23 Property, plant and equipment
HSBC
Property, plant and equipment
|
Freehold land and buildings |
|
Long leasehold land and buildings |
|
Short leasehold land and buildings1
|
|
Equipment, fixtures and fittings2
|
|
Equipment on operating leases |
|
Total3
|
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
Cost or fair value |
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2009 ................................. |
4,126 |
|
1,736 |
|
2,924 |
|
10,320 |
|
4,547 |
|
23,653 |
Additions at cost4 .................................. |
344 |
|
35 |
|
179 |
|
1,253 |
|
299 |
|
2,110 |
Acquisition of subsidiaries ...................... |
- |
|
- |
|
15 |
|
7 |
|
- |
|
22 |
Fair value adjustments ........................... |
(58) |
|
16 |
|
18 |
|
- |
|
- |
|
(24) |
Disposals ............................................... |
(201) |
|
(510) |
|
(98) |
|
(640) |
|
(117) |
|
(1,566) |
Reclassified to held for sale .................... |
(697) |
|
- |
|
(20) |
|
(63) |
|
- |
|
(780) |
Transfers ............................................... |
- |
|
(2) |
|
2 |
|
- |
|
- |
|
- |
Exchange differences ............................. |
342 |
|
62 |
|
90 |
|
737 |
|
507 |
|
1,738 |
Other changes ....................................... |
59 |
|
(10) |
|
25 |
|
(62) |
|
- |
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2009 ........................... |
3,915 |
|
1,327 |
|
3,135 |
|
11,552 |
|
5,236 |
|
25,165 |
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation and impairment |
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2009 ................................. |
(368) |
|
(228) |
|
(886) |
|
(6,614) |
|
(1,532) |
|
(9,628) |
Depreciation charge for the year ........... |
(82) |
|
(44) |
|
(193) |
|
(1,160) |
|
(169) |
|
(1,648) |
Disposals ............................................... |
39 |
|
46 |
|
90 |
|
495 |
|
(4) |
|
666 |
Reclassified to held for sale .................... |
46 |
|
- |
|
3 |
|
30 |
|
- |
|
79 |
Impairment losses recognised ................ |
(30) |
|
(1) |
|
(26) |
|
(20) |
|
- |
|
(77) |
Exchange differences ............................. |
(25) |
|
(7) |
|
(42) |
|
(496) |
|
(173) |
|
(743) |
Other changes ....................................... |
(30) |
|
5 |
|
(11) |
|
22 |
|
2 |
|
(12) |
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2009 ........................... |
(450) |
|
(229) |
|
(1,065) |
|
(7,743) |
|
(1,876) |
|
(11,363) |
|
|
|
|
|
|
|
|
|
|
|
|
Net carrying amount at 31 December 2009 .................................................. |
3,465 |
|
1,098 |
|
2,070 |
|
3,809 |
|
3,360 |
|
13,802 |
|
|
|
|
|
|
|
|
|
|
|
|
Cost or fair value |
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2008 ................................. |
4,701 |
|
1,438 |
|
2,856 |
|
10,957 |
|
6,054 |
|
26,006 |
Additions at cost4 .................................. |
466 |
|
26 |
|
327 |
|
1,813 |
|
353 |
|
2,985 |
Acquisition of subsidiaries ...................... |
29 |
|
- |
|
- |
|
16 |
|
- |
|
45 |
Fair value adjustments ........................... |
(93) |
|
4 |
|
(3) |
|
- |
|
- |
|
(92) |
Disposals ............................................... |
(138) |
|
(102) |
|
(41) |
|
(803) |
|
(175) |
|
(1,259) |
Reclassified from/(to) held for sale ........ |
16 |
|
469 |
|
(2) |
|
98 |
|
- |
|
581 |
Transfers ............................................... |
- |
|
3 |
|
(3) |
|
- |
|
- |
|
- |
Exchange differences ............................. |
(611) |
|
(62) |
|
(214) |
|
(1,876) |
|
(1,685) |
|
(4,448) |
Other changes ....................................... |
(244) |
|
(40) |
|
4 |
|
115 |
|
- |
|
(165) |
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2008 ........................... |
4,126 |
|
1,736 |
|
2,924 |
|
10,320 |
|
4,547 |
|
23,653 |
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation and impairment |
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2008 ................................. |
(344) |
|
(175) |
|
(826) |
|
(7,003) |
|
(1,964) |
|
(10,312) |
Depreciation charge for the year ........... |
(82) |
|
(53) |
|
(184) |
|
(1,201) |
|
(187) |
|
(1,707) |
Disposals ............................................... |
7 |
|
2 |
|
14 |
|
537 |
|
57 |
|
617 |
Reclassified (from)/to held for sale ........ |
1 |
|
(18) |
|
- |
|
(30) |
|
- |
|
(47) |
Transfers ............................................... |
- |
|
(3) |
|
3 |
|
- |
|
- |
|
- |
Impairment losses recognised ................ |
(30) |
|
(2) |
|
- |
|
(11) |
|
- |
|
(43) |
Exchange differences ............................. |
73 |
|
9 |
|
107 |
|
1,257 |
|
561 |
|
2,007 |
Other changes ....................................... |
7 |
|
12 |
|
- |
|
(163) |
|
1 |
|
(143) |
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2008 ........................... |
(368) |
|
(228) |
|
(886) |
|
(6,614) |
|
(1,532) |
|
(9,628) |
|
|
|
|
|
|
|
|
|
|
|
|
Net carrying amount at 31 December 2008 .................................................. |
3,758 |
|
1,508 |
|
2,038 |
|
3,706 |
|
3,015 |
|
14,025 |
|
|
|
|
|
|
|
|
|
|
|
|
Net carrying amount at 1 January 2008 . |
4,357 |
|
1,263 |
|
2,030 |
|
3,954 |
|
4,090 |
|
15,694 |
1 Including assets held on finance leases with a net book value of US$18 million (2008: US$13 million).
2 Including assets held on finance leases with a net book value of US$513 million (2008: US$315 million).
3 Including assets with a net book value of US$36 million (2008: US$28 million) pledged as security for liabilities.
4 At 31 December 2009, HSBC had US$878 million (2008: US$1,498 million) of contractual commitments to acquire property, plant and equipment.
In November 2009, HSBC entered into a contract for the sale and leaseback of 8 Canada Square in London for a consideration of £772.5 million (US$1,271 million). The transaction was effected through the sale of HSBC's 100 per cent shareholding in Project Maple II B.V. ('PMII') which is the legal owner of the building and long leasehold interest in 8 Canada Square.
On completion of the transaction on 30 November 2009, 'Property, plant and equipment' of £307 million (US$505 million) and 'Prepayments and accrued income' (representing the long leasehold on the land) of £106 million (US$174 million) were derecognised from HSBC's balance sheet and a gain of £353 million (US$576 million) was recognised within 'Other operating income'.
Under the terms of the arrangement, HSBC is leasing the building back from PMII for the remaining 17.5 years of the existing 20 year lease. The lease was originally entered into in May 2007, when HSBC had entered into a previous contract for the sale and leaseback of 8 Canada Square to Metrovacesa. The sale to Metrovacesa was not recognised for accounting purposes as HSBC retained a significant interest by virtue of a bridging loan. When HSBC took back ownership of 8 Canada Square in December 2008 by acquiring PMII, a then subsidiary of Metrovacesa, the impact on HSBC's operating profit for the year ended 31 December 2008 was a net gain of £244 million (US$383 million), comprising a gain of £265 million (US$416 million) included within 'Other operating income' and a charge of £21 million (US$33 million) included within 'Depreciation and impairment of property, plant and equipment'.
Leasehold land and buildings
Leasehold land and buildings are considered to be held under finance lease contracts where the value of the land cannot reliably be separated from the value of the lease and the respective contracts do not meet the criteria for classification as operating leases.
Included within 'Short leasehold land and buildings' are the following amounts in respect of assets classed as improvements to buildings, which are carried at depreciated historical cost:
|
2009 |
|
2008 |
||||
|
Cost |
|
Accumulated depreciation |
|
Cost |
|
Accumulated |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
|
|
|
|
|
|
|
At 1 January ................................................................... |
1,621 |
|
(675) |
|
1,490 |
|
(671) |
Additions ........................................................................ |
175 |
|
- |
|
314 |
|
- |
Disposals ........................................................................ |
(89) |
|
71 |
|
(40) |
|
12 |
Depreciation charge for the year .................................... |
- |
|
(133) |
|
- |
|
(116) |
Impairment loss recognised ............................................ |
- |
|
(24) |
|
- |
|
- |
Exchange differences ...................................................... |
86 |
|
(40) |
|
(141) |
|
100 |
Other changes ................................................................ |
31 |
|
(30) |
|
(2) |
|
- |
|
|
|
|
|
|
|
|
At 31 December ............................................................. |
1,824 |
|
(831) |
|
1,621 |
|
(675) |
|
|
|
|
|
|
|
|
Net carrying amount at 31 December ............................. |
993 |
|
|
|
946 |
|
|
Investment properties
The composition of the investment properties at fair value in the year was as follows:
|
Freehold land and buildings |
|
Long leasehold land and buildings |
|
Short leasehold land and buildings |
|
Total |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
Fair value |
|
|
|
|
|
|
|
At 1 January 2009 .......................................................... |
566 |
|
188 |
|
217 |
|
971 |
Additions at cost ............................................................ |
36 |
|
- |
|
- |
|
36 |
Fair value adjustments .................................................... |
(58) |
|
16 |
|
18 |
|
(24) |
Disposals ........................................................................ |
- |
|
(25) |
|
- |
|
(25) |
Exchange differences ...................................................... |
57 |
|
5 |
|
- |
|
62 |
Other changes ................................................................ |
39 |
|
- |
|
2 |
|
41 |
|
|
|
|
|
|
|
|
At 31 December 2009 .................................................... |
640 |
|
184 |
|
237 |
|
1,061 |
|
|
|
|
|
|
|
|
Fair value |
|
|
|
|
|
|
|
At 1 January 2008 .......................................................... |
925 |
|
205 |
|
216 |
|
1,346 |
Additions at cost ............................................................ |
78 |
|
- |
|
- |
|
78 |
Fair value adjustments .................................................... |
(93) |
|
4 |
|
(3) |
|
(92) |
Disposals ........................................................................ |
(2) |
|
- |
|
- |
|
(2) |
Transfers ........................................................................ |
- |
|
- |
|
(1) |
|
(1) |
Exchange differences ...................................................... |
(196) |
|
(15) |
|
5 |
|
(206) |
Other changes ................................................................ |
(146) |
|
(6) |
|
- |
|
(152) |
|
|
|
|
|
|
|
|
At 31 December 2008 .................................................... |
566 |
|
188 |
|
217 |
|
971 |
Investment properties are valued on an open market value basis as at 31 December each year by independent professional valuers who have recent experience in the location and type of properties. Investment properties in Hong Kong, the Macau Special Administrative Region and mainland China, which represent more than 35 per cent by value of HSBC's investment properties subject to revaluation, were valued by an independent valuer who is a member of the Hong Kong Institute of Surveyors and who has recent experience in the locations and categories of the investment properties.
Included within 'Other operating income' was rental income of US$81 million (2008: US$23 million; 2007: US$42 million) earned by HSBC on its investment properties. Direct operating expenses of US$2 million (2008: US$2 million; 2007: US$3 million) incurred in respect of the investment properties during the year were recognised in 'General and administrative expenses'. Direct operating expenses arising in respect of investment properties that did not generate rental income during 2009 amounted to nil (2008 and 2007: nil).
HSBC recognised no contractual obligations to purchase, construct, develop, maintain or enhance investment properties (2008: nil).
HSBC Holdings had no investment properties at 31 December 2009 or 2008.
HSBC properties leased to customers
HSBC properties leased to customers included US$434 million at 31 December 2009 (2008: US$396 million) let under operating leases, net of accumulated depreciation of US$18 million (2008: US$9 million). None was held by HSBC Holdings.
24 Investments in subsidiaries
Principal subsidiaries of HSBC Holdings
|
At 31 December 2009 |
||||||
|
Country of incorporation or registration |
|
HSBC's interest in equity capital % |
|
Issued capital |
|
Share |
Europe |
|
|
|
|
|
|
|
HSBC Asset Finance (UK) Limited ............................ |
England |
|
100 |
|
£265m |
|
Ordinary £1 |
HSBC Bank A.S. ........................................................ |
Turkey |
|
100 |
|
TRL652m |
|
A-Common TRL1 B-Common TRL1 |
HSBC Bank Malta p.l.c. ............................................. |
Malta |
|
70.03 |
|
€88m |
|
Ordinary €0.30 |
HSBC Bank plc .......................................................... |
England |
|
100 |
|
£797m |
|
Ordinary £1 Preferred Ordinary £1 Series 2 Third Dollar Third Dollar |
HSBC France ............................................................. |
France |
|
99.99 |
|
€337m |
|
Shares €5.00 |
HSBC Bank International Limited ............................. |
Jersey |
|
100 |
|
£1m |
|
Ordinary £1 |
HSBC Life (UK) Limited ........................................... |
England |
|
100 |
|
£94m |
|
Ordinary £1 |
HSBC Private Banking Holdings (Suisse) S.A. ............. |
Switzerland |
|
100 |
|
CHF1,363m |
|
Ordinary CHF1,000 |
HSBC Trinkaus & Burkhardt AG ................................ |
Germany |
|
78.60 |
|
€26m |
|
Shares of no par value |
Marks and Spencer Retail Financial Services Holdings |
England |
|
100 |
|
£67m |
|
Ordinary £1 |
|
|
|
|
|
|
|
|
Hong Kong |
|
|
|
|
|
|
|
Hang Seng Bank Limited7 .......................................... |
Hong Kong |
|
62.14 |
|
HK$9,559m |
|
Ordinary HK$5.00 |
HSBC Insurance (Asia) Limited .................................. |
Hong Kong |
|
100 |
|
HK$125m |
|
Ordinary HK$1,000 |
HSBC Life (International) Limited ............................ |
Bermuda |
|
100 |
|
HK$327m |
|
Ordinary HK$1.00 |
The Hongkong and Shanghai Banking Corporation Limited .................................................................. |
Hong Kong |
|
100 |
|
HK$22,494m |
|
Ordinary HK$2.50 CIP1 US$1.00 CRP2 US$1.00 NIP3 US$1.00 |
|
|
|
|
|
|
|
|
Rest of Asia-Pacific |
|
|
|
|
|
|
|
HSBC Bank Australia Limited .................................... |
Australia |
|
100 |
|
A$657m |
|
Ordinary A$1.00 Pref A$10,000 |
HSBC Bank (China) Company Limited ...................... |
PRC4 |
|
100 |
|
RMB8,000m |
|
Ordinary CNY1.00 |
HSBC Bank Malaysia Berhad ..................................... |
Malaysia |
|
100 |
|
RM114m |
|
Ordinary RM0.50 |
|
|
|
|
|
|
|
|
Middle East |
|
|
|
|
|
|
|
HSBC Bank Middle East Limited ................................ |
Jersey |
|
100 |
|
US$931m |
|
CRP2 US$1.00 Ordinary US$1.00 |
HSBC Bank Egypt S.A.E. ........................................... |
Egypt |
|
94.53 |
|
EGP1,509m |
|
Ordinary EGP84.00 |
|
|
|
|
|
|
|
|
North America |
|
|
|
|
|
|
|
The Bank of Bermuda Limited ................................... |
Bermuda |
|
100 |
|
US$30m |
|
Common BMD1.00 |
HSBC Bank Canada .................................................... |
Canada |
|
100 |
|
C$1,225m |
|
Class 1 Pref of NPV5 Class 2 Pref of NPV5 Common of NPV |
HSBC Bank USA, N.A. .............................................. |
United States |
|
100 |
|
US$2m |
|
Common US$100 |
HSBC Finance Corporation ........................................ |
United States |
|
100 |
|
US$3,038m |
|
Common US$0.01 |
HSBC Securities (USA) Inc. ........................................ |
United States |
|
100 |
|
-6 |
|
Common US$0.05 |
|
|
|
|
|
|
|
|
Latin America |
|
|
|
|
|
|
|
HSBC Bank Argentina S.A. ........................................ |
Argentina |
|
99.99 |
|
ARS1,244m |
|
Ordinary-A ARS1.00 Ordinary-B ARS1.00 |
HSBC Bank Brasil S.A. - Banco Múltiplo ................... |
Brazil |
|
100 |
|
BRL3,483m |
|
Ordinary BRL1.14 Ordinary BRL1.89 Ordinary BRL1.17 |
HSBC Mexico, S.A., Institucion de Banca Multiple, |
Mexico |
|
99.99 |
|
MXN4,334m |
|
Ordinary MXN2.00 |
HSBC Bank (Panama) S.A. ........................................ |
Panama |
|
100 |
|
US$10m |
|
Ordinary PAB 1.00 |
1 Cumulative Irredeemable Preference shares.
2 Cumulative Redeemable Preference shares.
3 Non-cumulative Irredeemable Preference shares.
4 People's Republic of China.
5 Preference shares of nil par value.
6 Issued equity capital is less than US$1 million.
7 Listed in Hong Kong.
Details of the debt, subordinated debt and preference shares issued by the principal subsidiaries to parties external to the Group are included in the Notes 28 'Debt securities in issue', 32 'Subordinated liabilities' and 36 'Minority interests', respectively.
All the above subsidiaries are included in the HSBC consolidated financial statements.
Details of all HSBC subsidiaries will be annexed to the next Annual Return of HSBC Holdings filed with the UK Registrar of Companies.
All the above make their financial statements up to 31 December except for HSBC Bank Argentina S.A., whose financial statements are made up to 30 June annually.
The principal countries of operation are the same as the countries of incorporation except for HSBC Bank Middle East Limited which operates mainly in the Middle East and HSBC Life (International) Limited which operates mainly in Hong Kong.
Subsidiaries which experience significant restrictions on their ability to transfer funds to HSBC in the form of cash dividends or to repay loans and advances
During 2009 and 2008, none of the Group's subsidiaries experienced significant restrictions on paying dividends or repaying loans and advances.
Subsidiaries excluding SPEs where HSBC owns less than 50 per cent of the voting rights
Subsidiary |
HSBC's interest in equity capital |
|
Description of relationship that gives HSBC control |
|
% |
|
|
2009 |
|
|
|
HSBC Private Equity Fund 3 ........................... |
38.8 |
|
HSBC has control under IAS 27 because it is the investment adviser/manager of the fund and has a significant equity interest. |
2008 |
|
|
|
HSBC Private Equity Fund 3 ........................... |
38.8 |
|
HSBC has control under IAS 27 because it is the investment adviser/manager of the fund and has a significant equity interest. |
SPEs consolidated by HSBC where HSBC owns less than 50 per cent of the voting rights
Carrying value of total |
|
Nature of SPE |
|
|
US$bn |
|
|
2009 |
|
|
|
Barion Funding Limited ................................................................................ |
4.4 |
|
Structured investment conduit |
Bryant Park Funding LLC ............................................................................ |
3.8 |
|
Conduit |
HSBC Affinity Corporation I ....................................................................... |
4.9 |
|
Securitisation |
HSBC Auto Receivables Corporation ............................................................ |
1.3 |
|
Securitisation |
HSBC Corporate Money Fund (Euro) ........................................................... |
0.8 |
|
Money market fund |
HSBC Funding Inc V ..................................................................................... |
5.3 |
|
Securitisation |
HSBC Home Equity Loan Corporation I ....................................................... |
3.1 |
|
Securitisation |
HSBC Home Equity Loan Corporation II ..................................................... |
3.3 |
|
Securitisation |
HSBC Investor Prime Money Market Fund .................................................. |
10.7 |
|
Money market fund |
HSBC Receivables Funding, Inc I .................................................................. |
5.4 |
|
Securitisation |
HSBC Receivables Inc Funding II .................................................................. |
1.8 |
|
Securitisation |
HSBC Sterling Liquidity Fund ........................................................................ |
7.5 |
|
Money market fund |
HSBC US Dollar Liquidity Fund .................................................................... |
23.4 |
|
Money market fund |
Malachite Funding Limited ........................................................................... |
4.3 |
|
Structured investment conduit |
Mazarin Funding Limited .............................................................................. |
11.3 |
|
Structured investment conduit |
Metrix Funding Ltd ...................................................................................... |
3.7 |
|
Securitisation |
Metrix Securities plc ..................................................................................... |
4.2 |
|
Securitisation |
Regency Assets Limited ................................................................................ |
6.8 |
|
Conduit |
Solitaire Funding Ltd .................................................................................... |
12.8 |
|
Conduit |
Turquoise Receivable Trustee Ltd ................................................................. |
0.5 |
|
Securitisation |
In addition to the above, HSBC consolidates a number of individually insignificant SPEs with total assets of US$12.1 billion. For further details, see 'Special Purpose Entities' on page 181.
Carrying value of total |
|
Nature of SPE |
|
|
US$bn |
|
|
2008 |
|
|
|
Barion Funding Limited ................................................................................ |
4.5 |
|
Structured investment conduit |
Bryant Park Funding LLC ............................................................................ |
5.5 |
|
Conduit |
Cullinan Funding Ltd .................................................................................... |
0.4 |
|
Structured investment vehicle |
HSBC Affinity Corporation I ....................................................................... |
6.0 |
|
Securitisation |
HSBC Auto Receivables Corporation ............................................................ |
3.5 |
|
Securitisation |
HSBC Corporate Money Fund (Euro) ........................................................... |
0.6 |
|
Money market fund |
HSBC Home Equity Loan Corporation I ....................................................... |
3.5 |
|
Securitisation |
HSBC Investor Prime Money Market Fund .................................................. |
10.5 |
|
Money market fund |
HSBC Receivables Funding, Inc I .................................................................. |
5.7 |
|
Securitisation |
HSBC Sterling Liquidity Fund ........................................................................ |
7.7 |
|
Money market fund |
HSBC US Dollar Liquidity Fund .................................................................... |
25.0 |
|
Money market fund |
Malachite Funding Limited ........................................................................... |
4.2 |
|
Structured investment conduit |
Mazarin Funding Limited .............................................................................. |
11.5 |
|
Structured investment conduit |
Metris Receivables Inc .................................................................................. |
3.6 |
|
Securitisation |
Metrix Funding Ltd ...................................................................................... |
3.6 |
|
Securitisation |
Metrix Securities plc ..................................................................................... |
4.2 |
|
Securitisation |
Regency Assets Limited ................................................................................ |
8.1 |
|
Conduit |
Solitaire Funding Ltd .................................................................................... |
12.1 |
|
Conduit |
Turquoise Receivable Trustee Ltd ................................................................. |
2.3 |
|
Securitisation |
In each of the above cases, HSBC has less than 50 per cent of the voting rights, but consolidates because it has the majority of risks and rewards of ownership of the SPE, or the substance of the relationship with the SPE is such that its activities are conducted on behalf of HSBC according to its specific business needs so that HSBC obtains benefit from the SPE's operation. HSBC also consolidates a number of other individually insignificant SPEs where it owns less than 50 per cent of the voting rights. The consolidation of SPEs sponsored by HSBC is discussed on page 181.
