee.
Key risk management process
Operational resilience is our ability to anticipate, prevent, adapt,
respond to, recover and learn from operational disruption while
minimising customer and market impact. Resilience is determined by
assessing whether we are able to continue to provide our important
business services, within an agreed level. This is achieved through
day-to-day oversight and periodic and ongoing assurance, such as
deep dive reviews and controls testing, which may result in
challenges being raised to the business by risk stewards. Further
challenge is also raised in the form of our risk steward opinion papers
to formal governance, at least four times a year. We accept we will
not be able to prevent all disruption but we must prioritise investment
to continually improve the response and recovery strategies for our
important business services.

HSBC Bank plc Annual Report and Accounts 2024 | 87

Business operations continuity
We continue to monitor geopolitical situation, including the Russia-
Ukraine war and the conflict in the Middle East, and remain ready to
take measures to ensure business continuity should the situation
require. There have been no significant disruptions to our services,
although businesses and functions in nearby markets continually
review their plans and responses to minimise any potential impacts.

Cybersecurity Risk
Overview
The threat of a cyber incident remains a concern for our organization,
as it does across the financial sector and other industries. As cyber
threats continue to evolve, failure to protect our operations may result
in disruption for our customers and our business, cause financial loss
or loss of sensitive data, and can have a negative impact on our
customers’ and our own reputation, among other risks.
We continue to monitor ongoing geopolitical events and changes to
the cyber threat landscape and take proactive measures with the aim
to reduce any impact to our customers.
We invest in business and technical controls to help prevent, detect,
and mitigate cyber threats. Our cybersecurity controls follow a
’defence in depth’ approach, making use of multiple security layers,
recognising the complexity of our environment. Our ability to detect
and respond to attacks through round-the-clock security operations
centre capabilities is intended to help reduce the impact of attacks.
We have a cyber intelligence and threat analysis team, which
proactively collects and analyses internal and external cyber
information to continuously evaluate threat levels for the most
prevalent attack types and their potential outcomes. We actively
participate in the broader cyber intelligence community, including by
sharing technical expertise in investigations, alongside others in the
financial services industry and government agencies around the
world.
Key developments in 2024
We have continued to work with our third parties, including suppliers,
financial infrastructure bodies, regulators, and other non-traditional
third parties, in an effort to help reduce the threat of cyber-attacks
impacting our business services and the wider financial sector. We
have a third-party security risk management process in place to
assess, identify and manage the risks associated with cybersecurity
threats with supplier and other third-party relationships. The process
includes risk-based cybersecurity due diligence reviews that assess
third parties’ cybersecurity programmes against our standards and
requirements.
In 2024, we continued our programme of continuous improvement to
further strengthen our cyber defences and enhance our cybersecurity
capabilities to help reduce the likelihood and impact of unauthorized
access, security vulnerabilities being exploited, data leakage, third-
party security exposure, and advanced malware. These defences
build upon a proactive data analytical approach to help identify
advanced targeted threats and malicious behaviour. One key area of
focus is the increasing use of AI, which could be used to facilitate
sophisticated cyber-attacks. We are enhancing governance processes
to manage potential cybersecurity risks associated with increasing
use of AI.
Governance and structure
We operate a three lines of defence model, aligned to the enterprise
risk management framework, to help ensure oversight and challenge
of our cybersecurity capabilities and priorities. In the first line of
defence, we have risk owners within global businesses and functions
who are accountable for identifying and managing cyber risk. They
work with cybersecurity control owners to apply the appropriate risk
treatment in line with our risk appetite. Our controls are designed to
be executed in line with our policies and are reviewed and challenged
by our risk stewards representing the second line of defence. They
are independently assured by the Global Internal Audit function, the
third line of defence.
The assessment and management of our cybersecurity risk across
the HSBC Group is led and coordinated by a Global Chief Information
Security Officer, supported by regional and business level chief
information security officers. Our regional chief information security
officer covering Europe and the UK has extensive experience in
financial services, security and resilience as well as in strategy,
governance, risk management and regulatory compliance. In the
event of incidents, the Global Chief Information Security Officer and
relevant supporting information security officers are informed by our
security operations team and are engaged in alignment with our
cybersecurity incident response protocols.
Key risk management processes
We have a robust suite of cybersecurity policies, procedures, and key
controls designed to help ensure that the organisation is well
managed, with effective oversight and control. This includes but is not
limited to defined information security responsibilities for employees,
contractors, and third parties, as well as standard procedures for
cyber incident identification, investigation, mitigation, and reporting.
Key performance indicators, control effectiveness, and other matters
related to cybersecurity, including significant cyber incidents, are
presented on a regular basis to various management risk and control
committees, including to the Board, the Risk Management Meeting,
and across global businesses, functions, and regions. This is done to
facilitate ongoing awareness and management of our cybersecurity
position.
Our cybersecurity capabilities are periodically assessed against
standards issued by the National Institute of Standards and
Technology ('NIST') by independent third parties and we proactively
collaborate with regulators to participate in regular testing activities. In
addition, HSBC engages external independent third parties to support
our penetration and threat-led penetration testing, which help to
identify our vulnerabilities to cyber threats and test our security
resilience.
Cyber training and awareness
We understand the important role our people play in protecting
against cybersecurity threats. Our aim is to equip every colleague
with the appropriate tools and behaviours they need to keep our
organisation and customers’ data safe. We provide cybersecurity
training and awareness to all our people, ranging from our top
executives (including our Board), to IT developers to front-line staff in
the group, and we deliver targeted training to staff that are identified
as having elevated cyber risk exposure.
We host an annual cyber awareness month for all colleagues,
covering topics such as online safety at home, social media safety,
safe hybrid working, and cyber incidents and response. Our dedicated
cybersecurity training and awareness team provides a wide range of
education and guidance to both custome rs and our colleagues about
how to spot and prevent online fraud.

Regulatory compliance risk
Overview
Regulatory compliance risk is the risk associated with breaching our
duty to clients and other counterparties, inappropriate market conduct
(including unauthorised trading) and breaching related financial
services regulatory standards. Regulatory compliance risk arises from
the failure to observe relevant laws, codes, rules and regulations and
can manifest itself in poor market or customer outcomes and lead to
fines, penalties and reputational damage to our business. We aim to
keep abreast of developments in legal principles or conduct
requirements (including in relation to the risk of such developments
in one part of the financial industry being construed as applying to
other parts of the financial industry, which could lead to legal or
regulatory proceedings).

88 | HSBC Bank plc Annual Report and Accounts 2024

Risk

Key developments in 2024
Regulatory horizon scanning and mapping capabilities continue to
evolve with the focus on enhanced connectivity to risk management
systems to support better traceability of regulatory obligations.
Climate risk has been integrated into regulatory compliance policies
and processes, with enhancements being made to the Product
Governance Framework, and controls, in order to ensure the effective
consideration of Climate risk, in particular Greenwashing risk.
We have enhanced our processes, framework, and governance
capabilities to improve the controls and oversight of Consumer Duty
outcomes in UK. Further requirements under the Consumer Duty
related to closed products became effective in July 2024.
Governance and structure
In Europe, the Chief Compliance Officer reports to the Group Head of
Regulatory Compliance, and is responsible for all Regulatory and
Financial Crime Compliance teams across the region. Regulatory
Compliance and Financial Crime teams work together and with all
relevant stakeholders to help ensure we achieve good conduct
outcomes and provide enterprise-wide support on the Compliance
risk agenda in collaboration with the regional Risk function.
Key risk management processes
The Europe Regulatory Compliance function is engaged in setting
policies, standards and risk appetite to guide the management of
regulatory compliance risks. It also devises frameworks and support
processes to mitigate such risks. The capability provides oversight,
review and challenge to the Country Chief Compliance Officers and
their teams to help them identify, assess and mitigate regulatory
compliance risks, where required. The regulatory compliance risk
policies are regularly reviewed. Policies and procedures require the
prompt identification and escalation of any actual or potential
regulatory breach. Relevant reportable events are escalated to the
HSBC Bank plc RMM and to the HSBC Group Risk Committee, as
appropriate.
Conduct of business
Our purpose-led conduct approach guides us to do the right thing and
to focus on the impact we have for our customers and the financial
markets in which we operate. It complements our purpose and values
and – together with more formal policies and the tools we have to do
our jobs – provides a clear path to achieving our purpose and
delivering our strategy. For further information on our Purpose-led
Conduct Approach, see www.hsbc.com/who-we-are/purpose-values-
and-strategy/our-conduct
Regulators and governments
We proactively engage with regulators and governments to facilitate
strong relationships through virtual and in-person meetings and by
responding to consultations individually and jointly via industry bodies.

Financial crime risk
Overview
Financial crime risk is the risk that HSBC’s products and services will
be exploited for criminal activity. This includes fraud, bribery and
corruption, tax evasion, sanctions and export control violations and
evasion, money laundering, terrorist financing and proliferation
financing. Financial crime risk arises from day-to-day banking
operations involving customers, third parties and employees.
Key developments in 2024
We regularly review the effectiveness of our financial crime risk
management framework, which includes continued consideration of
the complex and dynamic nature of sanctions compliance and export
control risk. We continued to respond to the financial sanctions and
trade restrictions that have been imposed on Russia, including
methods used to limit sanctions evasion.
We continued to make progress with several key financial crime risk
management initiatives, including:
– deployment of our intelligence-led, dynamic risk assessment
('DRA') capability for customer account monitoring in additional
entities and global businesses including in Bermuda, France and
Malta;
– deployment of the Correspondent Banking Monitoring solution,
Global Social Network Analysis ('GSNA') to Malta, Poland, Spain
and Ireland to meet our commitment to the ECB;
– enhancements in response to the rapidly evolving and complex
global payments landscape and refinement of our digital assets
and currencies strategy;
– enhancing our fraud controls and continuing to invest in, and
monitor, technological developments;
– updating the business risk appetite to restrict direct activity with
Russia and Belarus via HSBC; and
– completion of the sale of HSBC Bank (RR) (Limited Liability
Company) in May 2024, which has further reduced our Russia
exposure.
Governance and Structure
The structure of the Financial Crime function has remained
substantively unchanged in 2024. The Regional Head of Financial
Crime and HSBC Bank plc Money Laundering Reporting Officer
continues to report to the Chief Compliance Officer for Europe, while
the HSBC Bank plc Risk Management Meeting retains oversight of
matters relating to financial crime.
Key risk management processes
We will not tolerate knowingly conducting business with individuals or
entities believed to be engaged in criminal activity. We require
everybody in HSBC to play their role in maintaining effective systems
and controls to prevent and detect financial crime. Where we believe
we have identified suspected criminal activity or vulnerabilities in our
control framework, we will take appropriate mitigating action.
We manage financial crime risk because it is the right thing to do to
protect our customers, shareholders, staff, the communities in which
we operate, as well as the integrity of the financial system on which
we all rely. We operate in a highly regulated industry in which these
same policy goals are codified in law and regulation.
We are committed to complying with the laws and regulations of all
the markets in which we operate in HSBC Bank plc and applying a
consistently high financial crime standard. In cases where material
differences exist between the law and regulation of these markets,
our policy adopts the highest standard while acknowledging the
primacy of local law.
We continue to invest in enhancing our operational control capabilities
and technology solutions to deter and detect criminal activity. We
further strengthened our financial crime risk taxonomy and control
libraries and our monitoring capabilities through technology
deployments. We developed more targeted metrics, and continued to
seek to enhance our governance and reporting.
We are committed to working in partnership with the wider industry
and the public sector in managing financial crime risk. In 2024, our
focus remained on measures to improve the overall effectiveness of
the global financial crime framework and promote the risk-based
approach. Through our work with industry bodies, such as the
Wolfsberg Group, we provided input into legislative and regulatory
reform activities and supported the efforts of the global standard
setter, the Financial Action Task Force. We did this by contributing to
the development of responses to consultation papers focused on how
financial crime risk management frameworks can deliver more
effective outcomes in detecting and deterring criminal activity. In
addition, we participated in a number of public events related to the
promotion of risk-based supervision, payment transparency, fraud risk
management and financial inclusion, as well as tackling forestry
crimes, wildlife trafficking and human trafficking.

HSBC Bank plc Annual Report and Accounts 2024 | 89

Safeguarding the financial system
We have continued our efforts to combat financial crime and reduce
its impact on our organisation, customers and the communities that
we serve. Financial crime includes fraud, bribery and corruption, tax
evasion, sanctions and export control violations and evasion, money
laundering, terrorist financing and proliferation financing.
We manage financial crime risk because it is the right thing to do to
protect our customers, shareholders, staff, the communities in which
we operate, as well as the integrity of the financial system on which
we all rely. We have a financial crime risk management framework
that is applicable across all global businesses and functions, and in all
countries and territories in which we operate. The financial crime risk
framework, which is overseen by the HSBC Bank plc Board, is
supported by our global financial crime policy that is designed to
enable adherence to applicable laws and regulations globally. Annual
mandatory training is provided to all colleagues, with additional
targeted training tailored to certain individuals. We carry out regular
risk assessments, to identify where we need to respond to evolving
financial crime threats, as well as to monitor and test our financial
crime risk management programme.
We continue to invest in new technology, we are enhancing our fraud
monitoring capability and our trade screening controls, and investing
in the application of machine learning to improve the accuracy and
timeliness of our detection capabilities. These new technologies
should enhance our ability to respond effectively to unusual activity
and be more granular in our risk assessments.
Anti-bribery and anti-corruption
Our global Financial Crime policy requires that all activity must be:
conducted without intent to bribe or corrupt; reasonable and
transparent; considered to be neither lavish nor disproportionate to
the professional relationship; appropriately documented with business
rationale; and authorised at an appropriate level of seniority. There
were no concluded, nor live active, legal cases regarding bribery or
corruption brought against the group or its employees in 2024. The
global financial crime policy requires that we identify and mitigate the
risk of our customers and third parties committing bribery or
corruption. Among other controls we use risk assessments, due
diligence and ongoing monitoring following a risk-based approach, to
identify and help mitigate the risk that our customers are involved in,
or use HSBC's products or services, to commit bribery or corruption.

Model risk
Overview
Model risk is the risk of inappropriate or incorrect business decisions
arising from the use of models that have been inadequately designed,
implemented or used, or from models that do not perform in line with
expectations and predictions.
Model risk arises in both financial and non-financial contexts
whenever business decision making includes reliance on models.
Key developments in 2024
In 2024, we continued to make improvements in our Model Risk
Management (‘MRM’) processes amid regulatory changes in MRM
requirements.
We enhanced our risk management in the following areas:
– We updated our MRM Framework to meet the requirements of
the PRA’s SS1/23 with a programme of work in progress to
implement these changes across the model landscape;
– We completed a review of model tiering assessing the materiality
and complexity of all models and assigning a new tier which will
drive the level of oversight required at model level;
– We introduced a new framework to govern and manage the risks
associated with Deterministic Quantitative Methods, which are
complex and material calculators that although not technically
models still present similar risks;
– Following the feedback from the PRA and ECB on a number of our
model submissions, we prioritized the redevelopment of internal
ratings-based (‘IRB’), internal model approach (‘IMA’) and internal
model methods (‘IMM’) models, as part of the IRB repair, Basel
3.1 and Fundamental Review of the Trading Book programmes
with a key focus on enhancing the quality of data used as model
inputs;
– We Improved our framework for the independent validation of
models accounting for new generative AI techniques becoming
more widely used;
– We worked closely with businesses and functions in developing a
governance framework to manage the range of risks these AI and
Machine Learning (‘ML’) techniques can introduce; and
– We continued to support businesses in the programme of work
related to climate risk.
Governance and structure
The group's Model Risk Committee is chaired by our Chief Risk
Officer and provides oversight of model risk. The committee includes
senior leaders and risk owners across the lines of business and Risk
and focuses on model-related concerns and key model risk metrics.
Key risk management processes
We use a variety of modelling approaches, including regression,
simulation, sampling, machine learning and judgmental scorecards for
a range of business applications. These activities include customer
selection, product pricing, financial crime transaction monitoring,
creditworthiness evaluation and financial reporting. HSBC Bank plc
responsibility for managing model risk is delegated from the group's
RMM to the group's Model Risk Committee, which is chaired by the
group's Chief Risk Officer. This committee regularly reviews our
model risk management policies and procedures, and requires the
first line of defence to demonstrate comprehensive and effective
controls based on a library of model risk controls provided by MRM.
MRM also reports on model risk to senior management on a regular
basis through the use of risk management information, risk appetite
metrics and top and emerging risks.
We regularly review the effectiveness of these processes, including
the model oversight committee structure, to help ensure appropriate
understanding and ownership of model risk is embedded in the
businesses and functions.

Insurance manufacturing operations
risk
Overview
The key risks for our insurance manufacturing operations are market
risks, in particular interest rate and equity, credit risks and insurance
underwriting risks. These have a direct impact on the financial results
and capital positions of the insurance operations.
HSBC’s insurance business
We sell insurance products through a range of channels including our
branches, insurance sales forces, direct channels and third-party
distributors. The majority of sales are through an integrated
bancassurance model that provides insurance products principally for
customers with whom we have a banking relationship, although the
proportion of sales though digital is increasing.
For the insurance products we manufacture, the majority of sales are
savings, universal life and protection contracts.
We choose to manufacture these insurance products in HSBC
subsidiaries based on an assessment of operational scale and risk
appetite. Manufacturing insurance allows us to retain the risks and
rewards associated with writing insurance contracts by keeping part
of the underwriting profit and investment income within the HSBC
Group.

90 | HSBC Bank plc Annual Report and Accounts 2024

Risk

Where we do not have the risk appetite or operational scale to be an
effective insurance manufacturer, we engage with a small number of
leading external insurance companies in order to provide insurance
products to our customers. These arrangements are generally
structured with our exclusive strategic partners and earn the group a
combination of commissions, fees and a share of profits. We
distribute insurance products in all of our geographical regions.
Insurance products are sold through all global businesses, but
predominantly by WPB through our branches and direct channels.
Insurance manufacturing operations
risk management
Key developments in 2024
The insurance manufacturing subsidiaries follow the HSBC Group’s
risk management framework. In addition, there are specific policies
and practices relating to the risk management of insurance contracts,
which have not changed materially over 2024. During the year, there
was continued market volatility observed across interest rates, equity
and credit markets and foreign exchange rates. This was
predominantly driven by geopolitical factors and wider inflationary
concerns.
Following HSBC’s announcement on 20th December 2024 of the
signing of a Memorandum of Understanding for the planned sale of
its French Insurance business, the balance sheet of the French
business has been reported as held for sale at 31 December 2024.
Further details are provided on page 193.
Governance
(Audited)
Insurance manufacturing risks are managed to a defined risk appetite,
which is aligned to the bank’s risk appetite and risk management
framework, including the three lines of defence model. For details on
the governance framework, see page 21. The HSBC Group Insurance
Risk Management Meeting oversees the control framework globally
and is accountable to the WPB Risk Management Meeting on risk
matters relating to the insurance business.
The monitoring of the risks within the insurance operations is carried
out by Insurance Risk teams. The Bank’s risk stewardship functions
support the Insurance Risk teams in their respective areas of
expertise.
Stress and scenario testing
(Audited)
Stress testing forms a key part of the risk management framework for
the insurance business. We participate in local and HSBC Group-wide
regulatory stress tests, as well as individual country insurance
regulatory stress tests. The results of these stress tests and the
adequacy of management action plans to mitigate these risks are
considered in the HSBC Bank plc ICAAP and the entities’ regulatory
Own Risk and Solvency Assessments ('ORSAs'), which are produced
by all material entities.
Management and mitigation of key risk types
Market risk
(Audited)
All our insurance manufacturing subsidiaries have market risk
mandates and limits that specify the investment instruments in which
they are permitted to invest and the maximum quantum of market
risk that they may retain. They manage market risk by using, amongst
others, some or all of the techniques listed below, depending on the
nature of the contracts written:
– We are able to adjust bonus rates to manage the liabilities to
policyholders for products with participating features. The effect is
that a significant portion of the market risk is borne by the
policyholder.
– We use asset and liability matching where asset portfolios are
structured to support projected liability cash flows. The group
manages its assets using an approach that considers asset quality,
diversification, cash flow matching, liquidity, volatility and target
investment return. We use models to assess the effect of a range
of future scenarios on the values of financial assets and associated
liabilities, and ALCOs employ the outcomes in determining how
best to structure asset holdings to support liabilities.
– We use derivatives and other financial instruments to protect
against adverse market movements.
– We design new products to mitigate market risk, such as changing
the investment return sharing portion between policyholders and
the shareholder.
Credit risk
(Audited)
Our insurance manufacturing subsidiaries also have credit risk
mandates and limits within which they are permitted to operate,
which consider the credit risk exposure, quality and performance of
their investment portfolios. Our assessment of the creditworthiness
of issuers and counterparties is based primarily upon internationally
recognised credit ratings and other publicly available information.
Stress testing is performed on investment credit exposures using
credit spread sensitivities and default probabilities.
We use a number of tools to manage and monitor credit risk. These
include a credit report containing a watch-list of investments with
current credit concerns, primarily investments that may be at risk of
future impairment or where high concentrations to counterparties are
present in the investment portfolio. Sensitivities to credit spread risk
are assessed and monitored regularly.
Capital and liquidity risk
(Audited)
Capital risk for our insurance manufacturing subsidiaries is assessed
in the group’s ICAAP based on their financial capacity to support the
risks to which they are exposed. Capital adequacy is assessed on
both the group’s economic capital basis, and the relevant local
insurance regulatory basis.
Risk appetite buffers are set to ensure that the operations are able to
remain solvent, allowing for business-as-usual volatility and extreme
but plausible stress events.
Liquidity risk is less material for the insurance business. It is managed
by cash flow matching and maintaining sufficient cash resources,
investing in high credit-quality investments with deep and liquid
markets, monitoring investment concentrations and restricting them
where appropriate, and establishing committed contingency
borrowing facilities.
Insurance manufacturing subsidiaries complete quarterly liquidity risk
reports and an annual review of the liquidity risks to which they are
exposed.
Insurance underwriting risk
(Audited)
Our insurance manufacturing subsidiaries primarily use the following
frameworks and processes to manage and mitigate insurance
underwriting risks:
– a formal approval process for launching new products or making
changes to products;
– a product pricing and profitability framework, which requires initial
and ongoing assessment of the adequacy of premiums charged on
new insurance contracts to meet the risks associated with them;
– a framework for customer underwriting;
– reinsurance, which cedes risks to third-party reinsurers to keep
risks within risk appetite, reduce volatility and improve capital
efficiency; and
– oversight by financial reporting committees and actuarial review
committees in each of our entities of the methodology and
assumptions that underpin IFRS 17 reporting.

HSBC Bank plc Annual Report and Accounts 2024 | 91

Insurance manufacturing operations risk in 2024
Measurement
The following table shows the composition of assets and liabilities by contract type.

Balance sheet of insurance manufacturing subsidiaries by type of contract
(Audited)
| Life direct participating and investment DPF contracts 1 | Life other 2 | Other contracts 3 | Shareholder assets and liabilities | Total
At 31 Dec 2024 | £m | £m | £m | £m | £m
Financial assets | 3,749 | 48 | 1,026 | 421 | 5,244
– financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 3,223 | 32 | 1,018 | 365 | 4,638
– derivatives | 5 | — | — | — | 5
– financial investments – at amortised cost | — | — | — | 1 | 1
– financial investments at fair value through other comprehensive income | — | — | — | — | —
– other financial assets 4 | 521 | 16 | 8 | 55 | 600
Insurance contract assets | — | 38 | — | — | 38
Reinsurance contract assets | — | 132 | — | — | 132
Other assets and investment properties 5 | 18,229 | 1 | — | 1,176 | 19,406
Total assets at 31 Dec 2024 | 21,978 | 219 | 1,026 | 1,597 | 24,820
Liabilities under investment contracts designated at fair value | — | — | 1,078 | — | 1,078
Insurance contract liabilities | 3,165 | 259 | — | — | 3,424
Reinsurance contract liabilities | — | 38 | — | — | 38
Deferred tax | — | — | — | 9 | 9
Other liabilities 5 | 17,355 | 32 | — | 1,761 | 19,148
Total liabilities at 31 Dec 2024 | 20,520 | 329 | 1,078 | 1,770 | 23,697
Total equity | — | — | — | 1,123 | 1,123
Total liabilities and equity at 31 Dec 2024 | 20,520 | 329 | 1,078 | 2,893 | 24,820

Financial assets | 21,284 | 101 | 942 | 1,331 | 23,658
– financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 13,101 | 78 | 935 | 776 | 14,890
– derivatives | 92 | — | — | 5 | 97
– financial investments – at amortised cost | 218 | — | — | 14 | 232
– financial investments at fair value through other comprehensive income | 6,947 | — | — | 452 | 7,399
– other financial assets 4 | 926 | 23 | 7 | 84 | 1,040
Insurance contract assets | — | 41 | — | — | 41
Reinsurance contract assets | — | 145 | — | — | 145
Other assets and investment properties | 748 | 75 | — | 82 | 905
Total assets at 31 Dec 2023 | 22,032 | 362 | 942 | 1,413 | 24,749
Liabilities under investment contracts designated at fair value | — | — | 1,002 | — | 1,002
Insurance contract liabilities | 20,289 | 306 | — | — | 20,595
Reinsurance contract liabilities | — | 33 | — | — | 33
Deferred tax | — | — | — | 2 | 2
Other liabilities | — | — | — | 1,966 | 1,966
Total liabilities at 31 Dec 2023 | 20,289 | 339 | 1,002 | 1,968 | 23,598
Total equity at 31 Dec 2023 | — | — | — | 1,151 | 1,151
Total liabilities and equity at 31 Dec 2023 | 20,289 | 339 | 1,002 | 3,119 | 24,749

1‘Life direct participating and investment DPF’ contracts are life direct participating contracts and investment contracts with discretionary participating features.
These are substantially measured under the variable fee approach measurement model.
2‘Life other’ contracts are measured under the general measurement model and mainly includes protection insurance contracts as well as reinsurance contracts.
The reinsurance contracts primarily provide diversification benefits over the life direct participating and investment DPF contracts.
3‘Other contracts’ includes investment contracts for which HSBC does not bear significant insurance risk.
4'Other financial assets' comprise mainly loans and advances to banks, cash and intercompany balances with other non-insurance legal entities.
5'Other assets and investment properties' includes £19,309m and 'Other liabilities' includes £18,668m in respect of the classification of the French insurance
business to held for sale at 31 December 2024. Further details are provided on page 193.

92 | HSBC Bank plc Annual Report and Accounts 2024

Risk

Key risk types
Market risk
(Audited)
Description and exposure
Market risk is the risk of changes in market factors affecting the
bank’s capital or profit. Market factors include interest rates, equity
and growth assets, credit spreads and foreign exchange rates.
Our exposure varies depending on the type of contract issued. Our most
significant life insurance products are contracts with participating features.
These products typically include some form of capital guarantee or
guaranteed return on the sums invested by the policyholders, to which
bonuses are added if allowed by the overall performance of the funds. For
contracts without participating features, some form of guarantee may still
exist but the group’s ability to share risks with policyholders will be
reduced. Funds supporting these savings products are primarily invested
in fixed income, with a proportion in some cases allocated to other asset
classes to provide customers with the potential for enhanced returns.
These products expose the bank to the risk of variation in asset
returns, which will impact our participation in the investment
performance. In addition, in some scenarios the asset returns can
become insufficient to cover the policyholders’ financial guarantees,
in which case the shortfall has to be met by the group. Amounts are
held against the cost of such guarantees, calculated by stochastic
modelling in the larger entities. The cost of such guarantees are
generally not material and form part of insurance fulfilment cash
flows.
For unit-linked contracts, market risk is substantially borne by the
policyholder, but some market risk exposure typically remains as fees
earned are related to the market value of the linked assets.
Sensitivities
(Audited)
The following table provides the impacts on the contractual service
margin, profit after tax and equity of our insurance manufacturing
subsidiaries from reasonably possible effects of changes in selected
interest rate, equity price and growth assets scenarios for the year.
These sensitivities are prepared in accordance with current IFRS
Accounting Standards and are based on changing one assumption at a
time with other variables being held constant, recognising that in
practice such variables could be correlated. All policies and underline
investments are in respective functional currencies, no material
exposure to foreign exchange rate changes.
Due in part to the impact of the cost of guarantees and hedging
strategies which may be in place, the relationship between the
contractual service margin, profit after tax and total equity and the risk
factors is non-linear. Therefore, the results disclosed should not be
extrapolated to measure sensitivities to different levels of stress. For
the same reason, the impact of the stress is not necessarily
symmetrical on the upside and downside. The sensitivities are stated
before allowance for management actions, which may mitigate the
effect of changes in the market environment.
The method used for deriving sensitivity information and significant
variables did not change from the previous period.
The sensitivities provided below include the France insurance
business which was classified as held for sale. Further details are
provided on page 193.

Sensitivity of the group's insurance manufacturing subsidiaries to market risk factors
(Audited) | 2024 | 2023
| Effect on CSM | Effect on profit after tax 1 | Effect on total equity | Effect on CSM | Effect on profit after tax 1 | Effect on total equity
| £m | £m | £m | £m | £m | £m
+100 basis point parallel shift in yield curves | 50 | 6 | (19) | 5 | 1 | (25)
–100 basis point parallel shift in yield curves | (113) | (13) | 12 | (59) | (8) | 18
+100 basis point shift in credit spreads | (17) | (4) | (29) | (34) | (3) | (30)
–100 basis point shift in credit spreads | 8 | 4 | 28 | 36 | 4 | 31
10% increase in growth assets 2 | 64 | 21 | 21 | 65 | 32 | 32
10% decrease in growth assets 2 | (63) | (22) | (22) | (64) | (32) | (32)

1'Effect on profit after tax' in respect for the year.
2'Growth assets' primarily comprise equity securities and investment properties and variability in growth asset fair value constitutes a market risk to insurance
manufacturing subsidiaries.
Credit risk
(Audited)
Description and exposure
Credit risk is the risk of financial loss if a customer or counterparty
fails to meet their obligation under a contract. It arises in two main
risks for our insurance manufacturers:
– the risk associated with credit spread volatility and default by debt
security counterparties after investing premiums to generate a
return for policyholders and shareholders; and
– the risk of default by reinsurance counterparties and non-
reimbursement for claims made after ceding insurance risk.
The amounts outstanding at the balance sheet date in respect of
these items are shown in the tabl e on page 91.
The credit quality of the reinsurers’ share of liabilities under insurance
contracts is assessed as ‘satisfactory’ or higher as defined on page
32, with none of the exposure being either past due or impaired
(2023: none).
Credit risk on assets supporting unit-linked liabilities is predominantly
borne by the policyholder; therefore our exposure is primarily related
to liabilities under non-linked insurance and investment contracts and
shareholders’ funds. The credit quality of these financial assets is
included in the table on page 58.
The risk associated with credit spread volatility is to a large extent
mitigated by holding debt securities to maturity, and sharing a degree
of credit spread experience with policyholders.
Liquidity risk
(Audited)
Description and exposure
Liquidity risk is the risk that an insurance operation, though solvent,
either does not have sufficient financial resources available to meet
its obligations when they fall due, or can secure them only at
excessive cost. Liquidity risk may be able to be shared with
policyholders for products with participating features.
The remaining contractual maturity of investment contract liabilities is
included in Note 4 on page 138.

HSBC Bank plc Annual Report and Accounts 2024 | 93

The amounts of insurance contract liabilities that are payable on demand, excluding the French insurance contract liabilities that were classified
as held for sale at 31 December 2024 (further details are provided on page 193), are set out by the product grouping below:

Amounts Payable on Demand
(Audited) |  |  |  |
| 2024 | 2023
| Amounts Payable on Demand | Carrying Amount for these Contracts | Amounts Payable on Demand | Carrying Amount for these Contracts
| £m | £m | £m | £m
Life direct participating and investment DPF contracts | 3,154 | 3,165 | 17,880 | 20,289
Life other contracts | — | 259 | — | 306
At 31 Dec | 3,154 | 3,424 | 17,880 | 20,595

Insurance underwriting risk
(Audited)
Description and exposure
Insurance underwriting risk is the risk of loss through adverse
experience, in either timing or amount, of insurance underwriting
parameters (non-economic assumptions). These parameters include
mortality, morbidity, longevity, lapse and expense rates.
The principal risk we face is that, over time, the cost of the contract,
including claims and benefits, may exceed the total amount of
premiums and investment income received.
The insurance underwriting risk profile and related exposures remain
largely consistent with those observed at 31 December 2023.
Sensitivities
The table below shows the sensitivity of the contractual service
margin ('CSM'), profit and total equity to reasonably foreseeable
changes in non-economic assumptions across all our insurance
manufacturing subsidiaries.
These sensitivities are prepared in accordance with current IFRS
Accounting Standards.
Sensitivity to lapse rates depends on the type of contracts being
written. An increase in lapse rates typically has a negative effect on
CSM (and therefore expected future profits) due to the loss of future
income on the lapsed policies. However, some contract lapses have a
positive effect on profit due to the existence of policy surrender
charges. We are most sensitive to a change in lapse rates in France.
Mortality and morbidity risk is typically associated with life insurance
contracts. During the year we have revised the sensitivity to mortality
and morbidity rates from 10% to 5% to align with reasonably
foreseeable changes, and the comparatives have been restated
accordingly. The effect on profit of an increase in mortality or
morbidity depends on the type of business being written.
Expense rate risk is the exposure to a change in the allocated cost
of administering insurance contracts. To the extent that increased
expenses cannot be passed on to policyholders, an increase in
expense rates will have a negative effect on our profits. This risk is
generally greatest for smaller entities.
The impact of changing insurance underwriting risk factors is primarily
absorbed within the CSM, unless contracts are onerous in which case
the impact is directly to profit. The impact of changes to the CSM is
released to profits over the expected coverage periods of the related
insurance contracts.
The sensitivities provided below include the French insurance
business which was classified as held for sale at 31 December 2024.
Further details are provided on page 193.

Sensitivity of group's insurance manufacturing subsidiaries to insurance underwriting risk factors 1
(Audited)
| At 31 Dec 2024
| Effect on CSM | Effect on profit after tax 2 | Effect on total equity
| £m | £m | £m
10% increase in lapse rates | (52) | (5) | (5)
10% decrease in lapse rates | 57 | 5 | 5
5% increase in mortality and/or morbidity rates | (14) | — | —
5% decrease in mortality and/or morbidity rates | 15 | 1 | 1
10% increase in expense rates | (28) | (3) | (3)
10% decrease in expense rates | 28 | 3 | 3
| At 31 Dec 2023
10% increase in lapse rates | (55) | (8) | (8)
10% decrease in lapse rates | 58 | 7 | 7
5% increase in mortality and/or morbidity rates 3 | (14) | (3) | (3)
5% decrease in mortality and/or morbidity rates 3 | 15 | 2 | 2
10% increase in expense rates | (27) | (3) | (3)
10% decrease in expense rates | 27 | 3 | 3

1 The sensitivities impacts are provided after considering the impacts of reinsurance contracts held as risk mitigation.
2'Effect on profit after tax' in respect for the year.
3 During the year the sensitivity to mortality and morbidity rates have been changed from 10% to 5% and the comparatives have been restated accordingly.

94 | HSBC Bank plc Annual Report and Accounts 2024

Report of the Directors | Corporate Governance Report

Corporate Governance Report

Contents
94 | Directors
96 | Board Changes during 2024 and following the year-end
96 | Company Secretary
96 | Board of Directors
96 | Directors‘ emoluments
97 | Board committees
100 | Dividends
100 | Internal control
102 | Employees
103 | Disclosure of information to auditors
103 | Auditors
103 | Branches
103 | Directors' Report Disclosures table
104 | Articles of Association, conflicts of interest and indemnification of Directors
104 | Research and Development
104 | Events after the Balance Sheet Date
105 | Statement on going concern
106 | Statement of directors' responsibilities in respect of the financial statements

The statement of corporate governance practices set out on pages 94
to 103, together with the information incorporated by reference,
constitutes the Corporate Governance Report of the bank.
The following disclosures, read together with those in the Strategic
Report, including reporting on employee engagement on page 7 and
the section 172(1) statement on pages 8 to 10, describe how the
Board has discharged its responsibilities relating to section 172(1) of
the Companies Act 2006 (the 'Act'), as well as the requirements
under the Companies (Miscellaneous Reporting) Regulations 2018
(the 'Reporting Regulations').
Engagement with employees, suppliers, customers and other key
stakeholders:

Stakeholder | Page | Section
Customers | Page 7 | ESG Overview
| Pages 8 to 10 | Section 172(1) statement
Employees | Pages 7 and 8 | ESG Overview
| Pages 8 to 10 | Section 172(1) statement
| Pages 102 to 103 | Employees
Shareholders and Investors | Pages 8 to 10 | Section 172(1) statement
Communities | Pages 7 and 8 | ESG Overview
| Pages 8 to 10 | Section 172(1) statement
Regulators and governments | Pages 8 to 10 | Section 172(1) statement
Suppliers | Pages 8 to 10 | Section 172(1) statement

The bank, together with the wider HSBC Group, is committed to high
standards of corporate governance. The HSBC Group has a
comprehensive range of principles, policies and procedures
influenced by the UK Corporate Governance Code with requirements
in respect of Board independence, composition and effectiveness to
ensure that the HSBC Group is well managed, with appropriate
oversight and control. During the year, the bank adhered to these
corporate governance principles, policies and procedures, as
applicable.

Board of Directors
As at 31 December 2024, the Board comprised 11 Directors including
the Chair, non-executive Directors, and two executive Directors, being
the Chief Executive Officer and the Chief Financial Officer. All
Directors are subject to election or re-election at each Annual General
Meeting ('AGM') of the bank.
The Directors who served during the year ended 31 December 2024
and up to the date of this report are set out below.

Directors
Stephen O'Connor (63)
Chair of the Board
Chair of the Nomination, Remuneration & Governance Committee.
Appointed to the Board: May 2018. Chair of the Board since
August 2018.
Stephen is a non-executive Director and Vice Chair of HSBC
Continental Europe ('HBCE') and a member of the HBCE Nomination
Committee. He is also the Chair of Quantile Group Limited and its
subsidiary, Quantile Technologies Limited, and a non-executive
Director of the Financial Markets Standards Board. He has more than
25 years’ investment banking experience in London and New York.
Former appointments include: Senior Independent Director, Chair of
the Risk Committee and member of both the Audit and Nomination
Committees of the London Stock Exchange Group; Chair of the
International Swaps and Derivatives Association; and Managing
Director and a member of the Fixed Income Management Committee
at Morgan Stanley.
Michael Roberts (64)
Executive Director and Chief Executive Officer
Chair of the Executive Committee.
Appointed to the Board and as Chief Executive Officer:
January 2025.
Michael was appointed Chief Executive Officer, HSBC Bank plc and of
Corporate and Institutional Banking in January 2025. He also serves
as Chairman of HSBC Latin America Holdings (UK) Limited.
Michael previously served as Chief Executive Officer of HSBC US and
Americas until December 2024. Michael joined HSBC in 2019 as Chief
Executive Officer of HSBC USA. Prior to joining HSBC, Michael spent
over 30 years at Citigroup in a number of senior leadership roles,
most recently as Global Head of Corporate Banking and Capital
Management and Chief Lending Officer.
Kavita Mahtani (54)
Executive Director and Chief Financial Officer
Member of the Executive Committee.
Appointed to the Board and as Chief Financial Officer:
November 2023.
Kavita Mahtani is the Chief Financial Officer for HSBC Bank plc and
Corporate and Institutional Banking.
Kavita has over 25 years of experience in financial services and a
broad strategic knowledge of banking. She joined HSBC from
Citigroup, where she most recently served as Head of Asset and
Liability Management for Citi Corporate Treasury. She has held a
number of significant strategic roles at Citigroup, including Chief
Financial Officer, Global Corporate & Investment Banking; Global
Head of Financial Planning and Analysis; and Director, Investor
Relations. Before joining Citigroup in 2006, she held key roles at
Merrill Lynch and Morgan Stanley.
Kavita is a non-executive Director of Plug Power Inc. and is active in a
number of charitable organisations in New York City.

HSBC Bank plc Annual Report and Accounts 2024 | 95

Patrick Clackson (60)
Independent non-executive Director
Member of the Audit Committee.
Appointed to the Board: September 2022.
Former appointments include: Chief Financial Officer, Chief
Operations Officer and Chief Executive Officer at Barclays Capital
(now Barclays Corporate and Investment Bank). Patrick also held
several non-executive positions whilst with Barclays, Barclays Capital,
as Head of Business Transformation and Structural Reform, as well as
EMEA Chief Executive Officer, Chief Operations Officer, Chief
Financial Officer and Head of Risk. Between 1986-1996 he was
employed in the audit and financial services advisory teams of PwC,
London.
Norma Dove-Edwin (59)
Independent non-executive Director
Member of the Transformation, Operational Resilience and
Technology Committee.
Appointed to the Board: October 2021.
Norma is a non-executive Director of Pod Point Group Holdings plc
and a Director of Digital & Data Squared Ltd.
Former appointments include: Interim Group Chief Digital and
Information Officer of Rolls Royce plc, Chief Digital and Information
Officer at Thames Water, Chief Information Officer of ESO at National
Grid plc, Group Chief Data and Information Officer at Places for
People and a number of positions at British American Tobacco plc
including as Head of Global Data Services.
Juliet Ellis (58)
Independent non-executive Director
Chair of the Transformation, Operational Resilience and Technology
Committee, member of the Risk Committee and member of the
Nomination, Remuneration & Governance Committee.
Appointed to the Board: January 2021.
Former appointments include: Dual role as European Head of
Operations and Global Head of Shared Services and Banking
Operations and other senior management positions at Morgan
Stanley. Prior to 2007 she performed senior roles within Goldman
Sachs International.
Ann Godbehere (69)
Independent non-executive Director
Appointed to the Board: January 2025.
Ann is the Senior Independent non-executive Director of HSBC
Holdings plc and is a member of the Group Audit Committee, Group
Remuneration Committee and Nomination and Corporate Governance
Committee. Ann also serves as a non-executive Director and chair of
the Audit Committee of Stellantis N.V and non-executive Director and
chair of the Audit and Risk Committee of Shell plc. Ann has extensive
financial services experience over a 30-year career spanning
insurance, retail and private banking, and wealth management.
Former appointments include: Chief Financial Officer, Swiss RE from
2003 to 2007; Interim Chief Financial Officer, Northern Rock Bank
from 2008 to 2009 in the period immediately after its nationalisation;
non-executive Director of Prudential plc, British American Tobacco
plc, UBS AG, UBS Group AG; and Senior Independent non-executive
Director of Rio Tinto plc and Rio Tinto Limited.
Kathryn Gurney (56)
Non-executive Director
Appointed to the Board: March 2023.
Kathryn Gurney is General Counsel for International Wealth and
Premier Banking at HSBC.
Prior to this role, Kathryn served as Chief of Staff to Group Chief
Executive of HSBC from February 2020–2024.
Kathryn is a lawyer with over 20 years’ experience working in the
legal and financial services industry. Having trained and practised as a
lawyer in the City of London, she has lived and worked in London,
Beijing, Hong Kong and Switzerland.
Lewis O’Donald (59)
Independent Non-executive Director
Member of the Risk Committee and member of the Transformation,
Operational Resilience & Technology Committee.
Appointed to the Board: February 2023.
Lewis is currently a Member of the Global Association of Risk
Professionals (GARP) Board of Trustees and an Advisor for the
Citizens Advice Bureau. Further to this, in 2022, Lewis established his
own risk advisory business, Arboreal Risk Advisors, which he remains
a co-founder of. Lewis is also a Trustee of the Dorchester Sailing
Club.
Former appointments include: Global Chief Risk Officer, a member of
the Executive Management Board at Nomura Holdings INC and
various directorships at Nomura subsidiaries.
Yukiko Omura (69)
Independent non-executive Director
Member of the Audit Committee.
Appointed to the Board: May 2018.
Yukiko is the Chair of The Private Infrastructure Development Group
Limited (‘PIDG’). She also serves as a non-executive Director of
Assured Guaranty Ltd, a member of the Supervisory Board of
Nishimoto HD Co. Ltd and a member of the Advisory Board for The
Critical Mineral Fund. She has more than 40 years’ international
professional experience in both the public and private financial
sectors, performing senior roles for JP Morgan, Lehman Brothers,
UBS and Dresdner Bank.
Yukiko is the Consumer Duty Champion for the Board and helps
support the Chair and Chief Executive Officer by encouraging regular
dialogue at the Board level on customer outcomes.
Former appointments include: Chair of GuarantCo Limited, a
subsidiary of PIDG; Under-Secretary General and COO/Vice President
of the International Fund for Agricultural Development; and Executive
Vice President and CEO of the Multilateral Investment Guarantee
Agency of the World Bank Group.
Dr Eric Strutz (60)
Independent non-executive Director
Chair of the Risk Committee, member of the Nomination,
Remuneration & Governance Committee and member of the Audit
Committee.
Appointed to the Board: October 2016.
Eric is a director of HBCE and a member of the HBCE Risk
Committee.
Other appointments include member of the Board and Chair of the
Finance and Audit Committee of Global Blue Group Holding AG, and a
member of the Advisory Board and Chair of the Audit and Risk
Committee of Luxembourg Investment Company 261 Sarl.

96 | HSBC Bank plc Annual Report and Accounts 2024

Report of the Directors | Corporate Governance Report

Former appointments include: Vice Chair and Lead Independent
Director of Partners Group Holding AG, where he also Chaired the
Risk and Audit Committee; Chief Financial Officer of Commerzbank
Group; Partner and Director of the Boston Consulting Group; and non-
executive Director of Mediobanca Banca di Credito Finanziario SpA.
Andrew Wright (64)
Independent non-executive Director
Chair of the Audit Committee and member of the Risk Committee
and Nomination, Remuneration & Governance Committee.
Appointed to the Board: May 2018.
Former appointments include: Treasurer to the Prince of Wales and
the Duchess of Cornwall, a role he held from May 2012 until June
2019; Global Chief Financial Officer for the Investment Bank at UBS
AG; Chief Financial Officer, Europe and the Middle East at Lehman
Brothers; and Chief Financial Officer for the Private Client and Asset
Management Division at Deutsche Bank.

Board Changes during 2024 and
following the year-end
Annabel Spring was appointed to the Board as a non-executive
Director with effect from 8 April 2024 and resigned on 5 December
2024.
Colin Bell resigned from the Board and as Chief Executive Officer of
the bank on 31 December 2024. Michael Roberts was appointed to
the Board and as Chief Executive Officer of the bank and Corporate
and Institutional Banking with effect from 1 January 2025.
Ann Godbehere was appointed to the Board as a non-executive
Director with effect from 1 January 2025.

Company Secretary
The responsibilities of the Company Secretary include ensuring good
governance practices at Board level and effective information flows
within the Board and its committees and between senior
management and the non-executive Directors.
Olivier Oakley-White was Company Secretary of the bank until
7 October 2024. Lynne Stuart was appointed as Company Secretary
from 7 October 2024.

Board of Directors
Key responsibilities
The Board, led by the Chair, is responsible for, amongst other
matters:
– promoting the long-term success of the bank and delivering
sustainable value to shareholders and other stakeholders;
– entrepreneurial leadership of the bank within a framework of
prudent and effective controls which enables risks to be assessed
and managed;
– setting the bank's strategy and risk appetite statement, including
monitoring the bank's risk profile and overseeing management’s
execution of the strategy;
– establishing and monitoring the effectiveness of procedures for
the maintenance of a sound system of control and risk
management and compliance with statutory and regulatory
obligations; and
– approving and monitoring capital and financial resource plans for
achieving strategic objectives, including material transactions.
The role of the non-executive Directors is to support the development
of proposals on strategy, hold management to account and ensure
the executive Directors are discharging their responsibilities properly
while promoting a culture that encourages constructive challenge.
Non-executive Directors also review the performance of management
in meeting agreed goals and objectives. The Chair regularly meets
with the non-executive Directors without executive Directors in
attendance after Board meetings, and otherwise, as necessary.
Operation of the Board
During 2024, the Board met on a quarterly basis. In addition, three
meetings were scheduled for strategy and ‘deep dive’ development
sessions. Three additional meetings were also held to help facilitate,
amongst other matters, the submissions of the Internal Liquidity
Adequacy Assessment Process and Internal Capital Adequacy
Assessment Process to the PRA, the approval of the 2024 Recovery
Plan, the approval of the sale of the private banking business in
Germany (by HBCE, a direct subsidiary), the approval of the Financial
Resource Plan and to review employee survey results and culture
metrics. The Board agenda is agreed with the Chair, working closely
with the Company Secretary, in advance of scheduled meetings. The
agenda is informed by forward-looking planning and additional
emerging matters that require Board oversight or approval.
The Chief Risk Officer, General Counsel, and Company Secretary are
regular attendees at Board meetings, and other senior executives
attend to contribute their subject matter expertise and insight, as
required.
Board activities during 2024
During 2024, the areas of focus for the Board included overseeing
implementation of the approved strategy and the continued execution
of the bank’s transformation programme across Europe. The Board
also considered performance against financial and other strategic
objectives, key business challenges, emerging risks, business
development and relationships with the bank’s key stakeholders.
'Deep dives' on key aspects of the bank's business covered a range
of areas, including individual business lines, ESG, sustainability,
technology, cyber security, artificial intelligence, recovery and
resolution, market trends and the state of energy transition.
Throughout the year, the Board received regular updates from
management on, amongst other things, the implementation of
regulatory programmes, technology, ESG, operations and resilience,
as well as people, culture and talent.
During the year, the Board approved revised Terms of Reference
('ToR') for the Transformation, Operational Resilience and Technology
Committee ('TRT'), Audit Committee and Risk Committee. The most
material change related to an expansion of the scope of the Audit
Committee’s responsibilities in relation to internal controls, with
effect from 1 January 2025. This will result in the Audit Committee
assuming responsibility for the holistic oversight of the wider internal
control environment, reflecting its experience in overseeing internal
controls over financial reporting, and supporting HSBC Group’s
forthcoming responsibility to make a declaration on the effectiveness
of material controls under the 2024 UK Corporate Governance Code.

Directors’ emoluments
Details of the emoluments of the Directors for 2024, disclosed in
accordance with the Act, are shown in Note 5: ‘Employee
compensation and benefits on page 150.
Non-executive Directors do not have service contracts and are
engaged through letters of appointment. There are no obligations in
the non-executive Directors’ letters of appointment that could give
rise to payments other than fees due or payments for loss of office.

HSBC Bank plc Annual Report and Accounts 2024 | 97

Board committees
The Board delegates oversight of certain audit, risk, remuneration,
nomination and governance matters to its committees. With the
exception of the Executive Committee which is chaired by the Chief
Executive Officer, each Board committee is chaired by a non-
executive Board member and has a remit to cover specific topics in
accordance with their respective terms of reference approved by the
Board. Excluding the Executive Committee, only non-executive
Directors are members of Board committees. The Chair of each non-
executive Board committee reports to the Board on the activities of
the committee since the previous Board meeting.
Board and Committee performance
The Board understands the importance of, and benefits that derive
from, regular reviews of the effectiveness of the Board and its
committees. A performance review was facilitated by the bank’s
Company Secretary in 2024 which included a written questionnaire
completed by members and standing attendees for Board
committees and a series of individual interviews with the Directors for
the Board review. Overall, the work of the Board and its committees
was rated highly, with feedback highlighting positive and constructive
engagement with executive management. Each review covered a
number of areas, including the Board’s composition and skills,
stakeholder engagement, the quality of management reporting and
presentation, Director and management engagement and debate, and
Board priorities. Outcomes and recommendations were reported to
the Board and an action plan was produced for each committee and
the Board. All actions arising were completed over 2024.
An annual review of the terms of reference for the Board and its
committees was facilitated by the Corporate Governance and
Secretariat function. This concluded that the Board and its
committees had complied with their respective terms of reference
during 2024. Executive Directors are also subject to performance
evaluation which helps to determine the level of variable pay they
receive each year.
At the date of this report, the following are the principal committees
of the Board:
Audit Committee
Key Responsibilities
The Audit Committee is accountable to the Board and has non-
executive responsibility for the oversight of financial reporting related
matters, relevant internal controls and the bank's Internal Audit
function.
The committee's key responsibilities during 2024 included:
– oversight of financial reporting related matters (including regulatory
reporting matters as a key component of financial reporting);
– reviewing the effectiveness of internal financial control systems;
– reviewing and monitoring the relationship with the external
auditor; and
– overseeing the work of Internal Audit and monitoring and
assessing the effectiveness, performance, resourcing,
independence and standing of the function.
The committee has responsibility for the oversight of the bank’s
whistleblowing arrangements and receives regular updates on
matters relating to the whistleblowing arrangements that are in place.
Committee activities during 2024
Key topics considered by the committee during the year were
significant accounting judgements, regulatory reporting matters, the
effectiveness of internal financial reporting control systems, the
bank’s financial resources and capital, the independence, fees and
performance of the external auditor, PwC UK, and updates on key
issues identified by Internal Audit related to the bank and its
subsidiaries.
The committee also received updates from the audit committee
chairs of key subsidiaries of the bank, the external auditor on the
progress and findings of their audit, and on the tax, legal and
regulatory position of the bank and its subsidiaries.
During the year, the committee oversaw the bank’s compliance with
the U.S. Sarbanes-Oxley Act of 2002 ('SOX').
Regulatory reporting
Regulatory reporting has been a key priority for the committee over
recent years and will continue to be a priority for 2025. The
committee is focused on monitoring the programme of work to
address the quality and reliability of regulatory reporting to meet
regulatory expectations.
Management provided updates on the status of HSBC-specific
external reviews, including the PRA Skilled Person Review which
commenced in 2023, and discussed the issues and themes identified
from the bank's increased assurance work and focus on regulatory
reporting. The committee challenged management on remediation
plans to ensure there was a sustainable reduction in issues and that
dependencies with other key programmes were well understood.
Operation of the Committee
The committee held seven scheduled meetings during the year and
held separate meetings with each of the Chief Financial Officer, the
Head of Internal Audit and representatives of the external auditor
without management present.
The committee meets regularly with the bank’s senior Financial and
Internal Audit management and the external auditors to consider,
among other matters, the bank’s financial reporting, the nature and
scope of audit reviews, the effectiveness of the systems of internal
control relating to financial reporting and the monitoring of the
Finance function transformation programme.
The Chief Financial Officer, Financial Controller, Chief Risk Officer,
Head of Internal Audit, and Company Secretary are standing
attendees and regularly attend committee meetings to contribute
their subject matter expertise and insight. Other members of senior
management routinely attended meetings of the committee by
invitation. The external auditor attended all scheduled meetings.
The committee continued to actively engage with the bank’s key
subsidiaries and key subsidiary audit committees, with regular
reporting throughout the year. During 2024, the Audit and Risk
Committee Chairs held two engagement sessions with their material
subsidiary counterparts covering key topics including ESG, regulatory
reporting and internal controls.
The Chair of the committee regularly meets with the Chair of the
Group Audit Committee ('GAC') to help maintain connectivity with the
HSBC Group and develop deeper understanding on judgements
around key matters. Further, from time to time, the Chair is invited to
attend meetings of the GAC on relevant topics. The Chair of the GAC
attended a committee meeting held in November 2024.
The committee membership comprises four independent non-
executive Directors. The current members are Andrew Wright (Chair),
Eric Strutz, Yukiko Omura, and Patrick Clackson.

