HSBC 2009 Annual Report Download - page 150

HSBC HOLDINGS PLC
Report of the Directors: Operating and Financial Review (continued)
Other information > Assets held in custody / Property / Legal proceedings / Data security // Footnotes
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increased, primarily as a result of the improvement
in global equity markets during the year.
Global Asset Management funds increased by
14 per cent compared with 2008 to US$423 billion
as a result of market performance, strong net flows,
particularly in Asia, and favourable foreign exchange
movements. Emerging markets funds increased
during 2009, driven by market performance gains
and net flows. HSBC remains one of the world’s
largest emerging market asset managers with funds
under management of US$90 billion at 31 December
2009.
Private Banking funds under management
increased by 15 per cent to US$251 billion at
31 December 2009, driven by strengthening equity
markets, mainly in Europe and Hong Kong.
Client assets, which provide an indicator of
overall Private Banking volumes and include funds
under management, were US$367 billion, up by
US$15 billion compared with 2008.
Other funds under management, which are
mainly held by a corporate trust business in Asia,
increased to US$180 billion.
Assets held in custody and under
administration
Custody is the safekeeping and servicing of
securities and other financial assets on behalf of
clients. At 31 December 2009, assets held by HSBC
as custodian amounted to US$5.2 trillion, 45 per
cent higher than the US$3.6 trillion held at
31 December 2008. This was mainly driven by an
increase in the market value of assets.
HSBC’s assets under administration business,
which includes the provision of various support
function activities including the valuation of
portfolios of securities and other financial assets on
behalf of clients, complements the custody business.
At 31 December 2009, the value of assets held under
administration by the Group amounted to
US$2.8 trillion.
Property
At 31 December 2009, HSBC operated from some
10,100 operational properties worldwide, of which
approximately 2,600 were located in Europe, 2,900
in Hong Kong and Rest of Asia-Pacific, 800 in North
America, 3,500 in Latin America and 300 in the
Middle East. These properties had an area of
approximately 70.8 million square feet (2008:
73.6 million square feet).
A gain of US$576 million was recognised in
respect of the sale and leaseback of HSBC’s
headquarters building at 8 Canada Square, London
which was effected through the disposal of the
Group’s entire shareholding in Project Maple II B.V.
(‘PMII’) to the National Pension Service of Korea.
Gains were also realised on the sale of the head
office building in Argentina.
HSBC’s freehold and long leasehold properties,
together with all leasehold properties in Hong Kong,
were valued in 2009. The value of these properties
was US$4.1 billion (2008: US$3.3 billion) in excess
of their carrying amount in the consolidated balance
sheet. In addition, properties with a net book value
of US$1,061 million were held for investment
purposes.
HSBC’s operational properties are stated at cost,
being historical cost or fair value at the date of
transition to IFRSs (their deemed cost) less any
impairment losses, and are depreciated on a basis
calculated to write off the assets over their estimated
useful lives. Properties owned as a consequence of
an acquisition are recognised initially at fair value.
Further details are included in Note 23 on the
Financial Statements.
Legal proceedings
On 27 July 2007, the UK Office of Fair Trading
(‘OFT’) issued High Court legal proceedings against
a number of UK financial institutions, including
HSBC Bank, to determine the legal status and
enforceability of certain charges applied to their
personal customers in relation to unauthorised
overdrafts. In a judgement given on 25 November
2009, the Supreme Court held that provided the
relevant charges were in plain and intelligible
language, the amount of those charges could not be
assessed for fairness by either the OFT or the courts.
On 22 December 2009, the OFT announced that it
would not be continuing the investigation it began in
March 2007 into the fairness of unauthorised
overdraft charges following detailed consideration of
the Supreme Court judgement.
In December 2008, in the US, Bernard L
Madoff (‘Madoff’) was arrested and charged with
securities fraud and the US Securities and Exchange
Commission filed securities fraud charges against
Madoff and Madoff Securities. On 29 March 2009,
Madoff pleaded guilty to 11 felony cases and was
subsequently sentenced to 150 years in prison.
Various non-US HSBC group companies provide
custodial, administration and similar services to a