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

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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 54
Impaired assets and impairment losses The table below shows the composition of the balance of impaired financial assets classified by heading in the balance sheet and the impaired contingent liabilities as of June 30, 2010 and December 31, 2009: Millions of Euros Impaired Risks. Breakdown by Type of Asset and by Sector June 2010 December 2009 Impaired Risks on Balance Available-for-sale 157 212 Debt securities 157 212 Loans and receivables 15,889 15,311 Loans and advances to credit institutions 91 100 Loans and advances to customers 15,782 15,197 Debt securities 16 14 Total Impaired Risks on Balance (1) 16,046 15,523 Goverment 81 87 Credit institutions 118 172 Other sectors 15,847 15,264 Mortgage 4,861 4,426 Rest of secured loans 1,940 1,663 Without secured loans 9,046 9,175 Total Impaired Risks on Balance (1) 16,046 15,523 Impaired Risks Off Balance (2) - - Impaired contingent liabilities 355 405 TOTAL IMPAIRED RISKS (1)+(2) 16,401 15,928 The estimated value of assets used as security for impaired assets with secured loans as of June 30, 2010 and December 31, 2009 was higher than the outstanding amount of those assets. The changes for the six months ended June 30, 2010 and 2009 in the impaired financial assets and contingent liabilities were as follows: Millions of Euros Changes in Impaired Financial Assets and Contingent Liabilities June June 2010 2009 Balance at the beginning 15,928 8,859 Additions (1) 6,242 7,617 Recoveries (2) (4,468) (2,878) Net additions (1)+(2) 1,774 4,739 Transfers to write-off (1,919) (1,505) Exchange differences and others 618 85 Balance at the end 16,401 12,178 Recoveries on entries (%) 72 38 Below are details of the impaired financial assets as of June 30, 2010 and December 31, 2009, classified by geographical location of risk and by the time since their oldest past-due amount or the period since they were deemed impaired: June 2010 Less than 6 Months Past-Due 6 to 12 Months Past-Due Millions of Euros 12 to 18 Months Past-Due 18 to 24 Months Past-Due More than 24 Months Past-Due Spain 3,577 1,684 1,638 1,804 2,780 11,483 Rest of Europe 96 17 17 8 34 172 Latin America 1,388 102 87 96 576 2,249 The United States 1,879 - - - 259 2,138 Rest of the world - - - - 4 4 Total 6,940 1,803 1,742 1,908 3,653 16,046 Total 55
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BANCO BILBAO VIZCAYA ARGENTARIA, S.
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27. COMMON STOCK...................
Page 6 and 7: Translation of consolidated financi
Page 8 and 9: Millions of Euros LIABILITIES AND E
Page 10 and 11: Millions of Euros June June Notes 2
Page 16 and 17: BANCO BILBAO VIZCAYA ARGENTARIA, S.
Page 18 and 19: The BBVA Group ICFR Model is summar
Page 20 and 21: 2.2. ACCOUNTING POLICIES AND VALUAT
Page 22 and 23: - Other financial instruments The f
Page 24 and 25: In the case of unsecured transactio
Page 26 and 27: 2.2.2. TRANSFERS AND DERECOGNITION
Page 28 and 29: The fair value of non-current asset
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Page 32 and 33: insurees, as the case may be, based
Page 34 and 35: • The discount rate used is deter
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Page 38 and 39: 2.2.22. CONSOLIDATED STATEMENTS OF
Page 40 and 41: IFRIC 17 - Distributions of non-cas
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Page 50 and 51: Management & Asset Allocation, Risk
Page 52 and 53: Maximum exposure to credit risk The
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Page 58 and 59: 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
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Page 72 and 73: 10.2. DEBT SECURITIES The breakdown
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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
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Page 96 and 97: The item “Subordinated Liabilitie
Page 98 and 99: The breakdown of the commitments pe
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Page 102 and 103: Post-employments Benefits in Spain
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during which to increase the common
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Reserves Assigned to the Consolidat
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Millions of Euros Valuation Adjustm
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on equity (ROE) by each business; a
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39. INTEREST, INCOME AND SIMILAR EX
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39.3. AVERAGE RETURN ON INVESTMENTS
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41. SHARE OF PROFIT OR LOSS OF ENTI
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45. OTHER OPERATING INCOME AND EXPE
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linked to the movement of the Total
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48. PROVISIONS (NET) The net allowa
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The table below breaks down the mai
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The amount disposed of the loans gr
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BBVA executive team. It is to end o
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Commission (CNMV) announced the lif
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APPENDIX I. FINANCIAL STATEMENTS OF
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Millions of Euros LIABILITIES AND E
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Millions of Euros (Continued) June
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APPENDIX II. Additional information
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APPENDIX III. Additional informatio
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APPENDIX V. Changes and notificatio
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APPENDIX VI. Fully consolidated sub
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APPENDIX VIII. Breakdown of the mos
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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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BANCO BILBAO VIZCAYA ARGENTARIA, S.
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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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