BBVA
Annual Report
Financial Statements,
Management Report and
Auditors´ Report for the
year 2017
KPMG Auditores, S.L.
Paseo de la Castellana, 259 C
28046 Madrid
Translation of a report originally issued in Spanish based on our work performed in accordance with prevailing legislation
regulating the audit of annual accounts in Spain on the financial statements originally issued in Spanish and prepared in
accordance with the provisions of the financial reporting framework applicable in Spain (see notes 1.2 and 52). In the
event of a discrepancy, the Spanish-language version prevails.
Independent Auditors’ Report on the Annual Accounts
To the Shareholders of Banco Bilbao Vizcaya Argentaria, S.A.
commissioned by the Board of Directors
REPORT ON THE ANNUAL ACCOUNTS
Opinion __________________________________________________________________
We have audited the annual accounts of Banco Bilbao Vizcaya Argentaria, S.A. (hereinafter the
“Bank”), which comprise the balance sheet as of 31 December 2017, and the income statement,
statement of recognized income and expenses, statement of changes in equity, statement of cash
flows and the notes thereto for the year then ended
In our opinion, the accompanying annual accounts present fairly, in all material respects, the equity
and financial position of the Bank as of 31 December 2017, and the results of its operations and cash
flows for the year then ended in accordance with the provisions of the financial reporting framework
applicable (as identified in Note 1.2 to the annual accounts), and in particular, with the principles and
accounting criteria contained in the same.
Basis for Opinion _________________________________________________________
We conducted our audit in accordance with prevailing legislation regulating the audit of annual
accounts in Spain. Our responsibilities under those standards are further described in the Auditor's
Responsibilities for the Audit of the Annual Accounts section of our report.
We are independent of the Bank in accordance with the ethical requirements, including those
regarding independence, that are applicable to our audit of the annual accounts in Spain pursuant to
legislation regulating the audit of annual accounts. We have not provided any services other than the
audit of annual accounts, nor have any situations or circumstances arisen, under the aforementioned
regulations, which would have affected the required independence such that it would have been
compromised.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
KPMG Auditores S.L., sociedad española de responsabilidad limitada y
firma miembro de la red KPMG de firmas independientes afiliadas a
KPMG International Cooperative (“KPMG International”), sociedad suiza.
Paseo de la Castellana 259C – Torre de Cristal – 28046 Madrid
Inscrita en el Registro Oficial de Auditores de Cuentas con el nº.S0702, y en el
Registro de Sociedades del Instituto de Censores Jurados de Cuentas con el nº.10.
Reg. Mer Madrid, T. 11.961, F. 90, Sec. 8, H. M -188.007, Inscrip. 9
N.I.F. B-78510153
2
Key Audit Matters ________________________________________________________
Key audit matters are those matters that, in our professional judgment, were of the most significance
in our audit of the annual accounts as of and for the year ended 31 December 2017. These matters
were addressed in the context of our audit of the annual accounts as a whole, and in forming our
opinion thereon, and we do not express a separate opinion on these matters.
Impairment of the Loans and Receivables Portfolio
See Notes 2.1, 11 and 42 to the annual accounts
Key audit matter
How the matter was addressed in our audit
The process for estimating the impairment of the
loans and receivables portfolio associated with credit
risk is significant and complex.
For the individual analysis, these provisions consider
the estimates of future business performance and
the market value of collateral provided for credit
transactions.
For the collective analysis, these provisions are
based on automated processes that incorporate
voluminous databases, models, and assumptions for
the provision estimates of complex design and
implementation.
Our audit approach included assessing the relevant
controls associated with the processes for
estimating impairment of the loans and receivables
portfolio, and performing substantive procedures on
such estimate.
Our procedures related to the control environment
focused on the following key areas and involved our
credit risk specialists:
Governance: identification of the credit risk
management framework and relevant controls.
Accounting policies: assessment of the
alignment with the applicable accounting
standard.
Refinancing and restructuring transactions:
assessment of the criteria and policies in place
for the refinancing and restructuring of lending
operations.
Testing of the relevant controls relating to the
information available for the monitoring of loans
and receivables.
Collateral and guarantees: evaluation of the
design of the relevant guarantee management
and valuation controls.
Provision estimation process: both in terms of
collective provisions and those for individually
significant loans
Databases: evaluation of the completeness,
accuracy, quality and recency of the data and of
the control and management process in place
Translation of a report originally issued in Spanish based on our work performed in accordance with prevailing legislation regulating the audit of annual accounts
in Spain on the financial statements originally issued in Spanish and prepared in accordance with the provisions of the financial reporting framework applicable in
Spain (see notes 1.2 and 52). In the event of a discrepancy, the Spanish-language version prevails.
3
Impairment of the Loans and Receivables Portfolio
See Notes 2.1, 11 and 42 to the annual accounts
Key audit matter
How the matter was addressed in our audit
Our substantive procedures in relation to the
estimation of impairment of the loans and
receivables portfolio comprised the following:
With regard to the impairment of individually
significant loans, we selected a sample from the
population for which there was objective
evidence of impairment and assessed the
sufficiency of the provisions recorded.
With respect to the impairment provisions
estimated collectively, we evaluated the
methodology used by the Bank, performed an
assessment of the completeness of the input
into the calculation engine, as well as validated
the appropriate operation of the calculation
engine.
Finally, we have evaluated whether the information
disclosed in the notes to the financial statements is
adequate, in accordance with the criteria of the
applicable accounting standard.
Translation of a report originally issued in Spanish based on our work performed in accordance with prevailing legislation regulating the audit of annual accounts
in Spain on the financial statements originally issued in Spanish and prepared in accordance with the provisions of the financial reporting framework applicable in
Spain (see notes 1.2 and 52). In the event of a discrepancy, the Spanish-language version prevails.
4
Classification and Measurement of Financial Instruments
See Notes 2.1, 6, 8, 9, 10 and 13 to the annual accounts
Key audit matter
How the matter was addressed in our audit
The classification and measurement of financial
instruments, for the purpose of their valuation may
require an elevated level of judgment and complex
estimates, and in determining the criteria to be
applied in their subsequent measurement.
Our audit approach included assessing the relevant
controls associated with the classification and
measurement processes for financial instrument
portfolios, as well as performing substantive
procedures thereon.
In the absence of a quoted price in an active market
(level 2 and 3 financial instruments), the fair value of
financial instruments is determined using complex
valuation techniques which may take into
consideration direct or indirect unobservable market
data and complex pricing models which require an
elevated level of judgment
Also, due to the relevance of certain equity
instruments classified as available for sale, we
considered that there is an inherent risk associated
with the determination of the existence and
valuation of impairment in these instruments.
Our procedures related to the control environment
focused on the following key areas and involved our
market risk specialists:
Understanding of the strategy and operations of
the financial markets in which the Bank operates
Governance: identification of the market risk
framework and relevant controls.
Transaction origination process: evaluation of
the transaction settlement processes and
custody of deposits.
Classification of transactions: assessment of the
application of the Bank’s policies and of the
procedures implemented to identify and classify
financial instruments.
Measurement estimation process: assessment
of the relevant valuation controls.
Databases: evaluation of the completeness,
accuracy, quality and recency of the data and of
the control and management process in place
With regards to the substantive procedures related
to classification and measurement of financial
instruments, we selected a sample of the Bank’s
financial assets and derivatives, and evaluated the
appropriateness of their measurement and
classification. We also assessed the most significant
valuation models.
In relation to the determination of objective evidence
of impairment for available for sale investments, we
have evaluated the methodology applied and the
conclusion reached by the Bank regarding the
existence of objective evidence of impairment as of
31 December 2017.
Translation of a report originally issued in Spanish based on our work performed in accordance with prevailing legislation regulating the audit of annual accounts
in Spain on the financial statements originally issued in Spanish and prepared in accordance with the provisions of the financial reporting framework applicable in
Spain (see notes 1.2 and 52). In the event of a discrepancy, the Spanish-language version prevails.
5
Risks Associated with Information Technology
Key audit matter
How the matter was addressed in our audit
The Bank has a complex technological operating
environment with major data processing centers.
Given the significant dependence by the businesses
of the Bank on information technology (IT) systems,
it is critical to evaluate the controls over the principal
technology risks.
In accordance with our audit methodology, our
assessment of the IT systems encompassed two
areas: IT general controls and IT automated controls
in key processes.
Our assessment of IT general controls encompassed
the evaluation of existing general controls of
technological platforms on which the applications are
housed. During the audit we performed control tests
on the relevant applications applicable to the critical
areas of our work.
In this phase of our evaluation of the general controls
we assessed, among others, controls related to the
following activities: access to programs and data;
program changes; program development; and
computer operations.
With respect to the IT automated controls in key
processes, during our audit we determined the key
business processes, and for those processes we
identified the principal applications and automated
controls in place for information flows. For the
principal information systems, IT platforms and
applications considered key for our audit of the Bank,
we analyzed the threats and vulnerabilities
associated with the completeness, accuracy and
availability of information, and identified and tested
the design and the operating effectiveness of the
controls implemented to respond to these risks.
Translation of a report originally issued in Spanish based on our work performed in accordance with prevailing legislation regulating the audit of annual accounts
in Spain on the financial statements originally issued in Spanish and prepared in accordance with the provisions of the financial reporting framework applicable in
Spain (see notes 1.2 and 52). In the event of a discrepancy, the Spanish-language version prevails.
6
Other Information: Directors’ Report _______________________________________
Other information comprises, solely, the directors' report for the year ended 31 December 2017, the
preparation of which is the responsibility of the Bank's Directors and which does not form an integral
part of the annual accounts.
Our audit opinion on the annual accounts does not encompass the directors' report. Our
responsibility regarding the information contained in the directors' report is defined in the legislation
regulating the audit of annual accounts, which establishes two different levels for this information:
a)
b)
A specific level applicable to non-financial information, as well as certain information included
in the Annual Corporate Governance Report (ACGR), as defined in article 35.2. b) of the Audit
Law 22/2015, which consists of merely checking that this information has been provided in
the directors' report and if not, to report on this matter.
A general level applicable to the rest of the information included in the directors' report, which
consists of assessing and reporting on the consistency of this information with the annual
accounts, based on knowledge of the Bank obtained during the audit of the aforementioned
annual accounts and without including any information other than that obtained as evidence
during the audit. It is also our responsibility to assess and report on whether the content and
presentation of this part of the directors' report are in accordance with applicable legislation.
If, based on the work we have performed, we conclude that there are material
misstatements, we are required to report them.
Based on the work performed, as described in the preceding paragraph, we have checked that the
specific information mentioned in a) above has been provided in the directors’ report and that the
rest of the information contained in the directors' report is consistent with that disclosed in the
annual accounts for the year ended 31 December 2017 and the content and presentation of the
report are in accordance with applicable legislation.
Responsibility of the Bank’s Directors and the Audit and Compliance
Committee for the Annual Accounts _______________________________________
The Bank's Directors are responsible for the preparation of the accompanying annual accounts in
order to present fairly the equity, financial position and results of operations of the Bank in
accordance with the provisions of the financial reporting framework applicable to the Bank in Spain,
and for such internal control as they determine necessary to enable the preparation of annual
accounts free of material misstatement, whether due to fraud or error.
Translation of a report originally issued in Spanish based on our work performed in accordance with prevailing legislation regulating the audit of annual accounts
in Spain on the financial statements originally issued in Spanish and prepared in accordance with the provisions of the financial reporting framework applicable in
Spain (see notes 1.2 and 52). In the event of a discrepancy, the Spanish-language version prevails.
7
In preparing the annual accounts, the Bank's Directors are responsible for evaluating the Bank’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the Bank's Directors intend to either liquidate the
Bank or to cease operations, or have no other realistic alternative but to do so.
The Bank's Audit and Compliance Committee is responsible for providing oversight in the
preparation and presentation of the annual accounts.
Auditor’s Responsibilities for the Audit of the Annual Accounts_______________
Our objectives are to obtain reasonable assurance about whether the annual accounts as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report
that includes our opinion.
Reasonable assurance is a high level of assurance, but it does not guarantee that an audit conducted
in accordance with the prevailing legislation regulating the audit of annual accounts in Spain will
always detect an existing material misstatement. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these annual accounts.
As part of an audit in accordance with the prevailing legislation regulating the audit of annual
accounts in Spain, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:
•
Identify and assess the risks of material misstatement in the annual accounts, whether due to
fraud or error, design and perform audit procedures to respond to those risks, and obtain
sufficient and appropriate audit evidence to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, deliberate omissions, intentional misrepresentations, or
the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, and not for the purpose of expressing an
opinion on the effectiveness of the Bank’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Bank's Directors.
Translation of a report originally issued in Spanish based on our work performed in accordance with prevailing legislation regulating the audit of annual accounts
in Spain on the financial statements originally issued in Spanish and prepared in accordance with the provisions of the financial reporting framework applicable in
Spain (see notes 1.2 and 52). In the event of a discrepancy, the Spanish-language version prevails.
8
• Conclude on the appropriateness of the Bank's Directors' use of the going concern basis of
accounting and, based on the audit evidence obtained, conclude on whether a material
uncertainty exists related to events or conditions that may cast significant doubt on the Bank’s
ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor's report to the related disclosures in the annual accounts
or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor's report. However, future events or
conditions may cause the Bank to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the annual accounts, including the
disclosures, and whether the annual accounts represent the underlying transactions and events
in a manner that achieves fair presentation.
We communicate with the Bank's Audit and Compliance Committee, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide the Bank's Audit and Compliance Committee with the declaration that we have
complied with relevant ethical requirements, including those regarding independence, and have
communicated with the Committee all matters that may reasonably be thought to bear on our
independence, and where applicable, the related safeguards.
From the matters communicated to the Bank's Audit and Compliance Committee, we determine
those matters that were of most significance in the audit of the annual accounts as of and for the
year ended 31 December 2017 and are therefore the key audit matters.
We describe these matters in our auditor’s report unless laws or regulations preclude public
disclosure about the matter.
Translation of a report originally issued in Spanish based on our work performed in accordance with prevailing legislation regulating the audit of annual accounts
in Spain on the financial statements originally issued in Spanish and prepared in accordance with the provisions of the financial reporting framework applicable in
Spain (see notes 1.2 and 52). In the event of a discrepancy, the Spanish-language version prevails.
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 52). 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.
P. 1
Contents
Financial Statements
Balance sheets ........................................................................................................................................................ 4
Income statements .................................................................................................................................................. 7
Statements of recognized income and expenses ................................................................................................. 8
Statements of changes in equity ............................................................................................................................ 9
Statements of cash flows ....................................................................................................................................... 11
Notes to the Accompanying Financial Statements
1.
Introduction, basis for presentation of the financial statements and internal control of ...............................
financial information and other information .................................................................................................... 13
2. Accounting policies and valuation criteria applied ..........................................................................................16
3. Shareholder remuneration system ................................................................................................................. 34
4. Earnings per share ............................................................................................................................................ 36
5. Risk management ............................................................................................................................................. 37
6
Fair value of financial instruments .................................................................................................................. 78
7 Cash and cash balances at centrals and banks and other demands deposits and Financial ........................
liabilities measured at amortized cost ............................................................................................................ 88
8
Financial assets and liabilities held for trading ............................................................................................... 89
Financial assets and liabilities at fair value through profit or loss ................................................................. 92
9
10 Available-for-sale financial assets .................................................................................................................. 93
11. Loans and receivables ..................................................................................................................................... 98
12 Held-to-maturity investments ....................................................................................................................... 101
13 Hedging derivatives and fair value changes of the hedged items in portfolio hedge of interest rate ...........
risk ................................................................................................................................................................... 102
14
Investments in subsidiaries, joint ventures and associates ....................................................................... 105
15 Tangible assets .............................................................................................................................................. 109
Intangible assets .............................................................................................................................................. 111
16
17. Tax assets and liabilities .................................................................................................................................. 111
18. Other assets and liabilities ............................................................................................................................. 116
19. Non-current assets and disposal groups classified as held for sale ........................................................... 116
20. Financial liabilities at amortized cost ............................................................................................................ 118
21. Provisions ....................................................................................................................................................... 123
22. Post-employment and other employee benefit commitments .................................................................. 124
23. Common stock ............................................................................................................................................... 129
24. Share premium .............................................................................................................................................. 132
25. Retained earnings, Revaluation reserves and Other ................................................................................... 132
26. Treasury shares ............................................................................................................................................. 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 52). 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.
P. 2
27. Accumulated other comprehensive income ............................................................................................... 135
28. Capital base and capital management ......................................................................................................... 135
29. Commitments and guarantees given ........................................................................................................... 138
30. Other contingent assets and liabilities ......................................................................................................... 139
31. Purchase and sale commitments and future payment obligations ........................................................... 139
32. Transactions for the account of third parties .............................................................................................. 139
33. Interest income and expense ........................................................................................................................ 140
34. Dividend income ............................................................................................................................................. 141
35. Fee and commission income ......................................................................................................................... 141
36. Fee and commission expenses ...................................................................................................................... 141
37. Gains (losses) on financial assets and liabilities (net) hedge accounting and exchange differences .. 142
38. Other operating income and expenses ........................................................................................................ 143
39. Administration costs ..................................................................................................................................... 143
40. Depreciation ................................................................................................................................................... 147
41. Provisions or reversal of provisions ............................................................................................................. 147
42. Impairment or reversal of impairment on financial assets not measured at fair value through ...................
profit or loss ................................................................................................................................................... 148
43. Impairment or reversal of impairment on non-financial assets and investments in subsidiaries, ...............
joint ventures or associates. ......................................................................................................................... 148
44. Gains (losses) on derecognized of non-financial assets and subsidiaries, net ......................................... 149
45. Profit or loss from non-current assets and disposal groups classified as held for sale not ..........................
qualifying as discontinued operations ......................................................................................................... 149
46. Statements of cash flows .............................................................................................................................. 150
47. Accountant fees and services ........................................................................................................................ 151
48. Related-party transactions ............................................................................................................................ 151
49. Remuneration and other benefits of the Board of Directors and Members of the Bank’s ............................
Management Committee .............................................................................................................................. 153
50. Other information .......................................................................................................................................... 160
51. Subsequent events ........................................................................................................................................ 163
52. Explanation added for translation into English ............................................................................................ 163
Appendices
APPENDIX I. BBVA Group Consolidated Financial Statements ......................................................................... 165
APPENDIX II. Additional information on consolidated subsidiaries composing the BBVA Group as of
December 31, 2017 .............................................................................................................................................. 175
APPENDIX III. Additional information on investments and jointly controlled companies accounted for under
the equity method of consolidation in the BBVA Group as of December 31, 2017…………………………. 184
APPENDIX IV. Changes and notification of investments and divestments in the BBVA Group in 2017......... 185
APPENDIX V. Fully consolidated subsidiaries with more than 10% owned by non-Group shareholders as of
December 31, 2017 ................................................................................................................................................ 190
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 52). 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.
P. 3
APPENDIX VI. BBVA Group’s structured entities. Securitization funds as of December, 31 2017 .................. 191
APPENDIX VII. Details of the outstanding subordinated debt and preferred securities issued by the Bank as
of December 31, 2017 and 2016 ............................................................................................................................ 192
APPENDIX VIII. Balance sheets held in foreign currency as of December 31, 2017 and 2016 ......................... 193
APPENDIX IX. Income statement corresponding to the first and second half of 2017 and 2016 .................... 194
APPENDIX X. Information on data derived from the special accounting registry and other information on
bonds ...................................................................................................................................................................... 195
APPENDIX XI. Risks related to the developer and real-estate sector in Spain.................................................. 201
APPENDIX XII. Refinanced and restructured operations and other requirements under Bank of Spain Circular
6/2012 ....................................................................................................................................................................206
APPENDIX XIII. Agency Network .......................................................................................................................... 215
Glossary………………………………………………………………………………………………………………………………………..….225
MANAGEMENT REPORT
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 52). 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, 2017 and 2016
ASSETS (Millions of euros)
CASH, CASH BALANCES AT CENTRAL BANKS AND OTHER DEMAND DEPOSITS
FINANCIAL ASSETS HELD FOR TRADING
Notes
7
8
Derivatives
Equity instruments
Debt securities
Loans and advances to central banks
Loans and advances to credit institutions
Loans and advances to customers
OTHER FINANCIAL ASSETS DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS
AVAILABLE-FOR-SALE FINANCIAL ASSETS
Equity instruments
Debt securities
LOANS AND RECEIVABLES
Debt securities
Loans and advances to central banks
Loans and advances to credit institutions
Loans and advances to customers
HELD-TO-MATURITY INVESTMENTS
HEDGING DERIVATIVES
FAIR VALUE CHANGES OF THE HEDGED ITEMS IN PORTFOLIO HEDGES OF INTEREST RATE RISK
INVESTMENTS IN SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES
Group entities
Joint ventures
Associates
TANGIBLE ASSETS
Property, plants and equipment
For own use
Other assets leased out under an operating lease
Investment properties
INTANGIBLE ASSETS
Goodwill
Other intangible assets
TAX ASSETS
Current
Deferred
OTHER ASSETS
Insurance contracts linked to pensions
Inventories
Rest
NON-CURRENT ASSETS AND DISPOSAL GROUPS HELD FOR SALE
TOTAL ASSETS
(*) Presented for comparison purposes only (note 1.3).
9
10
11
12
13
13
14
15
16
17
18
22
19
P. 4
2016(*)
15,855
57,440
42,023
3,873
11,544
-
-
-
-
29,004
3,506
25,498
251,487
11,001
-
26,596
213,890
11,424
1,586
17
30,218
29,823
18
377
1,856
1,845
1,845
-
11
942
-
942
12,394
756
11,638
3,709
2,426
-
1,283
2,515
2017
18,503
50,424
36,536
6,202
7,686
-
-
-
648
24,205
2,378
21,827
244,232
10,502
28
22,105
211,597
8,354
1,561
(25)
30,795
30,304
58
433
1,599
1,587
1,587
-
12
882
-
882
12,911
1,030
11,881
3,768
2,142
-
1,626
2,226
400,083
418,447
The accompanying Notes 1 to 52 and Appendices I to XIII are an integral part of the balance sheet as of
December 31, 2017.
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 52). 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, 2017 and 2016
LIABILITIES AND EQUITY (Millions of euros)
FINANCIAL LIABILITIES HELD FOR TRADING
Notes
8
Derivatives
Short positions
Deposits from central banks
Deposits from credit institutions
Customer deposits
Debt certificates
Other financial liabilities
OTHER FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT
OR LOSS
FINANCIAL LIABILITIES AT AMORTIZED COST
Deposits from central banks
Deposits from credit institutions
Customer deposits
Debt certificates
Other financial liabilities
Subordinated liabilities
HEDGING DERIVATIVES
FAIR VALUE CHANGES OF THE HEDGED ITEMS IN PORTFOLIO HEDGES OF
INTEREST RATE RISK
PROVISIONS
Provisions for pensions and similar obligations
Other long term employee benefits
Provisions for taxes and other legal contingencies
Provisions for contingent risks and commitments
Other provisions
TAX LIABILITIES
Current
Deferred
OTHER LIABILITIES
LIABILITIES INCLUDED IN DISPOSAL GROUPS CLASSIFIED AS HELD FOR SALE
9
20
13
13
21
17
18
2017
43,703
36,097
7,606
-
-
-
-
-
-
305,797
28,132
40,599
194,645
34,166
8,255
10,887
1,327
(7)
7,605
4,594
31
329
272
2,379
1,240
124
1,116
2,207
-
P. 5
2016(*)
48,265
40,951
7,314
-
-
-
-
-
-
319,884
26,629
44,977
207,946
33,174
7,158
9,209
1,488
-
8,917
5,271
32
-
658
2,956
1,415
127
1,288
2,092
-
TOTAL LIABILITIES
361,872
382,061
(*) Presented for comparison purposes only (note 1.3).
The accompanying Notes 1 to 52 and Appendices I to XIII are an integral part of the balance sheet as of
December 31, 2017.
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 52). 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, 2017 and 2016
LIABILITIES AND EQUITY (Continued) (Millions of euros)
STOCKHOLDERS’ FUNDS
Capital
Paid up capital
Unpaid capital which has been called up
Share premium
Equity instruments issued other than capital
Equity component of compound financial instruments
Other equity instruments issued
Retained earnings
Revaluation reserves
Other reserves
Less: Treasury shares
Profit or loss attributable to owners of the parent
Less: Interim dividends
ACCUMULATED OTHER COMPREHENSIVE INCOME
Items that will not be reclassified to profit or loss
Actuarial gains or (-) losses on defined benefit pension plans
Non-current assets and disposal groups classified as held for sale
Other adjustments
Items that may be reclassified to profit or loss
Hedge of net investments in foreign operations [effective portion]
Foreign currency translation
Hedging derivatives. Cash flow hedges [effective portion]
Available-for-sale financial assets
Other debt securities
Equity instrumentS
Non-current assets and disposal groups classified as held for sale
TOTAL EQUITY
TOTAL EQUITY AND TOTAL LIABILITIES
P. 6
2016(*)
36,748
3,218
3,218
-
23,992
46
-
46
-
20
9,346
(23)
1,662
(1,513)
(362)
(43)
(43)
-
-
(319)
-
13
(127)
(205)
660
(865)
-
Notes
23
24
25
25
26
3
27
27
27
2017
37,802
3,267
3,267
-
23,992
47
-
47
-
12
9,445
-
2,083
(1,044)
409
(38)
(38)
-
-
447
-
-
(136)
583
547
36
-
38,211
400,083
36,386
418,447
OFF BALANCE SHEET EXPOSURES (Millions of euros)
Financial guarantees given
Contingent commitments
TOTAL EQUITY
(*) Presented for comparison purposes only (note 1.3).
Notes
29
29
2017
32,794
69,677
102,471
2016(*)
39,704
71,162
110,866
The accompanying Notes 1 to 52 and Appendices I to XIII are an integral part of the balance sheet as of
December 31, 2017.
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 52). 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.
P. 7
BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
Income statements for the years ended December 31, 2017 and 2016.
INCOME STATEMENTS (Millions of euros)
Interest and similar income
Interest and similar expenses
NET INTEREST INCOME
Dividend income
Fee and commission income
Fee and commission expenses
Gains or (-) losses on financial assets and liabilities designated at fair value through profit or loss, net
Gains or (-) losses on financial assets and liabilities held for trading, net
Gains or (-) losses on derecognition of financial assets and liabilities not measured at fair value through profit or loss, net
Gains or (-) losses from hedge accounting, net
Exchange differences (net)
Other operating income
Other operating expenses
GROSS INCOME
Administration costs
Personnel expenses
General and administrative expenses
Depreciation
Provisions or (-) reversal of provisions
Impairment or (-) reversal of impairment on financial assets not measured at fair value through profit or loss
Financial assets measured at cost
Available- for-sale financial assets
Loans and receivables
Held to maturity investments
NET OPERATING INCOME
Impairment or (-) reversal of impairment of investments in subsidiaries, joint ventures and associates)
Impairment or (-) reversal of impairment on non-financial assets
Tangible assets
Intangible assets
Other assets
Gains (losses) on derecognized assets not classified as non-current assets held for sale
Negative goodwill recognised in profit or loss
Notes
2017
2016(*)
33
33
34
35
36
37
37
37
37
37
38
38
4,860
6,236
(1,397)
(2,713)
3,463
3,555
2,003
(386)
18
32
634
(227)
435
159
(466)
9,220
3,523
2,854
1,886
(353)
-
(70)
955
(62)
305
140
(504)
8,674
39
(4,037)
(4,247)
(2,382)
(2,502)
(1,655)
(1,745)
40
41
42
43
43
44
(540)
(802)
(1,585)
(9)
(1,125)
(451)
-
2,256
207
(8)
(8)
-
-
(1)
-
(14)
2,440
(357)
2,083
-
(575)
(1,187)
(949)
(12)
(180)
(757)
-
1,716
(147)
(16)
(16)
-
-
12
-
(73)
1,492
170
1,662
-
2,083
1,662
Profit or (-) loss from non-current assets and disposal groups classified as held for sale not qualifying as discontinued operations 45
OPERATING PROFIT BEFORE TAX
Tax expense or (-) income related to profit or loss from continuing operation
PROFIT FROM CONTINUING OPERATIONS
Profit from discontinued operations (net)
PROFIT
(*) Presented for comparison purposes only (note 1.3).
The accompanying Notes 1 to 52 and Appendices I to XIII are an integral part of the income statement for the
year ended December 31, 2017.
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 52). 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.
P. 8
BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
Statements of recognized income and expenses for the years ended
December 31, 2017 and 2016.
STATEMENTS OF RECOGNIZED INCOME AND EXPENSES (Millions of euros)
PROFIT RECOGNIZED IN INCOME STATEMENT
OTHER RECOGNIZED INCOME (EXPENSES)
ITEMS NOT SUBJECT TO RECLASSIFICATION TO INCOME STATEMENT
ITEMS SUBJECT TO RECLASSIFICATION TO INCOME STATEMENT
Hedge of net investments in foreign operations [effective portion]
Foreign currency translation
Translation gains or (-) losses taken to equity
Transferred to profit or loss
Other reclassifications
Cash flow hedges [effective portion]
Valuation gains or (-) losses taken to equity
Transferred to profit or loss
Transferred to initial carrying amount of hedged items
Other reclassifications
Available-for-sale financial assets
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)
Income tax
TOTAL RECOGNIZED INCOME/EXPENSES
2017
2,083
771
4
767
-
(18)
-
(18)
-
(12)
(9)
(3)
-
-
751
142
609
-
-
-
-
-
46
2,854
2016(*)
1,662
(744)
(21)
(723)
-
(11)
18
(29)
-
(74)
(69)
(5)
-
-
(583)
217
(800)
-
-
-
-
-
(55)
918
(*) Presented for comparison purposes only (note 1.3).
The accompanying Notes 1 to 52 and Appendices I to XIII are an integral part of the statement of recognized
income and expenses for the year ended December 31, 2017
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 52). 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.
P. 9
Statements of changes in equity for the years ended December 31, 2017 and 2016.
BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
TOTAL STATEMENT OF CHANGES IN EQUITY ('Millions of Euros)
2017
Capital
Share
Premium
Equity
instruments
issued other than
capital
Other Equity
Retained
earnings
Revaluation
reserves
Other
reserves
(-) Treasury
shares
Balances as of January 1, 2017
3,218
23,992
Total income/expense recognized
Other changes in equity
Issuances of common shares
Issuances of preferred shares
Issuance of other equity instruments
Period or maturity of other issued equity instruments
Conversion of debt on equity
Common Stock reduction
Dividend distribution
Purchase of treasury shares
Sale or cancellation of treasury shares
Reclassification of financial liabilities to other equity
instruments
Reclassification of other equity instruments to financial
liabilities
Transfers between total equity entries
Increase/Reduction of equity due to business
combinations
Share based payments
Other increases or (-) decreases in equity
-
49
49
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balances as of December 31, 2017
3,267
23,992
(*) Presented for comparison purposes only (note 1.3).
46
-
1
-
-
-
-
-
-
-
-
-
-
-
(1)
-
-
2
47
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20
9,346
(23)
-
(8)
-
-
-
-
-
-
-
-
-
-
-
-
99
(49)
-
-
-
-
-
-
-
4
-
-
(8)
158
-
-
-
-
-
(14)
12
9,445
-
23
-
-
-
-
-
-
-
(1,354)
1,377
-
-
-
-
-
-
-
Profit or loss
attributable to
owners of the
parent
Interim
dividends
Accumulated
other
comprehensive
income
Total
1,662
2,083
(1,662)
(1,513)
(362) 36,386
-
469
771
2,854
-
(1,029)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(901)
-
-
-
-
(1,662)
1,513
-
-
-
-
-
(143)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(901)
(1,354)
1,381
-
-
-
-
-
(155)
2,083
(1,044)
409 38,211
The accompanying Notes 1 to 52 and Appendices I to XIII are an integral part of the statement of changes in equity for the year ended December 31, 2017.
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 52). 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.
P. 10
Statements of changes in equity for the years ended December 31, 2017 and 2016 (continued)
BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
TOTAL STATEMENT OF CHANGES IN EQUITY ('Millions of Euros)
December 2016
Capital
Share
Premium
Equity
instruments
issued other than
capital
Other Equity
Retained
earnings
Revaluation
reserves
Other
reserves
(-) Treasury
shares
Balances as of January 1, 2016
3,120
23,992
Total income/expense recognized
Other changes in equity
Issuances of common shares
Issuances of preferred shares
Issuance of other equity instruments
Period or maturity of other issued equity instruments
Conversion of debt on equity
Common Stock reduction
Dividend distribution
Purchase of treasury shares
Sale or cancellation of treasury shares
Reclassification of financial liabilities to other equity
instruments
Reclassification of other equity instruments to financial
liabilities
Transfers between total equity entries
Increase/Reduction of equity due to business
combinations
Share based payments
Other increases or (-) decreases in equity
-
98
98
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balances as of December 31, 2016
3,218
23,992
(*)
Presented for comparison purposes only (note 1.3).
28
-
18
-
-
-
-
-
-
-
-
-
-
-
(3)
-
-
21
46
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Profit or loss
attributable to
owners of the
parent
2,864
1,662
Interim
dividends
Accumulated
other
comprehensive
income
Total
(1,356)
382 36,820
-
(744)
918
(2,864)
(157)
-
(1,352)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,303)
-
-
-
-
(2,864)
1,356
-
-
-
-
-
(210)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,303)
(1,570)
1,576
-
-
-
139
-
(194)
-
-
-
-
-
-
7,787
-
1,559
(98)
-
-
-
-
-
-
-
(19)
-
(4)
-
-
-
-
-
-
-
(1,570)
10
1,566
22
-
(2)
-
-
-
-
-
-
-
-
-
-
-
-
-
(2)
1,513
-
-
-
139
-
(5)
20
9,346
(23)
1,662
(1,513)
(362) 36,386
The accompanying Notes 1 to 52 and Appendices I to XIII are an integral part of the statement of changes in equity for the year ended December 31, 2017.
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 52). 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.
P. 11
BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
Statements of cash flows for the years ended December 31, 2017 and
2016.
Notes
46
CASH FLOWS STATEMENTS (Continued) (Millions of euros)
A) CASH FLOW FROM OPERATING ACTIVITIES (1 + 2 + 3 + 4 + 5)
1. Profit for the year
2. Adjustments to obtain the cash flow from operating activities:
Depreciation and amortization
Other adjustments
3. Net increase/decrease in operating assets
Financial assets held for trading
Financial assets designated at fair value through profit or loss
Available-for-sale financial assets
Loans and receivables
Other operating assets
4. 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
5. Collection/Payments for income tax
B) CASH FLOWS FROM INVESTING ACTIVITIES (1 + 2)
46
1. Investment
Tangible assets
Intangible assets
Investments
Subsidiaries and other business units
Non-current assets held for sale and associated liabilities
Held-to-maturity investments
Other settlements related to investing activities
2. 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
(*) Presented for comparison purposes only (note 1.3).
2017
(20)
2,083
2,261
540
1,721
17,516
7,016
(648)
4,799
7,255
(906)
(22,237)
(4,562)
-
(15,228)
(2,447)
357
1,995
(2,118)
(100)
(276)
(1,117)
-
(625)
-
-
4,113
21
-
508
-
815
2,576
193
2016(*)
6,281
1,662
1,811
574
1,237
(16,227)
1,166
-
21,597
(24,706)
(14,284)
19,205
1,292
-
15,847
2,066
(170)
(1,048)
(3,168)
(170)
(320)
(246)
-
(674)
(1,758)
-
2,120
20
-
93
-
511
1,321
175
The accompanying Notes 1 to 52 and Appendices I to XIII are an integral part of the statement of cash flows
for the year ended December 31, 2017.
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 52). 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.
P. 12
BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
Statements of cash flows for the years ended December 31, 2017 and
2016. (continued)
CASH FLOWS STATEMENTS (Continued) (Millions of euros)
C) CASH FLOWS FROM FINANCING ACTIVITIES (1 + 2)
Notes
46
1. Investment
Dividends
Subordinated liabilities
Common stock amortization
Treasury stock acquisition
Other items relating to financing activities
2. Divestments
Subordinated liabilities
Common stock increase
Treasury stock disposal
Other items relating to financing activities
D) EFFECT OF EXCHANGE RATE CHANGES
E) NET INCREASE/DECREASE IN CASH OR CASH EQUIVALENTS (A+B+C+D)
F) CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR
G) CASH AND CASH EQUIVALENTS AT END OF THE YEAR
COMPONENTS OF CASH AND EQUIVALENTS AT END OF THE PERIOD (Millions of euros)
Cash
Balance of cash equivalent in central banks
Other financial assets
Less: Bank overdraft refundable on demand
2017
106
(4,090)
(1,570)
(919)
-
2016(*)
(501)
(3,247)
(1,497)
(180)
-
(1,354)
(1,570)
(247)
4,196
2,819
-
1,377
-
566
2,647
15,856
18,503
2017
906
15,858
1,739
-
-
2,746
1,000
-
1,574
172
(67)
4,665
11,191
15,856
2016(*)
879
14,913
63
-
TOTAL CASH AND CASH EQUIVALENTS AT END OF THE YEAR
7
18,503
15,855
(*) Presented for comparison purposes only (note 1.3).
The accompanying Notes 1 to 52 and Appendices I to XIII are an integral part of the statement of cash flows
for the year ended December 31, 2017.
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 52). 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.
P. 13
BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
Notes to the financial statements for the year ended December 31, 2017.
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 financial
statements.
The Bank’s financial statements for the year ended December 31, 2016 were approved by the shareholders
at the Bank’s Annual General Meeting (“AGM”) held on March 17, 2017.
The Bank’s financial statements for the year ended December 31, 2017 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 2017 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 publication of Bank of Spain Circular 4/2016, of
April 27, has updated Circular 4/2004 to adapt it to the latest publications in banking regulation, maintaining
full compatibility with the IFRS accounting framework.
The Bank's financial statements for the year ended December 31, 2017 have been prepared by the Bank’s
directors (at the Board of Directors meeting held on February 12, 2018) 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, 2017, 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
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 52). 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.
P. 14
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.
1.3 Comparative information
The information contained in these financial statements for 2016 is presented solely for the purpose of
comparison with information relating to December 31, 2017.
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 and 12).
The assumptions used to quantify certain provisions (see Note 21) for the actuarial calculation of post-
employment benefit liabilities and commitments (see Note 22).
The useful life and impairment losses of tangible and intangible assets (see Notes, 15, 16 and 19).
The fair value of certain unlisted financial assets and liabilities in organized markets (see Notes 5, 6, 8, 9,
10, 11, 12 and 13).
The recoverability of deferred tax assets (See Note 17).
Although these estimates were made on the basis of the best information available as of December 31, 2017
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 2017.
1.7 Deposit guarantee fund and Resolution 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 2017 and 2016 amounted to €165 million and €153 million, respectively. These amounts are
registered under the heading "Other operating expenses" of the accompanying income statements (see
Note 38).
The previously mentioned amount registered
includes the extraordinary contribution
established by the Royal Decree-Law 6/2013. A one-off Deposit Guarantee Fund contribution, applicable to 3
in year 2013
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 52). 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.
P. 15
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 was recognized as a liability as of December 31, 2014 and 50%
paid off in June 2016 and 2015, remaining in each year ended.
In accordance with the new regulations, in 2015 a contribution was made to Spain's Orderly Banking
Resolution Fund (FROB) of €123 million. In 2016 a single European resolution fund was established. The
contributions made to said fund in the years 2017 and 2016 have amounted to 115 and 137 million euros
respectively through contributions of 98 and 117 million euros and the creation of a commitment of €17 and
€20 million Euros, respectively. These contributions are registered under the heading "Other Operating
Expenses" in the attached income statements (see Note 38).
1.8 Consolidated financial statements
The consolidated financial statements of the BBVA Group for the year ended December 31, 2017 have been
prepared by the Bank's Directors (at the Board of Directors meeting held on February 12, 2018) in
accordance with the International Financial Reporting Standards adopted by the European Union and
applicable at the close of 2017, 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 2017,
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 2017 amounted to €690,059 million and
€53,323 million, respectively, while the consolidated net profit attributed to the parent company of this
period amounted to €3,519 million.
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 52). 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.
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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 plus, in the case of a financial asset or financial
liability not at fair value through profit or loss, transaction costs that are directly attributable to the
acquisition or issue of the financial asset or financial liability, unless there is evidence to the contrary, the best
evidence of the fair value of a financial instrument at initial recognition shall be the transaction price.
All the changes in the value of financial instruments, except trading derivatives that are not economic
hedges, all the financial assets held for trading and derivatives, arising from the accrual of interests and
similar items are recognized under the headings “Interest income” or “Interest expenses”, as appropriate, in
the accompanying income statement for the year in which the accrual took place (see Note 33). The
dividends paid from other companies, other than associate entities and joint venture entities, 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 34).
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:
2.1.1 “Financial assets and liabilities held for trading” and “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 “Gains (losses) on
financial assets and liabilities, net” in the accompanying income statements (see Note 37). However,
changes resulting from variations in foreign exchange rates are recognized under the heading “Exchange
differences, net" in the accompanying income statements (see Note 37).
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 “Accumulated other comprehensive income- Items that may be reclassified to profit or
loss - Available-for-sale financial assets ” in the balance sheets (see Note 27).
Changes in the value of non-monetary items resulting from changes in foreign exchange rates are recognized
temporarily under the heading “Accumulated other comprehensive income - Items that may be reclassified
to profit or loss - 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.
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principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 52). 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.
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The amounts recognized under the headings “Accumulated other comprehensive income- Items that may be
reclassified to profit or loss - Available-for-sale financial assets” and “Accumulated other comprehensive
income- Items that may be reclassified to profit or loss - 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 “Gains (losses) on financial assets and liabilities, net” or “Exchange differences, net", as
appropriate, in the income statement for the year in which they are derecognized (see Note 37).
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 “Profit or loss from non-current assets and disposal groups classified as held for sale not qualifying
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 45).
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 42).
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
once acquired 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 or reversal of impairment on financial assets not measured at fair value
through profit or loss – loans and receivables”, “Impairment or reversal of impairment on financial assets not
measured at fair value through profit or loss - held to maturity investments” or “Impairment or reversal of
impairment on financial assets not measured at fair value through profit or loss – financial assets measured
at cost” in the income statement for that year (see Note 42).
2.1.4 “Derivatives-Hedge Accounting ” 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 “Gains or losses from hedge accounting, net” in the income
statement (see Note 37), 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
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principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 52). This English
version is a translation of the original in Spanish for information purposes only. In the event of a discrepancy, the original Spanish-
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hedged risk) are also recognized in the income statement (in both cases under the heading “Gains or
losses from hedge accounting, net ”, 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 "Accumulated other comprehensive income - Items that may
be reclassified to profit or loss - Hedging derivatives. Cash flow hedges” in the balance sheets, with a
balancing entry under the heading “Hedging derivatives” of the Assets or Liabilities of the Financial
Statements as applicable. 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 (see Note 33).
Differences in the measurement of the hedging items corresponding to the ineffective portions of cash
flow hedges are recognized directly under the heading “Gains or losses from hedge accounting, net” in
the income statement (see Note 37).
In hedges of net investments in foreign operations, the differences in the effective portions of hedging
items are recognized temporarily under the heading " Accumulated other comprehensive income - Items
that may be reclassified to profit or loss – Hedging of net investments in foreign transactions " in the
balance sheets, with a balancing entry under the heading “Hedging derivatives” of the Assets or Liabilities
of the Financial Statements as applicable. 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 (see Note 37).
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 (see Note 6).
Accumulated other comprehensive income arising from financial instruments classified at balance sheet
date as “Non-current assets and disposal groups classified as held for sale” are recognized with a
balancing entry under the heading ““Accumulated other comprehensive income- Items that may be
reclassified to profit or loss – Non-current assets and disposal groups classified as held for sale” in the
accompanying balance sheets (see Note 27).
2.1.6
Impairment losses on financial assets
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.
In the case of equity instruments, it means that their carrying amount may not be fully recovered.
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principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 52). This English
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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 "Accumulated other comprehensive income - Items that may be reclassified to profit
or loss - Available-for-sale financial assets" in the balance sheet (see Note 27).
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.
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 sufficient guarantee) to a debtor 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 as a result of borrower arrears 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 as long as they have maintained
a credit risk coverage of 100%.
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.
Impairment of debt securities measured at amortized cost
With regard to impairment losses arising from insolvency risk of the obligors (credit risk), a debt instrument,
mainly Loans and receivables, is impaired due to insolvency when a deterioration in the ability to pay by the
obligor is evidenced, either due to past due status or for other reasons.
BBVA has developed policies, methods and procedures to estimate losses which may be incurred as a result
of outstanding credit risk. These policies, methods and procedures are applied in the study, approval and
execution of debt instruments and Commitments and guarantees given; as well as in identifying the
impairment and, where appropriate, in calculating the amounts necessary to cover estimated losses.
The amount of impairment losses on debt instruments measured at amortized cost is calculated based on
whether the impairment losses are determined individually or collectively. First it is determined whether
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principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 52). This English
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there is objective evidence of impairment individually for individually significant financial assets, and
collectively for financial assets that are not individually significant. In the case where the Group determines
that no objective evidence of impairment in the case of debt instrument analyzed individually will be included
in a group of debt instrument with similar risk characteristics and collectively impaired is analyzed.
In determining whether there is objective evidence of impairment the Group uses observable data on the
following aspects:
Significant financial difficulties of the debtor.
Ongoing delays in the payment of interest or principal.
Refinancing of credit due to financial difficulties by the counterparty.
Bankruptcy or reorganization / liquidation are considered likely.
Disappearance of the active market for a financial asset because of financial difficulties.
Observable data indicating a reduction in future cash flows from the initial recognition such as adverse
changes in the payment status of the counterparty (delays in payments, reaching credit cards limits, etc.)
National or local economic conditions that are linked to "defaults" in financial assets( increase of
unemployment rate, falling property prices, etc).
Impairment losses determined individually
The amount of the impairment losses incurred on financial assets represents the excess of their respective
carrying amounts over 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.
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.
Impairment losses determined collectively
Impairment losses on financial assets collectively evaluated for impairment are calculated by using statistical
procedures, and they are deemed equivalent to the portion of losses incurred on the date that the
accompanying financial statements are prepared that has yet to be allocated to specific asset. The Bank
estimates impairment losses through statistical processes that apply historical data and other specific
parameters that, although having been generated as of closing date for these financial statements, have
arisen on an individual basis following the reporting date.
With respect to financial assets that have no objective evidence of impairment, the Bank applies statistical
methods using historical experience and other specific information to estimate the losses that the Bank has
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principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 52). 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.
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incurred as a result of events that have occurred as of the date of preparation of the financial statements but
have not been known and will be apparent, individually after the date of submission of the information. This
calculation is an intermediate step until these losses are identified on an individual level, at which these
financial instruments will be segregated from the portfolio of financial assets without objective evidence of
impairment.
The incurred loss is calculated taking into account three key factors: exposure at default, probability of
default and loss given default.
Exposure at default (EAD) is the amount of risk exposure at the date of default by the counterparty.
Probability of default (PD) is the probability of the counterparty failing to meet its principal and/or interest
payment obligations. The PD is associated with the rating/scoring of each counterparty/transaction.
Loss given default (LGD) is the estimate of the loss arising in the event of default. It depends mainly on the
characteristics of the counterparty, and the valuation of the guarantees or collateral associated with the
asset.
In order to calculate the LGD at each balance sheet date, the Bank evaluates the whole amount expected to
be obtained over the remaining life of the financial asset. The recoverable amount from executable secured
collateral is estimated based on the property valuation, discounting the necessary adjustments to
adequately account for the potential fall in value until its execution and sale, as well as execution costs,
maintenance costs and sale costs.
When the property right is contractually acquired at the end of the foreclosure process or when the assets of
distressed borrowers are purchased, the asset is recognized in the financial statements. The accounting
treatment of these assets is included in Note 2.4.
Impairment of other debt instruments classified as financial assets available for sale
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 “Accumulated other comprehensive income - Items that
may be reclassified to profit or loss - 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 classified as available for sale valued at fair value:
When there is objective evidence that the negative differences arising on measurement of these equity
instruments are due to impairment, they are no longer registered as “Accumulated other comprehensive
income - Items that may be reclassified to profit or loss - Available-for-sale financial assets” and are
recognized in the consolidated income statement. In general, the Bank considers that there is objective
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principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 52). 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.
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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 equity instrument to determine whether it is a percentage that can be recovered through its
sale in the market; other different thresholds may exist for certain equity instruments or specific sectors.
In addition, for individually significant investments, the Bank compares the valuation of the most
significant equity instruments against valuations performed by independent experts.
Any recovery of previously recognized impairment losses for an investment in an equity instrument
classified as available for sale is not recognized in the consolidated income statement, but under the
heading " Accumulated other comprehensive income - Items that may be reclassified to profit or loss -
Available-for-sale financial assets" in the consolidated balance sheet.
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 accumulated
other comprehensive income 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 or reversal of
impairment on non-financial assets” in the income statement (see Note 43). Recoveries subsequent to
impairment losses recognized previously are recognized under the same heading in the income statement
for the period.
2.2 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:
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principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 52). This English
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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 20). 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.
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).
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principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 52). This English
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language version prevails.
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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 21). These provisions are recognized and reversed with a charge or credit, respectively, to “Provisions
or reversal of provision ” in the income statements (see Note 41).
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 35).
2.4 Non-current assets and disposal groups held for sale and liabilities
included in disposal groups classified as held for sale
The heading “Non-current assets and disposal groups held for sale and liabilities included in disposal groups
classified as 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 19).
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 included in disposal groups classified as held for sale” in the balance
sheets reflects the balances payable arising from disposal groups and discontinued operations.
Non-current assets and disposal groups held for sale and liabilities included in disposal groups classified as
held for sale are generally measured, or the fair value of the property (less costs to sell), whichever is lower.
In the case of real estate assets foreclosed or received in payment of debts, they are initially recognized at
the lower of: the restated carrying amount of the financial asset and the fair value at the time of the
foreclosure or receipt of the asset less estimated sales costs. The carrying amount of the financial asset is
updated at the time of the foreclosure, treating the real property received as a secured collateral and taking
into account the credit risk coverage that would correspond to it according to its classification prior to the
delivery. For these purposes, the collateral will be valued at its current fair value (less sale costs) at the time
of foreclosure. This carrying amount will be purchased with the previous carrying amount and the difference
will be recognized as a hedging variation. On the other hand, the fair value of the foreclosed asset is obtained
by appraisal, evaluating the need to apply a discount on the asset derived from the specific conditions of the
asset or the market situation for these assets, and in any case, deducting the company’s estimated sale
costs.
At the time of the initial recognition, these real estate assets foreclosed or received in payment of debts,
classified as "Non-current assets and disposal groups held for sale and liabilities included in disposal groups
classified as held for sale" are valued at the lower of: their restated fair value less estimated sale costs and
their carrying amount; a deterioration or impairment reversal can be recognized for the difference if
applicable.
Non-current assets and disposal groups held for sale groups classified as held for sale are not depreciated
while included under this heading.
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 52). 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.
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The fair value of the non-current assets and disposal groups held for sale and liabilities included in disposal
groups classified as 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., Eurovaloraciones, S.A., JLL Valoraciones, S.A., Tasibérica, 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
liabilities included in disposal groups classified as held for sale as well as impairment losses and, where
pertinent, the related recoveries, are recognized in “Profit or loss from non-current assets and disposal
groups classified as held for sale not qualifying as discontinued operations” in the income statements (see
Note 45). 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 “Profit from discontinued transactions” in the income statement,
whether the business remains on the balance sheet or is derecognized from the balance sheet. As long as an
asset remains in this category, it will not be amortized. This heading includes the earnings from their sale or
other disposal.
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 40) 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):
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 52). 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.
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Type of 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.
Running 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 - Other administrative expenses - Property, fixtures and equipment " (see Note 39.2).
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.
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.
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 52). 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.
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2.6
Intangible assets
Intangible assets in the financial statements have a finite useful life.
The useful life of intangible assets is, at most, equal to the period during which the entity is entitled to use the
asset; If the right of use is for a limited renewable period, the useful life includes the renewal period only when
there is evidence that the renewal will be carried out without a significant cost.
When the useful life of intangible assets cannot be estimated reliably, they are amortized over a ten year
period. Goodwill is presumed, unless proven otherwise, to have a useful life of ten years.
Intangible assets 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 40).
The Bank recognizes any impairment loss on the carrying amount of these assets with charge to the heading
“Impairment or reversal of impairment on non - financial assets- Intangible assets ” in the accompanying
income statements (see Note 43). 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).
liabilities
in relation to taxable temporary differences associated with
in
Deferred tax
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.
investments
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.
In those circumstances in which it is unclear how a specific requirement of the tax law applies to a particular
transaction or circumstance, and the acceptability of the definitive tax treatment depends on the decisions
taken by the relevant taxation authority in future, the entity recognizes current and deferred tax liabilities and
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 52). 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.
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assets considering whether it is probable or not that a taxation authority will accept an uncertain tax
treatment. Thus, if the entity concludes that it is not probable that the taxation authority will accept an
uncertain tax treatment, the entity uses the most likely amount or expected value in determining tax assets.
The income and expenses directly recognized in equity that do not increase or decrease taxable income are
accounted for as temporary differences.
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 21). 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 30).
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.
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 52). 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.
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2.9 Post-employment and other employee benefit commitments
Below we provide a description of the most significant accounting criteria relating to post-employment and
other employee benefit commitments assumed by the Bank (see Note 22).
Short-term employee benefits
Benefits for current active employees which are accrued and settled during the year and for which a
provision is not required in the entity´s accounts. These include wages and salaries, social security charges
and other personnel expenses.
Costs are charged and recognized under the heading “Administration costs – Personnel expenses – Other
personnel expenses” of the income statement (see Note 39.1).
Post-employment benefits – Defined-contribution plans
The Bank sponsors defined-contribution plans for its active employees. The amount of these benefits is
established as a percentage of remuneration and/or as a fixed amount.
The contributions made to these plans in each period by the Bank are charged and recognized under the
heading “Administration costs – Personnel expenses – Defined-contribution plan expense” of the income
statement (see Note 39.1).
Post-employment benefits – Defined-benefit plans
The Bank maintains pension commitments with employees who have already retired or taken early
retirement, certain closed groups of active employees still accruing defined benefit pensions, and in-service
death and disability benefits provided to most active employees. These commitments are covered by
insurance contracts, pension funds and internal provisions.
In addition, the Bank have offered certain employees the option to retire before their normal retirement age
stipulated in the collective labor agreement in force, recognizing the necessary provisions to cover the costs
of the associated benefit commitments, which include both the liability for the benefit payments due as well
as the contributions payable to external pension funds during the early retirement period.
Furthermore, the Bank provides welfare benefits to certain current employees and retirees.
All of these commitments are quantified based on actuarial valuations, with the amounts recorded under the
heading “Provisions – Provisions for pensions and similar obligations” and determined as the difference
between the value of the defined-benefit commitments and the fair value of plan assets at the date of the
financial statements (see Note 22).
Current service cost are charged and recognized under the heading “Administration costs – Personnel
expenses – Defined-benefit plan expense” of the income statement (see Note 39.1).
Interest credits/charges relating to these commitments are charged and recognized under the headings
“Interest income” and “Interest expense” of the income statement.
Past service costs arising from benefit plan changes as well as early retirements granted during the period
are recognized under the heading “Provisions or reversals of provisions” of the income statement (see Note
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 52). 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.
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Other long-term employee benefits
In addition to the above commitments, the Bank maintains leave and long-service awards to their employees,
which consist of either an established monetary amounts or shares in Banco Bilbao Argentaria S.A. granted
upon completion of a number of years of qualifying service.
These commitments are quantified based on actuarial valuations and the amounts recorded under the
heading “Provisions – Other long-term employee benefits” of the balance sheet (see Note 21).
Valuation of commitments: actuarial assumptions and recognition of gains/losses
The present value of these commitments is determined based on individual member data. Active employee
costs are determined using the “projected unit credit” method, which treats each period of service as giving
rise to an additional unit of benefit and values each unit separately.
In establishing the actuarial assumptions we taken into account that:
They should be unbiased, i.e. neither unduly optimistic nor excessively conservative.
They should be mutually compatible and adequately reflect the existing relationship between economic
variables such as price inflation, expected wage increases, discount rates and the expected return on plan
assets, etc. Future wage and benefit levels should be based on market expectations, at the balance sheet
date, for the period over which the obligations are to be settled.
The interest rate used to discount benefit commitments is determined by reference to market yields, at
the balance sheet date, on high quality bonds.
The Bank recognizes actuarial gains/losses relating to early retirement benefits, long service awards and
other similar items under the heading “Provisions or reversal of provisions” of the income statement for the
period in which they arise (see Note 41). Actuarial gains/losses relating to pension benefits are directly
charged and recognized under the heading "Accumulated other comprehensive income – Items that will not
be reclassified to profit or loss – Actuarial gains or losses on defined benefit pension plans" of equity in the
balance sheet (see Note 27).
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”
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 granted,
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.
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 52). 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.
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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 common stock (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 26).
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 - Retained earnings ” in the
balance sheets (see Note 25).
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. However, the exchange differences in non-monetary items, measured at fair value, are recognized
temporarily in equity under the heading “Accumulated other comprehensive income - Items that may be
reclassified to profit or loss - Exchange differences”.
The breakdown of the main balances in foreign currencies as of December 31, 2017 and 2016, with reference
to the most significant foreign currencies, is set forth in Appendix VIII.
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.
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 52). 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.
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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 identified transaction costs of that
amount will be deducted as directly attributable to the processing fees of loans and advances. 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” in the income statement includes the amount of sales of goods and
revenue from the provision of non-financial services (see Note 38).
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
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 52). 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.
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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.
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 " Tangible assets –
Property, plant and equipment – Other assets leased out under an operating lease " and "Other operating
expenses" (see Note 38).
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, 2017 and 2016 it
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
“Accumulated other comprehensive income” (see Note 27) recognized directly in equity. “Accumulated other
comprehensive income”include the changes that have taken place in the year in the “Accumulated other
comprehensive income” broken down by item.
The sum of the changes to the heading “Accumulated other comprehensive income” of the total equity and
the net income of the year forms the “Accumulated other comprehensive income””.
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 “Accumulated other comprehensive income” (see
Note 27), 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
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 52). 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.
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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.
2.21 Recent pronouncements
As of January 1, 2018, Circular 4/2007 issued by the Bank of Spain on public and reserved financial
information standards, and financial statement models entered into force for credit institutions.
The purpose of this circular is to adapt the Spanish credit institutions accounting system to changes in the
European accounting system resulting from the adoption of two new International Financial Reporting
Standards (IFRS), specifically "IFRS 15 - Revenue from contracts with customers "and" IFRS 9 - Financial
instruments ".
In 2016 and 2017, the Bank implemented a project for applying IFRS 9 with the participation of all the areas
affected: finance, risks, technology, business areas, etc., with the involvement of the BBVA's senior
management.
3.
Shareholder remuneration system
In accordance with BBVA’s shareholder remuneration policy communicated in October 2013, which
established the distribution of an annual pay-out of between 35% and 40% of the profits earned in each
financial year and the progressive reduction of the remuneration via “Dividend Options”, so that the
shareholders’ remuneration would ultimately be fully in cash, on February 1, 2017 BBVA announced that it
was expected to be proposed for the consideration of the competent governing bodies the approval of a
capital increase to be charged to voluntary reserves for the instrumentation of one “Dividend Option” in
2017, being the subsequent shareholders’ remunerations that could be approved fully in cash.
This fully in cash shareholders’ remuneration policy would be composed, for each financial year, of a
distribution on account of the dividend of such financial year (which is expected to be paid in October) and a
final dividend (which would be paid once the financial year has ended and the profit allocation has been
approved, which is expected for April), subject to the applicable authorizations by the competent governing
bodies.
Shareholder remuneration scheme “Dividend Option”
During 2012, 2013, 2014, 2015, 2016 and 2017, the Bank implemented a shareholder remuneration system
referred to as “Dividend Option”.
Under such remuneration scheme, BBVA offered its shareholders the possibility to receive all or part of their
remuneration in the form of newly-issued BBVA ordinary shares, whilst maintaining the possibility for BBVA
shareholders to receive their entire remuneration in cash by selling the rights of free allocation assigned
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 52). 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.
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either to BBVA (in execution of the commitment assumed by BBVA to acquire the rights of free allocation at
a guaranteed fixed price) or by selling the rights of free allocation on the market at the prevailing market price
at that time. However, the execution of the commitment assumed by BBVA was only available to whoever
had been originally assigned such rights of free allocation and only in connection with the rights of free
allocation initially allocated at such time.
On 29 March 2017, BBVA’s Board of Directors resolved to execute the capital increase to be charged to
voluntary reserves approved by the Annual General Meeting (“AGM”) held on 17 March 2017, under agenda
item three, to implement a “Dividend Option” this year. As a result of this increase, the Bank’s share capital
increased by €49,622,955.62 through the issuance of 101,271,338 newly-issued BBVA ordinary shares at
€0.49 par value, given that 83.28% of owners of the rights of free allocation opted to receive newly-issued
BBVA ordinary shares. The remaining 16.72% of the owners of the rights of free allocation exercised the
commitment assumed by BBVA, and as a result, BBVA acquired 1,097,962,903 rights (at a gross price of
€0.131 each) for a total amount of €143,833,140.29. This amount is recorded in “Total Equity-Dividends and
Remuneration” of the balance sheet as of December 31, 2017 (see Note 23).
On 28 September 2016, BBVA’s Board of Directors resolved to execute the second of the share capital
increases to be charged to voluntary reserves, as agreed by the AGM held on 11 March 2016. As a result of
this increase, the Bank’s share capital increased by €42,266,085.33 through the issuance of 86,257,317
newly-issued BBVA ordinary shares at 0.49 euros par value, given that 87.85% of owners of the rights of free
allocation opted to receive newly-issued BBVA ordinary shares. The remaining 12.15% of the owners of the
rights of free allocation exercised the commitment assumed by BBVA, and as a result, BBVA acquired
787,374,942 rights (at a gross price of €0.08 each) for a total amount of €62,989,995.36. This amount is
recorded in “Total Equity-Dividends and Remuneration” of the balance sheet as of 31 December 2016 (see
Note 23).
On 31 March 2016, BBVA’s Board of Directors resolved to execute the first of the share capital increases to
be charged to voluntary reserves, as agreed by the AGM held on 11 March 2016 for the implementation of the
shareholder remuneration system called the “Dividend Option”. As a result of this increase, the Bank’s share
capital increased by €55,702,125.43 through the issuance of 113,677,807 newly-issued BBVA ordinary
shares at a €0.49 par value, given that 82.13% of owners of the rights of free allocation opted to receive
newly-issued BBVA ordinary shares. The remaining 17.87% of the owners of the rights of free allocation
exercised the commitment assumed by BBVA, and as a result, BBVA acquired 1,137,500,965 rights (at a
gross price of €0.129 each) for a total amount of €146,737,624.49. This amount is recorded in “Total Equity-
Dividends and Remuneration” of the balance sheet as of 31 December 2016 (see Note 23).
Cash Dividends
Throughout 2016 and 2017, BBVA’s Board of Directors approved the payment of the following interim
dividends, recorded in “Total Equity- Interim Dividends” of the balance sheet of the relevant year:
The Board of Directors, at its meeting held on June 22, 2016, approved the payment in cash of €0.08
(€0.0648 net of withholding tax) per BBVA share as the first gross interim dividend against 2016
results. The total amount paid to shareholders on July 11, 2016, after deducting treasury shares held
by the Group's companies, amounted to €517 million and is recognized under the headings “Total
Equity- Interim Dividends” of the consolidated balance sheet as of December 31, 2016.
The Board of Directors, at its meeting held on December 21, 2016, approved the payment in cash of
€0.08 (€0.0648 withholding tax) per BBVA share, as the second gross interim dividend against
2016 results. The total amount paid to shareholders on January 12, 2017, after deducting treasury
shares held by the Group’s Companies, amounted to €525 million and is recognized under the
heading “Total Equity- Interim Dividends” of the consolidated balance sheet as of December 31,
2016.
The Board of Directors, at its meeting held on September 27, 2017, approved the payment in cash of
€0.09 (€0.0729 withholding tax) per BBVA share, as the first gross interim dividend against 2017
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principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 52). 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.
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results. The total amount paid to shareholders on October 10, 2017 amounted €600 million and is
recognized under the heading “Total Equity- Interim Dividends” of the balance sheet as of December
31, 2017.
The interim accounting statements prepared in accordance with legal requirements evidencing the existence
of sufficient liquidity for the distribution of said amounts are as follows:
Available Amount for Interim Dividend Payments (Millions of euros)
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 2017 capital increase
Additional Tier I capital instruments remuneration
Interim dividends for 2017 already paid
Maximum amount distributable
Amount of proposed interim dividend
BBVA cash balance available to the date
August 31, 2017
1,832
10
144
224
-
1,454
600
5,095
Proposal on allocation of earnings for 2017
The allocation of earnings for 2017 subject to the approval of the Board of Directors at the Annual
Shareholders Meeting is presented below:
Application of Earnings (Millions of euros)
Net income for year
Distribution:
Interim dividends
Final dividend
Acquisition by the bank of the free allotment rights(*)
Additional Tier 1 securities
Legal reserve
Voluntary reserves
December 2017
2,083
-
600
1,000
144
301
10
28
(*) Concerning to the remuneration to shareholders who chose to be paid in cash through the "Dividend Option".
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 2017 and 2016 (see Note 23). 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 2016 were
recalculated on this basis.
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principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 52). 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.
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The calculation of earnings per share of BBVA Group is as follows:
Basic and Diluted Earnings per Share
Numerator for basic and diluted earnings per share (millions of euros)
Profit attributable to parent company
Adjustment: Additional Tier 1 securities (1)
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 number of shares outstanding (2)
Weighted average number of shares outstanding x corrective factor (3)
Adjusted number of shares - Basic earning per share (C)
Adjusted number of shares - diluted earning per share (D)
Earnings per share
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
2017
2016(*)
3,519
(301)
3,218
-
-
6,642
6,642
6,642
6,642
0.48
0.48
0.48
-
-
3,475
(260)
3,215
-
-
6,468
6,592
6,592
6,592
0.49
0.49
0.49
-
-
(1) Remuneration in the period related to contingent convertible securities (See Note 20.4).
(2) Weighted average number of shares outstanding (millions of euros), excluding weighted average of
treasury shares during the period.
(3) 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, 2017 and 2016 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, basic and diluted earnings per share are the same for both dates.
5. Risk management
5.1 General risk management and control model
BBVA has an overall risk management and control model (hereinafter 'the model') tailored to its business
model, its organization and the geographies in which it operates, This model allows BBVA Group to develop
its activity in accordance with the risk strategy and risk controls and management policies defined by the
governing bodies of the Bank and to adapt to a changing economic and regulatory environment, tackling risk
management globally and adapted to the circumstances at all times. The model sets an adequate risk
management system related to risks profiles and the Bank strategy.
This model is applied comprehensively in the BBVA and consists of the basic elements listed below:
Governance and organization
Risk appetite framework
Decisions and processes
Assessment, monitoring and reporting
Infrastructure
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principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 52). 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.
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BBVA promotes the development of a risk culture that ensures consistent application of the risk
management and control model in the bank, and that guarantees 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. The risk function is responsible at management level for their
implementation and development, and 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 meet the policies, rules, procedures, infrastructures and controls, which are
defined by the function risk on the basis of the framework set by the governing bodies.
To perform this task properly, the risk function in the BBVA is configured as a single, global function with an
independent role from commercial areas.
Corporate bodies
BBVA Board of Directors (hereinafter also referred to as "the Board") approves the risk strategy and
oversees the internal management and control systems. Specifically, in relation to the risk strategy, the
Board approves the Group's risk appetite statement, the core metrics and the main metrics by type of risk,
as well as the general risk management and control model.
The Board of Directors is also responsible for approving and monitoring the strategic and business plan, the
annual budget and management goals, as well as the investment and funding policy, in a consistent way and
in line with the approved Risk Appetite Framework. For this reason, the processes for defining the Risk
Appetite Framework proposals and the strategic and budgetary planning at Group level are coordinated by
the executive areas for submission to the Board.
With the aim of ensuring the integration of the Risk Appetite Framework into management, on the basis
established by the Board of Directors, the Executive Committee approves the metrics by type of risk (in 2017
those in relation to concentration, profitability and reputational risk) and the Group's basic structure of limits
by geographical area, risk type, asset type and portfolio level. This committee also approves specific
corporate policies for each type of risk.
Lastly, the Board has set up a Board committee specialized in risks, the Risk Committee, that assists the
Board and the Executive Committee in determining the Group's risk strategy and the risk limits and policies,
respectively, analyzing and assessing beforehand the proposals submitted to those bodies. The Board of
Directors has the exclusive authority to amend the Bank’s risk strategy and its elements, including the Risk
Appetite Framework metrics, while the Executive Committee is responsible for amending the metrics by type
of risk within its scope of decision and the Group's basic structure of limits (core limits), when applicable. In
both cases, the amendments follow the same decision-making process described above, so the proposals
for amendment are submitted by the executive area (Chief Risk Officer, “CRO”) and analyzed by the Risk
Committee, for later submission to the Board of Directors or to the Executive Committee, as appropriate.
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principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 52). 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.
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Moreover, the Risk Committee, the Executive Committee and the Board itself conduct proper monitoring of
the risk strategy implementation and of the Group's risk profile. The risk function regularly reports on the
development of the Group's Risk Appetite Framework metrics to the Board and to the Executive Committee,
after the analysis by the Risk Committee, whose role in this monitoring and control work is particularly
relevant.
In addition to the constant supervision and control that performs the risk function and which accounts to the
corporate bodies, in case of deviation from the maximum appetite levels of the core metrics or by type of
risks or in the case of an exceeded of a limit of the basic structure, approved by the corporate bodies, the
situation will be reported to the Risks Committee, after analysis of the executive areas in the corresponding
maximum level committees. After the report of the Risk Committee, it will be reported to the corporate
bodies that have approved the exceeded metric in each case. In any case, information will be provided on the
corrective measures that may be applicable, as the case may be, and which should be agreed by the
corporate bodies or, in the executive sphere, by the corresponding area
Risk Function: CRO. Organizational structure and committees
The head of the risk function at executive level is the Group’s CRO, who carries out his functions
independently and with the necessary authority, rank, experience, knowledge and resources. He is appointed
by the Board as a member of its senior management and has direct access to its corporate bodies (Board,
Executive Standing Committee and Risk Committee), to whom he reports regularly on the status of risks in
the Group.
The CRO, for a better performance of its functions, is supported in the performance of its functions by a
structure consisting of cross-sectional risk units in the corporate area and the specific risk units in the
geographical and/or business areas of the Group. Each of the latter units is headed by a Chief Risk Officer for
the geographical and/or business area who, within his/her area of responsability, 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.
The Chief Risk Officers of the geographical and/or business areas report both to the Group's CRO 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 enable its alignment with the Group's
corporate risk policies and goals.
The risk management function, as defined above, consists of risk units from the corporate area, which carry
out cross-sectional functions, and risk units from the geographical and/or business areas.
The corporate area's risk units develop and submit to the Group CRO the proposal for the Group's Risk
Appetite Framework, the corporate policies, rules and global procedures and infrastructures within the
framework approved by the corporate bodies; they ensure their application and report either directly or
through the 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 framework principles.
• Monitoring and control of the Group's risk profile in relation to the risk appetite framework approved
by the Bank's corporate bodies, providing accurate and reliable information with the required
frequency and in the necessary format.
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principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 52). 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.
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• Prospective analyses to enable an evaluation of compliance with the risk appetite framework 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 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 Chief Risk Officer of the geographical
and/or business area the risk appetite framework proposal applicable in each geographical and/or
business area, independently and always within the Group's strategy/risk appetite framework. 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
management and control of their risks, within the global risk infrastructure framework defined by the
corporate areas; 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 top-level committee within
the risk function. 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 carrying out its business, and the determination of risk limits
by portfolio. The members of this Committee are the Group's CRO 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 analyzing and 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.
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.
Technology & Analytics Committee: It ensures an appropriate decision-making process regarding the
development, implementation and use of the tools and models required to achieve an appropriate
management of those risks to which the BBVA Group is exposed.
Global Market Risk Unit Global Committee:
is responsible for formalizing, supervising and
communicating the monitoring of trading desk risk in all the Global Markets business units, as well as
coordinating and approving GMRU key decisions activity, and developing and proposing to GRMC the
corporate regulation of the unit.
It
Corporate Operational and Outsourcing Risk Admission Committee: It identifies and assesses the
operational risks of new businesses, new products and services, and outsourcing initiatives.
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principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 52). 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.
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Retail Risk Committee: It ensures the alignment of the practices and processes of the retail credit risk
cycle with the approved risk tolerance and with the business growth and development objectives
established in the corporate strategy of the Group.
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, whose decisions are reflected in the corresponding minutes.
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. Moreover, this organization
enables the risks function to conduct and report to the corporate bodies integrated monitoring and control of
the entire Group's risks.
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. In this regard, The
Internal Risk Control unit verifies the performance of their duties by the units that develop the risk models,
manage the processes and execute the control. 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 these purposes the Internal Risks Control department has a Technical Secretary's Office, which offers
the Committee the technical support it needs to better perform its duties.
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, which reviews the performance of its duties by 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.
5.1.2
Risk appetite framework
The Group's risk appetite framework, approved by the Board, determines the risks (and their level) that the
Group is willing to assume to achieve its business objectives considering an organic evolution of its business.
These are expressed in terms of solvency, liquidity and funding, profitability and income recurrence or other
metrics, which are reviewed periodically as well as in case of material changes to the entity’s business or
relevant corporate transactions. The definition of the risk appetite has the following goals:
To express the maximum levels of risk it is willing to assume, at both Group and geographical and/or
business area level.
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principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 52). 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.
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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) that
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 framework is expressed through the following elements:
Risk appetite statement
It sets out the general principles of the Group's risk strategy and the target risk profile. The 2017 Risk
appetite statement is:
BBVA Group’s risk policy is designed to achieve a moderate risk profile for the entity, through: prudent
management and a responsible universal banking business model targeted to value creation, risk-adjusted
return and recurrence of results; diversified by geography, asset class, portfolio and clients; and with
presence in emerging and developed countries, maintaining a medium/low risk profile in every country, and
focusing on a long term relationship with the client.
Core metrics
Based on the risk appetite statement, statements are established to set down the general risk management
principles in terms of solvency, liquidity and funding, profitability and income recurrence.
Solvency: a sound capital position, maintaining resilient capital buffer from regulatory and internal
requirements that supports the regular development of banking activity even under stress situations. As a
result, BBVA proactively manages its capital position, which is tested under different stress scenarios
from a regular basis.
Liquidity and funding: A sound balance-sheet structure to sustain the business model. Maintenance of an
adequate volume of stable resources, a diversified wholesale funding structure, which limits the weight of
short term funding and ensures the access to the different funding markets, optimizing the costs and
preserving a cushion of liquid assets to overcome a liquidity survival period under stress scenarios.
Profitability and income recurrence: A sound margin-generation capacity supported by a recurrent
business model based on the diversification of assets, a stable funding and a customer focus; combined
with a moderate risk profile that limits the credit losses even under stress situations; all focused on
allowing income stability and maximizing the risk-adjusted profitability.
The core metrics define, in quantitative terms, the principles and the target risk profile set out in the risk
appetite statement and are in line with the strategy of the Group. Each metric have three thresholds (traffic-
light approach) ranging from a standard business management to higher deterioration levels: Management
reference, Maximum appetite and Maximum capacity. The Group’s Core metrics are:
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principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 52). 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.
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Solvency
Liquidity and Funding
Income recurrence
and profitability
Metric
Economic Solvency
Regulatory Solvency: CET1 Fully Loaded
Loan to Stable Costumer Deposits (LTSCD)
Liquidity Coverage Ratio (LCR)
Net margin / Average Total Assets
Cost of Risk
Return on Equity (ROE)
Metrics by type of risk
Based on the core metrics, statements are established for each type of risk reflecting the main principles
governing the management of that risk and several metrics are calibrated, compliance with which enables
compliance with the core metrics and the appetite risk statement of the Group. By type of risk metrics have a
maximum appetite threshold.
Basic limits structure (core limits)
The purpose of the basic limits structure or core limits is to shape the Risk Appetite Framework at
geographical area risk type, asset type and portfolio level, ensuring that the management of risks on an
ongoing basis is within the thresholds set forth for "by type of risk".
In addition to this framework, there’s a level of management limits level that is defined and managed by the
risk function developing the core limits, in order to ensure that the anticipatory management of risks by
subcategories or by subportfolios complies with that core limits and, in general, with the Risk Appetite
Framework.
The following graphic summarizes the structure of BBVA’s Risk appetite framework:
The corporate risk area works with the various geographical and/or business areas to define their risk
appetite framework, which will be coordinated with and integrated into the Group's risk appetite to ensure
that its profile fits as defined.
The Group Risk Appetite Framework 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. The Risk
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principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 52). 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.
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Appetite Framework is integrated into the management and the processes for defining the Risk Appetite
Framework proposals and strategic and budgetary planning at Group level are coordinates.
As explained above, the core metrics of BBVA Risk Appetite Framework measure Groups performance in
terms of solvency, liquidity and funding, profitability and income recurrence; most of the core metrics are
accounting related or regulatory metrics which are published regularly to the market in the BBVA Group
annual report and in the quarterly financial reports. During 2017, the Group risk profile evolved in line with the
Risk Appetite metrics.
5.1.3
Decisions and processes
The transfer of risk appetite framework to ordinary management is supported by three basic aspects:
A standardized set of regulations.
Risk planning.
Comprehensive management of risks over their life cycle.
Standardized regulatory framework
The corporate risk area is responsible for the definition and proposal of the corporate policies, specific rules,
procedures and schemes of delegation based on which risks decisions should take 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.
Standardization: a standardized name and content of document.
Accessibility: ability to search for, and easy access to, documentation through the corporate risk
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 comply with this set of regulations and, where necessary,
adapt it to local requirements 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 area of GRM, who must ensure the consistency of the regulatory body at the Group level and,
therefore, if necessary, give prior approval to the modifications proposed by the local risk areas.
Risk planning
Risk planning ensures that the risk appetite framework is integrated into management through a cascade
process for establishing limits and profitability adjusted to the risk profile, 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 with the Group's Risk Appetite Framework in terms of solvency, liquidity and funding, profitability
and income recurrence.
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principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 52). 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.
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There are tools in place that allow the risk appetite framework 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 aligned and taken into consideration within the rest of the Group's planning
framework so as to ensure consistency.
Comprehensive management
All risks must be managed comprehensively during their life cycle, and be treated differently depending on
the type.
The risk management cycle is composed of five 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 ensures that the Model has a dynamic
and proactive vision to enable compliance with the risk appetite framework approved by the corporate
bodies, even in adverse scenarios. The materialization of this process has the following objectives:
Assess compliance with the risk appetite framework at the present time, through monitoring of the core
metrics, metrics by type of risk and the basic structure of limits.
Assess compliance with the risk appetite framework in the future, through the projection of the risk
appetite framework 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 framework, 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 framework, but that condition its
compliance. These can be either external or internal.
This process is integrated in the activity of the risk units, both of the corporate area and in the business units,
and it is carried out during the following phases:
Identification of the risk factors that can compromise the performance of the Group or of the geographical
and/or business areas in relation to the defined risk thresholds.
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 52). 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.
P. 46
Assessment of the impact of the materialization of the risk factors on the metrics that define the Risk
Appetite Framework based on different scenarios, including stress scenarios.
Response to unwanted situations and proposals for readjustment to enable a dynamic management of
the situation, even before it takes place.
Monitoring of the Group's risk profile and of the identified risk factors, through internal, competitor and
market indicators, among others, to anticipate their future development.
Reporting: Complete and reliable information on the development of risks for the corporate bodies and
senior management, with the frequency and completeness appropriate to the nature, significance and
complexity of the reported risks. The principle of transparency governs all reporting of risk information.
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 has an adequate workforce, in terms of number,
skills, knowledge and experience.
With regards to technology, the Bank's risk function 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 have sufficient means from the point of view of
resources, structures and tools to develop a risk management in line with the corporate model.
5.2 Risk factors
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.
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 52). 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.
P. 47
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 framework 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
Global growth has improved during 2017, and is more synchronized across developed and emerging
markets, which makes the recovery more sustainable. Healthy global trade growth and calm financial
markets, which rely on the support from central banks and the lack of inflation pressure, also contribute
to the more upbeat outlook. The performance of the most advanced economies is solid, especially the
Eurozone, where global demand adds to domestic factors and reduced political uncertainty. Growth
momentum in The United States will be supported in the short term by the recently approved tax reform,
although its long-term impact is unlikely to be large. As regards emerging economies, China's growth
moderation continues, with a mix of policies oriented to diminish financial imbalances, while economic
activity in Latin America recovers against a background of higher commodity prices and favorable global
funding conditions.
The uncertainty around these positive economic perspectives has a downward bias but continues to be
elevated. First, following a long period of exceptionally loose monetary policies, the main central banks are
tapering their support, with uncertainty on their impact on markets and economies given the background
of high leverage and signs of overvaluation in some financial assets. A second source of uncertainty is
related with the political support to the multilateral global governance of trade. Third, both global
geopolitics and domestic politics in some countries are relevant for the economic perspectives within the
BBVA's footprint.
In this regard, the Group's geographical diversification remains a key element in achieving a high level of
revenue recurrence, despite the background conditions and economic cycles of the economies in which it
operates.
Regulatory 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 (such as IFRS
9, Basel IV, etc.) 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
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 52). 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.
P. 48
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.
Business, operational and legal 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, etc). but also opportunities (new framework of relations with
customers, greater ability to adapt to their needs, new products and distribution channels, etc.).
Digital transformation is a priority for the Group as it aims to lead digital banking of the future as one
of its objectives.
• Technological risks and security breaches: The Group is 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 Group 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).
• The financial sector is exposed to increasing litigation, so the financial institutions face a large number
of proceedings which economic consequences are difficult to determine. The Group manages and
monitors these proceedings to defend its interests, where necessary allocating the corresponding
provisions to cover them, following the expert criteria of internal lawyers and external attorneys
responsible for the legal handling of the procedures, in accordance with applicable legislation.
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:
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 52). 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.
P. 49
• 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.
5.3.1 Maximum Credit risk exposure
BBVA maximum credit risk exposure (see definition below) by headings in the balance sheet as of December
31, 2017 and 2016 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 (Millions of euros)
Financial assets held for trading
Debt securities
Equity instruments
Customer lending
Notes
8.1
8.1
Other financial assets designated at fair value through profit or loss
9
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 central banks
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
Held-to-maturity investments
Derivatives (trading and hedging)
Total Financial Assets Risk
Loan commitments given
Financial guarantees given
Other Commitments given
10.1
10.2
11.2
11.2
11.4
12
29
29
29
Total Loan commitments and financial guarantees
Total Maximum Credit Exposure
(*) Without considering derivatives whose counterparty are BBVA Group companies.
2017
13,888
7,686
6,202
-
648
648
-
-
24,205
21,827
2,378
250,018
28
22,110
217,375
19,142
1,341
22,331
21,627
32,083
2016
15,417
11,544
3,873
-
-
-
-
-
29,004
25,498
3,506
259,581
-
26,609
221,966
21,857
1,285
23,039
25,989
28,515
100,552
102,949
20,299
10,505
8,354
31,597
328,710
54,631
11,336
36,504
102,471
431,181
18,332
11,006
11,424
37,255
352,681
60,863
18,697
31,306
110,866
463,547
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 52). 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.
P. 50
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 derivatives 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.
The 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 financial statements,
derivatives are accounted for as of each reporting date at fair value.
• 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.
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 52). 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.
P. 51
The breakdown by counterparty and product of loans and advances, net of impairment losses, classified in the different headings of the assets, as of
December 31, 2017 and 2016 is shown below:
December 2017 (Millions of euros)
On demand and short notice
Credit card debt
Trade receivables
Finance leases
Reverse repurchase loans
Other term loans
Advances that are not loans
Loans and advances
of which: mortgage loans [Loans collateralized by immovable property]
of which: other collateralized loans
of which: credit for consumption
of which: lending for house purchase
of which: project finance loans
Central banks
General
governments
Credit
institutions
Other financial
corporations
Non-financial
corporations
Households
Total
-
0
-
28
-
-
28
222
1
800
55
1,093
15,576
1,973
19,720
447
446
-
-
-
-
13,513
1,827
6,765
22,105
-
13,507
1,206
1
160
3
10,812
6,151
820
19,153
232
10,816
8,942
117
9,299
3,190
-
52,418
1,130
75,096
12,885
1,760
7,024
1,897
1,900
63
206
-
94,115
96
98,277
83,387
425
8,726
82,462
12,267
2,019
10,322
3,454
25,446
170,087
10,784
234,379
96,951
26,954
8,726
82,462
7,024
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 52). 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.
P. 52
December 2016 (Millions of euros)
On demand and short notice
Credit card debt
Trade receivables
Finance leases
Reverse repurchase loans
Other term loans
Advances that are not loans
Loans and advances
of which: mortgage loans [Loans collateralized by immovable property]
of which: other collateralized loans
of which: credit for consumption
of which: lending for house purchase
of which: project finance loans
Central banks
General
governments
Credit
institutions
Other financial
corporations
Non-financial
corporations
Households
Total
-
0
-
-
-
-
-
372
1
1,042
42
544
17,357
2,405
21,763
440
544
-
-
-
-
14,907
5,104
6,585
26,596
-
14,908
1,760
1
140
4
6,666
5,298
1,980
15,849
203
6,669
8,371
107
9,254
2,805
-
54,323
773
75,633
14,722
1,870
7,918
1,759
1,717
70
199
-
96,805
94
100,644
87,757
596
7,240
86,423
12,262
1,826
10,506
3,050
22,117
178,887
11,837
240,485
103,122
24,587
7,240
86,423
7,918
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 52). 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.
P. 53
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 category:
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.
Derivatives 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.
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.).
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 52). 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.
P. 54
• Debt securities: The guarantees or credit enhancements obtained directly from the issuer or
counterparty are inherent to the structure of the instrument.
Collateralized loans granted by the Bank as of December 31, 2017 and 2016 excluding balances deemed
impaired, is broken down in the previous tables.
Financial guarantees, other contingent risks and drawable by third parties: These have the counterparty’s
personal guarantee.
5.3.3 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, general governments, 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,
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 52). 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.
P. 55
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.
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, 2017:
External rating
Internal rating
Standard&Poor's List
Reduced List (22 groups)
Average
Probability of default
(basic points)
Minimum from
>=
Maximum
AAA
AA+
AA
AA-
A+
A
A-
BBB+
BBB
BBB-
BB+
BB
BB-
B+
B
B-
CCC+
CCC
CCC-
CC+
CC
CC-
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
These different levels and their probability of default (PD) 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 Group’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 for each country in which the Group has tools available.
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principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 52). 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.
P. 56
The tables below outline 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, 2017 and 2016:
Credit Risk Distribution by Internal Rating
2017
Amount
(Millions of Euros)
%
17.16%
27.58%
15.88%
10.30%
14.34%
4.83%
2.52%
2.36%
2.12%
1.38%
0.62%
2016
Amount
(Millions of Euros)
34,713
49,879
38,844
20,870
31,643
19,448
7,812
5,880
4,388
1,784
1,542
%
15.72%
22.59%
17.59%
9.45%
14.33%
8.81%
3.54%
2.66%
1.99%
0.81%
0.70%
37,675
60,544
34,850
22,608
31,469
10,598
5,534
5,182
4,662
3,034
1,361
2,007
219,523
0.91%
100.00%
4,004
220,807
1.81%
100.00%
AAA/AA
A
BBB+
BBB
BBB-
BB+
BB
BB-
B+
B
B-
CCC/CC
Total
5.3.4 Financial assets past due but not impaired
The table below provides details by counterpart and by product of past due risks but not considered to be
impaired, as of December 31, 2017 and December 31, 2016, listed by their first past-due date; as well as the
breakdown of the debt securities and loans and advances individually and collectively estimated, and the
specific allowances for individually estimated and for collectively estimated (see Note 2.2.1):
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 52). 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.
P. 57
December 2017 (Millions of euros)
Past due
but not
impaired
≤ 30
days
> 30 days
≤ 60 days
Impaired
assets
> 60
days
≤ 90
days
Carrying
amount
of the
impaired
assets
Specific
allowances
for financial
assets,
individually
and
collectively
estimated
Collective
allowances
for incurred
but not
reported
losses
Accumulated
write-offs
(10)
(1,343)
-
(2)
(1)
(6)
(674)
(660)
(1,353)
-
(23,090)
-
(25)
-
(1)
(16,746)
(6,318)
(23,090)
Debt securities
Loans and advances
Central Banks
General governments
Credit institutions
Other financial corporations
Non-financial corporations
Households
TOTAL
Loans and advances by product, by collateral and by subordination
On demand (call) and short notice (current account)
Credit card debt
Trade receivables
Finance leases
Reverse repurchase loans
Other term loans
Advances that are not loans
of which: mortgage loans (Loans collateralized by immovable property)
of which: other collateralized loans
of which: credit for consumption
of which: lending for house purchase
of which: project finance loans
-
181
-
69
-
-
97
14
181
16
3
50
2
-
-
36
-
3
-
-
23
11
36
6
2
7
1
-
-
50
-
13
-
-
24
13
50
7
1
3
1
-
33
13,244
-
166
4
3
7,138
5,934
13,277
351
60
377
134
-
19
7,661
-
125
-
1
3,274
4,261
7,680
140
13
229
5
-
(14)
(5,583)
-
(42)
(4)
(2)
(3,863)
(1,672)
(5,597)
(211)
(47)
(148)
(129)
-
109
21
38
12,322
7,274
(5,048)
-
2
2
3
2
5
-
9
1
3
4
-
-
17
-
3
5
-
-
-
-
9,598
6,359
(3,239)
64
364
29
96
(35)
(267)
4,839
3,824
(1,015)
244
180
(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 52). 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.
P. 58
December 2016 (Millions of euros)
Debt securities
Loans and advances
Central Banks
General governments
Credit institutions
Other financial corporations
Non-financial corporations
Households
TOTAL
Loans and advances by product, by collateral and by subordination
On demand (call) and short notice (current account)
Credit card debt
Trade receivables
Finance leases
Reverse repurchase loans
Other term loans
Advances that are not loans
of which: mortgage loans (Loans collateralized by immovable property)
of which: other collateralized loans
of which: credit for consumption
of which: lending for house purchase
of which: project finance loans
Past due
but not
impaired
≤ 30
days
> 30 days
≤ 60 days
Impaired
assets
> 60
days
≤ 90
days
Carrying
amount
of the
impaired
assets
Specific
allowances
for financial
assets,
individually
and
collectively
estimated
Collective
allowances
for incurred
but not
reported
losses
Accumulated
write-offs
-
496
-
63
-
18
387
28
496
-
23
4
28
11
-
-
-
216
96
(120)
(27)
-
37
44
16,741
8,976
(7,765)
(1,663)
(21,601)
-
-
-
-
24
12
37
-
8
2
2
1
-
-
2
-
1
26
15
44
-
2
1
2
1
-
-
-
292
253
5
8
-
5
-
(39)
(5)
(3)
10,412
4,448
(5,963)
6,024
16,957
4,270
9,073
(1,754)
(7,884)
-
(2)
(8)
(11)
(888)
(754)
-
(13)
(5)
-
(17,347)
(4,237)
(1,691)
(21,601)
470
50
247
197
-
193
12
54
68
-
(277)
(39)
(193)
(129)
-
431
24
38
15,777
8,649
(7,128)
-
16
1
3
15
136
-
-
-
-
-
12
22
12,687
7,600
(5,087)
1
3
5
-
-
3
8
-
70
347
37
83
(33)
(264)
5,015
3,872
(1,143)
152
13
(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 52). 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.
P. 59
The breakdown of loans and advances of loans and receivables, impaired and accumulated impairment by
sectors as of December 31, 2017 and 2016 is as follows:
December 2017 (Millions of euros)
100 Basis-Point Increase
100 Basis-Point Decrease
100 Basis-Point Increase
100 Basis-Point Decrease
Agriculture, forestry and fishing
Mining and quarrying
Manufacturing
Electricity, gas, steam and air conditioning supply
Water supply
Construction
Wholesale and retail trade
Transport and storage
Accommodation and food service activities
Information and communication
Real estate activities
Professional, scientific and technical activities
Administrative and support service activities
Public administration and defense, compulsory social security
Education
Human health services and social work activities
Arts, entertainment and recreation
Other services
Households
LOANS AND ADVANCES
Non-performing
Accumulated
impairment or
Accumulated
changes in fair value
due to credit risk
Non-
performing
loans and
advances as a
% of the total
166
4
3
7,138
95
28
835
105
27
2,828
1,197
125
288
80
960
181
148
4
20
38
55
124
5,934
13,244
(44)
(5)
(8)
(4,538)
(52)
(16)
(517)
(52)
(10)
(1,656)
(690)
(69)
(122)
(52)
(900)
(118)
(93)
(3)
(9)
(13)
(27)
(139)
(2,332)
(6,927)
0.8%
-
-
9.0%
7.1%
1.8%
5.6%
2.0%
4.8%
24.1%
11.6%
2.8%
9.5%
2.4%
9.7%
5.6%
7.0%
2.8%
9.4%
5.2%
8.7%
2.1%
5.9%
5.4%
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 52). 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.
P. 60
December 2016 (Millions of euros)
100 Basis-Point Increase
100 Basis-Point Decrease
100 Basis-Point Increase
100 Basis-Point Decrease
Agriculture, forestry and fishing
Mining and quarrying
Manufacturing
Electricity, gas, steam and air conditioning supply
Water supply
Construction
Wholesale and retail trade
Transport and storage
Accommodation and food service activities
Information and communication
Real estate activities
Professional, scientific and technical activities
Administrative and support service activities
Public administration and defense, compulsory social security
Education
Human health services and social work activities
Arts, entertainment and recreation
Other services
Households
LOANS AND ADVANCES
Non-performing
Accumulated
impairment or
Accumulated
changes in fair value
due to credit risk
Non-
performing
loans and
advances as a
% of the total
292
5
8
(41)
(13)
(14)
10,412
(6,851)
104
32
1,099
128
26
5,098
1,205
129
408
88
1,246
382
148
10
20
32
61
195
6,024
16,741
(56)
(28)
(668)
(84)
(7)
(3,150)
(801)
(80)
(173)
(41)
(760)
(293)
(82)
(9)
(9)
(11)
(29)
(572)
(2,508)
(9,428)
1.3%
-
0.1%
12.6%
8.1%
2.1%
7.7%
1.9%
3.9%
33.5%
12.1%
3.4%
13.1%
3.4%
11.5%
12.5%
5.8%
5.0%
9.3%
4.3%
10.4%
3.7%
5.8%
6.8%
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 52). 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 the year 2017 and 2016 of impaired financial assets and guarantees are as follow:
Changes in Impaired Financial Assets and Contingent Risks (Millions of euros)
Balance at the beginning
1) Additions
2) Decreases
Net additions (1)+(2)
Transfers to write-off
Exchange differences and others (*)
Balance at the end
Recoveries on entries (%)
2017
17,507
3,606
(4,215)
(608)
(3,078)
35
13,856
117%
P. 61
2016
17,017
4,420
(4,405)
15
(3,336)
3,811
17,507
100%
(*) Reflects the total amount of impaired loans derecognized from the balance sheet throughout the period as a
result of mortgage foreclosures and real estate assets received in lieu of payment as well as monetary
recoveries (see Note 19 to the consolidated financial statement for additional information).
The changes in the year 2017 and 2016 in financial assets derecognized from the accompanying balance
sheet as their recovery is considered unlikely (hereinafter "write-offs"), is shown below:
Changes in Impaired Financial Assets Written-Off from the Balance Sheet (Millions of euros)
Balance at the beginning
Increase:
Assets of remote collectability
Past-due and not collected income
Contributions by mergers
Decrease:
Re-financing or restructuring
Cash recovery
Foreclosed assets
Sales of written-off
Debt forgiveness
Time-barred debt and other causes
Net exchange differences
Balance at the end
Notes
42
2017
21,601
3,934
3,078
856
-
2016
16,905
6,421
3,336
1,180
1,905
(2,434)
(1,728)
(7)
(446)
(88)
(460)
(1,105)
(328)
(11)
23,090
(31)
(448)
(150)
-
(845)
(254)
3
21,601
As indicated in Note 2.2.1, although they have been derecognized from the balance sheet, the BBVA Group
continues to attempt to collect on these written-off financial assets, until the rights to receive them are fully
extinguished, either because it is time-barred financial asset, the financial asset is condoned, or other
reasons.
5.3.5 Impaired assets and impairment losses
The table below shows the composition of the impaired financial assets and guarantees given as of
December 31, 2017 and 2016, broken down by heading in the accompanying balance sheet:
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 52). 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.
December 2017 (Millions of euros)
Equity instruments
Specific allowances for financial assets, individually and collectively
estimated
Debt securities
Central banks
General governments
Credit institutions
Other financial corporations
Non-financial corporations
Loans and advances
Central banks
General governments
Credit institutions
Other financial corporations
Non-financial corporations
Households
Collective allowances for incurred but not reported losses on financial assets
Debt securities
Loans and advances
Total
Opening balance
Increases due to amounts set
aside for estimated loan
losses during the period
Decreases due to amounts
reversed for estimated loan
losses during the period
Decreases due to
amounts taken against
allowances
Transfers between
allowances
Other adjustments
Closing balance
(7,884)
(120)
-
-
(15)
(2)
(103)
(7,765)
-
(39)
(5)
(3)
(5,963)
(1,754)
(1,691)
(27)
(1,663)
(9,575)
(3,171)
(21)
-
-
(5)
-
(17)
2,100
3,075
4
-
-
4
-
-
-
-
-
-
-
-
(3,150)
2,096
3,075
-
(50)
-
-
(2,443)
(656)
(408)
(3)
(405)
(3,579)
-
33
2
1
1,848
212
579
20
559
2,679
-
14
-
23
2,628
411
2
-
2
3,078
279
123
-
-
16
-
107
156
-
-
-
(23)
63
116
161
-
161
440
4
-
-
-
-
-
-
4
-
-
-
-
4
-
3
-
3
7
(5,597)
(14)
-
-
-
(2)
(12)
(5,583)
-
(42)
(4)
(2)
(3,863)
(1,672)
(1,353)
(10)
(1,343)
(6,950)
P. 62
Recoveries recorded
directly to the
statement of profit or
loss
446
-
-
-
-
-
-
446
-
1
-
-
305
140
-
-
-
446
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 52). 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.
December 2016 (Millions of euros)
Equity instruments
Specific allowances for financial assets, individually and collectively
estimated
Debt securities
Central Banks
General governments
Credit institutions
Other financial corporations
Non-financial corporations
Loans and advances
Central Banks
General governments
Credit institutions
Other financial corporations
Non-financial corporations
Households
Collective allowances for incurred but not reported losses on financial assets
Debt securities
Loans and advances
Total
Opening balance
Increases due to amounts set
aside for estimated loan
losses during the period
Decreases due to amounts
reversed for estimated loan
losses during the period
Decreases due to
amounts taken against
allowances
Transfers between
allowances
Other adjustments
(*)
Closing balance
P. 63
Recoveries recorded
directly to the
statement of profit or
loss
(7,248)
(21)
-
-
(20)
(2)
-
(7,227)
-
(27)
(16)
(8)
(5,868)
(1,307)
(1,423)
(68)
(1,355)
(8,672)
(3,761)
(164)
-
-
-
(26)
(138)
(3,597)
-
1
-
2
(2,733)
(867)
262
(12)
274
(3,500)
1,857
3,330
501
3
-
-
-
-
3
64
-
-
5
26
33
1,854
3,267
-
19
-
7
1,548
279
264
-
264
2,121
-
6
-
-
2,803
458
5
-
5
3,336
-
-
-
-
-
-
501
-
(28)
10
4
30
484
194
53
142
696
(2,563)
(1)
-
-
-
-
(1)
(2,562)
-
(10)
-
(9)
(1,742)
(801)
(993)
-
(993)
(3,556)
(7,884)
(120)
-
-
(15)
(2)
(103)
(7,765)
-
(39)
(5)
(3)
(5,963)
(1,754)
(1,691)
(27)
(1,663)
(9,575)
448
-
-
-
-
-
-
448
-
1
-
-
279
168
-
-
-
448
(*) Includes the impact of the merger of Catalunya Banc
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 52). 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.
P. 64
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 credit spread. 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.
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 52). 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.
P. 65
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 70% and 66% of the Group’s trading-
book market risk. For the rest of the geographical areas (South America, Garanti 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 BBVA´s business units.
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 except in
BBVA Chile and BBVA Colombia, where historical simulation methodolody is used.
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: Incremental Risk Capital (“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.
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 52). 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.
P. 66
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 2017
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. In 2017, the market risk of
trading book decrease slightly versus the previous year and, in terms of VaR, stood at €9 million at the close
of the period.
The average VaR for 2017 stood at €12 million, in comparison with the €11 million registered in 2016, with a
high for the year on day March 24, 2017 at €16 million.
20
10
VaR (non-smothed)
0
J-17
F-17 M-17
A-17 M-17
J-17
J-17
A-17
S-17 O-17
N-17
D-17
By type of market risk assumed by the Bank’s trading portfolio, the main risk factor in BBVA is linked to
Volatility and correlation, accounting for 42% of the total weight at the end of 2017, increasing its relative
weight (vs. 36% at the end of 2016). Interest rates (this figure includes the spread risk) amounts 31%,, its
relative weight is lower than the figure at the end of 2016 (46%). Exchange-rate risk accounts for 16%, an
increase on the figure 12 months prior (14%), while equity risk accounts for 11%, higher than the 4%
accounted at the end of 2016.
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 52). 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.
P. 67
Market risk by risk factor (Millions of euros)
Interest + credit spread
Exchange rate
Equity
Volatility
Diversification effect (*)
Total
Average VaR
Maximum VaR
Minimum VaR
2017
2016
8
4
3
11
(18)
9
12
16
8
12
4
1
10
(16)
11
11
15
8
(*) 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 BBVA, S.A. is adequate and precise.
Two types of backtesting have been carried out in 2017:
"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 the period between the end of 2016 and the end of 2017, it was carried out the 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.
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principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 52). 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.
P. 68
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 January 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).
5.4.2 Structural risk
The Assets and Liabilities Committee (ALCO) is the main responsible body for the management of structural
risks relating to liquidity/funding, interest rates, currency rates, equity and solvency. Every month, with the
assistance of the CEO and representatives from the areas of Finance, Risks and Business Areas, this
committee monitors the above risks and is presented with proposals for managing them for its approval.
These management proposals are made proactively by the Finance area, taking into account the risk
appetite framework and with the aim of guaranteeing recurrent earnings and financial stability and
preserving the entity's solvency. All the balance-sheet management units have a local ALCO, assisted
constantly by the members of the Corporate Center. There is also a corporate ALCO where the management
strategies in the Group's subsidiaries are monitored and presented.
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: reprising 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).
ALCO monitors the interest-rate risk metrics and the Assets and Liabilities Management unit carries out the
management proposals for the structural balance sheet. The management objective is to ensure the stability
of net interest income and book value in the face of changes in market interest rates, while respecting the
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 52). 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.
P. 69
internal solvency and limits in the different balance-sheets and for BBVA Group as a whole; and complying
with current and future regulatory requirements.
BBVA's structural interest-rate risk management control and monitoring 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 exposures of the Banking book are subjected to different stress
scenarios 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 criterions
are established, consistent with an adequate segmentation by type of product and customer, and
prepayment estimates (implicit optionality). The hypotheses are reviewed and adapted, at least on an annual
basis, 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 2017 in Europe monetary policy has remained expansionary, maintaining rates at 0%. In The United States
the rising rate cycle initiated by the Federal Reserve in 2015 has been intensified. In Mexico and Turkey, the
upward cycle has continued because of weak currencies and inflation prospects. In South America,
monetary policy has been expansive, with rate declines in most of the economies where the Group operates,
with the exception of Argentina, where rates increased during 2017.
BBVA mantains his positive sensitivity to interest rate upshocks related to both Net Interest Income and
Economic Value. Risk to downshocks remains at bounded levels in 2017, in accordance with the Risk Apetite
Framework, and constrained by the small room to down-shocks.
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.
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 52). 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.
P. 70
Structural management of equity portfolios is the responsibility of the BBVA 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.
The BBVA 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.
Structural equity risk, measured in terms of economic capital, has decreased in the period as a result of the
reduction of the stake in China Citic Bank, along with lower positioning in some sectors. 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.
Backtesting is carried out on a regular basis on the risk measurement model used.
With regard to the equity markets, the world indexes have closed the year 2017 with significant increases
helped by a positive macro environment. However, the European indexes, and especially the Spanish one,
have lagged despite their positive performance. In the case of the IBEX (+7% in the year), the index have
been partly penalized in the second half of the year by the political tensions in Catalonia.
5.4.3 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.
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principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 52). 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.
P. 71
The assets and liabilities subject to contractual netting rights at the time of their settlement are presented
below as of December 31, 2017.
December 2017(Millions of euros)
Gross Amounts Not Offset in the
Condensed Consolidated Balance
Sheets (D)
Gross Amounts
Recognized (A)
Gross Amounts
Offset in the
Condensed
Consolidated
Balance Sheets (B)
Net Amount
Presented in the
Condensed
Consolidated Balance
Sheets (C=A-B)
Financial
Instruments
Cash Collateral
Received/
Pledged
Net Amount
(E=C-D)
Trading and hedging derivatives
Reverse repurchase, securities borrowing
and similar agreements
Total Assets
Trading and hedging derivatives
Repurchase, securities lending and similar
agreements
Total Liabillities
49,681
25,447
75,127
49,209
29,628
78,837
11,584
-
11,584
11,785
-
11,785
38,097
25,447
63,543
37,424
29,628
67,052
28,583
25,739
54,323
28,584
29,718
58,302
6,487
3,027
141
-434
6,628
7,247
2,593
1,594
20
-111
7,267
1,483
The amount of recognized financial
in case of
compensation with counterparties with which the bank holds netting agreements, while, for repos, it reflects
the market value of the collateral associated with the transaction.
instruments within derivatives
includes the effect
5.5 Liquidity risk
5.5.1
Management of liquidity
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 several BBVA Group entities, which must cover their
liquidity needs independently in the markets where they operate. Liquidity Management Units (LMUs) 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., within the Euro currency scope, which includes BBVA Portugal.
A liquidity pool is maintained at an individual entity level, both in BBVA, S.A. and in the banking
subsidiaries.The table below shows the liquidity available by instrument as of December 31, 2017 based on
the prudential supervisory information:
December 2017 (Millions of Euros)
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
BBVA Eurozone (1)
15,634
47,429
26,784
20,836
20,645
-
7,987
71,050
67,823
(1)
Includes BBVA, S.A., Banco Bilbao Vizcaya Argentaria (Portugal), S.A. and rest of Eurasia.
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 52). 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.
P. 72
December 2016 (Millions of Euros)
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
(1)
Includes BBVA, S.A. and Banco Bilbao Vizcaya Argentaria (Portugal), S.A.
BBVA Eurozone (1)
16,038
50,706
30,702
23,353
20,005
-
6,884
73,629
68,322
Assets and Liabilities Management unit manages BBVA Group's liquidity and funding. It plans and executes
the funding of the long-term structural gap of each LMUs and proposes to ALCO the actions to adopt in this
regard in accordance with the policies and limits established by the Standing Committee.
As first core element, The Bank's target in terms of liquidity and funding risk is characterized through the
Liquidity Coverage Ratio (LCR) and the Loan-to-Stable-Customer-Deposits (LtSCD) ratio. LCR is a
regulatory measurement aimed at ensuring entities’ resistance in a scenario of liquidity stress within a time
horizon of 30 days. BBVA, within its risk appetite framework and its limits and alerts scheme, has established
a level of requirement for compliance with the LCR ratio both for the Group as a whole and for each of the
LMUs individually. The internal levels required are geared to comply sufficiently and efficiently in advance
with the implementation of the regulatory requirement of 2018, at a level above 100%.
LCR ratio in Europe came into force on 1st October 2015, with an initial 60% minimum requirement,
progressively increased (phased-in) up to 100% in 2018. Throughout the year 2017, LCR level at BBVA
Group has been comfortably above 100%. As of December 2017, the ratio level is 128%. Although this
regulatory requirement is mandatory at a Group level and Eurozone banks, BBVA is also well above this
minimum.
The LtSCD measures the relation between the net credit investment and stable funds.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.
Customer funds captured and managed by business units are defined as stable customer funds. These funds
usually show little sensitivity to market changes and are largely non-volatile in terms of aggregate amounts
per operation, thanks to customer linkage to the unit. Stable funds in each LMU are calculated by analyzing
the behavior of the balance sheets of the different customer segments identified as likely to provide stability
to the funding structure, and by prioritizing an established relationship and applying bigger haircuts to the
funding lines of less stable customers. The main base of stable funds is composed of deposits by individual
customers and small businesses.
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.
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principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 52). 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.
P. 73
The second core element in liquidity and funding risk management is to achieve proper diversification of the
funding structure, avoiding excessive reliance on short-term funding and establishing a maximum level of
short-term borrowing comprising both wholesale funding as well as funds from customers. Regarding long-
term funding, the maturity profile does not show significant concentrations, which enables adaptation of the
anticipated issuance schedule to the best financial conditions of the markets. Finally, concentration risk is
monitored at the LMU level, with a view to ensuring the right diversification both per counterparty and per
instrument type.
The third core 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 internal 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.
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 as well as establish
tolerance ranges at different management levels. 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 liquid assets to meet the
liquidity commitments/outflows in the various 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, during a period in general longer than 3 months for LMUs, including a
major downgrade in the bank's rating (by up to three notches).
Beside the results of stress exercises and risk metrics, Early Warning Indicators play an important role in the
corporate model and also in the Liquidity Contingency Plan. These are mainly financing structure indicators,
related to asset encumbrance, counterparty concentration, outflows of customer deposits, unexpected use
of credit lines, and market indicators, which help to anticipate potential risks and capture market
expectations.
In the Euro Liquidity Management Unit (LMU), solid liquidity and funding situation, where activity has
continued to generate liquidity through the decrease of Credit Gap and the good performance of the
customer liabilities. In addition, during 2017 the Euro LMU made issues in the public market for €7,100
million, which has allowed it to obtain funding at favorable price conditions.
In this context, 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.
Below is a breakdown by contractual maturity of the balances of certain headings in the accompanying
balance sheets, excluding any valuation adjustments or impairment losses:
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 52). 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.
P. 74
December 2017. Contractual Maturities (Millions of euros)
Demand
Up to 1 Month
1 to 3 Months
3 to 6 Months
6 to 9
Months
9 to 12
Months
1 to 2 Years 2 to 3 Years
3 to 5 Years Over 5 Years
Total
ASSETS
Cash, cash balances at central banks and other demand deposits
2,857
14,093
Deposits in credit entities
Deposits in other financial institutions
Reverse repo, securities borrowing and margin lending
Loans and Advances
Securities' portfolio settlement
December 2017. Contractual Maturities (Millions of euros)
-
-
-
-
-
489
1,218
17,107
9,092
570
-
35
2,467
3,999
-
28
212
1,921
-
10
100
340
-
10
192
426
-
-
227
815
-
11
352
30
-
-
488
727
-
16,949
1,328
2,181
1,911
7,438
226
25,590
12,393
11,915
5,944
7,454
16,831
16,024
23,041
80,806
183,500
2,480
1,698
1,707
11,755
2,872
2,657
2,634
28,564
54,937
Demand
Up to 1 Month
1 to 3 Months
3 to 6 Months
6 to 9
Months
9 to 12
Months
1 to 2 Years 2 to 3 Years
3 to 5 Years Over 5 Years
Total
LIABILITIES
Wholesale funding
Deposits in financial institutions
-
1,767
10,360
Deposits in other financial institutions and international agencies
122,207
Customer deposits
Securitiy pledge funding
-
-
929
4,242
3,909
9,441
28,559
(25)
1,443
1,041
1,393
9,732
3,118
(29)
1,327
444
340
145
64
166
101
169
140
253
130
224
7,271
5,556
6,715
4,993
1,911
1,456
86
376
35
766
43
113
337
23,675
89
51
415
881
385
13
1,357
9,337
3,192
20,421
1,608
170,315
1,620
60,068
322
870
1,144
1,587
3,328
11,354
20,459
41,716
Figures originally reported in the year 2016 in accordance to the applicable regulation, without restatements.
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 52). 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.
P. 75
December 2016. Contractual Maturities (Millions of euros)
Demand
Up to 1 Month
1 to 3 Months
3 to 6 Months 6 to 9 Months 9 to 12 Months 1 to 2 Years
2 to 3 Years
3 to 5 Years Over 5 Years
Total
ASSETS
Cash, cash balances at central banks and other demand
deposits
3,399
13,099
-
-
-
-
-
739
669
18,620
9,122
225
-
61
2,071
1,500
14,371
2,491
-
49
205
523
8,299
2,380
-
105
88
-
6,183
1,125
-
428
380
428
-
1
2,463
500
-
-
426
285
-
28
666
124
-
16,497
1,929
1,983
3,339
8,952
189
22,170
6,485
16,923
14,089
24,690
85,541
185,702
2,744
13,648
4,094
5,337
31,151
63,196
Demand
Up to 1 Month
1 to 3 Months
3 to 6 Months 6 to 9 Months 9 to 12 Months 1 to 2 Years
2 to 3 Years
3 to 5 Years Over 5 Years
Total
-
1,949
12,670
96,186
-
-
7,026
3,558
4,502
10,172
22,791
(2,017)
1,980
469
6,039
11,116
3,327
(1)
3,938
1,768
4,603
4,740
1,687
8,465
21,263
55,470
196
396
2,013
9,852
522
(1)
1,693
8,947
486
(3)
332
761
53
5
10
4
9,442
5,368
4,647
912
4
51
-
174
(1)
-
2,328
9,291
51
775
253
27,992
1,875
158,379
23,795
1,608
53,666
-
-
(2,018)
Figures originally reported in the year 2016 in accordance to the applicable regulation, without restatements.
Deposits in credit entities
Deposits in other financial institutions
Reverse repo, securities borrowing and margin lending
Loans and Advances
Securities' portfolio settlement
December 2016. Contractual Maturities (Millions of euros)
LIABILITIES
Wholesale funding
Deposits in financial institutions
Deposits in other financial institutions and international
agencies
Customer deposits
Securitiy pledge funding
Derivatives, net
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 52). 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.
P. 76
5.5.2 Encumbered Assets
As of December 31, 2017, the encumbered (given as collateral for certain liabilities) and unencumbered
assets ate broken down as follows:
2017 Assets (Millions of euros)
Equity instruments
Debt Securities
Other assets
Encumbered assets
Unencumbered assets
Book value
Fair value
Book value
Fair Value
2,296
12,871
64,844
2,296
12,793
6,285
35,499
169,534
6,262
35,187
The committed value of "Loans and Advances and other assets" corresponds mainly to loans linked to the
issue of covered bonds, territorial bonds or long-term securitized bonds (see Note 20) as well as those used
as a guarantee to access certain funding transactions with central banks. Debt securities and equity
instruments respond to underlying that are delivered in repos with different types of counterparties, mainly
clearing houses or credit institutions, and to a lesser extent central banks. Collateral provided to guarantee
derivative operations is also included as committed assets.
As of December 31, 2017 collateral pledge mainly due to repurchase agreements and securities lending, and
those which could be committed in order to obtain funding are provided below:
2017 Collateral received (Millions of euros)
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
Fair value of collateral
received or own debt
securities issued not available
for encumbrance
74
21,235
-
3
5
8,098
-
161
-
-
-
-
As of December 31, 2017, financial liabilities issued related to encumbered assets in financial transactions as
well as their book value were as follows:
2017 Sources of encumbrance (Millions of euros)
Matching liabilities, contingent liabilities
or securities lent
Assets, collateral received and own
debt securities issued other than covered
bonds and ABSs encumbered
Book value of financial liabilities
Derivatives
Loans and Advances
Outstanding subordinated debt
Other sources
5.6 Operational Risk
7,994
60,408
18,785
1,480
7,995
68,767
23,079
1,480
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.
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 52). 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.
P. 77
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:
• Knowledge of the real losses associated with this type of risk.
•
Identification, prioritization and management of real and potential risks.
• The existence of indicators that enable the Bank to analyze operational risk over time, define warning
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.
Model based on three lines of defense, aligned with international best practices.
Operational Risk Management Principles
Operational risk management in BBVA Group should:
Be aligned with the risk appetite framework 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.
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 52). 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.
P. 78
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.
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 a financial 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 financial assets and
liabilities 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 financial 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 Risk Analytics that reports to Global Risk Management.
Additionally, for financial 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:
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 52). 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.
P. 79
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 significant 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, 2017, the affected instruments accounted for approximately 0.16%
of financial assets and 0.03% of the Group’s financial liabilities registered at fair value. Model selection
and validation is undertaken by control areas outside the market area.
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 (Millions of euros)
ASSETS
Cash and balances with central banks
Financial assets held for trading
Financial assets designated at fair value through profit or loss
Available-for-sale financial assets
Loans and receivables
Held-to-maturity investments
Derivatives – Hedge accounting
LIABILITIES
Financial liabilities held for trading
Financial liabilities at amortized cost
Hedging derivatives
2017
2016
Notes
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
7
8
9
10
11
12
13
8
20
13
18,503
50,424
648
18,503
50,424
648
15,855
57,440
-
15,855
57,440
-
24,205
24,205
29,004
29,004
244,232
245,865
251,487
253,285
8,355
1,561
8,402
1,561
11,424
11,507
1,586
1,586
43,703
43,703
48,265
48,265
305,797
308,546
319,884
324,812
1,327
1,327
1,488
1,488
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.
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 52). 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.
P. 80
6.1 Fair value of certain financial instruments registered at fair value
using valuation criteria
The following table shows the 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 of financial Instruments by Levels (Millions of euros)
ASSETS
Financial assets held for trading
8
14,768
35,368
288
16,053
41,207
180
Notes
2017
2016
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
-
168
33
-
20
80
35,167
187
Loans and advances
Debt securities
Equity instruments
Derivatives
Financial assets designated at fair value through
profit or loss
Available-for-sale financial assets
Debt securities
Equity instruments
Hedging Derivatives
LIABILITIES
Financial liabilities held for trading
Derivatives
Short positions
Hedging Derivatives
9
10
13
8
13
-
7,498
6,089
1,181
-
23,473
21,193
2,280
648
488
480
8
-
1,561
8,710
1,105
7,606
34,874
34,874
-
-
1,327
-
11,109
3,769
1,175
-
28,066
24,717
3,349
-
412
7
40,788
-
752
751
1
-
1,586
8,230
39,989
916
39,989
7,314
-
-
1,488
-
24
96
60
-
30
30
-
-
47
47
-
-
-
160
154
6
-
119
119
-
-
The heading “Available-for-sale financial assets” in the accompanying balance sheets as of December 31,
2017 and 2016 additionally includes €84 and €156 million, respectively, accounted for at cost, as indicated in
the section of this Note entitled “Financial instruments at cost”. Also, under the heading "Financial assets
designated at fair value through profit or loss" includes a balance of €648 million euros, classified as Level 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 52). 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.
P. 81
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, 2017:
December 2017. Fair Value of financial Instruments by Levels (Millions of euros).
Level 2
Level 3
Valuation technique(s)
Observable inputs
Unobservable inputs
ASSETS
Financial assets held for trading
35,368
288
Loans and advances
Debt securities
Equity instruments
Derivatives
Interest rate
Equity
Foreign exchange and gold
Credit
Commodities
Financial assets designated at fair value through profit or loss
Loans and advances
Debt securities
Equity instruments
Available-for-sale financial assets
Debt securities
Equity instruments
Hedging derivatives
Interest rate
Equity
Foreign exchange and gold
Credit
Commodities
-
168
33
-
20
80
Present-value method
(Discounted future cash flows)
Present-value method
(Discounted future cash flows)
Comparable pricing (Observable price in a similar market)
Present-value method
35,167
187
- Issuer´s credit risk
- Current market interest rates
- Issuer´s credit risk
- Current market interest rates
- Brokers quotes
- Market operations
- NAVs published
- Prepayment rates
- Issuer credit risk
- Recovery rates
- Prepayment rates
- Issuer´s credit risk
- Recovery rates
- NAV provided by the administrator of the fund
Interest rate products (Interest rate swaps, Call money Swaps y FRA): Discounted cash flows
Caps/Floors: Black, Hull-White y SABR
Bond options: Black
Future and Equity Forward: Discounted future cash flows
Equity Options: Local Volatility, Moment adjustment
Future and Equity Forward: Discounted future cash flows
Foreign exchange Options: Local Volatility, moments ajustment
Credit Derivatives: Default model and Gaussian copula
Commodities: Moment adjustment and Discounted cash flows
- Exchange rates
- Market quoted future prices
- Market interest rates
- Underlying assests prices: shares, funds,
commodities
- Market observable volatilities
- Issuer credit spread levels
- Quoted dividends
- Market listed correlations
- Beta
- Correlation between tenors
- Interes rates volatility
- Volatility of volatility
- Assets correlation
- Volatility of volatility
- Assets correlation
- Correlation default
- Credit spread
- Recovery rates
648
648
-
-
488
480
8
1,561
-
-
-
-
160
154
6
-
Present-value method
(Discounted future cash flows)
Present-value method
(Discounted future cash flows)
Comparable pricing (Observable price in a similar market)
Present-value method
Present-value method
(Discounted future cash flows)
Comparable pricing (Observable price in a similar market)
Present-value method
- Issuer credit risk
- Current market interest rates
- Issuer credit risk
- Current market interest rates
- Brokers quotes
- Market operations
- NAVs published
- Issuer´s credit risk
- Current market interest rates
- Brokers quotes
- Market operations
- NAVs published
- Prepayment rates
- Issuer credit risk
- Recovery rates
- Prepayment rates
- Issuer credit risk
- Recovery rates
- NAV provided by the administrator of the fund
- Prepayment rates
- Issuer credit risk
- Recovery rates
- NAV provided by the administrator of the fund
Interest rate products (Interest rate swaps, Call money Swaps y FRA): Discounted cash flows
Caps/Floors: Black, Hull-White y SABR
Bond options: Black
Future and Equity Forward: Discounted future cash flows
Equity Options: Local Volatility, Moment adjustment
Future and Equity Forward: Discounted future cash flows
Foreign exchange Options: Local Volatility, moments ajustment
Credit Derivatives: Default model and Gaussian copula
Commodities: Moment adjustment and Discounted cash flows
- Exchange rates
- Market quoted future prices
- Market interest rates
- Underlying assests prices: shares, funds,
commodities
- Market observable volatilities
- Issuer credit spread levels
- Quoted dividends
- Market listed correlations
- Beta
- Correlation rate/credit
- Credit default volatility
- Volatility of volatility
- Interest rate yields
- Dividends
- Correlatio default
- Credit spread
- Recovery rates
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 52). 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.
P. 82
December 2017. Fair Value of financial Instruments by Levels (Millions of euros).
Level 2
Level 3
Valuation technique(s)
Observable inputs
Unobservable inputs
LIABILITIES-
Financial liabilities held for trading
Derivatives
Interest rate
Equity
Foreign exchange and gold
Credit
Commodities
Short positions
Financial liabilities designated at fair value through profit or loss
34,874
34,874
119
119
Interest rate products (Interest rate swaps, Call money Swaps y FRA): Discounted cash flows
Caps/Floors: Black, Hull-White y SABR
Bond options: Black
Swaptions: Black, Hull-White y LGM
Other Interest rate options: Black, Hull-White y LGM
Constant Maturity Swaps: SABR
Future and Equity Forward: Discounted future cash flows
Equity Options: Local Volatility, Moment adjustment
Future and Equity Forward: Discounted future cash flows
Foreign exchange Options: Local Volatility, moments ajustment
Credit Derivatives: Default model and Gaussian copula
Commodities: Moment adjustment and Discounted cash flows
-
-
-
Present-value method
(Discounted future cash flows)
-
Present-value method
(Discounted future cash flows)
Derivatives – Hedge accounting
1,327
-
Interest rate
Equity
Foreign exchange and gold
Credit
Commodities
Interest rate products (Interest rate swaps, Call money Swaps y FRA): Discounted cash flows
Caps/Floors: Black, Hull-White y SABR
Bond options: Black
Swaptions: Black, Hull-White y LGM
Other Interest rate options: Black, Hull-White y LGM
Constant Maturity Swaps: SABR
Future and Equity Forward: Discounted future cash flows
Equity Options: Local Volatility, Moment adjustment
Future and Equity Forward: Discounted future cash flows
Foreign exchange Options: Local Volatility, moments ajustment
Credit Derivatives: Default model and Gaussian copula
Commodities: Moment adjustment and Discounted cash flows
- Exchange rates
- Market quoted future prices
- Market interest rates
- Underlying assests prices: shares, funds,
commodities
- Market observable volatilities
- Issuer credit spread levels
- Quoted dividends
- Market listed correlations
- Issuer credit risk
- Current market interest rates
- Prepayment rates
- Issuer´s credit risk
- Current market interest rates
- Exchange rates
- Market quoted future prices
- Market interest rates
- Underlying assests prices: shares, funds,
commodities
- Market observable volatilities
- Issuer credit spread levels
- Quoted dividends
- Market listed correlations
- Beta
- Correlation between tenors
- Interes rates volatility
- Volatility of volatility
- Assets correlation
- Volatility of volatility
- Assets correlation
- Correlation default
- Credit spread
- Recovery rates
- Interest rate yield
- Default volatility
- Correlation default
- Credit spread
- Recovery rates
- Interest rate yield
- Beta
- Correlation between tenors
- Interes rates volatility
- Volatility of volatility
- Assets correlation
- Volatility of volatility
- Assets correlation
- Correlatio default
- Credit spread
- Recovery rates
- Interest rate yield
- Default volatility
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 52). 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.
P. 83
Quantitative information of non-observable inputs used to calculate Level 3 valuations is presented below:
Financial instrument
Valuation
technique(s)
Significant
unobservable inputs
Min
Max
Average
Units
Debt Securities
Equity instruments
Credit Option
Corporate Bond Option
Net Present Value
Comparable pricing
Net Asset Value
Comparable pricing
Gaussian Copula
Credit Spread
Recovery Rate
-
7.70%
-
78.27
32.70%
82.15%
399.93
34.58%
207.70%
b.p.
%
%
Correlation Default
35.19%
43.92%
57.82%
%
Black 76
Price Volatility
-
-
-
vegas
Heston
Forward Volatility Skew
56.63
56.63
56.63
vegas
Equity OTC Option
Local Volatility
Dividends
Volatility
FX OTC Options
Black Scholes/Local Vol Volatility
Beta
1.89
0.78
0.25
Interest Rate Option
Libor Market Model
Correlation Rate/Credit
(100)
Credit Default Volatility
-
22.96
77.03
vegas
7.67
9.00
-
-
15.47
vegas
18.00
100
%
%
-
vegas
The main 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 comparable instrument.
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.
Black 76: variant of Black Scholes model, which main application is the valuation of bond options, caps
floors and swaptions to directly model the behavior of the Forward and not the own Spot.
Black Scholes: The Black Scholes model postulates log-normal distribution for the prices of securities, so
that the expected return under the risk neutral measure is the risk free interest rate. Under this
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 52). 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.
P. 84
assumption, the price of vanilla options can be obtained analytically, so that inverting the Black- Scholes
formula, the implied volatility for process of the price can be calculated.
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
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.
instrument. As opposed to
local volatility models,
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.
Local Volatility: In the local volatility models of the volatility, instead of being static, evolves over time
according to the level of moneyness of the underlying, capturing the existence of smiles. These models
are appropriate for pricing path dependent options when use Monte Carlo simulation technique is used.
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 our own, respectively.
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) to 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, 2017 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), increased to €-125 million and €39 million, respectively. The impact recorded under
“Gains or (-) losses on financial assets and liabilities held for trading, net” in the income statement
corresponding to the mentioned adjustments was a net impact of €-25 million. Additionally, as of December
31, 2017, €-10 million related to the “Funding Valuation Adjustments” (“FVA”) were recognized in the
consolidated balance sheet.
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 52). 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.
P. 85
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 during the year 2017 and 2016, are as follows:
Financial Assets Level 3. Changes in the Period (Millions of euros)
Balance at the beginning
Changes in fair value recognized in profit and loss (*)
Changes in fair value not recognized in profit and loss
Acquisitions, disposals and liquidations
Net transfers to level 3
Exchange differences and others
Balance at the end
2017
2016
Assets
Liabilities
Assets
Liabilities
210
(20)
(5)
180
82
-
448
47
(26)
-
98
-
-
119
180
36
-
(23)
16
-
210
37
(6)
-
15
-
-
47
(*) Corresponds to securities remain in balance as of December 31, 2017 and 2016.
Valuation adjustments are recorded in the income statement under the heading "Gains or losses on financial
assets and liabilities designated at fair value through profit or loss"
In 2017, 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 financials instruments held for trading 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.
The financial instruments transferred between the different levels of measurement in 2017 are at the
following amounts in the accompanying balance sheets as of December 31, 2017:
Transfer between levels (Millions of euros)
ASSETS
Financial assets held for trading
Available-for-sale financial assets
Hedging Derivatives
Total
LIABILITIES-
Total
From:
Level I
Level 2
Level 3
To:
Level 2
Level 3
Level 1
Level 3
Level 1
Level 2
14
101
115
-
-
1
50
50
-
-
38
130
169
-
-
7
25
31
-
-
-
-
-
-
-
-
-
-
-
-
The amount of financial instruments that were transferred between levels of valuation for 2017 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:
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 52). 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.
P. 86
The transfers between Tier 1 and 2 were generally produced mainly in debt securities, which are either no
longer listed on an active market (transfer from Tier 1 to 2) or are just starting to be listed (transfer from
Tier 2 to 1).
The transfers from Tier 2 to Tier 3 are mainly as a result of equity issuances.
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, 2017, 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 (Millions of euros)
Potential Impact on Consolidated Income
Statement
Potential Impact on Total Equity
Most Favorable
Hypothesis
Least Favorable
Hypothesis
Most Favorable
Hypothesis
Least Favorable
Hypothesis
ASSETS
Financial assets held for trading
Available-for-sale financial assets
Hedging Derivatives
LIABILITIES-
Financial liabilities held for trading
Total
7
-
-
-
1
7
(18)
-
-
-
-
(18)
-
12
-
-
-
12
-
(20)
-
-
-
(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 52). 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.
P. 87
6.2 Fair value of financial instruments carried at cost
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 and other demand deposits" has been assimilated
to their book value, as it is mainly short-term balances.
The fair value of the "Loans and receivables", Held to maturity unlisted investments” 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 credit spreads and
prepayment rates 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:
Fair Value of financial Instruments at amortized cost by Levels (Millions of euros)
Notes
2017
2016
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
ASSETS-
Cash and cash balances at central banks
Loans and receivables
Held-to-maturity investments
LIABILITIES-
Financial liabilities at amortized cost
7
11
12
20
18,503
-
-
15,855
-
-
-
9,271
236,593
-
10,991
242,293
8,392
10
-
11,496
11
-
-
-
308,546
-
-
324,812
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, 2017:
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 52). 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.
P. 88
Fair Value of financial Instruments by Levels (Millions of euros)
Level 2
Level 3
Valuation technique(s)
Observable inputs
ASSETS
Loans and receivables
9,271 236,593
Central Banks
-
28
Loans and advances to credit
institutions
-
22,491
Present-value method
(Discounted future cash flows)
- Credit spread
- Prepayment rates
- Interest rate yield
- Credit spread
- Prepayment rates
- Interest rate yield
- Credit spread
- Prepayment rates
- Interest rate yield
- Credit spread
- Interest rate yield
Present-value method
(Discounted future cash flows)
- Credit spread
- Interest rate yield
Present-value method
(Discounted future cash flows)
- Issuer´s credit risk
- Prepayment rates
- Interest rate yield
Loans and advances to customers
- 212,843
Debt securities
9,271
1,231
Held-to-maturity investments
Debt securities
LIABILITIES
Financial liabilities at amortized cost
Central Banks
Loans and advances to credit
institutions
Loans and advances to customers
Debt securities
Other financial liabilities
Financial instruments at cost
10
10
-
-
- 308,546
- 308,546
-
-
28,132
40,763
- 195,271
-
-
36,125
8,255
As of December 31, 2017 and 2016, 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 €84
million and €156 million, respectively.
The table below outlines the financial assets and liabilities carried at cost that were sold in 2017 and 2016:
Sales of Financial Instruments at Cost (Millions of euros)
Amount of Sale (A)
Carrying Amount at Sale Date (B)
Gains (Losses) (A-B)
2017
21
15
6
2016
149
8
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 52). 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.
P. 89
7 Cash and cash balances at centrals and banks and other
demands deposits and Financial liabilities measured at
amortized cost
The breakdown of the balance under the headings “Cash and cash balances at central banks and other
demands deposits” and "Financial liabilities at amortized cost – Deposits from central banks" in the
accompanying balance sheets is as follows:
Cash and cash balances at central banks (Millions of euros)
Cash on hand
Cash balances at central banks
Other demand deposits
Total
2017
906
15,858
1,739
18,503
Financial liabilities measured at amortised cost. Deposits from Central Banks (Millions of euros)
2016
879
14,913
63
15,855
2016
26,514
115
26,629
Notes
31
20.1
2017
26,095
2,037
28,132
Deposits from Central Banks
Repurchase agreements
Total
8
Financial assets and liabilities held for trading
8.1 Breakdown of the balance
The breakdown of the balance under these headings in the accompanying balance sheets is as follows:
Financial Assets and Liabilities Held-for-Trading (Millions of euros)
Notes
2017
2016
ASSETS
Derivatives
Equity instruments
Debt securities
Total
LIABILITIES
Trading derivatives
Short positions
Other financial liabilities
Total
8.2 Debt securities
5.3.1
5.3.1
36,536
6,202
7,686
50,424
36,097
7,606
-
43,703
42,023
3,873
11,544
57,440
40,951
7,314
-
48,265
The breakdown by type of instrument of the balance under this heading in the accompanying balance sheets
is as follows:
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 52). 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 Assets Held-for-Trading. Debt securities by issuer (Millions of euros)
Issued by Central Banks
Issued by public administrations
Issued by financial institutions
Other debt securities
Total
P. 90
2016
-
10,146
609
789
11,544
2017
3
6,727
477
479
7,686
The debt securities included under Financial Assets Held for Trading earned average annual interest of
0.463% in 2017 (0.324% in 2016).
8.3 Equity instruments
The breakdown of the balance under this heading in the accompanying balance sheets is as follows:
Financial Assets Held-for-Trading. Equity instruments by Issuer (Millions of euros)
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
8.4 Derivatives
2017
2016
617
549
1,166
342
3,934
4,276
760
6,202
781
935
1,716
246
1,753
1,999
158
3,873
The 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, 2017 and 2016, derivatives are principally contracted in over-the-counter (OTC)
markets, with credit entities other financial corporations, and are related to foreign-exchange, interest-rate
and equity risk.
Below is a breakdown of the net positions by transaction type of the fair value of outstanding financial
derivatives recognized in the accompanying balance sheets, divided into organized and OTC markets:
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 52). 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.
P. 91
Diciembre 2017 - Derivatives by type of risk / by product or by type of market (Millions of euros)
Assets
Liabilities
Notional amount - Total
Interest rate
OTC options
OTC other
Organized market options
Organized market other
Equity
OTC options
OTC other
Organized market options
Organized market other
Foreign exchange and gold
OTC options
OTC other
Organized market options
Organized market other
Credit
Credit default swap
Credit spread option
Total return swap
Other
Commodity
Other
DERIVATIVES
Of which: OTC - credit institutions
Of which: OTC - other financial corporations
Of which: OTC - other
24,506
2,413
22,093
-
-
1,701
462
57
1,181
-
9,848
205
9,643
-
-
481
481
-
-
-
-
-
22,961
2,544
20,418
-
-
2,144
949
91
1,105
-
10,464
161
10,303
-
-
527
527
-
-
-
-
-
36,536
20,680
11,018
3,656
36,097
22,979
10,019
1,994
1,988,907
208,736
1,761,910
600
17,662
92,720
33,935
6,717
47,568
4,500
398,334
25,378
372,956
-
-
28,432
28,232
200
-
-
-
-
2,508,392
823,292
1,519,487
95,284
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 52). 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.
P. 92
Diciembre 2016 - Derivatives by type of risk / by product or by type of market (Millions of euros)
Interest rate
OTC options
OTC other
Organized market options
Organized market other
Equity
OTC options
OTC other
Organized market options
Organized market other
Foreign exchange and gold
OTC options
OTC other
Organized market options
Organized market other
Credit
Credit default swap
Credit spread option
Total return swap
Other
Commodity
Other
DERIVATIVES
Of which: OTC - credit institutions
Of which: OTC - other financial corporations
Of which: OTC - other
Assets
27,265
3,270
23,994
1
-
2,008
745
89
1,174
-
12,504
297
12,207
-
-
246
246
-
-
-
-
-
42,023
25,693
10,391
4,764
Liabilities
Notional amount - Total
25,540
3,379
22,161
-
-
1,985
990
79
916
-
13,198
398
12,800
-
-
229
229
-
-
-
-
-
40,951
27,835
8,923
3,277
1,477,601
210,629
1,251,133
1,311
14,528
87,107
44,538
4,109
34,916
3,544
378,670
23,978
354,691
-
-
16,136
15,986
150
-
-
-
-
1,959,514
816,295
990,992
97,927
9 Financial assets and liabilities at fair value through profit or
loss
As of December 31, 2017, the heading "Financial assets designated at fair value through profit or loss"
includes temporary acquisitions of assets for a nominal amount of $750 million (€648 million) (see Note
5.3.1).
Said registry has been made to reduce inconsistencies (asymmetries) between said operations and those
used to manage their risk.
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 52). 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.
P. 93
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 Financial Assets (Millions of euros)
Debt securities
Impairment losses
Subtotal
Equity instruments
Impairment losses
Subtotal
Total
10.2 Debt securities
Notes
5.3.1
5.3.1
2017
21,848
(21)
21,827
3,598
(1,220)
2,378
24,205
2016
25,640
(142)
25,498
3,603
(97)
3,506
29,004
The breakdown of the balance under the heading “Debt securities”, broken down by the nature of the
financial instruments, is as follows:
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 52). 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.
P. 94
December 2017 - Available-for-sale financial assets. Debt Securities.(Millions of euros)
Amortized
Cost (*)
Unrealized
Gains
Unrealized
Losses
Book
Value
Domestic Debt Securities
Spanish Government and other government agency debt securities
13,636
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
Turkey
Turkey Government and other government agency debt securities
Other debt securities
Issued by Central Banks
Issued by credit institutions
Issued by other issuers
Other countries
Other foreign governments and other government agency debt securities
Other debt securities
Issue by Central Banks
Issue by credit institutions
Issue by other issuers
Subtotal
Total
986
-
271
715
14,622
490
131
359
-
-
359
786
137
137
-
649
-
30
619
-
-
-
-
-
-
5,317
4,297
1,020
46
176
798
6,593
21,215
437
21
-
3
18
458
9
4
5
-
-
5
6
-
-
-
6
-
1
5
-
-
-
-
-
-
227
219
8
-
1
7
242
700
(14)
-
-
-
-
14,059
1,007
-
274
733
(14)
15,066
-
-
-
-
-
-
(3)
-
-
-
(3)
-
-
(3)
-
-
-
-
-
-
(71)
(63)
(8)
-
(1)
(7)
(74)
(88)
499
135
364
-
-
364
789
137
137
-
652
-
31
621
-
-
-
-
-
-
5,473
4,453
1,020
46
176
798
6,761
21,827
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 52). 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.
P. 95
December 2016 - Available-for-sale financial assets. Debt Securities (Millions of euros)
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
Turkey
Turkey Government and other government agency debt securities
Other debt securities
Issued by Central Banks
Issued by credit institutions
Issued by other issuers
Other countries
Other foreign governments and other government agency debt securities
Other debt securities
Issue by Central Banks
Issue by credit institutions
Issue by other issuers
Subtotal
Total
Amortized
Cost (*)
Unrealized
Gains
Unrealized
Losses
Book
Value
13,288
1,072
-
224
848
372
9
-
2
7
14,360
381
627
133
494
-
-
494
1,809
157
157
-
1,652
-
34
1,618
-
-
-
-
-
-
8,187
4,822
3,365
16
216
3,133
10,623
24,983
2
-
2
-
-
2
11
-
-
-
11
-
1
10
-
-
-
-
-
-
270
251
19
-
1
18
283
664
(16)
(1)
-
-
(1)
(17)
(9)
(3)
(6)
-
-
(6)
(22)
-
-
-
13,644
1,080
-
226
854
14,724
620
130
490
-
-
490
1,798
157
157
-
(22)
1,641
-
-
-
35
(22)
1,606
-
-
-
-
-
-
(101)
(72)
(29)
-
(1)
(28)
(132)
(149)
-
-
-
-
-
-
8,356
5,001
3,355
16
216
3,123
10,774
25,498
The credit ratings of the issuers of debt securities in the available-for-sale portfolio as of December 31, 2017
and 2016, are as follows:
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 52). 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.
Available-for-sale financial assets. Debt Securities by Rating
AAA
AA+
AA
AA-
A+
A
A-
BBB+
BBB
BBB-
BB+ or below
Without rating
Total
December 2017
Book value
(Millions of Euros)
-
35
194
30
148
145
149
%
-
0.2%
0.9%
0.1%
0.7%
0.7%
0.7%
December 2016
Book value
(Millions of Euros)
175
116
123
69
536
303
576
P. 96
%
-
-
0.2%
0.8%
-
-
-
15,326
70.2%
4,725
21.6%
144
166
765
0.7%
0.8%
3.5%
19,158
59.2%
1,387
1,246
1,086
721
3.3%
29.3%
-
7.2%
21,827 100.0%
25,498
100.0%
10.3 Equity instruments
The breakdown of the balance under the heading "Equity instruments" as of December 31, 2017 and 2016 is
as follows:
December 2017 - Available-for-sale financial assets. Equity Instruments. December 2017 (Millions of euros)
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Equity instruments listed
Listed Spanish company shares
Credit institutions
Other entities
Listed foreign company shares
United States
Other countries
Subtotal
Unlisted equity instruments
Unlisted Spanish company shares
Credit institutions
Other entities
Unlisted foreign companies shares
United States
Other countries
Subtotal
Total
2,163
-
2,163
56
-
56
2,219
31
4
27
87
73
14
118
2,337
-
-
-
5
-
5
5
23
-
23
16
16
-
39
44
Book
Value
2,163
-
2,163
58
-
58
2,221
54
4
50
103
89
14
157
-
-
-
(3)
-
(3)
(3)
-
-
-
-
-
-
-
(3)
2,378
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 52). 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.
December 2016 - Available-for-sale financial assets. Equity Instruments (Millions of euros)
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
P. 97
Book
Value
2,615
-
2,615
735
-
735
3,350
48
4
44
108
81
27
156
3,564
-
3,564
657
-
657
4,221
48
4
44
108
81
27
156
1
-
1
91
-
91
92
-
-
-
-
-
-
-
(950)
-
(950)
(13)
-
(13)
(963)
-
-
-
-
-
-
-
4,377
92
(963)
3,506
Equity instruments listed
Listed Spanish company shares
Credit institutions
Other entities
Listed foreign company shares
United States
Other countries
Subtotal
Unlisted equity instruments
Unlisted Spanish company shares
Credit institutions
Other entities
Unlisted foreign companies shares
United States
Other countries
Subtotal
Total
10.4 Gains/losses
The changes in the gains/losses, net of taxes, recognized under the equity heading “Accumulated other
comprehensive income – Items that may be reclassified to profit or loss- Available-for-sale financial assets ”
in the accompanying balance sheets are as follows:
Accumulated other comprehensive income-Items that may be reclassified to profit or loss - Available-for-Sale Financial Assets (Millions of euros)
Balance at the beginning
Valuation gains and losses
Income tax
Amounts transferred to income
Other reclassifications
Balance at the end
Of which:
Debt securities
Equity instruments
Debt securities
2017
(205)
142
37
609
-
583
547
36
2016
458
217
(80)
(800)
-
(205)
660
(865)
In 2017, the unrealized losses recognized under the heading “Accumulated other comprehensive income -
Items that may be reclassified to profit or loss– Available-for-sale financial assets” resulting from equity
instruments are not significant in the accompanying consolidated financial statements.
Equity instruments
As of December 31, 2017, the Banks most significant investment in equity instruments classified as available
for sale was the participation in Telefónica, S.A. (Telefónica), which accounted for approximately 70% of the
portfolio of equity instruments classified as available for sale financial assets, so that the Bank periodically
monitors the valuation of this participation, taking into account the volatility of the share price and the
estimated amount recoverable through its sale in the market.
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 52). 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.
P. 98
BBVA considers that the use of volatility is an appropriate reference for categorizing investments with similar
risk profiles when determining if there is a significant prolonged decline in value. The comparison of the
volatility of Telefónica’s shares with other market benchmarks shows a clearly lower level of volatility in these
shares.
As of December 29, 2017 (last session of the year), the share price of Telefónica closed at 8.125 euros per
share, so the unrealized losses recognized under the heading “Accumulated other comprehensive income -
Items that may be reclassified to profit or loss– Available-for-sale financial assets” resulting from equity
instrument, it would amount to 1,123 million euros.
As of December 31, 2017, the Bank carried out the analysis described in note 2 of the accompanying financial
statements, recording the aforementioned unrealized losses under the heading “Impairment or reversal of
impairment on financial assets not measured at fair value through profit or loss - Available-for-sale financial
assets" in the income statement for the year 2017.
As mentioned above, these losses were recorded in "Accumulated other comprehensive income”, therefore
the total equity of the Bank is not affected.
11. Loans and receivables
10.1 Breakdown of the balance
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 (Millions of euros)
Loans and advances to central banks
Loans and advances to credit institutions
Loans and advances to customers
Debt securities
Total
2017
28
22,105
211,597
10,502
244,232
2016
-
26,596
213,890
11,001
251,487
10.2 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 Central Banks and Credit Institutions (Millions of euros)
Loans and advances to central banks
Loans and advances to credit institutions
Reverse repurchase agreements
Other loans
Total gross
Impairment losses
Total
Notes
5.3.1
5.3.1
31
5.3.4 / 5.3.1
2017
28
22,110
13,513
8,596
22,138
(5)
22,133
2016
-
26,609
14,907
11,702
26,609
(13)
26,596
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 52). 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.
P. 99
10.3 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 (Millions of euros)
On demand and short notice
Credit card debt
Trade receivables
Finance leases
Reverse repurchase loans
Other term loans
Advances that are not loans
Total (*)
Of which:
Impaired assets
Impairment losses
Notes
31
5.3.4
5.3.4
2017
12,267
2,019
10,322
3,454
11,257
168,259
4,019
211,597
13,240
(6,921)
2016
12,262
1,826
10,506
3,050
7,210
173,783
5,252
213,890
16,736
(9,414)
As of December 31, 2017, 19% of "Loans and advances to customers" with a maturity greater than one year
were concluded with fixed-interest rates and 81% with variable interest rates. As of December 31, 2017, 10%
of "Loans and advances to customers" with a maturity greater than one year were concluded with fixed-
interest rates and 9% with variable interest rates.
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.
The amounts recognized in the balance sheets corresponding to these securitized loans are as follows:
Securitized Loans (Millions of euros)
Securitized mortgage assets
Other securitized assets
Total securitized assets
10.4 Debt securities
2017
28,044
3,872
31,916
2016
28,443
3,364
31,807
The breakdown of the balance under this heading in the accompanying balance sheets, according to the
nature of the financial instrument, is as follows:
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 52). 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 (Millions of euros)
Government
Credit institutions
Other sectors (*)
Total gross
Impairment losses
Total net
Notes
5.3.1
5.3.5
2017
3,985
28
6,492
10,505
(3)
10,502
P. 100
2016
4,094
12
6,900
11,006
(5)
11,001
In the year 2016, some debt securities were reclassified from this heading to “Held-to-maturity investments”
(see Note 12).
The following table shows the fair value and carrying amounts of these reclassified financial assets:
Debt Securities reclassified to "Loans and receivables" from "Available-for-sale financial assets" (Millions of euros)
As of Reclassification date
As of December 31, 2017
As of December 31, 2016
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
General Governments
Other sectors
Total
853
9
862
853
9
862
713
3
715
732
3
735
731
113
844
747
116
863
The following table presents the amount recognized in 2017 income statement from the valuation at
amortized cost of the reclassified financial assets, as well as the impact recognized on the income statement
and under the heading “Total Equity - Accumulated other comprehensive income”, as of December 31, 2017,
if the reclassification was not performed is included in the following table.
Effect on Income Statement and Other Comprehensive Income (Millions of euros)
2017
2016
Recognized in
Effect of not Reclassifying
Recognized in
Effect of not Reclassifying
Income
Statement
Income
Statement
Equity
"Valuation
Adjustments"
Income
Statement
Income
Statement
Equity
"Valuation
Adjustments"
General Governments
Total
26
26
26
26
4
4
22
22
22
22
(5)
(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 52). 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.
P. 101
12 Held-to-maturity investments
The breakdown of the balance under this heading in the accompanying balance sheets, according to the
according to the issuer of the financial instrument, is as follows:
Held-to-Maturity Investments (Millions of euros)
Government and other government agency debt securities
Credit institutions
Other
Total
Notes
December 2017
December 2016
8,103
203
48
8,354
10,783
551
90
11,424
5.3.1
As of December 31, 2017 and 2016, the credit ratings of the issuers of debt securities classified as held-to-
maturity investments were as follows:
Held to maturity investments. Debt Securities by Rating
AAA
AA+
AA
AA-
A+
A
A-
BBB+
BBB
BBB-
BB+ or below
Without rating
Total
December 2017
Book value
(Millions of Euros)
-
-
41
-
55
-
-
December 2016
Book value
(Millions of Euros)
-
-
43
134
-
-
-
%
-
-
0.2%
0.8%
-
-
-
%
-
-
0.5%
-
0.7%
-
-
5,667
67.8%
2,420
-
-
29.0%
-
-
171
2.1%
8,354 100.0%
10,472
59.2%
591
44
-
141
3.3%
29.3%
-
7.2%
11,424
100.0%
In the year 2016, some debt securities were reclassified from "Available-for-sale financial assets" to “Held-to-
maturity investments” amounted to €11,162 million, due to the intention the Bank regarding how to manage
such securities, is held to maturity.
The following table shows the fair value and carrying amounts of these reclassified financial assets:
Debt Securities reclassified to "Held to Maturity Investments" from "Available for sale assets" (Millions of euros)
As of Reclassification date
As of December 31, 2017
As of December 31, 2016
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
General Governments
10,321
10,321
6,270
Credit institutions
Other sectors
Total
614
227
614
227
203
48
11,162
11,162
6,521
6,298
204
49
6,551
8,948
551
90
9,589
8,991
553
91
9,635
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 52). 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.
P. 102
The fair value carrying amount of these financials asset on the date of the reclassification becomes its new
amortized cost. The previous gain on that asset that has been recognized in “Accumulated other
comprehensive income – Items that may be reclassified to profit or loss - Available for sale financial assets”
is amortized to profit or loss over the remaining life of the held-to-maturity investment using the effective
interest method. Any difference between the new amortized cost and maturity amount is also amortized
over the remaining life of the financial asset using the effective interest method, similar to the amortization of
a premium and a discount. This reclassification was triggered by a change in the Group´s strategy regarding
the management of these securities.
The following table presents the amount recognized in the 2017 income statement from the valuation at
amortized cost of the reclassified financial assets, as well as the impact recognized on the income statement
and under the heading “Total Equity - Accumulated other comprehensive income”, as of December 31, 2017,
if the reclassification was not performed.
Effect on Income Statement and Other Comprehensive Income (Millions of euros)
Recognized in
Effect of not Reclassifying
Recognized in
Effect of not Reclassifying
2017
2016
Income Statement
Income Statement
Equity
"Accumulated other
comprehensive income"
Income Statement
Income Statement
Equity
"Accumulated other
comprehensive income"
General Governments
Credit institutions
Other sectors
Total
163
7
2
163
7
2
(18)
(1)
0
172
172
(18)
211
14
5
230
211
14
5
230
(76)
(8)
(1)
(86)
13 Hedging derivatives and fair value changes of the hedged
items in portfolio hedge of interest rate risk
The balance of these headings in the accompanying balance sheets is as follows:
Hedging derivatives and fair value changes of the hedged items in portfolio hedge of interest rate risk (Millions of euros)
ASSETS-
Derivatives – Hedge accounting
Fair value changes of the hedged items in portfolio hedges of interest rate risk
LIABILITIES-
Derivatives – Hedge accounting
Fair value changes of the hedged items in portfolio hedges of interest rate risk
2017
2016
1,561
(25)
1,327
(7)
1,586
17
1,488
-
As of December 31, 2017 and 2016, 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 and loans and receivables: The interest rate risk of
these securities is hedged using interest rate derivatives (fixed-variable swaps) and forward sales.
• Long-term fixed-interest debt securities issued by the Bank: the interest rate risk of these securities is
hedged using interest rate derivatives (fixed-variable swaps).
• Fixed-interest loans: The equity price risk of these instruments is hedged using interest rate
derivatives (fixed-variable swaps).
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 52). 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.
P. 103
• Fixed-interest and/or embedded derivative deposit portfolio hedges: it covers the interest rate risk
through fixed-variable swaps. The valuation of the borrowed deposits corresponding to the interest
rate risk is in the heading "Fair value changes of the hedged items in 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 sales and 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:
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 52). 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.
P. 104
Derivatives - Hedge accounting. Breakdown by type of risk and type of hedge. December 2017 (Millions of euros)
Interest rate
OTC options
OTC other
Organized market options
Organized market other
Equity
Foreign exchange and gold
Credit
Commodity
Other
FAIR VALUE HEDGES
Interest rate
OTC options
OTC other
Organized market options
Organized market other
Equity
Foreign exchange and gold
OTC options
OTC other
Organized market options
Organized market other
Credit
Commodity
Other
CASH FLOW HEDGES
HEDGE OF NET INVESTMENTS IN A FOREIGN OPERATION
PORTFOLIO FAIR VALUE HEDGES OF INTEREST RATE RISK
PORTFOLIO CASH FLOW HEDGES OF INTEREST RATE RISK
DERIVATIVES-HEDGE ACCOUNTING
of which: OTC - credit institutions
of which: OTC - other financial corporations
of which: OTC - other
2017
2016
Assets
1,090
110
979
Liabilities
768
111
657
Assets
1,419
120
1,299
Liabilities
979
118
861
-
-
-
-
-
-
-
1,090
137
-
137
-
-
-
-
-
-
-
-
-
-
-
137
301
33
-
1,561
1,173
388
-
-
-
-
-
-
-
-
768
386
-
386
-
-
-
-
-
-
-
-
-
-
-
386
15
158
-
1,327
1,178
139
10
-
-
-
-
-
-
-
1,419
36
-
36
-
-
-
89
89
-
-
-
-
-
-
125
-
42
-
1,586
1,500
86
-
-
-
-
-
-
-
-
979
225
-
225
-
-
-
70
70
-
-
-
-
-
-
295
-
214
-
1,488
1,386
84
18
The cash flows forecasts for the coming years for cash flow hedging recognized on the accompanying
balance sheet as of December 31, 2017 are:
Cash Flows of Hedging Instruments (Millions of euros)
From 3 Months
or Less
From 3 Months
to 1 Year
From 1 to 5
Years
More than 5
Years
Receivable cash inflows
13
38
186
Payable cash outflows
The above cash flows will have an effect on the income statements until the year 2026.
266
63
23
133
172
Total
370
524
In 2017 and 2016, there was no reclassification in the accompanying income statements of any amount
corresponding to cash flow hedges that was previously recognized in equity.
As of December 31, 2017 and 2016 there was no hedge accounting that did not pass the effectiveness test.
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 52). 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.
P. 105
14 Investments in subsidiaries, joint ventures and associates
14.1 Investments 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: Breakdown by entities (Millions of euros)
Subsidiaries
By currency:
In euros
In foreign currencies
By share price
Listed
Unlisted
Impairment losses
Total
2017
2016
42,722
16,467
26,255
42,722
7,076
35,646
(12,418)
30,304
42,656
17,112
25,544
42,656
6,335
36,321
(12,833)
29,823
The changes in 2017 and 2016 in the balance under this heading in the balance sheets, disregarding the
balance of the impairment losses, are as follows:
Subsidiaries: Changes in the Year (Millions of euros)
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
2017
42,656
1,026
-
(551)
(67)
(342)
42,722
2016
36,772
15
6,326
(80)
(1)
(376)
42,656
Changes in the holdings in Group entities
The most notable transactions performed in 2017 and 2016 are as follows:
Significant changes in the Group in 2017
Investments
On February 21, 2017, BBVA Group entered into an agreement for the acquisition from Dogus Holding A.S.
and Dogus Arastirma Gelistirme ve Musavirlik Hizmetleri A.S of 41,790,000.000 shares of Turkiye Garanti
Bankasi, A.S. (“Garanti Bank”), amounting to 9.95% of the total issued share capital of Garanti Bank. On
March 22, 2017, the sale and purchase agreement was completed, and therefore BBVA´s total stake in
Garanti Bank as of December 31, 2017 amounts to 49.85%.
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 52). 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.
P. 106
Ongoing divestitures
Offer for the acquisition of BBVA’s stake in BBVA Chile
On November 28, 2017, BBVA received a binding offer from The Bank of Nova Scotia group (“Scotiabank”)
for the acquisition, at a price of approximately $2,200 million of BBVA’s stake in Banco Bilbao Vizcaya
Argentaria, Chile (“BBVA Chile”) as well as in other companies of the Group in Chile which operations are
complementary to the banking business (amongst them, BBVA Seguros Vida, S.A.). BBVA owns, directly
and indirectly, approximately 68.19% of BBVA Chile share capital. On December 5, 2017, BBVA accepted the
Offer and entered into a sale and purchase agreement.
The Offer received does not include BBVA’s stake in the automobile financing companies of Forum group
and in other Chilean entities from BBVA’s Group which are engaged in corporate activities of BBVA Group.
Completion of the transaction is subject to obtaining the relevant regulatory approvals.
Agreement for the creation of a “joint-venture” and transfer of the real estate business in Spain
On November 29, 2017, BBVA reached an agreement with a subsidiary of Cerberus Capital Management,
L.P. (“Cerberus”) for the creation of a “joint venture” to which the majority of the real estate business of
BBVA in Spain will be transferred (the “Business”). BBVA will contribute the Business to a single company
(the “Company”) and will sell 80% of the shares of such Company to Cerberus at the closing date of the
transaction.
The Business comprises: (i) foreclosed real estate assets (the “REOs”), with a gross book value of
approximately €13,000 million, taking as starting point the situation of the REOs on June 26, 2017; and
(ii) the necessary assets and employees to manage the Business in an autonomous manner. For the purpose
of the agreement with Cerberus, the whole Business was valued at approximately €5,000 million.
Considering the valuation of the whole Business previously mentioned and assuming that all the Business’
REOs on June 26, 2017 will be contributed to the Company, the sale price for 80% of the shares would
amount to approximately €4,000 million. The price finally paid will be determined by the volume of REOs
effectively contributed that may vary depending on, among other matters, the sales carried out from the date
of reference 26 June 2017 until the date of closing of the transaction and the fulfilment of the usual conditions
in this kind of transactions.
The transaction as a whole is subject to obtaining the relevant authorizations from the competent authorities
and it is not expected to have significant impact on the Consolidated Financial Statements when completed.
Refund of premium in BBV América, S.L.
On July 31, 2017, BBVA received a refund of the issue premium of BBV América, S.L. amounting to 400
million euros.
Sale of BBVA Autorenting, S.A.
On September 22, 2017, BBVA Autorenting, S.A. has been sold generating a capital gain of 51 million euros.
The shareholding had previously been reclassified to the heading "Non-current assets and disposable groups
of items that have been classified as held for sale" (see Note 19), for which reason it is included in the
Transfers line of the previous table.
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 52). 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.
P. 107
Significant changes in the Group in 2016
Mergers
The BBVA Group, at its Board of Directors meeting held on March 31, 2016, adopted a resolution to begin a
merger process of BBVA S.A. (absorbing company), Catalunya Banc, S.A., Banco Depositario BBVA, S.A. y
Unoe Bank, S.A.
This transaction was part of the corporate reorganization of its banking subsidiaries in Spain, was
successfully completed throughout 2016 and has no impact in the Financial Statements both from the
accounting and the solvency stand points.
14.2 Investments in joint ventures and associates
The breakdown, by currency and listings status, of this heading in the accompanying balance sheets is as
follows:
Joint Ventures Entities andAssociates: Breakdown by entities (Millions of euros)
2017
2016
Associates Entities
By currency
In euros
In foreign currencies
By share price
Listed
Unlisted
Impairment losses
Subtotal
Joint ventures
By currency
In euros
In foreign currencies
By share price
Listed
Unlisted
Impairment losses
Subtotal
Total
519
401
118
519
-
519
(86)
433
59
59
-
59
-
59
(1)
58
468
393
75
468
-
468
(91)
377
19
19
-
19
-
19
(1)
18
491
395
The investments in associates as of December 31, 2017, as well as the most important data related to them,
can be seen in Appendix III.
The following is a summary of the gross changes in 2017 and 2016 under this heading in the accompanying
balance sheets:
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 52). 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.
Joint Ventures Entities andAssociates: Changes in the Year (Millions of euros)
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
P. 108
2016
605
231
4
(6)
(342)
(5)
487
2017
487
91
-
-
(1)
1
578
The variation during the year 2017 is mainly explained by the increase of BBVA Group stakes in Testa
Residencial, S.A. and Metrovacesa Suelo y Promociones, S.A. through its contribution to the capital
increases carried out by both entities
The 2016 movement was mainly explained, by:
In January 2016, two capital increases were made of Metrovacesa through a debt swap and a contribution
of real estate assets, which provided the bank 194 million euros, including the share premium.
In March 2016, there was a partial split of Metrovacesa, S.A in favor of a beneficiary company from a new
constitution denominated Metrovacesa Suelo y Promocion, S.A, through the transfer in block and by
universal succession of the patrimony belonging to its branch activity of floor and real estate promotion.
In October 2016, there was a total split of Metrovacesa, S.A through its extinction and division of its
patrimony in three parts (Commercial Patrimony, Residential Patrimony and Non-Strategic Patrimony)
that was transmitted in block and by universal succession to Merlin Properties, SOCIMI, S.A, Testa
Residencial, SOCIMI, S.A and Metrovacesa Promoción y Arrendamiento, S.A, respectively.
As result of the previous mentioned splits, the Bank received equity interests in the corresponding
beneficiary companies. In the case of Merlin Properties, SOCIMI, S.A, 4.97% of its capital was received,
having been transferred to the heading "Available-for-sale financial assets (see Note 10).
14.3 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.
14.4 Impairment
The breakdown of the changes in impairment losses in 2017 and 2016 under this heading is as follows:
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 52). 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.
Impairment losses (Millions of euros)
Balance at the beginning
Increase in impairment losses charged to income
Decrease in impairment losses credited to income
Losses due to merger transactions
Amount used
Transfers and other movements
Balance at the end
15 Tangible assets
Notes
43
43
2017
12,925
74
(281)
-
(42)
(171)
12,505
P. 109
2016
5,778
316
(169)
7,101
(7)
(94)
12,925
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:
Tangible Assets. Breakdown by Type of Assets and Changes in the year 2017 (Millions of euros)
For Own Use
Notes
Land and
Buildings
Work in
Progress
Furniture,
Fixtures and
Vehicles
Total Tangible
Asset of Own
Use
Investment
Properties
Total
Revalued cost
Balance at the beginning
Additions
Retirements
Transfers
Exchange difference and other
Balance at the end
Accrued depreciation
Balance at the beginning
Additions
Retirements
Transfers
Exchange difference and other
Balance at the end
Impairment
Balance at the beginning
Additions
Retirements
Transfers
Exchange difference and other
Balance at the end
Net tangible assets
Balance at the beginning
Balance at the end
1,443
-
-
(217)
-
1,226
265
14
-
(44)
-
235
316
4
(3)
(57)
-
260
862
731
2
-
-
(2)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2
-
40
43
3,567
100
(188)
(38)
(4)
3,437
2,586
191
(167)
(25)
(4)
2,581
-
7
-
-
(7)
-
981
856
5,012
100
(188)
(257)
(4)
4,663
2,851
205
(167)
(69)
(4)
2,816
316
11
(3)
(57)
(7)
260
1,845
1,587
32 5,044
-
-
100
(188)
1
(256)
-
(4)
33 4,696
5 2,856
-
-
-
205
(167)
(69)
-
(4)
5 2,821
16
332
-
-
-
-
16
11
(3)
(57)
(7)
276
11 1,856
12 1,599
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 52). 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.
P. 110
Tangible Assets. Breakdown by Type of Assets and Changes in the year 2016 (Millions of euros)
For Own Use
Notes
Land and
Buildings
Work in
Progress
Furniture, Fixtures
and Vehicles
Total Tangible
Asset of Own
Use
Investment
Properties
Total
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
40
Contributions from merger transactions
Retirements
Transfers
Exchange difference and other
Balance at the end
Impairment
Balance at the beginning
Additions
43
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
852
-
554
-
34
3
1,443
172
14
80
-
-
(1)
265
152
4
-
(2)
(1)
163
316
528
862
61
-
-
-
(59)
-
2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
61
2
3,100
169
432
(143)
10
(1)
3,567
4,013
169
986
(143)
(15)
2
5,012
2,173
2,345
206
337
(123)
(6)
(1)
220
417
(123)
(6)
(2)
2,586
2,851
-
14
-
-
-
(14)
-
927
981
152
18
-
(2)
(1)
149
316
1,516
1,845
10
4,023
-
169
246
1,232
-
(143)
(224)
(239)
-
2
32
5,044
1
2
11
2,346
222
428
-
(123)
(9)
-
5
(15)
(2)
2,856
4
-
94
-
(85)
3
16
156
18
94
(2)
(86)
152
332
5
1,521
11
1,856
(*) Mainly as result of the integration of the companies Catalunya Banc, S.A., Custodian Bank BBVA, S.A. And Unoe Bank,
S.A. as indicated in Note 14.
As of December 31, 2017 and 2016, the fully depreciated tangible assets still in use amounted to €1,630
million and €1,555 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:
Branches by Geographical Location (Number of branches)
Spain
Rest of the world
Total
2017
3,019
14
3,033
2016
3,303
20
3,323
As of December 31, 2017 and 2016, the percentage of branches leased from third parties in Spain was
70.02% and 70.48%, respectively.
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 52). 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.
P. 111
16 Intangible assets
The breakdown of the balance under this heading in the balance sheets as of December 31, 2017 and 2016
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.
The breakdown of the changes in 2017 and 2016 in the balance under this heading in the balance sheets is as
follows:
Other Intangible Assets. Changes Over the Period (Millions of euros)
Balance at the beginning
Additions
Contributions from merger transactions
Amortization in the year
Balance at the end
Notes
40
-
2017
942
275
-
(335)
882
2016
853
321
121
(353)
942
"Contributions from merger transactions” in the table above reflects the intangible assets of the merged company
Catalunya Banc, S.A."
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. Lastly, on the occasion of the acquisition of Catalunya Banc Group in 2015, the
companies composing the Tax Group No. 585/11 which met the requirements became part of the tax group
2/82 from January 1, 2016.
In 2016, the Bank carried corporate restructuring operations, under the special regime for mergers,
divisions, transfers of assets and exchanges of securities provided for in Chapter VII of Title VII of the
Corporate Tax Law, approved by Law 27/2014, of November 27. The information requirements under the
above legislation are included in the financial statements for 2016 as well as in the merger by absorption
deed, other official documents and internal records of the Bank, available to the tax authorities.
In 2013, 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 Corporation Tax Act, approved by Royal Legislative Decree 4/2004, of March 5. The reporting
requirements under the above legislation are included in the financial statements of the relevant entities for
2013, 2011 and 2009 as well as in the merger by absorption deed, other official documents and internal
records of the Bank, available to the tax authorities.
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 52). 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.
P. 112
Also, in 2003, as in previous years, the Bank performed 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 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 has 2014 and subsequent years open for
review by the tax authorities for the main taxes applicable to it.
In 2017, as a result of the tax audit conducted by the tax authorities, tax inspection proceedings were issued
against several Group companies for the years up to and including 2013, having been all signed in
acceptance. These proceedings became final in 2017.
In view of the different 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 advisors 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
(Millions of euros)
Corporation tax
Decreases due to permanent differences:
Tax credits and tax relief at consolidated 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
2017
732
-
(23)
(547)
29
(29)
162
195
357
2016
448
-
(27)
(686)
425
(425)
(265)
95
(170)
The item ‘‘Other taxes’’ of the above table includes in 2017 the effect in income tax of those dividends and
capital gains entitled to avoid double taxation of €765 million.
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.
Under the regulations in force until December 31, 2001, the Bank and the savings banks which would form
Unnim Banc and Catalunya Banc were available to the tax deferral for reinvestment. The information related
to this tax credit can be found in the corresponding annual reports.
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 52). 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.
P. 113
From 2002 to 2014, the Bank availed itself to 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:
Year
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Millions of Euros
276
27
332
80
410
1,047
71
23
35
5
4
70
2
Additionally, due to the merger of Unnim Banc, 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 the deduction indicated is as follows:
Year
2008
2009
2010
Millions of Euros
61
59
202
Finally, due to the merger of Catalunya Banc, the Bank assumes the commitment of maintenance during the
time required by the tax legislation of the assets in which Caixa d´Estalvis de Catalunya, Caixa d´Estalvis de
Tarragona, Caixa d’Estalvis de Manresa and Caixa d´Estalvis Unió de Caixes de Catalunya, Tarragona I
Manresa 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
2005
2006
2007
2008
2009
2010
Millions of Euros
1
22
111
82
10
107
In 2017, following the approval of Royal Decree-Law 3/2016, of December 2, by which certain measures in
the tax field directed to the consolidation of the public finances and other urgent measures in social matter
are adopted, the Bank has included in its tax base €128 million as a reversal of the impairment losses on
instruments representing participation in the capital or in the equity of companies which have been tax
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 52). 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.
P. 114
deductible from the tax base of Corporate Income Tax in tax periods started prior to 1 January 2013.
Likewise, as a consequence of the sale and liquidation of companies during the year, it will no longer be
necessary to integrate income for an amount of €140 million. The amount pending to be included in the tax
base at closure and from the investees amounted to €292 million approximately.
Millions of Euros
Pending addition to taxable income as of December 31, 2016 (*)
Decrease income (included) 2016
Sales and liquidations 2017
Pending addition to taxable income as of December 31, 2017
(*)Includes outstanding balances pending to be integrated by Catalunya Banc, S.A.
2017
560
(128)
(140)
292
17.3 Tax recognized in equity
In addition to the income tax registered in the income statements, in 2017 and 2016 the Bank recognized the
following amounts in equity:
Tax Recognized in Total Equity (Millions of euros)
Charges to total equity
Debt securities
Equity instruments
Other
Subtotal
Credits to total equity
Debt securities
Equity instruments
Other
Subtotal
Total
2017
2016
(235)
(5)
-
(240)
-
-
75
75
(283)
-
(5)
(288)
-
6
73
79
(165)
(209)
17.4 Current and 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:
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 52). 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.
P. 115
Tax Assets and Liabilities. Breakdown (Millions of euros)
Tax assets-
Current tax assets
Deferred tax assets
Pensions
Financial Instruments
Other assets
Impairment losses
Other
Secured tax assets (*)
Tax losses
Total
Tax Liabilities-
Current tax liabilities
Deferred tax liabilities
Charge for income tax and other taxes
Total
2017
2016
Variation
1,030
11,881
756
11,638
273
352
284
62
286
9,355
1,269
12,911
123
1,116
1,116
1,239
215
349
266
206
357
9,125
1,120
12,394
127
1,288
1,288
1,415
274
243
58
3
18
(144)
(71)
230
149
517
(4)
(172)
(172)
(176)
(*) The Law guaranteeing the deferred tax assets have been approved in Spain in 2013.
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
would be generated when they become deductible under the provisions of tax legislation.
With respect to the changes in assets and liabilities due to deferred tax contained in the above table, the
following should be pointed out:
The decrease in deferred tax assets related to Impairment losses is due mainly to the reduction of
accounting provisions for credit risk. The decrease in deferred tax liabilities is due to the reduction of
valuation adjustments and deferred tax related to financial instruments.
The increase in guaranteed tax assets is due to the adjustments on the corporate income tax finally
presented for year 2016 and adjustments of the tax audit of the years from 2010 to 2013, closed in 2017.
The increase in tax losses is mainly due to the generation in 2017 of negative tax bases and deductions.
Of the assets and liabilities due to deferred tax contained in the above table, those included in section 18.3
above have been recognized against the entity's equity, and the rest against earnings for the year.
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 (Millions of euros)
Pensions
Impairment losses
Total
2017
1,924
7,431
9,355
2016
1,927
7,198
9,125
As a result of the merger by absorption of Catalunya Banc, S.A., the Bank has subrogated in the right to
offset negative tax bases and deductions pending compensation in the transferor as of December 31, 2015.
With respect to these tax credits, the Bank has maintained the criteria adopted in previous years by
Catalunya Banc, S.A., according to which the transferor entity only recognized in the balance sheet those tax
assets that have the guaranteed condition.
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 52). 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.
P. 116
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 (Millions of euros)
Notes
2017
2016
ASSETS
Insurance contracts linked to pensions
22
Rest of other assets
Transactions in progress
Accruals
Unaccrued prepaid expenses
Other prepayments and accrued income
Other items
Total
LIABILITIES
Transactions in transit
Accrued interest
Unpaid accrued expenses
Other accrued expenses and deferred income
Other items
Total
2,142
1,626
49
190
49
142
1,387
3,768
70
947
776
172
1,190
2,207
2,426
1,283
83
335
53
282
865
3,709
33
978
751
227
1,082
2,092
19. Non-current assets and disposal groups classified as held
for sale
The composition of the balance under the heading “Non-current assets and disposal groups classified as held
for sale” in the accompanying balance sheets, broken down by the origin of the assets, is as follows:
Non-current assets and disposal groups classified as held for sale: Breakdown by items (Millions of euros)
Foreclosures and recoveries
Foreclosures
Recoveries from financial leases
Other assets from tangible assets
Property, plant and equipment
Operating leases
Investment properties
Business sale - Assets
Accrued amortization (*)
Impairment losses
Total Non-current assets and disposal groups classified as held for sale
2017
2,991
2,863
128
414
414
-
-
-
(65)
(1,114)
2,226
2016
3,488
3,349
139
323
323
-
-
-
(42)
(1,253)
2,515
(*) Corresponds to the accumulated depreciation of assets before classification as “Non-current assets and
disposal groups classified as held for sale".
The changes in the balances under this heading in 2017 and 2016 are as follows:
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 52). 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.
P. 117
Non-Current Assets Held-for-Sale. Changes in the year 2017 (Millions of euros)
Foreclosed Assets
Foreclosed
Assets through
Auction
Proceeding
Recovered
Assets from
Finance Leases
From Own Use
Assets (*)
Other assets
(**)
Total
Notes
Cost (1)
Balance at the beginning
Additions
Contributions from merger transactions
Retirements (sales and other decreases)
Transfers, other movements and exchange
differences
Balance at the end
Impairment (2)
Balance at the beginning
Additions
45
Contributions from merger transactions
Retirements (sales and other decreases)
Other movements and exchange differences
Balance at the end
Balance at the end of Net carrying value (1)-
(2)
3,349
597
-
(826)
(257)
2,863
1,044
38
-
(221)
19
880
1,983
138
27
-
(32)
(5)
128
32
13
-
(6)
2
41
87
281
1
-
(121)
188
349
177
1
-
(42)
57
193
156
-
-
-
3,768
625
-
(68)
(1,047)
68
-
(6)
3,340
-
-
-
-
-
-
-
1,253
52
-
(269)
78
1,114
2,226
(*) Net of accumulated amortization until reclassified as non-current assets and disposal groups held for sale.
(**) Correspong to BBVA Autorenting, S.A. (see Note 14).
Non-Current Assets Held-for-Sale. Changes in the year 2016 (Millions of euros)
Foreclosed Assets
Foreclosed
Assets through
Auction
Proceeding
Recovered
Assets from
Finance Leases
From Own Use
Assets
(*)
Other assets
Total
Notes
Cost (1)
Balance at the beginning
Additions
Contributions from merger transactions
Retirements (sales and other decreases)
Transfers, other movements and exchange
differences
Balance at the end
Impairment (2)
Balance at the beginning
Additions
45
Contributions from merger transactions
Retirements (sales and other decreases)
Other movements and exchange differences
Balance at the end
Balance at the end of Net carrying value (1)-
(2)
2,666
629
402
(555)
207
3,349
537
60
212
(124)
359
1,044
2,305
166
42
-
(62)
(8)
138
38
2
-
(5)
(3)
32
106
186
3
147
(61)
6
281
103
7
-
(33)
100
177
104
-
-
-
-
-
-
-
-
-
-
-
-
-
3,018
674
549
(678)
205
3,768
678
69
212
(162)
456
1,253
2,515
(*) Net of accumulated amortization until reclassified as non-current assets and disposal groups held for sale.
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 52). 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 shows the non-current assets held for sale from foreclosures or recoveries:
Non-Current Assets Held for Sale. From Foreclosures or Recoveries (Millions of euros)
Residential assets
Industrial assets
Agricultural assets
Total
2017
1,675
367
28
2,070
P. 118
2016
1,961
417
33
2,411
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, 2017 and 2016 had been held:
Non-Current Assets Held for Sale. Period of Ownership (Millions of euros)
Up to one year
From 1 to 3 years
From 3 to 5 years
Over 5 years
Total
2017
267
740
656
407
2,070
2016
298
1,084
719
310
2,411
In 2017 and 2016, 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 €201 million and €210 million, respectively, with
a mean percentage financed of 91% and 93%, respectively, of the price of sale. The total nominal amount of
these loans, which are recognized under “Loans and receivables”, is €1,520 million and €1,320 million, as of
December 31, 2017 and 2016, respectively.
As of December 31, 2017 and 2016, there were no gains not recognized in the income statement from the
sale of assets financed by the Bank.
20. Financial liabilities at amortized cost
20.1 Breakdown of the balance
The breakdown of the balance under this heading in the accompanying balance sheets is as follows:
Financial liabilities measured at amortised cost (Millions of euros)
Deposits
Deposits from Central Banks
Deposits from Credit Institutions
Customer deposits
Debt securities issued
Other financial liabilities
Total
Notes
7
2017
263,376
28,132
40,599
194,645
34,166
8,255
305,797
2016
279,552
26,629
44,977
207,946
33,174
7,158
319,884
20.2 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:
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 52). 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.
Deposits from credit institutions (Millions of euros)
Deposits with agreed maturity
Demand deposits
Repurchase agreements
Total
Notes
31
2017
15,749
1,908
22,942
40,599
P. 119
2016
17,027
3,005
24,945
44,977
The breakdown of this heading by geographical area and the nature of the related instruments in the
accompanying balance sheets, is as follows:
December 2017 Deposits from Credit Institutions (Millions of euros)
Spain
Rest of Europe
Mexico
South America
The United States
Rest of the world
Total
Demand Deposits &
Reciprocal Accounts
Deposits with
Agreed Maturity
Repurchase
Agreements
744
591
63
415
22
73
1,908
3,997
7,777
55
755
1,442
1,723
15,749
879
21,704
-
-
-
359
22,942
December 2016 Deposits from Credit Institutions (Millions of euros)(*)
Demand Deposits &
Reciprocal
Accounts
Deposits with
Agreed Maturity
Repurchase
Agreements
924
1,120
286
460
131
83
3,004
5,153
7,944
-
900
1,328
1,652
16,977
817
23,620
-
-
-
508
24,945
Spain
Rest of Europe
Mexico
South America
The United States
Rest of the world
Total
(*)
Interest accrued not included
20.3 Customer deposits
Total
5,620
30,072
118
1,170
1,464
2,155
40,599
Total
6,894
32,684
286
1,360
1,459
2,243
44,926
The breakdown of this heading of the accompanying balance sheets, by type of financial instruments, is as
follows:
Customer deposits (Millions of euros)
Government and other government agencies
Demand deposits
Fixed-term deposits
Reverse repos
Other accounts
Total
Notes
31
2017
7,845
126,808
54,915
4,648
429
194,645
2016
7,375
105,851
85,989
6,230
2,500
207,946
Previous table includes as of 31, December 2017 and 2016, subordinated deposits amounted to €430 million
and €2,942 million, respectively, vinculated to subordinated debt issues and preferred shares launched by
BBVA International Preferred, S.A.U., BBVA Subordinated Capital, S.A.U., BBVA Global Finance, Ltd., Caixa
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 52). 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.
P. 120
Terrassa Societat de Participacions Preferents, S.A. Unipersonal and CaixaSabadell Preferents, S.A.
Unipersonal which are unconditionally and irrevocably secured by the Bank.
The breakdown of this heading in the accompanying balance sheets, by type of instrument and geographical
area, is as follows:
December 2017 - Customer Deposits (Millions of euros)
2017
Spain
Rest of Europe
Mexico
South America
The United States
Rest of the world
Total
Demand
Deposits
Savings Deposits
Deposits with
Agreed Maturity
Repos
Total
93,773
3,687
203
533
181
595
34,884
41,779
311
22
102
23
196
8,520
288
1,354
2,476
1,070
2,659
1,989
-
-
-
-
173,095
14,507
513
1,989
2,680
1,861
98,972
35,538
55,487
4,648
194,645
December 2016 - Customer Deposits (Millions of euros)(*)
Demand
Deposits
Savings
Deposits
64,542
3,903
268
449
191
415
41,464
426
24
143
40
160
2016
Deposits with
Agreed
Maturity
67,902
15,225
337
1,364
1,791
2,665
Repos
Total
1,900
4,307
175,808
23,861
-
-
8
-
629
1,956
2,030
3,240
69,768
42,257
89,284
6,215
207,524
Spain
Rest of Europe
Mexico
South America
The United States
Rest of the world
Total
(*)
Interest accrued not included
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 52). 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.
20.4 Debt certificates issued
The breakdown of the balance under this heading in the accompanying balance sheets is as follows:
P. 121
2016
30,161
-
2,509
20,376
600
1,840
4,836
4,000
4,000
770
14
756
66
3,013
-
1,443
121
18
1,431
1,423
1,423
-
-
-
2017
30,339
967
7,589
12,318
500
711
8,254
4,500
4,500
3,671
-
3,671
83
3,827
404
1,097
112
11
2,203
2,085
2,085
117
-
117
Debt securities issued (Millions of euros)
In Euros
Promissory bills and notes
Non-convertible bonds and debentures
Mortgage Covered bonds (**)
Other securities
Accrued interest and others (*)
Subordinated liabilities
Convertible
Convertible perpetual securities
Non-convertible
Preferred Stock
Other subordinated liabilities
Valuation adjustments (*)
In Foreign Currency
Promissory bills and notes
Non-convertible bonds and debentures
Mortgage Covered bonds (**)
Accrued interest and others (*)
Subordinated liabilities
Convertible
Convertible perpetual securities
Non-convertible
Preferred Stock
Other subordinated liabilities
Valuation adjustments (*)
Total
1
34,166
8
33,174
(*) Accrued interest but pending payment, valuation adjustments and issuance costs included
(**) See Appendix X.
As of December 31, 2017, 36% of “Debt securities issued” have fixed-interest rates and 64% have variable
interest rates.
The total cost of the accrued interest under “Debt securities issued” in 2017 and 2016 totaled €550 million
and €793 million, respectively.
As of December 31, 2017 and 2016 the accrued interest pending payment from promissory notes and bills
and bonds and debentures amounted to €275 million and €465 million, respectively.
The headings “Nonconvertible bonds and debentures at floating interest rate" and “Non-convertible bonds
and debentures at fixed rate” as of December 31, 2017 include several issues, the latest maturing in 2039.
The "Covered Bonds" account as of December 31, 2017 includes issues with various maturities, the latest in
2037.
Subordinated liabilities included in this heading and in Note 20.3, 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
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 52). 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.
P. 122
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.
The variations of the balance under this heading are mainly the result of the following transactions:
During 2017, for certain issuances initially carried out by companies belonging to the BBVA Group, a
replacement has been carried out as issuer of these companies by BBVA, S.A. This change has been carried
out for issuances initially made by BBVA Senior Finance S.A. Unipersonal in euros and in currency, for a total
amount of €1,367 million as well as subordinated issuances made by BBVA Subordinated Capital, S.A
Unipersonal, amounting to €1,618 million. Deposit contracts between the Bank and the aforementioned
companies have also been cancelled. This has meant the reclassification of these amounts from "Customer
deposits" (see Note 20.3) to "Debt certificates issued".
During 2017, € 8,385 million of mortgage bond issues were amortized. New issues of non-convertible bonds
and debentures in euros and subordinated non-convertible liabilities in euros were made amounting to €
4,290 and € 2,986 million respectively.
• Perpetual securities eventually convertible.
On May 24, 2017 and November 14, 2017, BBVA carried out issuances of perpetual contingent
convertible securities (additional tier 1 instrument), with exclusion of pre-emptive subscription rights of
shareholders, for a total nominal amount of €500 million and €1,000 million, respectively (see Note 23).
On April 8, 2016, BBVA issued perpetual securities eventually convertible into new ordinary shares of
BBVA,(Additional level I capital instruments) without pre-emption rights, for a total amount of €1,000
million (see Note 23) .
On February 10, 2015, BBVA issued perpetual securities eventually convertible into new ordinary shares
of BBVA, (Additional level I capital instruments) without pre-emption rights, for a total amount of €1,500
million.
Such 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 convertible perpetual securities could be subject into common shares if the trigger event occurs,
that is, if BBVA’s Common Equity Tier 1 capital ratio falls below 5.125% among other events.
These issuances may be fully amortized, to option of BBVA, only in the cases included in its terms and
conditions, and in any case, in accordance with the provisions of the applicable regulations.
20.5 Other financial liabilities
The breakdown of the balance under this heading in the accompanying balance sheets is as follows:
Other financial liabilities (Millions of euros)
Creditors for other financial liabilities
Collection accounts
Creditors for other payment obligations
Dividend payable but pending payment (*)
Total
2017
4,412
2,614
1,229
-
8,255
2016
3,662
1,964
1,007
525
7,158
(*) Corresponding to the cash dividend declared in December 2017 and 2016 and paid in January 2018 and 2017
(see Note 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 52). 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.
P. 123
The information required by Final Provision second of Law 31/2014 of December 3, amending 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 (*)
Average payment period to suppliers (days)
Ratio of outstanding payment transactions (days)
Ratio outstanding payment transactions (days)
Total payments (Millions of euros)
Total pending payments (Millions of euros)
2017
2016
BBVA SPAIN
BBVA GROUP IN
SPAIN
BBVA SPAIN
BBVA GROUP IN
SPAIN
29
30
20
2,410
124
29
29
19
2,497
128
33
34
21
2,426
92
33
33
22
2,568
96
(*)
It is considered on time payments made within 60 days, and not on time those which exceeds 60 days.
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.
21. 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 (Millions of euros)
Pensions and other post employment defined benefit obligations
Other long term employee benefits
Provisions for taxes and other legal contingencies
Commitments and guarantees given
Rest provisions
Total
2017
4,594
31
329
272
2,379
7,605
2016
5,271
32
-
658
2,956
8,917
(*) As of December 31, 2016, this caption includes provisions for different items, the most significant being those arising
from the merger of Catalunya Banc and the provision of€ 577 million made by the "floor clauses" (clausulas suelo).
The changes in 2017 and 2016 in the balances under this heading in the accompanying balance sheets are as
follows:
Provisions for pensions and similar obligations. Changes Over the Period (Millions of euros)
Notes
Balance at the beginning
Add
Charges to income for the year
Interest expenses and similar charges
Personnel expenses
Provision expenses
Charges to equity
Transfers and other changes
Less
Benefit payments
Employer contributions
Balance at the end
2017
5,303
27
4
277
-
-
(692)
(294)
4,625
2016
5,177
49
4
253
10
569
(735)
(24)
5,303
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 52). 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 for Taxes, Legal Contingents and Other Provisions, Changes Over the Period (Millions of euros)
Balance at beginning
Additions
Acquisition of subsidiaries
Unused amounts reversed during the period
Amount used and other variations
Balance at the end
Ongoing legal proceedings and litigation
P. 124
2016
1,032
1,339
-
(386)
1,629
3,614
2017
3,614
1,409
-
(855)
(1,188)
2,980
The financial sector is facing an environment of greater regulatory and litigious pressure. In this environment,
BBVA is frequently party to individual or collective legal actions 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, as of December 31, 2017, none of such actions is material, individually or as a whole, and with
no significant impact on the operating results, liquidity or financial situation at a Group consolidated or
individual level of the Bank. As of December 31, 2017, BBVA´s Management believes that the provisions
made in respect of such legal proceedings are adequate.
In 2016, the judicial procedure related to the clauses of limitation of interest rates in mortgage loans with
consumers (the so-called “cláusulas suelo”) was considered material. In relation to this issue, after the
preliminary ruling to the Court of Justice of the European Union (CJEU), and after the analysis carried out on
the portfolio of mortgage loans to consumers to which a floor clause had been applied, BBVA endowed a
provision of €577 million (with an impact on the attributed profit of approximately €404 million) recorded in
the consolidated profit and loss account for 2016, to cover potential claims. This provision has been used for
this purpose during the year 2017. The additional provisions that have been made during the year 2017, to
cover the possible claims that may arise in relation to this matter, have not been significant.
22. Post-employment
commitments
and
other
employee
benefit
As stated in Note 2.9, the Bank has assumed commitments with employees including short-term employee
benefits (Note 39.1), defined contribution and defined benefit plans, as well as other long-term employee
benefits.
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 supersedes and improves the terms and conditions of the
collective labor agreement for the banking industry; including benefits in the event of retirement, death and
disability for all employees, including those hired after March 8, 1980. The Bank externally funded all its
pension commitments with active and retired employees pursuant to Royal Decree 1588/1999, of October
15. These commitments are instrumented in external pension plans, insurance contracts with non-Group
companies and insurance contracts with BBVA Seguros, S.A. de Seguros y Reaseguros, which is 99.96%
owned by the Banco Bilbao Vizcaya Argentaria Group.
The table below shows a breakdown of recorded balance sheet liabilities relating to defined benefit plans as
at December 31, 2017 and 2016:
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 52). 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.
Net Liability (asset) on the Balance Sheet (Millions of euros)
Pension commitments
Early retirement commitments
Other long-term employee benefits
Total commitments
Pension plan assets
Early retirement plan assets
Other long-term plan assets
Total plan assets
Total net liability/asset on the balance sheet
of which:
Provisions- Provisions for pensions and similar obligations
Provisions-Other long-term employee benefits
Insurance contracts linked to pensions
P. 125
2016
3,744
2,555
32
6,331
1,028
-
-
1,028
5,303
5,271
32
2,426
2017
3,376
2,204
31
5,611
986
-
-
986
4,625
4,594
31
2,142
The following table shows defined benefit plan costs recorded in the income statement for fiscal years 2017
and 2016:
Income Statement and Equity Impact (Millions of euros)
Notes
2017
2016
Interest and similar expenses
Interest expense
Interest income
Personnel expenses
Defined contribution plan expense
Defined benefit plan expense
Other benefit expenses
Provision (net)
Early retirement expense
Past service cost expense
Remeasurements (*)
Other provision expenses
Total Effects in Income Statements: Debit (Credit)
Total Effects on Equity: Debit (Credit) (**)
39.1
39.1
27
27
-
43
38
1
4
268
224
1
32
11
338
(1)
49
49
-
53
46
3
4
239
233
(3)
3
6
341
10
(*) Actuarial losses (gains) on remeasurement of the net defined benefit liability relating to early retirements in
Spain and other long-term employee benefits that are charged to the income statement (see Note 2.9).
(**) Actuarial gains (losses) on remeasurement of the net defined benefit pension liability before income taxes (see
Note 2.9).
22.1 Defined benefit plans
The commitments under these plans relate 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.
The change in these commitments as of December 31, 2017 and 2016 was as follows:
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 52). 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.
P. 126
Defined Benefit Plans (Millions of euros)
2017
2016
Defined
Benefit
Obligation
Plan Assets
Net Liability
(asset)
Insurance
contracts
linked to
pensions
Defined
Benefit
Obligation
Plan
Assets
Net Liability
(asset)
Insurance
contracts
linked to
pensions
Balance at the beginning
6,299
1,028
5,271
2,426
6,210
1,033
5,177
2,151
Current service cost
Interest income or expense
Contributions by plan participants
Employer contributions
Past service costs (1)
Remeasurements:
Return on plan assets (2)
From changes in demographic
assumptions
From changes in financial
assumptions
Other actuarial gain and losses
Benefit payments
Settlement payments
Business combinations and disposals
Transformation to defined
contribution
Effect on changes in foreign
exchange rates
Other effects
Balance at the end
5
81
-
-
225
(41)
-
(3)
(23)
(15)
-
17
-
7
-
9
9
-
-
-
(909)
(115)
-
-
(82)
(7)
9
5,580
-
-
-
(5)
45
986
5
64
-
(7)
225
(50)
(9)
(3)
(23)
(15)
(794)
-
-
-
37
-
-
-
(81)
(81)
-
-
-
7
109
-
-
230
245
-
(1)
187
59
-
20
-
9
-
66
66
-
-
-
(138)
(936)
(118)
-
-
(82)
(67)
(2)
(36)
4,594
-
(35)
2,142
(43)
402
-
-
22
-
(17)
(13)
92
6,299
9
1,028
7
89
-
(9)
230
179
(66)
(1)
187
59
(818)
(43)
-
40
-
-
-
166
166
-
-
-
(136)
-
380
205
-
(4)
83
5,271
-
-
-
2,426
(1)
(2)
Including gains and losses arising from settlements.
Excluding interest, which is recorded under "Interest income or expense".
The balance under the heading “Provisions – Pensions and other post-employment defined benefit
obligations” of the accompanying balance sheet as of December 31, 2017 includes €341 million for
commitments for post-employment benefits maintained with previous members of the Board of Directors
and the Bank’s Management Committee.
Both the costs and the present value of the commitments are determined by independent qualified actuaries
using the “projected unit credit” method.
In order to guarantee the good governance of these plans, the Bank has established an Employee Benefits
Committee including members from the different areas to ensure that all decisions are made taking into
consideration all of the associated impacts.
The following table sets out the key actuarial assumptions used in the valuation of these commitments as at
December 31, 2017 and 2016:
Actuarial Assumptions. Commitments in Spain
Discount rate
Rate of salary increase
Mortality tables
2017
1.24%
-
2016
1.50%
1.50%
PERM/F 2000P
PERM/F 2000P
Discount rate shown as of December, 31, 2017, corresponds to the weighted average rate, the actual
discount rates used 0.50% and 1.75% depending on the type of commitment.
The discount rate used to value future benefit cashflows has been determined by reference to Eurozone high
quality corporate bonds (see Note 2.2.9).
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 52). 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.
P. 127
The expected return on plan assets has been set in line with the adopted discount rate.
Assumed retirement ages have been set by reference to the earliest age at which employees are entitled to
retire or the contractually agreed age in the case of early retirements.
Changes in the main assumptions can affect the calculation of the commitments. Should the discount rate
have increased or decreased by 50 basis points, an impact on equity for the commitments in Spain would
have been registered amounting to approximately €27 million net of tax.
In addition to the commitments to employees shown above, the Group has other less material long-term
employee benefits. These include leave and long-service awards, which consist of either an established
monetary award or shares in Banco Bilbao Argentaria A.A. granted to employees when they complete a given
number of years of qualifying service. As of December 31, 2017 and 2016 the value of these commitments
amounted to €31 and €32 million respectively. These amounts are recorded under the heading "Provisions -
Other long-term employee benefits" of the accompanying balance sheet (see Note 21).
Information on the various commitments is provided in the following sections.
Pension commitments
These commitments correspond mainly to retirement, death and disability pensions in payment. They are
covered by insurance contracts, pension funds and internal provisions.
The change in pension commitments as of December 31, 2017 and 2016 is as follows:
Pensions commitments (Millions of euros)
2017
2016
Defined
Benefit
Obligation
Plan Assets
Net Liability
(asset)
Insurance
contracts
linked to
pensions
Defined
Benefit
Obligation
Plan Assets
Net Liability
(asset)
Insurance
contracts
linked to
pensions
Balance at the beginning
3,744
1,028
2,716
2,426
3,521
1,033
2,488
2,151
Current service cost
Interest income or expense
Contributions by plan participants
Employer contributions
Past service costs (1)
Remeasurements:
Return on plan assets (2)
From changes in demographic assumptions
From changes in financial assumptions
Other actuarial gain and losses
Benefit payments
Settlement payments
Business combinations and disposals
Defined contribution transformation
Effect on changes in foreign exchange rates
Other effects
Balance at the end
Of Which:
Vested benefit obligation relating to current
employees
Vested benefit obligation relating to retired
employees
5
58
-
-
1
(82)
-
(3)
(69)
(10)
-
17
-
7
-
9
9
-
-
-
5
41
-
(7)
1
(91)
(9)
(3)
(69)
(10)
-
37
-
-
-
(81)
(81)
-
-
-
7
66
-
-
(3)
237
-
(1)
162
76
-
20
-
9
-
66
66
-
-
-
(274)
(115)
(159)
(138)
(275)
(118)
-
-
-
(5)
45
986
-
-
(82)
(2)
(32)
2,390
-
-
(67)
-
(35)
2,142
-
-
(82)
(7)
13
3,376
3,263
113
(43)
237
-
(17)
14
-
22
-
(13)
9
3,744
1,028
2,716
2,426
3,564
180
7
46
-
(9)
(3)
171
(66)
(1)
162
76
(157)
(43)
215
-
(4)
5
-
40
-
-
-
166
166
-
-
-
(136)
-
205
-
-
-
(1)
(2)
Including gains and losses arising from settlements.
Excluding interest, which is recorded under "Interest income or expense".
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 52). 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.
P. 128
In Spain, local regulation requires that pension and death benefit commitments must be funded, either
through a qualified pension plan or an insurance contract.
These commitments are covered by insurance contracts which meet the requirements of the accounting
standard regarding the non-recoverability of contributions. However, a significant number of the insurance
contracts are with BBVA Seguros, S.A. –BBVA related party – and consequently these policies cannot be
considered plan assets under IAS 19. For this reason, the liabilities insured under these policies are fully
recognized under the heading "Provisions – Pensions and other post-employment defined benefit
obligations" of the accompanying balance sheet (see Note 21), while the related assets held by the insurance
company are included under the heading “Insurance contracts linked to pensions “.
In addition there are commitments covered by insurance contracts with insurance companies not related to
the Bank and can therefore be considered qualifying insurance policies and plan assets under IAS 19. These
commitments are therefore shown in the accompanying balance sheets for the net amount of the
commitment less plan assets. As of December 31, 2017 and 2016, 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.
Pension benefits are paid by the insurance companies with whom BBVA has insurance contracts and to
whom all insurance premiums have been paid. The premiums are determined by the insurance companies
using “cash flow matching” techniques to ensure that benefits can be met when due, guaranteeing both the
actuarial and interest rate risk.
The Bank signed a Social Benefit Standardization Agreement for its employees in Spain. The agreement
standardizes the existing social benefits for the different groups of employees and, in some cases where a
service was provided, quantified it as an annual amount in cash.
In addition, some overseas branches of the Bank maintain defined-benefit pension commitments with some
of their active and inactive personnel. These arrangements are closed to new entrants who instead
participate in defined-contribution plans.
Early retirement commitments
In 2017 the Bank offered certain employees the possibility of taking retirement or early retirement before the
age stipulated in the collective labor agreement in force. This offer was accepted by 724 employees (601 in
2016).The commitments to early retirees include the compensation and indemnities and contributions to
external pension funds payable during the period of early retirement.
The change in these commitments during financial years 2017 and 2016 is shown below:
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 52). 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.
P. 129
Early retirement commitments (Millions of euros)
Balance at the beginning
Current service cost
Interest income or expense
Contributions by plan participants
Employer contributions
Past service costs (1)
Remeasurements:
Return on plan assets (2)
From changes in demographic assumptions
From changes in financial assumptions
Other actuarial gain and losses
Benefit payments
Settlement payments
Business combinations and disposals
Transformation to defined contribution
Effect on changes in foreign exchange rates
Other effects
Balance at the end
Defined
Benefit
Obligation
2,555
-
23
-
-
224
41
-
-
46
(5)
(635)
-
-
-
-
(4)
2,204
2017
2016
Plan Assets
Net Liability
(asset)
Defined
Benefit
Obligation
Plan Assets
Net Liability
(asset)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,555
2,689
-
23
-
-
224
41
-
-
46
(5)
(635)
-
-
-
-
(4)
2,204
-
43
-
-
233
8
-
-
25
(17)
(661)
-
165
-
-
78
2,555
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,689
-
43
-
-
233
8
-
-
25
(17)
(661)
-
165
-
-
78
2,555
(1)
(2)
Including gains and losses arising from settlements.
Excluding interest, which is recorded under "Interest income or expense".
The valuation and account treatment of these commitments is the same as that of the pension
commitments, except for the treatment of actuarial gains and losses (see Note 2.9).
Estimated benefit payments
The estimated payments over the next 10 years are as follows:
Estimated Future Payments (Millions of euros)
Commitments in Spain
Of which:
Early retirements
22.2 Defined contribution plans
2018
2019
2020
2021
2022
2023 -
2027
752
680
595
499
401
1,099
543
477
396
307
218
286
The Bank sponsors defined contribution plans, in some cases with employees making contributions which
are matched by the employer.
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.
23. Common stock
into
As of December 31, 2017, BBVA’s common stock amounted to €3,267,264,424.20 divided
6,667,886.580 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
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 52). 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.
P. 130
dividend rights, and no single stockholder enjoys special voting rights. Each and every share is part of the
Bank’s common stock.
The Bank’s shares are traded 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.
As of December 31, 2017, State Street Bank and Trust Co., Chase Nominees Ltd and The Bank of New York
Mellon SA NV in their capacity as international custodian/depositary banks, held 12.53%, 6.48%, and 3.80%
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 outstanding.
On October 18, 2017, the Blackrock, Inc. reported to the Spanish Securities and Exchange Commission
(CNMV) that, it now has an indirect holding of BBVA common stock totaling 5.939%, of which 5.708% are
voting rights attributed to shares and 0.231% are voting rights through financial instruments.
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 “Paid up capital” of the accompanying consolidated balance sheets are due to the
following common stock increases:
Capital Increase
As of December 31, 2015
Dividend option - April 2016
Dividend option - October 2016
As of December 31, 2016
Dividend Option . April 2017
As of December 31, 2017
Number of Shares
Common Stock
(Millions of Euros)
6,366,680,118
113,677,807
86,257,317
6,566,615,242
101,271,338
6,667,886,580
3,120
56
42
3,218
50
3,267
“Dividend Option” Program in 2017:
The AGM of BBVA held on March 17, 2017 adopted, under agenda item three, a capital increase to be
charged to voluntary reserves to implement the shareholder remuneration system called the “Dividend
Option” this year in similar conditions to those agreed in 2014, 2015 and 2016, conferring on the Board of
Directors, in accordance with article 297.1.a) of the Spanish Companies Act, the authority to set the date on
which the capital increase should be carried out, within one year of the date of approval of the AGM
resolution.
By virtue of such resolution, the Board of Directors of BBVA resolved, on March 29, 2017, to execute the
capital increase to be charged to voluntary reserves in accordance with the terms and conditions approved
by the AGM mentioned above. As a result, BBVA’s share capital was increased by an amount of
€49,622,955.62 through the issuance of 101,271,338 newly-issued BBVA ordinary shares at €0.49 par value
each (see Note 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 52). 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.
P. 131
“Dividend Option” Program in 2016:
The AGM held on March 11, 2016, under agenda item three, adopted four capital increase resolutions to be
charged to voluntary reserves to once again implement the shareholder remuneration program called the
“Dividend Option” (see Note 3), conferring on the Board of Directors, in accordance with article 297.1 a) of
the Spanish Companies Act, the authority to set the date on which said capital increases should be carried
out, within one year of the date of approval of the AGM resolution, including the power not to implement any
of the resolutions, when deemed advisable.
On March 31, 2016, the Board of Directors of BBVA approved the execution of the first of the capital
increases charged to voluntary reserves, in accordance with the terms and conditions agreed by the
aforementioned AGM. As a result of this increase, the Bank’s capital increased by €55,702,125.43 through
the issuance of 113,677,807 ordinary shares at €0.49 par value each (see Note 3).
On September 28, 2016, BBVA’s Board of Directors approved the execution of the second of the capital
increases charged to voluntary reserves in accordance with the terms and conditions agreed by the
aforementioned AGM. As a result of this increase, the Bank’s capital increased by €42,266,085.33 through
the issuance of 86,257,317 ordinary shares at €0.49 par value each (see Note 3).
Convertible and/or exchangeable securities:
The AGM held on March 17, 2017, resolved, under agenda item five, to confer authority to the Board of
Directors to issue securities convertible into newly issued BBVA shares, on one or several occasions, within
the maximum term of five years to be counted from the approval date of the authorization, up to a maximum
overall amount of €8 billion or its equivalent in any other currency. Likewise, the AGM resolved to confer to
the Board of Directors the authority to totally or partially exclude shareholders’ pre-emptive subscription
rights within the framework of a specific issue of convertible securities, although this power was limited to
ensure the nominal amount of the capital increases resolved or effectively carried out to cover the
conversion of mandatory convertible
issuances of this authority (without prejudice to anti-dilution
adjustments), with exclusion of pre-emptive subscription rights and of those likewise resolved or carried out
with exclusion of pre-emptive subscription rights in use of the authority to increase the share capital
conferred by the AGM held on March 17, 2017 under agenda item four, do not exceed the maximum nominal
amount, overall, of 20% of the share capital of BBVA at the time of the authorization, this limit not being
applicable to contingent convertible issues.
In use of the authority mentioned above, BBVA carried out, on May 24, 2017 the fifth issuance of perpetual
contingent convertible securities (additional tier 1 instrument), with exclusion of pre-emptive subscription
rights of shareholders, for a total nominal amount of €500 million. This issuance is listed in the Global
Exchange Market of the Irish Stock Exchange and was targeted only at qualified investors, not being offered
to, and not being subscribed for, in Spain or by Spanish residents. The issuance qualifies as additional tier 1
capital of the Bank and the Group in accordance with Regulation EU 575/2013 (see Note 20.4).
Likewise, in use of such authority, BBVA carried out, on November 14, 2017 the sixth issuance of perpetual
contingent convertible securities (additional tier 1 instrument), with exclusion of pre-emptive subscription
rights of shareholders, for a total nominal amount of $1,000 million. This issuance is listed in the Global
Exchange Market of the Irish Stock Exchange and was targeted only at qualified investors, not being offered
to, and not being subscribed for, in Spain or by Spanish residents. The qualification of this issuance as
additional tier 1 capital has been requested (see Note 20.4).
In past years, BBVA has carried out, in use of the authority to issue convertible securities conferred by the
AGM held on March 16, 2012 (in effect until March 16, 2017), four additional issuances of perpetual
contingent convertible securities (additional tier 1 instrument), with exclusion of pre-emptive subscription
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 52). 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.
P. 132
rights of shareholders (in April 2013 for an amount of $1.5 billion, in February 2014 and February 2015 for an
amount of €1.5 billion each one, and in April 2016 for an amount of €1 billion). These issuances were targeted
only at qualified investors and foreign private banking clients not being offered to, and not being subscribed
for, in Spain or by Spanish residents. The first two issuances are listed in the Singapore Exchange Securities
Trading Limited and the last two issuances are listed in the Global Exchange Market of the Irish Stock
Exchange. Furthermore, these four issuances qualify as additional tier 1 capital of the Bank and the Group in
accordance with Regulation UE 575/2013 (see Note 20.4).
Capital increase
BBVA’s AGM held on March 17, 2017 resolved, under agenda item four, to confer authority on the Board of
Directors to increase Bank’s share capital, on one or several occasions, subject to provisions in the law and in
the Company Bylaws that may be applicable at any time, within the legal term of five years of the approval
date of the authorization, up to the maximum amount corresponding to 50% of Bank’s share capital at the
time on which the resolution was adopted, likewise conferring authority to the Board of Directors to totally or
partially exclude shareholders’ pre-emptive subscription rights over any specific issue that may be made
under such authority; although the power to exclude pre-emptive subscription rights was limited, such that
the nominal amount of the capital increases resolved or effectively carried out with the exclusion of pre-
emptive subscription rights in use of the referred authority and those that may be resolved or carried out to
cover the conversion of mandatory convertible issues that may equally be made with the exclusion of pre-
emptive subscription rights in use of the authority to issue convertible securities conferred by the AGM held
on March 17, 2017, under agenda item five (without prejudice to the anti-dilution adjustments) shall not
exceed the nominal maximum overall amount of 20% of the share capital of BBVA at the time of the
authorization.
As of the date of this document, the Bank’s Board of Directors has not exercised the authority conferred by
the AGM.
24. Share premium
As of December 31, 2017 and 2016, the balance under this heading in the accompanying balance sheets was
€23,992 million.
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.
25. Retained earnings, Revaluation reserves and Other
The breakdown of the balance under this heading in the accompanying balance sheets is as follows:
Reserves. Breakdown by concepts (Millions of euros)
Restricted reserves:
Legal reserve
Restricted reserve
Revaluation Royal Decree-Law 7/1996
Voluntary reserves:
Voluntary and others
Total
2017
2016
644
159
12
8,643
9,457
624
201
20
8,521
9,366
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 52). 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.
P. 133
25.1 Legal reserve
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.
25.2 Restricted reserves
As of December 31, 2017 and 2016, the Bank’s restricted reserves are as follows:
Restricted Reserves (Millions of euros)
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
2017
88
69
2
159
2016
88
111
2
201
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.
25.3 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.
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:
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 52). 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.
Revaluation and Regularization of the Balance Sheet (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
26. Treasury shares
P. 134
2016
187
(6)
181
(5)
(156)
20
2017
187
(6)
181
(5)
(164)
12
In 2017 and 2016 the Group companies performed the following transactions with shares issued by the Bank:
Financial Assets Held-for-Trading: Equity instruments by Issuer (Millions of euros)
Balance at beginning
+ Purchases
- Sales and other changes
+/- Derivatives on BBVA shares
+/- Other changes
Balance at the end
Of which:
Held by BBVA, S.A.
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
(Shareholders' funds-Reserves)
2017
2016
Number of Shares
Millions of Euros
Number of Shares
Millions of Euros
7,230,787
48
38,917,665
238,065,297
1,674
379,850,939
(231,956,502)
(1,622)
(411,537,817)
-
-
13,339,582
-
13,339,582
-
7.03
6.99
-
-
7,230,787
2,789,894
4,440,893
-
5.27
5.50
(4)
-
96
-
96
-
1
309
2,004
(2,263)
(1)
-
48
22
26
-
(30)
The percentages of treasury stock held by the Bank in 2017 and 2016 are as follows:
Treasury Stock
Min
2017
Max
Closing
Min
2016
Max
Closing
% treasury stock
0.004%
0.278%
0.200%
0.081%
0.756%
0.110%
The number of BBVA shares accepted by the Bank in pledge as of December 31, 2017 and 2016 is as follows:
Shares of BBVA Accepted in Pledge
Number of shares in pledge
Nominal value
% of share capital
2017
2016
64,633,003
0.49
0.97%
90,731,198
0.49
1.38%
The number of BBVA shares owned by third parties but managed by a company in the Group as of December
31, 2017 and 2016 is as follows:
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 52). 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.
P. 135
Shares of BBVA Owned by Third Parties but Managed by the Group
Number of shares owned by third parties
Nominal value
% of share capital
2017
2016
34,597,310
0.49
0.52%
85,766,602
0.49
1.31%
27. Accumulated other comprehensive income
The breakdown of the balance under this heading in the accompanying balance sheets is as follows:
Accumulated other comprehensive income (Millions of euros)
Items that will not be reclassified to profit or loss
Actuarial gains or (-) losses on defined benefit pension plans
Non-current assets and disposal groups classified as held for sale
Other adjustments
Items that may be reclassified to profit or loss
Hedge of net investments in foreign operations [effective portion]
Foreign currency translation
Hedging derivatives. Cash flow hedges [effective portion]
Available-for-sale financial assets
Non-current assets and disposal groups classified as held for sale
Total
2017
(38)
(38)
-
-
447
-
-
(136)
583
-
409
2016
(43)
(43)
-
-
(319)
-
13
(127)
(205)
-
(362)
The balances recognized under these headings are presented net of tax.
28. Capital base and capital management
Capital base
As of December 31, 2017 and 2016, equity is calculated in accordance with current regulation on minimum
capital base requirements for Spanish credit institutions –both as individual entities and as consolidated
group– 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.
As a result of the Supervisory Review and Evaluation Process (SREP) carried out by the European Central
Bank (ECB), BBVA has received a communication from the ECB requiring BBVA to maintain, effective from
the 1st of January 2018, a (i) CET1 phased-in capital of 8.438% at a consolidated level and 7.875% at an
individual level; and (ii) a phased-in total capital ratio of 11.938% at the consolidated level and 11.375% at the
individual level.
This total consolidated capital ratio of 11.938% includes: i) the minimum CET1 capital ratio required under
Pillar 1 (4.5%); ii) Pillar 1 Additional Tier 1 capital requirements (1.5%); iii) Pillar 1 Tier 2 capital requirements
(2%); iv) Pillar 2 CET1 capital requirements (1.5%); v) the capital conservation buffer (CCB) (1.875% CET1
phased-in) and vi) the Other Systemic Important Institution buffer (OSII) (0.563% CET1 phased-in).
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 52). 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.
P. 136
Since BBVA has been excluded from the list of global systemically important financial institutions in 2017
(which is updated every year by the Financial Stability Board (FSB)), as of January 1, 2018, the G-SIB buffer
will not apply to BBVA in 2018, (notwithstanding the possibility that the FSB or the supervisor may include
BBVA on it in the future).
However, the supervisor has informed BBVA that it is included on the list of other systemically important
financial institutions, and a D-SIB buffer of 0.75% of the fully-loaded ratio applies at the consolidated level. It
will be implemented gradually from January 1, 2016 to January 1, 2019.
