Deposit Plus

Indicative Telegraphic Transfer rates as at 17 May 2012 05:13 HKT

Why is Deposit Plus right for you?

You can place your deposit for as low as HKD50,000 or equivalent with Business Internet Banking.
Perfect for businesses that regularly convert funds from one currency to another and are seeking higher returns
Earn a higher interest rate than a normal Hong Kong dollar or foreign currency time deposit if you are willing to risk conversion into another currency

Features and benefits

Choose two currencies¹ – a deposit currency and a linked currency. Deposit Plus offers you with a variety of currency choices including Renminbi, Hong Kong Dollar, US Dollar, Australian Dollar, Canadian Dollar, Euro, Pound Sterling, New Zealand Dollar, Japanese Yen or Swiss Franc to suit your need for foreign currency. For example, you might consider the currency of the country which you purchase goods from or where you have local expenses.
Choose your own deposit period, from 1 week to 6 months.
Enjoy the flexibility of fixing your deposit period and conversion rate or Deposit Plus interest rate

¹For Deposit Plus that trade via HSBC Business Internet Banking, either the deposit currency or linked currency must be Renminbi, Hong Kong Dollar or US Dollar.

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How the returns are calculated:

The following example illustrates various scenarios* that determine the final redemption currency and your return:

Deposit currency	Hong Kong Dollar (HKD)
Linked currency	Australian Dollar (AUD)
Deposit date	16 December 2010
Fixing date	29 December 2010
Maturity date	30 December 2010
Interest period	14 days
Conversion rate^	7.6658
Deposit amount	HKD50,000
Deposit Plus Interest rate	13.25%p.a.
Upon maturity	If the AUD/HKD exchange rate is at or above 7.6658 at fixing, the principal and interest will be paid in HKD. If the AUD/HKD exchange rate is below 7.6658 at fixing, the principal and interest will be paid in AUD.

^Based on indicative pricing quoted on 16 December 2010.

Maturity Payoff Scenarios (Click here to enlarge it)

^*The above scenarios are for reference only. Return depends upon the market conditions on the fixing date.
^&Interest = principal x interest rate p.a. x tenor (in number of days) / [365 days (if deposit currency is HKD or GBP) or 360 days (if deposit currency is other foreign currencies)]
^§Assume the deposit is converted back to HKD upon maturity and the exchange rate equals to the rate upon fixing.
In this worst payout scenario, you will receive return or the linked currency the value of which may be worth substantially less than the original amount you invested (and in the extreme case could be worth nothing)

Default Scenario
If the Bank has become insolvent, you will become an unsecured creditor of the Bank and what you will receive in respect of the product will depend on the liquidation procedure applicable to companies incorporated in the jurisdiction of the Bank. Upon insolvency of the Bank, the market value (or the termination value) of the product will be substantially less than the principal amount and there is a risk that the product may become valueless.
In the worst case scenario, you may get nothing back and the potential maximum loss could be 100% of principal amount and no interest will be received.

Scenario Analysis Disclaimer
The above scenarios are provided for illustrative purposes only, and do not reflect a complete analysis of all possible gain and loss scenarios that may arise during any actual investment. No representation or warranty is made by the Bank that any scenario described above can be duplicated under real investment conditions. Actual results may vary from the results shown above, and variations may be material.

Disclaimer
The net return in relation to Deposit Plus will depend upon market conditions prevailing at the deposit fixing time on the deposit fixing date. You must be prepared to incur loss as a result of depreciation in the value of the currency paid. Such loss may offset the interest earned on the deposit and may even result in losses in the principal amount of the deposit. Investment involves risks.You should carefully consider whether any investment products or services mentioned herein are appropriate for you in view of your risk appetite, investment experience, objectives, financial resources and circumstances. If you have any concerns about this product, you should consult your professional financial advisers.

Important Risk Warning

You should carefully consider whether any investment products or services mentioned herein are appropriate for you in view of your investment experience, objectives, financial resources and circumstances.
Deposit Plus is a structured product involving derivatives. The investment decision is yours but you should not invest in Deposit Plus unless the intermediary who sells it to you has explained to you that the product is suitable for you having regard to your financial situation, investment experience and investment objectives.
Deposit Plus is embedded with FX option(s). Option transactions involve risks, especially when selling an option.Although the premium received from selling an option is fixed, you may sustain a loss well in excess of such premium amount, and your loss could be substantial.
The maximum potential gain is limited to the interest on the deposit.
Investing in Deposit Plus is not the same as buying the linked currency directly.
The net return of Deposit Plus will depend upon the exchange rate of the deposit currency against the linked currency prevailing at the deposit fixing time on the deposit fixing date.Movements in exchange rates can be unpredictable, sudden and drastic, and affected by complex political and economic factors.
Liquidity risk - Deposit Plus is designed to be held until maturity.You do not have a right to request early termination of this product before maturity.
Investment involves risks. Past performance of investment products are no guide to future performance. The value of investments and the income from them can fluctuate and is not guaranteed. Investors may not get back the amount they invest.
Investment returns not denominated in home currency are exposed to exchange rate fluctuations. Rates of exchange may cause the value of investments to go up or down.
Deposit Plus is NOT equivalent to a time deposit. Deposit Plus is a structured product with derivatives underlying and is NOT protected under the Hong Kong Deposit Protection Scheme. The repayment of it is also not guaranteed by the Hong Kong SAR Government's Exchange Fund. Do not invest in Deposit Plus unless you fully understand and are willing to assume the risks associated with it.
The products discussed in this brochure are not straightforward deposits and should not be treated as a normal time deposit or a substitute of such.
Issuer's Risk - if investing in HSBC issued Deposit Plus, you rely on HSBC's creditworthiness. The product is subject to both the actual and perceived measures of the credit worthiness of the Bank and there is no assurance of protection against a default by the Bank in respect of its payment obligations. In the worst case scenario (e.g. insolvency of the Bank), the investor might not be able to recover the principal and/or any interest/coupon and the potential maximum loss could be 100% of the invested amount and no interest/coupon received.

Specific Risks related to Deposit Plus with Renminbi as Deposit Currency or Linked Currency

Renminbi currency risk - Renminbi is subject to exchange rate risk and is currently not freely convertible and conversion of Renminbi through banks in Hong Kong is subject to certain restrictions. In case you receive Linked Currency instead of Deposit Currency at maturity and you want to convert the maturity proceed back to Deposit Currency, you will be bound by the prevailing Renminbi exchange conversion restrictions and it may happen that such exchange cannot be performed.
Credit risk of counterparties - Derivatives instruments are involved in Deposit Plus and you are exposed to the credit risk of counterparties being the issuers of derivative instruments. In case the derivatives counterparty defaults and the bank suffers loss accordingly, the default risk of the bank with respect to the Deposit Plus payments will increase.
Commitment to the full Deposit Period - Early redemption is not allowed. In case you need to redeem a Deposit Plus before maturity and the bank agrees, the redemption amount will be determined at sole discretion of the bank and you must be prepared that you may incur a significant loss of the deposit principal.
Liquidity risk - Deposit Plus is not transferrable. There is no secondary market for trading Deposit Plus.

Next steps

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