Issue of Preference Shares

HSBC Holdings PLC
15 September 2005



                      ISSUE OF 6.20 PER CENT NON-CUMULATIVE 
                       DOLLAR PREFERENCE SHARES, SERIES A
               REPRESENTED BY SERIES A AMERICAN DEPOSITARY SHARES
                                         
                                        
This announcement is for information purposes only and is not, and does not
constitute, an invitation or offer to acquire, purchase or subscribe for
securities. A copy of the preliminary prospectus may be obtained from the Group
Company Secretary, HSBC Holdings plc, 8 Canada Square, London, E14 5HQ, United
Kingdom.

HSBC Holdings plc will raise US$1,305 million (before expenses) by the issue on
22 September 2005 of 1,305,000 non-cumulative preference shares of US$0.01 (the
"Series A dollar preference shares") for a consideration of US$1,000 each. The
aggregate nominal value of the Series A dollar preference shares to be issued,
which will qualify as core Tier 1 capital in the Group's regulatory capital
base, is US$13,050. The net proceeds after expenses of the issue of Series A
dollar preference shares will be approximately US$1,263 million which will be
used to support the development of HSBC Holdings plc and further strengthen the
Group's capital base.

American Depositary Shares ("ADS"), each of which will represent one-fortieth of
a Series A dollar preference share, will be issued to investors at US$25 per
ADS. The Series A dollar preference shares will be issued in bearer form and
deposited with the ADS depositary, The Bank of New York. Application will be
made to list the ADS on the New York Stock Exchange. To the extent that the
underwriters to the issue of the ADS sell more than 52.2 million ADS, the
underwriters have the option to purchase, during the 30-day period commencing 15
September 2005, up to an additional 7.8 million ADS at the public offering price
less the applicable underwriting discount.

A non-cumulative fixed-rate dividend of 6.20 per cent per annum will be paid
quarterly on the Series A dollar preference shares. Dividends will accrue from
22 September 2005. Dividends will be payable at the sole and absolute discretion
of the Board of HSBC Holdings plc and will not be payable if the payment of the
dividend would cause the Company not to meet the applicable capital adequacy
requirements of the UK Financial Services Authority or the profits of the
Company available for distribution as dividends are not sufficient to enable
HSBC Holdings plc to pay in full both dividends on the Series A dollar
preference shares and dividends on any other of its shares that are scheduled to
be paid on the same date and that have an equal right to dividends. HSBC
Holdings plc may not declare or pay dividends or distributions on any class of
its shares ranking lower in the right to dividends than the Series A dollar
preference shares nor redeem nor purchase in any manner any of its other shares
ranking equal to or lower than the Series A dollar preference shares, unless it
has paid in full, or set aside an amount to provide for payment in full, the
dividends on the Series A dollar preference shares for the then-current dividend
period.

Holders of the Series A dollar preference shares will only be entitled to attend
and vote at general meetings of shareholders of HSBC Holdings plc if the
dividend payable on the Series A dollar preference shares has not been paid in
full for four consecutive dividend payment dates. In such circumstances, holders
of the Series A dollar preference shares will be entitled to vote on all matters
put to general meetings until such time as HSBC Holdings plc shall have paid in
full a dividend on the Series A dollar preference shares. The Series A dollar
preference shares carry no rights of conversion into ordinary shares of HSBC
Holdings plc.

Subject to the prior consent of the UK Financial Services Authority, HSBC
Holdings plc may redeem the Series A dollar preference shares in whole (but not
in part only) at any time on or after 16 December 2010, at a redemption price
equal to US$1,000 per Series A dollar preference share (which is equal to US$25
per ADS) together with any accrued and unpaid dividends for the then-current
dividend period up to the date fixed for redemption.

In the 12 months prior to the date of this announcement HSBC Holdings plc has
not issued any equity securities for cash under a general mandate to issue
securities approved by shareholders. This issue of Series A dollar preference
shares is being made under the general mandate to issue securities approved by
shareholders at the Annual General Meeting on 27 May 2005.


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