HSBC Bank - Corporate Governance | HSBC



The following standards, together with the charters of committees of the Board of Directors, provide the framework for the corporate governance of HSBC USA Inc. (the "Corporation") and HSBC Bank USA, N.A. (the "Bank"). These standards will be reviewed by the Board periodically in order to ensure the Corporation and Bank maintains "best practices" in corporate governance.

Role of the Board and Management

The Corporation's business is conducted by its employees, managers and officers, under the direction of the chief executive officer ("CEO") and HSBC North America Holdings Inc. ("HNAH") Executive Committee, subject to the oversight of the Board, all with the purpose to enhance long-term value of the Corporation to HSBC Holdings plc ("HSBC"). The Board has responsibility for governing the affairs of the Corporation, including to:

  • contribute to and endorse business strategy formulated by management and HSBC;
  • provide input and approve the annual operating and capital plans and risk appetite statement prepared by management;
  • monitor the implementation of strategy by management and the Corporation's performance relative to approved operating and capital plans and risk appetite;
  • lead the implementation of HSBC's values and business principles and compliance with Group standards and policies throughout the Corporation;
  • review and provide input concerning relevant issues taken into account in proposed variable compensation award funding and specific award proposals for senior executives of the Corporation;
  • with HSBC's endorsement, appoint the CEO;
  • review and advise as to the adequacy of the succession plans for the CEO and senior executive management;
  • review and provide input to HSBC concerning evaluation of the CEO's performance, at least annually;
  • review and approve the Corporate Governance Standard and monitor compliance with the standards;
  • assess and monitor the major risks facing the Corporation consistent with the Board's responsibilities to the Corporation's ultimate parent, HSBC; and
  • review the effectiveness of the risk management and internal controls structures designed by management to ensure compliance with applicable law and regulation, HSBC policies, ethical standards and business strategies.

In all actions taken by the Board, the Directors will exercise their business judgment in what they reasonably believe to be in the best interests of the Corporation. In discharging that obligation, Directors may rely on the honesty and integrity of the Corporation's management, its outside advisors and independent auditors. Management is expected to be loyal to the Corporation, implement approved business strategy, appropriately resolve day-to-day operations issues, keep the Board informed, and maintain and promote high ethical standards while seeking to maximize returns to the Corporation within the risk tolerance as agreed with HSBC. Directors must consider:

  1. the likely consequences of any decision in the long term;
  2. the interests of the Corporation's employees;
  3. the need to foster the Corporation's business relationships with suppliers, customers and others;
  4. the impact on the Corporation's operations on the community and the environment; and
  5. the desirability of the Corporation maintaining a reputation for high standards of business conduct.

Composition, Qualification and Term

In accordance with the Bylaws of the Corporation, the size of the Board shall consist of the number of Directors established by the Board from time to time. The Chairman and the CEO of the Corporation shall also be Directors of the Corporation. A majority of the Board shall be non-executive Directors who are active or retired senior executives (or the equivalent) of other large companies, educational institutions, governmental agencies, service providers or non-profit organizations.

Each non-executive Director will be appointed for an initial three-year term subject to re-election by the shareholder as deemed appropriate. Upon completion of a second three-year term, Directors may serve an additional three-year term at the invitation of the Board after a review of whether there are relationships or circumstances which are likely to affect, or could appear to affect, the Director's independent judgment. Thereafter, the Director may serve further one-year terms at the invitation of the Board after a thorough review of the Director's continued independence.

Appointments shall expire at the third annual meeting following the date of the appointment or election by the shareholder, or the Board as applicable.

The Corporation maintains a mandatory retirement policy whereby retirement is required as of the annual meeting of the shareholder after the date on which a Director attains the mandatory retirement age of 72. Executive Directors will resign from the Board when their employment with HSBC and its subsidiaries ends. With respect to any Director, the Board may defer retirement from the Board if business conditions or other circumstances, in the opinion of the Board, warrant such action.

A non-executive Director is expected to offer to resign from the Board whenever there is (i) a major change in his or her career position or status (unless such change in position or status results from normal retirement), (ii) a change in his or her status as an "Independent Director" or (iii) a conflict of interest arises that could reasonably be expected to lead to reputational risk for the Corporation and/or HSBC as a whole. The Chairman, in consultation with the Corporation's CEO and HSBC senior executive management, shall determine whether to present the offer of resignation to the Board for action. If presented, the Board has discretion, after consultation with HSBC management, to either accept or reject such resignation.

Director Independence and Conflicts of Interest

A majority of the Directors will be independent. Annually, the Board shall determine whether each Director can exercise independent judgment from management. The Board shall use the standards set forth in Appendix A hereto, which are based upon the New York Stock Exchange listing standards, as a foundation for its determinations concerning independence.

Directors shall not be a director, consultant or employee of or to any direct competitor of the Corporation (i.e., a company that has a business segment offering products or seeking customers served by any business segment of the Corporation). To avoid potential conflicts of interest, senior executive officers of the Corporation (i.e., the Chairman, CEO, or any direct report to the CEO) may not serve on the board or as a trustee of a company or institution that employs any non-executive Director of HSBC (i.e., reciprocal directorship).

