HSBC 2003 Annual Report Download - page 289

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There is no material deferred taxation liability not provided for.
At 31 December 2003, there were potential future tax benefits of approximately US$963 million (2002: US$885
million) in respect of trading losses, allowable expenditure charged to the profit and loss account but not yet
allowed for tax, and capital losses which have not been recognised because recoverability of the potential
benefits is not considered likely.
(b) Other provisions for liabilities and charges
Provisions for
pension and
other post-
retirement
obligations
Provisions for
contingent
liabilities and
commitments
Insurance
provisions
Other
provisions Total
US$m US$m US$m US$m US$m
At 1 January 2003 ........................... 1,038 574 1,412 659 3,683
Additional provisions/increase in
provisions1 .................................. 110 35 305 309 759
Acquisition of subsidiaries .............. 249 – 505 126 880
Provisions utilised ........................... (85) (86) (248) (362) (781
)
Exchange and other movements ...... 70 212 185 70 537
At 31 December 2003 .................... 1,382 735 2,159 802 5,078
1The increase in ‘other provisions’ includes unwinding of discounts of US$9 million (2002: US$7 million) in relation to vacant
space provisions and US$18 million (2002: US$5 million) in relation to Brazilian labour claims provisions.
Included within ‘Provisions for contingent liabilities and commitments’ are provisions for the costs of possible
redress relating to the sales of certain personal pension plans of US$16 million (2002: US$35 million). This is
the result of an actuarial calculation extrapolated from a sample of cases and the timing of the expenditure
depends on settlement of the individual claims.
Included within ‘Other provisions’ are:
(i) Provisions for onerous property contracts of US$203 million (2002: US$189 million), of which US$28
million (2002: US$110 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 whilst finding new tenants, shortfalls in expected rent receivable compared to rent payable and costs
of refurbishing the buildings to attract tenants. Uncertainties relate to movements in market rents, the delay
in finding new tenants and the timing of rental reviews.
(ii) Labour, civil and fiscal litigation provisions in HSBC Brazilian operations of US$217 million (2002:
US$135 million), of which US$56 million arose on the acquisition of Lloyds TSB’ s Brazilian operations.
This relates to labour and overtime litigation claims brought by employees after leaving the bank. The
provision is based on the expected number of departing employees, their individual salaries and historical
trends. The timing of settlement of these potential claims is uncertain.