HSBC HOLDINGS PLC




--------------------------------------------------------------------------------


                                  RULES OF THE

                               HSBC HOLDINGS GROUP

                                SHARE OPTION PLAN


--------------------------------------------------------------------------------




                   Approved by the Company in General Meeting
                                 on 26 May 2000

   Part A approved by the Inland Revenue on 13 September 2000 under refX20871
 Amended by the Remuneration Committee on 25 January 2002 and 29 November 2002.




                                 BACON & WOODROW
                            Actuaries and Consultants
                                  St Olaf House
                               London Bridge City
                                     London
                                     SE1 2PE


<PAGE>

                                HSBC HOLDINGS PLC
                                      RULES
                                     OF THE
                      HSBC HOLDINGS GROUP SHARE OPTION PLAN

                                    CONTENTS
                                    --------

Section                                                                     Page

INTRODUCTION

1. General                                                                     3

2. Grant of Options                                                            3

PART A

1.  Definitions                                                                5

2.  Grant of Options/                                                         11

3.  Conditions relating to the grant of Options                               12

4.  Number of Shares in respect of which Options may be granted               13

5.  Rights of exercise                                                        15

6.  Takeover, reconstruction and amalgamation and liquidation                 17

7.  Manner of exercise                                                        19

8.  Issue of shares                                                           20

9.  Adjustments                                                               20

10. Administration                                                            21

11. Alterations                                                               22

12. General                                                                   23




PART B

1.  Definitions                                                               25

2.  Grant of Options                                                          31

3.  Conditions relating to the grant of Options                               33

4.  Number of Shares in respect of which Options may be granted               33

5.  Rights of exercise                                                        35

6.  Takeover, reconstruction and amalgamation and liquidation                 38

7.  Manner of exercise                                                        39

8.  Issue of shares                                                           41

9.  Adjustments                                                               41

10. Administration                                                            43

11. Alterations                                                               43

12. General                                                                   44

<PAGE>


INTRODUCTION

1.   General

     (1) Part A of the Rules of the Plan constitutes a Company Share Option Plan
         approved by the Inland Revenue under the provisions of the Act.

     (2) Part B of the Rules of the Plan is not approved by the Inland Revenue
         under the provisions of the Act.

2.   Grant of Options

     (1) The Committee shall specify whether an Option is being granted under
         Part A or Part B of the Rules of the Plan and the relevant Option
         Certificate shall be written accordingly.

     (2) The Committee may determine that any Option granted under Part B of the
         Rules shall be subject to additional and/or modified terms and
         conditions relating to the grant and terms of exercise as may be
         necessary to comply with or take account of any securities, exchange
         control or taxation laws, regulations or practice of any country or
         territory which may have application to the relevant Eligible Employee,
         Option Holder or Participating Company.

     (3) In exercising their discretion under Clause 2(2) above the Committee
         may:

         (a) require an Option Holder to make such declarations or take such
             other action (if any) as may be required for the purpose of any
             securities, tax or other laws of any country or territory which may
             be applicable to him at the Date of Grant or on exercise; and

         (b) adopt any supplemental rules or procedures governing the grant or
             exercise of Options as may be required for the purpose of any
             securities, tax or other laws of any country or territory which may
             be applicable to an Eligible Employee or Option Holder, provided
             that such rules or procedures may not be adopted to the extent that
             they require the sanction of an ordinary resolution of the Company
             in general meeting in accordance with Rule 11(4) of Part A of the
             Plan, unless such ordinary resolution has been passed.

<PAGE>
               Rules of the HSBC Holdings Group Share Option Plan

                                     PART A

      Approved by the Inland Revenue under the provisions of the Income and
           Corporation Taxes Act 1988 on [] under reference X20871/1A

1.   Definitions

     In this Plan, the following words and expressions shall, where the context
     so permits, have the meanings set forth below:



     "Acquiring Company"           the person mentioned in Rules 6(1)(a), (b)
                                   and (d), being a company within the meaning
                                   of Section 832 of the Act;

     "Acquisition Price"           in relation to an Option, the total amount
                                   payable on exercise being an amount equal to
                                   the relevant Share Price multiplied by the
                                   number of Shares in respect of which the
                                   Option is exercised;

     "the Act"                     the Income and Corporation Taxes Act 1988;

     "All-Employee Share Plan"     any plan under the terms of which
                                   participation is to be offered to all or
                                   substantially all employees of the Company or
                                   of any of its Subsidiaries or of such
                                   employees resident in a particular country or
                                   territory;

     "Annual Bonus"                The amount of bonus (if any) awarded at the
                                   discretion of the Committee to an Eligible
                                   Employee in respect of a financial year of
                                   the Company preceding a Plan Year;

     "Applicable Limit"            in relation to an Eligible Employee in any
                                   Plan Year a total of one hundred and fifty
                                   per cent (and, at the discretion of the
                                   Committee, in exceptional circumstances, a
                                   maximum of two hundred and twenty five per
                                   cent) of his annual rate of salary at the
                                   Date of Grant together with any Annual Bonus
                                   paid to him which limit shall include the
                                   grant of Options under the Plan and any grant
                                   of Performance Share Awards under the HSBC
                                   Holdings Restricted Share Plan 2000 PROVIDED
                                   that the Committee shall determine how such
                                   limit applies where Options are granted using
                                   such Option Pricing formula or model as they
                                   consider appropriate;

     "Associated Company"          the meaning given by Section 416 of the Act;

     "the Auditors"                the auditors for the time being of the
                                   Company acting as experts and not as
                                   arbitrators;

     "the Committee"               a duly authorised committee of the Directors
                                   comprising a majority of non-executive
                                   directors;

     "the Company"                 save as provided in Rule 6(3) HSBC Holdings
                                   plc registered in England under number
                                   617987;

     "Control"                     the meaning ascribed by Section 840 of the
                                   Act;

     "Date of Grant"               the date an Option Certificate is issued
                                   under the Plan pursuant to Rule 2;

     "Dealing Day"                 a day on which The London Stock Exchange is
                                   open for business;

     "the Directors"               the board of directors of the Company;

     "Discretionary Share
     Incentive Plan"               any Employee Share Plan which is not an
                                   All-Employee Share Plan

     "Eligible Employee"           any person who:

                                   (1) (a) is a director of a Participating
                                           Company required to devote
                                           substantially the whole of his time
                                           to his duties and in any case not
                                           less than 25 hours a week (exclusive
                                           of meal breaks); or

                                       (b) if not a director, is employed by a
                                           Participating Company;

                                       and

                                   (2) is not ineligible to participate in the
                                       Plan by virtue of paragraph 8 of Schedule
                                       9 to the Act (material interest in a
                                       close company);

     "Employee Share Plan"         any plan enabling or facilitating the holding
                                   of Shares by employees (including executive
                                   directors) of the Company or any of its
                                   subsidiaries;

     "Grant Period"                a period of three calendar months commencing
                                   on the Dealing Day following any of:


                                   (1) a day on which Part A of the Plan or any
                                       amendment thereto is approved by the
                                       Inland Revenue under the Act; or

                                   (2) a day on which the Company makes an
                                       announcement of its results for any year,
                                       half year or other period or issues any
                                       prospectus, listing particulars or other
                                       document containing equivalent
                                       information relating to Shares; or

                                   (3) a day on which the Directors resolve that
                                       exceptional circumstances have arisen
                                       which justify the grant of Options; or

                                   (4) a day on which any announcement is made
                                       of modifications to be made to the Act;

     "Group"                       the Company and its Subsidiaries;

     "Holding Company"             in relation to the Acquiring Company, a
                                   company falling within the definition in
                                   Section 736 of the Companies Act 1985;

     "Inland Revenue Limit"        in relation to an Eligible Employee,
                                   (pound)30,000 or such other amount as is
                                   prescribed from time pursuant to paragraph
                                   28(1) of Schedule 9 of the Act;