98 | HSBC Bank plc Annual Report and Accounts 2024

Report of the Directors | Corporate Governance Report

Significant accounting judgements and related matters considered by the Audit Committee ('AC') for the year ended 31 December 2024 included:
Key area | Action taken
Interim and annual reporting | The AC considered key matters in relation to interim and annual reporting, including US filings 20-F and 6-K.
Disposals | The AC considered the financial and accounting impacts of planned disposals of our insurance business in France, Private Banking business in Germany and business in South Africa. In particular, the AC considered judgements related to the timing of recognition of assets as held-for-sale, the remeasurement of those assets and losses arising, and their impact in the year ended 31 December 2024.
Expected credit loss ('ECL') | The AC considered key judgements in relation to ECL, in particular multiple economic scenarios and post-model adjustments, with due consideration to risk and uncertainty.
Valuation of financial instruments | The AC considered key valuation metrics and judgements involved in the determination of the fair value of financial instruments.
Going concern | The AC considered a wide range of information relating to present and potential financial conditions, including projections for profitability, cash flow, liquidity and capital.
Impairment of investment in subsidiaries | The AC reviewed management's periodic assessment of impairment of investments in subsidiaries and paid particular attention to the sensitivities to cash flow projections and long-term growth rate and discount rate assumptions.
Appropriateness of provisioning for legal proceedings and regulatory matters | The AC received reports from management on the recognition and measurement of provisions and contingent liabilities for legal proceedings and regulatory matters, including investigations by regulators and competition and law-enforcement authorities.
Regulatory reporting | The AC reviewed management action to strengthen the control environment and operating model. The AC also received updates on ongoing independent external reviews of key aspects of regulatory reporting.
Controls | The AC considered the financial reporting control environment on an ongoing basis through the year, reviewing and challenging remediation actions undertaken and enhancements made. This included confirmation of mitigating controls where programmes of work had not fully completed by the year end. Areas of particular focus in 2024 were embedding of the restructuring activities, forward looking planning for Environmental, Social and Governance ('ESG') reporting requirements, and Regulatory Reporting programmes of work.
Tax | The AC reviewed management’s judgements on the recognition, measurement, accounting and disclosure of tax assets and liabilities, in particular those related to deferred tax assets and withholding tax.
Environmental, Social and Governance (‘ESG’) Reporting | The AC reviewed UK and international regulatory developments in ESG Reporting and received updates on disclosures by bank subsidiaries in the European Union.

Risk Committee
Key Responsibilities
The Risk Committee is accountable to the Board and has overall non-
executive responsibility for oversight of risk-related matters and the
risks impacting the bank.
The committee's key responsibilities during 2024 included:
– Providing independent challenge on risk management reports and
advising the Board on risk appetite and risk tolerance related
matters;
– reviewing and recommending key regulatory submissions to the
Board;
– overseeing and advising the Board on all risk-related matters,
including financial and non-financial risks;
– reviewing, challenging, and satisfying itself that the bank's stress
testing framework, governance and relevant internal controls are
robust;
– reviewing the effectiveness of the bank's risk management
framework and internal control systems (other than internal
financial controls overseen by the Audit Committee); and
– to provide documentation or assurances to the HSBC Holdings plc
Risk Committee as requested.
Committee activities during 2024
Key matters considered by the committee during the year included
the bank’s approach to financial and non-financial risks in the context
of capital and liquidity risk, retail and wholesale credit risk, traded and
treasury risk, financial crime and fraud risk, geopolitical risk, model
risk management, regulatory compliance risk, people and climate-
related risk, and resilience risks.
The committee also reviewed and challenged management on key
regulatory processes, including the bank’s internal capital adequacy
assessment process ('ICAAP') and the internal liquidity adequacy
assessment process ('ILAAP'), recovery and resolution plans, the
outcome of stress tests undertaken during the year, and the bank’s
capital, liquidity, and funding plans.
Deep dives were undertaken throughout the year on key areas of risk
for the bank, covering areas such as ESG, emerging risks, model risk,
and risk return profile. The Risk Committee also reviewed the
potential impacts of Basel 3.1, and the potential impacts of HSBC
Private Bank (Suisse) SA to the bank's risk profile.
The committee was provided with quarterly updates from the TRT
during the year to ensure appropriate alignment in the review and
discussion on areas such as operational resilience and technology
risk-related matters. Two non-executive directors are members of
both the TRT and the Risk Committee, and the Risk Committee chair
is invited to attend quarterly TRT meetings, which ensures further
alignment between the two committees.
Operation of the Committee
The committee held seven scheduled meetings during the year and
two workshops allowing the Committee to deep dive into specific
areas of risk to the bank. The Chief Risk Officer, Chief Financial
Officer, Chief Compliance Officer, Regional Head of Enterprise Risk
Management, and Head of Internal Audit are standing attendees and
regularly attend committee meetings to contribute their subject
matter expertise and insight. The Chair and members of the
committee also hold private meetings with the Chief Risk Officer and
other members of management following scheduled meetings.
The committee reviews and challenges current and forward-looking
risk issues, and the regional senior business leaders are invited to
participate at committee meetings at least annually, working together
with functional and regional leaders across all three lines of defence.

HSBC Bank plc Annual Report and Accounts 2024 | 99

The Chair and members of the committee meet regularly with the
bank’s senior financial, risk, internal audit and compliance
management and the external auditors to consider and discuss,
specific risk matters and priorities, risk reports and internal audit
reports and the effectiveness of compliance activities. The Chair
meets regularly with the committee secretary to ensure the
committee meets its governance responsibilities.
During 2024 the committee continued to actively engage with the
bank’s key subsidiaries and key subsidiary risk committees, with
regular reporting from the respective Chairs throughout the year. The
Chair of the committee attended several key subsidiary meetings and
HSBC Group-led meetings to help promote connectivity, escalation,
and cascade of important topics.
The committee membership comprises four independent non-
executive Directors. The current members are Eric Strutz (Chair),
Juliet Ellis, Andrew Wright, and Lewis O’Donald.
Transformation, Operational
Resilience and Technology
Committee
Key Responsibilities
The Transformation, Operational Resilience and Technology
Committee was established to assist the Board and Risk Committee
with their respective responsibilities in relation to the Bank's
transformation strategy, operational resilience, as well as the
governance and oversight of Information Technology ('IT'). The
committee submits to the Board and Risk Committee a quarterly
report, which provides an overview of matters discussed at each
meeting. Furthermore, the committee escalates any matters that it
deems necessary, including those relating to cyber security, to the
Board and/or Risk Committee, taking into account their respective
responsibilities. During the year, and as required by the HSBC Group
Subsidiary Accountability Framework ('SAF'), the Committee received
approval, on the recommendation of the Board, from the HSBC Group
Nomination & Corporate Governance Committee for its continuance
until 1Q25, enabling further engagement and more detailed oversight
of matters within its remit.
The committee's key responsibilities include:
– reviewing progress of the Europe Entity Change portfolio, which
consists of key internal regulatory and other strategic
transformation programmes. This includes the steps management
have taken to manage risk, and to monitor progress against set
objectives;
– reviewing global and regional technology strategies to ensure
alignment and to ensure that both support the adopted business
strategies of the bank; and
– overseeing and challenging management on execution of
operational resilience objectives and deliverables.
Committee activities during 2024
Key matters considered by the committee during the year included
review and oversight of the Europe technology strategy and
governance, technology performance against quantifiable metrics and
measures to assess individual and collective risks, technology
infrastructure, cyber security, and operational resilience, including
operational resilience of critical IT and other business services, and
major IT change programmes. The committee received a quarterly
operational and resilience risk opinion from the second line of defence
on the management of resilience risk and the internal control
environment for the bank, including but not limited to technology and
cyber security and change execution risk. The committee also
reviewed and challenged management on the progress, associated
risks, and governance with respect to the third-party management
and data risks and mitigations, and key change programmes.
Throughout the year the Committee received updates from
management regarding artificial intelligence, agile ways of working
and value streams and business continuity and incident management.
Operation of the Committee
The committee held five scheduled meetings during 2024.
The Chief Operating Officer, Chief Information Officer, Head of
Internal Audit, Regional Head of Enterprise Risk Management, Head
of Transformation and Digital Business Services Chief of Staff, and
Head of Strategy and Planning Chief of Staff (Europe CEO) are
standing attendees and regularly attend Committee meetings to
contribute their subject matter expertise and insight. The Board Chair
and Risk Committee Chair are optional attendees and attend the
meeting at their discretion.
The current members are Juliet Ellis (Chair), Norma Dove-Edwin, and
Lewis O’Donald.
Nomination, Remuneration &
Governance Committee
Key Responsibilities
The Nomination, Remuneration & Governance Committee has
responsibility for:
– leading the process for Board appointments and for identifying and
nominating, for the approval of the Board, candidates for
appointment to the Board and its committees;
– the endorsement of the appointment of individuals to certain
Board and management positions of the bank's subsidiaries,
including proposed fees payable to non-executive Directors on
subsidiary boards;
– overseeing the implementation and operation of the HSBC
Group’s directors’ remuneration policy and the remuneration of the
bank’s senior executives, including the identification of the
Material Risk Taker population for the purposes of the PRA’s
Capital Requirements Directive V (‘CRD V’);
– reviewing the corporate governance framework on behalf of the
Board, considering its appropriateness to the size, complexity and
strategy of the bank; and
– overseeing compliance with the SAF.
Further information in relation to HSBC’s approach to remuneration for
HSBC Group employees is available in the Director’s remuneration report on
page s 279 to 284 of HSBC’s Annual Report and Accounts 2024 available on
https://www.hsbc.com/investors/results-and-announcements/annual-report.
Committee activities during 2024
During the year the committee continued to review the Board’s
composition, succession planning, skills, experience and diversity in
keeping with best practice and applicable policies, including the SAF.
A Board skills matrix was utilised to support this review. Ann
Godbehere, a non-executive Director of HSBC Holdings plc, was
appointed to the Board in January 2025 as a non-executive Director to
enhance connectivity with the HSBC Group.
Further information in relation to Board and committee changes throughout
the year can be found on p age 96.
In overseeing compliance with the SAF, the committee reviewed the
Board composition and succession planning for all the bank's material
subsidiaries as well as reviewing their overall compliance with the
principles and provisions of the SAF.
Other activities during the year included the review of key
remuneration matters for the bank and its subsidiaries in the context
of the HSBC Group's remuneration framework, including variable and
fixed pay allocations and the alignment of remuneration with the
bank's risk appetite, business strategy, culture and values, and long-
term interests.
The committee reviewed the annual pay review outcomes across the
region and received regular updates on relevant subsidiary and
regulatory matters.

100 | HSBC Bank plc Annual Report and Accounts 2024

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Operation of the Committee
The committee held six meetings during 2024.
The Head of HR and Head of Performance & Reward attend
committee meetings on a regular basis to contribute their subject
matter expertise and insight. Other senior executives attend
periodically for specific items considered by the committee.
The committee comprises four non-executive Directors. The current
members are: Stephen O'Connor (Chair), Juliet Ellis, Eric Strutz, and
Andrew Wright.
Executive Committee
The Executive Committee is a committee of the Board and has overall
executive responsibility, under formal delegation, for the management
and day-to-day running of the bank. The committee is accountable to
the Board for overseeing the execution of the bank’s strategy.
The purpose of the committee is to support the Chief Executive
Officer of the bank in the performance of their duties and exercise of
their powers, authorities and discretions in relation to the
management of the bank and its subsidiaries. The committee meets
on a regular basis and is chaired by the Chief Executive Officer.
The committee is responsible for oversight of the performance across
the bank's lines of business, review of the bank’s financial
performance, cost management, and preparing and overseeing the
implementation of the bank’s forward looking Financial Resource
Plan. In addition, the committee receives updates on people matters,
Snapshot survey results, talent, succession planning and retention.
During the year, updates were also received on technology,
geopolitical, ESG and sustainability matters.
During 2024, in addition to its day-to-day oversight of the bank's
operations, the committee remained focused on the Bank’s continued
strategic transformation and corporate restructuring across Europe.

Dividends
Information about dividends paid during the year is provided on page
15 of the Strategic Report and in Note 8 to the financial statements.

Internal control
The Board is responsible for the establishment and operation of
effective procedures for the maintenance of a sound system of
internal control and risk management, and compliance with statutory
and regulatory obligations. The Board determine the aggregate level
and types of risks the bank is willing to take in achieving its strategic
objectives.
To meet this requirement and to discharge its obligations under the
FCA Handbook and the PRA Handbook, procedures have been
designed to provide reasonable assurance against material
misstatement, errors, losses or fraud. They are designed to provide
effective internal control within the group and accord with the
Financial Reporting Council's guidance for Directors issued in 2014
(and subsequent relevant publications), internal control and related
financial and business reporting. The procedures have been in place
throughout the year and up to 19 February 2025, the date of
publication of this Annual Report and Accounts 2024.
The key risk management and internal control procedures include the
following:
– The HSBC Book: In 2024, the HSBC Book replaced the HSBC
Group's Global Principles document at the top of the HSBC
document hierarchy. It underpins the key principles, policies and
procedures that are fundamental to the HSBC Group’s risk
management structure. It informs and connects our purpose,
ambition, strategy and values guiding us to make responsible
decisions aligned to our risk culture and risk management
approach, to do the right thing and to treat our customers and our
colleagues fairly at all times.
– Risk management framework ('RMF'): The RMF supports the
HSBC Book. It outlines the key principles and practices that we
employ in managing material risks. It applies to all categories of
risk and supports a consistent approach in identifying, assessing,
managing and reporting the risks we accept and incur in our
activities.
– Delegation of authority within limits set by the Board: Subject to
certain matters reserved for the Board, the Chief Executive Officer
has been delegated authority limits and powers within which to
manage the day-to-day affairs of the bank, including the right to
sub-delegate those limits and powers. Each relevant executive has
authority within which to manage the day-to-day affairs of the
business or function for which he or she is accountable. Those
individuals are required to maintain a clear and appropriate
apportionment of significant responsibilities and to oversee the
establishment and maintenance of systems of control that are
appropriate to their business or function.
– A delegation of authorities framework is in place providing a HSBC
Group structure for the management of delegated powers. These
delegated authorities can be used for the approval, signing and
execution of specific written agreements and documents such as
procurement contracts. The delegation of authorities framework is
adopted via a Board resolution which is reviewed annually. Matters
not covered by the delegation of authority framework can be set
out in a separate Board resolution, powers of attorney or the
relevant HSBC Group policy with clear systems of control that are
appropriate to the business or function.
– Authorities to enter into credit and market risk exposures are
delegated with limits to line management of g roup companies.
However, credit proposals with specified higher-risk characteristics
require the concurrence of the appropriate global function. Credit
and market risks are measured and reported at subsidiary
company level and aggregated for risk concentration analysis on a
group-wide basis.
– Risk identification and monitoring: Systems and procedures are in
place to identify, assess, control and monitor the material risk
types facing the group as set out in the RMF. The group‘s risk
measurement and reporting systems are designed to help ensure
that material risks are captured with all the attributes necessary to
support well-founded decisions, that those attributes are
accurately assessed and that information is delivered in a timely
manner for those risks to be successfully managed and mitigated.
– Changes in market conditions/practices: Processes are in place to
identify new risks arising from changes in market conditions/
practices or customer behaviours, which could expose the group
to heightened risk of loss or reputational damage. The group
employs a top and emerging risks framework, which contains an
aggregate of all current and forward-looking risks and enables it to
take action, to the extent it considers appropriate, that either
prevents them materialising or limits their impact.
– We remain committed to investing in the reliability and resilience
of our IT systems and critical services, including those provided by
third parties, that support all parts of our business. We do so to
help protect our customers, affiliates and counterparties, and to
help ensure that we minimise any disruption to services that could
result in reputational and regulatory consequences. In our
approach to defend against these threats, we invest in business
and technical controls to help us detect, manage and recover from
issues, including data loss, in a timely manner.
– We continue our focus on the quality and timeliness of the data
used to inform management decisions, through measures such as
early warning indicators, prudent active risk management of our
risk appetite, and ensuring regular communication with our Board
and other key stakeholders.
– Responsibility for risk management: All employees are responsible
for identifying and managing risk within the scope of their role as
part of the three lines of defence model. This is an activity-based
model to delineate management accountabilities and
responsibilities for risk management and the control environment.
For more details on the three lines of defence please refer to page
21.

HSBC Bank plc Annual Report and Accounts 2024 | 101

– The Board has delegated to the Audit Committee oversight for the
implementation of the group’s policies and procedures for
capturing and responding to whistleblower concerns, ensuring
confidentiality, protection and fair treatment of whistleblowers,
and receiving reports arising from the operation of those policies
as well as ensuring arrangements are in place for independent
investigation.
– Strategic plans: Strategic plans are prepared for global businesses,
global functions and geographical regions within the framework of
the HSBC Group’s overall strategy. The bank also prepares and
adopts a Financial Resource Plan, which is informed by detailed
analysis of risk appetite, describing the types and quantum of risk
that the bank is prepared to take in executing its strategy and sets
out the key business initiatives and the likely financial effects of
those initiatives.
The effectiveness of the group’s system of risk management and
internal control is reviewed regularly by the Board, the Risk
Committee and the Audit Committee.
During 2024, the bank continued to focus on operational resilience
and material and emerging risks with progress made to enhance the
end-to-end risk and control assessment process. The Risk
Committee, supported by the TRT, and the Audit Committee ensured
that executive management continued to take efforts to effect the
necessary actions to remedy any failings or weaknesses identified
through the operation of the group's framework of controls.
Internal control over financial
reporting
The bank is required to comply with section 404 of the US Sarbanes-
Oxley Act of 2002 and assess its effectiveness of internal control over
financial reporting at 31 December 2024, adopting the principles of
the Committee of Sponsoring Organizations of the Treadway
Commission (’COSO’) 2013 framework for the monitoring of risk
management and internal control systems to satisfy the requirements
of section 404 of the Sarbanes-Oxley Act.
The primary mechanism through which comfort over risk
management and internal control systems is achieved is through
annual assessments of the effectiveness of controls to manage risk,
and the reporting of issues on a regular basis through the various risk
management and risk governance forums.
The key risk management and internal control procedures over
financial reporting include the following:
– Entity level controls ('ELC'): ELCs are a defined suite of internal
controls that have a pervasive influence over the entity as a whole
and meet the principles of the COSO framework. They include
controls related to the control environment, such as the bank's
values and ethics, the promotion of effective risk management and
the overarching governance exercised by the Board and its non-
executive committees. The design and operational effectiveness
of ELCs are assessed on an ongoing basis. If issues are significant
to the group, they are notified to the Audit Committee, and to
other Committees and forum as appropriate.
– Process level transactional controls: Key process level controls
that mitigate risk of financial misstatement are identified, recorded
and monitored in accordance with the risk framework. This
includes the identification and assessment of relevant control
issues against which action plans are tracked through to
remediation. Further details on the group’s approach to risk
management can be found on page 21. The Audit Committee has
continued to receive regular updates on HSBC’s ongoing activities
for improving the effective oversight of end-to-end business
processes and management continues to identify opportunities for
enhancing key controls, such as through the use of automation
technologies.
– Financial reporting controls: The group’s financial reporting process
is controlled using documented accounting policies and reporting
formats, supported by detailed instructions and guidance on
reporting requirements, issued to all reporting entities within the
group in advance of each reporting period end. The submission of
financial information from each reporting entity is supported by a
certification by the responsible financial officer and analytical
review procedures at subsidiary and group levels.
– External Reporting Forum: The External Reporting Forum reviews
financial reporting disclosures to be made by the bank for accuracy
and completeness. The integrity of disclosures is underpinned by
structures and processes within the group's Finance and Risk
functions that support rigorous analytical review of financial
reporting and the maintenance of proper accounting records.
– Disclosure Committee: Chaired by the Chief Financial Officer, the
committee supports the discharge of the bank’s obligations under
relevant legislation and regulation including the European Union’s
Market Abuse Regulation ('EU MAR'), as it forms part of domestic
law of the United Kingdom by virtue of the European Union
(Withdrawal) Act 2018, as amended ('UK MAR'), the UK Listing
Rules, Prospectus Regulation Rules and the Disclosure Guidance
and Transparency Rules of the UK's Financial Conduct Authority,
the New York Stock Exchange’s Listed Company Manual, U.S.
Securities laws and the rules and regulations of the SEC, and also
any other listing and disclosure rules of the markets and
exchanges on which the bank’s financial instruments are listed,
including any other requirements that shall apply from time to
time. In so doing, the Disclosure Committee is empowered to
determine whether a new event or circumstance should be
disclosed, including the form and timing of such disclosure, and
review certain material disclosures made or to be made by the
group. The membership of the Disclosure Committee consists of
senior management, including the Chief Financial Officer, Chief
Risk Officer, General Counsel, Company Secretary and the Head
of Fixed Income Investor Relations (HSBC Holdings plc). The
integrity of disclosures is underpinned by structures and processes
within the Finance, Risk and Compliance functions that support
rigorous analytical review of financial reporting and the
maintenance of proper accounting records. As required by the
Sarbanes-Oxley Act, the Chief Executive Officer and the Chief
Financial Officer have certified that the group’s disclosure controls
and procedures were effective as at the end of the period covered
by the Annual Report and Accounts 2024. The annual review of
the effectiveness of the group’s system of risk management and
internal control over financial reporting was conducted with
reference to the COSO 2013 framework. Based on the
assessment performed, the Chief Executive Officer and Chief
Financial Officer concluded that for the year ended 31 December
2024, the group’s internal control over financial reporting was
effective.
– Subsidiary certifications: Certifications are provided to the Audit
Committee and the Risk Committee (full and half yearly) and to the
Nomination, Remuneration and Governance Committee (annually)
from the audit, risk and remuneration committees of key material
subsidiary companies confirming amongst other things that:
–Audit – the financial statements of the subsidiary have been
prepared in accordance with group policies, present fairly the
state of affairs of the subsidiary and are prepared on a going
concern basis;
–Risk – the risk committee of the subsidiary has carried out its
oversight activities consistent with and in alignment to the
RMF; and
–Remuneration – the remuneration committee of the subsidiary
has discharged its obligations in overseeing the implementation
and operation of HSBC’s Group Remuneration Policy.

102 | HSBC Bank plc Annual Report and Accounts 2024

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Employees
Health and safety
We are committed to providing a safe and healthy working
environment for everyone. We have adopted global policies,
mandatory procedures, and incident and information reporting
systems across the organisation that reflect our core values and are
aligned to international standards. Our global health and safety
performance is subject to ongoing monitoring and assurance to
ensure we are compliant with relevant laws and regulations.
Our Chief Operating Officers have overall responsibility for
engendering a positive health and safety culture and ensuring that
global policies, procedures and systems are put into practice locally.
They also have responsibility for ensuring all local legal requirements
are met.
We delivered a range of initiatives in 2024 to help us understand and
manage our health and safety risks:
– We reinforced our advice and risk assessment and control
methodology on working from home for employees adopting a
hybrid work style, providing more awareness and best practices on
good ergonomics and well-being.
– We delivered health and safety training and awareness for HSBC
Bank Plc employees and contractors, ensuring roles and
responsibilities were clear and understood.
– We completed the annual safety inspection on all of our HSBC
Bank Plc buildings, to ensure we were meeting our standards and
continuously improving our safety performance.
– We continued to hold health & safety themed awareness
campaigns and facilitate CPR and first aid training for our
colleagues.
– In 2024, we achieved full implementation of our Eat Well Live Well
programme across 100% of catered HSBC sites, driving global
healthy food sales to 32% with over 10% of all dishes sold globally
being plant-based. These results were supported by monthly Eat
Well Live Well events, and virtual teaching kitchens accessible to
all employees.
– Protection of our colleagues and operations is of critical
importance, and we have effective controls in place to protect our
people from natural disasters (such as storms and earthquakes). In
2024, there were no injuries or business impact resulting from
natural disasters.

Employee health and safety
| 2024 | 2023 | 2022
Number of employee workplace fatalities | — | — | —
Number of major injuries to employees 1 | 1 | 3 | —
Number of employee All Other Accidents | 8 | 19 | 21
All injury rate per 100,000 employees | 78 | 148 | 136

1 Fractures, dislocation, concussion, loss of consciousness overnight
admission to hospital.
Inclusion
We are guided by our global purpose: to open up a world of
opportunity for our customers, colleagues, and communities, which is
underpinned by our values: we value difference; we succeed
together; we take responsibility, and we get it done.
As an international bank we recognize that economies, societies,
supply chains and people’s lives are interconnected. To help create
long-term value for our stakeholders, we focus on fostering inclusion
and building resilience for our colleagues, customers, and the
communities we operate within. Our established ambitions guide
how we deliver our purpose, including increasing representation of
under-represented groups, specifically, women and Black heritage
colleagues in the senior leadership roles, and cultivating a more
inclusive and resilient culture at HSBC. Members of the HSBC Europe
Executive Committee are held to account for the actions they take on
inclusion via ambitions contained within their performance
scorecards, and management through our governance forums.
We are pleased to report on key progress made in 2024:
Achievements
– Throughout 2024 we held our senior executives accountable for
activity via regular Europe Diversity and Inclusion Council sessions,
chaired by the Chief Executive Officer and consisting of the
European Executive Committee. The sessions worked to reinforce
our commitments, define high-impact actions, engage more
closely with our Employee Resources Groups and track progress
and accountability.
– Throughout 2024, we delivered multiple events and conferences
to support our colleagues across our European countries, including
a week of Inclusion events in May hosted by our Inclusive Europe
Employee Resource Group ('ERG') with more than 1000
attendees. Our Employee Resource Groups ('ERG's) contribute
significant support to colleagues across Europe. They are led by
colleagues with a range of shared values, identities, interests, and
goals including disability, LGBTQ+, ethnicity, parenting, and
gender. In 2024 we launched 3 new ERGs focused on Ethnicity,
Parents and Disability in Europe.
– We engaged 24 of our most talented women in career
conversations with the Europe Executive Committee, with scores
on quality of sessions averaging 9.3/10, and supported 70 of our
mid-level women executives with 1:1 coaching via the Ezra
coaching platform, our new global provider.
– 80+ of our most senior leaders participated in Inclusive Leadership
training.
– We had a Black heritage action plan, through 2024, to support our
ethnicity ambitions, including a Black Heritage Sponsorship
Programme in Global Banking and Markets and Commercial
Banking.
– 65.8% of employees in the UK, Bermuda, Channels Islands and
Isle of Man and South Africa have declared their ethnicity in our
'HR Direct' system, as of 31 December 2024. For our senior
leaders, this figure is 70.9%.
Gender representation statistics
As part of our global ambition to achieve 35% senior leadership roles
held by women by the end of 2025, HSBC Europe focused on making
improvements to promotion and recruitment processes to support
more equitable career progression. Whilst our progress remains slow,
with organizational restructuring across the region contributing to
static year on year figures for senior women in leadership roles, we
continued to hire a more balanced population at senior levels. Merit
remains the principal factor in our hiring decisions.
F emale representation by management level:
– All grades – 48.3%;
– GCB 6-8 Clerical grades – 63.4%;
– GCB 4-5 Management – 44%; and
– GCB 0-3 Senior management – 25.3%, with 29% of new senior
executives hires female, and overall, 47.5% new hires female in
2024.

HSBC Bank plc Annual Report and Accounts 2024 | 103

Employment of people with a
disability
We provided equal opportunities for all employees, particularly those
with disabilities. Where necessary, we will provide appropriate
training, facilities, and equipment. In 2024 we delivered a full review
and enhancement of our reasonable accommodations process in
France, Germany, and Switzerland to support colleagues with a
disability or neurodivergence through our recruitment processes.
Continuous work also ensures individualised support is provided to
make home office adjustments and colleagues have access to a range
of global resources that provide information on available software,
hardware, and support for managers.
Our ERG's, supported by HR and business leadership, are doing an
important job of breaking down barriers. They offer a space for
discussion between those with a disability and their allies for
exchanges of inclusive best practices, building confidence and
reducing stigma.
Where it is legally permissible to do so, colleagues are able to
disclose whether they have a disability in our HR systems.
Learning and talent development
We built a dynamic environment where our colleagues can develop
skills and undertake experiences that help them fulfil their potential.
Our approach allows us to support our colleagues' career goals.
We expect all colleagues to complete global mandatory training each
year regardless of their contract type. This training plays a critical role
in shaping our culture, ensuring a focus on the issues fundamental to
our work – such as sustainability, financial crime risk, and intolerance
of bullying and harassment. New joiners attend our Global Discovery
programme to build their knowledge of the organisation and engage
them with our purpose, values, and strategy.
HSBC University remains our home for skills development with
access to face-to-face training and an extensive digital content
catalogue ranging for quick videos, podcasts and Learning pathways.
Powered by Degreed, our HSBC University platform provides tailored
content aligned to employees' chosen skills and areas levering our
many technical academies. Our Leadership development partners
include Imperial College and London Business Schools, with whom
we work on topics of strategic importance. For example, during 2024,
we continued to deploy the suite of the Managing Director
Programmes, offering experiential learning with small working groups
to address live challenges across the business. Executive
Masterclasses provide a deep dive into topics, issues and skills that
will shape HSBC's future.
My HSBC Career Portal, which offers career development information
and resources to help colleagues manage the various stages of their
careers, from joining to career progression, is also available to all our
employees. However, we also recognise that most development
happens while our colleagues work through regular coaching,
feedback, and performance management, and to support this we
have launched the Talent Marketplace to all HSBC Europe employees.
This allows our employees to connect to 'on-the-job' development
opportunities across the HSBC Group by matching individuals'
existing skills and career aspirations to live projects. Allowing HSBC
Europe to supplement its personnel in developing local initiatives and
projects.
Employee relations
We consult and, where appropriate, negotiate with employee
representative bodies where we have them. We also aim to maintain
well-developed communications and consultation programmes with
all employee representative bodies, and there have been no material
disruptions to our operations from labour disputes during the past five
years.

Disclosure of information to auditors
The directors are not aware that there is any relevant audit
information (as defined in the Companies Act 2006) of which the
bank’s auditors are unaware and processes are in place to ensure that
the bank’s auditors are aware of any relevant audit information.

Auditors
PricewaterhouseCoopers LLP (‘PwC’) are the external auditors to the
bank. PwC has expressed its willingness to continue in office and the
Board recommends that PwC be re-appointed as the bank’s auditors.
A resolution proposing the re-appointment of PwC as the bank’s
auditors, and giving authority to the Audit Committee to determine its
remuneration, will be submitted to the forthcoming AGM.

Branches
HSBC Bank plc provides a wide range of banking and financial
services through 20 markets. HSBC Bank plc is simplifying its
operating model to one integrated business supporting a wholesale
banking hub for the EU in Paris and a wholesale banking hub for
we stern markets in London. Further information on the bank’s
branches are located in ‘HSBC in Europe’ on page 4.

Directors' Report Disclosures table
Disclosures required pursuant to the Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations 2008 as
updated by Companies (Miscellaneous Reporting) Regulations 2018
can be found on the following pages:

Engagement with employees | Pages 7 to 10
Engagement with suppliers, customers and others in a business relationship with the bank | Pages 7 to 10
Hedge accounting policy | Note 14, Pages 167 to 170
Future developments | Pages 4 to 5

104 | HSBC Bank plc Annual Report and Accounts 2024

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Articles of Association, conflicts of
interest and i nde mnification of
Directors
Revised Articles of Association were approved at the 2024 AGM. The
principal changes included updates and changes to articles on hybrid
meetings, general meetings, the Board’s powers to allot shares and
grant rights, Directors’ written resolutions, removal of the provisions
relating to untraced shareholders and powers of the Board regarding
reserves of the profits of the company.
The bank's Articles of Association gives the Board authority to
approve Directors’ conflicts and potential conflicts of interest. The
Board has adopted policies and procedures for the approval of
Directors’ actual or potential conflicts of interest. On appointment,
new Directors are advised of the process for dealing with conflicts
and a review of those conflicts that have been authorised, and the
terms of those authorisations, is routinely undertaken by the Board.
The Articles of Association of the bank contain a qualifying third-party
indemnity provision, which entitles Directors and other officers to be
indemnified out of the assets of the bank against claims from third
parties in respect of certain liabilities. HSBC Group has granted, by
way of deed poll, indemnities to the Directors, including former
Directors who retired during the year, against certain liabilities arising
in connection with their position as a Director of any HSBC Group
company, including the bank and its subsidiaries. Directors are
indemnified to the maximum extent permitted by law.
The indemnities that constitute a 'qualifying third-party indemnity
provision', as defined by section 234 of the Companies Act 2006,
remained in force for the whole of the financial year (or, in the case of
Directors appointed during 2024, from the date of their appointment).
The deed poll is available for inspection at the registered office of
HSBC Holdings plc.
Additionally, Directors have the benefit of Directors’ and Officers’
liability insurance. Qualifying pension scheme indemnities have also
been granted to the Trustees of the Group's pension schemes, which
were in force for the whole of the financial year and remain in force as
at the date of this report.

Research and Development
In the ordinary course, the businesses develop new products and
services.

Events after the Balance Sheet Date
For details of events after the balance sheet date, see Note 35 on
the Financial Statements.

HSBC Bank plc Annual Report and Accounts 2024 | 105

Statement on going concern
The Directors consider it appropriate to prepare the financial statements on the going concern basis. In making their going concern assessment,
the Directors have considered a wide range of detailed information relating to present and potential conditions, including profitability, cash flows,
capital requirements and capital resources.
Further information relevant to the assessment is provided in the Strategic Report and the Report of the Directors, in particular:
– a description of the group’s strategic direction;
– a summary of the group's financial performance and a review of performance by business;
– the group’s approach to capital management and its capital position; and
– the top and emerging risks facing the group, as appraised by the Directors, along with details of the group's approach to mitigating those
risks and its approach to risk management in general.
In addition, the objectives, policies and processes for managing credit, liquidity and market risk are set out in the ‘Report of the Directors: Risk’.
The Report of the Directors comprising pages 21 to 104 was approved by the Board on 18 February 2025 and is signed on its behalf:
By order of the Board
Kavita Mahtani
Director
HSBC Bank plc
18 February 2025
Registered number 00014259

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Report of the Directors | Corporate Governance Report

Statement of directors'
responsibilities in respect of the
financial statements
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the group
and the company financial statements in accordance with UK-adopted international accounting standards. In preparing the group and company
financial statements, the directors have also elected to comply with International Financial Reporting Standards issued by the International
Accounting Standards Board ('IFRS Accounting Standards').
The group and company have also prepared financial statements in accordance with international financial reporting standards adopted pursuant
to Regulation (EC) No 1606/2002 as it applies in the European Union.
Under company law, directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state
of affairs of the group and the company and of the profit or loss of the group for that period. In preparing the financial statements, the directors
are required to:
– select suitable accounting policies and then apply them consistently;
– state whether applicable UK-adopted international accounting standards, international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union and IFRS Accounting Standards have been followed, subject to any
material departures disclosed and explained in the financial statements;
– make judgements and accounting estimates that are reasonable and prudent; and
– prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and company will continue
in business.
The directors are responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The directors are also responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s
transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that
the financial statements comply with the Companies Act 2006.
The directors are responsible for the maintenance and integrity of the company’s financial statements published on HSBC’s website. Legislation
in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Directors’ confirmations
Each of the directors, whose names and functions are listed in Corporate Governance Report confirm that, to the best of their knowledge:
– the group and company financial statements, which have been prepared in accordance with UK-adopted international accounting standards,
international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union and IFRS
Accounting Standards, give a true and fair view of the assets, liabilities and financial position of the group and company, and of the profit of
the group; and
– the Strategic Report includes a fair review of the development and performance of the business and the position of the group and company,
together with a description of the principal risks and uncertainties that it faces.
In the case of each director in office at the date the Report of the Directors is approved:
– so far as the director is aware, there is no relevant audit information of which the group’s and company’s auditors are unaware; and
– they have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information
and to establish that the group’s and company’s auditors are aware of that information.
On behalf of the Board
Kavita Mahtani
Director
HSBC Bank plc
18 February 2025
Registered number 00014259

HSBC Bank plc Annual Report and Accounts 2024 | 107

Independent auditors’ report to the
members of HSBC Bank plc
Report on the audit of the financial statements
Opinion
In our opinion, HSBC Bank plc’s group financial statements and company financial statements (the 'financial statements'):
– give a true and fair view of the state of the group’s and of the company’s affairs as at 31 December 2024 and of the group’s profit and the
group’s and company’s cash flows for the year then ended;
– have been properly prepared in accordance with UK-adopted international accounting standards as applied in accordance with the provisions
of the Companies Act 2006; and
– have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Accounts 2024 (the 'Annual Report'), which comprise the:
– consolidated balance sheet as at 31 December 2024;
– consolidated income statement and consolidated statement of comprehensive income for the year then ended;
– consolidated statement of changes in equity for the year then ended;
– consolidated statement of cash flows for the year then ended;
– HSBC Bank plc balance sheet as at 31 December 2024;
– HSBC Bank plc statement of changes in equity for the year then ended;
– HSBC Bank plc statement of cash flows for the year then ended; and
– notes to the financial statements, comprising material accounting policy information and other explanatory information.
Certain notes to the financial statements have been presented elsewhere in the Annual Report, rather than in the notes to the financial
statements. These are cross-referenced from the financial statements and are identified as ‘(Audited)’. The relevant disclosures are included in
the Risk review section on pages 21 to 93.
Our opinion is consistent with our reporting to the Audit Committee.
Separate opinion in relation to international financial reporting standards
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union
As explained in note 1.1(a) to the financial statements, the group and company, in addition to applying UK-adopted international accounting
standards, have also applied international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union.
In our opinion, the group and company financial statements have been properly prepared in accordance with international financial reporting
standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.
Separate opinion in relation to IFRSs as issued by the IASB
As explained in note 1.1(a) to the financial statements, the group and company, in addition to applying UK-adopted international accounting
standards, have also applied International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board
(IASB) ('IFRS Accounting Standards').
In our opinion, the group and company financial statements have been properly prepared in accordance with IFRS Accounting Standards.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) ('ISAs (UK)'), International Standards on Auditing issued by
the International Auditing and Assurance Standards Board ('ISAs') and applicable law. Our responsibilities under ISAs (UK) and ISAs are further
described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in
the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and the International Code of Ethics for
Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants
(IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by either the FRC’s Ethical Standard or Article 5(1) of
Regulation (EU) No 537/2014 were not provided.
Other than those disclosed in note 6, we have provided no non-audit services to the company or its controlled undertakings in the period under
audit.

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Our audit approach
Overview
Audit scope
– We performed full scope audits of two significant components, namely the UK non-ring-fenced bank ('UK NRFB') and HSBC Continental
Europe ('HBCE'). For two further components, specific audit procedures were performed over selected significant account balances and
financial statement note disclosures.
Key audit matters
– Expected credit losses - Impairment of loans and advances to customers (group and company)
– Impairment of investment in subsidiaries (company)
Materiality
– Overall group materiality: £258m (2023: £231m) based on 1% of Tier 1 capital.
– Overall company materiality: £136m (2023: £129m) based on 1% of Tier 1 capital.
– Performance materiality: £194m (2023: £174m) (group) and £102m (2023: £97m) (company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud)
identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit;
and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were
addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Impairment of investment in subsidiaries (company) is a new key audit matter this year. Otherwise, the key audit matters below are consistent
with last year.
Expected credit losses – Impairment of loans and advances to customers (group and
company)

Nature of the key audit matter
Determining ECL involves management judgement and is subject to a high degree of estimation uncertainty. Management makes various assumptions when estimating ECL. We performed a risk assessment to identify those assumptions with significant levels of management judgement and for which variations had the most material impact on ECL. Judgements were made in selecting applicable recovery strategies which determine the estimated loss for the larger individually assessed wholesale Stage 3 cases, specifically around cash flow assumptions, including timing of cash flows and where applicable, valuation of collateral. The modelling methodologies used to estimate ECL are developed using historical experience. We assess the impact of limitations in these methodologies when forecasting the extent and timing of future customer defaults or when responding to emerging risks, such as climate risk. The focus of our assessment of the impact of climate risk on ECL was to evaluate management’s risk assessment process for identifying, quantifying and concluding that the impact of climate risk on ECL for the year end was immaterial.

Matters discussed with the Audit Committee
We reported to the Audit Committee our observations covering governance and controls over ECL. Our observations regarded: – conclusions over significant assumptions used to estimate the discounted cash flow projections for larger individually assessed credit impaired wholesale exposures; and – the disclosures made in relation to ECL.

How our audit addressed the Key Audit Matter
We assessed the design and effectiveness of governance and controls over the estimation of ECL. We observed management's review and challenge in governance forums for the assessment of ECL for wholesale portfolios. We also tested controls over the approval of significant individual impairments relating to high value wholesale credit-impaired exposures. In respect of a sample of larger individually assessed credit-impaired wholesale exposures we: – tested the completeness and accuracy of certain input data used by management to determine expected credit losses; – evaluated the reasonableness of certain cash flow scenarios and the weighting of those scenarios; – assessed the significant assumptions used to estimate the discounted cash flow projections and where appropriate we involved experts to assess the underlying collateral or business valuations; – considered the sensitivity of ECL to variations in the severity and probability weighting of scenarios; and – considered whether the judgements made in selecting the significant assumptions would give rise to indicators of possible management bias. We evaluated the disclosures made in the consolidated financial statements in relation to the measurement of expected credit losses of loans and advances to customers - wholesale stage 3. We evaluated management’s risk assessment in respect of the impact of climate change on the ECL provision, including involving our modelling specialists to evaluate the stress testing and scenario analysis methodology used and sensitising key assumptions. Finally, we tested the audited Credit Risk disclosures made in the Annual Report.

HSBC Bank plc Annual Report and Accounts 2024 | 109

Relevant reference in the Annual report and Accounts 2024
– Audited credit risk disclosures, pages 31 – 73. – Audit Committee Report, page 97. – Note 1.2(d): Financial instruments measured at amortised cost, page 129. – Note 1.2(i): Impairment of amortised cost and FVOCI financial assets, page 131.

Impairment of investment in subsidiaries (company)

Nature of the key audit matter
Management reviewed investments in subsidiaries for indicators of impairment as at 31 December 2024. Where indicators were identified management estimated the recoverable amount using a value in use (‘VIU’) model. Management’s assessment resulted in an impairment charge of £0.9 billion in relation to the investment in HBCE. The methodology in the VIU model is dependent on various assumptions, both short term and long term in nature. These assumptions, which are subject to estimation uncertainty, are derived from a combination of management’s judgement, experts engaged by management and market data. The significant assumptions that we focused our audit on were those with greater levels of management judgement and for which variations had the most significant impact on the recoverable amount. Specifically, these included forecast cash flows for 2025 to 2029 and discount rates.

Matters discussed with the Audit Committee
We discussed the appropriateness of methodologies used and significant assumptions with the audit committee, giving consideration to the macroeconomic outlook and HSBC’s strategy. We considered reasonable possible alternatives for significant assumptions.

How our audit addressed the Key Audit Matter
We tested the controls in place over the forecasted cash flow assumptions used to determine the recoverable amounts. We assessed the appropriateness of the methodology used, and the mathematical accuracy of the calculations, to estimate the recoverable amounts. In respect of the significant assumptions, our testing included the following: – Challenging the achievability of management’s business plan and the prospects for HSBC’s businesses, as well as considering the achievement of historic forecasts; – Obtaining and evaluating evidence relating to significant assumptions, from a combination of historic experience and external market and other group financial information; – Assessing whether the cash flows included in the model were in accordance with the relevant accounting standard; – Assessing the sensitivity of the VIU to reasonable variations in significant assumptions, both individually and in aggregate; and – Determining a reasonable range for the discount rate used within the model, with the assistance of our valuation experts, and comparing it to the discount rate used by management. We evaluated and tested the disclosures made in the financial statements in relation to investment in subsidiaries.

Relevant reference in the Annual report and Accounts 2024
– Audit Committee Report, page 97. – Note 1.2(a): consolidation and related policies, pages 127 – 128. – Note 18: Investments in subsidiaries, pages 173 – 174.

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How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a
whole, taking into account the structure of the group and the company, the accounting processes and controls, and the industry in which they
operate.
A focus on risk factors
The risks that HSBC Bank plc faces are diverse, with the interdependencies between them being numerous and complex. In performing our risk
assessment we engaged with a number of stakeholders to ensure we appropriately understood and considered these risks and their
interrelationships. This included stakeholders within HSBC and our own experts within PwC. This engagement covered external factors across
the geopolitical, macroeconomic, regulatory and accounting landscape, and the impact of climate risk. It also covered the strategy and
transformation-driven internal environment at HSBC.
Scoping
HSBC Bank plc operates as one integrated business with two main hubs in London and Paris. The London hub consists of the UK NRFB and the
Paris hub comprises HBCE, its EU branches and its subsidiaries in Malta and Luxembourg.
Through our risk assessment, we tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the
financial statements as a whole, taking into account the structure of the group and the company, the accounting processes and controls, and
the industry in which they operate. The risks of material misstatement can be reduced to an acceptable level by testing the entities that are
significant due to their size and those that drive particular significant risks identified as part of our risk assessment. We continually assessed
risks and changed the scope of our audit where necessary. Our risk assessment and scoping identified certain entities (collectively the
'components') for which we obtained audit opinions. This ensures that sufficient coverage has been obtained for each financial statement line
item (FSLI).
In establishing the overall approach to the group and company audit, we scoped using the balances relevant to each component and determined
the type of work that needed to be performed over the components by us, as the group engagement team, or auditors within PwC UK and from
other PwC network firms operating under our instruction (‘component auditors’).
Significant components audit approach
As a result of our scoping for the group we determined that full scope audits of the significant components were necessary, owing to their
financial significance. We instructed component auditors, PwC UK and PwC France to work to assigned materiality levels reflecting the size of
the operations they audited. Certain significant component auditors performed their work to a local statutory audit materiality that was a lower
level than our allocated group materiality. We then considered the significance of other components in relation to primary statement account
balances and note disclosures.
In doing this we also considered the presence of any significant audit risks and other qualitative factors (including history of misstatements
through fraud or error). For two components, specific audit procedures were performed over selected significant account balances. For the
remainder, the risk of material misstatement was mitigated through group audit procedures including testing of entity level controls and group
and company level analytical review procedures.
In June 2024, we held a meeting in London with the engagement partners and senior staff from the group audit team and the PwC teams who
undertake audits of the components that are significant due to size or risk. The meeting focused primarily on assessing our approach to auditing
the group’s businesses, changes at HSBC Bank plc and in our PwC teams, and how we continue to innovate and improve the quality of the
audit. We also discussed our significant audit risks.
We were in active dialogue throughout the year with the engagement partners and teams responsible for the UK NFRB and HBCE audits,
including directing how they planned and performed their work. Senior members of our team undertook at least one in-person site visit prior to
the year-end where a full scope audit was requested and we had oversight over certain areas of audit work performed. Our interactions with
component auditors included regular communication throughout the audit, including the issuance of instructions, a review of working papers
relating to the key audit matters, in-person site visits and remote virtual sessions to inspect their working papers throughout the different
phases of the audit and formal clearance meetings. This enabled us to effectively focus on the direction, supervision and review of the work
performed by the component auditors. The group audit engagement partner was also the partner on the audit of the UK NRFB significant
component.
Group-wide audit approach
Certain balances were audited by the PwC HSBC Holdings plc Group engagement team where they related to Group level accounts. HSBC has
entity level controls that have a pervasive influence across the Group, as well as other global and regional governance and controls over aspects
of financial reporting, such as those operated by the Global Risk function for expected credit losses. A significant amount of IT and operational
processes and controls relevant to financial reporting are undertaken in operations centres run by Digital Business Services ('DBS'). Whilst these
operations centres are not separate components, the IT and operational processes and controls are relevant to the financial information of HSBC
Bank plc. Financial reporting processes and controls are also performed centrally in HSBC Bank plc’s finance operations centres (‘Finance
Operations’), including the impairment assessment of investment in subsidiaries and intangible assets, the consolidation of HSBC Bank plc's
results, the preparation of financial statements, and certain management oversight controls relevant to financial reporting.
HSBC Holdings plc Group-wide processes or processes in DBS and Finance Operations are subject to specified audit procedures or an audit
over specific financial statement line items. These procedures primarily relate to testing of IT general controls, forward looking economic
scenarios for ECL, operating expenses, intangible assets, valuation of financial instruments, intercompany eliminations, reconciliations,
consolidation and payroll. For these areas, we either performed audit work ourselves, or directed and provided oversight of the audit work
performed by other PwC teams. This audit work, together with analytical review procedures and assessing the outcome of local external audits,
also addressed the risk of material misstatement for balances in entities that were not part of a significant component.

HSBC Bank plc Annual Report and Accounts 2024 | 111

The impact of climate risk on our audit
In considering the impact of climate risk on our audit, we:
– Made enquiries of management to understand the extent of the potential impact of climate risk on the financial statements and we remained
alert when performing our audit procedures for any indicators of the impact of climate risk.
– Evaluated and challenged management's assessment of the impact of climate risk, which includes the potential impact on ECL, classification
and measurement of financial instruments and going concern assumption.
– Read the disclosures in relation to climate risk made in the other information within the Annual Report to ascertain whether the disclosures
are materially consistent with the financial statements and our knowledge from our audit. Our responsibility over other information is further
described in the Reporting on other information section of our report.
Our procedures did not identify any material incremental adjustments needed to capture climate impacts on the group and company financial
statements.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together
with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the
individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the
financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

| Financial statements – group | Financial statements – company
Overall materiality | £258m (2023: £231m). | £136m (2023: £129m).
How we determined it | 1% of Tier 1 capital | 1% of Tier 1 capital
Rationale for benchmark applied | Tier 1 capital was also used as the benchmark in the prior year. The basis for determining materiality was re-evaluated and we considered other benchmarks, such as profit before tax. Tier 1 capital was determined to be the most appropriate benchmark given the importance of this metric to the HSBC Bank plc decision making process and to principal users of the financial statements, including regulators and the ultimate holding company HSBC Holdings plc.

For each component in the scope of our group audit, we allocated a materiality that was less than our overall group materiality. The range of
materiality allocated across components was £7m to £130m. Certain components were audited to a local statutory audit materiality that was
also less than our overall group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature
and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our
performance materiality was 75% (2023: 75%) of overall materiality, amounting to £194m (2023: £174m) for the group financial statements and
£102m (2023: £97m) for the company financial statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment and aggregation
risk and the effectiveness of controls - and concluded that an amount at the upper end of our normal range was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £13m (group audit) (2023:
£12m) and £7m (company audit) (2023: £6m) as well as misstatements below those amounts that, in our view, warranted reporting for
qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group's and the company’s ability to continue to adopt the going concern basis of accounting
included:
– Performing a risk assessment to identify factors that could impact the going concern basis of accounting, including both internal risks (e.g.,
strategy execution) and external risks (e.g., macroeconomic conditions);
– Understanding and evaluating the group and company’s financial forecasts and stress testing of liquidity and regulatory capital, including the
severity of the stress scenarios that were used;
– Understanding and evaluating credit rating agency ratings and actions; and
– Reading and evaluating the adequacy of the disclosures made in the financial statements in relation to going concern.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the group's and the company’s ability to continue as a going concern for a period of at least twelve
months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group's and the company's
ability to continue as a going concern.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

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Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon.
The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and,
accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be
materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to
conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on
the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report based on these responsibilities.
With respect to the Strategic report and Report of the Directors, we also considered whether the disclosures required by the UK Companies Act
2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as
described below.
Strategic report and Report of the Directors
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Report of the Directors
for the year ended 31 December 2024 is consistent with the financial statements and has been prepared in accordance with applicable legal
requirements.
In light of the knowledge and understanding of the group and company and their environment obtained in the course of the audit, we did not
identify any material misstatements in the Strategic report and Report of the Directors.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of directors' responsibilities in respect of the financial statements, the directors are responsible for the
preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view.
The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either
intend to liquidate the group or the company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but
is not a guarantee that an audit conducted in accordance with ISAs (UK) and ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of
detecting irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws and regulations related
to breaches of financial crime laws and regulations and regulatory compliance, including regulatory reporting requirements and conduct of
business, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered
those laws and regulations that have a direct impact on the financial statements such as the Companies Act 2006 and relevant tax legislation.
We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override
of controls) and determined that the principal risks were related to posting inappropriate journal entries to reduce costs, intentional mismarking
of trades, and management bias in accounting estimates.
The group engagement team shared this risk assessment with the component auditors so that they could include appropriate audit procedures
in response to such risks in their work. Audit procedures performed by the group engagement team and/or component auditors included:
– Review of correspondence with and reports to the regulators, including the Prudential Regulation Authority ('PRA') and Financial Conduct
Authority ('FCA');
– Review of minutes of meetings held by the Board of Directors and different committees such as the Audit Committee and Risk Committee,
which include discussions of management’s reporting to these committees in respect of compliance and legal matters;
– Enquiries of management and those charged with governance, and review of internal audit reports in so far as they related to the financial
statements;
– Obtaining legal confirmations from legal advisors relating to material litigation and compliance matters;
– Assessment of entity-level controls relating to corporate governance, whistleblowing arrangements, personal conduct and legal
investigations; and evaluation of matters reported on the group’s whistleblowing programmes and the results of management’s investigation
of such matters insofar as they related to the financial statements;
– Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation to the
determination of fair value of financial instruments, the determination of expected credit losses, recoverability of deferred tax assets,
impairment of investment in subsidiaries and sufficiency of recognised provisions for litigation cases;
– Obtaining confirmations from third parties to confirm the existence of a sample of balances;

HSBC Bank plc Annual Report and Accounts 2024 | 113

– Identifying and testing journal entries meeting specific fraud criteria, including backdated journals, those posted with certain descriptions,
posted and/or approved by unexpected individuals, or journals corresponding to certain account combinations; and
– Varying the nature, timing and extent of substantive testing to introduce unpredictability.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with
laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a
material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment
by, for example, forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques.
However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to
target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a
conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements in accordance with ISAs (UK) is located on the FRC’s
website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We
also:
– Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
– Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the group’s and company’s internal control;
– Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by
management;
– Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group’s and company’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the
related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the group to
cease to continue as a going concern;
– Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the
consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation; and
– Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group and
company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance
of the group and company audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence,
and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit
of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our
auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine
that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
Use of this report
This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter 3 of Part
16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior
consent in writing.

114 | HSBC Bank plc Annual Report and Accounts 2024

Independent auditors’ report to the members of HSBC Bank plc

Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
– we have not obtained all the information and explanations we require for our audit; or
– adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches
not visited by us; or
– certain disclosures of directors’ remuneration specified by law are not made; or
– the company financial statements are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we were appointed by the directors on 31 March 2015 to audit the financial statements
for the year ended 31 December 2015 and subsequent financial periods. The period of total uninterrupted engagement is ten years, covering the
years ended 31 December 2015 to 31 December 2024.

Other matter
The company is required by the Financial Conduct Authority Disclosure Guidance and Transparency Rules to include these financial statements
in an annual financial report prepared under the structured digital format required by DTR 4.1.15R – 4.1.18R and filed on the National Storage
Mechanism of the Financial Conduct Authority. This auditors’ report provides no assurance over whether the structured digital format annual
financial report has been prepared in accordance with those requirements.
Lawrence Wilkinson
(Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
18 February 2025

HSBC Bank plc Annual Report and Accounts 2024 | 115

Financial statements

Contents
115 | Consolidated income statement
116 | Consolidated statement of comprehensive income
117 | Consolidated balance sheet
118 | Consolidated statement of changes in equity
121 | Consolidated statement of cash flows
122 | HSBC Bank plc balance sheet
123 | HSBC Bank plc statement of changes in equity
125 | HSBC Bank plc statement of cash flows

Consolidated income statement
for the year ended 31 December

|  | 2024 | 2023 | 2022
| Notes* | £m | £m | £m
Net interest income |  | 985 | 2,151 | 1,904
– interest income 1,2 |  | 19,414 | 17,782 | 6,535
– interest expense 3 |  | (18,429) | (15,631) | (4,631)
Net fee income | 2 | 1,275 | 1,229 | 1,295
– fee income |  | 2,758 | 2,594 | 2,593
– fee expense |  | (1,483) | (1,365) | (1,298)
Net income from financial instruments held for trading or managed on a fair value basis | 3 | 4,726 | 3,395 | 2,875
Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss | 3 | 857 | 1,168 | (1,370)
Changes in fair value of long-term debt and related derivatives |  | 2 | (63) | 102
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss |  | 413 | 284 | 143
Net gains/(losses) from financial investments |  | 22 | (84) | (60)
(Losses)/gains recognised on Assets held for sale 4 |  | (100) | 296 | (1,947)
Insurance finance (expense)/income | 4 | (984) | (1,184) | 1,106
Insurance service result | 4 | 171 | 124 | 121
– Insurance revenue |  | 398 | 379 | 361
– Insurance service expense |  | (227) | (255) | (240)
Other operating income |  | 106 | 190 | 135
Net operating income before change in expected credit losses and other credit impairment charges 5 |  | 7,473 | 7,506 | 4,304
Change in expected credit losses and other credit impairment charges |  | (163) | (169) | (222)
Net operating income |  | 7,310 | 7,337 | 4,082
Total operating expenses |  | (5,260) | (5,142) | (5,251)
– employee compensation and benefits | 5 | (1,672) | (1,706) | (1,698)
– general and administrative expenses |  | (3,440) | (3,375) | (3,425)
– depreciation and impairment of property, plant and equipment and right of use assets |  | (71) | (45) | (103)
– amortisation and impairment of intangible assets |  | (77) | (16) | (25)
Operating profit/(loss) |  | 2,050 | 2,195 | (1,169)
Share of profit/(loss) in associates and joint ventures | 17 | 18 | (43) | (30)
Profit/(loss) before tax |  | 2,068 | 2,152 | (1,199)
Tax (charge)/credit | 7 | (785) | (427) | 646
Profit/(loss) for the year |  | 1,283 | 1,725 | (553)
Profit/(loss) attributable to the parent company |  | 1,253 | 1,703 | (563)
Profit attributable to non-controlling interests |  | 30 | 22 | 10

*For Notes on the financial statements, see page 126.
1 Interest income includes £17,467m (2023: £16,484m; 2022: £5,512m) of interest recognised on financial assets measured at amortised cost; £9m (2023: £42m;
2022: £422m) of negative interest recognised on financial liabilities and £1,944m (2023: £1,256m; 2022: £601m) of interest recognised on financial assets
measured at fair value through other comprehensive income. Include within this is £97m ( 2023: £117m; 2022: £59m) interest recognised on impaired financial
assets.
2 Interest revenue calculated using the effective interest method comprises interest recognised on financial assets measured at either amortised cost or fair value
through other comprehensive income.
3 Interest expense includes £17,195m (2023: £14,226m; 2022: £3,740m) of interest on financial liabilities, excluding interest on financial liabilities held for trading
or designated or otherwise mandatorily measured at fair value.
4 In relation to the sale of our retail banking operations in France, we recognised a £1.7b n impairment loss in 3Q22 on initial classification of the business as held-
for-sale. In 1Q23, we reversed the £1.7b n impairment loss as the sale became less certain. On subsequent re-classification of the business as held-for-sale in
4Q23, we recognised a £1.5b n impairment loss.
5 Net operating income before change in expected credit losses and other credit impairment charges is also referred to as 'revenue'.

116 | HSBC Bank plc Annual Report and Accounts 2024

Financial statements

Consolidated statement of comprehensive income
for the year ended 31 December

| 2024 | 2023 | 2022
| £m | £m | £m
Profit/(loss) for the year | 1,283 | 1,725 | (553)
Other comprehensive income/(expense) |  |  |
Items that will be reclassified subsequently to profit or loss when specific conditions are met: |  |  |
Debt instruments at fair value through other comprehensive income | 144 | 439 | (1,886)
– fair value gains/(losses) | 197 | 495 | (2,631)
– fair value (gains)/losses transferred to the income statement on disposal | (28) | 93 | 59
– expected credit losses/(recoveries) recognised in the income statement | 1 | (2) | 6
– income taxes | (26) | (147) | 680
Cash flow hedges | 103 | 663 | (943)
– fair value (losses)/gains | (396) | 614 | (1,418)
– fair value losses reclassified to the income statement | 538 | 301 | 127
– income taxes | (39) | (252) | 348
Finance (expenses)/income from insurance contracts | (108) | (298) | 1,408
– before income taxes | (146) | (402) | 1,898
– income taxes | 38 | 104 | (490)
Exchange differences | (491) | (302) | 672
Items that will not be reclassified subsequently to profit or loss: |  |  |
Remeasurement of defined benefit asset/liability | (2) | (2) | 38
– before income taxes | (6) | (20) | 56
– income taxes | 4 | 18 | (18)
Equity instruments designated at fair value through other comprehensive income | (2) | (1) | —
– fair value gains/(losses) | 13 | (1) | —
– income taxes | (15) | — | —
Changes in fair value of financial liabilities designated at fair value upon initial recognition arising from changes in own credit risk | (40) | (132) | 329
– fair value (losses)/gains | (55) | (179) | 462
– income taxes | 15 | 47 | (133)
Other comprehensive (expense)/income for the year, net of tax | (396) | 367 | (382)
Total comprehensive income/(expense) for the year | 887 | 2,092 | (935)
Attributable to: |  |  |
– shareholders of the parent company | 863 | 2,070 | (947)
– non-controlling interests | 24 | 22 | 12

HSBC Bank plc Annual Report and Accounts 2024 | 117

Consolidated balance sheet
at 31 December

|  | At
|  | 31 Dec | 31 Dec
|  | 2024 | 2023
| Notes* | £m | £m
Assets |  |  |
Cash and balances at central banks |  | 119,184 | 110,618
Trading assets | 10 | 116,042 | 100,696
Financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 13 | 9,417 | 19,068
Derivatives | 14 | 198,172 | 174,116
Loans and advances to banks |  | 14,521 | 14,371
Loans and advances to customers |  | 82,666 | 75,491
Reverse repurchase agreements – non-trading |  | 53,612 | 73,494
Financial investments | 15 | 52,216 | 46,368
Assets held for sale 1 | 34 | 21,606 | 20,368
Prepayments, accrued income and other assets 2 | 21 | 56,950 | 65,749
Current tax assets |  | 1,043 | 485
Interests in associates and joint ventures | 17 | 703 | 665
Goodwill and intangible assets | 20 | 303 | 203
Deferred tax assets | 7 | 895 | 1,278
Total assets |  | 727,330 | 702,970
Liabilities and equity |  |  |
Liabilities |  |  |
Deposits by banks |  | 26,515 | 22,943
Customer accounts |  | 242,303 | 222,941
Repurchase agreements – non-trading |  | 40,384 | 53,416
Trading liabilities | 22 | 42,633 | 42,276
Financial liabilities designated at fair value | 23 | 37,443 | 32,545
Derivatives | 14 | 197,082 | 171,474
Debt securities in issue |  | 19,461 | 13,443
Liabilities of disposal groups held for sale 1 | 34 | 23,110 | 20,684
Accruals, deferred income and other liabilities 2 | 24 | 50,484 | 62,560
Current tax liabilities |  | 250 | 272
Insurance contract liabilities | 4 | 3,424 | 20,595
Provisions | 25 | 275 | 390
Deferred tax liabilities | 7 | 5 | 6
Subordinated liabilities | 26 | 16,908 | 14,920
Total liabilities |  | 700,277 | 678,465
Equity |  |  |
Total shareholders’ equity |  | 26,895 | 24,359
– called up share capital | 29 | 797 | 797
– share premium account | 29 | 3,582 | 1,004
– other equity instruments | 29 | 3,921 | 3,930
– retained earnings |  | 25,040 | 24,724
– other reserves |  | (6,445) | (6,096)
Non-controlling interests |  | 158 | 146
Total equity |  | 27,053 | 24,505
Total liabilities and equity |  | 727,330 | 702,970

1 Includes businesses classified as held-for-sale as part of a broader restructuring of our European business. Refer to Note 34 'Assets held for sale and liabilities of
disposal groups held for sale' on page 193.
2 In 2023 ‘Items in the course of collection from other banks’ (£2,114 m) were presented on the face of the balance sheet but are now reported within
‘Prepayments, accrued income and other assets’ in the Annual Report and Accounts 2024. Similarly, ‘Items in the course of transmission to other
banks’ (£2,116 m) are now presented within ‘Accruals, deferred income and other liabilities’.
*For Notes on the financial statements, see page 126.
The accompanying notes on pages 126 to 195, and the audited sections of the 'Report of the Directors' on pages 21 to 104 f orm an integral part
of these financial statements.
The financial statements were approved by the Board of Directors on 18 February 2025 and signed on its behalf by:
Kavita Mahtani
Director

118 | HSBC Bank plc Annual Report and Accounts 2024

Financial statements

Consolidated statement of changes in equity
for the year ended 31 December

|  |  |  | Other reserves |  |  |
| Called up share capital & share premium | Other equity instru- ments | Retained earnings | Financial assets at FVOCI reserve | Cash flow hedging reserve | Foreign exchange reserve | Group reorgan- isation reserve (‘GRR’)5 | Insur- ance finance reserve 1 | Total share- holders’ equity | Non- control- ling interests | Total equity
| £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
At 1 Jan 2024 | 1,801 | 3,930 | 24,724 | (868) | (330) | 2,178 | (7,692) | 616 | 24,359 | 146 | 24,505
Profit for the period | — | — | 1,253 | — | — | — | — | — | 1,253 | 30 | 1,283
Other comprehensive (expense)/income (net of tax) | — | — | (40) | 176 | 103 | (493) | — | (136) | (390) | (6) | (396)
– debt instruments at fair value through other comprehensive income | — | — | — | 143 | — | — | — | — | 143 | 1 | 144
– equity instruments designated at fair value through other comprehensive income | — | — | — | (2) | — | — | — | — | (2) | — | (2)
– cash flow hedges | — | — | — | — | 103 | — | — | — | 103 | — | 103
– remeasurement of defined benefit asset/liability | — | — | (2) | — | — | — | — | — | (2) | — | (2)
– changes in fair value of financial liabilities designated at fair value due to movement in own credit risk 2 | — | — | (40) | — | — | — | — | — | (40) | — | (40)
– Foreign exchange reclassified to income statement on disposal of a foreign operation | — | — | — | — | — | 49 | — | — | 49 | — | 49
– insurance finance expense recognised in other comprehensive income | — | — | — | — | — | — | — | (108) | (108) | — | (108)
– exchange differences | — | — | 2 | 35 | — | (542) | — | (28) | (533) | (7) | (540)
Total comprehensive income/(expense) for the year | — | — | 1,213 | 176 | 103 | (493) | — | (136) | 863 | 24 | 887
Capital securities issued during the period 4 | 2,578 | 204 | — | — | — | — | — | — | 2,782 | — | 2,782
Redemption of securities | — | (213) | — | — | — | — | — | — | (213) | — | (213)
Dividends paid to the parent company 3 | — | — | (535) | — | — | — | — | — | (535) | (11) | (546)
Net impact of equity-settled share-based payments | — | — | (6) | — | — | — | — | — | (6) | — | (6)
Change in business combinations and other movements 6 | — | — | (356) | — | — | 1 | — | — | (355) | (1) | (356)
At 31 Dec 2024 | 4,379 | 3,921 | 25,040 | (692) | (227) | 1,686 | (7,692) | 480 | 26,895 | 158 | 27,053

HSBC Bank plc Annual Report and Accounts 2024 | 119

Consolidated statement of changes in equity (continued)

for the year ended 31 December
|  |  |  | Other reserves |  |  |
| Called up share capital & share premium | Other equity instru- ments | Retained earnings | Financial assets at FVOCI reserve | Cash flow hedging reserve | Foreign exchange reserve | Group reorgani- sation reserve ('GRR')5 | Insur- ance finance reserve 1 | Total share- holders’ equity | Non- control- ling interests | Total equity
| £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
At 1 Jan 2023 | 1,217 | 3,930 | 24,368 | (278) | (950) | 1,613 | (7,692) | 894 | 23,102 | 131 | 23,233
Profit for the year | — | — | 1,703 | — | — | — | — | — | 1,703 | 22 | 1,725
Other comprehensive income/(expense) (net of tax) | — | — | (134) | 422 | 661 | (294) | — | (288) | 367 | — | 367
– debt instruments at fair value through other comprehensive income | — | — | — | 437 | — | — | — | — | 437 | 2 | 439
– equity instruments designated at fair value through other comprehensive income | — | — | — | (1) | — | — | — | — | (1) | — | (1)
– cash flow hedges | — | — | — | — | 663 | — | — | — | 663 | — | 663
– remeasurement of defined benefit asset/ liability | — | — | (2) | — | — | — | — | — | (2) | — | (2)
– changes in fair value of financial liabilities designated at fair value due to movement in own credit risk 2 | — | — | (132) | — | — | — | — | — | (132) | — | (132)
– insurance finance expense recognised in other comprehensive income | — | — | — | — | — | — | — | (298) | (298) | — | (298)
– exchange differences | — | — | — | (14) | (2) | (294) | — | 10 | (300) | (2) | (302)
Total comprehensive income/(expense) for the year | — | — | 1,569 | 422 | 661 | (294) | — | (288) | 2,070 | 22 | 2,092
Capital securities issued during the period | 584 | — | — | — | — | — | — | — | 584 | — | 584
Dividends paid to the parent company 3 | — | — | (961) | — | — | — | — | — | (961) | (7) | (968)
Net impact of equity- settled share-based payments | — | — | (18) | — | — | — | — | — | (18) | — | (18)
Change in business combinations and other movements | — | — | (234) | (1,012) | (41) | 859 | — | 10 | (418) | — | (418)
At 31 Dec 2023 | 1,801 | 3,930 | 24,724 | (868) | (330) | 2,178 | (7,692) | 616 | 24,359 | 146 | 24,505

120 | HSBC Bank plc Annual Report and Accounts 2024

Financial statements

Consolidated statement of changes in equity (continued)

for the year ended 31 December
|  |  |  | Other reserves |  |  |
| Called up share capital & share premium | Other equity instru- ments | Retained earnings | Financial assets at FVOCI reserve | Cash flow hedging reserve | Foreign exchange reserve | Group reorgani- sation reserve ('GRR')5 | Insur- ance finance reserve 1 | Total share- holders’ equity | Non- control- ling interests | Total equity
| £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
At 1 Jan 2022 | 797 | 3,722 | 24,157 | 1,603 | (7) | 948 | (7,692) | (514) | 23,014 | 131 | 23,145
Loss for the year | — | — | (563) | — | — | — | — | — | (563) | 10 | (553)
Other comprehensive (expense)/income (net of tax) | — | — | 367 | (1,881) | (943) | 665 | — | 1,408 | (384) | 2 | (382)
– debt instruments at fair value through other comprehensive income | — | — | — | (1,881) | — | — | — | — | (1,881) | (5) | (1,886)
– cash flow hedges | — | — | — | — | (943) | — | — | — | (943) | — | (943)
– remeasurement of defined benefit asset/ liability | — | — | 38 | — | — | — | — | — | 38 | — | 38
– changes in fair value of financial liabilities designated at fair value due to movement in own credit risk 2 | — | — | 329 | — | — | — | — | — | 329 | — | 329
– insurance finance income recognised in other comprehensive income | — | — | — | — | — | — | — | 1,408 | 1,408 | — | 1,408
– exchange differences | — | — | — | — | — | 665 | — | — | 665 | 7 | 672
Total comprehensive (expense)/income for the year | — | — | (196) | (1,881) | (943) | 665 | — | 1,408 | (947) | 12 | (935)
Capital securities issued during the period | 420 | 208 | — | — | — | — | — | — | 628 | — | 628
Dividends paid to the parent company 3 | — | — | (1,052) | — | — | — | — | — | (1,052) | (2) | (1,054)
Net impact of equity- settled share-based payments | — | — | 5 | — | — | — | — | — | 5 | — | 5
Capital contribution 7 | — | — | 1,465 | — | — | — | — | — | 1,465 | — | 1,465
Change in business combinations and other movements | — | — | (11) | — | — | — | — | — | (11) | (10) | (21)
At 31 Dec 2022 | 1,217 | 3,930 | 24,368 | (278) | (950) | 1,613 | (7,692) | 894 | 23,102 | 131 | 23,233

1 The insurance finance reserve reflects the impact of the adoption of the other comprehensive income option for our insurance business in France. Underlying
assets supporting these contracts are measured at fair value through other comprehensive income. Under this option, only the amount that matches income or
expenses recognised in profit or loss on underlying items is included in finance income or expenses, resulting in the elimination of income statement accounting
mismatches. The remaining amount of finance income or expenses for these insurance contracts is recognised in other comprehensive income (‘OCI’).
2 The cumulative amount of change in fair value attributable to changes in own credit risk of financial liabilities designated at fair value wa s a gain of £70m (2023:
gain of £151m and 2022: gain of £292m).
3 The dividends to the parent company includes dividend on ordinary share capital £312m (2023: £750m and 2022: £850m) and coupon payments on additional tier
1 instrument £223m (2023: £211m and 2022: £202m).
4 During 2024, CET1 issuance of shares to HSBC Holdings plc equalled £2,578m, including £1,132m in respect of funding the acquisition of HSBC Private Bank
(Suisse) SA ('PBRS') in February 2024.
5 The Group reorganisation reserve ('GRR') is an accounting reserve resulting from the ring-fencing implementation.
6 Change in business combinations includes HSBC Bank pls's acquisition of PBRS.
7 HSBC Holdings plc injected £1.5 bn of CET1 capital into HSBC Bank plc during November 2022 which in turn injected into HSBC Continental Europe for funding
the acquisition of HSBC Bank Malta plc and HSBC Trinkaus & Burkhardt GmbH.

HSBC Bank plc Annual Report and Accounts 2024 | 121

Consolidated statement of cash flows
for the year ended 31 December

| 2024 | 2023 | 2022
| £m | £m | £m
Profit/(loss) before tax | 2,068 | 2,152 | (1,199)
Adjustments for non-cash items |  |  |
Depreciation, amortisation and impairment | 148 | 61 | 128
Net loss/(gain) from investing activities 1 | 83 | (66) | 2,002
Share of (profit)/loss in associates and joint ventures | (18) | 43 | 30
Change in expected credit losses gross of recoveries and other credit impairment charges | 165 | 161 | 253
Provisions including pensions | 78 | 132 | 192
Share-based payment expense | 61 | 58 | 46
Other non-cash items included in profit/(loss) before tax | (180) | (165) | (16)
Elimination of exchange differences 2 | 4,883 | 4,426 | (6,761)
Changes in operating assets and liabilities | (1,479) | (3,172) | 37,515
– change in net trading securities and derivatives | (13,266) | (15,528) | (6,213)
– change in loans and advances to banks and customers | (455) | 4,245 | (2,717)
– change in reverse repurchase agreements – non-trading | 9,341 | (13,531) | 6,251
– change in financial assets designated and otherwise mandatorily measured at fair value | (1,954) | (3,296) | 2,729
– change in other assets | 4,734 | (5,707) | (7,359)
– change in deposits by banks and customer accounts | 14,113 | 7,548 | 19,835
– change in repurchase agreements – non-trading | (13,813) | 20,516 | 5,641
– change in debt securities in issue | 6,018 | 6,175 | (1,060)
– change in financial liabilities designated at fair value | 4,937 | 4,042 | (1,827)
– change in other liabilities | (10,026) | (7,506) | 21,393
– dividend received from associates | — | 15 | 7
– contributions paid to defined benefit plans | (20) | (5) | (10)
– tax (paid)/received | (1,088) | (140) | 845
Net cash from operating activities | 5,809 | 3,630 | 32,190
– purchase of financial investments | (32,587) | (26,586) | (13,227)
– proceeds from the sale and maturity of financial investments | 23,272 | 15,497 | 20,490
– net cash flows from the purchase and sale of property, plant and equipment | (16) | (31) | (20)
– net investment in intangible assets | (149) | (125) | (28)
– net cash outflow from investment in associates and acquisition of businesses and subsidiaries 3 | (955) | (1,161) | (29)
– net cash flow on disposal of subsidiaries, businesses, associates and joint ventures 4 | (8,631) | (394) | —
Net cash from investing activities | (19,066) | (12,800) | 7,186
– issue of ordinary share capital and other equity instruments | 2,782 | 584 | 628
– redemption of other equity instruments | (213) | — | —
– subordinated loan capital issued 5 | 2,777 | 3,246 | 3,111
– subordinated loan capital repaid 5 | (474) | (2,693) | (2,248)
– dividends to the parent company | (535) | (961) | (1,052)
– funds received from the parent company | — | — | 1,465
– dividends paid to non-controlling interests | (11) | (7) | (2)
Net cash from financing activities | 4,326 | 169 | 1,902
Net increase in cash and cash equivalents | (8,931) | (9,001) | 41,278
Cash and cash equivalents at 1 Jan | 177,037 | 189,907 | 140,923
Exchange difference in respect of cash and cash equivalents | (5,178) | (3,869) | 7,706
Cash and cash equivalents at 31 Dec 6 | 162,928 | 177,037 | 189,907
Cash and cash equivalents comprise of |  |  |
– cash and balances at central banks | 119,184 | 110,618 | 131,433
– loans and advances to banks of one month or less | 13,285 | 12,970 | 13,801
– reverse repurchase agreement with banks of one month or less | 15,908 | 28,704 | 23,182
– treasury bills, other bills and certificates of deposit less than three months | 143 | 144 | 294
– cash collateral, net settlement accounts and items in course of collection from/transmission to other banks | 12,783 | 16,323 | 19,272
– cash and cash equivalents held for sale 7 | 1,625 | 8,278 | 1,925
Cash and cash equivalents at 31 Dec 6 | 162,928 | 177,037 | 189,907

1 B alances include losses on disposal of businesses classified as held-for-sale as part of a broader restructuring of our European business.
2 Adjustment to bring changes between opening and closing balance sheet amounts to average rates. This is not done on a line-by-line basis, as details cannot be
determined without unreasonable expense.
3 During 2024, HSBC Bank plc acquired PBRS from HSBC Private Banking Holdings (Suisse) SA ('PBSU') for net £941m and d uring 2023, HSBC Bank plc acquired
HBBM from HSBC Overseas Holdings (UK) Limited ('HOHU') for £990m and HBCE acquired PBLU for £170m.
4 Includes £(8.6)b n of net cash outflow on sale of our retail banking operations in France in January 2024 and £(667)m on sale of the assets of our HBCE Greece
branch in 2023.
5 Subordinated liabilities changes during the year are attributable to cash flows from issuance £2,777m (2023: £3,246m; 2022: £3,111m) and repayment of
£(474)m (2023: £(2,693)m; 2022: £(2,248)m) of securities as presented in the Consolidated statement of cash flows. Non-cash changes during the year included
foreign exchange (losse s)/gains £(445)m (2023: £(420)m; 2022: £711m) and fair value (losses)/gains £(45)m (2023: £62m; 2022: £(427)m).
6 At 31 December 2024, £19,884m (2023: £26,554m; 2022: £23,395m) was not available for use by the group due to a range of restrictions including currency
exchange and other restrictions.
7 Includ es £1,511m (2023: £177m, 2022: £1,562m) of cash and balances at central banks; £114m (2023: £8,103m; 2022: £114m) of loans and advances to banks
of one month or less, nil (2023: nil; 2022: £208m) of reverse repurchase agreements with banks of one month or less and remaining nil (2023: £(2)m; 2022:
£41m) relates to other cash and cash equivalents.
Interest received was £22,160m (2023: £19,288m; 2022: £7,668m), interest paid was £20,978m (2023: £17,267m; 2022: £5,284m) and
dividends received were £887m (2023: £522m; 2022: £431m).

122 | HSBC Bank plc Annual Report and Accounts 2024

Financial statements

HSBC Bank plc balance sheet
at 31 December

|  | 2024 | 2023
| Notes* | £m | £m
Assets |  |  |
Cash and balances at central banks |  | 78,250 | 61,128
Trading assets | 10 | 97,241 | 85,766
Financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 13 | 3,660 | 3,181
Derivatives | 14 | 183,658 | 153,765
Loans and advances to banks |  | 12,730 | 11,670
Loans and advances to customers |  | 30,916 | 32,443
Reverse repurchase agreements – non-trading |  | 34,394 | 56,973
Financial investments | 15 | 34,250 | 28,391
Assets held for sale 1 |  | 527 | 160
Prepayments, accrued income and other assets 2 | 21 | 44,036 | 49,277
Current tax assets |  | 604 | 39
Investments in subsidiary undertakings | 18 | 13,247 | 11,627
Goodwill and intangible assets | 20 | 134 | 88
Deferred tax assets | 7 | 335 | 391
Total assets |  | 533,982 | 494,899
Liabilities and equity |  |  |
Liabilities |  |  |
Deposits by banks |  | 19,355 | 18,775
Customer accounts |  | 142,122 | 133,373
Repurchase agreements – non-trading |  | 34,545 | 48,842
Trading liabilities | 22 | 29,143 | 24,932
Financial liabilities designated at fair value | 23 | 28,486 | 23,446
Derivatives | 14 | 183,745 | 152,799
Debt securities in issue |  | 12,668 | 7,353
Liabilities of disposal groups held for sale |  | 2,667 | —
Accruals, deferred income and other liabilities 2 | 24 | 38,427 | 46,759
Current tax liabilities |  | 41 | 77
Provisions | 25 | 110 | 176
Deferred tax liabilities | 7 | 2 | 1
Subordinated liabilities | 26 | 16,874 | 14,658
Total liabilities |  | 508,185 | 471,191
Equity |  |  |
Total shareholders’ equity |  | 25,797 | 23,708
– called up share capital | 29 | 797 | 797
– share premium account | 29 | 3,582 | 1,004
– other equity instruments | 29 | 3,921 | 3,930
– retained earnings |  | 23,001 | 23,499
– other reserves |  | (5,504) | (5,522)
Total equity |  | 25,797 | 23,708
Total liabilities and equity |  | 533,982 | 494,899

*For Notes on the financial statements, see page 126.
1 2024 balance i ncludes planned sale of business in South Africa.
2 I n 2023 ‘Items in the course of collection from other banks’ (£1,877 m) were presented on the face of the balance sheet but are now reported within
‘Prepayments, accrued income and other assets’ in the Annual Report and Accounts 2024. Similarly, ‘Items in the course of transmission to other
banks’ (£1,837 m) are now presented within ‘Accruals, deferred income and other liabilities’.
Profit after tax for the year was £61m (2023: £887m).
The accompanying notes on pages 126 to 195, and the audited sections of the 'Report of the Directors' on pages 21 to 104 form an integral
part of these financial statements.
The financial statements were approved by the Board of D irectors on 18 Fe bruary 2024 and signed on its behalf by:
Kavita Mahtani
Director

HSBC Bank plc Annual Report and Accounts 2024 | 123

HSBC Bank plc statement of changes in equity
for the year ended 31 December

|  |  |  | Other reserves |
| Called up share capital & share premium | Other equity instruments | Retained earnings | Financial assets at FVOCI reserve | Cash flow hedging reserve | Foreign exchange reserve | Group reorganisation reserve (‘GRR’)3 | Total shareholders’ equity
| £m | £m | £m | £m | £m | £m | £m | £m
At 1 Jan 2024 | 1,801 | 3,930 | 23,499 | (86) | (276) | 88 | (5,248) | 23,708
Profit for the year | — | — | 61 | — | — | — | — | 61
Other comprehensive (expense)/income (net of tax) | — | — | (21) | (6) | 31 | (6) | — | (2)
– debt instruments at fair value through other comprehensive income | — | — | — | 5 | — | — | — | 5
– equity instruments designated at fair value through other comprehensive income | — | — | — | (12) | — | — | — | (12)
– cash flow hedges | — | — | — | — | 31 | — | — | 31
– changes in fair value of financial liabilities designated at fair value due to movement in own credit risk 1 | — | — | (24) | — | — | — | — | (24)
– remeasurement of defined benefit asset/liability | — | — | 3 | — | — | — | — | 3
– exchange differences | — | — | — | 1 | — | (6) | — | (5)
Total comprehensive income/(expense) for the period | — | — | 40 | (6) | 31 | (6) | — | 59
Capital securities issued during the period | 2,578 | 204 | — | — | — | — | — | 2,782
Dividends to the parent company 2 | — | — | (535) | — | — | — | — | (535)
Redemption of Securities | — | (213) | — | — | — | — | — | (213)
Net impact of equity-settled share-based payments | — | — | (6) | — | — | — | — | (6)
Change in business combinations and other movements | — | — | 3 | (1) | — | — | — | 2
At 31 Dec 2024 | 4,379 | 3,921 | 23,001 | (93) | (245) | 82 | (5,248) | 25,797

124 | HSBC Bank plc Annual Report and Accounts 2024

Financial statements

HSBC Bank plc statement of changes in equity (continued)
for the year ended 31 December

|  |  |  | Other reserves |
| Called up share capital & share premium | Other equity instruments | Retained earnings | Financial assets at FVOCI reserve | Cash flow hedging reserve | Foreign exchange reserve | Group reorganisation reserve (‘GRR’)3 | Total shareholders’ equity
| £m | £m | £m | £m | £m | £m | £m | £m
At 1 Jan 2023 | 1,217 | 3,930 | 23,655 | (122) | (796) | 93 | (5,248) | 22,729
Profit for the year | — | — | 887 | — | — | — | — | 887
Other comprehensive income/ (expense) (net of tax) | — | — | (63) | 65 | 516 | (30) | — | 488
– debt instruments at fair value through other comprehensive income | — | — | — | 67 | — | — | — | 67
– cash flow hedges | — | — | — | — | 516 | — | — | 516
– changes in fair value of financial liabilities designated at fair value due to movement in own credit risk 1 | — | — | (80) | — | — | — | — | (80)
– remeasurement of defined benefit asset/liability | — | — | 17 | — | — | — | — | 17
– exchange differences | — | — | — | (2) | — | (30) | — | (32)
Total comprehensive income/ (expense) for the period | — | — | 824 | 65 | 516 | (30) | — | 1,375
Capital securities issued during the period | 584 | — | — | — | — | — | — | 584
Dividends to the parent company 2 | — | — | (961) | — | — | — | — | (961)
Net impact of equity-settled share-based payments | — | — | (18) | — | — | — | — | (18)
Change in business combinations and other movements | — | — | (1) | (29) | 4 | 25 | — | (1)
At 31 Dec 2023 | 1,801 | 3,930 | 23,499 | (86) | (276) | 88 | (5,248) | 23,708

1 The cumulative amount of change in fair value attributable to changes in own credit risk of financial liabilities designated at fair value was a gain of £11m (2023:
gain of £42m).
2 The dividends to the parent company includes dividend on ordinary share capital £312m (2023: £750m) and coupon payments on additional tier 1 instrument
£223m (2023: £211m).
3 The Group reorganisation reserve ('GRR') is an accounting reserve resulting from the ring-fencing implementation.

HSBC Bank plc Annual Report and Accounts 2024 | 125

HSBC Bank plc statement of cash flows
for the year ended 31 December

| 2024 | 2023
| £m | £m
Profit before tax | 428 | 1,063
Adjustments for non-cash items |  |
Depreciation, amortisation and impairment | 37 | 4
Net loss from investing activities 1 | 962 | 80
Change in expected credit losses gross of recoveries and other credit impairment charges | 85 | 37
Provisions including pensions | 54 | 110
Share-based payment expense | 37 | 45
Other non-cash items included in profit before tax | (117) | (127)
Elimination of exchange differences 2 | 1,776 | 2,650
Changes in operating assets and liabilities | 5,547 | (5,098)
– change in net trading securities and derivatives | (6,131) | (16,033)
– change in loans and advances to banks and customers | 567 | (1,405)
– change in reverse repurchase agreements – non-trading | 10,182 | (8,040)
– change in financial assets designated and otherwise mandatorily measured at fair value | (477) | (1,632)
– change in other assets | 526 | (6,509)
– change in deposits by banks and customer accounts | 11,861 | 5,989
– change in repurchase agreements – non-trading | (14,297) | 19,204
– change in debt securities in issue | 5,315 | 2,697
– change in financial liabilities designated at fair value | 4,997 | 3,946
– change in other liabilities | (6,093) | (3,554)
– contributions paid to defined benefit plans | (9) | (5)
– tax (paid)/received | (894) | 244
Net cash from operating activities | 8,809 | (1,236)
– purchase of financial investments | (18,618) | (19,798)
– proceeds from the sale and maturity of financial investments | 13,526 | 11,115
– net cash flows from the purchase and sale of property, plant and equipment | (2) | (6)
– net investment in intangible assets | (77) | (76)
– net cash outflow from investment in associates and acquisition of businesses and subsidiaries 3,4 | (2,582) | (990)
– net cash flow on disposal of subsidiaries, businesses, associates and joint ventures | — | 268
Net cash from investing activities | (7,753) | (9,487)
– issue of ordinary share capital and other equity instruments | 2,782 | 584
– redemption of other equity instruments | (213) | —
– subordinated loan capital issued 5 | 2,777 | 3,246
– subordinated loan capital repaid 5 | (257) | (2,685)
– dividends to the parent company | (535) | (961)
Net cash from financing activities | 4,554 | 184
Net increase/(decrease) in cash and cash equivalents | 5,610 | (10,539)
Cash and cash equivalents at 1 Jan | 102,417 | 115,310
Exchange difference in respect of cash and cash equivalents | (2,150) | (2,354)
Cash and cash equivalents at 31 Dec | 105,877 | 102,417
Cash and cash equivalents comprise of: |  |
– cash and balances at central banks | 78,250 | 61,128
– loans and advances to banks of one month or less | 10,539 | 9,922
– reverse repurchase agreement with banks of one month or less | 7,398 | 19,795
– cash collateral, net settlement accounts and items in course of collection from/transmission to other banks | 9,690 | 11,572
Cash and cash equivalents at 31 Dec | 105,877 | 102,417

1 Included within 2024 is the impact of £916m impair ment b ooked in Paris branch for investment in subsidiary in HBCE.
2 Adjustment to bring changes between opening and closing balance sheet amounts to average rates. This is not done on a line-by-line basis, as details cannot be
determined without unreasonable expense.
3 Includes net additional investment in subsidiaries £1,450m (2023: nil) in HBCE.
4 During 2024, HSBC Bank plc acquired PBRS from PBSU for £1,132m and during 2023, HSBC Bank plc acquired HBBM from HOHU for £990m.
5 Subordinated liabilities changes during the year are attributable to cash flows from issuance £2,777m (2023: £3,246m) and repayment of £(257)m (2023:
£(2,685)m) of securities as presented in the HSBC Bank plc statement of cash flows. Non-cash changes during the year included foreign exchange losses
£(434)m (2023: £(415)m) and fair value gains £144m (2023: £62m).
Interest received was £14,994m (2023: £13,005m), interest paid was £15,388m (2023: £12,934m) and dividends received was £1,314m (2023:
£629m).

126 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

Notes on the financial statements

Contents
126 | 1 | Basis of preparation and material accounting policies
137 | 2 | Net fee income
138 | 3 | Net income from financial instruments measured at fair value through profit or loss
138 | 4 | Insurance business
145 | 5 | Employee compensation and benefits
151 | 6 | Auditors’ remuneration
151 | 7 | Tax
154 | 8 | Dividends
154 | 9 | Segmental analysis
156 | 10 | Trading assets
156 | 11 | Fair values of financial instruments carried at fair value
164 | 12 | Fair values of financial instruments not carried at fair value
166 | 13 | Financial assets designated and otherwise mandatorily measured at fair value through profit or loss
166 | 14 | Derivatives
171 | 15 | Financial investments
171 | 16 | Assets pledged, collateral received and assets transferred
172 | 17 | Interests in associates and joint ventures
173 | 18 | Investments in subsidiaries
174 | 19 | Structured entities

176 | 20 | Goodwill and intangible assets
176 | 21 | Prepayments, accrued income and other assets
177 | 22 | Trading liabilities
177 | 23 | Financial liabilities designated at fair value
177 | 24 | Accruals, deferred income and other liabilities
178 | 25 | Provisions
179 | 26 | Subordinated liabilities
181 | 27 | Maturity analysis of assets, liabilities and off-balance sheet commitments
184 | 28 | Offsetting of financial assets and financial liabilities
185 | 29 | Called up share capital and other equity instruments
186 | 30 | Contingent liabilities, contractual commitments, guarantees and contingent assets
187 | 31 | Finance lease receivables
187 | 32 | Legal proceedings and regulatory matters
189 | 33 | Related party transactions
193 | 34 | Assets held for sale and liabilities of disposal groups held for sale
195 | 35 | Events after the balance sheet date
195 | 36 | HSBC Bank plc’s subsidiaries, joint ventures and associates

1 Basis of preparation and material accounting policies
1.1 Basis of preparation
(a)Compliance with International Financial Reporting Standards
The consolidated financial statements of the group and the separate financial statements of the bank comply with UK-adopted international
accounting standards and with the requirements of the Companies Act 2006, and have also applied international financial reporting standards
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. These financial statements are also prepared in
accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ('IFRS Accounting
Standards, including interpretations issued by the IFRS Interpretations Committee, as there are no applicable differences from IFRS Accounting
Standards for the periods presented. There were no unendorsed standards effective for the year ended 31 December 2024 affecting these
consolidated and separate financial statements.
IFRS Accounting Standards adopted during the year ended 31 December 2024
There were no new standards, amendments to standards or interpretations that had an effect on these financial statements. Accounting policies
have been applied consistently.
(b)Future accounting developments
Minor amendments to IFRS Accounting Standards
The International Accounting Standards Board (‘IASB') has published a number of minor amendments to IFRS Accounting Standards that are
effective from 1 January 2025. The group expects they will have an insignificant effect, when adopted, on the consolidated financial statements
of the group and the separate financial statements of the bank.
Other amendments and new IFRS Accounting Standards
Amendments to IFRS 9 ‘Financial Instruments’ and IFRS 7 ‘Financial Instruments: Disclosures’
In May 2024, the IASB issued amendments to IFRS 9 ‘Financial Instruments’ and IFRS 7 ‘Financial Instruments: Disclosures’, effective for
annual reporting periods beginning on, or after, 1 January 2026. In addition to guidance as to when certain financial liabilities can be deemed
settled when using an electronic payment system, the amendments also provide further clarification regarding the classification of financial
assets that contain contractual terms that change the timing or amount of contractual cash flows, including those arising from ESG-related
contingencies, and financial assets with certain non-recourse features. The group is undertaking an assessment of the potential impact.
IFRS 18 ‘Presentation and Disclosure in Financial Statements’
In April 2024, the IASB issued IFRS 18 ‘Presentation and Disclosure in Financial Statements’, effective for annual reporting periods beginning on
or after 1 January 2027. The new accounting standard aims to give users of financial statements more transparent and comparable information
about an entity’s financial performance. It will replace IAS 1 ‘Presentation of Financial Statements’ but carries over many requirements from that
IFRS Accounting Standard unchanged. In addition, there are three sets of new requirements relating to the structure of the income statement,
management-defined performance measures and the aggregation and disaggregation of financial information.
While IFRS 18 will not change recognition criteria or measurement bases, it may have an impact on presenting information in the financial
statements, in particular the income statement and to a lesser extent the cash flow statement. HSBC Group are currently assessing impacts
and data readiness before developing a more detailed implementation plan.

HSBC Bank plc Annual Report and Accounts 2024 | 127

(c)Foreign currencies
The functional currency of the bank is sterling, which is also the presentational currency of the consolidated financial statements of the group.
Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Assets and liabilities denominated in
foreign currencies are translated at the rate of exchange at the balance sheet date except non-monetary assets and liabilities measured at
historical cost, which are translated using the rate of exchange at the initial transaction date. Exchange differences are included in other
comprehensive income or in the income statement depending on where the gain or loss on the underlying item is recognised.
In the consolidated financial statements, the assets and liabilities of branches, subsidiaries, joint ventures and associates whose functional
currency is not sterling are translated into the group’s presentation currency at the rate of exchange at the balance sheet date, while their
results are translated into sterling at the average rates of exchange for the reporting period. Exchange differences arising are recognised in other
comprehensive income. On disposal of a foreign operation, exchange differences previously recognised in other comprehensive income are
reclassified to the income statement.
(d)Presentation of information
Certain disclosures required by IFRS Accounting Standards have been included in the audited sections of this Annual Report and Accounts 2024
as follows:
– disclosures concerning the nature and extent of risks relating to financial instruments and insurance contracts are included in the 'Report of
the Directors: Risk’ on pages 21 to 93;
– the 'Own funds' disclosure is included in the ‘Report of the Directors: Capital Risk in 2024’ on pag e 77; and
– in publishing the parent company financial statements together with the group financial statements, the bank has taken advantage of the
exemption in section 408(3) of the Companies Act 2006 not to present its individual income statement and related notes.
(e)Critical estimates and judgements
The preparation of financial information requires the use of estimates and judgements about future conditions. In view of the inherent
uncertainties and the high level of subjectivity involved in the recognition or measurement of items, highlighted as the 'critical estimates and
judgements' in section 1.2 below, it is possible that the outcomes in the next financial year could differ from those on which management’s
estimates are based. This could result in materially different estimates and judgements from those reached by management for the purposes of
these financial statements. Management’s selection of the group’s accounting policies that contain critical estimates and judgements reflects
the materiality of the items to which the policies are applied and the high degree of judgement and estimation uncertainty involved.
Management has considered the impact of climate-related risks on HSBC’s financial position and performance. While the effects of climate
change are a source of uncertainty, as at 31 December 2024 management did not consider there to be a material impact on our critical
judgements and estimates from the physical, transition and other climate-related risks in the short to medium term. In particular management
has considered the known and observable potential impacts of climate-related risks of associated judgements and estimates in our value in use
calculations.
(f)Going concern
The financial statements are prepared on a going concern basis, as the Directors are satisfied that the group and the company have the
resources to continue in business for the foreseeable future. In making this assessment, the Directors have considered a wide range of
information relating to present and future conditions, including future projections of profitability, liquidity, capital requirements and capital
resources.
These considerations include stressed scenarios that reflect the uncertainty in the macroeconomic environment following, uncertain inflation,
rapidly changing interest rates, and disrupted supply chains as a result of the Russia-Ukraine war, conflict in the Middle East and US-China
tensions. They also included other top and emerging risks, including climate change, as well as the related impacts on profitability, capital and
liquidity.
1.2 Summary of material accounting policies
(a)Consolidation and related policies
Investments in subsidiaries
Where an entity is governed by voting rights, the group consolidates when it holds – directly or indirectly – the necessary voting rights to pass
resolutions by the governing body. In all other cases, the assessment of control is more complex and requires judgement of other factors,
including having exposure to variability of returns, power to direct relevant activities and whether power is held as agent or principal.
Business combinations are accounted for using the acquisition method. The amount of non-controlling interest is measured either at fair value or
at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. This election is made for each business
combination.
The bank's investments in subsidiaries are stated at cost less impairment losses.
Impairment testing is performed where there is an indication of impairment, by comparing the recoverable amount of a cash-generating unit
with its carrying amount.

128 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

Critical estimates and judgements

Investments in subsidiaries are tested for impairment when there is an indication that the investment may be impaired, which involves estimations of value in use reflecting management’s best estimate of the future cash flows of the investment and the rates used to discount these cash flows, both of which are subject to uncertain factors as follows:
Judgements | Estimates
– The accuracy of forecast cash flows is subject to a high degree of uncertainty in volatile market conditions. Where such circumstances are determined to exist, management re-tests for impairment more frequently than once a year when indicators of impairment exist. This ensures that the assumptions on which the cash flow forecasts are based continue to reflect current market conditions and management's best estimate of future business prospects. | – The future cash flows of each investment are sensitive to the cash flows projected for the periods for which detailed forecasts are available and to assumptions regarding the long-term pattern of sustainable cash flows thereafter. Forecasts are compared with actual performance and verifiable economic data, but they reflect management’s view of future business prospects at the time of the assessment. – The rates used to discount future expected cash flows can have a significant effect on their valuation, and are based on the costs of equity assigned to the investment. The cost of equity percentage is generally derived from a capital asset pricing model and the market implied cost of equity, which incorporates inputs reflecting a number of financial and economic variables, including the risk-free interest rate in the country concerned and a premium for the risk of the business being evaluated. These variables are subject to fluctuations in external market rates and economic conditions beyond management’s control. – Key assumptions used in estimating impairment in subsidiaries are described in Note 18.

Group sponsored structured entities
The group is considered to sponsor another entity if, in addition to ongoing involvement with the entity, it had a key role in establishing that
entity or in bringing together relevant counterparties so the transaction that is the purpose of the entity could occur. The group is generally not
considered a sponsor if the only involvement with the entity is merely administrative.
Interests in associates and joint arrangements
Joint arrangements are investments in which the group, together with one or more parties, has joint control. Depending on the group’s rights
and obligations, the joint arrangement is classified as either a joint operation or a joint venture.
The group classifies investments in entities over which it has significant influence, and those that are neither subsidiaries nor joint
arrangements, as associates.
The group recognises its share of the assets, liabilities and results in a joint operation. Investments in associates and interests in joint ventures
are recognised using the equity method. The attributable share of the results and reserves of joint ventures and associates is included in the
consolidated financial statements of the group based on either financial statements made up to 31 December or pro-rated amounts adjusted for
any material transactions or events occurring between the date the financial statements are available and 31 December.
Investments in associates and joint ventures are assessed at each reporting date and tested for impairment when there is an indication that the
investment may be impaired, by comparing the recoverable amount of the relevant investment to its carrying amount. Goodwill on acquisition of
interests in joint ventures and associates is not tested separately for impairment, but is assessed as part of the carrying amount of the
investment.
(b)Income and expense
Operating income
Interest income and expense
Interest income and expense for all financial instruments, excluding those classified as held for trading or designated at fair value, are
recognised in ‘interest income’ and ‘interest expense’ in the income statement using the effective interest method. However, as an exception
to this, interest on debt instruments issued by the group for funding purposes that are designated under the fair value option to reduce an
accounting mismatch and on derivatives managed in conjunction with those debt instruments is included in interest expense.
Interest on credit-impaired financial assets is recognised by applying the effective interest rate to the amortised cost (i.e. gross carrying amount
of the asset less allowance for ECL).
Non-interest income and expense
The group generates fee income from services provided over time, such as account service and card fees, or when the group delivers a specific
transaction at a point in time, such as broking services and import/export services. With the exception of certain fund management and
performance fees, all other fees are generated at a fixed price. Fund management and performance fees can be variable depending on the size
of the customer portfolio and HSBC’s performance as fund manager. Variable fees are recognised when all uncertainties are resolved. Fee
income is generally earned from short-term contracts with payment terms that do not include a significant financing component.
The group acts as principal in the majority of contracts with customers, with the exception of broking services. For most brokerage trades, the
group acts as agent in the transaction and recognises broking income net of fees payable to other parties in the arrangement.
The group recognises fees earned on transaction-based arrangements at a point in time when it has fully provided the service to the customer.
Where the contract requires services to be provided over time, income is recognised on a systematic basis over the life of the agreement.
Where the group offers a package of services that contains multiple non-distinct performance obligations, such as those included in account
service packages, the promised services are treated as a single performance obligation. If a package of services contains distinct performance
obligations, the corresponding transaction price is allocated to each performance obligation based on the estimated stand-alone selling prices.
Dividend income is recognised when the right to receive payment is established.

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Net income/(expense) from financial instruments measured at fair value through profit or loss includes the following:
– ‘Net income from financial instruments held for trading or managed on a fair value basis’: This comprises net trading activities, which
includes all gains and losses from changes in the fair value of financial assets and financial liabilities held for trading and other financial
instruments managed on a fair value basis, together with the related interest income, interest expense and dividend income, excluding the
effect of changes in the credit risk of liabilities managed on a fair value basis. It also includes all gains and losses from changes in the fair
value of derivatives that are managed in conjunction with financial assets and liabilities measured at fair value through profit or loss.
– ‘Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit
or loss’: This includes all gains and losses from changes in the fair value, together with related interest income, interest expense and
dividend income in respect of financial assets and liabilities measured at fair value through profit or loss, and those derivatives managed in
conjunction with the above that can be separately identifiable from other trading derivatives.
– ‘Changes in fair value of designated debt instruments and related derivatives’: Interest paid on the debt instruments and interest cash flows
on related derivatives is presented in interest expense where doing so reduces an accounting mismatch.
– ‘Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss’: This includes interest on
instruments that fail the solely payments of principal and interest (‘SPPI’) test, see (d) below.
The accounting policies for insurance service result and insurance finance income/(expense) are disclosed in Note 1.2(j).
(c)Valuation of financial instruments
All financial instruments are initially recognised at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date. The fair value of a financial instrument on initial
recognition is generally its transaction price (that is, the fair value of the consideration given or received). However, if there is a difference
between the transaction price and the fair value of financial instruments whose fair value is based on a quoted price in an active market or a
valuation technique that uses only data from observable markets, the group recognises the difference as a trading gain or loss at inception (a
‘day 1 gain or loss’). In all other cases, the entire day 1 gain or loss is deferred and recognised in the income statement over the life of the
transaction until the transaction matures, is closed out, the valuation inputs become observable or the group enters into an offsetting
transaction.
The fair value of financial instruments is generally measured on an individual basis. However, in cases where the group manages a group of
financial assets and liabilities according to its net market or credit risk exposure, the fair value of the group of financial instruments is measured
on a net basis but the underlying financial assets and liabilities are presented separately in the financial statements, unless they satisfy the IFRS
offsetting criteria. Financial instruments are classified into one of three fair value hierarchy levels, described in Note 11, ‘Fair values of financial
instruments carried at fair value'.
Critical estimates and judgements

The majority of valuation techniques employ only observable market data. However, certain financial instruments are classified on the basis of valuation techniques that feature one or more significant market inputs that are unobservable, and for them, the measurement of fair value is more judgemental:
Judgements | Estimates
– An instrument in its entirety is classified as valued using significant unobservable inputs if, in the opinion of management, greater than 5% of the instrument’s valuation is driven by unobservable inputs. – ‘Unobservable’ in this context means that there is little or no current market data available from which to determine the price at which an arm’s length transaction would be likely to occur. It generally does not mean that there is no data available at all upon which to base a determination of fair value (consensus pricing data may, for example, be used). | – Details on the group’s level 3 financial instruments and the sensitivity of their valuation to the effect of applying reasonably possible alternative assumptions in determining their fair value are set out in Note 11.

(d)Financial instruments measured at amortised cost
Financial assets that are held to collect the contractual cash flows and which contain contractual terms that give rise on specified dates to cash
flows that are solely payments of principal and interest are measured at amortised cost. Such financial assets include most loans and advances
to banks and customers and some debt securities. In addition, most financial liabilities are measured at amortised cost. The group accounts for
regular way amortised cost financial instruments using trade date accounting. The carrying amount of these financial assets at initial recognition
includes any directly attributable transactions costs.
The group may commit to underwriting loans on fixed contractual terms for specified periods of time. When the loan arising from the lending
commitment is expected to be sold shortly after origination, the commitment to lend is recorded as a derivative. When the group intends to hold
the loan, the loan commitment is included in the impairment calculations set out below.
Financial assets are reclassified only when the business model for their management changes. Such changes, which are expected to be
infrequent, are determined by senior management as a result of external or internal changes and must be significant to operations and
demonstrable to external parties. Reclassifications are applied prospectively from the first day of the first reporting period following the change
of business model. Where a financial asset is reclassified out of the amortised cost measurement category and into the fair value through other
comprehensive income measurement category its fair value is measured at the date of reclassification. Any gain or loss arising from a difference
between the previous amortised cost and fair value is recognised in other comprehensive income. The effective interest rate and the
measurement of expected credit losses are not adjusted as a result of the reclassification.
Non-trading reverse repurchase, repurchase and similar agreements
When debt securities are sold subject to a commitment to repurchase them at a predetermined price (‘repos’), they remain on the balance
sheet and a liability is recorded in respect of the consideration received. Securities purchased under commitments to resell (‘reverse repos’) are
not recognised on the balance sheet and an asset is recorded in respect of the initial consideration paid. Non-trading repos and reverse repos
are measured at amortised cost. The difference between the sale and repurchase price or between the purchase and resale price is treated as
interest and recognised in net interest income over the life of the agreement.

