13
|
Financial assets designated and
otherwise mandatorily measured at fair value through profit or
loss
|
|
The
group
|
The
bank
|
|
2023
|
2022
|
2023
|
2022
|
|
Designated at fair value and
otherwise
mandatorily
measured at fair value
|
Designated at fair
value
and otherwise
mandatorily measured at fair value
|
Designated at fair value and
otherwise
mandatorily
measured at fair value
|
Designated at fair
value and otherwise
mandatorily measured at fair value
|
|
£m
|
£m
|
£m
|
£m
|
Securities
|
16,027
|
14,581
|
162
|
318
|
- debt securities
|
2,131
|
1,975
|
97
|
44
|
- equity
securities
|
13,896
|
12,606
|
65
|
274
|
Loans and advances to banks and
customers
|
2,814
|
971
|
2,791
|
971
|
Other
|
227
|
329
|
228
|
329
|
At 31 Dec
|
19,068
|
15,881
|
3,181
|
1,618
|
Notional contract amounts and fair
values of derivatives by product contract type
|
|
Notional contract
amount
|
Fair value -
Assets
|
Fair value -
Liabilities
|
|
Trading
|
Hedging
|
Trading
|
Hedging
|
Total
|
Trading
|
Hedging
|
Total
|
The group
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Foreign exchange
|
6,601,151
|
1,799
|
68,197
|
62
|
68,259
|
(66,691)
|
(17)
|
(66,708)
|
Interest rate
|
9,113,678
|
75,080
|
154,860
|
856
|
155,716
|
(151,077)
|
(1,116)
|
(152,193)
|
Equities
|
543,083
|
-
|
11,503
|
-
|
11,503
|
(13,937)
|
-
|
(13,937)
|
Credit
|
115,062
|
-
|
1,099
|
-
|
1,099
|
(1,356)
|
-
|
(1,356)
|
Commodity and other
|
76,435
|
-
|
1,584
|
-
|
1,584
|
(1,325)
|
-
|
(1,325)
|
Offset (Note 28)
|
|
|
|
|
(64,045)
|
|
|
64,045
|
At 31 Dec 2023
|
16,449,409
|
76,879
|
237,243
|
918
|
174,116
|
(234,386)
|
(1,133)
|
(171,474)
|
|
Foreign exchange
|
6,101,153
|
582
|
88,244
|
2
|
88,246
|
(86,119)
|
(57)
|
(86,176)
|
Interest rate
|
10,141,018
|
56,144
|
206,689
|
433
|
207,122
|
(201,419)
|
(819)
|
(202,238)
|
Equities
|
465,626
|
-
|
7,751
|
-
|
7,751
|
(8,175)
|
-
|
(8,175)
|
Credit
|
146,522
|
-
|
865
|
-
|
865
|
(1,012)
|
-
|
(1,012)
|
Commodity and other
|
57,594
|
-
|
1,053
|
-
|
1,053
|
(1,065)
|
-
|
(1,065)
|
Offset (Note 28)
|
|
|
|
|
(79,799)
|
|
|
79,799
|
At 31 Dec 2022
|
16,911,913
|
56,726
|
304,602
|
435
|
225,238
|
(297,790)
|
(876)
|
(218,867)
|
The notional contract amounts of
derivatives held for trading purposes and derivatives designated in
hedge accounting relationships indicate the nominal value of
transactions outstanding at the balance sheet date; they do not
represent amounts at risk.
Derivative asset and liability
fair values decreased during 2023, driven by yield curve movements
and changes in foreign exchange rates.
Notional contract amounts and fair
values of derivatives by product contract type
(continued)
|
|
Notional contract
amount
|
Fair value -
Assets
|
Fair value -
Liabilities
|
|
Trading
|
Hedging
|
Trading
|
Hedging
|
Total
|
Trading
|
Hedging
|
Total
|
The bank
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Foreign exchange
|
6,529,223
|
1,791
|
67,809
|
62
|
67,871
|
(66,018)
|
(17)
|
(66,035)
|
Interest rate
|
6,726,879
|
47,943
|
118,308
|
728
|
119,036
|
(116,658)
|
(1,051)
|
(117,709)
|
Equities
|
483,877
|
-
|
11,312
|
-
|
11,312
|
(13,532)
|
-
|
(13,532)
|
Credit
|
112,436
|
-
|
1,090
|
-
|
1,090
|
(1,328)
|
-
|
(1,328)
|
Commodity and other
|
75,871
|
-
|
1,584
|
-
|
1,584
|
(1,323)
|
-
|
(1,323)
|
Offset
|
|
|
|
|
(47,128)
|
|
|
47,128
|
At 31 Dec 2023
|
13,928,286
|
49,734
|
200,103
|
790
|
153,765
|
(198,859)
|
(1,068)
|
(152,799)
|
|
Foreign exchange
|
6,049,682
|
582
|
87,459
|
2
|
87,461
|
(84,885)
|
(56)
|
(84,941)
|
Interest rate
|
7,665,449
|
33,408
|
158,492
|
244
|
158,736
|
(157,315)
|
(780)
|
(158,095)
|
Equities
|
439,588
|
-
|
7,626
|
-
|
7,626
|
(7,325)
|
-
|
(7,325)
|
Credit
|
144,972
|
-
|
847
|
-
|
847
|
(982)
|
-
|
(982)
|
Commodity and other
|
57,346
|
-
|
1,051
|
-
|
1,051
|
(1,000)
|
-
|
(1,000)
|
Offset
|
|
|
|
|
(59,007)
|
|
|
59,007
|
At 31 Dec 2022
|
14,357,037
|
33,990
|
255,475
|
246
|
196,714
|
(251,507)
|
(836)
|
(193,336)
|
Use of derivatives
We undertake derivatives activity
for three primary purposes: to create risk management solutions for
clients, to manage the portfolio risks arising from client
business, and to manage and hedge our own risks.
Trading derivatives
Most of the group's derivative
transactions relate to sales and trading activities. Sales
activities include the structuring and marketing of derivative
products to customers to enable them to take, transfer, modify or
reduce current or expected risks. Trading activities include
market-making and risk management. Market-making entails quoting
bid and offer prices to other market participants for the purpose
of generating revenues based on spread and volume.
Risk management activity is
undertaken to manage the risk arising from client transactions,
with the principal purpose of retaining client margin. Other
derivatives classified as held for trading include non-qualifying
hedging derivatives.
Substantially all of the group's
derivatives entered into with subsidiaries are managed in
conjunction with financial liabilities designated at fair
value.
Derivatives valued using models with unobservable
inputs
The difference between the fair
value at initial recognition (the transaction price) and the value
that would have been derived had the valuation techniques used for
subsequent measurement been applied at initial recognition, less
subsequent releases, is in the following table:
Unamortised balance of derivatives
valued using models with significant unobservable inputs
|
|
The
group
|
The
bank
|
|
2023
|
2022
|
2023
|
2022
|
|
£m
|
£m
|
£m
|
£m
|
Unamortised balance at 1
Jan
|
64
|
64
|
56
|
64
|
Deferral on new
transactions
|
103
|
110
|
96
|
99
|
Recognised in the income statement
during the year:
|
(113)
|
(111)
|
(102)
|
(107)
|
- amortisation
|
(60)
|
(59)
|
(51)
|
(56)
|
- subsequent to unobservable
inputs becoming observable
|
(6)
|
-
|
(6)
|
-
|
- maturity, termination or
offsetting derivative
|
(47)
|
(52)
|
(45)
|
(51)
|
- risk hedged
|
-
|
-
|
-
|
-
|
Exchange differences and
other
|
-
|
1
|
-
|
-
|
Unamortised balance at 31 Dec1
|
54
|
64
|
50
|
56
|
1 This amount is yet to be recognised in the
consolidated income statement.
1
Hedge accounting
derivatives
The group applies hedge accounting
to manage the following risks: interest rate and foreign exchange.
The Report of the Directors - Risk presents more details on how
these risks arise and how they are managed by the group.
Hedged risk components
HSBC designates a portion of cash
flows of a financial instrument or a group of financial instruments
for a specific interest rate or foreign currency risk component in
a fair value or cash flow hedge. The designated risks and portions
are either contractually specified or otherwise separately
identifiable components of the financial instrument that are
reliably measurable. Risk-free or benchmark interest rates
generally are regarded as being both separately identifiable and
reliably measurable, except for the IBOR Reform transition where
HSBC designates Alternative Benchmark Rates as the hedged risk
which may not have been separately identifiable upon initial
designation, provided HSBC reasonably expects it will meet the
requirement within 24 months from the first designation date. The
designated risk component accounts for a significant portion of the
overall changes in fair value or cash flows of the hedged
item(s).
Fair value hedges
The group enters into
fixed-for-floating-interest-rate swaps to manage the exposure to
changes in fair value due to movements in market interest rates on
certain fixed rate financial instruments which are not measured at
fair value through profit or loss, including debt securities held
and issued.
Hedging instrument by hedged
risk
|
|
Hedging
instrument
|
|
|
Carrying
amount
|
|
|
The group
|
Notional
amount1
|
Assets
|
Liabilities
|
Balance sheet
presentation
|
Change in fair
value2
|
Hedged risk
|
£m
|
£m
|
£m
|
£m
|
Interest
rate3
|
32,750
|
849
|
(1,078)
|
Derivatives
|
(359)
|
At 31 Dec 2023
|
32,750
|
849
|
(1,078)
|
|
(359)
|
|
|
|
|
|
|
Interest
rate3
|
26,649
|
428
|
(799)
|
Derivatives
|
981
|
At 31 Dec 2022
|
26,649
|
428
|
(799)
|
|
981
|
1 The notional contract amounts of derivatives
designated in qualifying hedge accounting relationships indicate
the nominal value of transactions outstanding at the balance sheet
date; they do not represent amounts at risk.
2 Used in effectiveness testing; comprising the
full fair value change of the hedging instrument not excluding any
component.
3 The hedged risk 'interest rate' includes
inflation risk.
Hedged item by hedged
risk
|
|
Hedged
item
|
Ineffectiveness
|
|
Carrying
amount
|
Accumulated fair value hedge
adjustments included in carrying
amount2
|
|
Change in fair
value1
|
Recognised in profit and
loss
|
Profit and loss
presentation
|
The group
|
Assets
|
Liabilities
|
Assets
|
Liabilities
|
Balance sheet
presentation
|
Hedged risk
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Interest
rate3
|
22,540
|
-
|
(179)
|
-
|
Financial assets at fair
value through other comprehensive income
|
672
|
21
|
Net income from financial
instruments held for trading or managed on a fair value
basis
|
-
|
-
|
-
|
-
|
Loans and advances to
banks
|
-
|
650
|
-
|
(17)
|
-
|
Loans and advances to
customers
|
19
|
-
|
-
|
-
|
-
|
Reverse
Repos
|
12
|
-
|
1,320
|
-
|
(155)
|
Debt securities in
issue
|
(51)
|
-
|
6,414
|
-
|
(369)
|
Subordinated liabilities
and
deposits by
banks4
|
(272)
|
At 31 Dec 2023
|
23,190
|
7,734
|
(196)
|
(524)
|
|
380
|
21
|
|
|
|
|
|
|
|
|
|
|
Interest
rate3
|
15,446
|
-
|
(1,095)
|
-
|
Financial assets at fair
value
through other
comprehensive income
|
(1,850)
|
31
|
Net
income from financial instruments held for trading or managed on a
fair value basis
|
-
|
-
|
-
|
-
|
Loans
and advances to
banks
|
-
|
713
|
-
|
(31)
|
-
|
Loans
and advances to customers
|
(40)
|
431
|
-
|
(15)
|
-
|
Reverse
Repos
|
(14)
|
-
|
1,576
|
-
|
(169)
|
Debt
securities in issue
|
398
|
-
|
5,686
|
-
|
(659)
|
Subordinated liabilities and
deposits
by banks4
|
556
|
At 31 Dec 2022
|
16,590
|
7,262
|
(1,141)
|
(828)
|
|
(950)
|
31
|
|
1 Used in effectiveness assessment; comprising
amount attributable to the designated hedged risk that can be a
risk component.
2 The accumulated amounts of fair value
adjustments remaining in the statement of financial position for
hedged items that have ceased to be adjusted for hedging gains and
losses were £(3)m (2022: £10m) for 'Financial assets at fair value
through other comprehensive income', is nil (2022: nil) for
'Deposits by banks' and £7m (2022: £13m) for 'Debt securities in
issue'.
3 The hedged risk 'interest rate' includes
inflation risk.
4 The notional amount of non-dynamic fair value
hedges was £6,755m (2022: £6,312m) of which the weighted-average
maturity is March 2026 and the weighted average swap rate is 0.39%
(2022: 0.06%, negative). £6,755m (2022: £6,312m) of these hedges
are internal to HSBC Group and composed by internal funding between
HSBC Holdings and the group.
Hedging instrument by hedged
risk
|
|
Hedging
instrument
|
|
|
Carrying
amount
|
|
Change in fair
value2
|
The bank
|
Notional
amount1
|
Assets
|
Liabilities
|
Balance sheet
presentation
|
Hedged risk
|
£m
|
£m
|
£m
|
£m
|
Interest
rate3
|
22,455
|
724
|
(1,033)
|
Derivatives
|
(34)
|
At 31 Dec 2023
|
22,455
|
724
|
(1,033)
|
|
(34)
|
|
|
|
|
|
|
Interest
rate3
|
18,391
|
242
|
(773)
|
Derivatives
|
466
|
At 31 Dec 2022
|
18,391
|
242
|
(773)
|
|
466
|
1 The notional contract amounts of derivatives
designated in qualifying hedge accounting relationships indicate
the nominal value of transactions outstanding at the balance sheet
date; they do not represent amounts at risk.
2 Used in effectiveness testing; comprising the
full fair value change of the hedging instrument not excluding any
component.
3 The hedged risk 'interest rate' includes
inflation risk.
Hedged item by hedged
risk
|
|
Hedged
item
|
Ineffectiveness
|
|
Carrying
amount
|
Accumulated fair value hedge
adjustments included in carrying
amount2
|
|
Change in fair
value1
|
Recognised in profit and
loss
|
|
The bank
|
Assets
|
Liabilities
|
Assets
|
Liabilities
|
Balance sheet
presentation
|
Profit and loss
presentation
|
Hedged risk
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Interest
rate3
|
13,352
|
-
|
(36)
|
-
|
Financial assets at fair
value through other comprehensive income
|
383
|
28
|
Net income from financial
instruments
held for
trading
or managed on a
fair value
basis
|
71
|
-
|
(2)
|
-
|
Loans and advances to
customers
|
2
|
|
|
|
|
HTC (Amortised
Cost)
|
-
|
-
|
-
|
-
|
-
|
Reverse
Repos
|
-
|
-
|
1,292
|
-
|
(150)
|
Debt securities in
issue
|
(51)
|
-
|
6,414
|
-
|
(369)
|
Subordinated liabilities and
deposits by banks4
|
(272)
|
At 31 Dec 2023
|
13,423
|
7,706
|
(38)
|
(519)
|
|
62
|
28
|
|
|
|
|
|
|
|
|
|
|
Interest
rate3
|
9,072
|
-
|
(642)
|
-
|
Financial assets at fair
value through other comprehensive
income
|
(1,389)
|
31
|
Net
income from financial instruments held for trading or managed on a
fair value basis
|
7
|
-
|
3
|
-
|
Loans
and advances to customers
|
-
|
-
|
-
|
-
|
-
|
Reverse
Repos
|
-
|
-
|
1,576
|
-
|
(169)
|
Debt
securities in issue
|
398
|
-
|
5,653
|
-
|
(659)
|
Subordinated liabilities
and
deposits by banks4
|
556
|
At 31 Dec 2022
|
9,079
|
7,229
|
(639)
|
(828)
|
|
(435)
|
31
|
|
1 Used in effectiveness assessment; comprising
amount attributable to the designated hedged risk that can be a
risk component.
2 The accumulated amounts of fair value
adjustments remaining in the statement of financial position for
hedged items that have ceased to be adjusted for hedging gains and
losses were £(3)m (2022: £10m) for 'Financial assets at fair value
through other comprehensive income', nil (2022: nil) for 'Deposits
by banks' and £11m (2022: £13m) for 'Debt securities in
issue'.
3 The hedged risk 'interest rate' includes
inflation risk.
4 The notional amount of non-dynamic fair value
hedges was £6,755m (2022: £6,312m), of which the weighted-average
maturity is March 2026 and the weighted average swap rate is 0.39%
(2022: 0.06%, negative). Those hedges are internal to HSBC Group
and composed by internal funding between HSBC Holdings and the
group.
Cash flow hedges
The group's cash flow hedging
instruments consist principally of interest rate swaps and
cross-currency swaps that are used to manage the variability in
future interest cash flows of non-trading financial assets and
liabilities, arising due to changes in market interest rates and
foreign-currency basis.
The group applies macro cash flow
hedging for interest-rate risk exposures on portfolios of
replenishing current and forecasted issuances of non-trading assets
and liabilities that bear interest at variable rates, including
rolling such instruments. The amounts and timing of future cash
flows, representing both principal and interest flows, are
projected for each portfolio of financial assets and liabilities on
the basis of their contractual terms and other relevant factors,
including estimates of prepayments and defaults. The aggregate cash
flows representing both principal balances and interest cash flows
across all portfolios are used to determine the effectiveness and
ineffectiveness. Macro cash flow hedges are considered to be
dynamic hedges.
The group also hedges the
variability in future cash-flows on foreign-denominated financial
assets and liabilities arising due to changes in foreign exchange
market rates with cross-currency swaps; these are considered
dynamic hedges.
Hedging instrument by hedged
risk4
|
|
Hedging
instrument
|
Hedged
item
|
Ineffectiveness
|
|
|
Carrying
amount
|
|
Change in fair
value2
|
Change in fair
value3
|
Recognised in profit and
loss
|
Profit and loss
presentation
|
The group
|
Notional
amount1
|
Assets
|
Liabilities
|
Balance sheet
presentation
|
Hedged risk
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Foreign exchange
|
1,799
|
62
|
(17)
|
Derivatives
|
109
|
109
|
-
|
Net income from financial
instruments held for trading or managed on a fair value
basis
|
Interest rate
|
42,332
|
7
|
(38)
|
522
|
505
|
17
|
At 31 Dec 2023
|
44,131
|
69
|
(55)
|
|
631
|
614
|
17
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange
|
582
|
2
|
(57)
|
Derivatives
|
(84)
|
(84)
|
-
|
Net
income from financial instruments held for trading or managed on a
fair value basis
|
Interest rate
|
29,495
|
5
|
(20)
|
(1,345)
|
(1,334)
|
(11)
|
At 31 Dec 2022
|
30,077
|
7
|
(77)
|
|
(1,429)
|
(1,418)
|
(11)
|
|
|
Hedging
instrument
|
Hedged
item
|
Ineffectiveness
|
|
|
Carrying
amount
|
|
Change in fair
value2
|
Change in fair
value3
|
Recognised in profit and
loss
|
Profit and loss
presentation
|
The bank
|
Notional
amount1
|
Assets
|
Liabilities
|
Balance sheet
presentation
|
Hedged risk
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Foreign exchange
|
1,791
|
62
|
(17)
|
Derivatives
|
108
|
108
|
-
|
Net income from financial
instruments held for trading or managed on a fair value
basis
|
Interest rate
|
25,488
|
4
|
(18)
|
310
|
310
|
-
|
At 31 Dec 2023
|
27,279
|
66
|
(35)
|
418
|
418
|
-
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange
|
582
|
2
|
(56)
|
Derivatives
|
(84)
|
(84)
|
-
|
Net
income from financial instruments held for trading or managed on a
fair value basis
|
Interest rate
|
15,017
|
2
|
(7)
|
(1,021)
|
(1,021)
|
-
|
At 31 Dec 2022
|
15,599
|
4
|
(63)
|
|
(1,105)
|
(1,105)
|
-
|
|
1 The notional contract amounts
of derivatives designated in qualifying hedge accounting
relationships indicate the nominal value of transactions
outstanding at the balance sheet date; they do not represent
amounts at risk.
2 Used in effectiveness testing; comprising the
full fair value change of the hedging instrument not excluding any
component.
3 Used in effectiveness assessment; comprising
amount attributable to the designated hedged risk that can be a
risk component.
4 The amounts in the above table predominantly
represent the bank's exposure.
Sources of hedge ineffectiveness
may arise from basis risk including, but not limited to timing
differences between the hedged items and hedging instruments, and
hedges using instruments with a non-zero fair value.