The Group’s bank capital in accordance with the aforementioned applicable regulation, considering entities
scope required by the above regulation, as of December 31, 2017 and 2016 is shown below:
Eligible capital resources (Millions of euros)
Capital
Share premium
Retained earnings, revaluation reserves and other reserves
Other equity instruments, net
Treasury shares
Attributable to the parent company
Attributable dividend
Total Equity
Accumulated other comprehensive income
Non-controlling interests
Shareholders´ equity
Intangible assets
Fin. treasury shares
Indirect treasury shares
Deductions
Temporary CET 1 adjustments
Capital gains from the Available-for-sale debt instruments portfolio
Capital gains from the Available-for-sale equity portfolio
Differences from solvency and accounting level
Other adjustments and deductions
Common Equity Tier 1 (CET 1)
Additional Tier 1 before Regulatory Adjustments
Total Regulatory Adjustments of Aditional Tier 1
Tier 1
Tier 2
Other deductions
Total Capital (Total Capital=Tier 1 + Tier 2)
Total Minimum equity required (**)
(*) Provisional data.
December 2017 (*) (**) December 2016 (***)
3,267
23,992
25,443
54
(96)
3,519
(1,043)
55,136
(8,792)
6,979
53,323
(6,627)
(48)
(134)
(6,809)
(273)
(256)
(17)
(189)
(462)
(3,715)
42,337
6,296
(1,656)
46,977
9,137
56,114
40,238
3,218
23,992
23,641
54
(48)
3,475
(1,510)
52,821
(5,458)
8,064
55,428
(5,675)
(82)
(51)
(5,808)
(129)
(402)
273
(120)
(249)
(2,001)
47,370
6,114
(3,401)
50,083
8,810
58,893
37,923
(**) Includes updates on the calculation of Structural FX RWA, pending confirmation by ECB and the subordinated
debt (Tier2) issued by Garanti pending approval by ECB.
(***) Figures originally reported in the Prudential Relevance Report corresponding to the year 2016, without
restatements.
As of December 31, 2017, the phased-in Common Equity Tier 1 (CET1) stood at 11.7%, accounting a decrease
with respect to December 2016 of 47 basis points. The negative effect on the minority interests and
deductions due to the regulatory phase-in calendar of 80% in 2017 compared to 60% in 2016 has an impact
of -56 basis points which is compensated by the organic generation of capital leaning against the recurrence
of the results, net of dividends paid and remunerations.
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 52). 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.
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It should be noted that CET1 ratio was affected by corporate transactions carried out during 2017, in
particular the acquisition of an additional 9.95% stake in Garanti (see Note 14.1) and the sale of 1.7% in
CNCB. Both transactions had a combined negative impact on the ratio of -13 basis points.
Additionally, BBVA Group has registered a negative charge in the income statements of 2017 up to €1,123
million due to the unrealized losses from its shares in Telefonica. However, this impact does not affect the
equity or the capital ratio since these unrealized losses were already accounted for.
During 2017 BBVA Group continued to strengthen its capital position with the issuance of new perpetual
securities eventually convertible into shares, classified as additional TIER1 equity instruments (contingent
convertible) amounting to €500 million and $1,000 million (the latter in the American market, with the
prospectus registered at the Securities and Exchange Commission and not yet included in the Group’s TIER1
capital as of December 31, 2017).
Regarding TIER2, BBVA, S.A. issued subordinated debts with a total amount of €1,500 million; and Garanti
issued a subordinated debt of $750 million.
Finally, the total phased-in capital ratio stood at 15.5% reflecting the effects discussed above.
These levels are above the requirements established by the ECB in its SREP letter and the systemic buffers
applicable to BBVA Group for the CET1 ratio in 2017 (11.125%).
Risk-weighted assets decreased approximately by 7% compared to December 31, 2016, mainly explained by
the impact of the general depreciation of certain local currencies and the efficient management and
allocation of capital in line with the strategic objectives of the Group.
The increase in minimum capital requirements is mainly due to the consideration of the aforementioned new
prudential capital requirements applicable to BBVA.
The comparison of the amounts as of December 31, 2017 with respect to the amounts as of December 31,
2016 according to their respective existing regulations on both periods is as follows:
Eligible capital BBVA S.A. resources (Millions of euros)
Core Capital
Basic equity
Additional equity
Total Equity
Minimum equity required
(*) Provisional data and calculated according to CRD-IV
Capital management
Capital management in the BBVA Group has a two fold aim:
2017 (*)
34,882
40,604
3,892
44,495
15,805
2016
35,239
41,001
2,814
43,814
16,058
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 subordinate debt.
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 52). 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.
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This capital management is carried out determining the capital base and the solvency ratios established by
the prudential and minimum capital requirements also have to be met for the entities subject to prudential
supervision in each country.
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 and its internal capital
estimation model has received the Bank of Spain’s approval for certain portfolios (see 7).
29. Commitments and guarantees given
The breakdown of the balance under these headings in the accompanying balance sheets is as follows:
Loan commitments, financial guarantees and other commitments (Millions of euros)
Loan commitments given
of which: defaulted
Central banks
General governments
Credit institutions
Other financial corporations
Non-financial corporations
Households
Financial guarantees given
of which: defaulted
Central banks
General governments
Credit institutions
Other financial corporations
Non-financial corporations
Households
Other Commitments given
of which: defaulted
Central banks
General governments
Credit institutions
Other financial corporations
Non-financial corporations
Households
Total Loan commitments and financial guarantees
Notes
5.3.1
5.3.1
5.3.1
2017
54,631
261
1
1,776
863
2,414
35,199
14,378
11,336
154
-
229
503
5,174
5,292
138
36,504
425
7
58
14,722
3,952
17,653
112
102,471
2016
60,863
230
1
3,111
849
3,497
38,705
14,700
18,697
176
-
102
429
10,811
7,193
162
31,306
374
12
74
8,723
4,928
17,463
106
110,866
As of December 31, 2017, the provisions of loan commitments given, financial guarantees given and other
commitments and guarantees given, registered in the balance sheet amounted €83 million, €75 million and
€114 million, respectively.
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 2017 and 2016 no issuances of debt securities carried out by associated entities, joint ventures or non-
Group entities have been guaranteed.
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 52). 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.
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30. Other contingent assets and liabilities
As of December 31, 2017 and 2016, there were no contingent assets or liabilities for significant amounts
other than those registered in these Financial Statements.
31. Purchase and sale commitments and future payment
obligations
The breakdown of the sale and purchase commitments of the Bank as of December 31, 2017 and 2016 is as
follows:
Purchase and Sale Commitments (Millions of euros)
Financial instruments sold with repurchase commitments
Central Banks
Credit Institutions
General governments
Other sectors
Financial instruments purchased with resale commitments
Central Banks
Credit Institutions
General governments
Other sectors
Notes
7
20.2
20.3
20.3
11.2
11.3
11.3
2017
29,627
2,037
22,942
-
4,648
24,798
28
13,513
446
10,811
2016
31,290
115
24,945
-
6,230
22,117
-
14,907
544
6,666
Future payment obligations other than those mentioned in the notes above correspond mainly to long-term
(over 5 year) obligations amounting to around €2,351 million for leases payable derived from operating lease
contracts.
32. Transactions for the account of third parties
As of December 31, 2017 and 2016, the details of the most significant items under this heading are as follows:
Transactions on Behalf of Third Parties: Breakdown by concepts (Millions of euros)
Financial instruments entrusted by third parties
Conditional bills and other securities received for collection
Securities lending
Total
2017
576,780
3,879
3,423
584,082
2016
464,774
3,388
2,387
470,549
As of December 31, 2017 and 2016, the off-balance sheet customer funds managed by the Bank are as
follows:
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 52). 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.
Off-Balance Sheet Customer Funds by Type (Millions of euros)
Collective investment
Pension funds
Saving insurance contracts
Customer portfolios managed on a discretionary basis
33.
Interest income and expense
33.1 Interest income
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2016
37,907
19,386
8,774
8,210
74,277
2017
43,294
19,964
8,385
8,253
79,896
The breakdown of the interest income recognized in the accompanying income statement is as follows:
Interest Income. Breakdown by Origin (Millions of euros)
Financial assets held for trading
Financial assets designated at fair value through profit or loss
Available-for-sale financial assets
Loans and receivables
Held-to-maturity investments
Hedging derivatives
Cash flow hedges (effective portion)
Fair value hedges
Other Assets
Liabilities interest income
Total
Notes
2017
2016
49
10
393
4,136
207
(294)
22
(316)
6
353
4,860
47
-
817
4,402
254
540
(1)
541
2
174
6,236
50.5
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.
33.2 Interest expenses
The following table shows the adjustments in expenses resulting from hedge accounting, broken down by
type of hedge:
Interest Expenses. Breakdown by Origin (Millions of euros)
Financial liabilities held for trading
Financial liabilities designated at fair value through profit or loss
Financial liabilities at amortised cost
Hedging derivatives and interest rate risk
Cash flow hedges
Fair value hedges
Other liabilities
Assets interest expenses
Total
2017
34
-
1,549
(456)
(7)
(449)
43
227
1,397
2016
-
-
2,122
389
(14)
403
62
140
2,713
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 52). 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. Dividend income
The breakdown of the balance under this heading in the accompanying income statements is as follows:
Dividend Income (Millions of euros)
Investments in associates
Investments in jointly controlled entities
Investments in group Entities
Other shares and dividend income
Total
2017
4
-
3,280
271
3,555
P. 141
2016
14
5
2,424
411
2,854
35. Fee and commission income
The breakdown of the balance under this heading in the accompanying income statements is as follows:
Fee and Commission Income (Millions of euros)
2017
2016
Bills receivables
Demand accounts
Credit and debit cards
Checks
Transfers and others payment orders
Insurance product commissions
Commitment fees
Contingent risks
Asset Management
Securities fees
Custody securities
Other fees and commissions
Total
20
152
376
7
109
133
96
162
38
118
93
25
144
336
7
98
124
99
170
36
89
90
699
2,003
668
1,886
36. Fee and commission expenses
The breakdown of the balance under this heading in the accompanying income statements is as follows:
Fee and Commission Expenses (Millions of euros)
Commissions for selling insurance
Credit and debit cards
Transfers and others payment orders
Other fees and commissions
Total
2017
-
156
3
227
386
2016
-
132
3
218
353
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 52). 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.
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37. Gains (losses) on financial assets and liabilities (net) hedge
accounting and exchange differences
The breakdown of the balance under this heading, by source of the related items, in the accompanying
income statements is as follows:
Gains or losses on financial assets and liabilities. Breakdown by Heading of the Balance Sheet (Millions of euros)
Gains or losses on derecognition of financial assets and liabilities not measured at fair value through profit or
loss, net
Available-for-sale financial assets
Loans and receivables
Other
Gains or losses on financial assets and liabilities designated at fair value through profit or loss, net
Gains or losses on financial assets and liabilities held for trading, net
Gains or losses from hedge accounting, net
Subtotal
Exchange Differences
Total
2017
634
565
75
(6)
18
32
(227)
457
435
892
2016
955
955
(1)
1
-
(70)
(62)
823
305
1,128
The breakdown of the balance (excluding the exchange differences) under this heading in the accompanying
income statements by the nature of the financial instruments is as follows:
Gains or losses on financial assets and liabilities. Breakdown by nature of the Financial Instrument (Millions of euros)
Debt instruments
Equity instruments
Loans and advances to customers
Derivatives
Derivatives held for trading
Interest rate agreements
Security agreements
Commodity agreements
Credit derivative agreements
Foreign-exchange agreements
Other agreements
Hedging Derivatives Ineffectiveness
Fair value hedges
Hedging derivative
Hedged item
Cash flow hedges
Customer deposits
Other
Total
2017
556
438
18
(549)
(322)
-
(275)
-
(47)
-
-
(226)
(226)
(195)
(31)
-
-
(6)
457
2016
1,010
187
(1)
(233)
(171)
(209)
53
-
(15)
-
-
(62)
(62)
(137)
75
-
-
(140)
823
In addition, in 2017 and 2016, under the heading “Gains or losses on financial assets and liabilities held for
trading, net” of the income statements, net amounts of negative €235 million and positive €151 million,
respectively, are registered for transactions with foreign exchange derivatives.
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 52). 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.
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38. Other operating income and expenses
The breakdown of the balance under the heading “Other operating income” and in the accompanying income
statements is as follows:
Other operating income (Millions of euros)
Real estate income
Financial income from non-financial services
Rest of operating income
Total
2017
26
55
78
159
2016
20
56
63
140
The breakdown of the balance under the heading “Other operating expenses” in the accompanying income
statements is as follows:
Other operating expenses (Millions of euros)
Contributions to guaranted banks deposits funds
Real estate agencies
Other operating expenses
Total
39. Administration costs
39.1 Personnel expenses
Notes
1.7
2017
263
82
121
466
The breakdown of the balance under this heading in the accompanying income statements is as follows:
Personnel Expenses (Millions of euros)
Wages and salaries
Social security costs
Defined contribution plan expense
Defined benefit plan expense
Other personnel expenses
Total
Notes
22
22
2017
1,842
372
38
1
129
2,382
2016
270
105
129
504
2016
1,905
386
46
3
162
2,502
The breakdown of the number of employees in the Bank as of December 31, 2017 and 2016, by categories
and gender, is as follows:
Number of Employees at the end of year. Professional Category and Gender
Management Team
Other line personnel
Clerical staff
General Services
Branches abroad
Total
2017
2016
Male
Female
Male
Female
788
236
797
232
11,011
11,030
11,414
11,211
1,205
1,778
1,367
1,859
-
-
3
1
347
13,351
238
13,282
397
13,978
255
13,558
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 52). 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.
P. 144
Note 50.5 provides information about the average number of employees by gender.
Share-based employee remuneration
The amounts registered under the heading “Personnel expenses - Other personnel expenses” in the income
statements for the years 2017 and 2016, corresponding to the plans for remuneration based on equity
instruments in force in each year, amounted to €31 million and €49 million for BBVA, 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 remuneration plans based on equity instruments are described below.
System of Variable Remuneration in Shares
In BBVA, the annual variable remuneration applying generally to all employees consists of one incentive, to
be paid in cash, awarded once a year and linked to the achievement of predetermined objectives and to a
sound risk management (hereinafter, the “Annual Variable Remuneration”).
According to the remuneration policy for BBVA Group, in force until 2016, the specific settlement and
payment system for the Annual Variable Remuneration applicable to those employees and senior managers
whose professional activities have a significant impact on the Group’s risk profile including the executive
directors and members of BBVA Senior Management (hereinafter, the "Identified Staff"), which includes,
among others, the payment in shares of part of their Annual Variable Remuneration.
This remuneration policy was approved, with respect to BBVA directors, by the Annual General
Shareholders’ Meeting held on March 13, 2015.
The specific rules of the settlement and payment system of 2016 Annual Variable Remuneration which have
given rise to the delivery of shares in 2017 to executive directors and members of the Senior Management
are described in Note 54, while the rules listed below were established to the rest of the Identified Staff:
The Annual Variable Remuneration of Identified Staff members would be paid in equal parts in cash and in
BBVA shares.
The payment of 40% of the Annual Variable Remuneration, both in cash and in shares, would be deferred
in its entirety for a three–year period. Its accrual and payment would be subject to compliance with
certain multi-year performance indicators related to the share performance and the Group’s fundamental
control and risk management metrics regarding solvency, liquidity and profitability, which would be
calculated over the deferral period (hereinafter “Multi-year Performance Indicators”). These Multi-year
Performance Indicators could lead to a reduction in the amounts deferred, and might even bring it down
to zero, but they would not be used under any circumstances to increase the aforementioned deferred
remuneration.
All the shares delivered pursuant to the rules indicated above would be withheld for a period of one year
from the date of delivery. This withholding would be applied over the net amount of the shares, after
discounting the necessary part to pay any tax accruing on the shares received.
A prohibition was also established against hedging, both regarding vested shares that were withheld and
shares whose delivery was pending.
Moreover, circumstances were established under which the payment of the deferred Annual Variable
Remuneration could be limited or impeded ("malus" clauses), as well as the adjustment to update these
deferred parts.
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 52). 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.
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Finally, the variable component of the remuneration corresponding to a financial year for the Identified
Staff would be limited to a maximum amount of 100% of the fixed component of total remuneration,
unless the General Meeting resolved to increase such limit which, in any event, could not exceed 200% of
the fixed component of total remuneration.
In this regard, the Annual General Meeting resolved, in line with applicable legislation, the application of the
maximum level of variable remuneration up to 200% of the fixed remuneration for a specific group of
employees whose professional activities have a material impact on the Group’s risk profile, and to enlarge
this group, whose variable remuneration will be subject to the maximum threshold of 200% of the fixed
component of their total remuneration. This is entirely consistent with the Recommendations Report issued
by the BBVA's Board of Directors.
According to the settlement and payment scheme indicated, during 2017, members of the Identified Staff
received a total amount of 6,481,409 shares corresponding to the initial payment corresponding to 2016
Annual Variable Remuneration to be delivered in shares.
Additionally, the remuneration policy prevailing until 2014 provided for a specific settlement and payment
scheme for the variable remuneration of the Identified Staff that established a three-year deferral period for
the Annual Variable Remuneration, being the deferred amount paid in thirds over this period in equal parts, in
cash and in BBVA shares.
According to this prior scheme, during 2017, the members of the Identified Staff received the shares
corresponding to the deferred parts of the Annual Variable Remuneration from previous years, and their
corresponding adjustments in cash, delivery of which corresponded in 2017, were delivered to the
beneficiary members of the Identified Staff, resulting in (i) a total amount of 943,955 shares corresponding
to the second deferred third of the 2014 Annual Variable Remuneration and €697,583 as adjustments for
updates of the shares granted; and (ii) a total amount of 437,069 shares corresponding to the last deferred
third of the 2013 Annual Variable Remuneration and €501,318 in adjustments for updates.
The information on the delivery of shares to executive Directors and senior managementcorresponding to
the deferred parts of the Annual Variable Remuneration from previous years and their corresponding
adjustments in cash, are detailed in Note 49.
According to this regulation, during 2017 a number of 49,798 shares corresponding to the initial payment of
2016 Annual Variable Remuneration were delivered to these beneficiaries.
Additionally, during 2017 the shares corresponding to the deferred parts of the Annual Variable
Remuneration and their corresponding adjustments in cash, were delivered to these beneficiaries, giving rise
in 2017, of a total of 10,485 shares corresponding to the first deferred third of the 2015 Annual Variable
Remuneration, and €3,869 as adjustments for updates of the shares granted; a total of 7,201 shares
corresponding to the second third of the 2014 Annual Variable Remuneration, and €5,322 as adjustments for
updates of the shares granted; and a total of 5,757 shares corresponding to the final third of the 2013 Annual
Variable Remuneration, and €6,603 as adjustments for updates of the shares granted.
During 2017, a number of 331,111 shares corresponding to this programme were delivered.
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principles (Bank of Spain Circular 4/2004, and as amended thereafter, which adapts the EU-IFRS for banks. See Note 52). 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.
P. 146
Remuneration policy applicable from 2017 onwards
The Bank has modified its remuneration policy applicable to the Identified Staff and to BBVA Directors for the
years 2017, 2018 and 2019, aimed at improving alignment with new regulatory requirements, best market
practices and BBVA’s organization and internal strategy. This policy was approved, with respect to Identified
Staff, by the Board of Directors held in 9 February 2017 and by the General Shareholders’ Meeting held on
March 17, 2017.
The new remuneration policy includes a specific settlement and payment system of the Annual Variable
Remuneration applicable to the Identified Staff, including directors and senior management, under the
following rules, among others:
A significant percentage of variable remuneration – 60% in the case of executive directors, Senior
Management and those Identified Staff members with particularly high variable remuneration, and 40%
for the rest of the Identified Staff– shall be deferred over a five- year period, in the case of executive
directors and Senior Management, and over a three-year period, for the remaining Identified Staff.
50% of the variable remuneration of each year (including both upfront and deferred portions), shall be
established in BBVA shares, albeit a larger proportion (60%) in shares shall be deferred in the case of
executive directors and Senior Management.
The variable remuneration will be subject to ex ante adjustments, so that it will not be accrued, or will be
accrued in a reduced amount, should a certain level of profit or capital ratio not be obtained. Likewise, the
Annual Variable Remuneration will be reduced upon performance assessment in the event of negative
evolution of the Bank’s results or other parameters such as the level of achievement of budgeted targets.
The deferred component of the variable remuneration (in shares and in cash) may be reduced in its
entirety, yet not increased, based on the result of multi-year performance indicators aligned with the
Bank’s fundamental risk management and control metrics, related to the solvency, capital, liquidity,
funding or profitability, or to the share performance and recurring results of the Group.
During the entire deferral period (5 or 3 years, as applicable) and retention period, variable remuneration
shall be subject to malus and clawback arrangements, both linked to a downturn in financial performance
of the Bank, specific unit or area, or individual, under certain circumstances.
All shares shall be withheld for a period of one year after delivery, except for those shares required to
honor the payment of taxes.
No personal hedging strategies or insurance may be used in connection with remuneration and
responsibility that may undermine the effects of alignment with sound risk management
The deferred amounts in cash subject to multi-year performance indicators that are finally paid shall be
subject to updating, in the terms determined by the Bank’s Board of Directors, upon proposal of the
Remunerations Committee, whereas deferred amounts in shares shall not be updated.
Finally, the variable component of the remuneration of the Identified Staff members shall be limited to a
maximum amount of 100% of the fixed component of total remuneration, unless the General Meeting
resolves to increase this percentage up to 200%.
In this regard, the General Meeting held on March, 17 2017 resolved to increase the maximum level of
variable remuneration to 200% of the fixed component for a number of the Identified Staff, in the terms
indicated in the Report of Recommendations issued for this purpose by the Board of Directors dated 9
February 2017.
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 52). 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.
P. 147
In accordance with the new remuneration policy applicable to the Identified Staff, malus and clawback
arrangements will be applicable to the Annual Variable Remuneration awarded as of the year 2016, inclusive,
for each member of the Identified Staff.
According to this new policy, the first disbursement in shares will be the upfront payment of the 2017 Annual
Variable Remuneration, in equal parts in BBVA shares and in cash, which will take place in 2018.
39.2 General and administrative expenses
The breakdown of the balance under this heading in the accompanying income statements is as follows:
Administrative Expenses. Breakdown by main concepts (Millions of euros)
Technology and systems
Communications
Advertising
Property, fixtures and materials
Of which:Rent expenses (*)
Taxes
Other administration expenses
Total
2017
2016
496
66
104
404
290
22
563
1,655
483
64
139
454
325
10
595
1,745
(*) The Bank does not expect to terminate the lease contracts early.
40. Depreciation
The breakdown of the balance under this heading in the accompanying income statements is as follows:
Depreciation (Millions of euros)
Tangible assets
For own use
Investment properties
Assets leased out under financial lease
Other Intangible assets
Total
Notes
15
16
2017
2016
205
191
14
-
335
540
222
206
16
-
353
575
41. Provisions or reversal of provisions
In 2017 and 2016, the net provisions charged to in this heading of the income statement were as follows:
Provisions or reversal of provisions (Millions of euros)
Pensions and other post employment defined benefit obligations
Commitments and guarantees given
Other Provisions
Total
2017
237
(378)
943
802
2016
228
7
952
1,187
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 52). 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.
P. 148
42.
Impairment or reversal of impairment on financial assets
not measured at fair value through profit or loss
The impairment losses on financial assets broken down by the nature of these assets in the accompanying
income statements are as follows:
Impairment or reversal of impairment on financial assets not measured at fair value through profit or loss (Millions of euros)
Available-for-sale financial assets
Debt securities
Other equity instruments
Financial assets at amortized cost
Held-to-maturity investments
Loans and receivables
Of which: Recovery of written-off assets
Total
43.
Notes
10.4
5.3.4
2017
1,126
3
1,123
8
-
451
(446)
1,585
2016
180
174
6
12
-
757
(448)
949
Impairment or reversal of impairment on non-financial
assets and investments in subsidiaries, joint ventures or
associates.
The impairment losses on non-financial assets and investments in subsidiaries, joint ventures or associates
broken down by the nature of these assets in the accompanying income statements is as follows:
Impairment or reversal of impairment on Investments in subsidiaries, joint ventures or associates (Millions of euros)
Investments in subsidiaries, joint ventures or associates
Total
Impairment or reversal of impairment on non-financial assets (Millions of euros)
Intangible assets
Tangible assets
Total
Notes
14
Notes
16
15
2017
(207)
(207)
2016
147
147
2017
2016
-
8
8
-
16
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 52). 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.
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44. Gains (losses) on derecognized of non-financial assets
and subsidiaries, net
The breakdown of the balance under this heading in the accompanying income statements is as follows:
Gains or losses on derecognition of non-financial assets and investments in subsidiaries, joint ventures and associates, net (Millions of euros)
Gains
Disposal of investments in subsidiaries
Disposal of tangible assets and other
Losses:
Disposal of investments in subsidiaries
Disposal of tangible assets and other
Total
2017
2016
-
-
(1)
-
(1)
13
-
(1)
-
12
45. Profit or loss from non-current assets and disposal
groups classified as held for sale not qualifying as
discontinued operations
The main items included in the balance under this heading in the accompanying income statements are as
follows:
Profit or (-) loss from non-current assets and disposal groups classified as held for sale not qualifying as discontinued operations (Millions of
euros)
Gains for real estate (Note 14)
Of which:
Foreclosed
Sale of buildings for own use
Impairment of non-current assets held for sale
Gains on sale of available-for-sale financial assets
Other gains and losses
Total
Notes
19
2017
(13)
(31)
18
(52)
-
51
(14)
2016
(4)
2
(6)
(69)
-
-
(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 52). 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.
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46. Statements of cash flows
Cash flows from operating activities decreased in 2017 by €20 million (€6,281 million in 2016). The most
significant causes of the increase are linked to “Loans and receivables” and “Other operating assets”.
The most significant variations in cash flows from investment activities decreased in 2017 by €1,995 million
euros (€1,048 million in 2016) corresponded to main variations in the headings “Held-to-maturity
investments” and “Non-current assets for sale”.
Cash flows from financing activities increased in 2017 by €106 million (€501 million up in 2016),
corresponded 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, 2017 and 2016:
Main Cash Flows in Investing Activities 2017 (Millions of euros)
Tangible assets
Intangible assets
Investments
Subsidiaries and other business units
Non-current assets held for sale and associated liabilities
Held-to-maturity investments
Other settlements related to investing activities
Main Cash Flows in Investing Activities 2016 (Millions of euros)
Tangible assets
Intangible assets
Investments
Subsidiaries and other business units
Non-current assets held for sale and associated liabilities
Held-to-maturity investments
Other settlements related to investing activities
Cash Flows in Investment Activities
Investments (-)
Divestments (+)
(100)
(276)
(1,117)
-
(625)
-
-
21
-
508
-
815
2,576
193
Cash Flows in Investment Activities
Investments (-)
Divestments (+)
(170)
(320)
(246)
-
(674)
(1,758)
-
20
-
93
-
511
1,321
175
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.
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 52). 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.
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47. Accountant fees and services
The details of the fees for the services contracted by BBVA for the year ended December 31, 2017 with its
auditors and other audit entities are as follows:
Fees for Audits Conducted and Other Related Services (Millions of euros) (**)
Audits of the companies audited by firms belonging to the KPMG 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 KPMG worldwide
organization
Fees for audits conducted by other firms
(*)
Including fees pertaining to annual legal audits (€11.7 million)
(**) Regardless of the billed period.
In addition, in 2017, the Bank contracted services (other than audits) as follows:
Other Services Rendered (Millions of euros)
Firms belonging to the KPMG worldwide organization
2017
13.2
0.5
-
2017
0.2
This total of contracted services includes the detail of the services provided by KPMG Auditores, S.L. to
BBVA, S.A. or its controlled companies at the date of preparation of these financial statements as follows:
Fees for Audits Conducted (*) (Millions of euros)
Legal audit of BBVA,S.A. or its companies under control
Other audit services of BBVA,S.A. or its companies under control
Limited Review of BBVA, S.A. or its companies under control
Reports related to issuances
Assurance jobs and other required by the regulator
Other
2017
6.8
5.0
0.9
0.4
0.2
-
(*) Services provided KPMG Auditors, S.L. only to companies located in Spain.
The services provided by the auditors meet the independence requirements established under Audit of
Accounts Law (Law 22/2015) 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.
48. 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.
48.1 Transactions with significant shareholders
As of December 31, 2017 there were no shareholders considered significant (see Note 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 52). 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.
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48.2 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 (Millions of euros)
Assets:
Loans and advances to credit institutions
Loans and advances to customers
Debt securities
Liabilities:
Deposits from credit institutions
Customer deposits
Debt certificates
Memorandum accounts:
Financial guarantees given
Contingent commitments
2017
2016
1,598
12,537
119
1,273
10,514
-
6,310
2,472
2,422
12,157
320
2,189
18,625
-
14,052
2,638
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 (Millions of euros)
Income statement:
Financial Incomes
Financial Costs
Fee and commission income
Fee and commission expenses
2017
2016
168
215
541
98
157
317
559
60
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 22.
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.
48.3 Transactions with members of the Board of Directors and Senior
Management
The information on the remuneration of the members of the BBVA Board of Directors and Senior
Management is included in Note 49.
As of December 31, 2017 and December 31, 2016, there were no loans granted by the Group’s entities to the
members of the Board of Directors. The amount availed against the loans by the Group’s entities to the
members of Senior Management on those same dates (excluding the executive directors) amounted to
€4,049 and €5,573 thousand, respectively.
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 52). 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.
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As of December 31, 2017 and December 31, 2016, there were no loans granted to parties related to the
members of the Board of Directors. As of December 31, 2017 and 2016 the amount availed against the loans
to parties related to members of the Senior Management amounted to €85 and €98 thousand, respectively.
As of December 31, 2017 and 2016 no guarantees had been granted to any member of the Board of
Directors.
As of December 31, 2017 and December 31, 2016, the amount availed against guarantees arranged with
members of the Senior Management totaled €28 thousand.
As of December 31, 2017 and 2016 the amount availed against commercial loans and guarantees arranged
with parties related to the members of the Bank’s Board of Directors and the Senior Management totaled €8
thousands, and €8 thousand, respectively.
48.4 Transactions with other related parties
In the years ended December 31, 2017 and 2016 the Bank did not conduct any transactions with other
related parties that are not in the ordinary course of its business, which were not carried out at arm's-length
market conditions and of marginal relevance; whose information is not necessary to give a true picture of the
BBVA Group’s net equity, net earnings and financial situation.
49. Remuneration and other benefits of the Board of
Directors and Members of the Bank’s Management
Committee
Remuneration of non-executive directors received in 2017
The remuneration paid to the non-executive members of the Board of Directors during 2017 is indicated
below. The figures are given individually for each non-executive director and itemized:
Remuneration for non-executive directors (Thousands of euros)
Board of
Directors
Executive
Committee
Audit &
Compliance
Committee
Risks
Committee
Remunerations
Committee
Appointments
Committee
Technology and
Cybersecurity
Committee
Tomás Alfaro Drake
José Miguel Andrés Torrecillas
José Antonio Fernández Rivero
Belén Garijo López
Sunir Kumar Kapoor
Carlos Loring Martínez de Irujo
Lourdes Máiz Carro
José Maldonado Ramos
Juan Pi Llorens
129
129
129
129
129
129
129
129
129
Susana Rodríguez Vidarte
Total (1)
129
1,287
-
-
167
-
-
167
-
167
-
167
667
71
179
-
71
-
-
71
-
71
-
464
-
107
-
-
-
107
-
62
125
107
508
25
-
43
80
-
25
25
-
45
-
243
102
41
-
-
-
-
41
41
-
41
265
43
-
25
-
43
-
-
-
43
-
154
Total
370
455
363
280
172
427
266
399
412
443
3,587
(1) Includes the amounts for memberships of the different committees during the year 2017. The composition of these committees was
modified on May 31, 2017.
In addition, José Luis Palao García-Suelto and James Andrew Stott, who ceased as directors on March 17, 2017 and on May 31, 2017,
respectively, received a total amount of €70 thousand and €178 thousand, respectively, as members of the Board of Directors and of
the different Board committees.
Moreover, during 2017, €126 thousand has been paid in healthcare and casualty insurance premiums for the
non-executive members of the Board of Directors.
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 52). 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.
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Remuneration of executive directors received in the year 2017
During the year 2017, the executive directors have received the amount of the fixed remuneration
corresponding to that year, established in the Remuneration Policy for BBVA Directors applicable during
financial years 2017, 2018 and 2019. The Policy was approved by the General Meeting held on March 17, 2017
by a majority of 96.54%.
Likewise, the executive directors have received the annual variable remuneration corresponding to the year
2016 which payment vested during the first quarter of 2017, in accordance with the settlement and payment
system established under the former remuneration policy for directors, approved by the General Meeting
held on March 13, 2015.
In accordance with that settlement and payment system:
The upfront payment of the annual variable remuneration for executive directors corresponding to
the year 2016 has been paid in equal parts in cash and in BBVA shares.
The remaining 50% of the annual variable remuneration, both in cash and in shares, has been
deferred in its entirety for a three-year period, with its accrual and payment subject to compliance
with a series of multi-year indicators.
All the shares delivered pursuant to the indicated rules will be withheld for a one-year period from the
date of delivery. This withholding will be applied to the net amount of the shares, after discounting
the amount necessary to honor the payment of taxes accruing on the shares received.
A prohibition against hedging has been established, both regarding withheld vested shares and
shares pending delivery.
The deferred part of the annual variable remuneration will be subject to updating under the terms
established by the Board of Directors.
The variable component of the remuneration of executive directors corresponding to the year 2016
is limited to a maximum amount of 200% of the fixed component of total remuneration, as agreed by
the General Meeting.
Furthermore, following approval of the new Remuneration Policy for BBVA Directors by the 2017 General
Meeting, the annual variable remuneration awarded as of the year 2016, inclusive, is subject to arrangements
for the reduction (“malus”) and recoupment ("clawback") of variable remuneration during the entire deferral
and retention period, in the terms mentioned in said Policy.
Likewise, in accordance with the settlement and payment system applicable to the annual variable
remuneration of the years 2014 and 2013, pursuant to the applicable policy for said years, the executive
directors have received the deferred parts of the annual variable remuneration of those years, delivery of
which was due in the first quarter of year 2017.
Pursuant to the above, the remuneration paid to the executive directors during 2017 is shown below. The
figures are given individually for each executive director and itemized:
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 52). 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.
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Remuneration of executive directors (Thounsands of Euros)
Fixed
remuneration
2016 annual
variable
remuneration
in cash (1)
Deferred
variable
remuneration in
cash from
previous
years (2)
Total cash
2017
2016 annual
variable
remuneration in
BBVA shares (1)
Deferred variable
remuneration in
BBVA shares
from previous
years (2)
Total shares 2017
Group Executive Chairman
Chief Executive Officer
Head of Global Economics, Regulation
& Public Affairs (“Head of GERPA”)
Total
2,475
1,965
834
5,274
734
591
89
1,414
622
182
50
853
3,831
2,738
972
7,541
114,204
91,915
13,768
219,887
66,947
19,703
5,449
92,099
181,151
111,618
19,217
311,986
(1) Amounts corresponding to 50% of 2016 annual variable remuneration.
(2) Amounts corresponding to the sum of the deferred parts of the annual variable remuneration from previous years (2014 and 2013),
and their corresponding updating in cash, payment or delivery of which has been made in 2017, in accordance with the settlement
and payment system, as broken down below:
-
2nd third of deferred annual variable remuneration from 2014:
Under this item, the executive directors have received: €321 thousand and 37,392 BBVA shares in the case of the Group Executive
Chairman; €101 thousand and 11,766 BBVA shares in the case of the Chief Executive Officer; and €32 thousand and 3,681 BBVA
shares in the case of the executive director Head of GERPA.
-
3rd third of deferred annual variable remuneration from 2013:
Under this item, the executive directors have received: €301 thousand and 29,555 BBVA shares in the case of the Group Executive
Chairman; €81 thousand and 7,937 BBVA shares in the case of the Chief Executive Officer; and €18 thousand and 1,768 BBVA shares
in the case of the executive director Head of GERPA.
As at year-end 2017, the last third corresponding to the deferred variable remuneration of the year 2014 is
pending payment, delivery of which will correspond in the first quarter of the year 2018, in accordance with
the settlement and payment system established for that year.
In accordance with the conditions established in the settlement and payment system previously mentioned,
50% of executive directors’ annual variable remuneration corresponding to the years 2015 and 2016 remains
deferred, to be paid in future years, where applicable, according to the aforementioned system.
Likewise, executive directors have received, during 2017, remuneration in kind, which includes insurance
premiums and others, for a total overall amount of €217 thousand, of which €16 thousand correspond to the
Group Executive Chairman; €121 thousand to the Chief Executive Officer; and €79 thousand to the executive
director Head of GERPA.
Annual variable remuneration of executive directors for the year 2017
Following year-end 2017, the variable remuneration for executive directors corresponding to that year has
been determined, applying the conditions established at the beginning of 2017, as set forth in the
Remuneration Policy for BBVA Directors, approved by the General Meeting held on 17 March 2017, in the
following terms:
40% of the annual variable remuneration corresponding to 2017 will be paid, during the first quarter
of 2018, in equal parts in cash and in shares, which amounts to €660 thousand and 90,933 BBVA
shares in the case of the Group Executive Chairman; €562 thousand and 77,493 BBVA shares in the
case of the Chief Executive Officer; and €87 thousand and 12,029 BBVA shares in the case of the
executive director Head of GERPA.
The remaining 60% will be deferred for a five-year period, subject to compliance with the multi-year
performance indicators (the “Deferred Component”), which will vest, 40% in cash and 60% in
shares, under the following schedule: 60% of the Deferred Component after the third year of
deferral; 20% after the fourth year of deferral; and 20% after the fifth year of deferral.
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 52). 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.
P. 156
The Deferred Component of the annual variable remuneration will be subject to compliance with the
multi-year performance indicators determined by the Board of Directors at the beginning of the year,
calculated over the first three years of deferral. The application of these indicators may lead to a reduction
of the Deferred Component, even in its entirety, but in no event lead to an increase in its amount.
Moreover, in accordance with the settlement and payment system established in the Remuneration Policy
for BBVA Directors:
Shares delivered to executive directors as annual variable remuneration shall be withheld for a one-
year period from the date of delivery. Upon reception of the shares, executive directors will not be
allowed to transfer a number of shares equivalent to twice their annual fixed remuneration for at least
three years after their delivery. The foregoing shall not apply to the transfer of those shares required
to honor the payment of taxes.
The annual variable remuneration deferred in cash will be subject to updating in the terms
established by the Board of Directors.
Executive directors shall not be allowed to use personal hedging strategies or insurance in
connection with remuneration and responsibility that may undermine the effects of alignment with
sound risk management.
The variable component of the remuneration of executive directors for the year 2017 will be limited to
a maximum amount of 200% of the fixed component of total remuneration, as approved by the
General Meeting.
Finally, the entire annual variable remuneration of executive directors will be subject to malus and
clawback arrangements during the entire deferral and retention period.
The amounts corresponding to the deferred shares are recorded under the item “own share based
compensation schemes - equity” and the amounts corresponding to cash are recorded under the item
“Other Liabilities – Accrued interest” of the consolidated balance sheet at 31 December 2017.
Remuneration of the members of the Senior Management received in 2017
During 2017, members of Senior Management have received the amount of the fixed remuneration
corresponding to that year and the annual variable remuneration corresponding to the year 2016, which
payment vested during the first quarter of the year 2017, according to the settlement and payment system
set forth in the remuneration policy applicable to the Senior Management in that year.
In accordance with this settlement and payment system:
The upfront payment of 2016 annual variable remuneration for members of the Senior Management
has been paid in equal parts in cash and in BBVA shares.
The remaining 50% of the annual variable remuneration, both in cash and in shares, has been
deferred in its entirety for a three-year period, and its accrual and vesting shall be subject to
compliance with a series of multi-year indicators.
All the shares delivered pursuant to the indicated rules shall be withheld for a one-year period from
the date of delivery. This withholding will be applied to the net amount of the shares, after
discounting the amount necessary to honor the payment of taxes accruing on the shares received.
A prohibition against hedging has been established, both regarding withheld vested shares and
shares pending delivery.
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 52). 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.
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The deferred part of the annual variable remuneration will be subject to updating under the terms
established by the Board of Directors.
The variable component of the remuneration corresponding to the year 2016 for the Senior
Management is limited to a maximum amount of 200% of the fixed component of total remuneration
as agreed by the General Meeting.
Furthermore, the annual variable remuneration awarded as of the year 2016, inclusive, is subject to
arrangements for the reduction (“malus”) and recoupment ("clawback") of variable remuneration during the
entire deferral and retention period.
Pursuant to the above, the remuneration paid during the year 2017 to members of the Senior Management
as a whole, excluding executive directors, is shown below (itemized):
Remuneration of members of the Senior Management (Thousands of Euros)
Fixed
remuneration
2016 annual
variable
remuneration
in cash (1)
Deferred
variable
remuneration in
cash from
previous
years (2)
Total cash
2017
2016 annual
variable
remuneration in
BBVA shares (1)
Deferred variable
remuneration in
BBVA shares
from previous
years (2)
Total shares 2017
Total members of the Senior Management (*)
15,673
2,869
1,016
19,558
441,596
110,105
551,701
(*) This section includes aggregate information regarding those who were members of the Senior Management, excluding executive
directors, as at December, 31, 2017 (15 members).
(1) Amounts corresponding to 50% of 2016 annual variable remuneration.
(2) Amounts corresponding to the sum of the deferred parts of the annual variable remuneration from previous years (2014 and 2013),
and their corresponding updating in cash, payment or delivery of which has been made in 2017 to members of the Senior
Management who were entitled to them, as broken down below:
- 2nd third of deferred annual variable remuneration from 2014: corresponds to an aggregate amount of €555 thousand and
64,873 BBVA shares.
- 3rd third of deferred annual variable remuneration from 2013: corresponds to an aggregate amount of €461 thousand and
45,232 BBVA shares.
As at year-end 2017, the last third corresponding to the deferred variable remuneration of the year 2014 is
pending payment, delivery of which will correspond in the first quarter of the year 2018, in accordance with
the settlement and payment system established for that year.
Likewise, 50% of members of the Senior Management’s annual variable remuneration corresponding to the
years 2015 and 2016 remains deferred, to be paid in future years, where applicable, according to the
settlement and payment system established for said years.
Additionally, members of the Senior Management as a whole, excluding executive directors, have received
remuneration in kind during the year 2017, which includes insurance premiums and others, for a total overall
amount of €684 thousand.
Remuneration system 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 held on March 18, 2006 and extended by resolutions of the General
Meeting held on March 11, 2011 and on March 11, 2016, for a further five-year period in each case.
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 director in the previous year, calculated
according to the average closing prices of the BBVA share during the sixty trading sessions prior to the
Annual General Meetings approving the corresponding financial statements for each year.
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 52). 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.
P. 158
These shares will be delivered to each beneficiary, where applicable, on the date they leave directorship for
any reason other than serious breach of their duties.
The number of “theoretical shares” allocated in the first semester of 2017 to each non-executive director
beneficiary of the remuneration system in shares with deferred delivery, corresponding to 20% of the total
remuneration received in cash by said directors in 2016, is as follows:
Tomás Alfaro Drake
José Miguel Andrés Torrecillas
José Antonio Fernández Rivero
Belén Garijo López
Sunir Kumar Kapoor
Carlos Loring Martínez de Irujo
Lourdes Máiz Carro
José Maldonado Ramos
Juan Pi Llorens
Susana Rodríguez Vidarte
Total (1)
Theoretical shares
allocated in 2017
Theoretical shares
accumulated at December
31, 2017
10,630
14,002
11,007
7,313
4,165
11,921
7,263
10,586
10,235
13,952
73,082
23,810
102,053
26,776
4,165
86,891
15,706
67,819
42,609
92,558
101,074
535,469
(1)
In addition, in the first semester of 2017, 8,752 theoretical shares were allocated to José Luis Palao García-Suelto
and 10,226 theoretical shares were allocated to James Andrew Stott, who ceased as directors on March 17, 2017
and on May 31, 2017 respectively.
Pension commitments
The Bank has undertaken pension commitments in favor of the Chief Executive Officer and the executive
director Head of GERPA, in accordance with the Bylaws, the Remuneration Policy for BBVA Directors and
their respective contracts entered into with the Bank, to cover retirement, disability and death.
As regards the Chief Executive Officer, the Remuneration Policy for BBVA Directors provides for a new
benefits framework whereby his previous defined-benefits system has been transformed into a defined-
contribution system, according to which he is entitled, provided he does not leave his position as Chief
Executive Officer due to serious breach of his duties, to a retirement benefit when he reaches the legal
retirement age, in the form of capital or as income, which amount shall result from the funds accumulated by
the Bank until December 2016 to cover the commitments under his previous benefits scheme and the sum of
the annual contributions made by the Bank as of January 1, 2017, to cover said benefit under the new pension
scheme, along with the corresponding accumulated yields.
Should the contractual relationship be terminated before he reaches the retirement age, for reason other
than serious breach of his duties, the retirement benefit to which the Chief Executive Officer is entitled, when
he reaches the age legally established, shall be calculated on the basis of the contributions made by the Bank
up to that date, along with the corresponding accumulated yields, with no additional contributions to be
made by the Bank upon leave of directorship.
The amount established in the Remuneration Policy for BBVA Directors for the Chief Executive Officer, as
annual contribution to cover the retirement benefit under the new defined-contribution scheme, amounts to
€1,642 thousand, amount which shall be updated in the same proportion as the annual fixed remuneration
for the Chief Executive Officer, in the terms established in said Policy.
Likewise, pursuant to the Policy, 15% of the agreed annual contribution, mentioned above, shall be based on
variable components and be considered "discretionary pension benefits", thus subject to the conditions of
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 52). 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.
P. 159
delivery in shares, retention and clawback established in applicable regulations, as well as to those other
conditions of variable remuneration applicable to them pursuant to the aforementioned Policy.
On the other hand, the Bank will assume payment of the annual insurance premiums in order to top up the
coverage of death and disability of the Chief Executive Officer’s benefits scheme, in the terms established in
the Remuneration Policy for BBVA Directors.
Pursuant to the foregoing, in the year 2017 an amount of €1,853 thousand has been recorded to attend the
benefits commitments undertaken with the Chief Executive Officer, amount which includes the contribution
to retirement coverage (€1,642 thousand), as well as to death and disability (€211 thousand), with the total
accumulated fund to cover retirement commitments amounting €17,503 thousand, as at December 31,
2017.
15% of the agreed annual contribution to retirement (€246 thousand) has been registered in the year 2017
as “discretionary pension benefits” and, following year-end 2017, said amount has been adjusted according
to the criteria established for the determination of the Chief Executive Officer’s annual variable remuneration
for 2017. Accordingly, the “discretionary pension benefits” for the year 2017 have been determined in an
amount of €288 thousand, amount which will be included in the accumulated fund in the year 2018, subject
to the same conditions as the Deferred Component of annual variable remuneration for the year 2017, as well
as the remaining conditions established for these benefits in the Remuneration Policy for BBVA Directors.
As regards the executive director Head of GERPA, the pension scheme established in the Remuneration
Policy for BBVA Directors establishes an annual contribution of 30% of his fixed remuneration as of January
1, 2017, to cover retirement benefit, as well as payment of the corresponding annual insurance premiums in
order to top up the coverage of death and disability.
As in the case of the Chief Executive Officer, 15% of the agreed annual contribution, mentioned above, shall
be based on variable components and be considered "discretionary pension benefits", thus subject to the
conditions of delivery in shares, retention and clawback established in applicable regulations, as well as to
those other conditions of variable remuneration applicable to them pursuant to the aforementioned Policy.
The executive director Head of GERPA shall be entitled, when he reaches the retirement age, to the benefits
arising from the contributions made by the Bank to cover pension commitments, plus the corresponding
accumulated yields up to that date, provided he does not leave his position due to serious breach of his
duties. In the event of voluntary termination of contractual relationship by the director before retirement,
benefits shall be limited to 50% of the contributions made by the Bank to that date, along with the
corresponding accumulated yields, with the Bank's contributions ceasing upon leave of directorship.
Pursuant to the foregoing, in the year 2017 an amount of €393 thousand has been recorded to attend the
benefits commitments undertaken with the executive director Head of GERPA, amount which includes the
contribution to retirement coverage (€250 thousand), as well as to death and disability (€143 thousand),
with the total accumulated fund to cover retirement commitments amounting €842 thousand, as at
December 31, 2017.
15% of the agreed annual contribution to retirement (€38 thousand) has been registered in the year 2017 as
“discretionary pension benefits” and, following year-end 2017, said amount has been adjusted according to
the criteria established for the determination of the executive director Head of GERPA’s annual variable
remuneration for 2017. Accordingly, the “discretionary pension benefits” for the year 2017 have been
determined in an amount of €46 thousand, amount which will be included in the accumulated fund in the
year 2018, subject to the same conditions as the Deferred Component of annual variable remuneration for
the year 2017, as well as the remaining conditions established for these benefits in the Remuneration Policy
for BBVA Directors.
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 52). 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.
P. 160
There are no other pension obligations undertaken in favor of other executive directors.
Likewise, an amount of €5,630 thousand has been recorded to attend the benefits commitments undertaken
with members of the Senior Management, excluding executive directors, amount which includes the
contribution to retirement coverage (€4,910 thousand), as well as to death and disability (€720 thousand),
with the total accumulated fund to cover retirement commitments with the Senior Management amounting
€55,689 thousand, as at December 31, 2017.
As in the case of executive directors, 15% of the annual contributions agreed for members of the Senior
Management shall be based on variable components and be considered "discretionary pension benefits",
thus subject to the conditions of delivery in shares, retention and clawback established in applicable
regulations, as well as to those other conditions of variable remuneration applicable to them pursuant to the
remuneration policy applicable to Senior Management.
Pursuant to the foregoing, from the annual contribution to cover retirement recorded in 2017, an amount of
€585 thousand has been recorded in the year 2017 as “discretionary pension benefits” and, following year-
end 2017, said amount has been adjusted according to the criteria established for the determination of the
Senior Management’s annual variable remuneration for 2017. Accordingly, the “discretionary pension
benefits” for the year 2017 have been determined in an amount of €589 thousand, amount which will be
included in the accumulated fund in the year 2018, subject to the same conditions as the Deferred
Component of annual variable remuneration for the year 2017, as well as the remaining conditions
established for these benefits in the remuneration policy applicable to members of the Senior Management.
Extinction of contractual relationship
In accordance with the Remuneration Policy for BBVA Directors, approved by the 2017 General Meeting, the
Bank has no commitments to pay severance indemnity to executive directors.
The new contractual framework defined in the aforementioned Policy for the Chief Executive Officer and the
executive director Head of GERPA includes a post-contractual non-compete agreement for a period of two
years, after they cease as BBVA executive directors, in accordance to which they shall receive remuneration
in an amount equivalent to one annual fixed remuneration for every year of duration of the non-compete
arrangement, which shall be paid periodically over the course of the two years, provided that leave of
directorship is not due to retirement, disability or serious breach of duties.
50. Other information
50.1 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, 2017, 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, and consequently no specific disclosure of information on environmental
matters is included in these statements.
50.2 Breakdown of agents of credit institutions
Appendix XIII contains a list of the Bank's agents as required by article 21 of Royal Decree 84/2015, dated
February 13, of the Ministry of Economy and Finance.
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 52). 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.
P. 161
50.3 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.
50.4 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.
50.5 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 2016 and 2017 (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 2017 (see
Note 3).
Dividends Paid ("Dividend Option" not included)
Ordinary shares
Rest of shares
Total dividends paid in cash (*)
Dividends with charge to income
Dividends with charge to reserve or share
premium
Dividends in kind
Interest income by geographical area
2017
2016
% Over
Nominal
Euros per
Share
Amount
(Millions of
Euros)
% Over
Nominal
Euros per
Share
Amount
(Millions of
Euros)
34.69%
-
34.69%
34.69%
-
-
0.17
-
0.17
0.17
-
-
1,125
32.65%
-
1,125
1,125
-
-
-
32.65%
32.65%
-
-
0.16
-
0.16
0.16
-
-
1,028
-
1,028
1,028
-
-
The breakdown of the balance under the heading “Interest Income” in the accompanying income statements
by geographical area is as follows:
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 52). 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.
Interest Income. Breakdown by Geographical Area (Millions of euros)
Notes
P. 162
2016
5,914
322
145
85
92
2017
4,511
349
150
110
89
33.1
4,860
6,236
Domestic
Foreign
European Union
Rest of OECD
Rest of countries
Total
Average number of employees by gender
The breakdown of the average number of employees in the Bank in 2017 and 2016, by gender, is as follows:
Average number of employees
Management Team
Other line personnel
Clerical staff
General Services
Branches abroad
Total
2017
2016
Male
Female
Male
Female
791
11,130
1,255
-
364
13,540
235
11,050
1,806
-
239
13,330
806
10,851
1,345
3
441
13,445
232
10,347
1,677
1
278
12,534
During 2017 and 2016, the average number of handicap employees with disabilities greater than or
equal to 33% was 155 employees and 151, respectively.
50.6 Responsible lending and consumer credit granting
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;
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 52). 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.
P. 163
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.
51. Subsequent events
From January 1, 2018 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.
52. 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).
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 52). 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.
P. 164
Appendices
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 52). 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.
P. 165
APPENDIX I. BBVA Group Consolidated Financial Statements
Consolidated balance sheets as of December 31, 2017, 2016 and 2015
ASSETS (Millions of Euros)
CASH, CASH BALANCES AT CENTRAL BANKS AND OTHER DEMAND DEPOSITS
FINANCIAL ASSETS HELD FOR TRADING
Derivatives
Equity instruments
Debt securities
Loans and advances to central banks
Loans and advances to credit institutions
Loans and advances to customers
FINANCIAL ASSETS DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS
Equity instruments
Debt securities
Loans and advances to central banks
Loans and advances to credit institutions
Loans and advances to customers
AVAILABLE-FOR-SALE FINANCIAL ASSETS
Equity instruments
Debt securities
LOANS AND RECEIVABLES
Debt securities
Loans and advances to central banks
Loans and advances to credit institutions
Loans and advances to customers
HELD-TO-MATURITY INVESTMENTS
HEDGING DERIVATIVES
FAIR VALUE CHANGES OF THE HEDGED ITEMS IN PORTFOLIO HEDGES OF INTEREST RATE RISK
JOINT VENTURES, ASSOCIATES AND UNCONSOLIDATED SUBSIDIARIES
Joint ventures
Associates
INSURANCE AND 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 assets
TAX ASSETS
Current
Deferred
OTHER ASSETS
Insurance contracts linked to pensions
Inventories
Rest
NON-CURRENT ASSETS AND DISPOSAL GROUPS HELD FOR SALE
TOTAL ASSETS
(*) Presented for comparison purposes only.
2017
42,680
64,695
35,265
6,801
22,573
-
-
56
2,709
1,888
174
-
-
648
69,476
3,224
66,251
431,521
10,339
7,300
26,261
387,621
13,754
2,485
(25)
1,588
256
1,332
421
7,191
6,996
6,581
415
195
8,464
6,062
2,402
16,888
2,163
14,725
4,359
-
229
4,130
23,853
2016 (*)
2015 (*)
40,039
74,950
42,955
4,675
27,166
-
-
154
2,062
1,920
142
-
-
-
79,221
4,641
74,580
465,977
11,209
8,894
31,373
414,500
17,696
2,833
17
765
229
536
447
8,941
8,250
7,519
732
691
9,786
6,937
2,849
18,245
1,853
16,391
7,274
-
3,298
3,976
3,603
29,282
78,326
40,902
4,534
32,825
-
-
65
2,311
2,075
173
-
62
-
113,426
5,116
108,310
471,828
10,516
17,830
29,317
414,165
-
3,538
45
879
243
636
511
9,944
8,477
8,021
456
1,467
10,052
6,915
3,137
17,779
1,901
15,878
8,565
-
4,303
4,263
3,369
690,059
731,856
749,855
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 52). 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.
P. 166
Consolidated balance sheets as of December 31, 2017, 2016 and 2015
LIABILITIES AND EQUITY (Millions of Euros)
FINANCIAL LIABILITIES HELD FOR TRADING
Trading derivatives
Short positions
Deposits from central banks
Deposits from credit institutions
Customer deposits
Debt certificates
Other financial liabilities
FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS
Deposits from central banks
Deposits from credit institutions
Customer deposits
Debt certificates
Other financial liabilities
Of which: Subordinated liabilities
FINANCIAL LIABILITIES AT AMORTIZED COST
Deposits from central banks
Deposits from credit institutions
Customer Deposits
Debt certificates
Other financial liabilities
Of which: Subordinated liabilities
HEDGING DERIVATIVES
FAIR VALUE CHANGES OF THE HEDGED ITEMS IN PORTFOLIO HEDGES OF INTEREST RATE RISK
LIABILITIES UNDER INSURANCE AND REINSURANCE CONTRACTS
PROVISIONS
Provisions for pensions and similar obligations
Other long term employee benefits
Provisions for taxes and other legal contingencies
Provisions for contingent risks and commitments
Other provisions
TAX LIABILITIES
Current
Deferred
OTHER LIABILITIES
46,182
36,169
10,013
-
-
-
-
-
2,222
-
-
-
-
2,222
-
543,713
37,054
54,516
376,379
63,915
11,850
17,316
2,880
(7)
9,223
7,477
5,407
67
756
578
669
3,298
1,114
2,184
4,550
2017
2016 (*)
2015 (*)
54,675
43,118
11,556
-
-
-
-
-
2,338
-
-
-
-
2,338
-
589,210
34,740
63,501
401,465
76,375
13,129
17,230
2,347
-
9,139
9,071
6,025
69
418
950
1,609
4,668
1,276
3,392
4,979
-
55,202
42,149
13,053
-
-
-
-
-
2,649
-
-
-
-
2,649
-
606,113
40,087
68,543
403,362
81,980
12,141
16,109
2,726
358
9,407
8,852
6,299
68
616
714
1,155
4,656
1,238
3,418
4,610
-
LIABILITIES INCLUDED IN DISPOSAL GROUPS CLASSIFIED AS HELD FOR SALE
17,197
TOTAL LIABILITIES
(*) Presented for comparison purposes only.
636,736
676,428
694,573
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 52). 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.
P. 167
Consolidated balance sheets for the years ended December 31, 2017, 2016 and 2015
LIABILITIES AND EQUITY (Continued) (Millions of Euros)
SHAREHOLDERS’ FUNDS
Capital
Paid up capital
Unpaid capital which has been called up
Share premium
Equity instruments issued other than capital
Other equity
Retained earnings
Revaluation reserves
Other reserves
Reserves or accumulated losses of investments in subsidiaries, joint ventures and associates
Other
Less: Treasury shares
Profit or loss attributable to owners of the parent
Less: Interim dividends
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Items that will not be reclassified to profit or loss
Actuarial gains or (-) losses on defined benefit pension plans
Non-current assets and disposal groups classified as held for sale
Share of other recognized income and expense of investments in subsidiaries, joint ventures and
associates
Other adjustments
Items that may be reclassified to profit or loss
Hedge of net investments in foreign operations [effective portion]
Foreign currency translation
Hedging derivatives. Cash flow hedges [effective portion]
Available-for-sale financial assets
Non-current assets and disposal groups classified as held for sale
Share of other recognized income and expense of investments in subsidiaries, joint ventures and
associates
MINORITY INTERESTS (NON-CONTROLLING INTEREST)
Valuation adjustments
Rest
TOTAL EQUITY
2017
2016 (*)
2015 (*)
55,136
3,267
3,267
-
23,992
-
54
52,821
3,218
3,218
-
23,992
-
54
50,639
3,120
3,120
-
23,992
-
35
25,474
23,688
22,588
12
(44)
(44)
-
(96)
3,519
(1,043)
(8,792)
(1,183)
(1,183)
-
-
-
(7,609)
1
(9,159)
(34)
1,641
(26)
(31)
6,979
(3,378)
10,358
53,323
20
(67)
(67)
-
(48)
3,475
(1,510)
(5,458)
(1,095)
(1,095)
-
-
-
(4,363)
(118)
(5,185)
16
947
-
(23)
8,064
(2,246)
10,310
55,428
22
(98)
(98)
-
(309)
2,642
(1,352)
(3,349)
(859)
(859)
-
-
-
(2,490)
(274)
(3,905)
(49)
1,674
-
64
7,992
(1,333)
9,325
55,282
TOTAL EQUITY AND TOTAL LIABILITIES
690,059
731,856
749,855
MEMORANDUM ITEM (OFF-BALANCE SHEET EXPOSURES) (Millions of Euros)
Guarantees given
Contingent commitments
(*) Presented for comparison purposes only.
2017
47,671
108,881
2016 (*)
50,540
117,573
2015 (*)
49,876
135,733
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 52). 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, 2017, 2016 and 2015
CONSOLIDATED INCOME STATEMENTS (MILLIONS OF EUROS)
Interest income
Interest expense
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 expense
Gains (losses) on derecognition of financial assets and liabilities not measured at fair value through profit or loss, net
Gains (losses) on financial assets and liabilities held for trading, net
Gains (losses) on financial assets and liabilities designated at fair value through profit or loss, net
Gains (losses) from hedge accounting, net
Exchange differences, net
Other operating income
Other operating expense
Income from insurance and reinsurance contracts
Expense from insurance and reinsurance contracts
GROSS INCOME
Administration costs
Personnel expenses
Other administrative expenses
Depreciation and amortization
Provisions or reversal of provisions
Impairment or reversal of impairment on financial assets not measured at fair value through profit or loss
Financial assets measured at cost
Available- for-sale financial assets
Loans and receivables
Held to maturity investments
NET OPERATING INCOME
Impairment or reversal of impairment of investments in subsidiaries, joint ventures and associates
Impairment or reversal of impairment on non-financial assets
Tangible assets
Intangible assets
Other assets
Gains (losses) on derecognition of non financial assets and subsidiaries, net
Negative goodwill recognized in profit or loss
Profit (loss) from non-current assets and disposal groups classified as held for sale not qualifying as discontinued operations
OPERATING PROFIT BEFORE TAX
Tax expense or income related to profit or loss from continuing operations
PROFIT FROM CONTINUING OPERATIONS
Profit from discontinued operations, net
PROFIT
Attributable to minority interest [non-controlling interest]
Attributable to owners of the parent
EARNINGS PER SHARE (Euros)
Basic earnings per share from continued operations
Diluted earnings per share from continued operations
Basic earnings per share from discontinued operations
Diluted earnings per share from discontinued operations
(*)Presented for comparison purposes only.
2017
29,296
(11,537)
17,758
334
4
7,150
(2,229)
985
218
(56)
(209)
1,030
1,439
(2,223)
3,342
(2,272)
25,270
(11,112)
(6,571)
(4,541)
(1,387)
(745)
(4,803)
-
(1,127)
(3,677)
1
7,222
-
(364)
(42)
(16)
(306)
47
-
26
6,931
(2,169)
4,762
-
4,762
1,243
3,519
2017
0.48
0.48
0.48
-
-
2016 (*)
27,708
(10,648)
17,059
467
25
6,804
(2,086)
1,375
248
114
(76)
472
1,272
(2,128)
3,652
(2,545)
24,653
(11,366)
(6,722)
(4,644)
(1,426)
(1,186)
(3,801)
-
(202)
(3,597)
(1)
6,874
-
(521)
(143)
(3)
(375)
70
-
(31)
6,392
(1,699)
4,693
-
4,693
1,218
3,475
2016 (*)
2015 (*)
0.49
0.49
0.49
-
-
0.37
0.37
0.37
-
-
P. 168
2015 (*)
24,783
(8,761)
16,022
415
174
6,340
(1,729)
1,055
(409)
126
93
1,165
1,315
(2,285)
3,678
(2,599)
23,362
(10,836)
(6,273)
(4,563)
(1,272)
(731)
(4,272)
-
(23)
(4,248)
-
6,251
-
(273)
(60)
(4)
(209)
(2,135)
26
734
4,603
(1,274)
3,328
-
3,328
686
2,642
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 52). 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.
P. 169
Consolidated statements of changes in equity for the years ended December 31, 2017, 2016 and 2015
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (MILLIONS OF EUROS)
2017
Capital
Share
Premium
Equity
instruments
issued other
than capital
Other Equity
Retained
earnings
Revaluation
reserves
Other
reserves
(-) Treasury
shares
Profit or loss
attributable
to owners of
the parent
Interim
dividends
Accumulated
other
comprehensive
income
Valuation
adjustments
Rest
Total
Non-controlling interest
Balances as of January 1, 2017
3,218
23,992
Total income/expense recognized
Other changes in equity
Issuances of common shares
Issuances of preferred shares
Issuance of other equity instruments
Settlement or maturity of other equity instruments
issued
Conversion of debt on equity
Common Stock reduction
Dividend distribution
Purchase of treasury shares
Sale or cancellation of treasury shares
Reclassification of financial liabilities to other equity
instruments
Reclassification of other equity instruments to financial
liabilities
Transfers within total equity
Increase/Reduction of equity due to business
combinations
Share based payments
Other increases or (-) decreases in equity
-
50
50
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balances as of December 31, 2017
3,267
23,992
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
54
23,688
-
1,786
(50)
-
-
-
-
-
9
-
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(22)
22
54
20
-
(8)
(67)
-
24
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(9)
-
-
-
-
(48)
3,475
(1,510)
(5,458)
(2,246)
10,310
55,428
-
3,519
(48)
(3,475)
-
467
-
-
-
-
-
-
-
(1,674)
1,626
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(900)
-
-
-
-
(3,475)
1,510
-
-
-
-
-
(144)
(3,334)
(1,133)
1,243
295
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,195)
(2,400)
-
-
-
-
-
-
-
-
-
-
-
-
(290)
(1,189)
-
-
-
-
-
-
-
(1,674)
1,627
-
-
-
-
(22)
(905)
(1,141)
(96)
3,519
(1,043)
(8,792)
(3,378)
10,358
53,323
1,932
(8)
41
-
-
(107)
25,474
-
-
-
12
-
-
(7)
(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 52). 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.
P. 170
Consolidated statements of changes in equity for the years ended December 31, 2017, 2016 and 2015
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (MILLIONS OF EUROS)
2016 (*)
Capital
Share
Premium
Equity
instruments
issued other
than capital
Other Equity
Retained
earnings
Revaluation
reserves
Other
reserves
(-) Treasury
shares
Non-controlling interest
Profit or loss
attributable
to owners of
the parent
Interim
dividends
Accumulated
other
comprehensive
income
Valuation
adjustments
Rest
Total
Balances as of January 1, 2016
3,120
23,992
Total income/expense recognized
Other changes in equity
Issuances of common shares
Issuances of preferred shares
Issuance of other equity instruments
Settlement or maturity of other equity instruments
issued
Conversion of debt on equity
Common Stock reduction
Dividend distribution
Purchase of treasury shares
Sale or cancellation of treasury shares
Reclassification of financial liabilities to other equity
instruments
Reclassification of other equity instruments to financial
liabilities
Transfers within total equity
Increase/Reduction of equity due to business
combinations
Share based payments
Other increases or (-) decreases in equity
-
98
98
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balances as of December 31, 2016
(*) Presented for comparison purposes only.
3,218
23,992
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
35
-
19
-
-
-
-
-
-
-
-
-
-
-
-
-
(16)
35
54
22,588
-
1,100
(98)
-
-
-
-
-
93
-
(30)
-
-
22
-
(2)
-
-
-
-
-
-
-
-
-
-
-
-
31
-
-
-
-
-
-
(93)
-
-
-
-
1,166
(2)
126
-
3
(34)
23,688
-
-
-
20
-
-
(2)
(67)
(98)
(309)
2,642
(1,352)
(3,349)
(1,333)
9,325
55,281
-
3,475
-
(2,109)
(913)
1,218
1,671
260
(2,642)
(158)
-
-
-
-
-
-
-
(2,004)
2,264
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,301)
-
-
-
-
(2,642)
1,352
-
-
-
-
-
(210)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(233)
(1,526)
-
-
-
-
-
-
-
-
-
-
-
-
(234)
(1,535)
-
-
-
-
-
-
-
(2,004)
2,234
-
-
-
-
(12)
2
(209)
(48)
3,475
(1,510)
(5,458)
(2,246)
10,310
55,428
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 52). 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.
P. 171
Consolidated statements of changes in equity for the years ended December 31, 2017, 2016 and 2015
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (MILLIONS OF EUROS)
2015 (*)
Capital
Share
Premium
Equity
instruments
issued other
than capital
Other Equity
Retained
earnings
Revaluation
reserves
Other
reserves
(-) Treasury
shares
Balances as of January 1, 2015
3,024
23,992
Total income/expense recognized
Other changes in equity
Issuances of common shares
Issuances of preferred shares
Issuance of other equity instruments
Settlement or maturity of other equity instruments
issued
Conversion of debt on equity
Common Stock reduction
Dividend distribution
Purchase of treasury shares
Sale or cancellation of treasury shares
Reclassification of financial liabilities to other equity
instruments
Reclassification of other equity instruments to financial
liabilities
Transfers within total equity
Increase/Reduction of equity due to business
combinations
Share based payments
Other increases or (-) decreases in equity
-
96
96
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balances as of December 31, 2015
3,120
23,992
(*) Presented for comparison purposes only.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Profit or loss
attributable
to owners of
the parent
Interim
dividends
Accumulated
other
comprehensive
income
Non-controlling interest
Valuation
adjustments
Rest
Total
2,618
2,642
(841)
(348)
(53)
2,563
51,609
-
(3,000)
(1,280)
686
(953)
(2,618)
(512)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,222)
-
-
-
-
(2,618)
841
-
-
-
-
-
(131)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,075
4,626
-
-
-
-
-
-
-
-
-
-
-
-
(146)
(1,368)
-
-
-
-
-
-
-
(3,278)
3,325
-
-
-
-
(34)
6,221
5,980
-
-
-
-
-
-
-
(3,278)
3,319
-
-
-
-
-
-
66
-
20,281
-
(32)
2,308
23
-
(1)
633
-
(731)
(350)
-
41
-
-
-
-
-
-
-
-
-
-
-
-
-
(48)
16
35
(96)
-
-
-
-
-
86
-
6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(86)
-
-
-
-
2,423
(1)
(645)
-
14
(126)
22,588
-
-
-
-
-
-
22
(98)
(309)
2,642
(1,352)
(3,349)
(1,333)
9,325
55,281
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 52). 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.
P. 172
Statements of Recognized Income and Expenses for the year ended December 31, 2017, 2016 and
2015.
CONSOLIDATED FINANCIAL STATEMENTS OF RECOGNIZED INCOME AND EXPENSES (MILLIONS OF EUROS)
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
2017
4,762
(4,467)
(91)
(96)
-
-
5
2016 (*)
2015 (*)
4,693
(3,022)
(240)
(303)
-
-
63
3,328
(4,280)
(74)
(135)
-
8
53
ITEMS SUBJECT TO RECLASSIFICATION TO INCOME STATEMENT
(4,376)
(2,782)
(4,206)
Hedge of net investments in foreign operations [effective portion]
Valuation gains or (losses) taken to equity
Transferred to profit or loss
Other reclassifications
Foreign currency translation
Valuation gains or (losses) taken to equity
Transferred to profit or loss
Other reclassifications
Cash flow hedges [effective portion]
Valuation gains or (losses) taken to equity
Transferred to profit or loss
Transferred to initial carrying amount of hedged items
Other reclassifications
Available-for-sale financial assets
Valuation gains or (losses) taken to equity
Transferred to profit or loss
Other reclassifications
Non-current assets held for sale
Valuation gains or (losses) taken to equity
Transferred to profit or loss
Other reclassifications
Entities accounted for using the equity method
Income tax
TOTAL RECOGNIZED INCOME/EXPENSES
Attributable to minority interest [non-controlling interests]
Attributable to the parent company
(*) Presented for comparison purposes only.
80
112
-
(32)
(5,110)
(5,119)
(22)
31
(67)
(122)
55
-
-
719
384
347
(12)
(20)
-
-
(20)
(13)
35
295
110
185
166
166
-
-
(2,167)
(2,120)
(47)
-
80
134
(54)
-
-
(694)
438
(1,248)
116
-
-
-
-
(89)
(78)
1,671
305
1,366
88
88
-
-
(2,911)
(3,154)
243
-
4
47
(43)
-
-
(3,196)
(1,341)
(1,855)
-
-
-
-
-
861
948
(952)
(594)
(358)
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 52). 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.
P. 173
Consolidated statements of cash flows for the years ended December 31, 2017, 2016 and 2015
CONSOLIDATED FINANCIAL STATEMENTS OF RECOGNIZED INCOME AND EXPENSES (MILLIONS OF EUROS)
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
2017
4,762
(4,467)
(91)
(96)
-
-
5
2016 (*)
2015 (*)
4,693
(3,022)
(240)
(303)
-
-
63
3,328
(4,280)
(74)
(135)
-
8
53
ITEMS SUBJECT TO RECLASSIFICATION TO INCOME STATEMENT
(4,376)
(2,782)
(4,206)
Hedge of net investments in foreign operations [effective portion]
Valuation gains or (losses) taken to equity
Transferred to profit or loss
Other reclassifications
Foreign currency translation
Valuation gains or (losses) taken to equity
Transferred to profit or loss
Other reclassifications
Cash flow hedges [effective portion]
Valuation gains or (losses) taken to equity
Transferred to profit or loss
Transferred to initial carrying amount of hedged items
Other reclassifications
Available-for-sale financial assets
Valuation gains or (losses) taken to equity
Transferred to profit or loss
Other reclassifications
Non-current assets held for sale
Valuation gains or (losses) taken to equity
Transferred to profit or loss
Other reclassifications
Entities accounted for using the equity method
Income tax
TOTAL RECOGNIZED INCOME/EXPENSES
Attributable to minority interest [non-controlling interests]
Attributable to the parent company
(*) Presented for comparison purposes only.
80
112
-
(32)
(5,110)
(5,119)
(22)
31
(67)
(122)
55
-
-
719
384
347
(12)
(20)
-
-
(20)
(13)
35
295
110
185
166
166
-
-
(2,167)
(2,120)
(47)
-
80
134
(54)
-
-
(694)
438
(1,248)
116
-
-
-
-
(89)
(78)
1,671
305
1,366
88
88
-
-
(2,911)
(3,154)
243
-
4
47
(43)
-
-
(3,196)
(1,341)
(1,855)
-
-
-
-
-
861
948
(952)
(594)
(358)
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 52). 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, 2017, 2016 and 2015
CONSOLIDATED FINANCIAL STATEMENTS OF CASH FLOWS (MILLIONS OF EUROS)
A) CASH FLOWS FROM OPERATING ACTIVITIES (1 + 2 + 3 + 4 + 5)
1. Profit for the year
2. Adjustments to obtain the cash flow from operating activities:
Depreciation and amortization
Other adjustments
3. 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
4. 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
5. Collection/Payments for income tax
B) CASH FLOWS FROM INVESTING ACTIVITIES (1 + 2)
1. Investment
Tangible assets
Intangible assets
Investments in joint ventures and associates
Subsidiaries and other business units
Non-current assets held for sale and associated liabilities
Held-to-maturity investments
Other settlements related to investing activities
2. Divestments
Tangible assets
Intangible assets
Investments in joint ventures and associates
Subsidiaries and other business units
Non-current assets held for sale and associated liabilities
Held-to-maturity investments
Other collections related to investing activities
C) CASH FLOWS FROM FINANCING ACTIVITIES (1 + 2)
1. Payments
Dividends
Subordinated liabilities
Treasury stock amortization
Treasury stock acquisition
Other items relating to financing activities
2. Collections
Subordinated liabilities
Treasury stock increase
Treasury stock disposal
Other items relating to financing activities
D) EFFECT OF EXCHANGE RATE CHANGES
E) NET INCREASE/DECREASE IN CASH OR CASH EQUIVALENTS (A+B+C+D)
F) CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR
G) CASH AND CASH EQUIVALENTS AT END OF THE YEAR (E+F)
COMPONENTS OF CASH AND EQUIVALENT AT END OF THE YEAR (Millions of Euros)
Cash
Balance of cash equivalent in central banks
Other financial assets
Less: Bank overdraft refundable on demand
TOTAL CASH AND CASH EQUIVALENTS AT END OF THE PERIOD
(*) Presented for comparison purposes only.
2017
2,055
4,762
8,526
1,387
7,139
(4,894)
5,662
(783)
5,032
(14,503)
(302)
(3,916)
(6,057)
19
2,111
11
(2,423)
2,902
(2,339)
(777)
(564)
(101)
(897)
-
-
-
5,241
518
47
18
936
1,002
2,711
9
(98)
(5,763)
(1,698)
(2,098)
-
(1,674)
(293)
5,665
4,038
-
1,627
-
(4,266)
594
44,955
45,549
2017
6,416
39,132
-
-
45,549
2016 (*)
6,623
4,693
6,784
1,426
5,358
(4,428)
1,289
(2)
14,445
(21,075)
915
1,273
361
(53)
(7)
972
(1,699)
(560)
(3,978)
(1,312)
(645)
(76)
(95)
-
(1,850)
-
3,418
795
20
322
73
900
1,215
93
(1,113)
(4,335)
(1,599)
(502)
-
(2,004)
(230)
3,222
1,000
-
2,222
-
(3,463)
1,489
43,466
44,955
2016 (*)
7,413
37,542
-
-
44,955
P. 174
2015 (*)
23,101
3,328
18,327
1,272
17,055
(12,954)
4,691
337
3,360
(20,498)
(844)
15,674
(2,475)
120
21,422
(3,393)
(1,274)
(4,411)
(6,416)
(2,171)
(571)
(41)
(3,633)
-
-
-
2,005
224
2
1
9
1,683
-
86
127
(5,717)
(879)
(1,419)
-
(3,273)
(146)
5,844
2,523
-
3,321
-
(6,781)
12,036
31,430
43,466
2015 (*)
7,192
36,275
-
-
43,466
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 52). 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.
P. 175
APPENDIX II. Additional information on consolidated subsidiaries composing the BBVA
Group as of December 31, 2017
Additional Information on Consolidated Subsidiaries and consolidated structured entities composing the BBVA Group
Company
Location
Activity
Direct
Indirect
Total
Net Carrying
Amount
Assets
31.12.17
Liabilities
31.12.17
Equity
31.12.17
Profit (Loss)
31.12.17
% Legal share of participation
Millions of Euros (*)
Affiliate Entity Data
4D INTERNET SOLUTIONS, INC
ACTIVOS MACORP, S.L.
ALCALA 120 PROMOC. Y GEST.IMMOB. S.L.
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.
ANIDAPORT INVESTIMENTOS IMOBILIARIOS, UNIPESSOAL, LTDA
APLICA NEXTGEN OPERADORA S.A. DE C.V.
APLICA NEXTGEN SERVICIOS S.A. DE C.V
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.
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.
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 AGENCIA DE SEGUROS COLOMBIA LTDA
BBVA ASESORIAS FINANCIERAS, S.A.
UNITED STATES
SPAIN
SPAIN
SPAIN
GERMANY
SPAIN
MEXICO
SPAIN
MEXICO
PORTUGAL
MEXICO
MEXICO
MEXICO
MEXICO
MEXICO
UNITED STATES
SPAIN
SPAIN
SPAIN
SPAIN
SPAIN
SPAIN
SPAIN
SPAIN
SPAIN
PORTUGAL
CHILE
URUGUAY
PERU
SPAIN
SPAIN
CURAÇAO
VENEZUELA
UNITED STATES
UNITED STATES
UNITED STATES
UNITED STATES
SPAIN
COLOMBIA
CHILE
FINANCIAL SERVICES
REAL ESTATE
REAL ESTATE
REAL ESTATE
IN LIQUIDATION
INVESTMENT COMPANY
INVESTMENT COMPANY
REAL ESTATE
REAL ESTATE
REAL ESTATE
SERVICES
SERVICES
SERVICES
SERVICES
SERVICES
FINANCIAL SERVICES
REAL ESTATE
REAL ESTATE
REAL ESTATE
REAL ESTATE
REAL ESTATE
REAL ESTATE
REAL ESTATE
REAL ESTATE
INACTIVE
BANKING
BANKING
BANKING
BANKING
BANKING
BANKING
BANKING
BANKING
FINANCIAL SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
INVESTMENT COMPANY
INSURANCES SERVICES
FINANCIAL SERVICES
(*) Information on foreign companies at exchange rate on December 31, 2017
(**) These companies have equity loans from BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
(***) This company has an equity loan from ANIDA GRUPO INMOBILIARIO, S.L.
(****) These companies have an equity loan from UNNIM SOCIEDAD PARA LA GESTION DE ACTIVOS INMOBILIARIOS, S.A
.
-
50.63
-
-
-
100.00
-
-
-
-
-
-
-
-
100.00
-
-
-
-
-
-
-
-
-
99.95
100.00
-
100.00
-
-
49.43
-
1.46
-
-
-
-
100.00
-
-
100.00
49.37
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
-
-
68.19
-
46.12
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
100.00
100.00
99.95
100.00
68.19
100.00
46.12
99.93
100.00
100.00
55.21
100.00
100.00
100.00
100.00
100.00
100.00
100.00
18
18
15
-
-
-
163
-
91
29
-
-
-
1
203
816
-
53
-
9
-
1
-
-
1
252
863
110
910
97
17
47
31
2
13
1
54
79
-
2
18
24
26
284
-
2,040
116
4,066
94
87
-
-
8
4
268
816
61
220
199
10
264
52
74
34
1
4,029
19,114
2,705
19,666
63
18
369
958
2
13
2
129
571
-
3
1
5
10
413
-
2,689
-
4,451
3
81
-
-
7
3
74
-
49
76
166
-
214
44
63
23
-
3,805
17,848
2,515
17,693
2
-
324
877
-
-
1
75
-
-
1
20
3
14
56
-
(161)
109
(99)
84
8
-
-
-
-
181
816
(37)
133
(109)
9
(91)
(13)
(36)
(12)
1
220
1,121
166
1,597
(2)
18
42
97
2
9
1
43
599
-
1
(3)
16
1
(185)
-
(488)
7
(286)
7
(2)
-
-
-
-
13
-
48
11
141
1
141
20
47
23
-
4
145
24
377
63
-
3
(16)
-
4
-
11
(28)
-
1
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 52). 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.
P. 176
Additional Information on Consolidated Subsidiaries and structured entities composing the BBVA Group (Continued)
Company
Location
Activity
Direct
Indirec
t
Total
Net
Carrying
Amount
Assets
31.12.17
Liabilities
31.12.17
Equity
31.12.17
Profit
(Loss)
31.12.17
% Legal share of
participation
Millions of Euros (*)
Affiliate Entity Data
BBVA ASSET MANAGEMENT ADMINISTRADORA GENERAL DE FONDOS S.A.
BBVA ASSET MANAGEMENT CONTINENTAL S.A. SAF
BBVA ASSET MANAGEMENT, S.A. SOCIEDAD FIDUCIARIA (BBVA FIDUCIARIA)
BBVA ASSET MANAGEMENT, S.A., SGIIC
BBVA AUTOMERCANTIL, COMERCIO E ALUGER DE VEICULOS AUTOMOVEIS,LDA.
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, S.A.,INSTITUCION DE BANCA MULTIPLE, GRUPO FINANCIERO BBVA BANCOMER
BBVA BRASIL BANCO DE INVESTIMENTO, S.A.
BBVA BROKER, CORREDURIA DE SEGUROS Y REASEGUROS, S.A.
BBVA BROKER, S.A.
BBVA COLOMBIA, S.A.
BBVA COMPASS BANCSHARES, INC
BBVA COMPASS FINANCIAL CORPORATION
BBVA COMPASS INSURANCE AGENCY, INC
BBVA COMPASS PAYMENTS, 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
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 FACTORING LIMITADA (CHILE)
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 GLOBAL FINANCE LTD.
BBVA GLOBAL MARKETS B.V.
BBVA INMOBILIARIA E INVERSIONES, S.A.
BBVA INSTITUIÇAO FINANCEIRA DE CREDITO, S.A.
BBVA INTERNATIONAL PREFERRED, S.A.U.
BBVA INVERSIONES CHILE, S.A.
BBVA IRELAND PLC
FINANCIAL SERVICES
CHILE
FINANCIAL SERVICES
PERU
FINANCIAL SERVICES
COLOMBIA
OTHER INVESTMENT
SPAIN
FINANCIAL SERVICES
PORTUGAL
BANKING
ARGENTINA
FINANCIAL SERVICES
MEXICO
SERVICES
MEXICO
INSURANCES SERVICES
MEXICO
SERVICES
MEXICO
BANKING
MEXICO
BANKING
BRASIL
INSURANCES SERVICES
SPAIN
INSURANCES SERVICES
ARGENTINA
BANKING
COLOMBIA
INVESTMENT COMPANY
UNITED
FINANCIAL SERVICES
UNITED
INSURANCES SERVICES
UNITED
INVESTMENT COMPANY
UNITED
INSURANCES SERVICES
ARGENTINA
FINANCIAL SERVICES
CHINA
SERVICES
SPAIN
FINANCIAL SERVICES
PERU
INSURANCES SERVICES
CHILE
SECURITIES DEALER
CHILE
SERVICES
SPAIN
PAYMENT ENTITIES
SPAIN
INSURANCES SERVICES
URUGUAY
PENSION FUNDS
CHILE
FINANCIAL SERVICES
ITALY
FINANCIAL SERVICES
ARGENTINA
SECURITIES DEALER
ARGENTINA
PENSION FUNDS
PORTUGAL
CAYMAN
FINANCIAL SERVICES
NETHERLAND FINANCIAL SERVICES
REAL ESTATE
CHILE
FINANCIAL SERVICES
PORTUGAL
FINANCIAL SERVICES
SPAIN
INVESTMENT COMPANY
CHILE
FINANCIAL SERVICES
IRELAND
(*) Information on foreign companies at exchange rate on December 31, 2017
-
-
-
-
-
-
-
-
-
100.00
99.94
-
14
100.00 100.00
14
100.00 100.00
28
100.00 100.00
38
17.00 83.00 100.00
4
100.00
100.00
-
157
39.97 26.58 66.55
21
100.00 100.00
45
100.00 100.00
11
100.00 100.00
100.00 100.00
28
100.00 100.00 7,426
16
100.00
-
0.06 100.00
95.00 95.00
-
355
77.41 18.06 95.47
100.00 11,70
-
100.00
217
-
28
-
69
-
10
-
4
18
7
68
6
2
4
10
4
12
7
1
-
-
5
40
-
483
180
100.00 100.00
100.00 100.00
100.00 100.00
87.78 12.22 100.00
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
68.11 68.11
49.90 50.10 100.00
100.00
100.00
-
61.22 38.78 100.00
100.00
-
100.00
-
-
-
-
-
-
100.00
-
-
100.00
-
-
-
100.00
100.00
-
-
-
-
-
18
16
33
114
20
9,173
37
235
19
156
82,50
34
17
5
16,16
10,86
416
29
69
133
2
5
125
14
647
4
5
4
58
15
19
10
19
171
2,398
43
379
36
1,394
577
3
2
5
55
15
8,019
16
190
8
129
75,07
4
4
2
14,94
35
199
1
-
85
-
-
108
7
579
1
2
-
48
11
6
2
1
167
2,397
36
331
35
100
379
8
11
20
21
5
947
7
38
9
16
5,596
27
9
(1)
1,045
10,42
220
21
54
17
2
5
17
(1)
62
2
4
2
10
4
2
4
17
4
1
7
45
1
1,101
191
6
4
8
38
-
207
15
7
2
11
1,83
3
5
4
174
406
(3)
7
15
31
-
-
(1)
8
6
-
-
2
-
-
12
3
1
-
-
-
3
-
193
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 52). 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.
P. 177
Additional Information on Consolidated Subsidiaries and structured entities composing the BBVA Group (Continued)
% Legal share of participation
Millions of Euros (*)
Affiliate Entity Data
Company
Location
Activity
Direct
Indirect
Total
Net Carrying
Amount
Assets
31.12.17
Liabilities
31.12.17
Equity
31.12.17
Profit (Loss)
31.12.17
BBVA LEASING MEXICO, S.A. DE C.V.
BBVA LUXINVEST, S.A.
BBVA MEDIACION OPERADOR DE BANCA-SEGUROS VINCULADO, S.A.
BBVA NOMINEES LIMITED
BBVA OP3N S.L. (**)
BBVA OP3N, INC
BBVA PARAGUAY, S.A.
BBVA PENSIONES, SA, ENTIDAD GESTORA DE FONDOS DE PENSIONES
BBVA PLANIFICACION PATRIMONIAL, S.L.
BBVA PREVISION AFP S.A. ADM.DE FONDOS DE PENSIONES
BBVA PROCUREMENT SERVICES AMERICA DEL SUR SpA
BBVA PROPIEDAD, S.A.
BBVA RE DAC
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 SUBORDINATED CAPITAL S.A.U.
BBVA SUIZA, S.A. (BBVA SWITZERLAND)
BBVA TRADE, S.A. (***)
BBVA VALORES COLOMBIA, S.A. COMISIONISTA DE BOLSA
BBVA WEALTH SOLUTIONS, INC.
BEEVA TEC OPERADORA, S.A. DE C.V.
BEEVA TEC, S.A. DE C.V.
BILBAO VIZCAYA HOLDING, S.A.
BLUE INDICO INVESTMENTS, S.L.
CAIXA MANRESA IMMOBILIARIA ON CASA, S.L. (****)
CAIXA MANRESA IMMOBILIARIA SOCIAL, S.L. (****)
CAIXA TERRASSA SOCIETAT DE PARTICIPACIONS PREFERENTS, S.A.U.
CAIXASABADELL PREFERENTS, S.A.
CAIXASABADELL TINELIA, S.L.
CARTERA E INVERSIONES S.A., CIA DE
FINANCIAL SERVICES
INVESTMENT COMPANY
INSURANCES SERVICES
MEXICO
LUXEMBOURG
SPAIN
UNITED KINGDOM SERVICES
SERVICES
SPAIN
SERVICES
UNITED STATES
BANKING
PARAGUAY
PENSION FUNDS MANAGEMENT
SPAIN
FINANCIAL SERVICES
SPAIN
PENSION FUNDS MANAGEMENT
BOLIVIA
SERVICES
CHILE
SPAIN
REAL ESTATE INVESTMENT COMPANY
INSURANCES SERVICES
IRELAND
FINANCIAL SERVICES
MEXICO
INVESTMENT COMPANY
CHILE
FINANCIAL SERVICES
SPAIN
FINANCIAL SERVICES
UNITED STATES
INSURANCES SERVICES
COLOMBIA
INSURANCES SERVICES
COLOMBIA
INSURANCES SERVICES
CHILE
INSURANCES SERVICES
SPAIN
FINANCIAL SERVICES
SPAIN
SERVICES
CHILE
COMMERCIAL
SPAIN
FINANCIAL SERVICES
CHILE
FINANCIAL SERVICES
SPAIN
BANKING
SWITZERLAND
INVESTMENT COMPANY
SPAIN
SECURITIES DEALER
COLOMBIA
FINANCIAL SERVICES
UNITED STATES
SERVICES
MEXICO
SERVICES
MEXICO
INVESTMENT COMPANY
SPAIN
INVESTMENT COMPANY
SPAIN
REAL ESTATE
SPAIN
REAL ESTATE
SPAIN
FINANCIAL SERVICES
SPAIN
FINANCIAL SERVICES
SPAIN
INVESTMENT COMPANY
SPAIN
INVESTMENT COMPANY
SPAIN
-
36.00
-
100.00
-
-
100.00
100.00
80.00
75.00
-
-
-
-
-
100.00
-
94.00
94.00
-
99.96
100.00
-
-
-
100.00
100.00
-
-
-
-
-
89.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
64.00
100.00
-
100.00
100.00
-
-
20.00
5.00
100.00
100.00
100.00
100.00
100.00
-
100.00
6.00
6.00
100.00
-
-
100.00
100.00
97.49
-
-
100.00
100.00
100.00
100.00
100.00
11.00
-
-
-
-
-
-
-
100.00
100.00
100.00
100.00
100.00
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
100.00
99.96
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
100.00
100.00
100.00
100.00
100.00
100.00
51
3
10
-
-
2
23
13
-
1
6
874
39
-
294
90
178
10
14
71
1,039
-
3
-
28
-
98
1
4
6
-
1
35
21
-
-
1
-
41
92
837
213
82
-
2
3
1,784
53
1
23
9
874
72
-
295
665
368
83
404
201
18,231
1,765
11
8
82
121
859
42
4
6
1
3
227
46
2
4
76
91
42
55
717
209
51
-
3
1
1,621
15
-
13
3
5
23
-
1
565
190
63
289
129
16,989
1,764
8
1
53
120
753
37
-
-
1
2
28
27
5
4
74
90
-
38
97
(64)
16
-
-
7
132
27
1
4
6
921
40
-
229
95
162
13
74
62
948
1
-
7
26
1
98
13
5
5
-
1
187
17
(3)
-
2
1
41
21
23
68
15
-
(1)
(5)
32
11
-
5
-
(51)
9
-
65
5
16
7
41
10
294
-
3
-
3
-
7
(8)
(1)
1
-
-
12
2
-
-
-
-
-
(3)
(*) Information on foreign companies at exchange rate on December 31, 2017
(**) These companies have an equity loan from BILBAO VIZCAYA HOLDING, S.A.
(***) These companies have an equity loan from CARTERA E INVERSIONES S.A., CIA DE.
(****) These companies have an equity loan from BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
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 52). 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.
P. 178
Additional Information on Consolidated Subsidiaries and structured entities composing the BBVA Group (Continued)
Company
Location
Activity
Direct
Indirect
Total
Net Carrying
Amount
Assets
31.12.17
Liabilities
31.12.17
Equity
31.12.17
Profit (Loss)
31.12.17
% Legal share of participation
Millions of Euros (*)
Affiliate Entity Data
CASA DE BOLSA BBVA BANCOMER, S.A. DE C.V.
CATALONIA GEBIRA, S.L.
CATALONIA PROMODIS 4, S.A.
CATALUNYACAIXA ASSEGURANCES GENERALS, S.A.
CATALUNYACAIXA CAPITAL, S.A.
CATALUNYACAIXA IMMOBILIARIA, S.A. (**)
CATALUNYACAIXA SERVEIS, S.A.
CDD GESTIONI, S.R.L.
CETACTIUS, S.L. (**)
CIDESSA DOS, S.L.
CIDESSA UNO, S.L.
CIERVANA, S.L.
CLUB GOLF HACIENDA EL ALAMO, S.L.
COMERCIALIZADORA CORPORATIVA SAC
COMERCIALIZADORA DE SERVICIOS FINANCIEROS, S.A.
COMPAÑIA CHILENA DE INVERSIONES, S.L.
COMPASS BANK
COMPASS CAPITAL MARKETS, INC.
COMPASS GP, INC.
COMPASS INSURANCE TRUST
COMPASS LIMITED PARTNER, INC.
COMPASS LOAN HOLDINGS TRS, INC.
COMPASS MORTGAGE CORPORATION
COMPASS MORTGAGE FINANCING, INC.
COMPASS SOUTHWEST, LP
COMPASS TEXAS MORTGAGE FINANCING, INC
CONSOLIDAR A.F.J.P., S.A.
CONTENTS AREA, S.L.
CONTINENTAL BOLSA, SDAD. AGENTE DE BOLSA, S.A.
CONTINENTAL DPR FINANCE COMPANY
CONTINENTAL SOCIEDAD TITULIZADORA, S.A.
CONTRATACION DE PERSONAL, S.A. DE C.V.
COPROMED S.A. DE C.V.
CORPORACION GENERAL FINANCIERA, S.A.
COVAULT, INC
CX PROPIETAT, FII
DALLAS CREATION CENTER, INC
DATA ARCHITECTURE AND TECHNOLOGY S.L.
(*) Information on foreign companies at exchange rate on December 31, 2017
(**) These companies have an equity loan from BANCO BILBAO VIZCAYA ARGENTARIA, S.A
MEXICO
SECURITIES DEALER
SPAIN
REAL ESTATE
SPAIN
REAL ESTATE
SPAIN
INSURANCES SERVICES
SPAIN
INVESTMENT COMPANY
SPAIN
REAL ESTATE
SPAIN
SERVICES
ITALY
REAL ESTATE
SPAIN
REAL ESTATE
SPAIN
INVESTMENT COMPANY
SPAIN
INVESTMENT COMPANY
SPAIN
INVESTMENT COMPANY
SPAIN
REAL ESTATE
FINANCIAL SERVICES
PERU
SERVICES
COLOMBIA
INVESTMENT COMPANY
SPAIN
BANKING
UNITED STATES
INVESTMENT COMPANY
UNITED STATES
INVESTMENT COMPANY
UNITED STATES
INSURANCES SERVICES
UNITED STATES
INVESTMENT COMPANY
UNITED STATES
FINANCIAL SERVICES
UNITED STATES
FINANCIAL SERVICES
UNITED STATES
FINANCIAL SERVICES
UNITED STATES
FINANCIAL SERVICES
UNITED STATES
FINANCIAL SERVICES
UNITED STATES
IN LIQUIDATION
ARGENTINA
SERVICES
SPAIN
PERU
SECURITIES DEALER
CAYMAN ISLANDS FINANCIAL SERVICES
FINANCIAL SERVICES
PERU
SERVICES
MEXICO
SERVICES
MEXICO
INVESTMENT COMPANY
SPAIN
SERVICES
UNITED STATES
SPAIN
REAL ESTATE INVESTMENT COMPANY
SERVICES
UNITED STATES
SERVICES
SPAIN
-
-
-
100.00
100.00
100.00
100.00
100.00
100.00
-
-
100.00
-
-
-
99.97
-
-
-
-
-
-
-
-
-
-
46.11
-
-
-
-
-
-
100.00
-
94.96
-
-
100.00
100.00
100.00
-
-
-
-
-
-
100.00
100.00
-
97.87
50.00
100.00
0.03
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
53.89
100.00
100.00
100.00
100.00
100.00
100.00
-
100.00
-
100.00
51.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
97.87
50.00
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
94.96
100.00
51.00
46
-
-
42
104
310
2
5
-
15
5
53
-
-
3
580
10,083
6,789
41
-
5,932
68
2,661
-
4,906
-
-
6
5
-
1
5
-
510
-
48
-
-
60
4
8
49
113
388
9
6
2
15
199
61
-
1
9
920
76,898
6,789
51
-
5,932
68
2,720
-
4,907
-
2
7
11
63
1
9
-
1,821
-
51
6
5
14
4
8
23
10
94
6
-
22
1
84
-
-
1
6
339
66,816
-
10
-
-
-
59
-
-
-
1
1
6
63
-
4
-
140
-
-
6
3
14
(4)
(5)
22
96
74
3
6
(20)
15
75
60
-
-
2
442
9,708
6,729
41
-
5,873
67
2,607
-
4,847
-
-
6
4
-
1
4
-
1,448
-
60
3
-
32
4
5
3
8
221
-
-
(1)
-
40
-
-
-
1
139
375
60
-
-
59
-
54
-
59
-
-
-
1
-
-
1
-
232
-
(9)
(3)
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 52). 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.
P. 179
Additional Information on Consolidated Subsidiaries and structured entities composing the BBVA Group (Continued)
Company
Location
Activity
Direct
Indirect Total
Net
Carrying
Amount
Assets
31.12.17
Liabilities
31.12.17
Equity
31.12.17
Profit
(Loss)
31.12.17
% Legal share of
participation
Millions of Euros (*)
Affiliate Entity Data
-
-
-
-
-
-
-
-
-
UNITED
MEXICO
MEXICO
SPAIN
CHILE
SPAIN
SPAIN
URUGUAY
SPAIN
SPAIN
SPAIN
SPAIN
SPAIN
MEXICO
MEXICO
MEXICO
MEXICO
MEXICO
MEXICO
MEXICO
COLOMBIA
SERVICES
DENIZEN FINANCIAL, INC
FINANCIAL SERVICES
DEUTSCHE BANK MEXICO SA FIDEICOMISO F/1859
FINANCIAL SERVICES
DEUTSCHE BANK MEXICO SA FIDEICOMISO F/1860
REAL ESTATE
DISTRITO CASTELLANA NORTE, S.A.
FINANCIAL SERVICES
ECASA, S.A.
REAL ESTATE
EL ENCINAR METROPOLITANO, S.A.
REAL ESTATE
EL MILANILLO, S.A. (**)
FINANCIAL SERVICES
EMPRENDIMIENTOS DE VALOR S.A.
OTHER HOLDING
ENTIDAD DE PROMOCION DE NEGOCIOS, S.A.
FINANCIAL SERVICES 100.00
ENTRE2 SERVICIOS FINANCIEROS, E.F.C., S.A.
REAL ESTATE
ESPAIS SABADELL PROMOCIONS INMOBILIARIES, S.A.
FINANCIAL SERVICES 88.24
EUROPEA DE TITULIZACION, S.A., S.G.F.T.
INVESTMENT
100.00
EXPANSION INTERCOMARCAL, S.L.
-
REAL ESTATE
F/11395 FIDEICOMISO IRREVOCABLE DE ADMINISTRACION CON DERECHO DE REVERSION
-
REAL ESTATE
F/253863 EL DESEO RESIDENCIAL
REAL ESTATE
-
F/403035-9 BBVA HORIZONTES RESIDENCIAL
-
FINANCIAL SERVICES
FIDEICOMISO 28991-8 TRADING EN LOS MCADOS FINANCIEROS
-
FINANCIAL SERVICES
FIDEICOMISO F/29764-8 SOCIO LIQUIDADOR DE OPERACIONES FINANCIERAS DERIVADAS
-
REAL ESTATE
FIDEICOMISO F/403112-6 DE ADMINISTRACION DOS LAGOS
-
OTHER HOLDING
FIDEICOMISO HARES BBVA BANCOMER F/ 47997-2
-
REAL ESTATE
FIDEICOMISO LOTE 6.1 ZARAGOZA
-
FINANCIAL SERVICES
FIDEICOMISO N.989, EN THE BANK OF NEW YORK MELLON, S.A. INSTITUCION DE BANCA MULTIPLE, FIDUCIARIO (FIDEIC.00989 6 MEXICO
-
FINANCIAL SERVICES
FIDEICOMISO Nº 711, EN BANCO INVEX, S.A.,INSTITUCION DE BANCA MULTIPLE, INVEX GRUPO FINANCIERO, FIDUCIARIO (FIDEIC. MEXICO
-
FINANCIAL SERVICES
FIDEICOMISO Nº 752, EN BANCO INVEX, S.A.,INSTITUCION DE BANCA MULTIPLE, INVEX GRUPO FINANCIERO, FIDUCIARIO (FIDEIC. MEXICO
-
FINANCIAL SERVICES
FIDEICOMISO Nº 847, EN BANCO INVEX, S.A.,INSTITUCION DE BANCA MULTIPLE, INVEX GRUPO FINANCIERO, FIDUCIARIO (FIDEIC. MEXICO
-
REAL ESTATE
MEXICO
FIDEICOMISO SCOTIABANK INVERLAT S A F100322908
INACTIVE
PORTUGAL
FINANCEIRA DO COMERCIO EXTERIOR S.A.R.
100.00
-
MEXICO
FINANCIERA AYUDAMOS S.A. DE C.V., SOFOMER
FINANCIAL SERVICES
-
REAL ESTATE
SPAIN
FODECOR, S.L.
-
SERVICES
PERU
FORUM COMERCIALIZADORA DEL PERU, S.A.
-
PERU
FORUM DISTRIBUIDORA DEL PERU, S.A.
FINANCIAL SERVICES
-
CHILE
FORUM DISTRIBUIDORA, S.A.
FINANCIAL SERVICES
-
FINANCIAL SERVICES
CHILE
FORUM SERVICIOS FINANCIEROS, S.A.
-
SERVICES
MEXICO
FUTURO FAMILIAR, S.A. DE C.V.
-
INVESTMENT
NETHERLANDS
G NETHERLANDS BV
-
BANKING
ROMANIA
GARANTI BANK SA
-
SERVICES
TURKEY
GARANTI BILISIM TEKNOLOJISI VE TIC. TAS
FINANCIAL SERVICES
-
CAYMAN
GARANTI DIVERSIFIED PAYMENT RIGHTS FINANCE COMPANY
-
TURKEY
GARANTI EMEKLILIK VE HAYAT AS
INSURANCES
-
FINANCIAL SERVICES
TURKEY
GARANTI FACTORING HIZMETLERI AS
-
(*) Information on foreign companies at exchange rate on December 31, 2017
(**) This company has an equity loan from ANIDA OPERACIONES SINGULARES, S.A.
99.05
1
100.00 100.00
-
100.00 100.00
-
100.00 100.00
75.54
86
75.54
100.00 100.00 19
99.05
6
100.00 100.00 10
3
100.00 100.00
15
99.86
99.86
9
100.00
-
7
100.00 100.00
88.24
2
-
100.00 29
-
1
42.40
42.40
-
65.00
65.00
-
65.00
65.00
100.00 100.00
2
100.00 100.00 52
100.00 100.00
1
100.00 100.00 14
-
59.99
59.99
-
100.00 100.00
-
100.00 100.00
-
100.00 100.00
-
100.00 100.00
7
100.00 100.00
-
100.00
100.00 100.00 20
-
60.00
60.00
2
100.00 100.00
100.00 100.00
5
100.00 100.00 37
100.00 100.00 22
100.00 100.00
1
100.00 100.00 34
100.00 100.00 26
100.00 100.00 23
-
100.00 100.00
30
84.91
84.91
38
81.84
81.84
-
1
15
14
128
22
7
8
7
19
9
8
43
29
1
1
-
2
52
1
17
2
90
17
9
48
14
-
23
1
1
26
304
2,55
3
346
2,15
18
3,39
499
760
-
15
14
14
3
-
1
4
-
-
-
2
-
-
-
-
-
-
-
2
-
90
18
9
48
8
-
3
-
-
21
269
2,34
2
46
1,88
3
3,39
140
713
1
-
-
11
12
6
7
3
19
9
8
38
26
1
1
-
2
48
1
13
2
(5)
-
-
(1)
8
-
12
-
1
4
30
15
1
30
25
13
-
28
40
-
-
-
(3)
7
-
-
-
-
-
-
4
3
-
-
-
-
4
-
1
-
5
-
-
1
(1)
-
8
-
-
1
5
57
-
(2)
26
2
-
78
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 52). 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.
P. 180
Additional Information on Consolidated Subsidiaries and structured entities composing the BBVA Group (Continued)
Company
Location
Activity
Direct
Indirect
Total
Net Carrying
Amount
Assets
31.12.17
Liabilities
31.12.17
Equity
31.12.17
Profit (Loss)
31.12.17
% Legal share of participation
Millions of Euros (*)
Affiliate Entity Data
TURKEY
TURKEY
TURKEY
TURKEY
NETHERLANDS
GARANTI FILO SIGORTA ARACILIK HIZMETLERI A.S.
GARANTI FILO YONETIM HIZMETLERI A.S.
GARANTI FINANSAL KIRALAMA A.S.
GARANTI HIZMET YONETIMI A.S
GARANTI HOLDING BV
GARANTI KONUT FINANSMANI DANISMANLIK HIZMETLERI AS (GARANTI MORTGAGE) TURKEY
TURKEY
GARANTI KULTUR AS
TURKEY
GARANTI ODEME SISTEMLERI A.S.(GOSAS)
TURKEY
GARANTI PORTFOY YONETIMI AS
TURKEY
GARANTI YATIRIM MENKUL KIYMETLER AS
TURKEY
GARANTI YATIRIM ORTAKLIGI AS
NETHERLANDS
GARANTIBANK INTERNATIONAL NV
SPAIN
GARRAF MEDITERRANIA, S.A. (**)
SPAIN
GESCAT LLEVANT, S.L. (***)
SPAIN
GESCAT LLOGUERS, S.L. (***) (****)
POLAND
GESCAT POLSKA, SP. ZOO
SPAIN
GESCAT SINEVA, S.L.
