Scrip Dividend Circular

RNS Number : 2225S

HSBC Holdings PLC

05 November 2013

The following regulated information, disseminated pursuant to DTR6.3.5, comprises the scrip dividend circular for the third interim dividend for 2013 which was sent to shareholders of HSBC Holdings plc on 5 November 2013. A copy of the scrip dividend circular is available at www.hsbc.com/dividends.

THIS DOCUMENT IS IMPORTANTAND REQUIRES YOUR IMMEDIATEATTENTION. If you are

in any doubt about this document or as to the action you should take, you should consult a stockbroker, solicitor, accountantor other appropriate independent professional adviser.

Ifyou sold ortransferred all or some ofyour ordinary shares on orbefore 22 October 2013,but those shares are included in the number shown in box 1 on your Form of Election, Entitlement Advice or Dividend Notification email for the third interim dividend for 2013, you should, without delay, consult the stockbroker or other agent through whom the sale or transfer was effected for advice on the action you should take.

Hong Kong Exchangesand Clearing Limitedand The Stock Exchange of Hong Kong Limitedtake no responsibility for the contents of this document,make no representation as to its accuracy or completeness and expresslydisclaim any liabilitywhatsoever for any loss howsoever arising from or in relianceupon the whole or any part of the contents of this document. The ordinary shares of HSBC Holdings plc trade under stock code 5 on The Stock Exchange of Hong Kong Limited.

Dear Shareholder

5 November2013

SCRIP DIVIDEND SCHEME AND PAYMENT OF DIVIDENDS IN UNITED STATES DOLLARS, STERLING OR HONG KONG DOLLARS

On 7 October2013, your Directors declared a thirdinterim dividend for 2013 of US$0.10 per ordinary share, payable on 11 December 2013. You may elect to receive:

1. a scrip dividend of new shares at a 'Market Value' of US$10.9669 (£6.8202)per ordinary share;

2. a cash dividend in United States dollars, sterling, or Hong Kong dollars; or

3. a combination of cash and scrip dividend.

For illustration, using the exchange rates on 29 October 2013, the third interim dividend per ordinary share in sterling and Hong Kong dollars would have been approximately £0.0622 and HK$0.7753. The precise amounts whichwill be payableper ordinary sharein either sterlingor Hong Kong dollars on 11 December 2013 will be convertedfrom United States dollars using the exchangerates on 2 December 2013 as explained on page 3.

Please read this letter carefully.

In the absence of other instructions the dividend will be paid to you as described below. If you intend to give alternative instructions on how you wish to receive this dividend they must be received by the Company's Registrars by close of business on 27 November 2013. As an alternative to returning a printedForm of Election to make an election or writing to the Registrars to revoke a standinginstruction for new shares, you may give instructions electronically through the Registrars' Investor Centre, at the appropriate website address given on page 12. Instructions must be received by close of business on 27 November 2013. Before using this facility you will need to register with the Registrars' Investor Centre and you should do so without delay so that the formalities can be completed in time for you to give your instructions for this dividend by close of business on 27 November 2013. The use of the Registrars' Investor Centre to give your dividend instructions to the Registrars is referred to throughout this document as giving an Electronic Instruction. If you provide an email address to receive electronic communications from HSBC we will send notifications of your dividend entitlements by email. If you have not given a standinginstruction to receive new shares you will, in addition to the email notification (the "Dividend Notification email"), be sent a printedForm of Election until such time as you register with the Registrars' Investor Centre and are able to give your instructions electronically.

HSBC Holdings plc

8 Canada Square, London E14 5HQ, United Kingdom Web: www.hsbc.com

Registered in England: number617987. Registered Office: 8 Canada Square, LondonE14 5HQ Incorporated in England with limited liability

1. Scrip dividend

If you have already givenstanding instructions to receive new shares underthe Scrip Dividend Scheme, you will have been sent an Entitlement Advice. You need take no further action if you wish to receive the number of new shares shown on the Entitlement Advice. If you do not wish to receive the maximum entitlement to new shares,a letter revokingyour standing instructions must be received by the appropriate Registrars, at the address given on page 12, or an Electronic Instruction must be given, by close of businesson 27 November 2013. If you wish to receive new shares in respect of only part of this dividend, or if you wish to receive your cash dividendin any combination of United States dollars, sterling and Hong Kong dollars, please ask the Registrars for a Form of Election in time to return it to them by close of business on 27 November2013, or give an ElectronicInstruction by that time.

