BBVA in 2012

22 Real-estate exposure and coverage in Spain(Million euros)27,417Total real-estateexposure21,91621,6264340Total provisionsCoverage (%)183,88920115,791548,69111,8283,1372012 ex Unnim Unnim contribution 2012 BBVA GroupRefinancing and restructuring operationsBBVA’s business model is to forge and maintain lasting relationships with its customers.Because of this, the basic goal of a refinanced or restructured operation is to provide thecustomer with a lasting financial viability over time to face temporary difficulties, and to adaptdebt repayments to the Bank to the customer’s new situation of fund generation. In otherwords, this tool is used to resolve problems of temporary liquidity, and not of solvency, thatBank customers may have with the Bank at any given time. Refinancing and restructuring aretherefore a management tool; its use for other purposes, such as delaying loss recognition,is against the BBVA Group’s policy. It should be noted that BBVA has always had each of therefinancing/restructuring operations it has carried out duly identified and classified. A detailedfollow-up is conducted and, depending on their evolution, the Group’s philosophy on this matteris to classify refinancing risks as non-performing, substandard or performing loans, accordingto the following features:• Although the customers may be up to date with payments, these operations are classified asimpaired for reasons other than default, when there are significant doubts regarding whetherthe terms of the refinancing will be met.• They are classified as substandardloans when there is some material uncertainty regarding apossible non-compliance.• Finally, the others are considered performing risk. However, it should be noted that evenif they are considered performing risk, they are classified as performing risk with specialmonitoring.Expected lossesExpected losses in the performing portfolio, expressed in consolidated terms and adjusted tothe economic cycle average, stood at €3,859m as of the close of December 2012, a year-on-yearincrease of 10.2% on comparable data. In attributable terms, and also not including the nonperformingportfolio, the expected losses as of December 2012 stood at €3,541m, 9.0% higher thanthe previous year, on comparable data.The BBVA Group main portfolios show expected losses and economic capital as are detailed in thetable Risk statistics for the BBVA Group’s main performing portfolios”.Credit risk105