14. Held-to-maturity investments
The breakdown of the balance of these headings in the accompanying consolidated balance sheets is as follows:
| Held-to-Maturity Investments 2011 |
Millions of Euros | |||
|---|---|---|---|---|
| Amortized Cost |
Unrealized Gains | Unrealized Losses | Fair Value |
|
| Domestic Debt Securities |
|
|
|
|
| Spanish Government and other government agency debt securities | 6,520 | 1 | (461) | 6,060 |
| Other domestic debt securities | 853 | - | (65) | 788 |
| Issue by credit institutions | 255 | - | (11) | 244 |
| Issue by other issuers | 598 | - | (54) | 544 |
| Subtotal | 7,373 | 1 | (526) | 6,848 |
| Foreign Debt Securities | ||||
| Government and other government agency debt securities | 3,376 | 9 | (236) | 3,149 |
| Other debt securities | 206 | 3 | (16) | 193 |
| Subtotal | 3,582 | 12 | (252) | 3,342 |
| Total | 10,955 | 13 | (778) | 10,190 |
| Held-to-Maturity Investments 2010 |
Millions of Euros | |||
|---|---|---|---|---|
| Amortized Cost |
Unrealized Gains |
Unrealized Losses |
Fair Value |
|
| Domestic Debt Securities |
|
|
|
|
| Spanish Government and other government agency debt securities | 6,611 | 2 | (671) | 5,942 |
| Other domestic debt securities | 892 | - | (63) | 829 |
| Issue by credit institutions | 290 | - | (13) | 277 |
| Issue by other issuers | 602 | - | (50) | 552 |
| Subtotal | 7,503 | 2 | (734) | 6,771 |
| Foreign Debt Securities | ||||
| Government and other government agency debt securities | 2,181 | 10 | (20) | 2,171 |
| Issue by credit institutions | 262 | 6 | (21) | 247 |
| Subtotal | 2,443 | 16 | (41) | 2,418 |
| Total | 9,946 | 18 | (775) | 9,189 |
| Held-to-Maturity Investments 2009 |
Millions of Euros | |||
|---|---|---|---|---|
| Amortized Cost |
Unrealized Gains | Unrealized Losses | Fair Value |
|
| Domestic Debt Securities |
|
|
|
|
| Spanish Government and other government agency debt securities | 1,674 | 21 | (13) | 1,682 |
| Other domestic debt securities | 952 | 8 | (18) | 942 |
| Subtotal | 2,626 | 29 | (31) | 2,624 |
| Foreign Debt Securities | ||||
| Government and other government agency debt securities | 2,399 | 64 | (7) | 2,456 |
| Other debt securities | 412 | 7 | (6) | 413 |
| Subtotal | 2,811 | 71 | (13) | 2,869 |
| Total | 5,437 | 100 | (44) | 5,493 |
The foreign securities held by the Group as of December 31, 2011, 2010 and 2009 as held-to-maturity investments portfolio correspond basically to European issuers.
After analyzing the unrealized losses, it was decided that, with the exception of those recognized for Greece’s sovereign debt, the rest were temporary, as the interest payment dates of all the securities have been satisfied; and because there is no evidence that the issuer will not continue to comply with the payment obligations, nor that future payments of both principal and interests will not be sufficient to recover the cost of the debt securities.
The following is a summary of the gross changes in 2011, 2010 and 2009 under this heading in the accompanying consolidated balance sheets:
| Held-to-Maturity Investments Changes on the Period |
Notes | Millions of Euros | ||
|---|---|---|---|---|
| 2011 | 2010 | 2009 | ||
| Balance at the beginning |
|
9,947 | 5,438 | 5,285 |
| Acquisitions |
|
- | 4,969 | 426 |
| Reclassifications |
|
1,817 | - | - |
| Redemptions and others |
|
(808) | (460) | (273) |
| Balance at the end |
|
10,956 | 9,947 | 5,438 |
| Impairment | 7.1.8 | (1) | (1) | (1) |
| Total |
|
10,955 | 9,946 | 5,437 |
In the third quarter of 2011, some debt securities amounting to €1,817 million were reclassified from "Available-for-sale financial assets" to “Held-to-maturity investments”, as the intention of the Group had changed with respect to some of the sovereign debt securities due to the current market situation (see Note 7.1.5.).
Information about the fair value and carrying amounts of these reclassified financial assets is given here:
| Debt Securities reclassified to "Held to Maturity Investments" | Millions of Euros |
|||
|---|---|---|---|---|
| As of Reclassification date | As of December 31, 2011 | |||
| Carrying Amount | Fair Value | Carrying Amount | Fair Value | |
| Italy sovereign debt | 1,739 | 1,739 | 1,749 | 1,645 |
| Greece sovereign debt | 56 | 56 | 63 | 28 |
| Portugal sovereign debt | 22 | 22 | 23 | 22 |
| Total | 1,817 | 1,817 | 1,835 | 1,695 |
The changes in fair value recognized in “Total Equity - Valuation adjustments”, for the reclassified financial assets are as follows:
| Change in Fair Value Recognised | Millions of Euros | |
|---|---|---|
| From January 01, 2011 to reclassification |
2010 | |
| Italy sovereign debt | (11) | (69) |
| Greece sovereign debt | (13) | (30) |
| Portugal sovereign debt | (1) | (2) |
| Total | (25) | (101) |
The following table presents the amount recognized in the 2011 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 - Valuation adjustments”, as of December 31, 2011, if the reclassification was not performed.
| Effect on Income Statement and Other Comprehensive Income | Millions of Euros | ||
|---|---|---|---|
| Recognized in | Effect of not Reclassifying | ||
| Income Statement | Income Statement | Equity "Valuation Adjustments" |
|
| Italy sovereign debt | (6) | - | (92) |
| Greece sovereign debt (*) | (64) | (63) | (29) |
| Portugal sovereign debt | (1) | - | - |
| Total | (71) | (63) | (121) |
With respect to these reclassified values, the undiscounted future cash flows that, at the date of reclassification, were expected to be recovered, are indicated below:
| Debt Securities reclassified to "Held to Maturity Investments" |
|
||
|---|---|---|---|
| Effective Interest Rate % | Estimated Cash Flows (Millions of Euros) | ||
| Reclassified Amount | Amortised Cost Valuation | ||
| Italy sovereign debt | 3.79 | 1,739 | 61 |
| Greece sovereign debt | 2.12 | 56 | 69 |
| Portugal sovereign debt | 3.34 | 22 | 3 |
| Total | 2.91 | 1,817 | 133 |