Consolidated Financial Statements

Consolidated
Financial Statements
twenty12

Contents
Auditor's Report................................................................................................................4
Consolidated Balance Sheets............................................................................................5
Consolidated Income Statements....................................................................................6
Consolidated Statements of Comprehensive Income......................................................7
Comprehensive Statements of Changes in Consolidated Equity...................................8
Consolidated Statements of Cash Flows........................................................................10
1 Nature, activities and composition of the Group.......................................................11
2 Accounting principles used........................................................................................11
3 Distribution of earnings for the year.........................................................................18
4 Deposit Guarantee Fund.............................................................................................19
5 Accounting standards and valuation rules applied...................................................20
6 Cash and balances with central banks.......................................................................36
7 Trading portfolio of assets and liabilities and Other financial assets
and liabilities at fair value with changes through profit and loss............................37
8 Available-for-sale financial assets..............................................................................39
9 Held-to-maturity investments....................................................................................40
10 Loans and receivables................................................................................................41
11 Asset and liability hedging derivatives.....................................................................44
12 Non-current assets held for sale................................................................................47
13 Investments in associates...........................................................................................48
14 Property, plant and equipment..................................................................................53
15 Intangible assets.........................................................................................................54
16 Reinsurance assets.....................................................................................................54
17 Tax assets and liabilities............................................................................................55
18 Other assets and liabilities.........................................................................................56
19 Financial liabilities at amortised cost........................................................................56
20 Liabilities under insurance contracts.........................................................................65
21 Provisions...................................................................................................................67
22 Equity.........................................................................................................................68
23 Valuation adjustments (equity) ................................................................................73
24 Contingent risks and commitments...........................................................................74
25 Transfers of financial assets.......................................................................................74
26 Other memorandum accounts - financial derivatives...............................................77
27 Personnel expenses....................................................................................................77
28 Fee income and expense............................................................................................83
29 Interest and similar charges/income..........................................................................84
30 Gains/Losses on financial transactions......................................................................85
31 Exchange differences (net) .......................................................................................85
32 Other general administrative expenses.....................................................................86
33 Other operating income and expenses......................................................................86
34 Gains and losses on derecognition of assets not classified as non-current
assets held for sale and gains and losses on non-current assets held for sale
not classified as discontinued operations..................................................................87
35 Transactions and balances with related parties .......................................................87
36 Remuneration and balances with members of the Board of Directors.....................87
37 Environmental information.......................................................................................93
38 Customer Support service...........................................................................................94
39 Branches, centres and agents....................................................................................96
40 Fiduciary business and investment services.............................................................96
41 Auditors’ remuneration..............................................................................................97
42 Tax situation...............................................................................................................97
43 Assets and liabilities valued other than at fair value..............................................101
44 Risk policies and management................................................................................101
45 Information by segments.........................................................................................119
46 Equity holdings in credit institutions......................................................................119
47 Information required under Act 2/1981, of 25 March, on Mortgage Market
Regulation and under Royal Decree 719/2009, of 24 April, which implements
certain aspects of said law.......................................................................................119
48 Exposure to the construction and property development sector............................129
49 Additional information on risks: refinancing and restructuring
transactions. Geographical and sector risk concentration.......................................132
50 Events after the reporting period............................................................................138
Appendices
I Transactions with related parties............................................................................139
II Information by segment...........................................................................................143
III Financial Statements of Bankinter, S.A...................................................................147
IV Individualised information on certain issues, buybacks or reimbursements
of debt securities......................................................................................................153
MANAGEMENT REPORT...............................................................................................159

Bankinter Group
Consolidated annual financial
on the year ended
ended 31 December 2012 and
Consolidated Management Report
and Audit Report
3
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

4
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

BANKINTER GROUP, CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2012 AND 2011 (€000s)
ASSETS Note 31/12/2012 31/12/2011 (*) LIABILITIES AND EQUITY Note 31/12/2012 31/12/2011 (*)
CASH AND BALANCES WITH CENTRAL BANKS 6 665,374 412,795 LIABILITIES
FINANCIAL ASSETS HELD FOR TRADING 7 2,109,264 2,415,506 FINANCIAL LIABILITIES HELD FOR TRADING 7 1,797,324 2,360,584
Debt instruments 1,391,681 1,768,879 Trading derivatives 434,592 857,273
Equity instruments 61,072 101,733 Short positions in securities 1,362,732 1,503,311
Trading derivatives 656,511 544,894
Memorandum items: Loaned or advanced as collateral 1,391,681 1,768,879 OTHER FINANCIAL LIABILITIES AT FAIR VALUE
OTHER FINANCIAL ASSETS AT FAIR WITH CHANGES IN PROFIT AND LOSS 7 - -
VALUE THROUGH PROFIT OR LOSS 7 39,860 31,377 Customer deposits - -
Equity instruments 39,860 31,377 FINANCIAL LIABILITIES AT AMORTISED
Memorandum items: Loaned or advanced as collateral - - COST 19 52,079,071 52,929,285
Deposits from central banks 9,580,854 7,006,897
AVAILABLE-FOR-SALE FINANCIAL ASSETS 8 6,132,471 4,776,069 Deposits from credit institutions 4,008,226 3,260,647
Debt instruments 5,971,654 4,644,306 Customer deposits 24,631,869 25,505,317
Equity instruments 160,817 131,763 Marketable debt securities 12,499,194 15,540,242
Memorandum items: Loaned or advanced as collateral 1,719,346 3,074,142 Subordinated liabilities 767,852 958,170
Other financial liabilities 591,076 658,012
LOANS AND RECEIVABLES 10 44,751,950 47,167,367
Deposits with credit institutions 1,093,728 1,779,395 MACRO-HEDGING ADJUSTMENTS TO - -
Loans and advances to customers 43,575,351 45,387,972 FINANCIAL LIABILITIES
Debt instruments 82,871 -
Memorandum items: Loaned or advanced as collateral 414,953 950,667 HEDGING DERIVATIVES 11 43,100 68,677
HELD TO MATURITY INVESTMENTS 9 2,755,355 3,150,930 LIABILITIES ASSOCIATED WITH NON-CURRENT ASSETS HELD FOR SALE - -
Memorandum items: Loaned or advanced as collateral - -
LIABILITIES UNDER INSURANCE CONTRACTS 20 618,286 642,782
MACRO-HEDGING ADJUSTMENTS TO FINANCIAL ASSETS 11 3,018 11,463 PROVISIONS 21 48,200 64,122
Pension funds and similar obligations 2,811 5,245
HEDGING DERIVATIVES 11 152,201 118,651 Provisions for contingent risks and commitments 5,139 20,626
Other provisions 1,899 38,251
NON-CURRENT ASSETS HELD FOR SALE 12 381,141 308,514 Allowances for taxes and other legal contingencies 38,351 -
INVESTMENTS 13 40,600 28,341 TAX LIABILITIES 17 221,565 189,555
Associates 40,279 26,301 Current 73,636 70,572
Jointly controlled entities 321 2,040 Deferred 147,929 118,983
PENSION-LINKED INSURANCE AGREEMENTS 27 2,750 5,140 OTHER LIABILITIES 18 127,247 149,425
REINSURANCE ASSETS 16 3,966 3,928 TOTAL LIABILITIES 54,934,793 56,404,430
TANGIBLE ASSETS 14 442,288 466,901 EQUITY 3,231,097 3,086,996
Property, plant and equipment 433,336 466,901 EQUITY 22 3,228,045 3,118,641
For internal use 404,087 435,354 Capital 169,142 143,076
Assigned on lease 29,249 31,547 Registered 169,142 143,076
Real estate investments 8,952 - Issue premium 1,118,186 737,079
Memorandum item: acquired under finance lease - - Reserves 1,789,781 1,711,705
Accumulated reserves (losses) 1,784,859 1,700,635
INTANGIBLE ASSETS 15 317,538 338,040 Accumulated reserves (losses) of entities accounted for using the equity method 4,922 11,070
Goodwill
161,836 161,836 Other equity instruments 72,633 404,812
Other intangible assets 155,702 176,204 Remaining equity instruments 72,633 404,812
TAX ASSETS 17 235,489 159,271 Less: treasury shares (226) (742)
Current 86,953 55,742 Profit (loss) attributable to owners of the parent company 124,654 181,227
Deferred 148,536 103,529 Less: dividends and remuneration (46,125) (58,516)
OTHER ASSETS 18 132,625 97,132 VALUATION ADJUSTMENTS 23 3,052 (31,645)
Other 132,625 97,132 Financial assets available for sale 3,145 (29,248)
Exchange differences 209 206
Other valuation adjustments - -
Entities valued under the equity method (302) (2,603)
MINORITY INTERESTS
TOTAL ASSETS 58,165,890 59,491,426 TOTAL LIABILITIES AND EQUITY 58,165,890 59,491,426
MEMORANDUM ITEMS:
CONTINGENT RISKS 24 2,482,865 2,439,670
CONTINGENT COMMITMENTS 24 11,239,659 9,208,807
(*) Shown solely for purposes of comparison
Notes 1 to 49 contained in the report and Appendices I to IV form an integral part of the consolidated balance sheet as at 31 December 2012.
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Bankinter
Bankinter Group Consolidated Annual Accounts 2012

BANKINTER GROUP, CONSOLIDATED INCOME STATEMENT FOR THE YEARS ENDED 31 DECEMBER 2012 AND 2011 (€000s)
(Debit) Credit
Note 2012 2011 (*)
INTEREST AND SIMILAR INCOME 29 1,707,696 1,636,295
INTEREST EXPENSE AND SIMILAR CHARGES 29 (1,047,441) (1,093,620)
NET INTEREST INCOME 660,255 542,675
INCOME FROM EQUITY INSTRUMENTS 11,791 16,491
SHARE OF RESULTS OF ENTITIES ACCOUNTED FOR USING THE EQUITY METHOD 22 17,677 14,675
FEES AND COMMISSIONS INCOME 28 274,455 265,641
FEES AND COMMISSIONS EXPENSE 28 (70,615) (66,758)
GAINS / LOSSES ON FINANCIAL ASSETS AND LIABILITIES (net) 30 104,853 59,162
Held for trading 30,510 11,910
Other financial assets at fair value through profit and loss account (1,952) 97
Financial instruments not measured at fair value through profit and loss account 76,902 45,987
Other (607) 1,168
EXCHANGE DIFFERENCES (net) 31 40,277 38,678
OTHER OPERATING INCOME 33 698,173 716,231
Income from insurance and reinsurance policies issued 667,712 686,960
Other operating income 30,461 29,271
OTHER OPERATING EXPENSES 33 (482,825) (482,315)
Expenses on insurance and reinsurance policies (404,997) (455,442)
Other operating expenses (77,828) (26,873)
GROSS INCOME 1,254,041 1,104,480
ADMINISTRATIVE COST (599,004) (580,822)
Personnel expenses 27 (342,498) (329,965)
Other general administrative expenses 32 (256,506) (250,857)
DEPRECIATION AND AMORTISATION 14/15 (65,865) (64,097)
PROVISIONS (NET) 21 (21) (28,175)
IMPAIRMENT LOSSES ON FINANCIAL ASSETS (NET) (419,028) (158,229)
Loans and receivables 10 (410,356) (156,196)
Other financial instruments not measured at fair value through profit and loss account 8 (8,672) (2,033)
PROFIT FROM OPERATIONS 170,123 273,157
IMPAIRMENT LOSSES ON OTHER ASSETS (net) (536) (1,244)
Goodwill and other intangible assets
Other assets (536) (1,244)
GAINS / LOSSES ON DERECOGNITION OF ASSETS NOT CLASSIFIED AS NON-CURRENT ASSETS HELD FOR SALE 34 39,301 25,205
NEGATIVE GOODWILL ON BUSINESS COMBINATIONS - -
GAINS / LOSSES ON NON-CURRENT ASSETS HELD FOR SALE NOT CLASSIFIED AS DISCONTINUED OPERATIONS 34 (54,709) (56,970)
PROFIT BEFORE TAX 154,179 240,148
INCOME TAX 42 (29,525) (58,921)
PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS 124,654 181,227
PROFIT (LOSS) FROM DISCONTINUED OPERATIONS (net) - -
CONSOLIDATED PROFIT FOR THE YEAR 124,654 181,227
Profit (loss) attributable to owners of the parent company 124,654 181,227
Profit (loss) attributable to non-controlling interests
EARNINGS PER SHARE
Basic earnings (euros) 0.24 0.38
Diluted earnings (euros) 0.23 0.35
(*) Shown solely for purposes of comparison
Notes 1 to 49 contained in the report and Appendices I to IV form an integral part of the consolidated balance sheet as at 31 December 2012.
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Bankinter
Bankinter Group Consolidated Annual Accounts 2012

BANKINTER GROUP, COMPREHENSIVE STATEMENTS OF CONSOLIDATED INCOME FOR THE YEARS ENDED 31 DECEMBER 2012 AND 2011(€000s)
Financial year
2012
Financial year
2011 (*)
CONSOLIDATED PROFIT FOR THE YEAR 124,654 181,227
OTHER COMPREHENSIVE INCOME 34,697 (8,852)
Financial assets available for sale 46,275 (8,934)
Gains (losses) on valuation 72,655 (3,202)
Amounts transferred to profit and loss (26,380) (5,732)
Other reclassifications - -
Cash flow hedging - -
Gains (losses) on valuation - -
Amounts transferred to profit and loss - -
Amounts transferred to the initial value of hedged items - -
Other reclassifications - -
Hedging of net investments in foreign operations - -
Gains (losses) on valuation - -
Amounts transferred to profit and loss - -
Other reclassifications
Exchange differences 2 7
Gains (losses) on translation 2 71
Amounts transferred to profit and loss - (64)
Other reclassifications - -
Non-current assets for sale - -
Gains (losses) on valuation - -
Amounts transferred to profit and loss - -
Other reclassifications - -
Actuarial gains (losses) on pension plans - -
Entities accounted for using the equity method 2,302 (2,603)
Gains (losses) on valuation 2,302 (2,603)
Amounts transferred to profit and loss - -
Other reclassifications - -
Statement of comprehensive income - -
Income tax (13,882) 2,678
TOTAL COMPREHENSIVE INCOME 159,351 172,375
Attributable to owners of the parent company 159,351 172,375
Attributable to non-controlling interests - -
(*) Shown solely for purposes of comparison
Notes 1 to 49 contained in the report and Appendices I to IV form an integral part of the consolidated balance sheet as at 31 December 2012.
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Bankinter
Bankinter Group Consolidated Annual Accounts 2012

BANKINTER GROUP, COMPREHENSIVE STATEMENTS OF CHANGES IN CONSOLIDATED EQUITY FOR THE YEARS ENDED 31 DECEMBER 2012 AND 2011 (€000s)
Capital
Issue
premium
Accumulated
reserves
(losses)
EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT COMPANY
Other equity
instruments
EQUITY
Less:
Treasury
Shares
End-of-year
results
attributed
to the
parent
company
Less:
Dividends and
remunerations
Total Equity
Valuation
adjustments
Total
Noncontrolling
interests
Opening balance at 31/12/2011 143,076 737,079 1,711,705 404,812 (742) 181,227 (58,516) 3,118,641 (31,645) 3,086,996 - 3,086,996
Adjustments due to changes in accounting criteria - - - - - - - - - - -
Adjustments due to errors - - - - - - - - - - -
Adjusted opening balance 143,076 737,079 1,711,705 404,812 (742) 181,227 (58,516) 3,118,641 (31,645) 3,086,996 - 3,086,996
Total comprehensive income - - - - 124,654 - 124,654 34,697 159,351 - 159,351
Other changes in equity 26,066 381,107 78,076 (332,179) 516 (181,227) 12,391 (15,250) - (15,250) - (15,250)
Increases in capital/endowment fund 26,066 381,107 - (332,179) - - - 74,994 - 74,994 - 74,994
Capital reductions - - - - - - - - - - -
Conversion of financial liabilities into capital - - - - - - - - - - - -
Increases in other equity instruments - - - - - - - - - - - -
Reclassification of financial liabilities to other equity instruments - - - - - - - - - - -
Reclassification of other equity instruments to financial liabilities - - - - - - - - - - -
Distribution of dividends / Shareholder remuneration - - - - - (64,496) (64,496) - (64,496) - (64,496)
Operations with shares / contributions to equity (net) - - 1,119 516 - - 1,635 - 1,635 - 1,635
Transfer between net worth entries - - 104,340 - (181,227) 76,887 - - - - -
Increases (reductions) in equity due to business combinations
(net) - - - - - - - -
Discretionary contributions to social funds and projects (Savings
banks) - - - - - -
-
Total net
worth
- - - -
Payments with equity instruments - - (27,383) - - - (27,383) - (27,383) - (27,383)
Other increases (reductions) in equity - - - - - - - - - -
Closing balance as at 31/12/2012 169,142 1,118,186 1,789,781 72,633 (226) 124,654 (46,125) 3,228,045 3,052 3,231,096 - 3,231,096
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Bankinter
Bankinter Group Consolidated Annual Accounts 2012

BANKINTER GROUP, COMPREHENSIVE STATEMENTS OF CHANGES IN CONSOLIDATED EQUITY FOR THE YEARS ENDED 31 DECEMBER 2012 AND 2011 (€000s)
Capital
Issue
premium
Accumulated
reserves
(losses)
EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT COMPANY
Other equity
instruments
EQUITY
Less:
Treasury
Shares
End-of-year
results
attributed to
the parent
company
Less:
Dividends and
remunerations
Valuation
adjustments
Opening balance at 31/12/2010 142,034 737,079 1,648,910 - (1,753) 150,730 (74,512) 2,602,488 (22,793) 2,579,695 - 2,579,695
Adjustments due to changes in accounting criteria - - - - - - - - - - -
Adjustments due to errors - - - - - - - - - - -
Adjusted opening balance 142,034 737,079 1,648,910 - (1,753) 150,730 (74,512) 2,602,488 (22,793) 2,579,695 - 2,579,695
Total comprehensive income - - - - 181,227 - 181,227 (8,852) 172,375 - 172,375
Other changes in equity 1,042 62,795 404,812 1,011 (150,730) 15,996 334,926 - 334,926 - 334,926
Total
Equity
Total
Noncontrolling
interests
Increases in capital/endowment fund 1,042 (1,042) - - - - -
Capital reductions - - - - - - - - - - -
Conversion of financial liabilities into capital - - - 175,000 - - - 175,000 - 175,000 - 175,000
Increases in other equity instruments - - - 229,812 - - - 229,812 - 229,812 - 229,812
Reclassification of financial liabilities to other equity
instruments
Reclassification of other equity instruments to financial
liabilities
Total net
worth
- - - - - - - - - - -
- - - - - - - - - - -
Distribution of dividends / Shareholder remuneration - - - - - (58,516) (58,516) - (58,516) - (58,516)
Operations with shares / contributions to equity (net) - - 390 1,011 - - 1,401 - 1,401 - 1,401
Transfer between net worth entries - - 76,218 - (150,730) 74,512 - - - - -
Increases (reductions) in equity due to business combinations
(net)
Discretionary contributions to social funds and projects (Savings
banks)
- - - - - - - -
- - - - - - - - - - -
Payments with equity instruments - - (12,771) - - - (12,771) - (12,771) - (12,771)
Other increases (reductions) in equity - - - - - - - - - -
Closing balance as at 31/12/2011 143,076 737,079 1,711,705 404,812 (742) 181,227 (58,516) 3,118,641 (31,645) 3,086,996 - 3,086,996
(*) Shown solely for purposes of comparison
Notes 1 to 49 contained in the report and Appendices I to IV form an integral part of the consolidated balance sheet as at 31 December 2012.
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Bankinter
Bankinter Group Consolidated Annual Accounts 2012

BANKINTER GROUP, CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED 31 DECEMBER 2012 AND 2011 (€000s)
2012 2011(*)
NET CASH FLOW FROM OPERATING ACTIVITIES (132,587) 186,683
Consolidated profit for the year 124,654 181,227
Adjustments to obtain cash flow from operating activities 514,387 303,560
Depreciation and Amortisation 65,865 64,097
Other adjustments 448,522 239,463
Net increase/decrease in operating assets 740,429 (5,257,528)
Held for trading 306,242 (539,674)
Other financial assets at fair value through profit or loss (8,483) 4,351
Financial assets available for sale (1,318,747) (1,684,541)
Loans and receivables 1,880,506 (3,153,285)
Other operating assets (119,089) 115,621
Net increase/decrease in operating liabilities (1,576,509) 4,925,031
Held for trading (563,260) 417,155
Other financial liabilities at fair value through profit or loss - (88,745)
Financial liabilities at amortised cost (990,455) 4,528,111
Other operating liabilities (22,794) 68,510
Corporation tax collections/payments 64,452 34,393
NET CASH FLOW FROM INVESTING ACTIVITIES 515,325 88,879
Payments (24,776) (96,239)
Tangible assets (15,969) (86,202)
Intangible assets (8,807) (8,618)
Investments - (1,419)
Non-current assets held for sale and associated liabilities - -
Held to maturity investments - -
Collections 540,101 185,118
Tangible assets 1,602 37,487
Intangible assets - -
Investments 35,713 2,000
Non-current assets held for sale and associated liabilities 112,680 54,988
Held to maturity investments 390,106 90,643
NET CASH FLOW FROM FINANCING ACTIVITIES 4,864 160,754
Payments (147,228) (88,067)
Dividends (72,160) (58,352)
Subordinated liabilities - -
Acquisition of own equity instruments - -
Other payments linked to financing activities (75,068) (29,715)
Collections 152,092 248,821
Subordinated liabilities - -
Issue of own equity instruments - 211,568
Disposal of own equity instruments 77,099 31,380
Other inflows linked to financing activities 74,993 5,873
EFFECT OF EXCHANGE-RATE VARIATIONS - -
NET INCREASE/DECREASE IN CASH AND CASH EQUIVALENTS (A+B+C+D) 387,602 436,316
CASH AND CASH EQUIVALENTS AT START OF PERIOD 632,717 196,401
CASH AND CASH EQUIVALENTS AT END OF PERIOD 1,020,319 632,717
MEMORANDUM ITEMS:
BREAKDOWN OF CASH AND CASH EQUIVALENTS AT END OF PERIOD 1,020,319 632,717
Cash 120,843 114,751
Balances equivalent to cash with central banks 544,531 298,044
Other financial assets 354,945 219,922
Total cash and cash equivalents at end of period 1,020,319 632,717
(*) Shown solely for purposes of comparison
Notes 1 to 49 contained in the report and Appendices I to IV form an integral part of the consolidated balance sheet as at 31 December 2012.
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Bankinter
Bankinter Group Consolidated Annual Accounts 2012

Bankinter Group
2. Accounting principles applied
Consolidated Report
on the year ended 31 December 2012
31 December 2012
1. Nature of the Group and its activities and composition
Bankinter, S.A. was incorporated by public deed executed in Madrid on 4 June 1965 under
the name Banco Intercontinental Español, S.A. Its name was changed to the current one
on 24 July 1990. It is registered in the Special Registry of Banks and Bankers. Its tax
identification number is A-28157360 and itb belongs to the Deposit Guarantee Fund under
code number 0128. Its registered offices are located at Paseo de la Castellana number 29,
28046 Madrid, Spain.
The corporate object of Bankinter, S.A. (hereinafter referred to as the Bank or the
Entity) comprises banking activities subject to the rules and regulations governing banks
operating in Spain.
In addition to its direct operations, the Bank is the parent company of a group of subsidiary
companies dedicated to a variety of activities (mainly asset management, credit cards
and the insurance business) which, together with the Bank, make up the Bankinter Group
(hereinafter referred to as the 'Group' or the 'Bankinter Group'). Consequently, in addition
to its own individual financial statements, the Bank is obliged to draw up consolidated
financial statements for the Group, which also include holdings in joint businesses and
investments in associates.
The subsidiaries forming the Bankinter Group are listed in Note 13 'Investments'.
The Group's consolidated financial statements have been drawn up in accordance with
the accounting principles described in the section "Accounting principles and Valuation
Rules Applied."
The balance sheets of Bankinter, S.A. as at 31 December 2012 and 2011 and the income
statements for the years then ended are shown in Appendix III.
a) Rules for the presentation of the annual accounts
In accordance with EC Regulation No. 1606/2002 of the European Parliament and of the
Council of 19 July 2002, all companies governed by the law of a member state of the
European Union and whose securities are admitted to trading on a regulated market of
any member state must present their consolidated financial statements for each financial
year starting on or after 1 January 2005 in accordance with the International Financial
Reporting Standards (IFRS) previously adopted by the European Union.
To adapt the accounting system of Spanish credit institutions to the new regulations, the
Bank of Spain published Circular 4/2004 of 22 December on Rules for Public and Reserved
Financial Information and Model Financial Statements.
The Group’s consolidated financial statements for the year ended 31 December 2012
were approved by the Bank’s Directors in a meeting of the Board of Directors held on
20 February 2013, in accordance with the regulatory framework applying to the Group
as established in the Spanish Commercial Code and other commercial legislation and
with the International Financial Reporting Standards adopted by the European Union and
taking account of Bank of Spain Circular 4/2004 applying the principles of consolidation,
accounting policies, and valuation criteria described in Note 5 to the consolidated financial
statements so as to give a true and fair view of the Group’s financial situation as at 31
December 2012 and of the results of its operations, its comprehensive income and cash
flows for 2012. These financial statements for 2012 are pending approval by the General
Meeting of Shareholders. However, the Bank's Board of Directors believes that these
accounts will be approved without modifications.
The Group's consolidated financial statements for 2011 were approved by the General
Meeting of Shareholders held on 15 March 2012.
In accordance with the options established in IAS 1.81, the Group has opted to present
separate statements, one displaying components of consolidated results (“Consolidated
income statement”) and a second statement which, beginning with those consolidated
results, displays components of other comprehensive income (“Statement of comprehensive
income”). In Spanish it is referred to using the terminology of Bank of Spain Circular
4/2004.
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Bankinter
Bankinter Group Consolidated Annual Accounts 2012

All figures in this report referring to financial year 2011 are presented solely for purposes
of comparison.
The accounting policies and methods used to prepare these financial statements are the
same as those applied in drawing up the consolidated financial statements for 2011,
taking account of the standards and interpretations that came into effect in 2012. In this
respect we would highlight the following:
Standards and interpretations effective in the year under review
During 2012 the following standards and interpretations adopted by the European Union
and the Group came into force, with none of them having a significant impact on the
consolidated financial statements:
- Amendment to IFRS 7 Financial instruments: Breakdowns - Transfers of financial
assets. Tightens the disclosure requirements applying to transfers of assets, both
in cases where the assets are not removed from the Balance Sheet and, more
particularly, those where an asset is removed from the Balance Sheet but the
entity has some kind of continued involvement.
- Amendment to IAS 12 Income taxes – Deferred tax relating to investment
property: The fundamental change is the introduction of an exception to the
general principles of IAS 12 which affects deferred tax on investment property,
which the Group values using the fair value model in IAS 40 Investment Property
based on the assumption, for purposes of calculating deferred taxation, that the
carrying amount of these assets will be recovered in full through their sale.
No significant effects on the Group’s financial statements have arisen from application
of the aforementioned accounting standards.
In addition, at the date of preparation of these financial statements the following
standards and interpretations whose effective date is subsequent to 31 December
2012, had come into force:
- IFRS 10 Consolidated financial statements. (Mandatory for financial years
starting 1 January 2014 or later, early application permitted) – This standard
replaces the current IAS 27 and SIC 12, introducing a single consolidation model
based on control, irrespective of the nature of the investee. It changes the current
definition of control. The new definition of control consists of three conditions to
be met: the investor’s power over the investee; that the investor is exposed, or
has rights, to variable returns from its investment; and that it has the ability to
affect those returns by exercising that control.
- IFRS 11: Joint arrangements - replaces IAS 31 as currently in force. The basic
change from the current standard is that proportional consolidation may no
longer be applied to joint ventures, which must now be accounted for using the
equity method.
- IFRS 12: Disclosures of interests in other entities. IFRS 12 is a disclosure standard
bringing together all the disclosure requirements, including new ones, relating
to interests in other entities, be they subsidiaries, associates, joint arrangements
or other interests.
The Group is presently analysing the possible effects of these standards (IFRS 10,
11 and 12). based on the analysis so far, the Group does not expect the application
of these standards to have a significant effect on its consolidated financial
statements.
- IFRS 13: Fair value measurement. This new standard sets out in a single IFRS
a framework for measuring the fair value of assets and liabilities measured in
this way as required by other standards. IFRS 13 changes the current definition
of fair value, introduces new, more nuanced criteria and also adds to disclosure
requirements.
- IAS 27: Separate financial statements and IAS 28: Investments in associates and
joint ventures. The amendments to IAS 27 and IAS 28 are in parallel with the
issue of the new IFRS (IFRS 10, IFRS 11 and IFRS 12) referred to above.
- Amendment to IAS 1 Presentation of Other Comprehensive Income: consisting in
the obligation to present separate totals of components of “Other Comprehensive
Income” according to whether or not they will subsequently be reclassified to
profit or loss.
- Amendment to IAS 19 Employee benefits. The fundamental change in this
amendment to IAS 19 will affect the accounting treatment of defined benefit
plans, since it eliminates the corridor approach. At present it is possible to opt
to defer a certain portion of actuarial gains and losses. Starting from when the
12
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

amendment comes into force all actuarial gains and losses will be recognised in
OCI as they occur. It includes significant changes to the way cost components
are presented, such that service costs (past-service, reductions and settlements)
and net interest will be recognised in profit or loss, while the revaluation
component (basically actuarial gains and losses) will be charged or credited to
equity (valuation adjustments) and will not be reclassified to profit or loss. In
accordance with IAS 8, this change in accounting standard involves a change
in accounting policy, and as such must be applied retroactively from 1 January
2013, restating the starting balances of equity for the oldest preceding period so
that it is presented as if the new accounting policy had always been applied. It
will also involve changes in the grouping and presentation of cost components in
the statement of comprehensive income.
- “Amendment to IAS 32: Offsetting of financial assets and liabilities and
Amendment to IFRS 7 Disclosures: Offsetting of financial assets and liabilities.”
The amendment to IAS 32 introduces a series of additional clarifications in the
application guidance on requirements for offsetting financial assets and liabilities
on the Balance Sheet. IAS 32 already states that financial assets and liabilities can
be offset only when the entity currently has a legally enforceable right to offset
the recognised amounts. The amended application guidance indicates, among
other considerations, that in order to meet this condition, the right to offset must
not be dependent on future events and must be legally enforceable, both in the
normal course of business and in case of default, insolvency or bankruptcy of the
entity and all counterparties.
- The parallel amendment to IFRS 7 introduces a specific section of new disclosure
requirements for financial assets and liabilities that are shown net in the Balance
Sheet and also for other financial instruments that are subject to an enforceable
offset agreement or similar, irrespective of whether or not they are shown net in
accounting terms in accordance with IAS 32.
Lastly, as at the date on which these consolidated financial statements were approved,
the following standards and interpretations which come into force after 31 December
2012 were pending adoption by the European Union:
- IFRS 9 Financial instruments: Classification and measurement - IFRS 9
will in future replace the parts of IAS 39 that relate to the classification and
measurement of financial instruments. There are very significant changes from
the present standard. IFRS 9 requires financial assets to be classified into just
two measurement categories: those measured at fair value and those measured
at amortised cost. The current categories "Held-to-maturity investments" and
"Available-for-sale financial assets" will no longer exist. Impairment will in effect
apply only to assets recognised at amortised cost, and embedded derivatives will
no longer be separately accounted for.
As regards financial liabilities, the classification categories proposed for IFRS
9 are similar to the current ones under IAS 39.
- Improvements to IFRS, 2009–2011 reporting cycle: Minor amendments to a
number of standards
- Transitional rules for amendments to IFRS 10, 11 and 12: Clarification of the
transitional rules for these standards.
The Group has yet to assess the impact of these standards.
All accounting policies and valuation criteria having a significant effect on the
consolidated financial statements were applied in drawing up these statements.
Restructuring and recapitalisation of the Spanish banking sector
During the first half of 2012 the Spanish government pushed through a process of
structural reform which included a number of measures aimed at cleaning up the balance
sheets of Spanish credit institutions affected by the impairment undergone by their
property-related assets. The main milestones were the approval, on 3 February and 18
May respectively, of Royal Decree-Laws 2/2012 and 18/2012 on the restructuring of the
financial sector, which revised the minimum percentage provisions required to cover
impairments relating to financing for the Spanish property sector as well as impairments
to foreclosed or repossessed assets and those received in payment of debt arising from
financing to the sector.
These requirements involve additional provisions to those resulting from the application of
the minimum percentages previously established by the Bank of Spain for problem loans.
During 2012 the Group evaluated the impairment suffered in the period, recognising the
corresponding additions to provisions (see Notes 10 and 12) such that at year-end the
legal requirements were fully covered.
13
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Royal Decree-Law 24/2012 on the restructuring and resolution of credit institutions,
approved on 31 August 2012, aims to regulate credit institutions' early intervention,
restructuring and resolution processes, as well as establishing the legal regime of the FROB
(“Fondo de Reestructuración Ordenada Bancaria” or Fund for the Orderly Restructuring
of Banks) and its general framework of action, with a view to protecting the stability of
the financial system while keeping the use of public funds to a minimum. It also changes
the requirements and definition of core capital with which both consolidated groups of
credit institutions and credit institutions not belonging to a consolidated group must
comply, establishing a single requirement of 9% of risk-weighted exposure to be met from
1 January 2013.
Law 8/2012 of 30 October on the cleaning up and sale of property assets in the financial
sector, approved on 31 October 2012, is intended to insulate and provide market access
to assets whose inclusion in the institutions' balance sheets is hampering credit recovery.
To this end it provides for the mandatory incorporation of companies known as SGAs
(“sociedades de gestión de activos” or asset management companies) to which the credit
institutions will have to transfer all properties foreclosed or received in payment of debts
relating to land for real estate development or to property construction or developments.
They will also have to transfer other repossessed assets and assets received in payment
of debts after 31 December 2011. The deadline for complying with this legal obligation
was 31 December 2012.
Lastly, the following standards were approved as part of the reform of the financial sector:
- Law 9/2012 of 14 November on the restructuring and resolution of credit
institutions, approved on 15 November 2012, aims to regulate credit institutions'
early intervention, restructuring and resolution processes, as well as establishing
the legal regime of the FROB (“Fondo de Reestructuración Ordenada Bancaria” or
Fund for the Orderly Restructuring of Banks) and its general framework of action,
with a view to protecting the stability of the financial system while keeping the use
of public funds to a minimum.
- Royal Decree 1559/2012 of 15 November, approved on 16 November 2012, establishes
the legal regime for SGAs and develops the organisational and operational rules
for them, as well as the legal framework applicable to the creation of the SAREB
(“Sociedad de Gestión de Activos Procedentes de la Reestructuración Bancaria” or
Company for Managing Assets resulting from Bank Restructuring) and the assets
transferred to it.
b) Accounting standards and valuation rules
In preparing the consolidated financial statements, the generally accepted accounting
principles and valuation rules referred to in Note 5 as "Accounting principles and valuation
rules applied" have been followed.
Unless otherwise indicated, these consolidated financial statements are presented in
thousands of euros.
c) Opinions and estimates used
The information contained in these consolidated financial statements is the responsibility
of the Bank's Directors. In valuing certain assets, liabilities, revenues, expenses and
commitments, use has been made as necessary of estimates made by the Group's Senior
Management and ratified by its Directors. These estimates relate mainly to:
- impairment losses on certain assets (Note 10)
- the useful life attributed to tangible and non-tangible assets (Notes 14 and 15)
-the fair value of certain unlisted assets (Note 43)
- the actuarial assumptions used to calculate liabilities and commitments for postemployment
benefits (Note 27)
- the calculation of provisions (Note 21)
Although these estimates have been made based on the best information available as at
31 December 2012 on the items concerned, it is possible that future events might require
them to be revised in coming financial years. Any such revision would be carried out
prospectively, in accordance with the provisions of IFRS 8, recognising the effects of the
change in the corresponding profit and loss account in the financial years affected.
d) Consolidation principles
The Group has been defined in accordance with current applicable accounting regulations.
Group Companies comprise Subsidiaries, Joint Arrangements and Associates.
14
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Bankinter Group Consolidated Annual Accounts 2012

Subsidiaries are entities forming a single decision-making unit with the parent company,
in other words entities over which the parent company has the power to exert control
directly or indirectly through other Group Companies. This power to exert control is
generally, although not invariably, reflected in the parent company's holding, directly or
indirectly through one or more other Group Companies, 50% or more of the voting rights
in the Group Company. Control means the power to govern the financial and operating
policies of a Group Company with a view to obtaining benefits from its activities, and may
be exerted even if the abovementioned percentage of voting rights is not held.
Key information on investments in subsidiaries as at 31 December 2012 and 2011 is given
in Note 13. In 2012 there was no company considered to be a subsidiary in which the
Group’s holding was less than 50%.
The overall integration procedure for the annual accounts of dependent entities has
been applied to the consolidation process. Consequently, all significant inter-company
balances and transactions have been eliminated in the consolidation process. Third
party or minority interests in the Group's equity are presented under the heading Noncontrolling
interests in the consolidated balance sheet and the portion of the year's profit
attributable to them is shown under Profit (loss) attributable to non-controlling interests
in the consolidated income statement.
Results generated by entities acquired by the Group during the financial year are
consolidated only insofar as they relate to the period between the date of acquisition
and year-end. Similarly, results generated by entities disposed of by the Group during
the financial year are consolidated only insofar as they relate to the period between the
beginning of the financial year and the date of the disposal.
Joint Arrangements are Group Companies which, while not being Subsidiaries, are jointly
controlled by the Group and by one or more other entities not related to the Group (Joint
Ventures), and Joint Operations. Joint Operations are contractual agreements by virtue of
which two or more entities or participants perform transactions or maintain assets in such
a way that any financial or operational strategic decision which affects them requires
the unanimous consent of all participants, without these transactions or assets being
integrated in financial structures different from those of the two participants.
Joint Arrangements are accounted for using the equity method, applying the exceptions
provided for in current applicable accounting regulations.
Relevant information on investments in Joint Arrangements as at 31 December 2012 and
2011 is presented in Note 13.
Associates are those over which the Group has a significant influence. Said significant
influence is generally, although not invariably, reflected in the parent company's holding,
directly or indirectly through one or more other Group Companies, 20% or more of the
voting rights in the Group Company.
The equity method for associated entities has been applied to the consolidation process.
Consequently, investments in Associates are valued at the proportion represented by the
Group's holding in their capital, less dividends received and any other eliminations in
equity. Transactions with Associates are eliminated in the proportion represented by the
Group's holding. If an Associate's equity is negative as a result of losses incurred, it is
shown as zero in the Group's consolidated balance sheet unless the Group is under an
obligation to support it financially.
The relevant information on stockholdings in associates as at 31 December 2012 and 2011
is included in Note 13. In 2012 there was no investment in any company considered to be
an Associate in which the Group's holding was less than 20%. During the year, Sociedad
Canarias Excelencia en SIM, S.L. was wound up, having ceased trading, and is no longer
included in the consolidation scope.
Note 13 includes information on the most significant acquisitions and disposals during
the year of investments in Subsidiaries, Joint Arrangements and Associates.
In the third quarter of 2010, Bankinter, S.A. set up Gneis Global Services, S.A., which has
as its corporate object the provision of business advisory and consulting services for the
design and implementation of technological and operational systems. This company is
fully consolidated in the Bankinter Group financial statements.
Business combinations are operations whereby two or more entities or economic units
combine to become a single entity or group of companies.
Thus at 31 December 2012 and 2011, Bankinter Vida, in which the Group has a 50% holding,
was accounted for using the equity method.
e) Comparison of information
In accordance with business law, the Directors present the information contained in this
report referring to 2011 exclusively for purposes of comparison with the 2012 figures, and
therefore it does not constitute the Group's consolidated financial statements for 2011.
15
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

f) Equity
Bank of Spain Circular 3/2008 of 22 May for credit institutions on determining and
controlling minimum equity, regulates the minimum equity to be maintained by Spanish
credit institutions - both individually and as a consolidated group - and the way in which
said equity is to be determined, as well as the various processes for capital self-assessment
to be carried out by the institutions and the public information they must forward to the
market.
During 2012 the Group applied this Circular as updated by successive provisions. With
Bank of Spain approval, the Group uses the internal ratings based (IRB) method to
calculate capital requirements for the credit risk on certain credit exposures, and the
standard method for all other exposures. In subsequent financial years, in accordance
with the progressive implementation plan described in Rule 24 of Circular 3/2008 and
subject to authorisation from the Bank of Spain, new portfolios will be incorporated into
the IRB Approach.
The goal set by the Group’s Management in relation to equity management consists
in complying at all times with the applicable regulations, in accordance with the risks
inherent in its activity and the context in which it operates, while at the same time
seeking to make the process as efficient as possible. Capital consumption, together with
other risk and return variables, is considered a fundamental variable in the analyses
associated with the Group’s investment decisions.
In order to meet this goal, the Group has a series of policies and processes for managing
equity, the main guidelines in which are:
- The Equity Directorate, which is under the Capital Market Division, performs monitoring
and control of solvency ratios, and has warning systems that ensure that the applicable
rules are being applied at all times and that the decisions made by the various
departments and units in the entity are consistent with the targets set for compliance
with minimum capital requirements. Accordingly, there are contingency plans to ensure
that the limits laid down in the applicable regulations are met.
- The impact that decisions will have on the Group’s equity and on the balance between
capital consumption, risk and return, is taken into account as a key factor in planning,
analysing and monitoring the Group's operations.
Thus, the Group considers equity and the capital requirements established by the
abovementioned regulations to be a key factor in its management, affecting the entity’s
investment decisions, the analysis of the viability of any transaction, strategy for the
distribution of results by subsidiaries and issues by the entity and the Group, etc.
Bank of Spain Circular 3/2008 of 22 May and complementary provisions (information
available - in Spanish - on the Bank of Spain’s website, at: http://www.bde.es/bde/es/
secciones/normativas/Regulacion_de_En/Estatal/Solvencia_y_recursos_propios.html)
establishes which items are to be counted as capital for the purpose of complying with
the minimum requirements established. For the purposes of the above rule, equity is
classified as basic and second category equity and it differs from equity as calculated
in accordance with EU-IFRS as it includes certain items that are not included under
EU-IFRS and excludes others that are. In addition, the methods to be implemented for
the consolidation and appraisal of holdings for the purposes of calculating the Group’s
minimum equity requirements differ, in accordance with standing regulations, from
those implemented in drawing up these annual consolidated accounts, which also leads
to the existence of differences for the purposes of calculating equity under one regulation
or the other.
As regards the conceptual definitions, the Group's management of its shareholders' equity
is in compliance with the terms of Bank of Spain Circular 3/2008. Accordingly, the Group
deems computable equity to be as indicated in rule 8 of Bank of Spain Circular 3/2008.
The minimum equity requirements laid down in this Circular are calculated according to
the Group’s exposure to credit risk and dilution (depending on the assets, commitments
and other memorandum accounts these risks present, in accordance with their amounts,
characteristics, counterparties, guarantees, etc.), the counterparty, position and
settlement risks on the trading portfolio, the exchange and gold position risk (depending
on the net global position in foreign currency and the net gold position) and operational
risk. In addition, the Group is also subject to compliance with the risk concentration limits
laid down in the aforementioned Circular and the Group is subject to compliance with the
internal Corporate Governance obligations, capital self-assessment and measurement of
the interest-rate risk and the public information obligations to be forwarded to the market,
which are also laid down in the aforementioned Circular. With a view to guaranteeing
compliance with the aforementioned targets, the Group performs integrated management
of these risks, in accordance with the aforementioned policies.
16
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

As at 31 December 2012 and 2011 and throughout the years then ended, the computable
equity of the Group and of the Group entities subject to this obligation, considered on an
individual basis, exceeded the requirements laid down under the rules referred to.
Consolidated equity as at 31 December 2012 and 2011 and the corresponding capital
ratios are shown in the following table:
€000s
31/12/2012 (*) 31/12/2011 (*)
Capital and Reserves 2,991,426 2,554,154
Other equity instruments 72,633 404,812
Preference shares 60,844 168,165
Treasury shares (226) (742)
Intangible and other assets (283,117) (296,820)
Other deductions (103,581) (165,736)
Tier 1 2,737,979 2,663,833
Revaluation reserve 94,308 97,998
Subordinated financing 568,686 658,232
Generic insolvency funds - 54,678
Other deductions (96,551) (154,243)
Tier 2 566,443 656,665
Total Equity 3,304,422 3,320,498
Risk-weighted assets 25,424,253 28,454,731
Tier 1 (%) 10.77 9.36
Tier 2 (%) 2.23 2.31
Capital ratio (%) 13.00 11.67
(*) Figures in accordance with Bank of Spain Circular 3/2008 on determining and
controlling minimum equity. The lower limit of shareholders’ equity requirements
provided for in Transitional Provision Eight of the aforementioned Circular is not applied.
Internal models are applied to the following portfolios: Home mortgages for private
individuals, Small companies, Medium-sized companies, Project Finance and Unsecured
loans.
During 2012 there were some important changes in standards relating to financial
institutions' solvency:
Royal Decree-Law 2/2012, of 3 February, on the restructuring of the financial sector,
established among other things provisioning requirements for financing and assets
foreclosed or received in payment of debt relating to the property sector, as well as
increased core capital coverage requirements for real estate assets.
Royal Decree-Law 18/2012, of 11 May, on the write-down and sale of real estate assets in
the financial sector, established additional coverage requirements to those established
in Royal Decree-Law 2/2012, for impairment of financing linked to real estate activity
classified as standard risk.
Royal Decree-Law 24/2012, of 31 August, on the restructuring and resolution of credit
institutions, defines the regime for restructuring and resolution of entities and includes
measures for improving protection of retail investors who subscribe to financial products
not covered by the Deposit Guarantee Fund and modifies the requirements and definition
of core capital that credit institutions will have to comply with starting in 2013. The
definition is adjusted to bring it into line with the core tier 1 capita criteria of the European
Banking Authority (EBA), and the minimum level of core capital is set at 9% with effect
from 1 January 2013.
Bankinter complied throughout 2012 with these new regulatory requirements, and with
the objective of meeting the new capital requirements it undertook a number of financial
transactions aimed to strengthen its capital base, as described hereunder.
With regard to the 2011 issue of Mandatorily Convertible Subordinated Bonds, in March
2012 the General Meeting of Shareholders approved the establishment of an additional,
voluntary conversion period and of special remuneration for those holders voluntarily
converting their bonds during that period. The details of this conversion are contained in
the 14 February 2012 announcement of the calling of the AGM. The voluntary conversion
period ended on 10 May, and as a result the Bank’s core capital increased by €332 million.
Apart from this, in July 2012 the Board of Directors, by virtue of the authorisation
granted it by the General Meeting of Shareholders, made a public offer to holders of
Bankinter preferred shares. The terms and conditions of this offer were summarised in
the “Significant Event” report sent to the CNMV (Spain’s securities regulator) on 18 July
2012. As a result of this transaction the Bank’s core capita increased by €75 million.
Thanks to these transactions the Bank’s capital ratios increased during the year. As at 31
December 2012 the core capital ratio in accordance with Royal Decree-Law 2/2011 as in
force was 11.19% (9.47% at year-end 2011).
17
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

g) Minimum reserve ratio
3. Appropriation of profit (loss)
Monetary Circular 1/1998 of 29 September, effective 1 January 1999, abolished the cash coefficient
which had been in place for ten years and replaced it with the minimum reserve ratio.
As at 31 December 2012 and 2011 and throughout the years then ended, the consolidated
entities complied with the minimum amounts for this coefficient required by applicable
Spanish regulations.
The amount of cash which the Group held immobilised on account with the Bank of Spain for
this purpose stood at €544.43 million and €297.75 million as at 31 December 2012 and 2011
respectively, although the obligation of the various Group companies subject to this coefficient
to maintain the balance required by applicable regulations in order to comply with the
aforementioned minimum reserves coefficient is calculated on the average of closing balances for
the day held by each of them in this account during the period for which it is maintained.
h) Information on deferrals in payments to suppliers. Third additional provision. "Duty
of information" in Law 15/2010 of 5 July
The following information is provided in order to comply with the provisions of Law
15/2010 of 5 July amending Law 3/2004 of 29 December, establishing measures to combat
payment delinquency in commercial transactions, as implemented by the Resolution of
29 December 2010 of the Spanish Accounting and Audit Institute on disclosures to be
included in the notes to the financial statements with regard to delayed payments to
suppliers in commercial transactions:
Amounts paid and pending payment as at year end
2012 2011
Amount % Amount %
Paid within the maximum legal
798,937 100% 718,537 100%
timeframe
Other - - - -
Total payments for the year 798,937 100% 718,537 100%
Weighted average days past due 30 30
Deferrals which exceed the legal
maximum term as at year-end
- - - -
The legal timeframe has been defined in accordance with that which corresponds
depending on the nature of the good or service received by the company under the terms
of Act 3/2004, of 29 December, defining measures to combat default in trade operations.
The proposal to distribute the profits of Bankinter, S.A. for the year ending 31 December
2012, made by the bank's administrators and subject to the approval of the General
Shareholders Meeting is as follows:
€000s
31/12/2012 31/12/2011
Appropriation:
Voluntary reserves 86,708 76,529
Interim dividend 61,500 76,887
Profit appropriated 148,208 153,416
Profit (loss) for the year 148,208 153,416
Details of interim dividends distributed and the corresponding liquidity statements are
given in Note 22.
The proposed appropriation of profit for the year ended 31 December 2012 of the
subsidiaries of Bankinter, S.A. drawn up by their respective Directors and pending
approval by the respective General Shareholders Meetings is as follows:
€000s
Earnings Dividend Reserves Applications
Bankinter Consultoría, Asesoramiento, y
Atención Telefónica, S.A. 596 - 596 -
Bankinter Seguros Generales, S.A (formerly
Bankinter Servicios de Consultoría S.A) - - - -
Bankinter Gestión de Activos, S.A., S.G.I.I.C. 11,026 11,026 - -
Hispamarket, S.A. (4,929) - (4,929) -
Intermobiliaria, S.A. (79,428) - (79,428) -
Bankinter Consumer Finance, E.F.C, S.A. 22,149 11,075 11,074 -
Bankinter Capital Riesgo, S.G.F.C.R, S.A. 196 - 196 -
Bankinter Sociedad de Financiación, S.A. (8) - (8) -
Bankinter Emisiones, S.A. 259 - 259 -
Bankinter Capital Riesgo I Fondo Capital 1,426 - 1,426 -
Línea Directa Aseguradora, S.A. 86,605 - 86,605 -
Arroyo Business Consulting Development, S.L. - - - -
Relanza Gestión, S.A. 35 - 35 -
Gneis Global Services S.A. 13,992 - 13,992 -
18
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

The appropriation of profits for the year ended 31 December 2011 of the subsidiaries
of Bankinter, S.A., approved by their respective General Shareholders Meetings, was as
follows:
€000s
Earnings Dividend Reserves Applications
Bankinter Consultoría, Asesoramiento, y
Atención Telefónica, S.A. (41) - (41) -
Bankinter Seguros Generales, S.A
3 - 3 -
(formerly Bankinter Servicios de
Consultoría S.A)
Bankinter Gestión de Activos, S.A., S.G.I.I.C. 10,664 10,664 - -
Hispamarket, S.A. 372 - 372 -
Intermobiliaria, S.A. (68,719) - (68,719) -
Bankinter Consumer Finance, E.F.C, S.A. 11,210 5,600 1,340 4,270
Bankinter Capital Riesgo, S.G.F.C.R, S.A. 155 - 155 -
Bankinter Sociedad de Financiación, S.A. (842) - (842) -
Bankinter Emisiones, S.A. 501 - 501 -
Bankinter Capital Riesgo I Fondo Capital 830 - 830 -
Línea Directa Aseguradora, S.A. 74,869 33,500 41,369 -
Arroyo Business Consulting
Development, S.L. - - - -
Relanza Gestión, S.A. 13 - 13 -
Gneis Global Services S.A. 2,898 1,800 1,098 -
4. Deposit Guarantee Fund
Royal Decree–Law 16/2011, of 14 October, created the Credit Institution Deposit Guarantee
Fund, following the merging of the three previously existing deposit guarantee funds
into a single Credit Institution Deposit Guarantee Fund, which retains the functions and
characteristic features of the three funds it replaced. This Royal Decree-Law increased the
legal limit on banks’ annual contributions from 0.2% to 0.3% to ensure that the fund has
maximum operating capacity. Additionally, the Ministerial Orders establishing optional
short-term reductions in contributions to 0.06%, 0.08% or 0.1% depending on the type of
entity, were repealed. The result of these two changes is that there is now a limit of 0.3%
on contributions for guaranteed deposits and a real contribution of 0.2% instead of the
percentages referred to above.
a. In the case of term deposits or similar instruments at terms of up to three months
whose agreed annual interest is more than 150 basis points higher than average
three-month EURIBOR; or more than 150 basis points higher than average sixmonth
EURIBOR for terms of between three months and one year, or more than
100 basis points higher than average one-year EURIBOR for terms of one year or
more.
b. In the case of sight deposits whose annual interest paid in the periodic settlement
of the account is more than 100 basis points higher than average one-month
EURIBOR.
The treatment of contributions to the Fund is changed, by applying a 500% weighting to
the amounts of deposits whose agreed remuneration is in excess of the above limits. The
difference between this (weighted) contribution and the contribution that would apply in
the absence of these circumstances had to be paid in to the Fund every quarter.
With the publication during 2012 of Royal Decree–Law 24/2012, of 31 August, on the
restructuring and resolution of credit institutions, this requirement was cancelled.
This past year saw the publication of Royal Decree–Law 2/2012, of 3 February, on
restructuring of the financial sector, whereby, by virtue of the provisions of Royal Decree–
Law 19/2011, of 2 December, amending Royal Decree–Law 16/2011, of 14 October, creating
the Credit Institution Deposit Guarantee Fund, on the carrying out of the actions necessary
to restore the Fund to sufficiency, on 30 July 2012 the Management Committee of the
Credit Institution Deposit Guarantee Fund adopted a resolution to apply a surcharge to
member entities, estimated based on the contributions made as of 31 December 2011 and
payable in equal annual payments over the next ten years.
Royal Decree–Law 24/2012, of 31 August, on restructuring and resolution of credit
institutions, establishes, subject to Bank of Spain, decisions that the Deposit Guarantee
Fund shall reimburse the amounts of guaranteed deposits when a deposit that is due
and payable is unpaid, always providing no proceedings have been initiated to resolve
the entity. In this respect the Fund may adopt measures in support of the resolution of a
credit institution such as granting guarantees or loans and acquiring assets or liabilities,
either carrying out such actions itself or entrusting them to a third party. The Bank is a
member of the Deposit Guarantee Fund.
Additionally, Bank of Spain Circular 3/2011 of 30 June laid down the rules for applying
the changes introduced by Royal Decree 771/2011, of 3 June, amending Royal Decree–
Law 216/2008, of 15 February on guaranteed deposits remunerated in excess of any of
the following limits:
The cost for 2012 and 2011 of the company’s contributions to the Deposit Guarantee Fund
was €68.78 million and €14.82 million respectively. These costs are included under the
heading ‘Other operating charges’ in the Income Statement (Note 33).
19
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