130 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

Contracts that are economically equivalent to reverse repo or repo agreements (such as sales or purchases of debt securities entered into
together with total return swaps with the same counterparty) are accounted for similarly to, and presented together with, reverse repo or repo
agreements.
(e)Financial assets measured at fair value through other comprehensive income
Financial assets managed within a business model that is achieved by both collecting contractual cash flows and selling and which contain
contractual terms that give rise on specified dates to cash flows that are solely payments of principal and interest are measured at fair value
through other comprehensive income (‘FVOCI’). These comprise primarily debt securities. They are recognised on the trade date when HSBC
enters into contractual arrangements to purchase and are generally derecognised when they are either sold or redeemed. They are
subsequently remeasured at fair value with changes therein (except for those relating to impairment, interest income and foreign currency
exchange gains and losses) are recognised in other comprehensive income until the assets are sold. Upon disposal, the cumulative gains or
losses in other comprehensive income are recognised in the income statement as ‘Gains less losses from financial instruments’. Financial
assets measured at FVOCI are included in the impairment calculations set out below and impairment is recognised in profit or loss.
(f)Equity securities measured at fair value with fair value movements presented in other
comprehensive income
The equity securities for which fair value movements are shown in other comprehensive income are business facilitation and other similar
investments where HSBC holds the investments other than to generate a capital return. Dividends from such investments are recognised in
profit or loss. Gains or losses on the derecognition of these equity securities are not transferred to profit or loss. Otherwise, equity securities are
measured at fair value through profit or loss.
(g)Financial instruments designated at fair value through profit or loss
Financial instruments, other than those held for trading, are classified in this category if they meet one or more of the criteria set out below and
are so designated irrevocably at inception:
– The use of the designation removes or significantly reduces an accounting mismatch.
– A group of financial assets and liabilities or a group of financial liabilities is managed and its performance is evaluated on a fair value basis, in
accordance with a documented risk management or investment strategy.
– The financial liability contains one or more non-closely related embedded derivatives.
Designated financial assets are recognised when HSBC enters into contracts with counterparties, which is generally on trade date, and are
normally derecognised when the rights to the cash flows expire or are transferred. Designated financial liabilities are recognised when HSBC
enters into contracts with counterparties, which is generally on settlement date, and are normally derecognised when extinguished. Subsequent
changes in fair values are recognised in the income statement in ‘Net income from financial instruments held for trading or managed on a fair
value basis’ or ‘Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value
through profit or loss’ or ‘Changes in fair value of designated debt and related derivatives’ except for the effect of changes in the liabilities' credit
risk, which is presented in 'Other comprehensive income', unless that treatment would create or enlarge an accounting mismatch in profit or
loss.
Under the above criteria, the main classes of financial instruments designated by HSBC are:
– Debt instruments for funding purposes that are designated to reduce an accounting mismatch: The interest and/or foreign exchange
exposure on certain fixed-rate debt securities issued has been matched with the interest and/or foreign exchange exposure on certain swaps
as part of a documented risk management strategy.
– Financial assets and financial liabilities under unit-linked and non-linked investment contracts: A contract under which HSBC does not accept
significant insurance risk from another party is not classified as an insurance contract, other than investment contracts with discretionary
participation features (‘DPF’), but is accounted for as a financial liability. Customer liabilities under linked and certain non-linked investment
contracts issued by insurance subsidiaries are determined based on the fair value of the assets held in the linked funds or by a valuation
method. The related financial assets and liabilities are managed and reported to management on a fair value basis. Designation at fair value
of the financial assets and related liabilities allows changes in fair values to be recorded in the income statement and presented in the same
line.
– Financial liabilities that contain both deposit and derivative components: These financial liabilities are managed and their performance
evaluated on a fair value basis.
(h)Derivatives
Derivatives are financial instruments that derive their value from the price of underlying items such as equities, interest rates or other indices.
Derivatives are recognised initially and are subsequently measured at fair value through profit or loss. Derivatives are classified as assets when
their fair value is positive or as liabilities when their fair value is negative. This includes embedded derivatives in financial liabilities, which are
bifurcated from the host contract when they meet the definition of a derivative on a stand-alone basis.
Where the derivatives are managed with debt securities issued by HSBC that are designated at fair value where doing so reduces an accounting
mismatch, the contractual interest is shown in ‘Interest expense’ together with the interest payable on the issued debt.
Hedge accounting
When derivatives are not part of fair value designated relationships, if held for risk management purposes they are designated in hedge
accounting relationships where the required criteria for documentation and hedge effectiveness are met. The group uses these derivatives or,
where allowed, other non-derivative hedging instruments in fair value hedges, cash flow hedges or hedges of net investments in foreign
operations as appropriate to the risk being hedged.
Fair value hedge
Fair value hedge accounting does not change the recording of gains and losses on derivatives and other hedging instruments, but results in
recognising changes in the fair value of the hedged assets or liabilities attributable to the hedged risk that would not otherwise be recognised in
the income statement. If a hedge relationship no longer meets the criteria for hedge accounting, hedge accounting is discontinued and the

HSBC Bank plc Annual Report and Accounts 2024 | 131

cumulative adjustment to the carrying amount of a hedged item for which the effective interest rate method is used is amortised to the income
statement on a recalculated effective interest rate, unless the hedged item has been derecognised, in which case it is recognised in the income
statement immediately.
Cash flow hedge
The effective portion of gains and losses on hedging instruments is recognised in other comprehensive income and the ineffective portion of
the change in fair value of derivative hedging instruments that are part of a cash flow hedge relationship is recognised immediately in the
income statement within ‘Net income from financial instruments held for trading or managed on a fair value basis’. The accumulated gains and
losses recognised in other comprehensive income are reclassified to the income statement in the same periods in which the hedged item
affects profit or loss. When a hedge relationship is discontinued, or partially discontinued, any cumulative gain or loss recognised in other
comprehensive income remains in equity until the forecast transaction is recognised in the income statement. When a forecast transaction is no
longer expected to occur, the cumulative gain or loss previously recognised in other comprehensive income is immediately reclassified to the
income statement.
Derivatives that do not qualify for hedge accounting
Non-qualifying hedges are derivatives entered into as economic hedges of assets and liabilities for which hedge accounting was not applied.
(i)Impairment of amortised cost and FVOCI financial assets
Expected credit losses are recognised for loans and advances to banks and customers, non-trading reverse repurchase agreements, other
financial assets held at amortised cost, debt instruments measured at FVOCI, and certain loan commitments and financial guarantee contracts.
At initial recognition, an allowance (or provision in the case of some loan commitments and financial guarantees) is recognised for ECL resulting
from possible default events within the next 12 months, or less, where the remaining life is less than 12 months, (’12-month ECL’). In the event
of a significant increase in credit risk, an allowance (or provision) is recognised for ECL resulting from all possible default events over the
expected life of the financial instrument (‘lifetime ECL’). Financial assets where 12-month ECL is recognised are considered to be ‘stage 1’;
financial assets which are considered to have experienced a significant increase in credit risk are in ‘stage 2’; and financial assets for which
there is objective evidence of impairment, and so are considered to be in default or otherwise credit impaired are in ‘stage 3’. Purchased or
originated credit-impaired financial assets ('POCI') are treated differently as set out below.
Credit-impaired (stage 3)
The group determines that a financial instrument is credit impaired and in stage 3 by considering relevant objective evidence, primarily whether
contractual payments of either principal or interest are past due for more than 90 days, there are other indications that the borrower is unlikely
to pay such as that a concession has been granted to the borrower for economic or legal reasons relating to the borrower’s financial condition,
or the loan is otherwise considered to be in default.
If such unlikeliness to pay is not identified at an earlier stage, it is deemed to occur when an exposure is 90 days past due. Therefore, the
definitions of credit impaired and default are aligned as far as possible so that stage 3 represents all loans that are considered defaulted or
otherwise credit-impaired.
Interest income is recognised by applying the effective interest rate to the amortised cost (i.e. gross carrying amount less allowance for ECL).
Write-off
Financial assets (and the related impairment allowances) are normally written off, either partially or in full, when there is no realistic prospect of
recovery. Where loans are secured, this is generally after receipt of any proceeds from the realisation of security.
In circumstances where the net realisable value of any collateral has been determined and there is no reasonable expectation of further
recovery, write-off may be earlier.
Forbearance
Loans are identified as forborne and classified as either performing or non-performing when the group modifies the contractual terms due to
financial difficulty of the borrower. Non-performing forborne loans are stage 3 and classified as non-performing until they meet the curing
criteria, as specified by applicable credit risk policy (for example, when the loan is no longer in default and no other indicators of default have
been present for at least 12 months). Any amount written off as a result of any modification of contractual terms upon entering forbearance
would not be reversed.
The group applies the EBA Guidelines on the application of definition of default for our retail portfolios, which affect credit risk policies and our
reporting in respect of the status of loans as credit impaired principally due to forbearance (or curing thereof). Further details are provided under
'Forborne loans and advances' on page 32.
Performing forborne loans are initially stage 2 and remain classified as forborne until they meet applicable curing criteria (for example, they
continue to not be in default and no other indicators of default are present for a period of at least 24 months). At this point, the loan is either
stage 1 or stage 2 as determined by comparing the risk of a default occurring at the reporting date (based on the modified contractual terms)
and the risk of a default occurring at initial recognition (based on the original, unmodified contractual terms).
A forborne loan is derecognised if the existing agreement is cancelled and a new agreement is made on substantially different terms, or if the
terms of an existing agreement are modified such that the forborne loan is a substantially different financial instrument. Any new loans that
arise following derecognition events in these circumstances would generally be classified as POCI and will continue to be disclosed as forborne.
Loan modifications other than forborne loans
Loan modifications that are not identified as forborne are considered to be commercial restructurings. Where a commercial restructuring results
in a modification (whether legalised through an amendment to the existing terms or the issuance of a new loan contract) such that HSBC’s
rights to the cash flows under the original contract have expired, the old loan is derecognised and the new loan is recognised at fair value. The
rights to cash flows are generally considered to have expired if the commercial restructuring is at market rates and no payment-related
concession has been provided. Modifications of certain higher credit risk wholesale loans are assessed for derecognition having regard to
changes in contractual terms that either individually or in combination are judged to result in a substantially different financial instrument.
Mandatory and general offer loan modifications that are not borrower specific, for example market-wide customer relief programmes generally
do not result in derecognition, but their stage allocation is determined considering all available and supportable information under our ECL
impairment policy. Changes made to these financial instruments that are economically equivalent and required by interest rate benchmark
reform do not result in the derecognition or a change in the carrying amount of the financial instrument, but instead require the effective interest
rate to be updated to reflect the change of the interest rate benchmark.

132 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

Significant increase in credit risk (stage 2)
An assessment of whether credit risk has increased significantly since initial recognition is performed at each reporting period by considering
the change in the risk of default occurring over the remaining life of the financial instrument.
The assessment explicitly or implicitly compares the risk of default occurring at the reporting date compared with that at initial recognition,
taking into account reasonable and supportable information, including information about past events, current conditions and future economic
conditions. The assessment is unbiased, probability-weighted, and to the extent relevant, uses forward-looking information consistent with that
used in the measurement of ECL. The analysis of credit risk is multifactor. The determination of whether a specific factor is relevant and its
weight compared with other factors depends on the type of product, the characteristics of the financial instrument and the borrower, and the
geographical region. Therefore, it is not possible to provide a single set of criteria that will determine what is considered to be a significant
increase in credit risk and these criteria will differ for different types of lending, particularly between retail and wholesale. However, unless
identified at an earlier stage, all financial assets are deemed to have suffered a significant increase in credit risk when 30 days past due. In
addition, wholesale loans that are individually assessed, which are typically corporate and commercial customers, and included on a watch or
worry list, are included in stage 2.
For wholesale portfolios, the quantitative comparison assesses default risk using a lifetime probability of default ('PD'), which encompasses a
wide range of information including the obligor’s customer risk rating (‘CRR’), macro-economic condition forecasts and credit transition
probabilities. For origination CRRs up to 3.3, significant increase in credit risk is measured by comparing the average PD for the remaining term
estimated at origination with the equivalent estimation at reporting date. The quantitative measure of significance varies depending on the credit
quality at origination as follows:

Origination CRR | Significance trigger – PD to increase by
0.1-1.2 | 15bps
2.1-3.3 | 30bps

For CRRs greater than 3.3 that are not impaired, a significant increase in credit risk is considered to have occurred when the origination PD has
doubled. The significance of changes in PD was informed by expert credit risk judgement, referenced to historical credit migrations and to
relative changes in external market rates.
For loans originated prior to the implementation of IFRS 9, the origination PD does not include adjustments to reflect expectations of future
macroeconomic conditions since these are not available without the use of hindsight. In the absence of this data, origination PD must be
approximated assuming through-the-cycle PDs and through-the-cycle migration probabilities, consistent with the instrument’s underlying
modelling approach and the CRR at origination. For these loans, the quantitative comparison is supplemented with additional CRR deterioration-
based thresholds, as set out in the table below:

Origination CRR | Additional significance criteria – number of CRR grade notches deterioration required to identify as significant credit deterioration (stage 2) (> or equal to)
0.1 | 5 notches
1.1–4.2 | 4 notches
4.3–5.1 | 3 notches
5.2–7.1 | 2 notches
7.2–8.2 | 1 notch
8.3 | 0 notch

Further information about the 23-grade scale used for CRR can be found on page 32.
For Retail portfolios, default risk is assessed using a reporting date 12-month PD derived from internal models, which incorporate all available
information about the customer. This PD is adjusted for the effect of macroeconomic forecasts for periods longer than 12 months and is
considered to be a reasonable approximation of a lifetime PD measure. Retail exposures are first segmented into homogenous portfolios,
generally by country, product and brand. Within each portfolio, the stage 2 accounts are defined as accounts with an adjusted 12-month PD
greater than the average 12-month PD of loans in that portfolio 12 months before they become 30 days past due. The expert credit risk
judgement is that no prior increase in credit risk is significant. This portfolio-specific threshold therefore identifies loans with a PD higher than
would be expected from loans that are performing as originally expected and higher than that which would have been acceptable at origination.
It therefore approximates a comparison of origination to reporting date PDs.
We continue to refine the retail transfer criteria approach for certain portfolios, as additional data becomes available, in order to utilise a more
relative approach. These enhancements take advantage of the increase in origination related data in the assessment of significant increases in
credit risk by comparing remaining lifetime PD to the comparable remaining term lifetime PD at origination based on portfolio-specific origination
segments.
Unimpaired and without significant increase in credit risk (stage 1)
ECL resulting from default events that are possible within the next 12 months (’12-month ECL’) are recognised for financial instruments that
remain in stage 1.
Purchased or originated credit impaired
Financial assets that are purchased or originated at a deep discount that reflects the incurred credit losses are considered to be POCI. This
population includes new financial instruments recognised in most cases following the derecognition of forborne loans. The amount of change in
lifetime ECL for a POCI loan is recognised in profit or loss until the POCI loan is derecognised, even if the lifetime ECL are less than the amount
of ECL included in the estimated cash flows on initial recognition.

HSBC Bank plc Annual Report and Accounts 2024 | 133

Movement between stages
Financial assets can be transferred between the different categories (other than POCI) depending on their relative increase in credit risk since
initial recognition. Financial instruments are transferred out of stage 2 if their credit risk is no longer considered to be significantly increased
since initial recognition based on the assessments described above. In the case of non-performing forborne loans such financial instruments are
transferred out of stage 3 when they no longer exhibit any evidence of credit impairment and meet the curing criteria as described above.
Measurement of ECL
The assessment of credit risk and the estimation of ECL are unbiased and probability-weighted, and incorporate all available information which is
relevant to the assessment including information about past events, current conditions and reasonable and supportable forecasts of future
events and economic conditions at the reporting date. In addition, the estimation of ECL should take into account the time value of money and
considers other factors such as climate-related risks.
In general, HSBC calculates ECL using three main components, a probability of default ('PD'), a loss given default ('LGD') and the exposure at
default (‘EAD’).
The 12-month ECL is calculated by multiplying the 12-month PD, LGD, and EAD. Lifetime ECL is calculated using the lifetime PD instead. The
12-month and lifetime PDs represent the probability of default occurring over the next 12 months and the remaining maturity of the instrument
respectively.
The EAD represents the expected balance at default, taking into account the repayment of principal and interest from the balance sheet date to
the default event together with any expected drawdowns of committed facilities. The LGD represents expected losses on the EAD given the
event of default, taking into account, among other attributes, the mitigating effect of collateral value at the time it is expected to be realised and
the time value of money.
HSBC makes use of the IRB framework where possible, with recalibration to meet the differing IFRS 9 requirements as set out in the following
table:

Model | Regulatory capital | IFRS 9
PD | – Represents long-run average PD throughout a full economic cycle (for mortgage portfolios a hybrid approach, which sits between the extremes of point in time and through the cycle, is used for calculating long-run averages as required by the PRA). – Default backstop of 90+ days past due for all portfolios (includes unlikely to pay ('UTP') criteria in line with internal policy). – May be subject to a sovereign cap. | – Represents current portfolio quality and performance, adjusted for the impact of multiple forward-looking macroeconomic scenarios. – Default backstop of 90+ days past due for all portfolios (includes UTP criteria in line with internal policy).
EAD | – Cannot be lower than current balance. | – Amortisation captured for term products. – Future drawdown captured for revolving products.
LGD | – Downturn LGD (consistent with losses we would expect to suffer during a severe but plausible economic downturn). – Regulatory floors may apply to mitigate risk of underestimating downturn LGD due to lack of historical data. – Discounted using appropriate index (minimum 9%). – All collection costs included. | – LGD based on recent portfolio performance data and includes the expected impact of future economic conditions such as change in the value of collateral. – No floors applied, discounted using the original effective interest rate. – Only costs associated with selling collateral and certain third- party costs are included.
Other |  | – Discounted back from point of default to balance sheet date.

While 12-month PDs are recalibrated from IRB models where possible, the lifetime PDs are determined by projecting the 12-month PD using a
term structure. For the Wholesale methodology, the lifetime PD also takes into account credit migration, i.e. a customer migrating through the
CRR bands over its life.
The ECL for Wholesale stage 3 is determined primarily on an individual basis using a discounted cash flow (‘DCF’) methodology. The expected
future cash flows are based on estimates as of the reporting date, reflecting reasonable and supportable assumptions and projections of future
recoveries and expected future receipts of interest.
Collateral is taken into account if it is likely that the recovery of the outstanding amount will include realisation of collateral based on its
estimated fair value of collateral at the time of expected realisation, less costs for obtaining and selling the collateral.
The cash flows are discounted at a reasonable approximation of the original effective interest rate. For significant cases, cash flows under up to
four different scenarios are probability-weighted by reference to the status of the borrower, economic scenarios applied more generally by
HSBC and judgement of in relation to the likelihood of the workout strategy succeeding or receivership being required. For less significant cases
where an individual assessment is undertaken, the effect of different economic scenarios and work-out strategies results in an ECL calculation
based on a most likely outcome which is adjusted to capture losses resulting from less likely but possible outcomes. For certain less significant
cases, the bank may use an LGD-based modelled approach to ECL assessment, which factors in a range of economic scenarios.
Period over which ECL is measured
Expected credit loss is measured from the initial recognition of the financial asset. The maximum period considered when measuring ECL (be it
12-month or lifetime ECL) is the maximum contractual period over which HSBC is exposed to credit risk. However, where the financial
instrument includes both a drawn and undrawn commitment and the contractual ability to demand repayment and cancel the undrawn
commitment does not serve to limit HSBC’s exposure to credit risk to the contractual notice period, the contractual period does not determine
the maximum period considered. Instead, ECL is measured over the period HSBC remains exposed to credit risk that is not mitigated by credit
risk management actions. This applies to retail overdrafts and credit cards, where the period is the average time taken for stage 2 exposures to
default or close as performing accounts, determined on a portfolio basis and ranging from between two and six years. In addition, for these
facilities it is not possible to identify the ECL on the loan commitment component separately from the financial asset component. As a result,
the total ECL is recognised in the loss allowance for the financial asset unless the total ECL exceeds the gross carrying amount of the financial
asset, in which case the ECL is recognised as a provision. For wholesale overdraft facilities, credit risk management actions are taken no less
frequently than on an annual basis.

134 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

Forward-looking economic inputs
HSBC applies multiple forward-looking global economic scenarios determined with reference to external forecast distributions representative of
its view of forecast economic conditions. This approach is considered sufficient to calculate unbiased expected credit loss in most economic
environments. In certain economic environments, additional analysis may be necessary and may result in additional scenarios or adjustments, to
reflect a range of possible economic outcomes sufficient for an unbiased estimate. The detailed methodology is disclosed in 'Measurement
uncertainty and sensitivity analysis of ECL estimates' on page 42.
Critical estimates and judgements

The calculation of the group’s ECL under IFRS 9 requires the group to make a number of judgements, assumptions and estimates. The most significant are set out below:
Judgements | Estimates
– Defining what is considered to be a significant increase in credit risk. – Selecting and calibrating the PD, LGD and EAD models, which support the calculations, including making reasonable and supportable judgements about how models react to current and future economic conditions. – Selecting model inputs and economic forecasts, including determining whether sufficient and appropriately weighted economic forecasts are incorporated to calculate unbiased expected credit loss. – Making management judgemental adjustments to account for late breaking events, model and data limitations and deficiencies, and expert credit judgements. – Selecting applicable recovery strategies for certain wholesale credit-impaired loans. | – The section ‘Measurement uncertainty and sensitivity analysis of ECL estimates’, marked as audited from page 42 sets out the assumptions used in determining ECL, and provides an indication of the sensitivity of the result to the application of different weightings being applied to different economic assumptions.

(j)Insurance contracts
A contract is classified as an insurance contract where the group accepts significant insurance risk from another party by agreeing to
compensate that party if it is adversely affected by a specified uncertain future event. An insurance contract may also transfer financial risk, but
is accounted for as an insurance contract if the insurance risk is significant. In addition, the group issues investment contracts with discretionary
participation features ('DPF') which are also accounted under IFRS 17 ‘Insurance Contracts’.
Aggregation of insurance contracts
Individual insurance contracts that are managed together and subject to similar risks are identified as a portfolio. Contracts that are managed
together usually belong to the same product group, and have similar characteristics such as being subject to a similar pricing framework or
similar product management, and are issued by the same legal entity. If a contract is exposed to more than one risk, the dominant risk of the
contract is used to assess whether the contract features similar risks. Each portfolio is further separated by the contract’s expected profitability.
The portfolios are split by their profitability into: (i) contracts that are onerous at initial recognition; (ii) contracts that at initial recognition have no
significant possibility of becoming onerous subsequently; and (iii) the remaining contracts. These profitability groups are then divided by issue
date, with most contracts the group issues after the transition date being grouped into calendar quarter cohorts. For multi-currency groups of
contracts, the group considers its groups of contracts as being denominated in a single currency.
The measurement of the insurance contract liability is based on groups of insurance contracts as established at initial recognition, and will
include fulfilment cash flows as well as the CSM representing the unearned profit. The group's accounting policy is to update the estimates
used in the measurement on a year-to-date basis.
Fulfilment cash flows
The fulfilment cash flows comprise the following:
Best estimates of future cash flows
The cash flows within the contract boundary of each contract in the group include amounts expected to be collected from premiums and
payouts for claims, benefits and expenses, and are projected using a range of scenarios and assumptions in an unbiased way based on the
group’s demographic and operating experience along with external mortality data where the group’s own experience data is not sufficiently
large in size to be credible.
Adjustment for the time value of money and financial risks associated with the future cash flows
The estimates of future cash flows are adjusted to reflect the time value of money (i.e. discounting) and the financial risks to derive an expected
present value. The group generally makes use of stochastic modelling techniques in the estimation for products with options and guarantees.
A bottom-up approach is used to determine the discount rate to be applied to a given set of expected future cash flows. This is derived as the
sum of the risk-free yield and an illiquidity premium. The risk-free yield is determined based on observable market data, where such markets are
considered to be deep, liquid and transparent. When information is not available, management judgement is applied to determine the
appropriate risk-free yield. Illiquidity premiums reflect the liquidity characteristics of the associated insurance contracts.
Risk adjustment for non-financial risk
The risk adjustment reflects the compensation required for bearing the uncertainty about the amount and timing of future cash flows that arises
from non-financial risk. It is calculated as a 75th percentile level of stress over a one-year period. The level of the stress is determined with
reference to external regulatory stresses and internal economic capital stresses.
For the main insurance manufacturing entity in the group, the one-year 75th percentile level of stress corresponds to the 60th percentile (2023:
60th percentile) based on an ultimate view of risk over all future years.
The group does not disaggregate changes in the risk adjustment between insurance service result (comprising insurance revenue and insurance
service expense) and insurance finance income or expenses. All changes are included in the insurance service result.
Measurement models
The variable fee approach (‘VFA’) measurement model is used for most of the contracts issued by the group, which is mandatory upon meeting
the following eligibility criteria at inception:
– the contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying items;

HSBC Bank plc Annual Report and Accounts 2024 | 135

– the group expects to pay to the policyholder a substantial share of the fair value returns on the underlying items. The group considers that a
substantial share is a majority of returns; and
– the group expects a substantial proportion of any change in the amounts to be paid to the policyholder to vary with the change in fair value of
the underlying items. The group considers that a substantial proportion is a majority proportion of change on a present value probability-
weighted average of all scenarios.
For some contracts measured under VFA, the other comprehensive income (‘OCI’) option is used. The OCI option is applied where the
underlying items held by the group are not accounted for at fair value through profit or loss. Under this option, only the amount that matches
income or expenses recognised in profit or loss on underlying items is included in finance income or expenses for these insurance contracts,
and hence results in the elimination of accounting mismatches. The remaining amount of finance income or expenses for these insurance
contracts issued for the period is recognised in OCI. In addition, the risk mitigation option is used for a number of economic offsets against the
instruments that meet specific requirements.
The remaining contracts issued and the reinsurance contracts held are accounted for under the general measurement model (‘GMM’).
CSM and coverage units
The CSM represents the unearned profit and results in no income or expense at initial recognition when the group of contracts is profitable. The
CSM is adjusted at each subsequent reporting period for changes in fulfilment cash flows relating to future service (e.g. changes in non-
economic assumptions, including mortality and morbidity rates). For initial recognition of onerous groups of contracts and when groups of
contracts become onerous subsequently, losses are recognised in insurance service expense immediately.
For groups of contracts measured using the VFA, changes in the group’s share of the underlying items, and economic experience and economic
assumption changes adjust the CSM, whereas these changes do not adjust the CSM under the GMM, but are recognised in profit or loss as
they arise. However, under the risk mitigation option for VFA contracts, the changes in the fulfilment cash flows and the changes in the group’s
share in the fair value return on underlying items that the instruments mitigate are not adjusted in CSM but recognised in profit or loss. The risk
mitigating instruments are primarily reinsurance contracts held.
The CSM is systematically recognised in insurance revenue to reflect the insurance contract services provided, based on the coverage units of
the group of contracts. Coverage units are determined by the quantity of benefits and the expected coverage period of the contracts.
The group identifies the quantity of the benefits provided as follows:
– Insurance coverage: This is based on the expected net policyholder insurance benefit at each period after allowance for decrements, where
net policyholder insurance benefit refers to the amount of sum assured less the fund value or surrender value.
– Investment services (including both investment-return service and investment-related service): This is based on a constant measure basis
which reflects the provision of access for the policyholder to the facility.
For contracts that provide both insurance coverage and investment services, coverage units are weighted according to the expected present
value of the future cash outflows for each service.
Insurance service result
Insurance revenue reflects the consideration to which the group expects to be entitled in exchange for the provision of coverage and other
insurance contract services (excluding any investment components). Insurance service expenses comprise the incurred claims and other
incurred insurance service expenses (excluding any investment components), and losses on onerous groups of contracts and reversals of such
losses.
Insurance finance income and expenses
Insurance finance income and expenses comprise the change in the carrying amount of the group of insurance contracts arising from the
effects of the time value of money, financial risk and changes therein. For VFA contracts, changes in the fair value of underlying items (excluding
additions and withdrawals) are recognised in insurance finance income or expenses.
(k)Employee compensation and benefits
Share-based payments
The group enters into both equity-settled and cash-settled share-based payment arrangements with its employees as compensation for the
provision of their services.
The vesting period for these schemes may commence before the legal grant date if the employees have started to render services in respect of
the award before the legal grant date, where there is a shared understanding of the terms and conditions of the arrangement. Expenses are
recognised when the employee starts to render service to which the award relates.
Cancellations result from the failure to meet a non-vesting condition during the vesting period, and are treated as an acceleration of vesting
recognised immediately in the income statement. Failure to meet a vesting condition by the employee is not treated as a cancellation, and the
amount of expense recognised for the award is adjusted to reflect the number of awards expected to vest.
Post-employment benefit plans
The group operates a number of pension schemes including defined benefit, defined contribution and other post-employment benefit schemes.
Payments to defined contribution schemes are charged as an expense as the employees render service.
Defined benefit pension obligations are calculated using the projected unit credit method. The net charge to the income statement mainly
comprises the service cost and the net interest on the net defined benefit asset or liability, and is presented in operating expenses.
Remeasurements of the net defined benefit asset or liability, which comprise actuarial gains and losses, return on plan assets (excluding
interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in other comprehensive income. The net
defined benefit asset or liability represents the present value of defined benefit obligations reduced by the fair value of plan assets, after
applying the asset ceiling test, where the net defined benefit surplus is limited to the present value of available refunds and reductions in future
contributions to the plan.
The costs of obligations arising from other post-employment plans are accounted for on the same basis as defined benefit pension plans.

136 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

(l)Tax
Income tax comprises current tax and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to
items recognised in other comprehensive income or directly in equity, in which case the tax is recognised in the same statement in which the
related item appears.
Current tax is the tax expected to be payable on the taxable profit for the year and on any adjustment to tax payable in respect of previous years.
The group provides for potential current tax liabilities that may arise on the basis of the amounts expected to be paid to the tax authorities.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the balance sheet, and the
amounts attributed to such assets and liabilities for tax purposes. Deferred tax is calculated using the tax rates expected to apply in the periods
as the assets will be realised or the liabilities settled.
In assessing the probability and sufficiency of future taxable profit, we consider the availability of evidence to support the recognition of deferred
tax assets. Taking into account the inherent risks in long-term forecasting, including climate change-related, and drivers of recent history of tax
losses where applicable. We also consider the future reversal of existing taxable temporary differences and tax planning strategies, including
corporate reorganisations.
Current and deferred tax are calculated based on tax rates and laws enacted, or substantively enacted, by the balance sheet date.
Critical estimates and judgements

The recognition of deferred tax assets depends on judgements and estimates.
Judgements | Estimates
– Specific judgements supporting deferred tax assets are described in Note 7. | The recognition of deferred tax assets is sensitive to estimates of future cash flows projected for periods for which detailed forecasts are available and to assumptions regarding the long-term pattern of cash flows thereafter, on which forecasts of future taxable profit are based, and which affect the expected recovery periods and the pattern of utilisation of tax losses and tax credits.

The group does not consider there to be a significant risk of a material adjustment to the carrying amount of the deferred tax assets in the next
financial year but does consider this to be an area that is inherently judgemental.
(m)Provisions, contingent liabilities and guarantees
Provisions
Provisions are recognised when it is probable that an outflow of economic benefits will be required to settle a present legal or constructive
obligation that has arisen as a result of past events and for which a reliable estimate can be made.
Critical estimates and judgements

The recognition and measurement of provisions requires the group to make a number of judgements, assumptions and estimates. The most significant are set out below:
Judgements | Estimates
– Determining whether a present obligation exists. Professional advice is taken on the assessment of litigation and similar obligations. – Provisions for legal proceedings and regulatory matters typically require a higher degree of judgement than other types of provisions. When matters are at an early stage, accounting judgements can be difficult because of the high degree of uncertainty associated with determining whether a present obligation exists, and estimating the probability and amount of any outflows that may arise. As matters progress, management and legal advisers evaluate on an ongoing basis whether provisions should be recognised, revising previous estimates as appropriate. At more advanced stages, it is typically easier to make estimates around a better defined set of possible outcomes. | – Provisions for legal proceedings and regulatory matters remain very sensitive to the assumptions used in the estimate. There could be a wider range of possible outcomes for any pending legal proceedings, investigations or inquiries. As a result, it is often not practicable to quantify a range of possible outcomes for individual matters. It is also not practicable to meaningfully quantify ranges of potential outcomes in aggregate for these types of provisions, because of the diverse nature and circumstances of such matters and the wide range of uncertainties involved.

Contingent liabilities, contractual commitments and guarantees
Contingent liabilities
Contingent liabilities, which include certain guarantees and letters of credit pledged as collateral security, and contingent liabilities related to
legal proceedings or regulatory matters, are not recognised in the financial statements but are disclosed unless the probability of settlement is
remote.
Financial guarantee contracts
Liabilities under financial guarantee contracts that are not classified as insurance contracts are recorded initially at their fair value, which is
generally the fee received or present value of the fee receivable.
(n)Impairment of non-financial assets
Software under development is tested for impairment at least annually. Other non-financial assets are property, plant and equipment, intangible
assets (excluding goodwill) and right-of-use assets. They are tested for impairment at the individual asset level when there is indication of
impairment at that level, or at the CGU level for assets that do not have a recoverable amount at the individual asset level. In addition,
impairment is also tested at the CGU level when there is indication of impairment at that level. For this purpose, CGUs are considered to be the
principal operating legal entities divided by global business.
Impairment testing compares the carrying amount of the non-financial asset or CGU with its recoverable amount, which is the higher of the fair
value less costs of disposal or the value in use. The carrying amount of a CGU comprises the carrying amount of its assets and liabilities,
including non-financial assets that are directly attributable to it and non-financial assets that can be allocated to it on a reasonable and consistent
basis. Non-financial assets that cannot be allocated to an individual CGU are tested for impairment at an appropriate grouping of CGUs. The
recoverable amount of the CGU is the higher of the fair value less costs of disposal of the CGU, which is determined by independent and
qualified valuers where relevant, and the value in use, which is calculated based on appropriate inputs. When the recoverable amount of a CGU
is less than its carrying amount, an impairment loss is recognised in the income statement to the extent that the impairment can be allocated on

HSBC Bank plc Annual Report and Accounts 2024 | 137

a pro-rata basis to the non-financial assets by reducing their carrying amounts to the higher of their respective individual recoverable amount or
nil. Impairment is not allocated to the financial assets in a CGU.
Impairment losses recognised in prior periods for non-financial assets are reversed when there has been a change in the estimate used to
determine the recoverable amount. The impairment loss is reversed to the extent that the carrying amount of the non-financial assets would not
exceed the amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised in prior
periods.
(o)Non-current assets and disposal groups held for sale
HSBC classifies non-current assets or disposal groups (including assets and liabilities) as held for sale when their carrying amounts will be
recovered principally through sale rather than through continuing use. To be classified as held for sale, the non-current asset or disposal group
must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (or
disposal groups), and the sale must be highly probable. For a sale to be highly probable, the appropriate level of management must be
committed to a plan to sell the asset (or disposal group) and an active programme to locate a buyer and complete the plan must have been
initiated. Further, the asset (or disposal group) must be actively marketed for sale at a price that is reasonable in relation to its current fair value.
In addition, the sale should be expected to qualify as a completed sale within one year from the date of classification and actions required to
complete the plan should indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
Held-for-sale assets and disposal groups are measured at the lower of their carrying amount and fair value less costs to sell except for those
assets and liabilities that are not within the scope of the measurement requirements of IFRS 5. If the carrying amount of the non-current asset
(or disposal group) is greater than the fair value less costs to sell, an impairment loss for any initial or subsequent write down of the asset or
disposal group to fair value less costs to sell is recognised. Any such impairment loss is first allocated against the non-current assets that are in
scope of IFRS 5 for measurement. This first reduces the carrying amount of any goodwill allocated to the disposal group, and then to the other
non-current assets of the disposal group pro rata on the basis of the carrying amount of each asset in the disposal group. Thereafter, any
impairment loss in excess of the carrying amount of the non-current assets in scope of IFRS 5 for measurement is recognised against the total
assets of the disposal group.

2 Net fee income

Net fee income by product type
2024 |  | 2023 | 2022
| £m | £m | £m
Net fee income by product |  |  |
Funds under management | 457 | 408 | 420
Broking income | 406 | 327 | 354
Account services | 334 | 339 | 302
Credit facilities | 301 | 278 | 235
Underwriting | 291 | 239 | 171
Global custody | 171 | 190 | 203
Remittances | 113 | 114 | 101
Securities others (including stock lending) | 95 | 95 | 81
Corporate finance | 80 | 45 | 124
Loans granted other than prepayment fees | 68 | 44 | 38
Other | 442 | 515 | 564
Fee income | 2,758 | 2,594 | 2,593
Less: fee expense | (1,483) | (1,365) | (1,298)
Net fee income | 1,275 | 1,229 | 1,295

Net fee income by global business
| MSS | GB | GBM Other | CMB | WPB | Corporate Centre | Total
| £m | £m | £m | £m | £m | £m | £m
Year ended 31 Dec 2024 |  |  |  |  |  |  |
Fee income | 1,277 | 954 | 140 | 452 | 568 | (633) | 2,758
Less: fee expense | (1,606) | (237) | (100) | (29) | (143) | 632 | (1,483)
Net fee income/(expense) | (329) | 717 | 40 | 423 | 425 | (1) | 1,275
Year ended 31 Dec 2023 |  |  |  |  |  |  |
Fee income | 1,275 | 847 | 131 | 427 | 556 | (642) | 2,594
Less: fee expense | (1,496) | (177) | (102) | (19) | (207) | 636 | (1,365)
Net fee income/(expense) | (221) | 670 | 29 | 408 | 349 | (6) | 1,229
Year ended 31 Dec 2022 |  |  |  |  |  |  |
Fee income | 1,301 | 817 | 69 | 425 | 580 | (599) | 2,593
Less: fee expense | (1,439) | (173) | (55) | (25) | (199) | 593 | (1,298)
Net fee income/(expense) | (138) | 644 | 14 | 400 | 381 | (6) | 1,295

Net fee income includes £801m of fees earned on financial assets that are not at fair value through profit or loss (other than amounts included in
determining the effective interest rate) (2023: £842m; 2022: £778m), £249m of fees payable on financial liabilities that are not at fair value
through profit of loss (other than amounts included in determining the effective interest rate) (2023: £247m; 2022: £229m), £675m of fees
earned on trust and other fiduciary activities (2023: £654m; 2022: £673m), and £94m of fees payable relating to trust and other fiduciary
activities (2023: £83m; 2022: £69m).

138 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

3 Net income from financial instruments measured at fair value through
profit or loss

| 2024 | 2023 | 2022
| £m | £m | £m
Net income arising on: |  |  |
Net trading activities | 5,107 | 4,569 | (2,840)
Other instruments managed on a fair value basis | (381) | (1,174) | 5,715
Net income from financial instruments held for trading or managed on a fair value basis | 4,726 | 3,395 | 2,875
Financial assets held to meet liabilities under insurance and investment contracts | 956 | 1,231 | (1,429)
Liabilities to customers under investment contracts | (99) | (63) | 59
Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss | 857 | 1,168 | (1,370)

4 Insurance business
The table below represents an analysis of the total insurance revenue and expenses recognised in the period:

Insurance service result
| Year ended 31 Dec 2024 | Year ended 31 Dec 2023
| Life direct participating and investment DPF contracts 1 | Life other contracts 2 | Total | Life direct participating and investment DPF contracts 1 | Life other contracts 2 | Total
| £m | £m | £m | £m | £m | £m
Insurance revenue |  |  |  |  |  |
Amounts relating to changes in liabilities for remaining coverage | 215 | 171 | 386 | 183 | 188 | 371
– Contractual service margin recognised for services provided | 70 | 38 | 108 | 77 | 43 | 120
– Change in risk adjustment for non-financial risk for risk expired | 9 | 6 | 15 | 6 | 6 | 12
– Expected incurred claims and other insurance service expenses | 136 | 127 | 263 | 100 | 139 | 239
– Other | — | — | — | — | — | —
Recovery of insurance acquisition cash flows | 3 | 9 | 12 | 2 | 6 | 8
Total insurance revenue | 218 | 180 | 398 | 185 | 194 | 379
Insurance service expenses |  |  |  |  |  |
Incurred claims and other insurance service expenses | (91) | (131) | (222) | (88) | (120) | (208)
Losses and reversal of losses on onerous contracts | 4 | (5) | (1) | (8) | (7) | (15)
Amortisation of insurance acquisition cash flows | (3) | (9) | (12) | (2) | (6) | (8)
Adjustments to liabilities for incurred claims | — | 8 | 8 | — | (24) | (24)
Total insurance service expenses | (90) | (137) | (227) | (98) | (157) | (255)
Total insurance service result | 128 | 43 | 171 | 87 | 37 | 124

1'Life direct participating and investment DPF contracts' are substantially measured under the variable fee approach measurement model.
2'Life other contracts' are measured under the general measurement model.

HSBC Bank plc Annual Report and Accounts 2024 | 139

Net investment return
| Year ended 31 Dec 2024 | Year ended 31 Dec 2023
| Life direct participating and investment DPF contracts | Life other contracts | Total | Life direct participating and investment DPF contracts | Life other contracts | Total
| £m | £m | £m | £m | £m | £m
Investment return |  |  |  |  |  |
Amounts recognised in profit or loss 1 | 969 | 2 | 971 | 1,246 | 17 | 1,263
Amounts recognised in OCI 2 | 147 | — | 147 | 404 | — | 404
Total investment return (memorandum) | 1,116 | 2 | 1,118 | 1,650 | 17 | 1,667
Net finance (expense)/income |  |  |  |  |  |
Changes in fair value of underlying items of direct participating contracts | (1,122) | — | (1,122) | (1,585) | — | (1,585)
Effect of risk mitigation option | (11) | — | (11) | — | — | —
Interest accreted | — | 1 | 1 | — | 2 | 2
Effect of changes in interest rates and other financial assumptions | — | — | — | — | 1 | 1
Effect of measuring changes in estimates at current rates and adjusting the CSM at rates on initial recognition | — | 2 | 2 | — | (4) | (4)
Total net finance (expense)/income from insurance contracts | (1,133) | 3 | (1,130) | (1,585) | (1) | (1,586)
Represented by: |  |  |  |  |  |
Amounts recognised in profit or loss | (987) | 3 | (984) | (1,183) | (1) | (1,184)
Amounts recognised in OCI | (146) | — | (146) | (402) | — | (402)
Total net investment return | (17) | 5 | (12) | 65 | 16 | 81
Represented by: |  |  |  |  |  |
Amounts recognised in profit or loss | (18) | 5 | (13) | 63 | 16 | 79
Amounts recognised in OCI | 1 | — | 1 | 2 | — | 2

1 Total group ‘Net income/(expense) from assets and liabilities of insurance business, including related derivatives, measured at fair value through profit or loss’
gain of £857m (2023: £1,168m gain) includes returns on assets and liabilities supporting insurance policies o f £807m (2023: £1,082m gain) and on shareholder
assets of £50m (2023: £86m gain). Investment returns of £971m (2023: £1,263m gain) include gain s of £807m (2023: £1,082m loss) on underlying assets
supporting insurance liabilities reported in ‘Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at
fair value through profit or loss’, £166m gains (2023: £187m gain) reported in ‘Net interest income’ and £2m loss (2023: £6m loss) reported in ‘Other operating
income’.
2‘Amounts recognised in OCI’ comprises of fair value gains of £147m (2023: £407m gain) and expected credit (recoveries)/losses of nil (2023: £3m loss). The
group statement of comprehensive income statement ‘Debt instruments at fair value through other comprehensive income - fair value gains/(losses)’ gain of
£144m (2023: £439m gain) includes insurance investment income recognised in OCI gain of £147m (2023: £407m) and ‘Debt instruments at fair value through
other comprehensive income - expected credit losses/(recoveries) recognised in the income statement’ loss of £1m (2023: £2m recovery) includes insurance
expected credit losses/(recoveries) recognised in OCI of nil (2023: £3m loss).

Reconciliation of amounts included in other comprehensive income for financial assets measured at fair value through other comprehensive income – Contracts measured under the modified retrospective approach
| 2024 | 2023
| £m | £m
Balance at 1 Jan | (526) | (808)
Net change in fair value | (120) | 363
Net amount reclassified to profit or loss | 2 | (5)
Related income tax | 30 | (93)
Foreign exchange and other | 27 | 17
Balance at 31 Dec | (587) | (526)

140 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

Movements in carrying amounts of insurance contracts – analysis by remaining coverage and incurred claims
| Year ended 31 Dec 2024
| Life direct participating and investment DPF contracts | Life other contracts |
| Liabilities for remaining coverage: |  |  | Liabilities for remaining coverage: |  |  |
| Excluding loss component | Loss component | Incurred claims | Total | Excluding loss component | Loss component | Incurred claims | Total | Total
| £m | £m | £m | £m | £m | £m | £m | £m | £m
Opening assets | — | — | — | — | (54) | 4 | 9 | (41) | (41)
Opening liabilities | 20,274 | 13 | 2 | 20,289 | 152 | 12 | 142 | 306 | 20,595
Net opening balance at 1 Jan 2024 | 20,274 | 13 | 2 | 20,289 | 98 | 16 | 151 | 265 | 20,554
Changes in the consolidated income statement and statement of comprehensive income |  |  |  |  |  |  |  |  |
Insurance revenue |  |  |  |  |  |  |  |  |
Contracts under the fair value approach | (30) | — | — | (30) | (71) | — | — | (71) | (101)
Contracts under the modified retrospective approach 1 | (110) | — | — | (110) | (14) | — | — | (14) | (124)
Other contracts 2 | (78) | — | — | (78) | (95) | — | — | (95) | (173)
Total insurance revenue | (218) | — | — | (218) | (180) | — | — | (180) | (398)
Insurance service expenses |  |  |  |  |  |  |  |  |
Incurred claims and other insurance service expenses | — | — | 91 | 91 | — | (1) | 132 | 131 | 222
Amortisation of insurance acquisition cash flows | 3 | — | — | 3 | 9 | — | — | 9 | 12
Losses and reversal of losses on onerous contracts | — | (4) | — | (4) | — | 5 | — | 5 | 1
Adjustments to liabilities for incurred claims | — | — | — | — | — | — | (8) | (8) | (8)
Total insurance service expenses/ (income) | 3 | (4) | 91 | 90 | 9 | 4 | 124 | 137 | 227
Investment components | (1,817) | — | 1,817 | — | (4) | — | 4 | — | —
Insurance service result | (2,032) | (4) | 1,908 | (128) | (175) | 4 | 128 | (43) | (171)
Net finance expense/(income) from insurance contracts 3 | 1,133 | — | — | 1,133 | (3) | — | — | (3) | 1,130
Effect of movements in exchange rates | (766) | — | — | (766) | (3) | — | (3) | (6) | (772)
Total changes in the consolidated income statement and statement of comprehensive income | (1,665) | (4) | 1,908 | 239 | (181) | 4 | 125 | (52) | 187
Cash flows |  |  |  |  |  |  |  |  |
Premiums received | 2,053 | — | — | 2,053 | 196 | — | — | 196 | 2,249
Claims and other insurance service expenses paid | (22) | — | (1,907) | (1,929) | — | — | (131) | (131) | (2,060)
Insurance acquisition cash flows | (19) | — | — | (19) | (25) | — | — | (25) | (44)
Total cash flows | 2,012 | — | (1,907) | 105 | 171 | — | (131) | 40 | 145
Other movements 4 | (17,463) | (5) | — | (17,468) | (6) | (1) | (25) | (32) | (17,500)
Net closing balance at 31 Dec 2024 | 3,158 | 4 | 3 | 3,165 | 82 | 19 | 120 | 221 | 3,386
Closing assets | — | — | — | — | (57) | 9 | 10 | (38) | (38)
Closing liabilities | 3,158 | 4 | 3 | 3,165 | 139 | 10 | 110 | 259 | 3,424
Net closing balance at 31 Dec 2024 | 3,158 | 4 | 3 | 3,165 | 82 | 19 | 120 | 221 | 3,386

HSBC Bank plc Annual Report and Accounts 2024 | 141

Movements in carrying amounts of insurance contracts – analysis by remaining coverage and incurred claims (continued)
| Year ended 31 Dec 2023
| Life direct participating and investment DPF contracts | Life other contracts |
| Liabilities for: |  | Liabilities for: |  |
| Excluding loss component | Loss component | Incurred claims | Total | Excluding loss component | Loss component | Incurred claims | Total | Total
| £m | £m | £m | £m | £m | £m | £m | £m | £m
Opening assets | — | — | — | — | (49) | — | 6 | (43) | (43)
Opening liabilities | 19,712 | 5 | 2 | 19,719 | 146 | 10 | 129 | 285 | 20,004
Net opening balance at 1 Jan 2023 | 19,712 | 5 | 2 | 19,719 | 97 | 10 | 135 | 242 | 19,961
Changes in the consolidated income statement and statement of comprehensive income |  |  |  |  |  |  |  |  |
Insurance revenue |  |  |  |  |  |  |  |  |
Contracts under the fair value approach | (11) | — | — | (11) | (78) | — | — | (78) | (89)
Contracts under the modified retrospective approach 1 | (119) | — | — | (119) | (17) | — | — | (17) | (136)
Other contracts 2 | (55) | — | — | (55) | (99) | — | — | (99) | (154)
Total insurance revenue | (185) | — | — | (185) | (194) | — | — | (194) | (379)
Insurance service expenses |  |  |  |  |  |  |  |  |
Incurred claims and other insurance service expenses | — | (1) | 89 | 88 | — | (1) | 121 | 120 | 208
Amortisation of insurance acquisition cash flows | 2 | — | — | 2 | 6 | — | — | 6 | 8
Losses and reversal of losses on onerous contracts | — | 8 | — | 8 | — | 7 | — | 7 | 15
Adjustments to liabilities for incurred claims | — | — | — | — | — | — | 24 | 24 | 24
Total insurance service expenses | 2 | 7 | 89 | 98 | 6 | 6 | 145 | 157 | 255
Investment components | (1,879) | — | 1,879 | — | (3) | — | 3 | — | —
Insurance service result | (2,062) | 7 | 1,968 | (87) | (191) | 6 | 148 | (37) | (124)
Net finance expense from insurance contracts 3 | 1,585 | — | — | 1,585 | — | — | 1 | 1 | 1,586
Effect of movements in exchange rates | (371) | — | — | (371) | (1) | — | — | (1) | (372)
Total changes in the consolidated income statement and statement of comprehensive income | (848) | 7 | 1,968 | 1,127 | (192) | 6 | 149 | (37) | 1,090
Cash flows |  |  |  |  |  |  |  |  |
Premiums received | 1,471 | — | — | 1,471 | 218 | — | — | 218 | 1,689
Claims and other insurance service expenses paid | (51) | — | (1,968) | (2,019) | — | — | (116) | (116) | (2,135)
Insurance acquisition cash flows | (15) | — |  | (15) | (28) | — |  | (28) | (43)
Total cash flows | 1,405 | — | (1,968) | (563) | 190 | — | (116) | 74 | (489)
Other movements | 5 | 1 | — | 6 | 3 | — | (17) | (14) | (8)
Net closing balance at 31 Dec 2023 | 20,274 | 13 | 2 | 20,289 | 98 | 16 | 151 | 265 | 20,554
Closing assets | — | — | — | — | (54) | 4 | 9 | (41) | (41)
Closing liabilities | 20,274 | 13 | 2 | 20,289 | 152 | 12 | 142 | 306 | 20,595
Net closing balance at 31 Dec 2023 | 20,274 | 13 | 2 | 20,289 | 98 | 16 | 151 | 265 | 20,554

1 On transition to IFRS 17 the Bank applied the full retrospective approach to new business written from 2019 at the earliest. Where applying the full retrospective
approach was impracticable, the Bank primarily applied the modified retrospective approach.
2'Other contracts' are those contracts measured by applying IFRS 17 from inception of the contracts. This includes contracts measured under the full
retrospective approach at transition and contracts incepted after transition.
3‘Net finance expense/(income) from insurance contracts’ of £1,130m (2023: £1,586m expense) comprises expense of £984m (2023: £1,184m expense)
recognised in the income statement and expense of £146m (2023: £402m expense) recognised in other comprehensive income.
4'Other movements' £17,500m reduction in insurance contracts includes £17,387m in respect of the classification of the French insurance business as held for
sale at 31 December 2024. Further details are provided on page 193.

142 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

Movements in carrying amounts of insurance contracts – analysis by measurement component |
| Year ended 31 Dec 2024
| Life direct participating and investment discretionary participating contracts | Life other contracts | Total
|  | Contractual service margin |  |  | Contractual service margin |
| Estimates of present value of future cash flows and risk adjustment | Contracts under the fair value approach | Contracts under the modified retros- pective approach 1 | Other contracts 2 | Total | Estimates of present value of future cash flows and risk adjustment | Contracts under the fair value approach | Contracts under the modified retros- pective approach 1 | Other contracts 2 | Total
| £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
Opening assets | — | — | — | — | — | (63) | 4 | — | 18 | (41) | (41)
Opening liabilities | 19,517 | 10 | 561 | 201 | 20,289 | 153 | 106 | 15 | 32 | 306 | 20,595
Net opening balance at 1 Jan 2024 | 19,517 | 10 | 561 | 201 | 20,289 | 90 | 110 | 15 | 50 | 265 | 20,554
Changes in the consolidated income statement and statement of comprehensive income |  |  |  |  |  |  |  |  |  |  |
Changes that relate to current services |  |  |  |  |  |  |  |  |  |  |
Contractual service margin recognised for services provided | — | (7) | (47) | (16) | (70) | — | (17) | (4) | (17) | (38) | (108)
Change in risk adjustment for non-financial risk expired | (9) | — | — | — | (9) | (6) | — | — | — | (6) | (15)
Experience adjustments | (45) | — | — | — | (45) | 4 | — | — | — | 4 | (41)
Changes that relate to future services |  |  |  |  |  |  |  |  |  |  |
Contracts initially recognised in the year | (44) | — | — | 45 | 1 | (23) | — | — | 24 | 1 | 2
Changes in estimates that adjust contractual service margin | 12 | 10 | (3) | (19) | — | 4 | 1 | 6 | (11) | — | —
Changes in estimates that result in losses and reversal of losses on onerous contracts | (5) | — | — | — | (5) | 4 | — | — | — | 4 | (1)
Changes that relate to past services |  |  |  |  |  |  |  |  |  |  |
Adjustments to liabilities for incurred claims | — | — | — | — | — | (8) | — | — | — | (8) | (8)
Insurance service result | (91) | 3 | (50) | 10 | (128) | (25) | (16) | 2 | (4) | (43) | (171)
Net finance expense/ (income) from insurance contracts 3 | 1,133 | — | — | — | 1,133 | (6) | 2 | — | 1 | (3) | 1,130
Effect of movements in exchange rates | (736) | — | (23) | (7) | (766) | 1 | (5) | (1) | (1) | (6) | (772)
Total changes in the consolidated income statement and statement of comprehensive income | 306 | 3 | (73) | 3 | 239 | (30) | (19) | 1 | (4) | (52) | 187
Cash flows |  |  |  |  |  |  |  |  |  |  |
Premiums received | 2,053 | — | — | — | 2,053 | 196 | — | — | — | 196 | 2,249
Claims, other insurance service expenses paid and other cash flows | (1,929) | — | — | — | (1,929) | (131) | — | — | — | (131) | (2,060)
Insurance acquisition cash flows | (19) | — | — | — | (19) | (25) | — | — | — | (25) | (44)
Total cash flows | 105 | — | — | — | 105 | 40 | — | — | — | 40 | 145
Other movements 4 | (16,815) | (4) | (488) | (161) | (17,468) | (4) | — | (16) | (12) | (32) | (17,500)
Net closing balance at 31 Dec 2024 | 3,113 | 9 | — | 43 | 3,165 | 96 | 91 | — | 34 | 221 | 3,386
Closing assets | — | — | — | — | — | (60) | 4 | — | 18 | (38) | (38)
Closing liabilities | 3,113 | 9 | — | 43 | 3,165 | 156 | 87 | — | 16 | 259 | 3,424
Net closing balance at 31 Dec 2024 | 3,113 | 9 | — | 43 | 3,165 | 96 | 91 | — | 34 | 221 | 3,386

HSBC Bank plc Annual Report and Accounts 2024 | 143

Movements in carrying amounts of insurance contracts – analysis by measurement component (continued)
| Year ended 31 Dec 2023
| Life direct participating and investment discretionary participating contracts | Life other contracts | Total
|  | Contractual service margin |  |  | Contractual service margin |
| Estimates of present value of future cash flows and risk adjustment | Contracts under the fair value approach | Contracts under the modified retros- pective approach 1 | Other contracts 2 | Total | Estimates of present value of future cash flows and risk adjustment | Contracts under the fair value approach | Contracts under the modified retros- pective approach 1 | Other contracts 2 | Total
| £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
Opening assets | — | — | — | — | — | (76) | 6 | — | 27 | (43) | (43)
Opening liabilities | 18,771 | 29 | 657 | 262 | 19,719 | 134 | 114 | 15 | 22 | 285 | 20,004
Net opening balance at 1 Jan 2023 | 18,771 | 29 | 657 | 262 | 19,719 | 58 | 120 | 15 | 49 | 242 | 19,961
Changes in the consolidated income statement and statement of comprehensive income |  |  |  |  |  |  |  |  |  |  |
Changes that relate to current services |  |  |  |  |  |  |  |  |  |  |
Contractual service margin recognised for services provided | — | (3) | (57) | (17) | (77) | — | (19) | (5) | (19) | (43) | (120)
Change in risk adjustment for non-financial risk expired | (6) | — | — | — | (6) | (6) | — | — | — | (6) | (12)
Experience adjustments | (12) | — | — | — | (12) | (19) | — | — | — | (19) | (31)
Changes that relate to future services |  |  |  |  |  |  |  |  |  |  |
Contracts initially recognised in the year | (48) | — | — | 48 | — | (24) | — | — | 25 | 1 | 1
Changes in estimates that adjust contractual service margin | 133 | (16) | (26) | (91) | — | (1) | 9 | 5 | (13) | — | —
Changes in estimates that result in losses and reversal of losses on onerous contracts | 8 | — | — | — | 8 | 6 | — | — | — | 6 | 14
Changes that relate to past services |  |  |  |  |  |  |  |  |  |  |
Adjustments to liabilities for incurred claims | — | — | — | — | — | 24 | — | — | — | 24 | 24
Insurance service result | 75 | (19) | (83) | (60) | (87) | (20) | (10) | — | (7) | (37) | (124)
Net finance expense from insurance contracts 3 | 1,585 | — | — | — | 1,585 | (1) | 1 | — | 1 | 1 | 1,586
Effect of movements in exchange rates | (352) | — | (14) | (5) | (371) | — | (1) | — | — | (1) | (372)
Total changes in the consolidated income statement and statement of comprehensive income | 1,308 | (19) | (97) | (65) | 1,127 | (21) | (10) | — | (6) | (37) | 1,090
Cash flows |  |  |  |  |  |  |  |  |  |  |
Premiums received | 1,471 | — | — | — | 1,471 | 218 | — | — | — | 218 | 1,689
Claims, other insurance service expenses paid and other cash flows | (2,019) | — | — | — | (2,019) | (116) | — | — | — | (116) | (2,135)
Insurance acquisition cash flows | (15) | — | — | — | (15) | (28) | — | — | — | (28) | (43)
Total cash flows | (563) | — | — | — | (563) | 74 | — | — | — | 74 | (489)
Other movements | 1 | — | 1 | 4 | 6 | (21) | — | — | 7 | (14) | (8)
Net closing balance at 31 Dec 2023 | 19,517 | 10 | 561 | 201 | 20,289 | 90 | 110 | 15 | 50 | 265 | 20,554
Closing assets | — | — | — | — | — | (63) | 4 | — | 18 | (41) | (41)
Closing liabilities | 19,517 | 10 | 561 | 201 | 20,289 | 153 | 106 | 15 | 32 | 306 | 20,595
Net closing balance at 31 Dec 2023 | 19,517 | 10 | 561 | 201 | 20,289 | 90 | 110 | 15 | 50 | 265 | 20,554

1 On transition to IFRS 17 the Bank applied the full retrospective approach to new business written from 2019 at the earliest. Where applying the full retrospective
approach was impracticable, the Bank primarily applied the modified retrospective approach.
2'Other contracts' are those contracts measured by applying IFRS 17 from inception of the contracts. These include contracts measured under the full
retrospective approach at transition and contracts incepted after transition.
3‘Net finance (income)/expense from insurance contracts’ expense of £1,130m (2023: £1,586m expense) comprises expense of £984m (2023: £1,184m expense)
recognised in the income statement and expense of £146m (2023: £402m expense) recognised in other comprehensive income.
4'Other movements' £17,500m reduction in insurance contracts includes £17,387m in respect of the classification of the French insurance business as held for
sale at 31 December 2024. Further details are provided on page 193.