If you have not previouslygiven standing instructions to receive new shares under the Scrip Dividend Scheme and you wish to receivenew shares in lieu of the cash dividend, you should either complete and sign a printed Form of Electionand return it to the appropriate Registrars at the address given on page 12, or give an Electronic Instruction, by close of business on 27 November2013. If you take no action, you will receivethe dividend in cash in the currencyindicated on your Form of Election or Dividend Notification email.

We will calculateyour entitlement to new shares using a 'Market Value' of US$10.9669 (£6.8202) for each new share. An explanation of the calculation of 'Market Value' and thebasis of allotmentof new shares is set out in paragraphs 2 and 3 of the Appendix to this letter. Since fractions of shares cannotbe issued, if you have elected to receive new shares in relation to all or part of your holding of ordinary shares,any residual dividendentitlement will be carried forward in United States dollars and added to the next dividend. Residualdividend entitlements carried forwardwill not bear interest.

The scrip dividendalternative will enableshareholders to increasetheir holdings of shares without incurring dealing costs or stamp duty. To the extent that shareholders elect to receivenew shares, the Companywill benefit by retaining cash which would otherwise be payable by way of dividend. The Appendix to this letter sets out details of the Scrip Dividend Scheme and provides a general outline of the tax considerations in the United Kingdom and overseas.

Please read the next sectionregarding the paymentof dividends in cash, even if you wish to receive your dividend in the form of new shares.

2. Cash dividend

If your shares were recordedon the Hong Kong OverseasBranch Register at close of business on 24 October 2013, you will automatically receive any dividendspayable to you in cash in Hong Kong dollars,unless you have previously electedto receive paymentin United States dollars or sterling.

If your shareswere recorded on the Principal Register at closeof business on 25 October2013, you will automatically receive any dividendspayable to you in cash in sterling,unless you have previously elected to receivepayment in United States dollarsor Hong Kong dollars. However, if your addressis in the United States you will automatically receiveany dividends payable to you in cash in United States dollars, unless you have previously electedto receive payment in Hong Kong dollars or sterling.

If your shares were recordedon the Bermuda Overseas Branch Register at close of business on 25 October 2013, you will automatically receive any dividendspayable to you in cash in United States dollars, unless you have previously elected to receivepayment in Hong Kong dollars or sterling.

The currency in which any dividends payableto you in cash are to be paid is stated on your Form of Election, Entitlement Adviceor Dividend Notification email. If you wish to give standing instructions to receive such dividendsin one of the other available currencies(United States dollars, sterlingor Hong Kong dollars), you should eithercomplete the One Currency Election on page 2 of a printedForm of Election or Entitlement Advice, or give an Electronic Instruction. Completion of the One Currency Electionon the reverse of a printed Form of Election or Entitlement Advice will not revokea standing instruction to receive the maximum entitlement to new shares under the Scrip Dividend Scheme.

3. Combination of cash and scrip dividend

If you wish to receivethis dividend in a combination of the availablecurrencies or in a combination of cash and new shares, you must either complete Section B on page 1 of the Form of Election or give an Electronic Instruction. If you have received an Entitlement Adviceand not a Form of Election and you wish to receiveyour dividend in cash, in any combination of the available currencies, or in a combination of cash and new shares,you should either write to the appropriate Registrars at the addressgiven on page 12 to revoke your standing instructions for scrip dividends and to request a Form of Election in time to return it to them by close of business on 27 November2013, or give an ElectronicInstruction by this time.

Dividends payablein sterling or Hong Kong dollars on 11 December2013 will be converted from United States dollars at the forward exchange rates quoted by HSBC Bank plc in London at or about11.00 am on 2 December2013. The exchangerates will be announced to the London, Hong Kong, New York, Paris and Bermuda stock exchanges.

Dividend warrants and, where applicable, new share certificates are expected to be mailed to shareholders entitled thereto at their risk on or about 11 December 2013.

Whether you elect to receive your dividendsin cash or in new shares, it is recommended that you providepayment instructions eitherthrough the Registrars' Investor Centre or by completing and returning the DividendPayment Instruction on page 2 of a printed Form of Electionor Entitlement Advice, so that any dividends payableto you in cash can be sent to your bank account(s) as you require. It is not necessary for you to provide paymentinstructions if you have alreadygiven instructions for cash dividends to be sent direct to your bank account and you do not wish to change those instructions.

Yours sincerely

Ben J S Mathews

Group Company Secretary

APPENDIX

SCRIP DIVIDEND SCHEME ('THE SCHEME')

1. Terms

The Scheme, authority for which shareholders renewed at the Annual General Meeting on25 May 2012 for a further five-year period, will apply in respect of the third interim dividend for 2013.

