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| The Group capital base | Millions of Euros | ||
|---|---|---|---|
| 2013 | 2012 | % Change | |
| Stockholders' funds | 46,310 | 43,614 | 6.2 |
| Adjustments | (8,818) | (9,401) | (6.2) |
| Mandatory convertible bonds | - | 1,238 | (100.0) |
| CORE CAPITAL | 37,492 | 35,451 | 5.8 |
| Preferred securities | 2,905 | 1,860 | 56.2 |
| Adjustments | (786) | (1,860) | (57.7) |
| CAPITAL (TIER I) | 39,611 | 35,451 | 11.7 |
| Subordinated debt and other | 9,481 | 10,022 | (5.4) |
| Deductions | (786) | (2,636) | (70.2) |
| OTHER ELIGIBLE CAPITAL (TIER II) | 8,695 | 7,386 | 17.7 |
| CAPITAL BASE (TIER I + TIER II) (a) | 48,306 | 42,836 | 12.8 |
| Minimum capital requirement (BIS II Regulations) | 25,888 | 26,323 | (1.7) |
| CAPITAL SURPLUS | 22,418 | 16,514 | 35.8 |
| RISK WEIGHTED ASSETS (b) | 323,605 | 329,033 | (1.6) |
|
BIS RATIO (a)/(b) |
14.9% |
13.0% |
|
| CORE CAPITAL | 11.6% | 10.8% |
|
| TIER I | 12.2% | 10.8% |
|
| TIER II | 2.7% | 2.2% |
|
The BBVA Group’s capital base, calculated in accordance with the rules defined in the Basel II capital accord, stood at €48,306 million as of December 31, 2013, up on the figure registered as of December 31, 2012.
Risk-weighted assets (RWA) totaled €323,605 million as of December 31, 2013. The figure is lower than in December 2012, mainly due to the exchange differences and the devaluation of the Venezuelan bolivar, as well as the sale of the pension businesses and BBVA Panama. These declines, combined with the slight deleveraging seen in Spain, outweigh the increase due to increased activity of the banking business in emerging countries.
The minimum capital requirements under BIS II (8% of RWA) amounted to €25,888 million as of December 31, 2013. Thus the excess capital resources over and above the 8% of the risk-weighted assets required by the regulations stood at €22,418 million. Therefore, the Group has 87% of capital above the minimum required levels.
There has been an improvement in the core capital, which as of December 31, 2013 stood at €37,492 million, higher than the figure of €35,451 million as of December 31, 2012. The increase is basically the result of the generation of earnings and lower deductions due to the elimination of the goodwill of CNCB, which has been partially offset by the negative effect of the exchange rate during this period.
Core capital accounted for 11.6% of risk-weighted assets, compared with 10.8% as of December 31, 2012, an increase of 80 basis points.
Tier I capital stood at €39,611 million as of December 31, 2013, 12.2% of risk-weighted assets, and an increase of 140 basis points on December 31, 2012. The factors explaining this increase are the sale of 5.1% of CNCB, which reduced deductions, together with the issue of contingent convertible securities in the first half of the year (see Note 30.1).
As of December 31, 2013, Tier II capital reached €8,695 million, i.e. 2.7% of risk-weighted assets, an increase of 50 basis points, mainly due to the aforementioned sale of 5.1% of CNCB.
By aggregating Tier I and Tier II capital, as of December 31, 2013, the BIS total capital ratio is 14.9%, an increase of 190 basis points on the ratio as of December 31, 2012.
Other requirements on minimum capital levels
Irrespective of the aforementioned requirements, in 2011 the European Banking Authority (EBA) issued the recommendation of reaching, as of June 30, 2012, a new minimum capital level of 9%, in the ratio known as Core Tier 1 (CT1). In addition, this minimum ratio should have a sufficient excess amount to absorb the “sovereign buffer”, calculated based on sovereign exposure (see section on “Exposure to sovereign risk in Europe”). As of June 30, 2012, the BBVA Group's EBA Core Tier I capital stood at 9.9%, thus complying with the minimum required level.
In addition, on July 22, 2013, the EBA published a recommendation for supervisors to guarantee that banks subject to the capitalization exercise conducted in September 2011 should maintain their required capital levels in nominal terms and comply with data as of June 2012. For the BBVA Group, this limit was established at €32,152 million, and as of December 31, 2013, the EBA core capital stood at €35,038 million, €2,886 million above the required figure.