144 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

Effect of contracts initially recognised in the year
| Year ended 31 Dec 2024 | Year ended 31 Dec 2023
| Profitable contracts issued | Onerous contracts issued | Total | Profitable contracts issued | Onerous contracts issued | Total
| £m | £m | £m | £m | £m | £m
Life direct participating and investment DPF contracts |  |  |  |  |  |
Estimates of present value of cash outflows | 1,543 | 27 | 1,570 | 1,169 | 15 | 1,184
– insurance acquisition cash flows | 13 | — | 13 | 10 | — | 10
– claims and other insurance service expenses payable | 1,530 | 27 | 1,557 | 1,159 | 15 | 1,174
Estimates of present value of cash inflows | (1,594) | (26) | (1,620) | (1,222) | (15) | (1,237)
Risk adjustment for non-financial risk | 6 | — | 6 | 5 | — | 5
Contractual service margin | 45 | — | 45 | 48 | — | 48
(Losses) recognised on initial recognition | — | (1) | (1) | — | — | —
Life other contracts |  |  |  |  |  |
Estimates of present value of cash outflows | 122 | 4 | 126 | 129 | 9 | 138
– insurance acquisition cash flows | 24 | — | 24 | 1 | — | 1
– claims and other insurance service expenses payable | 98 | 4 | 102 | 128 | 9 | 137
Estimates of present value of cash inflows | (152) | (3) | (155) | (161) | (8) | (169)
Risk adjustment for non-financial risk | 6 | — | 6 | 7 | — | 7
Contractual service margin | 24 | — | 24 | 25 | — | 25
(Losses) recognised on initial recognition | — | (1) | (1) | — | (1) | (1)

Present value of expected future cash flows of insurance contract liabilities and contractual service margin
| Less than 1 year | 1-2 years | 2-3 years | 3-4 years | 4-5 years | 5-10 years | 10-20 years | Over 20 years | Total
| £m | £m | £m | £m | £m | £m | £m | £m | £m
2024 |  |  |  |  |  |  |  |  |
Insurance liability future cash flows 1 |  |  |  |  |  |  |  |  |
Life direct participating and investment DPF contracts | 71 | 65 | 91 | 86 | 91 | 409 | 664 | 1,626 | 3,103
Life other contracts | 64 | — | (4) | (6) | (6) | (21) | 19 | 87 | 133
Insurance liability future cash flows at 31 Dec | 135 | 65 | 87 | 80 | 85 | 388 | 683 | 1,713 | 3,236
Remaining contractual service margin 1 |  |  |  |  |  |  |  |  |
Life direct participating and investment DPF contracts | 9 | 4 | 4 | 3 | 3 | 12 | 11 | 6 | 52
Life other contracts | 18 | 15 | 13 | 12 | 10 | 31 | 22 | 4 | 125
Remaining contractual service margin at 31 Dec | 27 | 19 | 17 | 15 | 13 | 43 | 33 | 10 | 177
2023 |  |  |  |  |  |  |  |  |
Insurance liability future cash flows |  |  |  |  |  |  |  |  |
Life direct participating and investment DPF contracts | 614 | 660 | 648 | 612 | 555 | 1,809 | (15) | 14,536 | 19,419
Life other contracts | 33 | — | (4) | (5) | (4) | 13 | 28 | 59 | 120
Insurance liability future cash flows at 31 Dec | 647 | 660 | 644 | 607 | 551 | 1,822 | 13 | 14,595 | 19,539
Remaining contractual service margin |  |  |  |  |  |  |  |  |
Life direct participating and investment DPF contracts | 66 | 62 | 59 | 55 | 51 | 204 | 208 | 67 | 772
Life other contracts | 28 | 24 | 19 | 16 | 14 | 42 | 29 | 3 | 175
Remaining contractual service margin at 31 Dec | 94 | 86 | 78 | 71 | 65 | 246 | 237 | 70 | 947

1‘Insurance liability future cash flows’ and ‘Remaining contractual service margin’ at 31 Dec 2024 exclude the French insurance business that was classified as
held for sale at 31 December 2024. Further details are provided on page 193.
Discount rates
The discount rates applied to expected future cash flows are determined through a bottom-up approach as set out in Note 1.2(j) ‘Summary of
material accounting policies – Insurance contracts’ on page 134. The blended average of discount rates used within our most material
manufacturing entities are as follows:

| HSBC Life (UK) Ltd | HSBC Assurances Vie (France)
| £ | €
At 31 Dec 2024 |  |
10 year discount rate (%) | 4.07 | 2.97
20 year discount rate (%) | 4.30 | 2.95
At 31 Dec 2023 |  |
10 year discount rate (%) | 3.28 | 2.96
20 year discount rate (%) | 3.43 | 2.97

HSBC Bank plc Annual Report and Accounts 2024 | 145

5 Employee compensation and benefits

| 2024 | 2023 | 2022
| £m | £m | £m
Wages and salaries | 1,345 | 1,344 | 1,365
Social security costs | 240 | 294 | 278
Other pension costs 1 | 87 | 68 | 55
Year ended 31 Dec | 1,672 | 1,706 | 1,698

1 Includes £52m (2023: £52m; 2022: £42m) in employer contributions to the defined contribution pension plans.

Average number of persons employed by the group during the year by global business 1,2
| 2024 | 2023 | 2022
MSS | 3,555 | 3,954 | 3,722
GB | 1,988 | 2,125 | 2,155
GBM Other | 97 | 27 | 81
CMB | 2,496 | 2,536 | 2,748
WPB | 3,291 | 6,119 | 6,484
Corporate Centre | 29 | 48 | 215
Year ended 31 Dec | 11,456 | 14,809 | 15,405

1 Average numbers of headcount in corporate centre are allocated in respective businesses on the basis of amounts charged to the respective global businesses.
2 Average number of persons employed represents the number of persons with contracts of service with the group.
Share-based payments
'Wages and salaries’ includes the effect of share-based payments arrangements, of which £61m were equity settled (2023: £58m; 2022: £45m),
as follows:

| 2024 | 2023 | 2022
| £m | £m | £m
Restricted share awards | 61 | 58 | 45
Savings-related and other share award option plans | 1 | 1 | 1
Year ended 31 Dec | 62 | 59 | 46

HSBC share awards
Award | Policy
Deferred share awards (including annual incentive awards, long-term incentive ('LTI') awards delivered in shares) | – An assessment of performance over the relevant period ending on 31 December is used to determine the amount of the award to be granted. – Deferred awards generally require employees to remain in employment over the vesting period and are generally not subject to performance conditions after the grant date. An exception to these are the LTI awards, which are subject to performance conditions. – Deferred share awards generally vest over a period of three, four, five or seven years. – Vested shares may be subject to a retention requirement post-vesting. – Awards are subject to malus and clawback provisions.
International Employee Share Purchase Plan (‘ShareMatch’) | – The plan was first introduced in Hong Kong in 2013 and now includes employees based in 30 jurisdictions. – Shares are purchased in the market each quarter up to a maximum value of £750, or the equivalent in local currency. – Matching awards are added at a ratio of one free share for every three purchased. – Matching awards vest subject to continued employment and the retention of the purchased shares for a maximum period of two years and nine months.

Movement on HSBC share awards
| 2024 | 2023
| Number | Number
| (000s) | (000s)
Restricted share awards outstanding at 1 Jan | 19,205 | 20,454
Additions during the year 1 | 11,114 | 10,998
Released in the year 1 | (11,646) | (11,864)
Forfeited in the year | (259) | (383)
Restricted share awards outstanding at 31 Dec | 18,414 | 19,205
Weighted average fair value of awards granted (£) | 4.92 | 4.74

1 Includes a number of share option plans transferred from or to other subsidiaries of HSBC Holdings plc.

HSBC share option plans
Main plans | Policy
Savings-related share option plans (‘Sharesave’) | – From 2014, eligible employees for the UK plan can save up to £500 per month with the option to use the savings to acquire shares. – These are generally exercisable within six months following either the third or fifth anniversary of the commencement of a three years or five years contract, respectively. – The exercise price is set at a 20% (2023: 20%) discount to the market value immediately preceding the date of invitation.

146 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

Calculation of fair values
The fair values of share options are calculated using a Black-Scholes model. The fair value of a share award is based on the share price at the
date of the grant.

Movement on HSBC share option plans
| Savings-related share option plans
| Number | WAEP 1
| (000s) | £
Outstanding at 1 Jan 2024 | 4,339 | 3.51
Granted during the year 2 | 525 | 5.82
Exercised during the year | (987) | 2.92
Expired during the year | (19) | 3.78
Forfeited during the year | (218) | 4.08
Outstanding at 31 Dec 2024 | 3,640 | 3.97
Weighted average remaining contractual life (years) | 2.13 |
Outstanding at 1 Jan 2023 | 5,782 | 2.91
Granted during the year 2 | 1,348 | 4.57
Exercised during the year | (2,428) | 2.72
Expired during the year | (38) | 4.73
Forfeited during the year | (325) | 2.94
Outstanding at 31 Dec 2023 | 4,339 | 3.51
Weighted average remaining contractual life (years) | 2.37 |

1 Weighted average exercise price.
2 Includes a number of share option plans transferred from or to other subsidiaries of HSBC Holdings plc.
Post-employment benefit plans
We operate a number of pension plans throughout Europe for our employees. Some are defined benefit plans, of which HSBC Switzerland
Pension Plan is the most prominent within the group.
The group’s balance sheet includes the net surplus or deficit, being the difference between the fair value of plan assets and the discounted
value of scheme liabilities at the balance sheet date for each plan. Surpluses are only recognised to the extent that they are recoverable through
reduced contributions in the future, or through potential future refunds from the schemes. In assessing whether a surplus is recoverable, the
group has considered its current right to obtain a future refund or a reduction in future contributions together with the rights of third parties such
as trustees.
HSBC Switzerland Pension Plan (HSBC Private Bank (Suisse) Pension Plan)
HSBC Switzerland Pension Plan is a defined benefit obligation plan under IFRS. Benefits are paid in case of death, disability or retirement.
Retirement benefits are paid depending on the choice of the employee between pension payment, lump sum or combination thereof. The plan
is overseen by an independent joint pension board, made of elected employees’ and designated employer’s representatives, which has a
fiduciary responsibility of the operation of the plan. Its assets are held separately from the assets of the group.
The strategic aim of the investment is to achieve, as continuously as possible, an increase in value over time, while maintaining the security of
the financial situation. For this purpose, the fund invests mainly in bonds and equities (Swiss and foreign), as well as in alternative investments
and real estate funds. Overall, emphasis is placed on having a high degree of diversification.
The fund's assets come from regulatory employee and employer contributions, as well as investment returns.
The plan is reviewed at least annually or in accordance with local practice and regulations by qualified actuaries. The actuarial assumptions used
to calculate the defined benefit obligations and related net periodic pension cost vary according to the economic conditions of the countries in
which they are situated. The latest measurement of the obligation of the plan at 31 December 2024 was carried out by Aon Switzerland Ltd.
using the projected unit credit method. The next measurement will have an effective date of 31 December 2025.
HSBC Germany Pension Plan (HSBC Trinkaus & Burkhardt Pension Plan)
HSBC Germany Pension Plan is a final salary scheme and is calculated based on the employee length of service multiplied by a predefined
benefit accrual and earnings. The pension is paid when the benefit falls due and is a specified pension payment, lump sum or combination
thereof. The plan is overseen by an independent corporate trustee, who has a fiduciary responsibility for the operation of the plan. Its assets are
held separately from the assets of the group.
The strategic aim of the investment is to achieve, as continuously as possible, an increase in value over time. For this purpose, the fund invests
mainly in government bonds, corporate bonds, investment funds and equities. It invests predominantly in developed regions. Overall, emphasis
is placed on having a high degree of diversification.
Plan assets were created to fund the pension obligations and separated through what is known as a contractual trust agreement ('CTA'). HSBC
Trinkaus Vermögenstreuhänder e.V. and HSBC Trinkaus Mitarbeitertreuhänder e.V. assume the role of trustee. Active members of the trustee
are Bank employees.
The Bank regularly aims to comprehensively finance the committed benefits externally. There is no obligation to allocate contributions to the
CTA. The Bank is entitled to assets that are not needed to fund the committed benefits. No further additions to the plan assets are envisaged at
the present time.
In accordance with the Memorandum and Articles of Association, the revenues may only be used, for example, for pension payments or for
reinvestment. Similarly, withdrawals may only be made in accordance with the Memorandum and Articles of Association.

HSBC Bank plc Annual Report and Accounts 2024 | 147

The latest measurement of the defined benefit obligation of the plan at 31 December 2024 was carried out by Hans-Peter Kieselmann (Fellow of
the German Association of Actuaries ('DAV')) and Helga Bader, at Willis Towers Watson GmbH, using the projected unit credit method. The next
measurement will have an effective date of 31 December 2025.

Net assets/(liabilities) recognised on the balance sheet in respect of defined benefit plans
| Fair value of plan assets | Present value of defined benefit obligations | Total
| £m | £m | £m
Defined benefit pension plans | 910 | (967) | (57)
Defined benefit healthcare plans | — | (41) | (41)
At 31 Dec 2024 | 910 | (1,008) | (98)
Total employee benefit liabilities (within ‘Accruals, deferred income and other liabilities’) |  |  | (172)
Total employee benefit assets (within ‘Prepayments, accrued income and other assets’) |  |  | 74
Defined benefit pension plans | 459 | (479) | (20)
Defined benefit healthcare plans | — | (46) | (46)
At 31 Dec 2023 | 459 | (525) | (66)
Total employee benefit liabilities (within ‘Accruals, deferred income and other liabilities’) |  |  | (117)
Total employee benefit assets (within ‘Prepayments, accrued income and other assets’) |  |  | 51

Defined benefit pension plans

Net asset/(liability) under defined benefit pension plans
| Fair value of plan assets | Present value of defined benefit obligations | Net defined benefit asset/ (liability)
| Principal plan |  |  | Principal plan |  |  | Principal plan |  |
| HSBC Switzerland Pension Plan 1 | HSBC Germany Pension Plan 2 | Other plans | HSBC Switzerland Pension Plan 1 | HSBC Germany Pension Plan 2 | Other plans | HSBC Switzerland Pension Plan 1 | HSBC Germany Pension Plan 2 | Other plans
| £m | £m | £m | £m | £m | £m | £m | £m | £m
At 1 Jan 2024 | — | 337 | 122 | — | (304) | (175) | — | 33 | (53)
Service cost | — | — | (1) | (14) | (5) | (7) | (14) | (5) | (8)
– current service cost | — | — | — | (14) | (5) | (7) | (14) | (5) | (7)
– past service losses | — | — | (1) | — | — | — | — | — | (1)
Net interest income/(cost) on the net defined benefit asset/(liability) | 5 | 7 | 5 | (6) | (9) | (6) | (1) | (2) | (1)
Remeasurement effects recognised in other comprehensive income | 36 | (1) | (15) | (43) | 7 | 8 | (7) | 6 | (7)
– return on plan assets (excluding interest income) | 36 | (1) | (15) | — | — | — | 36 | (1) | (15)
– actuarial (losses)/gains financial assumptions | — | — | — | (27) | 7 | 11 | (27) | 7 | 11
– actuarial losses demographic assumptions | — | — | — | — | — | (2) | — | — | (2)
– actuarial losses experience assumptions | — | — | — | (16) | — | (1) | (16) | — | (1)
– other changes | — | — | — | — | — | — | — | — | —
Exchange differences | (11) | (16) | (1) | 12 | 14 | 3 | 1 | (2) | 2
Benefits paid | (41) | — | (6) | 41 | 12 | 12 | — | 12 | 6
Other movements 3,4,5 | 486 | — | 4 | (520) | 5 | 8 | (34) | 5 | 12
At 31 Dec 2024 | 475 | 327 | 108 | (530) | (280) | (157) | (55) | 47 | (49)

148 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

Net asset/(liability) under defined benefit pension plans (continued)
| Fair value of plan assets | Present value of defined benefit obligations | Net defined benefit asset/(liability)
| Principal plan |  |  | Principal plan |  |  | Principal plan |  |
| HSBC Switzerland Pension Plan 1 | HSBC Germany Pension Plan 2 | Other plans | HSBC Switzerland Pension Plan 1 | HSBC Germany Pension Plan 2 | Other plans | HSBC Switzerland Pension Plan 1 | HSBC Germany Pension Plan 2 | Other plans
| £m | £m | £m | £m | £m | £m | £m | £m | £m
At 1 Jan 2023 | — | 405 | 129 | — | (357) | (174) | — | 48 | (45)
Service cost | — | — | — | — | (7) | (5) | — | (7) | (5)
– current service cost | — | — | — | — | (8) | (6) | — | (8) | (6)
– past service gains | — | — | — | — | 1 | 1 | — | 1 | 1
Net interest income/(cost) on the net defined benefit asset/(liability) | — | 11 | 6 | — | (9) | (9) | — | 2 | (3)
Remeasurement effects recognised in other comprehensive income | — | 6 | (6) | — | (29) | 1 | — | (23) | (5)
– return on plan assets (excluding interest income) | — | 6 | (6) | — | — | — | — | 6 | (6)
– actuarial gains financial assumptions | — | — | — | — | (29) | (8) | — | (29) | (8)
– actuarial losses demographic assumptions | — | — | — | — | — | 2 | — | — | 2
– actuarial losses experience assumptions | — | — | — | — | — | 7 | — | — | 7
– other changes | — | — | — | — | — | — | — | — | —
Exchange differences | — | (8) | — | — | 7 | 1 | — | (1) | 1
Benefits paid | — | — | (7) | — | 12 | 15 | — | 12 | 8
Other movements 3,6 | — | (77) | — | — | 79 | (4) | — | 2 | (4)
At 31 Dec 2023 | — | 337 | 122 | — | (304) | (175) | — | 33 | (53)

1 The HSBC Switzerland Pension Plan has been disclosed as it is considered to be a prominent plan within the group.
2 The HSBC Germany Pension Plan and its comparatives have been disclosed as it was considered to be a prominent plan within the group in 2023.
3 Other movements include contributions by the group, contributions by employees, administrative costs and tax paid by plan.
4 Other movements for HSBC Switzerland Pension Plan include Fair value of plan assets/defined benefit obligations acquired on 1 February 2024.
5 Other movements for HSBC Germany Pension Plan include reclassification of defined benefit obligation to liabilities held for sale as part of planned sale of the
private banking business in Germany.
6 Other movements for HSBC Germany Pension Plan include reclassification of Lebensarbeitszeitkonto (LAZK) plan to long term employee benefits.
HSBC Switzerland expects to pay employer contributions as defined in the regulations. The forecasted employer contributions for 2025 are
£12m. HSBC Germany does not expect to make contributions to the HSBC Germany Pension Plan during 2025. Benefits expected to be paid
from the plans to leavers and inactive members (retirees, surviving spouses, disabled members, etc.) over each of the next five years, and in
aggregate for the five years thereafter, are as follows:

Benefits expected to be paid from plans
| 2025 | 2026 | 2027 | 2028 | 2029 | 2030 - 2034
| £m | £m | £m | £m | £m | £m
HSBC Switzerland Pension Plan 1 | 26 | 26 | 26 | 25 | 26 | 124
HSBC Germany Pension Plan 2 | 13 | 11 | 12 | 11 | 12 | 68

1 The duration of the defined benefit obligation is 14.9 years for the HSBC Switzerland Pension Plan under the disclosure assumptions adopted (2023:13.3 years).
2 The duration of the defined benefit obligation is 13.5 years for the HSBC Germany Pension Plan under the disclosure assumptions adopted (2023: 14.2 years).

Fair value of plan assets by asset classes
| 2024
| HSBC Switzerland Pension Plan | HSBC Germany Pension Plan
| Value | Quoted market price in active market | No quoted market price in active market | Thereof HSBC | Value | Quoted market price in active market | No quoted market price in active market | Thereof HSBC
| £m | £m | £m | £m | £m | £m | £m | £m
Fair value of plan assets | 475 | 430 | 45 | — | 327 | 314 | 13 | —
– equities | 130 | 130 | — | — | 2 | 2 | — | —
– bonds fixed income | 233 | 233 | — | — | 214 | 214 | — | —
– bonds index linked | — | — | — | — | 7 | 7 | — | —
– bonds other | — | — | — | — | — | — | — | —
– property | 58 | 58 | — | — | 3 | — | 3 | —
– pooled investment vehicle | — | — | — | — | — | — | — | —
– other | 54 | 9 | 45 | — | 101 | 91 | 10 | —

HSBC Bank plc Annual Report and Accounts 2024 | 149

Fair value of plan assets by asset classes (continued)
| 2023
| HSBC Switzerland Pension Plan 1 | HSBC Germany Pension Plan
| Value | Quoted market price in active market | No quoted market price in active market | Thereof HSBC | Value | Quoted market price in active market | No quoted market price in active market | Thereof HSBC
| £m | £m | £m | £m | £m | £m | £m | £m
Fair value of plan assets | — | — | — | — | 337 | 312 | 25 | —
– equities | — | — | — | — | 3 | 3 | — | —
– bonds fixed income | — | — | — | — | 196 | 196 | — | —
– bonds index linked | — | — | — | — | 6 | 6 | — | —
– bonds other | — | — | — | — | — | — | — | —
– property | — | — | — | — | 3 | — | 3 | —
– pooled investment vehicle | — | — | — | — | — | — | — | —
– other | — | — | — | — | 129 | 107 | 22 | —

1 The HSBC Switzerland Pension Plan has been acquired on 1 February 2024.
Post-employment defined benefit plans’ principal actuarial financial assumptions
The group determines the discount rates to be applied to its obligations in consultation with the plans’ local actuaries, on the basis of current
average yields of high quality (AA-rated or equivalent) debt instruments with maturities consistent with those of the defined benefit obligations.

Key actuarial assumptions
| HSBC Switzerland Pension Plan 1 | HSBC Germany Pension Plan
| Discount rate | Inflation rate | Rate of increase for pensions | Rate of pay increase | Discount rate | Inflation rate | Rate of increase for pensions | Rate of pay increase
| % | % | % | % | % | % | % | %
At 31 Dec 2024 | 0.85 | 1.00 | — | 1.60 | 3.41 | 2.25 | 2.25 | 3.75
At 31 Dec 2023 | — | — | — | — | 3.17 | 2.25 | 2.25 | 2.25

1 The HSBC Switzerland Pension Plan has been acquired on 1 February 2024.

Mortality tables and average life expectancy at age 60
| HSBC Switzerland Pension Plan 1 | HSBC Germany Pension Plan
| Mortality table | Life expectancy at age 60 for a male member currently: | Life expectancy at age 60 for a female member currently: | Mortality table | Life expectancy at age 60 for a male member currently: | Life expectancy at age 60 for a female member currently:
|  | Aged 60 | Aged 40 | Aged 60 | Aged 40 |  | Aged 60 | Aged 40 | Aged 60 | Aged 40
At 31 Dec 2024 | LPP2020 3 | 26.9 | 29.1 | 28.9 | 30.9 | RT 2018G 2 | 25.7 | 28.7 | 29.3 | 31.6
At 31 Dec 2023 | LPP2020 3 | 0 | 0 | 0 | 0 | RT 2018G 2 | 25.4 | 28.3 | 29.1 | 31.3

1 The HSBC Switzerland Pension Plan has been acquired on 1 February 2024.
2 Heubeck tables: RT 2018G. These are generally accepted and used mortality tables for occupational pension plans in Germany, taking into account future
mortality improvements and lighter mortality for higher-paid pensioners.
3 LPP2020 are generally accepted and used mortality tables for occupational pension plans in Switzerland, taking into account future mortality improvements and
lighter mortality for higher-paid pensioners.

The effect of changes in key assumptions
| HSBC Switzerland Pension Plan Obligation 1 | HSBC Germany Pension Plan Obligation
| Financial impact of increase | Financial impact of decrease | Financial impact of increase | Financial impact of decrease
| 2024 | 2023 | 2022 | 2024 | 2023 | 2022 | 2024 | 2023 | 2022 | 2024 | 2023 | 2022
| £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
Discount rate – increase/ decrease of 0.25% | (19) | — | — | 21 | — | — | (8) | (9) | (7) | 8 | 9 | 8
Inflation rate – increase/ decrease of 0.25% | 2 | — | — | (2) | — | — | 6 | 7 | 7 | (6) | (6) | (5)
Pension payments and deferred pensions – increase/decrease of 0.25% | 13 | — | — | (12) | — | — | 5 | 6 | 5 | (5) | (6) | (5)
Pay – increase/decrease of 0.25% | 2 | — | — | (2) | — | — | 1 | 1 | 1 | (1) | (1) | (1)
Change in mortality – increase of 1 Year | 16 | — | — | N/A | — | — | 8 | 9 | 10 | N/A | N/A | N/A

1 The HSBC Switzerland Pension Plan has been acquired on 1 February 2024.

150 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this in unlikely
to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to
significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit
method at the end of the reporting period) has been applied as when calculating the defined benefit asset recognised in the balance sheet. The
methods and types of assumptions used in preparing the sensitivity analysis did not change compared with the prior period.
Directors’ emoluments
The aggregate emoluments of the Directors of the bank, computed in accordance with the Companies Act 2006 as amended by statutory
instrument 2008 No.410, were:

| 2024 | 2023 | 2022
| £000 | £000 | £000
Fees 1 | 1,425 | 1,427 | 1,410
Salaries and other emoluments 2 | 3,182 | 2,792 | 2,294
Annual incentives 3 | 1,206 | 1,163 | 979
Long-term incentives 4 | 1,732 | 1,193 | 779
Year ended 31 Dec | 7,545 | 6,575 | 5,462

1 Fees paid to non-executive Directors.
2 Salaries and other emoluments include Fixed Pay Allowances.
3 Discretionary annual incentives for executive Directors are based on a combination of individual and corporate performance, and are determined by the
Remuneration Committee of the bank’s parent company, HSBC Holdings plc. Incentive awards made to executive directors are delivered in the form of cash and
HSBC Holdings plc shares. The total amount shown is comprised of £602,958 (2023: £581,561) in cash and £602,958 (2023: £581,561) in shares, which is the
upfront portion of the annual incentive granted in respect of performance year 2024.
4 The amount shown is comprised of £566,033 (2023: £493,868) in deferred cash, £1,165,574 (2023: £699,652) in deferred shares. These amounts relate to the
portion of the awards that will vest following the substantial completion of the vesting condition attached to these awards in 2024. The total vesting period of
deferred cash and share awards is no less than four years, with 25% of the award vesting on each of the first, second, third and fourth anniversaries of the date
of the award. The deferred share awards are subject to at least a six-month retention period upon vesting. Details of the Plans are contained within the Directors’
Remuneration Report of HSBC Holdings plc. The cost of any awards subject to service conditions under the HSBC Share Plan 2011 are recognised through an
annual charge based on the fair value of the awards, apportioned over the period of service to which the award relates.
No Director exercised share options over HSBC Holdings plc ordinary shares during the year.
No Director is accruing retirement benefits under a money purchase scheme in respect of Directors’ qualifying services (2023: None).
In addition, there were payments during 2024 under unfunded retirement benefit agreements to former Directors of £403,922 (2023: £410,403).
The provision at 31 December 2024 in respect of unfunded pension obligations to former Directors amounted to £3,506,170 (2023: £3,811,422).
Of these aggregate figures, the following amounts are attributable to the highest paid Director:

| 2024 | 2023 | 2022
| £000 | £000 | £000
Salaries and other emoluments | 1,638 | 1,641 | 1,641
Annual incentives 1 | 673 | 1,074 | 859
Long-term incentives 2 | 1,404 | 990 | 677
Year ended 31 Dec | 3,715 | 3,705 | 3,177

1 Awards made to the highest paid Director are delivered in the form of cash and HSBC Holdings plc shares. The amount shown comprises £336,560 (2023:
£537,040) in cash and £336,560 (2023: £537,040) in shares.
2 The amount shown comprises £437,126 (2023: £408,439) in deferred cash, £967,230 (2023: £581,165) in deferred shares. These amounts relate to a portion of
the awards that will vest following the substantial completion of the vesting condition attached to these awa rds in 2024. The to tal vesting period of deferred cash
and share awards is no less than four years, with 25% of the award vesting on each of the first, second, third and fourth anniversaries of the date of the award.
The share awards are subject to a six-month retention period upon vesting.
No pension contributions were made by the bank in respect of services by the highest paid Director during the year (2023: £0).

HSBC Bank plc Annual Report and Accounts 2024 | 151

6 Auditors’ remuneration

| 2024 | 2023 | 2022
| £m | £m | £m
Audit fees payable to PwC | 15.4 | 13.1 | 11.3
Other audit fees payable | 0.6 | 0.6 | 0.7
Year ended 31 Dec | 16.0 | 13.7 | 12.0

Fees payable by the group to PwC
|  | 2024 | 2023 | 2022
|  | £m | £m | £m
Fees for HSBC Bank plc‘s statutory audit 1,5 |  | 6.0 | 5.3 | 5.5
Fees for other services provided to the group |  | 17.8 | 17.5 | 15.6
– audit of the group‘s subsidiaries 2 |  | 9.4 | 7.8 | 5.8
– audit-related assurance services 3 |  | 4.4 | 5.2 | 5.3
– other assurance services 4 |  | 4.0 | 4.5 | 4.5
Year ended 31 Dec |  | 23.8 | 22.8 | 21.1

1 Fees payable to PwC for the statutory audit of the consolidated financial statements of the group and the separate financial statements of HSBC Bank plc. They
exclude amounts payable for the statutory audit of the bank’s subsidiaries which have been included in ‘Fees for other services provided to the group’.
2 Including fees payable to PwC for the statutory audit of the bank’s subsidiaries.
3 Including services for assurance and other services that relate to statutory and regulatory filings, including interim reviews.
4 Including permitted services relating to attestation reports on internal controls of a service organisation primarily prepared for and used by third-party end user,
including comfort letters.
5 2024 Audit fees payable to PwC includes prior year adjustments after finalisation of the 2023 financial statements.
In addition to the above, the estimated fees paid to PwC by third parties associated with HSBC Bank plc amount to £0.5m. In these cases,
HSBC Bank plc was connected with the contracting party and may therefore have been involved in appointing PwC. These fees arose from
services such as reviewing the financial position of corporate concerns that borrow from HSBC Bank plc.
Fees payable for non-audit services for HSBC Bank plc are not disclosed separately because such fees are disclosed on a consolidated basis for
the group.

7 Tax

Tax expense |
| 2024 | 2023 | 2022
| £m | £m | £m
Current tax | 497 | 386 | (283)
– for this year | 387 | 359 | (243)
– adjustments in respect of prior years | 110 | 27 | (40)
Deferred tax | 288 | 41 | (363)
– origination and reversal of temporary differences | 272 | 25 | (529)
– effect of changes in tax rates | — | — | 33
– adjustments in respect of prior years | 16 | 16 | 133
Year ended 31 Dec 1 | 785 | 427 | (646)

1 In addition to amounts recorded in the incom e statement, a tax charge of £61m (2023: charge of £334m; 2022 credit of £393m ) was recorded directly to equity.
The group’s profits are taxed at different rates depending on the country in which they arise. The key applicable corporate tax rates in 2024
included the UK and France. The UK tax rate applying to HSBC Bank plc and its banking subsidiaries in 2024 was a rate of 28% (2023: 27.75%),
comprising 25% corporation tax plus 3% surcharge on UK banking profits. The applicable tax rate in France was 26% (2023: 26%). Other
overseas subsidiaries and overseas branches provided for taxation at the appropriate rates in the countries in which they operate.
In July 2023, legislation was enacted in the UK, the jurisdiction of the Bank’s ultimate parent entity, HSBC Holdings plc, introduced the ‘Pillar
Two’ global minimum tax model rules (the ‘rules’) of the Organisation for Economic Cooperation and Development (‘OECD’)’s Inclusive
Framework on Base Erosion and Profit Shifting (‘BEPS’), with effect from 1 January 2024. Under these rules, a top-up tax liability arises where
the effective tax rate of the group’s operations in a jurisdiction, calculated based on principles set out in the OECD’s Pillar Two model rules, is
below 15%. Any additional tax arising in relation to jurisdictions in which a Qualified Domestic Minimum Top-up Tax (‘QDMTT’) applies will be
payable to the tax authority in that jurisdiction. Where there is no QDMTT, any resulting tax is payable by HSBC Holdings plc, being the group’s
ultimate parent, to the UK tax authority. New corporate income tax rules apply in Bermuda and the Channel Islands from 1 January 2025 and are
expected to result in local tax liabilities at an effective tax rate of 15% in these jurisdictions.
Top-up tax liabilities are expected to arise in respect of four jurisdictions in 2024, in particular Jersey and Bermuda, due to low statutory tax
rates.

152 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

Tax reconciliation
The tax charged to the income statement differs from the tax expense that would apply if all profits had been taxed at the UK corporation tax
rate as follows:

| 2024 | 2023 | 2022
| £m | % | £m | % | £m | %
Profit/(loss) before tax | 2,068 |  | 2,152 |  | (1,199) |
Tax expense |  |  |  |  |  |
Taxation at UK corporation tax rate | 516 | 25.0 | 506 | 23.5 | (228) | 19.0
Impact of taxing overseas profits at different rates | (116) | (5.6) | (20) | (0.9) | (75) | 6.3
UK banking surcharge | 5 | 0.2 | 5 | 0.2 | (47) | 3.9
Items increasing the tax charge in 2024: |  |  |  |  |  |
– movements in unrecognised deferred tax | 149 | 7.2 | (81) | (3.8) | (268) | 22.4
– adjustments in respect of prior periods | 147 | 7.1 | 58 | 2.7 | 93 | (7.8)
– loss (gain) on business disposals | 60 | 2.9 | (74) | (3.4) | — | —
– local taxes and overseas withholding taxes | 56 | 2.7 | 19 | 0.9 | 4 | (0.3)
– UK and European bank levies | 45 | 2.2 | 78 | 3.6 | 50 | (4.2)
– provisions for fines and penalties | 12 | 0.6 | 23 | 1.1 | 3 | (0.3)
– other | 4 | 0.2 | 25 | 1.2 | (5) | 0.4
Items reducing the tax charge in 2024: |  |  |  |  |  |
– deductions for AT1 coupon payments | (64) | (3.1) | (60) | (2.8) | (55) | 4.6
– movements in provisions for uncertain tax positions | (20) | (1.0) | (11) | (0.5) | (110) | 9.2
– effect of (profits)/losses in associates and joint ventures | (7) | (0.3) | 5 | 0.2 | 5 | (0.4)
– non-taxable income and gains | (2) | (0.1) | (21) | (1.0) | (93) | 7.8
– impact of held for sale adjustments | — | — | (25) | (1.2) | 47 | (3.9)
– impact of changes in tax rates | — | — | — | — | 33 | (2.8)
Year ended 31 Dec | 785 | 38.0 | 427 | 19.8 | (646) | 53.9

The effective tax rate for the yea r was 38.0% (2023: 19.8%; 2022: 53.9%). The 2024 effective tax rate of 38.0% reflects the mix of profits and
losses in different jurisdictions and is increased by the derecognition of deferred tax on French tax losses, charges in respect of prior years, in
particular in the UK, losses on business disposals and charges for withholding taxes.
The effective tax rate for 2023 of 19.8% was reduced by the recognition of a deferred tax asset for prior period excess expenses in HSBC Life
(UK) and the non-taxable gain arising on the transfer of the Guernsey branch to PBRS and increased by non-deductible UK and European bank
levy expenses and charges in respect of prior periods.
Accounting for taxes involves some estimation because tax law is uncertain and its application requires a degree of judgement, which
authorities may dispute. Liabilities are recognised based on best estimates of the probable outcome, taking into account external advice where
appropriate. We do not expect significant liabilities to arise in excess of the amounts provided. The current tax asset includes an estimate of tax
recoverable from HMRC with regards to past dividends received from EU resident companies. The ultimate resolution of this matter involves
litigation for which the outcome is uncertain.

Movement of deferred tax assets and liabilities
| Cash flow hedges | Loan impairment provisions | Property, plant and equipment | FVOCI investments | Relief for tax losses 2 | Other 1 | Total
| £m | £m | £m | £m | £m | £m | £m
Assets | 138 | 59 | 191 | 329 | 601 | 204 | 1,522
Liabilities | — | — | — | (197) | — | (53) | (250)
At 1 Jan 2024 | 138 | 59 | 191 | 132 | 601 | 151 | 1,272
Income statement | — | (15) | (44) | (40) | (145) | (44) | (288)
Other comprehensive income | (39) | — | — | (23) | — | 4 | (58)
Foreign exchange and other adjustments | (2) | (2) | 1 | 7 | (14) | (26) | (36)
At 31 Dec 2024 | 97 | 42 | 148 | 76 | 442 | 85 | 890
Assets 3 | 97 | 42 | 148 | 76 | 442 | 131 | 936
Liabilities 3 | — | — | — | — | — | (46) | (46)
Assets | 391 | 60 | 227 | 474 | 628 | 151 | 1,931
Liabilities | — | — | — | (351) | — | — | (351)
At 1 Jan 2023 | 391 | 60 | 227 | 123 | 628 | 151 | 1,580
Income statement | — | (4) | (36) | 44 | (17) | (28) | (41)
Other comprehensive income | (252) | — | — | (43) | — | 65 | (230)
Foreign exchange and other adjustments | (1) | 3 | — | 8 | (10) | (37) | (37)
At 31 Dec 2023 | 138 | 59 | 191 | 132 | 601 | 151 | 1,272
Assets 3 | 138 | 59 | 191 | 329 | 601 | 204 | 1,522
Liabilities 3 | — | — | — | (197) | — | (53) | (250)

1 Other deferred tax assets and liabilities relate to share-based payments, expense provisions and other temporary differences.
2 The deferred tax asset recognised in respect of tax losses mainly relates to France (£414m), US State tax losses of the New York branch of HSBC Bank plc
(£16m), and Switzerland (£11m), all of which are supported by future profit forecasts.
3 After netting off balances within countries, the balances as disclosed in the financial statements are as follows: deferred tax assets £895m (2023: £1,278 m); and
deferred tax liabilities £5m (2023: £6m).

HSBC Bank plc Annual Report and Accounts 2024 | 153

Management has assessed the likely availability of future taxable profits against which to recover t he deferred tax assets of the Company and
the group, taking into consideration the reversal of existing taxable temporary differences, past business performance and forecasts of futur e
business performance. During 2024, £124m of deferred tax in respect of French tax losses incurred in prior periods was derecognised and no
deferred tax was recognised on French tax losses arising during 2024, as management were not satisfied that there was sufficient evidence of
future taxable profits to support recognition of this amount.
The group’s net deferred tax asset of £890m (2023: £1,272m) included a net UK deferred tax asset of £347m (2023: £441m) and a net deferred
asset of £391m (2023: £693m) in France, of which £414m (2023: £566m) related to tax losses which are expected to be substantially recovered
within 12 years.
Management is satisfied that although the Group recorded a tax loss in France in the year, the aforementioned evidence is sufficient to support
the French deferred tax assets which have been recognised. The UK deferred tax assets are supported by future profit forecasts for the whole
of HSBC's UK tax group. This includes a number of companies which are not part of the HSBC Bank plc group, in particular HSBC UK Bank plc
and its subsidiaries.

Movement of deferred tax assets and liabilities
| Retirement benefits | Property, plant and equipment | FVOCI | Cashflow hedges | Relief for tax losses 2 | Other 1 | Total
The bank | £m | £m | £m | £m | £m | £m | £m
Assets 2 | 9 | 191 | 43 | 117 | 28 | 3 | 391
Lliabilities 2 | — | — | — | — | — | (1) | (1)
At 1 Jan 2024 | 9 | 191 | 43 | 117 | 28 | 2 | 390
Income statement | (4) | (32) | — | — | (12) | (2) | (50)
Other comprehensive income | 5 | — | (12) | (14) | — | 14 | (7)
Foreign exchange and other adjustments | — | — | (1) | — | — | 1 | —
At 31 Dec 2024 | 10 | 159 | 30 | 103 | 16 | 15 | 333
Assets 3 | 10 | 159 | 30 | 103 | 16 | 17 | 335
Liabilities 3 | — | — | — | — | — | (2) | (2)
Assets | 14 | 231 | 75 | 318 | 28 | (58) | 608
Liabilities | — | — | — | — | — | — | —
At 1 Jan 2023 | 14 | 231 | 75 | 318 | 28 | (58) | 608
Income statement | (15) | (40) | — | — | — | 38 | (17)
Other comprehensive income | 10 | — | (32) | (201) | — | 22 | (201)
Foreign exchange and other adjustments | — | — | — | — | — | — | —
At 31 Dec 2023 | 9 | 191 | 43 | 117 | 28 | 2 | 390
Assets 3 | 9 | 191 | 43 | 117 | 28 | 3 | 391
Liabilities 3 | — | — | — | — | — | (1) | (1)

1 Other deferred tax assets and liabilities relate to fair value of own debt, loan impairment allowances and share-based payments.
2 The deferred tax asset recognised in respect of losses relates to US State tax losses of the New York branch of HSBC Bank plc, which are supported by future
profit forecasts.
3 After netting off balances within countries, the balances as disclosed in the accounts are as follows: deferred tax assets £335m (2023: £391m) and deferred tax
liabilities £2m (2023: £1m).
Unrecognised deferred tax
The group
The amount of temporary differences, unused tax losses and tax credits for which no deferred tax asset is recognised in the balance sheet was
£2,117m (2023: £673m). These amounts include unused tax losses, tax credits and temporary differences of £1,496m (2023: £668m) arising in
the New York branch of HSBC Bank plc and £566m (2023: nil) in respect of French tax losses for which there is insufficient evidence of future
taxable profits to support recognition. £53m of the unrecognised losses expire before 10 years and the remaining unrecognised losses either
expire after 10 years or do not expire.
The bank
The amount of temporary differences, unused tax losses and tax credits for which no deferred tax asset is recognised in the balance sheet was
£1,496m (2023: £668m). These amounts include unused tax losses, tax credits and temporary differences arising in the New York branch of
HSBC Bank plc of £1,496m (2023: £668m). The unrecognised losses either expire after 10 years or do not expire.
Deferred tax is not recognised in respect of the group’s investments in subsidiaries and branches where HSBC Bank plc is able to control the
timing of remittance or other realisation and where remittance or realisation is not probable in the foreseeable future. The aggregate temporary
differences relating to unrecognised deferred tax liabilities arising on investments in subsidiaries and branches is £4.0b n (2023: £3.7b n) and the
corresponding unrecognised deferred tax liability was £31m (2023: £27m).

154 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

8 Dividends

Dividends to the parent company
| 2024 | 2023 | 2022
| £ per share | £m | £ per share | £m | £ per share | £m
Dividends paid on ordinary shares |  |  |  |  |  |
In respect of current year: |  |  |  |  |  |
– first interim dividend | 0.124 | 99 | — | — | — | —
– first special dividend | — | — | 0.941 | 750 | 1.067 | 850
– second interim dividend | 0.126 | 100 | — | — | — | —
– third interim dividend | 0.142 | 113 | — | — | — | —
Total | 0.392 | 312 | 0.941 | 750 | 1.067 | 850
Dividends on preference shares classified as equity |  |  |  |  |  |
Dividend on HSBC Bank plc non-cumulative third dollar preference shares | 0.001 | — | 0.001 | — | 0.001 | —
Total coupons on capital securities classified as equity | — | 223 | — | 211 | — | 202
Dividends to parent | — | 535 | — | 961 | — | 1,052

Total coupons on capital securities classified as equity
|  | 2024 | 2023 | 2022
| First call date | £m | £m | £m
Undated Subordinated additional Tier 1 instruments |  |  |  |
Undated Subordinated Resettable Additional Tier 1 instrument 2015 | Dec 2020 | 82 | 85 | 87
Undated Subordinated Resettable Additional Tier 1 instrument 2016 | Jan 2022 | 11 | 12 | 11
Undated Subordinated Resettable Additional Tier 1 instrument 2018 | Mar 2023 | 38 | 28 | 28
Undated Subordinated Resettable Additional Tier 1 instrument 2018 | Mar 2023 | 16 | 10 | 10
Undated Subordinated Resettable Additional Tier 1 instrument 2019 | Nov 2024 | 24 | 24 | 24
Undated Subordinated Resettable Additional Tier 1 instrument 2019 | Nov 2024 | 7 | 15 | 8
Undated Subordinated Resettable Additional Tier 1 instrument 2019 | Dec 2024 | 20 | 19 | 20
Undated Subordinated Resettable Additional Tier 1 instrument 2019 | Jan 2025 | 9 | 9 | 8
Undated Subordinated Resettable Additional Tier 1 instrument 2022 | Mar 2027 | 16 | 9 | 6
Total |  | 223 | 211 | 202

9 Segmental analysis
The Chief Executive, supported by the rest of the Executive Committee, was considered the Chief Operating Decision Maker (‘CODM’) during
the reporting period for the purposes of identifying the group’s reportable segments and as the reorganisation only took effect from 1 January
2025, it has no effect on the 2024 segmental reporting.
Our operations are closely integrated and accordingly, the presentation of data includes internal allocations of certain items of income and
expense. These allocations include the costs of certain support services and global functions to the extent that they can be meaningfully
attributed to global businesses. While such allocations have been made on a systematic and consistent basis, they necessarily involve a degree
of subjectivity. Costs that are not allocated to businesses are included in Corporate Centre.
Where relevant, income and expense amounts presented include the results of inter-segment funding along with inter-company and inter-
business line transactions. All such transactions are undertaken on arm’s length terms. Measurement of segmental assets, liabilities, income
and expenses is in accordance with the group’s accounting policies. Shared costs are included in segments on the basis of actual recharges.
The intra-group elimination items for the global businesses are presented in Corporate Centre.
The types of products and services from which each reportable segment derives its revenue are discussed in the ‘Strategic Report – Our global
businesses’ on page 6.

HSBC Bank plc Annual Report and Accounts 2024 | 155

By operating segment:

Profit/(loss) before tax
| 2024
| MSS | GB | GBM Other | CMB | WPB | Corporate Centre | Total
| £m | £m | £m | £m | £m | £m | £m
Net operating income/(expense) before change in ECL and other credit impairment charges 1 | 2,259 | 2,081 | 107 | 1,718 | 1,501 | (193) | 7,473
– of which: net interest income/(expense) | 570 | 1,332 | (55) | 1,180 | 956 | (2,998) | 985
Change in ECL and other credit impairment charges | (4) | 66 | — | (226) | 7 | (6) | (163)
Net operating income/(expense) | 2,255 | 2,147 | 107 | 1,492 | 1,508 | (199) | 7,310
Total operating expenses | (2,134) | (1,025) | (322) | (749) | (855) | (175) | (5,260)
Operating profit/(loss) | 121 | 1,122 | (215) | 743 | 653 | (374) | 2,050
Share of profit in associates and joint ventures | — | — | — | — | — | 18 | 18
Profit/(loss) before tax | 121 | 1,122 | (215) | 743 | 653 | (356) | 2,068
| % | % | % | % | % |  | %
Cost efficiency ratio | 94.5 | 49.3 | n/a | 43.6 | 57.0 |  | 70.4
| 2023
Net operating income before change in ECL and other credit impairment charges 1 | 1,996 | 2,092 | 13 | 1,746 | 1,339 | 320 | 7,506
– of which: net interest income/(expense) | 212 | 1,430 | (13) | 1,331 | 946 | (1,755) | 2,151
Change in ECL and other credit impairment charges | (9) | (91) | 3 | (83) | 12 | (1) | (169)
Net operating income | 1,987 | 2,001 | 16 | 1,663 | 1,351 | 319 | 7,337
Total operating expenses | (2,131) | (1,013) | (282) | (663) | (894) | (159) | (5,142)
Operating profit/(loss) | (144) | 988 | (266) | 1,000 | 457 | 160 | 2,195
Share of loss in associates and joint ventures | — | — | — | — | — | (43) | (43)
Profit/(loss) before tax | (144) | 988 | (266) | 1,000 | 457 | 117 | 2,152
| % | % | % | % | % |  | %
Cost efficiency ratio | 106.8 | 48.4 | n/a | 38.0 | 66.8 |  | 68.5
| 2022
Net operating income/(expense) before change in ECL other credit impairment charges 1 | 2,446 | 1,571 | (108) | 1,433 | (432) | (606) | 4,304
– of which: net interest income/(expense) | (54) | 903 | (16) | 925 | 710 | (564) | 1,904
Change in ECL and other credit impairment charges | (1) | (153) | (1) | (54) | (7) | (6) | (222)
Net operating income/(expense) | 2,445 | 1,418 | (109) | 1,379 | (439) | (612) | 4,082
Total operating expenses | (1,936) | (932) | (406) | (663) | (834) | (480) | (5,251)
Operating profit/(loss) | 509 | 486 | (515) | 716 | (1,273) | (1,092) | (1,169)
Share of loss in associates and joint ventures | — | — | (2) | — | — | (28) | (30)
Profit/(loss) before tax | 509 | 486 | (517) | 716 | (1,273) | (1,120) | (1,199)
| % | % | % | % | % |  | %
Cost efficiency ratio | 79.1 | 59.3 | n/a | 46.3 | n/a |  | 122.0

1 Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue. It i ncludes in ter-segment
revenue which is eliminated in Corporate centre, amounting to £63m (2023: £62m; 2022: £108m).
External net operating income is attributed to countries on the basis of the location of the branch responsible for reporting the results or
advancing the funds:

| 2024 | 2023 | 2022
| £m | £m | £m
External net operating income/(expense) by country | 7,473 | 7,506 | 4,304
– United Kingdom | 3,618 | 3,609 | 3,068
– France | 1,280 | 1,819 | (70)
– Germany | 836 | 836 | 732
– Other countries | 1,739 | 1,242 | 574

Balance sheet by business
| MSS | GB | GBM Other | CMB | WPB | Corporate Centre | Total
| £m | £m | £m | £m | £m | £m | £m
31 Dec 2024 |  |  |  |  |  |  |
Loans and advances to customers | 3,131 | 33,224 | 136 | 24,297 | 16,293 | 5,585 | 82,666
Customer accounts | 48,885 | 80,920 | 7,646 | 63,967 | 40,852 | 33 | 242,303
31 Dec 2023 |  |  |  |  |  |  |
Loans and advances to customers | 2,718 | 34,723 | 67 | 24,226 | 13,666 | 91 | 75,491
Customer accounts | 41,102 | 85,303 | 9,434 | 58,620 | 28,337 | 145 | 222,941

156 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

10 Trading assets

| The group | The bank
| 2024 | 2023 | 2024 | 2023
| £m | £m | £m | £m
Treasury and other eligible bills | 5,379 | 4,808 | 4,360 | 4,353
Debt securities | 29,805 | 27,724 | 17,553 | 16,071
Equity securities | 65,092 | 50,020 | 59,884 | 47,498
Trading securities | 100,276 | 82,552 | 81,797 | 67,922
Loans and advances to banks 1 | 2,957 | 5,094 | 2,902 | 5,060
Loans and advances to customers 1 | 12,809 | 13,050 | 12,542 | 12,784
At 31 Dec | 116,042 | 100,696 | 97,241 | 85,766

1 Loans and advances to banks and customers include reverse repos, stock borrowing and other accounts.

11 Fair values of financial instruments carried at fair value
Control framework
Fair values are subject to a control framework designed to ensure that they are either determined or validated by a function independent of the
risk taker.
For all financial instruments where fair values are determined by reference to externally quoted prices or observable pricing inputs to models,
independent price determination or validation is utilised. In inactive markets, the group will source alternative market information to validate the
financial instrument’s fair value, with greater weight given to information that is considered to be more relevant and reliable. The factors that are
considered in this regard are, inter alia:
– the extent to which prices may be expected to represent genuine traded or tradable prices;
– the degree of similarity between financial instruments;
– the degree of consistency between different sources;
– the process followed by the pricing provider to derive the data;
– the elapsed time between the date to which the market data relates and the balance sheet date; and
– the manner in which the data was sourced.
For fair values determined using valuation models, the control framework may include, as applicable, development or validation by independent
support functions of: (i) the logic within valuation models; (ii) the inputs to these models; (iii) any adjustments required outside the valuation
models; and (iv) where possible, model outputs. Valuation models are subject to a process of due diligence and calibration before becoming
operational and are calibrated against external market data on an ongoing basis.
Financial liabilities measured at fair value
In certain circumstances, the group records its own debt in issue at fair value, based on quoted prices in an active market for the specific
instrument. When quoted market prices are unavailable, the own debt in issue is valued using valuation techniques, the inputs for which are
based either on quoted prices in an inactive market for the instrument or are estimated by comparison with quoted prices in an active market for
similar instruments. In both cases, the fair value includes the effect of applying the credit spread that is appropriate to the group’s liabilities.
Structured notes issued and certain other hybrid instruments are included within trading liabilities and are measured at fair value. The spread
applied to these instruments is derived from the spreads at which the group issues structured notes.
Fair value hierarchy
Fair values of financial assets and liabilities are determined according to the following hierarchy:
– Level 1 – valuation technique using quoted market price: financial instruments with quoted prices for identical instruments in active markets
that HSBC can access at the measurement date.
– Level 2 – valuation technique using observable inputs: financial instruments with quoted prices for similar instruments in active markets or
quoted prices for identical or similar instruments in inactive markets and financial instruments valued using models where all significant
inputs are observable.
– Level 3 – valuation technique with significant unobservable inputs: financial instruments valued using valuation techniques where one or
more significant inputs are unobservable.

HSBC Bank plc Annual Report and Accounts 2024 | 157

Financial instruments carried at fair value and bases of valuation
| 2024 | 2023
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total
The group | £m | £m | £m | £m | £m | £m | £m | £m
Recurring fair value measurements at 31 Dec |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |
Trading assets | 87,915 | 24,557 | 3,570 | 116,042 | 72,164 | 26,482 | 2,050 | 100,696
Financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 4,615 | 3,720 | 1,082 | 9,417 | 7,008 | 9,178 | 2,882 | 19,068
Derivatives | 1,219 | 195,071 | 1,882 | 198,172 | 428 | 171,865 | 1,823 | 174,116
Financial investments | 31,769 | 7,142 | 1,079 | 39,990 | 25,857 | 10,743 | 907 | 37,507
Liabilities |  |  |  |  |  |  |  |
Trading liabilities | 24,713 | 17,296 | 624 | 42,633 | 29,791 | 12,233 | 252 | 42,276
Financial liabilities designated at fair value | 1,078 | 33,403 | 2,962 | 37,443 | 992 | 27,595 | 3,958 | 32,545
Derivatives | 745 | 193,982 | 2,355 | 197,082 | 994 | 168,145 | 2,335 | 171,474

The table below provides the fair value levelling of assets held for sale and liabilities of disposal groups that have been classified as held for sale
in accordance with IFRS 5. For further details, see Note 34.

