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12. Available-for-sale financial assets

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12.1 Breakdown of the balance

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

Available-for-Sale Financial Assets Millions of Euros
2011 2010 2009
Debt securities 53,050 51,064 57,293
Impairment losses (136) (189) (222)
Subtotal 52,914 50,875 57,071
Equity instruments 5,663 6,010 6,676
Impairment losses (433) (429) (226)
Subtotal 5,230 5,581 6,450
Total 58,144 56,456 63,521

12. 2 Debt securities

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

Debt Securities Available-for-Sale
2011
Millions of Euros
Amortized Cost Unrealized
Gains
Unrealized
Losses
Fair
Value
Domestic Debt Securities



Spanish Government and other government agency debt securities 20,597 58 (1,384) 19,271
Other debt securities 4,426 125 (300) 4,251
Issue by Central Banks - - - -
Issue by credit institutions 3,307 80 (247) 3,140
Issue by other issuers 1,119 45 (53) 1,111
Subtotal 25,023 183 (1,684) 23,522
Foreign Debt Securities


 
Mexico 4,815 176 - 4,991
Mexican Government and other government agency debt securities 4,742 164 - 4,906
Other debt securities 73 12 - 85
Issue by Central Banks - - - -
Issue by credit institutions 59 11 - 70
Issue by other issuers 14 1 - 15
The United States 7,355 243 (235) 7,363
Government securities 996 36 (12) 1,020
US Treasury and other US Government agencies 487 8 (12) 483
States and political subdivisions 509 28 - 537
Other debt securities 6,359 207 (223) 6,343
Issue by Central Banks - - - -
Issue by credit institutions 631 22 (36) 617
Issue by other issuers 5,728 185 (187) 5,726
Other countries 17,403 619 (984) 17,038
Other foreign governments and other government agency debt securities 11,617 345 (666) 11,296
Other debt securities 5,786 274 (318) 5,742
Issue by Central Banks 849 6 - 855
Issue by credit institutions 3,080 184 (266) 2,998
Issue by other issuers 1,857 84 (52) 1,889
Subtotal 29,573 1,038 (1,219) 29,392
Total 54,596 1,221 (2,903) 52,914

A significant part of the increase in “Other countries” is due primarily to the incorporation of the Garanti group into the consolidated BBVA Group.

Debt Securities Available-for-Sale
2010
Millions of Euros
Amortized Cost Unrealized
Gains
Unrealized
Losses
Fair
Value
Domestic Debt Securities



Spanish Government and other government agency debt securities 16,543 58 (1,264) 15,337
Other debt securities 5,386 49 (206) 5,229
Issue by Central Banks - - - -
Issue by credit institutions 4,222 24 (156) 4,090
Issue by other issuers 1,164 25 (50) 1,139
Subtotal 21,929 107 (1,470) 20,566
Foreign Debt Securities



Mexico 9,653 470 (17) 10,106
Mexican Government and other government agency debt securities 8,990 441 (14) 9,417
Other debt securities 663 29 (3) 689
Issue by Central Banks - - - -
Issue by credit institutions 553 28 (2) 579
Issue by other issuers 110 1 (1) 110
The United States 6,850 216 (234) 6,832
Government securities 767 13 (9) 771
US Treasury and other US Government agencies 580 6 (8) 578
States and political subdivisions 187 7 (1) 193
Other debt securities 6,083 203 (225) 6,061
Issue by Central Banks - - - -
Issue by credit institutions 2,981 83 (191) 2,873
Issue by other issuers 3,102 120 (34) 3,188
Other countries 13,606 394 (629) 13,371
Other foreign governments and other government agency debt securities 6,743 169 (371) 6,541
Other debt securities 6,863 225 (258) 6,830
Issue by Central Banks 944 1 - 945
Issue by credit institutions 4,431 177 (188) 4,420
Issue by other issuers 1,488 47 (70) 1,465
Subtotal 30,109 1,080 (880) 30,309
Total 52,038 1,187 (2,350) 50,875

The decrease in the balance under the heading “Debt securities” in 2010 is mainly due to the sale of securities and changes in the valuations of these portfolios.

