Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally
accepted accounting principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-
IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a
discrepancy, the original Spanish-language version prevails.
Annual Report
Financial Statements,
Management Report
and Audit Report 2014
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Contents
Financial Statements
Balance sheets ........................................................................................................................................ 5
Income statements ................................................................................................................................... 8
Statements of recognized income and expenses ........................................................................................ 10
Statements of changes in equity ............................................................................................................... 11
Statements of cash flows ......................................................................................................................... 13
Notes to the Accompanying Financial Statements
1.
2.
3.
4.
5.
6.
7.
8.
Introduction, basis for presentation of the financial statements and internal control of financial
information and other information ......................................................................................................................................................................................................................... 15
Accounting policies and valuation criteria applied .............................................................................................................................................................................. 17
System of shareholder remuneration ............................................................................................................................................................................................................... 34
Earnings per share .................................................................................................................................................................................................................................................................... 36
Risk management ..................................................................................................................................................................................................................................................................... 36
Fair value of financial instruments .........................................................................................................................................................................................................................66
Cash and balances with central banks ............................................................................................................................................................................................................. 74
Financial assets and liabilities held for trading ........................................................................................................................................................................................ 74
9. Other financial assets and liabilities at fair value through profit or loss .....................................................................................................................77
10. Available-for-sale financial assets ..............................................................................................................................................................................................................................77
11.
Loans and receivables ...........................................................................................................................................................................................................................................................81
12. Hedging derivatives (receivable and payable) and Fair-value changes of the hedged items in portfolio
hedges of interest-rate risk ............................................................................................................................................................................................................................................. 83
13. Non-current assets held for sale .............................................................................................................................................................................................................................. 86
14.
Investments in entities ......................................................................................................................................................................................................................................................... 88
15. Tangible assets .............................................................................................................................................................................................................................................................................. 95
16.
Intangible assets .......................................................................................................................................................................................................................................................................... 96
17. Tax assets and liabilities ...................................................................................................................................................................................................................................................... 97
18. Other assets and liabilities ............................................................................................................................................................................................................................................ 102
19. Financial liabilities at amortized cost ................................................................................................................................................................................................................ 102
20. Provisions.......................................................................................................................................................................................................................................................................................... 108
21. Pensions and other post-employment commitments ................................................................................................................................................................. 110
22. Common stock ............................................................................................................................................................................................................................................................................. 117
23. Share premium ............................................................................................................................................................................................................................................................................ 119
2
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
24. Reserves ............................................................................................................................................................................................................................................................................................. 120
25. Treasury stock ............................................................................................................................................................................................................................................................................... 121
26. Valuation adjustments ....................................................................................................................................................................................................................................................... 122
27. Capital base and capital management ............................................................................................................................................................................................................123
28. Contingent risks and commitments .................................................................................................................................................................................................................. 125
29. Other contingent assets and liabilities ............................................................................................................................................................................................................ 126
30. Purchase and sale commitments and future payment obligations ............................................................................................................................ 126
31. Transactions for the account of third parties ......................................................................................................................................................................................... 126
32.
Interest income and expense and similar items ................................................................................................................................................................................. 127
33. Dividend income ....................................................................................................................................................................................................................................................................... 128
34. Fee and commission income .................................................................................................................................................................................................................................... 129
35. Fee and commission expenses .............................................................................................................................................................................................................................. 129
36. Net gains (losses) on financial assets and liabilities .........................................................................................................................................................................130
37. Other operating income and expenses .......................................................................................................................................................................................................... 131
38. Administration costs ..............................................................................................................................................................................................................................................................132
39. Depreciation and amortization .................................................................................................................................................................................................................................135
40. Provisions (net) .............................................................................................................................................................................................................................................................................135
41.
Impairment losses on financial assets (net) ...............................................................................................................................................................................................135
42.
Impairment losses on other assets (net) ...................................................................................................................................................................................................... 136
43. Gains (losses) on derecognized assets not classified as non-current assets held for sale .............................................................. 136
44. Gains (losses) on non-current assets held for sale ............................................................................................................................................................................137
45. Statements of cash flows .................................................................................................................................................................................................................................................137
46. Accountant fees and services ................................................................................................................................................................................................................................... 138
47. Related-party transactions ............................................................................................................................................................................................................................................ 138
48. Remuneration and other benefits of the Board of Directors and Members of the Bank’s Management
Committee ....................................................................................................................................................................................................................................................................................... 140
49. Other information .................................................................................................................................................................................................................................................................... 145
50. Subsequent events................................................................................................................................................................................................................................................................. 147
51. Explanation added for translation into English .................................................................................................................................................................................... 148
3
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Appendices
APPENDIX I
BBVA Group consolidated financial statements .................................................................. 150
APPENDIX II
Additional information on subsidiaries composing the BBVA Group ...................................... 161
APPENDIX III
Additional information on investments and jointly controlled companies accounted for
under the equity method in the BBVA Group .................................................................... 169
APPENDIX IV Changes and notification of investments and divestments in the BBVA Group in 2013 .......... 170
APPENDIX V
Fully consolidated subsidiaries with more than 10% owned by non-Group shareholders as
of December 31, 2014 .................................................................................................. 173
APPENDIX VI
BBVA Group’s securitization funds .................................................................................... 174
APPENDIX VII Details of the outstanding subordinated debt and preferred securities issued by the Bank as
of December 31, 2014 and 2013 ................................................................................... 175
APPENDIX VIII Balances held in foreign currency as of December 31, 2014 and 2013............................... 176
APPENDIX IX
Income statements for the first and second half of 2014 and 2013 .................................... 177
APPENDIX X
Information on data derived from the special accounting registry ........................................ 178
APPENDIX XI
Risks related to the developer and real-estate sector in Spain ............................................. 183
APPENDIX XII Refinanced and restructured operations and other requirements under Bank of Spain
Circular 6/2012 ............................................................................................................. 187
APPENDIX XIII Agency Network ............................................................................................................ 194
APPENDIX XIV Conciliation of the balance sheet and the income statement for 2013. ................................ 208
Glossary
Management Report
4
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
Balance sheets as of December 31, 2014 and 2013
ASSETS
CASH AND BALANCES WITH CENTRAL BANKS
FINANCIAL ASSETS HELD FOR TRADING
Loans and advances to credit institutions
Loans and advances to cus tomers
Debt s ecurities
Equity instrum ents
Trading derivatives
Mem orandum item : Loaned or advanced as collateral
OTHER FINANCIAL ASSETS DESIGNATED AT FAIR VALUE
THROUGH PROFIT OR LOSS
Loans and advances to credit institutions
Loans and advances to cus tomers
Debt s ecurities
Equity instrum ents
Mem orandum item : Loaned or advanced as collateral
AVAILABLE-FOR-SALE FINANCIAL ASSETS
Debt s ecurities
Equity instrum ents
Mem orandum item : Loaned or advanced as collateral
LOANS AND RECEIVABLES
Loans and advances to credit institutions
Loans and advances to cus tomers
Debt s ecurities
Mem orandum item : Loaned or advanced as collateral
HELD-TO-MATURITY INVESTMENTS
Mem orandum item : Loaned or advanced as collateral
FAIR VALUE CHANGES OF THE HEDGED ITEMS IN PORTFOLIO
HEDGES OF INTEREST RATE RISK
HEDGING DERIVATIVES
NON-CURRENT ASSETS HELD FOR SALE
EQUITY METHOD
As sociates
Jointly controlled entities
Subsidiaries
INSURANCE CONTRACTS LINKED TO PENSIONS
TANGIBLE ASSETS
Property, plants and equipment
For own us e
Other as sets leas ed out under an operating lease
Investment properties
Mem orandum item : Loaned or advanced as collateral
INTANGIBLE ASSETS
Goodwill
Other intangible ass ets
TAX ASSETS
Current
Deferred
OTHER ASSETS
TOTAL ASSETS
Millions of Euros
Notes
2014
2013(*)
7
8
9
10
11
12
12
13
14
21
15
16
17
18
9,262
64,495
-
-
15,590
4,264
44,641
7,525
-
-
-
-
-
-
53,709
47,393
6,316
34,719
230,724
23,813
203,865
3,046
26,689
-
-
121
2,112
2,771
26,153
261
3,948
21,944
2,189
1,539
1,534
1,534
-
5
-
874
-
874
8,385
986
7,399
1,507
403,841
12,085
56,631
-
-
13,425
4,148
39,058
9,111
-
-
-
-
-
-
43,301
38,151
5,150
19,200
230,523
20,410
208,313
1,800
37,215
-
-
99
2,307
2,195
25,602
818
3,865
20,919
1,989
1,651
1,646
1,646
-
5
-
927
-
927
8,664
1,402
7,262
1,078
387,052
(*)
Presented for comparison purposes only (note 1.3).
The accompanying Notes 1 to 51 and Appendices I to XIV are an integral part of the balance sheet as of
December 31, 2014.
5
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
Balance sheets as of December 31, 2014 and 2013
LIABILITIES AND EQUITY
Notes
2014
2013(*)
Millions of Euros
FINANCIAL LIABILITIES HELD FOR TRADING
Deposits from central banks
Deposits from credit institutions
Customer deposits
Debt certificates
Trading derivatives
Short positions
Other financial liabilities
OTHER FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE
THROUGH PROFIT OR LOSS
8
9
Deposits from central banks
Deposits from credit institutions
Customer deposits
Debt certificates
Subordinated liabilities
Other financial liabilities
FINANCIAL LIABILITIES AT AMORTIZED COST
19
Deposits from central banks
Deposits from credit institutions
Customer deposits
Debt certificates
Subordinated liabilities
Other financial liabilities
FAIR VALUE CHANGES OF THE HEDGED ITEMS IN PORTFOLIO
HEDGES OF INTEREST RATE RISK
HEDGING DERIVATIVES
LIABILITIES ASSOCIATED WITH NON-CURRENT ASSETS HELD
FOR SALE
PROVISIONS
Provisions for pensions and similar obligations
Provisions for taxes and other legal contingencies
Provisions for contingent exposures and commitments
Other provisions
TAX LIABILITIES
Current
Deferred
OTHER LIABILITIES
TOTAL LIABILITIES
50,976
-
-
-
-
43,826
7,150
-
-
-
-
-
-
-
-
305,036
18,400
58,091
187,731
26,754
7,701
6,359
43,599
-
-
-
-
38,531
5,068
-
-
-
-
-
-
-
-
301,120
25,487
42,920
188,013
33,787
5,106
5,807
12
12
13
20
17
18
-
1,959
-
1,507
-
6,157
5,267
-
238
652
1,655
29
1,626
1,444
367,227
-
5,782
4,878
-
221
683
978
-
978
1,474
354,460
(*)
Presented for comparison purposes only (note 1.3).
The accompanying Notes 1 to 51 and Appendices I to XIV are an integral part of the balance sheet as of
December 31, 2014.
6
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
Balance sheets as of December 31, 2014 and 2013
LIABILITIES AND EQUITY (Continued)
Notes
2014
2013(*)
Millions of Euros
STOCKHOLDERS’ FUNDS
Common Stock
Issued
Unpaid and uncalled (-)
Share premium
Reserves
Other equity instruments
Equity component of com pound financial ins trum ents
Other equity instruments
Less: Treasury stock
Income attributed
Less: Dividends and remuneration
VALUATION ADJUSTMENTS
Available-for-sale financial assets
Cash flow hedging
Hedging of net investment in foreign transactions
Exchange differences
Non-current assets held-for-sale
Other valuation adjustments
TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY
MEMORANDUM ITEM
CONTINGENT RISK
CONTINGENT COMMITMENTS
22
23
24
25
26
34,923
3,024
3,024
-
23,992
7,642
47
-
47
(46)
1,105
(841)
1,691
1,781
(82)
-
12
-
(20)
36,614
403,841
32,708
2,835
2,835
-
22,111
7,244
43
-
43
(20)
1,263
(768)
(116)
(52)
(45)
-
1
-
(20)
32,592
387,052
Millions of Euros
Notes
2014
2013(*)
28
28
45,137
53,968
47,961
53,412
(*)
Presented for comparison purposes only (note 1.3).
The accompanying Notes 1 to 51 and Appendices I to XIV are an integral part of the balance sheet as of
December 31, 2014.
7
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
Income statements for the years ended December 31, 2014 and 2013.
Millions of Euros
Notes
2014
2013(*)
INTEREST AND SIMILAR INCOME
INTEREST AND SIMILAR EXPENSES
NET INTEREST INCOME
DIVIDEND INCOME
FEE AND COMMISSION INCOME
FEE AND COMMISSION EXPENSES
NET GAINS (LOSSES) ON FINANCIAL ASSETS AND LIABILITIES
32
32
33
34
35
36
Financial instruments held for trading
6,763
(3,493)
3,270
2,848
1,773
(308)
1,154
(8)
7,877
(4,589)
3,288
2,257
1,775
(332)
1,125
328
Other financial instruments at fair value through profit or loss
-
-
Other financial instruments not at fair value through profit or loss
Rest
EXCHANGE DIFFERENCES (NET)
OTHER OPERATING INCOME
OTHER OPERATING EXPENSES
GROSS INCOME
ADMINISTRATION COSTS
Personnel expenses
General and administrative expenses
DEPRECIATION AND AMORTIZATION
PROVISIONS (NET)
IMPAIRMENT LOSSES ON FINANCIAL ASSETS (NET)
Loans and receivables
Other financial instruments not at fair value through profit or loss
NET OPERATING INCOME
37
37
38
39
40
41
1,162
-
109
120
(433)
8,533
(3,664)
(2,194)
(1,470)
(517)
(872)
(1,868)
(1,857)
(11)
1,612
797
-
195
131
(641)
7,798
(3,877)
(2,352)
(1,525)
(502)
(730)
(3,254)
(3,224)
(30)
(565)
(*)
Presented for comparison purposes only (note 1.3).
The accompanying Notes 1 to 51 and Appendices I to XIV are an integral part of the income statement for the
year ended December 31, 2014.
8
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
Income statements for the years ended December 31, 2014 and 2013.
(Continuación)
Millones de euros
Notas
2014
2013(*)
RESULTADO DE LA ACTIVIDAD DE EXPLOTACIÓN
PÉRDIDAS POR DETERIORO DEL RESTO DE ACTIVOS (NETO)
Fondo de comercio y otro activo intangible
Otros activos
GANANCIAS (PÉRDIDAS) EN LA BAJA DE ACTIVOS NO
CLASIFICADOS COMO NO CORRIENTES EN VENTA
DIFERENCIA NEGATIVA EN COMBINACIONES DE NEGOCIO
GANANCIAS (PÉRDIDAS) DE ACTIVOS NO CORRIENTES EN VENTA
NO CLASIFICADOS COMO OPERACIONES INTERRUMPIDAS
RESULTADO ANTES DE IMPUESTOS
IMPUESTO SOBRE BENEFICIOS
RESULTADO DEL EJERCICIO PROCEDENTE DE OPERACIONES
CONTINUADAS
RESULTADO DE OPERACIONES INTERRUMPIDAS (NETO)
RESULTADO DEL EJERCICIO
42
43
44.1
17
44.2
1.612
40
-
40
(1)
-
(371)
1.280
(175)
1.105
-
1.105
(565)
145
-
145
(127)
-
(370)
(917)
1.119
202
1.061
1.263
(*)
Presented for comparison purposes only (note 1.3).
The accompanying Notes 1 to 51 and Appendices I to XIV are an integral part of the income statement for the
year ended December 31, 2014.
9
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
Statements of recognized income and expenses for the years ended
December 31, 2014 and 2013.
Millions of Euros
2014
2013(*)
NET INCOME RECOGNIZED IN INCOME STATEMENT
OTHER RECOGNIZED INCOME (EXPENSES)
ITEMS NOT SUBJECT TO RECLASSIFICATION TO P&L
Actuarial gains and los ses from defined benefit pens ion
plans
Non-current ass ets available for sale
Income tax related to items not s ubject to reclass ification to
p&l
ITEMS SUBJECT TO RECLASSIFICATION TO P&L
Available-for-sale financial assets
Valuation gains/(losses)
Amounts removed to income statement
Reclassifications
Cash flow hedging
Valuation gains/(losses)
Amounts removed to income statement
Amounts removed to the initial carrying amount of the hedged items
Reclassifications
Hedging of net investment in foreign transactions
Valuation gains/(losses)
Amounts removed to income statement
Reclassifications
Exchange differences
Valuation gains/(losses)
Amounts removed to income statement
Reclassifications
Non-current assets held for sale
Valuation gains/(losses)
Amounts removed to income statement
Reclassifications
Rest of recognized income and expenses
Income tax relating to items that may be reclassified to profit
or (-) loss
TOTAL RECOGNIZED INCOME/EXPENSES
(*)
Presented for comparison purposes only (note 1.3).
1,105
1,807
-
-
-
-
1,807
2,770
3,124
(354)
-
(53)
(53)
-
-
-
-
-
-
-
16
17
(1)
-
-
-
-
-
-
(926)
2,912
1,263
861
(2)
(3)
-
1
863
1,294
1,360
(66)
-
(8)
(7)
(1)
-
-
-
-
-
-
(17)
1
(18)
-
-
-
-
-
-
(406)
2,124
The accompanying Notes 1 to 51 and Appendices I to XIV are an integral part of the statement of recognized
income and expenses for the year ended December 31, 2014
10
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting principles (Bank of Spain Circular 4/2004, and as amended thereafter, which
adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-language version prevails.
Statements of changes in equity for the years ended December 31, 2014 and 2013.
BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
2014
Balances as of January 1, 2014 (*)
Effect o f changes in acco unting po licies (*)
Effect o f co rrectio n o f erro rs
Adjusted initial balance
Total incom e/expense recognized
Other changes in equity
Co mmo n sto ck increase
Co mmo n sto ck reductio n
Co nversio n o f financial liabilities into capital
Increase o f o ther equity instruments
Reclassificatio n o f financial liabilities to o ther equity instruments
Reclassificatio n o f o ther equity instruments to financial liabilities
Dividend distributio n
Transactio ns including treasury sto ck and o ther equity instruments (net)
Transfers between to tal equity entries
Increase/Reductio n due to business co mbinatio ns
P ayments with equity instruments
Rest o f increases/reductio ns in to tal equity
Of which:
A cquisitio n o f the free allo tment rights (No te 3)
T o t a l E quit y A t t ribut e d t o t he P a re nt C o m pa ny
M illio ns o f E uro s
S t o c k ho lde rs ’ F unds
C o m m o n
S t o c k
( N o t e 2 2 )
S ha re
P re m ium
( N o t e 2 3 )
R e s e rv e s
( N o t e 2 4 )
O t he r
E quit y
Ins t rum e nt s
Le s s :
T re a s ury
S t o c k
( N o t e 2 5 )
P ro f it f o r t he
Y e a r
Less:
D i vi d end s
and
R emuner at i o ns
T o t a l
S t o c k ho lde rs
' F unds
V a lua t io n
A djus t m e nt s
( N o t e 2 6 )
Total
Equity
2 ,8 3 5
2 2 ,111
-
2 ,8 3 5
-
18 9
189
-
2 2 ,111
-
1,8 8 1
1,881
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7 ,3 8 4
(140)
-
7 ,2 4 4
-
3 9 8
(70)
-
-
-
-
-
-
(7)
499
-
-
(24)
-
7 ,6 4 2
4 3
-
4 3
-
4
-
-
-
34
-
-
-
-
(4)
-
-
(26)
-
4 7
( 2 0 )
-
( 2 0 )
-
( 2 6 )
-
-
-
-
-
-
-
(26)
-
-
-
-
-
1,4 0 6
(143)
-
1,2 6 3
1,10 5
( 1,2 6 3 )
-
-
-
-
-
-
-
-
(1,263)
-
-
-
-
( 4 6 )
1,10 5
( 7 6 8 )
3 2 ,9 9 1
( 116 )
3 2 ,8 7 5
-
( 7 6 8 )
-
( 7 3 )
-
-
-
-
-
-
(597)
-
768
-
-
(283)
-
3 2 ,7 0 8
1,10 5
1,110
2,000
-
-
34
-
-
(597)
(33)
-
-
-
(244)
(294)
(244)
( 8 4 1)
(244)
3 4 ,9 2 3
-
( 116 )
1,8 0 7
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,6 9 1
(283)
-
3 2 ,5 9 2
2 ,9 12
1,110
2,000
-
-
34
-
-
(597)
(33)
-
-
-
(294)
(244)
3 6 ,6 14
B a la nc e s a s o f D e c e m be r 3 1, 2 0 14
3 ,0 2 4
2 3 ,9 9 2
(*)
Balance as of December 31, 2013, previously published (note 1.3)
The accompanying Notes 1 to 51 and Appendices I to XIV are an integral part of the statement of changes in equity for the year ended December 31, 2014.
11
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting principles (Bank of Spain Circular 4/2004, and as amended thereafter, which
adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-language version prevails.
Statements of changes in equity for the years ended December 31, 2014 and 2013.
BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
M illio ns o f E uro s
T o t a l Equit y A t t ribut e d t o t he P a re nt C o m pa ny
S to c k ho lde rs ’ F unds
C o m m o n
S t o c k
(N o t e 2 2 )
S ha re
P re m ium
( N o t e 2 3 )
R e s e rve s
( N o t e 29 )
Ot he r
E quit y
Ins t rum e nt s
Le s s :
T re a s ury
S t o c k
(N o t e 3 5 )
P ro f it f o r t he
Y e a r
Less:
D i vi d end s
and
R emuner at i o ns
T o t a l
S t o c kho lde rs
' F unds
Va lua t io n
A djus t m e nt s
( N o t e 2 6 )
Total
Equity
(*)
2013
Balances as of January 1, 2013 (**)
Effect o f changes in acco unting po licies (**)
Effect o f co rrectio n o f erro rs
Adjusted initial balance
Total incom e/expense recognized
Other changes in equity
Co mmo n sto ck increase
Co mmo n sto ck reductio n
Co nversio n o f financial liabilities into capital
Increase o f o ther equity instruments
Reclassificatio n o f financial liabilities to o ther equity instruments
Reclassificatio n o f o ther equity instruments to financial liabilities
Dividend distributio n
Transactio ns including treasury sto ck and o ther equity instruments (net)
Transfers between to tal equity entries
Increase/Reductio n due to business co mbinatio ns
Payments with equity instruments
Rest o f increases/reductio ns in to tal equity
Of which:
A cquisitio n o f the free allotment rights (No te 3)
2 ,6 7 0
2 0 ,9 68
7,0 4 9
-
-
-
-
(123)
-
2 ,6 7 0
2 0 ,9 68
6,9 2 6
-
16 5
71
-
94
-
-
-
-
-
-
-
-
-
-
-
-
1,143
-
-
1,143
-
-
-
-
-
-
-
-
-
-
-
-
3 18
(71)
-
-
-
-
-
-
-
90
308
-
(9)
-
-
Balances as of Decem ber 31, 2013
2 ,8 3 5
2 2 ,111
7,2 4 4
(*)
(*)
Presented for comparison purposes only (note 1.3).
Balance as of December 31, 2012, previously published (note 1.3)
4 3
-
-
4 3
-
-
-
-
-
27
-
-
-
-
(13)
-
-
(14)
-
-
4 3
( 4 1)
1,4 28
( 1,3 3 4 )
3 0 ,7 8 3
( 9 7 7 )
2 9 ,8 06
-
-
( 4 1)
-
2 1
-
-
-
-
-
-
-
21
-
-
-
-
-
-
(17)
-
1,411
1,2 63
( 1,411)
-
-
-
-
-
-
-
-
(1,411)
-
-
-
-
-
-
-
(140)
-
-
-
(140)
-
( 1,3 3 4 )
3 0 ,6 4 3
( 9 7 7 )
2 9 ,6 66
-
5 6 6
1,2 6 3
8 0 2
8 6 1
-
2 ,124
8 02
-
-
-
-
-
-
(607)
-
1,334
-
-
(161)
-
(161)
-
-
1,237
27
-
-
(607)
21
-
308
-
(184)
(161)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,237
27
-
-
(607)
21
-
308
-
(184)
(161)
( 2 0 )
1,2 63
(7 6 8 )
3 2 ,7 0 8
( 116 )
3 2 ,5 92
The accompanying Notes 1 to 51 and Appendices I to XIV are an integral part of the statement of changes in equity for the year ended December 31, 2014.
12
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
Statements of cash flows for the years ended December 31, 2014 and 2013.
Millions of Euros
Notes
2014
2013(*)
CASH FLOW FROM OPERATING ACTIVITIES (1)
Net income for the year
45
Adjustments to obtain the cash flow from operating activities:
Depreciation and amortization
Other adjustments
Net increase/decrease in operating assets
Financial assets held for trading
Other financial assets designated at fair value through profit
or loss
Available-for-sale financial assets
Loans and receivables
Other operating assets
Net increase/decrease in operating liabilities
Financial liabilities held for trading
Other financial liabilities designated at fair value through profit
or loss
Financial liabilities at amortized cost
Other operating liabilities
Collection/Payments for income tax
CASH FLOWS FROM INVESTING ACTIVITIES (2)
Investment
45
Tangible assets
Intangible assets
Investments
Other business units
Non-current assets held for sale and associated liabilities
Held-to-maturity investments
Other settlements related to investing activities
Divestments
Tangible assets
Intangible assets
Investments
Subsidiaries and other business units
Non-current assets held for sale and associated liabilities
Held-to-maturity investments
Other collections related to investing activities
(4,709)
1,105
4,749
517
4,232
(18,714)
(7,864)
-
(10,408)
(201)
(241)
7,976
7,377
-
1,250
(651)
175
(1,711)
2,194
156
265
714
-
1,059
-
-
483
14
-
147
-
322
-
-
3,912
1,263
3,885
502
3,383
13,597
7,139
-
(10,203)
6,506
10,155
(13,798)
(9,835)
-
(4,388)
425
(1,035)
(3,101)
6,957
517
498
4,895
-
1,047
-
-
3,856
28
-
1,359
-
2,030
439
-
(*)
Presented for comparison purposes only (note 1.3).
The accompanying Notes 1 to 51 and Appendices I to XIV are an integral part of the statement of cash flows for
the year ended December 31, 2014.
13
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
Statements of cash flows for the years ended December 31, 2014 and 2013.
(Continued)
CASH FLOWS FROM FINANCING ACTIVITIES (3)
Investment
Dividends
Subordinated liabilities
Common s tock amortization
Treasury stock acquis ition
Other items relating to financing activities
Divestments
Subordinated liabilities
Common s tock increas e
Treasury stock disposal
Other items relating to financing activities
EFFECT OF EXCHANGE RATE CHANGES (4)
NET INCREASE/DECREASE IN CASH OR CASH EQUIVALENTS
(1+2+3+4)
CASH OR CASH EQUIVALENTS AT BEGINNING OF THE YEAR
CASH OR CASH EQUIVALENTS AT END OF THE YEAR
COMPONENTS OF CASH AND EQUIVALENT AT END OF THE
YEAR
Cas h
Balance of cash equivalent in central banks
Other financial assets
Less: Bank overdraft refundable on demand
TOTAL CASH OR CASH EQUIVALENTS AT END OF THE YEAR
Millions of Euros
Notes
2014
2013(*)
45
3,749
4,108
772
678
-
2,658
-
7,857
3,015
2,000
2,623
219
(152)
168
3,735
1,313
88
-
2,325
9
3,903
1,559
-
2,344
-
27
(2,823)
12,085
9,262
1,006
11,079
12,085
Millions of Euros
Notes
2014
2013(*)
726
8,536
-
-
9,262
659
11,426
-
-
12,085
7
(*)
Presented for comparison purposes only (note 1.3).
The accompanying Notes 1 to 51 and Appendices I to XIV are an integral part of the statement of cash flows for
the year ended December 31, 2014.
14
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
Notes to the financial statements for the year ended December 31, 2014.
1.
Introduction, basis for presentation of the financial statements and
internal control of financial information and other information
1.1
Introduction
Banco Bilbao Vizcaya Argentaria, S.A. (hereinafter “the Bank” or “BBVA") is a private-law entity subject to the laws
and regulations governing banking entities operating in Spain. It carries out its activity through branches and
agencies across the country and abroad.
The Bylaws and other public information are available for consultation at the Bank’s registered address (Plaza San
Nicolás, 4 Bilbao) and on its official website: www.bbva.com.
In addition to the transactions it carries out directly, the Bank heads a group of subsidiaries, jointly controlled and
associated entities which perform a wide range of activities and which together with the Bank constitute the
Banco Bilbao Vizcaya Argentaria Group (hereinafter, “the Group” or “the BBVA Group”). In addition to its own
individual financial statements, the Bank is therefore obliged to prepare the Group’s consolidated financial
statements.
The Bank’s financial statements for the year ended December 31, 2014 were approved by the shareholders at
the Bank’s Annual General Meeting (“AGM”) held on March 14, 2014.
The Bank’s financial statements for the year ended December 31, 2014 are pending approval by the Annual
General Meeting. However, the Bank’s Board of Directors considers that the aforementioned financial statements
will be approved without any changes.
1.2 Basis for the presentation of the financial statements
The Bank's financial statements for 2014 are presented in accordance with Bank of Spain Circular 4/2004, dated
December 22, and its subsequent amendments, and with any other legislation governing financial reporting
applicable to the Bank. Circular 4/2004 implements and adapts the International Financial Reporting Standards
(EU-IFRS) to Spanish credit institutions, following stipulations established under Regulation 1606/2002 of the
European Parliament and of the Council, dated July 19, 2002, relating to the application of the International
Accounting Standards.
The Bank's financial statements for the year ended December 31, 2014 have been prepared by the Bank’s
directors (at the Board of Directors meeting held on February 2, 2015) by applying the accounting policies and
valuation criteria described in Note 2, so that they present fairly the Bank's equity and financial position as of
December 31, 2014, together with the results of its operations and cash flows generated during the year ended
on that date.
All obligatory accounting standards and valuation criteria with a significant effect in the financial statements were
applied in their preparation.
The amounts reflected in the accompanying financial statements are presented in millions of euros, unless it is
more convenient to use smaller units. Some items that appear without a total in these financial statements do so
because of the size of the units used. Also, in presenting amounts in millions of euros, the accounting balances
have been rounded up or down. It is therefore possible that the amounts appearing in some tables are not the
exact arithmetical sum of their component figures.
The percentage changes in amounts have been calculated using figures expressed in thousands of euros.
15
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
1.3 Comparative information
The information contained in these financial statements for 2013 is presented solely for the purpose of
comparison with information relating to December 31, 2014. It does not constitute the Bank's financial
statements for 2012.
The Bank has proceeded to make a change in accounting policy with respect to contributions made to the
Deposit Guarantee Fund retroactively, and therefore proceeded to restate certain amounts for the year 2013,
presented for comparative purposes (see Appendix XIV).
The main effect of this change is that:
• With respect to the income statements for the year 2013, the balances for the following line items have been
modified: "Other Income and Expenses" and consequently the line items of "Gross Margin", "Operating
income", "Operating Profit & Loss before tax" and "Profit attributable to parent company". Therefore, the "profit
attributable to parent company" for the year 2013 becomes €1,263 million compared to €1,406 million
registered under the previous regulation.
• With respect to the balance sheet from year 2013, this change affects in a material manner the balances for
the following line items: “Deferred tax assets”, “Financial liabilities at amortized cost – Other financial liabilities”,
“Reserves” and consequently the line items “Total assets”, “Total liabilities”, “Stockholders’ funds” and “Total
equity”.
1.4 Seasonal nature of income and expenses
The nature of the most significant operations carried out by the Bank is mainly related to traditional activities
carried out by financial institutions, which are not significantly affected by seasonal factors.
1.5 Responsibility for the information and for the estimates made
The information contained in the Bank's financial statements is the responsibility of the Bank’s Directors.
Estimates have to be made at times when preparing these financial statements in order to calculate the registered
amount of some assets, liabilities, income, expenses and commitments. These estimates relate mainly to the
following:
Impairment on certain financial assets (see Notes 5, 6, 10, 11, 12 and 14).
•
• The assumptions used to quantify certain provisions (see Note 20) for the actuarial calculation of post-
employment benefit liabilities and commitments (see Note 21).
• The useful life and impairment losses of tangible and intangible assets (see Notes 13, 15 and16).
• The fair value of certain unlisted financial assets and liabilities in organized markets (see Notes 5, 6, 8, 9, 10
and 12).
Although these estimates were made on the basis of the best information available as of December 31, 2014 on
the events analyzed, future events may make it necessary to modify them (either up or down). This would be
done in accordance with applicable regulations and prospectively, recording the effects of changes in the
estimates in the corresponding income statement.
1.6 Control of the BBVA Group’s financial reporting
The description of the BBVA Group’s Internal Financial Reporting Control model is described in the management
report accompanying the Financial Statements for 2014.
1.7 Deposit guarantee fund
The Bank is part of the “Fondo de Garantía de Depósitos” (Deposit Guarantee Fund). Adjusting to the previously
mentioned accounting criteria modification, the expense incurred by the contributions made to this Agency in
2014 and 2013 amounted to €215 million and €516 million, respectively. These amounts are registered under
the heading "Other operating expenses" of the accompanying income statements (see Note 37).
16
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
The previously mentioned amount registered in year 2013 includes the extraordinary contribution established by
the Royal Decree-Law 6/2013. A one-off Deposit Guarantee Fund contribution, applicable to 3 per thousand of
eligible deposits. The first contribution (40%) amounted to 121 million euros paid in 2013. Of the second
contribution (remaining 60%) in 2014 a seventh part was paid and according to the new payment schedule
established by the Management Committee of the Deposit Guarantee Fund. The remaining part of the previously
mentioned second contribution is recognized as a liability (see Note 1.3). This amount will be paid off in two
settlements, being the first one in June, 30th 2015 and the second one in June 30th 2016.
1.8 Consolidated financial statements
The consolidated financial statements of the BBVA Group for the year ended December 31, 2014 have been
prepared by the Bank's Directors (at the Board of Directors meeting held on February 3, 2015) in accordance
with the International Financial Reporting Standards adopted by the European Union and applicable at the close
of 2014, taking into account Bank of Spain Circular 4/2004, dated December 22, and subsequent amendments,
and with any other legislation governing financial reporting applicable to the Group.
The management of the Group’s operations is carried out on a consolidated basis, independently of the individual
allocation of the corresponding equity changes and their related results. Consequently, the Bank's annual financial
statements have to be considered within the context of the Group, due to the fact that they do not reflect the
financial and equity changes that result from the application of the consolidation policies (full consolidation or
proportionate consolidation methods) or the equity method.
These changes are reflected in the consolidated financial statements of the BBVA Group for the year 2014, which
the Bank's Board of Directors has also prepared. Appendix I includes the Group's consolidated financial
statements. In accordance with the content of these consolidated financial statements prepared following the
International Financial Reporting Standards adopted by the European Union, the total amount of the BBVA
Group’s assets and consolidated equity at the close of 2013 amounted to €631,942 million and €51,609
million, respectively, while the consolidated net profit attributed to the parent company totaled €2,618 million.
2.
Accounting policies and valuation criteria applied
The Glossary includes the definition of some of the financial and economic terms used in Note 2 and subsequent
Notes.
The accounting standards and policies and valuation criteria used in preparing these financial statements are as
follows:
2.1 Financial instruments
Measurement of financial instruments and recognition of changes in subsequent fair value
All financial instruments are initially accounted for at fair value which, unless there is evidence to the contrary,
shall be the transaction price.
All the changes in the value of financial instruments, except in trading derivatives, arising from the accrual of
interests and similar items are recognized under the headings “Interest and similar income” or “Interest and similar
expenses”, as appropriate, in the accompanying income statement for the year in which the accrual took place
(see Note 32). The dividends paid from other companies are recognized under the heading “Dividend income” in
the accompanying income statement for the year in which the right to receive them arises (see Note 33).
The changes in fair value after the initial recognition, for reasons other than those mentioned in the preceding
paragraph, are treated as described below, according to the categories of financial assets and liabilities:
17
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
2.1.1
“Financial assets held for trading” and “Other financial assets and liabilities
designated at fair value through profit or loss”
The assets and liabilities recognized in these chapters of the balance sheets are measured at fair value, and
changes in value (gains or losses) are recognized as their net value under the heading “Net gains (losses) on
financial assets and liabilities” in the accompanying income statements (see Note 36). However, changes resulting
from variations in foreign exchange rates are recognized under the heading “Exchange differences (net)" in the
accompanying income statements.
2.1.2
“Available-for-sale financial assets”
Assets recognized under this heading in the balance sheets are measured at their fair value. Subsequent changes
in this measurement (gains or losses) are recognized temporarily for their amount net of tax effect under the
heading “Valuation adjustments - Available-for-sale financial assets” in the balance sheets (see Note 26).
Changes in the value of non-monetary items resulting from changes in foreign exchange rates are recognized
temporarily under the heading “Valuation adjustments - Exchange differences” in the accompanying balance
sheets. Changes in foreign exchange rates resulting from monetary items are recognized under the heading
“Exchange differences (net)" in the accompanying income statements.
The amounts recognized under the headings “Valuation adjustments - Available-for-sale financial assets” and
“Valuation adjustments - Exchange differences” continue to form part of the Bank's equity until the asset is
derecognized from the balance sheet or until an impairment loss is recognized in the financial instrument in
question. If these assets are sold, these amounts are derecognized and entered under the headings “Net gains
(losses) on financial assets and liabilities” or “Exchange differences (net)", as appropriate, in the income statement
for the year in which they are derecognized (see Note 36).
In the specific case of the sale of equity instruments considered strategic investments and recognized under the
heading “Available-for-sale financial assets”, the gains or losses generated are recognized under the heading
“Gains (losses) in non-current assets held-for-sale not classified as discontinued operations” in the income
statement, even if they had not been classified in a previous balance sheet as non-current assets held for sale, as
indicated in Rule 56 of Circular 4/2004 and its subsequent amendments (see Note 44).
The net impairment losses in “Available-for-sale financial assets” over the year are recognized under the heading
“Impairment losses on financial assets (net) – Other financial instruments not at fair value through profit or loss” in
the income statement for that year (see Note 41).
2.1.3
“Loans and receivables”, “Held-to-maturity investments” and “Financial liabilities
at amortized cost”
Assets and liabilities recognized under these headings in the accompanying balance sheets are measured at
“amortized cost” using the “effective interest rate” method. This is because the Bank intends to hold such financial
instruments to maturity.
Net impairment losses of assets recognized under these headings arising in a particular year are recognized
under the heading “Impairment losses on financial assets (net) – Loans and receivables” or “Impairment losses on
financial assets (net) – Other financial instruments not valued at fair value through profit or loss” in the income
statement for that year (see Note 41).
18
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
2.1.4
“Hedging derivatives” and “Fair value changes of the hedged items in portfolio
hedges of interest-rate risk”
Assets and liabilities recognized under these headings in the accompanying balance sheets are measured at fair
value.
Changes that take place subsequent to the designation of the hedging relationship in the measurement of
financial instruments designated as hedged items as well as financial instruments designated as hedge accounting
instruments are recognized as follows:
•
•
•
In fair value hedges, the changes in the fair value of the derivative and the hedged item attributable to the
hedged risk are recognized under the heading “Net gains (losses) on financial assets and liabilities” in the
income statement (see Note 36), with a balancing item under the headings of the balance sheet where
hedging items ("Hedging derivatives") or the hedged items are recognized, as applicable.
In fair value hedges of interest rate risk of a portfolio of financial instruments (portfolio-hedges), the gains or
losses that arise in the measurement of the hedging instrument are recognized in the income statement, and
those that arise from the change in the fair value of the hedged item (attributable to the hedged risk) are
recognized in the income statement, using, as a balancing item, the headings "Fair value changes of the
hedged items in portfolio hedges of interest rate risk" in the balance sheets, as applicable.
In cash flow hedges, the gain or loss on the hedging instruments relating to the effective portion are
recognized temporarily under the heading "Valuation adjustments – Cash flow hedging” in the balance sheets.
These differences are recognized in the accompanying income statement at the time when the gain or loss in
the hedged instrument affects profit or loss, when the forecast transaction is executed or at the maturity date
of the hedged item. Almost all of the hedges used by the Bank are for interest-rate risks. Therefore, the
valuation changes are recognized under the headings “Interest and similar income” or “Interest and similar
expenses” in the accompanying income statement (see Note 32).
Differences in the measurement of the hedging items corresponding to the ineffective portions of cash flow
hedges are recognized directly under the heading “Net gains (losses) on financial assets and liabilities” in the
income statement (see Note 36).
In hedges of net investments in foreign operations, the differences in the effective portions of hedging items
are recognized temporarily under the heading "Valuation adjustments – Hedging of net investments in foreign
transactions" in the balance sheets. These differences in valuation are recognized under the heading
“Exchange differences (net)" in the income statement when the investment in a foreign operation is disposed
of or derecognized.
2.1.5
Other financial instruments
The following exceptions are applicable with respect to the above general criteria:
• Equity instruments whose fair value cannot be determined in a sufficiently objective manner and financial
derivatives that have those instruments as their underlying asset and are settled by delivery of those
instruments remain in the balance sheet at acquisition cost; this may be adjusted, where appropriate, for any
impairment loss.
• Valuation adjustments arising from financial instruments classified at balance sheet date as non-current assets
held for sale are recognized with a balancing entry under the heading “Valuation adjustments - Non-current
assets held for sale” in the accompanying balance sheets (see Note 26).
2.2
Impairment losses on financial assets
2.2.1
Definition of impaired financial assets
A financial asset is considered to be impaired – and therefore its carrying amount is adjusted to reflect the effect
of the impairment – when there is objective evidence that events have occurred which:
•
In the case of debt instruments (loans and debt securities), give rise to an adverse impact on the future cash
flows that were estimated at the time the transaction was arranged. So they are considered impaired when
there are reasonable doubts that the balances will be recovered in full and/or the related interest will be
collected for the amounts and on the dates initially agreed.
19
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
•
In the case of equity instruments, it means that their carrying amount may not be fully recovered.
As a general rule, the carrying amount of impaired financial instruments is adjusted with a charge to the income
statement for the year in which the impairment becomes known, and the recoveries of previously recognized
impairment losses are recognized in the income statement for the year in which the impairment is reversed or
reduced. any recovery of previously recognized impairment losses for an investment in an equity instrument
classified as financial assets available for sale is not recognized in the income statement, but under the heading
"Valuation Adjustments - Available-for-sale financial assets" (see Note 26) in the balance sheet.
In general, amounts collected in relation to impaired loans and receivables are used to recognize the related
accrued interest and any excess amount is used to reduce the principal not yet paid.
When the recovery of any recognized amount is considered to be remote, this amount is written-off on the
balance sheet, without prejudice to any actions that may be taken in order to collect the amount until the rights
extinguish in full either because it is time-barred debt, the debt is forgiven, or for other reasons.
In the case of particularly significant financial assets, and assets that cannot be classified within similar groups of
instruments in terms of risk, the amounts recognized are measured individually. In the case of financial assets for
lower amounts that can be classified in standard groups, this measurement is carried out as a group.
According to the Bank's established policy, the recovery of a recognized amount is considered to be remote and,
therefore, removed from the balance sheet in the following cases:
• Any loan (except for those carrying an effective guarantee) of a company in bankruptcy and/or in the last
phases of a “concurso de acreedores” (the Spanish equivalent of a Chapter 11 bankruptcy proceeding), and
• Financial assets (bonds, debentures, etc.) whose issuer’s solvency has undergone a notable and irreversible
deterioration.
Additionally, loans classified as non-performing secured loans are written off in the balance sheet within a
maximum period of four years from the date on which they are classified as non-performing, while non-
performing unsecured loans (such as commercial and consumer loans, credit cards, etc.) are written off within
two years of their classification as non-performing.
Calculation of impairment on financial assets
The impairment on financial assets is determined by type of instrument and other circumstances that could affect
it, taking into account the guarantees received by the owners of the financial instruments to assure (in part or in
full) the performance of transactions. The Bank recognizes impairment charges directly against the impaired asset
when the likelihood of recovery is deemed remote, and uses offsetting or allowance accounts when it registers
non-performing loan provisions to cover the estimated loss.
2.2.2
Impairment of debt securities measured at amortized cost
The amount of impairment losses of debt securities at amortized cost is measured depending on whether the
impairment losses are determined individually or collectively.
Impairment losses determined individually
The amount of the impairment losses incurred on these instruments relates to the positive difference between
their respective carrying amounts and the present values of their expected future cash flows. These cash flows
are discounted using the original effective interest rate. If a financial instrument has a variable interest rate, the
discount rate for measuring any impairment loss is the current effective rate determined under the contract.
As an exception to the rule described above, the market value of quoted debt instruments is deemed to be a fair
estimate of the present value of their future cash flows.
20
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
The following is to be taken into consideration when estimating the future cash flows of debt instruments:
• All the amounts that are expected to be recovered over the residual life of the instrument; including, where
appropriate, those which may result from the collateral and other credit enhancements provided for the
instrument (after deducting the costs required for foreclosure and subsequent sale). Impairment losses
include an estimate for the possibility of collecting accrued, past-due and uncollected interest.
• The various types of risk to which each instrument is subject.
• The circumstances in which collections will foreseeably be made.
In respect to impairment losses resulting from the materialization of insolvency risk of the obligors (credit risk), a
debt instrument is impaired:
• When there is evidence of a reduction in the obligor's capacity to pay, whether manifestly by default or for
other reasons; and/or
• For these purposes, country risk is understood to refer to risk with respect to debtors resident in a particular
country and resulting from factors other than normal commercial risk: sovereign risk, transfer risk or risks
derived from international financial activity.
The Bank has developed policies, methods and procedures to calculate the losses that it may incur as a result of
its credit risks, attributable both to the insolvency of counterparties and to country risk. These policies, methods
and procedures are applied to the arrangement, study and documentation of debt instruments, contingent risks
and commitments, as well as the detection of their deterioration and in the calculation of the amounts needed to
cover the estimated losses.
Impairment losses determined collectively
Impairment losses are calculated collectively, both in the case of certain assets classified as impaired that are not
individually significant and are therefore not determined on an individual basis (impaired portfolio), and for asset
portfolios that are currently not impaired but that represent a potential loss ("inherent loss") or it is not specifically
allocated (non-impaired portfolio), average and substandard risks.
Inherent losses are losses incurred on the date of preparing the financial statements that are still pending
allocation to specific transactions. They are therefore estimated using statistical procedures.
The Bank calculates the inherent loss in relation to the credit risk assumed by Spanish banking institutions by
applying the parameters set out in Annex IX to Bank of Spain Circular 4/2004, which are based on the Bank of
Spain's experience of the Spanish banking sector. For the specific case of the real-estate risk provisions existing as
of December 31, 2011, the Bank applies the parameters set out in section V of Appendix IX to the Circular,
which are a transposition of the provisions of Royal Decree-Law 2/2012, dated February 3, on the restructuring
of the financial sector and of Act 8/2012, dated October 30, on the restructuring and sale of real-estate assets in
the financial sector.
Following is a description of the methodology used to estimate the collective loss of credit risk corresponding to
operations with residents in Spain:
•
Impaired financial assets
As a general rule, provided that impaired debt instruments do not have any of the guarantees mentioned
below, they are provisioned by applying the percentages indicated to the amount of the outstanding risk,
according to the oldest past-due amount, or the date on which the assets are classified as impaired, if earlier:
21
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Allowance Percentages for Impairment Loans
Age of the Past-due Amount
Allowance Percentage
Up to 180 days
Over 180 days and up to 270 days
Over 270 days and up to 1 year
Over 1 year
25%
50%
75%
100%
• The impairment of debt instruments that have one or more of the guarantees indicated below is calculated
by applying the above percentages to the amount of the outstanding risk that exceeds the value of the
guarantees, in accordance with the following criteria:
− Transactions secured by real estate
For the purposes of calculating impairment of financial assets classified as impaired, the value of the real
rights received as security will be calculated according to the type of asset secured by the real right,
using the following criteria, provided they are first-call and duly constituted and registered in favor of the
bank:
− Completed home that is the primary residence of the borrower
Includes homes with a current certificate of habitability or occupancy, issued by the corresponding
administrative authority, in which the borrower usually lives and feels more attached to.
The calculation of the value of the rights received as collateral shall be 80% of the cost of the
completed home and the appraisal value of its current state, whichever is lower. For these
purposes, the cost will be the purchase price declared by the borrower in the public deed. If the
deed is manifestly old, the cost may be obtained by adjusting the original cost by an indicator that
accurately reflects the average change in price of existing homes between the date of the deed and
the calculation date.
− Rural buildings in use, and completed offices, premises and multi-purpose buildings
Includes land not declared as urbanized, and on which construction is not authorized for uses other
than agricultural, forest or livestock, as appropriate; as well as multi-purpose buildings, whether or
not they are linked to an economic use, that do not include construction or legal characteristics or
elements that limit or make difficult their multi-purpose use and thus their easy conversion into cash.
The calculation of the value of the rights received as collateral shall be 70% of the cost of the
completed property or multi-purpose buildings and the appraisal value of its current state, whichever
is lower. For these purposes, the cost will be the purchase price declared by the borrower in the
public deed. If the property was constructed by the borrower himself, the cost shall be calculated by
using the price of acquisition of the land declared in the public deed plus the value of work
certificates, and including any other necessary expenses and accrued taxes, but excluding financial
and business expenses.
− Finished homes (rest)
Includes finished homes that, on the date referred to by the financial statements, have the
corresponding current certificate of habitability or occupancy issued by the corresponding
administrative authority, but that do not qualify for consideration under above section “Completed
home that is the primary residence of the borrower”..
The value of the rights received as collateral shall be 60% of the cost of the completed home and
the appraisal value of its current state, whichever is lower. The cost will be the purchase price
declared by the borrower in the public deed.
In the case of finance for real estate construction, the cost will include the amount declared on the
purchase deed for the land, together with any necessary expenses actually paid for its development,
excluding commercial and financial expenses, plus the sum of the costs of construction as shown in
partial work certificates issued by experts with appropriate professional qualifications, including that
corresponding to work completion. In the case of groups of homes that form part of developments
partially sold to third parties, the cost shall be that which can be rationally assigned to the homes
making up the collateral.
22
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
− Land, lots and other real estate assets
The value of the rights received as collateral shall be 50% of the cost of the lot or real-estate asset
affected and the appraisal value of its current state, whichever is lower. For these purposes, the cost
is made up of the purchase price declared by in the public deed, plus the necessary expenses that
have actually been incurred by the borrower for the consideration of the land or lot in question as
urban land, as well as those stipulated in the previous section.
− Transactions secured by other collateral (not real estate):
Transactions that have as collateral any of the pledges indicated below shall be hedged by applying the
following criteria:
− Partial cash guarantees: Transactions that have partial cash guarantees shall be hedged by applying
the hedging percentages stipulated as general criteria to the difference between the amount for
which they are registered in the asset and the current value of the deposits.
− Partial pledges: Transactions that have partial pledges on shares in monetary financial institutions or
debt securities issued by the government, credit institutions or financial credit institutions rated in
the “negligible risk” class, or other financial instruments traded on active markets, shall be hedged by
applying the hedging percentages stipulated as a general rule to the difference between the amount
for which they are registered in the asset and 90% of the fair value of these financial instruments.
• Non-impaired portfolio
− Average Risk
Debt instruments, whoever the obligor and whatever the guarantee or collateral, that are not considered
impaired are assessed collectively, including the assets in a group with similar credit risk characteristics,
including sector of activity of the debtor or the type of guarantee. The applicable hedging percentages
are as follows:
Risk
Negligible risk
Low risk
Medium-low risk
Medium risk
Medium-high risk
High ris k
− Substandard Risk
Allowance Range
0%
0.06%
0.15%
0.18%
0.2%
0.25%
0%
0.75%
1.88%
2.25%
2.50%
3.13%
Loans classified in the Substandard Risk category will be analyzed to determine the necessary generic
provision, which is the difference between the amount recognized in assets for these instruments and the
present value of cash flows expected to be received for the group, discounted at the average contractual
interest
The coverage to be performed for each of the homogeneous groups of debt instruments classified as
substandard risks for belonging to a troubled range, will be collectively estimated for assets with similar
credit risk characteristics to the group’s based on historical loss experience. This historical experience is
adjusted on the basis of observable data to reflect the effect of current conditions that did not affect the
period that has been extracted from historical experience, and to remove the effects of conditions in the
historical period that do not exist today.
• Country risk allowance or provision
On the basis of the countries' economic performance, political situation, regulatory and institutional
framework, and payment capacity and record, the Bank classifies all the transactions into different groups,
assigning to each group the insolvency provision percentages derived from those analyses.
23
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
However, due to the dimension of the Bank and to the proactive management of its country risk exposure,
the allowances recognized in this connection are not material with respect to the credit loss allowances
recognized (as of December 31, 2014, these country risk allowances represent 0.29% of the credit loss
allowances recognized of the Bank).
Impairment of other debt instruments
The impairment losses on debt securities included in the “Available-for-sale financial asset” portfolio are equal to
the positive difference between their acquisition cost (net of any principal repayment), after deducting any
impairment loss previously recognized in the income statement, and their fair value.
When there is objective evidence that the negative differences arising on measurement of these assets are due to
impairment, they are no longer considered as “Valuation adjustments - Available-for-sale financial assets” and are
recognized in the income statement.
If all or part of the impairment losses are subsequently recovered, the amount is recognized in the income
statement for the year in which the recovery occurred, up to the limit of the amount recognized previously in
earnings.
Impairment of equity instruments
The amount of the impairment in the equity instruments is determined by the category where they are
recognized:
• Equity instruments measured at fair value: The criteria for quantifying and recognizing impairment losses on
equity instruments are similar to those for “Debt instruments”, with the exception that any recovery of
previously recognized impairment losses for an investment in an equity instrument classified as available for
sale is not recognized in the income statement but under the heading “Valuation adjustments – Available-for-
sale financial assets” in the balance sheet (see Note 26).
The Bank considers that there is objective evidence of impairment on equity instruments classified as
available-for-sale when significant unrealized losses have existed over a sustained period of time due to a
price reduction of at least 40% or over a period of more than 18 months.
When applying this evidence of impairment, the Bank takes into account the volatility in the price of each
individual security to determine whether it is a percentage that can be recovered through its sale on the
market; other different thresholds may exist for certain securities or specific sectors.
In addition, for individually significant investments, the Bank compares the valuation of the most significant
securities against valuations performed by independent experts.
• Equity instruments measured at cost: The impairment losses on equity instruments measured at acquisition
cost are equal to the difference between their carrying amount and the present value of expected future cash
flows discounted at the market rate of return for similar securities. These impairment losses are determined
taking into account the equity of the investee (except for valuation adjustments due to cash flow hedges) for
the last approved balance sheet, adjusted for the unrealized gains on the measurement date.
Impairment losses are recognized in the income statement for the year in which they arise as a direct
reduction of the cost of the instrument. These losses may only be reversed subsequently in the event of the
sale of these assets.
Impairment of holdings in subsidiaries, associates or jointly controlled entities
When evidence of impairment exists in the holdings in subsidiaries, associates or jointly controlled entities, the
entity will estimate the amount of the impairment losses by comparing their recoverable amount, which is the fair
value minus the necessary sale costs or their value in use, whichever is greater, with their carrying amount.
Impairment losses are recognized immediately under the heading “Impairment losses on other assets (net)” in the
income statement (see Note 42). Recoveries subsequent to impairment losses recognized previously are
recognized under the same heading in the income statement for the period.
24
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
2.2.3
Transfers and derecognition of financial assets and liabilities
The accounting treatment of transfers of financial assets is determined by the way in which risks and benefits
associated with the assets involved are transferred to third parties. Thus, the financial assets are only
derecognized from the balance sheet when the cash flows that they generate are extinguished, or when their
implicit risks and benefits have been substantially transferred to third parties. In the latter case, the financial asset
transferred is derecognized from the balance sheet, and any right or obligation retained or created as a result of
the transfer is simultaneously recognized.
Similarly, financial liabilities are derecognized from the balance sheet only if their obligations are extinguished or
acquired (with a view to subsequent cancellation or renewed placement).
The Bank is considered to have transferred substantially all the risks and benefits if such risks and benefits
account for the majority of the risks and benefits involved in ownership of the transferred assets. If substantially
all the risks and benefits associated with the transferred financial asset are retained:
• The transferred financial asset is not derecognized from the balance sheet and continues to be measured
using the same criteria as those used before the transfer.
• A financial liability is recognized at an amount equal to the amount received, which is subsequently measured
at amortized cost.
In the specific case of securitizations, this liability is recognized under the heading “Financial liabilities at
amortized cost – Customer deposits” in the balance sheets (see Note 19). As these liabilities do not constitute
a current obligation, when measuring such a financial liability the Bank deducts those financial instruments
owned by it which constitute financing for the entity to which the financial assets have been transferred, to
the extent that these instruments are deemed specifically to finance the transferred assets.
• Both the income generated on the transferred (but not derecognized) financial asset and the expenses
associated with the new financial liability continue to be recognized.
The criteria followed with respect to the most common transactions of this type made by the Bank are as follows:
• Purchase and sale commitments: Financial instruments sold with a repurchase agreement are not
derecognized from the balance sheets and the amount received from the sale is considered to be financing
from third parties.
Financial instruments acquired with an agreement to subsequently resell them are not recognized in the
balance sheets and the amount paid for the purchase is considered to be credit given to third parties.
•
Securitization: The Bank has applied the most stringent criteria for determining whether or not it retains
substantially all the risk and rewards on such assets for all securitizations performed since January 1, 2004.
As a result of this analysis, the Bank has concluded that none of the securitizations undertaken since that
date meet the prerequisites for derecognizing the securitized assets from the balance sheets (see Note 11 and
Appendix VI), as the Bank retains substantially all the expected credit risks and possible changes in net cash
flows, while retaining the subordinated loans and lines of credit extended to these securitization funds.
2.3 Financial guarantees
Financial guarantees are considered to be those contracts that require their issuer to make specific payments to
reimburse the holder for a loss incurred when a specific borrower breaches its payment obligations on the terms
– whether original or subsequently modified – of a debt instrument, irrespective of the legal form it may take.
Financial guarantees may take the form of a deposit, financial guarantee, insurance contract or credit derivative,
among others.
In their initial recognition, financial guarantees provided on the liability side of the balance sheet at fair value,
which is generally the present value of the fees, commissions and interest receivable from these contracts over
the term thereof, and we simultaneously recognize a credit on the asset side of the balance sheet for the amount
of the fees and commissions received at the inception of the transactions and the amounts receivable at the
present value of the fees, commissions and interest outstanding.
25
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Financial guarantees, irrespective of the guarantor, instrumentation or other circumstances, are reviewed
periodically so as to determine the credit risk to which they are exposed and, if appropriate, to consider whether
a provision is required for them. The credit risk is determined by application of criteria similar to those established
for quantifying impairment losses on debt instruments measured at amortized cost (see Note 2.2).
The provisions made for financial guarantees considered impaired are recognized under the heading “Provisions -
Provisions for contingent risks and commitments” on the liability side in the balance sheets (see Note 20). These
provisions are recognized and reversed with a charge or credit, respectively, to “Provisions (net)” in the income
statements (see Note 40).
Income from guarantee instruments is registered under the heading “Fee and commission income” in the income
statement and is calculated by applying the rate established in the related contract to the nominal amount of the
guarantee (see Note 34).