Financial instruments carried at fair value and bases of valuation – assets and liabilities held for sale
| 2024 | 2023
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total
The group | £m | £m | £m | £m | £m | £m | £m | £m
Recurring fair value measurements at 31 Dec |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |
Trading assets | — | — | — | — | — | — | — | —
Financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 2,365 | 7,189 | 2,053 | 11,607 | — | — | 38 | 38
Derivatives | — | 29 | — | 29 | — | — | — | —
Financial investments | 2,113 | 4,261 | 402 | 6,776 | — | — | 25 | 25
Liabilities |  |  |  |  |  |  |  |
Trading liabilities | — | — | — | — |  |  |  |
Financial liabilities designated at fair value | — | 104 | — | 104 | — | 1,858 | — | 1,858
Derivatives | — | 15 | — | 15 | — | 5 | — | 5

Financial instruments carried at fair value and bases of valuation
| 2024 | 2023
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total
The bank | £m | £m | £m | £m | £m | £m | £m | £m
Recurring fair value measurements at 31 Dec |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |
Trading assets | 70,108 | 23,700 | 3,433 | 97,241 | 58,152 | 25,772 | 1,842 | 85,766
Financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 171 | 3,390 | 99 | 3,660 | 206 | 2,910 | 65 | 3,181
Derivatives | 687 | 181,048 | 1,923 | 183,658 | 152 | 151,661 | 1,952 | 153,765
Financial investments | 17,812 | 2,150 | 71 | 20,033 | 15,074 | 1,233 | 55 | 16,362
Liabilities |  |  |  |  |  |  |  |
Trading liabilities | 11,315 | 17,204 | 624 | 29,143 | 13,177 | 11,503 | 252 | 24,932
Financial liabilities designated at fair value | — | 26,754 | 1,732 | 28,486 | — | 20,811 | 2,635 | 23,446
Derivatives | 155 | 181,235 | 2,355 | 183,745 | 601 | 149,850 | 2,348 | 152,799

Transfers between Level 1 and Level 2 fair values
| Assets | Liabilities
| Financial investments | Trading assets | Designated and otherwise mandatorily measured at fair value through profit or loss | Derivatives | Trading liabilities | Designated at fair value | Derivatives
| £m | £m | £m | £m | £m | £m | £m
At 31 Dec 2024 |  |  |  |  |  |  |
Transfers from Level 1 to Level 2 | 10 | 320 | — | — | 84 | — | —
Transfers from Level 2 to Level 1 | 30 | 577 | — | — | 54 | — | —
At 31 Dec 2023 |  |  |  |  |  |  |
Transfers from Level 1 to Level 2 | 26 | 252 | — | — | 4 | — | —
Transfers from Level 2 to Level 1 | 121 | 408 | — | — | 41 | — | —

Transfers between levels of the fair value hierarchy are deemed to occur at the end of each quarterly reporting period. Transfers are primarily
attributable to changes in price transparency and in the assessment of observability.

158 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

Fair value adjustments
Fair value adjustments take into consideration additional factors not incorporated within the primary product valuation model that would
otherwise be considered by a market participant. Adjustments are calculated using model infrastructure including those within primary valuation
systems. We classify fair value adjustments as either ‘risk-related’ or ‘model-related’. The majority of these adjustments relate to MSS.
Movements in the amount of fair value adjustments do not necessarily translate in equivalent movements of profits or losses within the income
statement, as these movements can be compensated by other related profits or loss effects. For example, as models are enhanced, fair value
adjustments may no longer be required. Similarly, fair value adjustments will decrease when the related positions are unwound, but this may
not result in profit or loss.

Fair value adjustments
| 2024 | 2023
| MSS | Corporate Centre | MSS | Corporate Centre
| £m | £m | £m | £m
Type of adjustment |  |  |  |
Risk-related | 321 | 29 | 327 | 32
– bid-offer | 151 | 2 | 155 | —
– uncertainty | 55 | 3 | 42 | 2
– credit valuation adjustment | 53 | 21 | 61 | 27
– debt valuation adjustment | (9) | — | (20) | —
– funding fair value adjustment | 71 | 3 | 89 | 3
– other | — | — | — | —
Model-related | 29 | — | 41 | —
– model limitation | 29 | — | 41 | —
– other | — | — | — | —
Inception profit (Day 1 P&L reserves) | 58 | — | 54 | —
At 31 Dec | 408 | 29 | 422 | 32

Bid-offer
IFRS 13 ‘Fair value measurement’ requires use of the price within the bid-offer spread that is most representative of fair value. Valuation models
will typically generate mid-market values. The bid-offer adjustment reflects the extent to which bid-offer costs would be incurred if substantially
all residual net portfolio market risks were closed using available hedging instruments or by disposing of or unwinding the position.
Uncertainty
Certain model inputs may be less readily determinable from market data, and/or the choice of model itself may be more subjective. In these
circumstances, an adjustment may be necessary to reflect the likelihood that market participants would adopt more conservative values for
uncertain parameters and/or model assumptions than those used in the valuation model.
Credit and debit valuation adjustments
The credit valuation adjustment ('CVA') is an adjustment to the valuation of over-the-counter (‘OTC’) derivative contracts to reflect the possibility
that the counterparty may default, and that the group may not receive the full market value of the transactions.
The debit valuation adjustment ('DVA') is an adjustment to the valuation of OTC derivative contracts to reflect the possibility that HSBC may
default, and that it may not pay the full market value of the transactions.
HSBC calculates a separate CVA and DVA for each legal entity, and for each counterparty to which the entity has exposure. With the exception
of central clearing parties, all third-party counterparties are included in the CVA and DVA calculations, and these adjustments are not netted
across the HSBC Group's entities.
HSBC calculates the CVA by applying the probability of default (‘PD’) of the counterparty, conditional on the non-default of HSBC, to HSBC’s
expected positive exposure to the counterparty and multiplying the result by the loss expected in the event of default.
Conversely, HSBC calculates the DVA by applying the PD of HSBC, conditional on the non-default of the counterparty, to the expected positive
exposure of the counterparty to HSBC and multiplying the result by the proportional loss expected in the event of default. Both calculations are
performed over the life of the potential exposure.
For most products, HSBC uses a simulation methodology, which incorporates a range of potential exposures over the life of the portfolio, to
calculate the expected positive exposure to a counterparty. The simulation methodology includes credit mitigants, such as counterparty netting
agreements and collateral agreements with the counterparty. The methodologies do not, in general, account for ‘wrong-way risk’, which arises
when the underlying value of the derivative prior to any CVA is positively correlated to the PD of the counterparty. When there is significant
wrong-way risk, a trade-specific approach is applied to reflect this risk in the valuation.
Funding fair value adjustment ('FFVA')
The FFVA is calculated by applying future market funding spreads to the expected future funding exposure of any uncollateralised component of
the OTC derivative portfolio. The expected future funding exposure is calculated by a simulation methodology, where available, and is adjusted
for events that may terminate the exposure, such as the default of HSBC or the counterparty. The FFVA and DVA are calculated independently.
Model limitation
Models used for portfolio valuation purposes may be based upon a simplified set of assumptions that do not capture all current and future
material market characteristics. In these circumstances, model limitation adjustments are adopted.
Inception profit (Day 1 P&L reserves)
Inception profit adjustments are adopted when the fair value estimated by a valuation model is based on one or more significant unobservable
inputs. The accounting for inception profit adjustments is discussed in Note 1.

HSBC Bank plc Annual Report and Accounts 2024 | 159

Fair value valuation bases

Financial instruments measured at fair value using a valuation technique with significant unobservable inputs – Level 3
| Assets | Liabilities
| Financial Investments | Held for trading | Designated and otherwise mandatorily measured at fair value through profit or loss | Derivatives | Total | Held for trading | Designated at fair value | Derivatives | Total
The group | £m | £m | £m | £m | £m | £m | £m | £m | £m
Private equity including strategic investments | 108 | 1 | 1,069 | — | 1,178 | — | 1 | — | 1
Asset-backed securities | 68 | 145 | — | — | 213 | — | — | — | —
Structured notes | — | — | — | — | — | — | 2,958 | — | 2,958
Derivatives | — | — | — | 1,882 | 1,882 | — | — | 2,355 | 2,355
Other portfolios | 903 | 3,424 | 13 | — | 4,340 | 624 | 3 | — | 627
At 31 Dec 2024 | 1,079 | 3,570 | 1,082 | 1,882 | 7,613 | 624 | 2,962 | 2,355 | 5,941
Private equity including strategic investments | 66 | 1 | 2,656 | — | 2,723 | 8 | 1 | — | 9
Asset-backed securities | 160 | 97 | 6 | — | 263 | — | — | — | —
Structured notes | — | — | — | — | — | — | 3,490 | — | 3,490
Derivatives | — | — | — | 1,823 | 1,823 | — | — | 2,335 | 2,335
Other portfolios | 681 | 1,952 | 220 | — | 2,853 | 244 | 467 | — | 711
At 31 Dec 2023 | 907 | 2,050 | 2,882 | 1,823 | 7,662 | 252 | 3,958 | 2,335 | 6,545

The bank |  |  |  |  |  |  |  |  |
Private equity including strategic investments | 55 | — | 99 | — | 154 | — | — | — | —
Asset-backed securities | — | 145 | — | — | 145 | — | — | — | —
Structured notes | — | 1 | — | — | 1 | — | 1,732 | — | 1,732
Derivatives | — | — | — | 1,923 | 1,923 | — | — | 2,352 | 2,352
Other portfolios | 16 | 3,287 | — | — | 3,303 | 624 | — | 3 | 627
At 31 Dec 2024 | 71 | 3,433 | 99 | 1,923 | 5,526 | 624 | 1,732 | 2,355 | 4,711
Private equity including strategic investments | 55 | — | 65 | — | 120 | 8 | — | — | 8
Asset-backed securities | — | 97 | — | — | 97 | — | — | — | —
Structured notes | — | — | — | — | — | — | 2,635 | — | 2,635
Derivatives | — | — | — | 1,952 | 1,952 | — | — | 2,343 | 2,343
Other portfolios | — | 1,745 | — | — | 1,745 | 244 | — | 5 | 249
At 31 Dec 2023 | 55 | 1,842 | 65 | 1,952 | 3,914 | 252 | 2,635 | 2,348 | 5,235

Level 3 instruments are present in both ongoing and legacy businesses. Loans held for securitisation, certain derivatives and predominantly all
Level 3 Asset-backed securities are legacy positions. HSBC has the capability to hold these positions.
Private equity including strategic investments
The investment’s fair value is estimated: on the basis of an analysis of the investee’s financial position and results, risk profile, prospects and
other factors; by reference to market valuations for similar entities quoted in an active market; the price at which similar companies have
changed ownership; or from published net asset values (‘NAVs’) received. If necessary, adjustments are made to the NAV of funds to obtain the
best estimate of fair value.
Asset-backed securities
While quoted market prices are generally used to determine the fair value of these securities, valuation models are used to substantiate the
reliability of the limited market data available and to identify whether any adjustments to quoted market prices are required. For certain ABSs,
such as residential mortgage-backed securities, the valuation uses an industry standard model with assumptions relating to prepayment speeds,
default rates and loss severity based on collateral type, and performance, as appropriate. The valuations output is benchmarked for consistency
against observable data for securities of a similar nature.
Structured notes
The fair value of Level 3 structured notes is derived from the fair value of the underlying debt security, and the fair value of the embedded
derivative is determined as described in the paragraph below on derivatives. These structured notes comprise principally equity-linked notes,
issued by HSBC, which provide the counterparty with a return linked to the performance of equity securities and other portfolios. Examples of
the unobservable parameters include long-dated equity volatilities and correlations between equity prices, and interest and foreign exchange
rates.
Derivatives
OTC derivative valuation models calculate the present value of expected future cash flows, based upon ‘no-arbitrage’ principles. For many vanilla
derivative products, the modelling approaches used are standard across the industry. For more complex derivative products, there may be some
differences in market practice. Inputs to valuation models are determined from observable market data, wherever possible, including prices
available from exchanges, dealers, brokers or providers of consensus pricing. Certain inputs may not be observable in the market directly, but
can be determined from observable prices through model calibration procedures or estimated from historical data or other sources.

160 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

Reconciliation of fair value measurements in Level 3 of the fair value hierarchy

Movement in Level 3 financial instruments
| Assets | Liabilities
| Financial Investments | Trading assets | Designated and otherwise mandatorily measured at fair value through profit or loss | Derivatives | Trading liabilities | Designated at fair value | Derivatives
The group | £m | £m | £m | £m | £m | £m | £m
At 1 Jan 2024 | 907 | 2,050 | 2,882 | 1,823 | 252 | 3,958 | 2,335
Total gains/(losses) on assets and total (gains)/losses on liabilities recognised in profit or loss | — | 182 | 13 | 767 | 226 | (1,818) | 654
– net income from financial instruments held for trading or managed on a fair value basis | — | 182 | — | 767 | 226 | (1,818) | 654
– net expense from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss | — | — | (35) | — | — | — | —
– changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss | — | — | 48 | — | — | — | —
– gains less losses from financial investments at fair value through other comprehensive income | — | — | — | — | — | — | —
Total losses or gains recognised in other comprehensive income (‘OCI’)1 | (25) | 3 | (84) | (4) | — | (64) | (1)
– financial investments: fair value total gains or losses | 7 | — | — | — | — | — | —
– exchange differences | (32) | 3 | (84) | (4) | — | (64) | (1)
Purchases | 1,027 | 2,488 | 447 | — | 723 | — | —
New issuances | — | — | — | — | — | 2,677 | —
Sales | (72) | (1,049) | (409) | — | (234) | — | —
Settlements 2 | (588) | (335) | (1,785) | (610) | (406) | (602) | (330)
Transfers out 3 | (204) | (277) | (17) | (683) | (29) | (2,172) | (1,075)
Transfers in 3 | 34 | 508 | 35 | 589 | 92 | 983 | 772
At 31 Dec 2024 | 1,079 | 3,570 | 1,082 | 1,882 | 624 | 2,962 | 2,355
Unrealised gains/(losses) recognised in profit or loss relating to assets and liabilities held at 31 Dec 2024 | — | (39) | 23 | (1,548) | (5) | (88) | (622)
– trading expense excluding net interest income | — | (39) | — | (1,548) | (5) | — | (622)
– net income/(expense) from other financial instruments designated at fair value | — | — | 23 | — | — | (88) | —
At 1 Jan 2023 | 1,447 | 2,738 | 3,318 | 1,737 | 415 | 2,461 | 2,478
Total gains/(losses) on assets and total (gains)/losses on liabilities recognised in profit or loss | (1) | 189 | 8 | 851 | (268) | 60 | 1,008
– net income from financial instruments held for trading or managed on a fair value basis | — | 189 | — | 851 | (268) | — | 1,008
– net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss | — | — | — | — | — | — | —
– changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss | — | — | 8 | — | — | 60 | —
– gains less losses from financial investments at fair value through other comprehensive income | (1) | — | — | — | — | — | —
Total gains/(losses) recognised in other comprehensive income (‘OCI’)1 | (1) | (28) | (92) | (2) | — | (8) | (5)
– financial investments: fair value gains/(losses) | 29 | — | — | — | — | — | —
– exchange differences | (30) | (28) | (92) | (2) | — | (8) | (5)
Purchases | 51 | 1,004 | 305 | — | 233 | — | —
New issuances | — | 1 | — | — | 2 | 3,005 | —
Sales | (213) | (1,675) | (484) | — | (253) | (2) | —
Settlements | (38) | (79) | (72) | (1,009) | 138 | (1,169) | (1,295)
Transfers out | (451) | (561) | (120) | (233) | (30) | (660) | (339)
Transfers in | 113 | 461 | 19 | 479 | 15 | 271 | 488
At 31 Dec 2023 | 907 | 2,050 | 2,882 | 1,823 | 252 | 3,958 | 2,335
Unrealised (losses)/gains recognised in profit or loss relating to assets and liabilities held at 31 Dec 2023 | — | — | (75) | 520 | — | (217) | (823)
– trading income/(expense) excluding net interest income | — | — | — | 520 | — | — | (823)
– net income from other financial instruments designated at fair value | — | — | (75) | — | — | (217) | —

1 Included in ‘financial investments: fair value gains/(losses)’ in the current year and ‘exchange differences’ in the consolidated statement of comprehensive
income.
2 Includes a £2.5b n decrease from classification of the assets of our French Life Insurance business as assets held for sale.
3 Includes £1.4b n of transfers out and £0.8b n of transfers in relating to enhancement of observability assessments on equity structured notes.

HSBC Bank plc Annual Report and Accounts 2024 | 161

Transfers between levels of the fair value hierarchy are deemed to occur at the end of each quarterly reporting period. Transfers are primarily
attributable to changes in price transparency and in the assessment of observability.

Movement in Level 3 financial instruments (continued)
| Assets | Liabilities
| Financial Investments | Trading Assets | Designated and otherwise mandatorily measured at fair value through profit or loss | Derivatives | Trading Liabilities | Designated at fair value | Derivatives
The bank | £m | £m | £m | £m | £m | £m | £m
At 1 Jan 2024 | 55 | 1,842 | 65 | 1,952 | 252 | 2,635 | 2,348
Total gains/(losses) on assets and total (gains)/ losses on liabilities recognised in profit or loss | — | 183 | 39 | 757 | 226 | (1,930) | 656
– net income from financial instruments held for trading or managed on a fair value basis | — | 183 | — | 757 | 226 | (1,930) | 656
– changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss | — | — | 39 | — | — | — | —
– gains less losses from financial investments at fair value through other comprehensive income | — | — | — | — | — | — | —
Total gains/(losses) recognised in other comprehensive income (‘OCI’) 1 | — | 11 | (1) | — | — | — | 4
– financial investments: fair value gains/(losses) | — | — | — | — | — | — | —
– exchange differences | — | 11 | (1) | — | — | — | 4
Purchases | 6 | 2,479 | — | — | 723 | — | —
New issuances | — | — | — | — | — | 2,020 | —
Sales | — | (1,024) | (73) | — | (234) | — | —
Settlements | — | (325) | 69 | (627) | (406) | (85) | (298)
Transfers out 2 | — | (240) | — | (716) | (29) | (1,538) | (1,101)
Transfers in 2 | 10 | 507 | — | 557 | 92 | 630 | 746
At 31 Dec 2024 | 71 | 3,433 | 99 | 1,923 | 624 | 1,732 | 2,355
Unrealised gains/(losses) recognised in profit or loss relating to assets and liabilities held at 31 Dec 2024 | — | (38) | — | (1,558) | (5) | (77) | (668)
– trading expense excluding net interest income | — | (38) | — | (1,558) | (5) | — | (668)
– net expense from other financial instruments designated at fair value | — | — | — | — | — | (77) | —
At 1 Jan 2023 | 71 | 2,159 | 272 | 1,899 | 403 | 1,850 | 1,737
Total gains/(losses) on assets and total (gains)/ losses on liabilities recognised in profit or loss | — | 192 | 22 | 1,025 | (271) | 13 | 1,222
– net income from financial instruments held for trading or managed on a fair value basis | — | 192 | — | 1,025 | (271) | — | 1,222
– changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss | — | — | 22 | — | — | 13 | —
– gains less losses from financial investments at fair value through other comprehensive income | — | — | — | — | — | — | —
Total gains/(losses) recognised in other comprehensive income (‘OCI’)1 | — | (18) | (7) | — | — | — | —
– financial investments: fair value gains/(losses) | — | — | — | — | — | — | —
– exchange differences | — | (18) | (7) | — | — | — | —
Purchases | — | 930 | — | — | 233 | — | —
New issuances | — | — | — | — | — | 2,548 | —
Sales | — | (1,280) | (154) | — | (252) | — | —
Settlements | (1) | (72) | (69) | (1,192) | 154 | (1,580) | (746)
Transfers out | (15) | (490) | — | (287) | (30) | (449) | (400)
Transfers in | — | 421 | 1 | 507 | 15 | 253 | 535
At 31 Dec 2023 | 55 | 1,842 | 65 | 1,952 | 252 | 2,635 | 2,348
Unrealised gains/(losses) recognised in profit or loss relating to assets and liabilities held at 31 Dec 2023 | — | — | (1) | 511 | — | (180) | (818)
– trading income/(expense) excluding net interest income | — | — | — | 511 | — | — | (818)
– net expense from other financial instruments designated at fair value | — | — | (1) | — | — | (180) | —

1 Included in ‘financial investments: fair value gains/(losses)’ in the current year and ‘exchange differences’ in the consolidated statement of comprehensive
income.
2 Includes £1.3bn of transfers out and £0.6bn of transfers in relating to enhancement of observability assessments on equity structured notes.
Transfers between levels of the fair value hierarchy are deemed to occur at the end of each quarterly reporting period. Transfers are primarily
attributable to changes in price transparency and in the assessment of observability.

162 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

Effect of changes in significant unobservable assumptions to reasonably
possible alternatives

Sensitivity of Level 3 fair values to reasonably possible alternative assumptions
| 2024 | 2023
| Reflected in profit or loss | Reflected in OCI | Reflected in profit or loss | Reflected in OCI
| Favourable changes | Unfavourable changes | Favourable changes | Unfavourable changes | Favourable changes | Unfavourable changes | Favourable changes | Unfavourable changes
The group | £m | £m | £m | £m | £m | £m | £m | £m
Derivatives, trading assets and trading liabilities 1 | 348 | (197) | — | — | 478 | (225) | — | —
Designated and otherwise mandatorily measured at fair value through profit or loss | 319 | (115) | — | — | 193 | (194) | — | —
Financial investments | 17 | (16) | 13 | (15) | 10 | (9) | 23 | (25)
Year ended 31 Dec | 684 | (328) | 13 | (15) | 681 | (428) | 23 | (25)

The bank
Derivatives, trading assets and trading liabilities 1 | 354 | (202) | — | — | 478 | (225) | — | —
Designated and otherwise mandatorily measured at fair value through profit or loss | 135 | (23) | — | — | 11 | (11) | — | —
Financial investments | 1 | — | 6 | (6) | 1 | — | 6 | (6)
Year ended 31 Dec | 490 | (225) | 6 | (6) | 490 | (236) | 6 | (6)

1 Derivatives, trading assets and trading liabilities are presented as one category to reflect the manner in which these instruments are risk managed.

Sensitivity of Level 3 fair values to reasonably possible alternative assumptions by instrument type
| 2024 | 2023
| Reflected in profit or loss | Reflected in OCI | Reflected in profit or loss | Reflected in OCI
| Favourable changes | Unfavourable changes | Favourable changes | Unfavourable changes | Favourable changes | Unfavourable changes | Favourable changes | Unfavourable changes
| £m | £m | £m | £m | £m | £m | £m | £m
Private equity including strategic investments | 310 | (106) | 10 | (10) | 182 | (184) | 6 | (6)
Asset-backed securities | 37 | (27) | 1 | (1) | 28 | (16) | 2 | (2)
Structured notes | 9 | (9) | — | — | 5 | (5) | — | —
Derivatives | 143 | (104) | — | — | 237 | (182) | — | —
Other portfolios | 185 | (82) | 2 | (4) | 229 | (41) | 15 | (17)
Total | 684 | (328) | 13 | (15) | 681 | (428) | 23 | (25)

The sensitivity analysis for certain private equity positions has been enhanced in order to reduce dependency on historical observations and
focus on current valuation uncertainty, resulting in some increases in favourable sensitivities.
The sensitivity analysis aims to measure a range of fair values consistent with the application of a 95% confidence interval. Methodologies take
account of the nature of the valuation technique employed, as well as the availability and reliability of observable proxy and historical data.
When the fair value of a financial instrument is affected by more than one unobservable assumption, the above table reflects the most
favourable or the most unfavourable change from varying the assumptions individually.

HSBC Bank plc Annual Report and Accounts 2024 | 163

Key unobservable inputs to Level 3 financial instruments

Quantitative information about significant unobservable inputs in Level 3 valuations
| Fair value |  |  | 2024 | 2023
| Assets | Liabilities | Valuation techniques | Key unobservable inputs | Full range of inputs | Full range of inputs
| £m | £m | Lower | Higher | Lower | Higher
Private equity including strategic investments 1 | 1,178 | 1 | Price - Net asset value | Current Value/Cost | 0 | 9 | See footnote 2
Asset-backed securities | 213 | — |  |  |  |  |  |
– collateralised loan/debt obligation | 78 | — | Market proxy | Price | 0 | 97 | — | 94
– other ABSs | 135 | — | Market proxy | Price | 0 | 248 |  | 220
Structured notes | — | 2,958 |  |  |  |  |  |
– equity-linked notes | — | 2,546 | Model – Option model | Equity Volatility | 9% | 49% | 6% | 154%
| Equity Correlation | 15% | 100% | 35% | 100%
– FX-linked notes | — | 16 | Model – Option model | FX Volatility | 3% | 17% | 1% | 18%
– other structured notes | — | 396 |  |  |  |  |  |
Derivatives | 1,882 | 2,355 |  |  |  |  |  |
Interest rate derivatives: | 879 | 905 |  |  |  |  |  |
– securitisation swaps | 156 | 149 | Model – Discounted cash flow | Prepayment Rate | 5% | 10% | 5% | 10%
– long-dated swaptions | 57 | 61 | Model – Option model | IR Volatility | 9% | 21% | 11% | 34%
– other interest rate derivatives | 666 | 695 |  |  |  |  |  |
Foreign exchange derivatives: | 192 | 216 |  |  |  |  |  |
– Foreign exchange options | 166 | 191 | Model – Option model | FX Volatility | 1% | 26% | 3% | 31%
– other foreign exchange derivatives | 26 | 25 |  |  |  |  |  |
Equity derivatives: | 507 | 490 |  |  |  |  |  |
– long-dated single stock options | 115 | 114 | Model – Option model | Equity Volatility | 7% | 66% | 7% | 87%
– other equity derivatives | 392 | 376 |  |  |  |  |  |
Credit derivatives | 302 | 744 |  |  |  |  |  |
– total return swaps | 278 | 675 | Market proxy | Price | 0 | 104 | 0 | 104
– other credit derivatives | 24 | 69 |  |  |  |  |  |
Other derivatives | 2 | — |  |  |  |  |  |
Other portfolios | 4,340 | 627 |  |  |  |  |  |
– bonds | 1,929 | 22 | Market proxy | Price | 0 | 105 | 0 | 104
– repurchase agreements | 1,284 | 591 | Model – Discounted cash flow | IR Curve | 0% | 26% | 3% | 8%
– other 2 | 1,127 | 14 |  |  |  |  |  |
At 31 Dec | 7,613 | 5,941 |  |  |  |  |  |

1‘Private equity including strategic investments’ includes private equity, private credit and private equity fund, primarily held as part of our Insurance business and
for strategic investments. The analysis for private equity positions has been enhanced with the range of key unobservable inputs now quoted.
2'Other' includes a range of asset holdings including loans and deposits, syndicated loans a nd infrastruct ure debt.
Private equity including strategic investments
The ‘private equity’ holdings include private equity investments and private equity funds held as limited partners. The key unobservable input is
the current value of the underlying positions, determined using valuation techniques in line with the International Capital Valuation Guidelines.
The inputs represented are an appropriate range of inputs normalised across different exposure types.
Prepayment rates
Prepayment rates are a measure of the anticipated future speed at which a loan portfolio will be repaid in advance of the due date. They vary
according to the nature of the loan portfolio and expectations of future market conditions, and may be estimated using a variety of evidence,
such as prepayment rates implied from proxy observable security prices, current or historical prepayment rates and macroeconomic modelling.
Market proxy
Market proxy pricing may be used for an instrument when specific market pricing is not available, but there is evidence from instruments with
common characteristics. In some cases, it might be possible to identify a specific proxy, but more generally evidence across a wider range of
instruments will be used to understand the factors that influence current market pricing and the manner of that influence.
Volatility
Volatility is a measure of the anticipated future variability of a market price. It varies by underlying reference market price, and by strike and
maturity of the option.
Certain volatilities, typically those of a longer-dated nature, are unobservable and estimated from observable data. The range of unobservable
volatilities reflects the wide variation in volatility inputs by reference market price. The core range is significantly narrower than the full range
because these examples with extreme volatilities occur relatively rarely within the HSBC portfolio.

164 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

Correlation
Correlation is a measure of the inter-relationship between two market prices, and is expressed as a number between minus one and one. It is
used to value more complex instruments where the payout is dependent upon more than one market price. There is a wide range of
instruments for which correlation is an input, and consequently a wide range of both same-asset correlations and cross-asset correlations is
used. In general, the range of same-asset correlations will be narrower than the range of cross-asset correlations.
Unobservable correlations may be estimated based upon a range of evidence, including consensus pricing services, HSBC trade prices, proxy
correlations and examination of historical price relationships. The range of unobservable correlations quoted in the table reflects the wide
variation in correlation inputs by market price pair.
Credit spread
Credit spread is the premium over a benchmark interest rate required by the market to accept lower credit quality. In a discounted cash flow
model, the credit spread increases the discount factors applied to future cash flows, thereby reducing the value of an asset. Credit spreads may
be implied from market prices and may not be observable in more illiquid markets.
Inter-relationships between key unobservable inputs
Key unobservable inputs to Level 3 financial instruments may not be independent of each other. As described above, market variables may be
correlated. This correlation typically reflects the manner in which different markets tend to react to macroeconomic or other events.
Furthermore, the effect of changing market variables on the HSBC portfolio will depend on HSBC’s net risk position in respect of each variable.

12 Fair values of financial instruments not carried at fair value

Fair values of financial instruments not carried at fair value and bases of valuation
|  | Fair value
| Carrying amount | Quoted market price Level 1 | Observable inputs Level 2 | Significant unobservable inputs Level 3 | Total
The group | £m | £m | £m | £m | £m
At 31 Dec 2024 |  |  |  |  |
Assets |  |  |  |  |
Loans and advances to banks | 14,521 | — | 14,523 | — | 14,523
Loans and advances to customers 1 | 82,666 | — | — | 81,752 | 81,752
Reverse repurchase agreements – non-trading | 53,612 | — | 53,614 | — | 53,614
Financial investments – at amortised cost | 12,226 | 10,980 | 1,196 | — | 12,176
Liabilities |  |  |  |  |
Deposits by banks | 26,515 | — | 26,518 | — | 26,518
Customer accounts | 242,303 | — | 242,320 | — | 242,320
Repurchase agreements – non-trading | 40,384 | — | 40,385 | — | 40,385
Debt securities in issue | 19,461 | — | 19,330 | 142 | 19,472
Subordinated liabilities | 16,908 | — | 17,267 | — | 17,267
At 31 Dec 2023 |  |  |  |  |
Assets |  |  |  |  |
Loans and advances to banks | 14,371 | — | 14,371 | — | 14,371
Loans and advances to customers | 75,491 | — | — | 74,904 | 74,904
Reverse repurchase agreements – non-trading | 73,494 | — | 73,494 | — | 73,494
Financial investments – at amortised cost | 8,861 | 7,173 | 1,660 | 4 | 8,837
Liabilities |  |  |  |  |
Deposits by banks | 22,943 | — | 22,950 | — | 22,950
Customer accounts | 222,941 | — | 223,067 | — | 223,067
Repurchase agreements – non-trading | 53,416 | — | 53,416 | — | 53,416
Debt securities in issue | 13,443 | — | 13,320 | 138 | 13,458
Subordinated liabilities | 14,920 | — | 15,219 | — | 15,219

1 Includes retained portfolio of French home and other loans following the sale of retail banking operations in France, with carrying am ount of £5.5bn (2023:
£6.2bn). We reclassified the portfolio to a hold-to-collect-and-sell business model from 1 January 2025 and will measure it prospectively from the first quarter of
2025 at fair value through other comprehensive income.We expect to recognise an estimated £0.8 bn fair value pre-tax loss in other comprehensive income on
the remeasurement of these financial instruments. The valuation of this portfolio of loans may be substantially different in the event of a sale due to entity and
deal-specific factors, including funding costs and the value of customer relationships (refer Note 34 for details).

HSBC Bank plc Annual Report and Accounts 2024 | 165

Fair values of selected financial instruments not carried at fair value and bases of valuation – assets and disposal groups held for sale
|  | Fair value
| Carrying amount | Quoted market price Level 1 | Observable inputs Level 2 | Significant unobservable inputs Level 3 | Total
| £m | £m | £m | £m | £m
At 31 Dec 2024 |  |  |  |  |
Assets |  |  |  |  |
Loans and advances to banks | 115 | — | 115 | — | 115
Loans and advances to customers | 769 | — | — | 771 | 771
Liabilities |  |  |  |  |
Customer accounts | 4,288 | — | 4,288 | — | 4,288
Debt securities in issue | — | — | — | — | —
At 31 Dec 2023 |  |  |  |  |
Assets |  |  |  |  |
Loans and advances to banks | 8,103 | — | 8,103 | — | 8,103
Loans and advances to customers | 13,345 | — | — | 12,902 | 12,902
Liabilities |  |  |  |  |
Customer accounts | 17,587 | — | 17,587 | — | 17,587
Debt securities in issue | 1,080 | — | 1,066 | — | 1,066

Fair values of financial instruments not carried at fair value and bases of valuation
|  | Fair value
| Carrying amount | Quoted market price Level 1 | Observable inputs Level 2 | Significant unobservable inputs Level 3 | Total
The bank | £m | £m | £m | £m | £m
At 31 Dec 2024 |  |  |  |  |
Assets |  |  |  |  |
Loans and advances to banks | 12,730 | — | 12,778 | — | 12,778
Loans and advances to customers | 30,916 | — | — | 30,897 | 30,897
Reverse repurchase agreements – non-trading | 34,394 | — | 34,394 | — | 34,394
Financial investments – at amortised cost | 14,217 | 7,695 | 6,521 | — | 14,216
Liabilities |  |  |  |  |
Deposits by banks | 19,355 | — | 19,355 | — | 19,355
Customer accounts | 142,122 | — | 142,122 | — | 142,122
Repurchase agreements – non-trading | 34,545 | — | 34,545 | — | 34,545
Debt securities in issue | 12,668 | — | 12,683 | — | 12,683
Subordinated liabilities | 16,874 | — | 17,291 | — | 17,291
At 31 Dec 2023 |  |  |  |  |
Assets |  |  |  |  |
Loans and advances to banks | 11,670 | — | 11,688 | — | 11,688
Loans and advances to customers | 32,443 | — | — | 32,359 | 32,359
Reverse repurchase agreements – non-trading | 56,973 | — | 56,973 | — | 56,973
Financial investments – at amortised cost | 12,029 | 5,738 | 6,328 | — | 12,066
Liabilities |  |  |  |  |
Deposits by banks | 18,775 | — | 18,796 | — | 18,796
Customer accounts | 133,373 | — | 133,373 | — | 133,373
Repurchase agreements – non-trading | 48,842 | — | 48,842 | — | 48,842
Debt securities in issue | 7,353 | — | 7,372 | — | 7,372
Subordinated liabilities | 14,658 | — | 15,015 | — | 15,015

Other financial instruments not carried at fair value are typically short-term in nature and reprice to current market rates frequently. Accordingly,
their carrying amount is a reasonable approximation of fair value. This includes cash and balances at central banks which is measured at
amortised cost.
Valuation
Fair value is an estimate of the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. This may be different from the theoretical economic value attributed from an instrument's cash
flows over its expected future life. Our valuation methodologies and assumptions in determining fair values for which no observable market
prices are available may differ from those of other companies.
Loans and advances to banks and customers
To determine the fair value of loans and advances to banks and customers, loans are segregated, into portfolios of similar characteristics. Fair
values are based on observable market transactions, when available. When they are unavailable, fair values are estimated using valuation
models incorporating a range of input assumptions. These assumptions may include: value estimates from third-party brokers reflecting over-
the-counter trading activity; forward-looking discounted cash flow models, taking account of expected customer prepayment rates, using
assumptions that HSBC believes are consistent with those that would be used by market participants in valuing such loans; recent origination

166 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

pricing for similar loans; and trading inputs from other market participants including observed primary and secondary trades. From time to time,
we may engage a third-party valuation specialist to measure the fair value of a pool of loans.
The fair value of loans reflects expected credit losses at the balance sheet date and estimates of market participants’ expectations of credit
losses over the life of the loans, and the fair value effect of repricing between origination and the balance sheet date. For credit impaired loans,
fair value is estimated by discounting the future cash flows over the time period they are expected to be recovered.
Financial investments
The fair values of listed financial investments are determined using bid market prices. The fair values of unlisted financial investments are
determined using valuation techniques that incorporate the prices and future earnings streams of equivalent quoted securities.
Deposits by banks and customer accounts
The fair values of on-demand deposits are approximated by their carrying amount. For deposits with longer-term maturities, fair values are
estimated using discounted cash flows, applying current rates offered for deposits of similar remaining maturities.
Debt securities in issue and subordinated liabilities
Fair values in debt securities in issue and subordinated liabilities are determined using quoted market prices at the balance sheet date where
available, or by reference to quoted market prices for similar instruments.
Repurchase and reverse repurchase agreements – non-trading
Fair values of repurchase and reverse repurchase agreements that are held on a non-trading basis provide approximate carrying amounts. This is
due to the fact that balances are generally short dated.

13 Financial assets designated and otherwise mandatorily measured at fair
value through profit or loss

| The group | The bank
2024 |  | 2023 | 2024 | 2023
| Designated at fair value and otherwise mandatorily measured at fair value | Designated at fair value and otherwise mandatorily measured at fair value | Designated at fair value and otherwise mandatorily measured at fair value | Designated at fair value and otherwise mandatorily measured at fair value
| £m | £m | £m | £m
Securities | 5,739 | 16,027 | 209 | 162
– debt securities, treasury and other eligible bills | 515 | 2,131 | 106 | 97
– equity securities | 5,224 | 13,896 | 103 | 65
Loans and advances to banks and customers | 2,874 | 2,814 | 3,080 | 2,791
Other | 804 | 227 | 371 | 228
At 31 Dec | 9,417 | 19,068 | 3,660 | 3,181

14 Derivatives

Notional contract amounts and fair values of derivatives by product contract type
| Notional contract amount | Fair value – Assets | Fair value – Liabilities
| Trading | Hedging | Trading | Hedging | Total | Trading | Hedging | Total
The group | £m | £m | £m | £m | £m | £m | £m | £m
Foreign exchange | 8,561,853 | 2,450 | 97,566 | 164 | 97,730 | (94,941) | (15) | (94,956)
Interest rate | 10,366,996 | 88,154 | 147,830 | 1,223 | 149,053 | (147,073) | (1,254) | (148,327)
Equities | 625,520 | — | 14,002 | — | 14,002 | (16,466) | — | (16,466)
Credit | 104,660 | — | 1,408 | — | 1,408 | (1,516) | — | (1,516)
Commodity and other | 93,617 | — | 2,457 | — | 2,457 | (2,295) | — | (2,295)
Offset (Note 28) |  |  |  |  | (66,478) |  |  | 66,478
At 31 Dec 2024 | 19,752,646 | 90,604 | 263,263 | 1,387 | 198,172 | (262,291) | (1,269) | (197,082)
Foreign exchange | 6,601,151 | 1,799 | 68,197 | 62 | 68,259 | (66,691) | (17) | (66,708)
Interest rate | 9,113,678 | 75,080 | 154,860 | 856 | 155,716 | (151,077) | (1,116) | (152,193)
Equities | 543,083 | — | 11,503 | — | 11,503 | (13,937) | — | (13,937)
Credit | 115,062 | — | 1,099 | — | 1,099 | (1,356) | — | (1,356)
Commodity and other | 76,435 | — | 1,584 | — | 1,584 | (1,325) | — | (1,325)
Offset (Note 28) |  |  |  |  | (64,045) |  |  | 64,045
At 31 Dec 2023 | 16,449,409 | 76,879 | 237,243 | 918 | 174,116 | (234,386) | (1,133) | (171,474)

The notional contract amounts of derivatives held for trading purposes and derivatives designated in hedge accounting relationships indicate the
nominal value of transactions outstanding at the balance sheet date; they do not represent amounts at risk.

HSBC Bank plc Annual Report and Accounts 2024 | 167

Notional contract amounts and fair values of derivatives by product contract type (continued)
| Notional contract amount | Fair value – Assets | Fair value – Liabilities
| Trading | Hedging | Trading | Hedging | Total | Trading | Hedging | Total
The bank | £m | £m | £m | £m | £m | £m | £m | £m
Foreign exchange | 8,585,852 | 2,234 | 98,063 | 157 | 98,220 | (95,596) | (15) | (95,611)
Interest rate | 7,519,533 | 53,013 | 121,219 | 1,072 | 122,291 | (121,509) | (1,164) | (122,673)
Equities | 526,998 | — | 13,494 | — | 13,494 | (15,894) | — | (15,894)
Credit | 102,885 | — | 1,401 | — | 1,401 | (1,477) | — | (1,477)
Commodity and other | 92,703 | — | 2,458 | — | 2,458 | (2,296) | — | (2,296)
Offset |  |  |  |  | (54,206) |  |  | 54,206
At 31 Dec 2024 | 16,827,971 | 55,247 | 236,635 | 1,229 | 183,658 | (236,772) | (1,179) | (183,745)
Foreign exchange | 6,529,223 | 1,791 | 67,809 | 62 | 67,871 | (66,018) | (17) | (66,035)
Interest rate | 6,726,879 | 47,943 | 118,308 | 728 | 119,036 | (116,658) | (1,051) | (117,709)
Equities | 483,877 | — | 11,312 | — | 11,312 | (13,532) | — | (13,532)
Credit | 112,436 | — | 1,090 | — | 1,090 | (1,328) | — | (1,328)
Commodity and other | 75,871 | — | 1,584 | — | 1,584 | (1,323) | — | (1,323)
Offset |  |  |  |  | (47,128) |  |  | 47,128
At 31 Dec 2023 | 13,928,286 | 49,734 | 200,103 | 790 | 153,765 | (198,859) | (1,068) | (152,799)

Use of derivatives
We undertake derivatives activity for three primary purposes: to create risk management solutions for clients, to manage the portfolio risks
arising from client business, and to manage and hedge our own risks.
Trading derivatives
Most of the group's derivative transactions relate to sales and trading activities. Sales activities include the structuring and marketing of
derivative products to customers to enable them to take, transfer, modify or reduce current or expected risks. Trading activities include market-
making and risk management. Market-making entails quoting bid and offer prices to other market participants for the purpose of generating
revenues based on spread and volume.
Risk management activity is undertaken to manage the risk arising from client transactions, with the principal purpose of retaining client margin.
Other derivatives classified as held for trading include non-qualifying hedging derivatives.
Substantially all of the group's derivatives entered into with subsidiaries are managed in conjunction with financial liabilities designated at fair
value.
Derivatives valued using models wit h unobservable inpu ts
The difference between the fair value at initial recognition (the transaction price) and the value that would have been derived had the valuation
techniques used for subsequent measurement been applied at initial recognition, less subsequent releases, is in the following table:

Unamortised balance of derivatives valued using models with unobservable inputs
| The group | The bank
| 2024 | 2023 | 2024 | 2023
| £m | £m | £m | £m
Unamortised balance at 1 Jan | 54 | 64 | 50 | 56
Deferral on new transactions | 98 | 103 | 98 | 96
Recognised in the income statement during the year: | (93) | (113) | (91) | (102)
– amortisation | (53) | (60) | (51) | (51)
– subsequent to unobservable inputs becoming observable | (15) | (6) | (15) | (6)
– maturity, termination or offsetting derivative | (25) | (47) | (25) | (45)
– risk hedged | — | — | — | —
Exchange differences and other | (1) | — | (1) | —
Unamortised balance at 31 Dec 1 | 58 | 54 | 56 | 50

1 This amount is yet to be recognised in the consolidated income statement.
Hedge accounting derivatives
The group applies hedge accounting to manage the following risks: interest rate and foreign exchange. The Report of the Directors – Risk
presents more details on how these risks arise and how they are managed by the group.
Hedged risk components
HSBC designates a portion of cash flows of a financial instrument or a group of financial instruments for a specific interest rate or foreign
currency risk component in a fair value or cash flow hedge. The designated risks and portions are either contractually specified or otherwise
separately identifiable components of the financial instrument that are reliably measurable. Risk-free or benchmark interest rates generally are
regarded as being both separately identifiable and reliably measurable, except for the Interest Rate Benchmark Reform Phase 2 transition where
HSBC designates Alternative Benchmark Rates as the hedged risk which may not have been separately identifiable upon initial designation,
provided HSBC reasonably expects it will meet the requirement within 24 months from the first designation date. The designated risk
component accounts for a significant portion of the overall changes in fair value or cash flows of the hedged item(s).

168 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

Fair value hedges
The group enters into fixed-for-floating-interest-rate swaps to manage the exposure to changes in fair value due to movements in market
interest rates on certain fixed rate financial instruments which are not measured at fair value through profit or loss, including debt securities held
and issued.

Hedging instrument by hedged risk
| Hedging instrument
|  | Carrying amount |  |
The group | Notional amount 1 | Assets | Liabilities | Balance sheet presentation | Change in fair value 2
Hedged risk | £m | £m | £m | £m
Interest rate 3 | 34,493 | 1,196 | (1,249) | Derivatives | 208
At 31 Dec 2024 | 34,493 | 1,196 | (1,249) |  | 208

Interest rate 3 | 32,750 | 849 | (1,078) | Derivatives | (359)
At 31 Dec 2023 | 32,750 | 849 | (1,078) |  | (359)

1 The notional contract amounts of derivatives designated in qualifying hedge accounting relationships indicate the nominal value of transactions outstanding at the
balance sheet date; they do not represent amounts at risk.
2 Used in effectiveness testing; comprising the full fair value change of the hedging instrument not excluding any component.
3 The hedged risk ‘interest rate’ includes inflation risk.

Hedged item by hedged risk
| Hedged item | Ineffectiveness
| Carrying amount | Accumulated fair value hedge adjustments included in carrying amount 2 |  | Change in fair value 1 | Recognised in profit and loss | Profit and loss presentation
The group | Assets | Liabilities | Assets | Liabilities | Balance sheet presentation
Hedged risk | £m | £m | £m | £m | £m | £m
Interest rate 3 | 24,848 | — | (224) | — | Financial assets at fair value through other comprehensive income | (81) | 15 | Net income from financial instruments held for trading or managed on a fair value basis
412 | — | (7) | — | Loans and advances to customers | 12
— | — | — | — | Reverse Repos | —
— | 333 | — | 12 | Debt securities in issue | 2
— | 7,383 | — | (392) | Subordinated liabilities and deposits by banks 4 | (126)
At 31 Dec 2024 | 25,260 | 7,716 | (231) | (380) |  | (193) | 15 |

Interest rate 3 | 22,540 | — | (179) | — | Financial assets at fair value through other comprehensive income | 672 | 21 | Net income from financial instruments held for trading or managed on a fair value basis
650 | — | (17) | — | Loans and advances to customers | 19
— | — | — | — | Reverse Repos | 12
— | 1,320 | — | (155) | Debt securities in issue | (51)
— | 6,414 | — | (369) | Subordinated liabilities and deposits by banks 4 | (272)
At 31 Dec 2023 | 23,190 | 7,734 | (196) | (524) |  | 380 | 21 |

1 Used in effectiveness assessment; comprising amount attributable to the designated hedged risk that can be a risk component.
2 The accumulated amounts of fair value adjustments remaining in the statement of financial position for hedged items that have ceased to be adjusted for
hedging gains and losses were £(15)m (2023: £(3)m) for 'Financial assets at fair value through other comprehensive income', is nil (2023: nil) for 'Deposits by
banks',£(54)m (2023: nil) for 'Subordinated liabilities' and £7m (2023: £7m) for 'Debt securities in issue'.
3 The hedged risk ‘interest rate’ includes inflation risk.
4 The notional amount of non-dynamic fair value hedges was £6,574m (2023: £6,755m) of which the weighted-average maturity is June 2026 and the weighted
average swap rate is 0.39% (2023: 0.39%). £6,574m (2023: £6,755m) of these hedges are internal to HSBC Group and composed by internal funding between
HSBC Holdings and the group.

HSBC Bank plc Annual Report and Accounts 2024 | 169

Hedging instrument by hedged risk
| Hedging instrument
|  | Carrying amount |  | Change in fair value 2
The bank | Notional amount 1 | Assets | Liabilities | Balance sheet presentation
Hedged risk | £m | £m | £m | £m
Interest rate 3 | 21,400 | 1,045 | (1,161) | Derivatives | 287
At 31 Dec 2024 | 21,400 | 1,045 | (1,161) |  | 287

Interest rate 3 | 22,455 | 724 | (1,033) | Derivatives | (34)
At 31 Dec 2023 | 22,455 | 724 | (1,033) |  | (34)

1 The notional contract amounts of derivatives designated in qualifying hedge accounting relationships indicate the nominal value of transactions outstanding at the
balance sheet date; they do not represent amounts at risk.
2 Used in effectiveness testing; comprising the full fair value change of the hedging instrument not excluding any component.
3 The hedged risk ‘interest rate’ includes inflation risk.

Hedged item by hedged risk
| Hedged item | Ineffectiveness
| Carrying amount | Accumulated fair value hedge adjustments included in carrying amount 2 |  | Change in fair value 1 | Recognised in profit and loss |
The bank | Assets | Liabilities | Assets | Liabilities | Balance sheet presentation | Profit and loss presentation
Hedged risk | £m | £m | £m | £m | £m | £m
Interest rate 3 | 12,312 | — | (172) | — | Financial assets at fair value through other comprehensive income | (149) | 18 | Net income from financial instruments held for trading or managed on a fair value basis
53 | — | (1) | — | Loans and advances to customers | 1
|  |  |  | HTC (Amortised Cost) | —
— | — | — | — | Reverse Repos | —
— | 305 | — | 15 | Debt securities in issue | 2
— | 7,383 | — | (392) | Subordinated liabilities and deposits by banks 4 | (123)
At 31 Dec 2024 | 12,365 | 7,688 | (173) | (377) |  | (269) | 18 |

Interest rate 3 | 13,352 | — | (36) | — | Financial assets at fair value through other comprehensive income | 383 | 28 | Net income from financial instruments held for trading or managed on a fair value basis
71 | — | (2) | — | Loans and advances to customers | 2
— | — | — | — | Reverse Repos | —
— | 1,292 | — | (150) | Debt securities in issue | (51)
— | 6,414 | — | (369) | Subordinated liabilities and deposits by banks 4 | (272)
At 31 Dec 2023 | 13,423 | 7,706 | (38) | (519) |  | 62 | 28 |

1 Used in effectiveness assessment; comprising amount attributable to the designated hedged risk that can be a risk component.
2 The accumulated amounts of fair value adjustments remaining in the statement of financial position for hedged items that have ceased to be adjusted for
hedging gains and losses were £(3)m (2023: £(3)m) for 'Financial assets at fair value through other comprehensive income', nil (2023: nil) for 'Deposits by banks',
£(54)m (2023: nil) for 'Subordinated liabilities' and £10m (2023: £11m) for 'Debt securities in issue'.
3 The hedged risk ‘interest rate’ includes inflation risk.
4 The notional amount of non-dynamic fair value hedges was £6,574 m (2023: £6,755m), of which the weighted-average maturity is June 2026 and the weighted
average swap rate is 0.39% (2023: 0.39%). Those hedges are internal to HSBC Group and composed by internal funding between HSBC Holdings and the group.
Cash flow hedges
The group's cash flow hedging instruments consist principally of interest rate swaps and cross-currency swaps that are used to manage the
variability in future interest cash flows of non-trading financial assets and liabilities, arising due to changes in market interest rates and foreign-
currency basis.
The group applies macro cash flow hedging for interest-rate risk exposures on portfolios of replenishing current and forecasted issuances of
non-trading assets and liabilities that bear interest at variable rates, including rolling such instruments. The amounts and timing of future cash
flows, representing both principal and interest flows, are projected for each portfolio of financial assets and liabilities on the basis of their
contractual terms and other relevant factors, including estimates of prepayments and defaults. The aggregate cash flows representing both
principal balances and interest cash flows across all portfolios are used to determine the effectiveness and ineffectiveness. Macro cash flow
hedges are considered to be dynamic hedges.
The group also hedges the variability in future cash-flows on foreign-denominated financial assets and liabilities arising due to changes in foreign
exchange market rates with cross-currency swaps; these are considered dynamic hedges.

170 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

Hedging instrument by hedged risk 4
| Hedging instrument | Hedged item | Ineffectiveness
|  | Carrying amount |  | Change in fair value 2 | Change in fair value 3 | Recognised in profit and loss | Profit and loss presentation
The group | Notional amount 1 | Assets | Liabilities | Balance sheet presentation
Hedged risk | £m | £m | £m | £m | £m | £m
Foreign exchange | 2,450 | 164 | (15) | Derivatives | 177 | 177 | — | Net income from financial instruments held for trading or managed on a fair value basis
Interest rate | 53,661 | 27 | (5) | (566) | (573) | 7
At 31 Dec 2024 | 56,111 | 191 | (20) |  | (389) | (396) | 7 |
Foreign exchange | 1,799 | 62 | (17) | Derivatives | 109 | 109 | — | Net income from financial instruments held for trading or managed on a fair value basis
Interest rate | 42,332 | 7 | (38) | 522 | 505 | 17
At 31 Dec 2023 | 44,131 | 69 | (55) |  | 631 | 614 | 17 |

| Hedging instrument | Hedged item | Ineffectiveness
|  | Carrying amount |  | Change in fair value 2 | Change in fair value 3 | Recognised in profit and loss | Profit and loss presentation
The bank | Notional amount 1 | Assets | Liabilities | Balance sheet presentation
Hedged risk | £m | £m | £m | £m | £m | £m
Foreign exchange | 2,234 | 157 | (15) | Derivatives | 177 | 177 | — | Net income from financial instruments held for trading or managed on a fair value basis
Interest rate | 31,613 | 27 | (3) | (482) | (481) | (1)
At 31 Dec 2024 | 33,847 | 184 | (18) | (305) | (304) | (1) |
Foreign exchange | 1,791 | 62 | (17) | Derivatives | 108 | 108 | — | Net income from financial instruments held for trading or managed on a fair value basis
Interest rate | 25,488 | 4 | (18) | 310 | 310 | —
At 31 Dec 2023 | 27,279 | 66 | (35) |  | 418 | 418 | — |

1 The notional contract amounts of derivatives designated in qualifying hedge accounting relationships indicate the nominal value of transactions outstanding at the
balance sheet date; they do not represent amounts at risk.
2 Used in effectiveness testing; comprising the full fair value change of the hedging instrument not excluding any component.
3 Used in effectiveness assessment; comprising amount attributable to the designated hedged risk that can be a risk component.
4 The amounts in the above table predominantly represent the bank's exposure.
Sources of hedge ineffectiveness may arise from basis risk including, but not limited to timing differences between the hedged items and
hedging instruments, and hedges using instruments with a non-zero fair value.

Reconciliation of equity and analysis of other comprehensive income by risk type
| Interest rate | Foreign exchange
| £m | £m
Cash flow hedging reserve at 1 Jan 2024 | (305) | (25)
Fair value (losses)/gains | (573) | 177
Fair value losses/(gains) reclassified from cash flow hedge reserve to income statement in respect of: |  |
– hedged items that have affected profit or loss | 695 | (159)
Income taxes | (39) | —
Other | 2 | —
Cash flow hedging reserve at 31 Dec 2024 | (220) | (7)

Cash flow hedging reserve at 1 Jan 2023 | (901) | (49)
Fair value gains | 505 | 109
Fair value losses/(gains) reclassified from cash flow hedge reserve to income statement in respect of: |  |
– hedged items that have affected profit or loss | 382 | (83)
Income taxes | (252) | —
Other | (39) | (2)
Cash flow hedging reserve at 31 Dec 2023 | (305) | (25)

HSBC Bank plc Annual Report and Accounts 2024 | 171

15 Financial investments

Carrying amount of financial investments
| The group | The bank
| 2024 | 2023 | 2024 | 2023
| £m | £m | £m | £m
Financial investments measured at fair value through other comprehensive income | 39,990 | 37,507 | 20,033 | 16,362
– treasury and other eligible bills | 3,826 | 1,469 | 2,496 | 540
– debt securities | 35,709 | 35,618 | 17,482 | 15,767
– equity securities | 118 | 80 | 55 | 55
– other instruments 1 | 337 | 340 | — | —
Debt instruments measured at amortised cost | 12,226 | 8,861 | 14,217 | 12,029
– treasury and other eligible bills | — | 723 | — | 719
– debt securities 2 | 12,226 | 8,138 | 14,217 | 11,310
At 31 Dec | 52,216 | 46,368 | 34,250 | 28,391

1'Other instruments’ are comprised of loans and advances.
2 The £6.5bn (2023: £5.7bn) of debt securities in the bank relates to Senior Non-Preferred debt issued by HSBC Continental Europe to comply with Single
Resolution Board requirements on Minimum Required Eligible Liabilities.