Reconciliation of equity and
analysis of other comprehensive income by risk type
|
|
Interest
rate
|
Foreign
exchange
|
|
£m
|
£m
|
Cash flow hedging reserve at 1 Jan
2023
|
(901)
|
(49)
|
Fair value gains
|
505
|
109
|
Fair value losses/(gains)
reclassified from cash flow hedge reserve to income statement in
respect of:
|
|
|
- hedged items that have
affected profit or loss
|
382
|
(83)
|
Income taxes
|
(252)
|
-
|
Other
|
(39)
|
(2)
|
Cash flow hedging reserve at 31 Dec 2023
|
(305)
|
(25)
|
Cash flow hedging reserve at 1 Jan
2022
|
32
|
(39)
|
Fair value losses
|
(1,334)
|
(84)
|
Fair value losses reclassified
from cash flow hedge reserve to income statement in respect
of:
|
|
|
- hedged items that have
affected profit or loss
|
53
|
74
|
Income taxes
|
348
|
-
|
Cash flow hedging reserve at 31
Dec 2022
|
(901)
|
(49)
|
Interest rate benchmark reform: amendments to IFRS 9 and IAS
39 'Financial Instruments'
HSBC has applied both the first
set of amendments ('Phase 1') and the second set of amendments
('Phase 2') to IFRS 9 and IAS 39 applicable to hedge accounting.
The hedge accounting relationships that are affected by Phase 1 and
Phase 2 amendments are presented in the balance sheet as 'Financial
assets designated and otherwise mandatorily measured at fair value
through other comprehensive income', 'Loans and advances to
customers', 'Debt securities in issue' and 'Deposits by banks'. The
notional value of the derivatives impacted by the Ibors reform,
including those designated in hedge accounting relationships, is
disclosed in Note 29 on page 177.
For some of the Ibors included
under the 'Other' header, in the table below, judgment has been
needed to establish whether a transition is required, since there
are Ibor benchmarks which are subject to computation methodology
improvements and insertion of fallback provisions without full
clarity being provided by their administrators on whether these
Ibor benchmarks will be demised.
The notional amounts of Interest
Rate derivatives designated in hedge accounting relationships do
not represent the extent of the risk exposure managed by the group
but they are expected to be directly affected by market-wide Ibor
reform and in scope of Phase 1 amendments and are shown in the
table below. The cross-currency swaps designated in hedge
accounting relationships and affected by Ibor reform are not
significant and have not been presented below.
Hedging instrument impacted by
Ibor Reform
|
|
Hedging
instrument
|
|
Impacted by Ibor
Reform
|
NOT Impacted by Ibor
Reform
|
Notional
Amount1
|
|
EUR2
|
USD
|
Other3
|
Total
|
The group
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Fair Value Hedges
|
7,433
|
-
|
141
|
7,574
|
25,175
|
32,749
|
Cash Flow Hedges
|
8,508
|
-
|
-
|
8,508
|
33,823
|
42,331
|
At 31 Dec 2023
|
15,941
|
-
|
141
|
16,082
|
58,998
|
75,080
|
|
|
|
|
|
|
|
Fair Value Hedges
|
7,581
|
225
|
105
|
7,911
|
18,738
|
26,649
|
Cash Flow Hedges
|
7,359
|
-
|
-
|
7,359
|
22,136
|
29,495
|
At 31 Dec 2022
|
14,940
|
225
|
105
|
15,270
|
40,874
|
56,144
|
|
|
|
|
|
|
|
The bank
|
|
|
|
|
|
|
Fair Value Hedges
|
5,008
|
-
|
140
|
5,148
|
17,307
|
22,455
|
Cash Flow Hedges
|
-
|
-
|
-
|
-
|
25,488
|
25,488
|
At 31 Dec 2023
|
5,008
|
-
|
140
|
5,148
|
42,795
|
47,943
|
|
|
|
|
|
|
|
Fair Value Hedges
|
5,184
|
4
|
104
|
5,292
|
13,099
|
18,391
|
Cash Flow Hedges
|
-
|
-
|
-
|
-
|
15,017
|
15,017
|
At 31 Dec 2022
|
5,184
|
4
|
104
|
5,292
|
28,116
|
33,408
|
1 The notional contract amounts of derivatives
designated in qualifying hedge accounting relationships indicate
the nominal value of transactions outstanding at the balance sheet
date; they do not represent amounts at risk.
2 The notional contract amounts of euro interest
rate derivatives impacted by Ibor reform mainly comprise hedges
with a Euribor benchmark, which are Fair value hedges of £7,433m
(31 Dec 2022: £7,581m) and Cash flow hedges £8,508m (31 Dec 2022:
£7,359m).
3 Other benchmarks impacted by Ibor reform
comprise derivatives that are expected to transition, but do not
have a published cessation date.
Carrying amount of financial
investments
|
|
|
The
group
|
The
bank
|
|
|
2023
|
2022
|
2023
|
2022
|
|
|
£m
|
£m
|
£m
|
£m
|
Financial investments measured at fair value through other
comprehensive income
|
|
37,507
|
29,356
|
16,362
|
12,261
|
- treasury and other
eligible bills
|
|
1,469
|
1,447
|
540
|
693
|
- debt securities
|
|
35,618
|
27,710
|
15,767
|
11,514
|
- equity
securities
|
|
80
|
109
|
55
|
54
|
- other
instruments1
|
|
340
|
90
|
-
|
-
|
Debt instruments measured at amortised cost
|
|
8,861
|
3,248
|
12,029
|
6,378
|
- treasury and other
eligible bills
|
|
723
|
1,030
|
719
|
976
|
- debt
securities2
|
|
8,138
|
2,218
|
11,310
|
5,402
|
At 31 Dec
|
|
46,368
|
32,604
|
28,391
|
18,639
|
1 'Other instruments' are comprised of loans and
advances.
2 The £5.7bn (2022: £4.2bn) of debt securities in
the bank relates to Senior Non-Preferred debt issued by HSBC
Continental Europe to comply with Single Resolution Board
requirements on Minimum Required Eligible
Liabilities.
Equity instruments measured at
fair value through other comprehensive income
|
|
Instruments held at year
end
|
|
Fair
value
|
Dividends
recognised
|
Type of equity instruments
|
£m
|
£m
|
Business facilitation
|
68
|
1
|
Investments required by central
institutions
|
12
|
-
|
Others
|
-
|
-
|
At 31 Dec 2023
|
80
|
1
|
|
|
|
Business facilitation
|
77
|
-
|
Investments required by central
institutions
|
31
|
-
|
Others
|
1
|
-
|
At 31 Dec 2022
|
109
|
-
|
16
|
Assets pledged, collateral
received and assets transferred
|
Assets
pledged1
Financial assets pledged as
collateral
|
|
The
group
|
The
bank
|
|
2023
|
2022
|
2023
|
2022
|
|
£m
|
£m
|
£m
|
£m
|
Treasury bills and other eligible
securities
|
1,252
|
1,649
|
720
|
877
|
Loans and advances to
banks
|
3,800
|
3,300
|
3,800
|
3,300
|
Loans and advances to
customers
|
3,861
|
4,996
|
-
|
-
|
Debt securities
|
21,060
|
17,407
|
10,539
|
9,699
|
Equity securities
|
27,610
|
25,408
|
27,096
|
25,014
|
Cash collateral
|
39,266
|
45,034
|
29,836
|
32,255
|
Other
|
228
|
330
|
228
|
329
|
Assets pledged at 31 Dec
|
97,077
|
98,124
|
72,219
|
71,474
|
|
|
|
|
|
Financial assets pledged as
collateral which the counterparty has the right to sell or
repledge
|
|
The
group
|
The
bank
|
|
2023
|
2022
|
2023
|
2022
|
|
£m
|
£m
|
£m
|
£m
|
Trading assets
|
44,072
|
38,896
|
35,168
|
32,371
|
Financial investments
|
2,606
|
3,588
|
902
|
1,974
|
At 31 Dec
|
46,678
|
42,484
|
36,070
|
34,345
|
Assets pledged as collateral
includes all assets categorised as encumbered in the disclosure on
page 76 except for assets held for sale.
The amount of assets pledged to
secure liabilities may be greater than the book value of assets
utilised as collateral. For example, in the case of securitisations
and covered bonds, the amount of liabilities issued, plus mandatory
over-collateralisation, is less than the book value of the pool of
assets available for use as collateral. This is also the case where
assets are placed with a custodian or a settlement agent that has a
floating charge over all the assets placed to secure any
liabilities under settlement accounts.
These transactions are conducted
under terms that are usual and customary to collateralised
transactions including, where relevant, standard securities lending
and borrowing, repurchase agreements and derivative margining. The
group places both cash and non-cash collateral in relation to
derivative transactions.
Collateral
received1
The fair value of assets accepted
as collateral, relating primarily to standard securities lending,
reverse repurchase agreements and derivative margining, that the
group is permitted to sell or repledge in the absence of default
was £224,836m (2022: £180,233m) (the bank: 2023: £191,832m;
2022: £154,376m). The fair value of any such collateral sold or
repledged was £175,100m (2022: £136,777m)
(the bank: 2023: £147,131m; 2022: £113,917m).
The group is obliged to return
equivalent securities. These transactions are conducted under terms
that are usual and customary to standard securities lending,
reverse repurchase agreements and derivative margining.
Assets
transferred1
The assets pledged include
transfers to third parties that do not qualify for derecognition,
notably secured borrowings such as debt securities held by
counterparties as collateral under repurchase agreements and equity
securities lent under securities lending agreements, as well as
swaps of equity and debt securities. For secured borrowings, the
transferred asset collateral continues to be recognised in full and
a related liability, reflecting the group's obligation to
repurchase the assets for a fixed price at a future date is also
recognised on the balance sheet.
Where securities are swapped, the
transferred asset continues to be recognised in full. There is no
associated liability as the non-cash collateral received is not
recognised on the balance sheet. The group is unable to use, sell
or pledge the transferred assets for the duration of these
transactions, and remains exposed to interest rate risk and credit
risk on these pledged assets. The counterparty's recourse is not
limited to the transferred assets.
Transferred financial assets not
qualifying for full derecognition and associated financial
liabilities
|
|
Carrying amount
of:
|
|
Transferred
assets
|
Associated
liabilities
|
The group
|
£m
|
£m
|
At 31 Dec 2023
|
|
|
Repurchase agreements
|
16,215
|
16,114
|
Securities lending
agreements
|
30,463
|
3,707
|
|
At 31 Dec 2022
|
|
|
Repurchase agreements
|
13,349
|
13,371
|
Securities lending
agreements
|
29,171
|
3,442
|
The bank
|
|
|
At 31 Dec 2023
|
|
|
Repurchase agreements
|
5,968
|
5,968
|
Securities lending
agreements
|
30,102
|
3,748
|
|
At 31 Dec 2022
|
|
|
Repurchase agreements
|
5,795
|
5,795
|
Securities lending
agreements
|
28,550
|
3,467
|
1 The group excludes assets classified as held
for sale.
17
|
Interests in associates and joint
ventures
|
Principal associates of the group
and the bank
Business Growth Fund Group plc
('BGF') is a principal associate of the group. BGF is an
independent company, established in 2011 to provide investment to
growing small to medium-sized British businesses. BGF is backed by
five of the UK's main banking groups: Barclays, HSBC, Lloyds, RBS
and Standard Chartered. At 31 Dec 2023, the group had a 24.62%
interest in the equity capital of BGF. Share of (Loss)/profit in
BGF is £(6)m (2022: £(22)m; 2021: £192m) and carrying amount of
interest in BGF is £652m (2022: £673m; 2021: £702m).
Interests in joint
ventures
A list of all associates is set
out on page 191.
18
|
Investments in
subsidiaries
|
Main subsidiaries of HSBC Bank
plc1
|
|
At 31 Dec
2023
|
|
Country of incorporation or
registration
|
HSBC Bank plc's interest in
equity capital
|
Share
class
|
|
%
|
HSBC Investment Bank Holdings
Limited
|
England and
Wales
|
100.00
|
£1
Ordinary
|
HSBC Life (UK) Limited
|
England and
Wales
|
100.00
|
£1
Ordinary
|
HSBC Bank Bermuda
Limited1
|
Bermuda
|
100.00
|
BM$1Ordinary
|
HSBC Continental Europe
|
France
|
99.99
|
€5 Actions
|
HSBC Assurances Vie
(France)
|
France
|
99.99
|
€287.5Actions
|
HSBC Bank Malta p.l.c
|
Malta
|
70.03
|
€0.3
Ordinary
|
1 Main subsidiaries are either held directly or
indirectly via intermediate holding companies. There has been no
material changes in HSBC's shareholding % for main existing
subsidiaries since 2022.
2 During 2023, HSBC Bank plc acquired HSBC Bank
Bermuda Limited ('HBBM') from HOHU.
All the above prepare their
financial statements up to 31 December. Details of all group
subsidiaries, as required under Section 409 of the Companies Act
2006, are set out in Note 38. The principal countries of operation
are the same as the countries of incorporation.
Impairment testing of investments
in subsidiaries
At each reporting period end, HSBC
Bank plc reviews investments in subsidiaries for indicators of
impairment. An impairment is recognised when the carrying amount
exceeds the recoverable amount for that investment. The recoverable
amount is the higher of the investment's fair value less costs of
disposal and its value-in-use ('VIU'), in accordance with the
requirements of IAS 36. The VIU is calculated by discounting
management's cash flow projections for the investment. The cash
flows represent the Free Cash Flows ('FCF') based on the
subsidiary's binding capital requirements.
We used a number of assumptions in
our VIU calculation, in accordance with the requirements of IAS
36:
- Management's
judgement in estimating future cash flows: The cash flow
projections for each investment are based on the latest approved
plans, which includes forecast capital available for distribution
based on the capital requirements of the subsidiary, taking into
account minimum and core capital requirements. For the impairment
test at 31 December 2023, cash flow projections until the end of
2028 were considered in line with our internal planning horizon.
Our cash flow projections include known and observable
climate-related opportunities and costs associated with our
sustainable products and operating model.
- Long-term
growth rates: A long term growth rate is used to extrapolate the
free cash flows in perpetuity. The growth rate reflects inflation
for the country or territory within which the investment operates,
and is based on the long-term average growth rates.
- Discount rates:
The rate used to discount the cash flows is based on the cost of
capital assigned to each investment, which is derived using a
capital asset pricing model ('CAPM'). CAPM depends on a number of
inputs reflecting financial and economic variables, including the
risk-free rate and a premium to reflect the inherent risk of the
business being evaluated. These variables are based on the market's
assessment of the economic variables and management's judgement.
The discount rates for each investment are refined to reflect the
rates of inflation for the countries or territories within which
the investment operates. In addition, for the purposes of testing
investments for impairment, management supplements this process by
comparing the discount rates derived using the internally generated
CAPM, with cost of capital rates produced by external sources for
businesses operating in similar markets. The impacts from climate
risk are included to the extent that they are observable in
discount rates and asset prices.
During 2022, an additional
investment of £3.4bn was made in HSBC Continental Europe. Further,
an impairment reversal of £2bn was recognised in the fourth quarter
of 2022 as a result of the impairment test performed which relates
to the investment in subsidiary i.e. HSBC Continental Europe. This
was due to updates to inputs and assumptions in the model used to
estimate VIU and increase in forecast free cash flows, resulting
from acquisition of HSBC Bank Malta plc and HSBC Trinkaus &
Burkhardt GmbH as well as interest rates rises in the eurozone. The
increase in carrying amount from £7.7bn to £10.1bn during this year
is due to £2bn impairment reversal, recognised in 2022. No
investments in subsidiaries is impaired or reversed in
2023.
In October 2023, HSBC Bank plc
acquired HBBM from HOHU and invested £1bn.
Impairment test results
|
Investments
|
Carrying
amount
|
Value in
use
|
Discount
rate
|
Long-term
growth
|
Headroom
|
HSBC Continental Europe
|
£m
|
£m
|
%
|
%
|
£m
|
At 31 Dec 2023
|
10,117
|
11,668
|
9.17
|
1.79
|
1,551
|
At 31 Dec
20221
|
7,743
|
11,507
|
9.95
|
1.56
|
3,764
|
1 2022 carrying amount does not include
impairment reversal of £2bn which was recognised in the fourth
quarter of 2022.
Sensitivities of key assumptions in calculating
VIU
At 31 December 2023, the
investment in HSBC Continental Europe was sensitive to reasonably
possible changes in the key assumptions supporting the recoverable
amount.
In making an estimate of
reasonably possible changes to assumptions, management considers
the available evidence in respect of each input to the model. These
include the external range of observable discount rates, historical
performance against forecast, and risks attached to the key
assumptions underlying cash flow.
The following table presents a
summary of the key assumptions underlying the most sensitive inputs
to the model for HSBC Continental Europe, the key risks attaching
to each, and details of a reasonably possible change to assumptions
where, in the opinion of management, there is a sufficient headroom
to cover the changes which could not result in an
impairment.
Reasonably possible changes in key
assumptions
|
|
|
|
|
|
Investment
|
HSBC Continental Europe
|
Free Cash Flows
projections
|
- Level of
interest rates and yield curves.
- Competitors'
positions within the market.
- Level and
change in unemployment rates.
|
- Customer
remediation and regulatory actions.
- Achievement of
strategic actions relating to revenue and costs.
|
- FCF projections
decrease by 10%.
|
|
Discount rate
|
- Discount rate
used is a reasonable estimate of a suitable market rate for the
profile of the business.
|
- External
evidence arises to suggest that the rate used is not appropriate to
the business.
|
- Discount rate
increases by 1%.
|
Sensitivity of VIU in key
assumptions and changes to current assumptions to reduce headroom
to nil
|
|
|
|
Increase/(decrease)
|
Investments1
|
Carrying
amount
|
Value in
use
|
Discount
rate
|
Free Cash
flows
|
At 31 Dec 2023
|
£m
|
£m
|
bps
|
%
|
HSBC Continental Europe
|
10,117
|
11,668
|
143
|
(35.1)
|
1 As at 31 December 2022, An increase of 614bps
in the discount rate and a decrease of 33.3% in the FCF to reduce
the headroom to nil.
The group is mainly involved with
both consolidated and unconsolidated structured entities through
the securitisation of financial assets, conduits and investment
funds, established either by the group or a third party.
Consolidated structured
entities
Total assets of the group's
consolidated structured entities, split by entity type
|
|
Conduits
|
Securitisations
|
HSBC managed
funds
|
Other
|
Total
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
At 31 Dec 2023
|
2,809
|
180
|
4,272
|
398
|
7,659
|
At 31 Dec 2022
|
3,479
|
192
|
3,981
|
463
|
8,115
|
Conduits
The group has established and
manages two types of conduits: securities investment conduits
('SICs') and multi-seller conduits.
Securities investment
conduits
The SICs purchase highly rated
ABSs to facilitate tailored investment opportunities.
At 31 December 2023, Solitaire,
the group's principal SIC held £0.8bn of ABSs (2022: £1.1bn). It is
currently funded entirely by commercial paper ('CP') issued to the
group. At 31 December 2023, the group held £1.0bn of CP (2022:
£1.3bn).
Multi-seller conduits
The group's multi-seller conduit
was established to provide access to flexible market-based sources
of finance for its clients. Currently, the group bears risk equal
to transaction-specific facility offered to the multi-seller
conduits, amounting to £4.2bn at 31 December 2023 (2022:£4.7bn).
First loss protection is provided by the originator of the assets,
and not by the group, through transaction-specific credit
enhancements. A layer of secondary loss protection is provided by
the group in the form of programme-wide enhancement
facilities.
Securitisations
The group uses structured entities
to securitise customer loans and advances it originates in order to
diversify the sources of funding for asset origination and capital
efficiency purposes. The loans and advances are transferred by the
group to the structured entities for cash or synthetically through
credit default swaps, and the structured entities issue debt
securities to investors.
HSBC managed funds
The group together with other HSBC
entities has established a number of money market and non-money
market funds. Where it is deemed to be acting as principal rather
than agent in its role as investment manager, the group controls
these funds.
Other
The group has entered into a
number of transactions in the normal course of business, which
include asset and structured finance transactions where it has
control of the structured entity. In addition, the group is deemed
to control a number of third-party managed funds through its
involvement as a principal in the funds.
Unconsolidated structured
entities
The term 'unconsolidated
structured entities' refers to all structured entities not
controlled by the group. The group enters into transactions
with unconsolidated structured entities in the normal course of
business to facilitate customer transactions and for specific
investment opportunities.
