Balance Sheet at 31 December 2010 of BBVA

the pertinent body. The Group's credit risk management is based on an integrated structure covering
all the functions, permitting objective, independent decision-making throughout the life cycle of the
risk.
The Group has standardised criteria for action and conduct in how to deal with credit risk in an
independent manner without detriment to the specialisation of each business unit or the specificities of
the legislation prevailing in each country. In order to guarantee this standardisation, the definitions and
proposal of the management criteria for credit risk, circuits, procedures, structure and oversight of
the management are the responsibility of the Corporate Risks Area. Managing credit risk
according to the defined criteria is the responsibility of the business units as a function of the
decision routing. In the case of retail segments, the decision routing works as follows: Authorisation
comes from the empowerment level granted to the branches and retail business units and decisions
are formalised as a function of what is dictated by the scoring tools. Changes in weighting and
variables within these tools must be validated by the Corporate Risk Area. For the wholesale
segments, the decision routing works as follows: Authorisation comes from the empowerment level
granted according to the delegation rules and the decisions are formalised in the respective Risks
committees.
The decisions adopted in Risks Committees are not collegiate but joint and several, the person with
the highest-level delegation deciding the criterion. The rule of delegation specifies those cases
where the decision on policies for customers or transactions cannot be delegated due to possibilities
of reputational risk or others that the governing bodies deem opportune. In other cases, the delegation
will be based on an iso-risk curve plotted by BBVA rating validated by the Corporate Risk Area. This
means that the main risks with customers or transactions in each business unit will be decided at the
level of the Corporate Risk Area committees or higher. The criteria for the development and use of the
scoring and rating tools are established by the Corporate Centre Risks Area, including the
construction, implementation and monitoring of models from Corporate Risk Management and their
importance in calculating the EC, EP, customer monitoring, pricing. On the basis of the empowerment
granted by the governing bodies to the president & COO and in compliance with the rule of delegation,
the Corporate Risk Area is responsible for proposing the terms of delegation in each of the business
units. This proposal will at all times be coherent with the characteristics of each unit's business; the
relative sixe of its economic capital; the extent to whichthe Group's decision routing, procedures and
standardised tools have been implemented; and the suitable organisational structure for correct credit
risk management.
Policies on risk concentration.
In order to mitigate credit risk concentration in any geographical area, individual or industry, the
Group constantly updates its individual and industry concentration indexes with respect to the
different variables that may impact credit risk. Thus the Financial Quota or presence of the Group in
one customer is based on that customer's asset quality, the type of transaction, and the Group's
presence in a market, according to the following guidelines: The balance between the customer's
financial requirements, distinguishing between commercial/financial, short/long term needs, and the
degree to which it is an attractive investment for BBVA. These elements give the most favourable
mix of transactions compatible with the customer's requirements. Other conditioning factors are
the legal requirements of each country, the ratio between the Bank's lending to the customer and its
equity, avoiding excessive concentration of risks in too few customers. Likewise, it takes into account
the conditioning factors stemming from the market, the customer, internal regulations, legislation and
the macroeconomic climate. Suitable portfolio management makes it possible to identify
concentrations and trigger action. Any transactions with customers or groups with an expected loss
plus capital of more than €18m is decided at the level of the Risks Committee. This benchmark is
equivalent to an exposure of 10% of the eligible equity for a AAA rating and 1% for a BB
rating. This entails the oversight of the main concentrations of individual risk by the highest-level
governing bodies for risk, as a function of asset quality. There is a maximum concentration of 10% of
eligible equity. Up to that level the operational approach is linked to detailed customer insight and
knowledge of the markets and the industry in which the customer operates.
WARNING: The English version is only a translation of the original in Spanish for information purposes. In case of a discrepancy,
the Spanish original prevails.