Interim Report - 13 of 28

Funds under management and assets held in custody

Funds under management ('FuM') at 30 June 2013 amounted to US$902bn, marginally lower than at 31 December 2012, reflecting adverse foreign exchange movements which were largely offset by favourable market movements in the first half of the year.

Global Asset Management FuM decreased by 4% compared with 31 December 2012 to US$409bn, primarily due to foreign exchange movements reflecting the stronger US dollar against most major currencies, and net outflows of US$1bn, mainly from a small number of high‑value mandates in Europe and outflows in liquidity funds. These movements were partly offset by strong inflows in fixed income products from our customers in Hong Kong, Rest of Asia‑Pacific, Europe and Latin America and favourable market movements in the period.

Global Private Banking FuM decreased by 2% compared with 31 December 2012 to US$281bn. This was mainly due to negative net new money and adverse foreign exchange movements. The former was driven by the adoption of new compliance and tax transparency standards and actions taken to reposition our client base towards higher net worth relationships. Negative net new money was also impacted by a large number of client withdrawals, notably in Switzerland. These factors were partly offset by favourable valuations of certain assets in Hong Kong.

Other FuM increased by 7% to US$208bn, primarily due to favourable market movements and net inflows of US$5.9bn.

Assets held in custody and under administration

Custody is the safekeeping and servicing of securities and other financial assets on behalf of clients. At 30 June 2013, we held assets as custodian of US$5.7 trillion, 5% lower than the US$6.0 trillion held at 31 December 2012. This was mainly driven by the exit of a large client in Hong Kong coupled with adverse foreign exchange movements.

Our assets under administration business, which includes the provision of various support function activities including the valuation of portfolios of securities and other financial assets on behalf of clients, complements the custody business. At 30 June 2013, the value of assets held under administration by the Group amounted to US$2.9 trillion, which was broadly unchanged compared with 31 December 2012.

Review of transactions with related parties

The FCA's Disclosure Rules and Transparency Rules require the disclosure of related party transactions that have taken place in the first six months of the current financial year and any changes in the related party transactions described in the Annual Report and Accounts 2012, that have or could have materially affected the financial position or performance of HSBC. A fair review has been undertaken and no such transactions were identified.