Nature and risks associated with
the group's interests in unconsolidated structured
entities
|
|
Securitisations
|
HSBC
managed
funds
|
Non-HSBC managed
funds
|
Other
|
Total
|
Total asset values of the entities
(£m)
|
|
|
|
|
|
0 - 400
|
1
|
154
|
977
|
13
|
1,145
|
400 - 1,500
|
1
|
50
|
874
|
1
|
926
|
1,500 - 4,000
|
-
|
34
|
329
|
-
|
363
|
4,000 - 20,000
|
-
|
20
|
149
|
-
|
169
|
20,000+
|
-
|
1
|
8
|
-
|
9
|
Number of entities at 31 Dec 2023
|
2
|
259
|
2,337
|
14
|
2,612
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
Total assets in relation to the
group's interests in the unconsolidated structured
entities
|
128
|
5,808
|
3,793
|
878
|
10,607
|
- trading assets
|
-
|
1
|
10
|
-
|
11
|
- financial assets
designated and otherwise mandatorily measured at fair
value
|
-
|
5,802
|
3,296
|
-
|
9,098
|
- loans and advances to
banks
|
-
|
-
|
-
|
-
|
-
|
- loans and advances to
customers
|
128
|
-
|
487
|
471
|
1,086
|
- financial
investments
|
-
|
5
|
-
|
-
|
5
|
- other assets
|
-
|
-
|
-
|
407
|
407
|
Total liabilities in relation to
the group's interests in the unconsolidated structured
entities
|
-
|
5
|
-
|
-
|
5
|
Other off-balance sheet
commitments
|
27
|
-
|
514
|
-
|
541
|
The group's maximum exposure at 31 Dec 2023
|
155
|
5,803
|
4,307
|
878
|
11,143
|
|
|
|
|
|
|
|
Securitisations
|
HSBC
managed
funds
|
Non-HSBC
managed
funds
|
Other
|
Total
|
Total asset values of the entities
(£m)
|
|
|
|
|
|
0 - 400
|
2
|
155
|
966
|
12
|
1,135
|
400 - 1,500
|
1
|
55
|
757
|
1
|
814
|
1,500 - 4,000
|
-
|
19
|
304
|
-
|
323
|
4,000 - 20,000
|
-
|
16
|
155
|
-
|
171
|
20,000+
|
-
|
3
|
14
|
-
|
17
|
Number of entities at 31 Dec 2022
|
3
|
248
|
2,196
|
13
|
2,460
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
Total assets in relation to the
group's interests in the unconsolidated structured
entities
|
220
|
4,671
|
4,425
|
925
|
10,241
|
- trading assets
|
-
|
1
|
104
|
-
|
105
|
- financial assets
designated and otherwise mandatorily measured at fair
value
|
-
|
4,665
|
3,869
|
-
|
8,534
|
- loans and advances to
customers
|
220
|
-
|
452
|
497
|
1,169
|
- financial
investments
|
-
|
5
|
-
|
-
|
5
|
- other assets
|
-
|
-
|
-
|
428
|
428
|
Total liabilities in relation to
group's interests in the unconsolidated structured
entities
|
-
|
4
|
-
|
-
|
4
|
Other off-balance sheet
commitments
|
34
|
-
|
571
|
24
|
629
|
The group's maximum exposure at
31 Dec 2022
|
254
|
4,667
|
4,996
|
949
|
10,866
|
The maximum exposure to loss from
the group's interests in unconsolidated structured entities
represents the maximum loss it could incur as a result of its
involvement with these entities regardless of the probability of
the loss being incurred.
- For
commitments, guarantees and written credit default swaps, the
maximum exposure to loss is the notional amount of potential future
losses.
- For retained
and purchased investments and loans to unconsolidated structured
entities, the maximum exposure to loss is the carrying amount of
these interests at the balance sheet reporting date.
The maximum exposure to loss is
stated gross of the effects of hedging and collateral arrangements
entered into to mitigate the group's exposure to loss.
Securitisations
The group has interests in
unconsolidated securitisation vehicles through holding notes issued
by these entities. In addition, the group has investments in ABSs
issued by third-party structured entities.
HSBC managed funds
The group together with other HSBC
entities establishes and manages money market funds and non-money
market investment funds to provide customers with investment
opportunities. The group, as fund manager, may be entitled to
receive management and performance fees based on the assets under
management. The group may also retain units in these
funds.
Non-HSBC managed funds
The group purchases and holds
units of third-party managed funds in order to facilitate business
and meet customer needs.
Other
The group has established
structured entities in the normal course of business, such as
structured credit transactions for customers, to provide finance to
public and private sector infrastructure projects, and for asset
and structured finance transactions.
In addition to the interests
disclosed above, the group enters into derivative contracts,
reverse repos and stock borrowing transactions with structured
entities. These interests arise in the normal course of business
for the facilitation of third-party transactions and risk
management solutions.
Group sponsored structured
entities
The amount of assets transferred
to and income received from such sponsored entities during 2023 and
2022 was not significant.
20
|
Goodwill and intangible
assets
|
|
The
group
|
The
bank
|
|
2023
|
20222
|
2023
|
20222
|
|
£m
|
£m
|
£m
|
£m
|
Goodwill
|
-
|
-
|
2
|
19
|
Other intangible
assets1
|
203
|
91
|
86
|
22
|
At 31 Dec
|
203
|
91
|
88
|
41
|
1 Included within the group's other intangible
assets is internally generated software with a net carrying amount
of £198m (2022: £87m). During 2023, capitalisation of internally
generated software was £120m (2022: £47m), net impairment reversal
was £(78)m (2022: £(13)m) and amortisation was £91m (2022:
£34m).
2 From 1 January 2023, we adopted IFRS 17
'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'.
Comparative data have been restated accordingly.
21
|
Prepayments, accrued income and
other assets
|
|
|
|
The
group
|
The
bank
|
|
2023
|
20221
|
2023
|
20221
|
|
£m
|
£m
|
£m
|
£m
|
Cash collateral and margin
receivables
|
39,125
|
44,932
|
29,835
|
32,255
|
Settlement accounts
|
13,028
|
6,926
|
9,942
|
5,441
|
Bullion
|
4,393
|
3,464
|
4,390
|
3,464
|
Prepayments and accrued
income
|
2,521
|
1,769
|
1,556
|
994
|
Property, plant and
equipment
|
819
|
761
|
11
|
9
|
Right-of-use assets
|
167
|
166
|
30
|
32
|
Employee benefit assets (Note
5)
|
51
|
73
|
10
|
12
|
Other accounts
|
3,531
|
3,353
|
1,626
|
1,700
|
At 31 Dec
|
63,635
|
61,444
|
47,400
|
43,907
|
1 From 1 January 2023, we adopted IFRS 17
'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'.
Comparative data have been restated accordingly.
Prepayments, accrued income and
other assets include £56,982m (2022: £55,846m) of financial assets,
the majority of which are measured at amortised cost.
|
The
group
|
The
bank
|
|
2023
|
2022
|
2023
|
2022
|
|
£m
|
£m
|
£m
|
£m
|
Deposits by
banks1
|
5,313
|
4,337
|
5,387
|
4,350
|
Customer
accounts1
|
4,955
|
5,812
|
4,955
|
5,692
|
Other debt securities in
issue
|
21
|
812
|
21
|
61
|
Other liabilities - net short
positions in securities
|
31,987
|
30,304
|
14,569
|
15,662
|
At 31 Dec
|
42,276
|
41,265
|
24,932
|
25,765
|
1 'Deposits by banks' and 'Customer accounts'
include repos, stock lending and other amounts.
1
23
|
Financial liabilities designated
at fair value
|
|
The
group
|
The
bank
|
|
2023
|
2022¹
|
2023
|
2022
|
|
£m
|
£m
|
£m
|
£m
|
Deposits by banks and customer
accounts
|
5,555
|
4,864
|
5,542
|
4,864
|
Liabilities to customers under
investment contracts
|
1,002
|
943
|
-
|
-
|
Debt securities in
issue
|
25,194
|
20,666
|
17,110
|
13,742
|
Subordinated liabilities (Note
26)
|
794
|
809
|
794
|
809
|
At 31 Dec
|
32,545
|
27,282
|
23,446
|
19,415
|
1 From 1 January 2023, we adopted IFRS 17
'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'.
2022 comparative data have been restated.
The group
The carrying amount of financial
liabilities designated at fair value was £2,407m less than the
contractual amount at maturity
(2022: £3,431m lower). The cumulative amount of change in fair
value attributable to changes in credit risk was a gain of £151m
(2022: gain of £292m).
The bank
The carrying amount of financial
liabilities designated at fair value was £1,974m less than the
contractual amount at maturity (2022: £2,230m lower). The
cumulative amount of change in fair value attributable to changes
in credit risk was a gain of £42m (2022: gain of £139m).
24
|
Accruals, deferred income and
other liabilities
|
|
|
The
group
|
The
bank
|
|
|
2023
|
2022¹
|
2023
|
2022
|
|
|
£m
|
£m
|
£m
|
£m
|
Cash collateral and margin
payables
|
|
43,305
|
55,467
|
31,920
|
40,356
|
Settlement accounts
|
|
9,789
|
4,915
|
9,861
|
4,485
|
Accruals and deferred
income
|
|
2,603
|
1,909
|
1,633
|
1,241
|
Amount due to investors in funds
consolidated by the group
|
|
1,158
|
991
|
-
|
-
|
Lease liabilities
|
|
227
|
269
|
36
|
45
|
Employee benefit liabilities (Note
5)
|
|
117
|
121
|
48
|
56
|
Reinsurance contract
liabilities
|
|
33
|
33
|
-
|
-
|
Share-based payment liability to
HSBC Holdings
|
|
107
|
98
|
77
|
72
|
Endorsements and
acceptances
|
|
236
|
231
|
227
|
218
|
Other liabilities
|
|
2,869
|
2,986
|
1,120
|
1,509
|
At 31 Dec
|
|
60,444
|
67,020
|
44,922
|
47,982
|
1 From 1 January 2023, we adopted IFRS 17
'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'.
2022 comparative data have been restated.
For the group, accruals, deferred
income and other liabilities include £59,806m (2022: £66,390m), and
for the bank £44,679m (2022: £47,683m) of financial
liabilities, the majority of which are measured at amortised
cost.
|
Restructuring
costs
|
Legal proceedings and
regulatory matters
|
Customer
remediation
|
Other
provisions
|
Total
|
The group
|
£m
|
£m
|
£m
|
£m
|
£m
|
Provisions (excluding contractual
commitments)
|
|
|
|
|
|
At 1 Jan 2023
|
126
|
77
|
13
|
103
|
319
|
Additions
|
27
|
99
|
3
|
62
|
191
|
Amounts utilised
|
(43)
|
(54)
|
(3)
|
(25)
|
(125)
|
Unused amounts reversed
|
(28)
|
(16)
|
(3)
|
(29)
|
(76)
|
Exchange and other
movements
|
(6)
|
(2)
|
(1)
|
7
|
(2)
|
At 31 Dec 2023
|
76
|
104
|
9
|
118
|
307
|
Contractual
commitments1
|
|
|
|
|
|
At 1 Jan 2023
|
|
|
|
|
105
|
Net change in expected credit loss
provision and other movements
|
|
|
|
|
(22)
|
At 31 Dec 2023
|
|
|
|
|
83
|
Total Provisions
|
|
|
|
|
|
At 31 Dec 2022
|
|
|
|
|
424
|
At 31 Dec 2023
|
|
|
|
|
390
|
Provisions (excluding contractual
commitments)
|
|
|
|
|
|
At 1 Jan 2022
|
164
|
175
|
21
|
99
|
459
|
Additions
|
117
|
61
|
4
|
63
|
245
|
Amounts utilised
|
(124)
|
(152)
|
(6)
|
(34)
|
(316)
|
Unused amounts reversed
|
(35)
|
(4)
|
(6)
|
(23)
|
(68)
|
Exchange and other
movements
|
4
|
(3)
|
-
|
(2)
|
(1)
|
At 31 Dec 2022
|
126
|
77
|
13
|
103
|
319
|
Contractual
commitments1
|
|
|
|
|
|
At 1 Jan 2022
|
|
|
|
|
103
|
Net change in expected credit loss
provision and other movements
|
|
|
|
|
2
|
At 31 Dec 2022
|
|
|
|
|
105
|
Total Provisions
|
|
|
|
|
|
At 31 Dec 2021
|
|
|
|
|
562
|
At 31 Dec 2022
|
|
|
|
|
424
|
|
Restructuring
costs
|
Legal proceedings and
regulatory matters
|
Customer
remediation
|
Other
provisions
|
Total
|
The bank
|
£m
|
£m
|
£m
|
£m
|
£m
|
Provisions (excluding contractual
commitments)
|
|
|
|
|
|
At 1 Jan 2023
|
17
|
57
|
8
|
35
|
117
|
Additions
|
11
|
95
|
2
|
16
|
124
|
Amounts utilised
|
(12)
|
(51)
|
(2)
|
(5)
|
(70)
|
Unused amounts reversed
|
(7)
|
(1)
|
(2)
|
(11)
|
(21)
|
Exchange and other
movements
|
-
|
(5)
|
(1)
|
-
|
(6)
|
At 31 Dec 2023
|
9
|
95
|
5
|
35
|
144
|
Contractual commitments1
|
|
|
|
|
|
At 1 Jan 2023
|
|
|
|
|
50
|
Net change in expected credit loss
provision and other movements
|
|
|
|
|
(18)
|
At 31 Dec 2023
|
|
|
|
|
32
|
Total Provisions
|
|
|
|
|
|
At 31 Dec 2022
|
|
|
|
|
167
|
At 31 Dec 2023
|
|
|
|
|
176
|
Provisions (excluding contractual
commitments)
|
|
|
|
|
|
At 1 Jan 2022
|
12
|
155
|
13
|
27
|
207
|
Additions
|
36
|
51
|
1
|
32
|
120
|
Amounts utilised
|
(14)
|
(146)
|
(3)
|
(11)
|
(174)
|
Unused amounts reversed
|
(17)
|
(3)
|
(3)
|
(13)
|
(36)
|
Exchange and other
movements
|
-
|
-
|
-
|
-
|
-
|
At 31 Dec 2022
|
17
|
57
|
8
|
35
|
117
|
Contractual
commitments1
|
|
|
|
|
|
At 1 Jan 2022
|
|
|
|
|
43
|
Net change in expected credit loss
provision and other movements
|
|
|
|
|
7
|
At 31 Dec 2022
|
|
|
|
|
50
|
Total Provisions
|
|
|
|
|
|
At 31 Dec 2021
|
|
|
|
|
250
|
At 31 Dec 2022
|
|
|
|
|
167
|
1 The contractual commitments provision includes
off-balance sheet loan commitments and guarantees, for which
expected credit losses are provided under IFRS 9. Further analysis
of the movement in the expected credit loss is disclosed within the
'Reconciliation of changes in gross carrying/nominal amount and
allowances for loans and advances to banks and customers including
loan commitments and financial guarantees' table on page
47.
Restructuring costs
These provisions comprise the
estimated cost of restructuring, including redundancy costs where
an obligation exists. Additions made during the year relate to
formal restructuring plans made within the group.
Legal proceedings and regulatory
matters
Further details of legal
proceedings and regulatory matters are set out in Note 33. Legal
proceedings include civil court, arbitration or tribunal
proceedings brought against HSBC companies (whether by way of claim
or counterclaim), or civil disputes that may, if not settled,
result in court, arbitration or tribunal proceedings. Regulatory
matters refer to investigations, reviews and other actions carried
out by, or in response to the actions of, regulatory or law
enforcement agencies in connection with alleged
wrongdoing.
26
|
Subordinated
liabilities
|
Subordinated
liabilities
|
|
The
group
|
The
bank
|
|
2023
|
2022
|
2023
|
2022
|
|
£m
|
£m
|
£m
|
£m
|
At amortised cost
|
14,920
|
14,528
|
14,658
|
14,252
|
- subordinated
liabilities
|
14,220
|
13,828
|
14,658
|
14,252
|
- preferred
securities
|
700
|
700
|
-
|
-
|
Designated at fair value (Note
23)
|
794
|
809
|
794
|
809
|
- subordinated
liabilities
|
794
|
809
|
794
|
809
|
At 31 Dec
|
15,714
|
15,337
|
15,452
|
15,061
|
Subordinated liabilities rank
behind senior obligations and generally count towards the capital
base of HSBC. Capital securities may be called and redeemed by HSBC
subject to prior notification to the PRA and, where relevant, the
consent of the local banking regulator. If not redeemed at the
first call date, coupons payable may reset or become floating rate
based on relevant market rates. On subordinated liabilities other
than floating rate notes, interest is payable at fixed rates of up
to 7.650%.
The balance sheet amounts
disclosed below are presented on an IFRS basis and do not reflect
the amount that the instruments contribute to regulatory capital
due to the inclusion of issuance costs, regulatory amortisation and
regulatory eligibility limits.
Subordinated liabilities of the
group
|
|
|
Carrying amount
|
|
|
2023
|
2022
|
|
|
£m
|
£m
|
Additional tier 1 instruments guaranteed by the
bank
|
|
|
£700m
|
5.844% Non-cumulative Step-up Perpetual Preferred
Securities1,5,6
|
605
|
569
|
Tier 2 instruments
|
|
|
£300m
|
6.5% Subordinated Notes
20233,7
|
-
|
134
|
€1,500m
|
Floating Rate Subordinated Loan
2032
|
1,299
|
1,326
|
€1,500m
|
Floating Rate Subordinated Loan
20247
|
-
|
1,329
|
$300m
|
7.65% Subordinated Notes
20252
|
136
|
141
|
$750m
|
HSBC Bank plc 4.19% Subordinated
Loan 2027
|
571
|
593
|
£200m
|
Floating Rate Subordinated Loan
2028
|
200
|
200
|
€300m
|
Floating Rate Subordinated Loan
2028
|
261
|
266
|
€260m
|
Floating Rate Subordinated Loan
2029
|
226
|
230
|
£350m
|
5.375% Callable Subordinated
Step-up Notes 20303,4,6
|
61
|
60
|
$2,000m
|
HSBC Bank plc 1.625% Subordinated
Loan 2031
|
1,462
|
1,497
|
€2,000m
|
HSBC Bank plc 0.375% Subordinated
Loan 2031
|
1,627
|
1,583
|
€2,000m
|
HSBC Bank plc 0.375% Subordinated
Loan 2031
|
1,627
|
1,583
|
€1,250m
|
HSBC Bank plc 0.25% Subordinated
Loan 2031
|
1,017
|
990
|
£500m
|
5.375% Subordinated Notes
20333
|
162
|
152
|
£225m
|
6.25% Subordinated Notes
20413
|
50
|
47
|
£600m
|
4.75% Subordinated Notes
20463
|
191
|
191
|
$750m
|
Undated Floating Rate Primary
Capital Notes7
|
-
|
624
|
$500m
|
Undated Floating Rate Primary
Capital Notes7
|
-
|
415
|
$300m
|
Undated Floating Rate Primary
Capital Notes (Series 3)7
|
-
|
249
|
$1,250m
|
HSBC Bank plc floating
Subordinated Loan 2028
|
978
|
1,035
|
$1,100m
|
HSBC Bank plc floating
Subordinated Loan 2033
|
860
|
910
|
€400m
|
HSBC Bank plc floating
Subordinated Loan 2028
|
353
|
362
|
€400m
|
HSBC Bank plc floating
Subordinated Loan 2027
|
353
|
361
|
€500m
|
HSBC Bank plc floating
Subordinated Loan 2028
|
433
|
443
|
€500m
|
HSBC Bank plc floating
Subordinated Loan 2028
|
433
|
-
|
€500m
|
HSBC Bank plc floating
Subordinated Loan 2028
|
433
|
-
|
€85m
|
HSBC Bank plc 5.15% Subordinated Loan
2030
|
74
|
-
|
€800m
|
HSBC Bank plc floating
Subordinated Loan 2029
|
693
|
-
|
€65m
|
HSBC Bank plc 5.24% Subordinated
Loan 2033
|
56
|
-
|
$800m
|
HSBC Bank plc 6.79% Subordinated
Loan 2028
|
651
|
-
|
€800m
|
HSBC Bank plc floating
Subordinated Loan 2029
|
693
|
-
|
€800m
|
HSBC Bank plc floating
Subordinated Loan 2029
|
173
|
-
|
Other Tier 2 instruments each less
than £100m
|
36
|
47
|
At 31 Dec
|
15,714
|
15,337
|
|
|
|
|
1 The value of the security partially decreased
as a result of a fair value hedge gain. The instrument was held at
amortised cost in 2021. Also, the interest rate payable after
November 2031 is the sum of the compounded daily Sonia rate
plus 2.0366%.
2 The bank tendered for this security in November
2022. The principal balance is $180m. The original notional value
of the security is $300m.
3 The bank tendered for these securities in
November 2022. The principal balance is £135m, £61m, £157m, £70m
and £237m respectively. The original notional values of these
securities are £300m, £350m, £500m, £225m and £600m
respectively.
4 The interest rate payable after November 2025
is the sum of the compounded daily Sonia rate plus
1.6193%.
5 See paragraph below, 'Guaranteed by HSBC Bank
plc'.
6 These securities are ineligible for inclusion
in the capital base of the group.
7 Redeemed in 2023.
Guaranteed by HSBC Bank
plc
A capital security guaranteed by
the bank was issued by a Jersey limited partnership. The proceeds
of this was lent to the bank by the limited partnership in the form
of a subordinated note. It qualified as additional tier 1 capital
for the group (on a solo and consolidated basis) under CRR II until
31 December 2021 by virtue of the application of grandfathering
provisions. Since 31 December 2021, this security has no longer
qualified as regulatory capital for the group.
This preferred security, together
with the guarantee, is intended to provide investors with rights to
income, capital distributions and distributions upon liquidation of
the company that are equivalent to the rights that they would have
had if they had purchased non-cumulative perpetual preference
shares of the company. There are limitations on the payment of
distributions if such payments are prohibited under UK banking
regulations or other requirements, if a payment would cause a
breach of HSBC's capital adequacy requirements, or if the bank has
insufficient distributable reserves (as defined).