Acquisitions
There were minor acquisitions and increases in investment in subsidiaries which increased goodwill by US$580 million.
25 Other assets
|
2009 |
|
2008 |
|
US$m |
|
US$m |
|
|
|
|
Bullion ................................................................................................................................... |
13,757 |
|
6,095 |
Assets held for sale ................................................................................................................ |
3,118 |
|
2,075 |
Reinsurers' share of liabilities under insurance contracts (Note 30) ........................................ |
2,069 |
|
2,023 |
Endorsements and acceptances .............................................................................................. |
9,311 |
|
10,482 |
Other accounts ...................................................................................................................... |
16,279 |
|
17,147 |
|
|
|
|
|
44,534 |
|
37,822 |
Assets held for sale
|
2009 |
|
2008 |
|
US$m |
|
US$m |
Non-current assets held for sale |
|
|
|
Interests in associates ............................................................................................................ |
105 |
|
2 |
Property, plant and equipment .............................................................................................. |
1,639 |
|
2,007 |
Investment properties ........................................................................................................... |
1 |
|
2 |
Financial assets ...................................................................................................................... |
1,359 |
|
62 |
Other ..................................................................................................................................... |
14 |
|
2 |
|
|
|
|
Total assets classified as held for sale ..................................................................................... |
3,118 |
|
2,075 |
Property, plant and equipment
In October 2009, HSBC entered into a contract for the sale of 452 Fifth Avenue and 1W. 39th Street in New York for a combined consideration of US$330 million. Under the terms of the arrangement, HSBC will lease back the entire 452 Fifth Avenue building for one year and certain parts of the building for 10 years. The transaction is
expected to complete in the second quarter of 2010. The carrying amount of the property included in assets held for sale at 31 December 2009 was (US$257 million).
In December 2009, HSBC entered into a contract for the sale of 103 Champs Elysées and 15 Rue Vernet in Paris for a combined consideration of EUR 400 million (US$576 million). Under the terms of the arrangement, HSBC will lease the buildings back for a period of 9 years. The carrying amount of the buildings included in assets held for sale at 31 December 2009 was EUR257 million (US$370 million). The transaction completed on 25 February 2010.
The remaining property, plant and equipment classified as held for sale is the result of repossession of property that had been pledged as collateral by customers. These assets are disposed of within 12 months of acquisition. The majority arose within the geographical segment of North America.
Financial assets
At 31 December 2009, financial assets classified as held for sale included US$972 million of vehicle finance loans and US$366 million of credit card portfolios. These are presented in North America geographical segment.
Neither a gain nor loss was recognised on reclassifying assets as held for sale during the year.
26 Trading liabilities
|
2009 US$m |
|
2008 US$m |
|
|
|
|
Deposits by banks .................................................................................................................. |
41,165 |
|
36,537 |
Customer accounts ................................................................................................................. |
99,306 |
|
113,053 |
Other debt securities in issue .................................................................................................. |
37,592 |
|
31,288 |
Other liabilities - net short positions in securities................................................................... |
90,067 |
|
66,774 |
|
|
|
|
|
268,130 |
|
247,652 |
At 31 December 2009, the cumulative amount of change in fair value attributable to changes in credit risk was a gain of US$119 million (2008: gain of US$563 million).
27 Financial liabilities designated at fair value
HSBC
|
2009 |
|
2008 |
|
US$m |
|
US$m |
|
|
|
|
Deposits by banks and customer accounts .............................................................................. |
6,586 |
|
6,618 |
Liabilities to customers under investment contracts ............................................................... |
10,865 |
|
9,283 |
Debt securities in issue (Note 28) ........................................................................................... |
38,208 |
|
34,969 |
Subordinated liabilities (Note 32) ........................................................................................... |
20,180 |
|
20,316 |
Preference shares (Note 32) .................................................................................................. |
4,253 |
|
3,401 |
|
|
|
|
|
80,092 |
|
74,587 |
The carrying amount at 31 December 2009 of financial liabilities designated at fair value was US$1,346 million more than the contractual amount at maturity (2008: US$1,851 million less). The cumulative amount of the change in fair value attributable to changes in credit risk was a gain of US$1,510 million (2008: gain of US$7,978 million).
HSBC Holdings
|
2009 |
|
2008 |
|
US$m |
|
US$m |
Subordinated liabilities (Note 32): |
|
|
|
- owed to third parties ....................................................................................................... |
12,549 |
|
13,321 |
- owed to HSBC undertakings ............................................................................................. |
4,360 |
|
3,068 |
|
|
|
|
|
16,909 |
|
16,389 |
The carrying amount at 31 December 2009 of financial liabilities designated at fair value was US$769 million more than the contractual amount at maturity (2008: US$969 million less). The cumulative amount of the change in fair value attributable to changes in credit risk was a loss of US$191 million (2008: gain of US$2,638 million).
28 Debt securities in issue
|
2009 |
|
2008 |
|
US$m |
|
US$m |
|
|
|
|
Bonds and medium-term notes ............................................................................................... |
160,295 |
|
160,927 |
Other debt securities in issue .................................................................................................. |
62,401 |
|
85,023 |
|
|
|
|
|
222,696 |
|
245,950 |
Of which debt securities in issue reported as: |
|
|
|
- trading liabilities (Note 26).............................................................................................. |
(37,592) |
|
(31,288) |
- financial liabilities designated at fair value (Note 27) ....................................................... |
(38,208) |
|
(34,969) |
|
|
|
|
|
146,896 |
|
179,693 |
Certain debt securities in issue are managed on a fair value basis as part of HSBC's interest rate risk management policies. The hedged portion of these debt securities is presented within the balance sheet caption 'Financial liabilities designated at fair value', with the remaining portion included within 'Trading liabilities'. The following table analyses the carrying amount of bonds and medium-term notes in issue at 31 December with original maturities greater than one year:
|
2009 |
|
2008 |
|
US$m |
|
US$m |
Fixed rate |
|
|
|
Secured financing: |
|
|
|
0.01% to 3.99%: due 2010 to 2019 ................................................................................... |
5,929 |
|
767 |
4.00% to 4.99%: due 2010 to 2015 ................................................................................... |
1,948 |
|
1,590 |
5.00% to 5.99%: due 2010 to 2021 ................................................................................... |
1,315 |
|
2,754 |
7.00% to 7.99%: due 2010 to 2011 ................................................................................... |
9 |
|
14 |
8.00% to 9.99%: due 2010 to 2028 ................................................................................... |
417 |
|
462 |
10.00% or higher: due 2010 ............................................................................................... |
43 |
|
- |
Other fixed rate senior debt: |
|
|
|
0.01% to 3.99%: due 2010 to 2051 ................................................................................... |
22,554 |
|
21,790 |
4.00% to 4.99%: due 2010 to 2046 ................................................................................... |
15,754 |
|
13,088 |
5.00% to 5.99%: due 2010 to 2036 ................................................................................... |
25,619 |
|
22,357 |
6.00% to 6.99%: due 2010 to 2033 ................................................................................... |
11,066 |
|
11,176 |
7.00% to 7.99%: due 2010 to 2039 ................................................................................... |
3,900 |
|
4,995 |
8.00% to 9.99%: due 2010 to 2037 ................................................................................... |
1,737 |
|
1,822 |
10.00% or higher: due 2010 to 2017 .................................................................................. |
280 |
|
884 |
|
|
|
|
|
90,571 |
|
81,699 |
Variable interest rate |
|
|
|
Secured financings - 0.01% to 13.99%: due 2010 to 2021 ..................................................... |
13,971 |
|
27,741 |
FHLB advances - 0.01% to 0.99%: due 2010 to 2036 ........................................................... |
1,000 |
|
3,156 |
Other variable interest rate senior debt - 0.01% to 12.99%: due 2010 to 2057 ...................... |
50,258 |
|
43,849 |
|
|
|
|
|
65,229 |
|
74,746 |
|
|
|
|
Structured notes |
|
|
|
Interest rate linked ................................................................................................................ |
5 |
|
348 |
Equity, equity index or credit-linked ...................................................................................... |
4,490 |
|
4,134 |
|
|
|
|
|
4,495 |
|
4,482 |
|
|
|
|
Total bonds and medium-term notes ...................................................................................... |
160,295 |
|
160,927 |
HSBC Holdings
|
2009 |
|
2008 |
|
US$m |
|
US$m |
Bonds and medium-term notes |
|
|
|
Fixed rate senior debt, unsecured: |
|
|
|
4.00% to 4.99%: due 2010 to 2014 ................................................................................... |
1,791 |
|
- |
6.00% to 6.99%: due 2010 to 2024 ................................................................................... |
1,048 |
|
- |
|
|
|
|
|
2,839 |
|
- |
29 Other liabilities
|
HSBC |
|
HSBC Holdings |
||||
|
2009 |
|
2008 |
|
2009 |
|
2008 |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
|
|
|
|
|
|
|
Amounts due to investors in funds consolidated |
48,193 |
|
44,539 |
|
- |
|
- |
Obligations under finance leases (Note 40) ..................... |
644 |
|
563 |
|
- |
|
- |
Dividend declared and payable by HSBC Holdings ........... |
1,231 |
|
1,795 |
|
1,231 |
|
1,795 |
Endorsements and acceptances ....................................... |
9,313 |
|
10,482 |
|
- |
|
- |
Other liabilities ............................................................... |
9,259 |
|
15,005 |
|
26 |
|
21 |
|
|
|
|
|
|
|
|
|
68,640 |
|
72,384 |
|
1,257 |
|
1,816 |
30 Liabilities under insurance contracts
|
Gross |
|
Reinsurers' share |
|
Net |
|
US$m |
|
US$m |
|
US$m |
At 31 December 2009 |
|
|
|
|
|
Non-life insurance liabilities |
|
|
|
|
|
Unearned premium provision ..................................................................... |
833 |
|
(135) |
|
698 |
Notified claims ........................................................................................... |
1,032 |
|
(245) |
|
787 |
Claims incurred but not reported ................................................................ |
685 |
|
(82) |
|
603 |
Other ......................................................................................................... |
178 |
|
(5) |
|
173 |
|
|
|
|
|
|
|
2,728 |
|
(467) |
|
2,261 |
|
|
|
|
|
|
Life insurance liabilities to policyholders |
|
|
|
|
|
Life (non-linked) ....................................................................................... |
20,979 |
|
(771) |
|
20,208 |
Investment contracts with discretionary participation features1 ................. |
21,014 |
|
- |
|
21,014 |
Life (linked) ............................................................................................... |
8,986 |
|
(831) |
|
8,155 |
|
|
|
|
|
|
|
50,979 |
|
(1,602) |
|
49,377 |
|
|
|
|
|
|
Total liabilities under insurance contracts ................................................... |
53,707 |
|
(2,069) |
|
51,638 |
|
|
|
|
|
|
At 31 December 2008 |
|
|
|
|
|
Non-life insurance liabilities |
|
|
|
|
|
Unearned premium provision ..................................................................... |
1,136 |
|
(159) |
|
977 |
Notified claims ........................................................................................... |
908 |
|
(230) |
|
678 |
Claims incurred but not reported ................................................................ |
368 |
|
(41) |
|
327 |
Other ......................................................................................................... |
68 |
|
- |
|
68 |
|
|
|
|
|
|
|
2,480 |
|
(430) |
|
2,050 |
|
|
|
|
|
|
Life insurance liabilities to policyholders |
|
|
|
|
|
Life (non-linked) ....................................................................................... |
17,370 |
|
(637) |
|
16,733 |
Investment contracts with discretionary participation features1 ................. |
17,766 |
|
- |
|
17,766 |
Life (linked) ............................................................................................... |
6,067 |
|
(956) |
|
5,111 |
|
|
|
|
|
|
|
41,203 |
|
(1,593) |
|
39,610 |
|
|
|
|
|
|
Total liabilities under insurance contracts ................................................... |
43,683 |
|
(2,023) |
|
41,660 |
1 Though investment contracts with discretionary participation features are financial instruments, HSBC continues to treat them as insurance contracts as permitted by IFRS 4.
