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 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.
Differences in the consolidated group for the purposes of the solvency regulations and accounting criteria
BBVA Group's Consolidated Annual Report are presented in accordance with the International Financial Reporting Standards as adopted by the European Union (“EU-IFRS”) in effect as of December 31 2018, taking into consideration Bank of Spain Circular 4/2017, and its successive amendments, and other provisions of the regulatory financial reporting framework applicable to the Group in Spain.
The BBVA Group's Consolidated Annual Report for 2018 are posted according to the models included in Circular 3/2018 of the Spanish Securities and Investment Board, with the aim of adapting the content of public financial information of credit institutions to the terminology and formats of financial statements established as mandatory by the European Union for credit institutions.
Based on 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 because of its involvement in the subsidiary and has the capacity to influence those returns through the power it exercises on the subsidiary. For such control to exist, the following aspects must be fulfilled:
- a) Power: an investor has power over a subsidiary when it has current rights that provide it with the capacity to direct its relevant activities, i.e. those that significantly affect the returns of the subsidiary.
- b) Returns: an investor is exposed, or is entitled to variable returns, as a result of its involvement in the subsidiary when the returns obtained by the investor for such involvement may vary based on the economic performance of the subsidiary. Investor returns may be positive only, negative only or both positive and negative.
- c) Relationship between power and returns: An investor has control over a subsidiary when it not only has power over the subsidiary and is exposed, or is entitled to, variable returns for its involvement in the subsidiary, but also has the capacity to use its power to influence the returns it obtains due to its involvement in the subsidiary.
- Credit institutions
- Investment firms
- Financial institutions
A financial institution is a company, separate from other institutions (credit institution or investment firm), whose main activity consists of acquiring holdings or performing one or more of the following activities:
- Loans, including in particular consumer finance, credit agreements relating to immovable property, recourse and non-recourse factoring, and financing of commercial transactions (including forfaiting)
- Financial leasing
- Payment services
- Issuing and managing other payment channels (e.g. traveller’s cheques and bank cheques)
- Granting of guarantees and commitments
- Trading on their own account or on behalf of customers on any of the following instruments:
- - Money market instruments (cheques, bills, certificates of deposit etc.)
- - Foreign currency
- - Financial futures and options
- - Foreign-exchange or interest-rate instruments
- - Marketable securities
- Participating in the issuance of securities and the provision of corresponding services
- Advising companies with regard to capital structure, industrial strategy and related matters, as well as advice and services for mergers and acquisitions of companies
- Brokerage in the interbank markets
- Managing or advising on equity management
- Custody and administration of marketable securities
- Issuance of electronic money
- This definition includes financial holding companies, mixed financial holding companies, payment institutions and asset management firms, but excludes pure industrial holding companies, insurance companies, insurance holding companies and mixed insurance holding companies.
- Auxiliary services companies: a company whose main activity is holding or management of property, management of computing services or any other similar activity of an auxiliary nature with regard to the main activity of one or more institutions (credit institution or investment firm).
- The difference between the balance contributed by entities (largely insurance, real-estate and financial companies) that are consolidated in the Group’s Consolidated Annual Report by the full consolidation method and consolidated for the purposes of solvency by applying the equity method.
- The entry of the balance from institutions (mainly financial) that are not consolidated at the accounting level but for purposes of solvency (by the proportional integration method).
Therefore, in drawing up the Group’s Consolidated Annual Report, 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.
The list of all the companies forming part of BBVA Group is included in the appendices to the Group's Consolidated Annual Report.
For the purposes of solvency regulations, the following subsidiaries form part of the consolidated group, as defined in the CRR:
Therefore, for the purposes of calculating solvency requirements, and hence the drawing up of this Prudential Relevance Report, the scope of consolidated entities is different from the scope defined for the purposes of drawing up the Group’s Consolidated Financial Statements.
The effect of the difference between the two regulations is basically due to:
The following table shows the reconciliation between the book balances reported in the Public Balance Sheet (attached to the Group's Consolidated Annual Report) and the book balances this report uses (regulatory scope), revealing the main differences between both scopes.
CC2 – Conciliation of regulatory capital to the balance sheet
|Public Balance Sheet Headings||Public Balance Sheet||Regulatory balance sheet||Reference to template CC1|
|Cash, cash balances at central banks and other demand deposits||58,196||58,296|
|Financial assets held for trading||90,117||91,394|
|Non-trading financial assets a mandatorily at fair value through profit or loss||5,135||2,367|
|Financial assetsdesignated at fair value through profit or loss||1,313||-|
|Financial assets at fair value through accumulated other comprehensive income||56,337||42,019|
|Financial assets at amortized cost||419,660||413,974|
|Fair value changes of the hedged items in portfolio hedges of interest rate risk||(21)||(21)|
|Investment in subsudiaries, joint ventures and||1,578||4,085|
|Assets under insurance and reinsurance contracts||366||-|
|Of which: deferred tax assets||1,260||1,260||h)|
|Non-current assets and desposal groups held for sale||2,001||2,001|
|Financial liabilities held for trading||80,774||81,140|
|Other financial liabilities designated at fair value through profit or less||6,993||2,858|
|Financial liabilities at amortized cost||509,185||504,968||p) q) t)|
|Fair value changes of the hedged items in portfolio hedges of interest rate risk||-||-|
|Liabilities under insurance and reinsurance contracts||9,834||-|
|Current tax liabilities and deferred tax liabilities (DTL)||3,276||2,568|
|Of which: deferred tax liabilities||1,275||1,275|
|Liabilities included in disposal groups clasified as held for sale||-||2|
|Equity instruments issued other than capital||-||-||b)|
|Less: treasury shares||(296)||(296)||l)|
|Profit or loss atributable to owners of the parent||5,324||5,292||e)|
|Less: interim dividend||(975)||(975)||e)|
|Accumulated other comprehensive income (loss)||(7,215)||(7,285)||c) i) k)|
|Minority interest (non-controlling interest)||5,764||5,709|
|Total equity and total liabilities||676,689||657,119|
The main differences between the public balance sheet and the regulatory balance sheet are due to withdrawals from the balance generated by insurance, real estate and financial entities that are consolidated through the application of the equity method for the amount of -EUR 20.191 billion; and balance entries generated by entities that are consolidated using the proportional integration method for an amount of +EUR 621 million.
For more details, see section 1 of the Report.