The bank has individually
covenanted that, if prevented under certain circumstances from
paying distributions on the preferred security in full, it will not
pay dividends or other distributions in respect of its ordinary
shares, or repurchase or redeem its ordinary shares, until the
distribution on the preferred security has been paid in
full.
If the preferred security
guaranteed by the bank is outstanding in November 2048, or if the
total capital ratio of the group (on a solo or consolidated basis)
falls below the regulatory minimum required, or if the Directors
expect it to do so in the near term, provided that proceedings have
not been commenced for the liquidation, dissolution or winding up
of the bank, the holders' interests in the preferred security
guaranteed by the bank will be exchanged for interests in
preference shares issued by the bank that have economic terms which
are in all material respects equivalent to the preferred security
and its guarantee.
Tier 2 securities
Tier 2 capital securities are
either perpetual or dated subordinated securities on which there is
an obligation to pay coupons. These capital securities are included
within the group's regulatory capital base as tier 2 capital under
CRR II, either as fully eligible capital or by virtue of the
application of grandfathering provisions. In accordance with CRR
II, the capital contribution of all tier 2 securities is amortised
for regulatory purposes in their final five years before
maturity.
27
|
Maturity analysis of assets,
liabilities and off-balance sheet commitments
|
Contractual maturity of financial
liabilities
The balances in the table below do
not agree directly with those in our consolidated balance sheet as
the table incorporates, on an undiscounted basis, all cash flows
relating to principal and future coupon payments (except for
trading liabilities and derivatives not treated as hedging
derivatives).
Undiscounted cash flows payable in
relation to hedging derivative liabilities are classified according
to their contractual maturities. Trading liabilities and
derivatives not treated as hedging derivatives are included in the
'Due not more than 1 month' time bucket and not by contractual
maturity.
In addition, loans and other
credit-related commitments, and financial guarantees are generally
not recognised on our balance sheet. The undiscounted cash flows
potentially payable under loan and other credit-related commitments
and financial guarantees are classified on the basis of the
earliest date they can be called.
Cash flows payable under financial
liabilities by remaining contractual maturities
|
|
Due not more than 1
month
|
Due over 1 month but not
more than 3 months
|
Due
between
3 and 12
months
|
Due
between
1 and 5
years
|
Due after
5
years
|
Total
|
The group
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Deposits by banks
|
19,626
|
2,028
|
453
|
700
|
269
|
23,076
|
Customer accounts
|
197,730
|
14,148
|
10,649
|
671
|
81
|
223,279
|
Repurchase agreements -
non-trading
|
42,743
|
7,801
|
1,761
|
1,686
|
-
|
53,991
|
Trading liabilities
|
42,276
|
-
|
-
|
-
|
-
|
42,276
|
Financial liabilities designated
at fair value
|
12,107
|
1,183
|
8,003
|
7,589
|
6,862
|
35,744
|
Derivatives
|
170,391
|
127
|
326
|
798
|
1,198
|
172,840
|
Debt securities in
issue
|
3,305
|
2,266
|
6,014
|
1,939
|
1,360
|
14,884
|
Subordinated
liabilities
|
31
|
157
|
397
|
6,478
|
13,122
|
20,185
|
Other financial
liabilities1
|
57,982
|
292
|
691
|
159
|
1,220
|
60,344
|
|
546,191
|
28,002
|
28,294
|
20,020
|
24,112
|
646,619
|
Loan and other credit-related
commitments
|
131,829
|
-
|
-
|
-
|
-
|
131,829
|
Financial
guarantees2
|
2,401
|
-
|
-
|
-
|
-
|
2,401
|
At 31 Dec 2023
|
680,421
|
28,002
|
28,294
|
20,020
|
24,112
|
780,849
|
|
|
|
|
|
|
|
Deposits by banks
|
16,178
|
36
|
2,479
|
1,994
|
256
|
20,943
|
Customer accounts
|
197,400
|
11,821
|
6,441
|
127
|
285
|
216,074
|
Repurchase agreements -
non-trading
|
30,572
|
1,793
|
203
|
427
|
-
|
32,995
|
Trading liabilities
|
41,265
|
-
|
-
|
-
|
-
|
41,265
|
Financial liabilities designated
at fair value
|
9,558
|
1,950
|
4,887
|
7,200
|
6,857
|
30,452
|
Derivatives
|
218,015
|
88
|
391
|
1,382
|
437
|
220,313
|
Debt securities in
issue
|
832
|
3,047
|
2,352
|
812
|
851
|
7,894
|
Subordinated
liabilities
|
9
|
137
|
427
|
3,300
|
14,713
|
18,586
|
Other financial
liabilities1
|
65,307
|
272
|
827
|
180
|
1,080
|
67,666
|
|
579,136
|
19,144
|
18,007
|
15,422
|
24,479
|
656,188
|
Loan and other credit-related
commitments
|
127,913
|
-
|
-
|
-
|
-
|
127,913
|
Financial
guarantees2
|
5,327
|
-
|
-
|
-
|
-
|
5,327
|
At 31 Dec 2022
|
712,376
|
19,144
|
18,007
|
15,422
|
24,479
|
789,428
|
Cash flows payable under financial
liabilities by remaining contractual maturities
(continued)
|
|
Due not more than 1
month
|
Due over 1 month but not
more than 3 months
|
Due
between
3 and 12
months
|
Due
between
1 and 5
years
|
Due after
5 years
|
Total
|
The bank
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Deposits by banks
|
17,389
|
1,090
|
318
|
-
|
-
|
18,797
|
Customer accounts
|
119,019
|
7,694
|
6,759
|
59
|
-
|
133,531
|
Repurchase agreements -
non-trading
|
38,794
|
7,337
|
1,588
|
1,686
|
-
|
49,405
|
Trading liabilities
|
24,932
|
-
|
-
|
-
|
-
|
24,932
|
Financial liabilities designated
at fair value
|
11,693
|
743
|
5,675
|
3,927
|
4,021
|
26,059
|
Derivatives
|
151,766
|
127
|
326
|
754
|
1,179
|
154,152
|
Debt securities in
issue
|
2,328
|
438
|
3,432
|
1,197
|
188
|
7,583
|
Subordinated
liabilities
|
31
|
157
|
396
|
6,454
|
13,238
|
20,276
|
Other financial
liabilities1
|
44,915
|
129
|
408
|
18
|
16
|
45,486
|
|
410,867
|
17,715
|
18,902
|
14,095
|
18,642
|
480,221
|
Loan and other credit-related
commitments
|
35,270
|
-
|
-
|
-
|
-
|
35,270
|
Financial
guarantees2
|
1,106
|
-
|
-
|
-
|
-
|
1,106
|
At 31 Dec 2023
|
447,243
|
17,715
|
18,902
|
14,095
|
18,642
|
516,597
|
|
|
|
|
|
|
|
Deposits by banks
|
13,327
|
6
|
214
|
53
|
-
|
13,600
|
Customer accounts
|
129,308
|
8,578
|
3,867
|
3
|
-
|
141,756
|
Repurchase agreements -
non-trading
|
27,436
|
1,663
|
203
|
427
|
-
|
29,729
|
Trading liabilities
|
25,765
|
-
|
-
|
-
|
-
|
25,765
|
Financial liabilities designated
at fair value
|
9,446
|
646
|
4,303
|
3,820
|
3,967
|
22,182
|
Derivatives
|
192,521
|
88
|
365
|
1,372
|
434
|
194,780
|
Debt securities in
issue
|
-
|
2,878
|
1,525
|
83
|
314
|
4,800
|
Subordinated
liabilities
|
9
|
137
|
417
|
3,283
|
14,874
|
18,720
|
Other financial
liabilities1
|
48,283
|
180
|
297
|
18
|
18
|
48,796
|
|
446,095
|
14,176
|
11,191
|
9,059
|
19,607
|
500,128
|
Loan and other credit-related
commitments
|
36,474
|
-
|
-
|
-
|
-
|
36,474
|
Financial
guarantees2
|
1,363
|
-
|
-
|
-
|
-
|
1,363
|
At 31 Dec 2022
|
483,932
|
14,176
|
11,191
|
9,059
|
19,607
|
537,965
|
1 Excludes financial liabilities of disposal
groups.
2 Excludes performance guarantee contracts to
which the impairment requirements in IFRS 9 are not
applied.
Maturity analysis of financial
assets and financial liabilities
The following table provides an
analysis of financial assets and liabilities by residual
contractual maturity at the balance sheet date. These balances are
included in the maturity analysis as follows:
- Financial
assets and liabilities with no contractual maturity (such as equity
securities) are included in the 'Due after more than 1 year' time
bucket. Undated or perpetual instruments are classified based on
the contractual notice period, which the counterparty of the
instrument is entitled to give. Where there is no contractual
notice period, undated or perpetual contracts are included in the
'Due after more than 1 year' time bucket.
- Financial
instruments included within assets and liabilities of disposal
groups held for sale are classified on the basis of the contractual
maturity of the underlying instruments and not on the basis of the
disposal transaction.
- Liabilities
under investment contracts are classified in accordance with
their contractual maturity. Undated investment contracts are
included in the 'Due after more than 1 year' time bucket, however,
such contracts are subject to surrender and transfer options by the
policyholders.
Maturity analysis of financial
assets and financial liabilities
|
|
|
|
2023
|
20221
|
|
Due within
1
year
|
Due after more than 1
year
|
Total
|
Due
within
1 year
|
Due
after more than 1 year
|
Total
|
The group
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Assets
|
|
|
|
|
|
|
Financial assets designated or
otherwise mandatorily measured at fair value
|
2,973
|
16,095
|
19,068
|
1,391
|
14,490
|
15,881
|
Loans and advances to
banks
|
14,037
|
334
|
14,371
|
15,867
|
1,242
|
17,109
|
Loans and advances to
customers
|
34,876
|
40,615
|
75,491
|
38,405
|
34,209
|
72,614
|
Reverse repurchase agreement -
non-trading
|
71,676
|
1,818
|
73,494
|
52,324
|
1,625
|
53,949
|
Financial investments
|
7,481
|
38,887
|
46,368
|
7,201
|
25,403
|
32,604
|
Other financial assets
|
56,693
|
288
|
56,981
|
55,414
|
428
|
55,842
|
Assets held for sale
|
10,182
|
10,186
|
20,368
|
4,174
|
17,040
|
21,214
|
At 31 Dec
|
197,918
|
108,223
|
306,141
|
174,776
|
94,437
|
269,213
|
Liabilities
|
|
|
|
|
|
|
Deposits by banks
|
22,069
|
874
|
22,943
|
18,674
|
2,162
|
20,836
|
Customer accounts
|
222,215
|
726
|
222,941
|
215,562
|
386
|
215,948
|
Repurchase agreements -
non-trading
|
51,848
|
1,568
|
53,416
|
32,486
|
415
|
32,901
|
Financial liabilities designated
at fair value
|
21,163
|
11,382
|
32,545
|
16,281
|
11,001
|
27,282
|
Debt securities in
issue
|
11,439
|
2,004
|
13,443
|
6,149
|
1,119
|
7,268
|
Other financial
liabilities
|
58,433
|
1,372
|
59,805
|
65,145
|
1,248
|
66,393
|
Subordinated
liabilities
|
-
|
14,920
|
14,920
|
142
|
14,386
|
14,528
|
Liabilities of disposal groups
held for sale
|
17,590
|
3,094
|
20,684
|
21,621
|
3,090
|
24,711
|
At 31 Dec
|
404,757
|
35,940
|
440,697
|
376,060
|
33,807
|
409,867
|
The bank
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Financial assets designated or
otherwise mandatorily measured at fair value
|
2,897
|
284
|
3,181
|
1,287
|
331
|
1,618
|
Loans and advances to
banks
|
10,673
|
997
|
11,670
|
13,338
|
1,148
|
14,486
|
Loans and advances to
customers
|
19,785
|
12,658
|
32,443
|
25,814
|
11,178
|
36,992
|
Reverse repurchase agreement -
non-trading
|
55,290
|
1,683
|
56,973
|
41,430
|
1,625
|
43,055
|
Financial investments
|
4,313
|
24,078
|
28,391
|
3,415
|
15,224
|
18,639
|
Other financial assets
|
42,285
|
-
|
42,285
|
39,605
|
2
|
39,607
|
Assets held for
sale2
|
160
|
-
|
160
|
-
|
-
|
-
|
At 31 Dec
|
135,403
|
39,700
|
175,103
|
124,889
|
29,508
|
154,397
|
Liabilities
|
|
|
|
|
|
|
Deposits by banks
|
18,775
|
-
|
18,775
|
13,543
|
51
|
13,594
|
Customer accounts
|
133,314
|
59
|
133,373
|
141,712
|
2
|
141,714
|
Repurchase agreements -
non-trading
|
47,274
|
1,568
|
48,842
|
29,223
|
415
|
29,638
|
Financial liabilities designated
at fair value
|
18,005
|
5,441
|
23,446
|
14,290
|
5,125
|
19,415
|
Debt securities in
issue
|
6,077
|
1,276
|
7,353
|
4,341
|
315
|
4,656
|
Other financial
liabilities
|
44,646
|
30
|
44,676
|
47,651
|
32
|
47,683
|
Subordinated
liabilities
|
-
|
14,658
|
14,658
|
133
|
14,119
|
14,252
|
At 31 Dec
|
268,091
|
23,032
|
291,123
|
250,893
|
20,059
|
270,952
|
1 From 1 January 2023, we adopted IFRS 17
'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'.
Comparative data of the financial year ended 31 December 2022 have
been restated accordingly.
2 Includes planned transfer of hedge fund
administration services.
28
|
Offsetting of financial assets and
financial liabilities
|
Financial assets and financial
liabilities are offset and the net amount is reported in the
balance sheet when there is a legally enforceable right to offset
the recognised amounts and there is an intention to settle on a net
basis, or realise the asset and settle the liability simultaneously
('the offset criteria').
In the following table, the
'Amounts not set off in the balance sheet' include transactions
where:
- the
counterparty has an offsetting exposure with the group and a master
netting or similar arrangement is in place with a right of set off
only in the event of default, insolvency or bankruptcy, or the
offset criteria are not otherwise satisfied; and
- in the case of
derivatives and reverse repurchase/repurchase, stock
borrowing/lending and similar agreements, cash and non-cash
collateral (debt securities and equities) has been received/pledged
to cover net exposure in the event of a default or other
predetermined events.
The effect of
over-collateralisation is excluded.
'Amounts not subject to
enforceable master netting agreements' include contracts executed
in jurisdictions where the rights of set off may not be upheld
under the local bankruptcy laws, and transactions where a legal
opinion evidencing enforceability of the right of offset may not
have been sought, or may have been unable to obtain.
For risk management purposes, the
net amounts of loans and advances to customers are subject to
limits, which are monitored and the relevant customer agreements
are subject to review and updated, as necessary, to ensure that the
legal right of offset remains appropriate.
|
Amounts subject to
enforceable netting arrangements
|
Amounts not
subject to
enforceable
netting
arrangements5
|
Total
|
|
|
|
|
Amounts not set off in the
balance sheet
|
|
|
Gross
amounts
|
Amounts
offset
|
Net
amounts
in the balance
sheet
|
Financial instruments,
including non-cash collateral6
|
Cash
collateral
|
Net
amount
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Financial assets
|
|
|
|
|
|
|
|
|
Derivatives (Note
14)1
|
237,360
|
(64,045)
|
173,315
|
(155,398)
|
(17,674)
|
243
|
801
|
174,116
|
Reverse repos, stock borrowing and
similar agreements classified as2:
|
|
|
|
|
|
|
|
|
- trading assets
|
17,454
|
(473)
|
16,981
|
(16,981)
|
-
|
-
|
243
|
17,224
|
- non-trading
assets
|
129,243
|
(58,972)
|
70,271
|
(70,204)
|
(62)
|
5
|
3,223
|
73,494
|
Loans and advances to
customers3
|
20,950
|
(10,473)
|
10,477
|
(9,321)
|
-
|
1,156
|
1
|
10,478
|
At 31 Dec 2023
|
405,007
|
(133,963)
|
271,044
|
(251,904)
|
(17,736)
|
1,404
|
4,268
|
275,312
|
|
Derivatives (Note
14)1
|
303,911
|
(79,799)
|
224,112
|
(193,720)
|
(29,998)
|
394
|
1,126
|
225,238
|
Reverse repos, stock borrowing and
similar agreements classified as2:
|
|
|
|
|
|
|
|
|
- trading assets
|
14,490
|
(196)
|
14,294
|
(14,293)
|
-
|
1
|
63
|
14,357
|
- non-trading
assets
|
103,839
|
(52,268)
|
51,571
|
(51,310)
|
(260)
|
1
|
2,378
|
53,949
|
Loans and advances to
customers3
|
17,979
|
(8,105)
|
9,874
|
(8,143)
|
-
|
1,731
|
1
|
9,875
|
At 31 Dec 2022
|
440,219
|
(140,368)
|
299,851
|
(267,466)
|
(30,258)
|
2,127
|
3,568
|
303,419
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
Derivatives (Note
14)1
|
234,304
|
(64,045)
|
170,259
|
(155,148)
|
(14,337)
|
774
|
1,215
|
171,474
|
Repos, stock lending and similar
agreements classified as2:
|
|
|
|
|
|
|
|
|
- trading
liabilities
|
10,249
|
(135)
|
10,114
|
(10,112)
|
-
|
2
|
5
|
10,119
|
- non-trading
liabilities
|
112,726
|
(59,310)
|
53,416
|
(52,878)
|
(539)
|
(1)
|
-
|
53,416
|
Customer
accounts4
|
26,395
|
(10,473)
|
15,922
|
(9,321)
|
-
|
6,601
|
6
|
15,928
|
At 31 Dec 2023
|
383,674
|
(133,963)
|
249,711
|
(227,459)
|
(14,876)
|
7,376
|
1,226
|
250,937
|
|
Derivatives (Note
14)1
|
297,341
|
(79,799)
|
217,542
|
(197,201)
|
(19,662)
|
679
|
1,325
|
218,867
|
Repos, stock lending and similar
agreements classified as2:
|
|
|
|
|
|
|
|
|
- trading
liabilities
|
10,180
|
(196)
|
9,984
|
(9,983)
|
-
|
1
|
2
|
9,986
|
- non-trading
liabilities
|
85,168
|
(52,268)
|
32,900
|
(32,719)
|
(182)
|
(1)
|
1
|
32,901
|
Customer
accounts4
|
24,082
|
(8,105)
|
15,977
|
(8,143)
|
-
|
7,834
|
10
|
15,987
|
At 31 Dec 2022
|
416,771
|
(140,368)
|
276,403
|
(248,046)
|
(19,844)
|
8,513
|
1,338
|
277,741
|
1 At 31 Dec 2023, the amount of cash margin
received that had been offset against the gross derivatives assets
was £1,508m (2022: £2,373m). The amount of cash margin paid that
had been offset against the gross derivatives liabilities was
£4,296m (2022: £7,279m).
2 For the amount of repos, reverse repos, stock
lending, stock borrowing and similar agreements recognised on the
balance sheet within 'Trading assets' and 'Trading liabilities',
see the 'Funding sources and uses' table on page
75.
3 At 31 Dec 2023, the total amount of 'Loans and
advances to customers' recognised on the balance sheet was £75,491m
(2022: £72,614m) of which £10,477m (2022: £9,874m) was subject to
offsetting.
4 At 31 Dec 2023, the total amount of 'Customer
accounts' recognised on the balance sheet was £222,941m (2022:
£215,948m) of which £15,922m (2022: £15,977m) was subject to
offsetting.
5 These exposures continue to be secured by
financial collateral, but we may not have sought or been able to
obtain a legal opinion evidencing enforceability of the right of
offset.
6 The disclosure was enhanced in year 2022 to
support consistency across HSBC Group entities. All financial
instruments (whether recognised on our balance sheet or as non-cash
collateral received or pledged) are presented within 'financial
instruments, including non-cash collateral' as balance sheet
classification has no effect on the rights of set-off associated
with financial instruments.
29
|
Interest rate benchmark
reform
|
|
Financial instruments yet to
transition to alternative benchmarks, by main
benchmark
|
|
USD Libor
|
Others1
|
At 31 Dec 2023
|
£m
|
£m
|
Non-derivative financial assets2
|
451
|
131
|
Non-derivative financial liabilities
|
4
|
-
|
Derivative notional contract amount
|
4,725
|
164,760
|
At 31 Dec 2022
|
|
|
Non-derivative financial
assets2
|
5,976
|
136
|
Non-derivative financial
liabilities
|
1,847
|
-
|
Derivative notional contract
amount
|
1,643,433
|
155,951
|
1 Comprises financial instruments referencing
other significant demising benchmark rates yet to transition to
alternative benchmarks: Canadian dollar offered rate ('CDOR'), GBP
libor, Mexican Interbank equilibrium interest rate ('TIIE'), SOR,
THBFIX, MIFOR and Sibor). An announcement was made by the South
African regulator during the first half of 2023 on the cessation of
the Johannesburg interbank average rate ('JIBAR'). Therefore, JIBAR
is also included in 'Others' during the current
period.