The movement of liabilities under insurance contracts during the year was as follows:
Non-life insurance liabilities
|
Gross |
|
Reinsurers' share |
|
Net |
|
US$m |
|
US$m |
|
US$m |
2009 |
|
|
|
|
|
Unearned premium reserve ('UPR') |
|
|
|
|
|
At 1 January .............................................................................................. |
1,136 |
|
(159) |
|
977 |
Changes in UPR recognised as (income)/expense ........................................ |
(233) |
|
10 |
|
(223) |
Gross written premiums .......................................................................... |
1,339 |
|
(215) |
|
1,124 |
Gross earned premiums ........................................................................... |
(1,572) |
|
225 |
|
(1,347) |
Exchange differences and other movements ............................................... |
(70) |
|
14 |
|
(56) |
|
|
|
|
|
|
At 31 December ......................................................................................... |
833 |
|
(135) |
|
698 |
|
|
|
|
|
|
Notified and incurred but not reported claims |
|
|
|
|
|
At 1 January .............................................................................................. |
1,276 |
|
(271) |
|
1,005 |
Notified claims ....................................................................................... |
908 |
|
(230) |
|
678 |
Claims incurred but not reported ............................................................. |
368 |
|
(41) |
|
327 |
|
|
|
|
|
|
Claims paid in current year ......................................................................... |
(987) |
|
156 |
|
(831) |
Claims incurred in respect of current year .................................................. |
939 |
|
(156) |
|
783 |
Claims incurred in respect of prior years .................................................... |
342 |
|
(2) |
|
340 |
Exchange differences and other movements ............................................... |
147 |
|
(54) |
|
93 |
|
|
|
|
|
|
At 31 December ......................................................................................... |
1,717 |
|
(327) |
|
1,390 |
Notified claims ....................................................................................... |
1,032 |
|
(245) |
|
787 |
Claims incurred but not reported ............................................................. |
685 |
|
(82) |
|
603 |
|
|
|
|
|
|
|
|
|
|
|
|
Other ......................................................................................................... |
178 |
|
(5) |
|
173 |
|
|
|
|
|
|
Total non-life insurance liabilities .............................................................. |
2,728 |
|
(467) |
|
2,261 |
|
|
|
|
|
|
2008 |
|
|
|
|
|
Unearned premium reserve ('UPR') |
|
|
|
|
|
At 1 January .............................................................................................. |
1,279 |
|
(181) |
|
1,098 |
Changes in UPR recognised as (income)/expense ........................................ |
(58) |
|
3 |
|
(55) |
Gross written premiums .......................................................................... |
1,776 |
|
(260) |
|
1,516 |
Gross earned premiums ........................................................................... |
(1,834) |
|
263 |
|
(1,571) |
Exchange differences and other movements ............................................... |
(85) |
|
19 |
|
(66) |
|
|
|
|
|
|
At 31 December ......................................................................................... |
1,136 |
|
(159) |
|
977 |
|
|
|
|
|
|
Notified and incurred but not reported claims |
|
|
|
|
|
At 1 January .............................................................................................. |
1,483 |
|
(429) |
|
1,054 |
Notified claims ....................................................................................... |
1,063 |
|
(380) |
|
683 |
Claims incurred but not reported ............................................................. |
420 |
|
(49) |
|
371 |
|
|
|
|
|
|
Claims paid in current year ......................................................................... |
(1,044) |
|
158 |
|
(886) |
Claims incurred in respect of current year .................................................. |
975 |
|
(68) |
|
907 |
Claims incurred in respect of prior years .................................................... |
69 |
|
(15) |
|
54 |
Exchange differences and other movements ............................................... |
(207) |
|
83 |
|
(124) |
|
|
|
|
|
|
At 31 December ......................................................................................... |
1,276 |
|
(271) |
|
1,005 |
Notified claims ....................................................................................... |
908 |
|
(230) |
|
678 |
Claims incurred but not reported ............................................................. |
368 |
|
(41) |
|
327 |
|
|
|
|
|
|
|
|
|
|
|
|
Other ......................................................................................................... |
68 |
|
- |
|
68 |
|
|
|
|
|
|
Total non-life insurance liabilities .............................................................. |
2,480 |
|
(430) |
|
2,050 |
Life insurance liabilities to policyholders
|
Gross |
|
Reinsurers' share |
|
Net |
|
US$m |
|
US$m |
|
US$m |
2009 |
|
|
|
|
|
Life (non-linked) |
|
|
|
|
|
At 1 January .............................................................................................. |
17,370 |
|
(637) |
|
16,733 |
Benefits paid .............................................................................................. |
(2,098) |
|
159 |
|
(1,939) |
Increase in liabilities to policyholders ......................................................... |
4,669 |
|
(98) |
|
4,571 |
Exchange differences and other movements ............................................... |
1,038 |
|
(195) |
|
843 |
|
|
|
|
|
|
At 31 December ......................................................................................... |
20,979 |
|
(771) |
|
20,208 |
|
|
|
|
|
|
Investment contracts with discretionary participation features |
|
|
|
|
|
At 1 January .............................................................................................. |
17,766 |
|
- |
|
17,766 |
Benefits paid .............................................................................................. |
(1,818) |
|
- |
|
(1,818) |
Increase in liabilities to policyholders ......................................................... |
3,934 |
|
- |
|
3,934 |
Exchange differences and other movements1 ............................................. |
1,132 |
|
- |
|
1,132 |
|
|
|
|
|
|
At 31 December ......................................................................................... |
21,014 |
|
- |
|
21,014 |
|
|
|
|
|
|
Life (linked) |
|
|
|
|
|
At 1 January .............................................................................................. |
6,067 |
|
(956) |
|
5,111 |
Benefits paid .............................................................................................. |
(325) |
|
21 |
|
(304) |
Increase in liabilities to policyholders ......................................................... |
2,676 |
|
146 |
|
2,822 |
Exchange differences and other movements2 ............................................. |
568 |
|
(42) |
|
526 |
|
|
|
|
|
|
At 31 December ......................................................................................... |
8,986 |
|
(831) |
|
8,155 |
|
|
|
|
|
|
Total liabilities to policyholders ................................................................. |
50,979 |
|
(1,602) |
|
49,377 |
|
|
|
|
|
|
2008 |
|
|
|
|
|
Life (non-linked) |
|
|
|
|
|
At 1 January .............................................................................................. |
14,370 |
|
(605) |
|
13,765 |
Benefits paid .............................................................................................. |
(1,491) |
|
172 |
|
(1,319) |
Increase in liabilities to policyholders ......................................................... |
5,480 |
|
(792) |
|
4,688 |
Exchange differences and other movements ............................................... |
(989) |
|
588 |
|
(401) |
|
|
|
|
|
|
At 31 December ......................................................................................... |
17,370 |
|
(637) |
|
16,733 |
|
|
|
|
|
|
Investment contracts with discretionary participation features |
|
|
|
|
|
At 1 January .............................................................................................. |
18,983 |
|
- |
|
18,983 |
Benefits paid .............................................................................................. |
(1,911) |
|
- |
|
(1,911) |
Increase in liabilities to policyholders ......................................................... |
1,743 |
|
- |
|
1,743 |
Exchange differences and other movements1.............................................. |
(1,049) |
|
- |
|
(1,049) |
|
|
|
|
|
|
At 31 December ......................................................................................... |
17,766 |
|
- |
|
17,766 |
|
|
|
|
|
|
Life (linked) |
|
|
|
|
|
At 1 January .............................................................................................. |
6,399 |
|
(57) |
|
6,342 |
Benefits paid .............................................................................................. |
(481) |
|
44 |
|
(437) |
Increase in liabilities to policyholders ......................................................... |
939 |
|
(1,442) |
|
(503) |
Exchange differences and other movements2 ............................................. |
(790) |
|
499 |
|
(291) |
|
|
|
|
|
|
At 31 December ......................................................................................... |
6,067 |
|
(956) |
|
5,111 |
|
|
|
|
|
|
Total liabilities to policyholders ................................................................. |
41,203 |
|
(1,593) |
|
39,610 |
1 Includes movement in liabilities relating to discretionary profit participation benefits due to policyholders arising from net unrealised investment gains recognised in other comprehensive income.
2 Includes amounts arising under reinsurance agreements.
The increase in liabilities to policyholders represents the aggregate of all events giving rise to additional liabilities to policyholders in the year. The key factors contributing to the movement in liabilities to policyholders include death claims, surrenders, lapses, liabilities to policyholders created at the initial inception of the policies, the declaration of bonuses and other amounts attributable to policyholders.
31 Provisions
|
2009 |
|
2008 |
|
US$m |
|
US$m |
|
|
|
|
At 1 January .......................................................................................................................... |
1,730 |
|
1,958 |
Additional provisions/increase in provisions1 ......................................................................... |
894 |
|
738 |
Provisions utilised .................................................................................................................. |
(684) |
|
(624) |
Amounts reversed .................................................................................................................. |
(225) |
|
(147) |
Exchange differences and other movements .......................................................................... |
250 |
|
(195) |
|
|
|
|
At 31 December .................................................................................................................... |
1,965 |
|
1,730 |
1 The increase in provisions includes the unwinding of discounts of US$3 million (2008: US$3 million) in relation to vacant space provisions and US$32 million (2008: US$21 million) in relation to Brazilian provisions for civil and fiscal labour claims.
Included within provisions are:
(i) Provisions for onerous property contracts of US$158 million (2008: US$85 million), of which US$32 million (2008: US$20 million) relates to discounted future costs associated with leasehold properties that became vacant as a consequence of HSBC's move to Canary Wharf in 2002. The provisions cover rent voids while finding new tenants, shortfalls in expected rent receivable compared with rent payable and the cost of refurbishing the buildings to attract tenants. Uncertainties arise from movements in market rents, delays in finding new tenants and the timing of rental reviews.
(ii) Labour, civil and fiscal litigation provisions in HSBC's Brazil operations of US$538 million (2008: US$334 million). These relate to labour and overtime litigation claims brought by employees after leaving the bank. The provisions are based on the expected number of departing employees, their individual salaries and historical trends. The timing of the settlement of these claims is uncertain.
(iii) Provisions of US$449 million (2008: US$439 million) have been made in respect of costs arising from contingent liabilities and contractual commitments (Note 39), including guarantees of US$56 million (2008: US$35 million) and commitments of US$172 million (2008: US$192 million).
