1-MONTH AUD STRUCTURED DEPOSIT LINKED AUD/USD (“SD”) Final application date: 16 September 2013 (Subject to change without prior notice) SD is a deposit designed to enables Investors to potentially earn a higher coupon compared with ordinary time deposits. In exchange for this enhanced return, the Bank may pay the minimum coupon, which may be lower than normal time deposit rate, if the exchange rate movement is out of the pre-determined foreign exchange range. Initial principal and potential yield in AUD 100% principal protection at maturity Tenor: 1 month Potential yield is linked to the performance of underlying currency against US Dollar (i.e. AUD/USD). The SD provides the highest potential yield if the price of the underlying has never traded outside of the predetermined price range during the investment period. The potential yield will be paid at maturity. Please refer to the Indicative Term Sheet in this document for more details. Issued by HSBC Bank (Vietnam) Ltd. Product Description Features 1-month tenor SD denominated in AUD 100% principal protection at maturity The SD is not allowed to be terminated by the Investors prior to Maturity Date The Enhanced Coupon is determined by the comparing the daily trading price of AUD against USD (AUD/USD) to the predetermined Range. If AUD/USD ever trades outside or at boundaries of the predetermined Range, a Knock-out Event is deemed to have occurred. A coupon of 0.50% p.a will be provided to Investors. Otherwise, if AUD/USD price has never traded outside or at boundaries of the predetermined Range during the SD period, Investors will receive the maximum payout of 4.00% p.a at maturity. Below is an indicative sample Range (Boundaries Exclusive) Condition Coupon Received at maturity AUD/USD ever trades outside or at boundaries of the predetermined 0.50% p.a Range during the SD period AUD/USD never trades outside (Spot – 0.0200, Spot + 0.0130) or at boundaries of the predetermined 4.00% p.a Range during the SD period Investors should be prepared to place their funds in the SD for the full 1-month period. Investors may receive coupon which is lower than normal time deposit rates. (Spot – 0.0200, Spot + 0.0130) Main Risks Issuer Information Please refer to the Risk Disclosure section in this document for more details HSBC Bank (Vietnam) Ltd. The Metropolitan, 235 Dong Khoi Street, District 1 Ho Chi Minh City, Vietnam Tel: +84 8 38 29 22 88 STRUCTURED DEPOSIT LINKED FOREIGN EXCHANGE KEY FEATURE DOCUMENT Issued by HSBC Bank (Vietnam) Ltd. 1 Scenario Analysis The following examples are purely hypothetical. The hypothetical rates of return shown in the following scenario examples are meant for illustrative purposes only. The levels/movement/trends shown have no reference to historical data and are not actual or indicative of future performance. HSBC makes no representation or warranty (express or implied) of any nature in relation to nor is any responsibility of any accepted with respect to the completeness or accuracy of any information, projection, or omission from the below scenario analysis. (Please refer to the Indicative Term Sheet for the definition of the terms). The following examples show what an Investor’s potential return on the SD could be under 5 different scenarios based on a principal investment of AUD 100,000. AUD 100,000 0.9095 (Spot – 0.0200, Spot + 0.0130) 17 September 2013 19 September 2013 17 October 2013 21 October 2013 1 month Initial Principal: AUD/USD Spot: Range: Trade date: Start Date: Fixing Date: Maturity Date: Tenor: Range (Boundaries Exclusive) (Spot – 0.0200 = 0.8895, Spot + 0.0130 = 0.9225) (Spot – 0.0200 = 0.8895, Spot + 0.0130 = 0.9225) Coupon Received at maturity Condition AUD/USD ever trades outside or at boundaries of the predetermined Range during the SD period AUD/USD never trades outside or at boundaries of the predetermined Range during the SD period 0.50% p.a 4.00% p.a Scenario 1: Assuming AUD against USD has the following performance Range (Boundaries Exclusive) 0.8895 0.9225 Lowest trading price during the SD period Highest trading price during The SD period Has AUD/USD price ever traded outside the Range? Enhanced Coupon entitled at maturity 0.9010 0.9150 No 4.00% p.a AUD/USD price has never traded outside of the predetermined Range during the SD period; therefore, no Knockout Event has occurred over the entire investment tenor. The SD provides a maximum enhanced coupon of 4.00% p.a. Coupon