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Derivative Financial Instruments (Tables)
12 Months Ended
Dec. 31, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of Derivative Instruments The following table presents the fair value of derivative contracts by major product type on a gross basis. Gross fair values exclude the effects of both counterparty netting as well as collateral, and therefore are not representative of our exposure. The table below also presents the amounts of counterparty netting and cash collateral that have been offset in the consolidated balance sheet, as well as cash and securities collateral posted and received under enforceable master netting agreements that do not meet the criteria for netting. Derivative assets and liabilities which are not subject to an enforceable master netting agreement, or are subject to a netting agreement where an appropriate legal opinion to determine such agreements are enforceable has not been either sought or obtained, have not been netted in the following table. Where we have received or posted collateral under netting agreements where an appropriate legal opinion to determine such agreements are enforceable has not been either sought or obtained, the related collateral also has not been netted in the following table.
December 31, 2020December 31, 2019
Derivative AssetsDerivative LiabilitiesDerivative AssetsDerivative Liabilities
(in millions)
Derivatives accounted for as fair value hedges(1)
OTC-cleared(2)
$ $ $— $
Bilateral OTC(2)
 2 — 164 
Interest rate contracts 2 — 165 
Derivatives accounted for as cash flow hedges(1)
Foreign exchange contracts - bilateral OTC(2)
 53 16 20 
Interest rate contracts - bilateral OTC(2)
  — 
Total derivatives accounted for as hedges 55 16 186 
Trading derivatives not accounted for as hedges(3)
Exchange-traded(2)
14 9 110 
OTC-cleared(2)
 58 167 29 
Bilateral OTC(2)
6,584 6,555 11,990 13,324 
Interest rate contracts(4)
6,598 6,622 12,267 13,356 
Exchange-traded(2)
  80 — 
OTC-cleared (2)
168  — — 
Bilateral OTC(2)
18,299 18,549 16,440 15,786 
Foreign exchange contracts18,467 18,549 16,520 15,786 
Equity contracts - Bilateral OTC(2)
4,009 4,200 3,753 3,993 
Exchange-traded(2)
 28 71 80 
Bilateral OTC(2)
1,323 1,550 1,087 1,309 
Precious metals contracts1,323 1,578 1,158 1,389 
OTC-cleared(2)
  — 
Bilateral OTC(2)
367 233 1,138 1,024 
Credit contracts367 233 1,139 1,024 
Other non-qualifying derivatives not accounted for as hedges(1)
Interest rate contracts - bilateral OTC(2)
89 1 128 51 
Foreign exchange contracts - bilateral OTC(2)
 1 — — 
Equity contracts - bilateral OTC(2)
1,607 91 1,354 75 
OTC-cleared(2)
 14 — — 
Bilateral OTC(2)
 50 — 44 
Credit contracts 64 — 44 
Other contracts - bilateral OTC(2)(5)
8 67 10 85 
Total derivatives32,468 31,461 36,345 35,989 
Less: Gross amounts of receivable / payable subject to enforceable master netting agreements(6)(8)
25,537 25,537 29,510 29,510 
Less: Gross amounts of cash collateral received / posted subject to enforceable master netting agreements(7)(8)
4,079 3,377 3,683 4,390 
Net amounts of derivative assets / liabilities presented in the balance sheet2,852 2,547 3,152 2,089 
Less: Gross amounts of financial instrument collateral received / posted subject to enforceable master netting agreements but not offset in the consolidated balance sheet
817 691 891 553 
Net amounts of derivative assets / liabilities$2,035 $1,856 $2,261 $1,536 
(1)Derivative assets / liabilities related to cash flow hedges, fair value hedges and derivative instruments held for purposes other than for trading are recorded in other assets / interest, taxes and other liabilities on the consolidated balance sheet.
(2)Over-the-counter ("OTC") derivatives include derivatives executed and settled bilaterally with counterparties without the use of an organized exchange or central clearing house. The credit risk associated with bilateral OTC derivatives is managed through obtaining collateral and enforceable master netting agreements. OTC-cleared derivatives are executed bilaterally in the OTC market but then novated to a central clearing counterparty, whereby the central clearing counterparty becomes the counterparty to each of the original counterparties. Exchange traded derivatives are executed directly on an organized exchange. Credit risk is minimized for OTC-cleared derivatives and exchange traded derivatives through daily margining requirements. In addition, OTC-cleared interest rate and credit derivatives with certain central clearing counterparties are settled daily.