32 Subordinated liabilities
HSBC
|
2009 |
|
2008 |
|
US$m |
|
US$m |
Subordinated liabilities |
|
|
|
At amortised cost ............................................................................................................ |
30,478 |
|
29,433 |
- subordinated liabilities .................................................................................................. |
23,893 |
|
24,618 |
-. preferred securities ...................................................................................................... |
6,585 |
|
4,815 |
|
|
|
|
Designated at fair value (Note 27) ................................................................................... |
24,433 |
|
23,717 |
- subordinated liabilities .................................................................................................. |
20,180 |
|
20,316 |
-. preferred securities ...................................................................................................... |
4,253 |
|
3,401 |
|
|
|
|
|
|
|
|
|
54,911 |
|
53,150 |
|
|
|
|
Subordinated liabilities |
|
|
|
HSBC Holdings ................................................................................................................ |
23,048 |
|
23,544 |
Other HSBC .................................................................................................................... |
31,863 |
|
29,606 |
|
|
|
|
|
54,911 |
|
53,150 |
HSBC's subordinated liabilities
|
|
2009 |
|
2008 |
|
|
US$m |
|
US$m |
|
|
|
|
|
Amounts owed to third parties by HSBC Holdings (see below) ...................................... |
23,048 |
|
23,544 |
|
|
|
|
|
|
Other HSBC subordinated liabilities |
|
|
|
|
€1,400m |
5.3687% non-cumulative step-up perpetual preferred securities1 .................. |
1,804 |
|
1,532 |
US$1,350m |
9.547% non-cumulative step-up perpetual preferred securities, series 11 ....... |
1,339 |
|
1,337 |
€800m |
Callable subordinated floating rate notes 20162 ............................................. |
1,152 |
|
1,116 |
£700m |
5.844% non-cumulative step-up perpetual preferred securities3 .................... |
1,136 |
|
1,021 |
US$1,250m |
4.61% non-cumulative step-up perpetual preferred securities1 ...................... |
1,077 |
|
745 |
US$1,000m |
4.625% subordinated notes 2014 .................................................................. |
1,002 |
|
1,001 |
US$1,000m |
5.911% trust preferred securities 20354 ........................................................ |
993 |
|
992 |
£600m |
4.75% subordinated notes 2046 .................................................................... |
961 |
|
863 |
€750m |
5.13% non-cumulative step-up perpetual preferred securities1 ...................... |
960 |
|
790 |
US$1,000m |
5.875% subordinated notes 2034 .................................................................. |
950 |
|
953 |
€600m |
4.25% callable subordinated notes 20165 ....................................................... |
904 |
|
831 |
US$900m |
10.176% non-cumulative step-up perpetual preferred securities, series 21 ..... |
900 |
|
900 |
€600m |
8.03% non-cumulative step-up perpetual preferred securities1 ...................... |
862 |
|
834 |
£500m |
8.208% non-cumulative step-up perpetual preferred securities1 .................... |
806 |
|
724 |
£500m |
4.75% callable subordinated notes 20206 ...................................................... |
785 |
|
675 |
£500m |
5.375% subordinated notes 2033 .................................................................. |
776 |
|
659 |
US$750m |
Undated floating rate primary capital notes .................................................. |
750 |
|
750 |
US$750m |
5.625% subordinated notes 2035 .................................................................. |
712 |
|
715 |
US$700m |
7.00% subordinated notes 2039 .................................................................... |
688 |
|
694 |
€500m |
Callable subordinated floating rate notes 20207 ............................................. |
639 |
|
567 |
£350m |
Callable subordinated variable coupon notes 20178 ........................................ |
608 |
|
518 |
£350m |
5% callable subordinated notes 20239 ............................................................ |
550 |
|
481 |
£350m |
5.375% callable subordinated step-up notes 203010 ....................................... |
531 |
|
461 |
US$500m |
6.00% subordinated notes 2017 .................................................................... |
521 |
|
498 |
US$500m |
Undated floating rate primary capital notes .................................................. |
500 |
|
500 |
£300m |
6.5% subordinated notes 2023 ...................................................................... |
483 |
|
436 |
US$450m |
Callable subordinated floating rate notes 20162 ............................................. |
449 |
|
449 |
£300m |
5.862% non-cumulative step-up perpetual preferred securities3 .................... |
412 |
|
333 |
US$400m |
Primary capital undated floating rate notes................................................... |
407 |
|
410 |
US$400m |
Primary capital undated floating rate notes (second series) ........................... |
404 |
|
404 |
US$400m |
Primary capital undated floating rate notes (third series) .............................. |
400 |
|
400 |
CAD400m |
4.80% subordinated notes 2022 .................................................................... |
382 |
|
277 |
£225m |
6.25% subordinated notes 2041 .................................................................... |
363 |
|
325 |
US$300m |
6.95% subordinated notes 2011 .................................................................... |
321 |
|
324 |
US$300m |
7.65% subordinated notes 2025 .................................................................... |
312 |
|
384 |
US$300m |
Undated floating rate primary capital notes, series 3 .................................... |
300 |
|
300 |
US$300m |
Callable subordinated floating rate notes 201711 ........................................... |
299 |
|
299 |
BRL500m |
Subordinated certificates of deposit 2016 ...................................................... |
287 |
|
215 |
US$250m |
Non-convertible subordinated obligations 2019............................................. |
247 |
|
- |
BRL383m |
Subordinated certificates of deposit 2015 ...................................................... |
220 |
|
- |
US$250m |
7.20% subordinated debentures 2097 ............................................................ |
213 |
|
218 |
US$200m |
7.808% capital securities 2026 ..................................................................... |
200 |
|
200 |
US$200m |
8.38% capital securities 2027 ....................................................................... |
200 |
|
200 |
CAD200m |
4.94% subordinated debentures 2021 ............................................................ |
190 |
|
163 |
US$200m |
7.75% subordinated notes 2009 .................................................................... |
- |
|
203 |
US$200m |
6.625% subordinated notes 2009 .................................................................. |
- |
|
198 |
|
Other subordinated liabilities each less than US$200m .................................. |
3,868 |
|
3,711 |
|
|
|
|
|
|
|
31,863 |
|
29,606 |
|
|
|
|
|
|
|
54,911 |
|
53,150 |
Subordinated loan capital is repayable at par on maturity, but some is repayable prior to maturity at the option of the borrower, generally subject to prior notification to the Financial Services Authority and, where relevant, the consent of the local banking regulator, and in certain cases at a premium over par. Interest rates on the floating rate loan capital are related to interbank offered rates. On the remaining subordinated loan capital, interest is payable at fixed rates up to 10.176 per cent.
1 See 'Step-up perpetual preferred securities' below, note (a) 'Guaranteed by HSBC Holdings'.
2 The interest margin on the €800 million and US$450 million callable subordinated floating rate notes 2016 increases by 0.5 per cent from March 2011 and July 2011, respectively.
3 See 'Step-up perpetual preferred securities' below, note (b) 'Guaranteed by HSBC Bank'.
4 The distributions on the trust preferred securities change in November 2015 to three-month dollar LIBOR plus 1.926 per cent.
5 The interest rate on the 4.25 per cent callable subordinated notes changes in March 2011 to three-month EURIBOR plus 1.05 per cent.
6 The interest rate on the 4.75 per cent callable subordinated notes 2020 changes in September 2015 to three-month sterling LIBOR plus 0.82 per cent.
7 The interest margin on the callable subordinated floating rate notes 2020 increases by 0.5 per cent from September 2015.
8 The interest rate on the callable subordinated variable coupon notes 2017 is fixed at 5.75 per cent until June 2012. Thereafter, the rate per annum is the sum of the gross redemption yield of the then prevailing five-year UK gilt plus 1.70 per cent.
9 The interest rate on the 5 per cent callable subordinated notes 2023 changes in March 2018 to become the rate per annum which is the sum of the gross redemption yield of the then prevailing five-year UK gilt plus 1.80 per cent.
10 The interest rate on the 5.375 per cent callable subordinated step-up notes 2030 changes in November 2025 to three-month sterling LIBOR plus 1.50 per cent.
11 The interest margin on the callable subordinated floating rate notes 2017 increases by 0.5 per cent from July 2012.
Footnotes 2, and 4 to 10 relate to notes that are repayable at the option of the borrower on the date of the change of the interest rate, and at subsequent interest rate reset dates and interest payment dates in some cases, subject to prior notification to the Financial Services Authority and, where relevant, the consent of the local banking regulator.
Step-up perpetual preferred securities
(a) Guaranteed by HSBC Holdings
The seven issues of non-cumulative step-up perpetual preferred securities (footnote 1) were made by Jersey limited partnerships and are guaranteed, on a subordinated basis, by HSBC Holdings. The proceeds of the issues were on-lent to HSBC Holdings by the limited partnerships by issue of subordinated notes. The preferred securities qualify as innovative tier 1 capital for HSBC. The preferred securities, together with the guarantee, are intended to provide investors with rights to income and capital distributions and distributions upon liquidation of HSBC Holdings that are equivalent to the rights that they would have had if they had purchased non-cumulative perpetual preference shares of HSBC Holdings.
The preferred securities are perpetual, but redeemable in 2014, 2010, 2013, 2016, 2030, 2012 and 2015, respectively, at the option of the general partner of the limited partnerships. If not redeemed, the distributions payable step-up and become floating rate or, for the sterling issue, for each successive five-year period the sum of the then five-year benchmark UK gilt plus a margin. There are limitations on the payment of distributions if 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 has insufficient distributable reserves (as defined).
HSBC Holdings has covenanted that if it is prevented under certain circumstances from paying distributions on the preferred securities in full, it will not pay dividends or other distributions in respect of its ordinary shares, or effect repurchase or redemption of its ordinary shares, until after a distribution has been paid in full.
If (i) HSBC's total capital ratio falls below the regulatory minimum ratio required, or (ii) the Directors expect that, in view of the deteriorating financial condition of HSBC Holdings, the former will occur in the near term, then the preferred securities will be substituted by preference shares of HSBC Holdings having economic terms which are in all material respects equivalent to those of the preferred securities and the guarantee taken together.
(b) Guaranteed by HSBC Bank
The two issues of non-cumulative step-up perpetual preferred securities (footnote 3) were made by Jersey limited partnerships and are guaranteed, on a subordinated basis, by HSBC Bank. The proceeds of the issues were on-lent to HSBC Bank by the limited partnerships by issue of subordinated notes. The preferred securities qualify as innovative tier 1 capital for HSBC and for HSBC Bank on a solo and consolidated basis and, together with the guarantee, are intended to provide investors with rights to income and capital distributions and distributions upon liquidation of HSBC Bank that are equivalent to the rights they would have had if they had purchased non-cumulative perpetual preference shares of HSBC Bank.
The two issues of preferred securities are perpetual, but redeemable in 2031 and 2020, respectively, at the option of the general partner of the limited partnerships. If not redeemed, the distributions payable step-up and become floating rate. The same limitations on the payment of distributions apply to HSBC Bank as to HSBC Holdings, as described above. HSBC Bank has provided a similar covenant to that provided by HSBC Holdings, also as described above.
If (i) any of the two issues of preferred securities are outstanding in November 2048 or April 2049, respectively, or (ii) the total capital ratio of HSBC Bank on a solo and consolidated basis falls below the regulatory minimum ratio required, or (iii) in view of the deteriorating financial condition of HSBC Bank, the Directors expect (ii) to occur in the near term, then the preferred securities will be substituted by preference shares of HSBC Bank having economic terms which are in all material respects equivalent to those of the preferred securities and the guarantee taken together.
