HSBC 2015 Annual Report Download - page 417

HSBC HOLDINGS PLC
415
Strategic Report Financial Review Corporate Governance Financial Statements Shareholder Information
Details of all HSBC subsidiaries, as required under Section 409 of the Companies Act 2006, are set out on pages 458 to 469.
The principal countries of operation are the same as the countries of incorporation except for HSBC Bank Middle East Limited,
which operates mainly in the Middle East and North Africa, and HSBC Life (International) Limited, which operates mainly in
Hong Kong.
HSBC is structured as a network of regional banks and locally incorporated regulated banking entities. Each bank is separately
capitalised in accordance with applicable prudential requirements and maintains a capital buffer consistent with the Group’s
risk appetite for the relevant country or region. HSBC’s capital management process culminates in the annual Group capital
plan, which is approved by the Board.
HSBC Holdings is the primary provider of equity capital to its subsidiaries and also provides them with non-equity capital
where necessary. These investments are substantially funded by HSBC Holdings’ issuance of equity and non-equity capital
and by profit retention. As part of its capital management process, HSBC Holdings seeks to maintain a balance between the
composition of its capital and its investment in subsidiaries. Subject to this, there is no current or foreseen impediment to
HSBC Holdings’ ability to provide funding for such investments. The ability of subsidiaries to pay dividends or advance monies
to HSBC Holdings depends on, among other things, their respective local regulatory capital and banking requirements,
exchange controls, statutory reserves, and financial and operating performance. During 2015, none of the Group’s subsidiaries
experienced significant restrictions on paying dividends or repaying loans and advances. Also, there are no foreseen
restrictions envisaged by our subsidiaries, with the exception of HSBC North America Holdings Inc., on paying dividends or
repaying loans and advances.
The amount of guarantees by HSBC Holdings in favour of other HSBC Group entities is set out in Note 37.
Structured entities consolidated by HSBC where HSBC owns less than 50% of the voting rights
Carrying value of total
consolidated assets Nature of SPE
2015 2014
$bn $bn
Solitaire Funding Ltd 7.3 9.0 Securities investment conduit
Mazarin Funding Limited 1.9 3.9 Securities investment conduit
Barion Funding Limited 1.1 2.0 Securities investment conduit
Malachite Funding Limited 0.4 1.4 Securities investment conduit
HSBC Home Equity Loan Corporation I
–
1.9 Securitisation
HSBC Home Equity Loan Corporation II 1.6 0.9 Securitisation
Regency Assets Limited 15.2 11.0 Conduit
In addition to the above, HSBC consolidates a number of individually insignificant structured entities with total assets of
$17.9bn (2014: $22.9bn). For further details, see Note 39.
In each of the above cases, HSBC controls and consolidates an entity when it is exposed, or has rights, to variable returns from
its involvement with the entity and has the ability to affect those returns through its power over the entity.
Subsidiaries with significant non-controlling interests
2015 2014
Hang Seng Bank Limited
Proportion of ownership interests and voting rights held by non-controlling interests 37.86% 37.86%
Place of business Hong Kong Hong Kong
$m $m
Profit attributable to non-controlling interests 1,364 760
Accumulated non-controlling interests of the subsidiary 5,866 5,765
Dividends paid to non-controlling interests 523 513
Summarised financial information:
–
total assets 169,813 160,769
–
total liabilities 153,458 144,642
–
net operating income before loan impairment 5,411 3,687
–
profit for the year 3,604 2,007
–
total comprehensive income for the year 1,636 4,460