(3)Trading related derivative assets / liabilities are recorded in trading assets / trading liabilities on the consolidated balance sheet.
(4)The decreases in interest rate derivative assets and liabilities at December 31, 2020 primarily reflects reduced positions driven by the exit or transfer of certain contracts as part of our Restructuring Plan. See Note 3, "Strategic Initiatives," for additional information.
(5)Consists of swap agreements entered into in conjunction with the sales of Visa Inc. ("Visa") Class B common shares ("Class B Shares").
(6)Represents the netting of derivative receivable and payable balances for the same counterparty under enforceable netting agreements.
(7)Represents the netting of cash collateral posted and received by counterparty under enforceable netting agreements.
(8)Netting is performed at a counterparty level in cases where enforceable master netting agreements are in place, regardless of the type of derivative instrument. Therefore, we have not allocated netting to the different types of derivative instruments shown in the table above.
[1]
Schedule of Gains and Losses on Fair Value Hedging Instruments
The following table presents the carrying amount of hedged items in fair value hedges recognized in the consolidated balance sheet at December 31, 2020 and 2019, along with the cumulative amount of fair value hedging adjustments included in the carrying amount of those hedged items:
 
Carrying Amount of Hedged Items(1)
Cumulative Amount of Fair Value Hedging Adjustments Increasing (Decreasing) the
Carrying Amount of Hedged Items
ActiveDiscontinuedTotal
 (in millions)
At December 31, 2020
Securities available-for-sale ("AFS")$7,966 $681 $738 $1,419 
Deposits(2)
5,214 214  214 
Long-term debt2,227 242 (15)227 
At December 31, 2019
Securities AFS7,277 554 428 982 
Long-term debt10,975 285 (32)253 
(1)The carrying amount of securities AFS represents the amortized cost basis.
(2)During 2020, $5.0 billion of fixed-rate senior debt obligations issued to HSBC North America were recharacterized as time deposits. The cumulative amount of fair value hedging adjustments associated with this debt was reclassified to deposits. See Note 23, "Related Party Transactions," for additional information.
The following table presents information on gains and losses on derivative instruments designated and qualifying as hedging instruments and the hedged items in fair value hedges and their locations on the consolidated statement of income (loss):
 
Gain (Loss) on Derivatives(1)
Gain (Loss) on Hedged Items(1)
Net Ineffective Gain (Loss) Recognized(1)
  
Net Interest
Income
Other IncomeNet Interest
Income
Other IncomeOther Income
 (in millions)
Year Ended December 31, 2020
Interest rate contracts / Securities AFS$(731)$ $900 $ $ 
Interest rate contracts / Deposits148  (261)  
Interest rate contracts / Long-term debt165  (261)  
Total$(418)$ $378 $ $ 
Year Ended December 31, 2019
Interest rate contracts / Securities AFS$(776)$— $1,086 $— $— 
Interest rate contracts / Long-term debt235 — (703)— — 
Total$(541)$— $383 $— $— 
Year Ended December 31, 2018
Interest rate contracts / Securities AFS$(41)$322 $362 $(309)$13 
Interest rate contracts / Long-term debt(58)74 (233)(74)— 
Total$(99)$396 $129 $(383)$13 
(1)As a result of adopting new accounting guidance in 2019, beginning January 1, 2019, we report gains and losses on the derivatives and the hedged items in fair value hedges in net interest income. Prior to January 1, 2019, fair value hedge ineffectiveness was separately measured and reported in other income.