     "Market Value"                in relation to a Share on any day:

                                   (1) save as mentioned in (2) below, its
                                       market value on the day preceding the
                                       Date of Grant as determined in accordance
                                       with Part VIII of the Taxation of
                                       Chargeable Gains Act 1992 and agreed in
                                       advance with the Shares Valuation
                                       Division of the Inland Revenue; or

                                   (2) if and so long as the Shares are listed
                                       by The UK Listing Authority, the higher
                                       of:

                                       i)  the average of the middle market
                                           quotations of a Share (as derived
                                           from the Daily Official List of The
                                           London Stock Exchange) for the five
                                           Dealing Days falling within the Grant
                                           Period immediately preceding the date
                                           of the relevant grant made under Rule
                                           2(1) and;

                                       ii) the middle market quotation of a
                                           Share (as derived from the Daily
                                           Official List of the London Stock
                                           Exchange) on the date of the relevant
                                           grant made under Rule 2(1);

     "Option"                      a right to acquire Shares pursuant to the
                                   Plan;

     "Option Holder"               a person to whom an Option has been granted
                                   (or, as the context requires, his personal
                                   representatives);

     "Participating Company"       (1) the Company; and

                                   (2) any other Company, which is both a
                                       Subsidiary and under the Control of the
                                       Company;

     "Performance Condition"       the objective performance condition
                                   determined by the Committee which must be
                                   satisfied before Options may be exercised;

     "the Plan"                    the HSBC Holdings Group Share Option Plan in
                                   its present form, or as from time to time
                                   altered in accordance with the Rules and Part
                                   A of which shall constitute an approved share
                                   option scheme under the provisions of the
                                   Act;

     "Plan Year"                   Means 1 January to 31 December of any year;

     "Savings Related Share
     Option Plan"                  A savings related share option scheme falling
                                   within the definition of paragraph 1 of
                                   Schedule 9 to the Act;

     "Share"                       save as provided in Rule 6(3), a share in the
                                   Company satisfying paragraphs 10 to 14
                                   inclusive of Schedule 9 to the Act;

     "Share Price"                 the price per Share, as determined by the
                                   Directors, at which an Eligible Employee may
                                   acquire Shares in respect of which an Option
                                   has been granted to him, being not less than:

                                   (1) the Market Value of a Share;

                                   or

                                   (2) if greater, and Shares are to be
                                       subscribed, the nominal value of a Share;

                                   subject to any adjustment pursuant to Rule
                                   9(1);

     "Subsidiary"                  the meaning given to it in Section 736 of the
                                   Companies Act 1985;

     "The Hong Kong Stock          The Stock Exchange of Hong Kong Limited;
     Exchange"

     "The London Stock             The London Stock Exchange Limited;
      Exchange"

     "The New York Stock Exchange" The New York Stock Exchange, Inc.

     "The UK Listing Authority"    The UK Financial Services Authority

     References to any statutory provision are to that provision as amended or
     re-enacted from time to time, and, unless the context otherwise requires,
     words in the singular shall include the plural (and vice versa) and words
     importing the masculine shall include the feminine (and vice versa).

2.   Grant of Options

     (1) Within a Grant Period, the Directors may, at their absolute discretion,
         grant Options under Part A of the Plan to Eligible Employees.

     (2) The Directors shall issue an Option certificate under seal or in such
         other manner as shall take effect as a deed of the Company which shall
         be in such form as the Directors shall from time to time determine
         (subject to the approval of the Inland Revenue) and which shall include
         details of:

         (a) the Date of Grant of the Option;

         (b) the Share Price;

         (c) the number of Shares subject to the Option;

         (d) any date or dates determined by the Directors upon which the Option
             is first exercisable in whole or in part and, where on any date
             only part is first exercisable, the number of Shares over which
             such partial exercise may be made; and

         (e) the Performance Condition to be satisfied as a condition of the
             exercise of the Option in accordance with Rule 3(2) (as amended,
             relaxed or waived, if relevant, in accordance with Rule 3(3)); and

         (f) shall state that the Option is granted under this Part A of the
             Plan; and details of which (as set out in Rule 2(2) (a)-(f)) shall
             be sent to each Eligible Employee to whom such Option has been
             granted.

     (3) Each Eligible Employee to whom an Option is granted may by notice in
         writing within 30 days of the Date of Grant disclaim in whole or in
         part his rights under the Option in which case the Option shall for all
         purposes be deemed never to have been granted.

     (4) Subject to the rights of an Option Holder's personal representatives to
         exercise an Option as provided in Rule 5(5), every Option shall be
         personal to the Eligible Employee to whom it is granted and shall not
         be transferable.

     (5) No payment shall be made in respect of the grant of an Option.

     (6) Notwithstanding the provisions of this Rule, where any Option is to be
         granted to an director of the Company all determinations in relation to
         such Options shall be made by the Committee.

3.   Conditions relating to the grant of Options

     (1) Any Option granted to an Eligible Employee shall be limited and take
         effect so that immediately following such grant, the aggregate Market
         Value of all the Shares which he may acquire under:

         (i)  Part A of the Plan; and

         (ii) any other share option scheme (except a Savings Related Share
              Option Plan) established by the Company or any Associated Company
              of the Company and approved by the Inland Revenue under the Act
              ("a Relevant Share Option Plan"),

         shall not exceed the Inland Revenue Limit.

     (2) The value of Options granted to an Eligible Employee under Part A and
         Part B of the Plan, valued using an appropriate option pricing
         methodology determined by the Committee, together with the amount used
         to acquire Shares pursuant to the grant of performance share awards
         made to him under the HSBC Holdings Restricted Share Plan 2000 may not
         exceed the Applicable Limit.

     (3) Save as provided in Rules 5(5), 5(6) and 6 an Option shall be granted
         subject to the Performance Condition.

     (4) When events have occurred which cause the Committee to consider that
         the Performance Condition has become unfair or impractical, they may,
         in their discretion (provided such discretion is exercised fairly and
         reasonably), amend, relax or in exceptional circumstances waive such
         Performance Condition. Any such amendment, waiver or relaxation shall
         not result in the Option being subject to performance conditions which
         are more difficult to satisfy than those which applied immediately
         prior to such amendment, waiver or relaxation. After such amendment,
         waiver or relaxation the Directors shall issue to the Option Holder a
         replacement Option Certificate or other notice specifying the details
         in Rule 2(2).

4.   Number of Shares in respect of which Options may be granted

     If and so long as any of the Company's shares are admitted by The UK
     Listing Authority;

     (1) (a) the maximum number of Shares which may be allocated for
             subscription under the Plan, when added to the number of Shares
             issued in the preceding ten years under any employees' share scheme
             within the meaning of Section 743 of the Companies Act 1985, or
             placed under option for subscription in the same period under any
             other share option scheme (whether or not an executive share option
             scheme), approved in general meeting by the Company or any company
             under its Control, shall not exceed 10% of the Company's issued
             ordinary share capital for the time being; and

         (b) the maximum number of Shares which may be allocated for
             subscription under the Plan , when added to the number of Shares
             issued or issuable under the HSBC Holdings Restricted Share Plan
             and any Discretionary Share Incentive Plan within the meaning of
             Section 743 of the Companies Act 1985, approved in general meeting
             by the Company or any company under its Control, in the preceding
             ten years shall not exceed 5% of the Company's issued ordinary
             share capital for the time being;

         (c) Shares allocated for subscription or transferred under the Plan
             shall not exceed 848,847,000 Shares (being 10% of the Company's
             issued ordinary share capital on 13 April 2000); and

         (d) at any time the number of Shares subject to all Options held by an
             Option Holder shall not exceed 25% of the shares subject to all
             outstanding Options under the Plan; and

     (2) For the purpose of the above limits other than (c):

         (a) any Shares which are already in issue when placed under option; and

         (b) any Shares comprised in any Option which has lapsed, shall be
             disregarded for the purposes of calculating the number of Shares
             under option and any Shares which are issued pursuant to the grant
             of Options shall be taken into account once only on the date they
             are placed under option.

