HSBC 2011 Annual Report Download - page 120

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HSBC HOLDINGS PLC
Report of the Directors: Operating and Financial Review (continued)
Risk > Credit risk > Areas of special interest > Wholesale lending / Personal lending
118
Exposures to peripheral eurozone countries – other financial institutions and corporates
(Audited)
Greece Ireland Italy Portugal Spain Total
US$bn US$bn US$bn US$bn US$bn US$bn
At 31 December 2011
Loans and advances ........................... 3.8 2.1 1.4 5.6 12.9
– gross ............................................ 4.0 2.1 1.4 5.7 13.2
– impairment allowances ............... (0.2) (0.1) (0.3)
Financial investments available
for sale11 ......................................... 0.3 0.3 0.1 0.1 0.8
– available-for-sale reserve ........... (0.1) (0.1)
– amortised cost ............................. 0.4 0.2 0.1 0.1 0.8
Net trading assets ............................... 0.3 0.2 0.1 0.6
– gross trading assets ..................... 0.3 0.2 0.2 0.7
– short positions ............................ (0.1) (0.1)
Derivatives12 ...................................... 0.1 0.5 0.7 0.2 1.5
– gross derivative assets ................ 0.1 0.7 1.0 0.2 2.0
– collateral and derivative
liabilities ................................ (0.2) (0.3) (0.5)
Total ................................................... 3.9 3.2 2.6 0.1 6.0 15.8
Of which, on-balance sheet
exposures held to meet
insurance liabilities ........................ 0.2 0.1 0.1 0.4
– discretionary participatory ......... 0.2 0.1 0.1 0.4
Off-balance sheet exposures .............. 1.4 0.3 1.3 0.6 3.6
– guarantees and other ................... 0.6 0.2 0.4 0.5 1.7
– commitments .............................. 0.8 0.1 0.9 0.1 1.9
Total credit default swaps
– CDS asset positions .................... 0.1 0.3 0.1 0.1 0.6
– CDS liability positions ............... (0.1) (0.2) (0.1) (0.1) (0.5)
– CDS asset notionals .................... 0.2 0.3 3.7 0.6 1.4 6.2
– CDS liability notionals ............... 0.3 0.3 3.5 0.7 1.3 6.1
For footnotes, see page 185.
Summary balance sheet exposures to core eurozone countries – other financial institutions and corporates
(Audited)
France Germany
The
Netherlands Total
US$bn US$bn US$bn US$bn
At 31 December 2011 ............................................................................... 35 7 9 51
Intra-Group funding to peripheral eurozone
countries
(Unaudited)
We fund our business through local bank deposits
and by extending intra-Group loans from parts
of HSBC with surplus funds. Funding carries risk in
the event of the exit of a member country from the
eurozone and the redenomination to national
currencies which would follow and may result in
their significant depreciation. Measures taken to
mitigate these risks include changes to composition
of internal funding sources and seeking access to
alternative external funding sources to reduce
potential currency mismatches.
US budget deficit
(Unaudited)
During 2011, the US economy expanded moderately.
In August 2011, Standard and Poor’s (‘S&P’)
lowered its long term debt rating for the US to
AA+, citing the rising public debt burden and
policymaking uncertainty as the key reasons. Fitch
and Moody’s changed the US debt rating’s outlook
from ‘stable’ to ‘negative’ for similar reasons. To
date, the effect of the US downgrade has been less
severe than originally feared.