HSBC 2001 Annual Report Download - page 230

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HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
228
should the contract be fully drawn upon and the client default. Since a significant portion of guarantees and
commitments are expected to expire without being drawn upon, the total of the contract amounts is not
representative of future liquidity requirements.
(b) HSBC Holdings
HSBC Holdings had no contingent liabilities (2000: US$ nil). In addition, HSBC Holdings enters into
guarantees and letters of support on behalf of other HSBC undertakings in the normal course of business.
(c) Concentration of contingent liabilities and commitments
HSBC has the following concentrations of exposure to contingent liabilities and commitments and these are
determined on the basis set out in Note 47(a):
Contract amounts
Europe
H
ong Kon
g
R
est o
f
Asia-Pacific North
America Latin
America Tota
l
US$m US$m US$m US$m US$m US$m
Contingent Liabilities
2001 .................................... 20,763 9,260 5,576 7,523 923 44,045
2000 .................................... 19,534 6,827 5,728 6,410 643 39,142
Commitments
2001 .................................... 72,397 50,743 26,191 45,245 3,883 198,459
2000 .................................... 68,750 47,888 24,498 38,300 3,280 182,716
40 Market risk management
HSBC’ s market risk management process is discussed in the ‘Financial Review’ section on pages 114 and 115 from
the paragraph under the heading ‘Market risk management’ to the paragraph ended ‘impact of extreme events on the
market risk exposures of HSBC’ .
(a) Trading VAR
VAR is a technique that estimates the potential losses that could occur on risk positions taken due to movements
in market rates and prices over a specified time horizon and to a given level of confidence.
Trading VAR for HSBC for 2001was:
At Minimum Maximum Average
31 December during the during the for the
2001 year year year
US$m US$m US$m US$m
Total trading activities .................................. 122.0 60.8 173.4 102.2
Foreign exchange trading positions .............. 13.3 1.8 50.6 22.1
Interest rate trading positions........................ 111.7 48.1 160.2 86.7
Equities trading positions.............................. 45.5 27.4 79.6 41.9