BANCO BILBAO VIZCAYA ARGENTARIA, S.A. AND ... - BBVA

Millions of Euros
Reserves. Breakdown by concepts
June December
2010 2009
Legal reserve 367 367
Restricted reserve for retired capital 88 88
Restricted reserve for Parent Company shares 835 501
Restricted reserve for redenomination of capital in euros 2 2
Revaluation Royal Decree-Law 7/1996 45 48
Voluntary reserves 4,358 2,918
Consolidation reserves attributed to the Bank and dependents
consolidated companies 8,899 8,150
Total 14,594 12,074
29.1. LEGAL RESERVE
Under the amended Corporations Act, 10% of any profit made each year must be transferred to the legal
reserve until the balance of this reserve reaches 20% of the share capital. This 20% minimum had already
been reached by Banco Bilbao Vizcaya Argentaria, S.A. as of June 30, 2010. The legal reserve can be used
to increase the share capital provided that the balance of the reserve does not fall below 10% of the
increased capital.
To the extent mentioned above, and until the legal reserve exceeds 20% of capital, it can only be used to
offset losses, provided that sufficient other reserves are not available for this purpose.
29.2. RESTRICTED RESERVES
Pursuant to the amended Spanish Corporations Act, a restricted reserve is recognized resulting from the
reduction of the nominal value of each share in April 2000, and another restricted reserve resulting from the
amount of treasury stock held by the Bank at each period-end, as well as by the amount of customer loans
outstanding at those dates that were granted for the purchase of, or are secured by, the Bank’s shares.
Finally, pursuant to Law 46/1998 on the introduction of the euro, a restricted reserve is recognized as a
result of the rounding effect of the redenomination of the share capital in euros.
29.3. REVALUATION OF ROYAL DECREE-LAW 7/1996 (REVALUATION AND REGULARIZATION OF
THE BALANCE SHEET)
Prior to the merger, Banco de Bilbao, S.A. and Banco de Vizcaya, S.A. availed themselves of the legal
provisions applicable to the regularization and revaluation of balance sheets. Thus, as of December 31,
1996, Banco Bilbao Vizcaya, S.A. revalued its tangible assets pursuant to Royal Decree-Law 7/1996 of June
7 by applying the maximum coefficients authorized, up to the limit of the market value arising from the
existing valuations.
Following the review of the balance of the “Revaluation Reserve pursuant to Royal Decree-Law 7/1996”,
June 7, account by the tax authorities in 2000, this balance could only be used, free of tax, to offset
recognized losses and to increase share capital until January 1, 2007. From that date, the remaining balance
of this account can also be allocated to unrestricted reserves, provided that the surplus has been
depreciated or the revalued assets have been transferred or derecognized. As of June 30, 2010 and
December 31, 2009, the balance of restricted reserves (not yet classified as unrestricted reserves) amounted
to €45 million and €48 million, respectively.
29.4. RESERVES AND LOSSES AT CONSOLIDATED COMPANIES
The breakdown, by company or corporate group, of the item “Reserves” in the accompanying consolidated
balance sheets is as follows:
105