Debt Securities Available-for-Sale
2009
Millions of Euros
Amortized Cost Unrealized
Gains
Unrealized
Losses
Fair
Value
Domestic Debt Securities



Spanish Government and other government agency debt securities 18,312 309 (70) 18,551
Other debt securities 6,265 178 (125) 6,318
Subtotal 24,577 487 (195) 24,869
Foreign Debt Securities


 
The United States 6,804 174 (173) 6,805
Government securities 628 11 (2) 637
US Treasury and other US Government agencies 414 4 (2) 416
States and political subdivisions 214 7 - 221
Other debt securities 6,176 163 (171) 6,168
Other countries 25,064 893 (560) 25,397
Other foreign governments and other government agency debt securities 17,058 697 (392) 17,363
Other debt securities 8,006 196 (168) 8,034
Subtotal 31,868 1,067 (733) 32,202
Total 56,445 1,554 (928) 57,071

As of December 31, 2011, the credit ratings of the issuers of debt securities in the available-for-sale portfolio are as follows:

Avalaible for Sale financial assets
Debt Secutities by Rating
Fair Value
(Millions of Euros)
%
AAA 3,022 5.7%
AA+ 5,742 10.9%
AA 1,242 2.3%
AA- 18,711 35.4%
A+ 735 1.4%
A 2,320 4.4%
A- 949 1.8%
With rating BBB+ or below 14,212 26.9%
Without rating 5,981 11.3%
Total 52,914 100.0%

12.3 Equity instruments

The breakdown of the balance under the heading "Equity instruments" as of December 31, 2011, 2010 and 2009 is as follows:

Equity Instruments Available-for-Sale 2011 Millions of Euros
Amortized Cost Unrealized
Gains
Unrealized
Losses
Fair
Value
Equity instruments listed



Listed Spanish company shares 3,802 468 (2) 4,268
Credit institutions 2 - - 2
Other entities 3,800 468 (2) 4,266
Listed foreign company shares 361 5 (91) 275
United States 41 - (12) 29
Mexico - - - -
Other countries 320 5 (79) 246
Subtotal 4,163 473 (93) 4,543
Unlisted equity instruments - - - -
Unlisted Spanish company shares 36 - - 36
Credit institutions 1 - - 1
Other entities 35 - - 35
Unlisted foreign companies shares 638 13 - 651
United States 560 2 - 562
Mexico 1 - - 1
Other countries 77 11 - 88
Subtotal 674 13 - 687
Total 4,837 486 (93) 5,230
Equity Instruments Available-for-Sale 2010 Millions of Euros
Amortized Cost Unrealized
Gains
Unrealized
Losses
Fair
Value
Equity instruments listed



Listed Spanish company shares 3,378 1,212 (7) 4,583
Credit institutions 3 - - 3
Other entities 3,375 1,212 (7) 4,580
Listed foreign company shares 270 8 (25) 253
United States 12 1 - 13
Other countries 258 7 (25) 240
Subtotal 3,648 1,220 (32) 4,836
Unlisted equity instruments        
Unlisted Spanish company shares 25 - - 25
Credit institutions 1 - - 1
Other entities 24 - - 24
Unlisted foreign companies shares 657 63 - 720
United States 594 55 - 649
Other countries 63 8 - 71
Subtotal 682 63 - 745
Total 4,330 1,283 (32) 5,581
Equity Instruments Available-for-Sale 2009 Millions of Euros
Amortized Cost Unrealized
Gains
Unrealized
Losses
Fair
Value
Equity instruments listed



Listed Spanish company shares 3,657 1,738 (12) 5,383
Credit institutions - - - -
Other entities 3,657 1,738 (12) 5,383
Listed foreign company shares 266 12 (28) 250
United States 16 - (8) 8
Other countries 250 12 (20) 242
Subtotal 3,923 1,750 (40) 5,633
Unlisted equity instruments



Unlisted Spanish company shares 26 - - 26
Credit institutions 1 - - 1
Other entities 25 - - 25
Unlisted foreign companies shares 682 109 - 791
United States 625 104 - 729
Other countries 57 5 - 62
Subtotal 708 109 - 817
Total 4,631 1,859 (40) 6,450

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:

Changes in Valuation Adjustments - Available-for-Sale Financial Assets Millions of Euros
2011 2010 2009
Balance at the beginning 333 1,951 931
Valuation gains and losses (1,349) (1,952) 1,520
Income tax 264 540 (483)
Amounts transferred to income 70 (206) (18)
Balance at the end (682) 333 1,951
Of which:      
Debt securities (1,027) (746) 456
Equity instruments 345 1,079 1,495

The losses recognized under the heading “Valuation adjustments – Available-for-sale financial assets” in the consolidated income statement for 2011 correspond mainly to Spanish government debt securities.

Of the losses recognized under the heading "Valuation adjustments – Available-for-sale financial assets” and originating in debt securities, some 38.9% were generated over more than twelve months. However, no impairment has been estimated, as following an analysis of these unrealized losses it can be concluded that they were temporary, because: 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 comply with his payment obligations, nor that future payments of both principal and interests will not be sufficient to recover the cost of the debt securities.

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 €25, €155 and €277 million for the years 2011, 2010 and 2009, respectively (see Note 49).

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