HSBC 2011 Annual Report Download - page 117

115
Overview Operating & Financial Review Corporate Governance Financial Statements Shareholder Information
experienced positive growth during the year and,
although it has shown modest growth, the French
economy is expected to stay resilient should the
crisis spread to other eurozone countries.
At 31 December 2011, our exposure to the
sovereign and agency debt of Greece, Ireland, Italy,
Portugal and Spain was US$4.7bn, US$2.2bn lower
than at the end of 2010. Of the total financial
investments available for sale in these countries,
approximately 46% mature within one year, 21%
between one and three years and 33% in excess of
three years.
At 31 December 2011, our exposure to the
sovereign and agency debt of Germany, France and
the Netherlands was US$87bn. Of the total financial
investments available for sale in these countries,
approximately 26% mature within one year, 28%
between one and three years and 46% in excess
of three years. Our exposure in the Netherlands
predominantly comprises cash placements with the
Dutch Central Bank, which in turn are put into the
euro clearing system (Target 2) managed by the
ECB. Our exposure in Germany and France is
commensurate to the size of our operations and is
well diversified across sectors and products.
During 2011, an impairment charge of
US$212m was recognised in respect of Greek
sovereign and agency exposures classified as
available for sale, reflecting the further deterioration
in Greece’s fiscal position and the expected effect of
the range of recently announced support measures.
The amount of the impairment charge represented the
cumulative fair value loss on these securities as at the
end of 2011, and does not necessarily represent the
expectation of future cash losses. The impairment
charge was transferred from the available-for-sale
reserve to the income statement. Our sovereign
exposures to Ireland, Italy, Portugal and Spain were
not considered to be impaired at 31 December 2011
because, despite financial difficulties in these
countries, the situation is not severe enough to
conclude that loss events have occurred which will
have an impact on the future cash flows of these
countries’ sovereign securities.
Exposures to peripheral eurozone countries – sovereigns and agencies
(Audited)
Greece Ireland Italy Portugal Spain Total
US$bn US$bn US$bn US$bn US$bn US$bn
At 31 December 2011
Cash and balances at central banks ... – – – – 0.1 0.1
Financial investments held to
maturity ......................................... – – 0.1 – – 0.1
– fair value ..................................... – – 0.1 – – 0.1
Financial investments available
for sale11 ......................................... 0.1 0.1 0.8 0.1 0.9 2.0
– cumulative impairment ............... 0.2 – – – – 0.2
– amortised cost ............................. – 0.1 0.8 0.1 0.9 1.9
Net trading assets ............................... 0.3 0.2 1.4 0.4 0.1 2.4
– gross trading assets ..................... 0.4 0.3 8.3 0.6 1.8 11.4
– short positions ............................ (0.1) (0.1) (6.9) (0.2) (1.7) (9.0)
Derivatives12 ...................................... – – – – 0.1 0.1
– gross derivative assets ................ – 0.3 0.7 0.3 0.2 1.5
– collateral and derivative
liabilities ................................ – (0.3) (0.7) (0.3) (0.1) (1.4)
Total ................................................... 0.4 0.3 2.3 0.5 1.2 4.7
Of which, on-balance sheet
exposures held to meet
insurance liabilities ........................ – 0.1 0.3 0.1 0.4 0.9
– discretionary participatory ......... – 0.1 0.3 0.1 0.4 0.9
Off-balance sheet exposures .............. – – – – 1.0 1.0
– commitments .............................. – – – – 1.0 1.0
Total credit default swaps
– CDS asset positions .................... 1.2 0.2 0.6 0.4 0.4 2.8
– CDS liability positions ............... (0.7) (0.2) (0.6) (0.3) (0.4) (2.2)
– CDS asset notionals .................... 1.8 0.9 3.9 1.2 3.3 11.1
– CDS liability notionals ............... 1.0 0.9 3.8 1.2 3.5 10.4
For footnotes, see page 185.