HSBC Bank Canada has entered into an agreement with a group of underwriters co-led by HSBC Securities (Canada) Inc. and RBC Dominion Securities Inc. to issue a new series of preferred shares.

The bank said it will issue 6 million Non-Cumulative Class 1 Preferred Shares Series D at a price of $25 per share.

HSBC Bank Canada has also granted the underwriters the option, exercisable in whole or in part up to 48 hours prior to closing, to purchase up to an additional 1 million Preferred Shares Series D at the issue price.

Should the underwriters’ option be fully exercised, the total gross proceeds of the financing will be $175 million.

Proceeds from the offering will be used for general corporate purposes and to enhance the bank’s Tier 1 Capital base.

Series D will entitle the holders to non-cumulative preferential quarterly dividends of 31.25¢ per share, to yield 5.00% annually.

Subject to regulatory approval, on or after Dec. 31, 2010 the bank may redeem Series D in whole or in part at a declining premium.

The transaction is subject to regulatory approval and is expected to close by Nov. 9, 2005.

Series D has been provisionally rated “P-1 (Low)” (Canadian national scale) and “A-” (global scale) by Standard & Poor’s Ratings Services and “Pfd-1 (low) n” by Dominion Bond Rating Service Ltd.