Today’s Hot Topics

1. Financial Services Update Global Banking and International AssigneesDoug Gallardo Bob WallaceOctober 4, 2010Forum for Expatriate ManagementNew York, New York

2. Today’s Hot Topics • Financial Challenges Facing Global Companies and their International Assignees • Regulatory Environment • Current Financial Turbulence • Changing Corporate Policies • Case Studies • 2010 Expat Explorer Survey- Expat Economics • Questions

3. Challenges Facing Global Companies and Their International Assignees • Physical Separation- changes elements of compensation and complicates pay delivery and reconciliation • Ensuring international assignee satisfaction and productivity • Reducing administrative overhead (doing more with less) • Timely, convenient access to compensation • Assignee’s ability to remotely access and move funds globally • Access to home and host country banking and credit facilities

4. Regulatory Environment USA PATRIOT ACT, Section 326 • Regulation: “The Act expands the authority of the Secretary of the Treasury to regulate the activities of U.S. financial institutions, particularly their relations with foreign individuals and entities.” • Rule 31 C.F.R. 103.121 (the cost factor) • Customer Identification Program (CIP) • Financial Recordkeeping and Reporting Regulations • (“Bank Secrecy Act”)

5. Regulatory Environment • Increased oversight, due diligence, record keeping and reporting requirements • Who is impacted? • Banks and trust companies • Savings associations • Credit unions • Securities brokers and dealers • Futures merchants and brokers • Mutual funds

6. Regulatory Environment Who else is impacted…and how? • International assignees • Banks exiting the international consumer business • Difficulties establishing host country banking relationships • Host country credit facilities • Cross border funds transfers • Financing US Properties • Companies: Changing Corporate Policies

7. Corporate and International Assignee Needs • Corporate • Convenient, reliable global payroll delivery • Reduces administrative time and costs • Flexible, customized programs • Low cost addition to international assignee benefits package • Ability to open bank accounts and credit cards for inbound US assignees • International Assignee • Reliable, convenient access to pay • Convenient, worldwide access to banking services • Dedicated International banking team • Flexible Programs • Ability to open home and host bank accounts remotely

8. Case Studies US Inbound Assignees Issues: no SS#, no credit history…you don’t exist!!! Challenges: can’t get bank account, credit card, mortgage, car loan… Traditional Expat, Localizing, International Transfer/Local Hire Solutions.... US Outbound Assignees Issues: delivering compensation to host location Challenges: remote access to US bank account functionality, establishing host country bank accounts and credit,… Overseas address/IP address Solutions….

9. 2010 Expat Explorer Survey Now in its third year, Expat Explorer surveyed more than 4,100 expats from over 100 countries, an increase of close to 1,000 additional respondents on 2009 making it once again the largest global survey of its kind. Expat Economicsrankings features 25 countries in 2010, determining each location’s economic score based on three main elements: • Annual income • Monthly disposable income in excess of US$3,000 • A measure of defined luxuries (such as owning more than one property or going on more luxurious holidays)

10. 2010 Expat Explorer Survey Emerging economies remain on top for expat finances • Russia home to wealthiest expats, followed by the Middle East • Wealth gap continues to widen between the East and Mainland Europe • BRIC countries emerging as expat hotspots • Expats repatriating a significant proportion of wealth • Stresses of Euro zone woes reflected in expat sentiment

11. 2010 Expat Explorer Survey The Wealth Gap • Expats in Russia remain the wealthiest in the world, with over one-third (36%) of those surveyed earning over $250,000. Both Singapore (32%) and Bermuda (27%) also have a much higher proportion of expats with an annual income of over $250,000, significantly higher than the world average of 13%. • Mainland Europe, however, dominates the bottom five positions on the league table.  Almost two-thirds (62%) of surveyed expats living in Spain earn below $60,000, as do almost half of the expats living in France (47%) the Netherlands (47%) and Germany (45%). This is much higher than the global average of only one quarter (26%) of expats who earn less than $60,000 and can largely be explained by the high number of expats who choose mainland Europe as a retirement destination.  The only other country to join mainland Europe in the bottom quartile was South Africa, where around one-third (36%) of expats earn less than $60,000.

12. 2010 Expat Explorer Survey BRIC Countries appear to be emerging expat hotspots • Scores for expats based in the BRIC (Brazil, Russia, India and China) countries were higher than average when looking at a number of economic factors including earnings, career development, improved economic outlook and the ability to save. • While close to two-thirds (63%) of all expats surveyed said they are earning more in their host country than in their country of origin, expats based in BRIC countries scored much higher (Brazil, 69%; Russia, 82%; India, 70% and China, 75%). In addition, with the exception of Brazil which fell slightly under the overall average, expats in BRIC countries were also more likely to see increased career opportunities within their host country (64% overall compared with; Russia, 82%; India and China, 70%).

13. 2010 Expat Explorer Survey Expat Finances remain strong and many are repatriating their wealth • Finances amongst expats in general remained extremely positive, with the majority of those surveyed saving more since moving abroad and very few accumulating more debt. Two-thirds (66%) of expats have more disposable income in their new country and those in the defined wealth hotspots are benefiting most from the increase in their personal finances. • Expats are also still saving a greater amount whilst working abroad and one in five (20%) are able to pay off more debt than when they lived in their home country. Only 5% of expats surveyed overall are now accumulating more debt. • Although expats tend to use a large variety of vehicles to save and invest, a large proportion of wealth in longer term investments is repatriated, the most common being property

14. 2010 Expat Explorer Survey Expats and the economy • Almost half (47%) of all the expats surveyed believed that the economy in their current country has deteriorated since the start of 2009. • This was in contrast to the economies that have escaped the worst of the economic downturn, with a smaller number of expats living in the emerging nations of Russia (45%), India (16%) and China (9%) feeling negative about their respective host economies. • Expats in these regions were also much more likely to view the economy as having improved over the last 12 months • Of those expats who revealed that the economic situation in their country had either deteriorated or remained the same, a vast majority (87%) did not believe that they would be relocating.

15. QUESTIONS

16. For more details or to receive the Expat Explorer Survey reports, please contact: Doug Gallardo Vice President Tel: 212-525-5924 Email: douglas.x.gallardo@us.hsbc.com OR Bob Wallace Vice President Tel 212-380-3442 Email: robert.s.wallace@us.hsbc.com www.expatbanking.hsbcnet.com