2.4 Non-current assets held for sale and liabilities associated with non-current
assets held for sale
The heading “Non-current assets held-for-sale” in the balance sheets includes the carrying amount of financial or
non-financial assets that are not part of the Bank’s operating activities. The recovery of this carrying amount is
expected to take place through the price obtained on its disposal (see Note 13).
This heading includes individual items and groups of items (“disposal groups”) that form part of a major operating
segment and are being held for sale as part of a disposal plan (“discontinued transactions”). The individual items
include the assets received by the Bank from their debtors in full or partial settlement of the debtors’ payment
obligations (assets foreclosed or in lieu of repayment of debt and recovery of lease finance transactions), unless
the Bank has decided to make continued use of these assets. The Bank has units that specialize in real estate
management and the sale of this type of asset.
Symmetrically, the heading “Liabilities associated with non-current assets held for sale” in the balance sheets
reflects the balances payable arising from disposal groups and discontinued operations.
Non-current assets held for sale are generally measured at fair value less sale costs, or their carrying amount,
calculated on the date of their classification within this category, whichever is lower. Non-current assets held for
sale are not depreciated while included under this heading.
The fair value of the non-current assets held for sale from foreclosures or recoveries is mainly based on appraisals
or valuations made by independent experts and not more than one year old, or less if there are indications of
impairment. The Bank applies the rule that these appraisals may not be older than one year, and their age is
reduced if there is an indication of deterioration in the assets.
The Spanish entities mainly use the services of the following valuation and appraisal companies. None of them is
linked to the BBVA Group and all are entered in the official Bank of Spain register: Sociedad de Tasación, S.A.,
Valtecnic, S.A., Krata, S.A., Gesvalt, S.A., Alia Tasaciones, S.A., Tasvalor, S.A., Tinsa, S.A., Ibertasa, S.A.,
Valmesa, S.A., Arco Valoraciones, S.A., Tecnicasa, S.A. and Uve Valoraciones, S.A.
Gains and losses generated on the disposal of assets and liabilities classified as non-current held for sale, and
related impairment losses and subsequent recoveries, where pertinent, are recognized under the heading “Gains
(losses) on non-current assets held for sale not classified as discontinued transactions” in the income statements
(see Note 44). The remaining income and expense items associated with these assets and liabilities are classified
within the relevant income statement headings.
Income and expenses for discontinued operations, whatever their nature, generated during the year, even if they
have occurred before their classification as discontinued operations, are presented net of the tax effect as a single
amount under the heading “Income from discontinued transactions” in the income statement, whether the
business remains on the balance sheet or is derecognized from the balance sheet. This heading includes the
earnings from their sale or other disposal.
26
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
2.5 Tangible assets
Property, plants and equipment for own use
This heading includes the assets under ownership or acquired under lease finance, intended for future or current
use by the Bank and that it expects to hold for more than one year. It also includes tangible assets received by
the Bank in full or part settlement of financial assets representing receivables from third parties and those assets
expected to be held for continuing use.
Property, plants and equipment for own use is recognized in the balance sheets at acquisition cost, less any
accumulated depreciation and, where appropriate, any estimated impairment losses resulting from comparing the
net carrying amount of each item with its corresponding recoverable value.
Depreciation is calculated using the straight-line method, on the basis of the acquisition cost of the assets less
their residual value; the land on which the buildings and other structures stand is considered to have an indefinite
life and is therefore not depreciated.
The tangible asset depreciation charges are recognized in the accompanying income statements under the
heading "Depreciation and amortization" (see Note 39) and are based on the application of the following
depreciation rates (determined on the basis of the average years of estimated useful life of the different assets):
Tangible Assets
Annual Percentage
Buildings for own use
Furniture
Fixtures
Office supplies and computerization
1% - 4%
8% - 10%
6% - 12%
8% - 25%
The Bank’s criteria for determining the recoverable amount of these assets, in particular the buildings for own
use, is based on up-to-date independent appraisals that are no more than 3-5 years old at most, unless there are
indications of impairment.
At each accounting close, the Bank analyzes whether there are internal or external indicators that a tangible asset
may be impaired. When there is evidence of impairment, the entity then analyzes whether this impairment
actually exists by comparing the asset’s net carrying amount with its recoverable amount. When the carrying
amount exceeds the recoverable amount, the carrying amount is written down to the recoverable amount and
future depreciation charges are adjusted to reflect the asset’s remaining useful life.
Similarly, if there is any indication that the value of a tangible asset has been recovered, the entities will estimate
the recoverable amounts of the asset and recognize it in the income statement, registering the reversal of the
impairment loss registered in previous years and thus adjusting future depreciation charges. Under no
circumstances may the reversal of an impairment loss on an asset raise its carrying amount above that which it
would have if no impairment losses had been recognized in prior years.
Upkeep and maintenance expenses relating to tangible assets held for own use are recognized as an expense in
the year they are incurred and recognized in the income statements under the heading "Administration costs -
General and administrative expenses - Property, fixtures and equipment" (see Note 38.2).
Other assets leased out under an operating lease
The criteria used to recognize the acquisition cost of assets leased out under operating leases, to calculate their
depreciation and their respective estimated useful lives and to register the impairment losses on them, are the
same as those described in relation to tangible assets for own use.
27
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Investment properties
The heading “Tangible assets - Investment properties” in the balance sheets reflects the net values (purchase cost
minus the corresponding accumulated depreciation and, if appropriate, estimated impairment losses) of the land,
buildings and other structures that are held either to earn rentals or for capital appreciation through sale and that
are neither expected to be sold off in the ordinary course of business nor are destined for own use (see Note 15).
The criteria used to recognize the acquisition cost of investment properties, calculate their depreciation and their
respective estimated useful lives and register the impairment losses on them, are the same as those described in
relation to tangible assets held for own use.
The Bank’s criteria for determining the recoverable amount of these assets is based on up-to-date independent
appraisals that are no more than one year old at most, unless there are indications of impairment.
2.6
Intangible assets
These assets may have an indefinite useful life if, based on an analysis of all relevant factors, it is concluded that
there is no foreseeable limit to the period over which the asset is expected to generate net cash flows for the
Bank. In all other cases they have a finite useful life.
Intangible assets with a finite useful life are amortized according to the duration of this useful life, using methods
similar to those used to depreciate tangible assets. The depreciation charge for these assets is recognized in the
accompanying income statements under the heading "Depreciation and amortization" (see Note 39).
The Bank recognizes any impairment loss on the carrying amount of these assets with charge to the heading
“Impairment losses on other assets (net) - Goodwill and other intangible assets” in the accompanying income
statements (see Note 42). The criteria used to recognize the impairment losses on these assets and, where
applicable, the recovery of impairment losses recognized in prior years, are similar to those used for tangible
assets.
2.7 Tax assets and liabilities
Expenses on corporation tax applicable to Spanish companies are recognized in the income statement, except
when they result from transactions on which the profits or losses are recognized directly in equity, in which case
the related tax effect is also recognized in equity.
The total corporate income tax expense is calculated by aggregating the current tax arising from the application
of the corresponding tax rate to the tax for the year (after deducting the tax credits allowable for tax purposes)
and the change in deferred tax assets and liabilities recognized in the income statement.
Deferred tax assets and liabilities include temporary differences, defined as at the amounts to be payable or
recoverable in future fiscal years arising from the differences between the carrying amount of assets and liabilities
and their tax bases (the “tax value”), and the tax loss and tax credit carry forwards. These amounts are registered
by applying to each temporary difference the tax rates that are expected to apply when the asset is realized or
the liability settled (see Note 17).
Deferred tax liabilities in relation to taxable temporary differences associated with investments in subsidiaries,
associates or jointly controlled entities are recognized for accounting purposes, except where the Bank can
control the timing of the reversal of the temporary difference and it is also unlikely that it will reverse in the
foreseeable future.
Deferred tax assets are only recognized if it is considered probable that they will have sufficient tax gains in the
future against which they can be made effective.
The deferred tax assets and liabilities recognized are reassessed by the Bank at the close of each accounting
period in order to ascertain whether they are still current, and the appropriate adjustments are made on the basis
of the findings of the analyses performed.
The income and expenses directly recognized in equity that do not increase or decrease taxable income are
accounted for as temporary differences.
28
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
2.8 Provisions, contingent assets and contingent liabilities
The heading “Provisions” in the balance sheets includes amounts recognized to cover the Bank’s current
obligations arising as a result of past events. These are certain in terms of nature but uncertain in terms of
amount and/or extinguishment date. The settlement of these obligations by the Bank is deemed likely to entail an
outflow of resources embodying economic benefits (see Note 20). The obligations may arise in connection with
legal or contractual provisions, valid expectations formed by Bank companies relative to third parties in relation to
the assumption of certain responsibilities or through virtually certain developments of particular aspects of the
regulations applicable to the operation of the entities; and, specifically, future legislation to which the Bank will
certainly be subject.
The provisions are recognized in the balance sheets when each and every one of the following requirements is
met:
• They represent a current obligation that has arisen from a past event;
• At the date referred to by the financial statements, there is more probability that the obligation will have to be
met than that it will not;
•
It is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation; and
• The amount of the obligation can be reasonably estimated.
Among other items, these provisions include the commitments made to employees (mentioned in section 2.9),
as well as provisions for tax and legal litigation.
Contingent assets are possible assets that arise from past events and whose existence is conditional on, and will
be confirmed only by, the occurrence or non-occurrence of events beyond the control of the Bank. Contingent
assets are not recognized in the balance sheet or in the income statement; however, they are disclosed in the
Notes to the financial statements, provided that it is probable that these assets will give rise to an increase in
resources embodying economic benefits (see Note 29).
Contingent liabilities are possible obligations of the Bank that arise from past events and whose existence is
conditional on the occurrence or non-occurrence of one or more future events beyond the control of the entity.
They also include the existing obligations of the entity when it is not probable that an outflow of resources
embodying economic benefits will be required to settle them; or when, in extremely rare cases, their amount
cannot be measured with sufficient reliability.
2.9 Pensions and other post-employment commitments
Below is a description of the most significant accounting criteria relating to the commitments to employees, in
terms of post-employment benefits and other long term commitments assumed by the Bank's companies in Spain
and abroad (see Note 21).
Commitments’ valuation: assumptions and actuarial gains/losses recognition
The present values of the commitments are quantified based on an individual member data. Costs are calculated
using the projected unit credit method, which sees each period of service as giving rise to an additional unit of
benefit/commitment and measures each unit separately to build up the final obligation.
The actuarial assumptions should take into account that:
• They are unbiased, in that they are not unduly aggressive nor excessively conservative.
• They are compatible with each other and adequately reflect the existing economic relations between factors
such as inflation, foreseeable wage increases, discount rates and the expected return on plan assets, etc. The
expected return on plan assets is calculated by taking into account both market expectations and the
particular nature of the assets involved..
• The rate used to discount the commitments is determined by reference to market yields at the date referred
to by the financial statements on high quality bonds.
29
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
The Bank recognizes actuarial differences originating in the commitments assumed with staff taking early
retirement, benefits awarded for seniority and other similar items under the heading “Provisions (net)” of the
income statement for the period (see Note 40) in which these differences occur. The Bank recognizes the
actuarial gains or losses arising on all other defined-benefit post-employment commitments directly under the
heading "Valuation adjustments" of equity in the accompanying consolidated balance sheets (see Note 26).
Post-employment benefit commitments
Pensions
The Bank’s post-employment benefit commitments are either defined-contribution or defined-benefit.
• Defined-contribution commitments: The amounts of these commitments are established as a percentage of
certain remuneration items and/or as a fixed pre-established amount. The contributions made in each period
by the Bank’s companies for these commitments are recognized with a charge to the heading “Personnel
expenses - Defined-contribution plan expense” in the consolidated income statements (see Note 38).
• Defined-benefit commitments: The Bank has defined-benefit commitments for permanent disability and death
for certain current employees and early retirees, and defined-benefit retirement commitments applicable only
to certain groups of serving employees, or early retired employees and retired employees. These
commitments are either funded by insurance contracts or registered as internal provisions.
The amounts recognized under the heading “Provisions – Provisions for pensions and similar obligations” (see
Note 20) are the differences, at the date of the financial statements, between the present values of the defined-
benefit commitments, adjusted by the past service cost, and the fair value of plan assets.
Early retirement
The Bank has offered certain employees in Spain the possibility of taking early retirement before the age
stipulated in the collective labor agreement in force and has put into place the corresponding provisions to cover
the cost of the commitments acquired for this item. The present values paid for early retirement are quantified
based on an individual member data and are recognized under the heading “Provisions – Provisions for pensions
and similar obligations” in the accompanying balance sheets (see Note 20).
The early retirement commitments in Spain include the compensation and indemnities and contributions to
external pension funds payable during the period of early retirement. The commitments relating to this group of
employees after they have reached normal retirement age are dealt with in the same way as pensions.
Other post-employment welfare benefits
The Bank has welfare benefit commitments whose effects extend beyond the retirement of the employees
entitled to the benefits. These commitments relate to certain current employees and retirees, depending on the
employee group they belong to.
The present values of post-employment welfare benefits are quantified based on an individual member data and
are recognized under the heading “Provisions – Provisions for pensions and similar obligations” in the consolidated
balance sheets (see Note 20).
Other long-term commitments to employees
The Bank is required to provide certain goods and services to groups of employees. The most significant of
these, in terms of the type of remuneration and the event giving rise to the commitments, are as follows: loans to
employees, life insurance, study assistance and long-service awards.
Some of these commitments are measured using actuarial studies, so that the present values of the vested
obligations for commitments with personnel are quantified based on an individual member data. They are
recognized under the heading “Provisions – Other provisions” in the balance sheets (see Note 20).
The cost of these benefits provided by the Bank's Spanish companies to active employees are recognized under
the heading “Personnel expenses - Other personnel expenses” in the consolidated income statements (see Note
38).
30
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Other commitments for current employees accrue and are settled on a yearly basis, so it is not necessary to
register a provision in this regard.
2.10 Equity-settled share-based payment transactions
Provided they constitute the delivery of such instruments following the completion of a specific period of services,
equity-settled share-based payment transactions are recognized as en expense for services being provided by
employees, by way of a balancing entry under the heading “Stockholders’ equity – Other equity instruments” in
the balance sheet. These services are measured at fair value, unless this value cannot be calculated reliably. In
this case, they are measured by reference to the fair value of the equity instruments committed, taking into
account the date on which the commitments were assumed and the terms and other conditions included in the
commitments.
When the initial compensation agreement includes what may be considered market conditions among its terms,
any changes in these conditions will not be reflected in the income statement, as these have already been
accounted for in calculating the initial fair value of the equity instruments. Non-market vesting conditions are not
taken into account when estimating the initial fair value of instruments, but they are taken into consideration
when determining the number of instruments to be granted. This will be recognized on the income statement
with the corresponding increase in equity.
2.11 Termination benefits
Termination benefits are recognized in the accounts when the Bank agrees to terminate employment contracts
with its employees and has established a detailed plan to do so.
2.12 Treasury stock
The value of the equity instruments (basically, shares and derivatives over the Bank's shares held by some Group
companies that comply with the requirements for recognition as equity instruments) is recognized under the
heading "Stockholders' funds - Treasury stock" in the balance sheets (see Note 25).
These financial assets are recognized at acquisition cost, and the gains or losses arising on their disposal are
credited or debited, as appropriate, under the heading “Stockholders’ funds - Reserves” in the balance sheets (see
Note 24).
2.13 Foreign-currency transactions
Assets, liabilities and futures transactions
The assets and liabilities in foreign currencies, including those of branches abroad, and the unmatured hedging
forward foreign currency purchase and sale transactions, are converted to euros at the average exchange rates
on the Spanish spot currency market (or based on the price of the U.S. dollar on local markets for the currencies
not listed on this market) at the end of each period, with the exception of:
• Non-current investments in securities denominated in foreign currencies and financed in euros or in a
currency other than the investment currency, which are converted at historical exchange rates.
• Unmatured non-hedging forward foreign currency purchase and sale transactions, which are converted at
the exchange rates on the forward currency market at the end of each period as published by the Bank of
Spain for this purpose.
The exchange differences that arise when converting these foreign-currency assets and liabilities (including those
of the branches) into euros are recognized under the heading “Exchange differences (net)" in the income
statement, except for those differences that arise in non-monetary items classified as available for sale.
The breakdown of the main balances in foreign currencies as of December 31, 2014 and 2013, with reference
to the most significant foreign currencies, is set forth in Appendix VIII.
31
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Structural currency positions
As a general policy, the Bank’s investments in foreign subsidiaries and the endowment funds provided to
branches abroad are financed in the same currency as the investment in order to eliminate the future currency
risk arising from these transactions. However, the investments made in countries whose currencies do not have a
market which permits the obtainment of unlimited, lasting and stable long-term financing are financed in another
currency.
2.14 Recognition of income and expenses
The most significant criteria used by the Bank to recognize its income and expenses are as follows.
•
Interest income and expenses and similar items
As a general rule, interest income and expenses and similar items are recognized on the basis of their period
of accrual using the effective interest rate method. The financial fees and commissions that arise on the
arrangement of loans (basically origination and analysis fees) must be deferred and recognized in the income
statement over the expected life of the loan. The direct costs incurred in arranging these transactions can be
deducted from the amount thus recognized. These fees are part of the effective rate for loans. Also dividends
received from other companies are recognized as income when the companies’ right to receive them arises.
However, when a debt instrument is deemed to be impaired individually or is included in the category of
instruments that are impaired because of amounts more than three months past-due, the recognition of
accrued interest in the income statement is interrupted. This interest is recognized for accounting purposes
as income, as soon as it is received.
• Commissions, fees and similar items
Income and expenses relating to commissions and similar fees are recognized in the income statement using
criteria that vary according to the nature of such items. The most significant items in this connection are:
− Those relating to financial assets and liabilities measured at fair value through profit or loss, which are
recognized when collected/paid.
− Those arising from transactions or services that are provided over a period of time, which are recognized
over the life of these transactions or services.
− Those relating to single acts, which are recognized when this single act is carried out.
• Non-financial income and expenses
These are recognized for accounting purposes on an accrual basis.
• Deferred collections and payments
These are recognized for accounting purposes at the amount resulting from discounting the expected cash
flows at market rates.
2.15 Sales and income from the provision of non-financial services
The heading “Other operating income – Sales and income form the provision of non-financial services” in the
income statement includes the amount of sales of goods and revenue from the provision of non-financial services
(see Note 37).
2.16 Leases
Lease contracts are classified as finance from the start of the transaction, if they substantially transfer all the risks
and rewards incidental to ownership of the asset forming the subject-matter of the contract. Leases other than
finance leases are classified as operating leases.
When the Bank acts as the lessor of an asset in finance leases, the aggregate present values of the lease
payments receivable from the lessee plus the guaranteed residual value (usually the exercise price of the lessee’s
purchase option on expiration of the lease agreement) are recognized as financing provided to third parties and,
therefore, are included under the heading “Loans and receivables” in the balance sheets.
32
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
When the Bank acts as lessor of an asset in operating leases, the acquisition cost of the leased assets is
recognized under "Tangible assets – Property, plants and equipment – Other assets leased out under an operating
lease" in the balance sheets (see Note 15). These assets are depreciated in line with the criteria adopted for items
of tangible assets for own use, while the income arising from the lease arrangements is recognized in the income
statements on a straight-line basis under the headings "Other operating income - Rest of other operating income"
and "Other operating expenses" (see Note 37).
In the case of a fair value sale and leaseback, the profit or loss generated by the sale is recognized in the income
statement at the time of sale. If such a transaction gives rise to a finance lease, the corresponding gains or losses
are amortized over the lease period.
2.17 Entities and branches located in countries with hyperinflationary economies
None of the functional currencies of the branches located abroad relate to hyperinflationary economies as defined
by Circular 4/2004 and subsequent amendments. Accordingly, as of December 31, 2014 and 2013it was not
necessary to adjust the financial statements of any branch to correct for the effect of inflation.
2.18 Statements of recognized income and expenses
The statements of recognized income and expenses reflect the income and expenses generated each year. They
distinguish between income and expenses recognized as results in the income statements and “Other recognized
income (expenses)” recognized directly in equity. “Other recognized income (expenses)” include the changes that
have taken place in the year in the “Valuation adjustments” broken down by item.
The sum of the changes to the heading “Valuation adjustments” of the total equity and the net income of the year
forms the “Total recognized income/expenses of the year”.
2.19 Statements of changes in equity
The statements of changes in equity reflect all the movements generated in each year in each of the headings of
the equity, including those from transactions undertaken with shareholders when they act as such, and those due
to changes in accounting criteria or corrections of errors, if any.
The applicable regulations establish that certain categories of assets and liabilities are recognized at their fair value
with a charge to equity. These charges, known as “Valuation adjustments” (see Note 26), are included in the
Bank’s total equity net of tax effect, which has been recognized as deferred tax assets or liabilities, as appropriate.
2.20 Statements of cash flows
The indirect method has been used for the preparation of the statement of cash flows. This method starts from
the Bank’s net income and adjusts its amount for the effects of transactions of a non-cash nature, any deferrals or
accruals of past or future operating cash receipts or payments, and items of income or expense associated with
cash flows classified as investment or finance. As well as cash, short-term, highly liquid investments subject to a
low risk of changes in value, such as cash and deposits in central banks, are classified as cash and cash
equivalents.
When preparing these financial statements the following definitions have been used:
• Cash flows: Inflows and outflows of cash and cash equivalents.
• Operating activities: The typical activities of credit institutions and other activities that cannot be classified as
investment or financing activities.
•
Investing activities: The acquisition, sale or other disposal of long-term assets and other investments not
included in cash and cash equivalents or in operating activities.
• Financing activities: Activities that result in changes in the size and composition of the Bank's equity and of
liabilities that do not form part of operating activities.
33
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
3.
System of shareholder remuneration
Shareholder remuneration system
During 2011, 2012 and 2103, a shareholder remuneration system called the “Dividend Option” was
implemented.
Under this remuneration scheme, BBVA offers its shareholders the opportunity to receive part of their
remuneration in the form of free shares; however, they can still choose to receive it in cash by selling the rights
assigned to them in each capital increase either to BBVA (by the Bank exercising its commitment to purchase the
free assignment rights) or on the market.
The Bank’s Shareholders’ Annual General Meeting held on March 14, 2014 once more approved the
establishment of the “Dividend Option” program for 2014, through four share capital increases charged to
voluntary reserves, under similar conditions to those established in the previous years.
In April 2014, the Executive Committee approved the execution of the first of the capital increases charged to
reserves as agreed by the AGM held on March 14, 2014 to implement the Dividend Option. As a result of this
increase, the Bank’s common stock increased by €49,594,990.83 (101,214,267 shares at a €0.49 par value
each). 89.21% of shareholders opted to receive their remuneration in the form of shares (see Note 22). The
other 10.79% of the right owners opted to sell the rights assigned to them to BBVA, and as a result, BBVA
acquired 624,026,809 rights for a total amount of €104,836,503.91; said shareholders were paid in cash at a
gross fixed price of €0.168 per right.
In October 2014, the Executive Committee approved the execution of the first of the capital increases charged to
reserves as agreed by the AGM held on March 14, 2014 to implement the Dividend Option. As a result of this
increase, the Bank’s common stock increased by €20,455,560.09 (41,746,041 shares at a €0.49 par value
each). 85.09% of shareholders opted to receive their remuneration in the form of shares (see Note 22). The
other 14.91% of the right owners opted to sell the rights assigned to them to BBVA, and as a result, BBVA
acquired 877,643,649 rights for a total amount of €70,211,491.92; said shareholders were paid in cash at a
gross fixed price of €0.080 per right.
In December 2014, the Executive Committee approved the execution of the third of the capital increases
charged to reserves as agreed by the AGM held on March 14, 2014 to implement the Dividend Option. As a
result of this increase, the Bank’s common stock increased by €26,256,622.07 (53,584,943 shares at a €0.49
par value each). 85.96% of shareholders opted to receive their remuneration in the form of shares (see Note 22).
The other 14.04% of the right owners opted to sell the rights assigned to them to BBVA, and as a result, BBVA
acquired 866,429,450 rights for a total amount of €69,314,363.20; said shareholders were paid in cash at a
gross fixed price of €0.080 per right.
34
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Dividends
At its meeting of June 25, 2014, the Board of Directors of BBVA approved the payment of an interim dividend
against 2014 earnings of €0.08 gross (€0.0632 net) per outstanding share to be paid on July 10, 2014.
The expected financial statements prepared in accordance with legal requirements evidenced the existence of
sufficient liquidity for the distribution of the amounts to the interim dividend, as follows:
Available Amount for Interim Dividend Payments
Profit of BBVA, S.A. at each of the dates indicated, after the
provision for income tax
Less -
Estimated provision for Legal Reserve
Acquisition by the bank of the free allotment rights in 2014
capital increase
Additional Tier I capital instruments remuneration
Maximum amount distributable
Amount of proposed interim dividend
BBVA cash balance available to the date
Millions of Euros
May 31,
2014
983
10
105
53
815
471
1,827
The first amount of the interim dividend which has been paid to the shareholders on July 10, 2014, amounted to
€471 million.
The table below shows the allocation of the Bank's earnings for 2014 that the Board of Directors will submit for
approval by the General Shareholders' Meeting:
Application of Earnings
Net income for year
Distribution:
Interim dividends
Acquisition by the bank of the free allotment rights(*)
Additional Tier 1 securities
Legal reserve
Voluntary reserves
Millons of euros
2014
1,105
471
244
126
38
226
(*)
Concerning to the remuneration to shareholders who chose to be paid in cash through the "Dividend Option".
35
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
4.
Earnings per share
Earnings per share, basic and diluted are calculated in accordance with the criteria established by IAS 33. For
more information see Glossary of terms
The Bank issued additional share capital in 2014 and 2013 (see Note 22). In accordance with IAS 33, when
there is a capital increase earnings per share, basic and diluted, should be recalculated for previous periods
applying a corrective factor to the denominator (the weighted average number of shares outstanding) This
corrective factor is the result of dividing the fair value per share immediately before the exercise of rights by the
theoretical ex-rights fair value per share. The basic and diluted earnings per share for December 2013 were
recalculated on this basis.
The calculation of earnings per share of the BBVA Group is as follows:
Basic and Diluted Earnings per Share
2014
2013
Numerator for basic and diluted earnings per share (millions of euros)
Profit attributable to parent company
Adjustment: Mandatory convertible bonds interest expenses
Profit adjusted (millions of euros) (A)
Profit from discontinued operations (net of non-controlling interest) (B)
Denominator for basic earnings per share (number of shares outstanding)
Weighted average numb er of shares outstanding (1)
Weighted average number of shares outstanding x corrective factor (2)
Adjustment: Average number of estimated shares to be converted
Adjusted number of shares - Basic earning per share (C)
Adjusted number of shares - diluted earning per share (D)
Basic earnings per share from continued operations (Euros per share)A-B/C
Diluted earnings per share from continued operations (Euros per share)A-B/D
Basic earnings per share from discontinued operations (Euros per share)B/C
Diluted earnings per share from discontinued operations (Euros per share)B/D
2,618
-
2,618
-
5,905
5,905
-
5,905
5,905
0.44
0.44
-
-
2,084
-
2,084
1,819
5,597
5,815
-
5,815
5,815
0.05
0.05
0.31
0.31
(1) Weighted average number of shares outstanding (millions of euros), excluded weighted average of treasury shares
during the period.
(2) Corrective factor, due to the capital increase with pre-emptive subscription right, applied for the previous years.
(*)
Data recalculated due to the mentioned corrective factor.
As of December 31, 2014 and 2013 there were no other financial instruments or share option commitments
with employees that could potentially affect the calculation of the diluted earnings per share for the years
presented. For this reason the basic and diluted earnings are matched.
5.
Risk management
5.1 General risk management and control model
BBVA has an overall control and risk management model (hereinafter 'the model') tailored to their business, their
organization and the geographies in which it operates, allowing them to develop their activity in accordance with
their strategy and policy control and risk management defined by the governing bodies of the Bank and adapt to
a changing economic and regulatory environment, tackling management globally and adapted to the
circumstances of each instance.
This model is applied comprehensively in the BBVA and consists of the basic elements listed below::
• Governance and organization
• Risk appetite
• Decisions and processes
36
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
• Assessment, monitoring and reporting
•
Infrastructure
BBVA encourages the development of a risk culture to ensure consistent application of the control and risk
management model in the Group, and to ensure that the risk function is understood and assimilated at all levels
of the organization.
5.1.1 Governance and organization
The governance model for risk management at BBVA is characterized by a special involvement of its corporate
bodies, both in setting the risk strategy and in the ongoing monitoring and supervision of its implementation.
Thus, as developed below, the corporate bodies are the ones that approve this risk strategy and corporate
policies for the different types of risk, being the risk function responsible for the management, its implementation
and development, reporting to the governing bodies.
The responsibility for the daily management of the risks lies on the businesses which abide in the development of
their activity to the policies, standards, procedures, infrastructure and controls, based on the framework set by
the governing bodies, which are defined by the function risk.
To perform this task properly, the risk function in the BBVA Group is configured as a single, comprehensive and
independent role of commercial areas.
Corporate governance system
BBVA has developed a corporate governance system that is in line with the best international practices and
adapted to the requirements of the regulators in the countries in which its different business units operate.
The Board of Directors (hereinafter also referred to as "the Board") approves the risk strategy and supervises the
internal control and management systems. Specifically, the strategy approved by the Board includes, at least, the
Group's Risk Appetite statement, the fundamental metrics and the basic structure of limits by geographies, types
of risk and asset classes, as well as the bases of the control and risk management model. The Board ensures that
the budget is in line with the approved risk appetite.
On the basis established by the Board of Directors, the Executive Committee approves specific corporate policies
for each type of risk. Furthermore, the committee approves the Group's risk limits and monitors them, being
informed of both limit excess occurrances and, where applicable, the appropriate corrective measures taken.
Lastly, the Board of Directors has set up a Board committee specializing in risks, the Risk Committee ("RC"). This
committee is responsible for analyzing and regularly monitoring risks within the remit of the corporate bodies and
assists the Board and the SC in determining and monitoring the risk strategy and the corporate policies,
respectively. Another task of special relevance it carries out is detailed control and monitoring of the risks that
affect the Group as a whole, which enables it to supervise the effective integration of the risk strategy
management and the application of corporate policies approved by the corporate bodies.
The head of the risk function in the executive hierarchy is the Group’s Chief Risk Officer (CRO), who carries out its
functions with independence, authority, capacity and resources to do so. He is appointed by the Board of
Directors of the Bank as a member of its senior management, and has direct access to its corporate bodies
(Board of Directors, Executive Standing Committee and Risk Committee), who reports regularly on the status of
risks to the Group.
The Chief Risk Officer, for the utmost performance of its functions, is supported by a cross composed set of units
in corporate risk and the specific risk units in the geographical and / or business areas of the Group structure.
Each of these units is headed by a Risk Officer for the geographical and/or business area who, within his/her field
of competence, carries out risk management and control functions and is responsible for applying the corporate
policies and rules approved at Group level in a consistent manner, adapting them if necessary to local
requirements and reporting to the local corporate bodies.
37
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
The Risk Officers of the geographical and/or business areas report both to the Group's Chief Risk Officer and to
the head of their geographical and/or business area. This dual reporting system aims to ensure that the local risk
management function is independent from the operating functions and that it is aligned with the Group's
corporate risk policies and goals.
Organizational structure and committees
The risk management function, as defined above, consists of risk units from the corporate area, which carry out
cross-cutting functions, and risk units from the geographical and/or business areas.
• The corporate area's risk units develop and present the Group's risk appetite proposal, corporate policies,
rules and global procedures and infrastructures to the Group's Chief Risk Officer (CRO), within the action
framework approved by the corporate bodies, ensure their application, and report either directly or through
the Group's Chief Risk Officer (CRO) to the Bank's corporate bodies. Their functions include:
− Management of the different types of risks at Group level in accordance with the strategy defined by the
corporate bodies.
− Risk planning aligned with the risk appetite principles.
− Monitoring and control of the Group's risk profile in relation to the risk appetite approved by the Bank's
corporate bodies, providing accurate and reliable information with the required frequency and in the
necessary format.
− Prospective analyses to enable an evaluation of compliance with the risk appetite in stress scenarios and
the analysis of risk mitigation mechanisms.
− Management of the technological and methodological developments required for implementing the
Model in the Group.
− Design of the Group's Internal Risk Control model and definition of the methodology, corporate criteria
and procedures for identifying and prioritizing the risk inherent in each unit's activities and processes.
− Validation of the models used and the results obtained by them in order to verify their adaptation to the
different uses to which they are applied.
• The risk units in the business units develop and present to the Risk Officer of the geographical and/or
business area the risk appetite proposal applicable in each geographical and/or business area, independently
and always within the Group's risk appetite. They also ensure that the corporate policies and rules approved
consistently at a Group level are applied, adapting them if necessary to local requirements; they are provided
with appropriate infrastructures for managing and controlling their risks; and they report to their corporate
bodies and/or to senior management, as appropriate.
The local risk units thus work with the corporate area risk units in order to adapt to the risk strategy at Group
level and share all the information necessary for monitoring the development of their risks.
The risk function has a decision-making process to perform its functions, underpinned by a structure of
committees, where the Global Risk Management Committee (GRMC) acts as the highest committee within Risk. It
proposes, examines and, where applicable, approves, among others, the internal risk regulatory framework and
the procedures and infrastructures needed to identify, assess, measure and manage the material risks faced by
the Group in its businesses. The members of this Committee are the Group's Chief Risk Officer and the heads of
the risk units of the corporate area and of the most representative geographical and/or business areas.
The Global Risk Management Committee (GRMC) carries out its functions assisted by various support committees
which include:
• Global Technical Operations Committee: It is responsible for decision-making related to wholesale credit risk
admission in certain customer segments.
• Monitoring, Assessment & Reporting Committee: It guarantees and ensures the appropriate development of
aspects related to risk identification, assessment, monitoring and reporting, with an integrated and cross-
cutting vision.
38
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
• Asset Allocation Committee: The executive body responsible for analysis and decision-making on all credit
risk matters related to the processes intended for obtaining a balance between risk and return in accordance
with the Group's risk appetite.
• Technology and Methodologies Committee: It determines the need for new models and infrastructures and
channels the decision-making related to the tools needed for managing all the risks to which the Group is
exposed.
• Corporate Technological Risks and Operational Control Committee: It approves the Technological Risks and
Operational Control Management Frameworks in accordance with the General Risk Management Model's
architecture and monitors metrics, risk profiles and operational loss events.
• Global Market Risk Unit Committee: It is responsible for formalizing, supervising and communicating the
monitoring of trading desk risk in all the Global Markets business units.
• Corporate Operational and Outsourcing Risk Admission Committee: It identifies and assesses the operational
risks of new businesses, new products and services, and outsourcing initiatives.
Each geographical and/or business area has its own risk management committee (or committees), with objectives
and contents similar to those of the corporate area, which perform their duties consistently and in line with
corporate risk policies and rules.
Under this organizational scheme, the risk management function ensures the risk strategy, the regulatory
framework, and standardized risk infrastructures and controls are integrated and applied across the entire Group.
It also benefits from the knowledge and proximity to customers in each geographical and/or business area, and
transmits the corporate risk culture to the Group's different levels.
Internal Risk Control and Internal Validation
BBVA has a specific Internal Risk Control unit whose main function is to ensure there is an adequate internal
regulatory framework in place, together with a process and measures defined for each type of risk identified in
the Bank, (and for other types of risk that could potentially affect the Bank, to oversee their application and
operation, and to ensure that the risk strategy is integrated into the Bank's management. The Internal Risk
Control unit is independent from the units that develop risk models, manage running processes and controls. Its
scope is global both geographically and in terms of type of risk.
The Director of Group Internal Control Risk is responsible for the function, and reports its activities and work plans
to the CRO and the Risk Committee of the Board, besides attending to it on issues deemed necessary.
For this purpose, the Risk area also has a Technical area independent from the units that develop risk models,
manage running processes and controls, which gives the Commission the necessary technical support to better
perform their functions.
The unit has a structure of teams at both corporate level and in the most relevant geographical areas in which
the Group operates. As in the case of the corporate area, local units are independent of the business areas that
execute the processes, and of the units that execute the controls. They report functionally to the Internal Risk
Control unit. This unit's lines of action are established at Group level, and it is responsible for adapting and
executing them locally, as well as for reporting the most relevant aspects.
Additionally, the Group has an Internal Validation unit, also independent rom the units that develop risk models
and of those who use them to manage. Its functions include, among others, review and independent validation,
internally, of the models used for the control and management of the Group's risks.
BBVA Group’s internal control system is based on the best practices developed in “Enterprise Risk Management –
Integrated Framework” by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and
in the “Framework for Internal Control Systems in Banking Organizations” by the Bank for International
Settlements (BIS).
The control model has a system with three lines of defense:
• The first line is made up of the Group's business units, which are responsible for control within their area and
for executing any measures established by higher management levels.
39
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
• The second line consists of the specialized control units (Legal Compliance, Global Accounting & Information
Management/Internal Financial Control, Internal Risk Control, IT Risk, Fraud & Security, Operations Control
and the Production Divisions of the support units, such as Human Resources, Legal Services, etc.). This line
supervises the control of the various units within their cross-cutting field of expertise, defines the necessary
improvement and mitigating measures, and promotes their proper implementation. The Corporate
Operational Risk Management unit also forms part of this line, providing a methodology and common tools
for management.
• The third line is the Internal Audit unit, which conducts an independent review of the model, verifying the
compliance and effectiveness of the corporate policies and providing independent information on the control
model.
5.1.2 Risk appetite
The Group's risk appetite, approved by the Board of Directors, determines the risks (and their level) that the
Group is willing to assume to achieve its business targets. These are expressed in terms of capital, liquidity,
profitability, recurrent earnings, cost of risk or other metrics. The definition of the risk appetite has the following
goals:
• To express the Group's strategy and the maximum levels of risk it is willing to assume, at both Group and
geographical and/or business area level.
• To establish a set of guidelines for action and a management framework for the medium and long term that
prevent actions from being taken (at both Group and geographical and/or business area level) which could
compromise the future viability of the Group.
• To establish a framework for relations with the geographical and/or business areas that, while preserving their
decision-making autonomy, ensures they act consistently, avoiding uneven behavior.
• To establish a common language throughout the organization and develop a compliance-oriented risk
culture.
• Alignment with the new regulatory requirements, facilitating communication with regulators, investors and
other stakeholders, thanks to an integrated and stable risk management framework.
Risk appetite is expressed through the following elements:
• Risk appetite statement: sets out the general principles of the Group's risk strategy and the target risk profile.
BBVA's risk policy aims to maintain the risk profile set out in the Group's risk appetite statement, which is
reflected in a series of metrics (fundamental metrics and limits).
• Fundamental metrics: they reflect, in quantitative terms, the principles and the target risk profile set out in
the risk appetite statement.
• Limits: they establish the risk appetite at geographical and/or business area, legal entity and risk type level, or
any other level deemed appropriate, enabling its integration into management.
The corporate risk area works with the various geographical and/or business areas to define their risk appetite,
which will be coordinated with and integrated into the Group's risk appetite to ensure that its profile fits as
defined.
The BBVA Group assumes a certain degree of risk to be able to provide financial services and products to its
customers and obtain attractive returns for its shareholders. The organization must understand, manage and
control the risks it assumes.
The aim of the organization is not to eliminate all risks, but to assume a prudent level of risks that allows it to
generate returns while maintaining acceptable capital and fund levels and generating recurrent earnings.
BBVA's risk appetite expresses the levels and types of risk that the bank is willing to assume to be able to
implement its strategic plan with no relevant deviations, even in situations of stress.
40
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Fundamental metrics
Those metrics that characterize the bank's objective behavior (as defined in the statement), enabling the
expression of the risk culture at all levels in a structured and understandable manner. They summarize the bank's
goals, and are therefore useful for communication to the stakeholders.
The fundamental metrics are strategic in nature. They are disseminated throughout the Group, understandable
and easy to calculate, and objectifiable at business and/or geographical area level, so they can be subject to
future projections.
Limits
Metrics that determine the bank's strategic positioning for the different types of risk: credit, ALM, liquidity,
markets, operational. They differ from the fundamental metrics in the following respects:
• They are levers, not the result. They are a management tool related to a strategic positioning that must be
geared toward ensuring compliance with the fundamental metrics, even in an adverse scenario.
• Risk metrics: a higher level of specialization, they do not necessarily have to be disseminated across the
Group.
•
Independent of the cycle: they can include metrics with little correlation with the economic cycle, thus
allowing comparability that is isolated from the specific macroeconomic situation.
Thus, they are levers for remaining within the thresholds defined in the fundamental metrics and are used for
day-to-day risk management. They include tolerance limits, sub-limits and alerts established at the level of
business and/or geographical areas, portfolios and products.
5.1.3 Decisions and processes
The transfer of risk appetite to ordinary management is supported by three basic aspects:
• A standardized set of regulations
• Risk planning
•
Integrated management of risks over their life cycle
Standardized regulatory framework
The corporate GRM area is responsible for proposing the definition and development of the corporate policies,
specific rules, procedures and schemes of delegation based on which risks decisions should taken within the
Group.
This process aims for the following objectives:
• Hierarchy and structure: well-structured information through a clear and simple hierarchy creating relations
between documents that depend on each other.
Simplicity: an appropriate and sufficient number of documents.
•
•
• Accessibility: ability to search for, and easy access to, documentation through the corporate risk
Standardization: a standardized name and content of document.
management library.
The approval of corporate policies for all types of risks corresponds to the corporate bodies of the Bank, while the
corporate risk area endorses the remaining regulations.
Risk units of geographical and / or business areas continue to adapt to local requirements the regulatory
framework for the purpose of having a decision process that is appropriate at local level and aligned with the
Group policies. If such adaptation is necessary, the local risk area must inform the corporate GRM area, which
must ensure the consistency of the set of regulations at the level of the entire Group, and thus must give its
approval prior to any modifications proposed by the local risk areas.
41
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Risk planning
Risk planning ensures that the risk appetite is integrated into management, through a cascade process for
establishing limits, in which the function of the corporate area risk units and the geographical and/or business
areas is to guarantee the alignment of this process against the Group's risk appetite.
It has tools in place that allow the risk appetite defined at aggregate level to be assigned and monitored by
business areas, legal entities, types of risk, concentrations and any other level considered necessary.
The risk planning process is present within the rest of the Group's planning framework so as to ensure
consistency among all of them.
Daily risk management
All risks must be managed integrally during their life cycle, and be treated differently depending on the type.
The risk management cycle is composed of 5 elements:
• Planning: with the aim of ensuring that the Bank’s activities are consistent with the target risk profile and
guaranteeing solvency in the development of the strategy.
• Assessment: a process focused on identifying all the risks inherent to the activities carried out by the Bank.
• Formalization: includes the risk origination, approval and formalization stages.
• Monitoring and reporting: continuous and structured monitoring of risks and preparation of reports for
internal and/or external (market, investors, etc.) consumption.
• Active portfolio management: focused on identifying business opportunities in existing portfolios and new
markets, businesses and products.
5.1.4
Assessment, monitoring and reporting
Assessment, monitoring and reporting is a cross-cutting element that should ensure that the Model has a
dynamic and proactive vision to enable compliance with the risk appetite approved by the corporate bodies, even
in adverse scenarios. The materialization of this process covers all the categories of material risks and has the
following objectives:
• Assess compliance with the risk appetite at the present time, through monitoring of the fundamental
management metrics and limits.
• Assess compliance with the risk appetite in the future, through the projection of the risk appetite variables, in
both a baseline scenario determined by the budget and a risk scenario determined by the stress tests.
•
Identify and assess the risk factors and scenarios that could compromise compliance with the risk appetite,
through the development of a risk repository and an analysis of the impact of those risks.
• Act to mitigate the impact in the Bank of the identified risk factors and scenarios, ensuring this impact
remains within the target risk profile.
• Monitor the key variables that are not a direct part of the risk appetite, but that condition its compliance.
These can be either external or internal.
The following phases need to be developed for undertaking this process:
•
•
Identification of risk factors
Aimed at generating a map with the most relevant risk factors that can compromise the Group's performance
in relation to the thresholds defined in the risk appetite.
Impact evaluation
This involves evaluating the impact that the materialization of one (or more) of the risk factors identified in the
previous phase could have on the risk appetite metrics, through the occurrence of a given scenario.
• Response to undesired situations and realignment measures
42
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Exceeding the parameters will trigger an analysis of the realignment measures to enable dynamic
management of the situation, even before it occurs.
• Monitoring
The aim is to avoid losses before they occur by monitoring the Group's current risk profile and the identified
risk factors.
• Reporting
This aims to provide information on the assumed risk profile by offering accurate, complete and reliable data
to the corporate bodies and to senior management, with the frequency and completeness appropriate to the
nature, significance and complexity of the risks.
5.1.5 Infrastructure
The infrastructure is an element that must ensure that the Group has the human and technological resources
needed for effective management and supervision of risks in order to carry out the functions set out in the
Group's risk Model and the achievement of their objectives.
With respect to human resources, the Group's risk function will have an adequate workforce, in terms of number,
skills and experience.
With regards to technology, the Group ensures the integrity of management information systems and the
provision of the infrastructure needed for supporting risk management, including tools appropriate to the needs
arising from the different types of risks for their admission, management, assessment and monitoring.
The principles that govern the Bank risk technology are:
•
•
Standardization: the criteria are consistent across the Group, thus ensuring that risk handling is standardized
at geographical and/or business area level.
Integration in management: the tools incorporate the corporate risk policies and are applied in the Group's
day-to-day management.
• Automation of the main processes making up the risk management cycle.
• Appropriateness: provision of adequate information at the right time.
Through the “Risk Analytics” function, the Bank has a corporate framework in place for developing the
measurement techniques and models. It covers all the types of risks and the different purposes and uses a
standard language for all the activities and geographical/business areas and decentralized execution to make the
most of the Group's global reach. The aim is to continually evolve the existing risk models and generate others
that cover the new areas of the businesses that develop them, so as to reinforce the anticipation and
proactiveness that characterize the Group's risk function.
Also the risk units of geographical and / or business areas shall ensure that they have sufficient means from the
point of view of resources, structures and tools to develop a risk management in line with the corporate model.
5.1.6 Risk culture
BBVA considers risk culture to be an essential element for consolidating and integrating the other components of
the Model. The culture transfers the implications that are involved in the Group's activities and businesses to all
the levels of the organization. The risk culture is organized through a number of levers, including the following:
• Communication: promotes the dissemination of the Model, and in particular the principles that must govern
risk management in the Group, in a consistent and integrated manner across the organization, through the
most appropriate channels.
• GRM has a number of communication channels to facilitate the transmission of information and knowledge
among the various teams in the function and the Group, adapting the frequency, formats and recipients
based on the proposed goal, in order to strengthen the basic principles of the risk function. The risk culture
and the management model thus emanate from the Group's corporate bodies and senior management and
are transmitted throughout the organization.
43
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
• Training: its main aim is to disseminate and establish the model of risk management across the organization,
ensuring standards in the skills and knowledge of the different persons involved in the risk management
processes.
Well defined and implemented training ensures continuous improvement of the skills and knowledge of the
Bank's professionals, and in particular of the GRM area, and is based on four aspects that aim to develop
each of the needs of the GRM group by increasing its knowledge and skills in different fields such as: finance
and risks, tools and technology, management and skills, and languages.
• Motivation: the aim in this area is for the incentives of the risk function teams to support the strategy for
managing those teams and the function's values and culture at all levels. Includes compensation and all those
elements related to motivation – working environment, etc… which contribute to the achievement Model
objectives.
5.2 Risk events
As mentioned earlier, BBVA has processes in place for identifying risks and analyzing scenarios that enable the
Group to manage risks in a dynamic and proactive way.
The risk identification processes are forward looking to ensure the identification of emerging risks and take into
account the concerns of both the business areas, which are close to the reality of the different geographical
areas, and the corporate areas and senior management.
Risks are captured and measured consistently using the methodologies deemed appropriate in each case. Their
measurement includes the design and application of scenario analyses and stress testing and considers the
controls to which the risks are subjected.
As part of this process, a forward projection of the risk appetite variables in stress scenarios is conducted in order
to identify possible deviations from the established thresholds. If any such deviations are detected, appropriate
measures are taken to keep the variables within the target risk profile.
To this extent, there are a number of emerging risks that could affect the Bank’s business trends. These risks are
described in the following main blocks:
• Macroeconomic and geopolitical risks
− The slowdown in economic growth in emerging countries and potential difficulties in the recovery of
European economies is a major focus for the Bank.
−
In addition, financial institutions are exposed to the risks of political and social instability in the countries
in which they operate, which can have significant effects on their economies and even regionally.
In this regard the Group's diversification is a key to achieving a high level of recurring revenues, despite
environmental conditions and economic cycles of the economies in which it operates.
• Regulatory, legal and reputational risks
− Financial institutions are exposed to a complex and ever-changing regulatory and legal environment
defined by governments and regulators. This can affect their ability to grow and the capacity of certain
businesses to develop, and result in stricter liquidity and capital requirements with lower profitability
ratios. The Bank constantly monitors changes in the regulatory framework that allow for anticipation and
adaptation to them in a timely manner, adopt best practices and more efficient and rigorous criteria in its
implementation
− The financial sector is under ever closer scrutiny by regulators, governments and society itself. Negative
news or inappropriate behavior can significantly damage the Group's reputation and affect its ability to
develop a sustainable business. The attitudes and behaviors of the group and its members are governed
by the principles of integrity, honesty, long-term vision and best practices through, inter alia, internal
control model, the Code of Conduct and Responsible Business Strategy of the Bank.
44
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
• Business and operational risks
− New technologies and forms of customer relationships: Developments in the digital world and in
information technologies pose significant challenges for financial institutions, entailing threats (new
competitors, disintermediation…) but also opportunities (new framework of relations with customers,
greater ability to adapt to their needs, new products and distribution channels...).
− Technological risks and security breaches: The financial entities are exposed to new threats such as
cyber-attacks, theft of internal and customer databases, fraud in payment systems, etc. that require
major investments in security from both the technological and human point of view. The Bank gives
great importance to the active operational and technological risk management and control. One example
was the early adoption of advanced models for management of these risks (AMA - Advanced
Measurement Approach).
5.3 Credit risk
Credit risk arises from the probability that one party to a financial instrument will fail to meet its contractual
obligations for reasons of insolvency or inability to pay and cause a financial loss for the other party.
It is the most important risk for the Group and includes counterparty risk, issuer risk, settlement risk and country
risk management.
The principles underpinning credit risk management in BBVA are as follows:
• Availability of basic information for the study and proposal of risk, and supporting documentation for
approval, which sets out the conditions required by the relevant body.
•
Sufficient generation of funds and asset solvency of the customer to assume principal and interest
repayments of loans owed.
• Establishment of adequate and sufficient guarantees that allow effective recovery of the operation, this being
considered a secondary and exceptional method of recovery when the first has failed.
Credit risk management in the Bank has an integrated structure for all its functions, allowing decisions to be taken
objectively and independently throughout the life cycle of the risk.
• At Group level: frameworks for action and standard rules of conduct are defined for handling risk, specifically,
the circuits, procedures, structure and supervision.
• At the business area level: they are responsible for adapting the Group's criteria to the local realities of each
geographical area and for direct management of risk according to the decision-making circuit:
− Retail risks: in general, the decisions are formalized according to the scoring tools, within the general
framework for action of each business area with regard to risks. The changes in weighting and variables
of these tools must be validated by the corporate GRM area.
− Wholesale risks: in general, the decisions are formalized by each business area within its general
framework for action with regard to risks, which incorporates the delegation rule and the Group's
corporate policies.
45
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
5.3.1
Credit risk exposure
BBVA maximum credit risk exposure (see definition below) by headings in the balance sheet as of December 31,
2014 and 2013 is provided below. It does not consider the availability of collateral or other credit enhancements
to guarantee compliance with payment obligations. The details are broken down by financial instruments and
counterparties.
Maximum Credit Risk Exposure
Notes
2014
2013
Millions of Euros
Financial assets held for trading
Debt securities
Debt securities
Available-for-sale financial assets
Debt securities
Debt securities
Loans and receivables
Loans and advances to credit institutions
Loans and advances to customers
Government
Agriculture
Industry
Real estate and construction
Trade and finance
Loans to individuals
Other
Debt securities
Derivatives (trading and hedging)
Total financial assets risk
Financial guarantees
Drawable by third parties
Other contingent commitments
Total Contingent Risks and Commitments
8
10
11
8
28
28
28
19,854
15,590
4,264
51,164
45,392
5,772
239,434
23,786
212,598
25,915
1,298
20,780
28,709
34,139
87,434
14,323
3,050
44,383
354,835
45,137
44,306
9,662
99,105
17,573
13,425
4,148
43,375
37,597
5,778
240,036
20,383
217,849
23,695
1,290
20,456
34,230
28,826
91,904
17,448
1,804
40,837
341,821
47,961
47,009
6,403
101,373
Total maximum credit exposure
453,940
443,194
The maximum credit exposure of the table above is determined by type of financial asset as explained below:
•
•
In the case of financial assets recognized in the bank’s balance sheets, exposure to credit risk is considered
equal to its gross carrying amount, not including certain valuation adjustments (impairment losses, hedges
and others), with the sole exception of trading and hedging derivatives.
The maximum credit risk exposure on financial guarantees granted is the maximum that the Group would be
liable for if these guarantees were called in, and that is their carrying amount.
• Our calculation of risk exposure for derivatives is based on the sum of two factors: the derivatives fair value
and their potential risk (or "add-on").
− The first factor, market value, reflects the difference between original commitments and market values on
the reporting date (mark-to-market). As indicated in Note 2.2.1 to the consolidated financial statements,
derivatives are accounted for as of each reporting date at fair value in accordance with IAS 39.
− The second factor, potential risk (‘add-on’), is an estimate of the maximum increase to be expected on
risk exposure over a derivative market value (at a given statistical confidence level) as a result of future
changes in the fair value over the remaining term of the derivatives.
The consideration of the potential risk ("add-on") relates the risk exposure to the exposure level at the time of a
customer’s default. The exposure level will depend on the customer’s credit quality and the type of transaction
with such customer. Given the fact that default is an uncertain event which might occur any time during the life
of a contract, the BBVA Group has to consider not only the credit exposure of the derivatives on the reporting
date, but also the potential changes in exposure during the life of the contract. This is especially important for
derivatives, whose valuation changes substantially throughout their terms, depending on the fluctuation of
market prices.
46
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
5.3.2 Mitigation of credit risk, collateralized credit risk and other credit enhancements
In most cases, maximum credit risk exposure is reduced by collateral, credit enhancements and other actions
which mitigate the Group’s exposure. The BBVA Group applies a credit risk hedging and mitigation policy deriving
from a banking approach focused on relationship banking. The existence of guarantees could be a necessary but
not sufficient instrument for accepting risks, as the assumption of risks by the Group requires prior evaluation of
the debtor’s capacity for repayment, or that the debtor can generate sufficient resources to allow the amortization
of the risk incurred under the agreed terms.
The policy of accepting risks is therefore organized into three different levels in the BBVA Group:
• Analysis of the financial risk of the operation, based on the debtor’s capacity for repayment or generation of
funds;
• The constitution of guarantees that are adequate, or at any rate generally accepted, for the risk assumed, in
any of the generally accepted forms: monetary, secured, personal or hedge guarantees; and finally,
• Assessment of the repayment risk (asset liquidity) of the guarantees received.
The procedures for the management and valuation of collaterals are set out in the Corporate Policies (retail and
wholesale), which establish the basic principles for credit risk management, including the management of
collaterals assigned in transactions with customers.
The methods used to value the collateral are in line with the best market practices and imply the use of appraisal
of real-estate collateral, the market price in market securities, the trading price of shares in mutual funds, etc. All
the collaterals assigned must be properly drawn up and entered in the corresponding register. They must also
have the approval of the Group’s legal units.
The following is a description of the main types of collateral for each financial instrument class:
• Financial instruments held for trading: The guarantees or credit enhancements obtained directly from the
issuer or counterparty are implicit in the clauses of the instrument.
• Trading and hedging derivatives: In derivatives, credit risk is minimized through contractual netting
agreements, where positive- and negative-value derivatives with the same counterparty are offset for their net
balance. There may likewise be other kinds of guarantees, depending on counterparty solvency and the
nature of the transaction.
• Other financial assets designated at fair value through profit or loss and Available-for-sale financial assets: The
guarantees or credit enhancements obtained directly from the issuer or counterparty are inherent to the
structure of the instrument.
• Loans and receivables:
− Loans and advances to credit institutions: These usually only have the counterparty’s personal guarantee.
− Loans and advances to customers: Most of these operations are backed by personal guarantees
extended by the counterparty. There may also be collateral to secure loans and advances to customers
(such as mortgages, cash guarantees, pledged securities and other collateral), or to obtain other credit
enhancements (bonds, hedging, etc.).
− Debt securities: The guarantees or credit enhancements obtained directly from the issuer or counterparty
are inherent to the structure of the instrument.
47
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Collateralized loans granted by the Group as of December 31, 2014 and 2013 excluding balances deemed
impaired, is broken down in the table below:
Collateralized Credit Risk
Mortgage loans
Operating assets m ortgage loans
Hom e mortgages
Non-hom e mortgages (1)
Secured loans, except mortgage
Cash guarantees
Secured loan (pledged securities)
Rest of s ecured loans (2)
Total
Millions of Euros
2014
2013
87,159
1,636
73,181
12,342
2,810
59
309
2,442
89,969
93,444
1,901
76,814
14,729
2,916
85
375
2,456
96,360
(1) Loans with mortgage collateral (other than residential mortgage) for property purchase or construction.
(2)
Includes loans with cash collateral, other financial assets with partial collateral.
•••• Financial guarantees, other contingent risks and drawable by third parties: These have the counterparty’s
personal guarantee.
5.3.3
Financial instrument netting
Financial assets and liabilities may be netted, i.e. they are presented for a net amount on the balance sheet only
when the Group's entities comply with the provisions of IAS 32-Paragraph 42, so they have both the legal right to
net recognized amounts, and the intention of settling the net amount or of realizing the asset and simultaneously
paying the liability.
In addition, the Bank has unnetted assets and liabilities on the balance sheet for which there are master netting
arrangements in place, but for which there is neither the intention nor the right to settle. The most common
types of events that trigger the netting of reciprocal obligations are bankruptcy of the entity, swifter accumulation
of indebtedness, failure to pay, restructuring and dissolution of the entity.
In the current market context, derivatives are contracted under different framework contracts being the most
widespread developed by the International Swaps and Derivatives Association (ISDA) and, for the Spanish market,
the Framework Agreement on Financial Transactions (CMOF). Almost all portfolio derivative transactions have
been concluded under these framework contracts, including in them the netting clauses mentioned in the
preceding paragraph as "Master Netting Agreement", greatly reducing the credit exposure on these instruments.
Additionally, in contracts signed with professional counterparts, the collateral agreement annexes called Credit
Support Annex (CSA) are included, thereby minimizing exposure to a potential default of the counterparty.
Moreover, in transactions involving assets purchased or sold under a purchase agreement there has greatly
increased the volume transacted through clearing houses that articulate mechanisms to reduce counterparty risk,
as well as through the signature of various master agreements for bilateral transactions, the most widely used
being the Global Master Repurchase Agreement (GMRA), published by ICMA (International Capital Market
Association), to which the clauses related to the collateral exchange are usually added within the text of the
master agreement itself.