2 Gross carrying amount excluding allowances for
expected credit losses.
The amounts in the above table
relate to the group's main operating entities where we have
material exposures impacted by Ibor reform, including in the United
Kingdom, France and Germany. The amounts provide an indication of
the extent of the group's exposure to the Ibor benchmarks that are
due to be replaced. Amounts are in respect of financial instruments
that:
- contractually
reference an interest rate benchmark that is planned to transition
to an alternative benchmark;
- have a
contractual maturity date beyond the date by which the reference
interest rate benchmark is expected to cease; and
- are recognised
on the group's consolidated balance sheet.
-
30
|
Called up share capital and other
equity instruments
|
Issued and fully paid
HSBC Bank plc £1.00 ordinary
shares
|
|
|
2023
|
2022
|
|
|
Number
|
£m
|
Number
|
£m
|
At 1 Jan
|
|
796,969,112
|
797
|
796,969,111
|
797
|
At 31 Dec
|
|
796,969,113
|
797
|
796,969,112
|
797
|
HSBC Bank plc share
premium
|
|
|
20231
|
2022
|
|
|
£m
|
£m
|
At 31 Dec
|
|
1,004
|
420
|
1 Increase relates to share premium on issuance
of 1 ordinary Share (£1/ per Share) to HSBC Holdings plc
('HGHQ').
Total called up share capital and
share premium
|
|
|
2023
|
2022
|
|
|
£m
|
£m
|
At 31 Dec
|
|
1,801
|
1,217
|
HSBC Bank plc $0.01 non-cumulative
third dollar preference shares
|
|
2023
|
2022
|
|
Number
|
£000
|
Number
|
£000
|
At 1 Jan and 31 Dec
|
35,000,000
|
172
|
35,000,000
|
172
|
The bank has no obligation to
redeem the preference shares but may redeem them in part or in
whole at any time, subject to prior notification to the Prudential
Regulation Authority ('PRA'). Dividends on the preference shares in
issue are paid annually at the sole and absolute discretion of the
Board of Directors. The Board of Directors will not declare a
dividend on the preference shares in issue if (i) payment of the
dividend would cause a breach of the capital adequacy requirements
of the bank (or its subsidiary undertakings) under applicable laws
or regulations or (ii) the distributable profits of the bank are
insufficient to enable the payment in full or in part (as
applicable) of the dividends on the preference shares in issue. If
either the solo or consolidated Common Equity Tier 1 Capital Ratio
of the bank as of any date falls below 7.00% (a so-called 'right
conversion event'), the rights attaching to the preference shares
shall be altered irrevocably and permanently such that they have
the same rights attaching to them as ordinary shares. Holders of
the preference shares in issue will be able to attend any general
meetings of shareholders of the bank and to vote on any resolution
proposed to vary or abrogate any of the rights attaching to the
preference shares or any resolution proposed to reduce the paid up
capital of the preference shares. If the dividend payable on the
preference shares in issue has not been paid in full for the most
recent dividend period, if a rights conversion event has occurred
or if any resolution is proposed for the winding-up of the bank or
the sale of its entire business then, in such circumstances,
holders of preference shares will be entitled to vote on all
matters put to general meetings. In the case of unpaid dividends,
the holders of preference shares in issue will be entitled to
attend and vote at any general meetings until such time as
dividends on the preference shares for the most recent dividend
period have been paid in full, or a sum set aside for such payment
in full, in respect of one dividend period. All shares in issue are
fully paid.
Other equity
instruments
HSBC Bank plc additional tier 1
instruments
|
|
|
First
call date
|
2023
|
2022
|
|
|
£m
|
£m
|
€1,900m
|
5.950% Undated Subordinated Resettable Additional
Tier 1 instrument 20151
|
Dec 2020
|
1,388
|
1,388
|
€235m
|
5.650% Undated Subordinated Resettable Additional
Tier 1 instrument 20161
|
Jan 2022
|
197
|
197
|
€300m
|
3.813% Undated Subordinated Resettable Additional
Tier 1 instrument 20181
|
Mar 2023
|
263
|
263
|
£555m
|
5.063% Undated Subordinated Resettable
Additional Tier 1 instrument 20181
|
Mar 2023
|
555
|
555
|
£500m
|
4.750% Undated Subordinated Resettable
Additional Tier 1 instrument 2019
|
Nov 2024
|
500
|
500
|
€250m
|
3.500% Undated Subordinated Resettable Additional Tier 1 instrument
2019
|
Nov 2024
|
213
|
213
|
£431m
|
4.551% Undated Subordinated Resettable Additional Tier 1 instrument
2019
|
Dec 2024
|
431
|
431
|
€200m
|
5.039% Undated Subordinated Resettable Additional Tier 1 instrument
2019
|
Jan 2025
|
175
|
175
|
€250m
|
FRN Undated Subordinated
Resettable Additional Tier 1 instruments
20222
|
Mar 2027
|
208
|
208
|
At 31 Dec
|
|
|
3,930
|
3,930
|
1 Instruments are contractually callable on any
interest payment date after the first call date. Interest rates
reset every five years if not called.
2 Interest is floating, based on 3 month EURIBOR
+ 4.060%.
These instruments are held by HSBC
Holdings plc. The bank has issued capital instruments that are
included in the group's capital base as fully CRR II compliant
additional tier 1 capital.
Interest on these instruments will
be due and payable only at the sole discretion of the bank, and the
bank has sole and absolute discretion at all times and for any
reason to cancel (in whole or in part) any interest payment that
would otherwise be payable on any date. There are limitations on
the payment of principal, interest or other amounts if such
payments are prohibited under UK banking regulations, or other
requirements, if the bank has insufficient distributable items
reserves or if the bank fails to satisfy the solvency condition as
defined in the instruments terms.
The instruments are undated and
are repayable, at the option of the bank, in whole at the initial
call date, or on any Interest Payment Date after the initial call
date. In addition, the instruments are repayable at the option of
the bank in whole for certain regulatory or tax reasons. Any
repayments require the prior consent of the Prudential Regulation
Authority. These instruments rank pari passu with the bank's most senior
class or classes of issued preference shares and therefore ahead of
ordinary shares. These instruments will be written down in whole,
together with any accrued but unpaid interest if either the group's
solo or consolidated Common Equity Tier 1 Capital Ratio falls below
7.00%.
31
|
Contingent liabilities, contractual
commitments, guarantees and contingent assets
|
|
The
group
|
The
bank
|
|
2023
|
2022
|
2023
|
2022
|
|
£m
|
£m
|
£m
|
£m
|
Guarantees and other contingent
liabilities:
|
|
|
|
|
- financial
guarantees
|
2,401
|
5,327
|
1,106
|
1,363
|
- performance and other
guarantees
|
19,548
|
17,136
|
7,395
|
6,886
|
- other contingent
liabilities
|
268
|
353
|
267
|
342
|
At 31 Dec
|
22,217
|
22,816
|
8,768
|
8,591
|
Commitments:1
|
|
|
|
|
- documentary credits and
short-term trade-related transactions
|
1,919
|
2,317
|
908
|
820
|
- forward asset purchases
and forward deposits placed
|
38,704
|
33,684
|
4,539
|
3,317
|
- standby facilities, credit
lines and other commitments to lend
|
91,206
|
91,912
|
29,823
|
32,337
|
At 31 Dec
|
131,829
|
127,913
|
35,270
|
36,474
|
1 Includes £125,616m of commitments (2022:
£126,457m), to which the impairment requirements in IFRS 9 are
applied where the group has become party to an irrevocable
commitment.
The above table discloses the
nominal principal amounts, which represent the maximum amounts at
risk should the contracts be fully drawn upon and clients default.
As a significant portion of guarantees and commitments is expected
to expire without being drawn upon, the total of the nominal
principal amounts is not indicative of future liquidity
requirements.
UK branches of HSBC overseas
entities
In December 2017, HM Revenue &
Customs ('HMRC') challenged the VAT status of certain UK branches
of HSBC overseas entities. HMRC has also issued notices of
assessment covering the period from 1 October 2013 to 31 December
2017 totalling £262m, with interest to be determined. No provision
has been recognised in respect of these notices. In Q1 2019, HMRC
reaffirmed its assessment that the UK branches are ineligible to be
members of the UK VAT group and, consequently, HSBC paid HMRC the
sum of £262m and filed appeals. In February 2022, the Upper
Tribunal issued a judgement addressing several preliminary legal
issues, which was partially in favour of HMRC and partially in
favour of HSBC. The case has now returned to the First-tier Tax
tribunal for determination. Since January 2018, HSBC's returns have
been prepared on the basis that the UK branches are not in the UK
VAT group. In the event that HSBC's appeals are successful, HSBC
will seek a refund of this VAT, of which £198m is estimated to be
attributable to HSBC Bank plc.
Contingent liabilities arising
from legal proceedings, regulatory and other matters against group
companies are disclosed in Note 33.
Financial Services Compensation
Scheme
The FSCS provides compensation, up
to certain limits, to eligible customers of financial services
firms that are unable, or likely to be unable, to pay claims
against them. The FSCS may impose a further levy on the HSBC UK to
the extent the industry levies imposed to date are not sufficient
to cover the compensation due to customers in any future possible
collapse. The ultimate FSCS levy to the industry as a result of
collapse cannot be estimated reliably. It is dependent on various
uncertain factors including the potential recovery of assets by the
FSCS, changes in the level of protected products (including
deposits and investments) and the population of FSCS members at the
time.
Guarantees
|
The
group
|
The
bank
|
|
2023
|
2022
|
2023
|
2022
|
|
In favour of third
parties
|
By the group
in
favour of other HSBC Group
entities
|
In
favour of third parties
|
By the
group in
favour
of other HSBC Group entities
|
In favour of third
parties
|
By the bank in favour of
other HSBC Group entities
|
In
favour of third parties
|
By the
bank in favour of other HSBC Group entities
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Financial
guarantees1
|
1,981
|
420
|
4,158
|
1,169
|
919
|
187
|
1,105
|
258
|
Performance and other
guarantees
|
17,432
|
2,116
|
15,475
|
1,661
|
5,238
|
2,157
|
5,516
|
1,370
|
Total
|
19,413
|
2,536
|
19,633
|
2,830
|
6,157
|
2,344
|
6,621
|
1,628
|
1 Financial guarantees contracts are contracts
that require the issuer to make specified payments to reimburse the
holder for a loss incurred because a specified debtor fails to make
payment when due, in accordance with the original or modified terms
of a debt instrument. The amounts in the above table are nominal
principal amounts. 'Financial guarantees' to which the impairment
requirements in IFRS 9 are applied have been presented separately
from other guarantees to align with credit risk
disclosures.
The group provides guarantees and
similar undertakings on behalf of both third-party customers and
other entities within HSBC Group. These guarantees are generally
provided in the normal course of the group's banking businesses.
Guarantees with terms of more than one year are subject to the
group's annual credit review process.
32
|
Finance lease
receivables
|
The group leases a variety of
assets to third parties under finance leases, including transport
assets (such as aircraft), property and general plant and
machinery. At the end of lease terms, assets may be sold to third
parties or leased for further terms. Rentals are calculated to
recover the cost of assets less their residual value, and earn
finance income.
|
2023
|
2022
|
|
Total future minimum
payments
|
Unearned
finance
income
|
Present
value
|
Total
future minimum payments
|
Unearned
finance income
|
Present
Value
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Lease receivables:
|
|
|
|
|
|
|
No later than one year
|
238
|
(27)
|
211
|
211
|
(24)
|
187
|
One to two years
|
231
|
(24)
|
207
|
214
|
(26)
|
188
|
Two to three years
|
113
|
(15)
|
98
|
207
|
(21)
|
186
|
Three to four years
|
116
|
(13)
|
103
|
117
|
(16)
|
101
|
Four to five years
|
65
|
(12)
|
53
|
100
|
(13)
|
87
|
Later than one year and no later than
five years
|
525
|
(64)
|
461
|
638
|
(76)
|
562
|
Later than five years
|
311
|
(28)
|
283
|
457
|
(50)
|
407
|
At 31 Dec
|
1,074
|
(119)
|
955
|
1,306
|
(150)
|
1,156
|
|
|
|
|
|
|
|
33
|
Legal proceedings and regulatory
matters
|
The group is party to legal
proceedings and regulatory matters in a number of jurisdictions
arising out of its normal business operations. Apart from the
matters described below, the group considers that none of these
matters are material. The recognition of provisions is determined
in accordance with the accounting policies set out in Note 1. While
the outcomes of legal proceedings and regulatory matters are
inherently uncertain, management believes that, based on the
information available to it, appropriate provisions have been made
in respect of these matters as at 31 December 2023 (see Note 25:
'Provisions'). Where an individual provision is material, the fact
that a provision has been made is stated and quantified, except to
the extent that doing so would be seriously prejudicial. Any
provision recognised does not constitute an admission of wrongdoing
or legal liability. It is not practicable to provide an aggregate
estimate of potential liability for our legal proceedings and
regulatory matters as a class of contingent liabilities.
Bernard L. Madoff Investment
Securities LLC
Various non-US HSBC companies
provided custodial, administration and similar services to a number
of funds incorporated outside the US whose assets were invested
with Bernard L. Madoff Investment Securities LLC ('Madoff
Securities'). Based on information provided by Madoff Securities as
at 30 November 2008, the purported aggregate value of these funds
was $8.4bn, including fictitious profits reported by Madoff. Based
on information available to HSBC, the funds' actual transfers to
Madoff Securities minus their actual withdrawals from Madoff
Securities during the time HSBC serviced the funds are estimated to
have totalled approximately $4bn. Various HSBC companies have been
named as defendants in lawsuits arising out of Madoff Securities'
fraud.
US litigation: The Madoff
Securities Trustee has brought lawsuits against various HSBC
companies and others, seeking recovery of alleged transfers from
Madoff Securities to HSBC in the amount of $543m (plus interest),
and these lawsuits remain pending in the US Bankruptcy Court for
the Southern District of New York (the 'US Bankruptcy
Court').
Certain Fairfield entities
(together, 'Fairfield') (in liquidation) have brought a lawsuit in
the US against fund shareholders, including HSBC companies that
acted as nominees for clients, seeking restitution of redemption
payments in the amount of $382m (plus interest). Fairfield's claims
against most of the HSBC companies have been dismissed by the
US Bankruptcy Court and the US District Court for the Southern
District of New York, but remain pending on appeal before the US
Court of Appeals for the Second Circuit. Fairfield's claims against
HSBC Private Bank (Suisse) SA and HSBC Securities Services
Luxembourg ('HSSL') have not been dismissed and their appeals are
also pending before the US Court of Appeals for the Second Circuit.
Meanwhile, proceedings before the US Bankruptcy Court with respect
to the claims against HSBC Private Bank (Suisse) SA and HSSL are
ongoing.
UK litigation: The Madoff
Securities Trustee has filed a claim against various HSBC companies
in the High Court of England and Wales, seeking recovery of
transfers from Madoff Securities to HSBC. The claim has not yet
been served and the amount claimed has not been
specified.
Cayman Islands litigation: In
February 2013, Primeo Fund ('Primeo') (in liquidation) brought an
action against HSSL and Bank of Bermuda (Cayman) Limited (now known
as HSBC Cayman Limited), alleging breach of contract and breach of
fiduciary duty and claiming damages. Following dismissal of
Primeo's action by the Grand Court and Court of Appeal of the
Cayman Islands, in 2019, Primeo appealed to the Judicial Committee
of the Privy Council. In November 2023, the Privy Council issued a
judgment upholding the dismissal of Primeo's claims. This matter is
now closed.
Luxembourg litigation: In
2009, Herald Fund SPC ('Herald') (in liquidation) brought an action
against HSSL before the Luxembourg District Court, seeking
restitution of cash and securities in the amount of $2.5bn (plus
interest), or damages in the amount of $2bn (plus interest). In
2018, HSBC Bank plc was added to the claim and Herald increased the
amount of the alleged damages claim to $5.6bn (plus interest). The
Luxembourg District Court has dismissed Herald's securities
restitution claim, but reserved Herald's cash restitution and
damages claims. Herald has appealed this dismissal to the
Luxembourg Court of Appeal, where the matter is pending.
Beginning in 2009, various HSBC
companies have been named as defendants in a number of actions
brought by Alpha Prime Fund Limited ('Alpha Prime') in the
Luxembourg District Court seeking damages for alleged breach of
contract and negligence in the amount of $1.16bn (plus interest).
These matters are currently pending before the Luxembourg District
Court.
Beginning in 2014, HSSL and the
Luxembourg branch of HSBC Bank plc have been named as defendants in
a number of actions brought by Senator Fund SPC ('Senator') before
the Luxembourg District Court seeking restitution of securities in
the amount of $625m (plus interest), or damages in the amount of
$188m (plus interest). These matters are currently pending before
the Luxembourg District Court.
Based on the facts currently
known, it is not practicable at this time for HSBC Bank plc to
predict the resolution of the pending matters, including the timing
or any possible impact on HSBC Bank plc, which could be
significant.
US Anti-Terrorism Act
litigation
Since November 2014, a number of
lawsuits have been filed in federal courts in the US against
various HSBC companies and others on behalf of plaintiffs who are,
or are related to, alleged victims of terrorist attacks in the
Middle East. In each case, it is alleged that the defendants aided
and abetted the unlawful conduct of various sanctioned parties in
violation of the US Anti-Terrorism Act, or provided banking
services to customers alleged to have connections to terrorism
financing. Seven actions, which seek damages for unspecified
amounts, remain pending and HSBC Bank plc's motions to dismiss have
been granted in three of these cases. These dismissals are subject
to appeals and/or the plaintiffs re-pleading their claims. The four
other actions are at an early stage.
Based on the facts currently
known, it is not practicable at this time for HSBC Bank plc to
predict the resolution of these matters, including the timing or
any possible impact on HSBC Bank plc, which could be
significant.
Interbank offered rates
investigation and litigation
Euro interest rate derivatives: In December 2016, the European Commission ('EC') issued a
decision finding that HSBC, among other banks, engaged in
anti-competitive practices in connection with the pricing of euro
interest rate derivatives, and the EC imposed a fine on HSBC based
on a one-month infringement in 2007. The fine was annulled in 2019
and a lower fine was imposed in 2021. In January 2023, the European
Court of Justice dismissed an appeal by HSBC and upheld the EC's
findings on HSBC's liability. A separate appeal by HSBC concerning
the amount of the fine remains pending before the General Court of
the European Union.
US dollar Libor: Beginning in
2011, HSBC and other panel banks have been named as defendants in a
number of individual and putative class action lawsuits filed in
federal and state courts in the US with respect to the setting of
US dollar Libor. The complaints assert claims under various US
federal and state laws, including antitrust and racketeering laws
and the Commodity Exchange Act ('US CEA'). HSBC has concluded class
settlements with five groups of plaintiffs, and several class
action lawsuits brought by other groups of plaintiffs have been
voluntarily dismissed. A number of individual US dollar
Libor-related actions seeking damages for unspecified amounts
remain pending.
Based on the facts currently
known, it is not practicable at this time for HSBC Bank plc to
predict the resolution of the pending matters, including the timing
or any possible impact on HSBC Bank plc, which could be
significant.
Foreign exchange-related
investigations and litigation
Since 2017, HSBC Bank plc, among
other financial institutions, has been defending a complaint filed
by the Competition Commission of South Africa before the South
African Competition Tribunal for alleged anti-competitive behaviour
in the South African foreign exchange market. In January 2024, the
South African Competition Appeal Court denied HSBC Bank plc's
application to dismiss the complaint.
In January 2023, HSBC Bank plc and
HSBC Holdings plc reached a settlement-in-principle with plaintiffs
in Israel to resolve a class action filed in the local courts
alleging foreign exchange-related misconduct. The settlement
remains subject to court approval. Lawsuits alleging foreign
exchange-related misconduct remain pending against HSBC Bank plc
and other banks in courts in Brazil.
In February 2024, HSBC Bank plc
and HSBC Holdings plc were joined to an existing claim brought in
the UK Competition Appeals Tribunal against various other banks
alleging historical anti-competitive behaviour in the foreign
exchange market and seeking damages for unspecified amounts. This
matter is at an early stage. It is possible that additional civil
actions will be initiated against HSBC Bank plc in relation to its
historical foreign exchange activities.
There are many factors that may
affect the range of outcomes, and the resulting financial impact,
of the pending matters, which could be significant.
Precious metals fix-related
litigation
US
litigation: HSBC and other members
of The London Silver Market Fixing Limited are defending a class
action pending in the US District Court for the Southern District
of New York alleging that, from January 2007 to December 2013, the
defendants conspired to manipulate the price of silver and silver
derivatives for their collective benefit in violation of US
antitrust laws, the US CEA and New York state law. In May 2023,
this action, which seeks damages for unspecified amounts, was
dismissed but remains pending on appeal.