5.   Rights of exercise

     (1) Save as provided in Rules 5(5) (death) and 5(6) (transfer out of group)
         and Rule 6 (takeover etc), an Option may only be exercised on or after
         the latest of:

         (a) the third anniversary of the Date of Grant; and

         (b) any date or dates which may have been specified in accordance with
             Rule 2(2)(d) in the relevant Option Certificate; and

         (c) the date on which the Performance Condition has been satisfied,
             (unless waived, amended or relaxed pursuant to Rule 3(3)),

         but in any event not later than the tenth anniversary of the Date of
         Grant.

     (2) Save as provided in Rules 5(5) (death), 5(6) (transfer out of group),
         5(7) (redundancy/early retirement) and Rule 6 below, an Option may only
         be exercised by an Option Holder while he is a director or employee of
         a Participating Company or an Associated Company of a Participating
         Company.

     (3) If an Option Holder retires at the age at which he would normally
         retire in accordance with the terms of his contract of employment he
         may not exercise any Option granted to him within two years of such
         retirement.

     (4) An Option may not be exercised by an Option Holder at any time when he
         is prohibited from such exercise by virtue of the provisions of
         paragraph 8 of Schedule 9 to the Act, or in the case of personal
         representatives when the Option Holder would have been so prohibited.

     (5) An Option may be exercised by the personal representatives of a
         deceased Option Holder during the period of one year following the date
         of death.

     (6) An Option may be exercised by an Option Holder where the Subsidiary,
         the undertaking or part-undertaking in which the Option Holder is
         employed is transferred to a person other than a Participating Company
         or an Associated Company of a Participating Company within six months
         of the date of such transfer.

     (7) An Option may be exercised by an Option Holder in accordance with Rule
         5(1) where the Option Holder ceases to hold any office or employment
         with a Participating Company on account of:-

         (a) redundancy (within the meaning of the Employment Rights Act 1996);
             or (b) early retirement by agreement with his employer

         and subject to the achievement of the Performance Condition as provided
         for in Rule 5(1)(c).

     (8) An Option shall lapse at the occurrence of the earliest of the
         following: (a) the tenth anniversary of the Date of Grant; or

         (b) the date on which the Performance Condition is deemed not to have
             been met or the date on which it becomes apparent that any such
             condition has become incapable of being satisfied or;

         (c) subject to Rule 6(3) (rollover), the expiry of any of the
             applicable periods specified in Rules 5(5) (death), 5(6) (transfer
             out of group) and Rules 6(2)(b), (c) and (d); or

         (d) the date on which an Option Holder ceases to be a director or
             employee of any Participating Company or any Associated Company of
             a Participating Company for any reason other than those specified
             in Rules 5(5) (death), 5(6) (transfer out of group) and 5(7)
             (redundancy/early retirement); or

         (e) the date on which a resolution is passed, or an order is made by
             the Court, for the compulsory winding-up of the Company; or

         (f) the date on which the Option Holder becomes bankrupt or does or
             omits to do anything as a result of which he is deprived of the
             legal or beneficial ownership of the Option; or

         (g) subject to Rule 6(3) (rollover), where Rule 6(1)(a) applies, six
             weeks from the date on which the person referred to therein obtains
             Control of the Company and first becomes entitled to give, in
             connection with the offer referred to therein, a valid notice to
             acquire compulsorily any Shares pursuant to Section 429 Companies
             Act 1985.

         Provided that for the purposes of the Plan (and, in particular, Rule
         5(8)(d)), a female Option Holder who is on maternity leave (as defined
         by the Employment Relations Act 1999) by reason of pregnancy or
         confinement and who exercises her right to return to work in accordance
         with the Employment Relations Act 1999 before exercising an Option
         shall be treated for the purposes of the Plan as not having ceased to
         hold such office or employment. If she does not so exercise her right
         to return to work she will be regarded as having ceased to hold such
         office or employment on the last day on which she is entitled to return
         to work.

6.   Takeover, reconstruction and amalgamation and liquidation

     (1) This Rule shall apply where:

         (a) any person obtains Control of the Company as a result of making
             either a general offer to acquire the whole of the Company's issued
             share capital (other than any shares already owned by the Holding
             Company or any Subsidiary of the Holding Company) and which is made
             on a condition such that if it is satisfied the offeror will have
             such Control, or a general offer to acquire all the Shares in the
             Company which are of the same class as the Shares; or

         (b) any person obtains Control of the Company in pursuance of a scheme
             of arrangement sanctioned by the Court under Section 425 of the
             Companies Act 1985; or

         (c) without any person obtaining Control of the Company the Court
             sanctions a scheme of arrangement affecting the Shares under
             Section 425 of the Companies Act 1985; or

         (d) any person becomes bound or entitled to acquire Shares in the
             Company under Sections 428 to 430 of the Companies Act 1985; or

         (e) a resolution is passed for the voluntary winding-up of the Company,

         and for the purpose of this Rule 6 (except Rule 6(3)), a person shall
         be deemed to have obtained Control of the Company if he and others
         acting in concert with him have together obtained Control.

     (2) Subject to Rule 5(8) an Option may be exercised during any of the
         following periods subject to the satisfaction of the Performance
         Condition in the period mentioned in Rule 6(2)(a), 6(2)(b), 6(2)(c),
         and 6(2)(d):

         (a) in relation to Rule 6(1)(a), within six months of the date on which
             Control is so obtained and any condition subject to which the offer
             is made is satisfied (or until the expiry of the period mentioned
             in (c) below, if earlier); or

         (b) in relation to Rules 6(1)(b) and (c), the period of six months
             after the date the Court sanctions such scheme of arrangement; or

         (c) in relation to Rule 6(1)(d), during any period such person remains
             so bound or entitled; or

         (d) in relation to Rule 6(1)(e), within six months of the passing of
             such resolution.

     (3) Notwithstanding anything to the contrary in these Rules, where any
         person mentioned in Rules 6(1)(a), (b) or (d) is a company an Option
         Holder may, by agreement with the Acquiring Company and within the
         appropriate period mentioned in Rules 6(2)(a) (b) and (c), release his
         Option under the Plan ("the Old Option") in consideration of the grant
         to him of a new Option ("the New Option") which, within the meaning
         ascribed by paragraph 15(3) of Schedule 9 to the Act, is equivalent to
         the Old Option but relates to shares in a different company (whether
         the Acquiring Company or some other company falling within paragraph
         (b) or (c) of paragraph 10 of Schedule 9 to the Act). With effect from
         the date of release references in Rules 5, 6, 7, 8, 9 and 10(1)-(4) and
         12(2) (and, in relation to expressions used in those Rules, in Rule 1)
         to "the Company" and "Shares" shall, in relation to the New Option, be
         construed as references to the Acquiring Company and Shares in the
         Acquiring Company or some other company as the case may be, but
         references to Participating Company shall continue to be construed as
         if references to the Company were references to HSBC Holdings plc.

7.   Manner of exercise

         An Option may be exercised, in whole or in part, by the delivery to the
         secretary of the Company, or his duly appointed agent, of an Option
         certificate (or such other documentation that the Company may deem
         appropriate) covering not less than the number of Shares over which the
         Option is then to be exercised, with the notice of exercise endorsed
         thereon duly completed and signed by the Option Holder together with
         cleared funds representing the Acquisition Price payable in respect of
         the Shares over which the Option is to be exercised. The relevant
         Shares shall be allotted or transferred (as the case may be) within 28
         days following such delivery and accordingly, in cases where Shares are
         to be transferred, the Company shall use its best endeavours to ensure
         due transfer thereof.

