BBVA in 2012

• Positive performance in the first quarter, as result of both the extraordinary measures adoptedby the ECB, including two long-term liquidity auctions, and improved risk perception inEuropean countries.• Less favorable performance from April to the summer months, due to doubts regarding theviability of the Spanish economy and the rating downgrades of sovereign debt and financialinstitutions.• Lastly, since the end of August and as a result of new measures adopted by the ECB with theoutright monetary transactions (OMT), the long-term funding markets have performed better,enabling top-level financial institutions like BBVA to resort to them on a recurring basis for theissue of both senior debt and covered bonds.Short-term funding markets have been affected by the lack of investor appetite as a result of therating downgrades, although the trend improved toward the end of the year, with growth in thevolume of amounts gathered.Against this background, BBVA has been one of the few European banks with access to themarket, as demonstrated by the successful issues completed in 2012. Thus, over the firstquarter, BBVA operated as usual, with an issue of senior debt for €2,000m. In the third quarter,the Group successfully completed several senior debt deals, with a very significant level ofdemand. Lastly, in the fourth quarter BBVA successfully completed two senior debt deals inEurope for a total of €2,500m, one senior debt deal in the US market for €2,000m and one5-year mortgage-covered bond deal for €2,000m, all with a very significant demand. Thisdemonstrates how BBVA is able to access the markets under very successful conditions interms of price and amount.The environment outside Europe has also been very constructive. BBVA has successfullycompleted issues in the Mexican and Peruvian markets, among others, and strengthened itsliquidity position in all the areas in which the Group operates.To sum up, BBVA’s proactive policy in its liquidity management, the growth in customer funds inall geographical areas, its proven ability to access the market in difficult environments, its retailbusiness model, its lower volume of debt redemptions compared with its peers and the relativelysmall size of its balance sheet, all give it a comparative advantage against its European peers.Moreover, the increased proportion of retail deposits on the liability side of the balance sheet in allthe geographical areas continues to strengthen the Group’s liquidity position and to improve itsfinancing structure.BBVA’s capital management has a twofold aim: to maintain the levels of capitalizationappropriate to the business targets in all the countries in which it operates and, at the sametime, to maximize the return on shareholders’ funds through the efficient allocation of capitalto the various units, good management of the balance sheet and proportionate use of thedifferent instruments that comprise the Group’s equity: common stock, preferred shares andsubordinated debt.The main highlights in 2012 as regards the Group’s capital management are summarized below:• In the first quarter of 2012, BBVA’s Annual General Meeting once more approved the “DividendOption” program, which offers shareholders a wider range of remuneration alternatives fortheir shares. Two of the four dividends paid out in 2012 have been paid under the “dividendoption” system and in both cases the success ratio has been close to 80%. This mechanismalso allows the Group to accumulate capital through a higher proportion of retained earningsin the current year.• In addition, March 30 marked the beginning of the period for voluntary conversion of theconvertible bonds issued in December 2011 as a result of an exchange of the preferred shares198 Business areas