v3.26.1
Related Party Transactions
 6 Months Ended
Jun. 30, 2026
Related Party Transactions [Abstract]  
Related Party Transactions Related Party Transactions
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 Federal Deposit Insurance Corporation 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:
June 30, 2026December 31, 2025
(in millions)
Assets:
Cash and due from banks$329 $304 
Interest bearing deposits with banks8 11 
Securities purchased under agreements to resell(1)
1,411 — 
Trading assets10 225 
Loans6,411 6,035 
Other(2)
639 469 
Total assets$8,808 $7,044 
Liabilities:
Deposits$9,739 $11,491 
Trading liabilities254 95 
Short-term borrowings2,554 1,960 
Long-term debt12,138 10,137 
Other(2)
314 295 
Total liabilities$24,999 $23,978 
(1)Reflects purchases of securities which other HSBC affiliates have agreed to repurchase.
(2)Other assets and other liabilities primarily consist of derivative balances associated with hedging activities and other miscellaneous account receivables and payables. Other assets also includes receivables from HSBC Bank plc associated with certain client share repurchase transactions.
Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
(in millions)
Income (Expense):
Interest income$85 $76 $165 $147 
Interest expense(186)(194)(367)(356)
Net interest expense(101)(118)(202)(209)
Trading revenue (expense)(1,795)(2,049)(467)(2,533)
Servicing and other fees from HSBC affiliates:
HSBC Bank plc67 57 125 124 
HSBC Markets (USA) Inc. ("HMUS")26 24 48 42 
Other HSBC affiliates26 17 48 34 
Total servicing and other fees from HSBC affiliates119 98 221 200 
Gain (loss) on instruments designated at fair value and related derivatives600 451 396 264 
Support services from HSBC affiliates:
HSBC Technology & Services (USA) Inc. ("HTSU")(259)(250)(512)(476)
HMUS(55)(64)(109)(119)
Other HSBC affiliates(169)(142)(322)(265)
Total support services from HSBC affiliates(483)(456)(943)(860)
Rental income from HSBC affiliates(1)
13 11 26 23 
(1)We receive rental income from our affiliates for certain office space, which is recorded as a component of occupancy expense, net in our consolidated statement of income.
Funding Arrangements with HSBC Affiliates:
We use HSBC affiliates to fund a portion of our borrowing and liquidity needs. At June 30, 2026 and December 31, 2025, long-term debt with affiliates reflected $12.1 billion and $10.1 billion, respectively, of borrowings from HSBC North America. The outstanding balance includes:
•$0.5 billion of fixed-rate senior debt which matures in December 2027;
•$1.5 billion of fixed-rate senior debt which matures in March 2028;
•$0.75 billion of floating-rate senior debt which matures in March 2028;
•$0.5 billion of fixed-rate senior debt which matures in December 2028;
•$1.0 billion of fixed-rate senior debt which matures in September 2029;
•$0.75 billion of floating-rate senior debt which matures in March 2030;
•$1.5 billion of fixed-rate senior debt which matures in June 2030;
•$1.64 billion of fixed-rate senior debt consisting of seven equal borrowings which mature in annual increments from November 2026 to November 2032;
•$2.0 billion of fixed-rate senior debt which matures in May 2035; and
•$2.0 billion of fixed-rate senior debt which was issued during the first quarter of 2026 and matures in March 2029.
We have a $4.3 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. and HSBC North America, but total borrowings cannot collectively exceed $4.3 billion at any time. We had no outstanding borrowing under this credit facility at either June 30, 2026 or December 31, 2025.
We also incur short-term borrowings with certain affiliates. In addition, certain affiliates have placed deposits with us.
Lending and Derivative Related Arrangements Extended to HSBC Affiliates:
At June 30, 2026 and December 31, 2025, loans to affiliates totaled $6.4 billion and $6.0 billion, respectively.
HMUS and subsidiaries We have extended loans and lines of credit, some of them uncommitted, to HMUS and its subsidiaries in the amount of $14.5 billion at both June 30, 2026 and December 31, 2025, of which $3.2 billion and $1.8 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 $4.3 billion uncommitted fungible line of credit with HSBC North America as discussed above, there was $3.2 billion and $4.2 billion outstanding at June 30, 2026 and December 31, 2025, respectively. The outstanding balance matures in the third quarter of 2026.
We have extended lines of credit to various other HSBC affiliates totaling $7.3 billion which did not have any outstanding balances at either June 30, 2026 or December 31, 2025.
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 both June 30, 2026 and December 31, 2025, there were nil 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 $1,018.3 billion and $794.8 billion at June 30, 2026 and December 31, 2025, 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 $36 million and $228 million at June 30, 2026 and December 31, 2025, 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.
Services Provided Between HSBC Affiliates:
Under multiple service level agreements, we provide services to and receive services from various HSBC affiliates. These activities are summarized in Note 20, "Related Party Transactions," in our 2025 Form 10-K. There have been no significant changes in these activities since December 31, 2025.
Other Transactions with HSBC Affiliates:
At both June 30, 2026 and December 31, 2025, we had $265 million of non-cumulative preferred stock issued and outstanding to HSBC North America. See Note 17, "Preferred Stock," in our 2025 Form 10-K for additional details.
During the second quarter of 2026, we paid a dividend on our common stock of $0.3 billion from retained earnings to HSBC North America. See Note 13, "Retained Earnings and Regulatory Capital Requirements," for additional details.