HSBC Holdings PLC · LSE:HSBA
HSBC — HSBC SFH (France) — Debt Investor Presentation (August 2013)
41 slides from HSBC's debt investor presentation, August 2013
Slide 1: HSBC SFH (France) Investor Presentation
HSBC SFH (France) Investor Presentation August 2013 1
Slide 2: Disclaimer
Disclaimer This document is issued by HSBC SFH (France) SA (“HSBC SFH”). HSBC SFH is authorised and regulated by the Autorité du Contrôle Prudentiel et de Résolution (“ACPR”) and is a member of the HSBC Group of companies. The information contained in this document is derived from sources that have
Slide 3: Table of contents
Table of contents Executive summary Section 1 HSBC Group Section 2 HSBC France Section 3 French Home Loan Market Section 4 HSBC SFH (France) within the SFH legal framework Section 5 Conclusion Section 6 Appendices Covered Bond Programme Structure Appendix I Contacts Appendix II 3
Slide 4: Section 1 - Executive summary
Section 1 - Executive summary
Slide 5: Executive Summary Overview
Executive Summary Overview HSBC France • HSBC France is one of the Group’s principal banking operations in Europe • Senior unsecured debt ratings of AA- (negative) by S&P, A1 (stable) by Moody’s, and AA- (stable) by Fitch • Strong Global Banking and Markets platforms and substantial Commercial Banki
Slide 6: Executive Summary Highlights
Executive Summary Highlights Programme terms Current cover pool1 Issuer HSBC SFH (France) Pool Notional EUR 4,397,434,178 Programme size EUR8bn Collateral 100% prime home loans AAA/Aaa Ratings Number of loans 33,570 (S&P/Moody’s) Maximum LTV 80% Average loan balance EUR 130,993 Minimum 81% Crédit Lo
Slide 7: Section 2 - The HSBC Group
Section 2 - The HSBC Group
Slide 8: The HSBC Group Home and Priority Growth markets
The HSBC Group 22 Home and Priority Growth markets With further Network and Small markets Asia Pacific Europe Middle East and North Latin North Africa America America Hong Kong1 United Kingdom Home markets Australia France Egypt Canada Argentina Mainland China Germany Saudi Arabia USA Brazil India S
Slide 9: HSBC Holdings plc Reported Profit before tax
HSBC Holdings plc Reported Profit before tax Increased by 10% 1H13 vs 1H12 USDm +2,805 -629 14,071 12,737 -2,525 +1,683 1H12 Revenue¹ Loan Operating Associates³ 1H13 Impairment Expenses Charges² 1 Revenue is net operating income before loan impairment charges and other credit risk positions 9 2 Loan
Slide 10: Capital Strength Now and under CRD IV
HSBC Holdings plc Capital Strength Now and under CRD IV Core / Common Equity Tier 1 ratio USDbn 1H13 Estimated impact of CRD IV1 +2.1bn -19.2bn -15.5bn +136.5bn 0.2% 0.2% 12.7% 12.3% (1.4%) 10.1% (1.2%) 31-Dec-12 Capital RWAs 30-Jun-13 Capital RWAs 30-Jun-13 (Basel 2.5) (Basel 2.5) (CRD IV) 1 Estima
Slide 11: Customer deposits are the principal source of funding
HSBC Holdings Customer deposits are the principal source of funding With over $300bn excess deposits compared to customer loans Advances to deposits ratio USDbn Advances: -28.2bn Deposits: -23.8bn +0.8bn -7.7bn -21.4bn -10.8bn +15.6bn -28.6bn 74.4% 0.1% 1.7% 73.7% (0.6%) 0.6% (1.6%) (0.9%) 31-Dec-12
Slide 12: Section 3 - HSBC France
Section 3 - HSBC France
Slide 13: HSBC France within the HSBC Group
HSBC France France within the HSBC Group • HSBC France is HSBC Bank plc’s principal banking operation in Continental Europe • HSBC France is given high credit ratings by all major rating agencies – AA- (negative) by S&P – A1 (stable) by Moody’s – AA- (stable) by Fitch • History – CCF was founded in
Slide 14: HSBC Operations in France Financial results
HSBC Operations in France Financial results France: Profit Before Taxation USDm as per HSBC Holdings financial statements 1H 122 2H 124 1H 136 Retail Banking and Wealth Management 29 106 130 Commercial Banking 114 89 135 Global Banking and Markets 330 184 302 Global Private Banking (5) (6) - Other (
Slide 15: HSBC France Position in France and retail approach
