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information of prudential relevance 2013

2.2. Amount of eligible capital resources

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The accompanying table shows the amount of eligible capital resources, net of deductions, of the different elements comprising the capital base:

Table 6. Amount of eligible capital resources

(Millions of euros)

Capital Base 2013 2012
Capital and Reserves 40,826 41,862
Minority interests 2,069 2,025
Convertible 0 1,238
Deductions –9,321 13,539
Goodwill –6,143 –8,444
Other intangible assets –1,890 –1,971
Treasury stock –66 –110
Minus equity AFS 0 –125
Financial deduction > 10% –353 –2,203
Insurance deduction > 20% –370 –377
Other deductions –498 –309
Preferred securities and COCOs 2,905 1,836
Earnings 2,197 1,658
Dividend –733 –1,323
TIER I 37,944 33,758
Subordinated 1,866 1,852
Eligible generic 2,589 2,609
Equity AFS capital gains 60 0
Financial deduction > 10% –353 –2,203
Insurance deduction > 20% –370 –377
Other deductions –63 –56
TIER II 3,729 1,825
Capital Base 41,672 35,583
RWAs 323,774 329,416
TIER I 11.72% 10.25%
TIER II 1.15% 0.55%
BIS RATIO 12.87% 10.80%

The main variations in the year include:

  • Reserves: the reduction in reserves is due basically to the depreciation of the exchange rate of the currencies of the Group entities against the parent company’s currency.
  • Deductions: the financial deductions (50% Tier 1 and Tier 2) have been reduced mainly as a result of the sale of 5.1% of China Citic, which has brought the holding down to 9.9% (below 10%), and is not deducted from capital. The sale of Citic has also had a significant impact on goodwill (around €1.4 billion).

Subsequent pages of this report refer to the issuance of CoCos, as shown in the above table.

The process followed is shown below, according to the recommendations issued by the EBA and in line with the exercise of transparency conducted by the Bank. Based on the shareholders’ equity reported in the Group’s Annual Consolidated Financial Statements and by applying the deductions and adjustments shown in the table below, the regulatory capital figure for solvency purposes is arrived at:

Table 7. Reconciliation of shareholders’ equity with regulatory capital

(Millions of euros)

Eligible capital resources Reconciliation of shareholders’ equity with regulatory capital
Capital 2,835
Share premium 22,111
Reserves 19,967
Own shares in portfolio –66
Attributed net income 2,228
Attributed dividend –765
Total shareholders' funds (public balance sheet) 46,310
Valuation adjustments –3,831
Minority interests 2,371
Total equity (public balance sheet) 44,850
Shares and other eligible preferred securities 2,905
Goodwill and other intangible assets –7,834
Fin. treasury stock –171
Deductions 8,005
Valuation adjustments not eligible as basic capital –854
Capital gains from the AFS fixed-income portfolio –780
Capital gains from the AFS equity portfolio –72
Exchange-rate variations non-current assets held for sale –3
Valuation adjustments not eligible as basic capital (minority interests) –233
Minority interests valuation adjustments –115
Difference between accounting vs estimated interim dividend –118
Equity not eligible at solvency level –1,087
Other adjustments 67
Tier 1 (before deductions) 38,730
(–) Deductions 50% Tier 1 –786
Tier 1 37,944

Other requirements on minimum capital levels

Apart from the requirements mentioned above, in 2011 the European Banking Authority (EBA) issued a recommendation to aim for a new minimum capital level of 9% by June 30, 2012, in the ratio called the Core Tier I (“CET1”). This minimum ratio also has to have a sufficient excess to absorb the “sovereign buffer”, calculated according to sovereign exposure. As of June 30, 2012, the EBA Core Tier I of the BBVA Group stood at 9.9% (before the sovereign buffer), thus complying with the minimum level required.

In addition, on July 22, 2013, the EBA published a recommendation for supervisors in order to guarantee that the banks that had been subject to the capitalization exercise in September 2011 should maintain, in nominal terms, the required capital levels and comply with the criteria required in June 2012. For the BBVA Group, this limit was set at €32,152 million and, as of December 31, 2013, EBA core capital amounted to €35,038 million, €2,886 million above the required limit.

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