HSBC and other members of The
London Platinum and Palladium Fixing Company Limited are defending
a class action pending in the US District Court for the Southern
District of New York alleging that, from January 2008 to November
2014, the defendants conspired to manipulate the price of platinum
group metals and related financial products for their collective
benefit in violation of US antitrust laws and the US CEA. In
February 2023, the court reversed an earlier dismissal of the
plaintiffs' third amended complaint and this action , which seeks
damages for unspecified amounts, is proceeding.
Canada litigation: HSBC and
other financial institutions are defending putative class actions
filed in the Ontario and Quebec Superior Courts of Justice alleging
that the defendants conspired to manipulate the price of silver,
gold and related derivatives in violation of the Canadian
Competition Act and common law. These actions each seek CA$1bn in
damages plus CA$250m in punitive damages. Two of the actions are
proceeding and the others have been stayed.
Based on the facts currently known,
it is not practicable at this time for HSBC Bank plc to predict the
resolution of these matters, including the timing or any possible
impact on HSBC Bank plc, which could be significant.
Tax-related
investigations
Various tax administration,
regulatory and law enforcement authorities around the world are
conducting investigations in connection with allegations of tax
evasion or tax fraud, money laundering and unlawful cross-border
banking solicitation. HSBC continues to cooperate with these
investigations.
In March 2023, the French National
Financial Prosecutor announced an investigation into a number of
banks, including HSBC Continental Europe and the Paris branch of
HSBC Bank plc, in connection with alleged tax fraud related to the
dividend withholding tax treatment of certain trading activities.
HSBC Bank plc and HSBC Germany also continue to cooperate with
investigations by the German public prosecutor into numerous
financial institutions and their employees, in connection with the
dividend withholding tax treatment of certain trading
activities.
Based on the facts currently known,
it is not practicable at this time for HSBC Bank plc to predict the
resolution of these matters, including the timing or any possible
impact on HSBC Bank plc, which could be significant.
Gilts trading investigation and
litigation
Since 2018, the UK Competition and
Markets Authority ('CMA') has been investigating HSBC and four
other banks for suspected anti-competitive conduct in relation to
the historical trading of gilts and related derivatives. In May
2023, the CMA announced its case against HSBC Bank plc and HSBC
Holdings plc; both HSBC companies are contesting the CMA's
allegations.
In June 2023, HSBC Bank plc, among
other banks, was named as a defendant in a putative class action
filed in the US District Court for the Southern District of New
York by plaintiffs alleging anti-competitive conduct in the gilts
market and seeking damages for unspecified amounts. In September
2023, the defendants filed a motion to dismiss which remains
pending. It is possible that additional civil actions will be
initiated against HSBC Bank plc in relation to its historical gilts
trading activities.
Based on the facts currently known,
it is not practicable at this time for HSBC Bank plc to predict the
resolution of these matters, including the timing or any possible
impact on HSBC Bank plc, which could be significant.
UK depositor protection
arrangements investigation
In January 2022, the UK Prudential
Regulation Authority ('PRA') commenced an investigation into HSBC
Bank plc's and HSBC UK Bank plc's compliance with depositor
protection arrangements under the Financial Services Compensation
Scheme in the UK. In January 2024, the PRA concluded its
investigation and imposed a £57m fine on HSBC Bank plc and HSBC UK
Bank plc, which has been paid, and this matter is now
closed.
UK collections and recoveries
investigation
Since 2019, the FCA has been
investigating HSBC Bank plc's, HSBC UK Bank plc's and Marks and
Spencer Financial Services plc's compliance with regulatory
standards relating to collections and recoveries operations in the
UK between 2017 and 2018. HSBC continues to cooperate with this
investigation.
There are many factors that may
affect the range of outcomes, and the resulting financial impact,
of this matter, which could be significant.
Stanford litigation
Since 2009, HSBC Bank plc has been
named as a defendant in numerous claims filed in courts in the UK
and the US arising from the collapse of Stanford International Bank
Ltd, for which it was a correspondent bank from 2003 to 2009. In
February 2023, HSBC Bank plc reached settlements with the
plaintiffs to resolve these claims. The US settlement is subject to
court approval and the UK settlement has concluded.
Other regulatory investigations,
reviews and litigation
HSBC Bank plc and/or certain of its
affiliates are also subject to a number of other enquiries and
examinations, requests for information, investigations and reviews
by various regulators and competition and law enforcement
authorities, as well as legal proceedings including litigation,
arbitration and other contentious proceedings, in connection with
various matters arising out of their ordinary course businesses and
operations.
At the present time, HSBC Bank plc
does not expect the ultimate resolution of any of these matters to
be material to its financial position; however, given the
uncertainties involved in legal proceedings and regulatory matters,
there can be no assurance regarding the eventual outcome of a
particular matter or matters.
34
|
Related party
transactions
|
The immediate and ultimate parent
company of the group is HSBC Holdings plc, which is incorporated in
England and Wales.
Copies of the group financial
statements may be obtained from the below address.
IAS 24 'Related party disclosures'
defines related parties as including the parent, fellow
subsidiaries, associates, joint ventures, post-employment benefit
plans for HSBC employees, Key Management Personnel ('KMP') of the
group and its ultimate parent company, close family members of the
KMP and entities which are controlled, jointly controlled or
significantly influenced by the KMP or their close family
members.
Particulars of transactions
between the group and the related parties are tabulated below. The
disclosure of the year-end balance and the highest amounts
outstanding during the year are considered to be the most
meaningful information to represent the amount of the transactions
and outstanding balances during the year.
Key Management
Personnel
The KMP of the bank are defined as
those persons having authority and responsibility for planning,
directing and controlling the activities of the bank. They include
the Directors and certain senior executives of the bank, directors
and certain members of the Group Executive Committee of HSBC
Holdings plc, to the extent they have a role in directing the
affairs of the bank.
The emoluments of those KMP who
are not Directors or senior executives of the bank are paid by
other Group companies who make no recharge to the bank.
Accordingly, no emoluments in respect of these KMP are included in
the following disclosure.
The tables below represent the
compensation for KMP (directors and certain senior executives) of
the bank in exchange for services rendered to the bank for the
period they served during the year.
Compensation of Key Management
Personnel
|
|
2023
|
2022
|
2021
|
|
£000
|
£000
|
£000
|
Short-term employee
benefits1,2
|
13,003
|
13,487
|
13,678
|
Post-employment
benefits
|
29
|
69
|
46
|
Other long-term employee
benefits
|
1,081
|
1,152
|
1,378
|
Share-based payments
|
4,699
|
4,234
|
4,331
|
Year ended 31 Dec
|
18,812
|
18,942
|
19,433
|
1 Includes fees paid to non-executive
Directors.
2 2023 includes payment of £30,000 (2022:
£600,000) relating to compensation for loss of
employment.
Advances and credits, guarantees
and deposit balances during the year with Key Management
Personnel
|
|
2023
|
2022
|
|
Balance at
31
Dec
|
Highest amounts
outstanding
during
year2
|
Balance
at
31 Dec
|
Highest
amounts outstanding
during year
|
|
£m
|
£m
|
£m
|
£m
|
Key Management Personnel1
|
|
|
|
|
Advances and credits
|
-
|
-
|
-
|
-
|
Deposits
|
27
|
83
|
21
|
32
|
1 Includes close family members and entities
which are controlled or jointly controlled by KMP of the bank or
their close family members.
2 Exchange rate applied for non-GBP amounts is
the average for the year.
The above transactions were made
in the ordinary course of business and on substantially the same
terms, including interest rates and security, as for comparable
transactions with persons of a similar standing or, where
applicable, with other employees. The transactions did not involve
more than the normal risk of repayment or present other
unfavourable features.
In addition to the requirements of
IAS 24, particulars of advances (loans and quasi-loans), credits
and guarantees entered into by the group with Directors of HSBC
Bank plc are required to be disclosed pursuant to section 413 of
the Companies Act 2006. Under the Companies Act, there is no
requirement to disclose transactions with other KMP. During the
course of 2023, there were no advances, credits and guarantees
entered into by the group with Directors of HSBC Bank
plc.
Other related parties
Transactions and balances during the year with KMP of the
bank's ultimate parent company
During the course of 2023, there
were no transactions and balances between KMP of the bank's
ultimate parent company, who were not considered KMP of the bank,
in respect of advances and credits, guarantees and
deposits.
Transactions and balances during the year with associates and
joint ventures
During the course of 2023, there
were no transactions and balances with associates and joint
ventures, in respect of loans, deposits, guarantees and
commitments.
The group's transactions and
balances during the year with HSBC Holdings plc and subsidiaries of
HSBC Holdings plc
|
|
2023
|
2022
|
|
Due
to/from
HSBC Holdings
plc
|
Due to/from subsidiaries of
HSBC Holdings plc
|
Due
to/from
HSBC Holdings plc
|
Due
to/from
subsidiaries of HSBC
Holdings plc
|
|
Highest
balance
during the
year
|
Balance at 31
Dec
|
Highest
balance
during the
year
|
Balance at 31
Dec
|
Highest
balance
during the year
|
Balance
at 31 Dec
|
Highest
balance
during the year
|
Balance
at 31 Dec
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Assets
|
|
|
|
|
|
|
|
|
Trading assets
|
75
|
10
|
2,883
|
78
|
62
|
17
|
7,074
|
848
|
Derivatives
|
7,495
|
4,767
|
27,928
|
23,035
|
7,196
|
5,714
|
39,341
|
27,473
|
Financial assets designated and
otherwise mandatorily measured at fair value through profit or
loss
|
5
|
5
|
26
|
26
|
6
|
5
|
28
|
25
|
Loans and advances to
banks
|
-
|
-
|
5,633
|
4,434
|
-
|
-
|
6,237
|
5,585
|
Loans and advances to
customers
|
211
|
-
|
571
|
408
|
183
|
-
|
496
|
424
|
Financial investments
|
194
|
194
|
-
|
-
|
154
|
136
|
-
|
-
|
Reverse repurchase agreements -
non-trading
|
-
|
-
|
14,561
|
13,538
|
-
|
-
|
6,150
|
4,341
|
Prepayments, accrued income and
other assets
|
62
|
4
|
12,146
|
6,961
|
1,263
|
21
|
11,591
|
8,389
|
Total related party assets at 31 Dec
|
8,042
|
4,980
|
63,748
|
48,480
|
8,864
|
5,893
|
70,917
|
47,085
|
Liabilities
|
|
|
|
|
|
|
|
|
Trading liabilities
|
83
|
79
|
1,239
|
1,196
|
45
|
21
|
522
|
91
|
Financial liabilities designated
at fair value
|
594
|
571
|
242
|
8
|
1,162
|
593
|
-
|
-
|
Deposits by banks
|
-
|
-
|
6,230
|
2,073
|
-
|
-
|
6,034
|
3,310
|
Customer accounts
|
6,601
|
5,508
|
1,999
|
1,999
|
6,202
|
4,315
|
3,149
|
1,551
|
Derivatives
|
2,824
|
2,062
|
32,126
|
23,373
|
4,345
|
2,680
|
43,384
|
30,997
|
Subordinated
liabilities
|
14,444
|
13,902
|
-
|
-
|
12,115
|
12,115
|
-
|
-
|
Repurchase agreements -
non-trading
|
-
|
-
|
9,983
|
8,187
|
-
|
-
|
5,811
|
5,738
|
Provisions, accruals, deferred
income and other liabilities
|
4,966
|
3,090
|
8,915
|
8,913
|
3,357
|
3,161
|
10,816
|
4,864
|
Total related party liabilities at 31 Dec
|
29,512
|
25,212
|
60,734
|
45,749
|
27,226
|
22,885
|
69,716
|
46,551
|
Guarantees and
commitments
|
-
|
-
|
6,218
|
4,335
|
-
|
-
|
4,762
|
3,383
|
HSBC Bank plc routinely enters
into related party transactions with other entities in the HSBC
Group. These include transactions to facilitate third-party
transactions with customers, transactions for internal risk
management, and other transactions relevant to HSBC Group
processes. These transactions and the above outstanding
balances arose in the ordinary course of business and on
substantially the same terms, including interest rates and
security, as for comparable transactions with third-party
counterparties.
The bank's transactions and
balances during the year with HSBC Bank plc subsidiaries, HSBC
Holdings plc and subsidiaries of
HSBC Holdings plc
|
|
2023
|
2022
|
|
Due to/from subsidiaries of
HSBC Bank plc subsidiaries
|
Due to/from HSBC Holdings
plc
|
Due to/from subsidiaries of
HSBC Holdings plc
|
Due
to/from subsidiaries of HSBC Bank plc subsidiaries
|
Due
to/from HSBC Holdings plc
|
Due
to/from subsidiaries of HSBC Holdings plc
|
|
Highest balance during the
year
|
Balance at 31
Dec
|
Highest balance during the
year
|
Balance at 31
Dec
|
Highest balance during the
year
|
Balance at 31
Dec
|
Highest
balance during the year
|
Balance
at 31 Dec
|
Highest
balance during the year
|
Balance
at 31 Dec
|
Highest
balance during the year
|
Balance
at 31 Dec
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading assets
|
174
|
83
|
73
|
9
|
2,882
|
65
|
264
|
172
|
62
|
17
|
7,074
|
845
|
Derivatives
|
11,332
|
9,135
|
7,495
|
4,767
|
26,740
|
21,668
|
17,187
|
11,332
|
7,196
|
5,714
|
37,475
|
26,170
|
Loans and advances to
banks
|
3,246
|
2,572
|
-
|
-
|
3,892
|
2,628
|
3,484
|
2,940
|
-
|
-
|
5,197
|
3,892
|
Loans and advances to
customers
|
4,594
|
4,111
|
211
|
-
|
387
|
155
|
4,517
|
4,515
|
183
|
-
|
285
|
247
|
Financial investments
|
5,776
|
5,728
|
-
|
-
|
-
|
-
|
4,521
|
4,183
|
-
|
-
|
-
|
-
|
Reverse repurchase agreements -
non-trading
|
4,102
|
4,102
|
-
|
-
|
14,314
|
12,768
|
4,683
|
2,332
|
-
|
-
|
5,920
|
3,947
|
Prepayments, accrued income and
other assets
|
7,134
|
2,297
|
62
|
4
|
10,548
|
6,219
|
4,868
|
2,905
|
1,262
|
21
|
10,096
|
6,818
|
Investments in subsidiary
undertakings
|
11,627
|
11,627
|
-
|
-
|
-
|
-
|
10,646
|
10,646
|
-
|
-
|
-
|
-
|
Total related party assets at 31 Dec
|
47,985
|
39,655
|
7,841
|
4,780
|
58,763
|
43,503
|
50,170
|
39,025
|
8,703
|
5,752
|
66,047
|
41,919
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading liabilities
|
80
|
79
|
83
|
78
|
1,239
|
1,196
|
113
|
32
|
44
|
21
|
508
|
91
|
Financial liabilities designated
at fair value
|
-
|
-
|
594
|
571
|
242
|
8
|
-
|
-
|
1,162
|
593
|
-
|
-
|
Deposits by banks
|
1,978
|
984
|
-
|
-
|
4,242
|
1,403
|
3,385
|
960
|
-
|
-
|
3,601
|
1,979
|
Customer accounts
|
583
|
405
|
6,601
|
5,508
|
1,877
|
1,877
|
1,095
|
514
|
6,202
|
4,315
|
3,048
|
1,426
|
Derivatives
|
13,361
|
10,388
|
2,824
|
2,062
|
29,977
|
21,869
|
13,479
|
13,361
|
4,345
|
2,680
|
40,460
|
29,001
|
Subordinated
liabilities
|
700
|
700
|
14,217
|
13,676
|
-
|
-
|
700
|
700
|
11,884
|
11,884
|
-
|
-
|
Repurchase agreements -
non-trading
|
2,362
|
1,135
|
-
|
-
|
9,983
|
8,142
|
1,279
|
429
|
-
|
-
|
5,328
|
5,030
|
Provisions, accruals, deferred
income and other liabilities
|
7,397
|
1,250
|
4,951
|
3,087
|
8,202
|
8,186
|
7,596
|
1,015
|
3,349
|
3,167
|
9,511
|
4,437
|
Total related party liabilities at 31 Dec
|
26,461
|
14,941
|
29,270
|
24,982
|
55,762
|
42,681
|
27,647
|
17,011
|
26,986
|
22,660
|
62,456
|
41,964
|
Guarantees and
commitments
|
5,315
|
3,321
|
-
|
-
|
4,406
|
2,964
|
4,469
|
2,655
|
-
|
-
|
2,690
|
1,380
|
The above outstanding balances
arose in the ordinary course of business and on substantially the
same terms, including interest rates and security, as for
comparable transactions with third-party counterparties.
Post-employment benefit
plans
The HSBC Bank (UK) Pension Scheme
(the 'Scheme') entered into swap transactions with the bank to
manage the inflation and interest rate sensitivity of the
liabilities. At 31 December 2023, the gross notional value of the
swaps was £5,574m (2022: £5,449m), the swaps had a positive fair
value of £429m to the bank (2022: positive fair value of £424m) and
the bank had delivered collateral of £439m (2022: £425m) to the
Scheme in respect of these swaps. All swaps were executed at
prevailing market rates and within standard market bid/offer
spreads.
35
|
Assets held for sale and
liabilities of disposal groups held for sale
|
Held for sale at 31
December
|
|
2023
|
2022
|
|
£m
|
£m
|
Held for sale at 31 Dec
|
|
|
Disposal groups
|
21,792
|
23,179
|
Unallocated impairment
losses1
|
(1,548)
|
(1,978)
|
Non-current assets held for
sale
|
124
|
13
|
Assets held for sale
|
20,368
|
21,214
|
Liabilities of disposal groups held for
sale
|
20,684
|
24,711
|
1 This represents impairment losses in excess of
the carrying amount on the non-current assets, excluded from the
measurement scope of IFRS 5.
Disposal groups
Sale of our retail banking operations in
France
On 1 January 2024, HSBC
Continental Europe completed the sale of its retail banking
operations in France to CCF, a subsidiary of Promontoria MMB SAS
('My Money Group'). The sale also included HSBC Continental
Europe's 100% ownership interest in HSBC SFH (France) and its 3%
ownership interest in Crédit Logement.
In the first quarter of 2023, the
sale had become less certain, as a result of which we recognised a
£1.7bn partial reversal of the impairment loss recognised in 2022,
when the disposal group was classified as held for sale. In the
fourth quarter of 2023, following the receipt of regulatory
approvals and the satisfaction of other relevant conditions, we
reclassified the disposal group as held for sale, and it was
subsequently remeasured at the lower of the carrying amount and
fair value less costs to sell. This resulted in the reinstatement
of a €1.8bn (£1.5bn) pre-tax impairment loss reflecting the final
terms of the sale, giving rise to a net reversal of impairment
recognised in other operating income in the year of
£0.2bn.
Upon completion and in accordance
with the terms of the sale, HSBC Continental Europe received a
€0.1bn (£0.1bn) profit participation interest in the ultimate
holding company of My Money Group. The associated impacts on
initial recognition of this stake at fair value were recognised as
part of the pre-tax loss on disposal. In addition, we recognised
the reversal of a €0.4bn (£0.4bn) deferred tax liability, which had
arisen as a consequence of the temporary difference in tax and
accounting treatment in respect of the provision for loss on
disposal, which was deductible in the French tax return in
2021.
In accordance with the terms of
the sale, HSBC Continental Europe retained a portfolio of €7.1bn
(£6.2bn) consisting of home and certain other loans, in respect of
which it may consider on-sale opportunities at a suitable time, and
the CCF brand, which it licensed to the buyer under a long-term
licence agreement. Additionally, HSBC Continental Europe's
subsidiaries, HSBC Assurances Vie (France) and HSBC Global Asset
Management (France), have entered into distribution agreements with
the buyer. Ongoing costs associated with the retention of the home
and certain other loans, net of income on distribution agreements
and the brand licence, are estimated to have an after-tax loss
impact of €0.1bn (£0.1bn) in 2024 based on expected funding
rates.
Planned sale of our business in Russia
On 30 June 2022, following a
strategic review of our business in Russia, HSBC Europe BV (a
wholly-owned subsidiary of HSBC Bank plc) entered into an agreement
for the sale of its wholly-owned subsidiary HSBC Bank (RR) (Limited
Liability Company). In 2022, a £0.2bn impairment loss on the
planned sale was recognised, upon classification as held for sale
in accordance with IFRS 5. As at 31 December 2023, following US
sanctions designation of the buyer, the outcome of the planned sale
became less certain. This resulted in the reversal of £0.2bn of the
previously recognised loss, as the business was no longer
classified as held for sale. However, owing to restrictions
impacting the recoverability of assets in Russia, we recognised
charges of £0.2bn in other operating income. Completion of the
planned sale remains subject to regulatory approval. On completion,
accumulated foreign currency translation reserves will be recycled
to the income statement.