As stated inthe announcement of thethird interim dividend for2013 made on 7 October 2013, any person who had acquired ordinary shares registered on the Hong Kong Overseas Branch Register should have lodged the share transfer with the Hong Kong Overseas Branch Registrar before 4.00 pm on 24 October 2013 in order to receive the dividend. Any person who had acquired ordinary shares registered on the Principal Register in the United Kingdom or on the Bermuda Overseas Branch Register should have lodged the share transfer with the Principal Registrar or the BermudaOverseas Branch Registrar before 4.00 pm on 25 October 2013 in order to receive the dividend.

Holders ofordinary shares on theHong Kong Overseas Branch Register asat theclose ofbusiness inHong Kong on 24October 2013 or onthe Principal Register asat theclose ofbusiness inEngland on25 October 2013 oron theBermuda Overseas Branch Register as atthe close of business in Bermuda on 25October 2013 (other than those shareholders referred toin paragraph 6) will be able to elect to receive new shares in respect of allor part of their holdings ofshares asan alternative to receiving the third interim dividend for 2013 of US$0.10 per ordinary share in cash.

The new ordinary shares will be issued subject tothe Articles of Association of theCompany andwill rank equally with the existing issued ordinary shares inall respects.

2. Market Value

The 'MarketValue' is the average of the middle market quotations for the ordinaryshares on the London Stock Exchange, as derived from the Daily Official List, for the five businessdays beginning on 23 October 2013. TheMarket Value of £6.8202 converted into United States dollars using the exchange rate quoted by HSBC Bank plc in London at 11.00 am on 29 October 2013 is US$10.9669 for each new share.

3. Basis ofallotment andexamples

Your entitlement tonew shares is based on:

(a) the Market Value (as defined in paragraph 2above) of US$10.9669 per share;

(b) the cash dividend of US$0.10 per share; and

(c) the number ofordinary shares held byyou onthe record date being 24 October 2013 onthe Hong Kong Overseas Branch Register and 25October 2013 on thePrincipal Register or theBermuda Overseas Branch Register.

The formula used for calculating your entitlement is asfollows:

Number ofshares held at therecord date xcash dividend per share + any residualdividend entitlement brought forward = maximumdividend available for share election

Maximum dividend available = maximum number of new shares

Market Value (rounded down to the nearest whole number)

You may elect to receive new shares in respect of all or part of your holding ofordinary shares. No fraction of a share will be issued.

If you elect to receive the maximum number ofnew shares in lieu of your dividend, a residual dividend entitlement may arise, representing the difference between the total Market Value of the new shares and the maximum dividend available on your shareholding. This residual dividend entitlement will be carried forward in United States dollars (without interest) to the next dividend (see Example 1).

Example 1

If you have 1,000 ordinaryshares and a residual dividend entitlement brought forwardof US$4.00, your maximum entitlement will be calculatedas follows:

Your cash dividend (1,000 x US$0.10) US$ 100.00

Plus residual dividend entitlement brought forward US$ 4.00

Maximum dividend available US$ 104.00

Number of new shares = US$104.00 = 9.4831 = 9new shares US$10.9669

Total Market Value of 9 new shares = 9 x US$10.9669 US$ 98.71

Plus residual dividend entitlement to be carried forward (US$104.00 - US$98.71) US$ 5.29

US$ 104.00

If you elect to receive only part of your dividend as new shares, you will receive the balance in cash.Any residual dividendentitlement relating to that portionof your holding in respectof which you have elected to receive new shares will be carriedforward in United States dollars(without interest) to the next dividend (see Example 2).

Example 2

If you have 1,000 ordinaryshares and a residual dividendentitlement brought forwardof US$4.00 your maximumentitlement will be 9 new shares, as shown in Example 1. Should you wish to electfor new shareson only 600 of your existing 1,000ordinary shares, you should insertthe number 600 in the box in Section B (i) of a printed Form of Election or, if giving an Electronic Instruction, in the relevant box in the Registrars' Investor Centre. The election for new shares, the cash balance due to you, and the residual entitlement to be carried forward to your next dividend,would be calculated as follows:

Your cash dividend (1,000 x US$0.10) US$100.00

Plus residual dividend entitlement brought forward US$ 4.00

Maximum dividend available US$104.00

600 existing shares on which you wish to receive new shares (600 x US$0.10) US$ 60.00 Plus residual dividend entitlement brought forward US$ 4.00

Total availableto elect for new shares US$ 64.00

Number of new shares = US$ 64.00 = 5.8357 = 5 new shares US$10.9669

Total Market Value of 5 new shares = 5 x US$10.9669 US$ 54.84 Plus residual entitlement to be carried forward (US$64.00- US$54.84) US$ 9.16 Plus balance of maximum dividend available to be paid in cash

