HSBC UK Bank PLC

The stable outlook on HSBC UK mirrors that on ultimate parent HSBC Holdings PLC. It indicates that we expect the HSBC group to maintain a robust credit profile over our two-year outlook horizon despite pressures from elevated inflation and slowing economic growth. The stable outlook also reflects our expectation that HSBC UK will remain a core subsidiary. We do not anticipate raising the ratings while the HSBC group completes its transformation program. Over time, we could consider raising the ratings on HSBC Holdings and HSBC UK if the group demonstrated statutory earnings and business stability consistent with the highest rated global banks, while maintaining robust balance sheet metrics. We could lower our ratings on HSBC Holdings if its transformation program

...We view HSBC UK Bank PLC (HSBC UK) as a core subsidiary of the HSBC group. HSBC UK is an important contributor to HSBC group's financials and offers reasonable growth opportunities to the parent. The bank's Common Equity Tier 1 (CET1) capital base as at year-end 2021 represented 13% of the group's, and it contributed 24% of the group's 2021 adjusted pretax earnings. We align our long-term issuer credit rating on HSBC UK with the 'a+' group credit profile on the HSBC group, and we do not assign a stand-alone credit profile to HSBC UK. Through internal downstreaming, we think that HSBC UK's senior creditors would benefit from the parent's additional loss-absorbing capacity buffer. HSBC UK operates within the U.K. ring-fencing regime. HSBC UK focuses on U.K. retail and corporate banking and wealth management (see chart 1). Its main peers are the other large ring-fenced banks--Lloyds Bank PLC, National Westminster Bank PLC, Barclays Bank UK PLC, and Santander UK PLC--as well as Nationwide Building...

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