HSBC 2001 Annual Report Download - page 256

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
254
As at 31 December 2001, approximately US$34 billion of the collateral obtained from reverse repo
transactions had been sold or pledged by HSBC in connection with repo transactions and securities sold not yet
purchased (2000: approximately US$26 billion).
HSBC also enters into stock lending and borrowing transactions for which either cash or other securities may
be received in exchange. At 31 December 2001, stock lending transactions where the securities lent are subject
to sale or repledge amounted to US$3,966 million (2000: US$3,958 million). At 31 December 2001, stock
borrowing transactions where the securities borrowed are subject to sale or repledge amounted to US$2,972
million (2000: US$6,718 million).
(a) Debt swaps
Under UK GAAP, assets acquired in exchange for advances in order to achieve an orderly realisation are
included at the net book value of the advance disposed of at the date of exchange, with any provision having
been duly updated. Under SFAS 15, such assets are included at the fair value at the date of acquisition. Under
US GAAP, as the Group disposed of its remaining debt swaps accounted for under SFAS 15 during 2001 there
would be no adjustment to shareholders’ funds at 31 December 2001 (2000: decrease US$4 million). Profit
before tax would increase by US$4 million (2000: increase US$97 million; 1999: decrease US$44 million) to
show such assets at their fair value at the date of acquisition.
(b) Pension costs
For the purpose of the above reconciliations, the provisions of SFAS 87 ‘Employers’ Accounting for Pensions’
have been applied to HSBC’ s main pension plans, which make up approximately 95% of all HSBC’ s schemes in
terms of plan assets. For non-US schemes, HSBC has applied SFAS 87 ‘Employers’ Accounting for Pensions’
with effect from 30 June 1992 as it was not feasible to apply it as of January 1989, the date specified in the
standard.
The projected benefit obligation in excess of plan assets at 30 June 1992 for the HSBC Bank (UK) Pension
Scheme has been recognised as a liability under the purchase accounting requirements of APB 16 ‘Business
Combinations’ . For other pension plans, the excess of the projected benefit obligation over plan assets at 30
June 1992 is recognised as a charge to pension expense over 15 years.
On 25 March 1998, HSBC Bank Brasil S.A. – Banco Múltiplo assumed liability for pension schemes which
were previously the responsibility of Banco Bamerindus do Brasil. This transfer arose on completion of the
intervention period. The projected benefit obligation in excess of plan assets at that date has been recognised as
a liability under the purchase accounting adjustments of APB 16 ‘Business Combinations’ .
Plan assets in excess of the projected benefit obligation at 31 December 1999 for Republic New York
Corporation pension schemes have been recognised as assets under the purchase accounting requirements of
APB 16 ‘Business Combinations’ .
The projected benefit obligation in excess of plan assets at 28 July 2000 for Crédit Commercial de France has
been recognised as a liability under the purchase accounting adjustments of APB 16 ‘Business Combinations.’
Estimated pension costs for these plans computed under SFAS 87 are as follows:
2001 2000 1999
US$m US$m US$m
Components of net periodic benefit cost
Service cost............................................................................. 447 445 413
Interest cost............................................................................. 801 736 716
Expected return on plan assets................................................ (862) (764) (633)
Amortisation of prior service cost........................................... 444
Amortisation of unrecognised net liability at 30 June 1992.... 644
Amortisation of recognised net actuarial (gain)...................... (1) (47) (13)
Net periodic pension cost........................................................ 395 378 491
Employee contributions ..........................................................
–
(2) (2)
Net periodic pension cost........................................................ 395 376 489