SPAIN
GESCAT, GESTIO DE SOL, S.L. (****)
SPAIN
GESCAT, VIVENDES EN COMERCIALITZACIO, S.L. (***) (****)
SPAIN
GESTION DE PREVISION Y PENSIONES, S.A.
SPAIN
GESTION Y ADMINISTRACION DE RECIBOS, S.A. - GARSA
SPAIN
GRAN JORGE JUAN, S.A.
MEXICO
GRUPO FINANCIERO BBVA BANCOMER, S.A. DE C.V.
UNITED STATES
GUARANTY BUSINESS CREDIT CORPORATION
UNITED STATES
GUARANTY PLUS HOLDING COMPANY
UNITED STATES
GUARANTY PLUS PROPERTIES LLC-2
UNITED STATES
GUARANTY PLUS PROPERTIES, INC-1
SPAIN
HABITATGES FINVER, S.L. (**)
SPAIN
HABITATGES INVERVIC, S.L.
SPAIN
HABITATGES JUVIPRO, S.L. (**)
SPAIN
HOLAMUNO AGENTE DE SEGUROS VINCULADO, S.L.U. (****)
FINLAND
HOLVI PAYMENT SERVICE OY
UNITED STATES
HOMEOWNERS LOAN CORPORATION
UNITED STATES
HUMAN RESOURCES PROVIDER, INC
UNITED STATES
HUMAN RESOURCES SUPPORT, INC
SPAIN
INFORMACIO I TECNOLOGIA DE CATALUNYA, S.L.
MEXICO
INMESP DESARROLLADORA, S.A. DE C.V.
PERU
INMUEBLES Y RECUPERACIONES CONTINENTAL S.A
SPAIN
INPAU, S.A.
SPAIN
INVERAHORRO, S.L.
INSURANCES SERVICES
SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
INVESTMENT COMPANY
SERVICES
SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
INVESTMENT COMPANY
BANKING
REAL ESTATE
REAL ESTATE
REAL ESTATE
REAL ESTATE
REAL ESTATE
REAL ESTATE
REAL ESTATE
PENSION FUNDS MANAGEMENT
SERVICES
REAL ESTATE
FINANCIAL SERVICES
FINANCIAL SERVICES
INVESTMENT COMPANY
FINANCIAL SERVICES
FINANCIAL SERVICES
REAL ESTATE
REAL ESTATE
REAL ESTATE
INSURANCES SERVICES
FINANCIAL SERVICES
IN LIQUIDATION
SERVICES
SERVICES
SERVICES
REAL ESTATE
REAL ESTATE
REAL ESTATE
INVESTMENT COMPANY
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100.00
100.00
-
100.00
100.00
60.00
-
100.00
99.98
-
-
-
-
-
-
-
-
-
-
-
-
76.00
-
-
-
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
3.30
100.00
100.00
100.00
-
-
100.00
-
-
-
100.00
-
-
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
100.00
100.00
100.00
100.00
100.00
100.00
99.97
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
60.00
100.00
100.00
99.98
100.00
100.00
100.00
100.00
100.00
35.00
100.00
100.00
100.00
100.00
100.00
100.00
76.00
100.00
100.00
100.00
100.00
-
2
208
-
229
-
-
-
16
26
-
591
1
1
-
9
6
-
-
9
1
395
6,678
31
-
-
-
-
-
-
-
22
7
365
361
-
24
39
25
10
-
398
1,199
1
340
1
1
8
18
40
8
4,267
2
5
9
9
6
29
182
29
2
983
8,337
31
-
-
-
3
-
1
1
5
8
366
361
6
33
40
25
91
-
391
990
-
-
-
-
5
3
14
-
3,678
1
4
20
-
-
46
590
3
1
588
1
-
-
-
-
1
-
1
1
1
1
-
-
5
8
2
-
82
-
2
203
1
340
-
-
3
11
14
7
563
-
(2)
(10)
12
(1)
(22)
(393)
21
2
381
6,200
31
2
-
-
(1)
(14)
-
-
10
7
362
358
1
24
37
2
13
-
5
5
-
-
-
-
-
5
12
1
26
1
3
(1)
(3)
7
5
(15)
6
-
14
2,136
-
(2)
-
-
2
14
1
(1)
(6)
-
4
3
-
-
2
24
(4)
(*) Information on foreign companies at exchange rate on December 31, 2017
(**) This company has an equity loan from UNNIM SOCIEDAD PARA LA GESTION DE ACTIVOS INMOBILIARIOS, S.A.
(***) These companies have an equity loan from CATALUNYACAIXA IMMOBILIARIA, S.A.
(****) These companies have an equity loan from BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
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 52). 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.
P. 181
Additional Information on Consolidated Subsidiaries and structured entities composing the BBVA Group (Continued)
Company
Location
Activity
Direct
Indirect
Total
Net Carrying
Amount
Assets
31.12.17
Liabilities
31.12.17
Equity
31.12.17
Profit (Loss)
31.12.17
% Legal share of participation
Millions of Euros (*)
Affiliate Entity Data
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.
IRIDION SOLUCIONS IMMOBILIARIES, S.L. (**)
JALE PROCAM, S.L.
L'EIX IMMOBLES, S.L. (***)
LIQUIDITY ADVISORS, L.P
MADIVA SOLUCIONES, S.L.
MICRO SPINAL LLC
MISAPRE, S.A. DE C.V.
MOMENTUM SOCIAL INVESTMENT HOLDING, S.L.
MOTORACTIVE IFN SA
MOTORACTIVE MULTISERVICES SRL
MULTIASISTENCIA OPERADORA S.A. DE C.V.
MULTIASISTENCIA SERVICIOS S.A. DE C.V.
MULTIASISTENCIA, S.A. DE C.V.
NEWCO PERU S.A.C.
NOET, INC.
NOIDIRI, S.L. (**)
NOVA TERRASSA 3, S.L.
OPCION VOLCAN, S.A.
OPENPAY S.A.P.I DE C.V.
OPENPAY SERVICIOS S.A. DE C.V.
OPERADORA DOS LAGOS S.A. DE C.V.
OPPLUS OPERACIONES Y SERVICIOS, S.A.
OPPLUS S.A.C (En liquidación)
P.I. HOLDINGS GPP, LLC
PARCSUD PLANNER, S.L. (***)
PARTICIPACIONES ARENAL, S.L.
PECRI INVERSION S.L.
PENSIONES BBVA BANCOMER, S.A. DE C.V., GRUPO FINANCIERO BBVA BANCOMER MEXICO
PHOENIX LOAN HOLDINGS, INC.
PI HOLDINGS NO. 1, INC.
PI HOLDINGS NO. 3, INC.
PORTICO PROCAM, S.L.
PROCAMVASA, S.A.
PROMOCION EMPRESARIAL XX, S.A.
SPAIN
VENEZUELA
CURAÇAO
VENEZUELA
SPAIN
VENEZUELA
SPAIN
SPAIN
SPAIN
UNITED STATES
SPAIN
UNITED STATES
MEXICO
SPAIN
ROMANIA
ROMANIA
MEXICO
MEXICO
MEXICO
PERU
UNITED STATES
SPAIN
SPAIN
MEXICO
MEXICO
MEXICO
MEXICO
SPAIN
PERU
UNITED STATES
SPAIN
SPAIN
SPAIN
INVESTMENT COMPANY
IN LIQUIDATION
INVESTMENT COMPANY
FINANCIAL SERVICES
INVESTMENT COMPANY
INACTIVE
REAL ESTATE
REAL ESTATE
REAL ESTATE
FINANCIAL SERVICES
SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
INVESTMENT COMPANY
FINANCIAL SERVICES
SERVICES
INSURANCES SERVICES
INSURANCES SERVICES
INSURANCES SERVICES
INVESTMENT COMPANY
SERVICES
REAL ESTATE
REAL ESTATE
REAL ESTATE
PAYMENT ENTITIES
SERVICES
SERVICES
SERVICES
IN LIQUIDATION
FINANCIAL SERVICES
REAL ESTATE
INACTIVE
OTHER INVESTMENT COMPANIES
INSURANCES SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
REAL ESTATE
REAL ESTATE
INVESTMENT COMPANY
UNITED STATES
UNITED STATES
UNITED STATES
SPAIN
SPAIN
SPAIN
-
-
48.00
100.00
-
-
100.00
-
-
-
-
-
-
-
-
-
-
-
-
100.00
-
100.00
-
-
-
-
-
100.00
-
-
-
-
100.00
-
-
-
-
-
-
100.00
100.00
100.00
-
-
100.00
60.46
-
50.00
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
51.00
-
100.00
100.00
48.00
100.00
100.00
60.46
100.00
50.00
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
100.00
100.00
100.00
51.00
100.00
3
-
16
1
41
-
-
-
-
1,051
5
-
2
7
37
-
-
-
19
124
2
-
4
19
15
-
-
1
1
-
-
6
99
159
259
79
1
25
-
8
7
-
50
-
42
-
2
4
14
1,053
2
-
2
7
176
15
1
-
31
917
2
-
4
20
1
-
1
35
1
-
7
8
99
4,059
278
79
1
25
-
8
4
-
2
-
1
-
131
53
21
2
1
-
-
-
151
15
1
-
12
-
1
12
-
2
-
-
-
11
-
-
6
2
-
3,900
19
-
-
-
-
-
3
-
45
-
40
-
(125)
(47)
(7)
1,053
1
-
2
7
22
-
-
1
13
744
4
(11)
4
14
1
-
-
19
1
-
(3)
6
100
113
254
79
1
25
-
8
-
-
3
-
1
-
(4)
(2)
(1)
(2)
-
-
-
-
3
-
-
-
6
173
(2)
-
-
5
-
-
-
5
-
-
3
-
(2)
46
5
-
-
-
-
-
(*) Information on foreign companies at exchange rate on December 31, 2017
(**) These companies have an equity loan from BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
(***) These companies have an equity loan from UNNIM SOCIEDAD PARA LA GESTION DE ACTIVOS INMOBILIARIOS, S.A
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 52). 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.
P. 182
Additional Information on Consolidated Subsidiaries and structured entities composing the BBVA Group (Continued)
Company
Location
Activity
Direct
Indirect
Total
Net Carrying
Amount
Assets
31.12.17
Liabilities
31.12.17
Equity
31.12.17
Profit (Loss)
31.12.17
% Legal share of participation
Millions of Euros (*)
Affiliate Entity Data
REAL ESTATE
REAL ESTATE
REAL ESTATE
REAL ESTATE
REAL ESTATE
REAL ESTATE
PAYMENT INSTITUIONS
REAL ESTATE
REAL ESTATE
FINANCIAL SERVICES
VENTURE CAPITAL
INACTIVE
SECURITIES DEALER
FINANCIAL SERVICES
REAL ESTATE
PENSION FUNDS MANAGEMENT
REAL ESTATE
SERVICES
FINANCIAL SERVICES
INACTIVE
REAL ESTATE
SPAIN
PROMOCIONES Y CONSTRUCCIONES CERBAT, S.L.U.
SPAIN
PROMOTORA DEL VALLES, S.L.
SPAIN
PROMOU CT 3AG DELTA, S.L. (**)
SPAIN
PROMOU CT EIX MACIA, S.L.
SPAIN
PROMOU CT GEBIRA, S.L. (**)
SPAIN
PROMOU CT OPENSEGRE, S.L. (**)
SPAIN
PROMOU CT VALLES, S.L.
SPAIN
PROMOU GLOBAL, S.L. (**)
SPAIN
PRONORTE UNO PROCAM, S.A.
SPAIN
PROPEL VENTURE PARTNERS GLOBAL, S.L
UNITED STATES
PROPEL VENTURE PARTNERS US FUND I, L.P.
VENEZUELA
PRO-SALUD, C.A.
VENEZUELA
PROVINCIAL DE VALORES CASA DE BOLSA, C.A.
VENEZUELA
PROVINCIAL SDAD.ADMIN.DE ENTIDADES DE INV.COLECTIVA, C.A.
SPAIN
PROV-INFI-ARRAHONA, S.L. (**)
BOLIVIA
PROVIVIENDA ENTIDAD RECAUDADORA Y ADMIN.DE APORTES, S.A.
SPAIN
PUERTO CIUDAD LAS PALMAS, S.A.
SPAIN
QIPRO SOLUCIONES S.L.
ROMANIA
RALFI IFN SA
SPAIN
RENTRUCKS, ALQUILER Y SERVICIOS DE TRANSPORTE, S.A.
MEXICO
RESIDENCIAL CUMBRES DE SANTA FE, S.A. DE C.V.
CAYMAN ISLANDS FINANCIAL SERVICES
RPV COMPANY
FINANCIAL SERVICES
UNITED STATES
RWHC, INC
REAL ESTATE
SPAIN
SATICEM GESTIO, S.L. (***)
REAL ESTATE
SPAIN
SATICEM HOLDING, S.L.
REAL ESTATE
SPAIN
SATICEM IMMOBILIARIA, S.L.
REAL ESTATE
SPAIN
SATICEM IMMOBLES EN ARRENDAMENT, S.L. (***)
INVESTMENT COMPANY
BELGIUM
SCALDIS FINANCE, S.A.
INSURANCES SERVICES
MEXICO
SEGUROS BBVA BANCOMER, S.A. DE C.V., GRUPO FINANCIERO BBVA BANCOMER
INSURANCES SERVICES
VENEZUELA
SEGUROS PROVINCIAL, C.A.
SERVICES
MEXICO
SERVICIOS CORPORATIVOS BANCOMER, S.A. DE C.V.
SERVICES
MEXICO
SERVICIOS CORPORATIVOS DE SEGUROS, S.A. DE C.V.
SERVICES
MEXICO
SERVICIOS EXTERNOS DE APOYO EMPRESARIAL, S.A DE C.V.
SERVICES
SPAIN
SERVICIOS TECNOLOGICOS SINGULARES, S.A.
FINANCIAL SERVICES
UNITED STATES
SIMPLE FINANCE TECHNOLOGY CORP.
SERVICES
SOCIEDAD DE ESTUDIOS Y ANALISIS FINANCIERO.,S.A.
SPAIN
INACTIVE
SOCIEDAD GESTORA DEL FONDO PUBLICO DE REGULACION DEL MERCADO HIPOTECARIO, S.A. SPAIN
INVESTMENT COMPANY
SPAIN
SPORT CLUB 18, S.A. (***)
FINANCIAL SERVICES
UNITED STATES
TEXAS LOAN SERVICES, LP.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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
100.00
100.00
100.00
100.00
99.50
100.00
58.86
90.00
100.00
100.00
100.00
96.64
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
99.50
100.00
58.86
90.00
100.00
100.00
100.00
96.64
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
77.20
100.00
100.00
9
-
1
4
-
4
2
6
-
31
41
-
-
-
5
2
-
5
39
1
14
-
692
-
5
20
-
4
304
-
4
2
8
1
51
81
-
11
1,061
25
135
11
5
9
30
9
71
5
35
41
-
-
-
17
7
31
13
128
2
14
1,384
692
11
5
20
26
18
3,095
-
6
14
21
1
64
90
-
13
1,063
-
117
10
1
9
26
7
67
4
2
-
-
-
-
12
5
57
3
110
-
-
1,384
-
93
-
-
88
-
2,791
-
1
12
13
-
13
9
-
-
2
25
(106)
(3)
4
(3)
(18)
2
(30)
(10)
32
34
-
-
-
(4)
2
(26)
9
13
1
13
-
676
(81)
6
19
(59)
18
119
1
4
1
6
1
88
84
-
14
1,062
-
123
3
1
3
22
1
35
11
1
7
-
-
-
9
-
-
2
4
-
1
-
16
(1)
-
1
(3)
-
185
-
1
1
2
-
(37)
(2)
-
(1)
(1)
(*) Information on foreign companies at exchange rate on December 31, 2017
(**) This company has an equity loan from UNNIM SOCIEDAD PARA LA GESTION DE ACTIVOS INMOBILIARIOS, S.A.
(****) These companies have an equity loan from BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
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 52). 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.
P. 183
Additional Information on Consolidated Subsidiaries and structured entities composing the BBVA Group (Continued)
Company
Location
Activity
Direct
Indirect
Total
Net Carrying
Amount
Assets
31.12.17
Liabilities
31.12.17
Equity
31.12.17
Profit (Loss)
31.12.17
% Legal share of participation
Millions of Euros (*)
Affiliate Entity Data
TMF HOLDING INC.
TRIFOI REAL ESTATE SRL
TUCSON LOAN HOLDINGS, INC.
TURKIYE GARANTI BANKASI A.S
UNITARIA GESTION DE PATRIMONIOS INMOBILIARIOS
UNIVERSALIDAD TIPS PESOS E-9
UNNIM SOCIEDAD PARA LA GESTION DE ACTIVOS INMOBILIARIOS, S.A. (**) SPAIN
UPTURN FINANCIAL INC
URBANIZADORA SANT LLORENC, S.A.
VERIDAS DIGITAL AUTHENTICATION SOLUTIONS S.L.
VOLJA LUX, SARL
VOLJA PLUS SL
VOLKSWAGEN FINANCIAL SERVICES COMPAÑIA FINANCIERA S.A.
UNITED STATES
SPAIN
SPAIN
LUXEMBOURG
SPAIN
ARGENTINA
UNITED STATES
ROMANIA
UNITED STATES
TURKEY
SPAIN
COLOMBIA
INVESTMENT COMPANY
REAL ESTATE
FINANCIAL SERVICES
BANKING
REAL ESTATE
FINANCIAL SERVICES
REAL ESTATE
FINANCIAL SERVICES
INACTIVE
SERVICES
INVESTMENT COMPANY
INVESTMENT COMPANY
FINANCIAL SERVICES
-
-
-
49.85
-
-
100.00
-
60.60
-
-
75.40
-
100.00
100.00
100.00
-
100.00
100.00
-
100.00
-
51.00
71.78
-
51.00
100.00
100.00
100.00
49.85
100.00
100.00
100.00
100.00
60.60
51.00
71.78
75.40
51.00
13
1
43
7,026
2
-
-
-
-
-
-
1
13
20
1
43
70,803
3
53
956
-
-
2
2
2
226
7
-
-
61,635
-
24
1,270
-
-
2
-
-
200
13
1
41
7,629
3
27
(161)
-
-
-
-
2
23
1
-
2
1,539
-
1
(153)
-
-
-
1
-
3
(*) Information on foreign companies at exchange rate on December 31, 2017
(**) This company has an equity loan from BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
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 52). 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.
P. 184
APPENDIX III. Additional information on investments and jointly controlled companies accounted for
under the equity method of consolidation in the BBVA Group as of December 31, 2017 (includes the
most significant companies that together represent 99.71% of total investments in these companies)
Company
Location
Activity
Direct
Indirect
Total
Net Carrying
Amount
Assets
31.12.17
Liabilities
31.12.17
Equity
31.12.17
Profit (Loss)
31.12.17
% Legal share of participation
Millions of Euros (**)
Affiliate Entity Data
ASSOCIATES
ADQUIRA ESPAÑA, S.A.
ATOM BANK PLC
AUREA, S.A. (CUBA)
BANK OF HANGZHOU CONSUMER FINANCE CO LTD
CANCUN SUN & GOLF COUNTRY CLUB, S.A.P.I. DE C.V.
COMPAÑIA ESPAÑOLA DE FINANCIACION DEL DESARROLLO S.A. SPAIN
COMPAÑIA PERUANA DE MEDIOS DE PAGO S.A.C. (VISANET
PERU)
FIDEICOMISO F/00185 FIMPE - FIDEICOMISO F/00185 PARA
EXTENDER A LA SOCIEDAD LOS BENEFICIOS DEL ACCESO A LA
INFRAESTRUCTURA DE LOS MEDIOS DE PAGO ELECTRONICOS
METROVACESA SUELO Y PROMOCION, S.A.
REDSYS SERVICIOS DE PROCESAMIENTO, S.L.
ROMBO COMPAÑIA FINANCIERA, S.A.
SERVICIOS ELECTRONICOS GLOBALES, S.A. DE C.V.
SERVIRED SOCIEDAD ESPAÑOLA DE MEDIOS DE PAGO, S.A.
TELEFONICA FACTORING ESPAÑA, S.A.
TESTA RESIDENCIAL SOCIMI SAU
SPAIN
SPAIN
ARGENTINA
MEXICO
SPAIN
SPAIN
SPAIN
MEXICO
SPAIN
UNITED
KINGDOM
CUBA
CHINA
MEXICO
PERU
COMMERCIAL
BANKING
REAL ESTATE
BANKING
REAL ESTATE
FINANCIAL SERVICES
ELECTRONIC MONEY
ENTITIES
FINANCIAL SERVICES
REAL ESTATE
FINANCIAL SERVICES
BANKING
SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
REAL ESTATE
JOINT VENTURES
ADQUIRA MEXICO, S.A. DE C.V. (*)
ALTURA MARKETS, SOCIEDAD DE VALORES, S.A. (*)
AVANTESPACIA INMOBILIARIA, S.L.(*)
COMPAÑIA MEXICANA DE PROCESAMIENTO, S.A. DE C.V. (*)
CORPORACION IBV PARTICIPACIONES EMPRESARIALES, S.A. (*)
DESARROLLOS METROPOLITANOS DEL SUR, S.L.(*)
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 (*)
INVERSIONES PLATCO, C.A. (*)
PARQUE RIO RESIDENCIAL, S.L. (*)
PROMOCIONS TERRES CAVADES, S.A.(*)
PSA FINANCE ARGENTINA COMPAÑIA FINANCIERA, S.A.(*)
RCI COLOMBIA S.A., COMPAÑIA DE FINANCIAMIENTO (*)
REAL ESTATE DEAL II, S.A. (*)
VITAMEDICA ADMINISTRADORA, S.A. DE C.V (*)
MEXICO
SPAIN
SPAIN
MEXICO
SPAIN
SPAIN
SPAIN
SPAIN
MEXICO
MEXICO
COMMERCIAL
SECURITIES DEALER
REAL ESTATE
SERVICES
INVESTMENT COMPANY
REAL ESTATE
SERVICES
SERVICES
REAL ESTATE
REAL ESTATE
MEXICO
VENEZUELA
SPAIN
SPAIN
ARGENTINA
COLOMBIA
SPAIN
MEXICO
REAL ESTATE
FINANCIAL SERVICES
REAL ESTATE
REAL ESTATE
BANKING
FINANCIAL SERVICES
IN LIQUIDATION
SERVICES
-
40.00
29.90
-
30.00
-
16.67
-
-
9.44
20.00
-
-
28.72
30.00
3.88
-
50.00
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20.06
-
-
49.00
-
33.33
-
20.28
28.50
19.07
-
40.00
46.14
-
-
22.98
50.00
-
30.01
50.00
50.00
50.00
20.00
20.00
32.25
30.00
42.40
50.00
50.00
39.11
50.00
49.00
-
51.00
40.00
29.90
49.00
30.00
33.33
16.67
20.28
28.50
28.51
20.00
40.00
46.14
28.72
30.00
26.86
50.00
50.00
30.01
50.00
50.00
50.00
20.00
20.00
32.25
30.00
42.40
50.00
50.00
39.11
50.00
49.00
20.06
51.00
3
66
4
18
26
21
2
3
697
10
15
6
9
4
444
2
64
18
6
29
12
4
3
53
27
7
2
10
4
14
19
4
3
18
1,334
9
214
72
129
38
11
2,479
130
390
13
41
48
2,307
5
1,953
77
13
63
59
455
294
163
146
17
5
32
15
225
280
18
12
11
1,162
-
156
22
5
28
-
82
80
354
-
8
34
662
2
1,826
18
-
6
34
431
276
-
49
-
1
12
-
197
241
-
6
6
226
8
63
50
116
3
13
2,413
41
32
11
29
7
1,594
3
120
60
11
58
25
25
19
163
90
17
7
20
15
20
39
18
4
1
(54)
-
(5)
1
8
7
(1)
(16)
8
3
2
3
7
51
-
7
(1)
1
-
(1)
(1)
(1)
-
6
-
(3)
-
-
8
-
-
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 52). 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.
P. 185
APPENDIX IV. Changes and notification of investments and divestments in the BBVA Group in 2017
Acquisitions or Increases of Interest Ownership in Consolidated Subsidiaries
Company
Type of
Transaction
Activity
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
Millions of Euros
% of Voting Rights
EUROPEA DE TITULIZACION, S.A., S.G.F.T.
COMPASS INSURANCE TRUST WILLMINGTON, DE
P.I.HOLDINGS GPP, LLC
MICRO SPINAL LLC
HOLAMUNO AGENTE DE SEGUROS VINCULADO, S.L.U.
F/11395 FIDEICOMISO IRREVOCABLE DE ADMINISTRACION CON
DERECHO DE REVERSION
DENIZEN FINANCIAL, INC
OPENPAY S.A.P.I DE C.V.
BBVA AGENCIA DE SEGUROS COLOMBIA LTDA
VERIDAS DIGITAL AUTHENTICATION SOLUTIONS S.L.
TURKIYE GARANTI BANKASI A.S
CX PROPIETAT, FII
PROPEL VENTURE PARTNERS GLOBAL, S.L
COVAULT, INC
APLICA NEXTGEN SERVICIOS S.A. DE C.V
APLICA NEXTGEN OPERADORA S.A. DE C.V.
UPTURN FINANCIAL INC
OPENPAY SERVICIOS S.A. DE C.V.
INFORMACIO I TECNOLOGIA DE CATALUNYA, S.L.
GARANTI HIZMET YONETIMI A.S
ACQUISITION
FOUNDING
FOUNDING
FOUNDING
FOUNDING
FINANCIAL SERVICES
INSURANCES SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
INSURANCES SERVICES
FOUNDING
REAL ESTATE
FOUNDING
ACQUISITION
FOUNDING
FOUNDING
ACQUISITION
ACQUISITION
FOUNDING
FOUNDING
FOUNDING
FOUNDING
FOUNDING
FOUNDING
ACQUISITION
ACQUISITION
SERVICES
PAYMENT ENTITIES
INSURANCES SERVICES
SERVICES
BANKING
REAL ESTATE INVESTMENT
FUND
FINANCIAL SERVICES
SERVICES
SERVICES
SERVICES
FINANCIAL SERVICES
SERVICES
SERVICES
FINANCIAL SERVICES
-
-
-
-
-
-
-
225
-
-
720,801
-
961
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.38%
100.00%
100.00%
100.00%
100.00%
42.40%
100.00%
100.00%
100.00%
51.00%
9.95%
27.02%
99.50%
100.00%
100.00%
100.00%
100.00%
100.00%
26.00%
0.60%
88.24%
100.00%
100.00%
100.00%
100.00%
42.40%
100.00%
100.00%
100.00%
51.00%
49.85%
94.96%
99.50%
100.00%
100.00%
100.00%
100.00%
100.00%
76.00%
100.00%
Effective
Date for the
Transaction
(or
Notification
Date)
Category
16-Mar-17
30-Jun-17
30-Jun-17
30-Jun-17
22-Feb-17
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
1-Feb-17
SUBSIDIARY
24-Feb-17
28-Apr-17
28-Apr-17
29-May-17
22-Mar-17
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
30-Nov-17
SUBSIDIARY
20-Jul-17
8-Jun-17
16-Nov-17
16-Nov-17
25-Oct-17
29-Nov-17
27-Dec-17
30-Nov-17
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
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 52). 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.
P. 186
Disposals or Reduction of Interest Ownership in Consolidated Subsidiaries
Company
Type of
Transaction
Activity
Profit (Loss)
in the Transaction
Changes in the Equity
due to the transaction
% Participation
Sold
in the Period
Total Voting Rights
Controlled after the
Disposal
Effective Date for
the Transaction
(or Notification
Date)
Category
Millions of Euros
% of Voting Rights
ESPANHOLA COMERCIAL E SERVIÇOS, LTDA.
BBVA COMERCIALIZADORA LTDA.
BETESE S.A DE C.V.
HIPOTECARIA NACIONAL, S.A. DE C.V.
TEXTIL TEXTURA, S.L.
VALANZA CAPITAL S.A. UNIPERSONAL
DESITEL TECNOLOGIA Y SISTEMAS, S.A. DE C.V.
APLICA SOLUCIONES TECNOLOGICAS CHILE LIMITADA
BBVA PARTICIPACIONES MEJICANAS, S.L.
COMPASS MULTISTATE SERVICES CORPORATION
COMPASS INVESTMENTS, INC.
COMPASS CUSTODIAL SERVICES, INC.
BBVA LEASIMO - SOCIEDADE DE LOCAÇAO FINANCEIRA, S.A.
BBVA SEGUROS GENERALES S.A.
CATALUNYACAIXA VIDA, S.A.
AUMERAVILLA, S.L.
ESPAIS CERDANYOLA, S.L.
NOVA EGARA-PROCAM, S.L.
CORPORACION BETICA INMOBILIARIA, S.A.
MILLENNIUM PROCAM, S.L.
PROVIURE PARC D'HABITATGES, S.L.
BBVA AUTORENTING, S.A.
BBVA EMISORA, S.A.
GRANFIDUCIARIA
BBVA U.S. SENIOR S.A.U.
COMPLEMENTOS INNOVACIÓN Y MODA, S.L.
INVESCO MANAGEMENT Nº 1, S.A.
INVESCO MANAGEMENT Nº 2, S.A.
TEXAS REGIONAL STATUTORY TRUST I
GOBERNALIA GLOBAL NET, S.A.
LIQUIDATION
LIQUIDATION
MERGER
MERGER
DISPOSAL
LIQUIDATION
MERGER
LIQUIDATION
LIQUIDATION
LIQUIDATION
LIQUIDATION
LIQUIDATION
MERGER
LIQUIDATION
MERGER
LIQUIDATION
DISPOSAL
LIQUIDATION
LIQUIDATION
LIQUIDATION
LIQUIDATION
DISPOSAL
MERGER
LIQUIDATION
LIQUIDATION
LIQUIDATION
LIQUIDATION
LIQUIDATION
LIQUIDATION
MERGER
FINANCIAL SERVICES
BANKING
INVESTMENT COMPANY
FINANCIAL SERVICES
COMMERCIAL
SERVICES
SERVICES
SERVICES
INVESTMENT COMPANY
SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
INSURANCES SERVICES
INSURANCES SERVICES
REAL ESTATE
REAL ESTATE
REAL ESTATE
REAL ESTATE
REAL ESTATE
REAL ESTATE
SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
COMMERCIAL
FINANCIAL SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
SERVICES
-
-
-
-
-
(23)
-
-
-
-
-
-
-
-
-
(1)
-
-
-
(1)
3
75
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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%
100.00%
100.00%
100.00%
97.51%
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%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30-Apr-17
31-Mar-17
15-Feb-17
15-Feb-17
1-Jun-17
10-Mar-17
15-Feb-17
24-Mar-17
4-Apr-17
1-Jun-17
1-Jun-17
1-Jun-17
10-Feb-17
3-Apr-17
31-Jan-17
30-Jun-17
13-Jun-17
30-Jun-17
30-Jun-17
30-Jun-17
30-Jun-17
22-Sep-17
7-Sep-17
31-Dec-17
22-Dec-17
7-Nov-17
9-Nov-17
9-Nov-17
31-Dec-17
27-Jul-17
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
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 52). 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.
P. 187
Disposals or Reduction of Interest Ownership in Consolidated Subsidiaries
Millions of Euros
% of Voting Rights
Company
Type of
Transaction
Activity
Profit (Loss)
in the Transaction
Changes in the Equity
due to the transaction
% Participation
Sold
in the Period
Total Voting Rights
Controlled after the
Disposal
Effective Date for
the Transaction
(or Notification
Date)
Category
ESTACION DE AUTOBUSES CHAMARTIN, S.A.
STATE NATIONAL CAPITAL TRUST I
STATE NATIONAL STATUTORY TRUST II
TEXASBANC CAPITAL TRUST I
COMPASS TEXAS ACQUISITION CORPORATION
COMPASS TRUST II
CAPITAL INVESTMENT COUNSEL, INC.
COMPASS ASSET ACCEPTANCE COMPANY, LLC
COMPASS AUTO RECEIVABLES CORPORATION
CB TRANSPORT ,INC.
AMERICAN FINANCE GROUP, INC.
FACILEASING, S.A. DE C.V.
INNOVATION 4 SECURITY, S.L.
CONSORCIO DE CASAS MEXICANAS, S.A.P.I. DE C.V.
HABITATGES INVERCAP, S.L.
GESTIO D'ACTIUS TITULITZATS, S.A.
INVERCARTERA INTERNACIONAL, S.L.
S.B.D. NORD, S.L.
PROVIURE, S.L.
AREA TRES PROCAM, S.L.
PROVIURE CIUTAT DE LLEIDA, S.L.
PROVIURE BARCELONA, S.L.
ALGARVETUR, S.L.
CONJUNT RESIDENCIAL FREIXA, S.L.
HABITAT ZENTRUM, S.L.
BBVA BANCO FRANCES, S.A.
LIQUIDATION
LIQUIDATION
LIQUIDATION
LIQUIDATION
MERGER
LIQUIDATION
LIQUIDATION
LIQUIDATION
MERGER
LIQUIDATION
MERGER
LIQUIDATION
MERGER
DISPOSAL
LIQUIDATION
LIQUIDATION
DISPOSAL
LIQUIDATION
LIQUIDATION
LIQUIDATION
LIQUIDATION
LIQUIDATION
LIQUIDATION
LIQUIDATION
LIQUIDATION
DILUTION
SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
INVESTMENT COMPANY
FINANCIAL SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
SERVICES
FINANCIAL SERVICES
FINANCIAL SERVICES
SERVICES
REAL ESTATE
REAL ESTATE
FINANCIAL SERVICES
INVESTMENT COMPANY
REAL ESTATE
REAL ESTATE
REAL ESTATE
REAL ESTATE
REAL ESTATE
REAL ESTATE
REAL ESTATE
REAL ESTATE
BANKING
-
-
-
-
-
-
-
5
-
(1)
-
-
-
3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
51.00%
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%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
50.00%
9.39%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
66.55%
30-Oct-17
31-Dec-17
31-Dec-17
1-Nov-17
31-Dec-17
30-Nov-17
31-Dec-17
31-Dec-17
31-Dec-17
31-Dec-17
30-Nov-17
31-Oct-17
27-Jul-17
31-Dec-17
27-Jul-17
31-Dec-17
21-Dec-17
27-Jul-17
27-Jul-17
27-Jul-17
27-Jul-17
27-Jul-17
27-Jul-17
27-Jul-17
27-Jul-17
31-Jul-17
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
SUBSIDIARY
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 52). 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.
P. 188
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
Millions of Euros
% of Voting Rights
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
Effective Date for
the Transaction
(or Notification
Date)
Category
ATOM BANK PLC
TESTA RESIDENCIAL SOCIMI SAU
BATEC ORTO DISTRIBUCION S.L.
HABITATGES SOCIALS DE CALAF S.L
DILUTION EFFECT
CAPITAL INCREASE
FOUNDING
CREDITORS AGREEMENT
COMPAÑIA PERUANA DE MEDIOS DE PAGO S.A.C. (VISANET PERU) SHARES AWARD
SISTARBANC S.R.L.
METROVACESA SUELO Y PROMOCION, S.A.
FOUNDING
CAPITAL INCREASE
BANKING
REAL ESTATE INVESTMENT
TRUST
COMMERCIAL
REAL ESTATE
ELECTRONIC MONEY
ENTITIES
FINANCIAL SERVICES
REAL ESTATE
42
340
-
-
-
-
-
-
-
-
-
-
-
-
0.44%
13.10%
100.00%
40.00%
20.28%
6.66%
7.99%
29.90%
26.87%
100.00%
40.00%
20.28%
26.66%
28.51%
30-Nov-17
ASSOCIATED
31-Oct-17
ASSOCIATED
8-Jun-17
1-May-17
JOINT VENTURE
JOINT VENTURE
1-Sep-17
ASSOCIATED
31-Aug-17
30-Nov-17
ASSOCIATED
ASSOCIATED
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 52). 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.
P. 189
Disposal or Reduction of Interest Ownership in Associates and Joint-Ventures Companies Accounted for Under the Equity Method
Company
Type of Transaction
Activity
Profit (Loss)
in the Transaction
% Participation
Sold
in the Period
Total Voting Rights
Controlled after the
Disposal
Effective Date for
the Transaction (or
Notification Date)
Category
Millions of Euros
SOCIEDAD ADMINISTRADORA DE FONDOS DE CESANTIA DE CHILE II, S.A.
DISPOSAL
DOBIMUS, S.L.
ESPAIS CATALUNYA INVERSIONS IMMOBILIARIES, S.L.
FACTOR HABAST, S.L.
IMPULS LLOGUER, S.L.
NAVIERA CABO ESTAY, AIE
JARDINES DEL RUBIN, S.A.
FIDEICOMISO DE ADMINISTRACION 2038-6
METROVACESA PROMOCION Y ARRENDAMIENTO S.A.
NUCLI, S.A.
RESIDENCIAL PEDRALBES-CARRERAS, S.L.
PROVICAT SANT ANDREU, S.A.
NOVA TERRASSA 30, S.L.
EUROESPAI 2000, S.L.
AGRUPACION DE LA MEDIACION ASEGURADORA DE ENTIDADES FINANCIERAS
A.I.E.
LIQUIDATION
DISPOSAL
DISPOSAL
DISPOSAL
LIQUIDATION
LIQUIDATION
LIQUIDATION
MERGER
LIQUIDATION
BANKRUPTCY
DISPOSAL
DISPOSAL
DISPOSAL
PENSION FUNDS
MANAGEMENT
PENSION FUNDS
PENSION FUNDS
PENSION FUNDS
PENSION FUNDS
PENSION FUNDS
PENSION FUNDS
PENSION FUNDS
PENSION FUNDS
PENSION FUNDS
PENSION FUNDS
PENSION FUNDS
PENSION FUNDS
PENSION FUNDS
LIQUIDATION
PENSION FUNDS
7
6
-
-
-
-
-
-
-
-
-
-
-
-
-
48.60%
50.00%
50.84%
50.00%
100.00%
16.00%
50.00%
33.70%
20.52%
29.47%
25.00%
50.00%
51.00%
35.00%
25.00%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
28-Jan-17
10-Jan-17
13-Jun-17
24-Jan-17
24-Jan-17
01-Feb-17
31-Dec-17
30-Sep-17
30-Nov-17
29-Nov-17
22-Dec-17
30-Sep-17
01-Dec-17
21-Dec-17
ASSOCIATE
JOINT VENTURE
JOINT VENTURE
JOINT VENTURE
JOINT VENTURE
ASSOCIATE
JOINT VENTURE
ASSOCIATE
ASSOCIATE
JOINT VENTURE
ASSOCIATE
JOINT VENTURE
JOINT VENTURE
JOINT VENTURE
30-Sep-17
ASSOCIATE
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 52). 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.
P. 190
APPENDIX V. Fully consolidated subsidiaries with more than 10% owned by non-Group shareholders as
of December 31, 2017
Company
BANCO CONTINENTAL, S.A.
BANCO PROVINCIAL S.A. - BANCO UNIVERSAL
INVERSIONES BANPRO INTERNATIONAL INC. N.V.
PRO-SALUD, C.A.
INVERSIONES P.H.R.4, C.A.
BANCO BILBAO VIZCAYA ARGENTARIA CHILE, S.A.
BBVA INMOBILIARIA E INVERSIONES, S.A.
COMERCIALIZADORA CORPORATIVA SAC
DISTRITO CASTELLANA NORTE, S.A.
GESTION DE PREVISION Y PENSIONES, S.A.
URBANIZADORA SANT LLORENC, S.A.
F/403035-9 BBVA HORIZONTES RESIDENCIAL
F/253863 EL DESEO RESIDENCIAL
DATA ARCHITECTURE AND TECHNOLOGY S.L.
VOLKSWAGEN FINANCIAL SERVICES COMPAÑIA FINANCIERA S.A.
FIDEICOMISO LOTE 6.1 ZARAGOZA
F/11395 FIDEICOMISO IRREVOCABLE DE ADMINISTRACION CON DERECHO DE REVERSION
VERIDAS DIGITAL AUTHENTICATION SOLUTIONS S.L.
HABITATGES INVERVIC, S.L.
GARANTI EMEKLILIK VE HAYAT AS
FODECOR, S.L.
INFORMACIO I TECNOLOGIA DE CATALUNYA, S.L.
PROCAMVASA, S.A.
JALE PROCAM, S.L.
VOLJA LUX, SARL
VOLJA PLUS SL
Activity
BANKING
BANKING
INVESTMENT COMPANY
NO ACTIVITY
NO ACTIVITY
BANKING
REAL ESTATE
FINANCIAL SERVICES
REAL ESTATE
PENSION FUND MANAGEMENT
NO ACTIVITY
REAL ESTATE
REAL ESTATE
SERVICES
FINANCIAL SERVICES
REAL ESTATE
REAL ESTATE
SERVICES
REAL ESTATE
INSURANCES
REAL ESTATE
SERVICES
REAL ESTATE
REAL ESTATE
INVESTMENT COMPANY
INVESTMENT COMPANY
% of Voting Rights Controlled by the Bank
Direct
-
1.46
48.00
-
-
-
-
-
-
60.00
60.60
-
-
-
-
-
-
-
-
-
-
76.00
-
-
-
75.40
Indirect
46.12
53.75
-
58.86
60.46
68.19
68.11
50.00
75.54
-
-
65.00
65.00
51.00
51.00
59.99
42.40
51.00
35.00
84.91
60.00
-
51.00
50.00
71.78
-
Total
46.12
55.21
48.00
58.86
60.46
68.19
68.11
50.00
75.54
60.00
60.60
65.00
65.00
51.00
51.00
59.99
42.40
51.00
35.00
84.91
60.00
76.00
51.00
50.00
71.78
75.40
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 52). 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.
P. 191
APPENDIX VI. BBVA Group’s structured entities. Securitization funds as
of December, 31 2017
Securitization Fund (consolidated)
Company
Millions of Euros
Origination
Date
Total Securitized
Exposures at the
Origination Date
Total Securitized
Exposures as of December
31, 2017 (*)
2 PS Interamericana
AYT CAIXA SABADELL HIPOTECARIO I, FTA
AYT HIPOTECARIO MIXTO IV, FTA
AYT HIPOTECARIO MIXTO, FTA
BACOMCB 07
BACOMCB 08
BACOMCB 08-2
BBVA CONSUMO 6 FTA
BBVA CONSUMO 7 FTA
BBVA CONSUMO 8 FT
BBVA CONSUMO 9 FT
BBVA EMPRESAS 4 FTA
BBVA LEASING 1 FTA
BBVA PYME 10 FT
BBVA RMBS 1 FTA
BBVA RMBS 10 FTA
BBVA RMBS 11 FTA
BBVA RMBS 12 FTA
BBVA RMBS 13 FTA
BBVA RMBS 14 FTA
BBVA RMBS 15 FTA
BBVA RMBS 16 FT
BBVA RMBS 17 FT
BBVA RMBS 18 FT
BBVA RMBS 2 FTA
BBVA RMBS 3 FTA
BBVA RMBS 5 FTA
BBVA RMBS 9 FTA
BBVA UNIVERSALIDAD E10
BBVA UNIVERSALIDAD E11
BBVA UNIVERSALIDAD E12
BBVA UNIVERSALIDAD E9
BBVA UNIVERSALIDAD N6
BBVA VELA SME 2017-1
BBVA-5 FTPYME FTA
BBVA-6 FTPYME FTA
BMERCB 13
FTA TDA-22 MIXTO
FTA TDA-27
FTA TDA-28
GAT ICO FTVPO 1, F.T.H
GC FTGENCAT TARRAGONA 1 FTA
HIPOCAT 10 FTA
HIPOCAT 11 FTA
HIPOCAT 6 FTA
HIPOCAT 7 FTA
HIPOCAT 8 FTA
HIPOCAT 9 FTA
Instrumentos de Titulizaci¿n Hip- Junior
TDA 19 FTA
TDA 20-MIXTO, FTA
TDA 23 FTA
TDA TARRAGONA 1 FTA
BBVA CHILE S.A.
BBVA, S.A.
BBVA, S.A.
BBVA, S.A.
BBVA BANCOMER, S.A.,INSTIT. BANCA
BBVA BANCOMER, S.A.,INSTIT. BANCA
BBVA BANCOMER, S.A.,INSTIT. BANCA
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 COLOMBIA, S.A.
BBVA COLOMBIA, S.A.
BBVA COLOMBIA, S.A.
BBVA COLOMBIA, S.A.
BBVA COLOMBIA, S.A.
BBVA, S.A.
BBVA, S.A.
BBVA, S.A.
BBVA BANCOMER, S.A.,INSTIT. BANCA
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, S.A.
BBVA, S.A.
BBVA, S.A.
BBVA, S.A.
Oct-04
Jul-08
Jun-05
Mar-04
Dec-07
Mar-08
Dec-08
Oct-14
Jul-15
Jul-16
Mar-17
Jul-10
Jun-07
Dec-15
Feb-07
Jun-11
Jun-12
Dec-13
Jul-14
Nov-14
May-15
May-16
Nov-16
Nov-17
Mar-07
Jul-07
May-08
Apr-10
Mar-09
May-09
Aug-09
Dec-08
Aug-12
Jun-17
Nov-06
Jun-07
Jun-13
Dec-04
Dec-06
Jul-07
Mar-04
Jun-08
Jul-06
Mar-07
Jul-03
Jun-04
May-05
Nov-05
Dec-07
Mar-04
Jun-04
Mar-05
Dec-07
29
300
100
100
112
49
246
299
1,450
700
1,375
1,700
2,500
780
2,500
1,600
1,400
4,350
4,100
700
4,000
1,600
1,800
1,800
5,000
3,000
5,000
1,295
21
14
22
39
59
3,000
1,900
1,500
458
112
275
250
40
283
1,500
1,600
850
1,400
1,500
1,000
21
200
100
300
397
3
90
21
15
-
-
-
100
924
651
1,361
56
64
266
1,111
1,224
1,077
3,450
3,375
530
3,435
1,449
1,696
1,790
2,073
1,529
2,527
900
-
-
-
-
-
2,200
17
21
-
27
97
98
105
35
353
362
124
256
311
240
1
30
17
64
134
Securitization Fund (not consolidated)
Company
Millions of Euros
Origination
Date
Total Securitized
Exposures at the
Origination Date
Total Securitized
Exposures as of December
31, 2017 (*)
FTA TDA-18 MIXTO
BBVA, S.A.
Nov-03
91
13
(*) Solvency Scope.
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 52). 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.
P. 192
APPENDIX VII. Details of the outstanding subordinated debt and
preferred securities issued by the Bank as of December 31, 2017 and
2016
Issue Type and data (Millions of euros)
2017
2016
Interest rate in
force in 2017
Fix (F) or
Variable (V)
Maturity date
Non-convertible
May-08
January-05
August-06
August-06
February-07
February-07
February-17
February-17
March-17
March-17
March-17
May-17
May-17
March-07
April-07
April-14
March-08
July-08
June-09
Convertible
May-13
February-14
February-15
April-16
May-17
November-17
Subtotal
Subordinated deposits
Preferred Stock
December-07
Total
3.00%
0.69%
0.75%
0.75%
-
0.47%
3.50%
4.00%
4.00%
3.00%
5.70%
1.60%
2.54%
0.97%
0.80%
3.50%
6.03%
6.20%
4.92%
9.00%
7.00%
6.75%
8.88%
5.88%
6.13%
50
50
50
75
-
254
1,000
100
65
53
100
17
149
65
39
1,496
125
97
5
1,251
1,500
1,500
1,000
500
833
10,374
429
-
10,803
-
49
40
46
70
255
-
-
-
-
-
-
-
67
-
-
125
100
5
1,423
1,500
1,500
1,000
-
-
6,180
2,943
14
9,137
V
V
V
V
V
V
F
F
F
F
F
F
F
V
V
V
V
F
V
V
V
V
V
V
V
5/19/2023
1/28/2020
8/9/2021
8/9/2021
2/15/2017
2/16/2022
10/2/2027
2/24/2032
2/24/2032
3/16/2027
3/31/2032
5/24/2027
5/24/2027
Perpetual
4/4/2022
11/5/2024
3/3/2033
7/4/2023
6/10/2024
Perpetual
Perpetual
Perpetual
Perpetual
Perpetual
Perpetual
V
Perpetual
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 52). 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.
P. 193
APPENDIX VIII. Balance sheets held in foreign currency as of December
31, 2017 and 2016
2017 (Millions of euros)
Assets
Financial assets held for trading
Available-for-sale financial assets
Loans and receivables
Investments in subsidiaries, joint ventures and associates
Tangible assets
Other Assets
Total
Liabilities
Financial assets held for trading
Financial liabilities at amortized cost
Other Liabilities
Total
2016 (Millions of euros)
Assets
Financial assets held for trading
Available-for-sale financial assets
Loans and receivables
Investments in subsidiaries, joint ventures and associates
Tangible assets
Other Assets
Total
Liabilities
Financial assets held for trading
Financial liabilities at amortized cost
Other Liabilities
Total
2,038
27,256
Pounds
Sterling
Other
Currencies
12,569
1,562
2,024
29,090
387
10
-
3
62
55
1,595
51
1,701
USD
1,034
1,683
192
4
4,724
20,206
627
22,659
231
23,517
USD
1,017
4,513
Pounds
Sterling
Other
Currencies
195
554
14,548
1,786
218
6
2,672
22,974
795
23,094
246
24,135
52
4
572
3,163
124
2,977
66
3,167
481
224
1,612
26,002
1
770
193
1,808
37
476
797
2,554
25,137
1
80
29,045
228
2,736
41
Total
1,902
1,917
15,743
26,194
8
5,556
51,320
875
26,062
319
Total
1,688
5,864
18,888
25,407
11
3,324
55,182
1,147
28,807
353
3,005
30,307
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 52). 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.
P. 194
APPENDIX IX. Income statement corresponding to the first and second
half of 2017 and 2016
INCOME STATEMENTS (Millions of euros)
Interest and similar income
Interest and similar expenses
NET INTEREST INCOME
Dividend income
Fee and commission income
Fee and commission expenses
Gains or (-) losses on financial assets and liabilities designated
at fair value through profit or loss, net
Gains or (-) losses on financial assets and liabilities held for
trading, net
Gains or (-) losses on derecognition of financial assets and
liabilities not measured at fair value through profit or loss, net
Gains or (-) losses from hedge accounting, net
Exchange differences (net)
Other operating income
Other operating expenses
GROSS INCOME
Administration costs
Personnel expenses
General and administrative expenses
Depreciation
Provisions or (-) reversal of provisions
Impairment or (-) reversal of impairment on financial assets
not measured at fair value through profit or loss
NET OPERATING INCOME
Impairment or (-) reversal of impairment of investments in
subsidiaries, joint ventures and associates)
Impairment or (-) reversal of impairment on non-financial
assets
Negative goodwill recognised in profit or loss
Profit or (-) loss from non-current assets and disposal groups
classified as held for sale not qualifying as discontinued
operations
OPERATING PROFIT BEFORE TAX
Tax expense or (-) income related to profit or loss from
continuing operation
PROFIT FROM CONTINUING OPERATIONS
Profit from discontinued operations (net)
PROFIT
Six months
ended June 30,
2017
Six months
ended June 30,
2016
Six months
ended
December, 2017
Six months
ended
December, 2016
2,420
(707)
1,713
1,763
995
(187)
-
20
458
(198)
206
73
(192)
4,651
(2,010)
(1,188)
(822)
(281)
(435)
(314)
1,611
5
(4)
-
(15)
1,597
(139)
1,458
-
1,458
2,457
(874)
1,584
1,951
831
(152)
-
(139)
355
(20)
305
66
(224)
4,556
(1,922)
(1,101)
(821)
(263)
(191)
(484)
1,695
(66)
(2)
-
(76)
1,552
(23)
1,529
-
1,529
2,440
(690)
1,750
1,792
1,008
(199)
18
12
176
(29)
229
86
(274)
4,569
(2,027)
(1,194)
(833)
(259)
(367)
(1,271)
645
202
(4)
-
1
843
(218)
625
-
625
3,779
(1,839)
1,939
903
1,055
(201)
-
69
600
(42)
-
74
(280)
4,118
(2,325)
(1,401)
(924)
(312)
(996)
(465)
21
(81)
(14)
-
3
(60)
193
133
-
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 52). 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.
P. 195
APPENDIX X. Information on data derived from the special accounting
registry and other information on bonds
financing of goods and services export contracts or of
The Bank has explicit policies and procedures in place regarding its activities in the mortgage market and in
the
internationalization processes of
companies, which provide for full compliance with applicable regulations al mercado hipotecario y a la
emisión de cédulas.
a) Mortgage market policies and procedures
Information required pursuant to Circular 5/2011 of the Bank of Spain is indicated as follows.
The mortgage origination policy is based in principles focused on assessing the adequate ratio between the
amount of the loan, and the payments, and the 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. 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
database queries (internal and external). This information is used for calculation purposes in order to
determine the level of indebtedness/compliance with the remainder of the system. This documentation is
kept in the transaction’s file.
In addition, the mortgage origination policy assesses the adequate ratio between the amount of the loan and
the appraisal value of the mortgaged asset. The policy also establishes that the property to be mortgaged be
appraised by an independent appraisal company as established by Circular 3/2010 and Circular 4/2016.
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 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 Finance area annually defines the strategy for wholesale
finance issues,, and more specifically mortgage bond issues, such as mortgage covered bonds or mortgage
securitization. The Assets and Liabilities Committee 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 the conditions in the market.
The Board of Directors of the Bank authorizes each of the issues of Mortgage Transfer Certificates and/or
Mortgage Participations issued by BBVA to securitize the credit rights derived from loans and mortgage
loans, Likewise, the Board of Directors authorizes the establishment of a Base Prospectus for the issuance of
fixed-income securities through which the mortgage-covered bonds are implemented.
As established in article 24 of Royal Decree 716/2009, of 24 April, by virtue of which certain aspects of Law
2/1981, of 25 March, of regulation of the mortgage market and other rules of the mortgage and financial
system are developed, “the volume of outstanding mortgage-covered bonds issued by a bank may not exceed
80% of a calculation base determined by adding the outstanding principal of all the loans and mortgage loans
in the bank’s portfolio that are eligible” and which 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, on a general basis: (i) must be
secured by a first mortgage on the freehold; (ii) the loan’s amount may not exceed 80% of the appraisal
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 52). 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.
P. 196
value for residential mortgages, and 60% for other mortgage lending; (iii) must be established on assets
exclusively and wholly owned by the mortgagor; (iv) must 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 according
to an agreed procedures engagement, 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.
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 as of December 31, 2017 and 2016.
b.1) Ongoing operations
Mortgage loans. Eligibility for the purpose of the mortgage market (Millions of euros)
Nominal value of outstanding loans and mortgage loans
2017
2016
105,539
113,977
Minus: Nominal value of all outstanding loans and mortgage loans that form part of the portfolio, but have been mobilized through mortgage bond holdings or mortgage transfer certificates.
(32,774)
(33,677)
Nominal value of outstanding loans and mortgage loans, excluding securitized loans
Of which:
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.
Minus: Loans and mortgage loans which would be eligible but, according to the criteria set forth in Article 12 of Spanish Royal Decree 716/2009, cannot be used to collateralize any issuance of
mortgage bonds.
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
Issuance limit: 80% of eligible loans and mortgage loans that can be used as collateral
Issued Mortgage-covered bonds
Outstanding Mortgage-covered bonds
Capacity to issue mortgage-covered bonds
Memorandum items:
Percentage of overcollateralization across the portfolio
Percentage of overcollateralization across the eligible used portfolio
Nominal value of available sums (committed and unused) from all loans and mortgage loans.
Of which:
Potentially eligible
Ineligible
72,765
80,300
48,003
46,987
(1,697)
(2,268)
46,306
37,045
20,153
16,065
16,892
361%
230%
3,084
2,471
613
44,719
35,775
29,085
24,670
6,690
276%
154%
2,917
2,237
680
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.
16,272
25,282
Nominal value of the replacement assets subject to the issue of mortgage-covered bonds.
-
-
Mortgage loans. Eligibility for the purpose of the mortgage market (Millions of euros)
2017
2016
Total loans
Issued mortgage participations
Of which: recognized on the balance sheet
Issued mortgage transfer certificates
Of which: recognized on the balance 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 limit provided for under the article 5.1 of the Spanish Royal Decree 716/2009
Other
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
(1)
(2)
(3)
(4)
1-2-3-4
105,539
1,809
-
30,965
28,954
-
72,765
24,762
16,272
8,490
48,003
1,697
46,306
-
46,306
113,977
2,865
695
30,812
28,778
-
80,300
33,313
25,282
8,031
46,987
2,268
44,719
-
44,719
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 52). 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.
P. 197
Mortgage loans. Classification of the nominal values according to different characteristics (Millions of euros)
2017
2016
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
(**)
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 which: public housing
For households
By type of guarantee
Secured by completed assets/buildings
Residential use
From which: public housing
Commercial
Other
Secured by assets/buildings under construction
Residential use
From which: public housing
Commercial
Other
Secured by land
Urban
Non-urban
72,765
48,003
46,306
80,300
46,987
67,134
795
4,836
72,070
695
61,013
11,752
15,482
29,131
18,470
9,682
5,578
67,187
-
17,111
4,520
55,654
70,922
53,543
4,124
4,610
12,769
1,433
522
8
174
737
410
8
402
43,315
692
3,996
47,623
380
43,578
4,425
10,268
23,344
11,565
2,826
2,697
45,306
-
7,788
1,670
40,215
47,619
39,050
3,029
2,535
6,034
245
61
1
48
136
139
5
134
41,694
686
3,926
45,945
361
43,187
3,119
9,659
22,748
11,153
2,746
2,614
43,692
-
6,569
726
39,737
45,989
38,499
2,981
2,414
5,076
191
61
1
48
82
126
2
124
74,220
904
5,176
79,422
878
61,264
19,036
19,762
30,912
19,899
9,727
4,460
75,840
-
20,913
6,958
59,387
75,806
61,338
5,607
5,453
9,015
1,914
1,457
57
286
171
2,580
-
2,580
42,641
685
3,661
46,594
393
40,685
6,302
12,722
22,417
9,375
2,473
1,680
45,307
-
8,614
1,894
38,373
46,240
39,494
3,338
2,563
4,183
413
290
11
61
62
334
-
334
44,719
40,451
678
3,590
44,341
378
40,389
4,330
11,765
21,646
8,910
2,398
1,559
43,160
-
6,926
740
37,793
44,237
38,139
3,213
2,289
3,809
295
187
10
53
55
187
-
187
(*) 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
December 2017. Nominal value of the total mortgage loans (Millions of euros)
Home mortgages
Other mortgages
Total
Loan to Value (Last available appraisal risk)
Less than or equal to
40%
Over 40% but less
than or equal to 60%
Over 60%
Over 60% but less
than or equal to 80%
Over 80%
Total
14,535
1,827
16,362
17,225
1,749
18,974
12,667
-
12,667
44,427
3,576
48,003
December 2016. Nominal value of the total mortgage loans (Millions of euros)
Home mortgages
Other mortgages
Total
Loan to Value (Last available appraisal risk)
Less than or equal to
40%
Over 40% but less
than or equal to 60%
Over 60%
Over 60% but less
than or equal to 80%
Over 80%
Total
12,883
2,150
15,033
15,921
1,986
17,907
-
-
-
14,047
14,047
-
-
42,851
4,136
46,987
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 52). 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.
P. 198
Elegible and non elegible mortgage loans. Changes of the nominal values in the period (Millions of euros)
2017
2016
Eligible (*)
Non eligible
Eligible (*)
Non eligible
Balance at the begining
Retirements
Held-to-maturity cancellations
Anticipated cancellations
Subrogations to other institutions
Rest
Additions
Originated by the bank
Subrogations to other institutions
Rest
Balance at the end
46,987
9,820
4,614
2,008
33
3,165
10,835
2,645
15
8,176
48,003
33,313
15,015
2,562
2,582
23
9,848
6,464
3,392
5
3,067
24,762
40,373
7,458
3,552
1,479
37
2,390
14,072
10,051
283
3,738
46,987
(*) Not taking into account the thresholds established by Article 12 of Spanish Royal Decree 716/2009
Mortgage loans supporting the issuance of mortgage-covered bonds. Nominal value (Millions of euros)
32,532
11,489
2,084
1,971
30
7,404
12,270
9,523
162
2,585
33,313
2016
2,237
680
2,917
2017
2,471
613
3,084
Potentially eligible
Ineligible
Total
b.2) Liabilities operations
Issued Mortgage Bonds (Millions of euros)
Mortgage bonds
Mortgage-covered bonds (*)
Of which:Non recognized as liabilities on balance
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
2017
2016
Nominal value Average residual maturity
Nominal value Average residual maturity
-
20,153
4,088
16,065
12,501
-
-
2,051
4,000
6,250
200
4,162
-
-
50
1,500
2,612
-
3,491
791
380
246
793
571
710
-
28,954
28,954
-
29,085
4,414
24,670
20,773
8,272
-
-
4,801
7,500
200
4,321
150
-
-
1,550
2,500
121
3,991
460
791
380
671
839
850
695
28,778
28,778
279
279
196
286
286
Issued without public offer
-
Given the characteristics of the type of covered bonds issued by the Bank, there is no substituting collateral
related to these issues.
-
-
-
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 52). 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.
P. 199
The Bank does not hold any derivative financial instruments relating to mortgage bond issues, as defined in
the aforementioned Royal Decree.
c) Quantitative information on internationalization covered bonds
Below is the quantitative information of BBVA, S.A. internationalization covered bonds required by Bank of
Spain Circular 4/2015 as of December 31, 2017 and 2016.
c.1) Assets operations
Principal outstanding payment of loans (Millions of euros)
Eligible loans according to article 34.6 y 7 of the Law 14/2013
Minos: Loans that support the issuance of internationalization bonds
Minos: NPL to be deducted in the calculation of the issuance limit, according to
Article 13 del Royal Decree 579/2014
Total Loans included in the base of all issuance limit
c.2) Liabilities operations
INTERNATIONALIZATION COVERED BONDS (Millions of euros)
(1) Debt securities issued through public offer (a)
of which: Treasury shares
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
(2) Debt securities issued without public offer (a)
of which: Treasury shares
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
(3) Deposits (b)
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
TOTAL: (1) + (2) + (3)
Coverage ratio of internationalization covered bonds on loans (c)
Nominal value 2017
Nominal value 2016
3,075
-
74
3,001
2,631
-
29
2,602
Nominal value 2017
Nominal value 2016
1,500
1,500
-
1,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,500
1,500
-
-
1,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,500
1,500
Porcentaje
50%
Porcentaje
58%
(a) Balance that includes all internationalization covered bonds issued by the entity pending amortization, although they
are not recognized in the liability (because they have not been placed to third parties or have been repurchased).
(b) Nominative bonds.
(c) Percentage that results from the value of the quotient between the nominal value of the issued and non-overdue
bonds, even if they are not recognized in the liability, and the nominal value balance pending collection of the loans
that serve as guarantee
Given the characteristics of the Bank's internationalization covered bonds, there are no substitute assets
assigned to these issuances.
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 52). 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.
P. 200
d) Territorial bonds
d.1) Assets operations
December 2017. Loans that serves as collateral for the territorial bonds
Central Governments
Regional Governments
Local Governments
Total loans
(a) Principal pending payment of loans.
December 2016. Loans that serves as collateral for the territorial bonds
Central Governments
Regional Governments
Local Governments
Total loans
d.2) Liabilities operations
TERRITORIAL BONDS
Territorial bonds issued (a)
Issued through a public offering
Of which: Treasury stock
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
Other issuances
Of which: Treasury stock
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
Coverage ratio of the territorial bonds on loans (b)
Nominal Value(a)
Total
Spanish Residents
Residents in other countries
of the European Economic
Area
473
8,882
7,040
420
8,851
7,040
16,395
16,311
53
31
-
84
Nominal Value(a)
Total
Spanish Residents
Residents in other countries
of the European Economic
Area
570
9,836
7,771
505
9,805
7,771
18,177
18,081
65
31
-
96
Nominal value 2017
Nominal value 2016
9,690
9,540
9,040
-
-
6,500
2,840
200
-
150
-
150
-
-
-
-
10,739
10,589
9,489
1,049
-
-
8,500
1,040
-
150
-
-
150
-
-
-
Percentage
59%
Percentage
59%
(a) Includes the nominal value of all loans that serve as collateral for the territorial bonds, regardless of the item
in which they are included in the balance sheet. Principal pending payment of loans. The territorial bonds
include all the instruments issued by the entity pending amortization, although they are not recognized in
the liability (because they have not been placed to third parties or have been repurchased).
(b) Percentage that results from the value of the quotient between the nominal value of the issued and non-
overdue bonds, even if they are not recognized in the liability, and the nominal value balance pending
collection of the loans that serve as guarantee
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 52). 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.
P. 201
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.
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 52). 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.
P. 202
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.
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 risk of rustic land is not
significant, 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, 2017 and 2016
is shown below:
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 52). 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.
P. 203
December 2017 - Financing Allocated to Construction and Real Estate Development and its Coverage (Millions of euros)
Gross Amount
Drawn Over the
Guarantee Value
Accumulated
impairment
Financing to construction ans real estate development (including land)
(Business in Spain)
Of which: Impaired assets
Memorandum item:
Write-offs
Memorandum item:
Total loans and advances to customers, excluding the Public Sector (Business in
Spain)
Total consolidated assets (total business)
Impairment and provisions for normal exposures
5,224
2,660
2,289
179,833
400,083
(1,420)
2,132
1,529
(1,654)
(1,588)
December 2016 - Financing Allocated to Construction and Real Estate Development and its Coverage (Millions of euros)
Gross Amount
Drawn Over the
Guarantee Value
Accumulated
impairment
Financing to construction ans real estate development (including land)
(Business in Spain)
Of which: Impaired assets
Memorandum item:
Write-offs
Memorandum item:
Total loans and advances to customers, excluding the Public Sector (Business in
Spain)
Total consolidated assets (total business)
Impairment and provisions for normal exposures
7,930
5,095
2,061
178,163
418,447
(2,025)
3,449
2,680
(3,181)
(3,086)
The following is a description of the real estate credit risk based on the types of associated guarantees:
Financing Allocated by credit institutions to Construction and Real Estate Development and lending for house purchase (Millions of euros)
Without secured loan
With secured loan
Terminated buildings
Homes
Other
Buildings under construction
Homes
Other
Land
Urbanized land
Rest of land
Total
December 2017
December 2016
552
4,672
2,904
2,027
877
462
439
23
1,306
704
602
5,224
801
7,129
3,875
2,954
921
760
633
127
2,494
1,196
1,298
7,930
As of December 31, 2017 and 2016, 55.6% and 48.9% of loans to developers were guaranteed with buildings
(69.8% and 76.2%, are homes), and only 25.0% and 31.5% by land, of which 53.9% and 48.0% are in urban
locations, respectively.
The table below provides the breakdown of the financial guarantees given as of December 31, 2017 and 2016:
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 52). 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.
P. 204
Financial guarantees given (Millions of euros)
Houses purchase loans
Without mortgage
2017
64
12
2016
62
18
The information on the retail mortgage portfolio risk (housing mortgage) as of December 31, 2017 and 2016
is as follows:
Financing Allocated by credit institutions to Construction and Real Estate Development and lending for house purchase - December 2017
(Millions of euros)
Houses purchase loans
Without mortgage
With mortgage
Gross amount
Of which: impaired
loans
83,505
1,578
81,927
4,821
51
4,770
Financing Allocated by credit institutions to Construction and Real Estate Development and lending for house purchase - December 2016
(Millions of euros)
Houses purchase loans
Without mortgage
With mortgage
Gross amount
Of which: impaired
loans
87,874
1,935
85,939
4,938
93
4,845
The loan to value (LTV) ratio of the above portfolio is as follows:
December 2017 - LTV Breakdown of mortgage to households for the purchase of a home (Business in Spain) (Millions of euros)
Gross amount
of which: Impaired loans
Total risk over the amount of the last valuation available (Loan To Value-LTV)
Less than or
equal to 40%
14,485
293
Over 40% but
less than or
equal to 60%
18,197
Over 60% but
less than or
equal to 80%
20,778
Over 80% but
less than or
equal to 100%
14,240
444
715
897
Over 100%
Total
14,227
2,421
81,927
4,770
December 2016 - LTV Breakdown of mortgage to households for the purchase of a home (Business in Spain) (Millions of euros)
Gross amount
of which: Impaired loans
Total risk over the amount of the last valuation available (Loan To Value-LTV)
Less than or
equal to 40%
13,780
306
Over 40% but
less than or
equal to 60%
18,223
Over 60% but
less than or
equal to 80%
20,705
Over 80% but
less than or
equal to 100%
15,967
447
747
962
Over 100%
Total
17,264
2,383
85,939
4,845
Outstanding home mortgage loans as of December 31, 2017 had an average LTV of 51%.
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 entities holding such assets is as
follows:
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 52). 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.
P. 205
Information about Assets Received in Payment of Debts (Business in Spain) (Millions of euros)
Real estate assets from loans to the construction and real
estate development sectors in Spain.
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
December 2017
Gross
Value
Provisions
Of wich: Valuation
adjustments on impaired
assets, at the time of
foreclosure
Carrying
Amount
-
-
-
-
3,078
1,646
638
1,763
894
302
656
257
250
1,315
752
336
Total
5,362
2,959
1,163
2,403
Information about Assets Received in Payment of Debts (Business in Spain) (Millions of euros)
December 2016
Gross
Value
Provisions
Of wich: Valuation
adjustments on
impaired assets, at the
time of foreclosure
Carrying
Amount
Real estate assets from loans to the construction and real
estate development sectors in Spain.
-
-
-
-
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
3,745
1,856
1,080
6,681
2,184
1,006
542
3,732
823
244
444
1,561
850
538
1,511
2,949
As of December 31, 2017 and December 31, 2016, there were not real estate assets from financing for
construction and real estate development companies.
The gross book value of real-estate assets from mortgage lending to households for home purchase as of
December 31, 2017 and 2016, amounted to €3,078 and €3,745 million, respectively, with an average
coverage ratio of 57.3% and 58.3%, respectively.
As of December 31, 2017 and 2016, the gross book value of the BBVA Group’s total real-estate assets
(business in Spain), including other real-estate assets received as debt payment, was €4,724 and €5,601
million, respectively. The coverage ratio was 56.2% and 57.0%, respectively.
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 52). 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.
P. 206
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 and 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 refinancing and restructuring 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 and restructuring for other purposes, such as to delay
loss recognition, is contrary to BBVA Group policies.
The BBVA Group’s refinancing and restructuring policies are based on the following general principles:
Refinancing and restructuring is authorized according to the capacity of customers to pay the new
installments. This is done by first identifying the origin of the payment difficulties and then carrying out an
analysis of the customers’ viability, including an updated analysis of their economic and financial situation
and capacity to pay and generate funds. If the customer is a company, the analysis also covers the
situation of the industry in which it operates.
With the aim of increasing the solvency of the operation, new guarantees and/or guarantors of
demonstrable solvency are obtained where possible. An essential part of this process is an analysis of the
effectiveness of both the new and original guarantees.
This analysis is carried out from the overall customer or group perspective.
Refinancing and restructuring operations do not in general increase the amount of the customer’s loan,
except for the expenses inherent to the operation itself.
The capacity to refinance and restructure loan is not delegated to the branches, but decided on by the risk
units.
The decisions made are reviewed from time to time with the aim of evaluating full compliance with
refinancing and restructuring policies.
These general principles are adapted in each case according to the conditions and circumstances of each
geographical area in which the Group operates, and to the different types of customers involved.
In the case of retail customers (private individuals), the main aim of the BBVA Group’s policy on refinancing
and restructuring loan is to avoid default arising from a customer’s temporary liquidity problems by
implementing structural solutions that do not increase the balance of customer’s loan. The solution required
is adapted to each case and the loan repayment is made easier, in accordance with the following principles:
Analysis of the viability of operations based on the customer’s willingness and ability to pay, which may be
reduced, but should nevertheless be present. The customer must therefore repay at least the interest on
the operation in all cases. No arrangements may be concluded that involve a grace period for both
principal and interest.
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 52). 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.
P. 207
Refinancing and restructuring of operations is only allowed on those loans in which the BBVA Group
originally entered into.
Customers subject to refinancing and restructuring operations are excluded from marketing campaigns
of any kind.
the
In
refinancing/restructuring is authorized according to an economic and financial viability plan based on:
case of non-retail
companies,
enterprises
customers
(mainly
and
corporates),
Forecasted future income, margins and cash flows to allow entities to implement cost adjustment
measures (industrial restructuring) and a business development plan that can help reduce the level of
leverage to sustainable levels (capacity to access the financial markets).
Where appropriate, the existence of a divestment plan for assets and/or operating segments that can
generate cash to assist the deleveraging process.
The capacity of shareholders to contribute capital and/or guarantees that can support the viability of the
plan.
In accordance with the Group’s policy, the conclusion of a loan refinancing and restructuring operation does
not meet the loan is reclassified from "impaired" or "standard under special monitoring" to outstanding risk.
The reclassification to the "standard under special monitoring" or normal risk categories must be based on
the analysis mentioned earlier of the viability, upon completion of the probationary periods described below.
The Group maintains the policy of including risks related to refinanced and restructured loans as either:
"Impaired assets", as although the customer is up to date with payments, they are classified as impaired
for reasons other than their default when there are significant doubts that the terms of their refinancing
may not be met; or
"Normal-risk assets under special monitoring" until the conditions established for their consideration as
normal risk are met).
The conditions established for assets classified as “standard under special monitoring” to be reclassified out
of this category are as follows:
The customer must have paid past-due amounts (principal and interest) since the date of the
renegotiation or restructuring of the loan or other objective criteria, demonstrating the borrower´s ability
to pay, have been verified; and
At least two years must have elapsed since completion of the renegotiation or restructuring of the loan;
It is unlikely that the customer will have financial difficulties and, therefore, it is expected that the
customer will be able to meet its loan payment obligations (principal and interest) in a timely manner.
The BBVA Group’s refinancing and restructuring policy provides for the possibility of two modifications in a
24 month period for loans that are not in compliance with the payment schedule.
The internal models used to determine allowances for loan losses consider the restructuring and
renegotiation of a loan, as well as re-defaults on such a loan, by assigning a lower internal rating to
to non-
restructured and
restructured/renegotiated loans. This downgrade results in an increase in the probability of default (PD)
assigned to restructured/renegotiated loans (with the resulting PD being higher than the average PD of the
non- renegotiated loans in the same portfolios).
rating assigned
the average
renegotiated
internal
loans
than
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 52). 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.
P. 208
b) Quantitative
operations.
information on
refinancing and
restructuring
Unsecured loans
DECEMEBER 2017
BALANCE OF FORBEARANCE
(Millions of Euros)
TOTAL
Secured loans
Number of
operations
Gross carrying
amount
Number of
operations
Gross carrying amount
Real estate mortgage
secured
Rest of secured loans
Maximum amount of secured loans that can
be considered
Accumulated impairment or
accumulated losses in fair
value due to credit risk
Credit institutions
General Governments
Other financial corporations and individual
entrepreneurs (financial business)
Non-financial corporations and individual
entrepreneurs (corporate non-financial
activities)
Of which: financing the construction and
property (including land)
Rest homes
Total
68
105
128
122
102
228
23
38
4
2
18
2
35,441
2,698
15,174
5,160
3,022
1,953
1,054
47,054
82,791
186
579
3,405
3,365
64,572
79,912
2,324
7,447
12,733
928
3,851
6,977
1,284
3,085
5,058
17
3
2,972
1,304
949
3,941
Of which: IMPAIRED
Unsecured loans
Secured loans
Number of
operations
Gross carrying
amount
Number of
operations
Gross carrying amount
Real estate mortgage
secured
Rest of secured loans
Maximum amount of secured loans that can
be considered
Accumulated impairment or
accumulated losses in fair
value due to credit risk
Credit institutions
General Governments
Other financial corporations and individual
entrepreneurs (financial business)
Non-financial corporations and individual
entrepreneurs (corporate non-financial
activities)
Of which: financing the construction and
property (including land)
Rest homes
Total
49
109
72
1
45
16
29
2
20
1
8
1
19,544
1,924
9,305
3,857
1,930
1,766
904
26,184
45,886
163
368
2,365
2,720
32,640
42,006
1,969
3,909
7,797
632
1,770
3,721
1,235
1,843
3,618
16
1
2,867
1,273
853
3,737
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 52). 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.
P. 209
Credit institutions
General Governments
Other financial corporations and individual
entrepreneurs (financial business)
Non-financial corporations and individual
entrepreneurs (corporate non-financial
activities)
Of which: financing the construction and
property (including land)
Rest homes
Total
Unsecured loans
DECEMEBER 2016
BALANCE OF FORBEARANCE
(Millions of Euros)
TOTAL
Secured loans
Number of
operations
Gross carrying
amount
Number of
operations
Gross carrying amount
Real estate mortgage
secured
Rest of secured
loans
Maximum amount of secured loans that can
be considered
22
8
109
103
76
22
237
46
37
4
2
2
Accumulated impairment
or accumulated losses in
fair value due to credit risk
4
2
38,045
3,508
19,776
8,016
4,539
3,222
4,715
1,096
50,760
89,064
324
610
4,172
5,046
70,157
90,079
4,382
7,968
16,091
1,853
4,051
8,668
2,370
3,354
6,600
2,553
975
(5,696)
Of which: IMPAIRED
Unsecured loans
Secured loans
Number of
operations
Gross carrying
amount
Number of
operations
Gross carrying amount
Real estate mortgage
secured
Rest of secured
loans
Maximum amount of secured loans that can
be considered
Accumulated impairment
or accumulated losses in
fair value due to credit risk
Credit institutions
General Governments
Other financial corporations and individual
entrepreneurs (financial business)
Non-financial corporations and individual
entrepreneurs (corporate non-financial
activities)
Of which: financing the construction and
property (including land)
Rest homes
Total
11
109
8
4
51
19
31
2
27
1
3
1
4
1
18,693
2,465
12,383
6,249
3,056
2,968
4,597
877
25,166
43,979
299
355
2,832
4,158
32,839
45,292
3,853
3,837
10,119
1,387
1,748
4,832
2,312
1,808
4,780
2,500
849
(5,451)
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 52). 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.
P. 210
The table below provides a roll forward of refinanced assets during 2016:
Refinanced assets Roll forward. December 2017 (Millions of euros)
Balance at the beginning
7,312
245
12,951
5,451
20,263
5,696
Normal
Impaired
TOTAL
Risk
Coverage
Risk
Coverage
Risk
Coverage
(+) Additions
(-) Foreclosures
(-) Write-offs
(+)/(-) Other
Ending Balance
1,121
-
-
(2,457)
5,976
86
-
-
(127)
204
1,050
(450)
276
(265)
2,171
(450)
361
(265)
(1,610)
(1,372)
(1,610)
(1,372)
(1,779)
10,162
(353)
3,737
(4,236)
16,138
(479)
3,941
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 52). 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.
P. 211
c) Loans and advances to customers by activity (carrying amount)
December 2017 (Millions of euros)
1 General governments
2 Other financial institutions and financial individual entrepreneurs
3 Non-financial institutions and non-financial individual entrepreneurs
3.1 Construction and property development
3.2 Construction of civil works
3.3 Other purposes
3.3.1 Large companies
3.3.2 SMEs (**) and individual entrepreneurs
4 Rest of households and NPISHs (***)
4.1 Housing
4.2 Consumption
4.3 Other purposes
6 TOTAL
TOTAL (*)
Of which:
Mortgage loans
Of which:
Secured 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% but less than or
equal to 100%
Over 100%
Collateralized loans and receivables -Loans and advances to customers. Loan to value
17,746
18,471
447
242
446
10,818
77,892
14,437
1,964
3,046
8,023
66,823
44,716
22,107
2,830
1,711
9,896
2,540
7,356
94,118
81,825
82,462
80,539
8,726
2,930
302
984
22
97
1,845
634
1,211
360
108
111
141
61
34
4,547
671
380
3,496
764
2,732
15,035
14,599
140
296
140
104
4,217
669
339
3,209
832
2,377
18,804
18,412
94
298
119
77
3,759
885
366
2,508
490
2,018
21,181
20,866
88
227
507
10,827
1,757
339
160
1,258
403
855
14,343
14,087
59
197
66
18
2,121
288
563
1,270
685
585
12,822
12,683
32
107
208,227
96,951
13,588
19,677
23,265
25,136
27,434
15,027
(*) The amounts included in this table are net of impairment losses.
(**) Small and medium enterprises
(***) Non profit institutions serving households.
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 52). 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.
d) Concentration of risks by activity and geographical area (carrying amount)
TOTAL(*)
Spain
European Union Other
74,564
58,023
38,552
19,471
67,939
115,722
3,686
11,752
100,284
76,152
24,132
94,362
82,464
8,727
3,171
20,689
45,872
26,694
19,178
31,298
87,850
3,685
9,867
74,298
50,830
23,468
93,601
81,804
8,711
3,086
32,520
10,124
9,973
151
14,825
15,001
1
991
14,009
13,585
424
415
342
4
69
America
11,418
1,440
1,411
29
21,508
8,065
-
573
7,492
7,281
211
115
102
7
6
P. 212
Other
9,937
587
474
113
308
4,806
-
321
4,485
4,456
29
231
216
5
10
December 2017 (Millions of euros)
Credit institutions
General governments
Central Administration
Other
Other financial institutions and financial individual entrepreneurs
Non-financial institutions and non-financial individual entrepreneurs
Construction and property development
Construction of civil works
Other purposes
Large companies
SMEs and individual entrepreneurs
Other households and NPISHs
Housing
Consumer
Other purposes
TOTAL
(*) The definition of risk for the purpose of this statement includes the following items on the public balance sheet: Loans and advances to credit institutions, Loans and advances, Debt
securities, Equity instruments, Other equity securities, Derivatives and hedging derivatives, Investments in subsidiaries, joint ventures and associates and guarantees given and Contingent
risks. The amounts included in this table are net of impairment losses.
410,610
279,310
72,885
42,546
15,869
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 52). 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.
P. 213
December 2017 (Millions of euros)
Credit institutions
Government agencies
Central Administration
Other
Other financial institutions and financial individual entrepreneurs
Non-financial institutions and non-financial individual entrepreneurs
Construction and property development
Construction of civil works
Other purposes
Large companies
SMEs and individual entrepreneurs
Other households and NPISHs
Housing
Consumer
Other purposes
TOTAL
TOTAL (*)
Andalucia
Aragon
Asturias
Baleares
Canarias
Cantabria
Castilla La Mancha
Castilla y León
Cataluña
20,689
45,872
26,694
19,178
31,298
87,850
3,685
9,867
74,298
50,830
23,468
93,601
81,804
8,711
3,086
71
1,915
-
1,915
80
5,410
391
373
4,646
1,415
3,231
13,253
11,664
1,421
168
53
911
-
911
9
1,250
47
62
1,141
553
588
1,434
1,263
156
15
-
513
-
513
3
649
40
38
571
339
232
1,305
1,094
195
16
21
543
-
543
150
-
665
-
665
5
1,869
2,022
49
159
1,661
1,182
479
2,103
1,888
198
17
142
136
1,744
571
1,173
3,885
3,187
664
34
1,663
106
-
106
-
376
7
25
344
129
215
884
787
78
19
96
475
-
475
2
-
930
1,013
3,334
-
1,013
48
-
3,334
2,405
1,112
1,300
17,696
98
69
945
295
650
2,720
2,399
295
26
44
65
1,193
4,447
1,191
12,056
396
795
6,319
5,737
2,962
29,282
2,583
26,568
340
39
2,005
709
279,310
20,729
3,657
2,470
4,686
6,577
3,029
4,405
5,323
53,647
(*) The definition of risk for the purpose of this statement includes the following items on the public balance sheet: Loans and advances to credit institutions, Loans and advances, Debt
securities, Equity instruments, Other equity securities, Derivatives and hedging derivatives, Investments in subsidiaries, joint ventures and associates and guarantees given and
Contingent risks. The amounts included in this table are net of impairment losses.
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 52). 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.
P. 214
December 2017 - Spain (Millions of euros)
Credit institutions
Government agencies
Central Administration
Other
Other financial institutions and financial individual entrepreneurs
Non-financial institutions and non-financial individual entrepreneurs
Construction and property development
Construction of civil works
Other purposes
Large companies
SMEs and individual entrepreneurs
Other households and NPISHs
Housing
Consumer
Other purposes
TOTAL
Extremadura
Galicia
Murcia
Navarra
Comunidad
Valenciana
País Vasco
La Rioja
Ceuta & Melilla
422
1,072
-
1,072
190
2,014
147
240
1,627
881
746
3,061
2,616
414
31
Madrid
16,685
3,310
-
3,310
27,815
39,308
1,065
3,543
34,700
30,650
4,050
15,916
13,114
1,130
1,672
-
229
-
229
1
652
24
35
593
128
465
1,416
1,208
191
17
2,298
-
312
-
312
3
1
645
-
645
1
1,296
1,198
30
71
1,195
492
703
1,927
1,637
261
29
3,538
19
51
1,128
809
319
520
454
57
9
-
1,403
-
1,403
14
4,255
229
237
3,789
1,374
2,415
8,933
7,835
891
207
747
2,557
-
2,557
572
7,053
138
296
6,619
5,215
1,404
2,887
2,526
294
67
-
98
-
98
-
263
8
10
245
76
169
352
308
39
5
713
-
77
-
77
-
127
14
10
103
6
97
761
673
82
6
965
6,759
103,034
2,365
14,605
13,816
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 52). 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.
P. 215
APPENDIX XIII. Agency Network
ABAD CAMPELO Mª CONCEPCION
ABELENDA MONTES MANUEL
ABELLA LOPEZ ROGELIO
ABRAHAM MORA JUAN PEDRO
ABREU PEÑA ANDRES SERGIO
ACEVEDO LAREZ LIGDEL RUTH
ACOSTA MARTINEZ ELEUTERIO
ADAN ROLDAN FCO. DE ASIS
ADROVER BAZ Mª DOLORES
AGENJO CALDERON JUAN LUIS
AGUILAR MATEOS Mª ISABEL
AGUILERA RUIZ MANUEL
AGUT RODRIGO OMAR
AHSAIN EL AZMANI FARID
ALAMILLO ALVAREZ CRISTINA
ALAMO MARTINEZ GUILLERMO
ALARCON CINTAS ANTONIO
ALARCON COROMINAS SERGIO LUIS
ALBELLA ESTEVE Mª MERCEDES
ALBENDIZ GONZALEZ IRENE
ALBIÑANA BOLUDA AMPARO
ALCACER FABRA FRANCISCO
ALCANTARA IZQUIERDO CRISTINA
ALDA CLEMENTE Mª LUISA
ALIAGA ARA ALBERTO JAVIER
ALMENDROS ESTEBAN ESTEBAN
ALONSO ALBARRAN IRMA
ALONSO BAJO LORENZO
ALONSO BUENAPOSADA ARIAS ARGÜELLO
Mª CONSUELO
ALONSO CUESTA LETICIA
ALONSO DIEZ JOSE CARLOS
ALONSO FERNANDEZ AGUSTIN
ALONSO FERNANDEZ LUIS MIGUEL
ALONSO GARCIA CARMELO HONORIO
ALONSO HEVIA AMPARO
ALONSO JUAREZ JAVIER
ALONSO PAREDES JOSE IGNACIO
ALONSO RAMOS Mª CAMINO
ALONSO RUISANCHEZ ENRIQUE
ALONSO SANTAMARTA LUIS MIGUEL
ALONSO VALLE ESTEBAN
ALONSO ZAPICO JUAN DE DIOS
ALONSO ZARRAGA MIKEL
ALSINA MARGALL MIREIA
ALTARRIBA GUITART Mª ALBA
ALTOLAGUIRRE AGUIRREBENGOA Mª JOSE
ALTURA PLATA PASTORA
ALVAREZ ALVAREZ LORETO
ALVAREZ GONZALEZ EVA GLORIA
ALVAREZ RODRIGUEZ CAMILO VALENTIN
ALVARO CAMPILLO EVA Mª
AMABLE MENDEZ LAZARO
AMADOR MONTESDEOCA JUAN LUIS
AMBRONA LAIRADO JOSE Mª
AMENEIROS GARCIA JOSE
AMOEDO GONZALEZ DANIEL
AMOEDO MOLDES Mª JOSE
AMOROSO ABUIN DELFINA
ANDRADA RINCON SOLEDAD
ANDRES SANTA JOSE
ANDRES SIERRA FERNANDO IGNACIO
ANTUÑA SCHUTZE MARTA
ARANDA GARRANCHO ANA MARIA
ARANDA GONZALEZ DOLORES
ARASANZ LAPLANA JOSE ANTONIO
ARCHS PRETEL FRANCISCO
ARCONES GARCIA ROCIO
ARCOS GONZALEZ FELIX
ARESTI MUGICA REGINA Mª
AREVALO AREVALO Mª CARMEN
ARIAS DELGADO Mª MERCEDES
ARIAS HERREROS JOSE IGNACIO
ARIAS TORRES MIGUEL
ARIZA GIL JESUS
ARJANDAS DARYNANI DILIP
ARNELA MAYO ISMAEL
AROSTEGUI ARGALUZA Mª VICTORIA
ARRANZ MAGDALENO JUAN ALBERTO
ARRAYAS LINERO RAFAEL
ARROYO AVILA BEATRIZ
ARROYO DIAZ CARLOS HUGO
ARROYO ROMERO CARLOS GUSTAVO
ARROYO ROMERO FCO. JAVIER
ARROYO SANTIAGO MANUEL
ARROYO SOBRINO DAVID
ARTAJO JARQUE FERNANDO Mª
ARTEAGA PARDO JOSE
PRAKASH
SUNDERDAS
ARUFE ESPIÑA PABLO
ARUMI RAURELL XAVIER
ASHTON SPARROWHAWK GILLIAN PAMELA
ASTILLERO GARCIA MIGUEL ANGEL
ASTORGA SANCHEZ JUAN ANTONIO
ASTUDILLO CASALS ALEJANDRO
AVELLANEDA GARCIA ANGEL FERNANDO
AYALA GONZALEZ VICTOR RAMON
AYUELA LOBATO JUAN JESUS
AYZAGAR SOTO JAVIER
BABILONI BELENGUER ANTONIO
BACHS RABASCALL JOSEP
BADAMMAL
CHAINANI
BADILLO SUAREZ Mª SANDRA
BAHAMONDE GONZALEZ JORGE JUAN
BALDOMINOS BALDOMINOS ALFIO
BALIBREA LUCAS MIGUEL ANGEL
BALLESTER MARTORELL MARTI
BALLESTER VAZQUEZ IGNACIO JAVIER
BALSEIRO PEREZ DE VILLAR RICARDO
BAÑUELOS DIEZ MARTA LUISA
BARAHONA VIÑES JORDI
BARBA VALDIVIESO Mª ISABEL
BARCELO BLANCH Mª LOURDES
BARCIA CARMONA RAFAEL
BARDAJI PLANA AGUSTIN
BARDERA CALVO GEMMA Mª
BARO CLARIANA SERGI
BARQUIN VITORERO BEATRIZ
BARRAGAN ZAPATA MARGARITA
BARRAL CASADO RICARDO
BARRAN CARIDAD JOSE MANUEL
BARRENA CARABALLO FCO. JAVIER
BARRIENTOS CHOCARRO JOSE CARLOS
BARTOMEU FERRANDO JOAN
BASCO RIBES Mª NORMA
BASCUÑANA GARCIA AGUSTIN
BASTANTE PATON RAMON FELIX
BATISTA MEDEROS ANTONIO DAVID
BATISTE ANGLES AMADEO
BAUZA MARTORELL FELIO JOSE
BECERRIL VALLEJO Mª ROSARIO
BEHOBIDE PERALTA JORGE
BELDA ALMIRA BORJA
BELLO NAVARRO MIQUEL
BELTRAN ANDREU MANUEL JORGE
BENEDI LOPEZ CARLOS JAVIER
BENGOCHEA BOTIN VICENTE
BENITEZ CENTENO ANTONIO
BENITO BARONA ANDER
BENITO MARIJUAN ANTONIO JOSE
BERNABEU JUAN ANTONIO JOSE
BERNIER RUIZ DE GOPEGUI Mª ISABEL
BERROCAL URBANO FCO. JESUS
BERTOMEU GONZALEZ KILIAN
BETANCOR GARCIA JOSE FCO.
BLANCO IGLESIAS IGNACIO
BLANCO RODRIGUEZ JUAN ANTONIO
BLANES SURROCA KILIAN
BLASCO MARI Mª JOSE
BLASCO SAMPIETRO FCO. JAVIER
BLAZQUEZ DE LA IGLESIA OSCAR
BOADO ORORBIA LEOPOLDO
BONDIA VIVES YESICA
BONILLO GOMEZ LOURDES
BONORA OLIVEROS FCO. JOSE
BORRAS SALAS CRISTOBAL
BOTELLO NUÑEZ FELIPE
BOULLOSA MOURE BENITO
BRAVO MASA Mª INMACULADA
BRIONES PEREZ DE LA BLANCA FERNANDO
BRIONES SERRANO CLARA Mª
BRITO PADRON INMACULADA
BRU FORES RAUL
BRUNET COMAS FRANCESCA Mª
BULLON DE DIEGO FCO. JAVIER
BURGOS BLANCO JUAN Mª
BUSTAMANTE FONTES MAYDA LOURDES
CABALLERO MARTINEZ JUAN RAMON
CABEZAS CARDENAS MIGUELA
CABRERA CABRERA VICENTE
CABRERA LLAMAS FCO. JAVIER
CABRERA MARTIN MIGUEL ANGEL
CABRERA SUAREZ LUIS RICARDO
CABRITO FERNANDEZ JUAN CRUZ
CALAFAT ROIG JUAN
CALDERON MORILLO Mª LUISA
CALERO CASADO Mª LAURA
CALLE DELGADO FELIX
CALLES VAQUERO IVAN
CALVA CORTES DANTE HUMBERTO
CALVET REVERTE Mª PILAR
CALVO HERNAN ALICIA
CAMACHO MARTIN ANTONIA
CAMACHO MARTINEZ PEDRO
CAMOS COLOM MIQUEL
CAMPOMANES IGLESIAS Mª TERESA
CAMPOS CARRERO Mª JOSE
CAMPOS CRESPO PRISCILA
CAMPS ALBERCH ENRIC
CAMPS CARBONELL JOAQUIN
CANIEGO MONREAL CARLOS
CANO LOBATO BEATRIZ
CANO PEREZ ANTONIO
CANTARERO MARTINEZ BARTOLOME
CANTERO NICOLAS Mª ANGELES
CAÑAS AYUSO FRANCISCO
CAO GONZALEZ NIEVES ESPERANZA
CAPDEVILA PLA RICARDO
CAPELLES LOPEZ JAVIER
CAPISTROS LOPEZ HUERTA LAURA
CARBAJO ALONSO ROMAN
CARBO PRACHNER GUILLERMO
CARBO ROYO JOSE JORGE
CARBONELL ALSINA CHANTAL
CARBONELL CHANZA FRANCISCO
CARBONELL FUENTE JONATAN
CARCELLER SUAREZ RAMON
CARCOLE ARDEVOL JOSE
CARDENO CHAPARRO FCO. MANUEL
CARDERO TABARES SUSANA
CARMONA ACEVEDO EUGENIO
CARNE SALES Mª JOSE
CARNICER SOSPEDRA DAVID
CARO VIEJO JUAN ANTONIO
CARPENA MARTINEZ Mª BELINDA
CARRASCAL PRIETO LUIS EUSEBIO
CARRASCO GONZALEZ Mª AMOR
CARRASCO MARTIN ELOY
CARRASCO MARTINEZ RAMON
CARREÑO FALCON PEDRO
CARRIL GONZALEZ BARROS ALEJANDRO
SERGIO
CARTAGENA CUESTA MARIO
CARULLA FELICES JORDI
CASADO GALLARDO GERARDO
CASADO HERRERO JOSEFA
CASADO RODRIGUEZ Mª MARBELLA
CASALS REIG IRMA
CASAS CASTELLA LLUIS
CASAS GRACIA CRISTINA
CASAS ROYO SATURIO
CASILLAS VIGARA JUAN
CASSO MAYOR FRANCISCA
CASTANY SANTANACH Mª ANGELES
CASTAÑEDA PEREZ PABLO
CASTELL AMENGUAL MARIA
CASTELLANO CARDALLIAGUET PABLO
CASTELLANO ESCOBAR Mª BEGOÑA
CASTELLANO GARCIA PABLO JOSE
CASTELLANOS JARQUE MANUEL
CASTILLO BLANCA ENRIQUE
CASTILLO MARZABAL FCO. JOSE
CASTILLO ORTEGA NICOLAS
CASTILLO YBARRA Mª CARMEN
CASTRESANA URIARTE RODOLFO
CASTRILLO PEREZ TRINIDAD
CASTRO VEGA XOSE
CAYUELA LINA
CEBALLOS URCELAY CRISTINA
CEJAS MARMOL ALBA Mª
CEJUDO RODRIGUEZ JUAN CARLOS
CELDRAN CARMONA JOSE Mª
CERCUNS CANDALIGA JOSEFINA
CERDAN GARCIA INMACULADA
CERDEIRA BRAVO DE MANSILLA ALFONSO
CERQUEIRA CRUCIO FERNANDO
CERRATO LLERENA Mª ANGELES
CERVERA AMADOR ANTONIO
CERVERA GASCO NURIA PILAR
CERVERO MARINA DANIEL
CERVIÑO OTERO Mª LUZ
CESPEDES CAPO MIGUEL
CHACON MACIAS ELADIO SALVADOR
CHAVARRI GONZALEZ ALVARO
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 52). 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.
P. 216
FALGUERA
MARTINEZ-ALARCON
CID GUERREROS ROBERTO CARLOS
CISTERO BOFARULL MARIA
CIUDAD BRONCANO JUAN FCO.
CLAPES ESQUERDA RAMON LUIS
CLEMENTE BLANCO PAULA ANDREA
CLIMENT MARTOS Mª ROSARIO
COBO RIVAS RAMON
COCA LOZA Mª DOLORES GENOVEVA
COLLADO SOLER ANA JOAQUINA
COMAS BERRADRE ANA
CONTRERAS AMOEDO JAVIER
CORBACHO SOLANCE Mª MAGDALENA
CORCUERA BRIZUELA JOSE Mª
CORDERO DE OÑA FRANCISCO
CORDOBA PARODI JUAN ANTONIO
CORDOBA TEJADA MANUEL
CORONADO MANSILLA DIEGO
COSCULLUELA SIN JOSE LUIS
COSTA CALAF MONTSERRAT
COSTA CAMBRA ANGEL
COSTA GARCIA ROSA Mª
COSTA PARIS JOSE LUIS
CREIXANS PONS JOSE Mª
CREIXELL GALLEGO XAVIER
CRESPO SANTIAGO Mª GLORIA
CRESPO CRESPO ANGEL MANUEL
CRESPO GOMEZ LUCAS
CRESPO MARTINEZ JUAN ENRIQUE
CRESPO MINCHOLED YOLANDA
CUESTA GONZALEZ DE LA ALEJA JAVIER
VICENTE
CUÑAT ALVAREZ OSSORIO JUAN LUIS
CURROS NEIRA FCO. JAVIER
DALMAU GOMEZ JORDI
DE ANDRES DE PABLOS Mª ESTHER
DE ARRIBA ARES ALVARO
DE ASTOBIZA AGUADO IGNACIO
DE BLAS QUEVEDO JOSE SANTOS
DE DIEGO MARTI FCO. JOSE
DE EUGENIO FERNANDEZ JOAQUIN
DE
ANTONIO
DE GUILLERMO DE SAN SEGUNDO Mª
SONSOLES
DE HARO GONZALEZ Mª LUISA
DE LA CALLE PALACIOS TEODORO
DE LA FUENTE TORRES ANAIS BEATRIZ
DE LA HOZ REGULES FCO. JAVIER
DE LA ORDEN MONTOLIO SANDRA
DE LA SIERRA PEÑA ANDRES
DE LA TORRE DEL CASTILLO CANDELARIA
DE LA TORRE PEREZ NOELIA
DE LAS CASAS PEREZ DE ORUETA JOSE LUIS
DE LAS HERAS CASAS FCO. RAUL
DE MARCOS MARDONES IÑIGO
DE PABLO SAN MIGUEL JAVIER
DE PASCUAL MASPONS AGUSTIN
DE PRADO MANEIRO JOSE IGNACIO
DE QUINTANA PEREZ ANNA
DE SOLA FABREGAS FRANCESC
DEHESA SAINZ DE LOS TERREROS ANGELA
DEL BARCO ASENCIO MANUEL LUIS
DEL POZO SANCHEZ SUSANA
DEL RIO SERRANO JUAN FELIX
DEL RIO USABEL IDOIA
DELGADO GARCIA JOSE LUIS
DELGADO OJEDA Mª ANGELES
DELGADO RUIZ DIEGO
DIAZ RODRIGUEZ PALMERO JAVIER ADOLFO
DIAZ BUSTOS JAIME
DIAZ DE ESPADA LOPEZ DE GAUNA LUIS Mª
DIAZ FLORES JUAN FCO.
DIAZ FRANCO Mª ANTONIA
DIAZ GARCIA MARINA
DIAZ LORENZO LORENZO
DIAZ PEREZ CARLOS
DIAZ RISCO Mª LUISA
DIAZ SANTAMARIA Mª VEGA
DIAZ-ROMERAL MARTIARENA JOSE Mª
DIENTE ALONSO SERGIO
DIEZ MELGOSA EDUARDO JOSE
DIEZ AMORETTI FRANCISCO
DOBLAS GEMAR ANTONIO
DOMINGO BALTA MARIANO
DOMINGUEZ CANELA INES
DOMINGUEZ JARA RAFAEL JESUS
DOMINGUEZ NAVARRO JAVIER
DOMINGUEZ RODES JUAN LUIS
DONAIRE MOLANO LUIS
DONOSO BUENO CARLOS
DORADO MUÑOZ MIRIAM
DORDA VENTURA ANTONI
DRIS MOHAMED SAMIR
ANGEL
ALMANSA
DUQUE MEDRANO JUAN CARLOS
DURAN VIDAL ANNA
ECHANIZ LIZAUR Mª BELEN
EGURROLA IRAOLA JESUS MIGUEL
ELGUEA OMATOS EMILIO
ELIAS ORELLANA JESUS
ENRICH SASTRE ILENIA
ENRIQUE SAAVEDRA CESAR
ESCALONA BELINCHON JOSE ANTONIO
ESCRIBANO BUENO JOSE ALBERTO
ESCRIG CASTAÑO PILAR
ESCUDERO NAHARRO ROQUE JAVIER
ESCUDERO SANCHEZ RAFAEL PEDRO
ESCUTIA DOTTI Mª VICTORIA
ESPALLARGAS MONTSERRAT Mª TERESA
ESPARCIA CUESTA FELISA
ESPINAR MEDINA RICARDO
ESPINILLA ORTIZ ROSARIO
ESPIÑA GALLEGO ANA Mª
ESPUIG IBORRA ELOISA
ESPUNY CURTO Mª NATIVIDAD
ESQUERDO BADALONA VICENTE
ESQUIROZ RODRIGUEZ ISIDRO
ESTEBAN TAVIRA ANTONIO
ESTEFANIA LARRAÑAGA GUILLERMINA
ESTELLE PEREZ VICENTE
ESTEVANEZ MOLINA VICENTE
EUGENIO CUBEROS ANGEL ENRIQUE
EUGERCIO HERRA FCO. JAVIER
FABRA VERGE TERESA ROSARIO
FARIÑAS MARTINEZ JOSE ANTONIO
FARRE BOSCH CRISTINA
FELEZ MARTIN FERMIN
FELPETO PRIETO Mª TERESA
FEO CLEMENTE ALEJANDRO
FERNANDES MONTEIRO RODOLFO
FERNANDEZ
ALEJANDRINO
FERNANDEZ CAMALEÑO Mª JULIA
FERNANDEZ COLIN MIGUEL MARCELO
FERNANDEZ DE TEJADA ALMEIDA CARLOS
ENRIQUE
FERNANDEZ DOMINGUEZ PABLO
FERNANDEZ FERNANDEZ ANTONIO
FERNANDEZ LOPEZ MIGUEL ANGEL
FERNANDEZ MORAY EVA Mª
FERNANDEZ MORO TATIANA
FERNANDEZ ONTAÑON DANIEL
FERNANDEZ PIÑEIRO ALBERTO
FERNANDEZ PLACIN ERIC
FERNANDEZ PUERTAS VICTOR MANUEL
FERNANDEZ QUILEZ BEGOÑA MONICA
FERNANDEZ RIOS Mª GORETTI
FERNANDEZ RIVERO JAVIER
FERNANDEZ RODRIGUEZ ALEJANDRO
FERNANDEZ RODRIGUEZ Mª TERESA
FERNANDEZ SILVA DIEGO Mª
FERNANDEZ SOTO ANA Mª
FERNANDEZ SOUTO Mª TERESA
FERNANDEZ VEIGA MANUEL
FERNANDEZ-LERGA GARRALDA JESUS
FERNANDEZ-MARDOMINGO
MIGUEL JOSE
FERRADAS GONZALEZ JESUS
FERRE REVILLA NATALIA
FERRE SABATE ALBERTO
FERREIRA FRAGA JULIAN
FERREIRO GARCIA Mª CRISTINA
FERRER GELABERT GABRIEL
FILGUEIRAS VERDEAL MARIA TERESA
FIRVIDA PLAZA BELEN
FISHER COLLETTE
FLORES MOLERO GREGORIO
FLORES PUIGVERT MARÇAL
FLUVIA PEIRO MARIOLA
FONTAN ZUBIZARRETA RAFAEL
FONTANIELLA FERNANDEZ JOSE LUIS
FONTECHA ALVAREZ Mª VICENTA
FONTES RODRIGUEZ DOMINGO
FORCADA RIFA DAVID
FORCEN LOPEZ Mª ESTHER
FRANCES MAESTRE FRANCISCA
FRANCES MICO CARMELO
FRANCO ALADRÉN JUAN CARLOS
FRANCO MARTINEZ JUAN JOSE
FUCHS KARL JOHANN MAX
FUENTE RODRIGUEZ Mª PILAR
FUENTES SALORIO Mª BELEN
FUENTESECA FERNANDEZ MIGUEL
FUSTER AMADES MAGDALENA ROSA
GABIÑO DIAZ JUAN ANTONIO
GAGO COMES PABLO
GAITAN PERLES JUAN JOSE
BARRIUSO
GALAN MERCHAN Mª OLALLA
GALEANO BARRADO MARCOS
GALINDO LOPEZ TOMAS
GALINDO SANCHO PALMIRA
GALLARDO AROZENA MARGARITA
GALLARDO GALLARDO BEATRIZ ANA
GALVEZ RUIZ PEDRO FCO.
