REG - HSBC Holdings PLC - Annual Financial Report - Part 10
21/02/2023 16:45
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RNS Number : 5861Q HSBC Holdings PLC 21 February 2023
15 Derivatives
Notional contract amounts and fair values of derivatives by product contract
type held by HSBC
Notional contract amount Fair value - Assets Fair value - Liabilities
Trading Hedging Trading Hedging Total Trading Hedging Total
$m $m $m $m $m $m $m $m
Foreign exchange 8,434,453 38,924 122,203 525 122,728 123,088 166 123,254
Interest rate 15,213,232 276,589 285,438 5,066 290,504 287,877 3,501 291,378
Equities 570,410 - 9,325 - 9,325 9,176 - 9,176
Credit 183,995 - 1,091 - 1,091 1,264 - 1,264
Commodity and other 78,413 - 1,485 - 1,485 1,679 - 1,679
Gross total fair values 24,480,503 315,513 419,542 5,591 425,133 423,084 3,667 426,751
Offset (Note 31) (140,987) (140,987)
At 31 Dec 2022 24,480,503 315,513 419,542 5,591 284,146 423,084 3,667 285,764
Foreign exchange 7,723,034 43,839 79,801 1,062 80,863 77,670 207 77,877
Interest rate 14,470,539 162,921 151,631 1,749 153,380 146,808 966 147,774
Equities 659,142 - 12,637 - 12,637 14,379 - 14,379
Credit 190,724 - 2,175 - 2,175 3,151 - 3,151
Commodity and other 74,159 - 1,205 - 1,205 1,261 - 1,261
Gross total fair values 23,117,598 206,760 247,449 2,811 250,260 243,269 1,173 244,442
Offset (Note 31) (53,378) (53,378)
At 31 Dec 2021 23,117,598 206,760 247,449 2,811 196,882 243,269 1,173 191,064
The notional contract amounts of derivatives held for trading purposes and
derivatives designated in hedge accounting relationships indicate the nominal
value of transactions outstanding at the balance sheet date. They do not
represent amounts at risk.
Derivative assets and liabilities increased during 2022, driven by yield curve
movements and changes in foreign exchange rates.
Notional contract amounts and fair values of derivatives by product contract
type held by HSBC Holdings with subsidiaries
Notional contract amount Assets Liabilities
Trading Hedging Trading Hedging Total Trading Hedging Total
$m $m $m $m $m $m $m $m
Foreign exchange 60,630 - 502 - 502 1,683 - 1,683
Interest rate 34,322 81,873 2,386 913 3,299 826 4,413 5,239
At 31 Dec 2022 94,952 81,873 2,888 913 3,801 2,509 4,413 6,922
Foreign exchange 36,703 - 384 - 384 377 - 377
Interest rate 35,970 45,358 712 1,715 2,427 769 74 843
At 31 Dec 2021 72,673 45,358 1,096 1,715 2,811 1,146 74 1,220
Use of derivatives
For details regarding the use of derivatives, see page 220 under 'Market
risk'.
Trading derivatives
Most of HSBC's derivative transactions relate to sales and trading activities.
Sales activities include the structuring and marketing of derivative products
to customers to enable them to take, transfer, modify or reduce current or
expected risks. Trading activities include market-making and risk management.
Market-making entails quoting bid and offer prices to other market
participants for the purpose of generating revenue based on spread and volume.
Risk management activity is undertaken to manage the risk arising from client
transactions, with the principal purpose of retaining client margin. Other
derivatives classified as held for trading include non-qualifying hedging
derivatives.
Substantially all of HSBC Holdings' derivatives entered into with subsidiaries
are managed in conjunction with financial liabilities designated at fair
value.
Derivatives valued using models with unobservable inputs
The difference between the fair value at initial recognition (the transaction
price) and the value that would have been derived had valuation techniques
used for subsequent measurement been applied at initial recognition, less
subsequent releases, is as shown in the following table:
Unamortised balance of derivatives valued using models with significant
unobservable inputs
2022 2021
$m $m
Unamortised balance at 1 Jan
106 104
Deferral on new transactions
191 311
Recognised in the income statement during the year:
(192) (308)
- amortisation
(112) (177)
- subsequent to unobservable inputs becoming observable
(3) (4)
- maturity, termination or offsetting derivative
(77) (127)
Exchange differences
(8) (1)
Unamortised balance at 31 Dec(1)
97 106
1 This amount is yet to be recognised in the consolidated income
statement.
1
Hedge accounting derivatives
HSBC applies hedge accounting to manage the following risks: interest rate and
foreign exchange risks. Further details on how these risks arise and how they
are managed by the Group can be found in the 'Risk review'.
Hedged risk components
HSBC designates a portion of cash flows of a financial instrument or a group
of financial instruments for a specific interest rate or foreign currency risk
component in a fair value or cash flow hedge. The designated risks and
portions are either contractually specified or otherwise separately
identifiable components of the financial instrument that are reliably
measurable. Risk-free or benchmark interest rates generally are regarded as
being both separately identifiable and reliably measurable, except for the
Interest Rate Benchmark Reform Phase 2 transition where HSBC designates
alternative benchmark rates as the hedged risk which may not have been
separately identifiable upon initial designation, provided HSBC reasonably
expects it will meet the requirement within 24 months from the first
designation date. The designated risk components account for a significant
portion of the overall changes in fair value or cash flows of the hedged
items.
HSBC uses net investment hedges to hedge the structural foreign exchange risk
related to net investments in foreign operations including subsidiaries and
branches whose functional currencies are different from that of the parent.
When hedging with foreign exchange forward contracts, the spot rate component
of the foreign exchange risk is designated as the hedged risk.
Fair value hedges
HSBC enters into fixed-for-floating-interest-rate swaps to manage the exposure
to changes in fair value caused by movements in market interest rates on
certain fixed-rate financial instruments that are not measured at fair value
through profit or loss, including debt securities held and issued.
HSBC hedging instrument by hedged risk
Hedging instrument
( ) Carrying amount ( )
Notional amount(1) Assets Liabilities Balance sheet presentation Change in fair value(2)
Hedged risk $m $m $m $m
Interest rate(3) 162,062 Derivatives
4,973 2,573 4,064
At 31 Dec 2022 162,062
4,973 2,573 4,064
Interest rate(3) Derivatives
90,556 1,637 1,410 1,330
At 31 Dec 2021
90,556 1,637 1,410 1,330
1 The notional contract amounts of derivatives designated in qualifying
hedge accounting relationships indicate the nominal value of transactions
outstanding at the balance sheet date. They do not represent amounts at risk.
2 Used in effectiveness testing, which uses the full fair value change of
the hedging instrument not excluding any component.
3 The hedged risk 'interest rate' includes inflation risk.
HSBC hedged item by hedged risk
Hedged item Ineffectiveness
Carrying amount Accumulated fair value hedge adjustments included in carrying amount(2) Change in fair value(1) Recognised in profit and loss
Assets Liabilities Assets Liabilities Balance sheet presentation Profit and loss presentation
Hedged risk $m $m $m $m $m $m
Interest rate(3) 82,792 (5,100) Financial investments measured at fair value through other comprehensive (8,005) (59) Net income from financial instruments held for trading or managed on a fair
income value basis
3,415 (210) Loans and advances to customers (233)
519 (18) Reverse repos (17)
49,180 (2,006) Debt securities in issue 4,138
83 - Deposits by banks (5)
At 31 Dec 2022 86,726 49,263 (5,328) (2,006) (4,122) (59)
Interest rate(3) 68,059 1,199 Financial assets designated and otherwise mandatorily measured at fair value (1,932) (36) Net income from financial instruments held for trading or managed on a fair
through other comprehensive income value basis
2 (3) Loans and advances to banks (3)
3,066 9 Loans and advances to customers (41)
14,428 992 Debt securities in issue 609
86 1 Deposits by banks 1
At 31 Dec 2021 71,127 14,514 1,205 993 (1,366) (36)
1 Used in effectiveness testing, which comprise an amount attributable to
the designated hedged risk that can be a risk component.
2 The accumulated amount of fair value adjustments remaining in the
statement of financial position for hedged items that have ceased to be
adjusted for hedging gains and losses were assets of $252m (2021: $1,061m) for
FVOCI assets and liabilities of $916m (2021: $15m) for debt issued.
3 The hedged risk 'interest rate' includes inflation risk.
HSBC Holdings hedging instrument by hedged risk
Hedging instrument
Carrying amount
Notional amount(1,4) Assets Liabilities Balance sheet presentation Change in fair value(2)
Hedged risk $m $m $m $m
Interest rate(3) 81,873 4,413 Derivatives
913 (5,599)
At 31 Dec 2022 81,873 4,413
913 (5,599)
Interest rate(3) 45,358 1,715 Derivatives
74 (1,515)
At 31 Dec 2021 45,358 1,715
74 (1,515)
1 The notional contract amounts of derivatives designated in qualifying
hedge accounting relationships indicate the nominal value of transactions
outstanding at the balance sheet date; they do not represent amounts at risk.
2 Used in effectiveness testing; comprising the full fair value change of
the hedging instrument not excluding any component.
3 The hedged risk 'interest rate' includes foreign exchange risk.
4 The notional amount of non-dynamic fair value hedges is equal to
$81,873m (2021: $45,358m), of which the weighted-average maturity date is June
2028 and the weighted-average swap rate is 2.33% (2021: 1.30%). The majority
of these hedges are internal to the Group.
HSBC Holdings hedged item by hedged risk
Hedged item Ineffectiveness
Carrying amount Accumulated fair value hedge adjustments included in carrying amount(2) Change in fair value(1) Recognised in
profit and loss
Assets Liabilities Assets Liabilities Balance sheet presentation Profit and loss
presentation
Hedged risk $m $m $m $m $m $m
Interest rate(3) 68,223 (3,829) Debt securities 6,258 (34) Net income from financial instruments held for trading or managed on a fair
value basis
in issue
6,812 (789) Loans and advances to banks (693)
At 31 Dec 2022 6,812 68,223 (789) (3,829) 5,565 (34)
Interest rate(3) 39,154 1,408 Debt securities 1,599 Net income from financial instruments held for trading or managed on a fair
in issue (21) value basis
7,863 (104) Loans and advances to banks
(104)
At 31 Dec 2021 7,863 39,154 (104) 1,408 1,495
(21)
1 Used in effectiveness testing; comprising amount attributable to the
designated hedged risk that can be a risk component.
2 The accumulated amount of fair value adjustments remaining in the
statement of financial position for hedged items that have ceased to be
adjusted for hedging gains and losses were liabilities of $971m (2021: $54.4m)
for debt issued.
3 The hedged risk 'interest rate' includes foreign exchange risk.
Sources of hedge ineffectiveness may arise from basis risk, including but not
limited to the discount rates used for calculating the fair value of
derivatives, hedges using instruments with a non-zero fair value, and notional
and timing differences between the hedged items and hedging instruments.
For some debt securities held, HSBC manages interest rate risk in a dynamic
risk management strategy. The assets in scope of this strategy are
high-quality fixed-rate debt securities, which may be sold to meet liquidity
and funding requirements.
The interest rate risk of the HSBC fixed-rate debt securities issued is
managed in a non-dynamic risk management strategy.
Cash flow hedges
HSBC's cash flow hedging instruments consist principally of interest rate
swaps and cross-currency swaps that are used to manage the variability in
future interest cash flows of non-trading financial assets and liabilities,
arising due to changes in market interest rates and foreign-currency basis.
HSBC applies macro cash flow hedging for interest rate risk exposures on
portfolios of replenishing current and forecasted issuances of non-trading
assets and liabilities that bear interest at variable rates, including rolling
such instruments. The amounts and timing of future cash flows, representing
both principal and interest flows, are projected for each portfolio of
financial assets and liabilities on the basis of their contractual terms and
other relevant factors, including estimates of prepayments and defaults. The
aggregate cash flows representing both principal balances and interest cash
flows across all portfolios are used to determine the effectiveness and
ineffectiveness. Macro cash flow hedges are considered to be dynamic hedges.
HSBC also hedges the variability in future cash flows on foreign-denominated
financial assets and liabilities arising due to changes in foreign exchange
market rates with cross-currency swaps, which are considered dynamic hedges.
Hedging instrument by hedged risk
Hedging instrument Hedged item Ineffectiveness
Carrying amount Change in fair value(2) Change in fair value(3) Recognised in profit and loss Profit and loss presentation
Notional amount(1) Assets Liabilities Balance sheet presentation
Hedged risk $m $m $m $m $m $m
Foreign currency 8,781 418 166 Derivatives 659 659 - Net income from
financial instruments
held for trading or
managed on a fair
value basis
Interest rate 114,527 93 950 Derivatives (4,997) (4,973) (24)
At 31 Dec 2022 123,308 511 1,116 (4,338) (4,314) (24)
Foreign currency 17,930 827 207 Derivatives 987 987 - Net income from financial instruments held for trading or managed on a fair
value basis
Interest rate 72,365 112 217 Derivatives (519) (500) (19)
At 31 Dec 2021 90,295 939 424 468 487 (19)
1 The notional contract amounts of derivatives designated in qualifying
hedge accounting relationships indicate the nominal value of transactions
outstanding at the balance sheet date. They do not represent amounts at risk.
2 Used in effectiveness testing; comprising the full fair value change of
the hedging instrument not excluding any component.
3 Used in effectiveness assessment; comprising amount attributable to the
designated hedged risk that can be a risk component.
Sources of hedge ineffectiveness may arise from basis risk, including but not
limited to timing differences between the hedged items and hedging instruments
and hedges using instruments with a non-zero fair value.
Reconciliation of equity and analysis of other comprehensive income by risk
type
Interest rate Foreign currency
$m $m
Cash flow hedging reserve at 1 Jan 2022 8
(205)
Fair value gains/(losses) (4,973)
659
Fair value (gains)/losses reclassified from the cash flow hedge reserve to the
income statement in respect of:
Hedged items that have affected profit or loss(1) 325
(926)
Income taxes 1,123
28
Others 130
23
Cash flow hedging reserve at 31 Dec 2022 (3,387)
(421)
Cash flow hedging reserve at 1 Jan 2021 495
(37)
Fair value gains/(losses) (500)
987
Fair value (gains)/losses reclassified from the cash flow hedge reserve to the
income statement in respect of:
Hedged items that have affected profit or loss (217)
(1,177)
Income taxes 185
25
Others 45
(3)
Cash flow hedging reserve at 31 Dec 2021 8
(205)
1 Hedged items that have affected profit or loss are primarily recorded
within interest income.
Net investment hedges
The Group applies hedge accounting in respect of certain net investments in
non-US dollar functional currency foreign operations for changes in spot
exchange rates only. Hedging could be undertaken for Group structural exposure
to changes in the US dollar to foreign currency exchange rates using forward
foreign exchange contracts or by financing with foreign currency borrowings.
The aggregate positions at the reporting date and the performance indicators
of both live and de-designated hedges are summarised below. There were no
amounts reclassified to the profit and loss account during the accounting
periods presented.
Hedges of net investment in foreign operations
Carrying value Nominal Amounts recognised in OCI Hedge ineffectiveness recognised in income statement
amount
Derivative Derivative liabilities
assets
Description of hedged risk $m $m $m $m $m
2022
Pound sterling-denominated structural foreign exchange 264 - 14,000 1,447
-
Swiss franc-denominated structural foreign exchange - (21) 727 111
-
Hong Kong dollar-denominated structural foreign exchange - (19) 4,597 (2)
-
Other structural foreign exchange(1) - (117) 10,819 375
-
Total 264 (157) 30,143 1,931
-
2021
Pound sterling-denominated structural foreign exchange 229 - 15,717
(126) -
Swiss franc-denominated structural foreign exchange - 809 101
(8) -
Hong Kong dollar-denominated structural foreign exchange 7 - 4,992 5
-
Other structural foreign exchange(1) 7 - 4,387 6
-
Total 243 25,906
(8) (14) -
1 Other currencies include New Taiwan dollar, Singapore dollar, Canadian
dollar, Omani rial, South Korean won, Indian rupee, Indonesian rupiah, euro,
Mexican peso, Qatari riyal, Kuwaiti dinar, Saudi riyal and United Arab
Emirates dirham.
Interest rate benchmark reform: Amendments to IFRS 9 and IAS 39 'Financial
Instruments'
HSBC has applied both the first set of amendments ('Phase 1') and the second
set of amendments ('Phase 2') to IFRS 9 and IAS 39 applicable to hedge
accounting. The hedge accounting relationships that are affected by Phase 1
and Phase 2 amendments are presented in the balance sheet as 'Financial assets
designated and otherwise mandatorily measured at fair value through other
comprehensive income', 'Loans and advances to customers', 'Debt securities in
issue' and 'Deposits by banks'. The notional value of the derivatives impacted
by the Ibor reform, including those designated in hedge accounting
relationships, is disclosed on page 138 in the section 'Financial instruments
impacted by the Ibor reform'. For further details on Ibor transition, see 'Top
and emerging risks' on page 137.
During 2022, the Group transitioned all of its hedging instruments referencing
sterling Libor, European Overnight Index Average rate ('Eonia') and Japanese
yen Libor. The Group also transitioned some of the hedging instruments
referencing US dollar Libor. There is no significant judgement applied for
these benchmarks to determine whether and when the transition uncertainty has
been resolved.
The most significant Ibor benchmark in which the Group continues to have
hedging instruments is US dollar Libor. It is expected that the transition out
of US dollar Libor hedging derivatives will be completed by the second quarter
of 2023. These transitions do not necessitate new approaches compared with any
of the mechanisms used so far for transition and it will not be necessary to
change the transition risk management strategy.
For some of the Ibors included under the 'Other' header in the table below,
judgement has been needed to establish whether a transition is required, since
there are Ibor benchmarks that are subject to computation methodology
improvements and insertion of fallback provisions without full clarity being
provided by their administrators on whether these Ibor benchmarks will be
demised.
The notional amounts of interest rate derivatives designated in hedge
accounting relationships do not represent the extent of the risk exposure
managed by the Group but they are expected to be directly affected by
market-wide Ibor reform and in scope of Phase 1 amendments and are shown in
the table below. The cross-currency swaps designated in hedge accounting
relationships and affected by Ibor reform are not significant and have not
been presented below.
Hedging instrument impacted by Ibor reform
Hedging instrument
Impacted by Ibor reform Not impacted by Ibor reform Notional
amount(1)
€(2) £ $ Other(3) Total
$m $m $m $m $m $m $m
Fair value hedges 12,756 - 2,015 12,643 27,414 134,648 162,062
Cash flow hedges 8,865 - - 27,830 36,695 77,832 114,527
At 31 Dec 2022 21,621 - 2,015 40,473 64,109 212,480 276,589
Fair value hedges 6,178 - 18,525 6,615 31,318 59,238 90,556
Cash flow hedges 7,954 - 100 8,632 16,686 55,679 72,365
At 31 Dec 2021 14,132 - 18,625 15,247 48,004 114,917 162,921
1 The notional contract amounts of interest rate derivatives designated in
qualifying hedge accounting relationships indicate the nominal value of
transactions outstanding at the balance sheet date and they do not represent
amounts at risk.
2 The notional contract amounts of euro interest rate derivatives impacted
by Ibor reform mainly comprise hedges with a Euribor benchmark, which are
'Fair value hedges' of $12,756m (31 December 2021: $6,178m) and 'Cash flow
hedges' of $8,865m (31 December 2021: $7,954m).
3 Other benchmarks impacted by Ibor reform comprise mainly of Canadian
dollar offered rate ('CDOR'), Hong Kong interbank offered rate ('HIBOR') and
Mexican interbank equilibrium interest rate ('TIIE') related derivatives.
3
Hedging instrument impacted by Ibor reform held by HSBC Holdings
Hedging instrument
Impacted by Ibor reform Not impacted by Ibor reform Notional amount
€ £ $ Other Total
$m $m $m $m $m $m $m
Fair value hedges 15,210 - 2,000 1,336 18,546 63,327 81,873
At 31 Dec 2022 15,210 - 2,000 1,336 18,546 63,327 81,873
Fair value hedges 9,944 - 20,035 1,458 31,437 13,921 45,358
At 31 Dec 2021 9,944 - 20,035 1,458 31,437 13,921 45,358
16 Financial investments
Carrying amount of financial investments
2022 2021
$m $m
Financial investments measured at fair value through other comprehensive 256,817 348,972
income
- treasury and other eligible bills 86,749 100,158
- debt securities 168,264 246,998
- equity securities 1,696 1,770
- other instruments 108 46
Debt instruments measured at amortised cost 168,747 97,302
- treasury and other eligible bills 35,282 21,634
- debt securities 133,465 75,668
At 31 Dec 425,564 446,274
Equity instruments measured at fair value through other comprehensive income
Fair value Dividends recognised
Type of equity instruments $m $m
Investments required by central institutions 690 24
Business facilitation 954 28
Others 52 2
At 31 Dec 2022 1,696 54
Investments required by central institutions 766 17
Business facilitation 954 24
Others 50 3
At 31 Dec 2021 1,770 44
Weighted average yields of investment debt securities
Up to 1 1 to 5 5 to 10 years Over 10 years
year years
Yield Yield Yield Yield
% % % %
Debt securities measured at fair value through other comprehensive income
US Treasury 1.0 1.3 1.3 2.3
US Government agencies 4.7 0.9 3.2 2.5
US Government-sponsored agencies 1.1 1.7 2.1 1.7
UK Government 0.5 0.8 0.4 1.3
Hong Kong Government 1.3 1.6 1.7 -
Other governments 2.3 3.0 2.9 3.7
Asset-backed securities 6.7 0.2 2.7 2.4
Corporate debt and other securities 3.4 1.8 2.5 2.2
Debt securities measured at amortised cost
US Treasury 10.2 3.4 3.8 2.8
US Government agencies - 2.9 7.2 3.2
US Government-sponsored agencies 2.9 2.4 3.2 3.3
UK Government - - 0.7 0.9
Hong Kong Government 1.9 3.8 2.2 4.5
Other governments 2.1 4.2 3.6 3.8
Asset-backed securities 4.0 4.7 - 7.7
Corporate debt and other securities 3.2 3.2 3.3 4.0
The maturity distributions of ABSs are presented in the above table on the
basis of contractual maturity dates. The weighted average yield for each range
of maturities is calculated by dividing the annualised interest income for the
year ended 31 December 2022 by the book amount of debt securities at that
date. The yields do not include the effect of related derivatives.
HSBC Holdings
HSBC Holdings carrying amount of financial investments
2022 2021
$m $m
Debt instruments measured at amortised cost
- treasury and other eligible bills 12,796 19,508
- debt securities 6,670 6,686
At 31 Dec 19,466 26,194
Weighted average yields of investment debt securities
Up to 1 1 to 5 5 to 10 years Over 10 years
year years
Yield Yield Yield Yield
% % % %
Debt securities measured at amortised cost
US Treasury 0.3 2.8 - -
The weighted average yield for each range of maturities is calculated by
dividing the annualised interest income for the year ended 31 December 2022
by the book amount of debt securities at that date. The yields do not include
the effect of related derivatives.
17 Assets pledged, collateral received and assets transferred
Assets pledged(1)
Financial assets pledged as collateral
2022 2021
$m $m
Treasury bills and other eligible securities 18,364 9,613
Loans and advances to banks 10,198 412
Loans and advances to customers 27,627 55,370
Debt securities 60,542 66,629
Equity securities 26,902 34,472
Other 67,576 45,396
Assets pledged at 31 Dec 211,209 211,892
Assets pledged as collateral include all assets categorised as encumbered in
the disclosure on page 89 of the Pillar 3 Disclosures at 31 December 2022,
except for assets held for sale.
The amount of assets pledged to secure liabilities may be greater than the
book value of assets utilised as collateral. For example, in the case of
securitisations and covered bonds, the amount of liabilities issued plus
mandatory over-collateralisation is less than the book value of the pool of
assets available for use as collateral. This is also the case where assets are
placed with a custodian or a settlement agent that has a floating charge over
all the assets placed to secure any liabilities under settlement accounts.
These transactions are conducted under terms that are usual and customary for
collateralised transactions including, where relevant, standard securities
lending and borrowing, repurchase agreements and derivative margining. HSBC
places both cash and non-cash collateral in relation to derivative
transactions.
Hong Kong currency notes in circulation are secured by the deposit of funds in
respect of which the Hong Kong Government certificates of indebtedness are
held.
Financial assets pledged as collateral which the counterparty has the right to
sell or repledge
2022 2021
$m $m
Trading assets 56,894 69,719
Financial investments 27,841 12,416
At 31 Dec 84,735 82,135
Collateral received(1)
The fair value of assets accepted as collateral relating primarily to standard
securities lending, reverse repurchase agreements, swaps of securities and
derivative margining that HSBC is permitted to sell or repledge in the absence
of default was $449,896m (2021: $476,455m). The fair value of any such
collateral sold or repledged was $228,245m (2021: $271,582m).
HSBC is obliged to return equivalent securities. These transactions are
conducted under terms that are usual and customary to standard securities
lending, reverse repurchase agreements and derivative margining.
Assets transferred(1)
The assets pledged include transfers to third parties that do not qualify for
derecognition, notably secured borrowings such as debt securities held by
counterparties as collateral under repurchase agreements and equity securities
lent under securities lending agreements, as well as swaps of equity and debt
securities. For secured borrowings, the transferred asset collateral continues
to be recognised in full while a related liability, reflecting the Group's
obligation to repurchase the assets for a fixed price at a future date, is
also recognised on the balance sheet.
Where securities are swapped, the transferred asset continues to be recognised
in full. There is no associated liability as the non-cash collateral received
is not recognised on the balance sheet. The Group is unable to use, sell or
pledge the transferred assets for the duration of the transaction, and remains
exposed to interest rate risk and credit risk on these pledged assets. With
the exception of 'Other sales' in the following table, the counterparty's
recourse is not limited to the transferred assets.