5. Accounting principles and valuation rules applied
These consolidated financial statements have been prepared in accordance with the
accounting principles and valuation rules currently in effect. A summary of the most
important of these is given below:
a) Going-concern principle
In preparing the consolidated financial statements it was assumed that the management
of the entities included in the Group will continue for the foreseeable future. Therefore,
application of accounting standards is not aimed at determining the value of the
consolidated equity with a view to their total or partial disposal or the amount that would
result in the event of their liquidation.
b) Accrual principle
These consolidated financial statements, with the exception of the statements of cash
flows, have been prepared based on the real flow of goods and services, regardless of
the payment or receipt dates, with the exception of the interest relating to loan and
receivables and other non-investment risks with borrowers deemed to be impaired, which
are credited to profit and loss at the time they are collected.
The accrual of interest on both lending and deposit transactions with settlement periods
in excess of 12 months, are calculated using the financial method. For transactions with a
lesser period, accrual is performed using either the financial method or the linear method.
Following general financial practice, transactions are recognised on the date they occur,
which may differ from their corresponding value date on which financial revenue and
expense calculations are based.
c) Transactions and balances in foreign currency
i. Functional Currency:
The Group’s functional currency is the euro. Consequently all balances and transactions
denominated in a currency other than the euro are considered to be denominated in
“foreign currency”.
ii. Criteria for conversion of foreign currency balances:
- Monetary assets and liabilities have been converted into euros using the average
spot exchange rates in the currency market at year end.
- Non-monetary items valued at historical cost have been converted into euros using
the exchange rates of the date of acquisition.
- Non-monetary entries valued at fair value have been converted into euros using
the exchange rates of the date on which the fair value was determined.
- Revenue and expenses have been converted into euros using exchange rates of
the date of the transaction (using the average exchange rates for the year for all
transactions performed in that year). Depreciation and amortisation have been
converted into euros at the exchange rate applied to the corresponding asset.
Exchange rate differences have been recognised in consolidated profit and loss except
for differences arising in non-monetary items at fair value, for which fair value
adjustments are recognised directly in equity.
d) Consolidated statements of cash flow
The Group used the indirect method to prepare the cash flow statements, which use the
following expressions and classification criteria:
- Cash flows: inflows and outflows of cash and cash equivalents; cash equivalents
are understood as short-term investments with high liquidity and a low risk of
alterations to their value. Cash and cash equivalents refer to the balances shown
under the heading “Cash and deposits with central banks” as well as other accounts
with highly liquid credit institutions in the enclosed balance sheets.
- Operating activities: typical activities of credit institutions, and other activities that
cannot be classified as investing or financing.
- Investing activities: acquisition, disposal or provision by other means of long-term
assets and other investments not included in cash and cash equivalents.
- Financing activities: activities that produce changes in the size and composition of
liabilities and equity and which do not form part of operating activities.
Balances and transactions in foreign currency have been converted into euros using
the following conversion rules:
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e) Consolidated other recognised income and expenses
This section of the consolidated statement of changes in equity shows the revenue and
expenses generated by the Group as a consequence of its activity during the year. A
distinction is made between items recognised in consolidated profit and loss for the year
and other comprehensive income as provided by current regulations recognised directly
in equity.
Therefore, this statement shows:
a. Consolidated income for the year.
b. The net amount of revenue and expenses temporarily recognised in consolidated
equity as valuation adjustments.
c. The net amount of revenue and expenses definitively recognised in consolidated
equity.
- Amounts transferred to profit and loss: This covers the amount of gains or losses
on valuation previously recognised in consolidated equity, even if in the same
financial year, which are now recognised in the consolidated Income Statement.
- Amounts transferred to the initial carrying amount of the hedged items:
This records the amount of valuation gains or losses previously recognised in
consolidated equity, even if in the same financial year, which are now recognised
in the initial value of the assets or liabilities as a result of cash flow hedges.
- Other reclassifications: This records the value of the transfers made in the period
between entries for valuation adjustments in accordance with the criteria provided
in current regulations.
The amounts of these items are reported by gross amount and, except as indicated above
for items corresponding to valuation adjustments for the valuation of entities accounted
for using the equity method, they show their corresponding tax effect under the heading
"Corporate tax" of the statement.
d. Corporation tax accrued on b) and c) above except for valuation adjustments on
investments in associates or joint arrangements accounted for using the equity
method, which are reported in net terms.
e. Total consolidated comprehensive income calculated as the sum of the above
sections, showing separately the amount attributable to owners of the parent
company and that attributable to non-controlling interests.
The amount of revenue and expenses corresponding to entities accounted for using the
equity method recognised directly in equity is reported in this statement, regardless of its
nature, under the heading "Entities accounted for using the equity method".
Changes in comprehensive income recognised in equity as valuation adjustments are
broken down into:
- Gains (losses) on valuation: This shows the amount of income, net of expenses
arising in the period, recognised directly in equity. The amounts recognised during
the year under this heading are kept under this heading, even if in the same year
they are transferred to consolidated profit and loss at the initial value of other
assets or liabilities or reclassified under another heading.
f) Consolidated statement of changes in total equity.
This part of the consolidated statement of changes in equity shows all changes in equity
that have occurred during the year, including those arising from changes in accounting
principles and the correction of errors. This statement therefore shows a reconciliation
between the carrying amount at the start and end of the year of all components of
consolidated equity, grouping together the movements based on their nature under the
following headings:
- Adjustments arising from changes in accounting principles and the correction
of errors: This includes changes to consolidated equity arising as a result of the
retroactive restatement of balances in the financial statements due to changes in
accounting standards or the correction of errors.
- Income and expenses recognised in the period:: This comprises, in aggregate
form, the total of the items recognised in the statement of comprehensive income
referred to above.
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- Other changes in equity: This comprises all other items recognised in equity,
such as increases or decreases in the endowment fund, appropriation of profits,
transactions with own equity instruments, payments with equity instruments,
transfers between equity headings and any other increases or decreases in
consolidated equity.
g) Recognition, valuation, and classification of financial instruments
Financial assets and liabilities are recognised when the group converts a portion of the
contractual agreements in accordance with the provisions of these agreements.
The following is a breakdown of the financial instruments recorded at fair value in
accordance with the procedure used to obtain the price:
The column headed “Level 1” shows the figures for financial instruments whose fair values
are obtained from listed prices on active markets for the same instrument, i.e. without
modifying or reorganising differently. The column headed “Level 2” shows the figures for
financial instruments whose fair values are obtained from listed prices on active markets
for similar instruments or using other valuation techniques in which all significant
inputs are based on observable market data. The column “Level 3” includes figures for
financial instruments whose fair values are obtained from valuation techniques in which
a significant input is not based on observable market data.
Additionally, in some cases and given the complexity of products valued the price used is
that published by the counterparty in official media such as Reuters.
As at 31 December 2012 the main techniques used by internal models to determine the
fair value of financial instruments were the net present value model, which discounts
future flows to the present using market interest rates, and the Black-Scholes model and
its derivative, which, by means of a closed formula and using exclusively market inputs,
enable interest rate options to be valued.
Credit derivatives are valued in the same way as other interest rate derivatives, except
that the market inputs include the (market) differentials corresponding to the underlying
of the issue.
We constantly compare and contrast the various valuations with counterparties to ensure
the validity of the models and inputs used at all times.
Financial instruments at fair value and determined by listings published on active
markets comprise the debt, private fixed income, variable income and organised market
derivatives (corresponding to valuation level 1)
In cases where listings cannot be observed, the valuation of the various positions is
determined using models that are compared with the market. This section includes two
different cases. In general, inputs used are observable market data (at Level 2), and, on
certain occasions, when the data are not observable, estimates are used (Level 3).
The fair value of financial instruments as derived from internal models takes account of
the terms of contracts and observable market data including interest rates, credit risk,
exchange rates, listings of shares, volatilities, etc. We assume that markets in which
we operate are efficient and that therefore their data are representative. The valuation
models do not incorporate subjectivities.
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€000s
2012 2011
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Financial assets held for trading and other financial
assets at fair value through profit or loss
999,650 1,149,474 - 2,149,124 1,161,939 1,284,944 - 2,446,883
Financial assets available for sale 4,154,154 1,978,317 - 6,132,471 2,899,186 1,876,878 5 4,776,069
Hedging derivatives (assets) - 152,201 - 152,201 - 118,651 - 118,651
Financial liabilities held for trading and other financial
liabilities at fair value with changes to the profit and loss
918,975 878,349 - 1,797,324 1,141,282 1,219,302 - 2,360,584
account
Hedging derivatives (liabilities) - 43,100 - 43,100 - 68,677 - 68,677
Financial liabilities
Financial liabilities are classified in the consolidated balance sheet according to the
following criteria:
i. Trading portfolio which includes financial liabilities issued with a view to short-term
realisation. They are part of a portfolio of financial instruments jointly identified
and managed for which recent actions have been taken to obtain short-term gains,
or they are derivative instruments not designated as hedging instruments or they
come from the firm sale of financial assets acquired temporarily or received on
loan.
ii. Other financial instruments at fair value through profit or loss: This includes
financial liabilities designated as “at fair value through profit or loss” with the
purpose of obtaining more relevant information, as this significantly reduces
accounting imbalances.
iii. Financial liabilities at amortised cost which cannot be included under any other
heading in the balance sheet and which are part of the normal funding activities
of financial institutions, regardless of the type of instrument used or their maturity
dates.
i. Financial liabilities under the headings 'Trading portfolio' and "Other financial
liabilities at fair value through profit or loss" are carried at fair value as defined
for financial assets. Financial liabilities hedged in fair-value hedging operations
are adjusted and any changes in their fair value relating to the risk hedged in the
hedging transaction are recognised.
ii. Financial derivatives that have as their underlying equity instruments whose
fair value cannot be determined in a sufficiently objective manner and which are
settled on delivery, are valued at cost.
Changes in the carrying amount of financial liabilities are recognised, in general, with
a balancing entry in profit and loss, with a distinction between those originating in the
accrual of interest and similar items, which are recognised under the heading 'Interest
and similar charges', and those due to other causes, which are recognised for their net
amount in 'Results of financial transactions' in the income statement.
Regarding financial liabilities designated as hedged items and accounting hedges,
differences in valuation are recognised on the basis of the criteria indicated for
financial assets.
Financial assets
iv Hedging derivatives including financial derivatives acquired or issued by the Bank
which qualify to be considered accounting hedges.
Financial liabilities are recognised at their amortised cost, as defined for financial
assets, except in the following cases:
Financial assets bought and sold by means of contractual agreements, meaning those
in which the reciprocal obligations of the parties must be performed within a particular
timeframe established by law or by market conventions and may not be settled by netting
off, such as stock market and spot currency trades, are recognised upon acquisition as
assets and are derecognised in the balance sheet upon sale, on the date from which the
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enefits, risks, rights and duties inherent in ownership pass to the acquiring party which,
depending on the type of asset or market involved, may be the contracting date or the
settlement or delivery date.
Financial debt instruments are recognised from the date on which the legal right to
receive or duty to pay cash arises, and derivatives are recognised from the date on which
they are contracted. As a general rule, the Group derecognises financial instruments in
the balance sheet on the date from which the benefits, risks, rights and responsibilities
inherent in them are or control of them is transferred to the acquiring party.
Financial assets are classified in the consolidated balance sheet in accordance with the
following criteria:
i. Cash and balances with central banks, corresponding to the cash balances and
balances deposited with the Bank of Spain and other central banks.
ii. Financial assets and liabilities held for trading, which includes financial assets
acquired with a view to short-term realisation. They are part of a portfolio of
financial instruments jointly identified and managed for which recent actions
have been taken to obtain short-term gains, or they are derivative instruments not
designated as hedging instruments. Changes in the fair value of the instruments
in this portfolio are recognised directly in profit or loss.
iii. Other financial assets at fair value through profit or loss, including (1) financial
assets which, while not part of the financial assets and liabilities held for trading,
are considered hybrid financial assets and are stated entirely at their fair value,
and (2) those managed jointly with liabilities by insurance contracts carried at
their fair value, or with financial derivatives that have the aim of significantly
reducing their exposure to variations in their fair value, or which are managed
jointly with financial liabilities and derivatives in order significantly to reduce
overall exposure to interest-rate risk.
iv. Available-for-sale financial assets which are debt securities not classified as heldto-maturity
investments, as other financial assets at fair value through profit or
loss, as loan and receivables or as financial assets and liabilities held for trading,
and the equity instruments of entities which are not subsidiaries, associates or
joint ventures and which are not included in the categories of financial assets
and liabilities held for trading or other assets at fair value through profit or loss.
Changes in the fair value of instruments in this portfolio are recognised directly in
equity worth until the financial asset is derecognised from the balance sheet.
v. Loan and advances including financial assets not traded on an active market
and not requiring to be carried at fair value but with cash flows of determined
or determinable amounts whereby the Group's entire disbursement will be
recovered, barring reasons attributable to the debtor's solvency. This includes both
the investments from typical lending activity, such as the cash amounts drawn
down and pending repayment by clients in the form of loans, and deposits lent to
other entities, regardless of how they are legally implemented, and unlisted debt
securities, as well as debt assumed by the buyers of goods or the users of services,
all of which are part of the Group's business.
vi. Investment portfolio held to maturity which corresponds to fixed-term debt
securities and cash flows of a determined or determinable amount for which the
company has, as from the start and as at any subsequent date, both the positive
intention and the financial capacity to hold them to maturity.
The Bank may not classify any financial asset as a held-to-maturity investment
if during the financial year in progress or the two previous financial years it has
sold or reclassified assets included in this portfolio for more than an insignificant
amount in relation to the total amount of the assets included in this category.
vii. Adjustments to financial assets in relation to macro-hedges, being the balancing
entry for the amounts credited to profit and loss arising from the valuation of the
portfolio of financial instruments which are effectively hedged against interestrate
risk by means of fair-value hedge derivatives.
viii.Hedging derivatives including the financial derivatives acquired or issued by the
Bank which qualify to be considered as accounting hedges.
ix. Investments which include equity instruments in Joint Ventures or Associates.
In general, financial assets are initially recognised at cost. Their subsequent valuation
at the end of each period is carried out on the basis of the following criteria:
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i. Financial assets are carried at fair value, with the exception of loan and receivables,
the portfolio of held-to-maturity investments, equity instruments whose fair value
cannot be determined with sufficient objectiveness, investments in Subsidiaries,
Joint Arrangements and Associates, and financial derivatives for which the
underlying assets are said equity instruments and which are settled by delivery
thereof.
ii. The fair value of a financial asset on any given date is deemed to be the amount
for which it could be delivered between duly informed, willing parties in an arm's
length transaction. The best evidence of fair value is the listed market price on an
active market which is organised, transparent and of sufficient depth.
When there is no market price for a certain financial asset, its fair value may be estimated
by valuation techniques which must comply with the following characteristics:
- The techniques must be as consistent and appropriate as possible and will include
observable market data such as recent transactions with other instruments that
are substantially the same; discounted cash flows and market models to value
options.
- The techniques used must be those which provide the most realistic estimate of the
price of the instrument, and preferably they will be those which are normally used
by market participants when valuing the instrument.
- The techniques will maximise the use of observable market data, with the use of
non-observable data being restricted as far as possible. The valuation method must
be maintained over time as long as the factors that led to its being chosen have not
altered. In any event, the valuation technique must be assessed periodically and
its validity examined using observable prices for recent transactions and current
market data.
- In addition, consideration must also be given to factors such as the time value
of money, credit risk, exchange rates, prices of equity instruments, volatility,
liquidity, the risk of early cancellation and administrative costs.
iii. The fair value of financial derivatives with a quoted value on an active market is
the daily trading price. If for any exceptional reason there is no trading price for
a particular date, then methods similar to those used to estimate the value of OTC
financial derivates are used.
The fair value of OTC financial derivatives is the sum of future cash flows originating
from the instrument and discounted to the valuation date using methods recognised
by the financial markets.
iv. Loans and receivables and the portfolio of investments held to maturity are carried
at amortised cost determined using the effective interest-rate method. Amortised
cost means the acquisition cost of a financial asset corrected by the principal
repayments and the portion of the difference between the initial cost and the
repayment value at maturity that is charged to profit and loss, using the effective
interest rate model, less any reduction in value due to impairment recognised
directly as a decrease in the value of the asset or by means of an account to correct
its value. If they are hedged by fair-value hedging transactions, any variations
arising in the fair value relating to the risk or risks hedged in said hedging
transaction are recognised.
The effective interest rate is the rate which, when used to discount the estimated
future cash flows over the life of the financial instrument, produces a present value
exactly equal to the price of the financial instrument, based on the contractual
conditions such as early repayment options, but without taking account of future
losses due to credit risk. For fixed-interest financial instruments, the effective
interest rate is the contractual interest rate established at the time of acquisition
plus any applicable fees or commissions which, by their nature, are equivalent to
an interest rate. For variable-interest financial instruments, the effective interest
rate coincides with the yield rate in force for all items up to the first scheduled
revision of the reference interest rate.
v. Investments held in the capital of other entities for which the fair value cannot be
determined in a sufficiently objective manner and financial derivatives for which
these instruments are the underlying assets and which are settled by delivering
the assets are carried at cost, corrected where applicable by the losses due to
impairment which they have experienced.
Changes in the carrying amount of financial assets are recognised, in general, with
a balancing entry in profit and loss, with a distinction between those originating in
the accrual of interest and similar items, which are recognised under the heading
'Interest and similar income', and those due to other causes, which are recognised
for their net amount in 'Results of financial transactions' in the income statement.
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However, variations in the carrying amount of the instruments included under the
heading ' Available-for-sale financial assets' are temporarily recognised under the
heading 'Equity valuation adjustments' except when they are due to exchangerate
differences. The amounts included under the heading 'Valuation adjustments'
continue to be part of equity until the assets to which they relate are removed from
the balance sheet, at which time the entry is cancelled against profit and loss.
For financial assets designated as hedged items or accounting hedges of fair value,
the valuation differences in both the hedging and the hedged items, as far as the
type of risk hedged is concerned, are recognised directly in profit and loss.
In hedges of the fair value of the interest-rate risk of a portfolio of financial
instruments, gains or losses arising on valuing the hedging instrument are
recognised directly in profit and loss, while gains or losses due to changes in the
fair value of the hedged amount, with regard to the hedged risk, are recognised in
profit and loss with a balancing entry under the heading 'Adjustments to financial
assets due to macro-hedges'.
h) Recognition of income and expenses
Income and expenses from interest and related items are recognised generally according
to the period of accrual and by application of the effective interest-rate method. Dividends
received from other entities are recognised as income at the moment the right to receive
them arises.
Fees paid or received for financial services, regardless of how they are described in
contractual terms, are classified in the following categories, thereby determining their
assignment in the income statement:
i. Financial fees which are an integral part of the return or effective cost of a financial
transaction, and which are taken into profit and loss over the expected lifetime
of the transaction as an adjustment to the cost or effective return. These include
commitment fees and fees for the study of asset products, fees for excess credits,
and overdraft fees on liability accounts.
ii Non-financial fees, which are those that derive from the provision of services and
that might arise in the execution of a service provided during a period of time and
in the provision of a service that is executed in a single act.
Income and expenses are generally recognised in profit and loss, in accordance with the
following criteria:
i. Those relating to financial liabilities at fair value through profit or loss are
recognised when received.
ii. Those relating to transactions or services that are provided over a period of time
are recognised during the period of such transactions or services.
iii. Those relating to a transaction or service executed in a single act are recognised
when such act is performed.
Non-financial income and expenses are recognised on an accrual basis. Deferred
collections and payments, for a term in excess of one year, are recorded as the amount
resulting from the financial updating of anticipated cash flows at market rates.
i) Impairment of financial assets
The carrying amount of financial assets is generally corrected as a charge against
consolidated profit and loss when there is objective evidence that a loss has occurred
owing to impairment, which occurs in the following cases:
i. In cases of debt instruments, meaning loans and debt securities; when, after their
initial recognition, there is an event or combined effect of several events that has
a negative impact on future cash flows.
ii. In the case of equity instruments, when after recognition there is an event or
combined effect of several events with the effect that its carrying amount will not
be recovered.
As a general principle, the correction of the carrying amount of financial instruments
owing to impairment is made against the income statement of the period in which the
impairment is manifested; and the recovery of the losses owing to previously recognised
losses from impairment, if any, is recognised in the income statement in the period in
which the impairment is eliminated or reduced. If the possibility of recovering an amount
owing to recognised impairment is considered remote, the impairment is eliminated from
the consolidated balance sheet, although the Group may perform the actions necessary
to attempt to achieve collection until the final expiration of rights owing to prescription,
cancellation or other causes.
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In the case of debt instruments valued at their amortised cost, the amount of losses owing
to impairment incurred is equal to the negative difference between its carrying amount
and the present value of estimated future cash flows. For listed debt instruments, use can
be made, as a substitute for the present value of future cash flows, of their market value
provided that it is sufficiently reliable to be considered representative of the value the
Group may recover.
Estimated future cash flows of a debt instrument are all the sums, both principal and
interest, that the Group estimates it will obtain during the lifetime of the instrument.
This estimate takes account of all the relevant information available as at the date of
preparation of the consolidated financial statements that provides data on the possible
future collection of the contractual cash flows. Similarly, when estimating the future cash
flows of instruments that have tangible securities, the flows that would be obtained from
their realisation are taken into account, minus the costs necessary for their collection and
subsequent sale, regardless of the probability of execution of the guarantee.
In calculating the present value of estimated future cash flows the original effective
interest rate of the instrument is used as the discount rate if its contractual rate is fixed, or
the effective interest rate on the date referred to in the financial statements determined
in accordance with the contractual conditions is used if it is variable.
Portfolios of debt instruments, contingent risks, and contingent commitments, regardless
of the customer, the instruments used or guarantees held, are analysed to determine the
credit risk to which the Group is exposed and to estimate the requirements for covering
any impairment in value. In drawing up the financial statements, the Group classifies its
transactions according to the credit risk, with a separate analysis of the insolvency risk
attributable to the client and the country-risk to which they are exposed, if any.
Objective evidence of impairment will be determined individually for all debt instruments
that are significant, and individually and collectively for groups of debt instruments
that are not individually significant. When a specific instrument cannot be included in
any asset group with similar risk characteristics, it will be analysed in an exclusively
individual manner to determine whether it is impaired and, if necessary, to estimate the
loss from impairment.
Collective evaluation of a group of financial assets in order to estimate the losses from
impairment is carried out as follows:
contractual conditions. The characteristics of credit risk used to group assets are,
among others, the instrument type, the debtor's activity sector, the geographical
area of the activity, the type of guarantee, the aging of the due amounts and any
other factor that may be relevant to an estimate of future cash flows.
ii. Future cash flows in each group of debt instruments are estimated for instruments
with credit risk characteristics similar to those of the respective group, after making
the adjustments necessary to adapt historical data to present market conditions.
iii. Loss due to impairment of each group is the difference between the carrying
amount of all debt instruments and the present value of their estimated future
cash flows.
Debt instruments not valued at fair value through profit or loss, contingent risks, and
contingent commitments are classified according to the default risk attributable to the
customer or to the transaction, into the following categories: normal risk, sub-standard
risk, doubtful risk owing to customer delinquency, doubtful risk owing to reasons other
than customer delinquency, and bad risk. For debt instruments not classified as normal
risk, estimates are made of the specific coverage necessary for impairment on the basis
of the aging of the unpaid amounts, the guarantees provided and the financial situation
of the customer and, if applicable, of the guarantors. This estimate is generally made on
the basis of arrears calendars.
In addition to the specific coverage for impairment indicated above, the Bank covers
inherent losses incurred on debt instruments not valued at fair value through profit or
loss and contingent risks classified as a normal risk through collective provisioning.
In this regard, the Bank of Spain determines the parameters, methods and amounts to
be used to cover losses from inherent impairment that occur in debt instruments and
contingent risks that have been classified as normal risk.
The calculation method as provided in Appendix IX to Bank of Spain Circular 4/2004 is
divided into two stages.
In the first stage, balances are divided into six types of risk as per the regulation. These
types are: No significant risk, low risk, medium-low risk, medium risk, medium-high risk
and high risk.
i. Debt instruments are included in groups that have similar credit-risk characteristics
that indicate the capacity of debtors to pay all sums, principal and interest, as per
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The impaired amount is therefore the sum of the following:
- The result of multiplying the value of the change in the balance of each risk type
in the period by the relevant alpha regulatory parameter, plus
- the sum of the results of multiplying the total balance of transactions included
in each of the risk types at the end of the period by the relevant beta regulatory
parameter, minus
- the net amount of additions to overall specific provisions made during the period.
The overall balance of generic provisions must not exceed 125% of the amount resulting
from adding the product obtained by multiplying the amount of each type of risk by its
relevant alpha regulatory parameter. During 2012 the Group released its entire generic
provision,
The α and β regulatory parameters, for each class of risk, are as follows:
α
β
No appreciable risk 0% 0 %
Low risk 0.6% 0.11%
Medium-low risk 1.5% 0.44%
Medium risk 1.8% 0.65%
Medium-high risk 2.0% 1.10%
High risk 2.5% 1.64%
Recognition in the income statement of the accrual of interest on the basis of contractual
terms is interrupted for all debt instruments individually classified as impaired, and for
those for which losses from impairment have been collectively calculated because they
have outstanding amounts more than three months old. The amount of financial assets
which would be in an irregular situation if it were not because their conditions were
renegotiated is not significant considering the group's financial statements as a whole.
equity are recognised immediately in the consolidated income statement. If some or all
of the losses from impairment are subsequently recovered, the amount is recognised,
in the case of debt securities, in the consolidated income statement for the period
when recovered and, in the case of equity instruments, under the heading 'Valuation
adjustments' in consolidated equity.
Impairment losses on equity instruments valued at their acquisition cost reflect the
difference between their carrying amount and the present value of future expected
cash flows, discounted at market rates of returns on other similar securities. These
impairment losses are recognised in profit and loss in the period in which they occur,
directly decreasing the cost of the financial asset, where the amount cannot be recovered
except in case of sale.
In the case of equity instruments constituting holdings in joint ventures and associates,
the Group estimates the amount of losses from impairment by comparing its recoverable
amount with its carrying amount. Said losses from impairment are recorded in the
consolidated profit and loss account of the period in which they occur and subsequent
recoveries are recorded in the profit and loss account of the recovery period.
In the case of listed equity instruments, and in addition to the above, checks are carried
out to ensure that their market value is higher than the carrying amount recognised for
the instrument.
j) Financial derivatives
Financial derivatives are instruments that not only provide a profit or loss but also can
allow, under certain conditions, offsetting of all or part of the credit and/or market risks
associated with balances and transactions, using as underlying such things as interest
rates, certain indices, the prices of certain securities, exchange rates between different
currencies and other references of a similar kind. The Group uses financial derivatives
traded on organised markets or bilaterally with over-the-counter trading (OTC) both in
its own transactions and with retail or wholesale customers.
The amount of losses from impairment incurred in debt securities and other equity
instruments included under the item 'Available-for-sale financial assets' is equal to the
positive difference between their acquisition cost, net of amortisation of the principal,
and their fair value minus any loss from impairment previously recognised in the
consolidated income statement.
The Group takes positions in derivatives with the purpose of hedging its positions,
performing active management with other financial assets and liabilities or benefiting
from the changes in their prices. Financial derivatives that can not be considered as
hedging are considered to be trading derivatives.
When there is objective evidence that the decrease in fair value is due to impairment, the
latent losses expressly recognised under the item 'Valuation adjustments' in consolidated
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Derivatives with an active market are valued according to the listed prices on said
markets.
Derivatives without a market, or for which the market has a low level of activity, are
valued on the basis of the most consistent and appropriate economic methodologies,
maximising the use of observable data and including any factor that a participant in the
market would consider, such as a) recent transactions with other instruments that are
substantially the same; b) discounted cash flows and c) market models to value options.
The techniques applied are those mainly used by market participants and have shown
their capacity to provide the most realistic estimate of the price of the instrument.
All financial derivatives are initially recognised at their fair value. For the case of financial
swaps, said value is presumed to be zero, except when the entity shows otherwise by
means of appropriate valuation techniques. In this case, the initial recognition of fair
value generates a profit or a loss that must be recorded in the profit and loss account
when all the model variables come exclusively from observable market data, thereby
generating so-called 'profits from day one'. On the basis of the principle of prudent
supervision stipulated for the entity by the Bank of Spain, the Board of Directors decided
to apply an alternative criterion of linear accrual of these 'day one gains' during the
lifetime of the financial swaps by which they are generated.
A derivative may be designated as a hedging instrument only if it meets the following
criteria:
by variations in market prices between the hedged items and their hedging are within
fair parameters throughout the lifetime of the transactions, thereby meeting the
forecasts made at the time of procurement.
If this is not the case at some point, the transactions related to the hedging group
would be deemed to be trade transactions and duly reclassified in the balance sheet.
The hedging performed by the Group belongs to the fair value hedging type:
- Micro-hedging or individual hedging (when there is a specific identification
between instruments hedged and hedging instruments) hedges against exposure
to changes in the fair value of the item hedged. The gain or loss arising from
valuing the hedge instruments is recognised immediately in the income statement.
- Portfolio hedging (interest rate risk hedging in a portfolio of financial instruments)
hedges exposure to changes in the fair value of the amount hedged in response
to changes in the interest rate. The gain or loss arising from valuing the hedge
instruments is recognised immediately in the income statement. In the case of the
hedged amount, the gain or loss that arises when valuing it is directly recognised
in the income statement, using as the balancing entry "Adjustments to financial
assets by macro-hedging", or "Adjustments to financial liabilities by macrohedging",
depending on whether the hedged amount corresponds to financial
assets or financial liabilities.
i. It may be considered a hedging instrument in its entirety, even if it is only a
hedging instrument for a percentage of its total amount, except in the case of
options, in which case the change in its intrinsic value may be deemed to be a
hedging instrument, excluding the change in its time value or in forward contracts,
which may be so considered for the difference between the cash prices and the
forward prices of the underlying asset.
ii. It is considered a hedge for the whole of its remaining term.
iii. Where more than one risk is hedged, the different risks hedged may be clearly
identified, each part of the instrument may be designated as hedging specific
hedged items, and the effectiveness of the different hedges may be demonstrated.
The effectiveness of derivatives hedging defined as hedging is duly documented by
way of the effectiveness tests, which are tools that prove that the differences caused
k) Transfers and removal of financial instruments from the balance sheet
Transfers of financial instruments are recognised taking into account the manner in
which the transfer of risks and profits related to the financial instruments transferred
is performed, on the basis of the following criteria:
i. If risks and profits are substantially transferred to third parties, as in unconditional
sales, sales with re-purchase agreements for fair value as at the re-purchase date, sales
of financial assets with a call or put option issued out of the money, securities of assets
in which the assignor does not withhold subordinated financing or give any type of
credit enhancement to the new holders, etc. the financial instrument is removed from
the balance sheet, with simultaneous recognition of any debt or obligation held or
created as a consequence of the transfer.
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ii. If there is substantial retention of risks and profits associated with the financial
instrument transferred, as in the sales of financial assets with a re-purchase agreement,
or for the sale price plus interest, securities loan agreements where the borrower is
obliged to return the same or similar assets, etc., the financial instrument transferred
is not removed from the balance sheet and it is still valued with the same criteria used
prior to the transfer. However, the attendant financial liability is acknowledged in
books at an amount equal to that of the consideration received, which is subsequently
valued at its amortised cost. Income from financial assets transferred but not removed
and the costs of the new financial liability are recognised directly in the income
statement.
iii. If there is no transfer or substantial retention of the risks and profits attending the
financial instrument transferred, as in the sales of financial assets with an acquired
call option or an issued put option which are not in or out of the money, the securities
in which the assignor assumes a subordinated financing or another type of credit
enhancements for a part of the transferred asset, there is a distinction between:
- Where the Group does not retain control of the financial instrument transferred,
in which case it is removed from the Balance Sheet and any right or obligation
retained or created as a result of the transfer is recognised.
- Where the Group retains control of the financial instrument transferred, in which
case it continues to recognise it in the Balance Sheet for an amount equal to its
exposure to the changes in value it may undergo, and a financial liability linked to
the financial asset transferred is recognised.
l) Property, plant and equipment
Property, plant, and equipment is shown for its acquisition cost, updated in accordance
with certain legal rules and appreciated as permitted under the transition to the new
accounting standard, minus the relevant accumulated depreciation and any loss from
impairment.
Depreciation is calculated systematically according to the linear or sum of the digits
method, applying estimated years of service life of the different elements to the acquisition
cost of assets minus their residual value. In the case of land on which buildings and other
constructions stand, it is deemed that these have an indefinite lifetime, and therefore
they are not subject to depreciation. Annual allocations for the depreciation of tangible
assets are charged to the profit and loss account and calculated according to the estimated
years of service life, which coincide with the legal minimums.
Depreciation method
Depreciation and
Amortisation
Buildings Straight-line over 50
years
Fixtures and fittings and others
Straight line from 6 to
12 years
Computer equipment
Sum of the digits
The group reviews, at least at the end of the year, the period and method for depreciation
of each tangible asset.
The net amount of the asset transferred and the associated liability will be the
amortised cost of the rights and obligations retained, where the asset transferred is
measured by its amortised cost, or for the fair value of the rights and obligations
retained, where the asset is measured by its fair value.
Therefore, financial assets are derecognised only when the cash flows they generate
have ceased or when the risks and benefits they have implicit have substantially been
transferred to third parties. Similarly, financial liabilities are derecognised only when
the obligations they generate have expired or when they are acquired with the intent
of cancelling them or disposing of them again.
Maintenance expenses and maintenance of tangible assets which do not improve their
use or lengthen the service life of the respective assets, are charged to profit and loss at
the time they occur.
At each accounting closure, the group analyses whether there are internal and external
indications that the net value of aspects of its tangible assets exceeds their corresponding
recoverable amount. In this case, the group reduces the carrying amount of the
corresponding element to its recoverable amount and adjusts future depreciation charges
in proportion to its adjusted carrying amount and for its remaining useful life, in the
event that a re-estimate is necessary. In addition, when there are indications that the
value of an asset has recovered, the group reverses the impairment loss recognised in
prior periods and adjusts future depreciation charges. Reversal of the impairment loss on
an asset may in no circumstances entail an increase in its carrying amount above what it
would be if impairment losses had not been recognised in previous years.
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The heading “Investment property” in the consolidated Balance Sheet comprises the net
value of land, buildings and other constructions held either for renting out or with a view
to obtaining a possible capital gain on their sale.
The criteria applied for recognition of the acquisition costs of investment properties, for
depreciation, for estimating their respective useful lives and recognising any impairment
losses are the same as those outlined above.
m) Intangible assets
Intangible assets are such identifiable, though invisible, non-monetary assets as arise as a
consequence of a legal transaction or have been developed internally by the consolidated
entities. Only those intangible assets whose cost can be estimated in a reasonably
objective way and from which consolidated entities consider it likely that they will obtain
future economic benefits are recognised in the accounts.
Intangible assets are recognised initially at their acquisition or production cost and
are subsequently valued at cost, less, as appropriate, their corresponding cumulative
amortisation and any impairment losses they may have suffered.
Goodwill
Differences between the cost of holdings in the capital of consolidated entities and entities
accounted for using the equity method and other forms of business combinations and
the corresponding net fair values of the assets and liabilities acquired, adjusted for the
percentage holding acquired in these net assets and liabilities in the case of purchase of
holdings, as at the date of their acquisition, are accounted for in the following way:
1. If the acquisition price exceeds the aforementioned fair value, as goodwill
under "Intangible assets - goodwill" in the consolidated balance sheet. In the
case of acquisition of holdings in associates or joint ventures accounted for
using the equity method, any goodwill arising on acquisition is recognised
as forming part of the value of the holding and not individually under the
heading "Intangible assets - goodwill".
2. Negative differences between the acquisition cost and the fair value referred
to are recognised once the valuation process has been reviewed, as income in
the consolidated income statement under "Negative differences in business
combinations".
Positive goodwill (excess of the acquisition price of a holding in a company or business
over the net fair value of the assets, liabilities and contingent liabilities acquired) -
which are recognised in the consolidated balance sheet only when acquired for valuable
consideration - therefore represent prepayments made by the acquiring entity for future
economic benefits deriving from the assets of the entity or business acquired which are
not individual and separately identifiable and recognisable.
Impairment losses recognised on goodwill shown under "Intangible assets - goodwill" are
not subsequently reversed.
Other intangible assets
Intangible assets other than goodwill are recognised in the consolidated balance sheet at
their acquisition or production cost, net of cumulative amortisation and any impairment
they may have suffered.
Intangible assets may have an "indefinite useful life" - when, based on the analyses
performed of all relevant factors, it is concluded that there is no foreseeable limit to the
period during which net cash flows are expected to be generated in favour of consolidated
entities - or a "definite useful life" in the remaining cases.
Intangible assets with an indefinite useful life are not amortised, while for the close of
each accounts period, consolidated entities review their remaining respective useful lives
in order to ensure that these continue to be indefinite or if not, to take appropriate action.
Intangible assets with a definite life are amortised based on this life, applying criteria
similar to those adopted for the depreciation of property, plant and equipment. The annual
amortisation of intangible assets with a definite useful life is recognised in “Amortisation”
in the consolidated income statement.
Both for intangible assets with indefinite useful lives and those with definite useful lives,
the consolidated entities recognise any impairment losses, using as a balancing item
"Impairment losses on other assets (net) - goodwill and other intangible assets" in the
consolidated income statement. The criteria for recognising impairment losses on these
assets and, if applicable, recoveries of impairment losses recognised in preceding years
are similar to those applying to tangible assets for own use.
The balances recognised in the intangible asset items in the Balance Sheet, both under
goodwill and under other intangible assets, essentially correspond to Línea Directa
Aseguradora, S.A (“LDA”).
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n) Leases
Leases are presented in accordance with the economic basis of the transaction,
independently of their legal form, and are classified from the start as finance or operating
leases.
i. A lease is deemed to be a finance lease when essentially all risks and benefits
inherent in ownership of the asset that is the subject of the contract are transferred
to the lessee.
When the Group acts as lessor, the total annual values of the amounts it will
receive from the lessee plus a guaranteed residual value, which is usually the price
of the purchase option held by the lessee upon termination of the contract, are
recognised as financing granted to a third party, and as such included under the
heading 'Loan and receivables' in the balance sheet, in accordance with the nature
of the lessee.
On the other hand when the Group acts as lessee, the cost of the assets leased is
recognised in the balance sheet according to nature of the asset that is the subject
of the contract, and simultaneously as a liability for the same amount, which
will be the lower of the fair value of the asset leased or the sum of the present
values of the amounts to be paid to the lessor plus, where applicable, the price of
the purchase option. These assets are depreciated using similar criteria to those
applied to tangible assets for own use.
ii. Lease agreements that are not considered finance leases are classified as operating
leases.
When the Group acts as lessor, it recognises the acquisition cost of the assets leased
under the heading 'Tangible assets'. Such assets are depreciated in accordance with
the policies in effect for similar tangible assets for own use and the income from
lease agreements is recognised in profit and loss on a straight line basis.
On the other hand when the Group acts as lessee, leasing costs including any
incentives granted by the lessor are recognised on a straight line basis in profit
and loss.
o) Non-current assets for sale
Non-current assets for sale are those with a carrying amount that is to be recovered
mainly through their sale, and which are available for immediate sale, and for which
their sale is considered to be highly likely.
Non-current assets for sale are shown at the lower of fair value minus selling costs and
their carrying amount, and they are not subject to depreciation or amortisation. In the
case of repossessed assets, the acquisition cost corresponds to the net value of the financial
assets delivered in exchange for taking possession thereof.
Losses from impairment are recognised under the item 'Losses from impairment of noncurrent
assets for sale' in the consolidated income statement. Recoveries of value are
recognised in the consolidated income statement up to an amount equal to the losses
from impairment recognised previously.
Buildings repossessed in payment of debt are recognised at the lower of fair value minus
selling costs and carrying amount. Losses from impairment are recognised under the
item 'Losses from impairment of non-current assets for sale' in the consolidated income
statement, calculated individually for those remaining for a period longer than that
initially foreseen for their sale.
p) Set-off of balances
Balances due and receivable originating from transactions which include the possibility of
set-off, either contractually or pursuant to a legal rule, and where the intention exists to
settle them at their net value or to realise the asset and pay the liability simultaneously,
are presented in the consolidated balance sheet at their net amount.
q) Security lending or guaranteed lending
Security lending is a transaction in which the borrower receives full ownership of the
securities without paying out more than commissions, with the undertaking to return to
the lender securities of the same type as those received.
Contracts for security lending in which the borrower bears the obligation to return the
same assets, other assets that are substantially the same, and other similar assets with the
32
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same fair value are deemed to be transactions in which the risks and benefits attending
ownership of the asset are substantially retained by the lender.
r) Financial guaranties
Financial guarantee contracts are considered as being contracts that require the issuer
to make specific payments in order to refund the creditor for the loss incurred when
a specific debtor defaults on its payment duties pursuant to the (original or amended)
conditions of a debt instrument, irrespective of the legal form thereof, and which may be,
amongst others, a surety, financial collateral, a contract of insurance, or a loan derivative.
The Bank recognises financial guarantee contracts under the heading 'Other financial
liabilities' for their fair value plus the costs of the transaction that are directly attributable
to their issue. At the start, and save where there is evidence to the contrary, the fair value
of financial guarantee contracts issued in favour of an unrelated third party, as part of an
isolated transaction at arm's length, will be the premium received plus, where appropriate,
the present value of the cash flows receivable, using an interest rate similar to that of
financial assets granted by the Bank with a similar term and risk; simultaneously, it
recognises the present value of the future cash flows pending receipt as a credit in the
assets using the aforementioned interest rate.
Subsequent to the initial recognition, the contracts are treated in accordance with the
following criteria:
a. The value of the fees or premiums receivable for financial guarantees are
discounted to present value, with the differences being recognised in profit and
loss as financial income.
b. The value of financial guarantee contracts which have not been classed as doubtful
will be the amount initially recognised under liabilities less the part attributed to
profit and loss on a linear basis over the expected lifetime of the guarantee or using
another criterion, provided that this reflects more appropriately the receipt of the
economic benefits and risks of the guarantee.
Financial guarantees are classified in accordance with the default risk attributable to the
customer or to the transaction, and where appropriate, consideration is given to the need
to establish provisions, applying criteria similar to those indicated in Note (g) for debt
instruments valued at amortized cost.
In the event it should be necessary to establish a provision for financial guarantees, any
fees pending accrual are reclassified to the corresponding provision.
s) Personnel expenses
Post-employment benefits
The Bank has made commitments with its personnel with regard to pensions arising
under the Private Sector Banking Collective Labour Agreement.
Commitments in respect of post-employment benefits made by the Bank to its
personnel are deemed to be 'Defined contribution plans', where the Bank makes
contributions of a pre-determined nature to a separate entity, without any legal or
effective duty to make additional contributions should the separate entity be unable
to honour the payments due to personnel in relation to the services provided in the
current period and previous periods. Post-employment commitments that do not meet
the above conditions are deemed to be 'Defined benefit plans'.
Defined contribution plans
The contribution accrued during the financial year for this item is carried under the
heading 'Personnel expenses' in the consolidated income statement.
If at 31 December of the financial year there is an outstanding amount pending
contribution to the external plan through which the commitments are fulfilled, this
is recognised at its present value under the heading 'Provisions - pension fund and
similar obligations'. As at 31 December 2012 and 2011, there were no outstanding
amounts pending contribution to external defined contribution plans.
Defined benefit plans
The Group records the present value of the post-employment fixed-provision benefits
under the heading 'Provisions - Pension fund and similar obligations' in the liabilities
of the consolidated balance sheet. As explained below, this value is recognised net of
the fair value of the assets that meet the requirements in order to be considered as
'Plan assets'.
“Plan assets” are those linked to a particular defined benefit commitment with which
these obligations will be settled directly, and which meet the following conditions: They
are not owned by the Group, but by a legally separate third party that is not a related
party; they are available only for paying or financing post-employment benefits; and
they cannot return to the consolidated entities, except where the assets remaining in
the plan are sufficient to meet all the obligations of the plan or the entities related to
33
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the benefits of the current or former personnel or to refund employee benefits already
paid by the Group.
If the Bank can require insurance companies to pay part or all of the payout required
to cancel a defined benefit obligation, and it is practically certain that said insurer will
reimburse some or all of the payouts required to cancel this obligation, but the insurance
policy does not meet the conditions to be a plan asset, the Bank recognises its right to
reimbursement on the asset side of the balance sheet under the heading "Insurance
contracts linked to pensions", which is otherwise treated as a plan asset.
'Actuarial differences' are deemed to be those arising from the differences between
previous actuarial hypotheses and reality and changes in the actuarial hypotheses
used. The Group recognises net actuarial losses and gains in the period in which they
arise, charging them to profit and loss.
Post-employment remunerations are recognised in the consolidated income statement
as follows:
- Current service cost - the increase in the current value of the obligations arising as a
result of employees’ service during the year - under the heading “Administration costs -
Personnel expenses”.
- Interest cost - defined as the increase during the year in the present value of the
obligations as a result of the passage of time - under “Interest expense and similar
charges”. Where the obligations are shown in the liabilities net of the plan assets, the
cost of the liabilities recognised in the consolidated income statement will be exclusively
that corresponding to the obligations recognised in the liabilities.
- The expected yield on any plan asset recognised in the assets of the consolidated Balance
Sheet is shown under the heading “Interest and similar income” in the consolidated
Income Statement.
- The amortisation of the actuarial gains and losses, under the heading “Additions to
Provisions (net)” in consolidated Income Statement.
Other long-term benefits
Early retirement
The Group guarantees certain commitments made to personnel who have retired early -
both with regard to salaries and other social benefits - from the time of early retirement
to the date of effective retirement.
Early retirement commitments up to the date of effective retirement are treated for
accounting purposes, where applicable, using the same criteria as explained above for
defined benefit post-employment benefits, except that all costs for past services and
actuarial gains (losses) are recognised as soon as they arise with a balancing entry in the
consolidated income statement.
Death and invalidity of active personnel
The commitments made by the Group to cover the contingencies of death and invalidity
of employees during the time that they are active and are covered by an insurance policy
taken out by way of co-insurance with Axa and Caser are recognised in the consolidated
income statement for an amount equal to the that of the premiums on these insurance
policies accruing in each financial year.
t) Other allowances and contingencies
The Group records provisions at the estimated value in order to meet current obligations
resulting from past events that are clearly specified as regards their nature but which are
indeterminate as regards amounts or the date of cancellation, and where cancellation will
require disposal of resources that contain economic benefits. Said obligations may arise
from the following:
- A legal or contractual provision.
- An implicit or tacit obligation originating from third parties’ valid expectation,
created by the Group, regarding the assumption of certain types of responsibilities.
These expectations are created when the Group publicly accepts responsibilities, or
they arise from past conduct or from business policies in the public domain.
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- Practically certain changes in the rules on certain issues, particularly regulatory
measures which the Group will not be able to avoid.
Contingent liabilities are possible obligations of the Group that arise as a consequence
of past events, the materialisation of which depends on whether future events outside
the Group's control occur or not. Contingent liabilities include present obligations of the
Group, the cancellation of which is improbable and which leads to a reduction of resources
including economic benefits and the amount of which, in extremely rare cases, cannot be
quantified with sufficient reliability.
Contingent obligations and liabilities are considered probable when there is a greater
likelihood that they will materialise than that they will not, possible when there is less
likelihood that they will materialise than that they will not, and remote when their
occurrence is extremely rare.
The Group includes in its consolidated financial statements all significant provisions for
which it is estimated that the probability that the obligation will have to be met is greater
than that it will not. Contingent liabilities are not recognised in the consolidated financial
statements but are instead reported on unless the possibility is considered remote that
that there will be a loss of resources that includes economic benefits.
Provisions are quantified on the basis of the best information available on the consequences
of the event that gives rise to them and they are estimated at the end of each accounting
year, including the financial effect if it is significant. These are used to meet specific
obligations for which they were recognised, and are reversed either totally or partially
when said obligations no longer exist.
As at 31 December 2012 and 2011 various legal proceedings and claims were being
pursued against the Group in relation to the performance of its regular activities. Both the
Group's legal advisors and the managers of the entity believe that the conclusion of these
proceedings and claims will not have a significant impact on the consolidated financial
statements, or as the case may be a significant additional impact to that already provided
for.
u) Corporate tax
Corporate tax is considered an expense and is recognised under the heading 'Corporate Tax'
in the income statement except when it is the result of a transaction recognised directly
in equity, in which case it is recognised directly in equity, or of a business combination,
where the deferred tax is recognised as an asset of the combination.
Expenses under the heading 'Corporate Tax' are determined by the tax calculated on the
tax base for the year, taking account of changes during the year arising from temporary
differences, tax credits for deductions and allowances and negative tax bases. The tax base
for the year may differ from the net profit or loss for the year as presented in the income
statement, since it excludes income and expense items that are taxable or deductible in
other financial years as well as items for which this is never the case.
Deferred tax assets and liabilities correspond to taxes that are expected to be payable or
recoverable on the differences between the carrying amounts of the assets and liabilities
in the financial statements and the corresponding tax bases. They are recognised using
the liability method in the balance sheet and are quantified by applying the tax rate at
which they are expected to be recovered or settled to the corresponding time difference
or credit.
Deferred tax assets, such as tax paid in advance, credits for deductions and allowances,
and credits for negative tax bases are recognised whenever it is probable that the Group
will obtain sufficient taxable profits in the future against which to apply them. It is
considered likely that the Group will obtain sufficient taxable profits in the following
cases, amongst others:
i) There are liabilities from deferred taxes that may be cancelled in the same year
as the realization of the deferred tax asset or in a subsequent year in which it can
offset the negative tax base in existence or generated by the amount paid early.
ii) The negative tax bases have been produced by identified causes that are unlikely
to occur again.
Notwithstanding the foregoing, deferred tax assets that arise upon recognition of
investments in joint ventures or associates are recognised only when it is probable that
they will be realised in the foreseeable future, and sufficient taxable profits are expected
in the future against which to apply them. Deferred tax assets are also not recognised
when an asset that is not a business combination is initially recognised, and where at the
time of recognition they have not affected the accounting or tax result.
Deferred tax liabilities are always recognised, except when goodwill is recognised or if they
arise upon recognition of investments in joint ventures or associates, if the Group is able to
control the timing of the reversal of the temporary difference and it is also probable that
the difference will not reverse in the foreseeable future. Deferred tax liabilities are also
not recognised when an asset that is not a business combination is initially recognised,
and where at the time of recognition they have not affected the accounting or tax result.
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At the end of each financial year the deferred taxes are revised, both assets and liabilities,
in order to verify that they are still in effect and that the proper corrections are made.
v) Off-balance-sheet customer resources
Resources entrusted by third parties for investment in companies and mutual funds,
pension funds (contracts of insurance), and discretionary portfolio management contracts
are not included in the Group Balance Sheet. Information on these resources as at 31
December 2012 can be found in Note 40.
Equity managed by consolidated companies owned by third parties is not included in
the consolidated balance sheet. Fees generated by this activity are recognised under the
heading 'Fees income' in the consolidated income statement. Note 40 provides information
on third-party equity managed by the Group on 31 December 2012 and during the
financial year ended on the aforementioned date.
Investment funds managed by consolidated companies are not recorded in the Group's
consolidated balance sheet, as the equity in same is owned by third parties. Fees accrued
in the financial year for the various services rendered to these funds by the companies in
the Group (wealth management services, portfolio custody, etc.) are recognised under the
heading “Fees received” in the consolidated Income Statement.
w) Insurance contracts
In accordance with the accounting practices that are generally used in the insurance
sector, insurance institutions record in the profits the amounts of the premiums that they
issue and debit from their income statement the cost of claims that they meet at the time
of the final settlement thereof. These accounting practices oblige insurance institutions to
accrue at the close of each financial year both the amounts paid for the premiums issued
to their profit and loss accounts and not accrued at that date, and the foreseeable costs for
claims that have occurred and which are pending debit to the income statement.
The most significant liabilities of these institutions as regards the direct insurance hired
by same refer to the following: Provision for unearned premiums, for unexpired Risks,
Provision for services, Mathematical provision, Life Insurance when the investment risk
is undertaken by the policyholders and Participation in profits and for rebates. These
technical provisions for direct insurance are recognised in the consolidated balance sheets
under 'Insurance liabilities' to cover claims arising from said insurance contracts.
The item 'Reinsurance assets' contains the amounts that the institutions are entitled to
receive that originate from the reinsurance contracts they hold with third parties. These
are calculated according to the reinsurance contracts that have been signed and applying
the same criteria that are used for direct insurance.
The results of the group's insurance companies from its insurance activity are recognised
under the heading 'Insurance Activity' in the income statement.
6. Cash and balances with central banks
This heading comprises cash balances and balances held at the Bank of Spain and other
central banks. The breakdown for the years ended 31 December 2012 and 2011 is as
follows:
€000s
31/12/2012 31/12/2011
Cash 120,843 114,751
Bank of Spain 544,429 297,754
Valuation adjustments 102 290
665,374 412,795
In euros 664,160 411,767
In foreign currency 1,214 1,028
665,374 412,795
Shown under valuation adjustments is an amount of €0.10 million representing accrued
interest as at 31 December 2012 (€0.29 million as at 31 December 2011).
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7. Trading portfolio of assets and liabilities and Other financial assets and liabilities
at fair value with changes in profit and loss
As at 31 December 2012
€000s
The breakdown of these items of the consolidated balance sheets as at 31 December 2012
and 2011 is as follows:
Credit
institutions
Nonresident
Public
Admins.
Other
Private
Sector
Resident
Other
Private
Sector Nonresident
Total
Debt instruments 95,267 1,292,582 3,204 628 1,391,681
€000s
31/12/2012 31/12/2011
Asset:
Debt instruments 1,391,681 1,768,879
Other equity instruments 100,932 133,110
Trading derivatives 656,511 544,894
2,149,124 2,446,883
In euros 2,144,547 2,442,841
In foreign currency 4,577 4,042
2,149,124 2,446,883
"Other equity instruments" includes the securities forming part of the trading portfolio,
as well as other financial assets at fair value through profit or loss. The balance of these
other equity instruments as at 31 December 2012 stood at €39.86 million (€31.38 million
as at 31 December 2011).
The fair value of the loaned assets (assets assigned temporarily) in the trading portfolio
on the asset side of the Balance Sheet as at 31 December 2012 was €1,391.68 million
(€1,768.88 million as at 31 December 2011). Practically the whole of these assets have
been ceded for terms of less than one year.
The breakdown of the financial assets and liabilities held for trading and other financial
assets at fair value through profit or loss in the consolidated balance sheet as at 31
December 2012 and 2011, by instrument type and counterparty, is as follows:
Other equity instruments 36,113 - 22,464 42,355 100,932
Trading derivatives 392,879 - 261,874 1,758 656,511
As at 31 December 2011
524,259 1,292,582 287,542 44,741 2,149,124
Credit
institutions
Nonresident
Public
Admins.
Other
Private
Sector
Resident
Other
Private
Sector Nonresident
Total
€000s
Debt instruments 109,320 1,652,335 5,292 1,932 1,768,879
Other equity instruments 9,705 - 92,028 31,377 133,110
Trading derivatives 158,692 - 384,671 1,531 544,894
277,717 1,652,335 481,991 34,840 2,446,883
The fair value of the guarantees received by the group (financial and non-financial assets)
that the Group is authorised to sell or pledge without the owner of the guarantee having
defaulted on payment is lacking in relative importance considering the Group's financial
statements as a whole.
The breakdown of the liabilities in the trading portfolio is as follows:
€000s
Liabilities 31/12/2012 31/12/2011
Trading derivatives 434,592 857,273
Short positions in securities 1,362,732 1,503,311
1,797,324 2,360,584
In euros 1,794,615 2,357,875
In foreign currency 3,357 2,709
1,797,324 2,360,584
37
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

The breakdown of the effect on the consolidated 2012 and 2011 profit and loss account
of the changes in the fair value of the financial assets and liabilities held for trading of
both assets and liabilities and the financial assets at fair value with changes to profits and
losses is as follows:
€000s
2012 2011
Trading portfolio (Note 30) 30,510 11,910
Organised market 37,440 (244)
Non-organised market (6,930) 12,154
Other financial assets at fair value through profit or loss (Note 30) (1,952) 97
28,558 12,007
The net results by financial operation, broken down by the type of instrument in the
trading portfolio and other financial assets at fair value through profit or loss recognised
in financial years 2012 and 2011, are as follows:
€000s
2012 2011
Fixed income for trading (Note 30) 27,539 31,937
Other equity instruments (Note 30) (14,934) (41,738)
Held for trading (12,982) (41,835)
Other financial assets at fair value through profit or loss (1,952) 97
Trading derivatives (Note 30) 15,953 21,808
a) Debt instruments
28,558 12,007
The breakdown of this item in financial assets held for trading in the consolidated balance
sheet as at 31 December 2012 and 2011 was as follows:
The breakdown of this item in accordance with the nature of the securities that make it
up as at 31 December 2012 and 2011 is as follows:
€000s
31/12/2012 31/12/2011
Treasury Bills 494,319 742,699
Bonds 599,787 173,017
Debentures 107,563 573,320
Scrip 75,060 93,964
Other 114,952 185,879
1,391,681 1,768,879
All of the amounts in this item are denominated in euros. The asset trading portfolio is
composed of securities traded on organised markets as at 31 December 2012 and 2011.
b) Equity instruments
The breakdown and changes under this heading of the asset trading portfolio and of the
other financial assets at fair value through profit or loss for financial years 2012 and 2011
is as follows:
From Credit
Institutions
From other
resident
sectors
From other
non-resident
sectors
€000s
Total
Balance as at 31/12/2011 9,705 92,028 31,377 133,110
Balance as at 31/12/2012 36,113 22,464 42,355 100,932
The majority of the instruments under Other equity instruments on the Bankinter Group
balance sheet are denominated in euros both in 2012 and in 2011.
€000s
31/12/2012 31/12/2011
Public Administrations 1,292,582 1,652,335
Other private sectors 99,099 116,544
1,391,681 1,768,879
38
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

c) Trading derivatives
d) Short positions
The breakdown of this item in the financial assets and liabilities held for trading for assets
in the consolidated balance sheet as at 31 December 2012 and 2011 is as follows:
Purchase and sale of unmatured forward
exchange contracts:
€000s
Fair value
31/12/2012 31/12/2011
Assets Liabilities Assets Liabilities
263,980 21,711 15,187 252,919
Currency purchases against euros 123,341 13,649 2,727 252,392
Currency purchases against other
1,526 134 1,007 759
currencies
Currency sales against euros 139,113 7,928 11,310 (232)
Currency sales against other currencies - - 143 -
Securities and interest-rate futures: - - 966 -
Bought - - 966 -
Securities options: 36,562 48,874 58,925 53,812
Bought 36,562 11,210 58,925 4,852
Issued - 37,664 - 48,960
Interest-rate options: 1,528 1,741 1,239 1,275
Bought 1,528 - 1,239 1,275
Issued - 1,741 - -
Currency options: 57 468 44 189
Bought 57 - 44 -
Issued - 468 - 189
Other interest-rate operations: 354,384 361,798 468,350 548,633
Interest-rate swaps (IRSs) 354,384 361,798 468,350 548,633
Credit derivatives - - 183 445
Credit derivatives - - 183 445
656,511 434,592 544,894 857,273
This heading in the Balance Sheet consists of the financial liabilities originated by short
selling to the value of €1,362.73 million as at 31 December 2012 (€1,503.31 million as at
31 December 2011). The balances are denominated in euros. These short positions are
generated by the firm sale of financial assets acquired temporarily.
8. Financial assets available for sale
The breakdown of this heading in the consolidated balance sheet as at 31 December 2012
and 2011 is as follows:
€000s
31/12/2012 31/12/2011
Debt instruments 5,971,654 4,644,306
Other equity instruments 160,817 131,763
6,132,471 4,776,069
In euros 6,132,471 4,774,648
In foreign currency - 1,421
6,132,471 4,776,069
The breakdown of this item in accordance with the nature of the securities that make it
up as at 31 December 2012 and 2011 is as follows:
€000s
31/12/2012 31/12/2011
Fixed Income 5,971,654 4,644,306
Bills of exchange 1,846,234 727,225
Debt 2,788,762 1,890,349
Other Fixed Income 1,336,658 2,026,732
Equities 160,817 131,763
39
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

The fair value of the assets under this item of the consolidated Balance Sheet as at 31
December 2012 loaned or in guarantee was €1,719,35 million (€3,074,14 million as at 31
December 2011). Practically all these assets are assigned for terms of less than one year.
The breakdown of these assets as at 31 December 2012 and 2011 is as follows (€000s):
31/12/2012
Resident Public
Administrations
Other Private
Sectors Total
Debt instruments 4,634,996 1,336,658 5,971,654
Other equity instruments - 160,817 160,817
€000s
4,634,996 1,497,475 6,132,471
€000s
Geographically, the portfolio of available-for-sale financial assets is concentrated
practically entirely in Spain as at 31 December 2012 and 2011.
In 2012 the Group recognised an impairment loss of €8.67 million (2011: €2.03 million)
under the headings “Impairment losses on available-for-sale financial assets” and “Other
financial instruments at fair value through profit or loss” in the enclosed consolidated
Income Statement.
The impairments for the year ended 31 December 2012 related mainly to the Group’s
holdings in the Eolia Group and Inmobiliaria Colonial, S.A.
Results recognised in the consolidated Income Statements for the years ended 31
December 2012 and 2011 from financial transactions (Note 30) by type of instrument in
the portfolio of available-for-sale financial assets, were as follows:
Resident Public
Administrations
31/12/2011
Other Private
Sectors
Total
€000s
31/12/2012 31/12/2011
Debt instruments 2,617,574 2,026,732 4,644,306
Other equity instruments - 131,763 131,763
Debt instruments 23,386 4,176
Other equity instruments 2,994 1,036
26,380 5,212
2,617,574 2,158,495 4,776,069
The effect on the item “Valuation adjustments” in consolidated equity was €3.15 million
as at 31 December 2012 (-€29.25 million as at 31 December 2011).
The following is the breakdown of the movement:
€000s
2012 2011
Valuation adjustments as at 1 January (29,248) (22,994)
Valuation gains and losses 72,655 (3,202)
Income tax (13,882) 2,680
9. Held to maturity investments
The breakdown of this item in the consolidated balance sheets as at 31 December 2012
and 2011 is as follows:
31/12/2012 31/12/2011
Public administrations 2,486,154 2,217,558
Credit institutions 269,201 933,372
€000s
2,755,355 3,150,930
Amounts transferred to results (26,380) (5,732)
Valuation adjustments as at 31 December 3,145 (29,248)
Debt securities 10,175 (22,282)
Equity instruments (7,030) (6,966)
40
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

The changes that occurred in the chapter "Held-to-maturity portfolio" in the financial
years 2012 and 2011 are as follows:
The valuation adjustments of the loan and receivables portfolio, as at 31 December 2012
and 2011 present the following figures:
€000s
2012 2011
Balance at start of period 3,150,930 3,241,573
Additions - 25,294
Withdrawals (395,575) (115,937)
Other movements
Balance at close of period 2,755,355 3,150,930
As at 31 December 2012 the portfolio of held-to-maturity investments was more than
90% concentrated in Spanish Public Administration bodies guaranteed by the State.
The Market Risks division values these references on a monthly basis to confirm that they
can be counted as liquid assets for calculating the Basel III Liquidity Coverage Ratio (LCR).
As at 31 December 2012 and 2011 the entire portfolio was denominated in euros.
10. Loans and receivables
The breakdown of this item in the consolidated balance sheets as at 31 December 2012
and 2011 is as follows:
€000s
31/12/2012 31/12/2011
Deposits with credit institutions 1,085,765 1,772,506
Valuation adjustments 7,963 6,889
Total bank deposits 1,093,728 1,779,395
Loans and advances to customers 44,539,674 46,174,514
Valuation adjustments (964,323) (786,542)
Total customer lending 43,575,351 45,387,972
Total Debt instruments 82,871 -
44,751,950 47,167,367
€000s
31/12/2012 31/12/2011
Valuation corrections due to asset impairment (953,385) (765,454)
Accrued interest 98,881 86,753
Other (101,856) (100,952)
(956,360) (779,653)
The following are the details of the changes that occurred during 2012 and 2011 in the
balance of financial assets classified as loans and receivables and considered to have been
impaired due to their credit risk:
€000s
2012 2011
Balance at start of period 1,500,788 1,330,180
Net additions 670,514 449,943
Transferred to bad debts (214,614) (279,335)
Balance at close of period 1,956,688 1,500,788
After the relevant provisions have been deducted, this amount is the Group's best estimate
of the fair value of the impaired assets.
The breakdown of this item in the consolidated Balance Sheet as at 31 December 2012
and 2011, by type of instrument and counterparty, irrespective of the fair value that may
be attributed to any kind of guarantee to ensure performance, is as follows:
Euros 40,281,112 41,977,815
Foreign currency 4,470,838 5,189,552
44,751,950 47,167,367
41
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

Bank deposits
€000s
31/12/2012 31/12/2011
Loans and advances
to customers Debt instruments Total Bank deposits
Loans and advances
to customers
Total
Banks 1,093,728 - - 1,093,728 1,779,395 - 1,779,395
Resident Public Administrations - 1,612,967 15,985 1,628,952 - 639,411 639,411
Other private sectors - 41,962,384 66,886 42,029,270 - 44,748,561 44,748,561
1,093,728 43,575,351 82,871 44,751,950 1,779,395 45,387,972 47,167,367
The following are the changes that occurred, during 2012 and 2011, in the balance of the
allowances that cover losses due to impairment of the assets that make up the balance of
the "Loans and Receivables" headings.
€000s
31/12/2012 31/12/2011
Balance at start of period 765,454 861,210
Provisions charged to results for the year 360,935 137,925
Of which:
Calculated on an individual basis 948,842 352,233
Calculated on a collective basis (97,479) (35,453)
Recoveries credited to P&L (490,428) (178,855)
Used (187,732) (228,279)
Transfer of funds 17,290 -
Other movements (2,562) (5,402)
Balance at close of financial year 953,385 765,454
Of which:
Calculated on an individual basis 953,385 667,975
Calculated on a collective basis - 97,479
Assets in suspense recovered during 2012 and 2011 totalled €11.18 million and €10.66
million respectively. During financial years 2012 and 2011, the Group recognised
impairment losses of €60.60 million and €36.18 million respectively on foreclosed assets
(Note 12).
Considering these amounts and those recognised in the account “Provisions charged to
results” in the previous table, impairment losses on “Loans and Receivables” amounted to
€410.36 million and €156.20 million, recognised under the heading “Losses due to (net)
impairment of financial assets” in the Income Statement.
Interest and return by type of instrument in the portfolio of loans and receivables
recognised in the consolidated income statement as at 31 December 2012 and 2011 are
as follows:
€000s
2012 2011
Deposits with credit institutions (Note 29) 28,128 48,040
Loans to customers (Note 29) 1,286,893 1,205,045
Debt instruments 5,413 -
1,320,434 1,253,085
During 2011 the Group sold a portfolio of bad debts for €122.83 million to OKO Investments
2, S.A.R.L., obtaining a gain of €7.25 million.
42
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

1. Deposits with credit institutions
The breakdown of this item in the loans and receivables portfolio for the assets in the
consolidated balance sheet as at 31 December 2012 and 2011 is as follows:
2. Loans and advances to customers
The breakdown of this item in the loans and receivables portfolio for the assets in the
consolidated balance sheet as at 31 December 2012 and 2011 is as follows:
€000s
31/12/2012 31/12/2011
Term accounts 46,060 121,525
Assets held temporarily 503,337 737,114
Other accounts 536,368 912,061
Of which, managed as cash 354,945 219,922
Impaired assets - 1,806
Valuation adjustments 7,963 6,889
Accrued interest 7,986 8,656
Other (23) (1,767)
1,093,728 1,779,395
In euros 945,606 1,650,602
In foreign currency 148,122 128,793
1,093,728 1,779,395
€000s
Loans and advances to customers 31/12/2012 31/12/2011
Public Administrations 1,612,967 639,411
Loans to Public Administrations 1,607,289 634,207
Impaired assets 817 657
Valuation adjustments 4,862 4,547
Accrued interest 5,300 5,773
Other (438) (1,226)
Other private sectors 41,962,384 44,748,561
Commercial lending 2,177,584 2,029,780
Receivables secured by collateral 27,421,466 29,507,806
Assets held temporarily 1,515,467 2,781,837
Other non-current receivables 7,963,701 8,081,732
Finance leases 807,586 900,608
Sight debtors and miscellaneous 1,089,894 739,562
Impaired assets 1,955,871 1,498,325
Valuation adjustments (969,185) (791,089)
Valuation corrections due to asset impairment (953,385) (765,454)
Accrued interest 85,595 72,325
Other (101,395) (97,960)
43,575,351 45,387,972
In euros 39,252,635 40,327,213
In foreign currency 4,322,716 5,060,759
43,575,351 45,387,972
43
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

The breakdown of impaired assets by maturity as at 31 December 2012 and 2011 was as
follows:
€000s
31/12/2012
Up to 6 months 516,951
More than 6 months but not more than 9 223,979
More than 9 months but not more than 12 220,246
More than 12 months 995,512
1,956,688
€000s
31/12/2011
Up to 6 months 403,148
More than 6 months but not more than 9 167,777
More than 9 months but not more than 12 152,302
More than 12 months 777,561
1,500,788
Assets matured and not impaired as at 31 December 2012 amounted to €171.87 million
(€161.93 million as at 31 December 2011).
Finance lease agreements for financial years 2012 and 2011, have the following
characteristics:
2012 2011
Average life 4-8 years 4-6 years
Maximum differential 9.00% 9.00%
The distribution of finance lease lending as at 31 December 2012 and 2011 is as follows:
31/12/2012 31/12/2011
Tourism 18.05% 14.73%
Assorted machinery 57.97% 56.50%
Transport vehicles 22.89% 27.62%
Other 1.09% 1.15%
100.00% 100.00%
3. Debt instruments
The breakdown of the heading Debt securities in the loans and receivables section of the
consolidated Balance Sheet as at 31 December 2012 is as follows:
€000s
2012 2011
Resident Public Administrations 15,985 -
Instituto de Crédito Oficial (Official Spanish government credit agency) 5,145 -
Other resident sectors 40,500 -
Other non-resident sectors 21,241 -
11. Asset/liability hedging derivatives
82,871 -
As at 31 December 2012, the Group held hedging derivatives in the amount of €152.20
million recognised on the assets side of the Balance Sheet and €43.10 million recognised
on the liabilities side (€118.65 million and €68.68 million on the assets and liabilities
sides respectively as at 31 December 2011). Net derivatives amounted to €109.10 million
and €49.97 million as at 31 December 2012 and 2011 respectively.
44
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

The breakdown of the hedging derivatives and the corresponding hedged elements,
differentiating according to the type of hedging, is as follows:
€000s
Hedged Instrument Type of Hedging Hedging Instrument
Fair value of the Hedged Instrument Fair Value of the Hedging
Nominal Hedged Nature of Hedged
attributed to the hedged risk
Instrument (ex-coupon)
(€ million)
Risk
31/12/2012 31/12/2012 31/12/2011 31/12/2011
Individual hedges or Micro-hedges:
Financial assets-
Public Debt Individual hedges or Micro-hedges: Interest-rate swaps 150 Interest Rate 29,611 (29,345) 25,499 (24,948)
Financial liabilities-
Subordinated Debt Individual hedges or Micro-hedges: Interest-rate swaps 290 Interest Rate (59,848) 61,572 (58,257) 59,330
Senior Debt Individual Hedges or Micro-hedges: Interest-rate swaps 79 Interest Rate (131) 64 (677) 656
Customer Deposits Individual hedges or Micro-hedges: Interest-rate swaps 5 Interest Rate (1,871) 1,872 (1,978) 1,977
Backed issue Individual hedges or Micro-hedges: Interest-rate swaps - Interest Rate - - (621) 597
FAAF bonds Individual hedges or Micro-hedges: Interest-rate swaps - Interest Rate - - (299) 285
Mortgage Bond Issues Individual hedges or Micro-hedges: Interest-rate swaps 3,910 Interest Rate (47,853) 48,124 (19,972) 19,842
Macro-hedging-
Mortgage Loans Macro-hedging Interest-rate swaps 1,875 Interest Rate 3,018 (2,990) 11,463 (11,336)
(77,074) 79,297 (44,842) 46,403
The following is a comparison of cum-interest and ex-interest hedging instruments as at
31 December 2012 and 2011:
€000s
31/12/2012 31/12/2011
With
interest Ex-interest With interest Ex-interest
Public Debt (32,011) (29,345) (26,916) (24,948)
Subordinated Debt 63,661 61,572 60,520 59,330
Customer Deposits 1,462 64 1,677 656
Senior debt 562 1,872 1,330 1,977
Backed issue - - 10,476 597
FAAF bonds - - 5,228 285
Mortgage Bond Issue 86,522 48,124 39,266 19,842
Macro-hedging - Mortgage loans (11,095) (2,990) (41,607) (11,336)
Other
109,101 79,297 49,974 46,403
The Group uses interest-rate swaps as hedging instruments. These swaps give rise to an
economic interest rate exchange with no principal being exchanged.
The following is a description of the main characteristics of the bank’s hedges as at 31
December 2012.
1.- Public Debt Hedging classified in the portfolio of available-for-sale assets
In this type of hedging, the hedged elements are Spanish State Public Debt securities at
5.50% for a total nominal value at closure of €150 million recognised under the heading
“Available-for-sale financial assets” in the assets included in Note 8. The risk hedged is the
change in the fair value of these securities as a result of changes in the risk-free interest
rate. The accounting hedge is used to exchange exposure to fixed interest for exposure to
variable interest. In each case, the amount hedged represents 100% of the issue.
45
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

2.- Hedging of issues of subordinated bonds
In this case the items hedged are subordinated bonds issued by Bankinter at fixed interest
rates of 6.00% and 6.375% for a total amount of €290 million, shown under the heading
‘Financial liabilities at amortised cost’ included in Note 19. The risk hedged is the change
in the fair value of these securities as a result of changes in the risk-free interest rate. This
accounting hedge is used to transform exposure to a fixed interest rate into exposure to
a variable interest rate. In each case, the amount hedged represents 100% of the issue.
3.- Hedging of senior bond issue
In this case the items hedged are senior bonds issued by Bankinter for a 3% fixed interest
rate for a total sum of 79 million euros carried under the heading 'Financial liabilities at
depreciated cost' of the liabilities included under (Note 19). The risk hedged is the change
in the fair value of these securities as a result of changes in the risk-free interest rate. This
accounting hedge is used to transform exposure to a fixed interest rate into exposure to a
variable interest rate. The amount hedged is 100% of the issue.
4.- Hedging of Customer Deposits
The elements hedged are various fixed-rate deposits taken from customers in the amount
of €5 million and shown under the heading “Financial liabilities at amortised cost”
included in Note 19. The risk hedged is the change in the fair value of these deposits as a
result of changes in the risk-free interest rate. This accounting hedge is used to transform
exposure to a fixed interest rate into exposure to a variable interest rate. The amount
hedged is 100% of the issue.
5.- Hedging of mortgage-backed bond issues
The instruments hedged are issues ES0413679079 (€899 million), ES0413679095 (€613
million), ES0413679079 (€400 million), ES0413679111 (€498 million), ES0413679178
(€1 billion) and ES0413679202 (€500 million) in mortgage-backed bonds for a nominal
total of €3.91 billion.
6.- Portfolio hedging
The element being hedged is the amount of the mortgage loans that it is decided to
hedge on a monthly basis according to the time distribution of the maturity and variable
interest-rate review dates to which they are linked.
The risk being hedged is the interest to which the aforementioned mortgage loan amounts
are exposed for each of the rate-review terms that are to be hedged, as a consequence of
changes in the risk-free interest rate.
In this hedge, the risk-free interest rate is understood as corresponding to the variable
interest rate for interest rate swaps (IRS).
The instruments used to hedge the various mortgage loan amounts are IRS, contracted on
a monthly basis depending on decisions taken with regard to managing interest-rate risk.
Effectiveness of the hedging:
The Micro-hedges and Portfolio Hedging described above are highly effective. The Group
performs and records the pertinent tests to verify that at the beginning and throughout
their lives it can be expected, prospectively, that the changes in the fair value of the item
hedged attributable to the risk hedged will be almost fully set off by the changes in the
fair value of the hedging instrument and that, retrospectively, the hedging results will
have fluctuated within a range of eighty to one hundred and twenty-five per cent in
respect of the results of the item hedged.
As regards portfolio hedges, as well as the foregoing, the Bank verifies compliance with
the alternative, described in current applicable accounting regulations, of appraising
their effectiveness by comparing the amount of the net asset position in each of the time
periods with the hedged amount designated for each one. According to this alternative,
the hedge would be ineffective only if upon review the amount of the net asset position
were lower than the hedged amount.
The risk hedged is the six-month interest rate risk at the start of each interest period to
which the above fixed-income instrument is exposed as a consequence of changes in the
risk-free interest rate, excluding changes due to possible credit risk premiums, market
liquidity or any other than the aforementioned interest-rate risk.
46
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

12. Non-current assets held for sale
The breakdown and changes in the non-current assets for sale are as follows:
The following is the classification of repossessed properties by category and average
length of time in the portfolio of non-current assets for sale:
€000s
Balance at 31.12.2010 271,537
Additions 190,724
Valuation adjustments (69,319)
Cancellations (84,428)
Balance at 31.12.2011 308,514
Additions 275,853
Valuation adjustments (54,630)
Cancellations (148,596)
Balance at 31.12.2012 381,141
€000s
Residential assets Industrial assets Other Assets Totals
31/12/2012 31/12/2011 31/12/2012 31/12/2011 31/12/2012 31/12/2011 31/12/2012 31/12/2011
Up to one month 14,615 6,699 6,162 5,644 2,402 120 23,179 12,463
Between one and three
months 33,836 24,398 11,923 9,236 3,631 2,032 49,390 35,666
Between three and six
months 34,520 5,890 10,504 4,795 3,010 155 48,034 10,840
Between six and twelve
months 40,375 45,685 19,157 19,692 2,050 3,809 61,582 69,186
More than one year 96,233 90,876 53,240 57,010 49,483 32,473 198,956 180,359
219,579 173,548 100,986 96,377 60,576 38,589 381,141 308,514
Movements in valuation adjustments to non-current assets for sale throughout the
financial year 2012 were as follows:
€000s
2012 2011
Starting balance 175,894 106,575
Net provisions charged to results 100,729 83,827
Of which due to insolvency (Note 10) 60,597 36,175
Of which due to ageing effect (Note 34) 40,132 47,652
Application of funds (46,099) (19,301)
Other movements - 4,793
End balance 230,524 175,894
Net losses recognised in 2012 (Note 34) on disposals of non-current assets held for sale
amounted to €13.25 million (€9.32 million in 2011).
Repossessed assets that are not destined for proprietary use or property investments
should be disposed of within a maximum timeframe of one year from the moment that
they become available for immediate sale. This latter circumstance determines that the
period for which a repossessed asset remains in the balance sheet may exceed one year.
The distribution of repossessed assets by business segment is as follows, as at December
2012 and 2011:
Segments 31/12/2012 31/12/2011
Companies 44% 50%
Commercial Banking 56% 50%
Grand total 100% 100%
From 31 December 2012 to the date on which these financial statements were drafted, no
significant amounts have been recognised under the item 'Non-current assets for sale' in
the consolidated balance sheet.
47
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

Repossessed assets consist of assets repossessed in payment of debts, dations in payment
of debts and acquisitions of assets with subrogation to companies in the Group. Initially,
these assets are recognised at the net carrying amount of the debts from which they
originated and the losses recognised on impairment are not released. Subsequently, these
assets are valued at the lower of the net carrying amount of the relevant loan on the date
of the acquisition or the fair value of the repossessed asset (estimated on the basis of its
appraisal value), with a downward adjustment according to the time that the asset has
remained in the consolidated balance sheet. The appraisal value of non-current assets for
sale has been estimated, basically, using appraisals performed by firms registered in the
Register of Bodies Specialising in Appraisal held at the Bank of Spain. All these assets
were denominated in euros as at 31 December 2012 and 2011.
The Bankinter Group uses its subsidiary Intermobiliaria, S.A., as the management
company for assets originating from problem lending (repossessions, properties accepted
in payment of debts, etc.) This company was incorporated on 16 February 1976 and has
its registered offices at Paseo de la Castellana 29, Madrid. The Group’s general policy is
that all assets originating from problem loans should be registered in the name of this
subsidiary, although there may occasionally be circumstances that make it desirable for
such registration to be carried out directly in the name of the parent company.
Since the current policy on repossessions was adopted and up until the date of these
financial statements, the cumulative volume of assets originating from problem lending
in this subsidiary is €875.72 million.
The acquisition of these assets is financed by the parent company on market terms. The
resources made available to Intermobiliaria by the parent company as at 31 December
2012 and 2011 are summarised in the following table:
€000s
31/12/2012 31/12/2011
Capital contributions 7,391 6,701
Participating loans 300,000 200,000
Loan account 169,197 107,365
Collateralised loans 196,550 184,393
673,138 498,459
13. Investments
The breakdown of this item in the consolidated balance sheets as at 31 December 2012
and 2011 is as follows:
€000s
31/12/2012 31/12/2011
Associates 40,279 26,301
Jointly controlled entities 321 2,040
The changes that occurred in the balance for this heading are shown below:
40,600 28,341
€000s
2012 2011
Balance at start of period 28,341 29,593
Transfers from Group entities 14,970 -
Share of results of entities accounted for using the equity method 17,677 14,675
Dividends paid (20,961) (12,679)
Other movements 573 (3,248)
Balance at close of financial year 40,600 28,341
During the fourth quarter of 2012, the Bank sold 40.10% of the share capital of Bankinter
Seguros Generales S.A. de Seguros y Reaseguros (formerly Bankinter Servicios de
Consultoría, S.A.) for €12 million.
Following this sale, the Group retains a 49.9% interest in the company, but no longer has
control. The company is now accordingly accounted for using the equity method. This
change led to a €14.97 million increase in the portfolio of associates.
In this past year the volume of assets transferred to Intermobiliaria was €255.38 million
(€160.63 million in 2011), generating a loss of €57.04 million (€36.17 million in 2011).
These acquisitions are financed entirely by the parent company.
48
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

The Group recognised a gain of €17.45 million on this transaction under the heading
“Gains (losses) on derecognition of assets not classified as non-current assets held for
sale’’. See Note 34. The portion of this gain corresponding to the recognition of the fair
value of the investment retained in the subsidiary amounts to €9.49 million.
The breakdown of fully consolidated Group companies as at 31 December 2012 is as
follows:
% Holding
Euros €000s
Theoretical
Number of Nominal
carrying
Registered office Direct Indirect Total Shares value Capital Reserves Results amount
Bankinter Consultoría, Asesoramiento, y Atención Telefónica, S.A. Castellana, 29. Madrid 99.99 0.01 100 35,222 30 1,060 40,332 596 41,988
Bankinter Gestión de Activos, S.G.I.I.C. Marqués de Riscal, 11 Madrid 99.99 0.01 100 144,599 30 4,345 17,170 11,026 32,541
Hispamarket, S.A. Castellana, 29. Madrid 99.99 0.01 100 4,516,452 6 27,144 6,968 (4,929) 29,183
Intermobiliaria, S.A. Castellana, 29. Madrid 99.99 0.01 100 243,546 30 7,319 (123,447) (79,428) (195,556)
Bankinter Consumer Finance, E.F.C, S.A.
Avda Bruselas 12 Arroyo de la Vega
(Alcobendas) Madrid
99.99 0.01 100 1,299,999 30 39,065 22,793 22,149 84,007
Bankinter Capital Riesgo, SGECR, S.A.
Avda Bruselas 12 Arroyo de la Vega
(Alcobendas) Madrid
99.99 0.01 100 3,000 100 310 356 196 862
Bankinter Sociedad de Financiación, S.A. Castellana, 29. Madrid 99.99 0.01 100 602 100 60 1,647 (8) 1,699
Bankinter Emisiones, S.A.U. Castellana, 29. Madrid 100 - 100 602 100 60 1,404 259 1,723
Bankinter Capital Riesgo I Fondo Capital Castellana, 29. Madrid 99.99 0.01 100 29,661 1,000 30,000 1,872 1,426 33,298
Arroyo Business Consulting Development, S. L.
Avenida Bruselas, 12. Arroyo de la
Vega (Alcobendas), Madrid
99.99 0.01 100 2,976 1 3 1 - 4
Gneis Global Services S.A. Tres Cantos (Madrid) 99.99 0.01 100 30,000,000 1 30,000 1,572 13,992 45,564
Relanza Gestión, S.A.
Avda Bruselas 12 Arroyo de la Vega
(Alcobendas) Madrid
- 100 100 1,000 60 60 89 35 184
Línea Directa Aseguradora, S.A., Compañía de Seguros y Reaseguros Isaac Newton, 7 100 - 100 2,400,000 16 37,512 277,741 78,418 393,671
Línea Directa Asistencia, S.L.U. Pozuelo de Alarcón (Madrid) - 100 100 500 60 30 25,152 8,282 33,464
Línea Directa Activos, S.L. Tres Cantos (Madrid) - 100 100 3,003,000 1 3,003 5,132 189 8,324
Moto Club LDA, S.L.U. Tres Cantos (Madrid) - 100 100 30 100 3 84 190 277
Centro Avanzado de Reparaciones CAR, S.L.U. Torrejón de Ardoz (Madrid) - 100 100 10,000 60 600 (322) 263 541
Ambar Medline, S.L. Tres Cantos (Madrid) - 100 100 100,310 10 1,003 4 26 1,033
49
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

The breakdown of fully consolidated Group companies as at 31 December 2011 is as
follows:
% Holding
Euros €000s
Registered office Direct Indirect Total
Number of
Shares
Nominal
value Capital Reserves Results
Theoretical
carrying
amount
Bankinter Consultoría, Asesoramiento, y Atención Telefónica, S.A. Castellana, 29. Madrid 99.99 0.01 100 35,222 30 1,060 40,373 (41) 41,392
Bankinter Seguros Generales, S.A. de Seguros y Reaseguros Castellana, 29. Madrid 89.99 0.01 90 1,999 30 10,060 461 3 10,524
Bankinter Gestión de Activos, S.G.I.I.C. Marqués de Riscal, 11 Madrid 99.99 0.01 100 144,599 30 4,345 17,170 10,664 32,179
Hispamarket, S.A. Castellana, 29. Madrid 99.99 0.01 100 4,516,452 6 27,144 6,595 372 34,111
Intermobiliaria, S.A. Castellana, 29. Madrid 99.99 0.01 100 222,999 30 6,701 (54,728) (68,719) (116,746)
Bankinter Consumer Finance, E.F.C, S.A.
Avenida Bruselas 12, Arroyo de la
Vega (Alcobendas), Madrid
99.99 0.01 100 1,299,999 30 39,065 17,183 11,210 67,458
Bankinter Capital Riesgo, SGECR, S.A.
Avenida Bruselas 12, Arroyo de la
Vega (Alcobendas), Madrid
99.99 0.01 100 3,000 100 310 201 155 666
Bankinter Sociedad de Financiación, S.A. Castellana, 29. Madrid 99.99 0.01 100 602 100 60 2,489 (842) 1,707
Bankinter Emisiones, S.A.U. Castellana, 29. Madrid 100 - 100 602 100 60 903 501 1,464
Bankinter Capital Riesgo I Fondo Capital Castellana, 29. Madrid 99.99 0.01 100 29,661 1,000 30,000 1,042 830 31,872
Arroyo Business Consulting Development, S. L.
Avenida Bruselas 12, Arroyo de la
Vega (Alcobendas), Madrid
99.99 0.01 100 2,976 1 3 1 - 4
Gneis Global Services S.A. Tres Cantos (Madrid) 99.99 0.01 100 30,000,000 1 30,000 474 2,898 33,372
Relanza Gestión, S.A.
Avenida Bruselas 12, Arroyo de la
Vega (Alcobendas), Madrid
- 100 100 1,000 60 60 77 13 150
Línea Directa Aseguradora, S.A., Compañía de Seguros y
Isaac Newton, 7
Reaseguros
100 - 100 2,400,000 16
37,512 228,226 74,869 340,607
Línea Directa Asistencia, S.L.U. Pozuelo de Alarcón (Madrid) - 100 100 500 60 30 17,131 8,022 25,182
Línea Directa Activos, S.L. Tres Cantos (Madrid) - 100 100 3,003,000 1 3,003 5,130 2 8,135
50
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

During 2012 Intermobiliaria, S.A. increased its share capital by €0.62 million. None of the
companies in the portfolio of permanent equity holdings as at 31 December 2012 is listed.
Details of Group companies accounted for using the equity method as at 31 December
2012 are as follows:
% Holding €000s
Net
Theoretical
carrying carrying
Registered office
Direct Indirect Total Capital Reserves Results amount amount
Mercavalor, S.V., S.A. Avenida Brasil 7, Madrid 25.01 - 25.01 2,576 6,424 (299) 8,701 2,274
Helena Activos Líquidos, S.L. Serrano 41, Madrid 29.53 - 29.53 24 1,711 (30) 1,705 504
Avenida Bruselas, 12. Arroyo de la Vega (Alcobendas),
Eurobits Technologies, S.L.
Madrid
32.01 - 32.01 9 1,171 (177) 1,003 321
Bankinter Seguros de Vida, S.A. de Seguros y Reaseguros Castellana, 29. Madrid 50.00 - 50.00 6,968 3,259 35,635 45,862 22,532
Bankinter Seguros Generales, S.A. de Seguros y Reaseguros Castellana, 29. Madrid 49.90 - 49.90 10,060 464 0 10,524 14,970
40,601
The breakdown of the companies in the Group that are consolidated by the equity method
as at 31 de December de 2009 is as follows :
% Holding €000s
Registered office
Direct Indirect Total Capital Reserves Results
Theoretical
carrying
amount
Net
carrying
amount
Mercavalor, S.V., S.A. Avenida Brasil 7, Madrid 20.01 - 20.01 3,220 7,103 140 10,463 2,191
Helena Activos Líquidos, S.L. Serrano 41, Madrid 29.53 - 29.53 24 1,694 (331) 1,387 412
Moto Club LDA, S.L.U. Tres Cantos (Madrid) - 100 100 3 350 233 587 587
Centro Avanzado de Reparaciones CAR, S.L.U. Torrejón de Ardoz (Madrid) - 100 100 600 - (322) 278 278
Ambar Medline, S.L. Tres Cantos (Madrid) - 100 100 1,003 14 18 1,034 1,007
Eurobits Technologies, S.L. Avda Bruselas 12 Arroyo de la Vega (Alcobendas) Madrid 40.01 - 40.01 9 1,212 7 1,228 491
Bankinter Seguros de Vida, S.A. de Seguros y Reaseguros Castellana, 29. Madrid 50.00 - 50.00 6,968 31,557 29,625 68,150 23,375
28,341
51
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

The financial statements of Eurobits Technologies, S.L, Mercavalor S.V., S.A and Helena
Activos Líquidos, S.L. are as at 30 November 2012. The impact on the consolidated
financial statements deriving from the use of financial statements as at dates prior to 31
December 2012 for these companies is not material.
Eurobits Technologies, S.A, Mercavalor, S.V., S.A., Helena Activos Líquidos, S.L. and
Bankinter Seguros de Vida, S.A. de Seguros y Reaseguros and Bankinter Seguros Generales,
S.A. de Seguros y Reaseguros are accounted for using the equity method as opposed to
proportional consolidation, in accordance with the accounting regulations in force, since
as there is no joint management with the other shareholders, this method allows the
economic basis of the relationship between the companies to be more accurately reflected.
The following is a summary of the assets, liabilities, profits and losses of the companies
consolidated by the equity method in financial years 2012 and 2011:
As at 31 December 2012
The following is a detailed breakdown of the activities of the group companies, joint
ventures and associates:
Group companies
Bankinter Consultoría, Asesoramiento, y
Atención Telefónica, S.A.
Bankinter Gestión de Activos, S.G.I.I.C.
Hispamarket, S.A.
Intermobiliaria, S.A.
Bankinter Consumer Finance, E.F.C.,S.A.
Bankinter Capital Riesgo, SGECR, S.A.
Bankinter Sociedad de Financiación, S.A.
Activity
Telephone helpline
Asset management
Holding and acquisition of securities
Property management
Finance company
Fund management and private equity
companies
Issue of debt securities
€000s
Balance Sheet Income Statement
Assets Liabilities Expenses Income
Eurobits Technologies, S.L. 1,798 1,975 1,210 1,033
Mercavalor, S.V., S.A. 15,995 16,294 2,236 1,937
Helena Activos Líquidos, S.L. 1,738 1,768 622 592
Bankinter Seguros de Vida, S.A. de Seguros y
Reaseguros
409,225 373,620 27,282 62,917
Bankinter Seguros Generales, S.A. de Seguros y
Reaseguros
10,528 10,528 6 6
As at 31 December 2011
Balance Sheet
€000s
Income Statement
Assets Liabilities Expenses Income
Eurobits Technologies, S.L. 1,979 1,973 1,547 1,554
Mercavalor, S.V., S.A. 13,444 13,304 3,628 3,768
Moto Club LDA, S.L.U. 707 120 258 491
Centro Avanzado de Reparaciones CAR, S.L.U. 2,079 1,801 5,087 4,765
Ambar Medline, S.L. 1,257 250 2,947 2,968
Helena Activos Líquidos, S.L. 1,418 1,750 605 273
Bankinter Seguros de Vida, S.A. de Seguros y
Reaseguros
461,082 414,335 23,881 53,505
Bankinter Emisiones, S.A.
Bankinter Capital Riesgo I Fondo Capital
Arroyo Business Consulting Development, S. L.
Gneis Global Services S.A.
Relanza Gestión, S.A.
Línea Directa Aseguradora, S.A., Compañía de
Seguros y Reaseguros
Línea Directa Asistencia, S.L.U.
Moto Club LDA, S.L.U.
Centro Avanzado de Reparaciones CAR, S.L.U.
Ambar Medline, S.L.
Línea Directa Activos, S.L.
Joint arrangements and associates:
Mercavalor, S.V., S.A.
Helena Activos Líquidos, S.L.
Eurobits Technologies, S.L.
Bankinter Seguros de Vida, S.A. de Seguros y
Reaseguros
Bankinter Seguros Generales, S.A.de Seguros y
Reaseguros
Issue of preferred shares
Private equity fund
Inactive
Consultancy
Collection and recovery services
Insurance company
Insurance assessments, vehicle inspections and
travel assistance
Services to motorcycle users
Vehicle repair
Insurance mediation
Property management
Securities broker
Other financial services
Advanced digital services
Insurance company
Insurance company
52
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

In December 2012 the entity reached agreement with Dutch bank Van Lanschot Bankiers
N.V. on acquiring its Luxembourg subsidiary Van Lanschot Bankiers (Luxembourg) S.A.
This transaction will provide the Bankinter group with the necessary infrastructure
and banking licence to develop its private banking business model. The execution of
the agreement, and therefore also the incorporation of this company into the Group, is
pending finalisation of the regulatory and supervisory procedures inherent in this kind of
transaction, and should be completed within the first quarter of 2013.
14. Property, plant and equipment
The breakdown of this heading in the balance sheet as at 31 December 2012 and 2011 is
as follows:
€000s
31/12/2012 31/12/2011
For internal use 410,839 435,354
Real estate investments 2,200 -
Other assets assigned under operating leases 29,249 31,547
442,288 466,901
€000s
Depreciation
31/12/2010 Additions Cancellations
Transfers and
others
and
Amortisation 31/12/2011
For internal use 444,396 66,128 40,566 - 34,604 435,354
Computer systems and
equipment 15,459 10,216 8,519 - 6,040 11,116
Furniture, vehicles, and
other installations 131,327 30,151 27,707 22,515 23,143 133,143
Buildings 285,761 13,232 4,339 - 5,421 289,233
Work in progress 11,833 12,529 - (22,515) - 1,847
Other 16 - 1 - - 15
Other assets assigned
under operating leases 12,173 20,079 - - 705 31,547
456,569 86,207 40,566 - 35,309 466,901
Fully depreciated property, plant and equipment held for the Bank's own use still in use
as at 31 December 2012 amounted to €91.75 million (€84.88 million as at 31 December
2011).
The breakdown by asset type of the gains and losses recognised in 2012 and 2011 on sales
of investment property and other items is as follows (Note 34):
The following is a summary of the elements of the tangible assets and their movements
during financial years 2012 and 2011:
31/12/2011 Additions Cancellations
Transfers and
others
Depreciation
and
Amortisation
€000s
31/12/2012
For internal use 435,354 15,966 4,024 (9,116) 34,093 404,087
Computer systems and
equipment
11,116 500 1,068 - 2,588 7,960
Furniture, vehicles, and
other installations
133,143 14,386 2,084 - 26,200 119,245
Buildings 289,233 886 - (9,116) 4,928 276,075
Work in progress 1,847 194 871 - 377 793
Other 15 - 1 - - 14
Real estate investments - - - 9,116 164 8,952
Other assets assigned under
operating leases
31,547 - - - 2,298 29,249
466,901 15,966 4,024 - 36,555 442,288
€000s
2012 2011
Gains Losses Gains Losses
Other 253 2,675 2,152 5,226
253 2,675 2,152 5,226
Note 43 'Assets and liabilities (financial and non-financial) valued at other than fair
value' shows the fair value of the main elements of tangible assets and the calculation
methodology used.
As at 31 December 2012 and 2011, the Bank had no tangible assets for its own use or
under construction that were subject to any ownership restrictions or had been given as
collateral in cover of debts. Neither are there any commitments to third parties on those
dates for the acquisition of tangible assets. During said financial years, the Bank did not
receive or expect to receive any amounts from third parties as compensation or indemnity
for the impairment or loss of value of tangible assets for its own use.
53
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

The whole of the Bank's tangible assets for internal use as at 31 December 2012 and 2011
was denominated in euros.
The balance of assets leased out under operating leases and included under this heading
in the balance sheer as at 31 December 2012 was €29.25 million (€31.55 million at 31
December 2011).
15. Intangible assets
The following is a breakdown of this item on the consolidated balance sheet and of its
movements during financial years 2012 and 2011:
€000s
31/12/2010
Additiontiontiotiontionsation
Cancella-
Amortisa-
Addi-
Cancella-
Amorti-
31/12/2011
31/12/2011
Goodwill 161,836 - - - 161,836 - - - 161,836
Other
intangible 196,373 8,619 - 28,788 176,204 8,808 - 29,310 155,702
assets
358,209 8,619 - 28,788 338,040 8,808 - 29,310 317,538
The acquisition during financial year 2009 of 50% of the share capital of Línea Directa
Aseguradora, S.A, Compañía de Seguros y Reaseguros (“LDA”) led to the recognition of
goodwill amounting to €161.84 million and Other Intangible Assets amounting to €221.93
million.
In accordance with the estimates made and the projections available to the Group's
Directors, the expected earnings attributable to the goodwill of these companies or cashgenerating
units to which they are linked, perfectly support the net value of the goodwill
recognised.
In this regard, the entity subjects the goodwill recognised on the acquisition of 100% of
LDA to the annual impairment analysis established in the accounting standards. This
analysis is based on the impairment of the cash-generating unit to which this goodwill
has been allocated; in this case LDA. This unit would be impaired if its carrying amount
were more than the present value of its estimated future cash flows. This circumstance
has not arisen in the last two financial years.
The estimated cash flows are taken from LDA’s business plan in its most prudent scenario,
with moderate growth rates and excluding the positive net flows that might be derived
from structural changes in the business or in its efficiency, in accordance with best
practices. Specifically, projected cash flows are based on the assumption that forecasts
for next year's profits will be achieved. For the remaining years the trend in cash flows
has been estimated as the lower of the company’s most recent forecasts and the objective
inflation of the economic environment in which it conducts its business, namely 2%. Both
past experience and forecasts are in excess of this 2%.
The discount rate applied to the projected cash flows is 10% (after tax), this being the
internal cost of capital. This estimated cost of capital is in line with those applied by
independent analysts in the sector. Also, 10% is the discount rate commonly used for this
kind of analysis in the insurance sector in which LDA conducts its business.
The period used for this estimate is ten financial years, since this is the period used to
value intangible assets recognised at the time of acquisition. The growth rate in perpetuity
is equal to target inflation, 2%.
Other Intangible Assets generated by the acquisition of 50% of LDA essentially relate to
the valuation of customer relationships at the time of the acquisition. Amortisation is
linear over a period of 10 years from the date of acquisition, which is the estimated useful
life of this asset. Amortisation of these assets during 2012 totalled €22.19 million, the
same amount as in 2011. As at 31 December 2011 and 2012, this intangible asset did not
show any sign of impairment.
As at 31 December 2012 and 2011 the Group reviewed the useful lives of its intangible
assets, no changes resulting.
16. Reinsurance assets
As at 31 December 2012, the balance of the item "Insurance contract assets" contains the
assets recognised by Línea Directa Aseguradora, S.A., Compañía de Seguros y Reaseguros
in the course of its activity.
The changes occurring in the financial years 2012 and 2011 for each of the technical
provisions included in the balance sheet attached hereto, are as follows:
54
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

Provision for
Unearned
Premium
€000s
Provision for
Claims
Total
Balance as at 31-12-2011 568 3,360 3,928
Additions due to full consolidation of Línea
Directa Aseguradora
Additions 547 3,604 4,151
Applications (567) (3,360) (3,927)
Adjustments and settlements (186) (186)
Balances as at 31/12/2012 548 3,418 3,966
The reinsurance scheme followed by the Company is mostly based on an Excess Loss (XL)
structure, with the aim of obtaining protection against serious or peak losses and events
caused by natural events not covered by the Insurance Compensation Consortium, using
reinsurance as a stabilising element for these kinds of losses which are random in both
occurrence and amount.
Current
Retentions and payments on account 8,733 10,016
€000s
Deferred
31/12/2012 31/12/2011 31/12/2012 31/12/2011
Income tax 71,813 36,886 148,536 103,529
VAT 6,407 8,840
Tax assets 86,953 55,742 148,536 103,529
Retentions and payments on account 7,576 6,685
Income tax 57,359 54,792 147,929 118,983
VAT 3,542 4,027
Other items 5,159 5,068
Tax liabilities 73,636 70,572 147,929 118,983
The movements in assets and liabilities due to deferred taxes during financial years 2012
and 2011, are as follows:
During 2008 the coverage of the XL Motor reinsurance contract was altered to adapt it to
the changes in the Revised Text of the Civil Liability Law (21/2007 of 11 July), one of the
most important aspects of which is the increase in the limits for compulsory car insurance.
Reinsurers must be registered with the CNSF (National Financial Services Commission)
and comply with strict prudential requirements; they must also have excellent ratings
proving their financial solvency. Foreign companies have to present a certificate of
residence in Spain.
The criterion used to establish the reinsurance framework stipulates that reinsurers’ rating
must not be lower than A. However, a deposit clause will be included in the contracts of
reinsurers with S&P ratings of AA- and below.
There is quarterly control over the ratings of the various companies that make up the
reinsurance panel, with monitoring of the credit risk ratings published by Standard &
Poor's, Moody's and Fitch, meaning that changes in the probability of default on the
commitments undertaken are subject to control.
17. Tax assets and liabilities
The breakdown of these items in the consolidated balance sheet as at 31 December 2012
and 2011 is as follows:
€000s
Deferred Taxes
Assets
Liabilities
Balance as at 31/12/2010 93,812 142,057
Additions 80,943 5,195
Cancellations 71,226 28,269
Balance as at 31/12/2011 103,529 118,983
Additions 64,519 28,952
Cancellations 19,512 6
Balance as at 31/12/2012 148,536 147,929
The reconciliation of the movements in deferred taxes during 2012 is as follows:
31/12/2011
Charged/credited
through profit
or loss
€000s
Charged/credited in
equity 31/12/2012
Deferred tax assets 103,529 55,926 (10,919) 148,536
Deferred tax liabilities 118,983 25,981 2,965 147,929
55
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

The reconciliation of the movements in deferred taxes during 2011 is as follows:
€000s
Charged/
31/12/2010
credited through
profit or loss
Charged/credited
in equity 31/12/2011
Deferred tax assets 93,812 7,039 2,678 103,529
Deferred tax liabilities 142,057 (23,074) - 118,983
The details of deferred tax assets and liabilities are as follows:
The deferred tax assets recognised during the year basically concern the increase in
deferred tax assets due to net additions to provisions of various kinds.
Derecognitions are due basically to the elimination of the deferred tax asset relating to
the release of provisions that were not tax deductible at the time they were established.
18. Other assets and other liabilities
The breakdown of these items in the consolidated balance sheet as at 31 December 2012
and 2011 is as follows:
Deferred Tax assets arising from:
€000s
31/12/2012 31/12/2011
€000s
Assets
Liabilities
31/12/2012 31/12/2011 31/12/2012 31/12/2011
Generic hedging - 32,044
Contributions to pension funds 1,373 1,794
Impairment of property assets 55,202 41,303
Provisions for real estate promoter risk 46,407 -
Other provisions and accruals 39,826 801
Others: 694
Early retirement fund Software - 514
Contract hire 52 191
Loan fees 2,204 2,596
Other 3,610 3,305
Available-for-Sale Portfolio 4,081 12,535
Consolidation adjustments (4,219) 7,752
148,536 103,529
Deferred tax liabilities arising from:
Revaluations of buildings 49,896 50,947
Others:
Available-for-Sale Portfolio 5,536 100
Accrued expenses and deferred
income
91,764 68,654 75,098 92,375
Operations in progress 11,760 1,082 16,953 16,825
Other items 29,101 27,396 35,196 40,225
132,625 97,132 127,247 149,425
In euros 132,534 97,043 127,209 148,911
In foreign currency 91 89 38 514
132,625 97,132 127,247 149,425
The heading "Other items" in liabilities includes sundry payables, provisions for expenses
and remuneration pending payment corresponding to the insurance business.
19. Financial liabilities at amortised cost
The breakdown of these items of the consolidated balance sheets as at 31 December 2012
and 2011 is as follows:
Intra-group sales 10,107 7,688
Other 20,767 -
Consolidation adjustments 61,623 60,248
Of which:
Revaluation of Assets of Línea Directa Aseguradora, S.A. 46,927 53,688
147,929 118,983
56
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

€000s
31/12/2012 31/12/2011
Deposits from central banks 9,580,854 7,006,897
Deposits from credit institutions 4,008,226 3,260,647
Customer deposits 24,631,869 25,505,317
Marketable debt securities 12,499,194 15,540,242
Subordinated liabilities 767,852 958,170
Other financial liabilities 591,076 658,012
52,079,071 52,929,285
In euros 51,555,534 51,696,715
In foreign currency 523,537 1,232,570
52,079,071 52,929,285
The breakdown of the 'Valuation adjustments' in the portfolio of financial liabilities at
amortised cost as at 31 December 2012 and 2011 is as follows:
a) Deposits from central banks
The composition of “Financial liabilities at amortised cost” in the consolidated balance
sheet was as follows as at 31 December 2012 and 2011:
€000s
31/12/2012 31/12/2011
Central Banks 9,500,000 7,000,000
Valuation adjustments 80,854 6,897
Accrued interest 80,854 6,897
b) Bank deposits
9,580,854 7,006,897
The composition of “Financial liabilities at amortised cost” in the consolidated balance
sheet was as follows as at 31 December 2012 and 2011:
€000s
31/12/2012 31/12/2011
Accrued interest- 408,456 295,776
Deposits with central banks 80,854 6,897
Deposits with credit institutions 11,973 15,833
Customer deposits 138,651 94,203
Marketable debt securities 170,359 171,789
Subordinated liabilities 6,619 7,054
Micro-hedging operations 146,791 116,044
Other (64,166) (67,183)
491,081 344,637
€000s
31/12/2012 31/12/2011
Term accounts 1,354,023 951,703
Temporary assignment of assets 2,144,742 1,908,645
Other accounts 497,488 384,466
Valuation adjustments- 11,973 15,833
Accrued interest 11,973 15,833
4,008,226 3,260,647
In euros 4,000,585 3,257,091
In foreign currency 7,641 3,556
4,008,226 3,260,647
Note 44 “Risk-management policies” includes the breakdowns of the maturity dates and
interest-rate review terms for the items making up financial liabilities at amortised cost.
Note 43 “Assets and liabilities valued at other than fair value” states the fair value by
instrument type of financial liabilities at amortised cost and the methodology used for
their calculation.
57
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

c) Customer deposits
The composition of “Financial liabilities at amortised cost” in the consolidated balance
sheet was as follows as at 31 December 2012 and 2011:
d) Marketable debt securities
The composition of “Financial liabilities at amortised cost” in the consolidated balance
sheet was as follows as at 31 December 2012 and 2011:
€000s
31/12/2012 31/12/2011
Public Administrations 430,863 1,483,544
Deposits received 429,581 1,482,111
Valuation adjustments 1,282 1,433
Accrued interest 1,282 1,433
Other private sectors 24,201,006 24,021,773
Sight deposits 9,269,136 9,045,156
Term deposits 10,592,220 9,378,212
Temporary assignment of assets 4,200,410 5,503,657
Valuation adjustments- 139,240 94,748
Accrued interest 137,369 92,770
Micro-hedging operations 1,871 1,978
24,631,869 25,505,317
In euros 24,196,331 25,090,321
In foreign currency 435,538 414,996
24,631,869 25,505,317
€000s
31/12/2012 31/12/2011
Promissory notes and bills of exchange 2,390,395 2,683,334
Mortgage-backed securities 12,683,345 9,998,496
Other securities linked to transferred financial assets 2,867,439 3,281,506
Treasury stock (7,999,014) (6,087,167)
Hybrid securities 225,871 341,261
Other non-convertible securities 2,155,887 5,162,652
Valuation adjustments 175,271 160,160
Accrued interest 170,359 171,795
Micro-hedging operations 68,710 55,132
Other (63,798) (66,767)
12,499,194 15,540,242
In euros 11,706,945 14,747,993
In foreign currency 792,249 792,249
12,499,194 15,540,242
Own securities at 31 December 2012 comprised mortgage bonds for €6.47 billion and
other non-convertible securities for €1.53 billion. Own securities at 31 December 2011
comprised mortgage bonds for €4.52 billion and other non-convertible securities for €1.57
billion.
Promissory notes and bills of exchange
As a consequence of the planning required to manage the Bank’s capital and liquidity,
Bankinter, S.A. maintains diverse financing programmes and instruments on both the
domestic market in Spain and international markets, to obtain financing or issue different
kinds of securities, both short-term (promissory notes and euro commercial paper) and
long-term (bonds, debentures and notes and mortgage bonds) under all kinds of debt
arrangements (guaranteed, senior, subordinated, etc.)
58
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

As at 31 December 2012, the outstanding balances of promissory notes and euro
commercial paper issued were €2.52 billion and €7 million respectively (€2.78 billion and
€22 million respectively as at 31 December 2011). The differences between the amounts
recognised in the books and the nominal values of these issues are the financial expenses
pending accrual.
The following is a breakdown of the issues of promissory notes in force as at 31 December
2012 and 2011, at their redemption value:
Date of registration with the CNMV (Spain’s securities
regulator)
Outstanding
balance at
31/12/2012
€000s
Outstanding
balance at
31/12/2011
09/11/2010 5,219 559,085
03/11/2011 1,788,265 2,216,837
08/11/2012 728,713 -
2,522,197 2,775,922
Euro Commercial Paper 7,000 22,000
These issues are denominated in euros.
2,529,197 2,797,922
Interest accruing on these issues of promissory notes during 2012 amounted to €109.58
million (Note 29) (€30.08 million in 2011).
Mortgage-backed securities, other non-convertible securities and hybrid securities
Mortgage-backed securities, other non-convertible securities, and hybrid liabilities state,
as at 31 December 2012 and 2011, the outstanding volume for the issues of bonds,
debentures, and mortgage bonds carried out by the Bank.
The following is a breakdown of the issues of bonds, debentures and mortgage bonds in
circulation as at 31 December 2012 and 2011 (nominal values, €000s):
Issue
Hybrid securities
Nominal
Value
(€000s)
Mar 05 75,000 Bonds
31/12/2012
Type of Security % Interest Listed
Eur3m flat
(3% - 5%)
Final
maturity of
the issue
YES Mar 2015
Jun 10 300 Structured bonds YES Jun 2013
Nov 10 16,850 Structured bonds YES Nov 2014
Jun 11 6,375 Structured bonds YES Jun 2014
Jun 11 1,285 Structured bonds YES Jun 2016
Jul 11 3,780 Structured bonds YES Jul 2014
Aug 11 6,775 Structured bonds YES Aug 2016
Aug 11 404(*) Structured bonds YES Aug 2016
Aug 11 2,340 Structured bonds YES Aug 2016
Oct 11 5,980 Structured bonds YES Oct 2016
Oct 11 1,000 Structured bonds YES Oct 2015
Nov 11 1,895 Structured bonds YES Nov 2016
Nov 11 68(*) Structured bonds YES Nov 2016
Dec. 11 370 Structured bonds YES Dec 2016
Dec. 11 4,400 Structured bonds YES Dec 2016
Jan 12 3,750 Structured bonds YES Jan 2015
Jan 12 9,050 Structured bonds YES Jan 2013
Feb 12 7,250 Structured bonds YES Feb 2017
Feb 12 3,850 Structured bonds YES Feb 2013
Mar 12 600 Structured bonds YES Mar 2017
Mar 12 2,650 Structured bonds YES Mar 2017
Mar 12 4,800 Structured bonds YES Apr 2017
Apr 12 1,000 Structured bonds YES Apr 2015
Apr 12 2,750 Structured bonds YES Apr 2017
Jun 12 2,450 Structured bonds YES Jun 2017
Jun 12 550 Structured bonds YES Jun 2015
Jun 12 1,300 Structured bonds YES Jun 2017
Aug 12 4,800 Structured bonds YES Aug 2017
Sep 12 4,200 Structured bonds YES Sep 2017
Oct 12 4,100 Structured bonds YES Oct 2013
Oct 12 600 Structured bonds YES Nov 2015
59
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

Issue
Nominal
Value
(€000s)
31/12/2012
Type of Security % Interest Listed
Oct 2012 3,000 Structured bonds YES
Final
maturity of
the issue
Oct 2013
(partial
amortisation,
90%) and
total in Oct
2017
Nov 2012 1,450 Structured bonds YES Nov 2014
Nov 2012 8,500 Structured bonds YES Nov 2017
Nov 2012 10,600 Structured bonds YES Nov 2015
Nov 2012 1,000 Structured bonds YES Nov 2017
Nov 2012 1,000 Structured bonds YES Nov 2017
Dec 2012 1,200 Structured bonds YES Dec 2017
Dec 2012 5,900 Structured bonds YES Dec 2013
Dec 2012 11,600 Structured bonds YES Dec 2015
Dec 2012 1,099(*) Structured bonds YES Dec 2017
(*) Issued in US dollars
Issue
225,871
Nominal Value
(€000s)
31/12/12
Type of
Security
% Interest Listed
Final
maturity of
the issue
Other non-convertible securities
Jun 06 150,000 Bonds Eur3m + 0.17% YES Jun 2016
Jan. 10 498,050 Bonds Eur3m + 0.95% YES Jan 2013
Jan. 10 78,800 Bonds Fixed rate 3% YES Jan 2013
Oct 10 30,000 Bonds Fixed rate 4.27% YES Jul 2016
Feb 12 800,000 Bonds Eur3m + 2.80% YES May 2015
Jun 12 320,000 Bonds Eur3m + 4.25% YES Jun 2016
Jun 12 280,000 Bonds Eur3m + 4.25% YES Jun 2015
2,156,850
Interest
Discounted upfront
(963)
2,155,887
(*) Issued in US dollars
Issue
Nominal
Value
(€000s)
Jun 05 68,213
31/12/12
Type of Security % Interest Listed
Mortgage bond in
foreign currency
3-mth LIBOR –
0.040%
Final
maturity of
the issue
NO Jun 2013
Jul 07 100,000 Mortgage bond Eur3m + 0.217% NO Jul 2015
Dec 07 100,000 Mortgage bond Eur3m + 0.343% NO Dec 2015
Mar 08 50,000 Mortgage bond Eur6m + 0.27% YES Mar 2013
Jun 08 200,000 Mortgage bond Eur3m + 0.006% NO Jun 2016
Nov 09 1,000,000 Mortgage bond Fixed rate 3.25% YES Nov 2014
Apr. 10 1,000,000 Mortgage bond Fixed rate 2.625% YES Apr 2013
Jul 10 200,000 Mortgage bond
EURIBOR 3m +
0.37%
YES Jul 2018
Jul 10 400,000 Mortgage bond Fixed rate 2.625% YES Apr 2013
Sept 10 650,000 Mortgage bond Fixed rate 3.75% YES Sep 2013
Jan 11 500,000 Mortgage bond Fixed rate 4.875% YES Jan 2013
Jan 11 20,000 Mortgage bond Fixed rate 3.90% YES Jan 2014
Mar 11 400,000 Mortgage bond Fixed rate 3.25% YES Nov 2014
May 11 25,000 Mortgage bond Fixed rate 4.875% NO Jan 2013
May 11 25,000 Mortgage bond Fixed rate 4.875% NO Jan 2013
Sept 11 1,000,000 Mortgage bond Fixed rate 4.25% YES Mar 2015
Oct 11 10,000 Mortgage bond Fixed rate 4.25% YES Jan 2014
Dec. 11 1,000,000 Mortgage bond Fixed rate 4.25% YES Mar 2015
Jan 12 1,200,000 Mortgage bond Fixed rate 4.675% YES Jan 2016
Jan 12 200,000 Mortgage bond Eur3m + 3.50% YES Jan 2020
Mar 12 1,000,000 Mortgage bond Fixed rate 4.125% YES Mar 2017
Jun 12 500,000 Mortgage bond Eur3m + 3.00% YES Jun 2014
Aug 12 100,000 Mortgage bond Eur3m + 4.90% YES Aug 2022
Oct 12 500,000 Mortgage bond Fixed rate 3.875% YES Oct 2015
Nov 12 1,250,000 Mortgage bond Eur3m + 4.00% YES Nov 2019
Nov 12 600,000 Mortgage bond Eur3m + 4.00% YES Nov 2017
Nov 12 700,000 Mortgage bond Eur3m + 4.00% YES Nov 2018
Interest
Discounted
up-front
12,798,213
(114,868)
12,683,345
60
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

31/12/2011
31/12/2011
Issue
Nominal
Value
(€000s) Type of Security % Interest Listed
Final maturity of
the issue
Issue
Nominal
Value
(€000s)
Type of
Security % Interest Listed
Final maturity of
the issue
Hybrid securities
Eur3m flat
Mar 2015
Mar 2005 75,000 Bonds
(3% - 5%) YES
Jun 2010 300 Structured bonds YES Jun 2013
Nov 2010 16,850 Structured bonds YES Nov 2014
Dec 2010 1,000 Structured bonds YES Dec 2014
Mar 2011 700 Structured bonds YES Mar 2016
Jun 2011 21,250 Structured bonds YES Jun 2014
Jun 2011 12,850 Structured bonds YES Jun 2016
Jul 2011 12,600 Structured bonds YES Jul 2014
Aug 2011 67,750 Structured bonds YES Aug 2016
Aug 2011 3,694 Structured bonds YES Aug 2016
Aug 2011 23,400 Structured bonds YES Aug 2016
Oct 2011 59,800 Structured bonds YES Oct 2016
Oct 2011 1,000 Structured bonds YES Oct 2015
Oct 2011 1,000 Structured bonds YES Oct 2014
Nov 2011 18,950 Structured bonds YES Nov 2016
Nov 2011 652 Structured bonds YES Nov 2016
Nov 2011 15,450 Structured bonds YES Nov 2016
Dec 2011 1,450 Structured bonds YES Dec 2016
Dec 2011 3,700 Structured bonds YES Dec 2016
Dec 2011 4,400 Structured bonds YES Dec 2016
Other non-convertible securities
Jun 2006 150,000 Bonds Eur3m + 0.17% YES Jun 2016
Jun 2007 900,000 Bonds Eur3m + 0.14% YES Jun 2012
Feb 2009 889,800 Bonds Fixed rate 3.00% YES Feb 12
Jun 2009 364,271 Bonds Yen Libor 3m + 0.62% YES Jun 2012
Jun 2009 353,293 Bonds Fixed rate 1.223% YES Jun 2012
Jan 2010 900,000 Bonds Eur3m + 0.95% YES Jan 2013
Jan 2010 78,800 Bonds Fixed rate 3% YES Jan 2013
Oct 2010 30,000 Bonds Fixed rate 4.27% YES Jul 2016
Jul 2011
100,000 Bonds
Average Eur3m +
1.8% YES
Jan 2014
Dec 2011 1,400,000 Bonds Fixed rate 4.625% YES Dec 2014
5,166,164
Interest
Discounted
up-front (3,512)
5,162,652
341,796
Interest
Discounted upfront
(535)
341,261
61
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

Issue
31/12/2011
Nominal
Value (€000s) Type of Security % Interest Listed
Final maturity
of the issue
Interest accruing on issues of other non-convertible securities during 2012 amounted to
€58.85 million (€119.95 million in 2011).
Jun 2005
Mortgage bond in
69,557
foreign currency
Libor 3m – 0.040 NO Jun 2013
Jul 2007 100,000 Mortgage bond Eur3m + 0.217% NO Jul 2015
Dec 2007 100,000 Mortgage bond Eur3m + 0.343% NO Dec 2015
Mar 2008 50,000 Mortgage bond Eur6m + 0.27% YES Mar 2013
Jun 2008 200,000 Mortgage bond Eur3m + 0.006% NO Jun 2016
Feb 2009 323,200 Mortgage bond Fixed rate 3.5% YES Feb 12
Nov 2009 1,000,000 Mortgage bond Fixed rate 3.25% YES Nov 2014
Apr 2010 1,000,000 Mortgage bond Fixed rate 2.625% YES Apr 2013
Jun 2010 300,000 Mortgage bond Fixed rate 2.25% YES Feb 2013
Jul 2010 200,000 Mortgage bond EURIBOR 3m + 0.37% YES Jul 2018
Jul 2010 400,000 Mortgage bond Fixed rate 2.625% YES Apr 2013
Sep 2010 750,000 Mortgage bond Fixed rate 3.75% YES Sep 2013
Oct 2011 500,000 Mortgage bond Fixed rate 4.875% YES Jan 2013
Jan 2011 20,000 Mortgage bond Fixed rate 3.90% YES Jan 2014
Mar 2011 400,000 Mortgage bond Fixed rate 3.25% YES Nov 2014
May 2011 600,000 Mortgage bond Fixed rate 2.625% NO Apr 2013
May 2011 600,000 Mortgage bond Fixed rate 4.875% NO Jan 2013
Sep 2011 1,000,000 Mortgage bond Fixed rate 4.25% YES Mar 2015
Oct 2011 10,000 Mortgage bond Fixed rate 4.25% YES Jan 2014
Dec 2011 1,500,000 Mortgage bond Fixed rate 4.25% YES Feb 2014
Dec 2011 1,000,000 Mortgage bond Fixed rate 4.25% YES Mar 2015
10,122,757
Interest
Discounted
up-front (124,261)
9,998,496
e) Subordinated liabilities
The composition of this heading in the portfolio of financial liabilities at amortised cost
is as follows:
€000s
31/12/2012 31/12/2011
Marketable debt securities 624,547 721,964
Non-convertible 624,547 721,964
Preference shares 60,844 170,635
Valuation adjustments 82,461 65,571
Accrued interest 6,619 7,054
Micro-hedging operations 76,210 58,934
Other (368) (417)
767,852 958,170
In euros 767,852 958,170
In foreign currency - -
767,852 958,170
These liabilities meet the requirements of Rule 8 in Bank of Spain Circular 3/2008 of 22
May for inclusion as Tier 2 capital, and Bank of Spain approval has been obtained for
them to be classified as such.
The following is the breakdown as at 31 December 2012 and 2011 of the subordinated
debentures and preference shares (nominal value, €000s):
All current issues are denominated in euros.
During 2012 mortgage-backed bonds were issued for €6.05 billion (€5.63 billion in 2011),
senior bonds for €1.44 billion (€1.5 billion in 2011) and hybrid securities for €106.65
million (€248.65 million in 2011), with the characteristics indicated in the foregoing
tables.
62
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

Balance as at 31 December 2012
Issue
Thousands
of Euros
Nominal
value
% Interest
Maturity
Issue
III SUBORDINATED BONDS 1998 14/05/1998 84,141 Fixed rate 6.00% 18/12/2028
I SUBORDINATED BONDS March 2006 21/03/2006 32,800 Eur3m + 0.50% 21/03/2016
II SUBORDINATED BONDS June 2006 23/06/2006 89,000 Eur3m + 0.80% 23/06/2016
III SUBORDINATED BONDS December
2006 18/12/2006 50,000 Eur3m + 0.84% 18/12/2016
I SUBORDINATED D. March 2007 16/03/2007 49,400 Eur3m + 0.82% 16/03/2017
I SUBORDINATED BONDS October 2008 10/10/2008 50,000 Eur3m + 3.00% 10/10/2018
I SUBORDINATED BONDS September
2009 11/09/2009 250,000
Fixed rate
6.375% 11/09/2019
I SUBORDINATED BONDS July 2010 07/07/2010 40,000 Fixed rate 6.75% 07/12/2020
Fixed rate
I SUBORDINATED BONDS February 2011 10/02/2011 47,250 6.375% 11/09/2019
692,591
Interest and other (68,044)
Balance as at 31 December 2011
Issue
624,547
Thousands
of Euros
Nominal
value
% Interest
Maturity
Issue
II SUBORDINATED BONDS 1998 14/05/1998 36,061 Fixed rate 5.70% 18/12/2012
III SUBORDINATED BONDS 1998 14/05/1998 84,141 Fixed rate 6.00% 18/12/2028
I SUBORDINATED BONDS March 2006 21/03/2006 32,800 Eur3m + 0.50% 21/03/2016
II SUBORDINATED BONDS June 2006 23/06/2006 89,000 Eur3m + 0.80% 23/06/2016
III SUBORDINATED BONDS December
2006 18/12/2006 50,000 Eur3m + 0.84% 18/12/2016
I SUBORDINATED D. March 2007 16/03/2007 49,400 Eur3m + 0.32% 16/03/2017
I SUBORDINATED BONDS October 2008 10/10/2008 50,000 Eur3m + 3.00% 10/10/2018
I SUBORDINATED BONDS September
2009 11/09/2009 250,000
Fixed rate
6.375% 11/09/2019
I SUBORDINATED BONDS July 2010 07/07/2010 40,000 Fixed rate 6.75% 07/12/2020
Fixed rate
I SUBORDINATED BONDS February 2011 10/02/2011 47,250 6.375% 11/09/2019
728,652
In July 2012 Bankinter S.A. made an offer to holders of preferred shares issued by
Bankinter Emisiones, S.A.U. The offer consisted in exchanging 70% of the nominal value
of the preferred shares for newly issued shares in Bankinter, S.A. and the remaining 30%
for cash, payable two years after the date of the exchange, subject to the new shares still
being held.
As a consequence of this exchange, by 31 December 2012 the Group had issued 27,270,552
new shares in Bankinter S.A, at a subscription price of €2.75 per share, leading to increases
in the share capital and the share premium account of €8.18 million and €66.81 million
respectively (See Note 22).
Additionally, the Group recognised an amount of €27.91 million under the heading
“Financial liabilities at amortised cost - Other financial liabilities” to meet any cash
payments deriving from the exchange. (See Note 19).
The profit obtained from this exchange transaction in the year ended 31 December 2012
was €4.24 million, recognised under the heading “Result of financial transactions" in the
enclosed consolidated Income Statement (see Note 30).
The movement brought about by this transaction in 2012 was as follows:
€000s
31/12/2012 31/12/2011
Balance as at 31 December 2011 168,165 3,363,293
Redeemed by means of exchange (see Note 22) (107,321) (2,146,407)
Balance as at 31 December 2011 60,844 1,216,886
During 2011 the Group prepaid subordinated bonds via a swap transaction whereby
newly issued subordinated bonds at a fixed interest rate of 6.375% maturing on 11
September 2019 were delivered. This exchange constitutes an exchange of liabilities with
substantially different conditions, since the present value of the new liability’s future
cash flows, including net fees paid and received, differs by more than 10% from the
present value of the remaining future cash flows of the original financial liability when
both are discounted at the effective interest rate of the latter. On this transaction the
Group recognised an amount of €7.97 million under the heading “Results of financial
transactions (net)” in the enclosed consolidated Income Statement (see Note 30).
Interest and other (6,688)
721,964
63
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

Interest accrued on these bond issues during 2012 amounted to €32.85 million (€33.90
million in 2011). Interest paid on subordinated deposits, which are recognised under the
heading “Interest and similar charges” in the enclosed consolidated Income Statement
(see Note 29), amounted to €6.53 million (€12.86 million in 2011).
g) Other financial liabilities
The composition of “Financial liabilities at amortised cost” in the consolidated balance
sheet was as follows as at 31 December 2012 and 2011:
The breakdown of issues in the Balance Sheet as at 31 December 2012 and 2011 is as
follows:
31/12/2012
Issue
Nominal
value % Interest Issue maturity
BK Emisiones
Series I 28/07/2004 60,844 Eur+3.75% min 4% - max 7% PERPETUAL
Balance at 31 Dec.
2011 60,844
31/12/2011
Issue
Nominal
value % Interest Issue maturity
BK Emisiones
Series I 28/07/2004 168,165 Eur+3.75% min 4% - max 7% PERPETUAL
Balance at 31 Dec.
2011 168,165
€000s
31/12/2012 31/12/2011
Bonds payable- 128,218 102,747
Payables in respect of factoring 15,503 15,228
Others (*) 112,715 87,519
Security deposits received 79,587 51,060
Clearing houses 38,963 22
Tax-collection accounts 186,799 223,679
Special accounts- 67,225 214,906
Stock-Market transactions pending settlement 67,225 214,906
Other items 90,284 65,598
591,076 658,012
In euros 580,480 636,174
In foreign currency 10,596 21,838
591,076 658,012
(*) As at 31 December 2012 and 2011 it included drafts pending settlement to the value
of €39.84 and €58.39 million respectively.
64
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

20. Liabilities under insurance contracts
As at 31 December 2012 and 2011, the balance of “Liabilities under insurance contracts”
contains the liabilities undertaken by Línea Directa Aseguradora, S.A. de Seguros y Reaseguros
in the course of its activity. The changes occurring in the financial years 2012 and 2011 for
each of the technical allowances included in the balance sheet attached hereto, are as follows:
€000s
31/12/2012 31/12/2011
Provision for Unearned Premium Provision for Claims Total Provision Provision for Claims Total
Balance at start of period 337,283 305,499 642,782 351,571 311,428 662,999
Additions due to change in scope
Additions 324,322 279,709 604,031 337,283 289,731 627,014
Applications (337,283) (305,499) (642,782) (351,571) (311,428) (662,999)
Adjustments and settlements - 14,255 14,255 - 15,768 15,768
Balance at close of period 324,322 293,964 618,286 337,283 305,499 642,782
The allowance for unearned premiums represents the fraction of the premiums accrued
in the financial year that is attributed to the period between the closing date and the end
of the policy coverage period, using the policy-by-policy procedure and taking as the basis
for calculation the fee premiums accrued in the financial year, with the security surcharge
being deducted.
The provision for claims represents the total amount of the insurer’s pending obligations
derived from claims occurring prior to the date on which the financial year is closed. The
Company establishes this provision for an amount that is sufficient to cover the cost of
claims, meaning an amount that includes all the expenses, both external and internal,
in managing and handling the files, regardless of their origin, incurred or to be incurred
until the claims are fully settled and paid, less the amounts already paid.
On 18 January 2008 the Company was authorised by the Directorate-General of Insurance
and Pension Funds to apply statistical methodology in calculating the Technical Provision
for Claims in accordance with Article 43 of the Regulation on the Organisation and
Supervision of Private Insurance following the amendment introduced by Royal Decree
239/2007 of 16 February.
Procedures used to determine the main assumptions affecting assets, liabilities, income
and expenses arising from insurance contracts and sensitivity analysis.
Income arising from insurance contracts consists mainly of insurance premiums paid in
consideration of the risks assumed. Trends in premium income can be analysed using
indicators such as average premium, product mix, percentage of cancellations, etc.
The main liability deriving from insurance contracts is that shown in the technical
reserves, while the biggest expenses recognised in the Income Statement are the payment
of claims and any additions considered necessary to provisions for payments pending at
the end of the reporting period. To estimate these liabilities the Company analyses the
changes over time in the frequency and average cost of events. Lastly, in estimating
insurance liabilities the effect of reinsurance contracts is taken into account.
The net combined ratio measures the weight of the cost of claims and other expenses
associated with the insurance business relative to the premiums accrued in the profit
and loss account, net of the reinsurance effect. Changes in the conditions influencing the
insurance risk are reflected in increases or decreases in the net combined ratio.
65
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

The following table shows the impact that a 1% change in net income recognised in equity
would have in 2012 and 2011, together with the volatility index of this ratio calculated on
the basis of its typical deviation over the past five years:
(€000s)
2012 2011 Volatility
Index
Profit Equity Profit Equity
1% change in combined ratio 5.36% 1.09% 6.34% 1.39% 1.38%
1% change in combined ratio 4,646 4,749
Objectives, policies and procedures for managing the risks arising from insurance
contracts
The risks involved in the insurance business are centred on the subscription risk in nonlife
insurance, which in turn consists of the premium sub-risk (the risk that premiums
may not be sufficient) and the reserves sub-risk (the risk that the technical reserves may
not be sufficient).
The Company makes use of reinsurance as the main means of mitigating the premium
and reserves sub-risks. Reinsurance in turn forms part of counterparty risk, in view of the
possibility of default by reinsurers on recoverable amounts.
Premium Sub-risk
The Technical Division of LDA is responsible for adjusting products and prices to the
Company’s general strategy. All such adjustments are supported by actuarial analyses
duly documented in technical memoranda, and are approved by the Technical Committee,
which is the body responsible for managing this sub-risk.
The Technical Committee takes operational decisions affecting prices and risk underwriting
conditions of products offered by LDA, ensuring that they are consistent with the strategy
and objectives laid down by the Board of Directors. In so doing it evaluates proposals
presented by the Technical Division, also taking into account information on the business
situation and future prospects provided by the business units.
Reserves Sub-risk
To estimate liabilities arising from insurance contracts, the Company uses statistical
methods based on chain ladder methodology and stochastic methods based on bootstrap
methodology. Finally it performs a validation using the average cost method.
The Claims and Reserves Committee is the body responsible for managing the Company’s
reserve risk and reinsurance credit risk. Its functions are to monitor the Company’s
reserves and provisions to ensure that claims are properly covered, and to approve
changes to policies on opening and provisioning of claims under the various kinds of
cover and guarantees, so as to ensure that reserves are adequate, in accordance with
directives approved by the Company’s Board of Directors.
It also approves the annual reinsurance programme and reports on it to the Management
Committee.
Also, to ensure that the Company complies with the obligations deriving from Article 29 of
the ROSSP (“Reglamento de Ordenación y Supervisión de los Seguros Privados”, or Private
Insurance Supervision Regulations) whereby the technical reserves must reflect in the
Balance Sheet the obligations deriving from contracts written, the following controls are
in place regarding additions to the technical reserves:
1. Analysis of future trends in cost deviations of events occurring before the
end of each financial year. The analysis is carried out on the basis of events
occurred and reported as at the end of the reporting period. The purpose of
this is to check and correct any cost deviations arising on so-called long-tail
claims caused by not having sufficient information to evaluate them at the
end of the reporting period.
2. Producing monthly and quarterly projections of accident cost expense.
3. The company’s reserves situation is also subjected to an analysis carried out
by independent consultants at least once a year, which is presented to the
Board of Directors.
66
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

Change during 2012 to the technical reserves (not counting cover for fines and travel
assistance) corresponding only to claims pending as at 31 December 2011, broken down
by branches, is as follows:
Insurance risk concentrations
The Company’s insurance business is located entirely in Spain, with no especially
significant concentration in any particular geographical region.
Reserves as at
31 December
2011
Net Payments
Reserves as at
31/12/2012
(€000s)
Surplus
(Deficit)
Motor, Civil Liability 207,114,281 90,361,308 100,977,140 15,775,834
Motor, Other Coverage 69,491,938 39,014,274 21,740,840 8,736,823
Home 3,408,019 2,498,275 810,245 99,499
280,014,238 131,873,857 123,528,225 24,612,156
The Company’s business is centred on non-life branches, mainly motor, and is distributed
as follows:
€000s
2012
Total Motor Multi-risk Home
Premiums billed 650,585 613,768 36,816
Premiums ceded 3,313 2,820 493
The above table includes the home insurance branch, which at year-end 2011 had had
four full years of operation since its launch. Losses incurred but not reported (IBNR) are
included in the reserves at the end of 2010 not in the home insurance branch but in the
motor branches, since the reserve for pending losses incurred, reported and not reported,
were calculated together using statistical methods.
Changes during 2011 in the Company’s technical reserves, not counting cover for fines
and travel assistance, corresponding only to claims pending as at 31 December 2010,
excluding losses incurred but not reported, broken down by branch, were as follows:
€000s
2011
Total Motor Multi-risk Home
Premiums billed 676,896 649,638 27,258
Premiums ceded 3,025 2,610 415
The Company is in the process of adapting to the Solvency II project, which will alter the
focus of risk management for Europe’s insurance companies.
Reserves
as at
31/12/2010
Net Payments
Reserves
as at 31
December
2011
(€000s)
Surplus
(Deficit)
Motor, Civil Liability 214,290,785 104,887,019 94,218,361 15,185,405
Motor, Other Coverage 59,322,071 43,630,258 22,253,168 (6,561,355)
Home 2,699,026 1,925,668 452,249 321,109
276,311,881 150,442,945 116,923,778 8,945,159
21. Provisions
The breakdown of this item in the consolidated balance sheets as at 31 December 2012
and 2011 is as follows:
€000s
31/12/2012 31/12/2011
Pension funds and similar obligations 2,811 5,245
Provisions for contingent risks and commitments 5,139 20,626
Other provisions 1,899 38,251
Allowances for taxes and other legal contingencies 38,351 -
48,200 64,122
67
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

The breakdown of the allocations made to allowances during the financial years 2012 and
2011 is as follows:
Movement in “Other provisions” during the years ended 31 December 2012 and 2011 was
as follows:
€000s
31/12/2012 31/12/2011
€000s
Net allocations charged to income:
Pension funds and similar obligations (5,645) (8,509)
Provisions for contingent risks and commitments 1,787 (1,642)
Other provisions (2,874) 38,326
Allowances for taxes and other legal contingencies 6,753 -
21 28,175
The balance shown against “Provisions for taxes and other legal contingencies” in the
“Provisions” section includes, among other items, those corresponding to provisions for
tax and legal proceedings, which have been estimated using prudent calculation methods
consistent with the uncertainties inherent in the obligations that they cover. In some
cases, the time at which resources involving economic benefits for the Group will have
to be released for the obligation in question has been determined as not having a fixed
term, and in other cases it has been set in accordance with the status of the proceedings
that are underway.
Balance as at 31/12/2010 71,090
Net additions to reserves for the year charged to profit and loss 28,175
Application of funds (42,532)
Other movements 7,389
Balance as at 31/12/2011 64,122
Net additions to reserves for the year charged to profit and loss 21
Application of funds (1,881)
Transfer of funds (17,290)
Other movements 3,228
Balance as at 31/12/2012 48,200
“Other movements” reflects the reclassification of balances under the heading “Provisions
for taxes and other legal contingencies”.
The heading “Provisions for contingent risks and commitments” comprises the generic
and specific provisions for contingent risks as at 31 December 2012 and 2011. In 2012
there was a net addition of €1.79 million to these provisions, there having been a net
release of €1.64 million in 2011.
The remaining amount under this heading refers to risks for which the Institution has
estimated there is a probability that disbursements may be required in the future for past
events.
22. Shareholders’ equity
The breakdown of the composition and movements in the Group's shareholders' equity
in financial years 2012 and 2011 is included in the Overall Statement of Changes in
Consolidated Public Net Worth.
a) Capital
As at 31 December 2012, the share capital of Bankinter, S.A. was represented by
563,806,141 registered shares with a nominal value of €0.30 each, fully subscribed and
paid up. These shares all have equal voting and economic rights. As at 31 December 2011,
68
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

the share capital of Bankinter, S.A. was represented by 476.919.014 registered shares
with a nominal value of €0.30 each.
The breakdown of shareholders with a percentage holding equal to or greater than 10%
of share capital as at 31 December 2012 and 2011 is as follows:
All the shares are represented by book entries, officially listed on the Madrid and
Barcelona stock exchanges and traded by the Spanish computer-assisted trading system.
The following changes were recorded in the shares in circulation in financial years 2012
and 2011:
Number of Shares held
Directly
Number of Shares held
Indirectly
Percentage of Share
Capital
Shareholder 31/12/2012 31/12/2011 31/12/2012 31/12/2011 31/12/2012 31/12/2011
Cartival, S.A. 131,565,493 106,671,902 - 7,378,822 23,34 23,91
Crédit Agricole, S.A 85,146,775 116,927,050 18,505 47,723 15,102 24,53
€000s
b) Issue premium
Number of shares Nominal value
Balance as at 31/12/2010 473,447,732 142,034
Additions 3,471,282 1,042
Of which alternative dividend 3,471,282 1,042
Balance as at 31/12/2011 476,919,014 143,076
Additions 86,887,127 26,066
Of which on conversion of subordinated bonds 59,616,575 17,885
Of which on exchange of preferred shares (Note 19) 27,270,552 8,181
Balance as at 31/12/2012 563,806,141 169,142
The increase in capital is the result of the conversion of mandatorily convertible
subordinated bonds into shares (see section d) as well as of the purchase of preferred
shares issued by Bankinter Emisiones S.A.U. (see Note 19).
During 2012 the share premium account increased by the difference between the nominal
value of the new shares and their subscription price. During 2011 there were no changes
in this Balance Sheet heading. Movements in the share premium account in 2012 and
2011 were as follows:
€000s
Nominal value
Balance as at 31/12/2010 737,079
Additions -
Balance as at 31/12/2011 737,079
Additions 381,107
Of which on conversion of subordinated bonds 314,294
March conversion 313,990
May conversion 146
Under the Bankinter Alternative Dividend Flexible Shareholder Remuneration Programme
approved by the Ordinary General Meeting of Shareholders of 28 April 2011, shareholders
holding 263,906,373 warrants opted during 2011 to receive free new shares. As a result
of the above, on 30 September 2011 the Board of Directors set the number of ordinary
shares to be issued in the capital increase against freely available reserves at 3,471,282
for a capital increase of €1.04 million.
November conversion 158
Of which on exchange of preferred shares (Note 19) 66,813
Balance as at 31/12/2012 1,118,186
69
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

c) Reserves
Voluntary reserves
The breakdown of this item in the consolidated balance sheet is as follows:
Voluntary reserves are freely available for use.
€000s
31/12/2012 31/12/2011
Statutory reserve 51,680 51,091
Freely-available reserve 1,448,986 1,349,513
Revaluation reserve 149,057 160,634
Treasury shares reserve- 106,773 111,034
By acquisition 225 742
By guarantee 106,548 110,292
Canary Islands investment reserve 28,363 28,363
Reserves (losses) of entities accounted for using the equity method- 4,922 11,070
Associates 4,707 10,743
Jointly controlled entities 215 327
1,789,781 1,711,705
Reserves (losses) of entities accounted for using the equity method-
The breakdown of the reserves and losses in companies accounted for using the equity
method is as follows:
31/12/2012 31/12/2011
€000s
Reserves Reserves
Bankinter Seguros Generales, S.A 232 -
Professional Future Materials, S.L. - (176)
Mercavalor, S.V., S.A. 1,607 1,414
Bankinter Seguros de Vida, S.A. 2,681 8,830
Helena Activos Líquidos, S.L. 187 499
Eurobits Technologies, S.L. 215 327
Statutory reserve
4,922 10,894
Companies are obliged to allocate 10% of their profits in each financial year to a reserve
fund, until this reaches at least 20% of share capital. This reserve may not be distributed
to shareholders and may be used only to cover losses if there are no other reserves
available. In certain circumstances it may also be used to increase the share capital in
the part of this reserve that exceeds 10% of the increased capital figure.
Revaluation reserves
This heading in the consolidated Balance Sheet shows the effect on the reserves of the
revaluation of properties carried out on 1 January 2004, as allowed in the transition
to the IFRS. This heading also includes the revaluation reserves generated by business
combination transactions.
d) Other Equity Instruments
On 11 May 2011 the Bank issued mandatorily convertible bonds for €404.81 million, in
two series: Series I for a nominal amount of €175.00 million and Series II for a nominal
amount of €229.81 million maturing 11 May 2014 with an annual remuneration of 7%.
The terms of the issue conform to the definition of equity instrument since i) there is
no obligation to deliver cash or other financial assets since conversion is mandatory,
and since the remuneration is subject, inter alia, to the discretion of the Bank’s Board of
Directors, and ii) the conversion rate is fixed for all conversions as the result of dividing
the nominal value of the bonds by the established conversion price (€6.28 and €5.03
per share for Series I and Series II respectively), subject in any case to fixed numbers of
bonds being exchanged for fixed numbers of shares. The issue is therefore recognised in
equity as “Equity - Other equity instruments”. Remuneration accruing during 2011 on this
product amounted to €18.24 million. This amount net of corporation tax (€12.77 million)
is recognised directly in equity as a deduction from reserves.
70
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

During the first half of 2012 the following mandatorily convertible subordinated bonds
were voluntarily converted into new Series I and II Bankinter shares:
The Company’s AGM, held on 15 March 2012, in its eighth resolution, approved the setting
of 29 March 2012 as an extraordinary date for voluntary conversion. Consequently on
that date requests were made for the conversion of 3,240,012 Series I bonds, with a
nominal value of €162 million (93% of Series I) and 3,397,138 Series II bonds, with a
nominal value of €169.86 million (74% of Series II). To meet these conversion requests a
total of 59,559,333 new shares were issued.
On the ordinary voluntary conversion date, 11 May 2012, requests were made for the
conversion of 1,186 Series I bonds with a nominal value of €59,000 and 1,901 Series
II bonds with a nominal value of €95,000. To meet these conversion requests a total of
28,279 new shares were issued.
On the ordinary voluntary conversion date, 12 November 2012, requests were made for
the conversion of 2,170 Series I bonds with a nominal value of €108,000 euros and 1,182
Series II bonds with a nominal value of €59.000. To meet these conversion requests a total
of 28,963 new shares were issued.
Remuneration accruing during 2012 on this product amounted to €57,362. This amount,
net of corporation tax (€40.15 million), is recognised directly in equity as a deduction
from reserves.
€000s
Balance as at 31/12/2010 -
Additions 404,812
Balance as at 31/12/2011 404,812
Additions -
Subordinated bonds cancelled upon conversion 332,179
March conversion 331,857
May conversion 154
November conversion 168
Balance as at 31/12/2012 72,633
None of the exchange transactions described involved the recognition of any amount in
the enclosed consolidated Income Statements for the years ended 31 December 2012 or
2011.
e) Own securities
As at 31 December de 2012, the Group owned 76,316 of its own shares (162,620 shares as
at 31 December de 2011).
During 2012, stock market transactions were carried out for the purchase of 22,014,342
shares (7,011,172 in 2011) and the sale of 22,100,646 shares (7,256,473 in 2011) on which
gains of €0.19 thousands were obtained, recognised directly in equity under “Reserves”
in the Balance Sheet.
The breakdown of treasury stock as at 31 December 2012 and 2011 is as follows:
Number of shares
31/12/
2012
31/12/
2011
€000s Euros €000s
Nominal value
31/12/
2012
31/12/
2011
Average
acquisition
price
31/12/
2012
31/12/
2011
Acquisition cost
31/12/
2012
31/12/
2011
Treasury-stock
reserve
31/12/
2012
31/12/
2011
Percentage of
capital
Bankinter, S.A. 76,316 71,203 23 21 2.95 4.33 226 308 226 308 0.01 0.01
Hispamarket, S.A. - 91,417 - 28 3.19 4.75 - 434 - 434 0.00 0.02
Total 76,316 162,620 23 49 6.14 9.08 226 742 226 742 0.01 0.03
31/12/
2012
31/12/
2011
71
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

f) Results attributed to the Group
The breakdown of the individual pre-tax results for each of the companies belonging to
the Group during the financial years 2012 and 2011 is as follows:
€000s
2012 2011
Bankinter, S.A. 187,958 187,267
Bankinter Consultoría, Asesoramiento y Atención Telefónica, S.A. 853 (59)
Bankinter Seguros Generales, S.A - 5
Bankinter Gestión de Activos, S. A., SGIIC 15,806 15,235
Hispamarket, S. A. (7,085) 514
Intermobiliaria, S. A. (113,463) (98,169)
Bankinter Consumer Finance, E.F.C, S.A. 31,636 16,033
Bankinter Capital Riesgo, SGECR, S. A. 280 222
Bankinter Sociedad de Financiación, S. A. (12) (1,203)
Bankinter Emisiones, S. A. 370 716
Bankinter Capital Riesgo I, Fondo Capital 1,426 830
Línea Directa Aseguradora, S.A. 121,497 107,213
Arroyo Business Consulting Development S.A - (1)
Relanza Gestión S.A 50 18
Gneis Global Services S.A. 18,223 2,937
g) Earnings per share
Earnings per share are calculated by dividing profit attributable to the Group by the
weighted average number of ordinary shares in circulation during the financial year,
excluding any treasury stock acquired by the Group. In financial years 2012 and 2011,
earnings per share are as follows:
2012 2011
Profit for the year (€000s) 124,654 181,227
Average number of shares (000s) 521,177 474,183
Earnings per share (euros) 0.24 0.38
To calculate diluted earnings per share, the weighted average number of ordinary shares
in circulation is adjusted to reflect the conversion of all the potentially dilutive ordinary
shares. The potentially dilutive ordinary shares that the Group holds are bonds convertible
into shares. It is assumed that convertible bonds are converted into common shares.
The calculation of diluted earnings per share for the Group is as follows:
2012 2011
Diluted profit for the year (€000s) 124,654 181,227
Average number of diluted shares (000s) 527,659 520,243
The result of the companies consolidated by the equity method for years 2012 and 2011
is as follows:
Diluted earnings per share (euros) 0.23 0.35
€000s
31/12/2012 31/12/2011
Mercavalor, S.V., S.A. (75) 28
Eurobits Technologies, S.L. (57) 3
Helena Activos Líquidos, S.L. (9) (98)
Moto Club LDA, S.L.U. - 233
Centro Avanzado de Reparaciones CAR, S.L.U. - (322)
Ambar Medline, S.L. - 19
Bankinter Seguros de Vida, S.A. de Seguros y Reaseguros 17,818 14,812
17,677 14,675
72
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

h) Dividends and remuneration
The Bank has a system of quarterly dividend payments, in January, April, July and
October of each year.
The breakdown of the dividends distributed from profits in 2012 and 2011 is as follows,
not including treasury shares in the possession of the bank:
Date
Dividend per
Share (Euros)
Number of
shares
Amount
(€000s)
Date approved
by Board
Results
for the year
Jul 11 0.05193 473,447,732 24,582 Jun 11 2011
Oct 11 0.052 473,447,732 10,896 Sept 11 2011
Jan 12 0.048313 476,919,014 23,038 Dec. 11 2011
Apr 12 0.038527 476,919,014 18,371 Feb 12 2011
Total 0.19077 76,887
July 12 0.028661 536,506,626 15,375 Jun 12 2012
Oct 12 0.027276 563,777,178 15,375 Oct 12 2012
Jan 13 0.027275 563,806,141 15,375 Dec 12 2012
Apr 13 0.027272 563,806,141 15,375 Feb 13 2012
Total 0.110484 61,500
During 2011, as well as the €76.89 million in dividends referred to, a further €13.72
million in shares was made available to shareholders as part of the Bankinter Alternative
Dividend Flexible Shareholder Remuneration Programme approved by the Ordinary
General Meeting of Shareholders of 28 April 2011. Shareholders holding 263,906,373 free
warrants opted to receive new shares. In consequence on 30 September 2011 the Board
of Directors set the number of ordinary shares to be issued in the capital increase against
freely available reserves at 3,471,282 for a capital increase of €1.04 million.
June
2012
September
2012
December
2012
First Second Third
Profit after tax (€000s) 99,212 121,848 148,208
Dividends paid (€000s) - 15,375 30,750
Interim dividend (€000s) 15,375 15,375 15,375
Accumulated interim dividends (€000s) 15,375 30,750 46,125
Gross dividend per share (euros) 0.0286614 0.027276 0.027275
Payment date July 2012 Oct 2012 Jan 2013
23. Valuation adjustments (equity)
The breakdown of this item is as follows:
€000s
31/12/2012 31/12/2011
Financial assets available for sale 3,145 (29,248)
Exchange differences 208 206
Entities valued under the equity method (301) (2.603)
3,052 (31,645)
The provisional accounting statements drawn up by the Bank in accordance with legal
requirements, which prove the existence of sufficient resources for the distribution of
interim dividends, were as follows:
73
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

24. Contingent risks and commitments
25. Transfers of financial assets
The composition of this item is as follows:
Contingent risks:
€000s
31/12/2012 31/12/2011
The breakdown of transfers of financial assets carried out by the Group at 31 December
2012 and 2011 is as follows:
€000s
31/12/2012 31/12/2011
Financial guarantees- 631,925 590,143
Financial guarantees 631,925 590,143
Loan derivatives sold - -
Removed from the balance sheet prior to 1 Jan. 2004 1,099,471 1,256,311
Retained in the balance sheet in full 4,276,316 8,996,843
5,375,787 10,253,154
Other financial guarantees - -
Assets associated with third-party obligations - -
Irrevocable documentary credits 123,893 149,454
Other guarantees and sureties given 1,676,110 1,590,114
Other contingent risks 50,937 109,959
2,482,865 2,439,670
Contingent commitments:
Available to third parties 6,684,740 6,895,998
Commitments to purchase financial assets in instalments 13,209 12,609
Contractual agreements to acquire financial assets 4,524,597 2,221,798
Subscribed securities pending disbursement 120 14,284
Other contingent commitments 16,993 64,118
11,239,659 9,208,807
The item “Contingent commitments available by third parties” consists entirely of
commitments on immediately available credit.
During 2012 the following securitisation funds were prepaid: Bankinter 14 FTH, Bankinter
15 FTH , Bankinter 17 FTA, Bankinter 18 FTA, BK Empresas 1 FTA and BK Leasing I.
The derecognised assets refer to the loans securitised prior to 1 January 2004, as described
below:
- In 2003, mortgage loans valued at €1.35 billion were transferred to “Bankinter 6, Asset
Securitisation Fund”, and loans to SMEs valued at €250 million were transferred to
“Bankinter I FTPYME, Asset Securitisation Fund”.
- In 2002 mortgage loans valued at €1.03 billion were transferred to “Bankinter 4,
Mortgage Securitisation Fund”, and mortgage loans valued at €710 million were
transferred to “Bankinter 5, Mortgage Securitisation Fund”.
- In 2001 mortgage loans valued at €1.33 billion were transferred to “Bankinter 3,
Mortgage Securitisation Fund”.
- In 1999, mortgage loans valued at €600 million were transferred to “Bankinter 1,
Mortgage Securitisation Fund”, and mortgage loans valued at €320 million were
transferred to “Bankinter 2, Mortgage Securitisation Fund”.
Assets retained in their entirety on the Bank’s balance sheet, according to the criteria
referred to in Note 5 section (i), refer to loans securitised after 1 January 2004 as described
below.
74
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

As at 31 December 2012 the Balance Sheet included securitisation bonds issued by
securitisation funds forming part of the consolidated Group for an amount of €1,536.28
million (€5,928.18 million as at 31 December 2011). These securities are recognised as
liabilities in the Balance Sheet, as deductions from the amount of the corresponding
issues under the heading “Customer deposits”.
The main characteristics of the securitisations carried out subsequent to 1 January 2004
are as follows (amounts in €000s):
Fund Series Rating Amount Interest Maturity
BK 7 FTH A-Series Aaa/AAA: 471,800 Eur 3 m. + 0.21% 26/09/2040
B-Series A2/A: 13,000 Eur 3 m. + 0.55%
C-Series Baa3/BBB: 5,200 Eur 3 m. + 1.20%
Total 490,000
BK 8 FTA A-Series Aaa/AAA: 1,029,300 Eur 3 m. + 0.17% 15/12/2040
B-Series A2/A: 21,400 Eur 3 m. + 0.48%
C-Series Baa3/BBB: 19,300 Eur 3 m. + 1.00%
Total 1,070,000
BK 9 FTA A1 (P) Series Aaa/AAA: 66,600 Eur 3 m. + 0.07% 16/07/2042
A2 (P) Series Aaa/AAA: 656,000 Eur 3 m. + 0.11%
B (P) Series A2/A+: 15,300 Eur 3 m. + 0.50%
C (P) Series Baa3/BBB: 7,100 Eur 3 m. + 0.95%
Total (1) 745,000
A1 (T) Series Aaa/AAA: 21,600 Eur 3 m. + 0.07% 16/07/2042
A2 (T) Series Aaa/AAA: 244,200 Eur 3 m. + 0.11%
B (T) Series A1/A: 17,200 Eur 3 m. + 0.50%
C (T) Series Baa1/BBB-: 7,000 Eur 3 m. + 0.95%
Total (2) 290,000
Total 1,035,000
BK 10 FTA A1 Series Aaa/AAA: 80,000 Eur 3 m. + 0.08% 21/06/2043
A2 Series Aaa/AAA: 1,575,400 Eur 3 m. + 0.16%
B-Series A1/A: 20,700 Eur 3 m. + 0.29%
C-Series Baa1/BBB-: 22,400 Eur 3 m. + 0.70%
D Series Ba3/BB-: 19,100 Eur 3 m. + 2.00%
E Series Caa3/CCC- 22,400 Eur 3 m. + 3.90%
Total 1,740,000
Fund Series Rating Amount Interest Maturity
BK 11 FTH A1 Series Aaa/AAA: 30,000 Eur 3 m. + 0.05% 21/08/2048
A2 Series Aaa/AAA: 816,800 Eur 3 m. + 0.14%
B-Series Aa3/A: 15,600 Eur 3 m. + 0.30%
C-Series Baa1/BBB-: 15,300 Eur 3 m. + 0.55%
D Series Ba3/BB-: 9,800 Eur 3 m. + 2.25%
E Series Ca 12,500 Eur 3 m. + 3.90%
Total 900,000
BK 12 FTH A1 Series Aaa/AAA: 50,000 Eur 3 m. + 0.04% 15/12/2043
A2 Series Aaa/AAA: 1,102,400 Eur 3 m. + 0.12%
B-Series Aa3/A+: 13,100 Eur 3 m. + 0.25%
C-Series A3/A- 11,900 Eur 3 m. + 0.35%
D Series Ba1/BBB- 11,300 Eur 3 m. + 2.25%
E Series Ca/CCC 11,300 Eur 3 m. + 3.90%
Total 1,200,000
Fund Series Rating Amount Interest Maturity
BK 2 Pyme
FTA A1 Series Aaa/AAA: 49,000 Eur 3 m. + 0.06% 16/05/2043
A2 Series Aaa/AAA: 682,000 Eur 3 m. + 0.12%
B-Series Aa3/A+: 16,200 Eur 3 m. + 0.22%
C-Series Baa2/BBB 27,500 Eur 3 m. + 0.52%
D Series Ba3/BB 10,700 Eur 3 m. + 2.10%
E Series C/CCC- 14,600 Eur 3 m. + 3.90%
Total 800,000
BK 13 FTA A1 Series Aaa/AAA: 85,000 Eur 3 m. + 0.06% 17/07/2049
A2 Series Aaa/AAA: 1,397,400 Eur 3 m. + 0.15%
B-Series Aa3/A: 22,400 Eur 3 m. + 0.27%
C-Series A3/BBB 24,100 Eur 3 m. + 0.48%
D Series Ba1/BB- 20,500 Eur 3 m. + 2.25%
E Series Ca/CCC- 20,600 Eur 3 m. + 3.90%
Total 1,570,000
75
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

Fund Series Rating Amount Interest Maturity
Outstanding balances of securitisations as at 31 December 2012 and 2011 were as follows:
CASTELLANA
FINANCE A-Series AAA 83,700 Eur 3 m. + 0.30% 08/01/2050
B1 Series AA 26,000 Eur 3 m. + 0.70%
B2 Series AA 10,000 Eur 3 m. + 0.85%
Removed from the balance sheet prior to 01-01-04:
€000s
31/12/2012 31/12/2011
C1 Series A+ 38,700 Eur 3 m. + 1.20%
C2 Series A 23,900 Eur 3 m. + 1.50%
D Series 2,850 Eur 3 m. + 7.00%
Total 185,150
BK 3 FTPyme
FTA A1 Series Aaa/AAA: 180,000 Eur 3 m. + 0.09% 18/02/2046
A2 Series Aaa/AAA: 288,900 Eur 3 m. + 0.20%
A3 Series
(guaranteed) Aaa/AAA: 91,200 Eur 3 m. + 0.02%
B-Series Aa3/AA: 23,100 Eur 3 m. + 0.35%
C-Series Baa2/BBB 6,000 Eur 3 m. + 0.90%
D Series Ba3/BB 10,800 Eur 3 m. + 1.80%
E Series C/CCC- 17,400 Eur 3 m. + 3.90%
Total 617,400
BK 4 FTPyme
FTA A1 Series AAA 160,000 Eur 3 m. + 0.32% 18/10/2051
A2 Series AAA 174,400 Eur 3 m. + 0.30%
A3 Series
(guaranteed) AAA 19,600 Eur 3 m. + 0.34%
B-Series A 30,000 Eur 3 m. + 0.50%
C-Series BBB 16,000 Eur 3 m. + 0.70%
Total 400,000
Bankinter 1 Mortgage Securitisation Fund - -
Bankinter 2 Mortgage Securitisation Fund 33,910 41,808
Bankinter 3 Mortgage Securitisation Fund 229,548 269,552
Bankinter 4 Mortgage Securitisation Fund 241,386 277,309
Bankinter 5 Mortgage Securitisation Fund 169,934 192,048
Bankinter 6 Mortgage Securitisation Fund 424,693 475,594
Bankinter 1 FTPYME - -
1,099,471 1,256,311
Retained on the balance sheet in full:
Bankinter 7 Mortgage Securitisation Fund 153,184 170,776
Bankinter 8 Asset Securitisation Fund 340,346 379,634
Bankinter 9 Asset Securitisation Fund 429,232 471,765
Bankinter 10 Asset Securitisation Fund 743,651 816,687
Bankinter 11 Mortgage Securitisation Fund 446,216 486,009
Bankinter 12 Mortgage Securitisation Fund 606,926 662,145
Bankinter 2 Asset Securitisation Fund 207,993 253,601
Bankinter 13 Asset Securitisation Fund 898,701 972,638
Bankinter 14 Mortgage Securitisation Fund - 660,164
Bankinter 3 Asset Securitisation Fund 254,599 299,953
Bankinter 15 Mortgage Securitisation Fund - 1,069,044
Bankinter 16 Asset Securitisation Fund - -
Bankinter 17 Asset Securitisation Fund - 758,649
Bankinter Leasing I, Asset Securitisation Fund - 112,104
Bankinter 4 Ftpymes, Asset Securitisation Fund 195,468 236,159
Bankinter 18 Asset Securitisation Fund - 1,239,175
Bankinter 1 Asset Securitization Fund - 408,340
Bankinter 19 Asset Securitisation Fund - -
Bankinter 20 Asset Securitisation Fund - -
4,276,316 8,996,843
76
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

The sum of the associated financial liabilities as at 31 December 2012 stands at €2.631
billion (€2.595 billion as at 31 December 2011).
26. Other memorandum accounts - financial derivatives
27. Personnel expenses
The composition of the amounts included under this item in the consolidated income
statement for financial years 2012 and 2011 is as follows:
The breakdown of financial derivatives in other memorandum accounts as at 31 December
2012 and 2011 is as follows:
€000s
2012 2011
€000s
31/12/2012 31/12/2011
Financial derivatives (Notes 7 and 10):
Exchange-rate risk 6,701,672 6,621,875
Interest-rate risk 17,996,801 26,921,783
Equity risk 3,159,866 3,156,955
Credit risk - 5,000
27,858,339 36,705,613
The notional amount of the contracts does not reflect the actual risk assumed by the
Group in relation to such instruments.
Salaries and bonuses paid to active staff 244,105 245,985
Social Security contributions 57,387 60,985
Contributions to defined benefit plans 1,905 1,300
Contributions to defined plans 117 -
Severance packages 20,534 1,550
Other personnel expenses 18,450 20,145
342,498 329,965
The breakdown of the Group’s personnel as at 31 December 2012 and 2011, in accordance
with pension commitments, was as follows:
31/12/2012 31/12/2011
Active employees in service since before 8 March 1980 302 372
Personnel who are pension beneficiaries 59 62
Early retirees 38 48
Other active employees 3,853 3,904
Post-employment benefits
As regards pension commitments, under the terms of the Collective Labour Agreement
in force, for personnel employed since before 8 March 1980 and for certain members of
personnel according to individually established agreements, the Bank has undertaken
the commitment to complement Social Security payments in cases of retirement (as
defined benefits), and in other particular cases, the Bank has undertaken to disburse an
amount (as a defined contribution), the value of which on the date of retirement will be
the employee’s benefits at that time.
77
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

Additionally, there is a group of early retirees who retired early in December 2002 and
December 2003, to whom the Bank has committed to pay a financial benefit in fourteen
monthly amounts not subject to revaluation until the date on which they attain 65 years
of age, this amount being established individually with each early retiree, and a financial
benefit in twelve monthly instalments until the date on which they attain 65 years of age
for the contributions to the Special Social Security Agreement, on the terms established
with each early retiree, which are subject to revaluation in accordance with increases in
the Minimum Bases for Self-Employed Workers / Maximum Contribution Bases.
Lastly, for members of Senior Management appointed in or after 2012, a single contribution
of €656,560 will be made to a Unit-Linked contract with AXA Seguros y Reaseguros S.A.,
such that in the event of retirement, death or incapacity, the beneficiary will receive the
funds accumulated in the Unit-Linked contract at the time of the loss.
Other long-term benefits
Moreover, under the Collective Bargaining Agreement in force, the Bank has undertaken
the commitment to complement Social Security payments to total, if necessary, certain
payments for permanent invalidity, widowhood or orphanhood.
In order to cover the aforementioned pension commitments, the Bank has an insurance
policy with Winterthur Seguros y Reaseguros S.A. (now AXA Seguros y Reaseguros S.A.
as a result of the subsequent merger of the two companies) backed by the unconditional
guarantee of the parent company, Winterthur A.G., which guarantees the future coverage
of all pension supplements payable to non-active staff arising prior to financial year
2003. In addition, for non-active staff as from 2003 and for the cover of active staff, the
aforementioned benefits are guaranteed under a co-insurance policy in which Winterthur
Seguros y Reaseguros (now AXA Seguros y Reaseguros S.A.) has a 40% participation,
acting as lead co-insurer, while Caser Ahorrovida S.A. de Seguros y Reaseguros and
Allianz, Compañía de Seguros y Reaseguros S. A. each have a 30% participation.
Active personnel
The basic assumptions used for the calculations in the actuarial study as at 31 December
2012 and 2011 for commitments to active personnel, are as shown in the following table:
Mortality:
Survival
Men:
Women:
IInvalidity:
31/12/2012 31/12/2011
Probabilities set in the GKM/-95
tables, at 80%.
Probability associated with PERM-
2000 P table.
Probability associated with PERF-
2000 P table.
Probabilities set in the OM
24/01/1977 on Bank insurance
net of costs.
Probabilities set in the GKM/-
95 tables, at 80%.
Probability associated with
PERM-2000 P table.
Probability associated with
PERF-2000 P table.
Probabilities set in the
OM 24/01/1977 on Bank
insurance net of costs.
Euribor zero-coupon curve as
at 03 Nov 2011
Euribor zero-coupon curve as
at 03 Nov 2011
Type of updating:
3.60%*
Expected total return on
assets: 3.60%*
Rise in CPI: 2% 2%
Salary inflation:
3.50% for remuneration
items linked to the collective
bargaining agreement
3.50% for remuneration
items linked to the collective
bargaining agreement
Social Security evolution - -
Rise in Maximum - -
Maximums: 2% 2%
Maximum pension: 2% 2%
*Returns corresponding to those indicated in the iBoxx Corporate AA curve of 31 October 2012, depending on the
duration of each payment commitment.
In 2012 regular premiums paid for retirement cover, net of recoveries, totalled -€6.86
million (-€3.07 million in 2011).
Premiums paid for death and incapacity cover in 2012 amounted to €0.11 million (€0.12
million in 2011).
78
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

The most significant aspects of the actuarial study carried out as at 31 December 2012
and 2011 are as follows:
€000s
31/12/2012 31/12/2011
Value of the obligations 29,359 40,943
Fair value of plan assets:
Allianz 9,769 13,888
Caser 9,769 13,888
AXA 13,025 18,518
One significant aspect of the difference between the actuarial values as at 31 December
2011 and 2012 is that the additions to provisions for retirement commitments were
reduced as a consequence of the evolution of the financial markets during 2012. As at
3 November 2011 the 24-year return - this being the average financial duration of the
commitments undertaken - based on the EuroSwap curve was 2.94%, and as at 30 October
2012, the 23-year return, based on the iBoxx Corporate AA10+ rate, stood at 3.60%, as a
result of which coverage of pension commitments was reduced by €4.71 million.
Personnel that are pension beneficiaries
The most significant aspects of the actuarial study carried out as at 31 December 2012
and 2011 are as follows:
31/12/2012 31/12/2011
Value of the obligations 9,012 9,463
Fair value of the plan
assets
8,977 9,424
Actuarial assumptions
Tables used
Pensions deriving from
the initial premium
PERMF/2000 P
PERMF/2000 P
Pensions deriving
from subsequent
PERMF/2000 P
PERMF/2000 P
contributions
Technical interest rate 3.60%*
Euribor zero-coupon curve as at 03
Nov 2011
Forecast total yield from
the assets:
3.60%*
Euribor zero-coupon curve as at 03
Nov 2011
Rise in salaries Not applicable Not applicable
Pension revaluation rate Not applicable Not applicable
*Returns corresponding to those indicated in the iBoxx Corporate AA curve of 31 October 2012, depending on the
duration of each payment commitment.
One significant aspect of the difference between the actuarial values as at 31 December
2011 and 2012 is that the additions to provisions for retirement commitments were
reduced as a consequence of the evolution of the financial markets during 2012. As
at 3 November 2011 the 13-year return - this being the average financial duration of
the commitments undertaken - based on the EuroSwap curve was 2.81%, and as at 30
October 2012 the return was 3.60%, based on iBoxx Corporate AA 10+ rates. As a result,
the amount of cover for pension commitments fell by €0.74 million.
79
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

Early retirees. Post-employment and other long-term benefits
In 2002 and 2003 the Bank organised two early retirement schemes for employees. The
commitments undertaken towards them up until the date of retirement were insured
with Nationale-Nederlanden Vida. The commitments undertaken towards early retirees
from the date of retirement are covered in the same policy, under a co-insurance between
Winterthur (now AXA) (40%), Allianz (30%) and Caser (30%) covering active personnel
who are beneficiaries of a pension after financial year 2003.
The basic assumptions used for the calculations in the actuarial study, as at 31 December
2012 and 2011, for commitments to active personnel, are as shown in the following table:
Survival:
Men
Women
31/12/2012 31/12/2011
Probability associated with
PERM-2000 P table.
Probability associated with
PERF-2000 P table.
Type of updating: Pre-retirement phase: 1.00%*
Post-retirement phase:
3.60%*
Forecast total yield from the
assets:
Pre-retirement phase: 1.00%*
Post-retirement phase:
3.60%*
Probability associated with PERM-
2000 P table.
Probability associated with PERF-
2000 P table.
Euribor zero-coupon curve as at 03
Nov 2011
Euribor zero-coupon curve as at 03
Nov 2011
Rise in CPI:
Early retirement stage 2% for re-valuable benefits 2% for re-valuable benefits
Retirement stage 2% 2%
Salary inflation:
Retirement stage Not applicable Not applicable
Social Security evolution
Rise in Maximum Bases 2% 2%
Maximum pension: 2% 2%
*Returns corresponding to those indicated in the iBoxx Corporate AA curve of 31 October 2012, depending on the
duration of each payment commitment.
For the retirement stage of early retirees and for the part accrued and not accrued at 31
December 2012 and 2011, the same profitability as mentioned previously for commitments
undertaken with active personnel were used.
The most significant aspects of the actuarial study carried out as at 31 December 2012
and 2011 are as follows:
Early
retirement
stage
31/12/2012 31/12/2011
Retirement
stage
Early
retirement
stage
Retirement
stage
Other long-term benefits:
Early retirees 2002 205 205
Early retirees 2003 2,571 2,571
Post-employment benefits
Early retirees 2002 239 239
Early retirees 2003 6,981 6,981
Pension-linked insurance agreements
Nationale Nederlanden Vida 2,750 - 2,750 -
Allianz, Compañía de Seguros y
Reaseguros, S.A. - 2,245 - 2,245
Caser, S.A. de Seguros y Reaseguros sobre
la Vida - 2,245 - 2,245
Winterthur Vida, S.A. de Seguros y
Reaseguros sobre la Vida - 2,994 - 2,994
As regards pre-retirement commitments, one significant aspect of the difference between
the actuarial valuations as at 31 December 2011 and 2012 is that the additions to
provisions for retirement commitments were increased as a consequence of the evolution
of the financial markets during 2012. As at 3 November 2011 the two-year return - this
being the average financial duration of the commitments undertaken - based on the
EuroSwap curve was 1.70%, and at 30 October 2012 the two-year return, based on iBoxx
Corporate AA 10+ rates, was 1.00%. As a result of this, the amounts corresponding to
cover for pension commitments have increased by €25,000.
As regards post-employment commitments, one significant aspect of the difference between
the actuarial valuations as at 31 December 2011 and 2012 is that the additions to provisions
for retirement commitments were reduced as a consequence of the evolution of the financial
markets during 2012. As at 3 November 2011 the 24-year return - this being the average
financial duration of the commitments undertaken - based on the EuroSwap curve was
2.94%, and as at 30 October 2012, the 23-year return, based on the iBoxx Corporate AA10+
rate, stood at 3.60%, as a result of which coverage of pension commitments was reduced by
930 thousand euros.
Explanation of the change in defined benefit pension commitments as at 31 December
2012 compared with 31 December 2011 and coverage thereof:
80
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

€000s
Valuation of commitments as at 31-12-2011: 64,869
Active Personnel 40,943
Early retirees (early retirement stage) 5,206
Early retirees (retirement stage) 9,257
Personnel who are pension beneficiaries 9,463
Changes in obligations during financial year 2012: (16,501)
Accruals for the year 2012: 1,756
Pension fund interest: 1,855
Reductions for payments of benefits or cancellation of commitments: (3,844)
Actuarial profits and losses (deviation and changes to assumptions) (16,268)
Valuation of commitments as at 31-12-2012: 48,368
Active Personnel 29,359
Early retirees (early retirement stage) 2,776
Early retirees (retirement stage) 7,221
Personnel who are pension beneficiaries 9,012
Coverage of obligations as at 31-12-2010: 70,835
Plan assets 65,695
Pension-linked insurance agreements 5,140
Other funds 0
Table for reconciling the value of the obligations and the fair value of the assets assigned
to cover them:
Reconciliation of the components of pension expenses
€000s
Present value
Period ended December 2012
of committed
benefits
Value of the
associated funds
Value as at 01 January 2012 64,869 70,835
Normal Cost (Annual accrual) 1,756
Interest Cost (financial expenses) 1,855
Expected return on plan assets 1,923
Company contributions 1,672
Company recoveries (8,201)
Benefits paid (3,834) (3,831)
Early retiree risk premiums earned (10)
Actuarial losses / (gains) (16,268)
(Losses) / gains on the value of the fund (10,625)
Value as at 31 December 2012 48,368 51,773
The following is a reconciliation between the present value of defined benefit obligations
and the fair value of the plan assets with the assets and liabilities recognised in the
Balance Sheet as at 31 December 2012:
Return anticipated from plan assets/insurance contracts: 1,923
Actuarial gains / (losses) (10,624)
Contributions 1,672
Recoveries (8,201)
Benefits paid (3,831)
Coverage of obligations as at 31-12-2011: 51,773
Plan assets 49,023
Pension-linked insurance agreements 2,750
81
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

Post-employment benefits
The Bank’s estimate with regard to pensions costs for 2013 amounts to €0.88 million.
Active, passive and early-retired personnel
Breakdown of plan assets associated with cover of defined benefit commitments
Present value of committed benefits 45,557
Value of the associated funds 49,023
Unrecognised net actuarial losses and gains 0
Cost of past service not recognised 0
Pension assets 3,466
Other liabilities
Present value of committed benefits 35
Value of the associated funds 0
Unrecognised net actuarial losses and gains 0
Cost of past service not recognised 0
Pension liabilities 35
The following is a breakdown of insurance policies taken out with the various insurance
institutions (at fair value):
Percentage
Axa - Winterthur 44%
Allianz 26%
Caser 25%
Nationale Nederlanden 5%
The expected return at the start of the financial year for the plan assets was estimated at
€1.92 million, while the actual return obtained was (€8.70 million), the difference being
due almost entirely to the increase in value as a result of the increase in market rates
between the end of 2011 and the end of 2012.
Other long-term benefits
Early retirees
The Bank’s estimate of forecast contributions to the plan during financial year 2013
amounts to (€1.92 million). The forecast return from plan assets for 2013 and estimated
at the start of said year amounts to 1.736 million euros.
Present value of committed benefits 2,776
Value of the associated funds 0
Details of changes in the present value of defined benefit pension commitments and
the assets assigned to cover them as at each year-end.
Pension liabilities 2,776
€000s
Insurance agreements linked to pensions 2,750
Year
Defined Benefit
Obligations
Assets
Assigned
Other
Funds
Deficit/Surplus
Pension costs incurred in 2012 for defined benefit commitments
The total cost recognised in the Income Statement for 2012 for coverage of pension
commitments amounts to (€3.96 million), as per the following breakdown:
€000s
Cost of services in the current period 1,756
Interest cost 1,855
Expected return on plan assets (1,923)
Actuarial gains and losses (5,644)
2.004 129,814 130,514 - 701
2.005 166,512 168,600 - 2,088
2.006 132,232 130,852 1,380 -
2.007 103,462 102,353 1,137 -
2.008 76,839 77,979 33 1,173
2.009 67,525 67,396 129 -
2.010 73,154 74,925 44 1,814
2011 64,869 70,835 39 6,005
2012 48,368 51,773 35 3,440
82
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

Pension costs incurred in 2012 for defined contribution commitments
The total cost recognised in profit and loss in 2012 for coverage of defined contribution
pension commitments amounts to €45,000.
28. Fees received and paid
Details of this heading in the consolidated income statement for the years ended 31
December 2012 and 2011 are as follows:
The average number of employees by category and sex during financial years 2012 and
2011 was as follows:
€000s
2012 2011
2012 2011
Men Women Men Women
Managers 393 170 415 179
Executives 957 780 968 781
Operatives 677 1,157 769 1,251
2,027 2,107 2,152 2,211
The breakdown of personnel by sex and category as at 31 December 2012 and 2011 was
as follows:
2012 2011
Men Women Men Women
Managers 399 172 399 170
Executives 943 790 974 780
Operatives 643 1.121 703 1.184
1,985 2,083 2,076 2,134
Fees expense:
Fees paid to other institutions and correspondents 29,010 24,805
Fees paid to brokers, virtual banking 19,596 24,914
Other fees 22,009 17,039
Total fees expense 70,615 66,758
Fee income:
For guarantees and documentary credits 27,853 23,842
For exchange of foreign currencies and foreign banknotes 7,499 7,247
For contingent commitments 14,139 11,619
For collections and payments- 58,573 54,955
Trade bills 5,468 5,786
Sight accounts 11,833 9,972
Credit and debit cards 32,867 31,053
Cheques 1,443 1,466
Payment orders 6,962 6,678
For securities services- 40,753 41,142
Underwriting and placement of securities 2,761 632
Securities trading (Note 40) 18,844 20,863
Administration and custody of securities 18,125 17,468
Wealth management 1,023 2,179
For the marketing of non-banking financial products- 87,546 87,537
Investment funds 36,928 36,869
SICAVs 6,130 6,032
Pension funds 3,912 3,706
Insurance 40,287 40,562
Other (advisory services) 289 368
Other fees 38,092 39,299
Total fee income 274,455 265,641
83
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

29. Interest and similar charges/income
The breakdown of these items in the consolidated income statement, in accordance with
the nature of the operations that give rise to the results, for the financial years ended 31
December 2012 and 2011 is as follows:
The item “Debits represented by negotiable securities” (Note 19) includes in 2012 interest
and charges for transactions with promissory notes and commercial paper to the value of
€107.45 million (€30.08 million in 2011).
The average annual interest per item during financial years 2012 and 2011 was as follows:
€000s
Interest and similar income 2012 2011
Deposits with Bank of Spain (Note 6) 2,240 6,006
Deposits with credit institutions (Note 10) 28,128 48,040
Money market transactions through counterparties 5,429 30,866
Customer loans (Note 10) 1,286,893 1,205,045
Debt instruments 371,980 314,734
Impaired assets 18,936 13,916
Income corrections from hedging operations (9,908) 11,192
Income from insurance contracts linked to pensions and similar
obligations
1,856 2,223
Other interest 2,142 4,273
1,707,696 1,636,295
In 2012, the heading “Customer loans” includes €686 million corresponding to operations
with tangible security (€679.54 million in 2011). The item “debt securities” includes, in
2012, €257.19 million corresponding to State Debt (€188.72 million in 2011).
31/12/2012 31/12/2011
Average
interest
Average
interest
Similar income:
Deposits with central banks 0.46% 0.97%
Deposits with credit institutions 1.02% 1.69%
Loans and advances to customers (a) 3.06% 2.96%
Debt instruments 3.73% 3.59%
Equities 4.16% 4.31%
Similar costs:
Deposits from central banks 0.89% 1.28%
Deposits from credit institutions 1.91% 2.30%
Customer resources (c) 2.07% 2.21%
Customer deposits 1.94% 1.97%
Marketable debt securities 2.27% 2.58%
Subordinated liabilities 3.93% 4.77%
€000s
Interest expense and similar charges 2012 2011
On deposits with the Bank of Spain 81,629 37,584
On deposits with credit institutions 139,655 153,702
On money-market transactions through counterparties 7,921 20,991
On customer loans 423,922 474,608
On debt represented by negotiable securities (Note 19) 400,285 414,290
Subordinated liabilities (Note 19) 39,005 45,956
Expense corrections from hedging transactions (48,543) (59,295)
Pension fund interest costs 1,787 2,200
Other interest 1,780 3,584
1,047,441 1,093,620
84
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

30. Trading income
The breakdown of these items in the consolidated income statement for the years ended
31 December 2012 and 2011 is as follows:
€000s
2012 2011
From financial assets and liabilities held for trading (Note 7) 30,510 11,910
From debt securities 27,539 31,937
Other equity instruments (12,982) (41,835)
Trading derivatives 15,953 21,808
Other financial instruments at fair value through profit and loss
account (Note 7) (1,952) 97
Other equity instruments (1,952) 97
From financial assets available for sale (Note 8) 26,380 5,212
From debt securities 23,386 4,176
Other equity instruments 2,994 1,036
Financial liabilities at amortised cost 47,322 40,774
Debt instruments 43,085 40,774
Subordinated liabilities 4,237
Other income and expense 2,593 1,169
104,853 59,162
31. Exchange differences (net)
The amount of the net exchange differences recognised in the consolidated Income
Statement for the year ended 31 December 2012 was €40.28 million (€38.68 million in
the year ended 31 December 2011).
The breakdown by currency of the assets and liabilities in the Group’s balance sheet
denominated in foreign currencies as at 31 December 2012 and 2011 is as follows:
€000s
2012 2011
Assets Liabilities Assets Liabilities
US dollar 334,129 460,900 265,162 438,710
Sterling 88,543 37,386 22,783 38,035
Japanese yen 3,290,617 5,871 4,089,271 722,425
Swiss franc 731,185 12,982 788,918 10,612
Norwegian krone 2,505 1,122 604 1,130
Swedish krona 1,421 649 1,008 856
Danish krone 13,813 135 1,896 19
Others 14,507 7,887 33,969 24,006
4,476,720 526,932 5,203,611 1,235,793
The breakdown of assets and liabilities denominated in foreign currencies as at 31
December 2012 and 2011 is as follows:
€000s
2012 2011
Assets Liabilities Assets Liabilities
Cash and balances with central banks 1,214 - 1,028 -
Financial assets and liabilities held for
trading
3,372 3,357 2,621 2,709
Loans and receivables 4,470,838 - 5,189,552 -
Financial assets available for sale 1,205 - 10,321 -
Accrued expenses and deferred income 45 - 42 -
Financial liabilities at amortised cost - 523,537 - 1,232,570
Other 46 38 47 514
4,476,720 526,932 5,203,611 1,235,793
85
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

32. Other general administrative expenses
The composition of the amounts included under this item in the consolidated income
statement for financial years 2012 and 2011 is as follows:
€000s
2012 2011
Taxes 6,923 5,133
Buildings and supplies 31,187 32,653
Entertaining and travel expenses 4,139 4,552
Material and sundry expenses 12,320 33,848
External services 71,829 59,681
Software and communications 49,003 42,624
Advertising 57,888 49,940
Other expenses 23,217 22,426
256,506 250,857
The amount recognised under the heading “Contribution to the Deposit Guarantee Fund”
is the result of the calculation made according to the rules established in Royal Decree
2606/1996 of 20 December on guarantee funds for deposits of credit institutions.
Spain’s deposit guarantee system was substantially reformed during 2011: The three
existing deposit guarantee funds (banks, savings banks and credit cooperatives) have
been merged into a single Credit Institution Deposit Guarantee Fund and its functions
updated and strengthened with a view to ensuring its flexible operation in reinforcing
the solvency and functioning of the institutions. The legal limit on annual contributions
to the fund was increased from 0.2% to 0.3%, which in practice means increasing the
annual contribution from 0.06% to 0.2% of deposits guaranteed as at each reference date.
Also, an additional quarterly contribution was introduced, with a 500% weighting applied
to deposits on which agreed remuneration exceeds certain rates of interest which are
reviewed on a quarterly basis.
Royal Decree-Law of 31 August 2012 on the restructuring and resolution of credit
institutions also repealed with immediate effect sections 2b and 2c of Article 3 of Royal
Decree 2606/1996 of 20 December on credit institution deposit guarantee funds, which
laid down the additional quarterly contributions to be made by the entities.
33. Other operating income and expense
The breakdown of this item in the consolidated income statement for the years ended 31
December 2012 and 2011 is as follows:
The item “financial fees setting off direct costs” contains the part of the fees that offset
direct costs linked to investment products.
The amounts shown under the heading Income and Expense on insurance and re-insurance
contracts issued correspond to the operating activity of Línea Directa Aseguradora.
€000s
2012 2011
Income Expenses Income Expenses
Income from the operation of investment
property and other operating leases
7,305 - 3,796 -
Financial fees setting off direct costs 12,146 - 11,807 -
Contribution to the Deposit Guarantee
Fund (Note 4)
- 68,775 - 14,817
Income and expense from/on insurance
and reinsurance policies issued
667,712 404,997 686,960 455,442
Other 11,010 9,053 13,668 12,056
698,173 482,825 716,231 482,315
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34. Gains and losses in the derecognition of assets not classified as non-current assets
held for sale and Profits and losses from non-current assets held for sale not classified
as discontinued operations
The breakdown of these items in the consolidated income statement for the years ended
31 December 2012 and 2011 is as follows:
€000s
2012 2011
Differences in the derecognition of assets not classified as noncurrent
assets held for sale:
Gains on disposal of property, plant and equipment (Note 14) 253 2,152
Losses on disposal of property, plant and equipment (Note 14) (2,675) (5,226)
Gains on disposal of shares 41,673 26,000
Gains on disposal of other equity instruments 50 2,279
39,301 25,205
Gains / (Losses) on non-current assets held for sale not classified as
discontinued operations:
Impairment losses on assets (Note 12) (40,132) (47,652)
Gains on disposals 55,870 22,875
Losses on disposals (70,447) (32,193)
(54,709) (56,970)
During 2012 the Group recognised €24.23 million under the heading “Gains on disposal
of equity holdings” deriving from the first variable payment associated with the sale,
in 2007, of 50% of the share capital of Bankinter Seguros de Vida, S.A de Seguros y
Reaseguros to Mapfre Vida, S.A. This variable payment is linked to the attainment of the
business plan established for the Company.
Additionally, the Group recognised €17.45 million under this same heading for the sale
in December 2012 of 40.1% of the share capital of Bankinter Seguros Generales, S.A de
Seguros y Reaseguros to the Mapfre Group (Note 13).
During 2011 the Group recognised €24 million under the heading “Gains on disposal; of
equity holdings” in respect of the release of blocked gains on the 30 June 2007 sale of
50% of Bankinter Seguros de Vida, Sociedad de Seguros y Reaseguros S. A. to Mapfre Vida
Sociedad de Seguros y Reaseguros S. A.. This gain remained blocked by the shareholders’
agreement providing for a purchase option in favour of the buyer in the event that, at
year-end 2011, Bankinter Seguros de Vida, Sociedad de Seguros y Reaseguros S. A. had
not attained 50% of its business plan. During 2011 this option was cancelled, since the
business plan objectives had been met.
35. Transactions and balances with related parties
The breakdown of transactions and balances with Group entities and other related entities
and private individuals as at 31 December 2012 and 2011 is provided in Appendix I and
the following Note 36.
36. Remuneration of and balances with members of the Board of Directors
Directors’ remuneration
As it has demonstrated year after year, Bankinter pursues a remuneration policy in line with
the criteria and recommendations of good corporate governance and currently applicable
laws and regulations. On 15 March 2012 Bankinter presented a remuneration policy
report to its AGM for a consultative vote. The report included information on the Bank’s
general policy in this area, its application to financial year 2011 and the remuneration
system applying to financial year 2012 1 . This is a good corporate governance practice
that Bankinter has carried out every year since the AGM held in 2008. The remuneration
policy report was approved by 99.607% (2011: 99.045%) of the total capital in attendance
and represented at the aforementioned 2012 General Meeting of Shareholders. Among
other information, it contained the remuneration for the Board and top management for
the financial year 2012, which is detailed and broken down in this note.
This report also included the conclusions of the analysis of the degree to which Bankinter’s
remuneration policy as applied to Directors, Senior Management and other persons
included in the Group’s “risk takers” conformed to the rules set out in Royal Decree
771/2011. Since 2009, Bankinter has carried out an exhaustive analysis of the extent to
which all remuneration systems and items in all the management, business, support and
control areas, including Senior Management and the Board of Directors, comply with the
1. Law 2/2011 on Sustainable Economy amended the existing legal framework, introducing new disclosure requirements for listed
companies. It established the obligation to provide a report on directors’ remuneration which must be distributed and submitted to
a consultative vote as a separate agenda item in the AGM, thus making the recommendation of the Unified Code of Good Corporate
Governance mandatory.
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principles contained in all the EU and Spanish standards and recommendations issued
during this period 2 . In general terms, as can be seen from the remuneration reports
submitted to our AGM in for the last two years, the conclusion has always been that the
Bank’s systems, principles and policies for remuneration were in line with the fundamental
principles contained in the recommendations of the FSB (Financial Stability Board) and in
the relevant EU Directives, and with the recommendations of the CUBG (Unified Code of
Good Governance for listed companies) and currently applicable Spanish law.
As regards the remuneration for the members of Bankinter's Board of Directors, the
individual breakdown of the total remuneration received in their status as directors
during financial years 2012 and 2011 is as follows:
In euros
Directors 2012 2011
Pedro Guerrero Guerrero 223,020 238,353
María Dolores Dancausa Treviño 163,800 175,354
Cartival, S.A. 163,800 175,354
Marcelino Botín-Sanz de Sautuola y Naveda 93,677 103,710
Fernando Masaveu Herrero 127,064 130,006
John de Zulueta Greenebaum: 132,362 160,646
Gonzalo de la Hoz Lizcano 115,853 127,531
Jaime Terceiro Lomba 151,458 137,342
José Antonio Garay Ibargaray 136,057 151,036
Rafael Mateu de Ros Cerezo 176,702 188,582
Former directors (1) - 44,610
1,483,793 1,632,524
(1) In the category of former directors, the amounts in the table for 2011 refer to those received by José Ramón
Arce Gómez, who resigned in April 2011.
At year-end 2012 the number of Directors of Bankinter S.A. stood at ten, unchanged from
year-end 2011.
Pursuant to Article 32 of the Articles of Association, the following items are included in
the amounts shown in the above table:
2. In December 2010, Directive 2010/76 of the European Parliament and Council, of 24 November 2010, was published, concerning
capital requirements for the trading book and for re-securitisations, and the supervisory review of remuneration policies,
establishing provisions for the policies and practices of credit institutions in the area of remuneration, in particular, regarding
categories of staff that have a significant impact on the institution’s risk profile or are engaged in control functions. Also in
December 2010, the Committee of European Banking Supervisors (CEBS) published a guide to interpreting the contents of the
aforementioned Directive (Guidelines on Remuneration Policies and Practices) with the aim of clarifying and detailing the criteria to
be applied in interpreting the provisions of the aforementioned Directive.
Also, 5 June 2011 saw the coming into force of Royal Decree 771/2011, of 3 June, amending Royal Decree 216/2008, of 15 February,
on financial institutions’ equity and Royal Decree 2606/1996, of 20 December, on guarantee funds for deposits of credit institutions
and incorporating a new Chapter XII on remuneration policy of credit institutions in Royal Decree 216/2008 on financial institutions’
equity, thus completing the transposition of Directive 2010/76/EU into Spanish law. This Royal Decree introduces a mandatory
framework for remuneration policies of credit institutions, which is applicable to remuneration accruing in 2011 and to that granted
in 2010 but not yet paid.
- a fixed amount for the role of director,
- an amount that is accrued for attendance at meetings of the Board and its Committees
(attendance fees).
- And allocation of shares.
The following is an individualised and itemised breakdown of the overall amounts
indicated in the above table to which each director is entitled as remuneration. Fixed
remuneration and fees for attending the meetings of the Board of Directors and the Board
Committees in financial years 2012 and 2011:
Finally, Bank of Spain Circular 4/2011, of 30 November, amending Circular 3/2008, of 22 May, on the determination and control of
minimum capital requirements, develops aspects relating to the transparency of the remuneration policy and aggregate quantitative
data on remuneration (to be included in the Information of Prudential Relevance report published in 2012 and relating to
remunerations in 2011). This Circular deals particularly with remuneration of managers and employees whose decisions may affect
the institution’s risk profile.
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In euros
2012 2011
Fixed Attendance Fixed Attendance
Directors
remuneration Fees remuneration Fees
Pedro Guerrero Guerrero 72,160 106,860 73,949 120,404
María Dolores Dancausa Treviño 54,120 76,680 55,461 86,893
Cartival, S.A. 54,120 76,680 55,461 86,893
Marcelino Botín-Sanz de Sautuola
y Naveda 36,080 35,597 36,975 44,735
Fernando Masaveu Herrero 36,080 68,984 36,975 71,031
John de Zulueta Greenebaum: 36,080 74,282 36,975 101,671
Gonzalo de la Hoz Lizcano 36,080 57,773 36,975 68,556
Jaime Terceiro Lomba 36,080 93,377 36,975 78,367
José Antonio Garay Ibargaray 36,080 77,977 36,975 92,061
Rafael Mateu de Ros Cerezo 46,904 101,198 48,066 111,916
Former directors (1) - - 7,454 31,656
Subtotals 443,784 769,408 462,241 894,183
Total 1,213,192 1,356,424
(1) In the category of former directors, the amounts in the table for 2011 refer to those received by José Ramón
Arce Gómez, who resigned in April 2011.
The individual breakdown of the allocations of shares to Directors by way of remuneration
in 2012 and 2011 is as follows:
2012 2011
Number
of shares
Allocated
Number
of shares
Allocated
Amounts
Amounts
Directors
invested
invested
Pedro Guerrero Guerrero 44,000 14,632 44,000 9,268
María Dolores Dancausa Treviño 33,000 10,973 33,000 6,950
Cartival, S.A. 33,000 10,973 33,000 6,950
Marcelino Botín-Sanz de Sautuola y
Naveda 22,000 7,315 22,000 4,633
Fernando Masaveu Herrero 22,000 7,315 22,000 4,633
John de Zulueta Greenebaum: 22,000 7,315 22,000 4,633
Gonzalo de la Hoz Lizcano 22,000 7,315 22,000 4,633
Jaime Terceiro Lomba 22,000 7,315 22,000 4,633
José Antonio Garay Ibargaray 22,000 7,315 22,000 4,633
Rafael Mateu de Ros Cerezo 28,600 9,509 28,600 6,024
Former directors (1) - - 5,500 1,077
270,600 89,977 276,100 58,067
(1) In the category of former directors, the amounts in the table for 2011 refer to those received by José Ramón
Arce Gómez, who resigned in April 2011.
Loans and guarantees
Total loans granted to Directors as at 31 December 2012 amounted to €26.33 million
(€23.83 million as at 31 December 2011). As at 31 December 2012 the Entity had
outstanding guarantees in favour of its Directors for a total of €0.39 million (the same
amount as at 31 December 2011).
The average term of the loans and lines of credit granted to the Bank’s Directors was
approximately 11 years in 2012 (10 years in 2011). The interest rates stand at between
1.05% and 5.55% in 2012 (1.93% and 5.98% in 2011).
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Remuneration of Executive Directors and Senior Management
As at 31 December 2012 the number of senior managers in the entity was five, not
including the Chairman, Vice-chairman and CEO. Taking this into account, remuneration
of Senior Management in 2012, excluding executive directors, was €1.68 million, of which
€1.34 million was fixed remuneration and €0.34 million variable remuneration. In 2011,
this amount stood at €1.51 million (5 persons).
In 2012, the Executive Directors received the following amounts, approved by the
Board of Directors on the proposal of the Nomination and Remuneration Committee, as
remuneration for their activity:
Fixed remuneration:
- Pedro Guerrero, Chairman of Bankinter, received a total of €0.92 million, all by way of
fixed remuneration.
- Cartival, S.A., Vice-chairman of Bankinter, received a total of €0.36 million, all by way
of fixed remuneration.
- María Dolores Dancausa, CEO of Bankinter, received a total of €0.61 million, all by way
of fixed remuneration.
Variable remuneration
Since the Bankinter AGM held in 2011, each year, as part of the remuneration policy
report, an annual variable remuneration has been approved in favour of all Bankinter
Group employees including Executive Directors, except for the Chairman, and members
of Senior Management. This annual variable remuneration is linked to the attainment
of the pre-tax profit objective for the Group’s banking activity, as approved by the Board
of Directors on the proposal of the Appointments and Remuneration Committee. Each
Director has been assigned an amount that will be received if the objective is fully achieved.
However, this variable incentive starts to accrue from an 80% achievement of the objective
and up to a maximum of 130%, such that directors may receive between 70% and 145%
of the variable amount assigned to each, depending on the degree of achievement. The
attainment rates for 2011 and 2012 were 100.52% and 93.52% respectively.
In the case of the Executive Directors, the Board of Directors approved, on the proposal of
the Appointments and Remuneration Committee, the application of certain measures on
remuneration received by way of the annual variable remuneration for 2011, as introduced
by Royal Decree 771/2011 of 3 June, and more specifically the deferral of 40% of the
accrued incentive over three years by the linear method as well as the payment of 50% of
the total incentive in the form of shares in the Bank. The latter measure was conditional,
in the case of the Executive Directors, upon approval by the 2012 General Meeting of
Shareholders of Bankinter, as required by Article 219 of the Corporate Enterprises Act.
The 2012 AGM approved the remuneration of the Executive Directors consisting in the
allocation of shares as part of their variable remuneration for 2011, with 99.771% of votes
in favour.
The following are the amounts received during 2012 by the Executive Directors of
the Company, with the exception of the Chairman, who does not receive any variable
remuneration for his activity.
As indicated above, at year-end 2011 the attainment rate was 100.52%, which led to the
accrual of a variable incentive of €201,030.93 for each of the two Executive Directors
(Vice-Chairman and CEO), which will be paid as follows:
In 2012 the Vice-Chairman and the CEO each received the following amounts relating to
this annual variable remuneration:
- In cash, 50% of the variable remuneration accrued in respect of variable incentive
2011: €100,430.90
- In shares, 10% of the variable remuneration accrued in respect of variable
incentive 2011: 4,180 shares, at a price of €4.83153 per share, this being the
average closing price of Bankinter shares between 2 January and 20 January
2012 inclusive.
The remaining 40% of the annual variable remuneration for 2011 will also be paid in
shares, as approved by the AGM held on 15 March 2012 (item 14.2). Since the reference
share price used to obtain the number of shares to be allocated is the same as that
previously indicated (€4.83153 per share), the numbers of shares to be received in the
coming years are as follows:
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- 5,547 shares will be delivered within the first fifteen days of January 2013.
- 5,547 shares will be delivered within the first fifteen days of January 2014.
- 5,547 shares will be delivered within the first fifteen days of January 2015.
Summary of Directors’ remuneration, loans, and other benefits for Directors
Remuneration by type
The sum of the amounts received by the Executive Directors in 2012 under the heading
of salaried remuneration was €2.13 million. In 2011, the total received by Executive
Directors was €1.95 million.
Bankinter has decided to apply the abovementioned principle of deferred payment and
payment in shares to annual variable remuneration from 2012 onwards, not only for
Executive Directors but also for members of Senior Management as referred to in this
report, among others. The details of the amounts of annual variable remuneration for
2012 accrued by the Vice-Chairman, CEO and Senior Management (as a group) and which
will be paid during 2013 and successive years, are shown in letter G of the Corporate
Governance Report that forms part of the Management Report of this Annual Report, as
well as in the report on remuneration policy which will be submitted to a consultative vote
at the forthcoming AGM.
Bankinter has no pension commitments to its non-executive Directors, nor does it have
commitments to its Executive Directors that are either new or different from those
already mentioned in the Remuneration Report for 2011. Bankinter has no commitments
to members of Senior Management that are either new or different from those already
mentioned in the Remuneration Report for 2011.
Bankinter has not agreed “golden parachute” clauses in its contracts with any of its
Executive Directors linking the accrual of financial rights to situations of change of control
of the Bank (which is a common clause in these types of contracts). The indemnifications
provided for in these contracts apply only in analogous cases to those established for
ordinary labour relations in the Workers’ Statute and are subject to a limit which, depending
on the particular case, is equal to or lower than that established in the regulations for
ordinary labour relations.
Bankinter has not agreed “golden parachute” clauses in its contracts with any of the
members of its senior management linking the accrual of financial rights to situations
of change of control of the Bank (which is a common clause in these types of contracts
and provided for in the Royal Decree). 1382/1985 regulating special labour relations with
senior management). The indemnifications provided for in these contracts apply only to
the cases envisaged for ordinary labour relations in the Workers’ Statute, and are subject
to a limit which is appreciably lower than that established in the Statute for ordinary
labour relations.
€000s
2012
Fixed remuneration (1) 1,886
Variable remuneration (2) 241
Attendance fees (3) 769
Directors’ Fees (4) 714
Options on shares and/or other financial instruments -
Other -
3,610
(1) Fixed remuneration corresponding to Executive Directors exclusively in their capacity as executives.
(2) Variable remuneration corresponding to Executive Directors in their capacity as executives, in respect of 2011
annual variable remuneration linked to the achievement of a specific pre-tax profit objective for the Group’s banking
activity in 2011. Each executive Director, except for the Chairman, was assigned an amount that he or she would
receive if the objective was fully achieved, as explained in the heading “Remuneration of Executive Directors and
Senior Management”.
(3) Attendance fees for Board and Committee meetings (Directors).
(4) Includes fixed remuneration plus the free allocation of shares (Directors)
Remuneration by type of director including all items
€000s
2012
Type of Director By Company By Group (**)
Executives (*) 2,677 -
External Proprietary Directors 221 -
External Independent Directors 712 27
Other External Directors - -
3,610 27
(*) The following are Executive Directors: Pedro Guerrero Guerrero, Chairman; CARTIVAL, S.A., Vice-chairman;
María Dolores Dancausa Treviño, CEO.
(**) During 2012 Mr. Gonzalo de la Hoz Lizcano and Mr. Rafael Mateu de Ros, in their capacity as non-executive
directors, received €9,000 and €6,000 respectively by way of attendance fees for meetings of the Board of Directors
of LDA. The amount received by Mr. Gonzalo de la Hoz Lizcano includes fees both as a member of the Board of
Directors and as a member of the Control Committee of LDA. Additionally, Mr. Gonzalo de la Hoz Lizcano is the
Chairman of Gneis Global Services, S.A., the Group’s technology and operating services company, and during 2012
he received €12,000 by way of fees for attending meetings of the Board of Directors.
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Other benefits
Advances -
Loans granted 26,332
Pension Funds and Plans: Contributions -
Pension Funds and Plans: Contractual obligations assumed 600
€000s
As at 31 December 2012, the holdings declared by the directors of Bankinter in companies
pursuant to Article 229.2 were as follows:
Director Entity % Capital (1) functions
Office or
María Dolores Dancausa Treviño
Banco Santander
Banco Bilbao Vizcaya Argentaria
Royal Bank of Scotland
0.00008%
0.00003%
0.00002%
None
None
None
Life insurance premiums 0.587
Cartival, S.A.
Banco Santander
0.09143%
None
Guarantees set up by the company in favour of directors -
Transactions with Members of the Board of Directors
In relation to transactions involving a transfer of resources or obligations between the
Company and entities belonging to the Group and the Directors of Bankinter, S.A., its
significant shareholders, directors and related parties, outside the scope of Bankinter
S.A.’s ordinary operations or not been carried out on normal market terms, please refer to
section C (transactions with related parties) in the Annual Corporate Governance Report
for 2011.
Fernando Masaveu Herrero
Rafael Mateu de Ros Cerezo
José Antonio Garay Ibargaray
(1) Direct and/or indirect holding.
Banco Santander
Banco Espírito Santo
Banco Popular
Banco Español de Crédito
Lloyds Banking Group
UBS
Banco Santander
Banco Bilbao Vizcaya Argentaria
Bankia
0.1736%
0.0255%
0.0732%
0.0034%
0.002%
0.001%
0.00001%
0.0042%
0.0147%
None
None
None
None
None
None
None
None
None
In compliance with Law 26/2003 of 17 July amending Law 24/1988 of 28 July on the
Securities Market and the revised text of the Corporate Enterprises Act approved by Royal
Legislative Decree 1/2010 of 2 July, the Entity is obliged to provide information on the
holdings of the Directors of Bankinter, S.A. in the entity’s share capital.
Article 229.2 of the revised text of the Corporate Enterprises Act provides that directors
must declare any holding they may have in a company with the same, analogous or
complementary type of activity to that which is carried out by the Entity, as well as any
posts, duties and activities carried out and/or held in such companies.
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Directors’ holdings in share capital
The breakdown of the interests held by the members of the Board of Directors as at 31
December 2012 and 2011 is as follows:
Pedro
Guerrero
Guerrero
María
Dolores
Dancausa
Treviño
Cartival,
S.A.
Marcelino
Botín-Sanz
de Sautuola
y Naveda
Fernando
Masaveu
Herrero
John de
Zulueta
Greenebaum:
Gonzalo
de la Hoz
Lizcano
Jaime
Terceiro
Lomba
José
Antonio
Garay
Ibargaray
Rafael
Mateu de
Ros Cerezo
Total
Shares
31/12/2012 (1) 31/12/2012 (2)
Percentage
Holding
Direct Indirect Total Shares
Percentage
Holding
Direct
Indirect
3,442,841 0.611 3,125,961 316,880 3,131,240 0.657 2,995,304 135,936
810,631 0.144 810,327 304 708,875 0.149 708,649 226
131,565,493 23.335 131,565,493 - 114,050,724 23.914 106,671,902 7,378,822
155,211 0.028 155,211 - 135,624 0.028 135,624 -
29,928,472 5.308 491,606 29,436,866 26,493,612 5.555 484,593 26,009,019
156,244 0.028 156,244 - 136,418 0.029 136,418 -
420,752 0.075 420,752 - 377,954 0.079 377,954 -
25,638 0.005 25,638 - 17,512 0.004 17,512 -
1,218,116 0.216 214,264 1,003,852 1,117,018 0.234 190,949 926,069
926,176 0.164 926,176 - 829,187 0.174 829,187 -
168,649,574 29,913 137,891,672 30,757,902 146,998,164 30,823 112,548,092 34,450,072
(1) The capital of Bankinter as at 31 December 2012 is represented by a total of 563,806,141 shares.
(2) The capital of Bankinter as at 31 December 2011 was represented by a total of 476,919,014 shares.
37. Environmental information
The Bankinter Group undertakes before its stakeholder groups – customers, shareholders,
employees and society in general – to operate in the most sustainable way, to minimise
its negative effects on the environment and maximise the positive ones. To this end, the
Bank has an active policy of protecting the environment and combating climate change,
and to this end it has identified, measured and controlled both the direct effects of its
activity and the indirect ones generated in financing transactions, asset management
and responsible management of the supply chain, including subcontractors.
The action principles of its environmental policy, which go beyond strict compliance with
legal requirements, adopting behavioural guidelines on unlegislated aspects, are:
1.- Comply with legal environmental requirements and other requirements endorsed by
the Bank that are applicable to its environmental affairs.
2.- Implement the necessary processes to achieve ongoing improvement of the
Environmental Management System, thereby improving the Group’s environmental
behaviour.
3.- Promote responsible environmental behaviour among stakeholder groups (employees,
customers, potential customers, suppliers, subcontractors, institutions, shareholders and
investors, analysts and society in general), and inform then through the annual reports
and the Bank’s website of the development and results of our environmental performance.
4.- Train and raise awareness among employees by implementing best environmental
practices, with the aim of promoting a rational and efficient use of natural resources.
5.- Support the development of conservation and environmental improvement projects.
6.- Market financial products and services related to environmental industries.
7.- Seek ways to mitigate and adapt to climate change.
Corporate Responsibility is the area responsible for monitoring compliance with this
Policy and for driving and coordinating activities aimed at improving environmental
performance, handling in-house and external suggestions for improvement and
monitoring the management indicators.
Every year it draws up a comprehensive environmental management programme
incorporating the objectives for improvement and also detailing the goals, actions and
resources involved and persons responsible for carrying it out.
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The Sustainability Committee was set up in 2009. It is headed by the Chairman and
coordinated by the Sustainability division. This Committee is responsible for guiding the
Group’s sustainability policy and programmes and driving the necessary environmental
responsibility initiatives to incorporate the Bank’s economic, environmental and social
dimensions in a sustainable development model.
To ensure compliance with the principles contained in its environmental policy, and as a
tool for ensuring the continuous improvement of its environmental behaviour, Bankinter
has implemented an environmental management system for the major Madrid centres
which has been certified by the company SGS in accordance with the UNE-EN ISO 14001
standard.
The main environmental measures taken by the Bankinter Group during 2012 included:
Calculating the institution’s carbon footprint, i.e. the total quantity of emissions of CO 2
and other greenhouse gases generated directly or locally by its activity. Offsetting direct
emissions and those deriving from its annual employees meeting in Madrid.
Implementing environmentally efficient measures and adopting environmental best
practices that enable the Bank to improve its environmental performance as recorded
in its main environmental indicators: consumption of electricity, materials, waste
management, etc.
Lending its support to various environmental initiatives and implementing the public
commitment undertaken by joining the following:
United Nations Global Compact, an initiative which the Bank joined as a member in 2011.
Carbon Disclosure Project, which promotes and facilitates dialogue between institutional
investors, purchasing organisations and senior managers, in response to the involvement
of companies as agents that are jointly responsible for climate change.
Making progress in implementing the environmental rating tool for credit operations.
Financing projects with a positive environmental impact.
During the financial year, it was not considered necessary to recognise any allocation for
environmental risks and liabilities as there were no contingencies linked to environmental
protection and enhancement and no sanction or fine was imposed in relation to the
environmental management carried out by the Bankinter Group.
The Directors of the Group consider that the environmental risks inherent to its activities
are minimal and adequately covered, and do not believe it is exposed to any additional
liabilities in relation to such risks.
Neither has the Group incurred any expenses or received any subsidies linked to these
risks.
38. Customer service
Article 17 of Order 734/2004 of 11 March of the Ministry of Economy on customer service
departments and services and ombudsmen at financial institutions stipulates, inter alia,
that financial institutions are required to prepare a report on the activities performed
by these services in the preceding financial year and, also, to include a summary of this
report in the notes to their financial statements
The Activities Report for 2012 drawn up by the Customer Support Service, which will be
presented at the meeting of the Board of Directors on 20 February 2013, indicates that
during 2012 the number of complaints/claims again fell, to 3.4 per million transactions
(compared to 4.13 in 2011).
The Earth Hour campaign run by the WWF, by turning off the lights in all of its buildings
during the campaign and inviting its employees and customers to join the initiative.
Promoting environmental training, communication and awareness campaigns aimed at
employees, and holding corporate volunteering initiatives linked to the environment.
Launching campaigns aimed at customers to promote the use of the web-based
correspondence service and avoid the use of paper via the postal service.
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There were a total of 6,027 complaints and claims in 2012, of which financial claims
accounted for 5,205. Of these, 42.80% were resolved in the customer’s favour.
2012 2011
Total number of Complaints and Claims:
Total no. of complaints (non-financial) 822 1,403
Total no. of claims (financial) 5,205 5,904
Total financial Complaints and Claims 6,027 7,307
Financial claims:
No. of claims in client’s favour 2,228 3,155
In customer’s favour (%). 42.80% 53.44%
No. of claims in the Bank’s favour 2,977 2,749
% in the Bank’s favour 57.20% 46.56%
Total financial claims 5,205 5,904
As regards the timeframe for dealing with these complaints, in 2012 51.63% of incidents
were answered in less than 48 hours, which represents an improvement of nearly three
percentage points on the previous year (48.73%).
Time taken to resolve dossiers
Total
Total
Timeframes 2012 Percentage 2011 Percentage
0 days 1,951 32.37% 2,321 31.76%
1 to 2 days 1,161 19.26% 1,240 16.97%
3 to 6 days 964 15.99% 1,178 16.12%
7 to 10 days 402 6.67% 991 13.56%
> 10 days 1,549 25.71% 1,577 21.59%
6,027 100.00% 7,307 100.00%
The External Customers Ombudsman dealt with 539 incidents in 2012, 10.68% more than
in 2011; of these, 254 were settled in the Bank’s favour (47.12% of the total) and 261 in
favour of the customer (48.42%).
2012 2011 Change
External Ombudsman:
Incidents processed 539 487 10.68%
Settled in the customer’s favour 261 208 25.48%
Settled in the Bank’s favour 254 249 2.01%
Excluded 24 30 (20%)
Also, in 2012 198 incidents were reported to the Bank of Spain (2011: 194), 91 of them
being resolved, with 33 of them in the Bank’s favour.
2012 2011 Change
Bank of Spain:
Claims processed 198 194 2.06%
In the customer’s favour 29 30 (3.33%)
Uncontested 23 12 91.67%
In the Bank’s favour 33 40 (17.50%)
Pending settlement 107 101 5.94%
Outside Bank of Spain jurisdiction 6 9 (33.33%)
Filed 0 2 (100.00%)
No recommendations were issued in the Activities Report for 2012 drawn up by the
Customer Support Service.
Finally, as regards the legal proceedings arising from the contracting of financial swaps,
their amount is set at indeterminate by the plaintiffs, since exact quantification of the
contingency involved in these proceedings is not possible until a firm ruling is given
and, if applicable, executed. In view of the uncertainty regarding the result of these legal
proceedings, no provision has been recognised in respect of these proceedings for merely
having been instigated. Any provisions for and impairment of receivables recognised in
relation to financial swaps are established in accordance with applicable standards, and
in the Bank’s judgement they are sufficient to cover both insolvency and any losses that
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might be generated by the legal proceedings instigated with respect to the validity of
these products, taking account of the proportion of favourable rulings at various stages of
the proceedings and the most recent case law in this area.
39. Branches, centres and agents
The breakdown of the Bankinter, S.A. branch offices, centres and agents as at 31 December
2012 and 2011 is as follows:
31/12/2012 31/12/2011
Branch Offices 367 366
Commercial management centres-
Corporate 45 47
SMEs 76 81
Private Banking and Personal Finance 38 59
Virtual Offices 353 360
Number of Agents 505 511
Telephone and Internet branches 3 3
As at 31 December 2012 Bankinter S.A. had a network of 505 agents (478 agents plus
27 EAFIs (“Empresas de Asesoramiento Financiero” or Financial Advisory Companies),
compared with 511 agents in 2011, composed of individuals or legal entities who have
been granted powers to deal in the name and on behalf of Bankinter S.A. with the Bank’s
customers in negotiating and completing operations typical of a credit institution. This
network handled average resources of €1.87 million as at 31 December 2012 (€1.79 million
as at 31 December 2011), with an average investment of €1.87 million (€1.92 million as at
31 December 2011). The list of agents is registered with the Financial Institutions Office of
the Bank of Spain. EAFIs (“Empresas de Asesoramiento Financiero” or Financial Advisory
Companies) are governed by the Stock Exchange Act, by Royal Decree 217/2008, of 15
February, on the legal regime of investment service companies and, in particular, Circular
10/2008, of 30 December, of the CNMV, the Spanish securities regulator, on EAFIs.
40. Trust and investment services
The following table details the fees recorded in financial years 2012 and 2011 for the
activities of investment services and complementary activities provided by the Group:
€000s
2012 2011
Wealth management 1,023 2,179
Management agreements 361 349
Safe deposit boxes 596 600
Securities trading (Note 28) 18,844 20,863
20,824 23,991
The following table states, in summary, the value of the mutual funds, pension funds, and
client portfolios managed by the Group:
€000s
31/12/2012 31/12/2011
Own investment funds 3,585,303 3,664,236
External investment funds sold 1,444,421 1,078,672
Pension funds 1,392,575 1,253,312
Management of SICAVs (open-ended collective investment companies) 1,433,502 1,336,320
7,855,801 7,332,540
The insurance centres section includes the call centre and telephone hotline offices of
Línea Directa Aseguradora.
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41. Auditors’ remuneration
Set forth below are the fees for professional services incurred by the auditors of the
individual and consolidated Annual Accounts for the Bank and the Group during financial
years 2012 and 2011:
Bankinter, S.A.
€000s
Bankinter Group
2012 2011 2012 2011
Auditing services 384 361 740 798
Audit-linked services 105 439 105 439
Tax services - 4 - 4
Other services 80 164 80 164
569 968 925 1,405
The amount stated in the above table for auditing services includes all fees relating to
auditing for the financial years 2012 and 2011, irrespective of when they were invoiced.
42. Tax situation
Profit, which is calculated in accordance with tax legislation, is subject to a 30% levy on
the taxable base. Certain deductions can be made from the resulting amount.
The fact that a consolidated return is filed for Corporation Tax does not mean that the
Corporation Tax payable by each Entity is substantially different from what it would be if
assessed on an individual basis.
On 27 December 2000, the Bank notified the National Inspection Office at the Spanish
Inland Revenue Authorities of its decision to apply the fiscal consolidation regime
from financial year 2001 onwards. The Fiscal Group number allocated by the National
Inspection Office at the Spanish Inland Revenue Authorities was 13/2001.
The list of subsidiary companies in the Bankinter tax group as at 31 December 2012 is as
follows:
Bankinter Consultoría, Asesoramiento, y Atención Telefónica, S.A.
Bankinter Gestión de Activos, S.A., S.G.I.I.C. (formerly Gesbankinter, S.A.)
Hispaarket, S.A.
Intermobiliaria, S.A.
Bankinter Emisiones, S.A.
Bankinter Consumer Finance, E.F.C, S.A.
Bankinter Capital Riesgo, S.G.E.C.R, S.A.
Bankinter Sociedad de Financiación, S.A.
Arroyo Business Consulting Development, S.L.
Gneis Global Services S.A.
Relanza Gestión, S.A.
Línea Directa Aseguradora, S.A.
Línea Directa Asistencia, S.L.U.
Motoclub LDA. S.L.U.
Centro Avanzado de Reparaciones CAR, S.L.U.
Ambar Medline, S.L.
LDActivos, S.L.U.
There follows below a reconciliation of the consolidated accounting profit and tax profit
for years 2012 and 2011:
€000s
31/12/2012 31/12/2011
Accounting profit before tax for the financial year 154,179 240,148
Permanent differences- (21,607) (12,157)
Application of prior years’ tax losses (263) -
Share in results of entities accounted for using the equity method (17,677) (14,675)
Others (3,667) 2,518
Accounting Base for Tax 132,572 227,992
Temporary differences 138,174 21,175
Tax Base 270,746 249,167
The positive temporary differences in 2012 are essentially due to adjustments for non taxdeductible
provisions. The negative temporary differences mostly consist of differences
due to reversals of adjustments for provisions and other non-tax-deductible items in
previous financial years. During 2012 the Group recognised deferred tax assets in an
amount of €14.87 million, corresponding mainly to changes in timing differences on
provisions relative to those calculated at year-end 2011.
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The tax expense for Corporation Tax for financial years 2012 and 2011 is calculated as
follows:
€000s
2012 2011
Expenses corresponding to current financial year 39,772 68,398
Deductions and allowances (6,258) (7,764)
Other items (*) (2,540) (2,266)
Tax adjustments from previous financial years (1,449) 553
29,525 58,921
(*) As at 31 December 2012 there were deductions pending application amounting to €2.48 million.
The item ‘Tax adjustments from previous years’ in 2012 states expenditure for Corporation
Tax caused by tax adjustments carried out in the settlement of the Group’s Corporation
Tax corresponding to financial year 2011 not envisaged as at 31 December 2011.
The following is the reconciliation of the profit before tax with the tax expense for the
financial year:
€000s
2012 2011
Pre-tax accounting profit 154,179 214,148
Tax at 30% 46,254 72,045
Breakdown of items to reconcile tax expense
at the tax rate and Corporation Tax expense for the year:
Non-deductible expenses 756 1,331
Non-computable income (9,952) (8,917)
Total deductions applied in the financial year (6,258) (7,764)
Others:
Corporate Tax adjustment from the previous financial year (1,449) 553
The expenditure incurred in corporate tax for the financial year is calculated by adding
the current tax resulting from applying the tax rate to the tax base for the financial year,
after applying the deductions that are fiscally allowed, plus the variation in the assets
and liabilities due to taxes paid in advance and deferred and tax credits, both due to
negative tax bases and deductions.
Assets and liabilities due to deferred taxes include the temporary differences that are
identified as the amounts that are expected to be payable or retrievable due to the
differences between the book value of assets and liabilities and their tax value, as well
as the negative tax bases pending offset and the credits for fiscal deductions that are not
fiscally applied. These amounts are recognised by applying to the temporary difference or
credit in question the rate at which they are expected to be retrieved or settled.
Liabilities are recognised due to deferred taxes for all of the taxable temporary differences,
except in general if the temporary difference is derived from the initial recognition of
goodwill. Deferred tax assets identified with temporary differences are recognised only
if it is considered probable that the consolidated entities will in future have sufficient
taxable profits against which to realise them. The remaining deferred tax assets (negative
tax bases and deductions pending offset) are recognised only if it is considered probable
that the consolidated entities will in future have sufficient taxable profits against which
to realise them.
On the occasion of each accounting closure, the deferred taxes recognised are reviewed
(both assets and liabilities) with a view to ensuring that they remain valid, with any
necessary corrections to same being made in accordance with the results of the tests
performed.
Amount of deductions pending application (2,479) (240)
Other 2,653 1,913
Corporate Tax expenditure for the financial year 29,525 58,921
Effective tax rate for the year 19.15% 24.53%
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As a consequence of the last general audit performed on the Bank for the financial years
2004 to 2006 for the following taxes:
Financial Years
Corporate Tax 2004 to 2006
Value Added Tax 06/2005 to 12/2006
Withholdings/Payroll tax/Professional earnings 06/2005 to 12/2006
Withholding/Payment on account Return on Investments 06/2005 to 12/2006
Withholding/Payment on account Real-estate leases 06/2005 to 12/2006
Withholding on account Non-residents’ income tax 06/2005 to 12/2006
Annual declaration of transactions 2005 to 2006
Summary declaration of intra-community supply and acquisition of
goods 04/2005 to 12/2006
During 2011, the Bank accepted, signed and paid assessments for 2005 and 2006
concerning retentions and payments on account of payroll tax and tax on non-residents
for total amounts of €62,508.36 and €117,812.91 respectively. It also signed acceptance
of assessments for €544,261.73 relating to Corporation Tax for 2006.
On 25 May 2011 the Bank signed deeds disputing the assessment for Corporation Tax for
the years 2004 to 2006 in an amount of €14.24 million in tax plus €3.86 million in delay
interest, as well as Retentions and payments on account of tax on movable assets for the
years 2005 and 2006 in an amount of €1.09 million in tax plus €0.55 million in delay
interest, and VAT with an assessment of zero.
Similarly, in February 2012 sanctions were imposed in respect of Corporation Tax for the
years 2004 to 2006 in an amount of €3.57 million, retentions and payments on account of
tax on investment income for 2005 and 2006 in an amount of €2.98 million and VAT for
2005 and 2006 in an amount of €0.33 million.
Regarding the inspection of the years 2001 to 2003, the TEAC issued a ruling on 25
October 2012 revoking the deed of non-acceptance for Corporation Tax for the years 2001
to 2003 and the imposition of sanctions, specifically in respect of the regularisation of the
Sogecable transaction, determining a reduction in the amount regularised in terms of tax,
delay interest and sanction of approximately €14.49 million.
The remaining items regularised for Corporation Tax 2001 to 2003 in an amount of
approximately €5.19 million in tax and delay interest plus a fine of €0.25 million, have
been appealed before the Spanish National Court.
Additionally, in relation to the fines imposed in respect of retentions corresponding to
deposits of our Dublin Branch’s customers, on 9 February 2010 Bankinter filed a complaint
with the Council for the Defence of the Taxpayer, and received a favourable response on
13 July 2010. However, on 18 December 2012 the TEAC issued a ruling dismissing the
complaints in respect of the years 2002 to 2005. An appeal will be lodged with the Spanish
National Court.
In any case, the tax liabilities that may derive from the appeals lodged against the
disputed assessments were adequately provided for as at the end of 2012 and preceding
financial years.
Due to the possible interpretations of the tax regulations that apply to certain transactions
carried out in the banking sector, there may be certain tax liabilities of a contingent
nature. The Bank considers that the possibility of these contingent liabilities becoming
actual liabilities is remote and that, in any case, the tax charge which would arise would
not materially affect the consolidated annual financial statements.
These assessments and sanctions have been appealed before the Central Administrative
Economic Tribunal (TEAC).
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The details of the deferred tax assets and liabilities that Bankinter’s Administrators
expect to be reversed in future financial years are as follows:
€000s
31/12/2012 31/12/2011
Deferred tax assets (Note 17) 148,536 103,529
Less than 10 years:
Provisions 143,524 72,086
Impairment of holdings 69,311 47,587
Early retirement Fund - 694
Pensions Fund 1,373 1,794
DVP portfolio 4,081 9,775
Other 5,907 9,366
Consolidation adjustments (75,659) (78,817)
More than 10 years:
Generic Cover: - 30,044
Deferred tax liabilities (Note 17)- 147,929 118,983
Less than 10 years 98,032 68,036
More than 10 years:
Revaluation of buildings 49,896 50,947
The various tax credits applied in the calculation of the Corporate Tax payable for the
Group in financial years 2012 and 2011 are shown in the following table:
€000s
31/12/2012 31/12/2011
Applied to the tax base:
Allocation of NTBs from EIGs 5,905 7,389
5,933 7,391
Applied to the tax due:
Deductions for double taxation 1,765 1,738
Deduction for ID/IT 599 223
Deduction for reinvestment of extraordinary profits 1,476 2,880
Deduction for donations to institutions 512 423
Deduction for film productions 1,906 2,500
6,258 7,764
Income covered by the deduction for re-investment of extraordinary income in 2012
amounted to €12.30 million (€24 million in 2011 and €2,000 in 2010), the Bank having
met the reinvestment requirements established in Article 42 of Legislative Royal Decree
4/2002, of 5 March, approving the consolidated text of the Corporation Tax Act.
The majority of the income covered in financial year 2009 by the deduction for
reinvestment corresponds to the amount obtained from the sale of 50 percent of Bankinter
Seguros de Vida. S.A. in 2007, the reinvestment of which was sufficiently materialised in
financial year 2009 by Bankinter’s purchase of 50 percent of Línea Directa Aseguradora,
S.A. for an amount of €426 million. The majority of the income covered in 2012 by the
deduction for reinvestment corresponds to the amount obtained from the sale of 50.1%
of Bankinter Seguros Generales S.A. in 2012, reinvestment of which was fully realised
in 2012 by Bankinter’s purchase of 100% of Van Lanschot Bankiers Luxembourg S.A. for
€17.8 million.
During 2005 the Bank opted to apply the tax regime applicable to institutions holding
foreign securities as regulated in chapter XIV of Title VII of Royal Legislative Decree
4/2002 of 5 March approving the revised text of the Corporation Tax Act, the competent
body of the Spanish Inland Revenue being notified of this decision on 21 April 2005.
Pursuant to the provisions of Article 118.3 of this consolidated text, during 2012 the Bank
obtained capital gains in the amount of €3.11 million (€2.31 million in 2011) and received
dividends in the amount of €1.38 million (€1.69 million in 2011), and that €0.21 million
(€0.18 million in 2011) was paid in foreign tax on these dividends.
Lastly, in accordance with the provisions of Article 93 of this consolidated text, and in
relation to the transaction whereby Bankinter S.A. contributed repossessed real estate
assets to Intermobiliaria S.A. on 24 December 2012 pursuant to the provisions of Law
8/2012, of 30 October, on the write-down and sale of real estate assets of the financial
sector, since the tax-neutral regime was applied, pursuant to Chapter VIII of Title VIII
of the Consolidated Text of the Corporation Tax Act as approved by Royal Decree-Law
4/2004, of 5 March, the following information is provided:
- Financial years in which the transferring entity acquired the depreciable assets
transferred
- List of assets acquired recognised in the accounts. These assets have been recognised
in Intermobiliaria, S.A. for the carrying amount at which they were shown in the
Bankinter S.A. head office.
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Assets
Carrying
amount
Accounting
Provision
Date of
Acquisition
0581 Patrim Colonia San Pedro 134 62 30/05/2011
0581 Patrim Colonia San Pedro 141 65 30/05/2011
0581 Patrim Colonia San Pedro 140 65 30/05/2011
0581 Patrim Colonia San Pedro 132 61 30/05/2011
0581 Patrim Colonia San Pedro 137 64 30/05/2011
0581 Patrim Colonia San Pedro 137 64 30/05/2011
0581 Patrim Colonia San Pedro 154 72 30/05/2011
0860 Construcciones Franchini - - 17/02/1996
0860 Construcciones Franchini - - 17/02/1996
0637 Promociones Casegar 609 513 11/10/2012
43. Assets and liabilities valued at other than fair value
€000s
31/12/2011
Recognised value Fair value
Asset:
Loans and advances to customers 45,387,972 45,570,065
Held to maturity investments 3,150,930 3,117,960
Property, plant and equipment 466,901 480,908
Liabilities:
Deposits from central banks 7,006,897 7,010,515
Deposits from credit institutions 3,260,647 3,323,062
Customer deposits 25,505,317 25,550,517
Marketable debt securities 15,540,242 16,148,924
With regard to the most significant items of assets and liabilities, the table below shows
a comparison between the value for which those assets of the Bank valued other than at
fair value are recorded, and their corresponding fair value, estimated at the close of each
financial year:
€000s
31/12/2012
Recognised value Fair value
Asset:
Loans and advances to customers 43,575,351 43,833,390
Held to maturity investments 2,755,355 2,735,665
Property, plant and equipment 442,288 455,115
Liabilities:
Deposits from central banks 9,580,854 9,721,707
Deposits from credit institutions 4,008,226 4,103,613
Customer deposits 24,631,869 25,009,016
Marketable debt securities 12,499,194 13,084,868
The fair values presented in this Note were calculated by discounting the estimated flows
of principal and corresponding interest to their present value, except in the case of the
held-to-maturity investment portfolio and investment property, for which market prices
are available.
To calculate the fair value of investment property, the appraisal values certified by
Appraisal Companies were taken as the basis and altered by the price variation index if
the appraisals had been made more than three years previously.
44. Risk policies and management
Risk management
The Framework Agreement on Risk Policy, issued by the Board of Directors, establishes
the Bank’s risk strategy and profile for each year.
The Board of Directors, through the Executive Committee and the Audit and Compliance
Committee, takes care of and supervises the policies, systems and internal control
procedures relating to all the Bank’s risks, as well as the prevention of money laundering
in accordance with applicable current legislation.
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The organisational structure of the entire risks function reports hierarchically to the
Executive Vice-Chairman, reflecting the independence that is inherent to the function.
The identification, measurement, management, control and monitoring of the risks
inherent in banking operations constitute a fundamental aim, always within a context of
optimising the overall management of all risks.
Bankinter has received Bank of Spain approval for its internal rating models,
methodologies, systems and policies for measuring most of its risks, applying them to
the calculation of capital requirements as established by the Basel II Capital Framework.
The basic principles that continue to govern risk management are:
- Contribute towards maximising capital, safeguarding the Bank’s solvency.
- Independence of the function.
-Alignment with strategic objectives.
- New products: risk determination, approval ad monitoring.
- Integrated risk management.
- Mass use of automated approval.
- Diversification of risk.
-Relevance of the quality of service factor in the risks function.
- Policy of Sustainable Investment .
The basic risk principles are determined in the Framework Agreement for each
segment. In this regard we would highlight the fact that, pursuant to the provisions of
the Transparency Act, we have brought together the various aspects of the Responsible
Lending Policy in a single document, in the interests of greater clarity, even though all the
principles had been incorporated over the past few years in the Framework Agreement,
which is reviewed and updated every year.
Policies for managing structural risks and market risks
Bankinter is guided by principles that constitute the basis of the general risk policy.
These basic principles are of a permanent nature; they have been applied in recent years
and continue to apply. In general, these policies are as follows:
1.- The purpose of Bankinter’s policy on the management and control of “Structural
Risks” and “Market Risk” is to neutralise the impact of variations in interest rates, in
the main market variables and in the balance sheet structure itself, on the Bank’s
profit and loss account, by adopting the most appropriate investment or hedging
strategies.
2.- To develop the most appropriate systems for measuring structural and market
risks so as to provide information on the Entity’s exposure to these risks, and to any
possible deviations that might arise regarding established limits and procedures.
The Board of Directors decides the strategy and policy for the Bankinter Group’s policy
as regards “Structural Risks” and “Market Risk” and delegates management, monitoring
and control to various Bodies in the Institution. It also decides on the risk profile that the
Institution is willing to undertake, establishing the maximum limits that it delegates to
said bodies and which are reviewed on an annual basis.
It should be noted that exchange rate risk is not significant in the Banking Group.
Structural risks
The Board of Directors delegates the ongoing monitoring of decisions regarding structural
balance sheet risks (interest rate risk and liquidity risk), stock market risk and exchange
rate risk of the Bank’s corporate positions, as well as the establishment of the financing
policies, to the Assets and Liabilities Committee (ALCO). Moreover, each year it reviews,
approves and delegates to the ALCO the limits applicable for managing the aforementioned
risks. The Treasury and Capital Markets area implements the decisions taken by the ALCO
with regard to the Bank’s corporate positions.
To exercise these functions, the most appropriate financial instruments at any given time
are used, which include interest-rate, exchange-rate and variable income derivatives. The
financial instruments with which trading is undertaken must, in general, be sufficiently
liquid and be associated with hedging instruments.
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The Balance Sheet Management unit, which is part of the Capital Markets Directorate,
has the function of measuring and managing the institution’s structural risks.
Market Risk, reporting to the Risks Directorate has the independent function of
controlling them:
Interest rate structural risk
Structural interest rate risk is the Entity’s exposure to changes in market interest rates
arising from timing differences between maturities and repricings of the various items
in the overall Balance Sheet.
Bankinter performs active management of this risk in order to protect the interest
margin and to preserve the economic value of the Bank against interest rate
fluctuations.
In order to control exposure to the interest rate structural risk, the Bank has established
a structure of limits that is reviewed and approved on an annual basis by the Board
of Management, in accordance with Bankinter’s strategies and policies in this regard.
Bankinter has tools to monitor and control the structural interest rate risk. We will
now go on to specify the main measurements used by the Bank that enable the
management and control of the interest rate risk profile approved by the Board of
Directors:
a) Sensitivity of the Financial Margin:
Dynamic simulation measures are used to measure on a monthly basis financial
margin exposure in different scenarios of variation in interest rates and for a 12-month
time horizon. Financial margin sensitivity is obtained as the difference between the
financial margin projected with the market curves at each analysis date and the one
that is projected with the interest-rate curves altered in different scenarios, both of
parallel movement of rates and changes in the slope of the curve.
Every year, the Board of Directors sets a reference for the financial margin in terms
of sensitivity for 100 basis point parallel movements in the interest rate curves for a
term of up to 12 months.
The sensitivity in this scenario is followed by the ALCO.
The exposure of Bankinter’s financial margin to interest rate risk in the event of +/- 100 bp
parallel movements in market interest rates is approximately 2.2% for a 12-month horizon.
The sensitivity of the Bank’s financial margin to changes in the slope of the curve for a
12-month horizon is 4.5%. This scenario is built by holding the 6-month rate constant and
changing the short-term (up to 3 months) and 12-month rates by the same amounts but in
opposite directions so as to alter the slope of the curve by 25 basis points in the period under
consideration.
Financial Margin Sensitivity 2012
100 bp parallel movements 2.2%
25 bp slope variations 4.5%
b) Economic Value Sensitivity
This is a measurement that complements the previous two and which is calculated on a
monthly basis. It allows the exposure of the Bank’s economic value to interest-rate risk to be
quantified, and is obtained as the difference between the net present value of the items that
are sensitive to interest rates calculated using the curves for rates in different scenarios and
the rates curve listed in the market at each analysis date.
Every year, the Board of Directors sets a reference in terms of the economic value sensitivity
for 200 bp parallel movements in market interest rates. Sensitivity to this scenario is
measured, controlled and submitted to the ALCO.
The sensitivity of the Bank’s Economic Value to 200 bp parallel movements, obtained by
means of the criterion described above, was, at year-end 2012 and 2011, 7.5% and 3.4% of
the Bank’s equity, respectively.
Economic Value Sensitivity
2011 2012
NPV Sensitivity 3.4% 7.5%
Structural liquidity risk
The structural liquidity Risk is related to the Institution’s capacity to fulfil its payment
obligations and finance its investments. The Bank actively monitors the liquidity situation
and its projection as well as actions to be taken both in normal market conditions and in
exceptional situations arising from internal causes or market trends.
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Management of this risk is the responsibility of the ALCO committee, delegated by the
Board of Directors.
Liquidity requirements were covered by turning to the international medium- and longterm
debt markets. The Bank issued €6.05 billion of mortgage-backed bonds and €1.44
billion of senior debt, of which €1.40 billion is guaranteed by the Kingdom of Spain. In
both cases a portion is retained in the Balance Sheet.
To meet its requirements, the Group used short-term issue programmes, mainly in the
domestic market with its commercial paper programme. The balance of promissory notes
placed in the wholesale market was €897 million as at 31 December.
The Group has various tools for analysing and monitoring the short- and long-term
liquidity situation. These tools are static and dynamic. Back-testing is also carried out on
projections made.
One of the analyses used for controlling and monitoring liquidity is the liquidity plan or
gap.
a) Liquidity plan or gap
This shows information on the distribution of the balances and cash flows of the asset
and liability positions of the balance sheet between various timeframes depending
on the expected date of completion or liquidation and in accordance with a series of
assumptions based on the historical performance of these products. These assumptions
are reviewed on a regular basis and, in such cases as where they are necessary, supported
by models based on historical series.
Liquidity plans or gaps at year-end 2012 and 2011 were as follows. The information
provided by the liquidity plan is static, and does not show the expected financing needs
as it does not include behavioural models of the asset items, that is, the prepayment
of mortgage loans and the renewal of lines of credit or of liability items such as the
renewal of fixed term deposits, among others.
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Figures as at December 2012 in € millions Sight 1 day to 1 month 1 to 3 months 3 to 12 months
12 months to 5
years
more than 5 years TOTAL
ASSETS
Loans and receivables 2,165 2,871 6,172 12,121 27,557 50,887
Deposits with credit institutions 0 0 0 1,120 1,120
Loans and advances to customers 2,165 2,871 6,131 12,098 26,413 49,679
Other 0 0 41 23 24 88
Fixed Income Portfolio 195 634 2,444 9,877 1,793 14,942
Trading portfolio 16 0 445 580 463 1,504
Available-for-Sale Portfolio 85 633 1,320 7,851 94 9,983
Held-to-Maturity Portfolio 95 1 679 1,445 1,236 3,455
Other Assets 666 0 0 0 2,167 2,833
Total Assets 3,026 3,505 8,616 21,998 31,517 68,662
LIABILITIES
Fixed income portfolio 365 236 98 522 452 1,673
Trading portfolio 365 236 98 522 452 1,673
Financial liabilities at Amortised Cost 11,043 3,896 4,963 8,534 9,933 20,062 58,430
Deposits from credit institutions 430 239 288 881 12,114 13,951
Customer deposits 11,043 1,546 3,924 5,206 4,585 6,330 32,633
Marketable debt securities 1,920 800 3,040 4,468 1,054 11,282
Other 0 0 0 0 563 563
Other liabilities 0 0 0 0 748 748
Equity 0 0 0 0 2,862 2,862
Total Liabilities and Equity 11,043 4,260 5,199 8,632 10,455 24,123 63,713
TOTAL LIQUIDITY GAP -11,043 -1,234 -1,695 -16 11,543 7,394 4,949
Figures as at December 2011 in € million
Total Assets 3,510 2,589 10,493 16,140 33,244 65,976
Total Liabilities and Equity 9,667 3,258 3,136 9,771 14,293 22,687 62,812
TOTAL LIQUIDITY GAP -9,667 252 -547 722 1,847 10,557 3,164
Note 1: Foreign-currency positions are not material and so have not been included in the breakdowns of the
attached Gaps.
Note 2: The Entity has no positions in unlisted securities
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In addition to those previously mentioned, the means used by Market Risks to control
the liquidity risk include checking to ensure compliance with the limits established by
the Board and delegated to the department heads and the ALCO (Assets and Liabilities
Committee). The calculation of limits is carried out by Market Risks based on the
information prepared for the various regulators.
There are three broad types of limit:
1) Determining the liquidity buffer
The Bank uses both the definition of regulatory LCR (liquidity coverage ratio) and a
similar ratio extended to ninety days and with a definition of liquid assets in accordance
with those accepted by the European Central Bank as collateral for liquidity. Another
reference for calculating the liquidity buffer is the schedule of upcoming maturities of
wholesale issues over the next few months.
2) Wholesale financing concentration ratios
With the aim of avoiding Bankinter’s being subjected to stress as a result of a possible
sudden shutdown of wholesale markets, limits are established on the amount of shortterm
wholesale financing that can be taken, as well as on the concentration of issue
maturities.
3) Ratio of stable deposits to total lending.
With a view to limiting reliance on wholesale financing, a minimum ratio of stable
deposits to loans is established. In establishing the stability of deposits, use is made both
of the regulatory definition of the NSFR (Net Stable Funding Ratio) and of experience of
the Spanish finance sector.
As well as the limits established by the Board, monitoring also covers the evolution in
the gap or ‘liquidity plan’ and information and analysis on the specific situation of the
balances resulting from trade operations, wholesale maturities, interbank assets and
liabilities and other sources of funding. These analyses are carried out both under normal
market conditions and simulating different liquidity scenarios that could come about as a
result of different trading conditions or changes in market conditions.
Market Risk
The Board of Directors delegates proprietary trading in the financial markets to Treasury
and Capital Markets, which acts through its Trading Area with a view to taking advantage
of trading opportunities that arise, using the most appropriate financial instruments at any
given time, including interest and exchange rate derivatives and equity derivatives. The
financial instruments with which trading is undertaken must, in general, be sufficiently
liquid and be associated with hedging instruments. The risk that may derive from the
management of the institution’s own accounts is associated with movements in interest
rates, stock market prices, exchange rates, volatility and credit spreads.
The Board of Directors delegates to the ALCO the continuous monitoring of the Treasury
Trading area's proprietary trading activities and establishes maximum limits for the
authorisation of the possible excesses that may arise in this activity.
Market Risk, which reports to the Risks Directorate, has the independent function of
measuring, tracking and controlling the Bank’s market risk and the delegated limits.
Market risk is measured mostly using the “Value-at-Risk” (VaR) methodology, considered
both globally and segregated for each significant risk factor. The limits in VaR terms
are supplemented by other measures such as stress testing, sensitivities, stop loss and
concentration.
We will now go on to describe the methodology for measuring the main market risk
indicators.
Value-at-Risk (VaR)
“Value-at-Risk” (VaR) is defined as the maximum loss that is anticipated from a particular
portfolio of financial instruments, under normal market conditions, for a certain confidence
level and time horizon, as a consequence of movements in prices and market variables.
The VaR is the main indicator used daily by the Group to measure and control on an
integrated and global basis exposure to market risks arising from interest rates, equities,
exchange rates, volatility and credit.
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The method used to measure VaR is “Historical Simulation” based on the analysis of
possible changes in the value of the position, using historical movements in the individual
assets forming it. VaR is calculated with a level of confidence of 95% and a time horizon
of one day, although additional monitoring is carried out with other levels of confidence.
There is also a monthly monitoring of the VaR of its subsidiary Línea Directa Aseguradora
S.A. using the “Historical Simulation” method.
The following are the comparative VaR data by risk factor for the Bank’s positions in 2012
and 2011, both for the total and differentiated by portfolio:
2012 was characterised by severe turbulence in the public debt markets of the euro zone.
On top of the interest rate risk came significant credit risk and the risk of redenomination
of various countries’ public debt. As these risks built up, so liquidity in certain financial
markets diminished.
In view of this situation in the financial markets, over the course of the year Bankinter
established a series of sub-limits in accordance with market circumstances. Apart from
this, the VaR calculation was reinforced by extending the stress testing analysis, as dealt
with in the following section, by adding specific assumptions based on expectations of
their occurring in the financial markets, as well as endeavouring to simulate the most
adverse circumstances for the positions taken in trading operations.
Total VaR 2012
million euros
Final
Interest Rate VaR 18.71
Equities VaR 0.32
Exchange Rate VaR 0.07
Volatility Rate VaR 0.05
Credit VaR 0.00
18.80
Total VaR 2011
million euros
Final
Interest Rate VaR 10.71
Equities VaR 0.76
Exchange Rate VaR 0.03
Volatility Rate VaR 0.02
Credit VaR 0.02
11.96
The market risk (VaR) for the Línea Directa Aseguradora portfolio at the close of the
financial years 2012 and 2011, was €0.77 million and €0.88 million respectively,
calculated using the “Historical Simulation” method, with a level of confidence of 95% and
a time horizon of one day. Market risk is slightly less from one year to the next due to the
reduced duration of the portfolio and a change in the distribution by type of risk, which
increases the correlation between positions at risk.
Stress Testing
Trading VaR 2012
million euros
Final
Interest Rate VaR 0.86
Equities VaR 0.15
Exchange Rate VaR 0.07
Volatility Rate VaR 0.05
Credit VaR 0.00
0.91
Available-for-sale VaR 2012
million euros
Final
Interest Rate VaR 18.35
Equities VaR 0.23
Exchange Rate VaR 0.00
Credit VaR 0.00
18.33
Confidence level 95%, time horizon of 1 day
Trading VaR 2011
million euros
Final
Interest Rate VaR 0.59
Equities VaR 0.47
Exchange Rate VaR 0.03
Volatility Rate VaR 0.02
Credit VaR 0.02
0.91
Available-for-sale VaR 2011
million euros
Final
Interest Rate VaR 10.56
Equities VaR 0.34
Exchange Rate VaR 0.00
Credit VaR 0.00
11.04
Stress testing, or the analysis of extreme scenarios, is a supplementary test to VaR. The
estimates from the stress tests quantify the potential loss in portfolio value under extreme
scenarios of change in the risk factors to which the portfolio is exposed.
Every year, the Board of Directors approves an extreme scenario based on significant
movements in interest rates, securities exchanges, exchange rates and volatility, and
certain upper references regarding these variations for each type of risk. Additionally,
estimates are made using other scenarios which replicate different historical crisis
situations and other relevant current market situations.
In 2012, the stress scenarios for Interest Rate and Volatility were updated to adapt them
to each product type and to the evolution of events observed in the market for this type
of risk factors.
The following is information on the results of one of the most extreme stress scenarios for
the Bank in financial years 2012 and 2011:
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Stress Testing 2012
million euros
Final
Interest Rate Stress 74.85
Equities Stress 5.14
Exchange Rate Stress 0.43
Volatility Stress 3.33
Credit Stress 0.00
Total Stress 83.75
Stress Testing 2011
million euros
Final
Interest Rate Stress 49.56
Equities Stress 7.30
Exchange Rate Stress 0.39
Volatility Stress 0.48
Credit Stress 0.09
Total Stress 57.82
At year-end 2012 the total level of interest rate stress testing had increased relative to
2011, as a consequence of an increase in the Available-for-Sale portfolio in public debt.
However, as can be seen in the foregoing table, equities stress testing at year-end 2012
reduced due to a decline in the stock market position.
The result of the calculation of the stress scenarios for the portfolio positions of Línea
Directa Aseguradora at the end of 2012 amounted to €23.52 million compared with €23.48
million in 2011. Stress testing was maintained at similar levels to the previous year, since
the reduced position in equities was offset by an increase in the fixed income position.
Operational risk
Operational risk is defined as: “the risk of loss resulting from inadequate or failed internal
processes, people and systems or from external events. This definition includes legal risk,
but excludes strategic and reputational risk”. In general, risks that are to be found in the
processes and that are generated internally by persons and systems, or as a consequence
of external agents, such as natural disasters.
Our operational risk management model is based on the guidelines of the Basel II Capital
Framework, complies with Bank of Spain Circular 3/2008 on the determination and
control of Equity and incorporates the best practices in the sector, which are shared in the
CERO (Spanish Operational Risk Consortium) and CECON (Spanish Business Continuity
Consortium) groups, of which Bankinter is an active member.
Basic governing principles.
With a view to achieving an adequate system for managing Operational Risk, Bankinter
has laid down the following basic governing principles:
- The basic aim is to identify and preventively mitigate the major operational risks,
seeking to minimise any possible associated losses.
- Systematic procedures are established for assessing, analysing, measuring and reporting
risks and generating appropriate action plans to control them.
- With a view to exploring the Bank’s activities to draw up an inventory of the operational
risks, the unit selected for analysis is the business unit. By analysing the business units’
risks and aggregating and consolidating them, the Bank’s total risks are obtained.
- Of the possible Capital calculation systems associated with Operational Risk in the
framework of the Basel Accord, Bankinter has adopted the Standard Method. This method
is reserved to institutions with efficient and systematic operational risk management
Operational Risk Management Framework
The Bankinter Management Framework for Operational Risk is based on the following
main elements:
-Identification and evaluation of risks by developing risk maps showing the severity level
of the risk, evaluating the appropriateness of existing control mechanisms and showing
action plans for mitigating these risks.
-Recording of loss events arising, with the associated management information, sorted
and classified in accordance with Basel recommendations.
- Monitoring risk by establishing a panel of indicators to provide information on the
evolution of existing operational risk levels and alerts on the appearance of undesired
trends.
- Drawing up Continuity and Contingency Plans describing the set of procedures that are
alternative to normal operations and which are aimed at restoring activity in the event
of an unforeseen interruption to critical services.
- Generating and disseminating management information that is suited to the needs of
each governing body that has responsibilities in managing operational risk.
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Structure of Governance
Bankinter applies a decentralised model in which final responsibility for managing
operational risk rests with the business and support units.
For governance purposes, the following control bodies and general lines of responsibility
have been established:
Board of Directors: Approves the policies and the management framework; establishes
the level of risk that Bankinter is willing to undertake.
Operational, Reputational and New Product Risk Committee: An executive governing body
on which the Senior Management is represented and which undertakes the following
main roles in managing operational risk:
Promote the implementation of active risk management policies.
- To track significant operational risks and trends in mitigation plans.
Ensure that the protocol for evaluating risks associated with new product launches is
applied.
Operational Risk: Reporting to the Risks Directorate, the Operational Risk unit has the
following main functions:
- Promoting management of operational risks in the various areas, encouraging
identification thereof, allocation of responsibility for them, the formalisation of controls,
the generation of indicators, the creation of mitigation plans, regular review and steps
to be taken in the event of substantial losses or risks.
- Equipping areas and units with the methodologies, tools and procedures that are
necessary for managing their operational risks.
- Promoting the creation of contingency and business continuity plans that are appropriate
and in proportion to the size and activity of the institution in the units that so require.
- Ensuring that operational losses occurring in the institution are recorded correctly and
in full.
- Providing the organisation with a uniform view of its exposure to operational risk, in
which the existing operational risks are identified, integrated and evaluated.
- Providing information on operational risk to be forwarded to regulators, supervisors and
external bodies.
Business Units: With the following functions:
- Management of operational risks in the unit and specifically, identification, evaluation,
control, monitoring, analysis and mitigation of the operational risks on which it has the
ability to act.
- Recording and communication of operational losses produced in the course of their
activity.
- Studying, defining, prioritising and financing the operational risk mitigation plans
which it is responsible for running.
- Maintaining and testing the business continuity plans supported by the unit.
As regards databases of loss events, the Bankinter operational risk profile is represented
in the following graphs:
80%
70%
60%
50%
40%
30%
20%
10%
0%
80%
70%
60%
50%
40%
30%
20%
10%
0%
74%
3%
% amount Events

Insurance in managing operational risk
Bankinter uses insurance as a key element in managing certain operational risks, thus
complementing the mitigation of risks where their nature makes this advisable.
To this end, the Insurance Area, together with the various areas in Bankinter and taking
into account both the operational risk assessments and historical losses, assesses the
advisability of altering the coverage perimeter of the insurance policies for the Bank’s
various operational risks.
Examples are insurance policies taken out with various companies of recognised solvency
for contingencies affecting the Bank’s premises (earthquake, fire, etc.), internal or
external fraud (robbery, embezzlement, etc.), employees’ civil liability, etc.
Credit risk
The Board of Directors establishes the Risks Policy, delegating its implementation to the
Risks Committee, which is chaired by the Executive Vice-Chairman. Its delegated powers
include approving operations and defining the powers of the committees at the next
levels below.
The Risks Directorate, reporting directly to the Vice-Chairman, is responsible for drawing
up and publishing risk policies. Its targets include the development of automatic
authorisation systems and all risk processes, while always seeking maximum efficiency
and quality.
The Credit Risk Department performs its functions through the units that form its structure:
- Risk approval and policies are the responsibility of:
o the Private Individual Risks Unit,
o the Company and Developer Risks Unit
o the Corporate Risks Unit.
- The Risk Processes Unit is in charge of defining and improving the various risk
processes, including the IT systems for risks.
In addition to their own functions the various units take part in the process of defining
new products and determining the risk parameters and the approval process.
The risk function’s principle of alignment with strategy combines a hierarchical approach
with the delegation of powers to each of the Risk Committees.
The risk approval process is supported by an electronic proposal that enables integration
and unification of all of the Bank’s networks and channels. The use of statistical models
enables retail risk approval to be automated and provides support for decisions on risks
requiring non-automated approval.
The Risk Map, which is produced annually, is an exercise in detection, analysis and
assessment of the potential impact (severity) of the risks inherent in the activity, as
well as processes for monitoring and controlling them and measures for mitigating or if
possible eliminating any remaining risk.
The current financial crisis and the requirements of the Basel Accords have demonstrated
the need for increased monitoring of the policy on risk concentration. In this regard,
monitoring is carried out of diversification by sector, geographical location, products and
guarantees, as well as by customer concentration, and a policy of permitted maximums
is in place.
Refinancing or restructuring transactions are carried out only when they can be shown
to be viable, and incorporating additional guarantees whenever possible. The system of
delegated powers does not allow these kinds of transactions to be approved by Branches,
and furthermore they are limited to 50% of the discretionary limits held by the Regional
Organisations.
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Policy on refinancing and restructuring:
The policy on refinancing in its various categories starts out from the basic principle that
any such refinancing must involve a clear improvement in the outlook for repayment by
strengthening security. The categories are:
- Refinancing / refinanced transactions: when a new transaction is carried out in
order to cancel, totally or in part, a transaction with a customer on whom or
which we wish to eliminate our risk and we establish the means of doing so.
- Restructuring: when we alter the financial conditions of transactions in force with
a customer on whom or which we wish to eliminate our risk and establish the
means of doing so.
- Assurance: when the customer is not in either of the above categories but there
is a change to the original conditions of the transaction.
In both cases we are dealing with a customer or group on whom/which we wish to eliminate
our risk and we establish the means of doing so,
A further condition is the impossibility of either cancelling or maintaining the current
conditions in light of the analysis carried out by the corresponding Risks Committee.
In particular, and by way of example:
- the carrying out of a new transaction in order to cancel, totally or partly, an existing
transaction or classification (not including ordinary renewals)
- the granting of additional grace or interest-only periods relative to those originally
authorised
- the financing of instalments (nominal and/or interest),
- the incorporation of guarantees in working capital transactions (ratings, financial risk,
issuer risk and commercial risk),
- the establishment of a calendar of repayments to cancel the risk
- Any other cases involving approval of transactions that are not in accordance with the
Bank’s risks policy.
Such transactions must not involve additional financing for the customer, and must
maintain the existing guarantees. Ordinary interest due must be collected, and
furthermore the restructuring must meet the following conditions:
The situation of delinquency will be considered to be at an end providing the guarantees
for the transaction are strengthened by incorporating effective tangible collateral or the
capacity to repay is strengthened.
In order for a debt refinancing to bring an end to the situation of delinquency, it is
important for guarantees of payment to exist, either in the form of effective security
being provided (pledges, mortgages or personal guarantees) or by means of verification
of the customer’s ability to pay, as indicated in Appendix IX to Bank of Spain Circular
No. 4/2004 as recently amended in 2010. Such transactions must not involve additional
financing for the customer, and must maintain the existing guarantees. Ordinary interest
due must be collected, and furthermore.
Refinanced transactions will generally be classified as subjectively doubtful and
restructured ones as substandard transactions if no effective guarantees are taken or if
there are reasonable doubts as to the customer’s ability to repay.
Collateral will be valued at the lesser of value per deed of conveyance or appraised value,
minus the following:
• Customer’s habitual residence: 20%
• Farmland, offices, warehouses and multi-purpose premises: 30%
• Other completed residential properties (second home, property developer's home, etc.):
40%
• Plots with building permission (real estate development): 50%
Refinancing and restructuring transactions must incorporate:
- Tangible guarantees for transactions with personal guarantees, or additional
tangible guarantees for transactions that already have tangible guarantees, or
- Sufficient guarantees such that the net assets of the guarantors less their direct
and indirect risks exceed the amount of the transaction.
The proposal must be processed through the credit approval systems established by the
Bank.
In all cases business and financial information must be updated, as must information on
borrowings, business plan and viability justifying the refinancing.
The Group currently has 4,794 live refinanced transactions totalling €1.37 billion. This
figure includes both regular status loans and substandard and delinquent balances. This
figure represents 2.96% of total Credit Risk.
The figure for risk on property developers is €333 million. At present 33.6% of the Group’s
real estate development portfolio (€983 million) is in arrears, with a coverage of 31%.
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In the private individuals segment, the Group refinanced 1,487 loans for a total of €216
million, with a delinquency rate of 13%.
Restructuring of the Finance Sector
February 2012 saw the publication of Royal Decree-Law 2/2012 on restructuring of the
finance sector, which laid down additional requirements for provisions and capital in
respect of assets associated with real estate business. Bankinter made all the provisions
required by this Royal Decree-Law during the first quarter of 2012. Also, its own funds
amply cover the top capital requirements established by this law.
Subsequently, in May 2012, Royal Decree-Law 18/2012 on the write-down and sale of
the finance sector’s real estate assets established additional coverage requirements for
impairment of lending linked to real estate business classed as performing. Bankinter
made all the provisions required by this Royal Decree-Law during the second quarter of
2012.
Apart from this, the Council of Ministers in its Resolution of 11 May instructed the Ministry
of Economy and Competitiveness to commission an external study to assess the ability of
the Spanish banking sector as a whole to withstand a further severe deterioration in the
economic situation. The Bank of Spain, in coordination with the Ministry of Economy and
Competitiveness, decided to commission Roland Berger and Oliver Wyman as independent
consultants to carry out this strict evaluation of the Spanish banking sector.
The results of this study, published on 21 June 2012 by the two consultancies, conclude
that for a base macroeconomic scenario and a core Tier 1 ratio of 9%, capital requirements
for the entire sector studied would be between €16 billion and €26 billion. In the adverse
macroeconomic scenario, with a core tier 1 ratio of 6%, the Spanish banking sector’s
additional capital requirements would be within a range of €51 billion to €62 billion.
Following this overall assessment, individual bottom-up assessments were carried out of
each entity, including a comprehensive analysis of due diligence and individual analyses
of banks’ portfolios in order to determine additional capital requirements, based on their
risk profiles.
Following analysis of the published information, in view of the Bank’s delinquency ratios,
which were the lowest in the sector, and its almost residual exposure to real estate,
Bankinter showed a capital surplus of €399 thousands.
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Maximum exposure to credit risk
The following table shows the maximum level of exposure to credit risk undertaken by the
Group as at 31 December 2012 and 2011 for each class of financial instrument, without
deducting from same tangible securities or other credit enhancements received to ensure
borrowers’ compliance:
As at 31 December 2012
€000s
Asset balances
Financial assets at fair value through
profit or loss
Types of instrument
Held for
trading
Other assets
Financial assets
available for sale
Loans and
receivables
Held to maturity
investments
Hedging
derivatives
Memorandum
accounts
Total
Debt instruments-
Deposits with credit institutions - - - 1,093,728 - - - 1,093,728
Negotiable securities 1,452,753 39,860 6,132,471 82,871 2,755,355 - - 10,463,310
Loans and advances to customers - - - 43,575,351 - - - 43,575,351
Total debt instruments 1,452,753 39,860 6,132,471 44,751,950 2,755,355 55,132,389
Contingent risks -
Financial guarantees - - - - - - 631,925 631,925
Other contingent risks - - - - - - 1,850,940 1,850,940
Total contingent risks 2,482,865 2,482,865
Other exposure -
Derivatives 656,511 - - - - - - 656,511
Contingent commitments - - - - - - 11,239,659 11,239,659
Other exposure - - - - - 152,201 - 152,201
Total other exposure 656,511 152,201 11,239,659 12,048,371
MAXIMUM LEVEL OF EXPOSURE TO
CREDIT RISK
2,109,264 39,860 6,132,471 44,751,950 2,755,355 152,201 13,722,524 69,663,625
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As at 31 December 2011
€000s
Asset balances
Financial assets at fair value through
profit or loss
Types of instrument
Held for
trading
Other assets
Financial assets
available for sale
Loans and
receivables
Held to maturity
investments
Hedging
derivatives
Memorandum
accounts
Total
Debt instruments-
Deposits with credit institutions - - - 1,779,395 - - - 1,779,395
Negotiable securities 1,870,612 31,377 4,776,069 - 3,150,930 - - 9,828,988
Loans and advances to customers - - - 45,387,972 - - - 45,387,972
Total debt instruments 1,870,612 31,377 4,776,069 47,167,367 3,150,930 - - 56,996,355
Contingent risks -
Financial guarantees - - - - - - 590,143 590,143
Other contingent risks - - - - - - 1,849,527 1,849,527
Total contingent risks - - - - - - 2,439,670 2,439,670
Other exposure -
Derivatives 544,894 - - - - - - 544,894
Contingent commitments - - - - - - 9,208,807 9,208,807
Other exposure - - - - - 118,651 - 118,651
Total other exposure 544,894 - - - - 118,651 9,208,807 9,872,352
MAXIMUM LEVEL OF EXPOSURE TO
CREDIT RISK
2,415,506 31,377 4,776,069 47,167,367 3,150,930 118,651 11,648,477 69,308,377
Trends in customer risk
The economic and financial crisis that started five years ago continued to make itself
felt throughout the year under review. In terms of new instances of arrears, the peak of
late 2008 marked a trend that bottomed out at the beginning of 2011 but then started to
deteriorate again, with the peak being repeated in the first half of 2012.
In this past year there were clear signs of fatigue on the part of business and household
economies alike in the face of this deep and prolonged crisis, which means it is affecting
all levels of solvency. Our customers’ situation was helped by the Bank’s sound refinancing
policy, which adheres to the Bank’s basic and unchanging principles.
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In this environment, the total risk of the financial system declined by 5% (latest figures
available from the Bank of Spain website, as at October 2012). The reasons for this
situation are deleveraging by households and businesses, combined with a contraction of
the markets, which led to a substantial reduction in liquidity in the system.
NPLs, a reflection of credit quality, continued to increase, by much more than in 2011,
contributing to greater control and restriction of credit risk. In general terms both
households and businesses have needed to refinance their debt.
The volume of distressed assets linked to the real estate sector is the main problem of
the economy. It has involved an increase in the volume of assets repossessed by the
institutions, which looks set to continue to grow considerably over the next few years.
If to these existing NPLs we add repossessed assets and assets classified as substandard
because of the sector they belong to or the unlikelihood of repayment capacity, the
deterioration in the quality of credit risk has been very significant.
Analysis of credit risk
Quality of assets €000s
“Computable risk” (total lending)
excluding securitisation
46,355,295 46,802,151 -446,856 -0.95
Doubtful debts 1,984,028 1,515,766 468,262 30.89
Provisions for credit risk 958,523 786,080 172,443 21.94
NPL ratio (%) 4.28 3.24 1.04 32.10
Non-performing loans coverage ratio (%) 48.31 51.86 -3.55 -6.85
Repossessed assets 611,665 484,408 127,257 26.27
Provision for impairment of repossessed
assets
230,524 175,894 54,630 31.06
Coverage of repossessed assets (%) 37.69 36.31 1.38 3.80
Computable credit risk fell by just 0.95%, which compares favourably with the deleveraging
being carried out throughout the banking industry. Once again our Bank stands out
because of the solidity of its credit portfolio, which enables it to outperform its peers.
Good risk selection in this period will help the Bank to emerge from the crisis with a clear
competitive advantage over its rivals.
In terms of arrears, we ended the year with a ratio of 4.28% compared with 3.24% the year
before. This compares very favourably with the system (Bank of Spain: 7.90% in December
2011 and latest figure from October 2012 of 11.23%) as we are at less than half the
average for the sector. As in 2011, companies were the worst affected, although it should
be pointed out that in 2012 the private individuals business suffered the consequences of
the persistent crisis.
Evolution of NPLs, Whole Sector vs. Bankinter (%)
12
10
8
6
4
2
11.23%*
4.28%
0
86 88 90 92 94 96 98 00 02 04 06 08 10 12*
Sector Bankinter *Sector data as at October 2012
The volume of problematic and repossessed assets continues to be well below those of the
Group’s main competitors in comparative terms.
Thanks to the prudent credit approval policy applied in both the growth phase of the
economy and the present contracting one, the volume of risk secured by mortgages (64%)
ensures better results in the current crisis. It should be borne in mind that LTV or loan
to value ratios applied have been in accordance with prudent criteria, the current ratio
being 54%, to guard against possible falls in prices as indeed have come about and are
likely to continue. Lastly, we would highlight the fact that 83% of the mortgage portfolio
is secured by residential properties, and this has proven to be the greatest strong point in
confronting the current recession.
The Bank has a very solid risk culture at all levels, with a team of highly qualified people
who, with the support of advanced information systems, constitute one of its basic pillars.
Another example of the judicious risk policy was the decision to keep exposure to risk
on property developers to a minimum (approximately 2%). This being one of the serious
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problems giving rise to the present crisis in all financial institutions, Bankinter’s highly
restrictive policy in approving risk on property developers, with almost no financing of
land purchases, now represent a clear competitive advantage.
The NPL ratio (2.16% in December 2012) continues to be the best in the entire financial
system, which in September 2012 (the latest information published by the Mortgage
Association of Spain) had a ratio of 3.49% for this type of lending.
Although NPLs continued to increase in the SME segment, the monitoring policy aimed at
greater reinforcement of collateral (53%) meant that the volume of specific provisioning
required was actually lower.
Non-performing loans ratio for home mortgages. Private individuals (%)
Private individuals
4
3.49%*
The excellent credit quality of the Bank’s private individuals portfolio remains unaltered,
with a non-performing loans ratio of 2.5%.
The approval policy for residential mortgage loans, the product with the biggest exposure
in the portfolio, has followed very conservative criteria, with the maximum LTV having
been established at 80% since 2003 in anticipation of the downturn, which again sets us
apart from the sector as a whole.
The average effort (measured as the proportion of income that the customer allocates
to paying mortgage loan instalments) in the mortgage portfolio remained at a very low
level (23%).
The breakdown of the portfolio by LTV is as follows:
MORTGAGE PORTFOLIO BY TRANCHES % LTV PRIVATE INDIVIDUALS
LTV 00 - 10% 16.84
LTV 10 - 20 % 11.74
LTV 20 - 30 % 12.19
LTV 30 - 40 % 12.79
LTV 40 - 50 % 13.53
LTV 50 - 60 % 13.02
LTV 60 - 70 % 10.84
LTV 70 - 80 % 6.00
LTV 80 - 90 % 1.96
LTV 90 - 100 % 1.11
TOTAL LTV BRACKETS 100
3
2
1
0
07 08 09 10 11 12
System Bankinter *Sector data for September 2012 vs. Bankinter for December 2012
(Data provided by the Spanish Mortgage Association)
Corporate Banking
2.16%
Since the onset of the crisis, and in line with the strategy laid down by the Board for
taking advantage of our competitive advantage, this has once again been the segment
with the most growth (16%). By focusing on the major corporates, with which it has
many years of experience, the Bank has been able to attract new customers and increase
credit exposure with a low incidence of NPLs. Total risk in Corporate Banking amounted
to €13.12 billion, while NPLs, at €339 million, were still well contained, ending the year
with an NPL ratio of 2.6%.
This growth continued on the basis of principles which remain fixed, notably:
- Monitoring of current risks.
-Systematic use of rating models based on statistical rating and subjective
assessment by the Risks Committee.
- Conservative customer portfolio management.
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- Optimisation of the risk-return trade-off.
- Long-term investment, with the aim of a long-term relationship with the
customer.
- Diversification of sectors and terms.
Small and medium-sized enterprises
Credit risk totalled €6,506 million, representing a 4% drop due to the economic slowdown.
The non-performing loan ratio was 10.5%.
The institution has automatic decision models for risk management and teams of highly
experienced risk analysts.
Diversification by sectors, which allows management by portfolios and greater dilution of
the risk amongst them all.
Our limited exposure to property developers, which have been most penalised by the
crisis, has enabled us to widen our lead over the sector as a whole and over our closest
rivals in terms of the arrears ratio.
The Control and Recoveries Process involves:
1. Support from technology (CRM).
2. Traceability.
3. Integration of all information from all parties involved, external and internal.
4. Behavioural models (Basel II).
The Bank has various applications for monitoring loans and advances.
- Statistical customer alert.
- Risk Rating “special watch” and “risk to be eliminated”.
- Office-branch alerts
- Back-testing
It should be highlighted that 64% of the outstanding arrears balance for SMEs has
mortgage guarantees with an LTV ratio of 39%.
Control, Monitoring and Recoveries
The Control, Recoveries and Real Estate Assets Department reports directly to the
Executive Vice-Chairman, thus ensuring its independence. Its basic function is to direct
and manage the monitoring and control procedures for loans and receivables. It also
defines and establishes the processes for recovering non-compliant positions. During this
past year the Real Estate Assets Unit was incorporated under this Directorate in order to
achieve greater integration of this part of the recovery process.
In 2012 the team’s wide experience and the excellent functioning of the processes and
tools enabled us to optimise the level of recoveries.
Bankinter has had automatic systems in place for years for controlling and monitoring
credit risk on a permanent basis.
In 2012 we saw a bigger increase in non-performing loans than in the previous year. The
volume of new NPLs increased due to the deepening crisis in the second half of the year,
although the ratio of recoveries to new cases was maintained above 80%.
Variation in non-performing loans Balance and ratio (Data in €millions and %)
2.000
1.500
1.000
500
0
0.36%
157
1.34%
607
486
2.46%
1,093
2.87%
1,330
237
3.24%
1,516
186
468
4.28%
1,984
07 08 09 10 11 12
Increase in the year Changes in arrears
The portfolio of credit risk refinancing and restructuring transactions at the end of 2012
stood at €1.38 billion, with any amendment to credit risk conditions being considered as
refinancing. The majority of refinancing operations have additional guarantees (See Note
49).
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The flow of non-performing loan balances was as follows:
Impaired assets 31/12/2012 31/12/2011
Balance at start of period 1,515,767 1,329,980
Net additions 936,826 611,927
Transferred to Repossessed 275,853 190,724
Transferred to Bad Debts 192,712 235,417
Balance at close of period 1,984,028 1,515,766
Provision for impairment 958,523 786,080
Repossessed assets 31/12/2012 31/12/2011
Balance at start of period 484,408 378,112
Net additions 127,257 106,296
Balance at close of period 611,665 484,408
Provision for impairment of repossessed assets -230,524 -175,894
Net balance of repossessed assets 381,141 308,514
Real estate assets
The balance of the current portfolio of real estate assets stood at €611.67 million,
representing an increase of €127.26 million on the previous year.
Real estate assets are highly diversified in geographical terms and as regards property
type, which makes them easier to sell. The volume of sales amounted to €148.60 million,
representing an increase of 76% compared with the previous year.
The coverage of repossessed assets stood at 37.7% in December 2012.
In the real estate asset portfolio, we would highlight the virtual absence of property
developments in progress and the limited number of non-urban plots, both of which are
products with a much more limited market in the current situation.
Provisions
Solvency levels and asset coverage allow us to face the current situation in optimum
conditions.
The doubtful mortgage portfolio with mortgage guarantees presents an LTV ratio of 47%
and given this fact, plus the excellent default ratio with mortgage guarantees, losses on
the mortgage portfolio are insignificant.
100
80
60
40
20
Reputational Risk
Loan Provisions (% coverage)
52%
0
Dec 11 Dec 12
Reputational Risk is the risk of interactions with customers leading to negative publicity
regarding business practices and relations, which may cause a loss of trust in the
institution’s moral integrity.
The responsibility is to detect, analyse and evaluate the potential impact (severity)
of all practices and factors inherent in the activity carried out and which may induce
reputational risk, as well as the task of establishing processes for monitoring and
controlling such mitigating practices and measures or, if applicable and possible,
eliminating the risk inherent in them.
The Operational, Reputational and New Products Risk Committee meets on a regular
basis, with the following functions as regards reputational risks:
- To promote the implementation of reputational risk policies.
- Following up the actions taken to mitigate the most significant risks.
- To decide on which proposals should be submitted to the Committee regarding
possible reputational risk events.
- Validating compliance with procedures and protocols for identifying and assessing
reputational risks. This function is particularly relevant where launches of new
products or business lines are concerned.
48%
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45. Information by segments
The Group is divided into Retail Banking, Corporate Banking and Línea Directa Aseguradora
(LDA): The ultimate authorities for taking operational decisions are the Management
Committee of Bankinter, S.A. for the Commercial banking and Business Banking segments,
and the Management Committee of LDA for Línea Directa Aseguradora.
- Based on similarities in the nature of products and services offered, the type of target
customer and distribution methods, Commercial Banking comprises:
- Private Banking, a business line that specialises in comprehensive advisory and
management services for high net worth investors. It caters to customers with
financial assets of over €1 million with Bankinter and elsewhere.
- Personal Banking: Customers not included in Private Banking and having:
o Annual household income of more than €70,000
o or Deposits + Securities + Intermediation of between €75,000 and
€1,000,000
o or Financial assets with Bankinter and elsewhere of between €75,000
and €1,000,000
- Private Individual Banking comprises the products and services offered to
households. Other Private Individuals
- Foreigners: Non-Spanish Europeans customers of any of the following. Regional
Headquarters Catalonia, Levante, Balearic Islands, Andalusia and Canary Islands.
- Obsidiana: Consumer financing
-Corporate Banking offers a specialised service demanded by big companies, the public
sector and SMEs. Based on similarities in the nature of products and services offered,
the type of target customer and distribution methods, this segment covers all the Bank's
activity with businesses.
- Línea Directa Aseguradora (LDA): includes the insurance business of the LDA sub-group.
46. Holdings in the capital of credit institutions
In accordance with the provisions of Article 20 of Royal Decree 1245/1995 of 14 July,
we provide hereunder the list of holdings in the capital of Group financial institutions
which exceed 5% of capital or voting rights and which are held by national or foreign
credit institutions or by groups as defined by Article 4 of the Stock Market Act to which a
national or foreign credit institution belongs.
Company or
group owning
% holding the investment
Crédit Agricole, S.A 15.102% Crédit Agricole
47. Information required by Law 2/1981 of 25 March on Mortgage Market Regulation
and Royal Decree 716/2009 of 24 April implementing certain aspects of said law-
The Framework Agreement is the document in which every year the Board of Directors
establishes the basic principles of Risks Policy for each business segment. In this regard
we would highlight the fact that, pursuant to the provisions of the Transparency Act, we
have brought together the various aspects of the Responsible Lending Policy in a single
document, in the interests of greater clarity, even though all the principles had been
incorporated over the past few years in the Framework Agreement, which is reviewed and
updated every year.
The Policies regarding the granting of mortgage loans include, among others, the
following criteria:
- The ratio between the amount of the loan and the valuation value of the property
being mortgaged, and the existence of other supplementary guarantees.
- Selecting the valuation institutions.
- The ratio between the debt and the borrower’s income, and verification of the
information provided by the borrower and the latter’s solvency.
In accordance with the provisions of Article 20 of Royal Decree 1245/1995 of 14 July, we
present hereunder a list of the Group’s investments in the capital of national and foreign
credit institutions that exceed 5% of capital or voting rights in same:
% holding
Bankinter Consumer Finance, E.F.C, S.A. 100%
The bases of the risks policy for this product are:
1. Automated approval with discrimination by rating.
In the case of residential mortgage loans we seek to maximise the extent to
which transactions can be approved using automated systems.
The Bank has an internal rating model, developed and improved over the
course of the last few years, based on statistical systems in accordance
with Basel II rules. For each transaction, obtaining a rating is associated
with a given probability of default based on historical data, and is the main
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indicator of the quality of a transaction. The rating is the fundamental
variable in automated approval and an important factor in taking decisions
on transactions for which approval is not automated.
2. Types of customers and ability to repay.
The approval of customer transactions is based on individualised studies
of the customer, the rating, financial capacity and personalised prices
depending on the customer’s social and financial profile.
The maximum effort that a customer can make must always be taken into
account. To calculate it, the following information is required: servicing of
all debts and recurring income (exceptional income must not be taken into
account). In this way we check whether final disposable income is enough
to service our financing and the usual expenses. The documentation used as
the basis for assessing repayment capacity for the transaction is tax-based,
and must be as up to date as possible: the last three months’ payslips for
employees, and in the case of self-employed persons the latest available
income tax declaration.
3. Expected profitability.
The expected profitability of the mortgage applicant is one of the variables
taken into account in the automated approval process. By means of an
internal statistical model, the Bank calculates the expected profitability of
all the products and services that the customer may use, depending on his/
her income and asset profile, excluding profitability obtained directly from
the mortgage transaction.
Providing the risk quality is good enough, measured in terms of rating,
then the approval decision takes into account the profitability both of the
mortgage loan itself and of any associated products.
4. Financing habitual dwelling and secondary residence.
The mortgage lending policy at Bankinter is geared to the financing of
habitual place of residence and secondary residence for private individuals,
not to investor-type financing.
5. LTV.
The Bank’s general policy is to finance homes up to 80% LTV. Exceptionally,
in the case of transactions for HNW customers with proven capacity to repay,
a higher LTV may be allowed. The security needs to be valued correctly, both
on approval and during the life of the loan.
In the approval process, the value of the security is determined by an official
appraisal or by the purchase price as registered in the deed of conveyance,
whichever is lower, subject to there not being a large difference between the
two.
6. Non-residents.
More stringent requirements as regards the ratio of effort required.
Additionally, LTD has to be lower and checks must be made on the real equity
contribution made by the customer.
7. Type of asset.
The residential property to be financed must be located in an established
urban zone and there must be a property market with ample supply and
demand.
8. Standardisation of the mortgage process.
Standardisation is of prime importance in achieving a process in which
efficiency is paramount, particularly in Retail Banking.
The integrated handling of this process, and co-ordination with all the parties
involved (mainly agencies and appraisal firms) is entrusted to a specialised
department which takes charge of establishing the procedures, applications,
organisation and control of the process. This ensures that the process is
carried out smoothly with first-class customer service and excellent quality
of mortgage lending.
9. Independent appraisal process.
The appraisal process is absolutely independent of the Sales network. It
is carried out on a centralised basis, and the appraiser assigned to each
valuation is selected at random, thus ensuring that transactions from any
given branch have been valued by different appraisal companies.
10. Monitoring of the mortgage market.
Official reports are regularly obtained in order to monitor property market
prices. In the event of any substantial change in the value of a property the
value must be adjusted in the Bank’s books.
11. Interest-rate hedges.
The risks policy for approving this type of transaction is restricted to
customers with a mortgage loan from the Bank, and we never cover more
than 75% of the balance of the transaction, nor do we ever go beyond an
eight-year term.
Policy on sale of repossessed assets
Prior to repossession, the team of specialised professionals forming the Real Estate Assets
Unit has as it initial task the in-situ inspection of the property in order to perform a
Technical Analysis which covers: characteristics, type, description and condition of the
property, as well as a study of the market and of prices in the area Selling prices are
established centrally based on objective criteria and reviewed periodically to ensure that
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they are in line with the market, following the active policy of managing property as
quickly and efficiently as possible.
For the sale of real estate assets the Bank has a network of external collaborating property
market specialists. These collaborating specialists are selected individually based on
considerations of proximity, local knowledge and product suitability. The effectiveness of
this network is very closely monitored, with daily contact and evaluation of the level of
sales and commitments.
By way of sales support the Bank relies on:
- The branch network, which has a financial incentive to refer possible
interested buyers.
- Dedicated property portal on the bank’s website:https://www.
bankinter.com/www/es-es/cgi/ebk+inm+home
- The assets are published on the main national portals.
- Our own property magazines, by type of property.
- Sales service call centre.
There is an active policy of studying possibilities for disposing of the portfolio as a whole
or in batches of repossessed assets.
Land and construction work in progress
As a consequence of the highly restrictive risk policy on financing for property developers,
the amount relating to repossessed land is insignificant relative to the size of the Bank and
particularly in comparison with the banking sector as a whole. Most of the repossessed
land is urban and therefore does not require town planning and management.
Specific examples of these procedures include:
- The selection and control of specialist providers for resolving
planning issues with land and unfinished developments, accepting
budgets and monitoring their execution
- Supervision and monitoring of the procedures for obtaining the
necessary sale permits from official bodies or town halls.
Other proposals such as barter and other alternative solutions have been studied but to
date have not been used.
Policy on financing granted to problematic property developers
Due to the low level of exposure to credit risk on property developers (about 2% of total
customer risk), there is no need to design recovery policies for problematic property
development projects. Policy has focused on financing specific, small-scale projects in
good locations and with well-established property developers. As a result most of the risk
in this sector is on completed developments ready for sale. The Bank’s real estate website
has a sales section which we can use for selling projects of property developers financed
by the Bank. Projects and selling prices are closely monitored with a view to reducing the
risk.
a) Asset transactions
We now go on to present, as at 31 December 2012, the nominal value of the totality of
mortgage credits and loans outstanding at that date in the Group entities indicated above,
the nominal value of these eligible loans and credits, the mortgage credits and loans
covering the issue of mortgage bonds, those that have been issued in the form of mortgage
participations or mortgage transfer certificates and non-committed transactions:
Our knowledge of property developers, the size of the developments and the risk policy
pursued have allowed us to support developers at least enough to ensure that financed
projects are completed, which explains why there are no developments in progress among
the repossessed assets. In any case the policy for managing land focuses on establishing
controls to prevent physical deterioration of the asset and carrying out the necessary
technical procedures to ensure a quick sale.
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31 December 2012;
31 December 2011;
Nominal
value
NPV
Nominal value
NPV
1 Total loans 29,033,037
2 Mortgage participations issued 2,640,009
Of which: Loans retained on the balance sheet 1,670,494
3 Mortgage transmission certificates issued 2,721,511
Of which: Loans retained on the balance sheet 2,591,555
4 Mortgage loans assigned in guarantee of financing
received
-
5 Loans backing the issue of mortgage debentures and
bonds
23,671,517
5.1 Non-eligible loans 5,784,014
5.1.1 They meet the eligibility requirements
except for the limit of Article 5.1 of Royal
-
Decree 716/2009
5.1.2 Other 5,784,014
5.2 Eligible loans 17,887,503
5.2.1 Non-computable amounts -
5.2.2 Computable amounts 17,887,503
5.2.2.1 Loans covering issues of mortgage
debentures
-
5.2.2.2Loans eligible for covering issues of
mortgage bonds
17,887,503
1 Total loans 31,260,157
2 Mortgage participations issued 4,679,764
Of which: Loans retained on the balance sheet 3,566,032
3 Mortgage transmission certificates issued 5,397,235
Of which: Loans retained on the balance sheet 5,254,655
4 Mortgage loans assigned in guarantee of financing received -
5 Loans backing the issue of mortgage debentures and bonds 21,183,158
5.1 Non-eligible loans 7,933,053
5.1.1 They meet the eligibility requirements except
for the limit of Article 5.1 of Royal Decree
-
716/2009
5.1.2 Other 7,933,053
5.2 Eligible loans 13,250,105
5.2.1 Non-computable amounts -
5.2.2 Computable amounts 13,250,105
5.2.2.1 Loans covering issues of mortgage
debentures
-
5.2.2.2Loans eligible for covering issues of
mortgage bonds
13,250,105
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31 December 2012;
Loans backing the issue of mortgage
debentures and bonds
Of which: Eligible
loans
TOTAL 23,671,517 17,887,503
1 ORIGIN OF TRANSACTIONS 23,671,517 17,887,503
1.1 Originated by the entity 21,763,604 16,270,011
1.2 Subrogated from other entities 1,907,913 1,617,492
1.3. Other - -
2 CURRENCY 23,671,517 17,887,503
2.1 Euros 19,205,354 15,203,899
2.2. Other currencies 4,466,163 2,683,604
3 PAYMENT SITUATION 23,671,517 17,887,503
3.1 Normal 22,773,725 17,644,941
3.2 Other than normal 897,792 242,562
4 AVERAGE REMAINING MATURITY 23,671,517 17,887,503
4.1 Up to ten years 3,115,479 2,373,295
4.2 From ten to twenty years 7,788,683 5,844,019
4.3 From twenty to thirty years 9,736,943 7,305,873
4.4 More than thirty years 3,030,412 2,364,316
5 INTEREST RATES 23,671,517 17,887,503
5.1 Fixed 53,202 23,657
5.2 Variable 23,618,315 17,863,846
5.3 Mixed - -
6 BORROWERS 23,671,517 17,887,503
6.1 Companies and entrepreneurs 4,958,368 2,841,880
Of which: Property developers 623,346 372,682
6.2 Other companies and ISFLSH (Private non-profit making institutions serving households) 18,713,149 15,045,623
7 TYPE OF GUARANTEE 23,671,517 17,887,503
7.1 Finished assets/buildings 19,529,498 15,471,770
7.1.1 Residential 15,789,110 13,776,856
Of which: State-subsidised housing -
7.1.2 Commercial 3,740,388 1,694,914
7.1.3 Other - -
7.2 Assets/buildings under construction 3,670,025 2,195,702
7.2.1 Residential 3,303,023 1,976,132
Of which: State-subsidised housing - -
7.2.2 Commercial 367,003 219,570
7.2.3 Other - -
7.3 Plots of land 471,993 220,030
7.3.1 Developed 322,497 220,030
7.3.2 Other 149,946 -
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31 December 2011;
Loans backing the issue of mortgage
debentures and bonds
Of which: Eligible
loans
TOTAL 21,183,158 13,250,105
1 ORIGIN OF TRANSACTIONS 21,183,158 13,250,105
1.1 Originated by the entity 19,350,546 11,890,375
1.2 Subrogated from other entities 1,832,612 1,359,730
1.3. Other - -
2 CURRENCY 21,183,158 13,250,105
2.1 Euros 15,946,125 10,858,546
2.2. Other currencies 5,237,033 2,391,559
3 PAYMENT SITUATION 21,183,158 13,250,105
3.1 Normal 20,554,037 13,215,264
3.2 Other than normal 629,121 34,841
4 AVERAGE REMAINING MATURITY 21,183,158 13,250,105
4.1 Up to ten years 2,843,959 1,765,082
4.2 From ten to twenty years 6,770,413 4,288,065
4.3 From twenty to thirty years 8,885,808 5,190,076
4.4 More than thirty years 2,682,978 2,006,882
5 INTEREST RATES 21,183,158 13,250,105
5.1 Fixed 48,604 30,994
5.2 Variable 21,134,554 13,219,111
5.3 Mixed - -
6 BORROWERS 21,183,158 13,250,105
6.1 Companies and entrepreneurs 4,911,585 2,217,704
Of which: Property developers 736,066 439,003
6.2 Other companies and ISFLSH (Private non-profit making institutions serving households) 16,271,573 11,032,401
7 TYPE OF GUARANTEE 21,183,158 13,250,105
7.1 Finished assets/buildings 20,248,297 12,638,023
7.1.1 Residential 13,278,202 10,176,211
Of which: State-subsidised housing - -
7.1.2 Commercial 6,970,095 2,461,812
7.1.3 Other - -
7.2 Assets/buildings under construction 736,066 439,003
7.2.1 Residential 662,459 395,103
Of which: State-subsidised housing - -
7.2.2 Commercial 73,607 43,900
7.2.3 Other - -
7.3 Plots of land 198,795 173,079
7.3.1 Developed 177,821 169,503
7.3.2 Other 20,974 3,576
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The following is a breakdown of the nominal value of eligible mortgage loans and credits outstanding as at 31 December 2012 and 31 December 2011 by loan to value (LTV) based on
the latest available appraisal of the mortgaged property:
31 December 2012;
RISK AS % OF AMOUNT OF LATEST AVAILABLE APPRAISAL FOR MORTGAGE MARKET (loan to value)
TYPE OF GUARANTEE Equal to or less than 40% From 40% to 60% incl. More than 60% From 60 % to 80 % incl. More than 80 % TOTAL
5 Loans eligible for the issue of mortgage debentures and
bonds
5,383,854 7,236,882 - 5,266,766 - 17,887,503
- On residential property 3,515,361 5,025,339 5,266,766 - 13,807,467
- On other assets 1,868,493 2,211,543 - 4,080,036
31 December 2011;
RISK AS % OF AMOUNT OF LATEST AVAILABLE APPRAISAL FOR MORTGAGE MARKET (loan to value)
TYPE OF GUARANTEE Equal to or less than 40% From 40% to 60% incl. More than 60% From 60 % to 80 % incl. More than 80 % TOTAL
5 Loans eligible for the issue of mortgage debentures and
bonds
3,807,526 5,023,337 - 4,419,242 - 13,250,105
- On residential property 2,370,861 3,386,108 4,419,242 - 10,176,211
- On other assets 1,436,665 1,637,229 - 3,073,894
2012
MOVEMENTS Eligible loans Non-eligible loans
1 Opening balance at 31/12/2011 13,250,105 7,933,053
2 Deductions in the period 1,605,994 2,853,079
2.1 Cancelled at due date 1,204,591 533,974
2.2 Pre-paid 401,403 392,815
2.3 Subrogated by other entities - -
2.4 Other - 1,926,290
3 Additions in the period 6,243,392 704,040
3.1 Originated by the entity 794,327 441,344
3.2 Subrogated from other entities 13,522 2,574
3.3 Other 5,435,543 260,122
4 Closing balance as at 31/12/2012 17,887,503 5,784,014
125
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

2011
MOVEMENTS Eligible loans Non-eligible loans
1 Opening balance at 31/12/2010 9,006,984 7,330,457
2 Deductions in the period 815,436 709,048
2.1 Cancelled at due date 525,564 369,212
b) Liability operations
We present hereunder the aggregate nominal value of the mortgage bonds outstanding
as at 31 December 2012 and 2011 issued by the Group, listed by remaining maturity, as
well as mortgage participations and mortgage transfer certificates outstanding as at 31
December 2012 and 2011 issued by the Group listed by remaining maturity:
2.2 Pre-paid 289,872 339,836
2.3 Subrogated by other entities - -
2.4 Other - -
3 Additions in the period 5,058,557 1,311,644
3.1 Originated by the entity 4,472,155 1,162,405
3.2 Subrogated from other entities 206,155 26,465
3.3 Other 380,247 122,775
4 Closing balance as at 31/12/2011 13,250,105 7,933,053
31 December 2012;
Mortgage credit and loans
Available balances.
Nominal value
Total 1,071,707
– Potentially eligible 152,997
– Non-eligible 918,710
31 December 2011;
Mortgage credit and loans
Available balances.
Nominal value
Total 378,961
– Potentially eligible 377,079
– Non-eligible 1,882
As at 31 December 2012 and 2011 there were no replacement assets in cover of issues of
mortgage bonds or debentures in Bankinter.
126
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

31 December 2012;
MORTGAGE-BACKED SECURITIES Nominal value NPV Average remaining maturity
1 Mortgage debentures issued and outstanding -
2 Mortgage bonds issued 12,798,213
Of which: Not recognised as liabilities in the balance sheet 6,541,150
2.1 Debt securities. Issued in a public offering 12,798,213
2.1.1 Remaining maturity up to one year 2,718,213
2.1.2 Remaining maturity from one to two years 1,930,000
2.1.3 Remaining maturity from two to three years 2,700,000
2.1.4 Remaining maturity from three to five years 3,000,000
2.1.5 Remaining maturity from five to ten years 2,450,000
2.1.6 Remaining maturity over ten years
2.2 Debt securities. Other issues
2.2.1 Remaining maturity up to one year
2.2.2 Remaining maturity from one to two years
2.2.3 Remaining maturity from two to three years
2.2.4 Remaining maturity from three to five years
2.2.5 Remaining maturity from five to ten years
2.2.6 Remaining maturity over ten years
2.3 Deposits
2.3.1 Remaining maturity up to one year
2.3.2 Remaining maturity from one to two years
2.3.3 Remaining maturity from two to three years
2.3.4 Remaining maturity from three to five years
2.3.5 Remaining maturity from five to ten years
2.3.6 Remaining maturity over ten years
3 Mortgage participations issued 1,670,494 237
3.1 Issued by means of public offering 1,670,494 237
3.2 Other issues - -
4 Mortgage transmission certificates issued 2,591,555 237
4.1 Issued by means of public offering 2,591,555 237
4.2 Other issues - -
127
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

31 December 2011;
MORTGAGE-BACKED SECURITIES Nominal value NPV Average remaining maturity
1 Mortgage debentures issued and outstanding -
2 Mortgage bonds issued 10,122,757
Of which: Not recognised as liabilities in the balance sheet 4,596,000
2.1 Debt securities. Issued in a public offering 10,122,757
2.1.1 Remaining maturity up to one year 323,200
2.1.2 Remaining maturity from one to two years 4,269,557
2.1.3 Remaining maturity from two to three years 2,930,000
2.1.4 Remaining maturity from three to five years 2,400,000
2.1.5 Remaining maturity from five to ten years 200,000
2.1.6 Remaining maturity over ten years
2.2 Debt securities. Other issues
2.2.1 Remaining maturity up to one year
2.2.2 Remaining maturity from one to two years
2.2.3 Remaining maturity from two to three years
2.2.4 Remaining maturity from three to five years
2.2.5 Remaining maturity from five to ten years
2.2.6 Remaining maturity over ten years
2.3 Deposits
2.3.1 Remaining maturity up to one year
2.3.2 Remaining maturity from one to two years
2.3.3 Remaining maturity from two to three years
2.3.4 Remaining maturity from three to five years
2.3.5 Remaining maturity from five to ten years
2.3.6 Remaining maturity over ten years
3 Mortgage participations issued 3,566,032 281
3.1 Issued by means of public offering 3,566,032 281
3.2 Other issues - -
4 Mortgage transmission certificates issued 5,254,655 281
4.1 Issued by means of public offering 5,254,655 281
4.2 Other issues -
128
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

48. Exposure to the construction and property development sector
Table 2: Breakdown of financing for property construction and development
In compliance with the request made by the Bank of Spain for credit institutions to
publish their exposure to the construction and property development sector, Bankinter,
S.A. publishes the following information as at 31 December 2012, which goes beyond the
level of detail and transparency requested:
Figures as at 31/12/2012
Financing of property construction and development.
Gross amount
Without a mortgage guarantee 134,171
With a mortgage guarantee 849,351
Finished buildings 579,391
Table 1: Financing for property development and its coverage
Figures as at 31/12/2012
Gross amount
Excess over
guarantee value (1) Specific coverage
1. Lending recorded by the
group’s credit institutions
(businesses in Spain) 983,522 95,636 302,700
1.1. Of which: Doubtful 330,758 49,828 135,555
1.2. Of which: Substandard 38,929 5,037 12,455
Information in €000s
Figures as at 31 December 2011
Gross amount
Excess over
guarantee value (1) Specific coverage
1. Lending recorded by the
group’s credit institutions
(businesses in Spain) 1,075,156 43,006 68,226
1.1. Of which: Doubtful 206,668 8,267 59,449
1.2. Of which: Substandard 60,253 2,410 8,777
Information in €000s
(1) This is the amount of the excess of the gross value of each transaction over the
value of any rights in rem received in guarantee, calculated in accordance with
the provisions of Appendix IX to Circular 4/2004 (finished habitual residence
80%; offices, shops and multipurpose industrial buildings 70%; other finished
housing 60%; other assets 50%)
Housing 398,307
Other 181,084
Buildings under construction 57,151
Housing 57,151
Other -
Land 212,809
Urban plots 197,309
Other land 15,500
TOTAL 983,522
Information in €000s
Financing of property construction and development.
Figures as at 31 December 2011
Gross amount
Without a mortgage guarantee 113,951
With a mortgage guarantee 961,205
Finished buildings 654,079
Housing 588,671
Other 65,408
Buildings under construction 108,331
Housing 97,498
Other 10,833
Land 198,795
Urban plots 177,821
Other land 20,974
TOTAL 1,075,156
Information in €000s
129
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

Figures as at 31/12/2012
Memorandum items:
- Total generic coverage (all businesses)
-
- Bad debts 44,063
Memorandum items: Figures for the consolidated group
Carrying amount
1. Total lending to customers excluding Public Administrations
(businesses in Spain). 41,962,384
2. Total consolidated assets (all businesses) 58,165,890
Figures as at 31 December 2011
Memorandum items:
- Total generic coverage (all businesses)
114,769
- Bad debts 13,360
Memorandum items: Figures for the consolidated group
Carrying amount
1. Total lending to customers excluding Public Administrations
(businesses in Spain). 42,731,343
2. Total consolidated assets (all businesses) 59,491,426
Table 3: Lending to households for purchase of residential property
Figures as at 31/12/2012
Gross amount Of which: Doubtful
Lending for the purchase of housing 22,741,182 491,258
Figures as at 31 December 2011
Gross amount Of which: Doubtful
Lending for the purchase of housing 24,328,310 399,127
Without a mortgage guarantee - -
With a mortgage guarantee 24,328,310 399,127
Information in €000s
Table 4: Breakdown of mortgage lending to households for the purchase of housing by loan
to value (LTV) based on the latest available appraisal.
Figures as at 31/12/2012
Gross
amount
Of which
doubtful
Information in €000s
LTV≤40% 40%

Table 5: Assets repossessed by consolidated group entities (businesses in Spain))
Figures as at 31/12/2012
Carrying
amount
Of which:
Coverage Initial cost Gross Debt
1. Real estate assets from financing transactions for property construction and development companies 191,204 73,651 264,855 351,875
1.1. Finished buildings 143,679 36,911 180,590 227,687
1.1.1. Housing 92,614 19,497 112,111 143,745
1.1.2. Other 51,065 17,414 68,479 83,942
1.2. Buildings under construction 4,289 700 4,989 8,559
1.2.1. Housing 4,289 700 4,989 8,559
1.2.2. Other - - - -
1.3. Land 43,236 36,040 79,276 115,629
1.3.1. Urban plots 43,236 36,040 79,276 115,629
1.3.2. Other land - - - -
2. Real estate assets from mortgage financing operations to households for the purchase of housing 91,080 7,647 98,727 119,159
3. Other real estate assets foreclosed 98,760 8,677 107,437 140,375
4. Other equity instruments, securities and financing to non-consolidated companies holding said assets 204 2,436 2,640 8,925
Information in €000s
Figures as at 31 December 2011
Carrying
amount
Of which:
Coverage Initial cost Gross Debt
1. Real estate assets from financing transactions for property construction and development companies 194,868 76,836 271,704 337,878
1.1. Finished buildings 150,324 32,536 182,860 216,038
1.1.1. Housing 88,910 22,056 110,966 133,447
1.1.2. Other 61,414 10,480 71,894 82,591
1.2. Buildings under construction 2,194 175,759 2,370 4,325
1.2.1. Housing 2,194 175,759 2,370 4,325
1.2.2. Other - - -
1.3. Land 42,350 44,125 86,474 117,515
1.3.1. Urban plots 34,818 39,964 74,782 98,686
1.3.2. Other land 7,532 4,161 11,692 18,829
2. Real estate assets from mortgage financing operations to households for the purchase of housing 61,401 3,264 64,665 79,086
3. Other real estate assets foreclosed 52,245 4,138 56,383 67,443
4. Other equity instruments, securities and financing to non-consolidated companies holding said assets - - -
131
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

49. Additional Information on risks: Refinancing and restructuring transactions:
Geographical and sector risk concentration
In compliance with the Bank of Spain’s request per Circular 6/2012 for credit institutions
to publish information on refinancing and restructuring transactions, as well as on sector
and geographical risk concentration.
The policy on refinancing and restructuring established by the Bank is described in Note
42.
The following is a breakdown by counterparty, type of insolvency and type of security
held, of balances of restructuring and refinancing transactions carried out by the Bank
and outstanding as at 31 December 2012.
Refinancing and restructuring transactions:
Outstanding balances of refinancing and restructuring transactions as at 31 December
2012:
NORMAL (b)
SUBSTANDARD
Fully secured by
property mortgage
Other tangible security
(c)
Without tangible
security
Fully secured by
property mortgage
Other tangible security (c)
Without tangible security
No. of
transactions
Gross
amount
No. of
transactions
Gross
amount
No. of
transactions
Gross
amount
No. of
transactions
Gross
amount
No. of
transactions
Gross
amount
No. of
transactions
Gross
amount
Specific
coverage
1. Public Administrations - - - - 3 606 - - - - - - -
2. Remaining companies and sole
proprietors
901 344,715 113 43,346 1,214 229,867 63 62,420 7 4,107 43 34,523 22,357
Of which: Financing of property
construction and development
115 81,239 10 7,699 19 15,349 26 35,962 - - - - 11,671
3. Other Private Individuals 791 160,042 61 17,829 419 7,019 5 2,400 4 1,139 11 209 623
4. Total 1,692 504,757 174 61,175 1,636 237,492 68 64,820 11 5,246 54 34,732 22,980
132
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

Outstanding balances of refinancing and restructuring transactions as at 31 December
2012:
Fully secured by property
mortgage
DOUBTFUL
Other tangible security (c)
Without tangible security
TOTAL
No. of
transactions
Gross
amount
No. of
transactions
Gross
amount
No. of
transactions
Gross
amount
Specific
coverage
No. of
transactions
Gross
amount
Specific
coverage
1. Public Administrations - - - - - - - 3 606 -
2. Remaining companies and sole
proprietors
383 289,357 51 28,065 532 115,621 169,916 3,307 1,152,021 192,273
Of which: Financing of property
construction and development
164 174,408 20 13,423 34 4,615 76,426 388 332,695 88,097
3. Other Private Individuals 62 21,740 12 2,920 119 3,376 3,754 1,484 216,674 4,377
4. Total 445 311,097 63 30,985 651 118,997 173,670 4,794 1,369,301 196,650
Breakdown of amount of transactions classed as doubtful subsequent to refinancing or
restructuring during the year.
Fully secured by property mortgage Other tangible security (c) Without tangible security
No. of transactions Gross amount No. of transactions Gross amount No. of transactions Gross amount
Companies and sole proprietors
170 76,768 20 9,078 415 79,621
Of which: Financing of property
construction and development 116 122,307 9 5,445 26 3,575
Private individuals 59 21,079 11 2,876 120 3,029
Total 229 97,847 31 11,954 535 82,650
133
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

Breakdown of the average probability of default (PD) of refinanced and restructured transactions by segment
NORMAL
SUBSTANDARD
Fully secured by
property mortgage
Other tangible
security
Without tangible
security
Fully secured by
property mortgage
Other tangible
security
Without tangible
security
No. of
transactions
PD
No. of
transactions
PD
No. of
transactions
PD
No. of
transactions
PD
No. of
transactions
PD
No. of
transactions
PD
1. Public Administrations - - - - - - - - - - - -
2. Remaining companies and sole proprietors 580 0.36 59 0.27 763 0.26 25 0.10 1 0.18 6 0.16
Of which: Financing of property construction and
development
69 0.23 2 0.01 6 0.15 5 0.00 0 0.00 0 0.00
3. Other Private Individuals 671 0.46 34 0.24 408 0.16 3 0.30 2 1.00 10 0.17
4. Total 1.251 0.41 93 0.26 1.171 0.25 28 0.11 3 0.93 16 0.15
Breakdown of the average probability of default (PD) of refinanced and restructured transactions by segment
DOUBTFUL
Fully secured by property
mortgage
Other tangible security
Without tangible security
TOTAL
No. of
transactions
PD
No. of
transactions
PD
No. of
transactions
PD
No. of
transactions
PD
1. Public Administrations
2. Remaining companies and sole proprietors 174 0.87 15 0.97 256 0.62 1,879 0.51
Of which: Financing of property construction and
development
58 0.96 4 0.96 9 0.84 153 0.56
3. Other Private Individuals 54 0.81 3 1.00 115 0.81 1,300 0.48
4. Total 228 0.86 18 0.97 371 0.65 3,179 0.50
134
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

Geographical and sector risk concentration
The following is a breakdown of the carrying amount of the Group’s most significant financial assets as
at 31 December 2012 by geographical area of activity, business segment, counterparty and purpose for
which the financing was granted.
Breakdown of customer lending by activity (carrying amount).
Of which: Of which:
Collateralised loans. Loan to value
TOTAL Secured by Other tangible Equal to or less From 40% to From 60 % to From 80% to More than
Information in 000s euros
property security than 40% 60% incl. 80% incl. 100% incl. 100%
1 Government Bodies 1,612,967 6,946 21,489 354 6,592 - - 21,489
2 Other financial institutions 1,642,862 - - - - - - -
3 Non-financial companies and sole proprietors 18,746,150 8,083,957 459,710 2,477,752 3,021,540 1,979,215 572,550 492,610
3.1 Property construction and development 901,840 786,010 15,793 165,258 263,718 249,839 50,021 72,967
3.2 Civil engineering construction 326,356 36,695 2,048 10,649 10,411 11,827 4,304 1,552
3.3 Other purposes 17,517,954 7,261,252 441,869 2,301,845 2,747,411 1,717,549 518,225 418,091
3.3.1 Major corporates 11,544,337 3,124,806 237,125 900,776 1,165,802 804,001 273,162 218,190
3.3.2 SMEs and sole proprietors 5,973,617 4,136,446 204,744 1,401,069 1,581,609 913,548 245,063 199,901
4 Other home and ISFLSH (Private non-profit
institutions serving households)
21,925,410 20,965,648 134,518 4,867,217 7,187,279 7,028,057 1,652,265 365,348
4.1 Residential properties 16,089,721 15,959,170 9,236 3,335,290 5,426,073 5,724,486 1,252,494 230,063
4.2. Consumer 235,890 20,830 1,097 7,670 7,895 5,412 778 172
4.3 Other purposes 5,599,799 4,985,648 124,185 1,524,257 1,753,311 1,298,159 398,993 135,113
SUBTOTAL 43,927,389 29,056,551 615,717 7,345,323 10,215,411 9,007,272 2,224,815 879,447
5 Less: Value corrections due to asset impairment not
attributable to specific transactions
154,690
6 TOTAL 43,772,699
MEMORANDUM ACCOUNTS
Refinancing, refinanced and restructured transactions: 1,177,807 828,251 33,716 192,375 216,961 257,976 124,182 70,472
135
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

Concentration of risks by Activity and Geographical Area (Carrying amounts). Total
activity.
Rest of the European
TOTAL
Spain
Information in 000s euros
Union
The Americas
Rest of the world
1 Credit institutions 3,057,483 2,426,885 626,121 3,261 1,216
2 Government Bodies 9,508,499 9,427,554 80,945 - -
2.1 Central Administration 8,803,046 8,722,101 80,945 - -
2.2. Other 705,453 705,453 - - -
3 Other financial institutions 10,731,996 10,697,829 31,200 391 2,576
4 Non-financial companies and sole proprietors 21,551,061 20,975,587 422,650 131,891 20,933
4.1 Property construction and development 943,515 943,515 - - -
4.2 Civil engineering construction 855,220 814,511 11,878 28,831 -
4.3 Other purposes 19,752,326 19,217,561 410,772 103,060 20,933
4.3.1 Major corporates 13,754,039 13,220,866 410,692 102,048 20,433
4.3.2 SMEs and sole proprietors 5,998,287 5,996,695 80 1,012 500
5 Other home and ISFLSH (Private non-profit
institutions serving households)
21,968,459 21,372,962 479,081 29,966 86,450
5.1 Residential properties 16,089,721 15,596,706 392,857 22,913 77,245
5.2. Consumer 235,894 234,587 597 243 467
5.3 Other purposes 5,642,844 5,541,669 85,627 6,810 8,738
SUBTOTAL 66,817,498 64,900,817 1,639,997 165,509 111,175
6. Less: value corrections due to asset impairment not
attributable to specific transactions
154,690
7 TOTAL 66,662,808
136
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

Concentration of risks by Activity and Geographical Area (Carrying amounts). Activity in Spain.
Information in 000s euros TOTAL Andalusia Aragón Asturias
Balearic
Islands
Canary
Islands
Cantabria
Castile - La
Mancha
1 Credit institutions 2,426,885 - - 1,026 81 - 119,504 - - 157,580
2 Government Bodies 9,427,554 99,314 16,603 25,702 12,139 47,880 6,524 40,465 68,073 62,068
2.1 Central Administration 8,722,101
2.2. Other 705,453 99,314 16,603 25,702 12,139 47,880 6,524 40,465 68,073 62,068
3 Other financial institutions 10,697,829 617,492 17,965 16,541 28 35 53 5,707 296 107,542
Castilla y
León
Catalonia
4 Non-financial companies and sole
proprietors
20,975,587 2,474,839 808,109 199,174 376,439 856,012 275,416 487,297 512,334 2,497,317
4.1 Property construction and development 943,515 172,939 57,117 11,128 21,453 18,933 28,800 10,004 37,431 55,214
4.2 Civil engineering construction 814,511 73,242 13,152 2,718 10,333 39,343 31,346 7,357 17,051 141,888
4.3 Other purposes 19,217,561 2,228,658 737,840 185,328 344,653 797,736 215,270 469,936 457,852 2,300,215
4.3.1 Major corporates 13,220,866 1,206,992 445,091 74,967 197,447 515,212 116,543 257,734 216,479 1,665,229
4.3.2 SMEs and sole proprietors 5,996,695 1,021,666 292,749 110,361 147,206 282,524 98,727 212,202 241,373 634,986
5 Other home and ISFLSH (Private non-profit
institutions serving households)
21,372,962 2,494,970 496,170 322,062 564,075 854,514 299,329 736,114 944,805 3,217,793
5.1 Residential properties 15,596,706 1,807,378 342,369 224,808 426,277 644,943 235,564 534,937 790,816 2,374,911
5.2. Consumer 234,587 29,840 5,474 4,304 4,282 12,164 4,222 7,954 9,797 30,042
5.3 Other purposes 5,541,669 657,752 148,327 92,950 133,516 197,407 59,543 193,223 144,192 812,840
SUBTOTAL 64,900,817 5,686,615 1,338,847 564,505 952,762 1,758,441 700,826 1,269,583 1,525,508 6,042,300
6 Less: Value corrections due to asset
impairment not attributable to specific
transactions
154,690
7 TOTAL 64,746,127
137
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

Concentration of risks by Activity and Geographical Area (Carrying amounts). Activity in
Spain.
Information in 000s euros TOTAL Extremadura Galicia Madrid Murcia Navarra
Valencia
Autonomous
Region
1 Credit institutions 2,426,885 2,218 31,079 2,010,862 912 - 30,881 72,742 - -
2 Government Bodies 9,427,554 24,886 43,026 125,016 3,002 28,609 6,312 72,175 23,659 -
2.1 Central Administration 8,722,101
2.2. Other 705,453 24,886 43,026 125,016 3,002 28,609 6,312 72,175 23,659 -
3 Other financial institutions 10,697,829 2 202,588 9,195,426 464 100 72,169 461,410 12 -
4 Non-financial companies and sole proprietors 20,975,587 250,545 544,931 7,556,434 577,110 376,116 1,713,207 1,267,889 196,590 5,828
4.1 Property construction and development 943,515 5,730 10,750 246,872 70,903 8,694 130,111 27,980 29,456 -
4.2 Civil engineering construction 814,511 31,172 25,958 273,828 15,948 21,686 56,547 50,283 2,659 -
4.3 Other purposes 19,217,561 213,643 508,223 7,035,734 490,259 345,736 1,526,549 1,189,626 164,475 5,828
4.3.1 Major corporates 13,220,866 159,428 390,550 5,542,799 348,858 278,579 852,065 840,267 109,891 2,735
4.3.2 SMEs and sole proprietors 5,996,695 54,215 117,673 1,492,935 141,401 67,157 674,484 349,359 54,584 3,093
5 Other home and ISFLSH (Private non-profit
institutions serving households)
21,372,962 156,326 438,839 7,339,974 383,308 138,283 1,796,603 1,087,630 95,290 6,877
5.1 Residential properties 15,596,706 116,738 305,721 5,178,762 290,786 100,247 1,287,788 851,492 76,948 6,221
5.2. Consumer 234,587 2,350 6,600 76,857 4,173 1,590 19,609 14,321 929 79
5.3 Other purposes 5,541,669 37,238 126,518 2,084,355 88,349 36,446 489,206 221,817 17,413 577
SUBTOTAL 64,900,817 433,977 1,260,463 26,227,712 964,796 543,108 3,619,172 2,961,846 315,551 12,705
6 Less: Value corrections due to asset
impairment not attributable to specific
transactions
154,690
7 TOTAL 64,746,127
Basque
Country
La Rioja
Ceuta and
Melilla
50. Subsequent events
No events having a significant effect on these consolidated financial statements have
occurred between the end of the reporting period and the date on which these statements
were approved.
138
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

APPENDIX I - Related Party Transactions
€000s
Related party income and expense
Significant Shareholders
Directors and Managers
2012
Persons, companies or
entities in the Group
Other related parties
Total
Expenses:
Financial expenses - 372 - 653 1,025
Management or collaboration contracts - - - - -
R&D transfers and licensing agreements - - - - -
Leases - - - - -
Receipt of services - - - - -
Purchase of assets (finished or in progress) - - - - -
Value corrections for bad and doubtful debts - - - - -
Dividends paid 19,968 21,577 - - 41,545
Other expenses - - - - -
19,968 21,949 - 653 42,570
Revenues:
Financial revenues - - - - -
Management or collaboration contracts - - - - -
R&D transfers and licensing agreements - - - - -
Dividends received - - - 20,961 20,961
Leases - - - - -
Provision of services - - - - -
Sale of assets (finished or in progress) - - - - -
Gains on cancellation or disposal of assets - - - - -
Other income - - - - -
- - - 20,961 20,961
139
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

APPENDIX I (cont.)
€000s
31/12/2012
Other Transactions
Significant Shareholders
Directors and Managers
Persons, companies or
entities in the Group
Other related parties
Total
Purchases of property, plant and equipment
and intangible and other assets
- - - - -
Financing, loan and capital contribution
agreements (lender)
- 26,332 - - 26,332
Finance leases - - - - -
Amortisation or cancellation of loans and
lease contracts (lessor)
- - - - -
Sales of tangible, intangible or other assets - - - - -
Financing, loan and capital contribution
agreements (borrower)
- - - 8,607 8,607
Finance leases (lessee) - - - - -
Amortisation or cancellation of loans and
financial lease contracts (lessee)
- - - - -
Guarantees issued 19,270 390 - 390 20,050
Guarantees received - - - - -
Commitments acquired - - - - -
Commitments/guarantees cancelled - - - - -
Dividends and other distributed profits - - - - -
Other transactions - 6,734 - - 6,734
140
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

APPENDIX I (cont.)
€000s
Related party income and expense
Significant Shareholders
Directors and Managers
2011
Persons, companies or
entities in the Group
Other related parties
Total
Expenses:
Financial expenses - 388 - 663 1,051
Management or collaboration contracts - - - - -
R&D transfers and licensing agreements - - - - -
Leases - - - - -
Receipt of services - - - - -
Purchase of assets (finished or in progress) - - - - -
Value corrections for bad and doubtful debts - - - - -
Dividends paid 20,482 16,472 - - 36,954
Other expenses - - - - -
20,482 16,860 - 663 38,005
Revenues: -
Financial revenues - - - - -
Management or collaboration contracts - - - - -
R&D transfers and licensing agreements - - - - -
Dividends received - - - 12,678 12,678
Leases - - - - -
Provision of services - - - - -
Sale of assets (finished or in progress) - - - - -
Gains on cancellation or disposal of assets - - - - -
Other income - - - - -
- - - 12,678 12,678
141
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

APPENDIX I (cont.)
€000s
Other Transactions
Significant Shareholders
Directors and Managers
31/12/2011
Persons, companies or
entities in the Group
Other related parties
Total
Purchases of property, plant and equipment and
intangible and other assets
- - - - -
Financing, loan and capital contribution agreements
(lender)
- 26,023 - - 26,023
Financial lease contracts (lessor) - - - - -
Amortisation or cancellation of loans and lease
contracts (lessor)
- - - - -
Sales of tangible, intangible or other assets - - - - -
Financing, loan and capital contribution agreements
(borrower)
- - - 23,002 23,002
Finance leases (lessee) - - - - -
Amortisation or cancellation of loans and lease
contracts (lessee)
- - - - -
Guarantees issued 19,734 390 - 390 20,514
Guarantees received - - - - -
Commitments acquired - - - - -
Commitments/guarantees cancelled - - - - -
Dividends and other distributed profits - - - - -
Other transactions - 8,002 - 83 8,085
142
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

APPENDIX II - Segmented Information
2012 Commercial Banking Corporate Banking LDA Other Businesses Total
NET INTEREST INCOME 271,403 400,914 40,825 (52,887) 660,255
Return on other equity instruments - - 2,190 9,601 11,791
Results of entities accounted for using
the equity method - - - 17,677 17,677
Fees and Commissions 128,472 108,877 (144) (33,365) 203,840
Results from financial transactions and
exchange differences 20,948 17,347 727 106,108 145,130
Other operating products/expenses (33,865) (2,405) 266,043 (14,425) 215,348
GROSS INCOME 386,958 524,733 309,641 32,709 1,254,041
Transformation costs 171,629 103,056 187,296 202,888 664,869
Losses from asset impairment 98,547 217,376 - 103,105 419,028
Provisions - - - (21) (21)
OPERATING PROFIT/(LOSS) 116,782 204,301 122,345 (273,305) 170,123
Other gains (net) 28,164 28,932 848 (42,000) 15,944
GROSS RESULT 88,618 175,369 121,497 (231,305) 154,179
Average assets for the segment 27,614,931 17,064,133 1,118,097 - 45,797,161
Average liabilities for the segment 15,788,701 8,740,387 732,626 - 25,261,714
Average off-balance sheet resources 6,444,609 638,942 - - 7,083,551
- -
Costs incurred in acquiring assets 4,986 3,009 - - 7,995
- -
Segment-to-segment net turnover (94,749) (47,099) - 141,848 -
Services provided 21,024 10,339 - (31,363) -
Services received 115,772 57,439 - (173,211) -
143
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

APPENDIX II (cont.)
2011 Commercial Banking Corporate Banking LDA Other Businesses Total
NET INTEREST INCOME 259,794 309,499 39,597 (66,215) 542,675
Return on other equity instruments - - - 16,491 16,491
Results for institutions valued
according to the equity method - - (71) 14,746 14,675
Fees and Commissions 130,680 98,366 318 (30,481) 198,883
Results from financial operations
and exchange differences 19,710 16,787 730 60,613 97,840
Other operating products/expenses 13,378 10,243 232,242 (21,947) 233,916
GROSS INCOME 423,562 434,895 272,816 (26,793) 1,104,480
Transformation costs 187,564 108,866 191,338 157,151 644,919
Losses from asset impairment 35,645 104,341 - 18,243 158,229
Provisions - - - 28,175 28,175
OPERATING PROFIT/(LOSS) 200,353 221,688 81,478 (230,362) 273,157
Other gains (net) 37,437 19,145 426 (23,999) 33,009
GROSS RESULT 162,916 202,543 81,052 (206,363) 240,148
Average assets for the segment 29,304,315 15,482,770 1,078,736 - 45,865,821
Average liabilities for the segment 13,645,268 7,849,164 738,556 - 22,232,988
Average off-balance sheet resources 6,069,759 724,787 - - 6,794,546
Costs incurred in acquiring assets 5,063 3,088 - - 8,151
Segment-to-segment net turnover (97,623) (48,469) - 146,092 -
Services provided 25,557 11,998 - (37,555) -
Services received 123,180 60,467 - (183,647) -
144
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

APPENDIX II (cont.)
€000s
2012 Ordinary income Profit (loss) before tax Average total assets
Andalusia 63,070 (13,913) 5,349,851
Balearic Islands 13,036 660 1,108,369
Castilla La Mancha-Extremadura 18,026 3,593 1,406,792
Catalonia 58,065 (3,048) 5,527,076
Canary Islands 23,299 (5,730) 1,775,695
Levante (Eastern Spain) 61,433 (95,395) 5,132,689
Madrid Corporate Banking 96,965 101,333 3,938,827
Madrid - East 33,944 (288) 4,048,957
Madrid - West 61,297 9,407 6,485,860
Navarre - Aragon - Rioja 39,546 (4,126) 2,383,660
North-Western Spain 45,907 (11,247) 3,328,657
Northern Spain 47,215 18,818 3,230,225
Remote networks 3,632 2,369 956,599
Consumer financing 49,211 28,135 323,272
Other business 45,609 123,611
Total 660,255 154,179 44,996,529
145
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

APPENDIX II (cont.)
2011 Ordinary income Profit (loss) before tax Average total assets
Andalusia 54,921 14,275 5,359,827
Balearic Islands 9,527 3,169 1,113,628
Castilla La Mancha-Extremadura 14,671 4,749 1,409,877
Catalonia 49,462 13,393 5,467,321
Las Palmas 11,631 2,717 1,086,053
Levante (Eastern Spain) 57,205 7,363 5,184,876
Madrid Corporate Banking 56,318 62,565 3,024,134
Madrid - East 32,839 13,254 4,146,732
Madrid - West 57,797 37,546 6,501,870
Navarre - Aragon - Rioja 32,114 14,138 2,331,222
North-Western Spain 39,876 14,041 3,381,548
Northern Spain 41,086 27,701 3,278,547
Tenerife 9,869 4,506 767,691
Remote networks 4,758 5,123 1,032,746
Consumer financing 45,034 13,585 325,737
Other business 25,567 2,023
Total 542,675 240,148 44,411,809
146
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

ANNEX III
Financial Statements of Bankinter, S.A. as at 31 December 2012 and 2011
BALANCE SHEETS AS AT 31 DECEMBER 2012 AND 2011
(€000s)
ASSETS 31/12/2012 31/12/2011 (*) LIABILITIES AND EQUITY 31/12/2012 31/12/2011 (*)
CASH AND BALANCES WITH CENTRAL BANKS 665,364 412,791 LIABILITIES:
FINANCIAL ASSETS HELD FOR TRADING: 1,791,953 2,353,904
FINANCIAL ASSETS HELD FOR TRADING: 2,109,264 2,415,506 Trading derivatives 429,221 850,593
Debt instruments 1,391,681 1,768,879 Short positions in securities 1,362,732 1,503,311
Equity instruments 61,072 101,733 Other financial liabilities - -
Trading derivatives 656,511 544,894
Memorandum items: Loaned or advanced as collateral 1,391,681 1,768,879 OTHER FINANCIAL LIABILITIES AT FAIR VALUE
WITH CHANGES IN PROFIT AND LOSS: - -
OTHER FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS 39,860 31,377 Customer deposits - -
Equity instruments 39,860 31,377
Memorandum items: Loaned or advanced as collateral - - FINANCIAL LIABILITIES AT AMORTISED COST 56,458,746 54,892,745
- - Deposits from central banks 9,580,854 7,006,897
Deposits from credit institutions 4,012,079 3,278,006
FINANCIAL ASSETS AVAILABLE FOR SALE: 9,477,068 5,608,126 Customer deposits 31,819,731 30,644,630
Debt instruments 9,390,319 5,552,595 Marketable debt securities 9,714,894 12,341,848
Equity instruments 86,749 55,531 Subordinated liabilities 767,851 955,701
Memorandum items: Loaned or advanced as collateral 4,321,260 4,686,364 Other financial liabilities 563,337 665,663
LOANS AND RECEIVABLES: 44,975,315 47,312,980 MACRO-HEDGING ADJUSTMENTS TO FINANCIAL LIABILITIES - -
Deposits with credit institutions 1,119,745 1,167,570
Loans and advances to customers 43,772,699 46,145,410 HEDGING DERIVATIVES 43,100 68,677
Debt instruments 82,871 -
Memorandum items: Loaned or advanced as collateral - - LIABILITIES LINKED TO NON-CURRENT ASSETS HELD FOR SALE - -
HELD TO MATURITY INVESTMENTS 2,755,355 3,150,931 LIABILITIES UNDER INSURANCE CONTRACTS - -
Memorandum items: Loaned or advanced as collateral - 122,730 PROVISIONS: 47,587 61,336
Pension funds and similar obligations 2,811 5,245
ADJUSTMENTS TO FINANCIAL ASSETS BY MACRO-HEDGING 3,018 11,463 Allowances for taxes and other legal contingencies 38,024 -
Provisions for contingent risks and commitments 5,139 20,626
HEDGING DERIVATIVES 152,201 118,651 Other provisions 1,613 35,465
NON-CURRENT ASSETS HELD FOR SALE 33,216 36,214 TAX LIABILITIES 129,070 113,350
Current 60,319 54,615
INVESTMENTS 573,159 559,271 Deferred 68,751 58,735
Associates 8,422 3,412
Jointly controlled entities 162 162 OTHER LIABILITIES 107,555 121,567
Group Companies 564,575 555,697
TOTAL LIABILITIES 58,578,011 57,611,579
PENSION-LINKED INSURANCE AGREEMENTS 2,750 5,140
EQUITY:
REINSURANCE ASSETS - -
EQUITY: 2,841,229 2,710,008
TANGIBLE ASSETS: 366,400 385,722 Capital- 169,142 143,076
Property, plant and equipment 366,400 385,722 Registered 169,142 143,076
For internal use 337,151 354,175 Less- uncalled capital - -
Assigned on lease 29,249 31,547 Issue premium 1,118,186 737,079
Real estate investments - - Reserves 1,379,410 1,330,449
Memorandum item: acquired under finance lease - - Other equity instruments 72,633 404,812
Of compound financial instruments -
INTANGIBLE ASSETS: - - Other equity instruments 72,633 404,812
Goodwill - - Less - Treasury shares (225) -308
Other intangible assets - - Profit (loss) for the year 148,208 153,416
Less - Dividends and remunerations (46,125) -58,516
TAX ASSETS: 260,047 236,711
Current 108,845 71,000 VALUATION ADJUSTMENTS: 20,586 -16,650
Deferred 151,202 165,711 Financial assets available for sale 20,377 -16,856
Exchange differences 209 206
OTHER ASSETS 26,809 20,054
TOTAL ASSETS 61,439,826 60,304,937 TOTAL LIABILITIES AND EQUITY 61,439,826 60,304,937
MEMORANDUM ITEMS
CONTINGENT RISKS 6,580,585 4,163,136
CONTINGENT COMMITMENTS 10,188,675 8,220,466
147
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

APPENDIX III (Continued).
INCOME STATEMENT FOR THE YEARS ENDED 31 December 2012 AND 2011 (€000s)
(Debit) Credit
2012 2011 (*)
INTEREST AND SIMILAR INCOME 1,667,728 1,578,754
INTEREST EXPENSE AND SIMILAR CHARGES (1,179,590) (1,165,778)
NET INTEREST INCOME 488,138 412,976
INCOME FROM EQUITY INSTRUMENTS 38,485 72,445
FEES AND COMMISSIONS INCOME 246,994 238,991
FEES AND COMMISSIONS EXPENSE (71,709) (70,763)
GAINS / LOSSES ON FINANCIAL ASSETS AND LIABILITIES: 155,457 86,188
Held for trading 86,567 42,319
Other financial assets at fair value through profit and loss account (1,952) 97
Financial instruments not measured at fair value through profit and loss account 71,449 42,604
Other (607) 1,168
EXCHANGE DIFFERENCES (net) 40,312 38,678
OTHER OPERATING INCOME: 30,862 31,580
Other operating income 30,862 31,580
OTHER OPERATING EXPENSES: (77,228) (26,050)
Other operating expenses (77,228) (26,050)
GROSS INCOME 851,311 784,045
ADMINISTRATIVE COSTS: (428,610) (413,896)
Personnel expenses (219,140) (193,581)
Other general administrative expenses (209,470) (220,315)
DEPRECIATION AND AMORTISATION (28,004) (26,064)
PROVISIONS (NET) 15,078 (28,380)
IMPAIRMENT LOSSES ON FINANCIAL ASSETS (NET): (253,714) (162,679)
Loans and receivables (251,646) (161,623)
Other financial instruments not measured at fair value through profit and loss account (2,068) (1,056)
PROFIT FROM OPERATIONS 156,061 153,026
IMPAIRMENT LOSSES ON OTHER ASSETS (net): - 3,406
Goodwill and other intangible assets - -
Other assets - 3,406
GAINS / (LOSSES) ON DERECOGNITION OF ASSETS NOT CLASSIFIED AS
NON-CURRENT ASSETS HELD FOR SALE 38,130 30,647
GAINS / LOSSES ON NON-CURRENT ASSETS HELD FOR SALE NOT CLASSIFIED AS DISCONTINUED OPERATIONS (6,233) 188
PROFIT BEFORE TAX 187,958 187,267
INCOME TAX (39,750) (33,851)
PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS 148,208 153,416
PROFIT (LOSS) FROM DISCONTINUED OPERATIONS (net) - -
RESULT FOR THE FINANCIAL YEAR 148,208 153,416
EARNINGS PER SHARE:
Basic earnings (euros) 0.28 0.32
Diluted earnings (euros) 0.27 0.29
148
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

APPENDIX III (Continued)
COMPREHENSIVE STATEMENTS OF INCOME FOR THE YEARS ENDED 31 December 2012 AND 2011 (€000s)
Financial
year 2011
2012 (*)
RESULT FOR THE FINANCIAL YEAR 148,208 153,416
OTHER COMPREHENSIVE INCOME 37,236 6,732
Financial assets available for sale 53,190 9,610
Gains (losses) on valuation 78,655 15,112
Amounts transferred to profit and loss (25,465) (5,502)
Other reclassifications - -
Cash flow hedging - -
Gains (losses) on valuation - -
Amounts transferred to profit and loss - -
Amounts transferred to the initial value of hedged items - -
Other reclassifications - -
Hedging of net investments in foreign operations - -
Gains (losses) on valuation - -
Amounts transferred to profit and loss - -
Other reclassifications - -
Exchange differences 4 7
Gains (losses) on valuation 4 71
Amounts transferred to profit and loss - (64)
Other reclassifications - -
Non-current assets for sale - -
Gains (losses) on valuation - -
Amounts transferred to profit and loss - -
Other reclassifications - -
Actuarial gains (losses) on pension plans - -
Statement of comprehensive income - -
Income tax (15,958) (2,885)
TOTAL COMPREHENSIVE INCOME 185,444 160,148
149
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

APPENDIX III (Continued)
COMPREHENSIVE STATEMENTS OF CHANGES IN CONSOLIDATED EQUITY FOR THE YEARS ENDED 31 DECEMBER 2012 AND 2011 (€000s)
Equity
Capital Issue premium Reserves
Other equity
instruments
Less - Treasury
shares
Profit (loss) for
the year
Less - Dividends
and
remunerations
Total Equity
Valuation adjustments
Total
CLOSING BALANCE AT 31 December 2011 143,076 737,079 1,330,449 404,812 (308) 153,416 (58,516) 2,710,008 (16,650) 2,693,358
Adjustments due to changes in accounting criteria
Adjustments due to errors
ADJUSTED OPENING BALANCE 143,076 737,079 1,330,449 404,812 (308) 153,416 (58,516) 2,710,008 (16,650) 2,693,358
Total comprehensive income - - - - - 148,208 - 148,208 37,236 185,444
Other changes in equity:
26,066 381,107
48,961 (332,179) 83 (153,416) 12,391 (16,987) - (16,987)
Capital increases 26,066 381,107
- (332,179) - - - 74,994 - 74,994
Capital reductions - - - - - - - - - -
Conversion of financial liabilities into capital - - - - - - - - - -
Increases in other equity instruments - - - - - - - - - -
Reclassification of financial liabilities to other equity instruments - - - - - - - - - -
Reclassification of other equity instruments to financial liabilities - - - - - - - - - -
Distribution of dividends / Shareholder remuneration - - - - - - (64,496) (64,496) - (64,496)
Transactions with own equity instruments (net) - - (185) - 83 - - (102) - (102)
Transfer between net worth entries - - 76,529 - - (153,416) 76,887 - - -
Increases (reductions) due to business combinations - - - - - - - - - -
Payments with equity instruments - - (27,383) - - - - (27,383) - (27,383)
Other increases (reductions) in equity - - - - - - - - - -
CLOSING BALANCE AT 31 December 2012 169,142 1,118,186 1,379,410 72,633 (225) 148,208 (46,125) 2,841,229 20,586 2,861,815
150
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

APPENDIX III (Continued).
Equity
Capital Issue premium Reserves
Other equity
instruments
Less - Treasury
shares
Profit (loss) for
the year
Less -
Dividends and
remunerations
Total Equity
Valuation
adjustments
Total
CLOSING BALANCE AT 31 DECEMBER 2010 142,034 737,079 1,341,827 - - 77,131 (74,512) 2,223,559 (23,382) 2,200,177
Adjustments due to changes in accounting criteria
Adjustments due to errors
ADJUSTED OPENING BALANCE 142,034 737,079 1,341,827 - - 77,131 (74,512) 2,223,559 (23,382) 2,200,177
Total comprehensive income - - - - - 153,416 - 153,416 6,732 160,148
Other changes in equity:
1,042
(11,378) 404,812 (308) (77,131) 15,996 333,033 - 333,033
Capital increases 1,042
(1,042) - - - - -
Capital reductions - - - - - - - - - -
Conversion of financial liabilities into capital - - - 175,000 - - - 175,000 - 175,000
Increases in other equity instruments - - - 229,812 - - - 229,812 - 229,812
Reclassification of financial liabilities to other equity instruments - - - - - - - - - -
Reclassification of other equity instruments to financial liabilities - - - - - - - - - -
Distribution of dividends / Shareholder remuneration - - - - - - (58,516) (58,516) - (58,516)
Transactions with own equity instruments (net) - - (184) - (308) - - (492) - (492)
Transfer between net worth entries - - 2,619 - - (77,131) 74,512 - - -
Increases (reductions) due to business combinations - - - - - - - - - -
Payments with equity instruments - - (12,771) - - - - (12,771) - (12,771)
Other increases (reductions) in equity - - - - - - - - - -
CLOSING BALANCE AT 31 December 2011 143,076 737,079 1,330,449 404,812 (308) 153,416 (58,516) 2,710,008 (16,650) 2,693,358
151
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

APPENDIX III (Continued).
STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED 31 DECEMBER 2012 AND 2011
(€000s)
2012 Financial year 2011 (*)
NET CASH FLOWS FROM OPERATIONS (144,197) 234,285
Profit (loss) for the year 148,208 153,416
Adjustments to obtain cash flow from operating activities 283,909 256,861
Other adjustments 255,905 230,797
Depreciation and Amortisation 28,004 26,064
Net increase/decrease in operating assets (1,480,458) (4,448,235)
Held for trading 306,242 (539,672)
Other financial assets at fair value through profit or loss (8,483) 4,350
Financial assets available for sale (3,817,819) (851,834)
Loans and receivables 2,078,572 (3,070,098)
Other operating assets (38,970) 9,019
Net increase/decrease in operating liabilities 839,602 4,237,850
Held for trading (561,951) 418,219
Other financial assets at fair value through profit or loss - (88,745)
Financial liabilities at amortised cost 1,412,980 3,857,920
Other operating liabilities (11,427) 50,456
Corporation tax collections/payments 64,542 34,393
NET CASH FLOWS FROM INVESTING ACTIVITIES: 405,926 23,259
Payments (41,433) (99,200)
Tangible assets (11,794) (64,462)
Intangible assets (8,062) (8,062)
Investments (21,577) (26,676)
Non-current assets held for sale and associated liabilities - -
Held to maturity investments - -
Collections 447,359 122,459
Tangible assets 1,531 26,689
Intangible assets - -
Investments 36,232 2,100
Subsidiaries and other business units 5,028
Non-current assets held for sale 19,488
Held to maturity investments 390,108 88,642
NET CASH FLOWS FROM FINANCING ACTIVITIES 2,794 170,968
Payments (73,921) (63,669)
Dividends (72,160) (58,352)
Subordinated liabilities - -
Amortisation of equity instruments - -
Acquisition of own shares (capital contributions) (other than savings banks) (1,761) (5,317)
Other payments linked to financing activities - -
Collections 76,715 234,637
Subordinated liabilities - -
Issuance of equity instruments 74,993 229,812
Disposal of own shares/capital contributions (other than savings banks) 1,722 4,825
Other inflows linked to financing activities -
EFFECT OF EXCHANGE-RATE VARIATIONS - -
EFFECT OF CHANGES IN CASH AND CASH EQUIVALENTS 264,523 428,512
CASH AND CASH EQUIVALENTS AT START OF PERIOD 624,907 196,395
CASH AND CASH EQUIVALENTS AT END OF PERIOD 889,430 624,907
MEMORANDUM ITEMS:
BREAKDOWN OF CASH AND CASH EQUIVALENTS
Cash 120,833 114,747
Balances equivalent to cash at central banks 544,531 298,044
Other financial assets 224,066 212,116
Total cash and cash equivalents at end of period 889,430 624,907
152
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

ANNEX IV Individualised information on certain issues, buybacks or reimbursements of debt securities
Details of the Issuing Institution
Name Relationship with the Group Country
Credit rating
of Issuer or
Issue ISIN code Type of Security
Bankinter Empresas
1 FTA Subsidiary SPAIN A3 ES0313402010
Bankinter Empresas
1 FTA Subsidiary SPAIN Baa3 ES0313402028
Securitisation
bonds
Securitisation
bonds
Bankinter S.A. Parent company SPAIN Aaa/AA+ ES0313679450 Backed senior
Bankinter S.A. Parent company SPAIN A1/A ES0313679484 Senior debt
Bankinter S.A. Parent company SPAIN A1/A ES0313679484 Senior debt
Bankinter S.A. Parent company SPAIN Aa3/A ES0313679443 Senior debt
Bankinter S.A. Parent company SPAIN NA ES0313679575
Bankinter S.A. Parent company SPAIN NA ES0313679575
Bankinter Emisiones,
S.A., a single
shareholder company Subsidiary SPAIN B2/CCC+ ES0113549002
Bankinter, S.A. Parent company SPAIN Ba1/BB- ES0313679625 Senior Debt
Bankinter, S.A. Parent company SPAIN Ba2/ ES0213679022
Type of
Transaction
Date of
transaction
Details of Issues carried out in 2012 (a)
Amount of
the Issue,
Buy-back
or Reimbursement
(€000s)
Outstanding
balance
as at 31-
12-2012
(thousands
of euros)
Depreciation and
Amortisation 18/06/2012 30,600 -
Depreciation and
Amortisation 18/06/2012 71,000 -
Interest Rate
EURIBOR 3m +
0.50%
EURIBOR 3m +
0.70%
Depreciation and
Amortisation 24/02/2012 744,700 - 3.00%
Partial
amortisation 29/03/2012 138,000 762,000
Partial
amortisation 26/06/2012 263,950 498,500
Depreciation and
Amortisation 21/06/2012 856,000 -
EURIBOR 3m +
0.95%
EURIBOR 3m +
0.95%
EURIBOR 3m +
0.14%
Convertible
Subordinated
Bonds Issue 29/03/2012 162,000 12,831 7.00%
Convertible
Subordinated
Bonds Issue 29/03/2012 169,856 59,800 7.00%
Series 1
Preferred Shares Issue 30/08/2012 168,164 60,844
Subordinated
Debt
Bankinter, S.A. Parent company SPAIN A3/A ES0313679079 Mortgage bond
Bankinter S.A. Parent company SPAIN A3/A ES0313679111 Mortgage bond
Bankinter S.A. Parent company SPAIN A3/A ES0413679095 Mortgage bond
Bankinter S.A. Parent company SPAIN A3/A ES0413679145 Mortgage bond
3-mth EURIBOR
+3.75%, min. 4% -
max 7%
Market on
which traded
Type of
Guarantee
Granted
AIAF
secondary
fixed-income Mortgage
market portfolio
AIAF
secondary
fixed-income Mortgage
market portfolio
AIAF
secondary
fixed-income
market -
AIAF
secondary
fixed-income
market -
AIAF
secondary
fixed-income
market -
AIAF
secondary
fixed-income
market -
AIAF
secondary
fixed-income
market -
AIAF
secondary
fixed-income
market -
AIAF
secondary
fixed-income
market -
AIAF
secondary
Depreciation and
Amortisation 13/07/2012 100,000 100,000
fixed-income
EURIBOR 3m+1.80% market -
Depreciation and
Amortisation 18/12/2012 20,370 - 5.70% AIA -
Depreciation and
Amortisation
Parcial 06/11/2012 600,000 1,400,000 2.625%
Depreciation and
Amortisation
Parcial 06/11/2012 550,000 550,000 4.875%
Depreciation and
Amortisation
Parcial 06/11/2012 100,000 650,000 3.75%
Depreciation and
Amortisation 06/11/2012 1,500,000 - 4.25%
AIAF
secondary
fixed-income
market -
AIAF
secondary
fixed-income
market -
AIAF
secondary
fixed-income
market -
AIAF
secondary
fixed-income
market -
Risks that the Group
would assume in
addition to the
guarantee
Credit Enhancement
(57.52%)
Credit Enhancement
(39.43%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
153
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

APPENDIX IV (cont.)
Name
Details of the Issuing Institution
Relationship with the
Group
Country
Credit rating
of Issuer or
Issue ISIN code Type of Security
Type of Transaction
Date of transaction
Details of Issues carried out in 2012 (a)
Amount of
the Issue,
Buy-back
or Reimbursement
(€000s)
Outstanding
balance
as at 31-
12-2012
(thousands
of euros)
Interest Rate
Bankinter S.A. Parent company SPAIN A3/A ES0413679194 Mortgage bond Issue 08/08/2012 100,000 100,000 EURIBOR 3m+4.90%
Bankinter S.A. Parent company SPAIN A3/A ES0413679202 Mortgage bond Issue 30/10/2012 500,000 500,000 3.875%
Bankinter S.A. Parent company SPAIN A3/A ES0413679210 Mortgage bond Issue 06/11/2012 1,250,000 1,250,000 EURIBOR 3m+4.00%
Bankinter S.A. Parent company SPAIN A3/A ES0413679228 Mortgage bond Issue 16/11/2012 600,000 600,000 EURIBOR 3m+4.00%
Bankinter S.A. Parent company SPAIN A3/A ES0413679236 Mortgage bond Issue 16/11/2012 700,000 700,000 EURIBOR 3m+4.00%
Bankinter S.A. Parent company SPAIN A2/BBB+ ES0313679807 Senior Debt
Depreciation and
Amortisation 10/11/2012 40,000 -
Average 3 mth EURIBOR
+ 1.8%
Market on
which traded
AIAF secondary
fixed-income
market -
AIAF secondary
fixed-income
market -
AIAF secondary
fixed-income
market -
AIAF secondary
fixed-income
market -
AIAF secondary
fixed-income
market -
AIAF secondary
fixed-income
market -
Type of Guarantee
Granted
Risks that the Group
would assume in
addition to the guarantee
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit enhancement
(0%)
Bankinter 14FTA Subsidiary SPAIN Aaa/AAA ES0313271001
Bankinter 14FTA Subsidiary SPAIN A3/A+ ES0313271019
Bankinter 14FTA Subsidiary SPAIN A3/A+ ES0313271027
Bankinter 14FTA Subsidiary SPAIN A3/A+ ES0313271035
Bankinter 14FTA Subsidiary SPAIN A3/A- ES0313271043
Bankinter 14FTA Subsidiary SPAIN Ba2/BB- ES0313271050
Bankinter 14FTA Subsidiary SPAIN C/D ES0313271068
Asset securitisation
bonds
Asset securitisation
bonds
Asset securitisation
bonds
Asset securitisation
bonds
Asset securitisation
bonds
Asset securitisation
bonds
Asset securitisation
bonds
Bankinter S.A. Parent company SPAIN Ba1/BB ES0313679765 Senior Debt
Bankinter S.A. Parent company SPAIN Ba1/BB ES0313679765 Senior Debt
Depreciation and
Amortisation 17/09/2012 - -
Depreciation and
Amortisation
17/09/2012 430,783 -
Depreciation and
Amortisation
17/09/2012 172,700 -
Depreciation and
Amortisation
17/09/2012 14,100 -
Depreciation and
Amortisation
17/09/2012 14,200 -
Depreciation and
Amortisation
17/09/2012 9,500 -
Depreciation and
Amortisation
17/09/2012 14,200 -
Depreciation and
Amortisation
Depreciation and
Amortisation
3 mth EURIBOR +
0.070%
3 mth EURIBOR +
0.150%
3 mth EURIBOR +
+0.230%
3 mth EURIBOR +
+0.300%
3 mth EURIBOR +
+0.400%
3 mth EURIBOR +
+2.500%
3 mth EURIBOR +
+3.900%
26/10/2012 900,000 - 4.625%
27/12/2012 500,000 - 4.625%
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market -
AIAF secondary
fixed-income
market -
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Credit enhancement
(10.10%)
Credit enhancement
(10.10%)
Credit enhancement
(10.10%)
Credit enhancement
(7.95%)
Credit enhancement
(5.78%)
Credit enhancement
(4.33%)
Credit enhancement
(2.17%)
Credit enhancement
(0%)
Credit enhancement
(0%)
154
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

APPENDIX IV (cont.)
Details of the Issuing Institution
Name Relationship with the Group Country
Credit rating of
Issuer or Issue ISIN code Type of Security
Type of Transaction
Details of Issues carried out in 2012 (a)
Date of transaction
Amount of
the Issue,
Buy-back
or Reimbursement
(€000s)
Outstanding
balance
as at
31-12-2012
(thousands
of euros)
Interest Rate
Bankinter S.A. Parent company SPAIN Aaa ES0413679160 Mortgage bond Issue 24/01/2012 1,200,000 1,200,000 4.675%
Bankinter S.A. Parent company SPAIN Aaa ES0413679152 Mortgage bond Issue 26/01/2012 200,000 200,000
EURIBOR 3m +
3.50%
Bankinter S.A. Controlling Company (*) SPAIN Aa2 ES0413679178 Mortgage bond Issue 22/03/2012 1,000,000 1,000,000 4.125%
Bankinter S.A. Controlling Company (*) SPAIN A1 ES0413679186 Mortgage bond Issue 11/06/2012 500,000 500,000
Bankinter S.A. Parent company SPAIN A3/BBB+ ES0213679139 Backed senior Issue 14/06/2012 280,000 280,000
Bankinter S.A. Parent company SPAIN A3/BBB+ ES0313679948 Backed senior Issue 14/06/2012 320,000 320,000
Bankinter S.A. Parent company SPAIN A2/A: ES0313679815 Backed senior Issue 24/02/2012 800,000 800,000
Bankinter S.A. Parent company SPAIN A2/BBB+ ES0313679807 Senior Debt Issue 10/02/2012 40,000 40,000
TDA 19 Parent company SPAIN Aaa/AAA Nominative Mortgage bond
Bankinter S.A. Parent company SPAIN Aaa/AA+ ES0313679476 Backed senior
Bankinter S.A. Parent company SPAIN Aaa/AA+ ES0313679468 Backed senior
Bankinter S.A. Parent company SPAIN Aaa/AA+ ES0313679450 Backed senior
Bankinter S.A. Parent company SPAIN Aaa/AAA ES0413679053 Mortgage bond
Bankinter 17FTA Subsidiary SPAIN A+/Aa1 ES0313582001
Bankinter 17FTA Subsidiary SPAIN A/Ba1 ES0313582019
Asset securitisation
bonds
Asset securitisation
bonds
EURIBOR 3m +
3.00%
EURIBOR 3m +
4.25%
EURIBOR 3m +
4.25%
EURIBOR 3m +
2.80%
Depreciation and
Amortisation 05/03/2012 300,000 - 2.25%
Depreciation and
Amortisation 15/06/2012 36,500,000 -
Market on
which traded
Type of
Guarantee
Granted
AIAF secondary
fixedincome
market portfolio
Mortgage
AIAF secondary
fixedincome
market portfolio
Mortgage
AIAF secondary
fixedincome
market portfolio
Mortgage
AIAF secondary
fixedincome
market portfolio
Mortgage
AIAF secondary
fixedincome
market -
AIAF secondary
fixedincome
market -
AIAF secondary
fixedincome
market -
AIAF secondary
fixed-
Average 3 mth
EURIBOR + 1.8% income market -
3 mth yen LI-
BOR + 0.62%
Depreciation and
Amortisation 15/06/2012 35,400,000 - 1.22%
Depreciation and
Amortisation 15/06/2012 744,700 - 3.00%
Depreciation and
Amortisation 15/06/2012 323,200 - 3.50%
Depreciation and
Amortisation 18/01/2012 720,497 -
Depreciation and
Amortisation 18/01/2012 34,000 -
EURIBOR 3m +
0.30%
EURIBOR 3m +
0.50%
AIAF secondary
fixedincome
market portfolio
Mortgage
AIAF secondary
fixedincome
market -
AIAF secondary
fixedincome
market -
AIAF secondary
fixedincome
market -
AIAF secondary
fixedincome
market portfolio
Mortgage
AIAF secondary
fixedincome
market portfolio
Mortgage
AIAF secondary
fixedincome
market
Mortgage
portfolio
Risks that the
Group would assume
in addition
to the guarantee
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(8.68%)
Credit Enhancement
(4.43%)
155
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

APPENDIX IV (cont.)
Details of the Issuing Institution
Name Relationship with the Group Country
Credit rating
of Issuer or
Issue ISIN code Type of Security
Bankinter 17FTA Subsidiary SPAIN BBB/Caa2 ES0313582027
Bankinter 15FTH Subsidiary SPAIN Aaa/A+ ES0313272017
Bankinter 15FTH Subsidiary SPAIN AAA/A+ ES0313272025
Bankinter 15FTH Subsidiary SPAIN Aa3/A+ ES0313272033
Bankinter 15FTH Subsidiary SPAIN Baa2/A- ES0313272041
Bankinter 15FTH Subsidiary SPAIN Ba3/BB ES0313272058
Bankinter 15FTH Subsidiary SPAIN C/D ES0313272066
Bankinter 18FTA Subsidiary SPAIN Aaa/AAA ES0313401004
Bankinter 18FTA Subsidiary SPAIN Aa3/A ES0313401012
Bankinter 18FTA Subsidiary SPAIN A2/BBB ES0313401020
Bankinter Leasing Subsidiary SPAIN A1 ES0314787005
Bankinter Leasing Subsidiary SPAIN Ba1 ES0314787013
Bankinter Leasing Subsidiary SPAIN Caa1 ES0314787021
Bankinter Empresas
1 FTA Subsidiary SPAIN Aa/AAA ES0313402002
Asset securitisation
bonds
Asset securitisation
bonds
Asset securitisation
bonds
Asset securitisation
bonds
Asset securitisation
bonds
Asset securitisation
bonds
Asset securitisation
bonds
Asset securitisation
bonds
Asset securitisation
bonds
Asset securitisation
bonds
Asset securitisation
bonds
Asset securitisation
bonds
Asset securitisation
bonds
Securitisation
bonds
Type of
ransaction
Details of Issues carried out in 2012 (a)
Date of
transaction
Amount of
the Issue,
Buy-back or
Reimbursement
(€000s)
Outstanding
balance as at
31-12-2012
(thousands
of euros)
Depreciation
and Amortisation
18/01/2012 13,500 -
Depreciation
and Amortisation
21/01/2012 691,626 -
Depreciation
and Amortisation
21/01/2012 345,000 -
Depreciation
and Amortisation
21/01/2012 15,800 -
Depreciation
and Amortisation
21/01/2012 15,800 -
Depreciation
and Amortisation
21/01/2012 15,000 -
Depreciation
and Amortisation
21/01/2012 25,500 -
Depreciation
and Amortisation
23/01/2012 1,159,675 -
Depreciation
and Amortisation
23/01/2012 65,300 -
Depreciation
and Amortisation
23/01/2012 30,000 -
Depreciation
and Amortisation
16/04/2012 70,914 -
Depreciation
and Amortisation
16/04/2012 21,400 -
Depreciation and
Amortisation 16/04/2012 12,000 -
Depreciation and
Amortisation 18/06/2012 290,949 -
Interest Rate
EURIBOR 3m +
0.70%
EURIBOR 3m +
0.18%
EURIBOR 3m +
0.27%
EURIBOR 3m +
0.35%
EURIBOR 3m +
0.45%
EURIBOR 3m +
2.65%
EURIBOR 3m +
3.90%
EURIBOR 3m +
0.30%
EURIBOR 3m +
0.50%
EURIBOR 3m +
0.70%
EURIBOR 3m +
0.30%
EURIBOR 3m +
0.50%
EURIBOR 3m +
0.80%
EURIBOR 3m +
0.30%
Market on
which traded
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
Type of
Guarantee
Granted
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Risks that the
Group would assume
in addition
to the guarantee
Credit Enhancement
(2.49%)
Credit Enhancement
(6.16%)
Credit Enhancement
(6.16%)
Credit Enhancement
(4.70%)
Credit Enhancement
(3.24%)
Credit Enhancement
(1.86%)
Credit Enhancement
(0%)
Credit Enhancement
(11.03%)
Credit Enhancement
(5.83%)
Credit Enhancement
(3.44%)
Credit Enhancement
(38.74%)
Credit Enhancement
(18.23%)
Credit Enhancement
(6.73%)
Credit Enhancement
(65.32%)
(a) In the case of securities in foreign currency, the relevant amounts have been converted into euros at the
closing exchange rate for the year.
156
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

APPENDIX IV (cont.)
Details of the Issuing Institution Details of Issues carried out in 2011 (a)
Name Relation to the Bank Country
Credit rating of
Issuer or Issue
ISIN code
Type of
Security
Bankinter TDA 19 Subsidiary SPAIN Aaa/AAA ES0315945008 Mortgage portfolio
Bankinter 20 FTA Subsidiary SPAIN Aaa/AA- ES0313438006 Mortgage portfolio
Bankinter 19 FTA Subsidiary SPAIN Aaa/AA- ES0313533004 Mortgage portfolio
Bankinter 19 FTA Subsidiary SPAIN A1 ES0313533012 Mortgage portfolio
Bankinter 19 FTA Subsidiary SPAIN Baa3 ES0313533020 Mortgage portfolio
Bankinter 16 FTA Subsidiary SPAIN Aaa/A+ ES0313480008 Mortgage portfolio
Bankinter 16 FTA Subsidiary SPAIN Aa2/A+ ES0313480016 Mortgage portfolio
Bankinter 16 FTA Subsidiary SPAIN A3/BBB ES0313480024 Mortgage portfolio
Bankinter 16 FTA Subsidiary SPAIN Ba2/BB ES0313480032 Mortgage portfolio
Rate
Transaction
Date of
Transaction
Amount of the
Issue, Buy-back
or Redemption
(€000s)
Outstanding
balance as at
31/12/2011
(€000s)
Type of
Rate
Depreciation
and Amortisation
04/05/2011 1,200,000 - 2.25%
Depreciation
and Amortisation
09/08/2011 1,531,954 - Eur 3m+0.30%
Depreciation
and Amortisation
20/06/2011 1,354,799 - Eur 3m+0.30%
Depreciation
and Amortisation
20/06/2011 20,700 - Eur 3m+0.50%
Depreciation
and Amortisation
20/06/2011 31,400 - Eur 3m+0.70%
Depreciation
and Amortisation
16/12/2011 1,431,066 - Eur 3m+0.30%
Depreciation
and Amortisation
16/12/2011 46,000 - Eur 3m+0.40%
Depreciation
and Amortisation
16/12/2011 38,000 - Eur 3m+0.50%
Depreciation
and Amortisation
16/12/2011 34,000 - Eur 3m+2.50%
Bankinter S.A. Parent company SPAIN A2/A: ES0313679625 Senior Debt Issue 13/07/2011 100,000 100,000 EURIBOR 3m+0.50%
Bankinter S.A. Parent company SPAIN A1/AA- ES0313679765 Senior Debt Issue 29/12/2011 1,400,000 1,400,000 4.625%
Bankinter S.A. Parent company SPAIN A2/A- ES0213679196 Subordinated Debt Issue 10/02/2011 47,250 47,250 6.375%
Bankinter S.A. Parent company SPAIN Aaa ES0413679111 Mortgage bond Issue 20/01/2011 500,000 500,000 4.875%
Bankinter S.A. Parent company SPAIN Aaa ES0413679103 Mortgage bond Issue 14/01/2011 20,000 20,000 3.90%
Bankinter S.A. Parent company SPAIN Aaa ES0413679061 Mortgage bond Issue 17/03/2011 400,000 400,000 3.25%
Bankinter S.A. Parent company SPAIN Aaa ES0413679079 Mortgage bond Issue 13/05/2011 600,000 600,000 2.625%
Market on
which traded
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
Type of Guarantee
Granted
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Mortgage
portfolio
Risks that the
Group would assume
in addition to
the guarantee
Credit Enhancement
(0%)
Credit enhancement
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
(b) In the case of securities in foreign currency, the relevant amounts have been converted into euros at the
closing exchange rate for the year.
157
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

APPENDIX IV (cont.)
(a) In the case of securities in foreign currency, the relevant amounts have been converted into euros at the
closing exchange rate for the year.
Details of the Issuing Institution Details of Issues carried out in 2011 (a)
Amount of the Outstanding
Issue, Buy-back or balance as at
Name Relation to the Bank Country
Credit rating of
Issuer or Issue ISIN code
Type of
Security
Rate
Transaction
Date of
Transaction
Redemption
(€000s)
31/12/2011
(€000s)
Bankinter S.A. Parent company SPAIN Aaa ES0413679111 Mortgage bond Issue 13/05/2011 600,000 600,000 4.875%
Bankinter S.A. Parent company SPAIN Aaa ES0413679129 Mortgage bond Issue 28/09/2011 1,000,000 1,000,000 4.25%
Bankinter S.A. Parent company SPAIN Aaa ES0413679137 Mortgage bond Issue 28/09/2011 10,000 10,000 4.25%
Bankinter S.A. Parent company SPAIN Aaa ES0413679145 Mortgage bond Issue 01/12/2011 1,500,000 1,500,000 4.25%
Bankinter S.A. Parent company SPAIN Aaa ES0413679129 Mortgage bond Issue 19/12/2011 1,000,000 1,000,000 4.25%
Depreciation
and Amortisation
Bankinter S.A. Parent company SPAIN A1/A- ES0213679139 Subordinated Debt
10/02/2011 42,200 - Eur3m + 0.50%
Depreciation
and Amortisation
Bankinter S.A. Parent company SPAIN A1/A- ES0213679147 Subordinated Debt
10/02/2011 11,000 - Eur3m + 0.80%
Depreciation
and Amortisation
Bankinter S.A. Parent company SPAIN A1/A- ES0213679170 Subordinated Debt
10/02/2011 600 - Eur3m + 0.32%
Depreciation
and Amortisation
Bankinter S.A. Parent company SPAIN Aaa/A+ ES0313679450 Senior Debt
08/06/2011 300,000 - 3.00%
Depreciation
and Amortisation
Bankinter S.A. Parent company SPAIN Aaa/A+ ES0313679450 Senior Debt
27/10/2011 130,500 - 3.00%
Depreciation
and Amortisation
Bankinter S.A. Parent company SPAIN Aaa/A+ ES0313679450 Senior Debt
15/11/2011 51,900 - 3.00%
Depreciation
and Amortisation
Bankinter S.A. Parent company SPAIN Aaa/A+ ES0313679450 Senior Debt
01/12/2011 127,800 - 3.00%
Depreciation
and Amortisation
Average EURIBOR
Bankinter S.A. Parent company SPAIN A1/A ES0313679518 Senior Debt
17/06/2011 100 -
3m +
1.1%
Bankinter S.A. Parent company SPAIN A1/A ES0313679450 Senior Debt
Bankinter S.A. Parent company SPAIN A1/A ES0313679526 Senior Debt
Depreciation
and Amortisation
19/09/2011 120,000 -
Depreciation
and Amortisation
19/09/2011 119,900 -
Type of
Rate
Average EURIBOR
3m + 1.1%
Average EURIBOR
3m + 1.1%
Bankinter S.A. Parent company SPAIN Aaa/AAA ES0413679012 Mortgage bond Redemption 14/04/2011 25,000 - Eur 6m + 0.30%
Bankinter S.A. Parent company SPAIN Aa3/A ES0313679435 Senior Debt Redemption 01/06/2011 1,000,000 - Eur3m + 0.125%
Bankinter S.A. Parent company SPAIN Aaa/AAA ES0413679046 Mortgage bond Redemption 28/09/2011 419,900 - 4.00%
Depreciation
and Amortisation
Bankinter S.A. Parent company SPAIN Aa3/A ES0313679443 Senior Debt
28/12/2011 100,000 - Eur3m + 0.14%
Depreciation
and Amortisation
EURIBOR 6m +
Bankinter 1 FTH Subsidiary SPAIN Aaa ES0313799001 Mortgage portfolio
26/04/2011 51,766,430,94 -
0.25%
Bankinter 1 FTH Subsidiary SPAIN A2 ES0313799019 Mortgage portfolio
Depreciation
and Amortisation
26/04/2011 6,000,000,66 -
EURIBOR 6m +
0.50%
Market on
which traded
AIAF secondary
fixed-income
market
Type of Guarantee
Granted
Mortgage portfolio
AIAF secondary
fixed-income Mortgage portfolio
market
AIAF secondary
fixed-income Mortgage portfolio
market
AIAF secondary
fixed-income Mortgage portfolio
market
AIAF secondary
fixed-income Mortgage portfolio
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income Mortgage portfolio
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income Mortgage portfolio
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
AIAF secondary
fixed-income
market
Mortgage portfolio
Mortgage portfolio
Risks that the
Group would assume
in addition
to the guarantee
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
Credit Enhancement
(0%)
158
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Bankinter Group Consolidated Annual Accounts 2012

Bankinter Group
Consolidated Management Report for the
Statements for the financial year
31 December 2012
1. Group’s Performance for the year
Company Activity
During the fourth quarter of 2012 the Group sold 40.10% of the share capital of Bankinter
Seguros Generales (BKSG) S.A. de Seguros y Reaseguros for €17.5 million.
During 2011 this company changed its name to the current one (from Bankinter Servicios
de Consultoría, S.A) and increased its share capital by €10 million. The Group subsequently
sold 10% of its share capital.
During 2012 Bankinter Seguros Generales S.A. de Seguros y Reaseguros obtained approval
from the Directorate General for Insurance to operate as an insurance company.
Additionally, in December 2012 Bankinter, S. A. reached an agreement with Dutch bank
Van Lanschot Bankiers N.V. on acquiring its Luxembourg subsidiary Van Lanschot Bankiers
(Luxembourg) S.A. This transaction will provide the Bankinter group with the necessary
infrastructure and banking licence to develop its private banking business model. The
execution of the agreement and therefore also the incorporation of this company into the
Group, is pending finalisation of the regulatory and supervisory procedures inherent in
this kind of transaction, and should be completed within the first quarter of 2013.
During 2012 Intermobiliaria, S.A. increased its share capital by €0.62 million.
The Bank’s equity holding in Mercavalor S.V., which is accounted for using the equity
method, increased by 5% in 2012.
During 2011 Canarias Excelencia en SIM, S.L., which had ceased trading, was wound up.
During 2011 Bankinter Capital Riesgo I Fondo de Capital increased its capital by €5 million.
Results
Bankinter’s net profit for the year ended 31 December 2012 was €124.65 million, on pretax
profit of €154.18 million. These profit figures are respectively 31.22% and 35.80%
down on those posted for 2011. However, it should be borne in mind that this past year
the Bank made the significant additions to provisions required by Royal Decree Laws
2/2012 and 18/2012, making the additions in full in the quarters in which the Laws were
proclaimed, which had an impact on net profit of €124.3 million. Without this impact, the
Bank's net profit for the year would have been €249 million.
The Group also continues to show extraordinary quality in terms of its assets, its NPL
figures and its solvency, as was demonstrated by the stress tests to which the sector was
subjected in September and which gave Bankinter a capital surplus of €399 million in the
most adverse scenario envisaged.
The quality of the Group’s assets continues to be much better than that of its peers, with
an NPL ratio of 4.28%, as against the 11.38% shown by the sector as a whole in November
and with coverage of 48.31%. In this respect the Bank’s ratio of troubled assets (at-risk
exposure + substandard risk + foreclosed assets as a percentage of total computable risk)
is much lower than those of other banks, with a total of €2.74 billion, giving a ratio of 5.9%
as opposed to 15.9% at comparable banks.
The Bankinter Group has a very small and well diversified portfolio of repossessed assets,
very little of it represented by land, with a gross amount valued at €611.66 million and
coverage of 37.69% of the book value. We would also point out that the Bank maintains a
good rate of turnover, with sales of these assets representing 53.1% of the gross amount
of all newly repossessed assets during the year.
As regards solvency, the Group has significantly strengthened its capital ratios, thanks in
part to the new share issues carried out in support of the early conversion of subordinated
notes and preferred shares. As a result, the Bank's EBA capital ratio at the end of 2012
stood at 10.22%, compared with 7.28% at the end of 2011.
We would also point out that 2012 maturities totalling €2.5 billion were met with ease,
thanks to new medium- and long-term issues carried out during the year for a total of
€1.8 billion, and to a €3.2 billion reduction in the liquidity gap. As regards wholesale
financing maturities for the next three years, these are totally covered by the bank's €7.9
billion of liquid assets.
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In parallel, the bank continues to strengthen its retail financing, as can be seen from
the trend in the ratio of deposits to lending, which at the end of 2012 stood at 66.9% as
against 58.4% at the end of 2011.
The Bankinter Group’s interest margin for the year amounted to €660.25 million, which
was 21.67% up on 2011, this being one of the main drivers of the result. This was in spite
of tighter margins brought about by the interest rate environment in the fourth quarter,
the effect of which will be gradually offset in 2013 thanks to the new restrictions on
remuneration of deposits. Gross margin for the year was €1,254.04 million, up by 13.54%.
The margin before provisions, at €608.59 million, was up by 32.43% on 2011.
As regards the Group’s Balance Sheet, total assets ended the year at €5817 billion (2.23%
less than at the end of December 2011). Total customer resources controlled by the
Bank stood at €44,328.14 million at year-end, 3.05% less than one year before, although
retail resources (sight accounts, deposits and promissory notes) grew by 10.57% and
resources managed off-balance sheet (investment funds, pensions and discretionary
asset management) were up by 7.14%.
Lending to customers reached €42,059.72 million, 1.28% less than at year-end 2011.
However, if we turn the spotlight onto lending to businesses, and more specifically the
Corporate Banking segment, lending increased by 20.3%, reaching €10.2 billion, as a
result of the changing mix in the Bank's lending portfolio towards greater weighting of
non-mortgage lending and consequently towards improved margins.
With regard to customer business, the steady pace at which new customers are won was
maintained throughout the year, with a total of 130,600 new customers being acquired,
15% more than in the previous year. Of these, more than 34,000 belong to high income
segments, a particularly important group in the Bank's strategy.
In this segment, Bankinter has set in train a major shift in its business model, towards a
format geared more to asset management and specialist advisory services to customers,
with more sophisticated products and services, larger and more highly trained teams of
account executives and a new segmentation into just two divisions: private banking and
personal banking. The acquisition of the Luxembourg subsidiary of the Dutch bank Van
Lanschot complements this new strategy by enhancing the value proposition from a more
global perspective.
A similar growth trend is also shown by the insurance business, to which Bankinter pays
particular strategic attention and which continues to make a notable contribution to
Group results.
Thus, the result achieved by Bankinter Seguros de Vida (Life Insurance) in 2012 stands
at €17.8 million, up 20.3% on 2011.
Línea Directa for its part showed sustained growth in a difficult environment, reaching
1.74 million motor policies at the end of the year, an increase of 2.1%. In relative terms,
the increase in the number of home insurance policies was much greater: 31.5%, reaching
a total of 219,000 policies at the end of 2012.
Bankinter maintains service quality as the fundamental basis of its customer business.
According to the results of studies carried out by an independent firm based on the
opinions of the customers themselves, Bankinter extended the lead that it has traditionally
maintained over the rest of the sector in terms of service quality. Thus the Group’s Net
Satisfaction Index (NSI) for private individuals as at 31 December 2012 stood at 75.1,
which is 8.4 points ahead of the market average, compared with a 4.4 point lead at the
end of 2011.
CORPORATE BANKING
Small and Medium Enterprise Segment
During 2012 the Group continued to pursue its policy of growth in the Small and Medium
Enterprises (SMEs) segment, not only by financing projects but also increasing the
degree of relations with these kinds of customers in their day-to-day operations, with
the aim of offering a comprehensive service providing these customers with access to the
technological advantages and efficient applications offered by the Bank in their payment
and collection processes.
This strategy was reflected in the profit and loss account in the form of a 3.6% increase
in gross revenues in the SME segment relative to 2011. All these developments are also
the consequence of increased attraction of regular customer resources (15% more than
in 2011), and appropriate investment management, although volumes for the latter
were slightly down on the previous year as a result of reduced investor activity in these
segments.
The balance sheet for the SME business is still based on very solid credit risk assessment,
with high-quality and diversified investments. This balance sheet has a high percentage
of financing granted against tangible security. At the same time the Bank’s strategy of
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maintaining a low concentration in the sectors most affected by the economic downturn
continues.
In 2012, the Group’s value proposition for this customer segment, which is differentiated
and highly competitive, continued to focus on global customer management, service
quality and multi-channelling.
Millions 2011 2012 % Diff.
Average resources 3,137.36 3,606.81 14.93%
Average loans and receivables 6,824.97 6,754.32 - 1.04%
Ordinary income 204.79 212.08 3.56%
NSI (points) 71.9 74.37 3.31%
Corporate Banking Segment
The economic situation deteriorated further during 2012, with international investors
continuing to lose confidence, leading to a tense situation in the markets, with the
consequent effects on liquidity and constantly rising risk premiums for the countries
involved.
As a result of all the foregoing factors, Bankinter posted EBITDA of €326.39 million for
the year.
The value proposition to customers in this segment continues to be based on constant
improvements in the quality of service, with overall satisfaction indices well in excess
of those of our competitors, the cumulative NSI ending December at 80.85 points, 0.86
points higher than in December 2011.
In its Corporate Banking segment, Bankinter continues to push its multi-channel business
model, offering products and services in accordance with the activity of these types of
customers, and with a constant focus on innovation, especially via the companies’ website,
one of the most highly regarded in the whole financial sector and through which 78% of
all transactions are channelled, ensuring that customers receive solutions that are quick
and efficient in their day-to-day operations.
In this difficult environment we succeeded in maintaining the main business management
ratios in Corporate Banking at very high levels, with a gross ROA of 3.4% and an excellent
cost/income ratio of 15.5%. To summarise, Corporate Banking continued to focus on quality
and innovation, supporting companies and improving the main business management
ratios.
In Spain’s case and as regards the Spanish business sector, economic activity continued to
decline, while the unemployment rate rose. Companies saw business volumes fall across
the board and rates of arrears and insolvencies in the market increased to unprecedented
levels.
Despite this adverse climate, the Corporate Banking segment continued to pursue its
strategy of supporting financing to its corporate customers, leading to a 22.7% increase
in lending to these companies, which reached €9.43 billion at year-end. All this was
achieved while still maintaining the long-standing principle of solid credit that has
enabled Bankinter to position itself as the bank with the lowest percentage of NPLs in the
sector, this ratio for the Corporate segment standing at 2.6% of total lending. This growth
in lending went hand in hand with increase attraction of customer deposits, which grew
by 2.2% in the segment, to €4.8 billion.
This growth strategy is clearly reflected in the income statement, with a 41.7% increase
in EBITDA thanks not only to this growth in lending but also to appropriate management
of interest differentials and constant improvement in fee income, which grew by 17.2%.
Millions 2011 2012 % Diff.
Average resources 4,698.54 4,800.79 2.18%
Average loans and receivables 7,685.63 9,426.20 22.65%
Gross Margin 230.42 326.39 41.65%
NSI (points) 79.99 80.85 1.08%
COMMERCIAL BANKING
Private Individuals Segment:
The private individuals banking segment reached a total of 333,316 active customers
in 2012. In terms of the Balance Sheet, the year ended with average resources of €2.71
billion. We should also point out that regular customer deposits grew by 8.57% in the year.
Loans and advances stood at €16.8 billion at year end, representing a reduction of 3.86%
relative to 2011. At the end of 2012 the mortgage portfolio stood at €15.42 billion with the
risk quality continuing to be excellent.
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Bankinter Group Consolidated Annual Accounts 2012

During 2012 substantial sales activities continued, focused on strengthening existing ties
with customers by offering them products such as payroll accounts, more than 30,000 of
which were opened.
Also notable were the efforts made in attracting customers, with an increase of 15%
compared with 2011, in addition to which these customers are more closely tied to the
Bank than in the past, given that one in every three new customers start their relations
with the Bank by way of the payroll account product. Another product with similar tie-in
effects is pure life insurance, more than 9,000 policies having been sold to customers in
this segment, for €630 million of capital sums insured.
Lastly, in terms of quality, this customer segment closed the year with a cumulative NSI
of 71.9.
€ millions 2011 2012 Diff. %
Average resources 2,492.94 2,706.68 8.57%
Average loans and receivables 17,474.58 16,799.99 -3.86%
Ordinary income 141.97 140.78 -0.83%
NSI 71.55 71.9 4.89%
Foreign Customers Segment
The Foreign Customers segment covers non-Spanish customers acquiring secondary
residences in coastal areas of Spain and requiring specialised financing and services.
This business at the end of 2012 reached a figure of 24,000 active clients. Average total
assets in 2012 were €715 million, representing a decrease of 7.10%.
In Balance Sheet terms, the year ended with average customer resources of €205 million,
of which 91% were conventional accounts and deposits and 9% intermediation.
Loans and advances at the end of 2012 stood at €715 million, with a total of 168 mortgage
loans having been signed during the year for a total volume of €17 million.
The quality of service to customers continues to be one of the strategic pillars of the area,
resulting its obtaining a cumulative NSI score of 81.63 at year-end.
€ millions 2011 2012 Diff. %
Average resources 205.06 187.26 -8.68%
Average loans and
receivables
769.45 714.78 -7.10%
Ordinary income 13.25 11.96 -9.57%
NSI 80.48 81.63 1.43%
Private Banking Sector
2012 was another challenging year for Private Banking. On top of the economic recession,
which has been underway for some time, came the euro crisis, investor concerns about
Spain’s financial situation and the possibility of its having to seek a bailout from the
European Union.
In this environment, Bankinter continued to make full use of the strength deriving
from its balance sheet and its business model, as well as of its commitment to service
and proximity in giving advice to customers, which lead to the Net Overall Customer
Satisfaction indices in the segment being maintained at near-excellent levels.
For Private Banking 2012 was another year of growth in revenue (12.31% up on 2011)
and an excellent one in terms of attracting new clients: a total of 1,692 new clients were
welcomed to this segment during the year.
Private Banking’s value proposition is based on comprehensive advisory and management
services for customers’ assets. Consequently, the Specialised Services and Legal and
Tax Advice departments, as well as the Wealth Management unit, seek to attend to the
complex needs of Bankinter’s HNW customers. Their involvement was very significant
both for the business results and, especially , for customer satisfaction with the service
received.
Bankinter Asset Management once again increased its market share in SICAVs (openended
collective investment companies) with the number of SICAVs managed rising to
252, representing 8.47% of SICAVs managed by the Spanish financial sector. In this way
the Bank consolidated its position as the number three bank in terms of the number of
companies and volume of assets under management, according to the Inverco ranking.
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Highlights of the Private Banking business
31/12/2011 31/12/2012 % difference
Average funds 4,795.75 4,951.37 3.25%
Total normal customer resources
(1+2)
Average loans and receivables 2,294.88 2,337.25 1.85%
Total loans and receivables ( 1+2)
Gross Margin
Ordinary income 88.6 99.5 12.31%
Management report for balances
NSI 79.45 79.8 0.44%
Churn rate 4.84% 6.12% 26.45%
Churn rate by segment/network
Personal Banking Segment
For Personal Banking, 2012 was a year of changes deriving from the transformation of the
Private Banking segment. As a result of these changes, we have raised the profile of the
clients to whom our segment is directed, focusing on the customer group which, because
of the level of income or assets, has greater financial requirements, and accordingly we
make available personal account managers with specialist knowledge and specific tools
to manage their assets, such as a Personal Financial Planning Adviser or an Investment
Adviser. We ended 2012 with 158,128 active customers.
Sales activity for the year was centred on two main areas: attracting new customers and
boosting the deposit base. In terms of new customers, the year was a very positive one,
with 19,030 new clients captured during the year, representing a sharp increase compared
with 2011. As for boosting the deposit base, the figure at year-end came to a monthly
average of €7.38 billion, representing an increase of 20.82% year-on-year.
All this activity was carried out through our established distribution networks: Branches,
Agents, Remote networks, Banca Partnet, and the team of account executives specialising
in providing service to this type of customer. We have 337 account executives spread
around our traditional branch network and in our remote customer service centre.
The main tool used in running the sales activity continues to be our CRM, which enables
frequency of customer contact to be maintained as well as facilitating the adaptation of
the range of products and services to customers’ needs, preferences and risk profiles.
We continue to be firmly committed to quality of service in this customer segment. We
ended 2012 with an improvement to our customers’ overall satisfaction level, showing
an NSI of 75.09 points while satisfaction with the services provided by personal account
executives reached an NSI of 81.01 points.
€ millions 31/12/2011 31/12/2012 % difference
Average funds 5,544.85 6,715.61 21.11%
Average loans and
8,116.69 7,949.08 -2.07%
receivables
Ordinary income 123.15 122.89 -0.21%
Efficiency 80.18 94.57 17.95%
NSI 74.93 75.09 0.21%
Obsidiana
Bankinter Consumer Finance continues to consolidate its position in the consumer finance
sector, strengthening its distribution of revolving cards through its strategic alliances.
Its main mission is to meet customers’ financing requirements by providing them with
flexible means of payment for managing their day-to-day finances.
As well as the capture of deposits, we should also point out the figures achieved in
investment and pension funds. We ended 2012 with €2.42 billion of assets in funds, 12.80%
more than in 2011. This past year credit also continued to flow in our segment, improving
the figures for personal loans granted in our customer segment very significantly, with
37% more transactions completed than in 2011.
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In line with previous years, the Bank made significant investments in marketing in order
to promote the growth of the business. The Company pursued a risk management policy
focused on the risk-return trade-off, adjusting the price of each offer in line with the
customer profile so as to ensure profitability.
As a result Bankinter Consumer Finance saw its customer base grow by 7% compared with
2011, reaching a total of 451,914 cards issued at year-end.
The quality of the portfolio increased substantially, with the fall in average customer
lending being cut back from 14% in 2011 to just 1% in 2012, ending at €323.27 million.
Gross operating profit grew by 3% during the year, to €58.84 million; and the cost of NPLs
continued its downward trend, thanks mainly to the in-house Recoveries unit.
In short, 2012 was very positive for Bankinter Consumer Finance, which contributed solid
profits to the Group’s results.
LDA
Despite the climate of crisis prevailing in all sectors of the Spanish economy during 2012,
the Company attained earned premiums of €661 million for the year, net of reinsurance,
representing a 2.8% decrease compared with the previous year.
The number of policies increased by 5.6% compared with 2011, reaching a total of
1,975,336 policies in the portfolio.
The non-life technical account showed a profit of €105.9 million, representing an increase
of 14,3% compared with that of 2011, due essentially to the good performance of the
claims rate and the policy of containing expenses implemented by the Company. In the
financial year 2012, the net reinsurance claims rate was 71.72%. This figure amounted to
76.63% in the financial year 2011.
In 2012, the fifth year of activity, the home insurance branch wrote premiums totalling
€36.8 million, representing a 35% increase on the previous year.
Solvency
Bank of Spain Circular 3/2008 of 22 May for credit institutions on determining and
controlling minimum equity, regulates the minimum equity to be maintained by Spanish
credit institutions - both individually and as a consolidated group - and the way in which
said equity is to be determined, as well as the various processes for capital self-assessment
to be carried out by the institutions and the public information they must forward to the
market.
During 2012 the Group applied this Circular as updated by successive provisions. With
Bank of Spain approval, the Group uses the internal ratings based (IRB) method to
calculate capital requirements for the credit risk on certain credit exposures, and the
standard method for all other exposures. In subsequent financial years, in accordance
with the progressive implementation plan described in Rule 24 of Circular 3/2008 and
subject to authorisation from the Bank of Spain, new portfolios will be incorporated into
the IRB Approach.
The goal set by the Group’s Management in relation to equity management consists
in complying at all times with the applicable regulations, in accordance with the risks
inherent in its activity and the context in which it operates, while at the same time
seeking to make the process as efficient as possible. Capital consumption, together with
other risk and return variables, is considered a fundamental variable in the analyses
associated with the Group’s investment decisions.
In order to meet this goal, the Group has a series of policies and processes for managing
equity, the main guidelines in which are:
1. The Equity Directorate, which is under the Capital Market Division, performs monitoring
and control of solvency ratios, and has warning systems that ensure that the applicable
rules are being applied at all times and that the decisions made by the various departments
and units in the entity are consistent with the targets set for compliance with minimum
capital requirements. Accordingly, there are contingency plans to ensure that the limits
laid down in the applicable regulations are met.
2. The impact that decisions will have on the Group’s equity and on the balance between
capital consumption, risk and return, is taken into account as a key factor in planning,
analysing and monitoring the Group’s operations.
Thus, the Group considers equity and the capital requirements established by the
abovementioned regulations to be a key factor in its management, affecting the entity’s
investment decisions, the analysis of the viability of any transaction, strategy for the
distribution of results by subsidiaries and issues by the entity and the Group, etc.
164
Bankinter
Bankinter Group Consolidated Annual Accounts 2012

