In the normal course of business, we conduct transactions with HSBC and its subsidiaries. HSBC policy requires that these transactions occur at prevailing market rates and terms and, where applicable, these transactions are compliant with United States banking regulations. All extensions of credit by (and certain credit exposures of) HSBC Bank USA to other HSBC affiliates (other than FDIC insured banks) are legally required to be secured by eligible collateral. The following tables and discussions below present the more significant related party balances and the income (expense) generated by related party transactions:


At December 31,	2021		2020
	(in millions)
Assets:
Cash and due from banks	$	300	$	516
Interest bearing deposits with banks	59		187
Securities purchased under agreements to resell(1)	594		3,941
Trading assets	119		314
Loans	2,793		1,100
Other(2)	401		319
Total assets	$	4,266	$	6,377
Liabilities:
Deposits	$	9,137	$	15,163
Trading liabilities(3)	130		2,375
Short-term borrowings	309		270
Long-term debt	5,511		2,878
Other(2)	277		268
Total liabilities	$	15,364	$	20,954



Year Ended December 31,	2021		2020		2019
	(in millions)
Income (Expense):
Interest income	$	26	$	55	$	168
Interest expense	(237)		(354)		(538)
Net interest expense	(211)		(299)		(370)
Trading revenue (expense)	(3,182)		(93)		(2,669)
Servicing and other fees from HSBC affiliates:
HSBC Bank plc	176		186		171
HSBC Markets (USA) Inc. ("HMUS")	91		107		111

Other HSBC affiliates	54		54		72
Total servicing and other fees from HSBC affiliates	321		347		354
Gain on instruments designated at fair value and related derivatives	1,128		699		1,986
Support services from HSBC affiliates:
HTSU	(1,061)		(1,066)		(1,153)
HMUS	(118)		(89)		(100)
Other HSBC affiliates	(441)		(396)		(385)
Total support services from HSBC affiliates	(1,620)		(1,551)		(1,638)
Rental income from HSBC affiliates, net(1)	42		44		55
Stock based compensation expense(2)	(15)		(22)		(25)

(1)We receive rental income from our affiliates, and in some cases pay rental expense to our affiliates, for certain office space. Net rental income from our affiliates is recorded as a component of occupancy expense, net in our consolidated statement of income (loss).

(2)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 (loss). 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 22, "Pension and Other Postretirement Benefits."

We use HSBC affiliates to fund a portion of our borrowing and liquidity needs. At December 31, 2021 and 2020, long-term debt with affiliates reflected $5.5 billion and $2.9 billion, respectively, of borrowings from HSBC North America. The remaining outstanding balances include:

We have a $4.0 billion uncommitted line of credit with HSBC North America. The available borrowing capacity under this facility is fungible between HSBC USA, HSBC Securities (USA) Inc. ("HSI") and HSBC North America, but total borrowings cannot collectively exceed $4.0 billion at any time. We had no outstanding borrowing under this credit facility at either December 31, 2021 or 2020.

HMUS and subsidiaries We have extended loans and lines of credit, some of them uncommitted, to HMUS and its subsidiaries in the amount of $11.9 billion and $12.0 billion at December 31, 2021 and 2020, respectively, of which $1.6 billion and $1.1

billion, respectively, was outstanding. The maturities of the outstanding balances range from overnight to three months. Each borrowing is re-evaluated prior to its maturity date and either extended or allowed to mature.

HSBC North America Under the $4.0 billion uncommitted fungible line of credit with HSBC North America as discussed above, there was $1.0 billion and nil outstanding at December 31, 2021 and 2020, respectively. The outstanding balance matures in April 2022.

Other short-term affiliate lending In addition to loans and lines extended to affiliates discussed above, from time to time we may extend loans to affiliates which are generally short term in nature. At December 31, 2021 and 2020, there were $217 million and $12 million, respectively, of these loans outstanding.

Derivative contracts As part of a global HSBC strategy to offset interest rate or other market risks associated with certain securities, debt issues and derivative contracts with unaffiliated third parties, we routinely enter into derivative transactions with HSBC Bank plc and other HSBC affiliates. The notional value of derivative contracts related to these transactions was approximately $753.2 billion and $923.6 billion at December 31, 2021 and 2020, respectively. The net credit exposure (defined as the net fair value of derivative assets and liabilities, including any collateral received) related to the contracts was approximately $127 million and $66 million at December 31, 2021 and 2020, respectively. We account for these transactions on a mark to market basis, with the change in value of contracts with HSBC affiliates substantially offset by the change in value of related contracts entered into with unaffiliated third parties.

As discussed further in Note 3, "Strategic Initiatives," during 2021, we continued to transfer certain interest rate derivative contracts to HSBC Bank plc as part of our Restructuring Plan. In addition, during the third quarter of 2021, we unwound our remaining legacy structured credit products which resulted in the sale of our remaining non-government asset-backed securities held for trading and the termination of the related derivatives. A majority of the securities were sold to HSBC Bank plc and a portion of the related terminated derivatives were total return swaps with HSBC Bank plc. The loss resulting from these unwind related transactions with HSBC Bank plc was not material.

•HSBC North America's technology and support services, including risk management, compliance, operations, finance, tax, legal, human resources, corporate affairs and other shared services, are centralized within HTSU. HTSU also provides certain item processing and statement processing activities to us. The fees we pay HTSU for the centralized support services and processing activities are included in support services from HSBC affiliates. We also receive fees from HTSU for providing certain administrative services to them. The fees we receive from HTSU are included in servicing and other fees from HSBC affiliates. In certain cases, for facilities used by HTSU, we may guarantee their performance under the lease agreements.

•We use other subsidiaries of HSBC, including HSBC Global Services Limited an HSBC subsidiary located outside of the United States, to provide various support services to our operations, including among other areas, information technology, software development, customer service, collection, risk management and accounting. The expenses related to these services are included in support services from HSBC affiliates.

•We utilize HSI, a subsidiary of HMUS, for broker dealer, debt underwriting, customer referrals, loan syndication and other treasury and traded markets related services, pursuant to service level agreements. Debt underwriting fees charged by HSI are deferred as a reduction of long-term debt and amortized to interest expense over the life of the related debt. Fees charged by HSI for the other services are included in support services from HSBC affiliates. We also receive fees from HSI for providing certain wealth management services to them. The fees we receive from HSI are included in servicing and other fees from HSBC affiliates.

•We receive fees from other subsidiaries of HSBC, including HSBC Bank plc, for providing them with banking and other miscellaneous services as well as support for certain administrative and global business activities. These fees are reported in servicing and other fees from HSBC affiliates.

At both December 31, 2021 and 2020, we had $1,265 million of non-cumulative preferred stock issued and outstanding to HSBC North America. See Note 19, "Preferred Stock," for additional details.

During the fourth quarter of 2021, we paid a distribution on our common stock of $1.0 billion from surplus capital to HSBC North America. See Note 26, "Retained Earnings and Regulatory Capital Requirements," for additional details.