(US$104.00 - US$64.00) US$ 40.00

Maximum dividend available US$104.00

In addition tothe 5 new shares, you will receive a cash balance of US$40.00and US$9.16 will be carried forward in United States dollars (without interest) to your next dividend. The cash balance will be paid to you in the currency indicated in the Dividend Notification email or in box 4 on the Form of Election,unless you give instructions to the contrary by indicating the currency/currencies you wish to receive in the boxes in sections B (ii) to B (iv) of a printedForm of Election or, if giving an Electronic Instruction, in the relevant boxes in the Registrars' Investor Centre. An example of how Section B of a printed Form of Election might be completed is given on page 6.

Section B

Complete this section with the relevant numbers of shares if you wish to receive your dividend in cash in a combination of the available currencies or in a combination of cash and new shares

I/We wish to receive my/our dividend in shares and/or in cash, based on the number of ordinary shares shown in box 1 above, as follows:

in shares (i) Number of shares on which I wish to receive new shares - 600 shares

in cash (ii) Number of shares on which I wish to receive cash in sterling - GBP 134
shares

(iii) Number of shares on which I wish to receive cash in US dollars - USD 133 shares

(iv) Number of shares on which I wish to receive cash in Hong Kong dollars - HKD 133 shares

Total number of existing shares (the sum of (i) to (iv)) - 1000 shares

If you wish toreceive a specific number of new shares, you may calculate the number of existing shares on which you need to elect as follows:

Number of new shares you wish to receive x Market Value = Number of shares on which to elect to receive new shares Cash dividend of US$0.10 per share (rounded up to the nearest whole number)

4. Payment ofresidual dividend entitlements

Residual dividend entitlements will be payable in cash (without interest) if, atany time, you:

• dispose of your entire holding; or

• receive the full cash dividend on the whole of your holding; or

• revoke your standing instructions to receive scrip dividends; or

• so request in writing to the appropriate Registrars.

5. How to participate in the Scheme

(a) If you have already given standing instructions to receive new shares under the Scheme, you will have been sent an Entitlement Advice. You need take no further action unless you wish to revoke your standing instructions or to elect to receive a smallernumber of new shares. If you do not revoke your standing instructions by 27 November 2013, you will receive the number of new shares shown in box 4 on the Entitlement Advice.

If you donot wish to receive new shares, aletter revoking the standing instructions to receive scrip dividends must be received by the Registrars at the appropriate address given on the Entitlement Advice, or an Electronic Instruction must be received, by close of business on 27 November 2013. A cash dividendwill then be paid on your entire holding in the currency shown in box 6 on the Entitlement Advice. If, however, you wish to receive new shares in respect of only part of this dividend, or if you wish to receive any dividend payable to you in cash in a currency/currencies other than that shown in box 6 on the Entitlement Advice, please also ask the Registrars for a Form of Electionin time to return it to them, or give an Electronic Instruction, by close of business on 27 November 2013. In any event, if you revoke your standing instructions you will receive, for any future dividends to which the Scheme applies, a printed Form of Election and/or DividendNotification email and, if you register with the Registrars' Investor Centre, you will be able to give an Electronic Instruction.

(b) If you have not previously given standinginstructions to receive new shares under the Scheme and you wish to receive new shares in lieu of a cash dividendon this occasion only, an election to participate in the Schememust be made on a printed Form of Election or by giving an Electronic Instruction through the Registrars' Investor Centre, each of which should be completedafter reading this letter. If you wish to elect to receive the maximumentitlement to new shares for this dividend,you may do so by inserting an 'X' in the box in SectionA (i) of a printedForm of Election or by electingfor new shares when givingan Electronic Instruction. If you wish to elect to receive a smaller number of shares than the maximum entitlement, you should complete Section B of the printed Form or make the appropriate election when giving an Electronic Instruction. To be valid in respectof the dividend payableon 11 December 2013, a printed Form of Election must be completedcorrectly, signed and received by the Registrars

(a)

at the addressgiven on page 2 of the Form, or an Electronic Instruction must be received, by close of businesson 27 November 2013.

(c) If you have not previously given standing instructions to receive new shares under the Scheme and you wish to receive the maximum entitlement to new shares automatically for this and for subsequent dividends to which the Scheme applies, you may do so by inserting an 'X' in the box in Section A (ii) of a printed Form of Election or by making the appropriate election when giving an Electronic Instruction. To be valid in respect of the dividend payable on 11 December 2013 a Form of Electionmust be completed correctly, signed and received by the Registrars at the address given on page 2 of the Form, or an Electronic Instruction must be received, by close of business on 27 November 2013.