Equity instruments measured at fair value through other comprehensive income
| Instruments held at year end
| Fair value | Dividends recognised
Type of equity instruments | £m | £m
Business facilitation | 64 | 1
Investments required by central institutions | 13 | —
Others | 41 | 1
At 31 Dec 2024 | 118 | 2
Business facilitation | 68 | 1
Investments required by central institutions | 12 | —
Others | — | —
At 31 Dec 2023 | 80 | 1

16 Assets pledged, collateral received and assets transferred
Assets pledged 1

Financial assets pledged as collateral
| The group | The bank
| 2024 | 2023 | 2024 | 2023
| £m | £m | £m | £m
Treasury bills and other eligible securities | 1,269 | 1,252 | 108 | 720
Loans and advances to banks | 5,500 | 3,800 | 5,500 | 3,800
Loans and advances to customers | 1,753 | 3,861 | — | —
Debt securities | 17,723 | 21,060 | 10,983 | 10,539
Equity securities | 42,189 | 27,610 | 42,004 | 27,096
Cash collateral | 41,179 | 39,266 | 31,662 | 29,836
Other | 805 | 228 | 371 | 228
Assets pledged at 31 Dec | 110,418 | 97,077 | 90,628 | 72,219

Financial assets pledged as collateral which the counterparty has the right to sell or repledge
| The group | The bank
| 2024 | 2023 | 2024 | 2023
| £m | £m | £m | £m
Trading assets | 56,664 | 44,072 | 49,093 | 35,168
Financial investments | 2,120 | 2,606 | 1,587 | 902
At 31 Dec | 58,784 | 46,678 | 50,680 | 36,070

Assets pledged as collateral include all assets categorised as encumbered in the disclosure on page 80, except for assets held for sale.
The value of assets pledged to secure liabilities may be greater than the book value of assets utilised as collateral. For example, in the case of
securitisations and covered bonds, the amount of liabilities issued, plus mandatory over-collateralisation, is less than the book value of the pool
of assets available for use as collateral. This is also the case where assets are placed with a custodian or a settlement agent that has a floating
charge over all the assets placed to secure any liabilities under settlement accounts.
These transactions are conducted under terms that are usual and customary to collateralised transactions including, where relevant, standard
securities lending and borrowing, repurchase agreements and derivative margining. The group places both cash and non-cash collateral in
relation to derivative transactions.

172 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

Collateral received 1
The fair value of assets accepted as collateral, relating primarily to standard securities lending, reverse repurchase agreements and derivative
margining, that the group is permitted to sell or repledge in the absence of default was £229,236m (2023: £224,836m) (the bank: 2024:
£195,638m; 2023: £191,832m). The fair value of any such collateral sold or repledged was £172,606m (2023: £175,100m) (the bank: 2024:
£153,025m; 2023: £147,131m).
The group is obliged to return equivalent securities. These transactions are conducted under terms that are usual and customary to standard
securities lending, reverse repurchase agreements and derivative margining.
Assets transferred 1
The assets pledged include transfers to third parties that do not qualify for derecognition, including secured borrowings such as debt securities
held by counterparties as collateral under repurchase agreements and equity securities lent under securities lending agreements, as well as
swaps of equity and debt securities. For secured borrowings, the transferred asset collateral continues to be recognised in full and a related
liability, reflecting the group’s obligation to repurchase the assets for a fixed price at a future date, is also recognised on the balance sheet.
Where securities are swapped, the transferred asset continues to be recognised in full. There is no associated liability as the non-cash collateral
received is not recognised on the balance sheet. The group is unable to use, sell or pledge the transferred assets for the duration of these
transactions, and remains exposed to interest rate risk and credit risk on these pledged assets. The counterparty’s recourse is not limited to the
transferred assets.

Transferred financial assets not qualifying for full derecognition and associated financial liabilities
| Carrying amount of:
| Transferred assets | Associated liabilities
The group | £m | £m
At 31 Dec 2024 |  |
Repurchase agreements | 14,206 | 13,992
Securities lending agreements | 44,578 | 5,150
At 31 Dec 2023 |  |
Repurchase agreements | 16,215 | 16,114
Securities lending agreements | 30,463 | 3,707

The bank |  |
At 31 Dec 2024 |  |
Repurchase agreements | 6,174 | 6,174
Securities lending agreements | 44,506 | 5,236
At 31 Dec 2023 |  |
Repurchase agreements | 5,968 | 5,968
Securities lending agreements | 30,102 | 3,748

1 E xclude assets classified as held for sale.

17 Interests in associates and joint ventures
Principal associates of the group
Business Growth Fund Group plc (‘BGF’) is a principal associate of the group. BGF is an independent company, established in 2011 to provide
investment to growing small to medium-sized British businesses. BGF is backed by five of the UK’s main banking groups: Barclays, HSBC,
Lloyds, RBS and Standard Chartered. At 31 Dec 2024, the group had a 24.62% interest in the equity capital of BGF. Share of Profit/(loss) in BGF
is £27m (2023: £(6)m; 2022: £(22)m) and carrying amount of interest in BGF is £678m (2023: £652m; 2022: £673m).
Interests in joint ventures
A list of all associates is set out on page 197.

HSBC Bank plc Annual Report and Accounts 2024 | 173

18 Investments in subsidiaries

Main subsidiaries of HSBC Bank plc 1
| At 31 Dec 2024
| Country of incorporation or registration | HSBC Bank plc’s interest in equity capital | Share class
| %
HSBC Investment Bank Holdings Limited | England and Wales | 100.00 | £1 Ordinary
HSBC Life (UK) Limited | England and Wales | 100.00 | £1 Ordinary
HSBC Private Bank (Suisse) SA 2 | Switzerland | 100.00 | CHF 1000 Ordinary
HSBC Bank Bermuda Limited | Bermuda | 100.00 | BM$1 Ordinary
HSBC Continental Europe | France | 99.99 | €5 Actions
HSBC Assurances Vie (France) | France | 99.99 | €287.5 Actions
HSBC Bank Malta p.l.c | Malta | 70.03 | €0.3 Ordinary

1 Main subsidiaries are either held directly or indirectly via intermediate holding companies. There have been no material changes in HSBC’s shareholding for its
main existing subsidiaries since 2023.
2 During 2024, HSBC Bank plc acquired HSBC Private Bank (Suisse) SA ('PBRS') from HSBC Private Banking Holdings (Suisse) SA ('PBSU').
All the above prepare their financial statements up to 31 December. Details of all group subsidiaries, as required under Section 409 of the
Companies Act 2006, are set out in N ote 36. The principal countries of operation are the same as the countries of incorporation.
Impairment testing of investments in subsidiaries
At each reporting period end, HSBC Bank plc reviews investments in subsidiaries for indicators of impairment. An impairment is recognised
when the carrying amount exceeds the recoverable amount for that investment. The recoverable amount is the higher of the investment’s fair
value less costs of disposal and its value-in-use ('VIU'), in accordance with the requirements of IAS 36. The VIU is calculated by discounting
management’s cash flow projections for the investment. The cash flows represent the Free Cash Flows ('FCF') based on the subsidiary’s
binding capital requirements.
We used a number of assumptions in our VIU calculation, in accordance with the requirements of IAS 36:
– Management’s judgement in estimating future cash flows: The cash flow projections for each investment are based on the latest approved
plans, which include forecast capital available for distribution based on the capital requirements of the subsidiary, taking into account
minimum and core capital requirements and factoring in reasonably possible uncertainties. For the impairment test at 31 December 2024,
cash flow projections until the end of 2029 were considered in line with our internal planning horizon. Our cash flow projections include
known and observable climate-related opportunities and costs associated with our sustainable products and operating model.
– Long-term growth rates: The long-term growth rate is used to extrapolate the free cash flows in perpetuity because of the long-term
perspective of the legal entity. The growth rate reflects long-term inflation for the country or territory within which the investment operates.
– Discount rates: The rate used to discount the cash flows is based on the cost of capital assigned to each investment, which is derived using
a capital asset pricing model (‘CAPM’) and market implied cost of equity. CAPM depends on a number of inputs reflecting financial and
economic variables, including the risk-free rate and a premium to reflect the inherent risk of the business being evaluated. These variables
are based on the market’s assessment of the economic variables and management’s judgement. The discount rates for each investment are
refined to reflect the rates of inflation for the countries or territories within which the investment operates. In addition, for the purposes of
testing investments for impairment, management supplements this process by comparing the discount rates derived using the internally
generated CAPM, with cost of capital rates produced by external sources for businesses operating in similar markets. The impacts from
climate risk are included to the extent that they are observable in discount rates and asset prices.
During 2024, an additional investment of £1.5bn was made in HSBC Continental Europe. In the fourth quarter of 2024, an impairment of £0.9bn
was recognised as a result of the impairment test performed which relates to the investment in the subsidiary, i.e., HSBC Continental Europe.
This was due to updates to inputs and assumptions in the model used to estimate VIU and reduction in forecast free cash flows, resulting from
the held for sale classification of the French life insurance business, HSBC Assurances Vie (France), as well as interest rates reduction in the
eurozone. No investments in subsidiaries were impaired in 2023.
In February 2024, HSBC Bank plc acquired PBRS from PBSU and invested £1,132m.

Impairment test results
Investment | Carrying amount | Value in use | Discount rate | Long-term growth rate | (Impairment)/ Headroom
HSBC Continental Europe | £m | £m | % | % | £m
At 31 Dec 2024 1 | 11,558 | 10,886 | 9.53 | 1.87 | (672)
At 31 Dec 2023 | 10,117 | 11,668 | 9.17 | 1.79 | 1,551

1 2024 carrying amount does not include impairment of £0.9bn which was recognised in the fourth quarter of 2024.

174 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

Sensitivities of key assumptions in calculating VIU
At 31 December 2024, the investment in HSBC Continental Europe was sensitive to reasonably possible changes in the key assumptions
supporting the recoverable amount.
In making an estimate of reasonably possible changes to assumptions, management considers the available evidence in respect of each input to
the model. These include the external range of observable discount rates, historical performance against forecast, and risks attached to the key
assumptions underlying cash flow.
The following table presents a summary of the key assumptions underlying the most sensitive inputs to the model for HSBC Continental
Europe, the key risks attaching to each, and details of a reasonably possible change to assumptions where, in the opinion of management, could
result in a change in VIU.

Reasonably possible changes in key assumptions
| Input | Key assumptions | Associated risks | Reasonably possible change
Investment
HSBC Continental Europe | Free Cash Flows projections | – Level of interest rates and yield curves. – Competitors’ positions within the market. | – Strategic actions relating to revenue and costs are not achieved. | – FCF projections decrease by 10%.
| Discount rate | – Discount rate used is a reasonable estimate of a suitable market rate for the profile of the business. | – External evidence arises to suggest that the rate used is not appropriate to the business. | – Discount rate increases by 1%.

Sensitivity of VIU to reasonably possible changes in key assumptions
In £m | At 31 Dec 2024 | At 31 Dec 2023
HSBC Continental Europe |  |
VIU | 10,886 | 11,668
Impact on VIU |  |
100bps decrease in the discount rate – single variable 1 | 1,103 | 1,494
100bps increase in the discount rate – single variable 1 | (858) | (1,140)
10% decrease in forecast profitability – single variable 1 | (1,015) | (442)

1 The recoverable amount of HSBC Bank plc represents the aggregate of recoverable amounts of the underlying subsidiaries. Single variable sensitivity analysis on
a single subsidiary may therefore not be representative of the aggregate impact of the change in the variable.

19 Structured entities
The group is mainly involved with both consolidated and unconsolidated structured entities through the securitisation of financial assets,
conduits and investment funds, established either by the group or a third party.
Consolidated structured entities

Total assets of the group’s consolidated structured entities, split by entity type
| Conduits | Securitisations | HSBC managed funds | Other | Total
| £m | £m | £m | £m | £m
At 31 Dec 2024 | 1,882 | 168 | 4,159 | 248 | 6,457
At 31 Dec 2023 | 2,809 | 180 | 4,272 | 398 | 7,659

Conduits
The group has established and manages two types of conduits: securities investment conduits (‘SICs’) and multi-seller conduits.
Securities investment conduits
The SICs purchase highly rated ABSs to facilitate tailored investment opportunities.
At 31 December 2024, Solitaire, the group's principal SIC held £0.6bn of ABSs (2023: £0.8bn). It is currently funded entirely by commercial
paper (‘CP’) issued to the group. At 31 December 2024, the group held £0.8bn of CP (2023: £1.0bn).
Multi-seller conduits
The group's multi-seller conduit was established to provide access to flexible market-based sources of finance for its clients. Currently, the
group bears risk equal to transaction-specific facility offered to the multi-seller conduits, amounting to £3.0bn at 31 December 2024 (2023:
£4.2bn). First loss protection is provided by the originator of the assets, and not by the group, through transaction-specific credit enhancements.
A layer of loss protection is provided by the group in the form of programme-wide enhancement facilities.
Securitisations
The group uses structured entities to securitise customer loans and advances it originates in order to diversify its sources of funding for asset
origination and capital efficiency purposes. The loans and advances are transferred by HSBC to the structured entities for cash or synthetically,
and the structured entities issue debt securities to investors. Where synthetic securitisations are used, the credit risk associated with the loan
portfolio of assets is transferred to the structured entities through loan portfolio financial guarantees.
HSBC managed funds
The group together with other HSBC entities has established a number of money market and non-money market funds. Where it is deemed to
be acting as principal rather than agent in its role as investment manager, the group controls these funds.

HSBC Bank plc Annual Report and Accounts 2024 | 175

Other
The group has entered into a number of transactions in the normal course of business, which include asset and structured finance transactions
where it has control of the structured entity. In addition, the group is deemed to control a number of third-party managed funds through its
involvement as a principal in the funds.
Unconsolidated structured entities
The term ‘unconsolidated structured entities’ refers to all structured entities not controlled by the group. The group enters into transactions with
unconsolidated structured entities in the normal course of business to facilitate customer transactions and for specific investment opportunities.

Nature and risks associated with the group’s interests in unconsolidated structured entities
| Securitisations | HSBC managed funds | Non-HSBC managed funds | Other | Total
Total asset values of the entities (£m) |  |  |  |  |
0 – 400 | 1 | 128 | 934 | 11 | 1,074
400 – 1,500 | — | 39 | 711 | 1 | 751
1,500 – 4,000 | — | 17 | 264 | — | 281
4,000 – 20,000 | — | 17 | 119 | — | 136
20,000+ | — | 1 | 14 | — | 15
Number of entities at 31 Dec 2024 | 1 | 202 | 2,042 | 12 | 2,257
| £m | £m | £m | £m | £m
Total assets in relation to the group's interests in the unconsolidated structured entities | 43 | 6,159 | 3,810 | 721 | 10,733
– trading assets | — | 1 | 38 | — | 39
– financial assets designated and otherwise mandatorily measured at fair value through profit or loss | — | 2,942 | 1,514 | — | 4,456
– loans and advances to customers | 43 | — | 547 | 311 | 901
– financial investments | — | 5 | — | — | 5
– assets held for sale | — | 3,211 | 1,711 | — | 4,922
– other assets | — | — | — | 410 | 410
Total liabilities in relation to the group’s interests in the unconsolidated structured entities | — | 6 | — | — | 6
Other off-balance sheet commitments | 13 | — | 556 | — | 569
The group's maximum exposure at 31 Dec 2024 | 56 | 6,153 | 4,366 | 721 | 11,296
Total asset values of the entities (£m) |  |  |  |  |
0 – 400 | 1 | 154 | 977 | 13 | 1,145
400 – 1,500 | 1 | 50 | 874 | 1 | 926
1,500 – 4,000 | — | 34 | 329 | — | 363
4,000 – 20,000 | — | 20 | 149 | — | 169
20,000+ | — | 1 | 8 | — | 9
Number of entities at 31 Dec 2023 | 2 | 259 | 2,337 | 14 | 2,612
| £m | £m | £m | £m | £m
Total assets in relation to the group’s interests in the unconsolidated structured entities | 128 | 5,808 | 3,793 | 878 | 10,607
– trading assets | — | 1 | 10 | — | 11
– financial assets designated and otherwise mandatorily measured at fair value through profit or loss | — | 5,802 | 3,296 | — | 9,098
– loans and advances to customers | 128 | — | 487 | 471 | 1,086
– financial investments | — | 5 | — | — | 5
– assets held for sale | — | — | — | — | —
– other assets | — | — | — | 407 | 407
Total liabilities in relation to the group‘s interests in the unconsolidated structured entities | — | 5 | — | — | 5
Other off-balance sheet commitments | 27 | — | 514 | — | 541
The group's maximum exposure at 31 Dec 2023 | 155 | 5,803 | 4,307 | 878 | 11,143

The maximum exposure to loss from the group’s interests in unconsolidated structured entities represents the maximum loss it could incur as a
result of its involvement with these entities regardless of the probability of the loss being incurred.
– For commitments, guarantees and written credit default swaps, the maximum exposure to loss is the notional amount of potential future
losses.
– For retained and purchased investments and loans to unconsolidated structured entities, the maximum exposure to loss is the carrying
amount of these interests at the balance sheet reporting date.
The maximum exposure to loss is stated gross of the effects of hedging and collateral arrangements that HSBC has entered into in order to
mitigate the group‘s exposure to loss.

176 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

Securitisations
The group has interests in unconsolidated securitisation vehicles through holding notes issued by these entities. In addition, the group has
investments in ABSs issued by third-party structured entities.
HSBC managed funds
The group together with other HSBC entities establishes and manages money market funds and non-money market investment funds to
provide customers with investment opportunities. The group, as fund manager, may be entitled to receive management and performance fees
based on the assets under management. The group may also retain units in these funds.
Non-HSBC managed funds
The group purchases and holds units of third-party managed funds in order to facilitate business and meet customer needs.
Other
The group has established structured entities in the normal course of business, such as structured credit transactions for customers, to provide
finance to public and private sector infrastructure projects, and for asset and structured finance transactions.
In addition to the interests disclosed above, the group enters into derivative contracts, reverse repos and stock borrowing transactions with
structured entities. These interests arise in the normal course of business for the facilitation of third-party transactions and risk management
solutions.
Group sponsored structured entities
The amount of assets transferred to and income received from such sponsored entities during 2024 and 2023 was not significant.

20 Goodwill and intangible assets

| The group | The bank
| 2024 | 2023 | 2024 | 2023
| £m | £m | £m | £m
Goodwill | — | — | 2 | 2
Other intangible assets 1 | 303 | 203 | 132 | 86
At 31 Dec | 303 | 203 | 134 | 88

1 Included within the group's other intangible assets is internally generated software with a net carrying amount of £296m (2023: £198m). During 2024,
capitalisation of internally generated software was £145m (2023: £120m), impairment was £4m (2023: impairment reversal of £(78)m) and amortisation was
£71m (2023: £91m).

21 Prepayments, accrued income and other assets

| The group | The bank
| 2024 | 2023 | 2024 | 2023
| £m | £m | £m | £m
Cash collateral and margin receivables | 41,027 | 39,125 | 31,662 | 29,835
Settlement accounts and Items in the course of collection from other banks | 4,680 | 15,142 | 4,196 | 11,819
Bullion | 5,612 | 4,393 | 5,428 | 4,390
Prepayments and accrued income | 2,426 | 2,521 | 1,485 | 1,556
Property, plant and equipment | 176 | 819 | 10 | 11
Right-of-use assets | 146 | 167 | 25 | 30
Employee benefit assets (Note 5) | 74 | 51 | 20 | 10
Other accounts | 2,809 | 3,531 | 1,210 | 1,626
At 31 Dec | 56,950 | 65,749 | 44,036 | 49,277

Prepayments, accrued income and other assets include £50,003m (2023: £59,095m) of financial assets, the majority of which are measured at
amortised cost.

HSBC Bank plc Annual Report and Accounts 2024 | 177

22 Trading liabilities

| The group | The bank
| 2024 | 2023 | 2024 | 2023
| £m | £m | £m | £m
Deposits by banks 1 | 8,529 | 5,313 | 8,669 | 5,387
Customer accounts 1 | 6,531 | 4,955 | 6,530 | 4,955
Other debt securities in issue | 59 | 21 | 59 | 21
Other liabilities – net short positions in securities | 27,514 | 31,987 | 13,885 | 14,569
At 31 Dec | 42,633 | 42,276 | 29,143 | 24,932

1 'Deposits by banks' and 'Customer accounts' include repos, stock lending and other amounts.

23 Financial liabilities designated at fair value

| The group | The bank
| 2024 | 2023 | 2024 | 2023
| £m | £m | £m | £m
Deposits by banks and customer accounts | 5,127 | 5,555 | 5,079 | 5,542
Liabilities to customers under investment contracts | 1,078 | 1,002 | — | —
Debt securities in issue | 30,432 | 25,194 | 22,601 | 17,110
Subordinated liabilities (Note 26) | 806 | 794 | 806 | 794
At 31 Dec | 37,443 | 32,545 | 28,486 | 23,446

The group
The carrying amount of financial liabilities designated at fair value was £3,111m less than the contractual amount at maturity (2023: £2,407m
lower). The cumulative amount of change in fair value attributable to changes in credit risk was a gain of £70m (2023: gain of £151m).
The bank
The carrying amount of financial liabilities designated at fair value was £2,817m less than the contractual amount at maturity (2023 : £1,974m
lower). The cumulative amount of change in fair value attributable to changes in credit risk was a gain of £11m (2023: gain of £42m).

24 Accruals, deferred income and other liabilities

| The group | The bank
| 2024 | 2023 | 2024 | 2023
| £m | £m | £m | £m
Cash collateral and margin payables | 39,676 | 43,305 | 30,922 | 31,920
Settlement accounts and Items in the course of transmission to other banks | 4,893 | 11,905 | 4,480 | 11,698
Accruals and deferred income | 2,662 | 2,603 | 1,628 | 1,633
Amount due to investors in funds consolidated by the group | — | 1,158 | — | —
Lease liabilities | 196 | 227 | 30 | 36
Employee benefit liabilities (Note 5) | 172 | 117 | 51 | 48
Reinsurance contract liabilities | 39 | 33 | — | —
Share-based payment liability to HSBC Holdings | 118 | 107 | 80 | 77
Endorsements and acceptances | 69 | 236 | 68 | 227
Other liabilities | 2,659 | 2,869 | 1,168 | 1,120
At 31 Dec | 50,484 | 62,560 | 38,427 | 46,759

For the group, accruals, deferred income and other liabilities include £49,767m (2023: £61,921m), and for the bank £38,173m (2023: £46,513m)
of financial liabilities, the majority of which are measured at amortised cost.

178 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

25 Provisions

| Restructuring costs | Legal proceedings and regulatory matters | Customer remediation | Other provisions | Total
The group | £m | £m | £m | £m | £m
Provisions (excluding contractual commitments) |  |  |  |  |
At 1 Jan 2024 | 76 | 104 | 9 | 118 | 307
Additions | 8 | 46 | 3 | 37 | 94
Amounts utilised | (41) | (94) | (3) | (46) | (184)
Unused amounts reversed | (19) | (7) | (2) | (26) | (54)
Exchange and other movements | 3 | 1 | — | 24 | 28
At 31 Dec 2024 | 27 | 50 | 7 | 107 | 191
Contractual commitments 1 |  |  |  |  |
At 1 Jan 2024 |  |  |  |  | 83
Net change in expected credit loss provision and other movements |  |  |  |  | 1
At 31 Dec 2024 |  |  |  |  | 84
Total Provisions |  |  |  |  |
At 31 Dec 2023 |  |  |  |  | 390
At 31 Dec 2024 |  |  |  |  | 275

Provisions (excluding contractual commitments) |  |  |  |  |
At 1 Jan 2023 | 126 | 77 | 13 | 103 | 319
Additions | 27 | 99 | 3 | 62 | 191
Amounts utilised | (43) | (54) | (3) | (25) | (125)
Unused amounts reversed | (28) | (16) | (3) | (29) | (76)
Exchange and other movements | (6) | (2) | (1) | 7 | (2)
At 31 Dec 2023 | 76 | 104 | 9 | 118 | 307
Contractual commitments 1 |  |  |  |  |
At 1 Jan 2023 |  |  |  |  | 105
Net change in expected credit loss provision and other movements |  |  |  |  | (22)
At 31 Dec 2023 |  |  |  |  | 83
Total Provisions |  |  |  |  |
At 31 Dec 2022 |  |  |  |  | 424
At 31 Dec 2023 |  |  |  |  | 390

| Restructuring costs | Legal proceedings and regulatory matters | Customer remediation | Other provisions | Total
The bank | £m | £m | £m | £m | £m
Provisions (excluding contractual commitments) |  |  |  |  |
At 1 Jan 2024 | 9 | 95 | 5 | 35 | 144
Additions | 5 | 43 | 2 | 17 | 67
Amounts utilised | (3) | (91) | (2) | — | (96)
Unused amounts reversed | (4) | (3) | (2) | (13) | (22)
Exchange and other movements | — | (1) | — | (7) | (8)
At 31 Dec 2024 | 7 | 43 | 3 | 32 | 85
Contractual commitments 1 |  |  |  |  |
At 1 Jan 2024 |  |  |  |  | 32
Net change in expected credit loss provision and other movements |  |  |  |  | (7)
At 31 Dec 2024 |  |  |  |  | 25
Total Provisions |  |  |  |  |
At 31 Dec 2023 |  |  |  |  | 176
At 31 Dec 2024 |  |  |  |  | 110

Provisions (excluding contractual commitments) |  |  |  |  |
At 1 Jan 2023 | 17 | 57 | 8 | 35 | 117
Additions | 11 | 95 | 2 | 16 | 124
Amounts utilised | (12) | (51) | (2) | (5) | (70)
Unused amounts reversed | (7) | (1) | (2) | (11) | (21)
Exchange and other movements | — | (5) | (1) | — | (6)
At 31 Dec 2023 | 9 | 95 | 5 | 35 | 144
Contractual commitments 1 |  |  |  |  |
At 1 Jan 2023 |  |  |  |  | 50
Net change in expected credit loss provision and other movements |  |  |  |  | (18)
At 31 Dec 2023 |  |  |  |  | 32
Total Provisions |  |  |  |  |
At 31 Dec 2022 |  |  |  |  | 167
At 31 Dec 2023 |  |  |  |  | 176

1 The contractual commitments provision includes off-balance sheet loan commitments and guarantees, for which expected credit losses are provided under
IFRS9. Further analysis of the movement in the expected credit loss is disclosed within the 'Reconciliation of changes in gross carrying/nominal amount and
allowances for loans and advances to banks and customers including loan commitments and financial guarantees' table on page 49.

HSBC Bank plc Annual Report and Accounts 2024 | 179

Customer remediation
Customer remediation refers to HSBC’s activities to compensate customers for losses or damages associated with a failure to comply with
regulations or to treat customers fairly. Customer remediation is often initiated by HSBC in response to customer complaints and/or industry
developments in sales practices, and is not necessarily initiated by regulatory action.
Restructuring costs
These provisions comprise the estimated cost of restructuring, including redundancy costs where an obligation exists. Additions made during
the year relate to formal restructuring plans made within the group.
Legal proceedings and regulatory matters
Further details of legal proceedings and regulatory matters are set out in Note 32. Legal proceedings include civil court, arbitration or tribunal
proceedings brought against HSBC companies (whether by way of claim or counterclaim), or civil disputes that may, if not settled, result in
court, arbitration or tribunal proceedings. Regulatory matters refer to investigations, reviews and other actions carried out by, or in response to
the actions of, regulatory or law enforcement agencies in connection with alleged wrongdoing.

26 Subordinated liabilities

Subordinated liabilities
| The group | The bank
| 2024 | 2023 | 2024 | 2023
| £m | £m | £m | £m
At amortised cost | 16,908 | 14,920 | 16,874 | 14,658
– subordinated liabilities | 16,208 | 14,220 | 16,874 | 14,658
– preferred securities | 700 | 700 | — | —
Designated at fair value (Note 23) | 806 | 794 | 806 | 794
– subordinated liabilities | 806 | 794 | 806 | 794
At 31 Dec | 17,714 | 15,714 | 17,680 | 15,452

Subordinated liabilities rank behind senior obligations and generally count towards the capital base of HSBC. Capital securities may be called and
redeemed by HSBC subject to prior notification to the PRA and, where relevant, the consent of the local banking regulator. If not redeemed at
the first call date, coupons payable may reset or become floating rate based on relevant market rates. On subordinated liabilities other than
floating rate notes, interest is payable at fixed rates of up to 7.650%.
The balance sheet amounts disclosed below are presented on an IFRS basis and do not reflect the amount that the instruments contribute to
regulatory capital due to the inclusion of issuance costs, regulatory amortisation and regulatory eligibility limits.

180 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

Subordinated liabilities of the group
|  | Carrying amount
|  | 2024 | 2023
|  | £m | £m
Additional tier 1 instruments guaranteed by the bank |  |
£700m | HSBC Bank plc 5.844% Non-cumulative Step-up Perpetual Preferred Securities due 2048 1,5,6 | 583 | 605
Tier 2 instruments |  |
€1,500m | HSBC Bank plc Floating Rate Subordinated Loan due 2032 | 1,239 | 1,299
$300m | HSBC Bank plc 7.65% Subordinated Notes due 2025 2 | 142 | 136
$750m | HSBC Bank plc 4.19% Subordinated Loan due 2027 | 589 | 571
£200m | HSBC Bank plc Floating Rate Subordinated Loan due 2028 | 200 | 200
€300m | HSBC Bank plc Floating Rate Subordinated Loan due 2028 7 | — | 261
€260m | HSBC Continental Europe Floating Rate Subordinated Loan due 2029 7 | — | 226
£350m | HSBC Bank plc 5.375% Callable Subordinated Step-up Notes due 2030 3,4,6 | 61 | 61
$2,000m | HSBC Bank plc 1.625% Subordinated Loan due 2031 | 1,532 | 1,462
€2,000m | HSBC Bank plc 0.375% Subordinated Loan due 2031 | 1,605 | 1,627
€2,000m | HSBC Bank plc 0.375% Subordinated Loan due 2031 | 1,605 | 1,627
€1,250m | HSBC Bank plc 0.25% Subordinated Loan due 2031 | 1,003 | 1,017
£500m | HSBC Bank plc 5.375% Subordinated Notes due 2033 3 | 156 | 162
£225m | HSBC Bank plc 6.25% Subordinated Notes due 2041 3 | 46 | 50
£600m | HSBC Bank plc 4.75% Subordinated Notes due 2046 3 | 165 | 191
$1,250m | HSBC Bank plc floating Subordinated Loan due 2028 | 995 | 978
$1,100m | HSBC Bank plc floating Subordinated Loan due 2033 | 875 | 860
€400m | HSBC Bank plc floating Subordinated Loan due 2028 | 335 | 353
€400m | HSBC Bank plc floating Subordinated Loan due 2029 | 335 | 353
€500m | HSBC Bank plc floating Subordinated Loan due 2028 | 413 | 433
€500m | HSBC Bank plc floating Subordinated Loan due 2029 | 413 | 433
€500m | HSBC Bank plc floating Subordinated Loan due 2029 | 413 | 433
€85m | HSBC Bank plc 5.15% Subordinated Notes due 2043 | 70 | 74
€800m | HSBC Bank plc 6.79% Subordinated Loan due 2030 | 660 | 693
€65m | HSBC Bank plc 5.24% Subordinated Notes due 2043 | 54 | 56
$800m | HSBC Bank plc floating Subordinated Loan due 2029 | 647 | 651
€200m | HSBC Bank plc floating Subordinated Loan due 2034 | 165 | 173
€800m | HSBC Bank plc floating Subordinated Loan due 2030 | 660 | 693
€300m | HSBC Bank plc floating Subordinated Loan due 2035 | 247 | —
€400m | HSBC Bank plc floating Subordinated Loan due 2035 | 330 | —
€500m | HSBC Bank plc floating Subordinated Loan due 2031 | 412 | —
€800m | HSBC Bank plc floating Subordinated Loan due 2031 | 660 | —
€500m | HSBC Bank plc floating Subordinated Loan due 2036 | 412 | —
€400m | HSBC Bank plc floating Subordinated Loan due 2033 | 330 | —
€400m | HSBC Bank plc floating Subordinated Loan due 2032 | 330 | —
Other Tier 2 instruments each less than £100m | 32 | 36
At 31 Dec | 17,714 | 15,714

1 The value of the security partially decreased as a result of a fair value hedge gain. The instrument was held at amortised cost in 2021. Also, the interest rate
payable after November 2031 is the sum of the compounded daily Sonia rate plus 2.0366%.
2 The bank tendered for this security in November 2022. The principal balance is $180m. The original notional value of the security is $300m.
3 The bank tendered for these securities in November 2022. The principal balance is £135m, £61m, £157m, £70m and £237m respectively. The original notional
values of these securities are £300m, £350m, £500m, £225m and £600m respectively.
4 The interest rate payable after November 2025 is the sum of the compounded daily Sonia rate plus 1.6193%.
5 See paragraph below, ‘Guaranteed by HSBC Bank plc’.
6 These securities are ineligible for inclusion in the capital base of the group.
7 Redeemed in 2024.

HSBC Bank plc Annual Report and Accounts 2024 | 181

Guaranteed by HSBC Bank plc
A capital security guaranteed by the bank was issued by a Jersey limited partnership. The proceeds of this was lent to the bank by the limited
partnership in the form of a subordinated note. It qualified as additional tier 1 capital for the group (on a solo and consolidated basis) under CRR
II until 31 December 2021 by virtue of the application of grandfathering provisions. Since 31 December 2021, this security has no longer
qualified as regulatory capital for the group.
As at 31 December 2024, the preferred securities guaranteed by HSBC Bank plc are intended to provide investors with rights to income and
capital distributions, as well as distributions upon liquidation of the issuer that are equivalent to the rights that they would have had if they had
purchased non-cumulative perpetual preference shares of the issuer. There are limitations on the payment of distributions if such payments are
prohibited under UK banking regulations or other requirements, if a payment would cause a breach of the bank's capital adequacy requirements,
or if the bank has insufficient distributable reserves (as defined).
The bank has individually covenanted that, if prevented under certain circumstances from paying distributions on the preferred security in full, it
will not pay dividends or other distributions in respect of its ordinary shares, or repurchase or redeem its ordinary shares, until the distribution on
the preferred security has been paid in full.
If the preferred security guaranteed by the bank is outstanding in November 2048, or if the total capital ratio of the group (on a solo or
consolidated basis) falls below the regulatory minimum required, or if the Directors expect it to do so in the near term, provided that
proceedings have not been commenced for the liquidation, dissolution or winding up of the bank, the holders’ interests in the preferred security
guaranteed by the bank will be exchanged for interests in preference shares issued by the bank that have economic terms which are in all
material respects equivalent to the preferred security and its guarantee.
Tier 2 securities
Tier 2 capital securities are either perpetual or dated subordinated securities on which there is an obligation to pay coupons. These capital
securities are included within the group’s regulatory capital base as tier 2 capital under CRR II, either as fully eligible capital or by virtue of the
application of grandfathering provisions. In accordance with CRR II, the capital contribution of all tier 2 securities is amortised for regulatory
purposes in their final five years before maturity.

27 Maturity analysis of assets, liabilities and off-balance sheet commitments
Contractual maturity of financial liabilities
The balances in the table below do not agree directly with those in our consolidated balance sheet as the table incorporates, on an undiscounted
basis, all cash flows relating to principal and future coupon payments (except for trading liabilities and derivatives not treated as hedging
derivatives).
Undiscounted cash flows payable in relation to hedging derivative liabilities are classified according to their contractual maturities. Trading
liabilities and derivatives not treated as hedging derivatives are included in the ‘Due not more than 1 month’ time bucket and not by contractual
maturity.
In addition, loans and other credit-related commitments, and financial guarantees are generally not recognised on our balance sheet. The
undiscounted cash flows potentially payable under loan and other credit-related commitments and financial guarantees are classified on the
basis of the earliest date they can be called.

Cash flows payable under financial liabilities by remaining contractual maturities
| Due not more than 1 month | Due over 1 month but not more than 3 months | Due between 3 and 12 months | Due between 1 and 5 years | Due after 5 years | Total
The group | £m | £m | £m | £m | £m | £m
Deposits by banks | 22,218 | 1,144 | 2,510 | 537 | 316 | 26,725
Customer accounts | 212,491 | 19,021 | 10,965 | 654 | 89 | 243,220
Repurchase agreements – non-trading | 36,469 | 2,542 | 1,001 | 859 | — | 40,871
Trading liabilities | 42,633 | — | — | — | — | 42,633
Financial liabilities designated at fair value | 10,719 | 2,074 | 4,977 | 15,915 | 8,266 | 41,951
Derivatives | 195,839 | 83 | 140 | 509 | 1,309 | 197,880
Debt securities in issue | 3,630 | 3,662 | 10,563 | 2,040 | 886 | 20,781
Subordinated liabilities | 28 | 160 | 622 | 7,839 | 13,916 | 22,565
Other financial liabilities 1 | 47,159 | 277 | 563 | 140 | 35 | 48,174
| 571,186 | 28,963 | 31,341 | 28,493 | 24,817 | 684,800
Loan and other credit-related commitments | 128,007 | — | — | — | — | 128,007
Financial guarantees 2 | 2,876 | — | — | — | — | 2,876
At 31 Dec 2024 | 702,069 | 28,963 | 31,341 | 28,493 | 24,817 | 815,683

182 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

Cash flows payable under financial liabilities by remaining contractual maturities (continued)
| Due not more than 1 month | Due over 1 month but not more than 3 months | Due between 3 and 12 months | Due between 1 and 5 years | Due after 5 years | Total
| £m | £m | £m | £m | £m | £m
Deposits by banks | 19,626 | 2,028 | 453 | 700 | 269 | 23,076
Customer accounts | 197,730 | 14,148 | 10,649 | 671 | 81 | 223,279
Repurchase agreements – non-trading | 42,743 | 7,801 | 1,761 | 1,686 | — | 53,991
Trading liabilities | 42,276 | — | — | — | — | 42,276
Financial liabilities designated at fair value | 12,107 | 1,183 | 8,003 | 7,589 | 6,862 | 35,744
Derivatives | 170,391 | 127 | 326 | 798 | 1,198 | 172,840
Debt securities in issue | 3,305 | 2,266 | 6,014 | 1,939 | 1,360 | 14,884
Subordinated liabilities | 31 | 157 | 397 | 6,478 | 13,122 | 20,185
Other financial liabilities 1 | 57,982 | 292 | 691 | 159 | 1,220 | 60,344
| 546,191 | 28,002 | 28,294 | 20,020 | 24,112 | 646,619
Loan and other credit-related commitments | 131,829 | — | — | — | — | 131,829
Financial guarantees 2 | 2,401 | — | — | — | — | 2,401
At 31 Dec 2023 | 680,421 | 28,002 | 28,294 | 20,020 | 24,112 | 780,849

Cash flows payable under financial liabilities by remaining contractual maturities
| Due not more than 1 month | Due over 1 month but not more than 3 months | Due between 3 and 12 months | Due between 1 and 5 years | Due after 5 years | Total
The bank | £m | £m | £m | £m | £m | £m
Deposits by banks | 16,038 | 1,097 | 2,306 | 22 | — | 19,463
Customer accounts | 122,014 | 12,645 | 7,537 | 195 | — | 142,391
Repurchase agreements – non-trading | 29,939 | 1,904 | 1,236 | 2,159 | — | 35,238
Trading liabilities | 29,143 | — | — | — | — | 29,143
Financial liabilities designated at fair value | 10,468 | 1,720 | 3,838 | 11,546 | 4,805 | 32,377
Derivatives | 182,584 | 83 | 137 | 454 | 1,281 | 184,539
Debt securities in issue | 2,513 | 2,459 | 7,608 | 256 | 83 | 12,919
Subordinated liabilities | 28 | 160 | 609 | 7,829 | 14,370 | 22,996
Other financial liabilities 1 | 36,663 | 127 | 342 | 14 | 13 | 37,159
| 429,390 | 20,195 | 23,613 | 22,475 | 20,552 | 516,225
Loan and other credit-related commitments | 35,552 | — | — | — | — | 35,552
Financial guarantees 2 | 1,143 | — | — | — | — | 1,143
At 31 Dec 2024 | 466,085 | 20,195 | 23,613 | 22,475 | 20,552 | 552,920
Deposits by banks | 17,389 | 1,090 | 318 | — | — | 18,797
Customer accounts | 119,019 | 7,694 | 6,759 | 59 | — | 133,531
Repurchase agreements – non-trading | 38,794 | 7,337 | 1,588 | 1,686 | — | 49,405
Trading liabilities | 24,932 | — | — | — | — | 24,932
Financial liabilities designated at fair value | 11,693 | 743 | 5,675 | 3,927 | 4,021 | 26,059
Derivatives | 151,766 | 127 | 326 | 754 | 1,179 | 154,152
Debt securities in issue | 2,328 | 438 | 3,432 | 1,197 | 188 | 7,583
Subordinated liabilities | 31 | 157 | 396 | 6,454 | 13,238 | 20,276
Other financial liabilities 1 | 44,915 | 129 | 408 | 18 | 16 | 45,486
| 410,867 | 17,715 | 18,902 | 14,095 | 18,642 | 480,221
Loan and other credit-related commitments | 35,270 | — | — | — | — | 35,270
Financial guarantees 2 | 1,106 | — | — | — | — | 1,106
At 31 Dec 2023 | 447,243 | 17,715 | 18,902 | 14,095 | 18,642 | 516,597

1 Excludes financial liabilities of disposal groups.
2 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.

HSBC Bank plc Annual Report and Accounts 2024 | 183

Maturity analysis of financial assets and financial liabilities
The following table provides an analysis of financial assets and liabilities by residual contractual maturity at the balance sheet date. These
balances are included in the maturity analysis as follows:
– Financial assets and liabilities with no contractual maturity (such as equity securities) are included in the ‘Due after more than 1 year’ time
bucket. Undated or perpetual instruments are classified based on the contractual notice period, which the counterparty of the instrument is
entitled to give. Where there is no contractual notice period, undated or perpetual contracts are included in the ‘Due after more than 1 year’
time bucket.
– Financial instruments included within assets and liabilities of disposal groups held for sale are classified on the basis of the contractual
maturity of the underlying instruments and not on the basis of the disposal transaction.
– Liabilities under investment contracts are classified in accordance with their contractual maturity. Undated investment contracts are included
in the ‘Due after more than 1 year’ time bucket, however, such contracts are subject to surrender and transfer options by the policyholders.

Maturity analysis of financial assets and financial liabilities |  |
| 2024 | 2023
| Due within 1 year | Due after more than 1 year | Total | Due within 1 year | Due after more than 1 year | Total
The group | £m | £m | £m | £m | £m | £m
Assets |  |  |  |  |  |
Financial assets designated or otherwise mandatorily measured at fair value | 3,695 | 5,722 | 9,417 | 2,973 | 16,095 | 19,068
Loans and advances to banks | 13,859 | 662 | 14,521 | 14,037 | 334 | 14,371
Loans and advances to customers | 41,064 | 41,602 | 82,666 | 34,876 | 40,615 | 75,491
Reverse repurchase agreement – non-trading | 52,190 | 1,422 | 53,612 | 71,676 | 1,818 | 73,494
Financial investments | 10,549 | 41,667 | 52,216 | 7,481 | 38,887 | 46,368
Other financial assets | 49,500 | 503 | 50,003 | 58,807 | 288 | 59,095
Assets held for sale | 3,356 | 18,250 | 21,606 | 10,182 | 10,186 | 20,368
At 31 Dec | 174,213 | 109,828 | 284,041 | 200,032 | 108,223 | 308,255
Liabilities |  |  |  |  |  |
Deposits by banks | 25,750 | 765 | 26,515 | 22,069 | 874 | 22,943
Customer accounts | 241,587 | 716 | 242,303 | 222,215 | 726 | 222,941
Repurchase agreements – non-trading | 39,627 | 757 | 40,384 | 51,848 | 1,568 | 53,416
Financial liabilities designated at fair value | 17,563 | 19,880 | 37,443 | 21,163 | 11,382 | 32,545
Debt securities in issue | 17,628 | 1,833 | 19,461 | 11,439 | 2,004 | 13,443
Other financial liabilities | 49,482 | 285 | 49,767 | 60,549 | 1,372 | 61,921
Subordinated liabilities | 155 | 16,753 | 16,908 | — | 14,920 | 14,920
Liabilities of disposal groups held for sale | 4,552 | 18,558 | 23,110 | 17,590 | 3,094 | 20,684
At 31 Dec | 396,344 | 59,547 | 455,891 | 406,873 | 35,940 | 442,813

The bank |  |  |  |  |  |
Assets |  |  |  |  |  |
Financial assets designated or otherwise mandatorily measured at fair value | 3,231 | 429 | 3,660 | 2,897 | 284 | 3,181
Loans and advances to banks | 11,141 | 1,589 | 12,730 | 10,673 | 997 | 11,670
Loans and advances to customers | 17,802 | 13,114 | 30,916 | 19,785 | 12,658 | 32,443
Reverse repurchase agreement – non-trading | 33,069 | 1,325 | 34,394 | 55,290 | 1,683 | 56,973
Financial investments | 5,668 | 28,582 | 34,250 | 4,313 | 24,078 | 28,391
Other financial assets | 38,061 | — | 38,061 | 44,162 | — | 44,162
Assets held for sale 1 | 390 | 137 | 527 | 160 | — | 160
At 31 Dec | 109,362 | 45,176 | 154,538 | 137,280 | 39,700 | 176,980
Liabilities |  |  |  |  |  |
Deposits by banks | 19,334 | 21 | 19,355 | 18,775 | — | 18,775
Customer accounts | 141,930 | 192 | 142,122 | 133,314 | 59 | 133,373
Repurchase agreements – non-trading | 32,592 | 1,953 | 34,545 | 47,274 | 1,568 | 48,842
Financial liabilities designated at fair value | 15,926 | 12,560 | 28,486 | 18,005 | 5,441 | 23,446
Debt securities in issue | 12,370 | 298 | 12,668 | 6,077 | 1,276 | 7,353
Other financial liabilities | 38,148 | 25 | 38,173 | 46,483 | 30 | 46,513
Subordinated liabilities | 142 | 16,732 | 16,874 | — | 14,658 | 14,658
Liabilities of disposal groups held for sale | 2,667 | — | 2,667 | — | — | —
At 31 Dec | 263,109 | 31,781 | 294,890 | 269,928 | 23,032 | 292,960

1 For the period ended 31 December 2024 Assets held for sale include planned sale of business in South Africa.

184 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

28 Offsetting of financial assets and financial liabilities
In the offsetting of financial assets and financial liabilities, the net amount is reported in the balance sheet when the offset criteria are met. This
is achieved when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise
the asset and settle the liability simultaneously.
In the following table, the ‘Amounts not set off in the balance sheet’ include transactions where:
– the counterparty has an offsetting exposure with the group and a master netting or similar arrangement is in place with a right of set off only
in the event of default, insolvency or bankruptcy, or the offset criteria are not otherwise satisfied; and
– in the case of derivatives and reverse repurchase/repurchase, stock borrowing/lending and similar agreements, cash and non-cash collateral
(debt securities and equities) has been received/pledged to cover net exposure in the event of a default or other predetermined events.
The effect of over-collateralisation is excluded.
‘Amounts not subject to enforceable master netting agreements’ include contracts executed in jurisdictions where the rights of set off may not
be upheld under the local bankruptcy laws, and transactions where a legal opinion evidencing enforceability of the right of offset may not have
been sought, or may have been unable to obtain.
For risk management purposes, the net amounts of loans and advances to customers are subject to limits, which are monitored and the
relevant customer agreements are subject to review and updated, as necessary, to ensure that the legal right of offset remains appropriate.

| Amounts subject to enforceable netting arrangements | Amounts not subject to enforceable netting arrangements 5 | Total
|  |  |  | Amounts not set off in the balance sheet |
| Gross amounts | Amounts offset | Net amounts in the balance sheet | Financial instruments, including non- cash collateral | Cash collateral | Net amount
| £m | £m | £m | £m | £m | £m | £m | £m
Financial assets |  |  |  |  |  |  |  |
Derivatives (Note 14)1 | 260,807 | (66,478) | 194,329 | (177,527) | (16,137) | 665 | 3,843 | 198,172
Reverse repos, stock borrowing and similar agreements classified as 2: |  |  |  |  |  |  |  |
– trading assets | 13,994 | (635) | 13,359 | (13,360) | — | (1) | 390 | 13,749
– non-trading assets | 117,236 | (67,320) | 49,916 | (49,019) | (178) | 719 | 3,696 | 53,612
Loans and advances to customers 3 | 21,359 | (11,119) | 10,240 | (8,897) | — | 1,343 | 3 | 10,243
At 31 Dec 2024 | 413,396 | (145,552) | 267,844 | (248,803) | (16,315) | 2,726 | 7,932 | 275,776
Derivatives (Note 14)1 | 237,360 | (64,045) | 173,315 | (155,398) | (17,674) | 243 | 801 | 174,116
Reverse repos, stock borrowing and similar agreements classified as 2: |  |  |  |  |  |  |  |
– trading assets | 17,454 | (473) | 16,981 | (16,981) | — | — | 243 | 17,224
– non-trading assets | 129,243 | (58,972) | 70,271 | (70,204) | (62) | 5 | 3,223 | 73,494
Loans and advances to customers 3 | 20,950 | (10,473) | 10,477 | (9,321) | — | 1,156 | 1 | 10,478
At 31 Dec 2023 | 405,007 | (133,963) | 271,044 | (251,904) | (17,736) | 1,404 | 4,268 | 275,312
Financial liabilities |  |  |  |  |  |  |  |
Derivatives (Note 14)1 | 260,721 | (66,478) | 194,243 | (172,425) | (21,461) | 357 | 2,839 | 197,082
Repos, stock lending and similar agreements classified as 2: |  |  |  |  |  |  |  |
– trading liabilities | 15,283 | (252) | 15,031 | (15,032) | — | (1) | 5 | 15,036
– non-trading liabilities | 108,006 | (67,702) | 40,304 | (40,015) | (124) | 165 | 80 | 40,384
Customer accounts 4 | 25,259 | (11,119) | 14,140 | (8,897) | — | 5,243 | 8 | 14,148
At 31 Dec 2024 | 409,269 | (145,551) | 263,718 | (236,369) | (21,585) | 5,764 | 2,932 | 266,650
Derivatives (Note 14)1 | 234,304 | (64,045) | 170,259 | (155,148) | (14,337) | 774 | 1,215 | 171,474
Repos, stock lending and similar agreements classified as 2: |  |  |  |  |  |  |  |
– trading liabilities | 10,249 | (135) | 10,114 | (10,112) | — | 2 | 5 | 10,119
– non-trading liabilities | 112,726 | (59,310) | 53,416 | (52,878) | (539) | (1) | — | 53,416
Customer accounts 4 | 26,395 | (10,473) | 15,922 | (9,321) | — | 6,601 | 6 | 15,928
At 31 Dec 2023 | 383,674 | (133,963) | 249,711 | (227,459) | (14,876) | 7,376 | 1,226 | 250,937

1 At 31 Dec 2024, the amount of cash margin received that had been offset against the gross derivatives assets was £2,279m (2023: £1,508m). The amount of
cash margin paid that had been offset against the gross derivatives liabilities was £1,663m (2023: £4,296m).
2 For the amount of repos, reverse repos, stock lending, stock borrowing and similar agreements recognised on the balance sheet within 'Trading assets' and
'Trading liabilities', see the 'Funding sources and uses' table on page 80.
3 At 31 Dec 2024, the total amount of 'Loans and advances to customers' recognised on the balance sheet was £82,666m (2023: £75,491m) of which £10,240m
(2023: £10,477m) was subject to offsetting.
4 At 31 Dec 2024, the total amount of 'Customer accounts' recognised on the balance sheet was £242,303m (2023: £222,941m) of which £14,140m (2023:
£15,922m) was subject to offsetting.
5 These exposures continue to be secured by financial collateral, but we may not have sought or been able to obtain a legal opinion evidencing enforceability of the
right of offset.

HSBC Bank plc Annual Report and Accounts 2024 | 185

29 Called up share capital and other equity instruments
Issued and fully paid

HSBC Bank plc £1.00 ordinary shares
|  | 2024 | 2023
|  | Number | £m | Number | £m
At 1 Jan |  | 796,969,113 | 797 | 796,969,112 | 797
At 31 Dec |  | 796,969,115 | 797 | 796,969,113 | 797

HSBC Bank plc share premium
|  | 2024 1 | 2023
|  | £m | £m
At 31 Dec |  | 3,582 | 1,004

1 Increase relates to share premium on issuance of 2 ordinary shares (£1/ per share) to HSBC Holdings plc ('HGHQ').

Total called up share capital and share premium
|  | 2024 | 2023
|  | £m | £m
At 31 Dec |  | 4,379 | 1,801

HSBC Bank plc US$0.01 non-cumulative third dollar preference shares preferred ordinary shares
| 2024 | 2023
| Number | £000 | Number | £000
At 1 Jan and 31 Dec | 35,000,000 | 172 | 35,000,000 | 172

The bank has no obligation to redeem the preference shares but may redeem them in part or in whole at any time, subject to prior notification to
the PRA. Dividends on the preference shares in issue are paid annually at the sole and absolute discretion of the Board of Directors. The Board
of Directors will not declare a dividend on the preference shares in issue if (i) payment of the dividend would cause a breach of the capital
adequacy requirements of the bank (or its subsidiary undertakings) under applicable laws or regulations or (ii) the distributable profits of the bank
are insufficient to enable the payment in full or in part (as applicable) of the dividends on the preference shares in issue. If either the solo or
consolidated Common Equity Tier 1 Capital Ratio of the bank as of any date falls below 7.00% (a so-called 'right conversion event'), the rights
attaching to the preference shares shall be altered irrevocably and permanently such that they have the same rights attaching to them as
ordinary shares. Holders of the preference shares in issue will be able to attend any general meetings of shareholders of the bank and to vote
on any resolution proposed to vary or abrogate any of the rights attaching to the preference shares or any resolution proposed to reduce the
paid up capital of the preference shares. If the dividend payable on the preference shares in issue has not been paid in full for the most recent
dividend period, if a rights conversion event has occurred or if any resolution is proposed for the winding-up of the bank or the sale of its entire
business then, in such circumstances, holders of preference shares will be entitled to vote on all matters put to general meetings. In the case of
unpaid dividends, the holders of preference shares in issue will be entitled to attend and vote at any general meetings until such time as
dividends on the preference shares for the most recent dividend period have been paid in full, or a sum set aside for such payment in full, in
respect of one dividend period. All shares in issue are fully paid.
Other equity instruments

HSBC Bank plc additional tier 1 instruments
|  | First call date | 2024 | 2023
|  | £m | £m
€1,900m | 5.950% Undated Subordinated Resettable Additional Tier 1 instrument issued 2015 1 | Dec 2020 | 1,388 | 1,388
€235m | 5.650% Undated Subordinated Resettable Additional Tier 1 instrument issued 2016 1 | Jan 2022 | 197 | 197
€300m | 3.813% Undated Subordinated Resettable Additional Tier 1 instrument issued 2018 1 | Mar 2023 | 263 | 263
£555m | 5.063% Undated Subordinated Resettable Additional Tier 1 instrument issued 2018 1 | Mar 2023 | 555 | 555
£500m | 4.750% Undated Subordinated Resettable Additional Tier 1 instrument issued 2019 1 | Nov 2024 | 500 | 500
€250m | 3.500% Undated Subordinated Resettable Additional Tier 1 instrument issued 2019 3 | Nov 2024 | — | 213
£431m | 4.551% Undated Subordinated Resettable Additional Tier 1 instrument issued 2019 1 | Dec 2024 | 431 | 431
€200m | 5.039% Undated Subordinated Resettable Additional Tier 1 instrument issued 2019 1 | Jan 2025 | 175 | 175
€250m | FRN Undated Subordinated Floating Rate Additional Tier 1 instrument issued 2022 1,2 | Mar 2027 | 208 | 208
€250m | 5.625% Undated Subordinated Resettable Additional Tier 1 instrument issued 2024 4 | Dec 2029 | 204 | —
At 31 Dec |  |  | 3,921 | 3,930

1 Securities are contractually callable on any interest payment date after the first call date. Interest rates on resettable securities reset every five years if not called.
2 Interest is floating, based on 3 month EURIBOR + 4.060%.
3 This security was called and redeemed in 2024.
4 This security is contractually callable on any interest rate reset date which occurs every five years.
These instruments are held by HSBC Holdings plc. The bank has issued capital instruments that are included in the group’s capital base as fully
CRR II compliant additional tier 1 capital.
Interest on these instruments will be due and payable only at the sole discretion of the bank, and the bank has sole and absolute discretion at all
times and for any reason to cancel (in whole or in part) any interest payment that would otherwise be payable on any date. There are limitations
on the payment of principal, interest or other amounts if such payments are prohibited under UK banking regulations, or other requirements, if
the bank has insufficient distributable items reserves or if the bank fails to satisfy the solvency condition as defined in the instruments terms.