The assets and liabilities subject to contractual netting rights at the time of their settlement are presented below
as of December 31, 2014.
48
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Millions of euros
G ro s s A m o unt s N o t O f f s e t in t he
C o nde nse d C o ns o lida te d B a la nce
She e t s ( D )
2014
G ro s s A m o unt s
R e co gnize d (A )
G ro s s A m o unt s
O f f s e t in t he
C o ndens e d
C o ns o lida t ed
B a la nc e S he et s
( B )
N et A m o unt
P re se nt ed in the
C o ndens e d
C o ns o lida t ed
B a lanc e S he et s
( C =A - B )
F ina nc ia l
Ins t rum e nt s
C a sh C o lla t e ra l
R e c e ive d/
P le dge d
N et A m o unt
(E =C -D )
Derivative financial assets
Reverse repurchase, securities borrowing and similar agreem ents
Total Assets
Derivative financial liabilities
Repurchase, securities lending and sim ilar agreements
Total Liabillities
55,251
17,989
73,240
55,112
49,534
104,646
8,497
-
8,497
9,327
-
9,327
46,754
17,989
64,742
45,785
49,534
95,319
31,711
17,650
49,361
31,711
49,524
81,235
5,930
339
6,269
8,368
10
8,378
9,112
-
9,112
5,705
-
5,705
5.3.4
Credit quality of financial assets that are neither past due nor impaired
The BBVA Group has tools (“scoring” and “rating”) that enable it to rank the credit quality of its operations and
customers based on an assessment and its correspondence with the probability of default (“PD”) scales. To
analyze the performance of PD, the Group has a series of tracking tools and historical databases that collect the
pertinent internally generated information, which can basically be grouped together into scoring and rating
models.
Scoring
Scoring is a decision-making model that contributes to both the arrangement and management of retail loans:
consumer loans, mortgages, credit cards for individuals, etc. Scoring is the tool used to decide to originate a
loan, what amount should be originated and what strategies can help establish the price, because it is an
algorithm that sorts transactions by their credit quality. This algorithm enables the BBVA Group to assign a score
to each transaction requested by a customer, on the basis of a series of objective characteristics that have
statistically been shown to discriminate between the quality and risk of this type of transactions. The advantage of
scoring lies in its simplicity and homogeneity: all that is needed is a series of objective data for each customer,
and this data is analyzed automatically using an algorithm.
There are three types of scoring, based on the information used and on its purpose:
• Reactive scoring: measures the risk of a transaction requested by an individual using variables relating to the
requested transaction and to the customer’s socio-economic data available at the time of the request. The
new transaction is approved or rejected depending on the score.
• Behavioral scoring: scores transactions for a given product in an outstanding risk portfolio of the entity,
enabling the credit rating to be tracked and the customer’s needs to be anticipated. It uses transaction and
customer variables available internally. Specifically, variables that refer to the behavior of both the product
and the customer.
•
Proactive scoring: gives a score at customer level using variables related to the individual’s general behavior
with the entity, and to his/her payment behavior in all the contracted products. The purpose is to track the
customer’s credit quality and it is used to pre-grant new transactions.
Rating
Rating tools, as opposed to scoring tools, do not assess transactions but focus on the rating of customers
instead: companies, corporations, SMEs, public authorities, etc. A rating tool is an instrument that, based on a
detailed financial study, helps determine a customer’s ability to meet his/her financial obligations. The final rating
is usually a combination of various factors: on one hand, quantitative factors, and on the other hand, qualitative
factors. It is a middle road between an individual analysis and a statistical analysis.
The main difference between ratings and scorings is that the latter are used to assess retail products, while
ratings use a wholesale banking customer approach. Moreover, scorings only include objective variables, while
ratings add qualitative information. And although both are based on statistical studies, adding a business view,
rating tools give more weight to the business criterion compared to scoring tools.
49
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
For portfolios where the number of defaults is very low (sovereign risk, corporates, financial entities, etc.) the
internal information is supplemented by “benchmarking” of the external rating agencies (Moody’s, Standard &
Poor’s and Fitch). To this end, each year the PDs compiled by the rating agencies at each level of risk rating are
compared, and the measurements compiled by the various agencies are mapped against those of the BBVA
master rating scale.
Once the probability of default of a transaction or customer has been calculated, a "business cycle adjustment" is
carried out. This is a means of establishing a measure of risk that goes beyond the time of its calculation. The aim
is to capture representative information of the behavior of portfolios over a complete economic cycle. This
probability is linked to the Master Rating Scale prepared by the BBVA Group to enable uniform classification of the
Group’s various asset risk portfolios.
The table below shows the abridged scale used to classify the BBVA Group’s outstanding risk as of December 31,
2014:
External rating
Internal rating
Standard&Poor's List
Reduced List (22 groups)
Probability of default
(basic points)
Minimum
from >=
Average
Maximum
AAA
AA+
AA
AA-
A+
A
A-
BBB+
BBB
BBB-
BB+
BB
BB-
B+
B
B-
CCC
CCC
CCC
CCC
CCC
CCC
AAA
AA+
AA
AA-
A+
A
A-
BBB+
BBB
BBB-
BB+
BB
BB-
B+
B
B-
CCC+
CCC
CCC-
CC+
CC
CC-
1
2
3
4
5
8
10
14
20
31
51
88
150
255
441
785
1,191
1,500
1,890
2,381
3,000
3,780
-
2
3
4
5
6
9
11
17
24
39
67
116
194
335
581
1,061
1,336
1,684
2,121
2,673
3,367
2
3
4
5
6
9
11
17
24
39
67
116
194
335
581
1,061
1,336
1,684
2,121
2,673
3,367
4,243
50
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
The table below outlines the distribution of exposure, including derivatives, by internal ratings, to corporates,
financial entities and institutions (excluding sovereign risk), of the main BBVA Group entities as of December 31,
2014:
Credit Risk Distribution by Internal
Rating
Millions of
Euros
AAA/AA
A
BBB+
BBB
BBB-
BB+
BB
BB-
B+
B
B-
CCC/CC
Total
30,244
67,567
37,278
23,262
31,136
19,378
9,367
4,888
5,629
4,001
3,361
11,205
247,316
%
12.23%
27.32%
15.07%
9.41%
12.59%
7.84%
3.79%
1.98%
2.28%
1.62%
1.36%
4.53%
100.00%
These different levels and their probability of default were calculated by using as a reference the rating scales and
default rates provided by the external agencies Standard & Poor’s and Moody’s. These calculations establish the
levels of probability of default for the BBVA’s Master Rating Scale. Although this scale is common to the entire
Group, the calibrations (mapping scores to PD sections/Master Rating Scale levels) are carried out at tool level.
5.3.5
Financial assets past due but not impaired
The table below provides details of financial assets past due as of December 31, 2014 and 2013, but not
considered to be impaired, listed by their first past-due date:
2014
2013
Millions of Euros
Financial Assets Past Due but Not
Impaired
Loans and advances to credit institutions
Loans and advances to cus tomers
Government
Other s ectors
Debt securities
Total
Less than 1
Month
Past-Due
1 to 2 Months
Past-Due
2 to 3 Months
Past-Due
Less than 1
Month
Past-Due
1 to 2 Months
Past-Due
2 to 3 Months
Past-Due
-
797
28
769
-
797
-
73
1
72
-
73
-
44
3
41
-
44
-
616
56
560
-
616
-
92
3
89
-
92
-
122
6
116
-
122
51
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
5.3.6
Impaired assets and impairment losses
The table below shows the composition of the impaired financial assets and risks as of December 31, 2014 and
2013, broken down by heading in the accompanying balance sheet:
Impaired Risks.
Breakdown by Type of Asset and by Sector
Asset Instruments Impaired
Available for sale financial assets
Debt securities
Loans and receivables
Loans and advances to credit institutions
Loans and advances to customers
Debt securities
Total 'Asset Instruments Impaired (1)
Contingent Risks Impaired
Contingent Risks Impaired (2)
Total Impaired Risks (1)+(2)
Of w hich:
Government
Credit institutions
Other sectors
Contingent Risks Impaired
Total impaired risks (1) + (2)
Millions of Euros
2014
2013
27
27
19,102
23
19,074
5
19,129
371
19,500
178
44
18,907
371
19,500
36
36
21,929
29
21,896
4
21,965
393
22,358
161
48
21,756
393
22,358
All doubtful or impaired risks fall into this category individually, either by default or nonperforming criteria, or for
reasons other than its default. The BBVA group classification as impaired financial assets is as follows:
•
The classification of financial assets impaired due to customer default is objective and individualized to the
following criteria:
− The total amount of financial assets, whoever the holder and collateral, which have principal, interest or
fees amounts past due for more than 90 days as contractually agreed following objective criteria through
aging calculation systems, unless already charged off.
− Contingent risks where the third party collateral individual becomes impaired.
The changes in the year ended December 31, 2014 and 2013 in the impaired financial assets and contingent
risks are as follows:
Changes in Impaired Financial Assets and Contingent Risks
2014
2013
M illions of Euros
Balance at the beginning
Additions (1)
Recoveries (2)
Net additions (1)+(2)
Trans fers to write-off
Exchange differences and others (*)
Balance at the end
Recoveries on entries (%)
(*)
Including Unnim in 2013.
52
22,358
4,252
(4,569)
(317)
(2,566)
25
19,500
107
13,148
10,865
(4,442)
6,423
(1,977)
4,764
22,358
41
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Below are the details of the impaired financial assets as of December 31, 2014 and 2013, classified by
geographical area and by the time since their oldest past-due amount or the period since they were deemed
impaired:
Impaired Assets by Geographic Area and Time
2014
Spain
Res t of Europe
Res t of the world
Total
Less than 6
Months
Past-Due
6 to 9
Months
Past-Due
M illions of Euros
9 to 12
Months
Past-Due
More than
12 Months
Past-Due
8,517
172
6
8,695
612
-
-
612
743
-
-
743
9,008
71
-
9,079
Impaired Assets by Geographic Area and Time
2013
Spain
Rest of Europe
Rest of the world
Total
Less than 6
Months
Past-Due
6 to 9
Months
Past-Due
Millions of Euros
9 to 12
Months
Past-Due
More than
12 Months
Past-Due
9,824
44
18
9,886
1,862
3
-
1,865
1,362
6
-
1,368
8,655
182
9
8,846
Total
18,880
243
6
19,129
Total
21,703
235
27
21,965
Below are details of the impaired financial assets as of December 31, 2014 and 2013, classified by type of loan
according to its associated guarantee, and by the time elapsed since their oldest past-due amount or the period
since they were deemed impaired:
Impaired Assets by Guarantee and by the Time since they were Deemed Impaired.
2014
Unsecured loans
Mortgage
Residential mortgage
Commercial mortgage (rural properties in operation
and offices, and industrial buildings)
property of the borrower
Plots and other real s tate as sets
Other partially secured loans
Others
Total
Less than 6
Months
Pas t-Due
6 to 9
Months
Past-Due
Millions of Euros
9 to 12
Months
Past-Due
More than
12 Months
Past-Due
3,225
5,275
2,209
944
770
1,352
-
195
8,695
144
468
200
119
86
63
-
-
612
198
545
172
115
112
146
-
-
743
1,251
7,828
1,802
1,409
2,103
2,514
-
-
9,079
Impaired Assets by Guarantee and by the Time since they were Deemed Impaired.
2013
Unsecured loans
Mortgage
Residential mortgage
Commercial mortgage (rural properties in operation
and offices, and industrial buildings)
Rest of residential mortgage
Plots and other real s tate as sets
Other partially secured loans
Others
Total
Less than 6
Months
Pas t-Due
6 to 9
Months
Past-Due
Millions of Euros
9 to 12
Months
Past-Due
More than
12 Months
Past-Due
3,322
6,381
2,708
1,036
938
1,699
-
183
9,886
408
1,457
312
238
225
682
-
-
1,865
320
1,048
302
150
323
273
-
-
1,368
1,450
7,396
1,974
1,254
2,029
2,139
-
-
8,846
Total
4,818
14,116
4,383
2,587
3,071
4,075
-
195
19,129
Total
5,500
16,282
5,296
2,678
3,515
4,793
-
183
21,965
53
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Below is the accumulated financial income accrued as of December 31, 2014 and 2013 with origin in the
impaired assets that, as mentioned in Note 2.2, are not recognized in the accompanying income statements as
there are doubts as to the possibility of collection:
Financial Income from Impaired Assets
2,340
2,125
The changes in 2014 and 2013 in financial assets derecognized from the accompanying balance sheet as their
recovery is considered unlikely (hereinafter “write-offs”) is shown below:
Millions of Euros
2014
2013
Changes in Impaired Financial Assets Written-Off from
the Balance Sheet
Millions of Euros
2014
2013
Balance at the beginning
Increase:
Assets of remote collectability
Past-due and not collected income
Contributions by mergers
Decrease:
Cash recovery
Foreclosed assets
Definitive derecognitions
Cancellation
Expiry of rights and other causes
Net exchange differences
Balance at the end
14,460
4,111
2,566
1,545
-
(2,144)
(310)
(61)
(1,773)
(1,247)
(526)
4
16,431
11,785
4,029
1,977
1,418
634
(1,351)
(216)
(49)
(1,086)
(602)
(484)
(3)
14,460
As indicated in Note 2.2, although they have been derecognized from the balance sheet, the Bank continues to
attempt to collect on these write-offs, until the rights to receive them are fully extinguished, either because it is
time-barred debt, the debt is forgiven, or other reasons.
54
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
5.3.7
Impairment losses
Below is a breakdown of the provisions registered on the accompanying balance sheets to cover estimated
impairment losses as of December 31, 2014 and 2013 in financial assets and contingent risks, according to the
different headings under which they are classified in the balance sheet:
Impairment losses and provisions for contingent
risks
Available-for-sale portfolio
Loans and receivables
Loans and advances to customers
Loans and advances to credit institutions
Debt securities
Held to maturity investment
Impairment losses
Provisions for Contingent Risks and Commitments
Total
Of w hich:
For impaired portfolio
For current portfolio non impaired
Notes
10.1
11.2
11.1
11.3
20
Millions of Euros
2014
2013
20
10,178
10,146
28
4
-
10,198
238
10,436
10,203
233
20
10,833
10,799
30
4
-
10,853
221
11,074
10,841
233
Below are the changes in 2014 and 2013 in the estimated impairment losses, broken down by the headings in
the accompanying balance sheet:
Changes in the year 2014:
Impairment losses provisions (*)
Balance at the beginning
Increase in im pairment losses charged to income
Decrease in im pairm ent losses credited to incom e
Impairment losses (net)
Transfers to written-off loans
Losses due to m erger transactions
Exchange differences and other (**)
Balance at the end
40-41
Notes
Held to
maturity
investment
Available-for-
sale porfolio
Loans and
receivables
Contingent
risks
Total
Millions of Euros
-
-
-
-
-
-
-
-
20
2
(2)
-
(1)
-
1
20
10,833
8,269
(6,103)
2,166
(2,566)
-
(255)
10,178
221
38
(21)
17
-
-
-
238
11,074
8,309
(6,126)
2,183
(2,567)
-
(254)
10,436
(*)
(**)
Includes impairment losses on financial assets (Note 49) and the provisions for contingent risks (Note 48).
Includes transfers to “Impairment on Group investments” after the Anida capital increase (Note 15).
Changes in the year 2013:
Impairment losses provisions (*)
Balance at the beginning
Increase in im pairment losses charged to income
Decrease in impairment losses credited to income
Impairment losses (net) (*)
Transfers to written-off loans
Losses due to merger transactions
Exchange differences and other (**)
Balance at the end
40-41
Notes
Held to
maturity
investment
Available-for-
sale porfolio
Loans and
receivables
Contingent
risks
Total
Millions of Euros
1
-
-
-
-
-
(1)
-
57
15
(6)
9
(50)
5
(1)
20
9,182
7,478
(4,038)
3,440
(1,927)
2,191
(2,053)
10,833
176
59
(22)
37
-
10
(2)
221
9,416
7,552
(4,066)
3,486
(1,977)
2,206
(2,057)
11,074
(*)
(**)
Includes impairment losses on financial assets (Note 49) and the provisions for contingent risks (Note 48).
Includes transfers to “Impairment on Group investments” after the Anida capital increase (Note 15).
55
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
5.4 Market risk
5.4.1
Trading portfolio activities
Market risk originates as a result of movements in the market variables that impact the valuation of traded
financial products and assets. The main risks generated can be classified as follows:
•
Interest-rate risk: This arises as a result of exposure to movements in the different interest-rate curves
involved in trading. Although the typical products that generate sensitivity to the movements in interest rates
are money-market products (deposits, interest-rate futures, call money swaps, etc.) and traditional interest-
rate derivatives (swaps and interest-rate options such as caps, floors, swaptions, etc.), practically all the
financial products are exposed to interest-rate movements due to the effect that such movements have on
the valuation of the financial discount.
• Equity risk: This arises as a result of movements in share prices. This risk is generated in spot positions in
shares or any derivative products whose underlying asset is a share or an equity index. Dividend risk is a sub-
risk of equity risk, arising as an input for any equity option. Its variation may affect the valuation of positions
and it is therefore a factor that generates risk on the books.
• Exchange-rate risk: This is caused by movements in the exchange rates of the different currencies in which a
position is held. As in the case of equity risk, this risk is generated in spot currency positions, and in any
derivative product whose underlying asset is an exchange rate. In addition, the quanto effect (operations
where the underlying asset and the instrument itself are denominated in different currencies) means that in
certain transactions in which the underlying asset is not a currency, an exchange-rate risk is generated that
has to be measured and monitored.
• Credit-spread risk: Credit spread is an indicator of an issuer's credit quality. Spread risk occurs due to
variations in the levels of spread of both corporate and government issues, and affects positions in bonds
and credit derivatives.
• Volatility risk: This occurs as a result of changes in the levels of implied price volatility of the different market
instruments on which derivatives are traded. This risk, unlike the others, is exclusively a component of
trading in derivatives and is defined as a first-order convexity risk that is generated in all possible underlying
assets in which there are products with options that require a volatility input for their valuation.
The metrics developed to control and monitor market risk in BBVA Group are aligned with best practices in the
market and are implemented consistently across all the local market risk units.
Measurement procedures are established in terms of the possible impact of negative market conditions on the
trading portfolio of the Group's Global Markets units, both under ordinary circumstances and in situations of
heightened risk factors.
The standard metric used to measure market risk is Value at Risk (VaR), which indicates the maximum loss that
may occur in the portfolios at a given confidence level (99%) and time horizon (one day). This statistic is widely
used in the market and has the advantage of summing up in a single metric the risks inherent to trading activity,
taking into account how they are related and providing a prediction of the loss that the trading book could
sustain as a result of fluctuations in equity prices, interest rates, foreign exchange rates and commodity prices. In
addition, for some positions other risks also need to be considered, such as credit spread risk, basis risk, volatility
risk and correlation risk.
Most of the headings on the bank’s balance sheet subject to market risk are positions whose main metric for
measuring their market risk is VaR.
With respect to the risk measurement models used in BBVA Group, the Bank of Spain has authorized the use of
the internal model to determine bank capital requirements deriving from risk positions on the BBVA S.A. and
BBVA Bancomer trading book, which jointly account for around 80% of the Group’s trading-book market risk. For
the rest of the geographical areas (South America and Compass), bank capital for the risk positions in the trading
book is calculated using the standard model.
The current management structure includes the monitoring of market-risk limits, consisting of a scheme of limits
based on VaR (Value at Risk), economic capital (based on VaR measurements) and VaR sub-limits, as well as stop-
loss limits for each of the Group’s business units.
56
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
The model used estimates VaR in accordance with the "historical simulation" methodology, which involves
estimating losses and gains that would have taken place in the current portfolio if the changes in market
conditions that took place over a specific period of time in the past were repeated. Based on this information, it
infers the maximum expected loss of the current portfolio within a given confidence level. This model has the
advantage of reflecting precisely the historical distribution of the market variables and not assuming any specific
distribution of probability. The historical period used in this model is two years.
VaR figures are estimated following two methodologies:
• VaR without smoothing, which awards equal weight to the daily information for the previous two years. This
is currently the official methodology for measuring market risks for the purpose of monitoring compliance
with risk limits.
• VaR with smoothing, which gives a greater weight to more recent market information. This metric
supplements the previous one.
In the case of South America, a parametric methodology is used to measure risk in terms of VaR.
At the same time, and following the guidelines established by the Spanish and European authorities, BBVA
incorporates metrics in addition to VaR with the aim of meeting the Bank of Spain's regulatory requirements with
respect to the calculation of bank capital for the trading book. Specifically, the new measures incorporated in the
Group since December 2011 (stipulated by Basel 2.5) are:
• VaR: In regulatory terms, the charge for VaR Stress is added to the charge for VaR and the sum of both (VaR
and VaR Stress) is calculated. This quantifies the loss associated with movements in the risk factors inherent
in market operations (interest rate, FX, equity, credit, etc.). Both VaR and Stressed VaR are re-scaled by a
regulatory multiplication factor, set at 3 and by the square root of 10, to calculate the capital charge.
•
•
Specific Risk: IRC. Quantification of the risks of default and rating downgrade of the bond and credit
derivative positions on the trading book. The specific risk capital IRC is a charge exclusively for those
geographical areas with an approved internal model (BBVA S.A. and Bancomer). The capital charge is
determined based on the associated losses (at 99.9% over a time horizon of 1 year under the constant risk
assumption) resulting from the rating migration and/or default status of the asset's issuer. Also included is the
price risk in sovereign positions for the indicated items.
Specific Risk: Securitizations and Correlation Portfolios. Capital charge for securitizations and for the
correlation portfolio to include the potential losses associated with the rating level of a given credit structure
(rating). Both are calculated using the standardized approach. The perimeter of the correlation portfolios is
referred to FTD-type market operations and/or market CDO tranches, and only for positions with an active
market and hedging capacity.
Validity tests are performed regularly on the risk measurement models used by the Group. They estimate the
maximum loss that could have been incurred in the positions with a certain level of probability (backtesting), as
well as measurements of the impact of extreme market events on risk positions (stress testing). As an additional
control measure, backtesting is conducted at trading desk level in order to enable more specific monitoring of the
validity of the measurement models.
Market risk in 2014
The year 2014 has been characterized by a continued improvement first noted in 2013 in Spain, which has been
reflected in a narrowing of the spread between Spanish and German debt, and of the main credit spreads.
Toward the end of the year, global markets have been affected by the significant slump in oil prices and
increased volatility of exchange rates. In this context, the function of risk control in market activities has a special
importance.
The Group’s market risk remains at low levels compared with the aggregates of risks managed by BBVA,
particularly in the case of credit risk. This is due to the nature of the business and the Group’s policy of minimal
proprietary trading. In 2014, the market risk of trading book increase slightly versus the previous year and, in
terms of VaR, stood at €11 million at the close of the period.
The average VaR for 2014 stood at €10 million, in comparison with the €10 million registered in 2013, with a
high for the year on day October 16 at €15 million.
57
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
By type of market risk assumed by the Group’s trading portfolio, the main risk factor in the Group continues to be
linked to interest rates, accounting for 70% of the total at the end of 2014 (this figure includes the spread risk).
This relative weight was higher than the figure at the close of 2013 (67%). Exchange-rate risk accounts for 5%, a
decrease on the figure 12 months prior (12%), while equity risk maintain the same level (5%) and volatility and
correlation risk increase, and had a weight of 20%, respectively at the close of 2014 (vs. 16% at the close of
2013).
Market risk by risk factor
Interest + credit spread
Exchange rate
Equity
Volatility
Diversification effect (*)
Total
Average VaR
Maximum VaR
Minimum VaR
Millions of euros
2014
2013
17
1
1
5
(12)
12
10
15
7
9
1
1
9
(11)
9
11
21
7
(*)
The diversification effect is the difference between the sum of the average individual risk factors and the total VaR
figure that includes the implied correlation between all the variables and scenarios used in the measurement.
Validation of the model
The internal market risk model is validated on a regular basis by backtesting in both BBVA S.A. and Bancomer.
The aim of backtesting is to validate the quality and precision of the internal model used by BBVA Group to
estimate the maximum daily loss of a portfolio, at a 99% level of confidence and a 250-day time horizon, by
comparing the Group's results and the risk measurements generated by the model. These tests showed that the
internal market risk model of both BBVA, S.A. and Bancomer is adequate and precise.
Two types of backtesting have been carried out in 2014:
58
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
-
-
"Hypothetical" backtesting: the daily VaR is compared with the results obtained, not taking into account
the intraday results or the changes in the portfolio positions. This validates the appropriateness of the
market risk metrics for the end-of-day position.
"Real" backtesting: the daily VaR is compared with the total results, including intraday transactions, but
discounting the possible minimum charges or fees involved. This type of backtesting includes the
intraday risk in portfolios.
In addition, each of these two types of backtesting was carried out at the level of risk factor or business type, thus
making a deeper comparison of the results with respect to risk measurements.
In 2014, Bancomer carried out backtesting of the internal VaR calculation model, comparing the daily results
obtained with the estimated risk level estimated by the VaR calculation model. At the end of the year the
comparison showed the model was working correctly, within the "green" zone (0-4 exceptions), thus validating
the model, as has occurred each year since the internal market risk model was approved for the Group.
Stress test analysis
A number of stress tests are carried out on BBVA Group's trading portfolios. First, global and local historical
scenarios are used that replicate the behavior of an extreme past event, such as for example the collapse of
Lehman Brothers or the "Tequilazo" crisis. These stress tests are complemented with simulated scenarios, where
the aim is to generate scenarios that have a significant impact on the different portfolios, but without being
anchored to any specific historical scenario. Finally, for some portfolios or positions, fixed stress tests are also
carried out that have a significant impact on the market variables affecting these positions.
Historical scenarios
The historical benchmark stress scenario for the BBVA Group is Lehman Brothers, whose sudden collapse in
September 2008 led to a significant impact on the behavior of financial markets at a global level. The following
are the most relevant effects of this historical scenario:
• Credit shock: reflected mainly in the increase of credit spreads and downgrades in credit ratings.
•
•
Increased volatility in most of the financial markets (giving rise to a great deal of variation in the prices of
different assets (currency, equity, debt).
Liquidity shock in the financial systems, reflected by a major movement in interbank curves, particularly in
the shortest sections of the euro and dollar curves.
Simulated scenarios
Unlike the historical scenarios, which are fixed and therefore not suited to the composition of the risk portfolio at
all times, the scenario used for the exercises of economic stress is based on Resampling methodology. This
methodology is based on the use of dynamic scenarios are recalculated periodically depending on the main risks
held in the trading portfolios. On a data window wide enough to collect different periods of stress (data are taken
from 1-1-2008 until today), a simulation is performed by resampling of historic observations, generating a loss
distribution and profits to analyze most extreme of births in the selected historical window. The advantage of this
methodology is that the period of stress is not predetermined, but depends on the portfolio maintained at each
time, and making a large number of simulations (10,000 simulations) allows a richer information for the analysis
of expected shortfall than what is available in the scenarios included in the calculation of VaR.
The main features of this approach are: a) The generated simulations respect the correlation structure of the
data, b) Flexibility in the inclusion of new risk factors and c) allows to introduce a lot of variability in the
simulations (desirable to consider extreme events).
59
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
5.4.2 Structural risk
Structural interest-rate risk
The structural interest-rate risk (SIRR) is related to the potential impact that variations in market interest rates have
on an entity's net interest income and equity. In order to properly measure SIRR, BBVA takes into account the
main sources that generate this risk: repricing risk, yield curve risk, option risk and basis risk, which are analyzed
from two complementary points of view: net interest income (short term) and economic value (long term).
BBVA's structural interest-rate risk management procedure is based on a set of metrics and tools that enable the
Entity's risk profile to be monitored correctly. A wide range of scenarios are measured on a regular basis,
including sensitivities to parallel movements in the event of different shocks, changes in slope and curve, as well
as delayed movements. Other probabilistic metrics based on statistical scenario-simulating methods are also
assessed, such as income at risk (IaR) and economic capital (EC), which are defined as the maximum adverse
deviations in net interest income and economic value, respectively, for a given confidence level and time horizon.
Impact thresholds are established on these management metrics both in terms of deviations in net interest
income and in terms of the impact on economic value. The process is carried out separately for each currency to
which the Group is exposed, and the diversification effect between currencies and business units is considered
after this.
In order to guarantee its effectiveness, the model is subjected to regular internal validation, which includes
backtesting. In addition, interest-rate risk measurements are subjected to stress testing in order to reveal balance
sheet vulnerabilities under extreme scenarios. This testing includes an analysis of adverse macroeconomic
scenarios designed specifically by BBVA Research, together with a wide range of potential scenarios that aim to
identify interest-rate environments that are particularly damaging for the Entity. This is done by generating
extreme scenarios of a breakthrough in interest rate levels and historical correlations, giving rise to sudden
changes in the slopes and even to inverted curves.
The model is necessarily underpinned by an elaborate set of hypotheses that aim to reproduce the behavior of
the balance sheet as closely as possible to reality. Especially relevant among these assumptions are those related
to the behavior of “accounts with no explicit maturity”, for which stability and remuneration assumptions are
established, consistent with an adequate segmentation by type of product and customer, and prepayment
estimates (implicit optionality). The hypotheses are adapted regularly to signs of changes in behavior, kept
properly documented and reviewed on a regular basis in the internal validation processes.
The impacts on the metrics are assessed both from a point of view of economic value (gone concern) and from
the perspective of net interest income, for which a dynamic model (going concern) consistent with the corporate
assumptions of earnings forecasts is used.
In 2014, stagnating growth in advanced economies has led to the continuation of accommodative monetary
policies with the aim of boosting demand and investment, with interest rates in Europe and in the United States
remaining at all-time lows. In Latin America, the slowdown in growth and the deterioration in external financial
conditions have prompted the central banks to cut monetary policy rates.
BBVA Group's positioning in terms of its BSMUs as a whole has a positive sensitivity in its net interest income to
interest rate hikes, while in terms of economic value the sensitivity is negative to interest rate increases, except
for the euro balance sheet. Mature markets, both in Europe and the United States, show greater sensitivity in
relative terms of their projected net interest income to a parallel interest-rate shock. However, in 2014 this
negative sensitivity to cuts has been confined by the limited downward trend in interest rates. In this interest-rate
environment, appropriate management of the balance sheet has maintained BBVA's exposure at moderate levels,
in accordance with the Group's target risk profile.
5.5 Structural equity risk
BBVA's exposure to structural equity risk stems basically from investments in industrial and financial companies
with medium- and long-term investment horizons. This exposure is mitigated through net short positions held in
derivatives of their underlying assets, used to limit portfolio sensitivity to potential falls in prices.
Structural management of equity portfolios is the responsibility of the Group's units specializing in this area. Their
activity is subject to the corporate risk management policies for equity positions in the equity portfolio. The aim is
to ensure that they are handled consistently with BBVA's business model and appropriately to its risk tolerance
level, thus enabling long-term business sustainability.
60
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
The Group's risk management systems also make it possible to anticipate possible negative impacts and take
appropriate measures to prevent damage being caused to the Entity. The risk control and limitation mechanisms
are focused on the exposure, annual operating performance and economic capital estimated for each portfolio.
Economic capital is estimated in accordance with a corporate model based on Monte Carlo simulations, taking
into account the statistical performance of asset prices and the diversification existing among the different
exposures.
Backtesting is carried out on a regular basis on the risk measurement model used.
The year 2014 has been characterized by strong stock market performance in all the geographical areas. The
Spanish stock markets performed particularly well against the European indices, above all the telecommunications
sector, where a large part of BBVA's exposure is concentrated. This performance has boosted the returns on
these investments and the levels of capital gains accumulated in the Group's equity portfolios.
Structural equity risk, measured in terms of economic capital, has remained at moderate levels thanks to active
management of positions. This management includes modulating the exposures through positions in derivatives
of underlying assets of the same kind in order to limit portfolio sensitivity to potential falls in prices.
Stress tests and analyses of sensitivity to different simulated scenarios are carried out periodically to analyze the
risk profile in more depth. They are based on both past crisis situations and forecasts made by BBVA Research.
This checks that the risks are limited and that the tolerance levels set by the Group are not at risk.
5.6 Liquidity risk
Management of liquidity and structural finance within the BBVA Group is based on the principle of the financial
autonomy of the entities that make it up. This approach helps prevent and limit liquidity risk by reducing the
Group’s vulnerability in periods of high risk. This decentralized management avoids possible contagion due to a
crisis that could affect only one or various BBVA Group entities, which must cover their liquidity needs
independently in the markets where they operate. Liquidity Management Units have been set up for this reason
in the geographical areas where the main foreign subsidiaries operate, and also for the parent BBVA S.A.
Thus a core principle of the BBVA Group’s liquidity management is the financial independence of its banking
subsidiaries. This aims to ensure that the cost of liquidity is correctly reflected in price formation. Accordingly, a
liquidity pool is maintained at an individual entity level, both in Banco Bilbao Vizcaya Argentaria, S.A. and in the
banking subsidiaries, including BBVA Compass, BBVA Bancomer and the Latin American subsidiaries.
The table below shows the liquidity available by instrument as of December 31, 2014 for the most significant
entities:
2014
BBVA
Eurozone (1)
Cash and balances with central banks
Assets for credit operations with central banks
Central governments issues
Of Which: Spanish government securities
Other issues
Loans
Other non-eligible liquid assets
ACCUMULATED AVAILABLE BALANCE
AVERAGE BALANCE
7,967
44,282
18,903
17,607
25,379
-
6,133
58,382
54,717
(1)
Includes Banco Bilbao Vizacaya Argentaria, S.A. and Banco Bilbao Vizcaya Argentaria (Portugal), S.A.
61
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
The Strategy and Finance Division, through Balance Sheet Management, manages BBVA Group's liquidity and
funding. It plans and executes the funding of the long-term structural gap of each Liquidity Management Unit
(LMUs) and proposes to ALCO the actions to adopt in this regard in accordance with the policies and limits
established by the Standing Committee.
The Bank's target behavior, in terms of liquidity and funding risk is characterized through the Loan to Stable
Customer Deposits (LtSCD) ratio. The aim is to preserve a stable funding structure in the medium term for each
of the LMUs making up BBVA Group, taking into account that maintaining an adequate volume of stable
customer funds is key to achieving a sound liquidity profile.
For the purpose of establishing the (maximum) target levels for LtSCD in each LMU and providing an optimal
funding structure reference in terms of risk appetite, GRM-Structural Risks identifies and assesses the economic
and financial variables that condition the funding structures in the various geographical areas.
The second core element in liquidity and funding risk management is to achieve proper diversification of the
wholesale funding structure, avoiding excessive reliance on short-term funding and establishing a maximum level
of short-term wholesale borrowing.
The third element promotes the short-term resilience of the liquidity risk profile, making sure that each LMU has
sufficient collateral to address the risk of wholesale markets closing. Basic Capacity is the short-term liquidity risk
management and control metric that is defined as the relationship between the available explicit assets and the
maturities of wholesale liabilities and volatile funds, at different terms, with special relevance being given to 30-
day maturities.
The above metrics are completed with a series of indicators and thresholds that aim to avoid the concentration of
wholesale funding by product, counterparty, market and term, as well as to promote diversification by
geographical area. In addition, reference thresholds are established on a series of advance indicators that make it
possible to anticipate stress situations in the markets and adopt, if necessary, preventive actions.
Stress analyses are also a basic element of the liquidity and funding risk monitoring system, as they help
anticipate deviations from the liquidity targets and limits set out in the risk appetite. They also play a key role in
the design of the Liquidity Contingency Plan and in defining the specific measures for action for realigning the risk
profile. For each of the scenarios, a check is carried out whether the Bank has a sufficient stock of liquid assets to
ensure the ability to meet the liquidity commitments/outflows in the different periods analyzed. The analysis
considers four scenarios, one core and three crisis-related: systemic crisis; unexpected internal crisis with a
considerable rating downgrade and/or affecting the ability to issue in wholesale markets and the perception of
business risk by the banking intermediaries and the bank's customers; and a mixed scenario, as a combination of
the two aforementioned scenarios. Each scenario considers the following factors: liquidity existing on the market,
customer behavior and sources of funding, impact of rating downgrades, market values of liquid assets and
collateral, and the interaction between liquidity requirements and the performance of the bank's asset quality. The
results of these stress analyses carried out regularly reveal that BBVA has a sufficient buffer of liquid assets to deal
with the estimated liquidity outflows in a scenario such as a combination of a systemic crisis and an unexpected
internal crisis with a major downgrade in the bank's rating (by up to three notches).
In 2014, both long and short-term wholesale funding markets continued to be stable thanks to the positive trend
in sovereign risk premiums and the setting of negative rates by the ECB for the marginal deposit facility, in an
environment marked by greater uncertainty on growth in the Eurozone, which has led to new actions by the
ECB. At its meeting on June 5, 2014 the ECB announced non-standard measures aimed at increasing inflation
and boosting credit and improving the financial conditions for the European economy as a whole. The first two
targeted long-term refinancing operations (TLTRO) auctions were held in September and December 2014. BBVA
took €2,600 million at each one. BBVA continues to maintain a good funding structure in the short, medium and
long term, diversified by products. Issuances for €8,613 million have been completed over the year and the
position vis-à-vis the ECB has been reduced significantly, with early repayment of the total of the long-term
refinancing operations (LTRO). In 2014, the improvement in the Bank's liquidity and funding profile has made it
possible to increase the survival period in each of the stress scenarios analyzed.
In this context of improved access to the market, BBVA has maintained its objective of strengthening the funding
structure of the different Group entities based on growing their self-funding from stable customer funds, while
guaranteeing a sufficient buffer of fully available liquid assets, diversifying the various sources of funding available,
and optimizing the generation of collateral available for dealing with stress situations in the markets. The liquidity
risk exposure has been kept within the risk appetite and the limits approved by the Board of Directors.
62
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
5.7 Encumbered Assets
As of December 31, 2014, the encumbered (given as collateral for certain liabilities) and unencumbered assets
ate broken down as follows:
2014
Assets
Assets
Equity instruments
Debt Securities
Other assets
Encum bered assets
Unencum bered asse ts
Millions of Euros
Book value
Book value
99,983
3,602
35,391
60,990
303,858
6,978
30,638
266,242
These assets are mainly linked to covered bonds. Such assets relate mainly to loans linked to the issue of
mortgage bonds, covered bonds or long term securitized bonds (see Note 19); to debt securities that are
committed in repurchase agreements; collateral pledged and also loans or debt instruments, in order to access to
financing transactions with central banks. The encumbered assets caption also includes any type of collateral
pledged to derivative transactions.
As of December 31, 2014 collateral pledge mainly due to repurchase agreements and securities lending, and
those which could be committed in order to obtain funding are provided below:
2014
Collateral received
Collateral received
Equity instruments
Debt securities
Other collateral received
Own debt securities issued other than own
covered bonds or ABSs
Fair value of encumbered collateral
received or own debt securities issued
Fair value of collateral received or own debt
securities issued available for
encumbrance
Millones de euros
15,577
-
15,577
-
-
4,767
78
4,689
-
534
As of December 31, 2014, financial liabilities issued were as follows:
2014
Sources of encumbrance
Book value of financial liabilities
Millones de euros
Matching liabilities, contingent liabilities or
securities lent
Assets, collateral received and own
debt securities issued other than covered
bonds and ABSs encumbered
105,744
115,560
63
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
5.8 Residual maturity
Below is a breakdown by contractual maturity of the balances of certain headings in the accompanying
consolidated balance sheets, excluding any valuation adjustments or impairment losses:
2014
ASSETS -
Cash and balances with central banks
Loans and advances to credit institutions
Loans and advances to customers
Debt securities
OTC derivatives
LIABILITIES-
Deposits from central banks
Deposits from credit institutions
Deposits from customers
Debt certificates (including bonds)
Subordinated liabilities
Short positions
Other financial liabilities
OTC derivatives
CONTINGENT LIABILITIES
Financial guarantees
2013
ASSETS -
Cash and balances with central banks
Loans and advances to credit institutions
Loans and advances to customers
Debt securities
OTC derivatives
LIABILITIES-
Deposits from central banks
Deposits from credit institutions
Deposits from customers
Debt certificates (including bonds)
Subordinated liabilities
Short positions
Other financial liabilities
OTC derivatives
CONTINGENT LIABILITIES
Financial guarantees
Demand
Up to 1
Month
1 to 3
Months
3 to 12
Months
1 to 5 Years
Over 5
Years
Total
Millions of Euros
9,262
2,210
21,439
28
-
2
2,856
72,830
-
-
7,150
501
-
-
16,116
21,534
547
1,835
4,839
31,884
26,941
18
-
-
5,724
2,142
-
640
14,507
1,676
2,180
6,812
4,960
12,039
3,521
-
-
59
2,238
-
1,819
27,859
5,498
4,098
1,483
6,740
45,412
153
63
-
71
4,044
-
1,137
44,698
27,392
11,317
5,256
8,876
29,219
11,920
1,546
-
2
11,466
-
1,864
82,561
30,091
27,324
-
2,670
983
8,743
6,036
-
2
25,895
9,262
23,786
212,598
65,232
46,754
18,392
57,986
187,424
24,355
7,645
7,150
6,359
45,785
3,024
3,748
685
7,746
7,924
2,931
26,058
Demand
Up to 1
Month
1 to 3
Months
3 to 12
Months
1 to 5 Years
Over 5
Years
Total
Millions of Euros
12,085
2,476
25,619
19
-
2
1,142
64,279
-
-
5,068
369
-
-
10,501
20,978
1,388
878
8,438
15,810
35,444
1,749
-
-
4,906
781
-
1,865
13,645
1,002
1,451
1,350
9,657
9,342
133
-
-
51
1,455
-
1,089
24,945
7,424
3,745
1,015
5,417
40,758
6,932
-
-
54
3,816
-
2,488
48,346
28,402
12,565
14,490
8,353
34,987
15,109
386
-
21
12,096
-
1,964
84,316
14,742
22,569
-
2,392
3,143
7,694
4,670
-
2
21,862
12,085
20,383
217,849
52,977
41,208
25,295
42,771
187,953
31,617
5,056
5,068
5,403
40,010
2,799
5,422
793
5,705
11,372
1,468
27,559
5.9 Operational Risk
Operational risk is defined as one that could potentially cause losses due to human errors, inadequate or faulty
internal processes, system failures or external events. This definition includes legal risk and excludes strategic
and/or business risk and reputational risk.
Operational risk is inherent to all banking activities, products, systems and processes. Its origins are diverse
(processes, internal and external fraud, technology, human resources, commercial practices, disasters, suppliers).
Operational risk management framework
Operational risk management in the Group is based on the value-adding drivers generated by the advanced
measurement approach (AMA), as follows:
• Active management of operational risk and its integration into day-to-day decision-making means:
64
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
− Knowledge of the real losses associated with this type of risk.
−
− The existence of indicators that enable the Bank to analyze operational risk over time, define warning
Identification, prioritization and management of real and potential risks.
signals and verify the effectiveness of the controls associated with each risk.
The above helps create a proactive model for making decisions about control and business, and for
prioritizing the efforts to mitigate relevant risks in order to reduce the Group's exposure to extreme
events.
Improved control environment and strengthened corporate culture.
•
• Generation of a positive reputational impact.
Operational Risk Management Principles
Operational risk management in BBVA Group should:
• Be aligned with the risk appetite statement set out by the Board of Directors of BBVA.
• Anticipate the potential operational risks to which the Group would be exposed as a result of new or modified
products, activities, processes, systems or outsourcing decisions, and establish procedures to enable their
evaluation and reasonable mitigation prior to their implementation.
• Establish methodologies and procedures to enable a regular reassessment of the relevant operational risks to
which the Group is exposed in order to adopt appropriate mitigation measures in each case, once the
identified risk and the cost of mitigation (cost/benefit analysis) have been considered, while preserving the
Group's solvency at all times.
•
Identify the causes of the operational losses sustained by the Group and establish measures to reduce them.
Procedures must therefore be in place to enable the capture and analysis of the operational events that cause
those losses.
• Analyze the events that have caused operational risk losses in other institutions in the financial sector and
promote, where appropriate, the implementation of the measures needed to prevent them from occurring in
the Group.
•
Identify, analyze and quantify events with a low probability of occurrence and high impact in order to ensure
their mitigation. Due to their exceptional nature, it is possible that such events may not be included in the
loss database or, if they are, they have impacts that are not representative.
• Have an effective system of governance in place, where the functions and responsibilities of the areas and
bodies involved in operational risk management are clearly defined.
These principles reflect BBVA Group's vision of operational risk, on the basis that the resulting events have an
ultimate cause that should always be identified, and that the impact of the events is reduced significantly by
controlling that cause.
Irrespective of the adoption of all the possible measures and controls for preventing or reducing both the
frequency and severity of operational risk events, BBVA ensures at all times that sufficient capital is available to
cover any expected or unexpected losses that may occur.
Three lines of defense
Operational risk management in BBVA is designed and coordinated by the Corporate Operational Risk
Management (CORM) unit, belonging to GRM, and by the Operational Risk Management (ORM) units, located in
the Risks departments of the different countries and business areas (Country ORM). The business or support
areas, in turn, have operational risk managers (Business ORM) who report to the Country ORM and are
responsible for implementing the model in the day-to-day activities of the areas. This gives the Group a view of
risks at the process level, where risks are identified and prioritized and mitigation decisions are made. By
aggregation, this system provides an overall view at a variety of levels.
65
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
6.
Fair value of financial instruments
The fair value of financial instrument is defined as the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date. It is therefore a
market-based measurement and not specific to each entity.
All financial instruments, both assets and liabilities are initially recognized at fair value, which at that point is
equivalent to the transaction price, unless there is evidence to the contrary in an active market. Subsequently,
depending on the type of financial instrument, it may continue to be registered at fair value through adjustments
in the profit and loss or equity.
When possible, the fair value is determined as the market price of a financial instrument. However, for many of
the assets and liabilities of the Group, especially in the case of derivatives, there is no market price available, so its
fair value is estimated on the basis of the price established in recent transactions involving similar instruments or,
in the absence thereof, by using mathematical measurement models that are sufficiently tried and trusted by the
international financial community. The estimates used in such models take into consideration the specific features
of the asset or liability to be measured and, in particular, the various types of risk associated with the asset or
liability. However, the limitations inherent in the measurement models and possible inaccuracies in the
assumptions and parameters required by these models may mean that the estimated fair value of an asset or
liability does not exactly match the price for which the asset or liability could be exchanged or settled on the date
of its measurement.
The process for determining the fair value established in the entity to ensure that trading portfolio assets are
properly valued, BBVA has established, at a geographic level, a structure of New Product Committees responsible
for validating and approving new products or types of assets and liabilities before being contracted. The
members of these Committees, responsible for valuation, are independent from the business (see Note 5).
These areas are required to ensure, prior to the approval stage, the existence of not only technical and human
resources, but also adequate informational sources to measure these assets and liabilities, in accordance with the
rules established by the Global Valuation Area and using models that have been validated and approved by the
Department of Methodologies that reports to Global Risk Management.
Additionally, for assets and liabilities that show significant uncertainty in inputs or model parameters used for
assessment, criteria is established to measure said uncertainty and activity limits are set based on these. Finally,
these measurements are compared, as much as possible, against other sources such as the measurements
obtained by the business teams or those obtained by other market participants.
The process for determining the fair value required the classification of the financial assets and liabilities according
to the measurement processes used set forth below:
• Level 1: Measurement using market observable quoted prices for the financial instrument in question,
secured from independent sources and referred to active markets - according to the Group policies. This level
includes listed debt securities, listed equity instruments, some derivatives and mutual funds.
• Level 2: Measurement that applies techniques using inputs drawn from observable market data.
• Level 3: Measurement using techniques where some of the material inputs are not taken from market
observable data. As of December 31, 2014, the affected instruments accounted for approximately 0.14% of
financial assets and 0.07% of the Group’s financial liabilities registered at fair value. Model selection and
validation is undertaken by control areas outside the market units.
66
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Below is a comparison of the carrying amount of the Bank’s financial instruments in the accompanying balance
sheets and their respective fair values.
Fair Value and Carrying Amount
ASSETS-
Cash and balances with central banks
Financial assets held for trading
Available-for-sale financial assets
Loans and receivables
Held-to-m aturity investm ents
Fair value changes of the hedges item s in
portfolio hedges of interes rate risk
Hedging derivatives
LIABILITIES-
Financial assets held for trading
Financial liabilities at amortized cost
Fair value changes of the hedges item s in
portfolio hedges of interes rate risk
Hedging derivatives
Millions of Euros
2014
2013
Notes
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
7
8
10
11
12
12
8
19
12
12
9,262
64,495
53,709
230,724
-
9,262
64,495
53,709
232,314
-
12,085
56,631
43,301
230,523
-
12,085
56,631
43,301
230,788
-
121
2,112
121
2,112
98
2,307
98
2,307
50,976
305,036
50,976
301,154
43,599
300,716
43,599
299,618
-
1,959
-
1,959
-
1,507
-
1,507
Not all assets and liabilities are recorded at fair value, so below we provide the information on financial
instruments at fair value and subsequently the information of those recorded at cost with an assigned value,
although this value is not used when accounting for these instruments.
Fair value of certain financial instruments registered at fair value using valuation criteria
The following table shows the main financial instruments carried at fair value in the accompanying balance
sheets, broken down by the measurement technique used to determine their fair value:
Fair Value by Levels
Notes
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
Millions of Euros
2014
2013
ASSETS-
Financial assets held for trading
Debt securities
Other equity instruments
Trading derivatives
Available-for-sale financial assets
Debt securities
Other equity instruments
Hedging derivatives
LIABILITIES-
Financial liabilities held for trading
Trading derivatives
Short positions
Hedging derivatives
8
10
12
8
12
20,637
15,046
4,172
1,419
52,657
46,495
6,162
-
8,510
1,360
7,150
-
43,694
533
15
43,146
926
896
30
2,112
42,430
42,430
-
1,959
164
11
77
76
2
2
-
-
36
36
-
-
18,080
12,858
4,068
1,154
40,511
35,514
4,997
-
5,988
920
5,068
-
38,315
446
21
37,848
2,650
2,637
13
2,307
37,594
37,594
-
1,507
236
121
58
57
-
-
-
-
17
17
-
-
The heading “Available-for-sale financial assets” in the accompanying balance sheets as of December 31, 2014
and 2013 additionally includes €124 and €140 million, respectively, accounted for at cost, as indicated in the
section of this Note entitled “Financial instruments at cost”.
67
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
The following table sets forth the main measurement techniques, hypothesis and inputs used in the estimation of
fair value of the financial instruments classified under Levels 2 and 3, based on the type of financial asset and
liability and the corresponding balances as of December 31, 2014:
Financial Instrum ents
Level 2
Fair Value
(Millons of
euros)
Debt securities
Trading portf olio
Other financial assets at f air value
through profit and loss
Available-f or-sale f inancial assets
Equity Instrum ents
Trading portf olio
Available-f or-sale f inancial assets
Derivatives
Trading deri vatives
Trading asset portfolio
Trading liability portf olio
Hedgi ng derivatives
Assets
Liability
533
-
896
15
30
-
43,146
42,430
2,112
1,959
Financial Instrum ents
Level 3
Fair Value
(Millons of
euros)
De bt securities
Trading portf olio
Available-for-sale financial assets
Equity Ins trum ents
Trading portf olio
Available-for-sale financial assets
De rivatives
Tradi ng deri vati ves
Trading asset portf olio
Trading liability portf olio
Hedgi ng deri vatives
Liability
11
2
77
-
76
36
-
Valuation technique(s )
Unobservable inputs
Present-value m ethod
(Discounted future cash f low s)
Active price in inactive m arket
Com parable pricing
(Observable price in a similar market)
- Prepayment rates
- Issuer credit risk
- Current market interest rates
- Brokers/dealers quotes
- External contributing prices
- Market benchmarks
Com parable pricing
(Observable price in a similar market)
- Brokers quotes
- Market operations
- NAVs published
• Commodit ies: D isco unt ed cash f l o w s and mo ment
ad just ment
• Credit products: D ef ault mo d el and G aussi an co p ula
• Exchange rat e product s: D isco unt ed cash f lo w s, B lack,
Lo cal V o l and M o ment ad j ust ment
• Fixed income products: D isco unt ed cash f l o w s
• Equit y inst ruments: Lo cal- V o l , B lack, M o ment ad just ment
and D i sco unt ed cash f lo w s
• Interest rat e product s:
- Interest rat e swaps, Call money Swaps y FRA: D i sco unt ed cash
f lo w s
- Caps/Floors: B lack, Hull - W hi t e y SA B R
- Bond options: B l ack
- Swapt ions: B l ack, Hul l- W hit e y LG M
- Int erest rate opt ions: B l ack, Hull- W hi t e y SA B R
- Constant M at urity Swaps: SA B R
- Excahnge rates
- M arket quo ted future prices
- M arkert interest rates
- Underlying assests prices: shares, funds,
co mmmo dities
- M arket o bservable vo latilities
- Issuer credit spread levels
- Quo ted dividens
- M arkert listed co rrelatio ns
Valuation technique(s)
Unobservable inputs
Present-value m ethod
(Discounted f uture cash f low s)
Com parable pricing
(Comparison w ith prices of similar instruments)
- Credit spread
- Reco very rates
- Interest rates
- M arket benchmark
- Default co rrelatio n
- P rices o f similar instruments o r market
benchmark
Net As set Value
- NA V pro vided by the administrato r o f
the fund
Com parable pricing
(Comparison w ith prices of similar instruments)
- P rices o f similar instruments o r market
benchmark
Credit Option: Gaussian Copula
Equity OTC Options : Heston
Interest rate options: Libor Marke t Model
- Co rrelació n default
- Credit spread
- Reco very rates
- Interest rate yields
- Vo llatility o f vo latility
- Interest rate yields
- Dividens
- A ssets co rrelatio n
- B eta
- Co rrelatio n rate/credit
- Credit default vo latility
68
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Quantitative information of non-observable inputs used to calculate Level 3 valuations is presented below:
Financial instrum ent
Valuation technique(s)
Significant unobservable
inputs
Min
Max
Average
Units
Debt Securities
Net Present Value
Credit Spread
16.00
1052.00
190.90
b.p.
Comparable princing
Price
Recovery Rate
Equity instruments
Net Asset Value
Net Asset Value
Comparable pricing
Price
Credit Option
Gaussian Copula
Correlation Default
Equity OTC Option
Heston
Volatility of Volatility
Interest Rate Option
Libor Market Model
Beta
0.50
0.50
-
-
35.01
25.00
0.25
40.00
22.50
-
-
91.52
97.11
18.00
Correlation Rate/Credit
(100.00)
100.00
Credit Default Volatility
0.00
0.00
39.55
5.32
-
-
61.37
66.43
9.00
(**)
0.00
%
%
-
-
%
Vegas
%
%
Vegas
Range is not provided as it would be too wide to take into account the diverse nature of the different positions.
(*)
(**) Depending on the sensitivity of the worst scenario transaction by transaction.
The techniques used for the assessment of the main instruments classified in Level 3, and its main unobservable
inputs, are described below:
The net present value: This model uses the future cash flows of each instrument, which are established in the
different contracts, and discounted to their present value. This model often includes many observable market
parameters, but may also include unobservable market parameters directly, as described below:
• Credit Spread: represents the difference in yield of an instrument and the reference rate, reflecting the
additional return that a market participant would require to take the credit risk of that instrument. Therefore,
the credit spread of an instrument is part of the discount rate used to calculate the present value of future
cash flows.
• Recovery rate: defines how the percentage of principal and interest recovered from a debt instrument that
has defaulted.
Comparable prices: prices of comparable instruments and benchmarks are used to calculate its yield from the
entry price or current rating making further adjustments to account for differences that may exist between valued
asset and it is taken reference. It can also be assumed that the price of an instrument is equivalent to the other.
Net asset value: represents the total value of the assets and liabilities of a fund and is published by the fund
manager thereof.
Gaussian copula: dependent on credit instruments of various references, the joint density function to integrate to
value is constructed by a Gaussian copula that relates the marginal densities by a normal distribution, usually
extracted from the correlation matrix of events approaching default by CDS issuers.
Heston: the model, typically applied to equity options assumes stochastic behavior of volatility. According to
which, the volatility follows a process that reverts to a long-term level and is correlated with the underlying
instrument. As opposed to local volatility models, in which the volatility evolves deterministically, the Heston
model is more flexible, allowing it to be similar to that observed in the short term today.
Libor market model: This model assumes that the dynamics of the interest rate curve can be modeled based on
the set of forwards that compose the process. The correlation matrix is parameterized on the assumption that the
correlation between any two forwards decreases at a constant rate, beta, to the extent of the difference in their
respective due dates. The multifactorial frame of this model makes it ideal for the valuation of instruments
sensitive to the slope or curve.
Adjustments to the valuation for risk of default
The credit valuation adjustments (“CVA”) and debit valuation adjustments (“DVA”) are a part of derivative
valuations, both assets and liabilities, to reflect the impact in the fair value of the credit risk of the counterparty
and its own, respectively.
69
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
These adjustments are calculated by estimating Exposure At Default, Probability of Default and Loss Given
Default, for all derivative products on any instrument at the legal entity level (all counterparties under a same
ISDA / CMOF) in which BBVA has exposure.
As a general rule, the calculation of CVA is done through simulations of market and credit variables to calculate
the expected positive exposure, given the Exposure at Default and multiplying the result by the Loss Given
Default of the counterparty. Consequently, the DVA is calculated as the result of the expected negative exposure
given the Exposure at Default and multiplying the result by the Loss Given Default of the counterparty. Both
calculations are performed throughout the entire period of potential exposure.
The information needed to calculate the exposure at default and the loss given default come from the credit
markets (Credit Default Swaps or iTraxx Indexes), save for cases where an internal rating is available. For those
cases where the information is not available, BBVA implements a mapping process based on the sector, rating
and geography to assign probabilities of both probability of default and loss given default, calibrated directly to
market or with an adjustment market factor for the probability of default and the historical expected loss.
The impact recorded under "Net gains (losses) on financial asset and liabilities" in the income statement for the
year ended December 31, 2014 corresponding to the credit risk assessment of the asset derivative positions as
"Credit Valuation Adjustment" (CVA) and liabilities derivative position as "Debit Valuation Adjustment" (DVA), was
€24 million.
Financial assets and liabilities classified as Level 3
The changes in the balance of Level 3 financial assets and liabilities included in the accompanying balance sheets
are as follows:
Financial Assets Level 3
Changes in the Period
Balance at the beginning
Valuation adjustments recognized in the income
Valuation adjustments not recognized in the income
Acquisitions, disposals and liquidations
Net transfers to level 3
Exchange differences and others
Balance at the end
Millions of Euros
2014
5-jul-1905
Assets Liabilities Assets Liabilities
236
40
1
(116)
5
-
166
17
23
-
(4)
-
-
36
442
7
(1)
(202)
(10)
-
236
29
(2)
-
(10)
-
-
17
(*)
Profit or loss that is attributable to gains or losses relating to those assets and liabilities held at the end of the reporting
period. Valuation adjustments are recorded under the heading “Net gains (losses) on financial assets and liabilities
(net)”.
As of December 31, 2014, the profit/loss on sales of financial instruments classified as level 3 recognized in the
accompanying income statement was not material.
Transfers between levels
The Global Valuation Area, in collaboration with the Technology and Methodology Area, has established the rules
for a proper trading portfolio asset classification according to the fair value hierarchy defined by international
accounting standards.