Completing Section A (ii) of the printed Form or making the appropriate election when giving an Electronic Instruction will ensure that you receive your maximum entitlement to new shares offered in lieu of the third interim dividend for 2013 payableon 11 December 2013 and for subsequent dividends. Your standing instructions may be revoked by giving signed notice in writing to the appropriate Registrars or by giving an Electronic Instruction on or before the final date for receipt of printed Forms of Election or ElectronicInstructions in respect of that dividend.Your standing instructions will lapse automatically if at any time you cease to hold any ordinary shares.

ONTHE ASSUMPTION THAT NORESIDUAL DIVIDEND ENTITLEMENT ISBROUGHT FORWARD, SHAREHOLDERS WITH AHOLDING AS AT THE RECORD DATE OF FEWER THAN 110 ORDINARY SHARES WHO HAVE GIVEN STANDING INSTRUCTIONS TO RECEIVE SCRIP DIVIDENDS,AND SHAREHOLDERS WHO GIVE AN ELECTION TO RECEIVE SCRIP DIVIDENDS ON FEWER THAN 110 ORDINARY SHARES, WILL NOT RECEIVE ANY NEW SHARES ON THIS OCCASIONAND WILL HAVE THEIR DIVIDEND ENTITLEMENT RELATING TO THOSE SHARES CARRIED FORWARD IN UNITED STATES DOLLARS (WITHOUT INTEREST) AS DESCRIBED ON PAGE 2.

6. Overseas shareholders

No person receiving acopy of this document, a Form of Electionor a DividendNotification email in any jurisdiction outside the United Kingdom ('UK') or Hong Kong may treat the same as offering a right to elect to receive new shares unless such offer could lawfullybe made to such person without the Company being required to comply with any governmental or regulatory procedures or any similar formalities. It is the responsibility of any person outside the UK and Hong Kong who wishes to receive new shares under the Scheme to comply with the laws of the relevant jurisdiction(s), including the obtaining of any governmental or other consents and compliance with all other formalities. It is also the responsibility of any person who receives new shares in lieu of a cash dividendto comply with any restrictions on the resale of the shares which may apply outside the UK and Hong Kong. For example, shareholders in Ontario who have new shares allotted to them under the Scheme must ensure that the first trade of their new shares is executed on a stock exchange outside Canada.

7. Issue of share certificates and listing ofnew shares

Application will be made to the UK Listing Authorityand to the London Stock Exchange for the new shares to be admitted to the Official List and to trading respectively, to the Stock Exchange of Hong Kong for listing of, and permission to deal in, the new shares, and to the New York, Paris and Bermuda stock exchanges for listing of the new shares.

Existing ordinary shares onthe Principal Register may be held either incertificated form, or inuncertificated form through CREST. Where a shareholder has holdings of ordinary shares in both certificated and uncertificated form, each holding will be treated separately for the purpose of calculating entitlements to new shares.

Definitive share certificates forthe newshares issued under theScheme inrespect ofholdings incertificated form are expected to bemailed toshareholders entitled thereto attheir risk on orabout 11December 2013, at thesame time as warrants in respect of thecash dividend are mailed. New shares issued under the Scheme in respect of holdings of shares which arein uncertificated form will also beissued inuncertificated form. The Company will arrange for therelevant shareholders' stock accounts in CREST to becredited with the appropriate numbers ofnew shares on 11December 2013.

Dealings inthe new shares inLondon, Hong Kong, Paris and Bermuda, and inthe American Depositary Shares in New York are expected tobegin on11 December 2013.

8. If you have sold ortransferred your shares

If you sold or transferred all orsome ofyour ordinary shares onor before 22 October 2013 (the date onwhich the shares eligible for the third interim dividend for 2013 were last quoted cum-dividend onthe London, Hong Kong, Paris and Bermuda stock exchanges), but those shares are nevertheless included inthe number shown inbox 1 on your Form of Election, Entitlement Advice or Dividend Notification email, you should, without delay, consult the stockbroker or other agent through whom the sale or transferwas effected for advice on the action you should take.

9. General

If all shareholders were toelect totake uptheir entitlements to new shares under the Scheme in respect of the third interim dividend for 2013, approximately 170,944,596 new shares would be issued, representing anincrease of0.91 per cent inthe issued ordinary share capital ofthe Company as at28 October 2013.

The total cost of the third interim dividend for 2013, ignoring any elections for the scrip alternative, is approximately US$1,875 million. The applicable tax credit is the sterling equivalent of approximately US$208 million.

