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.