On a monthly basis, any new assets registered in the portfolio are classified, according to this criterion, by the
generating subsidiary. Then, there is a quarterly review of the portfolio in order to analyze the need for a change
in classification of any of these assets.
70
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
The financial instruments transferred between the different levels of measurement in 2014 are at the following
amounts in the accompanying balance sheets as of December 31, 2014:
Transfer between levels
To:
Level 2
Level 3
Level 1
Level 3
Level 1
Level 2
From:
Level I
Millions of Euros
Level 2
Level 3
ASSETS
Financial as sets held for trading
Available-for-sale financial assets
Hedging derivatives
LIABILITIES-
Financial liabilities held for trading
Hedging derivatives
9
60
-
-
-
-
2
-
-
-
44
182
-
-
-
3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The amount of financial instruments that were transferred between levels of valuation for 2014 is insignificant
relative to the total portfolios, basically corresponding to the above revisions of the classification between levels
because these assets had modified some of its features . Specifically:
• Transfers of Levels 1 and 2 to Level 3 €5 million: Due to certain debt instruments ceasing to have an
observable prices in active markets or that the fundamental parameters used in their assessment had
become unobservable in the market, which has led to transfers of Level 1 to Level 3 in an amount of €2
million because certain capital instruments ceased to be observable quotes and prices for being in liquidation,
so they have gone from Level 1 to Level 3 in an amount of €3 million.
• Transfers between Levels 1 and 2 for a net €157 million: Mainly due to the reclassification from €226 million
of debt instruments that had had any observable trading on the market and have been transferred from
Level 2 to Level 1.
Sensitivity Analysis
Sensitivity analysis is performed on products with significant unobservable inputs (products included in level 3), in
order to obtain a reasonable range of possible alternative valuations. This analysis is carried out on a monthly
basis, based on the criteria defined by the Global Valuation Area taking into account the nature of the methods
used for the assessment and the reliability and availability of inputs and proxies used. In order to establish, with a
sufficient degree of certainty, the valuating risk that is incurred in such assets without applying diversification
criteria between them.
As of December 31, 2013, the effect on the income and equity of changing the main hypotheses used for the
measurement of Level 3 financial instruments for other reasonably possible models, taking the highest (most
favorable hypotheses) or lowest (least favorable hypotheses) value of the range deemed probable, would be as
follows:
Financial Assets Level 3
Sensitivity Analysis
ASSETS
Financial assets held for trading
Available-for-sale financial assets
Hedging derivatives
LIABILITIES-
Financial liabilities held for trading
Total
Millions of Euros
Potential Im pact on Incom e Statem ent
Potential Im pact on Total Equity
Most Favorable
Hypotheses
Least Favorable
Hypotheses
Most Favorable
Hypotheses
Least Favorable
Hypotheses
16
-
-
1
17
(18)
-
-
(1)
(19)
-
1
-
-
1
-
-
-
-
-
71
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
6.1 Fair value of financial instruments carried at cost using valuation criteria
The valuation methods used to calculate the fair value of financial assets and liabilities carried at cost are
presented below:
• The fair value of "Cash and balances with central banks" has been assimilated to their book value, as it is
mainly short-term balances.
• The fair value of the "Loans and advances to customers" and "financial liabilities at amortized cost" was
estimated using the method of discounted expected future cash flows using market interest rates at the end
of each year. Additionally, factors such as prepayment rates and correlations of default are taken into
account.
The following table presents key financial instruments carried at amortized cost in the accompanying balance
sheets, broken down according to the method of valuation used to estimate their fair value:
Millions of Euros
2014
2013
Fair Value by Levels
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
ASSETS-
Cash and balances with central banks
Loans and receivables
Held-to-maturity investments
9,262
-
-
-
3,046
-
-
229,268
-
12,085
-
-
-
1,369
-
-
229,419
-
LIABILITIES-
Financial liabilities at amortized cost
-
-
301,154
-
-
299,618
72
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
The main valuation methods, hypotheses and inputs used to estimate the fair value of financial instruments
accounted for at cost and classified in levels 2 and 3 is shown below. These are broken down by type of financial
instrument and the balances correspond to those at December 31, 2014:
Financial Instrum ents
Level 2
Fair Value
(Millons of
euros)
Valuation technique(s)
Unobservable inputs
Loans and receivables
Debt securities
3,046
Present-value m ethod
(Discounted f uture cash f low s)
- Credit spread
- Interest rates
Financial Instrum ents
Level 3
Fair Value
(Millons of
euros)
Valuation technique(s)
Unobservable inputs
Loans and receivables
Loans and advances to credit
institutions
21,978
Present-value m ethod
(Discounted f uture cash f low s)
- Credit spread
- Prepayment rates
- Market interest rates
Loans and advances to customers
188,105
Debt securities
(19)
Financial liabilities at am ortized cost
Deposits f rom central banks
Deposits f rom credit institutions
Customer deposits
Debt certif icates
Sobordinated liabilities
Other financial liabilities
18,400
45,062
155,517
37,445
3,610
3,529
Financial instruments at cost
Present-value m ethod
(Discounted f uture cash f low s)
- Credit spread
- Prepayment rates
- Market interest rates
As of December 31, 2014 and 2013, equity instruments, derivatives with these equity instruments as underlying
assets, and certain discretionary profit-sharing arrangements in some companies, are recognized at cost in the
balance sheets because their fair value could not be reliably determined, as they are not traded in organized
markets and, thus, their unobservable inputs are significant. On the above dates, the balance of these financial
instruments recognized in the portfolio of available-for-sale financial assets amounted to €140 million and €114
million, respectively.
The table below outlines the financial assets and liabilities carried at cost that were sold in 2014 and 2013:
Sales of financial instruments at cost
Amount of Sale
Carrying Amount at Sale Date
Gains/Losses
Millions of Euros
2014
2013
71
21
50
22
9
13
73
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
7. Cash and balances with central banks
The breakdown of the balance under the headings “Cash and balances with central banks” and "Financial liabilities
at amortized cost – deposits from central banks" in the accompanying balance sheets is as follows:
Cash and Balances with Central Banks
Note s
2014
2013
M illions of Euros
Cash
Balances at the Central Banks
Revers e repurchas e agreem ents
30
Subtotal
Accrued interes ts
Total
726
8,536
-
9,262
-
9,262
659
11,426
-
12,085
-
12,085
Millions of Euros
Deposits from Central Banks
Notes
2014
2013
Deposits from Central Banks
Repurchase agreements
Accrued interest until expiration
Total
30
19
17,819
573
8
18,400
24,933
362
192
25,487
8. Financial assets and liabilities held for trading
The breakdown of the balance under these headings in the accompanying balance sheets is as follows:
Financial Assets and Liabilities Held-for-Trading
ASSETS-
Loans and advances to credit institutions
Loans and advances to customers
Debt securities
Equity instruments
Trading derivatives
Total
LIABILITIES-
Deposits from central banks
Deposits from credit institutions
Customer deposits
Debt certificates
Trading derivatives
Short positions
Other financial liabilities
Total
74
Millions of Euros
2014
2013
-
-
15,590
4,264
44,641
64,495
-
-
-
-
43,826
7,150
-
50,976
-
-
13,425
4,148
39,058
56,631
-
-
-
-
38,531
5,068
-
43,599
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
8.1 Debt securities
The breakdown by type of instrument of the balance under this heading in the accompanying balance sheets is
as follows:
Debt Securities Held-for-Trading
Breakdown by type of issuer
Issued by Central Banks
Spanish government bonds
Foreign government bonds
Issued by Spanish financial institutions
Issued by foreign financial institutions
Other debt securities
Total
Millions of Euros
2014
2013
-
6,332
5,256
879
1,252
1,871
15,590
-
5,251
4,930
596
969
1,679
13,425
The debt securities included under Financial Assets Held for Trading earned average annual interest of 1.362% in
2014 (1.727% in 2013).
8.2 Equity instruments
The breakdown of the balance under this heading in the accompanying balance sheets is as follows:
Equity Instruments Held-for-Trading
Breakdown by Issuer
Shares of Spanish companies
Credit institutions
Other sectors
Subtotal
Shares of foreign companies
Credit institutions
Other sectors
Subtotal
Shares in the net assets of mutual funds
Total
Millions of Euros
2014
2013
865
1,646
2,511
139
1,472
1,611
142
4,264
497
2,234
2,731
106
1,171
1,277
140
4,148
8.3 Trading derivatives
The trading derivatives portfolio arises from the Bank’s need to manage the risks incurred by it in the course of
normal business activity, as well as commercializing these products to large corporations, mutual funds, etc. As
of December 31, 2014 and 2013, trading derivatives are principally contracted in over-the-counter (OTC)
markets, with credit entities not resident in Spain as the main counterparties, and related to foreign-exchange,
interest-rate and equity risk.
75
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Below is a breakdown of the net positions by transaction type of the fair value of outstanding financial trading
derivatives recognized in the accompanying balance sheets, divided into organized and OTC markets:
Currency
Risk
Interest
Rate Risk
Equity Price
Risk
Precious
Metals Risk
Com m odities
Risk
Credit Risk Other Risks
Total
Millions of Euros
of which: Asset Trading Derivatives
9,742
31,112
3,236
of which: Liability Trading Derivatives
(9,864)
(29,954)
(3,474)
2014
Organized markets
Financial futures
Options
Other products
Subtotal
OTC markets
Credit institutions
Forward transactions
Future rate agreements (FRAs)
Swaps
Options
Other products
Subtotal
Other financial institutions
Forward transactions
Future rate agreements (FRAs)
Swaps
Options
Other products
Subtotal
Other sectors
Forward transactions
Future rate agreements (FRAs)
Swaps
Options
Other products
Subtotal
Subtotal
Total
2013
Organized markets
Financial futures
Options
Other products
Subtotal
OTC markets
Credit institutions
Forward transactions
Future rate agreements (FRAs)
Swaps
Options
Other products
Subtotal
Other financial institutions
Forward transactions
Future rate agreements (FRAs)
Swaps
Options
Other products
Subtotal
Other sectors
Forward transactions
Future rate agreements (FRAs)
Swaps
Options
Other products
Subtotal
Subtotal
Total
-
-
-
-
(114)
-
-
(4)
-
(118)
292
-
-
(35)
-
257
(118)
-
-
(143)
-
(261)
(122)
(122)
-
1
-
1
-
-
(2,102)
(30)
-
(2,132)
-
-
169
(3)
-
166
-
-
3,124
(1)
-
3,123
1,157
1,158
-
335
-
335
-
-
(14)
(459)
-
(473)
-
-
0
(306)
-
(306)
-
-
55
151
-
206
(573)
(238)
-
2
-
2
(512)
-
-
179
-
(333)
(139)
-
-
29
-
(110)
154
-
-
(26)
-
128
(315)
(313)
-
-
-
-
-
-
(1,342)
(68)
-
(1,410)
-
-
1,117
(108)
-
1,009
-
-
1,359
21
-
1,380
979
979
-
232
-
232
-
-
9
(388)
-
(379)
-
-
11
(350)
-
(339)
-
-
28
323
-
351
(367)
(135)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2)
-
(2)
-
-
(4)
(3)
-
(7)
-
-
-
-
-
-
-
-
-
-
-
-
(7)
(9)
2
-
-
-
-
-
-
-
-
(29)
(29)
-
-
-
-
55
55
-
-
-
-
-
-
26
26
549
(11)
(523)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
334
-
334
0
(114)
-
(2,120)
(496)
(29)
(2,759)
-
292
-
169
(344)
55
172
-
(118)
-
3,179
7
-
3,068
481
815
44,641
(43,826)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
(1)
-
-
-
-
-
-
2
(2)
-
-
-
-
-
-
-
-
-
-
1
-
-
1
1
1
5
-
-
-
-
-
-
-
-
(45)
(45)
-
-
-
-
40
40
-
-
-
-
-
-
(5)
(5)
430
(4)
(435)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
234
-
234
(512)
-
(1,331)
(279)
(45)
(2,167)
(139)
-
1,128
(429)
40
600
154
-
1,388
318
-
1,860
293
527
39,058
(38,531)
Currency
Risk
Interest
Rate Risk
Equity
Price Risk
Precious
Metals
Risk
Com m odities
Risk
Credit Risk
Other
Risks
Total
Millions of Euros
of which: Asset Trading Derivatives
4,696
30,370
3,556
of which: Liability Trading Derivatives
(5,009)
(29,391)
(3,691)
76
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
9. Other financial assets and liabilities at fair value through profit or loss
As of December 31, 2014 and 2013, this heading of the accompanying balance sheets had no balances.
10. Available-for-sale financial assets
10.1 Breakdown of the balance
The breakdown of the balance by the main financial instruments in the accompanying balance sheets is as
follows:
Available-for-Sale (AFS) Financial Assets
Debt securities
Impairment losses
Subtotal
Equity instruments
Impairment losses
Subtotal
Total
Millions of Euros
2014
2013
47,413
(20)
47,393
6,391
(75)
6,316
53,709
38,171
(20)
38,151
5,224
(74)
5,150
43,301
77
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
10.2 Debt securities
The breakdown of the balance under the heading “Debt securities”, broken down by the nature of the financial
instruments, is as follows:
Debt Securities Available-for-Sale by Type of Financial Instrument
2014
Domestic Debt Securities
Spanish Government and other government agency debt securities
Other debt securities
Issue by Central Banks
Issue by credit institutions
Issue by other issuers
Subtotal
Foreign Debt Securities
Mexico
Mexican Government and other government agency debt
securities
Other debt securities
Issue by Central Banks
Issue by credit institutions
Issue by other issuers
The United States
Government securities
US Treasury and other US Government agencies
States and political subdivisions
Other debt securities
Issue by Central Banks
Issue by credit institutions
Issue by other issuers
Other countries
securities
Other debt securities
Issue by Central Banks
Issue by credit institutions
Issue by other issuers
Subtotal
Total
Cost
Unrealized
Gains
Millions of Euros
Unrealized
Losses
Fair
Value
27,622
4,375
-
2,528
1,847
31,997
435
111
324
-
-
324
1,131
402
402
-
729
-
3
726
11,829
6,871
4,958
-
717
4,241
13,395
45,392
1,632
122
-
75
47
1,754
1
-
1
-
-
1
5
-
-
-
5
-
-
5
490
411
79
-
6
73
496
2,250
(20)
(9)
-
(1)
(8)
(29)
(4)
(1)
(3)
-
-
(3)
(20)
-
-
-
(20)
-
-
(20)
(196)
(13)
(183)
-
(2)
(181)
(220)
(249)
29,234
4,488
-
2,602
1,886
33,722
432
110
322
-
-
322
1,116
402
402
-
714
-
3
711
12,123
7,269
4,854
-
721
4,133
13,671
47,393
78
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Debt Securities Available-for-Sale by Type of Financial Instrument
2013
Domestic Debt Securities
Spanish Government and other government agency debt securities
Other debt securities
Issue by Central Banks
Issue by credit institutions
Issue by other issuers
Subtotal
Foreign Debt Securities
Mexico
Mexican Government and other government agency debt
securities
Other debt securities
Issue by Central Banks
Issue by credit institutions
Issue by other issuers
The United States
Government securities
US Treasury and other US Government agencies
States and political subdivisions
Other debt securities
Issue by Central Banks
Issue by credit institutions
Issue by other issuers
Other countries
Other foreign governments and other government agency debt
Other debt securities
Issue by Central Banks
Issue by credit institutions
Issue by other issuers
Subtotal
Total
10.3 Equity instruments
Millions of Euros
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
23,715
6,434
-
4,547
1,887
30,149
142
-
142
-
-
142
500
51
33
18
449
-
10
439
6,806
3,438
3,368
-
1,558
1,810
7,448
37,597
624
148
-
105
43
772
4
-
4
-
-
4
3
-
-
-
3
-
-
3
73
40
33
-
9
24
80
852
(70)
(17)
-
(2)
(15)
(87)
-
-
-
-
-
-
(8)
(1)
-
(1)
(7)
-
(1)
(6)
(203)
(197)
(6)
-
(3)
(3)
(211)
(298)
24,269
6,565
-
4,650
1,915
30,834
146
-
146
-
-
146
495
50
33
17
445
-
9
436
6,676
3,281
3,395
-
1,564
1,831
7,317
38,151
The breakdown of the balance under the heading "Equity instruments" as of December 31, 2014 and 2013 is as
follows:
AFS-Equity Instruments. Breakdown by Type of Financial Instrument
2014
Equity instruments listed
Listed Spanish com pany shares
Credit institutions
Other entities
Listed foreign company shares
United States
Other countries
Subtotal
Unlisted equity instruments
Unlisted Spanish com pany shares
Credit institutions
Other entities
Unlisted foreign com panies shares
United States
Other countries
Subtotal
Total
Millions of Euros
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
3,071
-
3,071
2,577
17
2,560
5,648
41
-
41
83
55
28
124
5,772
1
-
1
641
2
639
642
-
-
-
-
-
-
-
642
(70)
-
(70)
(28)
-
(28)
(98)
-
-
-
-
-
-
-
(98)
3,002
-
3,002
3,190
19
3,171
6,192
41
-
41
83
55
28
124
6,316
79
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
AFS-Equity Instruments. Breakdown by Type of Financial Instrument
2013
Equity instruments listed
Listed Spanish com pany shares
Credit institutions
Other entities
Listed foreign company shares
United States
Other countries
Subtotal
Unlisted equity instruments
Unlisted Spanish com pany shares
Credit institutions
Other entities
Unlisted foreign com panies shares
United States
Other countries
Subtotal
Total
10.4 Gains/losses
Millions of Euros
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
3,127
-
3,127
2,511
-
2,511
5,638
54
4
50
86
61
25
140
5,778
11
-
11
3
-
3
14
-
-
-
-
-
-
-
14
(46)
-
(46)
(596)
-
(596)
(642)
-
-
-
-
-
-
-
(642)
3,092
-
3,092
1,918
-
1,918
5,010
54
4
50
86
61
25
140
5,150
The changes in the gains/losses, net of taxes, recognized under the equity heading “Valuation adjustments –
Available-for-sale financial assets” in the accompanying balance sheets are as follows:
Changes in Valuation Adjustments - Available-for-Sale
Financial Assets
Balance at the beginning
Valuation gains and losses
Income tax
Amounts transferred to income
Balance at the end
Of which:
Debt securities
Equity instruments
Millions of Euros
2014
2013
(52)
3,124
(937)
(354)
1,781
1,401
380
(938)
1,360
(408)
(66)
(52)
388
(440)
The losses recognized under the heading “Valuation adjustments – Available-for-sale financial assets – Debt
securities” in the income statement for 2014 correspond mainly to Spanish government debt securities. As of
December 31, 2014, 14% of the unrealized losses recognized under the heading "Valuation adjustments –
Available-for-sale financial assets – Debt securities” were generated over more than twelve months. However, no
impairment has been estimated, as following an analysis of these unrealized losses it can be concluded that they
were temporary due to the following reasons: the interest payment dates of all the fixed-income securities have
been satisfied; and because there is no evidence that the issuer will not continue to meet its payment obligations,
nor that future payments of both principal and interest will not be sufficient to recover the cost of the debt
securities.
The losses recognized under the heading “Valuation adjustments – Available for sale financial assets” in the
income statement for 2014 correspond mainly to the market value of the investment in CNBC (see Note 14.1).
As of December 31, 2014, the Bank has analyzed the unrealized losses recognized under the heading “Valuation
adjustments – Available-for-sale financial assets – Equity instruments” resulting from equity instruments generated
over a period of more than 12 months and with a fall of more 470% in their price, as a first approximation to the
existence of possible impairment, not finding any reference in such situation.
The heading “Impairment losses on financial assets (net) – Available-for-sale financial assets” in the accompanying
income statements recognizes losses of €12 million and losses of €30 million for the years 2014 and 2013,
respectively (see Note 41).
80
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
11. Loans and receivables
The breakdown of the balance under this heading in the accompanying balance sheets, according to the nature
of the financial instrument, is as follows:
Loans and Receivables
Notes
2014
2013
Loans and advances to credit ins titutions
Loans and advances to cus tomers
Debt securities
Total
11.1
11.2
11.3
23,813
203,865
3,046
230,724
20,410
208,313
1,800
230,523
Millions of Euros
11.1 Loans and advances to credit institutions
The breakdown of the balance under this heading in the accompanying balance sheets, according to the nature
of the financial instrument, is as follows:
Loans and Advances to Credit Institutions
Notes
2014
2013
Millions of Euros
Reciprocal accounts
Deposits with agreed maturity
Demand deposits
Reverse repurchase agreements
Other financial assets
Impaired assets
Total gross
Valuation adjustments
Impairment losses
Accrued interest and fees
Hedging derivatives and others
Total
30
5.3.1
5.3.7
84
4,548
1,850
8,880
8,401
23
23,786
27
(28)
55
-
23,813
68
6,414
1,166
5,788
6,918
29
20,383
27
(30)
57
-
20,410
81
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
11.2 Loans and advances to customers
The breakdown of the balance under this heading in the accompanying balance sheets, according to the nature
of the financial instrument, is as follows:
Loans and Advances to Customers
Notas
2014
2013
Millions of Euros
Mortage s ecured loans
Other secured loans
Other loans
Credit accounts
Com mercial credit
Receivable on demand and other
Credit cards
Finance leases
Reverse repurchase agreements
Financial paper
Impaired assets
Total gross
Valuation adjustm ents
Impairment losses
Accrued interests and fees
Hedging derivatives and others
Total net
87,159
2,810
67,018
9,606
7,830
2,158
1,119
2,655
9,108
4,061
19,074
212,598
(8,733)
(10,146)
574
839
203,865
93,444
2,916
65,243
9,426
7,887
2,282
1,413
2,954
6,062
4,326
21,896
217,849
(9,536)
(10,799)
671
592
208,313
30
5.3.6
5.3.1
5.3.7
As of December 31, 2014, 10.71% of "Loans and advances to customers" with a maturity greater than one year
were concluded with fixed-interest rates and 89.29% with variable interest rates.
The heading “Loans and advances to customers” includes financial lease arrangements provided by various
entities in the Bank for their customers to finance the purchase of assets, including movable and immovable
property. The breakdown of the financial lease arrangements as of December 31, 2014 and 2013 is as follows:
Financial Lease Arrangements
Movable property
Real Estate
Fixed rate
Floating rate
Millions of Euros
2014
2013
1,224
1,431
1,222
1,433
1,288
1,666
1,267
1,687
The heading “Loans and receivables – Loans and advances to customers” in the accompanying balance sheets
also includes certain mortgage loans that, as mentioned in Note 5.6 and pursuant to the Mortgage Market Act,
are considered a suitable guarantee for the issue of long-term mortgage covered bonds (see Appendix X).
Additionally, this heading also includes certain loans that have been securitized and that have not been
derecognized since the Bank has retained substantially all the related risks or rewards due to the fact that it has
granted subordinated debt or other types of credit enhancements that absorb either substantially all expected
credit losses on the asset transferred or the probable variation in attendant net cash flows.
82
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
The amounts recognized in the balance sheets corresponding to these securitized loans are as follows:
Securitized Loans
Securitized mortgage assets
Other securitized assets
Commercial and industrial loans
Finance leases
Loans to individuals
Total
11.3 Debt securities
Millions of Euros
2014
2013
25,384
1,111
503
205
403
26,495
21,038
4,611
2,710
277
1,624
25,649
The breakdown of the balance under this heading in the accompanying balance sheets, according to the nature
of the financial instrument, is as follows:
Debt securities
Government
Credit institutions
Other sectors
Total gross
Valuation adjustments
Total
Millions of Euros
Notes
2014
2013
2,576
4
470
3,050
(4)
3,046
1,264
4
536
1,804
(4)
1,800
5.3.1
5.3.7
12. Hedging derivatives (receivable and payable) and Fair-value changes of
the hedged items in portfolio hedges of interest-rate risk
The balance of these headings in the accompanying balance sheets is as follows:
He dging de riva tive s a nd Fa ir va lue cha nge s of the
he dge d ite m s in portfolio he dge s of inte re st ra te risk
ASSETS-
Fair value changes of the hedged item s in portfolio hedges of
H edging derivatives
LIABILITIES-
interes t rate ris k
H edging derivatives
M illons of Eur os
2014
2013
121
2,112
-
1,959
99
2,307
-
1,507
83
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
As of December 31, 2014 and 2013, the main positions hedged by the Bank and the derivatives assigned to
hedge those positions were:
• Fair value hedging:
− Available-for-sale fixed-interest debt securities: This risk is hedged using interest-rate derivatives (fixed-
variable swaps).
− Long-term fixed-interest debt securities issued by the Bank: This risk is hedged using interest-rate
derivatives (fixed-variable swaps).
− Available-for-sale equity instruments: This risk is hedged using equity forwards.
− Fixed-interest loans: This risk is hedged using interest-rate derivatives (fixed-variable swaps).
− Fixed-interest deposit portfolio hedges and/or implicit interest derivatives: This risk is hedged using fixed-
variable swaps and interest-rate options. The valuation of the deposit hedges corresponding to interest-
rate risk is recognized under the heading "Fair value changes of the hedged items in the portfolio hedges
of interest-rate risk.”
• Cash-flow hedges
Most of the hedged items are floating interest-rate loans and asset hedges linked to the inflation of the
available for sale portfolio. This risk is hedged using foreign-exchange and interest-rate swaps, inflation and
FRA’s (“Forward Rate Agreement”).
• Net foreign-currency investment hedges
The risks hedged are foreign-currency investments in the Bank’s subsidiaries based abroad. This risk is
hedged mainly with foreign-exchange options and forward currency purchases.
Note 5 analyzes the Bank's main risks that are hedged using these financial instruments.
The details of the net positions by hedged risk of the fair value of the hedging derivatives recognized in the
accompanying balance sheets are as follows:
2014
OTC markets
Credit institutions
Fair value hedge
Of wich: Macro hedge
Cash f low hedge
Net investment in a foreign operation hedge
Subtotal
Other financial Institutions
Fair value hedge
Of wich: Macro hedge
Cash f low hedge
Net investment in a foreign operation hedge
Subtotal
Other sectors
Fair value hedge
Of wich: Macro hedge
Cash f low hedge
Net investment in a foreign operation hedge
Subtotal
Total
Of which:
Asset Hedging Derivatives
Liability Hedging Derivatives
Millions of Euros
Currency Risk
Interest Rate
Risk
Equity Price
Risk
Other Risks
Total
269
(208)
(109)
160
17
(70)
(0)
-
17
(26)
(26)
(1)
-
(27)
150
2,084
(1,934)
-
-
10
10
-
-
-
-
-
-
-
-
-
-
10
22
(12)
84
(5)
-
-
(5)
(1)
-
-
(1)
-
-
-
-
-
(6)
6
(12)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
264
(208)
(99)
-
165
16
(70)
(0)
-
16
(26)
(26)
(1)
-
(27)
153
2,112
(1,959)
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
2013
OTC markets
Credit institutions
Fair value hedge
Of wich: Macro hedge
Cash flow hedge
Net investment in a foreign operation hedge
Subtotal
Other financial Institutions
Fair value hedge
Of wich: Macro hedge
Cash flow hedge
Net investment in a foreign operation hedge
Subtotal
Other sectors
Fair value hedge
Of wich: Macro hedge
Cash flow hedge
Net investment in a foreign operation hedge
Subtotal
Total
Of which:
Asset Hedging Derivatives
Liability Hedging Derivatives
Millions of Euros
Currency Risk
Interest Rate
Risk
Equity Price
Risk
Other Risks
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
758
(253)
(61)
-
697
119
(71)
(3)
-
116
(12)
(6)
-
-
(12)
801
2,306
(1,505)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1)
-
-
-
(1)
-
-
-
-
-
-
-
-
-
-
(1)
1
(2)
757
(253)
(61)
-
696
119
(71)
(3)
-
116
(12)
(6)
-
-
(12)
800
2,307
(1,507)
The cash flows forecasts for the coming years for cash flow hedging recognized on the accompanying balance
sheet as of December 31, 2014 are:
Cash Flows of Hedging
Instruments
Receivable cash inflows
Payable cash outflows
Millions of Euros
3 Months or
Less
From 3
Months to 1
Year
From 1 to 5
Years
More than 5
Years
Total
12
9
32
28
129
148
151
184
324
369
The above cash flows will have an effect on the income statements until the year 2024.
In 2014 and 2013, there was no reclassification in the accompanying consolidated income statements of any
amount corresponding to cash flow hedges that was previously recognized in equity.
The amount for derivatives designated as accounting hedges that did not pass the effectiveness test during 2014
was not material.
As of December 31, 2014 and 2013 there was no hedge accounting that did not pass the effectiveness test.
85
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
13. Non-current assets held for sale
The composition of the balance under the heading “Non-current assets held for sale” in the accompanying
balance sheets, broken down by the origin of the assets, is as follows:
Non-Current Assets Held-for-Sale
Breakdown by type of Asset
Business sale agreement - Assets (note 14)
Other assets from:
Tangible fixed assets (net)
For ow n use
Assets leased out under an operating lease
Foreclosures or recoveries (net)
Foreclosures
Recoveries from financial leases
Accrued amortization (*)
Impairment losses
Total Non-Current Assets Held-for-Sale
Millions of Euros
2014
2013
482
205
205
-
2,678
2,540
138
(32)
(562)
2,771
-
217
217
-
2,440
2,305
135
(26)
(436)
2,195
Business sale agreement - Liabilities (note 14)
Liabilities associated with non-current assets held for sale
-
-
(*) Corresponds to the accumulated depreciation of assets before classification as "non-current assets held for sale” "
(**) Until classified as non-current assets held for sale
.
The changes in the balances under this heading in 2014 and 2013 are as follows:
2014
Foreclosed
Millions of Euros
Recovered
Assets from
Operating Lease
From Ow n Use
Assets
(*)
Othe r
(**)
Total
Cost-
Balance at the beginning
Additions (Purchases) (***)
Contributions from merger transactions
Retirements (Sales)
Transfers
Balance at the end
Impairment-
Balance at the beginning
Additions
Contributions from merger transactions
Retirements (Sales)
Transfers
Balance at the end
Total
2,305
1,020
(373)
(412)
2,540
309
317
(69)
(101)
456
2,084
135
39
(23)
(13)
138
32
18
(5)
(6)
39
99
191
-
(82)
64
173
95
1
(47)
18
67
106
-
-
-
482
482
-
-
-
-
-
482
2,631
1,059
-
(478)
121
3,333
436
336
-
(121)
(89)
562
2,771
Until classified as non-current assets held for sale
(*)
(**) Corresponds to the CIFH business sale agreement (Note 14)
(***) Corresponds to the initial cost of the asset received.
86
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
2013
Cost-
Balance at the beginning
Additions (Purchases ) (***)
Contributions from merger transactions
Retirements (Sales)
Transfers
Balance at the end
Impairment-
Balance at the beginning
Additions
Contributions from merger transactions
Retirements (Sales)
Transfers
Balance at the end
Millions of Euros
Foreclosed
Recovered
Assets from
Operating Lease
From Ow n Use
Assets (*)
Other
(**)
Total
1,818
710
477
(700)
-
2,305
195
496
198
(187)
(393)
309
1,996
113
57
2
(34)
(3)
135
28
21
-
(9)
(8)
32
103
59
-
-
(40)
172
191
9
2
-
(14)
98
95
96
210
-
-
(297)
87
-
-
-
-
-
-
-
-
2,200
767
479
(1,071)
256
2,631
232
519
198
(210)
(303)
436
2,195
Until classified as non-current assets held for sale
(*)
(**) Business sale agreement (Note 14)
(***) Corresponds to the initial cost of the asset received.
As of December 31, 2014 and 2013, the balance under the heading "Non-current assets held for sale -
Foreclosures or recoveries" was made up of €1,860 million and €1,801 million of assets for residential use, €303
million and €270 million of assets for tertiary use (industrial, commercial or offices) and €26 million and €28
million of assets for agricultural use, respectively.
The table below shows the length of time for which the main assets from foreclosures or recoveries that were on
the balance sheet as of December 31, 2014 and 2013 had been held:
Non-Current Assets Held for Sale
Period of Ownership
Up to one year
From 1 to 3 years
From 3 to 5 years
Over 5 years
Total
Millions of Euros
2014
2013
702
1,090
354
37
2,183
788
1,067
229
15
2,099
In 2014 and 2013, some of the sales of these assets were financed by the Bank. The amount of the loans
granted to the buyers of these assets in those years totaled €158 million and €112 million, respectively, with a
mean percentage financed of 89% and 90%, respectively, of the price of sale. The total nominal amount of these
loans, which are recognized under “Loans and receivables”, is €940 million and €782 million, as of December
31, 2014 and 2013, respectively.
As of December 31, 2014 and 2013, the gains from the sale of assets financed by the Bank (and, therefore, not
recognized in the income statement), amounted to €21 million and €23 million, respectively.
87
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
14.
Investments in entities
Ongoing operations
Investments
New agreement for the acquisition of an additional 14.9% of Garanti
On November 19, 2014 BBVA Group entered into a new agreement with Dogus Holding A.S., Ferit Faik Şahenk,
Dianne Şahenk and Defne Şahenk (“Dogus”) for the acquisition of 62,538,000,000 shares of Garanti at a
maximum total consideration of 8.90 Turkish Liras per share, which is equal to 5,566 million of Turkish liras.
Completion of the acquisition and the entry into force of the new agreement are conditional on the obtaining of
all necessary regulatory consents from the relevant Turkish, Spanish, European Union and, if applicable, other
jurisdictions’ regulatory authorities. After the acquisition of the new shares, the stake of the Bank in Garanti will be
39.9%.
Catalunya Banc competitive auction
On July 21, 2014, the Management Commission of the Banking Restructuring Fund (known as “FROB”) accepted
BBVA´s bid in the competitive auction for the acquisition of Catalunya Banc, S.A. (“Catalunya Banc”).
As a consequence, BBVA has executed a sale and purchase agreement with FROB, by virtue of which FROB will
sell up to 100% of the shares of Catalunya Banc to BBVA for the price of up to €1,187 million.
The price will be reduced in an amount equal to €267 million provided that, prior to the effective closing of the
transaction, FROB and Catalunya Banc do not obtain a confirmation issued by the Spanish tax authorities of the
application of the deferred tax assets regime (foreseen in Royal Decree Law 14/2013) to some losses recorded in
Catalunya Banc’s consolidated financial statements for 2013 which were originated as a consequence of the
transfer of assets by Catalunya Banc to the Management Company for Assets Arising from the Banking Sector
Reorganization (known as “SAREB”).
Closing of the sale and purchase transaction will be subject, among others, to the obtaining of the relevant
administrative authorizations and approvals and to the effective closing of the transaction announced by
Catalunya Banc to the market on July 17, 2014 whereby Catalunya Banc will transfer to an asset securitization
fund a loan portfolio with a nominal value of €6,392 million.
Divestitures
Agreement to sell CNCB
On October 2013 this participation was reclassified under the heading “Available for sale financial assets” as
mentioned bellow.
On January 23, 2015 the Group BBVA has signed an agreement to sell 4.9% in China CITIC Bank Corporation
Limited (CNCB) to UBS AG, London Branch (UBS), who has entered into transactions pursuant to which such
CNCB shares will be transferred to a third party and the ultimate economic benefit of ownership of such CNCB
shares will be transferred to Xinhu Zhongbao Co., Ltd (Xinhu) (the Relevant Transactions).
The selling price to UBS is HK$ 5.73 per share, amounting to a total of HK$ 13,136 million, equivalent to
approximately 1,460 million Euros. After completing the sale BBVA will hold a 4.7% interest in CNCB.
The closing of this transaction between UBS and BBVA will happen after the legal and corporate requirements
necessary for the Relevant Transactions relating to Xinhu have been completed. As of December 31, 2014 the
investment in CNCB was recognized under the heading “Available for sale financial assets”.
We estimate that the closing of the BBVA transaction will take place within the first quarter of 2015. The
estimated impact on the financial statements of BBVA will be a gross capital gain of approximately €268 million.
88
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Agreement to sell the partipation in Citic International Financial Holding (CIFH)
On December 23, 2014, the BBVA Group signed an agreement to sell its participation of 29.68% in Citic
International Financial Holdings Limited (CIFH), to China CITIC Bank Corporation Limited (CNCB). CIFH is a non
listed subsidiary of CNCB domiciled in Hong Kong. The selling price is HK$8,162 million. The closing of such
agreement is subject to the relevant regulatory approvals. The estimated impact on the financial statements of
BBVA will be a gross capital gain of approximately €363 million. As of December 31, 2014 the investment in
CNCB was recognized under the heading “Non-current assets held for sale” (see Note 13).
14.1 Associates
The breakdown, by currency and listing status, of this heading in the accompanying balance sheets is as follows:
Associates Entities
By currency:
In euros
In foreign currencies
Total
By share price
Listed
Unlisted
Total
Less:
Impairment losses
Total
Millions of Euros
2014
2013
413
1
414
6
408
414
(153)
261
414
480
894
6
888
894
(76)
818
The investments in associates as of December 31, 2014, as well as the most important data related to them, can
be seen in Appendix III.
As of October 21, 2013, BBVA completed the sale of 5.1% stake in CNCB to Citic Limited for an amount of
approximately €944 million. The loss attributable to BBVA at the time of the sale amounted to €303 million,
which was recognized under the heading “Gains (losses) on derecognized assets not classified as non-current
assets held for sale” in the income statement in 2013. After this sale, the stake of BBVA in CNCB is reduced to
the 9.9%.
The arrangement implied a change in the accounting criteria applied to the participation of BBVA in CNCB, being
since then a non material financial participation recognized under the heading “Available-for-sale financial assets”
(see Note 10).
89
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
The following is a summary of the gross changes in 2014 and 2013 under this heading in the accompanying
balance sheets:
Associates Entities. Changes in the year
Balance at the beginning
Acquisitions and capital increases
Losses due to merger transactions
Disposals and capital reductions
Transfers
Exchange differences and others
Balance at the end
Millions of Euros
2014
2013
894
-
-
(1)
(479)
-
414
4,531
22
14
(1,241)
(2,448)
16
894
The change in 2014 relates mainly to the aforementioned sale of CIFH. The change in 2013 relates mainly to the
sale of 5.1% of CNBC and to the transfer of the remaining 9.9% stake held by the Group in the CNBC portfolio of
"Available for sale financial assets ".
14.2 Investments in jointly controlled entities
The breakdown, by currency and listing status, of this heading in the accompanying balance sheets is as follows:
Joint ventures
By currency:
In euros
In foreign currencies
Total
By share price
Listed
Unlisted
Total
Less:
Impairment losses
Total
Millions of Euros
2014
2013
20
3,928
3,948
3,928
20
3,948
-
3,948
16
3,849
3,865
3,849
16
3,865
-
3,865
90
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
The following is a summary of the changes in 2014 and 2013 under this heading in the accompanying balance
sheets:
Joint ventures. Changes in the year
Balance at the beginning
Acquisitions:
Losses due to merger transactions
Transfers
Exchange differences and others
Balance at end of year
Millions of Euros
2014
2013
3,865
-
-
5
78
3,948
4,013
352
146
(495)
(151)
3,865
The breakdown of associates and joint ventures as of December 31, 2014 is shown in Appendix III.
14.3 Holdings in Group entities
The heading Investments - Group Entities in the accompanying balance sheets includes the carrying amount of
the shares of companies forming part of the BBVA Group. The percentages of direct and indirect ownership and
other relevant information on these companies are provided in Appendix II.
The breakdown, by currency and listing status, of this heading in the accompanying balance sheets is as follows:
Subsidiaries.
By currency:
In euros
In foreign currencies
Total
By share price
Listed
Unlisted
Total
Less:
Impairment losses
Total
Millions of Euros
2014
2013
9,442
19,197
28,639
222
28,417
28,639
(6,695)
21,944
9,014
18,740
27,754
237
27,517
27,754
(6,835)
20,919
91
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
The changes in 2014 and 2013 in the balance under this heading in the balance sheets, disregarding the
balance of the impairment losses, are as follows:
Subsidiaries. Changes in the period.
Balance at the beginning
Acquisitions and capital increases
Los ses due to merger trans actions
Sales
Transfers
Exchange differences and other
Balance at the end
Millions of Euros
2014
2013
27,754
714
-
(147)
-
318
28,639
22,921
4,610
204
(303)
453
(131)
27,754
Changes in the holdings in Group entities
Besides the aforementioned transactions related to CIFH and CNCB, the most notable transactions performed in
2014 and 2013 are as follows:
Changes in 2014
Capital increase in Anida Grupo Inmobiliario
On December 23, 2014 BBVA fully subscribed an increase of capital in Anida Grupo Imobiliario by € 400 million.
Capital increase in Gran Jorge Juan
On July 29, 2014 BBVA fully subscribed an increase of capital in Gran Jorge Juan by € 130 million.
Capital increase in BBVA Compass
On March 17, 2014 BBVA fully subscribed an increase of capital in BBVA Compass Bancshares, Inc by $117
million (approximately €84 million).
Changes in the Group in 2013
Purchase of Unnim Vida and Unnim Protecció
On February 1, 2013, Unnim Banc, SA reached an agreement with Aegon Spain Holding B.V. for the acquisition
of 50% of Unnim Vida, Inc. Seguros y Reaseguros("Unnim Vida") for a price of €352 million. Thus, the BBVA
Group reached 100% of the stake of "Unnim Vida. This acquisition has caused the reclassification of the
investment in this entity from “Investments in jointly-controlled entities” to “Investments in Group entities” in the
amount of €495 million and a transfer from “Other provisions” to “Impairment of Group investments” in the
amount of €255 million
On February 15, 2013 Unnim Banc, SA formalized with Reale Seguros Generales, SA the acquisition of 50% of
Unnim Protecció, SA Insurance and Reinsurance Company ("Unnim Protecció") at a price of €68 million. Thus,
BBVA reached 100% stake in Unnim Protecció. This acquisition has caused a transfer from "Other Provisions" to
Impairment on Group investments" for an amount of €60 million. This company was merged with BBVA Seguros,
SA Seguros y Reaseguro on October 23, 2013.
Capital Increase in Anida Grupo Inmobiliario
On December 27, 2013 BBVA fully subscribed a capital increase in Anida Real Grupo Inmobiliario, SL amounting
to €4,000 million. This increase has caused a transfer from "Impairment on Loans and receivables” and "Other
Provisions" to ”Impairment on Group investments” for a total of €1,883 and € 1,554 million respectively.
92
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Capital Increase in Unnim Sociedad for Management of Real Estate Assets
BBVA has fully subscribed various capital increases in Unnim Society for Management of Real Estate Asset , SA
Unipersonal for a total amount of €248 million, which have caused a transfer for the same amount from "Other
provisions" to ”Impairment on Group investments"
Sale of Seguros Bancomer
On February 22, 2013, the sale of Seguros BBVA Bancomer, SA de CV, Grupo Financiero BBVA Bancomer to
Grupo Financiero BBVA Bancomer, SA de C.V. was formalized The gross gain amounted to €131 million
recorded in “Gains (losses) on derecognized assets not classified as non-current assets held for sale” in the income
statement in 2013.
Sale of BBVA Panama
On July 20, BBVA announced that it had reached an agreement with the entity Leasing Bogotá S.A., Panamá, a
subsidiary of Grupo Aval Acciones y Valores, S.A., for the sale to the former of all the stake that BBVA holds
directly and indirectly in Banco Bilbao Vizcaya Argentaria (Panamá), S.A. (“BBVA Panamá”).The aggregate direct
and indirect participation of BBVA in BBVA Panamá represents approximately 98.92% of the share capital of the
company
On December 19, after having obtained the necessary approvals, BBVA completed the sale.
The total consideration that BBVA obtained pursuant to this sale amounted to approximately $353 million (€259
million) after the adjustment of the net income generated by BBVA Panamá from June 1, 2013 up to closing,
which amounted a positive adjustment of approximately $8 million (€6 million).
BBVA received part of the consideration through the distribution of dividends from BBVA Panamá amounting to
$77 million prior to closing (such amount has consequently reduced the purchase price to be paid to BBVA on
closing). After deducing such distribution of dividends, the gross capital gain amounted to approximately €190
million which was recognized in the section “Gains (losses) in non-current assets held for sale not classified as
discontinued operations”in theincome statement in 2013.
Sale of pension businesses in Latin America
On May 24, 2012 BBVA announced its decision to conduct a study on strategic alternatives for its pension
business in Latin America. The alternatives considered in this process include the total or partial sale of the
businesses of the Pension Fund Administrators (AFP) in Chile, Colombia and Peru, and the Retirement Fund
Administrator (Afore) in Mexico.
On October 2, 2013, with the sale of “AFP Provida” (Administradora de Fondos de Pensiones AFP Provida de
Chile), BBVA finalized the process. Below there is a description of each of the operations that have been carried
out during this process:
Sale of AFP Provida (Chile)
On February 1, 2013, BBVA reached an agreement with MetLife, Inc., for the sale of the 64.3% stake that BBVA
held in the Chilean Pension Fund manager Administradora de Fondos de Pensiones Provida SA ("AFP Provida").
On October 2, 2013, BBVA completed the sale, generating a capital gain net of taxes amounted to € 480 million
which was recognized under the heading “Profit from discontinued operations (Net)” in the income statement in
2013.
Sale of BBVA AFP Horizonte S.A. (Peru)
On April 23, 2013, BBVA executed the transfer of 100% of the share capital of the Peruvian company "AFP
Horizonte SA" in favor of "AFP Integra SA" and "Profuturo AFP, SA" who have each acquired 50% of said company.
The capital gain attributable to parent company net of taxes arising from the transaction amounted to
approximately €87 million, and was recognized under the heading “Profit from discontinued operations (Net)” in
the income statement in 2013.
93
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Sale of BBVA AFP Horizonte S.A. (Colombia)
On December 24, 2012, BBVA reached an agreement with Sociedad Administradora de Fondos de Pensiones y
Cesantías Porvenir, S.A., a subsidiary of Grupo Aval Acciones y Valores, S.A., for the sale to the former of the
total stake that BBVA held directly or indirectly in the Colombian company BBVA Horizonte Sociedad
Administradora de Fondos de Pensiones y Cesantías S.A.
On April 18, 2013, after having obtained the necessary approvals, BBVA completed the sale. The capital gain
attributable to parent company net of taxes arising from the transaction amounted to approximately €276 million
at the moment of the sale, and was recognized under the heading “Profit from discontinued operations (Net)” in
the income statement in 2013.
Sale of Afore Bancomer (Mexico)
On November 27, BBVA announced that it had reached an agreement to sell to Afore XXI Banorte, S.A. de C.V.
the entire stake that BBVA held directly or indirectly in the Mexican subsidiary Administradora de Fondos para el
Retiro Bancomer, S.A. de C.V.
Once the corresponding authorization had been obtained from the competent authorities, the sale was closed on
January 9, 2013, at which point the BBVA Group no longer had control over the subsidiary sold.The gain on sale
attributable to parent company net of taxes was approximately €118 million and was recognized under the
heading “Profit from discontinued operations (Net)” in the income statement in 2013.
14.4 Notifications about acquisition of holdings
Appendix IV provides notifications on acquisitions and disposals of holdings in associates or jointly-controlled
entities, in compliance with Article 155 of the Corporations Act and Article 53 of the Securities Market Act
24/1988.
14.5 Impairment
The breakdown of the changes in impairment losses in 2014 and 2013 under this heading is as follows:
Impairment.
Balance at the beginning
Increase in impairment losses charged to incom e
Decrease in im pairm ent losses credited to incom e
Losses due to merger transactions
Am ount used
Transfers
Balance at the end
Millions of Euros
Notes
2014
2013
42
42
6,911
780
(843)
-
-
-
6,848
2,941
332
(517)
205
(60)
4,010
6,911
The line item “Transfer” in the table above for 2013, includes transfers under “Impairment Losses on Loans and
Receivables” and “Other Provisions” to “Impairment of Group investments” due to the aforementioned operations
of purchase of Unnim Vida and Unnim Protecció and the capital increases in Anida Grupo Inmobiliario and
Unnim Sociedad para la Gestión de Activos Inmobiliarios.
In 2013 and 2014, and as a result of the improvement in the future expectations for BBVA USA Bancshares, the
difference between the carrying amount and the present value of expected cash flows has been reduced by
€364 million and €782 million respectively. This figure has been charged under the heading "Impairment losses
on other assets (net)" in the income statement for 2013 and 2014. The changes in impairment include the
exchange differences resulting from applying the dollar exchange rate at the close of each year and comparing it
with the carrying amount exchange rate (exchange rate at the time of the acquisition).
94
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
15. Tangible assets
The breakdown of the balance and changes under this heading in the accompanying balance sheets, according
to the nature of the related items, is as follows:
2014
Revalued cost -
Balance at the beginning
Additions
Contributions from m erger transactions
Retirem ents
Transfers
Exchange difference and other
Balance at the end
Accrued depreciation -
Balance at the beginning
Additions
Contributions from m erger transactions
Retirem ents
Transfers
Exchange difference and other
Balance at the end
Impairment -
Balance at the beginning
0
Additions
Contributions from m erger transactions
Retirem ents
Transfers
Exchange difference and other
Balance at the end
Net tangible assets -
Balance at the beginning
Balance at the end
For Ow n Use
Millions of Euros
Land and
Buildings
Work in
Progres s
Furniture,
Fixture s and
Vehicles
Total
Tangible
Asset of Ow n
Use
Investm ent
Properties
Total
920
23
-
-
(69)
-
874
170
9
-
-
(9)
-
170
152
13
-
(1)
(17)
-
147
598
557
83
-
-
-
(37)
-
46
-
-
-
-
-
-
-
-
-
-
-
-
-
-
83
46
3,420
133
-
(640)
26
5
2,944
2,455
190
-
(626)
(9)
3
2,013
-
11
-
-
-
(11)
-
965
931
4,423
156
-
(640)
(80)
5
3,864
2,625
199
-
(626)
(18)
3
2,183
152
24
-
(1)
(17)
(11)
147
1,646
1,534
10
-
-
-
-
-
10
1
-
-
-
-
-
1
4
-
-
-
-
-
4
5
5
4,433
156
-
(640)
(80)
5
3,874
2,626
199
-
(626)
(18)
3
2,184
156
24
-
(1)
(17)
(11)
151
1,651
1,539
95
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
2013
Revalued cost -
Balance at the beginning
Additions
Contributions from merger transactions
Retirements
Transfers
Exchange difference and other
Balance at the end
Accrued depreciation -
Balance at the beginning
Additions
Contributions from merger transactions
Retirements
Transfers
Exchange difference and other
Balance at the end
Impairment -
Balance at the beginning
Additions
Contributions from merger transactions
Retirements
Transfers
Exchange difference and other
Balance at the end
Net tangible assets -
Balance at the beginning
Balance at the end
Millions of Euros
For Ow n Use
Land and
Buildings
Work in
Progress
Furniture,
Fixtures and
Vehicles
Total
Tangible
Asset of Ow n
Use
Investm ent
Properties
Total
589
3
413
-
(76)
(9)
920
130
10
37
-
(3)
(4)
170
37
14
135
(3)
(32)
1
152
-
422
598
74
9
-
-
-
-
83
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
74
83
3,364
174
231
(343)
(4)
(2)
3,420
2,400
191
190
(315)
(10)
(1)
2,455
-
29
-
-
-
(29)
-
-
964
965
4,027
186
644
(343)
(80)
(11)
4,423
2,530
201
227
(315)
(13)
(5)
2,625
37
43
135
(3)
(32)
(28)
152
-
1,460
1,646
1
-
84
-
(75)
-
10
-
-
8
-
(7)
-
1
-
-
27
-
(23)
-
4
-
1
5
4,028
186
728
(343)
(155)
(11)
4,433
2,530
201
235
(315)
(20)
(5)
2,626
37
43
162
(3)
(55)
(28)
156
-
1,461
1,651
As of December 31, 2014 and 2013, the fully depreciated tangible assets still in use amounted to €1,105 million
and €1,558 million, respectively.
The main activity of the Bank is carried out through a network of bank branches located geographically as shown
in the following table:
Bank Branches by Geographical Location
Spain
Rest of the world
Total
Num ber of Branches
2014
2013
3,111
19
3,130
3,229
18
3,247
As of December 31, 2014 and 2013, the percentage of branches leased from third parties in Spain was 76.47%
and 77.64%, respectively.
16.
Intangible assets
The breakdown of the balance under this heading in the balance sheets as of December 31, 2014 and 2013
relates mainly to the net balance of the disbursements made on the acquisition of computer software. The
average life of the Bank's intangible assets is 5 years.
96
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
The breakdown of the changes in 2014 and 2013 in the balance under this heading in the balance sheets is as
follows:
Other Intangible Assets. Changes Over the Period Notes
2014
2013
Millions of Euros
Balance at the beginning
Additions
Contributions from merger transactions
Retirements
Amortization in the year
Exchange differences and other
Impairment
Balance at the end
39
927
265
-
-
(318)
-
-
874
729
331
168
-
(301)
-
-
927
“Contributions from merger transactions” in 2013 in the table above reflects intangible assets of the merged
company Unnim Banc, SA.
17. Tax assets and liabilities
The balance of the heading “Tax Liabilities” in the accompanying balance sheets contains the liability for applicable
taxes, including the provision for corporation tax of each year, net of tax withholdings and prepayments for that
period, and the provision for current period corporation tax in the case of companies with a net tax liability. The
amount of the tax refunds due to Group companies and the tax withholdings and prepayments for the current
period are included under “Tax Assets” in the accompanying balance sheets.
Banco Bilbao Vizcaya Argentaria, S.A. and its tax-consolidable subsidiaries file consolidated tax returns. The
subsidiaries of Argentaria, which had been in Tax Group 7/90, were included in Tax Group 2/82 from 2000,
since the merger had been carried out under the tax neutrality system provided for in Title VIII, Chapter VIII of
Corporation Tax Law 43/1995. On 30 December 2002, the pertinent notification was made to the Ministry of
Economy and Finance to extend its taxation under the consolidated taxation regime indefinitely, in accordance
with current legislation. Similarly, on the occasion of the acquisition of Unnim Group in 2012, the companies
composing the Tax Group No. 580/11 which met the requirements became part of the tax group 2/82 from
January 1, 2013.
In 2013, the Bank carried out a merger by absorption of Unnim Banc, SA under the special regime for mergers,
divisions, transfers of assets and exchanges of securities under Chapter VIII of Title VII of the Corporate Tax Law,
approved by Royal Decree 4/2004 as of March 5. Consequently, and in accordance with Article 93 of the quoted
Consolidated Text, information requirements and mandatory references relating to the merger are set out in
2013’s annual report of BBVA, S.A., being the first annual report approved after the transaction. However, all the
required information regarding assets transferred from Unnim, SA to BBVA, SA is in the merger by absorption
deed, other official documents and internal records of the Bank, available to the tax authorities.
Unnim Banc is the result of the integration of Caixa d´Estalvis de Manlleu , Caixa d´Estalvis de Sabadell and Caixa
d´Estalvis de Terrassa . This integration was carried out on July 1,2010 , under merger creating a new savings
bank Caja d´Estalvis Unió de Caixes Manlleu , Sabadell y Terrassa. With effect 1 January 2011, the entity
transferred its financial business for a newly created bank , Unnim Banc , SA. Both the merger and the
segregation of financial activity conducted under the special regime for mergers, divisions, transfers of assets and
exchanges of securities under Chapter VIII of Title VII of the Consolidated Law Tax. The mandatory terms
resulting from these restructuring operations are contained in the Annual Report of Caixa d'Estalvis Unió de
Caixes Manlleu ,Sabadell y Terrassa for the year 2010 and in the Annual Report of Unnim Banc , SA , for the year
2011, respectively. In general, the information requirements relating to the restructuring are included in the
financial statements for those years.
97
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
In 2011 and 2009, the Bank also participated in corporate restructuring operations subject to the special regime
for mergers, splits, transfers of assets and exchanges of securities under Chapter VIII of Title VII of the Amended
Corporation Tax Act, as approved by Royal Legislative Decree 4/2004, of 5 March. The reporting requirements
under the above legislation are included in the notes to the financial statements of the relevant entities for 2011
and 2009.
Also, in 2003, as in previous years, the Bank performed or participated in corporate restructuring operations
under the special system of tax neutrality regulated by Act 29/1991 of December 16 (which adapted certain tax
provisions to the Directives and Regulations of the European Communities) and by Title VIII, Chapter VIII of
Corporation Tax Act 43/1995 of December 27. The disclosures required under the aforementioned legislation
are included in the notes to the financial statements of the relevant entities for the period in which the
transactions took place.
17.1 Years open for review by the tax authorities
At the date these financial statements were prepared, the Bank had 2010 and subsequent years open for review
by the tax authorities for the main taxes applicable to it.
In 2014, as a result of the tax audit conducted by the tax authorities, tax inspection proceedings were initiated
against several Group companies for the years up to and including 2009. Having been all signed in acceptance.
These proceedings have become final in 2014.
In view of the varying interpretations that can be made of some applicable tax legislation, the outcome of the tax
inspections of the open years that could be conducted by the tax authorities in the future could give rise to
contingent tax liabilities which cannot be objectively quantified at the present time. However, the Banks’ Board of
Directors and its tax advisers consider that the possibility of these contingent liabilities becoming actual liabilities is
remote and, in any case, the tax charge which might arise therefore would not materially affect the Bank’s
financial statements.
17.2 Reconciliation
The reconciliation of the corporation tax expense resulting from the application of the standard tax rate to the
recognized corporation tax expense is as follows:
Reconciliation of the Corporate Tax Expense Resulting from
the Application of the Standard Rate and the Expense
Registered by this Tax
Corporation tax
Decreases due to permanent differences:
Tax credits and tax relief at cons olidated Companies
Other items net
Net increases (decreases) due to temporary differences
Charge for income tax and other taxes
Deferred tax assets and liabilities recorded (utilized)
Income tax and other taxes accrued in the period
Adjustments to prior years' income tax and other taxes
Income tax and other taxes
Millions of Euros
2014
2013
384
(311)
(53)
(20)
-
20
20
155
175
68
(344)
(219)
495
-
(495)
(495)
(624)
(1,119)
The item "Other taxes" of the above table includes the effect of income derived from the change of estimates, on
the tax liabilities calculation generated from the integration of Unnim.
The Bank avails itself of the tax credits for investments in new fixed assets (in the scope of the Canary Islands tax
regime, for a non-material amount), tax relief, R&D tax credits, donation tax credits and double taxation tax
credits, in conformity with corporate income tax legislation.
98
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Up to December 31, 2001, the Bank and certain Group companies have opted to defer corporation tax on the
gains on disposals of tangible assets and shares in investees more than 5% owned by them, the breakdown of
which by year is as follows:
Year
1996
1997
1998
1999
2000
2001
Millions of Euros
26
150
568
117
75
731
Under the regulations in force until December 31, 2001, the amount of the aforementioned gains for each year
had to be included in equal parts in the taxable profit of the seven tax years ending from 2000, 2001, 2002,
2003, 2004 and 2005, respectively. Following inclusion of the portion relating to 2001, the amount of the gains
not yet included totaled €1,639 million, with respect to which the Bank availed itself of Transitional Provision
Three of Act 24/2001 (of 27 December) on Administrative, Tax, Labor and Social Security Measures. Almost all
this amount (€1,634 million) was included as a temporary difference in the 2001 taxable profit.
The share acquisitions giving rise to an ownership interest of more than 5%, particularly investments of this kind
in Latin America, were assigned to meet reinvestment commitments assumed in order to qualify for the above-
mentioned tax deferral.
