12. Available-for-sale financial assets

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:

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Available-for-Sale Financial Assets	Millions of Euros
	2012	2011	2010
Debt securities	67,648	53,050	51,064
Impairment losses	(105)	(136)	(189)
Subtotal	67,543	52,914	50,875
Equity instruments	4,193	5,663	6,010
Impairment losses	(236)	(433)	(429)
Subtotal	3,957	5,230	5,581
Total	71,500	58,144	56,456

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:

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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	25,439	243	(860)	24,822
Other debt securities	9,604	145	(120)	9,629
Issued by Central Banks	-	-	-	-
Issued by credit institutions	7,888	71	(59)	7,900
Issued by other issuers	1,716	74	(61)	1,729
Subtotal	35,043	388	(980)	34,451
Foreign Debt Securities
Mexico	8,251	964	(1)	9,214
Mexican Government and other government agency debt securities	7,251	835	-	8,086
Other debt securities	1,000	129	(1)	1,128
Issued by Central Banks	-	-	-	-
Issued by credit institutions	334	56	(1)	389
Issued by other issuers	666	73	-	739
The United States	6,944	189	(88)	7,045
Government securities	714	21	(10)	725
US Treasury and other US Government agencies	228	1	(1)	228
States and political subdivisions	486	20	(9)	497
Other debt securities	6,230	168	(78)	6,320
Issued by Central Banks	-	-	-	-
Issued by credit institutions	151	11	(7)	155
Issued by other issuers	6,079	157	(71)	6,165
Other countries	16,817	579	(563)	16,833
Other foreign governments and other government agency debt securities	9,285	321	(377)	9,229
Other debt securities	7,532	258	(186)	7,604
Issued by Central Banks	1,161	2	(1)	1,162
Issued by credit institutions	4,663	210	(101)	4,772
Issued by other issuers	1,708	46	(84)	1,670
Subtotal	32,012	1,732	(652)	33,092
Total	67,055	2,120	(1,632)	67,543

(*) The amortized cost includes portfolio gains/losses linked to insurance contracts in which the policyholder assumes the risk in case of redemption. Download Excel

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
Issued by Central Banks	-	-	-	-
Issued by credit institutions	3,307	80	(247)	3,140
Issued 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
Issued by Central Banks	-	-	-	-
Issued by credit institutions	59	11	-	70
Issued 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
Issued by Central Banks	-	-	-	-
Issued by credit institutions	631	22	(36)	617
Issued 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
Issued by Central Banks	849	6	-	855
Issued by credit institutions	3,080	184	(266)	2,998
Issued 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

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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
Issued by Central Banks	-	-	-	-
Issued by credit institutions	4,222	24	(156)	4,090
Issued 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
Issued by Central Banks	-	-	-	-
Issued by credit institutions	553	28	(2)	579
Issued 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
Issued by Central Banks	-	-	-	-
Issued by credit institutions	2,981	83	(191)	2,873
Issued 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
Issued by Central Banks	944	1	-	945
Issued by credit institutions	4,431	177	(188)	4,420
Issued 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

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

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Avalaible for Sale financial assets Debt Secutities by Rating	2012		2011
	Fair Value (Millions of Euros)	%	Fair Value (Millions of Euros)	%
AAA	1,436	2.1%	3,022	5.7%
AA+	5,873	8.7%	5,742	10.9%
AA	214	0.3%	1,242	2.3%
AA-	1,690	2.5%	18,711	35.4%
A+	741	1.1%	735	1.4%
A	1,125	1.7%	2,320	4.4%
A-	6,521	9.7%	949	1.8%
With rating BBB+ or below	41,153	60.9%	14,212	26.9%
Without rating	8,790	13.0%	5,980	11.2%
Total	67,543	100.0%	52,913	100.0%

12.3 Equity instruments

The breakdown of the balance under the heading "Equity instruments" as of December 31, 2012, 2011 and 2010 is as follows:

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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	297	10	(45)	262
United States	32	1	(4)	29
Mexico	-	-	-	-
Other countries	265	9	(41)	233
Subtotal	3,598	132	(425)	3,305
Unlisted equity instruments	-	-	-	-
Unlisted Spanish company shares	76	2	(4)	74
Credit institutions	3	-	-	3
Other entities	73	2	(4)	71
Unlisted foreign companies shares	571	7	-	578
United States	474	-	-	474
Mexico	(1)	-	-	(1)
Other countries	98	7	-	105
Subtotal	647	9	(4)	652
Total	4,245	141	(429)	3,957

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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

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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

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
	2012	2011	2010
Balance at the beginning	(682)	333	1,951
Valuation gains and losses	646	(1,349)	(1,952)
Income tax	(227)	264	540
Amounts transferred to income	118	70	(206)
Balance at the end	(145)	(682)	333
Of which:
Debt securities	13	(1,027)	(746)
Equity instruments	(158)	345	1,079

The losses recognized under the heading “Valuation adjustments – Available-for-sale financial assets” in the consolidated balance sheet for 2012 correspond mainly to Spanish government debt securities and equity instruments from Spanish listed companies.

• As of December 31, 2012, 15.2% 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, 2012, 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 December 31, 2012, 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 €43 million, €25 million and €155 million for the years 2012, 2011 and 2010, respectively (see Note 49).