Balance Sheet at 31 December 2010 of BBVA

Translation of financial statements originally issued in Spanish and prepared in accordance with generally accounting principles Spain
(See Note 1 and 54). In the event of a discrepancy, the Spanish-language version prevails.
The recognized deferred tax assets and liabilities are reassessed by the Bank on each balance sheet date in
order to ascertain whether they still exist, and the appropriate adjustments are made on the basis of the
findings of the analyzes performed.
The income and expenses directly recognized in equity that do not increase or decrease taxable income are
accounted as temporary differences.
Deferred tax liabilities in relation to taxable temporary differences associated with investments in
subsidiaries, associates or jointly controlled entities are recognized as such, except where the Bank can
control the timing of the reversal of the temporary difference and it is unlikely that it will reverse in the
foreseeable future.
2.8. PROVISIONS, CONTINGENT ASSETS AND CONTINGENT LIABILITIES
The heading “Provisions” in the accompanying balance sheets includes amounts recognized to cover the
Bank’s current obligations arising as a result of past events. These are certain in terms of nature but
uncertain in terms of amount and/or cancellation date. The settlement of these obligations is deemed likely to
entail an outflow of resources embodying economic benefits (see Note 21). The obligations may arise in
connection with legal or contractual provisions, valid expectations that the Bank forms relating to third parties
in relation to the assumption of certain responsibilities or virtually certain developments of particular aspects
of applicable regulation, specifically draft legislation to which the Bank will certainly be subject.
Provisions are recognized in the balance sheet when each and every one of the following requirements is
met: The Bank has an existing obligation resulting from a past event and, on the balance sheet date, it is
more likely than not that the obligation will have to be settled; it is probable that to settle the obligation the
entity will have to give up resources embodying economic benefits; and a reliable estimate can be made of
the amount of the obligation. Among other items they include provisions for commitments to employees
mentioned in section 2.9, as well as provisions for tax and legal litigation.
Contingent assets are possible assets that arise from past events and whose existence is conditional on,
and will be confirmed only by the occurrence or non-occurrence of, events beyond the control of the Bank.
Contingent assets will not be recognized in the balance sheet or in the income statement; however, they will
be disclosed in the notes to the financial statements, provided that it is probable that these assets will give
rise to an increase in resources embodying economic benefits (see Note 31).
Contingent liabilities are possible Bank obligations that arise from past events and whose existence is
conditional on the occurrence or non-occurrence of one or more future events beyond the control of the
Bank. They include the existing obligations of the Bank when it is not probable that an outflow of resources
embodying economic benefits will be required to settle them or when, in extremely rare cases, their amount
cannot be measured with sufficient reliability (Note 31).
2.9. POST-EMPLOYMENT BENEFITS AND OTHER LONG-TERM COMMITMENTS TO EMPLOYEES
Below is a description of the most significant accounting criteria relating to the commitments to employees,
related to post-employment benefits and other commitments, of the Bank and branches abroad (Note 22).
Commitments valuation: actuarial assumptions and actuarial gains/losses recognition
The present values of the commitments are quantified on a case-by-case basis. Costs are calculated using
projected unit credit method, which sees each period of service as giving rise to an additional unit of
benefit/commitment and measures each unit separalely to build up the final obligation.
In adopting the actuarial assumptions, the following are taken into account:
• They are unbiased, in that they are not unduly aggressive nor excessively conservative.
• They are mutually compatible, reflecting the economic relationships between factors such as
inflation, rates of salary increase and discount rates.
• The future levels of salaries and benefits are based on market expectations on the balance sheet
date for the year over which the obligations are to be settled.
• The discount rate used is determined by reference to market yields on the financial statement date
on high-quality corporate bonds or debentures.
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