HSBC

HSBC Bank Capital Funding (Sterling 2) L.P. (established in Jersey as a limited partnership under the Limited Partnerships (Jersey) Law 1994)

£300,000,000 5.862% Non-cumulative Step-up Perpetual Preferred Securities having the benefit of a subordinated guarantee of HSBC Bank plc (incorporated with limited liability under the laws of England and Wales with registered number 14259) Issue Price: £1,000 per Preferred Security

The £300,000,000 5.862% Non-cumulative Step-up Perpetual Preferred Securities, (the “Preferred Securities”) each issued for a capital contribution of £1,000 (referred to herein as the “nominal amount”), representing limited partnership interests in HSBC Bank Capital Funding (Sterling 2) L.P., (the “Issuer”), will be issued on 7 April 2004 (the “Issue Date”). The Preferred Securities will entitle investors, subject to certain conditions described herein, to receive non-cumulative cash distributions (“Distributions”) annually in arrear on 7 April in each year until 7 April 2020 and thereafter semi-annually in arrear on 7 April and 7 October in each year. Distributions shall accrue from (and including) the Issue Date to (but excluding) 7 April 2020 at a fixed rate per annum of 5.862% and semi-annually in arrear from (and including) 7 April 2020, at a floating rate per annum equal to the sum of 1.85% and six-month LIBOR for the relevant Distribution Period (as defined herein). The first Distribution will, if payable, be paid on 7 April 2005, and will be calculated in respect of the period from (and including) 7 April 2004 to (but excluding) 7 April 2005. See “Description of the Preferred Securities – Distributions”. The Issuer is a Jersey limited partnership and is not a legal entity separate from its partners. All obligations of the Issuer to make payments in respect of the Preferred Securities are guaranteed on a subordinated basis pursuant to a guarantee dated 7 April 2004 (the “Guarantee”) given by HSBC Bank plc (the “Bank”). See “Description of the Guarantee”. The Preferred Securities are perpetual securities and not subject to any mandatory redemption provisions. The Preferred Securities may be redeemed, at the option of HSBC Bank (General Partner) Limited, a wholly owned Jersey incorporated subsidiary of the Bank, as general partner of the Issuer (the “General Partner”), on 7 April 2020 or on each Distribution Date thereafter, in whole but not in part each at its nominal amount, subject to satisfaction of the Redemption Conditions (each as defined herein). The Preferred Securities are also redeemable, subject to satisfaction of certain conditions, in whole but not in part, at any time following the occurrence of a Tax Event or a Regulatory Event (each as defined herein). Under existing regulations, neither the Issuer nor the Bank nor any of its subsidiaries may redeem or purchase any Preferred Securities unless the Financial Services Authority, or any successor organisation thereto in the United Kingdom (the “FSA”), has given its prior written consent. See “Description of the Preferred Securities – Redemption and Purchase”. These requirements and restrictions do not affect the ability of the Bank and its subsidiaries and affiliates to engage in market-making activities in relation to the Preferred Securities. In the event of the dissolution or winding-up of the Issuer, holders of Preferred Securities will be entitled, subject to satisfaction of certain conditions, to receive a Liquidating Distribution (as defined herein). See “Description of the Preferred Securities – Liquidating Distributions”. Upon the occurrence of a Substitution Event (as defined herein) or, subject to certain conditions, at the option of the General Partner following a Tax Event or Regulatory Event, the Preferred Securities may be substituted by the Substitute Preference Shares (as defined herein). If any Preferred Securities are outstanding on 7 April 2049 and no notice to redeem such Preferred Securities on or before 7 April 2049 has been