HSBC UK Bank PLC

The stable outlook on HSBC UK mirrors that on ultimate parent HSBC Holdings PLC. It indicates that we expect 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 consider raising the ratings on HSBC Holdings and HSBC UK if macroeconomic and geopolitical risks eased and HSBC group demonstrated 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 the group failed to sustain strong earnings or if macroeconomic and geopolitical challenges triggered significantly higher credit

...We view HSBC UK Bank PLC (HSBC UK) as a core subsidiary of HSBC group. HSBC UK is an important contributor to HSBC group's financials, providing strong returns on capital and medium-term growth opportunities. The bank's ú14.6 billion common equity Tier 1 (CET1) capital base as at June 2024 represented 15% of the group's, and it contributed 21% to the group's pretax earnings (excluding notable one-off items) in the first half of 2024. We align our long-term issuer credit rating on HSBC UK with the 'a+' group credit profile on 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 is a U.K. ring-fenced bank. 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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