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financial statements 2014

12. Available-for-sale financial assets and Held-to-maturity investment

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12.1 Available-for-sale financial assets - Balance details

The breakdown of the balance by the main financial instruments in the accompanying consolidated balance sheets is as follows:

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Available-for-Sale Financial Assets Millions of Euros
2014 2013 2012
Debt securities 87,679 71,861 63,651
Impairment losses (70) (55) (103)
Subtotal 87,608 71,806 63,548
Equity instruments 7,370 6,111 4,188
Impairment losses (103) (143) (236)
Subtotal 7,267 5,968 3,952
Total 94,875 77,774 67,500

12.2 Debt securities

The breakdown of the balance under the heading “Debt securities” of the accompanying financial statements, broken down by the nature of the financial instruments, is as follows:

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Debt Securities Available-for-Sale
2014
Millions of Euros
Amortized
Cost (*)
Unrealized
Gains
Unrealized
Losses
Fair
Value
Domestic Debt Securities



Spanish Government and other government agency debt securities 34,445 2,290 (55) 36,680
Other debt securities 5,892 252 (22) 6,122
Issued by Central Banks - - - -
Issued by credit institutions 3,567 162 (13) 3,716
Issued by other issuers 2,325 90 (9) 2,406
Subtotal 40,337 2,542 (77) 42,802
Foreign Debt Securities



Mexico 12,662 493 (96) 13,060
Mexican Government and other government agency debt securities 10,629 459 (76) 11,012
Other debt securities 2,034 34 (20) 2,048
Issued by Central Banks - - - -
Issued by credit institutions 141 3 (3) 142
Issued by other issuers 1,892 31 (17) 1,906
The United States 10,289 102 (83) 10,307
Government securities 4,211 28 (8) 4,231
US Treasury and other US Government agencies 1,539 6 (3) 1,542
States and political subdivisions 2,672 22 (5) 2,689
Other debt securities 6,078 73 (76) 6,076
Issued by Central Banks - - - -
Issued by credit institutions 24 - - 24
Issued by other issuers 6,054 73 (76) 6,052
Other countries 20,705 1,044 (310) 21,439
Other foreign governments and other government agency debt securities 10,355 715 (104) 10,966
Other debt securities 10,350 329 (206) 10,473
Issued by Central Banks 1,540 10 (9) 1,540
Issued by credit institutions 3,352 175 (55) 3,471
Issued by other issuers 5,459 143 (141) 5,461
Subtotal 43,657 1,639 (490) 44,806
Total 83,994 4,181 (566) 87,608
(*) The amortized cost includes portfolio gains/losses linked to insurance contracts in which the policyholder assumes the risk in case of redemption. Excel Download Excel
Debt Securities Available-for-Sale
2013
Millions of Euros
Amortized
Cost (*)
Unrealized
Gains
Unrealized
Losses
Fair
Value
Domestic Debt Securities



Spanish Government and other government agency debt securities 30,688 781 (90) 31,379
Other debt securities 8,536 227 (25) 8,738
Issued by Central Banks - - - -
Issued by credit institutions 5,907 124 (4) 6,027
Issued by other issuers 2,629 103 (21) 2,711
Subtotal 39,224 1,008 (115) 40,116
Foreign Debt Securities



Mexico 10,433 328 (178) 10,583
Mexican Government and other government agency debt securities 9,028 281 (160) 9,150
Other debt securities 1,404 47 (19) 1,433
Issued by Central Banks - - - -
Issued by credit institutions 84 11 (2) 93
Issued by other issuers 1,320 36 (16) 1,340
The United States 5,962 58 (82) 5,937
Government securities 1,055 11 (11) 1,056
US Treasury and other US Government agencies 171 3 (4) 170
States and political subdivisions 884 8 (7) 885
Other debt securities 4,907 46 (72) 4,881
Issued by Central Banks - - - -
Issued by credit institutions 234 2 (2) 233
Issued by other issuers 4,674 44 (70) 4,648
Other countries 14,928 570 (329) 15,170
Other foreign governments and other government agency debt securities 7,128 333 (261) 7,199
Other debt securities 7,801 237 (67) 7,971
Issued by Central Banks 1,209 9 (10) 1,208
Issued by credit institutions 4,042 175 (51) 4,166
Issued by other issuers 2,550 54 (6) 2,597
Subtotal 31,323 956 (589) 31,690
Total 70,547 1,964 (704) 71,806
(*) The amortized cost includes portfolio gains/losses linked to insurance contracts in which the policyholder assumes the risk in case of redemption. Excel Download Excel
Debt Securities Available-for-Sale
2012
Millions of Euros
Amortized
Cost (*)
Unrealized
Gains
Unrealized
Losses
Fair
Value
Domestic Debt Securities



