Discontinued Operations

12 Months Ended

Dec. 31, 2015

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

2012 Discontinued Operations:

Insurance In 2013, we sold our interest in substantially all of our insurance subsidiaries to Enstar Group Ltd. for $153 million in cash and recorded a gain at sale of $21 million ($13 million after-tax), which is reflected in the table below. There were no assets or liabilities in our discontinued Insurance operations at either December 31, 2015 or December 31, 2014. The following table summarizes the operating results of our discontinued Insurance business for the periods presented:

Year Ended December 31,	2015		2014		2013
	(in millions)
Net interest income and other revenues	$	—	$	—	$	70
Loss from discontinued operations before income tax	—		—		(10		)

Commercial In 2012, we began reporting our Commercial business in discontinued operations as there were no longer any outstanding receivable balances or any remaining significant cash flows generated from this business. At December 31, 2015 and December 31, 2014, assets of our Commercial business totaled $5 million and $62 million, respectively. There were no liabilities in our Commercial business at either December 31, 2015 or December 31, 2014. The following table summarizes the operating results of our discontinued Commercial business for the periods presented:

Year Ended December 31,	2015		2014		2013
	(in millions)
Net interest income and other revenues	$	14	$	10	$	22
Income from discontinued operations before income tax	8		6		14

2011 Discontinued Operations:

Card and Retail Services In 2012, HSBC, through its wholly-owned subsidiaries HSBC Finance Corporation, HSBC USA Inc. ("HSBC USA") and other wholly-owned affiliates, sold its Card and Retail Services business to Capital One Financial Corporation (“Capital One”). In addition to receivables, the sale included real estate and certain other assets and liabilities which were sold at book value or, in the case of real estate, appraised value.

The following table summarizes the operating results of our discontinued Card and Retail Services business for the periods presented:

Year Ended December 31,	2015			2014			2013
	(in millions)
Net interest income and other revenues	$	—		$	—		$	1
Loss from discontinued operations before income tax(1)	(62		)	(33		)	(253		)

⁽¹⁾  Amounts include incremental expenses of $41 million, $7 million and $87 million during 2015, 2014 and 2013, respectively, for actions taken and actions planned to be taken in connection with an industry review of enhancement services products. See additional discussion below. For 2014 and 2013, the amounts also include expenses related to activities to complete the separation of the credit card operational infrastructure between us and Capital One. Additionally, amounts during 2015 and 2013 also reflect additional legal accruals.

At December 31, 2015 and December 31, 2014, assets of our discontinued Card and Retail Services business totaled $8 million and $1 million, respectively. Liabilities of our Card and Retail Services business totaled $102 million and $71 million, at December 31, 2015 and December 31, 2014, respectively, which primarily consists of certain legal accruals.

Through our discontinued Cards and Retail Services business, we previously offered or participated in the marketing, distribution, or servicing of products, such as identity theft protection and credit monitoring products, that were ancillary to the provision of credit to the consumer (enhancement services products). We ceased the marketing, distribution and servicing of these products by May 2012. The offering and administration of these, and other enhancement services products such as debt protection products, has been the subject of enforcement actions against other institutions by regulators, including the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency (“OCC”), and the Federal Deposit Insurance Corporation. These enforcement actions have resulted in orders to pay restitution to customers and the assessment of penalties in substantial amounts. We previously made restitution to certain customers in connection with certain enhancement services products and we continue to cooperate with our regulators in connection with their on-going reviews. In light of the actions regulators have taken in relation to other credit card issuers regarding their enhancement services products, one or more regulators may order us to pay additional restitution to customers and/or impose civil money penalties or other relief arising from our prior offering and administration of such enhancement services products. In conjunction with this on-going review of our prior offering and administration of such enhancement services products, we increased our accrual by $41 million during the fourth quarter of 2015. Given this review is on-going, the amount by which we have increased our accrual is an estimate and actual experience may differ from our estimate.