186 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

The instruments are undated and are repayable, at the option of the bank, in whole at the first call date, or (as applicable) on any Interest
Payment Date after the first call date or on any interest rate reset date thereafter. In addition, the instruments are repayable at the option of the
bank in whole for certain regulatory or tax reasons. Any repayments require the prior consent of the PRA. These instruments rank pari passu
with the bank’s most senior class or classes of issued preference shares and therefore ahead of ordinary shares. These instruments will be
written down in whole, together with any accrued but unpaid interest if either the group’s solo or consolidated Common Equity Tier 1 Capital
Ratio falls below 7.00%.

30 Contingent liabilities, contractual commitments, guarantees and
contingent assets

| The group | The bank
| 2024 | 2023 | 2024 | 2023
| £m | £m | £m | £m
Guarantees and other contingent liabilities: |  |  |  |
– financial guarantees | 2,876 | 2,401 | 1,143 | 1,106
– performance and other guarantees | 19,464 | 19,548 | 6,774 | 7,395
– other contingent liabilities 1 | 18 | 268 | 5 | 267
At 31 Dec | 22,358 | 22,217 | 7,922 | 8,768
Commitments:2 |  |  |  |
– documentary credits and short-term trade-related transactions | 1,588 | 1,919 | 688 | 908
– forward asset purchases and forward deposits placed | 32,672 | 38,704 | 3,791 | 4,539
– standby facilities, credit lines and other commitments to lend | 93,746 | 91,206 | 31,073 | 29,823
At 31 Dec | 128,006 | 131,829 | 35,552 | 35,270

1 Other contingent liabilities for period ended 31 December 2023 includes £262m related to UK VAT. See ‘UK branches of HSBC overseas entities’ below.
2 Includes £121,764m of commitments (2023: £125,616m), to which the impairment requirements in IFRS 9 are applied where the group has become party to an
irrevocable commitment.
The above table discloses the nominal principal amounts of off-balance sheet liabilities and commitments, which represent the maximum
amounts at risk should the contracts be fully drawn upon and clients default. As a significant portion of guarantees and commitments is
expected to expire without being drawn upon, the total of the nominal principal amounts is not indicative of future liquidity requirements.
Contingent liabilities arising from legal proceedings, regulatory and other matters against group companies are disclosed in Note 32.
UK branches of HSBC overseas entities
In December 2017, HM Revenue & Customs (‘HMRC’) challenged the VAT status of certain UK branches of HSBC overseas entities. HMRC has
also issued notices of assessment covering the period from 1 October 2013 to 31 December 2017 totalling £262m, with interest to be
determined. In Q1 2019, HMRC reaffirmed its assessment that the UK branches are ineligible to be members of the UK VAT group and,
consequently, HSBC paid HMRC the sum of £262m and filed appeals. Since January 2018, HSBC’s returns have been prepared on the basis
that the UK branches are not in the UK VAT group. In July 2024, a resolution to these appeals was agreed with HMRC, which did not have a
material financial impact on HSBC Bank plc.
Financial Services Compensation Scheme
The F SCS provides compensation, up to certain limits, to eligible customers of financial services firms that are unable, or likely to be unable, to
pay claims against them. The FSCS may impose a further levy on the group to the extent the industry levies imposed to date are not sufficient
to cover the compensation due to customers in any future possible collapse. The ultimate FSCS levy to the industry as a result of collapse
cannot be estimated reliably. It is dependent on various uncertain factors including the potential recovery of assets by the FSCS, changes in the
level of protected products (including deposits and investments) and the population of FSCS members at the time.
Guarantees

| The group | The bank
| 2024 | 2023 | 2024 | 2023
| In favour of third parties | By the group in favour of other HSBC Group entities | In favour of third parties | By the group in favour of other HSBC Group entities | In favour of third parties | By the bank in favour of other HSBC Group entities | In favour of third parties | By the bank in favour of other HSBC Group entities
| £m | £m | £m | £m | £m | £m | £m | £m
Financial guarantees 1 | 2,413 | 463 | 1,981 | 420 | 969 | 174 | 919 | 187
Performance and other guarantees | 17,675 | 1,789 | 17,432 | 2,116 | 4,814 | 1,960 | 5,238 | 2,157
Total | 20,088 | 2,252 | 19,413 | 2,536 | 5,783 | 2,134 | 6,157 | 2,344

1 Financial guarantees contracts are contracts that require the issuer to make specified payments to reimburse the holder for a loss incurred because a specified
debtor fails to make payment when due, in accordance with the original or modified terms of a debt instrument. The amounts in the above table are nominal
principal amounts. ‘Financial guarantees’ to which the impairment requirements in IFRS 9 are applied have been presented separately from other guarantees to
align with credit risk disclosures.
The group provides guarantees and similar undertakings on behalf of both third-party customers and other entities within HSBC Group. These
guarantees are generally provided in the normal course of the group‘s banking businesses. Guarantees with terms of more than one year are
subject to the group’s annual credit review process.

HSBC Bank plc Annual Report and Accounts 2024 | 187

31 Finance lease receivables
The group leases a variety of assets to third parties under finance leases, including transport assets (such as aircraft), property and general plant
and machinery. At the end of lease terms, assets may be sold to third parties or leased for further terms. Rentals are calculated to recover the
cost of assets less their residual value, and earn finance income.

| 2024 | 2023
| Total future minimum payments | Unearned finance income | Present value | Total future minimum payments | Unearned finance income | Present Value
| £m | £m | £m | £m | £m | £m
Lease receivables: |  |  |  |  |  |
No later than one year | 132 | (22) | 110 | 238 | (27) | 211
One to two years | 113 | (15) | 98 | 231 | (24) | 207
Two to three years | 97 | (13) | 84 | 113 | (15) | 98
Three to four years | 80 | (11) | 69 | 116 | (13) | 103
Four to five years | 57 | (10) | 47 | 65 | (12) | 53
Later than one year and no later than five years | 347 | (49) | 298 | 525 | (64) | 461
Later than five years | 241 | (18) | 223 | 311 | (28) | 283
At 31 Dec | 720 | (89) | 631 | 1,074 | (119) | 955

32 Legal proceedings and regulatory matters
The group is party to legal proceedings and regulatory matters in a number of jurisdictions arising out of its normal business operations. Apart
from the matters described below, the group considers that none of these matters are material. The recognition of provisions is determined in
accordance with the accounting policies set out in Note 1. While the outcomes of legal proceedings and regulatory matters are inherently
uncertain, management believes that, based on the information available to it, appropriate provisions have been made in respect of these
matters as at 31 December 2024 (see Note 25: ‘Provisions’). Where an individual provision is material, the fact that a provision has been made is
stated and quantified, except to the extent that doing so would be seriously prejudicial. Any provision recognised does not constitute an
admission of wrongdoing or legal liability. It is not practicable to provide an aggregate estimate of potential liability for our legal proceedings and
regulatory matters as a class of contingent liabilities.
Bernard L. Madoff Investment Securities LLC
Various non-US HSBC companies provided custodial, administration and similar services to a number of funds incorporated outside the US
whose assets were invested with Bernard L. Madoff Investment Securities LLC ('Madoff Securities'). Based on information provided by Madoff
Securities as at 30 November 2008, the purported aggregate value of these funds was $8.4b n, including fictitious profits reported by Madoff.
Based on information available to HSBC, the funds’ actual transfers to Madoff Securities minus their actual withdrawals from Madoff Securities
during the time HSBC serviced the funds are estimated to have totalled approximately $4b n. Various HSBC companies have been named as
defendants in lawsuits arising out of Madoff Securities’ fraud.
Trustee litigation: The Madoff Securities trustee (the 'Trustee') has brought lawsuits in the US against various HSBC companies and others
seeking recovery of alleged transfers from Madoff Securities to the HSBC companies in the amount of $543m (plus interest), and these lawsuits
remain pending in the US Bankruptcy Court for the Southern District of New York.
The Trustee has filed a claim against various HSBC companies in the High Court of England and Wales seeking recovery of alleged transfers
from Madoff Securities to the HSBC companies. The claim has not yet been served and the amount claimed has not been specified.
Fairfield Funds litigation: Fairfield Sentry Limited, Fairfield Sigma Limited and Fairfield Lambda Limited (together, the ‘Fairfield Funds’) (in
liquidation) have brought lawsuits in the US against various HSBC companies and others seeking recovery of alleged transfers from the Fairfield
Funds to the HSBC companies (that acted as nominees for clients) in the amount of $382m (plus interest). Fairfield Funds' claims against most
of the HSBC companies have been dismissed, but remain pending on appeal before the US Court of Appeals for the Second Circuit. Fairfield
Funds' claims against PBRS and HSBC Securities Services Luxembourg ('HSSL') have not been dismissed and are ongoing before the US
Bankruptcy Court for the Southern District of New York. PBRS and HSSL have appealed the decision not to dismiss them and these appeals are
pending before the US Court of Appeals for the Second Circuit.
Herald Fund SPC ('Herald') litigation: HSSL and HSBC Bank plc are defending an action brought by Herald (in liquidation) before the
Luxembourg District Court seeking restitution of securities and cash in the amount of $2.5b n (plus interest), or damages in the amount of
$5.6b n (plus interest). In 2013, the Luxembourg District Court dismissed Herald’s securities restitution claim and stayed the cash restitution and
damages claims. In December 2024, the Luxembourg Court of Appeal reversed the Luxembourg District Court's dismissal and determined that
Herald's claims for restitution of securities and cash were founded in principle. HSSL has appealed this decision. Herald's claim against HSBC
Bank plc is pending.
Alpha Prime Fund Limited ('Alpha Prime') litigation: Various HSBC companies are defending a number of actions brought by Alpha Prime in
the Luxembourg District Court seeking damages for alleged breach of contract and negligence in the amount of $1.16b n (plus interest). These
matters are currently pending before the Luxembourg District Court.
In November 2024, Alpha Prime served various HSBC companies with a lawsuit filed in the Bermuda Supreme Court seeking damages for
unspecified amounts for alleged breach of contract and negligence. This claim is currently stayed.
Senator Fund SPC ('Senator') litigation: HSSL and the Luxembourg branch of HSBC Bank plc are defending a number of actions brought by
Senator before the Luxembourg District Court seeking restitution of securities in the amount of $625m (plus interest), or damages in the
amount of $188m (plus interest). These matters are currently pending before the Luxembourg District Court.
Based on the facts currently known, it is not practicable at this time for HSBC Bank plc to predict the resolution of these matters, including the
timing or any possible impact on HSBC Bank plc, which could be significant.

188 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

US Anti-Terrorism Act litigation
Since November 2014, a number of lawsuits have been filed in federal courts in the US against various HSBC companies and others on behalf
of plaintiffs who are, or are related to, alleged victims of terrorist attacks in the Middle East. In each case, it is alleged that the defendants aided
and abetted the unlawful conduct of various sanctioned parties in violation of the US Anti-Terrorism Act, or provided banking services to
customers alleged to have connections to terrorism financing. Seven actions, which seek damages for unspecified amounts, remain pending
and HSBC Bank plc's motions to dismiss have been granted in three of these cases. These dismissals are subject to appeals and/or the plaintiffs
re-pleading their claims. The four other actions are at an early stage.
Based on the facts currently known, it is not practicable at this time for HSBC Bank plc to predict the resolution of these matters, including the
timing or any possible impact on HSBC Bank plc, which could be significant.
Interbank offered rates investigation and litigation
Euro interest rate derivatives: In December 2016, the European Commission (‘EC’) issued a decision finding that HSBC, among other banks,
engaged in anti-competitive practices in connection with the pricing of euro interest rate derivatives, and the EC imposed a fine on HSBC based
on a one-month infringement in 2007. The fine was annulled in 2019 and a lower fine was imposed in 2021, which has been paid. In January
2023, the European Court of Justice dismissed an appeal by HSBC and upheld the EC's findings on HSBC's liability. In November 2024, the
General Court of the European Union rejected a separate appeal by HSBC concerning the amount of the fine. This matter is now closed.
US dollar Libor: Beginning in 2011, HSBC and other panel banks have been named as defendants in a number of individual and putative class
action lawsuits filed in federal and state courts in the US with respect to the setting of US dollar Libor. The complaints assert claims under
various US federal and state laws, including antitrust and racketeering laws and the Commodity Exchange Act (‘US CEA’). HSBC has concluded
class settlements with five groups of plaintiffs, and several class action lawsuits brought by other groups of plaintiffs have been voluntarily
dismissed. Two individual US dollar Libor-related actions seeking damages from HSBC for unspecified amounts remain pending.
Based on the facts currently known, it is not practicable at this time for HSBC Bank plc to predict the resolution of the pending matters,
including the timing or any possible impact on HSBC Bank plc, which could be significant.
Foreign exchange-related investigations and litigation
Since 2017, HSBC Bank plc, among other financial institutions, has been defending a complaint filed by the Competition Commission of South
Africa before the South African Competition Tribunal for alleged anti-competitive behaviour in the South African foreign exchange market. In
2020, a revised complaint was filed which also named HSBC Bank USA N.A. (‘HSBC Bank USA’) as a defendant. In January 2024, the South
African Competition Appeal Court dismissed HSBC Bank USA from the revised complaint but denied HSBC Bank plc's application to dismiss.
Both the Competition Commission and HSBC Bank plc have appealed to the Constitutional Court of South Africa.
HSBC Bank plc and HSBC Holdings plc have reached a settlement with plaintiffs in Israel to resolve a class action filed in the local courts
alleging foreign exchange-related misconduct. The settlement remains subject to court approval.
Lawsuits alleging foreign exchange-related misconduct remain pending against HSBC Bank plc and other banks in courts in Brazil.
In February 2024, HSBC Bank plc and HSBC Holdings plc were joined to an existing claim brought in the UK Competition Appeals Tribunal
against various other banks alleging historical anti-competitive behaviour in the foreign exchange market and seeking approximately £3b n in
damages from all the defendants. This matter is at an early stage.
Based on the facts currently known, it is not practicable at this time for HSBC Bank plc to predict the resolution of these matters, including the
timing or any possible impact on HSBC Bank plc, which could be significant.
Precious metals fix-related litigation
US litigation: HSBC and other members of The London Silver Market Fixing Limited are defending a class action pending in the US District
Court for the Southern District of New York alleging that, from January 2007 to December 2013, the defendants conspired to manipulate the
price of silver and silver derivatives for their collective benefit in violation of US antitrust laws, the US CEA and New York state law. In May
2023, this action, which seeks damages for unspecified amounts, was dismissed but remains pending on appeal.
HSBC and other members of The London Platinum and Palladium Fixing Company Limited have been defending a class action in the US District
Court for the Southern District of New York alleging that, from January 2008 to November 2014, the defendants conspired to manipulate the
price of platinum group metals and related financial products for their collective benefit in violation of US antitrust laws and the US CEA. In
January 2025, the court approved a settlement reached with the plaintiffs to resolve this action. This matter is now closed.
Canada litigation: HSBC and other financial institutions are defending putative class actions filed in the Ontario and Quebec Superior Courts of
Justice alleging that the defendants conspired to manipulate the price of silver, gold and related derivatives in violation of the Canadian
Competition Act and common law. These actions each seek CA$1b n in damages plus CA$250m in punitive damages. Two of the actions are
proceeding and the others have been stayed.
Based on the facts currently known, it is not practicable at this time for HSBC Bank plc to predict the resolution of the pending matters,
including the timing or any possible impact on HSBC Bank plc, which could be significant.
Tax-related investigations
Since 2023, the French National Financial Prosecutor has been investigating a number of banks, including HBCE and the Paris branch of HSBC
Bank plc, in connection with alleged tax fraud related to the dividend withholding tax treatment of certain trading activities. HSBC Bank plc and
the German branch of HBCE also continue to cooperate with investigations by the German public prosecutor into numerous financial institutions
and their employees, in connection with the dividend withholding tax treatment of certain trading activities.
Based on the facts currently known, it is not practicable at this time for HSBC Bank plc to predict the resolution of these matters, including the
timing or any possible impact on HSBC Bank plc, which could be significant.

HSBC Bank plc Annual Report and Accounts 2024 | 189

Gilts trading investigation and litigation
Since 2018, the UK Competition and Markets Authority has been investigating HSBC and four other banks for suspected anti-competitive
conduct in relation to the historical trading of gilts and related derivatives. This matter is nearing conclusion. The impact on HSBC is not
expected to be significant.
In June 2023, HSBC Bank plc and HSBC Securities (USA) Inc., among other banks, were named as defendants in a putative class action filed in
the US District Court for the Southern District of New York by plaintiffs alleging anti-competitive conduct in the gilts market and seeking
damages for unspecified amounts. Certain of the defendants, including HSBC Bank plc and HSBC Securities (USA) Inc., have reached a
settlement with the plaintiffs to resolve this matter. The settlement remains subject to court approval. Based on the facts currently known, it is
not practicable at this time for HSBC Bank plc to predict the resolution of this matter, including the timing or any possible impact on HSBC Bank
plc, which could be significant.
Other regulatory investigations, reviews and litigation
HSBC Bank plc and/or certain of its affiliates are also subject to a number of other enquiries and examinations, requests for information,
investigations and reviews by various tax authorities, regulators, competition and law enforcement authorities, as well as legal proceedings
including litigation, arbitration and other contentious proceedings, in connection with various matters arising out of their businesses and
operations.
At the present time, HSBC Bank plc does not expect the ultimate resolution of any of these matters to be material to its financial position;
however, given the uncertainties involved in legal proceedings and regulatory matters, there can be no assurance regarding the eventual
outcome of a particular matter or matters.

33 Related party transactions
The immediate and ultimate parent company of the group is HSBC Holdings plc, which is incorporated in England and Wales.
Copies of the group financial statements may be obtained from the below address.
HSBC Holdings plc
8 Canada Square
London E14 5HQ
The group's related parties include the parent, fellow subsidiaries, associates, joint ventures, post-employment benefit plans for HSBC
employees, Key Management Personnel (‘KMP’) of the bank and its ultimate parent company, HSBC Holdings plc, close family members of the
KMP and entities which are controlled, jointly controlled or significantly influenced by the KMP or their close family members.
Particulars of transactions between the group and the related parties are tabulated below in accordance with IAS 24 'Related party disclosures'.
The disclosure of the year-end balance and the highest amounts outstanding during the year are considered to be the most meaningful
information to represent the amount of the transactions and outstanding balances during the year.
Key Management Personnel
The KMP of the bank are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the
bank and the group. They include the Directors of the bank, certain senior executives of the bank, directors of HSBC Holdings plc and certain
senior executives of HSBC Holdings plc.
The emoluments of those KMP who are not Directors or senior executives of the bank are paid by other Group companies who make no
recharge to the bank. Accordingly, no emoluments in respect of these KMP are included in the following disclosure.
The table below represents the compensation for KMP (directors and certain senior executives) of the bank in exchange for services rendered to
the bank for the period they served during the year.

Compensation of Key Management Personnel
| 2024 | 2023 | 2022
| £000 | £000 | £000
Short-term employee benefits 1 | 12,764 | 13,003 | 13,487
Post-employment benefits | 71 | 29 | 69
Other long-term employee benefits | 1,229 | 1,081 | 1,152
Share-based payments | 4,195 | 4,699 | 4,234
Year ended 31 Dec | 18,259 | 18,812 | 18,942

1 Includes fees paid to non-executive Directors.

190 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

Advances and credits, guarantees and deposit balances during the year with Key Management Personnel
| 2024 | 2023
| Balance at 31 Dec | Highest amounts outstanding during year 2 | Balance at 31 Dec | Highest amounts outstanding during year
| £m | £m | £m | £m
Key Management Personnel 1 |  |  |  |
Advances and credits | — | — | — | —
Deposits | 32 | 79 | 27 | 83

1 Includes close family members and entities which are controlled or jointly controlled by KMP of the bank or their close family members.
2 Exchange rate applied for non-GBP amounts is the average for the year.
The above transactions were made in the ordinary course of business and on substantially the same terms, including interest rates and security,
as for comparable transactions with persons of a similar standing or, where applicable, with other employees. The transactions did not involve
more than the normal risk of repayment or present other unfavourable features.
In addition to the requirements of IAS 24, particulars of advances (loans and quasi-loans), credits and guarantees entered into by the group with
Directors of HSBC Bank plc are required to be disclosed pursuant to section 413 of the Companies Act 2006. Under the Companies Act, there is
no requirement to disclose transactions with other KMP. During the course of 2024, there were no advances, credits and guarantees entered
into by the group with Directors of HSBC Bank plc.
Other related parties
Transactions and balances during the year with KMP of the bank’s ultimate parent company
During the course of 2024, there were no transactions and balances between KMP of the bank’s ultimate parent company, who were not
considered KMP of the bank, in respect of advances and credits, guarantees and deposits.
Transactions and balances during the year with associates and joint ventures
The group provides certain banking and financial services to associates and joint ventures, including loans, overdrafts, interest and non-interest
bearing deposits and current accounts. Details of the interests in associates and joint ventures are given in Notes 17 and 36.

Transactions and balances during the year with associates and joint ventures
| 2024 | 2023
| Highest balance during the year | Balance at 31 Dec | Highest balance during the year | Balance at 31 Dec
| £m | £m | £m | £m
Subordinated amounts due from associates | 87 | 46 | 185 | 128
Amounts due to associates | 77 | 36 | 105 | 96
Amounts due to joint ventures | 4 | 4 | 5 | 5
Fair value of derivative assets with associates | 14 | 14 | 4 | 4
Fair value of derivative liabilities with associates | 25 | 20 | 10 | 10
Guarantees and commitments | 144 | 180 | 104 | 43

The above outstanding balances arose in the ordinary course of business and on substantially the same terms, including interest rates and
security, as for comparable transactions with third-party counterparties.

HSBC Bank plc Annual Report and Accounts 2024 | 191

The group’s transactions and balances during the year with HSBC Holdings plc and subsidiaries of HSBC Holdings plc
| 2024 | 2023
| Due to/from HSBC Holdings plc | Due to/from subsidiaries of HSBC Holdings plc | Due to/from HSBC Holdings plc | Due to/from subsidiaries of HSBC Holdings plc
| Highest balance during the year | Balance at 31 Dec | Highest balance during the year | Balance at 31 Dec | Highest balance during the year | Balance at 31 Dec | Highest balance during the year | Balance at 31 Dec
| £m | £m | £m | £m | £m | £m | £m | £m
Assets |  |  |  |  |  |  |  |
Trading assets | 77 | 26 | 190 | 55 | 75 | 10 | 2,883 | 78
Derivatives | 6,314 | 4,220 | 23,365 | 23,365 | 7,495 | 4,767 | 27,928 | 23,035
Financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 5 | 1 | 26 | — | 5 | 5 | 26 | 26
Loans and advances to banks | — | — | 6,384 | 3,723 | — | — | 5,633 | 4,434
Loans and advances to customers | 15 | — | 565 | 444 | 211 | — | 571 | 408
Financial investments | 194 | 79 | — | — | 194 | 194 | — | —
Reverse repurchase agreements – non-trading | — | — | 13,538 | 5,139 | — | — | 14,561 | 13,538
Prepayments, accrued income and other assets | 109 | 51 | 11,134 | 7,028 | 62 | 4 | 12,146 | 6,961
Total related party assets at 31 Dec | 6,714 | 4,377 | 55,202 | 39,754 | 8,042 | 4,980 | 63,748 | 48,480
Liabilities |  |  |  |  |  |  |  |
Trading liabilities | 96 | 83 | 2,795 | 2,795 | 83 | 79 | 1,239 | 1,196
Financial liabilities designated at fair value | 589 | 589 | 608 | 12 | 594 | 571 | 242 | 8
Deposits by banks | — | — | 5,352 | 4,141 | — | — | 6,230 | 2,073
Customer accounts | 7,441 | 1,982 | 11,113 | 2,938 | 6,601 | 5,508 | 1,999 | 1,999
Derivatives | 2,320 | 2,236 | 24,744 | 24,270 | 2,824 | 2,062 | 32,126 | 23,373
Subordinated liabilities | 15,938 | 15,938 | — | — | 14,444 | 13,902 | — | —
Repurchase agreements – non-trading | — | — | 8,187 | 3,181 | — | — | 9,983 | 8,187
Provisions, accruals, deferred income and other liabilities | 4,153 | 2,382 | 11,174 | 4,115 | 4,966 | 3,090 | 8,915 | 8,913
Total related party liabilities at 31 Dec | 30,537 | 23,210 | 63,973 | 41,452 | 29,512 | 25,212 | 60,734 | 45,749
Guarantees and commitments | — | — | 5,046 | 4,317 | — | — | 6,218 | 4,335

HSBC Bank plc routinely enters into related party transactions with other entities in the HSBC Group. These include transactions to facilitate
third-party transactions with customers, transactions for internal risk management, and other transactions relevant to HSBC Group processes.
These transactions and the above outstanding balances arose in the ordinary course of business and on substantially the same terms, including
interest rates and security, as for comparable transactions with third-party counterparties.

192 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

The bank's transactions and balances during the year with HSBC Bank plc subsidiaries, HSBC Holdings plc and subsidiaries of HSBC Holdings plc
| 2024 | 2023
| Due to/from subsidiaries of HSBC Bank plc subsidiaries | Due to/from HSBC Holdings plc | Due to/from subsidiaries of HSBC Holdings plc | Due to/from subsidiaries of HSBC Bank plc subsidiaries | Due to/from HSBC Holdings plc | Due to/from subsidiaries of HSBC Holdings plc
| Highest balance during the year | Balance at 31 Dec | Highest balance during the year | Balance at 31 Dec | Highest balance during the year | Balance at 31 Dec | Highest balance during the year | Balance at 31 Dec | Highest balance during the year | Balance at 31 Dec | Highest balance during the year | Balance at 31 Dec
| £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
Assets |  |  |  |  |  |  |  |  |  |  |  |
Trading assets | 135 | 3 | 76 | 26 | 190 | 55 | 174 | 83 | 73 | 9 | 2,882 | 65
Derivatives | 11,959 | 11,959 | 6,314 | 4,220 | 21,999 | 21,999 | 11,332 | 9,135 | 7,495 | 4,767 | 26,740 | 21,668
Financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 207 | 206 | — | — | — | — | — | — | — | — | — | —
Loans and advances to banks | 3,059 | 2,161 | — | — | 5,015 | 2,443 | 3,246 | 2,572 | — | — | 3,892 | 2,628
Loans and advances to customers | 4,111 | 2,839 | 15 | — | 202 | 198 | 4,594 | 4,111 | 211 | — | 387 | 155
Financial investments | 6,658 | 6,481 | — | — | — | — | 5,776 | 5,728 | — | — | — | —
Reverse repurchase agreements – non-trading | 4,102 | 973 | — | — | 12,768 | 1,857 | 4,102 | 4,102 | — | — | 14,314 | 12,768
Prepayments, accrued income and other assets | 5,293 | 492 | 109 | 51 | 9,566 | 5,742 | 7,134 | 2,297 | 62 | 4 | 10,548 | 6,219
Investments in subsidiary undertakings | 13,247 | 13,247 | — | — | — | — | 11,627 | 11,627 | — | — | — | —
Total related party assets at 31 Dec | 48,771 | 38,361 | 6,514 | 4,297 | 49,740 | 32,294 | 47,985 | 39,655 | 7,841 | 4,780 | 58,763 | 43,503
Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Trading liabilities | 357 | 140 | 95 | 82 | 2,795 | 2,795 | 80 | 79 | 83 | 78 | 1,239 | 1,196
Financial liabilities designated at fair value | — | — | 589 | 589 | 608 | 12 | — | — | 594 | 571 | 242 | 8
Deposits by banks | 1,698 | 1,172 | — | — | 3,839 | 2,640 | 1,978 | 984 | — | — | 4,242 | 1,403
Customer accounts | 661 | 563 | 7,441 | 1,982 | 10,954 | 2,698 | 583 | 405 | 6,601 | 5,508 | 1,877 | 1,877
Derivatives | 10,388 | 10,022 | 2,320 | 2,236 | 22,993 | 21,934 | 13,361 | 10,388 | 2,824 | 2,062 | 29,977 | 21,869
Subordinated liabilities | 700 | 700 | 15,938 | 15,938 | — | — | 700 | 700 | 14,217 | 13,676 | — | —
Repurchase agreements – non-trading | 4,071 | 3,178 | — | — | 8,142 | 3,045 | 2,362 | 1,135 | — | — | 9,983 | 8,142
Provisions, accruals, deferred income and other liabilities | 7,045 | 2,679 | 4,148 | 2,379 | 10,298 | 3,684 | 7,397 | 1,250 | 4,951 | 3,087 | 8,202 | 8,186
Total related party liabilities at 31 Dec | 24,920 | 18,454 | 30,531 | 23,206 | 59,629 | 36,808 | 26,461 | 14,941 | 29,270 | 24,982 | 55,762 | 42,681
Guarantees and commitments | 5,322 | 2,115 | — | — | 3,674 | 2,302 | 5,315 | 3,321 | — | — | 4,406 | 2,964

The above outstanding balances arose in the ordinary course of business and on substantially the same terms, including interest rates and
security, as for comparable transactions with third-party counterparties.
Post-employment benefit plans
The HSBC Bank (UK) Pension Scheme (the ‘Scheme’) entered into swap transactions with the bank to manage the inflation and interest rate
sensitivity of the liabilities. At 31 December 2024, the gross notional value of the swaps was £5,109m (2023: £5,574m), the swaps had a
positive fair value of £336m to the bank (2023: positive fair value of £429m) and the bank had delivered collateral of £322m (2023: £439m) to the
Scheme in respect of these swaps. All swaps were executed at prevailing market rates and within standard market bid/offer spreads.

HSBC Bank plc Annual Report and Accounts 2024 | 193

34 Assets held for sale and liabilities of disposal groups held for sale

Held for sale at 31 December
| 2024 | 2023
| £m | £m
Held for sale at 31 Dec |  |
Disposal groups | 21,620 | 21,792
Unallocated impairment losses 1 | (25) | (1,548)
Non-current assets held for sale | 11 | 124
Assets held for sale | 21,606 | 20,368
Liabilities of disposal groups held for sale | 23,110 | 20,684

1 This represents impairment losses in excess of the carrying amount on the non-current assets, excluded from the measurement scope of IFRS 5.
Disposal groups
Planned sale of Private Banking business in Germany
On 23 September 2024, HSBC Continental Europe reached an agreement to sell its private banking business in Germany to BNP Paribas and
the disposal group met the held for sale criteria at 31 December 2024. This sale, which remains subject to works council consultation, is
expected to be completed in the second half of 2025. The sale is expected to generate an estimated pre-tax gain on disposal of £0.2 bn, which
will be recognised on completion.
Planned sale of our business in South Africa
On 25 September 2024, HSBC reached an agreement to transfer its business in South Africa to local lender FirstRand Bank Ltd and the disposal
group met the held for sale criteria at 31 December 2024. The transaction, which is subject to regulatory and governmental approvals, is
expected to complete in the second half of 2025. At closing, cumulative foreign currency translation reserves and other reserves will recycle to
the income statement. At 31 December 2024, foreign currency translation reserve and other reserve losses stood at £0.1 bn.
Planned sale of French Life Insurance Business
On 20 December 2024, HSBC Continental Europe, a wholly owned subsidiary of HSBC Bank plc, signed a Memorandum of Understanding
(MoU) for the planned sale of its French life insurance business, HSBC Assurances Vie (France), to Matmut Société d’Assurance Mutuelle. The
transaction, which is subject to regulatory approvals and employee consultation, is expected to co mplete in the second half of 2025. The
disposal group met the held for sale criteria at 31 December 2024, resulting in the reclassification of £19.3 bn in assets and £18.7 bn in liabilities
to held for sale, and the recognition of an immaterial loss on disposal. The total pre-tax loss at completion is estimated at £0.2 bn inclusive of
migration costs and the recycling of cumulative foreign currency translation reserves, insurance finance reserves and other reserves which
stood at a net loss of £0.1 bn as at 31 December 2024.
At 31 December 2024, the major classes of assets and associated liabilities of disposal groups held for sale, excluding allocated impairment
losses, were as follows:

| French Life Insurance Business | South Africa 1 | German Private Banking Business | Total
| £m | £m | £m | £m
Operating segment | WPB | GBM and Corporate Centre | WPB |
Assets of disposal groups held for sale |  |  |  |
Cash and balances at central banks | — | — | 1,511 | 1,511
Financial assets designated and otherwise mandatorily measured at fair value through profit and loss | 11,607 | — | — | 11,607
Loans and advances to banks | 115 | — | — | 115
Loans and advances to customers | — | 523 | 246 | 769
Financial investments 2 | 6,776 | — | — | 6,776
Insurance Contract Assets | 18 | — | — | 18
Prepayments, accrued income and other assets | 793 | 13 | 18 | 824
Total Assets at 31 Dec 2024 | 19,309 | 536 | 1,775 | 21,620
Liabilities of disposal groups held for sale |  |  |  |
Customer accounts | — | 2,626 | 1,662 | 4,288
Financial liabilities designated at fair value | 9 | — | 95 | 104
Insurance Contract Liabilities | 17,387 | — | — | 17,387
Accruals, deferred income and other liabilities | 1,272 | 41 | 18 | 1,331
Total Liabilities at 31 Dec 2024 | 18,668 | 2,667 | 1,775 | 23,110
Expected date of completion | Second half of 2025 | Second half of 2025 | Second half of 2025 |

1 Under the financial terms of the sale of our South Africa business, HSBC Bank Plc will transfer the business with a net asset value of £0.5 bn for a book value
less any provisions. The purchase price will be satisfied by the transfer of agreed liabilities of £2.7 bn. Any required increase to the net asset value of the business
to achieve this will be satisfied by the inclusion of additional cash. As at 31 December 2024, HSBC would be expected to include a cash contribution of £2.1 bn.
2 Represents financial investments measured at fair value through other comprehensive income.

194 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

| France retail banking operations | Other 1 | Total
| £m | £m | £m
Operating segment | WPB | CMB, GBM |
Assets of disposal groups held for sale |  |  |
Cash and balances at central banks | 177 | — | 177
Financial assets designated and otherwise mandatorily measured at fair value through profit and loss | 38 | — | 38
Loans and advances to banks | 8,103 | — | 8,103
Loans and advances to customers | 13,255 | 90 | 13,345
Financial investments 2 | 25 | — | 25
Prepayments, accrued income and other assets | 103 | 1 | 104
Total Assets at 31 Dec 2023 | 21,701 | 91 | 21,792
Liabilities of disposal groups held for sale |  |  |
Customer accounts | 17,492 | 95 | 17,587
Financial liabilities designated at fair value | 1,858 | — | 1,858
Debt securities in issue | 1,080 | — | 1,080
Accruals, deferred income and other liabilities | 159 | — | 159
Total Liabilities at 31 Dec 2023 | 20,589 | 95 | 20,684
Date of completion | 1 January 2024 |  |

1 Includes transfer of hedge fund administration services.
2 Includes financial investments measured at fair value through other comprehensive income of £21.7 m and debt instruments measured at amortised cost of
£3.8 m.
Business disposals
France retail banking operations
On 1 January 2024, HSBC Continental Europe completed the sale of its retail banking business in France to CCF, a subsidiary of Promontoria
MMB SAS (‘My Money Group’). The sale also included HSBC Continental Europe’s 100% ownership interest in HSBC SFH (France) and its 3%
ownership interest in Crédit Logement.
Upon completion and in accordance with the terms of the sale, HSBC Continental Europe received a €0.1 bn (£0.1b n) profit participation interest
in the ultimate holding company of My Money Group. The associated impacts on initial recognition of this stake at fair value were recognised as
part of the pre-tax loss on disposal in 2023, upon the reclassification of the disposal group as held for sale. In accordance with the terms of the
sale, HSBC Continental Europe retained a portfolio of €7.1 bn (£5.9b n) at the time of the sale, consisting of home and certain other loans, and
the CCF brand, which it licensed to the buyer under a long-term licence agreement. Additionally, HSBC Continental Europe’s subsidiaries, HSBC
Assurances Vie (France) and HSBC Global Asset Management (France), entered into distribution agreements with the buyer.
The customer lending balances and associated income statement impacts of the portfolio of retained loans, together with the profit participation
interest and the licence agreement of the CCF brand, were reclassified from WPB to Corporate Centre, with effect from 1 January 2024.
During the fourth quarter of 2024, we began the process of marketing the retained home and other loan portfolio for sale, which had a carrying
value of €6.7 bn (£5.5b n) at 31 December 2024. As a result, we reclassified the portfolio to a hold-to-collect-and-sell business model from 1
January 2025 and will measure it prospectively from the first quarter of 2025 at fair value through other comprehensive income. We expect to
recognise an estimated £0.8 b n fair value pre-tax loss in other comprehensive income on the remeasurement of the financial instruments. The
valuation of this portfolio of loans may be substantially different in the event of a sale due to entity and deal-specific factors, including funding
costs and the value of customer relationships. In the event of a sale, upon completion, the cumulative fair value changes recognised through
other comprehensive income, which would reflect the terms of an agreed sale, would reclassify to the income statement. In December 2024,
we entered into non-qualifying economic hedges, hedging interest rate risk on the portfolio and recognised a £0.1 bn mark-to-market gain year-
to-date.
Armenia
On 29 November 2024, HSBC Europe BV completed the sale of HSBC Bank Armenia to Ardshinbank with a year-to-date loss of £0.1 bn
recognised.
Russia
On 30 May 2024, HSBC Europe BV, a wholly-owned subsidiary of HSBC Bank plc, completed the sale of HSBC Bank (RR) (Limited Liability
Company) to Expobank. Foreign currency translation reserve losses of £0.1 bn were recognis ed in the income statement upon completion.

HSBC Bank plc Annual Report and Accounts 2024 | 195

35 Events after the balance sheet date
In its assessment of events after the balance sheet date, the group has considered and concluded that there are no events requiring adjustment
or disclosures in the financial statements.

36 HSBC Bank plc’s subsidiaries, joint ventures and associates
In accordance with section 409 of the Companies Act 2006 a list of HSBC Bank plc subsidiaries, joint ventures and associates, the registered
office address and the effective percentage of equity owned at 31 December 2024 is disclosed below.
Unless otherwise stated, the share capital comprises ordinary or common shares which are held by HSBC Bank plc or its subsidiaries. The
ownership percentage is provided for each undertaking. The undertakings below are consolidated by HSBC Bank plc unless otherwise indicated.
HSBC Bank plc's registered office address is:
HSBC Bank plc
8 Canada Square
London E14 5HQ

196 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

Sub sidiaries
The undertakings below are consolidated by th e group.

Subsidiaries | % of share class held by immediate parent company (or by HSBC Bank plc where this varies) | Footnotes
AI Nominees (UK) One Limited | 100.00 |  | 3, 10
AI Nominees (UK) Two Limited | 100.00 |  | 3, 10
Assetfinance December (H) Limited | 100.00 |  | 10
Assetfinance December (P) Limited | 100.00 |  | 3, 10
Assetfinance December (R) Limited | 100.00 |  | 10
Assetfinance June (A) Limited | 100.00 |  | 10
Assetfinance March (B) Limited | 100.00 |  | 11
Assetfinance March (F) Limited | 100.00 |  | 10
Assetfinance September (F) Limited | 100.00 |  | 10
Banco Nominees (Guernsey) Limited | 100.00 |  | 12
Banco Nominees 2 (Guernsey) Limited | 100.00 |  | 12
Banco Nominees Limited | 100.00 |  | 13
Beau Soleil Limited Partnership | N/A |  | 1, 14
BentallGreenOak China Real Estate Investments, L.P. | N/A |  | 1, 15
Canada Crescent Nominees (UK) Limited (In Liquidation) | 100.00 |  | 3, 16
CCF & Partners Asset Management Limited | 100.00 | (99.99) | 10
CCF Holding (Liban) S.A.L. (In Liquidation) | 74.99 |  | 2, 17
Charterhouse Administrators (D.T.) Limited | 100.00 | (99.99) | 10
Charterhouse Management Services Limited | 100.00 | (99.99) | 10
Charterhouse Pensions Limited | 100.00 |  | 3, 10
COIF Nominees Limited | N/A |  | 1, 3, 10
Corsair IV Financial Services Capital Partners - B L.P | N/A |  | 1, 18
Dempar 1 | 100.00 | (99.99) | 5, 19
Eton Corporate Services Limited | 100.00 |  | 12
Flandres Contentieux S.A. | 100.00 | (99.99) | 5, 19
Foncière Elysées | 100.00 | (99.99) | 5, 19
Griffin International Limited | 100.00 |  | 10
HLF | 100.00 | (99.99) | 5, 19
HSBC (BGF) Investments Limited | 100.00 |  | 3, 10
HSBC Asset Finance (UK) Limited | 100.00 |  | 3, 10
HSBC Asset Finance M.O.G. Holdings (UK) Limited | 100.00 |  | 3, 10
HSBC Assurances Vie (France) | 100.00 | (99.99) | 5, 20
HSBC Bank (General Partner) Limited | 100.00 |  | 3, 21
HSBC Bank Bermuda Limited | 100.00 |  | 3, 13
HSBC Bank Capital Funding (Sterling 1) LP | N/A |  | 1, 21
HSBC Bank Malta p.l.c. | 70.03 |  | 22
HSBC Cayman Limited | 100.00 |  | 23
HSBC Cayman Services Limited | 100.00 |  | 23
HSBC Client Holdings Nominee (UK) Limited | 100.00 |  | 3, 10
HSBC Client Nominee (Jersey) Limited | 100.00 |  | 2, 3, 24
HSBC Continental Europe | 99.99 |  | 3, 5, 19
HSBC Corporate Trustee Company (UK) Limited | 100.00 |  | 3, 10
HSBC Custody Services (Guernsey) Limited | 100.00 |  | 12
HSBC Equity (UK) Limited | 100.00 |  | 3, 10
HSBC Europe B.V. | 100.00 |  | 10
HSBC Factoring (France) | 100.00 | (99.99) | 5, 19
HSBC Financial Services (Lebanon) S.A.L | 99.83 |  | 25
HSBC Global Asset Management (Bermuda) Limited | 100.00 |  | 4, 13
HSBC Global Asset Management (Deutschland) GmbH | 100.00 | (99.99) | 7, 26
HSBC Global Asset Management (France) | 100.00 | (99.99) | 5, 20
HSBC Global Asset Management (Malta) Limited | 100.00 | (70.03) | 27
HSBC Global Custody Nominee (UK) Limited | 100.00 |  | 3, 10
HSBC Global Custody Proprietary Nominee (UK) Limited | 100.00 |  | 3, 10
HSBC Institutional Trust Services (Bermuda) Limited | 100.00 |  | 13

Subsidiaries | % of share class held by immediate parent company (or by HSBC Bank plc where this varies) | Footnotes
HSBC Insurance Services Holdings Limited (In Liquidation) | 100.00 |  | 3, 16
HSBC Investment Bank Holdings Limited | 100.00 |  | 3, 10
HSBC Issuer Services Common Depositary Nominee (UK) Limited | 100.00 |  | 3, 10
HSBC Life (UK) Limited | 100.00 |  | 3, 10
HSBC Life Assurance (Malta) Ltd. | 100.00 | (70.03) | 27
HSBC LU Nominees Limited | 100.00 |  | 3, 10
HSBC Marking Name Nominee (UK) Limited | 100.00 |  | 3, 10
HSBC Middle East Leasing Partnership | N/A |  | 1, 28
HSBC Operational Services GmbH | 100.00 | (99.99) | 7, 26
HSBC Overseas Nominee (UK) Limited | 100.00 |  | 3, 10
HSBC PB Corporate Services 1 Limited | 100.00 |  | 29
HSBC Pension Trust (Ireland) DAC | 100.00 |  | 3, 30
HSBC PI Holdings (Mauritius) Limited | 100.00 |  | 31
HSBC Preferential LP (UK) | 100.00 |  | 3, 10
HSBC Private Bank (Luxembourg) S.A. | 100.00 | (99.99) | 32
HSBC Private Bank (Suisse) SA | 100.00 |  | 3, 33
HSBC Private Banking Nominee 3 (Jersey) Limited | 100.00 |  | 29
HSBC Private Equity Investments (UK) Limited | 100.00 |  | 10
HSBC Private Markets Management SARL | N/A |  | 1, 2, 34
HSBC Property Funds (Holding) Limited | 100.00 |  | 10
HSBC Real Estate Leasing (France) | 100.00 | (99.99) | 5, 19
HSBC REIM (France) | 100.00 | (99.99) | 5, 20
HSBC Securities (South Africa) (Pty) Limited | 100.00 |  | 3, 35
HSBC Securities Services (Bermuda) Limited | 100.00 |  | 13
HSBC Securities Services (Guernsey) Limited | 100.00 |  | 12
HSBC Securities Services (Ireland) DAC | 100.00 |  | 30
HSBC Securities Services (Luxembourg) S.A. | 100.00 |  | 3, 32
HSBC Securities Services Holdings (Ireland) DAC | 100.00 |  | 30
HSBC Service Company Germany GmbH | 100.00 | (99.99) | 7, 26
HSBC Services (France) | 100.00 | (99.99) | 5, 19
HSBC SFT (C.I.) Limited | 100.00 |  | 3, 12
HSBC Specialist Investments Limited | 100.00 |  | 6, 10
HSBC Transaction Services GmbH | 100.00 | (99.99) | 7, 26
HSBC Trinkaus & Burkhardt (International) S.A. | 100.00 | (99.99) | 36
HSBC Trinkaus & Burkhardt Gesellschaft fur Bankbeteiligungen mbH | 100.00 | (99.99) | 26
HSBC Trinkaus & Burkhardt GmbH | 100.00 | (99.99) | 7, 26
HSBC Trinkaus Family Office GmbH | 100.00 | (99.99) | 7, 26
HSBC Trinkaus Real Estate GmbH | 100.00 | (99.99) | 7, 26
HSBC Trustee (C.I.) Limited | 100.00 |  | 3, 29
HSBC Trustee (Guernsey) Limited | 100.00 |  | 3, 12
HSIL Investments Limited | 100.00 |  | 10
Internationale Kapitalanlagegesellschaft mit beschränkter Haftung | 100.00 | (99.99) | 26
James Capel (Nominees) Limited | 100.00 |  | 3, 10
James Capel (Taiwan) Nominees Limited | 100.00 |  | 3, 10
Keyser Ullmann Limited | 100.00 | (99.99) | 10
Midcorp Limited | 100.00 |  | 3, 10
Prudential Client HSBC GIS Nominee (UK) Limited | 100.00 |  | 3, 10
Republic Nominees Limited | 100.00 |  | 12
RLUKREF Nominees (UK) One Limited | 100.00 |  | 3, 10
RLUKREF Nominees (UK) Two Limited | 100.00 |  | 3, 10
S.A.P.C. - Ufipro Recouvrement | 99.99 |  | 8, 19
Saf Baiyun | 100.00 | (99.99) | 5, 19
Saf Guangzhou | 100.00 | (99.99) | 5, 19
SCI HSBC Assurances Immo | 100.00 | (99.99) | 8, 20
SFM | 100.00 | (99.99) | 5, 19

HSBC Bank plc Annual Report and Accounts 2024 | 197

Subsidiaries | % of share class held by immediate parent company (or by HSBC Bank plc where this varies) | Footnotes
SFSS Nominees (Pty) Limited | 100.00 |  | 35
Sico Limited | 100.00 |  | 38
SNC Les Oliviers D'Antibes | 60.00 | (59.99) | 8, 20
SNCB/M6-2007 A | 100.00 | (99.99) | 2, 5, 19
SNCB/M6-2007 B | 100.00 | (99.99) | 2, 5, 19
SNCB/M6-2008 A | 100.00 | (99.99) | 2, 5, 19
Société Française et Suisse | 100.00 | (99.99) | 5, 19
Somers Dublin DAC | 100.00 | (99.99) | 30
Somers Nominees (Far East) Limited | 100.00 |  | 13
Sopingest | 100.00 | (99.99) | 5, 19
South Yorkshire Light Rail Limited | 100.00 |  | 10
Trinkaus Europa Immobilien-Fonds Nr.3 Objekt Utrecht Verwaltungs-GmbH | 100.00 | (99.99) | 7, 26
Trinkaus Immobilien-Fonds Geschaeftsfuehrungs-GmbH | 100.00 | (99.99) | 7, 26
Trinkaus Immobilien-Fonds Verwaltungs- GmbH | 100.00 | (99.99) | 7, 26
Trinkaus Private Equity Management GmbH | 100.00 | (99.99) | 7, 26
Trinkaus Private Equity Verwaltungs GmbH | 100.00 | (99.99) | 7, 26
Valeurs Mobilières Elysées | 100.00 | (99.99) | 5, 19
Woodex Limited | 100.00 |  | 13

Joint ventures
The undertakings below are joint ventures and equity accounted.

Joint Ventures | % of share class held by immediate parent company (or by HSBC Bank plc where this varies) | Footnotes
MK HoldCo Limited | 50.32 |  | 2, 39
ProServe Bermuda Limited | 50.00 |  | 40
The London Silver Market Fixing Limited | N/A |  | 1 ,2, 3, 41

Associates
The undertakings below are associates and equity accounted.

Associates | % of share class held by immediate parent company (or by HSBC Bank plc where this varies) | Footnotes
BGF Group plc | 24.62 |  | 42
Bud Financial Limited | 4.50 |  | 4, 43
Divido Financial Services Limited (In Administration) | 7.85 |  | 4, 44
Episode Six Inc. | 5.69 |  | 4, 45
HQLAX S.à r.l. | 6.10 |  | 4, 46
Lightico Ltd | 2.80 |  | 4, 47
LiquidityMatch LLC | N/A |  | 1, 48
London Precious Metals Clearing Limited | 30.00 |  | 2, 3, 49
Marketnode PTE. Ltd. | 12.60 |  | 4, 50
Quantexa Limited | 9.36 |  | 4, 51
Threadneedle Software Holdings Limited | 7.10 |  | 4, 52
Trade Information Network Limited | 12.76 |  | 37
Trinkaus Europa Immobilien-Fonds Nr. 7 Frankfurt Mertonviertel KG | N/A |  | 1, 26
We Trade Innovation Designated Activity Company (In Liquidation) | 9.88 |  | 2, 9

Footnotes
1 | Where an entity is governed by voting rights, HSBC consolidates when it holds – directly or indirectly – the necessary voting rights to pass resolutions by the governing body. In all other cases, the assessment of control is more complex and requires judgement of other factors, including having exposure to variability of returns, power to direct relevant activities, and whether power is held as an agent or principal. HSBC’s consolidation policy is described in Note 1.2(a).
2 | Management has determined that these undertakings are excluded from consolidation in the group accounts as these entities do not meet the definition of subsidiaries in accordance with IFRS. HSBC’s consolidation policy is described in Note 1.2(a).
3 | Directly held by HSBC Bank plc
Description of shares
4 | Preference Shares
5 | Actions
6 | Redeemable Preference Shares
7 | GmbH Anteil
8 | Parts
Registered offices
9 | 10 Earlsfort Terrace, Dublin, Ireland, D02 T380
10 | 8 Canada Square, London, United Kingdom, E14 5HQ
11 | 5 Donegal Square South, Northern Ireland, Belfast, United Kingdom, BT1 5JP
12 | Arnold House St Julians Avenue, St Peter Port, Guernsey, GY1 3NF
13 | 37 Front Street, Harbourview Centre, Ground Floor, Hamilton, Pembroke, Bermuda, HM 11
14 | 1 Queen's Road Central, Hong Kong
15 | Oak House Hirzel Street, St Peter Port, Guernsey, GY1 2NP
16 | c/o Teneo Financial Advisory Limited, The Colmore Building, 20 Colmore Circus, Queensway, Birmingham, United Kingdom, B4 6AT
17 | Solidere - Rue Saad Zaghloul Immeuble - 170 Marfaa, P.O. Box 17 5476 Mar Michael, Beyrouth, Lebanon, 11042040
18 | c/o Walkers Corporate Services Limited, Walker House, 87 Mary Street, George Town, Grand Cayman, Cayman Islands, KY1-9005
19 | 38 avenue Kléber, Paris, France, 75116
20 | Immeuble Cœur Défense 110 esplanade du Général de Gaulle, Courbevoie, France, 92400
21 | HSBC House Esplanade, St. Helier, Jersey, JE4 8UB
22 | 116 Archbishop Street, Valletta, Malta, VLT1444
23 | P.O. Box 309 Ugland House, Grand Cayman, Cayman Islands, KY1-1104
24 | HSBC House Esplanade, St. Helier, Jersey, JE1 1HS
25 | Centre Ville 1341 Building - 4th Floor Patriarche Howayek Street, PO Box Riad El Solh, Lebanon, 9597
26 | Hansaallee 3, Düsseldorf, Germany, 40549
27 | 80 Mill Street, Qormi, Malta, QRM 3101
28 | Unit 401, Level 4, Gate Precinct Building 2, Dubai International Financial Centre, P. O. Box 506553, Dubai, United Arab Emirates
29 | HSBC House Esplanade, St. Helier, Jersey, JE1 1GT
30 | 1 Grand Canal Square, Grand Canal Harbour, Dublin 2, Ireland, D02 P820
31 | 6th floor HSBC Centre 18, Cybercity, Ebene, Mauritius, 72201
32 | 18 Boulevard de Kockelscheuer, Luxembourg, Luxembourg, 1821
33 | 9-17 Quai des Bergues, Geneva, Switzerland, 1201
34 | 5 rue Heienhaff, Senningerberg, Luxembourg, L-1736
35 | 1 Mutual Place, 107 Rivonia Road, Sandton, Gauteng, South Africa, 2196
36 | 16 Boulevard d'Avranches, Luxembourg, L-1160
37 | 3 More London Riverside, London, United Kingdom, SE1 2AQ
38 | Woodbourne Hall, Road Town, Tortola, British Virgin Islands, P.O. Box 3162
39 | 35 Ballards Lane, London, United Kingdom, N3 1XW
40 | c/o Mayfair Corporate Services Ltd., 26 Burnaby Street, Hamilton, Bermuda, HM11
41 | 27 Old Gloucester Street, London, United Kingdom, WC1N 3AX
42 | 13-15 York Buildings, London, United Kingdom, WC2N 6JU
43 | 167-169 Great Portland Street, 5th Floor, London, United Kingdom, W1W 5PF
44 | c/o Interpath Ltd, 10 Fleet Place, London, United Kingdom, EC4M 7RB
45 | 251 Little Falls Drive, New Castle, Wilmington, United States of America, 19808

198 | HSBC Bank plc Annual Report and Accounts 2024

Notes on the financial statements

Registered offices
46 | 9 rue du Laboratoire, Grand Duchy of Luxembourg, Luxembourg, L-1911
47 | 121 HaHashmonaim St., Tel Aviv, Israel, 6713328
48 | 111 Town Square Place, Suite 840, Jersey City, New Jersey, United States of America, 07310
49 | 7th Floor, 62 Threadneedle Street, London, United Kingdom, EC2R 8HP
50 | 1 Harbourfront Avenue, #14-07 Keppel Bay Tower, Singapore, 098632
51 | c/o Company Secretarial Department, 280 Bishopsgate, London, United Kingdom, EC2M 4AG
52 | 2nd Floor, Regis House, 45 King William Street, London, United Kingdom, EC4R 9AN

HSBC Bank plc
8 Canada Square
London E14 5HQ
United Kingdom
Telephone: 44 020 7991 8888
www.hsbc.co.uk
Registered number 00014259