8.   Issue of shares

     (1) All Shares issued pursuant to the exercise of Options under the Plan
         shall rank pari passu in all respects with the Shares then in issue,
         except that they shall not rank for any dividend or other rights
         declared by reference to a record date preceding the date of such
         exercise.

     (2) If and so long as the Shares are listed on The London Stock Exchange,
         The Hong Kong Stock Exchange and The New York Stock Exchange the
         Company shall use its best endeavours to procure that as soon as
         practicable after the allotment of any Shares pursuant to the Plan
         application shall be made to The UK Listing Authority for admission of
         the Shares to the Official List to the Listing Committee of The Hong
         Kong Stock Exchange for the listing of, and permission to deal in, the
         Shares and to a Listing Representative of the New York Stock Exchange
         for the listing of, and permission to deal in, the Shares.

9.   Adjustments

     (1) The number of Shares over which an Option is granted, the Share Price
         thereof and the limits in Rule 4 on the number of Shares issuable under
         the Plan shall, subject to the prior approval of the Inland Revenue, be
         adjusted in such manner as the Committee shall determine (and which the
         Auditors shall confirm in writing to be in their opinion fair and
         reasonable) following any capitalisation issue, subdivision,
         consolidation or reduction of share capital and in respect of any
         discount element in any rights issue or other variation of share
         capital to the intent that (as nearly as may be without involving
         fractions of a Share or a Share Price calculated to more than two
         places of decimals) the Acquisition Price payable in respect of an
         Option shall remain unchanged but the number of Shares issuable under
         the Plan and any other employees' share scheme shall take account of
         any such event, PROVIDED that, save as provided in Rules 9(2) and (3),
         no adjustment made pursuant to this Rule 9(1) shall have the effect of
         reducing the Share Price below the nominal value of a Share.

     (2) Where an Option subsists over both issued and unissued Shares, an
         adjustment may be made under Rule 9(1) which would have the effect of
         reducing the Share Price to less than the nominal value of a Share
         provided that the reduction of the Share Price in relation to Options
         over both issued and unissued Shares can be made to the same extent.

     (3) Any adjustment made to the Share Price of unissued Shares which would
         have the effect of reducing the Share Price to less than the nominal
         value of a Share shall only be made if and to the extent that the
         Directors are authorised to capitalise from the reserves of the Company
         a sum equal to the amount by which the nominal value of the Shares in
         respect of which the Option is exercisable exceeds the adjusted Share
         Price. The Directors may apply such sum in paying up such amount on
         such Shares so that on the exercise of any Option in respect of which
         such a reduction shall have been made, the Directors shall capitalise
         such sum (if any) and apply the same in paying up such amount as
         aforesaid.

     (4) The Committee may take such steps as they may consider necessary to
         notify Option Holders of any adjustments made under Rule 9(1) and to
         call in, cancel, endorse, issue or re-issue any Option certificate
         consequent upon such adjustment.

10.  Administration

     (1) Notices or documents required to be given to an Eligible Employee or to
         an Option Holder shall either be delivered to him by hand or sent to
         him at his place of work or by first class post pre-paid at his last
         known home address according to the information provided by him.
         Notices sent by first class post shall be deemed to have been given on
         the day following the date of posting.

     (2) The Company may distribute to Option Holders copies of any notice or
         document sent by the Company to its shareholders generally.

     (3) The Company shall at all times keep available unissued Shares or shall
         ensure that sufficient issued Shares will be available as may be
         required to satisfy the exercise of all Options which have neither
         lapsed nor been exercised taking account of any other obligations of
         the Company to allot unissued Shares.

     (4) The Committee may make such regulations for the administration of the
         Plan as they deem fit, provided that no regulation shall be valid to
         the extent it is inconsistent with the Rules.

     (5) The decision of the Committee in any dispute relating to an Option, or
         the due exercise thereof, or any other matter in respect of the Plan,
         shall be final and conclusive subject to the determination of the
         Auditors when so required by Rule 9(1).

     (6) The costs of introducing and administering the Plan shall be borne by
         the Company.

11.  Alterations

     (1) The Committee may, prior to approval of Part A of the Plan under the
         Act by the Inland Revenue, alter Part A of the Plan as may be necessary
         in order to obtain or maintain such approval.

     (2) After the date on which Part A of the Plan is approved by the Inland
         Revenue under the Act, no alteration made by the Committee to Part A of
         the Plan shall be effective until it shall have previously been
         approved by the Inland Revenue.

     (3) Subject to (2) above, after the date on which Part A of the Plan is
         approved by the Inland Revenue under the Act, the Committee may, in
         their absolute discretion, alter Part A of the Plan to give effect to
         changes under the Act.

     (4) The Plan may be amended by the Committee in any way, provided that
         amendments which are to the material advantage of Option Holders
         (present or future) may only be made by or with the prior approval of
         The Hong Kong Stock Exchange and of an ordinary resolution of the
         shareholders of the Company in general meeting unless they are minor
         amendments which the Committee considers necessary or desirable in
         order to benefit the administration of the Plan, or they are amendments
         to obtain or maintain favourable tax, exchange control or regulatory
         treatment of any Eligible Employee rights to acquire such Shares or
         Option Holders or of any Participating Company.

     (5) Where any alteration would abrogate or adversely affect the subsisting
         rights of Option Holders it will not be effective unless such
         alteration is made:

         (a) with the consent in writing of such number of Option Holders as
             hold Options over 75 per cent of the Shares which would be issued
             if all Options granted and subsisting were exercised and Shares
             issued; or

         (b) by a resolution at a meeting of Option Holders by a majority of not
             less than 75 per cent of the Option Holders who attend and vote
             either in person or by proxy. For the purposes of this Rule
             11(5)(b) the Option Holders shall be treated as the holders of a
             separate class of share capital and the provisions of the articles
             of association of the Company relating to class meetings shall
             apply mutatis mutandis.

     (6) Written notice of any amendment made in accordance with this Rule 11
         shall be given to all Option Holders.

12.  General

     (1) The Plan shall terminate on 26 May 2005 being the fifth anniversary of
         the date on which it is approved by the Company in general meeting or
         at any earlier time by resolution of the Directors. Termination of the
         Plan shall be without prejudice to the subsisting rights of Option
         Holders.

     (2) If an Eligible Employee or an Option Holder shall cease for any reason
         including as a result of being wrongfully or unfairly dismissed to be
         in the employment of the company or any of its Subsidiaries, he shall
         not be entitled, by way of compensation for loss of office or
         employment or otherwise howsoever, to any sum or any benefit to
         compensate him for any consequential loss or curtailment of any right
         or benefit accrued or in prospect under the Plan, and any such loss or
         curtailment shall not form part of any claim for damages for breach of
         any contract of employment of any Eligible Employee or Option Holder or
         compensation for unfair dismissal or any other claim whatsoever.

13.  Governing Law

     This Plan is governed by and shall be construed in accordance with the laws
     of England.

