Since 25th February 2010, I am pleased to chair the HSBC Private Banking Holdings (Suisse) SA Board of Directors and I would like to take this opportunity on behalf of the members of the Board, as well as my colleagues in Global Private Banking to sincerely thank the Group Chairman Stephen Green for his wise guidance and stewardship as Chairman of HSBC Private Banking Holdings (Suisse) SA for over ten years. During this time, HSBC has grown into one of the major forces in international Private Banking and I am delighted to have the opportunity to help build on this legacy.

In a number of important respects, 2009 was a year of transition. It began with further turbulence in global financial markets but, during the year, the markets pulled back from uncertainty and progressively stabilised as a consequence of the continued, extraordinary and timely actions by governments and central banks.

The global macro-economic transition from West to East gathered pace during 2009. At HSBC we have long been convinced that the world’s economic centre of gravity is shifting, and the financial crisis has only accelerated this trend.

Throughout the crisis, HSBC has remained profitable, financially strong and independently owned by our shareholders. It is testimony to the quality and strength of HSBC’s management team that, in 2009, our underlying performance was significantly ahead of 2008. On an underlying basis, and excluding the impact of the goodwill impairment recorded in 2008, HSBC’s pre-tax profit was US$13.3 billion, 56 per cent higher. On a reported basis, profit before tax was US$7.1 billion, down 24 per cent, in part due to the reversal of fair value accounting gains on our own debt.

The successful completion of HSBC’s rights issue in April 2009 added US$17.8 billion to shareholders’ equity and helped to set the tenor for market recovery. Its success demonstrated the strong confidence, which our shareholders have in our future and we were profoundly thankful for their support. We indicated at the time of the rights issue our expectation that, if successful, it would increase HSBC’s tier 1 ratio by around 150 basis points. I am pleased to report that HSBC’s tier 1 ratio increased by some 250 basis points to 10.8 per cent at 31 December 2009, largely as a result of the rights issue and internal capital generation. The core tier 1 ratio was 9.4 per cent at the same date, increasing by some 240 basis points.

Throughout the crisis, our strategy has remained clear: to build on our position as the leading international and emerging markets bank. We have also never forgotten that it is our responsibility to make a real contribution to economic and social development, and that our ability to do so is fundamental to our success in delivering sustainable value to our shareholders.

In a difficult environment for Private Banking, where many investors opted to keep a higher portion of their wealth in deposit accounts, HSBC Private Bank had a solid performance. The contribution to Group pre-tax profits from Private Banking, of which HSBC Private Banking Holdings (Suisse) SA is the principal component, was higher at 8.3 per cent (excluding the goodwill impairment), with pre-tax profits in 2009 of US$1,108 million.

HSBC Private Banking Holdings (Suisse) SA posted a pre-tax profit of US$1,074 million, a decline of 14 per cent over 2008. There were some strong regional results, particularly in our strategically important emerging markets, which is referred to in the Chief Executive Officer’s Review.

HSBC Private Bank (Suisse) SA, our principal banking subsidiary in Switzerland, reported in March 2010 a very serious data theft by a former IT employee some three years ago which has been subject to a criminal investigation by the Swiss authorities. The theft of client information affects about 15,000 existing clients who had accounts with the Swiss bank excluding those with the former HSBC Guyerzeller Bank. It does not affect clients of branches outside Switzerland or other entities within the HSBC Group. This is reported on in the Chief Executive Officer’s Review.

As policymakers and industry participants take the necessary steps to improve the way banking and financial markets work, there are also some important over-arching challenges which must be addressed. It is imperative to strike the right balance between strengthening the financial system and supporting economic growth. ‘De-risking’ the Banking system, if taken too far, will throttle recovery and drive risk into other, unregulated parts of the capital markets. It is in the collective public interest to get this balance right. We must not rush to implement hastily conceived responses and policy must be co-ordinated internationally if we are to manage risk better on a truly global basis.

HSBC has always believed in having a transparent structure based on separately capitalised subsidiaries, takes a conservative approach to liquidity management, and has built a business with the scale to provide broad, diversified services to its global customers. While the detail and timing of regulatory changes in the Private Banking industry and wider financial services sector remain uncertain, we are confident that our focus on these fundamentals positions us strongly and competitively to respond to the challenges ahead.

On behalf of the Board of Directors
Stuart Gulliver
Geneva, 23 March 2010