At 31 December 2023, the major
classes of assets and associated liabilities of disposal groups
held for sale, excluding allocated impairment losses, were as
follows:
|
France retail banking
operations
|
Other1
|
Total
|
|
£m
|
£m
|
£m
|
Assets of disposal groups held for
sale
|
|
|
|
Cash and balances at central banks
2
|
177
|
-
|
177
|
Financial assets designated and
otherwise mandatorily measured at fair value through profit and
loss
|
38
|
-
|
38
|
Loans and advances to banks
2
|
8,103
|
-
|
8,103
|
Loans and advances to
customers
|
13,255
|
90
|
13,345
|
Reverse repurchase
agreements
|
-
|
-
|
-
|
Financial investments
3
|
25
|
-
|
25
|
Prepayments, accrued income and
other assets
|
103
|
1
|
104
|
Total Assets at 31 Dec 2023
|
21,701
|
91
|
21,792
|
|
|
|
|
Liabilities of disposal groups
held for sale
|
|
|
|
Customer accounts
|
17,492
|
95
|
17,587
|
Financial liabilities designated
at fair value
|
1,858
|
-
|
1,858
|
Debt securities in
issue
|
1,080
|
-
|
1,080
|
Liabilities under insurance
contracts
|
-
|
-
|
-
|
Accruals, deferred income and
other liabilities
|
159
|
-
|
159
|
Total Liabilities at 31 Dec 2023
|
20,589
|
95
|
20,684
|
Expected date of
completion
|
1 January
2024
|
Second Half
of
2024
|
|
Operating segment
|
WPB
|
CMB, GBM
|
|
1 Includes planned transfer of hedge fund
administration services.
2 Under the financial terms of the sale of our
retail banking operations in France, HSBC Continental Europe will
transfer the business with a net asset value of €1.7bn (£1.4bn) for
a consideration of €1. Any required increase to the net asset value
of the business to achieve this will be satisfied by the inclusion
of additional cash. Based upon the net liabilities of the disposal
group at 31 December 2023, HSBC would be expected to include a cash
contribution of £8.6bn, of which £8.3bn was reclassified as held
for sale at 31 December 2023 ('Loans and advances to banks',
£8.1bn, 'Cash and balances at central bank',
£0.2bn).
3 Includes financial investments measured at fair
value through other comprehensive income of £21.7m and debt
instruments measured at amortised cost of £3.8m.
|
France
retail banking operations
|
Branch
operations in Greece
|
Business
in Russia
|
Total
|
|
£m
|
£m
|
£m
|
£m
|
Assets of disposal groups held for
sale
|
|
|
|
|
Cash and balances at central
banks
|
60
|
1,502
|
-
|
1,562
|
Financial assets designated and
otherwise mandatorily measured at fair value through profit and
loss
|
39
|
-
|
-
|
39
|
Loans and advances to
banks
|
-
|
25
|
102
|
127
|
Loans and advances to
customers
|
20,776
|
291
|
-
|
21,067
|
Reverse repurchase
agreements
|
-
|
-
|
208
|
208
|
Financial investments
|
-
|
66
|
22
|
88
|
Prepayments, accrued income and
other assets
|
63
|
4
|
21
|
88
|
Total Assets at 31 Dec
2022
|
20,938
|
1,888
|
353
|
23,179
|
|
|
|
|
|
Liabilities of disposal groups
held for sale
|
|
|
|
|
Customer accounts
|
18,551
|
1,900
|
27
|
20,478
|
Financial liabilities designated
at fair value
|
2,925
|
-
|
-
|
2,925
|
Debt securities in
issue
|
1,100
|
-
|
-
|
1,100
|
Accruals, deferred income and
other liabilities
|
138
|
52
|
18
|
208
|
Total Liabilities at 31 Dec
2022
|
22,714
|
1,952
|
45
|
24,711
|
Operating segment
|
WPB
|
All
global businesses
|
CMB,
GBM
|
|
Business disposals
Our branch operations in Greece
On 24 May 2022, HSBC Continental
Europe signed a sale and purchase agreement for the sale of its
branch operations in Greece to Pancreta Bank SA. In the second
quarter of 2022, we recognised a loss of £0.1bn, upon
reclassification as held for sale in accordance with IFRS 5. At
completion on 28 July 2023, the disposal group included £0.2bn of
loans and advances to customers and £0.8bn of customer
accounts.
36
|
Effects of adoption of IFRS
17
|
On 1 January 2023 the group adopted
IFRS 17 'Insurance Contracts' and as required by the standard
applied the requirements retrospectively with comparatives restated
from the transition date, 1 January 2022. The tables below provide
the transition restatement impact on the group's consolidated
balance sheet as at 1 January 2022, as well as the group
consolidated income statement and the group consolidated statement
of comprehensive income for the year ended 31 December
2022.
Further information about the
effect of adoption of IFRS 17 is provided in Note 1: 'Basis of
preparation of material accounting policies' on page
118.
IFRS 17 transition impact on the
consolidated balance sheet at 1 January 2022
|
|
Under
IFRS 4
|
Removal of PVIF and
IFRS 4 balances
|
Recognition of IFRS
17
fulfilment cash
flows
|
Recognition of IFRS
17
contractual service
margin
|
Tax effect
|
Under
IFRS 17
|
Total
movements
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Assets
|
|
|
|
|
|
|
|
Financial assets designated and
otherwise mandatorily measured at fair value through profit or
loss
|
18,649
|
-
|
-
|
-
|
-
|
18,649
|
-
|
Loans and advances to
banks
|
10,784
|
-
|
-
|
-
|
-
|
10,784
|
-
|
Loans and advances to
customers
|
91,177
|
-
|
-
|
-
|
-
|
91,177
|
-
|
Financial investments
|
41,300
|
-
|
-
|
-
|
-
|
41,300
|
-
|
Goodwill and intangible
assets
|
894
|
(811)
|
-
|
-
|
-
|
83
|
(811)
|
Deferred tax assets
|
599
|
-
|
-
|
-
|
199
|
798
|
199
|
All other assets
|
433,208
|
(114)
|
142
|
-
|
-
|
433,236
|
28
|
Total assets
|
596,611
|
(925)
|
142
|
-
|
199
|
596,027
|
(584)
|
Liabilities and equity
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Insurance contract
liabilities
|
22,264
|
(22,264)
|
21,311
|
890
|
-
|
22,201
|
(63)
|
Deferred tax
liabilities
|
15
|
-
|
-
|
-
|
(10)
|
5
|
(10)
|
All other liabilities
|
550,617
|
4
|
68
|
(13)
|
-
|
550,676
|
59
|
Total liabilities
|
572,896
|
(22,260)
|
21,379
|
877
|
(10)
|
572,882
|
(14)
|
Total shareholders' equity
|
23,584
|
21,335
|
(21,237)
|
(877)
|
209
|
23,014
|
(570)
|
Non-controlling
interests
|
131
|
-
|
-
|
-
|
-
|
131
|
-
|
Total equity
|
23,715
|
21,335
|
(21,237)
|
(877)
|
209
|
23,145
|
(570)
|
Total liabilities and equity
|
596,611
|
(925)
|
142
|
-
|
199
|
596,027
|
(584)
|
Transition drivers
Removal of PVIF and IFRS 4 balances
The PVIF intangible asset of £811m
previously reported under IFRS 4 within 'Goodwill and intangible
assets' arose from the upfront recognition of future profits
associated with in-force insurance contracts. PVIF is no longer
reported following the transition to IFRS 17, as future profits are
deferred within the CSM. Other IFRS 4 insurance contract assets
(shown above within 'All other assets') and insurance contract
liabilities are removed on transition, to be replaced with IFRS 17
balances.
Recognition of the IFRS 17 fulfilment cash
flows
The measurement of the insurance
contracts liabilities under IFRS 17 is based on groups of insurance
contracts and includes a liability for fulfilling the insurance
contract, such as premiums, expenses, insurance benefits and claims
including policyholder returns and the cost of guarantees. These
are recorded within the fulfilment cash flow component of the
insurance contract liability, together with the risk adjustment for
non-financial risk.
Recognition of the IFRS 17 contractual service
margin
The CSM is a component of the
insurance contract liability and represents the future unearned
profit associated with insurance contracts that will be released to
the profit and loss over the expected coverage period.
Tax effect
The removal of deferred tax
liabilities primarily results from the removal of the associated
PVIF intangible, and new deferred tax assets are reported, where
appropriate, on temporary differences between the new IFRS 17
accounting balances and their associated tax bases.
IFRS 17 transition impact on the
reported consolidated income statement for the year ended 31
December 2022
|
|
Under
IFRS 4
|
Removal of PVIF and
IFRS 4 balances
|
Insurance finance
income/expense
|
Contractual service
margin
|
Onerous
contracts
|
Experience variance and
other
|
Attributable
expenses
|
Tax effect
|
Under
IFRS 17
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Net interest income
|
1,904
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1,904
|
Net fee income
|
1,261
|
-
|
-
|
-
|
-
|
-
|
34
|
-
|
1,295
|
Net income from financial
instruments held for trading or managed on a fair value
basis
|
2,875
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
2,875
|
Net expense from assets and
liabilities of insurance businesses, including related derivatives,
measured at fair value through profit or loss
|
(1,370)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,370)
|
Losses recognised on assets held
for sale
|
(1,947)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,947)
|
Net insurance premium
income
|
1,787
|
(1,787)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Insurance finance
income
|
-
|
-
|
1,106
|
-
|
-
|
-
|
-
|
-
|
1,106
|
Insurance service
result
|
-
|
-
|
-
|
126
|
(7)
|
2
|
-
|
-
|
121
|
- insurance
revenue
|
-
|
-
|
-
|
126
|
-
|
235
|
-
|
-
|
361
|
- insurance service
expense
|
-
|
-
|
-
|
-
|
(7)
|
(233)
|
-
|
-
|
(240)
|
Other operating
income1
|
542
|
(219)
|
10
|
-
|
-
|
(13)
|
-
|
-
|
320
|
Total operating income
|
5,052
|
(2,006)
|
1,116
|
126
|
(7)
|
(11)
|
34
|
-
|
4,304
|
Net insurance claims and benefits
paid and movement in liabilities to policyholders
|
(406)
|
406
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Net operating income before change in expected credit losses
and other credit impairment charges
|
4,646
|
(1,600)
|
1,116
|
126
|
(7)
|
(11)
|
34
|
-
|
4,304
|
Change in expected credit losses
and other credit impairment charges
|
(222)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(222)
|
Net operating income
|
4,424
|
(1,600)
|
1,116
|
126
|
(7)
|
(11)
|
34
|
-
|
4,082
|
Total operating
expenses
|
(5,353)
|
-
|
-
|
-
|
-
|
-
|
102
|
-
|
(5,251)
|
Operating loss
|
(929)
|
(1,600)
|
1,116
|
126
|
(7)
|
(11)
|
136
|
-
|
(1,169)
|
Share of loss in associates and
joint ventures
|
(30)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(30)
|
Loss before tax
|
(959)
|
(1,600)
|
1,116
|
126
|
(7)
|
(11)
|
136
|
-
|
(1,199)
|
Tax charge
|
561
|
-
|
-
|
-
|
-
|
-
|
-
|
85
|
646
|
Loss for the period
|
(398)
|
(1,600)
|
1,116
|
126
|
(7)
|
(11)
|
136
|
85
|
(553)
|
|
|
|
|
|
|
|
|
|
|
1 'Other operating income' as shown in the table
above is presented inclusive of 'Changes in fair value of long-term
debt and related derivatives', 'Changes in fair value of other
financial instruments mandatorily measured at fair value through
profit or loss', and 'Net (losses)/gains from financial
investments'.
Transition drivers
Removal of PVIF and IFRS 4 balances
As a result of the removal of the
PVIF intangible asset and IFRS 4 results, the associated revenue of
£219m for year ended 31 December 2022 that was previously
reported within 'Other operating income' is no longer reported
under IFRS 17. This includes the removal of the value of new
business and changes to in-force book PVIF from valuation
adjustments and experience variances.
On the implementation of IFRS 17
new income statement line items associated with insurance contract
accounting were introduced. Consequently, the previously reported
IFRS 4 line items 'Net insurance premium income', and 'Net
insurance claims and benefits paid and movement in liabilities to
policyholders' were also removed.
Introduction of IFRS 17 income statement
Insurance finance
income/(expense)
Insurance finance income/(expense)
of £1,106m for the year ended 31 December 2022 represents the
change in the carrying amount of insurance contracts arising from
the effect of, and changes in, the time value of money and
financial risk. For VFA contracts, which represent more than 98% of
HSBC's insurance contracts, the insurance finance income/(expense)
includes the changes in the fair value of underlying items
(excluding additions and withdrawals). It therefore has an
offsetting impact to investment income earned on underlying assets
supporting insurance contracts. This includes an offsetting impact
to the gains and losses on assets held at fair value through profit
or loss, and which is now included in 'Net expense from assets and
liabilities of insurance businesses, including related derivatives,
measured at fair value through profit or loss'.
Contractual service
margin
Revenue is recognised for the
release of the CSM associated with the in-force business, which was
allocated at a rate of approximately 9% during 2022. The CSM
release is largely impacted by the constant measure allocation
approach for investment services, but may vary over time primarily
due to changes in the total amount of CSM reported on the balance
sheet from factors such as new business written, changes to levels
of actual returns earned on underlying assets, or changes to
assumptions.
Onerous contracts
Losses on onerous contracts are
taken to the income statement as incurred.
Experience variance and
other
Experience variance and other
represents the expected expenses, claims and amortisation of
acquisition cash flows which are reported as part of the insurance
service revenue. This is offset with the actual expenses and claims
incurred in the period and recovery of acquisition cash
flows.
Attributable expenses
Directly attributable expenses are
the costs associated with originating and fulfilling an identified
portfolio of insurance contracts. These costs include distribution
fees paid to third parties as part of originating insurance
contracts together with appropriate allocations of fixed and
variable overheads which are included within the fulfilment cash
flows and are no longer shown on the operating expenses
line.
IFRS 17 transition impact on the
consolidated statement of comprehensive income
|
|
|
|
Year
ended 31 Dec 2022
|
|
Under
IFRS 17
|
Under
IFRS
4
|
|
£m
|
£m
|
Opening equity for the year
|
23,145
|
23,715
|
of which
|
|
|
- Retained earnings
|
24,157
|
24,735
|
- Financial assets at FVOCI reserve
|
1,603
|
1,081
|
- Insurance finance reserve
|
(514)
|
-
|
Profit for the period
|
(553)
|
(398)
|
Debt instruments at fair value
through other comprehensive income
|
(1,886)
|
(454)
|
Equity instruments designated at
fair value through other comprehensive income
|
-
|
-
|
Insurance finance income/
(expense) recognised in other comprehensive income
|
1,408
|
-
|
Other comprehensive expense for
the period, net of tax
|
96
|
125
|
Total comprehensive (expense)/income for the
year
|
(935)
|
(727)
|
Other movements
|
1,023
|
1,028
|
Closing equity for the year
|
23,233
|
24,016
|
Transition drivers
Insurance finance reserve
The insurance finance reserve
reflects the impact of the adoption of the other comprehensive
income option for our insurance business in France. Underlying
assets supporting these contracts are measured at fair value
through other comprehensive income. Under this option, only the
amount that matches income or expenses recognised in profit or loss
on underlying items is included in finance income or expenses,
resulting in the elimination of income statement accounting
mismatches. The remaining amount of finance income or expenses for
these insurance contracts is recognised in OCI. At the transition
date an insurance finance reserve of £(514)m was recognised and
following transition, gains net of tax of £1,408m were recorded in
the year ended 31 December 2022. An offsetting fair value through
OCI reserve of £522m recorded on transition represents the
accumulated fair value movements on assets supporting these
insurance liabilities, with associated losses net of taxes of
£1,506m recorded within the fair value through other comprehensive
income reserve during the year ended 31 December 2022.
Consolidated balance sheet at
transition date and at 31 December 2022.
Consolidated balance
sheet
|
|
|
|
Under IFRS
17
|
Under
IFRS 4
|
|
31 Dec
|
1 Jan
|
31
Dec
|
31
Dec
|
|
2022
|
2022
|
2022
|
2021
|
|
£m
|
£m
|
£m
|
£m
|
Assets
|
|
|
|
|
Cash and balances at central
banks
|
131,433
|
108,482
|
131,433
|
108,482
|
Items in the course of collection
from other banks
|
2,285
|
346
|
2,285
|
346
|
Trading assets
|
79,878
|
83,706
|
79,878
|
83,706
|
Financial assets designated and
otherwise mandatorily measured at fair value through profit or
loss
|
15,881
|
18,649
|
15,881
|
18,649
|
Derivatives
|
225,238
|
141,221
|
225,238
|
141,221
|
Loans and advances to
banks
|
17,109
|
10,784
|
17,109
|
10,784
|
Loans and advances to
customers
|
72,614
|
91,177
|
72,614
|
91,177
|
Reverse repurchase agreements -
non-trading
|
53,949
|
54,448
|
53,949
|
54,448
|
Financial investments
|
32,604
|
41,300
|
32,604
|
41,300
|
Assets held for sale
|
21,214
|
9
|
21,214
|
9
|
Prepayments, accrued income and
other assets
|
61,444
|
43,146
|
61,379
|
43,118
|
Current tax assets
|
595
|
1,135
|
595
|
1,135
|
Interests in associates and joint
ventures
|
728
|
743
|
728
|
743
|
Goodwill and intangible
assets
|
91
|
83
|
1,167
|
894
|
Deferred tax assets
|
1,583
|
798
|
1,279
|
599
|
Total assets
|
716,646
|
596,027
|
717,353
|
596,611
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
Liabilities
|
|
|
|
|
Deposits by banks
|
20,836
|
32,188
|
20,836
|
32,188
|
Customer accounts
|
215,948
|
205,241
|
215,948
|
205,241
|
Repurchase agreements -
non-trading
|
32,901
|
27,259
|
32,901
|
27,259
|
Items in the course of
transmission to other banks
|
2,226
|
489
|
2,226
|
489
|
Trading liabilities
|
41,265
|
46,433
|
41,265
|
46,433
|
Financial liabilities designated
at fair value
|
27,282
|
33,608
|
27,287
|
33,608
|
Derivatives
|
218,867
|
139,368
|
218,867
|
139,368
|
Debt securities in
issue
|
7,268
|
9,428
|
7,268
|
9,428
|
Liabilities of disposal groups
held for sale
|
24,711
|
-
|
24,711
|
-
|
Accruals, deferred income and
other liabilities
|
67,020
|
43,515
|
66,945
|
43,456
|
Current tax liabilities
|
130
|
97
|
130
|
97
|
Insurance contract
liabilities
|
20,004
|
22,201
|
19,987
|
22,264
|
Provisions
|
424
|
562
|
424
|
562
|
Deferred tax
liabilities
|
3
|
5
|
14
|
15
|
Subordinated
liabilities
|
14,528
|
12,488
|
14,528
|
12,488
|
Total liabilities
|
693,413
|
572,882
|
693,337
|
572,896
|
Equity
|
|
|
|
|
Called up share
capital
|
797
|
797
|
797
|
797
|
Share premium account
|
420
|
-
|
420
|
-
|
Other equity
instruments
|
3,930
|
3,722
|
3,930
|
3,722
|
Other reserves
|
(6,413)
|
(5,662)
|
(6,368)
|
(5,670)
|
Retained earnings
|
24,368
|
24,157
|
25,096
|
24,735
|
Total shareholders' equity
|
23,102
|
23,014
|
23,875
|
23,584
|
Non-controlling
interests
|
131
|
131
|
141
|
131
|
Total equity
|
23,233
|
23,145
|
24,016
|
23,715
|
Total liabilities and equity
|
716,646
|
596,027
|
717,353
|
596,611
|
37
|
Events after the balance sheet
date
|
On 1 January 2024, HSBC
Continental Europe completed the sale of its retail banking
operations in France to CCF, a subsidiary of Promontoria MMB SAS
('My Money Group'). The sale also included HSBC Continental
Europe's 100% ownership interest in HSBC SFH (France) and its 3%
ownership interest in Crédit Logement. In the fourth quarter of
2023, a loss of £1.5bn was recognised upon reclassification to held
for sale, in accordance with IFRS 5, which net of the £1.7bn
partial reversal of impairment recognised in the first quarter of
2023, gave rise to a net reversal of impairment recognised in the
year of £0.2bn.
On 30 January 2024, the PRA
concluded its investigation into HSBC Bank plc's and HSBC UK Bank
plc's compliance with depositor protection arrangements under the
Financial Services Compensation Scheme in the UK. The PRA imposed a
fine of £57m on these entities, the majority of which was borne by
HSBC Bank plc, was fully provided for at 31 December 2023, and has
since been paid.
On 1 February 2024, HSBC Bank plc
invested £1.1bn to acquire HSBC Private Bank (Suisse) SA which is
owned by HSBC Private Banking Holdings (Suisse) SA, a subsidiary of
HSBC Overseas Holdings (UK) Limited as on 31 December
2023.
On 6 February 2024, HSBC Europe
B.V., a direct subsidiary of HSBC Bank plc, signed an agreement to
sell HSBC Bank Armenia CJSC, its wholly-owned subsidiary, to
Ardshinbank CJSC subject to regulatory approvals. The transaction
is expected to complete within the next 12 months.