<PAGE>
                                     PART B
               Rules of the HSBC Holdings Group Share Option Plan

1.   Definitions

     In this Plan, the following words and expressions shall, where the
     context so permits, have the meanings set forth below:

     "Acquiring Company"           the person mentioned in Rules 6(1)(a), (b)
                                   and (d), being a company within the meaning
                                   of Section 832 of the Act;

     "Acquisition Price"           in relation to an Option, the total amount
                                   payable on exercise being an amount equal to
                                   the relevant Share Price multiplied by the
                                   number of Shares in respect of which the
                                   Option is exercised;

     "the Act"                     the Income and Corporation Taxes Act 1988;


     "All-Employee Share Plan"     any plan under the terms of which
                                   participation is to be offered to all or
                                   substantially all employees of the Company or
                                   of any of its Subsidiaries or of such
                                   employees resident in a particular country or
                                   territory;

     "Annual Bonus"                The amount of bonus (if any) awarded at the
                                   discretion of the Committee to an Eligible
                                   Employee in respect of a financial year of
                                   the Company preceding a Plan Year;

     "Applicable Limit"            in relation to an Eligible Employee in any
                                   Plan Year a total of one hundred and fifty
                                   per cent (and, at the discretion of the
                                   Committee, in exceptional circumstances, a
                                   maximum of two hundred and twenty five per
                                   cent) of his annual rate of salary - at the
                                   Date of Grant together with any Annual Bonus
                                   paid to him which limit shall include the
                                   grant of Options under the Plan and any grant
                                   of Performance Share Awards under the HSBC
                                   Holdings Restricted Share Plan 2000; PROVIDED
                                   that the Committee shall determine how such
                                   limit applies where options are granted using
                                   such Option Pricing formula or model as they
                                   consider appropriate;

     "Associated Company"          the meaning given by Section 416 of the Act;

     "the Auditors"                the auditors for the time being of the
                                   Company acting as experts and not as
                                   arbitrators;

     "the Committee"               a duly authorised committee of the Directors
                                   comprising a majority of non-executive
                                   directors;

     "the Company"                 save as provided in Rule 6(3) HSBC Holdings
                                   plc registered in England under number
                                   617987;

     "Control"                     the meaning ascribed by Section 840 of the
                                   Act;

     "Date of Grant"               the date an Option Certificate is issued
                                   under the Plan pursuant to Rule 2;

     "Dealing Day"                 a day on which The London Stock Exchange is
                                   open for business;

     "the Directors"               the board of directors of the Company;

     "Discretionary Share
     Incentive Plan"               any Employee Share Plan which is not an
                                   All-Employee Share Plan

     "Eligible Employee"           any person who:

                                   (1) (a) is a director of a Participating
                                           Company required to devote
                                           substantially the whole of his time
                                           to his duties and in any case not
                                           less than 25 hours a week (exclusive
                                           of meal breaks); or

                                       (b) if not a director, is employed by a
                                           Participating Company

                                   and

                                   (2) is not ineligible to participate in the
                                       Plan by virtue of paragraph 8 of Schedule
                                       9 to the Act (material interest in a
                                       close company);

     "Employee Share Plan"         any plan enabling or facilitating the holding
                                   of Shares by employees (including executive
                                   directors) of the Company or of any of its
                                   Subsidiaries;

     "Grant Period"                a period of three calendar months commencing
                                   on the Dealing Day following any of:

                                   (1) a day on which Part A of the Plan or any
                                       amendment thereto is approved by the
                                       Inland Revenue under the Act; or

                                   (2) a day on which the Company makes an
                                       announcement of its results for any year,
                                       half year or other period or issues any
                                       prospectus, listing particulars or other
                                       document containing equivalent
                                       information relating to Shares; or

                                   (3) a day on which the Directors resolve that
                                       exceptional circumstances have arisen
                                       which justify the grant of Options; or

                                   (4) a day on which any announcement is made
                                       of modifications to be made to the Act;

     "Group"                       the Company and its Subsidiaries;

     "Holding Company"             in relation to the Acquiring Company, a
                                   company falling within the definition in
                                   Section 736 of the Companies Act 1985;

     "Market Value"                in relation to a Share on any day:

                                   (1) save as mentioned in (2) below, its
                                       market value on the day preceding the
                                       Date of Grant as determined in accordance
                                       with Part VIII of the Taxation of
                                       Chargeable Gains Act 1992; or

                                   (2) if and so long as the Shares are listed
                                       by The UK Listing Authority, the higher
                                       of:

                                           i)  the average of the middle market
                                               quotations of a Share (as derived
                                               from the Daily Official List of
                                               The London Stock Exchange) for
                                               the five Dealing Days falling
                                               within the Grant Period
                                               immediately preceding the date of
                                               the relevant grant made under
                                               Rule 2(1) or;

                                           ii) the middle market quotation of a
                                               Share (as derived from the Daily
                                               Official List of the London Stock
                                               Exchange) on the date of the
                                               relevant grant made under Rule
                                               2(i);

     "Option"                      a right to acquire Shares pursuant to the
                                   Plan;

     "Option Holder"               a person to whom an Option has been granted
                                   (or, as the context requires, his personal
                                   representatives);

     "Participating Company"       (1) the Company; and

                                   (2) any other Company, which is both a
                                       Subsidiary and under the Control of the
                                       Company:

     "Performance Condition"       the performance condition determined by the
                                   Committee which must be satisfied before
                                   Options may be exercised;

     "Savings Related Share
     Option Plan"                  a savings related share option scheme falling
                                   within the definition of paragraph 1 of
                                   Schedule 9 to the Act;

     "the Plan"                    the HSBC Holdings Group Share Option Plan in
                                   its present form, or as from time to time
                                   altered in accordance with the Rules;

     "Plan Year"                   means 1 January to 31 December of any year;

     "Share"                       save as provided in Rule 6(3), a share in the
                                   Company;

     "Share Price"                 the price per Share, as determined by the
                                   Directors, at which an Eligible Employee may
                                   acquire Shares in respect of which an Option
                                   has been granted to him, being not less than:

                                   (1) the Market Value of a Share;

                                   or

                                   (2) if greater, and Shares are to be
                                       subscribed, the nominal value of a Share;

                                   subject to any adjustment pursuant to Rule
                                   9(1);

     "Subsidiary"                  the meaning given to it in Section 736 of the
                                   Companies Act 1985;

     "The HongKong Stock           The Stock Exchange of Hong Kong Limited;
     Exchange"

     "The London Stock             The London Stock Exchange Limited;
      Exchange"

     "The New York Stock Exchange" The New York Stock Exchange, Inc;


     "The UK Listing Authority"    The UK Financial Services Authority.

     "Year of Assessment"          a year beginning on any 6th April and ending
                                   on the following 5th April.


     References to any statutory provision are to that provision as amended or
     re-enacted from time to time, and, unless the context otherwise requires,
     words in the singular shall include the plural (and vice versa) and words
     importing the masculine shall include the feminine (and vice versa).

2.   Grant of Options

     (1) Within a Grant Period, the Directors may, at their absolute discretion,
         grant Options under Part B of the Plan to Eligible Employees.

     (2) The Directors shall issue an Option certificate under seal or in such
         other manner as shall take effect as a deed of the Company which shall
         be in such form as the Directors shall from time to time determine and
         which shall include details of:

         (a) the Date of Grant of the Option; and

         (b) the Share Price;

         (c) the number of Shares subject to the Option;

         (d) any date or dates determined by the Directors upon which the Option
             is first exercisable in whole or in part and, where on any date
             only part is first exercisable, the number of Shares over which
             such partial exercise may be made; and

         (e) the Performance Condition to be satisfied as a condition of the
             exercise of the Option in accordance with Rule 3(2) (as amended,
             relaxed or waived, if relevant, in accordance with Rule 3(3)); and

         (f) any variation in the application to the Option Holder of Rule 5, as
             determined by the Directors pursuant to Rule 5(7); and

         (g) shall state that the Option is granted under this Part B of the
             Plan; and

     details of which (as set out in Rule 2(2) (a)-(g)) shall be sent to each
     Eligible Employee to whom such Option has been granted.


     (3) Each Eligible Employee to whom an Option is granted may by notice in
         writing within 30 days of the Date of Grant disclaim in whole or in
         part his rights under the Option in which case the Option shall for all
         purposes be deemed never to have been granted.

     (4) Subject to the rights of an Option Holder's personal representatives to
         exercise an Option as provided in Rule 5(4), every Option shall be
         personal to the Eligible Employee to whom it is granted and shall not
         be transferable.

