HSBC Holdings plc HSBC Bank USA, National Association US Resolution Plans Section I – Public Section Date: December 31, 2015 HSBC US Resolution Plans: Section I – Public Section This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about HSBC Group’s beliefs and expectations. 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. HSBC Group 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. The US Resolution Plan is not binding on a bankruptcy court, HSBC Group’s regulators or any other resolution authority and the scenarios described and the assumptions made are hypothetical and do not necessarily reflect events to which HSBC Group is or may be subject. Written and/or oral forward-looking statements may also be made in the periodic reports to the US Securities and Exchange Commission (SEC), summary financial statements to shareholders, proxy statements, offering circulars and prospectuses, press releases and other written materials, and in oral statements made by HSBC Group’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. Factors that could cause HSBC Holdings plc’s or HSBC Bank USA, National Association’s actual results to differ materially from those described in the forward-looking statements can be found in HSBC Holdings plc’s Annual Report on Form 20-F for the fiscal year ended December 31, 2014 filed with the SEC under the Securities Exchange Act of 1934, as amended (Exchange Act), on February 26, 2015 (Form 20-F) and in HSBC USA Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 filed with the SEC under the Exchange Act on February 20, 2015. Page i HSBC US Resolution Plans: Section I – Public Section TABLE OF CONTENTS PAGE 1. INTRODUCTION ............................................................................................................................. 1 1.1 US resolution plan rules ..................................................................................................... 1 1.2 Global structure .................................................................................................................. 2 1.3 HSBC Group business model ............................................................................................ 2 2. OVERVIEW OF RESOLUTION STRATEGY .................................................................................. 4 2.1 HSBC Group Resolution Planning ..................................................................................... 4 2.2 US Resolution Strategy ...................................................................................................... 5 2.3 Post-resolution Structure ................................................................................................. 10 3. MATERIAL ENTITIES ................................................................................................................... 11 3.1 Introduction ...................................................................................................................... 11 3.2 US Material Entities.......................................................................................................... 13 3.3 Non-US Material Entities .................................................................................................. 37 4. CORE BUSINESS LINES ............................................................................................................. 50 4.1 Banking and Capital Financing Core Business Line ........................................................ 50 4.2 Markets Core Business Lines .......................................................................................... 50 4.3 Commercial Banking ........................................................................................................ 50 5. ACTIONS TAKEN TO ENHANCE RESOLVABILITY OF HSBC GROUP’S US OPERATIONS ............................................................................................................................... 52 5.1 Global ServCo Structure .................................................................................................. 52 5.2 Legal Structure of HSBC Group’s US Operations ........................................................... 53 5.3 ISDA Resolution Stay Protocol ........................................................................................ 53 6. SUMMARY FINANCIAL INFORMATION REGARDING ASSETS, LIABILITIES, CAPITAL AND MAJOR FUNDING SOURCES ............................................................................................. 54 6.1 HSBC Group’s financial information ................................................................................ 54 6.2 Funding sources ............................................................................................................... 56 7. DERIVATIVE AND HEDGING ACTIVITIES.................................................................................. 57 7.1 Trading derivatives ........................................................................................................... 57 7.2 Derivatives for hedging risks ............................................................................................ 57 8. MEMBERSHIPS IN MATERIAL PAYMENT, CLEARING AND SETTLEMENT SYSTEMS ......... 58 9. FOREIGN OPERATIONS ............................................................................................................. 59 10. MATERIAL SUPERVISORY AUTHORITIES ................................................................................ 60 10.1 US supervisory authorities ............................................................................................... 60 10.2 Foreign supervisory authorities ........................................................................................ 61 Page ii HSBC US Resolution Plans: Section I – Public Section 11. PRINCIPAL OFFICERS ................................................................................................................ 62 11.1 HSBC Holdings plc........................................................................................................... 62 11.2 HSBC North America Holdings Inc. ................................................................................. 63 11.3 HSBC Bank USA, National Association ........................................................................... 65 12. CORPORATE GOVERNANCE STRUCTURE AND PROCESSES RELATED TO RESOLUTION PLANNING ........................................................................................................... 66 12.1 Global resolution planning ............................................................................................... 66 12.2 US resolution planning governance and organization ..................................................... 66 12.3 Approval of US Resolution Plan ....................................................................................... 66 13. MATERIAL MANAGEMENT INFORMATION SYSTEMS ............................................................. 67 Page iii HSBC US Resolution Plans: Section I – Public Section 1. INTRODUCTION 1.1 US resolution plan rules In September 2011, the Federal Deposit Insurance Corporation (FDIC) and the Board of Governors of the Federal Reserve System (FRB) issued a final rule (SIFI Rule) implementing Section 165(d) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (DFA). This requires bank holding companies with total global consolidated assets of USD50 billion or more (Covered Company) to submit periodically to the FRB and the FDIC a plan for the rapid and orderly resolution in the event of material distress or failure of the covered companies’ United States of America (US) operations. In January 2012, the FDIC also issued a final rule (IDI Rule and, with the SIFI Rule, the Rules) that requires insured depository institutions (IDIs) with assets of USD50 billion (Covered IDI) or more to submit periodically to the FDIC a plan for resolution of the IDI in the event of failure. In addition, the FDIC provided further clarification, guidance and direction for the 2015 preparation of the IDI Plan (as defined below) in December 2014. The global consolidated assets of HSBC Holdings plc (HGHQ, and together with its subsidiaries and affiliates, HSBC Group), the holding company for HSBC Group, exceed USD50 billion and as a result, it is a Covered Company under the SIFI Rule and must file a resolution plan under the SIFI Rule (SIFI Plan). Similarly, the assets of HSBC Group’s largest IDI in the US, HSBC Bank USA, National Association (HBUS), exceed USD50 billion, and as a result HBUS is a Covered IDI under the IDI Rule and it must file a resolution plan (IDI