HSBC 2007 Annual Report Download - page 7

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– lack of liquidity in wholesale funding
markets;
– illiquidity and downward price pressure in
national real estate markets, particularly
consumer-owned real estate markets;
– the emergence of structural inflationary
pressures from rising energy, raw material,
food and labour costs particularly in
emerging economies experiencing strong
domestic growth and capacity constraints;
– the impact of lower than expected
investment returns on the funding of private
and public sector defined benefit pensions;
– the effect of unexpected changes in
actuarial assumptions on longevity which
would influence the funding of private and
public sector defined benefit pensions; and
– consumer perception as to the continuing
availability of credit, and price competition
in the market segments served by HSBC.
• changes in governmental policy and regulation,
including:
– the monetary, interest rate and other
policies of central banks and other
regulatory authorities, including the UK
Financial Services Authority, the Bank of
England, the Hong Kong Monetary
Authority, the US Federal Reserve, the US
Securities and Exchange Commission, the
US Office of the Comptroller of the
Currency, the European Central Bank, the
People’s Bank of China and the central
banks of other leading economies and
markets where HSBC operates;
– expropriation, nationalisation, confiscation
of assets and changes in legislation relating
to foreign ownership;
– initiatives by local, state and national
regulatory agencies or legislative bodies
to revise the practices, pricing or
responsibilities of financial institutions
serving their consumer markets;
– changes in bankruptcy legislation in the
principal markets in which HSBC operates
and the consequences thereof;
– general changes in governmental policy that
may significantly influence investor
decisions, in particular markets in which
HSBC operates;
– other unfavourable political or diplomatic
developments producing social instability or
legal uncertainty which in turn may affect
demand for HSBC’s products and services;
– the costs, effects and outcomes of
regulatory reviews, actions or litigation,
including any additional compliance
requirements; and
– the effects of competition in the markets
where HSBC operates including increased
competition from non-bank financial
services companies, including securities
firms.
• factors specific to HSBC:
– the success of HSBC in adequately
identifying the risks it faces, such as the
incidence of loan losses or delinquency, and
managing those risks (through account
management, hedging and other
techniques). Effective risk management
depends on, among other things, HSBC’s
ability through stress testing and other
techniques to prepare for events that cannot
be captured by the statistical models it uses.