GAMBOA DONES SUSANA
GAMEZ MARTINEZ ANTONIO MANUEL
GANDARA DUQUE Mª MILAGROS
GARATE MINTEGUI FRANCISCO
GARAY GURBINDO FELICIDAD Mª ANGELES
GARCIA ALVAREZ-REMENTERIA ANTONIO
GARCIA ARRIBAS Mª SAGRARIO
GARCIA BASCUÑANA Mª CRISTINA
GARCIA CACERES JULIO
GARCIA CANAL JAVIER
GARCIA CASO ENCARNACION
GARCIA DAUDER VICENTE
GARCIA DEL HOYO VIRGINIA
GARCIA DIAZ Mª CARMEN
GARCIA DIAZ RAMON JESUS
GARCIA FONDON CONSTANTINO
GARCIA GARCIA JOSE MIGUEL
GARCIA GARCIA REMEDIOS
GARCIA GONZALEZ PILAR
GARCIA HERNANDEZ SIGFREDO
GARCIA HIERRO JIMENEZ FCO. JAVIER
GARCIA LAZARO VANESA
GARCIA LORENZO JAVIER
GARCIA MEJIAS JUAN ANTONIO
GARCIA MUÑOZ MARIA OLGA
GARCIA NAVARRO ROBERTO
GARCIA OVALLE OSCAR
GARCIA PEREZ ALICIA
GARCIA PEREZ DE ARRILUCEA RAMON
GARCIA PEREZ OLGA
GARCIA PERIS SANTIAGO DAVID
GARCIA PUJADAS MONTSERRAT
GARCIA RIAL FELIPE
GARCIA RODRIGUEZ ANA ISABEL
GARCIA RODRIGUEZ JOSE FERNANDO
GARCIA ROSALES JUAN ANTONIO
GARCIA RUBIO ELENA
GARCIA RUIVIEJO SERGIO
GARCIA SAAMEÑO JUAN JOSE
GARCIA SANCHEZ LUIS
GARCIA SENENT VERONICA
GARCIA SIERRA JOSE MANUEL
GARCIA-TRESPALACIOS GOMEZ PABLO
GARCIA-VALENCIANO LOPEZ LUIS
GARRIDO ARAN FRANCISCO
GARRIDO GOMEZ ISABEL
GASCON VAL JESUS
GENE TICO REMEI
GENESTAR BOSCH ANDRES
GENOL ESTEVEZ ANTONIO
GEORKIAN BABAYAN LEILA
GESTEIRO MOREIRA JOSE GERMAN
GIJON EXPOSITO NATALIA
GIL BELMONTE CONRADO
GIL BELMONTE SUSANA
GIL FERNANDEZ JUAN JOSE
GIL RODRIGUEZ RICARDO
GIL TIO JULIA
GIL UREÑA Mª CARMEN
GIL USON MARTA
GILI MARQUEZ JORGE LUIS
GIMENO CACHO Mª CRISTINA
GINE ABAD FCO. JOSE
GINES LAHERA DARIO ALFONSO
GISTAU LATRE LAURA
GODOY GARCIA FCO. JAVIER
GOMEZ ANDRES JUAN JOSE
GOMEZ ASUA ASIER
GOMEZ CAPEANS JUAN JESUS
GOMEZ DE MAINTENANT MARTA Mª
GOMEZ EBRI CARLOS
GOMEZ FERNANDEZ JOSE IGNACIO
GOMEZ GOMEZ DAMIAN
GOMEZ GONZALEZ MIGUEL CLEMENTE
GOMEZ JUEZ ARTURO Mª
GOMEZ LOBO JUAN
GOMEZ MARTINEZ ALBERTO
GOMEZ MARTINEZ LUIS
GOMEZ TORRES Mª CATALINA
GOMEZ VALVERDE ANTONIO
GOMEZ VAZQUEZ Mª JESUS
GOMEZ VELILLA Mª BRIGIDA
GOMEZ-LANDERO GUIJARRO Mª LUISA
GOMIS JIMENEZ CARLOS
GONZALEZ AGUILERA JOSE MIGUEL
GONZALEZ ALONSO LUIS MIGUEL
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 52). 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.
P. 217
GONZALEZ ALONSO REBECA
GONZALEZ ALVAREZ NOELIA
GONZALEZ ANTA RODRIGUEZ ORTA PEDRO
GONZALEZ BENAVIDES Mª LIBERTAD
GONZALEZ BORINAGA IVANA
GONZALEZ CARDOSA INMACULADA
GONZALEZ COCA Mª DE LA ENCINA
GONZALEZ DIAZ VICTORINO
GONZALEZ ESPARZA JUANA Mª
GONZALEZ FEO SERGIO
GONZALEZ FREIJO ROSALIA
GONZALEZ GARCIA ANTONIO
GONZALEZ GARCIA JORGE
GONZALEZ GARCIA JUSTO
GONZALEZ GARCIA SERGIO
GONZALEZ GARRE PATRICIO JULIAN
GONZALEZ GONZALEZ JOSE MANUEL
GONZALEZ GONZALEZ JOSE MANUEL
GONZALEZ GONZALEZ Mª ANGELES
GONZALEZ GONZALEZ VICTOR JAVIER
GONZALEZ HERNANDEZ ALBERTO
GONZALEZ JIMENEZ FRANCISCO
GONZALEZ JIMENEZ NESTOR
GONZALEZ JUSTO CARLA
GONZALEZ LANZA ALEXIA Mª
GONZALEZ LUIS JULIAN
GONZALEZ LUNA ISMAEL
GONZALEZ MARIN MANUEL
GONZALEZ MAYO GONZALO
GONZALEZ MOLANO FCO. JAVIER
GONZALEZ MONTERO CONCEPCION
GONZALEZ MONZON MARIO
GONZALEZ MOSQUERA FERNANDO
GONZALEZ PARRA RICARDO
GONZALEZ PAVON FCO. JOSE
GONZALEZ PEREZ ANA RUTH
GONZALEZ RAMIREZ JOSE
GONZALEZ RODRIGUEZ FRANCISCO
GONZALEZ SOCAS ANTONIA MARINA
GONZALEZ TABOADA JOSE
GONZALO SAINZ FCO. JAVIER
GOÑI IDARRETA ANA Mª
GOPAR MARRERO PABLO
GOROSTARZU DIAZ MIGUEL ANGEL
GRACIA CAMATS ENRIC
GRACIA JACOBO EMILIO
GRANDA RODRIGUEZ DE LA FLOR ARMANDO
GRAÑON LOPEZ LUIS ALBERTO
GRASSA VARGAS FERNANDO
GRELA CASTRO MARCELINO
GROS JAQUES ENRIQUE MANUEL
GUARAS JIMENEZ Mª RESURRECCION
GUELL MERRY DEL VAL IGNACIO
GUERRA CEBALLOS JUAN LUIS
GUERRA GARCIA DE CELIS JOSE JUAN
GUERRA MENGUAL MARCOS
GUIJARRO BACO JUAN JOSE
GUIJARRO CRUZ MARTA
GUILLEN RUIZ EMILIO
GUMBAU RODA JAIME JOSE
GUTIERREZ FERNANDEZ MARIA
GUTIERREZ GALENDE IGNACIO
GUTIERREZ GARCIA AZAHARA
GUTIERREZ LORENZO ANGEL
GUTIERREZ PASTOR JUAN CARLOS
GUZMAN GARCIA Mª JESUS
GUZMAN GONZALEZ EMILIANO
HENCHE MUÑOZ GREGORIA
HERAS HERNANDEZ FERNANDO
HERAS TERREROS ALFREDO
HEREDERO POL OSCAR EDUARDO
HERMO MARTINEZ MARTA
HERMOSO NUÑEZ PEDRO
HERNANDEZ ALEJANDRO JOSE MANUEL
HERNANDEZ ALEJANDRO JUDITH
HERNANDEZ FERRERA JOSE ALBERTO
HERNANDEZ MANRESA JOSEFA
HERNANDEZ MANRIQUE CARLOS MANUEL
HERNANDEZ NUÑEZ ALVARO
HERNANDEZ PELARDA ANGEL FELIPE
HERNANDEZ PRIETO MIGUEL ANGEL
HERNANDEZ SANCHEZ JOSE RAMON
HERNANDEZ SANCHEZ Mª ISABEL
HERNANDEZ VELAZQUEZ JOSE GREGORIO
HERRAIZ ARGUDO CONSUELO
HEVIA PATALLO TERESA
HIDALGO GOMEZ VALENTINA
HIDALGO PEREZ JOSE ANTONIO
HITA JURADO DAVID
HORTELANO GARCIA RICARDA
HUERTAS FERNANDEZ JUAN ANTONIO
HUGUET CABRERA SERGIO
IBAÑEZ IBAÑEZ LUIS
MANUEL
ALCANTARA
IBAÑEZ LERA ALEJANDRO
IBAÑEZ NIETO ADORACION MAR
IBAÑEZ SANCHEZ JAVIER
IBAÑEZ ZORRILLA Mª IZASKUN
IGLESIAS GONZALEZ Mª ARANZAZU
IGLESIAS LORENZO LUCIANO
IGLESIAS MARTIN SANTIAGO
IGLESIAS SEXTO JOSE LUIS
ILIEVA NENKOVA KATIA
INFANTES
ALEJANDRO
IRIGOYEN GARCIA VICTORIA EUGENIA
ISACH GRAU ANA Mª
ISERTE MUÑOZ FCO. JAVIER
IVARS PERIS PABLO JOSE
IZQUIERDO DOLS MIGUEL
JAEN CLAVEL LEONARDO
JANER VALENTI IGNACIO
JARA GUERRERO FRANCISCO
JIMENEZ ARROYO BLAS
JIMENEZ BETANZOS DAVID
JIMENEZ CALERO CONSUELO
JIMENEZ LORENTE MANUEL
JIMENEZ MARQUEZ Mª DOLORES
JIMENEZ PINEDA MERCEDES
JIMENEZ RAMOS IGNACIO
JIMENEZ THOMAS EMILIO
JORDAN CHIVELI IGNACIO
JOVER BENAVENT ENRIQUE
JUAN TORTOSA FEDERICO
JUANOLA COCH MARTI
JUESAS FERNANDEZ ENRIQUE
JULIAN SANZ MARIA
JUNQUERA FRESCO BEATRIZ INMACULADA
JURADO CORDOBES RICARDO JESUS
KNUCHEL FRITZ
LABORDA CARNICER FELIPE
LADRON GALAN FRANCISCO
LAGUNA SEBASTIANES FCO. MANUEL
LALANZA PINA VALERO BLAS
LALMOLDA SANZ PABLO
LAMBERT JONATHAN RAYMOND
LAMONEDA PRIETO DIEGO
LAMY GARCIA ANTONIO
LANAU ALTEMIR RAMON ANGEL
LANAU SERRA Mª FRANCISCA
LANERO PEREZ MIGUEL ANGEL
LARA MARTINEZ CARLOS
LARA VIDAL FCO. JOSE
LARREA ORCOYEN ASIER
LARROSA ESCARTIN ANA BELEN
LASO CASTAÑERA JOSE FCO.
LEAL ARIAS GUILLERMO
LEÑA CAMACHO ROSA Mª
LEON ACOSTA MANUEL TOMAS
LEON ANTOÑANZAS MARIO
LEON CRISTOBAL JOSE LUIS
LEON MARTINEZ JUAN
LIARTE BENEDI Mª INMACULADA
LIMIÑANA MARTINEZ LORENZO
LIMONCHI LOPEZ HERIBERTO
LINARES LOPEZ RAMÓN
LINO MAÑERU Mª ANGELES
LIÑANA VICO VICENTE
LLAMAS ABADIÑO EDUARDO
LLAMAZARES GALVAN ALBERTO
LLANDRICH LLANDRICH Mª CARMEN
LLEONART CATEURA PERE
LLOBET VILA AUGUSTO
LLORENS ARMENGOL ALEJANDRO
LLUCH RODRIGUEZ CRISTINA
LOMAS PEREZ JESUS Mª
LOPE CARVAJAL JUAN JESUS
LOPEZ ARIAS Mª EUGENIA
LOPEZ BERGUA MARTI
LOPEZ CARCAS EDUARDO
LOPEZ DELGADO Mª PILAR
LOPEZ FERNANDEZ FERNANDO
LOPEZ FERNANDEZ RAQUEL
LOPEZ FIDALGO Mª MONICA
LOPEZ FRAILE LUIS ANTONIO
LOPEZ GARCIA ANTONIO
LOPEZ GARCIA ANTONIO PEDRO
LOPEZ GRANADOS JOSE Mª
LOPEZ HERNANDEZ ALVARO
LOPEZ LOMA ALFONSO FCO.
LOPEZ LOPEZ DORLETA
LOPEZ LOPEZ IGNACIO
LOPEZ LOPEZ Mª MAR
LOPEZ LOZANO ROSA Mª
LOPEZ LUQUE IGNACIO
LOPEZ MANCIÑEIRAS Mª CARMEN
LOPEZ MARTINEZ MANUELA
LOPEZ MERINO ANTONIO
LOPEZ PRO DIEGO
LOPEZ RASCON Mª JESUS
LOPEZ RUBAL ANTONIO
LOPEZ SARALEGUI ELENA Mª TRINIDAD
LOPEZ SEGURA JUAN FCO.
LOPEZ SEQUERA PEDRO
LOPEZ TORRES PATRICIA
LORENZO VILLAMISAR JESUS MANUEL
LORENZO SEGOVIA SUSANA
LORENZO VELEZ JUAN
LORES FANDIÑO JUAN JOSE
LOSADA LOPEZ ANTONIO
LOUBET MENDIOLA JAVIER
LOZANO ROSA FAUSTINO
LUGILDE VELEZ JOSE LUIS
LUJAN FALCON JUAN CARLOS
LUNA ARIZA RAFAEL IGNACIO
LUNA GARCIA MINA ANTONIO FERMIN
LUQUE FERNANDEZ JULIA
MACHIN CARREÑO FELIX ALBERTO
MACIAS FONTANILLO ISAAC SANTIAGO
MACIAS GUERRERO MANUEL
MADRONA MARTINEZ MIRIAM
MAESTRE RODRIGUEZ JUAN JESUS
MAGAÑA PLAZA PEDRO ANTONIO
MALMAGRO BLANCO ANTONIO
MALUENDA URGEL NURIA
MANTEIGA ROSENDE JOSE MANUEL
MARANDI ASSL MOHAMMAD
MARAÑON OTEIZA Mª CRISTINA
MARCHANTE GARCIA MARTA Mª
MARCOS BERNARDO Mª TERESA
MARGALIDA GATNAU JOSE Mª
MARIAKA AMERIGO GUSTAVO
MARIN LLORIS ANTONIO ANGEL
MARIN PEREZ ANA MERCEDES
MARQUES GONZALEZ Mª FRANCISCA
MARQUES MENENDEZ JOSE LUIS
MARQUEZ PEREZ LAURA
MARRERO GONZALEZ PLACIDO VICTOR
MARRERO MAYORGA Mª ROSA
MARROYO MONGE MANUEL
MARTI AVILES Mª JOSE
MARTI SALA ESTHER
MARTI TORRENTS MIQUEL
MARTIN CARLOSENA RAFAEL
MARTIN GARCIA ELIAS
MARTIN GRANADOS JUAN
MARTIN HERNANDEZ PEDRO Mª
MARTIN JIMENEZ ANSELMO
MARTIN LOPEZ CARLOS FCO.
MARTIN MAYOR ANTONIO
MARTIN MURILLO IGNACIO JOSE
MARTIN NADAL ALBERTO
MARTIN RAMIREZ FRANCISCO
MARTIN VIZAN MILAGROS
MARTINEZ ANDRES Mª ANGELES
MARTINEZ BERMUDEZ JOSE FCO.
MARTINEZ BERMUDEZ LEOPOLDO
MARTINEZ CASTRO MANUEL FCO.
MARTINEZ GAMEZ CARMEN Mª
MARTINEZ GARCIA CARLOS
MARTINEZ GARCIA PEDRO RAFAEL
MARTINEZ GOMEZ MIGUEL AMARO
MARTINEZ GONZALEZ VANESA
MARTINEZ HERNAEZ Mª DOLORES
MARTINEZ MARTOS LUIS CARLOS
MARTINEZ MENDOZA DIEGO
MARTINEZ MOYA DIEGO
MARTINEZ PARRA ENRIQUE
MARTINEZ PEREZ JOSE FCO.
MARTINEZ PEREZ JOSE Mª
MARTINEZ PUJANTE ALFONSO
MARTINEZ RIVADAS FRANCISCO
MARTINEZ VECINO Mª CONCEPCION
MARTINEZ VERA Mª ESTRELLA
MARTINEZ VILLAR FRANCISCO
MAS NEBOT JOSE Mª
MASDEU BALLART MONTSERRAT
MASIP ESCALONA DAVID
MASSOT PUNYED MONTSERRAT
MATA MARCO CARMEN
MATA SANTIN ENRIQUE
MATEO SANTIAGO IGNACIO MANUEL
MAYA MONTERO ANGEL
MAYORAL MURILLO FCO. JAVIER EUSEBIO
MAYORDOMO PULPON ALBERTO
MAZO ORTEGA Mª NURIA
MAZON GINER JOSE FERNANDO
MECHO PAUNER NOELIA
MECIA FERNANDEZ RAMON
MEDINA GONZALEZ JON ANDER
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 52). 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.
P. 218
MEDINA VALLES JUAN CARLOS
MELCHOR GOMEZ CANDIDO DANIEL
MENDEZ BANDERAS LUIS FELIPE
MENDEZ HERNANDEZ CAYETANO
MENDEZ HERNANDEZ Mª CRUZ
MENDEZ ZAPATA Mª PILAR
MENDIZABAL GOIBURU AGUSTIN
MERA RANCAÑO MANUEL
MERELAS CASTRO SONIA
MERINO MARTINEZ CESAR JOAQUIN
MESA VIÑAS ARGEO
MESANZA QUERAL ALBERTO GUILLERMO
MIALDEA CARRASCO JULIA
MIER ROMAN SILVIA
MIGUEL BENITO JOSE ANDRES
MIGUEL HERNANDEZ JAVIER
MINER GUERRERO JAVIER
MIÑO PEREZ JOSE IGNACIO
MODINO MARTINEZ MANUEL ANGEL
MODOL RUIZ CRISTINA
MOLINA HERRIEGA MIGUEL
MOLINA LOPEZ RAFAEL
MOLINA LUCAS Mª ALMUDENA
MOLL BRAGAGIA ANALINA
MOLLEJA BELLO Mª CARMEN
MONCHONIS TRASCASAS PEDRO
MONREAL RUBIO PATRICIO
MONROY CABAÑAS JULIAN
MONROY REY PATRICIA
MONSERRAT OBRADOR RAFAEL
MONTANER ARBONA FRANCISCO
MONTEAGUDO NAVARRO MARIA
MONTERO BEJARANO FCO. JAVIER
MONTES SADABA FCO. JAVIER
MONTESINOS CONTRERAS VICENTE
MONTIEL GUARDIOLA Mª JOSEFA
MOR FIGUERAS JOSE ANTONIO
MORA GIRONA JOSE MANUEL
MORACHO MUÑOZ JOSE ANGEL
MORALEDA GALAN RAFAEL
MORANTE REDONDO MANUEL ANGEL
MORCILLO GARCIA JOSE LUIS
MORCILLO GRANADO FRANCISCO
MOREIRA GARCIA JULIO CESAR
MORENES SOLIS Mª ROCIO
MORENO BLESA JUAN IGNACIO
MORENO CAMPOS JOAQUIN
MORENO DE MIGUEL VICENTE
MORENO DEL PINO NICOLAS
MORENO LATORRE DANIEL
MORENO MAROTO LUIS MIGUEL
MORENO SILVERIA Mª ISABEL
MORGA GUIRAO Mª PILAR
MORODO PASARIN PURA
MOROTE ESPADERO RAFAEL MANUEL
MORSO PELAEZ JOSE RAMON
MORUNO GONZALEZ MIGUEL ANGEL
MOSQUERA ARJONA JESUS
MOUZO CASTIÑEIRA JESUS ANTONIO
MUIÑO DIAZ Mª MAR
MULET MULET VICENT JOSEP
MUNGUIA TORRES JUAN MIGUEL
MUNIN MOSQUERA SANDRA
MUÑOZ BERZOSA JOSE RAMON
MUÑOZ BONET JOAQUIN BERNARDO
MUÑOZ CALVO FERNANDO JOAQUIN
MUÑOZ PINEDA FCO. ANTONIO
MUÑOZ RAMOS PEDRO
MUR CEREZA ALVARO JESUS
MURGA PEINADO JOSE ALBERTO
MURO ALCORTA Mª ANTONIA
MUSA MOHAMED ABDELAZIZ
MUZAS BALCAZAR JESUS ANGEL
MYLNIKAVA LIUDMILA
NACHER NAVARRO Mª VANESSA
NAHARRO GATA MANUEL
NARANJO PEREZ JUAN CARLOS
NAVARRO CUESTA ESTER
NAVARRO MARQUEZ JOSE MANUEL
NAVARRO MORALES JOAQUIN
NAVARRO SAENZ Mª MAR
NAVARRO UNAMUNZAGA FCO. JAVIER
NAZABAL ORTUETA PABLO
NEGRETE LEAL LUIS MANUEL
NEIRA ALIAGA FERNANDO
NIETO GONZALEZ RUFINO
NODA MORALES HECTOR JOSE
NOVELLA MORALES MANUEL
NOVO MARTINEZ ALBA
NOVOSELOVA ELENA
NUÑEZ MAILLO VICENTE JESUS
NUÑEZ VIÑAS SANDRA Mª
NUÑO NUÑO AZUCENA
OBELLEIRO RODRIGUEZ JOSE MANUEL
OGAZON GOMEZ YON ANDONI
OJEDA PEREZ FCO. JOSE
OLIVA PAPIOL ENRIQUE
OLIVER GUASP BARTOLOME
OLIVER MOMPO JOSE
OLMEDO APARICIO CARLOS
OLMO BARONA ANDRES
OLMOS LOPEZ MARCOS
ORDOYO CASAS ANA Mª
ORRIOLS GESE JORDI
ORTEGA AGULLO JOSE
ORTEGA ALTUNA FERNANDO Mª
ORTEGA JIMENEZ FRANCISCO
ORTIZ ACUÑA FRANCISCO
ORTIZ ALVAREZ BENITO
ORTIZ GARCIA JUAN ANTONIO
ORTIZ GARCIA RAFAEL
ORTIZ MARTIN FCO. EULOGIO
ORTS BERENGUER JUAN JOSE Mª
ORTUÑO CAMARA JOSE LUIS
ORTUÑO FERNANDEZ JOSE LUIS
ORUS RODES RICARDO
OSTROWSKA JOANNA
OTERO ALVAREZ JULIA
OUTEIRIÑO VAZQUEZ JOSE Mª
OVIEDO PEREZ ZULEMA
PABLOS MUÑOZ Mª JESUS
PACHA PRIOR BEATRIZ
PADILLA CABRERA ROMINA DEL CARMEN
PADILLA MOLINA MARIA
PADILLA ORTEGA GENOVEVA
PADRON GARCIA HERCILIO JOSE
PAEZ ORDOÑEZ SERGIO
PALACIOS NAVAL IGNACIO
PALAU DE LA NOGAL JORGE IVAN
PALAZON GARCIA JOSE MIGUEL
PANDAVENES CANAL AZUCENA Mª
PANIAGUA VALDES MILAGROS
PARDINES GARCIA ANTONIO
PARDO CANO FCO. JAVIER
PAREDES VERA GRACIA
PARENT FITE JAUME
PARNAU BOSCH JOAN
PARRA ASENSIO Mª TERESA
PARRA MAIQUEZ JOAQUINA
PARREÑO MENDEZ Mª JOSE
PASTOR GOMEZ PASCUAL
PASTOR MARCO JOSE LUIS
PATIÑO ROBLES Mª CONCEPCION
PAULINO CARCELLES LUIS MIGUEL
PAZ BARKBY ALISON SUSAN
PAZ GRANDIO FCO. JOSE
PAZOS SANCHEZ JAVIER
PEDEVILLA BURKIA ADOLFO
PEINADO MARTINEZ JOSE ANGEL
PELLICER BARBERA MARIANO
PENA DIAZ JOSE MANUEL
PEÑA LOPEZ MILAGROS
PEÑA NAVAL JESUS
PEÑA PEÑA MANUEL
PEÑAS BRONCHALO JOSE MIGUEL
PEÑATE SANTANA DUNIA
PERDOMO PEÑA PATRICIA
PEREA PRIETO JOSE LUIS
PEREZ ABAD JAUME
PEREZ ALVAREZ LAURA
PEREZ ANDREU ALEJANDRO
PEREZ CAMACHO MIGUEL ANGEL
PEREZ CHAVARRIA JOAQUIN MIGUEL
PEREZ CORDOBA VICTOR MIGUEL
PEREZ DE LIS FERNANDEZ JOSE DANIEL
PEREZ DOMENECH JOSE MANUEL
PEREZ FERNANDEZ Mª DOLORES
PEREZ GOMEZ CARMEN BEGOÑA
PEREZ GUTIERREZ SANTIAGO
PEREZ IGLESIAS SUSANA
PEREZ MAGALLARES EMILIO
PEREZ MALON Mª BELEN
PEREZ MASCUÑAN JORGE
PEREZ MORENO YOLANDA
PEREZ ORTEGA ANA ISABEL
PEREZ PEREZ JOSE MANUEL
PEREZ POYATOS EMILIO JOSE
PEREZ SANTOS ALFONSO
PEREZ SOTO PABLO MANUEL
PEREZ-ARCOS ALONSO JUANA Mª
PEROLADA VALLDEPEREZ ANDRES
PERTUSA MONERA ENCARNACIÓN
PINILLA VELA FCO. JAVIER
PINTOR ZAMORA GUADALUPE
PISONERO PEREZ JAVIER
PIZA PROHENS BARTOMEU ANTONI
PLA NAVARRO EMILIA
PLANAS VIDAL PERE DOMINGO
PLANELLA SARGATAL ORIOL
PLANELLS ROIG JOSE VICENTE
PLANO IZAGUIRRE JOSE DANIEL
PLASENCIA TORRES GERARDO
POLO PRIETO BORJA
PONCE VELAZQUEZ JOSEFA
PORRAS JURADO JUAN
PORTA MENGOT JOSE VICENTE
PORTILLA ARROYO ALICIA
POTAPOVICH IGOR
POUS ANDRES JUAN
POZO RIVAS CARMEN Mª
PRADA PRADA Mª CARMEN
PRADO PAREDES ALEJANDRO
PRESA GARCIA ALFONSO ABILIO
PRIETO BENEITEZ VICTOR JESUS
PRIETO RICO MAURO
PUERTA BROTO SILVIA
PUERTAS VALLES Mª LUISA
PUGA LOPEZ Mª DOLORES
PUIG SEMPERE FILOMENA
PUJOL HUGUET AMADEU
PUJOLS SERRA RAMON
PUP ANCA
QUERO GUTIERREZ CARIDAD
QUILEZ SANCHEZ ANDRES
QUIRALTE FUENTES RUBEN
RAGA PENELLA JUAN
RAMIREZ JORQUERA MIGUEL ANGEL
RAMIREZ LOPEZ AGUSTIN
RAMIREZ RUBIO JOSE RAMON
RAMIREZ TORNES ALAIN LAZARO
RAMIS FERRER FRANCISCO
RAMOS CAGIAO AMPARO
RAMOS CALDERON RAUL
RAMOS ROMERO JUAN JESUS
RAMOS SOBRIDO JOSE ANDRES
RANEDO VITORES Mª MILAGROS
RANZ YARRITU JAVIER
RATON BELLO MIGUEL ANGEL
RAVELO RAMIREZ JUAN ALFONSO
REBOLLO CAMBRILES JUAN ROMAN
RECAJ ERRUZ ENRIQUE CLEMENTE
RECIO CEÑA TOMAS
RECUENCO BENEDICTO JOSEFINA MATILDE
REGA RODRIGUEZ Mª LUISA
REGLERO BLANCO Mª ISABEL
REICHARDT OLIVER MARK
REIFS PEREZ MANUEL
REINA GARCIA ANA ESTHER
REINA PUEYO MANUEL
RELAÑO CAÑAVERAS CRISTOBAL
REMENTERIA LECUE AITOR
REMON ROCA RAMON TOMAS
REMON SAENZ CESAR
RETAMERO VEGA MANUEL
REVUELTA GUTIERREZ LAURA
REY FERRIN PAULA
REY GONZALEZ NICOLAS
REY PAZ ROCIO
REYES BLANCO FCO. JAVIER
REYES BLANCO RAFAEL
REYES LANZAROTE FRANCISCA
REYES QUINTANA VICTORIO JESUS
REZA MONTES FCO. JAVIER
RIBAS RUBIO PEDRO
RIBERA AIGE JOSEFA
RIERA PALOP JOSE CARLOS
RINCON GUTIERREZ Mª PILAR
RIOJA ROMAN RAQUEL
RIOLOBOS GALLEGO MERCEDES
RIOS GARCIA PAULA
RIPOLL BARRACHINA ENRIQUE
RIVAS ANORO FERNANDO
RIVAS CASTRO JOSE CARLOS
RIVAS URBANO JOSE
RIVERA FERNANDEZ Mª CAMINO
RIVERO RIVERO SAMUEL
ROBLES ALONSO SARA
ROBLES SANCHEZ ROSA Mª
RODES BIOSCA CARLOS RAFAEL
RODRIGUEZ ALVAREZ Mª ISABEL
RODRIGUEZ CAÑIZARES ANTONIO JAVIER
RODRIGUEZ CARBALLO JOSE LUIS
RODRIGUEZ CEDILLO LORENA
RODRIGUEZ CIFUENTES IVAN
RODRIGUEZ DELGADO RENE
RODRIGUEZ DONOSO JOSE MARIO
RODRIGUEZ FERNANDEZ ESPERANZA
RODRIGUEZ GALVAN SARA ISABEL
RODRIGUEZ GROVA AMELIA
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 52). 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.
P. 219
RODRIGUEZ LLOPIS MIGUEL ANGEL
RODRIGUEZ LOPEZ OLGA
RODRIGUEZ MARTI NEUS
RODRIGUEZ MARTINEZ RAFAEL
RODRIGUEZ MUÑOZ JOAQUIN JOSE
RODRIGUEZ OTERO MIRIAN
RODRIGUEZ PEREZ Mª JOSE
RODRIGUEZ RODRIGUEZ JUAN CARLOS
RODRIGUEZ RODRIGUEZ MARIA
RODRIGUEZ RODRIGUEZ Mª CARMEN
RODRIGUEZ ROGEL MANUEL ALEJANDRO
RODRIGUEZ RUIZ JUAN ANTONIO
ROGADO ROLDAN ROSA
ROGET LEMUS JOSE MANUEL
ROIG FENOLLOSA JUAN BAUTISTA
ROIG MARTORELL NURIA
ROJAS SOLER FRANCISCO
ROJAS TRONCOSO PEDRO
ROLDAN SACRISTAN JESUS HILARIO
ROMAN BERMEJO Mª ISABEL
ROMAN CAMPOS Mª ETELVINA
ROMAN CIVIDANES CONSTANTINO
ROMERO ARIAS TATIANA
ROMERO AZNAR JOSE MANUEL
ROMERO EXPOSITO VANESA
ROMERO MENDEZ JUAN ANTONIO
ROMERO MORENO MANUEL RAMON
ROMERO RODRIGUEZ JOSE GIL
ROMERO SIERRA BENJAMIN
ROPERO MONTERO MIGUEL ANGEL
ROS PEREZ XAVIER
ROSALES ROMERO ANA CARMEN
ROSILLO PAREDES Mª MERCEDES
ROTGER LLINAS DANIEL
ROYO RUIZ JOSE LUIS
ROYO ESCARTIN RAQUEL
ROYO GARCIA FCO. JAVIER
ROZAS NEIRA ADRIAN
RUA PIRAME ENRIQUE
RUANO CAMPS ANTONI
RUBIALES REGORDAN RAFAEL
RUBIO BERNARDEAU ANTONIA MILAGROSA
RUBIO COBO ALBERTO
RUBIO GARCIA EMILIA
RUBIO RODENAS Mª LOURDES
RUBIO SIERRA FCO. JOSE
RUIPEREZ MATOQUE PIERRE
RUIZ ALVARO ALFONSO MANUEL
RUIZ CASAS JUAN BAUTISTA
RUIZ DEL RIO ROSA Mª
RUIZ ESCALONA ANTONIO
RUIZ JARILLO Mª JOSE
RUIZ LUQUE HERNAN
RUIZ MORENO EVA
RUIZ NOGALES LIDIA
RUIZ PEREZ Mª VICTORIA
RUIZ TARI ROGELIO
RUIZ-ESTELLER HERNANDEZ GUSTAVO
SAAVEDRA MARTINEZ ENRIQUE
SABATE NOLLA TERESA
SABES TORQUET JUAN CARLOS
SAENZ GIL DE GOMEZ DAVID
SAEZ NICOLAS JOSE RAMON
SAINZ TAJADURA Mª VICTORIA
SAINZ-EZQUERRA LANAS SANTIAGO
SAIZ SEPULVEDA FCO. JAVIER
SALA AZORIN AURORA
SALADICH OLIVE LUIS
SALAET FERRES MARISA
SALAMERO MORENO JOAQUIN
SALAS SEGUI BARTOLOME
SALMERON TOLOSA MONICA
SALMON ALONSO JOSE LUIS
SALVIA FABREGAT Mª PILAR
SAMPER CAMPANALS PILAR
SAMPER JIMENEZ JUAN ANGEL
SAN EMETERIO GAYO JAVIER
SANCHEZ BURUAGA MARTA
SANCHEZ ELIZALDE JUAN FCO.
SANCHEZ FERNANDEZ ELENA Mª
SANCHEZ GARCIA YOLANDA
SANCHEZ GONZALEZ HELENA
SANCHEZ HERNANDEZ IVAN
SANCHEZ HERRERA PATRICIA
SANCHEZ HERRERO MIGUEL
SANCHEZ IGLESIAS JOSE FCO.
SANCHEZ LOPEZ MIGUEL
SANCHEZ MESA FRANCISCO
SANCHEZ MUÑOZ RAQUEL
SANCHEZ NAVARRO JOSE ANTONIO
SANCHEZ PEÑA MIGUEL ANGEL
SANCHEZ POUSADA JULIA
SANCHEZ PULIDO AGUSTIN JAVIER
SANCHEZ RODRIGUEZ Mª TERESA CARMEN
SANCHEZ ROMERO BENITO
SANCHEZ SAN VICENTE GUILLERMO JESUS
SANCHEZ SANCHEZ JOSE ANTONIO
SANCHEZ SECO VIVAR CARLOS JAVIER
SANCHIS MARTIN LAURA
SANTANA GONZALEZ TEODOMIRO
SANTANDREU ROSSELLO PERE
SANTOS GARCIA MANUEL
SANTOS HERRERA MERCEDES
SANTOS MAYORDOMO RUBEN
SANTOS PAEZ SILVIA
SANTOS ROMAN Mª NURIA
SANZ CALDERON FCO. JAVIER
SANZ CALVO SARA
SANZ FUENTES LUIS ALBERTO
SANZ VIVANCO DIEGO
SARDA ANTON JUAN IGNACIO
SARRI SOLE FRANCESC XAVIER
SARRIO TIERRASECA LEON
SARROCA GIL MOISES
SASTRE SOLER ANA
SAUN FUERTES Mª JOSE
SAURA MARTINEZ PEDRO
SECO FERNANDEZ LUIS ALBERTO
SEGOVIA GOMEZ JUAN ANTONIO
SEGURA MASSOT Mª TERESA
SEGURA SANTONJA EVA PATRICIA
SEOANE MENDEZ ROBERTO
SERNA CABRERO PEDRO ANTONIO
SERNA MINONDO Mª ANTONIA
SERRANO DOMINGUEZ FCO. JAVIER
SERRANO ROJAS JOSE MANUEL
SERRANO GRAN LUIS
SERRANO QUEVEDO RAMON
SERRANO RODRIGUEZ RAFAEL
SERRANO VACAS JUAN CARLOS
SETAYESH SHAHNAZ
SEVA VERA JAVIER
SEVILLA CAÑON ROBERTO
SHEVCHENKO YANA
SIERRA TORRE MIGUEL
SILVERA BARRIOS Mª ISABEL
SIMON BENITO JOSE JUAN
SIMON MARTIN ANTONIO MIGUEL
SINDIN RODRIGUEZ NOELIA
SINTAS NOGALES FRANCISCO
SISNIEGA REVUELTA Mª JESUS
SMITH BASTERRA FCO. JAVIER
SOLER ASCASO Mª LOURDES
SOLER FERNANDEZ ROBERTO
SOMOZA RODRIGUEZ ESCUDERO OSCAR
JOSE FELIX
SOSA BLANCO SERVANDO
SOTO DE PRADO ISABEL
SOTO PASTOR RAFAEL
SOUSA LAMAS ANGELES
SOUSA TEJEDA ALEJANDRA
SUAREZ CUETOS MANUEL
SUAREZ DEL POZO JUAN ANTONIO
SUAREZ NAVAS ANDREA
SUAREZ RODRIGUEZ ASCENSION
SUAREZ RODRIGUEZ Mª CARMEN
SUBIRATS ESPUNY Mª DOLORES
SUBIRON GARAY RAFAEL
TABACO MARTIN JUAN ANTONIO
TABORGA ONTAÑON ANTONIO JOAQUIN
TARIN BOSCH JUAN JESUS
TELLECHEA ABASCAL PEDRO MANUEL
TENA LAGUNA LORENZO
TOIMIL SOMESO Mª DOLORES
TOLEDO VALIENTE Mª GLORIA
TORIBIO MALDONADO Mª ESTRELLA
TORMOS MARTINEZ ISIDRO
TORRECILLAS BELMONTE JOSE Mª
TORRENS SERRA JOAN ANTONI
TORRES CLEMENTE Mª MAR
TORRES DIAZ ANTONIO
TORRES MONTEJANO FELIX
TORRES PEREZ JOSE ARISTIDES
TRABA PUENTE SANDRA
TRILLO PEREZ PATRICIA
TRUJILLO AYMES PHILIPPE
TUÑON GARCIA JOSE GIL
TUTUSAUS LASHERAS MONTSERRAT
UCAR ESTEBAN ROSARIO
UREÑA FERNANDEZ FEDERICO
URIAGUERECA CARRILERO FCO. JAVIER
URRERO SANTIAGO LUIS
VACA DELGADO ANDRES JESUS
VADILLO ALMAGRO Mª VICTORIA
VALCARCEL LOPEZ ALFONSO
VALCARCEL GRANDE FCO. JAVIER
VALENCIA MUÑOZ JOSE JAVIER
VALENCIA TRENADO MANUEL RODRIGO
VALIENTE GARCIA DEL CASTILLO ANTONIO
VALLS BENAVIDES IGNACIO
VALLS FLORES JESUS RAFAEL
VALLS GAVALDA JOSEP VICTOR
VAN CAMP VANESSA IRMA
VAQUERO GOMEZ JOSE MANUEL
VAZQUEZ DIEGUEZ JOSE ANDRES
VAZQUEZ FERREIRO ALFONSO
VAZQUEZ FIGUEIRAS JULIA
VAZQUEZ SANTOS CRISTINA
VEGA ALVAREZ FRANCISCO
VEGA GARCIA CRISTIAN
VEGA RODRIGUEZ REGINA DOMINICA
VEIGUELA LASTRA CARLOS Mª
VELASCO FERNANDEZ ALFONSO
VELASCO LOZANO FRANCISCO
VELASCO ROCA IGNACIO
VENZAL CONTRERAS FCO. JAVIER
VERDU CASTELL JOSEP MANEL
VERGEL CRESPO Mª ISABEL
VICENTE GONZALEZ ANGEL
VICENTE SOLDEVILA JOSE MIGUEL
VIDAL ARAGON DE OLIVES GERARDO
IGNACIO
VIDAL JAMARDO LUIS RAMON
VILAS LOSADA RAMONA
VILLACE MEDINA JUAN CARLOS
VILLEGAS SABIO RAMON
VILLORO OLLE ROGER
VINYES SABATA MERCÉ
VIÑA ARASA RICARDO
VIÑAO BALLARIN Mª ANGELES
VIVER MIR JAIME JAVIER
WALS FERNANDEZ PETRA
WHITE ORR ROBERT HENRY
WU ZOU REBECA
YAGO BASTIDAS ENRIQUE
YANES CARRILLO Mª JESUS
YANG CHEN BEILEI
YUSTE SORIANO Mª BELEN
ZARATE IBARRA TEODULO LORENZO
ZUBIZARRETA UNCETA AITOR
ZUECO GIL JESUS ANGEL
ZURAWKA ERHARD RUDOLF
ZURDO RUBIO Mª CRISTINA
3IMPULSA, S.C.P.
A 5 ASESORES CONSULTORES, S.L.
A J M ASESORES DE CORDOBA, S.L.
A PLUS ABOGADOS Y ECONOMISTAS, S.L.P.
A&J
PRADAS
SANMARTIN
CONSULTORES, S.L.
A7 MARTINEZ LLANOS, S.L.
ABADIA EXPLOTACIONES HOTELERAS, S.L.
ABBANTIA ABOGADOS BILBAO, S.L.
ABEMPATRI, S.L.
ABIACO, S.L.
ABOGADOS & ASESORES EUROPEOS, S.L.
ABOGAP SERVICIOS INTEGRALES, S.L.U.
ABONA GESTION SERVICIOS INTEGRADOS,
S.L.
ACEGA ASESORES, S.L.
ACENTEJO CONSULTORES, S.A.L.
ACERTIUS SUMA CAPITAL, S.L.
ACEVES Y VILLANUEVA, S.L.
ACOFI ASESORES Y CONSULTORES, S.L.
ACOFIRMA, S.L.
ACOSTA
ASEGURADOR, S.L.
ACREMUN, S.L.
ACTIVIDADES
EMPRESARIALES, S.L.
ACTUARIOS Y SERVICIOS FINANCIEROS, S.L.
ADA PROMOCIONES Y NEGOCIOS, S.A.
ADA SEQUOR, S.L.
ADIRCA CONSULTING, S.L.U.
ADLANTA SERVICIOS PROFESIONALES, S.L.
ADMON.
TECNOLOGIA
CONSULTING, S.L.
ADMON. LEGAL DE COMUNIDADES, S.L.
ADMINISTRACIONES
CELDRAN, S.L.
ADMON PATRIMONIOS Y PERSONALIZACION
DE PATRIMONIOS, S.L.
ADOE ASESORES, S.L.
ADOLFO
TRIBUTARIOS, S.L.
ADVICE LABOUR FINANCE SOCIETY, S.L.
AEMTIA ASSESSORS, S.L.U.
AEQUUS ABOGADOS, S.L.
AESTE, S.L.
FINANCIERAS
CONSULTING
DIRECCION
ASESORES
SANCHEZ
PATRICIA
TERESA
RUIZ
DE
Y
Y
Y
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 52). 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.
P. 220
AFER ASSESSORIA FISCAL I COMPTABLE,
S.L.
AFIANZA FINANCIERA, S.L.
AFIANZA GESTION EMPRESARIAL, S.L.
AFICOEX ASESORIA, S.L.
AFISEG II, S.L.
AFYSE INIESTA ASESORES, S.L.
AGENCIA FERRERO Y LAGARES, S.L.
AGENCIA JOSE OLIVA-JOV, S.L.
AGENCIA ROMERO OGANDO, S.L.
AGORA PROFESS, S.L.
AGRAMUNT BUILDING, S.L.
AGRICOLA DE ALBATARREC, S. COOP. CAT.
LTDA.
AGUSTIN FERNANDEZ CRUZ AFC, S.L.
AIMER AGRONOMIA, S.L.U.
AISM, S.L.
ALARCON BUENO, S.L.
ALBA & ARCOS ASOCIADOS, S.L.
ALBA ASESORIA INTEGRAL, S.L.
ALBOA 17.8, S.L.
ALC ASESORES, S.C.
ALCES GRUPO ASEGURADOR, S.L.
ALDAIA 94, S.L.
ALDGIS, S.L.
ALEXA ESTRATEGIA EMPRESARIAL, S.L.
ALF CONSULTORES Y SERV. FINANCIEROS Y
SEGUROS, S.L.
ALGESORES NAVARRO Y ASOCIADOS, S.L.
ALKAIMENA, S.L.
ALKARLAN GESTION, S.L.
ALL ABOUT FUNDS, S.L.
ALLES IST MOGLICH, S.L.
ALONSO Y SERODIO ASESORES, S.L.
ALPEREZG SERVICIOS PARA EMPRESAS, S.L.
ALPHALYNX CAPITAL, S.L.
ALQABALA GRUPO GESTOR, S.L.
ALTER FORMA ABOGADOS, S.L.
ALVAMAR GESTIONES Y CONTRATACIONES,
S.L.
ALZAGA ASESORES, S.L.
ALZO CAPITAL, S.L.
ALZO SOLAR, S.L.
AMAM SANXENXO, S.C.
AMTEMIS ASSESSORS, S.L.
AN ASESORES DEZA, S.L.
ANAI INTEGRA, S.L.
ANALIZO CONSULTING, S.L.
ANDAL DE ASESORAMIENTO Y GESTION, S.L.
ANDEX CONSULTORES, S.L.
ANDIPLAN, S.L.
ANDISARU, S.L.
ANDRES ASESORES, S.L.P.
ANDUGAR-CARBONELL ABOGADOS, S.L.
ANGERIZ LOUREIRO E ASOCIADOS, S.L.
ANGLIRU INVERSIONES, S.L.
ANGMAR 2015, S.L.U.
ANTEQUERA ASESORES, S.L.
ANTONIO ALEGRET GALLART, S.L.
APEKONO 1964, S.L.
APF3 SERVICIOS DE ASESORIA, S.L.
APISA ADMINISTRACION DE
S.L.
APPROACH TO FINANCIAL SERVICES, S.L.
APUNTES CONTABLES, S.L.
ARAGESTIN, S.L.
ARANE PROMOCION Y GESTION, S.L.
ARANZABAL SERVICIOS FINANCIEROS, S.L.
ARBO MASNOU ASSESSORIA, S.L.U.
ARCAYANA CONSULTING, S.L.
ARCO R ASESORES, S.C.
ARDORA CORPORATE, S.L.
ARENYS CONSULTING 2013, S.L.
ARES CONSULTORES, S.L.
ARGIGES BERMEO, S.L.
ARILLA CIUDAD ASESORES, S.L.
ARIS GESTION FINANCIERA, S.L.
ARRAUT Y ASOCIADOS, S.L.
ARTI INVERSIONES Y PATRIMONIOS, S.L.
ARUM ASESORES, S.L.
ASCOR CONSULTING, S.L.
ASDE ASSESSORS, S.L.
ASEBIL - HERBLA ASESORES, S.L.
ASEC, C.B.
ASECAN GESTION INTEGRAL, S.L.U.
ASECOLAFI LAFUENTE, S.L.
ASEDIEM PROFESIONALES, S.L.N.E.
ASEDORA BSB, S.L.
ASEFINSO, S.C.
ASEFISTEN, S.L.
ASEGEM ASESORAMIENTO Y GESTION DE
EMPRESAS, S.L.
ASEGI SERVICIOS FINANCIEROS, S.L.
INMUEBLES,
INDAFISA GESTION EMPRESARIAL,
ASELCO GESTION, S.L.
ASEM
S.L.
ASEMRECA, S.L.
ASEMVA 1999, S.L.
ASEMYL, S.L.
ASEPYME GLOBAL, S.L.
ASES ASESORES Y CONSULTORES, S.L.
ASESCON GESTION INTEGRAL, S.L.
ASESORAMIENTO PROFESIONAL CANARIO,
S.L.
ASESORES DE EMPRESA AFILCO, S.L.
ASESORES DE EMPRESA Y GESTION ADMIN.
MARIN & MARIN, S.L.
ASESORES DO BAIXO MIÑO, S.L.
ASESORES E INVERSORES EPILA, S.L.
ASESORES MOLINA, S.L.
ASESORES TECNICOS MERCANTILES, S.L.
ASESORES Y CONSULTORES AFICO, S.L.
ASESORES Y CONSULTORES, C.B.
ASESORIA & CONSULTORIA, S.C.P.
ASESORIA A.B., C.B.
ASESORIA ADOLFO SUAREZ, S.L.
ASESORIA ANTONIO JIMENEZ LOPEZ, C.B.
ASESORIA AREGUME, S.L.U.
ASESORIA ASETRA, S.L.
ASESORIA ATAGESA, S.L.
ASESORIA ATAMAN, S.L.
ASESORIA BAIXA LIMIA, S.L.
ASESORIA BASTIAS, S.L.
ASESORIA BELLAVISTA, S.L.
ASESORIA BERCONTA, S.L.
ASESORIA BLANCO, S.L.
ASESORIA CAMINO, S.L.
ASESORIA CARRETERO JOVANI, S.L.
ASESORIA CECOINFI, S.L.
ASESORIA CERVANTES, S.L.
ASESORIA CM, C.B.
ASESORIA DE EMPRESAS CARANZA, S.L.
ASESORIA DE EMPRESAS RC, S.L.
ASESORIA DEUSTO, S.L.
ASESORIA EMPRESARIAL CATALANA, S.L.
ASESORIA EMPRESARIAL LAS MARINAS, S.L.
ASESORIA EMPRESARIAL POSE, S.L.
ASESORIA ENRIQUE YAÑEZ, S.L.
ASESORIA ERAKIN AHOLKULARITZA, S.L.
ASESORIA EUROBILBAO, S.L.
ASESORIA EXPANSION 2001, S.L.
ASESORIA FINANCIERA CUBICA, S.L.
ASESORIA FINANCIERA IBAIGANE, S.L.
ASESORIA FINANCIERA LUGO, S.L.
ASESORIA FINANCIERO CONTABLE CLOT,
S.L.
ASESORIA FISCAL CONTABLE Y LABORAL
TRIBUTO, S.L.
ASESORIA FISCAL LULL, S.L.
ASESORIA FISCAL SANTIAGO, C.B.
ASESORIA FISCAL VALLIRANA, S.L.
ASESORIA FISELA, S.L.U.
ASESORIA GAMASERVI, S.L.
ASESORIA GARCIA FUENTES, S.L.
ASESORIA GARCIA LOPEZ, S.L.
ASESORIA GEST. PATRIMONIAL DE ENT.
RELIGIOSAS, S.L.
ASESORIA GILMARSA, S.L.
ASESORIA GOARTE, S.L.
ASESORIA GONZALEZ VALDES, S.L.
ASESORIA GORROTXA ASEGUROAK, S.L.
ASESORIA HERGON, S.L.
ASESORIA HIDALGO JUAREZ, S.L.
ASESORIA INFIS, S.L.
ASESORIA
EMPRESAS, S.L.L.
ASESORIA INTEGRAL RONDA, S.L.
ASESORIA JIMENEZ, S.C.
ASESORIA JOSE ADOLFO GARCIA, S.L.
ASESORIA JURIDICA FISCAL SAN ANDRES,
S.L.
ASESORIA LABORAL FISCAL JURIDICA MMB,
S.L.
ASESORIA LABORDA, S.C.
ASESORIA LASER, S.L.
ASESORIA LEMA Y GARCIA, S.L.
ASESORIA LEMASA, S.L.
ASESORIA LIZARDI, S.L.
ASESORIA MANCISIDOR, MURGA Y BRATOS,
S.L.
ASESORIA MARCOS FERNANDEZ, S.L.
ASESORIA MARI & ACC, S.L.
ASESORIA MERCANTIL DE ZALLA, S.L.
ASESORIA MERCANTIL, S.L.
ASESORIA MERFISA, C.B.
ASESORIA OLIVER TORRENS, S.L.
INTEGRAL DE FARMACIAS Y
GARDEL
CAMATS
INTEGRAL MAESTRAT,
ASESORIA ONLINE GRG, S.L.
ASESORIA PROGRESO, S.L.
ASESORIA RA-ES, S.L.
ASESORIA RAMILO E BOTANA, S.L.
ASESORIA RANGEL 2002, S.L.
ASESORIA SAGASTIZABAL, S.L.
ASESORIA SANCHEZ & ALCARAZ, S.L.
ASESORIA TOLEDO DE SACEDON, S.L.
ASESORIA VELSINIA, S.L.
ASESORIA VIA LIGHT, S.L.U.
ASESORIA XIRIVELLA, S.L.
ASESORIA Y FINANZAS DEL ORIENTE, S.L.
ASESORIA Y SEGUROS PUERTO DE LA
TORRE, S.L.
ASESORIA Y SERVICIOS DE GESTORIA
CABELLO, S.L.
ASESORIA ZUBIRI, S.L.
ASESORIAS ISADOR, S.L.
ASESORIAS NAPOLES, S.L.
ASESPA , S.L.
ASETUR, C.B.
ASFIPA , S.L.
ASFITO, S.L.
ASIEXCAN, S.R.L.
ASOCIADOS BILBOINFORM 2000, S.L.
ASSECOM BIZKAIA S. COOP. PEQUEÑA
ASSESMERCAT, S.L.P.
ASSESSORAMENT EMPRESARIAL CABRE I
ASSOCIATS, S.L.
ASSESSORAMENT
S.L.
ASSESSORAMENT MIRA MARTINEZ, S.L.
ASSESSORAMENTS I SERVEIS LLEIDA, S.L.
ASSESSORIA ARASTELL, S.L.
ASSESSORIA AREA ECONOMICA LEGAL, S.L.
ASSESSORIA BAIX PENEDES, S.L.
ASSESSORIA BUFET JURIDIC SM&TA, S.L.
ASSESSORIA
CORREDURIA DE SEGUROS, S.L.
ASSESSORIA COSTA BRAVA, S.L.
ASSESSORIA DOMINGO VICENT, S.L.
ASSESSORIA EUROCOMPTE LLORET, S.L.
ASSESSORIA I SERVEIS CAN BORRELL, S.L.
ASSESSORIA LLUIS VILASECA, S.L.P.
ASSESSORIA MARGARIT, S.L.P
ASSESSORIA PONENT, S.L.
ASSESSORIA VISERTA, S.L.
ASSESSORS
S.L.P.U.
ASSESSORS FINANCERS CASTELLAR XXI,
S.L.L.
ASSESSORS GOMEZ & CAMPOS, S.L.
ASSPE VILANOVA, S.L.
ASTILSUR 2012, S.L.
ASUNFIN, S.L.
AT. VIGO, S.L.
ATC ASESORES INTEGRALES, S.L.
ATENCION Y GESTION PROFESIONAL, S.L.
ATENEA IURIS CONSULTING GROUP, S.L.
AUDAL CONSULTORES AUDITORES, S.L.
AUDICONMUR, S.L.
AUDITORIA INTERNACIONAL, S.L.
AULES ASESORES, S.L.
AUREA JURISTAS Y ASESORES FISCALES,
S.L.P.
AURELIO ALVAREZ SALAMANCA, S.L.
AURVIR & PEÑA CONSULTORES, S.L.
AVANT PERSONAL SERVICES, S.L.
AVANTIS ASESORES JURIDICOS, S.L.
AVARUA CONSULTING, S.L.
AVENTIS ASESORES, S.L.
AXENTES FINANCEIROS DE BALTAR, S.L.
AYCE CONSULTING, S.L.
AYUDA Y CREDITO CONSULTORES, S.L.
AZ BILBAO GESTION INTEGRAL, S.L.
AZAUSTRE GALAN Y ASOCIADOS II, S.L.
B&S GLOBAL OPERATIONS CONSULTING,
S.A.
BADALONA ASESORES, S.C.C.L.
BAENA
ASESORES
EMPRESARIALES, S.L.
BAFINCA ESTUDIO FINANCIERO, S.L.
BAGUR CARRERAS ASSESSORS, S.L.
BAIKAL ESTRATEGIAS, S.L.
BAILEN ASESORES CONSULTORES, S.L.
BANESFIN, S.L.
BANKING Y CONSULTING FINANCIERO-
JURIDICO, S.C.
BARBESULA MAR, S.L.
BARREIROS Y ASOCIADOS CONSULTORES,
S.L.
BASCOMPTE ADVOCATS, S.L.P.
BASCUAS ASESORES, S.L.
Y CONSULTORES
EMPRESARIALS
ASEMAX,
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 52). 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.
P. 221
NCS
BALEAR
CONSULTING
BAZAR NAVAS, S.L.
BEL BEGIRA ASESORES, S.L.
BELCASTI, S.L
BELRIVER PARTNERS, S.L.
BENALWIND, S.L.
BENAVIDES & MUÑOZ ASSOCIATS, S.L.
BENCHMARK 5 V'S, S.L.
BENGOETXEA Y ASOCIADOS , S.L.P.
BENIDORM
EMPRESARIAL, S.C.V.
BERNAD GESTION FINANCIERA, S.L.
BERNAOLA ASEGURO ARTEKARITZA , S.L.
BETRIU ADVOCATS, S.C.P.
BG ASESORIA DE FINANZAS E INVERSIONES,
S.L.
BHEX ASESORES, S.L.P.
BILBAO CONSULTORES GLOBALES, S.L.
BILBOTAX ABOGADOS, S.L.
BINIPOL 2001, S.L.
BIOK ZERBITZUAK, S.L.
BIRMANI PROMOCIONS, S.L.
BITACAPITAL INVERSIONES, S.L.
BIZKAIBOLSA, S.A.
BK ASESORIA JURIDICA, S.L.
BKBM CONSULTING INVESTMENT, S.L.
BL ECONOMISTES, S.L.P.
BLAI GABINET DE SERVEIS, S.L.
BLANCO & MARTIN ASESORES, S.L.
BLANCO PARRONDO, C.B.
BLANCO Y PARADA ASESORES, S.L.
BLAUSERVEIS PROFESSIONALS, S.L.
BONMATI COMPTABLE, S.L.
BOSCH ASSESSORIA TECNICA LABORAL,
S.L.U.
BOSCH BATLE CONSULTORIA, S.L.
BOUTIQUE
SEGURO
DEL
CORREDURIA DE SEGUROS, S.L.
BRAIN STAFF, S.L.
BRAVOSOL GESTION, S.L.
BROKER F2, S.L.
BROKERMAM NOVA CORREDURIA DE
SEGUROS, S.L.
BUFET ENRIC LLINAS, S.L.P.
BUFET JORDI DOMINGO, S.L.P.
BUFET MILARA, S.L.
BUFET PUIG I ASSOCIATS, S.L.P.
BUFETE CANOVAS, S.C.P.
BUFETE CHAMIZO GALAVIS, S.L.
BUFETE DE ABOGADOS Y ASESORES
FISCALES THEDENS, S.L.
BUFETE MADRIGAL Y ASOCIADOS, S.L.
BUFETE MARTINEZ GARCIA, C.B.
BUFETE ROMERO Y MONGE, S.L.
BUFETE VARGAS DE LA CAL Y ASOCIADOS,
S.C.
BUSBAC SERVEIS, S.L.
BUSINESS MANAGER SEL14, S.L.U.
BUSINESS,
KNOWLEDGE, S.L.
C. BURGOS GATON, S.L.
CACERES PORRAS, C.B.
CADENAS DE LLANO, S.L.
CAFARES, S.L.U.
CAMPDEPADROS
D'ASSEGURANCES, S.L.
CAMPOS
CORREDURIA DE SEGUROS, S.L.
CANOVAS 1852, S.L.
CANTELAR Y SAINZ DE BARANDA, S.L.
CANTOS Y PASTOR CONSULTING, S.L.
CAÑADA SANCHEZ, S.L.
CAÑELLAS BROS ASSESSORS, S.L.P.
CAPAFONS Y CIA, S.L.
CAPITEL ASESORES ALMANSA, S.L.
CAPON CONSULTORES, S.L.
CARRETERO E IZQUIERDO ASOCIADOS, S.L.
CARRO FERNANDEZ ASESORES, S.L.
CATDINV CORPORATE FINANCE, S.L.L.
CAU ASESORES Y CONSULTORES, S.L.
CAUCE CONSULTORES DE NEGOCIO, S.L.
CAURIA PROMOCIONES, S.L.
CE CONSULTING ABOGADOS VIGO, S.L.P.
CEASA ASESORES FISCALES, S.L.
CECEA INTER, S.L.
CEINCO PORRERES, S.L.
CENTAUREA BUSINESS DEVELOPMENT, S.L.
CENTRAL INTERNACIONAL DE SERVICIOS Y
ASESORAMIENTO, S.L.
CENTRE ASSESSOR TERRAFERMA, S.L.
CENTRE CORPORATIU INI 6, S.L.
CENTRE FINANCER BERENGUER SAPENA
XABIA, S.L.
CENTRE GESTOR, S.L.
DEVELOPMENT
CORREDURIA
ASESORES
PALACIOS
AND
DE
Y
ECONOMICOS
CENTRO ASESOR MONTEHERMOSO, S.L.
CENTRO DE ESTUDIOS ROMO & CAMPOS,
S.L.
CENTRO DE NEGOCIOS ASERGALICIA, S.L.
CERTIS MEDIUM, S.L.
CERTOVAL, S.L.
CGM ASESORES BECOY, S.L.
CHAMORRO MULTISERVICIOS, S.L.
CHICLANA 9, S.L.
CHICUEI SEGUROS, S.L.
CHOGUY, S.L.
CICONIA CONSULTORIA, S.L.
CLAVE OPTIMA BUSINESS, S.L.U.
CLAVELL & SAINZ DE LA MAZA ASESORES,
S.L.
CLOSE CONSULTING, S.L.
CLUB AVOD, S.L.
CLUSTER ASESORES, S.L.
CLUSTER BUSINESS GROUP, S.L.
CODELVA GESTION, S.L.
COENDU, S.L.
COLLET I DURAN, S.L.
COLON DE CARVAJAL SOLANA CARDONA
ABOGADOS, S.L.P.
COMES & ASOCIADOS ASESORES, S.L.P.
COMPAÑÍA VIZCAINA DE ASESORIA, S.L.
COMPASS CONSULTING SPAIN, S.L.
CONFIANZ, S.A.P.
CONFIDENTIAL GESTION, S.L.
CONMEDIC GESTIONS MEDICAS, S.L.
CONSULTING DONOSTI, S.L.
CONSULTING EMPRESARIAL CASARES, S.L.
CONSULTING JL ARBILLAGA, S.L.P.U.
CONSULTOR FINANCIERO Y TRIBUTARIO,
S.A.
CONSULTORA EMPRESARIAL GRACIA 2004,
S.L.
CONSULTORES DEL NORTE, S.L.
CONSULTORES
PATRIMONIALES AAA, S.L.
CONSULTORES EMPRESARIALES TORRES
ALBA, S.L.
CONSULTORES EXTERNOS BERMEJO Y DIAZ,
S.L.
CONSULTORES FINANCIEROS LABORALES,
S.L.
CONSULTORES FINANCIEROS LEONESES,
S.L.
CONSULTORES GRUPO DELTA PAMPLONA,
S.L.
CONSULTORES LEONESES, S.L.
CONSULTORIA CIUDADANA EN GESTION Y
SEGUROS, S.L.U.
CONSULTORIA FINANCIERA PONTEVEDRA,
S.L.
CONSULTORIA INVERSIONES MENORCA, S.L.
CONSULTORIA ORTIZ & ASOCIADOS, S.L.
CONSULTORIA PIÑERO, C.B.
CONSULTORIA SANTA FE, S.L.
CONSULTORS DE MIGUEL FONT MATES,
S.L.P.
CONTABILIDADES
SAN ANTONIO, S.L.
CONTARAMA ASESORES, S.L.
CONTAS, C.B. LA ESTRADA
CONTASORIA, S.L.
CORSAN FINANCE, S.L.
COSENOR INSURANCE BROKER, S.L.
COSTAS NUÑEZ ASESORES, S.L.
COVIBAN ASESORES INMOBILIARIOS, S.L.
COWORKING HOSPITALET, S.L.
CREDYCAU DOHER SURESTE, S.L.U.
CRITERION SONSULTING, S.L.
CROSS ASESORES, S.L.
CUBERO PATRIMONIOS, S.L.
CUELLAR MERCANTIL ASESORIA, S.L.
CUTTER BUSINESS, S.L.
DANTE ASSESSORS, S.R.L.
DARA SPORTS, S.L.
DATACONTROL ASESORES, S.L.
DBSER INVEPAT, S.L.
DE CAMBRA AGOGADOS, S.L.
DEEP TIMER, S.L.
DEL AGUILA FERRER Y ASOCIADOS, S.L.
DELFOS ASESORIA FISCAL, S.L.
DESPACHO ABACO, S.A.
DESPACHO J.M. COARASA, S.L.
DESPACHO, TRAMITACION Y GESTION DE
DOCUMENTOS, S.L.
DIAZ GARCIA ASESORES Y CONSULTORES,
S.L.U.
DIAZ Y FERRAZ ASOCIADOS, S.L.
DIMANA ASESORES, S.L.
INFORMATIZADAS DE
DIMAVI JARAMA, S.L.
DINAPIXEL, S.L.
DOBLE A AVILA ASESORES, S.L.
DOMENECH GIMENO GESTIO, S.L.
DOMUS AVILA, S.L.
DORRONSORO URDAPILLETA, S.L.
DOSA ILERGESTION, S.L.
DOWNTOWN IBIZA, S.L.
DUPLA CONSULTORES, S.L.
DURFERAL, S.L.
E.C. ASESORES 2006, S.L.
ECBATAN, S.L.
ECONOMIALEGAL, S.L.
EDECO ASESORES DE EMPRESA, S.L.
EDISATEL ASESORES, S.L.
EDUARDO ALBERDI ZUBIZARRETA Y OTRA,
C.B.
EFILSA, S.C.
EIGHTY ONE LEVANTE, S.L.
EKO - LAN CONSULTORES, S.L.
EL PINOS GESTION LABORAL, S.C.
EL ROBLE PROTECCION, S.L.
ELISENDA VILA ADVOCATS, S.L.P.
EMASFA, S.L.
ENDOR INVERSIONES, S.L.
ENERGIA Y DATOS, S.L.
ENRIQUE AMOR CORREDURIA DE SEGUROS,
S.L.
ENTORNOS RURALES Y URBANOS, S.L.
EP MR ASESORES, S.L.U.
EPC ASSESORS LEGALS I TRIBUTARIS, S.L.
EROSMARVAL 2013, S.L.
ERUDITISSIMUS DISCIPLINA IURIS, S.L.
ESCAMILLA ASESORES, S.L.
ESCOBAR Y SANCHEZ ABOGADOS, S.L.
ESCRIBANO ABOGADOS, S.L.
ESCRIVA & SANCHEZ CONSULTORES, S.L.P.
ESCRIVA DE ROMANI, S.L.
ESCUDEIRO Y RODRIGUEZ VILA, S.L.P.
ESINCO CONSULTORIA, S.L.
ESTANY DE PEGUERA, S.L.
ESTHA PATRIMONIOS, S.L.
ESTRADA DA GRANXA 6, S.L.
ESTRATEGIA FINANCIERA EMPRESARIAL,
S.L.
ESTUDIO CASTRO, S.L.
ESTUDIO FINANCIERO AVANZADO, S.L.
ESTUDIO FISCAL BARCELONA, S.L.
EUROFISC CONSULTING, S.L.
EUROFOMENTO EMPRESARIAL, S.L.
EUROGESTION XXI, S.L.
EUROMAULE, S.L.
EUROTAX ABOGADOS, S.L.
EVALUACION CUANTITATIVA, S.L.
EXAMERON, S.L.
EXIT ASESORES, S.L.
F. D. PANTIGA, S.L.
FAMILYSF SALUFER, S.L.
FARIZO ASESORES, S.L.U.
FARMASERVICIOS Y CONSULTORIA, S.L.
FASE ASESORES, S.L.
FASER 89, S.L.
FAUSBE 2005, S.L.
FELEZ BIELSA, S.L.
FELIX AHOLKULARITZA, S.L.
FEMIDA CONSULTING, S.L.
FERNANDEZ
CARTAGENA Y BRAZO, S.L.
FERNANDEZ SERRA, S.L.
FERNANDO BAENA, S.L.
FERPAPER, S.L.
FERTAPDO, S.L.
FICOTEC ASESORAMIENTO, S.L.
FINACO ASESORES, S.L.
FINANCIAL AGENTS GANIVET, S.L.
FINANCIAL LIFE PLANNING, S.L.
FINANCIAL PREMIUM CATALUNYA, S.L.
FINANCIAL TOOLS BCN, S.L.
FINANCIERA 2000 ASD, S.L.
FINANCIERA AGRICOLA DEL PONIENTE, S.L.
FINANCIERA MAYORGA, S.L.
FINANCO CONSULTORES, S.L.
FINANTZA ETA ETXEBIZITZAK, S.L.
FINANZAS Y SEGUROS FANJUL, S.L.
FINCAS DELLAKUN, S.L.
FISCOPYME, S.L.
FISLAC ASESORES, S.L.
FOCUS PARTNERS, S.L.
FORNIES & GUELBENZU, S.L.
FORUARGI, S.L.
FORUMLEX XXI, S.L.
FRANCES Y BARCELO, C.B.
FRANCIAMAR AREATZA, S.L.
RAMIREZ
GALBIS,
DE
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 52). 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.
P. 222
I
-
Y
IKER
Y GESTION
CONSULTORIA
FRANCIAMAR GORLIZ, S.L.
FRANCIAMAR, S.L.
FRANCISCO JOSE PEÑUELA SANCHEZ, S.L.
FRANK ASESORES, S.L.
FRESNO CAPITAL, S.L.
FUENTES & GESCOM, S.L.
FUSTER Y G. ANDRES ASOCIADOS, S.L.
G & G ASESORES, C.B.
G Y G ABOGADOS, S.L.
GABINET ADMINISTRATIU RAMON GOMEZ,
S.L.
GABINET D'ASSESSORAMENT FISCAL
COMPTABLE GAFIC, S.L.P.
GABINET D'ECONOMISTES ASSESSORS
FISCALS, C.B.
GABINETE AFIMECO ASESORES, S.A.L.
GABINETE ASESOR THALES, S.L.
GABINETE EMPRESARIAL J. ESPERON, S.L.
GABINETE EMPRESARIAL SALMANTINO, C.B.
GABINETE JURIDICO GESFYL, S.L.
GABINETE JURIDICO-FINANCIERO SERRANO,
S.L.
GABINETE LAREU Y SEOANE, S.L.
GAIZKA MUNIATEGUI MUSATADI
BILBAO ZUAZUA, C.B.
GALATEA SYSTEMS, S.L.
GALICA CORREDURIA Y ASESORES, S.L.
GALILEA MARTINEZ ASESORES, S.L.
GALIOT ASESORES, S.L.
GAMTRIS 2006, S.L.
GARCES SUAREZ ASESORES, S.L.
GARCIA LUCHENA ASESORES, S.L.
GARCIA MATEO ASESORES, S.L.U.
GARFE, ASESORAMIENTO
EMPRESARIAL, S.L.
GARO
ASESORIA
AUDITORIA, S.L.
GARRIDO ABOGADOS, S.L.P.
GARVIN Y FISAC CONSULTORES, S.L.
GARZON SERVICIOS EMPRESARIALES, S.L.
GASEM SERVICIOS, S.L.
GASSO SOLE CONSULTORS, S.L.
GAVAMAR 2011, S.L.
GAYCA ASESORES, S.L.
GEMMA HERNANDEZ, C.B.
GENERAL DE SERVEIS LA SEGARRA, S.L.
GENERAL MEAT, S.L.
GESAL ASESORIA, S.L.
GESBARBON GRUPO, S.L.
GESCOFI OFICINAS, S.L.
GESDIA ASESORES, S.L.U.
GESLALIN, S.L.
GESMADRID ABOGADOS, S.L.P.
GESPIME ROMERO MIR, S.L.
GESPYME GESTIO I ASSESSORAMENT DE
PYMES, S.L.
GESTAE VALENCIA, S.L.
GESTICONTA 2000, S.L.
GESTINSERVER CONSULTORES, S.L.U.
GESTIO I ASSESSORAMENT OROPESA, S.L.
GESTION ASCEM, S.L.
GESTION DE INVERSIONES Y PROMOCIONES
ELKA CANARIAS, S.L.
GESTION EMPRESARIAL PABLO PAZOS, S.L.
GESTION ESTUDIO Y AUDITORIA DE
EMPRESAS GEA, S.L.
GESTION FINANCIERA MIGUELTURRA, S.L.
GESTION INTEGRAL CONTRERAS, S.L.P.U.
GESTION INTEGRAL DE EMPRESAS FUSTER,
S.L.
GESTION
COMUNIDADES, S.L.
GESTION PARERA, S.L.
GESTION Y FINANZAS ZARAGOZA, S.A.
GESTION Y SERVICIOS JOVER, S.L.
GESTION Y SERVICIOS SAN ROMAN DURAN,
S.L.
GESTIONA
ADMINISTRATIVOS, S.L.U.
GESTIONA MADRIDEJOS, S.L.
GESTIONAMOS 64, S.L.
GESTIONES MARTIN BENITEZ, S.L.
GESTIONES ORT-BLANC, S.L.
GESTIONES PATRIMONIALES CANARIAS, S.L.
GESTIONES Y SOLUCIONES EFFICAX, S.L.
GESTIONS EMPRESARIALS CABIROL, S.L.
GESTIONS
PERSONALIZADES, S.L.
GESTIOR CONSULTING, S.A.
GESTITRAMI FINANCIAL, S.L.
GESTMILENIUM VALORES, S.L.
GESTORED CONSULTING, S.L.
GESTORIA ADMINISTRATIVA LASTRA, S.L.
INTEGRAL MANTENIMIENTO DE
ASSEGURANCES
SERVICIOS
INNOVA
E
I
&
DE
DOS
PALOP
LUCERO
PONENT
SERVICES
FINANCIAL
ASESORES
ADMINISTRATIVA
GESTORIA
ALCAIDE, S.L.P.
GESTORIA ADMINISTRATIVA SAN JOSE, S.L.
GESTORIA ARANA, S.L.
GESTORIA ARENYS, S.L.P.
GESTORIA ASFER, S.L.
GESTORIA CORDOVA OF.TRAMIT. Y GESTION
ADMTVA., S.L.
GESTORIA ESTRADA OSONA, S.L.P.
GESTORIA GARCIA NAVARRO, S.L.P.
GESTORIA GARCIA POVEDA, S.R.L.
GESTORIA HERMANOS FRESNEDA, S.L.
GESTORIA IVORRA, S.L.P.U.
GESTORIA JUAN AMER, S.L.
GESTORIA LLURBA GARZON, S.L.
GESTORIA
EMPRESAS, S.L.
GESTORIA MALINGRE GRANDE, S.L.
GESTORIA MONTSERRAT, S.L.
GESTORIA PARIS, S.L.
GESTORIA POUSA Y RODRIGUEZ, S.L.
GESTORIA ROYO LOPEZ, S.L.
GESTORIA RUIZ MILLAN, S.L.
GIL MANSERGAS, C.B.
GIL MAYORAL CORREDURIA DE SEGUROS,
S.L.
GIS NOVIT LEX, S.L.P.
GIT CANARIAS, S.L.
GLOBAL CONSULTING BCN, S.L.
GLOBAL TAX GESTION, S.L.
GLOBE
CONSULTANCIES, S.L.U.
GONZALEZ & PARDAVILA, S.C.
GONZALEZ & SANTIBAÑEZ GESTION, S.L.
GONZALVO ALEJANDRINO ABOGADOS &
ASESORES TRIBUTARIOS, S.L.
GRACIA-HERNANDEZ-LAPEÑA ASESORIA Y
CONSULTORIA INTEGRADAS, S.L.
GRADO CONSULTORES, S.L.
GRAN CANARIA ELEGANCE 7, S.L.
GRANADOS ASSESSORS CONSULTORS, S.L.
GROS MONSERRAT, S.L.
GRUP
GESTIO
DE
ASSEGURANCES, S.L.
GRUP SBD ASSESSORAMENT I GESTIO, S.L.
GRUPAMERO ADMINISTRACION, S.L.
GRUPO 1 ASESORES, S.C.A.
GRUPO BABAC, S.L.
GRUPO DTM CONSULTING, S.L.
GRUPO FERRERO DE ASESORIA , S.L.
GRUPO FINANCIERO TALAMANCA 11, S.L.
GRUPO MURCIA ASESORIA EMPRESARIAL,
S.L.
GRUPO SUBVENCION DIRECTA ASESORES
INTEGRALES, S.L.
GUADALPICO, S.L.
GUERIANO, S.L.
GUERRA CARDONA CONSULTORES, S.L.
GUILLEN & GIL BUSINESS & CONSULTING,
S.L.
GURRIA Y ASOCIADOS, S.C.
GUTIERREZ DE GUEVARA, S.L.
HALF LEMON, S.L.
HELLIN PYMES GESTION, S.L.
HELP CONTROL DE GESTION, S.L.
HERAS GABINETE JURIDICO Y DE GESTION,
S.L.
HERCA CONSULTING, S.L.
HERNEZ GESTORES, S.L.
HERRANZ Y DAVID, S.C.
HERVI, C.B.
HEVIAN CONSULTORES FINANCIEROS, S.L.
HIDALGO GESTIO, S.L.
HOY DE 2004, S.L.
IB2CLOUD, S.L.
IBERBRIT, S.L.
IBERBROKERS ASESORES
TRIBUTARIOS, S.L.
IBERFIS GESTION FINANCIERA, S.L.
IBERGEST ASESORIA, S.L.L.
IBERKO ECONOMIA Y GESTION, S.L.
ICIAR
SEGUROS, S.L.
IDF ALL FINANCING, S.L.
IGES EUROPA, S.L.
IGLESIAS MACEDA BARCO ABOGADOS, C.B.
IGNACIO CONSTANTINO, S.L.
ILURCE ASESORES Y CONSULTORES, S.L.
INCOS,
EMPRESAS DE SERVICIOS, S.L.
INDICE GESTION, S.L.
INDOS INGENIEROS DE SISTEMAS, S.L.
INFEM, S.L.
COMERCIALIZADORA
CORREDURIA DE
LEGALES Y
VILLANUEVA
PARA
16
DE
DE
SERVICIOS
ASESORAMIENTO
INFOGES PYME, S.L.
INGARBO, S.L.
INICIATIVA EMPRENDEDORA, S.L.U.
INITIUM ALC CONSULTING, S.L.
INLASTIME, S.L.
INMOBILIARIA DONADAVI, S.L.
INMOGEST2012, S.L.
INMONAEVA, S.L.
INMONEY 2017, S.L.
INNOVACIONES FINANCIERAS, S.L.
INPOL DESARROLLOS URBANISTICOS, S.L.
INSERVICE D & B, S.L.
INSTITUTO
EMPRESARIAL INSESA, S.L.
INSUAS SARRIA, S.L.
INTASSE EMPRESARIAL, S.L.
INTEGRAL WORK SPACE, S.L.
INTEGRIA ENERGIA EMPRESAS EUROZONA,
S.L.
INVAL 02, S.L.
INVERGESTION MALLORCA, S.L.
INVERGU 2914, S.L.
INVERSAN BROKERS, S.L.
INVERSIONES
FINANCIEROS E INMOBILIARIOS, S.L.
INVERSIONES BARCARES 55, S.L.
INVERSIONES CASTUERA, S.L.
INVERSIONES DAFEGOBE, S.L.
INVERSIONES GEFONT, S.L.
INVERSIONES IZARRA 2000, S.L.
INVERSIONES MARTINEZ ESPINOSA E HIJOS,
S.L.
INVERSIONES PATRIMONIALES EL ARENAL,
S.L.
INVERSIONES TECNICAS GRUPO CHAHER,
S.L.
INVERSIONES Y GESTION AINARCU, S.L.
INVERSORA MARTIARTU, S.L.
INVERSUR 4 CUATROS, S.L.
INVERTIA SOLUCIONES, S.L.
INVEST FINANZAS, S.L.U.
INVESTIMENTOS XURDE PABLO, S.L.
IRCAVIGO, S.L.
IRDIN AUTOMOTIVE,S.L.
ISDAGAR 2000, S.L.
ISLA CONSULTING 2014, S.L.
ITZEA, S.L.
IURIS ASSESSORS VIFE, S.L.P.
IXPE ASSESSORS 94, S.L.
IZQUIERDO - PARDO, S.L.P.
J B CONSULTING FINANCIERO, S.L.
J L COLOMINA C CEBRIAN ERNESTO ANTON,
C.B.
J. A. GESTIO DE NEGOCIS, S.A.
J. MIR CONSULTORIA, S.L.
J. RETA ASOCIADOS, S.L.
J.F. BONIFACIO SERVICIOS INTEGRALES, S.L.
J.M. CORUJO ASESORES, S.L.
JARVEST GESTION DE INVERSIONES, S.L.
JAVIER CARRETERO Y ASOCIADOS, S.L.
JAYLA CELA, S.L.
JBAUTE, S.L.U.
JEDA GROUP SABA, S.L.
JEST
ASESORES
PARTICULARES, SL
JESTERSA INVERSIONES, S.L.
JESUS FELIU CONSULTORS, S.L.
ABOGADOS
JGBR
TRIBUTARIOS, S.L.
JM 2004 EMPRESISTES, S.L.
JM MORROS I ASSOCIATS, S.L.
JOAN MAYANS I ASSOCIATS, S.L.
JOANA JAREÑO, S.L.
JOSE ANGEL ALVAREZ, S.L.U.
JOSE ANTONIO MANRIQUE RULLO, S.L.
JOSE MARIA GARCIA FRAU, S.L.
JOSFRAN ASSESSORS, S.L.
JUAN JOSE ORTIZ, S.L.
JUAN MIGUEL MARQUEZ
EMPRESA DE SERVICIOS, S.L.
JURIDIC COMTIGEST, S.L.
JUSTITIA CONSULTORES, S.L.P.
KANOPA, S.L.
KREA MARKETING AND CONSULTING, S.L.
KRIVDA LC ASOCIADOS, S.L.
L.G.A. CONSULTORES, S.L.
LA ARENA ASESORES, S.L.
LABUTIKE, S.L.
LACMAC 2012 INVESTMENTS, S.L.
LACOASFI , S.L.
LAFUENTE SERVICIOS EXTERNOS, S.L.
LAJUSER GESTIONES Y ASESORAMIENTOS,
S.L.
ASESORES
HORRILLO
EMPRESA
DE
Y
Y
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 52). 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.
P. 223
MONTAÑEZ
LAMBERT CASTELLO, S.L.
LAMPER IBERICA, S.L.
LAR CENTRO EMPRESARIAL, S.A.
LARA Y MARCOS ASESORES, S.L.
LARRE & ASOCIADOS, S.C.P.
LARREY ASESORES, S.L.
LAUKI AHOLKULARITZA, S.L.
LAUKIDE ABOGADOS, C.B.
LAZARO & POUSADA, S.C.
LDG GROUP MULTIFAMILY OFFICE, S.L.
LEAL SLP ASESORIA LABORAL FISCAL Y
CONTABLE
LEASBA CONSULTING, S.L.
LEASING E INVERSION EMPRESARIAL, S.L.
LECONDIS, S.L.
LEGAL, INMOBILIARIO Y URBANISMO, S.L.
LEMERODRI, S.L.
LEMES ASESORES FISCALES, S.L.
LENADER, S.L.
LEO GESTION, S.L.U.
LEXEL ESTUDI LEGAL, S.L.
LIFESTYLE FINDER, S.L.
LINEA CONTABLE, S.L.
LIT & PITARCH, S.L.
LIVACE, S.L.
LLADO ADVOCATS ASSOCIATS, S.L.P.
LLANA CONSULTORES, S.L.
LLEDO YANGUAS, S.L.
LLIRIA HOME, S.L.
LLUCH & SARRION, S.L.
LLUCIA GUITERAS, S.L.
LLUIS GARRUDO Y ASOCIADOS, S.L.
LOBERA LOPEZ ASESORES, S.L.
LOGARILL & ASOCIADOS, S.L
LOGROSA SOLUCIONES, S.L.
LORDA DE LOS RIOS, S.L.
LOSADA Y MORELL, S.L.
LOVENSA INVERSIONES, S.L.
LTA ASESORES LEGALES Y TRIBUTARIOS,
S.L.
LUIS CARDONA AGENCIA DE SEGUROS,
S.L.U.
LUIS F. SIMO, S.L.
LUNA, C.B.
M
DE
ASEGURADORES, S.L.L.
M. L. BROKERS, S.L.
M.C.I. BUREAU CONSULTING DE GESTION,
S.L.
MAC PRODUCTOS DE
FINANCIACION, S.L.
MAINCTA, C.B.
MAÑONEA AGENTZIA, S.L.
MARBAR ASESORES 2014, S.L.
MARCELINO DIAZ Y BARREIROS, S.L.
MARDEBONI, S.L.P.
MARESME CONSULTORS, S.L.
MARIA CARMEN PEREZ AZNAR, S.L.P.
MARIA COBIAN Y ASOCIADOS, S.L.
MARISCAL CONSULTING, S.L.
MARKETING
CONSULTORES, S.A.
MARNAT INVERSIONES,S.L.
MARQUES BARO, S.L.
MARTIN GARCIA -ESTRADA ABOGADOS, S.C.
MARTIN PEREZ ASSESSMENT, S.L.P.
MARTIN
000680010S, S.L.N.E.
MATARO DE GESTIONS
EMPRESSARIALS, S.L.
MATEO59
AGENTE
VINCULADO, S.L.
MATTS
ECONOMISTES, S.L.
MAYBE CONSULTORIA
EMPRESAS, S.C.A.
MAYTE COSTAS ASESORES, S.L.
MB ASESORES 2012, S.L.P.
MEDICAL CONSULTING PROFESIONAL, S.L.
MELGAREJO Y VIÑALS ASESORES, C.B.
MENDOZA MORANTE E INCLAN, S.L.P.
MERIDIAN ASESORES, S.L.
MESA IZQUIERDO ASOCIADOS, S.L.
MEXICO NOROESTE GESTION EMPRESARIAL,
S.L.
MG ECONOMISTES, S.L.U.P.
MI CONSULTORIA, S.L.
MIC COMUNITATS, S.L.
MICYD CONSULTING, S.L.
MIÑANA
ABOGADOS, S.L.P.
MIQUEL
VALLS
ASSOCIATS, S.L.P.
INTERNACIONAL
INTEGRAL DE
INVERSION Y
ECONOMISTAS
ECONOMISTES
VALENCIANO,
ASSESSORS
FERNANDO
SEGUROS
BELTRAN
ANALISIS
SERVEIS
LEGALS
DE
&
Y
I
I
GESTORIA
ASSESSORS
MIRO
ADMINISTRATIVA, S.L.P.
MISE MIGUEZ, S.L.
MITECA PROMOCIONES E INVERSIONES, S.L.
MITJAVILA Y ASOCIADOS ESTUDIO JURIDICO
FISCAL, S.L.
ML ASESORES, C.B.
MOLINA CONSULTING GROUP, S.L.P.
MOMENTO ASESORES 2014, S.L.
MON JURIDIC RDJ, S.L.
MONACHIL ASESORES DE INVERSION, S.L.
MONTE AZUL CASAS, S.L.
MORA MAG, S.A.
MORAN CASTELL-BLANCH LAW AND TAX
FIRM, S.L.
MORERA GESTIO EMPRESARIAL, S.L.
MORILLO MUÑOZ, C.B.
MUGA Y LOPEZ ASESORES, S.L.
MUNDOFINANZ CONSULTORES, S.L.
MUÑOZ VIÑOLES, S.L.
NANOBOLSA, S.L.
NASH ASESORES, S.L.U.
NAVES DIAZ ASSOCIATS, S.L.
NEGOCIOS DIZMOR, S.L.
NEGOCONT BILBAO 98, S.L.
NEWLAM INVEST, S.L.
NEXUM CONFIANZA, S.L.
NICCALIA, S.L.
NORMA-3 ON LINE, S.L.
NOVAGESTION AVANZADA, S.L.
NOVAGESTION MARINA BAIXA, S.L.
OBJETIVO MERCADO, S.L.
OBLA 2012 CONSULTING, S.L.
OFICINA PALMA, ASESORIA Y FORMACION,
S.L.
OFICINA SUPORT, S.L.
OFICINAS ADMINISTRATIVAS FELIX, S.L.
OFICINAS EMA, S.L.
OLAZABAL Y ASOCIADOS, S.C.
OLCADIA INVERSIONES, S.L.
OLIVERAS TARRES, S.C.
OMEGA GESTION INTEGRAL, S.L.
OMEGA GESTION Y FORMACION, S.L.
OMF ASESORES, S.L.
ONRRISA, S.L.
OPERATIVO CONSULTING, S.L.U.
OPTIMA SAT, S.L.
ORDENACIONES CONTABLES, S.L.
OREGUI ASESORES, S.L.
ORGANIZACIÓN Y CONTROL PYME, S.L.
ORIBIO ASESORES, S.L.
ORTEGAL A ESTACA, S.L.
OSYPAR GESTION, S.L.
OTC ORIENTA PYMES, S.L.
OTERO Y PEREZ CONSULTORES, S.L.
OURENOFIX, S.L.
OUTSIDE ADVISORS DENIA, S.L.
P V 1, S.L.
PAPOI AND PARTNERS, S.L.
PARERA CONSULTING GROUP, S.L.
PARTNER TERRITORIAL SUR, S.L.
PASTOR BEVIA, ALFONSO
S.L.N.E.
PATRIAL, S.A.
PAUDIM CONSULTORES, S.L.
PAYMER INVERSIONES, S.L.
PB GESTION, S.L.
PDCE CONSULTING DE EMPRESAS, S.L.P.
PEDRO LOPEZ PINTADO E HIJOS, S.L.
PERALTA
CONSULTORES, S.L.
PERE ARAÑO PLANAS ASSESSORS, S.L.P.
PERELLO Y TOMAS, S.L.
PEREZ
ASESORIA
EMPRESARIALES, S.L.
PEREZ GUILARTE Y ASOCIADOS, S.L.
PEREZ SIERRA ASESORES, S.L.
PERNIA CONSULTORES, S.L.
PERUCHET
D'ENGINYERIA, S.C.P.
PGS ACELERADORA, S.L.
PILAR RAMON ALVAREZ, S.L.
PIME ASSESSORAMENT I QUALITAT, S.L.
PIÑOL & PUJOL ASSESSORIA D'EMPRESES,
S.L.
PLANNING ASESORES, S.C.
PLAYAS TERRAMAR, S.L.
PLEYA GLOBAL SERVICE, S.L.
PLUSIERS CONCEP, S.L.
POGGIO, S.A.
POISY, S.L.
POLO ACCIONES, S.L.
POPIN DE LOS MARES, S.L.
CONSULTOR
ASESORES
SERVICIOS
2140868H,
ARENSE
GRUP
Y
Y
Y
DE
ASESORAMENTO
ASSEGURANCES
POTIOR LEX 2016, S.L.
POU ADVOCATS, S.L.P.
POUSADA Y CORTIZAS, S.L.
POZA SOTO INVESTIMENTOS, S.L.
PRACTICA LEGAL BARCELONA, S.L.
PRADO RECOLETOS ASESORES, S.L.
PRESTACIONS
EMPRESARIAL, S.L.
PRESUPUESTAME EXTREMADURA, S.L.
PREVENALICANTE 2015, S.L.
PREVISION PERSONAL CORREDURIA DE
SEGUROS, S.A.
PROELIA, S.L.
PROGESEM, S.L.
PROGRESO 21 CONSULTORES TECNICOS Y
ECONOMICOS, S.L.
PROINVER PARTNERS, S.L.
PROYECTOS DE ASESORIA GLOBAL, S.L.
PROYECTOS INTEGRALES FERADO, S.L.L.
PROYECTOS INTEGRALES FINCASA, S.L.
PROYECTOS PINTON, S.L.
PUENTE & B GESTION INTEGRAL, S.L.
PUERTAS Y GALERA CONSULTING, S.L.
PUNT D'ASSESSORAMENT FINANCER, S.L.U.
PYME BUSSINES TWO, S.L.
PYME'S ASESORIA, S.L.
Q-INVEST FAMILY OFFICE, S.L.
QLEY AUDITORES CONSULTORES, S.L.
QUALIFIED EXPERIENCE, S.L.
QUALITY ASEGURA2,S.L.
QUEIJA CONSULTORES, S.L.
QUINTELA Y PEREZ ASESORES, S.L.
R Y B ASESORES, S.L.
R. & J. ASSESSORS D'
ASEGUR XXI, S.L.
RACA INVERSIONES Y GESTION, S.L.
RAFAEL VALLS GRUPO ASESOR, S.L.
RAMOS CONSULTORES, S.L.
RCI EXPANSION FINANCIERA, S.L.U.
REAMOBA, S.L.
RED DE ASESORES ALCAMAN, S.L.
REDIS INVERSIONS, S.L.
RENTA INMOBILIARIA ARAGONESA, S.L.
RENTA JUBILADOS, S.L.
RENTABILIDAD VALOR Y UTILIDAD, S.L.
RENTEK 2005, S.L.
REYMONDEZ , S.L.
RGR ACTIVOS E INVERSIONES, S.L.
RIOJAMACRAL, S.L.
ROALGA GESTION DE RIESGOS, S.L.
ROBIPAL 2016, S.L.
ROCA VILA I JURADO ASSOCIATS, S.L.P.
ROCHE BLASCO Y ROCHE ASESORES, S.L.
RODAEL INVERSIONES, S.L.
RODON I VERGES ASSOCIATS, S.L.
ROLO GESTION E INVERSION, S.L.
ROMERO & BURGOS ASESORES, C.B.
ROS PETIT, S.A.
ROSADO PROIMAGEN, S.L.
ROSVEGA, S.L.
ROY ASSESSORS, S.L.
RS GESTION ALTO ARAGON, S.L.
RUALI CONSULTANTS, S.L.
RUIZ ASESORES, S.C.
RUIZ MOLINA ASESORES, S.L.
S&B CONSULTORES DE CANTABRIA, S.L.
S.A.G. MEN, S.L.
S.C. BUSINESS ADVISORS, S.L.
S.C.L. ECONOMISTAS CANARIOS
S.M. ASESORES ARAÑUELO, S.L.
SAAVEDRA
EMPRESARIAL, S.L.
SABALLS GESTIO, S.L.
SABATER Y SALVADADOR ABOGADOS, S.L.
SACHEL 82, S.L.
SACRISTAN ASESORES, S.L.
SAENZ DE TEJADA ASESORES, S.L.
SAFE SERVICIOS DE ASESORAMIENTO
FISCAL DE LA EMPRESA, S.L.
SAFIN 2062, S.L.
SAFOR CONSULTORES INMOBILIARIOS, S.L.
SAGEM XX, S.L.
SAINZ Y ASOCIADOS, S.L.
SALES HERMANOS, C.B.
SALOR XVI, C.B.
SAMHER ASESORES, S.L.
SANTAMANS
TRIBUTARIOS, S.L.
SANTIVERI GESTIO I ASSESSORAMENT, S.L.
SAPRO INVESTMENT, S.L.
SAR NARON, S.L.
SARA Y LETICIA, S.L.
SARACLAU, S.L.
ASOCIADOS
ASESORES
ASESORIA
LEGALES
Y
Y
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 52). 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.
P. 224
DE
SERVICIOS
INVERSIONES DEL CID &
SARCASA, S.L.
SASUKE XXI, S.L.
SAURINA DELGADO ADVOCATS, S.L.
SAYAR & RIVAS ASOCIADOS, S.L.
SB GESTION IMPUESTOS, S.A.
SB LAW FIRM, S.L.P.U.
SECI ASESORAMIENTO INTEGRAL 2050, S.L.
SEGURALIA 2050, S.L.
SEGURBAN
INTERMEDIACION, S.L.
SEGUROS E
VILLAFAINA, S.L.
SEGURVITAL CORREDURIA DE SEGUROS,
S.L.
SELUCON, C.B.
SEMPERE & PICO ASESORES, S.L.
SENDA GESTION, S.L.
SERBANASER 2000, S.L.
SERCOM ARAGON S.XXI, S.L.
SERGESA ASSESSORS, S.L.
SERJACAT, S.L.
SERKA ASESORES, S.L.
SERTE RIOJA, S.A.P.
SERVEIS FINANCERS PUIGVERD, S.L.U.
SERVICAT ASESORES, S.L.
SERVICIOS DE ASESORAMIENTO Y GESTION
ATENEA, S.L.
SERVICIOS FINANCIEROS ALENAT, S.L.
SERVICIOS FINANCIEROS AZMU, S.L.
SERVICIOS FINANCIEROS CONTABLES 2000,
S.L.
SERVICIOS FINANCIEROS GABIOLA, S.L.
SERVICIOS INTEGRALES CANARIOS, S.L.
SERVICIOS JURIDICOS VENTANOVA, C.B.
SERVICIOS JURIDICOS Y ADMINISTRACION
GRUPO ROPASA, S.L.
SERVICIOS
JEGAVI, S.L.
SERVICONTA ALCOY, S.L.
SERVIGEST GESTION EMPRESARIAL, S.L.
SFT SERVICIOS JURIDICOS, S.L.P.
SHIRELA FINANCE, S.L.
SIERRA FERNANDEZ ASESORES, S.L.
SIGNES ASESORES, S.L.
SIGNES Y COLL CONSULTING, S.L.
SIGNIA CONSULTORS, S.L.
SILBERT-4, S.L.
SILJORINE, S.L.
SILLERO MARQUEZ & ASOCIADOS, S.L.
SIMON & POSTIGO ASESORES, S.L.
SIP CONSULTORS, S.C.C.L.
SIRVAL, S.A.
SISTEMA ASESORES FERROL, S.L.
SISTEMAS INTEGRADOS DE GESTION PARA
LA EMPRESA ANDALUZA, S.L.
SOBALER Y RODRIGUEZ ASESORIA Y
GESTION, S.L.
EMPRESARIAL
Y GESTION
SOCIEDAD CONSULTORA DE ACTUARIOS
ASESORES, S.L.
SOCOGADEM, S.L.
SOLER SOLER MENESES ABOGADOS &
ASOCIADOS, S.L.P.
SOLIVIS, S.L.
SOLUCION ASESORES XXI, S.L.
SOLUCIONES FISCALES DE GALICIA, S.L.L.
SOLYGES CIUDAD RODRIGO, S.L.U.
SOMOZA SIMON Y GARCIA, C.B.
SPAIN SALUD EXCELENCIA, S.L.
SPI SERVICIOS JURIDICOS EMPRESARIALES,
S.L.
SPRING MEDICA, S.L.
SSD ASESORES 1963, S.L.
STAFF MARKET 6, S.L.
STM NUMMOS, S.L.
SUAREZ BARCENA ASESORES, S.L.
SUMA 2015 SOLUCIONES ESTRATEGICAS,
S.L.
SUMA LEGAL, S.L.
T & P SAFOR GESTIO, S.L.
T.S. GESTIO, S.L.
TACASA BIAR, S.L.
TALLER DE PROJECTES GRUP XXI, S.L.L.
TAMG, S.C.
TAPIAS & BELLIDO CONSULTING, S.L.
TARIN MOMPO, S.L.P.
TARRAKO IDEX CORPORATION, S.L.
TARSIUS FINANCIAL ADVICE, S.L.
TAX SAN SEBASTIAN, S.L.
TECFIS, S.L.
TECNICOS AUDITORES CONTABLES Y TRIB.
EN SERV. DE ASESORAMIENTO, S.L.
TECNICOS DE APROVISIONAMIENTO Y
ASESORAMIENTO SISTEMATICO, S.L.
TECNIFISCAL, S.L.
TECNOCORDOBA ASESORES TRIBUTARIOS,
S.L.L.
TEICASTILLO ASSESSORS, S.L.
TEIDE SERVICIOS REALEJOS, S.L.
TEIKEL WEALTH MANAGEMENT, S.L.
TELEMEDIDA Y GAS, S.L.
TETIAROA GESTION Y CONSULTING 2011,
S.L.
THE GADO GROUP. S.L.
THEIA PLUS, S.L.
THINKCO CONSULTORIA DE NEGOCIO, S.L.
TIGALMA , S.L.
TIO & CODINA ASSESSOR D'INVERSIONS,
S.L.
TIRAMAT INVERSIONS, S.L.
TODOPYME, S.L.
TOLL SERVICIOS ECONOMICOS Y FISCALES,
S.L.
TOLOCONSULTING, S.L.
TOMAS SECO ASESORES, S.L.
TOP TEN FRANQUICIAS, S.L.
Y
DE
LEGALES
EMPRESA
SERVICIOS
SERVICIOS
ASESORES
ASOCIADOS
TOPE MEDITERRANEA ASSEGURANCES, S.L.
TORRE DE LA CUESTA CORREDURIA DE
SEGUROS, S.L.
TRAMITES FACILES SANTANDER ASESORES
Y CONSULTORES, S.L.L.
TRAMITS I FORMES, S.L.
TRAYSERCAN, S.L.
TRES
U
PROFESIONALES, S.L.
TRYCICLO ADVISORS, S.L.
TURBON
TRIBUTARIOS, S.L.
TWOINVER IBERICA, S.L.
TXIRRIENA, S.L.
UGARTE
EMPRESARIALES, S.L.
UNAEX CONSULTORIA DE EMPRESAS, S.L.
UNIGLOBAL CONSULTING, S.L.
URBANSUR GLOBAL, S.L.
USKARTZE, S.L.
V.S. SERVICIOS EMPRESARIALES, S.L.
V.S. SERVICOS JURIDICOS, S.L.
VACCEOS GESTORES, S.L.
VALOR AFEGIT OSONA, S.L.
VASALLO RAPELA ASESORES, S.L.
VEJERIEGA CONSULTING, S.L.
VELASCO BERNAL ASESORES LEGALES Y
TRIBUTARIOS, S.L.
VERUM MANAGEMENT, S.L.
VICENTE JUAN ASESORES, S.L.
VICENTE OYA AMATE Y DOS MAS, C.B.
VICOFERSA, S.L.U.
VIGUE PUJOL, S.L.
VILA ABELLO ASESORES, S.L.
VILAR AVIÑO ASESORES, S.L.P.
VILAR RIBA, S.A.
VINTERGEST SERVICIOS INTEGRALES, S.L.
VIÑAS GRABOLEDA ASSESORS, S.L.
VITARSA ESTATE, S.L.
VIVIAL ASESORAMIENTO Y ALQUILERES, S.L.
WEISSE KUSTE, S.L.
WIZNER FAMILY OFFICE, S.L.
XESDEZA, S.L.
XESPRODEM ASESORES, S.L.L.
XESTADEM, S.L.
XESTION CERCEDA, S.L.
YBIS XXI, S.L.
YLLANA Y CABRERIZO CONSULTORES, S.L.
YOGESTOREO, S.L.
ZALTYS, S.L.
ZATOSTE,S.L.
ZONA JURIDICA AGENTE, S.L.
ZORROZUA CONSULTING, S.L.
ZUBIZUA, S.L.
ZUIKER Y ASOCIADOS, S.L
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 52). 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.
P. 225
Glossary
Additional Tier 1
Capital
Adjusted acquisition
cost
Amortized cost
Associates
Available-for-sale
financial assets
Basic earnings per
share
Basis risk
Business
combination
Cash flow hedges
Commissions
Includes: Preferred stock and convertible perpetual securities and deductions
The acquisition cost of the securities less accumulated amortizations, plus interest
accrued, but not net of any other valuation adjustments.
The amortized cost of a financial asset is the amount at which it was measured at
initial recognition minus principal repayments, plus or minus, as warranted, the
cumulative amount taken to profit or loss using the effective interest rate method of
any difference between the initial amount and the maturity amount, and minus any
reduction for impairment or change in measured value.
Companies in which the Group has a significant influence, without having control.
Significant influence is deemed to exist when the Group owns 20% or more of the
voting rights of an investee directly or indirectly.
Available-for-sale (AFS) financial assets are debt securities that are not classified as
held-to-maturity investments or as financial assets designated at fair value through
profit or loss (FVTPL) and equity instruments that are not subsidiaries, associates or
jointly controlled entities and have not been designated as at FVTPL.
Calculated by dividing “Profit attributable to Parent Company” corresponding to
ordinary shareholders of the entity by the weighted average number of shares
outstanding throughout the year (i.e., excluding the average number of treasury
shares held over the year).
Risk arising from hedging exposure to one interest rate with exposure to a rate that
reprices under slightly different conditions.
A business combination is a transaction, or any other event, through which a single
entity obtains the control of one or more businesses.
Those that hedge the exposure to variability in cash flows attributable to a particular
risk associated with a recognized asset or liability or a highly probable forecast
transaction and could affect profit or loss.
Income and expenses relating to commissions and similar fees are recognized in the
consolidated income statement using criteria that vary according to their nature. The
most significant income and expense items in this connection are:
· Fees and commissions relating linked to financial assets and liabilities measured
at fair value through profit or loss, which are recognized when collecte
· Fees and commissions arising from transactions or services that are provided
over a period of time, which are recognized over the life of these transactions or
services.
· Fees and commissions generated by a single act are accrued upon execution of
that act.
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 52). 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.
P. 226
Method used for the consolidation of the accounts of the Group’s subsidiaries. The
assets and liabilities of the Group entities are incorporated line-by-line on the
consolidate balance sheets, after conciliation and the elimination in full of intragroup
balances, including amounts payable and receivable.
income statement
Group entity
income and expense headings are similarly
combined line by line into the consolidated income statement, having made the
following consolidation eliminations:
a)
Income and expenses in respect of intragroup transactions are eliminated in full.
b) Profits and losses resulting from intragroup transactions are similarly eliminated.
The indirect method has been used for the preparation of the consolidated statement
of cash flows. This method starts from the entity’s consolidated profit 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 equivalents.
When preparing these financial statements the following definitions have been used:
· Cash flows: Inflows and outflows of cash and 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 Group’s equity and of liabilities that do not form part of operating activities.
The consolidated statements of changes in equity reflect all the movements
generated in each year in each of the headings of the consolidated 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 31), are included in the Group’s total consolidated
equity net of tax effect, which has been recognized as deferred tax assets or
liabilities, as appropriate.
The consolidated statements of recognized income and expenses reflect the income
and expenses generated each year. Such statement distinguishes between income
and expenses recognized in the consolidated income statements and “Other
recognized income (expenses)” recognized directly in consolidated 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 “Other comprehensive income” of the
consolidated total equity and the consolidated profit for the year comprise the “Total
recognized income/expenses of the year”.
Current obligations of the entity arising as a result of past events whose existence
depends on the occurrence or non-occurrence of one or more future events
independent of the will of the entity.
Consolidated Method
Consolidated
statements of cash
flows
Consolidated
statements of
changes in equity
Consolidated
statements of
recognized income
and expenses
Contingencies
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 52). 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.
P. 227
Contingent
commitments given
Control
Correlation risk
Credit Valuation
Adjustment (CVA)
Current tax assets
Current tax liabilities
Debit Valuation
Adjustment (DVA)
Debt certificates
Deferred tax assets
Deferred tax liabilities
Defined benefit plans
Defined contribution
plans
Possible obligations of the entity that arise from past events and whose existence
depends on the occurrence or non-occurrence of one or more future events
independent of the entity’s will and that could lead to the recognition of financial
assets.
An investor controls an investee when it is exposed, or has rights, to variable returns
from its involvement with the investee and has the ability to affect those returns
through its power over the investee. An investor controls an investee if and only if the
investor has all the following:
a) Power; An investor has power over an investee when the investor has existing
rights that give it the current ability to direct the relevant activities, i.e. the
activities that significantly affect the investee’s returns.
b) Returns; An investor is exposed, or has rights, to variable returns from its
involvement with the investee when the investor’s returns from its involvement
have the potential to vary as a result of the investee’s performance. The
investor’s returns can be only positive, only negative or both positive and
negative.
c) Link between power and returns; An investor controls an investee if the investor
not only has power over the investee and exposure or rights to variable returns
from its involvement with the investee, but also has the ability to use its power to
affect the investor’s returns from its involvement with the investee.