Transferred financial assets not qualifying for full derecognition and
associated financial liabilities
Carrying amount of: Fair value of:
Transferred Associated Transferred Associated Net
assets liabilities assets liabilities position
$m $m $m $m $m
At 31 Dec 2022
Repurchase agreements 52,604 48,501
Securities lending agreements 39,134 4,613
At 31 Dec 2021
Repurchase agreements 51,135 48,180
Securities lending agreements 43,644 2,918
Other sales (recourse to transferred assets only) 3,826 3,826 3,830 3,842
(12)
1 Excludes assets classified as held for sale.
18 Interests in associates and joint ventures
Carrying amount of HSBC's interests in associates and joint ventures
2022 2021
$m $m
Interests in associates 29,127 29,515
Interests in joint ventures 127 94
Interests in associates and joint ventures 29,254 29,609
Principal associates of HSBC
2022 2021
Carrying amount Fair value(1) Carrying amount Fair value(1)
$m $m $m $m
Bank of Communications Co., Limited 8,141 23,616 8,537
23,307
The Saudi British Bank 6,602 4,426 5,599
4,494
1 Principal associates are listed on recognised stock exchanges. The fair
values are based on the quoted market prices of the shares held (Level 1 in
the fair value hierarchy).
At 31 Dec 2022
Country of incorporation Principal activity HSBC's interest
and principal place of %
business
Bank of Communications Co., Limited People's Republic of China Banking services 19.03
The Saudi British Bank Saudi Arabia Banking services 31.00
Share of profit in associates and joint ventures
2022 2021
$m $m
Bank of Communications Co., Limited 2,377 2,461
The Saudi British Bank 342 276
Other associates and joint ventures 4 309
Share of profit in associates and joint ventures 2,723 3,046
A list of all associates and joint ventures is set out in Note 38.
Bank of Communications Co., Limited
The Group's investment in Bank of Communications Co., Limited ('BoCom') is
classified as an associate. Significant influence in BoCom was established
with consideration of all relevant factors, including representation on
BoCom's Board of Directors and participation in a resource and experience
sharing agreement ('RES'). Under the RES, HSBC staff have been seconded to
assist in the maintenance of BoCom's financial and operating policies.
Investments in associates are recognised using the equity method of accounting
in accordance with IAS 28 'Investments in Associates and Joint Ventures',
whereby the investment is initially recognised at cost and adjusted thereafter
for the post-acquisition change in the Group's share of BoCom's net assets. An
impairment test is required if there is any indication of impairment.
Impairment testing
At 31 December 2022, the fair value of the Group's investment in BoCom had
been below the carrying amount for approximately 11 years. As a result, the
Group performed an impairment test on the carrying amount, which confirmed
that there was no impairment at 31 December 2022 as the recoverable amount as
determined by a value-in-use ('VIU') calculation was higher than the carrying
value.
At 31 Dec 2022 At 31 Dec 2021
VIU Carrying value Fair value VIU Carrying value Fair value
$bn $bn $bn $bn $bn $bn
BoCom 23.5 23.3 8.1 24.8 23.6 8.5
The headroom, which is defined as the extent to which the VIU exceeds the
carrying value, decreased by $1.0bn compared with 31 December 2021. The
decrease in headroom was principally due to revisions to management's best
estimates of BoCom's future earnings in the short to medium term, and the
impact from BoCom's actual performance.
In future periods, the VIU may increase or decrease depending on the effect of
changes to model inputs. The main model inputs are described below and are
based on factors observed at period-end. The factors that could result in a
change in the VIU and an impairment include a short-term underperformance by
BoCom, a change in regulatory capital requirements or an increase in
uncertainty regarding the future performance of BoCom resulting in a downgrade
of the forecast of future asset growth or profitability. An increase in the
discount rate could also result in a reduction of VIU and an impairment.
If the Group did not have significant influence in BoCom, the investment would
be carried at fair value rather than the current carrying value.
Basis of recoverable amount
The impairment test was performed by comparing the recoverable amount of
BoCom, determined by a VIU calculation, with its carrying amount. The VIU
calculation uses discounted cash flow projections based on management's best
estimates of future earnings available to ordinary shareholders prepared in
accordance with IAS 36 'Impairment of Assets'. Significant management
judgement is required in arriving at the best estimate.
There are two main components to the VIU calculation. The first component is
management's best estimate of BoCom's earnings. Forecast earnings growth over
the short to medium term are lower than recent (within the last five years)
historical actual growth and reflect the uncertainty arising from the current
economic outlook. Reflecting management's intent to continue to retain its
investment, earnings beyond the short to medium term are then extrapolated
into perpetuity using a long-term growth rate to derive a terminal value,
which comprises the majority of the VIU. The second component is the capital
maintenance charge ('CMC'), which is management's forecast of the earnings
that need to be withheld in order for BoCom to meet capital requirements over
the forecast period, meaning that CMC is deducted when arriving at
management's estimate of future earnings available to ordinary shareholders.
The principal inputs to the CMC calculation include estimates of asset growth,
the ratio of risk-weighted assets to total assets and the expected capital
requirements. An increase in the CMC as a result of a change to these
principal inputs would reduce VIU. Additionally, management considers other
qualitative factors, to ensure that the inputs to the VIU calculation remain
appropriate.
Key assumptions in value-in-use calculation
We used a number of assumptions in our VIU calculation, in accordance with the
requirements of IAS 36:
• Long-term profit growth rate: 3% (2021: 3%) for periods after 2026,
which does not exceed forecast GDP growth in mainland China and is similar to
forecasts by external analysts.
• Long-term asset growth rate: 3% (2021: 3%) for periods after 2026,
which is the rate that assets are expected to grow to achieve long-term profit
growth of 3%.
• Discount rate: 10.04% (2021: 10.03%), which is based on a capital
asset pricing model ('CAPM'), using market data. The discount rate used is
within the range of 8.4% to 10.4% (2021: 8.7% to 10.1%) indicated by the CAPM.
While the CAPM range sits at the lower end of the range adopted by selected
external analysts of 8.8% to 13.5% (2021: 9.9% to 13.5%), we continue to
regard the CAPM range as the most appropriate basis for determining this
assumption.
• Expected credit losses ('ECL') as a percentage of customer advances:
ranges from 0.99% to 1.05% (2021: 0.98% to 1.12%) in the short to medium term,
reflecting reported credit experience through the ongoing Covid-19 pandemic in
mainland China followed by an expected reversion to recent historical levels.
For periods after 2026, the ratio is 0.97% (2021: 0.97%), which is higher than
BoCom's average ECL as a percentage of customer advances in recent years prior
to the pandemic.
• Risk-weighted assets as a percentage of total assets: ranges from
61.0% to 64.4% (2021: 61.0% to 62.4%) in the short to medium term, reflecting
higher risk-weights in the short term followed by an expected reversion to
recent historical levels. For periods after 2026, the ratio is 61.0% (2021:
61.0%), which is similar to BoCom's actual results in recent years.
• Operating income growth rate: ranges from 1.9% to 7.7% (2021: 5.1%
to 6.2%) in the short to medium term, which is lower than BoCom's actual
results in recent years and is similar to the forecasts disclosed by external
analysts. This reflects BoCom's most recent actual results, global trade
tensions and industry developments in mainland China.
• Cost-income ratio: ranges from 35.5% to 36.3% (2021: 35.5% to 36.1%)
in the short to medium term. These ratios are similar to BoCom's actual
results in recent years and forecasts disclosed by external analysts.
• Effective tax rate ('ETR'): ranges from 4.4% to 15.0% (2021: 6.8% to
15.0%) in the short to medium term, reflecting BoCom's actual results and an
expected increase towards the long-term assumption through the forecast
period. For periods after 2026, the rate is 15.0% (2021: 15.0%), which is
higher than the recent historical average, and aligned to the minimum tax rate
as proposed by the OECD/G20 Inclusive Framework on Base Erosion and Profit
Shifting.
• Capital requirements: capital adequacy ratio of 12.5% (2021: 12.5%)
and tier 1 capital adequacy ratio of 9.5% (2021: 9.5%), based on BoCom's
capital risk appetite and capital requirements respectively.
The following table shows the change to each key assumption in the VIU
calculation that on its own would reduce the headroom to nil:
Key assumption Changes to key assumption to reduce headroom to nil
• Long-term profit growth rate • Decrease by 4 basis points
• Long-term asset growth rate • Increase by 3 basis points
• Discount rate • Increase by 5 basis points
• Expected credit losses as a percentage of customer advances • Increase by 1 basis points
• Risk-weighted assets as a percentage of total assets • Increase by 26 basis points
• Operating income growth rate • Decrease by 5 basis points
• Cost-income ratio • Increase by 15 basis points
• Long-term effective tax rate • Increase by 46 basis points
• Capital requirements - capital adequacy ratio • Increase by 5 basis points
• Capital requirements - tier 1 capital adequacy ratio • Increase by 175 basis points
The following table further illustrates the impact on VIU of reasonably
possible changes to key assumptions. This reflects the sensitivity of the VIU
to each key assumption on its own and it is possible that more than one
favourable and/or unfavourable change may occur at the same time. The selected
rates of reasonably possible changes to key assumptions are based on external
analysts' forecasts, statutory requirements and other relevant external data
sources, which can change period to period.
Sensitivity of VIU to reasonably possible changes in key assumptions
Favourable change Unfavourable change
Increase in VIU VIU Decrease in VIU VIU
bps $bn $bn bps $bn $bn
At 31 Dec 2022
Long-term profit growth rate(1) 75 3.6 27.1 (71) (2.7) 20.8
Long-term asset growth rate(1) (71) 3.1 26.6 (4.1) 19.4
75
Discount rate (164) 6.9 30.4 136 (3.7) 19.8
Expected credit losses as a percentage 2022 to 2026: 95 1.9 25.4 2022 to 2026: 120 (2.9) 20.6
of customer advances 2027 onwards: 91 2027 onwards: 104
Risk-weighted assets as a percentage of total assets (118) 0.1 23.6 239 (2.3) 21.2
Operating income growth rate 44 1.3 24.8 (83) (2.5) 21.0
Cost-income ratio (122) 1.0 24.5 174 (2.1) 21.4
Long-term effective tax rate (426) 1.5 25.0 1,000 (3.6) 19.9
Capital requirements - capital adequacy ratio - - 23.5 191 (6.3) 17.2
Capital requirements - tier 1 capital adequacy ratio - - 23.5 266 (3.2) 20.3
At 31 Dec 2021
Long-term profit growth rate(1) 87 4.2 29.0 22.1
(69) (2.7)
Long-term asset growth rate(1) 2.9 27.7 20.1
(69) 87 (4.7)
Discount rate 5.4 30.2 207 19.5
(133) (5.3)
Expected credit losses as a percentage 2021 to 2025: 103 1.5 26.3 2021 to 2025: 121 22.1
(2.7)
of customer advances 2026 onwards: 91 2026 onwards: 105
Risk-weighted assets as a percentage of total assets 0.2 25.0 280 22.7
(111) (2.1)
Operating income growth rate 37 1.0 25.8 23.0
(58) (1.8)
Cost-income ratio 1.7 26.5 174 23.1
(152) (1.7)
Long-term effective tax rate 0.3 25.1 1,000 21.2
(104) (3.6)
Capital requirements - capital adequacy ratio - - 24.8 325 14.8
(10.0)
Capital requirements - tier 1 capital adequacy ratio - - 24.8 364 18.3
(6.5)
1 The reasonably possible ranges of the long-term profit growth rate and
long-term asset growth rate assumptions reflect the close relationship between
these assumptions, which would result in offsetting changes to each
assumption.
Considering the interrelationship of the changes set out in the table above,
management estimates that the reasonably possible range of VIU is $16.9bn to
$28.7bn (2021: $19.0bn to $29.3bn). The range is based on impacts set out in
the table above arising from the favourable/unfavourable change in the
earnings in the short to medium term, the long-term expected credit losses as
a percentage of customer advances, and a 50bps increase/decrease in the
discount rate. All other long-term assumptions and the basis of the CMC have
been kept unchanged when determining the reasonably possible range of the VIU.
Impairment, if determined, would be recognised in the income statement. The
impact on the Group's CET1 ratio is expected to be minimal in the event of an
impairment, as the adverse impact on CET1 capital from the impairment would be
offset by the favourable impact from a lower carrying value.
Selected financial information of BoCom
The statutory accounting reference date of BoCom is 31 December. For the year
ended 31 December 2022, HSBC included the associate's results on the basis of
the financial statements for the 12 months ended 30 September 2022, taking
into account any known changes in the subsequent period from 1 October 2022 to
31 December 2022 that would have materially affected the results.
Selected balance sheet information of BoCom
At 30 Sep
2022 2021
$m $m
Cash and balances at central banks 114,390 123,194
Due from and placements with banks and other financial institutions 99,802 98,932
Loans and advances to customers 1,022,223 993,956
Other financial assets 549,364 541,577
Other assets 55,884 47,679
Total assets 1,841,663 1,805,338
Due to and placements from banks and other financial institutions 277,185 287,057
Deposits from customers 1,144,297 1,099,266
Other financial liabilities 237,521 228,135
Other liabilities 35,543 40,070
Total liabilities 1,694,546 1,654,528
Total equity 147,117 150,810
Reconciliation of BoCom's total shareholders' equity to the carrying amount in
HSBC's consolidated financial statements
At 30 Sep
2022 2021
$m $m
HSBC's share of total shareholders' equity 22,828 23,097
Goodwill 479 519
Carrying amount 23,307 23,616
Selected income statement information of BoCom
For the 12 months ended 30 Sep
2022 2021
$m $m
Net interest income 25,314 24,582
Net fee and commission income 6,854 7,170
Credit and impairment losses (9,712) (9,701)
Depreciation and amortisation (2,351) (2,297)
Tax expense (598) (1,045)
Profit for the year 13,582 14,199
Other comprehensive income (245) (368)
Total comprehensive income 13,337 13,831
Dividends received from BoCom 749 692
The Saudi British Bank
The Group's investment in The Saudi British Bank ('SABB') is classified as an
associate. HSBC is the largest shareholder in SABB with a shareholding of 31%.
Significant influence in SABB is established via representation on the Board
of Directors. Investments in associates are recognised using the equity method
of accounting in accordance with IAS 28, as described previously for BoCom.
Impairment testing
There were no indicators of impairment at 31 December 2022. The fair value of
the Group's investment in SABB of $6.6bn was above the carrying amount of
$4.5bn.
19 Investments in subsidiaries
Main subsidiaries of HSBC Holdings(1)
At 31 Dec 2022
Place of incorporation or registration HSBC's interest %
Share class
Europe
HSBC Bank plc England and Wales 100 £1 Ordinary, $0.01 Non-Cumulative Third Dollar Preference
HSBC UK Bank plc England and Wales 100 £1 Ordinary
HSBC Continental Europe France 99.99 €5 Actions
HSBC Trinkaus & Burkhardt GmbH Germany 99.99 €1 Ordinary
Asia
Hang Seng Bank Limited Hong Kong 62.14 HK$5 Ordinary
HSBC Bank (China) Company Limited People's Republic of China 100 CNY1 Ordinary
HSBC Bank Malaysia Berhad Malaysia 100 RM0.5 Ordinary
HSBC Life (International) Limited Bermuda 100 HK$1 Ordinary
The Hongkong and Shanghai Banking Corporation Limited Hong Kong 100 Ordinary no par value
Middle East and North Africa
HSBC Bank Middle East Limited United Arab Emirates 100 $1 Ordinary and $1 Cumulative Redeemable Preference shares
North America
HSBC Bank Canada Canada 100 Common no par value and Preference no par value
HSBC Bank USA, N.A. US 100 $100 Common and $0.01 Preference
Latin America
HSBC Mexico, S.A., Institución de Banca Múltiple, Mexico 99.99 MXN2 Ordinary
Grupo Financiero HSBC
1 Main subsidiaries are either held directly or indirectly via
intermediate holding companies.
Details of the debt, subordinated debt and preference shares issued by the
main subsidiaries to parties external to the Group are included in Note 26
'Debt securities in issue' and Note 29 'Subordinated liabilities',
respectively.
A list of all related undertakings is set out in Note 38. The principal
countries of operation are the same as the countries and territories of
incorporation except for HSBC Life (International) Limited, which operates
mainly in Hong Kong.
HSBC is structured as a network of regional banks and locally incorporated
regulated banking entities. Each bank is separately capitalised in accordance
with applicable prudential requirements and maintains a capital buffer
consistent with the Group's risk appetite for the relevant country or region.
HSBC's capital management process is incorporated in the annual operating
plan, which is approved by the Board.
HSBC Holdings is the primary provider of equity capital to its subsidiaries
and also provides them with non-equity capital where necessary. These
investments are substantially funded by HSBC Holdings' issuance of equity and
non-equity capital, and by profit retention.
As part of its capital management process, HSBC Holdings seeks to maintain a
balance between the composition of its capital and its investment in
subsidiaries. Subject to this, there is no current or foreseen impediment to
HSBC Holdings' ability to provide funding for such investments. During 2022,
consistent with the Group's capital plan, the Group's subsidiaries did not
experience any significant restrictions on paying dividends or repaying loans
and advances. Also, there are no foreseen restrictions envisaged with regard
to planned dividends or payments. However, the ability of subsidiaries to pay
dividends or advance monies to HSBC Holdings depends on, among other things,
their respective local regulatory capital and banking requirements, exchange
controls, statutory reserves, and financial and operating performance.
The amount of guarantees by HSBC Holdings in favour of other Group entities is
set out in Note 33.
Information on structured entities consolidated by HSBC where HSBC owns less
than 50% of the voting rights is included in Note 20 'Structured entities'. In
each of these cases, HSBC controls and consolidates an entity when it is
exposed, or has rights, to variable returns from its involvement with the
entity and has the ability to affect those returns through its power over the
entity.
Impairment testing of investments in subsidiaries
At each reporting period end, HSBC Holdings reviews investments in
subsidiaries for indicators of impairment. An impairment is recognised when
the carrying amount exceeds the recoverable amount for that investment. The
recoverable amount is the higher of the investment's fair value less costs of
disposal and its VIU, in accordance with the requirements of IAS 36. The VIU
is calculated by discounting management's cash flow projections for the
investment. The cash flows represent the free cash flows based on the
subsidiary's binding capital requirements.
We used a number of assumptions in our VIU calculation, in accordance with the
requirements of IAS 36:
• Management's judgement in estimating future cash flows: The cash
flow projections for each investment are based on the latest approved plans,
which include forecast capital available for distribution based on the capital
requirements of the subsidiary, taking into account minimum and core capital
requirements. For the impairment test at 31 December 2022, cash flow
projections until the end of 2027 were considered in line with our internal
planning horizon. Our cash flow projections include known and observable
climate-related opportunities and costs associated with our sustainable
products and operating model.
• Long-term growth rates: A long-term growth rate is used to
extrapolate the free cash flows in perpetuity. The growth rate reflects
inflation for the country or territory within which the investment operates,
and is based on the long-term average growth rates.
• Discount rates: The rate used to discount the cash flows is based on
the cost of capital assigned to each investment, which is derived using a
CAPM. CAPM depends on a number of inputs reflecting financial and economic
variables, including the risk-free rate and a premium to reflect the inherent
risk of the business being evaluated. These variables are based on the
market's assessment of the economic variables and management's judgement. The
discount rates for each investment are refined to reflect the rates of
inflation for the countries or territories within which the investment
operates. In addition, for the purposes of testing investments for impairment,
management supplements this process by comparing the discount rates derived
using the internally generated CAPM, with cost of capital rates produced by
external sources for businesses operating in similar markets. The impacts from
climate risk are included to the extent that they are observable in discount
rates and asset prices.
The net increase in investments in subsidiaries was partly due to the reversal
of impairment of HSBC Overseas Holdings (UK) Limited of $2.5bn. The
recoverable amount of HSBC Overseas Holdings (UK) Limited is supported by the
recoverable amounts of its subsidiaries, of which the principal subsidiaries
are HSBC North America Holdings Limited, HSBC Bank Canada and HSBC Bank
Bermuda Limited. As HSBC Overseas Holdings (UK) Limited has entered into a
sales purchase agreement with Royal Bank of Canada to dispose of HSBC Bank
Canada the sales purchase agreement has been used to support the recoverable
amount of $10.8bn (inclusive of the preferred shares) under a fair value less
costs of disposal basis. The fair value less costs of disposal of HSBC Bank
Canada is at a $3.7bn premium to the book value recorded in HSBC Overseas
Holdings (UK) Limited. The cumulative impairment for HSBC Overseas Holdings
(UK) Limited at 31 December 2022 was $4.7bn (2021: $7.2bn). The carrying value
was $32.8bn at 31 December 2022 (2021: $33.1bn). In 2022, in addition to the
planned sale of our banking business in Canada, there has been demonstrable
performance of the underlying subsidiaries and an increase in interest rate
forecasts. These factors provide us with observable indications that HSBC
Overseas Holdings (UK) Limited's value has increased, which has led to the
reversal of impairment in HSBC Holdings. However, a distribution of the
proceeds from the planned sale of HSBC Bank Canada to HSBC Holdings from HSBC
Overseas Holdings (UK) Limited could lead to a future impairment.
Impairment test results
Investments Recoverable amount Discount rate Long-term growth
At 31 Dec 2022 $m % %
HSBC North America Holdings Limited 10.00 2.22
18,363
HSBC Bank Bermuda Limited 10.40 1.87
2,471
HSBC Bank Bermuda Limited
At 31 Dec 2021
HSBC North America Holdings Limited 9.20 3.50
20,560
HSBC Bank Bermuda Limited 9.50 1.71
1,643
Sensitivities of key assumptions in calculating VIU
At 31 December 2022, the recoverable amount of HSBC Overseas Holdings (UK)
Limited remained sensitive to reasonably possible changes in key assumptions
impacting its principal subsidiaries, notably HSBC North America Holdings
Limited and HSBC Bank Bermuda Limited.
In making an estimate of reasonably possible changes to assumptions,
management considers the available evidence in respect of each input to the
model. These include the external range of observable discount rates,
historical performance against forecast, and risks attaching to the key
assumptions underlying cash flow.
The following table presents a summary of the key assumptions underlying the
most sensitive inputs to the model for HSBC North America Holdings Limited and
HSBC Bank Bermuda Limited, the key risks attaching to each, and details of a
reasonably possible change to assumptions where, in the opinion of management,
these could result in an impairment.
Reasonably possible changes in key assumptions
Investment
HSBC North America Holdings Limited and HSBC Bank Bermuda Limited Free cash flows projections • Level of interest rates and yield curves. • Strategic actions relating to revenue and costs are not achieved. • Free cash flow projections decrease by 10%.
(subsidiaries of HSBC Overseas Holdings (UK) Limited)
• Competitors' positions within the market.
Discount rate • Discount rate used is a reasonable estimate of a suitable market rate • External evidence arises to suggest that the rate used is not • Discount rate increases by 1%.
for the profile of the business. appropriate to the business.
•
Sensitivity of VIU to reasonably possible changes in key assumptions
In $bn (unless otherwise stated) HSBC North America Holdings Limited HSBC Bank Bermuda Limited
At 31 December 2022
VIU 18.4 2.5
Impact on VIU
100bps increase in the discount rate - single variable(1)
(1.7) (0.2)
10% decrease in forecast profitability - single variable(1)
(1.8) (0.2)
1 The recoverable amount of HSBC Overseas Holding (UK) Limited represents
the aggregate of recoverable amounts of the underlying subsidiaries. Single
variable sensitivity analysis on a single subsidiary may therefore not be
representative of the aggregate impact of the change in the variable.
Subsidiaries with significant non-controlling interests
2022 2021
Hang Seng Bank Limited
Proportion of ownership interests and voting rights held by non-controlling 37.86% 37.86%
interests
Place of business Hong Kong Hong Kong
$m $m
Profit attributable to non-controlling interests 520
708
Accumulated non-controlling interests of the subsidiary 7,683 7,597
Dividends paid to non-controlling interests 361
568
Summarised financial information:
- total assets 240,679 230,866
- total liabilities 218,892 209,315
- net operating income before changes in expected credit losses and other 4,325 4,280
credit impairment charges
- profit for the year 1,375 1,872
- total comprehensive income for the year 1,269 1,686
20 Structured entities
HSBC is mainly involved with both consolidated and unconsolidated structured
entities through the securitisation of financial assets, conduits and
investment funds, established either by HSBC or a third party.
Consolidated structured entities
Total assets of HSBC's consolidated structured entities, split by entity type
Conduits Securitisations HSBC managed funds Other Total
$bn $bn $bn $bn $bn
At 31 Dec 2022 4.2 7.2 7.5 23.7
4.8
At 31 Dec 2021 4.4 10.0 8.4 29.1
6.3
Conduits
HSBC has established and manages two types of conduits: securities investment
conduits ('SICs') and multi-seller conduits.
Securities investment conduits
The SICs purchase highly rated ABSs to facilitate tailored investment
opportunities.
• At 31 December 2022, Solitaire, HSBC's principal SIC, held $1.3bn of
ABSs (2021: $1.6bn). It is currently funded entirely by commercial paper
('CP') issued to HSBC. At 31 December 2022, HSBC held $1.5bn of CP (2021:
$1.8bn).
Multi-seller conduit
HSBC's multi-seller conduit was established to provide access to flexible
market-based sources of finance for its clients. Currently, HSBC bears risk
equal to the transaction-specific facility offered to the multi-seller
conduit, amounting to $6.2bn at 31 December 2022 (2021: $6.7bn). First loss
protection is provided by the originator of the assets, and not by HSBC,
through transaction-specific credit enhancements. A layer of secondary loss
protection is provided by HSBC in the form of programme-wide enhancement
facilities.