HSBC Holdings
|
2009 |
|
2008 |
|
US$m |
|
US$m |
Subordinated liabilities: |
|
|
|
-. at amortised cost ............................................................................................................ |
14,406 |
|
14,017 |
-. designated at fair value (Note 27) ................................................................................... |
16,909 |
|
16,389 |
|
|
|
|
|
31,315 |
|
30,406 |
HSBC Holdings subordinated borrowings
|
|
2009 US$m |
|
2008 US$m |
Amounts owed to third parties |
|
|
|
|
€1,750m |
6.0% subordinated notes 2019 ...................................................................... |
2,835 |
|
- |
US$2,500m |
6.5% subordinated notes 2037 ...................................................................... |
2,659 |
|
2,669 |
€1,600m |
6.25% subordinated notes 2018 .................................................................... |
2,306 |
|
2,231 |
US$2,000m |
6.5% subordinated notes 2036 ...................................................................... |
2,052 |
|
2,052 |
€1,000m |
5.375% subordinated notes 2012 .................................................................. |
1,549 |
|
1,403 |
£900m |
6.375% callable subordinated notes 20221 .................................................... |
1,517 |
|
1,330 |
US$1,400m |
5.25% subordinated notes 2012 .................................................................... |
1,488 |
|
1,455 |
US$1,500m |
6.8% subordinated notes 2038 ...................................................................... |
1,484 |
|
1,484 |
£750m |
7.0% subordinated notes 2038 ...................................................................... |
1,267 |
|
1,140 |
£650m |
6.75% subordinated notes 2028 .................................................................... |
1,043 |
|
938 |
€700m |
3.625% callable subordinated notes 20202 .................................................... |
1,005 |
|
840 |
£650m |
5.75% subordinated notes 2027 .................................................................... |
1,000 |
|
878 |
US$750m |
Callable subordinated floating rate notes 20163 ............................................. |
750 |
|
750 |
US$750m |
Callable subordinated floating rate notes 20154 ............................................. |
750 |
|
750 |
US$488m |
7.625% subordinated notes 2032 .................................................................. |
587 |
|
609 |
£250m |
9.875% subordinated bonds 20185 ................................................................ |
496 |
|
441 |
US$222m |
7.35% subordinated notes 2032 .................................................................... |
260 |
|
269 |
€2,000m |
Callable subordinated floating rate notes 20146 ............................................. |
- |
|
2,805 |
US$1,000m |
7.5% subordinated notes 2009 ...................................................................... |
- |
|
1,068 |
€300m |
5.5% subordinated notes 2009 ...................................................................... |
- |
|
432 |
|
|
|
|
|
|
|
23,048 |
|
23,544 |
|
|
|
|
|
Amounts owed to HSBC undertakings |
|
|
|
|
€1,400m |
5.3687% fixed/floating subordinated notes 2043 - HSBC Capital Funding (Euro 2) LP ............................................................... |
2,042 |
|
1,532 |
US$1,350m |
9.547% subordinated step-up cumulative notes 2040 - HSBC Capital Funding (Dollar 1) LP ............................................................ |
1,339 |
|
1,337 |
US$1,250m |
4.61% fixed/floating subordinated notes 2043 - HSBC Capital Funding (Dollar 2) LP ............................................................ |
1,223 |
|
745 |
€750m |
5.13% fixed/floating subordinated notes 2044 - HSBC Capital Funding (Euro 3) LP ............................................................... |
1,095 |
|
790 |
US$900m |
10.176% subordinated step-up cumulative notes 2040 - HSBC Capital Funding (Dollar 1) LP ............................................................ |
900 |
|
900 |
€600m |
8.03% subordinated step-up cumulative notes 2040 - HSBC Capital Funding (Euro 1) LP ............................................................... |
862 |
|
834 |
£500m |
8.208% subordinated step-up cumulative notes 2040 - HSBC Capital Funding (Sterling 1) LP .......................................................... |
806 |
|
724 |
|
|
|
|
|
|
|
8,267 |
|
6,862 |
|
|
|
|
|
|
|
31,315 |
|
30,406 |
1 The interest rate on the 6.375 per cent callable subordinated notes 2022 changes in October 2017 to become three-month sterling LIBOR plus 1.3 per cent. The notes may be redeemed at par from October 2017 at the option of the borrower, subject to the prior notification of the FSA.
2 The interest rate on the 3.625 per cent callable subordinated notes 2020 changes in June 2015 to become three-month EURIBOR plus 0.93 per cent. The notes may be redeemed at par from June 2015 at the option of the borrower, subject to the prior notification of the FSA.
3 The interest margin on the callable subordinated floating rate notes 2016 increases by 0.5 per cent from October 2011. The notes are repayable from their step up date at the option of the borrower, subject to the prior notification of the FSA.
4 On 11 February 2010, HSBC Holdings gave notice to holders of its US$750 million callable subordinated floating rate notes due 2015 that it will call and redeem the notes at par on 16 March 2010.
5 The interest rate on the 9.875 per cent subordinated bonds 2018 changes in April 2013 to become the higher of (i) 9.875 per cent or (ii) the sum of the yield on the relevant benchmark treasury stock plus 2.5 per cent. The bonds may be redeemed in April 2013 at par and redemption has also been allowed from April 1998, subject to the prior notification of the FSA, for an amount based on the redemption yields of the relevant benchmark treasury stocks.
6 In September 2009, HSBC Holdings redeemed its €2,000 million callable subordinated floating rate notes due 2014 at par.
33 Maturity analysis of assets and liabilities
The following is an analysis, by remaining contractual maturities at the balance sheet date, of asset and liability line items that represent amounts expected to be recovered or settled within one year, and after more than one year.
Trading assets and liabilities are excluded because they are not held for collection or settlement over the period of contractual maturity.
HSBC
|
At 31 December 2009 |
||||
|
Due within |
|
Due after |
|
Total |
|
US$m |
|
US$m |
|
US$m |
Assets |
|
|
|
|
|
Financial assets designated at fair value ...................................................... |
3,786 |
|
33,395 |
|
37,181 |
Loans and advances to banks ...................................................................... |
172,916 |
|
6,865 |
|
179,781 |
Loans and advances to customers ............................................................... |
381,967 |
|
514,264 |
|
896,231 |
Financial investments ................................................................................ |
134,824 |
|
234,334 |
|
369,158 |
Other financial assets ................................................................................. |
26,189 |
|
7,383 |
|
33,572 |
|
|
|
|
|
|
|
719,682 |
|
796,241 |
|
1,515,923 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Deposits by banks ...................................................................................... |
118,308 |
|
6,564 |
|
124,872 |
Customer accounts ..................................................................................... |
1,114,149 |
|
44,885 |
|
1,159,034 |
Financial liabilities designated at fair value ................................................. |
4,666 |
|
75,426 |
|
80,092 |
Debt securities in issue ................................................................................ |
83,590 |
|
63,306 |
|
146,896 |
Other financial liabilities ............................................................................ |
67,061 |
|
3,606 |
|
70,667 |
Subordinated liabilities ................................................................................ |
369 |
|
30,109 |
|
30,478 |
|
|
|
|
|
|
|
1,388,143 |
|
223,896 |
|
1,612,039 |
|
At 31 December 2008 |
||||
|
Due within |
|
Due after |
|
Total |
|
US$m |
|
US$m |
|
US$m |
Assets |
|
|
|
|
|
Financial assets designated at fair value ...................................................... |
4,735 |
|
23,798 |
|
28,533 |
Loans and advances to banks ...................................................................... |
146,268 |
|
7,498 |
|
153,766 |
Loans and advances to customers ............................................................... |
407,582 |
|
525,286 |
|
932,868 |
Financial investments ................................................................................ |
111,027 |
|
189,208 |
|
300,235 |
Other financial assets ................................................................................. |
27,642 |
|
6,308 |
|
33,950 |
|
|
|
|
|
|
|
697,254 |
|
752,098 |
|
1,449,352 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Deposits by banks ...................................................................................... |
123,835 |
|
6,249 |
|
130,084 |
Customer accounts ..................................................................................... |
1,083,426 |
|
31,901 |
|
1,115,327 |
Financial liabilities designated at fair value ................................................. |
7,368 |
|
67,219 |
|
74,587 |
Debt securities in issue ................................................................................ |
107,094 |
|
72,599 |
|
179,693 |
Other financial liabilities ............................................................................ |
70,898 |
|
4,860 |
|
75,758 |
Subordinated liabilities ................................................................................ |
745 |
|
28,688 |
|
29,433 |
|
|
|
|
|
|
|
1,393,366 |
|
211,516 |
|
1,604,882 |
HSBC Holdings
|
At 31 December 2009 |
||||
|
Due within |
|
Due after |
|
Total |
|
US$m |
|
US$m |
|
US$m |
Assets |
|
|
|
|
|
Loans and advances to HSBC undertakings ................................................. |
18,067 |
|
5,145 |
|
23,212 |
Financial investments ................................................................................ |
- |
|
2,455 |
|
2,455 |
Other financial assets ................................................................................. |
4 |
|
- |
|
4 |
|
|
|
|
|
|
|
18,071 |
|
7,600 |
|
25,671 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Amounts owed to HSBC undertakings ......................................................... |
277 |
|
3,434 |
|
3,711 |
Financial liabilities designated at fair value ................................................. |
- |
|
16,909 |
|
16,909 |
Debt securities in issue................................................................................. |
- |
|
2,839 |
|
2,839 |
Other financial liabilities ............................................................................ |
1,240 |
|
17 |
|
1,257 |
Subordinated liabilities ................................................................................ |
- |
|
14,406 |
|
14,406 |
|
|
|
|
|
|
|
1,517 |
|
37,605 |
|
39,122 |
|
At 31 December 2008 |
||||
|
Due within |
|
Due after |
|
Total |
|
US$m |
|
US$m |
|
US$m |
Assets |
|
|
|
|
|
Loans and advances to HSBC undertakings ................................................. |
4,842 |
|
6,962 |
|
11,804 |
Financial investments ................................................................................ |
- |
|
2,629 |
|
2,629 |
Other financial assets ................................................................................. |
25 |
|
- |
|
25 |
|
|
|
|
|
|
|
4,867 |
|
9,591 |
|
14,458 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Amounts owed to HSBC undertakings ......................................................... |
176 |
|
3,866 |
|
4,042 |
Financial liabilities designated at fair value ................................................. |
1,500 |
|
14,889 |
|
16,389 |
Other financial liabilities ............................................................................ |
1,805 |
|
11 |
|
1,816 |
Subordinated liabilities ................................................................................ |
- |
|
14,017 |
|
14,017 |
|
|
|
|
|
|
|
3,481 |
|
32,783 |
|
36,264 |
Structural foreign exchange exposures
HSBC's structural foreign exchange exposures are represented by the net asset value of its foreign exchange equity and subordinated debt investments in subsidiaries, branches, joint ventures and associates with non-US dollar functional currencies. Gains or losses on structural foreign exchange exposures are recognised in other comprehensive income. HSBC's management of its structural foreign exchange exposures is discussed in the 'Report of the Directors: Risk' on page 257.
In its separate financial statements, HSBC Holdings recognises its foreign exchange gains and losses on structural foreign exchange exposures in the income statement.