Caixa d´Estalvis de Manlleu, Caixa d´Estalvis de Sabadell and Caixa d´Estalvis de Terrassa adopted until
December 31 2001 the deferral for reinvestment of extraordinary profits. The reinvestment was made in land
amounting to €1 million and in buildings amounting to €3 million. As of December 31, 2014 there is no amount
pending to include for this item.
Since 2002 the Bank has availed itself of the tax credit for reinvestment of extraordinary income obtained on the
transfer for consideration of properties and shares representing ownership interests of more than 5%. The
acquisition of shares over the 5% figure in each period was allocated to fulfill the reinvestment commitments
which are a requirement of the previously mentioned tax credit.
The amount assumed in order to qualify for the aforementioned tax credit is as follows:
Millions of Euros
276
27
332
80
410
1,047
71
23
35
5
4
70
2
Year
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
99
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
In 2014 income attributable to the deduction for reinvestment amounted to €2 million and the year’s investment
in the equity elements established by tax regulations was applied to reinvestment.
Additionally, due to the merger of Banc Unnim, the Bank assumes the commitment of maintenance during the
time required by the tax legislation of the assets in which Caixa d´Estalvis de Sabadell, Caixa d´Estalvis de
Terrassa and Caixa d´Estalvis Unió de Caixes Manlleu Sabadell y Terrassa materialized in previous years the
reinvestment of extraordinary profits for the implementation of a corresponding deduction. The amount of
income qualifying for this deduction indicated is as follows:
Year
2008
2009
2010
Millions of Euros
61
59
202
In 2014, following the approval of Law 16/2013, as of October 29, by which certain measures in environmental
taxation and other tax and financial measures are adopted, the Bank has included in its tax base 11 million euros
as a result of the change in book value of participations in Group companies, associates and joint ventures. The
amount pending to include in the tax base at closure and from the investees amounted to €404 million
approximately.
Pending addition to taxable income as of December 31, 2013
Decrease income (included) 2014
Changes in Investments Equity
Pending addition to taxable income as of December 31, 2014
Millions of Euros
2014
415
(11)
404
17.3 Tax recognized in equity
In addition to the income tax registered in the income statements, in 2014 and 2013 the Bank recognized the
following amounts in equity:
Tax Recognized in Total Equity
Charges to total equity
Debt securities
Equity instruments
Rest
Subtotal
Credits to total equity
Debt securities
Equity instruments
Rest
Subtotal
Total
100
Millions of Euros
2014
2013
(680)
(163)
(5)
(848)
79
-
44
123
(725)
(166)
-
-
(166)
-
188
28
216
50
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
17.4 Deferred taxes
The balance under the heading "Tax assets" in the accompanying balance sheets includes the tax receivables
relating to deferred tax assets. The balance under the “Tax liabilities” heading includes the liabilities relating to the
Bank's various deferred tax liabilities. The details of the most important tax assets and liabilities are as follows:
Tax Assets and Liabilities. Breakdown
Millions of Euros
2014
2013
Tax assets-
Current
Deferred
Pensions
Portfolio
Other assets
Impairment losses
Rest
Secured tax assets
Tax losses
Total
Tax Liabilities-
Current
Deferred
Charge for income tax and other taxes
Total
986
7,399
111
735
391
89
163
4,774
1,136
8,385
29
1,626
1,626
1,655
1,402
7,262
103
1,028
434
76
139
4,294
1,188
8,664
-
978
978
978
Based on the available information, including historical profit levels and projections that the Bank handles for the
coming years results, it is considered that sufficient taxable income to recover deferred tax assets above are
generated when they are deductible depending tax legislation.
From the guaranteed tax assets contained in the above table, the detail of the items and amounts guaranteed by
the Spanish Government is as follows:
Secured tax assets
Pensions
Impairment losses
Total
Millions of Euros
2014
2013
1,714
3,060
4,774
1,565
2,729
4,294
101
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
18. Other assets and liabilities
The breakdown of the balance under these headings in the accompanying balance sheets is as follows:
Other Assets and Liabilities
ASSETS-
Transactions in transit
Accrued interest
Unaccrued prepaid expenses
Other prepayments and accrued income
Other items
Total
LIABILITIES-
Transactions in transit
Accrued interest
Discounted capital
Unpaid accrued expenses
Other accrued expenses and deferred income
Other items
Total
Millions of Euros
2014
2013
33
258
24
234
1,216
1,507
29
778
-
551
227
637
1,444
19
233
17
216
826
1,078
36
813
-
562
251
625
1,474
19. Financial liabilities at amortized cost
The breakdown of the balance under this heading in the accompanying balance sheets is as follows:
Financial Liabilities at Amortized Cost
Notes
2014
2013
Millions of Euros
Deposits from central banks
Deposits from credit institutions
Customer deposits
Debt certificates
Subordinated liabilities
Other financial liabilities
Total
7
19.1
19.2
19.3
19.4
19.5
18,400
58,091
187,731
26,754
7,701
6,359
305,036
25,487
42,920
188,013
33,787
5,106
5,807
301,120
102
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
19.1 Deposits from credit institutions
The breakdown of the balance under this heading in the accompanying balance sheets, according to the nature
of the financial instruments, is as follows:
Deposits from Credit Institutions
Notes
2014
2013
Millions of Euros
Reciprocal accounts
Deposits with agreed maturity
Other accounts
Repurchase agreements
Subtotal
Valuation adjustments (*)
Total
30
110
24,688
2,730
30,458
57,986
105
58,091
102
23,704
1,035
17,930
42,771
149
42,920
(*)
Includes mainly accrued interest until expiration
The breakdown of this heading by geographical area and the nature of the related instruments in the
accompanying balance sheets, disregarding accrued interest pending maturity, is as follows:
2014
Deposits from Credit Institutions
Spain
Rest of Europe
Mexico
South America
The United States
Rest of the world
Total
Millions of Euros
Dem and
Deposits
Deposits w ith
Agreed
Maturity
Repos
Total
1,339
1,165
75
215
13
33
2,840
11,315
9,981
326
1,023
1,099
944
24,688
2,294
27,933
-
-
-
231
30,458
14,948
39,079
401
1,238
1,112
1,208
57,986
Millions of Euros
Deposits w ith
Agreed
Maturity
Repos
Total
12,328
9,223
-
691
715
747
23,704
562
17,218
-
-
-
150
17,930
13,519
26,705
47
817
768
915
42,771
2013
Deposits from Credit Institutions
Dem and
Deposits
Spain
Rest of Europe
Mexico
South America
The United States
Rest of the world
Total
629
264
47
126
53
18
1,137
103
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
19.2 Customer deposits
The breakdown of this heading of the accompanying balance sheets, by type of financial instruments, is as
follows:
Customer Deposits
Notes
2014
2013
Millions of Euros
Government and other government agencies
Spanish
Foreign
Repurchase agreem ents
Accrued interest
Other resident sectors
Current accounts
Savings accounts
Fixed-term deposits
Reverse repos
Other accounts
Accrued interest
Non-resident sectors
Current accounts
Savings accounts
Fixed-term deposits
Repurchase agreem ents
Other accounts
Accrued interest
Total
Of which:
Deposits f rom other creditors w ithout valuation adjustment
Accrued interest
Of which:
In euros
In f oreign currency
30
30
30
19
10,931
7,600
300
3,023
8
150,231
34,137
27,411
80,734
7,364
(174)
759
26,569
2,939
531
14,786
8,118
155
40
187,731
186,924
807
177,266
10,465
14,489
5,881
87
8,511
10
154,816
31,698
24,296
92,312
5,552
70
888
18,708
2,470
457
8,432
7,289
26
34
188,013
187,081
932
178,804
9,209
The breakdown of this heading in the accompanying balance sheets, by type of instrument and geographical
area, disregarding valuation adjustments, is as follows:
2014
Customer Deposits
Spain
Rest of Europe
Mexico
South America
The United States
Rest of the world
Total
Dem and
Deposits
Savings
Deposits
Millions of Euros
Deposits
w ith Agreed
Maturity
Repos
Total
40,948
2,070
268
351
173
359
44,169
27,433
314
13
98
21
85
27,964
81,328
11,071
116
911
2,132
730
96,288
10,386
8,035
-
-
82
-
18,503
160,095
21,490
397
1,360
2,408
1,174
186,924
104
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
2013
Customer Deposits
Spain
Rest of Europe
Mexico
South America
The United States
Rest of the world
Total
Dem and
Deposits
Savings
Deposits
Millions of Euros
Deposits
w ith Agreed
Maturity
Repos
Total
35,898
1,431
151
583
149
256
38,468
24,315
269
18
84
17
69
24,772
94,044
6,377
143
905
465
554
102,488
14,064
7,289
-
-
-
-
21,353
168,321
15,366
312
1,572
631
879
187,081
19.3 Debt certificates (including bonds)
The breakdown of the balance under this heading in the accompanying balance sheets is as follows:
Debt Certificates
Promissory notes and bills
Bonds and debentures issued
Total
Millions of Euros
2014
2013
-
26,754
26,754
-
33,787
33,787
The total cost of the accrued interest under “Debt certificates (including bonds)” in 2014 and 2013 totaled
€1,154 million and €1,462 million, respectively (see Note 34.2).
As of December 31, 2014 and 2013 the accrued interest pending payment from promissory notes and bills and
bonds and debentures amounted to €643 million and €802 million, respectively.
The changes in 2014 and 2013 under the heading “Debt certificates (including bonds)” are described in Note
49.5.
105
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Bonds and debentures issued
The breakdown of the balance under this heading, by financial instrument and currency, is as follows:
Bonds and debentures issued
In euros -
Non-convertible bonds and debentures at floating interest rates
Non-convertible bonds and debentures at fixed interest rates
Covered bonds
Treas ury s tock
Accrued interest and others
In foreign currency -
Covered bonds
Other Non-convertible s ecurities at fixed interest rates
Treas ury s tock
Accrued interest and others
Total
Millions of Euros
2014
2013
26,197
8,841
812
24,523
(10,367)
2,388
557
122
822
(398)
11
26,754
33,264
10,067
4,457
34,836
(18,254)
2,158
523
132
724
(343)
10
33,787
The headings “Nonconvertible bonds and debentures at floating interest rate" and “Non-convertible bonds and
debentures at fixed rate” as of December 31, 2014 include several issues, the latest maturing in 2023.
The "Covered Bonds" account as of December 31, 2014 includes issues with various maturities, the latest in
2027.
19.4 Subordinated liabilities
The breakdown of this heading of the accompanying balance sheets, by type of financial instruments, is as
follows:
Subordinated Liabilities
Convertible
Convertib le perpetual securities
Non-convertible
Preferred Stock
Other sub ordinated liab ilities
Subordinated deposits
Subtotal
Valuation adjustments and other concepts (*)
Total
Millions of Euros
2014
2013
2,736
2,736
809
5
804
4,100
7,645
56
7,701
1,088
1,088
1,431
5
1,426
2,528
5,047
59
5,106
(*)
Accrued interest but pending payment, valuation adjustments and issuance costs included
This issues include issuances of subordinated debt and accordingly, for debt seniority purposes, they rank behind
ordinary debt, but ahead of the Bank’s shareholders, without prejudice to any different seniority that may exist
between the different types of subordinated debt instruments according to the terms and conditions of each
issue. The breakdown of this heading in the accompanying balance sheets, disregarding valuation adjustments,
by currency of issuance and interest rate is shown in Appendix VII.
106
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
From the previous table, the issues launched by BBVA International Limited, BBVA Capital Finance, S.A.U., BBVA
International Preferred, S.A.U., BBVA Subordinated Capital, S.A.U., BBVA Global Finance, Ltd., Caixa de Manlleu
Preferents, S.A. Unipersonal, Caixa Terrassa Societat de Participacions Preferents, S.A. Unipersonal and
CaixaSabadell Preferents, S.A. Unipersonal, are unconditionally and irrevocably secured by the Bank.
The variations of the balance under this heading are mainly the result of the following transactions:
• Perpetual securities eventually convertible.
During 2014 and 2013 respectively, BBVA issued perpetual securities eventually convertible into ordinary
shares of BBVA, (Additional level I capital instruments) without pre-emption rights, for a total amount of
€1,500 million and $1,500 million (€1,235 million as of December 31, 2014). Both issuances were targeted
only towards qualified foreign investors and in any case would not be made or subscribed in Spain or by
Spanish-resident investors. These securities are listed in the Singapore Exchange Securities Trading Limited.
These convertible perpetual securities are convertible into common shares if the trigger event occurs, that is,
if BBVA’s Common Equity Tier 1 capital ratio falls below 5.125%.
• Early expiration of subordinated debt
On September 23, 2014, BBVA announced the early expiration of the outstanding nominal amount of €633
million of the issue “Subordinated debt – October 04”. On October 20, 2014, after having obtained the
necessary approvals, BBVA completed the expiration.
19.5 Other financial liabilities
The breakdown of the balance under this heading in the accompanying balance sheets is as follows:
Other financial liabilities
Creditors for other financial liabilities
Collection accounts
Creditors for other payment obligations (*)
Dividend payable but pending payment
Total
Millions of Euros
2014
2013
3,295
1,873
1,191
-
6,359
2,737
1,850
1,220
-
5,807
(*)
As of December 31, 2014, includes €69 million corresponding to the remuneration to shareholders who choose to
be paid in cash through the "Dividend Option" paid on January 14, 2015.
The information required by Additional Provision third of Law 15/2010, of July 5, amending the Law 3/2004 of
December 29, through which measures for combating late payment are set, is as follows:
Payments made and peding payments
Millions of Euros
2014
BBVA SPAIN
Within the m aximum legal period (*)
Other
Total paym ents in the year
Exceeded weighted average period (in days)
Defered payments as of year close that exceed maximum legal period
1,571
144
1,715
39.4
-
(*)
It is considered on time payments made within 60 days, and not on time those which exceeds 60 days.
107
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
The data shown in the table above on payments to suppliers refer to those which by their nature are trade
creditors for the supply of goods and services, so data relating to "Other financial liabilities other liabilities -Trade
pay " is included in the balance.
The weighted average term exceeded (PMPE) payment is calculated as the quotient of the numerator by the sum
of the products of each supplier payments made during the year with a higher deferral to the respective legal
payment and number of days exceeded the respective deferral period, and the denominator by the total amount
of payments made during the year with a higher legal payment period.
The maximum legal fee applicable to the Company in 2014 according to Law 15/2010 of July 5, amending the
Law 3/2004 of December 29, on measures for the control of contractual payment in commercial transactions, it
is 60 days.
20. Provisions
The breakdown of the balance under this heading in the accompanying balance sheets, based on type of
provisions, is as follows:
Provisions.
Breakdown by concepts
Provisions for pensions and similar obligations
Provisions for taxes and other legal contingents
Provisions for contingent Risks and commitments
Other provisions
Total
Millions of Euros
2014
2013
5,267
-
238
652
6,157
4,878
-
221
683
5,782
108
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
The changes in 2014 and 2013 in the balances under this heading in the accompanying balance sheets are as
follows:
Provisions. Changes over the Period
Notes
Balance at the beginning
Add -
Increase charged to income
Interest and similar expenses
Personnel expenses
Provisions (net)
Increase charged to retained earnings (*)
Increases due to mergers
Other transfers
Other changes
Less -
Available allowances
Payments to early retirements
Credited to retained earnings
Derecognition of allowances
Other transfers
Other changes
Balance at the end
32.2
40
21
40
Millions of Euros
2014
Pensio n f und
and simi l ar
o b l ig at i o ns
( N o t e 2 1)
C o mmi t ment s
and co nt i ng ent
r i sks
p r o vi si o ns
T axes, o t her
l eg al
co nt i ng enci es
and o t her
p r o vi si o ns
4,878
221
683
865
86
3
776
-
-
-
204
(2)
(654)
-
(24)
-
-
5,267
17
-
-
17
-
-
-
-
-
-
-
-
-
-
238
90
4
1
85
-
-
-
73
(4)
-
-
(96)
(94)
-
652
(*)
Corresponds to actuarial losses (gains) arising from certain welfare benefits (see Note 2.9).
109
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Provisions. Changes over the Period
Notes
Balance at the beginning
Add -
Increas e charged to income
Interest and similar expenses
Personnel expenses
Provisions (net)
Increas e charged to retained earnings (*)
Increas es due to mergers
Other transfers
Other changes
Les s -
Available allowances
Payments to early retirements
Credited to retained earnings
Derecognition of allowances
Other transfers
Other changes
Balance at the end
32.2
40
21
40
Millions of Euros
2013
Pensi o n f und
and si mi l ar
o b l ig at i o ns
( N o t e 2 1)
C o mmi t ment s
and co nt i ng ent
r i sks
p r o vi si o ns
T axes, o t her
l eg al
co nt i ng enci es
and o t her
p r o vi sio ns
4,998
176
1,522
430
91
3
336
3
66
72
-
(8)
(604)
-
(22)
-
(57)
4,878
37
-
-
37
-
10
-
-
-
-
-
-
-
(2)
221
360
-
1
359
712
501
-
-
(15)
-
-
(175)
(2,217)
(5)
683
(*)
Corresponds to actuarial losses (gains) arising from certain welfare benefits (see Note 2.9).
Ongoing legal proceedings and litigation
The Bank is party to certain legal actions in a number of jurisdictions, including, among others, Spain, Mexico and
the United States, arising in the ordinary course of business. According to the procedural status of these
proceedings and the criteria of the legal counsel, BBVA considers that none of such actions is material,
individually or as a whole, and with no significant impact on the operating results, liquidity or financial situation of
the Bank to arise. The Bank´s Management believes that adequate provisions have been made in respect of such
legal proceedings and considers that the possible contingencies that may arise from such on-going lawsuits are
not significant enough to require disclosure to the markets.
21. Pensions and other post-employment commitments
The Bank has defined Employee Welfare Systems that include both defined-benefit and defined-contribution post-
employment commitments with its employees; the proportion of the latter benefits is gradually increasing, mainly
due to new hires and because pre-existing defined-benefit commitments have been mostly closed.
The main Employee Welfare System has been implemented in Spain. Under the collective labor agreement,
Spanish banks are required to supplement the social security benefits received by employees or their beneficiary
right-holders in the event of retirement (except for those hired after March 8, 1980), permanent disability, death
of spouse or death of parent.
The employee welfare system in place at the Bank superseded and improved the terms and conditions of the
collective labor agreement for the banking industry; the commitments envisaged in the event of retirement,
death and disability cover all employees, including those hired after March 8, 1980. The Bank outsourced all its
commitments to serving and retired employees pursuant to Royal Decree 1588/1999, of October 15. These
commitments are instrumented in external pension plans, insurance contracts with a non-Group company and
insurance contracts with BBVA Seguros, S.A. de Seguros y Reaseguros, which is 99.95% owned by the Banco
Bilbao Vizcaya Argentaria Group.
110
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
As stated in Note 2.9, the Bank has both defined-benefit and defined-contribution post-employment commitments
with employees; the latter are gradually increasing mainly because it is the scheme being applied to new hires
and because pre-existing defined-benefit commitments have been mostly closed.
21.1 Defined-contribution commitments
The defined-contribution commitments are settled through contributions made by the Bank annually on behalf of
the beneficiaries, who are, almost exclusively, active employees in the Bank. These contributions are accrued and
charged to the income statement in the corresponding financial year (see Note 2.9). No liability is therefore
recognized in the accompanying balance sheets for this purpose.
The amounts registered in the accompanying income statements for contributions to these plans in 2014 and
2013 are €28 million and €30 million, respectively.
21.2 Defined-benefit plans and other long-term commitments
Pension commitments in defined-benefit plans correspond mainly to employees who have retired or taken early
retirement from the Bank and to certain groups of employees still active in the case of pension benefits, and to
most active employees in the case of permanent disability and death benefits. For the latter, BBVA pays the
required premiums for full underwriting.
A breakdown of the Bank’s total amounts for pension commitments in defined-benefit plans and other post-
employment commitments (such as early retirement and welfare benefits) for the last five years can be found in
the table below. The commitments are recognized under the heading "Provisions – Provisions for pensions and
similar obligations" of the corresponding accompanying balance sheets (see Note 20).
Commitments in Defined-Benefit Plans and Other
Post-Employment Commitments
Pension and post-employment benefits
Assets and insurance contracts coverage
Total net liabilities (*)
Millions of Euros
2014
2013
2012
2011
2010
5,747
480
5,267
5,335
457
4,878
5,464
466
4,998
5,414
448
4,966
5,657
480
5,177
This information is presented in greater detail in the table below for 2014 and 2013, broken down by
beneficiaries from the Bank's companies in Spain and from the branches abroad:
Pensions and Early-Retirement Commitments and Welfare
Benefits: Spain and Abroad
2014
2013
2014
2013
2014
2013
Com m itm ents in Spain
Millions of Euros
Com m itm ents Abroad
Total
Post-employment benefits
Post-employment benefits
Early retirement
Post-employment welfare benefits
Total post-employment benefits (1)
Insurance contracts coverage
Post-employment benefits
Other plan assets
Post-employment benefits
Post-employment welfare benefits
Total plan assets and insurance contracts coverage (2)
Net commitments (1) - (2)
of which:
With contracts to related companies
2,570
2,803
241
5,614
2,372
2,634
220
5,226
381
383
-
-
381
5,233
-
-
383
4,843
2,189
1,989
133
-
-
133
-
99
99
34
-
109
-
-
109
-
74
-
74
35
-
2,703
2,803
241
5,747
2,481
2,634
220
5,335
381
383
99
-
480
5,267
74
-
457
4,878
2,189
1,989
The balance under the heading “Provisions - Provisions for pensions and similar obligations” of the accompanying
balance sheet as of December 31, 2014 includes €280 million for commitments for post-employment benefits
maintained with previous members of the Board of Directors and the Bank’s Management Committee. .
111
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
In addition to the aforementioned commitments to employees, the Bank has other less relevant commitments.
These include long-service awards granted to certain groups of employees when they complete a given number
of years of effective service. The Bank has offered these employees the option of an early payment of their
awards. As of December 31, 2014 and 2013, the actuarial liabilities for outstanding awards amounted to €9 and
€11 million, respectively. The above commitments are recognized under the heading "Other provisions" of the
accompanying balance sheets (see Note 20).
21.2.1
Commitments in Spain
The most significant actuarial assumptions used as of December 31, 2014 and 2013 to quantify these
commitments with employees in Spain are as follows:
Actuarial Assumptions
Commitments with employees in Spain
2014
2013
Mortality tables
PERM/F 2000P.
PERM/F 2000P.
Discount rate (cum ulative annual)
Salary growth rate (cumulative annual)
2.25%
At least 2%
3.5%
At least 3%
Retirement age
First date at w hich the employees are entitled to retire or
contractually agreed at the individual level in the case of
early retirements
(*)
The interest rate used to discount the commitments has been determined by reference to high-quality corporate
bonds (Note 2.9).
Changes in the main assumptions can affect the calculation of the commitments. Should the discount interest
rate have increased or decreased by 50 basis points, an impact on equity for the commitments in Spain would
have been registered for approximately €35 million net of tax.
The breakdown of the various commitments to employees in Spain is as follows:
Pension commitments in Spain
Pension commitments in defined-benefit plans correspond mainly to employees who have retired or taken early
retirement from the Bank and to certain groups of employees still active in the Bank in the case of pension
benefits, and to the majority of active employees in the case of permanent incapacity and death benefits. These
commitments are hedged through insurance contracts and internal funds.
The breakdown of pension commitments in defined-benefit plans as of December 31, 2014 and 2013 is as
follows:
Pension commitments in defined-benefits plans
Pension commitments to retired employees
Vested contingencies in respect of current employees
Total
Hedging at the end of the year
With insurances contracts to related companies
With insurances contracts to non-related companies
Total
112
Millions of Euros
2014
2013
2,403
167
2,570
2,189
381
2,570
2,210
162
2,372
1,989
383
2,372
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Insurance contracts have been arranged with insurance companies not related to the Bank to cover some
pension commitments in Spain. These commitments are funded by plan assets and therefore are presented in
the accompanying balance sheets for the net amount of the commitment less plan assets. As of December 31,
2014 and 2013, the plan assets related to the aforementioned insurance contracts equaled the amount of the
commitments covered; therefore, no amount for this item is included in the accompanying balance sheets.
The rest of the pension commitments in Spain include defined-benefit commitments for which insurance has
been contracted with BBVA Seguros, S.A. de Seguros y Reaseguros, an insurance company that is 99.95%
owned by the Bank. These commitments are recognized under the heading "Provisions - Provisions for pensions
and similar obligations" of the accompanying balance sheets (Note 20) and the insurance contract assets are
recognized under the heading “Insurance contracts linked to pensions”.
Insurance contracts with insurance companies not linked to the Group and included in the above table reflect the
amount of insurance contract coverage in these contracts. As of December 31, 2014 and 2013, the amount of
the plan assets to the aforementioned insurance contracts equaled the amount of the commitments covered.
The current contributions made by the Bank in relation to defined-benefit retirement commitments are recorded
with a charge to the “Personnel Expenses – Contributions to external pension funds” account of the
accompanying income statement and amounted to €13 million and €17 million in 2014 and 2013, respectively.
Early retirement in Spain
In 2014 and 2013, the Bank offered certain employees the possibility of taking early retirement before the age
stipulated in the collective labor agreement in force. This offer was accepted by 1,706 employees (1,055 in
2013).
The commitments to early retirees include the compensation and indemnities and contributions to external
pension funds payable during the period of early retirement. The commitments relating to this group of
employees after they have reached the age of effective retirement are included in the employee welfare system.
The early retirement commitments in Spain as of December 31, 2014 and 2013 are recognized under the
heading “Provisions – Provisions for pensions and similar obligations” (Note 20) in the accompanying balance
sheets for the amount of €2,803 million and €2,634 million, respectively.
The cost of early retirement for the year is recognized under the heading “Provision expense (Net) – Transfers to
pension funds and similar obligations” in the accompanying income statements (see Note 40).
The changes in 2014 and 2013 in the present value of the vested obligations for commitments to early retirees
in Spain are as follows:
Early retirements commitments
Changes in the year
Current actuarial value at the begining of the year
+ Contributions from merger trans actions
+ Interes t costs
+ Early retirements in the period
- Payments and settelments
+/- Other changes
+/- Remeasurements :
Due to changes in demographic ass umptions
Due to changes in financial ass umptions
Other actuarial gain and los ses
Current actuarial value at the end of the year
Heading at the end of the year
In internal funds (*)
Millions of Euros
2014
2013
2,634
-
76
681
(654)
(10)
76
-
68
8
2,803
2,803
2,721
37
82
336
(604)
69
(7)
-
-
-
2,634
2,634
(*)
This funds are recognized under the heading “Provisions-Provisions for pension and similar obligation” in the
accompanying consolidated balance sheets
113
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Post-employment welfare benefits in Spain
The Bank signed a Social Benefit Standardization Agreement for its employees in Spain. The agreement
standardizes the existing welfare benefits for the different groups of employees and, in some cases when a
service is provided, quantifies it as an annual amount in cash. These welfare benefits include post-employment
welfare benefits and other commitments with employees.
The details of these commitments as of December 31, 2014 and 2013 are as follows:
Post-employment Welfare Benefits Commitments
2014
2013
Commitments to employees
Vested contingencies in respect of current employees
Total
Heaging at the end of the year
In internal funds (*)
176
65
241
241
158
62
220
220
Millions of Euros
(*)
This funds are recognized under the heading “Provisions-Provisions for pension and similar obligation” in the
accompanying consolidated balance sheets
The changes in 2014 and 2013 in the present value of the vested obligation for post-employment welfare benefit
commitments are as follows:
Post-employment Welfare Benefits Commitments
Changes in the year
Balance at the beginning
+ Contributions from merger transactions
+ Interest costs
+Current service cost
- Payments and settelments
+/- Past service cost
+/- Other changes
+/- Remeasurements:
Due to changes in demographic assumptions
Due to changes in financial assumptions
Other actuarial gain and losses
Balance at the end
Millions of Euros
2014
2013
220
-
8
3
(18)
-
11
17
-
19
(2)
241
219
3
8
3
(17)
-
5
(1)
-
-
(1)
220
Long-service awards
In addition to the aforementioned post-employment welfare benefits, the Bank maintained certain commitments
in Spain with some employees, called "Long-service awards". These commitments are for payment of a certain
amount in cash and for the allocation of Banco Bilbao Vizcaya Argentaria S.A. shares, when these employees
complete a given number of years of effective service.
The aforementioned Benefit Standardization Agreement established that the long-service awards terminated as of
December 31, 2007. Employees meeting the seniority conditions established are entitled to receive only the
value of the commitment accrued to December 31, 2007.
114
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
The following is the breakdown of the commitments recognized as of December 31, 2014 and 2013 under
these headings:
Long-Service Awards
Long-service awards (in Cash)
Long-service awards (in Shares )
Total
Other commitments with employees
Millions of Euros
2014
2013
7
2
9
9
2
11
Other benefits for active employees are earned and settled annually, not being necessary to provision them. The
total cost of these employee welfare benefits as of December 31, 2014, amounts to €48 million and is
recognized with a charge to "Personnel expenses - Other personnel expenses" in the accompanying income
statements (Note 38.1) (€49 million in 2013).
Estimated future payments for commitments with the Bank's employees
The estimated benefit payments in millions of euros over the next 10 years for commitments with employees in
Spain are as follows:
Estimated Future Payments for Post-
Employment Commitments in Spain
Post-employment benefits
Of w hich:
Early retirements
2015
2016
2017
2018
2019
2020-2024
824
632
742
553
663
474
577
391
496
314
1,447
603
Millions of Euros
21.2.2
Commitments abroad
Part of the Bank’s foreign network has post-employment defined-benefit commitments to certain current and/or
retired employees. Those commitments are not available for new employees. The most relevant data relating to
these commitments are as follows:
Defined-benefit commitments
The accrued liability for defined-benefit commitments to current and/or retired employees, net, where
appropriate, of the specific assets assigned to fund them, amounted to €34 million and €35 million as of 31
December 2014 and 2013, respectively, and is included under "Provisions – Provisions for Pensions and Similar
Obligations" in the accompanying balance sheets.
The present values of the vested obligations of the foreign network are quantified based on an individual member
data, and the projected unit credit valuation method is used for current employees. As a general rule, the
actuarial assumptions used are as follows: the discount rate have been determined by reference to high quality
corporate bonds of the appropriate currency; the mortality tables are those applicable in each local market when
an insurance contract is arranged; and the inflation and salary growth rates are those applicable in each local
market.
115
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
The changes in 2014 and 2013 in the foreign network as a whole, in the balances of "Provisions – Pension funds
and similar obligations", net of the plan assets, are as follows:
Net Commitments in Branches Abroad
Changes in the year
Balance at the beginning
+ Interest costs
+ Current service cost
- Payments and s ettelments
+/- Past service cost
+/- Other changes
+/- Remeasurements:
Due to changes in demographic assumptions
Due to changes in financial assumptions
Other actuarial gain and los ses
+/- Exchange differences
Balance at the end
Millions of Euros
2014
2013
35
2
-
(6)
1
-
-
-
-
-
2
34
36
1
-
(5)
-
1
3
-
-
-
(1)
35
The contributions to defined-contribution plans and pension commitments through defined-benefit plans in the
foreign network recognized under the heading “Personnel expenses” in the accompanying income statements
amounted to €5 million each year.
21.2.3
Summary of the entries in the income statement and equity
The net charges in the income statements for 2014 and 2013 for all commitments to post-employment
remuneration and benefits, both in Spain and the branches abroad, are summarized below:
Post-employments Benefits (Spain+Branches Abroad)
Income Statements and Equity Effects.
Interest and similar expenses
Interes t cost of pens ion funds
Personnel expenses
Contributions and provisions to pensions funds
Welfare benefits
Provision (net)
Provisions to fund for pension and similar obligations
Pension funds
Early retirements
Welfare benefits
Total Effects in Income Statements
Total Effects in Retained Earning: Credit (Debit) (*)
Millions of Euros
Notes
2014
2013
32.2
38.1
86
46
3
76
681
17
909
-
91
52
3
(7)
336
(1)
474
3
(*)
Correspond to actuarial losses (gains) arising from pension commitments and certain welfare benefits recognized in
“Valuation Adjustments”. For early retirements are recognized in the Income Statements (see Note 2.9.).
116
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
22. Common stock
As of December 31, 2014, BBVA’s share capital amounted to €3,050,212,729.62 divided into 6.224.923.938
fully subscribed and paid-up registered shares, all of the same class and series, at €0.49 par value each,
represented through book-entry accounts. All of the Bank shares carry the same voting and dividend rights, and
no single stockholder enjoys special voting rights. There are no shares that do not represent an interest in the
Bank’s common stock.
The Bank’s shares are traded on the on the Spanish stock market, as well as on the London and Mexico stock
markets. BBVA American Depositary Shares (ADSs) traded on the New York Stock Exchange are also traded on
the Lima Stock Exchange (Peru), under an exchange agreement between these two markets.
Also, as of December 31, 2014, the shares of BBVA Banco Continental, S.A., Banco Provincial, S.A., BBVA
Colombia, S.A., BBVA Chile, S.A. and BBVA Banco Francés, S.A. are listed on their respective local stock markets.
BBVA Banco Francés, S.A. is also listed on the Latin American market of the Madrid Stock Exchange and on the
New York Stock Exchange
As of December 31, 2014, State Street Bank and Trust Co., The Bank of New York Mellon SA NV and Chase
Nominees Ltd in their capacity as international custodian/depositary banks, held 11.65%, 7.46%, and 5.84% of
BBVA common stock, respectively. Of said positions held by the custodian banks, BBVA is not aware of any
individual shareholders with direct or indirect holdings greater than or equal to 3% of BBVA common stock.
On February 4, 2010, Blackrock, Inc. reported to the Spanish Securities and Exchange Commission (CNMV) that,
as a result of the acquisition (on December 1, 2009) of the Barclays Global Investors (BGI) company, it had an
indirect holding of BBVA common stock totaling 4.453% through the Blackrock Investment Management
Company.
BBVA is not aware of any direct or indirect interests through which control of the Bank may be exercised. BBVA
has not received any information on stockholder agreements including the regulation of the exercise of voting
rights at its annual general meetings or restricting or placing conditions on the free transferability of BBVA shares.
No agreement is known that could give rise to changes in the control of the Bank.
The changes in the heading “Common Stock” of the accompanying balance sheets are due to the following
common stock increases:
Capital Increase
As of December 31, 2013
Dividend option - April 2014
Dividend option - October 2014
Capital increas e - November 2014
As of December 31, 2014
Number of
Shares
5,785,954,443
101,214,267
41,746,041
242,424,244
6,171,338,995
Common Stock
(Millions of
Euros )
2,835
50
20
119
3,024
Year 2014
“Dividend Option” Program:
The AGM held on March 14, 2014 under Point Four of the Agenda, resolved to perform four common stock
increases, charged to voluntary reserves, to once again implement the program called the “Dividend Option” (see
Note 4), delegando en el Consejo de Administración, de conformidad con, pursuant to article 297.1 a) of the
Corporations Act, to indicate the date on which said common stock increases should be carried out, within one
year of the date on which the agreements are made.
On March 26, 2014, the Board of Directors of BBVA approved the execution of the first of the capital increases
charged to reserves agreed by the aforementioned AGM. As a result of this increase, the Bank’s common stock
increased by €49,594,990.83 through the issue and circulation of 101,214,267shares with a €0.49 par value
each.
117
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Likewise, on September 24, 2014, Board of Directors of BBVA approved the execution of the second of the
capital increases charged to reserves agreed by the aforementioned AGM of March 14, 2014. As a result of this
increase, the Bank’s common stock increased by €20,455,560.09 through the issue and circulation of
41,746,041 ordinary shares with a €0.49 par value each (see Note 4).
Similarly, on December 17, 2014, Board of Directors of BBVA approved the execution of the third of the capital
increases charged to reserves agreed by the aforementioned AGM. As of January 15, 2015, the Bank’s common
stock increased by €26,256,622.07 through the issue and circulation of 53,584,943 ordinary shares with a
€0.49 par value each, of the same class and series as the shares currently in circulation, without issuance
premium and represented by book entries. As a result of this increase, the Bank’s common stock reached
€3,050,212,729.62 divided into 6,224,923,938 registered shares, all of the same class and series, at €0.49
par value each, represented through book-entry accounts.
Capital increase
On November 19, 2014, the Board of Directors of BBVA, exercising the authority delegated by the AGM held on
March 16, 2012 under point Three of its Agenda, decided to carry out a capital increase though an accelerated
bookbuilt offering.
On November 20, 2014, the capital increase finished with a total par value of €118,787,879.56 through the
issue of 242,424,244 shares of BBVA, each with a par value of forty-nine euro cents (€0.49), of the same class
and series as the shares currently in circulation and represented by book entries. The subscription price of these
new shares was determined to be €8.25 per share. Therefore, the total effective amount of the Capital Increase
was of €2,000,000,013 corresponding €118,787,879.56 euros to par value and €1,881,212,133.44 euros to
share premium (see Note 26).
Year 2013
“Dividend Option” Program
The AGM held on March 15, 2013, under Point Four of the Agenda, resolved to perform two common stock
increases, charged to voluntary reserves, to once again implement the program called the “Dividend Option” (see
Note 3). This confers authority on the Board of Directors, pursuant to article 297.1 a) of the Corporations Act, to
indicate the date on which said common stock increases should be carried out, within one year of the date on
which the agreements are made.
On April 3, 2013, the Executive Committee approved the execution of the first of the capital increases charged to
reserves agreed by the aforementioned AGM. As a result of this increase, the Bank’s common stock increased by
€40,862,919.86 through the issue and circulation of 83,393,714 shares with a €0.49 par value each. Likewise,
on September 25, 2013, the Executive Committee approved the execution of the second of the capital increases
charged to reserves agreed by the aforementioned AGM on March 15, 2013. As a result of this increase, the
Bank’s common stock increased by €30,197,696.48 through the issue and circulation of 61,627,952 shares
with a €0.49 par value each.
Convertible Bonds-December 2011
On December 31, 2014, the maturity date of the issue, there was a mandatory conversion of the outstanding
Convertible Bonds as of that date. An increase in the Bank’s common stock was carried out to satisfy the shares
to be issued upon conversion by the issue and distribution of 192,083,232 ordinary shares at a par value of
€0.49 each, amounting to a total of €94,120,783.68, with the share premium being €1,143,279,396.8640
(see Note 23).
Other resolutions of the General Shareholders Meeting on the issue of shares and other securities
Common stock increases
The Bank’s AGM held on March 14, 2014 agreed, in point Four of the Agenda, section 4.4, a common stock
increase charge to reserves through the issue and circulation of new ordinary shares with a €0.49 par value
each, withouth issuance premium, which as of December 31, 2014 was not executed. This agreement is valid
until March 13, 2015.
118
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
The Bank’s AGM held on March 16, 2012 agreed, in Point Three of the Agenda, to confer authority on the Board
of Directors to increase common stock in accordance with Article 297.1.b) of the Corporations Act, on one or
several occasions, within the legal deadline of five years from the date the resolution takes effect, up to the
maximum nominal amount of 50% of the subscribed and paid-up common stock on the date on which the
resolution is adopted. Likewise, an agreement was made to enable the Board of Directors to exclude the
preemptive subscription right on those common stock increases in line with the terms of Article 506 of the
Corporations Act. This authority is limited to 20% of the common stock of the Bank on the date the agreement is
adopted.
Convertible and/or exchangeable securities
At the AGM held on March 16, 2012, the shareholders resolved, in Point Five of the Agenda, to delegate to the
Board of Directors for a five-year period the right to issue bonds, convertible and/or exchangeable into BBVA
shares, for a maximum total of €12,000 million. The powers include the right to establish the different aspects
and conditions of each issue; to exclude the pre-emptive subscription right of shareholders in accordance with
the Corporations Act; to determine the basis and methods of conversion and/or exchange; and to increase the
Bank’s common stock as required to address the conversion commitments.
Other securities
The Bank’s AGM held on March 11, 2011, in Point Six of the agenda, agreed to delegate to the Board of
Directors, the authority to issue, within the five-year maximum period stipulated by law, on one or several
occasions, directly or through subsidiaries, with the full guarantee of the Bank, any type of debt instruments,
documented in obligations, bonds of any kind, promissory notes, all type of covered bonds, warrants, mortgage
participation, mortgage transfers certificates and preferred securities (that are totally or partially exchangeable for
shares already issued by the company itself or by another company, in the market or which can be settled in
cash), or any other fixed-income securities, in euros or any other currency, that can be subscribed in cash or in
kind, registered or bearer, unsecured or secured by any kind of collateral, including a mortgage guarantee, with
or without incorporation of rights to the securities (warrants), subordinate or otherwise, for a limited or indefinite
period of time, up to a maximum nominal amount of €250 billion.
23. Share premium
The changes in the balances under this heading in the accompanying balance sheets are due to the common
stock increases carried out in 2014 and 2013 (see Note 22), as set out below:
Capital Increase
As of December 31, 2012
Convertible bonds conversion - July 2013
As of December 31, 2013
Capital increase - Novem ber 2014
As of December 31, 2014
M illions of Euros
Share premium
20,968
1,143
22,111
1,881
23,992
The amended Spanish Corporation Act expressly permits the use of the share premium balance to increase
capital and establishes no specific restrictions as to its use.
119
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
24. Reserves
The breakdown of the balance under this heading in the accompanying balance sheets is as follows:
Reserves. Breakdown by concepts
Restricted reserves:
Legal reserve
Res tricted reserve for retired capital
Revaluation Royal Decree-Law 7/1996
Voluntary reserves:
Voluntary and others
Total
24.1 Legal reserve
Millions of Euros
2014
2013
567
268
23
6,784
7,642
534
296
26
6,388
7,244
Under the amended Corporations Act, 10% of any profit made each year must be transferred to the legal
reserve. These provisions must be made until the legal reserve reaches 20% of the share capital. The legal
reserve can be used to increase the common stock provided that the remaining reserve balance does not fall
below 10% of the increased capital. While it does not exceed 20% of the common stock, it can only be allocated
to offset losses exclusively in the case that there are not sufficient reserves available.
24.2 Restricted reserves
As of December 31, 2014 and 2013, the Bank’s restricted reserves are as follows:
Restricted Reserves
Restricted reserve for retired capital
Restricted reserve for Parent Company shares and loans for
those shares
Restricted reserve for redenomination of capital in euros
Total
Millions of Euros
2014
2013
88
178
2
268
88
206
2
296
The restricted reserve for retired capital originated in the reduction of the nominal par value of the BBVA shares
made in April 2000.
The most significant heading corresponds to restricted reserves related to the amount of shares issued by the
Bank in its possession at each date, as well as the amount of customer loans outstanding on those dates that
were granted for the purchase of, or are secured by, the Bank’s shares.
Finally, pursuant to Law 46/1998 on the Introduction of the Euro, a restricted reserve is recognized as a result of
the rounding effect of the redenomination of the Bank’s common stock in euros.
24.3 Revaluation and regularizations of the balance sheet
Prior to the merger, Banco de Bilbao, S.A. and Banco de Vizcaya, S.A. availed themselves of the legal provisions
applicable to the regularization and revaluation of balance sheets. Thus, on December 31, 1996, Banco Bilbao
Vizcaya, S.A. revalued its tangible assets pursuant to Royal Decree-Law 7/1996 of June 7 by applying the
maximum coefficients authorized, up to the limit of the market value arising from the existing valuations. As a
result of these updates, the increases in the cost and depreciation of tangible fixed assets were calculated and
allocated as follows.
120
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Following the review of the balance of the “Revaluation reserve pursuant to Royal Decree-Law 7/1996 of June 7"
account by the tax authorities in 2000, this balance could only be used, free of tax, to offset recognized losses
and to increase share capital until January 1, 2007. From that date, the remaining balance of this account can
also be allocated to unrestricted reserves, provided that the surplus has been depreciated or the revalued assets
have been transferred or derecognized.
The breakdown of the calculation and movement to voluntary reserves under this heading are:
Revaluation and Regularization of the Balance Sheet
2014
2013
Millions of Euros
Legal revaluations and regularizations of tangible assets:
Cost
Less:
Single revaluation tax (3%)
Balance as of December 31, 1999
Rectification as a result of review by the tax authorities in 2000
Transfer to voluntary reserves
Total
187
(6)
181
(5)
(153)
23
187
(6)
181
(5)
(150)
26
25. Treasury stock
In 2014 and 2013 the Group companies performed the following transactions with shares issued by the Bank:
Treasury Stock
Balance at beginning
+ Purchases
- Sales and other changes
+/- Derivatives over BBVA shares
+/- Other changes
Balance at the end
Of w hich:
Held by BBVA
Held by Corporación General Financiera, S.A.
Held by other subsidiaries
Average purchase price in euros
Average selling price in euros
Net gain or losses on transactions
(Stockholders' funds-Reserves)
2014
2013
Number of
Shares
6,876,770
425,390,265
(390,756,337)
-
-
41,510,698
5,001,897
36,480,861
27,940
8.86
8.94
Millions of
Euros
66
3,770
(3,484)
(1)
-
350
46
304
-
-
-
5
Number of
Shares
15,462,936
488,985,513
(497,571,679)
-
-
6,876,770
1,357,669
5,491,697
27,404
7.39
7.44
Millions of
Euros
111
3,614
(3,658)
(1)
-
66
20
46
-
30
The percentages of treasury stock held by the Group in 2014 and 2013 are as follows:
Treasury Stock
% treasury stock
2014
2013
Min
Max
Min
Max
0.000%
0.699%
0.000%
0.718%
121
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
The number of BBVA shares accepted by the Bank in pledge as of December 31, 2014 and 2013 is as follows:
Shares of BBVA Accepted in Pledge
2014
2013
Number of shares in pledge
Nominal value
% of share capital
97,795,984
0,49
1.58%
111,627,466
0.49
1.93%
The number of BBVA shares owned by third parties but managed by a company in the Group as of December
31, 2014 and 2013 is as follows:
Shares of BBVA Owned by Third Parties but Managed
by the Group
Number of shares property of third parties
Nominal value
% of share capital
2014
2013
101,425,692
0.49
1.64%
101,184,985
0.49
1.75%
26. Valuation adjustments
The breakdown of the balance under this heading in the accompanying balance sheets is as follows:
Valuation Adjustments
Available-for-sale financial assets
Cash flow hedging
Hedging of net investments in foreign transactions
Exchange differences
Non-current assets held for sale
Other valuation adjustments
Total
Millions of Euros
2014
2013
1,781
(82)
-
12
-
(20)
1,691
(52)
(45)
-
1
-
(20)
(116)
The balances recognized under these headings are presented net of tax.
122
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
27. Capital base and capital management
Capital base
Up to December 31, 2013, Bank of Spain Circular 3/2008 of May 22 on determination and control of minimum
capital base, regulated capital requirements for Spanish financial institutions, both individual and consolidated
entities.
On June 27, 2013 the European Union Official Bulletin published a new regulation on capital requirements
(CRDIV) that came into effect on January 1, 2014 and made up of:
• Directive 2013/36/UE, of June 26 of the European Parliament on access to credit institution and investment
firm activities and on prudential supervision credit institutions and investment firms. This regulation modifies
Directive 2002/87/CE and revokes directives 2006/48/CE and 2006/49/CE; and
• Regulation (UE) Nº UE 575/2013 (CRR) of June 26 of the European Parliament on prudential requirements
on credit institutions and investment firms. This regulation modifies regulation (UE) Nº 648/2012
These directives require the adoption by a national law while the regulation is effective directly.
In Spain, Royal Decree Law 14/2013 of November 29, on urgent measures to adapt Spanish Law to the
European Union regulation on supervision and solvency of financial institutions, partially adapted the European
regulation (Directive 2013/36/UE) to Spanish Law and allowed Bank of Spain, through its fifth clause, to exercise
the use of options available to domestic regulating authorities in regulation UE 575/2013.
This regulation came into effect on January 1, 2014. From this date on, any clauses from the previous regulation
(Circular 3/2008 of Bank of Spain) that oppose the new European regulation were revoked. Additionally, on
February 5, 2014, Bank of Spain Circular 2/2014 of January 31 was published so that, in accordance with
Regulation Nº 575/2013 that grants domestic authorities certain capacities, Bank of Spain could make use of
some of the permanent regulatory options of said regulation.
Also, Law 10/2014, of June 26, of organization, supervision and solvency of credit institutions, has continued
with the adaptation of CRD-IV to the legal Spanish regulatory framework.
All of the above represents the current regulation on minimum capital base requirements for Spanish credit
institutions –both as individual entities and as consolidated groups– and how to calculate them, as well as the
various internal capital adequacy assessment processes they should have in place and the information they
should disclose to the market.
The minimum capital base requirements established by the current regulation are calculated according to the
Group’s exposure to credit and dilution risk, counterparty and liquidity risk relating to the trading portfolio,
exchange-rate risk and operational risk. In addition, the Group must fulfill the risk concentration limits established
in said regulation and the internal Corporate Governance obligations.
The Group’s bank capital in accordance with the aforementioned applicable regulation, considering entities scope
required by the above regulation, as of December 31, 2014 and 2013 is shown below: (please note that the
information for the latter period has been adapted to the new presentation format for comparison purposes):
123
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Capital Base
Common Equity Tier 1 Capital
Common Stock
Parent company reserves
Reserves in consolidated companies
Non-controlling interests
Perpetual securities eventually convertible
Deductions (Goodwill and others)
Attributed net income (less dividends)
Aditional Tier 1 Capital
Capital instruments elegible as AT1 Capital
Deductions and others
Tier 1 Capital
Tier 2 Capital
Other deductions
Own Funds
Minimum equity required
(*)
Provisional data
Millions of Euros
2014
(*)
2013
41,937
3,024
42,406
(1,204)
1,992
(6,152)
1,871
-
4,205
(4,205)
41,937
11,046
52,983
28,047
35,825
2,835
41,371
(3,380)
2,069
(8,534)
1,464
2,119
2,905
(786)
37,944
4,515
(786)
41,673
25,871
The comparison of the amounts as of December 31, 2014 with respect to the amounts as of December 31,
2013 is affected by the differences between the existing regulations on both periods.
Changes during the year 2014 in the amount of Tier 1 capital in the table above are mainly due to the
accumulated profit net dividends until December, the capital increase mentioned in Note 25 and also reissuing
contingent convertible perpetual securities (see Note 19.4). This increase was partially offset by new deductions
that entered into force on January 1, 2014 mainly equity adjustment for prudent valuation, certain indirect or
synthetic positions of treasury shares, interests in significant financial institutions, deferred tax assets and the
lowest computability of certain elements (minority interests, preferred shares).
The Tier 2 capital increase is mainly due to movements in other subordinated liabilities (see Note 21.4).
With regard to minimum capital requirements, the increase is mainly due to the different criteria applied with
regard to computing requirements according to CRR (new requirements such as adjustments for Credit Valuation
Adjustment (CVA) for deferred tax assets or significant stakes in financial institutions in the amount not deducted,
etc.) and increased activity in the Group's units, mainly outside Europe.
The comparison of the amounts as of December 31, 2014 with respect to the amounts as of December 31,
2013 is affected by the differences between the existing regulations on both periods.
Capital Base
Core Capital
Basic equity
Additional equity
Total Equity
Minimum equity required
(*)
Provisional data
124
Millions of Euros
2014
(*)
34,035
37,436
3,308
40,744
15,826
2013
31,410
34,183
2,562
36,745
19,724
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Las variaciones producidas en el ejercicio 2014 en los importes de recursos propios mínimos del cuadro anterior
vienen dadas, básicamente, por la reducción de Activos Ponderados por Riesgos (APRs) debida esencialmente a
la adaptación al criterio CRR del tratamiento del riesgo de crédito de la cartera de instrumentos de capital.
Capital management
Capital management in the BBVA Group has a twofold aim:
• Maintain a level of capitalization according to the business objectives in all countries in which it operates and,
simultaneously.
• Maximize the return on shareholders’ funds through the efficient allocation of capital to the different units, a
good management of the balance sheet and appropriate use of the various instruments forming the basis of
the Group's equity: shares, preferred securities and subordinated debt.
This capital management is carried out in accordance with the criteria of the Bank of Spain Circular 3/2008 and
subsequent amendments both in terms of determining the capital base and the solvency ratios. Prudential and
minimum capital requirements also have to be met for the subsidiaries subject to prudential supervision in other
countries.
The current regulation allows each entity to apply its own internal ratings-based (IRB) approach to risk assessment
and capital management, subject to Bank of Spain approval. The BBVA Group carries out an integrated
management of these risks in accordance with its internal policies (see Note 5) and its internal capital estimation
model has received the Bank of Spain's approval for certain portfolios.
28. Contingent risks and commitments
The breakdown of the balance under these headings in the accompanying balance sheets is as follows:
Financial Guarantees and Drawable by Third Parties
2014
2013
Millions of Euros
Contingent Risks
Collateral, bank guarantees and indemnities
Rediscounts, endors ements and acceptances
Res t
Total Contingent Risks
Contingent Commitments
Drawable by third parties
Credit institutions
Government and other government agency
Other resident sectors
Non-resident sector
Other commitments
Total Contingent Commitments
26,058
1,236
17,843
45,137
44,306
1,057
1,359
21,054
20,837
9,662
53,968
27,718
1,194
19,049
47,961
47,009
1,583
4,354
23,443
17,629
6,403
53,412
Total contingent Risks and Commitments
99,105
101,373
Since a significant portion of the amounts above will reach maturity without any payment obligation materializing
for the companies, the aggregate balance of these commitments cannot be considered as an actual future
requirement for financing or liquidity to be provided by the Bank to third parties.
In 2014 and 2013 no issuances of debt securities carried out by associated entities, joint ventures or non-Group
entities have been guaranteed.
125
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
29. Other contingent assets and liabilities
As of December 31, 2014 and 2013, there were no contingent assets or liabilities for significant amounts other
than those registered in these Financial Statements.
30. Purchase and sale commitments and future payment obligations
The breakdown of the sale and purchase commitments of the Bank as of December 31, 2014 and 2013 is as
follows:
Millions of Euros
Purchase and Sale Commitments
Notes
2014
2013
Financial instruments sold with repurchase commitments
Central Banks
Credit Institutions
Government and other government agencies
Other resident sectors
Non-resident sectors
Financial instruments purchased with resale commitments
Central Banks
Credit Institutions
Government and other government agencies
Other resident sectors
Non-resident sectors
7
19.1
19.2
19.2
19.2
7
11.1
11.2
11.2
11.2
49,536
573
30,458
3,023
7,364
8,118
17,988
-
8,880
378
7,889
841
39,645
362
17,930
8,512
5,552
7,289
11,850
-
5,788
-
5,756
306
Future payment obligations other than those mentioned in the notes above correspond mainly to long-term (over
5 year) obligations amounting to around €3,221 million for leases payable derived from operating lease
contracts.
31. Transactions for the account of third parties
As of December 31, 2014 and 2013, the details of the most significant items under this heading are as follows:
Transactions on Behalf of Third Parties
Millions of Euros
2014
2013
Financial ins truments entrusted by third parties
403,486
367,442
Conditional bills and other securities received for collection
Securities received in credit
2,964
1,808
2,087
1,696
126
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
As of December 31, 2014 and 2013, the off-balance sheet customer funds managed by the Bank are as follows:
Off-Balance Sheet Customer Funds by Type
2014
2013
Millions of Euros
Inves tment companies and mutual funds
Pens ion funds
Saving ins urance contracts
Managed customers portfolio
Total
32,520
17,884
9,144
5,396
64,944
25,529
16,510
8,978
3,932
54,949
32.
Interest income and expense and similar items
32.1 Interest and similar income
The breakdown of the interest and similar income recognized in the accompanying income statement is as
follows:
Interest and Similar Income. Breakdown by Origin.
2014
2013
Millions of Euros
Central Banks
Loans and advances to credit institutions
Loans and advances to customers
Government and other government agencies
Resident sector
Non resident sector
Debt securities
Trading
Investment
Rectification of income as a res ult of hedging transactions
Other income
Total
6
142
5,177
708
4,071
398
1,568
204
1,364
(318)
188
6,763
10
191
6,182
855
4,906
421
1,627
218
1,409
(342)
209
7,877
The amounts recognized in equity during both years in connection with hedging derivatives and the amounts
derecognized from equity and taken to the income statement during those years are disclosed in the
accompanying statements of recognized income and expenses.
The following table shows the adjustments in income resulting from hedge accounting, broken down by type of
hedge:
Adjustments in Income Resulting from Hedge
Accounting
Cash flow hedging
Fair value hedging
Total
Millions of Euros
2014
2013
1
(319)
(318)
1
(343)
(342)
127
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
32.2 Interest and similar expenses
The breakdown of the balance under this heading in the accompanying income statements is as follows:
Interest and Similar Expenses. Breakdown by Origin
2014
2013
Millions of Euros
Bank of Spain and other central banks
Deposits from credit ins titutions
Cus tomers deposits
Debt certificates
Subordinated liabilities (Note 19.4)
Rectification of expenses as a res ult of hedging transactions
Cos t attributable to pension funds (Note 21.2.3)
Other charges
Total
51
438
2,317
1,154
255
(843)
86
35
3,493
157
695
3,104
1,462
260
(1,201)
91
21
4,589
The following table shows the adjustments in expenses resulting from hedge accounting, broken down by type of
hedge:
Adjustments in Expenses Resulting from Hedge Accounting
2014
2013
Millions of Euros
Cash flow hedging
Fair value hedging
Total
33. Dividend income
4
(847)
(843)
4
(1,205)
(1,201)
The breakdown of the balance under this heading in the accompanying income statements is as follows:
Dividend Income
Investments in associates
Investments in jointly controlled entities
Investments in group Entities
Other shares and equity instruments
Total
Millions of Euros
2014
2013
4
38
2,328
478
2,848
135
65
1,880
177
2,257
128
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
34. Fee and commission income
The breakdown of the balance under this heading in the accompanying income statements is as follows:
Fee and Commission Income
Commitment fees
Contingent risks
Letters of credit
Bank and other guarantees
Arising from exchange of foreign currencies and banknotes
Collection and payment services
Bills receivables
Current accounts
Credit and debt cards
Checks (trading, clearing, return)
Transfers and others payment orders
Rest
Securities services
Securities underw riting
Securities dealing
Custody securities
Investment and pension funds
Rest assets management
Counselling on and management of one-off transactions
Financial and similar counselling services
Factoring transactions
Non-banking financial products sales
Other fees and commissions
Total
Millions of Euros
2014
2013
127
182
11
171
2
531
7
115
297
6
57
49
244
72
60
73
-
39
-
-
34
447
206
1,773
139
200
17
183
2
550
8
111
300
8
64
59
231
61
63
70
-
37
-
-
37
398
218
1,775
35. Fee and commission expenses
The breakdown of the balance under this heading in the accompanying income statements is as follows:
Fee and Commission Expenses
Brokerage fees on lending and deposit transactions
Fees and commissions assigned to third parties
Credit and debt cards
Transfers and others payment orders
Securities dealing
Rest
Other fees and commissions
Total
Millions of Euros
2014
2013
1
163
129
2
26
6
144
308
-
173
131
3
26
13
159
332
129
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
36. Net gains (losses) on financial assets and liabilities
The breakdown of the balance under this heading, by source of the related items, in the accompanying income
statements is as follows:
Net Gains (Losses) on Financial Assets and Liabilities
2014
2013
Millions of Euros
Financial as sets held for trading
Other financial assets designated at fair value through profit or
los s
Other financial instruments not des ignated at fair value through
profit or loss
Available-f or-sale financial assets
Loans and receivables
Rest
Total
(7)
-
1,161
1,191
-
(30)
1,154
328
-
797
804
84
(91)
1,125
The breakdown of the balance under this heading in the accompanying income statements by the nature of the
financial instruments is as follows:
Net Gains (Losses) on Financial Assets and Liabilities
Breakdown by Nature of the Financial Instrument
Debt instruments
Equity instruments
Loans and receivables
Derivatives
Deposits from customers
Rest
Total
Millions of Euros
2014
2013
1,749
272
-
(568)
-
(299)
1,154
859
710
84
(488)
-
(40)
1,125
130
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
While the breakdown of the impact of the derivatives (trading and hedging) in the balance under this heading in
the accompanying income statements is as follows:
Derivatives Trading and Hedging
Trading derivatives
Interest rate agreements
Security agreements
Commodity agreements
Credit derivative agreements
Other agreements
Subtotal
Hedging Derivatives Ineffectiveness
Fair value hedging
Hedging derivative
Hedged item
Cash flow hedging
Subtotal
Total
Millions of Euros
2014
2013
(461)
(96)
(1)
25
(533)
(35)
(478)
443
(35)
(568)
119
(496)
(2)
(59)
-
(438)
(50)
(866)
816
-
(50)
(488)
In addition, in 2014 and 2013, under the heading “Exchange differences (net)” of the income statements, net
amounts of positive €39 million and positive €137 million, respectively, are registered for transactions with
foreign exchange trading derivatives.