     (5) No payment shall be made in respect of the grant of an Option.

     (6) Notwithstanding the provisions of this Rule, where any Option is to be
         granted to an executive director of the Company all determinations in
         relation to such Options shall be made by the Committee.

3.   Conditions relating to the grant of Options

     (1) The value of Options granted to an Eligible Employee under Part A and
         Part B of the Plan, valued using an appropriate option pricing
         methodology determined by the Committee, together with the amount used
         to acquire Shares pursuant to the grant of performance share awards
         made to him under the HSBC Holdings Restricted Share Plan 2000 may not
         exceed the Applicable Limit.

     (2) An Option shall be granted subject to the Performance Condition except
         that in the case of the grant of an Option to an Eligible Employee who
         is employed outside the United Kingdom the Committee shall have the
         discretion to set a different performance condition, or to decide that
         there should be no performance condition, as appropriate in accordance
         with customary practice in the country or territory in which the
         Eligible Employee is employed.

     (3) In the application of Rule 3(2), when events have happened which cause
         the Committee to consider that the Performance Condition has become
         unfair or impractical, they may, in their discretion (provided such
         discretion is exercised fairly and reasonably), amend, relax or waive
         such Performance Condition. Any such amendment, waiver or relaxation
         shall not result in the Option being subject to performance conditions
         which are more difficult to satisfy than those which applied
         immediately prior to such amendment, waiver or relaxation. After any
         such amendment, waiver or relaxation the Directors shall issue to the
         Option Holder a replacement Option Certificate or other notice
         specifying the details in Rule 2(2).

4.   Number of Shares in respect of which Options may be granted

     If and so long as any of the Company's shares are admitted to the Official
     List of The London Stock Exchange;

         (a) the maximum number of Shares which may be allocated for
             subscription under the Plan, when added to the number of Shares
             issued in the preceding ten years under any employees' share scheme
             within the meaning of Section 743 of the Companies Act 1985, or
             placed under option for subscription in the same period under any
             other share option scheme (whether or not an executive share option
             scheme), approved in general meeting by the Company or any company
             under its Control, shall not exceed 10% of the Company's issued
             ordinary share capital for the time being; and

         (b) the maximum number of Shares which may be allocated for
             subscription under the Plan, when added to the number of Shares
             issued or issuable under the HSBC Holdings Restricted Share Plan
             and any Discretionary Employee's Share Incentive Plan, approved in
             general meeting by the Company or any company under its Control in
             the preceding ten years shall not exceed 5% of the Company's issued
             or ordinary share capital for the time being.

         (c) Shares allocated for subscription or to be transferred under the
             Plan shall not exceed 848,847,000 Shares (being 10% of the
             Company's issued ordinary share capital on 13 April 2000);

         (d) at any time the number of Shares subject to all Options held by any
             Option Holder which have not been exercised and have not lapsed
             shall not exceed 25% of the Shares subject to all outstanding
             Options under the Plan; and

     (2) For the purpose of the above limits other than (c): (b) any Shares
         which are already in issue when placed under option; and (c) any Shares
         comprised in any Option which has lapsed,

         shall be disregarded for the purposes of calculating the number of
         Shares under option and any Shares which are issued pursuant to the
         grant of Options shall be taken into account once only on the date they
         are placed under option.

5.   Rights of exercise

     (1) Save as provided in Rule 5(4) (death), Rule 5(5) (transfer out of
         group) and Rule 6 (takeover etc), an Option may only be exercised on or
         after the latest of:

         (a) the third anniversary of the Date of Grant; and

         (b) any date or dates which may have been specified in accordance with
             Rule 2(2)(d) in the relevant Option Certificate; and

         (c) the date on which the Performance condition has been satisfied
             (unless waived, amended or relaxed pursuant to Rule 3(3);

         but in any event not later than the tenth anniversary of the Date of
         Grant.

     (2) Save as provided in Rules 5(4) (death), 5(5) (transfer out of group),
         5(6) (redundancy/early retirement and Rule 6 (takeover etc) below, an
         Option may only be exercised by an Option Holder while he is a director
         or employee of a Participating Company or an Associated Company of a
         Participating Company.

     (3) If an Option Holder retires at the age at which he would normally
         retire in accordance with the terms of his contract of employment he
         may not exercise any Option granted to him within two years of such
         retirement and may not exercise any Option at a Share Price which is
         less than the Market Value of a Share on the Dealing Day immediately
         preceding the relevant Date of Grant granted to him within four years
         of such retirement.

     (4) An Option may be exercised by the personal representatives of a
         deceased Option Holder during the period of one year following the date
         of death.

     (5) An Option may be exercised by an Option Holder where the Subsidiary,
         the undertaking or part-undertaking in which the Option Holder is
         employed is transferred to a person other than a Participating Company
         or an Associated Company of the Company or a Participating Company
         within six months of the date of such transfer.

     (6) An Option may be exercised by an Option Holder in accordance with rule
         5(1) where the Option Holder ceases to hold any office or employment
         with a Participating Company on account of:-

         (a) redundancy (within the meaning of the Employment Rights Act 1996);
             or

         (b) early retirement by agreement with his employer

         subject to the achievement of the Performance Condition as
         provided for in Rule 5(1)(c).

     (7) An Option shall lapse at the occurrence of the earliest of the
         following:

         (a) the tenth anniversary of the Date of Grant; or

         (b) the date on which the Performance Condition is deemed not to have
             been met; or the date on which it becomes apparent that any such
             condition has become incapable of being satisfied or

         (c) subject to Rules 5(8) and 6(3), the expiry of any of the applicable
             periods specified in Rules 5(4) (death) and 5(5) (transfer out of
             the group) and Rules 6(2)(b), (c) and

         (d) subject to Rule 5(8) the date on which an Option Holder ceases to
             be a director or employee of any Participating Company or any
             Associated Company of a Participating Company for any reason other
             than those specified in Rules 5(4) (death), 5(5) (transfer out of
             group) and 5(6) (redundancy/early retirement); or

         (e) the date on which a resolution is passed, or an order is made by
             the Court, for the compulsory winding-up of the Company; or

         (f) the date on which the Option Holder becomes bankrupt or does or
             omits to do anything as a result of which he is deprived of the
             legal or beneficial ownership of the Option; or

         (g) subject to Rule 6(3) (rollover), where Rule 6(1)(a) applies, six
             weeks from the date on which the person referred to therein obtains
             Control of the Company and first becomes entitled to give, in
             connection with the offer referred to therein, a valid notice to
             acquire compulsorily any Shares pursuant to Section 429 Companies
             Act 1985.

         Provided that for the purposes of the Plan (and, in particular, Rule
         5(7)(d)), a female Option Holder who is on maternity leave (as defined
         by the Employment Relations Act 1999) by reason of pregnancy or
         confinement and who exercises her right to return to work in accordance
         with the Employment Relations Act 1999 before exercising an Option
         shall be treated for the proposes of the Plan as not having ceased to
         hold such office or employment. If she does not so exercise her right
         to return to work she will be regarded as having ceased to hold such
         office or employment on the last day as which she is entitled to return
         to work.

     (8) The provisions of this Rule 5 insofar as they relate to the
         consequences of the cessation of an Option Holder's employment with any
         Participating Company or any Associated Company of a Participating
         Company may be varied in the case of an Option Holder who is resident
         outside the United Kingdom at the Date of Grant in such manner as the
         Directors see fit.

