HSBC 2002 Annual Report Download - page 239

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North America
HSBC Bank Canada (99.99% owned) ................... Canada Banking C$950m
HSBC Bank USA .................................................. United States Banking US$205m
HSBC Securities (USA) Inc................................... United States Investment banking
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3
HSBC USA Inc...................................................... United States Holding company
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Banco Internacional S.A (99.14% owned)............. Mexico Banking MXP2,921m
South America
HSBC Bank Argentina S.A (99.92% owned) ........ Argentina Banking ARS237m
HSBC Bank Brasil S.A. – Banco Múltiplo ............ Brazil Banking BRL1,082m
HSBC Seguros (Brasil) S.A. (97.96% owned)....... Brazil Insurance BRL194m
HSBC La Buenos Aires Seguros S.A. (99.24%
owned)................................................................ Argentina Insurance ARS44m
Máxima S.A. AFJP (55.74% owned)..................... Argentina Pension fund
management
ARS84m4
3issued equity capital is less than US$1 million
4HSBC has a 60% economic and voting interest in Máxima S.A. AFJP .
Details of all HSBC companies will be annexed to the next Annual Return of HSBC Holdings filed with the UK
Registrar of Companies.
Except where indicated otherwise, the issued equity capital of the above undertakings is wholly-owned by
HSBC and is held by subsidiaries of HSBC Holdings. All the above make their financial statements up to
31 December except for HSBC Bank Argentina S.A., HSBC La Buenos Aires Seguros S.A. and Maxima S.A.
AFJP, whose financial statements are made up to 30 June annually.
The principal countries of operation are the same as the countries of incorporation except for HSBC Bank
Middle East which operates mainly in the Middle East, and HSBC Life (International) Limited which operates
mainly in Hong Kong. All the above subsidiaries are included in the consolidation.
(c) Acquisitions
HSBC made the following acquisitions of subsidiary undertakings or business operations in 2002, which were
accounted for on an acquisition basis:
i. On 28 June 2002, HSBC increased its stake in Merrill Lynch HSBC from 50% to 100% for nil
consideration. Negative goodwill of US$82 million arose on this acquisition. Prior to becoming a
subsidiary undertaking, HSBC’ s 50% interest in MLHSBC was accounted for as a joint venture.
In accordance with FRS 2 ‘Accounting for subsidiary undertakings’ , and in order to give a true and fair
view, negative goodwill on the acquisition in June has been calculated as that arising on the later acquisition
of shares, being the difference between the fair value of consideration paid and the fair values of the
identifiable assets and liabilities attributable to the further 50% interest purchased. This represents a
departure from the method required by Schedule 4A to the Act, under which goodwill is calculated as the
difference between total consideration paid and the fair values of the identifiable assets and liabilities on the
date that MLHSBC became a subsidiary undertaking.
The method required by the Act would not give a true and fair view because it would result in the Group’ s
share of MLHSBC’ s retained losses, during the period that it was a joint venture, being reclassified as
goodwill. The effect of this departure is to reduce positive goodwill by US$89 million, recognise negative
goodwill of US$82 million, and reduce retained profits by US$171 million.
ii. On 1 July 2002, CCF, a 99.9 per cent owned subsidiary of HSBC, acquired the business in respect of 11
branches of Banques Worms for a cash consideration of US$10 million. Goodwill of US$10 million arose
on this acquisition.