HSBC 2014 Annual Report Download - page 89

HSBC BANK PLC
Report of the Directors: Capital Management (continued)
87
Capital structure at 31 December
(Audited)
CRD IV
transitional
Basel 2.5
2014
2013
Composition of regulatory capital
£m
£m
Tier 1 capital
Shareholders’ equity 1
34,562
31,993
Shareholders’ equity per balance sheet
36,079
32,370
Foreseeable interim dividend
(315)
–
Preference share premium
(431)
(431)
Deconsolidation of special purpose entities 2
(86)
53
Deconsolidation of insurance entities
(685)
1
Non-controlling interests
353
399
Non-controlling interests per balance sheet
620
549
Preference share non-controlling interest
(150)
(150)
Surplus non-controlling interest disallowed in CET 1
(117)
–
Regulatory adjustments to the accounting basis
(5,444)
(1,389)
Unrealised gains on available-for-sale debt and equity securities 3
(837)
(656)
Own credit spread
245
218
Debit valuation adjustment
(88)
–
Defined benefit pension fund adjustment 4
(2,400)
(946)
Cash flow hedging reserve
(163)
13
Reserves arising from revaluation of property
–
(16)
Other equity instruments classified as Additional Tier 1
(2,195)
–
Other regulatory adjustments
(6)
(2)
Deductions
(8,380)
(8,565)
Goodwill capitalised & intangible assets
(6,822)
(7,218)
Deferred Tax assets that rely on future profitability (excludes those arising from temporary differences)
(21)
–
Additional valuation adjustment (referred to as PVA)
(588)
–
50% of securitisation positions
–
(902)
50% of excess expected losses over impairment allowances
–
(477)
50% of tax credit adjustment for excess expected losses
–
32
Excess of expected losses over impairment allowances
(949)
–
Common equity / Core tier 1 capital
21,091
22,438
Additional tier 1 capital
Other tier 1 capital before deductions
4,047
2,353
Preference shares & related premium
464
581
Other tier 1 capital securities
3,583
1,772
Deductions
–
(683)
Unconsolidated investments 5
–
(715)
50% of tax credit adjustment for excess expected losses
–
32
Tier 1 capital
25,138
24,108
Tier 2 capital
Total qualifying tier 2 capital before deductions
8,628
11,582
Reserves arising from unrealised gains on revaluation of property & available-for-sale equities
–
221
Collective impairment allowances 6
–
139
Perpetual subordinated debt
2,844
2,683
Term subordinated debt
5,784
8,539
Total deductions other than from tier 1 capital
(210)
(2,147)
Unconsolidated investments 5
(210)
(715)
50% of securitisation positions
–
(902)
50% of excess expected losses over impairment allowances
–
(477)
Other deductions
–
(53)
Total regulatory capital
33,556
33,543
1 Includes externally verified profits for the year to 31 December 2014 and the interim dividend of £315 million declared by the Board of Directors
after 31 December 2014.
2 Mainly comprises unrealised gains on available-for-sale securities owned by deconsolidated special purpose entities.
3 Under CRD IV transitional rules net unrealised gains on available-for-sale securities must be excluded from capital resources
4 CRD IV rules require banks to exclude from capital resources any surplus in a defined benefit pension scheme.
5 Mainly comprises investment in insurance entities. Under CRD IV rules the value of unconsolidated investments in insurance entities in 2014 falls
below the 10% threshold for deductions.
6 Under previous PRA rules collective impairment allowances on loan portfolios under the standardised approach were allowable in tier 2 capital.