Net structural foreign exchange exposures
|
2009 |
|
2008 |
|
US$m |
|
US$m |
Currency of structural exposure |
|
|
|
Euro ...................................................................................................................................... |
25,284 |
|
23,137 |
Pound sterling ........................................................................................................................ |
21,369 |
|
15,319 |
Chinese renminbi ................................................................................................................... |
13,398 |
|
11,927 |
Mexican pesos ....................................................................................................................... |
5,393 |
|
4,127 |
Brazilian reais ........................................................................................................................ |
5,234 |
|
3,381 |
Hong Kong dollars ................................................................................................................. |
3,842 |
|
3,929 |
Indian rupees ......................................................................................................................... |
3,836 |
|
3,252 |
Canadian dollars ..................................................................................................................... |
3,620 |
|
3,423 |
Swiss francs ............................................................................................................................ |
2,910 |
|
2,192 |
UAE dirhams ......................................................................................................................... |
2,209 |
|
3,472 |
Turkish lira ............................................................................................................................ |
1,741 |
|
1,505 |
Korean won ........................................................................................................................... |
1,412 |
|
1,243 |
Malaysian ringgit ................................................................................................................... |
1,300 |
|
1,148 |
Indonesian rupiah .................................................................................................................. |
1,057 |
|
221 |
Australian dollars ................................................................................................................... |
1,017 |
|
690 |
Argentine pesos ..................................................................................................................... |
675 |
|
510 |
Saudi riyals ............................................................................................................................. |
657 |
|
530 |
Egyptian pounds .................................................................................................................... |
561 |
|
517 |
Singapore dollars .................................................................................................................... |
556 |
|
534 |
Taiwanese dollars ................................................................................................................... |
547 |
|
485 |
Vietnamese dong .................................................................................................................... |
505 |
|
483 |
Philippine pesos .................................................................................................................... |
473 |
|
445 |
Qatari rial .............................................................................................................................. |
384 |
|
272 |
Costa Rican colon .................................................................................................................. |
375 |
|
378 |
Thai baht ............................................................................................................................... |
357 |
|
404 |
Russian rouble ........................................................................................................................ |
295 |
|
268 |
Honduran lempira .................................................................................................................. |
282 |
|
341 |
Chilean pesos ......................................................................................................................... |
230 |
|
176 |
Japanese yen .......................................................................................................................... |
228 |
|
263 |
Colombian pesos .................................................................................................................... |
220 |
|
185 |
Omani rial ............................................................................................................................. |
210 |
|
210 |
South African rand ................................................................................................................. |
201 |
|
151 |
New Zealand dollars ............................................................................................................... |
161 |
|
124 |
Jordanian dinar ...................................................................................................................... |
159 |
|
147 |
Algerian dinar ........................................................................................................................ |
146 |
|
27 |
Sri Lankan rupee .................................................................................................................... |
141 |
|
96 |
Brunei dollars ......................................................................................................................... |
132 |
|
91 |
Bahraini dinar ........................................................................................................................ |
85 |
|
114 |
Others, each less than US$100 million ................................................................................... |
587 |
|
518 |
|
|
|
|
Total ..................................................................................................................................... |
101,789 |
|
86,235 |
Shareholders' equity would decrease by US$2,222 million (2008: US$1,830 million) if euro and sterling foreign currency exchange rates weakened by 5 per cent relative to the US dollar.
35 Assets charged as security for liabilities and collateral accepted as security for assets
Financial assets pledged to secure liabilities were as follows:
|
Assets pledged at 31 December |
||
|
2009 |
|
2008 |
|
US$m |
|
US$m |
|
|
|
|
Treasury bills and other eligible securities ............................................................................... |
3,970 |
|
3,434 |
Loans and advances to banks ................................................................................................. |
6,767 |
|
6,949 |
Loans and advances to customers ........................................................................................... |
77,699 |
|
70,209 |
Debt securities ....................................................................................................................... |
203,766 |
|
185,224 |
Equity shares ......................................................................................................................... |
7,305 |
|
4,326 |
Other ..................................................................................................................................... |
646 |
|
439 |
|
|
|
|
|
300,153 |
|
270,581 |
These transactions are conducted under terms that are usual and customary to collateralised transactions, including, where relevant, standard securities lending and repurchase agreements.
Collateral accepted as security for assets
The fair value of assets accepted as collateral that HSBC is permitted to sell or repledge in the absence of default is US$362,560 million (2008: US$290,469 million). The fair value of any such collateral that has been sold or repledged was US$215,940 million (2008: US$159,256 million). HSBC is obliged to return equivalent securities.
These transactions are conducted under terms that are usual and customary to standard securities borrowing and reverse repurchase agreements.
|
2009 |
|
2008 |
|
US$m |
|
US$m |
|
|
|
|
Minority interests attributable to holders of ordinary shares in subsidiaries ............................. |
4,665 |
|
4,227 |
Preference shares issued by subsidiaries ................................................................................... |
2,697 |
|
2,411 |
|
|
|
|
|
7,362 |
|
6,638 |
Preference shares issued by subsidiaries
|
|
2009 |
|
2008 |
|
|
US$m |
|
US$m |
|
|
|
|
|
US$575m |
6.36% non-cumulative preferred stock, Series B1 .......................................... |
559 |
|
559 |
US$518m |
Floating rate non-cumulative preferred stock, Series F2 ................................ |
518 |
|
518 |
US$374m |
Floating rate non-cumulative preferred stock, Series G3 ................................ |
374 |
|
374 |
US$374m |
6.50% non-cumulative preferred stock, Series H3 ......................................... |
374 |
|
374 |
CAD250m |
Non-cumulative 5 year rate reset class 1 preferred shares, Series E4 .............. |
238 |
|
- |
CAD175m |
Non-cumulative redeemable class 1 preferred shares, Series C5 ...................... |
167 |
|
143 |
CAD175m |
Non-cumulative class 1 preferred shares, Series D5 ........................................ |
167 |
|
143 |
US$150m
|
Depositary shares each representing 25% interest in a share of |
150 |
|
150 |
US$150m |
Cumulative preferred stock7 ......................................................................... |
150 |
|
150 |
|
|
|
|
|
|
|
2,697 |
|
2,411 |
1 The Series B preferred stock is redeemable at the option of HSBC Finance Corporation, in whole or in part, from 24 June 2010 at par.
2 The Series F preferred stock is redeemable at par at the option of HSBC USA Inc., in whole or in part, on any dividend payment date on or after 7 April 2010.
3 The Series G and Series H preferred stock are redeemable at par at the option of HSBC USA Inc., in whole or in part, at any time from 1 January 2011 and 1 July 2011, respectively.
4 The Series E preferred shares are redeemable at par at the option of HSBC Bank Canada, in whole or in part from 30 June 2014.
5 The Series C and Series D preferred shares are redeemable at a declining premium above par at the option of HSBC Bank Canada, in whole or in part, from 30 June 2010 and 31 December 2010, respectively.
6 The preferred stock has been redeemable at the option of HSBC USA Inc., in whole or in part, from 1 July 1999 at par.
7 The preferred stock has been redeemable at the option of HSBC USA Inc., in whole or in part, from 1 October 2007 at par.
All redemptions are subject to prior notification to the Financial Services Authority and, where relevant, the local banking regulator.
37 Called up share capital and other equity instruments
Authorised
The concept of authorised share capital was abolished under the UK Companies Act 2006 with effect from 1 October 2009 and consequential amendments to the Company's Articles of Association were approved by shareholders at the 2009 Annual General Meeting.
At 31 December 2008, the authorised ordinary share capital of HSBC Holdings was US$7,500 million divided into 15,000 million ordinary shares of US$0.50 each.
At 31 December 2008, the authorised preference share capital of HSBC Holdings was 10 million non-cumulative preference shares of £0.01 each, 10 million non-cumulative preference shares of US$0.01 each, and 10 million non-cumulative preference shares of €0.01 each.
At 31 December 2008, the authorised non-voting deferred share capital of HSBC Holdings was £301,500 divided into 301,500 non-voting deferred shares of £1 each.
Issued
|
2009 |
|
2008 |
|
US$m |
|
US$m |
|
|
|
|
HSBC Holdings ordinary shares1 ............................................................................................. |
8,705 |
|
6,053 |
|
Number |
|
US$m |
HSBC Holdings ordinary shares1 |
|
|
|
At 1 January 2009 ................................................................................................................. |
12,105,265,082 |
|
6,053 |
Shares issued under HSBC employee share plans ..................................................................... |
7,476,952 |
|
4 |
Shares issued in lieu of dividends ............................................................................................. |
235,225,669 |
|
118 |
Shares issued in respect of rights issue2 ................................................................................... |
5,060,239,065 |
|
2,530 |
|
|
|
|
At 31 December 2009 ........................................................................................................... |
17,408,206,768 |
|
8,705 |
|
|
|
|
At 1 January 2008 ................................................................................................................. |
11,829,052,317 |
|
5,915 |
Shares issued under HSBC Finance share plans ........................................................................ |
65,198 |
|
- |
Shares issued under HSBC employee share plans ..................................................................... |
40,578,468 |
|
20 |
Shares issued in lieu of dividends ............................................................................................. |
235,569,099 |
|
118 |
|
|
|
|
At 31 December 2008 ........................................................................................................... |
12,105,265,082 |
|
6,053 |
1 All ordinary shares in issue confer identical rights in respect of capital, dividends, voting and otherwise.
2 See Note 41 for details of the rights issue.
|
Number |
|
US$m |
HSBC Holdings non-cumulative preference shares of US$0.01 each |
|
|
|
|
|
|
|
At 1 January 2009 and 31 December 2009 ............................................................................ |
1,450,000 |
|
- |
|
|
|
|
At 1 January 2008 and 31 December 2008 ............................................................................ |
1,450,000 |
|
- |
Dividends on the HSBC Holdings non-cumulative dollar preference shares in issue are paid quarterly at the sole and absolute discretion of the Board of Directors. The Board of Directors will not declare a dividend on the preference shares in issue if payment of the dividend would cause HSBC Holdings not to meet the applicable capital adequacy requirements of the FSA or the profit of HSBC Holdings available for distribution as dividends is not sufficient to enable HSBC Holdings to pay in full both dividends on the preference shares in issue and dividends on any other shares that are scheduled to be paid on the same date and that have an equal right to dividends. HSBC Holdings may not declare or pay dividends on any class of its shares ranking lower in the right to dividends than the preference shares in issue nor redeem nor purchase in any manner any of its other shares ranking equal with or lower than the preference shares in issue unless it has paid in full, or set aside an amount to provide for payment in full, the dividends on the preference shares in issue for the then-current dividend period. The preference shares in issue carry no rights to conversion into ordinary shares of HSBC Holdings. Holders of the preference shares in issue will only be entitled to attend and vote at general meetings of shareholders of HSBC Holdings if the dividend payable on the preference shares in issue has not been paid in full for four consecutive dividend payment dates. In such circumstances, holders of the preference shares in issue will be entitled to vote on all matters put to general meetings until such time as HSBC Holdings has paid a full dividend on the preference shares in issue. HSBC Holdings may redeem the preference shares in issue in whole at any time on or after 16 December 2010, subject to prior notification to the FSA.
HSBC Holdings non-voting deferred shares
The 301,500 non-voting deferred shares were in issue throughout 2008 and 2009 and are held by a subsidiary of HSBC Holdings. Holders of the non-voting deferred shares are not entitled to receive dividends on these shares. On winding-up or other return of capital, holders are entitled to receive the amount paid up on their shares after distribution to ordinary shareholders of £10 million in respect of each ordinary share held by them.