Schedule of Gains and Losses on Cash Flow Hedging Instruments
The following table presents information on gains and losses on derivative instruments designated and qualifying as hedging instruments in cash flow hedges (including amounts recognized in AOCI from discontinued cash flow hedges) and their locations on the consolidated statement of income (loss):
 
Gain (Loss) Recognized in
AOCI on Derivatives(1)
Location of Gain (Loss)
Reclassified from AOCI into Income(1)
Gain (Loss) Reclassified From
AOCI into Income(1)
202020192018202020192018
 (in millions)
Year Ended December 31,
Foreign exchange contracts$ $$(2)Net interest income$ $— $— 
Interest rate contracts84 (27)31 Net interest income(11)(35)(23)
Total$84 $(24)$29 $(11)$(35)$(23)
(1)As a result of adopting new accounting guidance in 2019, beginning January 1, 2019, gains and losses on the derivatives in cash flow hedges are initially reported in AOCI and then reclassified into earnings in the same accounting period in which the designated forecasted transaction or hedged item affects earnings. Prior to January 1, 2019, cash flow hedge ineffectiveness was separately measured and reported immediately in other income. Cash flow hedge ineffectiveness was immaterial during 2018.
Schedule of Gains and Losses on Derivative Instruments Included in Trading Activities
The following table presents information on gains and losses on derivative instruments held for trading purposes and their locations on the consolidated statement of income (loss):
 Location of Gain (Loss)
Recognized in Income on Derivatives
Gain (Loss) Recognized in Income on Derivatives
Year Ended December 31,
202020192018
 (in millions)
Interest rate contractsTrading revenue$396 $(89)$303 
Foreign exchange contractsTrading revenue(747)310 105 
Equity contractsTrading revenue57 (496)100 
Precious metals contractsTrading revenue594 312 376 
Credit contractsTrading revenue(556)(445)(52)
Total$(256)$(408)$832 
Schedule of Gains and Losses on Derivative Instruments Held for Non-qualifying Hedging Activities
The following table presents information on gains and losses on derivative instruments held for non-qualifying hedging and other activities and their locations on the consolidated statement of income (loss):
 Location of Gain (Loss)
Recognized in Income on Derivatives
Gain (Loss) Recognized in Income on Derivatives
Year Ended December 31,
202020192018
 (in millions)
Interest rate contractsGain (loss) on instruments designated at fair value and related derivatives$229 $364 $(120)
Interest rate contractsOther income(6)(1)(1)
Foreign exchange contractsGain (loss) on instruments designated at fair value and related derivatives(1)(3)(11)
Equity contractsGain (loss) on instruments designated at fair value and related derivatives592 1,809 (981)
Credit contractsGain (loss) on instruments designated at fair value and related derivatives37 — — 
Credit contractsOther income(18)(24)(3)
Other contracts(1)
Other income(9)(63)(15)
Total$824 $2,082 $(1,131)
(1)Consists of swap agreements entered into in conjunction with the sales of Visa Class B Shares.
Credit-Risk Related Contingent Features
The following table presents the amount of additional collateral that we would be required to post (from the current collateral level) related to derivative instruments with credit-risk related contingent features if our long-term ratings were downgraded by one or two notches. A downgrade by a single rating agency that does not result in a rating lower than a preexisting corresponding rating provided by another rating agency will generally not result in additional collateral.
One-notch downgradeTwo-notch downgrade
 (in millions)
Amount of additional collateral to be posted upon downgrade$— $121 
Notional Value of Derivative Contracts The following table summarizes the notional values of derivative contracts:
At December 31,20202019
 (in millions)
Interest rate:
Futures and forwards$37,098 $597,980 
Swaps406,609 2,130,442 
Options written33,269 158,861 
Options purchased32,427 164,265 
Total interest rate509,403 3,051,548 
Foreign exchange:
Swaps, futures and forwards1,195,449 1,362,959 
Options written53,200 44,876 
Options purchased53,595 46,085 
Spot57,040 67,060 
Total foreign exchange1,359,284 1,520,980 
Commodities, equities and precious metals:
Swaps, futures and forwards54,458 55,678 
Options written17,078 39,035 
Options purchased27,083 49,517 
Total commodities, equities and precious metals98,619 144,230 
Credit derivatives52,611 90,049 
Other contracts(1)
1,216 1,044 
Total$2,021,133 $4,807,851 
(1)Consists of swap agreements entered into in conjunction with the sales of Visa Class B Shares.
[1] Netting is performed at a counterparty level in cases where enforceable master netting agreements are in place, regardless of the type of derivative instrument. Therefore, we have not allocated netting to the different types of derivative instruments shown in the table above.