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 />
II. unm<strong>at</strong>ured non-hedging forward foreign currency purchase and sale transactions, which are transl<strong>at</strong>ed<br />
<strong>at</strong> the exchange r<strong>at</strong>es on the forward currency market <strong>at</strong> the end <strong>of</strong> each period published by the Bank<br />
<strong>of</strong> Spain for this purpose.<br />
The breakdown <strong>of</strong> the balances in foreign currencies <strong>of</strong> the balance sheet as <strong>of</strong> <strong>December</strong> <strong>31</strong>, <strong>2010</strong> and<br />
2009, based on the most significant foreign currencies, are set forth in Appendix X.<br />
Structural currency positions<br />
As a general policy, the Bank’s investments in foreign subsidiaries and the endowment funds provided to<br />
branches abroad are financed in the same currency as the investment in order to elimin<strong>at</strong>e the future<br />
exchange risk arising from these transactions. However, the investments made in countries whose<br />
currencies do not have a market which permits the obtainment <strong>of</strong> unlimited, lasting and stable financing <strong>at</strong><br />
long-term are financed in another currency.<br />
2.14. RECOGNITION OF INCOME AND EXPENSES<br />
The most significant criteria used by the Bank to recognize its income and expenses are summarized as<br />
follows:<br />
Interest income and expenses and similar items<br />
As a general rule, interest income and expenses and similar items are recognized on the basis <strong>of</strong> their period<br />
<strong>of</strong> accrual using the effective interest r<strong>at</strong>e method. Specifically, the financial fees and commissions th<strong>at</strong> arise<br />
on the arrangement <strong>of</strong> loans, basically origin<strong>at</strong>ion and analysis fees, must be deferred and recognized in the<br />
income st<strong>at</strong>ement over the expected life <strong>of</strong> the loan. The direct costs incurred in arranging these transactions<br />
can be deducted from the amount thus recognized. Bank <strong>of</strong> Spain’s Circular 4/2004 and subsequent<br />
amendments establishes th<strong>at</strong>, when there are no analytic accounting d<strong>at</strong>a to determine those direct costs,<br />
they can be compens<strong>at</strong>ed with the arrangement commission up to a 0.4% <strong>of</strong> the amount <strong>of</strong> the loan with a<br />
maximum limit <strong>of</strong> €400 per oper<strong>at</strong>ion, which will be credited on the d<strong>at</strong>e <strong>of</strong> arrangement to the heading<br />
“Other oper<strong>at</strong>ing income” <strong>of</strong> the accompanying income st<strong>at</strong>ements and will diminish the aforementioned<br />
accrued commissions.<br />
On the other hand, dividends received from other companies are recognized as income when the Bank’ right<br />
to receive them arises.<br />
However, when a debt instrument is deemed to be impaired individually or is included in the c<strong>at</strong>egory <strong>of</strong><br />
instruments th<strong>at</strong> are impaired because <strong>of</strong> amounts more than three months past-due, the recognition <strong>of</strong><br />
accrued interest in the income st<strong>at</strong>ement is interrupted. This interest is recognized for accounting purposes<br />
as income, as soon it is received, from the recovery <strong>of</strong> the impairment loss.<br />
Commissions, fees and similar items<br />
Income and expenses rel<strong>at</strong>ing to commissions and similar fees are recognized in the income st<strong>at</strong>ement<br />
using criteria th<strong>at</strong> vary according to their n<strong>at</strong>ure. The most significant income and expense items in this<br />
connection are:<br />
• Those rel<strong>at</strong>ing to financial assets and liabilities measured <strong>at</strong> fair value through pr<strong>of</strong>it or loss, which<br />
are recognized when collected.<br />
• Those arising from transactions or services th<strong>at</strong> are provided over a period <strong>of</strong> time, which are<br />
recognized over the life <strong>of</strong> these transactions or services.<br />
• Those rel<strong>at</strong>ing to a single act, which is recognized when the single act is carried out.<br />
Non-financial income and expenses<br />
These are recognized for accounting purposes on an accrual basis.<br />
Deferred collections and payments<br />
These are recognized for accounting purposes <strong>at</strong> the amount resulting from discounting the expected cash<br />
flows <strong>at</strong> market r<strong>at</strong>es.<br />
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