Other equity instruments
On 9 April 2008, HSBC Holdings issued, in bearer form, 88 million 8.125 per cent Perpetual Subordinated Capital Securities ('Capital Securities'), each with a par value of US$25 and with an aggregate nominal value of US$2,200 million. The securities were issued at par value, raising US$2,133 million, net of issuance costs. The Capital Securities were issued to support the development of and to strengthen further HSBC's capital base. Coupon payments on the Capital Securities are paid quarterly in arrears from 15 July 2008 and may be deferred at the discretion of HSBC Holdings. The Capital Securities have no fixed maturity and are redeemable at HSBC's option on or after 15 April 2013 at their principal amounts together with any accrued, unpaid and deferred coupon payments. While any coupon payments are unpaid or deferred, HSBC Holdings will not declare, pay dividends or make distributions or similar periodic payments in respect of, or repurchase, redeem or otherwise acquire any securities of lower or equal rank. At the Company's discretion, and subject to certain conditions being satisfied, the Capital Securities may be exchanged on any coupon payment date for non-cumulative preference shares to be issued by HSBC Holdings and which would rank pari passu with the dollar preference shares in issue at 2 March 2009. The preference shares will be issued at a nominal value of US$0.01 per share and a premium of US$24.99 per share, with both such amounts being subscribed and fully paid.
Shares under option
Details of the options outstanding to subscribe for HSBC Holdings ordinary shares under the HSBC Holdings Group Share Option Plan, HSBC Holdings Executive Share Option Scheme, the HSBC Share Plan and HSBC Holdings savings-related share option plans are given in Note 10. In aggregate, options outstanding under these plans were as follows:
|
Number of HSBC Holdings ordinary shares |
|
Period of exercise |
|
Exercise price |
|
|
|
|
|
|
31 December 20091....................................... |
270,742,989 |
|
2010 to 2015 |
|
£3.3116 - 8.4024 |
|
50,938,242 |
|
2010 to 2015 |
|
HK$37.8797 - 94.5057 |
|
3,283,710 |
|
2010 to 2015 |
|
€3.6361 - 9.5912 |
|
12,073,216 |
|
2010 to 2015 |
|
US$4.8876 - 12.0958 |
|
|
|
|
|
|
31 December 2008 .......................................... |
211,226,573 |
|
2009 to 2015 |
|
£5.3496 - 9.642 |
|
11,344,167 |
|
2009 to 2014 |
|
HK$103.4401 - 108.4483 |
|
1,304,119 |
|
2009 to 2014 |
|
€8.6720 - 11.0062 |
|
7,382,145 |
|
2009 to 2014 |
|
US$13.3290 - 14.7478 |
|
|
|
|
|
|
31 December 2007 .......................................... |
240,726,775 |
|
2008 to 2015 |
|
£5.3496 - 9.642 |
|
12,839,412 |
|
2008 to 2013 |
|
HK$103.4401 - 108.4483 |
|
823,472 |
|
2008 to 2013 |
|
€10.4217 - 11.0062 |
|
6,324,920 |
|
2008 to 2013 |
|
US$13.3290 - 14.7478 |
1 During 2009, the number and prices of unexercised share options were adjusted for the rights issue.
HSBC France and subsidiary company plans
Following the acquisition of HSBC France in 2000, outstanding employee share options over HSBC France shares vested. On exercise of the options, the HSBC France shares are exchangeable for HSBC Holdings ordinary shares. As a consequence of the rights issue, the ratio of HSBC Holdings ordinary shares exchangeable for each HSBC France share was adjusted from 13 to 14.917916.
During 2009, no HSBC France shares were issued following the exercise of employee share options (2008: 221,154) and no shares were exchanged for HSBC Holdings ordinary shares (2008: 2,875,002 HSBC Holdings ordinary shares). During 2009, 183,627 options over HSBC France shares lapsed (2008: nil). At 31 December 2009, the HSBC Holdings Employee Benefit Trust 2001 (No. 1) held 9,963,718 (2008: 8,790,276) HSBC Holdings ordinary shares which may be exchanged for HSBC France shares arising from the exercise of options.
HSBC France options effectively outstanding over HSBC Holdings ordinary shares under this arrangement were as follows:
|
Number of HSBC France shares exchangeable for HSBC Holdings ordinary shares |
|
Period of exercise |
|
Exercise price |
|
|
|
|
|
|
31 December 2009 ............................................. |
604,250 |
|
2010 |
|
€142.50 |
31 December 2008 ............................................... |
787,877 |
|
2009 to 2010 |
|
€81.71 - 142.50 |
31 December 2007 ............................................... |
1,009,031 |
|
2008 to 2010 |
|
€73.48 - 142.50 |
HSBC Private Bank France plan
There are also outstanding options over the shares of HSBC Private Bank France, a subsidiary of HSBC France.
On exercise of the options, the HSBC Private Bank France shares are exchangeable for HSBC Holdings ordinary shares. As a consequence of the rights issue, the ratio of HSBC Holdings ordinary shares exchangeable for each HSBC Private Bank France share was adjusted from 1.83 to 2.099984. During 2009, 33,456 (2008: 7,000) HSBC Private Bank France shares were issued following the exercise of employee share options and exchanged for 70,248 (2008: 12,810) HSBC Holdings ordinary shares, such shares being delivered from The CCF Employee Benefit Trust 2001 (Private Banking France). During 2009, 9,000 options over HSBC Private Bank France shares lapsed (2008: nil). At 31 December 2009, The CCF Employee Benefit Trust 2001 (Private Banking France) held 998,783 (2008: 943,142) HSBC Holdings ordinary shares which may be exchanged for HSBC Private Bank France shares arising from the exercise of options.
HSBC Private Bank France options effectively outstanding over HSBC Holdings ordinary shares under this arrangement were as follows:
|
Number of HSBC Private Bank France shares exchangeable for HSBC Holdings ordinary shares |
|
Period of exercise |
|
Exercise price |
|
|
|
|
|
|
31 December 2009 ............................................. |
291,520 |
|
2010 to 2012 |
|
€12.44 - 22.22 |
31 December 2008 ............................................... |
333,976 |
|
2009 to 2012 |
|
€10.84 - 22.22 |
31 December 2007 ............................................... |
340,976 |
|
2008 to 2012 |
|
€10.84 - 22.22 |
HSBC Finance
Following the acquisition of HSBC Finance in 2003, all outstanding options and equity-based awards over HSBC Finance common shares were converted into rights to receive HSBC Holdings ordinary shares in the same ratio as the share exchange offer for HSBC Finance (2.675 HSBC Holdings ordinary shares for each HSBC Finance common share) and the exercise prices per share adjusted accordingly. During 2009, 20,000 options (2008: 327,635) over HSBC Holdings ordinary shares were exercised and 20,000 (2008: 169,138) HSBC Holdings ordinary shares delivered from The HSBC (Household) Employee Benefit Trust 2003 to satisfy the exercise of these options. During 2009, options over 5,606,714 (2008: 718,793) HSBC Holdings ordinary shares lapsed. In April 2009, 195,000 ADSs held in the Trust were cancelled, increasing the number of HSBC Holdings ordinary shares held by 975,000. At 31 December 2009, the Trust held a total of 2,642,279 (2008: 1,687,279) HSBC Holdings ordinary shares and 1,455 (2008: 196,455) ADSs, which may be used to satisfy the exercise of these options and equity-based awards under the HSBC Finance share plans. Each ADS represents five HSBC Holdings ordinary shares.
Options (and, in 2008 and 2007, equity-based awards) outstanding over HSBC Holdings ordinary shares under the HSBC Finance share plans were as follows:
|
Number of HSBC Holdings ordinary shares |
|
Period of exercise |
|
Exercise price |
|
|
|
|
|
|
31 December 20091 ........................................... |
18,105,959 |
|
2010 to 2012 |
|
US$9.29 - 18.62 |
31 December 2008 ............................................... |
20,681,582 |
|
2009 to 2012 |
|
US$10.66 - 21.37 |
31 December 2007 ............................................... |
21,728,010 |
|
2008 to 2012 |
|
nil - US$21.37 |
1 During 2009, the number and prices of unexercised share options were adjusted for the rights issue.
Bank of Bermuda plan
Following the acquisition of Bank of Bermuda in 2004, all outstanding employee share options over Bank of Bermuda shares were converted into rights to receive HSBC Holdings ordinary shares based on the consideration of US$40 for each Bank of Bermuda share and the average closing price of HSBC Holdings ordinary shares, derived from the London Stock Exchange Daily Official List, for the five business days preceding the closing date of the acquisition. During 2009, options over 18,153 HSBC Holdings ordinary shares were exercised (2008: 12,847) and satisfied by delivery from the HSBC (Bank of Bermuda) Employee Benefit Trust 2004. During 2009, options over 24,673 (2008: 95,915) HSBC Holdings ordinary shares lapsed. At 31 December 2009, the HSBC (Bank of Bermuda) Employee Benefit Trust 2004 held 2,113,611 (2008: 1,877,056) HSBC Holdings ordinary shares which may be used to satisfy the exercise of options.
Options outstanding over HSBC Holdings ordinary shares under the Bank of Bermuda share plans were as follows:
|
Number of HSBC Holdings ordinary shares |
|
Period of exercise |
|
Exercise price |
|
|
|
|
|
|
31 December 20091............................. |
2,481,702 |
|
2010 to 2013 |
|
US$6.13 - 15.99 |
31 December 2008 ................................ |
2,205,321 |
|
2009 to 2013 |
|
US$7.04 - 18.35 |
31 December 2007 ................................ |
2,314,083 |
|
2008 to 2013 |
|
US$7.04 - 18.35 |
1 During 2009, the number and prices of unexercised share options were adjusted for the rights issue.
Maximum obligation to deliver HSBC Holdings ordinary shares
At 31 December 2009, the maximum obligation to deliver HSBC Holdings ordinary shares under all of the above option arrangements, together with awards of Performance Shares and Restricted Shares under the HSBC Holdings Restricted Share Plan 2000 and the HSBC Share Plan, was 559,960,290 (2008: 400,887,713). The total number of shares at 31 December 2009 held by employee benefit trusts that may be used to satisfy such obligations to deliver HSBC Holdings ordinary shares was 134,903,061 (2008: 164,985,811).
38 Notes on the statement of cash flows
Non-cash items included in profit before tax
|
HSBC |
|
HSBC Holdings |
||||||
|
2009 |
|
2008 |
|
2007 |
|
2009 |
|
2008 |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
|
|
|
|
|
|
|
|
|
Depreciation, amortisation and impairment ....... |
2,538 |
|
13,367 |
|
2,522 |
|
5,947 |
|
3,601 |
Gains arising from dilution of interests in associates......................................................... |
- |
|
- |
|
(1,092) |
|
- |
|
- |
Revaluations on investment property ................. |
24 |
|
92 |
|
(152) |
|
- |
|
- |
Share-based payment expense ............................. |
683 |
|
819 |
|
870 |
|
21 |
|
14 |
Loan impairment losses gross of recoveries and |
27,378 |
|
25,771 |
|
18,247 |
|
- |
|
- |
Provisions .......................................................... |
669 |
|
591 |
|
989 |
|
- |
|
- |
Impairment of financial investments .................. |
358 |
|
1,042 |
|
42 |
|
- |
|
- |
Charge for defined benefit plans ......................... |
192 |
|
490 |
|
727 |
|
- |
|
- |
Accretion of discounts and amortisation of |
(458) |
|
(867) |
|
(452) |
|
6 |
|
4 |
|
|
|
|
|
|
|
|
|
|
|
31,384 |
|
41,305 |
|
21,701 |
|
5,974 |
|
3,619 |