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Related Party Transactions (Tables)
6 Months Ended
Jun. 30, 2018
Related Party Transactions [Abstract]  
Summary of Related Party Transactions
The following tables and discussions below present the more significant related party balances and the income (expense) generated by related party transactions:
 
June 30, 2018
 
December 31, 2017
 
(in millions)
Assets:
 
 
 
Cash and due from banks
$
351

 
$
191

Interest bearing deposits with banks
182

 
473

Securities purchased under agreements to resell(1)
330

 
1,115

Trading assets
111

 
63

Loans
1,895

 
6,750

Other(2)
212

 
134

Total assets
$
3,081

 
$
8,726

Liabilities:
 
 
 
Deposits
$
11,502

 
$
10,521

Trading liabilities
174

 
737

Short-term borrowings
838

 
1,595

Long-term debt
4,843

 
4,841

Other(2)
282

 
387

Total liabilities
$
17,639

 
$
18,081

 
(1) 
Reflects purchases of securities which other HSBC affiliates have agreed to repurchase.
(2) 
Other assets and other liabilities primarily consist of derivative balances associated with hedging activities and other miscellaneous account receivables and payables.
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
 
(in millions)
Income/(Expense):
 
 
 
 
 
 
 
Interest income
$
24

 
$
11

 
$
46

 
$
35

Interest expense
(90
)
 
(70
)
 
(168
)
 
(136
)
Net interest expense
(66
)
 
(59
)
 
(122
)
 
(101
)
Trading revenue (expense)
(627
)
 
(891
)
 
531

 
(806
)
Servicing and other fees from HSBC affiliates:(1)
 
 
 
 
 
 
 
HSBC Bank plc
43

 
34

 
84

 
75

HSBC Markets (USA) Inc. ("HMUS")
30

 
18

 
61

 
35

HSBC Finance Corporation ("HSBC Finance")
1

 
3

 
2

 
37

Other HSBC affiliates
13

 
26

 
39

 
48

Total servicing and other fees from HSBC affiliates
87

 
81

 
186

 
195

Gain (loss) on instruments designated at fair value and related derivatives
135

 
164

 
(303
)
 
524

Support services from HSBC affiliates:(1)
 
 
 
 
 
 
 
HSBC Technology & Services (USA) ("HTSU")
(310
)
 
(302
)
 
(608
)
 
(595
)
HMUS
(25
)
 
(31
)
 
(56
)
 
(60
)
Other HSBC affiliates
(70
)
 
(66
)
 
(152
)
 
(128
)
Total support services from HSBC affiliates
(405
)
 
(399
)
 
(816
)
 
(783
)
Rental income from HSBC affiliates, net(1)(2)
14

 
15

 
26

 
28

Stock based compensation expense(3)
(10
)
 
(11
)
 
(15
)
 
(18
)

 
(1) 
During the fourth quarter of 2017, we changed our presentation for certain cost reimbursements that were previously netted as an offset to affiliate expense and began presenting these reimbursements gross in affiliate income for consistency in presentation across similar transactions. Separately, we also concluded that rental revenue we receive from our affiliates for rent on certain office space would be better presented as a reduction to occupancy expense as opposed to a reduction to affiliate expense. As a result, we have reclassified prior period amounts in order to conform to the current year presentation, which increased servicing and other fees from HSBC affiliates by $29 million and $61 million, respectively, increased support services from HSBC affiliates by $44 million and $89 million, respectively, and increased rental income from HSBC affiliates, net by $15 million and $28 million, respectively, during the three and six months ended June 30, 2017. Reported net income for the three and six months ended June 30, 2017 remained unaffected.
(2) 
We receive rental revenue from our affiliates, and in some cases pay rental expense to our affiliates, for rent on certain office space. Net rental income from our affiliates is recorded as a component of occupancy expense, net in our consolidated statement of income.
(3) 
Employees may participate in one or more stock compensation plans sponsored by HSBC. These expenses are included in salaries and employee benefits in our consolidated statement of income. Certain employees are also eligible to participate in a defined benefit pension plan and other postretirement plans sponsored by HSBC North America which are discussed in Note 12, "Pension and Other Postretirement Benefits."
Schedule of Assets by Related Party
At June 30, 2018 and December 31, 2017, we have the following loan balances outstanding with HSBC affiliates:
 
June 30, 2018
 
December 31, 2017
 
(in millions)
HMUS and subsidiaries
$
1,890

 
$
6,690

Other short-term affiliate lending
5

 
60

Total loans
$
1,895

 
$
6,750