In addition to the matters described below, in the ordinary course of business, we are routinely named as defendants in, or as parties to, various legal actions and proceedings relating to activities of our current and/or former operations. These legal actions and proceedings may include claims for substantial or indeterminate compensatory or punitive damages, or for injunctive relief. In the ordinary course of business, we also are subject to governmental and regulatory examinations, information-gathering requests, investigations and proceedings (both formal and informal), certain of which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief. In connection with formal and informal inquiries by these regulators, we receive numerous requests, subpoenas and orders seeking documents, testimony and other information in connection with various aspects of our regulated activities.

Due to the inherent unpredictability of legal matters, including litigation, governmental and regulatory matters, particularly where the damages sought are substantial or indeterminate or when the proceedings or investigations are in the early stages, we cannot determine with any degree of certainty the timing or ultimate resolution of such matters or the eventual loss, fines, penalties or business impact, if any, that may result. We establish reserves for litigation, governmental and regulatory matters when those matters present loss contingencies that are both probable and can be reasonably estimated. Once established, reserves are adjusted from time to time, as appropriate, in light of additional information. The actual costs of resolving litigation and regulatory matters, however, may be substantially higher than the amounts reserved for those matters. Some of our exposure may be offset by applicable insurance coverage. We do not consider the possible availability of insurance coverage in determining the amounts of any accruals (although we record the amount of related insurance recoveries that are deemed probable up to the amount of the accrual).

For the legal matters disclosed below, including litigation and governmental and regulatory matters as to which a loss in excess of accrued liability is reasonably possible in future periods and for which there is sufficient currently available information on the basis of which management believes it can make a reliable estimate, we believe a reasonable estimate could be as much as $100 million for HUSI. The legal matters underlying this estimate of possible loss will change from time to time and actual results may differ significantly from this current estimate. Based on the facts currently known, in respect of each of the disclosed investigations, it is not practicable at this time for us to determine the terms on which these ongoing investigations will be resolved or the timing of such resolution or for us to estimate reliably the amounts, or range of possible amounts, of any fines and/or penalties. As matters progress, it is possible that any fines and/or penalties could be significant.

Credit Card Litigation Since 2005, HSBC Bank USA, HSBC Finance Corporation, HSBC North America and HSBC, as well as other banks and Visa Inc. ("Visa") and MasterCard Incorporated ("MasterCard"), have been named as defendants in a number of consolidated merchant class actions and individual merchant actions, alleging that the imposition of a no-surcharge rule by the associations and/or the establishment of the interchange fee charged for credit card transactions causes the merchant discount fee paid by retailers to be set at supracompetitive levels in violation of the federal antitrust laws. In 2011, MasterCard, Visa, the other defendants, including HSBC Bank USA, and certain affiliates of the defendants entered into settlement and judgment sharing agreements (the "Sharing Agreements") that provide for the apportionment of certain defined costs and liabilities that the defendants, including HSBC Bank USA and our affiliates, may incur, jointly and/or severally, in connection with these actions.

In June 2018, the defendants, including the HSBC entities, reached an agreement with counsel for a putative opt-out class of merchants seeking monetary relief. The district court approved the settlement in December 2019. In January 2020, objectors to the settlement filed an appeal. In September 2021, the court certified a non-opt-out class of merchants seeking injunctive relief.

Various merchants have filed individual opt-out suits seeking unspecified damages in either state or federal court, most of which were transferred to the consolidated multidistrict litigation. A large majority of opt-out merchants have entered into settlement agreements with the defendants in those actions and certain HSBC entities that, pursuant to the Sharing Agreements, are responsible for a pro rata portion of any such settlement amount. In July 2024, the Judicial Panel on Multidistrict Litigation

In 2020, the Competition Commission of South Africa, having initially referred a complaint for proceedings before the South African Competition Tribunal in 2017, filed a revised complaint against HSBC Bank USA and other financial institutions for alleged anti-competitive behavior in the South African foreign exchange market, seeking injunctive relief prohibiting the alleged conduct and unspecified damages. In January 2024, the South African Competition Appeal Court dismissed HSBC Bank USA from the revised complaint. The Competition Commission has appealed the dismissal of HSBC Bank USA to the Constitutional Court of South Africa.