Bank of Spain Circular 3/2008 of 22 May and the provisions complementing it (information
available - in Spanish - on the Bank of Spain’s website at: http://www.bde.es/bde/es/
secciones/normativas/Regulacion_de_En/Estatal/Solvencia_y_recursos_propios.html)
establishes which items are to be counted as capital for purposes of complying with the
minimum requirements laid down by the standard. For the purposes of the above rule,
equity is classified as basic and second category equity and it differs from equity as
calculated in accordance with EU-IFRS as it includes certain items that are not included
under EU-IFRS and excludes others that are. In addition, the methods to be implemented
for the consolidation and appraisal of holdings for the purposes of calculating the Group’s
minimum equity requirements differ, in accordance with standing regulations, from
those implemented in drawing up these annual consolidated accounts, which also leads
to the existence of differences for the purposes of calculating equity under one regulation
or the other.
As regards the conceptual definitions, the Group's management of its shareholders' equity
is in compliance with the terms of Bank of Spain Circular 3/2008. Accordingly, the Group
deems computable equity to be as indicated in rule 8 of Bank of Spain Circular 3/2008.
The minimum equity requirements laid down in this Circular are calculated according to
the Group’s exposure to credit risk and dilution (depending on the assets, commitments
and other memorandum accounts these risks present, in accordance with their amounts,
characteristics, counterparties, guarantees, etc.), the counterparty, position and
settlement risks on the trading portfolio, the exchange and gold position risk (depending
on the net global position in foreign currency and the net gold position) and operational
risk. In addition, the Group is also subject to compliance with the risk concentration limits
laid down in the aforementioned Circular and the Group is subject to compliance with the
internal Corporate Governance obligations, capital self-assessment and measurement of
the interest-rate risk and the public information obligations to be forwarded to the market,
which are also laid down in the aforementioned Circular. With a view to guaranteeing
compliance with the aforementioned targets, the Group performs integrated management
of these risks, in accordance with the aforementioned policies.
Consolidated equity as at 31 December 2012 and 2011 and the corresponding capital
ratios are shown in the following table:
€000s
31/12/2012 (*) 31/12/2011 (*)
Capital and Reserves 2,991,426 2,554,154
Other equity instruments 72,633 404,812
Preference shares 60,844 168,165
Treasury shares (226) (742)
Intangible and other assets (283,117) (296,820)
Other deductions (103,581) (165,736)
Tier 1 2,737,979 2,663,833
Revaluation reserve 94,308 97,998
Subordinated financing 568,686 658,232
Generic insolvency funds - 54,678
Other deductions (96,551) (154,243)
Tier 2 566,443 656,665
Total Equity 3,304,422 3,320,498
Risk-weighted assets 25,424,253 28,454,731
Tier 1 (%) 10.77 9.36
Tier 2 (%) 2.23 2.31
Capital ratio (%) 13.00 11.67
(*) Figures in accordance with Bank of Spain Circular 3/2008 on determining and controlling minimum equity. The
lower limit of shareholders’ equity requirements provided for in Transitional Provision Eight of the aforementioned
Circular is not applied. Internal models are applied to the following portfolios: Home mortgages for private
individuals, Small companies, Medium-sized companies, Project Finance and Unsecured loans.
As at 31 December 2012 and 2011 and throughout the years then ended, the computable
equity of the Group and of the Group entities subject to this obligation, considered on an
individual basis, exceeded the requirements laid down under the rules referred to.
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During 2012 there were some important changes in standards relating to financial
institutions' solvency:
Royal Decree-Law 2/2012, of 3 February, on the restructuring of the financial sector,
established among other things provisioning requirements for financing and assets
foreclosed or received in payment of debt relating to the property sector, as well as
increased core capital coverage requirements for real estate assets.
Royal Decree-Law 18/2012, of 11 May, on the write-down and sale of real estate assets in
the financial sector, established additional coverage requirements to those established
in Royal Decree-Law 2/2012 for impairment of financing linked to real estate activity
classified as standard risk.
Royal Decree-Law 24/2012, of 31 August, on the restructuring and resolution of credit
institutions, defines the regime for restructuring and resolution of entities and includes
measures for improving protection of retail investors who subscribe to financial products
not covered by the Deposit Guarantee Fund and modifies the requirements and definition
of core capital that credit institutions will have to comply with starting in 2013. The
definition is adjusted to bring it into line with the core tier 1 capita criteria of the European
Banking Authority (EBA), and the minimum level of core capital is set at 9% with effect
from 1 January 2013.
Bankinter complied throughout 2012 with these new regulatory requirements, and with
the objective of meeting the new capital requirements it undertook a number of financial
transactions aimed to strengthen its capital base, as described hereunder.
With regard to the 2011 issue of Mandatorily Convertible Subordinated Bonds, in March
2012 the General Meeting of Shareholders approved the establishment of an additional,
voluntary conversion period and of special remuneration for those holders voluntarily
converting their bonds during that period. The details of this conversion are contained in
the 14 February 2012 announcement of the calling of the AGM. The voluntary conversion
period ended on 10 May, and as a result the Bank’s core capital increased by €332 million.
Apart from this, in July 2012 the Board of Directors, by virtue of the authorisation
granted it by the General Meeting of Shareholders, made a public offer to holders of
Bankinter preferred shares. The terms and conditions of this offer were summarised in
the “Significant Event” report sent to the CNMV (Spain’s securities regulator) on 18 July
2012. As a result of this transaction the Bank’s core capita increased by €75 million.
As a result of these measures, capital ratios increased in the year and at 31 December
2012 the core capital ratio in accordance with Royal Decree-Law 2/2011 was 11.19%
(9.47% at year-end 2011).
2. Principal business risks
Economic Environment and International Markets
We leave behind us a difficult year, which involved an intense process of adjustment in
which austerity and growth were in serious conflict with one another. This past year 2012,
and more particularly the last quarter, constituted an important inflection point in this
crisis.
The agreements reached at the European summit of 28 and 29 June have provided the
roadmap for resolving the serious problems of the euro zone. Following an extremely
tough period in July, in which euroscepticism gained more ground than ever, advances in
financial and fiscal union started to materialise. From September onwards we have seen
a gradual improvement in the climate thanks to factors such as the approval of the ESM
(European Stability Mechanism) by Germany’s Constitutional Tribunal, unconditional
support from central banks and the individual efforts of the various national economies
to comply with their deficit reduction objectives.
As regards the central banks, whose actions took on a more central role during the year,
we would highlight the following matters:
1. The launch of the ECB’s new Outright Monetary Transactions (OMT) debt purchasing
programme, and the more flexible definition of assets accepted for discount (September).
This programme constituted a valid safety net, dispelling fears about the demise of the
euro and relieving debt tensions in peripheral economies. And so the year ended with a
considerable and apparently consistent reduction in risk premiums.
2. The Federal Reserve maintained an extremely loose monetary policy, with minimal
interest rates, a decision that favoured the US real estate market which is now definitely
on the road to recovery. Concerns about the jobs market became the main reason for
launching QE3 1 in September and extending it to December, in order to replace Operation
Twist 2 , which had come to an end, and to continue providing stimulus to the economy.
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3. The Japanese economy was held back by the strength of the yen in its capacity as a
safe haven currency. The new Abe administration that came to power at the end of 2012,
and the pressure it exerted on the BoJ after less than a month in office, led to much faster
than expected depreciation of the yen.
The last three months of the year saw a combination of events that brought about a clear
change in the environment. Funds have started to flow into risk assets and out of safe
haven assets. The macroeconomic variables ceased to present a persistently negative
picture, even beyond the US, where the “fiscal cliff” has apparently been avoided for the
time being. The crisis in Europe has started to ease thanks to progress on agreements
and ECB support. Lastly, economies such as that of China, which were threatening a hard
landing, have once again shown signs of revival.
In sum, although 2012 was just as difficult as 2011, if not more so, events unfolding in
the last part of the year have turned out to be rather constructive. This development has
been more readily observable in the United States; and certain signs pointing in the same
direction can be seen in other economies - not, however including those of Europe at the
time of writing.
Interest and currency rates
During 2012 the environment was clearly one of low key interest rates on the part of the
major central banks, while safe haven currencies suffered significant stresses, except in
the last two months of the year.
Inflationary risks continued to take a back seat to the need to push for growth in a depressed
global economy. We even saw further cuts in key interest rates in emerging markets such
as Brazil and China, where the cycle appeared to run out of steam to a worrying extent
at certain times. However, the improvement in the economic environment and a more
favourable financial climate have reduced the likelihood of further cuts in key lending
rates.
During the first half of the year, uncertainty surrounding the future of the euro led to
downward pressure on the common currency relative to other major currencies. However,
starting in the third quarter, the euro strengthened thanks to the support of the ECB and
a decrease in risk aversion. Without doubt the explicit and unconditional support for the
euro on the part of the governor of the ECB, who said he was prepared to “do whatever is
1. QE3, the third round of quantitative easing since the onset of the crisis in 2007.
2. “Operation Twist”, an operation undertaken in September 2011 consisting in shifting part of the Federal Reserve’s
Balance Sheet assets from short-to-medium (maximum duration three years) into medium-to-long term (from six
to thirty years).
necessary to save the euro” played a decisive part in the single currency’s regaining part
of its attraction.
In this regard, the Swiss franc, capped by the SNB 3 at 1.20, came under less pressure,
weakening thanks to investors shifting their savings into other assets. Something similar
happened with the yen, although the depreciation posted at the end of the year was much
more abrupt. The yen weakened much faster than expected as a result of BoJ intervention
by means of consecutive purchases of bonds through various linked quantitative easing
programmes and as a result of the more aggressive expectations brought about by the
change of government.
Policy rates 2007 2008 2009 2010 2011 2012
Euro zone 4.00 2.50 1.00 1.00 1.00 0.75
United States 4.25 0.25 0.00/0.25 0.00/0.25 0.00/0.25 0.00/0.25
UK 5.50 2.00 0.50 0.50 0.50 0.50
Japan 0.50 0.10 0.10 0.0/0.1 0.0/0.1 0.0/0.1
Note: At the end of each financial year
International stock markets
The downward impetus of the stock markets, carried through from 2011, gradually
lost momentum over the course of 2012. The US stock markets were the first to regain
investors’ confidence, followed by those of Europe in the second half of the year, and the
year eventually closed with gains on both sides of the Atlantic.
2012 did not turn out to be particularly adverse for stock markets, contrary to what one
might intuitively expect. With the exception of the Ibex, which despite the year-end rally
did not manage to offset the cumulative losses, the major indices closed with gains, from
the most developed economies to emerging ones like India, Brazil, Mexico, etc. This is
clearly shown in the following table.
Risk appetite gradually returned to the market over the course of the year. Central banks’
support in stimulating economies played a crucial role, especially the ECB’s defence of the
euro. In general terms, the expectations that arose of an improved economic and financial
climate in the US and Europe were an important catalyst for the recovery in equities over
the course of 2012.
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The following table shows the changes in the major stock markets in 2012 and 2011, all
in local currency:
Major currencies 2007 2008 2009 2010 2011 2012
Euro 1.32 1.40 1.43 1.34 1.30 1.32
Sterling 0.67 0.95 0.89 0.86 0.83 0.81
Swiss franc 1.61 1.49 1.48 1.25 1.22 1.21
Yen 157.1 126.7 133.2 108.5 99.7 114.5
Note: Year-end exchange rate of each currency against the euro, except in the case of
the euro, where the exchange rate is against the US dollar
Source: Invertia
Geographical area Contents Change % 2011 Change % 2012
Spain Ibex35 -13.1 -4.7
United States S&P 500 -0.0 13.4
United States NASDAQ 100 2.7 16.8
Euro zone EuroStoxx 50 -17.1 13.8
UK FTSE 100 -5.6 5.8
Germany DAX -14.7 29.1
France CAC -17.0 15.2
Japan Nikkei -17.3 22.9
China Shanghai (B) -29.3 13.8
Brazil Bovespa -18.1 7.4
India Sensex -24.6 25.7
The organisational structure of the entire risks function reports hierarchically to the
Executive Vice-Chairman, reflecting the independence that is inherent to the function.
The identification, measurement, management, control and monitoring of the risks
inherent in banking operations constitute a fundamental aim, always within a context of
optimising the overall management of all risks.
Bankinter has received Bank of Spain approval for its internal rating models,
methodologies, systems and policies for measuring most of its risks, applying them to
the calculation of capital requirements as established by the Basel II Capital Framework.
The basic principles that continue to govern risk management are:
• Contribute towards maximising capital, safeguarding the Bank’s solvency.
• Independence of the function.
• Alignment with strategic objectives.
• New products: risk determination, approval and monitoring.
• Integrated risk management.
• Mass use of automated approval.
• Risk diversification.
• Relevance of the quality of service factor in the risks function.
3. Risk policies and management
The Framework Agreement on Risk Policy, issued by the Board of Directors, establishes
the Bank’s risk strategy and profile for each year.
The Board of Directors, through the Executive Committee and the Audit and Compliance
Committee, takes care of and supervises the policies, systems and internal control
procedures relating to all the Bank’s risks, as well as the prevention of money laundering
in accordance with applicable current legislation.
3. SNB, Swiss National Bank.
• Policy of Sustainable Investment.
The basic risk principles are determined in the Framework Agreement for each
segment. In this regard we would highlight the fact that, pursuant to the provisions of
the Transparency Act, we have brought together the various aspects of the Responsible
Lending Policy in a single document, in the interests of greater clarity, even though all the
principles had been incorporated over the past few years in the Framework Agreement,
which is reviewed and updated every year.
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Structural and market risk management policies
Bankinter is guided by principles that constitute the basis of the general risk policy. These
basic principles are of a permanent nature; they have been applied in recent years and
continue to apply. In general, these policies are as follows:
1.- The purpose of Bankinter’s policy on the management and control of “Structural Risks”
and “Market Risk” is to neutralise the impact of variations in interest rates, in the main
market variables and in the balance sheet structure itself, on the Bank’s profit and loss
account, by adopting the most appropriate investment or hedging strategies.
2.- To develop the most appropriate systems for measuring structural and market risks
so as to provide information on the Entity’s exposure to these risks, and to any possible
deviations that might arise regarding established limits and procedures.
The Board of Directors decides the strategy and policy for the Bankinter Group’s policy
as regards “Structural Risks” and “Market Risk” and delegates management, monitoring
and control to various Bodies in the Institution. It also decides on the risk profile that the
Institution is willing to undertake, establishing the maximum limits that it delegates to
said bodies and which are reviewed on an annual basis.
It should be noted that exchange rate risk is not significant in the Banking Group.
STRUCTURAL RISKS
The Board of Directors delegates the ongoing monitoring of decisions regarding structural
balance sheet risks (interest rate risk and liquidity risk), stock market risk and exchange
rate risk of the Bank’s corporate positions, as well as the establishment of the financing
policies, to the Assets and Liabilities Committee (ALCO). Moreover, each year it reviews,
approves and delegates to the ALCO the limits applicable for managing the aforementioned
risks. The Treasury and Capital Markets area implements the decisions taken by the ALCO
with regard to the Bank’s corporate positions.
To exercise these functions, the most appropriate financial instruments at any given time
are used, which include interest-rate, exchange-rate and variable income derivatives. The
financial instruments with which trading is undertaken must, in general, be sufficiently
liquid and be associated with hedging instruments.
The Balance Sheet Management unit, which is part of the Capital Markets Directorate,
has the function of measuring and managing the institution’s structural risks.
Market Risk, reporting to the Risks Directorate has the independent function of controlling
them:
Interest rate structural risk
Structural interest rate risk is the Entity’s exposure to changes in market interest rates
arising from timing differences between maturities and repricings of the various items in
the overall Balance Sheet.
Bankinter performs active management of this risk in order to protect the interest margin
and to preserve the economic value of the Bank against interest rate fluctuations.
In order to control exposure to the interest rate structural risk, the Bank has established
a structure of limits that is reviewed and approved on an annual basis by the Board of
Management, in accordance with Bankinter’s strategies and policies in this regard.
Bankinter has tools to monitor and control the structural interest rate risk. We will now go
on to specify the main measurements used by the Bank that enable the management and
control of the interest rate risk profile approved by the Board of Directors:
a) Sensitivity of the Financial Margin:
Dynamic simulation measures are used to measure on a monthly basis financial margin
exposure in different scenarios of variation in interest rates and for a 12-month time
horizon. Financial margin sensitivity is obtained as the difference between the financial
margin projected with the market curves at each analysis date and the one that is projected
with the interest-rate curves altered in different scenarios, both of parallel movement of
rates and changes in the slope of the curve.
Every year, the Board of Directors sets a reference for the financial margin in terms of
sensitivity for 100 basis point parallel movements in the interest rate curves for a term of
up to 12 months. The sensitivity in this scenario is followed by the ALCO.
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The exposure of Bankinter’s financial margin to interest rate risk in the event of +/- 100
bp parallel movements in market interest rates is approximately 2.2% for a 12-month
horizon.
The sensitivity of the Bank’s financial margin to changes in the slope of the curve for a
12-month horizon is 4.5%. This scenario is built by holding the 6-month rate constant and
changing the short-term (up to 3 months) and 12-month rates by the same amounts but
in opposite directions so as to alter the slope of the curve by 25 basis points in the period
under consideration.
Financial Margin Sensitivity 2012
100 bp parallel movements 2.2%
25 bp slope variations 4.5%
b) Economic Value Sensitivity
This is a measurement that complements the previous two and which is calculated on a
monthly basis. It allows the exposure of the Bank’s economic value to interest-rate risk
to be quantified, and is obtained as the difference between the net present value of the
items that are sensitive to interest rates calculated using the curves for rates in different
scenarios and the rates curve listed in the market at each analysis date.
Every year, the Board of Directors sets a reference in terms of the economic value
sensitivity for 200 bp parallel movements in market interest rates. Sensitivity to this
scenario is measured, controlled and submitted to the ALCO.
The sensitivity of the Bank’s Economic Value to 200 bp parallel movements, obtained by
means of the criterion described above, was, at year-end 2012 and 2011, 7.5% and 3.4%
of the Bank’s equity, respectively.
Economic Value Sensitivity
2011 2012
NPV Sensitivity 3.4% 7.5%
Structural liquidity risk
The structural liquidity Risk is related to the Institution’s capacity to fulfil its payment
obligations and finance its investments. The Bank actively monitors the liquidity situation
and its projection as well as actions to be taken both in normal market conditions and in
exceptional situations arising from internal causes or market trends.
Management of this risk is the responsibility of the ALCO committee, delegated by the
Board of Directors.
Liquidity requirements were covered by turning to the international medium- and longterm
debt markets. The Bank issued €6.05 billion of mortgage-backed bonds and €1.44
billion of senior debt, of which €1.40 billion is guaranteed by the Kingdom of Spain. In
both cases a portion is retained in the Balance Sheet.
To meet its requirements, the Group used short-term issue programmes, mainly in the
domestic market with its commercial paper programme. The balance of promissory notes
placed in the wholesale market was €897 million as at 31 December.
The Bank has various tools for analysing and monitoring the short- and long-term
liquidity situation. These tools are static and dynamic. Back-testing is also carried out on
projections made.
One of the analyses used for controlling and monitoring liquidity is the liquidity plan or
gap.
a) Liquidity plan or gap
This shows information on the distribution of the balances and cash flows of the asset
and liability positions of the balance sheet between various timeframes depending on the
expected date of completion or liquidation and in accordance with a series of assumptions
based on the historical performance of these products. These assumptions are reviewed
on a regular basis and, in such cases as where they are necessary, supported by models
based on historical series.
Liquidity plans or gaps at year-end 2012 and 2011 were as follows. The information
provided by the liquidity plan is static, and does not show the expected financing needs
as it does not include behavioural models of the asset items, that is, the prepayment of
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mortgage loans and the renewal of lines of credit or of liability items such as the renewal
of fixed term deposits, among others.
Figures as at December 2012 in € millions Sight 1 day to 1 month 1 to 3 months 3 to 12 months
12 months to 5
years
more than 5 years TOTAL
ASSETS
Loans and receivables 2,165 2,871 6,172 12,121 27,557 50,887
Deposits with credit institutions 0 0 0 1,120 1,120
Loans and advances to customers 2,165 2,871 6,131 12,098 26,413 49,679
Other 0 0 41 23 24 88
Fixed Income Portfolio 195 634 2,444 9,877 1,793 14,942
Trading portfolio 16 0 445 580 463 1,504
Available-for-Sale Portfolio 85 633 1,320 7,851 94 9,983
Held-to-Maturity Portfolio 95 1 679 1,445 1,236 3,455
Other Assets 666 0 0 0 2,167 2,833
Total Assets 3,026 3,505 8,616 21,998 31,517 68,662
LIABILITIES
Fixed income portfolio 365 236 98 522 452 1,673
Trading portfolio 365 236 98 522 452 1,673
Financial liabilities at Amortised Cost 11,043 3,896 4,963 8,534 9,933 20,062 58,430
Deposits from credit institutions 430 239 288 881 12,114 13,951
Customer deposits 11,043 1,546 3,924 5,206 4,585 6,330 32,633
Marketable debt securities 1,920 800 3,040 4,468 1,054 11,282
Other 0 0 0 0 563 563
Other liabilities 0 0 0 0 748 748
Equity 0 0 0 0 2,862 2,862
Total Liabilities and Equity 11,043 4,260 5,199 8,632 10,455 24,123 63,713
TOTAL LIQUIDITY GAP -11,043 -1,234 -1,695 -16 11,543 7,394 4,949
Figures as at December 2011 in € million
Total Assets 3,510 2,589 10,493 16,140 33,244 65,976
Total Liabilities and Equity 9,667 3,258 3,136 9,771 14,293 22,687 62,812
TOTAL LIQUIDITY GAP -9,667 252 -547 722 1,847 10,557 3,164
Note 1: Foreign-currency positions are not material and so have not been included in the
breakdowns of the attached Gaps.
Note 2: The Entity has no positions in unlisted securities
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In addition to those previously mentioned, the means used by Market Risks to control
the liquidity risk include checking to ensure compliance with the limits established by
the Board and delegated to the department heads and the ALCO (Assets and Liabilities
Committee). The calculation of limits is carried out by Market Risks based on the
information prepared for the various regulators.
There are three broad types of limit:
1) Determining the liquidity buffer
The Bank uses both the definition of regulatory LCR (liquidity coverage ratio) and a
similar ratio extended to ninety days and with a definition of liquid assets in accordance
with those accepted by the European Central Bank as collateral for liquidity. Another
reference for calculating the liquidity buffer is the schedule of upcoming maturities of
wholesale issues over the next few months.
2) Wholesale financing concentration ratios
With the aim of avoiding Bankinter being subjected to stress as a result of a possible
sudden shutdown of wholesale markets, limits are established on the amount of shortterm
wholesale financing that can be taken, as well as on the concentration of issue
maturities.
3) Ratio of stable deposits to total lending.
With a view to limiting reliance on wholesale financing, a minimum ratio of stable
deposits to loans is established. In establishing the stability of deposits, use is made both
of the regulatory definition of the NSFR (Net Stable Funding Ratio) and of experience of
the Spanish finance sector.
As well as the limits established by the Board, monitoring also covers the evolution in
the gap or ‘liquidity plan’ and information and analysis on the specific situation of the
balances resulting from trade operations, wholesale maturities, interbank assets and
liabilities and other sources of funding. These analyses are carried out both under normal
market conditions and simulating different liquidity scenarios that could come about as a
result of different trading conditions or changes in market conditions.
MARKET RISK
The Board of Directors delegates proprietary trading in the financial markets to Treasury
and Capital Markets, which acts through its Trading Area with a view to taking advantage
of trading opportunities that arise, using the most appropriate financial instruments at any
given time, including interest and exchange rate derivatives and equity derivatives. The
financial instruments with which trading is undertaken must, in general, be sufficiently
liquid and be associated with hedging instruments. The risk that may derive from the
management of the institution’s own accounts is associated with movements in interest
rates, stock market prices, exchange rates, volatility and credit spreads.
The Board of Directors delegates to the ALCO the continuous monitoring of the Treasury
Trading area's proprietary trading activities and establishes maximum limits for the
authorisation of the possible excesses that may arise in this activity.
Market Risk, which reports to the Risks Directorate, has the independent function of
measuring, tracking and controlling the Bank’s market risk and the delegated limits.
Market risk is measured mostly using the “Value-at-Risk” (VaR) methodology, considered
both globally and segregated for each significant risk factor. The limits in VaR terms
are supplemented by other measures such as stress testing, sensitivities, stop loss and
concentration.
We will now go on to describe the methodology for measuring the main market risk
indicators.
Value-at-Risk (VaR)
“Value-at-Risk” (VaR) is defined as the maximum loss that is anticipated from a particular
portfolio of financial instruments, under normal market conditions, for a certain confidence
level and time horizon, as a consequence of movements in prices and market variables.
The VaR is the main indicator used daily by the Group to measure and control on an
integrated and global basis exposure to market risks arising from interest rates, equities,
exchange rates, volatility and credit.
The measuring methodology used is the 'Historical Simulation' based on the analysis of
possible changes in the value of the position used. Historical movements in the individual
assets that make it up are used. VaR is calculated with a level of confidence of 95% and a
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time horizon of one day, although additional monitoring is carried out with other levels
of confidence.
There is also a monthly monitoring of the VaR of its subsidiary Línea Directa Aseguradora
S.A. using the “historical simulation” method.
The following are the comparative VaR data by risk factor for the Bank’s positions in 2012
and 2011, both for the total and differentiated by portfolio:
Total VaR 2012
million euros
Final
Interest Rate VaR 18.71
Equities VaR 0.32
Exchange Rate VaR 0.07
Volatility Rate VaR 0.05
Credit VaR 0.00
18.80
Total VaR 2011
million euros
Final
Interest Rate VaR 10.71
Equities VaR 0.76
Exchange Rate VaR 0.03
Volatility Rate VaR 0.02
Credit VaR 0.02
11.96
2012 was characterised by severe turbulence in the public debt markets of the euro zone.
On top of the interest rate risk came significant credit risk and the risk of redenomination
of various countries’ public debt. As these risks built up, so liquidity in certain financial
markets diminished.
In view of this situation in the financial markets, over the course of the year Bankinter
established a series of sub-limits in accordance with market circumstances. Apart from
this, the VaR calculation was reinforced by extending the stress testing analysis, as dealt
with in the following section, by adding specific assumptions based on expectations of
their occurring in the financial markets, as well as endeavouring to simulate the most
adverse circumstances for the positions taken in trading operations.
The market risk (VaR) for the LDA portfolio at year-end 2012 and 2011 was €0.77 million
and €0.88 million respectively, calculated using the “Historical Simulation” method, with
a level of confidence of 95% and a time horizon of one day. Market risk is slightly less
from one year to the next due to the reduced duration of the portfolio and a change in
the distribution by type of risk, which increases the correlation between positions at risk.
Stress Testing
Trading VaR 2012
million euros
Final
Interest Rate VaR 0.86
Equities VaR 0.15
Exchange Rate VaR 0.07
Volatility Rate VaR 0.05
Credit VaR 0.00
0.91
Trading VaR 2011
million euros
Final
Interest Rate VaR 0.59
Equities VaR 0.47
Exchange Rate VaR 0.03
Volatility Rate VaR 0.02
Credit VaR 0.02
0.91
Stress testing, or the analysis of extreme scenarios, is a supplementary test to VaR. The
estimates from the stress tests quantify the potential loss in portfolio value under extreme
scenarios of change in the risk factors to which the portfolio is exposed.
Every year, the Board of Directors approves an extreme scenario based on significant
movements in interest rates, securities exchanges, exchange rates and volatility, and
certain upper references regarding these variations for each type of risk. Additionally,
estimates are made using other scenarios which replicate different historical crisis
situations and other relevant current market situations.
Available-for-sale VaR 2012
million euros
Final
Interest Rate VaR 18.35
Equities VaR 0.23
Exchange Rate VaR 0.00
Credit VaR 0.00
18.33
Confidence level 95%, time horizon of 1 day
Available-for-sale VaR 2011
million euros
Final
Interest Rate VaR 10.56
Equities VaR 0.34
Exchange Rate VaR 0.00
Credit VaR 0.00
11.04
In 2012, the stress scenarios for Interest Rate and Volatility were updated to adapt them
to each product type and to the evolution of events observed in the market for this type
of risk factors.
The following is information on the results of one of the most extreme stress scenarios for
the Bank in financial years 2012 and 2011:
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Stress Testing 2012
million euros
Final
Interest Rate Stress 74.85
Equities Stress 5.14
Exchange Rate Stress 0.43
Volatility Stress 3.33
Credit Stress 0.00
Total Stress 83.75
Stress Testing 2011
million euros
Final
Interest Rate Stress 49.56
Equities Stress 7.30
Exchange Rate Stress 0.39
Volatility Stress 0.48
Credit Stress 0.09
Total Stress 57.82
The Credit Risk Department performs its functions through the units that form its structure:
• Risk approval and policies are the work area of:
o
o
o
the Private Individual Risks Unit.
the Business and Property Developer Risks Unit.
the Corporate Risks Unit.
• The Risk Processes Unit is in charge of defining and improving the various risk processes,
including the IT systems for risks.
At year-end 2012 the total level of interest rate stress testing had increased relative to
2011, as a consequence of an increase in the Available-for-Sale portfolio in public debt.
However, as can be seen in the foregoing table, equities stress testing at year-end 2012
reduced due to a decline in the stock market position.
The result of the calculation of the stress scenarios for the portfolio positions of Línea
Directa Aseguradora at the end of 2012 amounted to €23.52 million compared with €23.48
million in 2011. Stress testing was maintained at similar levels to the previous year, since
the reduced position in equities was offset by an increase in the fixed income position.
Credit Risk
Organisation and functions
The Board of Directors establishes the Risks Policy, delegating its implementation to the
Risks Committee, which is chaired by the Executive Vice-Chairman. Its delegated powers
include approving operations and defining the powers of the committees at the next
levels below.
The Risks Directorate, reporting directly to the Vice-Chairman, is responsible for drawing
up and publishing risk policies. Its targets include the development of automatic
authorisation systems and all risk processes, while always seeking maximum efficiency
and quality.
In addition to their own functions the various units take part in the process of defining
new products and determining the risk parameters and the approval process.
The risk function’s principle of alignment with strategy combines a hierarchical approach
with the delegation of powers to each of the Risk Committees.
The risk approval process is supported by an electronic proposal that enables integration
and unification of all of the Bank’s networks and channels. The use of statistical models
enables retail risk approval to be automated and provides support for decisions on risks
requiring non-automated approval.
The Risk Map, which is produced annually, is an exercise in detection, analysis and
assessment of the potential impact (severity) of the risks inherent in the activity, as
well as processes for monitoring and controlling them and measures for mitigating or if
possible eliminating any remaining risk.
The current financial crisis and the requirements of the Basel Accords have demonstrated
the need for increased monitoring of the policy on risk concentration. In this regard,
monitoring is carried out of diversification by sector, geographical location, products and
guarantees, as well as by customer concentration, and a policy of permitted maximums
is in place.
Refinancing or restructuring transactions are carried out only when they can be shown
to be viable, and incorporating additional guarantees whenever possible. The system of
delegated powers does not allow these kinds of transactions to be approved by Branches,
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and furthermore they are limited to 50% of the discretionary limits held by the Regional
Organisations.
Policy on refinancing and restructuring:
The policy on refinancing in its various categories starts out from the basic principle that
any such refinancing must involve a clear improvement in the outlook for repayment by
strengthening security. The categories are:
-Refinancing / refinanced transactions: when a new transaction is carried out in order to
cancel, totally or in part, a transaction with a customer on whom or which we wish to
eliminate our risk and we establish the means of doing so.
-Restructuring: when we alter the financial conditions of transactions in force with a
customer on whom or which we wish to eliminate our risk and establish the means of
doing so.
-Assurance: when the customer is not in either of the above categories but there is a
change to the original conditions of the transaction.
In both cases we are dealing with a customer or group on whom/which we wish to eliminate
our risk and we establish the means of doing so.
A further condition is the impossibility of either cancelling or maintaining the current
conditions in light of the analysis carried out by the corresponding Risks Committee.
In particular, and by way of example:
- the carrying out of a new transaction in order to cancel, totally or partly, an existing
transaction or classification (not ordinary renewals)
- the granting of additional grace or interest-only periods relative to those originally
authorised
- the financing of instalments (nominal and/or interest),
- Any other cases involving approval of transactions that are not in accordance with the
Bank’s risks policy.
Such transactions must not involve additional financing for the customer, and must
maintain the existing guarantees. Ordinary interest due must be collected, and
furthermore the restructuring must meet the following conditions:
The situation of delinquency will be considered to be at an end providing the guarantees
for the transaction are strengthened by incorporating effective tangible collateral or the
capacity to repay is strengthened.
In order for a debt refinancing to bring an end to the situation of delinquency, it is
important for guarantees of payment to exist, either in the form of effective security
being provided (pledges, mortgages or personal guarantees) or by means of verification
of the customer’s ability to pay, as indicated in Appendix IX to Bank of Spain Circular
No. 4/2004 as recently amended in 2010. Such transactions must not involve additional
financing for the customer, and must maintain the existing guarantees. Ordinary interest
due must be collected, and furthermore.
Refinanced transactions will generally be classified as subjectively doubtful and
restructured ones as substandard transactions if no effective guarantees are taken or if
there are reasonable doubts as to the customer’s ability to repay.
Collateral will be valued at the lesser of value per deed of conveyance or appraised value,
minus the following:
• Customer’s habitual residence: 20%
• Farmland, offices, warehouses and multi-purpose premises: 30%
• Other completed residential properties (second home, property developer's home, etc.):
40%
• Plots with building permission (real estate development): 50%
- the incorporation of guarantees in working capital transactions (ratings, financial risk,
issuer risk and commercial risk),
- the establishment of calendar of repayments to cancel risk
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Refinancing and restructuring transactions must incorporate:
- Tangible guarantees for transactions with personal guarantees, or additional tangible
guarantees for transactions that already have tangible guarantees, or
- Sufficient guarantees such that the net assets of the guarantors less their direct and
indirect risks exceed the amount of the transaction.
The proposal must be processed through the credit approval systems established by the
Bank.
In all cases business and financial information must be updated, as must information on
borrowings, business plan and viability justifying the refinancing.
The Group currently has 5,062 live refinanced loans totalling €1.37 billion. This figure
includes both regular status loans and substandard and delinquent balances. This figure
represents 2.96% of total Credit Risk.
The figure for risk on property developers is €333 million. At present 33.6% of the Group’s
real estate development portfolio (€983 million) is in arrears, with a coverage of 31%.
In the private individuals segment, the Group refinanced 1,487 loans for a total of €216
million, with a delinquency rate of 13%.
Restructuring of the Finance Sector
February 2012 saw the publication of Royal Decree-Law 2/2012 on restructuring of the
finance sector, which laid down additional requirements for provisions and capital in
respect of assets associated with real estate business. Bankinter made all the provisions
required by this Royal Decree-Law during the first quarter of 2012. Also, its own funds
amply cover the top capital requirements established by this law.
the Spanish banking sector as a whole to withstand a further severe deterioration in the
economic situation. The Bank of Spain, in coordination with the Ministry of Economy and
Competitiveness, decided to commission Roland Berger and Oliver Wyman as independent
consultants to carry out this strict evaluation of the Spanish banking sector.
The results of this study, published on 21 June 2012 by the two consultancies, conclude
that for a base macroeconomic scenario and a core Tier 1 ratio of 9%, capital requirements
for the entire sector studied would be between €16 billion and €26 billion. In the adverse
macroeconomic scenario, with a core tier 1 ratio of 6%, the Spanish banking sector’s
additional capital requirements would be within a range of €51 billion to €62 billion.
Following this overall assessment, individual bottom-up assessments were carried out of
each entity, including a comprehensive analysis of due diligence and individual analyses
of banks’ portfolios in order to determine additional capital requirements, based on their
risk profiles.
Following analysis of the published information, in view of the Bank’s delinquency ratios,
which were the lowest in the sector, and its almost residual exposure to real estate,
Bankinter showed a capital surplus of €399 million.
Maximum exposure to credit risk
The following table shows the maximum level of exposure to credit risk undertaken by the
Group as at 31 December 2012 and 2011 for each class of financial instrument, without
deducting from same tangible securities or other credit enhancements received to ensure
borrowers’ compliance:
Subsequently, in May 2012, Royal Decree-Law 18/2012 on the write-down and sale of
the finance sector’s real estate assets established additional coverage requirements for
impairment of lending linked to real estate business classed as performing. Bankinter
made all the provisions required by this Royal Decree-Law during the second quarter of
2012.
Apart from this, the Council of Ministers in its Resolution of 11 May instructed the Ministry
of Economy and Competitiveness to commission an external study to assess the ability of
176
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As at 31 December 2012
€000s
Asset balances
Financial assets at fair value through
profit or loss
Types of instrument
Held for
trading
Other assets
Financial assets
available for sale
Loans and
receivables
Held to maturity
investments
Hedging
derivatives
Memorandum
accounts
Total
Debt instruments
Deposits with credit institutions - - - 1,093,728 - - - 1,093,728
Negotiable securities 1,452,753 39,860 6,132,471 82,871 2,755,355 - - 10,463,310
Loans and advances to customers - - - 43,575,351 - - - 43,575,351
Total debt instruments 1,452,753 39,860 6,132,471 44,751,950 2,755,355 55,132,389
Contingent risks -
Financial guarantees - - - - - - 631,925 631,925
Other contingent risks - - - - - - 1,850,940 1,850,940
Total contingent risks 2,482,865 2,482,865
Other exposure -
Derivatives 656,511 - - - - - - 656,511
Contingent commitments - - - - - - 11,239,659 11,239,659
Other exposure - - - - - 152,201 - 152,201
Total other exposure 656,511 152,201 11,239,659 12,048,371
MAXIMUM LEVEL OF EXPOSURE TO
CREDIT RISK
2,109,264 39,860 6,132,471 44,751,950 2,755,355 152,201 13,722,524 69,663,625
177
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As at 31 December 2011
€000s
Asset balances
Financial assets at fair value through
profit or loss
Types of instrument
Held for
trading
Other assets
Financial assets
available for sale
Loans and
receivables
Held to maturity
investments
Hedging
derivatives
Memorandum
accounts
Total
Debt instruments
Deposits with credit institutions - - - 1,779,395 - - - 1,779,395
Negotiable securities 1,870,612 31,377 4,776,069 - 3,150,930 - - 9,828,988
Loans and advances to customers - - - 45,387,972 - - - 45,387,972
Total debt instruments 1,870,612 31,377 4,776,069 47,167,367 3,150,930 - - 56,996,355
Contingent risks -
Financial guarantees - - - - - - 590,143 590,143
Other contingent risks - - - - - - 1,849,527 1,849,527
Total contingent risks - - - - - - 2,439,670 2,439,670
Other exposure -
Derivatives 544,894 - - - - - - 544,894
Contingent commitments - - - - - - 9,208,807 9,208,807
Other exposure - - - - - 118,651 - 118,651
Total other exposure 544,894 - - - - 118,651 9,208,807 9,872,352
MAXIMUM LEVEL OF EXPOSURE TO
CREDIT RISK
2,415,506 31,377 4,776,069 47,167,367 3,150,930 118,651 11,648,477 69,308,377
178
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Bankinter Group Consolidated Annual Accounts 2012

Trends in customer risk
The economic and financial crisis that started five years ago continued to make itself
felt throughout the year under review. In terms of new instances of arrears, the peak of
late 2008 marked a trend that bottomed out at the beginning of 2011 but then started to
deteriorate again, with the peak being repeated in the first half of 2012.
In this past year there were clear signs of fatigue on the part of business and household
economies alike in the face of this deep and prolonged crisis, which means it is affecting
all levels of solvency. Our customers’ situation was helped by the Bank’s sound refinancing
policy, which adheres to the Bank’s basic and unchanging principles.
In this environment, the total risk of the financial system declined by 5% (latest figures
available from the Bank of Spain website, as at October 2012). The reasons for this
situation are deleveraging by households and businesses, combined with a contraction of
the markets, which led to a substantial reduction in liquidity in the system.
NPLs, a reflection of credit quality, continued to increase, by much more than in 2011,
contributing to greater control and restriction of credit risk. In general terms both
households and businesses have needed to refinance their debt.
The volume of distressed assets linked to the real estate sector is the main problem of
the economy. It has involved an increase in the volume of assets repossessed by the
institutions, which looks set to continue to grow considerably over the next few years.
If to these existing NPLs we add repossessed assets and assets classified as substandard
because of the sector they belong to or the unlikelihood of ability to repay, the deterioration
in the quality of credit risk has been very significant.
Over the course of 2012 further progress was made with the process of recapitalising and
restructuring of the Spanish financial sector that had started in 2009 and the purpose of
which is to ease tensions in the financial markets deriving from the sovereign debt crisis
and doubts about the Spanish financial sector.
The measures taken in 2012 to strengthen and restructure financial institutions were:
a) New requirements for additional provisions for exposure to credit risk on real estate
construction and development, applying to problem loans, repossessed assets and also
regular status lending (Royal Decree-Laws 02/2012 and 18/2012).
Bankinter was among the first banks to meet these requirements, provisioning all
required additional amounts in the first half of the year. The total amount concerned was
€275.2 million. These provisions will enable the Bank to cover any losses deriving from
its small real estate risk in the coming years.
b) Independent in-depth valuation of balance sheets in the financial sector. This exercise
was conducted with the 14 biggest banks, which represent 90% of the financial sector. The
exercise was carried out between May and September 2012
-Phase 1: Top-down analysis carried out by Oliver Wyman and Roland Berger to evaluate
the financial system’s ability to withstand a highly adverse base scenario. The study
showed that the system as a whole needed between €51 billion and €62 billion in
additional capital in the adverse scenario.
-Phase 2: Bottom-up analysis. A detailed individual analysis was carried out of each
bank’s credit portfolios, to assess the appropriateness of their systems for classifying,
provisioning and measuring their risks, as well as the procedures established for dealing
with unpaids.
Based on this analysis a more comprehensive exercise was developed, applying a stress
test to calculate individual additional requirements in the two scenarios, base and
adverse. The exercise was carried out by consultants Oliver Wyman together with the
leading audit firms in Spain and under the supervision of the Boston Consulting Group.
The adverse scenario used was very tough, the toughest of any applied to stress tests
carried out in Europe to date. The probabilities of default used were multiplied by three
for businesses and property developers, and by five for residential mortgage lending
while for repossessed assets a loss of 64% was assumed. As for the absorption capacity,
the exercise was highly restrictive in terms of net results from financial transactions and
future trading income.
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In Bankinter, it involved the rigorous analysis of 9% of the credit risk portfolio and more
than half of the Bank’s risk on property developers.
In the adverse scenario core tier one capital (CT1) required is 6%, while in the base case it is 9%.
The results were that at overall sector level, additional capital requirements amounted to
€57 billion before tax.
For Bankinter the results were highly satisfactory, the Bank being one of seven institutions,
representing 62% of the risk portfolio analysed, that does not need additional capital
in the adverse scenario. Bankinter is one of the banks in “group zero”, with no capital
shortfall.
The main conclusions of the exercise in Bankinter are:
- Capital ratio of 7.4% in the adverse scenario, well in excess of minimum requirements,
with a capital surplus of €399 million.
Computable credit risk fell by just 0.95%, which compares favourably with the deleveraging
being carried out throughout the banking industry. Once again our Bank stands out
because of the solidity of its credit portfolio, which enables it to outperform its peers.
Good risk selection in this period will help the Bank to emerge from the crisis with a clear
competitive advantage over its rivals.
The Bank has a very solid risk culture at all levels, with a team of highly qualified people
who, together with the support of advanced information systems, constitute one of its
basic pillars.
In terms of arrears, we ended the year with a ratio of 4.28% compared with 3.24% the
year before. This compares very favourably with the system (Bank of Spain: 7.90% in
December 2011 and latest figure, in October 2012, of 11.23%) as we have less than half
the sector’s average delinquency rate. As in 2011, companies were the worst affected,
although it should be pointed out that in 2012 the private individuals business suffered
the consequences of the persistent crisis.
- Level of expected losses of 7.2% of total assets in the adverse scenario, the lowest in the
financial sector
- Expected loss of 6.5% on the loan portfolio in the adverse scenario, by far the lowest in its
peer group and with the lowest ratios in both the private individuals and the residential
mortgage loan portfolios (4.1% and 2.1% respectively) as well as in lending to businesses
(16%).
- The portfolio mix is ideal in terms of credit risk, due to the minimal exposure to real
estate risk.
Evolution of NPLs, Whole Sector vs. Bankinter (%)
12
10
8
6
4
2
11.23%*
4.28%
Analysis of credit risk
QUALITY OF ASSETS €000s
“Computable risk” (total lending)
excluding securitisation
46,355,295 46,802,151 -446,856 -0.95
Doubtful debts 1,984,028 1,515,766 468,262 30.89
Provisions for credit risk 958,523 786,080 172,443 21.94
NPL ratio (%) 4.28 3.24 1.04 32.10
Non-performing loans coverage ratio (%) 48.31 51.86 -3.55 -6.85
Repossessed assets 611,665 484,408 127,257 26.27
Provision for impairment of repossessed
assets
230,524 175,894 54,630 31.06
Coverage of repossessed assets (%) 37.69 36.31 1.38 3.80
0
86 88 90 92 94 96 98 00 02 04 06 08 10 12*
Sector Bankinter *Sector data as at October 2012
The volume of problematic and repossessed assets continues to be well below those of the
Bank’s main competitors in comparative terms.
Thanks to the prudent credit approval policy applied in both the growth phase of the
economy and the present contracting one, the volume of risk secured by mortgages (64%)
180
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ensures better results in the current crisis. It should be borne in mind that LTV or loan
to value ratios applied have been in accordance with prudent criteria, the current ratio
being 54%, to guard against possible falls in prices as indeed have come about and are
likely to continue. Lastly, we would highlight the fact that 83% of the mortgage portfolio
is secured by residential properties, and this has proven to be the greatest strong point in
confronting the current recession.
Another example of the judicious risk policy was the decision to keep exposure to risk
on property developers to a minimum (approximately 2%). This being one of the serious
problems giving rise to the present crisis in all financial institutions, Bankinter’s highly
restrictive policy in approving risk on property developers, with almost no financing of
land purchases, now represent a clear competitive advantage.
Although NPLs continued to increase in the SME segment, the monitoring policy aimed at
greater reinforcement of collateral (53%) meant that the volume of specific provisioning
required was actually lower.
Private individuals
The excellent credit quality of the Bank’s private individuals portfolio remains unaltered,
with a non-performing loans ratio of 2.5%.
The approval policy for residential mortgage loans, the product with the biggest exposure
in the portfolio, has followed very conservative criteria, with the maximum LTV having
been established at 80% since 2003 in anticipation of the downturn, which again sets us
apart from the sector as a whole.
The breakdown of the portfolio by LTV is as follows:
MORTGAGE PORTFOLIO BY TRANCHES % LTV PRIVATE INDIVIDUALS
LTV 00 - 10% 16.84
LTV 10 - 20 % 11.74
LTV 20 - 30 % 12.19
LTV 30 - 40 % 12.79
LTV 40 - 50 % 13.53
LTV 50 - 60 % 13.02
LTV 60 - 70 % 10.84
LTV 70 - 80 % 6.00
LTV 80 - 90 % 1.96
LTV 90 - 100 % 1.11
TOTAL LTV BRACKETS 100
The NPL ratio (2.16% in December 2012) continues to be the best in the entire financial
system, which in September 2012 (the latest information published by the Mortgage
Association of Spain) had a ratio of 3.49% for this type of lending.
(Data provided by the Spanish Mortgage Association)
*Sector data for September 2012 vs. Bankinter for December 2012
Non-performing loans ratio for home mortgages. Private individuals (%)
The average effort (measured as the proportion of income that the customer allocates
to paying mortgage loan instalments) in the mortgage portfolio remained at a very low
level (23%).
4
3
3.49%*
2
1
2.16%
0
07 08 09 10 11 12
System Bankinter *Sector data for September 2012 vs. Bankinter for December 2012
(Data provided by the Spanish Mortgage Association)
181
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Corporate Banking
Since the onset of the crisis, and in line with the strategy laid down by the Board for
taking advantage of our competitive advantage, this has once again been the segment
with the most growth (16%). By focusing on the major corporates, with which it has
many years of experience, the Bank has been able to attract new customers and increase
credit exposure with a low incidence of NPLs. Total risk in Corporate Banking amounted
to €13.12 billion, while NPLs, at €339 million, were still well contained, ending the year
with an NPL ratio of 2.6%.
This growth continued on the basis of principles which remain fixed, notably:
- Monitoring of current risks.
-Systematic use of rating models based on statistical rating and subjective assessment by
the Risks Committee.
- Conservative customer portfolio management.
- Optimisation of the risk-return trade-off.
- Long-term investment, with the aim of a long-term relationship with the customer.
- Diversification of sectors and terms
Small and medium-sized enterprises
Credit risk totalled €6,506 million, representing a 4% drop due to the economic slowdown.
The non-performing loan ratio was 10.5%.
The institution has automatic decision models for risk management and teams of highly
experienced risk analysts.
Diversification by sectors, which allows management by portfolios and greater dilution of
the risk amongst them all.
It should be highlighted that 64% of the outstanding arrears balance for SMEs has
mortgage guarantees with an LTV ratio of 39%.
Control, Monitoring, and Recoveries
The Control, Recoveries and Real Estate Assets Department reports directly to the
Executive Vice-Chairman, thus ensuring its independence. Its basic function is to direct
and manage the monitoring and control procedures for loans and receivables. It also
defines and establishes the processes for recovering non-compliant positions. During this
past year the Real Estate Assets Unit was incorporated under this Directorate in order to
achieve greater integration of this part of the recovery process.
In 2012 the team’s wide experience and the excellent functioning of the processes and
tools enabled us to optimise the level of recoveries.
Bankinter has had automatic systems in place for years for controlling and monitoring
credit risk on a permanent basis.
In 2012 we saw a bigger increase in non-performing loans than in the previous year. The
volume of new NPLs increased due to the deepening crisis in the second half of the year,
although the ratio of recoveries to new cases was maintained above 80%.
Our limited exposure to property developers, which have been most penalised by the
crisis, has enabled us to widen our lead over the sector as a whole and over our closest
rivals in terms of the arrears ratio.
The Control and Recoveries Process involves:
1. Support from technology (CRM).
2. Traceability.
3. Integration of all information from all parties involved, external and internal.
4. Behavioural models (Basel II).
The Bank has various applications for monitoring loans and advances.
• Statistical customer alert.
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• Risk Rating “special watch” and “risk to be eliminated”.
Real estate assets
• Branch-Office Alerts
• Back-testing
Variation in non-performing loans Balance and ratio (Data in €millions and %)
2.000
1.500
1.000
500
0
0.36%
157
1.34%
607
486
2.46%
1,093
07 08 09 10 11 12
Increase in the year Changes in arrears
2.87%
1,330
237
3.24%
1,516
186
468
4.28%
The portfolio of credit risk refinancing and restructuring transactions at the end of 2012
stood at €1.38 billion, with any amendment to credit risk conditions being considered as
refinancing. The majority of refinancing operations have additional guarantees.
1,984
The balance of the current real estate portfolio amounts to €610.9 million, representing
an increase of €128 million on the previous year.
Real estate assets are highly diversified in geographical terms and as regards property
type, which makes them easier to sell. The volume of sales amounted to €146 million,
representing an increase of 74% compared with the previous year.
The coverage of repossessed assets stood at 37.7% in December 2012.
In the real estate asset portfolio, we would highlight the virtual absence of property
developments in progress and the limited number of non-urban plots, both of which are
products with a much more limited market in the current situation.
Provisions
Solvency levels and asset coverage allow us to face the current situation in optimum
conditions.
The doubtful mortgage portfolio with mortgage guarantees presents an LTV ratio of 47%
and given this fact, plus the excellent default ratio with mortgage guarantees, losses on
the mortgage portfolio are insignificant.
Loan Provisions (% coverage)
The flow of non-performing loan balances was as follows:
100
80
Impaired assets 31/12/2012 31/12/2011
Balance at start of period 1,515,767 1,329,980
Net additions 660,973 421,203
Written off 192,712 235,417
Balance at close of period 1,984,028 1,515,766
Provision for impairment 958,523 786,080
60
52%
40
48%
20
0
Dec 11 Dec 12
183
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Reputational Risk
Reputational Risk is the risk that is inherent to taking steps with clients that may lead to
negative publicity regarding practices and business relations, which may cause a loss of
trust in the institution’s moral integrity.
The responsibility is to detect, analyse and evaluate the potential impact (severity) of all
practices and factors inherent in the activity carried out and which may induce reputational
risk, as well as the task of establishing processes for monitoring and controlling such
mitigating practices and measures or, if applicable and possible, eliminating the risk
inherent in them.
The Operational, Reputational and New Products Risk Committee meets on a regular
basis, with the following functions as regards reputational risks:
• To promote the implementation of reputational risk policies.
• To monitor mitigation projects for substantial risks.
• To decide on the proposals put to the Committee as possible reputational risk events.
• Validating compliance with procedures and protocols for identifying and assessing
reputational risks. This function is particularly relevant where launches of new products
or business lines are concerned.
4. Use of financial instruments to hedge risks.
As at 31 December 2012, the Group held hedging derivatives in the amount of €152.20
million recognised on the assets side of the balance sheet and €43.10 million recognised
on the liabilities side (€118.65 million and €68.68 million on the assets and liabilities
sides respectively as at 31 December 2011). Net derivatives amounted to €109.10 million
and €49.97 million as at 31 December 2012 and 2011 respectively.
The breakdown of the hedging derivatives and the corresponding hedged elements,
differentiating according to the type of hedging, is as follows:
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Hedged Instrument Type of Hedging Hedging Instrument
Nominal Hedged
(€ million)
Nature of Hedged
Risk
Fair value of the Hedged Instrument
attributed to the hedged risk
Fair Value of the Hedging
Instrument (ex-coupon)
31/12/2012 31/12/2012 31/12/2011 31/12/2011
Individual hedges or Micro-hedges:
Financial assets-
Public Debt Individual hedges or Micro-hedges: Interest-rate swaps 150 Interest Rate 29,611 (29,345) 25,499 (24,948)
Financial liabilities-
Subordinated Debt Individual hedges or Micro-hedges: Interest-rate swaps 290 Interest Rate (59,848) 61,572 (58,257) 59,330
€000s
Senior Debt Individual Hedges or Micro-hedges: Interest-rate swaps 79 Interest Rate (131) 64 (677) 656
Customer Deposits Individual hedges or Micro-hedges: Interest-rate swaps 5 Interest Rate (1,871) 1,872 (1,978) 1,977
Backed issue Individual hedges or Micro-hedges: Interest-rate swaps - Interest Rate - - (621) 597
FAAF bonds Individual hedges or Micro-hedges: Interest-rate swaps - Interest Rate - - (299) 285
Mortgage Bond Issues Individual hedges or Micro-hedges: Interest-rate swaps 3.910 Interest Rate (47,853) 48,124 (19,972) 19,842
Macro-hedging-
Mortgage Loans Macro-hedging Interest-rate swaps 1.875 Interest Rate 3,018 (2,990) 11,463 (11,336)
(77,074) 79,297 (44,842) 46,403
The following is a comparison of cum-interest and ex-interest hedging instruments as at
31 December 2012 and 2011:
€000s
31/12/2012 31/12/2011
With
interest Ex-interest With interest Ex-interest
Public Debt (32,011) (29,345) (26,916) (24,948)
Subordinated Debt 63,661 61,572 60,520 59,330
Customer Deposits 1,462 64 1,677 656
Senior debt 562 1,872 1,330 1,977
Backed issue - - 10,476 597
FAAF bonds - - 5,228 285
Mortgage Bond Issue 86,522 48,124 39,266 19,842
Macro-hedging - Mortgage loans (11,095) (2,990) (41,607) (11,336)
Other
109,101 79,297 49,974 46,403
185
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The Group uses interest-rate swaps as hedging instruments. These swaps give rise to an
economic interest rate exchange with no principal being exchanged.
The following is a description of the main characteristics of the bank’s hedges as at 31
December 2012.
1.- Public Debt Hedging classified in the portfolio of available-for-sale assets
In this type of hedging, the hedged elements are Spanish State Public Debt securities at
5.50% for a total nominal value at closure of €150 million recognised under the heading
“Available-for-sale financial assets” in the assets included in Note 8. The risk hedged is the
change in the fair value of these securities as a result of changes in the risk-free interest
rate. The accounting hedge is used to exchange exposure to fixed interest for exposure to
variable interest. In each case, the amount hedged represents 100% of the issue.
2.- Hedging of issues of subordinated bonds
In this case the items hedged are subordinated bonds issued by Bankinter at fixed interest
rates of 6.00% and 6.375% for a total amount of €290 million, shown under the heading
‘Financial liabilities at amortised cost’ included in Note 19. The risk hedged is the change
in the fair value of these securities as a result of changes in the risk-free interest rate. This
accounting hedge is used to transform exposure to a fixed interest rate into exposure to
a variable interest rate. In each case, the amount hedged represents 100% of the issue.
3.- Hedging of issues of senior bonds
In this case the items hedged are senior bonds issued by Bankinter for a 3% fixed interest
rate for a total sum of 79 million euros carried under the heading 'Financial liabilities at
depreciated cost' of the liabilities included under (Note 19). The risk hedged is the change
in the fair value of these securities as a result of changes in the risk-free interest rate. This
accounting hedge is used to transform exposure to a fixed interest rate into exposure to a
variable interest rate. The amount hedged is 100% of the issue.
4.- Hedging of Customer Deposits
The elements hedged are various fixed-rate deposits taken from customers in the amount
of €5 million and shown under the heading “Financial liabilities at amortised cost”
included in Note 19. The risk hedged is the change in the fair value of these deposits as a
result of changes in the risk-free interest rate. This accounting hedge is used to transform
exposure to a fixed interest rate into exposure to a variable interest rate. The amount
hedged is 100% of the issue.
5.- Hedging of mortgage-backed bond issues
The instruments hedged are issues ES0413679079 (€899 million), ES0413679095 (€613
million), ES0413679079 (€400 million), ES0413679111 (€498 million), ES0413679178
(€1 billion) and ES0413679202 (€500 million) of mortgage bonds for a total nominal
value of €3.91 billion.
The risk hedged is the six-month interest rate risk at the start of each interest period to
which the above fixed-income instrument is exposed as a consequence of changes in the
risk-free interest rate, excluding changes due to possible credit risk premiums, market
liquidity or any other than the aforementioned interest-rate risk.
6.- Portfolio hedging
The element being hedged is the amount of the mortgage loans that it is decided to
hedge on a monthly basis according to the time distribution of the maturity and variable
interest-rate review dates to which they are linked.
The risk being hedged is the interest to which the aforementioned mortgage loan amounts
are exposed for each of the rate-review terms that are to be hedged, as a consequence of
changes in the risk-free interest rate.
In this hedge, the risk-free interest rate is understood as corresponding to the variable
interest rate for interest rate swaps (IRS).
The instruments used to hedge the various mortgage loan amounts are IRS, contracted on
a monthly basis depending on decisions taken with regard to managing interest-rate risk.
Effectiveness of the hedging:
The Micro-hedges and Portfolio Hedging described above are highly effective. The Bank
performs and documents the necessary analyses to verify that at the start and during the
lifetime of same, it is possible to expect, on a prospective basis, that the changes in the
fair value of the hedged item that are attributable to the hedged risk will be almost fully
compensated for by the changes in the fair value of the hedging instrument and, on a
retrospective basis, that the results of the hedging will have fluctuated within a range of
variation of between eighty and one hundred and twenty-five percent from the result of
the hedged item.
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As regards portfolio hedges, as well as the foregoing, the Bank verifies compliance with
the alternative, described in current applicable accounting regulations, of appraising
their effectiveness by comparing the amount of the net asset position in each of the time
periods with the hedged amount designated for each one. According to this alternative,
the hedge would be ineffective only if upon review the amount of the net asset position
were lower than the hedged amount.
5. New products
This past year saw fierce competition for remunerated deposits in the financial sector.
Over the course of the year we adapted our offering and made it more flexible in order
to respond to customer needs and preferences at any given time, as well as offering
competitive rates. As a result of this effort to adapt, and also of the excellent image that
the Bank’s rigorous approach projects in the markets, plus its inclusion in the so-called
“zero group” for additional capital requirements, the net increase in remunerated deposits
was 14.1%.
As regards current accounts, we continued with the Payroll Account campaign started in
2011. There was a sharp increase in the number of new accounts opened, reflecting the
fact that its terms are possibly the best in the market.
In 2012 the markets were characterised by uncertainty and volatility, making it difficult
for customers to make decisions. The Bank has made all its analytical power available to
customers, with new product lines allowing customers to delegate part of the management
of their assets to Bankinter. In 2012 the Bank launched a new product called “Delegated
Wealth Management” which meets this need and which has been extremely well received
by customers.
As regards lending, Bankinter increased financing to customers following its habitual
rigorous and diversifying approach.
The decline in the mortgage lending market was offset by the increase in business
financing in all its various forms. Bankinter’s role in the ICO mediation lines, in which
we have raised our share from last year to 4.9% of the total financing provided by the
banking sector under the ICO-funded scheme.
In 2012 we saw companies looking to exports as a way out of the ups and downs of
domestic business. Bankinter is committed to providing further support for this initiative,
and to this end we will continue with the project that we launched in 2011, further
developing its two main thrusts:
- Creating a range of new foreign trade services for our customers, not limited to banking
but extending to the essence of their international activity or expansion - search for
assistance, grants, international tender opportunities, consortia, etc.
- And developing our own banking products and services, adapting them to suit actual
current needs, and with a clear view focused on the customer’s day-to-day operations.
Increasing available self-service operability through remote channels so as to bring
customers closer to their handling of international business with Bankinter.
During 2011, Bankinter continued to offer its HNW customers alternative investments
with which to diversify their assets. The assets most in demand were ‘buy to let’,
particularly commercial buildings and shops, preferably located in privileged commercial
zones, occupied by first rate tenants and with solid leases.
Bankinter offers a wide range of products and services for stock market investors,
including spot trading on the national market and the main international markets, as
well as transactions involving derivatives, warrants and futures. Also worthy of note is
the possibility of operating on credit, making the most of opportunities in both bull and
bear markets, or the hiring of a broad range of ETFs, listed funds that allow investors to
combine the agility of a stock market investment with the possibility of diversification
offered by investment funds. Lastly, customers have access to various tools to help them
manage risk. For example they can select the type of order to be sent to the stock market:
stop, dynamic, referenced and linked orders, with conditions and restrictions, etc.
At the close of 2012, one in every five customers had at least one securities account with
Bankinter.
6. Foreseeable evolution
Looking towards the future, the Group will continue to develop its business model based
on creating value through differentiation, focusing on service quality and supported by
multi-channelling and ongoing innovation, as well as strict monitoring of asset quality
and solvency. With this model, it expects to maintain the positive trend in results and
value creation.
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7. Subsequent events
No events having a significant effect on these consolidated financial statements have
occurred between the end of the reporting period and the date on which these statements
were approved.
8. Research and development activities
At the close of financial year 2012, the bank was not engaged in any significant research
and development activities.
9. Dependence on patents and licences
At the close of financial year 2012, the Bankinter Group is not affected by any relevant
degree of dependency as regards the issuers of patents, licences, industrial, commercial
or financial contracts or new manufacturing processes.
10. Transactions with treasury shares
These transactions are described in Note 22 of the Consolidated Report and in Note 21 of
the Individual Report.
11. Corporate Governance Report
This is attached as a separate document.
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