HSBC 2015 Annual Report Download - page 160

Report of the Directors: Risk (continued)
Liquidity and funding
HSBC HOLDINGS PLC
158
Liquid assets also include any unencumbered liquid
assets held outside BSM for any other purpose. The LFRF
gives ultimate control of all unencumbered assets and
sources of liquidity to BSM.
For a summary of our liquid asset policy and definitions of the
classifications shown in the table below, see the Appendix to Risk
on page 206.
Liquid assets of HSBC’s principal entities
Estimated liquidity value25
31 December
2015
31 December
2014
$m $m
HSBC UK liquidity group19
Level 1 118,193 131,756
Level 2 4,722 4,688
Level 3 59,378 66,011
182,293 202,455
The Hongkong and Shanghai Banking Corporation20
Level 1 132,870 109,683
Level 2 6,029 4,854
Level 3 7,346 7,043
146,245 121,580
HSBC USA21
Level 1 42,596 51,969
Level 2 11,798 15,184
Level 3 9 197
Other 5,557 9,492
59,960 76,842
Total of HSBC’s other principal entities24
Level 1 108,789 115,770
Level 2 10,764 7,940
Level 3 5,486 9,360
125,039 133,070
For footnotes, see page 191.
All assets held within the liquid asset portfolio are
unencumbered.
• The quantum of liquid assets held by the HSBC UK
liquidity group on a constant currency basis was broadly
unchanged.
• Liquid assets held by The Hongkong and Shanghai
Banking Corporation increased due to added holdings of
government securities and higher regulatory reserves.
This was driven by the investment of surplus deposits.
• Liquid assets held by HSBC USA decreased, mainly due
to a switch from regulatory reserves to reverse repo
placements. A corresponding improvement can be seen
in HSBC USA’s net repo cash flow shown in the net
contractual cash flow table.
Net contractual cash flows
The following table quantifies the contractual cash flows
from interbank and intra-Group loans and deposits, and
reverse repo, repo (including intra-Group transactions)
and short positions for the principal entities shown. These
contractual cash inflows and outflows are reflected gross in
the numerator and denominator, respectively, of the one
and three-month stressed coverage ratios and should be
considered alongside the level of liquid assets.
Outflows included in the denominator of the stressed
coverage ratios include the principal outflows associated
with the contractual maturity of wholesale debt securities
reported in the table headed ‘Wholesale funding cash flows
payable by HSBC under financial liabilities by remaining
contractual maturities’ on page 161.
For a summary of our policy and definitions of the classifications
shown in the table on page 159, see the Appendix to Risk on
page 206.