Correlation risk
is related to derivatives whose final value depends on the
performance of more than one underlying asset (primarily, stock baskets) and
indicates the existing variability in the correlations between each pair of assets.
An adjustment to the valuation of OTC derivative contracts to reflect the
creditworthiness of OTC derivative counterparties.
Taxes recoverable over the next twelve months.
Corporate income tax payable on taxable profit for the year and other taxes payable
in the next twelve months.
An adjustment made by an entity to the valuation of OTC derivative liabilities to
reflect within fair value the entity’s own credit risk.
Obligations and other interest-bearing securities that create or evidence a debt on
the part of their issuer, including debt securities issued for trading among an open
group of investors, that accrue interest, implied or explicit, whose rate, fixed or
benchmarked to other rates, is established contractually, and take the form of
securities or book-entries, irrespective of the issuer.
Taxes recoverable in future years, including loss carry forwards or tax credits for
deductions and tax rebates pending application.
Income taxes payable in subsequent years.
Post-employment obligation under which the entity, directly or indirectly via the plan,
implicit obligation to pay remuneration directly to
retains the contractual or
employees when required or to pay additional amounts if the insurer, or other entity
required to pay, does not cover all the benefits relating to the services rendered by
the employees when insurance policies do not cover all of the corresponding post-
employees benefits.
Defined contribution plans are retirement benefit plans under which amounts to be
paid as retirement benefits are determined by contributions to a fund together with
investment earnings thereon. The employer's obligations in respect of its employees
current and prior years' employment service are discharged by contributions to the
fund.
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 52). 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.
P. 228
Deposits from central
banks
Deposits from credit
institutions
Deposits from
customers
Derivatives
Derivatives - Hedging
derivatives
Diluted earnings per
share
Dividends and
retributions
Early retirements
Economic capital
Effective interest rate
Employee expenses
Equity
Equity instruments
Equity instruments
issued other than
capital
Deposits of all classes, including loans and money market operations, received from
the Bank of Spain and other central banks.
Deposits of all classes, including loans and money market operations received, from
credit entities.
Redeemable cash balances received by the entity, with the exception of debt
certificates, money market operations through counterparties and subordinated
liabilities, which are not received from either central banks or credit entities. This
category also includes cash deposits and consignments received that can be readily
withdrawn.
The fair value in favor (assets) or again (liabilities) of the entity of derivatives not
designated as accounting hedges.
Derivatives designated as hedging instruments in an accounting hedge. The fair value
or future cash flows of those derivatives is expected to offset the differences in the
fair value or cash flows of the items hedged.
Calculated by using a method similar to that used to calculate basic earnings per
share; the weighted average number of shares outstanding, and the profit
attributable to the parent company corresponding to ordinary shareholders of the
entity, if appropriate, is adjusted to take into account the potential dilutive effect of
certain financial instruments that could generate the issue of new Bank shares (share
option commitments with employees, warrants on parent company shares,
convertible debt instruments, etc.).
Dividend income collected announced during the year, corresponding to profits
generated by investees after the acquisition of the stake.
Employees that no longer render their services to the entity but which, without being
legally retired, remain entitled to make economic claims on the entity until they
formally retire.
Methods or practices that allow banks to consistently assess risk and attribute
capital to cover the economic effects of risk-taking activities.
Discount rate that exactly equals the value of a financial instrument with the cash
flows estimated over the expected life of the instrument based on its contractual
period as well as its anticipated amortization, but without taking the future losses of
credit risk into consideration.
All compensation accrued during the year in respect of personnel on the payroll,
under permanent or temporary contracts, irrespective of their jobs or functions,
irrespective of the concept, including the current costs of servicing pension plans,
own share based compensation schemes and capitalized personnel expenses.
Amounts reimbursed by the state Social Security or other welfare entities in respect
of employee illness are deducted from personnel expenses.
The residual interest in an entity's assets after deducting its liabilities. It includes
owner or venturer contributions to the entity, at incorporation and subsequently,
unless they meet the definition of liabilities, and accumulated net profits or losses,
fair value adjustments affecting equity and, if warranted, non-controlling interests.
An equity instrument that evidences a residual interest in the assets of an entity, that
is after deducting all of its liabilities.
Includes equity instruments that are financial instruments other than “Capital” and
“Equity component of compound financial instruments”.
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 52). 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.
P. 229
Equity Method
Exchange/translation
differences
Exposure at default
Fair value
Fair value hedges
Financial guarantees
Financial guarantees
given
Financial instrument
Financial liabilities at
amortized cost
Goodwill
Hedges of net
investments in
foreign operations
Held for trading
(assets and liabilities)
Held-to-maturity
investments
Is a method of accounting whereby the investment is initially recognized at cost and
adjusted thereafter for the post-acquisition change in the investor’s share of the
investee’s net assets. The investor’s profit or loss includes its share of the investee’s
profit or loss and the investor’s other comprehensive income includes its share of the
investee’s other comprehensive income.
Exchange differences (P&L): Includes the earnings obtained in currency trading and
the differences arising on translating monetary items denominated in foreign
currency to the functional currency. Exchange differences (valuation adjustments):
those recorded due to the translation of the financial statements in foreign currency
to the functional currency of the Group and others recorded against equity.
EAD is the amount of risk exposure at the date of default by the counterparty.
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.
Derivatives that hedge the exposure to changes in the fair value of assets and
liabilities or firm commitments that have not be recognized, or of an identified portion
of said assets, liabilities or firm commitments, attributable to a specific risk, provided
it could affect the income statement.
Contracts that require the issuer to make specified payments to reimburse the
holder for a loss it incurs when a specified debtor fails to make payment when due in
accordance with the original or modified terms of a debt instrument, irrespective of
its instrumentation. These guarantees may take the form of deposits, technical or
financial guarantees, insurance contracts or credit derivatives.
Transactions through which the entity guarantees commitments assumed by third
parties in respect of financial guarantees granted or other types of contracts.
A financial instrument is any contract that gives rise to a financial asset of one entity
and to a financial liability or equity instrument of another entity.
Financial liabilities that do not meet the definition of financial liabilities designated at
fair value through profit or loss and arise from the financial entities' ordinary activities
to capture funds, regardless of their instrumentation or maturity.
Goodwill acquired in a business combination represents a payment made by the
acquirer in anticipation of future economic benefits from assets that are not able to
be individually identified and separately recognized.
Foreign currency hedge of a net investment in a foreign operation.
Financial assets and liabilities acquired or incurred primarily for the purpose of
profiting from variations in their prices in the short term.
This category also includes financial derivatives not qualifying for hedge accounting,
and in the case of borrowed securities, financial liabilities originated by the firm sale
of financial assets acquired under repurchase agreements or received on loan
(“short positions”).
Held-to-maturity investments are financial assets traded on an active market, with
fixed maturity and fixed or determinable payments and cash flows that an entity has
the positive intention and financial ability to hold to maturity.
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 52). 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.
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Impaired financial
assets
Income from equity
instruments
Insurance contracts
linked to pensions
Inventories
Investment
properties
A financial asset is deemed impaired, and accordingly restated to fair value, when
there is objective evidence of impairment as a result of one or more events that give
rise to:
a) A measurable decrease in the estimated future cash flows since the initial
recognition of those assets in the case of debt instruments (loans and
receivables and debt securities).
b) A significant or prolonged drop in fair value below cost in the case of equity
instruments.
Dividends and income on equity instruments collected or announced during the year
corresponding to profits generated by investees after the ownership interest is
acquired. Income is recognized gross, i.e., without deducting any withholdings made,
if any.
The fair value of insurance contracts written to cover pension commitments.
instruments, under production, construction or
Assets, other than financial
development, held for sale during the normal course of business, or to be consumed
in the production process or during the rendering of services. Inventories include land
and other properties held for sale at the real estate development business.
Investment property is property (land or a building—or part of a building—or both)
held (by the owner or by the lessee under a finance lease) to earn rentals or for
capital appreciation or both, rather than for own use or sale in the ordinary course of
business.
Joint arrangement
An arrangement of which two or more parties have joint control.
Joint control
Joint venture
Leases
The contractually agreed sharing of control of an arrangement, which exists only
when decisions about the relevant activities require the unanimous consent of the
parties sharing control.
A joint arrangement whereby the parties that have joint control of the arrangement
have rights to the net assets of the arrangement. A joint venturer shall recognize its
interest in a joint venture as an investment and shall account for that investment
using the equity method in accordance with IAS 28 Investments in Associates and
Joint Ventures.
A lease is an agreement whereby the lessor conveys to the lessee in return for a
payment or series of payments the right to use an asset for an agreed period of time,
a stream of cash flows that is essentially equivalent to the combination of principal
and interest payments under a loan agreement.
a) A lease is classified as a finance lease when it substantially transfers all the risks
and rewards incidental to ownership of the asset forming the subject-matter of
the contract.
b) A lease will be classified as operating lease when it is not a financial lease.
Liabilities included in
disposal groups
classified as held for
sale
Liabilities under
insurance contracts
Loans and advances
to customers
The balance of liabilities directly associated with assets classified as non-current
assets held for sale, including those recognized under liabilities in the entity's balance
sheet at the balance sheet date corresponding to discontinued operations.
The technical reserves of direct insurance and inward reinsurance recorded by the
consolidated entities to cover claims arising from insurance contracts in force at
period-end.
Loans and receivables, irrespective of their type, granted to third parties that are not
credit entities.
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 52). 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.
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Financial instruments with determined or determinable cash flows and in which the
entire payment made by the entity will be recovered, except for reasons attributable
to the solvency of the debtor. This category includes both the investments from the
lending activity (amounts of cash available and pending maturity by
typical
customers as a loan or deposits lent to other entities, and unlisted debt certificates),
as well as debts contracted by the purchasers of goods, or users of services, that
form part of the entity’s business. It also includes all finance lease arrangements in
which the consolidated subsidiaries act as lessors.
It is the estimate of the loss arising in the event of default. It depends mainly on the
characteristics of the counterparty, and the valuation of the guarantees or collateral
associated with the asset.
Financial asset or security created from mortgage loans and backed by the
guarantee of the mortgage loan portfolio of the entity.
The balance of non performing risks, whether for reasons of default by customers or
for other reasons, for financial guarantees given. This figure is shown gross: in other
words, it is not adjusted for value corrections (loan loss reserves) made.
The net amount of the profit or loss and net assets of a subsidiary attributable to
associates outside the group (that is, the amount that is not owned, directly or
indirectly, by the parent), including that amount in the corresponding part of the
consolidated earnings for the period.
A non-current asset or disposal group, whose carrying amount is expected to be
realized through a sale transaction, rather than through continuing use, and which
meets the following requirements:
a) It is immediately available for sale in its present condition at the balance sheet
date, i.e. only normal procedures are required for the sale of the asset.
b) The sale is considered highly probable.
Assets and liabilities that do not provide any right to receive or deliver a determined
or determinable amount of monetary units, such as tangible and intangible assets,
goodwill and ordinary shares subordinate to all other classes of capital instruments.
Risks arising from options, including embedded options.
Loans and
receivables
Loss given default
(LGD)
Mortgage-covered
bonds
Non performing
financial guarantees
given
Non-controlling
interests
Non-current assets
and disposal groups
held for sale
Non-monetary assets
Option risk
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 52). 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.
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Instruments designated by the entity from the inception at fair value with changes in
profit or loss.
An entity may only designate a financial instrument at fair value through profit or loss,
if doing so more relevant information is obtained, because:
a)
It eliminates or significantly reduces a measurement or recognition
inconsistency (sometimes called "accounting mismatch")
that would
otherwise arise from measuring assets or liabilities or recognizing the gains
and losses on them on different bases. It might be acceptable to designate
only some of a number of similar financial assets or financial liabilities if doing
so a significant reduction (and possibly a greater reduction than other
allowable designations) in the inconsistency is achieved.
b) The performance of a group of financial assets or financial liabilities is managed
and evaluated on a fair value basis, in accordance with a documented risk
management or investment strategy, and information about the group is
provided internally on that basis to the entity´s key management personnel.
These are financial assets managed
insurance
contracts” measured at fair value, in combination with derivatives written with a view
to significantly mitigating exposure to changes in these contracts' fair value, or in
combination with financial liabilities and derivatives designed to significantly reduce
global exposure to interest rate risk.
jointly with “Liabilities under
These headings include customer loans and deposits effected via so-called unit-
linked life insurance contracts, in which the policyholder assumes the investment
risk.
This heading is broken down as follows:
i) Reserves or accumulated losses of investments in subsidiaries, joint ventures and
associate: include the accumulated amount of income and expenses generated
by the aforementioned investments through profit or loss in past years.
ii) Other: includes reserves different from those separately disclosed in other items
and may include legal reserve and statutory reserve.
Other financial
assets/liabilities at
fair value through
profit or loss
Other Reserves
Other retributions to
employees long term
Includes the amount of compensation plans to employees long term
Own/treasury shares The amount of own equity instruments held by the entity.
Post-employment
benefits
Probability of default
(PD)
Provisions
Provisions for
contingent liabilities
and commitments
Retirement benefit plans are arrangements whereby an enterprise provides benefits
for its employees on or after termination of service.
It is the probability of the counterparty failing to meet its principal and/or interest
is associated with the rating/scoring of each
payment obligations. The PD
counterparty/transaction.
Provisions include amounts recognized to cover the Group’s current obligations
arising as a result of past events, certain in terms of nature but uncertain in terms of
amount and/or cancellation date.
Provisions recorded to cover exposures arising as a result of transactions through
which the entity guarantees commitments assumed by third parties in respect of
financial guarantees granted or other types of contracts, and provisions for
contingent commitments, i.e., irrevocable commitments which may arise upon
recognition of financial assets.
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 52). 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.
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Provisions for
pensions and similar
obligation
Provisions or (-)
reversal of provisions
Refinanced Operation
Refinancing
Operation
Repricing risk
Restructured
Operation
Retained earnings
Share premium
Shareholders' funds
Short positions
including
Constitutes all provisions recognized to cover retirement benefits,
commitments assumed vis-à-vis beneficiaries of early retirement and analogous
schemes.
Provisions recognized during the year, net of recoveries on amounts provisioned in
prior years, with the exception of provisions for pensions and contributions to
pension funds which constitute current or interest expense.
An operation which is totally or partially brought up to date with its payments as a
result of a refinancing operation made by the entity itself or by another company in its
group.
An operation which, irrespective of the holder or guarantees involved, is granted or
used for financial or legal reasons related to current or foreseeable financial
difficulties that the holder(s) may have in settling one or more operations granted by
the entity itself or by other companies in its group to the holder(s) or to another
company or companies of its group, or through which such operations are totally or
partially brought up to date with their payments, in order to enable the holders of the
settled or refinanced operations to pay off their loans (principal and interest) because
they are unable, or are expected to be unable, to meet the conditions in a timely and
appropriate manner.
Risks related to the timing mismatch in the maturity and repricing of assets and
liabilities and off-balance sheet short and long-term positions.
An operation whose financial conditions are modified for economic or legal reasons
related to the holder's (or holders') current or foreseeable financial difficulties, in
order to enable payment of the loan (principal and interest), because the holder is
unable, or is expected to be unable, to meet those conditions in a timely and
appropriate manner, even if such modification is provided for in the contract. In any
event, the following are considered restructured operations: operations in which a
haircut is made or assets are received in order to reduce the loan, or in which their
conditions are modified in order to extend their maturity, change the amortization
table in order to reduce the amount of the installments in the short term or reduce
their frequency, or to establish or extend the grace period for the principal, the
interest or both; except when it can be proved that the conditions are modified for
reasons other than the financial difficulties of the holders and, are similar to those
applied on the market on the modification date for operations granted to customers
with a similar risk profile.
Accumulated net profits or losses recognized in the income statement in prior years
and retained in equity upon distribution.
The amount paid in by owners for issued equity at a premium to the shares' nominal
value.
Contributions by stockholders, accumulated earnings recognized in the income
statement and the equity components of compound financial instruments.
Financial liabilities arising as a result of the final sale of financial assets acquired
under repurchase agreements or received on loan.
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 52). 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.
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Is the power to participate in the financial and operating policy decisions of the
investee but is not control or joint control of those policies. If an entity holds, directly
or indirectly (i.e. through subsidiaries), 20 per cent or more of the voting power of the
investee, it is presumed that the entity has significant influence, unless it can be
clearly demonstrated that this is not the case. Conversely, if the entity holds, directly
or indirectly (i.e. through subsidiaries), less than 20 per cent of the voting power of
the investee, it is presumed that the entity does not have significant influence, unless
such influence can be clearly demonstrated. A substantial or majority ownership by
another investor does not necessarily preclude an entity from having significant
influence.
The existence of significant influence by an entity is usually evidenced in one or more
of the following ways:
a) representation on the board of directors or equivalent governing body of the
investee;
b) participation in policy-making processes, including participation in decisions
about dividends or other distributions
c) material transactions between the entity and its investee;
d) interchange of managerial personnel; or
e) provision of essential technical information.
Financing received, regardless of its instrumentation, which ranks after the common
creditors in the event of a liquidation.
Companies over which the Group exercises control. An entity is presumed to have
control over another when it possesses the right to oversee its financial and
operational policies, through a legal, statutory or contractual procedure, in order to
obtain benefits from its economic activities. Control is presumed to exist when the
parent owns, directly or indirectly through subsidiaries, more than one half of an
entity's voting power, unless, exceptionally, it can be clearly demonstrated that
ownership of more than one half of an entity's voting rights does not constitute
control of it. Control also exists when the parent owns half or less of the voting power
of an entity when there is:
a) An agreement that gives the parent the right to control the votes of other
shareholders;
b) power to govern the financial and operating policies of the entity under a
statute or an agreement; power to appoint or remove the majority of the
members of the board of directors or equivalent governing body and control of
the entity is by that board or body;
c) power to cast the majority of votes at meetings of the board of directors or
equivalent governing body and control of the entity is by that board or body.
Buildings, land, fixtures, vehicles, computer equipment and other facilities owned by
the entity or acquired under finance leases.
All tax related liabilities except for provisions for taxes.
Financial assets or fixed asset security issued with the guarantee of portfolio loans of
the public sector of the issuing entity
in consolidated
Includes: Common stock, parent company reserves, reserves
companies, non-controlling interests, , generic countable , deduction and others and
attributed net income
Significant influence
Subordinated
liabilities
Subsidiaries
Tangible assets
Tax liabilities
Territorials bonds
Tier 1 Capital
Tier 2 Capital
Includes: Subordinated, preferred shares and non- controlling interest
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 52). 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.
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Unit-link
This is life insurance in which the policyholder assumes the risk. In these policies, the
funds for the technical insurance provisions are invested in the name of and on behalf
of the policyholder in shares of Collective Investment Institutions and other financial
assets chosen by the policyholder, who bears the investment risk.
Value at Risk (VaR)
Value at Risk (VaR) is the basic variable for measuring and controlling the Group’s
market risk. This risk metric estimates the maximum loss that may occur in a
portfolio’s market positions for a particular time horizon and given confidence level
VaR figures are estimated following two methodologies:
· VaR without smoothing, which awards equal weight to the daily information for
is currently the official
the
methodology for measuring market risks vis-à-vis limits compliance of the risk.
immediately preceding
last two years. This
· VaR with smoothing, which weights more recent market information more
heavily. This is a metric which supplements the previous one.
VaR with smoothing adapts itself more swiftly to the changes in financial market
conditions, whereas VaR without smoothing is, in general, a more stable metric that
will tend to exceed VaR with smoothing when the markets show less volatile trends,
while it will tend to be lower when they present upturns in uncertainty.
Yield curve risk
Risks arising from changes in the slope and the shape of the yield curve.
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 52). 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.
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BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
Management report for the year ended December 31, 2017
Contents
1.
Introduction ........................................................................................................................................................ 2
2. Economic outlook ............................................................................................................................................... 2
3. Balance sheet, business activity and earnings ................................................................................................. 2
4. Risk management ............................................................................................................................................... 3
5. BBVA Group solvency and capital ratios .......................................................................................................... 3
6. Sustainable finance and contribution to society .............................................................................................. 3
7. Customer Care Service and Customer Ombudsman ..................................................................................... 3
7.1. Activity report on the Customer Care Service in Spain ........................................................................... 4
7.2. Report on the activity of the BBVA Group Customer Ombudsman in Spain ......................................... 5
8.
Innovation and Technology................................................................................................................................ 6
9. Other information ............................................................................................................................................... 8
9.1. Capital and treasury stock ......................................................................................................................... 8
9.2. Shareholder remuneration and allocation of earnings ............................................................................ 8
9.3. Average period for payment to suppliers .................................................................................................. 8
Subsequent events ......................................................................................................................................... 8
Annual corporate governance report ............................................................................................................ 9
10.
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 52). 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.
P. 2
1. Introduction
Banco Bilbao Vizcaya Argentaria, S.A. (the “Bank” or “BBVA”) is a private-law entity governed by the rules
and regulations applicable to banks operating in Spain. The Bank conducts its business through branches
and offices located throughout Spain and abroad.
The management report of BBVA, S.A. has been prepared from the individual accounting and management
records of Banco Bilbao Vizcaya Argentaria, SA
BBVA is the parent company of the BBVA Group (hereinafter, “the Group”). It is an internationally diversified
group with a significant presence in the business of traditional retail banking, asset management and
wholesale banking.
The financial information included in this management report is presented in accordance with the criteria
established by the Bank of Spain Circular 4/2004, of December 22, on Public and Confidential Financial
Reporting Rules and Formats for Financial Statements, and its subsequent amendments.
2. Economic outlook
Global economic growth held steady at around 1% quarter-on-quarter in the first nine months of 2017 and
latest available indicators suggest a continuation of this momentum in the last part of the year. Confidence
data continues to improve, accompanied by a recovery in world trade and the industrial sector, while private
consumption remains robust in developed countries. This positive trend reflects an improved economic
performance across all regions. In advanced economies, U.S. GDP expanded more than expected in 2017
(+2.3%), alleviating doubts about the sustainability of growth rates over the coming quarters. In Europe, the
pickup in growth in recent quarters (+2.5% en el 2017) can be explained by a strengthening of domestic
demand. Among emerging economies, growth in China is set to remain supportive for the rest of Asia.
Alongside favorable market conditions, this will give increased impetus to Latin American countries. Finally,
with their recovery, Russian and Brazilian economies are no longer hampering global growth. Accordingly,
and in contrast to other post-financial crisis periods, there has been a global synchronous recovery.
This growth environment has been accompanied by moderate levels of inflation, despite ample liquidity in
the markets. As a result of the above, central banks have more room for maneuver in emerging economies to
continue using monetary policy to support growth, while allowing monetary authorities in advanced
economies to maintain a cautious approach to implementing monetary policy normalization.
Other factors which have contributed to the upbeat global picture, such as generally neutral or somewhat
expansive fiscal policy and moderate commodity prices, look likely to remain in place over the coming
quarters. Global growth is therefore forecast to accelerate to around 3.7% in 2017.
3. Balance sheet, business activity and earnings
The key figures in the Bank’s balance sheet with respect to its main business are as follow:
The Bank's total balance sheet as of December 31, 2017 stood at €400,083 million (€418,447 million
in 2016). At the close of 2017, “Loans and receivables – Loans and advances to customers”
amounted to €211,597 million, compared with €213,890 million for the previous year. As of
December 31, 2017, customer deposits stood at €194,645 million (€207,946 million in 2016).
In 2017, the Bank had a net profit after tax of €2,083 million euros (€1,662 million in 2016).
Operating expenses decreased from €4,247 million in 2016 to €4,037 million in 2017.
Administration costs have decreased from €4,247 million in 2016 to €4,037 million in 2017.
Gross income for 2017 totaled €9,220 million, compared with €8,674 million in 2016.
Net interest income in 2017 stood at €3,463 million (€3,523 million in 2016).
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 52). 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.
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4. Risk management
BBVA's risk management system is outlined in Note 5, Risk Management, of the accompanying Financial
Statements.
5.
BBVA Group solvency and capital ratios
The BBVA Group’s capital ratios
BBVA Group's solvency and capital ratios required by the regulation in force are outlined in Note 28 of the
accompanying Financial Statements.
6.
Sustainable finance and contribution to society
Banks play a key role in the fight against climate change, thanks to their unique position in mobilizing capital
through investment, loans and advisory functions. Although most banks have worked in recent years to
mitigate the direct impacts of their activity, there are other very important ways they can contribute to this
challenge: first, by providing innovative solutions to their customers to help them move to a low-carbon
economy and by promoting sustainable finance; and second, by systematically integrating social and
environmental risks into decision-making.
BBVA's commitment to sustainable development is reflected in its Environmental policy, which is global in
scope.
In 2017, BBVA worked its strategy on climate change and sustainable development. The strategy covers
comprehensive management of the risks and opportunities deriving from the fight against climate change
and the resolve to achieve the Sustainable Development Goals (SDGs).
This strategy is based on a threefold commitment through 2025:
First, a commitment to finance, which contributes to the mobilization of the capital needed to halt climate
change and achieve the SDGs.
Second, a commitment to mitigate the social and environmental risks derived from the Bank's activity, to
minimize their potential direct and indirect negative aspects.
And finally, a commitment to engagement with all the stakeholders involved in the collective promotion of
the role of the financial industry in sustainable development.
As of December 31, 2017, the accompanying Consolidated Annual Accounts of the BBVA Group do not
include any material item that would warrant inclusion in the environmental information document set forth
in the Ministry of Justice Order JUS / 471/2017, of May 19, which approves the new models for the
presentation in the Companies Registry of the annual accounts of the subjects bound to its publication.
7.
Customer Care Service and Customer Ombudsman
The activities of the Customer Care Service and Customer Ombudsman in 2017 were carried out in
accordance with the stipulations of Article 17 of the Ministerial Order (OM) ECO/734/2004, dated March 11,
of the Ministry of the Economy, regarding customer care and consumer ombudsman departments at
financial institutions, and in line with the new "Regulations for Customer Protection in Spain" of the BBVA
Group approved by the Board of Directors of the Bank in 2015, regulating the activities and powers of the
Customer Care Service and Customer Ombudsman.
The Customer Care Service processes complaints and claims addressed to both the Customer Ombudsman
and the Customer Care Service itself in the first instance, except for matters falling within the powers of the
Customer Ombudsman as established in the aforementioned regulation.
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 52). 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.
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7.1. Activity report on the Customer Care Service in Spain
2017 was marked by a difficult environment, above all relating to the various clauses in mortgage loan
agreements (arrangement fees, multi-currency mortgages, benchmark indices), which have conditioned the
figures for claims in the Spanish financial system. In addition, the Customer Care Service Department
assumed the claims of all customers from Catalunya Bank, which were integrated into BBVA in September
2016, which resulted in a greater number of claims compared to the previous year.
Customer claims received by BBVA's customer care service in Spain amounted to 172,030 cases in 2017, of
which 169,064 were resolved by the Customer Care Service itself and concluded in the same year (98% of
the total). A total of 2,966 cases remained as pending analysis.
Practically 90% of the claims received corresponded to mortgage loans, mainly to expenses from the
formalization of mortgages.
In 2016, the admitted claims amounted to 21,160 and the cases resolved and concluded amounted to 18,477,
an 87% of the issues.
In 2017 the Customer Care Service assumed the processing of claims from all the customers of Catalunya
Bank, which was integrated into BBVA in September 2016, resulting in a greater number of claims on the
figure for the previous year.
Complaints handled by Customer Care Service by complaint type (Percentage)
Type
Resources
Assets products/ loans
Insurances
Collection and payment services
Financial counselling and quality service
Credit Cards
Securities and equity portfolios
Other
Total
Complaints handled by Customer Care Service according to resolution (Number)
In favor of the person submitting the complaint
Partially in favor of the person submitting the complaint
In favor of the BBVA Group
Total
2017
9.0%
80.0%
-
2.0%
2.0%
4.0%
1.0%
2.0%
2016
26.0%
29.0%
-
8.0%
8.0%
10.0%
6.0%
13.0%
100.0%
100.0%
2017
28,456
89,585
51,023
2016
6,373
2,511
9,594
169,064
18,478
The claims management model and the principles governing the activity of the Customer Care Service are
aimed at achieving recognition and trust on the part of the Group's customers, with the aim of increasing
their satisfaction levels. The model operates from the origination stage, as the Customer Care Service sits on
the committees presenting new products and services. In this way, possible customer dissatisfaction can be
anticipated and avoided.
Additionally, in accordance with the recommendation of the regulatory body, progress continued in 2017 on
the ambitious training plan that has been created for the whole team making up this Service. The aim is to
guarantee the BBVA managers have the knowledge to improve identification of customer needs and
contribute high added value solutions.
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 52). 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.
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7.2. Report on the activity of the BBVA Group Customer Ombudsman in Spain
In 2017, the Customer Ombudsman maintained the goal common to the BBVA Group as a whole of unifying
criteria and fostering the protection and security of customers, making progress in compliance with
regulations on transparency and customer protection. With the aim of passing on effectively its reflections
and criteria on matters subjected to its consideration, the Ombudsman meets with areas and units in BBVA
Group: Insurance, Pension Plan Manager, Business, Legal Services, etc.
The number of customer complaints presented to the Customer Ombudsman for resolution in 2017 was
1,438. Of these, 114 were finally not processed as they did not meet the requirements set out in OM
ECO/734/2004.
Complaints handled by the Customer Ombudsman by complaint type (Number)
Type
Insurance and welfare products
Assets operations
Investment services
Liabilities operations
Other banking products (credit card, ATM, etc.)
Collection and payment services
Other
Total
2017
2016
377
367
133
257
140
69
95
462
298
137
175
86
62
128
1,438
1,348
The type of complaints managed in the table above follows the criteria established by the Complaints
Department of the Bank of Spain in their requests for information:
Complaints handled by Customer Ombudsman according to resolution (Number)
In favor of the person submitting the complaint
Partially in favor of the person submitting the complaint
In favor of the BBVA Group
Processing suspended
Total
2017
2016
-
704
527
8
-
784
457
-
1,239
1,241
52.03% of the customers who submitted a complaint to the Ombudsman in 2017 reported some level of
satisfaction, either because of the decision of the Customer Ombudsman or its role as mediator between
BBVA Group entities and customers.
Customers who are not satisfied with the Customer Ombudsman's response may refer the matter to the
official supervisory bodies (the Bank of Spain, CNMV and the Directorate General of Insurance and Pension
Funds). The number of complaints submitted by customers to the supervisory bodies in 2017 was 127.
In 2017, BBVA Group continued to make progress in implementing the suggestions of the Customer
Ombudsman related to adapting products to the profile of customers and the need for transparent, clear and
responsible information. The recommendations and suggestions made by the Customer Ombudsman are
focused on increasing the level of transparency and clarity of information that BBVA Group provides for its
customers, both in its commercial products that it makes available to them, and in compliance with the
orders and instructions issued by customers. The aim is to guarantee that customers understand the nature
and risks of the financial products that they are offered, that the product is adapted to the customer profile
and that the information provided by the Entity is impartial and clear, including the advertising targeted at
customers. To do so, the Group is employing the Transparent, Clear and Responsible (TCR) communication
initiative for Responsible Business, providing as much data and documentation as necessary.
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 52). 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.
P. 6
In addition, with the increasing digitalization of the products offered to customers and their growing
complexity, a special sensitivity is required with some groups of customers that due to their profile, age or
personal situation present a high level of vulnerability.
8. Innovation and Technology
BBVA is engaged in a process of digital transformation, the main aim of which is to achieve its aspiration of
strengthening relationships with its customers and being the best possible bank for them. Engineering is an
essential component of this transformation. Its mission has always been to enable a technology strategy that
provides the foundation for this transformation, thus becoming more customer-centric and establishing a
more global strategy, fast to implement, digital, flexible and leveraged on the Group's data. This must be
done while continuing to provide support to the Bank's core business: catering to the demand for traditional
business (multi-segment, multi-product, multi-channel, etc.); and b) contributing reliability, with the
necessary tools to ensure adequate internal controls, based on consistent information and data. Another
Engineering objective is provide the group with all the tools it needs to drive profitability, new productivity
paradigms and new business processes.
The area's responsibilities continue to be focused on the lines of work that were indicated in 2016:
A new technology stack to offer customers services that are more suited to their needs, in terms of
speed and content.
Alliances with strategic partners to harness cutting-edge technology, and the necessary
collaboration to speed up the transformation process.
Productivity and reliability, i.e. securing improved performance from technology, and doing so in a
manner that is fully reliable and guarantees the highest quality standards.
New technology stack: cloud paradigms
With customers increasingly making use of digital channels, and therefore driving an exponential increase in
transaction numbers, the Group is continuing to develop its IT model into a more uniform and scalable
system, boosting cloud technology.
In 2017, Engineering continued to construct and deploy the building blocks of the new global technological
stack for the whole of BBVA. This stack shares the cloud attributes of flexibility and stability that are
demanded by the digital world, while strictly complying with regulatory requirements. The first pilot projects
have been executed on the blocks with good results. This new stack will enable real-time access, a new
approach to data management and the optimization of processing costs, providing customers with a service
that caters directly to their needs.
Strategic alliances
Engineering continues to drive the creation of a network of strategic alliances, giving traction to BBVA's
digital transformation and complement its technology stack. Establishing an ecosystem of strategic alliances
with some of the leading businesses in the market ensures the adoption of innovative technologies,
digitalization of the business, speed in activation, as well as global deployment of solutions. Furthermore, by
building a network of technological alliances with strategic partners, BBVA will work in close cooperation with
some of the foremost companies in their respective fields.
In 2017 alliances have been established with relevant entities wich will, on one hand, operate and optimize
BBVA current technology and on the other hand, manage the global communications structure.
Productivity and reliability
Engineering continues focus on productivity as part of the transformation process. Greater productivity is
needed to provide our customers with the best possible service while being profitable. The area is therefore
working on the following:
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 52). 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.
P. 7
Technology transformation at two levels:
o Hardware: creating lower-cost infrastructure components based on the cloud paradigm.
There has been very significant progress in the use of this infrastructure in Spain, and Mexico
is beginning to use it, resulting in an increase in productivity.
o Software: multiple global functionalities have been constructed, reused by various of the
Group's geographic areas, and construction continues on the technological stack with a high
level of automation.
Transformation of operations: an initial operations optimization exercise has been carried out with good
results, and the necessary working methodology has been created to implement it throughout the whole
Group. The first robotics activities have also been carried out in Spain.
It is critical to obtain the best possible performance from infrastructures, architectures, operations and
internal processes, and to do so in a way that is fully reliable. Reliability remains another key factor for the
Engineering function and digital transformation.
In 2017 programs have been executed to improve reliability, resulting in a reduction of the volume of
incidents in the Group.
Operational and technological risk management
Security measures have been strengthened in 2017 as a result of the increase in cyber threats and cyber
crime in general. Protection and prevention strategies have been applied to mitigate the risk of attacks and
their possible impacts on internal and external resources.
A working methodology has been developed to allow the deployment of baselines (resources, capacities,
plans and responsibilities) according to the different vectors of attack, based on four key elements:
prevention, preparation, response and recovery. This working methodology forms part of a general
framework that BBVA defined at the end of 2016 for the Group's organizational resilience, geared to:
Improving the procedures for detection, prioritization and escalation;
Improving the global capacity for reaction and response; and
Strengthening the technical teams in all the countries dedicated to cybersecurity and engineering risk
management.
In addition, the capacities created by the Engineering Risk & Corporate Assurance (ERCA) committee have
been consolidated in the area of security mechanisms, and specifically in the area of identification and
authentication, allowing the Group to generate new customer experiences and improve existing ones. As a
result of this work with a single team, together with the business areas, and with the precept that the
customer is first, a significant increase in new experiences for customers has been noted, which allows BBVA
to follow the path of the latest technological innovations offered by the major players.
Examples of this are iris ID access by customers to mobile banking, supported by the technology offered by
Samsung devices, access by Face ID, or the possibility of ordering transfers through Siri using the Apple
technology. All these make perfectly clear the great responsiveness when it comes to creating new customer
opportunities, thinking fast and thinking big, taking into account the available capacities for security, and
industry standards.
without
level of protection
legislators and
required by
reducing
the
A number of initiatives have been taken within the area of business continuity, in other words incidents with a
low probability of occurrence and very high impact, such as reviewing and updating the corporate
regulations; continuing with the implementation of the business impact analyses, with the resulting update of
informing the
the continuity plans; and reviewing technological dependency on critical processes,
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 52). 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.
P. 8
corresponding continuity committees of their results so they can improve response where necessary, in a
scenario of unavailability due to failures in the information systems.
During 2017 numerous business continuity strategies have been activated in BBVA Group, among them
related to the earthquakes in Chile, and particularly Mexico; those affecting the United States as a result of
hurricanes and storms: Harvey in Texas, Irma in Florida and Stella in New York; the problems of social
conflict in Venezuela; serious flooding in the north of Peru; and the torrential rains in the area of Mocoa,
Colombia.
As regards personal data protection, there has been much work done in 2017 to implement the General Data
Protection Regulation in BBVA Group. Working groups have been set up, and their work will conclude before
the Regulation becomes applicable in May 2018. Moreover, in compliance with one of the new requirements
under the Regulation, a Data Protection Officer has been appointed for BBVA Group.
With respect to the personal data security measures, and in line with the above, a supplementary
organizational project was implemented to review and update all functions, processes, methodologies,
classification models, controls, incident management, etc. and ensure they are adapted to the new
Regulation.
9. Other information
9.1. Capital and treasury stock
Information about common stock and transactions with treasury stock is detailed in Notes 23 and 26 of the
accompanying Financial Statements.
9.2. Shareholder remuneration and allocation of earnings
Information about shareholder remuneration and application of earnings can be found in Note 3 of the
accompanying Financial Statements.
9.3. Average period for payment to suppliers
The average period payment to suppliers during the year 2017 is 29 days, below the maximum legal limit of
60 days established by Law 15/2010 of July 5, for which measures are put into place combating
late payment in commercial transactions. The calculation of the average period for payment was made as
established in the Act.
10.
Subsequent events
From January 1, 2018 to the date of preparation of these consolidated financial statements, no other
subsequent events not mentioned above in these financial statements have taken place that could
significantly affect the Group’s earnings or its equity position.
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 52). 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.
P. 9
11. Annual corporate governance report
In accordance with the provisions of Article 540 of the Spanish Corporate Act, the BBVA Group prepared the
Annual Corporate Governance Report for 2017 (which is an integral part of the Management Report for that
year) following the content guidelines set down in Order ECC/461/2013, dated March 20, and in CNMV
Circular 5/2013, dated June 12 in the wording provided by CNMV Circular 7/2015, dated December 22,
including a section detailing the degree to which the Bank is compliant with existing corporate governance
recommendations in Spain. In addition, all the information required by Article 539 of the Spanish
Corporations Act can be accessed on BBVA’s website www.bbva.com.
ANNUAL CORPORATE GOVERNANCE REPORT ON THE PUBLICLY TRADED
COMPANIES
ISSUER IDENTIFICATION
FINANCIAL YEAR-END
31/12/2017
TAX ID No.: A-
48265169
Registered name: BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
Registered Address: Plaza de San Nicolás 4, 48005 Bilbao (Vizcaya)
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
10
ANNUAL CORPORATE GOVERNANCE REPORT
ON THE PUBLICLY TRADED COMPANIES
A. OWNERSHIP STRUCTURE
A.1 Fill in the following table on the company’s share capital:
Date of last modification
Share capital (EUR)
Number of shares
Number of voting rights
24/04/2017
3,267,264,424.20
6,667,886,580
6,667,886,580
Indicate if there are different classes of shares with different rights associated with them.
NO
Class
Number of shares
Nominal
amount
Number of voting
rights
Different rights
A.2 Detail the direct and indirect owners of significant holdings in your company at year-end, excluding directors:
Name of shareholder
(person or company)
Number of direct
voting rights
Direct owner of stake
Number of
voting rights
% of total voting
rights
Indirect voting rights
Indicate the most significant movements in the shareholder structure during the year:
Name of shareholder (person or
company)
Date of the transaction
Description of the transaction
A.3 Fill in the following tables with the members of the company’s Board of Directors with voting rights on company
shares:
Name of
director
Number of direct
voting rights
Direct owner of
stake
Number of voting
rights
% of total voting
rights
Indirect voting rights
FRANCISCO GONZÁLEZ
RODRÍGUEZ
CARLOS TORRES VILA
TOMÁS ALFARO DRAKE
JOSÉ MIGUEL ANDRÉS
TORRECILLAS
2,485,888
1,748,521
0.06%
290,879
18,114
10,828
0.00%
0.00%
0.00%
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
11
JOSÉ ANTONIO FERNÁNDEZ
RIVERO
BELÉN GARIJO LÓPEZ
JOSÉ MANUEL GONZÁLEZ-
PÁRAMO MARTÍNEZ-MURILLO
SUNIR KUMAR KAPOOR
CARLOS LORING MARTÍNEZ DE
IRUJO
LOURDES MÁIZ CARRO
75,845
0
72,518
0
59,390
0
JOSÉ MALDONADO RAMOS
38,761
JUAN PI LLORENS
0
0
0
0
0
SUSANA RODRÍGUEZ VIDARTE
26,980
1,046
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
% total voting rights held by the Board of Directors
0.06%
Fill in the following tables with the members of the company’s Board of Directors with share options:
Name of director (person or
company)
Number of
direct share
options
Direct owner
Number of
voting rights
Number of
equivalent
shares
% of total voting
rights
Indirect share options
FRANCISCO GONZÁLEZ
RODRÍGUEZ
286,893
CARLOS TORRES VILA
183,637
JOSÉ MANUEL GONZÁLEZ-
PÁRAMO MARTÍNEZ-
MURILLO
32,261
0
0
0
0
0
0
0
0
0
0.00%
0.00%
0.00%
A.4 Where applicable, indicate any family, commercial, contractual or corporate relationships between holders of
significant shareholdings, insofar as the company is aware of them, unless they are of little relevance or due to
ordinary trading or exchange activities:
Related name (person or
company)
Type of relationship
Brief description
A.5 Where applicable, indicate any commercial, contractual or corporate relationships between holders of significant
shareholdings, and the company and/or its group, unless they are of little relevance or due to ordinary trading or
exchange activities:
Related name (person or
company)
Type of relationship
Brief description
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
12
A.6 Indicate whether the company has been informed of any shareholder agreements that may affect it as set out
under articles 530 and 531 of the Corporate Enterprises Act. Where applicable, briefly describe them and list the
shareholders bound by such agreement:
Participants in shareholders
agreements
% of share capital affected
Brief description of agreement
NO
Indicate whether the company is aware of the existence of concerted actions amongst its shareholders. If so,
describe them briefly.
Participants in concerted action
% of share capital affected
Brief description of concerted
action
NO
If there has been any amendment or breaking-off of said pacts or agreements or concerted actions, indicate this
expressly:
A.7 Indicate whether any person or organization exercises or may exercise control over the company pursuant to
article 5 of the Securities Exchange Act. If so, identify names:
NO
Name (person or company)
Comments
A.8 Fill in the following tables regarding the company’s treasury stock:
At year end:
Number of direct shares
Number of indirect shares (*)
Total % of share capital
0
13,339,582
0.20%
(*) Through:
Name of direct owner of shareholding (person or company)
Number of direct shares
CORPORACIÓN GENERAL FINANCIERA, S.A.
Total:
13,339,582
13,339,582
Give details of any significant changes during the year, pursuant to Royal Decree 1362/2007:
Explain the significant changes
Five treasury stock communications were made in 2017, of which one correspond to a change in the number of
voting rights in the “Dividend Option”, which let shareholders decide whether to receive shares or cash for their
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
13
dividend payment and the rest correspond to acquisitions passed the 1% threshold. These communications are
detailed below:
• Communication date: 22 February 2017 with a total of 2,597,437 direct shares and 14,175,081 indirect
shares acquired for 0.255% of the total share capital. This communication was made after acquisitions
passed the 1% threshold.
• Communication date: 20 April 2017 with a total of 2,089,826 direct shares and 4,676,084 indirect shares
acquired for 0.103% of the total share capital. This communication was made after acquisitions passed the
1% threshold.
• Communication date: 28 April 2017 with a total of 2,370,436 direct shares and 4,676,084 indirect shares
acquired for 0.106% on the total share capital. This communication was made on execution of the “Dividend
Option” program.
• Communication date: 26 July 2017 with a total of 2,591,747 direct shares and 6,138,937 indirect shares
acquired for 0.131% of the total share capital. This communication was made after acquisitions passed the
1% threshold.
• Communication date: 23 November 2017 with a total of 2,627,409 direct shares and 12,020,164 indirect
shares acquired for 0.220% on the total share capital. This communication was made after acquisitions
passed the 1% threshold.
A.9 Describe the conditions and term of the prevailing mandate from the general meeting to the Board of Directors to
issue, buy back and transfer treasury stock.
•
•
The Annual General Shareholders’ Meeting of BBVA held on March 17, 2017, under item three of the agenda,
passed a resolution to delegate to the Board of Directors the power to increase share capital within five years up
to a maximum amount corresponding to 50% of BBVA's share capital on the date of such authorization, on one
or several occasions, to the amount and on the date that the Board resolves, by issuing new shares of any kind
allowed by law, with or without an issue premium, the countervalue of said shares comprising cash
considerations. The authorization includes the setting out of the terms and conditions of the share capital
increase in any respect not provided for in the resolution, and delegation to the Board of Directors of a power to
wholly or partly exclude pre-emptive subscription rights in relation to any share capital increase carried out by
virtue of the referred resolution when so demanded by the interests of the Company and in compliance with the
applicable legal requirements. However, this power was limited insofar as the nominal amount of the capital
increases resolved upon or actually carried out with an exclusion of the pre-emptive subscription right by virtue
of the above delegation or resolved upon or executed to accommodate the conversion of ordinarily convertible
issues that are also carried out with an exclusion of the pre-emptive subscription right in the exercise of the
delegated power to issue convertible securities granted by the General Shareholders' Meeting itself, under item
five of the agenda, may not exceed the maximum nominal amount, taken as a whole, of 20% of BBVA's share
capital at the time of delegation. This limit does not apply to issues of contingently convertible securities.
To date, BBVA has not adopted any resolution using this delegated power.
The BBVA Annual General Shareholders’ Meeting of March 17, 2017, under the fifth item on the agenda,
delegated to the Board of Directors a power to issue securities that are convertible into newly issued BBVA
shares, on one or more occasions within a maximum term of five years, up to a total combined maximum
amount of €8,000,000,000 or its equivalent in any other currency; the Board may likewise resolve upon, set and
determine each and every one of the terms and conditions of the issues carried out by virtue of that delegated
power, determine the basis and mode of conversion, and resolve upon, set and determine the conversion ratio,
which may be fixed or variable. Moreover, the General Meeting resolved to delegate to the Board of Directors a
power totally or partially exclude pre-emptive subscription rights over any issue of convertible securities that
may be made hereunder, when the corporate interest so requires, in compliance with any legal requirements
established to this end. However, this power was limited in so far as the normal amount of the capital increases
resolved upon or actually carried out to accommodate the conversion of ordinarily convertible issues executed
by virtue of that delegated power with an exclusion of the pre-emptive subscription right, and those resolved
upon or executed also with an exclusion of the pre-emptive subscription right in the exercise of the delegated
power to increase share capital granted by the General Meeting itself, under item four of the agenda, may not
exceed the maximum nominal amount, taken as a whole, of 20% of BBVA's share capital at the time of
delegation. This limit does not apply to issues of contingently convertible securities.
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
14
In exercising this delegation in 2017, BBVA executed two issues of perpetual securities that are contingently
convertible (additional tier 1 capital instruments) with exclusion of the pre-emptive subscription rights, amounting
to EUR 500 million and USD 1 billion, respectively.
•
The Annual General Shareholders’ Meeting of BBVA of March 14, 2014, under agenda item three, resolved to
authorize BBVA, directly or via any of its subsidiaries, for a maximum term of five years, for the acquisition of
BBVA shares at any time and on as many occasions as it deems appropriate, by any means permitted by law,
and to subsequently dispose of the shares acquired, indicating that derivative acquisition of shares will at all
times be carried out in compliance with the conditions established under applicable legislation and, in particular,
the following conditions: (i) at no time will the nominal value of the treasury shares acquired, directly or
indirectly, under this authorization, added to the shares already owned by the Company and its subsidiaries,
exceed 10% of the subscribed share capital of BBVA or, as appropriate, the maximum amount permitted by
applicable legislation; (ii) the acquisition shall not result in the equity being less than the share capital plus the
legal reserves or the reserves that are restricted by the Company bylaws; (iii) a restricted reserve, equivalent to
the sum of treasury shares of the company recorded to assets, may be established against the net equity; (iv)
shares acquired must be fully paid up, unless the acquisition is without consideration, and must not entail any
obligation to provide ancillary benefits; and (v) the acquisition price per share will not be below the nominal
value of the share or more than 20% above the listed price or any other price associated with the shares on the
acquisition date. Moreover, said General Meeting expressly authorized that the shares acquired by BBVA or its
subsidiaries by exercising the aforementioned authorization may be wholly or partially earmarked for delivery to
workers or administrators of BBVA or its subsidiaries.
A.9 bis Estimated floating capital:
Estimated floating capital
%
100
A.10 Indicate whether there is any restriction on the transferability of securities and/or any restriction on voting rights.
In particular, report the existence of any restrictions that might hinder the take-over of control of the company by
purchasing its shares on the market.
NO
A.11 Indicate whether the General Meeting has agreed to adopt measures to neutralize a public takeover bid,
pursuant to Act 6/2007.
NO
If so, explain the measures approved and the terms and conditions under which the restrictions would become
inefficient:
A.12 Indicate whether the company has issued securities that are not traded on a regulated market in the EU.
YES
Where applicable, indicate the different classes of shares, and what rights and obligations each share class confers.
All the shares in BBVA's capital have the same class and series, and confer the same voting and economic rights.
There are no different voting rights for any shareholder. There are no shares that do not represent capital.
The Bank's shares are admitted for trading on the Securities Exchanges in Madrid, Barcelona, Bilbao and Valencia,
through the Spanish electronic trading platform (Continuous Market), and the stock markets in London and Mexico.
BBVA American Depositary Shares (ADS) are traded on the New York Stock Exchange.
Additionally, as of 31 December 2017, 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., were traded on their respective local securities
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
15
markets and, for the latter entity, on the New York Stock Exchange and in the Latin American securities exchange
(LATIBEX) on the Stock Market of Madrid.
B GENERAL MEETING
B.1 Indicate, and where applicable give details, whether there are any differences from the minimum standards
established under the Corporate Enterprises Act (CEA) with respect to the quorum and constitution of the General
Meeting.
YES
% quorum different from quorum set
% quorum different from quorum set out in
out in art. 193 of CEA for general
art. 194 of CEA for special circumstances
circumstances
in art.194 of CEA
Quorum required on first
summons
Quorum required on
second summons
0.00%
0.00%
66.66%
60.00%
Description of differences
Article 194 of the Corporate Enterprises Act establishes that, in limited companies, in order for a General Meeting
(whether annual or extraordinary) to validly resolve to increase or reduce capital or make any other amendment to
the Company Bylaws, bond issuance, the cancellation or restriction of first refusal subscription rights over new
shares, or the conversion, merger or spin-off of the company or global assignment of assets and liabilities or the
transfer the registered office abroad, the shareholders present and represented on first summons must own at
least fifty percent of the subscribed capital with voting rights.
On second summons, twenty-five percent of said capital will be sufficient.
The above notwithstanding, article 25 of the BBVA Company Bylaws establishes that a reinforced quorum of two-
thirds of subscribed capital with voting rights must attend the General Meeting at first summons or 60% of that
capital at second summons, in order to adopt resolutions on replacing the corporate purpose, the transformation,
total spin off, winding-up of the Company and amending that article of Bylaws establishing this reinforced quorum.
B.2 Indicate, and where applicable give details, whether there are any differences from the minimum standards
established under the Corporate Enterprises Act (CEA) for the adoption of corporate resolutions:
Describe any differences from the minimum standards established under the CEA.
NO
B.3 Indicate the rules applicable to amendments to the company bylaws. In particular, report the majorities
established to amend the bylaws, and the rules, if any, to safeguard shareholders' rights when amending the bylaws.
Article 30 of the BBVA Company Bylaws establishes that the General Meeting is empowered to amend the Company
Bylaws and to confirm and/or rectify Board of Directors’ interpretation of them.
To such end, the rules established under articles 285 et seq. of the Corporate Enterprises Act shall apply.
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
16
The above paragraph notwithstanding, article 25 of the BBVA Company Bylaws establishes that in order to adopt
resolutions regarding any change to the corporate purpose, transformation, total spin-off or winding up the Company
and amendment of the second paragraph of said article 25, two-thirds of the subscribed voting capital must attend
the General Meeting on first summons or 60% of that capital on second summons.
As regards the procedure for amending the Company Bylaws, article 4.2 c) of Act 10/2014 dated 26th June, on the
regulation, supervision and solvency of credit institutions, establishes that the Bank of Spain shall be responsible for
authorizing amendments to the bylaws of credit institutions, as set out by regulations.
Moreover, article 10 of Royal Decree 84/2015 dated 13rd February, implementing Act 10/2014, stipulates that the
Bank of Spain shall have two months to decide following receipt of the request for the Company’s Bylaws
amendment, which must be accompanied by a certification of minutes recording the agreement, a report
substantiating the proposal drawn up by the board of directors and a project of new bylaws, identifying the cited
amendments.
Notwithstanding the foregoing, article 10 of Royal Decree 84/2015 also establishes that no previous authorization
from the Bank of Spain is required, though the latter must be notified, so that it may be entered into the Credit Entity
Register, of amendments with the following purposes:
- Change of the registered office within the national territory.
- Stock capital increase.
- Incorporating verbatim into the bylaws legal or regulatory precepts of a mandatory or prohibitive nature, or for the
purpose of complying with legal or administrative decisions.
- Those amendments for which the Bank of Spain, in response to a prior enquiry made by the affected bank, deems
that authorization is not required due to their little relevance.
This communication must be made within fifteen working days following the adoption of the Bylaws amendment
resolution.
Finally, to indicate that as a significant entity, BBVA is under the direct supervision of the European Central Bank
(ECB) in cooperation with the Bank of Spain under the Single Supervision Mechanism, so the authorization of the
Bank of Spain above mentioned shall be submitted to the ECB, prior to its resolution by the Bank of Spain.
B.4 Indicate the data on attendance at general meetings held during the year to which this report refers and the
previous year:
Attendance figures
% voting remotely
General Meeting date
% shareholders
% attending by
present
proxy
11/03/2016
17/03/2017
1.83%
1.89%
38.34%
38.68%
Electronic
vote
Other
Total
0.26%
22.08%
62.51%
0.19%
22.95%
63.71%
B.5 Indicate the number of shares, if any, that are required to be able to attend the General Meeting and whether
there are any restrictions on such attendance in the bylaws:
Number of shares required to attend the General Meetings
500
YES
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
17
B.6 Section repealed.
B.7 Indicate the address and means of access through the company website to the information on corporate
governance and other information on the general meetings that must be made available to shareholders on the
company's website.
The content on corporate governance and other information on the latest general meetings are directly accessible
through the Banco Bilbao Vizcaya Argentaria, S.A. corporate website, www.bbva.com, in the Shareholders and
Investors, Corporate Governance and Remunerations Policy section.
C COMPANY MANAGEMENT STRUCTURE
C.1 Board of Directors
C.1.1 Maximum and minimum number of directors established in the bylaws:
Maximum number of Directors
Minimum number of Directors
C.1.2 Fill in the following table on the Board members:
15
5
Name of
director
(person or
company)
FRANCISCO
GONZÁLEZ
RODRÍGUEZ
CARLOS
TORRES VILA
TOMÁS
ALFARO
DRAKE
JOSÉ MIGUEL
ANDRÉS
TORRECILLAS
JOSÉ ANTONIO
FERNÁNDEZ
RIVERO
BELÉN GARIJO
LÓPEZ
JOSÉ MANUEL
GONZÁLEZ-
PÁRAMO
MARTÍNEZ-
Representative
Type of
directorship
Position on the
Board
Date first
appointed
Date last
appointed
Election
procedure
-
-
-
-
-
-
-
EXECUTIVE
EXECUTIVE
GROUP
EXECUTIVE
CHAIRMAN
CHIEF
EXECUTIVE
OFFICER
28/01/2000
11/03/2016
04/05/2015
11/03/2016
INDEPENDENT
DIRECTOR
18/03/2006
17/03/2017
INDEPENDENT
LEAD DIRECTOR
13/03/2015
13/03/2015
OTHER
EXTERNAL
DIRECTOR
28/02/2004
13/03/2015
INDEPENDENT
DIRECTOR
16/03/2012
13/03/2015
EXECUTIVE
DIRECTOR
03/06/2013
17/03/2017
GENERAL
MEETING
RESOLUTION
GENERAL
MEETING
RESOLUTION
GENERAL
MEETING
RESOLUTION
GENERAL
MEETING
RESOLUTION
GENERAL
MEETING
RESOLUTION
GENERAL
MEETING
RESOLUTION
GENERAL
MEETING
RESOLUTION
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
18
MURILLO
SUNIR KUMAR
KAPOOR
CARLOS
LORING
MARTÍNEZ DE
IRUJO
LOURDES
MÁIZ CARRO
JOSÉ
MALDONADO
RAMOS
JUAN PI
LLORENS
SUSANA
RODRÍGUEZ
VIDARTE
-
-
-
-
-
-
INDEPENDENT
DIRECTOR
11/03/2016
11/03/2016
OTHER
EXTERNAL
DIRECTOR
28/02/2004
17/03/2017
INDEPENDENT
DIRECTOR
14/03/2014
17/03/2017
OTHER
EXTERNAL
DIRECTOR
28/01/2000
13/03/2015
INDEPENDENT
DIRECTOR
27/07/2011
13/03/2015
OTHER
EXTERNAL
DIRECTOR
28/05/2002
17/03/2017
GENERAL
MEETING
RESOLUTION
GENERAL
MEETING
RESOLUTION
GENERAL
MEETING
RESOLUTION
GENERAL
MEETING
RESOLUTION
GENERAL
MEETING
RESOLUTION
GENERAL
MEETING
RESOLUTION
Total number of Directors
13
Indicate the severances that have occurred on the Board of Directors during the reporting period:
Name of director (person or company)
Status of the Director at the
time
Date of leaving
JOSÉ LUIS PALAO GARCÍA-SUELTO
JAMES ANDREW STOTT
INDEPENDENT
INDEPENDENT
17/03/2017
31/05/2017
C.1.3 Fill in the following tables on the Board members and their different kinds of directorship:
EXECUTIVE DIRECTORS
Name of director (person or company)
Position within company organization
FRANCISCO GONZÁLEZ RODRÍGUEZ
GROUP EXECUTIVE CHAIRMAN
CARLOS TORRES VILA
CHIEF EXECUTIVE OFFICER
JOSÉ MANUEL GONZÁLEZ-PÁRAMO MARTÍNEZ-
MURILLO
DIRECTOR OF GLOBAL ECONOMICS, REGULATION
& PUBLIC AFFAIRS
Total number of executive Directors
% of total directors
3
23.08%
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
19
EXTERNAL PROPRIETARY DIRECTORS
EXTERNAL INDEPENDENT DIRECTORS
Name of director (person or
company)
PROFILE
TOMÁS ALFARO DRAKE
JOSÉ MIGUEL ANDRÉS
TORRECILLAS
BELÉN GARIJO LÓPEZ
JUAN PI LLORENS
LOURDES MÁIZ CARRO
(REA),
SPANISH
INSTITUTE OF
INTERNATIONAL EXECUTIVE COMMITTEE,
CHAIR OF THE BOARD'S APPOINTMENTS COMMITTEE.
DIRECTOR OF INTERNAL DEVELOPMENT AND TEACHER IN THE
FINANCE AREA AT UNIVERSIDAD FRANCISCO DE VITORIA.
OTHER RELEVANT POSITIONS: WAS DIRECTOR OF THE FOLLOWING
BACHELOR'S DEGREES AT UNIVERSIDAD FRANCISCO DE VITORIA:
BUSINESS ADMINISTRATION AND MANAGEMENT; BUSINESS
STUDIES; MARKETING; BUSINESS ADMINISTRATION. GRADUATED IN
ENGINEERING AT ICAI AND BECAME MASTER IN ECONOMICS AND
BUSINESS ADMINISTRATION (MBA) AT IESE.
CHAIR OF THE BOARD'S AUDIT AND COMPLIANCE COMMITTEE AND
LEAD DIRECTOR.
HIS PROFESSIONAL CAREER BEGAN WITH ERNST & YOUNG AS
GENERAL MANAGING PARTNER FOR AUDIT AND ADVISORY
SERVICES AND CHAIRMAN OF ERNST & YOUNG SPAIN UNTIL 2014.
MEMBER OF SEVERAL ENTITIES SUCH AS THE OFFICIAL REGISTRY
(ROAC), REGISTRY OF ECONOMIST
OF ACCOUNT AUDITORS
AUDITORS
CHARTERED
ACCOUNTANTS AND THE ADVISORY BOARD OF THE INSTITUTE OF
INTERNAL AUDITORS. GRADUATED IN BUSINESS SCIENCES AND
ECONOMICS FROM THE COMPLUTENSE UNIVERSITY IN MADRID.
CHAIR OF THE BOARD´S REMUNERATION COMMITTEE.
MEMBER OF THE EXECUTIVE BOARD OF MERCK GROUP AND CEO
OF MERCK HEALTH CARE. DIRECTOR OF L’OREAL AND CHAIR OF
THE PHRMA
ISEC
(PHARMACEUTICAL RESEARCH AND MANUFACTURERS OF
AMERICA).
OTHER RELEVANT POSITIONS: WAS PRESIDENT OF COMMERCIAL
OPERATIONS IN EUROPE AND CANADA AT SANOFI AVENTIS.
GRADUATED IN MEDICINE FROM UNIVERSIDAD DE ALCALÁ DE
HENARES, MADRID.
SPECIALIST IN CLINICAL PHARMACOLOGY AT HOSPITAL DE LA PAZ -
UNIVERSIDAD AUTÓNOMA DE MADRID.
CHAIR OF THE BOARD'S RISK COMMITTEE.
HAD A PROFESSIONAL CAREER AT IBM HOLDING VARIOUS SENIOR
POSITIONS AT A NATIONAL AND INTERNATIONAL LEVEL INCLUDING
VICE PRESIDENT FOR SALES AT IBM EUROPE, VICE PRESIDENT OF
TECHNOLOGY & SYSTEMS AT IBM EUROPE AND VICE PRESIDENT OF
FINANCIAL SERVICES SECTOR, GMU (GROWTH MARKETS UNITS) IN
CHINA. HE WAS EXECUTIVE CHAIRMAN OF IBM SPAIN.
GRADUATED IN INDUSTRIAL ENGINEERING FROM UNIVERSIDAD
POLITECNICA DE BARCELONA AND TOOK A GENERAL MANAGEMENT
PROGRAM AT IESE.
WAS SECRETARY OF THE BOARD OF DIRECTORS AND DIRECTOR OF
THE LEGAL DEPARTMENT OF IBERIA, LÍNEAS AÉREAS DE ESPAÑA
UNTIL APRIL 2016.
PHD IN PHILOSOPHY, WORKED IN RESEARCH AND GAVE CLASSES IN
METAPHYSICS AT THE COMPLUTENSE UNIVERSITY DURING FIVE
YEARS. GRADUATED IN LAW, JOINED THE STATE COUNSEL CORPS
AND HELD VARIOUS POSTS OF RESPONSIBILITY IN THE PUBLIC
ADMINISTRATIONS SUCH AS GENERAL ORGANIZATIONAL DIRECTOR,
WORK AND COMPUTING POSITIONS AT THE MINISTRY OF PUBLIC
ADMINISTRATIONS, GENERAL DIRECTOR OF THE SOCIEDAD
ESTATAL DE PARTICIPACIONES PATRIMONIALES (SEPPA) IN THE
MINISTRY OF ECONOMY AND FINANCES AND GENERAL TECHNICAL
SECRETARY AT THE MINISTRY OF AGRICULTURE. SHE HAS BEEN A
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
20
SUNIR KUMAR KAPOOR
DIRECTOR IN NUMEROUS COMPANIES, INCLUDING RENFE, GIF
(NOW, ADIF), ICO (INSTITUTO DE CRÉDITO OFICIAL), ALDEASA AND
BANCO HIPOTECARIO.
HE IS AN OPERATING PARTNER AT ATLANTIC BRIDGE CAPITAL,
INDEPENDENT DIRECTOR AT STRATIO BIGDATA AND LOGTRUST
TECHNOLOGY, AND AN ADVISOR TO GLOBALLOGIC AND POINT
INSIDE.
OTHER RELEVANT POSITIONS: RESPONSIBLE FOR EMEA
IN
MICROSOFT EUROPE AND WORLDWIDE DIRECTOR OF BUSINESS
STRATEGY IN MICROSOFT CORPORATION. FORMERLY EXECUTIVE
VICE PRESIDENT AND MARKETING DIRECTOR OF CASSATT
CORPORATION AND PRESIDENT AND CEO OF UBMATRIX
INCORPORATED. GRADUATED
IN PHYSICS STUDIES FROM
BIRMINGHAM UNIVERSITY AND MASTER IN COMPUTER SYSTEMS AT
CRANFIELD INSTITUTE OF TECHNOLOGY.
Total number of independent Directors
% of total directors
6
46.15%
Indicate whether any director considered an independent director is receiving from the company or from its group any
amount or benefit under any item that is not the remuneration for his/her directorship, or maintains or has maintained
over the last year a business relationship with the company or any company in its group, whether in his/her own
name or as a significant shareholder, director or senior manager of an entity that maintains or has maintained such a
relationship.
Where applicable, include a reasoned statement from the Board with the reasons why it deems that this director can
perform his/her duties as an independent director.
Name of director (person or company)
Description of the relationship
Reasoned statement
OTHER EXTERNAL DIRECTORS
Identify all other external Directors and explain why these cannot be considered proprietary or independent Directors
and detail their relationships with the company, its executives or shareholders.
Name of director (person or
company)
Reasons
Company, executive or
shareholder to which
related
JOSÉ MALDONADO RAMOS
José Maldonado Ramos has been a director for
a continuous period of more than 12 years.
Banco Bilbao Vizcaya
Argentaria, S.A.
JOSÉ ANTONIO FERNÁNDEZ
RIVERO
CARLOS LORING MARTÍNEZ
DE IRUJO
José Antonio Fernández Rivero has been a
director for a continuous period of more than 12
years.
Carlos Loring Martínez de Irujo has been a
director for a continuous period of more than 12
years.
Banco Bilbao Vizcaya
Argentaria, S.A.
Banco Bilbao Vizcaya
Argentaria, S.A.
SUSANA RODRÍGUEZ
VIDARTE
Susana Rodríguez Vidarte has been a director
for a continuous period of more than 12 years.
Banco Bilbao Vizcaya
Argentaria, S.A.
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
21
Total number of other external Directors
% of total directors
4
30.77%
Indicate any changes that may have occurred during the period in the type of directorship of each director:
Name of director (person or company)
Date of change Previous category
Current category
C.1.4 Fill in the following table with information regarding the number of female directors over the last 4 years, and
the category of their directorships:
Number of female directors
% of total Directors of each category
Year
2017
0
0
2
1
3
Year
2016
0
Year
2015
0
Year
2014
0
0
2
1
3
0
2
1
3
0
2
1
3
Year
2017
Year
2016
Year
2015
Year
2014
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
33.33%
25%
25%
28.57%
25%
25%
25%
25%
23.08%
20 %
20%
21.43%
Executive
Proprietary
Independent
Other external
Total:
C.1.5 Explain the measures, if any, that have been adopted to try to include a number of female directors on the
Board that would mean a balanced presence of men and women.
Explanation of measures
Article 2 of the Regulations of the Board of Directors establishes that the appointment of members of the Board
corresponds to the General Shareholders' Meeting notwithstanding the Board’s capacity to co-opt Members in the
event of any vacancy. Thus, the Appointments Committee's mission is to assist the Board of Directors in matters
concerning the selection and appointment of directors and, in particular, to submit to the Board of Directors the
proposals for the appointment, re-election or removal of independent directors and to report on the proposals for
the appointment, re-election or removal of all other directors.
To such end, article 33 of the Regulations of the Board of Directors establish that the Appointments Committee
will assess the balance of skills, knowledge and expertise that the Board of Directors requires, as well as the
conditions that candidates should meet to fill the vacancies arising, assessing the dedication of time necessary to
be able to suitably perform their duties in light of the needs that the Company’s governing bodies may have at any
given time. The Committee will ensure that, in line with the principles set out in the BBVA Regulations of the
Board of Directors, when filling new vacancies, the selection procedures are not marred by implicit biases that
may involve any kind of discrimination or, in particular, hinder the selection of female directors, trying to ensure
that women who display the professional profile being sought are included as potential candidates.
BBVA's director selection policy states that the selection, appointment and rotation procedures for the Board of
Directors shall be aimed at attaining a composition of the company's governing bodies that enable the powers
established by law, Company Bylaws and its own regulations to be properly discharged in the company's best
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
22
interest. To this effect, the Board of Directors shall ensure that the procedures enable the most suitable
candidates to be identified at all times, based on the requirements of the governing bodies and that they favor
diversity of experience, knowledge, skills and gender and, in general, do not suffer from implicit biases that may
involve any kind of discrimination.
Specifically, its shall ensure that the selection procedures do not involve discrimination in selecting female
members and that in 2020 the number of female board members will represent at least 30% of the total number of
members of the Board of Directors. In turn, it shall ensure that the composition of the Board has an appropriate
balance between the different types of board members and that non-executive members represent an ample
majority over executive directors.
Furthermore, in order to ensure the suitable composition of the Board of Directors at all times, its structure, size
and composition shall be periodically analyzed, setting out the corresponding candidate identification and
selection processes to, where applicable, be put forward as new members of the Board of Directors, where
deemed necessary or appropriate. This analysis process shall also consider the composition of the different
Board committees that assist this corporate body in the performance of its duties and which comprise an essential
element of BBVA’s corporate governance.
The governing bodies shall also be evaluated to ensure they have a suitable and diverse composition, combining
individuals who have experience and knowledge of the Group, its businesses and the financial sector in general
with others who have training, skills, knowledge and experience in other areas and sectors that enable the right
balance to be attained in the composition of governing bodies to improve operation and performance of their
duties.
In these selection processes carried out by the Appointments Committee, it has the support of prestigious
consultants in the selection of international directors, who carry out an independent search for potential
candidates that meet the profile defined in each case by the Appointments Committee.
During these processes, the external expert was expressly requested to include women with the suitable profile
among the candidates to be presented and the Committee analyzed the personal and professional profiles of all
the candidates presented on the basis of the information provided by the consultancy firm, according to the needs
of the Bank's governing bodies at any given time. The skills, knowledge and expertise necessary to be a Bank
director were assessed and the rules on incompatibilities and conflicts of interest as well as the dedication
deemed necessary to be able to comply with the duties were taken into account.
BBVA currently has three female directors on its Board of Directors, i.e. 23.08% of its members, one of whom is a
member of the Bank's Executive Committee. However, if the proposals for re-election and appointment of
directors that are going to submit to the General Meeting of 2018 are approved, the number of female directors
will increase, which will be 4.
C.1.6 Explain the measures, if any, agreed by the Appointments Committee to ensure that selection procedures do
not suffer from implicit biases that may hinder the selection of female directors, and that the company deliberately
seeks and includes potential female candidates that meet the professional profile sought:
Explanation of measures
See above section.
The Appointments Committee, in compliance with the principles established in the Board of Directors' Regulations
and Selection, Appointment, Rotation and Diversity Policy of the Board of Directors, in the selection processes of
the directors, ensures that among the potential candidates are women who meet the professional profile sought,
and also takes care that in the selection procedures there are no implicit biases that might hinder the selection of
female directors.
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
23
When, despite any measures that might have been adopted, the number of female directors is low or zero, explain
the reasons:
Explanation of reasons
C.1.6.bis Explain the conclusions of the Appointments Committee regarding verification of compliance with the board
member selection policy. And, in particular, explain how this policy is fostering the goal for 2020 to have the number
of female board members represent at least 30% of the total number of members of the board of directors.
As to the principles underpinning the director selection policy of BBVA, described in section C.1.5 above, the
Appointments Committee has conducted throughout the year an ongoing analysis of the structure, size and
composition of the Board of Directors and of the principles and aims established by the Bank's director selection
policy.
With regard to the suitability requirements necessary under the selection policy for the performance of the office, in
particular, commercial and professional good repute, knowledge and experience appropriate to the performance of
his/her duties and aptitude to exercise good governance of the Company, the Appointments Committee considered
that the Board, as a whole, has an appropriate balance in its composition and an adequate knowledge of the
environment, activities, strategies and risks of the Bank and its Group, thus supporting suitable operation.
The Committee believes that Bank directors have the required reputation to hold their position, the skills required and
the availability to devote the time required to discharge their responsibilities.
As to the Board selection, appointment and rotation procedures, which are aimed at achieving a composition of the
corporate bodies of the Bank that supports the proper exercise of their duties in the Company's best interests, the
Appointments Committee has thought it appropriate to continue the process of gradual rotation of the Board so as to
open the way to directors with experience and knowledge of the financial sector and the culture and businesses of
the Group, thus gradually recruiting people with different professional profiles and expertise to enhance the diversity
of corporate bodies.
The Committee therefore endeavors to ensure that the selection, appointment and rotation procedures enable the
most suitable candidates to be identified at all times, based on the requirements of the governing bodies and that
they favor diversity of experience, knowledge, skills and gender and, in general, do not suffer from implicit biases that
may involve any kind of discrimination, for which purpose it has had the assistance of a leading international
independent consultancy firm on director selection.
Moreover, the Committee encourages the recruitment to the Board of new members who are able to fulfill or maintain
the aims set out in the selection policy, while ensuring that selection processes are carried out to the highest standard
of professionalism and independence.
In addition, the Committee has analyzed and considered, for the purposes of proposals for re-election and
appointment of directors that are going to submit to the General Meeting of 2018, the terms of the selection policy
requiring that by 2020 the number of women directors accounts for at least 30% of the entire Board, while ensuring
that non-executive directors preserve an ample majority over executive directors, and, moreover, ensuring that the
number of independent directors is at least 50% of the Board.
If the General Shareholders' Meeting of 2018 adopts the respective proposals for appointment and re-election of
directors, the number of women directors will increase to 4, which would imply a percentage of 26% of the total Board
members (15), approaching the target of 30% set for 2020. The number of non-executive directors will continue to
account for an ample majority of the Board (80%), and at least 50% of directors will be independent, in line with the
provisions established in the selection policy.
Hence, in accordance with the conclusions reached by the Appointments Committee, BBVA's corporate bodies would
maintain a structure, size and composition according to their needs and, as in recent years, with a structure in which
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
24
at least half of its directors are independent directors, in line with the provisions established in the Regulations of the
Board of Directors and in the Selection, Appointment, Rotation and Diversity Policy of the Board of Directors.
C.1.7 Explain the form of representation on the Board of shareholders with significant holdings.
C.1.8 Explain, where applicable, the reasons why proprietary directors have been appointed at the behest of a
shareholder whose holding is less than 3% of the capital:
Indicate whether formal petitions have been ignored for presence on the Board from shareholders whose holding is
equal to or higher than that of others at whose behest proprietary directors were appointed. Where applicable,
explain why these petitions have been ignored.
NO
C.1.9 Indicate whether any director has stood down before the end of his/her term of office, if the director has
explained his/her reasons to the Board and through which channels, and if reasons were given in writing to the entire
Board, explain below, at least the reasons that were given:
Name of director
James Andrew Stott
Reason for leaving
Mr. James Andrew Stott resigned as member of the Board of
Directors on May 31, 2017 for personal reasons. The resignation
was implemented through the corresponding letter to the Board of
Directors.
C.1.10 Indicate any powers delegated to the managing directors(s):
Name of director (person or company)
Brief description
FRANCISCO GONZÁLEZ RODRÍGUEZ
Holds broad-ranging powers of representation and
administration in line with his duties as Group Executive
Chairman.
CARLOS TORRES VILA
Holds broad-ranging powers of representation and
administration in line with his duties as Chief Executive Officer.
JOSÉ MANUEL GONZÁLEZ-PÁRAMO
MARTÍNEZ-MURILLO
Holds powers of representation and administration in line with
his duties as Head of Global Economics, Regulation & Public
Affairs.
C.1.11 Identify any members of the Board holding positions as directors or managers in other companies belonging
to the listed company’s group:
Name of director (person or
company)
Name of the Group Company
Position
Does the
director hold
executive
functions?
FRANCISCO GONZÁLEZ
RODRÍGUEZ
BBVA BANCOMER, S.A. INSTITUCIÓN DE
BANCA MÚLTIPLE, GRUPO FINANCIERO
BBVA BANCOMER
DIRECTOR
NO
FRANCISCO GONZÁLEZ
RODRÍGUEZ
GRUPO FINANCIERO BBVA BANCOMER,
S.A. DE C.V.
DIRECTOR
NO
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
25
CARLOS TORRES VILA
BBVA BANCOMER, S.A. INSTITUCIÓN DE
BANCA MÚLTIPLE, GRUPO FINANCIERO
BBVA BANCOMER
DIRECTOR
NO
CARLOS TORRES VILA
GRUPO FINANCIERO BBVA BANCOMER,
S.A. DE C.V.
DIRECTOR
NO
C.1.12 Detail, where applicable, any company directors that sit on Boards of other companies publicly traded on
regulated securities markets outside the company's own group, of which the company has been informed:
Name of director (person or company)
Corporate name of the listed
company
Position
BELÉN GARIJO LÓPEZ
L’ORÉAL SOCIÉTÉ ANONYME
DIRECTOR
JUAN PI LLORENS
ECOLUMBER, S.A.
CHAIRMAN
JOSÉ MIGUEL ANDRÉS TORRECILLAS
ZARDOYA OTIS, S.A.
DIRECTOR
C.1.13 Indicate and, where applicable, if board regulations have established rules on the maximum number of
company boards on which its directors may sit:
YES
Explanation of rules
Article 11 of the Board of Directors Regulations establishes that in the performance of their duties, directors will be
subject to the rules on limitations and incompatibilities established under applicable regulations at any time and in
particular to the provisions of Spanish Act 10/2014 on the regulation, supervision and solvency of credit
institutions.
Article 26 of Act 10/2014 establishes that the directors of credit institutions may not hold at the same time more
positions than those set out in one of the following combinations: (i) an executive position together with two non-
executive positions; or (ii) four non-executive positions. Executive positions are defined as those performing
management duties irrespective of the legal bond attributed by those duties. The following will count as a single
position: 1) executive or non-executive positions held within the same group; 2) executive or non-executive
positions held within: (i) entities belonging to the same institutional protection scheme; or (ii) companies in which
the entity holds a significant stake. The positions held in non-profit organizations or entities pursuing non-
commercial purposes shall not count when determining the maximum number of positions. Nonetheless, the Bank
of Spain may authorize members of the Board of Directors to hold an additional non-executive post if it deems that
such a post would not interfere with the correct performance of the activities thereof in the credit institution.
Also, in accordance with article 11 of the Board of Directors Regulations, BBVA directors may not:
• Provide professional services to companies competing with the Bank or with any of its Group companies, or
be an employee, manager or director of such companies unless they have received express prior
authorization from the Board of Directors or from the Annual General Meeting, as appropriate, unless these
activities had been provided or performed before they became a Bank director, do not involve no effective
competition and had been reported to the Bank at that time.
Take a direct or indirect stake in businesses or enterprises in which the Bank or its Group companies hold an
interest, unless such stake was held prior to joining the Board of Directors or to the time when the Group took
out its holding in such businesses or enterprise, or unless such companies are listed on domestic or
international securities exchanges, or unless authorized to do so by the Board of Directors.
•
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
26
• Be a director in companies in which the Group or any of the Group companies hold a stake. As an exception
and when proposed by the Bank, executive directors are able to hold directorships in companies directly or
indirectly controlled by the Bank with the approval of the Executive Committee, and in other associate
companies with the approval of the Board of Directors. A person ceasing to be an executive director is
obliged to resign from any office in a subsidiary or associate company that is held by virtue of such
directorship.
Non-executive directors may hold a directorship in the Bank's associate companies or in any other Group
company provided the directorship is not related to the Group's holding in such companies. They must have
prior approval from the Bank’s Board of Directors. For these purposes, holdings of the Bank or its Group in
companies resulting from its ordinary business activities, asset management, treasury trading, derivative
hedging and/or other transactions will not be taken into account.
• Hold political office or engage in other activities that might have a public significance or affect the image of
the Company in any manner, unless there is prior authorization from the Bank's Board of Directors.
C.1.14 Section repealed.
C.1.15 Indicate the overall remuneration for the Board of Directors:
Remuneration of the Board of Directors (thousands of euros)
16,504
Cumulative amount of rights of current Directors in pension scheme (thousands of euros)
18,345
Cumulative amount of rights of former Directors in pension scheme (thousands of euros)
82,573
C.1.16 Identify members of senior management that are not in turn executive directors, and indicate the total
remuneration accruing to them during the year:
Name (person or company)
Position(s)
JUAN ASÚA MADARIAGA
CORPORATE & INVESTMENT BANKING (CIB)
JORGE SÁENZ-AZCÚNAGA CARRRANZA
COUNTRY MONITORING
CRISTINA DE PARIAS HALCÓN
COUNTRY MANAGER SPAIN
EDUARDO OSUNA OSUNA
COUNTRY MANAGER MEXICO
DON DEREK JENSEN WHITE
CUSTOMER AND CLIENT SOLUTIONS
RICARDO FORCANO GARCÍA
TALENT & CULTURE
RICARDO ENRIQUE MORENO GARCÍA
ENGINEERING
DAVID PUENTE VICENTE
DATA
JAIME SÁENZ DE TEJADA PULIDO
FINANCE
RAFAEL SALINAS MARTÍNEZ DE LECEA
GLOBAL RISK MANAGEMENT
EDUARDO ARBIZU LOSTAO
LEGAL & COMPLIANCE
FRANCISCO JAVIER RODRÍGUEZ SOLER
STRATEGY & M&A
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
27
RICARDO GÓMEZ BARREDO
ACCOUNTING & SUPERVISORS
DOMINGO ARMENGOL CALVO
GENERAL SECRETARY
JOSÉ LUIS DE LOS SANTOS TEJERO
INTERNAL AUDIT
Total senior management remuneration
(thousands of euros)
23,674
C.1.17 Indicate the identity of the Board members, if any, who are in turn members of the Board of Directors in
companies of significant shareholders and/or in entities of their group:
Detail the relevant affiliations, other than those considered in the above paragraph, that link Board members to
significant shareholders and/or companies in their group:
C.1.18 Indicate whether there has been any change in the Board regulations during the year:
NO
Description of changes
C.1.19. Indicate procedures for selection, appointment, re-election, assessment and removal of directors. List the
competent bodies, the procedures to be followed and the criteria to be employed in each procedure.
Selection, appointment and re-election procedure:
BBVA has established a policy setting out the main general principles applicable in the selection and appointment of
directors. Additionally, articles 2 and 3 of the Board of Directors Regulations stipulate that the General Meeting is
responsible for the appointment of members of the Board. However, if a seat falls vacant, the Board has the authority
to co-opt members. In any event, persons proposed for appointment as directors must meet the requirements of
prevailing legislation, the specific regulations applicable to credit institutions and he provisions of the Company
Bylaws. In particular, directors should meet the necessary suitability requirements to exercise their directorship. Thus,
they must be considered to be of commercial and professional good repute, with adequate knowledge and expertise
to perform their duties and in situation in which they can exercise good governance of the entity.
The Board will ensure that the selection procedures for directors favour diversity in experience, knowledge, skills and
gender and, in general, do not suffer from implicit biases that may imply any discrimination. The Board will submit its
proposals to the General Meeting in such a way that there is an ample majority of non-executive directors over the
number of executive directors on the Board. The proposals submitted to the General Meeting for appointment or re-
election of directors and the appointments the Board makes directly to cover vacancies, exercising its powers of co-
option, will be approved at proposal of the Appointments Committee in the case of independent directors, and
following a report from said Committee for all other directors. In any case, the proposal must be accompanied by a
report of the Board explaining the grounds on which the Board of Directors has assessed the competence,
experience and merits of the proposed candidate, which will be attached to the minutes of the General Meeting or of
the Board of Directors. The Board’s resolutions and deliberations on these matters will take place in the absence of
the director whose re-election is proposed who, if present, must leave the meeting.
To such end, the Board of Directors Regulations establish that the Appointments Committee will evaluate the balance
of skills, knowledge and expertise on the Board of Directors, as well as the conditions that candidates should display
to fill the vacancies arising, assessing the dedication necessary to be able to suitably perform their duties in view of
the needs that the Company’s governing bodies may have at any time. The Committee will ensure that when filling
new vacancies, the selection procedures are not marred by implicit biases that may involve any discrimination and, in
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
28
particular, those that hinder the selection of female directors, trying to ensure that women who display the
professional profile being sought are included as potential candidates.
Directors will stay in office for the term established by the Company Bylaws or, if they have been co-opted, until the
first General Meeting is held.
Assessment:
As indicated in article 17 w) of the Board's Regulations, the Board of Directors is responsible for assessing the quality
and efficiency of its operation and assessment of the performance of the duties of the Chairman of the Board. Such
assessment will always begin with the report submitted by the Appointments Committee. Likewise, evaluation of the
operation of its Committees, on the basis of the report that these submit to it. Moreover, article 5 of the Board's
Regulations establishes that the Chairman, who is responsible for efficiently running of the Board, will organize and
coordinate the regular assessment of the Board with the Chairs of the relevant Committees. Moreover, article 5 ter of
the Board's Regulations establishes that the Lead Director is especially empowered to conduct the regular
assessment of the Chairman of the Board.
Pursuant to the provisions of the Board Regulations, as in previous years, in 2017 the Board of Directors assessed
the quality and efficiency of its own running and that of its Committees, as well as the performance of the duties of
the Chairman, both as Chairman of the Board and as the first executive of the Bank, based on the report of the
Appointments Committee.
Severance:
Directors will stand down from office when the term for which they were appointed has expired, unless they are re-
elected.
Directors must apprise the Board of any circumstances affecting them that might harm the Company’s reputation and
credit and circumstances that may impact their suitability for the position. Directors must place their directorship at the
disposal of the Board and accept its decision regarding their continuity or non-continuity in office, under the
circumstances listed in section C.1.21 below. If its decision is negative, they are obliged to tender their resignation. In
any event, directors will resign their positions on reaching 75 years of age. They must present their resignation at the
first meeting of the Bank’s Board of Directors after the General Meeting of Shareholders that approves the accounts
for the year in which they reach this age.
C.1.20 Explain to what degree the self- assessment has led to significant changes in its internal organization and the
procedures applicable to its activities:
Description of changes
Article 17 of the Board of Directors Regulations establishes that the Board will assess the quality and efficiency of
the Board’s operation, based on the report submitted by the Appointments Committee, which it has done in 2017,
likewise producing certain changes (indicated below), similar to previous years, to continue the ongoing adaptation
process of corporate governance to the regulatory requirements and best practices.
Thus, the entity has been analyzing its needs for improvement by introducing various measures throughout 2017
to continue to evolve its Corporate Governance system and practices in accordance with the new environment in
which the entity carries out its activity and its own reality, including, among other measures, the following: (i) fresh
progress in the development of the Corporate Bodies' decision-making process, further specifying the involvement
of the Board Committees and the interaction among the different Corporate Bodies; (ii) continuing improvement of
Corporate Bodies' reporting model to ensure that decisions are made on the basis of adequate, complete and
standardized information and to enable proper oversight of performance; (iii) a new remuneration policy for the
Board of Directors, where deferral has been extended and the share-based payment component has been
amplified, introducing clawback arrangements for variable remuneration and modifying the pensions system
toward a defined-contribution scheme, thus making strides toward alignment with international best practices; (iv)
entrenchment of the Technology and Cybersecurity Committee, which has supported the Board in understanding
the Group's technology strategy and in the awareness and oversight of technology -related risks; and (v)
development of a new organizational structure for Data with the creation of the "Head of Data" position at the
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
29
highest level of the organization to drive the integration of global and strategic data management in all areas and
businesses of the Bank, and of the "Data Protection Officer" position to equip the Group with a system for data
control and protection that is suited to the new supervisory and business environment.
C.1.20.bis Describe the assessment process and the assessed areas conducted by the board of directors assisted,
as the case may be, by an external consultant, regarding the diversity in its composition and capacities, duties and
composition of its committees, the performance of the chair of the board of directors and the first executive of the
company, and the performance and contribution of each board member.
According to article 17 of the Board of Directors Regulations, the Board shall evaluate the quality and efficiency of its
running and the performance of the functions of the Chairman of the Board, based in each case on the report
submitted by the Appointments Committee. Likewise, the Board of Directors shall assess of the running of its
Committees, based on the report they submit.
In the most recent assessment process carried out for 2017, the Board of Directors has assessed: (i) the quality and
efficiency of the Board of Directors' and of the Executive Committee`s operation, (ii) the performance of the Chairman
of the Board of Directors; and (iii) the running of the Committees of the Board of Directors. The procedure to conduct
these assessments was:
•
•
•
Throughout the year, the Appointments Committee has been analyzing the structure, size and composition of
the Board of Directors during the selection processes to incorporate new members of the Board of Directors,
re-elect directors and while conducting the yearly assessment on the running of the Board of Directors. Thus
the quality and efficiency of the running of the Board of Directors and the Executive Committee was examined
based on the prior report submitted by the Appointments Committee and conveyed to the Board of Directors
where the following matters were reviewed in detail: structure, size and composition of the Board of Directors;
organization, preparation and development of the meetings of the Board of Directors; adequate dedication of
time by Board members; training of members of the Board of Directors and activity of the Board of Directors.
The Appointments Committee, with a view to drawing up its prior report, had the support of a report on the
activities carried out throughout the year by the Board of Directors and the Executive Committee containing
detailed information on the composition and operations thereof, and on the main activities implemented by
these bodies in the performance of the duties attributed thereto by the Company Bylaws and the Regulations
of the Board of Directors.
The performance of the duties of the Chairman of the Board of Directors, as Chairman and as first executive,
was carried out by the Board of Directors on the basis of a report on its activities during the year and taking
into account the previous report of the Appointments Committee, the Lead Director having conducted the
evaluation process in accordance with the provisions of Article 5 ter of the Board Regulations.
The Board of Directors conducted the quality and efficiency assessment on the operations of the Audit and
Compliance, Risk, Appointments, Remuneration and Technology and Cybersecurity Committees based on the
reports submitted by their respective Chairs. The activity of the Audit and Compliance Committee is reported
quarterly to the Board at meetings held throughout the year. In addition, the Committee Chair, at the Board
meeting of February 12, 2018, accounted for the oversight work done on the preparation of the Group's
financial statements, the project to implement accounting standard IFRS 9, as well as the oversight of the
adequacy, sufficiency and effective operation of internal control systems in the course of financial reporting.
Moreover, during its meeting on November 29, 2017, the Board of Directors received the report of the director
Chair of the Risk Committee regarding the activities undertaken by the Committee during 2017, reporting on
the tasks executed by the Committee in its ongoing monitoring and oversight of changes in the risks faced by
the Group and the extent to which consistency is maintained with specified strategies and policies. Moreover,
at its meeting of January 31, 2018 the Board heard a report by the Chair of the Remuneration Committee on
that body's activity throughout 2017. Among other matters, the Board was briefed on the work done by the
Committee to prepare and implement the draft resolutions submitted to the Board on remuneration, especially
as to remuneration of executive directors and senior management, and the other projects developed regarding
the adoption of the new remuneration policies of directors, identified staff and BBVA Group. Likewise, in its
session on 31 January 2018, the Board received the report of the director Chair of the Appointments
Committee regarding the activities undertaken by the Committee during 2017 within the different scopes of
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
30
duties. Finally, at its meeting of November 29, 2017, the Board was briefed by the Chair of the Technology and
Cybersecurity Committee on that body's activities since its constitution in 2016. The Board was briefed, inter
alia, on the review of the global organization of the Engineering Area, the new Group strategy and the ERCA
team's assessment of the Engineering area as to Group's cybersecurity risk.
C.1.20.ter Break down, where pertinent, the business relationship that the consultant or any company of its group
maintains with the company or any company of its group.
C.1.21 Indicate the circumstances under which directors are obliged to resign.
In addition to the circumstances set out in applicable legislation, as established in article 12 of the BBVA Board of
Directors Regulations, the directors shall resign from their office when the term for which they were appointed has
expired, unless they are re-elected. Directors must apprise the Board of Directors of any circumstances affecting
them that might harm the Company’s reputation and credit circumstances that may impact their suitability for the
position.
As set out in article 12 of the BBVA Board of Directors Regulations, directors must place their office at the disposal of
the Board of Directors and accept the Board’s decision regarding their continuity or non-continuity in office. Should
the Board resolve they not continue, they will be obliged to tender their resignation, in the following circumstances:
- When they are affected by circumstances of incompatibility or prohibition as defined under prevailing legislation, in
the Company Bylaws or in the Board of Directors Regulation;
- When significant changes occur in their personal or professional situation that may affect the condition by virtue of
which they were appointed to the Board;
- When they are in serious dereliction of their duties as directors;
- When for reasons attributable to the director in his or her condition as such, serious damage has been done to the
Company's net worth, credit or reputation; or
- When they lose their suitability to hold the position of director of the Bank.
C.1.22 Section repealed.
C.1.23 Are reinforced qualified majorities required, other than the legal majorities, for some type of resolution?
If applicable, describe the differences.
NO
C.1.24 Explain whether there are specific requirements, other than those regarding directors, to be appointed
Chairman of the Board of Directors.
C.1.25 Indicate whether the Chairman has a casting vote:
NO
NO
C.1.26 Indicate whether the bylaws or the Board Regulations establish an age limit for directors:
YES
Age limit for Chairman
Age limit for Chief Executive
Officer
Age limit for directors
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
31
0
0
75
C.1.27 Indicate whether the bylaws or the Board Regulations establish a limited term of office for independent
directors, other than that established by law:
NO
C.1.28 Indicate whether the bylaws or the Board Regulations establish specific rules for proxy voting in the Board of
Directors, the way this is done and, in particular, the maximum number of proxies a director may have, and whether it
has established any limit regarding the categories that may be delegated beyond the limits stipulated by legislation. If
so, briefly give details on such rules.
The BBVA Board of Directors Regulations establishes that directors are required to attend the meetings of corporate
bodies and the meetings of the Board Committees on which they sit, except for a justifiable reason. Directors shall
participate in the deliberations, discussions and debates on matters submitted for their consideration.
However, article 21 of the Board of Directors Regulations establishes that should it not be possible for directors to
attend any of the Board of Directors’ meetings, they may grant proxy to another director to represent and vote for
them. This may be done by a letter or e-mail sent to the Company with the information required for the proxy director
to be able to follow the absent director's instructions, in observance of the applicable legislation, though non-
executive directors may only grant their proxy to another director that is also non-executive.
C.1.29 Indicate the number of meetings the Board of Directors has held during the year. Where applicable, indicate
how many times the Board has met without the Chairman in attendance. In calculating this number, proxies given
with specific instructions will be counted as attendances.
Number of Board meetings
Number of Board meetings held without the Chairman’s attendance
15
0
If the Chairman is an executive Director, indicate the number of meetings held without an executive director present
or represented and chaired by the Lead Director
Number of meetings
0
Indicate the number of meetings of the Board’s different committees held during the year.
Number of Executive Committee meetings
Number of Audit and Compliance Committee meetings
Number of Appointments Committee meetings
Number of Remuneration Committee meetings
Number of Risk Committee meetings
Number of Technology and Cyber-security Committee meetings
19
14
5
5
20
7
C.1.30 Indicate the number of meetings held by the Board of Directors during the year attended by all its members. In
calculating this number, proxies given with specific instructions will be counted as attendances.
Number of meetings attended by all directors
% of attendances to total votes during the year
14
99%
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
32
C.1.31 Indicate whether the individual and consolidated financial statements presented for Board approval are
certified beforehand:
NO
Where applicable, identify the person(s) who has(have) certified the Company's individual and consolidated financial
statements to be filed by the Board:
C.1.32 Explain the mechanisms, if any, established by the Board of Directors to prevent the individual and
consolidated financial statements that it files from being presented to the General Meeting with a qualified auditors
report.
Article 29 of BBVA's Board of Directors Regulations establishes that the Audit and Compliance Committee will be
formed exclusively by independent directors and its main task is to assist the Board of Directors in overseeing the
financial information and the exercise of the Group control duties. In this regard, its functions are as follows: oversee
the efficacy of the Company's internal control, the internal audit and the risk management systems in the process of
drawing up and reporting the financial information, including tax-related risks, as well as to discuss with the external
auditor any significant weaknesses in the internal control system detected when the audit is conducted, without
undermining its independence and oversee the process of drawing up and reporting the financial information. For
such purposes, the Audit and Compliance Committee may submit recommendations or proposals to the Board of
Directors.
Moreover, article 3 of the Audit and Compliance Committee Regulations establishes that the Committee shall verify
that the external audit schedule is conducted under the agreed conditions at appropriate intervals, and that it meets
the requirements of the competent authorities and the Bank’s governing bodies. The Committee will also periodically
– at least once a year – request from the external auditor its evaluation of the quality of the group’s internal control
procedures regarding the drafting and presentation the financial information of the Group.
The Committee shall also be apprised of any infringements, situations requiring adjustments, or anomalies that may
be detected during the course of the external audit and are of a material nature; materiality in this context signifies
those issues that, in isolation or as a whole, may give rise to a significant and substantive impact or harm to assets,
earnings or the reputation of the Group; discernment of such matters shall be at the discretion of the external auditor
who, if in doubt, must opt to report on them.
In exercising these duties, the Audit and Compliance Committee holds monthly meetings with the external auditor's
representatives without the presence of executives, to monitor their work on an ongoing basis, in order to guarantee
that the activity is carried out under the best conditions and with no interference in management.
C.1.33 Is the company Secretary a director?
NO
Complete if the Secretary is not also a Director:
Name or corporate name of Secretary
DOMINGO ARMENGOL CALVO
C.1.34 Section repealed.
Representative
-
C.1.35 Indicate the specific mechanisms the company has established, if any, to preserve the independence of the
external auditors, the financial analysts, the investment banks and the rating agencies.
The BBVA Audit and Compliance Committee Regulations establish that this Committee’s duties, described in section
C.2.1, include ensuring the independence of the external auditor in two ways:
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
33
- Avoiding any possibility of the warnings, opinions or recommendations of the external auditor being adversely
influenced. To this end, the Committee must ensure that compensation for the auditor's work does not compromise
either its quality or independence, in compliance with current legislation on auditing at all times.
- Stipulating as incompatible the provision of audit and consulting services unless they are work required by
supervisors or whose provision by the external auditor is allowed by applicable legislation, and there are not available
in the market alternatives as regards content, quality or efficiency of equal value to those which the auditor could
provide; in this case approval by the Committee will be required, but this decision may be delegated in advance to its
Chair. The external auditor shall be prohibited from providing prohibited services outside the audit, in compliance with
what is set out at all times by audit legislation.
This matter is the subject of special attention by the Audit and Compliance Committee, which holds monthly meetings
with the representatives of the external auditor, without the presence of Bank executives, to know the details of the
progress and quality of their work, as well as to confirm their independence of the performance of their work. It also
monitors the engagement of additional services to ensure compliance with the Committee’s Regulations and
applicable legislation in order to safeguard the independence of the external auditor.
Moreover, in accordance with the provisions of point f), section 4 of article 529 quaterdecies of the Corporate
Enterprises Act and article 30 of the BBVA Board of Directors Regulations, the Audit and Compliance Committee
each year before the external auditor issues their report on the financial statements, has to issue a report expressing
its opinion regarding the independence of the external auditor.
This report must in any event contain the reasoned assessment of the provision of additional services of any kind by
the auditors to the Group's entities, considered individually and as a whole, other than the legal audit and in relation
to the regime of independence or the rules regulating the account audit activity. The external auditor must issue, also
on an annual basis, a report confirming its independence via-à-vis BBVA or entities linked to BBVA, either directly or
indirectly, with information on the additional services of any kind provided to these entities by the external auditor, or
by the individuals or entities linked to them, as set out in the redrafted text of the Audit Act.
In keeping with the legislation in force, the relevant reports confirming the external auditor's independence were
issued in 2017.
In addition, as BBVA's shares are listed on the New York Stock Exchange, it is subject to compliance with the
provisions established in the Sarbanes Oxley Act and its implementing regulations.
Likewise, BBVA has in place a Shareholders and Investors Communication and Contact Policy that has been adopted
by the Board of Directors. The policy is guided by the principle of equal treatment for all shareholders and investors,
who are in the same position in terms of information, involvement and the exercise of their rights as shareholders and
investors, inter alia.
Moreover, the principles and channels set out in the Shareholders and Investors Communication and Contact Policy
govern, where applicable, BBVA relations with other interested parties, such as financial analysts, bank share
management firms and depository institutions, and proxy advisors, among others.
C.1.36 Indicate whether the company has changed its external auditor during the year. If so, identify the incoming
and outgoing auditors:
Outgoing auditor
Incoming auditor
YES
Deloitte, S.L.
KPMG Auditores, S.L.
If there were disagreements with the outgoing auditor, explain their grounds:
NO
Explanation of disagreements
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
34
C.1.37 Indicate whether the audit firm does other work for the company and/or its group other than the audit. If so,
declare the amount of fees received for such work and the percentage of such fees on the total fees charged to the
company and/or its group:
YES
Company
Group
Total
Amount of non-audit work (thousands euros)
234
274
508
Amount of non-audit work/total amount billed by the
audit firm (%)
1.68%
1.75%
1.72%
C.1.38 Indicate whether the audit report on the annual financial statements for the previous year contained
reservations or qualifications. If so, indicate the reasons given by the chair of the audit committee to explain the
content and scope of such reservations or qualifications.
NO
C.1.39 Indicate the number of consecutive years during which the current audit firm has been auditing the financial
statements for the company and/or its group. Likewise, indicate the percentage of the number of years audited by the
current audit firm to the total number of years in which the annual financial statements have been audited:
Number of consecutive years
Number of years audited by current audit firm / number of
years the company has been audited (%)
Company
1
5.88%
Group
1
5.88%
C.1.40 Indicate and, where applicable, give details on the existence of a procedure for directors to engage external
advisory services:
YES
Details of the procedure
Article 6 of the BBVA Board of Directors Regulations expressly recognizes that directors may request any
additional information or advice they require to comply with their duties, and may request the Board of Directors for
assistance from external experts on matters subject to their consideration whose special complexity or importance
so requires.
The Audit and Compliance Committee, pursuant to article 31 of the Board of Directors Regulations, may engage
external advisory services for relevant issues when it considers that these cannot be properly provided by experts
or technical staff within the Group on grounds of specialization or independence.
Under articles 34, 37 and 40 of the Board of Directors Regulations and in accordance with the specific regulations
of the Technology and Cyber-security Committee, the rest of the Committees may obtain such advice as may be
necessary to establish an informed opinion on matters related to its business.
C.1.41 Indicate and, where applicable, give details on the existence of a procedure for directors to obtain the
information they need to prepare the meetings of the governing bodies with sufficient time:
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
35
YES
Details of the procedure
Article 6 of the Regulations of the Board of Directors establishes that directors will be apprised beforehand of
sufficient information to be able to form their own opinions regarding the questions that the Bank’s governing bodies
are empowered to deal with. They may request any additional information or advice they require to fulfill their
duties.
Exercise of this right will be channeled through the Chairman or Secretary of the Board of Directors who will attend
to requests by providing the information directly or by establishing suitable arrangements within the organization for
this purpose, unless a specific procedure has been established in the regulations governing the Board of Directors
Committees.
In accordance with article 24 of the Board Regulations, directors will be provided with any information or
clarifications as they believe necessary or advisable in connection with the matters to be considered at the meeting.
This can be done before or during the meetings.
BBVA has in place an informational model to allow decisions to be made based on sufficient, complete and
consistent information, and, also, to facilitate appropriate oversight of performance.
Thus, the Bank's corporate bodies have a procedure for verifying the information that is submitted for consideration
to them, coordinated by the Board Secretariat with the areas responsible for information, through the Information of
the Governing Bodies' Department, in order to provide the directors for early consideration sufficient, adequate and
complete information for the meetings of the Bank's various corporate bodies and to enable directors to best
perform their duties. The information that is made available to the Bank’s corporate bodies, prior to the holding of its
sessions, is carried out through an electronic tool, to which all members of the Board of Directors have access,
which ensures his availability.
C.1.42 Indicate and, where applicable give details, whether the company has established rules requiring directors to
inform and, where applicable, resign under circumstances that may undermine the company’s standing and
reputation:
YES
Explanation of rules
In accordance with article 12 of the Board of Directors Regulations, directors must apprise the Board of Directors of
any circumstances affecting them that might harm the Company’s reputation and credit and circumstances that may
impact their suitability for the position.
Directors must place their office at the disposal of the Board of Directors and accept its decision regarding their
continuity or non-continuity in office. Should the Board resolve they not continue, they will be obliged to tender their
resignation when for reasons attributable to the director in his or her condition as such, serious damage has been
done to the Company’s net worth, credit and/or reputation or when they lose their suitability to hold the position of
director of the Bank.
C.1.43 Indicate whether any member of the Board of Directors has informed the company of any legal suit or court
proceedings against him or her for any of the offences listed in article 213 of the Corporate Enterprises Act:
NO
Indicate whether the Board of Directors has analyzed the case. If so, explain the grounds for the decision taken as to
whether or not the director should retain his/her directorship or, where applicable, describe the actions taken or
planned to be taken by the Board of Directors on the date of this report.
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
36
Decision adopted/action
taken
Reasoned explanation
C.1.44 Detail significant agreements reached by the Company that come into force, are amended or concluded in the
event of a change in the control of the company stemming from a public takeover bid, and its effects.
C.1.45 Identify in aggregate terms and indicate in detail any agreements between the company and its directors,
managers or employees that have guarantee or ring-fencing severance clauses for when such persons resign or are
wrongfully dismissed or if the contractual relationship comes to an end due to a public takeover bid or other kinds of
transactions.
Number of beneficiaries
60
Type of beneficiary
15 members of Senior
Management (excluding
executive directors)
45 technical & specialist
professionals
Description of the agreement
The Bank does not have commitments to pay compensations to directors.
As of 31 December 2017, 15 members of Senior Management are entitled to
receive compensation payment in the event of severance on grounds other than
their own will, retirement, disability or dereliction of duties. Its amount will be
calculated by factoring the Bank employee's remuneration and length of office
and which under no circumstances will be paid in the event of lawful dismissal for
misconduct by decision of the employer on grounds of the worker's dereliction of
duties.
The Bank has also agreed compensation clauses with some employees (45
technical and specialist professionals) in the event of unfair dismissal. The
amount of this compensation is calculated as a function of the wage and
professional conditions of each employee.
Indicate whether these contracts must be disclosed to and/or approved by the Company governance bodies:
Body authorizing the clauses
YES
NO
Board of Directors
General Meeting
Is the General Meeting informed of the clauses?
