HSBC 2006 Annual Report Download - page 404

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
Notes 44, 45, 46 and 47
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With the exception of the special collateral arrangements detailed above, all other aspects of the swap transactions
between HSBC and the scheme are on substantially the same terms as comparable transactions with third party
counterparties.
HSBC International Staff Retirements Benefits Scheme entered into swap transactions with HSBC to manage the
inflation and interest rate sensitivity of the liabilities and selected assets. At 31 December 2006, the gross notional
value of the swaps was US$1.2 billion (2005: US$1.0 billion), and the swaps had a net positive fair value of
US$14 million to the scheme (2005: US$53 million).
HSBC Holdings
Details of HSBC Holdings’ principal subsidiaries are shown in Note 24.
Transactions and balances during the year with subsidiaries were as follows:
2006 2005
Highest
balance during
the year1
Balance at
31 December1
Highest
balance during
the year1
Balance at
31 December1
Subsidiaries US$m US$m US$m US$m
Assets
Cash at bank .................................................................. 784 729 756 756
Derivatives .................................................................... 1,599 1,599 1,795 968
Loans and advances ...................................................... 14,935 14,456 17,282 14,092
Financial investments ................................................... 3,426 3,316 6,240 3,256
Investments in subsidiaries ........................................... 62,356 62,356 58,038 58,038
Total related party assets .............................................. 83,100 82,456 84,111 77,110
Liabilities
Amounts owed to HSBC undertakings ........................ 4,279 3,100 7,352 4,075
Derivatives .................................................................... 385 177 286 286
Subordinated liabilities:
– cost ......................................................................... 3,991 3,991 3,997 3,786
– fair value ................................................................ 4,231 4,231 4,498 4,055
Total related party liabilities ......................................... 12,886 11,499 16,133 12,202
Guarantees .................................................................... 36,877 17,605 41,455 36,877
1 The disclosure of the year-end balance and the highest balance during the year is considered the most meaningful information to
represent transactions during the year.
The above outstanding balances arose in the ordinary course of business and are on substantially the same terms,
including interest rates and security, as for comparable transactions with third party counterparties, with no
exceptions in respect of loans and advances to subsidiaries (exceptions in 2005: US$3,296 million), and exceptions of
US$640 million (2005: US$3,235 million) in respect of loans from HSBC undertakings to HSBC Holdings made at
an agreed zero per cent interest.
Some employees of HSBC Holdings are members of the HSBC Bank (UK) Pension Scheme, which is sponsored by a
separate Group company. HSBC Holdings incurs a charge for these employees equal to the contributions paid into
the scheme on their behalf. Disclosure in relation to the scheme is made in Note 7 to the accounts.
45 Events after the balance sheet date
As a consequence of inviting proposals for a sale and leaseback of 8 Canada Square, London, under an operating
lease arrangement, the property has been reclassified as a non-current asset held for sale after 31 December 2006.
This is in accordance with IFRS 5 ‘Non-current Assets Held for Sale and Discontinued Operations’. The
reclassification was made at carrying value, with no financial impact on the income statement. At 31 December 2006,
the carrying amount of the property, included in ‘Property, plant and equipment’, was US$742 million and the
carrying amount of the long leasehold land, included in ‘Prepayments and accrued income’, was US$210 million.
The building and leasehold interest are included in the assets of the Europe geographical segment and the ‘Other’
customer group segment.