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LONDON - HSBC Holdings (NYSE:HSBC) PLC announced today that it will no longer count certain legacy debt securities towards its regulatory capital and minimum requirement for own funds and eligible liabilities (MREL). The bank has taken this step ahead of regulatory changes and to maintain the eligibility of its other tier 2 capital securities.
The affected securities include New York law-governed Legacy Tier 2 Securities, which were set to lose their grandfathered status as tier 2 capital instruments on June 28, 2025, under UK Capital Requirements Regulation (CRR). Additionally, a Legacy Senior Security will no longer be counted towards the bank’s MREL. Both types of securities lack a contractual recognition of UK bail-in powers, known as a CROB clause.
If this action had been taken at the end of the fiscal year on December 31, 2024, it would have resulted in a 54 basis point reduction in HSBC’s MREL as a percentage of risk-weighted assets and a 46 basis point decrease in its total capital ratio.
The decision aligns with the Bank of England’s stance on securities without a CROB clause, as detailed in a recent consultation paper. It also ensures consistent treatment of the bank’s capital instruments and supports the stability of HSBC’s overall capital structure.
HSBC, headquartered in London, is one of the world’s largest banking and financial services organizations, with assets totaling US$3,017bn as of December 31, 2024. The bank operates from offices in 58 countries and territories globally.
This move is part of HSBC’s ongoing adjustments to comply with regulatory requirements and to ensure the robustness of its capital framework. The information is based on a press release statement from HSBC Holdings PLC.
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