Spanish Government and other government agency debt securities 25,375 243 (857) 24,761
Other debt securities 9,580 145 (120) 9,605
Issued by Central Banks - - - -
Issued by credit institutions 7,868 71 (59) 7,880
Issued by other issuers 1,712 74 (61) 1,725
Subtotal 34,955 388 (977) 34,366
Foreign Debt Securities



Mexico 8,230 962 (1) 9,191
Mexican Government and other government agency debt securities 7,233 833 - 8,066
Other debt securities 997 129 (1) 1,125
Issued by Central Banks - - - -
Issued by credit institutions 333 56 (1) 388
Issued by other issuers 664 73 - 737
The United States 6,927 189 (88) 7,028
Government securities 713 21 (10) 724
US Treasury and other US Government agencies 228 1 (1) 228
States and political subdivisions 485 20 (9) 496
Other debt securities 6,214 168 (78) 6,304
Issued by Central Banks - - - -
Issued by credit institutions 150 11 (7) 154
Issued by other issuers 6,064 157 (71) 6,150
Other countries 13,054 469 (560) 12,963
Other foreign governments and other government agency debt securities 5,557 212 (374) 5,395
Other debt securities 7,497 257 (186) 7,568
Issued by Central Banks 1,158 2 (1) 1,159
Issued by credit institutions 4,642 209 (101) 4,750
Issued by other issuers 1,697 46 (84) 1,659
Subtotal 28,211 1,620 (649) 29,182
Total 63,166 2,008 (1,626) 63,548
(*) The amortized cost includes portfolio gains/losses linked to insurance contracts in which the policyholder assumes the risk in case of redemption.

The credit ratings of the issuers of debt securities in the available-for-sale portfolio as of December 31, 2014, 2013 and 2012 are as follows:

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2014 2013 2012
Available for Sale financial assets
Debt Securities by Rating
Fair Value
(Millions of Euros)
% Fair Value
(Millions of Euros)
% Fair Value
(Millions of Euros)
%
AAA 1,459 1.7% 847 1.2% 1,436 2.3%
AA+ 7,620 8.7% 4,927 6.9% 5,873 9.2%
AA 329 0.4% 198 0.3% 214 0.3%
AA- 1,059 1.2% 748 1.0% 1,690 2.7%
A+ 597 0.7% 554 0.8% 741 1.2%
A 2,223 2.5% 8,463 11.8% 1,125 1.8%
A- 13,606 15.5% 4,588 6.4% 6,521 10.3%
BBB+ 9,980 11.4% 7,203 10.0% 890 1.4%
BBB 41,283 47.1% 29,660 41.3% 3,314 5.2%
BBB- 2,568 2.9% 9,152 12.7% 28,466 44.8%
BB+ or below 3,942 4.5% 3,548 4.9% 7,706 12.1%
Without rating 2,942 3.4% 1,918 2.7% 5,572 8.8%
Total 87,608 100.0% 71,806 100.0% 63,548 100.0%

12.3 Equity instruments

The breakdown of the balance under the heading "Equity instruments" of the accompanying financial statements as of December 31, 2014, 2013 and 2012 is as follows:

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Equity Instruments Available-for-Sale
2014
Millions of Euros
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
Equity instruments listed



Listed Spanish company shares 3,129 92 (71) 3,150
Credit institutions 2 1 - 3
Other entities 3,126 92 (71) 3,147
Listed foreign company shares 2,227 1,235 (34) 3,428
United States 54 2 - 56
Mexico 54 - (5) 49
Other countries 2,118 1,233 (28) 3,323
Subtotal 5,356 1,327 (105) 6,578
Unlisted equity instruments



