OPEN INVITATION TO INSTITUTIONAL SHAREHOLDERS OF HSBC HOLDINGS PLC

New York, 17 September 2007

We invite institutional shareholders of HSBC Holdings plc ("HSBC") to meet with us and review the evidence underlying the letter we sent to the Board of Directors on 4 September 2007 seeking an independent review of HSBC's governance and strategy. A copy of this letter is available on request.

HSBC has some very attractive businesses, a strong brand and a strong capital base. Despite this, its shares have systematically underperformed those of almost all the 28 banks used for the purposes of determining management pay, going back to 1994. This is true whether the performance is measured in US dollars or in pounds sterling and is also true if one broadens the peer group to include HSBC's largest direct competitors in the emerging markets -- bearing in mind that it has been the Group's objective since at least 1994 to derive half of its income from the emerging markets.

HSBC has taken to defending its track record by comparing itself with Bank of America and Citigroup, both of which it has outperformed over the past 12 months and 5 years. This is true but misses the point that these two banks have also been perennial underperformers. As we say in our letter to the Board, HSBC should measure its performance against the very best of its peers and not the worst.

We believe that poor governance and an unfocused strategy lie at the root of HSBC's chronic stock market underperformance. An independent and far-reaching review is long overdue ­ perhaps by as much as ten years.

HSBC says that a review is not necessary because it has responded to shareholders earlier this year by agreeing to "rebalance its businesses, putting more emphasis into Asia and Latin America... Its current goal is to draw half its income from emerging markets and half from Europe and North America" (Wall Street Journal 10/09/07). This statement is no different from statements which have been made over the past 15 years. In short, the "new" strategy is no different from the old (unfocused) strategy, which has resulted in systematic underperformance over this period.

We note that there was very little transparency surrounding the way in which this supposed change in strategy was determined earlier this year and, in light of the fact that HSBC's Executive Chairman was formerly Group Chief Executive, believe that a truly independent review, with no sacred cows, has yet to be conducted.

We are also concerned that HSBC's long term incentive scheme for senior management may be contributing to the problem of persistent underperformance since it fails to ensure proper alignment of shareholder and management interests, as we discussed in our letter to the Board.

Together with our management consultants, we have spent several months examining HSBC's potential and the reasons for its failure to deliver outperformance over the years. Although we have definite views on what changes could unlock this potential, we have avoided being prescriptive since we believe that there are a number of acceptable alternatives, any one of which would result in a substantially better outcome for shareholders over the next 5 to 10 years. We also believe that a consensual approach is necessary.

Over the past few days we have been approached by (and have ourselves approached) a number of HSBC's leading shareholders. We intend to have discussions, in private, with these shareholders over the course of the next two to three weeks. As a matter of policy, Knight Vinke does not disclose the names of institutional investors with whom it is in discussions without their consent.

Shareholders of HSBC are entitled to a fair and well informed debate on its governance and strategy. In light of HSBC's long history of underperformance, our request for an independent review, in consultation with shareholders, is not unreasonable. HSBC's Board and shareholders have nothing to lose by supporting this.

Yours sincerely,

Knight Vinke is an institutional asset management firm which specializes in the linkage between value creation and better governance in large cap public
companies. Its clients include some of the world's largest public pension funds and institutional investors.
Institutional shareholders who wish to meet with us are invited to contact us by e-mail at hermitage@kvamllc.com.

For further information, please contact:
Martin Forrest, Director of Communications, Knight Vinke Asset Management, T: +377 93 30 06 36, forrest@kvamllc.com

This announcement is not intended, and shall not be construed, as an offer, solicitation, invitation or inducement to buy or sell securities or interests
therein or other investments.