HSBC 2011 Annual Report Download - page 372

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
23 – Interests in associates and joint ventures / 24 – Goodwill and intangible assets
370
Summarised aggregate financial information on associates
2011 2010
US$m US$m
HSBC’s share of:
– assets .................................................................................................................................................. 249,461 191,286
– liabilities ............................................................................................................................................ 230,902 175,812
– revenues ............................................................................................................................................. 12,009 9,274
– profit after tax .................................................................................................................................... 3,221 2,479
HSBC’s investment in Bank of Communications Co., Limited was equity accounted with effect from August 2004.
HSBC’s significant influence in 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 maintenance of financial and operating policies and a number of staff have been seconded to assist in
this process.
HSBC’s investment in Industrial Bank Co., Limited was equity accounted with effect from May 2004. HSBC’s
significant influence has been established as a result of representation on the Board of Directors.
HSBC’s investment in Ping An Insurance (Group) Company of China Limited (‘Ping An’) was equity accounted with
effect from August 2005, reflecting HSBC’s significant influence over this associate. HSBC’s significant influence
was established as a result of representation on the Board of Directors. In May 2010, following the issue of shares by
Ping An to a third party, HSBC’s holding was diluted to 16.13% and a dilution gain of US$188m was recognised in
‘Other operating income’. In June 2011, following a further issue of shares by Ping An to a third party, HSBC’s
holding was diluted to 15.57% and a dilution gain of US$181m was recognised in ‘Other operating income’.
In July 2011, Ping An increased its ownership interest in Shenzhen Development Bank (‘SDB’) from 29.99% to
52.38%. As a result, the status of its investment in SDB changed from an interest in an associate to an investment in
subsidiary. As a result of this transaction, Ping An recognised a remeasurement loss; HSBC’s share of this
remeasurement loss was US$48m.
The statutory accounting reference date of Bank of Communications Co., Limited, Ping An Insurance (Group)
Company of China, Limited and Industrial Bank Co., Limited is 31 December. For the year ended 31 December
2011, these companies were included on the basis of financial statements made up for the twelve months to
30 September 2011, taking into account changes in the subsequent period from 1 October 2011 to 31 December 2011
that would have materially affected their results.
HSBC acquired 15% of Vietnam Technological & Commercial Joint Stock Bank in October 2007. This investment
was equity accounted from that date due to HSBC’s representation on the Board of Directors and involvement in the
Technical Support and Assistance Agreement. In December 2007, as a result of a rights issue in which HSBC did not
participate, HSBC’s equity interest was diluted to 14.44%. In September 2008, HSBC increased its equity interest to
20%. HSBC’s equity interest has been subsequently diluted to below 20% due to the issue of shares by the associate
to its own employees.
Joint ventures
Principal interests in joint ventures
At 31 December 2011
Country of
incorporation
Principal
activity
HSBC’s interest
in equity
capital
Issued
equity
capital
HSBC Saudi Arabia Limited .................................... Saudi Arabia Investment banking 49.00% SR500m
Vaultex UK Limited ................................................. England Cash management 50.00% £10m
Hana HSBC Life Insurance Co., Ltd ........................ South Korea Insurance manufacturing 49.99% KRW85,201m
Canara HSBC Oriental Bank of Commerce
Life Insurance Company Limited ........................ India Insurance manufacturing 26.00% INR8,000m