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

Policies and procedures for preventing excessive risk concentration
In order to prevent the build-up of excessive concentrations of credit risk at the individual, country and sector
levels, the Group oversees updated risk concentration indices at the individual and portfolio levels tied to the
various observable variables within the field of credit risk management. The limit on the Group’s exposure or
share of a customer’s financial business therefore depends on the customer’s credit rating, the nature of the
facility, and the Group’s presence in a given market, based on the following guidelines:
• The need to balance the customer’s financing needs, broken down by type (commercial/financial,
short/long-term, etc.). This approach provides a better operational mix that is still compatible with the
needs of the bank's clientele.
• Other determining factors are national legislation and the ratio between the size of customer lending and
the Bank’s equity (to prevent risk from becoming overly concentrated among few customers). Additional
factors taken into consideration include constraints related to market, customer, internal regulation and
macroeconomic factors, etc.
• Meanwhile, correct portfolio management leads to identification of risk concentrations and enables
appropriate action to be taken.
Operations with customers or groups that entail an expected loss plus economic capital of over €18 million
are approved at the highest level, i.e., by the Board Risk Committee. As a reference, this is equivalent in
terms of exposure to 10% of eligible equity for AAA and to 1% for a BB rating, implying oversight of the major
individual risk concentrations by the highest-level risk governance bodies as a function of credit ratings.
There is additional guideline in terms of a maximum risk concentration level of up to and including 10% of
equity: up to this level there are stringent requirements in terms of in-depth knowledge of the client, its
operating markets and sectors of operation.
Financial assets past due but not impaired
The table below provides details of financial assets past due as of June 30, 2010 and December 31, 2009,
but not considered to be impaired, listed by their first due date:
Millions of Euros
Financial Assets Past Due but Not Impaired
June December
2010 2009
Less than 1 month 1,494 2,653
1 to 2 months 465 336
2 to 3 months 356 311
Total 2,315 3,300
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