Securitisations
HSBC uses structured entities to securitise customer loans and advances it
originates in order to diversify its sources of funding for asset origination
and capital efficiency purposes. The loans and advances are transferred by
HSBC to the structured entities for cash or synthetically through credit
default swaps, and the structured entities issue debt securities to investors.
HSBC managed funds
HSBC has established a number of money market and non-money market funds.
Where it is deemed to be acting as principal rather than agent in its role as
investment manager, HSBC controls these funds.
Other
HSBC has entered into a number of transactions in the normal course of
business, which include asset and structured finance transactions where it has
control of the structured entity. In addition, HSBC is deemed to control
a number of third-party managed funds through its involvement as a principal
in the funds.
Unconsolidated structured entities
The term 'unconsolidated structured entities' refers to all structured
entities not controlled by HSBC. The Group enters into transactions with
unconsolidated structured entities in the normal course of business to
facilitate customer transactions and for specific investment opportunities.
Nature and risks associated with HSBC interests in unconsolidated structured
entities
Securitisations HSBC managed funds Non-HSBC managed funds Other Total
Total asset values of the entities ($m)
0-500 85 338 1,321 41 1,785
500-2,000 8 102 929 4 1,043
2,000-5,000 - 28 388 - 416
5,000-25,000 - 18 206 - 224
25,000+ - 5 24 - 29
Number of entities at 31 Dec 2022 93 491 2,868 45 3,497
$bn $bn $bn $bn $bn
Total assets in relation to HSBC's interests in the unconsolidated structured 2.5 10.7 19.7 2.6 35.5
entities
- trading assets - 0.4 0.1 - 0.5
- financial assets designated and otherwise mandatorily measured at fair - 9.7 18.7 - 28.4
value
- loans and advances to customers 2.5 - 0.5 1.9 4.9
- financial investments - 0.6 0.4 - 1.0
- other assets - - - 0.7 0.7
Total liabilities in relation to HSBC's interests in the unconsolidated - - - 0.4 0.4
structured entities
- other liabilities - - - 0.4 0.4
Other off-balance sheet commitments 0.2 1.5 4.6 1.8 8.1
HSBC's maximum exposure at 31 Dec 2022 2.7 12.2 24.3 4.0 43.2
Total asset values of the entities ($m)
0-500 96 294 1,408 37 1,835
500-2,000 11 116 911 3 1,041
2,000-5,000 - 33 435 - 468
5,000-25,000 - 14 197 - 211
25,000+ - 4 11 - 15
Number of entities at 31 Dec 2021 107 461 2,962 40 3,570
$bn $bn $bn $bn $bn
Total assets in relation to HSBC's interests in the unconsolidated structured 4.8 10.8 18.6 3.8 38.0
entities
- trading assets - 0.2 2.4 0.1 2.7
- financial assets designated and otherwise mandatorily measured at fair - 10.0 15.5 - 25.5
value
- loans and advances to customers 4.8 - 0.1 3.0 7.9
- financial investments - 0.6 0.6 - 1.2
- other assets - - - 0.7 0.7
Total liabilities in relation to HSBC's interests in the unconsolidated - - - 0.4 0.4
structured entities
- other liabilities - - - 0.4 0.4
Other off-balance sheet commitments 0.1 0.9 4.6 1.2 6.8
HSBC's maximum exposure at 31 Dec 2021 4.9 11.7 23.2 4.6 44.4
The maximum exposure to loss from HSBC's interests in unconsolidated
structured entities represents the maximum loss it could incur as a result of
its involvement with these entities regardless of the probability of the loss
being incurred.
• For commitments, guarantees and written credit default swaps, the
maximum exposure to loss is the notional amount of potential future losses.
• For retained and purchased investments and loans to unconsolidated
structured entities, the maximum exposure to loss is the carrying value of
these interests at the balance sheet reporting date.
The maximum exposure to loss is stated gross of the effects of hedging and
collateral arrangements that HSBC has entered into in order to mitigate the
Group's exposure to loss.
Securitisations
HSBC has interests in unconsolidated securitisation vehicles through holding
notes issued by these entities. In addition, HSBC has investments in ABSs
issued by third-party structured entities.
HSBC managed funds
HSBC establishes and manages money market funds and non-money market
investment funds to provide customers with investment opportunities. Further
information on funds under management is provided on page 115.
HSBC, as fund manager, may be entitled to receive management and performance
fees based on the assets under management. HSBC may also retain units in these
funds.
Non-HSBC managed funds
HSBC purchases and holds units of third-party managed funds in order to
facilitate business and meet customer needs.
Other
HSBC has established structured entities in the normal course of business,
such as structured credit transactions for customers, to provide finance to
public and private sector infrastructure projects, and for asset and
structured finance transactions.
In addition to the interests disclosed above, HSBC enters into derivative
contracts, reverse repos and stock borrowing transactions with structured
entities. These interests arise in the normal course of business for the
facilitation of third-party transactions and risk management solutions.
HSBC sponsored structured entities
The amount of assets transferred to and income received from such sponsored
structured entities during 2022 and 2021 was not significant.
21 Goodwill and intangible assets
2022 2021
$m $m
Goodwill 4,156 5,033
Present value of in-force long-term insurance business 9,900 9,453
Other intangible assets(1) 7,265 6,136
At 31 Dec 21,321 20,622
1 Included within other intangible assets is internally generated software
with a net carrying value of $6,166m (2021: $5,430m). During the year,
capitalisation of internally generated software was $2,663m (2021: $2,373m),
impairment was $125m (2021: $137m) and amortisation was $1,447m (2021:
$1,183m).
1
Movement analysis of goodwill
2022 2021
$m $m
Gross amount
At 1 Jan 22,215 23,135
Exchange differences (776) (905)
Reclassified to held for sale and additions(1) (2,485) -
Other 11 (15)
At 31 Dec 18,965 22,215
Accumulated impairment losses
At 1 Jan (17,182) (17,254)
Impairment losses(2) - (587)
Exchange differences 482 659
Reclassified to held for sale(1) 1,891 -
At 31 Dec (14,809) (17,182)
Net carrying amount at 31 Dec 4,156 5,033
1 Includes goodwill allocated to disposal groups as a result of the
planned sales of our retail banking operations in France, banking business in
Canada and branch operations in Greece, offset by goodwill arising from the
acquisition of L&T Investment Management Limited. For further details, see
Note 23.
2 Full impairment of goodwill allocated to Latin America - WPB.
2
Goodwill
Impairment testing
The Group's impairment test in respect of goodwill allocated to each
cash-generating unit ('CGU') is performed at 1 October each year. A review for
indicators of impairment is undertaken at each subsequent quarter-end and at
31 December 2022. No indicators of impairment were identified as part of these
reviews.
Basis of the recoverable amount
The recoverable amount of all CGUs to which goodwill has been allocated was
equal to its value in use ('VIU') at each respective testing date. The VIU is
calculated by discounting management's cash flow projections for the CGU. The
key assumptions used in the VIU calculation for each individually significant
CGU that is not impaired are discussed below.
Key assumptions in VIU calculation - significant CGUs at 1 October 2022
Carrying amount at 1 Oct 2022 of which goodwill Value in use at 1 Oct 2022 Discount rate Growth rate Carrying amount at 1 Oct 2021 of which goodwill Value in use at 1 Oct 2021 Discount Growth rate beyond initial cash flow projections
beyond initial rate
cash flow
$m $m $m % % $m $m $m % %
Europe - WPB 15,215 2,643 46,596 9.9 2.0 18,780 3,556 29,799 9.2 1.8
At 1 October 2022, aggregate goodwill of $1,464m (1 October 2021: $2,108m) had
been allocated to CGUs that were not considered individually significant. The
Group's CGUs do not carry on their balance sheets any significant intangible
assets with indefinite useful lives, other than goodwill.
Management's judgement in estimating the cash flows of a CGU
The cash flow projections for each CGU are based on forecast profitability
plans approved by the Board and minimum capital levels required to support the
business operations of a CGU. The Board challenges and endorses planning
assumptions in light of internal capital allocation decisions necessary to
support our strategy, current market conditions and macroeconomic outlook. For
the 1 October 2022 impairment test, cash flow projections until the end of
2027 were considered, in line with our internal planning horizon. Key
assumptions underlying cash flow projections reflect management's outlook on
interest rates and inflation, as well as business strategy, including the
scale of investment in technology and automation. Our cash flow projections
include known and observable climate-related opportunities and costs
associated with our sustainable products and operating model. As required by
IFRSs, estimates of future cash flows exclude estimated cash inflows or
outflows that are expected to arise from restructuring initiatives before an
entity has a constructive obligation to carry out the plan, and would
therefore have recognised a provision for restructuring costs.
Discount rate
The rate used to discount the cash flows is based on the cost of equity
assigned to each CGU, which is derived using a capital asset pricing model
('CAPM') and market implied cost of equity. CAPM depends on a number of inputs
reflecting financial and economic variables, including the risk-free rate and
a premium to reflect the inherent risk of the business being evaluated. These
variables are based on the market's assessment of the economic variables and
management's judgement. The discount rates for each CGU are refined to reflect
the rates of inflation for the countries within which the CGU operates. In
addition, for the purposes of testing goodwill for impairment, management
supplements this process by comparing the discount rates derived using the
internally generated CAPM, with the cost of equity rates produced by external
sources for businesses operating in similar markets. The impacts of
climate-risk are included to the extent that they are observable in discount
rates and asset prices.
Long-term growth rate
The long-term growth rate is used to extrapolate the cash flows in perpetuity
because of the long-term perspective within the Group of business units making
up the CGUs. These growth rates reflect inflation for the countries within
which the CGU operates or from which it derives revenue.
Sensitivities of key assumptions in calculating VIU
At 1 October 2022, given the extent by which VIU exceeds carrying amount, the
Europe - WPB CGU was not sensitive to reasonably possible adverse changes in
key assumptions supporting the recoverable amount. In making an estimate of
reasonably possible changes to assumptions, management considers the available
evidence in respect of each input to the VIU calculation, such as the external
range of discount rates observable, historical performance against forecast
and risks attaching to the key assumptions underlying cash flow projections.
None of the remaining CGUs are individually significant.
Other intangible assets
Impairment testing
Impairment of other intangible assets is assessed in accordance with our
policy explained in Note 1.2(n) by comparing the net carrying amount of CGUs
containing intangible assets with their recoverable amounts. Recoverable
amounts are determined by calculating an estimated VIU or fair value, as
appropriate, for each CGU. No significant impairment was recognised during the
year.
Key assumptions in VIU calculation
We used a number of assumptions in our VIU calculation, in accordance with the
requirements of IAS 36:
• Management's judgement in estimating future cash flows: We
considered past business performance, current market conditions and our
macroeconomic outlook to estimate future earnings. As required by IFRSs,
estimates of future cash flows exclude estimated cash inflows or outflows that
are expected to arise from restructuring initiatives before an entity has a
constructive obligation to carry out the plan, and would therefore have
recognised a provision for restructuring costs. For some businesses, this
means that the benefit of certain strategic actions may not be included in the
impairment assessment, including capital releases. Our cash flow projections
include known and observable climate-related opportunities and costs
associated with our sustainable products and operating model.
• Long-term growth rates: The long-term growth rate is used to
extrapolate the cash flows in perpetuity because of the long-term perspective
of the businesses within the Group.
• Discount rates: Rates are based on a combination of CAPM and
market-implied calculations considering market data for the businesses and
geographies in which the Group operates. The impacts of climate-risk are
included to the extent that they are observable in discount rates and asset
prices.
Future software capitalisation
We will continue to invest in digital capabilities to meet our strategic
objectives. However, software capitalisation within businesses where
impairment was identified will not resume until the performance outlook for
each business indicates future profits are sufficient to support
capitalisation. The cost of additional software investment in these businesses
will be recognised as an operating expense until such time.
Sensitivity of estimates relating to non-financial assets
As explained in Note 1.2(a), estimates of future cash flows for CGUs are made
in the review of goodwill and non-financial assets for impairment.
Non-financial assets include other intangible assets shown above, and owned
property, plant and equipment and right-of-use assets (see Note 22). The most
significant sources of estimation uncertainty are in respect of the goodwill
balances disclosed above. There are no non-financial asset balances relating
to individual CGUs which involve estimation uncertainty that represents a
significant risk of resulting in a material adjustment to the results and
financial position of the Group within the next financial year.
Non-financial assets are widely distributed across CGUs within the legal
entities of the Group, including Corporate Centre assets that cannot be
allocated to CGUs and are therefore tested for impairment at consolidated
level. The recoverable amounts of other intangible assets, owned property,
plant and equipment, and right-of-use assets cannot be lower than individual
asset fair values less costs to dispose, where relevant. At 31 December 2022,
none of the CGUs were sensitive to reasonably possible adverse changes in key
assumptions supporting the recoverable amount. In making an estimate of
reasonably possible changes to assumptions, management considers the available
evidence in respect of each input to the VIU calculation, such as the external
range of discount rates observable, historical performance against forecast
and risks attaching to the key assumptions underlying cash flow projections.
Present value of in-force long-term insurance business
When calculating the present value of in-force long-term ('PVIF') insurance
business, expected cash flows are projected after adjusting for a variety of
assumptions made by each insurance operation to reflect local market
conditions, and management's judgement of future trends and uncertainty in the
underlying assumptions is reflected by applying margins (as opposed to a cost
of capital methodology) including valuing the cost of policyholder options and
guarantees using stochastic techniques.
Financial Reporting Committees of each key insurance entity meet on a
quarterly basis to review and approve PVIF assumptions. All changes to
non-economic assumptions, economic assumptions that are not observable and
model methodologies must be approved by the Financial Reporting Committee.
Movements in PVIF
2022 2021
$m $m
At 1 Jan 9,453 9,435
Acquisitions 271 -
Change in PVIF of long-term insurance business 263 130
- value of new business written during the year 1,322 1,090
- expected return(1) (785) (903)
- assumption changes and experience variances (see below) (252) (105)
- other adjustments (22) 48
Exchange differences and other movements (87) (112)
At 31 Dec 9,900 9,453
1 'Expected return' represents the unwinding of the discount rate and
reversal of expected cash flows for the period.
1
Assumption changes and experience variances
Included within this line item are:
• $875m decrease (2021: $59m increase) in PVIF due to rising interest
rates, which is directly offset within the valuation of liabilities under
insurance contracts;
• $72m decrease (2021: $324m decrease) reflecting the future expected
sharing of returns with policyholders on contracts with discretionary
participation features ('DPF'), to the extent this sharing is not already
included in liabilities under insurance contracts; and
• $695m increase (2021: $160m increase) driven by other assumptions
changes and experience variances.
Key assumptions used in the computation of PVIF for main life insurance
operations
Economic assumptions are set in a way that is consistent with observable
market values. The valuation of PVIF is sensitive to observed market movements
and the impact of such changes is included in the sensitivities presented
below.
2022 2021
Hong Kong France(1) Hong Kong France(1)
% % % %
Weighted average risk-free rate 3.85 2.80 1.40 0.69
Weighted average risk discount rate 7.33 4.44 5.20 1.55
Expense inflation 3.00 4.26 3.00 1.80
1 For 2022, the calculation of France's PVIF assumes a risk discount rate
of 4.44% (2021: 1.55%) plus a risk margin of $100m (2021: $215m).
1
Sensitivity to changes in economic assumptions
The Group sets the risk discount rate applied to the PVIF calculation by
starting from a risk-free rate curve and adding explicit allowances for risks
not reflected in the best-estimate cash flow modelling. Where the insurance
operations provide options and guarantees to policyholders, the cost of these
options and guarantees is accounted for as a deduction from the PVIF asset,
unless the cost of such guarantees is already allowed for as an explicit
addition to liabilities under insurance contracts. For further details of
these guarantees and the impact of changes in economic assumptions on our
insurance manufacturing subsidiaries, see page 237.
Sensitivity to changes in non-economic assumptions
Policyholder liabilities and PVIF are determined by reference to non-economic
assumptions, including mortality and/or morbidity, lapse rates and expense
rates. For further details on the impact of changes in non-economic
assumptions on our insurance manufacturing operations, see page 238.
22 Prepayments, accrued income and other assets
2022 2021
$m $m
Prepayments and accrued income 10,316 8,233
Settlement accounts 19,565 17,713
Cash collateral and margin receivables 63,421 42,171
Bullion 15,752 15,283
Endorsements and acceptances 8,407 11,229
Reinsurers' share of liabilities under insurance contracts (Note 4) 4,257 3,668
Employee benefit assets (Note 5) 7,282 10,269
Right-of-use assets 2,219 2,985
Owned property, plant and equipment 10,365 10,255
Other accounts 15,282 14,765
At 31 Dec 156,866 136,571
Prepayments, accrued income and other assets include $113,383m (2021:
$91,045m) of financial assets, the majority of which are measured at amortised
cost.
23 Assets held for sale and liabilities of disposal groups held for sale
2022 2021
$m $m
Held for sale at 31 December
Disposal groups 118,055 2,921
Unallocated impairment losses(1) (2,385) -
Non-current assets held for sale 249 490
Assets held for sale 115,919 3,411
Liabilities of disposal groups held for sale 114,597 9,005
1 This represents impairment losses in excess of the carrying value of the
non-current assets, excluded from the measurement scope of IFRS 5.
Disposal groups
Planned sale of our retail banking operations in France
On 25 November 2021, HSBC Continental Europe signed a framework agreement with
Promontoria MMB SAS ('My Money Group') and its subsidiary Banque des Caraïbes
SA, regarding the planned sale of HSBC Continental Europe's retail banking
operations in France. The sale, which is subject to regulatory approvals and
the satisfaction of other relevant conditions, includes: HSBC Continental
Europe's French retail banking operations; the Crédit Commercial de France
('CCF') brand; and HSBC Continental Europe's 100% ownership interest in HSBC
SFH (France) and its 3% ownership interest in Crédit Logement.
The framework agreement has a long-stop date of 31 May 2024, if the sale has
not closed by that point, the agreement will terminate, although that date can
be extended by either party to 30 November 2024 in certain circumstances or
with the agreement of both parties. We have agreed a detailed plan with My
Money Group with the aim of completing the sale in the second half of 2023,
subject to regulatory approvals, agreement and implementation of necessary
financing structures, and the completion of the operational transfer,
including customer and data migrations. In this regard the framework agreement
imposes certain obligations on the parties in planning for completion.
Given the scale and complexity of the business being sold, there is risk of
delay in the implementation of this plan. The disposal group was classified as
held for sale for the purposes of IFRS 5 as at 30 September 2022, reflecting
the prevailing judgements concerning likelihood of the framework agreement's
timetable being achieved. The assets and liabilities classified as held for
sale were determined in accordance with the framework agreement, and are
subject to change as the detailed transition plan is executed. This
classification and consequential remeasurement resulted in an impairment loss
of $2.4bn, which included impairment of goodwill of $0.4bn and related
transaction costs. At 31 December 2022, we reassessed the likelihood of
completion, taking account of the most recent correspondence with My Money
Group concerning the implementation of the plan and related developments. As a
result of this reassessment, the likelihood of completion in 2023 is judged to
be highly probable. As such, and in accordance with IFRS 5, the disposal group
continues to be classified as held for sale.
The disposal group will be remeasured at the lower of the carrying amount and
fair value less costs to sell at each reporting period. Any remaining gains or
losses not previously recognised, including from the recycling of foreign
currency translation reserves and the reversal of any remaining deferred tax
assets and liabilities, will be recognised on completion.
Planned sale of our banking business in Canada
On 29 November 2022, HSBC Holdings plc announced its wholly-owned subsidiary,
HSBC Overseas Holdings (UK) Limited, entered into an agreement for the planned
sale of its banking business in Canada to Royal Bank of Canada. Completion of
the transaction is expected in late 2023, subject to regulatory and
governmental approval.
The majority of the estimated gain on sale of $5.7bn (inclusive of the
recycling of an estimated $0.6bn of accumulated foreign currency translation
reserve losses) will be recognised on completion, reduced by earnings
recognised by the Group in the period to completion. The estimated pre-tax
profit on the sale will be recognised through a combination of the
consolidation of HSBC Canada's results into the Group's financial statements
(between the 30 June 2022 net asset reference date and until completion), and
the remaining gain on sale recognised at completion. There would be no tax on
the gain recognised at completion. At 31 December 2022, total assets of $90bn
and total liabilities of $85bn met the criteria to be classified as held for
sale in accordance with IFRS 5.
Planned sale of our branch operations in Greece
On 24 May 2022, HSBC Continental Europe signed a sale and purchase agreement
for the planned sale of its branch operations in Greece to Pancreta Bank SA.
Completion of the transaction is subject to regulatory approval, and is
currently expected to occur in the first half of 2023. At 31 December 2022,
the disposal group included $0.4bn of loans and advances to customers and
$2.3bn of customer accounts, which met the criteria to be classified as held
for sale. In the second quarter of 2022, we recognised a loss of $0.1bn,
including goodwill impairment, upon reclassification as held for sale in
accordance with IFRS 5. On completion accumulated foreign currency translation
reserves will be recycled to the income statement.
Planned sale of our business in Russia
On 30 June 2022, following a strategic review of our business in Russia, HSBC
Europe BV (a wholly-owned subsidiary of HSBC Bank plc) entered into an
agreement for the planned sale of its wholly-owned subsidiary HSBC Bank (RR)
(Limited Liability Company). Completion of the transaction is subject to
regulatory and governmental approval, and is currently expected to occur in
the first half of 2023. In 2022, a $0.3bn loss on the planned sale was
recognised, upon reclassification as held for sale in accordance with IFRS 5.
On completion accumulated foreign currency translation reserves will be
recycled to the income statement.
At 31 December 2022, the major classes of assets and associated liabilities of
disposal groups held for sale, including allocated impairment losses, were as
follows:
Canada Retail banking operations in France Other Total
$m $m $m $m
Assets of disposal groups held for sale
Cash and balances at central banks 4,664 1,811 6,546
71
Trading assets 3,168 8 3,176
-
Financial assets designated and otherwise mandatorily measured at fair value 1 61
through profit or loss 13 47
Derivatives - 866
866 -
Loans and advances to banks 154 253
99 -
Loans and advances to customers 55,197 25,029 350 80,576
Reverse repurchase agreements - non-trading 4,396 250 4,646
-
Financial investments(1) 17,243 106 17,349
-
Goodwill - 225
225 -
Prepayments, accrued income and other assets 4,256 26 4,357
75
Total assets at 31 December 2022 90,127 25,222 2,706 118,055
Liabilities of disposal groups held for sale
Trading liabilities 2,751 3 2,754
-
Deposits by banks 2 64
62 -
Customer accounts 60,606 22,348 2,320 85,274
Repurchase agreements - non-trading 3,266 - 3,266
-
Financial liabilities designated at fair value - 3,523
- 3,523
Derivatives - 813
806 7
Debt securities in issue 11,602 - 12,928
1,326
Subordinated liabilities - 8
8 -
Accruals, deferred income and other liabilities 5,727 81 5,967
159
Total liabilities at 31 December 2022 84,828 27,363 2,406 114,597
Expected date of completion Second half of 2023 Second half of 2023
Operating segment All global businesses WPB
1 Includes financial investments measured at fair value through other
comprehensive income of $11,184m and debt instruments measured at amortised
cost of $6,165m
Retail banking operations in France
$m
Net assets/(liabilities) classified as held for sale(1) (2,063)
Expected cash contribution (2)
4,094
Disposal group post-cash contribution (3)
2,031
1 Excludes impairment loss allocated against the non-current assets that
are in scope of IFRS 5 measurement of $78m.
2 The contributions are reported within 'Cash and balances at central
banks' on the Group's consolidated balance sheet.
3 'Disposal group post-cash contribution' includes the net asset value of
the transferring business of €1.6bn ($1.8bn) and $0.2bn of additional items
to which a nil value is ascribed per the framework agreement.
Under the financial terms of the planned transaction, HSBC Continental Europe
will transfer the business with a net asset value of €1.6bn ($1.8bn),
subject to adjustment (upwards or downwards) in certain circumstances, for a
consideration of €1. Any required increase to the net asset value of the
business to achieve the net asset value of €1.6bn ($1.8bn) will be satisfied
by the inclusion of additional cash. The value of cash contribution will be
determined by the net asset or liability position of the disposal group at the
point of completion. Based upon the net liabilities of the disposal group at
31 December 2022, HSBC would be expected to include a cash contribution of
$4.1bn as part of the planned transaction.
Completed business disposals
Mass market retail banking business in the US
On 26 May 2021, we announced our intention to exit our mass market retail
banking business in the US, including our Personal and Advance propositions,
as well as retail business banking, and rebranding approximately 20 to 25 of
our retail branches into international wealth centres to serve our Premier and
Jade customers. In conjunction with the execution of this strategy, HSBC Bank
USA, N.A. entered into definitive sale agreements with Citizens Bank and
Cathay Bank to sell 90 of our retail branches along with substantially all
residential mortgage, unsecured and retail business banking loans and all
deposits in our branch network not associated with our Premier, Jade and
Private Banking customers. As a result of entering into these sale agreements,
assets and liabilities related to the agreements were transferred to held for
sale during the second quarter of 2021.
In February 2022, we completed the sale of the branch disposal group and
recognised a net gain on sale of $0.2bn (including subsequent closing
adjustments). Included in the sale were $2.1bn of loans and advances to
customers and $6.9bn of customer accounts. Certain assets under management
associated with our mass market retail banking operations were also
transferred. The remaining branches not sold or rebranded have been closed.
Business acquisitions
The following acquisitions form part of our strategy to become a market leader
in Asian wealth management:
• On 28 January 2022, HSBC Insurance (Asia-Pacific) Holdings Limited,
a subsidiary of the Group, notified the shareholders of Canara HSBC Life
Insurance Company Limited ('Canara HSBC') of its intention to increase its
shareholding in Canara HSBC up to 49%. HSBC currently has a 26% shareholding,
which is accounted for as an associate. Any increase in shareholding is
subject to agreement with other shareholders in Canara HSBC, as well as
internal and regulatory approvals. Established in 2008, Canara HSBC is a life
insurance company based in India.