Amount = Initial Principal x Coupon x Number of days / 360 = AUD 100,000 x 4.00% x 32 / 360 = AUD 355.56 Total redemption amount at maturity = Initial Principal + Coupon Amount = AUD 100,000 + AUD 355.56 = AUD 100,355.56 The total return under this scenario would be 4.00% p.a. Under this scenario, an investment of AUD 100,000 would generate a return of AUD 355.56 STRUCTURED DEPOSIT LINKED FOREIGN EXCHANGE KEY FEATURE DOCUMENT Issued by HSBC Bank (Vietnam) Ltd. 2 Scenario 2: Assuming AUD against USD has the following performance Range (Boundaries Exclusive) 0.8895 0.9225 Lowest trading price during the SD period Highest trading price during The SD period Has AUD/USD price ever traded outside the Range? Enhanced Coupon entitled at maturity 0.8830 0.9150 Yes 0.50% p.a AUD/USD price has traded outside of the predetermined Range during the SD period; therefore, a Knock-out Event has occurred. The SD provides an enhanced coupon of 0.50% p.a. Coupon Amount = Initial Principal x Coupon x Number of days / 360 = AUD 100,000 x 0.50% x 32 / 360 = AUD 44.44 Total redemption amount at maturity = Initial Principal + Coupon Amount = AUD 100,000 + AUD 44.44 = AUD 100,044.44 The total return under this scenario would be 0.50% p.a. Under this scenario, an investment of AUD 100,000 would generate a return of AUD 44.44 Scenario 3: Assuming AUD against USD has the following performance Range (Boundaries Exclusive) 0.8895 0.9225 Lowest trading price during the SD period Highest trading price during The SD period Has AUD/USD price ever traded outside the Range? Enhanced Coupon entitled at maturity 0.9010 0.9363 Yes 0.50% p.a AUD/USD price has traded outside of the predetermined Range during the SD period; therefore, a Knock-out Event has occurred. The SD provides an enhanced coupon of 0.50% p.a. Coupon Amount = Initial Principal x Coupon x Number of days / 360 = AUD 100,000 x 0.50% x 32 / 360 = AUD 44.44 Total redemption amount at maturity = Initial Principal + Coupon Amount = AUD 100,000 + AUD 44.44 = AUD 100,044.44 The total return under this scenario would 0.50% p.a. Under this scenario, an investment of AUD 100,000 would generate a return of AUD 44.44 Scenario 4: Assuming AUD against USD has the following performance Range (Boundaries Exclusive) 0.8895 0.9225 Lowest trading price during the SD period Highest trading price during The SD period Has AUD/USD price ever traded outside the Range? Enhanced Coupon entitled at maturity 0.8895 0.9150 Yes 0.50% p.a AUD/USD price has traded at the lowest price of the predetermined Range during the SD period; therefore, a Knock-out Event has occurred. The SD provides an enhanced coupon of 0.50% p.a. STRUCTURED DEPOSIT LINKED FOREIGN EXCHANGE KEY FEATURE DOCUMENT Issued by HSBC Bank (Vietnam) Ltd. 3 Coupon Amount = Initial Principal x Coupon x Number of days / 360 = AUD 100,000 x 0.50% x 32 / 360 = AUD 44.44 Total redemption amount at maturity = Initial Principal + Coupon Amount = AUD 100,000 + AUD 44.44 = AUD 100,044.44 The total return under this scenario would be 0.50% p.a. Under this scenario, an investment of AUD 100,000 would generate a return of AUD 44.44 Scenario 5: Assuming AUD against USD has the following performance Range (Boundaries Exclusive) 0.8895 0.9225 Lowest trading price during the SD period Highest trading price during The SD period Has AUD/USD price ever traded outside the Range? Enhanced Coupon entitled at maturity 0.9010 0.9225 Yes 0.50% p.a AUD/USD price has traded at the highest price of the predetermined Range during the SD period; therefore, a Knock-out Event has occurred. The SD provides an enhanced coupon of 0.50%% p.a. Coupon Amount = Initial Principal x Coupon x Number of days / 360 = AUD 100,000 x 0.50%x 32 / 360 = AUD 44.44 Total redemption amount at maturity = Initial Principal + Coupon Amount = AUD 100,000 + AUD 44.44 = AUD 100,044.44 The total return under this scenario would be 0.50% pa. Under this scenario, an investment of AUD 100,000 would generate a return of AUD 44.44 Scenario Analysis Disclaimer The above scenarios will provide Investors with illustrations of potential payout calculations under different scenarios. They do not reflect a complete analysis of all potential gain and loss scenarios that may arise in respect of any actual investment. Figures used in the scenarios are for illustrative purposes only. Investors should not project the future performance of the SD based on these illustrations. STRUCTURED DEPOSIT