37. Other operating income and expenses
The breakdown of the balance under the heading “Other operating income” in the accompanying income
statements is as follows:
Other Operating Income. Breakdown by main Items
2014
2013
Real estate income
Financial income from non-financial services
Rest of operating income
Total
8
64
48
120
7
68
56
131
Millions of Euros
The breakdown of the balance under the heading “Other operating expenses” in the accompanying income
statements is as follows:
Other Operating Expenses. Breakdown by main Item
2014
2013
Millions of Euros
Other operating expenses
Of which:
Contributions to guaranted banks deposits funds
Real estate agencies
Total
433
215
114
433
641
516
75
641
131
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
38. Administration costs
38.1 Personnel expenses
The breakdown of the balance under this heading in the accompanying income statements is as follows:
Personnel Expenses. Breakdown by main
Concepts
Wages and salaries
Social security costs
Transfers to internal pension provisions
Contributions to external pension funds
Other personnel expenses
Total
Millions of Euros
Notes
2014
2013
21.2.3
21.2.3
1,623
362
2
44
163
2,194
1,762
361
2
50
177
2,352
The breakdown of the number of employees in the Bank as of December 31, 2014 and 2013, by categories and
gender, is as follows:
Number of Employees at the end of year
Professional Category and Gender
2014
2013
Male
Female
Male
Female
Management Team
Other line personnel
Clerical staff
General Services
Branches abroad
Total
835
10,925
1,618
9
456
13,843
210
9,859
1,592
1
293
11,955
911
11,803
2,051
10
473
15,248
209
10,053
1,915
1
296
12,474
Share-based employee remuneration
The amounts registered under the heading “Personnel expenses - Other personnel expenses” in the income
statements for the years 2014 and 2013, corresponding to the plans for remuneration based on equity
instruments in force in each year, amounted to €50 million and €40 million, respectively. These amounts have
been registered with a balancing entry under the heading “Stockholders’ funds – Other equity instruments” in the
accompanying balance sheets, net of tax effect.
The specifications of the Bank's remuneration plans based on equity instruments are described below.
Variable Share-based Remuneration System
The BBVA General Meeting, held on March 11, 2011, approved a system of variable remuneration in shares for
the BBVA Management Team, including the executive directors and members of the Management Committee
(the "System of Variable Remuneration in Shares for the Management Team" or the "System"), whose conditions
for 2014 were approved by the BBVA General Meeting, held on March 14, 2014.
This system is based on a specific incentive for members of the Management Team (made up by approximately
2,200 recipients) (the "Incentive") comprising the annual allocation to each beneficiary of a number of units that
provide the basis for determining the number of shares to which, where applicable, they will be entitled when the
Incentive is settled. These depend on the level of delivery against indicators established each year by the General
Meeting, taking into account the performance of Total Shareholder Return (TSR); the Group Economic Profit
without one-offs; and the Group Attributable Profit without one-offs.
This incentive, plus the ordinary variable remuneration in cash to which each manager is entitled, comprises their
annual variable remuneration (the "Annual Variable Remuneration").
132
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
After each financial year-end, the number of units allocated is divided into three parts indexed to each one of the
indicators as a function of the weightings established at any time and each one of these parts is multiplied by a
coefficient of between 0 and 2 as a function of the scale defined for each indicator every year.
The shares resulting from this calculation are subject to the following withholding criteria:
• 40% of the shares received will be freely transferrable by the beneficiaries from the time of their vesting;
• 30% of the shares received will become transferrable after one year has elapsed from the incentive
settlement date; and
•
The remaining 30% will become transferrable after two years have elapsed from the incentive settlement
date.
Apart from this, the Bank also has a specific system for settlement and payment of the variable remuneration
applicable to employees and managers, including the executive directors and members of the Management
Committee, performing professional activities that may have a significant impact on the risk profile of the entity or
perform control duties (hereinafter, the "Identified staff").
The specific rules for settlement and payment of the Annual Variable Remuneration of executive directors and
members of the Management Committee are described in Note 48, while the rules listed below are applicable to
the rest of the Identified staff:
• At least 50% of the total Annual Variable Remuneration of the members of the management team in the
Identified staff will be paid in BBVA shares.
•
•
Those in the Identified staff who are not members of the management team will receive 50% of their
ordinary variable remuneration in BBVA shares.
The payment of 40% of their variable remuneration, both in cash as in shares, will be deferred in time. The
deferred amount will be paid one third a year over the following three years.
• All the shares delivered to these beneficiaries pursuant to the rules explained in the previous paragraph will
be unavailable during one year after they have vested. This withholding will be applied against the net
amount of the shares, after discounting the part needed to pay the tax accruing on the shares received. A
prohibition has also been established against hedging with unavailable vested shares and shares pending
reception.
• Moreover, circumstances have been defined in which the payment of the deferred Annual Variable
Remuneration payable may be capped or impeded (malus clauses), and the adjustment to update these
deferred parts has also been determined.
•
Finally, the variable component of the remuneration corresponding to the Identified Staff is limited to a
maximum amount of the 100% of the fix component of the total remuneration, unless the General Meeting
approves to increase this limit that, in any case, cannot exceed 200% of the fix component of the total
remuneration.
For this purpose, the BBVA General Meeting held on March 14, 2014 approved, in accordance with the current
laws applicable, that the variable component of the remuneration, corresponding to a year, of the executive
directors and certain managers and employees with significant impact on the risk profile of the entity or perform
control duties, can reach the 200% of the fix component of the total remuneration, all according to the Report of
Recommendations issued by the Board of Directors of BBVA dated January 30, 2014.
When the term of the Incentive ended on December 31, 2014, the multiplier applicable to the units allocated to
each beneficiary was 0.4775. This resulted in a total number of 1,919,496 shares for the Management Team as
a whole, subject to the settlement and payment system described above.
Likewise, during 2014 the shares corresponding to the deferred part of the Annual Variable Remuneration
corresponding to previous years and its updates have been granted to the beneficiary members of the Identified
Staff. Therefore, during 2014 534,953 shares have been granted corresponding to the first third of the Deferred
Variable Remuneration in 2012, plus €171,185 as an adjustment for the updated value of the shares vested;
and a total of 817,012 shares corresponding to the second third of the Deferred Variable Remuneration in 2011,
plus €602,138 as and adjustment for the updated value of the shares vested.
133
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Likewise, during 2014 the shares corresponding to the deferred part of the 2010-2011 Multi-Year Variable Share
Remuneration Programme (hereinafter the "Programme" or the "LTI 2010-2011") have been granted to the
beneficiaries of BBVA Compass as it is described below:
When the term of LTI 2010-2011approved by the General Meeting, 12th March 2010, ended on 31st
December 2011, it was settled in application of the conditions established when it began.
However, with respect to those Programme beneficiaries who are members of the Identified staff described
above, the Bank’s General Meeting, 16th March 2012, approved the modification of the settlement and payment
system for the LTI 2010-2011 in order to align it with the special rules applicable to employees performing
professional activities that may have a significant impact on the risk profile of the entity or perform control duties,
including executive directors and members of the Management Committee, such that:
•
•
•
•
The payment of 40% of the shares resulting from settlement of the Programme (50% in the case of
executive directors and other members of the Management Committee) was deferred to vest in thirds in
2013, 2014 and 2015.
The shares paid will not be availed during a period of one year as of their vesting date. This withholding is
applicable to the net amount of the shares, after discounting the part needed to pay taxes on the shares
received.
The vesting of the deferred shares will be subject to the application of the circumstances limiting or impeding
payment of the variable remuneration (malus clauses) established by the Board of Directors; and
The deferred shares will be adjusted to reflect their updated value.
Thus, under the conditions established in the Deferred Variable Remuneration, in 2014 the Identified staff vested
a total of 351,105 shares, equivalent to the second third of the deferred part of the shares resulting from
settlement of the Programme, plus €259,818 as an adjustment for the updated value of the shares vested. The
payment of the remaining one third of the deferred shares resulting from the settlement of the Programme was
deferred until the first quarter of 2015.
The settlement and payment of the shares arising from this Programme for the executive directors and members
of the Management Committee was carried out according to the scheme defined for such purpose, as described
in Note 48.
38.2 General and administrative expenses
The breakdown of the balance under this heading in the accompanying income statements is as follows:
General and Administrative Expenses.
Breakdown by main concepts
Technology and systems
Communications
Advertising
Property, fixtures and materials
Of which:Rent expenses (*)
Taxes
Other administration expenses
Total
(*)
The Bank does not expect to terminate the lease contracts early.
Millions of Euros
2014
2013
364
65
151
415
302
14
461
1,470
386
69
164
434
308
30
442
1,525
134
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
39. Depreciation and amortization
The breakdown of the balance under this heading in the accompanying income statements is as follows:
Depreciation and Amortization
Notes
2014
2013
Millions of Euros
Tangible assets
For ow n use
Investment properties
Operating lease
Other Intangible assets
Total
40. Provisions (net)
15
16
199
190
9
-
318
517
201
191
10
-
301
502
In 2014 and 2013, the net allowances charged to the income statement under the headings “Provisions for
pensions and similar obligations”, “Provisions for contingent risks and commitments” “Provisions for taxes and
other legal contingencies” and “Other provisions” in the accompanying income statements are as follows:
Provisions (Net)
Millions of Euros
Notes
2014
2013
Provisions for pensions and similar obligations
Provisions for contingent Risks and Commitments
Other Provisions
20
20
20
Total
774
17
81
872
349
37
344
730
41.
Impairment losses on financial assets (net)
The impairment losses on financial assets broken down by the nature of these assets in the accompanying
income statements are as follows:
Impairment Losses on Financial Assets (Net)
Breakdown by main concepts
Available-for-sale financial assets
Debt securities
Other equity instruments
Held-to-maturity investments
Loans and receivables
Of which: Recovery of written-off assets
Total
Millions of Euros
2014
2013
12
-
12
-
1,856
310
1,868
30
9
21
-
3,224
216
3,254
135
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
42.
Impairment losses on other assets (net)
The impairment losses on non-financial assets broken down by the nature of these assets in the accompanying
income statements is as follows:
Impairment Losses on Other Assets (Net)
Tangible assets
For ow n use
Investment properties
Rest
Total
Millions of Euros
2014
2013
23
23
-
(63)
(40)
40
40
-
(185)
(145)
43. Gains (losses) on derecognized assets not classified as non-current
assets held for sale
The breakdown of the balance under this heading in the accompanying income statements is as follows:
Gains and Losses on Derecognized Assets Not
Classified as Non-current Assets Held for Sale
Gains
Disposal of investments in entities
Disposal of intangible assets and other
Losses:
Disposal of investments in entities
Disposal of intangible assets and other
Total
Millions of Euros
2014
2013
1
-
(2)
-
(1)
177
-
(304)
-
(127)
The heading “Disposal of investments in entities” gathered up in 2013 includes the loss attributable to BBVA for
the sale of its 5.1% stake in China Citic Bank Corporation Limited (CNCB) as shown in Note 14.4.
136
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
44. Gains (losses) on non-current assets held for sale
44.1 Gains (losses) on non-current assets held for sale not classified as
discontinued transactions
The main items included in the balance under this heading in the accompanying income statements are as
follows:
Gains and Losses in Non-current Assets Held for Sale
2014
2013
Millions of Euros
Gains for real estate (Note 14)
Of which:
Foreclosed
Sale of buildings for ow n use
Impairment of non-current assets held for sale
Gains on sale of available-for-sale financial assets
Other gains and losses
Total
(26)
(30)
4
(336)
-
(9)
(371)
(51)
(73)
22
(519)
-
200
(370)
44.2 Gains (losses) on non-current assets held for sale classified as discontinued
operations
The earnings generated by discontinued operations amount to €1,061 million as of December 31,
2013corresponding to the gain on disposal of the Pension Fund Administrators (AFP) in Latin America and the
dividends from these companies, (see Note 14).
45. Statements of cash flows
Cash flows from operating activities decreased in 2014 by €4,709 million (€3,912 million in 2013). The most
significant causes of the increase are linked to “Available-for-sale financial assets” and “Financial instruments held
for trading”.
The most significant variations in cash flows from investment activities in 2014 corresponded to “Non-current
assets held for sale” and “Investments”.
Cash flows from financing activities increased in 2014 by €3,749 million (€168 million up in 2013),
corresponding to the most significant changes in the acquisition and disposal of own equity instruments.
The table below shows the breakdown of the main cash flows related to investing activities as of December 31,
2014 and 2013:
Main Cash Flows in Investing Activities
2014
Tangible assets
Intangible assets
Investments
Subsidiaries and other business units
Non-current assets and liabilities associated held for sale
Held-to-maturity investments
Other settlements related with investement activities
Millions of Euros
Cash Flow s in Investm ent Activities
Investments (-)
Divestments (+)
156
265
714
-
1,059
-
-
14
-
147
-
322
-
-
137
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Main Cash Flows in Investing Activities
2013
Tangible assets
Intangible assets
Investments
Subsidiaries and other business units
Non-current assets and liabilities associated held for sale
Held-to-maturity investments
Other settlements related with investement activities
Millions of Euros
Cash Flow s in Investm ent Activities
Investments (-)
Divestments (+)
517
498
4,895
-
1,047
-
-
28
-
1,359
-
2,030
439
-
The heading “Non-current assets held for sale and associated liabilities” in the above tables includes transactions of
a non-cash nature related to the foreclosed assets received as payment for past-due loans.
46. Accountant fees and services
The breakdown of the fees for the services provided to the Bank by its auditors in 2014 is as follows:
Fees for Audits Conducted
Audits of the companies audited by firms belonging to the Deloitte worldwide
organization and other reports related with the audit (*)
Other reports required pursuant to applicable legislation and tax regulations
issued by the national supervisory bodies of the countries in which the Group
operates, reviewed by firms belonging to the Deloitte worldwide organization
Fees for audits conducted by other firms
(*)
Including fees belonging to annual statutory audits (€6 million)
In addition, in 2014, the Bank contracted services (other than audits) as follows:
Accountant Fees. Other Services Contracted
Firms belonging to the Deloitte worldwide organization(*)
Other firm s
(*)
Includes €0.2 million relating to fees for tax services
Millions of Euros
2014
10.1
1.2
-
Millions of Euros
2014
1.3
18.9
The services provided by our auditors meet the independence requirements established under Act 44/2002, of
22 November 2002, on Measures Reforming the Financial System and under the Sarbanes-Oxley Act of 2002
adopted by the Securities and Exchange Commission (SEC); accordingly they do not include the performance of
any work that is incompatible with the auditing function.
47. Related-party transactions
As a financial institution, BBVA engages in transactions with related parties in the normal course of business. All of
these transactions are of little relevance and are carried out under normal market conditions.
138
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
47.1 Transactions with significant shareholders
As of December 31, 2014 there were no shareholders considered significant (see Note 22).
47.2 Transactions with BBVA Group entities
The balances of the main aggregates in the accompanying balance sheets arising from the transactions carried
out by the Group companies, which consist of ordinary business and financial transactions carried out under
normal market conditions, are as follows:
Balances arising from transactions with Entities of the
Group
Assets:
Loans and advances to credit institutions
Loans and advances to customers
Financial assets- Available for sale
Liabilities:
Deposits from credit institutions
Customers deposits
Debt certificates
Memorandum accounts:
Contingent Risks
Contingent Commitments
Millions of Euros
2014
2013
1,581
10,482
453
5,941
16,855
21,098
2,049
2,690
9,551
554
5,639
17,251
-
22,598
4,958
The balances of the main aggregates in the accompanying income statements arising from the transactions
carried out by the Bank with Group companies, which consist of ordinary business and financial transactions
carried out under normal market conditions, are as follows:
Balances of Income Statement arising from
transactions with Entities of the Group
Income statement:
Financial Incomes
Financial Costs
Millions of Euros
2014
2013
1,122
1,278
1,167
1,489
There are no other material effects in the financial statements arising from dealings with these companies, other
than the effects arising from using the equity method and from the insurance policies to cover pension or similar
commitments, which are described in Note 21.
In addition, as part of its normal activity, the Bank has entered into agreements and commitments of various
types with shareholders of subsidiaries and associates, which have no material effects on the financial statements.
47.3 Transactions with members of the Board of Directors and the Management
Committee
The information on the remuneration of the members of the BBVA Board of Directors and the Management
Committee is included in Note 48.
As of December 31, 2014 and 2013, the amount disposed of the loans granted by the Group’s entities to the
members of the Board of Directors was €235 and €141 thousand, respectively. As of December 31, 2014 and
2013 the amount disposed of the loans granted by the Group’s entities to the members of the Management
Committee (excluding the executive directors) amounted to €4,614 thousand and €6,076 thousand,
respectively.
139
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
As of December 31, 2014, there were no loans granted to parties related to the members of the Bank’s Board of
Directors and as of December 31, 2013 the amount disposed of the loans granted to parties related to the
members of the Bank’s Board of Directors amounted to €6,939 thousand. As of December 31, 2014 the
amount disposed of loans granted to parties linked to members of the Bank’s Management Committee amounted
to €291 thousand. As of December 31, 2013, there were no loans granted to parties linked to members of the
Bank’s Management Committee.
As of December 31, 2014 and2013no guarantees had been granted to any member of the Board of Directors.
As of December 31, 2014 and 2013no guarantees had been granted to any member of the Management
Committee.
As of December 31, 2014 and 2013the amount disposed for guarantee and commercial loan transactions
arranged with parties related to the members of the Bank’s Board of Directors and Management Committee
totaled €419 thousand and €5,192 thousand respectively.
47.4 Transactions with other related parties
In 2014 and 2013, the Bank did not perform any transactions with other related parties that did not belong to
the normal course of its business, that were not under normal market conditions or that were relevant for the
equity, financial situation or earnings of the Bank.
48. Remuneration and other benefits of the Board of Directors and
Members of the Bank’s Management Committee
• Remuneration of non-executive directors received in 2014
The cash remuneration paid to the non-executive members of the Board of Directors during 2014 is indicated
below. The figures are given individually for each non-executive director and itemised:
Non-Executive Director
remuneration
Tomás Alfaro Drake
Ramón Bustamante y de la Mora
José Antonio Fernández Rivero (1)
Ignacio Ferrero Jordi
Belén Garijo López
Carlos Loring Martínez de Irujo
Lourdes Máiz Carro (2)
José Maldonado Ramos
José Luis Palao García-Suelto
Juan Pi Llorens
Susana Rodríguez Vidarte
Total (3)
Board of
Directors
Executive
Committee
129
129
129
129
129
129
107
129
129
129
129
1,395
-
-
-
167
-
-
-
167
-
-
167
500
Audit &
Compliance
71
71
-
-
71
71
-
-
179
-
-
464
Thousands of Euros
Risks
Committee
Remuneration
Committee
-
107
214
-
-
-
-
-
107
107
53
588
21
-
-
43
-
107
-
43
-
43
21
278
Appointments
Committee
Total
102
-
41
-
-
-
-
41
20
-
41
244
323
307
383
338
200
307
107
379
435
278
411
3,469
(1) Mr. José Antonio Fernández Rivero received, in addition to the above mentioned amounts, a total of €546
thousand as a pre-retired BBVA employee. As of November, his status changed to retired, and he recived a
retirement pension amount of €95 thousand from an insurance company.
(2) Mrs. Lourdes Máiz Carro was named director on March 14, 2014, as agreed at the AGM.
(3) Mr. Juan Carlos Álvarez Mezquíriz, who ceased to be a director on March 14, 2014, received the total amount of
€84 thousand as retribution for his tenure in the Board of Directors, Executive Committee and Appointments
Committee. These amounts likewise include the changes in the composition of the committees during 2014.
Moreover, in 2014, €117 thousand were paid in health and casualty insurance premiums for non-executive
members of the Board of Directors.
• Remuneration of executive directors received in 2014
The remuneration paid to the executive directors during 2014 is indicated below. The figures are given
individually for each executive director and itemised:
140
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Executive Director remuneration
Fixed
Remuneration
2013 Annual
Variable
Remuneration
in cash (1)
Thousands of Euros
Deferred
Variable
Remuneration
in cash (2)
Total Cash
2013 Annual
Variable
Remuneration in
BBVA Shares (1)
Deferred Variable
Remuneration in
BBVA Shares (2)
Total Shares
Chairman and CEO
Pres ident and COO
Jos é Manuel González-Páramo Martínez-Murillo
Total
1,966
1,748
800
4,514
797
495
48
1,340
682
432
-
1,114
3,445
2,675
848
6,968
88,670
55,066
5,304
149,040
122,989
84,995
-
207,984
211,659
140,061
5,304
357,024
(1) Amounts corresponding to 50% of the Annual Variable Remuneration for 2013.
(2) Amounts corresponding to the sum of the deferred remuneration of the Annual Variable Remuneration of previous
years (2012 and 2011) and to the LTI 2010-2011 shares, and its cash updates, whose payment have been done
during 2014.
Moreover, the executive directors have received during 2014 benefits in kind and other remuneration for a total
amount of €54,196; of which €13,527 correspond to the Chairman and CEO, €25,971 to the President and
COO and €14,698 to Mr. José Manuel González- Páramo Martinez-Murillo.
The executive directors’ remuneration, that correspond to the model that apply to the management team of
BBVA, is composed by a fix remuneration and a variable remuneration, constituted by an ordinary variable cash
remuneration and a variable remuneration share-based incentive for the management team of the BBVA Group.
(the "Annual Variable Remuneration").
During 2014, the executive directors have received the amount of the fixed remuneration corresponding to the
year and the variable remuneration to be payable this year, to which they are entitled under the settlement and
payment system resolved by the General Meeting (the "Settlement and Payment System"), which determines that:
• At least 50% of the total Annual Variable Remuneration shall be paid in BBVA shares.
•
The payment of 50% of the Annual Variable Remuneration shall be deferred in time, the deferred amount
being paid in thirds over the three-year period following its settlement.
• All the shares vesting to these beneficiaries pursuant to the rules explained in the previous paragraph may
not be availed during a period of one year after they have vested. This withholding will be applied against the
net amount of the shares, after discounting the necessary part to pay the tax accruing on the shares
received.
• Moreover, cases have been established in which the payment of the deferred Annual Variable Remuneration
payable may be limited or impeded (malus clauses), and
•
The deferred parts of the Annual Variable Remuneration will be adjusted to update them in the terms
established by the Board of Directors.
Thus, during 2014 executive directors have received the following variable remuneration:
1. Annual Variable Remuneration for year 2013
The amount corresponding to the 50% of the Annual Variable Remuneration (in cash and in shares)
corresponding to 2013, as indicated in the chart above. The remaining 50% of the Annual Variable
Remuneration for 2013 that has been deferred under the Settlement and Payment System will be paid,
subject to the conditions described above, in thirds during the first quarter of 2015, 2016 and 2017, such
that under this item the Chairman and CEO will receive €265,713 and 29,577 BBVA shares, the President
and COO will receive €165,012 and 18,356 BBVA shares and Mr. José Manuel González-Páramo will receive
€15,894 and 1,768 shares.
(*) Mr. José Manuel González-Páramo Martínez-Murillo was appointed executive director of BBVA by agreement of the
Board of Directors on May 29, 2013, being his Annual Variable Remuneration for 2013 proportional to the time he
has been on the charge.
2. Deferred parts of the Variable Remuneration from previous years paid in 2014:
The Chairman & CEO and the President & COO, in application of the Settlement & Payment System, have
received the following variable remuneration during 2014:
141
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
− Annual Variable Remuneration for the year 2012
The amount corresponding to the first third of the deferred Annual Variable Remuneration of 2012, both
in cash and in shares, receiving, after the pertinent adjustments, the amount of €273,902 and 36,163
shares in the case of the Chairman and CEO, and €166,877 and 22,032 shares in the case of the
President and COO.
The remaining two thirds of the deferred Annual Variable Remuneration corresponding to 2012 will be
paid during the first quarter of 2015 and 2016, subject to the aforementioned conditions.
− Annual Variable Remuneration for the year 2011
The amount corresponding to the second third of the deferred Annual Variable Remuneration of 2011,
both in cash and in shares, receiving, after the pertinent adjustments, the amount of €381,871 and
51,826 shares in the case of the Chairman and CEO, and €242,883 and 32,963 shares in the case of the
President and COO.
The remaining third of the Annual Variable Remuneration corresponding to 2011 will be paid, during the
first quarter of 2015, subject to the conditions mentioned above.
− Multi-Year Variable Share Remuneration Programme for 2010-2011 ("LTI 2010-2011”)
Lastly, the Chairman and CEO and the President and COO have received during 2014 the second third of
the shares resulting from the settlement of the LTI 2010-2011 that were deferred, for which the Chairman
and CEO received 35,000 shares and the President & COO 30,000 shares; and the cash amount resulting
from the adjustment for the updated value of these deferred shares, for which the Chairman & CEO received
€25,795 and the President and COO €22,110, being deferred until the first semester of 2015 the payment,
under the aforementioned conditions, of the remaining third resulting from the settlement of the LTI 2010-
2011.
• Annual Variable Remuneration of executive directors for the year 2014
Following year-end 2014, the Annual Variable Remuneration for the executive directors corresponding to
that year has been determined, applying the conditions established for that purpose by the General Meeting.
Consequently, during the first quarter of 2015 the executive directors will receive 50% of this remuneration,
i.e., €865,644 and 112,174 BBVA shares for the Chairman & CEO; €530,169 and 68,702 BBVA shares for
the President & COO; and €85,199 and 11,041 BBVA shares for José Manuel González-Páramo Martínez-
Murillo (*). The remaining 50% of the Annual Variable Remuneration will be deferred over a three-year
period, such that during the first quarter of each year (2016, 2017 and 2018) the Chairman & CEO will
receive the amount of €288,548 and 37,392 BBVA shares; the President & COO will receive €176,723 and
22,901 BBVA shares; and José Manuel González-Páramo Martínez-Murillo will receive €28,400 and 3,681
BBVA shares.
The payment of the deferred parts of the 2014 Annual Variable Remuneration will be subject to the
conditions of the Settlement & Payment System established pursuant to the resolutions adopted by the
General Meeting.
These amounts are recorded under the item “Other Liabilities - Accrued interest” of the consolidated balance
sheet at December 31, 2014.
• Remuneration of the members of the Management Committee received in 2014(*)
During 2014, the remuneration paid to the members of the BBVA Management Committee as a whole,
excluding the executive directors, amounted to €8,764 thousand corresponding to fixed remuneration plus the
variable remuneration indicated below, pursuant to the Settlement and Payment System described above:
(*)
This section includes aggregated information for the non-executive members of the Board of Directors as of
December 31, 2014 (13 members)
142
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
1. Annual Variable Remuneration for year 2013
A total amount of €2.734 thousand and 304.579 BBVA shares, that corresponds to the part of the
Annual Variable Remuneration of 2013 under the Settlement and Payment System applicable to each
menber of the Management Committe.
The remaining part of the deferred Annual Variable Remuneration for 2013 will be paid, subject to the
conditions described above, in thirds during the first quarter of 2015, 2016 and 2017, such that under
this item, this group as a whole will receive the amount of €911 thousand (*) and 101,098 BBVA shares
each year.
(*)
According to the average exchange rate as of December 31, 2014
2. Deferred parts of the Variable Remuneration from previous years
− Annual Variable Remuneration for 2012
The first third of the deferred Annual Variable Remuneration of 2012, corresponding for this item, after
its updates, the amount of €765 thousand and 101,407 shares.
The remaining Annual Variable Remuneration corresponding to 2012 for this group has been deferred
and will be payable in thirds during the first quarter of 2015 and 2016, under the conditions described
above.
− Annual Variable Remuneration for 2011
The second third of the deferred Annual Variable Remuneration of 2011, corresponding for this item,
after its updates, the amount of €989 thousand and 134,618 shares.
The remaining Annual Variable Remuneration corresponding to 2011 for this group has been deferred
and will be payable during the first quarter of 2015, under the conditions described above.
− Multi-Year Variable Share Remuneration Programme for 2010-2011 (“LTI 2010-2011”).
The second third of the shares resulting from the settlement of the LTI 2010-2011 that were deferred,
corresponding under this item a total of 89,998 shares for the Management Committee as a whole. A
further €66 thousand was paid corresponding to the adjustment of these deferred vested shares.
The remaining two third of the deferred shares resulting from the settlement of the LTI 2010-2011 for
thiese members will be paid during the first quarter of 2015, under the conditions described above.
Finally, in 2014, members of the BBVA Management Committee as a whole, excluding executive directors,
received remuneration in kind amounting to a total of €1,084 thousand.
• System of Remuneration in Shares with Deferred Delivery for non-executive directors
BBVA has a remuneration system in shares with deferred delivery for its non-executive directors, which was
approved by the General Meeting, 18th March 2006 and extended for an additional 5-year period under a
resolution of the General Meeting, 11th March 2011.
This System is based on the annual allocation to non-executive directors of a number of "theoretical shares",
equivalent to 20% of the total remuneration in cash received by each of them in the previous year, according to
the average closing prices of the BBVA share during the sixty trading sessions prior to the Annual General
Meeting approving the corresponding financial statements for each year.
These shares, where applicable, will be delivered to each beneficiary on the date they leave the position as
director for any reason other than dereliction of duty.
143
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
The number of "theoretical shares" allocated to the non-executive directors in 2014 who are beneficiaries of the
system of deferred delivery of shares, corresponding to 20% of the total remuneration in cash received by said
directors during 2013, are as follows:
Tomás Alfaro Drake
Ramón Bustamante y de la Mora
José Antonio Fernández Rivero
Ignacio Ferrero Jordi
Belén Garijo López
Carlos Loring Martínez de Irujo
José Maldonado Ramos
José Luis Palao García-Suelto
Juan Pi Llorens
Susana Rodríguez Vidarte
Total (1)
Theoretical
shares
allocated in
2014
Theoretical
shares
accumulated
at December
31, 2014
6,693
6,807
8,497
7,500
4,437
6,811
8,402
9,181
6,174
6,817
71,319
43,159
69,512
69,013
74,702
7,957
57,307
36,268
29,658
16,365
53,919
457,860
(1) Mr. Juan Carlos Álvarez Mezquíriz, who ceased as director on March 14, 2014, was also allocated 7,453
theroretical shares.
• Pensions commitments
The provisions recorded as of December 31, 2014 to cover pension commitments for executive directors
amount to €26,026 thousand in the case of the President and COO and €269 thousand in the case of José
Manuel González-Páramo Martínez-Murillo. €2,624 thousand and €261 thousand were set aside in 2014 for the
President and COO and for José Manuel González-Páramo Martínez-Murillo, respectively, to cover the
contingencies of retirement, disability and death.
There are no other pension obligations in favour of other executive directors.
The provisions charged to December 31, 2014 for pension commitments for the members of the Management
Committee, excluding executive directors, amounted to €89,817 thousand, of which, €8,649 thousand were
provisioned during 2014.
• Extinction of contractual relationship.
The Bank does not have any commitments to pay severance indemnity to executive directors other than the
commitment in respect of José Manuel González-Páramo Martinez-Murillo who is contractually entitled to receive
an indemnity equivalent to twice his fixed remuneration should he cease to hold his position on grounds other
than his own will, death, retirement, disability or dereliction of duty.
The contractual conditions of the President & COO determine that should he cease to hold his position for
any reason other than his own will, retirement, disability or dereliction of duty, he will be given early
retirement with a pension payable, as he chooses, through a lifelong annuity pension, or by payment of a
lump sum that will be 75% of his pensionable salary should this occur before he is 55, and 85% should it
occur after he has reached said age.
144
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
49. Other information
49.1 Environmental impact
Given the activities in which it engages, the Bank has no environmental liabilities, expenses, assets, provisions or
contingencies that could have a significant effect on its equity, financial situation and profits. Consequently, as of
December 31, 2014, there is no item in the accompanying financial statements that requires disclosure in an
environmental information report pursuant to Ministry of Economy Order JUS/206/2009, dated January 28,
implementing new forms for the presentation of financial statements by entities obliged to publish such
information, and no specific disclosure of information on environmental matters is included in these statements.
49.2 Breakdown of agents of credit institutions
Appendix XIII contains a list of the Bank's agents as required by article 22 of Royal Decree 1245/1995, dated
July 14, of the Ministry of Economy and Finance.
49.3 Report on the activity of the Customer Care Service and the Customer
Ombudsman
The report on the activity of the Customer Care Service and the Customer Ombudsman, required pursuant to
Article 17 of Ministry of Economy Order ECO/734/2004 dated March 11, is included in the Management Report
accompanying these financial statements.
49.4 Mortgage market policies and procedures
The disclosure required by Bank of Spain Circular 5/2011 under the provisions of Spanish Royal Decree
716/2009, of April 24, (implementing certain aspects of Act 2/1981, of March 25, on the regulation of the
mortgage market and other mortgage and financial market regulations) is detailed in Appendix X.
49.5 Reporting
requirements of
the Spanish National Securities Market
Commission (CNMV)
Dividends paid in the year
The table below presents the dividends per share paid in cash in 2014 and 2013 (cash basis accounting,
regardless of the year in which they are accrued), but not including other shareholder remuneration such as the
“Dividend Option”. For a complete analysis of all remuneration awarded to shareholders in 2014 ( see Note 3).
Dividends Paid
("Dividend Option" not included)
% Over
Nominal
Euros per
Share
Amount
(Millions of
Euros)
% Over
Nominal
Euros per
Share
Amount
(Millions of
Euros)
2014
2013
Ordinary shares
Rest of shares
Total dividends paid in cash (*)
Dividends with charge to income
Dividends with charge to reserve or
share prem ium
Dividends in kind
16%
-
16%
16%
-
-
0.08
-
0.08
0.08
-
-
471
-
471
471
-
-
41%
-
41%
41%
-
-
0.20
-
0.20
0.20
-
-
1,117
-
1,117
1,117
-
-
(*)
Only included dividends paid in cash each year (cash-flows criteria), regardless of the year they were accrued in.
145
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
Issuances by market type
Changes in debt certificates (including bonds) and subordinated liabilities (see Notes 19.3 and 19.4) in 2014 and
2013 by the type of market in which they were issued are as follows:
2014
Debt Certificates and Subordinated
Liabilities
Debt certificates issued in the
European Union
With information brochure
Without information brochure
Subordinated deposits
Total
Millions of Euros
Balance at the
Beginning
Issuances
Repurchase or
Redem ption
Exchange
Differences
and Other (*)
Balance at the
End
36,365
36,365
-
2,528
38,893
2,971
2,971
-
1,500
4,471
(9,549)
(9,549)
-
-
(9,549)
568
568
-
72
640
30,355
30,355
-
4,100
34,455
Interest and income by geographical area
The breakdown of the balance under the heading “Interest and Similar Income” in the accompanying income
statements by geographical area is as follows:
Interest and Similar Income.
Breakdown by Geographical Area
Domestic market
Foreign market
European Union
Rest of OECD
Rest of countries
Total
Millions of Euros
2014
2013
6,447
316
193
36
87
6,763
7,545
332
224
34
74
7,877
Average number of employees by gender
The breakdown of the average number of employees in the Bank in 2014 and 2013, by gender, is as follows:
Average number of employees
Male
Female
Male
Female
2014
2013
Management Team
Other line personnel
Clerical staff
General Services
Branches abroad
Total
871
11,473
1,928
10
460
14,742
208
9,961
1,852
1
298
12,320
916
11,915
2,187
12
492
15,522
209
9,855
1,971
2
302
12,339
146
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
49.6 Concesión responsable de préstamos
BBVA has incorporated the best practices of responsible lending and consumer credit granting, and has policies
and procedures that contemplate these practices complying with the provisions of the Order of the Ministry of
Finance EHA / 2899/2011, of 28 October, transparency and customer protection of banking services, as well as
the Bank of Spain Circular 5/2012, of 27 June, on transparency of banking services and responsible lending.
Specifically, the Corporate Retail Credit Risk Policy (approved by the Executive Committee of the Board of
Directors of the Bank on April 3, 2013) and Specific Rules derived from it, establish policies, practices and
procedures in relation to responsible granting of loans and consumer credit.
In compliance with Bank of Spain Circular 3/2014, of July 30, the following summary of those policies contained
in the Corporate Retail Credit Risk Policy BBVA is provided:
• The need to adapt payment plans with sources of income generation;
• The evaluation requirements of affordability;
• The need to take into account the level of expected retirement income of the borrower;
• The need to take account of existing financial obligations payments;
•
In cases where, for commercial reasons or the type of rate/currency, the offer to the borrowers includes
contractual clauses or contracting financial products to hedge interest rate and exchange rate risks.
• The need, when there is collateral, to establish a reasonable relationship between the amount of the loan and
its potential extensions and value of collateral, regardless revaluations thereof;
• The need for extreme caution in the use of appraisal values on credit operations that have real estate as an
additional borrower's personal guarantee;
• The periodic review of the value of collateral taken to hedge loans;
• A number of elements of management in order to ensure independence in the activity of appraisal
companies;
• The need to warn customers of potential consequences in terms of cost by default interest and other
expenses that would continue in default;
• Debt renegotiation criteria (refinancing and restructurings);
• The minimum documentation that operations should have in order to be granted and during its term.
In order to maintain an effective monitoring of these policies, BBVA has the following control mechanisms:
• Validations and computer controls built into the workflows of analysis, decision and contracting operations, in
order to embed these principles in management;
• Alignment between the specifications of the product catalog with the policies of responsible lending;
• Different areas of sanction to ensure adequate hierarchy decision levels in response to the complexity of
operations;
• A reporting scheme that allows to monitor the proper implementation of the policies of responsible lending.
50. Subsequent events
Subsequent to the year ended December 31, 2014, it is expected that on February 3, 2015, under the powers
delegated by the Company’s AGM held on March 16, 2012, under point five of its agenda, the Board of
Directors meeting submits for approval an agreement for the issue of debentures convertible into ordinary BBVA
shares, excluding the pre-emptive subscription right.
147
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accepted accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
language version prevails.
In case such agreement is approved, and for the purposes set out in articles 414, 417 and 511 of the Spanish
Corporations Act, the mandatory Directors report explaining the conversion conditions and types will be issued,
justifying the proposal for the abolition of the pre-emptive subscription right, to be accompanied, as appropriate,
by another report drafted by an auditor other than the company’s auditor, appointed for this purpose by the
Companies Register to year end, it is expected that on February 3, 2015, there will be a resolution to issue
bonds convertible into ordinary shares of BBVA excluding preferential subscription rights subject to approval by
the Board of Directors, under the authority delegated by the General Meeting of Shareholders of the Company
held on March 16, 2012, in its fifth item on the agenda,
From January 1, 2015 to the date of preparation of these financial statements, no other subsequent events not
mentioned above in these financial statements have taken place that significantly affect the Bank’s earnings or its
equity position.
51. Explanation added for translation into English
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally
accepted accounting principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-
IFRS for banks).
148
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original
Spanish-language version prevails.
Appendices
149
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original
Spanish-language version prevails.
BBVA Group Consolidated Financial Statements
APPENDIX I. BBVA Group Consolidated Financial Statements
BBVA Group Consolidated Financial Statements
BBVA Group Consolidated Financial Statements
Consolidated balance sheets as of December 31, 2014, 2013 and 2012
ASSETS
CASH AND BALANCES WITH CENTRAL BANKS
FINANCIAL ASSETS HELD FOR TRADING
Loans and advances to credit institutions
Loans and advances to customers
Debt securities
Equity instruments
Trading derivatives
OTHER FINANCIAL ASSETS DESIGNATED AT FAIR VALUE
THROUGH PROFIT OR LOSS
Loans and advances to credit institutions
Loans and advances to customers
Debt securities
Equity instruments
AVAILABLE-FOR-SALE FINANCIAL ASSETS
Debt securities
Equity instruments
LOANS AND RECEIVABLES
Loans and advances to credit institutions
Loans and advances to customers
Debt securities
HELD-TO-MATURITY INVESTMENTS
FAIR VALUE CHANGES OF THE HEDGED ITEMS IN PORTFOLIO
HEDGES OF INTEREST RATE RISK
HEDGING DERIVATIVES
NON-CURRENT ASSETS HELD FOR SALE
EQUITY METHOD
Associates
Jointly ventures
INSURANCE CONTRACTS LINKED TO PENSIONS
REINSURANCE ASSETS
TANGIBLE ASSETS
Property, plants and equipment
For own use
Other assets leased out under an operating lease
Investment properties
INTANGIBLE ASSETS
Goodwill
Other intangible ass ets
TAX ASSETS
Current
Deferred
OTHER ASSETS
Inventories
Rest
TOTAL ASSETS
Millions of Euros
2014
2013
2012
31,430
83,258
-
128
33,883
5,017
44,229
2,761
-
-
737
2,024
94,875
87,608
7,267
372,375
27,059
338,657
6,659
-
121
2,551
3,793
4,509
417
4,092
-
559
7,820
6,428
5,985
443
1,392
7,371
5,697
1,673
12,426
2,035
10,391
8,094
4,443
3,651
631,942
34,903
72,112
-
106
29,602
4,766
37,638
2,413
-
-
663
1,750
77,774
71,806
5,968
350,945
22,862
323,607
4,476
-
98
2,530
2,880
4,742
1,272
3,470
-
619
7,534
5,841
5,373
468
1,693
6,759
5,069
1,690
11,704
2,502
9,202
7,684
4,636
3,048
582,697
35,494
79,829
-
244
28,020
2,915
48,650
2,530
-
-
753
1,777
67,500
63,548
3,952
371,347
25,448
342,163
3,736
10,162
226
4,894
4,229
10,782
6,469
4,313
7
50
7,572
5,702
5,177
525
1,870
7,132
5,430
1,702
11,710
1,851
9,859
7,668
4,223
3,445
621,132
150
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original
Spanish-language version prevails.
LIABILITIES AND EQUITY
2014
2013
2012
Millions of Euros
FINANCIAL LIABILITIES HELD FOR TRADING
Deposits from central banks
Deposits from credit institutions
Customer deposits
Debt certificates
Trading derivatives
Short positions
Other financial liabilities
OTHER FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE
THROUGH PROFIT OR LOSS
Deposits from central banks
Deposits from credit institutions
Customer deposits
Debt certificates
Subordinated liabilities
Other financial liabilities
FINANCIAL LIABILITIES AT AMORTIZED COST
Deposits from central banks
Deposits from credit institutions
Customer deposits
Debt certificates
Subordinated liabilities
Other financial liabilities
FAIR VALUE CHANGES OF THE HEDGED ITEMS IN PORTFOLIO
HEDGES OF INTEREST RATE RISK
HEDGING DERIVATIVES
LIABILITIES ASSOCIATED WITH NON-CURRENT ASSETS HELD
FOR SALE
LIABILITIES UNDER INSURANCE CONTRACTS
PROVISIONS
Provisions for pensions and similar obligations
Provisions for taxes and other legal contingencies
Provisions for contingent risks and commitments
Other provisions
TAX LIABILITIES
Current
Deferred
OTHER LIABILITIES
TOTAL LIABILITIES
56,798
-
-
-
-
45,052
11,747
-
2,724
-
-
-
-
-
2,724
491,899
28,193
65,168
319,060
58,096
14,095
7,288
45,648
-
-
-
-
38,119
7,529
-
2,467
-
-
-
-
-
2,467
464,549
30,893
52,423
300,490
64,120
10,556
6,067
55,834
-
-
-
-
49,254
6,580
-
2,216
-
-
-
-
-
2,216
490,807
46,475
55,675
282,795
86,255
11,815
7,792
-
2,331
-
1,792
-
2,968
-
10,460
7,444
5,970
262
381
831
4,157
980
3,177
4,519
580,333
-
9,834
6,853
5,512
208
346
787
2,530
993
1,537
4,460
538,133
387
9,020
7,834
5,777
406
322
1,329
3,820
1,058
2,762
4,586
577,472
151
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original
Spanish-language version prevails.
Consolidated balance sheets as of December 31, 2014, 2013 and 2012
LIABILITIES AND EQUITY (Continued )
2014
2013
2012
Millions of Euros
STOCKHOLDERS’ FUNDS
Common Stock
Issued
Unpaid and uncalled (-)
Share premium
Reserves
Accumulated reserves (losses)
Reserves (losses) of entities accounted for using the equity
method
Other equity instruments
Equity component of compound financial instruments
Other equity instruments
Less: Treasury stock
Income attributed to the parent company
Less: Dividends and remuneration
VALUATION ADJUSTMENTS
Available-for-sale financial assets
Cash flow hedging
Hedging of net investment in foreign transactions
Exchange differences
Non-current assets held-for-sale
Entities accounted for using the equity method
Other valuation adjustments
NON-CONTROLLING INTEREST
Valuation adjustments
Rest
TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY
MEMORANDUM ITEM
CONTINGENT RISKS
CONTINGENT COMMITMENTS
49,446
3,024
3,024
-
23,992
20,936
20,304
633
67
-
67
(350)
2,618
(841)
(348)
3,816
(46)
(373)
(2,173)
-
(796)
(777)
2,511
(53)
2,563
51,609
631,942
46,025
2,835
2,835
-
22,111
19,767
19,317
450
59
-
59
(66)
2,084
(765)
(3,831)
851
8
(100)
(3,023)
3
(1,130)
(440)
2,371
70
2,301
44,565
582,697
43,473
2,670
2,670
-
20,968
19,531
18,580
951
62
-
62
(111)
1,676
(1,323)
(2,184)
(238)
36
(243)
(1,164)
(104)
(24)
(447)
2,372
188
2,184
43,661
621,132
Millions of Euros
2014
2013
2012
33,741
106,252
33,543
94,170
37,019
90,142
152
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original
Spanish-language version prevails.
Consolidated income statements for the years ended December 31, 2014, 2013 and
2012
INTEREST AND SIMILAR INCOME
INTEREST AND SIMILAR EXPENSES
NET INTEREST INCOME
DIVIDEND INCOME
SHARE OF PROFIT OR LOSS OF ENTITIES ACCOUNTED FOR
USING THE EQUITY METHOD
FEE AND COMMISSION INCOME
FEE AND COMMISSION EXPENSES
NET GAINS (LOSSES) ON FINANCIAL ASSETS AND
LIABILITIES
Financial instruments held for trading
Other financial instruments at fair value through profit or loss
Other financial instruments not at fair value through profit or
loss
Rest
EXCHANGE DIFFERENCES (NET)
OTHER OPERATING INCOME
Income on insurance and reinsurance contracts
Financial income from non-financial services
Rest of other operating income
OTHER OPERATING EXPENSES
Expenses on insurance and reinsurance contracts
Changes in inventories
Rest of other operating expenses
GROSS INCOME
ADMINISTRATION COSTS
Personnel expenses
General and adm inistrative expenses
DEPRECIATION AND AMORTIZATION
PROVISIONS (NET)
IMPAIRMENT LOSSES ON FINANCIAL ASSETS (NET)
Loans and receivables
Other financial instruments not at fair value through profit or
loss
NET OPERATING INCOME
Millions of Euros
2014
2013
2012
22,838
(8,456)
14,382
531
343
5,530
(1,356)
1,435
11
23,512
(9,612)
13,900
235
694
5,478
(1,228)
1,608
540
24,815
(10,341)
14,474
390
1,039
5,290
(1,134)
1,636
653
27
49
69
1,397
-
699
4,581
3,622
650
308
(5,420)
(2,714)
(506)
(2,200)
20,725
(9,414)
(5,410)
(4,004)
(1,145)
(1,142)
(4,340)
(4,304)
(36)
4,684
1,019
-
903
4,995
3,761
851
383
(5,833)
(2,831)
(495)
(2,507)
20,752
(9,701)
(5,588)
(4,113)
(1,095)
(609)
(5,612)
(5,577)
(35)
3,735
914
-
69
4,765
3,631
807
327
(4,705)
(2,646)
(406)
(1,653)
21,824
(9,396)
(5,467)
(3,929)
(978)
(641)
(7,859)
(7,817)
(42)
2,950
153
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original
Spanish-language version prevails.
Consolidated income statements for the years ended December 31, 2014, 2013 and
2012
(Continued)
NET OPERATING INCOME
IMPAIRMENT LOSSES ON OTHER ASSETS (NET)
Goodwill and other intangible assets
Other assets
GAINS (LOSSES) ON DERECOGNIZED ASSETS NOT
CLASSIFIED AS NON-CURRENT ASSETS HELD FOR SALE
NEGATIVE GOODWILL
GAINS (LOSSES) IN NON-CURRENT ASSETS HELD FOR SALE
NOT CLASSIFIED AS DISCONTINUED OPERATIONS
OPERATING PROFIT BEFORE TAX
INCOME TAX
PROFIT FROM CONTINUING OPERATIONS
PROFIT FROM DISCONTINUED OPERATIONS (NET)
PROFIT
Profit attributable to parent company
Profit attributable to non-controlling interests
EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share
Millions of Euros
2014
2013
2012
4,684
(297)
(8)
(289)
3,735
(467)
(14)
(453)
2,950
(1,123)
(54)
(1,069)
46
-
(1,915)
-
(453)
3,980
(898)
3,082
-
3,082
2,618
464
(399)
954
16
970
1,866
2,836
2,084
753
3
376
(624)
1,582
352
1,934
393
2,327
1,676
651
Euros
2014
2013 (*)
2012 (*)
0.44
0.44
0.36
0.36
0.30
0.30
154
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting principles (Bank of Spain Circular 4/2004, and as amended thereafter,
which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-language version prevails.
Consolidated statements of changes in equity for the years ended December 31, 2014, 2013 and 2012
2014
C o m m o n
S t o c k
S ha re
P re m ium
R e s e rv e s
A c c um ula t ed
R e s e rv e s
( Lo s s e s )
R e se rv e s
( Lo s s e s ) f ro m
E nt it ies
A cc o unt e d f o r
Us ing the E quit y
M et ho d
O t her
E quit y
Ins t rum ent s
Le s s :
T rea s ury
S t o c k
P ro f it
A t tribut a ble
t o the
P a rent
C o m pa ny
Le ss :
D iv ide nds
a nd
R e m une ra t io ns
Total
Stock holders'
Funds
V a lua t io n
A djust m ent s
Total
Non-
controlling
Interests
Total
Equity
T o ta l E quit y A t t ribut e d t o the P a re nt C o m pa ny
M illio ns o f E uro s
S t o c k ho lde rs ’ F unds
( 6 6 )
2 ,2 2 8
( 76 5 )
4 6 ,3 10
( 3 ,8 3 1)
4 2 ,4 7 9
2 ,3 7 1
4 4 ,85 0
-
-
( 76 5 )
-
(7 6 )
-
-
-
-
-
-
(597)
-
765
-
-
(244)
-
244
( 84 1)
(285)
-
4 6 ,0 2 5
2 ,6 18
8 0 3
2,000
-
-
44
-
-
(597)
(279)
-
-
(29)
(336)
-
244
-
-
( 3 ,8 3 1)
3,4 8 3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(285)
-
4 2 ,19 4
6 ,10 1
8 0 3
2,000
-
-
44
-
-
(597)
(279)
-
-
(29)
(336)
-
244
-
-
2 ,3 7 1
3 4 1
(2 0 1)
-
-
-
-
-
-
(243)
-
-
-
-
42
-
-
(285)
-
4 4 ,56 5
6 ,44 2
60 2
2,000
-
-
44
-
-
(840)
(279)
-
-
(29)
(294)
-
244
4 9 ,4 4 6
( 3 4 8 )
4 9 ,0 9 8
2 ,5 11
5 1,60 9
Balances as of January 1, 2014 (*)
Effect o f changes in acco unting po licies (*)
Effect o f co rrection o f erro rs
Adjus ted initial balance
Total incom e/expense recognize d
Othe r change s in e quity
Co mmo n sto ck increase
Co mmo n sto ck reductio n
Co nversio n of financial liabilities into capital
Increase o f o ther equity instruments
Reclassificatio n o f financial liabilities to o ther equity instruments
Reclassificatio n o f o ther equity instruments to financial liabilities
Dividend distributio n
Transactio ns including treasury sto ck and o ther equity instruments (net)
Transfers between to tal equity entries
Increase/Reduction due to business co mbinatio ns
P ayments with equity instruments
Rest o f increases/reductions in to tal equity
Of which:
A cquisitio n o f the free allo tment rights
Balances as of Decem ber 31, 2014
2 ,8 3 5
22 ,111
19 ,4 5 8
-
-
-
-
(141)
-
2 ,8 3 5
22 ,111
19 ,3 17
-
18 9
189
-
1,8 8 1
1,881
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9 8 7
(70)
-
-
-
-
-
-
5
1,133
-
7
(88)
-
-
4 5 0
-
-
4 5 0
-
18 3
-
-
-
-
-
-
-
-
186
-
-
(3)
-
-
59
-
-
59
-
8
-
-
-
44
-
-
-
-
-
-
(36)
-
-
-
-
-
( 6 6 )
-
(144)
-
2 ,0 8 4
2 ,6 18
( 2 8 4 )
( 2 ,0 8 4 )
-
-
-
-
-
-
-
(284)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,084)
-
-
-
-
-
3 ,0 2 4
2 3,9 9 2
2 0 ,3 0 4
6 3 3
67
( 3 5 0 )
2 ,6 18
155
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting principles (Bank of Spain Circular 4/2004, and as amended thereafter,
which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-language version prevails.
Consolidated statements of changes in equity for the years ended December 31, 2014, 2013 and 2012
M illio ns o f E uro s
T o t a l E quit y A t t ribut e d t o t he P a re nt C o m pa ny
S t o c k ho lde rs ’ F unds
2013
C o m m o n
S t o c k
S ha re
P re m ium
R e s e rv e s
A c c um ula t e d
R e s e rv e s
( Lo s s e s )
R e s e rv e s
( Lo s s e s ) f ro m
E nt it ie s
A c c o unt e d f o r
Us ing t he E quit y
M e t ho d
O t he r
E quit y
Ins t rum e nt s
Le s s :
T re a s ury
S t o c k
P ro f it
A t t ribut a ble
t o t he
P a re nt
C o m pa ny
Le s s :
D iv ide nds
a nd
R e m une ra t io ns
Total
Stockholders'
Funds
V a lua t io n
A djus t m e nt s
Total
N o n-
c o nt ro lling
Int e re s t s
Total
Equity
(*)
Balances as of January 1, 2013 (**)
Effect o f changes in acco unting po licies (**)
Effect o f co rrectio n o f erro rs
Adjusted initial balance
Total incom e/expense recognized
Other changes in equity
Co mmo n sto ck increase
Co mmo n sto ck reductio n
Co nversio n o f financial liabilities into capital
Increase o f o ther equity instruments
Reclassificatio n o f financial liabilities to o ther equity instruments
Reclassificatio n o f o ther equity instruments to financial liabilities
Dividend distributio n
Transactio ns including treasury sto ck and o ther equity instruments (net)
Transfers between to tal equity entries
Increase/Reductio n due to business co mbinatio ns
P ayments with equity instruments
Rest o f increases/reductio ns in to tal equity
Of which:
A cquisitio n o f the free allo tment rights
Balances as of Decem ber 31, 2013
2 ,6 7 0
2 0 ,9 6 8
18 ,7 2 1
-
-
-
-
(141)
-
2 ,6 7 0
2 0 ,9 6 8
18 ,5 8 0
-
16 5
71
-
94
-
1,14 3
-
-
1,143
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7 3 7
(71)
-
-
-
-
-
-
30
853
-
22
(97)
-
-
9 5 1
-
-
9 5 1
-
( 5 0 1)
-
-
-
-
-
-
-
-
(501)
-
-
-
-
-
2,835
22,111
19,317
450
6 2
-
-
6 2
-
( 3 )
-
-
-
33
-
-
-
-
-
-
(36)
-
-
-
59
( 111)
1,6 7 6
( 1,3 2 3 )
-
-
( 111)
-
4 5
-
-
1,6 7 6
2 ,0 8 4
( 1,6 7 6 )
-
-
-
-
-
-
-
45
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,676)
-
-
-
-
-
(66)
2,084
-
-
( 1,3 2 3 )
-
5 5 8
-
-
-
-
-
-
(605)
-
1,324
-
-
(161)
-
(161)
(765)
43,614
(141)
-
43,473
2,084
468
-
-
1,237
33
-
-
(605)
75
-
-
(14)
(258)
-
(161)
46,025
( 2 ,18 4 )
-
-
( 2 ,18 4 )
( 1,6 4 7 )
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,831)
41,430
(141)
-
41,289
437
468
-
-
1,237
33
-
-
(605)
75
-
-
(14)
(258)
-
(161)
42,194
2 ,3 7 2
-
-
2 ,3 7 2
6 3 5
( 6 3 6 )
-
-
-
-
-
-
(482)
-
-
-
-
(154)
-
-
2,371
43,802
(141)
-
43,661
1,072
(168)
-
-
1,237
33
-
-
(1,087)
75
-
-
(14)
(412)
-
(161)
44,565
156
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting principles (Bank of Spain Circular 4/2004, and as amended thereafter,
which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-language version prevails.
