Because of the current economic background, improvement in this area has been necessary, adapting risk models of BBVA’s real-estate activities to the current market situation. This adjustment largely consists of calculating the fair value of these assets, according to the corporate methodology, with the aim of estimating potential losses.
Risk is estimated by simulating variations in the price of housing while taking into account the appraisal value and the main drivers identified (volatility, project delays, liquidity, etc.) for the defined time horizon. The model also has a portfolio focus, segmenting the information of each project and asset.
The result obtained, which is called economic capital (the standard metric with the rest of the Group’s risks), is integrated into the BBVA capital map.