• On 11 February 2022, HSBC Insurance (Asia-Pacific) Holdings Limited
completed the acquisition of 100% of AXA Insurance Pte Limited ('AXA
Singapore') for $0.5bn. A gain on acquisition of $0.1bn was recorded,
reflecting the excess of the fair value of net assets acquired (gross assets
of $4.5bn and gross liabilities of $3.9bn) over the acquisition price. The
legal integration of AXA Singapore with HSBC's pre-existing insurance
operations in the country concluded on 1 February 2023.
• On 6 April 2022, The Hongkong and Shanghai Banking Corporation
Limited, a subsidiary of the Group, announced it had increased its
shareholding in HSBC Qianhai Securities Limited, a partially-owned subsidiary,
for $0.2bn from 51% to 90%.
• On 23 June 2022, HSBC Insurance (Asia) Limited, a subsidiary of the
Group, acquired the remaining 50% equity interest in HSBC Life Insurance
Company Limited for $0.2bn. Headquartered in Shanghai, HSBC Life Insurance
Company Limited offers a comprehensive range of insurance solutions covering
annuity, whole life, critical illness and unit-linked insurance products.
• On 25 November 2022, HSBC Asset Management (India) Private Ltd, a
subsidiary of the Group, completed the acquisition of L&T Investment
Management Limited from L&T Finance Holdings Limited for $0.4bn,
recognised primarily as intangibles and goodwill. L&T Investment
Management Limited is the investment manager of the L&T Mutual Fund, with
assets under management of $9.4bn on completion.
•
24 Trading liabilities
2022 2021
$m $m
Deposits by banks(1) 9,332 4,243
Customer accounts(1) 10,724 9,424
Other debt securities in issue (Note 26) 978 1,792
Other liabilities - net short positions in securities 51,319 69,445
At 31 Dec 72,353 84,904
1 'Deposits by banks' and 'Customer accounts' include fair value repos,
stock lending and other amounts.
1
25 Financial liabilities designated at fair value
HSBC
2022 2021
$m $m
Deposits by banks and customer accounts(1) 19,171 16,703
Liabilities to customers under investment contracts 5,380 5,938
Debt securities in issue (Note 26) 93,140 112,761
Subordinated liabilities (Note 29) 9,636 10,100
At 31 Dec 127,327 145,502
1 Structured deposits placed at HSBC Bank USA are insured by the
Federal Deposit Insurance Corporation, a US government agency, up to $250,000
per depositor.
The carrying amount of financial liabilities designated at fair value was
$8,124m less than the contractual amount at maturity (2021: $827m more). The
cumulative amount of change in fair value attributable to changes in credit
risk was a profit of $234m (2021: loss of $2,084m).
HSBC Holdings
2022 2021
$m $m
Debt securities in issue (Note 26) 25,423 26,818
Subordinated liabilities (Note 29) 6,700 5,600
At 31 Dec 32,123 32,418
The carrying amount of financial liabilities designated at fair value was
$2,405m less than the contractual amount at maturity (2021: $1,766m more).
The cumulative amount of change in fair value attributable to changes in
credit risk was a loss of $516m (2021: $951m).
26 Debt securities in issue
HSBC
2022 2021
$m $m
Bonds and medium-term notes 145,240 166,537
Other debt securities in issue 27,027 26,573
Total debt securities in issue 172,267 193,110
Included within:
- trading liabilities (Note 24) (978) (1,792)
- financial liabilities designated at fair value (Note 25) (93,140) (112,761)
At 31 Dec 78,149 78,557
HSBC Holdings
2022 2021
$m $m
Debt securities 92,361 94,301
Included within:
- financial liabilities designated at fair value (Note 25) (25,423) (26,818)
At 31 Dec 66,938 67,483
27 Accruals, deferred income and other liabilities
2022 2021
$m $m
Accruals and deferred income 12,353 10,466
Settlement accounts 18,176 15,226
Cash collateral and margin payables 70,292 50,226
Endorsements and acceptances 8,379 11,232
Employee benefit liabilities (Note 5) 1,096 1,607
Lease liabilities 2,767 3,586
Other liabilities 20,177 22,430
At 31 Dec 133,240 114,773
Accruals, deferred income and other liabilities include $125,890m (2021:
$111,887m) of financial liabilities, the majority of which are measured at
amortised cost.
28 Provisions
Restructuring Legal proceedings Customer Other Total
costs
and regulatory
remediation
provisions
matters
$m $m $m $m $m
Provisions (excluding contractual commitments)
At 1 Jan 2022 383 619 386 558 1,946
Additions 434 271 60 206 971
Amounts utilised (288) (393) (106) (168) (955)
Unused amounts reversed (87) (82) (109) (125) (403)
Exchange and other movements 3 (6) (36) (74) (113)
At 31 Dec 2022 445 409 195 397 1,446
Contractual commitments(1)
At 1 Jan 2022 620
Net change in expected credit loss provision and other movements (108)
At 31 Dec 2022 512
Total provisions
At 31 Dec 2021 2,566
At 31 Dec 2022 1,958
Restructuring Legal proceedings Customer Other Total
costs and regulatory remediation provisions
matters
$m $m $m $m $m
Provisions (excluding contractual commitments)
At 1 Jan 2021 671 756 858 305 2,590
Additions 347 249 192 471 1,259
Amounts utilised (499) (316) (548) (58) (1,421)
Unused amounts reversed (170) (59) (113) (124) (466)
Exchange and other movements 34 (11) (3) (36) (16)
At 31 Dec 2021 383 619 386 558 1,946
Contractual commitments(1)
At 1 Jan 2021 1,088
Net change in expected credit loss provision and other movements (468)
At 31 Dec 2021 620
Total provisions
At 31 Dec 2020 3,678
At 31 Dec 2021 2,566
1 Contractual commitments include the provision for contingent
liabilities measured under IFRS 9 'Financial Instruments' in respect of
financial guarantees and the expected credit loss provision on off-balance
sheet guarantees and commitments.
Further details of 'Legal proceedings and regulatory matters' are set out in
Note 35. Legal proceedings include civil court, arbitration or tribunal
proceedings brought against HSBC companies (whether by way of claim or
counterclaim) or civil disputes that may, if not settled, result in court,
arbitration or tribunal proceedings. Regulatory matters refer to
investigations, reviews and other actions carried out by, or in response to
the actions of, regulators or law enforcement agencies in connection with
alleged wrongdoing by HSBC.
Customer remediation refers to HSBC's activities to compensate customers for
losses or damages associated with a failure to comply with regulations or to
treat customers fairly. Customer remediation is often initiated by HSBC in
response to customer complaints and/or industry developments in sales
practices and is not necessarily initiated by regulatory action.
For further details of the impact of IFRS 9 on undrawn loan commitments and
financial guarantees, presented in 'Contractual commitments', see Note 33.
This provision results from the adoption of IFRS 9 and has no comparatives.
Further analysis of the movement in the expected credit loss provision is
disclosed within the 'Reconciliation of allowances for loans and advances to
banks and customers including loan commitments and financial guarantees' table
on page 163.
29 Subordinated liabilities
HSBC's subordinated liabilities
2022 2021
$m $m
At amortised cost 22,290 20,487
- subordinated liabilities 20,547 18,640
- preferred securities 1,743 1,847
Designated at fair value (Note 25) 9,636 10,100
- subordinated liabilities 9,636 10,100
- preferred securities - -
At 31 Dec 31,926 30,587
Issued by HSBC subsidiaries 6,094 9,112
Issued by HSBC Holdings 25,832 21,475
Subordinated liabilities rank behind senior obligations and generally count
towards the capital base of HSBC. Capital securities may be called and
redeemed by HSBC subject to prior notification to the PRA and, where relevant,
the consent of the local banking regulator. If not redeemed at the first call
date, coupons payable may reset or become floating rate based on relevant
market rates. On subordinated liabilities other than floating rate notes,
interest is payable at fixed rates of up to 10.176%.
The balance sheet amounts disclosed in the following table are presented on an
IFRS basis and do not reflect the amount that the instruments contribute to
regulatory capital, principally due to regulatory amortisation and regulatory
eligibility limits.
HSBC's subsidiaries subordinated liabilities in issue
2022 2021
First call date Maturity date $m $m
Additional tier 1 capital securities guaranteed by HSBC Holdings(1,2)
$900m 10.176% non-cumulative step-up perpetual preferred securities, series 2(3) Jun 2030 900 900
900 900
Additional tier 1 capital securities guaranteed by HSBC Bank plc(1,2)
£700m 5.844% non-cumulative step-up perpetual preferred securities(4,5) Nov 2031 684 947
684 947
Tier 2 securities issued by HSBC Bank plc
$750m Undated floating rate primary capital notes Jun 1990 750 750
$500m Undated floating rate primary capital notes Sep 1990 500 500
$300m Undated floating rate primary capital notes, series 3 Jun 1992 300 300
$300m 7.65% subordinated notes(6) - May 2025 170 300
1,720 1,850
£300m 6.50% subordinated notes(7) - Jul 2023 162 406
£350m 5.375% callable subordinated step-up notes(2,7,8) Nov 2025 Nov 2030 73 539
£500m 5.375% subordinated notes(7) - Aug 2033 186 900
£225m 6.25% subordinated notes(7) - Jan 2041 56 303
£600m 4.75% subordinated notes(7) - Mar 2046 230 805
707 2,953
2,427 4,803
Tier 2 securities issued by The Hongkong and Shanghai Banking Corporation
Limited
$400m Primary capital undated floating rate notes (third series) Jul 1991 400 400
400 400
Tier 2 securities issued by HSBC Bank Malaysia Berhad
MYR500m 5.05% subordinated bonds(2,9) Nov 2022 Nov 2027 - 120
- 120
Tier 2 securities issued by HSBC USA Inc.
$250m 7.20% subordinated debentures(2) - Jul 2097 223 222
223 222
Tier 2 securities issued by HSBC Bank USA, N.A.
$1,000m 5.875% subordinated notes(10) - Nov 2034 339 456
$750m 5.625% subordinated notes(10) - Aug 2035 366 489
$700m 7.00% subordinated notes - Jan 2039 700 697
1,405 1,642
Tier 2 securities issued by HSBC Bank Canada
Other subordinated liabilities each less than $150m(2,11) Oct 1996 Nov 2083 - 9
- 9
Securities issued by other HSBC subsidiaries
Other subordinated liabilities each less than $200m(12) 55 69
Subordinated liabilities issued by HSBC subsidiaries at 31 Dec 6,094 9,112
1 See paragraph below, 'Guaranteed by HSBC Holdings or HSBC Bank plc'.
2 These securities are ineligible for inclusion in the capital base of
HSBC.
3 The interest rate payable after June 2030 is the sum of the three-month
Libor plus 4.98%.
4 The interest rate payable after November 2031 is the sum of the
compounded daily Sonia rate plus 2.0366%.
5 The value of the security partially decreased as a result of a fair
value hedge gain. The instrument was held at amortised cost in 2021.
6 HSBC Bank plc tendered for this security in November 2022. The
principal balance is $180m. The original notional value of the security was
$300m.
7 HSBC Bank plc tendered for these securities in November 2022. The
principal balances are £135m, £61m, £157m, £70m and £237m, respectively.
The original notional values of these securities were £300m, £350m, £500m,
£225m and £600m respectively.
8 These securities qualified as tier 2 capital for HSBC under CRR II
until 31 December 2021 by virtue of the application of grandfathering
provisions. The interest rate payable after November 2025 is the sum of the
compounded daily Sonia rate plus 1.6193%.
9 These securities were fully repaid in November 2022.
10 HSBC tendered for these securities in November 2019. The principal
balances are $357m and $383m respectively. The original notional values of
these securities were $1,000m and $750m, respectively.
11 Liability accounts for HSBC Bank Canada have been reclassified to
'Liabilities of disposal groups held for sale'.
12 These securities are included in the capital base of HSBC, in accordance
with the grandfathering provisions under CRR II. In 2022, securities of $11m
matured and were redeemed.
HSBC Holdings' subordinated liabilities
2022 2021
$m $m
At amortised cost 19,727 17,059
Designated at fair value (Note 25) 6,700 5,600
At 31 Dec 26,427 22,659
HSBC Holdings' subordinated liabilities in issue
First call Maturity 2022 2021
date date $m $m
Tier 2 securities issued by HSBC Holdings
Amounts owed to third parties
$2,000m 4.25% subordinated notes(2,3) - Mar 2024 1,941 2,072
$1,500m 4.25% subordinated notes(2) - Aug 2025 1,450 1,615
$1,500m 4.375% subordinated notes(2) - Nov 2026 1,450 1,641
$264m 7.625% subordinated notes(1,4) - May 2032 308 536
$223m 7.625% subordinated notes(2,6) - May 2032 223 -
$125m 7.35% subordinated notes(1,4) - Nov 2032 143 241
$97m 7.35% subordinated notes(2,6) - Nov 2032 97 -
$1,431m 6.50% subordinated notes(1,5) - May 2036 1,461 2,032
$569m 6.50%subordinated notes(2,6) - May 2036 568 -
$1,515m 6.50% subordinated notes(1,5) - Sep 2037 1,178 2,825
$985m 6.50% subordinated notes(2,6) - Sep 2037 977 -
$961m 6.80% subordinated notes(1,5) - Jun 2038 953 1,491
$539m 6.80% subordinated notes(2,6) - Jun 2038 540 -
$1,500m 5.25% subordinated notes(2) - Mar 2044 1,447 1,946
$2,000m 4.762% subordinated notes(2) Mar 2032 Mar 2033 1,766 -
$2,000m 8.113% subordinated notes(2) Nov 2032 Nov 2033 2,008 -
£650m 5.75% subordinated notes(2) - Dec 2027 775 1,040
£650m 6.75% subordinated notes(2) - Sep 2028 816 877
£750m 7.00% subordinated notes(2) - Apr 2038 817 1,082
£900m 6.00% subordinated notes(2) - Mar 2040 776 1,320
£1,000m 8.201% subordinated notes(2) Aug 2029 Nov 2034 1,252 -
€1,500m 3.0% subordinated notes(2) - Jun 2025 1,492 1,737
€1,000m 3.125% subordinated notes(2) - Jun 2028 991 1,304
€1,250m 6.364% subordinated notes(2) Nov 2027 Nov 2032 1,316 -
SGD900m 5.25%subordinated notes(2) Jun 2027 Jun 2032 694 -
JPY11,900m 2.50% subordinated notes(2) Sep 2027 Sep 2032 88 -
25,527 21,759
Amounts owed to HSBC undertakings
$900m 10.176% subordinated step-up cumulative notes Jun 2030 Jun 2040 900 900
900 900
At 31 Dec 26,427 22,659
1 Amounts owed to third parties represent securities included in the
capital base of HSBC as tier 2 securities in accordance with the
grandfathering provisions under CRR II.
2 These securities are included in the capital base of HSBC as fully CRR
II-compliant tier 2 securities on an end point basis.
3 These subordinated notes are measured at amortised cost in HSBC
Holdings, where the interest rate risk is hedged using a fair value hedge,
while they are measured at fair value in the Group.
4 These securities were subjected to a tender and an exchange offer
exercise in September 2022. The original principal amounts were $488m and
$222m, respectively, and are now $264m and $125m.
5 These securities were subjected to an exchange offer exercise in
September 2022. The original principal amounts were $2,000m, $2,500m and
$1,500m, respectively, and are now $1,431m, $1,515m and $961m.
6 These subordinated notes were issued under an exchange offer
exercise in September 2022.
Guaranteed by HSBC Holdings or HSBC Bank plc
Capital securities guaranteed by HSBC Holdings or HSBC Bank plc were issued by
the Jersey limited partnerships. The proceeds of these were lent to the
respective guarantors by the limited partnerships in the form of subordinated
notes. They qualified as additional tier 1 capital for HSBC under CRR II until
31 December 2021 by virtue of the application of grandfathering provisions.
The capital security guaranteed by HSBC Bank plc also qualified as additional
tier 1 capital for HSBC Bank plc (on a solo and a consolidated basis) under
CRR II until 31 December 2021 by virtue of the same grandfathering process.
Since 31 December 2021, these securities have no longer qualified as
regulatory capital for HSBC or HSBC Bank plc.
These preferred securities, together with the guarantee, are intended to
provide investors with rights to income and capital distributions and
distributions upon liquidation of the relevant issuer that are equivalent to
the rights that they would have had if they had purchased non-cumulative
perpetual preference shares of the relevant issuer. There are limitations on
the payment of distributions if such payments are prohibited under UK banking
regulations or other requirements, if a payment would cause a breach of HSBC's
capital adequacy requirements, or if HSBC Holdings or HSBC Bank plc has
insufficient distributable reserves (as defined).
HSBC Holdings and HSBC Bank plc have individually covenanted that, if
prevented under certain circumstances from paying distributions on the
preferred securities in full, they will not pay dividends or other
distributions in respect of their ordinary shares, or repurchase or redeem
their ordinary shares, until the distribution on the preferred securities has
been paid in full.
If the consolidated total capital ratio of HSBC Holdings falls below the
regulatory minimum required or if the Directors expect it to do so in the near
term, provided that proceedings have not been commenced for the liquidation,
dissolution or winding up of HSBC Holdings, the holders' interests in the
preferred securities guaranteed by HSBC Holdings will be exchanged for
interests in preference shares issued by HSBC Holdings that have economic
terms which are in all material respects equivalent to the preferred
securities and their guarantee.
If the preferred securities guaranteed by HSBC Bank plc are outstanding in
November 2048, or if the total capital ratio of HSBC Bank plc (on a solo or
consolidated basis) falls below the regulatory minimum required, or if the
Directors expect it to do so in the near term, provided that proceedings have
not been commenced for the liquidation, dissolution or winding up of HSBC Bank
plc, the holders' interests in the preferred security guaranteed by HSBC Bank
plc will be exchanged for interests in preference shares issued by HSBC Bank
plc that have economic terms which are in all material respects equivalent to
the preferred security and its guarantee.
Tier 2 securities
Tier 2 capital securities are either perpetual or dated subordinated
securities on which there is an obligation to pay coupons. These capital
securities are included within HSBC's regulatory capital base as tier 2
capital under CRR II, either as fully eligible capital or by virtue of the
application of grandfathering provisions. In accordance with CRR II, the
capital contribution of all tier 2 securities is amortised for regulatory
purposes in their final five years before maturity.
30 Maturity analysis of assets, liabilities and off-balance sheet commitments
The table on page 397 provides an analysis of consolidated total assets,
liabilities and off-balance sheet commitments by residual contractual maturity
at the balance sheet date. These balances are included in the maturity
analysis as follows:
• Trading assets and liabilities (including trading derivatives but
excluding reverse repos, repos and debt securities in issue) are included in
the 'Due not more than 1 month' time bucket, because trading balances are
typically held for short periods of time.
• Financial assets and liabilities with no contractual maturity (such
as equity securities) are included in the 'Due over 5 years' time bucket.
Undated or perpetual instruments are classified based on the contractual
notice period, which the counterparty of the instrument is entitled to give.
Where there is no contractual notice period, undated or perpetual contracts
are included in the 'Due over 5 years' time bucket.
• Non-financial assets and liabilities with no contractual maturity
are included in the 'Due over 5 years' time bucket.
• Financial instruments included within assets and liabilities of
disposal groups held for sale are classified on the basis of the contractual
maturity of the underlying instruments and not on the basis of the disposal
transaction.
• Liabilities under insurance contracts included in 'other financial
liabilities', are irrespective of contractual maturity included in the 'Due
over 5 years' time bucket in the maturity table provided below. An analysis of
the expected maturity of liabilities under insurance contracts based on
undiscounted cash flows is provided on page 238. Liabilities under investment
contracts are classified in accordance with their contractual maturity.
Undated investment contracts are included in the 'Due over 5 years' time
bucket, although such contracts are subject to surrender and transfer options
by the policyholders.
• Loan and other credit-related commitments are classified on the
basis of the earliest date they can be drawn down.
•
HSBC
Maturity analysis of assets, liabilities and off-balance sheet commitments
Due not Due over Due over Due over Due over Due over Due over Due over Total
more than 1 month 3 months 6 months 9 months 1 year 2 years 5 years
1 month but not but not but not but not but not but not
more than more than more than more than more than more than
3 months 6 months 9 months 1 year 2 years 5 years
$m $m $m $m $m $m $m $m $m
Financial assets
Cash and balances at central banks 327,002 - - - - - - - 327,002
Items in the course of collection from other banks 7,297 - - - - - - - 7,297
Hong Kong Government certificates of indebtedness 43,787 - - - - - - - 43,787
Trading assets 213,234 1,333 1,343 338 425 808 222 390 218,093
Financial assets designated or otherwise mandatorily measured at fair value 2,778 101 370 658 (53) 645 2,005 38,559 45,063
Derivatives 281,710 133 30 21 64 261 1,052 875 284,146
Loans and advances to banks 72,241 13,963 8,364 880 2,344 3,058 3,900 132 104,882
Loans and advances to customers 139,935 75,487 58,983 35,642 33,738 100,027 173,306 307,736 924,854
- personal 41,835 9,142 6,664 5,754 5,779 18,375 51,104 273,487 412,140
- corporate and commercial 84,956 60,064 45,719 24,427 22,627 68,514 108,590 31,135 446,032
- financial 13,144 6,281 6,600 5,461 5,332 13,138 13,612 3,114 66,682
Reverse repurchase agreements - non-trading 171,173 51,736 16,164 5,840 2,776 3,999 2,066 - 253,754
Financial investments 46,997 79,912 31,629 12,301 13,581 41,968 79,410 119,766 425,564
Assets held for sale(1) 33,781 3,755 3,452 3,044 3,263 15,369 40,017 14,697 117,378
Accrued income and other financial assets 99,409 6,249 3,772 616 777 546 303 1,708 113,380
Financial assets at 31 Dec 2022 1,439,344 232,669 124,107 59,340 56,915 166,681 302,281 483,863 2,865,200
Non-financial assets - - - - - - - 101,330 101,330
Total assets at 31 Dec 2022 1,439,344 232,669 124,107 59,340 56,915 166,681 302,281 585,193 2,966,530
Off-balance sheet commitments received
Loan and other credit-related commitments 27,340 - - - - - - - 27,340
Financial liabilities
Hong Kong currency notes in circulation 43,787 - - - - - - - 43,787
Deposits by banks 46,994 359 3,510 205 136 1,455 13,737 326 66,722
Customer accounts 1,388,297 93,108 47,712 14,244 17,295 4,719 4,607 321 1,570,303
- personal 657,413 55,252 35,430 10,431 12,374 2,835 2,351 2 776,088
- corporate and commercial 555,539 31,624 10,385 3,080 3,824 1,667 2,146 274 608,539
- financial 175,345 6,232 1,897 733 1,097 217 110 45 185,676
Repurchase agreements - non-trading 121,193 3,804 685 170 645 1,250 - - 127,747
Items in the course of transmission to other banks 7,864 - - - - - - - 7,864
Trading liabilities 66,027 5,668 281 113 113 116 35 - 72,353
Financial liabilities designated at 16,431 7,399 6,561 4,307 5,326 19,287 34,885 33,131 127,327
fair value
- debt securities in issue: covered bonds - - - - - - - - -
- debt securities in issue: unsecured 7,057 3,621 4,792 3,156 4,289 16,234 29,940 23,510 92,599
- subordinated liabilities and preferred securities - - - - - 1,971 3,675 3,990 9,636
- other 9,374 3,778 1,769 1,151 1,037 1,082 1,270 5,631 25,092
Derivatives 284,414 73 18 46 57 171 849 136 285,764
Debt securities in issue 4,514 7,400 7,476 4,745 3,585 9,198 19,240 21,991 78,149
- covered bonds - - - - - - 601 - 601
- otherwise secured 705 28 40 38 36 124 656 1,346 2,973
- unsecured 3,809 7,372 7,436 4,707 3,549 9,074 17,983 20,645 74,575
Liabilities of disposal groups held for sale(2) 76,928 4,342 5,374 6,599 8,606 2,343 8,653 1,479 114,324
Accruals and other financial liabilities 104,224 9,384 4,785 1,022 1,626 1,111 2,018 1,720 125,890
Subordinated liabilities - - 11 160 - - 1,689 20,430 22,290
Total financial liabilities at 31 Dec 2022 2,160,673 131,537 76,413 31,611 37,389 39,650 85,713 79,534 2,642,520
Non-financial liabilities - - - - - - - 127,982 127,982
Total liabilities at 31 Dec 2022 2,160,673 131,537 76,413 31,611 37,389 39,650 85,713 207,516 2,770,502
Off-balance sheet commitments given
Loan and other credit-related commitments 825,781 184 75 59 210 242 975 328 827,854
- personal 242,953 2 3 - 110 199 811 300 244,378
- corporate and commercial 449,843 176 72 59 84 43 163 28 450,468
- financial 132,985 6 - - 16 - 1 - 133,008
1 Unallocated impairment losses in relation to disposal groups of
$2.4bn and non-financial assets of $1bn that are both are presented within
assets held for sale on the balance sheet have been included within
non-financial assets in the table above.
2 $0.3bn of non-financial liabilities that are presented within
liabilities of disposal groups held for sale on the balance sheet have been
included within non-financial liabilities in the table above.
Maturity analysis of assets, liabilities and off-balance sheet commitments
(continued)
Due not Due over Due over Due over Due over Due over Due over Due over Total
more than 1 month 3 months 6 months 9 months 1 year 2 years 5 years
1 month but not but not but not but not but not but not
more than more than more than more than more than more than
3 months 6 months 9 months 1 year 2 years 5 years
$m $m $m $m $m $m $m $m $m
Financial assets
Cash and balances at central banks 403,018 - - - - - - - 403,018
Items in the course of collection from other banks 4,136 - - - - - - - 4,136
Hong Kong Government certificates of indebtedness 42,578 - - - - - - - 42,578
Trading assets 244,422 2,403 440 194 468 621 294 - 248,842
Financial assets designated at fair value 4,968 89 585 515 224 855 1,852 40,716 49,804
Derivatives 195,701 164 85 110 233 91 310 188 196,882
Loans and advances to banks 55,572 10,889 5,469 1,078 1,512 5,321 3,134 161 83,136
Loans and advances to customers 160,583 82,531 69,380 42,459 42,651 107,393 220,746 320,071 1,045,814
- personal 50,573 11,373 8,934 8,022 7,766 25,271 78,373 284,922 475,234
- corporate and commercial 97,554 64,511 52,548 29,341 28,749 72,441 127,527 32,664 505,335
- financial 12,456 6,647 7,898 5,096 6,136 9,681 14,846 2,485 65,245
Reverse repurchase agreements - non-trading 155,997 49,392 18,697 9,386 3,661 2,672 1,843 - 241,648
Financial investments 47,084 68,034 33,233 20,638 21,779 49,903 80,367 125,236 446,274
Assets held for sale(1) 58 - - - 180 11 549 2,033 2,831
Accrued income and other financial assets 79,019 5,932 2,935 536 357 254 263 1,689 90,985
Financial assets at 31 Dec 2021 1,393,136 219,434 130,824 74,916 71,065 167,121 309,358 490,094 2,855,948
Non-financial assets - - - - - - - 101,991 101,991
Total assets at 31 Dec 2021 1,393,136 219,434 130,824 74,916 71,065 167,121 309,358 592,085 2,957,939
Off-balance sheet commitments received
Loan and other credit-related commitments 49,061 - - - - - - - 49,061
Financial liabilities
Hong Kong currency notes in circulation 42,578 - - - - - - - 42,578
Deposits by banks 63,660 2,695 2,419 238 125 14,653 16,734 628 101,152
Customer accounts 1,615,025 51,835 19,167 8,007 9,710 3,143 3,585 102 1,710,574
- personal 802,777 24,725 12,038 5,961 5,255 2,304 2,242 26 855,328
- corporate and commercial 623,459 22,980 5,654 1,762 3,402 706 1,167 33 659,163
- financial 188,789 4,130 1,475 284 1,053 133 176 43 196,083
Repurchase agreements - non-trading 117,625 4,613 1,716 292 142 975 377 930 126,670
Items in the course of transmission to other banks 5,214 - - - - - - - 5,214
Trading liabilities 79,789 3,810 346 218 223 445 73 - 84,904
Financial liabilities designated at fair value 18,080 9,437 4,514 3,287 4,485 17,422 42,116 46,161 145,502
- debt securities in issue: covered bonds - 1,137 - - - 1,481 1,160 - 3,778
- debt securities in issue: unsecured 9,916 5,967 2,823 2,259 3,462 14,758 34,515 35,282 108,982
- subordinated liabilities and preferred securities - - - - - - 5,371 4,729 10,100
- other 8,164 2,333 1,691 1,028 1,023 1,183 1,070 6,150 22,642
Derivatives 190,233 46 11 30 25 100 288 331 191,064
Debt securities in issue 7,053 7,777 5,664 6,880 1,703 9,045 20,254 20,181 78,557
- covered bonds - - - 997 - 996 860 - 2,853
- otherwise secured 957 164 42 31 193 896 1,696 1,207 5,186
- unsecured 6,096 7,613 5,622 5,852 1,510 7,153 17,698 18,974 70,518
Liabilities of disposal groups held for sale 8,753 6 9 9 8 31 68 11 8,895
Accruals and other financial liabilities 82,996 10,311 5,621 1,094 1,064 1,917 2,339 2,818 108,160
Subordinated liabilities - 1 11 - - 417 2,055 18,003 20,487
Total financial liabilities at 31 Dec 2021 2,231,006 90,531 39,478 20,055 17,485 48,148 87,889 89,165 2,623,757
Non-financial liabilities - - - - - - - 127,405 127,405
Total liabilities at 31 Dec 2021 2,231,006 90,531 39,478 20,055 17,485 48,148 87,889 216,570 2,751,162
Off-balance sheet commitments given
Loan and other credit-related commitments 813,491 121 133 228 254 78 931 238 815,474
- personal 239,207 34 34 54 108 32 688 238 240,395
- corporate and commercial 456,498 76 91 168 143 46 243 - 457,265
- financial 117,786 11 8 6 3 - - - 117,814
HSBC Holdings
Maturity analysis of assets, liabilities and off-balance sheet commitments
(continued)
Due not Due over Due over Due over Due over Due over Due over Due over Total
more than 1 month 3 months 6 months 9 months 1 year 2 years 5 years
1 month but not but not but not but not but not but not
more than more than more than more than more than more than
3 months 6 months 9 months 1 year 2 years 5 years
$m $m $m $m $m $m $m $m $m
Financial assets
Cash at bank and in hand:
- balances with HSBC undertakings 3,210 - - - - - - - 3,210
Derivatives 2,889 - - - - - 796 116 3,801
Loans and advances to HSBC undertakings - 2,163 240 - - 2,035 4,414 17,913 26,765
Financial assets with HSBC undertakings designated and otherwise mandatorily - - - - - 9,007 16,230 27,085 52,322
measured at fair value
Financial investments 1,517 2,712 8,870 1,020 2,194 3,153 - - 19,466
Accrued income and other financial assets 68 4,147 179 90 4 - 14 - 4,502
Total financial assets at 31 Dec 2022 7,684 9,022 9,289 1,110 2,198 14,195 21,454 45,114
110,066
Non-financial assets - - - - - - - 171,035
171,035
Total assets at 31 Dec 2022 7,684 9,022 9,289 1,110 2,198 14,195 21,454 216,149
281,101
Financial liabilities
Amounts owed to HSBC undertakings 48 266 - - - - - - 314
Financial liabilities designated at fair value - - - - - 1,447 16,459 14,217 32,123
- debt securities in issue - - - - - 1,447 12,784 11,192 25,423
- subordinated liabilities and preferred securities - - - - - - 3,675 3,025 6,700
Derivatives 2,540 - 35 - 102 460 1,638 2,147 6,922
Debt securities in issue - - 1,972 448 714 11,046 25,380 27,378 66,938
Accruals and other financial liabilities 722 450 648 61 35 - 14 31 1,961
Subordinated liabilities - - - - - 1,941 1,492 16,294 19,727
Total financial liabilities 31 Dec 2022 3,310 716 2,655 509 851 14,894 44,983 60,067
127,985
Non-financial liabilities - - - - - - - 8 8
Total liabilities at 31 Dec 2022 3,310 716 2,655 509 851 14,894 44,983 60,075
127,993
Financial assets
Cash at bank and in hand:
- balances with HSBC undertakings 2,590 - - - - - - - 2,590
Derivatives 1,101 - - - - 23 585 1,102 2,811
Loans and advances to HSBC undertakings 120 750 341 - 3,017 5,608 13,333 1,939 25,108
Loans and advances to HSBC undertakings designated at fair value - 1,759 250 1,019 - 5,987 19,455 22,938 51,408
Financial investments in HSBC undertakings 8,377 7,166 3,014 1,346 3,026 3,265 - - 26,194
Accrued income and other financial assets 129 874 108 58 4 - - - 1,173
Total financial assets at 31 Dec 2021 12,317 10,549 3,713 2,423 6,047 14,883 33,373 25,979 109,284
Non-financial assets - - - - - - - 163,888 163,888
Total assets at 31 Dec 2021 12,317 10,549 3,713 2,423 6,047 14,883 33,373 189,867 273,172
Financial liabilities
Amounts owed to HSBC undertakings - 111 - - - - - - 111
Financial liabilities designated at fair value 397 2,484 - - - 1,364 11,276 16,897 32,418
- debt securities in issue 397 2,484 - - - 1,364 8,020 14,553 26,818
- subordinated liabilities and preferred securities - - - - - - 3,256 2,344 5,600
Derivatives 1,167 - - - - 5 1 47 1,220
Debt securities in issue 1,051 - - - - 8,525 29,889 28,018 67,483
Accruals and other financial liabilities 1,778 730 1,612 68 12 - - 40 4,240
Subordinated liabilities - - - - - - 3,809 13,250 17,059
Total financial liabilities at 31 Dec 2021 4,393 3,325 1,612 68 12 9,894 44,975 58,252 122,531
Non-financial liabilities - - - - - - - 311 311
Total liabilities at 31 Dec 2021 4,393 3,325 1,612 68 12 9,894 44,975 58,563 122,842
Contractual maturity of financial liabilities
The following table shows, on an undiscounted basis, all cash flows relating
to principal and future coupon payments (except for trading liabilities and
derivatives not treated as hedging derivatives). For this reason, balances in
the following table do not agree directly with those in our consolidated
balance sheet. Undiscounted cash flows payable in relation to hedging
derivative liabilities are classified according to their contractual
maturities. Trading liabilities and derivatives not treated as hedging
derivatives are included in the 'Due not more than 1 month' time bucket and
not by contractual maturity.
In addition, loan and other credit-related commitments and financial
guarantees are generally not recognised on our balance sheet. The undiscounted
cash flows potentially payable under loan and other credit-related commitments
and financial guarantees are classified on the basis of the earliest date they
can be called.
Cash flows payable by HSBC under financial liabilities by remaining
contractual maturities
Due not more Due over Due over Due over Due over Total
than 1 month 1 month but 3 months but 1 year but not 5 years
not more than not more than more than
3 months 1 year 5 years
$m $m $m $m $m $m
Deposits by banks 47,082 406 4,024 16,050 359 67,921
Customer accounts 1,387,125 96,474 80,608 9,961 346 1,574,514
Repurchase agreements - non-trading 121,328 3,852 1,535 1,268 - 127,983
Trading liabilities 72,353 - - - - 72,353
Financial liabilities designated at fair value 16,687 7,859 18,740 63,606 43,475 150,367
Derivatives 283,512 171 1,181 2,222 1,059 288,145
Debt securities in issue 4,329 8,217 17,522 34,283 26,428 90,779
Subordinated liabilities 37 168 1,395 7,321 32,946 41,867
Other financial liabilities(1) 153,597 8,670 5,994 3,230 1,704 173,195
2,086,050 125,817 130,999 137,941 106,317 2,587,124
Loan and other credit-related commitments 825,781 184 344 1,217 328 827,854
Financial guarantees(2) 18,696 25 62 - - 18,783
At 31 Dec 2022 2,930,527 126,026 131,405 139,158 106,645 3,433,761
Proportion of cash flows payable in period 85% 4% 4% 4% 3%
Deposits by banks 63,684 2,712 2,800 31,294 643 101,133
Customer accounts 1,613,065 54,092 37,219 7,093 138 1,711,607
Repurchase agreements - non-trading 117,643 4,615 2,157 1,359 935 126,709
Trading liabilities 84,904 - - - - 84,904
Financial liabilities designated at fair value 18,335 9,760 13,606 63,834 50,953 156,488
Derivatives 190,354 192 190 1,792 1,332 193,860
Debt securities in issue 7,149 7,958 15,142 32,651 21,911 84,811
Subordinated liabilities 119 168 848 6,741 28,347 36,223
Other financial liabilities(1) 129,706 9,842 7,664 4,577 2,697 154,486
2,224,959 89,339 79,626 149,341 106,956 2,650,221
Loan and other credit-related commitments 813,471 121 615 1,029 238 815,474
Financial guarantees(2) 27,774 6 9 6 - 27,795
At 31 Dec 2021 3,066,204 89,466 80,250 150,376 107,194 3,493,490
Proportion of cash flows payable in period 88% 3% 2% 4% 3%
1 Excludes financial liabilities of disposal groups.
2 Excludes performance guarantee contracts to which the impairment
requirements in IFRS 9 are not applied.
HSBC Holdings
HSBC Holdings' primary sources of liquidity are dividends received from
subsidiaries, interest on and repayment of intra-Group loans and securities,
and interest earned on its own liquid funds. HSBC Holdings also raises funds
in the debt capital markets to meet the Group's minimum requirement for own
funds and eligible liabilities. HSBC Holdings uses this liquidity to meet its
obligations, including interest and principal repayments on external debt
liabilities, operating expenses and collateral on derivative transactions.
HSBC Holdings is also subject to contingent liquidity risk by virtue of
credit-related commitments and guarantees and similar contracts issued
relating to its subsidiaries. Such commitments and guarantees are only issued
after due consideration of HSBC Holdings' ability to finance the commitments
and guarantees and the likelihood of the need arising.
HSBC Holdings actively manages the cash flows from its subsidiaries to
optimise the amount of cash held at the holding company level. During 2022,
consistent with the Group's capital plan, the Group's subsidiaries did not
experience any significant restrictions on paying dividends or repaying loans
and advances. Also, there are no foreseen restrictions envisaged with regard
to planned dividends or payments. However, the ability of subsidiaries to pay
dividends or advance monies to HSBC Holdings depends on, among other things,
their respective local regulatory capital and banking requirements, exchange
controls, statutory reserves, and financial and operating performance.
HSBC Holdings currently has sufficient liquidity to meet its present
requirements.
Liquidity risk in HSBC Holdings is overseen by Holdings ALCO. This risk arises
because of HSBC Holdings' obligation to make payments to debt holders as they
fall due and to pay its operating expenses. The liquidity risk related to
these cash flows is managed by matching external debt obligations with
internal loan cash flows and by maintaining an appropriate liquidity buffer
that is monitored by Holdings ALCO.
The balances in the following table are not directly comparable with those on
the balance sheet of HSBC Holdings as the table incorporates, on an
undiscounted basis, all cash flows relating to principal and future coupon
payments (except for derivatives not treated as hedging derivatives).
Undiscounted cash flows payable in relation to hedging derivative liabilities
are classified according to their contractual maturities. Derivatives not
treated as hedging derivatives are included in the 'On demand' time bucket.
In addition, loan commitments and financial guarantees and similar contracts
are generally not recognised on our balance sheet. The undiscounted cash flows
potentially payable under financial guarantees and similar contracts are
classified on the basis of the earliest date on which they can be called.
Cash flows payable by HSBC Holdings under financial liabilities by remaining
contractual maturities
Due not more Due over 1 Due over 3 Due over 1 Due over Total
than 1 month month but not months but year but not 5 years
more than 3 not more than more than 5
months 1 year years
$m $m $m $m $m $m
Amounts owed to HSBC undertakings 48 266 - - - 314
Financial liabilities designated at fair value 11 72 1,139 22,921 19,196 43,339
Derivatives 1,182 177 1,089 4,231 1,321 8,000
Debt securities in issue - 544 4,899 44,608 32,540 82,591
Subordinated liabilities 46 161 1,068 8,262 27,045 36,582
Other financial liabilities 721 458 745 14 31 1,969
2,008 1,678 8,940 80,036 80,133 172,795
Loan commitments - - - - - -
Financial guarantees(1) 17,707 - - - - 17,707
At 31 Dec 2022 19,715 1,678 8,940 80,036 80,133 190,502
Amounts owed to HSBC undertakings - 111 - - - 111
Financial liabilities designated at fair value 473 2,611 621 15,017 17,557 36,279
Derivatives 1,223 9 51 414 585 2,282
Debt securities in issue 1,196 276 1,286 43,360 30,800 76,918
Subordinated liabilities 81 155 722 7,222 20,777 28,957
Other financial liabilities 1,778 730 1,692 - 40 4,240
4,751 3,892 4,372 66,013 69,759 148,787
Loan commitments - - - - - -
Financial guarantees(1) 13,746 - - - - 13,746
At 31 Dec 2021 18,497 3,892 4,372 66,013 69,759 162,533
1 Excludes performance guarantee contracts to which the impairment
requirements in IFRS 9 are not applied.
31 Offsetting of financial assets and financial liabilities
In the offsetting of financial assets and financial liabilities, the net
amount is reported in the balance sheet when the offset criteria are met. This
is achieved when there is a legally enforceable right to offset the recognised
amounts and there is either an intention to settle on a net basis, or realise
the asset and settle the liability simultaneously.
In the following table, the 'Amounts not set off in the balance sheet' include
transactions where:
• the counterparty has an offsetting exposure with HSBC and a master
netting or similar arrangement is in place with a right to set off only in the
event of default, insolvency or bankruptcy, or the offset criteria are
otherwise not satisfied; and
• cash and non-cash collateral (debt securities and equities) has been
received/pledged for derivatives and reverse repurchase/repurchase, stock
borrowing/lending and similar agreements to cover net exposure in the event of
a default or other predetermined events.
The effect of over-collateralisation is excluded.
'Amounts not subject to enforceable netting agreements' include contracts
executed in jurisdictions where the rights of offset may not be upheld under
the local bankruptcy laws, and transactions where a legal opinion evidencing
enforceability of the right of offset may not have been sought, or may have
been unable to obtain.
For risk management purposes, the net amounts of loans and advances to
customers are subject to limits, which are monitored and the relevant customer
agreements are subject to review and updated, as necessary, to ensure the
legal right to set off remains appropriate.
Offsetting of financial assets and financial liabilities
Amounts subject to enforceable netting arrangements Amounts not Total
subject to
enforceable
netting
arrangements(2)
Amounts not set off in the balance sheet
Gross Amounts Net Financial instruments, including non-cash collateral(1) Cash Net
amounts offset amounts in collateral amount
the balance
sheet
$m $m $m $m $m $m $m $m
Financial assets
Derivatives (Note 15)(3) 419,006 (140,987) 278,019 (236,373) (36,486) 5,160 6,127 284,146
Reverse repos, stock borrowing and similar agreements classified as:(4)
- trading assets 24,372 (236) 24,136 (24,106) (29) 1 1,367 25,503
- non-trading assets 335,193 (102,888) 232,305 (231,432) (449) 424 21,689 253,994
Loans and advances to customers(5) 28,337 (12,384) 15,953 (13,166) - 2,787 267 16,220
At 31 Dec 2022 806,908 (256,495) 550,413 (505,077) (36,964) 8,372 29,450 579,863
Derivatives (Note 15)(3) 244,694 (53,378) 191,316 (151,304) (36,581) 3,431 5,566 196,882
Reverse repos, stock borrowing and similar agreements classified as:(4)
- trading assets 21,568 (222) 21,346 (21,272) 3 1,729 23,075
(71)
- non-trading assets 353,066 (136,932) 216,134 (215,769) 200 25,731 241,865
(165)
Loans and advances to customers(5) 27,045 (10,919) 16,126 (13,065) - 3,061 327 16,453
At 31 Dec 2021 646,373 (201,451) 444,922 (401,410) (36,817) 6,695 33,353 478,275
Financial liabilities
Derivatives (Note 15)(3) 419,994 (140,987) 279,007 (239,235) (29,276) 10,496 6,757 285,764
Repos, stock lending and similar agreements classified as:(4)
- trading liabilities 20,027 (236) 19,791 (19,790) - 1 4 19,795
- non-trading liabilities 206,827 (102,888) 103,939 (103,296) (249) 394 23,808 127,747
Customer accounts(6) 37,164 (12,384) 24,780 (13,166) - 11,614 14 24,794
At 31 Dec 2022 684,012 (256,495) 427,517 (375,487) (29,525) 22,505 30,583 458,100
Derivatives (Note 15)(3) 239,597 (53,378) 186,219 (163,359) (18,225) 4,635 4,845 191,064
Repos, stock lending and similar agreements classified as:(4)
- trading liabilities 13,540 (222) 13,318 (13,318) - - 17 13,335
- non-trading liabilities 235,042 (136,932) 98,110 (97,816) 91 28,560 126,670
(203)
Customer accounts(6) 40,875 (10,919) 29,956 (13,065) - 16,891 17 29,973
At 31 Dec 2021 529,054 (201,451) 327,603 (287,558) (18,428) 21,617 33,439 361,042
1 The disclosure has been enhanced in 2022 to support consistency
across Group entities. All financial instruments (whether recognised on our
balance sheet or as non-cash collateral received or pledged) are presented
within 'financial instruments, including non-cash collateral', as balance
sheet classification has no effect on the rights of offset associated with
financial instruments. Comparative data have been re-presented accordingly.
2 These exposures continue to be secured by financial collateral, but we
may not have sought or been able to obtain a legal opinion evidencing
enforceability of the right of offset.
3 At 31 December 2022, the amount of cash margin received that had been
offset against the gross derivatives assets was $8,357m (2021: $4,469m). The
amount of cash margin paid that had been offset against the gross derivatives
liabilities was $10,918m (2021: $9,479m).
4 For the amount of repos, reverse repos, stock lending, stock
borrowing and similar agreements recognised on the balance sheet within
'Trading assets' of $25,503m (2021: $23,075m) and 'Trading liabilities' of
$19,795m (2021: $13,335m), see the 'Funding sources and uses' table on page
210.
5 At 31 December 2022, the total amount of 'Loans and advances to
customers' was $924,854m (2021: $1,045,814m), of which $15,953m (2021:
$16,126m) was subject to offsetting.
6 At 31 December 2022, the total amount of 'Customer accounts' was
$1,570,303m (2021: $1,710,574m), of which $24,780m (2021: $29,956m) was
subject to offsetting.
32 Called up share capital and other equity instruments
Called up share capital and share premium
HSBC Holdings ordinary shares of $0.50 each, issued and fully paid
2022 2021
Number $m Number $m
At 1 Jan 20,631,520,439 10,316 20,693,621,100 10,347
Shares issued under HSBC employee share plans 10,226,221 5 58,266,053 29
Shares issued in lieu of dividends - - - -
Less: Shares repurchased and cancelled 348,139,250 174 120,366,714 60
At 31 Dec(1) 20,293,607,410 10,147 20,631,520,439 10,316
HSBC Holdings share premium
2022 2021
$m $m
At 31 Dec 14,664 14,602
Total called up share capital and share premium
2022 2021
$m $m
At 31 Dec 24,811 24,918
1 All HSBC Holdings ordinary shares in issue, excluding 325,273,407
shares held in treasury, confer identical rights, including in respect of
capital, dividends and voting.
HSBC Holdings 6.20% non-cumulative US dollar preference shares, Series A of
$0.01
The 6.20% non-cumulative US dollar preference shares, Series A of $0.01 each
were called by HSBC Holdings on 10 December 2020 and were redeemed and
cancelled on 13 January 2021.
HSBC Holdings non-cumulative preference share of £0.01
The one non-cumulative sterling preference share of £0.01 ('sterling
preference share') has been in issue since 29 December 2010 and is held by a
subsidiary of HSBC Holdings. Dividends are paid quarterly at the sole and
absolute discretion of the Board. The sterling preference share carries no
rights of conversion into ordinary shares of HSBC Holdings and no right to
attend or vote at shareholder meetings of HSBC Holdings. These securities can
be redeemed by HSBC Holdings at any time, subject to prior approval by the
PRA.
Other equity instruments
HSBC Holdings has included two types of additional tier 1 capital securities
in its tier 1 capital, including the contingent convertible securities
described below. These are accounted for as equity because HSBC does not have
an obligation to transfer cash or a variable number of its own ordinary shares
to holders under any circumstances outside its control. See Note 29 for
additional tier 1 securities accounted for as liabilities.
Additional tier 1 capital - contingent convertible securities
HSBC Holdings continues to issue contingent convertible securities that are
included in its capital base as fully CRR II-compliant additional tier 1
capital securities on an end point basis. These securities are marketed
principally and subsequently allotted to corporate investors and fund
managers. The net proceeds of the issuances are typically used for HSBC
Holdings' general corporate purposes and to further strengthen its capital
base to meet requirements under CRR II. These securities bear a fixed rate of
interest until their initial call dates. After the initial call dates, if they
are not redeemed, the securities will bear interest at rates fixed
periodically in advance for five-year periods based on credit spreads, fixed
at issuance, above prevailing market rates. Interest on the contingent
convertible securities will be due and payable only at the sole discretion of
HSBC Holdings, and HSBC Holdings has sole and absolute discretion at all times
to cancel for any reason (in whole or part) any interest payment that would
otherwise be payable on any payment date. Distributions will not be paid if
they are prohibited under UK banking regulations or if the Group has
insufficient reserves or fails to meet the solvency conditions defined in the
securities' terms.
The contingent convertible securities are undated and are repayable at the
option of HSBC Holdings in whole typically at the initial call date or on any
fifth anniversary after this date. In addition, the securities are repayable
at the option of HSBC in whole for certain regulatory or tax reasons. Any
repayments require the prior consent of the PRA. These securities rank pari
passu with HSBC Holdings' sterling preference shares and therefore rank ahead
of ordinary shares. The contingent convertible securities will be converted
into fully paid ordinary shares of HSBC Holdings at a predetermined price,
should HSBC's consolidated non-transitional CET1 ratio fall below 7.0%.
Therefore, in accordance with the terms of the securities, if the
non-transitional CET1 ratio breaches the 7.0% trigger, the securities will
convert into ordinary shares at fixed contractual conversion prices in the
issuance currencies of the relevant securities, subject to anti-dilution
adjustments.
