Balance Sheet at 31 December 2010 of BBVA
Balance Sheet at 31 December 2010 of BBVA
Balance Sheet at 31 December 2010 of BBVA
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Transl<strong>at</strong>ion <strong>of</strong> financial st<strong>at</strong>ements originally issued in Spanish and prepared in accordance with generally accounting principles Spain<br />
(See Note 1 and 54). In the event <strong>of</strong> a discrepancy, the Spanish-language version prevails.<br />
sheets. As these liabilities do not constitute a current oblig<strong>at</strong>ion, when measuring such a financial<br />
liability the Bank deducts those financial instruments owned by it which constitute financing for the<br />
entity to which the financial assets have been transferred, to the extent th<strong>at</strong> these instruments are<br />
deemed to specifically finance the assets transferred.<br />
• Both the income gener<strong>at</strong>ed on the transferred (but not derecognized) financial asset and the<br />
expenses <strong>of</strong> the new financial liability are recognized in the accompanying income st<strong>at</strong>ements.<br />
Purchase and sale commitments<br />
The financial instruments sold with a commitment to subsequently repurchase them are not derecognized<br />
from the balance sheets and the amount received from the sale is considered financing from third parties.<br />
The financial instruments acquired with a commitment to subsequently resell them are not recognized in the<br />
balance sheets and the amount paid for the sale is considered credit given to third parties.<br />
Securitiz<strong>at</strong>ion<br />
The Bank has applied the most stringent prevailing criteria in determining whether or not it retains the risks<br />
and rewards on such assets for all securitiz<strong>at</strong>ions performed since 1 January 2004. As a result <strong>of</strong> this<br />
analysis, the Bank has concluded th<strong>at</strong> none <strong>of</strong> the securitiz<strong>at</strong>ions undertaken since th<strong>at</strong> d<strong>at</strong>e meet the<br />
prerequisites for derecognizing the underlying assets from the balance sheets as it substantially retains all<br />
the risks embodied by expected loan losses or associ<strong>at</strong>ed with the possible vari<strong>at</strong>ion in net cash flows, due<br />
to retaining the subordin<strong>at</strong>ed loans th<strong>at</strong> the Bank issued to these securitiz<strong>at</strong>ion funds and hedging the<br />
interest r<strong>at</strong>e risk to which said securitiz<strong>at</strong>ion fund is exposed (Note 11 and Annex VII).<br />
2.3. FINANCIAL GUARANTEES<br />
Financial guarantees are those contracts th<strong>at</strong> require the issuer to make specific payments to reimburse the<br />
holder for a loss incurred when a specific borrower breaches its payment oblig<strong>at</strong>ions on the terms –whether<br />
original or subsequently modified– <strong>of</strong> a debt instrument, irrespective <strong>of</strong> the legal form it may take. These<br />
guarantees may take the form <strong>of</strong> a deposit, financial guarantee, insurance contract or credit deriv<strong>at</strong>ive,<br />
among others.<br />
Financial guarantees, irrespective <strong>of</strong> the guarantor, instrument<strong>at</strong>ion or other circumstances, are reviewed<br />
periodically so as to determine the credit risk to which they are exposed and, if appropri<strong>at</strong>e, to consider<br />
whether a provision is required for them. The credit risk is determined by applic<strong>at</strong>ion <strong>of</strong> criteria similar to<br />
those established for quantifying impairment losses on debt instruments measured <strong>at</strong> amortized cost (see<br />
Note 2.1).<br />
The provisions made for financial guarantees classified as substandard are recognized under “Provisions -<br />
Provisions for contingent liabilities and commitments” on the liability side in the accompanying balance<br />
sheets (Note 21). These provisions are recognized and reversed with a charge or credit, respectively, to<br />
“Provision expenses (net)” in the accompanying income st<strong>at</strong>ements (Note 42) .<br />
Income from guarantee instruments is recorded under the heading “Fee and commission income” in the<br />
accompanying income st<strong>at</strong>ements and is calcul<strong>at</strong>ed by applying the r<strong>at</strong>e established in the rel<strong>at</strong>ed contract<br />
to the nominal amount <strong>of</strong> the guarantee (Note 36).<br />
2.4. NON-CURRENT ASSETS HELD FOR SALE AND LIABILITIES ASSOCIATED WITH NON-CURRENT<br />
ASSETS HELD FOR SALE<br />
The heading “Non-current assets held for sale” in the accompanying balance sheets recognizes the carrying<br />
amount <strong>of</strong> non-financial assets th<strong>at</strong> are not part <strong>of</strong> the Bank’s oper<strong>at</strong>ing activities. The recovery <strong>of</strong> this<br />
carrying amount is expected to take place through the price obtained on its disposal (Note 14). The assets<br />
included under this heading are assets where an active sale plan has been initi<strong>at</strong>ed and approved <strong>at</strong> the<br />
appropri<strong>at</strong>e management level and it is highly probable they will be sold in their current condition within one<br />
year from the d<strong>at</strong>e on which they are classified as such.<br />
This heading includes individual items and groups <strong>of</strong> items (“disposal groups”) th<strong>at</strong> form part <strong>of</strong> a major<br />
business unit and are being held for sale as part <strong>of</strong> a disposal plan (“discontinued oper<strong>at</strong>ions”). The<br />
individual items include the assets received by the Bank in full or partial settlement <strong>of</strong> the debtors’ payment<br />
oblig<strong>at</strong>ions (assets foreclosed or don<strong>at</strong>ed in repayment <strong>of</strong> debt and recovery <strong>of</strong> lease finance transactions),<br />
unless the Bank has decided to make continued use <strong>of</strong> these assets. The Bank has units th<strong>at</strong> specialize in<br />
real est<strong>at</strong>e management and the sale <strong>of</strong> this type <strong>of</strong> asset.<br />
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