Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2012

The following table presents related party balances and the income and expense generated by related party transactions:


	September 30, 2012		December 31, 2011
	(in millions)
Assets:
Cash and due from banks	$	458	$	263
Interest bearing deposits with banks		908		1,416
Federal funds sold and securities purchased under resale agreements		-		228
Trading assets⁽¹⁾		22,697		22,367
Loans		2,843		858
Other		977		248

Total assets	$	27,883	$	25,380

Liabilities:
Deposits	$	16,805	$	18,153
Trading liabilities⁽¹⁾		24,695		25,298
Short-term borrowings		2,725		2,916
Long-term debt		3,989		3,988
Other		631		451

Total liabilities	$	48,845	$	50,806

⁽¹⁾	Trading assets and liabilities exclude the impact of netting which allow the offsetting of amounts relating to certain contracts if certain conditions are met.


	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
	(in millions)
Income/(Expense):
Interest income	$	12		$	16		$	38		$	46
Interest expense		(23	)		(23	)		(70	)		(57	)

Net interest expense	$	(11	)	$	(7	)	$	(32	)	$	(11	)

Servicing and other fees with HSBC affiliates:
Fees and commissions:
HSBC Finance	$	6		$	2		$	8		$	6
HSBC Markets (USA) Inc. (“HMUS”)		4			9			14			19
Other HSBC affiliates		17			13			59			53
Other HSBC affiliates income		36			25			84			73

Total affiliate income	$	63		$	49		$	165		$	151

Residential mortgage banking revenue	$	-		$	3		$	3		$	7

Support services from HSBC affiliates:
HSBC Finance	$	5		$	8		$	22		$	27
HMUS		81			70			227			192
HSBC Technology & Services (USA) Inc. (“HTSU”)		237			279			711			725
Other HSBC affiliates		39			55			140			148

Total support services from HSBC affiliates	$	362		$	412		$	1,100		$	1,092

Stock based compensation expense with HSBC	$	8		$	14		$	27		$	38

Information Regarding Loans

•

As it relates to our discontinued credit card and private label operations, in January 2009, we purchased the GM and UP Portfolios from HSBC Finance, with an outstanding principal balance of $12.4 billion at the time of sale, at a total net premium of $113 million. Additionally, in December 2004, we purchased the private label credit card receivable portfolio as well as private label commercial and closed end loans from HSBC Finance. HSBC Finance retained the customer account relationships for both the GM and UP receivables and the private label credit card receivables and by agreement prior to these loans being sold to Capital One on May 1, 2012, we purchased on a daily basis substantially all new originations from these account relationships from HSBC Finance. Premiums paid for these receivables were amortized to interest income over the estimated life of the receivables purchased and are included as a component of income from discontinued operations. HSBC Finance continued to service these credit card loans for us for a fee. Information regarding these loans is summarized in the table below.


	Private Label				Credit Card
	Cards		Commercial and Closed End Loans⁽¹⁾		General Motors		Union Privilege		Other		Total
	(in billions)
Loans serviced by HSBC Finance:
September 30, 2012	$	-	$	-	$	-	$	-	$	-	$	-
December 31, 2011		12.5		.3		4.1		3.5		.8		21.2
Total loans purchased on a daily basis from HSBC Finance during:
Three months ended September 30, 2012		-		-		-		-		-		-
Three months ended September 30, 2011		3.7		-		3.2		.8		.4		8.1
Nine months ended September 30, 2012		4.4		-		3.9		1.0		.6		9.9
Nine months ended September 30, 2011		10.5		-		9.6		2.3		1.3		23.7

⁽¹⁾	Private label commercial loans were previously included in other commercial loans and private label closed end loans were included in other consumer loans in Note 6, “Loans”.