HSBC 2004 Annual Report Download - page 266

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
264
15 Loans and advances to customers
2004 2003
US$m US$m
Remaining maturity:
Repayable on demand or at short notice ...................................................................................... 70,452 60,331
3 months or less but not repayable on demand or at short notice ................................................ 124,893 94,001
1 year or less but over 3 months .................................................................................................. 76,073 63,648
5 years or less but over 1 year ..................................................................................................... 172,900 142,814
Over 5 years ................................................................................................................................ 238,182 181,874
General and specific bad and doubtful debt provisions (Note 16) ................................................... (12,669) (13,691)
669,831 528,977
Amounts include:
Subordinated advances ................................................................................................................ 218 202
Securitised advances not qualifying for linked presentation under FRS 5
(‘Reporting the substance of transactions’ ) ............................................................................. 18,463 26,640
Due from joint ventures
Unsubordinated ........................................................................................................................... 71 65
Due from associates
Subordinated ............................................................................................................................... 38 35
Unsubordinated ........................................................................................................................... 931 464
Loans and advances to customers included US$793 million (2003: US$824 million) of repossessed real estate and
other assets.
Securitisation transactions
Loans and advances to customers include balances that have been securitised. Certain of these balances meet the
requirements for linked presentation under FRS 5 ‘Reporting the substance of transactions’ .
The non-recourse finance has been netted against customer loans as follows:
2004 2003
US$m US$m
Customer loans ................................................................................................................................ 1,456 2,555
Non-recourse finance ...................................................................................................................... (1,251) (2,291)
Funding provided by HSBC ............................................................................................................ 205 264
Clover Funding Securitisation
HSBC has securitised a designated portion of its corporate loan portfolio. The transaction was effected through a
declaration of trust in favour of Clover Securitisation Limited. Clover Securitisation Limited holds its beneficial
interest in the trust for Clover Funding No. 1 plc, Clover Funding No. 3 plc, Clover Funding No. 4 plc (collectively
‘Clover Funding’ ) and HSBC.
To fund the acquisition of this beneficial interest, Clover Funding has issued US$2,010 million (2003: US$2,541
million) floating rate notes (‘FRNs’ ). Clover Funding No.2 plc is in scheduled accumulation and has collected
US$702 million (2003: US$395 million) to repay its outstanding Notes in April 2005. The offering circulars for the
FRNs stated that they are the obligations of Clover Funding only and are not guaranteed by, or the responsibility of,
any other party.
Non-returnable proceeds of US$1,102 million (2003: US$1,882 million) received by HSBC from Clover Funding
have been deducted from ‘Loans and advances to customers’ . Clover Securitisation Limited has entered into swap
agreements with HSBC under which Clover Securitisation Limited pays the floating rate of interest on the loans and
receives interest linked to three-month London Interbank Offered Rate (‘LIBOR’ ). The proceeds generated from the
loans are used in priority to meet the claims of the FRN holders, and amounts payable in respect of the interest rate
swap arrangements after the payment of trustee and administration expenses.
There is no provision whatsoever, either in the financing arrangements or otherwise, whereby HSBC has a right or
obligation either to keep the loans and advances on repayment of the finance or to repurchase them at any time other
than in certain circumstances where HSBC is in breach of warranty.