YES
x
NO
C.2 Board of Directors Committees
C.2.1 Detail all the Board Committees, their members and the proportion of executive, proprietary, independent and
other external directors sitting thereon:
EXECUTIVE OR DELEGATE COMMITTEE
Name
Position
Category
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
37
FRANCISCO GONZÁLEZ RODRÍGUEZ
CHAIRMAN
EXECUTIVE
CARLOS TORRES VILA
SUSANA RODRÍGUEZ VIDARTE
JOSÉ ANTONIO FERNÁNDEZ RIVERO
JOSÉ MALDONADO RAMOS
CARLOS LORING MARTÍNEZ DE IRUJO
MEMBER
MEMBER
MEMBER
MEMBER
MEMBER
EXECUTIVE
OTHER EXTERNAL
OTHER EXTERNAL
OTHER EXTERNAL
OTHER EXTERNAL
% of executive Directors
% of proprietary Directors
% of independent Directors
% of other external Directors
33.33%
0%
0%
66.67%
Explain the committee's duties, describe the procedure and organizational and operational rules and summarize the
main actions taken during the year.
In accordance with article 27 of BBVA's Board of Directors Regulations, the Executive Committee shall be
apprised of matters delegated by the Board of Directors, in accordance with the pertinent legislation currently in
force, the Company Bylaws or the Board Regulations. Among the functions of the Executive Committee is that of
assisting the Board of Directors in its general supervision role, and in particular in the supervision of the progress
of business and the monitoring of the risks to which the Bank is or may be exposed and in decision-making on
matters that fall within the scope of the powers of the Board of Directors, provided that they do not constitute non-
delegable powers under the Law, the Company Bylaws or the Board of Directors Regulations.
As regards its organizational and operating rules of this Committee, article 28 of the Board Regulations establishes
that the Executive Committee shall meet on the dates set out in the annual calendar of meetings and at the
request of the Chair or the Chair's delegate. All other aspects of its organization and operation will be subject to
the provisions established for the Board of Directors by the Board Regulations. Once the minutes of the meeting of
the Executive Committee are approved, they shall be signed by the meeting's Secretary and countersigned by
whoever has chaired the meeting.
Directors will be given access to the approved minutes of the Executive Committee at the beginning of Board
meetings, so that they can be apprised of the content of its meetings and the resolutions it has adopted.
Regarding the main actions of 2017, the Executive Committee analyzed the Bank's and the Group's annual, half-
yearly and quarterly performance, and month-to-month developments in the business and results of the Group and
of the business areas. The Committee has been briefed on developments in the Group's Strategic Plan and on the
annual budget for the year and on the main decisions of the Bank's Assets and Liabilities Committee. The
Committee has also fulfilled its duties of management, control and oversight of the main risks affecting the Group.
The Committee considered the main features of the economic situation, the markets, and BBVA's share price
performance, as well as the results of BBVA's main competitors. The Committee was briefed on the key aspects of
legislative and regulatory developments affecting financial institutions. In advance of submission to the Board, the
Committee has analyzed the main corporate transactions and projects in the course of the Group's business. The
Committee has heard and approved proposals for changes to corporate policies and other internal rules of the
Bank. The Committee has been informed of the highlights of BBVA's corporate governance engagement policy
concerning institutional investors and, specifically, the results of the roadshow conducted throughout the year.
Likewise, the Executive Committee has approved, among other matters, corporate transactions and projects that
were within its scope of responsibility, the establishment and/or designation of those responsible for the branches
and representative offices that the Bank has established in the abroad, as well as authorized the appointment of
directors in subsidiaries and/or investees by the Group, in addition to the granting of powers.
Indicate whether the composition of the Executive Committee reflects the distribution of different classes of
directorship on the Board:
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
38
YES
Otherwise, explain the composition of the Executive Committee.
AUDIT AND COMPLIANCE COMMITTEE
Name
Position
Category
JOSÉ MIGUEL ANDRÉS TORRECILLAS
CHAIRMAN
INDEPENDENT
BELÉN GARIJO LÓPEZ
JUAN PI LLORENS
TOMÁS ALFARO DRAKE
LOURDES MÁIZ CARRO
MEMBER
MEMBER
MEMBER
MEMBER
INDEPENDENT
INDEPENDENT
INDEPENDENT
INDEPENDENT
% of proprietary Directors
% of independent Directors
% of other external Directors
0%
100%
0%
Explain the committee's duties, describe the procedure and organizational and operational rules and summarize the
main actions taken during the year.
As established in article 30 of the Board of Directors Regulations, the duties of the Audit and Compliance
Committee include the following:
- Report to the General Meeting on questions raised in relation to issues within the Committee's competence.
- To supervise the effectiveness of the Company's internal control, the internal audit area and the risk management
systems in the process of drawing up and reporting the financial information, including tax-related risks, as well as
to discuss with the auditor any significant weaknesses in the internal control system detected during the audit,
without undermining its independence.
- To oversee the drafting and presentation of the financial information and submit recommendations or proposals
to the Board aimed at safeguarding its completeness.
- To submit to the Board of Directors the proposals for the selection, appointment, re-election and replacement of
the external auditor, taking responsibility for the selection process in accordance with applicable regulations, as
well as the conditions for its engagement, and periodically obtain from the external auditor information on the audit
plan and its execution, in addition to preserving its independence in the discharge of its duties.
- To establish appropriate relations with the external auditor in order to receive information on any matters that
may jeopardize its independence, for examination by the Committee, and any others that have to do with the
process of auditing the accounts, as well as those other communications provided for by law and in auditing
standards.
- Each year, before the audit report is issued, to submit a report expressing an opinion on whether the auditor's
independence has been compromised. This report must contain the reasoned assessment of the provision of each
of the additional services provided of any kind, considered individually and as a whole, other than the legal audit
and in relation to the regime of independence or the rules regulating the audit activity.
- To report, prior to the decisions that the Board may adopt, on all those matters provided for by law, in the
Company Bylaws and in the Board Regulations, and in particular on: (i) the financial information that the Company
is required to disclose regularly; (ii) the creation or acquisition of shares in special-purpose entities or entities
domiciled in countries or territories considered tax havens; and (iii) the transactions carried out with related parties.
- To oversee compliance with applicable domestic and international regulations on matters related to money
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
39
laundering, conduct on the securities markets, data protection and the scope of Group activities with respect to
anti-trust regulations. Also to ensure that any requests for action or information made by official authorities on
these matters are dealt with in due time and in due form.
- To ensure that the internal codes of ethics and conduct and securities market trading, as they apply to Group
personnel, comply with legislation and are suitable.
- To especially enforce compliance with the provisions applicable to directors contained in the Board of Directors
Regulations, and ensure that directors comply with applicable regulations regarding their conduct on the securities
markets.
In keeping with the organizational and operating rules, article 31 of the Board Regulations states that the Audit and
Compliance Committee shall meet as often as necessary to discharge its duties, though an annual calendar of
meetings will be drawn up in accordance with its tasks. The officers responsible for the areas within their remit, in
particular, Accounting, Internal Audit and Compliance, may be invited to attend Committee meetings. They may
request that other staff be invited from their areas that have particular knowledge or responsibility in the matters
contained on the agenda, when their presence at the meeting is deemed advisable. However, only the Committee
members and the Secretary shall be present when the results and conclusions of the meeting are assessed. The
Committee may hire external advisory services for matters of importance if, for reasons of specialization or
independence, it considers that such services cannot be rendered by Group experts or technical personnel. The
Committee may also call on the personal cooperation and reports of any employee when it considers that this is
necessary to fulfill its duties with regard to relevant issues. The usual channel for a request of this nature shall be
through the reporting lines of the Company. However, in exceptional cases the request may be notified directly to
the person in question. In addition, its convocation, quorum of constitution, adoption of agreements, minutes and
other ends of its operating regime shall be in accordance with the Board Regulations for the Board of Directors, as
applicable, and with that established in the specific regulations of this Committee
The most important activities carried out by the Audit and Compliance Committee in 2017 are detailed in section
C.2.5.
Identify the Director of the audit committee who has been appointed on the basis of knowledge and experience of
accounting or auditing, or both and state the number of years that its Chairman has been in office.
Name of Director with experience
Number of years of the Chairman in office
JOSÉ MIGUEL ANDRÉS TORRECILLAS
2
APPOINTMENTS COMMITTEE
Name
Position
Category
TOMÁS ALFARO DRAKE
CHAIRMAN
INDEPENDENT
JOSÉ MIGUEL ANDRÉS TORRECILLAS
JOSÉ MALDONADO RAMOS
LOURDES MÁIZ CARRO
SUSANA RODRÍGUEZ VIDARTE
MEMBER
MEMBER
MEMBER
MEMBER
INDEPENDENT
OTHER EXTERNAL
INDEPENDENT
OTHER EXTERNAL
% of proprietary Directors
% of independent Directors
% of other external Directors
0%
60%
40%
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
40
Explain the committee's duties, describe the procedure and organizational and operational rules and summarize the
main actions taken during the year.
The Appointments Committee is bound to assist the Board of Directors in matters relating to the selection and
appointment of Board members. Thus, as provided for under article 33 of the Board of Directors Regulations, the
Appointments Committee will discharge the following duties:
- Submit proposals to the Board of Directors on the appointment, re-election or removal of independent directors
and report on the proposals for the appointment, re-election or removal of the other directors.
To such end, the Committee will assess the balance of skills, knowledge and expertise on the Board of Directors,
as well as the conditions that candidates should display to fill the vacancies arising, assessing the time dedication
necessary to be able to suitably perform their duties in view of the needs that the Company’s governing bodies
may have at any time.
The Committee will ensure that when filling new vacancies, the selection procedures are not marred by implicit
biases that may entail any discrimination and, in particular, discrimination that may hinder the selection of female
directors, trying to ensure that women who display the professional profile being sought are included as potential
candidates.
Likewise, when drawing up proposals within its scope of competence for the appointment of directors, the
Committee will take into account, in case they may be considered suitable, any applications that may be made by
any Board of Directors’ member for potential candidates to fill the vacancies.
- Submit proposals to the Board of Directors for policies on the selection and diversity of members of the Board of
Directors.
- Establish a target for representation of the under-represented gender in the Board of Directors and draw up
guidelines on how to achieve that target.
- Analyze the structure, size and composition of the Board of Directors at least once a year when carrying out its
operational assessment.
- Analyze the suitability of the various members of the Board of Directors.
- Perform an annual review of the status of each director, so that this may be reflected in the annual corporate
governance report.
- Report the proposals for the appointment of the Chairman and the Secretary and, where applicable, of the
Deputy Chairman and the Deputy Secretary.
- Report on the performance of the duties of the Chairman of the Board, for the purposes of the periodic
assessment by the Board of Directors, under the terms established in the Board of Directors Regulations.
- Examine and organize the succession of the Chairman in conjunction with the Lead Director and, where
appropriate, submit proposals to the Board of Directors so that the succession takes place in an planned and
orderly manner.
- Review the Board of Directors policy on the selection and appointment of members of senior management, and
make recommendations to the Board when necessary.
- Report on proposals for appointment and removal of senior managers.
Moreover, article 34 of the Board of Directors Regulations regulates the organizational and operating rules of the
Appointments Committee, establishing that it will meet as often as necessary to fulfill its duties, convened by its
Chair or by whoever stands in for its Chair pursuant to the provisions of article 32 of the Board Regulations. The
Committee may request the attendance at its meetings of persons with tasks in the Group that are related to the
Committee's duties. It may also obtain advice as necessary to establish criteria related to its business. This will be
done through the Secretary of the Board. For all other matters, the system for convening meetings, quorums,
passing resolutions, drafting minutes and other details of its operation shall be in accordance with the Board
Regulations for the Board of Directors, as applicable.
Regarding the Appointments Committee's activities in 2017, the Chair of the Committee submitted to the Board a
report on the Committee's ongoing analysis of the structure, size and composition of the Board of Directors to
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
41
ensure that they remain suited to the best possible performance of the duties and functions of the corporate
bodies, the analysis of fulfillment by directors of the criteria of independence and suitability and the absence of
conflicts of interest for the exercise of their functions, and the review on the Board selection, appointment, rotation
and diversity policy, which, together with the analysis of structure, size and composition, led to relevant proposals
for the re-election and appointment of directors to be submitted to the upcoming General Meeting of the Company.
Moreover, the Chair analyzed the assessment of the operation of the Board and of the Executive Committee and
the performance of the Chairman's duties as chairman of the Board and first executive of the Company. The Chair
likewise reported on the Committee's analysis of proposed appointments of new members of Senior Management
of the Bank.
REMUNERATION COMMITTEE
Name
Position
Category
BELÉN GARIJO LÓPEZ
CHAIR
INDEPENDENT
JOSÉ ANTONIO FERNÁNDEZ RIVERO
MEMBER
OTHER EXTERNAL
TOMÁS ALFARO DRAKE
MEMBER
INDEPENDENT
CARLOS LORING MARTÍNEZ DE IRUJO
MEMBER
OTHER EXTERNAL
LOURDES MÁIZ CARRO
MEMBER
INDEPENDENT
% of proprietary Directors
% of independent Directors
% of other external Directors
0%
60%
40%
Explain the committee's duties, describe the procedure and organizational and operational rules and summarize the
main actions taken during the year.
The Remuneration Committee's main task is to assist the Board of Directors in matters related to the remuneration
policy for directors, senior management and any employees, whose professional activities have a significant
impact on the Bank's risk profile, ensuring that the established remuneration policy is observed. Thus, as provided
for under article 36 of the Board of Directors Regulations, it will discharge the following duties:
- Propose to the Board of Directors, for its submission to the Annual General Meeting, the directors’ remuneration
policy, with respect to its items, amounts and parameters for its determination and its vesting. Also to submit the
corresponding report, in the terms established by applicable law at any time.
- Determine the extent and amount of the individual remunerations, entitlements and other economic
compensations and other contractual conditions for the executive directors, so that these can be reflected in their
contracts. The Committee’s proposals on such matters will be submitted to the Board of Directors.
- Propose the annual report on the remuneration of the Bank's directors to the Board of Directors each year, which
will then be submitted to the Annual General Shareholders Meeting in accordance with applicable law.
- Propose the remuneration policy to the Board of Directors for senior managers and employees whose
professional activities have a significant impact on the Company's risk profile.
- Propose the basic conditions of the senior management contracts to the Board of Directors, and directly
supervise the remuneration of senior managers responsible for risk management and compliance duties within the
Company.
- Oversee observance of the remuneration policy established by the Company and periodically review the
remuneration policy applied to directors, senior managers and employees whose professional activities have a
significant impact on the Company's risk profile.
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
42
- Verify the information on directors and senior managers’ remunerations contained in the different corporate
documents, including the annual report on directors’ remuneration.
Moreover, article 37 of the Board of Directors Regulations states that the Remuneration Committee will meet as
often as necessary to fulfill its duties, convened by its Chair or by whoever stands in for its Chair pursuant to the
provisions of article 35 of the Board Regulations. The Committee may request the attendance at its meetings of
persons with tasks in the Group that are related to the Committee's duties. It may also obtain advice as necessary
to establish criteria related to its business. This will be done through the Secretary of the Board. For all other
matters, the system for convening meetings, quorums, passing resolutions, drafting minutes and other details of its
operation will be in accordance with the provisions of the Board of Directors Regulations for the Board insofar as
they are applicable.
The most important activities carried out by the Remuneration Committee in 2017 are detailed in section H, as a
complement of the section C.2.5.
RISK COMMITTEE
Name
Position
Category
JUAN PI LLORENS
CHAIRMAN
INDEPENDENT
JOSÉ MALDONADO RAMOS
CARLOS LORING MARTÍNEZ DE IRUJO
SUSANA RODRÍGUEZ VIDARTE
JOSÉ MIGUEL ANDRÉS TORRECILLAS
MEMBER
MEMBER
MEMBER
MEMBER
OTHER EXTERNAL
OTHER EXTERNAL
OTHER EXTERNAL
INDEPENDENT
% of proprietary Directors
% of independent Directors
% of other external Directors
0%
40%
60%
Explain the committee's duties, describe the procedure and organizational and operational rules and summarize the
main actions taken during the year.
The Risk Committee will be tasked with assisting the Board of Directors in determining and monitoring the Group's
risk control and management policy and its strategy in this area. Thus, as provided for under article 39 of the
Board of Directors Regulations, it will discharge the following duties:
- Analyze and assess the proposals on the Group's risk management, control and strategy. In particular, these will
identify:
i. The Group's risk appetite; and
ii. The setting of the level of risk considered acceptable according to the risk profile and capital at risk, broken
down by the Group’s businesses and areas of activity.
- Analyze and assess the control and management policies for the Group's different risks and the information and
internal control systems.
- The measures established to mitigate the impact of risk identified, should they materialise.
- Monitor the performance of the Group's risks and their fit with the strategies and policies and the Group’s risk
appetite.
- Analyze, prior to submitting them to the Board of Directors or the Executive Committee, those risk operations that
must be put to its consideration.
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
43
- Examine whether the prices of the assets and liabilities offered to customers fully take into account the Bank's
business model and risk strategy and, if not, present a remedy plan to the Board of Directors.
- Participate in the process for establishing the remuneration policy, ensuring that it is consistent with adequate
and effective risk management and does not offer incentives for assuming risks that may exceed the level
tolerated by the Company.
- Ensure that the Company and its Group are provided with means, systems, structures and resources in line with
best practices to enable it to implement its risk management strategy, ensuring that the entity's risk management
mechanisms are appropriate in relation to the strategy.
Moreover, article 40 of the Board Regulations regulates the organizational and operating rules of the Risk
Committee, establishing that it will meet as often as necessary to fulfill its duties, convened by its Chair or by
whoever stands in for its Chair pursuant to the provisions of article 38 of the Board Regulations, though an annual
calendar of meetings will be drawn up in accordance with its tasks. The Committee may request the attendance at
its meetings of the Group's Chief Risk Officer, as well as the executives to whom the various risk areas report or
the persons with tasks in the Group that are related to the Committee's duties. It may also obtain advice as
necessary to establish criteria related to its business. This will be done through the Secretary of the Board. The
system for convening meetings, quorums, adopting resolutions, drafting minutes and other details of its procedures
will be governed by the provisions defined in the Board Regulations for the Board of Directors insofar as they are
applicable and by the specific Committee Regulations.
The most important activities carried out by the Risk Committee in 2017 are detailed in section H, as a
complement of the section C.2.5.
TECHNOLOGY AND CYBER-SECURITY COMMITTEE
Position
Position
category
CARLOS TORRES VILA
CHAIRMAN
EXECUTIVE
TOMÁS ALFARO DRAKE
SUNIR KUMAR KAPOOR
JUAN PI LLORENS
JOSÉ ANTONIO FERNÁNDEZ RIVERO
MEMBER
MEMBER
MEMBER
MEMBER
INDEPENDENT
INDEPENDENT
INDEPENDENT
OTHER EXTERNAL
% of executive Directors
% of proprietary Directors
% of independent Directors
% of other external Directors
20%
0%
60%
20%
Explain the committee's duties, describe the procedure and organizational and operational rules and summarize the
main actions taken during the year.
According to its specific regulations, the purpose of the Technology and Cyber-security Committee is to assist
the Board in the following areas: (i) the understanding and acknowledgement of the risks associated to
technology and information systems related to the Group's activity and the oversight of its management and
control, particularly with regard to the cyber-security strategy; (ii) the acknowledgment and supervision of the
infrastructure and technology strategy of the Group and how this is integrated into the development of its overall
strategy; and (iii) ensuring that the Bank has determined plans and policies, and has the appropriate means, for
managing the abovementioned matters.
It will also perform the following functions:
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
44
- Oversight of technological risk and cyber-security management
• Review the major technology risks exposures of the Bank, including information security and cyber-
security risks and the steps management has taken to monitor and control such exposures.
• Review the policies and systems for the assessment, control and management of the Group’s technology
risks and infrastructures, including the cyber-attack incident response and recovery plans.
• Receive reports from management regarding the business continuity planning in technology and
technology infrastructure matters.
• Receive reports from management, as and when appropriate, on: (i) IT-related compliance risks; and (ii)
the steps taken to identify, assess, monitor, manage and mitigate those risks.
• Additionally, the Technology and Cyber-security Committee will be informed of any relevant event that
may occur regarding cyber-security issues. These are deemed to be those which, individually or as a
whole, may have a material impact or damage in the Group’s equity, results or reputation. In any case,
such events will be informed to the Chair of the Committee as soon as possible.
- Stay informed of the Technology Strategy
• Receive reports from management, as and when appropriate, on technology strategy and trends that may
affect the Company’s strategic plans, including the monitoring of overall industry trends.
• Receive reports from management, as and when appropriate, on the metrics established by the Group for
the management and control of IT-related matters, including the progress of the developments and
investments carried out by the Group in this field.
• Receive reports from management, as and when appropriate, on matters related to new technologies,
applications, information systems and best practices that affect the Group’s IT strategy or plans.
• Receive reports from management on the core policies, strategic projects and plans defined by the
•
Engineering area.
Inform the Board of Directors and, if applicable, the Executive Committee, on any IT-related matters
falling within the scope of their functions.
For a better performance of its functions, channels for an appropriate coordination between the Technology and
Cyber-security Committee and the Audit and Compliance Committee will be established to ensure: (i) that the
Technology and Cyber-security Committee can have access to the conclusions of the work performed by the
Internal Audit Department in technology and cyber-security matters; (ii) and that the Audit and Compliance
Committee is informed on IT-related systems and processes that are related to or affect the Bank’s internal
control systems and other matters falling within the scope of its functions. Additionally, channels for an
appropriate coordination between the Technology and Cyber-security Committee and the Risk Committee will
be established to ensure that the Risk Committee monitors the impact of technological risks within the scope of
Operational Risk and other matters falling within the scope of its functions.
With regard to its functioning and organization, will meet as often as necessary to perform its duties, convened
by its Chair or by whoever stands in for its Chair pursuant to its Regulations. The Committee may request the
attendance at its meetings of persons with tasks within the Group that are related to the Committee's duties. In
particular, the Committee will maintain a direct and recurring contact with the executives responsible for the
areas of Engineering and Cyber-security in the Group, for the purpose of receiving the necessary information
for a better performance of the Committee’s duties. This information will be discussed in the meetings held.
The Committee may also engage external advisory services as may be necessary to establish an informed
opinion on matters related to its duties. This will be done through the Secretariat of the Board. For all other
matters, the system for convening meetings, quorums, passing resolutions, drafting minutes and other details of
its operation will be in accordance with the provisions of the Board of Directors Regulations for the Board
insofar as they are applicable.
The most important activities carried out by the Technology and Cyber-security Committee in 2017 are detailed
in section C.2.5.
C.2.2 Fill in the following table with information on the number of female directors sitting on Board Committees over
the last four years:
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
45
Year 2017
Year 2016
Year 2015
Year 2014
Number of female directors
Number
%
Number
%
Number
%
Number
1
2
2
2
1
-
16.66%
40%
40%
40%
20%
-
1
2
2
1
1
-
16.66%
40%
40%
20%
20%
-
1
2
1
-
1
-
20%
40%
20%
-
16.66%
-
1
1
1
-
1
-
%
20%
25%
20%
-
20%
-
Executive
Committee
Audit and
Compliance
Committee
Appointments
Committee
Remuneration
Committee
Risk Committee
Technology and
Cyber-security
Committee
C.2.3 Section repealed.
C.2.4 Section repealed.
C.2.5 Indicate, where applicable, the existence of regulations for the Board Committees, where they can be consulted
and any amendments made to them during the year. Indicate whether an annual report on the activities of each
committee has been prepared voluntarily.
The Board of Directors Regulations, available on the Company's website, www.bbva.com, regulate the composition,
functions and operating rules of the Board Committees which have regulatory nature. All the Board of Directors’
Committees have prepared and submitted to the Board of Directors a report which details the activity carried out by
each Committee during 2017.
APPOINTMENTS COMMITTEE: The Chairman of the Appointments Committee presented to the Board of Directors
a report on the activities of the Committee throughout 2017, which is explained in more detail in the section on the
Appointments Committee in section C.2.1 above.
AUDIT AND COMPLIANCE COMMITTEE: The Audit and Compliance Committee has specific Regulations approved
by the Board and available on the company's website, which govern its operation and powers, among other matters.
The Chairman of the Audit and Compliance Committee submitted to the Board an activity report for 2017 describing
the Committee's main tasks relating to the functions that the Regulations of the Board of Directors ascribe to the
Committee, indicating that the Committee had carried out its role without incident and in fulfillment of its duties as to
monitoring and overseeing financial reporting, the system of internal control of financial and accounting reporting,
internal and external audits, compliance matters, and regulatory affairs. Among other matters, he reported on the
Supervisory Review and Evaluation Process (SREP) conducted by the European Central Bank, the implications for
the financial statements of the Group of the entry into force of accounting standard IFRS 9, the role of the Committee
in analyzing the major corporate transactions of the Group, the annual plan of the Compliance Area and its regular
monitoring, and communications with Spanish and foreign supervisory and regulatory authorities. He also informed
the Board regarding the changes in the Group's corporate structure during 2017, the Group's fiscal management and
the tax and legal risks faced by the Group.
With respect to the external audit, it covered the working plans, schedules and communication with the persons
responsible for the external audit for 2017, the Committee having ensured the independence of the external auditor in
compliance with applicable regulations. As to the appointment of a new external auditor for BBVA and its Group for
2017, 2018 and 2019 as decided at the General Meeting of March 17, 2017, the Chair reported on the oversight work
done by the Committee on the transition between the outgoing and incoming auditors, the statements and
confirmations of independence from the new external auditor in accordance with applicable law, and the approval of
the contractual framework that is to govern relations with the external auditor.
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
46
RISK COMMITTEE: The Risk Committee has specific Regulations approved by the Board and available on the
Company's website, which govern matters including its duties and procedural standards, among other matters.
Likewise, the Chairman of the Risk Committee presented to the Board of Directors a report on the activities of the
Committee in 2017, which is explained in more detail in section H of this report, as a complement of this section.
TECHNOLOGY AND CYBER-SECURITY COMMITTEE: The Technology and Cyber-Security Committee has
specific Regulations approved by the Board and available on the Company's website, which govern matters including
its duties and procedural standards, among other matters.
The Chair of the Technology and Cybersecurity Committee submitted to the Board a report on the Committee's
activity since its constitution in 2016. The report described the tasks carried out by the Committee in relation to the
duties set out in its Regulations, with an emphasis on matters relating to technology and cybersecurity strategy, such
as review of the global strategic organization of the Engineering Area, review of the lines of work that make up the
Group's Transformation Plan, the strategy for evolving the Group's communications infrastructure, and key plans of
action as to technology strategy for 2017 and goals for the coming years.
As to cybersecurity, the Committee Chair briefed the Board on the work done by the Bank's technical units facing
cybersecurity risks and on the global cybersecurity incidents that took place in 2017.
C.2.6 Section repealed.
D RELATED-PARTY TRANSACTIONS AND INTRA-GROUP TRANSACTIONS
D.1 Explain the procedure, if any, for approving related-party and intra-group transactions.
Procedures for approving related party transactions
Article 17 v) of the Board of Directors Regulations establishes that the Board is responsible for approving, where
applicable, the transactions that the Company or its Group companies may make with directors or with shareholders
that individually or in concert hold a significant stake. This includes shareholders represented in the Board of
Directors of the Company or of other Group companies or with parties related to them, with the exceptions provided
for by law.
Moreover, article 8 of the Board of Directors Regulations establishes that approval of the transactions of the
Company or its Group companies with directors needing to be approved by the Board of Directors will be granted
after receiving a report from the Audit and Compliance Committee. The only exceptions to this approval will be
transactions that simultaneously fulfill the following three characteristics: (i) they are carried out under contracts with
standard terms and are applied en masse to a large number of customers; (ii) they go through at market rates or
prices set in general by the party acting as supplier of the goods or services; and (iii) they are worth less than 1% of
the Company's annual revenues.
D.2 Detail any significant transactions, entailing a transfer of a significant amount or obligations between the
company or its group companies, and the company’s significant shareholders:
Name of significant
Name of the
shareholder (person or
company or group
company)
entity
Nature of the
relationship
Type of
transaction
Amount
(thousands of euros)
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
47
D.3 Detail any significant transactions entailing a transfer of a significant amount or obligations between the company
or its group companies, and the directors and/or senior managers:
Name of the directors
Name of the related
and/or senior managers
party (person or
Relationship
(person or company)
company)
Nature of
transaction
Amount
(thousands of euros)
D.4 Detail the significant transactions in which the company has engaged with other companies belonging to the
same group, except those that are eliminated in the process of drawing up the consolidated financial statements and
that do not form part of the company’s usual trade with respect to its object and conditions.
In any event, provide information on any intragroup transactions with companies established in countries or territories
considered tax havens.
Name of the Group Company
Brief description of the transaction
BBVA GLOBAL FINANCE LTD.
BBVA GLOBAL FINANCE LTD.
BBVA GLOBAL FINANCE LTD.
BBVA GLOBAL FINANCE LTD.
Holding of securities representing
debt
Current account deposits
Term account deposits
Issue-linked subordinated liabilities
165,339
Amount
(€k)
4,394
1,678
5,667
D.5 State the amount of the transactions carried out with other related parties.
D.6 Detail the mechanisms established to detect, determine and resolve possible conflicts of interest between the
company and/or its group, and its directors, managers and/or significant shareholders.
Articles 7 and 8 of the Board Regulations regulate issues relating to possible conflicts of interest as follows:
Article 7
Directors must adopt necessary measures to avoid finding themselves in situations where their interests, whether for
their own account or for that of others, may enter into conflict with the corporate interest and with their duties with
respect to the Company, unless the Company has granted its consent under the terms established in applicable
legislation and in the Board of Directors Regulations.
Likewise, they must refrain from participating in deliberations and votes on resolutions or decisions in which they or a
related party may have a direct or indirect conflict of interest, unless these are decisions relating to appointment to or
severance from positions on the governing body.
Directors must notify the Board of Directors of any situation of direct or indirect conflict that they or parties related to
them may have with respect to the Company's interest.
Article 8
The duty of avoiding situations of conflict of interest referred to in the previous article obliges the directors to refrain
from, in particular:
- Carrying out transactions with the Company, unless these are ordinary business, performed under standard
conditions for the customers and of insignificant quantity. Such transactions are deemed to be those whose
information is not necessary to provide a true picture of the net worth, financial situation and performance of the
Company.
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
48
- Using the Company's name or invoking their position as director to unduly influence the performance of private
transactions.
- Making use of the corporate assets, including the Company's confidential information, for private ends.
- Taking advantage of the Company’s business opportunities.
- Obtaining advantages or remuneration from third parties other than the Company and its Group, associated to the
performance of their position, unless they are mere tokens of courtesy.
- Engaging in activities for their own account or on behalf of third parties that involve effective actual or potential
competition with the Company or that, in any other way, bring them into permanent conflict with the Company's
interests.
The above provisions will also apply should the beneficiary of the prohibited acts or activities described in the
previous subsections be a related party related to the director. However, the Company may dispense with the
aforementioned prohibitions in specific cases, authorising a director or a related party to carry out a certain
transaction with the Company, to use certain corporate assets, to take advantage of a specific business opportunity
or to obtain an advantage or remuneration from a third party.
When the authorization is intended to dispense with the prohibition against obtaining an advantage or remuneration
from third parties, or affects a transaction whose value is over 10% of the corporate assets, it must necessarily be
agreed by a General Meeting resolution.
The obligation not to compete with the Company may only be dispensed with them no damage is expected to the
Company or when any damage that is expected is compensated by benefits that are foreseen from the dispensation.
The dispensation will be conferred under an express and separate resolution of the General Meeting.
In other cases, the authorization may also be resolved by the Board of Directors, provided the independence of the
members conferring it is guaranteed with respect to the director receiving the dispensation. Moreover, it will be
necessary to ensure that the authorized transaction will not do harm to the corporate net worth or, where applicable,
that it is carried out under market conditions and that the process is transparent.
Approval of the transactions of the Company or its Group companies with directors needing to be approved by the
Board will be granted after receiving a report from the Audit and Compliance Committee. The only exceptions to this
approval will be transactions that simultaneously meet the following 3 specifications: 1) they are carried out under
contracts with standard terms and are applied en masse to a large number of customers; 2) they go through at
market rates or prices set in general by the party acting as supplier of the goods or services; and 3) they are worth
less than one per cent of the Company’s annual revenues.
Since BBVA is a credit institution, it is subject to the provisions of Act 10/2014, dated 26th June, on the regulation,
supervision and solvency of credit institutions, whereby the directors and general managers or similar may not obtain
credits, bonds or guarantees from the Bank on whose board or management they work, above the limit and under the
terms established in article 35 of Royal Decree 84/2015, which implemented Law 10/2014, unless expressly
authorized by the Bank of Spain.
All the members of the Board of Directors and the Senior Management are subject to the Company’s Internal
Standards of Conduct on the Securities Markets. These Standards are intended to control possible Conflicts of
Interest. They establish that all Persons Subject to it must notify the head of their area or the Compliance Department
of situations that could potentially and under specific circumstances may entail Conflicts of Interest that could
compromise their impartiality, before they engage in any transaction or conclude any business in which they could
arise in the scope of the securities markets.
D.7 Are more than one of the Group’s companies listed in Spain as publicly traded companies?
Identify the listed subsidiaries in Spain:
NO
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
49
Listed subsidiaries
Indicate whether the respective areas of business and any potential relations between them and any potential
business relations between the holding company and the listed subsidiary and other group companies have been
publicly defined;
Define any potential business relations between the holding company and the listed subsidiary
company and between the listed subsidiaries and other group companies
Identify the mechanisms established to resolve any potential conflicts of interest between the listed subsidiary and
other companies of the group:
Mechanisms to resolve possible conflicts of interest
E RISK CONTROL AND MANAGEMENT SYSTEMS
E.1 Explain the scope of the company’s Risk Management System, including risks of a tax-related nature.
The BBVA Group has a General Risk Control and Management Model (hereinafter, "the Model") adapted to its
business model, organization and the geographical areas in which it operates. It allows it to operate within the
framework of strategy and control policy and risk management defined by the Bank's corporate bodies and adapt
to an economic and regulatory environment, addressing risk management globally and adapted to the
circumstances at any particular time. The Model makes provision for a suitable risk management system in
relation to the Bank's risk profile and strategy of the Company, which applies comprehensively across the Group.
The Model is composed of the elements set out below:
Governance and organization.
I.
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. The
corporate bodies therefore approve the risk strategy and the corporate policies for the different types of risks,
being the risk management function in charge of its implementation and development in terms of management,
reporting to the corporate bodies. The responsibility for the day-to-day management of risks lies with the
businesses, whose activity is carried out in accordance with the policies, rules, procedures, infrastructures and
controls defined by the risk management function, based on the framework set by the corporate bodies. To
adequately carry out this task, BBVA Group's risk management function has been configured as a single and
global function independent of the commercial areas.
Risk Appetite Framework.
II.
It is approved by the Board and determines the risks and risk levels that the Group is willing to assume to
achieve its business objectives, taking into account the organic development of the business. These are
expressed in terms of solvency, profitability, liquidity and funding or other metrics, which are reviewed periodically
or if there are any substantial changes in the entity's business. The determination of the Risk Appetite
Framework has the following objectives:
• Set out the maximum risk levels the Group is willing to accept.
•
To establish a set of guidelines for action and a management framework for the medium and long term
that prevent actions from being taken which could compromise the future viability of the Group.
• Establish a relationship framework with the geographical and/or business areas.
•
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.
III.
The transfer of the Risk Appetite Framework to ordinary management is underpinned by three basic elements:
Decisions and processes.
• A harmonized regulatory body.
• Risk planning.
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
50
•
Integrated management of risks over their life cycle
Assessment, monitoring and reporting.
IV.
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 Framework approved by the corporate
bodies, even in adverse scenarios. There are various phases:
Identify the risk factors that could compromise compliance with the risk appetite thresholds.
•
• Assessment of the impact of the materialization of the risk factors on the metrics that define the Risk
Appetite Framework based on different scenarios, including stress scenarios.
• Response to undesired situations and proposal of rechanneling measures to allow a dynamic
management of the situation, even before it occurs.
• Monitoring of the Group's risk profile and of the identified risk factors, through internal, competitor and
market indicators, among others, to anticipate their future development.
• Reporting: Complete and reliable information on the development of risks for the governing bodies and
senior management, with the frequency and completeness appropriate to the nature, significance and
complexity of the risks reported. The principle of transparency governs all reporting of risk information.
Infrastructure.
V.
This 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 achieve their aims. With respect to human resources, the Group's risk function has an adequate
workforce in terms of number, skills, knowledge and experience. With respect to technology, the Group's risk
function assures the integrity of the management information systems and the provision of the infrastructure
required to support risk management, using the tools appropriate to the needs derived from the different types of
risks in their admission, management, valuation and monitoring.
The Group promotes the development of a risk culture that ensures consistent application of the risk control and
management model in the Group, and that guarantees that the risks function is understood and internalized at all
levels of the organization.
Regarding taxation, BBVA has defined a tax-related risk management policy based on a suitable control
environment, a system for identifying risks and a monitoring process including continuous improvement of the
effectiveness of the established controls. This management model was evaluated and assessed by an
independent expert.
E.2 Identify the corporate bodies responsible for drawing up and enforcing the Risk Management System, including
tax-related risks.
The Board of Directors (hereinafter "the Board") approves the risk strategy and supervises the internal control
and management systems. Specifically, in relation to the risk strategy, the Board approves the Group's Risk
Appetite statement, the core metrics and the main metrics by type of risk, as well as the General Risk
Management and Control Model.
The Board of Directors is also responsible for approving and monitoring the strategic and business plan, the
annual budgets and management goals, as well as the investment and funding policy, in a consistent way and in
line with the approved Risk Appetite Framework. For this reason, the processes for defining the Risk Appetite
Framework proposals and strategic and budgetary planning at Group level are coordinated by the executive area
for submission to the Board.
With the aim of ensuring the integration of the Risk Appetite Framework into management, on the basis
established by the Board of Directors, the Executive Committee ("EC") approves the rest of metrics by type of
risk (in 2017, in relation to concentration, profitability and reputation) and the Group's basic structure of limits in
terms of geographic areas, types of risk, asset classes and portfolios. This Committee also approves specific
corporate policies for each type of risk.
Lastly, the Board of Directors has set up a committee specializing in risks, the Risk Committee ("RC"), that
assists the Board and the EC in determining the Group's risk strategy and the risk limits and policies,
respectively, analyzing and assessing beforehand the proposals submitted to those bodies. The amendment of
the Group's risk strategy and the elements composing it, including the Risk Appetite Framework metrics within its
remit, is the exclusive power of the BBVA Board of Directors, while the Executive Committee is responsible for
amending the metrics by type of risk within its scope of decision and the Group's basic structure of limits (core
limits), when applicable. In both cases, the amendments follow the same decision-making process described
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
51
above, so the proposals for amendment are submitted by the executive area (CRO) and later analyzed, first by
the RC, for later submission to the Board of Directors or to the EC, as appropriate.
Moreover, the RC, the EC and the Board itself conduct proper monitoring of the risk strategy implementation and
of the Group's risk profile. The risks function regularly reports on the development of the Group's Risk Appetite
Framework metrics to the Board and to the Executive Committee, after their analysis by the Risk Committee,
whose role in this monitoring and control work is particularly relevant.
The head of the risk function in the executive line, the Chief Risk Officer (CRO), carries out his work with the
independence, authority, rank, experience, knowledge and resources required. This Officer is appointed by the
Bank's Board of Directors, as a member of its Senior Management, and has direct access to the corporate
bodies (Board of Directors, EC and RC), to which it reports on a regular basis on the situation of the risks in the
Group.
The CRO for the best performance of his functions is supported by a structure consisting of cross-cutting risk
units in the corporate area and specific risk units in the Group's geographical and/or business areas. Each of
these units is headed by a Chief Risk Officer for the geographical and/or business area who, within his/her area
of responsibility, carries out risk control and management 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 governing bodies.
The Chief 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 the
independence of the local risk management function from the operating functions and enable its alignment with
the Group's corporate policies and goals related to risks.
The risks function has a decision-making process supported by a structure of committees. The Global Risk
Management Committee (GRMC) is the highest executive body in the risk area and 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 risks facing the Group in its businesses, as
well as the admission of operations involving more relevant risks.
Regarding the tax-related risk, the Tax Department establishes the control mechanisms and internal rules
necessary to ensure compliance with the tax laws in force and the tax strategy approved by the Board of
Directors. This function is subject to supervision by the Audit and Compliance Committee of the BBVA Group,
and is evidenced by the appearances made before the same by the Head of the Fiscal Function of the BBVA
Group.
E.3 Indicate the primary risks, including tax-related risks that could prevent business targets from being met.
BBVA has risk identification and scenario analysis processes in place that enables to conduct a dynamic and
proactive risk management. These processes are forward-looking to ensure the identification of emerging risks,
and take into account the concerns of both the business areas and the corporate areas and Senior Management.
Risks are captured and measured in a consistent way using the most appropriate methodologies in each case.
Their measurement includes the design and application of scenario analyses and stress testing, and considers
the controls the risks are subjected to.
A forward projection is performed of the Risk Appetite Framework variables in stress scenarios with the aim of
identifying possible deviations from the established thresholds; if such deviations are detected, the appropriate
measures are adopted to keep those variables within the target risk profile.
In this context, there are a series of emerging risks that could affect the Group's business performance. These
risks are described in the following main blocks:
• Macroeconomic and geopolitical risks
o Global growth improved in 2017 and developed and emerging markets came into better synchrony, thus
making recovery more sustainable. The growth of world trade, calm financial markets - which depend
on the support of central banks - and the absence of inflation further contribute to a brighter outlook.
The more advanced economies are performing strongly, especially in the euro area. Growth in the
United States will be supported in short term by the recently passed tax reform, although its long-term
impact is unlikely to be significant. In the emerging economies, growth in China continues to moderate,
with a combination of policies designed to smooth out financial imbalances. In Latin America, activity is
picking up in a context of higher prices for basic products and favorable conditions in financial markets.
o The uncertainty surrounding these positive economic prospects, though trending downward, continues
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
52
to be high. After a protracted period of exceptionally loose monetary policy, the main central banks are
scaling down their support. Uncertainty now arises as to the effect on the markets and the economy,
given the background of high leverage and signs of overvaluation in some financial assets. A second
source of uncertainty is the extent of political support for multilateral governance of global trade. Thirdly,
global geopolitics and internal politics in some countries may have an effect on the economic outlook
within the purview of BBVA.
o The Group's geographical diversification is the key to achieving a high level of recurring revenue,
despite the conditions of the environment and the cycles of the economies in which it operates.
• Regulatory and reputational risks
o Financial institutions are exposed to a complex and changing regulatory and legal environment that can
impact their growth capacity and the conducting of certain businesses, with higher liquidity and capital
requirements and lower profitability ratios. The Group monitors changes in the regulatory framework
(e.g., IFRS 9, Basel IV, etc.) on an ongoing basis to enable it to anticipate and adapt to those changes
sufficiently in advance, adopt the best practices and the most efficient and rigorous criteria for their
implementation.
o The financial sector is coming under intense scrutiny by regulators, governments and society itself.
Negative news or inappropriate conduct can seriously damage an institution's reputation and affect its
ability to conduct a sustainable business. The attitudes and conduct of the Group and of its members
are governed by the principles of integrity, honesty, long-term vision and best practices, thanks to the
internal control model, the Code of Conduct, tax strategy and the Group's Responsible Business
strategy, among others.
• Business, legal and operational risks
o New technologies and forms of customer relationships: The development of the digital world and the
information technologies poses major challenges for financial institutions, that represent threats (new
competitors, disintermediation, etc.) and also opportunities (new customer relations framework, greater
ability to adapt to their needs, new products and distribution channels, etc.). Digital transformation is
one of the priorities for the Group, which aims to lead the digital banking of the future.
o Technological risks and security breaches: Financial institutions are exposed to new threats such as
cyber-attacks, internal and customer database theft, or payment system fraud that require major
investments in security from the technological and human point of view. The Group attaches a great
deal of importance to active management and control of operational and technological risk. One
example is the early adoption of advanced models for managing these risks.
o The financial sector is exposed to growing litigation rates and is facing an elevated number of lawsuits
whose economic consequences cannot be easily foreseen. The Group carries out a constant
management and tracking of such lawsuits in defense of its own interests, and allocates, when
considered necessary, the corresponding provisions for coverage thereof, following the criteria of
internal lawyers and external legal experts handle the conduct of the proceedings themselves.
E.4 Identify whether the entity has a risk tolerance level, including tax-related risks.
The Group's Risk Appetite Framework approved by the governing bodies determines the risks and the risk level
that the Group is willing to assume to achieve its business objectives taking into account its natural development.
These are expressed in terms of solvency, profitability, liquidity and funding or other metrics, which are reviewed
periodically or if there are any substantial changes in the entity's business or relevant corporate operations.
The Risk Appetite Framework 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.
• Core metrics: based on the Risk Appetite Statement, these statements specify the general principles of risk
management in terms of solvency, profitability, liquidity, funding, and recurring revenue. Moreover, the core
metrics reflect, in quantitative terms, the principles and the target risk profiles set out in the Risk Appetite
Statement and are aligned with the Group's strategy.
• Metrics by type of risk: based on the core metrics and their thresholds for each type of risk, statements are
established that set out the general management principles for the risk and a number of metrics are
calibrated, whose observance enables compliance with the core metrics and the Group's Risk Appetite
Statement.
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
53
• Core limits structure: The core limits structure is designed to shape the Risk Appetite Framework at
geographical area, risk type, asset type and portfolio level, ensuring that management is within the metrics
by type of risk.
In addition to this Framework, there is a level of management limits that is defined and managed by the risks
function when developing the basic structure of limits, with the aim of ensuring that proactive management of
risks by risk subcategory within each type or by subportfolio is in line with that basic structure of limits and in
general with the established Risk Appetite Framework.
The corporate risk area works with the various geographical and/or business areas to define their Risk Appetite
Framework, so that it is coordinated with, and integrated into the Group's Risk Appetite, making sure that its
profile is in line with the one defined.
The Risk Appetite Framework 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. The Risk Appetite
Framework is integrated within management, and the processes for defining the Risk Appetite Framework
proposals are coordinated with the strategic and budgetary planning at Group level.
As mentioned earlier, the core metrics of the BBVA Risk Appetite Framework measure the Group's performance
in terms of solvency, liquidity, funding, profitability and revenue recurrence. Most of the core metrics are
accounting and/or regulatory metrics, and are therefore regularly disclosed to the market in the BBVA Group's
annual and quarterly financial reporting. In 2017 the Risk Appetite metrics changed in line with the metrics of the
Risk Appetite Framework.
E.5 State what risks, including tax-related risks, have occurred during the year.
Risk is inherent to financial business, so the occurrence of risk to a greater or lesser extent is absolutely implicit
in the Group’s activities. BBVA thus provides detailed information on its annual financial statements (note 7 in the
Report and note 19 in the consolidated accounts covering tax-related risks) regarding the developments of such
risks, since their very nature can permanently affect the Group in undertaking its activities.
Furthermore, as stated in note 24 to the financial statements, after the decision of the Court of Justice of the
European Union on interest rate limitation clauses in consumer mortgage loans (known as "floor clauses"), BBVA
recognized a provision to cover any future claims in this respect.
E.6 Explain the response and supervision plans for the principal risks faced by the company, including tax-related
risks
The BBVA Group's internal control system takes its inspiration from the best practices developed both in the
“Enterprise Risk Management – Integrated Framework” of COSO (Committee of Sponsoring Organizations of the
Treadway Commission) and in the “Framework for Internal Control Systems in Banking Organizations”, drawn up
by the Basel Bank of International Settlements (BIS).
The control model has a system with three lines of defense:
•
•
The Group's business units constitute the first line of defense. They are responsible for managing
current and emerging risks and implementing control procedures. It is also responsible for reporting to
its business/support unit.
The second line of defense is made up of the units specializing in control: Compliance, Accounting &
Supervisors (Internal Financial Control), Global Risk Management (Internal Risk Control) and
Engineering (Internal Operations Control and IT Control). This line collaborates in identifying current and
emerging risks, defines the control policies within the scope of its cross-sector specialty, ensures that
they are implemented correctly, and provides training and advice to the first line. In addition, one of its
main functions is to monitor and question the control activity carried out by the first line of defense.
The control activity of the first and second line of defense will be coordinated by the Internal Control
Unit, which will also be responsible for providing these units with a common internal control
methodology and global tools. The Group's Head of Internal Risk Control is responsible for the function
and reports its activities to the CRO and to the Board's Risk Committee, assisting it in any matters
where requested.
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
54
•
The third line of defense is made up of the Internal Audit unit, for which the Group assumes the
guidelines of the Basel Committee on Banking Supervision and of the Institute of Internal Auditors. Its
function is that of providing independent and objective assurance and consulting activity designed to
add value and improve the Organization's operations.
In addition, within the risk area, the Group has units for Internal Risk Control and Internal Validation that are
independent of the units that develop the models, manage the processes and execute the controls.
Its scope of action is global, both from the geographical point of view and in terms of the types of risks. It
encompasses all the areas of the organization and is designed to identify and manage the risks faced by the
Group entities, in order to guarantee the established corporate objectives.
The main function of Internal Risk Control is to ensure the existence of a sufficient internal regulatory framework,
a process and measures defined for each type of risks identified in the Group, and for those other types of risk
that may potentially affect the Group, control their application and operation, and ensure that the risk strategy is
integrated into the Group's management.
The Group's Head of Internal Risk Control is responsible for the function and reports its activities and informs on
its work plans to CRO and to the Board's Risk Committee, assisting it in any matters where requested.
To perform its duties, the unit has a structure of teams at a corporate level and also in the most important
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.
Among other functions, Internal Validation is responsible for the internal review and independent validation of the
models used for risk measurement and assumption and for determining the Group's capital requirements.
With regard to tax risks, the Board of Directors approved the Tax Strategy for the BBVA Group. This strategy
reflects the tax-related postures of the Group. This strategy integrates the results of the OECD BEPS project and
the guidelines given in Chapter XI, Part I of the "OECD Guidelines for Multinational Enterprises". In this regard,
the Tax Department establishes the policies and control processes for guaranteeing compliance with the tax laws
currently in force and the tax strategy.
F SYSTEMS OF RISK MANAGEMENT AND INTERNAL CONTROL OVER FINANCIAL REPORTING (ICFR)
Describe the mechanisms comprising the risk management and control systems for financial reporting (ICFR) in the
entity.
F.1 The entity’s control environment
Give information, describing the key features of at least:
F.1.1. Which bodies and/or functions are responsible for: (i) the existence and maintenance of an adequate and
effective ICFR; (ii) its implementation; and (iii) its supervision.
Pursuant to article 17 of the Board Regulations, the Board of Directors approves the financial information that BBVA
is required to publish periodically as a publicly traded company. The Board of Directors has an Audit and Compliance
Committee, whose mission is to assist the Board in overseeing the financial information and the exercise of the
Group control duties.
In this respect, the BBVA Audit and Compliance Committee Regulations establish that the Committee's duties include
the supervision of the sufficiency, suitability and effective operation of the internal control systems in the process of
drawing up and preparing financial information, so as to rest assured of the correctness, accuracy, sufficiency and
clarity of the financial information of the Entity and its consolidated Group.
The BBVA Group complies with the requirements imposed by the Sarbanes Oxley Act ("SOX") for each year's
consolidated annual financial statements due to its status as a publicly traded company listed with the United States
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
55
Securities Exchange Commission ("SEC"). The main Group executives are involved in the design, compliance and
maintenance of an effective internal control model that guarantees the quality and veracity of the financial
information. The Accounting & Supervisors Unit ("A&S") is in charge of producing the consolidated annual financial
statements and maintaining the model of control over financial information generation. Specifically, this function is
performed by the Financial Internal Control area, which is integrated within the general internal control model of the
Group, which is outlined below.
The BBVA Group has established and maintains an internal control model that has two components. The first element
is the structure of control organized into three lines of defense (3LD); the second is a scheme of governance known
as Corporate Assurance.
In accordance with the most advanced standards of internal control, the three lines of defense model is configured as
follows:
•
•
•
The first line of defense rests with the various areas and/or business units of the Group that are in charge of
managing the risks relating to their operations and carrying out the controls required to mitigate them.
The second line of defense is made up of the areas/units specializing in control, such as: Compliance, Internal
Financial Control, Internal Risk Control, Internal Operations Control and Internal Technology Control. This
second line of defense cooperates with the first line of defense to identify current and emerging risks in
connection with operations, specifies control policies and models within its cross-cutting remit, monitors
progress, and regularly assesses the proper design and effectiveness of implemented controls.
The third line of defense is the Internal Audit area, which depends directly on the Group's Executive Chairman. It
is completely independent from the functions being audited and is not part of any other activity that may be
subject to an audit. It has global scope, meaning it covers each and every one of BBVA Group activities and
entities.
In addition, to reinforce the internal control environment, the Group has in place a scheme of governance called
Corporate Assurance, which establishes a framework for the supervision of the internal control model and for
escalation to Senior Management of the main issues relating to internal control within the Group. The Corporate
Assurance model (in which the business areas, support areas and the areas specializing in internal control
participate) is organized into a system of committees that analyze the most relevant issues related to internal control
in each geographical area, with the participation of the country's top managers. These committees report to the
Group's Global Committee, chaired by the CEO with the assistance of the main global executives responsible for the
business and control areas.
The effectiveness of this internal control system is assessed on an annual basis for those risks that may have an
impact on the proper drawing up of the Group's financial statements. The assessment is conducted under the
coordination of the Internal Financial Control area, and is assisted by the control specialists of the business and
support areas and the Group's Internal Audit department. In addition, the external auditor of the BBVA Group issues
an opinion every year on the effectiveness of internal control over financial reporting based on criteria established by
COSO (Committee of Sponsoring Organizations of the Treadway Commission) and in accordance with the standards
of the United States Public Company Accounting Oversight Board (PCAOB). This opinion appears in the Form 20-F
that is filed every year with the SEC.
The result of the annual internal assessment of the System of Internal Control over Financial Reporting is reported to
the Group's Audit and Compliance Committee by the heads of Internal Audit and Internal Financial Control.
F.1.2. Whether, especially in the process of drawing up the financial information, the following elements exist:
• Departments and/or mechanisms responsible for: (i) the design and review of the organisational structure; (ii) the
clear definition of lines of responsibility and authority, with an adequate distribution of tasks and functions; and (iii)
ensuring that sufficient procedures exist for their correct dissemination within the entity.
The drafting of the financial information is carried out by the local Financial Management units of the countries and
the related consolidation work is done by the A&S Division, which is overall responsible for the drafting and reporting
of financial and regulatory information of the Group.
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
56
BBVA has an organizational structure that clearly defines action lines and responsibility in the areas involved in the
preparation of financial information, both in each entity and in the consolidated Group, and has the necessary
channels and circuits for its correct dissemination. The units responsible for drawing up these financial statements
have an adequate distribution of tasks and segregation of functions necessary to draw up these statements in an
appropriate operational and control framework.
Additionally, there is a cascade accountability assumption model aimed at extending the internal control culture and
the commitment of its compliance. Those in charge of the design and operation of the processes that have an impact
on financial information certify that all the controls associated with its operation under their responsibility are sufficient
and have worked correctly.
• Code of conduct, approval body, degree of dissemination and instruction, principles and values included (indicating
whether specific mention is made of recording the transactions and drawing up of the financial information), body in
charge of analysing non-compliance and proposing corrective measures and sanctions.
BBVA has a Code of Conduct, approved by the Board of Directors, that sets out BBVA's specific commitments in
developing one of the principles of its Corporate Culture: Integrity as a means of understanding and conducting
business. This Code likewise establishes the corresponding channel for whistleblowers regarding possible
infringements of the Code. It is the subject of ongoing training and refresher programs including key personnel in the
financial function.
Since 2016, and after the Code was updated in 2015, campaigns have been developed to communicate and
disseminate its new contents, taking advantage of new formats and digital channels. In addition, an ambitious training
plan has been developed at a global level, reaching the entire workforce of the Group.
The Code of Conduct is published on the Bank's website (www.bbva.com) and on the employees website (intranet).
Additionally, Group members undertake personally and individually to observe its principles and rules in an express
declaration of awareness and adhesion.
The duties of the Audit and Compliance Committee include ensuring that the internal codes of ethics and conduct
and on securities markets, applicable to all group personnel, comply with legal requirements and are adequate for the
Bank.
Additionally, BBVA has adopted a structure of Corporate Integrity Management Committees (with individual powers at
jurisdiction or Group entity levels, as applicable). Their joint scope of action covers all the Group businesses and
activities and their main duty is to ensure effective application of the Code of Conduct. There is also a Corporate
Integrity Management Committee, whose scope of responsibility extends throughout BBVA. The critical mission of
this committee entails ensuring uniform application of the Code in BBVA.
The Compliance Unit in turn independently and objectively promotes and supervises to ensure that BBVA acts with
integrity, particularly in areas such as money-laundering prevention, conduct with clients, security market conduct,
corruption prevention, and other areas that could entail a reputational risk for BBVA. The unit's duties include
fostering the knowledge and application of the Code of Conduct, promoting the drafting and distribution of its
implementing standards, assisting in the resolution of any concern insofar as interpretation of the Code that may
arise, and managing the Whistle-Blowing Channel.
• Whistle-blowing channel, to allow financial and accounting irregularities to be communicated to the Audit
Committee, as well as possible non-compliance with the code of conduct and irregular activities in the organization,
reporting where applicable if this is confidential in nature.
Preservation of the Corporate Integrity of BBVA transcends the merely personal accountability for individual actions, it
calls for all employees to have zero tolerance for activities outside the Code of Conduct or that could harm the
reputation or good name of BBVA, an attitude that is reflected in everyone's commitment to whistle-blowing, by timely
communication, of situations that, even when unrelated to their activity or area of responsibility, could be illegal or
infringe upon the values and guidelines of the Code.
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
57
The Code of Conduct itself establishes the communication guidelines to follow and contemplates a Whistle-Blowing
Channel, likewise guaranteeing the duty to reserve of the reporting parties, confidentiality of the investigations and
the prohibition of retaliation or adverse consequences in light of communications made in good faith.
Telephone lines and email boxes have been set up for these communications in each jurisdiction. A list of these
appears on the Group Intranet.
As described in the previous section, BBVA has adopted a structure of Corporate Integrity Management Committees
(with individual powers at jurisdiction or Group entity levels, as applicable), whose joint scope of action covers all the
Group businesses and activities and whose functions and responsibilities (explained in greater detail in their
corresponding regulations) include:
• Drive and monitor global initiatives to foster and promote a culture of ethics and integrity among members of the
Group.
• Ensure uniform application of the Code.
• Promote and monitor the functioning and effectiveness of the Whistle-blowing Channel.
• In exceptional cases where they are not already included among the members of the Committee, inform Senior
Management and/or the person responsible for the preparation of the financial statements of those events and
circumstances from which significant risks might arise for BBVA.
In addition, periodic reports are made to the Audit and Compliance Committee that supervises and controls their
proper functioning (independently managed by the Compliance area).
• Periodic training and refresher courses for employees involved in preparing and revising the financial information,
and in ICFR assessment, covering at least accounting standards, audit, internal control and risk management.
Specific training and periodic refresher courses are given on accounting and tax-related standards, internal control
and risk management in units involved in drawing up and reviewing the financial and tax-related information and in
evaluating the internal control system, to help them perform their functions correctly.
Within the A&S area, there is an annual training program for all members of the area on aspects related to the
preparation of financial information and new regulations applicable in accounting, financial and fiscal matters, as well
as other courses adapted to the needs of the area. These courses are taught by professionals from the area and
renowned external providers.
This specific training program is in addition to the general Group training, which includes courses on finance and
technology among other subjects.
Additionally, the BBVA Group has a personal development plan for all employees, which forms the basis of a
personalized training program to deal with the areas of knowledge necessary to perform their functions.
F.2 Financial reporting risk assessment
Give information on at least:
F.2.1. The key features of the risk identification process, including error and fraud risks, with respect to:
• Whether the process exists and is documented.
The ICFR was developed by the Group Management in accordance with international standards set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), establishing five components on
which the effectiveness and efficiency of internal control systems must be based:
• Establishing an adequate control environment for monitoring all these activities.
• Evaluating the risks that may be incurred by an entity in drawing up its financial information.
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
58
• Designing the necessary controls to mitigate the most critical risks.
• Establishing the adequate information circuits to detect and communicate the system's weaknesses or
inefficiencies.
• Monitoring such controls to ensure they are operational and the validity of their effectiveness over time.
In order to identify the risks with a greater potential impact on the generation of financial information, the processes
from which such information is generated are analyzed and documented, and an analysis of the risk situation that
may arise in each is later conducted.
Based on the corporate internal control and operational risk methodology, the risks are included in a range of
categories by type, which include the error and fraud (internal/external) categories, and their probability of occurrence
and possible impact is analyzed.
The process of identifying risks in the preparation of the Financial Statements, including risks of error, misstatement
or omission, is conducted by the parties responsible for each of the processes that underpin financial reporting,
together with the Financial Internal Control unit, which, in turn, manages mitigation plans and reports to the Audit and
Compliance Committee.
The scope of the annual/quarterly or monthly assessment of their controls is determined based on the materiality of
the risks, thus ensuring coverage of the risks believed to be critical for the financial statements.
The assessment of the aforementioned risks and the design and effectiveness of their controls begins with the
management's understanding of and insight into the business and the analyzed operating process, considering
criteria of quantitative materiality, likelihood of occurrence and economic impact, in addition to qualitative criteria
associated with the type, complexity and nature of the risks or of the business structure itself.
The system for identifying and assessing the risks of internal control over financial reporting is dynamic. It evolves
continuously, always reflecting the reality of the Group's business, changes in operating processes, the risks affecting
them and the controls that mitigate them.
All this is documented in a corporate management tool developed and managed by Operational Risk (STORM). This
tool documents all the processes, risks and controls managed by the different control specialists, including the
Financial Internal Control unit.
• Whether the process covers all the objectives of financial reporting (existence and occurrence; completeness;
valuation; presentation, breakdown and comparability; and rights and obligations), whether the information is updated
and with what frequency.
Each of the processes developed and identified in the BBVA Group for drawing up financial information aim to record
all financial transactions, value the assets and liabilities in accordance with applicable accounting regulations and
provide a breakdown of the information in accordance with regulator requirements and market needs.
The financial reporting control model analyzes each of the above processes to ensure that identified risks are
properly covered by efficiently functioning controls. The control model is updated when changes arise in the relevant
processes for producing financial information.
• The existence of a process for identifying the consolidation perimeter, taking into account aspects including the
possible existence of complex corporate structures, instrumental or special purpose vehicles.
The A&S (Accounting and Supervisors) organization includes a Consolidation department that carries out a monthly
process of identification, analysis and updating of the Group's consolidation perimeter.
In addition, the information from the consolidation department on new companies set up by the Group's different units
and the changes made to existing companies is compared with the data analyzed by two specific committees whose
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
59
function is to analyze and document the changes in the composition of the corporate group (Holding Structure
Committee and Investments in Non-Banking Companies Committee, both corporate).
In addition, with regard to special purpose vehicle control, the Internal Audit and Compliance areas of the Bank make
a periodic report of the Group's structure to the Board of Directors and to the Audit and Compliance Committee.
• Whether the process takes into account the effects of other types of risks (operational, technological, financial,
legal, tax-related, reputational, environmental, etc.) insofar as they impact the financial statements.
The internal control model over financial reporting applies to processes for directly drawing up such financial
information and all operational or technical processes that could have a relevant impact on the financial, accounting,
tax-related or management information.
As explained above, all the specialist control areas apply a standard methodology and use a common tool (STORM)
to document the identification of the risks, of the controls that mitigate those risks and of the assessment of their
effectiveness.
There are control specialists in all the operational or support areas, and therefore any type of risk that may affect the
Group's operations is analyzed under that methodology (market, credit, operational, technological, financial, legal,
tax-related, reputational or any other type of risk) and is included in the ICFR insofar as it may have an impact on the
financial information.
• Which of the entity's governing bodies supervises the process.
The process for identifying risks and assessing the design, effectiveness and suitability of the controls is documented
at least once a year, and it is supervised by the Internal Audit area.
Moreover, the Head of Internal Audit and the Head of Internal Financial Control of the Group report annually to the
Audit and Compliance Committee in respect of analysis work and the conclusions of the assessment of the control
model for financial reporting and the certification process. This work follows the SOX methodology to comply with the
legal requirements under laws and regulations on systems of internal control over financial reporting, and is included
in report 20-F, submitted annually to the SEC, as indicated in the first point of the control environment.
F.3 Control activities
Give information on the main features, if at least the following exist:
F.3.1. Procedures for review and authorization of the financial information and the description of the ICFR, to be
published on the securities markets, indicating who is responsible for it, and the documentation describing the activity
flows and controls (including those concerning risk of fraud) for the different types of transactions that may materially
impact the financial statements, including the procedure for closing the accounts and the specific review of the
relevant judgements, estimates, valuations and projections.
All the processes related to the drawing up of the financial information are documented, together with their control
model: potential risks linked to each process and controls established for their mitigation. As explained in point F.2.1,
the aforementioned risks and controls are recorded in the corporate tool STORM, which also includes the result of the
assessment of the operation of the controls and the degree of risk mitigation.
In particular, the main processes related to the generation of financial information are: accounting, consolidation,
financial reporting, financial planning and monitoring, financial and tax-related management. The analysis of these
processes, their risks and their controls is also supplemented by all other critical risks that may have a financial
impact from business areas or other support areas.
Likewise, there are procedures for review by the areas responsible for generating the financial and tax-related
information disseminated to the securities markets, including the specific review of the relevant judgments, estimates
and projections.
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
60
As mentioned in the annual financial statements, it is occasionally necessary to make estimates to determine the
amount at which some assets, liabilities, income and expenses and commitments should be recorded. These
estimates relate mainly to the following:
•
•
•
•
•
•
•
Impairment losses on certain financial assets.
The assumptions used to quantify certain provisions and in the actuarial calculation of liabilities and
commitments for post-employment and other obligations.
The useful life and impairment losses of tangible and intangible assets.
The appraisal of goodwill and price assignments in business combinations.
The fair value of certain unlisted assets and liabilities.
The recoverability of deferred tax assets.
The exchange rate and inflation index in certain countries.
These estimates are made based on the best information available on the financial statement closing date and,
together with the other relevant issues for the closing of the annual and six-monthly financial statements, are
analyzed and authorized by a Technical Committee at A&S (A&S Executive Steering Committee) and submitted to
the Audit and Compliance Committee before their filing by the Board of Directors.
F.3.2. Internal control procedures and policies for information systems (among others, access security, change
control, their operation, operational continuity and segregation of functions) that support the relevant processes in the
entity with respect to the drawing up and publication of the financial information.
Internal control models include procedures and controls regarding the operation of information systems and access
security, functional segregation, development and modification of computer applications used to generate financial
information.
The current methodology for internal control and operational risk establishes a list of controls by category whose
breakdown includes (among others) two categories: access control and functional segregation. Both categories of
controls are identified in the model of internal control of financial information and their risks and controls are analyzed
and assessed on a regular basis, so the integrity and reliability of the information drawn up can be guaranteed.
Additionally, there is a corporate level procedure for managing system access profiles. It is developed, implemented
and updated by the Group's Engineering internal control unit. This unit is also in charge of providing support for
control processes in change management (development in test environments and putting changes into production),
incident management, management of transactions, media and backup copy management, and management of
business continuity, among other things.
With all these mechanisms, the BBVA Group ensures the maintenance of adequate management of access control,
the establishment of the correct and necessary steps to put applications into production and their subsequent
support, the creation of backup copies, and assurance of continuity in the processing and recording of transactions.
In summary, the entire process of preparing and publishing financial information has established and documented the
procedures and control models necessary to provide reasonable assurance about the correctness of BBVA Group's
public financial information.
F.3.3. Internal control procedures and policies designed to supervise the management of activities subcontracted to
third parties, and those aspects of the evaluation, calculation and assessment outsourced to independent experts,
which may materially impact the financial statements.
The internal control model set out specific controls and procedures for the management of subcontracted activities or
those aspects of evaluation, calculation and assessment of assets or liabilities outsourced to independent experts.
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
61
There is a set of standards and an Outsourcing Committee that establishes and supervises the requirements that
must be met at group level for the activities to be subcontracted. Regarding the financial processes, there are
procedural manuals contemplating the outsourced activity that identify the processes to be executed and the controls
to be applied by the service provider units and units entrusted with the outsourcing thereof. The controls established
in the outsourced processes concerning the generation of financial information are also tested by the Internal
Financial Control area.
The valuations from independent experts used for matters relevant for generating financial information are included
within the standard circuit of review procedures executed by internal control, Internal Audit and external Audit.
F.4 Information and communication
Give information on the main features, if at least the following exist:
F.4.1. A specific function in charge of defining and keeping the accounting policies updated (accounting policy
department or area) and dealing with queries or conflicts stemming from their interpretation, ensuring fluent
communication with those in charge of operations in the organization, and an up-to-date manual of accounting
policies, communicated to the units through which the entity operates.
The organization has two areas within A&S (Group Financial Accounting and Global Supervisory Relations) in charge
of the Accounting (Accounting Working Group) and Solvency Technical Committees. Their purpose is to analyze,
study and issue standards that may impact the drawing up of the Group's financial and regulatory information,
determining the accounting and solvency criteria required to ensure correct recording of transactions to the accounts
and calculation of capital requirements within the framework of applicable rules and standards.
The Group has in place an updated accounting policies manual, disseminated over the Company intranet to all the
units in the Group. This manual is the tool that guarantees that all the decisions related to accounting policies or
specific accounting criteria to be applied in the Group are supported and are standardized. The Accounting Policies
Manual is approved in the Accounting Working Group and is documented and updated for its use and analysis by all
the Group's entities.
F.4.2. Mechanisms to capture and prepare the financial reporting in standardised formats, for application and use by
all the units of the entity or the group, that support the main financial statements and the notes, and the information
detailed on ICFR.
The Group's A&S area and the financial directorates of the countries are responsible for the preparation of the
financial statements in accordance with the current accounting and consolidation manuals. There is also a
consolidation computer application that includes the information on the accounting of the various Group companies
and performs the consolidation processes, including the standardization of accounting criteria, aggregation of
balances and consolidation adjustments.
Control measures have also been implemented in each of the said processes, locally and at consolidated level, in
order to guarantee that all the data underpinning the financial information are collected in a comprehensive, exact
and timely manner. There is also a single and standardized format for the financial reporting system. It is applicable
to and used by all the Group units and supports the main financial statements and the explanatory notes. There are
also control measures and procedures to ensure that the information disclosed to the markets includes a sufficient
level of detail to enable investors and other users of the financial information to understand and interpret it.
F.5 Supervision of the system's operation
Give information, describing the key features of at least:
F.5.1. The ICFR supervision activities carried out by the Audit Committee and whether the entity has an internal audit
function whose powers include providing support to the Audit Committee in its task of supervising the internal control
system, including the ICFR. Likewise, information will be given on the scope of the ICFR assessment carried out
during the year and of the procedure by which the person in charge of performing the assessment communicates its
results, whether the entity has an action plan listing the possible corrective measures, and whether its impact on the
financial reporting has been considered.
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
62
The internal control units of the business areas and of the support areas conduct a preliminary assessment of the
internal control model, assess the risks identified in the processes, the effectiveness of controls, and the degree of
mitigation of the risks, and also identify weaknesses, design, implement and monitor the mitigation measures and
action plans.
BBVA also has an Internal Audit unit that provides support to the Audit and Compliance Committee on the
independent supervision of the financial information internal control system. The Internal Audit function is entirely
independent of the units that draw up the financial information.
All the control weaknesses, mitigation measures and specific action plans are documented in the corporate tool
STORM and submitted to the internal control and operational risk committees of the areas, as well as to the local or
global Corporate Assurance Committees, based on the relevance of the detected issues.
To sum up: both the weaknesses identified by the internal control units and those detected by the internal or external
auditor have an action plan in place to correct or mitigate the risks.
During 2017, internal control areas conducted a full assessment of the financial information internal control system,
and, to date, no material or significant weakness have been revealed therein. The assessment was reported to the
Audit and Compliance Committee.
Additionally, in compliance with SOX, the Group annually assesses the effectiveness of the internal control model for
financial reporting on group of risks (within the perimeter of SOX companies and critical risks) that could impact the
drawing up of financial statements at local and consolidated levels. This perimeter considers risks and controls of
other specialties that are not directly financial (regulatory compliance, technology, risks, operational, human
resources, procurement, legal, etc.).
F.5.2. Whether there is a discussion procedure by which the auditor (in line with the technical auditing notes), the
internal audit function and other experts can inform senior management and the audit committee or the directors of
the entity of significant weaknesses in the internal control encountered during the review processes for the annual
accounts or any others within their remit. Likewise, give information on whether there is an action plan to try to correct
or mitigate the weaknesses observed.
As mentioned in the preceding section (F.5.1) of this Annual Corporate Governance Report, the Group does have a
procedure in place whereby the internal auditor, the external auditor and the heads of Internal Financial Control can
report to the Audit and Compliance Committee any internal control weaknesses detected in the course of their work.
Any material weaknesses will likewise be reported. Thus, a plan of action is prepared for all detected weaknesses,
which is presented to the Audit and Compliance Committee.
Since BBVA is a company listed with the SEC, the BBVA Group's auditor issues on an annual basis its opinion on the
effectiveness of the internal control over the financial information contained in the Group's annual consolidated
financial statements as of 31 December each year under PCAOB standards (“Public Company Accounting Oversight
Board”), with a view to filing the financial information under Form 20-F with the SEC. The latest report issued on the
financial information for 2016 is available on www.sec.gov.
The internal control oversight carried out by the Audit and Compliance Committee, described in the Audit and
Compliance Committee Regulations published on the Group website, includes the following activities:
• Analyze the financial statements of the Bank and of its consolidated Group contained in the annual, six-monthly
and quarterly reports prior to their submission to the Board, as well as all other required financial information,
with the necessary detail deemed appropriate. For this purpose, the Committee shall be provided with the
necessary support by the Group's Senior Management, especially that of the Accounting Department and the
Company and Group auditor.
• Review the necessary scope of consolidation, the correct application of accounting criteria, and all the relevant
changes relating to the accounting principles used and the presentation of the financial statements.
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
63
• Oversee the effectiveness of the company's internal control, internal audit and risk management systems in the
process of drawing up and reporting the mandatory financial information, including tax-related risks, as well as
discuss with the auditor any significant weaknesses in the internal control systems detected during the audit,
without undermining its independence. For such purposes, and where appropriate, they may submit
recommendations or proposals to the Board of Directors, along with the period for their follow-up.
• Analyze, and approve as the case may be, the Annual Internal Audit Plan, monitoring it and being apprised of
the degree to which the audited units are complying with the corrective measures recommended.
The external auditor and the Head of Internal Audit regularly attend all meetings of the Audit and Compliance
Committee and are properly informed of the matters addressed therein.
F.6 Other relevant information
F.7 External auditor report
Report on:
F.7.1. Whether the ICFR information disclosed to the markets has been submitted by the external auditor, in which
case the entity must attach the corresponding report as an annex. Otherwise, explain the reasons why it was not.
The information related to internal control over the financial information of the BBVA Group described in this report is
reviewed by the external auditor, which issues its opinion on the control system and on its effectiveness in relation to
the statements published at the close of each financial year.
On 31 March 2017, the BBVA Group, as a private foreign issuer in the United States, filed the Annual Report Form
20-F which was published on the SEC website on that same date.
In accordance with the requirements set out in Section 404 of the Sarbanes-Oxley Act of 2002 by the Securities and
Exchange Commission (SEC), the Annual Report Form 20-F included the certification of the main Group executives
on the establishment, maintenance and assessment of the Group's internal control system of financial reporting.
Form 20-F report also included the opinion of the external auditor regarding the effectiveness of the entity's internal
control system of financial reporting at year-end 2016.
G DEGREE OF COMPLIANCE WITH CORPORATE GOVERNANCE RECOMMENDATIONS
Indicate the extent to which the company follows the recommendations of the Good Governance Code of listed
companies.
Should any recommendation not be followed or be only partially followed, a detailed explanation should be given of
the reasons so that the shareholders, investors and the market in general have sufficient information to assess the
way the company works. General explanations will not be acceptable.
1. The bylaws of listed companies should not place an upper limit on the votes that can be cast by a single
shareholder, or impose other obstacles to the takeover of the company by means of share purchases on the market.
COMPLIANT
2. When a dominant and subsidiary company are both listed, they should provide detailed disclosure on:
a) The activity they engage in and any business dealings between them, as well as between the listed
subsidiary and other group companies.
b) The mechanisms in place to resolve possible conflicts of interest.
NOT APPLICABLE
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
64
3. During the annual general meeting the chairman of the board should verbally inform shareholders in sufficient
detail of the most relevant aspects of the company’s corporate governance, supplementing the written information
circulated in the annual corporate governance report. In particular:
a) Changes taking place since the previous annual general meeting.
b) The specific reasons for the company not following a given Good Governance Code recommendation, and
any alternative procedures followed in its stead.
COMPLIANT
4. The company should draw up and implement a policy of communication and contacts with shareholders,
institutional investors and proxy advisors that complies in full with market abuse regulations and accords equitable
treatment to shareholders in the same position.
This policy should be disclosed on the company’s website, complete with details of how it has been put into practice
and the identities of the relevant interlocutors or those charged with its implementation.
COMPLIANT
5. The board of directors should not make a proposal to the general meeting for the delegation of powers to issue
shares or convertible securities without pre-emptive subscription rights for an amount exceeding 20% of capital at the
time of such delegation.
When a board approves the issuance of shares or convertible securities without pre-emptive subscription rights, the
company should immediately post a report on its website explaining the exclusion as envisaged in company
legislation.
PARTIALLY COMPLIANT
The General Shareholders' Meeting of the Company of March 17, 2017 delegated to the Board of Directors a power
to increase capital and issue convertible securities, with an attached power to wholly or partially exclude pre-emptive
subscription rights in respect of capital increases and issues of convertible securities carried out using such
delegated power. The power to exclude pre-emptive subscription rights is limited, overall, to 20% of share capital as it
stood at the time of the delegation, except for the issuance of contingently convertible securities which foresee its
conversion to satisfy regulatory capital adequacy requirements as to eligibility as capital instruments in accordance
with applicable laws and regulations, because such instruments do not dilute the interests of shareholders.
6. Listed companies drawing up the following reports on a voluntary or compulsory basis should publish them on their
website well in advance of the annual general meeting, even if their distribution is not obligatory:
a) Report on auditor independence.
b) Reviews of the operation of the audit committee and the nomination and remuneration committee.
c) Audit committee report on related-party transactions.
d) Report on corporate social responsibility policy.
COMPLIANT
7. The company should broadcast its general meetings live on the corporate website.
COMPLIANT
8. The audit committee should strive to ensure that the board of directors can present the company’s accounts to the
general meeting without limitations or qualifications in the auditor’s report. In the exceptional case that qualifications
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
65
exist, both the chairman of the audit committee and the auditors should give a clear account to shareholders of their
scope and content.
COMPLIANT
9. The company should disclose its conditions and procedures for admitting share ownership, the right to attend
general meetings and the exercise or delegation of voting rights, and display them permanently on its website.
Such conditions and procedures should encourage shareholders to attend and exercise their rights and be applied in
a non-discriminatory manner.
COMPLIANT
10. When an accredited shareholder exercises the right to supplement the agenda or submit new proposals prior to
the general meeting, the company should:
a)
Immediately circulate the supplementary items and new proposals.
b) Disclose the model of attendance card or proxy appointment or remote voting form duly modified so that
new agenda items and alternative proposals can be voted on in the same terms as those submitted by the
board of directors.
c) Put all these items or alternative proposals to the vote applying the same voting rules as for those submitted
by the board of directors, with particular regard to presumptions or deductions about the direction of votes.
d) After the general meeting, disclose the breakdown of votes on such supplementary items or alternative
proposals.
11. In the event that a company plans to pay for attendance at the general meeting, it should first establish a general,
long-term policy in this respect.
NOT APPLICABLE
NOT APPLICABLE
12. The Board of Directors should perform its duties with unity of purpose and independent judgement, according the
same treatment to all shareholders in the same position. It should be guided at all times by the company’s best
interest, understood as the creation of a profitable business that promotes its sustainable success over time, while
maximizing its economic value.
In pursuing the corporate interest, it should not only abide by laws and regulations and conduct itself according to
principles of good faith, ethics and respect for commonly accepted customs and good practices, but also strive to
reconcile its own interests with the legitimate interests of its employees, suppliers, clients and other stakeholders, as
well as with the impact of its activities on the broader community and the natural environment.
13. The board of directors should have an optimal size to promote its efficient functioning and maximize participation.
The recommended range is accordingly between five and fifteen members.
COMPLIANT
14. The board of directors should approve a director selection policy that:
a)
Is concrete and verifiable;
COMPLIANT
b) Ensures that appointment or re-election proposals are based on a prior analysis of the board’s needs; and
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
66
c) Favours a diversity of knowledge, experience and gender.
The results of the prior analysis of board needs should be written up in the nomination committee’s explanatory
report, to be published when the general meeting is convened that will ratify the appointment and re-election of each
director.
The director selection policy should pursue the goal of having at least 30% of total board places occupied by women
directors before the year 2020.
The nomination committee should run an annual check on compliance with the director selection policy and set out its
findings in the annual corporate governance report.
15. Proprietary and independent directors should constitute an ample majority on the board of directors, while the
number of executive directors should be the minimum practical bearing in mind the complexity of the corporate group
and the ownership interests they control.
COMPLIANT
COMPLIANT
16. The percentage of proprietary directors out of all non-executive directors should be no greater than the proportion
between the ownership stake of the shareholders they represent and the remainder of the company’s capital.
This criterion can be relaxed:
a)
In large cap companies where few or no equity stakes attain the legal threshold for significant shareholdings.
b)
In companies with a plurality of shareholders represented on the board but not otherwise related.
17. Independent directors should be at least half of all board members.
COMPLIANT
However, when the company does not have a large market capitalization, or when a large cap company has
shareholders individually or concertedly controlling over 30 percent of capital, independent directors should occupy,
at least, a third of board places.
EXPLAIN
Until May 2017, the BBVA Board of Directors was composed by a majority of non-executive directors and
independent directors accounted, at least, the half of the total members of the Board. Notwithstanding, an
independent director resigned from the BBVA Board on May 31, 2017 for personal reasons. From that day onward
and at year-end, BBVA independent directors accounted for 46.15% of all Bank directors.
In the exercise of its powers and duties the Appointments Committee has in the course of the year undertaken an
ongoing analysis of the structure, size and composition of the Board such that it support the best possible discharge
of its duties, and of the terms of the Board selection, appointment, rotation and diversity policy, which, for these
purposes, provides that the composition of the Board of Directors should comprise a suitable balance among the
different classes of director, with non-executive directors accounting for an ample majority over executive directors
and independent directors making up at least 50% of the entire Board. Based on its analysis, the Committee decided
to set in motion in 2017 a process of selection of candidates who fulfill the required professional profile and suitability
requirements under applicable laws and regulations and might be appointed members of the Board of Directors as
independent directors.
The candidate selection process conducted by the Committee with the assistance of a leading international external
consultant on director selection concluded with the proposals for re-election and appointment of directors submitted
by the Board of Directors to the General Shareholders’ Meeting of the Company of 2018. A highlight is the proposal
to appoint three new independent directors. If the proposals for re-election and appointment submitted to the Annual
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
67
General Meeting are approved, the BBVA Board will then be composed by a total of 15 directors, of whom 3 will be
executive, 12 non-executive, 4 being "other external" and 8 being independent, such that independent directors will
account for more than half of all directors of the Bank.
18. Companies should disclose the following director particulars on their websites and keep them regularly updated:
a) Background and professional experience.
b) Directorships held in other companies, listed or otherwise, and other paid activities they engage in, of
whatever nature.
c) Statement of the director class to which they belong, in the case of proprietary directors indicating the
shareholder they represent or have links with.
d) Dates of their first appointment as a board member and subsequent re-elections.
e) Shares held in the company, and any options on the same.
COMPLIANT
19. Following verification by the nomination committee, the annual corporate governance report should disclose the
reasons for the appointment of proprietary directors at the urging of shareholders controlling less than 3 percent of
capital; and explain any rejection of a formal request for a board place from shareholders whose equity stake is equal
to or greater than that of others applying successfully for a proprietary directorship.
NOT APPLICABLE
20. Proprietary directors should resign when the shareholders they represent dispose of their ownership interest in its
entirety. If such shareholders reduce their stakes, thereby losing some of their entitlement to proprietary directors, the
latters’ number should be reduced accordingly.
COMPLIANT
21. The board of directors should not propose the removal of independent directors before the expiry of their tenure
as mandated by the bylaws, except where they find just cause, based on a proposal from the nomination committee.
In particular, just cause will be presumed when directors take up new posts or responsibilities that prevent them
allocating sufficient time to the work of a board member, or are in breach of their fiduciary duties or come under one
of the disqualifying grounds for classification as independent enumerated in the applicable legislation.
The removal of independent directors may also be proposed when a takeover bid, merger or similar corporate
transaction alters the company’s capital structure, provided the changes in board membership ensue from the
proportionality criterion set out in recommendation 16.
COMPLIANT
22. Companies should establish rules obliging directors to disclose any circumstance that might harm the
organization’s name or reputation, tendering their resignation as the case may be, and, in particular, to inform the
board of any criminal charges brought against them and the progress of any subsequent trial.
The moment a director is indicted or tried for any of the offences stated in company legislation, the board of directors
should open an investigation and, in light of the particular circumstances, decides whether or not he or she should be
called on to resign. The board should give a reasoned account of all such determinations in the annual corporate
governance report.
COMPLIANT
23. Directors should express their clear opposition when they feel a proposal submitted for the board’s approval
might damage the corporate interest. In particular, independents and other directors not subject to potential conflicts
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
68
of interest should strenuously challenge any decision that could harm the interests of shareholders lacking board
representation.
When the board makes material or reiterated decisions about which a director has expressed serious reservations,
then he or she must draw the pertinent conclusions. Directors resigning for such causes should set out their reasons
in the letter referred to in the next recommendation.
The terms of this recommendation also apply to the secretary of the board, even if he or she is not a director.
24. Directors who give up their place before their tenure expires, through resignation or otherwise, should state their
reasons in a letter to be sent to all members of the board. Whether or not such resignation is disclosed as a material
event, the motivating factors should be explained in the annual corporate governance report.
COMPLIANT
COMPLIANT
25. The nomination committee should ensure that non-executive directors have sufficient time available to discharge
their responsibilities effectively.
The board of director’s regulations should lay down the maximum number of company boards on which directors can
serve.
COMPLIANT
26. The board should meet with the necessary frequency to properly perform its functions, eight times a year at least,
in accordance with a calendar and agendas set at the start of the year, to which each director may propose the
addition of initially unscheduled items.
COMPLIANT
27. Director absences should be kept to a strict minimum and quantified in the annual corporate governance report.
In the event of absence, directors should delegate their powers of representation with the appropriate instructions.
COMPLIANT
28. When directors or the secretary express concerns about some proposal or, in the case of directors, about the
company’s performance, and such concerns are not resolved at the meeting, they should be recorded in the minute
book if the person expressing them so requests.
COMPLIANT
29. The company should provide suitable channels for directors to obtain the advice they need to carry out their
duties, extending if necessary to external assistance at the company’s expense.
COMPLIANT
30. Regardless of the knowledge directors must possess to carry out their duties, they should also be offered
refresher programmes when circumstances so advise.
COMPLIANT
31. The agendas of board meetings should clearly indicate on which points directors must arrive at a decision, so
they can study the matter beforehand or gather together the material they need.
For reasons of urgency, the chairman may wish to present decisions or resolutions for board approval that were not
on the meeting agenda. In such exceptional circumstances, their inclusion will require the express prior consent, duly
minuted, of the majority of directors present.
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
69
COMPLIANT
32. Directors should be regularly informed of movements in share ownership and of the views of major shareholders,
investors and rating agencies on the company and its group.
COMPLIANT
33. The chairman, as the person charged with the efficient functioning of the board of directors, in addition to the
functions assigned by law and the company’s bylaws, should prepare and submit to the board a schedule of meeting
dates and agendas; organize and coordinate regular evaluations of the board and, where appropriate, the company’s
first executive; exercise leadership of the board and be accountable for its proper functioning; ensure that sufficient
time is given to the discussion of strategic issues, and approve and review refresher courses for each director, when
circumstances so advise.
COMPLIANT
34. When a lead director has been appointed, the bylaws or board of directors regulations should grant him or her the
following powers over and above those conferred by law: chair the board of directors in the absence of the chairman
or vice chairmen; give voice to the concerns of non-executive directors; maintain contacts with investors and
shareholders to hear their views and develop a balanced understanding of their concerns, especially those to do with
the company’s corporate governance; and coordinate the chairman’s succession plan.
COMPLIANT
35. The board secretary should strive to ensure that the board’s actions and decisions are informed by the
governance recommendations of the Good Governance Code of relevance to the company.
36. The board in full should conduct an annual evaluation, adopting, where necessary, an action plan to correct
weakness detected in:
COMPLIANT
a) The quality and efficiency of the board’s operation.
b) The performance and composition of its committees.
c) The diversity of board membership and competences of the board.
d) The performance of the chairman of the board of directors and the company’s first executive.
e) The performance and contribution of individual directors, with particular attention to the chairmen of board
committees.
The evaluation of board committees should start from the reports they send the board of directors, while that of the
board itself should start from the report of the appointments committee.
Every three years, the board of directors should engage an external consultant to aid in the evaluation process. This
consultant’s independence should be verified by the appointments committee.
Any business dealings that the consultant or members of its corporate group maintain with the company or members
of its corporate group should be detailed in the annual corporate governance report.
The process followed and areas evaluated should be detailed in the annual corporate governance report.
37. When an executive committee exists, its membership mix by director class should resemble that of the board.
The secretary of the board should also act as secretary to the executive committee.
COMPLIANT
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
70
PARTIALLY COMPLIANT
The current composition of the Executive Committee of BBVA was agreed by the Board of Directors at its meeting on
31 March 2016, and it was considered that it had the most adequate composition for the performance of its functions.
Thus, in accordance with article 26 of the Board of Directors Regulations of BBVA, which establishes that in its
composition non-executive directors have to be a majority over executive directors, as of 31 December 2017, the
Executive Committee of the Board of Directors partially reflects the participation on the Board of Directors since its
Chairman and Secretary are those of the Board of Directors and is composed of two executive directors and four
non-executive directors with the status of other external directors, which represents a majority of non-executive
directors in accordance with the provisions of the Regulations of the Board of Directors.
38. The board should be kept fully informed of the business transacted and decisions made by the executive
committee. To this end, all board members should receive a copy of the committee’s minutes.
COMPLIANT
39. All members of the audit committee, particularly its chairman, should be appointed with regard to their knowledge
and experience in accounting, auditing and risk management matters. A majority of committee places should be held
by independent directors.
40. Listed companies should have a unit in charge of the internal audit function, under the supervision of the audit
committee, to monitor the effectiveness of reporting and control systems. This unit should report functionally to the
board’s non-executive chairman or the chairman of the audit committee.
COMPLIANT
COMPLIANT
41. The head of the unit handling the internal audit function should present an annual work programme to the audit
committee, inform it directly of any incidents arising during its implementation and submit an activities report at the
end of each year.
42. The audit committee should have the following functions over and above those legally assigned:
1. With respect to internal control and reporting systems:
COMPLIANT
a) Monitor the preparation and the integrity of the financial information prepared on the company and, where
appropriate, the group, checking for compliance with legal provisions, the accurate demarcation of the
consolidation perimeter, and the correct application of accounting principles.
b) Monitor the independence of the unit handling the internal audit function; propose the selection,
appointment, re-election and removal of the head of the internal audit service; propose the service’s budget;
approve its priorities and work programmes, ensuring that it focuses primarily on the main risks the company
is exposed to; receive regular report-backs on its activities; and verify that senior management are acting on
the findings and recommendations of its reports.
c) Establish and supervise a mechanism whereby staff can report, confidentially and, if appropriate and
feasible, anonymously, any significant irregularities that they detect in the course of their duties, in particular
financial or accounting irregularities.
2. With regard to the external auditor:
a)
Investigate the issues giving rise to the resignation of the external auditor, should this come about.
b) Ensure that the remuneration of the external auditor does not compromise its quality or independence.
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
71
c) Ensure that the company notifies any change of external auditor to the CNMV as a material event,
accompanied by a statement of any disagreements arising with the outgoing auditor and the reasons for the
same.
d) Ensure that the external auditor has a yearly meeting with the board in full to inform it of the work
undertaken and developments in the company’s risk and accounting positions.
e) Ensure that the company and the external auditor adhere to current regulations on the provision of non-audit
services, limits on the concentration of the auditor’s business and other requirements concerning auditor
independence.
COMPLIANT
43. The audit committee should be empowered to meet with any company employee or manager, even ordering their
appearance without the presence of another senior officer.
COMPLIANT
44. The audit committee should be informed of any fundamental changes or corporate transactions the company is
planning, so the committee can analyze the operation and report to the board beforehand on its economic conditions
and accounting impact and, when applicable, the exchange ratio proposed.
45. Risk control and management policy should identify at least:
COMPLIANT
a) The different types of financial and non-financial risk the company is exposed to (including operational,
technological, financial, legal, social, environmental, political and reputational risks), with the inclusion under
financial or economic risks of contingent liabilities and other off-balance sheet risks.
b) The determination of the risk level the company sees as acceptable.
c) The measures in place to mitigate the impact of identified risk events should they occur.
d) The internal control and reporting systems to be used to control and manage the above risks, including
contingent liabilities and off-balance sheet risks.
COMPLIANT
46. Companies should establish a risk control and management function in the charge of one of the company’s
internal department or units and under the direct supervision of the audit committee or some other dedicated board
committee. This function should be expressly charged with the following responsibilities:
a) Ensure that risk control and management systems are functioning correctly and, specifically, that major risks
the company is exposed to are correctly identified, managed and quantified.
b) Participate actively in the preparation of risk strategies and in key decisions about their management.
c) Ensure that risk control and management systems are mitigating risks effectively in the frame of the policy
drawn up by the board of directors.
COMPLIANT
47. Appointees to the nomination and remuneration committee – or of the nomination committee and remuneration
committee, if separately constituted – should have the right balance of knowledge, skills and experience for the
functions they are called on to discharge. The majority of their members should be independent directors.
COMPLIANT
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
72
48. Large-cap companies should operate separately constituted nomination and remuneration committees.
COMPLIANT
49. The nomination committee should consult with the company’s chairman and first executive, especially on matters
relating to executive directors.
When there are vacancies on the board, any director may approach the nomination committee to propose candidates
that it might consider suitable.
COMPLIANT
50. The remuneration committee should operate independently and have the following functions in addition to those
assigned by law:
a) Propose to the board the standard conditions for senior officer contracts.
b) Monitor compliance with the remuneration policy set by the company.
c) Periodically review the remuneration policy for directors and senior officers, including share-based
remuneration systems and their application, and ensure that their individual compensation is proportionate
to the amounts paid to other directors and senior officers in the company.
d) Ensure that conflicts of interest do not undermine the independence of any external advice the committee
engages.
e) Verify the information on director and senior officers’ pay contained in corporate documents, including the
annual directors’ remuneration report.
COMPLIANT
51. The remuneration committee should consult with the company’s chairman and first executive, especially on
matters relating to executive directors and senior managers.
COMPLIANT
52. The terms of reference of supervision and control committees should be set out in the board of directors
regulations and aligned with those governing legally mandatory board committees as specified in the preceding sets
of recommendations.
They should include at least the following terms:
a) Committees should be formed exclusively by non-executive directors, with a majority of independents.
b) They should be chaired by independent directors.
c) The board should appoint the members of such committees with regard to the knowledge, skills and
experience of its directors and each committee’s terms of reference; discuss their proposals and reports;
and provide report-backs on their activities and work at the first board plenary following each committee
meeting.
d) They may engage external advice, when they feel it necessary for the discharge of their functions.
e) Meeting proceedings should be minuted and a copy made available to all board members.
PARTIALLY COMPLIANT
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
73
Until May 31, 2017, when a member of the Board resigned for personal reasons, the Board committees of oversight
and control were made up exclusively by non-executive directors, the majority being independents, except the Audit
and Compliance Committee which is composed exclusively by independent directors. As a result of that resignation,
and from that date onward, the composition of the Risk Committee ceased to have a majority of independent
directors.
Therefore, so that it adapts to the requirements of the Regulations of the Board of Directors and to assist in their
proper functioning, the Board of Directors reviewed the composition of the Committees during the year, rotating their
members to ensure that the members of each Committee has the appropriate, knowledge, skills and experience for
the responsibilities attributed to them.
After that review, the oversight and control committees of the Board are made up of non-executive directors, with a
majority of independents, except the Risk Committee, which, in compliance with the Regulations of the Board of
Directors as to composition, comprises 3 "other external" directors and 2 independent directors. All the Chairs of the
oversight and control committees are independent directors; specifically, the Chairs of the Audit and Compliance,
Appointments, Remuneration and Risk Committees.
After the Annual General Meeting of the Company to be held in March 2018, the Board will perform another analysis
of the composition of Board Committees, taking into account the potential new additions of directors that will be
approved at the General Meeting and, as appropriate, changes in the status of current directors and any regulatory
requirements prevailing in this respect.
53. The task of supervising compliance with corporate governance rules, internal codes of conduct and corporate
social responsibility policy should be assigned to one board committee or split between several, which could be the
audit committee, the nomination committee, the corporate social responsibility committee, where one exists, or a
dedicated committee established ad hoc by the board under its powers of self-organization, with at the least the
following functions:
a) Monitor compliance with the company’s internal codes of conduct and corporate governance rules.
b) Oversee the communication and relations strategy with shareholders and investors, including small and
medium-sized shareholders.
c) Periodically evaluate the effectiveness of the company’s corporate governance system, to confirm that it is
fulfilling its mission to promote the corporate interest and catering, as appropriate, to the legitimate interests
of remaining stakeholders.
d) Review the company’s corporate social responsibility policy, ensuring that it is geared to value creation.
e) Monitor corporate social responsibility strategy and practices and assess compliance in their respect.
f) Monitor and evaluate the company’s interaction with its stakeholder groups.
g) Evaluate all aspects of the non-financial risks the company is exposed to, including operational,
technological, legal, social, environmental, political and reputational risks.
h) Coordinate non-financial and diversity reporting processes in accordance with applicable legislation and
international benchmarks.
COMPLIANT
54. The corporate social responsibility policy should state the principles or commitments the company will voluntarily
adhere to in its dealings with stakeholder groups, specifying at least:
a) The goals of its corporate social responsibility policy and the support instruments to be deployed.
b) The corporate strategy with regard to sustainability, the environment and social issues.
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
74
c) Concrete practices in matters relative to: shareholders, employees, clients, suppliers, social welfare issues,
the environment, diversity, fiscal responsibility, respect for human rights and the prevention of illegal
conducts.
d) The methods or systems for monitoring the results of the practices referred to above and identifying and
managing related risks.
e) The mechanisms for supervising non-financial risk, ethics and business conduct.
f) Channels for stakeholder communication, participation and dialogue.
g) Responsible communication practices that prevent the manipulation of information and protect the
company’s honor and integrity.
COMPLIANT
55. The company should report on corporate social responsibility developments in its management’s report or in a
separate document, using an internationally accepted methodology.
COMPLIANT
56. Director remuneration should be sufficient to attract individuals with the desired profile and compensate the
commitment, abilities and responsibility that the post demands, but not so high as to compromise the independent
judgement of non-executive directors.
COMPLIANT
57. Variable remuneration linked to the company and the director’s performance, the award of shares, options or any
other right to acquire shares or to be remunerated on the basis of share price movements, and membership of long-
term savings schemes such as pension plans should be confined to executive directors.
The company may consider the share-based remuneration of non-executive directors provided they retain such
shares until the end of their mandate. This condition, however, will not apply to shares that the director must dispose
of to defray costs related to their acquisition.
COMPLIANT
58. In the case of variable awards, remuneration policies should include limits and technical safeguards to ensure
they reflect the professional performance of the beneficiaries and not simply the general progress of the markets or
the company’s sector, or circumstances of that kind.
In particular, variable remuneration items should meet the following conditions:
a) Be subject to predetermined and measurable performance criteria that factor the risk assumed to obtain a
given outcome.
b) Promote the long-term sustainability of the company and include non-financial criteria that are relevant for
the company’s long-term value, such as compliance with its internal rules and procedures and its risk control
and management policies.
c) Be focused on achieving a balance between the delivery of short, medium and long-term objectives, such
that performance-related pay rewards ongoing achievement, maintained over sufficient time to appreciate its
contribution to long-term value creation. This will ensure that performance measurement is not based solely
on one-off, occasional or extraordinary events.
COMPLIANT
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
75
59. A major part of variable remuneration components should be deferred for a long enough period to ensure that
predetermined performance criteria have effectively been met.
60. Remuneration linked to company earnings should bear in mind any qualifications stated in the external auditor’s
report that reduce their amount.
COMPLIANT
61. A major part of executive directors’ variable remuneration should be linked to the award of shares or financial
instruments whose value is linked to the share price.
COMPLIANT
COMPLIANT
62. Following the award of shares, share options or other rights on shares derived from the remuneration system,
directors should not be allowed to transfer a number of shares equivalent to twice their annual fixed remuneration, or
to exercise the share options or other rights on shares for at least three years after their award.
The above condition will not apply to any shares that the director must dispose of to defray costs related to their
acquisition.
COMPLIANT
63. Contractual arrangements should include provisions that permit the company to reclaim variable components of
remuneration when payment was out of step with the director’s actual performance or based on data subsequently
found to be misstated.
COMPLIANT
64. Termination payments should not exceed a fixed amount equivalent to two years of the director’s total annual
remuneration and should not be paid until the company confirms that he or she has met the predetermined
performance criteria.
H OTHER INFORMATION OF INTEREST
COMPLIANT
1. If there is any other aspect relevant to the corporate government in the company or in the group entities that has
not been reflected in the rest of the sections of this report, but is necessary to include to provide more comprehensive
and well-grounded information on the corporate governance structure and practices in your entity or its group, detail
them briefly.
2. This section may also include any other relevant information, clarification or detail related to previous sections of
the report insofar as they are relevant and not reiterative.
Specifically indicate whether the company is subject to corporate governance legislation from a country other than
Spain and, if so, include the mandatory information to be provided when different from that required by this report.
3. The company may also indicate if it has voluntarily signed up to other international, industry-wide or any other
codes of ethical principles or best practices. Where applicable, the code in question will be identified along with the
date of signing. In particular, mention will be made as to whether it has adhered to the Code of Best Tax Practices
(Código de Buenas Prácticas Tributarias) of 20 July 2010.
The data in this report refer to the year ending 31 December 2017, except in those cases when another date of
reference is specifically stated.
Further to Section A.2, State Street Bank and Trust Co., The Bank of New York Mellon S.A.N.V. and Chase
Nominees Ltd., as international custodian/depositary banks, held 12.53%, 3.80% and 6.48% of BBVA's share capital,
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
76
respectively, as of December 31 2017. 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.
Filings of significant holdings to CNMV: On 18 October 2017, Blackrock Inc. filed a report with the CNMV (National
Securities Market Commission) stating that it now had an indirect holding of 5.708% of the BBVA share capital,
through the company Blackrock Investment Management.
The director holdings indicated in section A.3 are those reported as of 31 December 2017 and therefore may have
subsequently changed. Moreover, following the instructions in Circular 7/2015 of the CNMV to complete the
Corporate Governance Report, the owners of indirect holdings are not identified in this section, as none of them
reaches the 3% of share capital and none of them reside in tax havens.
Moreover, as an explanation to the second table of section A.3., the number of direct rights on shares in the
Company corresponds with the shares from the Annual Variable Remuneration (AVR) from previous years that was
deferred and pending payment on the date of this Report, if conditions are met. Thus, it is included the total number
of “rights to shares” of BBVA executive directors corresponding to the third and last third deferred of year 2014 that
they will receive in 2018; the 50% deferred of the AVR 2015 they will receive in 2019, and the 50% deferred of the
AVR 2016 they will receive in 2020, the two latter amounts, are subject to the applicable multi-year indicators that
may reduce the deferred amount, even become zero, yet never be increased.
These amounts are disclosed in an individual manner for each executive director in the following way:
-
-
-
In the case of the Group Executive Chairman: 37,390 shares corresponding to the third and last third
deferred of the AVR 2014; 135,299 shares corresponding to the 50% of AVR 2015; and 114,204 shares
corresponding to the 50% of AVR 2016.
In the case of the CEO: 11,766 shares corresponding to the third and last third deferred of AVR 2014;
79,956 shares corresponding to the 50% of AVR 2015; and 91,915 shares corresponding to the 50% of AVR
2016.
In the case of the executive director Head of GERPA: 3,678 shares corresponding to the third and last third
deferred of AVR 2014; 14,815 shares corresponding to the 50% of AVR 2015; and 13,768 shares
corresponding to the 50% of AVR 2016.
The payment of these deferred shares is also subject to the non-occurrence of any of the conditions established by
the remuneration policy applicable in each year that could impede payment thereof (malus and clawback clauses), as
well as the remaining conditions of the settlement and payment system.
Further to the information in section A.8, regarding earnings from treasury-stock trading, rule 21 of Circular 4/2004
and IAS 32, paragraph 33, expressly prohibit the recognition in the income statement of profits or losses made on
transactions carried out with treasury shares, including their issue and redemption. Said profits and losses are directly
booked against the company’s net equity. In the table of significant variations, the date of entry of CNMV Model IV in
the registries of that organism, model corresponding to the communications with own shares and the reason for such
communication.
Regarding section A.9 bis, the resulting estimated floating capital of BBVA less the capital held by the members of
the Board of Directors and as treasury shares, both as of December 31, 2017, following the instructions to complete
the Annual Corporate Governance Report is 99.74%.
Further to the information in section A.10, there are no legal or bylaws restrictions on the exercise of voting rights and
there are no legal or bylaws restrictions on the free acquisition or transfer of shares in the company’s share capital.
As for the legal restrictions on the free acquisition or transfer of shares in the company’s share capital, Spanish Act
10/2014, dated 26th June, on the regulation, supervision and solvency of credit institutions establishes that the direct
or indirect acquisition of a significant holding (as defined in article 16 of that Act) is subject to assessment by the
Bank of Spain as set out in articles 16 et seq. of that Act. Additionally, article 25 of Royal Decree 84/2015,
implementing Act 10/2014, establishes that the Bank of Spain shall evaluate proposals for acquisitions of significant
shares and submit a proposal to the European Central Bank regarding whether to oppose this acquisition or not. This
same article establishes the criteria that should be considered during said evaluation and the applicable timelines.
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
77
Further to the information included in section C.1.15:
The amount indicated as "Remuneration of the Board of Directors" includes remuneration stemming from the
remuneration systems established for non-executive and executive directors as provided for in the Remuneration
Policy for BBVA directors approved by the General Shareholders’ Meeting held in March 17, 2017 and pursuant to
article 33 bis and 50 bis of the Company Bylaws, respectively, and includes:
a) The fixed remuneration (for pertaining to the Board and Committees) and remuneration in kind
corresponding to 2017 of non-executive board members.
b) The fixed remuneration and in kind for executive directors corresponding to 2017.
c) The 2017 Annual Variable Remuneration in cash and in shares monetized for executive directors. It should
nonetheless be noted that this remuneration, has not accrued to the executive directors in its entirety on the
date of this Report, since, according to the BBVA Director Remuneration Policy applicable to them, they will
only receive 40% of this amount in 2018, while the remaining 60% will be deferred for a period of 5 years,
subject to compliance with multi-year performance indicators, 40% in cash and 60% in shares, if conditions
are met, with the following payment schedule: 60% after the third year of deferral; 20% after the fourth year
of deferral; and 20% after the fifth year of deferral.
