1.1.1. Corporate name and scope of application
Banco Bilbao Vizcaya Argentaria, S.A. (hereinafter, "the Bank" or "BBVA") is a private-law entity subject to the rules and regulations governing banking institutions operating in Spain.
The Bylaws and other public information about the Bank are available for consultation at its registered address (Plaza San Nicolás, 4 Bilbao) and on its official website: www.bbva.com.
In addition to the transactions it carries out directly, the Bank heads a group of subsidiaries, jointly-controlled and associate institutions which perform a wide range of activities and which, together with the Bank, constitute the Banco Bilbao Vizcaya Argentaria Group (hereinafter, "the Group" or "the BBVA Group").
Circular 3/2008 and its amendments 9/2010 and 4/2011 are binding at a consolidated level for the entire Group.
1.1.2. Differences among the consolidated group for the purposes of the Solvency Circular and the Accounting Circular
The Group’s consolidated financial statements are drawn up in accordance with what is laid down in the International Financial Reporting Standards adopted by the European Union (hereinafter, “EU-IFRS”). The EU-IFRS were adapted to the Spanish credit institution sector in Spain via Bank of Spain Circular 4/2004 of December 22, 2004 (hereinafter, "the Accounting Circular") as well as through its subsequent amendments, including Bank of Spain Circulars 6/2008 of November 26, 2008, 3/2010 of June 29, and 8/2010 of November 30.
For the purposes of the Accounting Circular, companies are considered to form part of a consolidated group when the controlling institution holds or can hold, directly or indirectly, control of them. For these purposes, an institution is understood to control another when it has the power to direct its policies as regards finance and the pursuit of its business in order to obtain economic profit from its activities. In particular, control is presumed to exist when the controlling institution has a relationship with another, which is termed dependent, in some of the following situations:
- It holds the majority of voting rights.
- It is entitled to appoint or dismiss the majority of the members of its governing body.
- By agreements subscribed with other partners, it can avail itself of the majority of voting rights.
- It has appointed exclusively with its votes the majority of the members of the governing body who are undertaking their responsibilities at the time the consolidated accounts must be drawn up and during the two fiscal years immediately preceding that moment. This case will not give rise to consolidation if the company whose directors have been appointed is bound to another in any of the cases described in the first two bullets of this section.
Therefore, in drawing up the Group’s consolidated financial statements, all dependent companies have been consolidated by applying the full consolidation method.
The Group’s accounting policy applied to jointly-controlled entities (those which are not dependent and are jointly-controlled under contractual agreement through unanimous consent of the equity holders) is as follows:
- Jointly-controlled financial entities: the proportionate consolidation method is applied.
- Jointly-controlled non-financial entities: the equity method is applied.
Moreover, associates, meaning those over which the Group holds a significant influence but which are neither dependent nor jointly-controlled, are valued using the equity method.
A list of all the companies forming part of the BBVA Group is included in the Appendices of the Consolidated Report.
For the purposes of the Solvency Circular, as set out in Spanish Law 36/2007, heading two, section 3.4, the consolidated group comprises the following subsidiaries:
- Credit institutions.
- Investment services companies.
- Open-end funds.
- Companies managing mutual funds, together with companies managing pension funds, whose sole purpose is the administration and management of the aforementioned funds.
- Companies managing mortgage securitization funds and asset securitization funds.
- Venture capital companies and venture capital fund managers.
- Institutions whose main activity is holding shares or investments, unless they are mixed-portfolio financial corporations supervised at the financial conglomerate level.
Likewise, the special-purpose entities whose main activity implies a prolongation of the business of any of the institutions included in the consolidation, or includes the rendering of back-office services to these, will also form part of the consolidated group.
However, according to the provisions of this law, insurance entities and some service firms do not form part of consolidated groups of credit institutions.
Therefore, for the purposes of calculating solvency requirements, and hence the drawing up of this Information of Prudential Relevance, the perimeter of consolidated institutions is different from the perimeter defined for the purposes of drawing up the Group’s financial statements.
The outcome of the difference between the two regulations is that institutions, largely real-estate, insurance and service companies, which are consolidated in the Group’s annual accounts by the full or proportionate consolidation method, are consolidated for the purposes of Solvency by applying the equity method. In addition, insurance companies in which the holding is over 20% and financial institutions in which the holding of over 10% are deducted from capital.
The Annex of this report presents a list of these institutions.
1.1.3. Main changes in the Group's scope of consolidation in 2012
See Note 3 of the Consolidated Financial Statement for more information.
Acquisition of Unnim
On March 7, 2012 the Governing Committee of the Fund for Orderly Bank Restructuring (FROB) assigned Unnim Banc, S.A. (hereinafter "Unnim") to BBVA as part of the competitive process for restructuring it.
As a result, a purchase-sale contract for shares was concluded between FROB, the Credit Institution Deposit Guarantee Fund (hereinafter "FGD") and BBVA, under which the Bank would acquire 100% of the shares of Unnim for 1 euro.
A Protocol of Financial Support Measures was also signed to restructure Unnim, regulating an asset protection scheme (EPA) by which for a 10 years period the FGD would assume 80% of the losses from a portfolio of predetermined Unnim assets, once the existing provisions for these assets had been applied.
On July 27, 2012, once the operation was concluded, BBVA became the holder of 100% of the capital of Unnim.
As of December 31, 2012, Unnim had a volume of assets of €24,756 million, of which €15,932 million correspond to "Loans and advances to customers", and a volume of "Customer deposits" of €11,083 million.
Sale of the businesses in Puerto Rico
On June 28, 2012, BBVA reached an agreement for the sale of its businesses in Puerto Rico to the financial group Oriental Financial Group Inc.
The sale was closed on the corresponding authorizations were obtained, on December 18, 2012, when the BBVA Group gave up control over these businesses.