HSBC plans return optimization securities linked to basket of financial stocks

By Laura Lutz

Des Moines, Sept. 7 - HSBC USA Inc. plans to price an issue of 0% return optimization securities due Jan. 13, 2009 linked to a basket of financial stocks, according to an FWP filing with the Securities and Exchange Commission.

The basket consists the common stocks of Bank of America Corp.; the Bank of New York Mellon Corp.; BB&T Corp.; SunTrust Banks, Inc.; TCF Financial Corp.; Zions Bancorp.; Kookmin Bank; Marshall & Ilsley Corp.; PNC Financial Services Group, Inc.; Regions Financial Corp. and Fifth Third Bancorp and American Depositary Shares representing the common stocks of Banco Bradesco SA and Mitsubishi UFJ Financial Group Inc.

The stocks of Bank of America, Bank of New York and BB&T each have a 7.7% weight. The other component stocks each have a 7.69% weight.

If the final basket level is at least the initial level, the payout at maturity will be par plus double any gain on the basket, capped at between 25% and 27%. The exact cap will be set at pricing.

If the basket declines by up to 5%, the payout will be par.

Investors will lose 1% for each 1% that the basket declines beyond 5%.

The securities are expected to price on Sept. 10 and settle on Sept. 13.

UBS Financial Services Inc. and HSBC USA Inc. will be the agents.

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