General information requirements
Banco Bilbao Vizcaya Argentaria, S.A. (hereinafter “the Bank” or “BBVA") is a private-law entity subject to the laws and regulations governing banking entities operating in Spain. It carries out its activity through branches and agencies across the country and abroad.
The Bylaws and other public information are available for consultation at its registered address (Plaza San Nicolás, 4 Bilbao) and on its corporate website (www.bbva.com).
The Solvency Regulations are applicable at the consolidated level for the whole Group.
BBVA Group's annual consolidated financial statements are presented in accordance with the International Financial Reporting Standards as adopted by the European Union (“EU-IFRS”) in effect as of December 31 2017, taking into consideration Bank of Spain Circular 4/2004, dated December 22, and its successive amendments, and other provisions of the regulatory financial reporting framework applicable to the Group in Spain.
On the basis of accounting criteria, companies are considered to form part of a consolidated group when the controlling institution holds or can hold, directly or indirectly, control of them. An institution is understood to control another entity when it is exposed, or is entitled to, variable returns as a result of its involvement in the subsidiary and has the capacity to influence those returns through the power it exercises on the subsidiary.
Therefore, in drawing up the Group’s Annual Consolidated Financial Statements, all dependent companies and consolidated structured entities have been consolidated by applying the full consolidation method. Jointly-controlled entities, as well as joint ventures (those over which joint control arrangements are in place), are valued using the equity method.
For the purposes of the solvency regulations, 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 securitisation funds and asset securitisation funds.
- · Venture capital companies and venture capital fund managers.
- · The entities whose main activity is holding shares.
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, 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 Prudential Relevance Report 2017, the scope of consolidated entities is different from the scope defined for the purposes of drawing up the Group’s Consolidated Financial Statements.
The following table includes an exercise in transparency aimed at offering a clear view of the process of reconciliation between the book balances reported in the Public Balance Sheet (attached to the Group's Annual Consolidated Financial Statements) and the book balances this report uses (regulatory scope), revealing the main differences between both scopes.
Reconciliation of the Public Balance Sheet from the accounting perimeter to the regulatory perimeter
| Public Balance Sheet Headings | Public Balance Sheet | Insurance companies and real-estate finance companies (1) | Jointly-controlled entities and other adjustments (2) | Regulatory balance sheet |
|---|---|---|---|---|
| Cash and balances with central banks and other demand deposits | 42,680 | - | 24 | 42,704 |
| Financial assets held for tradingr | 64,695 | 2,206 | - | 66,901 |
| Other financial assets designated at fair value through profit or loss | 2,709 | (2,061) | - | 648 |
| Available for sale financial assets | 69,476 | (19.794) | - | 49,682 |
| Loans and receivables | 431.521 | (1,805) | 764 | 430.480 |
| Held-to-maturity investments | 13,754 | - | - | 13,754 |
| Hedging derivatives | 2,485 | (90) | (1) | 2,394 |
| Fair value changes of the hedged items in portfolio hedges of interest rate risk | (25) | - | - | (25) |
| Investments in entities accounted for using the equity method | 1,588 | 3,294 | (80) | 4,802 |
| Non-current assets held for sale (3) | 23,853 | (334) | 3 | 23,522 |
| Resto de activos | 37,323 | 595 | 5 | 37,923 |
| Other assets | 690,059 | (17,989) | 715 | 672,785 |
(1) Balances corresponding to the companies not consolidated for solvency purposes, but for accounting purposes
(2) Other adjustments correspond to other intra-group removals and other homogenization adjustments
(3) As of December 31, 2017, derived from the binding offer to purchase by the The Bank of Nova Scotia Group of the company BBVA Chile (see section 1.1.4), this share has been reclassified as a non-current asset held for sale, while under the solvency perimeter BBVA Chile continues consolidating by Global Integration and, therefore, integrating its assets and liabilities in the corresponding headings. However, only for comparative purposes, are shown in this table, under the solvency perimeter, its assets grouped under the heading Non-Current Assets held for Sale
For more details, see section 1 of the Report.