The ratings on U.K.-incorporated HSBC Bank PLC reflect its strong franchise, improving profitability, satisfactory capitalization, and strong liquidity. Its overall asset quality is satisfactory, but features a large exposure to the challenging U.K. consumer credit market, which was the cause of a significant increase in the loan impairment charge in 2005. The bank is a wholly owned, core subsidiary of HSBC Holdings PLC (AA-/Stable/A-1+). Its strong franchise is based on its position as a U.K. clearing bank, albeit the fifth-largest in terms of domestic assets, while its ownership of the HSBC group's continental European and private banking businesses benefit geographic and product diversity. Earnings and cost efficiency improved in 2004-2005 as the bank adopted a more proactive approach to sales
