HSBC 2006 Annual Report Download - page 363

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Summarised aggregate financial information on associates
2006 2005
US$m US$m
HSBC’s share of:
– assets ........................................................................................................................................... 83,096 63,347
– liabilities ..................................................................................................................................... 77,446 58,883
– revenues ...................................................................................................................................... 5,521 3,330
– profit after tax .............................................................................................................................. 823 546
HSBC’s share of associates’ contingent liabilities amounted to US$13,824 million at 31 December 2006 (2005:
US$7,818 million). No matters arose where HSBC was severally liable.
HSBC’s 15.98 per cent investment in Industrial Bank Company Limited was equity accounted with effect from
May 2004, reflecting HSBC’s significant influence over this associate. HSBC’s significant influence was established
as a result of representation on the Board of Directors, and in accordance with the Technical Support and Assistance
Agreements, HSBC is assisting in the development of financial and operating policies.
HSBC’s 19.9 per cent investment in Ping An Insurance (Group) Company of China, Limited was equity accounted
with effect from 31 August 2005, reflecting HSBC’s significant influence over this associate. HSBC’s significant
influence was established as a result of the acquisition of an additional participation of 9.91 per cent on 31 August
2005, for a consideration of US$1,039 million.
HSBC’s significant influence on Bank of Communications Co., Limited was established as a result of representation
on the Board of Directors, and in accordance with the Technical Support and Assistance Agreements, HSBC is
assisting in the development of financial and operating policies and a number of staff have been seconded to assist in
this process.
The statutory accounting reference date of Bank of Communications Co., Limited, Ping An Insurance (Group)
Company of China, Limited and Industrial Bank Company Limited is 31 December. For the year ended 31 December
2006, these companies were included on the basis of financial statements made up for the twelve months to
30 September 2006, taking into account changes in the subsequent period from 1 October 2006 to 31 December 2006
that would have materially affected their results.
HSBC also has a 100 per cent interest in the issued preferred stock (less than US$1 million) of Wells Fargo HSBC
Trade Bank, N.A. HSBC has a 40 per cent economic interest in Wells Fargo HSBC Trade Bank, N.A. by virtue of the
joint agreement under which HSBC’s equity capital and preferred stock interests are being held.
HSBC acquired 19.9 per cent of Financiera Independencia S.A. de C.V. on 20 June 2006. The investment was equity
accounted from that date, reflecting HSBC’s significant influence over this associate.
Principal interests in joint ventures
At 31 December 2006
Country of
incorporation
Principal
activity
HSBC’s
interest in
equity
capital
Issued
equity
capital
HSBC Saudi Arabia Limited ......................................... Saudi Arabia
Investment
banking 60% SR50m
HSBC Saudi Arabia Limited has been established as a joint venture between HSBC and The Saudi British Bank,
operating from July 2006. The ownership of HSBC Saudi Arabia Limited is split between HSBC, with 60 per cent,
and The Saudi British Bank, with 40 per cent. The strategic financial and operating decisions of HSBC Saudi Arabia
Limited require unanimous consent of HSBC and The Saudi British Bank.