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

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Millions of Euros Valuation Adjustments Notes June December 2010 2009 Available-for-sale financial assets 12.4 462 1,951 Cash flow hedging 151 188 Hedging of net investments in foreign transactions (366) 219 Exchange differences 2.2.16 454 (2,236) Non-current assets held for sale - - Entities accounted for using the valuation method 143 (184) Other valuation adjustments - - Total 844 (62) The balances recognized under these headings are presented net of tax. 32. NON-CONTROLLING INTEREST The breakdown by consolidated company of the balance under the heading “Non-controlling interests” of total equity in the accompanying consolidated balance sheets was as follows: Millions of Euros Non-Controlling Interest June December 2010 2009 BBVA Colombia Group 33 30 BBVA Chile Group 321 280 BBVA Banco Continental Group 447 391 BBVA Banco Provincial Group 418 590 BBVA Banco Francés Group 130 127 Other companies 50 45 Total 1,399 1,463 These amounts are broken down by consolidated company under the heading “Net income attributed to noncontrolling interests” in the accompanying consolidated income statements: Millions of Euros Net Income atributed to Non-Controlling Interests June June 2010 2009 BBVA Colombia Group 4 3 BBVA Chile Group 45 34 BBVA Banco Continental Group 70 69 BBVA Banco Provincial Group 45 110 BBVA Banco Francés Group 16 22 Other companies 3 5 Total 183 243 33. CAPITAL BASE AND CAPITAL MANAGEMENT Capital base 108
Bank of Spain Circular 3/2008, of May 22, on the calculation and control of minimum capital base requirements, regulates the minimum capital base requirements for Spanish credit institutions –both as individual entities and as consolidated groups– and how to calculate them, as well as the various internal capital adequacy assessment processes they should have in place and the information they should disclose to the market. Circular 3/2008 implements Spanish legislation on capital base and consolidated supervision of financial institutions, as well as adapting Spanish law to the relevant European Union Directives, in compliance with the Accord adopted by the Basel Committee on Banking Supervision (Basel II). The minimum capital base requirements established by Circular 3/2008 are calculated according to the Group’s exposure to credit and dilution risk, counterparty and liquidity risk relating to the trading portfolio, exchange rate risk and operational risk. In addition, the Group must fulfill the risk concentration limits established in said Circular and the internal Corporate Governance obligations. As of June 30, 2010 and December 31, 2009, the Group's capital exceeded the minimum capital base level required by regulations in force on each date as shown below: Millions of Euros Capital Base June December 2010 2009 Basic equity 27,965 27,114 Common Stock 1,837 1,837 Parent company reserves 23,200 20,892 Reserves in consolidated companies 4,210 1,600 Non-controlling interests 1,274 1,245 Other equity instruments 7,224 7,130 Deductions (Goodwill and others) (11,200) (8,177) Attributed net income (less dividends) 1,420 2,587 Additional equity 12,101 12,116 Other deductions (3,605) (2,133) Additional equity due to mixed group (*) 1,287 1,305 Total Equity 37,748 38,402 Minimum equity required 24,769 23,282 (*) Mainly insurance companies in the Group. The results of the stress tests of European financial institutions, published as of July 23, 2010, suggest that the BBVA Group will maintain its current solvency levels in 2011, even in the most adverse scenario that incorporates the additional impact of a possible sovereign risk crisis. Capital management Capital management in the Group has a twofold aim: to preserve the level of capitalization, in accordance with the business objectives in all the countries in which it operates; and, at the same time, to maximize the return on shareholders’ funds through the efficient allocation of capital to the different units, good management of the balance sheet and appropriate use of the various instruments forming the basis of the Group's equity: stock, preferential stock and subordinate debt. This capital management is carried out in accordance with the criteria of the Bank of Spain Circular 3/2008, both in terms of determining the capital base and the solvency ratios. This regulation allows each entity to apply its own internal ratings based (IRB) approach to risk and capital management. The Group carries out an integrated management of these risks, in accordance with its internal policies (see Note 7) and its internal capital estimation model has received the Bank of Spain's approval for certain portfolios. Capital is allocated to each business area (see Note 6) according to economic risk capital (ERC) criteria, which are based on the concept of unexpected loss with a specific confidence level, as a function of a solvency target determined by the Group. This target is established at two levels: Core equity: adjusted core capital, which determines the allocated capital and serves as a reference to calculate the return generated 109
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BANCO BILBAO VIZCAYA ARGENTARIA, S.
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27. COMMON STOCK...................
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Translation of consolidated financi
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Millions of Euros LIABILITIES AND E
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Millions of Euros June June Notes 2
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The BBVA Group ICFR Model is summar
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2.2. ACCOUNTING POLICIES AND VALUAT
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- Other financial instruments The f
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In the case of unsecured transactio
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2.2.2. TRANSFERS AND DERECOGNITION
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The fair value of non-current asset
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2.2.7. BUSINESS COMBINATIONS The re
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insurees, as the case may be, based
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• The discount rate used is deter
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2.2.16. FOREIGN CURRENCY TRANSACTIO
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2.2.22. CONSOLIDATED STATEMENTS OF
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IFRIC 17 - Distributions of non-cas
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The Group’s activity is mainly lo
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Changes in the Group The most signi
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- In the denominator, the average n
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The breakdown of the consolidated n
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Management & Asset Allocation, Risk
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Maximum exposure to credit risk The
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debtors includes mortgages, cash gu
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Policies and procedures for prevent
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December 2009 Less than 6 Months Pa
Page 60 and 61: 7.2 MARKET RISK a) Market Risk Mark
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Page 66 and 67: Determining the fair value of finan
Page 68 and 69: Financial Instruments LEVEL 2 Valua
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Page 72 and 73: 10.2. DEBT SECURITIES The breakdown
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Page 84 and 85: 17.1. ASSOCIATES The following tabl
Page 86 and 87: 17.3. INFORMATION ABOUT ASSOCIATES
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Page 90 and 91: 21.3 RECONCILIATION The reconciliat
Page 92 and 93: 23. FINANCIAL LIABILITIES AT AMORTI
Page 94 and 95: Millions of Euros December 2009 Dem
Page 96 and 97: The item “Subordinated Liabilitie
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Page 102 and 103: Post-employments Benefits in Spain
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Page 106 and 107: during which to increase the common
Page 108 and 109: Reserves Assigned to the Consolidat
Page 112 and 113: on equity (ROE) by each business; a
Page 114 and 115: 39. INTEREST, INCOME AND SIMILAR EX
Page 116 and 117: 39.3. AVERAGE RETURN ON INVESTMENTS
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Page 124 and 125: 48. PROVISIONS (NET) The net allowa
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Page 128 and 129: The amount disposed of the loans gr
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Page 134 and 135: APPENDIX I. FINANCIAL STATEMENTS OF
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Outsanding as of June 30, 2010 of S
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APPENDIX IX. Consolidated balance s
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Diluted earnings per share Early re
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Other financial assets/liabilities
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The explanations of the changes in
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4. SUMMARIZED INTERIM CONSOLIDATED
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Spain and Portugal Millions of Euro
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Mexico Millions of Euros Mexico Jun
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South America Millions of Euros Sou
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The United States Millions of Euros
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Wholesale Banking and Asset Managem
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The changes in the principal headin
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Aggregating Tier I and Tier II, as
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BANCO BILBAO VIZCAYA ARGENTARIA, S.A. AND ... - BBVA

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