In re London Silver Fixing, Ltd. Antitrust Litigation (Silver Fix Litigation) HSBC, HSBC Bank plc, HSBC Bank USA and other members of The London Silver Market Fixing Limited are defending a class action pending in the U.S. District Court for the Southern District of New York (transferred and centralized class actions filed in 2014 in the Southern and Eastern Districts of New York) alleging that, from January 2007 to December 2013, the defendants conspired to manipulate the price of silver and silver derivatives for their collective benefit in violation of U.S. antitrust laws, the U.S. Commodity Exchange Act and New York state law. In May 2023, this action, which seeks damages for unspecified amounts, was dismissed but remains pending on appeal. Based on the facts currently known, it is not practicable at this time for the HSBC defendants to predict the resolution of this matter, including the timing or any possible impact, which could be significant.

Canada Litigation HSBC, HSBC Bank plc, HSBC USA, HSI, HSBC Bank Canada, HSBC Securities Canada and other financial institutions are defending four 2015 putative class actions filed in the Ontario and Quebec, Canada, Superior Courts of Justice (1) DiFilippo and Caron v. The Bank of Nova Scotia, et al. (Superior Court of Justice, Ontario Province); (2) DiFilippo and Caron v. The Bank of Nova Scotia, et al. (Superior Court of Justice, Ontario Province); (3) Benoit v. Bank of Nova Scotia, et al. (Superior Court of Justice, Québec Province); and (4) Ayas v. La Banque de Nouvelle-Ecosse, et. al. (Superior Court of Justice, Quebec Province) alleging that the defendants conspired to manipulate the price of silver, gold and related derivatives in violation of the Canadian Competition Act and common law. Two of the actions have been stayed, and in each of the two other actions the plaintiffs are seeking Canadian dollar $1 billion in damages plus Canadian dollar $250 million in punitive damages. The HSBC defendants have reached a settlement with the plaintiffs to resolve these matters. The settlement, the impact of which is not significant and is fully reserved, is subject to court approval.

Trustee litigation: The Madoff Securities trustee (the "Trustee") has brought lawsuits in the U.S. Bankruptcy Court for the Southern District of New York against various HSBC companies and others seeking recovery of alleged transfers from Madoff Securities to the HSBC companies, including HSBC USA in the amount of $27 million and HSBC Bank USA in the amount of $82 million.

Fairfield Funds litigation: Fairfield Sentry Limited, Fairfield Sigma Limited and Fairfield Lambda Limited (each in liquidation and together, the "Fairfield Funds") brought lawsuits in the U.S. Bankruptcy Court for the Southern District of New York against various HSBC companies and others seeking recovery of alleged transfers from the Fairfield Funds to the HSBC companies (that acted as nominees for clients). In March 2025, the claims against HSBC Bank USA were dismissed pursuant to a settlement between Fairfield Funds and a non-HSBC defendant who had allegedly been the initial recipient of the redemption payments Fairfield Funds had sought to recover from HSBC Bank USA.

entities violated various U.S. federal and state laws, including antitrust laws, related to the setting of U.S. dollar Libor, and seek damages for unspecified amounts. In September 2025, the U.S. District Court for the Southern District of New York granted the defendants' joint motion for summary judgment and dismissed these actions. The plaintiffs, the Federal Home Loan Mortgage Corporation and the FDIC, have appealed.

In addition to the repurchase risk described in Note 24, "Guarantee Arrangements, Pledged Assets and Repurchase Agreements," HSBC Bank USA has also been involved as a sponsor/seller of loans used to facilitate whole loan securitizations underwritten by HSI. During 2005-2007, HSBC Bank USA purchased and sold $24 billion of whole loans to HSI which were subsequently securitized and sold by HSI to third parties. The outstanding principal balance on these loans was approximately $2.2 billion and $2.3 billion at December 31, 2025 and 2024, respectively.

Participants in the U.S. mortgage securitization market that purchased and repackaged whole loans have been the subject of lawsuits and governmental and regulatory investigations and inquiries, which have been directed at groups within the U.S. mortgage market, such as servicers, originators, underwriters, trustees or sponsors of securitizations, and at particular participants within these groups. We expect activity in this area to continue. As the industry's residential mortgage foreclosure issues continue, HSBC Bank USA has taken title to a number of foreclosed homes as trustee on behalf of various securitization trusts. As nominal record owner of these properties, HSBC Bank USA has been sued by municipalities and tenants alleging various violations of law, including laws regarding property upkeep and tenants' rights. We believe and continue to maintain that the obligations at issue and any related liability are properly those of the servicer of each trust.

Mortgage Securitization Trust Litigation Beginning in 2014, a number of lawsuits were filed in various state and federal courts in the U.S. against HSBC Bank USA, as trustee of more than 280 mortgage securitization trusts, seeking unspecified damages for losses in collateral value allegedly sustained by the trusts. Nearly all of these lawsuits have either been settled or dismissed; one action filed in May 2021 by Freedom Trust 2011-2 and ARI Investments LLC, remains pending in New York State Supreme Court, New York County.

Silicon Valley Bank ("SVB") Litigation In May 2023, First-Citizens Bank & Trust Company ("First Citizens") brought a lawsuit in the U.S. District Court for the Northern District of California against HSBC USA, HSBC Bank USA, certain other HSBC entities, and seven HSBC Bank USA employees who had previously worked for SVB. The lawsuit seeks $1 billion in damages and alleges, among other things, that the various HSBC entities conspired with the individual defendants to solicit employees from First Citizens and that the individual defendants took confidential information belonging to SVB and/or First Citizens.

In January 2026, First Citizens amended its complaint to add claims purportedly assigned by the FDIC. These include claims concerning the period between SVB's entry into FDIC receivership and First Citizens' purchase of SVB's U.S. assets. First Citizens also seeks to bring certain claims and defendants dismissed by the court in July 2024 back into the litigation (not including HSBC USA). Defendants have moved to dismiss this amended complaint. Based on the facts currently known, it is not practicable at this time for us to predict the resolution of this matter, including the timing or any possible impact on us, which could be significant.

Since November 2014, a number of lawsuits have been filed in the U.S. District Court for the Eastern District of New York and the U.S. District Court for the Southern District of New York against HSBC, HSBC Bank USA, HSBC North America, HSBC Bank plc and/or HSBC Bank Middle East Limited and others on behalf of plaintiffs who are, or are related to, alleged victims of terrorist attacks in the Middle East. In each case, it is alleged that the defendants are civilly liable for the attacks under the U.S. Anti-Terrorism Act because they allegedly provided support to terrorist organizations, including by altering or falsifying payment messages involving Iran, Iranian parties and Iranian banks for transactions processed through the U.S. and by providing banking services to customers alleged to have connections to terrorism financing. Six actions, which seek damages for unspecified amounts, remain pending. One of these actions (Timothy O'Sullivan, et al. v. Deutsche Bank AG, et al.) has been dismissed but may be appealed. The other five actions remain at an early procedural stage ((1) Kathaleen Freeman, et al. v. HSBC Holdings plc, et al.; (2) Joel Tavera, et al. v. Deutsche Bank AG, et al.; (3) James Donaldson v. HSBC Holdings plc, et al.; (4) Kathleen Stephens v. HSBC Holdings plc, et al.; and (5) a second, distinct case also captioned Timothy O'Sullivan, et al. v. Deutsche Bank AG, et al.). Based on the facts currently known, it is not practicable at this time for us to predict the resolution of these matters, including the timing or any possible impact on us, which could be significant.

In 2014, the Argentine tax authority filed a complaint against several individuals, including some current and former HSBC employees, alleging tax evasion and an unlawful tax association between HSBC Private Bank Suisse SA, HSBC Bank Argentina and HSBC Bank USA and certain HSBC officers, which allegedly enabled HSBC customers to evade Argentine tax obligations. To date, none of the cases against the individuals has been referred to trial. In early February 2026, three individuals, none of whom were affiliated with HSBC, asked the court to dismiss the charges against them as time-barred. No charges have been brought against any HSBC entity. Based on the facts currently known, it is not practicable at this time for us to predict the resolution of these matters, including the timing or any possible impact on us.