HSBC 2010 Annual Report Download - page 372

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
45 – Related party transactions / 46 – Events after the balance sheet date // Shareholder information > Dividends
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Collateral is posted to the scheme by HSBC at an amount that provides the Trustee with a high level of confidence
that would be sufficient to replace the swaps in the event of default by HSBC Bank plc. With the exception of the
special collateral arrangements detailed above, all other aspects of the swap transactions between HSBC and the
scheme are on substantially the same terms as comparable transactions with third-party counterparties.
On 17 June 2010, HSBC Bank plc made a £1,760m (US$2,638m) special contribution to accelerate the reduction of
the deficit of the HSBC Bank (UK) Pension Scheme. On the same day the Scheme used the contribution to acquire
debt securities with a fair value of £1,760m (US$2,638m) from HSBC in a transaction at an arm’s length value
determined by the Scheme’s independent third-party advisors.
HSBC International Staff Retirements Benefits Scheme entered into swap transactions with HSBC to manage the
inflation and interest rate sensitivity of the liabilities and selected assets. At 31 December 2010, the gross notional
value of the swaps was US$1.8bn (2009: US$1.8bn) and the swaps had a net positive fair value of US$77m to the
scheme (2009: US$27m).
HSBC Holdings
Details of HSBC Holdings’ principal subsidiaries are shown in Note 26. Transactions and balances during the year
with subsidiaries were as follows:
2010 2009
Highest
balance during
the year1
Balance at
31 December1
Highest
balance during
the year1
Balance at
31 December1
US$m US$m US$m US$m
Assets
Cash at bank .................................................................................. 459 459 443 224
Derivatives .................................................................................... 3,219 2,327 3,682 2,981
Loans and advances ...................................................................... 23,212 21,238 26,156 23,212
Financial investments ................................................................... 2,606 2,025 2,629 2,455
Investments in subsidiaries ........................................................... 92,899 92,899 90,914 86,247
Total related party assets .............................................................. 122,395 118,948 123,824 115,119
Liabilities
Amounts owed to HSBC undertakings ........................................ 4,580 2,932 5,669 3,711
Derivatives .................................................................................... 1,677 827 1,324 362
Subordinated liabilities:
– at amortised cost .................................................................... 3,907 2,464 3,907 3,907
– designated at fair value .......................................................... 4,507 4,259 4,360 4,360
Total related party liabilities ......................................................... 14,671 10,482 15,260 12,340
Guarantees .................................................................................... 46,988 46,988 47,341 35,073
Commitments ................................................................................ 3,240 2,720 3,241 3,240
1 The disclosure of the year-end balance and the highest balance during the year is considered the most meaningful information to
represent transactions during the year. The above outstanding balances arose in the ordinary course of business and are on
substantially the same terms, including interest rates and security, as for comparable transactions with third-party counterparties, with
the exception of US$160m (2009: US$160m) in respect of loans to HSBC subsidiaries from HSBC Holdings and US$506m
(2009: US$529m) in respect of loans from HSBC subsidiaries to HSBC Holdings made at an agreed zero per cent interest rate.
Some employees of HSBC Holdings are members of the HSBC Bank (UK) Pension Scheme, which is sponsored by a
separate Group company. HSBC Holdings incurs a charge for these employees equal to the contributions paid into
the scheme on their behalf. Disclosure in relation to the scheme is made in Note 7 to the accounts.
46 Events after the balance sheet date
A fourth interim dividend for 2010 of US$0.12 per ordinary share (a distribution of approximately US$2,125m) was
declared by the Directors after 31 December 2010.
These accounts were approved by the Board of Directors on 28 February 2011 and authorised for issue.