HSBC 2012 Annual Report Download - page 290

HSBC HOLDINGS PLC
Report of the Directors: Operating and Financial Review (continued)
Capital > Capital structure
288
At 31 December 2012
Accounting
balance
sheet
Decon-
solidation
of insurance/
other entities
Consolidation
of banking
associates
Regulatory
balance
sheet
Ref US$m US$m US$m US$m
Liabilities and equity
Deposits by banks ......................................................................... 107,429 (202) 51,296 158,523
Customer accounts ........................................................................ 1,340,014 (652) 158,631 1,497,993
Trading liabilities .......................................................................... 304,563 (131) 119 304,551
Financial liabilities designated at fair value ................................. 87,720 (12,437) – 75,283
of which:
– term subordinated debt included in tier 2 capital ............... .. m 16,863 –– 16,863
– hybrid capital securities included in tier 1 capital .............. .. j 4,696 –– 4,696
Debt securities in issue ................................................................. 119,461 (11,390) 1,888 109,959
Retirement benefits liabilities ....................................................... g 3,905 (21) 52 3,936
Subordinated liabilities ................................................................. 29,479 3 2,953 32,435
of which:
– hybrid capital securities included in tier 1 capital. .............. j 2,828 – – 2,828
– perpetual subordinated debt included in tier 2 capital ......... l 2,778 – – 2,778
– term subordinated debt included in tier 2 capital ............ … m 23,873 –– 23,873
Other liabilities ............................................................................. 516,838 (67,562) 5,375 454,651
of which:
– contingent liabilities and contractual commitments ............ 301 – – 301
of which:
– credit-related provisions on IRB portfolios ......................... i 267 – – 267
– credit-related provisions on STD portfolios ........................ k 34 – – 34
Total shareholders’ equity ............................................................ a 175,242 (626) (0) 174,616
of which:
– other equity instruments included in tier 1 capital .............. c, j 5,851 –– 5,851
– preference share premium included in tier 1 capital ........... b 1,405 –– 1,405
Non-controlling interests .............................................................. d 7,887 (610) 0 7,277
of which:
– non-cumulative preference shares issued by subsidiaries
included in tier 1 capital ....................................................... e 2,428 –– 2,428
– non-controlling interests included in tier 2 capital,
cumulative preferred stock ................................................... f 300 –– 300
– non-controlling interests attributable to holders of
ordinary shares in subsidiaries included in tier 2 capital ..... f,m 201 –– 201
Total liabilities and equity ......................................................... 2,692,538 (93,628) 220,314 2,819,224
For footnote, see page 292.
The references (a) – (m) identify balance sheet components which are used in the calculation of regulatory capital on page 286.
Regulatory and accounting consolidations
(Unaudited)
The basis of consolidation for financial accounting
purposes is described in Note 1 on the Financial
Statements and differs from that used for regulatory
purposes. The table above provides a reconciliation
of the financial accounting balance sheet to the
regulatory balance sheet. Not all items are
reconcilable, due to regulatory adjustments that are
applied, for example to non-core capital instruments
before they can be included in the Group’s
regulatory capital base. It is the regulatory balances,
and not the financial accounting balance sheet,
which form the basis for the regulatory capital
calculations. Investments in banking associates
are equity accounted in the financial accounting
consolidation, whereas their assets and liabilities are
proportionally consolidated for regulatory purposes.
Subsidiaries and associates engaged in insurance and
non-financial activities are excluded from the
regulatory consolidation and are deducted from
regulatory capital. The regulatory consolidation does
not include SPEs where significant risk has been
transferred to third parties. Exposures to these
SPEs are risk-weighted as securitisation positions
for regulatory purposes. Entities in respect of which
the basis of consolidation for financial accounting
purposes differs from that used for regulatory
purposes can be found in the Pillar 3 Disclosures
2012 report.
Basel III and its implementation in Europe
(Unaudited)
In July 2011, the European Commission published
proposals for a new Regulation and Directive,
known collectively as CRD IV, to give effect to the
Basel III framework in the EU. The majority of the
Basel III proposals are in the Regulation, removing