Whetheror not it is to your advantageto elect to receive new shares in lieu of a cash dividend or to elect to receive paymentin United States dollars, sterlingor Hong Kong dollars is a matter for individual decision by each shareholder. HSBC cannot accept any responsibility for your decision. The effect on the tax position of any shareholder will depend on that shareholder's particular circumstances. If you are in any doubt as to what to do, you should consult your professional advisers.

No acknowledgement ofreceipt ofa printed Form of Electionwill be issued.

10. Tax return

To assist shareholders who receive ascrip dividend, we will send a NotionalTax Voucher which may be needed for tax returns. This will contain the following particulars:

• number of ordinary shares held by you at close of business on the record date being 24 October 2013 on the Hong Kong Overseas Branch Register and 25 October 2013 on the PrincipalRegister or the Bermuda Overseas Branch Register;

• number of new shares allotted;

• total dividend payable;

• residual dividend entitlement (if any) brought forward from previous dividend;

• residual dividend entitlement (if any) carried forward to the next dividend;

• cash equivalent of the new shares allotted; and

• amount of UK income tax treated as paid on the new shares.

11.Taxation

The precise tax consequences for a shareholder receiving a cash dividend or electing to receive new shares in lieu of a cash dividend will depend upon the shareholder's own individual circumstances. The following is a generaloutline of the tax consequences in the UK and overseas, based on current law and practice.This outline assumesthat a holder of AmericanDepository Shares ("ADSs")is the beneficial owner of the underlying ordinary shares for UK direct tax purposes. Based on publishedguidance by HerMajesty's Revenue and Customs it is expected that holders of ADSs should be treatedas such by Her Majesty's Revenue and Customs. However, the guidance is not consideredin any detail in this outline and holders of ADSs should consult their own professional advisors.

No tax iscurrently withheld from dividends paid bythe Company. Such dividends carry a tax credit equal to one-ninth of the dividend.

(i) Cash dividends

UK resident individuals

Individual shareholders, who are resident inthe UKfor tax purposes, will generally besubject toincome tax on the aggregate amount of the dividend and associated tax credit. For example, ona

cash dividend ofUS$90 anindividual would be treated as having received dividend income equal to the sterling equivalent of both the US$90 dividend received and the associated tax credit ofUS$10 and as having paid income tax equal to the sterling equivalent of US$10 (the associated tax credit).

Individual shareholders who are liable toincome tax at the basic rate only will have nofurther tax to pay, as the tax liability will befully extinguished by the associated tax credit.

Individual shareholders who are not liable toincome tax are not able torecover the tax credit.

Individual shareholders subject toincome tax at the higher rate of 40per cent or the additional rate of 45 per cent will be liable to tax at the dividend upper rate of 32.5 per cent or the dividend additional rate of37.5 per cent respectively on the aggregate ofthe dividend and the associated tax credit. For example, ifa higher rate or additional rate tax payer were to receive a dividendof US$90, he/she would for income tax purposes be treated as receiving dividend income equal to the sterling equivalent of both the US$90 dividend received and the associated tax credit of US$10. The related tax liability would be the sterling equivalent of US$32.50 (for a higher rate tax payer) or US$37.50(for an additional rate tax payer). However, the associated tax credit equal to the sterling equivalent of US$10 would be set against the tax liability, leaving the individual with net tax to pay of the sterling equivalent of US$22.50 or US$27.50 respectively.

UK resident trustees

Trustees ofdiscretionary trusts, which are usually liable to pay income tax at the rate of45 per cent, may be required to account for additional tax onUK dividend income at37.5 per cent ofthe aggregate amount ofdividend received and the associated tax credit, against which the effective 10per cent tax credit may beoffset.

UK resident companies

Corporate shareholders (other than certain insurance companies and companies which hold shares on trading account) are not liable to corporation tax or income tax in respect of dividends received from the Company.

UK resident gross funds/charities

There is no entitlement, for either a gross fund or charity, to a tax credit and consequently no claim to recover the tax credit will be possible.

US resident shareholders

The summary information on USfederal income tax does not purport to bea comprehensive description of all the tax considerations that may be relevant to a holder of shares and must not be used for the purpose of avoidingUS federal tax penalties.

Shareholders who are subject to USfederal income taxation ona net income basis must includecash dividends in income on the date that such holder or the depository holder of the ADSs receives them.

Subject tocertain exceptions for positions that areheld forless than 61 days or arehedged, andsubject toa foreigncorporation being considered a 'qualified foreign corporation' (which includes not being classified for US federal income tax purposes as a passiveforeign investment company), certain dividends ('qualified dividends') received by an individual US shareholder generally will be subject to US taxation at a maximum rate of up to 20 per cent. Based on the Company'saudited financial statements and relevant market and shareholder data, HSBC does not anticipate being classified as a passiveforeign investment company. Accordingly, dividends paid on the shares or ADSs generally should be treated as qualified dividends.

