For the purposes of calculating its minimum capital requirements, the Group considers the capital defined in the second part of chapter IV, section I of the Solvency Regulations to be Tier 2 capital. In addition, it considers the deductions to be those defined as such in section II of the above chapter. The distribution of the various component elements of capital and the deductions between basic capital and auxiliary capital are carried out in keeping with the provisions chapter II, sections I and III of the second part of the Solvency Regulations. In addition, the entity considers eligible capital to include the additional Tier 1 capital elements and instruments as defined in Article 51 of the Solvency Regulations, as well as its corresponding deductions under Article 56 as mentioned above.
In line with what is stipulated in the solvency regulation, capital essentially comprises:
- Common equity: This is the Bank’s share capital.
- Share premium.
- Retained profits and undisclosed reserves: These are understood to be those produced and charged to profits when their balance is in credit and those amounts which, without being included on the income statement, must be booked in the “other reserves” account, in keeping with the provisions contained in the Accounting Circular. In application of Rules Eighteen and Fifty-one of the aforementioned Accounting Circular, exchange rate differences will also be classified as reserves. Likewise, valuation adjustments in the coverage of net investments in businesses abroad and the balance of the equity account which contains remuneration accrued on capital instruments will also be included in reserves.
- Minority interests: The holdings representing minority interests, and corresponding to those ordinary shares in the companies belonging to the consolidated group that are fully paid up, excluding the part which is included in revaluation reserves and in valuation adjustments. Earnings net of dividends attributable to these shareholders are also included hereunder.
- Net income for the year, referring to the perimeter of credit institutions and deducting the foreseeable amount corresponding to dividend payments.
Capital is, moreover, adjusted mainly through the following deductions:
- Intangible assets and goodwill.
- Loss carry-forwards (LCFs).
- Valuation adjustments corresponding to the prudential valuation and debt valuation adjustment (DVA).
- Shares or other securities eligible as capital that are held by any consolidated entity in the Group, as well as those held by entities in the economic group itself that are not consolidable.
- Finance for third parties with the aim of acquiring shares or other securities eligible as bank capital of the financer or of other institutions in its consolidable group.
- The outstanding debit balance of each of the total equity accounts that reflect valuation adjustments in available-for-sale financial assets and exchange-rate variations.
- The valuation adjustments corresponding to defined-benefit plans.
- Shortfall of provisions, if any, for the expected loss in positions calculated according to the model based on internal ratings, as well as the amount of securitizations that receive a risk weighting of 1.250%, as indicated by Article 36.1.k.ii of the CRR.
The application of some of the above deductions (mainly intangible assets and LCFs) shall be carried out gradually over a transition period of 5 years (phased in), as set out in the current regulation.
In addition, the Group includes as eligible capital the additional Tier 1 capital instruments defined in Article 51 of the Solvency Regulations:
- Capital instruments, if they meet the conditions established under Article 52.1.
- Issue premiums related to the instruments to which the above section refers.
Finally, the entity also includes additional capital as total eligible capital. This is largely made up of the following elements:
- Subordinated debt received by the Group, understood as that which, for credit seniority purposes, comes behind all the common creditors. The issues, moreover, have to fulfill a number of conditions which are laid out in Article 63 of the Solvency Regulations.
- The surplus resulting between the allowances for losses on risks related to exposures calculated as per the IRB method on the losses they are expected to incur, for the part that is below 0.6% of the risk-weighted exposures calculated according to this method.
It will also include the book balances of generic allowances referring to securitized exposures which have been excluded from the risk-weighted exposures calculation under the IRB method, for the part not exceeding 0.6% of the risk-weighted exposures that would have corresponded to these securitized exposures, had they not been excluded. There is no treatment defined for the surplus of allowances over expected loss in portfolios assessed under the IRB approach above the 0.6% limit.
Furthermore, the book balance for generic allowances for losses reached in keeping with the Accounting Circular and which corresponds to those portfolios to which the standardized approach is applied, for an amount up to 1.25% of the weighted risks that have been the basis for the coverage calculation, will also be considered eligible additional capital.
Generic allowances for losses for those securitized assets that have been excluded from the risk-weighted exposures under the standardized approach are also eligible up to a limit of 1.25% of the weighted risks that would have corresponded to them, had they not been excluded. The surplus over the 1.25% limit is deducted from exposure.
The table below presents the Group's issues of other equity instruments and subordinated debt, which as explained above, form part of additional Tier 1 capital:
TABLE 6: Issues of preferred securities outstanding as of 31/Dec/2014
(Millions of euros)
| Preferred securities by issuers | 2014 | 2013 | 2012 |
|---|---|---|---|
| BBVA International Preferred, S.A.U. (*) | 1,750 | 1,666 | 1,695 |
| Unnim Group (**) | 109 | 109 | 95 |
| BBVA Capital Finance, S.A.U. (***) | 25 | 29 | 32 |
| Phoenix Loan Holdings, Inc. | 20 | 15 | 16 |
| BBVA International, Ltd. (***) | 7 | 8 | 9 |
| Total | 1,910 | 1,827 | 1,847 |
| Eligible limit (1) | 1,470 |
|
|
TABLE 7: Issues of subordinated debt as of 31/Dec/2014
(Millions of euros)
| Issuer company and issue date | Currency | Issue date | Maturity date | Eligibility | Current balance | Balance Eligible |
|---|---|---|---|---|---|---|
| Issues in euros |
|
|
|
|
|
|
| BANCO BILBAO VIZCAYA ARGENTARIA, S.A. |
|
|
|
|
|
|
|
|
EUR | Jul-96 | 12/22/2016 | YES | 27 | 6 |
|
|
EUR | Jul-08 | 7/4/2023 | YES | 100 | 100 |
|
|
EUR | Feb-07 | 2/16/2022 | NO | 253 | 255 |
|
|
EUR | Mar-08 | 3/3/2033 | NO | 125 | 125 |
|
|
EUR | Several issues | Several | YES |
|
68 |
|
|
EUR | Several issues | Several | NO | 315 | 112 |
| Subtotal | EUR |
|
|
|
820 | 665 |
| BBVA GLOBAL FINANCE LTD. |
|
|
|
|
|
|
|
|
EUR | Jul-99 | 10/16/2015 | YES | 58 | 0 |
|
|
EUR | Oct-01 | 10/10/2016 | YES | 10 | 2 |
|
|
EUR | Oct-01 | 10/15/2016 | YES | 46 | 9 |
|
|
EUR | Nov-01 | 11/2/2016 | YES | 53 | 11 |
|
|
EUR | Dec-01 | 12/20/2016 | YES | 56 | 11 |
| Subtotal | EUR |
|
|
|
223 | 33 |
| BBVA Subordinated Capital Finance SAU |
|
|
|
|
|
|
|
|
EUR | Jul-08 | 7/22/2018 | YES | 20 | 12 |
|
|
EUR | May-08 | 5/19/2023 | YES | 50 | 50 |
|
|
EUR | Oct-05 | 10/13/2020 | NO | 96 | 99 |
|
|
EUR | Apr-07 | 4/4/2022 | YES | 66 | 68 |
|
|
EUR | Apr-14 | 4/11/2024 | YES | 1485 | 1,480 |
| Subtotal | EUR |
|
|
|
1,717 | 1,709 |
| Total issues in euros |
|
|
|
|
2,760 |
|
| Issues in foreign currency |
|
|
|
|
|
|
| BBVA GLOBAL FINANCE LTD. | USD | Dec-95 | 12/1/2025 | YES | 165 | 160 |
| Subtotal | USD |
|
|
|
165 | 160 |
| BANCO BILBAO VIZCAYA ARGENTARIA CHILE, S.A. | CLP | Several issues | Several | NO | 578 | 519 |
| Subtotal | CLP |
|
|
|
578 | 519 |
| BBVA BANCOMER | USD | Mar-11 | 3/10/2021 | NO | 1031 | 1030 |
|
|
USD | Apr-10 | 4/22/2020 | NO | 825 | 824 |
|
|
USD | Jul-12 | 9/30/2022 | NO | 825 | 824 |
|
|
USD | Sep-12 | 9/30/2022 | NO | 413 | 412 |
|
|
USD | May-07 | 5/17/2022 | NO | 413 | 412 |
|
|
USD | Nov-14 | 11/12/2029 | NO | 165 | 165 |
| Subtotal | USD |
