HSBC 2001 Annual Report Download - page 178

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
176
2001 2000 1999
US$m US$m US$m
Independent attestation
Audit reports for US and other non-UK
reporting............................................................. 0.2 0.1 0.2
Review of information for publication including
work in connection with securities issuance...... 0.4 0.5 0.2
Reviews and reporting under regulatory
requirements (including interim profits
review) .............................................................. 5.0 3.7 5.3
5.6 4.3 5.7
Financial advice
Acquisition due diligence .................................... 0.6 5.2 7.3
Group reorganisations.......................................... 0.6 0.5
–
Taxation services ................................................. 2.1 2.1 3.2
Financial systems ................................................. 0.8 0.3 0.1
Consultancy services............................................ 1.9 0.8 0.5
Other .................................................................... 1.7 1.8 0.9
7.7 10.7 12.0
Total non-audit fees paid to auditors ................... 13.3 15.0 17.7
Of fees paid to auditors for non-audit work, US$0.4 million were capitalised (2000: US$4.8 million; 1999:
US$0.7 million).
6 Loss from foreign currency redenomination in Argentina
A loss of US$520 million arose on the redenomination by the Argentine Government of certain in-country US dollar
assets and liabilities into pesos at mandatory but different rates of exchange. In December 2001, the Argentine
Government announced that it was considering removing the fixed exchange rate of parity between the peso and the
US dollar. The banking system was then effectively closed as a number of different proposals for currency and
monetary reform were considered and rejected. In early January 2002, the Argentine Government presented
proposals for a redenomination of certain US dollar customer loans, restrictions on access to customer deposits and
introduced a dual exchange rate system. The foreign exchange market officially reopened on 11 January 2002 and
the free market exchange rate on that date (US dollar 1: Peso 1.65) has been taken as providing the most relevant
evidence of the value of the peso at the year-end. The original proposals for pesification of customer loans were,
however, modified and on 3 February 2002, the Argentine Government announced that all US dollar-denominated
customer loans would be converted to pesos at par. In addition, US dollar-denominated Argentine Government
obligations and customer deposits were to be converted to pesos at a rate of 1.40. The relevant in-country Argentine
US dollar-denominated assets and liabilities have been translated into pesos using these exchange rates as they
provide the most relevant evidence of the conditions existing at the year-end.
The overall loss arises from the asymmetric treatment of assets and liabilities within Argentina most notably because
US dollar assets converted at par were funded by either US dollar-denominated domestic deposits which were
translated to pesos at a rate of 1.40 or through external US dollar liabilities raised offshore. Encompassed within the
aggregate loss on redenomination is the effective impairment of the Argentine Government US dollar obligations
(including those exchanged for loans in November 2001) which were redenominated to pesos at a rate of 1.40.