Distributions made on shares or ADSs and proceeds from the sale ofshares orADSs that are paid within the US, orthrough certain financial intermediaries to USshareholders, are subject toinformation reporting and may be subject to a US 'backup' withholding tax unless, in general, the US shareholder complies with certain certification procedures or is a corporation or other person exempt from such withholding tax.

Generally, USresidents will not besubject toany UKtaxation inrespect ofUK dividend income nor will they be able to recover the associated tax credit.

Other non-UK residents

Generally, non-UK residents will not besubject toany UKtaxation inrespect ofUK dividend income nor will they be able to recover the associated tax credit.

Non-UK resident shareholders may be subject to tax on UKdividend income under any law towhich that person issubject outside the UK. Non-UK resident shareholders should consult their own tax advisers with regard totheir liability to taxation in respect of the cash dividend.

There arespecial rules which apply to non-UK resident discretionary trusts inreceipt ofUK dividends. (ii)Scrip dividends

UK resident individuals

The tax consequences of electing to receive new shares in lieu of a dividend are similar to those of receiving cash dividends.

Individual shareholders who elect to receive new shares in lieu of a cash dividend will be treated as having received income of an amount which, when reduced by income tax at 10 per cent, is equal to the 'cash equivalent' which would have been received had they not elected to receive new shares. For example if a shareholder elected to receive new shares in lieu of a US$90 cash dividend,they would for UK tax purposes be treated as receiving income of US$100 and as having paid tax equivalent to US$10.

Individual shareholders who are liable toincome tax at the basic rate only will have nofurther tax to pay. Individual shareholders liable to tax at the higher rate of 40 per cent or the additional rate of 45 per cent will be liable to pay additional tax at the rate of 22.5 per cent or 27.5 per cent respectively of the aggregate of the cash equivalent and associated tax credit (which equates to the sterling equivalent of US$22.50 or US$27.50 respectively in the example above).

For income tax purposes, Her Majesty's Revenue and Customs will substitute the market value ofthe shares on the first day they are dealt inon the London Stock Exchange for the 'cash equivalent' ifthe difference between the cash dividend and the market value equals orexceeds 15per cent of the market value.

For capital gains tax purposes the new shares will be treated as a separate holding. The base cost of these shares will equal the 'cash equivalent'. If the difference between the cash dividend and the market value equals or exceeds 15 per cent of the market value on the first day that the shares are dealt in on the London Stock Exchange, then the base cost will be the market value.

UK resident trustees

Trustees ofdiscretionary trusts, which are liable toaccount for income tax on the income ofthe trust will betreated ashaving received gross income equal tothe 'cash equivalent' asdescribed above. Any tax liability will be calculated in line with the cash dividend treatment described above (tax at a rate of 37.5 per cent being partially offset by the effective 10 per cent tax credit).

UK resident companies

Corporate shareholders will not be liable to corporation tax onthe receipt of new shares. For capital gains tax purposes the base cost ofthese shares will benil.

UK resident gross funds/charities

There is no entitlement, for either a gross fund or charity, to a tax credit and consequently no claim to recover the tax credit will be possible.

US resident shareholders

Shareholders who are subject to USfederal income taxation ona net incomebasis and who elect to receive new shares in lieu of a cash dividendmust include in income the fair market value of such shares on the dividend payment date, and the tax basis of those shares will equal such fair market value.

Company's audited financial statements and relevant market and shareholder data, HSBC does not anticipate being classified as a passive foreign investment company. Accordingly, dividends paid on the shares or ADSs generally should be treated as qualified dividends.

Distributions made on shares or ADSs and proceeds from the sale ofshares orADSs that are paid within the US, or through certain financial intermediaries to US shareholders, are subject toinformation reporting and may be subject to a US 'backup'withholding tax unless, in general, the US shareholder complies with certain certification procedures or is a corporation or other person exempt from such withholding tax.

Generally, US residents will not besubject toany UKtaxation inrespect ofUK dividend income nor will they be able to recover the associated tax credit.

Other non-UK residents

Individual shareholders will betreated for UK tax purposes ashaving received income ofan amount which, when reduced byincome tax at 10per cent, is equal to the 'cash equivalent' which would have been received had they not elected toreceive new shares. NoUK tax assessment will be made on such individuals, but the tax credit cannot be recovered.

However, a non-UK resident shareholder may be subject to tax on the new shares received under any law to which that person is subject outside the UK. Non-UK resident shareholders should consult their own tax advisers with regard to their liability to taxation in respect of the new shares.

