Stable Outlooks

Fitch Ratings-London-10 December 2012: Fitch Ratings has affirmed HSBC Bank Middle East's (HBME) Long-term Issuer Default Ratings (IDR) at 'AA-' and HSBC Bank Oman's (HBON) Long-term IDR at 'A+'. The Outlooks are Stable. The rating actions follow the downgrade of the banks' ultimate parent, HSBC Holdings plc (see 'Fitch Downgrades HSBC to 'AA-'; Outlook Stable' dated 7 December at www.fitchratings.com). A full list of rating actions is at the end of this rating action commentary.

RATING DRIVERS AND SENSITIVITIES- IDRs ANDSUPPORT RATING

HBME and HBON's IDRs and Support Ratings are driven by the extremely high probability of support available to the bank from HSBC Holdings plc (HSBC or the group). Fitch's opinion of support is based on the ability and willingness of HSBC to support its subsidiary banks, if ever required, given their overall importance to the group.

Fitch believes that HBME (100% indirectly owned by HSBC) is core to the group's international banking strategy in light of which a default of a core subsidiary would have significant reputational issues for HSBC. The agency has therefore equalised HBME's Long-term IDR with HSBC's at 'AA-'. Other factors considered include HBME's unique regional position and high level of strategic and operational integration, specifically in its business franchise, risk management, and liquidity and capital management policies.

Fitch considers HBON a strategically important subsidiary of HSBC, given its relative size, 51% ownership and it being less aligned with the group. Therefore, HBON's Long-term IDR is one notch lower at 'A+'.

The IDRs of both banks are, therefore, sensitive to changes in HSBC's IDRs.

Fitch has not reviewed the Viability Ratings of either HBME or HBON, which are unaffected by today's action.

Established in 1959 and operating out of Dubai, HBME is HSBC's main vehicle for its Gulf/Middle Eastern operations. The bank has a presence in 13 countries in the region through a wide network of branches and affiliates. HBON was created in June 2012 following the merger of Oman International Bank and HBME's Oman operations. The combined entity is 51% owned by HBME.

The rating actions are as follows:

HSBC Bank Middle East Limited

Long-term IDR affirmed at 'AA-'; Outlook Stable

Short-term IDR affirmed at 'F1+'

VR unaffected at 'bbb'

Support Rating affirmed at '1'

EMTN Programme: Senior unsecured debt affirmed at 'AA-' / 'F1+'

HBME Sukuk Company Limited

Trust Certificate Issuance Programme: Senior unsecured trust certificates affirmed at 'AA-'

HSBC Bank Oman SAOG

Long-term IDR affirmed at 'A+'; Outlook Stable

Short-term IDR affirmed at 'F1'

VR unaffected at 'bb'

Support Rating affirmed at '1'

Contact:
Primary Analyst
Mahin Dissanayake
Director
+44 20 3530 1618
Fitch Ratings Limited
30 North Colonnade
London E14 5GN

Secondary Analyst
Philip Smith
Senior Director
+44 20 3530 1091
Committee Chairperson
Michael Dawson-Kropf
Senior Director
+49 69 768076 113

Media Relations: Hannah Huntly, London, Tel: +44 20 3530 1153, Email: hannah.huntly@fitchratings.com.

© Press Release 2012