HSBC plans to issue $1.5 billion in perpetual capital securities
Key Facts
HSBC announced on November 6, 2026, that it plans to issue perpetual subordinated contingent convertible securities with an aggregate nominal value of $1.5 billion, with issuance scheduled for November 13. The company set a 7.625% yield on the securities, which are capital instruments that convert when specified conditions are met. HSBC said in its disclosure that net proceeds would be used for general corporate purposes and to maintain or strengthen its capital base. The announcement comes as its Common Equity Tier 1 ratio stood at 13.9% at the end of September, according to the bank’s quarterly results. The issuance gives the bank a permanent funding instrument, while investors face terms that include the potential cancellation of interest and conversion into shares.
The disclosure states that the conversion trigger will occur if the Common Equity Tier 1 ratio, known as CET1, falls below 7.0%. Once the event is determined to have occurred, conversion will take place automatically without delay and within a maximum period of one month. This mechanism is a capital condition specified in the securities and is separate from the issuance date scheduled for November 13. The securities are also perpetual, and holders have no right to request their redemption. The bank retains absolute discretion to cancel interest payments in whole or in part, meaning the stated yield does not guarantee payment of every amount due.
HSBC’s CET1 ratio was about 13.9% on September 30, 2026, compared with 14.1% on June 30 of the same year. The group attributed the decline in the ratio during the third quarter to higher risk-weighted assets, a fall in the value of some debt instruments and the impact of share buybacks. It said regulatory earnings offset some of these factors. In its October update, HSBC set a medium-term target range of 14% to 14.5% for the ratio. The ratio had fallen 0.8 percentage points from the end of 2025 to 14.1% on June 30, with the bank then citing the impact of the privatization of Hang Seng Bank, distributions and higher risk-weighted assets.
The November issuance is not the bank’s first transaction of this kind this year. In a May 2026 announcement, HSBC expected gross proceeds of $1.5 billion and net proceeds of $1.485 billion after deducting managers’ fees. It said at the time that net proceeds would be used for general corporate purposes and to maintain or strengthen its capital base. In the current issuance, HSBC plans to offer and sell the securities to at least six independent investors, whether individuals, companies or institutions. The securities are expected to be listed and admitted to trading on the Global Market of Euronext Dublin within 30 days of the issue date. Completion of the managers’ obligations to purchase the securities and pay for them remains subject, among other things, to the securities not being downgraded and to no material adverse change in the company’s and its subsidiaries’ financial position, earnings or general affairs.
HSBC shares fell in the session before the issuance announcement, closing at $88.06 on November 5, compared with $89.37 on November 4. The shares had risen on November 4 compared with the November 3 close, according to EL7 data. This movement took place in sessions before the November 6 announcement, so it does not represent a reported market reaction to the issuance. In its third-quarter results, Chief Executive George Elhedery said the group’s performance reflected the execution of its strategic priorities. He added that simplifying HSBC gives the group greater capacity to invest and grow and to deliver strong returns to shareholders. The issuance is scheduled for November 13, with listing expected within the anticipated 30-day period thereafter.