In the event a non-executive Director becomes aware of any potential or actual conflict of interest or circumstances which could lead to reputational risk for the Corporation and/or the HSBC Group, he/she should disclose these to the Chairman and the Company Secretary as soon as apparent and the matter will be referred to the Board to determine if a conflict or reputational risk requires resignation nor any other action. If the potential or actual conflict of interest may arise from a new appointment or a change in an existing appointment, the Director shall not accept the new or changed appointment before the agreement of the Board.

A non-executive Director should advise the Secretary whenever there is a change to the Director’s circumstances that will have a significant impact on the time commitments of the Director, including any additional directorships accepted. The Nominating and Governance Committee will consider that information in recommending the slate of directors for election at the next shareholder meeting.

Director Standards

Each Director, while representing the best interests of HSBC and the Corporation, shall:

  • promote HSBC's values and business principles and compliance with Group standards and policies throughout the Corporation in performing their responsibilities;
  • have the ability to spend the necessary time required to function effectively and satisfy the appropriate duty of care as a Director;
  • develop and maintain a sound understanding of the strategies, business and senior executive succession planning of the Corporation;
  • carefully study all Board materials and provide active, objective, constructive and challenging participation at meetings of the Board and its committees;
  • assist in affirmatively representing HSBC to the world;
  • be available to advise and consult on key organizational changes and to counsel on corporate issues;
  • develop and maintain a good understanding of global economic issues and trends that are pertinent to the operations of the Corporation; and
  • seek clarification from experts retained by the Corporation (including employees of the Corporation) to better understand legal, compliance, risk, financial and business issues affecting the Corporation.


Annually, all Directors shall be provided with a schedule identifying all regularly scheduled Board and committee meetings for the current, and as soon as possible, for the next succeeding year. There will generally be six regularly scheduled meetings of the Board each year. At the first regularly scheduled meeting of each calendar year, the Board will review and approve proposed annual operating and capital plans. Annually, in advance of the preparation of the annual operating plan, the Board will meet to consider the Risk Appetite and the strategic focus of the Corporation. At least once a year, the Independent Directors shall meet in executive session. Personal attendance of the Directors at Board and Committee meetings is expected. The use of current technology to facilitate attendance should be requested by Directors only in extraordinary situations that prevent a Director from attending a meeting in person. While meetings are in session, Directors should not access electronic devices concerning matters that are not under discussion at the meeting.

The Corporate Secretary and the Chairman, in consultation with the CEO will establish the agenda for each Board meeting. The Chair of a Committee in consultation with the Corporate Secretary and senior management will develop the agenda for each Committee meeting. Directors are encouraged to suggest to the Chairman topics for inclusion on future agendas.

If the total number of Directors on the Board is odd, a quorum to transact business at the meeting will be a majority of the Directors. If the total number of Directors is even, a quorum will exist if one-half of the Directors are present. If at any meeting of the Board there is less than a quorum, the ma of those present may adjourn the meeting until a quorum is present. At any such adjourned meeting, if a quorum is present, any business may be transacted that might have been transacted at the original meeting. In the event a Director has a conflict of interest, that Director may not be counted in the quorum for the portion of the meeting or vote on matters relating to that conflict are considered by the Board. A quorum must be present for any vote taken to be effective.

At every regularly scheduled Board meeting, the CEO or his/her designee shall advise the Board of the operating performance of the Corporation, focusing on important trends, achievements, plans and developments, and how those matters may affect the annual operating plan approved by the Board. Also, at every regularly scheduled Board meeting, the Chief Financial Officer or Chief Accounting Officer of the Corporation or of HNAH shall present the latest available financial results with respect to the Corporation, focusing on significant variances from the annual operating and capital plans approved by the Board and from prior year/quarter results. Interim meetings will be scheduled to discuss the business as required. At each Board and Committee meeting, the Directors will be provided the opportunity to question, respond to and advise management on all matters presented as well as other topics of relevance to the Corporation.

Information with respect to any Board or Committee meeting should be sent to Directors at least five (5) days in advance of the meeting, if possible. Materials relating to any matter in which a Director has a personal interest will be withheld from that Director. Financial statements included in this information should be condensed with commentary focused on important issues, trends or variances, noting the perceived reasons therefor and the opportunities or risks, if any, which may result.

Minutes of all Board and Committee meetings shall be sent to all Directors unless it is legally required that such minutes be kept confidential or such minutes relate to a matter in which a Director has a personal interest.


The Committee structure of the Board shall be reviewed annually. The Board will have Audit, Risk, Compliance and Chairman's Committees. The Board may also appoint other ad hoc committees for limited purposes and duration as it deems appropriate. The Corporate Secretary and the Chairman, in consultation with the CEO, shall make recommendations to the Board regarding membership on the Committees. The Board will appoint and remove all Committee members and the Chair of each Committee.

Each standing Committee of the Board shall adopt and approve a charter. Each such charter, and any amendments thereto, must be approved by the Board. At least annually, each Committee will review the appropriateness of its charter and evaluate and report on the satisfaction of its responsibilities to the Board.

The Chair of each Committee, in consultation with Committee members and senior management of the Corporation will determine the frequency and length of the meetings of the Committee.

Unless otherwise stated in a Committee charter, quorum and the vote required at any Committee meeting shall be determined in the same manner as a quorum for a meeting of the Board as set forth above under the heading "Meetings".

Director Compensation

Director compensation will be in the form of cash compensation. The amount of compensation to be paid to Directors will be determined by the Board in consultation with HSBC senior executive management and shall be within ranges approved by the Remuneration Committee of the Board of Directors of HSBC ("REMCO"), or as specifically approved by the REMCO.

Access to Senior Management and Independent Advisors

Directors shall have free and full access to senior management and other employees of the Corporation. The CEO or Corporate Secretary may assist in arranging any contacts or meetings at a Director's request.

The Board and its Committees shall have the right at any time to retain independent outside financial, legal or other advisors and any expenses related thereto will be the responsibility of the Corporation.

Director Orientation and Continuing Education

The Corporation shall provide an orientation program for new non-executive Directors and a continuing education program for all members of the Board. These programs shall include presentations by senior management on the responsibilities of the Directors under United Kingdom and U.S. law, the Corporation's governance structure and strategic plans, its significant financial, accounting and risk management issues, its compliance programs, Statement of Business Principles and Code of Ethics, management structure, executive officers and internal and independent auditors. The orientation program may also include visits to certain of the Corporation's and its affiliates' significant facilities, to the extent practical. All Directors are invited to participate in the orientation and continuing education programs. Requests for attendance at development programs for which an attendance fee and any related travel expense would be charged to the Corporation should be submitted for approval by the Chairman, through the Corporate Secretary.

Directors are expected to regularly review their personal development needs and to continually update their skills and knowledge of the roles of Directors, the Corporation and its products and target markets.

Annual Evaluation

Annually, the Board shall undertake a formal and rigorous annual evaluation of its own performance and that of its Committees. The evaluation should consider how the Board works together as a unit and the balance of skills, experience, independence and knowledge of the Corporation and its businesses, as well as its diversity, including gender. The Chair of the HNAH Nominating and Governance Committee and the HBIO Chairman, in consultation with the Corporate Secretary and the CEO shall determine the process to be followed in connection with this evaluation.

Annually, the HNAH Chairman shall also review and discuss the effectiveness of each Director in their capacity as a Director of HNAH and as a Director of the Corporation with the Director. The Corporate Secretary will assist the HNAH Chairman in discharging this responsibility, including through providing information on the Director's attendance at meetings and continuing education opportunities. The non-executive Directors of HNAH and the Corporation shall also provide feedback to the HNAH Chairman concerning his or her performance as a part of the annual evaluation process of the Board of HNAH. Feedback shall be led by a senior independent non-executive Director of HNAH as agreed by the non-executive Directors of HNAH.

Appendix A


The Board shall consider all relevant facts and circumstances in assessing the independence of Directors. As a foundation for such determinations, the Board will consider if the Director:

  • has personal loans from the Corporation, other than mortgage loans, credit cards and charge cards made in the ordinary course of business on substantially the same terms as those prevailing at the time for comparable transactions with non-affiliated persons;
  • has been retained by the Corporation or any of its affiliates in the capacity of an employee or non-employee executive officer within the last five years;
  • has received in the last three years or is currently receiving more than $120,000 in direct compensation from the Corporation or any of its affiliates or is a member of any performance related compensation plan, any HSBC pension plan or is otherwise financially dependent on any HSBC company (other than for service on the Board of Directors of one or more HSBC subsidiaries, deferred compensation for prior service or benefits under a tax-qualified retirement plan);
    • (i) is a current partner of a firm that is an internal or external auditor of the Corporation;
    • (ii) has an immediate family member who is a current partner of such a firm;
    • (iii) has an immediate family member who is a current employee of such a firm and personally works on the Corporation's audit; or
    • (iv) within the last three years, has been and has had an immediate family member who has been a partner or employee of such a firm and personally worked on the Corporation's audit within such time;
  • has been an employee, partner, significant shareholder, or executive officer of any significant vendor or customer of the Corporation or any of its subsidiaries, or a pension, profit sharing or employee benefit plan sponsored by the Corporation that makes payments to, or receives payments from the Corporation in an amount that in any fiscal year exceeded the greater of $1 million, or 2% of such entity's consolidated gross revenues within the last three years;
  • has been an executive officer, director or trustee of a charitable organization in which the Corporation or any of its subsidiaries made contributions in any fiscal year that exceeded the greater of $1 million, or 2% of the charitable organization's consolidated gross revenues;
  • has an interest in any significant transactions or business relationships with the Corporation or its subsidiaries that are required to be disclosed by the rules and regulations of the Securities and Exchange Commission;
  • represents a significant external shareholder other than HSBC;
  • holds cross-directorships or has significant links with other directors through involvement with other companies or entities; and
  • is a member of the immediate family of any person described above.

Immediate family members are the Director's spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law and anyone (other than domestic employees) who share the Director's home.


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