HSBC 2002 Annual Report Download - page 267

265
39 Memorandum Items
(a) HSBC
Contingent liabilities and commitments
2002 2001
Contract
amount
Credit
equivalent
amount
Risk-
weighte
d
amoun
t
Contract
amount
Credi
t
equivalen
t
amoun
t
Risk-
weighte
d
amount
US$m US$m US$m US$m US$m US$m
Contingent liabilities:
Acceptances and endorsements...... 4,711 2,785 2,580 4,219 2,840 2,792
Guarantees and assets pledged as
collateral security:
– guarantees and irrevocable
letters of credit ........................ 46,527 36,333 28,190 39,817 30,428 24,700
Other contingent liabilities............. 17 17 15 999
51,255 39,135 30,785 44,045 33,277 27,501
Commitments:
Documentary credits and short-
term trade-related transactions ... 6,131 2,221 1,157 5,580 1,917 1,125
Forward asset purchases and
forward forward deposits placed 1,464 1,463 268 1,669 1,669 106
Undrawn note issuing and
revolving underwriting facilities 85 43 42 381 156 191
Undrawn formal standby facilities,
credit lines and other
commitments to lend:
– over 1 year .............................. 41,734 20,867 19,536 35,156 17,690 16,106
– 1 year and under...................... 176,215 –
–
155,673
–
–
225,629 24,594 21,003 198,459 21,432 17,528
The table above gives the nominal principal amounts, credit equivalent amounts and risk-weighted amounts of
off-balance-sheet transactions. The credit equivalent amounts are calculated for the purposes of deriving the
risk-weighted amounts. These are assessed in accordance with the Financial Services Authority’ s guidelines
which implement the 1988 Basel Capital Accord on capital adequacy and depend on the status of the
counterparty and the maturity characteristics.
Contingent liabilities and commitments are credit-related instruments which include acceptances, letters of
credit, guarantees and commitments to extend credit. The contractual amounts represent the amounts at risk
should the contract be fully drawn upon and the client default. Since a significant portion of guarantees and
commitments are expected to expire without being drawn upon, the total of the contract amounts is not
representative of future liquidity requirements.
Guarantees
HSBC provides guarantees and similar undertakings, both on behalf of third party customers and on behalf of
other entities within the HSBC Group. These guarantees are generally provided in the normal course of HSBC’ s
banking business.
The principal types of guarantees provided, and the maximum potential amount of future payments which
HSBC could be required to make, at 31 December 2002 were as follows: