HSBC 2001 Annual Report Download - page 115

113
Asset, deposits and advances (US$bn)
Debt securities and loans and
advances to banks
Customer accounts
Loans and advances to
customers
Total assets
HSBCs strong liquidity is demonstrated by the
surplus of its lending to other banks over its
borrowings from banks. As HSBC is a net lender to
the inter-bank market, which is much more sensitive
than customers to credit ratings, a limited credit
rating downgrade of HSBC should not significantly
impair its liquidity.
HSBC does not use securitisations as a material
source of off-balance-sheet funding for its ongoing
businesses.
Other than in respect of its operations in
Argentina, HSBC is not aware of any conditions that
are reasonably likely to negatively affect the liquidity
of individual group companies. The actions taken by
HSBCs operations in Argentina to manage its
liquidity are detailed in the discussion of Argentina
on pages 96 and 97.
Customer accounts and deposits by banks
2001
%US$bn
Deposits by
banks 10.7 53.6
Current 34.1 171.8
Savings
and other
deposits 55.2 278.2
Total 100.0 503.6
Customer accounts and deposits by banks
2000
%US$bn
Deposits by
banks 12.3 60.1
Current 30.5 148.6
Savings
and other
deposits 57.2 278.5
Total 100.0 487.2
HSBC Holdings
HSBC Holdings' primary source of cash is dividends
from its directly and indirectly held subsidiaries.
The ability of these subsidiaries to pay dividends or
loan or advance monies to HSBC Holdings depends,
among other things, on their respective regulatory
capital requirements, statutory reserves, and their
financial and operating performance. The diversity of
HSBCs activities means that HSBC Holdings is not
dependent on a single source of profits to generate
dividends. HSBC Bank plc and The Hongkong and
Shanghai Banking Corporation, which currently
provide most of the cash paid up to HSBC Holdings,
are themselves diversified banking businesses.
At 31 December 2001, the short term liabilities
of HSBC Holdings plc totalled US$4.5 billion,
including US$2.7 billion in respect of the proposed
second interim dividend for 2001. In practice,
shareholders may elect to receive their dividend
entitlement in scrip rather than cash so that the full
amount of the proposed dividend is not paid out.
Short term assets of US$5.5 billion, consisting
mainly of cash at bank and money market deposits of
US$3.4 billion, and other amounts due from HSBC
undertakings (including dividends) of
US$1.8 billion, exceeded short term liabilities and no
additional funding was required.
HSBC Holdings actively manages the cash
flows from its subsidiaries to maximise the amount
of cash held at the holding company and non-trading
subsidiary levels and expects to continue to do so in
the future. With its accumulated liquid assets, HSBC
Holdings believes that dividends from subsidiaries,
coupled with debt and equity financing, will enable it
to meet anticipated cash obligations.
265.2308.6
450.0
695.9
258.8289.8
427.1
673.8
210.1 253.6
360.0
569.1
0
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2001 2000 1999