Annual Report and Accounts HSBC Bank plc HSBC BANK PLC Annual Report and Accounts 2007 Contents Page Page Financial Highlights .............................................. 1 Consolidated statement of recognised income and expense for the year ended Board of Directors and Senior Management ...... 2 31 December 2007 .............................................. 32 Report of the Directors ......................................... 4 Consolidated cash flow statement for the year ended 31 December 2007 ............................ 33 Statement of Directors’ Responsibilities in Relation to the Directors’ Report and the HSBC Bank plc balance sheet at Financial Statements ........................................... 28 31 December 2007 .............................................. 34 Independent Auditor’s Report to the Member HSBC Bank plc statement of recognised income of HSBC Bank plc ............................................... 29 and expense for the year ended 31 December 2007 .............................................. 35 Financial Statements HSBC Bank plc cash flow statement for the year Consolidated income statement for the year ended 31 December 2007 .................................... 36 ended 31 December 2007 ................................30 Notes on the Financial Statements ............................ 37 Consolidated balance sheet at 31 December 2007 ......................................... 31 Presentation of Information This document comprises the Annual Report and Accounts 2007 for HSBC Bank plc (‘the bank’) and its subsidiary undertakings (together ‘the group’). It contains the Directors’ Report and Accounts, together with the Auditor’s report, as required by the UK Companies Act 1985. References to ‘HSBC’ or ‘the Group’ within this document mean HSBC Holdings Plc together with its subsidiaries. Cautionary statement regarding forward-looking statements This Annual Report contains certain forward-looking statements with respect to the financial condition, results of operations and business of the bank. Statements that are not historical facts, including statements about the bank’s beliefs and expectations, are forward- looking statements. Words such as ‘expects’, ‘anticipates’, ‘intends’, ‘plans’, ‘believes’, ‘seeks’, ‘estimates’, ‘potential’ and ‘reasonably possible’, variations of these words and similar expressions are intended to identify forward looking statements. These statements are based on current plans, 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, and it should not be assumed that they have been revised or updated in the light of new information or future events. 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. HSBC BANK PLC Financial Highlights 2007 2006 20054 2004 2003 £m £m £m £m £m For the year1,2 Profit on ordinary activities before tax3 ....................................... 4,081 3,796 3,731 2,953 2,810 Profit attributable to shareholders of the parent company3 .......... 3,227 2,722 2,842 2,057 2,046 At year-end Shareholders’ funds of the parent company ................................. 24,423 20,399 19,091 16,828 17,064 Capital resources ........................................................................... 24,231 21,360 19,677 16,424 14,603 Customer accounts and deposits by banks ................................... 317,055 265,863 239,673 193,664 175,390 Total assets ................................................................................... 622,280 440,760 386,422 292,481 246,104 Ratios (%) Return on average shareholders’ funds (equity) of the parent company ................................................................................... 14.5 13.6 16.4 12.7 8.5 Capital ratios ................................................................................. – total capital ........................................................................... 10.9 11.2 10.8 10.5 10.7 – tier 1 capital .......................................................................... 7.5 7.5 6.9 7.4 7.4 Cost efficiency ratio5 ..................................................................... 60.3 58.9 58.8 64.2 62.9 Profit on ordinary activities before tax (£m) Cost efficiency ratio (%) Capital resources (£m) 4,500 65.0 4,000 64.0 4,081 64.2 25,000 24,231 3,500 3,796 3,731 63.0 62.9 3,000 62.0 20,000 21,360 19,677 2,953 2,500 2,810 61.0 15,000 16,424 2,000 60.0 14,603 60.3 1,500 59.0 10,000 58.9 58.8 1,000 58.0 5,000 500 57.0 — 56.0 — 2007 2006 2005 2004 2003 2007 2006 2005 2004 2003 2007 2006 2005 2004 2003 1 From 2004 the financial highlights are prepared in accordance with IFRSs as endorsed by the EU. 2 2004 financial highlights excludes IAS 32, IAS 39 and IFRS 4. The 2003 financial highlights are under UK GAAP as previously reported. 3 The profit on ordinary activities before tax and the profit attributable to shareholders for 2003 exclude goodwill amortisation. 4 Restated 2005 income statement and balance sheet figures. 5 The cost efficiency ratio is defined as total operating expenses divided by net operating income before loan impairment charges and other credit risk provisions. The financial highlights are influenced by changes in the group structure over the five years. The most significant acquisition during this period was the acquisition of Marks and Spencer Retail Financial Services Holdings Limited in 2004. 1 HSBC BANK PLC Board of Directors and Senior Management Directors S T Gulliver S K Green, Chairman Age 48. A Director since 2006. Head of Global Banking and Markets and HSBC Global Asset Age 59. Chairman since 2005 and a Director since Management. A Group Managing Director since 1995. Deputy Chairman from 2003 to December 2004. Joined HSBC in 1980. A Director of HSBC 2004. Group Chairman of HSBC Holdings plc since Private Banking Holdings (Suisse) SA since 2006. Group Chief Executive of HSBC Holdings plc September 2007 and HSBC Trinkaus & Burkhardt from 2003 to 2006. Joined HSBC in 1982. Chairman AG since June 2007. A Director of HSBC Bank of HSBC North America Holdings Inc. and HSBC USA , N.A. and The Hongkong and Shanghai Private Banking Holdings (Suisse) SA. Banking Corporation Limited. , , Deputy Chairman M F Geoghegan CBE C M S Jones** Age 54. Deputy Chairman since 2006 and a Director Age 64. A Director since 2001. Formerly Chairman since 2004. Chief Executive from 2004 to 2006. and Managing Director, James Beattie PLC. Group Chief Executive of HSBC Holdings plc since 2006. Joined HSBC in 1973. Chairman of HSBC R E S Martin** Bank USA, N.A., HSBC USA Inc. and HSBC Bank Canada. A Director of The Hongkong and Shanghai Age 47. A Director since 2005. General Counsel and Banking Corporation Limited, HSBC France, HSBC Company Secretary of Reuters Group PLC. North America Holdings Inc. and HSBC National Bank USA. A R D Monro-Davies** Age 67. A Director since 2004. Formerly Chief D D J John, Chief Executive Executive Officer, Fitch Ratings. Age 57. Chief Executive since 2006 and a Director since 2003. A Group Managing Director since 2006. P M Shawyer** Joined HSBC in 1971. Age 57. A Director since 2004. Formerly a Managing Partner of Deloitte. S P O’Sullivan, Chief Operating Officer Age 52. A Director and Chief Operating Officer J F Trueman** since August 2007. Joined HSBC in 1980. A Age 65. A Director since 2004. Formerly Deputy Director of HFC Bank Limited since June 2007 and Chairman of S G Warburg & Co. Marks and Spencer Financial Services plc since * Non Executive Director November 2007. ** Independent Non-Executive Director D C Budd, Director International Secretary Age 54. Director International since August 2007. Chief Operating Officer from 2005 to August 2007. J H McKenzie A Director since 2005. A Group General Manager since 2005. Joined HSBC in 1972. Chairman of Age 54. Joined HSBC in 1987. HSBC Bank Polska SA since September 2007 and HSBC Bank (RR) LLC from October 2007. Registered Office: 8 Canada Square, London E14 5HQ C-H Filippi* Age 55. A Director since 2000. Non-Executive Chairman of HSBC France. A Director of HSBC Private Banking Holdings (Suisse) SA. J D Fishburn** Age 61. A Director since 2003. Chairman of HFC Bank Limited and an independent non-executive Director of HSBC Finance Corporation. 2 Senior executives A M Mahoney J P Armstrong Age 45. General Manager and Head of the Network. Joined HSBC in 1983. A Group General Manager Age 48. Chief Information Officer, HSBC since 2006. Technology Services Europe. Joined HSBC in 1982. M S McCombe, OBE P Boyles Age 41. Global Chief Executive Officer HSBC Asset Age 52. Chief Executive Officer, HSBC France. Management. Joined HSBC in 1987. Joined HSBC in 1975. A Group General Manager since 2006. R K McGregor B M Cannon Age 59. Chief Financial Officer. Joined HSBC in 1977. Age 52. General Manager and Head of Credit and Risk. Joined HSBC in 1982. P M Nolan J M Flint Age 42. Head of UK Corporate Banking. Joined HSBC in 1987. Age 39. Group Treasurer and Deputy Head of Global Markets. Joined HSBC in 1989. C Schnor Age 48. General Manager and Head of Insurance. J D Garner Joined HSBC in 2007. Age 38. General Manager, Personal Financial Services and Direct Businesses. Joined HSBC in D K Sheehan 2004. A Group General Manager since 2006. Age 46. Chief Executive Officer HSBC Private Bank, UK and Channel Islands.