LINKED FOREIGN EXCHANGE KEY FEATURE DOCUMENT Issued by HSBC Bank (Vietnam) Ltd. 4 Risk Disclosure Investors should carefully consider the range of risk factors outlined in this section. These risks are not, and are not intended to be, a complete list of all risks and considerations relevant to the SD or Investors’ decision to purchase the SD. SD is complex and an investment in a SD may involve a high risk of loss of Investors’ initial investment. Prior to entering into an investment in the SD, Investors should ensure that Investors understand the nature of all of the risks associated with the SD in order to determine whether the investment is suitable for Investors in light of Investors’ investment experience, objectives, risk appetite, financial position and other relevant circumstances. This document contains general information only. Investors should consult with Investors’ legal, regulatory, tax, financial and/or accounting advisers to the extent Investors consider it necessary in making Investors’ own investment decision. In the event Investors choose not to seek advice from an independent professional adviser, Investors should carefully examine the risk profile of the SD and consider whether it is suitable for Investors. (Please refer to the Indicative Term Sheet for definitions of the terms used below). Principal Risk The SD is designed to be 100% protected at maturity. However, if the SD is early terminated by the Issuer, it is possible that the redemption proceeds may go below 100% of the initial investment amount. Furthermore, Investors should be aware that receipt of any sum due at maturity is subject to the credit risk of the Issuer. Return Risk An investment in the SD linked to the spot price performance of AUD against USD (i.e. AUD/USD) can be extremely volatile. The potential return is linked to the performance of the AUD against US Dollar. In the worst case, Investors will receive 100% of their principal at maturity with a minimum return of 0.50% p.a. Investors may also suffer a potential loss of principal amount invested if the SD is redeemed by the Bank, the market maker of the SD, prior to maturity irrespective of the underlying performance. Furthermore, interest rates fluctuate; as such, there is no guarantee that the SD will produce yields in excess of those available on other investment or savings products linked to current market variable interest rates. Credit Risk Prospective Investors should be aware that receipt of any sums due at maturity by an Investor is subject to the credit risk of the Issuer. Investors assume the risk that the Issuer will not be able to satisfy their obligations under the SD. Except where specifically provided otherwise, the SD will constitute general and unsecured contractual obligations of the Issuer and such obligations will rank equally with all other unsecured contractual obligations of the Issuer. The SD will also rank pari passu (equally without preference) with subsequent unsecured obligations of the Issuer. In the case of an insolvency of the Issuer, preferred liabilities of the Issuer will have priority over unsecured obligations such as the SD. Any stated credit rating of the Issuer reflects the independent opinion of the referenced rating agency as to the creditworthiness of the rated entity but is not a guarantee of credit quality of the Issuer. Any downgrading of the credit ratings of the Issuer or its parent or affiliates, by any rating agency could result in a reduction in the value of the SD. In the event that bankruptcy proceedings or composition, scheme of arrangement or similar proceedings to avert bankruptcy are instituted by or against the Issuer, the payment of sums due on the SD may be substantially reduced or delayed. Market Risk The SD can be volatile instruments and may be subject to considerable fluctuations in value and other risks inherent in investing in securities and/or derivatives. The value of a SD may fall as rapidly as it may rise due to numerous factors, including, but not limited to, systemic risks, variations in the frequency and magnitude of changes in interest rates, inflation outlook and the price/level of any underlying reference to which the SD relates (e.g. securities, commodities, funds, rates and/or shares). The value of the SD may increase or decrease throughout its tenor. Re-investment Risk Investors need to consider your ability to re-invest the principal investment amount