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January-December 2013

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Asset/Liability Management

The Assets and Liabilities Management unit is responsible for managing structural interest-rate and foreign-exchange positions, as well as the Group’s overall liquidity and shareholders’ funds.

Earnings from the management of liquidity and the structural interest-rate positions in each balance sheet are registered in the corresponding areas.

With respect to the management of exchange-rate risk of BBVA’s long-term investments, the results are included in the Corporate Center and explained in detail in the Risk Management section, under the sub-section on “Structural Risks”.

The Bank’s capital management has a twofold aim: to maintain levels of capitalization appropriate to the business targets in all the countries in which it operates and, at the same time, to maximize return on shareholders’ funds through the efficient allocation of capital to the various units, good management of the balance sheet and proportionate use of the various instruments that comprise the Group’s equity: common stock, preferred securities, conditional convertible bonds and subordinated debt.

During the quarter, BBVA has closed the sale of 5.1% of its stake in CNBC. This sale has a positive impact on the Group’s solvency, particularly under the new BIS III regulations.

Furthermore, the Bank has exercised the call on a subordinated debt issue by BBVA Bancomer for 3,000m Mexican pesos. In Peru, Banco Continental has completed a 15-year $45m issue.

In October, BBVA paid its traditional second interim dividend using the “dividend-option” shareholder remuneration program, which offers shareholders a broader range of remuneration alternatives for their shares. On this occasion, the holders of 88.3% of free allotment rights opted to receive new shares. Therefore, the number of ordinary BBVA shares issued under the paid-up capital increase was 61,627,952, with a capital saving of 15 basis points.

Lastly, turning to regulation, Royal Decree 14/2013, dated November 29 aims to adapt the European regulations CRR 575/2013, dated June 26, and CRD 2013/36, dated June 26. It came into effect as Spanish Law in January 2014, and includes the change in the treatment of deferred tax assets, in line with the regulation in force in other States of the European Union. The latter improves the forecast for core equity tier I under BIS III regulations for the BBVA Group.


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