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's credit profile will remain robust 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 could lower our ratings on HSBC Holdings if the group failed to sustain strong earnings or if macroeconomic and geopolitical challenges triggered significantly higher credit losses than we currently assume. Our ratings on HSBC UK may not be affected in this scenario because we have scope to increase ALAC uplift to two notches. We would lower our ratings on HSBC UK if we

...We view HSBC UK Bank PLC (HSBC UK) as a core subsidiary of HSBC group. HSBC UK is an important contributor to the HSBC group's financials, providing strong returns on capital and medium-term growth opportunities. The bank's common equity tier 1 (CET1) capital base as at June 2023 represented 14% of the group's and contributed 18% to the group's pretax earnings (excluding notable items) in the first half of 2023. 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 (ALAC) 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...

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