plus the coupon amount (if paid) in other suitable products with similar returns and tenors, where the SD has been allowed to early redeem. STRUCTURED DEPOSIT LINKED FOREIGN EXCHANGE KEY FEATURE DOCUMENT Issued by HSBC Bank (Vietnam) Ltd. 5 Interest Rate Risk Investors are exposed to the movement of interest rates whenever their SD is redeemed, tendered or sold prior to maturity. From an economic perspective, the SD is typically comprised of a deposit and an option. Movements in interest rates will have an impact upon both the value of the deposit and the option. As interest rates move upwards, the value of the SD generally falls. Moreover, the longer the tenor of the SD is, the more sensitive the SD will be to interest rate changes. Settlement Risk Upon purchasing the SD, Investors assume all settlement risks relating to Issuer failing to settle the SD on the settlement date, and unless otherwise provided for. Correlation Risk Investors should be aware that the return they receive from investing in the SD may be less than, or greater than, the performance of the reference underlying. Legal Risk The SD is subject to the legal provisions that regulate such instrument. If these rules are amended so as to require the cancellation of such products, the Bank may be obliged to repurchase and cancel the SD in line with such directive. In such situations, the amount that would be returned to the Investors will be determined solely by the Bank acting in good faith. Such amount may be lower than the initial investment. Significant risks that are not generally associated with similar investments in conventional fixed rate or floating rate debt securities An investment in the SD entails significant risks that are not generally associated with similar investments in conventional fixed rate or floating rate debt securities. Calculation of the performance return on the SD is linked to the change in the underlying, which may decline as well as rise. Although Investors have the opportunity to receive a high return, the Investors risk a lower return than comparable instruments. As such, the investment may not be suitable for persons unfamiliar with underlying performance, or unwilling or unable to bear the risk attendant with this trade. Hedging activities may create conflicts of interest between Investors and the Issuer Hedging activities may create conflicts of interest between Investors and the Issuer. The Issuer or one or more of its affiliates may hedge their obligations under the SD by purchasing futures or options on the underlying or by entering into other derivative instruments with returns linked or related to changes in the performance of the underlying, and the Issuer may adjust these hedges by, among other things, purchasing or selling futures or options or modifying other derivative instruments linked to the underlying at any time. Although they are not expected to, any of these hedging activities may adversely affect the level of the underlying price and, therefore, the market value of the SD. It is possible that the Issuer or one or more of affiliates of the Issuer could receive substantial returns from these hedging activities while the market value of the SD declines. Conflicts of Interest Various potential and actual conflicts may arise between the interests of the Investors and the Issuer, as a result of the commercial and investment banking businesses and activities of the Issuer and its affiliates. The Issuer may recommend or effect a transaction in which it or any affiliate, or one of its other clients, may have an interest, relationship or arrangement that is material. In particular, the Issuer or any affiliate may deal as principal for its own account, to hedge liabilities under the SD or for other purposes, and may match a transaction or order with that of another client. Neither the Issuer nor any affiliate is under any duty to account for any profits, commission, remuneration, rebates or other benefits made or received as a result of such transaction or service. Further, the Issuer is the Calculation Agent with regard to the SD. The Calculation Agent is solely responsible for making certain determinations in the calculation of the underlying price and the redemption amount and other determinations and calculations in connection with the SD. Because the Calculation Agent is the Issuer, and is obligated to redeem the SD, the Calculation Agent may have economic interests