Retained Earnings and Regulatory Capital Requirements

12 Months Ended

Dec. 31, 2023

Retained Earnings Note Disclosure [Abstract]

Retained Earnings and Regulatory Capital Requirements

Retained Earnings and Regulatory Capital Requirements

Bank dividends are one of the sources of funds used for payment of shareholder dividends and other HSBC USA cash needs. Approval from the Office of the Comptroller of the Currency ("OCC") is required if the total of all dividends HSBC Bank USA declares in any year exceeds the cumulative net income for that year, combined with the net income for the two preceding years reduced by dividends attributable to those years. OCC approval also is required for a reduction of permanent capital of HSBC Bank USA. Under a separate restriction, payment of dividends is prohibited in amounts greater than undivided profits then on hand, after deducting actual losses and bad debts. Bad debts are debts due and unpaid for a period of six months unless well secured, as defined, and in the process of collection.

We are subject to regulatory capital rules issued by U.S. banking regulators including Basel III (the "Basel III rule"). A bank or bank holding company's failure to meet minimum capital requirements can result in certain mandatory actions and possibly additional discretionary actions by its regulators. The following table summarizes the capital amounts and ratios of HSBC USA and HSBC Bank USA, calculated in accordance with the Basel III rule at December 31, 2023 and 2022:

	December 31, 2023							December 31, 2022
	Capital Amount		Well-Capitalized  Ratio(1)			Actual Ratio		Capital Amount		Well-Capitalized Ratio(1)			Actual Ratio
	(dollars are in millions)
Common equity Tier 1 ratio:
HSBC USA	$	12,822	4.5	%	(2)	13.0	%	$	13,950	4.5	%	(2)	13.5	%
HSBC Bank USA	15,407		6.5			16.1		16,492		6.5			16.3
Tier 1 capital ratio:
HSBC USA	13,087		6.0			13.3		14,215		6.0			13.8
HSBC Bank USA	16,907		8.0			17.7		17,992		8.0			17.8
Total capital ratio:
HSBC USA	15,452		10.0			15.7		16,579		10.0			16.1
HSBC Bank USA	19,024		10.0			19.9		20,114		10.0			19.9
Tier 1 leverage ratio:
HSBC USA	13,087		4.0		(2)	7.7		14,215		4.0		(2)	8.5
HSBC Bank USA	16,907		5.0			10.2		17,992		5.0			10.9
Risk-weighted assets:(3)
HSBC USA	98,450							103,101
HSBC Bank USA	95,455							101,331
Adjusted quarterly average assets:(4)
HSBC USA	170,527							167,866
HSBC Bank USA	166,526							164,564

(1)HSBC USA and HSBC Bank USA are categorized as "well-capitalized," as defined by their principal regulators. To be categorized as well-capitalized under regulatory guidelines, a banking institution must maintain capital equal to or in excess of the ratios reflected in the above table, and must not be subject to a directive, order, or written agreement to meet and maintain specific capital levels.

(2)There are no common equity Tier 1 or Tier 1 leverage ratio components in the definition of a well-capitalized bank holding company. The ratios shown are the regulatory minimums.

(3)Calculated using the Standardized Approach.

(4)Represents the Tier 1 leverage ratio denominator which reflects quarterly average assets adjusted for amounts permitted to be deducted from Tier 1 capital.

During 2023, HSBC USA did not receive any cash capital contributions from its parent, HSBC North America. During 2023, HSBC USA made a capital contribution of $17 million to its subsidiary, HSBC Bank USA.

During 2023, HSBC USA received common stock dividends of $1.8 billion from its subsidiary, HSBC Bank USA, and paid dividends on its common stock of $1.5 billion from retained earnings to its parent, HSBC North America.