Residual dividend entitlement

A UK residentshareholder will not be subject to UK tax on any amount carried forward as a residualdividend entitlement until either a new share or cash is received.The tax treatment of the new share will be the same as that of any other new ordinary share issued at the same time as a scrip dividend.Any payment in cash will be taxed as a cash dividend.

A non-UKresident shareholder may be subject to tax on any amount carried forward as a residualdividend entitlement under any law to which that person is subject outside the UK. Non-UK resident shareholders should consult their own tax advisers with regard to their liability to taxation in respect of the residual dividend entitlement.

Timetable of events

Ordinary shares quoted ex-dividend in London, Hong Kong, Paris and Bermuda	23 October 2013
American Depositary Shares quoted ex-dividend in New York	23 October 2013
Record date for the third interim dividend for 2013 for holders on the Hong Kong Overseas Branch Register	24 October 2013
Record date for the third interim dividend for 2013 for holders on the Principal Register or the Bermuda Overseas Branch Register	25 October 2013
FINAL DATE FOR RECEIPT BY REGISTRARS OF FORMS OF ELECTION, REVOCATIONS OF STANDING INSTRUCTIONS FOR SCRIP DIVIDENDS AND ELECTRONIC INSTRUCTIONS	27 November 2013
Exchange rate determined for payment of dividends in sterling and Hong Kong dollars	2 December 2013
Payment date - dividend warrants mailed; new share certificates or Bermuda Overseas Branch Register Transaction Advices and Notional Tax Vouchers mailed; and shares credited to stock accounts in CREST	11 December 2013
Expected first day of dealings in new shares in London, Hong Kong, Paris and Bermuda; and in American Depositary Shares in New York	11 December 2013

Shareholders may at any time choose to receive corporate communications in printed form orto receive notifications oftheir availability on HSBC's website. Toreceive future notifications ofthe availability of a corporate communication on HSBC's website by email, or revoke or amend an instruction to receive such notifications by email, go to www.hsbc.com/ecomms. Ifyou provide an email address toreceive electronic communications from HSBC we will also send notifications of your dividend entitlements by email. If you received a notification of the availability of this document on HSBC's website and would like to receive a printedcopy of it, or if you would like to receive future corporate communications in printed form, please write or send an email (quoting your shareholder reference number) to the appropriate Registrars at the address given below. Printed copies will be provided without charge.

Further copies of this letter, replacement Forms ofElection anda Chinese translation of this and future documents may be obtained from the Registrars.

Principal Register Hong Kong Overseas Branch Register

Computershare Investor Services PLC Computershare Hong Kong Investor Services Limited The Pavilions Rooms 1712-1716, 17th Floor

Bridgwater Road Hopewell Centre

Bristol 183 Queen's Road East

BS99 6ZZ Hong Kong SAR

United Kingdom Telephone: 2862 8555

Telephone: (44) 870 702 0137 Email: hsbc.ecom@computershare.com.hk Email via website: Investor Centre: www.investorcentre.co.uk/contactus www.investorcentre.com/hk

Investor Centre: www.investorcentre.co.uk

Bermuda Overseas Branch Register US Shareholder helpline

Investor Relations Team Telephone: 1 866 299 4242 HSBC Bank BermudaLimited

6 Front Street

Hamilton HM 11 Bermuda Telephone: 299 6737

Email: hbbm.shareholder.services@hsbc.bm Investor Centre: www.investorcentre.com/bm

Persons whose shares areheld ontheir behalf by another person mayhave been nominated toreceive communications from HSBC pursuant tosection 146of theUK Companies Act 2006 ("nominated persons"). The main point ofcontact fornominated persons remains theregistered shareholder (for example your stockbroker, investment manager, custodian orother person who manages the investment on your behalf). Anychanges orqueries relating to nominated persons' personal details andholding (including any administration thereof) must continue tobe directed to theregistered shareholder and not HSBC's Registrars. The only exception iswhere HSBC, in exercising one ofits powers under theUK Companies Act 2006, writes tonominated persons directly fora response.

Within this document theHong Kong Special Administrative Region of thePeople's Republic of China hasbeen referred to as'Hong Kong'.

The Directors of HSBC Holdings plc are D J Flint, S T Gulliver, S A Catz†, L M L Cha†, M K T Cheung†, J D Coombe†, Sir Jonathan Evans†, J Faber†, R A Fairhead†, R Fassbind†, J W J Hughes-Hallett†, W S H Laidlaw†, J P Lipsky†, J R Lomax†, I J Mackay and Sir Simon Robertson†.