HSBC 2009 Annual Report Download - page 472

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
Notes 43 and 44
470
Transactions with other related parties of HSBC
Associates and joint ventures
The Group provides certain banking and financial services to associates and joint ventures, including loans,
overdrafts, interest and non-interest bearing deposits and current accounts. Details of the interests in associates and
joint ventures are given in Note 21. Transactions and balances during the year with associates and joint ventures were
as follows:
2009 2008
Highest
balance during
the year1
Balance at
31 December1
Highest
balance during
the year1
Balance at
31 December1
US$m US$m US$m US$m
Amounts due from joint ventures:
– unsubordinated .................................................................. 423 378 424 343
Amounts due from associates:
– subordinated ...................................................................... 17 17 59 59
– unsubordinated .................................................................. 1,343 1,239 1,060 280
1,783 1,634 1,543 682
Amounts due to joint ventures .................................................. 130 129 66 64
Amounts due to associates ........................................................ 1,494 136 735 293
1,624 265 801 357
1 The disclosure of the year-end balance and the highest balance during the year is considered the most meaningful information to
represent transactions during the year.
The above outstanding balances arose from the ordinary course of business and on substantially the same terms,
including interest rates and security, as for comparable transactions with third-party counterparties.
Post-employment benefit plans
At 31 December 2009, US$4.2 billion (2008: US$3.5 billion) of HSBC post-employment benefit plan assets were
under management by HSBC companies. Fees of US$15 million (2008: US$26 million) were earned by HSBC
companies for these management services provided to its post-employment benefit plans. HSBC’s post-employment
benefit plans had placed deposits of US$929 million (2008: US$430 million) with its banking subsidiaries, on which
interest payable to the schemes amounted to US$3 million (2008: US$55 million). The above outstanding balances
arose from the ordinary course of business and on substantially the same terms, including interest rates and security,
as for comparable transactions with third-party counterparties.
In the first half of 2009, a gain of US$499 million was recognised by HSBC following a restructuring of the basis of
delivery of death in service and ill health early retirement benefits to certain UK employees. These benefits were
provided by the HSBC Bank (UK) Pension Scheme but will now be provided outside the scheme.
HSBC Bank (UK) Pension Scheme entered into swap transactions with HSBC as part of the management of the
inflation and interest rate sensitivity of its liabilities. At 31 December 2009, the gross notional value of the swaps was
US$23.7 billion (2008: US$17.7 billion), the swaps had a positive fair value of US$1.0 billion (2008: positive fair
value of US$1.8 billion) to the scheme and HSBC had delivered collateral of US$2.8 billion (2008: US$2.4 billion)
to the scheme in respect of these swaps, on which HSBC earned interest amounting to US$7 million (2008:
US$59 million). All swaps were executed at prevailing market rates and within standard market bid/offer spreads.
In order to satisfy diversification requirements, there are special collateral provisions for the swap transactions
between HSBC and the scheme. The collateral agreement stipulates that the scheme never posts collateral to HSBC.
Collateral is posted to the scheme by HSBC at an amount that provides the Trustee with a high level of confidence
that would be sufficient to replace the swaps in the event of default by HSBC Bank plc. With the exception of the
special collateral arrangements detailed above, all other aspects of the swap transactions between HSBC and the
scheme are on substantially the same terms as comparable transactions with third-party counterparties.