20. Intangible assets

20.1 Goodwill

The breakdown of the balance under this heading in the accompanying consolidated balance sheets, according to the cash-generating units (“CGU”) that originated them, is as follows:

Goodwill. Breakdown by CGU and Changes of the year 2011	Millions of Euros
	Balance at the Beginning	Additions	Exchange Difference	Impairment	Rest	Balance at the End
The United States	5,773	-	79	(1,444)	1	4,409
Turkey	-	1,384	(122)	-	-	1,262
Mexico	678	11	(57)	-	-	632
Colombia	236	-	4	-	-	240
Chile	202	-	(14)	-	-	188
Rest	60	7	-	-	-	67
Total	6,949	1,402	(110)	(1,444)	1	6,798

Goodwill. Breakdown by CGU and Changes of the year 2010	Millions of Euros
	Balance at the Beginning	Additions	Exchange Difference	Impairment	Rest	Balance at the End
The United States	5,357	-	418	-	(2)	5,773
Mexico	593	-	85	-	-	678
Colombia	205	-	31	-	-	236
Chile	173	-	29	-	-	202
Rest	68	1	1	(13)	3	60
Total	6,396	1	564	(13)	1	6,949

Goodwill. Breakdown by CGU and Changes of the year 2009	Millions of Euros
	Balance at the Beginning	Additions	Exchange Difference	Impairment	Rest	Balance at the End
The United States	6,676	-	(226)	(1,097)	4	5,357
Mexico	588	-	9	-	(4)	593
Colombia	193	-	12	-	-	205
Chile	143	-	30	-	-	173
Rest	59	-	-	-	9	68
Total	7,659	-	(175)	(1,097)	9	6,396

United States -

The most significant goodwill of the Group corresponds to the CGU of the United States (including Puerto Rico) and is equal to its value in use. This is calculated as the discounted value of the cash flow projections that the Group’s Management estimates based on the latest budgets available for the next five years.

As of December 31, 2011, the Group used a sustainable growth rate of 4.0%, (4.2% and 4.3% as of December 31, 2010 and 2009, respectively) to extrapolate the cash flows in perpetuity which was based on the US real GDP growth rate. The rate used to discount the cash flows is the cost of capital assigned to the CGU, and stood at 11.4% as of December 31, 2011 (11.4% and 11.2% as of December 31, 2010 and 2009, respectively), which consists of the free risk rate plus a risk premium.

Turkey -

As stated in Note 3, in 2011 the Group acquired 25.01% of the share capital of the Turkish bank Garanti. This acquisition has involved the provisional recognition at the time of the purchase of €1,384 million in goodwill on the acquisition date. The calculation of this goodwill is subject to change, since the fair values are being calculated according to the purchase method set out in IFRS-3, and they may be modified during a period of up to one year from the acquisition date (March 2011).

The detail of the carrying amount of the consolidated assets and liabilities of the Garanti Group previous to its acquisition and the corresponding fair values, gross of tax, which according to the acquisition method have been estimated provisionally at the moment of purchase, is as follows:

Valuation and calculation of goodwill for the acquisition of 25.01% stake in Garanti	Millons of euros
	Carrying Amount	Fair Value
Acquisition cost (A)(*)		3,650
Value of the 25.01% of Garanti at the moment of the acquisition
Cash	536	536
Loans and receivables	9,640	9,479
Financial assets	4,051	4,103
Tangible assets	176	243
Intangibles assets obtained from previous business combinatios	4	-
Intangible assets identify at the date of the business combination (**)	-	589
Other assets	837	836
Financial liabilities	(12,466)	(12,475)
Other liabilities	(967)	(967)
Non-recognised contingent liabilities	-	-
Deferred tax	28	(78)
Total fair value of assets and liabilities acquiered (b)	1,840	2,266
Goodwill (A)-(B)		1,384

(*) Cost of acquisition is the price paid net of the amount of hedges, dividends declared and the value of the control premium that is included in the purchase agreement (see Note 3). (**) The amount of intangible assets identified at the time of purchase, mainly corresponds to the goodwill allocated to the mark and the "core desposits."

The valuations are being conducted by independent experts, applying different valuation methods on the basis of each asset and liability. The valuation methods used are: based on the present value of the cash flows that business or asset is expected to generate in the future, the Market Transaction Method and the Cost Method.

Impairment tests -

As described in Note 2.2.8, the cash-generating units to which goodwill has been allocated are periodically tested for impairment by including the allocated goodwill in their carrying amount. This analysis is performed at least annually and always if there is any indication of impairment. These estimates have been verified by independent experts, not by the Group's accounts auditor.

The Group performed the necessary goodwill impairment tests with the following results:

• As of December 31, 2011: Impairment losses of €1,444 million have been estimated in the United States cash-generating unit which have been recognized under "Impairment losses on other assets (net) - Goodwill and other intangible assets" in the accompanying consolidated income statement for 2011 (see Note 50). This loss has been attributed to a lower forecast of the benefits expected from this CGU in relation to those anticipated initially due to the fact that:
  • the economic recovery is slower than expected and demand for loans is lower than forecasted; this, together with the low interest rate prediction all imply a slowdown in net interest income growth below the initial expectations; and
  • growing regulatory pressure, with the implementation of new regulations, will imply lower-than-expected fee income, basically for cards, while operating costs will rise with respect to the expectations.

Both the US CGU's fair values and the fair values assigned to its assets and liabilities are based on the estimates and assumptions that the Group's Management has deemed most likely given the circumstances. However, some changes to the valuation assumptions used could result in differences in the impairment test result.

If the discount rate had increased or decreased by 50 basis points, the difference between the carrying amount and its recoverable amount would have increased or decreased by up to €585 million and €671 million, respectively. If the growth rate had increased or decreased by 50 basis points, the difference between the carrying amount and its recoverable amount would have increased or decreased by €517 million and €452 million, respectively.

• As of December 31, 2010: There were no indications of impairment in the goodwill recognized by the Group as of that date, except for the insignificant impairment estimated on the goodwill of investments in Rentrucks, Alquiler y Servicios de Transportes, S.A. and in BBVA Finanzia SpA (for €9 and €4 million, respectively).
• As of December 31, 2009: Impairment losses of €1,097 million have been estimated in the United States cash-generating unit which have been recognized under "Impairment losses on other assets (net) - Goodwill and other intangible assets" in the accompanying consolidated income statement for 2009 (see Note 50). This loss was attributed to the significant decline in economic and credit conditions in the states in which the Group operates in the United States.

20.2 Other intangible assets

The breakdown of the balance and changes of this heading in the accompanying consolidated balance sheets, according to the nature of the related items, is as follows:

Other Intangible Assets	Millions of Euros
	2011	2010	2009
Computer software acquisition expenses	1,138	749	464
Other deferred charges	34	28	29
Other intangible assets	708	282	360
Impairment	(1)	(1)	(1)
Total	1,879	1,058	852

Other Intangible Assets. Changes Over the Period	Notes	Millions of Euros
		2011	2010	2009
Balance at the beginning		1,058	852	780
Additions		1,201	458	362
Amortization in the year	47	(334)	(291)	(262)
Exchange differences and other		(46)	39	(28)
Impairment	50	-	-	-
Balance at the end		1,879	1,058	852

The increase of the additions to the table above in 2011 with respect to previous years is due, primarily, to the intangible assets recognized for the Garanti purchase transaction.

As of December 31, 2011, 2010 and 2009, the totally amortized intangible assets still in use amounted to €224, €294 and €1,061 million, respectively.