In its assessment of events after
the balance sheet date, the group has considered and concluded that
there are no events requiring adjustment or disclosures in the
financial statements.
38
|
HSBC Bank plc's subsidiaries,
joint ventures and associates
|
In accordance with section 409 of
the Companies Act 2006 a list of HSBC Bank plc subsidiaries, joint
ventures and associates, their registered office address and the
effective percentage of equity owned at 31 December 2023 is
disclosed below.
Unless otherwise stated, the share
capital comprises ordinary or common shares which are held by HSBC
Bank plc or its subsidiaries. The ownership percentage is provided
for each undertaking. The undertakings below are consolidated by
HSBC Bank plc unless otherwise indicated.
HSBC Bank plc's registered office
address is:
HSBC Bank plc
8 Canada Square
London E14 5HQ
Subsidiaries
The undertakings below are
consolidated by the group.
Subsidiaries
|
% of share class held by
immediate parent company
(or by HSBC
Bank
plc where this
varies)
|
Footnotes
|
AI Nominees (UK) One
Limited
|
100.00
|
|
1, 2, 53
|
AI Nominees (UK) Two
Limited
|
100.00
|
|
1, 2, 53
|
Assetfinance December (H)
Limited
|
100.00
|
|
53
|
Assetfinance December (P)
Limited
|
100.00
|
|
2, 53
|
Assetfinance December (R)
Limited
|
100.00
|
|
53
|
Assetfinance June (A)
Limited
|
100.00
|
|
53
|
Assetfinance Limited (In
Liquidation)
|
100.00
|
|
8
|
Assetfinance March (B)
Limited
|
100.00
|
|
9
|
Assetfinance March (F)
Limited
|
100.00
|
|
53
|
Assetfinance September (F)
Limited
|
100.00
|
|
53
|
Banco Nominees (Guernsey)
Limited
|
100.00
|
|
10
|
Banco Nominees 2 (Guernsey)
Limited
|
100.00
|
|
10
|
Banco Nominees Limited
|
100.00
|
|
11
|
Beau Soleil Limited
Partnership
|
n/a
|
|
0, 12
|
BentallGreenOak China Real Estate
Investments, L.P.
|
n/a
|
|
0, 1, 13
|
Canada Crescent Nominees (UK)
Limited
|
100.00
|
|
2, 53
|
Canada Water Nominees (UK) Limited
(In Liquidation)
|
100.00
|
|
2, 8
|
CCF & Partners Asset
Management Limited
|
100.00
|
(99.99)
|
53
|
CCF Holding (Liban) S.A.L. (In
Liquidation)
|
74.99
|
|
14
|
Charterhouse Administrators (
D.T.) Limited
|
100.00
|
(99.99)
|
53
|
Charterhouse Management Services
Limited
|
100.00
|
(99.99)
|
53
|
Charterhouse Pensions
Limited
|
100.00
|
|
2, 53
|
COIF Nominees Limited
|
n/a
|
|
0, 2, 53
|
Corsair IV Financial Services
Capital Partners - B L.P
|
n/a
|
|
0, 1, 15
|
Dempar 1
|
100.00
|
(99.99)
|
3, 16
|
Eton Corporate Services
Limited
|
100.00
|
|
10
|
Flandres Contentieux
S.A.
|
100.00
|
(99.99)
|
3, 16
|
Foncière Elysées
|
100.00
|
(99.99)
|
3, 16
|
Griffin International
Limited
|
100.00
|
|
53
|
HLF
|
100.00
|
(99.99)
|
3, 16
|
HSBC (BGF) Investments
Limited
|
100.00
|
|
2, 53
|
HSBC Asset Finance (UK)
Limited
|
100.00
|
|
2, 53
|
HSBC Asset Finance M.O.G. Holdings
(UK) Limited
|
100.00
|
|
2, 53
|
HSBC Assurances Vie
(France)
|
100.00
|
(99.99)
|
3, 17
|
HSBC Bank (General Partner)
Limited
|
100.00
|
|
2, 18
|
HSBC Bank (RR) (Limited Liability
Company)
|
n/a
|
|
0, 6, 19
|
HSBC Bank Armenia CJSC
|
100.00
|
|
20
|
HSBC Bank Bermuda
Limited
|
100.00
|
|
2, 11
|
HSBC Bank Capital Funding
(Sterling 1) LP
|
n/a
|
|
0, 18
|
HSBC Bank Capital Funding
(Sterling 2) LP
|
n/a
|
|
0, 18
|
HSBC Bank Malta p.l.c.
|
70.03
|
|
21
|
HSBC Cayman Limited
|
100.00
|
|
26
|
HSBC Cayman Services
Limited
|
100.00
|
|
22
|
HSBC City Funding Holdings (In
Liquidation)
|
100.00
|
|
8
|
HSBC Client Holdings Nominee (UK)
Limited
|
100.00
|
|
2, 53
|
HSBC Client Nominee (Jersey)
Limited
|
100.00
|
|
2, 23
|
HSBC Continental Europe
|
99.99
|
|
3, 16
|
HSBC Corporate Trustee Company
(UK) Limited
|
100.00
|
|
2, 53
|
HSBC Custody Services (Guernsey)
Limited
|
100.00
|
|
10
|
HSBC Epargne Entreprise
(France)
|
100.00
|
(99.99)
|
3, 17
|
HSBC Equity (UK)
Limited
|
100.00
|
|
2, 53
|
HSBC Europe B.V.
|
100.00
|
|
53
|
HSBC Factoring (France)
|
100.00
|
(99.99)
|
3, 16
|
HSBC Global Asset Management
(Bermuda) Limited
|
100.00
|
|
7, 11
|
HSBC Global Asset Management
(Deutschland) GmbH
|
100.00
|
(99.99)
|
4, 24
|
HSBC Global Asset Management
(France)
|
100.00
|
(99.99)
|
3, 17
|
HSBC Global Asset Management
(Malta) Limited
|
100.00
|
(70.03)
|
25
|
HSBC Global Custody Nominee (UK)
Limited
|
100.00
|
|
2, 53
|
HSBC Global Custody Proprietary
Nominee (UK) Limited
|
100.00
|
|
1, 2, 53
|
HSBC Infrastructure Limited (In
Liquidation)
|
100.00
|
|
8
|
HSBC Institutional Trust Services
(Bermuda) Limited
|
100.00
|
|
11
|
HSBC Insurance Services Holdings
Limited
|
100.00
|
|
2, 53
|
HSBC Investment Bank Holdings
Limited
|
100.00
|
|
2, 53
|
HSBC Issuer Services Common
Depositary Nominee (UK) Limited
|
100.00
|
|
2, 53
|
HSBC Issuer Services Depositary
Nominee (UK) Limited (In Liquidation)
|
100.00
|
|
2, 8
|
HSBC Life (UK) Limited
|
100.00
|
|
2, 53
|
HSBC Life Assurance (Malta)
Limited
|
100.00
|
(70.03)
|
25
|
HSBC LU Nominees
Limited
|
100.00
|
|
2, 53
|
HSBC Marking Name Nominee (UK)
Limited
|
100.00
|
|
2, 53
|
HSBC Middle East Leasing
Partnership
|
n/a
|
|
0, 27
|
HSBC Operational Services
GmbH
|
100.00
|
(99.99)
|
4, 24
|
HSBC Overseas Nominee (UK)
Limited
|
100.00
|
|
2, 53
|
HSBC PB Corporate Services 1
Limited
|
100.00
|
|
28
|
HSBC Pension Trust (Ireland)
DAC
|
100.00
|
|
2, 29
|
HSBC PI Holdings (Mauritius)
Limited
|
100.00
|
|
30
|
HSBC Preferential LP
(UK)
|
100.00
|
|
2, 53
|
HSBC Private Bank (Luxembourg)
S.A.
|
100.00
|
(99.99)
|
31
|
HSBC Private Banking Nominee 3
(Jersey) Limited
|
100.00
|
|
28
|
HSBC Private Equity Investments
(UK) Limited
|
100.00
|
|
53
|
|
|
|
|
Subsidiaries
|
% of share class held by
immediate parent company
(or by HSBC
Bank
plc where this
varies)
|
Footnotes
|
HSBC Private Markets Management
SARL
|
n/a
|
|
0, 1, 32
|
HSBC Property Funds (Holding)
Limited
|
100.00
|
|
53
|
HSBC Real Estate Leasing
(France)
|
100.00
|
(99.99)
|
3, 16
|
HSBC REIM (France)
|
100.00
|
(99.99)
|
3, 17
|
HSBC Securities (South Africa)
(Pty) Limited
|
100.00
|
|
2, 34
|
HSBC Securities Services (Bermuda)
Limited
|
100.00
|
|
11
|
HSBC Securities Services
(Guernsey) Limited
|
100.00
|
|
10
|
HSBC Securities Services (Ireland)
DAC
|
100.00
|
|
29
|
HSBC Securities Services
(Luxembourg) S.A.
|
100.00
|
|
2, 31
|
HSBC Securities Services Holdings
(Ireland) DAC
|
100.00
|
|
29
|
HSBC Service Company Germany
GmbH
|
100.00
|
(99.99)
|
1, 4, 24
|
HSBC Services (France)
|
100.00
|
(99.99)
|
3, 16
|
HSBC SFH (France)
|
100.00
|
(99.99)
|
3, 17
|
HSBC SFT (C.I.) Limited
|
100.00
|
|
2, 10
|
HSBC Specialist Investments
Limited
|
100.00
|
|
7, 53
|
HSBC Transaction Services
GmbH
|
100.00
|
(99.99)
|
4, 24
|
HSBC Trinkaus & Burkhardt
(International) S.A.
|
100.00
|
(99.99)
|
35
|
HSBC Trinkaus & Burkhardt
Gesellschaft fur Bankbeteiligungen mbH
|
100.00
|
(99.99)
|
24
|
HSBC Trinkaus & Burkhardt
GmbH
|
100.00
|
(99.99)
|
1, 4, 36
|
HSBC Trinkaus Family Office
GmbH
|
100.00
|
(99.99)
|
4, 24
|
HSBC Trinkaus Real Estate
GmbH
|
100.00
|
(99.99)
|
4, 24
|
HSBC Trustee (C.I.)
Limited
|
100.00
|
|
2, 28
|
HSBC Trustee (Guernsey)
Limited
|
100.00
|
|
2, 10
|
HSIL Investments
Limited
|
100.00
|
|
53
|
INKA Internationale
Kapitalanlagegesellschaft mbH
|
100.00
|
(99.99)
|
24
|
James Capel (Nominees)
Limited
|
100.00
|
|
2, 53
|
James Capel (Taiwan) Nominees
Limited
|
100.00
|
|
2, 53
|
Keyser Ullmann Limited
|
100.00
|
(99.99)
|
53
|
Midcorp Limited
|
100.00
|
|
2, 53
|
Prudential Client HSBC GIS Nominee
(UK) Limited
|
100.00
|
|
2, 53
|
RLUKREF Nominees (UK) One
Limited
|
100.00
|
|
1, 2, 53
|
RLUKREF Nominees (UK) Two
Limited
|
100.00
|
|
1, 2, 53
|
S.A.P.C. - Ufipro
Recouvrement
|
99.99
|
|
5, 16
|
Saf Baiyun
|
100.00
|
(99.99)
|
3, 16
|
Saf Guangzhou
|
100.00
|
(99.99)
|
3, 16
|
SCI HSBC Assurances
Immo
|
100.00
|
(99.99)
|
5, 17
|
SFM
|
100.00
|
(99.99)
|
3, 16
|
SFSS Nominees (Pty)
Limited
|
100.00
|
|
34
|
SNC Les Oliviers
D'Antibes
|
60.00
|
(59.99)
|
5, 17
|
SNCB/M6-2008 A
|
100.00
|
(99.99)
|
3, 16
|
SNCB/M6-2007 A
|
100.00
|
(99.99)
|
3, 16
|
SNCB/M6-2007 B
|
100.00
|
(99.99)
|
3, 16
|
Société Française et
Suisse
|
100.00
|
(99.99)
|
3, 16
|
Somers Dublin DAC
|
100.00
|
(99.99)
|
29
|
Somers Nominees (Far East)
Limited
|
100.00
|
|
11
|
Sopingest
|
100.00
|
(99.99)
|
3, 16
|
South Yorkshire Light Rail
Limited
|
100.00
|
|
53
|
Swan National Limited (In
Liquidation)
|
100.00
|
|
8
|
The Venture Catalysts Limited (In
Liquidation)
|
100.00
|
|
2, 8
|
Trinkaus Europa Immobilien-Fonds
Nr.3 Objekt Utrecht Verwaltungs-GmbH
|
100.00
|
(99.99)
|
4, 24
|
Trinkaus Immobilien-Fonds
Geschaeftsfuehrungs-GmbH
|
100.00
|
(99.99)
|
4, 24
|
Trinkaus Immobilien-Fonds
Verwaltungs-GmbH
|
100.00
|
(99.99)
|
4, 24
|
Trinkaus Private Equity Management
GmbH
|
100.00
|
(99.99)
|
4, 24
|
Trinkaus Private Equity
Verwaltungs GmbH
|
100.00
|
(99.99)
|
4, 24
|
Valeurs Mobilières
Elysées
|
100.00
|
(99.99)
|
3, 16
|
Woodex Limited
|
100.00
|
|
11
|
Joint ventures
The undertakings below are joint
ventures and equity accounted.
Joint Ventures
|
% of share class held by
immediate parent company
(or by HSBC Bank
plc where this varies)
|
Footnotes
|
HCM Holdings Limited (In
Liquidation)
|
50.99
|
|
8
|
MK HoldCo Limited
|
50.32
|
|
1, 37
|
ProServe Bermuda
Limited
|
50.00
|
|
38
|
The London Silver Market Fixing
Limited
|
n/a
|
|
0, 1, 2,
39
|
Associates
The undertakings below are
associates and equity accounted.
Associates
|
% of share class held by
immediate parent company
(or by HSBC Bank
plc where this varies)
|
Footnotes
|
BGF Group plc
|
24.62
|
|
40
|
Bud Financial Limited
|
4.84
|
|
1, 41
|
Contour Pte Ltd
|
9.87
|
|
1, 42
|
Divido Financial Services
Limited
|
7.70
|
|
1, 43
|
Episode Six Inc.
|
5.69
|
|
1, 44
|
Euro Secured Notes
Issuer
|
16.67
|
|
45
|
LiquidityMatch LLC
|
n/a
|
|
0, 1, 46
|
London Precious Metals Clearing
Limited
|
30.00
|
|
1, 2, 47
|
Monese Ltd
|
5.39
|
|
1, 48
|
Quantexa Limited
|
9.36
|
|
49
|
Services Epargne
Entreprise
|
14.18
|
|
50
|
Threadneedle Software Holdings
Limited
|
7.10
|
|
1, 51
|
Trade Information Network
Limited
|
12.76
|
|
1, 52
|
Trinkaus Europa Immobilien-Fonds
Nr. 7 Frankfurt Mertonviertel KG
|
n/a
|
|
0, 24
|
We Trade Innovation Designated
Activity Company (In Liquidation)
|
9.88
|
|
1, 33
|
Footnotes
|
0
|
Where an entity is governed by voting rights, HSBC
consolidates when it holds - directly or indirectly - the necessary
voting rights to pass resolutions by the governing body. In all
other cases, the assessment of control is more complex and requires
judgement of other factors, including having exposure to
variability of returns, power to direct relevant activities, and
whether power is held as an agent or principal. HSBC's
consolidation policy is described in Note 1.2(a).
|
1
|
Management has determined that these undertakings are
excluded from consolidation in the group accounts as these entities
do not meet the definition of subsidiaries in accordance with IFRS
Accounting Standards. HSBC's consolidation policy is described in
Note 1.2(a).
|
2
|
Directly held by HSBC Bank plc
|
Description of shares
|
3
|
Actions
|
4
|
GmbH Anteil
|
5
|
Parts
|
6
|
Russian Limited Liability Company Shares
|
7
|
Preference Shares
|
Registered offices
|
8
|
c/o Teneo Financial Advisory Limited, The Colmore Building,
20 Colmore Circus, Queensway, Birmingham, United Kingdom, B4
6AT
|
9
|
5 Donegal Square South, Northern Ireland, Belfast, United
Kingdom, BT1 5JP
|
|
|
|
|
Registered offices
|
10
|
Arnold House, St Julians Avenue, St Peter Port, Guernsey, GY1
3NF
|
11
|
37 Front Street, Harbourview Centre, Ground Floor, Hamilton,
Pembroke, Bermuda, HM 11
|
12
|
HSBC Main Building, 1 Queen's Road Central, Hong
Kong
|
13
|
Oak House Hirzel Street, St Peter Port, Guernsey, GY1
2NP
|
14
|
Solidere - Rue Saad Zaghloul Immeuble - 170 Marfaa, P.O. Box
17 5476 Mar Michael, Beyrouth, Lebanon, 11042040
|
15
|
c/o Walkers Corporate Services Limited, Walker House, 87 Mary
Street, George Town, Grand Cayman, Cayman Islands,
KY1-9005
|
16
|
38 avenue Kléber, Paris, France, 75116
|
17
|
Immeuble Cœur Défense, 110 esplanade du Général de Gaulle,
Courbevoie, France, 92400
|
18
|
HSBC House Esplanade, St. Helier, Jersey, JE4
8UB
|
19
|
2 Paveletskaya Square Building 2, Moscow, Russia,
115054
|
20
|
90 Area 42 Paronyan Street, Yerevan, Armenia,
0015
|
21
|
116 Archbishop Street, Valletta, Malta
|
22
|
P.O. Box 1109, Strathvale House, Ground Floor, 90 North
Church Street, George Town, Grand Cayman, Cayman Islands,
KY1-1102
|
23
|
HSBC House Esplanade, St. Helier, Jersey, JE1
1HS
|
24
|
Hansaallee 3, Düsseldorf, Germany, 40549
|
25
|
80 Mill Street, Qormi, Malta, QRM 3101
|
26
|
P.O. Box 309, Ugland House, Grand Cayman, Cayman Islands,
KY1-1104
|
27
|
Unit 401, Level 4, Gate Precinct Building 2, Dubai
International Financial Centre, P. O. Box 506553, Dubai, United
Arab Emirates
|
28
|
HSBC House Esplanade, St. Helier, Jersey, JE1
1GT
|
29
|
1 Grand Canal Square, Grand Canal Harbour, Dublin 2, Ireland,
D02 P820
|
30
|
6th Floor, HSBC Centre 18, Cybercity, Ebene, Mauritius,
72201
|
31
|
18 Boulevard de Kockelscheuer, Luxembourg, Luxembourg,
1821
|
32
|
5 rue Heienhaff, Senningerberg, Luxembourg,
L-1736
|
33
|
10 Earlsfort Terrace, Dublin, Ireland, D02
T380
|
34
|
1 Mutual Place, 107 Rivonia Road, Sandton, Gauteng, South
Africa, 2196
|
35
|
16 Boulevard d'Avranches, Luxembourg,
L-1160
|
36
|
3 Hansaallee, Düsseldorf, Nordrhein-Westfalen, Germany,
40549
|
37
|
35 Ballards Lane, London, United Kingdom, N3
1XW
|
38
|
c/o MUFG Fund Services (Bermuda) Limited, Cedar House, 4th
Floor North, 41 Cedar Avenue, Hamilton, Bermuda,
HM12
|
39
|
27 Old Gloucester Street, London, United Kingdom, WC1N
3AX
|
40
|
13-15 York Buildings, London, United Kingdom, WC2N
6JU
|
41
|
167-169 Great Portland Street, 5th Floor, London, United
Kingdom, W1W 5PF
|
42
|
1 Harbourfront Avenue, #14-07 Keppel Bay Tower, Singapore,
098632
|
43
|
Office 7, 35-37 Ludgate Hill, London, United Kingdom, EC4M
7JN
|
44
|
251 Little Falls Drive, New Castle, Wilmington, United States
of America, 19808
|
45
|
3 avenue de l'Opera, Paris, France, 75001
|
46
|
100 Town Square Place, Suite 201, Jersey City, New Jersey,
United States of America, 07310
|
47
|
7th Floor, 62 Threadneedle Street, London, United Kingdom,
EC2R 8HP
|
48
|
Eagle House, 163 City Road, London, United Kingdom, EC1V
1NR
|
49
|
Hill House, 1 Little New Street, London, United Kingdom, EC4A
3TR
|
50
|
32 rue du Champ de Tir, Nantes, France,
44300
|
51
|
2nd Floor, Regis House, 45 King William Street, London,
United Kingdom, EC4R 9AN
|
52
|
3 More London Riverside, London, United Kingdom, SE1
2AQ
|
53
|
8 Canada Square, London, United Kingdom, E14
5HQ
|
HSBC Bank plc
8 Canada Square
London E14 5HQ
United Kingdom
Telephone: 44 020 7991
8888
www.hsbc.co.uk
Registered number
00014259
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