HSBC France Position in France and retail approach • Market position in France Distribution of branch networks Number of branches as of 31st December 2012 (315 branches) – c. 6% penetration rate on the Premier customer segment in France (c. 6.5m customers, i.e. 10% of French Nord population1) 17 Pic
Slide 16: HSBC France Funding Strategy
HSBC France Funding Strategy Motivation for covered bonds issuance Profile of HSBC SFH covered bonds1 • Fund asset growth EUR bn, as of 30 June 2013 3.2 3.2 3.0 3.0 • Refinance maturing debt • Manage Asset & Liabilities profile 1.5 • Diversify investor base 1.4 1.3 1.3 1.3 1.3 • Reduce overall cost
Slide 17: Section 4 - French Home Loan market
Section 4 - French Home Loan market
Slide 18: French home loan market
French home loan market Typical loan characteristics • Fixed rate for the entire length of the home loan • Fully amortising, not “re-advanceable” • Underwriting criteria primarily based on the creditworthiness of the borrower • Compulsory life and disability insurance • Institutional guarantees avai
Slide 19: French home loan market dynamics
French home loan market Market dynamics1 • In 2012, market slowdown with a 25.8% reduction in volume • In 2013, return to growth in the H1 (annualised 38.8%) • Market mainly driven by: • Historically low interest rates • Shortage of housing supply • Reduced house prices Quarterly growth rate in New
Slide 20: Specificity of the French home loan market: guaranteed home loans
French home loan market Specificity of the French home loan market : guaranteed home loans • Home loans which are secured by a guarantee provided either by a selected credit institution or a selected insurance company represent the majority of the French home loan market (52.9% of outstanding home l
Slide 21: French home loan market Crédit Logement
French home loan market Crédit Logement Crédit Logement is a major partner in the French home loan guarantee market • Surety agreements are the most popular residential • Crédit Logement maintains its credit strength guarantee on the French housing market with 54.1%1 – Regulatory capital of EUR8.2bn
Slide 22: HSBC SFH (France) within the SFH legal framework
HSBC SFH (France) within the SFH legal framework
Slide 23: Main characteristics of the programme
HSBC SFH (France) within the SFH legal framework Main characteristics of the programme • HSBC SFH (France) is a French covered bond issuer, registered under the Société de Financement de l’Habitat (SFH) legal framework. It is a credit institution licensed and supervised by the Autorité de Contrôle P
Slide 24: Main characteristics of the programme
HSBC SFH (France) within the SFH legal framework Main characteristics of the programme HSBC France Borrower Administrator Issuer Calculation Agent Loan Receivables Borrower Collateral Advances to Security HSBC France Covered Bonds HSBC SFH (France) Investors The Issuer Cash 24
Slide 25: Cover pool statistics
HSBC SFH (France) within the SFH legal framework Cover pool statistics1 Regional distribution2 Pool Notional EUR 4,397,434,178 100% prime home loans originated by HSBC France: Type 81% guaranteed by Crédit Logement, 19% first lien mortgages Average Greater Paris (51.6%) balance EUR 130,993 North Eas
Slide 26: Section 6 – Conclusions
Section 6 – Conclusions
Slide 27: Conclusions
Conclusions • AAA investment in HSBC France • Issuer fully regulated by the Autorité de Contrôle Prudentiel with the status of SFH • Full recourse to HSBC France • Secured by prime French residential home loans originated by HSBC France • All home loans either guaranteed by Crédit Logement or secure
Slide 28: Appendix I - Covered Bond Programme Structure
Appendix I - Covered Bond Programme Structure
Slide 29: Key features of the SFH legal framework
Key features of the SFH legal framework • Key provisions of SFH law: – Requirement to cover all liquidity needs for the next 180-day period on an on-going basis – Minimum 2% legal overcollateralisation of the cover assets – Possibility for the issuers to use up to 10% of outstanding issued covered b
