HSBC Reaches Definitive Agreement with US Department of Justice to Resolve Legacy RMBS Claims

NEW YORK–(BUSINESS WIRE)–HSBC today announced a definitive agreement with the US Department of
Justice (DOJ) to resolve its multi-year investigation of its legacy
securitization, issuance and underwriting of residential mortgage-backed
securities (RMBS) issued between 2005 and 2007.

“We are pleased to put this investigation related to activity that
occurred more than a decade ago behind us,” said Patrick J. Burke,
President and Chief Executive Officer, HSBC USA. “Since the financial
crisis, HSBC has been strengthening our culture, processes and internal
controls to ensure fair outcomes for our clients. The US management team
is focused on putting historical matters into the rear view mirror and
completing the turn-around of HSBC’s US operations.”

Under the terms of the agreement, HSBC North America Holdings Inc. (HSBC
North America), without admitting liability or wrongdoing, will pay to
the DOJ a $765 million civil monetary penalty, of which $492 million
will be paid by HSBC USA Inc., HSBC North America’s US-based public
company. As previously disclosed, HSBC North America and HSBC USA Inc.
were fully reserved for these amounts as of June 30, 2018.

The settlement releases HSBC from potential civil claims by the DOJ
related to its securitization, issuance and underwriting of RMBS during
the period from 2005 through 2007, and requires no additional remedial
action.

Forward-looking statements:

Certain statements in this press release are “forward-looking
statements” within the meaning of the rules and regulations of the U.S.
Securities and Exchange Commission. These statements are based on
management’s current expectations and are subject to uncertainty and
changes in circumstances. Actual results and other financial conditions
may differ materially from those included in these statements due to a
variety of factors including those contained in HSBC USA Inc.’s filings
with the U.S. Securities and Exchange Commission, including without
limitation the “Risk Factors” section of HSBC USA Inc.’s 2017 Annual
Report on Form 10-K. Precautionary statements included in such filings
should be read in conjunction with this release.

Note to editors:

HSBC USA Inc. is a Maryland corporation and its principal
business is to act as a holding company for its subsidiaries including
HSBC Bank USA, N.A. Through HSBC Bank USA, N.A. and its subsidiaries,
HUSI offers a full range of traditional banking products and services to
individuals, including high net worth individuals, small businesses,
corporations, institutions and governments. HSBC USA Inc. is a
wholly-owned subsidiary of HSBC North America Holdings Inc.

HSBC North America Holdings Inc. is the holding company for HSBC
Holdings plc’s operations in the United States. The company’s businesses
serve customers in the following key areas: retail banking and wealth
management, commercial banking, private banking, and global banking and
markets.

HSBC Holdings plc, the parent company of the HSBC Group, is
headquartered in London. The Group serves customers worldwide from
around 3,900 offices in 67 countries and territories in Europe, Asia,
North and Latin America, and the Middle East and North Africa. With
assets of US$2,652bn at 31 March 2018, HSBC is one of the world’s
largest banking and financial services organisations.

Contacts

HSBC
Media enquiries to:
Rob Sherman, +1 212-525-6901
robert.a.sherman@us.hsbc.com
or
Heidi
Ashley, +44 (0)207 992 2045
heidi.ashley@hsbc.com
or
Investor
enquiries to:

Richard O’Connor, +44 (0)207 991 6590
richard.j.oconnor@hsbc.com

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