HSBC France € 20,000,000,000 Euro Medium Term Note Programme

Operational risks:· Legal risk: The HSBC France Legal Department helps the various HSBC Francegroup businesses to prevent and control legal risk and is in charge of litigationfollow-up, to ensure that the risks framework remains adequate in the face ofchanges in laws, regulations and organisations.· Tax risk: The HSBC France Tax Department assists HSBC France's variousbusiness lines, along with its subsidiaries, to prevent and control tax risks.· Information technologies risk: failure to comply with legal obligations, humanand programming errors, loss of expertise relating to projects and/or technologies,unavailability of the information system when new developments or new thirdpartysolutions are implemented, system and code vulnerabilities, outsourcing ofsensitive functions and processes, loss of or damage to audit trails, failure of keysuppliers in the regulatory sense, internal and external fraud.· Business continuity (which is enlarged since January 2012 to security andfraud): The purpose of the Business Recovery Plan (BRP) is to ensure thatbusiness can carry on or continue to run at the minimum level considerednecessary to safeguard the interests of the business, its employees and itscustomers, in the event of a major disaster or disruption likely to have asignificant impact on the business of HSBC France and/or of its subsidiaries, or toproduce a significant deterioration in the image of the business.· Human Resources: HSBC France’s Human Resources Department is responsiblefor the permanent control of the Human Resources (HR) risk of the HSBC Francegroup.· Compliance risk: is defined by the situations of failure of compliance andinfringements of internal rules of procedure.· Accounting risk: The Finance Department is responsible for the properapplication of the HSBC France group’s accounting principles and accountingcontrol procedures. It defines the procedures and controls to be applied under theresponsibility of each legal entity’s accounting department. This more particularlyconcerns accounting and reconciliation procedures designed to verify theexistence and validity of balance sheets, off-balance sheet statements and incomestatements. The Finance Department maintains accounting control manualsfeaturing procedures and instructions, which comply with French accountingstandards.D.3 Keyinformationon the keyrisks that arespecific to theNotesThere are certain factors which are material for the purpose of assessing the risksrelated to the Notes including the following:· General risks (e.g. independent review and advice, potential conflicts ofinterest, legality of purchase, taxation, liquidity risks, exchange rate risks)such as:- each prospective investor in the Notes must determine, based on its ownindependent review and such professional advice as it deems appropriateunder the circumstances, that its acquisition of the Notes is fully consistentwith its financial needs, objectives and condition, is a fit, proper and suitableinvestment for it, notwithstanding the clear and substantial risks inherent ininvesting in or holding the Notes;- there can be no assurance of a secondary market for the Notes or the17