6.   Takeover, reconstruction and amalgamation and liquidation

     (1) This Rule shall apply where:

         (a) any person obtains Control of the Company as a result of making
             either a general offer to acquire the whole of the Company's issued
             share capital (other than any shares already owned by the Holding
             Company or any Subsidiary of the Holding Company) and which is made
             on a condition such that if it is satisfied the offeror will have
             such Control, or a general offer to acquire all the Shares in the
             Company which are of the same class as the Shares; or

         (b) any person obtains Control of the Company in pursuance of a scheme
             of arrangement sanctioned by the Court under Section 425 of the
             Companies Act 1985; or

         (c) without any person obtaining Control of the Company the Court
             sanctions a scheme of arrangement affecting the Shares under
             Section 425 of the Companies Act 1985; or

         (d) any person becomes bound or entitled to acquire Shares in the
             Company under Sections 428 to 430 of the Companies Act 1985; or

         (e) a resolution is passed for the voluntary winding-up of the Company,

         and for the purpose of this Rule 6 (except Rule 6(3)), a person shall
         be deemed to have obtained Control of the Company if he and others
         acting in concert with him have together obtained Control.

     (2) Subject to Rule 5(7) an Option may be exercised during any of the
         following periods subject to the satisfaction of the Performance
         Condition in the period mentioned in Rule 6(2)(a), 6(2)(b) 6(2)(c),
         and 6(2)(d):

         (a) In relation to Rule 6(1)(a), within six months of the date on which
             control is so obtained any condition subject to which the offer is
             made is satisfied (or until the expiry of the period mentioned in
             (c) below if earlier);

         (b) in relation to Rules 6(1)(b) and (c), the period of six months
             after the date the Court sanctions such scheme of arrangement; or

         (c) in relation to Rule 6(1)(d), during any period such person remains
             so bound or entitled; or

         (d) in relation to Rule 6(1)(e), within six months of the passing of
             such resolution.

     (3) Notwithstanding anything to the contrary in these Rules, where any
         person mentioned in Rules 6(1)(a), (b) or (d) is a company an Option
         Holder may, by agreement with the Acquiring Company and within the
         appropriate period mentioned in Rules 6(2)(a) (b) and (c), release his
         Option under the Plan ("the Old Option") in consideration of the grant
         to him of a new Option ("the New Option. With effect from the date of
         release references in Rules 5, 6, 7, 8, 9 and 10(1)-(4) and 12(2) (and,
         in relation to expressions used in those Rules, in Rule 1) to "the
         Company" and "Shares" shall, in relation to the New Option, be
         construed as references to the Acquiring Company and Shares in the
         Acquiring Company or some other company as the case may be.

7.   Manner of exercise

     (1) (a) An Option may be exercised, in whole or in part, by the delivery to
             the secretary of the Company or his duly appointed agent of an
             Option certificate (or such other documentation that the Company
             may deem appropriate) covering not less than the number of Shares
             over which the Option is then to be exercised, with the notice of
             exercise endorsed thereon duly completed and signed by the Option
             Holder

         (b) The notice of exercise must be accompanied by either:

             (i)  cleared funds representing the Acquisition Price payable in
                  respect of the Shares over which the Option is to be exercised
                  and for the amount of any tax or other liability of the Option
                  Holder for which the Company or any Participating Company or
                  Subsidiary is bound to account (such amount being calculated
                  by the Option Holder as a best estimate at the time of
                  completion of the notice of exercise); or

             (ii) an irrevocable instruction to a bank or broker to provide
                  funds to the Company for the Acquisition Price payable in
                  respect of the Shares over which the Option is to be exercised
                  on the terms of an agreement between the Option Holder and the
                  bank or broker which include provision for the sale of Shares
                  issued or transferred on the exercise of the Option and
                  remittal to the Company, any Participating Company or any
                  Subsidiary of the amount of any tax or other liability of the
                  Option Holder for which that company is bound to account.

         (c) The relevant Shares shall be allotted or transferred (as the case
             may be) within 28 days following such delivery and accordingly, in
             cases where Shares are to be transferred, the Company shall use its
             best endeavours to ensure due transfer thereof.

     (2) On exercise of an Option the Directors may in lieu of allotting or
         procuring the transfer of Shares in accordance with Rule 7(1) pay to
         such Option Holder a cash sum equal to the amount by which the value of
         the Shares in respect of which the notice of exercise was given
         (calculated as the average of the middle market quotations on The
         London Stock Exchange for the five Dealing Days prior to the date of
         exercise) exceeds the Acquisition Price of those Shares. If payment is
         made pursuant to this Rule 7(2) to an Option Holder, he shall have no
         further rights in respect of the Shares for which the notice of
         exercise was given. The company may deduct from such payment any tax
         which it is liable to deduct under the laws of any country or territory
         which laws are applicable to the Option Holder and/or the Participating
         Company by which he is employed.

8.   Issue of shares

     (1) All Shares issued pursuant to the exercise of Options under the Plan
         shall rank pari passu in all respects with the Shares then in issue,
         except that they shall not rank for any dividend or other rights
         declared by reference to a record date preceding the date of such
         exercise.

     (2) If and so long as the Shares are listed on The London Stock Exchange,
         The Hong Kong Stock Exchange and The New York Stock Exchange the
         Company shall use its best endeavours to procure that as soon as
         practicable after the allotment of any Shares pursuant to the Plan
         application shall be made to The UK Listing Authority for admission of
         the Shares to the Official List and to the Listing Committee of The
         Hong Kong Stock Exchange for the listing of, and permission to deal in,
         the Shares and to a Listing Representative of the New York Stock
         Exchange for the listing of, and permission to deal in, the Shares.


9.   Adjustments

     (1) The number of Shares over which an Option is granted, the Share Price
         thereof and the limits in Rule 4 on the number of Shares issuable under
         the Plan shall be adjusted in such manner as the Committee shall
         determine (and which the Auditors shall confirm in writing to be in
         their opinion fair and reasonable) following any capitalisation issue,
         subdivision, consolidation or reduction of share capital and in respect
         of any discount element in any rights issue or other variation of share
         capital to the intent that (as nearly as may be without involving
         fractions of a Share or a Share Price calculated to more than two
         places of decimals) the Acquisition Price payable in respect of an
         Option shall remain unchanged but the number of Shares issuable under
         the Plan and any other employees' share scheme shall take account of
         any such event, PROVIDED that, save as provided in Rules 9(2) and (3),
         no adjustment made pursuant to this Rule 9(1) shall have the effect of
         reducing the Share Price below the nominal value of a Share.

     (2) Where an Option subsists over both issued and unissued Shares, an
         adjustment may be made under Rule 9(1) which would have the effect of
         reducing the Share Price to less than the nominal value of a Share
         provided that the reduction of the Share Price in relation to Options
         over both issued and unissued Shares can be made to the same extent.

     (3) Any adjustment made to the Share Price of unissued Shares which would
         have the effect of reducing the Share Price to less than the nominal
         value of a Share shall only be made if and to the extent that the
         Directors are authorised to capitalise from the reserves of the Company
         a sum equal to the amount by which the nominal value of the Shares in
         respect of which the Option is exercisable exceeds the adjusted Share
         Price. The Directors may apply such sum in paying up such amount on
         such Shares so that on the exercise of any Option in respect of which
         such a reduction shall have been made, the Directors shall capitalise
         such sum (if any) and apply the same in paying up such amount as
         aforesaid.

     (4) The Committee may take such steps as they may consider necessary to
         notify Option Holders of any adjustments made under Rule 9(1) and to
         call in, cancel, endorse, issue or re-issue any Option certificate
         consequent upon such adjustment.

10.  Administration

     (1) Notices or documents required to be given to an Eligible Employee or to
         an Option Holder shall either be delivered to him by hand or sent to
         him at his place of work or by first class post pre-paid at his last
         known home address according to the information provided by him.
         Notices sent by first class post shall be deemed to have been given on
         the day following the date of posting.

     (2) The Company may distribute to Option Holders copies of any notice or
         document sent by the Company to its shareholders generally.

     (3) The Company shall at all times keep available unissued Shares or shall
         ensure that sufficient issued Shares will be available as may be
         required to satisfy the exercise of all Options which have neither
         lapsed nor been exercised taking account of any other obligations of
         the Company to allot unissued Shares.

