Strategic Initiatives

12 Months Ended

Dec. 31, 2021

Restructuring and Related Activities [Abstract]

In February 2020, our Board of Directors approved a strategic plan to restructure our operations ("Restructuring Plan") in alignment with HSBC’s global strategy to refocus our wholesale operations to better serve our international corporate clients and restructure our retail operations to better meet the needs of globally mobile and affluent clients. Our Restructuring Plan also includes streamlining our functional and operations support model by removing duplication and reducing the size of our balance sheet to better align with the scope and scale of the U.S. opportunity. As a result of the May 2021 decision to further reposition our Wealth and Personal Banking business, along with the identification of additional restructuring activities primarily relating to further simplifying our wholesale operations and support service functions as well as additional investments in systems infrastructure and new technologies, we currently expect to incur pre-tax charges over the three-year period of 2020-2022 of approximately $780-$860 million ($590-$650 million after-tax). The following table presents a summary of the total pre-tax charges we expect to incur by reportable segment:


	Expected Charges in Connection with Restructuring Plan
	Minimum		Maximum
	(in millions)
Wealth and Personal Banking	$	215	$	235
Commercial Banking	8		10

Markets and Securities Services	82		88
Global Banking and Markets Other	10		12
Corporate Center(1)	465		515
Total	$	780	$	860

(1)Includes restructuring charges primarily related to lease impairment and other related costs, support service project costs and severance costs associated with certain centralized activities and functions.

We continue to progress our Restructuring Plan, including simplification of our support service functions, consolidation of our retail middle and back office functions under a single operations structure and the exit of certain derivative contracts. In 2021, we also completed the consolidation of our wholesale middle and back office functions as well as the transfer of interest rate derivative contracts associated with Fixed Income activities to HSBC Bank plc. In addition, as noted above, during the second quarter of 2021, we made the decision to exit our mass market retail banking business, including the sale or closure of certain branches, and transferred certain assets and liabilities to held for sale. See Note 4, "Branch Assets and Liabilities Held for Sale," for additional information. In 2020, we also completed the initial consolidation of our retail branch network and the creation of our Wealth and Personal Banking business. To date, we have recorded a total of $569 million of pre-tax charges in connection with our Restructuring Plan, of which $289 million and $280 million were recorded during 2021 and 2020, respectively. We remain committed to our multi-year strategic plan to re-profile our business.

The following table summarizes the changes in the liability associated with our Restructuring Plan during 2021 and 2020:


	Severance and Other Employee Costs(1)		Lease Termination and Associated Costs(2)		Other(3)		Total
	(in millions)












Year Ended December 31, 2021
Restructuring liability at beginning of period	$	10	$	23	$	—	$	33
Restructuring costs accrued during the period	12		38		15		65
Restructuring costs paid during the period	(12)		(15)		(15)		(42)
Restructuring liability at end of period	$	10	$	46	$	—	$	56

Year Ended December 31, 2020
Restructuring liability at beginning of period	$	—	$	—	$	—	$	—
Restructuring costs accrued during the period	28		29		—		57
Restructuring costs paid during the period	(18)		(6)		—		(24)
Restructuring liability at end of period	$	10	$	23	$	—	$	33

(1)Severance and other employee costs are included in salaries and employee benefits in the consolidated statement of income (loss). The majority of these costs were reported in the Wealth and Personal Banking business segment. Not included in these costs are allocated severance costs from HSBC Technology & Services ("HTSU") discussed further below.

(2)Primarily includes real estate taxes, service charges and decommissioning costs. Lease termination and associated costs are included in occupancy expense, net in the consolidated statement of income (loss) and were reported in the Wealth and Personal Banking and the Corporate Center business segments.

(3)Primarily includes professional fees and other staff costs, which are included in other expenses in the consolidated statement of income (loss).

In addition to the restructuring costs reflected in the rollforward table above, during the second quarter of 2021, as part of our decision to exit our mass market retail banking business we determined that we would exit approximately 30 branches. As a result, we recorded impairment charges during the second quarter of 2021 to write-off the assets associated with these branches, including $29 million of lease ROU assets, $18 million of leasehold improvement assets and $3 million of equipment assets. During 2021, we also recorded impairment charges of $40 million to write-down the lease ROU assets and leasehold improvement assets primarily associated with certain office space that we determined we would exit and $13 million to write-down one of our owned office space properties to fair value upon transferring it to held for sale during the fourth quarter.

During the first quarter of 2020, we determined that we would exit approximately 60 branches (in addition to the approximately 20 branches for which we disclosed plans to exit in 2019). As a result, we recorded impairment charges during 2020 to write-down the lease ROU assets, net of estimated sublease income, by $67 million and to write-down the leasehold improvement assets associated with these branches by $16 million based on their estimated remaining useful lives. These branches were closed in 2020. During 2020, we also recorded impairment charges of $9 million to write-down the lease ROU assets associated with certain office space that we determined we would exit. Lease impairment charges are reflected in occupancy expense, net in the consolidated statement of income (loss) and were reported in the Wealth and Personal Banking and the Corporate Center business segments.

In addition, during 2021 and 2020, we recorded $35 million and $67 million, respectively, of trading losses associated with the continued exit of certain derivative contracts as part of our Restructuring Plan. These losses are included in trading revenue in the consolidated statement of income (loss) and were reported in the Markets and Securities Services and the Corporate Center business segments. Beginning in 2020 and into 2021, we also completed the transfer of substantially all interest rate derivative contracts associated with Fixed Income activities to HSBC Bank plc. These activities were being consolidated in and operated from HSBC Bank plc to better utilize HSBC Group's global scale, which allows us to record revenue as a business introducer and hold fewer assets on our balance sheet. Transfers of interest rate derivative contracts with a notional value of $25.9 billion and $64.6 billion were completed during 2021 and 2020, respectively. The remainder of these contracts not transferred are being retained as a run-off portfolio. The transferred derivatives were substantially fully collateralized which resulted in an immaterial impact on our consolidated balance sheet.

Our Restructuring Plan also resulted in costs being allocated to us from HTSU, primarily support service project costs and severance costs, which are reflected in support services from HSBC affiliates in the consolidated statement of income (loss). During 2021, we recorded $86 million of allocated costs from HTSU related to restructuring activities compared with $64 million of allocated costs during 2020. These costs were reported in the Corporate Center business segment.

HSBC Group Restructuring Separate from the charges related to our Restructuring Plan as detailed above, during 2021, we also recorded $53 million of allocated costs from other HSBC affiliates related to the HSBC Group's restructuring activities, primarily support service project costs and severance costs, compared with $16 million of allocated costs during 2020. These costs are reflected in support services from HSBC affiliates in the consolidated statement of income (loss) and were reported in the Corporate Center business segment.