Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2012

The following tables present related party balances and the income and (expense) generated by related party transactions for continuing operations:


	September 30, 2012		December 31, 2011
	(in millions)
Assets:
Cash	$	726	$	209
Securities purchased under agreements to resell		900		920
Derivative related assets		10		-
Other assets		147		124

Total assets	$	1,783	$	1,253

Liabilities:
Due to affiliates (includes $501 million and $447 million at September 30, 2012 and December 31, 2011, respectively, carried at fair value)	$	7,826	$	8,262
Derivative related liabilities		-		25
Other liabilities⁽¹⁾		24		47

Total liabilities	$	7,850	$	8,334

⁽¹⁾	Other liabilities includes $15 million and $55 million at September 30, 2012 and December 31, 2011, respectively, related to accrued interest receivable on derivative positions and other amounts with affiliates.


	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
	(in millions)
Income/(Expense):
Interest income from HSBC affiliates	$	1		$	1		$	3		$	5
Interest expense paid to HSBC affiliates⁽¹⁾		(140	)		(140	)		(420	)		(436	)

Net interest income (loss)		(139	)		(139	)		(417	)		(431	)

Gain (loss) on FVO debt with affiliate		(35	)		19			(54	)		12

HSBC affiliate income:
Servicing and other fees from HSBC affiliates:
Real estate secured servicing and related fees from HSBC Bank USA		3			2			8			8
Other servicing, processing, origination and support revenues		1			3			6			8
HSBC Technology and Services (USA) Inc. (“HTSU”) administrative fees and rental revenue⁽²⁾		4			(1	)		12			1

Total servicing and other fees from HSBC affiliates		8			4			26			17

Support services from HSBC affiliates		(84	)		(68	)		(229	)		(207	)

Stock based compensation expense with HSBC		(2	)		(2	)		(6	)		(6	)

⁽¹⁾	Includes interest expense paid to HSBC affiliates for debt held by HSBC affiliates as well as net interest paid to or received from HSBC affiliates on risk management positions related to non-affiliated debt.

⁽²⁾	Rental revenue/(expense) from HTSU totaled $4 million and $11 million during the three and nine months ended September 30, 2012, respectively, compared to $(2) million and $(3) million in the year-ago periods.

Fees Received and Paid

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In the fourth quarter of 2009, an initiative was begun to streamline the servicing of real estate secured receivables across North America. As a result, certain functions that we had previously performed for our mortgage customers were being performed by HSBC Bank USA for all North America mortgage customers, including our mortgage customers. Additionally, we began performing certain functions for all North America mortgage customers where these functions had been previously provided separately by each entity. During 2011, we began a process to separate these functions so that each entity will be servicing its own mortgage customers when the process is completed. The following table summarizes fees received and paid during the three and nine months ended September 30, 2012 and 2011, respectively:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
	(in millions)
Fees received from HSBC Bank USA	$	2	$	2	$	5	$	5
Fees paid to HSBC Bank USA		-		3		3		7

Receivable Portfolios

The following table summarizes the receivable portfolios we serviced for HSBC Bank USA at December 31, 2011 as well as the cumulative amount of receivables sold on a daily basis, gains recorded on these sales as well as servicing fees recognized during the three and nine months ended September 30, 2012 and 2011:


			Credit Cards
	Private Label		General Motors		Union Privilege		Other		Total
	(in billons)
Receivables serviced for HSBC Bank USA:
September 30, 2012	$	-	$	-	$	-	$	-	$	-
December 31, 2011		12.8		4.1		3.5		2.0		22.4
Total of receivables sold on a daily basis to HSBC Bank USA during:
Three months ended September 30, 2012⁽¹⁾	$	-	$	-	$	-	$	-	$	-
Three months ended September 30, 2011		3.7		3.2		.8		1.0		8.7
Nine months ended September 30, 2012⁽¹⁾		4.4		3.9		1.0		1.1		10.4
Nine months ended September 30, 2011		10.5		9.6		2.3		3.0		25.4

⁽¹⁾	Amounts shown for 2012 represent totals from the beginning of the period through May 1, 2012, the date of the sale of our Card and Retail Services business to Capital One.