adverse to those of the investors of the SD, including with respect to certain determinations and judgments that the Calculation Agent must make as referred to above, any of which may affect payments in respect of the SD. In its capacity as Calculation Agent, STRUCTURED DEPOSIT LINKED FOREIGN EXCHANGE KEY FEATURE DOCUMENT Issued by HSBC Bank (Vietnam) Ltd. 6 HSBC does not act as fiduciary for or an advisor to any of the Investors in respect of any such determination or judgment or otherwise. Early Redemption by Investors Investors are not allowed to redeem the SD prior to maturity. Early Redemption by Issuer If the SD has to be terminated early due to the winding up of the Issuer or any of the applicable terms of the SD allowing for early termination, Investors should understand that they will not receive any returns and the Bank will deduct any early termination costs from the principal payable to Investors. It is therefore possible that the Investor will not receive 100% of the principal amount back. Investors are advised to study and understand specifically the events which may cause or permit the Issuer or the Calculation Agent to early terminate the SD and such risk is effectually borne by the Investors. Foreign Exchange Risk If the investment currency is not Investors’ base currency, and Investors choose to convert other currencies into investment currency for the purpose of subscribing for the SD and/or Investors choose to convert the redemption amount back to your base currency at maturity, Investors’ actual returns could be affected negatively or positively due to exchange fluctuations. Inflation Risk Although the SD is principal protected at maturity, Investors need to consider the effect that inflation may have on the real value of the investment during the tenor of the SD. Derivative Risk The underlying of the SD is subject to financial derivatives risk which is dependent on the market value of an underlying, such as options, futures, forwards and swaps. Compound of Risk More than one risk factor may have simultaneous effects with regard to the SD such that the effect of a particular risk factor may not be predictable. In addition, more than one risk factor may have a compounding effect which may not be predictable. No assurance can be given as to the effect that any combination of risk factors may have on the value of the SD. Limited Liquidity of the SDs and Transfer Restrictions There is limited liquidity for the SD; as such, Investors may not be able to liquidate or sell some or all the SD as and when they require or at an amount equal to or more than the principal. In addition, the SD will be subject to certain transfer restrictions. This may further limit the liquidity of the SD. Terms are Indicative All terms are indicative and thus do not represent an offer to sell, purchase or subscribe to any investment nor a solicitation of such an offer. Prospective Investors should rely solely on the final documentation relating to the purchase of the SD that will contain the final terms and conditions. STRUCTURED DEPOSIT LINKED FOREIGN EXCHANGE KEY FEATURE DOCUMENT Issued by HSBC Bank (Vietnam) Ltd. 7 Investor Commitment The SD has a product risk level of two (2) and are likely to be suitable for investors whose attitude to risk is Cautious and who agree to the related terms and investment risks. The SD is not likely to be suitable for inexperienced Investors. Investors should understand that Investors should hold their SD until maturity. The SD is likely to be suitable for Investors who are happy to hold the investment for the entire period. Investors should regard the SD as a 1-month investment and should make sure there are sufficient liquid emergency funds to meet any unforeseen circumstances. The SD is likely to be suitable for Investors who have views that the performance of the AUD against USD over the term of investment will be within the defined Range until maturity. The SD is to be suitable to Vietnamese residents who place SD in either cash or non-cash base foreign currencies. The SD is also to be suitable to resident foreigners who are working or living legally in Vietnam and make SD placement in non-cash base foreign currencies. Investors should avoid excessive investment in a single type of investment, in respect of its total proportion of an overall portfolio, in order to guard against overexposure to any investment risks. Investors should self-assess