HSBC 2012 Annual Report Download - page 210

HSBC HOLDINGS PLC
Report of the Directors: Operating and Financial Review (continued)
Risk > Liquidity and funding > Management of liquidity and funding risk / Contingent liquidity risk
208
Net cash inflows/(outflows) for interbank and intra-group loans and deposits and reverse repo, repo and short positions
(Audited)
At 31 December 2012 At 31 December 2011
Cash flows
within
one month
Cash flows
from one to
three months
Cash flows
within
one month
Cash flows
from one to
three months
US$m US$m US$m US$m
Interbank and intra-group loans and deposits
HSBC UK40 ................................................................................... (16,464) (1,429) (12,832) 446
The Hongkong and Shanghai Banking Corporation41 ................. 4,402 9,685 8,715 9,246
HSBC USA42 ................................................................................ (30,269) (473) (32,154) 213
Total of HSBC’s other principal entities43 ................................... 5,419 10,511 14,053 2,589
Reverse repo, repo, stock borrowing, stock lending and
outright short positions (including intra-group)
HSBC UK40 ................................................................................... (4,184) (13,776) (558) (171)
The Hongkong and Shanghai Banking Corporation41 ................. 13,672 2,501 7,393 (487)
HSBC USA42 ................................................................................ (4,003) 62 (3,872) (377)
Total of HSBC’s other principal entities43 ................................... (31,951) (231) (6,597) 10,162
For footnotes, see page 249.
Net cash flow arising from interbank and intra-
group loans and deposits
Under the LFRF, a net cash inflow within three
months arising from interbank and intra-group loans
and deposits will give rise to a lower liquid asset
requirement. Conversely, a net cash outflow within
three months arising from interbank and intra-group
loans and deposits will give rise to a higher liquid
assets requirement.
Net cash flow arising from reverse repo, repo,
stock borrowing, stock lending and outright short
positions (including intra-group)
A net cash inflow represents additional liquid
resources, in addition to liquid assets, because any
unencumbered asset held as a consequence of a
reverse repo transaction with a residual contractual
maturity within the stressed coverage ratio time
period is not reflected as a liquid asset.
The impact of net cash outflow depends on
whether the underlying collateral encumbered as a
result will qualify as a liquid asset when released at
the maturity of the repo. The majority of the Group’s
repo transactions are collateralised by liquid assets
and, as such, any net cash outflow shown is offset by
the return of liquid assets, which are excluded from
the liquid asset table above.
Contingent liquidity risk arising from
committed lending facilities
(Audited)
The Group’s operating entities provide commitments
to various counterparts. In terms of liquidity risk, the
most significant risk relates to committed lending
facilities which, whilst undrawn, give rise to
contingent liquidity risk, as these could be drawn
during a period of liquidity stress. Commitments are
given to customers and committed lending facilities
are provided to consolidated multi-seller conduits,
established to enable clients to access a flexible
market-based source of finance (see page 209),
consolidated securities investment conduits and
third-party sponsored conduits.
The consolidated securities investment conduits
primarily represent Solitaire and Mazarin (see
pages 186). These conduits issue asset-backed
commercial paper secured against the portfolio of
securities held by these conduits. At 31 December
2012, HSBC UK had undrawn committed lending
facilities to these conduits of US$18bn (2011:
US$22bn), of which Solitaire represented US$13bn
(2011: US$16bn) and the remaining US$5.1bn
(2011: US$6.2bn) pertained to Mazarin. At
31 December 2012, the commercial paper issued by
Solitaire and Mazarin was entirely held by HSBC