     (4) The Committee may make such regulations for the administration of the
         Plan as they deem fit, provided that no regulation shall be valid to
         the extent it is inconsistent with the Rules.

     (5) The decision of the Committee in any dispute relating to an Option, or
         the due exercise thereof, or any other matter in respect of the Plan,
         shall be final and conclusive subject to the determination of the
         Auditors when so required by Rule 9(1).

     (6) The costs of introducing and administering the Plan shall be borne by
         the Company.

11.  Alterations

     (1) The Committee may, in its absolute discretion, alter Part B of the
         Plan.

     (2) The Plan may be amended by the Committee in any way, provided that
         amendments which are to the material advantage of Option Holders
         (present or future) may only be made by or with the prior approval of
         The Hong Kong Stock Exchange and of an ordinary resolution of the
         Shareholders of the Company in general meeting unless they are minor
         amendments which the Committee considers necessary or desirable in
         order to benefit the administration of the Plan, or they are amendments
         to obtain or maintain favourable tax, exchange control or regulatory
         treatment of any Eligible Employee, rights to acquire Shares, Option
         Holders, or of any Participating Company.

     (3) Where any alteration would abrogate or adversely affect the subsisting
         rights of Option Holders it will not be effective unless such
         alteration is made:

         (a) with the consent in writing of such number of Option Holders as
             hold Options over 75 per cent of the shares which would be issued
             if all Options granted and subsisting were exercised and Shares
             issued; or

         (b) by a resolution at a meeting of Option Holders by a majority of not
             less than 75 per cent of the Option Holders who attend and vote
             either in person or by proxy. For the purposes of this Rule
             11(3)(b) the Option Holders shall be treated as the holders of a
             separate class of share capital and the provisions of the articles
             of association of the Company relating to class meetings shall
             apply mutatis mutandis.

     (4) Written notice of any amendment made in accordance with this Rule 11
         shall be given to all Option Holders.

12.  General

     (1) The Plan shall terminate on 26 May 2005 being the fifth anniversary of
         the date on which it is approved by the Company in general meeting or
         at any earlier time by resolution of the Directors. Termination of the
         Plan shall be without prejudice to the subsisting rights of Option
         Holders.

     (2) If an Eligible Employee or an Option Holder shall cease for any reason
         including as a result of being wrongfully or unfairly dismissed to be
         in the employment of the company or any of its Subsidiaries, he shall
         not be entitled, by way of compensation for loss of office or
         employment or otherwise howsoever, to any sum or any benefit to
         compensate him for any consequential loss or curtailment of any right
         or benefit accrued or in prospect under the Plan, and any such loss or
         curtailment shall not form part of any claim for damages for breach of
         any contract of employment of any Eligible Employee or Option Holder or
         compensation for unfair dismissal or any other claim whatsoever.

13.  Governing Law

     This Plan is governed by and shall be construed in accordance with the laws
     of England.

<PAGE>
                          HSBC Group Share Option Plan

                              PERFORMANCE SCHEDULE
   [To be applied to all grants unless the Committee exercises its discretion
     to determine performance conditions applicable to local jurisdictions]


1.   PERFORMANCE TARGETS

     This schedule sets out the Performance Conditions referred to in Rule 1 of
     the Rules of the HSBC Group Share Option Plan ("the Plan").

     The Options or a proportion of them shall become exercisable where the
     Committee has determined that the Company's performance during the
     Performance Period has shown sustained growth; and FN1

     1.1  in relation to a grant of an Option equal to or less than 100% of
          Earnings Options shall become exercisable if the Total Shareholder
          Return achieved by the Company in the Performance Period is equal to
          or greater than that of the mean of the Comparator Group ("the Minimum
          Performance Measure"). If the Minimum Performance Measure is satisfied
          on the third, fourth or fifth anniversary of the Date of Grant of the
          Options, Options shall become exercisable immediately. If the Minimum
          Performance Measure is not satisfied on the third anniversary
          following the Date of Grant of the Options, but is satisfied on the
          fourth anniversary following the Date of Grant of the Option, Options
          shall become exercisable immediately. If the Minimum Performance
          Measure is not satisfied on the fourth anniversary following the Date
          of Grant of the Options, but is satisfied on the fifth anniversary
          following the Date of Grant of the Option, Options shall become
          exercisable immediately.

     1.2  in relation to a grant of an Option in excess of 100% of Earnings
          Options shall become exercisable if the Total Shareholder Return
          achieved by the Company in the Performance Period is within the upper
          quartile of the ranked list of the Comparator Group ("the Superior
          Performance Measure") subject to the following provisions:

          a)  if the Superior Performance Measure is satisfied on the third,
              fourth or fifth anniversary of the Date of Grant of the Option,
              then Options shall become exercisable immediately; and

          b)  on the first date, being the third, fourth or fifth anniversary of
              the Date of Grant, that the Total Shareholder Return achieved by
              the Company in the Performance Period is equal to the Minimum
              Performance Measure but less than the Superior Performance
              Measure, the greater of 50% of the Option and 100% of Salary will
              be exercisable. The balance of the Option will become exercisable
              pro rata based on Total Shareholder Return performance between the
              Minimum Performance Measure and the Superior Performance Measure
              on a straight line basis and to the extent that the Superior
              Performance Measure has not been achieved the Option shall lapse
              pro rata.

     1.3  If the Minimum Performance Measure is not satisfied at the end of the
          fifth anniversary following the Date of Grant, the Option shall lapse
          and if the Superior Performance Measure is not satisfied at that time
          the Options shall lapse pro rata.

-------------
(FN1) However, in relation to the grant of Options under Part A of the Plan
where rules 5(5), 5(6) and 6 (2) apply the words set out above ".....the
Committee .....sustained growth ; and" shall not apply.


2.   DEFINITIONS

     2.1  For the purposes of the Performance Condition words defined in the
          Rules of the Plan have the same meaning herein.

     2.2  The following additional definitions relate to the Performance
          Condition:


         "Comparator Group"        Means a group of banks involved in similar
                                   activities to the Company, those of a similar
                                   market size to the Company and also, banks in
                                   general. Within the overall benchmark, these
                                   groups are weighted as follows:

                                     a)  50% - nine banks identified as having
                                         similar activities to the Company;

                                     b)  25% - twenty other banks comprising;
                                         the five largest banks from each of the
                                         United States, the United Kingdom,
                                         continental Europe and the Far East;

                                     c)  25% - other world banks as defined by
                                         the Morgan Stanley Capital
                                         International World Index (excluding
                                         those in the above two categories)

                                     PROVIDED that the Committee shall be
                                     entitled in its absolute discretion to make
                                     adjustments to the list when necessary to
                                     take account of mergers, acquisitions or
                                     other such events and specifically in
                                     determining the ranking list ;

         "Earnings"                  means an Eligible Employee's annual rate of
                                     salary on the Date of Grant of an Option,
                                     together with any bonus paid to him for the
                                     previous year;

         "Performance Period"        means a period of three, four or five years
                                     commencing on the first day of the
                                     accounting period in which the Date of
                                     Grant falls as defined in 1 above;


         "Total Shareholder Return"  The growth in Share value combined with
                                     dividend income during the relevant period.
                                     In calculating the Total Shareholder
                                     Return, dividend income is assumed to be
                                     reinvested in the relevant underlying
                                     shares.

3.   VARIATIONS

     When events have happened which cause the Committee to consider that the
     Performance Condition(s) have become unfair or impractical, it may, in its
     discretion amend or substitute the Performance Condition(s).

4.   DISPUTES

     In the event of any dispute as to whether or not the Option has vested or
     as to the number of Shares in respect of which it has vested the
     Committee's decision shall be final and binding for all purposes.