HSBC's additional tier 1 capital - contingent convertible securities in issue
which are accounted for in equity
First call 2022 2021
date
$m $m
$2,250m 6.375% perpetual subordinated contingent convertible securities Sep 2024 2,250 2,250
$2,450m 6.375% perpetual subordinated contingent convertible securities Mar 2025 2,450 2,450
$3,000m 6.000% perpetual subordinated contingent convertible securities May 2027 3,000 3,000
$2,350m 6.250% perpetual subordinated contingent convertible securities(1) Mar 2023 2,350 2,350
$1,800m 6.500% perpetual subordinated contingent convertible securities Mar 2028 1,800 1,800
$1,500m 4.600% perpetual subordinated contingent convertible securities(2) Dec 2030 1,500 1,500
$1,000m 4.000% perpetual subordinated contingent convertible securities(3) Mar 2026 1,000 1,000
$1,000m 4.700% perpetual subordinated contingent convertible securities(4) Mar 2031 1,000 1,000
€1,500m 5.250% perpetual subordinated contingent convertible securities(5) Sep 2022 - 1,945
€1,000m 6.000% perpetual subordinated contingent convertible securities Sep 2023 1,123 1,123
€1,250m 4.750% perpetual subordinated contingent convertible securities Jul 2029 1,422 1,422
£1,000 5.875% perpetual subordinated contingent convertible securities Sep 2026 1,301 1,301
SGD1,000m 4.700% perpetual subordinated contingent convertible securities(6) Jun 2022 - 723
SGD750m 5.000% perpetual subordinated contingent convertible securities Sep 2023 550 550
At 31 Dec 19,746 22,414
1 This security was called by HSBC Holdings on 30 January 2023 and is
expected to be redeemed and cancelled on 23 March 2023.
2 This security was issued by HSBC Holdings on 17 December 2020. The first
call date is six calendar months prior to the reset date of 17 June 2031.
3 This security was issued by HSBC Holdings on 9 March 2021. The first
call date is six calendar months prior to the reset date of 9 September 2026.
4 This security was issued by HSBC Holdings on 9 March 2021. The first
call date is six calendar months prior to the reset date of 9 September 2031.
5 This security was called by HSBC Holdings on 9 August 2022 and was
redeemed and cancelled on 16 September 2022.
6 This security was called by HSBC Holdings on 4 May 2022 and was
redeemed and cancelled on 8 June 2022.
Shares under option
For details of the options outstanding to subscribe for HSBC Holdings ordinary
shares under the HSBC Holdings Savings-Related Share Option Plan (UK), see
Note 5.
Aggregate options outstanding under these plans
31 Dec 2022 31 Dec 2021
Number of Usual period of exercise Exercise price Number of Usual period of exercise Exercise price
HSBC Holdings HSBC Holdings
ordinary shares ordinary shares
115,650,723 2021 to 2028 £2.6270-£5.9640 123,196,850 2020 to 2027 £2.6270-5.9640
Maximum obligation to deliver HSBC Holdings ordinary shares
At 31 December 2022, the maximum obligation to deliver HSBC Holdings ordinary
shares under all of the above option arrangements and the HSBC International
Employee Share Purchase Plan, together with long-term incentive awards and
deferred share awards granted under the HSBC Share Plan 2011, was 240,612,019
(2021: 224,974,433). The total number of shares at 31 December 2022 held by
employee benefit trusts that may be used to satisfy such obligations to
deliver HSBC Holdings ordinary shares was 12,315,711 (2021: 9,297,415).
33 Contingent liabilities, contractual commitments and guarantees
HSBC HSBC Holdings(1)
2022 2021 2022 2021
$m $m $m $m
Guarantees and other contingent liabilities:
- financial guarantees 18,783 27,795 17,707 13,746
- performance and other guarantees 88,240 85,534 - -
- other contingent liabilities 676 858 90 133
At 31 Dec 107,699 114,187 17,797 13,879
Commitments:(2)
- documentary credits and short-term trade-related transactions 8,241 8,827 - -
- forward asset purchases and forward deposits placed 50,852 47,184 - -
- standby facilities, credit lines and other commitments to lend 768,761 759,463 - -
At 31 Dec 827,854 815,474 - -
1 Financial guarantees by HSBC Holdings are all in favour of other
Group entities.
2 Includes $618,788m of commitments at 31 December 2022 (31 December
2021: $627,637m), to which the impairment requirements in IFRS 9 are applied
where HSBC has become party to an irrevocable commitment.
The preceding table discloses the nominal principal amounts of off-balance
sheet liabilities and commitments for the Group, which represent the maximum
amounts at risk should the contracts be fully drawn upon and the clients
default. As a significant portion of guarantees and commitments are expected
to expire without being drawn upon, the total of the nominal principal amounts
is not indicative of future liquidity requirements. The expected credit loss
provision relating to guarantees and commitments under IFRS 9 is disclosed in
Note 28.
The majority of the guarantees have a term of less than one year, while
guarantees with terms of more than one year are subject to HSBC's annual
credit review process.
Contingent liabilities arising from legal proceedings, regulatory and other
matters against Group companies are excluded from this note but are disclosed
in Notes 28 and 35.
Financial Services Compensation Scheme
The Financial Services Compensation Scheme ('FSCS') provides compensation, up
to certain limits, to eligible customers of financial services firms that are
unable, or likely to be unable, to pay claims against them. The FSCS may
impose a further levy on the group to the extent the industry levies imposed
to date are not sufficient to cover the compensation due to customers in any
future possible collapse. The ultimate FSCS levy to the industry as a result
of a collapse cannot be estimated reliably. It is dependent on various
uncertain factors including the potential recovery of assets by the FSCS,
changes in the level of protected products (including deposits and
investments) and the population of FSCS members at the time. In December 2022,
the FCA announced that it expects to review various elements of the scheme to
ensure consumers are appropriately and proportionately protected, with costs
distributed across industry levy payers in a fair and sustainable way, with a
view to deliver the majority of changes by the end of the 2023/24 financial
year.
Associates
HSBC's share of associates' contingent liabilities, contractual commitments
and guarantees amounted to $64.8bn at 31 December 2022 (2021: $63.5bn). No
matters arose where HSBC was severally liable.
34 Finance lease receivables
HSBC leases a variety of assets to third parties under finance leases,
including transport assets (such as aircraft), property and general plant and
machinery. At the end of lease terms, assets may be sold to third parties or
leased for further terms. Rentals are calculated to recover the cost of assets
less their residual value, and earn finance income.
The table below excludes finance lease receivables reclassified on the balance
sheet to 'Assets held for sale' in accordance with IFRS 5. Net investment in
finance leases of $1,502m was reclassified to 'Assets held for sale' as a
result of the planned sale of our banking business in Canada.
2022 2021
Total future Unearned Present Total future Unearned Present
minimum finance value minimum finance value
payments income payments income
$m $m $m $m $m $m
Lease receivables:
No later than one year 2,159 (236) 1,923 3,298 (303) 2,995
One to two years 1,652 (201) 1,451 2,303 (242) 2,061
Two to three years 1,391 (161) 1,230 1,645 (192) 1,453
Three to four years 906 (131) 775 1,225 (146) 1,079
Four to five years 613 (112) 501 795 (113) 682
Later than one year and no later than five years 4,562 (605) 3,957 5,968 (693) 5,275
Later than five years 4,064 (736) 3,328 4,044 (528) 3,516
At 31 Dec 10,785 (1,577) 9,208 13,310 (1,524) 11,786
35 Legal proceedings and regulatory matters
HSBC is party to legal proceedings and regulatory matters in a number of
jurisdictions arising out of its normal business operations. Apart from the
matters described below, HSBC considers that none of these matters are
material. The recognition of provisions is determined in accordance with the
accounting policies set out in Note 1. While the outcomes of legal proceedings
and regulatory matters are inherently uncertain, management believes that,
based on the information available to it, appropriate provisions have been
made in respect of these matters as at 31 December 2022 (see Note 28). Where
an individual provision is material, the fact that a provision has been made
is stated and quantified, except to the extent that doing so would be
seriously prejudicial. Any provision recognised does not constitute an
admission of wrongdoing or legal liability. It is not practicable to provide
an aggregate estimate of potential liability for our legal proceedings and
regulatory matters as a class of contingent liabilities.
Bernard L. Madoff Investment Securities LLC
Various non-US HSBC companies provided custodial, administration and similar
services to a number of funds incorporated outside the US whose assets were
invested with Bernard L. Madoff Investment Securities LLC ('Madoff
Securities'). Based on information provided by Madoff Securities as at 30
November 2008, the purported aggregate value of these funds was $8.4bn,
including fictitious profits reported by Madoff. Based on information
available to HSBC, the funds' actual transfers to Madoff Securities minus
their actual withdrawals from Madoff Securities during the time HSBC serviced
the funds are estimated to have totalled approximately $4bn. Various HSBC
companies have been named as defendants in lawsuits arising out of Madoff
Securities' fraud.
US litigation: The Madoff Securities Trustee has brought lawsuits against
various HSBC companies and others, seeking recovery of transfers from Madoff
Securities to HSBC in an amount not specified, and these lawsuits remain
pending in the US Bankruptcy Court for the Southern District of New York (the
'US Bankruptcy Court').
Certain Fairfield entities (together, 'Fairfield') (in liquidation since July
2009) have brought a lawsuit in the US against fund shareholders, including
HSBC companies that acted as nominees for clients, seeking restitution of
redemption payments. In August 2022, the US District Court for the Southern
District of New York (the 'New York District Court') affirmed earlier
decisions by the US Bankruptcy Court that dismissed the majority of the
liquidators' claims (against most of the HSBC companies). In September 2022,
the remaining defendants before the US Bankruptcy Court sought leave to appeal
and the liquidators filed appeals to the US Court of Appeals for the Second
Circuit, which are currently pending. Meanwhile, proceedings before the US
Bankruptcy Court with respect to the remaining claims are ongoing.
UK litigation: The Madoff Securities Trustee has filed a claim against various
HSBC companies in the High Court of England and Wales, seeking recovery of
transfers from Madoff Securities to HSBC. The claim has not yet been served
and the amount claimed has not been specified.
Cayman Islands litigation: In February 2013, Primeo Fund ('Primeo') (in
liquidation since April 2009) brought an action against HSBC Securities
Services Luxembourg ('HSSL') and Bank of Bermuda (Cayman) Limited (now known
as HSBC Cayman Limited), alleging breach of contract and breach of fiduciary
duty and claiming monetary damages. Following dismissal of Primeo's action by
the lower and appellate courts in the Cayman Islands, in 2019, Primeo appealed
to the UK Privy Council. During 2021, the UK Privy Council held two separate
hearings in connection with Primeo's appeal. Judgment was given against HSBC
in respect of the first hearing and judgment is pending in respect of the
second hearing.
Luxembourg litigation: In April 2009, Herald Fund SPC ('Herald') (in
liquidation since July 2013) brought an action against HSSL before the
Luxembourg District Court, seeking restitution of cash and securities that
Herald purportedly lost because of Madoff Securities' fraud, or money damages.
The Luxembourg District Court dismissed Herald's securities restitution claim,
but reserved Herald's cash restitution and money damages claims. Herald has
appealed this judgment to the Luxembourg Court of Appeal, where the matter is
pending. In late 2018, Herald brought additional claims against HSSL and HSBC
Bank plc before the Luxembourg District Court, seeking further restitution and
damages.
In October 2009, Alpha Prime Fund Limited ('Alpha Prime') brought an action
against HSSL before the Luxembourg District Court, seeking the restitution of
securities, or the cash equivalent, or money damages. In December 2018, Alpha
Prime brought additional claims seeking damages against various HSBC
companies. These matters are currently pending before the Luxembourg District
Court.
In December 2014, Senator Fund SPC ('Senator') brought an action against HSSL
before the Luxembourg District Court, seeking restitution of securities, or
the cash equivalent, or money damages. In April 2015, Senator commenced a
separate action against the Luxembourg branch of HSBC Bank plc asserting
identical claims. In December 2018, Senator brought additional claims against
HSSL and HSBC Bank plc Luxembourg branch, seeking restitution of Senator's
securities or money damages. These matters are currently pending before the
Luxembourg District Court.
There are many factors that may affect the range of possible outcomes, and any
resulting financial impact, of the various Madoff-related proceedings
described above, including but not limited to the multiple jurisdictions in
which the proceedings have been brought. Based upon the information currently
available, management's estimate of the possible aggregate damages that might
arise as a result of all claims in the various Madoff-related proceedings is
around $600m, excluding costs and interest. Due to uncertainties and
limitations of this estimate, any possible damages that might ultimately arise
could differ significantly from this amount.
Anti-money laundering and sanctions-related matters
In December 2012, HSBC Holdings entered into a number of agreements, including
an undertaking with the UK Financial Services Authority (replaced with a
Direction issued by the UK Financial Conduct Authority ('FCA') in 2013 and
again in 2020) as well as a cease-and-desist order with the US Federal Reserve
Board ('FRB'), both of which contained certain forward-looking anti-money
laundering ('AML') and sanctions-related obligations. For several years
thereafter, HSBC retained a Skilled Person under section 166 of the Financial
Services and Markets Act and an Independent Consultant under the FRB
cease-and-desist order to produce periodic assessments of the Group's AML and
sanctions compliance programme. The Skilled Person completed its engagement in
the second quarter of 2021, and the FCA determined that no further Skilled
Person work is required. Separately, the Independent Consultant's engagement
is now complete and, in August 2022, the FRB terminated its cease-and-desist
order.
Since November 2014, a number of lawsuits have been filed in federal courts in
the US against various HSBC companies and others on behalf of plaintiffs who
are, or are related to, victims of terrorist attacks in the Middle East. In
each case, it is alleged that the defendants aided and abetted the unlawful
conduct of various sanctioned parties in violation of the US Anti-Terrorism
Act. Nine actions remain pending in federal courts and HSBC's motions to
dismiss have been granted in five of these cases. In September 2022 and
January 2023, respectively, the appellate courts affirmed the dismissals of
two of the cases, and the plaintiffs' requests for review of these decisions
by the full appellate courts have been denied. The dismissals in the other
cases are subject to appeal. The four remaining actions are at an early stage.
Based on the facts currently known, it is not practicable at this time for
HSBC to predict the resolution of the pending matters, including the timing or
any possible impact on HSBC, which could be significant.
London interbank offered rates, European interbank offered rates and other
benchmark interest rate investigations and litigation
Euro interest rate derivatives: In December 2016, the European Commission
('EC') issued a decision finding that HSBC, among other banks, engaged in
anti-competitive practices in connection with the pricing of euro interest
rate derivatives, and the EC imposed a fine on HSBC based on a one-month
infringement in 2007. The fine was annulled in 2019 and a lower fine was
imposed in 2021. In January 2023, the European Court of Justice dismissed an
appeal by HSBC and upheld the EC's findings on HSBC's liability. A separate
appeal by HSBC concerning the amount of the fine remains pending before the
General Court of the European Union.
US dollar Libor: Beginning in 2011, HSBC and other panel banks have been named
as defendants in a number of private lawsuits filed in the US with respect to
the setting of US dollar Libor. The complaints assert claims under various US
federal and state laws, including antitrust and racketeering laws and the
Commodity Exchange Act ('US CEA'). The lawsuits include individual and
putative class actions, most of which have been transferred and/or
consolidated for pre-trial purposes before the New York District Court. HSBC
has reached class settlements with five groups of plaintiffs, and the court
has approved these settlements. HSBC has also resolved several of the
individual actions, although a number of other US dollar Libor-related actions
remain pending.
Singapore interbank offered rate ('Sibor') and Singapore swap offer rate
('SOR'): In 2016, The Hongkong and Shanghai Banking Corporation Limited and
other panel banks were named as defendants in a putative class action filed in
the New York District Court on behalf of persons who transacted in products
related to the Sibor and SOR benchmark rates. The complaint alleged, among
other things, misconduct related to these benchmark rates in violation of US
antitrust, commodities and racketeering laws, and state law.
In October 2021, The Hongkong and Shanghai Banking Corporation Limited reached
a settlement-in-principle with the plaintiffs to resolve this action, the
agreement for which was executed in May 2022. The court granted final approval
of the settlement in November 2022.
Based on the facts currently known, it is not practicable at this time for
HSBC to predict the resolution of the pending matters, including the timing or
any possible impact on HSBC, which could be significant.
Foreign exchange-related investigations and litigation
In December 2016, Brazil's Administrative Council of Economic Defense
initiated an investigation into the onshore foreign exchange market and
identified a number of banks, including HSBC, as subjects of its
investigation, which remains ongoing.
In June 2020, the Competition Commission of South Africa, having initially
referred a complaint for proceedings before the South African Competition
Tribunal in February 2017, filed a revised complaint against 28 financial
institutions, including HSBC Bank plc and HSBC Bank USA N.A. ('HSBC Bank
USA'), for alleged anti-competitive behaviour in the South African foreign
exchange market. In December 2021, a hearing on HSBC Bank plc's and HSBC Bank
USA's applications to dismiss the revised complaint took place before the
South African Competition Tribunal, where a decision remains pending.
Beginning in 2013, various HSBC companies and other banks have been named as
defendants in a number of putative class actions filed in, or transferred to,
the New York District Court arising from allegations that the defendants
conspired to manipulate foreign exchange rates. HSBC has reached class
settlements with two groups of plaintiffs, including direct and indirect
purchasers of foreign exchange products, and the court has granted final
approval of these settlements. A putative class action by a group of retail
customers of foreign exchange products remains pending.
In 2018, complaints alleging foreign exchange-related misconduct were filed in
the New York District Court and the High Court of England and Wales against
HSBC and other defendants by certain plaintiffs that opted out of the direct
purchaser class action settlement in the US. In December 2022, HSBC reached a
settlement-in-principle with the plaintiffs to resolve these matters. The
settlement remains subject to the negotiation of definitive documentation.
Additionally, in January 2023, HSBC reached a settlement-in-principle with
plaintiffs in Israel to resolve a class action lawsuit filed in the local
courts alleging foreign exchange-related misconduct. The settlement remains
subject to the negotiation of definitive documentation and court approval.
Lawsuits alleging foreign exchange-related misconduct remain pending against
HSBC and other banks in courts in Brazil. It is possible that additional civil
actions will be initiated against HSBC in relation to its historical foreign
exchange activities.
There are many factors that may affect the range of outcomes, and the
resulting financial impact, of these matters, which could be significant.
Precious metals fix-related litigation
Gold: Beginning in December 2015, numerous putative class actions were filed
in the Ontario and Quebec Superior Courts of Justice against various HSBC
companies and other financial institutions. The plaintiffs allege that, among
other things, from January 2004 to March 2014, the defendants conspired to
manipulate the price of gold and gold derivatives in violation of the Canadian
Competition Act and common law. These actions are ongoing.
Silver: Beginning in July 2014, numerous putative class actions were filed in
federal district courts in New York, naming HSBC and other members of The
London Silver Market Fixing Limited as defendants. The complaints, which were
consolidated in the New York District Court, allege that, from January 2007 to
December 2013, the defendants conspired to manipulate the price of silver and
silver derivatives for their collective benefit in violation of US antitrust
laws, the US CEA and New York state law. In February 2022, following the
conclusion of pre-class certification discovery, the defendants filed a motion
seeking to dismiss the plaintiffs' antitrust claims, which remains pending.
In April 2016, two putative class actions were filed in the Ontario and Quebec
Superior Courts of Justice against various HSBC companies and other financial
institutions. The plaintiffs in both actions allege that, from January 1999 to
August 2014, the defendants conspired to manipulate the price of silver and
silver derivatives in violation of the Canadian Competition Act and common
law. These actions are ongoing.
Platinum and palladium: Between late 2014 and early 2015, numerous putative
class actions were filed in the New York District Court, naming HSBC and other
members of The London Platinum and Palladium Fixing Company Limited as
defendants. The complaints allege that, from January 2008 to November 2014,
the defendants conspired to manipulate the price of platinum group metals and
related financial products for their collective benefit in violation of US
antitrust laws and the US CEA. In March 2020, the court granted the
defendants' motion to dismiss the plaintiffs' third amended complaint but
granted the plaintiffs leave to re-plead certain claims. The plaintiffs have
filed an appeal.
Based on the facts currently known, it is not practicable at this time for
HSBC to predict the resolution of these matters, including the timing or any
possible impact on HSBC, which could be significant.
Film finance litigation
In June 2020, two separate investor groups issued claims against HSBC UK Bank
plc (as successor to HSBC Private Bank (UK) Limited ('PBGB')) in the High
Court of England and Wales in connection with PBGB's role in the development
of Eclipse film finance schemes. These actions are ongoing.
In April 2021, HSBC UK Bank plc (as successor to PBGB) was served with a claim
issued in the High Court of England and Wales in connection with PBGB's role
in the development of the Zeus film finance schemes. In October 2022, this
claim was discontinued.
Based on the facts currently known, it is not practicable at this time for
HSBC to predict the resolution of the pending matters, including the timing or
any possible impact on HSBC, which could be significant.
Other regulatory investigations, reviews and litigation
HSBC Holdings and/or certain of its affiliates are subject to a number of
other investigations and reviews by various regulators and competition and law
enforcement authorities, as well as litigation, in connection with various
matters relating to the firm's businesses and operations, including:
• investigations by tax administration, regulatory and law enforcement
authorities in Argentina, India and elsewhere in connection with allegations
of tax evasion or tax fraud, money laundering and unlawful cross-border
banking solicitation;
• an investigation by the US Commodity Futures Trading Commission
('CFTC') regarding interest rate swap transactions related to bond issuances,
among other things. HSBC has reached a settlement-in-principle with the CFTC's
Division of Enforcement to resolve this investigation. The settlement is
subject to final approval by the CFTC;
• investigations by the CFTC and US Securities and Exchange Commission
('SEC') concerning compliance with records preservation requirements relating
to the use of unapproved electronic messaging platforms for business
communications. HSBC has reached settlements-in-principle with the CFTC's and
SEC's Divisions of Enforcement to resolve these investigations. The
settlements are subject to the negotiation of definitive documentation and
final approval by the CFTC and SEC;
• an investigation by the PRA in connection with depositor protection
arrangements in the UK;
• an investigation by the FCA in connection with collections and
recoveries operations in the UK;
• an investigation by the UK Competition and Markets Authority into
potentially anti-competitive arrangements involving historical trading
activities relating to certain UK-based fixed income products and related
financial instruments;
• a putative class action brought in the New York District Court
relating to the Mexican government bond market;
• two group actions pending in the US courts and a claim issued in the
High Court of England and Wales in connection with HSBC Bank plc's role as a
correspondent bank to Stanford International Bank Ltd from 2003 to 2009; and
• litigation brought against various HSBC companies in the US courts
relating to residential mortgage-backed securities, based primarily on (a)
claims brought against HSBC Bank USA in connection with its role as trustee on
behalf of various securitisation trusts; and (b) claims against several HSBC
companies seeking that the defendants repurchase various mortgage loans.
There are many factors that may affect the range of outcomes, and the
resulting financial impact, of these matters, which could be significant.
36 Related party transactions
Related parties of the Group and HSBC Holdings include subsidiaries,
associates, joint ventures, post-employment benefit plans for HSBC employees,
Key Management Personnel ('KMP') as defined by IAS 24, close family members of
KMP and entities that are controlled or jointly controlled by KMP or their
close family members. KMP are defined as those persons having authority and
responsibility for planning, directing and controlling the activities of HSBC
Holdings. These individuals also constitute 'senior management' for the
purposes of the Hong Kong Listing Rules. In applying IAS 24, it was determined
that for this financial reporting period all KMP included Directors, former
Directors and senior management listed on pages 240 to 246 except for the
roles of Group Chief Legal Officer, Group Head of Internal Audit, Group Chief
Human Resources Officer, Group Chief Sustainability Officer, Group Head of
Strategy, Group Chief Communications and Brand Officer, and Group Company
Secretary and Chief Governance Officer who do not meet the criteria for KMP as
provided for in the standard.
Particulars of transactions with related parties are tabulated below. The
disclosure of the year-end balance and the highest amounts outstanding during
the year is considered to be the most meaningful information to represent the
amount of the transactions and outstanding balances during the year.
Key Management Personnel
Details of Directors' remuneration and interests in shares are disclosed in
the 'Directors' remuneration report' on pages 276 to 301. IAS 24 'Related
Party Disclosures' requires the following additional information for key
management compensation.
Compensation of Key Management Personnel
2022 2021 2020
$m $m $m
Short-term employee benefits 52 50 39
Post-employment benefits 1 - -
Other long-term employee benefits 8 6 5
Share-based payments 26 27 20
Year ended 31 Dec 87 83 64
Shareholdings, options and other securities of Key Management Personnel
2022 2021
(000s) (000s)
Number of options held over HSBC Holdings ordinary shares under employee share 35 35
plans
Number of HSBC Holdings ordinary shares held beneficially and non-beneficially 18,185 13,529
Number of other HSBC securities held 228 228
At 31 Dec 18,448 13,792
Advances and credits, guarantees and deposit balances during the year with Key
Management Personnel
2022 2021
Balance at Highest amounts Balance at Highest amounts
31 Dec outstanding 31 Dec outstanding
during year during year
$m $m $m $m
Key Management Personnel
Advances and credits(1) 16 25 373 401
Guarantees - - 25 45
Deposits 53 123 284 3,190
1 Advances and credits entered into by subsidiaries of HSBC Holdings
plc during 2022 with Directors and former Directors, disclosed pursuant to
section 413 of the Companies Act 2006, totalled $2.5m (2021: $2.8m) and the
total value of guarantees entered into on behalf of the Directors and former
Directors was $nil (2021: $nil).
Some of the transactions were connected transactions as defined by the Rules
Governing The Listing of Securities on The Stock Exchange of Hong Kong
Limited, but were exempt from any disclosure requirements under the provisions
of those rules. The above transactions were made in the ordinary course of
business and on substantially the same terms, including interest rates and
security, as for comparable transactions with persons of a similar standing
or, where applicable, with other employees. The transactions did not involve
more than the normal risk of repayment or present other unfavourable features.
Associates and joint ventures
The Group provides certain banking and financial services to associates and
joint ventures including loans, overdrafts, interest and non-interest bearing
deposits and current accounts. Details of the interests in associates and
joint ventures are given in Note 18.
