HSBC 2009 Annual Report Download - page 452

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
Notes 31 and 32
450
31 Provisions
2009 2008
US$m US$m
At 1 January ............................................................................................................................................. 1,730 1,958
Additional provisions/increase in provisions1 ......................................................................................... 894 738
Provisions utilised .................................................................................................................................... (684) (624)
Amounts reversed .................................................................................................................................... (225) (147)
Exchange differences and other movements ........................................................................................... 250 (195)
At 31 December ....................................................................................................................................... 1,965 1,730
1 The increase in provisions includes the unwinding of discounts of US$3 million (2008: US$3 million) in relation to vacant space
provisions and US$32 million (2008: US$21 million) in relation to Brazilian provisions for civil and fiscal labour claims.
Included within provisions are:
(i) Provisions for onerous property contracts of US$158 million (2008: US$85 million), of which US$32 million
(2008: US$20 million) relates to discounted future costs associated with leasehold properties that became vacant
as a consequence of HSBC’s move to Canary Wharf in 2002. The provisions cover rent voids while finding new
tenants, shortfalls in expected rent receivable compared with rent payable and the cost of refurbishing the
buildings to attract tenants. Uncertainties arise from movements in market rents, delays in finding new tenants
and the timing of rental reviews.
(ii) Labour, civil and fiscal litigation provisions in HSBC’s Brazil operations of US$538 million (2008:
US$334 million). These relate to labour and overtime litigation claims brought by employees after leaving the
bank. The provisions are based on the expected number of departing employees, their individual salaries and
historical trends. The timing of the settlement of these claims is uncertain.
(iii) Provisions of US$449 million (2008: US$439 million) have been made in respect of costs arising from
contingent liabilities and contractual commitments (Note 39), including guarantees of US$56 million
(2008: US$35 million) and commitments of US$172 million (2008: US$192 million).
32 Subordinated liabilities
HSBC
2009 2008
US$m US$m
Subordinated liabilities
At amortised cost .............................................................................................................................. 30,478 29,433
– subordinated liabilities ................................................................................................................. 23,893 24,618
– preferred securities ....................................................................................................................... 6,585 4,815
Designated at fair value (Note 27) ................................................................................................... 24,433 23,717
– subordinated liabilities ................................................................................................................. 20,180 20,316
– preferred securities ....................................................................................................................... 4,253 3,401
54,911 53,150
Subordinated liabilities
HSBC Holdings ................................................................................................................................ 23,048 23,544
Other HSBC ...................................................................................................................................... 31,863 29,606
54,911 53,150