BANCO BILBAO VIZCAYA ARGENTARIA, S.A. AND ... - BBVA
BANCO BILBAO VIZCAYA ARGENTARIA, S.A. AND ... - BBVA
BANCO BILBAO VIZCAYA ARGENTARIA, S.A. AND ... - BBVA
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If there is control based on the preceding guidelines, the securitization funds are integrated into the<br />
consolidated Group.<br />
The consolidated Group is deemed to transfer substantially all risks and rewards if its exposure to the<br />
potential variation in the future net cash flows of the securitized assets following the transfer is not<br />
significant. In this instance, the consolidated Group may derecognize the securitized assets.<br />
The <strong>BBVA</strong> Group has applied the most stringent prevailing criteria in determining whether or not it retains the<br />
risks and rewards on such assets for all securitizations performed since 1 January 2004. As a result of this<br />
analysis, the Group has concluded that none of the securitizations undertaken since that date meet the<br />
prerequisites for derecognizing the underlying assets from the consolidated balance sheets (see Note 13.3<br />
and Appendix VII) as it retains substantially all the risks embodied by expected loan losses or associated<br />
with the possible variation in net cash flows, as it retains the subordinated loans and lines of credit extended<br />
by the <strong>BBVA</strong> Group to these securitization funds.<br />
2.2.3. FINANCIAL GUARANTEES<br />
Financial guarantees are considered those contracts that oblige their issuer to make specific payments to<br />
reimburse the lender for a loss incurred when a specific borrower breaches its payment obligations on the<br />
terms – whether original or subsequently modified – of a debt instrument, irrespective of the legal form it may<br />
take. These guarantees may take the form of a deposit, financial guarantee, insurance contract or credit<br />
derivative, among others.<br />
Financial guarantees, irrespective of the guarantor, instrumentation or other circumstances, are reviewed<br />
periodically so as to determine the credit risk to which they are exposed and, if appropriate, to consider<br />
whether a provision is required for them. The credit risk is determined by application of criteria similar to<br />
those established for quantifying impairment losses on debt instruments measured at amortized cost (see<br />
Note 2.2.1).<br />
The provisions made for financial guarantees classified as substandard are recognized under the heading<br />
“Provisions - Provisions for contingent exposures and commitments” in the liability side in the accompanying<br />
consolidated balance sheets (see Note 25). These provisions are recognized and reversed with a charge or<br />
credit, respectively, to “Provisions” in the accompanying consolidated income statements (see Note 48).<br />
Income from guarantee instruments is recorded under the heading “Fee and commission income” in the<br />
consolidated income statement and is calculated by applying the rate established in the related contract to<br />
the nominal amount of the guarantee (see Note 42).<br />
2.2.4. NON-CURRENT ASSETS HELD FOR SALE <strong>AND</strong> LIABILITIES ASSOCIATED WITH NON-<br />
CURRENT ASSETS HELD FOR SALE<br />
The heading “Non-current assets held-for-sale” in the accompanying consolidated balance sheets<br />
recognized the carrying amount of financial or non-financial assets that are not part of operating activities of<br />
the Group. The recovery of this carrying amount is expected to take place through the price obtained on its<br />
disposal (see Note 16). The assets included under this heading are assets where an active sale plan has<br />
been initiated and approved at the appropriate level of management and it is highly probable they will be sold<br />
in their current condition within one year from the date on which they are classified as such.<br />
This heading includes individual items and groups of items (“disposal groups”) and disposal groups that form<br />
part of a major business unit and are being held for sale as part of a disposal plan (“discontinued<br />
operations”). The individual items include the assets received by the subsidiaries from their debtors in full or<br />
partial settlement of the debtors’ payment obligations (assets foreclosed or donated in repayment of debt<br />
and recovery of lease finance transactions), unless the Group has decided to make continued use of these<br />
assets. The Group has units that specialize in real estate management and the sale of this type of asset.<br />
Symmetrically, the heading “Liabilities associated with non-current assets held for sale” in the accompanying<br />
consolidated balance sheets reflects the balances payable arising from disposal groups and discontinued<br />
operations.<br />
Non-current assets held for sale are generally measured at fair value less sale costs or their carrying amount<br />
upon classification within this category, whichever is the lower. Non-current assets held for sale are not<br />
depreciated while included under this heading.<br />
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