HSBC 2009 Annual Report Download - page 496

HSBC HOLDINGS PLC
Glossary (continued)
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Term Definition
Student loan related assets Securities with collateral relating to student loans.
Subordinated liabilities Liabilities which rank after the claims of other creditors of the issuer in the event o
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insolvency or liquidation.
Sub-prime A US description for customers with high credit risk, for example those who have
limited credit histories, modest incomes, high debt-to-income ratios, high
loan-to-value ratios (for real estate secured products) or have experienced credit
problems caused by occasional delinquencies, prior charge-offs, bankruptcy or
other credit-related problems.
Tier 1 capital A component of regulatory capital, comprising core tier 1 and other tier 1 capital.
Other tier 1 capital includes qualifying hybrid capital instruments such as
non-cumulative perpetual preference shares and innovative tier 1 securities.
Tier 2 capital A component of regulatory capital, comprising qualifying subordinated loan capital,
related minority interests, allowable collective impairment allowances and
unrealised gains arising on the fair valuation of equity instruments held as
available-for-sale. Tier 2 capital also includes reserves arising from the
revaluation of properties.
Troubled debt restructuring A US description for restructuring a debt whereby the creditor for economic or legal
reasons related to a debtor’s financial difficulties grants a concession to the debto
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that it would not otherwise consider.
Unfunded exposures An exposure where the notional amount of a contract has not been exchanged.
Value-at-risk
(‘VAR’)
A technique that measures the loss that could occur on risk positions as a result of
adverse movements in market risk factors (e.g. rates, prices, volatilities) over a
specified time horizon and to a given level of confidence.
Wholesale loans Money loaned to sovereign borrowers, banks, non-bank financial institutions and
corporate entities.
Write-down Reduction in the carrying value of an asset due to impairment or fair value
movements.
Wrong-way risk An adverse correlation between the counterparty’s probability of default and the
mark-to-market value of the underlying transaction.