Slide 30: Covered Bonds Programme Structure Legal features
Covered Bonds Programme Structure Legal features To ensure insolvency protection and security enforcement in case of bankruptcy of HSBC France, the Covered Bond Programme relies on the new legal framework of the SFH (Article L515-34 to L. 515-38 of the FMFC) and the use of the collateral provisions
Slide 31: Asset Cover Test
Covered Bonds Programme Structure Asset Cover Test • The Asset Cover Test (ACT) is designed to ensure that the collateral constituted by home loans, cash and other collateral is able to meet the future cash flows (interest and principal) on the covered bonds (tested monthly by the calculation agent)
Slide 32: Amortisation Test
Covered Bonds Programme Structure Amortisation Test • The Amortisation Test is designed to ensure that the Issuer has the capacity to meet its obligations following the enforcement of the Borrower Event of Default. Compliance with the Amortisation Test requires compliance with the amortisation ratio
Slide 33: Hedging strategies
Covered Bonds Programme Structure Hedging strategies • Before a default event, the Issuer is not exposed to any risk of an interest or currency rate mismatch arising between the payments received on the Borrower Advances and the payments to be made under the Covered Bonds • Upon the occurrence of a
Slide 34: Structural Highlights
Covered Bonds Programme Structure Structural Highlights • Pre-Maturity Test – Designed to ensure that the Borrower can provide sufficient liquidity in case of a downgrade – If, 270 days before the maturity of any series of hard bullet Covered Bonds, the Borrower’s short-term rating is below A (long
Slide 35: Key events: Borrower event of default
Covered Bonds Programme Structure Key events Borrower event of default • The occurrence of any of the following events will constitute a Borrower Event of Default : – Default in the payment of principal or interest on any Borrower Facility not remedied within 3 business days after the due date – Bre
Slide 36: Key events: Issuer event of default
Covered Bonds Programme Structure Key events Issuer event of default • The occurrence of any of the following events will constitute an Issuer Event of Default – Breach of Amortisation Test – Default in the payment of principal or interest on any Covered Bond not remedied within 5 business days afte
Slide 37: Key events: No further issuance
Covered Bonds Programme Structure Key events No further issuance • The Issuer undertakes not to issue any new Covered Bonds under the Programme – As from the date a Borrower Enforcement Notice has been served – As from the date an Issuer Enforcement Notice has been served – For so long as Non-Compli
Slide 38: Cash flow priorities
Covered Bonds Programme Structure Cash flow priorities Pre-Enforcement Priority Controlled Post-Enforcement Priority Accelerated Post-Enforcement Priority Payment Order Payment Order Payment Order An Issuer Event of Default will result in an Issuer In the event of service by the Issuer to the Prior
Slide 39: Home Loan eligibility criteria
Covered Bonds Programme Structure Home Loan eligibility criteria a. All lending criteria and conditions precedent as applied by the originator of the Home Loan pursuant to its customary lending procedures were satisfied b. the purpose of the Home Loan is either to buy, to renovate, to build or to re
Slide 40: Appendix II - Contacts
Appendix II - Contacts
Slide 41: Contacts and further information
Contacts and further information HSBC France HSBC SFH (France) Matthieu Kiss Samir El Aziz Chief Financial Officer Chief Executive Officer [email protected] [email protected] +33 1 4070 2396 +33 1 5813 0410 HSBC Holdings plc Websites Nick Turnor www.hsbc.fr/1/2/hsbc-france Head of Debt Inves
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