Unlisted Spanish company shares 48 1 - 49
Credit institutions - - - -
Other entities 48 1 - 49
Unlisted foreign companies shares 616 28 (3) 641
United States 486 16 - 502
Mexico 1 - - 1
Other countries 129 12 (3) 138
Subtotal 664 29 (3) 690
Total 6,020 1,356 (108) 7,267
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Equity Instruments Available-for-Sale
2013
Millions of Euros
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
Equity instruments listed



Listed Spanish company shares 3,270 54 (46) 3,277
Credit institutions 3 - - 3
Other entities 3,267 54 (46) 3,275
Listed foreign company shares 2,030 46 (9) 2,066
United States 16 - - 16
Mexico 8 37 - 45
Other countries 2,006 9 (9) 2,006
Subtotal 5,300 100 (55) 5,343
Unlisted equity instruments



Unlisted Spanish company shares 61 - (1) 60
Credit institutions 3 - - 3
Other entities 58 - (1) 57
Unlisted foreign companies shares 554 9 (1) 563
United States 455 - - 455
Mexico - - - -
Other countries 99 9 (1) 107
Subtotal 616 9 (2) 623
Total 5,916 109 (57) 5,968
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Equity Instruments Available-for-Sale
2012
Millions of Euros
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
Equity instruments listed



Listed Spanish company shares 3,301 122 (380) 3,043
Credit institutions 2 - - 2
Other entities 3,299 122 (380) 3,041
Listed foreign company shares 294 9 (44) 259
United States 32 1 (4) 29
Mexico - - - -
Other countries 262 8 (40) 230
Subtotal 3,595 131 (424) 3,302
Unlisted equity instruments



Unlisted Spanish company shares 77 2 (4) 75
Credit institutions 4 - - 4
Other entities 73 2 (4) 71
Unlisted foreign companies shares 568 7 - 575
United States 474 - - 474
Mexico - - - -
Other countries 94 7 - 101
Subtotal 645 9 (4) 650
Total 4,240 140 (428) 3,952

12.4 Gains/losses

The changes in the gains/losses, net of taxes, recognized under the equity heading “Valuation adjustments – Available-for-sale financial assets” in the accompanying consolidated balance sheets are as follows:

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Changes in Valuation Adjustments - Available-for-Sale Financial Assets Millions of Euros
2014 2013 2012
Balance at the beginning 851 (238) (628)
Valuation gains and losses 4,841 1,653 464
Income tax (1,414) (489) (192)
Amounts transferred to income (462) (136) 118
Other reclassifications - 61 -
Balance at the end 3,816 851 (238)
Of which:


Debt securities 2,965 780 (80)
Equity instruments 851 71 (158)

The losses recognized under the heading “Valuation adjustments – Available-for-sale financial assets” in the consolidated balance sheet for the year 2014 correspond mainly to debt securities from government agencies.

As of December 31, 2014, 44.8% of the unrealized losses recognized under the heading "Valuation adjustments – Available-for-sale financial assets” and originating in debt securities were generated over more than twelve months. However, no impairment has been considered, as following an analysis of these unrealized losses it can be concluded that they were temporary due to the following reasons: the interest payment dates of all the fixed-income securities have been satisfied; and because there is no evidence that the issuer will not continue to meet its payment obligations, nor that future payments of both principal and interest will not be sufficient to recover the cost of the debt securities.

As of December 31, 2014, the Group has analyzed the unrealized losses recognized under the heading “Valuation adjustments – Available-for-sale financial assets” resulting from equity instruments generated over a period of more than 12 months and with a fall of more 20% in their price, as a first approximation to the existence of possible impairment. As of 31 December, 2014, the unrealized losses recognized under the heading “Valuation adjustments – Available-for-sale financial assets” resulting from equity instruments generated over a period of more than 18 months or with a fall of more 40% in their price are not significant.

The losses recognized under the heading “Impairment losses on financial assets (net) – Available-for-sale financial assets” in the accompanying consolidated income statement amounted to €36, €36 and €41 million for the year ended December 31, 2014, 2013 and 2012, respectively (see Note 46).

12.5 Held-to-maturity investment

During 2013 these investment was reclassify to “Available for sale financial assets”. Such reclassification was due to a change in management criteria of these portfolios. These balances may not be kept until maturity and are subject to sale. As of December 31, 2014 and 2013, there is no balance of Held to maturity investments.

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