Moreover, the 2017 Annual Variable Remuneration will be subject to the remaining conditions established in
the settlement and payment system provided in the BBVA Directors’ Remuneration Policy, and in particular
to: mandatory withholding and unavailability periods; hedging prohibitions; criteria for the update of the
deferred component in cash; forfeiture and recovery arrangements for the entire AVR
d) The remuneration paid for all concepts to two non-executive directors who ceased in their position in 2017
and who, consequently, did not remain in office as of 31 December 2017.
The total amount indicated, pursuant to the instructions in this Report, corresponds to the amount declared as total
remuneration accrued according to chart c) "Summary of Remuneration", section D.1 in the Annual Report on
Directors' Remuneration of BBVA.
All these items are included for each individual director in Note 54 of the Annual Report for year 2017.
For the purpose of calculating the cash value of the shares corresponding to the Annual Variable Remuneration for
2017 for executive directors, and in accordance with the BBVA Directors’ Remuneration Policy, the reference used
was the average BBVA share closing price corresponding to the trading days between 15 December 2017 and 15
January 2018, namely €7.25 per share.
In regard of the “Cumulative amount of rights of current directors in pension scheme” indicated in section C.1.15 of
this Report, the Bank has the Bank undertaken pension commitments with the Chief Executive Officer and the Head
of GERPA to cover retirement, disability and death contingencies as established in the Corporate Bylaws, BBVA
Directors’ Remuneration Policy, and their respective contracts with the Bank.
The amount established in the Remuneration Policy for BBVA Directors for the Chief Executive Officer, as annual
contribution to cover the retirement benefit under the new defined-contribution scheme, amounts to €1,642 thousand,
amount which shall be updated in the same proportion as the annual fixed remuneration for the Chief Executive
Officer, in the terms established in said Policy.
Likewise, pursuant to the Policy, 15% of the agreed annual contribution, mentioned above, shall be based on variable
components and be considered "discretionary pension benefits", thus subject to the conditions of delivery in shares,
retention and clawback established in applicable regulations, as well as to those other conditions of variable
remuneration applicable to them pursuant to the aforementioned Policy.
On the other hand, the Bank will assume payment of the annual insurance premiums in order to top up the coverage
of death and disability of the Chief Executive Officer’s benefits scheme, in the terms established in the Remuneration
Policy for BBVA Directors.
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
78
Pursuant to the foregoing, in the year 2017 an amount of €1,853 thousand has been recorded to attend the benefits
commitments undertaken with the Chief Executive Officer, amount which includes the contribution to retirement
coverage (€1,642 thousand), as well as to death and disability (€211 thousand), with the total accumulated fund to
cover retirement commitments amounting €17,503 thousand, as at December 31, 2017.
15% of the agreed annual contribution to retirement (€246 thousand) has been registered in the year 2017 as
“discretionary pension benefits” and, following year-end 2017, said amount has been adjusted according to the
criteria established for the determination of the Chief Executive Officer’s annual variable remuneration for 2017.
Accordingly, the “discretionary pension benefits” for the year 2017 have been determined in an amount of €288
thousand, amount which will be included in the accumulated fund in the year 2018, subject to the same conditions as
the Deferred Component of annual variable remuneration for the year 2017, as well as the remaining conditions
established for these benefits in the Remuneration Policy for BBVA Directors.
As regards the executive director Head of GERPA, the pension scheme established in the Remuneration Policy for
BBVA Directors establishes an annual contribution of 30% of his fixed remuneration as of January 1, 2017, to cover
retirement benefit, as well as payment of the corresponding annual insurance premiums in order to top up the
coverage of death and disability.
As in the case of the Chief Executive Officer, 15% of the agreed annual contribution, mentioned above, shall be
based on variable components and be considered "discretionary pension benefits", thus subject to the conditions of
delivery in shares, retention and clawback established in applicable regulations, as well as to those other conditions
of variable remuneration applicable to them pursuant to the aforementioned Policy.
Pursuant to the foregoing, in the year 2017 an amount of €393 thousand has been recorded to attend the benefits
commitments undertaken with the executive director Head of GERPA, amount which includes the contribution to
retirement coverage (€250 thousand), as well as to death and disability (€143 thousand), with the total accumulated
fund to cover retirement commitments amounting €842 thousand, as at December 31, 2017.
15% of the agreed annual contribution to retirement (€38 thousand) has been registered in the year 2017 as
“discretionary pension benefits” and, following year-end 2017, said amount has been adjusted according to the
criteria established for the determination of the executive director Head of GERPA’s annual variable remuneration for
2017. Accordingly, the “discretionary pension benefits” for the year 2017 have been determined in an amount of €46
thousand, amount which will be included in the accumulated fund in the year 2018, subject to the same conditions as
the Deferred Component of annual variable remuneration for the year 2017, as well as the remaining conditions
established for these benefits in the Remuneration Policy for BBVA Directors.
There are no other pension obligations undertaken in favor of other executive directors.
The balance of the item "Provisions - Funds for pensions and similar liabilities" on the Group's consolidated balance
sheet as of 31 December 2017 includes €82,57 million under the item for post-employment benefit commitments
maintained with former members of the Board of Directors.
The explanation of the principal characteristics of the mentioned pension scheme is detailed in the Remuneration
Policy for BBVA Directors and Note 54 of the Annual Report for 2017.
Further to the information included in section C.1.16:
The heading “Total senior management remuneration” includes the remuneration of members of Senior Management
listed as such as of 31 December 2017 (15 members), comprising:
a) The fixed remuneration and the remuneration in kind during 2017;
b) The Annual Variable Remuneration received during 2017 corresponding to 2016, both in cash and in
shares;
c) The deferred part of the variable remuneration received during 2017, corresponding to previous years (2014
and 2013) both in cash and in shares, plus the amount of the corresponding updates.
For the purpose of calculating the cash value of the shares corresponding to said remuneration, the price considered
the delivery price in 2017 has been €6.22.
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
79
In 2017, an amount of €5,630 thousand has been recorded to attend the benefits commitments undertaken with
members of the Senior Management, excluding executive directors, amount which includes the contribution to
retirement coverage (€4,910 thousand), as well as to death and disability (€720 thousand), with the total accumulated
fund to cover retirement commitments with the Senior Management amounting €55,689 thousand, as at December
31, 2017.
As in the case of executive directors, 15% of the annual contributions agreed for members of the Senior Management
shall be based on variable components and be considered "discretionary pension benefits", thus subject to the
conditions of delivery in shares, retention and clawback established in applicable regulations, as well as to those
other conditions of variable remuneration applicable to them pursuant to the remuneration policy applicable to Senior
Management.
Pursuant to the foregoing, from the annual contribution to cover retirement of €4,910 thousand recorded in 2017, an
amount of €585 thousand has been recorded in the year 2017 as “discretionary pension benefits” and, following year-
end 2017, said amount has been adjusted according to the criteria established for the determination of the Senior
Management’s annual variable remuneration for 2017. Accordingly, the “discretionary pension benefits” for the year
2017 have been determined in an amount of €589 thousand, subject to the same conditions as the Deferred
Component of annual variable remuneration for the year 2017, as well as the remaining conditions established for
these benefits in the remuneration policy applicable to members of the Senior Management.
The balance of the item "Provisions - Funds for pensions and similar liabilities" on the Group's consolidated balance
sheet as of 31 December 2017 includes €259 million under the item for post-employment benefit commitments
maintained with former members of the Bank's Senior Management.
In reference to section C.1.29, the Board of Directors always meets with the attendance of its chair and therefore the
Lead Director has never chaired a meeting of the Board of Directors. The Lead Director, in the scope of his entrusted
duties, maintains fluid contact with the independent directors to simplify the discharge of his duties.
As a supplement to section C.1.30, it is to be noted that normally the Board of Directors meets monthly in accordance
with the annual meeting schedule drawn up before the beginning of the year, and extraordinarily as often as deemed
necessary. In 2017, the Board held 15 meetings, of which 13 were ordinary and 2 extraordinary. All directors were
present at all Board meetings, whether in person or by proxy, except the meeting of June 6, 2017, at which 2
directors were absent.
With regard to section C.1.31, as BBVA shares are listed on the New York Stock Exchange, it is subject to the
supervision of the Securities & Exchange Commission (SEC) and, thus, to compliance with the Sarbanes Oxley Act
and its implementing regulations, and for this reason each year the Group Executive Chairman, the CEO and the
executive tasked with preparing the Accounts sign and submit the certifications described in sections 302 and 906 of
this Act, related to the content of the Annual Financial Statements. These certificates are contained in the annual
registration statement (Form 20-F) which the Company files with this authority for the official record.
As reference to section C.1.45, the Board of Directors only approves the contract conditions related to executive
directors and Senior Management members as set out in article 17 of the Board Regulations, which are reported to
the General Meeting through this Report and the Annual Report on Directors' Remuneration of BBVA, but does not
authorize those of other technical and specialist professionals.
In this regard, the Board of Directors has approved the new contractual conditions for the Chief Executive Officer and
the executive director Head of GERPA that, according to the framework established in the Policy, includes, among
others, the transformation of the previous defined-benefits system of the Chief Executive Officer has been
transformed into a defined-contribution system, as well as the determination of the annual contribution to such
system. Moreover, these contractual changes have involved the elimination of the possibility for the Chief Executive
Officer of receiving the retirement pension in advance and established a post-contractual non-compete agreement for
a period of two years, after they cease as BBVA executive directors, in accordance to which they shall receive
remuneration in an amount equivalent to one annual fixed remuneration for every year of duration of the non-
compete arrangement which shall be paid periodically over the course of the two years in the event of severance on
grounds other than their own retirement, disability or dereliction of duties; as well as the removal of the right of the
executive director Head of GERPA to receive an indemnity.
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
80
According to the new applicable regulation to credit institutions on remuneration, in particular, to the Circular 2/2016
of the Bank of Spain and the European Banking Authority Guidelines on sound remuneration policies, the Board has
approved in 2017, the new basic contractual framework for notice, compensation and post-contractual non-
competition applicable to Senior Management with effect from January, 1, 2018.
Further to section C.2.1, we provide brief indications regarding what the regulations establish about the composition
and functions of each board committee:
• Audit and Compliance Committee: Article 29 of the Board Regulations establishes that the Audit and Compliance
Committee will be formed exclusively by independent directors and its mission will be to assist the Board of Directors
in overseeing the financial information and the exercise of the Group control duties. The members of the Audit and
Compliance Committee, and particularly its Chair, shall be appointed taking into account their knowledge and
background in accounting, auditing and risk management. It will have a minimum of four members appointed by the
Board, one of whom will be appointed taking into account their knowledge of accounting, auditing or both. The Board
of Directors will also nominate the Chair of this Committee, who must be replaced every four years. However, the
same person may be re-elected once a year has elapsed since ceasing to hold the position. When the Chair cannot
be present, his/her duties will be performed by the most long-standing independent director of the Committee, and,
where more than one person of equal seniority is present, by the eldest. The Committee will appoint a Secretary who
may or may not be a member of the Committee.
• Appointments Committee: Article 32 of the Board Regulations establishes that the Appointments Committee will
consist of at least three members, who will be appointed by the Board of Directors, which will also appoint the
Committee Chair. All Committee members must be non-executive directors, with a majority of independent directors.
Its Chair must be an independent director. When the Chair cannot be present, his/her duties will be performed by the
most long-standing independent member of the Committee, and, where more than one person of equal seniority are
present, by the eldest.
• Remuneration Committee: Article 35 of the Board Regulations establishes that the Remuneration Committee will
consist of at least three members, appointed by the Board of Directors, which will also appoint the Committee Chair.
All Committee members must be non-executive directors, with a majority of independent directors. Its Chair must also
be an independent director. When the Chair cannot be present, his/her duties will be performed by the most long-
standing independent member of the Committee, and, where more than one person of equal seniority are present, by
the eldest.
• Executive Committee: Article 26 of the Board Regulations states that the Board of Directors may, in accordance
with the Company Bylaws and with the favorable vote of two-thirds of its members, appoint an Executive Committee,
ensuring that there is a majority of non-executive directors over executive directors. The Executive Committee will be
chaired by the Chairman of the Board of Directors, or when this is not possible, by whomever the Company Bylaws
determines. The secretary of the Committee will be the Secretary of the Board. If absent, the person the meeting’s
members appoint for this purpose will stand in for the secretary.
• Risk Committee: Article 38 of the Company Board Regulations establishes that the Risk Committee will consist of at
least three members, appointed by the Board of Directors, which will also appoint the Committee Chair. All
Committee members must be non-executive directors, of whom at least one third must be independent directors. Its
Chair must also be an independent director. When the Chair cannot be present, his/her duties will be performed by
the most long-standing independent director of the Committee, and, where more than one person of equal seniority is
present, by the eldest.
• Technology and Cybersecurity Committee: The Technology and Cybersecurity Committee regulations establish that
it will have a minimum of three members appointed by the Board among its directors, which will also nominate the
Chair of this Committee. For this purpose, the Board will take into consideration the knowledge and experience in
technology, information systems and cybersecurity matters. When the Chair cannot be present, the Committee
meetings will be chaired by the most senior member of the Committee and, where more than one person of equal
seniority are present, by the eldest.
As a supplement to section C.2.5 on the key activities of the Risk Committee throughout 2017, it is to be noted that
the Chairman of the Risk Committee presented to the Board of Directors a report on the activities of the Committee in
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
81
2017. The report gave an account of the meetings held by the Committee over the year and explained that the direct
relationship had been strengthened between the Committee and the Group Chief Risk Officer. This was
supplemented by the involvement of the heads of the various divisions of the Risk area, both at the holding level and
at the level of each business unit of the Group. In his opinion this allowed for the proper performance of the duties
assigned to the Committee by the Board. As to the Committee's activity in each of the main functions assigned to it
by the Board, he referred to the General Risk Appetite Framework of the BBVA Group, which the Committee had
analyzed before submitting it to the consideration of the Board. In particular, he said that the Committee had
analyzed in detail the Risk Appetite Statement and the core metrics for risk management and control in the BBVA
Group, which in addition were monitored on an ongoing basis by the Committee to ensure that they stay within the
thresholds specified by the Board. He said that the Risk Committee permanently monitors the performance of metrics
"by type of risk" approved by the Executive Committee, and the disaggregation of the core metrics. The Committee
Chair pointed out that another of the Committee's main function is to monitor the performance of the Group's risks. It
does this in a structured manner by monitoring the risks by type per business unit, portfolio and sector, paying special
attention to the main borrowers and risks in each category and sector to be appropriately aware of the trends of the
entity's main risks. Regarding other risks, he explained that the Committee monitors them, holding specific meetings
for each, in addition to regular, monthly reporting to the Chief Risk Officer on the core metrics and factors impacting
their performance. Also pointed that special attention is also paid by the Committee to the performance, monitoring
and control of non-financial risks, namely operational risk. In the domain of risk policy, he said that the Committee
had monitored and controlled corporate policies prior to their submission to the Executive Committee. The report
touched upon the Committee's monitoring of the infrastructure and resources relied on by the Risk area for the proper
performance of its duties, and said that it had been verified that the Group's Risk area had the resources, systems,
structures and means required to implement the Board's risk strategy. As to other functions, he said that the Risk
Committee had been directly involved in the analysis of the indicators included in the Remuneration Policy approved
by the Board of Directors, which were submitted to the Annual General Meeting for approval, to ensure said
indicators are aligned with an adequate institution-wide risk control and management model and with the parameters
established in the Group's General Risk Appetite Framework. He also noted that the Committee has reviewed the
regulatory reports that are relevant to the Group, including the Capital and Liquidity Self-Assessment Plan and the
Group Recovery Plan, to align them with the General Risk Appetite Framework and verify the adequate preparation
and implementation of the applicable stress scenarios. He also said that the Committee supervises the risk strategy's
alignment with price policies on an ongoing basis, fostering the inclusion of profitability metrics in terms of risk
appetite in the risk monitoring and control model. Finally, was set out the tasks that the Risk Committee has analyzed
and debated the Group's Risk Appetite Framework proposal for 2018, in accordance with the Institution's general
decision making process, which is coordinated with the annual budget preparation process.
Likewise, regarding the most important actions of the Remuneration Committee during 2017, the Chairman of the
Remuneration Committee submitted a report to the Board on its activities during 2017 including, among others, the
Committee works on the proposals to the Board on the remuneration policy for directors, senior managers and other
employees whose professional activities may have a significant impact on the Group’s risk profile (Identified Staff).
Therefore, it should be noted that as the main activities carried out in 2017, the Remuneration Committee has
submitted to the Board a proposal for a new BBVA Directors’ Remuneration Policy for the years 2017, 2018 and
2019, which was approved by the General Shareholders’ Meeting held on March 17, 2017, as well as a new
remuneration policy for BBVA’s Identified Staff, and the approval of a new corporate remuneration policy applicable
to all employees of the Bank and of subsidiaries forming part of its consolidated group, in line with the new
regulations published in 2016 and best market practices on remuneration.
In execution of said remuneration policies, the Committee has analyzed the necessary proposals to be submitted to
the Board for application of the policies.
In particular, regarding the remuneration issues of executive directors, the Committee submitted to the Board: the
settlement of the Annual Variable Remuneration; the updating of the deferred parts of the variable remuneration of
previous years; the determination of the fixed and target variable remuneration for 2017; the determination of the
annual and multi-year indicators for the calculation of the Annual Variable Remuneration as well as their weightings,
targets and new scales for achievement, minimum thresholds Attributable Profit and Capital Ratio established in the
respective remuneration policies for Directors and Identified Staff as ex ante adjustments to variable remuneration,
and the corresponding scales established to determine the generation of annual variable remuneration in 2017.
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
82
Moreover, the Committee has determined, for its proposal to the Board, the contractual conditions for the Chief
Executive Officer and the executive Global Economics Regulations and Public Affairs Director ("GERPA Director").
Regarding the remuneration issues of Senior Management, the Committee’s activities have been especially intense
on reviewing its basic contractual framework in light of the new applicable regulations. In this regard, has carried out
the determination of the basic contractual conditions for the Senior Management regarding its fixed and target
variable remuneration; has determined the contributions to the pension schemes and other applicable remuneration;
has analyzed the Bank’s contractual commitments with members of the Senior Management for notice, compensation
and post-contractual non-competition, submitting to the Board the corresponding proposals.
The Committee has reviewed as well the application of the Remuneration Policy for Identified Staff during the closing
exercise 2016, including the process carried out by the Bank to identify this Staff, and as well has received
information concerning application of the procedure for identification of Identified Staff in the BBVA Group in 2017.
Furthermore, among other duties, the Committee has proposed to the Board for its approval and submission to the
General Shareholders Meeting: the Annual Report on Directors’ Remuneration, and the agreement concerning the
ratio 1:2 between the fixed and the variable remuneration for a specified number of members of the Identified Staff.
Detailed information on the activity carried out by the Remuneration Committee is available in the Bank’s corporate
website (www.bbva.com).
With respect to section D (Related-party and Intragroup Transactions), see Note 53 of the BBVA Annual
Consolidated Financial Statements for 2017. With respect to section D.4, it details the transactions conducted by
Banco Bilbao Vizcaya Argentaria, S.A. at the close of the year, with the company issuing securities on international
markets, carried out as part of ordinary trading related to the management of outstanding issuances. Moreover, with
respect to section D.4, please refer to the section entitled “Offshore financial centers” in the BBVA Consolidated
Management Report for 2017.
As to adherence to codes of ethics or good practice, it is to be noted that in 2011 the BBVA Board of Directors
approved the Bank's adhesion to the Code of Best Tax Practices (Código de Buenas Prácticas Tributarias) approved
by Foro de Grandes Empresas according to the wording proposed by the State Tax Administration Agency (AEAT).
During this year, it has been compliant with the contents of this Code. Moreover, BBVA is committed to applying the
provisions of the Universal Declaration of Human Rights, Principles of United Nations Global Compact (which BBVA
has formally signed), Equator Principles (to which BBVA has been formally adhered since 2004), the United Nations
Responsible Investment Principles, the Green Bond Principles, and other conventions and treaties involving
international organizations such as the Organization for Economic Cooperation and Development and the
International Labor Organization. In addition, BBVA is a member of the United Nations Environmental Program
Finance Initiative and the Thun Group of Banks on Human Rights.
This annual report on corporate governance has been approved by the company’s board of directors on 12 February
2018.
List whether any Directors voted against or abstained from voting on the approval of this Report.
NO
This English version is a translation of the original in Spanish for information purposes only. In case of a
discrepancy, the Spanish original will prevail.
83
NON-FINANCIAL INFORMATION ANCILLARY TO THE MANAGEMENT
REPORT OF BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
As a complement to the non-financial information set out in the Management
Report of Banco Bilbao Vizcaya Argentaria, S.A., drafted by the Board of
Directors of the Company at its meeting held on February 12, 2018, and for the
purposes of providing greater detail of its content, set forth hereinafter is the
information on these matters with relation to the Company that is included in
the Consolidated Management Report of the BBVA Group.
This English version is a translation of the original in Spanish for information purposes
only. In case of a discrepancy, the Spanish original will prevail.
StrAtEgy And BuSInESS modEl
P. 2
Strategy and business model
Vision and aspiration
During 2017, the BBVA Group made significant progress on its
transformation process, firmly underpinned by the Group’s
Purpose and six Strategic Priorities. The Bank’s strategy has
been strengthened with a particular focus on digitalization
and customer experience under a new tagline: “Creating
Opportunities”, as well as the Values established to steer
the behavior of the Organization as a whole. A necessary
transformation process in order to adapt to the new
environment in the financial industry described previously
and preserve its leadership.
The financial industry is facing an environment characterized
by an onslaught of regulatory reform which has been
introduced in recent years at a global level, which has
resulted in regulatory changes in diverse areas ranging from
solvency, liquidity, separation of activities, bank resolution, as
well as affecting investment banking activities.
New technological developments (big data, artificial
intelligence, blockchain, the cloud, data processing,
biometry, etc.) represent a major step forward in improving
the customer experience, enable data and algorithms to be
analyzed automatically, as well as providing easy access to
the best solutions available on the market and, by default,
the most beneficial conditions. Technological innovations
reduce unit costs thanks to process automation and
scalability.
Shifting consumer needs. Customers are seeking a new
type of banking relationship and are demanding greater
added-value services based on new needs. Technology is
enabling these new demands to be met. The use of mobile
devices has led to changes in the distribution model.
Consumers are permanently connected, well accustomed
to digital experiences, and making use of multiple devices
and applications. The fact is that the number of mobile
banking users worldwide has grown exponentially in recent
years and customers are increasingly interacting through
these devices.
At the same time, new players are entering the financial
industry and specializing in specific parts of the value
chain (payments, financing, asset management, insurance,
etc.). These new players include fintech companies as well
as digital giants, who are already competing with banks
in the new environment, offering very attractive value
propositions and with major potential.
Data forms the crucial element for helping people take
financial decisions, provided customers consent to their
data being used. In this regard, at BBVA we believe it is
essential to create a trust circle with customers, given that
data is a crucial element for better understanding them.
Applying intelligence to these data can provide customers
with personalized services that offer higher value-added,
which will increase the trust, thus completing this circle.
Trust circle
Trust
Added
value
Consent
Actionable
insights
Customer’s
data
Within this context, the main objective of the BBVA Group’s
transformation strategy, its aspiration, is to strengthen the
relationship with its customers. Customers should be the
main beneficiaries of this new environment in which the
democratization of financial services is taking place. To do
so, BBVA is redefining its value proposition, based on the real
needs of its customers, helping them to make better financial
decisions through a clear, simple and transparent product
and service offer, in order to gain their trust.
2017 StrAtEgy And BuSInESS modEl
P. 3
Our Aspiration
Through an easy and
convenient experience:
DIY through digital
channels or
human interaction
Helping our customers
to make the best financial
decisions offering
relevant advice
In addition, the value proposition of BBVA must also be easy
and accessible; in other words, a proposition that offers
access to its services at any time, from any place and by the
means chosen by each individual customer, whether on a
do-it-yourself basis via digital channels, or through human
interaction.
Strengthening
the relationship
with the customer
Providing the best solutions
that generate trust to our customers:
clear, transparent and honest conditions
2017 StrAtEgy And BuSInESS modEl
P. 4
Progress in BBVA’s transformation journey
During 2017, BBVA has continued to make progress in
achieving its Purpose to bring the age of opportunity to
everyone, through products and services which help people to
make better financial decisions and fulfill their goals in life.
In this regard, and in line with its Purpose, significant steps have
been taken in pursuit of the Group’s six Strategic Priorities so
as to make headway in this transformation process.
Strategic Priorities
New standard
in customer experience
Digital
sales
New business
models
Optimize capital
allocation
Unrivaled
efficiency
A first
class workforce
1. A new standard in customer experience
BBVA Group’s main focus is on providing a new standard
in customer experience that stands out for its simplicity,
transparency and swiftness, further empowering its
customers while offering them personalized advice.
BBVA increased its customers ‘ empowerment in 2017 by
expanding the number of products available on a do-it-
yourself basis, allowing them to interact with BBVA at any
time and from any place.
Significant progress has been made in improving the
customer experience in terms of the relationship model and
products and functionalities.
Various projects have been launched as part of the
relationship model: MIA, a virtual mobile information
assistant, and Facebook Messenger BOT (Turkey), live
chat (Mexico), the front-office tool (Peru) and fast track in
branches (Spain).
Some of the more prominent new products and
functional features developed this year include:
Beconomy and BBVA Cashup (Spain), Tuyyo and digital
loans to non-customers (the United States), BBVA Plan -
financial objectives and BBVA financial situation check up
(Mexico), iris recognition login and Garanti Pay (Turkey),
one-click credit cards (Argentina) and microinsurance
against theft from cash withdrawals (Colombia).
In essence, BBVA has a customer-oriented business model
that offers a differential service with one very ambitious goal: to
be leaders in customer satisfaction across its global footprint.
In order to know the level of recommendation of BBVA’s
customers, and therefore , their level of satisfaction, the
Group applies the Net Promoter Score (NPS) methodology,
as explained in the section on Customer relationship. The
internalization and application of this methodology has
led to a steady increase in the customers’ level of trust,
as they recognize BBVA to be one of the most secure and
recommendable banking institutions in every country where
it operates.
2. Digital sales
At BBVA, it is essential to foster digitalization as part of its
transformation journey while boosting business on digital
channels. In this regard, the Bank is developing a significant
digital offering of products and services.
The relationship model of BBVA is evolving to adapt to the
multi-channel profile of its customers. The number of digital
and mobile customers in BBVA Group grew considerably
in 2017. The 50% tipping point in digital clients has been
reached in most of the countries where BBVA is present
(Spain, the United States, Turkey, Argentina, Chile and
Venezuela).
Digital and mobile customers (BBVA Group. Million)
Digital customers
+25%
15.4
18.1
22.6
Mobile customers
+44%
17.7
9.0
12.3
Dec. 15
Dec.16
Dec.17
Dec. 15
Dec.16
Dec.17
Furthermore, a significant boost to sales through digital
channels is being made, which is having a very positive
evolution across the global footprint. In 2017, five million units
were sold through the mobile devices.
2017 StrAtEgy And BuSInESS modEl
P. 5
Digital Sales (By geography. Percentage of total sales YTD, number of
transactions)
products and markets, not to mention talent and digital
and entrepreneurial capabilities.
GROUP
SPAIN
USA
28.0
28.6
22.8
19.4
16.8
17.1
Dec-16
Dec-17
Dec-16
Dec-17
Dec-16
Dec-17
MEXICO
TURKEY
SOUTH AMERICA
21.7
32.8
36.9
11.9
25.2
15.4
Dec-16
Dec-17
Dec-16
Dec-17
Dec-16
Dec-17
3. New business models
Developing new business models is one of the Group’s
strategic priorities. New business models have been
developed and implemented through five key levers: i)
exploring, ii) constructing, iii) partnering, iv) acquiring and
investing and v) venture capital.
i. Exploring: seeking out new business opportunities arising
from companies (startups) and connecting the solutions
which have been identified with internal projects with the
goal of achieving real impact. Open innovation is a key
element for ensuring BBVA can bring the age of opportunity
to its customers. BBVA is connecting with the global fintech
ecosystem to create collaboration opportunities which are
embodied in specific projects and initiatives aimed at having
a real impact.
The ninth edition of the BBVA Open Talent fintech startups
competition is a particularly prominent example of the
exploring activity undertaken in 2017. The Group also
possesses a network of spaces which serve as a meeting point
between BBVA and the ecosystem. The BBVA Open Space
network currently includes Madrid, Bogota and Mexico.
ii. Constructing: BBVA has also decided to commit to
creating an internal incubation model that combines
internal talent and know-how in partnership with “resident”
entrepreneurs.
iii. Partnering through strategic alliances: ethe goal of this
lever is to reach mutually beneficial agreements that also
contribute to providing BBVA’s customers with a better
value proposition.
iv. Acquiring and investing: BBVA considers investing in
companies of this type a form of accelerating its digital
transformation and an excellent way to incorporate new
v. Venture capital: complementary to its strategic activities,
BBVA invests, through the independent venture capital
company, Propel Ventures Partners, in fintechs and
startups which are “rethinking” the financial industry.
BBVA’s goal is not to control these companies but rather
to play a role as an ally and/or advisor on all aspects where
the company may need support, as such BBVA has taken
minority stakes of up to 20%.
4. Optimize capital allocation
The objective of this priority is to improve the profitability and
sustainability of the business while simplifying and focusing it
on the most relevant activities.
During 2017 work has been undertaken to develop new tools
to correctly measure the profitability of each activity. These
tools are being incorporated in management and corporate
processes, enabling the Group to continue making progress in
terms of solvency. Accordingly, the fully-loaded CET1 capital
ratio stood at 11.1% at the end of 2017, up 18 basis points on
the close of the previous year.
CET1 fully-loaded (Year-on-year trend in basis points)
+18 b.p.
11.1%
10.9%
Dec. 16
Dec. 17
5. Unrivaled efficiency
In an environment of lower profitability for the financial
industry, efficiency has become an essential priority in BBVA’s
transformation plan. This priority is based on building a new
organizational model that is as agile, simple and automated
as possible.
In this regard, in 2017 BBVA identified the key levers and
developed the action plans necessary to make this change a
reality. The Bank is thus transforming its distribution model,
systems architecture, model of operations, organizational
structures and processes. And it is doing so without losing
sight of providing a new standard in customer experience.
2017 StrAtEgy And BuSInESS modEl
P. 6
In 2017, the efficiency ratio closed at 49.5%, below the figure
of 51.9% in the previous year.
Efficiency ratio (BBVA Group. Percentage)
51.9
49.5
2016
2017
6. A first-class workforce
BBVA Group’s most important asset is its people, which is
why having “a first-class workforce” is one of the six Strategic
Priorities. This entails attracting, selecting, training and
retaining top-class talent wherever it may be.
BBVA Group has developed new people management models
and ways of working which have enabled the Bank to keep
transforming its operational model, but have also enhanced its
ability to become a purpose-driven company: a company where
staff are genuinely inspired and motivated to work for the same
Purpose of: bringing the age of opportunity to everyone.
2017 StrAtEgy And BuSInESS modEl
P. 7
our Values
BBVA engaged in an open process to identify the Group’s
values, which took on board the opinion of employees from
across the global footprint and units of the Group. These
Values define our identity and are the pillars for making our
Purpose a reality:
1. Customer comes first
We are empathetic: we take the customer’s viewpoint into
account from the outset, putting ourselves in their shoes to better
understand their needs.
We have integrity: everything we do is legal, publishable and morally
acceptable to society. We always put customer interests’ first.
We meet their needs: we are swift, agile and responsive in resolving
the problems and needs of our customers, overcoming any
difficulties we encounter.
2. We think big
We are ambitious: we set ourselves ambitious and
aspirational challenges to have a real impact on peoples’ lives.
We break the mold: we question everything we do to
discover new ways of doing things, innovating and testing
new ideas which enables us to learn.
We amaze our customers: we seek excellence in everything
we do in order to amaze our customers, creating unique
experiences and solutions which exceed their expectations.
3. We are one team
I am committed: I am committed to my role and my
objectives and I feel empowered and fully responsible for
delivering them, working with passion and enthusiasm.
I trust others: I trust others from the outset and work
generously, collaborating and breaking down silos between
areas and hierarchical barriers.
I am BBVA: I feel ownership of BBVA. The Bank’s objectives
are my own and I do everything in my power to achieve them
and make our Purpose a reality.
The implementation and adoption of these Values is
supported by the entire Organization, including the Global
Leadership, launching local and global initiatives which ensure
these Values are adopted uniformly throughout the Group.
In conclusion, at BBVA we are accelerating our transformation in order to be the best bank for our customers.
Our Values
Customer comes first
We think big
We are one team
We are empathetic
We have integrity
We meet their needs
We are ambitious
We break the mold
We amaze our customers
I am committed
I trust others
I am BBVA
2017 StrAtEgy And BuSInESS modEl
P. 8
Innovation and technology
BBVA is engaged in a process of digital transformation, the
main aim of which is to achieve its aspiration of strengthening
relationships with its customers and being the best possible
bank for them. Engineering is an essential component of
this transformation. Its mission has always been to enable
a technology strategy that provides the foundation for this
transformation, thus becoming more customer-centric and
establishing a more global strategy, fast to implement, digital,
flexible and leveraged on the Group’s data. This must be
done while continuing to provide support to the Bank’s core
business: catering to the demand for traditional business
(multi-segment, multi-product, multi-channel, etc.); and b)
contributing reliability, with the necessary tools to ensure
adequate internal controls, based on consistent information
and data. Another Engineering objective is provide the
group with all the tools it needs to drive profitability, new
productivity paradigms and new business processes.
Strategic alliances
Engineering continues to encourage the creation of a
network of strategic alliances, giving traction to BBVA’s
digital transformation and complement its technology stack.
Establishing an ecosystem of strategic alliances with some
of the leading businesses in the market ensures the adoption
of innovative technologies, digitalization of the business,
speed in activation, as well as global deployment of solutions.
Furthermore, by building a network of technological alliances
with strategic partners, BBVA will work in close cooperation
with some of the foremost companies in their respective fields.
In 2017 alliances were established with relevant companies that
will be responsible, on the one hand, for operating and optimizing
BBVA’s current technology and, on the other hand, for managing
the communications infrastructure in a global manner.
The area’s responsibilities continue to be focused on the
lines of work that were indicated in 2016:
Productivity and reliability
A new technology stack to offer customers services that are
more suited to their needs, in terms of speed and content.
Alliances with strategic partners to harness cutting-edge
technology, and the necessary collaboration to speed up
the transformation process.
Productivity and reliability, i.e. securing improved
performance from technology, and doing so in a manner that
is fully reliable and guarantees the highest quality standards.
New technology stack: cloud paradigms
With customers increasingly making use of digital channels,
and therefore driving an exponential increase in transaction
numbers, the Group is continuing to develop its IT model into a
more uniform and scalable system, boosting cloud technology.
During 2017, Engineering continued to construct and deploy
the building blocks of the new global technological stack for
the whole of BBVA. This stack shares the cloud attributes of
flexibility and stability that are demanded by the digital world,
while strictly complying with regulatory requirements. The
first pilot projects have been executed on the blocks with
good results. This new stack will enable real-time access, a
new approach to data management and the optimization of
processing costs, providing customers with a service that
caters directly to their needs.
Engineering continues to focus on productivity as part of
the transformation process. Greater productivity is needed
to provide our customers with the best possible service while
being profitable. The area is therefore working on the following:
Technology transformation at two levels:
• Hardware: creating lower-cost infrastructure
components based on the cloud paradigm. There
has been very significant progress in the use of this
infrastructure in Spain, and Mexico is beginning to use it,
resulting in an increase in productivity.
• Software: multiple global functionalities have been
constructed, reused by various of the Group’s
geographic areas, and construction continues on the
technological stack with a high level of automation.
Transformation of operations: an initial operations
optimization exercise has been carried out with good results,
and the necessary working methodology has been created to
implement it throughout the whole Group. The first robotics
activities have also been carried out in Spain.
It is crucial to obtain the best possible performance from
infrastructures, architectures, operations and internal
processes, and to do so in a way that is fully reliable.
Reliability remains another key factor for the Engineering
function and digital transformation.
In 2017 programs have been executed to improve reliability,
resulting in a reduction of the volume of incidents in the Group.
2017 StrAtEgy And BuSInESS modEl
P. 9
responsible banking model
At BBVA we have a differential banking model that we refer
to as responsible banking, based on seeking out a return
adjusted to principles, strict legal compliance, best practices
and the creation of long-term value for all stakeholders. It
is reflected in the Bank’s Corporate Social Responsibility
or Responsible Banking Policy. The Policy’s mission is to
manage the responsibility for the Bank’s impact on people
and society, which is key to the delivery of BBVA’s Purpose.
All the business and support areas integrate this policy into
their operational models. The Responsible Business Unit
coordinates the implementation and basically operates as a
second line for defining standards and offering support.
The responsible banking model is supervised by the Board of
Directors and its committees, as well as by the Bank’s Global
Leadership Team, chaired by the CEO.
The four pillars of BBVA’s responsible banking model are as
follows:
Balanced relations with its customers, based on
transparency, clarity and responsibility.
Sustainable finance to combat climate change, respect
human rights and achieve the UN Sustainable Development
Goals (SDGs).
Responsible practices with employees, suppliers and other
stakeholders.
Community investment to promote social change and
create opportunities for all.
During 2017, the Group has worked on a climate change
and sustainable development strategy which provides
comprehensive coverage for the management of risks and
opportunities deriving from the fight against climate change and
the achievement of the Sustainable Development Goals (SDGs).
BBVA’s approach to these kinds of risks and opportunities are
described in the section on Sustainable finance.
2017 5. PrImAry StAKehoLDerS
P.71
5. 2. The customer
5. 2. 1. customer experience
One of BBVA’s main Strategic Priorities is to provide “a
new standard in customer experience” that stands out
At BBVA we are all creators of experiences for our
for its simplicity, transparency and swiftness; empowering
customers.
customers while offering them personalized advice.
In order to achieve this, we rely mostly on the power of design
We are seeking to take advantage of our relations with
customers in a fair and transparent manner.
As mentioned in the section on Strategy, enriching customer
experience is done through a customer-centric business
model that offers a differential service with a very ambitious
goal: to be leaders in customer satisfaction across our
global footprint.
cuStomEr rElAtIonShIP
Further, as part of the organizational changes taking place
within the Group, in July 2016 the customer Solutions
area, responsible for the creation and development of new
products, was restructured to adapt to our customers’ needs.
The new area has four main tasks:
Customer relationship
thinking as the basis for designing our products and services.
Design thinking is much more than making things look
attractive; it involves mainly the ability of leading companies
to put their customers at the center of their businesses. It
combines social factors, demographic and technological
trends and a deep understanding of consumer behavior. It
starts with obtaining an understanding of our customers;
knowing who they are and what drives their behavior. It helps
us to define the problems we want to resolve and ensures that
customers are always at the heart of any solution.
P. 10
Grow and transform our business, redefining and shaping
the Bank’s relationship with our customers.
Develop internal capabilities for creating new products
customer experience
and customer experiences.
Maintain innovation as a fundamental pillar of BBVA.
BBVA’s main focus of attention is to satisfy its customers’ needs
Launch and acquire new businesses that differ from
and connect with them in a more attractive way that combines
BBVA’s usual activities.
innovation, technology and experience. That is because a
new standard in customer experience is one of the Group’s
Strategic Priorities, as explained in the Strategy section.
A customer-centric approach
A customer-centric approach
The way in which customers interact with their banks has
changed radically. We are firmly in the “do-it-yourself” era,
an era of new technologies, where customers want to be
There has been a radical change in the way clients interact
connected anytime, anywhere. To remain competitive and
with banks. “Do it yourself”, new technologies and the desire of
still be a key player in a changing environment, the Customer
customers to be connected at any time and from anywhere is
Solutions area is promoting a customer-centric mentality
booming. In this changing scenario, BBVA has a clear strategy:
throughout the Organization. We want to put the customer
to put the customer at the center of everything we do.
at the heart of everything we do, in accordance with the
following principles:
The objective of BBVA is to move from being infrastructure
providers around the money to helping our clients in making
The transformation of the Group should be guided
financial decisions, providing them with relevant advice and
by our customers’ demand for unique and innovative
solutions with greater added value. In short: at BBVA we want
experiences.
to have a positive impact on the lives of people and companies.
We are investing in capital and talent to create a future of
opportunities for our customers.
In addition, BBVA promotes a customer-centered mentality
throughout the Organization, because it considers all
its employees can have a positive effect on customers,
regardless of the department they work in. That is why
it is implementing new ways of doing things, such as
design thinking method, intra-entrepreneurship, external
collaboration, and other.
BBVA is also becoming an increasingly global bank through
its focus on creating global products and experiences. This
allows it to leverage best practices, wherever they come from.
This model of creation is present in each global project, and
is supported by two key elements: the triangle and 3-6-9.
It aims to offer incredible experiences to customers, while
reducing execution time.
The triangle is formed by three vertices: business, customer
experience and technology. It represents the connection
between three disciplines in a single project: those
responsible for the business, for user experience (designers
and data experts) and for the responsibles for technology (or
software engineers).
BBVA is also becoming an increasingly global bank through
its focus on creating global products and experiences. This
allows us to leverage our best practices, wherever they come
from, to the benefit of our customers.
To do this we are reorganizing around a new concept known
as the triangle. The Triangle has three vertices: business,
customer experience and technology, where Customer
Solutions would be at the center.
Relationship model
Business
Technology
Experience
The aim of the 3-6-9 methodology is to speed up the pace of
Our Customer Solutions team relies on design thinking and
creation and launch solutions onto the market in record time,
collaborative work to create an inspiring vision for the future.
starting from when teams are defined until the solution is
It is also responsible for project planning and execution. The
made available to customers.
focus on creativity and execution ensures us the possibility to
make digital innovation available for our customers. This team
was originally located in Spain, the United States and Mexico.
Net Promoter Score
Agility, simplicity and transparency are key factors that
mark the improvement initiatives at BBVA Group to ensure
that all customer interactions with the Bank are a positive
experience.
The internationally recognized Net Promoter Score (NPS
or Net Recommendation Index - IReNe) methodology
calculates the level of recommendation, and hence, the level
of satisfaction of BBVA customers with its different products,
channels and services. This index is based on a survey that
measures on a scale of 0 to 10 whether a bank’s customers are
positive (score of 9 or 10), neutral (score of 7 or 8) or negative
(score of 0 to 6) when asked if they would recommend their
bank, a specific product or a channel to a friend or family
member. This is vital information for identifying their needs
and drawing up improvement plans, on multidisciplinary teams
work to create unique and personal experiences.
2017BBVA IN 2016 cuStomEr rElAtIonShIP
P. 11
The Group’s internalization and application of this
methodology over the last six years has led to a steady
increase in the customers’ level of trust, as they recognize
BBVA to be one of the most secure and recommendable
banking institutions in every country where it operates.
In 2017, BBVA ranked first in the NPS indicator in eight
countries (seven in 2016): Spain, Mexico, Turkey, Argentina,
Colombia, Peru, Venezuela and Paraguay. By channels, there
was also an improvement in this indicator in both digital
banking and branches, with the improvement experienced
among digital customers being greater.
Net Promoter Score (NPS) (31-12-2017)
Spain
Mexico
Turkey
Argentina
#1
#1
#1
#1
Colombia
Peru
Paraguay
Venezuela
#1
#1
#1
#1
Peer Group: Spain: Santander, CaixaBank, Bankia, Sabadell, Popular // Mexico: Banamex,
Santander, Banorte, HSBC // Turkey: AKbank, Isbank , YKB, Deniz, Finanz //
Argentina: Galicia, HSBC, Santander Río // Colombia: Davivienda, Bogotá, Bancolombia //
Peru: Interbank, BCP, Scotiabank // Paraguay: Continental, Itaú, Regional //
Venezuela: Banesco, Mercantil, Banco de Venezuela.
TCR Communication
The Transparent, Clear and Responsible (TCR)
Communication project promotes transparent, clear and
responsible relations between BBVA and its customers.
T is for transparency: providing customers with all relevant
information at the right time, maintaining a balance
between benefits and costs.
C is for clarity, meaning easy to understand. It is achieved
by the Group through language, structure and design.
R is for responsibility, and means looking after the
customers’ interests in the short, medium and long term.
The objectives are to help customers make informed
decisions, improve customer relations with the Bank, look
out for their interests and make BBVA the most transparent
and clearest bank in all the markets where it operates. It also
means BBVA can attract new customers and encourage
existing customers to recommend it.
The project is coordinated by a global team together with a
network of local TCR owners located in the main countries
where the Bank operates, while its execution involves the
participation of many of the Bank’s areas and employees.
The project has two main lines of work:
Implement TCR to transform the traditional bank, through
the creation of product cards, the adaptation of the
agreements to a TCR format, the amendment of the claims
response letters and the follow up of the telephone sales
and advertising of the Entity.
Implement TCR in the new bank and progress in the
training and change towards a TCR culture.
TCR indicators
BBVA has an indicator called the Net TCR Score (NTCRS),
which measures the degree to which customers perceive
BBVA as a transparent and clear bank in comparison with
its peers in the main geographic areas where the Group
operates.
In 2017 BBVA was in first place in six countries: Mexico,
Turkey, Colombia, Peru, Venezuela and Uruguay.
2017 cuStomEr rElAtIonShIP
P. 12
customer care
Complaints and claims
The BBVA Group has an appropriate claims management
and service model that positively transforms customer
experience. Customer opinions are gathered by digital
feedback quickly and efficiently, allowing BBVA to anticipate
any problems that they may have in real situations and
meet their expectations. In this way, BBVA wants to
respond precisely to its customers’ demands, avoiding bad
experiences that can harm its image and lose trust.
In line with the commitment to digital transformation,
any type of opinion provided by the customer is examined,
whatever its source (NPS, digital feedback, complaints,
claims, etc.). In addition, BBVA is active in the social media,
which gives it the opportunity to respond and manage
negative comments from dissatisfied customers, and offer
solutions to problems with simple, friendly, quick and above
all personalized responses.
Customer claims in 2017 showed a growth trend compared to
the previous year in Spain, a very focused increase in clauses
related to mortgage loans. Mexico, with the biggest active
customer base, is also the country with the biggest number of
claims.
Number of claims before the banking authority
(For each 10.000 active customers) (1)
Spain
The United States
Mexico
Turkey
Argentina
Chile
Colombia
Peru
Venezuela
Paraguay
Uruguay
Portugal
2017
4,87
4.96
16.12
3.21
2.68
5.55
21.65
2.21
1.04
0.79
0.41
34.84
2016
0.82
n/av
19.87
3.76
1.90
5.90
19.69
2.02
1.93
0.19
0.39
43.66
Main indicators of claims (BBVA Group)
Number of claims before the banking authority (for each
10.000 active customers)
Average time for settling claims (normal days)
Claims settled by First Contact Resolution (FCR) (%)
2017
10.02
2016
9.93
7
31
12
37
n/av = not available
(1) The banking authority refers to the external body in which the customers can complain
against BBVA.
The average time for settling claims in the Group has been
reduced by nearly half, mainly due to the significant reduction
in the average time for resolution in Mexico (from 13 days in
2016 to 4 in 2017).
The various claims units in BBVA Group are constantly evolving,
optimizing processes and improving and developing new
functionalities to which defined protocols are applied. All this will
lead to greater efficiency in the service offered to customers.
In addition, work continues on a specific site for recording
and monitoring the claims metrics. All the information related
to complaints and claims is loaded into it, and it generates
reports that analyze changes and behavior that is reported to
senior management. The site also includes work on a system
of alerts on the main claims indicators by country, designed to
ensure compliance with the benchmark indicators based on
the acceptable number of claims for each country.
The Group’s claims units implemented action plans on a
regular basis, in which the most important initiatives to be
carried out were prioritized to solve the problems detected,
based on understanding of the root causes identified in the
claims analysis.
In short, BBVA’s claims management is an opportunity to
offer greater value to customers and increase their loyalty to
the Group.
Average time for settling claims by countries (normal days)
Spain
The United States
Mexico
Turkey
Argentina
Chile
Colombia
Peru
Venezuela
Paraguay
Uruguay
Portugal
n/av = not available
2017
25
3
4
2
7
5
4
12
13
6
8
5
2016
15
n/av
13
1
8
6
4
15
4
5
6
3
The claims settled by the First Contact Resolution (FCR)
model account for 31% of total claims, thanks to the
management and attention of these claims are aimed to
reduce the time of resolution and increase the quality service,
improving so the customer experience.
2017 cuStomEr rElAtIonShIP
P. 13
Claims settled by First Contact Resolution (FCR. Percentage)
Spain (1)
The United States
Mexico
Turkey (2)
Argentina
Chile
Colombia
Peru
Venezuela
Paraguay
Uruguay
Portugal (3)
n/a = not applicable
n/av = not available
2017
n/a
63
38
44
27
6
73
4
1
28
12
n/a
(1) In Spain, is applicable a FCR type called IRR (Immediate resolution response) to credit
card incidents, but not claims.
(2) In Turkey, the weighting is calculated by the total number of customers.
(3) This kind of management does not apply in Portugal.
Customer Care Service and Customer
Ombudsman
Other
Total
On the other hand, 153,061 cases were not admitted to
processing as they did not comply with the requirements
of OM ECO/734. Practically 90% of the claims received
corresponded to mortgage loans, mainly to expenses from
the formalization of mortgages.
In 2016, the admitted claims amounted to 23,060 and the
cases resolved and concluded amounted to 20,279, an 88%
of the issues.
Claims handled by Customer Care Service by complaint type (Percentage)
2016
n/a
n/av
40
39
34
18
78
4
8
35
16
n/a
Type
Resources
Assets products
Insurances
Collection and payment services
Financial counselling and quality service
Credit cards
Securities and equity portfolios
2017
9
79
1
2
2
4
1
2
2016
24
27
7
8
7
10
5
12
100
100
The activities of the Customer Care Service and Customer
Ombudsman in 2017 were carried out in accordance
with the stipulations of Article 17 of the Ministerial Order
(OM) ECO/734/2004, dated March 11, of the Ministry of
the Economy, regarding customer care and consumer
ombudsman departments at financial institutions, and in line
with the new “Regulations for Customer Protection in Spain”
of the BBVA Group approved by the Board of Directors of
the Bank in 2015, regulating the activities and powers of the
Customer Care Service and Customer Ombudsman.
The Customer Care Service processes complaints and
claims addressed to both the Customer Ombudsman
and the Customer Care Service itself in the first instance,
except for matters falling within the powers of the Customer
Ombudsman as established in the aforementioned regulation.
Activity report on the Customer Care Service in Spain
2017 was marked by a difficult environment, above all
relating to the various clauses in mortgage loan agreements
(arrangement fees), which have conditioned the figures
for claims in the Spanish financial system. In addition, the
Customer Care Service Department assumed the claims of all
customers from Catalunya Bank, which were integrated into
BBVA in September 2016, which resulted in a greater number
of claims compared to the previous year.
Customer claims admitted by BBVA’s Customer Care Service
in Spain amounted to 174,249 cases in 2017, of which 171,146
were resolved by the Customer Care Service itself and
concluded in the same year, which accounted for 98% of the
total. A total of 3,103 cases remained as pending analysis.
Claims handled by Customer Care Service according to resolution (Number)
In favor of the person submitting the claim
Partially in favor of the person submitting the
claim
In favor of the BBVA Group
Total
2017
29,041
90,047
52,058
171,146
2016
7,071
2,830
10,378
20,279
The claims management model and the principles governing
the activity of the Customer Care Service are aimed at
achieving recognition and trust on the part of the Group’s
customers, with the aim of increasing their satisfaction
levels. The model operates from the origination stage, as the
Customer Care Service sits on the committees presenting
new products and services. In this way, possible customer
dissatisfaction can be anticipated and avoided.
Additionally, in accordance with the recommendation of the
regulatory body, progress continued in 2017 on the ambitious
training plan that has been created for the whole team
making up this Service. The aim is to guarantee the BBVA
managers have the knowledge to improve identification of
customer needs and contribute high added value solutions.
Report on the activity of the BBVA Group Customer
Ombudsman in Spain
In 2017, the Customer Ombudsman maintained the goal
common to the BBVA Group as a whole of unifying criteria
and fostering the protection and security of customers,
making progress in compliance with regulations on
transparency and customer protection. With the aim of
passing on effectively its reflections and criteria on matters
subjected to its consideration, the Ombudsman meets with
2017 cuStomEr rElAtIonShIP
P. 14
areas and units in BBVA Group: Insurance, Pension Plan
Manager, Business, Legal Services, etc.
The number of customer claims managed by the Customer
Ombudsman for resolution in 2017 was 1,661. Of these,
121 were finally not processed as they did not meet the
requirements set out in OM ECO/734/2004.
Claims handled by the Customer Ombudsman by complaint type (Number)
Type
Insurance and welfare product
Assets operations
Investment services
Liabilities operations
Other banking products (credit card, ATM, etc.)
Collection and payment services
Other
Total
2017
600
367
133
257
140
69
95
2016
590
305
141
175
100
63
127
1,661
1,501
The type of complaints managed in the table above follow
the criteria established by the Complaints Department of the
Bank of Spain in their requests for information.
Claims handled by Customer Ombudsman according to resolution (Number)
In favor of the person submitting the claim
Partially in favor of the person submitting the claim
In favor of the BBVA Group
Suspended processing
Total
2017
-
797
622
8
2016
-
861
516
-
1,427
1,377
51.48% of the customers who submitted a claim to the
Ombudsman in 2017 reported some level of satisfaction,
either because of the decision of the Customer Ombudsman
or its role as mediator between BBVA Group entities and
customers.
Customers who are not satisfied with the Customer
Ombudsman’s response may refer the matter to the official
supervisory bodies (the Bank of Spain, CNMV and the
Directorate General of Insurance and Pension Funds). The
number of claims submitted by customers to the supervisory
bodies in 2017 was 127.
In 2017, BBVA Group continued to make progress in
implementing the suggestions of the Customer Ombudsman
related to adapting products to the profile of customers and
the need for transparent, clear and responsible information.
The recommendations and suggestions made by the
Customer Ombudsman are focused on increasing the level
of transparency and clarity of information that BBVA Group
provides for its customers, both in its commercial products
that it makes available to them, and in compliance with the
orders and instructions issued by customers. The aim is to
guarantee that customers understand the nature and risks of
the financial products that they are offered, that the product
is adapted to the customer profile and that the information
provided by the Entity is impartial and clear, including the
advertising targeted at customers. To do so, the Group is
employing the Transparent, Clear and Responsible (TCR)
communication initiative for Responsible Business, providing
as much data and documentation as necessary.
In addition, with the increasing digitalization of the products
offered to customers and their growing complexity, a special
sensitivity is required with some groups of customers that
due to their profile, age or personal situation present a high
level of vulnerability.
Operational risk management and customer
protection
Security measures have been strengthened in 2017 as a
result of the increase in cyber threats and cyber crime in
general. Protection and prevention strategies have been
applied to mitigate the risk of attacks and their possible
impacts on internal and external resources.
A working methodology has been developed to allow the
deployment of baselines (resources, capacities, plans
and responsibilities) according to the different vectors of
attack, based on four key elements: prevention, preparation,
response and recovery. This working methodology forms part
of a general framework that BBVA defined at the end of 2016
for the Group’s organizational resilience, geared to:
improving the procedures for detection, prioritization and
escalation;
improving the global capacity for reaction and response; and
strengthening the technical teams in all the countries
dedicated to cybersecurity and engineering risk
management.
In addition, the capacities created by the Engineering Risk
& Corporate Assurance (ERCA) committee have been
consolidated in the area of security mechanisms, and
specifically in the area of identification and authentication,
allowing the Group to generate new customer experiences
and improve existing ones. As a result of this work with a
single team, together with the business areas, and with the
precept that the customer is first, a significant increase in
new experiences for customers has been noted, which allows
BBVA to follow the path of the latest technological innovations
offered by the major players.
A number of initiatives have been taken within the area of
business continuity, in other words, incidents with a low
probability of occurrence and very high impact, such as
reviewing and updating the corporate regulations; continuing
2017 cuStomEr rElAtIonShIP
P. 15
with the implementation of the business impact analysis, with
the resulting update of the continuity plans; and reviewing
technological dependency on critical processes, informing the
corresponding continuity committees of their results so they can
be aware and improve response where necessary, in a scenario
of unavailability due to failures in the information systems.
As regards personal data protection, there has been much
work done in 2017 to implement the General Data Protection
Regulation in BBVA Group, which will enter into force in 2018.
Moreover, in compliance with one of the new requirements
under the aforementioned Regulation, a Data Protection
Officer for the BBVA Group was appointed.
During 2017 numerous business continuity strategies have
been activated in BBVA Group, among them related to the
earthquakes in Chile, and particularly Mexico; those affecting
the United States as a result of hurricanes and storms:
Harvey in Texas, Irma in Florida and Stella in New York; the
problems of social conflict in Venezuela; serious flooding
in the north of Peru; and the torrential rains in the area of
Mocoa, Colombia.
With respect to the personal data security measures, and
in line with the above, a supplementary organizational
project was implemented to review and update all functions,
processes, methodologies, classification models, controls,
incident management, etc. and ensure they are adapted to
the new Regulation.
2017 StAff InformAtIon
P. 16
Staff information
team management
BBVA’s most important asset is its team: the people who
make up the Group. That is why one of BBVA’s six Strategic
Priorities is a first-class workforce.
As of December 31, 2017, BBVA Group had 131,856
employees located in over 30 countries, 54% of them women
and 46% men. The average age of the workforce was 37.5
years. The average length of service in the Organization was
10.2 years, with a staff turnover of 7.3% over the year.
BBVA Group (December 2017)
THE UNITED
STATES
10,928
MEXICO
37,207
SOUTH
AMERICA
29,423
SPAIN
30,584
REST OF
EURASIA
1,099
TURKEY
22,615
46%
54%
Age average:
38 years
BBVA GROUP:
131,856
employees
In 2017, the number of the Group employees decreased
(down 2,936). This reduction was due, to a large extent, to the
transformation plans of the distribution model that are being
carried out in countries, such as in Turkey, and to the efficiency
plans that are being carried out in South America, within the
framework of the current legislation in each country.
Over the last few years, BBVA Group has been incorporating
talent from a series of capacities that were not usual in the
financial sector, but which are key in the new era in which the
Group is operating (specialists in data, customer experience,
etc.). In addition, to accompany the transformation process,
a new, more transversal, transparent and effective people
management model is being developed, so that each
employee may occupy the role that best suits his or her profile
and contribute the greatest value to the Organization, with the
greatest commitment, and training and growing professionally.
There has also been a transformation in ways of working
over the last year, moving toward an agile model of
organization, where the teams are responsible end to end
for everything they do; constructing everything based on
customer feedback and focusing on delivering solutions that
best satisfy current and future customer needs.
BBVA understands corporate culture as a set of values,
beliefs, policies, practices and conducts that are shared by the
people in the Organization and that generate characteristics
of identity differentiating it from other companies. This has
been done by implementing the Our Values project.
For further information on the process of identifying and
defining the three Values, see the section Our Values in the
Strategy section.
2017 StAff InformAtIon
P. 17
Professional development
In the current context of transformation in the financial industry,
all the evidence from the market demonstrates that the
differential factor for assuming change is the people who form
part of the organization. It is therefore crucial to have the best
professionals available and to be capable of retaining them.
To achieve so, in 2016 a project was launched to create a
new people management model in BBVA that allows it to
guarantee the best professionals were available for each
role: those capable of generating the greatest value, the
most committed, those who could grow and learn; and that
this should be possible with greater flexibility in managing
the professional careers of employees, contributing
greater transparency, simplicity and consistency. In
2017 the definition of the model was completed, and its
implementation began through a number of pilot projects
across the whole Group, reaching around 40,000 employees.
The new model puts the BBVA employees at the center of
their professional development, so that they have the tools
allowing them to measure all their capabilities, detect whether
there is an area for improvement and identify their growth
opportunities within the Bank.
Selection and development
Throughout 2017, BBVA worked on transforming the Group’s
selection model with the aim of attracting and selecting
the talent needed in the different units to provide the best
possible experience to all those involved in the process,
without giving up the levers of equal opportunities and
objective criteria in processes of assessing what is required in
specific job positions.
The transformation of this model means, generating a global
framework of reference that provides uniform support
to all the geographic areas in which the Group operates,
and also enrichment of the teams with the incorporation
of new professionals who arrive from talent communities
that the Bank wants to attract. The use of technology and
the implementation of new tools allow to streamline and
standardized the selection processes, whose decisions are
based on data analysis.
Thanks to the brand positioning actions and the launch onto
the market of the professional options available in BBVA,
more than 321,000 candidates have been attracted, of whom
57% were women and 43% men; and 75% were young people
under the age of 30.
The internal mobility model also experienced an important
evolution aimed at putting the focus on the employees,
implementing new policies based on transparency, trust
and flexibility that will have to contribute to increase internal
mobility, between areas and geographies, of the people who
are part of BBVA.
Training
The strategic training agenda has put the emphasis on
developing innovative initiatives that provide professionals
with continuous learning, in such a way the new capacities
and talent needed are developed to meet the challenges
posed by the Bank’s transformation. In 2017 online has been
consolidated as the main channel in this respect, with 65%
of the training given through it, making it possible to give an
average of 39 hours of training per employee.
A special effort has also been made to structure a digital
offering segmented by levels and available for the whole
workforce. Around 11,500 employees around the world have
taken part in the Design Thinking and Agile programs in their
different forms. The course on Security in information teaches
employees to detect possible cyber threats when processing
information on mobile devices. This course has been taken for
more than 21,000 professionals, in other words, 16% of the
workforce.
Basic training data (BBVA Group)
Total investment in training (million euros)
Investment in training per employee (euros) (1)
Hours of training per employee (2)
Employees who received training (%)
Satisfaction with the training (rating out of 10)
Subsidies received from FORCEM for training in Spain
(million euros)
Note: excluding Turkey in 2016, except for Investment in training.
(1) Ratio calculated considering the Group’s workforce at closing.
2017
52.2
396
39
84
8,6
3.1
2016
45,5
337
39
91
8.8
2,7
(2) Ratio calculated considering the workforce of BBVA with access to the training
platform.
With respect to the legal requirements of the MiFID
II (Markets in Financial Instruments Directive) on the
knowledge required by employees who distribute information
or advise on financial products and services in the european
area , it is worth noting that 12,682 professionals are officially
certified in Spain in the different forms authorized by the
EFPA (DAF/EIP, EFA and EFP).
Over the year 19,151 professionals were incorporated into the
Group, of whom 51% were young people under the age of 30.
Self-development, which makes each employee responsible
for his or her training experience, has meant the design of
technological solutions in mobility that adapt to when, how
2017 StAff InformAtIon
P. 18
and where employees can choose to receive training. This has
allowed specialized training resources to be made available
openly to all, as a result of integration with external digital
content platforms, thus accounting for more than 76,000
training hours.
Diversity and inclusion
BBVA is committed to diversity in its workforce as one of the
key elements to attract and retain the brightest talent and
offer the best possible service to its customers. This diversity,
understood in the broadest sense, includes not only gender
diversity but also generational, experiential, racial, ethnic and
geographic diversity (among others).
In terms of gender diversity, women account for 54% of
the Group’s workforce. Women are in 48% of management
positions, 31% of technology and engineering and 58% of the
business and profit generating jobs.
To give greater external and internal visibility to women who
are key in their areas of responsibility, as well as providing
incentives and supporting local initiatives in favor of gender
equality, the initiative Women@BBVA was launched in 2017.
It has given the chance to get to know BBVA professionals
whose career paths have made them models both inside
and outside the bank. A series of interviews sets out their
main professional challenges, their leadership style, what
characteristics they value most in their colleagues and why
BBVA is an excellent place to develop their professional
aspirations.
Meanwhile, BBVA continues to demonstrate its commitment
to ensure the labor integration of people with different
capabilities through the Plan Integra, which was conceived
with the belief that employment is an essential pillar in
achieving equal opportunity for everyone.
Progress is also being made on making the branches of the
different banks making up the Group more accessible. The
corporate headquarters of BBVA in Madrid, BBVA Bancomer
in Mexico, BBVA Francés in Argentina and BBVA Chile are all
accessible.
2017 StAff InformAtIon
P. 19
Workplace
BBVA conducts a general survey to measure the employees’
commitment and to know their opinions. In 2017, the
percentage of employee participation that BBVA has
throughout the world was 87%, 13 points more than in 2016.
One of the highlights of the results is the average of the 12
main questions of the survey, which was 4.02 out of 5, which
represents an increase of 0.11 points with respect to 2016.
Finally, the level of commitment of BBVA employees increased
from 3.7 in 2016 to 4.4 in 2017. This improvement has been
possible thanks to the more than 11,000 action plans that
were agreed as a result of the previous year’s survey.
The safety policy in Spain is carried out through the
Occupational Risk Prevention Service, with activities such
as the periodic assessment of occupational risks at work,
specific assessment of workstations, the implementation
of emergency and evacuation plans and coordination of
preventive activities. It is also responsible for monitoring
the health of workers through medical checkups, protecting
vulnerable workers and adapting workstations with specific
ergonomic material. In 2017 activities and campaigns were
organized to improve the health of workers.
Freedom of association and representation
In accordance with the different regulations in force in
countries in which BBVA operates, the employment rights
and conditions are included in the standards, agreements
and arrangements subscribed, in this instance, with the
corresponding employee representatives.
On matters of freedom of association and labor union
representation, BBVA always aims for solutions via
consensus. It places a very high value on dialog and
negotiation as the best way of resolving any conflict in
accordance with the pertinent local regulations in force where
BBVA has its global footprint.
In BBVA Spain, the collective agreement for the banking
sector is applicable to 100% of the workforce. There are also
company agreements that complement and develop the
provisions of this agreement and are signed with the labor
unions representatives.. Labor union representatives sitting
on company committees are elected every four years by
personal, free, direct and secret vote and are informed of any
relevant changes to the organization of work in the Bank, as
provided for by the pertinent legislation currently in force.
Occupational health and safety
BBVA considers the promotion of health and safety as one of
its basic principles and fundamental goals, which is served by
means of the continuous improvement of working conditions.
The occupational risk prevention model in BBVA in Spain is
a participative one, based on the right of workers to consult
and participate, through their representatives in matters
related to health and safety at work. Its application reaches
100% of the workforce throughout Spain.
Occupational health (Spain)
Technical preventive actions
Preventive actions to improve working conditions
Appointments for health checks
Employees represented in health and safety
committees (%)
Absenteeism rate (%)
2017
2,655
3,429
18,471
100
2.6
2016
2,420
2,981
15,100
100
2.4
BBVA Occupational Health received recognition for good
business practice in health promotion by the National
Institute for Health and Safety at Work (INSHT), which
complies with the requirements of the European Network for
Workplace Health Promotion.
In Mexico, a number of campaigns were run in 2017 to
promote awareness and prevention in occupational health
and safety.
In Turkey a software was developed to manage all the
processes related to occupational health and safety (OHS):
risk assessment, monitoring of employee health, training
programs, OHS unit committees, accidents at work, etc.
Argentina incorporated new workshops to the range of
schemes for employees to promote healthy habits. In Colombia,
promotion and prevention activities were carried out focused
on the needs detected in the results of periodic medical
examinations and the analysis of absenteeism. And in Venezuela
the Integrated Health Center remained active, with periodic
medical checkups have been given to nearly 1,000 workers.
Volunteer work
The BBVA Corporate Volunteering Policy manifests
BBVA’s pledge to activities of this type and provides
employees with conditions for engaging in corporate
volunteer actions that generate a positive social impact. The
policy is applied in all countries.
2017 StAff InformAtIon
P. 20
The activities of corporate volunteering enhance the
professional development of employees, channeling their
spirit of solidarity, and allowing them to make a personal
contribution of their time and knowledge to provide help
for people who need it most. This improves self-esteem,
increases the sense of pride in belonging to the company and
thus has an effect on talent attraction and retention. It also
generates a positive impact at the level of corporate social
responsibility of the company.
In 2017, nearly 8,000 employees took part in volunteering
actions. These corporate volunteering activities are designed
to boost initiatives arising from the employees themselves or
coordinated by BBVA, in connection with education, primarily
to boost financial education and thus support the strategic
lines set out in the responsible banking model.
2017 EthIcAl BEhAVIour
P. 21
Ethical behaviour
compliance system
The Group’s compliance system constitutes one of the
bases upon which BBVA consolidates its institutional pledge
to conduct all operations and businesses in accordance with
strict codes of ethical conduct.
A basic element in BBVA’s compliance system is the Code of
Conduct, updated in 2015 and available on BBVA’s corporate
website (bbva.com).
Communication, training systems and policies
implemented to raise employee awareness of the applicable
requirements.
Metrics and indicators that allow the supervision of the
global model implementation.
Independent periodic review of effective model
implementation.
In line with the principles set by the Bank for International
Settlements (BIS) and the reference regulations in this
area, the Compliance Unit continues to organize its activity
around the development and implementation of policies
and procedures; communication and training; and the
identification, assessment and mitigation of potential
compliance risks, understood as those that affect the
following issues:
Prevention of money laundering and terrorist financing
(PML&TF).
Conduct with customers.
Conduct on securities markets.
Dealing with conflicts of interest.
Prevention of corruption and bribery.
The model of compliance risk assessment and management
associated with these matters is global in nature. It is not
a static concept; it evolves over time, strengthening those
elements and pillars on which it is based and anticipating any
new developments and initiatives that may arise in this field.
This model is built on the following basic pillars:
A suitable organizational structure with a clear assignment
of roles and responsibilities throughout the organization.
Policies and procedures that clearly define positions and
requirements to be applied.
Mitigation processes and controls applied to enforce these
policies and procedures.
A technology infrastructure focused on monitoring and
designed to guarantee the above objective.
During 2017 the documentation and management of the
model continued to be improved through a set of technological
tools and improvements to the internal processes in the
different countries. With respect to the digital transformation
activities, it should be noted that during 2017 the supervision
and advice governance teams that operate from Compliance
Units were also strengthened. In addition, with the aim of the
new European data protection regulations, during 2017 the
activities and programs related to personal data protection
developed by the Compliance Unit began to be integrated
within BBVA’s Legal Services function, in which the position of
data protection officer (DPO) was created.
Prevention of money laundering and terrorist
activity financing
Prevention of money laundering and terrorist financing
(hereinafter PML&TF) constitutes above all an ever-present
objective that BBVA Group associates with its pledge to
make improvements in the different communities in which it
operates.
For BBVA, ensuring that its products and services are not
used for illegal purposes likewise constitutes an essential
requirement for safeguarding its corporate integrity, and
thereby one of its main assets, namely, the trust of the
people and institutions it deals with on a day-to-day basis
(customers, employees, shareholders, suppliers, etc.) in the
different jurisdictions where it operates.
To achieve the above objective, as a global financial group
with branches and subsidiaries that operate in numerous
countries, BBVA adopted a corporate model for managing
the risk associated with PMN&TF. This model is applicable to
2017 EthIcAl BEhAVIour
P. 22
all of the entities forming part of BBVA Group within the scope
of PML&TF and not only takes into account regulations on
prevention of money laundering in the jurisdictions in which
BBVA operates, but also incorporates the best practices in the
international financial industry in this regard, as well as the
recommendations issued by international institutions such
as the FATF (Financial Action Task Force). This management
model is constantly evolving. In particular, risk analysis
ensures that controls can be tightened and any additional
mitigating measures that may be required to enhance the
model can be implemented.
The risk management model of PLD&TF is subject to
continuous independent review. Pursuant to Spanish
regulations, an independent expert annually audits the BBVA
Group matrix. This review is complemented by internal and
external audits carried out by local supervisory bodies, both
in Spain in other jurisdictions.
During 2017, BBVA continued to deploy the new monitoring
tool, in Spain, Turkey and Mexico. The Group also began to
apply new technologies to enhance PML&TF (for example,
identification of customers through videoconference using
facial recognition techniques). It carries out ongoing analysis of
opportunities for applying new technologies (machine learning,
artificial intelligence, etc.) to strengthen both the capacities to
detect suspicious activities of the different entities making up
BBVA and the efficiency of the PML&TF processes.
In addition, the different entities in BBVA Group in various
jurisdictions were selected by local authorities to participate
in a mutual review process carried out by FATF-GAFI.
Also worth noting BBVA’s collaboration with the different
governmental bodies and international organizations in this field.
In the area of training related to PML&TF, each of the
BBVA Group entities has an annual training plan for all its
employees. T.
Conduct with customers
BBVA’s Code of Conduct places the customers at the center
of its activities, with the aim of establishing lasting relations
based on mutual confidence and the contribution of value.
To achieve this objective, BBVA has implemented policies
and procedures to get to know its customers better, with
the aim of being able to offer them products and services in
line with their financial needs, as well as providing them with
clear and accurate information, sufficiently in advance, on
the risks of the products in which they invest. BBVA has also
implemented processes geared to prevention, or where this is
not possible, management of the possible conflicts of interest
that may arise in the marketing of its products.
During 2017, the Compliance Unit focused its activity on
adapting its rules and processes for the entry into force in
2018 of the new regulations on investor protection in the
securities markets, such as the EU Markets in Financial
Instruments Directive (MiFID II) and Regulation on Packaged
Retail and Insurance-Based Investment Products (PRIIPs).
During the year work also began to adapt to the European
Union directives on distribution of insurance and real-estate
credit.
Also of note is progress in the implementation of a global
model of customer compliance that aims to establish a
minimum framework of rules of conduct to respect in relation
to customers, applicable in all jurisdictions and in line with the
principles of BBVA Group’s Code of Conduct.
In addition, in 2017 the Compliance Unit carried out training
courses for employees in its territorial units and its network
of agents to achieve a better level of knowledge of the rules of
conduct applicable to the customer products with particular
focus on retail customers. Within the work for adapting to the
new MiFID II Directive on knowledge and competence of the
personnel that offers information or advice, BBVA S.A. has
established a program of training and accreditation of the
knowledge that the personnel must have to inform or advise
on financial instruments.
Conduct on securities markets
Integrity in market activity is one of the commitments
of BBVA’s Code of Conduct to the values making up the
corporate culture of BBVA Group. For this purpose it
establishes the general guidelines for action designed to
preserve the integrity of the markets, which include standards
and principles geared to the prevention of market abuse and
guaranteeing their transparency and free competition.
The Policy for Conduct in the Securities Markets includes
the principles and general criteria for action designed to
uphold BBVA’s integrity in the markets. Specifically, this
Policy contains the minimum procedural guidelines regarding
the treatment of privileged information, prevention of price
manipulation, management of potential conflicts of interest
and own account trading by employees.
It is worth noting in this respect that in 2017 the Policy and
the Internal Regulation on Conduct in Securities Markets
was updated, incorporating the regulatory changes derived
from the Market Abuse Regulation, as well as best practices
in the industry. As well as this, during the year the capacities
of processes and tools for the detection of suspicious
operations initially implemented in 2016 continued to be
enhanced. There was also stronger compliance with the U.S.
Dodd-Frank Act in terms of BBVA’s condition of swap dealer,
with the development of a General Swap Dealer Policy that
covers all the aspects of the Act.
2017 EthIcAl BEhAVIour
P. 23
From the point of view of prevention of market abuse,
and as an additional measure for strengthening the body of
policies and procedures covering this matter, the training
of employees continued to be one of the unit’s priorities. In
2017 training actions were implemented for the areas and
professionals with greatest exposure to market activity,
including courses on privileged information for sales and
market analysis teams in Corporate & Investment Banking
and on market manipulation for trading and sales teams
specializing in currency trading.
Other standards of conduct
The Code of Conduct, together with other internal policies
and rules, develop the aspects related with the prevention of
money laundering and terrorist financing, commitments with
respect to politically exposed persons and those relating to
conduct in business.
One of the main mechanisms for managing conduct risk
in the Group is its whistleblowing channels. As set out in
the Code of Conduct, BBVA employees have the obligation
not to tolerate any conduct that is contrary to the Code, or
any conduct in the performance of their professional duties
that may harm the reputation or good name of BBVA. This
whistleblowing channel is a means for enabling employees
to report any breaches they observe or are notified by their
collaborators, customers, suppliers or colleagues. The
channel is available 24/7 and is also open to the Group’s
suppliers. The reports are processed diligently and promptly.
They are checked and measures are taken to resolve any
issues. The information is analyzed in an objective, impartial
and confidential manner.
The work carried out in 2017 included ongoing advice on
applying the Code of Conduct. In particular, individual
written and phone queries were responded to in the Group.
Basically, they focused on potential conflicts of interest in
matters such as managing personal assets or engaging in
professional activities. During the year, BBVA continued its
work on communication and dissemination of the new Code
of Conduct, as well as training related to its contents.
In addition, since the introduction in Spain of the new
regulations on the criminal liability of legal entities, BBVA
has been operating in accordance with the legislation in
force by establishing effective systems of supervision and
control geared to preventing employees from committing
crimes. This has been done through the establishment of a
specific model of criminal prevention implemented in all the
companies controlled by BBVA S.A. in Spain.
Among the possible crimes included in the crime prevention
model are those related to corruption and bribery, as there
are a number of risks that could arise in this respect in an
entity of the nature of BBVA. Among these risks are those
related to the following activities:
Acceptance or delivery of gifts or personal benefits and
invitations to events, or similar.
Payments for facilitating activity.
Political contributions.
Donations.
Sponsorship activities.
Handling of corporate and travel expenses.
Hiring of employees.
Contracting of suppliers, agents or intermediaries.
Mergers, acquisitions or joint ventures.
Accounting and registration of transactions.
To regulate the identification and management of risks, BBVA
has a body of internal regulations made up of principles,
policies and other internal arrangements, including:
Principles:
Principles applicable to the disinvestment processes for
BBVA Group goods or services in favor of Group employees.
Principles to be applied to those involved in BBVA’s
procurement process.
Policies:
Policy for the prevention and management of conflicts of
interest in BBVA.
Responsible procurement policy.
Policy of events and acceptance of gifts related to sporting
events of relevance.
Corporate travel policy.
The anti-corruption framework in BBVA is not only
composed of this body of regulations, but also has a program
that includes a risk map, as well as i) a set of mitigation
measures aimed at reducing this risk; ii) procedures for action
in case of situations of risk; iii) training programs and plans;
and iv) indicators geared to the knowledge of the risk situation
and its mitigation and control framework.
In addition to the above, BBVA has established other specific
instruments for managing core commitments in each
functional area. The most salient of these are:
The Compliance Statute.
Basic principles of risk management and the Risk
Management Policy Manual.
Rules on dealing with individuals and entities of public
importance in matters of financing and guarantees.
2017 EthIcAl BEhAVIour
P. 24
Within the general training program in this area, there is
an online course that describes matters such as the basic
principles related to the Group’s prevention framework
on anti-corruption that reminds employees of BBVA’s
zero tolerance commitment with respect to any form of
corruption or bribery in its business activities.
It is worth noting that in 2017 BBVA was the first financial
institution to obtain an AENOR certificate accrediting that its
system for managing criminal compliance is in accordance
with UNE 19601:2017 Standard published in May 2017.
Other basic commitments acquired by the Group are:
Rules of Conduct in Defense.
Environmental Policy.
Responsible Procurement Policy.
Commitment to Human Rights.
2017 EthIcAl BEhAVIour
P. 25
commitment to human rights
BBVA has a commitment to human rights and work was
performed to update it throughout 2017. This involved
carrying out a due diligence process in all BBVA’s business
and support areas across the Group’s whole footprint. This
process has been carried out taking as a reference the
guidelines on the Guiding Principles on Business and Human
Rights, endorsed on June 16, 2011 by the United Nations
Human Rights Council. It It has also been anchored in the
BBVA’s Purpose: to bring the age of opportunity to everyone.
The materiality analysis carried out by the Group among
its stakeholders makes clear that the main issues they are
concerned with are related to human rights. Combined
with this, BBVA has wanted to mitigate any reputational
risk related to human rights, and to respond to demands by
consumers, investors, analysts and civil society on the role of
companies in this highly significant issue.
The Guiding Principles mentioned above are based on
three pillars:
subject to the Bank’s Code of Conduct and each country’s
legislation. The Responsible Banking area is in charged
of the design, implementation and improvement of the
commitment, as well as acting as a second line of defense
for the rest of the areas; in this it shares duties with Legal
Services and Regulatory Compliance.
In addition to this commitment to human rights, the Bank has
a number of policies and regulations that help strengthen
compliance, which include:
BBVA’s Code of Conduct, as mentioned above in the section
on Compliance;
the Housing Policy in Spain;
the Responsible Procurement Policy;
the Equator Principles, which is developed in the section on
Management of environmental and social impacts.
The State duty to protect human rights;
The Housing Policy in Spain
The corporate responsibility to respect human rights;
The joint duty to find mechanisms that ensure remedy in
the case of any abuse of human rights.
To comply with these Principles and with the responsibility to
prevent, mitigate and remedy the potential impacts on human
rights in all its areas of operation and all its businesses, BBVA
has begun a process in which it has:
identified the potential impacts of its operations on human
rights;
designed mechanisms within the Company to prevent and
mitigate them;
set up adequate channels and procedures to ensure that
in the case of human rights violations there are sufficient
measures in place to ensure remedy for the people affected.
Based on an analysis of the different areas in the Group and
a study of the corporate culture, the Bank’s processes, its
policies and mechanisms for handling claims and complaints,
the issues on which BBVA has room for maneuver have been
identified. These issues have been prioritized and set out in an
action plan.
The main responsibility for applying this commitment relies
with each area and each employee in the Organization.
They have the duty to know the issues within their area of
responsibility that may imply a violation of human rights and
apply the due diligence to avoid them. Employees are also
In Spain, the comprehensive plan to provide solutions to
families in difficulties implemented by BBVA since the
beginning of the crisis has been consolidated under BBVA’s
Social Housing Policy, whose main aim is to help customers
keep their homes.
This plan is divided into three core areas:
Offering solutions to all families with difficulties to pay their
mortgage loans.
Ensuring that any family that is a BBVA customer and at
risk of exclusion has a home and is not evicted.
Supporting families through employment programs that
enable customers to regain their confidence and self-
esteem.
In February 2012, BBVA decided to voluntarily adhere to the
Code of Good Practices approved by the Government, which
had the objective of granting benefits to families at risk of
exclusion who had contracted a mortgage loan. With the
approval of Royal Decree-Law (RDL) 27/2012, the Law 1/2013
and, finally, the RDL 1/2015 and the Law 9/2015, BBVA
decided to proactively inform all its customers, engaged in a
foreclosure process, of the existence of the above mentioned
regulations and the extent of their effects, so that they could
benefit from the advantages set out. A total of 2,676 homes
are assigned to public entities.
BBVA is seeking at every refinancing option available in
accordance with the customers’ ability to pay, in order to
2017 EthIcAl BEhAVIour
P. 26
allow them to keep their homes. The Group has done this for
60,900 customers so far. Any situation can be referred to
the Committee for the Protection of Mortgage Debtors for
review. It analyzes every case in which the customers or their
families face the risk of exclusion without legal protection, and
provides individual solutions in accordance with each family’s
specific circumstances (refinancing, debt remission, dation in
payment, rented social housing in the debtor’s own home or
the Bank’s available homes, etc.).
In this context, since the beginning of the crisis, BBVA
has agreed more than 16,500 dations in payment with its
customers (including dations involving products such as
mortgage loans, consumer finance, etc.).
Responsible Procurement Policy
BBVA aims to integrate ethical, social and environmental
factors in the supply chain for which it is responsible. That is
why in 2017 it has drafted an Ethical Code for Suppliers, which
defines the minimum standards of behavior in ethical, social
and environmental conduct that suppliers are expected to
comply with when they provide products and services.
The Responsible Procurement Policy establishes that during
the procurement process special attention should be paid to
comply with the legal requirements applicable with respect to
human rights, employment rights, rights of association and
environmental rights by all those affected by this process,
and to involve them in the Group’s efforts aimed at preventing
corruption. Likewise, the aim is to ensure that the choice of
suppliers is adapted to the internal rules in place at any time,
and in particular aligned to the values of the Group’s Code
of Conduct, based on respect for the law, commitment to
integrity, competition, objectivity, transparency, value creation
and confidentiality.
The Responsible Procurement Policy also establishes as one
of its principles to “raise awareness in social accountability
of staff and other stakeholders involved in the Group’s
procurement process.”
2017 SuStAInABlE fInAncE
P. 27
Sustainable finance
Banks play a crucial role in the fight against climate change,
thanks to their unique position in mobilizing capital through
investment, loans and advisory functions. Although most
banks have worked in recent years to mitigate the direct
impacts of their activity, there are other very important ways
they can contribute to this challenge: first, by providing
innovative solutions to their customers to help them move
to a low-carbon economy and by promoting sustainable
finance; and second, by systematically integrating social and
environmental risks into decision-making.
BBVA’s commitment to sustainable development is reflected
in its Environmental policy , which is global in scope.
During 2017, BBVA has worked on its strategy on climate
change and sustainable development. The strategy covers
comprehensive management of the risks and opportunities
deriving from the fight against climate change and the resolve
to achieve the Sustainable Development Goals (SDGs).
This strategy is based on a threefold commitment to 2025:
First, a commitment to finance, which contributes to the
mobilization of the capital needed to halt climate change
and achieve the SDGs.
Second, a commitment to mitigate the social and
environmental risks derived from the Bank’s activity, to
minimize their potential direct and indirect negative impacts.
And finally, a commitment to engagement with all the
stakeholders involved in the collective promotion of the role
of the financial industry in sustainable development.
As of December 31, 2017, the accompanying Annual Financial
Statements of the BBVA Group do not include any material
item that would warrant inclusion in the environmental
information document set forth in the Ministry of Justice
Order JUS / 471/2017, of May 19, which approves the new
models for the presentation in the Companies Registry of the
financial statements of the subjects bound to its publication.
2017 SuStAInABlE fInAncE
P. 28
Sustainable financing
Sustainable bonds and loans
Sustainable bonds and loans are instruments used for
channeling funds to finance our customers’ projects in
sectors such as renewable energies, energy efficiency, waste
management, water treatment and access to essential goods
and services such as homes or inclusive finance.
BBVA has the knowledge and experience to provide its
customers with comprehensive advice on sustainable
financing solutions through both bonds and loans, and it is
also playing a relevant role in the development of this market.
Since 2014 BBVA is signatory of the green Bond Principles,
a series of voluntary guidelines that establish the issuance
transparency requirements and promote integrity in the
development of the green bond market. In addition, since 2017,
it has also formed part of the working group that is developing
the Green Lending Principles, an initiative of the Loan Market
Association adapted to the needs in the case of loans.
In bonds, the Bank has been very active in the green bond
market in the Iberian Peninsula in 2017. It is a globally
recognized institution, having advised, placed and structured
green bonds for customers in a variety of sectors in Mexico,
the United States and Europe in both local currency and
euros and U.S. dollars.
On another note, green loans are beginning to take off in the
market. In 2017, the Bank has been very active as structuring
bank, with a total of ten operations.
Financing sustainable projects
BBVA has been supporting the renewable energy sector for
years. Thus, in 2017, the Group financed projects of this type
with a total installed capacity of more than 700 MW, for a total
volume of €218m.
Among the highlighted operations of 2017 are the financing of
seven wind farms in Portugal, two in Italy and Spain and one
photovoltaic plant in Mexico. Moreover, in 2017 the Bank also
financed social infrastructure projects for an amount of €333m.
Socially Responsible Investment
BBVA assumed its commitment to Socially Responsible
Investment (SRI) in 2008 when it joined the United Nations
Principles for Responsible Investment (PRI) through the
employee pension plan and one of the Group’s major asset
management companies, Gestión de Previsión y Pensiones.
The goal at the time was to start building BBVA’s own SRI
model from the ground, with the initial implementation
focused on employment pension funds. Nine years later, the
Group continues to work on improving its model, making it
more complete and solid every day.
During 2017, BBVA Asset Management (BBVA AM) continued
to adapt to the market and changes in it, working to extend
and improve the SRI solutions offered. Among them are
the training solutions in place, such as events streamed
and available via its website and the regular newsletters
addressing SRI matters, which are also posted on the BBVA
AM website; and in particular through personal meetings with
its customers to address their specific concerns in this field.
BBVA AM’s SRI model has implemented the following strategies:
Integration of ESG criteria in the investment process.
Exclusion: Rules of Conduct in Defense.
ESG analysis of third-party funds.
Engagement and exercise of voting rights.
Financial inclusion
BBVA is aware that greater financial inclusion has a favorable
impact on the welfare and sustained economic growth of
countries. The fight against financial exclusion is therefore
consistent with its ethical and social commitment, as well
as its medium-term and long-term business objectives. For
this purpose, the Group has developed a financial inclusion
(FI) business model to cover the low-income population in
emerging countries within its global footprint. This model is
based on the development of a responsible business model
that is sustainable in the long term, shifting from a model
that is intensive in human capital and of limited scalability to
a scalable strategy that is intensive in alternative and digital
channels with a multi-product focus. In short, this model is
based on:
the use of new digital technologies,
an increase in products and services offered through non-
branch platforms,
innovative low-cost financial solutions designed for this
segment.
At the end of 2017, BBVA had more than 8 million active
customers in this segment.
2017 SuStAInABlE fInAncE
P. 29
management of environmental and social impacts
Social, environmental and reputational risks
As a financial institution, BBVA has an impact on the
environment and society: directly through the consumption of
natural resources and its relationship with stakeholders; and
indirectly through its credit activity and the projects it finances.
These non-financial risks may affect the credit profile of
borrowers or the projects financed by the Bank. To manage
such risks, BBVA takes into account environmental, social
and reputational aspects in its risk management, alongside
traditional financial variables.
In 2017, BBVA worked with a number of areas involved in
the development of new standards for the mining, energy,
infrastructure and agricultural business sectors, and a
new improved process of due diligence that can assess
new operations, customers or products with criteria that
are aligned with BBVA’s strategy of climate change and
sustainable development.
1. Equator Principles
The energy, transport and social services infrastructures that
boost economic development and create jobs can have an
impact on the environment and society. BBVA is committed
to managing the financing of these projects in order to avoid
and reduce their negative impacts and boost their economic,
social and environmental value.
All the decisions on project finance are based on the criterion
of return adjusted to principles. Placing people at the core
of the business implies dealing with stakeholder expectations
and the social demand to fight against climate change and
respect human rights.
In line with this commitment, BBVA adhered to the Equator
Principles in 2004. Based on the International Finance
Corporation’s (IFC) Policy and Performance Standards on
Social and Environmental Sustainability and the World Bank’s
Environmental, Health and Safety guidelines, the Equator
Principles are a set of standards for managing environmental
and social risks in project finance. These principles have set
the benchmark for responsible finance.
During 2017, the Group contributed to their development and
dissemination as a member of the working groups in which it
participates and has been one of the eleven signatories to the
letter sent to the Equator Principles Association, in which it
urged measures to be taken to tighten the environmental and
social due diligence requirements for project finance.
The Corporate & Investment Banking (CIB) Sustainable
Finance and Reputational Risk team is responsible for
analysis of the projects, representation of the Bank before
its stakeholders, accountability to senior management, and
the design and implementation of the management system,
proposing the adoption of best practices and contributing
toward training and communication on matters related to the
Equator Principles.
The application of the Equator Principles in BBVA is integrated
into the internal processes for structuring, admission and
monitoring of transactions, and is subject to regular controls
by the Internal Audit Department.
In 2017, BBVA took the decision to enhance its due diligence
procedures associated with the financing of projects whose
development affects indigenous communities. When this
occurs, the free, prior and informed consent (FPIC) by these
communities must be taken into consideration, regardless of
the geographic location of the project. This means extending
the current demands of the Equator Principles, which limits
this requirement to countries classified as “non-designated”,
leaving out the “designated” countries (those that are
considered to have a robust legal system and an institutional
capacity that provides sufficient guarantees of environmental
protection and their people’s social rights). BBVA is one of
the ten banks that in 2017 called on the rest of the banks
adhering to the Equator Principles to support the adoption of
amendments in this respect.
Details of the Equator Principles operations analyzed (BBVA Group)
Number of operations (1)
Total Amount (millon euros)
Amount financed by BBVA (millon euros)
2017
22
7,069
1,054
2016
32
6,863
1,451
(1) Within the 22 analized operations, 9 are into Ecuator Principles Scope and the other 13
are analized voluntarily by BBVA under the same criteria.
2. Eco-rating
The Eco-rating tool is used to rate the risk portfolio of SMEs
from an environmental point of view. This is done by assigning
a level of credit risk to each customer in accordance with a
combination of several factors such as location, polluting
emissions, consumption of resources, potential to affect the
environment and applicable legislation.
3. Reputational risk management
Since 2006, BBVA has had a methodology in place for
identifying, evaluating and managing reputational risk.
Through this methodology, the Bank regularly defines and
2017 SuStAInABlE fInAncE
P. 30
reviews a map in which it prioritizes the reputational risks it
faces, together with a set of action plans to mitigate them.
the 2017 corporate Risk Assessment processes and in
estimating the impacts of the scenarios in the recovery plan.
This prioritization is carried out according to two variables:
the impact on stakeholder perceptions and the strength of
BBVA’s resilience to risk.
Global Risk Management calculated reputational risk
capital for the first time.
This reputational exercise is carried out in each country, and
the integration of all of them provides a consolidated view of
the Group. In addition, since 2017 a specific exercise has been
carried out for the CIB EMEA area.
Integration of key risk indicators into the reputational risk
management tool with the aim of improving risk monitoring.
Integration of CIB into the reputational risk management
model.
This exercise has been performed since 2015 using a
computer tool that allows risks to be assessed by the
competent areas.
The main milestones related to reputational risk management
in 2017 were:
Strengthening of the reputational risk model with the
establishment of the position of Corporate Reputation
Specialist, integrated into BBVA’s model of three lines of
defense.
Participation of the Reputational Risk Department in
Eco-efficiency
BBVA also assumes its commitment to mitigate the direct
impacts of its activity. These impacts are fundamentally those
derived from the use of its buildings and offices around the world.
During 2017, BBVA has continued to work on its third Global
Eco-efficiency Plan (GEP), focused on positioning the Group
among the leading entities at global level in terms of eco-
efficiency. The GEP establishes the following strategic areas
and global targets for the period 2016-2020, continuing on
from the two previous plans that were begun in 2008 and
2012, respectively, and setting the following targets:
Global Eco-efficiency Plan
Vectors
Strategic guidelines
Global target
Environmental management and
sustainable construction
% occupants in certified buildings
Consumption per occupant (kWh/occup)
Energy and climate change
% of clean energy
Water
Paper and waste
CO2 eq emissions per occupant (tCO2 eq /occp)
Consumption per occupant (m3/occup)
% occupants in buildings with alternative water sources
Paper consumption per occupant (kg/occup)
% occupants in occupants in buildings with separate waste collection
42%
-5%
48%
-8%
-5%
9%
-5%
30%
Extension of the commitment
Awareness campaigns for employees and supplier
Goals per person
2017 SuStAInABlE fInAncE
P. 31
During 2017 a number of the goals set have been achieved,
such as the percentage of people in certified buildings, in
buildings with alternative water sources and with selective
collection of waste, which have already reached 42%, 11% and
41%, respectively. The evolution of the GEP indicators in the
last year is reflected in the table below:
Main GEP indicators
People working in certified buildings (%) (1)
Electricity usage per person (MWh)
Energy coming from renewable sources (%)
CO2 emissions per person (T)
Water consumption per person (m3)
People working in buildings with alternative sources of water
supply (%)
Paper consumption per person (T)
People working in buildings with separate waste collection
certificate (%)
(1) Including IS0 14001 and LEED certifications.
2017
2016
42
5.9
27
2.2
23
11
0.1
41
40
5.8
25
2.1 (2)
21.1
10
0.1
32
(2) This figure has been adjusted according to update of the emissions factor applied.
Note: indicators calculated based on employees and external staff.
To achieve these targets, BBVA continued its efforts to
minimize its environmental footprint through initiatives in all
the countries where the Group is present, most notably:
Improvement in efficiency in the air conditioning and lighting
systems of buildings and branches.
Remodeling of some headquarters.
Adaptation to ISO 14001:2015 of the Environmental
Management System certifications under ISO 14001. In total,
1,034 branches and 79 of the Group’s buildings around the
world possess this certification.
Achievement of LEED Platinum certification in two new
buildings. In addition to the 19 BBVA buildings that have
already received it.
Participation in the Earth Hour campaign in 177 cities around
the world.
2017 SuStAInABlE fInAncE
P. 32
Engagement
BBVA is participating in major international sustainable
development initiatives (UN Global Compact, Equator
Principles, Principles for Responsible Investment, United
Nations Environment Programme Finance Initiative, Thun
Group of Banks and Human Rights, Green Bond Principles
and Social Bond Principles), and has been committed, since
2017, to achieve the United Nations Sustainable Development
Goals (SDGs). BBVA is also part of the pilot group of banks
that have committed to implement financing and climate
change recommendations that were published in July by the
Financial Stability Board in the framework of the G20.
Task Force on Climate-related Financial
Disclosures (TCFD)
BBVA is committed to mitigating the impacts derived
from climate change and to integrating these risks into its
risk management model. To further this end, it has joined
the pilot group of banks working under the tutelage of the
UN Environment Program - Finance Initiative (UNEP FI)
to implement the recommendations of the Task Force on
Climate Related Climate Disclosures, created by the Financial
Stability Board (FSB).
This pilot group of 16 banks aims to analyze how climate
change affects the banking industry in its governance model,
strategy and risk model.
Over the next two years (2018-2019), a number of possible
climate change scenarios will be used to determine how
global warming will affect the banking business. The basic
aim of the working group will be focused on analyzing risks,
whether physical (associated mainly with the direct effects of
climate change) or transitional (regulatory, technological or
social changes), and how these form part of each entity’s risk
model.
Currently, the group is working to determine the sectors on
which the analysis will focus, together with the geographic
areas of analysis on which the pilot program will be run.
Sustainable Development Goals
On September 25, 2015, the world leaders adopted 17 SDGs
to protect the planet, fight poverty and try to eradicate it and
to achieve a prosperous world for future generations. These
goals are part of the 2030 Sustainable Development Agenda.
The aim is to involve everyone: governments, companies,
civil society and individuals. Each goal, set out with a specific
purpose, has in turn a number of targets to be achieved; and
each target has its own indicators that serve to determine the
level of achievement of each goal.
Given its broad spectrum of business, BBVA contributes to
a number of SDGs, together with the BBVA Microfinance
Foundation and the different geographic areas in which it
operates. To respond to the obligations it has imposed on
itself as a bank, BBVA has defined its strategy for climate
change and sustainable development that orders its different
commitments and relates them directly to the SDGs. In
this way, BBVA aims to respond to the commitments of the
2030 Agenda, but at the same time to take advantage of the
business opportunities derived from compliance.
2017 contrIButIon to SocIEty
P. 33
Contribution to society
Investment in social programs
In 2017, BBVA allocated €103m to social projects. This figure
accounts for 2.9% of the Group’s net attributable profit.
Investment in social programs by focus of actions (Percentage)
16
6
8
Knowledge, education
and culture
Entrepreneurship
Financial education
Other
70
Investment in social programs by geographical area and Foundation
(Thousand euros)
Spain and corporate areas
The United States
Mexico
Turkey
South America
BBVA Foundation
BBVA Microfinance Foundation
2017
24,728
9,042
26,847
5,184
5,971
25,930
5,372
% 2016
16,923
24
9
26
5
6
25
5
8,732
24,612
6,193
6,380
25,598
4,827
%
16
8
24
6
6
25
5
Total
103,075
100
93,265
100
In 2017, BBVA continued to push forward the main areas
of action of the Community Investment Plan for the period
2016-2018, which include:
1. Financial education, aimed at promoting the acquisition of
financial skills and competencies to enable people to make
informed financial decisions.
2. Social entrepreneurship, designed to support the most
vulnerable entrepreneurs and those whose companies have
a positive social impact.
3. Knowledge, through support for initiatives that drive
development and create opportunities for people.
Education for society was one of the core areas of the
previous Plan until 2016. It is now framed within the strategic
line of knowledge. Nonetheless, it retains a significant weight
in BBVA’s social investment, which continues to support
access to education, educational quality and education in
values as sources of opportunity. However, it also shares
this space with other Group initiatives such as the BBVA
Foundation activities and research work by the BBVA
Research Department.
The BBVA’s community support activity has been focusing
on these three strategic lines since 2016, although at the
local level the Group’s banks will maintain their commitment
to investment in the community to address local social
problems. In this regard, the Support to Social Organizations
program backs educational and community development
projects carried out by non-governmental organizations, and
other non-profit associations and institutions.
Financial education
Financial education is one of the three lines of action
established in the 2016-2018 Community Investment Plan.
Through its financial education programs, BBVA fosters the
acquisition of financial knowledge, skills and abilities that
allow people to make better financial decisions and thus
access new opportunities.
Since 2008, BBVA has run its own financial education
programs and worked together with other actors on more
projects. These programs are designed for a diverse target
audience, including children, young people and adults, and
also entrepreneurs and managers of small businesses. They
cover a broad range of subjects, from financial planning to
savings and investment. BBVA also adapts its programs at
a local level to provide financial education adapted to the
environment and economic reality across its global footprint.
In these ten years, BBVA has invested over €73m, benefiting
over 11 million people.
2017 contrIButIon to SocIEty
P. 34
Entrepreneurship
Knowledge, education and culture
In the 2016-2018 Community Investment Plan the
entrepreneurship support programs are organized into a single
line of action that thus becomes particularly important. Through
this line of action, BBVA supports two types of entrepreneurs:
Knowledge, education and culture are three areas of activity
that are grouped together in a new line of action included
in the new Community Investment Plan for 2016-2018 and
that encompasses the activities carried out by the BBVA
Foundation and local educational and cultural initiatives.
Vulnerable entrepreneurs, who are supported through the
BBVA Microfinance Foundation.
Entrepreneurs who create high social impact through their
enterprises, who are supported by the BBVA Momentum
program.
2017 contrIButIon to SocIEty
P. 35
fiscal transparency
Fiscal strategy
In 2015, the BBVA Board of Directors approved the
“Corporate Principles in BBVA’s Tax and Fiscal Strategy”.
The strategy forms part of BBVA’s corporate governance
system and establishes the policies, principles and values that
guide the way the Group behaves with respect to taxes. This
strategy has a global scope and affects everyone who is part
of the Bank. Compliance with the strategy is very important,
given the scale and impact that the tax contributions of large
multinationals such as BBVA have on the jurisdictions where
they operate.
payments of corporate taxes, VAT, local taxes and fees,
income tax withholdings, Social Security payments, and
payments made during the year arising from tax litigation
in relation to the aforementioned taxes. In other words, it
includes both the taxes related to the BBVA Group companies
(taxes which represent a cost to them and affect their results)
and taxes collected on behalf of third parties. The Total Tax
Contribution Report gives all the stakeholders an opportunity
to understand BBVA’s tax payments and represents a
forward-looking approach and commitment to corporate
social responsibility, by which it assumes a leading position in
fiscal transparency.
Effective compliance with the tax strategy is duly monitored
and supervised by BBVA’s governing bodies.
Global Tax Contribution (BBVA Group. Million euros)
Accordingly, BBVA’s fiscal strategy consists of the following
basic points:
Own taxes
Third-party taxes
Total tax contribution
2017
4,106
5,775
9,881
2016
3,762
5,678
9,440
BBVA’s decisions concerning fiscal-related matters are
determined by the payment of taxes, given that they
contribute heavily to the economies of all the jurisdictions
in which it operates. Tax payments are aligned with effective
business practices and the generation of value in the
different geographic areas in which BBVA operates.
Active adaptation to the new digital environment, also in terms
of taxation, through the incorporation of virtual presence into
the generation of value, and its consequent valuation.
The establishment of reciprocal cooperative relations
with tax authorities that are based on the principles of
transparency, mutual trust, good faith and fairness.
Promotion of a clear, transparent and responsible reporting
strategy to stakeholders on its main fiscal-related matters.
Offshore financial centers
BBVA maintains a policy on activities in entities permanently
registered in offshore financial centers, which includes a plan
for reducing the number of offshore financial centers.
In this respect, both from the OCDE and the Spanish
regulation perspective, as of December 31, 2017, the BBVA
Group’s permanent establishments registered in offshore
financial centers considered tax havens are as follows:
Branches of the BBVA Group’s banks in the Cayman Islands,
Issuers of securities in the Cayman Islands: BBVA Global
Finance, Ltd., Continental DPR Finance Company, Garanti
Diversified Payment Rights Finance Company and RPV
Company.
Total tax contribution
1. Banking branch
BBVA is committed to providing full transparency in tax
payments, which is why once more this year the Group has
voluntarily disclosed all major tax payments in the countries
where it has a significant presence, as it has done every year
since 2011.
BBVA Group’s total tax contribution (TTC), which uses a
method created by PwC, includes its own and third-party
As of December 31, 2017, the BBVA Group had a banking
branch registered in the Cayman Islands engaging in
corporate banking activities.The activities and business of this
branch, which do not include the provision of private banking
services, are pursued under the strictest compliance with the
applicable law, both in the jurisdictions in which it is domiciled
and in those where its operations are effectively managed, in
this case the United States of America.
2017 contrIButIon to SocIEty
P. 36
Branch at offshore entities (BBVA Group. Million euros)
Main figures of the balance
sheets
Loans and advances to customers
Deposits from customers
31-12-17
31-12-16
1,499
1,144
805
430
2. Issuers of securities
The BBVA Group has four issuers registered in Grand
Cayman, two of them from the Garanti Group.
Issues outstanding at offshore entities
(BBVA Group. Million euros)
Issuing entity
Subordinated debts (1)
BBVA Global Finance LTD
Other debt securities
Continental DPR Finance Company (2)
Garanti Diversified Payment Rights
Finance Company
RPV Company
TOTAL
31-12-17
31-12-16
162
188
59
1,879
1,262
3,362
102
1,760
1,457
3,508
(1) Securities issued before the enactment of Act 19/2003 dated 4 July 2003.
(2) Securitization bond issues on flows generated from export bills.
3. Supervision and control of the permanent establishments
of the BBVA Group in offshore financial centers
The BBVA Group applies risk management criteria and
policies to all its permanent establishments in offshore
financial centers that are identical to those for the rest of the
companies making up the Group.
During the reviews carried out annually on each and every one
of the BBVA Group’s permanent establishments in offshore
financial centers, BBVA’s Internal Audit Department checks
the following: i) that their activities match the definition of
their corporate purpose, ii) that they comply with corporate
policies and procedures in matters relating to knowledge of
the customers and prevention of money laundering, iii) that
the information submitted to the parent company is true, iv)
and that they comply with tax obligations. In addition, every
year a specific review of Spanish legislation applicable to the
transfer of funds between the Group’s banks in Spain and its
companies established in offshore centers is performed.
In 2017, BBVA’s Compliance and Internal Audit Departments
have supervised the action plans deriving from the audit
reports on each one of these centers.
As far as external audits are concerned, one of the functions
of the Audit and Compliance Committee is to select an
external auditor for the Consolidated Group and for all the
companies in it. For 2017, all of the BBVA Group’s permanent
establishments registered in offshore financial centers have
the same external auditor (KPMG), except Continental DPR
Finance Company.
2017