Transactions and balances during the year with associates and joint ventures
2022 2021
Highest balance Balance at Highest balance Balance at
during the year 31 Dec during the year 31 Dec
$m $m $m $m
Unsubordinated amounts due from joint ventures 140 90 160 96
Unsubordinated amounts due from associates 7,378 6,594 4,527 4,188
Amounts due to associates 2,548 1,295 3,397 1,070
Amounts due to joint ventures 57 53 102 44
Fair value of derivative assets with associates 1,205 841 936 465
Fair value of derivative liabilities with associates 4,319 3,648 696 555
Guarantees and commitments 513 293 1,016 347
The above outstanding balances arose in the ordinary course of business and on
substantially the same terms, including interest rates and security, as for
comparable transactions with third-party counterparties.
Post-employment benefit plans
At 31 December 2022, $2.9bn (2021: $3.4bn) of HSBC post-employment benefit
plan assets were under management by HSBC companies, earning management fees
of $13m in 2022 (2021: $14m). At 31 December 2022, HSBC's post-employment
benefit plans had placed deposits of $369m (2021: $476m) with its banking
subsidiaries, earning interest payable to the schemes of nil (2021: nil). The
above outstanding balances arose from the ordinary course of business and on
substantially the same terms, including interest rates and security, as for
comparable transactions with third-party counterparties.
The combined HSBC Bank (UK) Pension Scheme enters into swap transactions with
HSBC to manage inflation and interest rate sensitivity of its liabilities and
selected assets. At 31 December 2022, the gross notional value of the swaps
was $6.6bn (2021: $7.4bn). These swaps had a positive fair value to the scheme
of $0.5bn (2021: $1.0bn); and HSBC had delivered collateral of $0.5bn (2021:
$1.0bn) to the scheme in respect of these arrangements. All swaps were
executed at prevailing market rates and within standard market bid/offer
spreads.
HSBC Holdings
Details of HSBC Holdings' subsidiaries are shown in Note 38.
Transactions and balances during the year with subsidiaries
2022 2021
Highest balance Balance at Highest balance Balance at
during the year 31 Dec during the year 31 Dec
$m $m $m $m
Assets
Cash and balances with HSBC undertakings 7,421 3,210 3,397 2,590
Financial assets with HSBC undertakings designated and otherwise mandatorily 52,322 52,322 64,686 51,408
measured at fair value
Derivatives 5,380 3,801 4,187 2,811
Loans and advances to HSBC undertakings 26,765 26,765 27,142 25,108
Prepayments, accrued income and other assets 4,893 4,803 1,555 1,135
Investments in subsidiaries 167,542 167,542 163,211 163,211
Total related party assets at 31 Dec 264,323 258,443 264,178 246,263
Liabilities
Amounts owed to HSBC undertakings 314 314 340 111
Derivatives 8,318 6,922 2,872 1,220
Accruals, deferred income and other liabilities 1,375 429 2,036 1,732
Subordinated liabilities 900 900 900 900
Total related party liabilities at 31 Dec 10,907 8,565 6,148 3,963
Guarantees and commitments 17,707 17,707 16,477 13,746
The above outstanding balances arose in the ordinary course of business and on
substantially the same terms, including interest rates and security, as for
comparable transactions with third-party counterparties.
Some employees of HSBC Holdings are members of the HSBC Bank (UK) Pension
Scheme, which is sponsored by a separate Group company. HSBC Holdings incurs a
charge for these employees equal to the contributions paid into the scheme on
their behalf. Disclosure in relation to the scheme is made in Note 5.
37 Events after the balance sheet date
A second interim dividend for 2022 of $0.23 per ordinary share (a distribution
of approximately $4,593m) was approved by the Directors after 31 December
2022. HSBC Holdings called $2,350m 6.250% perpetual subordinated contingent
convertible securities on 30 January 2023. The security is expected to be
redeemed and be cancelled on 23 March 2023. HSBC Holdings also exercised the
call option on AUD350m and AUD650m MREL on 13 January 2023 callable on 16
February 2023. The redemption took place on 16 February 2023. These accounts
were approved by the Board of Directors on 21 February 2023 and authorised for
issue.
38 HSBC Holdings' subsidiaries, joint ventures and associates
In accordance with section 409 of the Companies Act 2006 a list of HSBC
Holdings plc subsidiaries, joint ventures and associates, the registered
office addresses and the effective percentages of equity owned at 31 December
2022 are disclosed below.
Unless otherwise stated, the share capital comprises ordinary or common shares
that are held by Group subsidiaries. The ownership percentage is provided for
each undertaking. The undertakings below are consolidated by HSBC unless
otherwise indicated.
Subsidiaries
Subsidiaries % of share class held by immediate parent company (or by the Group where this Footnotes
varies)
452 TALF Plus ABS Opportunities SPV LLC 100.00 15
452 TALF SPV LLC 100.00 15
Almacenadora Banpacifico S.A. (In Liquidation) 99.99 16
Assetfinance December (F) Limited 100.00 17
Assetfinance December (H) Limited 100.00 18
Assetfinance December (P) Limited 100.00 18
Assetfinance December (R) Limited 100.00 18
Assetfinance June (A) Limited 100.00 18
Assetfinance June (D) Limited 100.00 17
Assetfinance Limited 100.00 18
Assetfinance March (B) Limited 100.00 19
Assetfinance March (D) Limited 100.00 17
Assetfinance March (F) Limited 100.00 18
Assetfinance September (F) Limited 100.00 18
Assetfinance September (G) Limited 100.00 17
AXA Insurance Pte. Ltd. 100.00 1, 20
B&Q Financial Services Limited 100.00 18
Banco HSBC S.A. 100.00 21
Banco Nominees (Guernsey) Limited 100.00 22
Banco Nominees 2 (Guernsey) Limited 100.00 22
Banco Nominees Limited 100.00 23
Beau Soleil Limited Partnership N/A 0, 46
Beijing Miyun HSBC Rural Bank Company Limited 100.00 12, 24
BentallGreenOak China Real Estate Investments L.P. N/A 0, 1, 25
Canada Crescent Nominees (UK) Limited 100.00 18
Canada Square Nominees (UK) Limited 100.00 18
Capco/Cove, Inc. 100.00 26
Card-Flo #1, Inc. 100.00 15
Card-Flo #3, Inc. 100.00 15
CC&H Holdings LLC 100.00 27
CCF & Partners Asset Management Limited 100.00 (99.99) 18
CCF Holding (Liban) S.A.L. (In Liquidation) 74.99 28
Charterhouse Administrators (D.T.) Limited 100.00 (99.99) 18
Charterhouse Management Services Limited 100.00 (99.99) 18
Charterhouse Pensions Limited 100.00 18
Chongqing Dazu HSBC Rural Bank Company Limited 100.00 12, 29
Chongqing Fengdu HSBC Rural Bank Company Limited 100.00 12, 30
Chongqing Rongchang HSBC Rural Bank Company Limited 100.00 12, 31
COIF Nominees Limited N/A 0, 18
Corsair IV Financial Services Capital Partners - B, LP N/A 0, 1, 32
Dalian Pulandian HSBC Rural Bank Company Limited 100.00 12, 33
Decision One Mortgage Company, LLC N/A 0, 34
Dem 9 100.00 (99.99) 4, 35
Dempar 1 100.00 (99.99) 4, 35
Desarrollo Turistico, S.A. de C.V. (In Liquidation) 100.00 (99.99) 16
Electronic Data Process México, S.A. de C.V. 100.00 1, 16
Eton Corporate Services Limited 100.00 22
Far East Leasing SA (In Dissolution) 100.00 36
Flandres Contentieux S.A. 100.00 (99.99) 35
Foncière Elysées 100.00 (99.99) 35
Fujian Yongan HSBC Rural Bank Company Limited 100.00 12, 37
Fulcher Enterprises Company Limited 100.00 (62.14) 38
Fundacion HSBC, A.C. 100.00 (99.99) 11, 16
Giller Ltd. 100.00 26
Subsidiaries % of share class held by immediate parent company (or by the Group where this Footnotes
varies)
GPIF Co-Investment, LLC N/A 0, 15
Griffin International Limited 100.00 18
Grupo Financiero HSBC, S. A. de C. V. 99.99 16
Guangdong Enping HSBC Rural Bank Company Limited 100.00 12, 39
Guangzhou HSBC Real Estate Company Ltd 100.00 1, 12, 40
Hang Seng (Nominee) Limited 100.00 (62.14) 38
Hang Seng Bank (China) Limited 100.00 (62.14) 41
Hang Seng Bank (Trustee) Limited 100.00 (62.14) 38
Hang Seng Bank Limited 62.14 38
Hang Seng Bullion Company Limited 100.00 (62.14) 38
Hang Seng Credit Limited 100.00 (62.14) 38
Hang Seng Data Services Limited 100.00 (62.14) 38
Hang Seng Finance Limited 100.00 (62.14) 38
Hang Seng Financial Information Limited 100.00 (62.14) 38
Hang Seng Indexes (Netherlands) B.V. 100.00 (62.14) 1, 42
Hang Seng Indexes Company Limited 100.00 (62.14) 38
Hang Seng Insurance Company Limited 100.00 (62.14) 38
Hang Seng Investment Management Limited 100.00 (62.14) 38
Hang Seng Investment Services Limited 100.00 (62.14) 38
Hang Seng Life Limited (In Liquidation) 100.00 (62.14) 43
Hang Seng Qianhai Fund Management Company Limited 70.00 (43.49) 12, 44
Hang Seng Real Estate Management Limited 100.00 (62.14) 38
Hang Seng Securities Limited 100.00 (62.14) 38
Hang Seng Security Management Limited 100.00 (62.14) 38
HASE Wealth Limited 100.00 (62.14) 1, 38
Haseba Investment Company Limited 100.00 (62.14) 38
HFC Bank Limited (In Liquidation) 100.00 45
High Time Investments Limited 100.00 (62.14) 38
HLF 100.00 (99.99) 35
Honey Blue Enterprises Limited 100.00 1, 46
Honey Green Enterprises Ltd. 100.00 47
Honey Grey Enterprises Limited 100.00 1, 46
Honey Silver Enterprises Limited 100.00 1, 46
Household International Europe Limited (In Liquidation) 100.00 45
Household Pooling Corporation 100.00 48
Housing (USA) LLP N/A 0, 1, 27
HSBC (BGF) Investments Limited 100.00 18
HSBC (General Partner) Limited 100.00 2, 79
HSBC (Guernsey) GP PCC Limited 100.00 22
HSBC (Kuala Lumpur) Nominees Sdn Bhd 100.00 49
HSBC (Malaysia) Trustee Berhad 100.00 49
HSBC (Singapore) Nominees Pte Ltd 100.00 20
HSBC Agency (India) Private Limited 100.00 50
HSBC Alternative Investments Limited 100.00 18
HSBC Amanah Malaysia Berhad 100.00 49
HSBC Americas Corporation (Delaware) 100.00 15
HSBC Argentina Holdings S.A. 100.00 51
HSBC Asia Holdings B.V. 100.00 18
HSBC Asia Holdings Limited 100.00 2, 46
HSBC Asia Pacific Holdings (UK) Limited 100.00 18
HSBC Asset Finance (UK) Limited 100.00 18
HSBC Asset Finance M.O.G. Holdings (UK) Limited 100.00 18
HSBC Asset Management (Fund Services UK) Limited 100.00 1, 18
HSBC Asset Management (India) Private Limited 100.00 52
HSBC Asset Management (Japan) Limited 100.00 53
HSBC Assurances Vie (France) 100.00 (99.99) 54
HSBC Australia Holdings Pty Limited 100.00 55
HSBC BANK (CHILE) 100.00 (99.99) 56
HSBC Bank (China) Company Limited 100.00 12, 57
HSBC Bank (General Partner) Limited 100.00 79
HSBC Bank (Mauritius) Limited 100.00 58
HSBC Bank (RR) (Limited Liability Company) N/A 0, 13, 59
HSBC Bank (Singapore) Limited 100.00 20
HSBC Bank (Taiwan) Limited 100.00 60
HSBC Bank (Uruguay) S.A. 100.00 61
HSBC Bank (Vietnam) Ltd. 100.00 62
HSBC Bank A.S. 100.00 (99.99) 63
HSBC Bank Argentina S.A. 99.99 51
HSBC Bank Armenia cjsc 100.00 64
HSBC Bank Australia Limited 100.00 55
HSBC Bank Bermuda Limited 100.00 23
HSBC Bank Canada 100.00 65
HSBC Bank Capital Funding (Sterling 1) LP N/A 0, 79
HSBC Bank Capital Funding (Sterling 2) LP N/A 0, 79
HSBC Bank Egypt S.A.E 94.54 66
HSBC Bank Malaysia Berhad 100.00 49
HSBC Bank Malta p.l.c. 70.03 67
HSBC Bank Middle East Limited 100.00 68
HSBC Bank Middle East Limited Representative Office Morocco SARL (In 100.00 69
Liquidation)
HSBC Bank Oman S.A.O.G. 51.00 70
HSBC Bank Pension Trust (UK) Limited 100.00 18
HSBC Bank plc 100.00 2, 18
HSBC Bank USA, National Association 100.00 71
HSBC Branch Nominee (UK) Limited 100.00 17
HSBC Brasil Holding S.A. 100.00 21
HSBC Broking Forex (Asia) Limited 100.00 46
HSBC Broking Futures (Asia) Limited 100.00 46
HSBC Broking Futures (Hong Kong) Limited 100.00 46
HSBC Broking Securities (Asia) Limited 100.00 46
HSBC Broking Securities (Hong Kong) Limited 100.00 46
HSBC Broking Services (Asia) Limited 100.00 46
HSBC Canadian Covered Bond (Legislative) GP Inc. 100.00 72
HSBC Canadian Covered Bond (Legislative) Guarantor Limited Partnership N/A 0, 72
HSBC Capital (USA), Inc. 100.00 15
HSBC Capital Funding (Dollar 1) L.P. N/A 79
HSBC Card Services Inc. 100.00 15
HSBC Casa de Bolsa, S.A. de C.V., Grupo 100.00 (99.99) 16
HSBC Cayman Limited 100.00 73
HSBC Cayman Services Limited 100.00 73
HSBC City Funding Holdings 100.00 18
HSBC Client Holdings Nominee (UK) Limited 100.00 18
HSBC Client Nominee (Jersey) Limited 100.00 74
HSBC Columbia Funding, LLC N/A 0, 15
HSBC Continental Europe 99.99 35
HSBC Corporate Advisory (Malaysia) Sdn Bhd 100.00 49
HSBC Corporate Finance (Hong Kong) Limited 100.00 46
HSBC Corporate Secretary (UK) Limited 100.00 2, 18
HSBC Corporate Trustee Company (UK) Limited 100.00 18
HSBC Custody Nominees (Australia) Limited 100.00 55
HSBC Custody Services (Guernsey) Limited 100.00 22
HSBC Daisy Investments (Mauritius) Limited 100.00 75
HSBC Diversified Loan Fund General Partner Sarl N/A 76
HSBC Electronic Data Processing (Guangdong) Limited 100.00 12, 77
HSBC Electronic Data Processing (Malaysia) Sdn Bhd 100.00 78
HSBC Electronic Data Processing (Philippines), Inc. 99.99 79
HSBC Electronic Data Processing India Private Limited 100.00 80
HSBC Electronic Data Processing Lanka (Private) Limited 100.00 81
HSBC Electronic Data Service Delivery (Egypt) S.A.E. 100.00 82
HSBC Epargne Entreprise (France) 100.00 (99.99) 54
HSBC Equipment Finance (UK) Limited 100.00 17
HSBC Equity (UK) Limited 100.00 18
HSBC Europe B.V. 100.00 18
HSBC Executor & Trustee Company (UK) Limited 100.00 17
HSBC Factoring (France) 100.00 (99.99) 35
HSBC Finance (Netherlands) 100.00 2, 18
HSBC Finance Corporation 100.00 15
HSBC Finance Limited 100.00 18
HSBC Finance Mortgages Inc. 100.00 83
HSBC Finance Transformation (UK) Limited 100.00 18
HSBC Financial Advisors Singapore Pte. Ltd. 100.00 1, 20
HSBC Financial Services (Lebanon) s.a.l. 99.65 84
HSBC Financial Services (Uruguay) S.A. (In Liquidation) 100.00 85
HSBC FinTech Services (Shanghai) Company Limited 100.00 86
HSBC Global Asset Management (Bermuda) Limited 100.00 3, 23
HSBC Global Asset Management (Canada) Limited 100.00 65
HSBC Global Asset Management (Deutschland) GmbH 100.00 87
HSBC Global Asset Management (France) 100.00 (99.99) 54
HSBC Global Asset Management (Hong Kong) Limited 100.00 46
HSBC Global Asset Management (Malta) Limited 100.00 (70.03) 88
HSBC Global Asset Management (México), S.A. de C.V., Sociedad Operadora de 100.00 (99.99) 16
Fondos de Inversión, Grupo Financiero HSBC
HSBC Global Asset Management (Singapore) Limited 100.00 20
HSBC Global Asset Management (Switzerland) AG 100.00 4, 89
HSBC Global Asset Management (Taiwan) Limited 100.00 46
HSBC Global Asset Management (UK) Limited 100.00 18
HSBC Global Asset Management (USA) Inc. 100.00 91
HSBC Global Asset Management Argentina S.A. Sociedad Gerente de Fondos Comunes 100.00 51
de Inversión
HSBC Global Asset Management Holdings (Bahamas) Limited 100.00 92
HSBC Global Asset Management Limited 100.00 2, 18
HSBC Global Custody Nominee (UK) Limited 100.00 18
HSBC Global Custody Proprietary Nominee (UK) Limited 100.00 1, 18
HSBC Global Services (Canada) Limited 100.00 83
HSBC Global Services (China) Holdings Limited 100.00 18
HSBC Global Services (Hong Kong) Limited 100.00 46
HSBC Global Services (UK) Limited 100.00 18
HSBC Global Services Limited 100.00 2, 18
HSBC Global Shared Services (India) Private Limited (In Liquidation) 99.99 1, 50
HSBC Group Management Services Limited 100.00 18
HSBC Group Nominees UK Limited 100.00 2, 18
HSBC Holdings B.V. 100.00 18
HSBC IM Pension Trust Limited 100.00 18
HSBC Infrastructure Debt GP 1 S.à r.l. N/A 0, 93
HSBC Infrastructure Debt GP 2 S.à r.l. N/A 0, 93
HSBC Infrastructure Limited 100.00 18
HSBC Institutional Trust Services (Asia) 100.00 46
HSBC Institutional Trust Services (Bermuda) Limited 100.00 23
HSBC Institutional Trust Services (Mauritius) Limited 100.00 94
HSBC Institutional Trust Services (Singapore) Limited 100.00 20
HSBC Insurance (Asia) Limited 100.00 95
HSBC Insurance (Asia-Pacific) Holdings Limited 100.00 46
HSBC Insurance (Bermuda) Limited 100.00 23
HSBC Insurance (Singapore) Pte. Limited 100.00 20
HSBC Insurance Agency (USA) Inc. 100.00 91
HSBC Insurance Brokerage Company Limited 100.00 1, 96
HSBC Insurance Brokers Greater China Limited 100.00 1, 46
HSBC Insurance Holdings Limited 100.00 2, 18
HSBC Insurance SAC 1 (Bermuda) Limited 100.00 23
HSBC Insurance SAC 2 (Bermuda) Limited 100.00 1, 23
HSBC Insurance Services Holdings Limited 100.00 18
HSBC International Finance Corporation (Delaware) 100.00 97
HSBC International Trustee (BVI) Limited 100.00 98
HSBC International Trustee (Holdings) Pte. Limited 100.00 20
HSBC International Trustee Limited 100.00 99
HSBC Inversiones S.A. 100.00 56
HSBC InvestDirect (India) Private Limited 100.00 52
HSBC InvestDirect Financial Services (India) Limited 99.99 (99.98) 52
HSBC InvestDirect Sales & Marketing (India) Limited 98.99 (98.98) 50
HSBC InvestDirect Securities (India) Private Limited 99.99 52
HSBC Investment and Insurance Brokerage, Philippines Inc. 99.99 100
HSBC Investment Bank Holdings B.V. 100.00 18
HSBC Investment Bank Holdings Limited 100.00 18
HSBC Investment Company Limited 100.00 2, 18
HSBC Investment Funds (Canada) Inc. 100.00 65
HSBC Investment Funds (Hong Kong) Limited 100.00 46
HSBC Investment Funds (Luxembourg) SA 100.00 101
HSBC Invoice Finance (UK) Limited 100.00 102
HSBC Issuer Services Common Depositary Nominee (UK) Limited 100.00 18
HSBC Issuer Services Depositary Nominee (UK) Limited 100.00 18
HSBC Latin America B.V. 100.00 18
HSBC Latin America Holdings (UK) Limited 100.00 2, 18
HSBC Leasing (Asia) Limited 100.00 46
HSBC Life (Bermuda) Limited 100.00 23
HSBC Life (Cornell Centre) Limited 100.00 95
HSBC Life (Edwick Centre) Limited 100.00 95
HSBC Life (International) Limited 100.00 23
HSBC Life (Property) Limited 100.00 95
HSBC Life (Tsing Yi Industrial) Limited 100.00 95
HSBC Life (UK) Limited 100.00 18
HSBC Life (Workshop) Limited 100.00 1, 95
HSBC Life Assurance (Malta) Limited 100.00 (70.03) 88
HSBC Life Insurance Company Limited 100.00 12, 57
HSBC LU Nominees Limited 100.00 18
HSBC Management (Guernsey) Limited 100.00 103
HSBC Markets (USA) Inc. 100.00 15
HSBC Marking Name Nominee (UK) Limited 100.00 18
HSBC Master Trust Trustee Limited 100.00 18
HSBC Mexico, S.A., Institucion de Banca Multiple, Grupo Financiero HSBC 99.99 16
HSBC Middle East Asset Co. LLC 100.00 104
HSBC Middle East Holdings B.V. 100.00 2, 68
HSBC Middle East Leasing Partnership N/A 0, 68
HSBC Middle East Securities L.L.C 100.00 105
HSBC Mortgage Corporation (Canada) 100.00 65
HSBC Mortgage Corporation (USA) 100.00 15
HSBC Nominees (Asing) Sdn Bhd 100.00 49
HSBC Nominees (Hong Kong) Limited 100.00 46
HSBC Nominees (New Zealand) Limited 100.00 106
HSBC Nominees (Tempatan) Sdn Bhd 100.00 49
HSBC North America Holdings Inc. 100.00 3, 15
HSBC Operational Services GmbH 80.00 87
HSBC Overseas Holdings (UK) Limited 100.00 2, 18
HSBC Overseas Investments Corporation (New York) 100.00 107
HSBC Overseas Nominee (UK) Limited 100.00 18
HSBC Participaciones (Argentina) S.A. 100.00 51
HSBC PB Corporate Services 1 Limited 100.00 74
HSBC PB Services (Suisse) SA 100.00 108
HSBC Pension Trust (Ireland) DAC 100.00 109
HSBC Pensiones, S.A. (In Liquidation) 100.00 16
HSBC PI Holdings (Mauritius) Limited 100.00 94
HSBC Portfoy Yonetimi A.S. 100.00 63
HSBC Preferential LP (UK) 100.00 18
HSBC Private Bank (Luxembourg) S.A. 100.00 101
HSBC Private Bank (Suisse) SA 100.00 108
HSBC Private Bank (UK) Limited 100.00 18
HSBC Private Banking Holdings (Suisse) SA 100.00 108
HSBC Private Banking Nominee 3 (Jersey) Limited 100.00 74
HSBC Private Equity Investments (UK) Limited 100.00 18
HSBC Private Investment Counsel (Canada) Inc. 100.00 65
HSBC Private Markets Management SARL N/A 0, 110
HSBC Private Trustee (Hong Kong) Limited 100.00 46
HSBC Professional Services (India) Private Limited 100.00 50
HSBC Property (UK) Limited 100.00 18
HSBC Property Funds (Holding) Limited 100.00 18
HSBC Provident Fund Trustee (Hong Kong) Limited 100.00 46
HSBC Qianhai Securities Limited 90.00 12, 111
HSBC Real Estate Leasing (France) 100.00 (99.99) 35
HSBC REGIO Fund General Partner S.à r.l. 100.00 1, 93
HSBC REIM (France) 100.00 (99.99) 54
HSBC Retirement Benefits Trustee (UK) Limited 100.00 1, 2, 18
HSBC Retirement Services Limited 100.00 1, 18
HSBC Saudi Arabia, Closed Joint Stock Company 66.19 112
HSBC Savings Bank (Philippines) Inc. 99.99 113
HSBC Securities (Canada) Inc. 100.00 83
HSBC Securities (Egypt) S.A.E. (In Liquidation) 100.00 (94.65) 66
HSBC Securities (Japan) Co., Ltd. 100.00 1, 53
HSBC Securities (Japan) Limited 100.00 18
HSBC Securities (Singapore) Pte Limited 100.00 20
HSBC Securities (South Africa) (Pty) Limited 100.00 114
HSBC Securities (Taiwan) Corporation Limited 100.00 60
HSBC Securities (USA) Inc. 100.00 15
