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HSBC BANK PLC
Report of the Directors: Risk (continued)
40
Maximum exposure to credit risk
(Audited)
The bank
2014
2013
Maximum
exposure
Offset
Exposure to
credit risk
(net)
Maximum
exposure
Offset
Exposure to
credit risk
(net)
£m
£m
£m
£m
£m
£m
Cash and balances at central banks
41,424
–
41,424
60,996
–
60,996
Items in the course of collection from other banks
630
–
630
1,374
–
1,374
Trading assets1
55,858
–
55,858
66,865
(1,075)
65,790
treasury and other eligible bills
154
–
154
643
–
643
debt securities
25,150
–
25,150
28,821
–
28,821
loans and advances to banks
13,039
–
13,039
16,568
–
16,568
loans and advances to customers
17,515
–
17,515
20,833
(1,075)
19,758
Financial assets designated at fair value1
9
–
9
3,983
–
3,983
debt securities
9
–
9
3,983
–
3,983
loans and advances to banks
–
–
–
–
–
–
Derivatives2
160,232
(136,187)
24,045
112,623
(77,990)
34,633
Loans and advances held at amortised cost3
220,447
(35,607)
184,840
233,899
(53,637)
180,262
loans and advances to banks
18,776
–
18,776
16,332
–
16,332
loans and advances to customers
201,671
(35,607)
166,064
217,567
(53,637)
163,930
Reverse repurchase agreements – non-trading3
36,391
(628)
35,763
47,847
(5,924)
41,923
Financial investments1
48,001
–
48,001
44,594
–
44,594
treasury and other similar bills
2,081
–
2,081
1,927
–
1,927
debt securities
45,920
–
45,920
42,667
–
42,667
Other assets
6,126
–
6,126
4,722
–
4,722
endorsements and acceptances
364
–
364
343
–
343
accrued income and other
5,762
–
5,762
4,379
–
4,379
Financial guarantees
10,968
–
10,968
9,366
–
9,366
Loan commitments and other credit-related
commitments
96,785
–
96,785
80,417
–
80,417
At 31 December
676,871
(172,422)
504,449
666,686
(138,626)
528,060
1 Reported amounts exclude equity instruments.
2 The derivative offset amount in the ‘maximum exposure to credit risk table’ relates to exposures where the counterparty has an offsetting
derivative exposure with the group, a master netting agreement is in place and the credit risk exposure is managed on a net basis, or the
position is specifically collateralised, normally in the form of cash. At 31 December 2014, the total amount of such offsets was £174 billion
(2013: £113 billion), of which £147 billion (2013: £93 billion) were offsets under a master netting arrangement, £24 billion (2013: £17 billion)
were received in cash and £3 billion (2013: £3 billion) were other collateral. These amounts do not qualify for net presentation for accounting
purposes as settlement may not actually be made on a net basis.
3 The loans and advances offset adjustment primarily relates to customer loans and deposits, and balances arising from repo and reverse repo
transactions. The offset relates to balances where there is a legally enforceable right of offset in the event of counterparty default, and where,
as a result there is a net exposure for credit risk management purposes. As there is no intention to settle these balances on a net basis under
normal circumstances, they do not qualify for net presentation for accounting purposes. No offset has been applied to off balance sheet
collateral.