Consolidated statements of changes in equity for the years ended December 31, 2014, 2013 and 2012
2012 (*)
C o m mo n
S t o c k
S ha re
P re m ium
R e s e rv e s
A c c um ula t e d
R e s e rv e s
( Lo s s e s )
R e s e rv e s
( Lo s s e s ) f ro m
E nt it ie s
A c c o unt e d f o r
Us ing t he E quit y
M e t ho d
O t he r
E quit y
Ins t rum e nt s
Le s s :
T re a s ury
S t o c k
P ro f it
A t t ribut a ble
t o t he
P a re nt
C o m pa ny
Le s s :
D iv ide nds
a nd
R e m une ra t io ns
Total
Stockholders'
Funds
V a lua t io n
A djus t me nt s
Total
N o n-
c o nt ro lling
Int e re s t s
Total
Equity
M illio ns o f E uro s
T o t a l E quit y A t t ribut e d t o t he P a re nt C o m pa ny
S t o c k ho lde rs ’ F unds
(300)
3,004
(1,116)
Balances as of January 1, 2012 (**)
Effect o f changes in acco unting po licies (**)
Effect o f co rrectio n o f erro rs
Adjus ted initial balance
Total incom e/expe nse recognized
Other changes in equity
Co mmo n sto ck increase
Co mmo n sto ck reductio n
Co nversio n o f financial liabilities into capital
Increase o f o ther equity instruments
Reclassificatio n o f financial liabilities to o ther equity instruments
Reclassificatio n o f o ther equity instruments to financial liabilities
Dividend distributio n
Transactio ns including treasury sto ck and o ther equity instruments (net)
Transfers between to tal equity entries
Increase/Reductio n due to business co mbinatio ns
P ayments with equity instruments
Rest o f increases/reductio ns in to tal equity
Of which:
A cquisitio n o f the free allo tment rights
Balances as of Decem ber 31, 2012
2,403
18,970
-
-
2,403
-
267
73
-
194
-
-
18,970
-
1,998
-
-
1,998
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17,580
(141)
-
17,439
-
1,141
(73)
-
-
-
-
-
-
81
1,291
-
(28)
(130)
-
-
2,670
20,968
18,580
360
-
-
360
-
591
-
-
-
-
-
-
-
-
597
-
-
(6)
-
-
951
-
-
(1,116)
-
(207)
-
-
-
-
-
-
(1,073)
-
1,116
-
-
(250)
-
(250)
(1,323)
40,952
(141)
-
40,811
1,676
986
-
-
2,192
32
-
-
(1,073)
270
-
-
(49)
(386)
-
(250)
43,473
(2,787)
-
-
(2,787)
603
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,184)
38,165
(141)
-
38,024
2,279
986
-
-
2,192
32
-
-
(1,073)
270
-
-
(49)
(386)
-
(250)
41,289
1,893
-
-
1,893
802
(323)
-
-
-
-
-
-
40,058
(141)
-
39,917
3,081
663
-
-
2,192
32
-
-
(357)
(1,430)
-
-
-
-
34
-
-
2,372
270
-
-
(49)
(352)
-
(250)
43,661
51
-
-
51
-
11
-
-
-
32
-
-
-
-
-
-
(21)
-
-
-
-
-
(300)
-
189
-
-
-
-
-
-
-
189
-
-
-
-
-
-
-
-
3,004
1,676
(3,004)
-
-
-
-
-
-
-
-
(3,004)
-
-
-
-
-
62
(111)
1,676
157
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original
Spanish-language version prevails.
Consolidated statements of recognized income and expenses for the years ended
December 31, 2014, 2013 and 2012
PROFIT RECOGNIZED IN INCOME STATEMENT
OTHER RECOGNIZED INCOME (EXPENSES)
ITEMS NOT SUBJECT TO RECLASSIFICATION TO INCOME STATEMENT
Actuarial gains and losses from defined benefit pension
plans
Non-current assets available for sale
Entities under the equity method of accounting
Income tax related to items not subject to reclassification
to income statement
ITEMS SUBJECT TO RECLASSIFICATION TO INCOME STATEMENT
Available-for-sale financial assets
Valuation gains/(losses)
Amounts reclassified to income statement
Reclassifications (other)
Cash flow hedging
Valuation gains/(losses)
Amounts reclassified to income statement
Amounts reclassified to the initial carrying amount of the
hedged items
Reclassifications (other)
Hedging of net investment in foreign transactions
Valuation gains/(losses)
Amounts reclassified to income statement
Reclassifications (other)
Exchange differences
Valuation gains/(losses)
Amounts reclassified to income statement
Reclassifications (other)
Non-current assets held for sale
Valuation gains/(losses)
Amounts reclassified to income statement
Reclassifications (other)
Entities accounted for using the equity method
Valuation gains/(losses)
Amounts reclassified to income statement
Reclassifications (other)
Rest of recognized income and expenses
Income tax
TOTAL RECOGNIZED INCOME/EXPENSES
Attributable to the parent company
Attributable to non-controlling interest
Millions of Euros
2014
2013
2012
3,082
3,359
(346)
(498)
-
(5)
157
3,705
4,306
4,770
(464)
-
(71)
(71)
-
-
-
(273)
(273)
-
-
760
761
(1)
-
(4)
(4)
-
-
338
337
1
-
-
(1,351)
6,441
6,100
341
2,836
(1,765)
8
11
-
1
(4)
(1,773)
1,659
1,737
(140)
62
(32)
(31)
-
-
(1)
143
143
-
-
(2,045)
(2,026)
(19)
-
135
-
135
-
(1,054)
(736)
(260)
(58)
-
(579)
1,071
436
635
2,327
754
(224)
(316)
-
(5)
97
978
679
541
109
29
7
7
-
-
-
(84)
(84)
-
-
601
601
-
-
(103)
(103)
-
-
238
238
-
-
-
(360)
3,081
2,279
802
158
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original
Spanish-language version prevails.
Consolidated statements of cash flows for the years ended December 31, 2014,
2013 and 2012
Millions of Euros
2014
2013
2012
CASH FLOW FROM OPERATING ACTIVITIES ( 1)
Profit for the year
Adjustments to obtain the cash flow from operating activities:
Depreciation and amortization
Other adjustments
Net increase/decrease in operating assets
Financial assets held for trading
Other financial assets designated at fair value through profit
or loss
Available-for-sale financial assets
Loans and receivables
Other operating assets
Net increase/decrease in operating liabilities
Financial liabilities held for trading
Other financial liabilities designated at fair value through profit
or loss
Financial liabilities at amortized cost
Other operating liabilities
Collection/Payments for income tax
CASH FLOWS FROM INVESTING ACTIVITIES ( 2 )
Investment
Tangible assets
Intangible assets
Inves tm ents
Subs idiaries and other business units
Non-current assets held for sale and associated liabilities
Held-to-maturity investments
Other settlements related to investing activities
Divestments
Tangible assets
Intangible assets
Inves tm ents
Subs idiaries and other business units
Non-current assets held for sale and associated liabilities
Held-to-maturity investments
Other collections related to investing activities
(6,188)
3,082
8,315
1,145
7,170
(53,244)
(11,145)
(349)
(13,485)
(27,299)
(966)
36,557
11,151
256
24,219
931
(898)
(1,151)
(1,984)
(1,419)
(467)
-
(98)
-
-
-
833
167
-
118
-
548
-
-
(500)
2,836
8,332
1,099
7,233
25,613
7,717
117
1,938
12,704
3,137
(37,265)
(10,186)
251
(24,660)
(2,670)
(16)
3,021
(2,325)
(1,252)
(526)
(547)
-
-
-
-
5,346
101
-
944
3,299
571
431
-
9,728
2,327
10,400
978
9,422
(38,637)
(9,358)
243
(12,463)
(12,073)
(4,986)
35,990
4,656
595
28,072
2,666
(352)
(1,060)
(2,522)
(1,685)
(777)
-
-
-
(60)
-
1,462
-
-
19
-
590
853
-
159
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original
Spanish-language version prevails.
Consolidated statements of cash flows for the years ended December 31, 2014,
2013 and 2012
(Continued)
CASH FLOWS FROM FINANCING ACTIVITIES (3)
Investment
Dividends
Subordinated liabilities
Comm on stock am ortization
Treasury stock acquisition
Other items relating to financing activities
Divestments
Subordinated liabilities
Comm on stock increase
Treasury stock dispos al
Other items relating to financing activities
EFFECT OF EXCHANGE RATE CHANGES ( 4 )
NET INCREASE/DECREASE IN CASH OR CASH EQUIVALENTS
( 1+2 +3 +4 )
CASH OR CASH EQUIVALENTS AT BEGINNING OF THE YEAR
CASH OR CASH EQUIVALENTS AT END OF THE YEAR
Millions of Euros
2014
2013
2012
3,157
(5,955)
(826)
(1,046)
-
(3,770)
(313)
9,112
3,628
2,000
3,484
-
725
(3,457)
34,887
31,430
(1,326)
(6,104)
(1,275)
(697)
-
(3,614)
(518)
4,778
1,088
2
3,688
-
(1,784)
(589)
35,476
34,887
(3,492)
(10,387)
(1,269)
(3,930)
-
(4,831)
(357)
6,895
1,793
-
5,102
-
471
5,647
29,829
35,476
Millions of Euros
COMPONENTS OF CASH AND EQUIVALENT AT END OF THE YEAR
2014
2013
2012
Cas h
Balance of cash equivalent in central banks
Other financial as sets
Less: Bank overdraft refundable on demand
TOTAL CASH OR CASH EQUIVALENTS AT END OF THE YEAR
Of which:
Held by cons olidated subsidiaries but not available for the
Group
6,247
25,183
-
-
31,430
-
5,533
29,354
-
-
34,887
-
5,155
30,321
-
-
35,476
-
-
-
-
160
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting principles (Bank of Spain Circular 4/2004, and as amended thereafter,
which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-language version prevails.
APPENDIX II.
Additional information on consolidated subsidiaries composing the BBVA Group
Additional Information on Consolidated Subsidiaries composing the BBVA Group
Company
Location
Activity
Direct
Indirect
Total
Net
Carrying
Amount
Assets
12.31.14
Liabilities
12.31.14
Equity
12.31.14
Profit
(Loss)
12.31.14
% of Voting Rights
Controlled by the Bank
Millions of Euros (*)
Affiliate Entity Data
AMERICAN FINANCE GROUP, INC.
ANIDA DESARROLLOS INMOBILIARIOS, S.L.
ANIDA GERMANIA IMMOBILIEN ONE, GMBH
ANIDA GRUPO INMOBILIARIO, S.L.
ANIDA INMOBILIARIA, S.A. DE C.V.
ANIDA OPERACIONES SINGULARES, S.A.
ANIDA PROYECTOS INMOBILIARIOS, S.A. DE C.V.
ANIDA SERVICIOS INMOBILIARIOS, S.A. DE C.V.
ANIDAPORT INVESTIMENTOS IMOBILIARIOS, UNIPESSOAL, LTDA
APLICA SOLUCIONES TECNOLOGICAS CHILE LIMITADA
APLICA TECNOLOGIA AVANZADA OPERADORA, S.A. DE C.V.
APLICA TECNOLOGIA AVANZADA SERVICIOS, S.A. DE C.V.
APLICA TECNOLOGIA AVANZADA, S.A. DE C.V.- ATA
ARIZONA FINANCIAL PRODUCTS, INC
ARRAHONA AMBIT, S.L.
ARRAHONA IMMO, S.L.
ARRAHONA NEXUS, S.L.
ARRAHONA RENT, S.L.U.
ARRELS CT FINSOL, S.A.
ARRELS CT LLOGUER, S.A.
ARRELS CT PATRIMONI I PROJECTES, S.A.
ARRELS CT PROMOU, S.A.
AUMERAVILLA, S.L.
BAHIA SUR RESORT, S.C.
BANCO BILBAO VIZCAYA ARGENTARIA (PORTUGAL), S.A.
BANCO BILBAO VIZCAYA ARGENTARIA CHILE, S.A.
BANCO BILBAO VIZCAYA ARGENTARIA URUGUAY, S.A.
BANCO CONTINENTAL, S.A. (1)
BANCO DE PROMOCION DE NEGOCIOS, S.A.
BANCO DEPOSITARIO BBVA, S.A.
BANCO INDUSTRIAL DE BILBAO, S.A.
BANCO OCCIDENTAL, S.A.
BANCO PROVINCIAL OVERSEAS N.V.
BANCO PROVINCIAL S.A. - BANCO UNIVERSAL
BANCOMER FINANCIAL SERVICES INC.
BANCOMER FOREIGN EXCHANGE INC.
BANCOMER PAYMENT SERVICES INC.
BANCOMER TRANSFER SERVICES, INC.
BBV AMERICA, S.L.
BBVA ASESORIAS FINANCIERAS, S.A.
INACTIVE
REAL ESTATE
REAL ESTATE
INVESTMENT COMPANY
INVESTMENT COMPANY
REAL ESTATE
REAL ESTATE
SERVICES
UNITED STATES
SPAIN
GERMANY
SPAIN
MEXICO
SPAIN
MEXICO
MEXICO
PORTUGAL REAL ESTATE
SERVICES
CHILE
SERVICES
MEXICO
SERVICES
MEXICO
SERVICES
MEXICO
FINANCIAL SERVICES
UNITED STATES
REAL ESTATE
SPAIN
REAL ESTATE
SPAIN
REAL ESTATE
SPAIN
REAL ESTATE
SPAIN
REAL ESTATE
SPAIN
REAL ESTATE
SPAIN
REAL ESTATE
SPAIN
INVESTMENT COMPANY
SPAIN
REAL ESTATE
SPAIN
SPAIN
INACTIVE
PORTUGAL BANKING
CHILE
BANKING
URUGUAY BANKING
BANKING
PERU
BANKING
SPAIN
BANKING
SPAIN
BANKING
SPAIN
BANKING
SPAIN
BANKING
CURAÇAO
BANKING
VENEZUELA
FINANCIAL SERVICES
UNITED STATES
FINANCIAL SERVICES
UNITED STATES
FINANCIAL SERVICES
UNITED STATES
FINANCIAL SERVICES
UNITED STATES
INVESTMENT COMPANY
SPAIN
FINANCIAL SERVICES
CHILE
-
-
-
100.00
-
-
-
-
-
-
-
-
100.00
-
-
-
-
-
-
-
-
-
-
99.95
52.20
-
100.00
-
-
-
-
49.43
-
1.46
-
-
-
-
100.00
-
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
-
47.80
68.18
-
92.24
99.86
100.00
99.93
50.57
100.00
53.75
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
99.95
100.00
68.18
100.00
92.24
99.86
100.00
99.93
100.00
100.00
55.21
100.00
100.00
100.00
100.00
100.00
100.00
17
51
4
271
155
244
91
2
25
-
5
-
160
805
-
53
-
9
-
-
-
-
2
1
105
682
110
1,424
15
2
97
17
51
493
2
6
-
34
479
1
17
516
7
1,987
133
4,583
131
2
112
1
14
3
322
806
76
291
234
11
288
39
135
19
2
1
5,203
16,275
2,603
17,542
19
2,709
153
18
586
21,157
2
7
-
67
1,745
1
-
464
-
1,717
-
4,316
40
-
99
-
9
2
125
1
112
204
327
-
344
44
165
28
-
-
4,982
15,275
2,433
15,999
-
2,667
13
-
533
19,131
-
2
-
32
-
-
17
87
7
742
122
643
82
2
21
-
4
-
190
802
(25)
75
(72)
11
(22)
(2)
(28)
(11)
2
1
284
903
157
1,187
19
21
126
18
53
1,727
2
3
-
25
1,784
1
-
(35)
-
(471)
11
(375)
10
-
(7)
-
-
-
7
2
(12)
12
(21)
(1)
(33)
(2)
(3)
2
-
-
(64)
97
13
357
-
22
14
-
-
299
-
3
-
9
(39)
-
Impairment lo sses due to pro perty, real estate and sto cks, o f Spanish Real Estate co mpanies,
acco rding to Ro yal Decree-Law 10/2008 and successive, are no t co unted fo r purpo ses o f A rticle 363 o f
the Co mpanies A ct Capital.
(*) Info rmatio n o n fo reign co mpanies at exchange rate o n December 31, 2014
(1) Full co nso lidatio n metho d is used acco rding to acco unting rules (see Glo ssary)
161
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting principles (Bank of Spain Circular 4/2004, and as amended thereafter,
which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-language version prevails.
Additional Information on Consolidated Subsidiaries composing the BBVA Group (Continued)
Company
Location
Activity
Direct
Indirect
Total
Net
Carrying
Amount
Assets
12.31.14
Liabilities
12.31.14
Equity
12.31.14
Profit
(Loss)
12.31.14
% of Voting Rights
Controlled by the Bank
Millions of Euros(*)
Affiliate Entity Data
BBVA ASSET MANAGEMENT ADMINISTRADORA GENERAL DE FONDOS S.A.
CHILE
FINANCIAL SERVICES
BBVA ASSET MANAGEMENT CONTINENTAL S.A. SAF (1)
PERU
FINANCIAL SERVICES
BBVA ASSET MANAGEMENT, S.A. SOCIEDAD FIDUCIARIA (BBVA FIDUCIARIA)
COLOMBIA FINANCIAL SERVICES
BBVA ASSET MANAGEMENT, S.A., SGIIC
BBVA AUTOMERCANTIL, COMERCIO E ALUGER DE VEICULOS AUTOMOVEIS,LDA.
SPAIN
PORTUGAL FINANCIAL SERVICES
OTHER INVESTMENT COMPANIES
BBVA AUTORENTING, S.A.
BBVA BANCO DE FINANCIACION S.A.
BBVA BANCO FRANCES, S.A.
BBVA BANCOMER GESTION, S.A. DE C.V.
BBVA BANCOMER OPERADORA, S.A. DE C.V.
BBVA BANCOMER SEGUROS SALUD, S.A. DE C.V.
BBVA BANCOMER SERVICIOS ADMINISTRATIVOS, S.A. DE C.V.
BBVA BANCOMER USA, INC.
BBVA BANCOMER, S.A.,INSTITUCION DE BANCA MÚLTIPLE, GRUPO FINANCIERO
BBVA BANCOMER
BBVA BRASIL BANCO DE INVESTIMENTO, S.A.
BBVA BROKER, CORREDURIA DE SEGUROS Y REASEGUROS, S.A.
BBVA CAPITAL FINANCE, S.A.
BBVA COLOMBIA, S.A.
BBVA COMERCIALIZADORA LTDA.
BBVA COMPASS BANCSHARES, INC
BBVA COMPASS FINANCIAL CORPORATION
BBVA COMPASS INSURANCE AGENCY, INC
BBVA CONSOLIDAR SEGUROS, S.A.
BBVA CONSULTING ( BEIJING) LIMITED
BBVA CONSULTORIA, S.A.
BBVA CONSUMER FINANCE ENTIDAD DE DESARROLLO A LA PEQUEÑA Y MICRO
EMPRESA, EDPYME, S.A. (BBVA CONSUMER FINANCE - EDPYME)
BBVA CORREDORA TECNICA DE SEGUROS LIMITADA
BBVA CORREDORES DE BOLSA LIMITADA
BBVA DATA & ANALYTICS, S.L.
BBVA DINERO EXPRESS, S.A.U
BBVA DISTRIBUIDORA DE SEGUROS S.R.L.
BBVA ELCANO EMPRESARIAL II, S.A. EN LIQUIDACION
BBVA ELCANO EMPRESARIAL, S.A. EN LIQUIDACION
BBVA FACTORING LIMITADA (CHILE)
BBVA FINANCE (UK), LTD.
BBVA FINANZIA, S.p.A
BBVA FRANCES ASSET MANAGMENT S.A. SOCIEDAD GERENTE DE FONDOS
COMUNES DE INVERSIÓN.
BBVA FRANCES VALORES, S.A.
BBVA FUNDOS, S.GESTORA FUNDOS PENSOES,S.A.
BBVA GEST, S.G.DE FUNDOS DE INVESTIMENTO MOBILIARIO, S.A.
Impairment losses due to property, real estate and stocks, of Spanish Real Estate
companies, according to Royal Decree-Law 10/2008 and successive, are not
counted for purposes of Article 363 of the Companies Act Capital.
(*) Information on foreign companies at exchange rate on December 31, 2014
(1) Full consolidation method is used according to accounting rules (see Glossary)
SPAIN
SPAIN
ARGENTINA
MEXICO
MEXICO
MEXICO
MEXICO
UNITED STATES
SERVICES
BANKING
BANKING
FINANCIAL SERVICES
SERVICES
INSURANCES SERVICES
SERVICES
INVESTMENT COMPANY
FINANCIAL SERVICES
FINANCIAL SERVICES
BANKING
MEXICO
BRASIL BANKING
SPAIN
SPAIN
COLOMBIA BANKING
CHILE
UNITED STATES
UNITED STATES
UNITED STATES
ARGENTINA
CHINA
SPAIN
FINANCIAL SERVICES
INVESTMENT COMPANY
FINANCIAL SERVICES
FINANCIAL SERVICES
INSURANCES SERVICES
FINANCIAL SERVICES
SERVICES
FINANCIAL SERVICES
PERU
FINANCIAL SERVICES
CHILE
SECURITIES DEALER
CHILE
SERVICES
SPAIN
SPAIN
FINANCIAL SERVICES
URUGUAY FINANCIAL SERVICES
SPAIN
SPAIN
CHILE
UNITED KINGDOM
ITALY
IN LIQUIDATION
IN LIQUIDATION
FINANCIAL SERVICES
IN LIQUIDATION
FINANCIAL SERVICES
ARGENTINA
ARGENTINA
PORTUGAL PENSION FUNDS MANAGEMENT
PORTUGAL SECURITIES DEALER
FINANCIAL SERVICES
SECURITIES DEALER
162
-
-
-
17.00
100.00
100.00
-
45.61
-
-
-
-
-
-
100.00
99.94
100.00
76.20
-
100.00
-
-
87.78
-
-
-
-
-
-
100.00
-
45.00
45.00
-
-
100.00
-
-
-
-
100.00
100.00
100.00
83.00
-
-
100.00
30.32
100.00
100.00
100.00
100.00
100.00
100.00
-
0.06
-
19.23
100.00
-
100.00
100.00
12.22
100.00
100.00
84.32
100.00
100.00
100.00
-
100.00
-
-
100.00
100.00
-
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
75.93
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
95.43
100.00
100.00
100.00
100.00
100.00
100.00
100.00
84.32
100.00
100.00
100.00
100.00
100.00
45.00
45.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
14
15
31
11
5
69
64
157
26
159
21
16
45
7,498
16
-
-
377
4
9,754
214
131
9
-
4
15
13
50
-
2
2
14
14
8
3
29
8
2
1
1
16
20
34
145
20
389
2,159
6,927
43
440
30
101
46
85,940
37
24
37
14,592
4
9,966
483
133
110
2
5
52
18
589
3
5
2
36
36
88
12
318
19
4
15
8
2
5
3
83
15
335
2,084
5,932
16
281
9
85
1
78,458
3
6
36
13,390
1
103
270
2
75
1
1
34
4
538
2
1
0
4
4
79
-
291
6
1
1
-
8
12
25
27
5
40
74
697
11
108
18
11
33
6,075
31
13
-
1,019
3
9,512
214
126
23
1
5
19
8
84
-
4
1
28
28
8
12
23
7
2
13
8
5
3
6
35
-
13
-
298
15
51
3
6
12
1,407
2
5
-
183
-
351
(1)
5
12
-
-
(1)
6
(34)
1
-
1
4
4
-
-
4
5
1
1
-
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting principles (Bank of Spain Circular 4/2004, and as amended thereafter,
which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-language version prevails.
Additional Information on Consolidated Subsidiaries composing the BBVA Group (Continued)
Company
Location
Activity
Direct
Indirect
Total
Net
Carrying
Amount
Assets
12.31.14
Liabilities
12.31.14
Equity
12.31.14
Profit
(Loss)
12.31.14
% of Voting Rights
Controlled by the Bank
Millions of Euros(*)
Affiliate Entity Data
BBVA GLOBAL FINANCE LTD.
BBVA GLOBAL MARKETS B.V.
BBVA INMOBILIARIA E INVERSIONES, S.A.
BBVA INSTITUIÇAO FINANCEIRA DE CREDITO, S.A.
BBVA INTERNATIONAL LIMITED
BBVA INTERNATIONAL PREFERRED, S.A.U.
BBVA INVERSIONES CHILE, S.A.
BBVA IRELAND PLC
CAYMAN ISLANDS
FINANCIAL SERVICES
NETHERLANDS
FINANCIAL SERVICES
CHILE
REAL ESTATE
PORTUGAL FINANCIAL SERVICES
CAYMAN ISLANDS
FINANCIAL SERVICES
SPAIN
CHILE
IRELAND
FINANCIAL SERVICES
INVESTMENT COMPANY
FINANCIAL SERVICES
BBVA LEASIMO - SOCIEDADE DE LOCAÇAO FINANCEIRA, S.A.
PORTUGAL FINANCIAL SERVICES
BBVA LUXINVEST, S.A.
LUXEMBOURG
INVESTMENT COMPANY
BBVA MEDIACION OPERADOR DE BANCA-SEGUROS VINCULADO, S.A.
SPAIN
FINANCIAL SERVICES
BBVA NOMINEES LIMITED
BBVA PARAGUAY, S.A.
BBVA PARTICIPACIONES MEJICANAS, S.L.
BBVA PENSIONES, SA, ENTIDAD GESTORA DE FONDOS DE PENSIONES
BBVA PLANIFICACION PATRIMONIAL, S.L.
UNITED KINGDOM
SERVICES
PARAGUAY
BANKING
SPAIN
SPAIN
SPAIN
INVESTMENT COMPANY
PENSION FUNDS MANAGEMENT
FINANCIAL SERVICES
BBVA PREVISIÓN AFP S.A. ADM.DE FONDOS DE PENSIONES
BOLIVIA PENSION FUNDS MANAGEMENT
BBVA PROPIEDAD, S.A.
BBVA RE LIMITED
BBVA REAL ESTATE MEXICO, S.A. DE C.V.
BBVA RENTAS E INVERSIONES LIMITADA
BBVA RENTING, S.A.
BBVA SECURITIES INC.
BBVA SEGUROS COLOMBIA, S.A.
BBVA SEGUROS DE VIDA COLOMBIA, S.A.
BBVA SEGUROS DE VIDA, S.A.
BBVA SEGUROS, S.A., DE SEGUROS Y REASEGUROS
BBVA SENIOR FINANCE, S.A.U.
BBVA SERVICIOS CORPORATIVOS LIMITADA
BBVA SERVICIOS, S.A.
BBVA SOCIEDAD DE LEASING INMOBILIARIO, S.A.
BBVA SOLUCIONES AVANZADAS DE ASESORAMIENTO Y GESTION, S.L. (**)
BBVA SUBORDINATED CAPITAL S.A.U.
BBVA SUIZA, S.A. (BBVA SWITZERLAND)
BBVA TRADE, S.A.
BBVA U.S. SENIOR S.A.U.
BBVA VALORES COLOMBIA, S.A. COMISIONISTA DE BOLSA
BBVA VIDA, S.A.DE SEGUROS Y REASEGUROS
BBVA WEALTH SOLUTIONS, INC.
BILBAO VIZCAYA HOLDING, S.A.
Impairment lo sses due to pro perty, real estate and sto cks, o f Spanish Real Estate co mpanies,
acco rding to Ro yal Decree-Law 10/2008 and successive, are no t co unted fo r purpo ses o f A rticle 363
o f the Co mpanies A ct Capital.
(*) Info rmatio n o n fo reign co mpanies at exchange rate o n December 31, 2014
(**) This co mpany has an equity lo an fro m B lue Indico Investments, S.L.
SPAIN
IRELAND
MEXICO
CHILE
SPAIN
REAL ESTATE INVESTMENT COMPANY
INSURANCES SERVICES
FINANCIAL SERVICES
INVESTMENT COMPANY
FINANCIAL SERVICES
UNITED STATES
FINANCIAL SERVICES
COLOMBIA
INSURANCES SERVICES
COLOMBIA
INSURANCES SERVICES
CHILE
SPAIN
SPAIN
CHILE
SPAIN
CHILE
SPAIN
SPAIN
INSURANCES SERVICES
INSURANCES SERVICES
FINANCIAL SERVICES
SERVICES
COMERCIAL
FINANCIAL SERVICES
SERVICES
FINANCIAL SERVICES
SWITZERLAND
BANKING
SPAIN
INVESTMENT COMPANY
SPAIN
COLOMBIA SECURITIES DEALER
FINANCIAL SERVICES
SPAIN
UNITED STATES
SPAIN
INSURANCES SERVICES
FINANCIAL SERVICES
INVESTMENT COMPANY
163
100.00
100.00
-
49.90
100.00
100.00
61.22
100.00
-
36.00
-
95.00
100.00
99.00
100.00
80.00
75.00
-
-
-
-
5.94
-
94.00
94.00
-
-
68.11
50.10
-
-
38.78
-
100.00
64.00
100.00
-
-
1.00
-
20.00
5.00
100.00
100.00
100.00
100.00
94.06
100.00
6.00
6.00
-
100.00
94.35
100.00
-
-
-
-
100.00
39.72
-
100.00
-
100.00
-
89.00
5.60
-
100.00
100.00
97.49
100.00
-
60.28
100.00
-
100.00
-
100.00
11.00
100.00
100.00
68.11
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
95.00
100.00
100.00
100.00
100.00
80.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
99.95
100.00
100.00
100.00
97.49
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
-
-
5
39
-
-
483
180
9
256
3
-
23
-
13
-
2
395
592
42
267
12
1,772
1,366
459
12
275
166
-
1,726
-
67
1
15
1,162
1,187
1
-
191
21
149
10
14
52
431
-
8
-
20
-
-
67
6
-
4
122
5
35
87
1
192
716
2,903
66
417
227
18,113
11,585
15
10
66
-
1,768
927
34
1,670
5
2,151
5
175
391
592
35
221
9
1,772
6
254
3
7
150
-
1,584
-
35
-
7
10
45
1
-
631
2,754
50
320
174
16,382
11,584
7
2
46
1
1,767
786
13
1,670
1
2,019
-
56
4
-
6
44
3
1
1,244
198
9
143
9
-
119
-
16
1
5
-
-
1
2
-
-
116
7
-
125
6
-
23
-
16
-
3
1,237
(61)
34
(1)
158
71
121
14
68
50
8
-
34
15
28
3
29
3
1,513
218
1
7
7
20
3
1
127
13
-
3
52
6
114
-
1
2
-
(3)
-
15
8
-
1
79
(1)
6
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting principles (Bank of Spain Circular 4/2004, and as amended thereafter,
which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-language version prevails.
Additional Information on Consolidated Subsidiaries composing the BBVA Group (Continued)
Company
Location
Activity
Direct
Indirect
Total
Net
Carrying
Amount
Assets
12.31.14
Liabilities
12.31.14
Equity
12.31.14
Profit
(Loss)
12.31.14
% of Voting Rights
Controlled by the Bank
Millions of Euros (*)
Affiliate Entity Data
BLUE INDICO INVESTMENTS, S.L.
CAIXA DE MANLLEU PREFERENTS, S.A.
CAIXA TERRASSA SOCIETAT DE PARTICIPACIONS PREFERENTS, S.A.U.
CAIXASABADELL PREFERENTS, S.A.
CAIXASABADELL TINELIA, S.L.
CAPITAL INVESTMENT COUNSEL, INC.
CARTERA E INVERSIONES S.A., CIA DE
CASA DE BOLSA BBVA BANCOMER, S.A. DE C.V.
CATALONIA GEBIRA, S.L, (**)
CATALONIA PROMODIS 4, S.A.
CB TRANSPORT ,INC.
CDD GESTIONI, S.R.L.
CIA. GLOBAL DE MANDATOS Y REPRESENTACIONES, S.A.
CIDESSA DOS, S.L.
CIDESSA UNO, S.L.
CIERVANA, S.L.
COMERCIALIZADORA CORPORATIVA SAC
COMERCIALIZADORA DE SERVICIOS FINANCIEROS, S.A.
COMPASS ASSET ACCEPTANCE COMPANY, LLC
COMPASS AUTO RECEIVABLES CORPORATION
COMPASS BANK
COMPASS CAPITAL MARKETS, INC.
COMPASS CUSTODIAL SERVICES, INC.
COMPASS GP, INC.
COMPASS INVESTMENTS, INC.
COMPASS LIMITED PARTNER, INC.
COMPASS LOAN HOLDINGS TRS, INC.
COMPASS MORTGAGE CORPORATION
COMPASS MORTGAGE FINANCING, INC.
COMPASS MULTISTATE SERVICES CORPORATION
COMPASS SOUTHWEST, LP
COMPASS TEXAS ACQUISITION CORPORATION
COMPASS TEXAS MORTGAGE FINANCING, INC
COMPASS TRUST II
COMPAÑIA CHILENA DE INVERSIONES, S.L.
COMPLEMENTOS INNOVACIÓN Y MODA, S.L. (***)
CONSOLIDAR A.F.J.P., S.A.
CONSORCIO DE CASAS MEXICANAS, S.A.P.I. DE C.V.
INVESTMENT COMPANY
FINANCIAL SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
INVESTMENT COMPANY
FINANCIAL SERVICES
INVESTMENT COMPANY
SECURITIES DEALER
REAL ESTATE
REAL ESTATE
INACTIVE
REAL ESTATE
IN LIQUIDATION
INVESTMENT COMPANY
INVESTMENT COMPANY
INVESTMENT COMPANY
FINANCIAL SERVICES
SPAIN
SPAIN
SPAIN
SPAIN
SPAIN
UNITED STATES
SPAIN
MEXICO
SPAIN
SPAIN
UNITED STATES
ITALY
URUGUAY
SPAIN
SPAIN
SPAIN
PERU
COLOMBIA SERVICES
INACTIVE
UNITED STATES
INACTIVE
UNITED STATES
BANKING
UNITED STATES
INVESTMENT COMPANY
UNITED STATES
INACTIVE
UNITED STATES
INVESTMENT COMPANY
UNITED STATES
INACTIVE
UNITED STATES
INVESTMENT COMPANY
UNITED STATES
FINANCIAL SERVICES
UNITED STATES
FINANCIAL SERVICES
UNITED STATES
FINANCIAL SERVICES
UNITED STATES
INACTIVE
UNITED STATES
FINANCIAL SERVICES
UNITED STATES
INACTIVE
UNITED STATES
FINANCIAL SERVICES
UNITED STATES
INACTIVE
UNITED STATES
INVESTMENT COMPANY
SPAIN
IN LIQUIDATION
SPAIN
IN LIQUIDATION
ARGENTINA
REAL ESTATE
MEXICO
Impairment lo sses due to pro perty, real estate and sto cks, o f Spanish Real Estate co mpanies, acco rding
to Ro yal Decree-Law 10/2008 and successive, are no t co unted fo r purpo ses o f A rticle 363 o f the
Co mpanies A ct Capital.
(*) Info rmatio n o n fo reign co mpanies at exchange rate o n December 31, 2014
(**) This co mpany has an equity lo an fro m A RRELS CT P A TRIM ONI I P ROYECTES, S.A .
(***) This co mpany has an equity lo an fro m B B VA ELCA NO EM P RESA RIA L, S.C.R.S.A . and B B VA ELCA NO EM P RESA RIA L II, S.C.R.S.A . In liquidato n.
164
100.00
100.00
100.00
100.00
100.00
-
100.00
-
-
-
-
100.00
-
-
-
100.00
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100.00
-
46.11
-
-
-
-
-
-
100.00
-
100.00
81.66
100.00
100.00
-
100.00
100.00
100.00
-
99.99
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
-
100.00
53.89
99.99
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
81.66
100.00
100.00
100.00
100.00
100.00
100.00
100.00
99.99
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
99.99
5
-
1
-
41
12
92
66
-
-
16
5
-
15
5
53
-
2
402
3
9,673
6,517
-
40
-
5,673
66
2,492
-
3
4,675
2
-
-
580
-
-
1
18
-
76
92
42
13
88
74
44
14
16
6
-
15
178
61
1
6
402
3
70,583
6,517
-
50
-
5,674
66
2,547
-
3
4,675
2
-
-
781
-
6
26
18
-
74
91
-
-
56
8
51
17
-
-
-
-
131
2
1
4
-
-
60,911
-
-
10
-
1
-
54
-
-
-
-
-
-
1
-
5
13
3
-
2
1
41
11
34
31
(6)
5
15
6
-
15
51
53
-
1
402
3
9,343
6,447
-
39
-
5,605
66
2,456
-
3
4,615
2
-
-
778
-
1
13
(2)
-
-
-
-
2
(2)
35
-
(7)
1
-
-
-
(5)
6
-
1
-
-
330
70
-
-
-
67
-
36
-
-
60
-
-
-
3
-
(1)
1
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting principles (Bank of Spain Circular 4/2004, and as amended thereafter,
which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-language version prevails.
Additional Information on Consolidated Subsidiaries composing the BBVA Group (Continued)
Company
Location
Activity
Direct
Indirect
Total
Net
Carrying
Amount
Assets
12.31.14
Liabilities
12.31.14
Equity
12.31.14
Profit
(Loss)
12.31.14
% of Voting Rights
Controlled by the Bank
Millions of Euros(*)
Affiliate Entity Data
CONTENTS AREA, S.L.
CONTINENTAL BOLSA, SDAD. AGENTE DE BOLSA, S.A. (1)
CONTINENTAL DPR FINANCE COMPANY (1)
CONTINENTAL SOCIEDAD TITULIZADORA, S.A. (1)
CONTRATACION DE PERSONAL, S.A. DE C.V.
COPROMED S.A. DE C.V.
CORPORACION GENERAL FINANCIERA, S.A.
DESARROLLO URBANISTICO DE CHAMARTIN, S.A.
DESITEL TECNOLOGIA Y SISTEMAS, S.A. DE C.V.
DEUTSCHE BANK MEXICO SA FIDEICOMISO F/1859
DEUTSCHE BANK MEXICO SA FIDEICOMISO F/1860
ECASA, S.A.
ECOARENYS, S.L. (**)
EL ENCINAR METROPOLITANO, S.A.
EL MILANILLO, S.A. (***)
EMPRENDIMIENTOS DE VALOR S.A.
ENTRE2 SERVICIOS FINANCIEROS, E.F.C., S.A.
ESPAIS SABADELL PROMOCIONS INMOBILIARIES, S.A.
ESPANHOLA COMERCIAL E SERVIÇOS, LTDA.
ESTACION DE AUTOBUSES CHAMARTIN, S.A.
EUROPEA DE TITULIZACION, S.A., S.G.F.T.
F/253863 EL DESEO RESIDENCIAL
F/403035-9 BBVA HORIZONTES RESIDENCIAL
FACILEASING EQUIPMENT, S.A. DE C.V.
SERVICES
SERVICES
SERVICES
INVESTMENT COMPANY
REAL ESTATE
SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
REAL ESTATE
REAL ESTATE
REAL ESTATE
SPAIN
PERU SECURITIES DEALER
CAYMAN ISLANDS
FINANCIAL SERVICES
PERU FINANCIAL SERVICES
MEXICO
MEXICO
SPAIN
SPAIN
MEXICO
MEXICO
MEXICO
CHILE
SPAIN
SPAIN
SPAIN
URUGUAY FINANCIAL SERVICES
FINANCIAL SERVICES
SPAIN
REAL ESTATE
SPAIN
BRASIL IN LIQUIDATION
SPAIN
SPAIN
MEXICO
MEXICO
MEXICO
SERVICES
FINANCIAL SERVICES
REAL ESTATE
REAL ESTATE
FINANCIAL SERVICES
FACILEASING S.A. DE C.V.
FIDEICOMISO 28991-8 TRADING EN LOS MCADOS FINANCIEROS
FINANCIERAS DERIVADAS
FIDEICOMISO HARES BBVA BANCOMER F/ 47997-2
INSTITUCION DE BANCA MULTIPLE, FIDUCIARIO (FIDEIC.00989 6
FIDEICOMISO Nº 711, EN BANCO INVEX, S.A.,INSTITUCION DE BANCA
MULTIPLE, INVEX GRUPO FINANCIERO, FIDUCIARIO (FIDEIC. INVEX 1ª
EMISION)
FIDEICOMISO Nº 752, EN BANCO INVEX, S.A.,INSTITUCION DE BANCA
MULTIPLE, INVEX GRUPO FINANCIERO, FIDUCIARIO (FIDEIC. INVEX 2ª
EMISION)
FIDEICOMISO Nº 781, EN BANCO INVEX, S.A.,INSTITUCION DE BANCA
MULTIPLE, INVEX GRUPO FINANCIERO, FIDUCIARIO (FIDEIC. INVEX 3ª
EMISION)
FIDEICOMISO Nº 847, EN BANCO INVEX, S.A.,INSTITUCION DE BANCA
MULTIPLE, INVEX GRUPO FINANCIERO, FIDUCIARIO (FIDEIC. INVEX 4ª
EMISION)
FINANCEIRA DO COMERCIO EXTERIOR S.A.R.
FINANCIERA AYUDAMOS S.A. DE C.V., SOFOMER
FORUM COMERCIALIZADORA DEL PERU, S.A.
FORUM DISTRIBUIDORA DEL PERU, S.A.
FORUM DISTRIBUIDORA, S.A.
FORUM SERVICIOS FINANCIEROS, S.A.
FUTURO FAMILIAR, S.A. DE C.V.
MEXICO
MEXICO
MEXICO
MEXICO
MEXICO
FINANCIAL SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
REAL ESTATE
FINANCIAL SERVICES
MEXICO
FINANCIAL SERVICES
MEXICO
FINANCIAL SERVICES
MEXICO
FINANCIAL SERVICES
FINANCIAL SERVICES
INACTIVE
FINANCIAL SERVICES
MEXICO
PORTUGAL
MEXICO
PERU SERVICES
PERU FINANCIAL SERVICES
FINANCIAL SERVICES
CHILE
FINANCIAL SERVICES
CHILE
SERVICES
MEXICO
Impairment lo sses due to pro perty, real estate and sto cks, of Spanish Real Estate
co mpanies, acco rding to Ro yal Decree-Law 10/2008 and successive, are not co unted
for purpo ses o f A rticle 363 o f the Co mpanies A ct Capital.
(*) Info rmatio n o n fo reign co mpanies at exchange rate on December 31, 2014
(**) This company has an equity lo an fro m P ROM OTORA DEL VA LLES, S.L.
(***) This co mpany has an equity lo an fro m A NIDA OP ERA CIONES SINGULA RES, S.A .
(1) Full co nsolidatio n metho d is used acco rding to acco unting rules (see Glossary)
165
-
-
-
-
-
-
100.00
-
-
-
-
-
-
-
-
-
-
-
100.00
-
88.99
-
-
-
-
-
-
-
-
-
-
-
-
100.00
-
-
-
-
-
-
100.00
100.00
100.00
100.00
100.00
100.00
-
75.54
100.00
100.00
100.00
100.00
50.00
99.05
100.00
100.00
100.00
100.00
-
51.00
-
65.00
65.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
75.54
100.00
100.00
100.00
100.00
50.00
99.05
100.00
100.00
100.00
100.00
100.00
51.00
88.99
65.00
65.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
-
100.00
84.32
84.32
75.52
75.50
100.00
100.00
100.00
100.00
84.32
84.32
75.52
75.50
100
6
7
-
1
5
-
510
70
2
-
-
11
-
4
11
3
9
6
-
-
2
-
-
51
70
3
73
37
2
-
-
-
-
-
9
3
6
17
133
1
6
10
322
1
10
-
1,188
107
2
-
-
13
16
8
8
8
9
10
-
-
42
1
1
517
728
3
73
40
201
49
24
1
2
322
-
5
-
1
15
-
-
-
2
53
4
1
6
-
3
-
-
6
-
-
438
668
-
-
7
199
49
24
6
7
-
-
4
-
966
93
2
-
-
6
(31)
5
7
3
9
6
1
-
32
1
1
66
52
3
69
34
(7)
1
-
161
103
50
127
-
24
4
26
127
1,098
2
128
-
15
1
19
107
941
2
-
-
14
3
6
17
117
1
-
1
-
-
-
-
221
(1)
-
-
-
5
(6)
(1)
-
(1)
-
1
-
-
4
-
-
13
8
-
3
(1)
9
(1)
-
8
(1)
-
(5)
1
-
3
41
-
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting principles (Bank of Spain Circular 4/2004, and as amended thereafter,
which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-language version prevails.
Additional Information on Consolidated Subsidiaries composing the BBVA Group (Continued)
Company
Location
Activity
Direct
Indirect
Total
Net
Carrying
Amount
Assets
12.31.14
Liabilities
12.31.14
Equity
12.31.14
Profit
(Loss)
12.31.14
% of Voting Rights
Controlled by the Bank
Millions of Euros(*)
Affiliate Entity Data
GESTION DE PREVISION Y PENSIONES, S.A.
GESTION Y ADMINISTRACION DE RECIBOS, S.A. - GARSA
GOBERNALIA GLOBAL NET, S.A.
GRAN JORGE JUAN, S.A. (**)
GRANFIDUCIARIA
GRUPO FINANCIERO BBVA BANCOMER, S.A. DE C.V.
GUARANTY BUSINESS CREDIT CORPORATION
GUARANTY PLUS HOLDING COMPANY
GUARANTY PLUS PROPERTIES LLC-2
GUARANTY PLUS PROPERTIES, INC-1
HABITATGES INVERCAP, S.L. (***)
HABITATGES INVERVIC, S.L. (***)
HABITATGES JUVIPRO, S.L. (***)
HIPOTECARIA NACIONAL MEXICANA INCORPORATED
HIPOTECARIA NACIONAL, S.A. DE C.V.
HOLDING CONTINENTAL, S.A.
HOMEOWNERS LOAN CORPORATION
HUMAN RESOURCES PROVIDER, INC
HUMAN RESOURCES SUPPORT, INC
IMOBILIARIA DUQUE DE AVILA, S.A.
INMESP DESARROLLADORA, S.A. DE C.V.
INMUEBLES Y RECUPERACIONES CONTINENTAL S.A (1)
INNOVATION 4 SECURITY, S.L.
INVERAHORRO, S.L.
INVERPRO DESENVOLUPAMENT, S.L.
INVERSIONES ALDAMA, C.A.
INVERSIONES BANPRO INTERNATIONAL INC. N.V.
INVERSIONES BAPROBA, C.A.
INVERSIONES DE INNOVACION EN SERVICIOS FINANCIEROS, S.L. (****)
INVERSIONES P.H.R.4, C.A.
INVESCO MANAGEMENT Nº 1, S.A.
INVESCO MANAGEMENT Nº 2, S.A.
L'EIX IMMOBLES, S.L. (*****)
LIQUIDITY ADVISORS, L.P
MADIVA SOLUCIONES, S.L.
MISAPRE, S.A. DE C.V.
MOMENTUM SOCIAL INVESTMENT 2011, S.L.
MOMENTUM SOCIAL INVESTMENT 2012, S.L.
MOMENTUM SOCIAL INVESTMENT 2013, S.L.
MOMENTUM SOCIAL INVESTMENT HOLDING, S.L.
(*) Info rmatio n o n fo reign co mpanies at exchange rate o n December 31, 2014
(**) This co mpany has an equity lo an fro m B B VA , S. A .
(***) These co mpanies has an equity lo an fro m lnverpro Desenvo lupament, S.L.
(*****)This co mpany has an equity lo an fro m B ILB A O VIZCA YA HOLDING, S.A .
(*****)This co mpany has an equity lo an fro m P ROM OTORA DEL VA LLES, S.L.
(1) Full co nso lidatio n metho d is used acco rding to acco unting rules (see Glo ssary)
IN LIQUIDATION
SERVICES
SERVICES
PENSION FUNDS MANAGEMENT
SERVICES
SERVICES
REAL ESTATE
IN LIQUIDATION
FINANCIAL SERVICES
FINANCIAL SERVICES
INVESTMENT COMPANY
FINANCIAL SERVICES
FINANCIAL SERVICES
REAL ESTATE
REAL ESTATE
REAL ESTATE
REAL ESTATE
FINANCIAL SERVICES
SPAIN
SPAIN
SPAIN
SPAIN
COLOMBIA
MEXICO
UNITED STATES
UNITED STATES
UNITED STATES
UNITED STATES
SPAIN
SPAIN
SPAIN
UNITED STATES
MEXICO
PERU INVESTMENT COMPANY
UNITED STATES
UNITED STATES
UNITED STATES
PORTUGAL REAL ESTATE
MEXICO
REAL ESTATE
PERU REAL ESTATE
SPAIN
SPAIN
SPAIN
VENEZUELA
CURAÇAO
VENEZUELA
SPAIN
VENEZUELA
LUXEMBOURG
LUXEMBOURG
SPAIN
UNITED STATES
SPAIN
MEXICO
SPAIN
SPAIN
SPAIN
SPAIN
SERVICES
INVESTMENT COMPANY
INVESTMENT COMPANY
IN LIQUIDATION
INVESTMENT COMPANY
FINANCIAL SERVICES
INVESTMENT COMPANY
INACTIVE
FINANCIAL SERVICES
FINANCIAL SERVICES
REAL ESTATE
FINANCIAL SERVICES
SERVICES
FINANCIAL SERVICES
INVESTMENT COMPANY
INVESTMENT COMPANY
INVESTMENT COMPANY
INVESTMENT COMPANY
60.00
-
-
100.00
-
99.97
-
-
-
-
-
-
-
-
-
50.00
-
-
-
-
-
-
-
100.00
-
-
48.00
100.00
-
-
-
-
-
-
-
-
-
-
-
-
-
100.00
100.00
-
90.00
-
100.00
100.00
100.00
100.00
100.00
35.00
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
100.00
100.00
100.00
-
100.00
100.00
-
-
100.00
60.46
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
60.00
100.00
100.00
100.00
90.00
99.97
100.00
100.00
100.00
100.00
100.00
35.00
100.00
100.00
100.00
50.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
48.00
100.00
100.00
60.46
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
9
1
1
424
-
6,677
30
(33)
38
10
-
-
-
-
13
124
8
510
506
9
39
2
-
19
1
-
11
1
-
-
8
-
-
1,029
9
1
3
2
2
7
33
1
7
979
-
9,340
30
53
38
10
-
1
2
-
21
1,453
8
510
506
24
39
9
3
77
26
-
55
1
42
-
8
4
20
1,029
1
3
3
2
2
7
4
-
3
592
-
1
-
86
-
-
1
12
2
-
8
-
-
-
-
14
-
7
2
57
24
-
2
-
46
-
-
17
25
-
-
2
-
-
-
-
21
1
3
383
-
7,581
30
(32)
38
10
(1)
(9)
-
-
11
1,123
8
501
498
8
39
-
1
20
2
-
53
1
-
-
8
(13)
(4)
1,024
1
6
3
2
2
7
7
-
1
5
-
1,758
-
(1)
-
-
-
(1)
-
-
3
330
-
8
8
3
-
2
1
(1)
(1)
-
-
-
(4)
-
-
(1)
(1)
6
-
(5)
-
-
-
-
166
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting principles (Bank of Spain Circular 4/2004, and as amended thereafter,
which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-language version prevails.
Additional Information on Consolidated Subsidiaries composing the BBVA Group (Continued)
Company
Location
Activity
Direct
Indirect
Total
Net
Carrying
Amount
Assets
12.31.14
Liabilities
12.31.14
Equity
12.31.14
Profit
(Loss)
12.31.14
% of Voting Rights
Controlled by the Bank
Millions of Euros(*)
Affiliate Entity Data
MULTIASISTENCIA OPERADORA S.A. DE C.V.
MULTIASISTENCIA SERVICIOS S.A. DE C.V.
MULTIASISTENCIA, S.A. DE C.V.
OPCION VOLCAN, S.A.
OPPLUS OPERACIONES Y SERVICIOS, S.A.
OPPLUS S.A.C
PARCSUD PLANNER, S.L.
PARTICIPACIONES ARENAL, S.L.
PECRI INVERSION S.A
PENSIONES BANCOMER, S.A. DE C.V.
PHOENIX LOAN HOLDINGS, INC.
PI HOLDINGS NO. 1, INC.
PI HOLDINGS NO. 3, INC.
PRO-SALUD, C.A.
PROMOCION EMPRESARIAL XX, S.A.
PROMOTORA DE RECURSOS AGRARIOS, S.A.
PROMOTORA DEL VALLES, S.L.
PROMOU CT 3AG DELTA, S.L. (**)
PROMOU CT EIX MACIA, S.L. (**)
PROMOU CT GEBIRA, S.L. (**)
PROMOU CT OPENSEGRE, S.L. (**)
PROMOU CT VALLES, S.L.
PROMOU GLOBAL, S.L. (**)
PROV-INFI-ARRAHONA, S.L. (***)
PROVINCIAL DE VALORES CASA DE BOLSA, C.A.
PROVINCIAL SDAD.ADMIN.DE ENTIDADES DE INV.COLECTIVA, C.A.
PROVIVIENDA ENTIDAD RECAUDADORA Y ADMIN.DE APORTES, S.A.
PROXIMA ALFA INVESTMENTS (USA) LLC
PROXIMA ALFA INVESTMENTS HOLDINGS (USA) II INC.
PROXIMA ALFA INVESTMENTS HOLDINGS (USA) INC.
RENTRUCKS, ALQUILER Y SERVICIOS DE TRANSPORTE, S.A.
RESIDENCIAL CUMBRES DE SANTA FE, S.A. DE C.V.
RWHC, INC
SCALDIS FINANCE, S.A.
SEGUROS BANCOMER, S.A. DE C.V.
SEGUROS PROVINCIAL, C.A.
SERVICIOS CORPORATIVOS BANCOMER, S.A. DE C.V.
SERVICIOS CORPORATIVOS DE SEGUROS, S.A. DE C.V.
SERVICIOS EXTERNOS DE APOYO EMPRESARIAL, S.A DE C.V.
SERVICIOS TECNOLOGICOS SINGULARES, S.A.
Impairment lo sses due to pro perty, real estate and sto cks, o f Spanish Real Estate
co mpanies, acco rding to Ro yal Decree-Law 10/2008 and successive, are no t co unted
fo r purpo ses o f A rticle 363 o f the Co mpanies A ct Capital.
(*) Info rmatio n o n fo reign co mpanies at exchange rate o n December 31, 2014
(**) This co mpany has an equity lo an fro m A RRELS CT P ROM OU, S.A .
(***)This co mpany has an equity lo an fro m P ROM OTORA DEL VA LLES S.L.
MEXICO
MEXICO
MEXICO
MEXICO
SPAIN
PERU
SPAIN
SPAIN
SPAIN
MEXICO
UNITED STATES
UNITED STATES
UNITED STATES
VENEZUELA
SPAIN
SPAIN
SPAIN
SPAIN
SPAIN
SPAIN
SPAIN
SPAIN
INSURANCES SERVICES
INSURANCES SERVICES
INSURANCES SERVICES
REAL ESTATE
SERVICES
IN LIQUIDATION
REAL ESTATE
INACTIVE
OTHER INVESTMENT COMPANIES
INSURANCES SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
INACTIVE
INVESTMENT COMPANY
COMERCIAL
INVESTMENT COMPANY
REAL ESTATE
REAL ESTATE
REAL ESTATE
REAL ESTATE
REAL ESTATE
SPAIN
SPAIN
REAL ESTATE
REAL ESTATE
SECURITIES DEALER
FINANCIAL SERVICES
VENEZUELA
VENEZUELA
BOLIVIA PENSION FUNDS MANAGEMENT
UNITED STATES
UNITED STATES
UNITED STATES
SPAIN
MEXICO
UNITED STATES
BELGIUM
MEXICO
VENEZUELA
MEXICO
MEXICO
MEXICO
SPAIN
IN LIQUIDATION
IN LIQUIDATION
IN LIQUIDATION
INACTIVE
REAL ESTATE
FINANCIAL SERVICES
INVESTMENT COMPANY
INSURANCES SERVICES
INSURANCES SERVICES
SERVICES
SERVICES
SERVICES
SERVICES
167
-
-
-
-
100.00
-
-
-
100.00
-
-
-
-
-
100.00
100.00
-
-
-
-
-
-
-
-
-
-
-
-
-
100.00
99.32
-
-
-
-
-
-
-
-
-
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
58.86
-
-
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
90.00
100.00
100.00
100.00
100.00
-
-
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
58.86
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
90.00
100.00
100.00
100.00
100.00
100.00
99.32
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
-
1
30
66
1
1
-
8
88
278
370
78
23
-
6
-
-
1
-
-
-
2
-
-
1
1
1
8
-
-
2
9
640
4
493
42
4
2
5
2
1
3
38
69
26
-
6
8
88
4,119
390
78
23
-
9
-
166
10
10
8
16
10
72
10
3
1
5
1
-
8
3
10
640
18
3,499
53
12
11
16
8
1
2
8
5
15
-
8
-
-
3,842
20
-
-
-
-
-
256
10
12
11
31
8
111
16
1
-
4
-
-
4
1
1
-
-
3,006
12
8
9
11
5
-
1
25
54
7
-
(1)
8
95
241
361
78
23
-
8
-
(73)
(2)
(2)
(3)
(13)
3
(38)
(5)
3
-
1
1
-
4
5
7
628
18
271
47
4
2
5
2
-
-
5
11
4
-
(1)
-
(7)
37
9
-
-
-
-
-
(17)
2
-
-
(2)
(1)
(1)
(1)
(1)
-
-
-
-
-
(4)
1
13
-
222
(6)
1
-
1
-
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting principles (Bank of Spain Circular 4/2004, and as amended thereafter,
which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-language version prevails.
Additional Information on Consolidated Subsidiaries composing the BBVA Group (Continued) and consolidated structured entities
Company
Location
Activity
Direct
Indirect
Total
Net
Carrying
Amount
Assets
12.31.14
Liabilities
12.31.14
Equity
12.31.14
Profit
(Loss)
12.31.14
% of Voting Rights
Controlle d by the Bank
Millions of Euros(*)
Affiliate Entity Data
UNITED STATES
SPAIN
FINANCIAL SERVICES
SERVICES
INACTIVE
INVESTMENT COMPANY
FINANCIAL SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
COMERCIAL
INVESTMENT COMPANY
FINANCIAL SERVICES
FINANCIAL SERVICES
REAL ESTATE
SPAIN
SPAIN
UNITED STATES
UNITED STATES
UNITED STATES
UNITED STATES
UNITED STATES
SPAIN
UNITED STATES
UNITED STATES
MEXICO
SPAIN
COLOMBIA FINANCIAL SERVICES
COLOMBIA FINANCIAL SERVICES
SPAIN
SPAIN
SPAIN
SPAIN
REAL ESTATE
BANKING
INACTIVE
VENTURE CAPITAL
-
100.00
77.20
100.00
-
-
-
-
-
-
-
-
-
-
-
-
100.00
100.00
60.60
100.00
100.00
-
-
-
100.00
100.00
100.00
100.00
100.00
68.67
100.00
100.00
100.00
100.00
100.00
100.00
-
-
-
-
100.00
100.00
77.20
100.00
100.00
100.00
100.00
100.00
100.00
68.67
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
60.60
100.00
88
110
-
15
-
-
1,033
1
1
2
10
90
3
2
-
-
-
175
-
1
90
110
-
15
13
9
1,033
43
21
-
14
90
5
3
2
149
983
1,367
-
14
2
-
-
-
12
8
-
41
21
-
4
-
2
-
-
121
839
1,180
-
7
99
111
-
26
-
-
1,025
1
1
-
10
87
2
3
2
24
338
161
-
7
(11)
(1)
-
(11)
-
-
8
-
-
-
-
3
-
-
-
4
(194)
25
-
-
SIMPLE FINANCE TECHNOLOGY CORP.
SOCIEDAD DE ESTUDIOS Y ANALISIS FINANCIERO.,S.A.
SOCIEDAD GESTORA DEL FONDO PUBLICO DE REGULACION DEL
MERCADO HIPOTECARIO, S.A.
SPORT CLUB 18, S.A.
STATE NATIONAL CAPITAL TRUST I
STATE NATIONAL STATUTORY TRUST II
TEXAS LOAN SERVICES, LP.
TEXAS REGIONAL STATUTORY TRUST I
TEXASBANC CAPITAL TRUST I
TEXTIL TEXTURA, S.L.
TMF HOLDING INC.
TUCSON LOAN HOLDINGS, INC.