HSBC Securities and Capital Markets (India) Private Limited 99.99 50
HSBC Securities Brokers (Asia) Limited 100.00 46
HSBC Securities Investments (Asia) Limited 100.00 46
HSBC Securities Services (Bermuda) Limited 100.00 23
HSBC Securities Services (Guernsey) Limited 100.00 22
HSBC Securities Services (Ireland) DAC 100.00 109
HSBC Securities Services (Luxembourg) S.A. 100.00 101
HSBC Securities Services Holdings (Ireland) DAC 100.00 109
HSBC Securities Services Nominees Limited 100.00 1, 46
HSBC Seguros de Retiro (Argentina) S.A. 100.00 (99.99) 51
HSBC Seguros de Vida (Argentina) S.A. 100.00 (99.99) 51
HSBC Seguros, S.A de C.V., Grupo Financiero HSBC 100.00 (99.99) 16
HSBC Service Company Germany GmbH 100.00 (99.99) 1, 87
HSBC Service Delivery (Polska) Sp. z o.o. 100.00 115
HSBC Services (France) 100.00 (99.99) 35
HSBC Services Japan Limited 100.00 92
HSBC Services USA Inc. 100.00 116
HSBC Servicios Financieros, S.A. de C.V 100.00 (99.99) 16
HSBC Servicios, S.A. DE C.V., Grupo Financiero HSBC 100.00 (99.99) 16
HSBC SFH (France) 100.00 (99.99) 4, 54
HSBC SFT (C.I.) Limited 100.00 22
HSBC Software Development (Guangdong) Limited 100.00 117
HSBC Software Development (India) Private Limited 100.00 118
HSBC Software Development (Malaysia) Sdn Bhd 100.00 78
HSBC Specialist Investments Limited 100.00 18
HSBC Technology & Services (China) Limited 100.00 57
HSBC Technology & Services (USA) Inc. 100.00 15
HSBC Titan GmbH & Co. KG 100.00 (99.99) 1, 87
HSBC Transaction Services GmbH 100.00 (99.99) 6, 87
HSBC Trinkaus & Burkhardt (International) S.A. 100.00 (99.99) 119
HSBC Trinkaus & Burkhardt Gesellschaft fur Bankbeteiligungen mbH 100.00 (99.99) 87
HSBC Trinkhaus & Burkhardt GmbH 100.00 (99.99) 87
HSBC Trinkaus Europa Immobilien-Fonds Nr. 5 GmbH 100.00 (99.99) 87
HSBC Trinkaus Family Office GmbH 100.00 (99.99) 6, 87
HSBC Trinkaus Real Estate GmbH 100.00 (99.99) 6, 87
HSBC Trust Company (Canada) 100.00 65
HSBC Trust Company (Delaware), National Association 100.00 97
HSBC Trust Company (UK) Limited 100.00 18
HSBC Trustee (C.I.) Limited 100.00 74
HSBC Trustee (Cayman) Limited 100.00 120
HSBC Trustee (Guernsey) Limited 100.00 22
HSBC Trustee (Hong Kong) Limited 100.00 46
HSBC Trustee (Singapore) Limited 100.00 20
HSBC UK Bank plc 100.00 2, 17
HSBC UK Client Nominee Limited 100.00 17
HSBC UK Covered Bonds LLP N/A 0, 17
HSBC UK Holdings Limited 100.00 2, 18
HSBC USA Inc. 100.00 107
HSBC Ventures USA Inc. 100.00 15
HSBC Violet Investments (Mauritius) Limited 100.00 75
HSBC Wealth Client Nominee Limited 100.00 1, 17
HSBC Yatirim Menkul Degerler A.S. 100.00 63
HSI Asset Securitization Corporation 100.00 15
HSI International Limited 100.00 (62.14) 38
HSIL Investments Limited 100.00 18
Hubei Macheng HSBC Rural Bank Company Limited 100.00 121
Hubei Suizhou Cengdu HSBC Rural Bank Company Limited 100.00 12, 122
Hubei Tianmen HSBC Rural Bank Company Limited 100.00 123
Hunan Pingjiang HSBC Rural Bank Company Limited 100.00 12, 124
Imenson Limited 100.00 (62.14) 38
INKA Internationale Kapitalanlagegesellschaft mbH 100.00 (99.99) 87
Inmobiliaria Bisa, S.A. de C.V. 99.98 16
Inmobiliaria Grufin, S.A. de C.V. 100.00 (99.99) 16
Inmobiliaria Guatusi, S.A. de C.V. 100.00 (99.99) 16
James Capel (Nominees) Limited 100.00 18
James Capel (Taiwan) Nominees Limited 100.00 18
John Lewis Financial Services Limited 100.00 18
Keyser Ullmann Limited 100.00 (99.99) 18
L&T Investment Management Limited 100.00 (99.99) 1, 52
Lion Corporate Services Limited 100.00 46
Lion International Corporate Services Limited 100.00 1, 99
Lion International Management Limited 100.00 99
Lion Management (Hong Kong) Limited 100.00 1, 46
Lyndholme Limited 100.00 46
Marks and Spencer Financial Services plc 100.00 125
Marks and Spencer Unit Trust Management Limited 100.00 125
Maxima S.A. AFJP (In Liquidation) 99.98 51
Midcorp Limited 100.00 18
Midland Bank (Branch Nominees) Limited 100.00 17
Midland Nominees Limited 100.00 17
MIL (Cayman) Limited 100.00 73
MP Payments Group Limited 100.00 1, 18
MP Payments Operations Limited 100.00 1, 18
MP Payments UK Limited 100.00 1, 18
MW Gestion SA 100.00 51
Prudential Client HSBC GIS Nominee (UK) 100.00 18
PT Bank HSBC Indonesia 99.99 (98.93) 126
PT HSBC Sekuritas Indonesia 85.00 126
R/CLIP Corp. 100.00 15
Real Estate Collateral Management Company 100.00 15
Republic Nominees Limited 100.00 22
RLUKREF Nominees (UK) One Limited 100.00 1, 18
RLUKREF Nominees (UK) Two Limited 100.00 1, 18
S.A.P.C. - Ufipro Recouvrement 99.99 35
Saf Baiyun 100.00 (99.99) 4, 35
Saf Guangzhou 100.00 (99.99) 4, 35
SCI HSBC Assurances Immo 100.00 (99.99) 54
Serai Limited 100.00 46
Serai Technology Development (Shanghai) Limited 100.00 1, 12, 57
SFM 100.00 (99.99) 35
SFSS Nominees (Pty) Limited 100.00 114
Shandong Rongcheng HSBC Rural Bank Company Limited 100.00 12, 127
Shenzhen HSBC Development Company Ltd 100.00 1, 12, 128
Sico Limited 100.00 129
SNC Les Oliviers D'Antibes 60.00 (59.99) 11, 54
SNCB/M6 - 2008 A 100.00 (99.99) 35
SNCB/M6-2007 A 100.00 (99.99) 4, 35
SNCB/M6-2007 B 100.00 (99.99) 4, 35
Société Française et Suisse 100.00 (99.99) 35
Somers Dublin DAC 100.00 (99.99) 109
Somers Nominees (Far East) Limited 100.00 23
Sopingest 100.00 (99.99) 35
South Yorkshire Light Rail Limited 100.00 18
St Cross Trustees Limited 100.00 17
Sun Hung Kai Development (Lujiazui III) Limited 100.00 12, 57
Swan National Limited 100.00 18
The Hongkong and Shanghai Banking Corporation Limited 100.00 5, 46
The Venture Catalysts Limited 100.00 18
Tooley Street View Limited 100.00 2, 18
Tower Investment Management 100.00 130
Trinkaus Australien Immobilien Fonds Nr. 1 Brisbane GmbH & Co. KG 100.00 (99.99) 87
Trinkaus Australien Immobilien-Fonds Nr. 1 Treuhand-GmbH 100.00 (99.99) 6, 87
Trinkaus Europa Immobilien-Fonds Nr.3 Objekt Utrecht Verwaltungs-GmbH 100.00 (99.99) 87
Trinkaus Immobilien-Fonds Geschaeftsfuehrungs-GmbH 100.00 (99.99) 6, 87
Trinkaus Immobilien-Fonds Verwaltungs-GmbH 100.00 (99.99) 6, 87
Trinkaus Private Equity Management GmbH 100.00 (99.99) 87
Trinkaus Private Equity Verwaltungs GmbH 100.00 (99.99) 6, 87
Tropical Nominees Limited 100.00 73
Turnsonic (Nominees) Limited 100.00 17
Valeurs Mobilières Elysées 100.00 (99.99) 35
Wardley Limited 100.00 46
Wayfoong Nominees Limited 100.00 46
Westminster House, LLC N/A 0, 15
Woodex Limited 100.00 23
Yan Nin Development Company Limited 100.00 (62.14) 38
Joint ventures
The undertakings below are joint ventures and equity accounted.
Joint ventures % of share class held by immediate parent company (or by the Group where this Footnotes
varies)
Climate Asset Management Limited 40.00 1, 131
Global Payments Technology Mexico S.A. De C.V 50.00 16
HCM Holdings Limited (In Liquidation) 50.99 45
Pentagreen Capital Pte. Ltd 50.00 1, 132
ProServe Bermuda Limited 50.00 133
The London Silver Market Fixing Limited N/A 0 1, 134
Vaultex UK Limited 50.00 135
Associates
The undertakings below are associates and equity accounted.
Associates % of share class held by immediate parent company (or by the Group where this Footnotes
varies)
Bank of Communications Co., Ltd. 19.03 136
Barrowgate Limited 15.31 137
BGF Group PLC 24.61 138
Bud Financial Limited 5.36 1, 139
Canara HSBC Life Insurance Company Limited 26.00 140
Contour Pte Ltd 12.65 1, 141
Divido Financial Services Limited 5.56 1, 142
Electronic Payment Services Company (Hong Kong) Limited 38.66 46
Episode Six Limited 7.02 1, 143
EPS Company (Hong Kong) Limited 38.66 46
EURO Secured Notes Issuer 16.67 144
GZHS Research Co Ltd 20.50 145
HSBC Jintrust Fund Management Company Limited 49.00 57
Liquidity Match LLC N/A 0, 1, 146
London Precious Metals Clearing Limited 30.00 1, 147
MENA Infrastructure Fund (GP) Ltd 33.33 145
Monese Ltd 5.39 1, 149
Quantexa Ltd 10.10 131
Services Epargne Entreprise 14.18 150
The London Gold Market Fixing Limited 25.00 134
The Saudi British Bank 31.00 152
Threadneedle Software Holdings Limited 6.56 1, 153
Trade Information Network Limited 16.67 1, 154
Trinkaus Europa Immobilien-Fonds Nr. 7 Frankfurt Mertonviertel KG N/A 0, 87
Vizolution Limited 17.95 1, 155
We Trade Innovation Designated Activity Company 9.88 1, 156
Footnotes for Note 38
Description of Shares
0 Where an entity is governed by voting rights, HSBC consolidates when it holds
- directly or indirectly - the necessary voting rights to pass resolutions by
the governing body. In all other cases, the assessment of control is more
complex and requires judgement of other factors, including having exposure to
variability of returns, power to direct relevant activities, and whether power
is held as an agent or principal. HSBC's consolidation policy is described in
Note 1.2(a).
1 Management has determined that these undertakings are excluded from
consolidation in the Group accounts as these entities do not meet the
definition of subsidiaries in accordance with IFRS. HSBC's consolidation
policy is described in Note 1.2(a).
2 Directly held by HSBC Holdings plc
3 Preference Shares
4 Actions
5 Redeemable Preference Shares
6 GmbH Anteil
7 Limited and Unlimited Liability Shares
8 Liquidating Share Class
9 Nominal Shares
10 Non-Participating Voting Shares
11 Parts
12 Registered Capital Shares
13 Russian Limited Liability Company Shares
14 Stückaktien
Registered offices
15 c/o The Corporation Trust Company 1209 Orange Street, Wilmington, Delaware,
United States of America, 19801
16 Paseo de la Reforma 347 Col. Cuauhtemoc, Mexico, 06500
17 1 Centenary Square, Birmingham, United Kingdom, B1 1HQ
18 8 Canada Square, London, United Kingdom, E14 5HQ
19 5 Donegal Square South, Northern Ireland, Belfast, United Kingdom, BT1 5JP
20 10 Marina Boulevard #48-01 Marina Bay Financial Centre, Singapore, 018983
21 1909 Avenida Presidente Juscelino Kubitschek, 19° andar, Torre Norte, São
Paulo Corporate Towers, São Paulo, Brazil, 04551-903
22 Arnold House, St Julians Avenue, St Peter Port, Guernsey, GY1 3NF
23 37 Front Street, Hamilton, Bermuda, HM 11
24 First Floor, Xinhua Bookstore Xindong Road (SE of roundabout), Miyun District,
Beijing, China
25 Oak House Hirzel Street, St Peter Port, Guernsey, GY1 2NP
26 2929 Walden Avenue, Depew, New York, United States of
27 Corporation Service Company 251 Little Falls Drive, Wilmington, Delaware,
United States of America, 19808
28 Solidere - Rue Saad Zaghloul Immeuble - 170 Marfaa, P.O. Box 17 5476 Mar
Michael, Beyrouth, Lebanon, 11042040
29 No 1, Bei Huan East Road Dazu County, Chongqing, China
30 No 107 Ping Du Avenue (E), Sanhe Town, Fengdu County, Chongqing, China
31 No. 3, 5, 7, Haitang Erzhi Road Changyuan, Rongchang, Chongqing, China, 402460
32 c/o Walkers Corporate Services Limited Walker House, 87 Mary Street, George
Town, Grand Cayman, Cayman Islands, KY1-9005
33 First & Second Floor, No.3 Nanshan Road, Pulandian , Dalian, Liaoning,
China
34 160 Mine Lake CT, Ste 200, Raleigh, North Carolina, United States Of America,
27615-6417
35 38 avenue Kléber, Paris, France, 75116
36 MMG Tower, 23 floor Ave. Paseo del Mar Urbanizacion Costa del Este, Panama
37 No. 1 1211 Yanjiang Zhong Road, Yongan, Fujian, China
38 83 Des Voeux Road Central, Hong Kong
39 No.44 Xin Ping Road Central, Encheng, Enping, Guangdong, China, 529400
40 Room 311, Cheng Hui No. 2, Nan Sha Street, Nan Sha District, Guangzhou,
Guangdong, China
41 34/F, 36/F, Unit 031 of 45/F, and 46/F, Hang Seng Bank Tower, 1000 Lujiazui
Ring Road, Pilot Free Trade Zone, Shanghai, China, 200120
42 Gustav Mahlerplein 2 1082 MA, Amsterdam, Netherlands
43 8/F, Prince's Building, 10 Chater Road, Central, Hong Kong
44 1001, T2 Office Building, Qianhai Kerry Business Center, Qianhai Avenue,
Nanshan Street, Qianhai Shenzhen-Hong Kong Cooperation Zone, Shenzhen,
Guangdong, China
45 156 Great Charles Street, Queensway, Birmingham, West Midlands, United
Kingdom, B3 3HN
46 1 Queen's Road, Central, Hong Kong
47 Commerce House, Wickhams Cay 1, P.O. Box 3140, Road Town, Tortola, British
Virgin Islands, VG1110
48 The Corporation Trust Company of Nevada 311 S. Division Street, Carson City,
Nevada, United States of America, 89703
49 Menara IQ, Lingkaran TRX, Tun Razak Exchange, Kuala Lumpur, Malaysia, 55188
50 52/60 M G Road Fort, Mumbai, India, 400 001
51 557 Bouchard Level 20, Ciudad de Buenos Aires, Capital Federal, Argentina,
C1106ABG
52 9-11 Floors, NESCO IT Park Building No. 3 Western Express Highway, Goregaon
(East), Mumbai, India, 400063
53 HSBC Building 11-1, Nihonbashi 3-chome, Chuo-ku, Tokyo, Japan, 103-0027
54 Immeuble Cœur Défense, 110 Esplanade du Général de Gaulle, Courbevoie,
France, 92400
55 Level 36, Tower 1, International Towers Sydney, 100 Barangaroo Avenue, Sydney,
New South Wales, Australia, 2000
56 Isidora Goyenechea 2800. 23rd Floor, Las Condes, Santiago, Chile, 7550647
57 HSBC Building Shanghai ifc, 8 Century Avenue, Pudong, Shanghai, China, 200120
58 IconEbene, Level 5 Office 1 (West Wing), Rue de L'institut, Ebene, Mauritius
59 2 Paveletskaya Square Building 2, Moscow, Russian Federation, 115054
60 54F, 7 Xinyi Road Sec. 5, Xinyi District, Taipei, Taiwan
61 1266 Dr Luis Bonativa, 1266 Piso 30 (Torre IV WTC), Montevideo, Uruguay, CP
11.000
62 The Metropolitan, 235 Dong Khoi Street, District 1, Ho Chi Minh City, Viet Nam
63 Esentepe mah. Büyükdere Caddesi No.128, Istanbul, Türkiye, 34394
64 66 Teryan Street, Yerevan, Armenia, 0009
65 885 West Georgia Street, 3rd Floor, Vancouver, British Columbia, Canada, V6C
3E9
66 306 Corniche El Nil, Maadi, Egypt, 11728
67 116 Archbishop Street, Valletta, Malta
68 401, Level 4 Gate Precinct Building 2, Dubai International Financial Centre,
P.O. Box 30444, Dubai, United Arab Emirates
69 Majer Consulting, Office 54/44, Building A1, Residence Ryad Anfa, Boulevard
Omar El Khayam, Casa Finance City (CFC), Casablanca, Morocco
70 Al Khuwair Office, PO Box 1727, PC111 CPO Seeb, Muscat, Oman
71 1800 Tysons Boulevard Suite 50, Tysons, Virginia, United States of America,
22102
72 66 Wellington Street West, Suite 5300, Toronto, Ontario, Canada, M5K 1E6
73 P.O. Box 1109, Strathvale House, Ground Floor, 90 North Church Street , George
Town, Grand Cayman, Cayman Islands, KY1-1102
74 HSBC House Esplanade, St. Helier, Jersey, JE1 1HS
75 c/o Rogers Capital St. Louis Business Centre, Cnr Desroches & St Louis
Streets, Port Louis, Mauritius
76 49 avenue J.F. Kennedy, Luxembourg, 1855
77 4-17/F, Office Tower 2 TaiKoo Hui, No. 381 Tian He Road, Tian He District,
Guangzhou, Guangdong, China
78 Suite 1005, 10th Floor, Wisma Hamzah Kwong, Hing No. 1, Leboh Ampang, Kuala
Lumpur, Malaysia, 50100
79 Filinvest One Building, Northgate Cyberzone, Filinvest Corporate City,
Alabang, Muntinlupa City, Philippines
80 HSBC House, Plot No.8, Survey No.64 (Part), Hightec City Layout Madhapur,
Hyderabad, India, 500081
81 439, Sri Jayawardenapura Mawatha Welikada, Rajagiriya, Colombo, Sri Lanka
82 Smart Village 28th Km Cairo- Alexandria Desert Road Building, Cairo, Egypt
83 16 York Street, 6th Floor, Toronto, Ontario, Canada, M5J 0E6
84 Centre Ville 1341 Building, 4th Floor, Patriarche Howayek Street (facing
Beirut Souks), PO Box Riad El Solh, Lebanon, 9597
85 World Trade Center, Montevideo Avenida Luis Alberto de Herrera 1248, Torre 1,
Piso 15, Oficina 1502, Montevideo, Uruguay, CP 11300
86 Room 655, Building A, No. 888, Huan Hu West Two Road, Lin Gang New Area of
Shanghai (Pilot) Free Trade Zone, Shanghai, China
87 Hansaallee 3, Düsseldorf, Germany, 40549
88 80 Mill Street, Qormi, Malta, QRM 3101
89 26 Gartenstrasse, Zurich, Switzerland, 8002
90 24th Floor, 97-99, Sec.2, Tunhwa S. Road, Taipei, Taiwan
91 452 Fifth Avenue, New York, United States of America, NY10018
92 Mareva House, 4 George Street, Nassau, Bahamas
93 4 rue Peternelchen, Howald, Luxembourg, 2370
94 6th floor HSBC Centre 18, Cybercity, Ebene, Mauritius, 72201
95 18th Floor, Tower 1, HSBC Centre, 1 Sham Mong Road, Kowloon, Hong Kong
96 Unit 201 Floor 2, Building 3, No. 12, Anxiang Street, Shunyi District,
Beijing, China
97 300 Delaware Avenue, Suite 1401, Wilmington, Delaware, United States of
America, 19801
98 Woodbourne Hall, Road Town, Tortola, British Virgin Islands, P.O. Box 916
99 PO Box 71, Craigmuir Chambers, Road Town Tortola, British Virgin Islands
100 5/F HSBC Centre 3058 Fifth Ave West, Bonifacio Global City, Taguig City,
Philippines
101 18 Boulevard de Kockelscheuer, Luxembourg, 1821
102 21 Farncombe Road Worthing, United Kingdom, BN11 2BW
103 Arnold House, St Julians Avenue, St Peter Port, Guernsey, GY1 1WA
104 345-6791, HSBC Tower, Burj Khalifa Community, Dubai, United Arab Emirates
105 Office No.16, Owned by HSBC Bank Middle East Limited, Dubai Branch, Bur Dubai,
Burj Khalifa, Dubai, United Arab Emirates
106 HSBC Tower, Level 21, 188 Quay Street, Auckland, New Zealand, 1010
107 The Corporation Trust Incorporated, 2405 York Road, Suite 201, Lutherville
Timonium, Maryland, United States of America, 21093
108 Quai des Bergues 9-17, Geneva, Switzerland, 1201
109 1 Grand Canal Square, Grand Canal Harbour, Dublin 2, Ireland, D02 P820
110 5 rue Heienhaff, Senningerberg, Luxembourg, 1736
111 Block 27 A&B, Qianhai Enterprise Dream Park No. 63 Qianwan Yi Road,
Shenzhen-Hong Kong Cooperation Zone, Shenzhen, China, 518052
112 HSBC Building 7267 Olaya - Al Murrooj, Riyadh, Saudi Arabia, 12283 - 2255
113 Unit 1 GF The Commerical Complex Madrigal Avenue, Ayala Alabang Village,
Muntinlupa City, Philippines, 1780
114 1 Mutual Place, 107 Rivonia Road, Sandton, Gauteng, South Africa, 2196
115 Kapelanka 42A , Krakow, Poland, 30-347
116 C T Corporation System 820 Bear Tavern Road, West Trenton, New Jersey, United
States of America, 08628
117 L22, Office Tower 2, Taikoo Hui, 381 Tianhe Road, Tianhe District, Guangzhou,
Guangdong, China
118 Business Bay, Wing 2, Tower B, Survey no 103, Hissa no. 2, Airport road,
Yerwada, Pune, India, 411006
119 16 Boulevard d'Avranches, Luxembourg, Luxembourg, L-1160
120 P.O. Box 309 Ugland House, Grand Cayman, Cayman Islands, KY1-1104
121 No. 56 Yu Rong Street, Macheng, China, 438300
122 No. 205 Lie Shan Road Suizhou, Hubei, China
123 Building 3, Yin Zuo Di Jing Wan Tianmen New City, Tianmen, Hubei Province,
China
124 RM101, 102 & 106 Sunshine Fairview, Sunshine Garden, Pedestrian Walkway,
Pingjiang, China
125 Kings Meadow Chester Business Park , Chester, United Kingdom, CH99 9FB
126 World Trade Center 1, Jalan Jenderal Sudirman Kavling 29 - 31, Jakarta,
Indonesia, 12920
127 No. 198-2 Chengshan Avenue (E), Rongcheng, China, 264300
128 Room 1303-13062 Marine Center Main Tower, 59 Linhai Road, Nanshan District,
Shenzhen, China
129 Woodbourne Hall, Road Town, Tortola, British Virgin Islands, P.O. Box 3162
130 25 Main St. P.O. Box 694, Grand Cayman KY1 1107, Cayman Islands, KY1 1107
131 Hill House, 1 Little New Street, London , United Kingdom, EC4A 3TR
132 60B Orchard Road #06-18, The Atrium @Orchard, Singapore, 238891
133 c/o MUFG Fund Services (Bermuda) Limited, Cedar House, 4th Floor North, 41
Cedar Avenue, Hamilton, Bermuda, HM 12
134 c/o Hackwood Secretaries Limited, One Silk Street, London, United Kingdom,
EC2Y 8HQ
135 All Saints Triangle, Caledonian Road, London, United Kingdom, N19UT
136 No.188, Yin Cheng Zhong Road China (Shanghai), Pilot Free Trade Zone,
Shanghai, China
137 50/F, Lee Garden One, 33 Hysan Avenue, Hong Kong
138 13-15 York Buildings, London, United Kingdom, WC2N 6JU
139 Linen Court, Floor 3, 10 East Road, London, United Kingdom, N1 6AD
140 Unit No. 208, 2nd Floor, Kanchenjunga Building 18, Barakhamba Road, New Delhi,
India, 110001
141 50 Raffles Place, #32-01 Singapore Land Tower, Singapore, 048623
142 Office 7, 35-37 Ludgate Hill, London, United Kingdom, EC4M 7JN
143 100 Town Square Place, Suite 201, Jersey City, New Jersey, United States Of
America, 07310
144 7th Floor, 62 Threadneedle Street, London, United Kingdom, EC2R 8HP
145 Precinct Building 4, Level 3, Dubai International Financial Centre, Dubai,
United Arab Emirates, PO Box 506553
146 9/F Amtel Building, 148 des Voeux Road Central, Central, Hong Kong
147 3 Avenue de l'Opera , Paris, France, 75001
148 Room 1303, 106 Feng Ze Dong Road, Nansha District, Guangzhou, Guangdong, China
149 Eagle House, 163 City Road, London, United Kingdom, EC1V 1NR
150 32 rue du Champ de Tir, Nantes, France, 44300
151 Ernst-Schneider-Platz 1 , Duesseldorf, Germany, 40212
152 Al Amir Abdulaziz Ibn Mossaad Ibn Jalawi Street, Riyadh, Saudi Arabia
153 2nd Floor, Regis House, 45 King William Street, London, United Kingdom, EC4R
9AN
154 3 More London Riverside, London, United Kingdom, SE1 2AQ
155 Office Block A, Bay Studios Business Park, Fabian Way, Swansea, Wales, United
Kingdom, SA1 8QB
156 10 Earlsfort Terrace, Dublin, Ireland, DO2 T380
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