and confirm the appropriateness and suitability of investing in the SD and receiving the related payments. Investors should understand that investment in the SD is not the same as an investment in the underlying, and does not confer any legal or beneficial interest in the same underlying. Investors should understand that investment in the SD will not be used as pledge or guarantee for loans. The minimum investment amount is AUD 5,000 STRUCTURED DEPOSIT LINKED FOREIGN EXCHANGE KEY FEATURE DOCUMENT Issued by HSBC Bank (Vietnam) Ltd. 8 Indicative Term Sheet Initial Principal Trade Date Start Date Fixing Date Maturity Date Tenor Range Enhanced Coupon Early redemption by Investors Definition AUD 5,000 17 Sep 2013 19 Sep 2013 17 Oct 2013 21 Oct 2013 1 month (Spot – 0.0200, Spot + 0.0130) and Spot is fixed on 17 Sep 2013 If AUD/USD never trades outside or at boundaries of the predetermined Range during the SD tenor, the Enhanced Coupon is 4.00% p.a If AUD/USD ever trades outside or at boundaries of the predetermined Range during the SD tenor, the Enhanced Coupon is 0.50% p.a Investors shall not be entitled to redeem the SD prior to the Maturity Date. “Issuer”, “Calculation Agent”, “Bank” or “HSBC” means HSBC Bank (Vietnam) Ltd. “Structured Deposit” or “SD” means the Structured Deposit as specified herein “Initial Principal” means the initial investment of Investors as specified herein “Trade Date” means the date, 02 (two) business days before the Start Date, which the Bank provides Range as specified herein “Start Date” means the date which the SD placement begins as specified herein “Fixing Date” means the date which the Bank determines the Enhanced Coupon of the SD as specified herein “Maturity Date” means the date which the SD matures as specified herein “Tenor” means the duration of the SD as specified herein “Enhanced Coupon” means the rate of return on investment for the SD placement as specified herein “Spot” means the exchange rate of the AUD/USD quoted by the Bank as specified herein “Range” means the predetermined foreign exchange range in which AUD/USD rate moves during the investment period as specified herein “Knock-out Event” is the time when AUD/USD meets the required conditions of the SD. The event is used to determine the final Enhance Coupon of the SD as specified herein STRUCTURED DEPOSIT LINKED FOREIGN EXCHANGE KEY FEATURE DOCUMENT Issued by HSBC Bank (Vietnam) Ltd. 9 Investment Acknowledgement The indicative term sheet set forth above are a summary only and are subject to tranches supplemented from time to time and the final term sheet to be issued under tranches for the issuance of SD. In issuing the SD, the Issuer is not making, and has not made, any representation whatsoever as to the underlying. In purchasing any SD, Investors confirm that they are not relying on either the views or advice of the Issuer or any other HSBC Group company. Investors will also confirm that they understand (i) that the Issuer and the Calculation Agent are both HSBC, and (ii) that neither the Issuer nor the Calculation Agent owes any obligations to Investors to take any action other than those prescribed by the terms and conditions of the SD. Investors acknowledge and agree that where the Issuer is prevented from, hindered or delayed by reason of force majeure or act of the government or other circumstances beyond the control of the Issuer, in the performance of any its obligations under these terms and conditions, the Issuer will not be under any liability to the Investors for any loss, damage, cost or expense incurred by the Investors due to the inability or failure of the Issuer to perform any such obligation. Investors agree that an investment in SD will be subject to the General Terms and Conditions of the Bank. Investors also agree that the governing law to SD provided by the Issuer shall be the laws of Vietnam. Any dispute arising out of or in connection with a specific term sheet shall be submitted to a competent court in Vietnam for resolution. Investors acknowledge that they have read, understood and agreed to accept this document which is served as the SD terms and conditions (as they may be amended from time to time) of the Bank and acknowledge receipt of a copy of such documents. Investor’s signature and full name STRUCTURED DEPOSIT LINKED FOREIGN EXCHANGE KEY FEATURE DOCUMENT Issued by HSBC Bank (Vietnam) Ltd. Date 10
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