UNIDAD DE AVALUOS MEXICO, S.A. DE CV
UNITARIA GESTION DE PATRIMONIOS INMOBILIARIOS
UNIVERSALIDAD "E5"
UNIVERSALIDAD TIPS PESOS E-9
UNNIM SOCIEDAD PARA LA GESTION DE ACTIVOS INMOBILIARIOS, S.A.
UNO-E BANK, S.A.
URBANIZADORA SANT LLORENC, S.A.
VALANZA CAPITAL RIESGO S.G.E.C.R. S.A. UNIPERSONAL
Impairment lo sses due to pro perty, real estate and sto cks, o f Spanish Real Estate
co mpanies, acco rding to Ro yal Decree-Law 10/2008 and successive, are no t co unted
fo r purpo ses o f A rticle 363 o f the Co mpanies A ct Capital.
(*) Info rmatio n o n fo reign co mpanies at exchange rate o n December 31, 2014
168
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting principles (Bank of Spain Circular 4/2004, and as amended thereafter,
which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-language version prevails.
APPENDIX III.
Additional information on investments and jointly controlled companies accounted for under the equity method of
consolidation in the BBVA Group (includes the most significant companies that together represent 98% of total investments in these companies)
Including the most significant entities, jointly representing 99.71% of all investment in this group
Company
Location
Activity
Direct
Indirect
Total
Net Carrying
Amount
Assets
12.31.14
Liabilities
12.31.14
Equity
12.31.14
Profit
(Loss)
12.31.14
% of Voting Rights
Controlled by the Bank
Millions of Euros(**)
Affiliate Entity Data
ACA, S.A. SOCIEDAD DE VALORES
ADQUIRA ESPAÑA, S.A.
ADQUIRA MEXICO, S.A. DE C.V.
ALMAGRARIO, S.A.
ALTITUDE SOFTWARE SGPS, S.A. (*)
ALTURA MARKETS, SOCIEDAD DE VALORES, S.A. (*)
ASOCIACION TECNICA CAJAS DE AHORROS, A.I.E. (ATCA, AIE) (*)
AUREA, S.A. (CUBA)
BRUNARA, SICAV, S.A.
CANCUN SUN & GOLF COUNTRY CLUB, S.A.P.I. DE C.V.
CITIC INTERNATIONAL FINANCIAL HOLDINGS LIMITED CIFH
COMPAÑIA ESPAÑOLA DE FINANCIACION DEL DESARROLLO S.A.
COMPAÑIA MEXICANA DE PROCESAMIENTO, S.A. DE C.V. (*)
CORPORACION IBV PARTICIPACIONES EMPRESARIALES, S.A. (*)
FERROMOVIL 3000, S.L. (*)
FERROMOVIL 9000, S.L. (*)
FIDEICOMISO 1729 INVEX ENAJENACION DE CARTERA (*)
FIDEICOMISO F 403853- 5 BBVA BANCOMER SERVICIOS ZIBATA (*)
FIDEICOMISO F/402770-2 ALAMAR (*)
FIDEICOMISO F/403112-6 DE ADMINISTRACION DOS LAGOS (*)
FIDEICOMISO SCOTIABANK INVERLAT SA 100322742 (*)
I+D MEXICO, S.A. DE C.V. (*)
INVERSIONES PLATCO, C.A. (*)
METROVACESA, S.A.
OCCIDENTAL HOTELES MANAGEMENT, S.L.
PARQUE REFORMA SANTA FE, S.A. de C.V.
SPAIN
SPAIN
MEXICO
COLOMBIA SERVICES
PORTUGAL SERVICES
SECURITIES DEALER
COMERCIAL
COMERCIAL
SPAIN
SPAIN
CUBA
SPAIN
MEXICO
HONG-KONG
SPAIN
MEXICO
SPAIN
SPAIN
SPAIN
MEXICO
MEXICO
MEXICO
MEXICO
MEXICO
MEXICO
VENEZUELA
SPAIN
SECURITIES DEALER
SERVICES
REAL ESTATE
VARIABLE CAPITAL
REAL ESTATE
INVESTMENT COMPANY
FINANCIAL SERVICES
SERVICES
INVESTMENT COMPANY
SERVICES
SERVICES
REAL ESTATE
REAL ESTATE
REAL ESTATE
REAL ESTATE
REAL ESTATE
SERVICES
FINANCIAL SERVICES
REAL ESTATE
SPAIN
MEXICO
SERVICES
REAL ESTATE
PSA FINANCE ARGENTINA COMPAÑIA FINANCIERA, S.A. (*)
ARGENTINA
BANKING
REAL ESTATE DEAL II, S.A. (*)
REDSYS SERVICIOS DE PROCESAMIENTO, S.L.
ROMBO COMPAÑIA FINANCIERA, S.A.
SERVICIOS ELECTRONICOS GLOBALES, S.A. DE C.V.
SERVICIOS ON LINE PARA USUARIOS MULTIPLES, S.A. (SOLIUM) (*)
SERVIRED SOCIEDAD ESPAÑOLA DE MEDIOS DE PAGO, S.A.
SOCIEDAD ADMINISTRADORA DE FONDOS DE CESANTIA DE CHILE II, S.A.
TELEFONICA FACTORING ESPAÑA, S.A.
TURKIYE GARANTI BANKASI A.S (*)
VITAMEDICA ADMINISTRADORA, S.A. DE C.V (*)
OTHER COMPANIES
SPAIN
SPAIN
ARGENTINA
MEXICO
SPAIN
SPAIN
CHILE
SPAIN
TURKEY
MEXICO
OTHER INVESTMENT COMPANIES
FINANCIAL SERVICES
BANKING
SERVICES
SERVICES
FINANCIAL SERVICES
PENSION FUND MANAGEMENT
FINANCIAL SERVICES
BANKING
SERVICES
(*) Joint venture entities accounted for using the equity method.
(**) Information on foreign companies at exchange rate on December 31, 2014.
(1) Consolidated data
(2) Non-currents sets held for sale
37.50
-
-
-
-
50.00
31.00
-
1.64
-
29.68
16.67
-
-
-
-
-
-
-
-
-
-
-
18.31
-
-
-
20.06
16.75
-
-
-
22.30
-
30.00
25.01
-
-
40.00
50.00
35.38
31.55
-
-
49.00
9.39
33.33
-
-
50.00
50.00
20.00
20.00
32.25
30.00
42.400
46.91
33.62
50.00
50.00
-
57.54
30.00
50.00
-
0.22
40.00
46.14
66.67
0.29
48.60
-
-
51.00
37.50
40.00
50.00
35.38
31.55
50.00
31.00
49.00
11.03
33.33
29.68
16.67
50.00
50.00
20.00
20.00
32.25
30.00
42.40
46.91
33.62
50.00
50.00
18.31
57.54
30.00
50.00
20.06
16.97
40.00
46.14
66.67
22.59
48.60
30.00
25.01
51.00
2
3
2
4
8
18
2
4
52
36
675
17
6
111
4
3
70
20
10
9
11
17
11
257
104
5
26
5
4
25
5
7
8
8
3
3,853
3
16
12
16
7
28
21
1,406
7
8
158
84
20,593
107
13
443
559
359
216
120
23
20
68
33
38
6,956
625
52
222
39
112
216
11
12
52
21
59
2
10
3
-
21
1,370
-
-
1
28
18,584
8
-
172
529
337
-
50
-
-
33
-
16
5,705
445
36
170
11
89
154
-
5
15
4
44
13
6
4
28
1
30
7
8
144
58
1,791
91
12
270
30
22
216
64
23
20
34
23
26
1,620
180
11
32
29
17
37
11
6
28
16
7
20,955
13
18,631
7
2,069
6
(3)
1
-
-
(4)
(1)
(1)(4)
6
-
-
12
(3)
219
8
1
-
-
-
-
6
-
-
1
11
(4)
(348)
-
5
20
(1)
6
24
1
1
9
2
9
255
1
(1)(2)(4)
(2)
(1)
(1)(4)
(2)
(1)
(4)
(3)
(1)
(3) Information on Garanti Group as of September 30, 2014. Total market capitalization as of December 31, 2014 w as €13,970 million. Total received dividends amounted to €36 million.
(4) Figures as of December 31, 2013
169
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting principles (Bank of Spain Circular 4/2004, and as amended thereafter,
which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-language version prevails.
APPENDIX IV. Changes and notification of investments and divestments in the BBVA Group in 2013
Acquisitions or Increases of Interest Ownership in Consolidated Subsidiaries
Company
Type of
Transaction
Activity
DESARROLLO URBANISTICO DE CHAMARTIN, S.A.
SIMPLE FINANCE TECHNOLOGY CORP.
BBVA DATA & ANALYTICS, S.L.
MOMENTUM SOCIAL INVESTMENT 2013, S.L.
HABITATGES JUVIPRO, S.L.
RENTRUCKS, ALQUILER Y SERVICIOS DE TRANSPORTE, S.A.
MOMENTUM SOCIAL INVESTMENT HOLDING, S.L.
L'EIX IMMOBLES, S.L.
MADIVA SOLUCIONES, S.L.
DESARROLLO URBANISTICO DE CHAMARTIN, S.A.
EUROPEA DE TITULIZACION, S.A., S.G.F.T.
DEUTSCHE BANK MEXICO SA FIDEICOMISO F/1859
DEUTSCHE BANK MEXICO SA FIDEICOMISO F/1860
DILUTION EFFECT
ACQUISITION
FOUNDING
FOUNDING
ACQUISITION
DILUTION EFFECT
FOUNDING
ACQUISITION
ACQUISITION
DILUTION EFFECT
ACQUISITION
FOUNDING
FOUNDING
REAL ESTATE
FINANCIAL SERVICES
SERVICES
INVESTMENT COMPANY
REAL ESTATE
FINANCIAL SERVICES
INVESTMENT COMPANY
REAL ESTATE
SERVICES
REAL ESTATE
FINANCIAL SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
M illio ns o f E uro s
% o f V o t ing R ight s
Price Paid in the
Transactions +
Expenses
directly
attributable to
the
Transactions
Fair Value of
Equity
Instruments
issued for the
Transactions
% Participation
(net)
Acquired
in the Period
Total Voting
Rights
Controlled after
the
Transactions
E f f e c t iv e D a t e f o r
t he T ra ns a c t io n
( o r N o t if ic a t io n
D a t e )
7
84
-
2
-
4
7
-
9
3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2.16%
100.00%
100.00%
100.00%
60.00%
0.10%
100.00%
10.00%
100.00%
0.88%
1.48%
100.00%
100.00%
74.66%
0.00%
100.00%
100.00%
100.00%
99.32%
100.00%
100.00%
100.00%
75.54%
88.99%
100.00%
100.00%
2/7/2014
3/20/2014
4/20/2014
5/30/2014
7/9/2014
10/7/2014
10/7/2014
10/7/2014
11/28/2014
12/11/2014
12/18/2014
12/23/2014
12/23/2014
Disposals or Reduction of Interest Ownership in Consolidated Subsidiaries
M illio ns o f E uro s
% o f V o t ing R ight s
Company
Type of
Transaction
Activity
Profit (Loss)
in the Transaction
Changes in the
Equity due to the
transaction
% Participation
Sold
in the Period
EL OASIS DE LAS RAMBLAS, S.L.
BBVA BANCO FRANCES, S.A. (*)
GRUPO PROFESIONAL PLANEACION Y PROYECTOS, S.A. DE C.V.
F/11032604 FRACCIONAMIENTO LORCA
LIQUIDATION
DISPOSAL
DISPOSAL
DILUTION EFFECT
REAL ESTATE
BANK
SERVICES
REAL ESTATE
BBVA CARTERA DE INVERSIONES,SICAV,S.A.
SOCIETE INMOBILIERE BBV D'ILBARRIZ
UNNIM SERVEIS DE DEPENDENCIA, S.A.
SERVICIOS Y SOLUCIONES DE GESTION PARA CORPORACIONES, EMPRESAS
Y PARTICULARES, S.L.
IBERNEGOCIO DE TRADE, S.L.
F/11032604 FRACCIONAMIENTO LOARCA TERCERA SECCION
FIDEICOMISO Nº.402900-5 ADMINISTRACION DE INMUEBLES
LIQUIDATION
LIQUIDATION
LIQUIDATION
LIQUIDATION
LIQUIDATION
DISPOSAL
LIQUIDATION
VARIABLE CAPITAL
REAL ESTATE
SERVICES
SERVICES
COMMERCIAL
REAL ESTATE
FINANCIAL SERVICES
-
-
-
-
-
-
-
-
-
-
-
-
1
-
-
-
-
-
-
-
-
-
70.00%
0.03%
72.05%
3.29%
100.00%
100.00%
100.00%
100.00%
100.00%
56.76%
100.00%
Total Voting
Rights
Controlled after
the
Disposal
0.00%
75.93%
0.00%
56.76%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
Effective Date for
the Transaction
(or Notification
Date)
5/2/2014
6/30/2014
9/9/2014
6/30/2014
10/31/2014
12/15/2014
12/16/2014
12/22/2014
12/24/2014
12/30/2014
12/31/2014
Consolidated Structured Entities
CID II FINANCE B.V.
(*) The profit figure show n is the net attributed income for the sale
LIQUIDATION
FINANCIAL SERVICES
-
-
12/30/2014
170
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting principles (Bank of Spain Circular 4/2004, and as amended thereafter,
which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-language version prevails.
Business Combinations and Other Acquisitions or Increases of Interest Ownership in Associates and Joint-Ventures Accounted for Under the Equity Method
Company
Type of
Transaction
Activity
M illio ns o f E uro s
% o f V o t ing R ight s
P ric e P a id in t he
T ra ns a c t io ns +
E xpe ns e s D ire c t ly
A t t ribut a ble t o t he
T ra ns a c t io ns
F a ir V a lue o f
E quit y
Ins t rum e nt s
Is s ue d f o r t he
T ra ns a c t io ns
% P a rt ic ipa t io n
( N e t )
A c quire d
in t he P e rio d
T o t a l V o t ing
R ight s
C o nt ro lle d A f t e r
t he
T ra ns a c t io ns
E f f e c t iv e D a t e f o r
t he T ra ns a c t io n
( o r N o t if ic a t io n
D a t e )
REAL ESTATE DEAL II, S.A.
BATEC MOBILITY, S.L.
GARANTI FILO SIGORTA ARACILIK HIZMETLERI A.S.
SEGURIDAD Y PROTECCION BANCARIAS, S.A. DE C.V.
GARANTI FINANSAL KIRALAMA A.S.
GARANTI ODEME SISTEMLERI A.S.(GOSAS)
GARANTI HIZMET YONETIMI A.S
ALTITUDE SOFTWARE SGPS, S.A.
FIDEICOMISO SCOTIABANK INVERLAT S A F100322908
ACQUISITION
ACQUISITION
FOUNDING
DILUTION EFFECT
ACQUISITION
ACQUISITION
ACQUISITION
DILUTION EFFECT
ACQUISITION
OTHER INVESTMENT COMPANIES
SERVICES
INSURANCES SERVICES
SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
SERVICES
REAL ESTATE
Consolidated Structured Entities
COMPANY
RPV COMPANY
FOUNDING
FOUNDING
FINANCIAL SERVICES
FINANCIAL SERVICES
5
-
-
-
-
-
-
-
-
-
-
20.06%
48.51%
100.00%
3.82%
0.04%
0.04%
99.40%
0.54%
50.00%
20.06%
48.51%
100.00%
26.14%
99.99%
100.00%
3.00%
31.54%
50.00%
-
-
-
-
-
-
-
-
-
-
-
3/31/2014
2/26/2014
3/20/2014
5/30/2014
10/31/2014
10/31/2014
10/31/2014
12/23/2014
12/23/2014
2/28/2014
2/28/2014
171
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting principles (Bank of Spain Circular 4/2004, and as amended thereafter,
which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-language version prevails.
Disposal or Reduction of Interest Ownership in Associates and Joint-Ventures Companies Accounted for Under the Equity Method
M illio ns o f
E uro s
% o f V o t ing R ight s
Company
Type of Transaction
Activity
P ro f it ( Lo s s )
in t he
T ra ns a c t io n
% P a rt ic ipa t io n
S o ld
in t he P e rio d
AC HOTEL MANRESA, S.L.
LIQUIDATION
SERVICES
RENT AND TECH ALQUILER Y SERVICIOS TECNOLOGICOS. S.L. DISPOSAL
TUBOS REUNIDOS, S.A.
TUBOS REUNIDOS, S.A.
EFEAGRO, S.A.
SVENSON, S.L.
DISPOSAL
DISPOSAL
DISPOSAL
DISPOSAL
FIDEICOMISO SCOTIABANK INVERLAT SA 100322742
DILUTION EFFECT
NAVIERA ATTILA, AIE
CONNEX GARRAF, S.L.
PROMOU CT MEDEA, S.L.
DOMENIA CREDIT IFN SA
STICHTING UNITED CUSTODIAN
GESTIO CASA JOVE, S.L.
SBD LLOGUER SOCIAL, S.A.
LIQUIDATION
LIQUIDATION
DISPOSAL
MERGER
LIQUIDATION
DISPOSAL
DISPOSAL
FIDEICOMISO SCOTIABANK INVERLAT SA 100322742
DILUTION EFFECT
PROMOTORA DE INVERSION DE C. V.
GOLDEN CLOVER STICHTING CUSTODY
SAFEKEEPING CUSTODY COMPANY B.V.
COMPAÑIA ESPAÑOLA DE FINANCIACION DEL DESARROLLO
S.A.
STICHTING SAFEKEEPING
DISPOSAL
LIQUIDATION
LIQUIDATION
DISPOSAL
LIQUIDATION
SERVICES
INDUSTRIAL
INDUSTRIAL
SERVICES
COMMERCIAL
REAL ESTATE
SERVICES
REAL ESTATE
REAL ESTATE
FINANCIAL SERVICES
FINANCIAL SERVICES
REAL ESTATE
REAL ESTATE
REAL ESTATE
REAL ESTATE
FINANCIAL SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
INVESTMENT COMPANY
-
-
-
16
-
-
-
-
-
-
-
-
-
3
-
8
-
-
-
-
50.00%
100.00%
0.46%
21.75%
50.00%
31.51%
1.67%
21.01%
33.00%
51.00%
100.00%
100.00%
31.00%
20.00%
3.39%
50.00%
100.00%
100.00%
1.14%
100.00%
T o t a l V o t ing
R ight s
C o nt ro lle d a f t e r
t he
D is po s a l
0.00%
0.00%
21.75%
0.00%
0.00%
0.00%
37.01%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
33.61%
0.00%
0.00%
0.00%
16.67%
0.00%
E f f e c t iv e D a t e f o r
t he T ra ns a c t io n
( o r N o t if ic a t io n
D a t e )
1/7/2014
1/9/2014
1/31/2014
2/18/2014
4/28/2014
5/1/2014
6/30/2014
6/30/2014
10/15/2014
10/28/2014
11/14/2014
11/18/2014
11/19/2014
11/21/2014
11/28/2014
11/30/2014
12/8/2014
12/12/2014
12/16/2014
12/22/2014
Changes in other Companies quoted recognize as Available-For-Sale
Company
Type of
Transaction
Activity
% P a rt ic ipa t io n
A c quire d ( S o ld)
in t he P e rio d
Totally Controlle d
afte r Transaction
E f f e c t iv e D a t e f o r
t he T ra ns a c t io n
( o r N o t if ic a t io n
D a t e )
% of voting rights
TUBOS REUNIDOS, S.A.
DISPOSAL
INDUSTRIAL
6.89%
14.87%
2/18/2014
172
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting principles (Bank of Spain Circular 4/2004, and as amended thereafter,
which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-language version prevails.
APPENDIX V.
Fully consolidated subsidiaries with more than 10% owned by non-Group shareholders as of December 31, 2014
Company
Activity
Direct
Indirect
% of Voting Rights
Controlled by the Bank
BANCO BILBAO VIZCAYA ARGENTARIA CHILE, S.A.
BANCO PROVINCIAL S.A. - BANCO UNIVERSAL
BANKING
BANKING
BBVA CONSUMER FINANCE ENTIDAD DE DESARROLLO A LA PEQUEÑA
Y MICRO EMPRESA, EDPYME, S.A. (BBVA CONSUMER FINANCE -
EDPYME)
BBVA ELCANO EMPRESARIAL, S.A. EN LIQUIDACION
BBVA INMOBILIARIA E INVERSIONES, S.A.
CATALONIA GEBIRA, S.L,
DESARROLLO URBANISTICO DE CHAMARTIN, S.A.
ECOARENYS, S.L.
ESTACION DE AUTOBUSES CHAMARTIN, S.A.
F/253863 EL DESEO RESIDENCIAL
F/403035-9 BBVA HORIZONTES RESIDENCIAL
FORUM COMERCIALIZADORA DEL PERU, S.A.
FORUM DISTRIBUIDORA DEL PERU, S.A.
FORUM DISTRIBUIDORA, S.A.
FORUM SERVICIOS FINANCIEROS, S.A.
GESTION DE PREVISION Y PENSIONES, S.A.
HABITATGES INVERVIC, S.L.
HOLDING CONTINENTAL, S.A.
INVERSIONES BANPRO INTERNATIONAL INC. N.V.
INVERSIONES P.H.R.4, C.A.
PRO-SALUD, C.A.
TEXTIL TEXTURA, S.L.
FINANCIAL SERVICES
IN LIQUIDATION
REAL ESTATE
REAL ESTATE
REAL ESTATE
REAL ESTATE
SERVICES
REAL ESTATE
REAL ESTATE
SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
PENSION FUND MANAGEMENT
REAL ESTATE
INVESTMENT COMPANY
INVESTMENT COMPANY
NO ACTIVITY
NO ACTIVITY
COMERCIAL
-
1.46
-
45.00
-
-
-
-
-
-
-
-
-
-
-
60.00
-
50.00
48.00
-
-
-
68.18
53.75
84.32
-
68.11
81.66
75.54
50.00
51.00
65.00
65.00
84.32
84.32
75.52
75.50
-
35.00
-
-
60.46
58.86
68.67
Total
68.18
55.21
84.32
45.00
68.11
81.66
75.54
50.00
51.00
65.00
65.00
84.32
84.32
75.52
75.50
60.00
35.00
50.00
48.00
60.46
58.86
68.67
173
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRES for banks. See Note 54).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original
Spanish-language version prevails.
APPENDIX VI.
BBVA Group’s securitization funds
Securitization Fund (consolidated)
Company
Origination
Date
BBVA-3 FTPYME FTA
BBVA HIPOTECARIO 3 FTA
BBVA-4 PYME FTA
BBVA AUTOS 2 FTA
BBVA CONSUMO 1 FTA
BBVA-5 FTPYME FTA
BBVA CONSUMO 2 FTA
BBVA RMBS 1 FTA
BBVA RMBS 2 FTA
BBVA LEASING 1 FTA
BBVA-6 FTPYME FTA
BBVA RMBS 3 FTA
BBVA EMPRESAS 1 FTA
BBVA-7 FTGENCAT FTA
BBVA CONSUMO 3 FTA
BBVA RMBS 5 FTA
BBVA-8 FTPYME FTA
BBVA EMPRESAS 2 FTA
BBVA CONSUMO 4 FTA
BBVA EMPRESAS 3 FTA
BBVA RMBS 9 FTA
BBVA EMPRESAS 4 FTA
BBVA EMPRESAS 5 FTA
BBVA EMPRESAS 6 FTA
BBVA RMBS 10 FTA
BBVA RMBS 11 FTA
BBVA SECURITISED FUNDING 1.FTA
BBVA RMBS 12 FTA
BBVA-FINANZIA AUTOS 1 FTA
FTA TDA-22 MIXTO
FTA IM TERRASSA MBS-1
FTA TDA-27
FTA TDA-28
FTA GAT FTGENCAT 2007
FTA GAT FTGENCAT 2008
AYT HIPOTECARIO MIXTO, FTA
TDA 20-MIXTO, FTA
AYT HIPOTECARIO MIXTO IV, FTA
GC FTGENCAT CAIXA SABADELL 1, FTA
AYT CAIXA SABADELL HIPOTECARIO I, FTA
GC FTGENCAT CAIXA SABADELL 2, FTA
BBVA PYME 9 FTA
BBVA RMBS 13 FTA
BBVA CONSUMO 6 FTA
BBVA RMBS 14 FTA
PEP80040F110
BBVA UNIVERSALIDAD E9
BBVA UNIVERSALIDAD E10
BBVA UNIVERSALIDAD E11
BBVA UNIVERSALIDAD E12
BBVA UNIVERSALIDAD N6
BACOMCB 07
BACOMCB 08
BACOMCB 08U
BACOMCB 08-2
BACOMCB 09
BMERCB 13
2 PS Interamericana
2 PS Interamericana
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BANCO CONTINENTAL, S.A
BBVA COLOMBIA, S.A.
BBVA COLOMBIA, S.A.
BBVA COLOMBIA, S.A.
BBVA COLOMBIA, S.A.
BBVA COLOMBIA, S.A.
BBVA BANCOMER, S.A
BBVA BANCOMER, S.A
BBVA BANCOMER, S.A
BBVA BANCOMER, S.A
BBVA BANCOMER, S.A
BBVA BANCOMER, S.A
BBVA CHILE S.A.
BBVA SOCIEDAD DE LEASING INMOBILIARIO, S
11/2004
06/2005
09/2005
12/2005
05/2006
10/2006
11/2006
02/2007
03/2007
06/2007
06/2007
07/2007
11/2007
02/2008
04/2008
05/2008
07/2008
03/2009
12/2009
12/2009
04/2010
07/2010
03/2011
12/2011
06/2011
06/2012
03/2013
12/2013
04/2007
12/2004
07/2006
12/2006
07/2007
11/2007
08/2008
03/2004
06/2004
06/2005
10/2006
07/2008
12/2008
12/2012
07/2014
10/2014
11/2014
12/2007
12/2008
03/2009
05/2009
08/2009
08/2012
12/2007
03/2008
08/2008
12/2008
08/2009
06/2013
10/2004
10/2004
Millions of Euros
Total Securitized
Exposures at the
Origination Date
1,000,023
1,450,013
1,250,025
1,000,000
1,499,999
1,900,022
1,500,000
2,500,000
5,000,000
2,500,000
1,500,101
3,000,000
1,450,002
250,010
975,000
5,000,001
1,100,127
2,850,062
1,100,000
2,600,011
1,295,101
1,700,025
1,250,050
1,200,154
1,600,065
1,400,077
847,997
4,350,001
800,000
62,000
525,000
275,000
250,000
225,000
350,000
100,000
100,000
100,000
304,500
300,000
238,000
470,035
4,100,110
298,858
700,019
20,591
48,434
25,543
16,862
27,088
73,317
147,949
64,626
318,761
325,917
366,296
606,112
9,769
19,391
Total Securitized
Exposures as of
Decem ber 31, 2014
13,984
79,355
27,159
24,318
39,022
76,413
44,786
1,391,188
2,670,495
205,596
99,389
1,842,994
78,545
23,649
53,697
3,054,292
137,950
471,408
142,360
346,112
1,048,977
282,637
308,720
440,438
1,411,889
1,255,711
602,218
4,133,729
33,429
21,196
162,452
134,014
135,017
45,953
118,039
24,189
26,749
33,476
26,583
135,062
19,053
226,297
4,006,130
273,156
686,425
3,177
6,212
2,606
1,281
3,028
20,424
47,313
23,027
151,790
124,434
191,679
191,032
2,987
5,929
Securitization Fund (not consolidated)
Company
Millions of Euros
Origination
Date
Total Securitized
Exposures at the
Origination Date
Total Securitized
Exposures as of
Decem ber 31, 2014
BCL MUNICIPIOS I FTA
FTA TDA13
FTA TDA-18 MIXTO
AYT 1 HIPOTECARIO, FTH
2 PS RBS (ex ABN)
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA, S.A
BBVA SOCIEDAD DE LEASING INMOBILIARIO, S.A.
06/2000
12/2000
11/2003
06/1999
09/2002
1,205,059
84,142
91,000
149,040
7,622
57,947
8,621
18,750
3,538
4,786
174
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original
Spanish-language version prevails.
APPENDIX VII.
Details of the outstanding subordinated debt and preferred securities issued by the Bank as of December 31, 2014 and
2013
Issue Type and data
Non-convertible
July-96
July-04
October-04
January-05
December-05
August-06
August-06
February-07
February-07
March-07
March-08
July-08
June-09
September-09
Convertible
May-13
Subtotal
Subordinated deposits
Preferred Stock
December-07
Total
Millions of Euros
2014
2013
Interest rate
in force in
2014
Fix (F) or
Variable (V)
Maturity date
27
3
-
49
3
40
45
70
253
74
125
100
5
10
1,235
1,500
3,539
4,100
14
7,653
27
2
628
49
3
36
46
64
255
75
125
100
5
10
1,088
-
2,513
2,529
14
5,056
9.37%
0.34%
0.61%
2.37%
4.70%
0.66%
0.64%
4.50%
1.38%
6.03%
6.20%
5.33%
6.00%
9.00%
7.00%
2.33%
F
V
V
V
V
F
V
V
V
V
V
F
V
V
V
V
V
12/22/2016
7/30/2019
20/10/2019(*)
1/28/2020
12/1/2015
8/9/2021
8/9/2021
2/15/2017
2/16/2022
Perpetual
3/3/2033
7/4/2023
6/10/2024
9/29/2019
Perpetual
Perpetual
Perpetual
175
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original
Spanish-language version prevails.
APPENDIX VIII.
Balance sheets held in foreign currency as of December 31, 2014 and
2013
2014
Assets -
Financial assets held for trading
Available-for-sale financial assets
Loans and receivables
Investments
Tangible assets
Rest
Total
Liabilities -
Financial assets held for trading
Financial liabilities at amortized cost
Rest
Total
2013
Assets -
Financial assets held for trading
Available-for-sale financial assets
Loans and receivables
Investm ents
Tangible assets
Rest
Total
Liabilities -
Financial assets held for trading
Financial liabilities at amortized cost
Rest
Total
Millions of Euros
USD
Pounds
Sterling
Other
Currencies
TOTAL
2,126
3,475
12,839
2,028
7
9,140
29,615
1,474
28,118
5
29,597
305
950
1,461
-
6
1,385
4,107
241
3,772
59
4,072
600
3,081
1,900
19,826
2
(8,495)
16,914
398
873
668
1,939
3,031
7,506
16,200
21,854
15
2,030
50,636
2,113
32,763
732
35,608
Millions of Euros
USD
Pounds
Sterling
Other
Currencies
TOTAL
1,611
1,228
10,893
8,961
7
822
23,522
1,054
22,592
64
23,710
305
68
1,513
6
32
1,924
261
2,744
61
3,066
897
1,902
1,545
12,059
1
91
16,495
368
783
(561)
590
2,813
3,198
13,951
21,020
14
945
41,941
1,683
26,119
(436)
27,366
176
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original
Spanish-language version prevails.
APPENDIX IX.
Income statement corresponding to the first and second half of
2014 and 2013
INTEREST AND SIMILAR INCOME
INTEREST EXPENSE AND SIMILAR CHARGES
INCOME FROM EQUITY INSTRUMENTS
NET INTEREST INCOME
INCOME FROM EQUITY INSTRUMENTS
FEE AND COMMISSION INCOME
FEE AND COMMISSION EXPENSES
GAINS OR LOSSES ON FINANCIAL ASSETS AND LIABILITIES (NET)
EXCHANGE DIFFERENCES
OTHER OPERATING INCOME
OTHER OPERATING EXPENSES
GROSS INCOME
ADMINISTRATION COSTS
Personnel expenses
General expenses
AMORTIZATION
PROVISIONS (NET)
IMPAIRMENT LOSSES ON FINANCIAL ASSETS (NET)
NET OPERATING INCOME
IMPAIRMENT LOSSES ON OTHER ASSETS (NET)
GAINS (LOSSES) ON DERECOGNIZED ASSETS NOT CLASSIFIED AS NON-
CURRENT ASSETS HELD FOR SALE
NEGATIVE GOODWILL IN BUSINESS COMBINATIONS
GAINS AND LOSSES ON NON-CURRENT ASSETS HELD FOR SALE NOT
CLASSIFIED AS DISCONTINUED TRANSACTIONS
INCOME BEFORE TAX
INCOME TAX
INCOME FROM CONTINUING TRANSACTIONS
INCOME FROM DISCONTINUED TRANSACTIONS (NET)
PROFIT FOR THE YEAR
Millions of Euros
1H14
1H13
2H14
2H13
3,473
(1,893)
-
1,580
1,910
896
(166)
753
(58)
56
(194)
4,778
(1,838)
(1,093)
(745)
(259)
(352)
(918)
1,411
(259)
(2)
-
(254)
895
86
981
-
981
4,225
(2,460)
-
1,765
1,729
904
(169)
542
172
68
(162)
4,849
(1,952)
(1,193)
(759)
(247)
(343)
(1,480)
827
(31)
137
-
(277)
656
223
879
578
1,457
3,290
(1,600)
-
1,690
938
877
(142)
401
167
64
(239)
3,755
(1,826)
(1,101)
(725)
(258)
(520)
(950)
201
299
1
-
(117)
385
(261)
124
-
124
3,652
(2,129)
-
1,523
528
871
(163)
583
23
63
(479)
2,949
(1,925)
(1,159)
(766)
(255)
(387)
(1,774)
(1,392)
176
(264)
-
(93)
(1,573)
896
(677)
483
(194)
177
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original
Spanish-language version prevails.
APPENDIX X.
Information on data derived from the special accounting registry
Information required pursuant to Circular 5/2011 of the Bank of Spain is indicated as follows.
a) Mortgage market policies and procedures
The Bank has express policies and procedures in place regarding its activities in the mortgage market, which
provide for full compliance with applicable legislation pursuant to Royal Decree 716/2009, of 24 April, 2009
implementing certain aspects of Act 2/1981, of 25 March 1981, regulating the mortgage market and other
standards of the mortgage and financial system.
The mortgage granting policy is based in principles focused on assessing the adequate ratio between the
amount of the loan, and the payments, and the net income of the applicant. Applicants must in all cases prove
sufficient repayment ability (present and future) to meet their repayment obligations, for both the mortgage debt
and for other debts detected in the financial system, and even those from an estimate of their current expenses
deduced from socio-demographic information. Therefore, the applicant’s repayment ability is a key aspect within
the credit decision-making tools and retail risk acceptance manuals, and has a high weighting in the final
decision.
During the mortgage risk transaction analysis process , documentation supporting the applicant’s income
(payroll, etc.) is required, and the applicant’s position in the financial system is checked through automated
default database queries (internal and external). This information is used for calculation purposes in order to
determine the level of indebtedness/compliance with the rest of the system. This documentation is kept in the
transaction’s file.
In addition, the mortgage granting policy assesses the adequate ratio between the amount of the loan and the
appraisal value of the mortgaged asset. If an appropriate level is not exceeded, additional collateral is required to
reinforce the transaction’s hedging. The policy also establishes that the property to be mortgaged be appraised
by an independent appraisal company unrelated to the Group and authorized by the Bank of Spain. BBVA
selects those companies whose reputation, standing in the market and independence ensure that their
appraisals adapt to the market reality in each region. Each appraisal is reviewed and checked before the loan is
granted by BBVA staff and, in those cases where the loan is finally granted, it is kept in the transaction’s file.
As for issues related to the mortgage market, the Group’s Finance Division annually defines the wholesale
finance issue strategy, and more specifically mortgage bond issues, such as mortgage covered bonds or
mortgage securitization. The Assets and Liabilities Committee (“ALCO”) tracks the budget monthly. The volume
and type of assets in these transactions is determined in accordance with the wholesale finance plan, the trend
of the Bank’s “Loans and receivables” outstanding balances and market conditions.
The Board of Directors of the Bank authorizes each of the issues of Mortgage Transfer Certificate and/or
Mortgage Participation issued by BBVA to securitize loans and mortgage loans, as well as the establishment of a
Base Prospectus for the issue of fixed-income securities through which the mortgage-covered bonds are
implemented, based on the agreements for the issue of fixed-income securities approved by the Annual General
Meeting.
As established in article 24 of Royal Decree 716/2009, the volume of unmatured mortgage-covered bonds
issued by a bank may not exceed 80% of a calculation base determined by adding the non-amortized capital of
all the loans and mortgage loans in the bank’s portfolio that are eligible and are not covered by the issue of
Mortgage Bonds, Mortgage Participations or Mortgage Transfer Certificates. For these purposes, in accordance
with the aforementioned Royal Decree 716/2009, in order to be eligible, loans and mortgage loans must: (i) be
secured by a first mortgage on the freehold; (ii) the loan’s amount may not exceed 80% of the appraisal value
for home mortgages, and 60% for other mortgage lending; (iii) be established on assets exclusively and wholly
owned by the mortgagor; (iv) have been appraised by an independent appraisal company unrelated to the
Group and authorized by the Bank of Spain; and (v) the mortgaged property must be covered at least by a
current damage insurance policy.
The Bank has set up a series of controls for mortgage covered bonds, which regularly control the total volume
of issued mortgage covered bonds issued and the remaining eligible collateral, to avoid exceeding the
maximum limit set by Royal Decree 716/2009, and outlined in the preceding paragraph. In the case of
securitizations, the preliminary portfolio of loans and mortgage loans to be securitized is checked by the Bank’s
external auditor as required by the Spanish Securities and Exchange Commission. There is also a series of filters
through which some mortgage loans and credits are excluded in accordance with legal, commercial and risk
concentration criteria.
178
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original
Spanish-language version prevails.
b) Quantitative information on activities in the mortgage market
The quantitative information on activities in the mortgage market required by Bank of Spain Circular 5/2011 is
shown below.
b.1) Assets operation
Mortgage loans.
Eligibility for the purpose of the mortgage market.
Millions of Euros
December
2014
December
2013
Nominal value of outstanding loans and m ortgage loans
(A)
104,217
108,962
Minus: Nom inal value of all outstanding loans and mortgage loans that form part of the
portfolio, b ut have b een m ob ilized through mortgage b ond holdings or m ortgage transfer
certificates.
(B)
(24,390)
(21,551)
Nominal value of outstanding loans and mortgage loans, excluding securitized loans
Of which:
(A)-(B)
79,827
-
87,411
Loans and mortgage loans which would be eligible if the calculation limits set forth in
Article 12 of Spanish Royal Decree 716/2009 were not applied.
(C)
42,920
58,742
Minus: Loans and mortgage loans which would b e eligib le b ut, according to the criteria set
forth in Article 12 of Spanish Royal Decree 716/2009, cannot b e used to collateralize any
issuance of mortgage b onds.
Eligible loans and mortgage loans that, according to the criteria set forth in Article 12 of
Spanish Royal Decree 716/2009, can be used as collateral for the issuance of mortgage
bonds
(D)
(2,738)
(3,590)
(C)-(D)
40,182
55,152
Issuance lim it: 80% of eligible loans and m ortgage loans that can be used as collateral
Issued Mortgage-covered bonds
Outstanding Mortgage-covered bonds
Capacity to issue mortgage-covered bonds
Memorandum items:
(E )
(F)
(E)-(F)
Percentage of overcollateralization across the portfolio
Percentage of overcollateralization across the eligible used portfolio
Nominal value of available sum s (com mitted and unused) from all loans and m ortgage
loans.
Of which:
Potentially eligib le
Ineligib le
Nominal value of all loans and mortgage loans that are not eligible, as they do not meet the
thresholds set in Article 5.1 of Spanish Royal Decree 716/2009, but do meet the rest of the
eligibility requirements indicated in Article 4 of the Royal Decree.
32,145
29,958
27,210
2,187
-
266%
44,122
40,865
39,169
3,257
214%
134%
135%
1,900
1,633
1,322
578
1,365
268
30,810
23,698
Nominal value of the replacement assets subject to the issue of mortgage-covered bonds.
-
-
179
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original
Spanish-language version prevails.
Mortgage loans.
Eligibility for the purpose of the mortgage market.
Total loans
Issued mortgage participations
Of which: recognized on the b alance sheet
Issued mortgage transfer certificates
Of which: recognized on the b alance sheet
Mortgage loans as collateral of mortgages bonds
Loans supporting the issuance of mortgage-covered bonds
Non elegible loans
Comply requirements to be elegible except the lim it provided for under
the article 5.1 of the Spanish Royal Decree 716/2009
Rest
Elegible loans
That can not be used as collateral for issuances
That can be used as collateral for issuances
Loans used to collateralize mortgage bonds
Loans used to collateralize mortgage-covered bonds
Millions of Euros
(1)
(2)
(3)
(4)
1-2-3-4
December
2014
104,217
3
-
24,387
24,345
-
79,827
36,907
30,810
6,097
42,920
2,738
40,182
-
40,182
December
2013
108,962
12
-
21,539
21,492
-
87,411
28,669
23,698
4,971
58,742
3,590
55,152
-
55,152
Mortgage loans. Classification of the
nominal values according to different
characteristics
Total
mortgage
loans
Eligible
Loans(*)
Elegibles that
can be used
as collateral
for issuances
(**)
Total
mortgage
loans
Eligible
Loans(*)
Elegibles that
can be used
as collateral
for issuances
(**)
December 2014
December 2013
Millions of Euros
TOTAL
By source of the operations
Originated by the bank
Subrogated by other institutions
Rest
By Currency
In euros
In foreign currency
By payment situation
Normal payment
Other situations
By residual maturity
Up to 10 years
10 to 20 years
20 to 30 years
Over 30 years
By Interest Rate
Fixed rate
Floating rate
Mixed rate
By Target of Operations
For business activity
From w ich: public housing
For households
By type of guarantee
Secured by completed assets/buildings
Residential use
From w ich: public housing
Commercial
Other
Secured by assets/buildings under construction
Residential use
From w ich: public housing
Commercial
Other
Secured by land
Urban
Non-urban
79,827
-
69,794
928
9,105
-
79,462
365
-
59,012
20,815
-
18,434
24,768
23,027
13,598
-
3,211
76,616
-
-
22,483
10,421
57,344
-
72,770
63,083
6,253
9,687
-
2,350
1,888
100
462
-
4,707
2,021
2,686
42,920
-
35,600
703
6,617
-
42,920
-
-
35,268
7,652
-
10,733
17,939
10,619
3,629
-
863
42,057
-
-
7,232
2,519
35,688
-
41,565
37,547
3,845
4,018
-
380
261
7
119
-
975
442
533
40,182
-
32,945
698
6,539
-
40,182
-
-
34,509
5,673
-
9,377
17,276
10,030
3,499
-
687
39,495
-
-
5,065
875
35,117
-
39,471
36,038
3,536
3,433
-
262
163
3
99
-
449
135
314
87,411
58,742
55,152
78,194
1,153
8,064
87,033
378
65,459
21,952
17,574
25,736
27,956
16,145
2,706
84,705
-
21,414
10,345
65,997
80,528
71,039
7,463
9,182
307
2,547
2,083
126
464
-
4,336
1,753
2,583
49,963
1,026
7,753
58,557
185
48,784
9,958
10,640
20,278
19,962
7,862
947
57,795
-
8,042
3,574
50,700
57,156
53,209
6,747
3,947
-
546
411
78
135
-
1,040
482
558
46,460
1,019
7,673
54,977
175
47,690
7,462
9,155
19,400
18,957
7,640
731
54,421
-
5,204
1,245
49,948
54,367
50,993
6,273
3,374
-
350
240
42
110
-
435
131
304
(*) Not taking into account the thresholds established by Article 12 of Spanish Royal Decree 716/2009
(**) Taking into account the thresholds established by Article 12 of Spanish Royal Decree 716/2009
180
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original
Spanish-language version prevails.
Millions of Euros
Loan to Value (Last available appraisal risk)
December 2014
Nominal value of the total mortgage
loans
Less than or
equal to 40%
Over 40% but
less than or
equal to 60%
Over 60% but
less than or
equal to 80%
Over 80%
Total
Home mortgages
Other mortgages
Total
9,518
2,454
11,972
13,848
2,483
16,331
14,617
14,617
37,983
4,937
42,920
-
Millions of Euros
Loan to Value (Last available appraisal risk)
December 2013
Nominal value of the total mortgage
loans
Less than or
equal to 40%
Over 40% but
less than or
equal to 60%
Over 60% but
less than or
equal to 80%
Over 80%
Total
Home mortgages
Other m ortgages
Total
12,561
2,478
15,039
18,939
2,752
21,691
22,012
22,012
-
-
53,512
5,230
58,742
Elegible and non elegible mortgage loans.
Changes of the nominal values in the period
Balance at the begining
Retirements
Held-to-m aturity cancellations
Anticipated cancellations
Subrogations to other institutions
Rest
Additions
Acquisition of Unnim
Originated by the bank
Subrogations to other institutions
Rest
Balance at the end
Millions of Euros
December 2014
Millions of Euros
December 2013
Eligible
Loans (*)
Non eligible
Eligible
Loans (*)
Non eligible
58,742
17,832
5,055
342
-
12,435
2,010
-
1,819
5
186
42,920
28,669
5,901
3,231
606
-
2,064
14,139
-
3,382
3
10,754
36,907
69,598
24,428
5,784
1,477
5
17,162
13,572
10,958
2,516
12
86
58,742
14,147
4,587
2,468
421
1
1,697
19,109
2,753
3,647
4
12,705
28,669
Mortgage loans supporting the issuance of mortgage-covered
bonds
Nominal value.
Potentially eligible
Ineligible
Total
Millions of Euros
December
2014
December
2013
1,322
578
1,900
1,365
268
1,633
181
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting
principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original
Spanish-language version prevails.
b.2) Liabilities operations
Issued Mortgage Bonds
Nominal value
Average
residual
maturity
Nominal value
Average
residual
maturity
Millions of Euros
December 2014
December 2013
Mortgage bonds
Mortgage-covered bonds
Of which:Non recognized as liab ilities on b alance
Of Which: outstanding
Debt securities issued through public offer
Residual maturity up to 1 year
Residual maturity over 1 year and less than 2 years
Residual maturity over 2 years and less than 3 years
Residual maturity over 3 years and less than 5 years
Residual maturity over 5 years and less than 10 years
Residual maturity over 10 years
Debt securities issued without public offer
Residual maturity up to 1 year
Residual maturity over 1 year and less than 2 years
Residual maturity over 2 years and less than 3 years
Residual maturity over 3 years and less than 5 years
Residual maturity over 5 years and less than 10 years
Residual maturity over 10 years
Deposits
Residual maturity up to 1 year
Residual maturity over 1 year and less than 2 years
Residual maturity over 2 years and less than 3 years
Residual maturity over 3 years and less than 5 years
Residual maturity over 5 years and less than 10 years
Residual maturity over 10 years
Mortgage participations
Mortgage transfer certificates
Issued through public offer
Issued without public offer
(*) Including mortgage-covered bonds hold by the BBVA Group's companies
-
29,958
2,748
27,210
22,620
3,598
4,500
6,772
5,550
2,200
2,272
-
-
150
-
2,000
122
5,066
993
1,064
460
815
843
891
-
24,345
24,345
-
-
40,865
39,169
7,810
28,027
6,407
3,598
4,500
6,772
4,550
2,200
7,227
200
-
-
150
2,500
4,377
5,611
530
993
1,079
1,099
1,019
891
-
21,492
21,492
-
289
289
-
-
287
287
-
Given the characteristics of the type of covered bonds issued by the Bank, there is no substituting collateral
related to these issues.
The Bank does not hold any derivative financial instruments relating to mortgage bond issues, as defined in the
aforementioned Royal Decree.
182
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting principles
(Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRES for banks. See Note 54).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original
Spanish-language version prevails.
APPENDIX XI.
Risks related to the developer and real-estate sector in Spain
a)
Policies and strategies established by the Group to deal with risks related to the
developer and real-estate sector
BBVA has teams specializing in the management of the Real-Estate Sector risk, given its economic importance
and specific technical component. This specialization is not only in the Risk-Acceptance teams, but throughout
the handling, commercial, problematic management and legal aspects, and includes the research department
(BBVA Research), which helps determine the medium/long-term vision needed to manage this portfolio.
Specialization has been increased and the management teams in the areas of recovery and the Real Estate Unit
itself have been reinforced.
The portfolio management policies, established to address the risks related to the developer and real-estate
sector, aim to accomplish, among others, the following objectives: to avoid concentration in terms of
customers, products and regions; to estimate the risk profile for the portfolio; and to anticipate possible
worsening of the portfolio.
Specific policies for analysis and admission of new developer risk transactions
In the analysis of new operations, the assessment of the commercial operation in terms of the economic and
financial viability of the project has been once of the constant points that have helped ensure the success and
transformation of construction land operations for our customers’ developments.
As regards the participation of the Risk Acceptance teams, they have a direct link and participate in the
committees of areas such as Recoveries and the Real Estate Unit. This guarantees coordination and exchange of
information in all the processes.
The following strategies have been implemented with customers: avoidance of large corporate transactions,
which had already reduced their share in the years of greatest market growth; non-participation in the second-
home market; commitment to public housing financing; and participation in land operations with a high level of
urban development security, giving priority to land open to urban development.
Risk monitoring policies
The base information for analyzing the real estate portfolios is updated monthly. The tools used include the so-
called “watch-list”, which is updated monthly with the progress of each client under watch, and the different
strategic plans for management of special groups. There are plans that involve an intensification of the review of
the portfolio for financing land, while, in the case of ongoing promotions, they are classified for monitoring
purposes based on the rate of progress of the projects.
These actions have enabled the Bank to anticipate possible impairment situations, by always keeping an eye on
BBVA’s position with each customer (whether or not as first creditor).In this regard, key aspects include
management of the risk policy to be followed with each customer, contract review, deadline extension,
improved collateral, rate review (repricing) and asset purchase.
Proper management of the relationship with each customer requires knowledge of various aspects such as the
identification of the source of payment difficulties, an analysis of the company’s future viability, the updating of
the information on the debtor and the guarantors (their current situation and business course, economic-
financial information, debt analysis and generation of funds), and the updating of the appraisal of the assets
offered as collateral.
BBVA has a classification of debtors in accordance with legislation in force in each country, usually categorizing
each one’s level of difficulty for each risk.
Based on the information above, a decision is made whether to use the refinancing tool, whose objective is to
adjust the structure of the maturity of the debt to the generation of funds and the customer’s payment capacity.
As for the policies relating to risk refinancing with the developer and real-estate sector, they are the same as the
general policies used for all of the Group’s risks. In the developer and real estate sector, they are based on clear
solvency and viability criteria for projects, with demanding terms for guarantees and legal compliance. The
policy on refinancing uses outstanding risk rather than nonperforming assets, with a refinancing tool that
standardizes criteria and values up to a total of 19 variables when considering any refinancing operation.
183
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting principles
(Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original
Spanish-language version prevails.
In the case of refinancing, the tools used for enhancing the Bank’s position are: the search for new intervening
parties with proven solvency and initial payment to reduce the principal debt or outstanding interest; the
improvement of the debt bond in order to facilitate the procedure in the event of default; the provision of new
or additional collateral; and making refinancing viable with new conditions (period, rate and repayments),
adapted to a credible and sufficiently verified business plan.
Policies applied in the management of real estate assets in Spain
The policy applied for managing these assets depends on the type of real-estate asset, as detailed below.
In the case of completed homes, the final aim is the sale of these homes to private individuals, thus diluting the
risk and beginning a new business cycle. Here, the strategy has been to help subrogation (the default rate in this
channel of business is notably lower than in any other channel of residential mortgages) and to support our
customers’ sales directly, using BBVA’s own channel (BBVA Services and our branches), creating incentives for
sale and including sale orders for BBVA that set out sale prices which are notably lower than initial ones. In
exceptional case we have even accepted partial haircuts, with the aim of making the sale easier.
In the case of ongoing construction work, our strategy has been to help and promote the completion of the
works in order to transfer the investment to completed homes. The whole developer Works in Progress portfolio
has been reviewed and classified into different stages with the aim of using different tools to support the
strategy. This includes the use of developer accounts-payable financing as a form of payment control, the use of
project monitoring supported by the Real Estate Unit itself, and the management of direct suppliers for the
works as a complement to the developer’s own management.
With respect to land, our presence at advanced stages in land development, where the vast majority of our risk
is urban land, simplifies our management. Urban management and liquidity control to tackle urban planning
costs are also subject to special monitoring.
b)
Quantitative information on activities in the real-estate market in Spain
Lending for real estate development according to the purpose of the loans as of December 31, 2014 and 2013
is shown below:
2014
Financing allocated to construction and real estate
development and its coverage
Gross
am ount
Millions of Euros
Draw n over
the
guarantee
value
Provision
coverage
Loans recorded by the BBVA, S.A. Bank (Businesses in Spain)
10,986
Of which: Impaired assets
Of which: Potencial prob lem assets
Memorandum item:
Write-offs
7,418
981
1,075
4,832
3,686
374
4,572
4,225
347
2013
Financing allocated to construction and real estate
development and its coverage
Gross
am ount
Millions of Euros
Draw n over
the
guarantee
value
Provision
coverage
Loans recorded by the BBVA, S.A. Bank (Businesses in Spain)
13,505
Of which: Impaired assets
Of which: Potencial prob lem assets
Memorandum item:
Write-offs
8,838
1,445
692
5,723
4,152
501
5,237
4,735
502
184
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting principles
(Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original
Spanish-language version prevails.
Memorandum item:
Total loans and advances to customers, excluding the Public
Sector (Business in Spain)
Total Assets (BBVA, S.A.)
Impairment losses determined collectively (BBVA, S.A.)
Millions of Euros
2014
2013
175,447
403,841
233
179,477
387,052
233
As of December 31, 2014, 29% of the nonperforming assets in this sector are up-to-date on payments, but
were classified as non-performing in accordance with the provisions of Appendix IX of Bank of Spain Circular
4/2004. Furthermore, substandard risk amounted to 9% of total developer risk.
The drawn over the guarantee value shown in the tables above corresponds to the difference between the gross
amount of each loan and the value of the real rights that, if applicable, were received as security, calculated
according to Bank of Spain Circular 3/2010, which complements Appendix IX of Bank of Spain Circular 4/2004.
This means that additional regulatory corrective factors ranging from 30% to 50%, based on the type of asset,
have been applied to the updated appraisal values.
After applying said corrective factors, the excess value above the guarantee value, which represents the amount
to be provisioned, amounted to €3,686 million and €374 million for nonperforming assets and substandard
assets, respectively as of December 31, 2014 (€4,152 million and €501 million as of December 31, 2013).
In addition, as of December 31, 2014 and 2013, specific provisions were allocated, amounting to €4,572
million and €5,237 million, respectively.
As of December 31, 2014 and 2013, the updated appraisal values, without the application of said corrective
factors, rose to €13,438 million and €16,590 million, respectively (an average LTV of 81.7% and 81.4%,
respectively) which broadly covers the amount of the debt.
The following is a description of the real estate credit risk based on the types of associated guarantees:
Financing allocated to construction and real
estate development (Gross)
Without secured loan
With secured loan
Terminated buildings
Homes
Other
Buildings under construction
Homes
Other
Land
Urbanized land
Rest of land
Total
Millions of Euros
2014
2013
1,007
9,979
5,776
4,976
800
883
861
22
3,320
1,881
1,439
10,986
1,303
12,202
7,270
6,468
802
1,238
1,202
36
3,694
2,120
1,574
13,505
The information on the retail mortgage portfolio risk as of December 31, 2014 and 2013 is as follows:
Housing-acquisition loans to households
(Businesses in Spain)
Without secured loan (gross amount)
Of which: Impaired
With secured loan (gross amount)
Of which: Impaired
Total
Millions of Euros
2014
2013
897
28
78,408
4,400
79,305
853
36
82,143
5,086
82,996
185
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting principles
(Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original
Spanish-language version prevails.
The loan to value (LTV) ratio (resulting from dividing the pending risk at any particular date by the amount of the
latest available appraisal) of the above portfolio is as follows:
2014
LTV Breakdown of secured loans to households
for the purchase of a home
(Businesses in Spain)
Gross amount
Of which: Impaired
Total risk over the am ount of the last valuation available (Loan To Value -LTV)
Millions of Euros
Less than or
equal to 40%
Ove r 40% but
le ss than or
e qual to 60%
Ove r 60% but
less than or
equal to 80%
Over 80% but
le ss than or
equal to 100%
Ove r 100%
Total
14,472
199
22,234
276
28,874
533
7,541
842
5,287
2,550
78,408
4,400
2013
LTV Breakdown of secured loans to households
for the purchase of a home
(Businesses in Spain)
Gross amount
Of which: Impaired
Total risk over the am ount of the last valuation available (Loan To Value -LTV)
Millions of Euros
Less than or
equal to 40%
Ove r 40% but
le ss than or
e qual to 60%
Ove r 60% but
less than or
equal to 80%
Over 80% but
le ss than or
equal to 100%
Ove r 100%
Total
14,370
262
22,368
338
31,542
618
8,964
1,010
4,899
2,858
82,143
5,086
The breakdown of foreclosed, acquired, purchased or exchanged assets from debt from loans relating to
business in Spain, as well as the holdings and financing to non-consolidated companies holding such assets is as
follows:
Information about assets received in payment of debts
(Businesses in Spain)
Gross
Value
Real estate assets from loans to the construction and real
estate development sectors in Spain.
Terminated buildings
Homes
Other
Buildings under construction
Homes
Other
Land
Urbanized land
Rest of land
Millions of Euros
2014
Provisions
Carrying
Am ount
Gross
Value
2013
Provisions
Carrying
Am ount
36
36
-
36
-
-
7
7
7
-
-
29
29
29
-
-
36
36
36
-
-
7
7
7
-
-
29
29
29
-
-
Real estate assets from mortgage financing for households
for the purchase of a home
Rest of foreclosed real estate assets
Equity instruments, investments and financing to non-
consolidated companies holding said assets
Total
2,751
1,137
737
4,661
1,197
532
492
2,228
1,554
605
245
2,433
2,515
918
730
4,199
953
411
408
1,779
1,562
507
322
2,420
As of December 31, 2014 and 2013, the gross book value of BBVA’s real-estate assets from corporate
financing for real estate construction and development was €36 million with an average coverage ratio of 19%
and 19%, respectively.
The gross book value of real-estate assets from mortgage lending to households for home purchase as of
December 31, 2014 and 2013, amounted to €2,751 million and €2,515 million, respectively, with an average
coverage ratio of 44% and 387%, respectively.
As of December 31, 2014 and 2013, the amount of real-estate assets on BBVA’s balance sheet, including other
real-estate assets received as debt payment, was €3,924 million and €3,469 million, respectively. The average
coverage ratio was 44.2% and 39.5%, respectively.
186
Translation of financial statements originally issued in Spanish and prepared in accordance with Spanish generally accounting principles
(Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRES for banks. See Note 51).
This English version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original
Spanish-language version prevails.
APPENDIX XII. Refinanced and restructured operations and
other requirements under Bank of Spain Circular 6/2012
REFINANCING AND RESTRUCTURING OPERATIONS
a) Policies and strategies established by the Group to deal with risks related to
refinancing and restructuring operations.
Refinancing/restructuring operations (see definition in the Glossary) are carried out with customers who have
requested such an operation in order to meet their current loan payments if they are expected, or may be
expected, to experience financial difficulty in making the payments in the future.
The basic aim of a refinanced/restructured operation is to provide the customer with a situation of financial
viability over time by adapting repayment of the loan incurred with the Group to the customer’s new situation of
fund generation. The use of refinancing or restructuring with for other purposes, such as for delaying loss
recognition