|
|
|
3,672 | 3,665 |
|
|
MXN | Dec-08 | 11/26/2020 | NO | 160 | 160 |
| Subtotal | MXN |
|
|
|
160 | 160 |
| Texas Regional Statutory Trust I | USD | Feb-04 | 3/17/2034 | NO | 41 | 41 |
| Subtotal | USD |
|
|
|
41 | 41 |
| State National Capital Trust I | USD | Jul-03 | 9/30/2033 | NO | 12 | 12 |
| Subtotal | USD |
|
|
|
12 | 12 |
| State National Statutory Trust II | USD | Mar-04 | 3/17/2034 | NO | 8 | 8 |
| Subtotal | USD |
|
|
|
8 | 8 |
| Texasbanc Capital Trust I | USD | Jul-04 | 7/23/2034 | NO | 21 | 21 |
| Subtotal | USD |
|
|
|
21 | 21 |
| BBVA COMPASS BANCSHARES, INC. | USD | Mar-05 | 4/1/2020 | NO | 182 | 188 |
|
|
USD | Mar-06 | 4/1/2026 | NO | 56 | 59 |
|
|
USD | Sep-07 | 10/1/2017 | NO | 288 | 115 |
| Subtotal | USD |
|
|
|
526 | 361 |
| BBVA COLOMBIA, S.A. | COP | Sep-11 | 9/19/2018 | NO | 35 | 21 |
|
|
COP | Sep-11 | 9/19/2021 | NO | 36 | 36 |
|
|
COP | Sep-11 | 9/19/2026 | NO | 54 | 54 |
|
|
COP | Feb-13 | 2/19/2023 | NO | 69 | 69 |
|
|
COP | Feb-13 | 2/19/2028 | NO | 57 | 57 |
|
|
COP | Nov-14 | 11/26/2034 | NO | 55 | 55 |
|
|
COP | Nov-14 | 11/26/2029 | NO | 31 | 31 |
| Subtotal | COP |
|
|
|
337 | 323 |
| BANCO CONTINENTAL, S.A. | USD | Dec-06 | 15-02-17 | NO | 25 | 25 |
|
|
USD | May-07 | 14-05-27 | NO | 17 | 16 |
|
|
USD | Sep-07 | 24-09-17 | NO | 16 | 16 |
|
|
USD | Feb-08 | 28-02-28 | NO | 17 | 16 |
|
|
USD | Jun-08 | 15-06-18 | NO | 25 | 25 |
|
|
USD | Nov-08 | 15-02-19 | NO | 17 | 16 |
|
|
USD | Oct-10 | 07-10-40 | NO | 165 | 165 |
|
|
USD | Oct-13 | 08-10-28 | NO | 37 | 37 |
|
|
USD | Sep-14 | 22-09-29 | YES | 246 | 247 |
| Subtotal | USD |
|
|
|
565 | 564 |
|
|
PEN | May-07 | 07-05-22 | NO | 11 | 11 |
|
|
PEN | Jun-07 | 18-06-32 | NO | 19 | 15 |
|
|
PEN | Nov-07 | 19-11-32 | NO | 17 | 14 |
|
|
PEN | Jul-08 | 08-07-23 | NO | 15 | 12 |
|
|
PEN | Sep-08 | 09-09-23 | NO | 16 | 14 |
|
|
PEN | Dec-08 | 15-12-33 | NO | 10 | 8 |
| Subtotal | PEN |
|
|
|
88 | 75 |
| BBVA Paraguay, S.A. | USD | Nov-14 | 11/5/2021 | NO | 16 | 16 |
| Subtotal | USD |
|
|
|
16 | 16 |
| BBVA URUGUAY S.A. | USD | Dec-14 | 12/19/2024 | NO | 12 | 12 |
| Subtotal | USD |
|
|
|
12 | 12 |
| Total issues in other currencies (million euros) |
|
|
|
|
6201 |
|
| Total |
|
|
|
|
|
8,961 |
| Total balance eligible as fully-loaded |
|
|
|
|
|
2,224 |
TABLE 8: Issues of Contingent Convertible Bonds as of 31/Dec/2014
| Issuer company | Currency | Issue date | December 2014 |
|---|---|---|---|
| Issues in euros |
|
|
|
| BANCO BILBAO VIZCAYA ARGENTARIA, S.A. |
|
|
|
|
|
USD | May-13 | 1,235 |
|
|
EUR | Feb-14 | 1,500 |
| Subtotal |
|
|
2,735 |
| Total |
|
|
2,735 |