HSBC 2010 Annual Report Download - page 361

359
Overview Operating & Financial Review Governance Financial Statements Shareholder Information
The amounts disclosed in the above table are nominal principal amounts and reflect HSBC’s maximum exposure
under a large number of individual guarantee undertakings. The risks and exposures arising from guarantees are
captured and managed in accordance with HSBC’s overall credit risk management policies and procedures.
Approximately half of the above guarantees have a term of less than one year. Guarantees with terms of more than
one year are subject to HSBC’s annual credit review process.
Financial Services Compensation Scheme
The Financial Services Compensation Scheme (‘FSCS’) has provided compensation to consumers following the
collapse of a number of deposit takers. The compensation paid out to consumers is currently funded through loans
from the Bank of England and HM Treasury. HSBC Bank could be liable to pay a proportion of the outstanding
borrowings that the FSCS has borrowed from HM Treasury which at 31 March 2010 stood at approximately £20bn
(US$30bn). Currently, the levy paid by the bank represents its share of the interest on these borrowings. The accrual
at 31 December 2010 was US$144m in respect of the 2010/11 and 2011/12 levy years (2009: US$182m in respect of
the 2009/10 and 2010/11 levy years).
The ultimate FSCS levy to the industry as a result of the collapses cannot currently be estimated reliably as it is
dependent on various uncertain factors including the potential recoveries of assets by the FSCS and changes in the
interest rate, the level of protected deposits and the population of FSCS members at the time.
Commitments
In addition to the commitments disclosed on page 358, at 31 December 2010, HSBC had US$1,071m (2009:
US$1,359m) of capital commitments contracted but not provided for and US$287m (2009: US$227m) of capital
commitments authorised but not contracted for.
Associates
HSBC’s share of associates’ contingent liabilities amounted to US$25,640m at 31 December 2010 (2009:
US$19,770m). No matters arose where HSBC was severally liable.
42 Lease commitments
Finance lease commitments
HSBC leases land and buildings (including branches) and equipment from third parties under finance lease
arrangements to support its operations.
At 31 December 2010 At 31 December 2009
Total future
minimum
payments
Future
interest
charges
Present value
of finance
lease
commitments
Total future
minimum
payments
Future
interest
charges
Present value
of finance
lease
commitments
US$m US$m US$m US$m US$m US$m
Lease commitments:
– no later than one year ................ 107 (20) 87 103 (29) 74
– later than one year and no later
than five years ........................... 187 (92) 95 249 (116) 133
– later than five years ................... 390 (118) 272 619 (182) 437
684 (230) 454 971 (327) 644
At 31 December 2010, future minimum sublease payments of US$436m (2009: US$512m) are expected to be
received under non-cancellable subleases at the balance sheet date.