HSBC 2005 Annual Report Download - page 304

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
302
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
None of the Group’s subsidiaries has experienced significant restrictions on paying dividends or repaying loans and
advances except in the case of HSBC Bank Argentina during the recent debt crisis. All regulated banking and
insurance entities are subject to regulations which require them to maintain capital ratios at agreed levels and so
govern the availability of funds available for distribution.
Subsidiaries 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
2005
Beijing HSBC Insurance Brokers Limited 24.9 HSBC has the right to appoint the majority of the board,
therefore has management control.
HSBC Insurance Brokers (India) Private Limited 25.9 HSBC has the right to appoint the majority of the board,
therefore has management control.
HSBC Private Equity Fund 3 38.8 HSBC is the fund manager and controls the fund.
HSBC Continental European Alpha Fund 6.1 The fund is a ‘Wider Purpose Fund’ and consolidation is
required under IAS 27 ‘Consolidated and Separate Financial
Statements’.
HSBC Global Technology Alpha Fund 48.7 The fund is a ‘Wider Purpose Fund’ and consolidation is
required under IAS 27.
2004
Beijing HSBC Insurance Brokers Limited 24.9 HSBC has the right to appoint the majority of the board,
therefore has management control.
HSBC Insurance Brokers (India) Private Limited 25.9 HSBC has the right to appoint the majority of the board,
therefore has management control.
HSBC Private Equity Fund 3 47.3 HSBC is the fund manager and controls the fund.
HSBC Continental European Alpha Fund 19.9 The fund is a ‘Wider Purpose Fund’ and consolidation is
required under IAS 27.
Investments where HSBC owns 20 per cent or more of the voting rights but does not classify the investment as
a subsidiary, joint venture or associate
Investment
HSBC’s
interest in
equity capital
%
Description of relationship that results in HSBC accounting
for entity as an investment
2005
Zhong-Run Company Limited 25.0 Entity is held by a venture capital organisation which is exempt
from classifying investments as associates under IAS 28.
Acquisitions
HSBC made the following acquisitions of subsidiaries or business operations in 2005, which were accounted for
using the purchase method:
On 1 December 2005, HSBC Financial Corporation Limited, a wholly-owned subsidiary of HSBC, acquired 100 per
cent of the share capital of Metris Companies Inc. (‘Metris’) for a cash consideration of US$1,595 million. Metris
was the 11th largest issuer of MasterCard and Visa Cards in the US.
Goodwill of US$521 million arose from this acquisition. The goodwill on the Metris acquisition represents value
obtainable from synergies with HSBC, expertise HSBC brings to the proposition and the platform the acquisition
provides for the Group to extend its presence in the near-prime credit card segment of the US market.
The post acquisition profit before tax of Metris was US$6 million.
HSBC also made the following acquisitions of subsidiaries or business operations in 2005, which were accounted for
using the purchase method: