Bankinter Group Consolidated Financial Statements 2011

Bankinter Group 

Consolidated Financial 

Statements 2011

2 Bankinter Group Consolidated Financial Statements 2011 

Contents 

Auditor's Report................................................................................................................4 

Consolidated Balance Sheets...........................................................................................5 

Consolidated Income Statements....................................................................................6 

Consolidated Statements of Comprehensive Income......................................................7 

Consolidated Statement of Changes in Equity...............................................................8 

Consolidated Statements of Cash Flows.......................................................................10 

1 Nature of the Group and its activities and composition............................................11 

2 Accounting principles applied...................................................................................11 

3 Appropriation of profit (loss).....................................................................................18 

4 Deposit Guarantee Fund............................................................................................19 

5 Accounting principles and valuation rules applied...................................................19 

6 Cash and balances with central banks......................................................................38 

7 Trading portfolio of assets and liabilities and Other financial assets and liabilities . 

at fair value through profit or loss.............................................................................38 

8 Available-for-sale financial assets.............................................................................42 

9 Held-to-maturity investments...................................................................................43 

10 Loans and receivables................................................................................................43 

11 Asset/liability hedging derivatives............................................................................46 

12 Non-current assets held for sale................................................................................49 

13 Investments................................................................................................................51 

14 Tangible assets...........................................................................................................57 

15 Intangible assets........................................................................................................58 

16 Reinsurance assets.....................................................................................................59 

17 Tax assets and liabilities............................................................................................60 

18 Other assets and liabilities.........................................................................................61 

19 Financial liabilities at amortised cost........................................................................61 

20 Liabilities under insurance policies...........................................................................68 

21 Provisions...................................................................................................................69 

22 Equity.........................................................................................................................70 

23 Valuation adjustments (equity).................................................................................74 

24 Contingent risks and commitments..........................................................................74 

25 Financial asset transfers............................................................................................75 

26 Other memorandum accounts - financial derivatives...............................................78 

27 Personnel expenses....................................................................................................78 

28 Fees received and paid...............................................................................................84 

29 Interest and similar charges/income.........................................................................84 

30 Finance income/costs.................................................................................................85 

31 Exchange differences (net)........................................................................................85 

32 Other general administrative expenses....................................................................86 

33 Other operating income and expense.......................................................................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 of and balances with members of the Board of Directors.................88 

37 Environmental information.......................................................................................93 

38 Customer Service........................................................................................................95 

39 Offices, centres and agents........................................................................................96 

40 Trust and investment services...................................................................................96 

41 Auditor’s remuneration..............................................................................................96 

42 Tax situation...............................................................................................................97 

43 Assets and liabilities valued at other than fair value.............................................100 

44 Risk policies and management................................................................................101 

45 Information by segments.........................................................................................119 

46 Equity holdings in credit institutions......................................................................120 

47 Information required by Law 2/1981 of 25 March regulating the mortgage . 

market and by Royal Decree 719/2009 of 24 April developing certain aspects . 

of said law...............................................................................................................120 

48 Exposure to the construction and property development sector............................130 

49 Subsequent events...................................................................................................133 

50 Explanation Added for Translation to English........................................................133 

Appendices 

I Transactions with related parties............................................................................135 

II Segmented information...........................................................................................139 

III Financial Statements of Bankinter, S.A...................................................................142 

IV Individualised information on certain issuances, buy-backs. 

or redemptions of debt securities...........................................................................148 

MANAGEMENT REPORT..............................................................................................151



Consolidated Annual Financial 

Statements for the financial year 

ended 31 December 2011 and 

Consolidated Management Report, 

together with Auditor's Report 

Translation of a report originally issued in Spanish 

based on our work performed in accordance with 

generally accepted auditing standards in Spain and) 

of financial statements originally issued in Spanish 

and prepared in accordance with generally accepted 

accounting principles in Spain (see Note 50). In the 

event of a discrepancy, the Spanish-language version 

prevails.

4 Bankinter Group Consolidated Financial Statements 2011


Consolidated balance sheets as at 31 December 2011 and 2010 (notes 1 to 3) (€000s) 

ASSETS Note 31-12-11 31-12-10 (*) LIABILITIES AND EQUITY Note 31-12-11 31-12-10 (*) 

CASH AND BALANCES WITH CENTRAL BANKS 6 412,795 196,401 LIABILITIES 

FINANCIAL LIABILITIES HELD FOR TRADING 7 2,415,506 1,875,834 FINANCIAL LIABILITIES HELD FOR TRADING 7 2,360,584 1,943,429 

Debt instruments 1,768,879 1,275,490 Trading derivatives 857,273 854,126 

Equity instruments 101,733 87,769 Short positions in securities 1,503,311 1,089,303 

Trading derivatives 544,894 512,575 

Memorandum items: Loaned or advanced as collateral 1,768,879 984,898 

OTHER FINANCIAL ASSETS AT FAIR 

OTHER FINANCIAL LIABILITIES AT FAIR VALUE. 

THROUGH PROFIT OR LOSS 

7 - 88,745 

VALUE THROUGH PROFIT OR LOSS 7 31,377 35,727 Customer deposits - 88,745 

Equity instruments 31,377 35,727 

Memorandum items: Loaned or advanced as collateral - - FINANCIAL LIABILITIES AT AMORTISED COST 19 52,929,285 48,479,559 

Deposits from central banks 7,006,897 3,301,646 

AVAILABLE-FOR-SALE FINANCIAL ASSETS 8 4,776,069 3,100,215 Deposits from credit institutions 3,260,647 2,462,457 

Debt instruments 4,644,306 2,961,894 Customer deposits 25,505,317 24,176,201 

Equity instruments 131,763 138,321 Marketable debt securities 15,540,242 16,895,422 

Memorandum items: Loaned or advanced as collateral 3,074,142 1,227,514 Subordinated liabilities 958,170 1,118,631 

Other financial liabilities 658,012 525,202 

LOANS AND RECEIVABLES 10 47,167,367 44,126,944 

Loans and advances to credit institutions 1,779,395 1,601,470 MACRO-HEDGING ADJUSTMENTS TO FINANCIAL LIABILITIES 

Loans and advances to customers 45,387,972 42,525,474 

Memorandum items: Loaned or advanced as collateral 950,667 693,928 

HEDGING DERIVATIVES 11 68,677 40,441 

HELD-TO-MATURITY INVESTMENTS 9 3,150,931 3,241,573 

Memorandum items: Loaned or advanced as collateral - 1,770,513 LIABILITIES ASSOCIATED WITH NON-CURRENT ASSETS HELD FOR SALE - - 

MACRO-HEDGING ADJUSTMENTS TO FINANCIAL ASSETS 11 11,463 1,308 LIABILITIES UNDER INSURANCE CONTRACTS 20 642,782 654,923 

PROVISIONS 21 64,122 71,090 

HEDGING DERIVATIVES 11 118,651 171,917 Pension funds and similar obligations 5,245 7,836 

Provisions for contingent risks and commitments 20,626 22,268 

NON-CURRENT ASSETS HELD FOR SALE 12 308,514 271,537 Other provisions 38,251 40,986 

INVESTMENTS 13 28,341 29,593 TAX LIABILITIES 17 189,555 183,846 

Associates 26,301 29,067 Current 70,572 41,789 

Joint arrangements 2,040 526 Deferred 118,983 142,057 

PENSION-LINKED INSURANCE AGREEMENTS 27 5,140 7,690 OTHER LIABILITIES 18 149,425 110,249 

REINSURANCE ASSETS 16 3,928 2,657 TOTAL LIABILITIES 56,404,430 51,572,282 

TANGIBLE ASSETS 14 466,901 456,569 EQUITY (NET ASSETS) 3,086,996 2,579,695 

Property, plant and equipment 466,901 456,569 EQUITY 22 3,118,641 2,602,488 

For own use 435,354 444,396 Capital 143,076 142,034 

Assigned on operating lease 31,547 12,173 Registered 143,076 142,034 

Investment property - - Issue premium 737,079 737,079 

Memorandum items: Acquired under finance lease - - Reserves 1,711,705 1,648,910 

Accumulated reserves (losses) 1,700,635 1,636,260 

INTANGIBLE ASSETS 15 338,040 358,209 Accumulated reserves (losses) of entities accounted for using the equity method 11,070 12,650 

Goodwill 161,836 161,836 Other equity instruments 404,812 - 

Other intangible assets 176,204 196,373 Remaining equity instruments 404,812 - 

TAX ASSETS 17 159,271 164,375 Less: Treasury shares (742) (1,753) 

Current 55,742 70,563 Profit (loss) attributable to owners of the parent company 181,227 150,730 

Deferred 103,529 93,812 Less: Dividends and remuneration (58,516) (74,512) 

OTHER ASSETS 18 97,132 111,428 VALUATION ADJUSTMENTS 23 (31,645) (22,793) 

Other 97,132 111,428 Available-for-sale financial assets (29,248) (22,994) 

Exchange differences 206 201 

Other valuation adjustments (2,603) --- 

MINORITY INTERESTS 

TOTAL ASSETS 59,491,426 54,151,977 TOTAL LIABILITIES AND EQUITY 59,491,426 54,151,977 

MEMORANDUM ITEMS: 

CONTINGENT RISKS 24 2,439,670 2,361,188 

CONTINGENT COMMITMENTS 24 9,208,807 9,258,379 

(*) 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 2011.


Consolidated Income Statement for the years ended 

31 December 2011 and 2010 (notes 1 to 3) (€000s) 

(Debit) Credit 

Note 2011 2010 (*) 

INTEREST AND SIMILAR INCOME 29 1,636,295 1,202,577 

INTEREST EXPENSE AND SIMILAR CHARGES 29 (1,093,620) (652,624) 

NET INTEREST INCOME 542,675 549,953 

INCOME FROM EQUITY INSTRUMENTS 16,491 14,456 

SHARE OF RESULTS OF ENTITIES ACCOUNTED FOR USING THE EQUITY METHOD 22 14,675 10,958 

FEES AND COMMISSIONS INCOME 28 265,641 261,479 

FEES AND COMMISSIONS EXPENSE 28 (66,758) (65,976) 

GAINS / LOSSES ON FINANCIAL ASSETS AND LIABILITIES (net) 30 59,162 71,152 

Trading portfolio 11,910 16,794 

Other financial instruments at fair value through profit or loss: 97 10,835 

Financial instruments not measured at fair value through profit or loss 45,987 46,572 

Other 1,168 (3,049) 

EXCHANGE DIFFERENCES (net) 31 38,678 49,319 

OTHER OPERATING INCOME 33 716,231 708,172 

Income from insurance and reinsurance policies issued 686,960 681,080 

Other operating income 29,271 27,092 

OTHER OPERATING EXPENSES 33 (482,315) (497,190) 

Expenses on insurance and reinsurance policies (455,442) (473,901) 

Other operating expenses (26,873) (23,289) 

GROSS INCOME 1,104,480 1,102,323 

ADMINISTRATIVE COST (580,822) (593,514) 

Personnel expenses 27 (329,965) (332,934) 

Other general administrative expenses 32 (250,857) (260,580) 

DEPRECIATION AND AMORTISATION 14/15 (64,097) (62,183) 

PROVISIONS (NET) 21 (28,175) (815) 

IMPAIRMENT LOSSES ON FINANCIAL ASSETS (NET) (158,229) (216,666) 

Loans and receivables 10 (156,196) (216,281) 

Other financial instruments not measured at fair value through profit or loss 8 (2,033) (385) 

PROFIT FROM OPERATIONS 273,157 229,145 

IMPAIRMENT LOSSES ON OTHER ASSETS (net) (1,244) (800) 

Goodwill and other intangible assets 

Other assets (1,244) (800) 

GAINS / LOSSES ON DERECOGNITION OF ASSETS NOT CLASSIFIED AS NON-CURRENT ASSETS HELD FOR SALE 34 25,205 (895) 

NEGATIVE GOODWILL ON BUSINESS COMBINATIONS - - 

GAINS / LOSSES ON NON-CURRENT ASSETS HELD FOR SALE NOT CLASSIFIED AS DISCONTINUED OPERATIONS 34 (56,970) (22,236) 

PROFIT BEFORE TAX 240,148 205,214 

INCOME TAX 42 (58,921) (54,484) 

PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS 181,227 150,730 

PROFIT (LOSS) FROM DISCONTINUED OPERATIONS (net) - - 

CONSOLIDATED PROFIT FOR THE YEAR 181,227 150,730 

Profit (loss) attributable to owners of the parent company 181,227 150,730 

Profit (loss) attributable to non-controlling interests 

EARNINGS PER SHARE 

Basic earnings (euros) 0.38 0.32 

Diluted earnings (euros) 0.35 0.32 

(*) 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 income statement for the year ended 31 December 2011.


Consolidated statements of comprehensive income for the years ended 31 December 2011 and 2010 

(notes 1 to 3) (€000s) 

2011 2010 (*) 

CONSOLIDATED PROFIT FOR THE YEAR 181,227 150,730 

OTHER COMPREHENSIVE INCOME (8,852) (52,681) 

Available-for-sale financial assets (8,934) (75,383) 

Gains (losses) on valuation (3,202) (42,800) 

Amounts transferred to profit and loss (5,732) (32,583) 

Other reclassifications - - 

Cash flow hedging - - 

Gains (losses) on valuation - - 

Amounts transferred to profit and loss - - 

Amounts transferred to the initial value of hedged items - - 


Hedging of net investments in foreign operations - - 



Other reclassifications 


Gains (losses) on valuation 71 124 

Amounts transferred to profit and loss (64) - 


Non-current assets for sale - - 




Actuarial gains (losses) on pension plans - - 

Entities accounted for using the equity method (2,603) - 

Gains (losses) on valuation (2,603) - 



Other comprehensive income - - 

Income tax 2,678 22,578 

TOTAL COMPREHENSIVE INCOME 172,375 98,049 

Attributable to owners of the parent company 172,375 98,049 

Attributable to non-controlling interests - - 

(*) Shown solely for purposes of comparison Notes 1 to 49 contained in the attached report and Appendices I to IV form an integral part of the consolidated statement of comprehensive income for the year ended 31 December 2011.


Consolidated statements of changes in equity for the years ended 


EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT COMPANY 

Issue 

premium 

. EQUITY Valuation 

adjustments 

Capital 

Accumulated 

reserves 

(losses) 

Other 

equity 

instruments 

Less: 

Treasury 

Shares 

Profit 

(loss) 

attributable 

to 

owners of 

the parent 

company 

Less: 

Dividends 

and remuneration 

Total 

Noncontrolling 

interests 

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 principle - - - - - - - - - - - 

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 

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 - - - - - - - - - - - 

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 

Transfers between equity headings - - 76,218 - (150,730) 74,512 - - - - - 

Total 

Equity 

Total 

equity 

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 the purpose of comparison 

Notes 1 to 49 contained in the attached report and Appendices I to IV form an integral part of the consolidated statement of changes in equity for the year ended 31 December 2011.


Consolidated statements of changes in equity for the years ended 


EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT COMPANY 


Notes 1 to 49 contained in the attached report and Appendices I to IV form an integral part of the consolidated statement of changes in equity for the year ended 31 December 2011. 

Capital 

Issue premium 

Accumulated 

reserves 

(losses) 

EQUITY 

Less: 

Treasury 

Shares 

Profit 

(loss) 

attributable 

to 

owners of 

the parent 

company 

Less: 

Dividends 

and remuneration 

Valuation 

adjustments 

Total 

Noncontrolling 

interests 

Opening balance at 31 December 2009 142,034 737,079 1,524,487 (538) 254,404 (104,464) 2,553,002 29,888 2,582,890 - 2,582,890 

Adjustments due to changes in accounting principle - - - - - - - - - - - 

Adjustments due to errors - - - - - - - - - - - 

Adjusted opening balance 142,034 737,079 1,524,487 (538) 254,404 (104,464) 2,553,002 29,888 2,582,890 - 2,582,890 

Total comprehensive income - - - - 150,730 - 150,730 (52,681) 98,049 - 98,049 

Other changes in equity - - 124,423 (1,215) (254,404) 29,952 (101,244) - (101,244) - (101,244) 

Increases in capital/endowment fund - - - - - - - - - - - 

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 - - - - - (97,250) (97,250) - (97,250) - (97,250) 

Operations with shares / contributions to equity (net) - - (244) (1,215) - - (1,459) - (1,459) - (1,459) 

Transfers between equity headings - - 127,202 - (254,404) 127,202 - - - - - 

Increases (reductions) in equity due to business combinations (net) - - - - - - - - - - - 

Discretionary contributions to social funds and projects (Savings banks) - - - - - - - - - - - 

Payments with equity instruments - - - - - - - - - - - 

Other increases (reductions) in equity - - (2,535) - - - (2,535) - (2,535) - (2,535) 

Closing balance as at 31 December 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 

Total 

Equity 

Total 

equity


Consolidated statements of cash flows for the years ended 31 December 2011 and 2010 

(notes 1 to 3) (€000s) 

2011 2010 (*) 

NET CASH FLOW FROM OPERATING ACTIVITIES 186,683 1,544,877 

Consolidated profit for the year 181,227 150,730 

Adjustments to obtain cash flow from operating activities 303,560 355,446 

Amortisation 64,097 62,183 

Other adjustments 239,463 293,263 

Net increase/decrease in operating assets (5,257,528) 1,385,732 

Trading portfolio (539,674) 1,709,007 

Other financial assets at fair value through profit or loss 4,351 (19,366) 

Available-for-sale financial assets (1,684,541) 169,082 

Loans and receivables (3,153,285) (635,403) 

Other operating assets 115,621 162,412 

Net increase/decrease in operating liabilities 4,925,031 (389,472) 

Trading portfolio 417,155 452,264 

Other financial liabilities at fair value through profit or loss (88,745) (189,982) 

Financial liabilities at amortised cost 4,528,111 (591,222) 

Other operating liabilities 68,510 (60,532) 

Corporate tax collections/payments 34,393 42,438 

NET CASH FLOW FROM INVESTING ACTIVITIES 88,879 (1,731,950) 

Payments (96,238) (1,977,565) 

Tangible assets (86,202) (69,192) 

Intangible assets (8,618) (7,436) 

Investments (1,419) - 

Non-current assets held for sale and associated liabilities - (281,033) 

Held-to-maturity investments - (1,619,904) 

Collections 185,118 245,615 

Tangible assets 37,487 50,665 

Intangible assets - - 

Investments 2,000 5,604 

Non-current assets held for sale and associated liabilities 54,988 189,346 

Held-to-maturity investments 90,643 - 

NET CASH FLOW FROM FINANCING ACTIVITIES 160,754 (121,790) 

Payments (88,067) (167,802) 

Dividends (58,352) (110,408) 

Subordinated liabilities - (50,000) 

Acquisition of own equity instruments - - 

Other payments linked to financing activities (29,715) (7,394) 

Collections 248,821 46,012 

Subordinated liabilities - 40,000 

Issue of own equity instruments 211,568 - 

Disposal of own equity instruments 31,380 6,012 

Other inflows linked to financing activities 5,873 - 

EXCHANGE GAINS/(LOSSES) ON CASH AND CASH EQUIVALENTS - - 

NET INCREASE/DECREASE IN CASH AND CASH EQUIVALENTS (A+B+C+D) 436,316 (308,864) 

CASH AND CASH EQUIVALENTS AT START OF PERIOD 196,401 505,265 

CASH AND CASH EQUIVALENTS AT END OF PERIOD 632,717 196,401 


BREAKDOWN OF CASH AND CASH EQUIVALENTS AT END OF PERIOD 632,717 196,401 

Cash 114,751 105,492 

Balances equivalent to cash with central banks 298,044 90,659 

Other financial assets 219,922 250 

Total cash and cash equivalents at end of period 632,717 196,401 


Notes 1 to 49 contained in the report and Appendices I to IV form an integral part of the consolidated statement of cash flows for the year ended 31 December 2011.



Consolidated Report on the year ended 31 December 2011 

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. The Group's 

tax identification number is A-28157360 and it belongs to the Deposit Guarantee Fund 

under code number 0128. Its registered offices are located at Paseo de la Castellana 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 the operations which it carries on directly, 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 2011 and 2010 and the income 

statements for the years then ended are shown in Appendix III. 

2. Accounting principles applied 

a) Basis of presentation 

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 3 December 2011 have 

been approved by the Bank’s Directors (in a meeting of the Board of Directors held on 

13 February 2012), 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 2011 and the results of its operations, its consolidated comprehensive income 

and cash flows that took place in 2011. These financial statements for 2011 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 2010 were approved by the General 

Meeting of Shareholders held on 28 April 2011. 

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.


All figures appearing in this report referring to the year ended 31 December 2010 are 

presented solely and exclusively for purposes of comparison. 

The accounting policies and methods used to preare these annual accounts are the same 

as those applied in the consolidated annual accounts from 2010, considering the rules and 

interpretation which came into effect in 2011. Accordingly, we highlight the following: 

Standards and interpretations effective in the year under review 

During 2011 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 IAS 32 Financial Instruments: Presentation – Classification of rights 

issues: This amendment concerns the classification of rights issues (rights, options 

or warrants to acquire shares) denominated in foreign currency. In accordance with 

this amendment, provided these rights are offered to all shareholders and are for the 

acquisition of a fixed number of shares for a fixed amount, they are classified as equity 

instruments, regardless of the currency in which this amount is denominated and as long 

as other specific requirements of the regulation are complied with. 

- IAS 24 (revised 2009) Related party disclosures: This amendment introduces a partial 

exemption for certain breakdowns when the related party status arises from the parties 

being entities dependent on or related to the State (or equivalent government institution) 

and revises the scope applicable to the breakdowns required given the inclusion in the 

definition of related party of some relations between jointly controlled companies and 

associates of a single investor which were not previously explicit in the standard. 

- Improvements to IFRS (published in May 2010): Amendments to a number of standards 

- Amendment to IFRIC 14 Prepayment of a Minimum Funding Requirement: This 

amendment introduces the possibility of certain pre-payments of contributions where 

there is a minimum funding requirement being recognised as assets rather than expenses. 

- IFRIC 19 Extinguishing financial liabilities with equity instruments: Clarifies the 

requirements of IFRSs when an entity renegotiates the terms of a financial liability with 

its creditor and the creditor agrees to accept the entity’s shares or other equity instruments 

to settle the financial liability fully or partially The interpretation does not apply in this 

type of transaction when the counterparties at hand are shareholders or related and 

act as such or when the debt swap for equity instruments was already envisaged in the 

terms of the original contract. In all other cases the equity instruments issued will be 

measured at their fair value on the date on which the financial liability is extinguished 

and any difference between this value and the carrying amount of the financial liability 

extinguished will be recognised in profit or loss. 

Standards and interpretations which will be effective in coming financial years 

The following mandatory new standards, amendments and interpretations were issued 

but were not effective for the financial year beginning 1 January 2011 (applicable from 

2012 on): 

- Amendment to IFRS 7 Financial Instruments – Transfer of financial assets: This 

amendment broadens and tightens the disclosure requirements for transfer transactions, 

both those retained on the balance sheet and, more particularly, where the asset is 

derecognised. 

At the time these consolidated financial statements were drawn up, the most significant 

standards and interpretations that had been published by the IASB but had not yet come 

into force, either because their effective date is subsequent to the date of the consolidated 

financial statements or because they have not yet been adopted by the European Union, 

were as follows: 

- 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. 

- Amendment to IAS 12 Income Taxes - deferred tax relating to investment property: 

Changes the treatment of the calculation of deferred tax relating to investment property 

measured at fair value as per IAS 40. 

- IFRS 10 Consolidated financial statements: This will change 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 involvement with the investee; and that it has the ability to affect those returns 

through its power over the investee. 

- IFRS 11 Joint arrangements: This will replace 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 Disclosure of interests in other entities: This is a disclosure standard requiring 

new and extensive disclosures relating to an entity's interests in subsidiaries, joint 

arrangements, associates and unconsolidated entities. 

- 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. It changes the definition of fair value, introduces new, more nuanced 

criteria and also adds to disclosure requirements. 

- IAS 27 (Revised 2011) Separate financial statements and IAS 28 (Revised 2011) 

Associates and joint ventures: The amendments run parallel to the new IFRS (IFRS 10, 

IFRS 11 and IFRS 12) previously referred to. 

- Amendment to IAS 1 Financial statement presentation, regarding other comprehensive 

income: Minor amendment concerning the presentation of other comprehensive income. 

- Amendment to IAS 19 Employee benefits: The main impact of this amendment will be 

on the accounting treatment of defined benefit plans, since the corridor approach, which 

allowed certain actuarial gains and losses to be deferred, is eliminated. Starting from 

when the amendment comes into force all actuarial gains and losses will be recognised 

in OCI as they occur. It will also involve changes in the grouping and presentation of cost 

components in the statement of comprehensive income. 

- Mandatory Effective Date and Transition Disclosures (Amendments to IFRS 9 and IFRS 7): 

Postpones the effective date of IFRS 9 and modifies required transition disclosures. 

- Amendment to IAS 32 and IFRS 7 Offsetting Financial Assets and Financial Liabilities: 

Additional explanations of the rules for offsetting financial assets and liabilities under 

IAS 32, and associated new disclosure requirements under IFRS 7. 

The Group has yet to assess the impact of these standards. 

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) Judgements and estimates made 

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) 

Given that these estimates were made in accordance with the best information 

available at 31 December 2011 on the items concerned, it is possible that future events 

might require them to be revised in either direction in coming financial years. Any 

such revision will be made prospectively, recognising the effects of the change in 

estimate in the corresponding income statement. 

d) Basis of consolidation 

The Group has been defined in accordance with current applicable accounting 

regulations. Group Companies comprise Subsidiaries, Joint Arrangements and 

Associates. 

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 holdings in Group Companies as at 31 December 2011 and 2010 is 

given in Note 13. In 2011 there was no company considered to be a subsidiary in which 

the Group's holding was less than 50%. 

Subsidiaries are fully consolidated. 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 2011 

and 2010 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. 

Associates are accounted for using the equity method. 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.


Relevant information on holdings in Associates as at 31 December 2011 and 2010 is 

included in Note 13. In 2011 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 scope of consolidation. 

Note 13 includes information on the most significant acquisitions and disposals during 

the year regarding 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's financial statements. 

Business combinations are operations whereby two or more entities or economic units 

combine to form a single entity or group of companies. 

Thus at 31 December 2011 and 2010, 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 2010 exclusively for purposes of comparison with the 2011 figures, 

and therefore it does not constitute the Group's consolidated financial statements for 

2010. 

f) Equity 

Bank of Spain Circular 3/2008 of 22 May to 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 are required forward to the market. 

During 2011 the Group applied this Circular as updated by Circular 4/2011, which 

came into force on December 2011. 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 of 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, establishes which elements are to be counted as 

equity for the purposes of complying with the minimum requirements laid down in said 

regulation. For the purposes of the above rule, equity is classified as basic and second 

category equity, which differ from equity as calculated in accordance with EU-IFRS, 

certain items being considered as equity which are not so considered under EU-IFRS and 

vice-versa. Also, the consolidation and valuation methods for subsidiaries and associates 

used to calculate the Group's minimum capital requirements in accordance with these 

rules differ from those used in preparing these consolidated financial statements, which 

leads to differences between capital requirements as calculated in accordance with the 

two sets of rules. The Group manages its equity in accordance with the provisions of Bank 

of Spain Circular 3/2008 as far as conceptual definitions are concerned. 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 the risk concentration limits laid 

down in the Circular and to its own internal Corporate Governance obligations, as well as 

to capital self-assessment and measurement of the interest-rate risk and the public/market 

disclosure obligations which are also laid down in the abovementioned Circular. With 

a view to ensuring achievement of the abovementioned objectives, the Group manages 

these risks in an integrated manner in accordance with the aforementioned policies. 

As at 31 December 2011 and 2010 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 2011 and 2010 and the corresponding capital 

ratios are shown in the following table: 

€000s 

31-12-2011(*) 31-12-2010(*) 

Capital and Reserves 2,554,154 2,435,576 

Other equity instruments 404,812 

Preference shares 168,165 343,165 

Treasury shares (742) (1,753) 

Intangible and other assets (296,820) (339,044) 

Other deductions (165,736) (174,658) 

Tier 1 2,663,833 2,263,286 

Revaluation reserve 97,998 98,698 

Subordinated financing 658,232 706,354 

Generic loan provision 54,678 76,852 


Tier 2 656,665 707,246 

Total Equity 3,320,498 2,970,529 

Risk-weighted assets 28,454,731 30,963,938 

Tier 1 (%) 9.36 7.31 

Tier 2 (%) 2.31 2.28 

Capital ratio (%) 11.67 9.59 

. 

(*) Figures in accordance with Bank of Spain Circular 3/2008 on determining and controlling minimum equity. The 

lower limit of 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. 

In January 2011 the Ministry of the Treasury published its draft "Reinforcement Plan 

for the Financial Sector" which, among other targets, proposed to bring forward the 

solvency requirements laid down in Basel III, establishing certain minimum core capital 

requirements to be met before the autumn of 2011. 

On 18 February 2011 the Council of Ministers approved Royal Decree Law 2/2011 on the 

reinforcement of the financial system (hereinafter RDL 2/2011), which had two priority 

objectives: to greatly reinforce the solvency of credit institutions and their ability to 

withstand even the most adverse and unlikely of scenarios, and to facilitate funding for 

them, thereby ensuring that credit will be channelled to the real economy and therefore 

growth and employment.


This Royal Decree Law complements actions carried out in 2011 in the field of finance, 

such as the reform of savings bank’s governing bodies and the stress tests performed by 

the European Banking Authority, and facilitated the restructuring of Spain's financial 

sector. 

The Board of Directors of Bankinter, SA, in its extraordinary meeting of 7 March 2011, 

resolved, by virtue of the authorisation granted by the General Meeting of Shareholders 

of 23 April 2009, to issue Subordinated Bonds Mandatorily Convertible into newly issued 

Bankinter, SA shares in two series, Series I and Series II, for a total combined value of 

€406 million at three years from the date of issuance and disbursement. 

The issue was fully subscribed by 27 April 2011, the first tranche of €175 million by means 

of exchange of preferred shares, and the second one, for €229.81 million, giving a total of 

€404.81 million issued and subscribed. 

The entire amount of the issue counts for purposes of the Bankinter Group's core capital 

ratio, enabling it to reach 9.02% as at 30 September 2011, in accordance with the 

requirements of RDL 2/2011 which imposes a minimum core capital ratio of 8% with effect 

from that date. As at 31 December 2011 the core capital ratio was 9.47%. Pursuant to the 

provisions of Bank of Spain Circular 3/2008 as updated by Circular 4/2011, the issue counts 

as Tier 1 and is shown in the line “Other equity instruments”. 

g) Minimum reserve ratio 

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 2011 and 2010 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 €297.75 million and €90.66 million as at 31 December 2011 and 

2010 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 

2011 2010 

Amount % Amount % 

Paid within the maximum legal timeframe 718,537 100% 747,894 100% 

Other - - - - 

Total payments for the year 718,537 100% 747,894 100% 

Weighted average days past due 30 30 

Deferrals which exceed the legal maximum 

term as at year-end 

- - - - 

. 

The legal timeframe has been determined according to the nature of the goods or service 

received by the company under the terms of Law 3/2004 of 29 December establishing 

measures to combat payment delinquency in commercial transactions.


3. Appropriation of profit 

The proposed appropriation of profit of Bankinter, S.A. for the year ended 31 December 

2011, made by the Bank's Directors and subject to the approval of the General Shareholders 

Meeting is as follows:. 

. 

€000s 

31-12-11 31-12-10 

Appropriation: 

Voluntary reserves 76,529 2,619 

Interim dividend 76,887 74,512 

Profit appropriated 153,416 77,131 

Consolidated profit for the year 153,416 77,131 

The amount of dividends (€76.89 million) includes both the dividends actually distributed 

(€65.99 million) and the amount assigned to acquire free assignment rights from the 

shareholders who opted to receive the equivalent cash remuneration for the second interim 

dividend under the Bankinter Alternative Dividend flexible shareholder remuneration 

programme (€10.90 million). 

The breakdown of the interim dividends distributed and the corresponding liquidity 

statements are given in Note 22. 

In addition to these €76.89 million of dividends, a further €13.72 million worth of 

shares were granted to shareholders by way of remuneration (scrip dividend), under 

the Bankinter Alternative Dividend flexible shareholder remuneration programme, 

approved by the General Meeting of Shareholders of 28 April 2011. Shareholders holding 

263,906,373 warrants for free shares 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 

amount of €1.04 million. 

The proposed appropriation of profit for the year ended 31 December 2011 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. (41) - (41) 

Bankinter Seguros Generales, S.A 

3 - 3 - 

(formerly Bankinter Servicios de 

Consultoría S.A) 

Bankinter Gestión de Activos, S.A., 

10,664 

- 

S.G.I.I.C. 

10,664 - 

Hispamarket, S.A. 372 - 372 - 

Intermobiliaria, S.A. (68,719) - (68,719) - 

Bankinter Consumer Finance, S.A., E.F.C 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 - 

The appropriation of profits for the year ended 31 December 2010 of the subsidiaries 

of Bankinter, S.A., approved by their respective General Shareholders Meetings, was as 

follows:


€000s 

Earnings Dividend Reserves Applications 


Atención Telefónica, S.A. 433 - 433 - 

Bankinter Servicios de Consultoría, S.A. (4) - (4) - 

Bankinter Gestión de Activos, S.A., 

S.G.I.I.C. 11,808 11,808 - - 

Hispamarket, S.A. 85 - 85 - 

Intermobiliaria, S.A. (43,022) - (43,022) - 

Bankinter Consumer Finance, S.A., E.F.C (3,352) - (3,352) - 

Bankinter Capital Riesgo, S.G.F.C.R, S.A. 26 - 26 - 

Bankinter Sociedad de Financiación, S.A. 180 - 180 - 

Bankinter Emisiones, S.A. 84 - 84 - 

Bankinter Capital Riesgo I, Fondo Capital 112 - 112 - 

Línea Directa Aseguradora, S.A. 66,260 - 66,260 - 

Arroyo Business Consulting 

Development, S.L. (1) - (1) - 

Canarias Excelencia en SIM, S.L. - - - - 

Relanza Gestión, S.A. 56 - 56 - 

Gneis Global Services S.A. 474 474 

4. Deposit Guarantee Fund 

Spain's deposit guarantee system was substantially reformed during the year under 

review: The three existing deposit guarantee funds (banks, savings banks and credit 

cooperatives) have been merged in a single Credit Institutions' 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. At the same time the legal 

limit on annual contributions to the fund has been 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 has been 

introduced, with a 500% weighting applied to deposits on which agreed remuneration 

exceeds certain rates of interest which are reviewed on a quarterly basis. 

The cost for 2011 and 2010 of the company's contributions to the Deposit Guarantee Fund 

was €14.82 million and €9.70 million respectively. These costs are included under the 

heading "Other operating charges" in the income statement (Note 33). 

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 loans 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 

Balances and transactions in foreign currency have been converted into euros using 

the following conversion rules:


- Monetary assets and liabilities have been converted into euros using average spot 

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 items at fair value have been converted into euros using the 

exchange rates of the date on which 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 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 flows 

The Group used the indirect method to prepare the cash flow statements, which use 

the following expressions and classification criteria: 

- Cash flows: Inflow and outflow of cash and cash equivalents; these equivalents 

are deemed to be short-term investments with high liquidity and a low risk of 

alterations to their value. Cash and equivalents are the balances shown under the 

headings "Cash and balance with central banks" in the attached 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. 

e) Consolidated statement of comprehensive income 

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 income and expenses temporarily recognised in equity as 

valuation adjustments. 

c. The net amount of income and expenses definitively recognised in consolidated 

equity. 

d. The corporate 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: 

- Financing activities: Activities that produce changes in the size and composition of 

equity and liabilities and which do not form part of operating activities.


- Gains (losses) on valuation: This shows the value of the revenue, 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. 

- 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 headings for valuation adjustments in accordance with the criteria laid 

down 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. 

- Adjustments arising from changes in accounting principles and the correction 

of errors: This includes changes in consolidated equity arising as a result of 

the retroactive restatement of balances in the financial statements arising from 

changes to accounting principles 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. 

- 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. 

There follows below a breakdown of financial instruments carried at fair value in 

accordance with the procedure used for obtaining the price: 

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:


Financial assets held for trading and other financial assets at fair value through 

profit or loss 

€000s 


Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total 

1,161,939 1,284,944 - 2,446,883 902,046 1,009,515 - 1,911,561 

Available-for-sale financial assets 2,899,186 1,876,878 5 4,776,069 1,799,501 1,300,660 54 3,100,215 

Hedging derivatives (assets) - 118,651 - 118,651 - 171,917 - 171,917 

Financial liabilities held for trading and other financial liabilities at fair value 

through profit or loss 

1,141,282 1,219,302 - 2,360,584 1,124,395 907,779 - 2,032,174 

Hedging derivatives (liabilities) - 68,677 - 68,677 - 40,441 - 40,441 

The column "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 "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" shows 

figures for financial instruments whose fair values are obtained using valuation 

techniques in which one or more significant inputs are not based on observable market 

data. 

Financial instruments at fair value and determined by listings published on active 

markets comprise the debt, private sector fixed income, equity and derivatives of 

organised markets (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). 

in which we operate are efficient and therefore, their data are representative. The 

valuation models do not incorporate subjectivities. 

In addition, 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. 

At 31 December 2011 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. 

The fair value of financial instruments which arises 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


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. 

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: 

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 

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 benefits, 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 


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. Portfolio of held-to-maturity investments consisting of fixed-term debt securities 

with cash flows of a determined or determinable amount where, from the outset 

and at all times since, the company has had 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. 

vii. 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: 

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: a) recent transactions with other instruments that 

are substantially the same; b) discounted cash flows and c) 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.


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 provisions 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. 

ii. 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 terms in excess of one year, are recognised in the 

amount resulting from discounting the anticipated cash flows to their present value 

using market rates of interest. 

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. 

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: 

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 

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 client or transaction, into the following categories: normal risk, sub-standard risk, 

doubtful risk owing to client delinquency, doubtful risk owing to reasons other than 

client 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, mediumhigh 

risk and high risk. 

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 α and β regulatory parameters, for each class of risk, are as follows: 

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% 

α 

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. 

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. 

β 

- The product 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, less 

- The amount of the net overall provisioning for specific coverage 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. In the Bank's case, the balance as at 

31 December 2011 and 2010 corresponds to the maximum values. 

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 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. Such impairment lossses are recognised in the 

consolidated income statement of the period in which they occur and any subsequent 

recoveries are recognised in the income statement 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 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. 

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 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 gain or a loss that must be recognised in the 

income statement when all the model variables come exclusively from observable 

market data, thereby generating so-called "day one gains". 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: 

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 

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 (where there is a specific identification 

between the instruments hedged and the hedge instruments) hedges 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 variations 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. 

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. 

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. 

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 at 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. 

l) Tangible assets 

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 income statement and calculated 

according to the estimated years of useful life, which coincide with the legal minimums. 

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. 

The heading "Investment Property" in the consolidated balance sheet states the net 

values of the land, properties, and other constructions that are held either in order to 

let them, or to obtain a possible capital gain on their sale as a result of future increases 

in their respective market values. 

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. 

Buildings 

Fixtures and fittings and others 

Computer equipment 

Depreciation method 

Straight-line over 50 years 

Straight line from 6 to 12 years 

Sum of the digits 

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. 

The group reviews, at least at the end of the year, the period and method for 

depreciation of each tangible asset. 

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. 

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: 

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". 

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 tangible assets. The annual amortisation 

of intangible assets with a definite useful life is recognised in "Amortisation" in the 


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 shown against Intangible Assets in the balance sheet, both in goodwill 

and other intangible assets, essentially correspond to Línea Directa Aseguradora, S.A.


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 held 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 

non-current 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) Offsetting 

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) Securities loaned or advanced as collateral 

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 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 guarantees 

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 


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 remuneration 

The Bank has made commitments to 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 2010 and 2009, there was no outstanding 

amount 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 

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 gains (losses)" are those arising from the differences between previous 

actuarial assumptions and reality and from changes in the actuarial assumptions 

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: 

- The cost of the services in the current period - deemed to be the increase in the 

present value of the obligations arising as a result of the services provided during 

the financial year by the employees - under the heading "Administrative expenses 

- Personnel expenses". 

- Borrowing costs - deemed to be the increase arising during the period in the present 

value of the obligations as a result of the passage of time - under the heading 

"Interest 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 of any plan asset recognised in the assets of the consolidated 

balance sheet is shown under the heading "Interest and similar income" of the 


- The amortisation of the actuarial gains and losses, under the heading ”Provisions 

(net)" in the consolidated income statement. 

Other long-term remuneration 

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 that of the premiums on these 

insurance policies accruing in each financial year.


t) Other provisions 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, which originates in a valid expectation created by the 

Group in third parties 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. 

- The practically certain evolution in the regulation of certain issues, particularly 

regulatory measures from which the Group cannot be exempt. 

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 unlikely to lead to a reduction of resources containing 

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 2011 and 2010 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) Income 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) When there are deferred tax liabilities that can be cancelled in the same year as 

the realisation 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) When 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. 

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 (insurance contracts), and discretionary portfolio management 

contracts are not included in the Group balance sheet. Information on said resources 

as at 31 December 2010 is 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 2010 and 

during the financial year ended on the aforementioned date. 

Investment funds managed by consolidated companies are not recognised 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 policies 

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 as at 31 December 2011 and 2010 was as follows: 

. 

€000s 

31-12-11 31-12-10 

Cash 114,751 105,492 

Bank of Spain 297,754 90,659 

Other central banks - - 

Valuation adjustments 290 250 

412,795 196,401 

In euros 411,767 195,252 

In foreign currency 1,028 1,149 

412,795 196,401 

. 

Shown under valuation adjustments is an amount of €0.29 million representing accrued 

interest as at 31 December 2011 (€0.25 million as at 31 December 2010). 

7. Assets and liabilities held for trading and Other financial assets and liabilities at fair 

value through profit or loss 

The breakdown of these items of the consolidated balance sheets as at 31 December 2011 

and 2010 is as follows: 

€000s 

Assets 31-12-11 31-12-10 

Debt instruments 1,768,879 1,275,490 

Other equity instruments 133,110 123,496 


2,446,883 1,911,561 

In euros 2,442,841 1,900,138 


2,446,883 1,911,561 

"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 the latter 

as at 31 December 2011, stood at €31.38 million (€35.73 million as at 31 December 2010). 

The fair value of the loaned assets (assets assigned temporarily) in the trading portfolio 

of the assets of the balance sheet as at 31 December 2011 stood at €1.769 billion (€984.90 

million as at 31 December 2010). 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 2011 and 2010, by instrument type and counterparty, is as follows:


As at 31 December 2011 

Credit 

institutions 

Nonresident 

Public 

Admins. 

Nonresident 

Public 

Admins. 

€000s 

Other Private 

Sector 

Resident 

Total 

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 breakdown of the liabilities in the financial assets and liabilities held for trading and 

other financial liabilities at fair value through profit or loss is as follows: 

€000s 

Liabilities 31-12-11 31-12-10 

Customer deposits - 88,745 

Short positions in securities 1,503,311 1,089,303 


2,360,584 2,032,174 

In euros 2,357,875 2,030,740 


2,360,584 2,032,174 

As at 31 December 2010 

Credit 

institutions 

Other 

Private 

Sector Nonresident 

Nonresident 

Public 

Admins. 

Nonresident 

Public 

Admins. 

€000s 

Other 

Private 

Sector 

Resident 

Other 

Private 

Sector Nonresident 

Debt instruments 288,841 984,898 1,475 274 2 1,275,490 

Other equity 

instruments 

18,385 - - 69,086 36,025 123,496 

Trading 

derivatives 

292,195 - - 219,228 1,152 512,575 

599,421 984,898 1,475 288,588 37,179 1,911,561 

Total 

. 

The breakdown of the effect on the consolidated 2011 and 2010 income statement of the 

changes in fair value of financial assets and liabilities held for trading and of financial 

assets at fair value through profit or loss is as follows: 

€000s 


Trading portfolio (Note 30) 11,910 16,794 

Organised market (244) (27,252) 

Non-organised market 12,154 44,046 

Other financial assets carried at fair value through profit or loss 

(Note 30) 

97 10,835 

12,007 27,629 

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 net results by financial operation, broken down by the type of instrument in the 

trading portfolio and other financial assets at fair value with changes to profits and losses 

recorded in financial years 2011 and 2010, are as follows: 

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 2011 and 

2010. 

€000s 


Fixed income for trading (Note 30) 31,937 24,737 

Other equity instruments (Note 30) (41,738) (9,170) 

Trading portfolio (41,835) (20,005) 

Other financial assets at fair value through profit or loss 97 10,835 

Trading derivatives (Note 30) 21,808 12,062 

12,007 27,629 

a) Debt instruments 

The breakdown of this item in financial assets held for trading in the consolidated 

balance sheet as at 31 December 2011 and 2010 was as follows: 

€000s 

31-12-11 31-12-10 

b) Other 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 2011 


From Credit 

Institutions 

From other 

resident 

sectors 

€000s 

From other 

non-resident 

sectors 

Total 

Balance as at 31 December 2010 18,385 69,086 36,025 123,496 

Balance as at 31 December 2011 9,705 92,028 31,377 133,110 

. 

The majority of the instruments under Other equity instruments in the Bankinter 

Group balance sheet are denominated in euros both in 2011 and in 2010. 

Public Administrations 1,652,335 984,898 

Other private sectors 116,544 290,592 

1,768,879 1,275,490 

The breakdown of this item in accordance with the nature of the securities that make 

it up as at 31 December 2011 and 2010 is as follows: 

€000s 

31-12-11 31-12-10 

Treasury Bills 742,699 499,198 

Bonds 173,017 80,766 

Debentures 573,320 330,090 

Scrip 93,964 40,825 

Other 185,879 324,611 

1,768,879 1,275,490


c) Trading derivatives 

d) Short positions in securities 

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 2011 and 2010 is as 

follows: 

€000s 

Fair value 

31-12-11 31-12-10 

Assets Liabilities Assets Liabilities 

Purchase and sale of unmatured 

forward exchange contracts: 

15,187 252,919 15,294 132,531 

Currency purchases against 

euros 

2,727 252,392 9,966 126,414 

Currency purchases against 

other currencies 

1,007 759 - 3,308 

Currency sales against euros 11,310 (232) 5,328 2,809 

Currency sales against other 

currencies 

143 - - - 

Securities and interest-rate 

futures: 

966 - 1,028 - 

Bought 966 - 1,028 - 

Securities options: 58,925 53,812 19,627 43,456 

Bought 58,925 4,852 19,627 

Issued - 48,960 - 43,456 

Interest-rate options: 1,239 1,275 2,195 1,576 

Bought 1,239 1,275 2,195 - 

Issued - - - 1,576 

Currency options: 44 189 - 481 

Bought 44 - - 

Issued - 189 - 481 

Other interest-rate operations: 468,350 548,633 474,431 676,082 

Interest-rate swaps (IRSs) 468,350 548,633 474,431 676,082 

Credit derivatives 183 445 - - 

Credit derivatives 183 445 - - 

544,894 857,273 512,575 854,126 

This heading in the balance sheet consists of the financial liabilities originated by short 

selling to the value of €1.50331 billion as at 31 December 2011 (€1.0893 billion as at 

31 December 2010). The balances are denominated in euros. These short positions are 

generated by the firm sale of financial assets acquired temporarily. 

e) Customer deposits 

The heading “Other financial liabilities at fair value through profit or loss” includes 

debts to the resident public sector, the balance being zero as at 31 December 2011 

(€88.745 million at 31 December 2010). 

€000s 

31-12-11 31-12-10 

Deposits with Central Administration - 88,639 

Valuation adjustments - 106 

- 88,745 

. 

These financial liabilities have been designated "at fair value through profit or loss" 

with a view to obtaining more relevant information, as this significantly reduces the 

accounting imbalances that would occur if it were not done in this way. 

No change in the fair value of these financial liabilities attributable to changes in the 

value of the instrument or institution has been recognised, because the aforementioned 

valuation adjustments correspond to deposits that materialised in temporary loans 

of assets discountable with the European Central Bank and therefore, given their 

legal formalisation and the maximum solvency of collateral, they do not incorporate 

proprietary credit risk. In fact, they are legally formalised in two contracts: one of 

which is a firm sale and the other a future purchase. Therefore, the aforementioned 

valuation adjustments correspond exclusively to changes in interest rates.


8. Available-for-sale financial assets 

The breakdown of this heading in the consolidated balance sheet as at 31 December 2011 


€000s 

31-12-11 31-12-10 

Debt instruments 4,644,306 2,961,894 


4,776,069 3,100,215 

In euros 4,774,648 3,097,399 


4,776,069 3,100,215 

. 

The fair value of the assets under this item of the consolidated balance sheet as at 31 

December 2011, loaned or under guarantee, was €3.074 billion (€1.228 billion as at 31 

December 2010). Practically all these assets are assigned for terms of less than one year. 

The breakdown of these assets as at 31 December 2011 and 2010 is as follows (€000s): 

€000s 

31-12-11 

Resident Public 

Administrations 

Other Private 

Sectors 

Total 

Debt instruments 2,617,574 2,026,732 4,644,306 

Other equity instruments - 131,763 131,763 

2,617,574 2,158,495 4,776,069 

Resident Public 

Administrations 

€000s 

31-12-10 

Other Private 

Sectors 

Total 

Debt instruments 1,030,154 1,931,740 2,961,894 

Other equity instruments - 138,321 138,321 

1,030,154 2,070,061 3,100,215 

The effect on the item "Valuation adjustments" of the consolidated net worth was €29.25 

million as at 31 December 2011 (€22.99 million as at 31 December 2010). 

The following is the breakdown of the movement: 

€000s 


Valuation adjustments as at 1 January (22,994) 29,774 

Valuation gains and losses (3,202) (42,763) 

Income tax 2,680 22,578 

Amounts transferred to results (5,732) (32,583) 

Valuation adjustments as at 31 December (29,248) (22,994) 

Debt securities (22,282) (24,083) 

Equity instruments (6,966) 1,089 

The portfolio of available-for-sale financial assets is concentrated according to geographical 

areas, practically all of which are in Spain as at 31 December 2011 and 2010. 

As at 31 December 2011 and 2010, the Group has recognised an impairment of €2.03 

million and €0.39 million respectively. 

The results for financial operations (Note 30) according to the type of instrument in 

the portfolio of available-for-sale financial assets recognised in the consolidated income 

statement as at 31 December 2011 and 2010 are as follows:


€000s 

31-12-11 31-12-10 

Debt instruments 4,176 29,003 


9. Held-to-maturity investments 

5,212 32,545 

The breakdown of this item in the consolidated balance sheets as at 31 December 2011 


€000s 

31-12-11 31-12-10 

Public administrations 2,217,559 2,181,880 

Credit institutions 933,372 1,059,693 

3,150,931 3,241,573 

The changes that occurred in "Held-to-maturity portfolio" in the financial years 2011 and 

2010 were as follows: 

€000s 


Balance at start of period 3,241,573 1,621,669 

Transfers - - 

Additions 25,294 1,623,588 

Withdrawals (115,936) - 

Other movements (3,684) 

Balance at close of period 3,150,931 3,241,573 

10. Loans and receivables 



€000s 

31-12-11 31-12-10 

Loans and advances to credit institutions 1,772,506 1,610,194 

Valuation adjustments 6,889 (8,724) 

Total bank deposits 1,779,395 1,601,470 


Valuation adjustments (786,542) (909,534) 

Total Loans and advances to customers 45,387,972 42,525,474 

47,167,367 44,126,944 

Euros 41,977,815 38,992,555 

Foreign currency 5,189,552 5,134,389 

47,167,367 44,126,944 

The valuation adjustments of the loan and receivables portfolio, as at 31 December 2011 

and 2010 present the following figures: 

€000s 

31-12-10 31-12-10 

Valuation corrections due to asset impairment (765,454) (861,210) 

Accrued interest 86,753 52,280 

Other (100,952) (109,328) 

(779,653) (918,258) 

. 

There were no transfers in 2011 or 2010.


The following are the details of the changes that occurred during 2011 and 2010 in the 

balance of the financial assets classified as loans and receivables and considered to have 

been impaired due to their credit risk: 

€000s 

31-12-11 31-12-10 

Balance at start of period 1,330,180 1,094,137 

Net additions 371,141 435,392 

Transferred to bad debts (200,533) (199,349) 

Balance at close of period 1,500,788 1,330,180 

The following are the changes that occurred, during 2011 and 2010, 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 

31-12-11 31-12-10 

Balance at start of period 861,210 783,885 

Provisions charged to results for the year 137,925 184,950 

Of which: 

Calculated on an individual basis 352,233 559,746 

Calculated on a collective basis (35,453) 34,859 

Recoveries credited to P&L (178,855) (409,655) 

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 of the consolidated balance sheet as at 31 December 2011 

and 2010, by instrument type and counterparty, irrespective of the fair value that may be 

attributable to any kind of guarantee to ensure performance, is as follows: 

Bank . 

deposits 

€000s 

31-12-11 31-12-10 

Loans and 

advances to 

customers 

Total 

Bank . 

deposits 

Loans and 

advances to 

customers 

Banks 1,779,395 - 1,779,395 1,601,470 - 1,601,470 

Resident 

Public 

Administrations - 639,411 639,411 - 221,933 221,933 

Other private 

sectors - 44,748,561 44,748,561 - 42,303,541 42,303,541 

Total 

1,779,395 45,387,972 47,167,367 1,601,470 42,525,474 44,126,944 

Used (228,279) (99,329) 

Other movements (5,402) (8,296) 

Balance at close of financial year 765,454 861,210 

Of which: 

Calculated on an individual basis 667,975 723,802 

Calculated on a collective basis 97,479 137,408 

Assets in suspense recovered during 2011 and 2010 totalled €10.66 million and €4.60 

million respectively. During the financial years 2011 and 2010, the Group recognised losses 

of €36.18 million and €35.93 million due to the impairment of foreclosed assets (Note 

12). Additionally, during 2011 the Group sold a portfolio of bad debts for €122.83 million 

to OKO Investments 2, S.A.R.L for a gain of €7.25 million. Considering these amounts 

and those recognised in the account "Provisions charged to results" in the previous table, 

the losses due to impairment of "Loans and Receivables" amounted to €156.20 million 

and €216.28 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 2011 and 2010 are 

as follows:


€000s 


Due from banks (Note 29) 48,040 27,952 

Loans to customers (Note 29) 1,205,045 984,676 

1,253,085 1,012,628 

1. Loans and advances to 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 2011 and 2010 is as follows: 

€000s 

31-12-11 31-12-10 

Term accounts 121,525 189,638 

Temporary asset acquisitions 737,114 829,174 

Other accounts 912,061 578,123 

Impaired assets 1,806 13,259 

Valuation adjustments 6,889 (8,724) 


Other (1,767) (12,723) 

1,779,395 1,601,470 

In euros 1,650,602 1,513,799 


1,779,395 1,601,470 

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 2011 and 2010 is as follows: 

€000s 

Loans and advances to customers 31-12-11 31-12-10 

Public Administrations 639,411 221,933 

Loans to Public Administrations 634,207 220,781 

Impaired assets 657 - 

Valuation adjustments 4,547 1,152 

Valuation corrections due to asset impairment - - 


Other (1,226) (145) 

Other private sectors 44,748,561 42,303,541 

Commercial loans 2,029,780 1,930,582 

Debtors with tangible guarantee 29,507,806 30,465,427 

Temporary asset acquisitions 2,781,837 845,999 

Other term debtors 8,081,732 6,874,515 

Financial leases 900,608 1,021,974 

Sight debtors and miscellaneous 739,562 757,657 

Impaired assets 1,498,325 1,316,921 

Valuation adjustments (791,089) (909,534) 

Valuation corrections due to asset impairment (765,454) (861,210) 


Other (97,960) (96,605) 

45,387,972 42,525,474 

In euros 40,327,213 37,478,756 

In foreign currency 5,060,759 5,046,718 

45,387,972 42,525,474


The breakdown of impaired assets by maturity as at 31 December 2011 and 2010 was as 

follows: 

€000s 

31-12-11 

Up to 6 months 403,148 

More than 6 months but not more than 9 167,777 


More than 12 months 777,561 

1,500,788 

€000s 

31-12-10 

Up to 6 months 369,246 



More than 12 months 709,746 

1,330,180 

Assets matured and not impaired as at 31 December 2011 amounted to €161.93 million 

(€129.54 million as at 31 December 2010). 

The distribution of finance lease lending as at 31 December 2011 and 2010 is as follows: 

31-12-2011 31-12-2010 

Tourism 14.73% 16.37% 

Assorted machinery 56.50% 52.42% 

Transport vehicles 27.62% 29.27% 

Other 1.15% 1.94% 

100.00% 100.00% 

11. Asset/liability hedging derivatives 

As at 31 December 2011, the Group held hedging derivatives in the amount of €118.65 

million recognised on the assets side of the balance sheet and €68.68 million recognised 

on the liabilities side (€171.92 million and €40.44 million on the assets and liabilities 

sides respectively as at 31 December 2010). Net derivatives amounted to €49.97 million 

and €131.48 million at 31 December 2011 and 2010 respectively. 

The breakdown of the hedging derivatives and the corresponding hedged elements, 

differentiating according to the type of hedging, is as follows: 

Finance lease agreements for financial years 2011 and 2010, have the following 

characteristics: 


Average life 4-6 years 4-8 years 

Maximum differential 9.00% 9.00%


€000s 

Hedged Instrument 

Type of Hedging 

Hedging 

Instrument 

Nominal amount 

hedged . 

(€ millions) 

Nature of 

Risk Hedged 

Fair value of the Hedged 

Instrument attributable 

to the hedged risk 

Fair Value of the 

Hedging 

Instrument (ex-coupon) 

31-12-11 31-12-10 31-12-11 31-12-10 

Individual hedges or Micro-hedges: 

Financial assets- 

Public Debt 

Individual hedges 

or Micro-hedges: 

Interest-rate 

swaps 

150 Interest Rate 25,499 23,212 (24,948) (22,476) 

Financial liabilities- 

Subordinated Debt 



Interest-rate 

swaps 

370 Interest Rate (58,257) (30,794) 59,330 31,436 

Senior Debt 

Individual Hedges 


Interest-rate 

swaps 

79 Interest Rate (677) (1,007) 656 999 

Customer Deposits 



Interest-rate 

swaps 

7 Interest Rate (1,978) (41,545) 1,977 41,627 

Backed issue 



Interest-rate 

swaps 

745 Interest Rate (621) (16,715) 597 15,302 

FAAF bonds 



Interest-rate 

swaps 

323 Interest Rate (299) (11,577) 285 11,631 

Mortgage Bond Issues 



Interest-rate 

swaps 

2,650 Interest Rate (19,972) (26,229) 19,842 25,208 

Macro-hedging- 

Mortgage Loans 

Macro-hedging 

Interest-rate 

swaps 

6,900 Interest Rate 11,463 1,308 (11,336) (1,210) 

(44,842) (103,347) 46,403 102,517


The following is a comparison of the interest and ex-interest hedging instruments as at 

31 December 2011 and 2010: 

With 

interest 

€000s 

31-12-11 31-12-10 

Ex-interest 

With 

interest 

Ex-interest 

Public Debt (26,916) (24,948) (27,124) (22,476) 

Subordinated Debt 60,520 59,330 33,094 31,436 

Customer Deposits 1,677 656 41,666 41,627 

Senior debt 1,330 1,977 2,268 999 

Backed issue 10,476 597 38,385 15,302 

FAAF bonds 5,228 285 17,345 11,631 

Mortgage Bond Issue 39,266 19,842 38,231 25,208 

Macro-hedging - Mortgage loans (41,607) (11,336) (12,389) (1,210) 

Other 

49,974 46,403 131,476 102,517 

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 hedging maintained by 

the institution as at 31 December 2011. 

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 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. 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 5.70%, 6.00% and 6.375% for a total amount of €370 million shown under the 

heading "Financial liabilities at amortised cost" included in Note 19. The risk hedged is the 


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 at a 3% fixed interest 

rate for a total amount of €79 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. 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 €7 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 backed issue 

The instrument hedged is issue ES0313679450 for €745 million. The risk hedged is the 



exposure to a variable interest rate. The amount hedged is 100%.


6.- Hedging of FAAF bonds 

The instrument hedged is the bond ES0413679053 for a combined nominal value of €323 

million. 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%. 

7.- Hedging of mortgage-backed bond issues 

The instruments hedged are issues ES0413679079 (€1 billion), ES0413679095 (€500 

million), ES0413679095 (€250 million), ES0413679079 (€400 million) and ES0413679111 

(€500 million) of mortgage bonds for a total nominal value of €2.65 billion. 

The risk being 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. 

8.- 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 will be understood to correspond to the variable 

interest rates of call money swaps (CMS) and interest rate swaps (IRS). 

The instruments used to hedge the various mortgage loan amounts are CMS and 

IRS contracted on a monthly basis depending on the decisions that are adopted on 

managing interest-rate risk. 

Effectiveness of hedges 

The Micro-hedges and Portfolio hedges 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. 

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. 

12. Non-current assets held for sale 

The breakdown and changes in the non-current assets for sale are as follows: 

€000s 

Balance as at 31.12.2009 238,017 

Additions 157,067 

Valuation adjustments (40,776) 

Cancellations (82,771) 

Balance as at 31.12.2010 271,537 

Additions 190,724 

Valuation adjustments (69,319) 

Cancellations (84,428) 

Balance as at 31.12.2011 308,514


Movements in valuation adjustments to non-current assets for sale throughout the 

financial year 2011 were as follows: 

€000s 


Starting balance 106,575 65,799 

Net provisions charged to results 83,827 55,757 

Application of funds (19,301) (11,200) 

Other movements 4,793 (3,781) 

End balance 175,894 106,575 

Net losses in 2011 (Note 34) on disposals of non-current assets for sale totalled €9.32 

million (€2.41 million in 2010). During 2011 provisions for these assets to the value of 

€31.43 million were used or released. 

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 

Residential assets Industrial assets Other Assets Totals 

31-12-11 31-12-10 31-12-11 31-12-10 31-12-11 31-12-10 31-12-11 31-12-10 

Up to one 

month 6,699 6,547 5,644 1,348 120 3,546 12,463 11,440 

Between 

one and 

three 

months 24,398 8,147 9,236 2,433 2,032 926 35,666 11,506 

Between 

three 

and six 

months 5,890 14,527 4,795 - 155 5,179 10,840 19,706 

Between 

six and 

twelve 

months 45,685 25,982 19,692 1,129 3,809 8,375 69,186 35,486 

More than 

one year 90,876 102,943 57,010 10,008 32,473 80,448 180,359 193,399 

173,548 158,146 96,377 14,918 38,589 98,474 308,514 271,537 

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. 

All repossessed assets are valued by appraisal firms registered with the Bank of Spain's 

register of appraisal firms. 

The distribution of the awarded assets according to business segments is as follows, as at 

December 2011 and 2009: 

Segments 31-12-11 31-12-10 

Companies 50% 47% 

Retail Banking 50% 53% 

Grand total 100% 100% 

From 31 December 2011 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. 

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 2011 and 2010.


13. Investments 



€000s 

31-12-11 31-12-10 

Associates 26,301 29,067 

Joint arrangements 2,040 526 

28,341 29,593 

The changes that occurred in the balance for this heading are shown below: 

€000s 


Balance at start of period 29,593 34,678 

Acquisitions and capital increases - - 

Sales and capital reductions - (340) 

Share of results of entities accounted for using the equity 

method 

14,675 10,958 

Dividends paid (12,679) (8,032) 

Other movements (3,248) (7,671) 

Balance at close of financial year 28,341 29,593


The breakdown of fully consolidated Group companies as at 31 December 2011 is as 

follows: 

% Holding 

Registered office Direct Indirect Total 

Number of 

Shares 

Euros €000s 

Nominal 

value 

Capital Reserves Results 

Theoretical 

carrying 

amount 


Atención Telefónica, S.A. 

Castellana,29 Madrid 99.99 0.01 100 35,222 30 1,060 1,373 (41) 2,392 

Bankinter Seguros Generales, S.A.de Seguros y 

Castellana,29 Madrid 89.99 0.01 90 1,999 5,030 10,060 461 3 10,524 

Reaseguros 

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 34,112 

Intermobiliaria, S.A. Castellana,29 Madrid 99.99 0.01 100 222,999 30 6,701 (54,728) (68,719) (116,745) 

Bankinter Consumer Finance, S.A., E.F.C 

Avda Bruselas 12 Arroyo de la Vega (Alcobendas) 

Madrid 

99.99 0.01 100 1,299,999 30 39,065 (3,754) 11,210 46,521 

Bankinter Capital Riesgo, SGECR, S.A. 


Madrid 

99.99 0.01 100 3,000 100 310 201 155 666 

Bankinter Sociedad de Financiación, S.A. Castellana,29 Madrid 100 - 100 602 100 60 2,489 (842) 1,707 

Bankinter Emisiones, S.A. Castellana,29 Madrid 100 - 100 602 

100 

60 903 501 1,464 

Bankinter Capital Riesgo I Fondo Capital Castellana,29 Madrid 100 - 100 24,219 1,000 30,000 1,042 830 31,872 

Arroyo Business Consulting Development, S. L. 


Madrid 

100 - 100 2,976 1 3 (2) - 1 

Gneis Global Services S.A. Tres Cantos (Madrid) 100 - 100 30,000,000 1 30,000 474 2,898 33,372 

Relanza Gestión, S.A. 


Madrid 

- 100 100 1,000 60 60 77 13 150 

Línea Directa Aseguradora, S.A., Compañía de 

Isaac Newton, 7 

--- 100 2,400,000 16 37,512 228,226 74,869 340,607 

Seguros y Reaseguros 

100 

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


The breakdown of fully consolidated Group companies as at 31 December 2010 is as 

follows: 

% Holding 

Registered office Direct Indirect Total 

Number of 

Shares 

Euros €000s 

Nominal 

value 

Capital Reserves Results 

Theoretical 

carrying 

amount 


Atención Telefónica, S.A. 

Castellana 29, Madrid 99.99 0.01 100 35,222 30 1,060 39,940 433 41,433 

Bankinter Servicios de Consultoría, S.A. Castellana 29, Madrid 99.99 0.01 100 1,999 30 60 465 (4) 521 

Bankinter Gestión de Activos, S.G.I.I.C. Marqués de Riscal 11, Madrid 99.99 0.01 100 144,599 30 4,345 5,363 11,808 21,516 

Hispamarket, S.A. Castellana 29, Madrid 99.99 0.01 100 4,516,452 6 27,144 6,510 (85) 33,569 

Intermobiliaria, S.A. Castellana 29, Madrid 99.99 0.01 100 222,999 30 6,701 (11,706) (43,022) (48,027) 

Bankinter Consumer Finance, S.A., E.F.C 

Avda Bruselas 12, Arroyo de la Vega, Alcobendas 

(Madrid) 

99.99 0.01 100 1,299,999 30 39,065 20,535 (3,352) 56,248 



(Madrid) 

99.99 0.01 100 3,000 100 310 175 26 511 

Bankinter Sociedad de Financiación, S.A. Castellana 29, Madrid 100 - 100 602 100 60 2,309 180 2,549 

Bankinter Emisiones, S.A. Castellana 29, Madrid 100 - 100 602 100 60 819 84 963 

Bankinter Capital Riesgo I Fondo Capital Castellana 29, Madrid 100 - 100 24,219 1,000 25,000 771 112 25,883 


Canarias Excelencia en SIM, S.L. 


(Madrid) 


(Madrid) 

100 - 100 2,976 -1 3 - (1) 5 

100 - 100 100,000 1 100 (2) - 98 

Gneis Global Services S.A. Tres Cantos (Madrid) 100 - 100 30,000,000 1 30,000 - 474 30,474 



(Madrid) 

- 100 100 1,000 60 60 - 56 116 

Línea Directa Aseguradora, S.A., Compañía de 

Seguros y Reaseguros 

Isaac Newton 7, Madrid 100 - 100 2,400,000 15 37,512 195,466 66,260 299,238 

Línea Directa Asistencia, S.L.U. Pozuelo de Alarcón (Madrid) - 100 100 500 60 30 9,742 7,389 17,161 

Moto Club LDA, S.L.U. Tres Cantos (Madrid) - 100 100 (30) 100 3 142 208 353 

Centro Avanzado de Reparaciones CAR, S.L.U. Torrejón de Ardoz (Madrid) - 100 100 10,000 100 1,000 (1,046) 143 97 

Servicio Integral a Sociedades Tecnológicas, 

S.L.U. 

Tres Cantos (Madrid) - 100 100 3,006 1 3 - - 3 

Ambar Medline, S.L. Tres Cantos (Madrid) - 100 100 310 10 3 - (14) (11)


During 2011 Canarias Excelencia en SIM, S.L., which had ceased trading, was wound up. 

During the fourth quarter of 2011 Bankinter Servicios de Consultoría, S.A. increased 

its capital by €10 million. This company also changed its name to Bankinter Seguros 

Generales S.A. de Seguros y Reaseguros. Subsequently the Bank sold 10% of the capital 

of Seguros Generales S.A. de Seguros y Reaseguros for €3 million. The gain of €2 million 

on this transaction was recognised under “Gains (losses) on derecognition of assets not 

classified as non-current assets for sale and Gains and losses on non-current assets for 

sale nor classified as discontinued operations” (see Note 34). 

During 2011 Bankinter Capital Riesgo I Fondo de Capital increased its capital by €5 million. 

None of the companies integrated in the portfolio of permanent investments as at 31 

December 2011 is a listed company.


The breakdown of Group companies accounted for using the equity method as at . 

31 December 2011 is as follows: 

Registered office 

% Holding €000s 

Direct Indirect Total Capital Reserves Results 

Theoretical 

carrying 

amount 

Mercavalor, S.V., S.A. Avda. 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 

Net 

carrying 

amount 

Castellana 29, Madrid 50.00 - 50.00 6,968 31,557 29,625 68,150 23,375 

28,341 

The breakdown of Group companies accounted for using the equity method as at . 

31 December 2010 is as follows: 

Mercavalor, S.V., S.A. 

Registered office 

Avda. Brasil 7, Madrid 

% Holding €000s 

Direct Indirect Total Capital Reserves Results 

Theoretical 

carrying 

amount 

Net 

carrying 

amount 

20.01 - 20.01 3,220 6,465 435 10,120 2,164 

Helena Activos Líquidos, S.L. Serrano 41, Madrid 29.53 - 29.53 24 1,693 (7) 1,710 960 

Eurobits Technologies, S.L. Avda Bruselas 12, Arroyo de la Vega, Alcobendas (Madrid) 40.01 - 40.01 9 1,139 (157) 991 396 


Reaseguros Castellana 29, Madrid 50.00 - 50.00 6,968 27,388 21,526 55,882 26,073 

29,593


The financial statements for Eurobits Technologies, S.L, Mercavalor S.V., S.A and Helena 

Activos Líquidos, S.L, correspond to 30 November 2011. The impact on the consolidated 

financial statements deriving from the use of financial statements as at dates prior to 31 

December 2011 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 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 detailed breakdown of the activities of the group companies, joint 

ventures and associates: 

Group companies 

Bankinter Consultoría, Asesoramiento, y Atención 

Telefónica, S.A. 

Bankinter Servicios de Consultoría, S.A. (formerly 

Bankinter Gestión de Seguros S.A. de Correduría de 

Seguros) 

Bankinter Gestión de Activos, S.G.I.I.C. 

Hispamarket, S.A. 

Telephone helpline 

Insurance company 

Asset management 

Activity 

Holding and acquisition of securities 

The following is a summary of the assets, liabilities, profits and losses of the companies 

accounted for using the equity method in financial years 2011 and 2010: 


€000s 

Balance Sheet 

Income Statement 

Assets Liabilities Expenses Income 

Eurobits Technologies, S.L. 1,979 1,973 1,547 1,553 

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 


€000s 

Balance Sheet 

Income Statement 

Assets Liabilities Expenses Income 

Eurobits Technologies, S.L. 1,879 2,036 1,704 1,547 

Mercavalor, S.V., S.A. 15,983 15,548 6,243 6,678 

Helena Activos Líquidos, S.L. 1,777 1,784 499 492 

Bankinter Seguros de Vida, S.A. de Seguros 

y Reaseguros 501,281 456,771 20,205 41,731 

Intermobiliaria, S.A. 

Bankinter Consumer Finance, E.F.C.,S.A. 


Bankinter Sociedad de Financiación, S.A. 

Bankinter Emisiones, S.A. 

Bankinter Capital Riesgo I Fondo Capital 


Canarias Excelencia en SIM, S.L. 

Gneis Global Services, 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. 


Reaseguros 

Property management 

Finance company 

Fund management and private equity 

companies 

Issue of debt securities 

Issue of preferred shares 

Private equity fund 

Inactive 

Telephony 

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


14. Tangible assets 

The breakdown of this heading in the balance sheet as at 31 December 2011 and 2010 is 

as follows: 

€000s 

31-12-11 31-12-10 

For own use 435,354 444,396 

Investment property - - 

Other assets assigned under operating leases 31,547 12,173 

466,901 456,569 

The following is a summary of the elements of the tangible assets and their movements 

during financial years 2011 and 2010: 

€000s 

Transfers 

and 

31-12-10 Additions Cancellations others Amortisation 31-12-11 

For own 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 

Investment property - - - - - - 

Other assets assigned 

under operating leases 12,173 20,079 - - 705 31,547 

€000s 

Transfers 

31-12-09 Additions Cancellations and others Amortisation 31-12-10 

For own use 440,137 58,815 20,042 - 34,514 444,396 

Computer systems and 9,811 21,417 9,280 - 6,489 15,459 

equipment 

Furniture, vehicles, and 118,955 12,104 10,744 34,071 23,061 131,327 

other installations 

Buildings 286,842 3,902 20 - 4,963 285,761 

Work in progress 24,512 21,392 - (34,071) - 11,833 

Other 17 - - - 1 16 

Investment property 22,991 12,104 - (34,480) 615 - 

Other assets assigned 

under operating leases 

12,508 449 - - 784 12,173 

475,636 69,192 20,042 34,480 35,913 456,569 

The cost of the elements for own use totally depreciated as at 31 December 2011 and 

which are in service amounted to €84.88 million (€91.04 million as at 31 December 2010). 

The breakdown by asset type of the gains and losses recognised in 2011 and 2010 on sales 

of investment property and other items is as follows (Note 34): 

€000s 


Gains Losses Gains Losses 

Building - - - - 

Undeveloped land, plots, and building sites - - - - 

Other 2,152 5,226 3,117 4,012 

2,152 5,226 3,117 4,012 

456,569 86,207 40,566 - 35,309 466,901


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 2011 and 2010, 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. 

The whole of the Bank's tangible assets for internal use as at 31 December 2011 and 2010 

was denominated in euros. 

The balance of assets assigned on operating lease contained in the balance sheet as at 

31 December 2011 under this item is €31.55 million, and the balance as at 31 December 

2010 was €12.17 million. 

15. Intangible assets 

The following is a breakdown of this item on the consolidated balance sheet and of its 

movements during financial years 2011 and 2009: 

The acquisition during financial year 2009 of 50% of the share capital of LDA led to 

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 and on an annual basis, the entity subjects the goodwill recognised as a 

consequence of the acquisition of 100% of LDA to the 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. The discount rate applied to these cash flows is that which is commonly used 

for this type of analysis in the insurance sector in which LDA's business is carried out. 

€000s 

31/12/2009 Additions Cancellations Amortisation 31/12/2010 Additions Cancellations Amortisation 31/12/2011 

Goodwill 161,836 - - - 161,836 - - - 161,836 

Other intangible 

assets 215,207 7,435 - 26,270 196,373 8,619 - 28,788 176,204 

377,043 7,435 - 26,270 358,209 8,619 - 28,788 338,040


The Other Intangible Assets generated by the purchase of 50% of LDA mostly correspond 

to the estimated value of relations with clients at the time of acquisition. Amortisation is 

linear over a period of 10 years from the date of acquisition, which is the estimated useful 

life of this asset. In the financial year 2011, amortisation of these assets totalled €22.19 

million (€22.19 million in 2010). As at 31 December 2010 and 2011, this intangible asset 

did not show any sign of impairment. 

As at 31 December 2011 and 2010, the Group proceeded to review the useful life of 

its intangible assets, adjusting their value according to the current perception of the 

economic benefits that it expects to obtain from these assets. As a consequence of this 

review, in 2011 the Group did not recognise any amount under the heading "Losses due to 

impairment of other assets (net)". 

16. Reinsurance assets 

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. 

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. 

As at 31 December 2011, 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. 

This criterion changed in 2010, when it was stipulated that the reinsurer rating should 

not be lower than A. However, a deposit clause is included in the contracts of reinsurers 

with an S&P rating that is lower than AA-. 

The changes occurring in the financial years 2011 and 2010 for each of the technical 

provisions included in the balance sheet attached hereto, are as follows: 

Provision for Unearned 

Premium 

€000s 

Provision for 

Claims 

Balance at 31 December 2010 681 1,976 2,657 

Additions due to full consolidation of 

Línea Directa Aseguradora - - - 

Allocations 568 3,946 4,514 

Applications (681) (1,976) (2,657) 

Adjustments and settlements (586) (586) 

Balances as at 31 December 2011 568 3,360 3,928 

Total 

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 2011 


€000s 

Current 

Deferred 

31-12-11 31-12-10 31-12-11 31-12-10 

Retentions and payments on account 10,016 8,182 

Income tax 36,886 55,955 103,529 93,812 

VAT 8,841 6,427 

Tax assets 55,743 70,563 103,529 93,812 

Retentions and payments on account 6,685 4,419 

Income tax 54,792 25,289 118,983 142,057 

VAT 4,027 6,928 

Other items 5,068 5,153 

Tax liabilities 70,572 41,789 118,983 142,057 

The reconciliation of the movements in deferred taxes during 2010 is as follows: 

31-12-10 

Charged/credited 

through profit or 

loss 

€000s 

Charged/credited in 

equity 31-12-11 

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: 

€000s 

31-12-11 31-12-10 

Deferred tax assets arising from: 

Generic hedging 32,044 12,396 

Contributions to pension funds 1,794 1,522 

Other provisions and accruals 42,104 38,677 

Others: 

Early retirement fund 694 1,509 

Software 514 1,677 

The movements in assets and liabilities due to deferred taxes during financial years 2011 

and 2010, are as follows: 

€000s 

Deferred Taxes 

Assets Liabilities 

Balance as at 31-12-09 141,687 163,710 

Additions 51,475 5,899 

Cancellations 99,350 27,552 

Balance as at 31-12-10 93,812 142,057 

Additions 80,945 5,196 

Cancellations 71,228 28,269 

Balance as at 31 December 2011 103,529 118,983 

Contract hire 191 329 

Loan fees 2,596 3,057 

Other 3,305 4,700 

Portfolio Available for Sale 12,535 9,719 

Consolidation adjustments 7,752 20,226 

103,529 93,812 

Deferred tax liabilities arising from: 

Revaluations of buildings 50,947 51,766 

Others: 

Portfolio Available for Sale 100 97 

Intra-group sales 7,688 - 

Miscellaneous 60,248 90,194 

Of which: 

Revaluation of Assets of Línea Directa Aseguradora, S.A. 53,688 60,448 

118,983 142,057


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 2011 


€000s 

Assets 

Liabilities 

31-12-11 31-12-10 31-12-11 31-12-10 

Accrued expenses and deferred 

income 

68,654 98,225 92,375 59,355 

Operations in progress 1,082 2,737 16,825 17,898 

Other items 27,396 10,466 40,225 32,996 

97,132 111,428 149,425 110,249 

19. Financial liabilities at amortised cost 

The breakdown of these items of the consolidated balance sheets as at 31 December 

2011 and 2010 is as follows: 

€000s 

31-12-11 31-12-10 


Deposits from credit institutions 3,260,647 2,462,457 

Customer deposits 25,505,317 24,176,201 

Marketable debt securities 15,540,242 16,895,422 

Subordinated liabilities 958,170 1,118,631 

Other financial liabilities 658,012 525,202 

52,929,285 48,479,559 

In euros 51,696,715 47,294,339 

In foreign currency 1,232,570 1,185,220 

52,929,285 48,479,559 

In euros 97,043 111,342 148,911 110,245 

In foreign currency 89 86 514 4 

97,132 111,428 149,425 110,249 

The heading "Other items" in liabilities includes sundry payables, provisions for expenses 

and remuneration pending payment corresponding to the insurance business. 

The breakdown of the “Valuation adjustments” in the portfolio of financial liabilities at 

amortised cost as at 31 December 2011 and 2010 is as follows: 

€000s 

31-12-11 31-12-10 

Accrued interest- 295,776 271,047 

Deposits with central banks 6,897 1,646 

Loans and advances to credit institutions 15,833 6,263 

Customer deposits 94,203 129,267 

Marketable debt securities 171,789 127,844 

Subordinated liabilities 7,054 6,027 

Micro-hedging operations 

116,044 92,142 

Other (67,183) (31,813) 

344,637 331,376


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. 

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 2011 and 2010: 

€000s 

31-12-11 31-12-10 

Central Banks 7,000,000 3,300,000 



7,006,897 3,301,646 

b) Deposits from credit institutions 



€000s 

31-12-11 31-12-10 

Term accounts 951,703 623,139 

Temporary assignment of assets 1,908,645 1,520,893 

Other accounts 384,466 312,162 



3,260,647 2,462,457 

c) Customer deposits 



€000s 

31-12-11 31-12-10 

Public Administrations 1,483,544 300,649 

Deposits received 1,482,111 298,291 



Micro-hedging operations - - 

Other - 106 

Other private sectors 24,021,773 23,875,552 

Sight deposits 9,045,156 9,016,549 

Term deposits 9,378,212 9,764,660 

Temporary assignment of assets 5,503,657 4,961,507 



Micro-hedging operations 1,978 5,820 

25,505,317 24,176,201 

In euros 25,090,321 23,761,205 


25,505,317 24,176,201 

In euros 3,257,091 2,437,153 


3,260,647 2,462,457


d) Marketable debt securities 



€000s 

31-12-11 31-12-10 

Promissory notes and bills of exchange 2,683,335 1,216,650 

Mortgage-backed securities 9,998,496 6,117,081 

Other securities linked to transferred financial assets 3,281,510 3,801,382 

Treasury stock (6,087,167) (40,689) 

Hybrid securities 341,261 93,150 

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.) 

As at 31 December 2011, the outstanding balances of promissory notes and euro 

commercial paper issued were €2.776 billion and €22.00 million respectively (€731.74 

million and €535.00 million respectively as at 31 December 2010). 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 2011 and 2010, at their redemption value: 

Other non-convertible securities 5,162,652 5,557,045 




Other (66,766) (31,562) 

Date of registration with the CNMV (Spain’s securities 

regulator) 

Outstanding 

balance at 

31-12-11 

€000s 

Outstanding 

balance at 

31-12-10 

15,540,242 16,895,422 

In euros 14,747,993 16,165,988 


15,540,242 16,895,422 

10-11-2009 - 412,848 

09-11-2010 559,085 318,893 

3-11-2011 2,216,837 

2,775,922 731,741 

Own securities at 31 December 2011 comprise mortgage bonds for €4.52 million and 

other non-convertible securities for €1.57 million. At 31 December 2010, own securities 

consisted entirely of other non-convertible securities. 

Euro Commercial Paper 22,000 535,000 

2,797,922 1,266,741 

Promissory notes and bills of exchange 

These issues are denominated in euros. 

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 

Interest accruing on these issues of promissory notes during the course of 2011 totalled 

€30.08 million (Note 29) (€27.33 million in 2010).


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 2011 and 2010, 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 2011 and 2010 (nominal values, €000s): 

31-12-11 

Nominal 

value Type of Security % Interest Listed 

Final 

maturity of 

the issue 

Issue 

Hybrid securities 

Eur3m flat 

March 2005 

75,000 Bonds 

(3% - 5%) YES 16/03/15 

June 2010 300 Structured bonds YES 24/06/13 

November 2010 16,850 Structured bonds YES 17/11/14 

December 2010 

1,000 

23/12/14 

Structured bonds 

YES 

YES 22/03/16 

March 2011 

700 Structured bonds 

YES 09/06/14 

June 2011 

21,250 Structured bonds 

YES 24/06/16 

June 2011 


YES 07/07/14 

July 2011 


August 2011 67,750 Structured bonds YES 03/08/16 



October 2011 59,800 Structured bonds YES 06/10/16 



November 2011 18,950 Structured bonds YES 04/11/16 

November 2011 652 Structured bonds YES 04/11/16 

31-12-11 

Final 

Issue 

Nominal 


maturity of 

the issue 

November 2011 15,450 Structured bonds YES 11/11/16 

December 2011 1,450 Structured bonds YES 02/12/16 



341,796 

Other nonconvertible 

securities 

16/06/06 150,000 Bonds 

Eur3m + 

0.17% YES 16/06/16 

21/06/07 900,000 Bonds 

Eur3m + 

0.14% YES 21/06/12 

24/02/09 889,800 Bonds 

Fixed rate 

3.00% YES 24/02/12 

15/06/09 364,271 Bonds 

Yen Libor 

3m + 

0.62% YES 15/06/12 

15/06/09 353,293 Bonds 

Fixed rate 

1.223% YES 15/06/12 

15/01/10 900,000 Bonds 

Eur3m + 

0.95% YES 15/01/13 

21/01/10 78,800 Bonds 

Fixed rate 

3% YES 21/01/13 

22/10/10 30,000 Bonds 

Fixed rate 

4.27% YES 22/07/16 

13/07/11 100,000 Bonds 

Average 

Eur3m + 

1.8% YES 13/01/14 

29/12/11 1,400,000 Bonds 

Fixed rate 

4.625% YES 29/12/14 

5,166,164


Issue 

Hybrid securities 

16-03-2005 75,000 Bonds 

31-12-10 

Nominal 


Final 

maturity of 

the issue 

Eur 3m flat (3% 

- 5%) YES 16-03-2015 

June 2010 300 Structured bonds YES 24/06/2013 

November 2010 16,850 Structured bonds YES 17/11/2014 

December 2010 1,000 Structured bonds YES 23/12/2014 

Other nonconvertible 

securities 

93,150 

01-06-2006 1,000,000 Bonds Eur 3m + 0.125% YES 01-06-2011 

16-06-2006 150,000 Bonds Eur 3m + 0.17% YES 16-06-2016 

21-06-2007 1,000,000 Bonds Eur 3m + 0.14% YES 21-06-2012 

24-02-2009 1,500,000 Bonds 3.00% FIXED YES 24-02-2012 

Yen Libor 3m + 

15-06-2009 335,941 Bonds 

0.62% YES 15-06-2012 

15-06-2009 325,817 Bonds 1,22% YES 15-06-2012 

15-01-2010 900,000 Bonds 

Euribor 

3m+0.95% YES 15-01-2013 

21-01-2010 78,800 Bonds 

FIXED RATE 

3.00% YES 21-01-2013 

17-09-2010 120,000 Bonds Euribor 3m+1.1% YES 17-09-2012 

17-09-2010 120,000 Bonds Euribor 3m+1.1% YES 17-09-2012 

22-10-2010 30,000 Bonds fixed rate 4.27% YES 22-07-2016 

Issue 

Mortgage-backed 

securities 

31-12-10 

Nominal 


Final 

maturity of 

the issue 

14-03-2008 50,000 Mortgage bond Eur 6m + 0.27% YES 04-03-2013 

14-04-2008 25,000 Mortgage bond Eur 6m + 0.30% YES 14-04-2011 

29-12-2008 419,900 Mortgage bond 4.00% FIXED YES 29-12-2011 

17-02-2009 323,200 Mortgage bond 3.50% FIXED YES 17-02-2012 

13-11-2009 1,000,000 Mortgage bond 3.25% FIXED YES 13-11-2014 

15-06-2003 67,355 Mortgage bond 

Libor 3m $-4bps 

(swap at Eur- 

4bps) NO 15-06-2013 

05-07-2007 100,000 Mortgage bond 

Euribor 3m-4.7 

bps NO 05-07-2015 

17-12-2007 100,000 Mortgage bond 

Euribor 3m-5.5 

bps NO 17-12-2015 

24-06-2008 200,000 Mortgage bond 

Euribor 

3m+0.006% NO 24-06-2016 

09-04-2010 1,000,000 Mortgage bond 

FIXED RATE 

2.625% YES 09-04-2013 

21-06-2010 1,500,000 Mortgage bond 

FIXED RATE 

2.25% YES 01-02-2013 

Euribor 

07-07-2010 200,000 Mortgage bond 3m+1.90% YES 07-07-2018 

26-07-2010 400,000 Mortgage bond 

FIXED RATE 

2.625% YES 09-04-2013 

23-09-2010 750,000 Mortgage bond 

FIXED RATE 

3.75% YES 23-09-2013 

6,135,455 

5,560,558


Issue 

15/06/05 69,557 

31-12-11 

Nominal 


Final 

maturity of 

the issue 

Mortgage bond in 

foreign currency Libor 3m – 0.040 NO 14/06/13 

05/07/07 100,000 Mortgage bond Eur 3m + 0.217% NO 05/07/15 


14/03/08 50,000 Mortgage bond Eur 6m + 0.27% YES 04/03/13 


17/02/09 323,200 Mortgage bond Fixed rate 3.5% YES 17/02/12 

13/11/09 1,000,000 Mortgage bond Fixed rate 3.25% YES 13/11/14 

Fixed rate 

09/04/10 1,000,000 Mortgage bond 

2.625% YES 09/04/13 


07/07/10 200,000 Mortgage bond Eur 3m + 0.37% YES 07/07/18 

Fixed rate 

26/07/10 400,000 Mortgage bond 

2.625% YES 09/04/13 


Fixed rate 

20/01/11 500,000 Mortgage bond 

4.875% YES 21/01/13 



13/05/11 600,000 Mortgage bond 

Fixed rate 

2.625% NO 09/04/13 

13/05/11 600,000 Mortgage bond 

Fixed rate 

4.875% NO 21/01/13 





All current issues are denominated in euros. 

Interest accruing on issues of other non-convertible securities during 2011 amounted to 

€119.95 million (€125.18 million in 2010). 

e) Subordinated liabilities 

The composition of this heading in the portfolio of financial liabilities at amortised 

cost is as follows: 

€000s 

31-12-11 31-12-10 

Marketable debt securities 721,964 732,815 

Non-convertible 721,964 732,815 





Other (417) (357) 

Total 958,170 1,118,631 

In euros 958,170 1,118,631 

In foreign currency - - 

Total 958,170 1,118,631 

As at 31 December 2011, the Bank had subordinated debentures in circulation with 

a value of €721.97 million (€732.82 million at 31 December 2010) and subordinated 

deposits captured by subsidiary companies, originating from issues of preference 

shares, to the value of €168.17 million (€343.17 million as at 31 December 2010). 

These liabilities have subordinated status, in accordance with the provisions of 

Article 7 of Law 13/1992 of 1 June on equity and consolidated supervision of financial 

institutions, and with the eighth rule of Bank of Spain Circular 5/1993 of 26 March. 

During 2011 mortgage bonds for €5.63 billion were issued (€3.85 billion in 2010), senior 

bonds for €1.5 billion (€1.25 million in 2010) and hybrid securities for €248.65 million 

(€18.15 million in 2010), with the characteristics indicated in the above tables.


These liabilities comply with the requirements described in the eighth rule of Bank 

of Spain Circular 5/1993 of 26 March, for inclusion as Tier 2 capital and therefore the 

Bank of Spain approved their classification as such. 

On 10 February 2011 the Bank prepaid subordinated bonds via a swap transaction 

whereby newly issued subordinated bonds at a fixed interest rate of 6.375% maturing 

11 September 2019 were delivered. 

The following is the breakdown as at 31 December 2011 and 2010 of the subordinated 

debentures and preference shares (nominal value, €000s): 

31 December 2011 

€000s 

Issue 

Nominal 

value 

% Interest Issue 

II SUBORDINATED BONDS 1998 14/05/98 36,061 Fixed rate 5.70% 18/12/12 

III SUBORDINATED BONDS 1998 14/05/98 84,141 Fixed rate 6.00% 18/12/28 

I SUBORDINATED BONDS . 

March 2006 

21/03/06 32,800 Eur 3m + 0.50% 21/03/16 

II SUBORDINATED BONDS . 

June 2006 

23/06/06 89,000 Eur 3m + 0.80% 23/06/16 

III SUBORDINATED BONDS . 

December 2006 

18/12/06 50,000 Eur 3m + 0.84% 18/12/16 


March 2007 

16/03/07 49,400 Eur 3m + 0.32% 16/03/17 


October 2008 

10/10/08 50,000 Eur 3m + 3.00% 10/10/18 


September 2009 

I- SUBORDINATED BONDS . 

July 2010 


February 2011 

11/09/09 250,000 

Fixed rate 

6.375% 

11/09/19 

07/07/10 40,000 Fixed rate 6.75% 07/12/20 

Fixed rate 

10/02/11 47,250 

6.375% 

728,652 

11/09/19 

Interest accruing on these bond issues over the course of 2011 totalled €33.90 million 

(€28.20 million in 2010). Interest paid on subordinated deposits amounted to €12.86 

million (€16.44 million in 2010). 

31 December 2010 

€000s 

Issue 

Nominal 

value % Interest 

Maturity 

Issue 

II SUBORDINATED BONDS 1998 14-05-1998 36,061 5.70 18-12-2012 

III SUBORDINATED BONDS 1998 14-05-1998 84,141 6.00 18-12-2028 


March 2006 21-03-2006 75,000 Eur 3m + 0.26 21-03-2016 

II SUBORDINATED BONDS . 

June 2006 23-06-2006 100,000 Eur 3m + 0.30 23-06-2016 

III SUBORDINATED BONDS 

December 2006 18-12-2006 50,000 Eur 3m + 0.50 18-12-2016 


March 2007 16-03-2007 50,000 Eur 3m + 0.32 16-03-2017 


October 2008 10-10-2008 50,000 Eur 3m + 3.00 10-10-2018 

I SUBORDINATED BONDS 

September 2009 11-09-2009 250,000 6,375 

I- SUBORDINATED BONDS . 

July 2010 07-07-2010 40,000 6.75% 07-12-2020 

735,202 

Issue 

31-12-11 

Nominal 

value 

BK Emisiones Series I 28-07-2004 168,165 

Balance at 31 Dec. 

2011 

168,165 

% Interest Issue maturity 

Eur+3.75% min 4%- 

max 7% 

PERPETUAL 

31-12-10 

Nominal 

Issue value % Interest Issue maturity 

BK Emisiones Series I 28-07-2004 253,165 

Eur+3.75% min 

4% - max 7% PERPETUAL 

BK Emisiones Series II 28-10-2004 90,000 

Eur+3.75% min 

4% - max 7% PERPETUAL 

Balance 31 Dec. 2009 343,165


g) Other financial liabilities 

20. Liabilities under insurance contracts 



€000s 

31-12-11 31-12-10 

Bonds payable- 102,747 109,025 

Payables in respect of factoring 15,228 9,377 

Others (*) 87,519 99,648 

Security deposits received 51,060 58,383 

Clearing houses 22 - 

Tax-collection accounts 223,679 153,218 

Special accounts - 214,906 145,798 

Stock-Market transactions pending settlement 214,906 145,798 

Other items 65,598 58,778 

658,012 525,202 

In euros 636,174 509,716 


658,012 525,202 

(*) As at 31 December 2011 and 2010, this included cheques pending settlement to the value of €58.39 million and 

€32.78 million respectively. 

As at 31 December 2011 and 2010, 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 2011 

and 2010 for each of the technical allowances included in the balance sheet attached 

hereto, are as follows: 

€000s 

31-12-11 31-12-10 

Provision 

for 

Unearned 

Premiums 

Provision 

For 

Benefits 

Total 

Provision 

for 

Unearned 

Premiums 

Provision 

for 

Benefits 

Balance at start of 343,495 311,428 654,923 335,421 290,199 625,620 

period 

Additions due to 

change in scope 

Allocations 337,283 289,731 627,014 343,496 292,053 635,549 

Applications (343,496) (311,427) (654,923) (335,421) (290,199) (625,620) 

Adjustments and 

settlements 

Balance at close of 

period 

Total 

- 15,768 15,768 - 19,375 19,374 

337,282 305,500 642,782 343,495 311,428 654,923 

. 

The provision 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 tariff 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. 

21. Provisions 



€000s 

31-12-11 31-12-10 

Pension funds and similar obligations 5,245 7,836 

Allowances for contingent risks and commitments 20,626 22,268 

Other provisions 38,251 40,986 

64,122 71,090 

The breakdown of the allocations made to allowances during the financial years 2011 and 

2010 is as follows: 

€000s 

31-12-11 31-12-10 

Net allocations charged to income: 

Pension funds and similar obligations (8,509) (2,774) 

Allowances for contingent risks and commitments (1,642) (8,086) 


28,175 815 

The provisions referred to under the heading “Other Provisions” are basically of a legal 

and tax nature. The tax provisions derive from proceedings in progress with different 

authorities (economic-administrative and judicial) for tax contingencies deriving from 

state taxes revealed in inspections, and regional and local tax settlements. They are 

recorded at their present value, which is calculated using market interest rates and 

according to the expected calendar for outgoing cash flows, to which a probability of 

occurrence has been applied. 

The heading “Provisions for contingent risks and commitments” contains the general and 

specific provision for contingent risks as at 31 December 2011 and 2010. The net amounts 

allocated to results for this item in 2011 and 2010 were credits (releases of provision) for 

€1.64 million and €8.09 million respectively. 

Movement in “Other provisions” during the years ended 31 December 2011 and 2010 was 

as follows: 

€000s 

Balance as at 31 Dec. 2009 46,017 

Allocations to provisions: 

Allocations charged to profit and loss 12,106 

Recovery of sums allocated in previous financial years (431) 

Application of funds (16,706) 

Other movements 0 

Balance at 31 Dec, 2010 40,986 

Allocations to provisions: 

Allocations charged to profit and loss 40,047 

Recovery of sums allocated in previous financial years (1,721) 

Application of funds (43,766) 

Other movements 2,705 

Balance as at 31 December 2011 38,251 

The heading “Other Provisions” includes a provision for tax assessments corresponding 

mainly to Corporation Tax for the years 2001 to 2006 (Note 42). 

The heading “Allocations charged to results” includes the amount corresponding to 

severance payments. 

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. Shareholder’s equity 

The breakdown of the composition and movements in the Group's shareholder’s equity 

in financial years 2011 and 2010 is included in the Overall Statement of Changes in 

Consolidated Public Net Worth. 

a) Capital 

As at 31 December 2011, the share capital of Bankinter, S.A. was represented by 

476,919,014 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 

2010, the share capital of Bankinter, S.A. was represented by 473,447,732 registered 

shares with a nominal value of €0.30 each. 

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 

2011 and 2010: 

Number of shares 

Nominal Value (€000s) 

Balance as at 31 Dec. 

2009 

473,447,732 142,034 

Additions - - 

Cancellations - - 

Balance at 31 Dec, 2010 473,447,732 142,034 

Additions 3,471,282 1,042 

Cancellations - - 

Balance as at 

31 December 2011 

476,919,014 143,076 

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 to receive free 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 

amount of €1,041,384.60. 

The breakdown of shareholders with a percentage holding equal to or greater than 10% 

of share capital as at 31 December 2011 and 2010 is as follows: 

Number of Shares held 

Directly 

Number of Shares 

held Indirectly 

Percentage of Share 

Capital 

Shareholder 31-12-11 31-12-10 31-12-11 31-12-10 31-12-11 31-12-10 

Cartival, S.A. 106,671,902 105,279,273 7,378,822 7,282,994 23.91 23.77 

Crédit Agricole, S.A 116,927,050 116,927,050 47,723 7,005 24.53 24.70 

b) Issue premium 

During the financial year 2011 there was no change in the issue premium. 

c) Reserves 

The breakdown of this item in the consolidated balance sheet is as follows: 

€000s 

31-12-11 31-12-10 

Statutory reserve 51,091 50,990 

Freely-available reserve 1,349,513 1,292,944 


Treasury shares reserve- 111,034 95,442 

By acquisition 742 1,753 

By guarantee 110,292 93,689 

Canary Islands investment reserve 28,363 28,363 

Reserves (losses) of entities accounted for using the equity method- 11,070 12,650 

Associates 10,743 12,530 

Jointly controlled entities 327 120 

1,711,705 1,648,910


Statutory reserve 

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 item in the consolidated balance sheet is the consequence of the operations to 

update the value of tangible fixed assets carried out in accordance with Royal Decree- 

Law 7/1996 and the revaluation of buildings carried out on 1 January 2004 as allowed 

under standing accounting rules. 

Voluntary reserves 

Voluntary reserves are freely available for use. 

Reserves (losses) of entities accounted for using the equity method 

d) Other equity instruments 

On 11 May 2011 the Bank issued mandatory 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 and it 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. 

e) Treasury stock 

As at 31 December 2011, the Group owned 162,620 of its own shares (407,921 shares 

as at 31 December 2010). 

During 2011, stock market transactions were carried out for the purchase of 7,011,172 

shares (1,209,166 in 2010) and the sale of 7,256,473 shares (1,281,765 in 2010) 

on which gains of €0.74 million were obtained, recognised directly in equity under 

“Reserves” in the Balance Sheet. 

The breakdown of the reserves and losses in companies accounted for using the equity 

method is as follows: 

€000s 

31-12-11 31-12-10 

Reserves Losses Reserves Losses 

Professional Future Materials, S.L. - - (176) 

Mercavalor, S.V., S.A. 1,414 1,284 - 

Bankinter Seguros de Vida, S.A. 8,830 - 10,745 - 

Helena Activos Líquidos, S.L. 500 - 500 - 

Eurobits Technologies, S.L. 327 - 297 - 

11,070 - 12,826 (176)


The breakdown of treasury stock as at 31 December 2011 and 2010 is as follows: 

€000s Euros €000s 

Number of shares Nominal value Average acquisition price Acquisition cost Treasury-stock reserve Percentage of capital 

31-12-11 31-12-10 31-12-11 31-12-10 31-12-11 31-12-10 31-12-11 31-12-10 31-12-11 31-12-10 31-12-11 31-12-10 

Bankinter, S.A. 71,203 21 - 4.33 - 308 - 308 - 0.01 - 

Hispamarket, S.A. 91,417 407,921 28 122 4.75 4.30 434 1,753 434 1,753 0.02 0.09 

Total 162,620 407,921 49 122 9.08 4.30 742 1,753 742 1,753 0.03 0.09 

f) Profit attributable to the Group 

The breakdown of the individual results for each of the companies belonging to the Group 

during the financial years 2011 and 2010 is as follows: 

€000s 


Bankinter, S.A. 187,267 91,917 

Bankinter Consultoría, Asesoramiento y Atención Telefónica, S.A. (59) 618 

Bankinter Seguros Generales, S.A 5 (6) 

Bankinter Gestión de Activos, S. A., SGIIC 15,235 16,869 

Hispamarket, S. A. 514 87 

Intermobiliaria, S. A. (98,169) (61,460) 

Bankinter Consumer Finance, E.F.C, S.A. 16,033 (4,762) 

Bankinter Capital Riesgo, SGECR, S. A. 222 37 

Bankinter Sociedad de Financiación, S. A. (1,203) 257 

Bankinter Emisiones, S. A. 716 119 

Bankinter Capital Riesgo I, Fondo Capital 830 114 

Línea Directa Aseguradora, S.A. 107,213 94,352 

Arroyo Business Consulting Development S.A (1) (1) 

Relanza Gestión S.A 18 81 

Gneis Global Services, S.A. 2,937 677 

The result of the companies consolidated by the equity method for years 2011 and 2010 

is as follows: 

€000s 

31-12-11 31-12-10 

Mercavalor, S.V., S.A. 28 87 

Eurobits Technologies, S.L. 3 (66) 

Helena Activos Líquidos, S.L. (98) (2) 

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 14,812 10,763 

Professional Future Materials, S.L. - 176 

14,675 10,958


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 2011 and 2010, 

earnings per share are as follows: 


Profit for the year (€000s) 181,227 150,730 

Average number of shares (000s) 474,183 473,352 

Earnings per share (euros) 0.38 0.32 

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 results of 2011 and 2010 is as follows, 

not including treasury shares in the Bank’s possession: 

Date 

Dividend per 

Share (Euros) 

Number of 

shares 

Amount 

(€000s) 

Date approved 

by Board 

Results 

for the year 

Jul 10 0.05708 473,447,732 27,020 Jun 10 2010 

Oct 10 0.052003 473,447,732 24,618 Sept 10 2010 

Jan 11 0.048313 473,447,732 22,874 Dec 10 2010 

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: 


Diluted profit for the year (€000s) 181,227 150,730 

Average number of diluted shares (000s) 520,243 473,352 

Diluted earnings per share (euros) 0.35 0.32 

Total 0.15739 74,512 

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 

0.19077 76,887 

In addition to the €76.89 million of dividends referred to, a further €13.72 million were 

used to remunerate shareholders with shares 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 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 amount of €1.04 million.


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: 

June 


September . 


December . 


First Second Third 

Profit after tax (€000s) 64,031 86,874 153,416 

Dividends paid (€000s) - 24,582 35,478 

Interim dividend (€000s) 24,582 10,896 23,038 

Accumulated interim dividends (€000s) 24,582 35,478 58,516 

Gross dividend per share (euros) 0.05193 0.052 0.048313 

Payment date July 11 Oct 11 Jan 12 

23. Valuation adjustments (equity) 

The breakdown of this item is as follows: 

€000s 

31-12-11 31-12-10 

Financial assets available for sale (29,248) (22,994) 


Other valuation adjustments (2,603) 

(31,645) (22,793) 

24. Contingent risks and commitments 

The composition of this item is as follows: 

€000s 

31-12-11 31-12-10 

Contingent risks: 

Financial guarantees- 590,143 113,951 

Financial guarantees 590,143 113,951 

Loan derivatives sold - - 

Other financial guarantees - - 

Assets associated with third-party obligations - - 

Irrevocable documentary credits 149,454 119,086 

Other guarantees and sureties given 1,590,114 2,034,019 

Other contingent risks 109,959 94,132 

2,439,670 2,361,188 

Contingent commitments: 

Available by third parties 6,895,998 7,368,511 

Commitments to purchase financial assets in instalments 12,609 18,085 

Contractual agreements to acquire financial assets 2,221,798 1,800,636 

Subscribed securities pending disbursement 14,284 2,076 

Other contingent commitments 64,118 69,071 

9,208,807 9,258,379 

. 

The item “Contingent commitments available by third parties” consists entirely of 

commitments on immediately available credit.


25. Transfers of financial assets 

The breakdown of transfers of financial assets carried out by the Group at 31 December 


€000s 

31-12-11 31-12-10 

Removed from the balance sheet prior to 1 Jan. 2004 1,256,311 1,485,403 

Retained in the balance sheet in full 8,996,843 14,577,701 

10,253,154 16,063,104 

During 2011 the following securitisation funds were pre-paid; Bankinter 16 Asset 

Securitisation Fund, Bankinter 19 Asset Securitisation Fund, Bankinter 20 Asset 

Securitisation Fund and Bankinter 1 Mortgage Securitisation Fund. 

The derecognised assets refer to the loans securitised prior to 1 January 2004, as described 

below: 

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. 

As at 31 December 2011 the balance sheet included securitisation bonds issued by 

securitisation funds forming part of the consolidated Group for an amount of €5,928.18 

million (€11.148 billion at 31 December 2010). These securities are recognised as liabilities 

in the balance sheet, as deductions from the amount of the corresponding issues under 

the heading “Debt represented by negotiable securities”. 

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% 16-09-2040 

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 

- 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". 

BK 8 FTA A-Series Aaa/AAA: 1,029,300 Eur 3 m. + 0.17% 15-12-2040 


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% 


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 


BK 13 FTA A1 Series Aaa/AAA: 85,000 Eur 3 m. + 0.06% 17-07-2049 


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 

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% 


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 




B-Series Aa2/AA: 14,100 Eur 3 m. + 0.30% 

C-Series A3/A- 14,200 Eur 3 m. + 0.40% 


E Series C/CCC- 14,200 Eur 3 m. + 3.90% 

Total 964,000 



B-Series Aa3/A+: 13,100 Eur 3 m. + 0.25% 


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 

CASTELLANA A-Series AAA 83,700 Eur 3 m. + 0.30% 08-01-2050 

FINANCE B1 Series AA 26,000 Eur 3 m. + 0.70% 

B2 Series AA 10,000 Eur 3 m. + 0.85% 

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 2 Pyme 

FTA A1 Series Aaa/AAA: 49,000 Eur 3 m. + 0.06% 16-05-2043 


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% 


Total 800,000 








Total 1,525,500



BK 3 FTPyme 

FTA A1 Series Aaa/AAA: 180,000 Eur 3 m. + 0.09% 18-02-2046 


A3 Series 

(guaranteed) Aaa/AAA: 91,200 Eur 3 m. + 0.02% 


C-Series Baa2/BBB 6,000 Eur 3 m. + 0.90% 



Total 617,400 

BK 16 FTA A-Series Aaa/AAA: 1,882,000 Eur 3 m. + 0.30% 16-09-2050 





Total 2,043,000 

BK 17 FTA A-Series AAA 952,500 Eur 3 m. + 0.30% 18-04-2051 

B-Series A 34,000 Eur 3 m. + 0.50% 

C-Series BBB 13,500 Eur 3 m. + 0.70% 

Total 1,000,000 

BK Leasing 1 

FTA A-Series Aaa 366,600 Eur 3 m. + 0.30% 15-04-2031 

B-Series A3 21,400 Eur 3 m. + 0.50% 

C-Series Baa3 12,000 Eur 3 m. + 0.80% 

Total 400,000 


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 

BK 18 FTA A1 Series Aaa/AAA: 1,404,700 Eur 3 m. + 0.30% 23-01-2052 



Total 1,500,000 

BK 1 

Companies 

FTA A-Series Aaa 608,400,000 Eur 3 m. + 0.30% 14-03-2047 

B-Series A3 30,600,000 Eur 3 m. + 0.50% 

C-Series Baa3 71,000,000 Eur 3 m. + 0.70% 

Total 710,000,000 

BK 19 FTA A-Series Aaa 1,597,900,000 Eur 3 m. + 0.30% 18-06-2052 

B-Series A1 20,700,000 Eur 3 m. + 0.50% 

C-Series Baa3 31,400,000 Eur 3 m. + 0.70% 

Total 1,650,000,00 

BK 20 FTA A-Series Aaa/AAA 1,650,000 Eur 3m+0.30% 17-12-2053 

Total 1,650,000,00


Outstanding balances of securitisations as at 31 December 2011 and 2010 were as follows: 

€000s 

The sum of the associated financial liabilities as at 31 December 2011 stood at €2,594.72 

million (€2,768.86 million at 31 December 2010). 

Removed from the balance sheet prior to 01-01-04: 

31-12-11 31-12-10 

26. Other memorandum accounts - financial derivatives 

Bankinter 1 Mortgage Securitisation Fund - 53,609 

Bankinter 2 Mortgage Securitisation Fund 41,808 50,316 





Bankinter 1 FTPYME - - 

1,256,311 1,485,403 

Retained on the balance sheet in full: 


Bankinter 8 Asset Securitisation Fund 379,634 423,502 






Bankinter 13 Asset Securitisation Fund 972,638 1,049,105 



Bankinter 15 Mortgage Securitisation Fund 1,069,044 1,155,314 

Bankinter 16 Asset Securitisation Fund - 1,623,772 


Bankinter Leasing I, Asset Securitisation Fund 112,104 178,898 

Bankinter 4 Ftpymes, Asset Securitisation Fund 236,159 273,740 

Bankinter 18 Asset Securitisation Fund 1,239,175 1,319,450 

Bankinter Companies 1 Asset Securitisation Fund 408,340 501,680 

The breakdown of Other memorandum accounts as at 31 December 2011 and 2010 is as 

follows: 

€000s 

31-12-10 31-12-10 

Financial derivatives (Notes 7 and 10): 

Exchange-rate risk 6,621,875 6,150,266 

Interest-rate risk 26,921,783 35,775,440 

Equity risk 3,156,955 2,564,977 

Credit risk 5,000 - 

Other risks - - 

36,705,613 44,490,683 

The notional amount of the contracts does not reflect the actual risk assumed by the 

Group in relation to such instruments. 

27. Personnel expenses 

The composition of the amounts included under this item in the consolidated profit and 

loss account for financial years 2011 and 2010 is as follows: 

€000s 


Salaries and bonuses paid to active staff 245,985 240,529 

Social Security contributions 60,985 61,248 

Contributions to defined benefit plans 1,300 1,160 

Severance packages 1,550 3,907 

Other personnel expenses 20,145 26,090 

329,965 332,934 



8,996,843 14,577,701


The breakdown of the Group’s personnel as at 31 December 2011 and 2010, in accordance 

with pension commitments, was as follows: 

31-12-11 31-12-10 

Active employees in service since before 8 March 1980 372 459 

Personnel that are pension beneficiaries 62 57 

Early retirees 48 59 

Other active employees 3,904 4,165 

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. 

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. 

Other long-term benefits 

In accordance with the Collective Labour Agreement in force, the Bank has also undertaken 

the commitment to complement Social Security payments if necessary up to certain 

amounts for permanent invalidity, widowhood or orphanhood. 

To cover the aforementioned pension commitments, the Bank has taken out an insurance 

contract with Winterthur Seguros y Reaseguros, S.A. (now AXA Seguros y Reaseguros S.A. 

following the subsequent merger with this institution), with the unconditional guarantee of 

its parent Winterthur A. G., which guarantees future coverage for all payments to complement 

pensions for passive personnel until financial year 2003. In addition, for passive personnel 

after financial year 2003 and to cover active personnel, the aforementioned payments are 

guaranteed by a co-insurance policy in which Winterthur Seguros y Reaseguros (now AXA 

Seguros y Reaseguros S.A.) participates for 40% as the party opening the co-insurance, with 

Caser Ahorrovida S. A de Seguros y Reaseguros and Allianz, Compañía de Seguros y Reaseguros 

S.A each taking part for 30%. 

In 2011 regular premiums paid, net of recoveries, totalled €3.07 million for retirement cover 

(€0.16 million in 2010). 

The premium paid for death and incapacity cover in 2011 amounted to €0.12 million 

(€0.21 in 2010). 

Active personnel 

The basic assumptions used for the calculations in the actuarial study as at 31 December 

2011 and 2010 for commitments to active personnel, are as shown in the following table: 

Mortality 

Survival 

Men 

Women 

Invalidity 

NPV discount rate 

31-12-11 31-12-10 

Probabilities set in the GKM/-95 

tables, at 80%. 

Probability associated with table 

PERM-2000 P. 

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 

03.11.2011 



Probabilities set in the GKM/-95 

tables, at 80%. 

Probability associated with table 

PERM-2000 P. 

Probability associated with PERF- 

2000 P table. 

Probabilities set in the OM 

24/01/1977 on Bank insurance net 

of costs. 


23.11.2010 


23.11.2010 

Rise in CPI 

Rise in salaries 2% 2% 

Social Security 

evolution 

Rise in Maximum 

Bases 

3.50% for remuneration items 

linked to the collective bargaining 

agreement 

3.50% for remuneration items 

linked to the collective bargaining 

agreement 

Maximum pension: 2% 2%


The most significant aspects of the actuarial study carried out as at 31 December 2011 

and 2010 are as follows: 

€000s 

31-12-11 31-12-10 

Value of the obligations 40,943 46,014 

Fair value of plan assets: 

Allianz 13,888 14,268 

Caser 13,888 14,268 

AXA 18,518 19,024 

As a significant aspect of the difference between the actuarial valuations as at 31 December 

2010 and 2011, we should point out the fact that the allocations corresponding to the 

retirement commitments were increased, as a result of financial market trends during the 

financial year 2011. As at 23 November 2010, the 24-year return - the average financial 

duration of the commitments undertaken - was 3.29%, and as at 3 November 2011, the 

24-year return stood at 2.94%; consequently, the amounts corresponding to the pension 

commitment coverage increased by €1.90 million. 

Personnel that are pension beneficiaries 



31-12-11 31-12-10 

Value of the obligations 9,463 8,957 

Fair value of the plan assets 9,424 8,913 

Actuarial assumptions 

Tables used 

Pensions deriving from the initial premium PERMF/2000 P PERMF/2000 P 

Pensions deriving from subsequent 

contributions 

PERMF/2000 P 

PERMF/2000 P 

Technical interest rate 

Euribor zero-coupon 

curve as at 03.11.2011 

Euribor zero-coupon 

curve as at 23.11.2010 

Rise in salaries Not applicable Not applicable 

Pension revaluation rate 

2% for re-valuable 

benefits 

2% for re-valuable 

benefits 

As a significant aspect of the difference between the actuarial valuations as at 31 December 

2010 and 2011, we should point out the fact that the allocations corresponding to the 

retirement commitments were increased, as a result of financial market trends during the 


duration of the commitments undertaken - was 3.21%, and as at 3 November 2011 it 

was 2.81%. Consequently the amounts corresponding to cover for pension commitments 

increased by €0.28 million. 

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 

2011 and 2010, for commitments to active personnel, are as shown in the following table: 

Survival: 

Men 

Women 

NPV discount rate 

31-12-11 31-12-10 

Probability associated with 

table PERM-2000 P. 


PERF-2000 P table. 




table PERM-2000 P. 


PERF-2000 P table. 


23.11.2010 

Rise in CPI: 

Early retirement stage 2% for re-valuable benefits 2% for re-valuable benefits 

Retirement stage 2% 2% 

Rise in salaries - - 

Retirement stage - - 

Changes in Social Security: - - 

Retirement stage - - 

Rise in Maximum Bases 2% 2% 

Maximum pension:


For the retirement stage of early retirees and for the part accrued and not accrued at 31 

December 2011 and 2010, the same profitability as mentioned previously for commitments 

undertaken with active personnel were used. 



Early 

retirement 

stage 

31-12-11 31-12-10 

Retirement 

stage 

Early 

retirement 

stage 

Retirement 

stage 

Other long-term benefits: 

Early retirees 2002 557 1,090 

Early retirees 2003 4,649 6,702 


Early retirees 2002 670 1,096 

Early retirees 2003 8,587 9,296 

Pension-linked insurance agreements 

Nationale Nederlanden Vida 5,140 - 7,690 - 

Allianz, Compañía de Seguros y 

Reaseguros, S.A. - 2,993 - 3,229 

Caser, S.A. de Seguros y Reaseguros 

sobre la Vida - 2,993 - 3,229 

Winterthur Vida, S.A. de Seguros y 

Reaseguros sobre la Vida - 3,990 - 4,305 

We may highlight as a significant aspect of the difference between the actuarial valuations 

as at 31 December 2010 and 2011 the fact the allocations corresponding to the retirement 

commitments were increased as a result of the evolution in the financial markets during 


duration of the commitments undertaken - stood at 3.29%, and as at 3 November 2011, 

that return had reached 2.91%. As a result of this, the amounts corresponding to cover for 

pension commitments increased by €0.37 million. 

Explanation of the variation in pension commitments under the fixed-provision system 

as at 31 December 2011 (as compared to 31 December 2010) and the coverage thereof: 

€000s 

Valuation of commitments as at 31-12-2010: 73,154 

Active Personnel 46,014 

Early retirees (early retirement stage) 7,792 

Early retirees (retirement stage) 10,392 

Personnel who are pension beneficiaries 8,957 

Changes in obligations during financial year 2011: (8,285) 

Accruals for the year 2011: 1,300 

Pension fund interest: 2,301 

Reductions for payments of benefits or cancellation of commitments: (4,223) 

Actuarial profits and losses (deviation and changes to assumptions) (7,663) 

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 

Coverage of obligations as at 31-12-2010: 74,925 

Plan assets 67,235 

Pension-linked insurance agreements 7,690 

Other funds 0 

Return anticipated from plan assets/insurance contracts: 2,323 

Actuarial gains / (losses) 867 

Contributions 273 

Recoveries (3,345) 

Benefits paid (4,207) 

Coverage of obligations as at 31-12-2011: 70,835 

Plan assets 65,695 

Pension-linked insurance agreements 5,140 

Other funds


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 2011 

of committed 

benefits 

Value of the 

associated funds 

Value as at 1 January 2011 73,154 74,925 

Normal Cost (Annual accrual) 1,300 

Interest Cost (financial expenses) 2,301 

Expected return on plan assets 2,323 

Company contributions 273 

Company recoveries (3,345) 

Benefits paid (4,223) (4,207) 

Early retiree risk premiums earned 

Other liabilities 

Present value of committed benefits 38 

Value of the associated funds 0 

Unrecognised net actuarial losses and gains 0 

Cost of past service not recognised 0 

Pension liabilities 38 

Other long-term benefits 

Early retirees 

Present value of committed benefits 5,206 

Value of the associated funds 0 

Pension liabilities 5,206 

Insurance agreements linked to pensions 5,140 

Actuarial losses / (gains) (7,663) 

(Losses) / gains on the value of the fund 866 

Value as at 31 December 2011 64,869 70,835 

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 2011: 


Active, passive and early-retired personnel 

Present value of committed benefits 59,625 

Pension expense incurred in financial year 2011 

The total cost recognised in the income statement for 2011 for coverage of pension 

commitments amounts to €7.25 million, as per the following breakdown: 

€000s 

Cost of services in the current period: 1,300 

Interest cost 2,301 

Expected return on plan assets: (2,323) 

Actuarial gains and losses: (8,530) 

Value of the associated funds 65,695 

Unrecognised net actuarial losses and gains 0 

Cost of past service not recognised 0 

The Bank’s estimate with regard to pension costs for 2012 is €1.69 million. 

Pension assets 6,070


The following is a breakdown of insurance policies taken out with the various insurance 

institutions (at fair value): 

Percentage 

Axa - Winterthur 42% 

Allianz 26% 

Caser 25% 

Nationale Nederlanden 7% 

. 

The expected return at the start of the financial year for the assets in the plan was 

estimated at €2.32 million, whereas the actual return obtained for the year was €3.19 

million, the difference being due almost entirely to the increase in value as a result of the 

increase in market rates since the close of the previous financial year. 

The Bank’s estimate of expected contributions to the plan during 2012 is €3.92 million. 

The expected return on plan assets for 2012 as estimated at the start of the year is €1.92 

million. 

Details of changes in the present value of defined benefit pension commitments and 

the assets assigned to cover them as at each year-end 

The average number of employees by category and sex during financial years 2011 and 

2010 was as follows: 


Men Women Men Women 

Managers 415 179 440 187 

Executives 968 781 976 798 

Operatives 769 1251 855 1311 

2,152 2,211 2,271 2,296 

The breakdown of personnel by sex and category as at 31 December 2011 and 2010 was 

as follows: 


Men Women Men Women 

Managers 399 170 433 188 

Executives 974 780 986 807 

Operatives 703 1184 831 1298 

2,076 2,134 2,250 2,293 

€000s 

Year 

Defined Benefit 

Obligations 

Assets 

Assigned 

Other 

Funds 

Deficit/Surplus 

2004 129,814 130,514 - 701 

2005 166,512 168,600 - 2,088 

2006 132,232 130,852 1,380 - 

2007 103,462 102,353 1,137 - 

2008 76,839 77,979 33 1,173 

2009 67,525 67,396 129 - 

2010 73,154 74,925 44 1,814 

2011 64,869 70,835 39 6,005


28. Fees received and paid 

Details of this heading in the consolidated income statement for the years ended . 

31 December 2011 and 2010 are as follows: 

Fees expense: 

€000s 


Fees paid to other institutions and correspondents 24,805 23,934 

Fees paid to brokers, virtual banking 24,914 22,606 

Other fees 17,039 19,436 

Total fees expense 66,758 65,976 

Fee income: 

For guarantees and documentary credits 23,842 24,202 

For exchange of foreign currencies and foreign banknotes 7,247 7,022 

For contingent commitments 11,619 8,317 

For collections and payments- 54,955 57,041 

Trade bills 5,787 6,151 

Sight accounts 9,972 10,016 

Credit and debit cards 31,053 31,909 

Cheques 1,466 1,520 

Payment orders 6,677 7,445 

For securities services- 41,142 40,623 

Underwriting and placement of securities 632 1,003 

Securities trading (Note 40) 20,863 21,610 

Administration and custody of securities 19,647 18,010 

For the marketing of non-banking financial products- 87,537 87,621 

Investment funds 43,269 45,738 

Pension funds 3,706 3,632 

Insurance 40,562 38,251 

Other fees 39,299 36,653 

Total fee income 265,641 261,479 

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 2011 and 2010 is as follows: 

€000s 

Interest and similar income 2011 2010 

Deposits with the Bank of Spain 6,006 4,309 

Deposits with credit institutions (Note 10) 48,040 27,952 

Money market transactions through counterparties 30,866 2,858 

Customer loans (Note 10) 1,205,045 984,676 

Debt instruments 314,734 201,227 

Impaired assets 13,916 15,588 

Income corrections from hedging operations 11,192 (40,031) 

Income from insurance contracts linked to pensions and similar 

obligations 

2,223 2,406 

Other interest 4,273 3,592 

1,636,295 1,202,577 

In 2011, the heading “Customer loans” includes €679.54 million corresponding to 

operations with collateral (€585.45 million in 2010). The item “debt securities” includes, in 

2011, €192.36 million corresponding to Registered State Debt (€103.52 million in 2010).


€000s 

Interest expense and similar charges 2011 2010 

On deposits with the Bank of Spain 37,584 36,122 

On deposits with credit institutions 153,702 52,126 

On money-market transactions through counterparties 20,991 3,735 

On customer loans 474,608 264,204 

On debt represented by negotiable securities (Note 19) 414,290 344,450 

On subordinated liabilities 45,956 44,344 

Expense corrections from hedging transactions (59,295) (97,407) 

Pension fund interest costs 2,200 2,371 

Remuneration of equity having the nature of a financial liability - - 

Other interest 3,584 2,680 

1,093,620 652,624 

. 

The item “Debt represented by negotiable securities” (note 19) in financial year 2011 

includes interest and charges for transactions with promissory notes and commercial 

paper to the value of €30.08 million (€27.33 million in 2010). 

30. Trading income 

The breakdown of these items in the consolidated income statement for the years ended 

31 December 2011 and 2010 is as follows: 

€000s 


From financial assets and liabilities held for trading (Note 7) 11,910 16,794 

From debt securities 31,937 24,737 

Other equity instruments (41,835) (20,005) 


Other financial instruments at fair value through profit and loss 

account (Note 7) 97 10,835 

Other equity instruments 97 10,835 

From financial assets available for sale (Note 8) 5,212 32,545 

From debt securities 4,176 29,003 


Other income and expense 41,943 10,978 

59,162 71,152 

The average annual interest per item during financial years 2011 and 2010 was as follows: 

31-12-11 31-12-10 

Average 

interest 

Average 

interest 

Similar income: 

Deposits with central banks 0.97% 0.77% 

Loans and advances to credit institutions 1.69% 0.63% 

Loans and advances to customers 2.96% 2.47% 

Debt instruments 3.59% 2.84% 

Similar costs: 

As at 31 December 2011 the heading Other income and expenses included €27.85 million 

relating to the gains arising from the buy-back of securitisation bonds during the year 

then ended. 

31. Exchange differences (net) 

The amount of net exchange differences recognised in the consolidated income statement 

for the year ended 31 December 2011 was €38.68 million (€49.32 million in 2010). 

The breakdown by currency of the assets and liabilities in the Group’s balance sheet 

denominated in foreign currencies as at 31 December 2011 and 2010 is as follows: 

Deposits from central banks 1.28% 0.99% 

Deposits from credit institutions 2.30% 1.11% 

Customer funds 2.21% 1.53% 

Customer deposits 1.97% 1.26% 

Marketable debt securities 2.58% 1.86% 

Subordinated liabilities 4.77% 3.94%


€000s 


Assets Liabilities Assets Liabilities 

US dollar 265,162 438,710 198,547 457,649 

Sterling 22,783 38,035 46,822 42,192 

Japanese yen 4,089,271 722,425 4,014,753 670,309 

Swiss franc 788,918 10,612 884,692 7,783 

Norwegian krone 604 1,130 707 1,440 

Swedish krona 1,008 856 1,639 396 

Danish krone 1,896 19 995 713 

Others 33,969 24,006 8,798 6,174 

5,203,611 1,235,793 5,156,953 1,186,656 

32. Other general administrative expenses 

The composition of the amounts included under this item in the consolidated profit and 

loss account for financial years 2011 and 2010 is as follows: 

€000s 


Taxes 5,133 4,382 

Buildings and supplies 32,653 36,924 

Entertaining and travel expenses 4,552 6,446 

Material and sundry expenses 33,848 38,386 

External services 59,681 64,517 

Software and communications 42,624 63,045 

Advertising 49,940 38,872 

Other expenses 22,426 8,008 

The breakdown of assets and liabilities denominated in foreign currencies as at . 


250,857 260,580 

€000s 


Assets Assets Assets Liabilities 

Cash and balances with central banks 1,028 - 1,149 - 

Financial assets and liabilities held 

for trading 

2,621 2,709 1,825 1,434 

Loans and receivables 5,189,552 - 5,134,390 - 

Available-for-sale financial 

assets 

10,321 - 19,504 - 

Accrued expenses and deferred 

income 

42 - 41 - 

Financial liabilities at amortised cost - 1,232,570 - 1,185,220 

Other 47 514 45 2 

5,203,611 1,235,793 5,156,953 1,186,656 

33. Other operating income and expense 

The breakdown of this item in the consolidated income statement for the years ended . 


€000s 


Income Expenses Income Expenses 

Income from the operation of investment 

- 

- 

property and other operating leases 3,796 

4,080 

Financial fees setting off direct costs 11,807 - 13,028 - 

Contribution to the Deposit Guarantee 

Fund (Note 4) 

- 14,817 - 9,703 

Income and expense from/on insurance 

and reinsurance policies issued 686,960 455,442 681,080 473,901 

Other 13,668 12,056 9,984 13,586 

716,231 482,315 708,172 497,190


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 the year under 

review: The three existing deposit guarantee funds (banks, savings banks and credit 

cooperatives) have been merged in a single Credit Institutions’ 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 has been 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 has been introduced, with a 

500% weighting applied to deposits on which agreed remuneration exceeds certain rates 

of interest which are reviewed on a quarterly basis. 

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. 

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 


Differences in the derecognition of assets not classified as noncurrent 

assets held for sale: 

€000s 


Gains on disposal of tangible assets (Note 14) 2,152 3,117 

Losses on disposal of tangible assets (Note 14) (5,226) (4,012) 

Gains on disposal of shares 26,000 - 

Gains on disposal of other equity instruments 2,279 - 

Gains / (Losses) on non-current assets held for sale not classified as 

discontinued operations: 

25,205 (895) 

Impairment losses on assets (Note 12) (47,652) (19,825) 

Gains on disposals 22,875 16,493 

Losses on disposals (32,193) (18,904) 

(56,970) (22,236) 

The heading “Gains on disposal of holdings” includes €24 million relating to the release 

of blocked gains on the 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. on 30 June 2007. 

This gain remained blocked by the shareholder’s 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. 

During 2012 the Bank expects to receive an amount which will be determined by the 

degree of achievement of the business plan at 31 December 2011, as an increase to the 

sale price, which will be recognised in profit and loss for 2012. Also included is a €2.00 

million gain on Bankinter’s sale of 10% of the capital of Seguros Generales (BKSG) S.A de 

Seguros y Reaseguros (Note 13). 

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 2011 and 2010 is provided in Appendix I and 

the following Note 36.


36. Remuneration of and balances with members of the Board of Directors 

Director’s remuneration 

In accordance with the principles and recommendations of the Spanish securities 

regulator’s (CNMV’s) Unified Code of Good Corporate Governance (CUBG) and more 

specifically Recommendation 40 CUBG, this past year Bankinter once again presented 

to the AGM of 28 April 2011 for consultative approval a report on remuneration policies 

which included information on general policy in this area, its application to financial year 

2010 and the remuneration system applying to financial year 2011 1 . The remuneration 

policy report was approved by 99.045% (2010: 99.025%) of the total capital in attendance 

and represented at the aforementioned 2009 General Meeting of Shareholders. Among 

other information, it contained the remuneration for the Board and top management 

for the financial year 2011, which are detailed and broken down in this note. This 

report included the conclusions of the analysis as to the degree to which the institution’s 

remuneration schemes conformed to applicable Financial Stability Board (FSB) standards 

of September 2009 (on the principles approved by the Financial Stability Forum in 

September 2009), which concluded that in general the study carried out on the Bank’s 

remuneration schemes, items and policies conformed to the basic principles contained in 

the FSB document 2 . 

(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 director’s 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. 

(2) In December 2010, Directive 2010/76/EU of the European Parliament and the Council of 24 November 2010 

was published, concerning capital requirements for the trading book and for resecuritisations, 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 employees whose activities have a significant impact 

on the institution’s risk profile or who perform controlling 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 R.D. 216/2008 of 15 

February on financial institution’s equity and R.D. 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 R.D. 

216/2008 on financial institution’s 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. 

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 of 2011). This Circular deals particularly with remuneration 

of managers and employees whose decisions may affect the institution’s risk profile. 

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 2011 and 2010 is as follows: 

In euros 

Directors 2011 2010 

Pedro Guerrero Guerrero 238,353 259,173 

María Dolores Dancausa Treviño (1) 175,354 29,481 

Cartival, S.A. 175,354 208,012 

Marcelino Botín-Sanz de Sautuola y Naveda 103,710 97,178 

Fernando Masaveu Herrero 130,006 123,991 

John de Zulueta Greenebaum 160,646 178,013 

Gonzalo de la Hoz Lizcano 127,531 110,080 

Jaime Terceiro Lomba 137,342 134,440 

José Antonio Garay Ibargaray 151,036 163,053 

Rafael Mateu de Ros Cerezo 188,582 204,123 

Former directors (2) 44,610 327,271 

1,632,524 1,834,815 

(1) Appointed Chief Executive Officer of Bankinter (by cooption) on 21 October 2010; appointment ratified by the 

General Meeting of Shareholders of 28 April 2011. 

(2) 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, and those for 2010 relate to those received by José Ramón Arce and Jaime 

Echegoyen Enríquez de la Orden who resigned as CEO of Bankinter in October 2010. 

At the end of 2011 the number of directors of Bankinter S.A. was one fewer than at yearend 

2010. The Board of Directors of Bankinter currently includes one woman, who is the 

CEO of Bankinter, having joined the Bank in October 2010. 

Pursuant to Article 32 of the Articles of Association, the following items are included in 

the amounts shown in the above table: 

- A fixed amount for the function of Director, 

- An amount that is accrued for attendance at meetings of the Board and its Committees 

(attendance fees). 

- Shares are also provided.


Article 32 of the Articles of Association also allows Directors to be remunerated with option 

schemes or other instruments linked to Bankinter shares. However, in line with current 

good corporate governance recommendations, since 2007 Bankinter has not granted its 

Directors any remuneration consisting of stock options on shares in return for their board 

member status. 

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 2011 and 2010: 

Directors 

Fixed 

remuneration 

In euros 


Attendance 

Fees 

Fixed 

Remuneration (*) 

Attendance 

Fees 

Pedro Guerrero Guerrero 73,949 120,404 97,173 112,000 

María Dolores Dancausa Treviño (1) 55,461 86,893 11,871 10,272 

Cartival, S.A. 55,461 86,893 75,983 94,529 

Marcelino Botín-Sanz de 

Sautuola y Naveda 36,975 44,735 41,000 31,178 

Fernando Masaveu Herrero 36,975 71,031 56,172 42,818 

John de Zulueta Greenebaum 36,975 101,671 56,172 96,840 

Gonzalo de la Hoz Lizcano 36,975 68,556 41,000 44,080 

Jaime Terceiro Lomba 36,975 78,367 41,000 68,440 

José Antonio Garay Ibargaray 36,975 92,061 56,172 81,880 

Rafael Mateu de Ros Cerezo 48,066 111,916 68,472 103,150 

Former directors (2) 7,454 31,656 120,973 174,890 

Subtotals 462,241 894,183 665,988 860,077 

Total 1,356,424 1,526,065 

(*) Fixed remuneration corresponds to that received for meetings of the Board and of the Executive Committee 

during 2010. For 2011, there was no fixed remuneration for the Executive Committee, all remuneration being 

by way of attendance fees. 






The individual breakdown of the allocations of shares to Directors carried out under the 

item of remuneration in financial years 2011 and 2010 is as follows: 


Number of 

Shares 

Delivered 

Number of 

Shares 

Delivered 

Amounts 

Amounts 

Directors 

invested 

invested 

Pedro Guerrero Guerrero 44,000 9,268 50,000 9,526 

María Dolores Dancausa Treviño (1) 33,000 6,950 7,337 1,518 

Cartival, S.A. 33,000 6,950 37,500 7,145 

Marcelino Botín-Sanz de Sautuola y 

Naveda 

22,000 4,633 25,000 4,762 

Fernando Masaveu Herrero 22,000 4,633 25,000 4,762 

John de Zulueta Greenebaum 22,000 4,633 25,000 4,762 

Gonzalo de la Hoz Lizcano 22,000 4,633 25,000 4,762 

Jaime Terceiro Lomba 22,000 4,633 25,000 4,762 

José Antonio Garay Ibargaray 22,000 4,633 25,000 4,762 

Rafael Mateu de Ros Cerezo 28,600 6,024 32,500 6,191 

Former directors (2) 5,500 1,077 45,890 10,388 

276,100 58,067 323,227 63,340 






As indicated previously, since 1 January 2007 the granting of options linked to Bankinter 

S.A. shares is no longer used as a system for remunerating directors for fulfilling their 

duties. 

There are currently no option plans in place granted to Directors (of the kind granted 

prior to 2007). 

The 2006 option plan for Directors expired on 30 December 2010, as indicated in last year’s 

legal annual report. This plan was settled on a net basis in accordance with the terms and 

conditions laid down at the time, but because the settlement price of the plan was lower 

than the strike price at maturity, the options were cancelled without any payment being 

made to Directors.


Also, as indicated in last year’s legal report, the Board agreed to maintain the stock 

options in place for Jaime Echegoyen at the time of his resignation, which were settled 

by netting off in accordance with the terms and conditions established at the time, but 

because the settlement price of the plan was lower than the strike price at the time of 

expiry, the options were cancelled with no payment being made to Jaime Echegoyen, 

former CEO of the Bank, and with no other option plans existing in his name. 

Loans and guarantees 

The amount of loans granted to Directors as at 31 December 2011 was €23.83 million 

(€25.00 million as at 31 December 2010). As at 31 December 2011 the Entity had 

outstanding guarantees in favour of its Directors for a total of €0.39 million (the same 

amount as at 31 December 2010). 

The average term of the loans and lines of credit granted to the Bank’s Directors was 

approximately 10 years in 2011 (9 years in 2010). The interest rates stand between 1.93% 

and 5.98% in 2011 (0.84% and 3.76% in 2010). 

Remuneration of Executive Directors and Senior Management 

As at 31 December 2011 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, excluding executive directors, was €1.51 million, of which €1.34 

million was fixed remuneration and €0.17 million variable remuneration. In 2010, this 

amount was €1.45 million (5 persons). The Board of Directors of Bankinter resolved in its 

meeting of 20 January 2011 to appoint a General Manager for the Capital Markets area, 

who would form part of the Bank’s senior management. Also, in April 2011 the number of 

senior managers fell from six to five. 

- 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 €0.60 million, all by way 

of fixed remuneration. 

The sum of the amounts received by the executive directors in 2011 under the heading of 

salary was €1.95 million. Remuneration received by executive directors in 2010 totalled 

€2.29 million (including that received by Jaime Echegoyen Enríquez de la Orden, who 

was CEO of the Entity until 21 October and received €1.06 million). 

Bankinter has no pension commitments to its non-executive directors. Bankinter has no 

commitments to its executive directors as regards new pension contributions. In the case 

of the CEO, as indicated in last year’s legal report, it should be pointed out that as the 

CEO of Bankinter’s subsidiary Línea Directa Aseguradora S.A. she was awarded a defined 

contribution pension plan in 2005, which the Board of Directors of Bankinter, following a 

proposal from its Nomination and Remuneration Committee, decided to maintain when 

she joined the Bank. The amount contributed to this plan totalled €0.60 million. Since it is 

a defined contribution plan, there is no commitment by either Línea Directa or Bankinter 

to make new contributions. 

There are no pension commitments to senior managers except for one special case where 

in order to align with mechanisms used in the past for Senior Management, a defined 

contribution pension plan was awarded in 2011, as approved by the Board of Directors at 

the proposal of the Nomination and Remuneration Committee. The amount contributed 

to this plan was €656,565. This pension plan covers the usual contingencies of retirement, 

death and invalidity. Since it is a defined contribution plan, there is no commitment on 

the part of Bankinter to make new contributions. 

The executive directors received the following amounts in 2011 as remuneration for their 

activity: 

- Pedro Guerrero, Chairman of Bankinter, received a total of €0.99 million, all by way of 

fixed remuneration.


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 Worker’s Statute and are subject to a limit which in no 

case may exceed that established in the Statute for the entity’s employees as a whole. 

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 Royal Decree 1382/1985 regulating special labour relations with 

senior management). The indemnifications provided for in these contracts apply only in 

analogous cases to those established for ordinary labour relations in the Worker’s Statute 

and are subject to a limit which is appreciably lower than that established in the Statute 

for the entity’s employees as a whole. 

As indicated in the report for the previous financial year, the General Meeting of 

Shareholders of Bankinter held in April 2009 approved as part of the remuneration policy 

report the setting up of a new Pluriannual Incentives Plan (2009-2010) 3 , the beneficiaries of 

which are the Chairman, the Chief Executive Officer and members of Senior Management, 

as well as the rest of the bank’s management team. The settlement made in May 2011 did 

not involve any payment by the company to any of the beneficiaries, since the objective 

was not met. 

Lastly, the 2011 Bankinter AGM approved, as part of the report on remuneration policy, 

an annual incentive plan of which the entire workforce of the Bankinter Group are 

beneficiaries, including executive directors, except for the Chairman and member of 

Senior Management. This incentive plan is linked to the achievement of the pre-tax profit 

objective for the Group’s banking activity. 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 objective for the year was achieved 

to the extent of 100.52%. Details of the amounts accruing to the Vice-chairman, CEO 

and members of Senior Management (in grouped form) are given under letter G of the 

Corporate Governance Report which forms part of the Management Report in this annual 

report, as well as in the Report on remuneration policy which will be submitted to a 

consultative vote at the forthcoming AGM. 

Summary of Director’s remuneration, loans, and other benefits for Directors 

Remuneration by type 

€000s 


Fixed remuneration (1) 1,949 

Variable remuneration (2) - 

Attendance fees (3) 894 

Director’s Fees (4) 738 

Options on shares and/or other financial instruments - 

Other - 

3,581 

(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. The 2011 Incentive 

Plan was linked to the achievement of a specific profit objective from the Group’s banking activity for the year 

2011, in terms of Profit before Tax. Since payment of the amounts accrued is after 31 December 2011, they are 

not included in the amounts referred to in the previous table. Each executive Director, except for the Chairman, 

has been assigned an amount that he or she will receive if the objective is fully achieved. However, this variable 

incentive could start 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 degree of achievement for the year was 100.52%, which determined the accrual 

of a variable incentive of €201,030.93 for each executive director included in the Plan, which will be paid in 

the manner and at the times indicated in the Report on Remuneration Policy which will be submitted to a 

consultative vote at the AGM as item no. 15 on the agenda. 

(3) Attendance fees for Board and Committee meetings (Directors). 

(4) Includes fixed remuneration plus the free allocation of shares (Directors) 

(3) The characteristics of the pluriannual Incentive Plan (2009-2010) are set out in the Report on remuneration 

policy of Bankinter, S.A. approved by the Bank’s AGM of 22 April 2010.


Remuneration by type of director including all items 

€000s 


Type of Director By Company By Group (**) 

Executives (*) 2,538 - 

External Proprietary Directors 234 - 

External Independent Directors 621 15 

Other External Directors 188 7 

3,581 22 

(*) The following are executive directors: Pedro Guerrero Guerrero, Chairman; Cartival, S.A., Vice-chairman 

(executive as from 21 October 2010); María Dolores Dancausa Treviño, Chief Executive Officer. 

(**) Gonzalo de la Hoz Lizcano and Rafael Mateu de Ros, in their capacity as non-executive directors received 

during 2011 by way of attendance fees for meetings of the Board of Directors of Línea Directa Aseguradora, 

S.A., the amounts of €12,000 and €7,200, respectively. The amount received by 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 Línea 

Directa Aseguradora. Additionally, in December 2010 Gonzalo de la Hoz Lizcano was appointed Chairman of 

Gneis Global Services, S.A., a Group company involved in IT services and operations, taking up his post in the 

first meeting held in January 2011. 

Other benefits 

€000s 

Advances - 

Loans granted 23,831 

Pension Funds and Plans: Contributions - 

Pension Funds and Plans: Contractual obligations assumed 600 

Life insurance premiums 0.173 

Guarantees set up by the company in favour of directors - 

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. 

As at 31 December 2011, the holdings declared by the directors of Bankinter in companies 

pursuant to Article 229.2 were as follows: 

Director Entity % Capital (1) Office or 

functions 

María Dolores Dancausa Treviño 

Banco Santander 

Banco Bilbao Vizcaya Argentaria 

Royal Bank of Scotland 

0.00008% 

0.00003% 

0.00002% 

None 

None 

None 

Cartival, S.A. Banco Santander 0.1059% None 

Fernando Masaveu Herrero 

Banco Santander 

Banco Espírito Santo 

Banco Popular 

Banco Español de Crédito 

Lloyds Banking Group 

UBS 

0.1736% 

0.0255% 

0.0732% 

0.0034% 

0.002% 

0.001% 

None 

None 

None 

None 

None 

None 

Rafael Mateu de Ros Cerezo Banco Santander 0.00001% None 

José Antonio Garay Ibargaray 

(1) Direct and/or indirect holding. 

Banco Bilbao Vizcaya Argentaria 

Bankia 

0.0042% 

0.0147% 

None 

None 

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.


Director’s holdings in share capital 

The breakdown of the interests held by the members of the Board of Directors as at . 


31-12-11 (1) 31-12-10 (2) 

Total Shares % holding Direct Indirect Total Shares % holding Direct Indirect 

Pedro Guerrero Guerrero 3,131,240 0.657 2,995,304 135,936 3,080,868 0.651 2,946,697 134,171 

María Dolores Dancausa Treviño (1) 708,875 0.149 708,649 226 692,812 0.146 692,588 224 

Cartival, S.A. 114,050,724 23.914 106,671,902 7,378,822 112,562,267 23.775 105,279,273 7,282,994 

Marcelino Botín-Sanz de Sautuola y Naveda 135,624 0.028 135,624 - 129,010 0.027 129,010 - 

Fernando Masaveu Herrero 26,493,612 5.555 484,593 26,009,019 462,718 0.098 450,718 12,000 

John de Zulueta Greenebaum 136,418 0.029 136,418 - 131,305 0.028 131,305 - 

Gonzalo de la Hoz Lizcano 377,954 0.079 377,954 - 368,193 0.078 368,193 - 

Jaime Terceiro Lomba 17,512 0.004 17,512 - 12,432 0.003 12,432 - 

José Antonio Garay Ibargaray 1,117,018 0.234 190,949 926,069 973,627 0.205 167,627 806,000 

Rafael Mateu de Ros Cerezo 829,187 0.174 829,187 - 908,908 0.192 908,908 - 

146,998,164 30.823 112,548,092 34,450,072 119,322,140 25.203 111,086,995 8,235,389 

(1) The capital of Bankinter as at 31 December 2011 is represented by a total of 476,919,014 shares. 

(2) The capital of Bankinter as at 31 December 2010 was represented by a total of: 473,447,732 shares. 

37. Environmental information 

As a financial institution, Bankinter commits to its stakeholder groups – customers, 

shareholders, employees and society in general – to operate in the most sustainable way 

and to mitigate its environmental impact. Therefore the Bank has an active policy to 

protect the environment and combat 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. 

In 2004 Bankinter published its Environmental Policy, which it revised and extended in 

2011, with objectives that go beyond strict compliance with legal requirements, adopting 

behavioural guidelines on non-legislated aspects, as contained in the following action 

principles: 

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 Bank’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 the persons responsible for carrying it out. 

The Sustainability Committee, which is headed by the Chairman and coordinated by 

Corporate Responsibility was set up in 2009 as the body responsible for guiding the 

Group’s sustainability policy and programmes and driving the necessary environmental 

responsibility to incorporate the Bank’s economic, environmental and social dimensions 

in a sustainable development model. 

To ensure compliance with the principles embodied in its Environmental Policy, and as 

a tool for ensuring continuous improvement in the entity’s environmental conduct, an 

Environmental Management System has been put in place and certified in accordance 

with UNE EN ISO 14.001 for the major Madrid centres of Paseo de la Castellana and Tres 

Cantos. 

The main environmental measures taken by Bankinter during year 2011 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. 

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: 

The United Nations Global Compact, an initiative which the Bank joined as 

a member in 2011. 

The 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. 

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. 

The publication of the Guide to identifying environmental impacts of SMEs in the 

framework of sustainability reports, with the Ministry of Labour and Immigration 

and the Spanish National Grid. 

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. 

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 allocations 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 Bank’s Directors consider that the environmental risks inherent in 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 Bank 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 2011 drawn up by the Customer Support Service, which will 

be presented at the meeting of the Board of Directors of 13 February 2012, indicates 

that during the year 2011, the number of complaints/claims came to 4.13 per million 

transactions (compared with 8.38 in the previous year). 

There were a total of 7,307 complaints and claims in 2011, of which financial claims 

accounted for 5,904. Of these, 53.44% were resolved in the customer’s favour. 


Total number of Complaints and Claims: 

Total no. of complaints (non-financial) 1,403 3,987 

Total no. of claims (financial) 5,904 10,535 

Total financial Complaints and Claims 7,307 14,522 

Financial claims: 

No. of claims in client’s favour 3,155 6,357 

In customer’s favour (%). 53.44% 60.34% 

No. of claims in the Bank’s favour 2,749 4,178 

% in the Bank’s favour 46.56% 39.66% 

Total financial claims 5,904 10,535 

As for the time taken to deal with complaints and claims, 48,73% of the incidents were 

resolved in less than 48 hours. 

Time taken to resolve dossiers 

Total 

Total 

Timeframes 2011 Percentage 2010 Percentage 

0 days 2,321 31.76% 5,738 39.51% 

1 to 2 days 1,240 16.97% 2,588 17.82% 

3 to 6 days 1,178 16.12% 2,194 15.11% 

7 to 10 days 991 13.56% 888 6.12% 

> 10 days 1,577 21.58% 3,114 21.44% 

7,307 100.00% 14,522 100.00% 

The External Customers Ombudsman dealt with 487 incidents, 40.90% fewer than in 

2010; of these, 249 were settled in the Bank’s favour (51.13%) and 208 in that of the 

customer (42.71%). 

2011 2010 Change 

External Ombudsman: 

Incidents processed 487 824 -40.90% 

Settled in the customer’s favour 208 271 -23.25% 

Settled in the Bank’s favour 249 486 -48.77% 

Excluded 30 67 -55.22% 

. 

Also, 194 incidents were handled by the Bank of Spain in 2011 (539 in 2010), of which 90 

were resolved, 37 of them in the Bank’s favour. 

2011 2010 Change 

Bank of Spain: 

Claims processed 194 539 -64.01% 

In the customer’s favour 30 154 -80.52% 

Uncontested 12 39 -69.23% 

In the Bank’s favour 37 164 -77.44% 

Pending settlement 101 116 -12.93% 

Outside Bank of Spain jurisdiction 9 66 -86.36% 

Filed 2


No recommendations were issued in the Activities Report for financial year 2011 drawn 

up by the Customer Support Service. 

39. Branches, centres and agents 

The breakdown of the Bankinter, S.A. branch offices, centres and agents as at 31 December 


31-12-11 31-12-10 

Branch Offices 366 367 

Commercial management centres - 

Corporate 47 47 

SMEs 81 89 

Private Banking and Personal Finance 59 61 

Virtual Offices 360 377 

Number of Agents 511 543 

Telephone and Internet branches 3 3 

Insurance centres 3 3 

As at 31 December 2011, Bankinter, S.A. had a network of 511 agents (543 agents in 

2010), composed of individuals or legal entities who have been granted powers to deal 

with the Bank's clients on its behalf in the negotiation and formalization of the typical 

operations of a lending institution. This network handled average resources of €1.79 

million as at 31 December 2011 (€1.74 million as at 31 December 2010), with an average 

investment of €1.92 million (€1.96 million as at 31 December 2010). The list of agents is 

registered with the Financial Institutions Office of the Bank of Spain. 

The insurance centres section includes the call centre and telephone hotline offices of 

Línea Directa Aseguradora. 

40. Trust and investment services 

The following table states the fees recorded in financial years 2011 and 2010 for the 

activities of investment services and complementary activities provided by the Group: 

€000s 

2010 2010 

Wealth management 2,179 1,342 

Management agreements 349 328 

Safe deposit boxes 600 603 

Securities trading (Note 28) 20,863 21,610 

23,991 23,883 

The following table states, in summary, the value of the investment funds, pension funds, 

and customer portfolios managed by the group: 

€000s 

31-12-2011 31-12-2010 

Investment funds 3,664,236 3,958,823 

Pension funds 1,253,312 1,246,968 

Customer portfolios managed 1,336,320 1,429,710 

41. Auditor’s remuneration 

6,253,868 6,635,501 

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 2011 and 2010: 

Bankinter, S.A. 

€000s 


2011 2010 2011 2010 

Auditing services 361 337 798 533 

Audit-linked services 439 398 439 407 

Tax services 4 22 4 22 

Other services 164 139 164 139 

968 896 1,405 1,101


The amount stated in the above table for auditing services includes all fees relating to 

auditing for financial years 2011 and 2010, 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 of the Spanish 

Inland Revenue of its opting to apply the fiscal consolidation regime from financial year 

2001 onwards. The Fiscal Group number allocated by the National Inspection Office of the 

Spanish Inland Revenue was 13/2001. 

The list of subsidiary companies in the Bankinter tax group as at 31 December 2011 is as 

follows: 

Bankinter Consultoría, Asesoramiento, y Atención Telefónica, S.A. 

Bankinter Gestión de Activos, S.A., S.G.I.I.C. (formerly known as Gesbankinter, S.A.) 

Hispaarket, S.A. 

Intermobiliaria, S.A. 

Bankinter Servicios de Consultoría, S.A. (formerly Bankinter Gestión de Seguros y Reaseguros, 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. 


Línea Directa Aseguradora, S.A. 

Línea Directa Asistencia, S.L.U. 

Moto Club 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 2011 and 2010: 

€000s 

31-12-11 31-12-10 

Accounting profit before tax for the financial year 240,148 205,214 

Permanent differences- (12,157) (12,377) 

Profits (losses) of entities accounted for using the equity 

method (14,675) (10,958) 

Others 2,518 (1,419) 

Accounting Base for Tax 227,992 192,838 

Temporary differences 21,175 (165,162) 

Tax Base 249,167 27,676 

The positive temporary differences in 2011 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. 

The expenditure in the year for Corporation Tax for financial years 2011 and 2010 is 

calculated as follows: 

€000s 


Expenses corresponding to current financial year 68,398 57,851 

Deductions and allowances (7,764) (3,028) 

Other items (*) (2,266) 45 

Tax adjustments from previous financial years 554 (384) 

58,922 54,484 

(*) As at 31 December 2011 there were deductions pending application amounting to €0.24 million.


The item "Tax adjustments from previous years" in 2011 states expenditure for Corporation 

Tax caused by tax adjustments carried out in the settlement of the Group’s Corporation 

Tax corresponding to financial year 2009 not envisaged as at 31 December 2010. 

The following is the reconciliation of the profit before tax with the tax expense for the 

financial year: 

€000s 


Pre-tax accounting profit 214,148 205,214 

Tax at 30% 72,045 61,564 

Breakdown of items to reconcile tax expense at the tax rate and 

Corporation Tax expense for the year: 

Non-deductible expenses 1,331 1,451 

Non-computable income (8,917) (5,163) 

Total deductions applied in the financial year (7,764) (3,028) 

Others: 

Corporate Tax adjustment from the previous financial year 554 (384) 

Corporate Tax Dublin branch - 

Deferred tax adjustment - - 

Amount of deductions pending application (240) - 

Other 1,913 45 

Corporate Tax expenditure for the financial year 58,922 54,484 

Effective tax rate for the year 24.53% 26.55% 

Income tax expense for the year is calculated by adding the current tax resulting from 

applying the tax rate to the tax base for the financial year, after applying admissible 

deductions, plus the change in tax assets and liabilities due to taxes paid in advance and 

deferred and tax credits, both due to negative tax bases and deductions. 

negative tax bases pending offset and credits for tax deductions not yet 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 derives 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. 

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 

Withholding/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-resident’s 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 

Deferred tax assets and liabilities include the temporary differences that are identified 

as the amounts that are expected to be payable or recoverable due to the differences 

between the carrying amounts of assets and liabilities and their tax value, as well as


During financial year 2011, the Bank accepted, signed and paid assessments for 2005 and 

2006 concerning withholdings and payments on account of payroll tax and tax on nonresidents 

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. These assessments have been appealed 

before the Central Administrative Economic Tribunal (TEAC). 

Regarding the inspection of the years 2001 to 2003, both the assessments and the penalties 

have been appealed before the TEAC, which has yet to issue a ruling. Additionally, in 

relation to the sanctions imposed in respect of retentions corresponding to deposits made 

by customer of our Dublin branch, Bankinter presented a complaint to the Council for the 

Defence of the Taxpayer on 9 February 2010, and received a favourable response to our 

requests on 13 July 2010. This response was forwarded to the TEAC for its consideration. 

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 2011 and preceding 

financial years. 

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 

31-12-11 31-12-10 

Deferred tax assets (Note 17) 103,529 93,812 

Less than 10 years: 

Provisions 72,086 49,793 

Impairment of holdings 47,587 29,374 

Early retirement Fund 694 1,509 

Pensions Fund 1,794 1,522 

DVP portfolio 9,775 9,719 

Other 9,366 9,762 

Consolidation adjustments (126,193) (77,638) 

More than 10 years: 

Generic Cover: 88,420 69,770 

Deferred tax liabilities (Note 17) 118,983 142,057 

Less than 10 years 68,036 90,291 

More than 10 years: 

Revaluation of buildings 50,947 51,766 

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.


The various tax credits applied in the calculation of the Corporation Tax payable for the 

Group in financial years 2010 and 2009 are shown in the following table: 

€000s 

31-12-11 31-12-10 

Applied to the tax base: 

Monetary depreciation 2 - 

Exemption for international double taxation - - 

Exemption for domestic double taxation - - 

Allocation of NTBs from EIGs 7,389 1,934 

7,391 1,934 

Applied to the tax due: 

Deductions for double taxation 1,961 1,470 

Deduction for training costs - 3 

Deduction for ID/IT - 804 

Deduction for reinvestment of extraordinary profits 2,880 2 

Deduction for donations to institutions 423 750 

Deduction for film productions 2,500 - 

7,764 3,028 

. 

Income covered by the deduction for reinvestment of extraordinary income in 2011 

amounted to €24.00 million (€2,000 in 2010 and €143.35 million in 2009), the Bank 

having met the reinvestment requirements established in Article 42 of Legislative Royal 

Decree 4/2002 of 5 March approving the revised 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. 

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. 

In accordance with the provisions of Article 118.3 of this revised text, we report that 

during 2011 the Bank obtained capital gains of €2.31 million (€2.01 million in 2010) and 

received dividends amounting to €1.69 million (€0.97 million in 2009), and that €0.18 

million (€0.21 million in 2010) were paid in foreign tax on said dividends. 

43. Assets and liabilities valued at other than fair value 

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 recognised and their corresponding fair value estimated at the close of each 

financial year: 

€000s 

31-12-11 

Recognised 

value 

Fair value 

Asset: 


Held-to-maturity investments 3,150,931 3,150,931 


Liabilities: 



Customer deposits 25,505,317 25,550,517 

Marketable debt securities 15,540,242 16,148,924


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 Board of Directors, which is the highest body responsible for Risk Management, 

determines the profile and defines the risk policy and the internal control systems. The 

risk strategy is set each year in the Framework Agreement. 

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. 

The Risks structure (Credit, Control and Recoveries and Global Management), as well as 

Market and Operational Risk report directly to the Executive Vice-chairman, respecting 

the principle of independence and segregation functions. 

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 main principles that govern Risk Management are as follows: 

• Independence of the function. 

• Alignment with the strategic objectives. 

• Comprehensive risk management. 

• Management based on the risk-return trade-off 

• Mass use of automated approval. 

• Diversification of risk by customers, sectors, counterparts and markets. 

• Identification, assessment and control of product risk, particularly when new 

products are launched. 

• Relevance of the quality of service factor in the risks function. 

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 sovereign debt crisis continued to overshadow the situation in 2011. The euro zone 

has been suffering violent speculative attacks on public bonds of various member states, 

turbulence in the financial and stock markets and a decline in the value of its currency, 

in a context moreover of uncertainty and difficulty in reaching collective agreement. The 

loss of confidence has been reflected in the way that risk premiums, especially those


of the peripheral euro zone countries have developed, and in the returns on their debt. 

The wholesale markets have been practically closed to banks, which have had to seek 

other sources of financing. Towards the end of November 2011 there was a concerted 

action among central banks to inject additional liquidity into the markets and contain the 

debt crisis and its consequences. All of these facts illustrate the importance of managing 

interest and liquidity risks in financial institutions. Bankinter has continued with its 

prudent policy in managing and controlling these risks, so as to minimise their impact. 

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 

The structural interest rate risk is the Institution’s exposure to fluctuations in market 

interest rates deriving from the different timing structure (mismatch) of maturities and 

revaluations in the overall balance sheet. The Bankinter Group actively manages this risk 

in order to protect the financial margin and protect the economic value of the Group from 

the effects of interest rate fluctuations. 

In order to control exposure to the interest rate structural risk, the Group has established 

a structure of limits that is reviewed and approved on an annual basis by the Board of 

Directors, in accordance with the Group’s strategies and policies in this regard. 

In addition, Market Risk performs sensitivity analyses on financial margin and economic 

value, for both the Bank and the Subsidiaries that are associated with these risks and the 

impact that they have on the Consolidated Group. 

The Bankinter Group has tools to monitor and control the structural interest rate risk. 

The following are the main measurements used by the Bank to manage and control the 

interest rate risk profile approved by the Board of Directors: 

a) Interest Rate Gap 

Shows the exposure to the interest rate risk on the basis of the structure of maturities 

and/or repricing of the Institution’s on- and off-balance sheet items. This measurement 

is obtained automatically, at least on a weekly basis, and it constitutes the basic tool 

that provides static information on interest rate concentrations at the various terms 

and which also serves as the basis for analysing the possible impacts that variations 

in interest rates may have on the Institution’s Financial Margin and Asset Value. 

The interest rate gap is obtained by distributing the positions and balances of the 

on- and off-balance sheet items according to time terms depending on their nature. 

Therefore, items that are sensitive to interest rates and for which the maturity or 

interest rate review date is known are classified in the plan according to these criteria, 

depending on whether they are referenced to a fixed or variable rate. Items with no 

fixed maturity date, whether or not they are sensitive to interest rates, are distributed 

according to certain assumptions on historical behaviour which are reviewed on a 

regular basis by Market Risk, with a view to adjusting the measurement model to 

their historical performance. 

Maximum references applicable to this measurement are defined as maximum 

opening figures or the difference between the total amount of the asset and liability 

positions (gap) that may be maintained in each time bracket in the interest rate risk 

plan.


The interest rate risk plans for the Bankinter Group at the close of 2011 and 2010 

are attached below: 

Figures as at 31/12/11 in € millions Up to 1 month 1 to 3 months 3 to 12 months 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years >5 years Total 

ASSETS 

Loan and receivables 21,061 10,297 12,663 407 86 116 95 2,100 46,736 

Deposits from credit institutions 663 368 42 0 0 0 0 211 1,284 

Loans and advances to customers 17,616 9,839 12,621 407 86 116 95 1,888 42,669 

Other 2,782 0 0 0 0 0 0 1 2783 

Fixed Income Portfolio 214 835 3,864 2,773 1,027 439 553 1,413 11,117 

Trading portfolio 35 4 771 237 183 37 124 378 1,769 

Available-for-Sale Portfolio 178 570 2,070 1,879 464 251 357 428 6,197 

Held-to-Maturity Portfolio 0 262 1,023 657 380 151 73 606 3,151 

Other Assets 698 0 0 0 0 0 0 3,099 3,797 

Total Assets 21,973 11,043 16,527 3,180 1,113 555 648 6,612 61,650 

LIABILITIES 

Fixed income portfolio 0 87 361 598 180 80 0 197 1,503 


Financial liabilities at Amortised Cost 19,064 12,179 13,344 4,692 1,738 474 662 2,282 54,435 

Deposits from credit institutions 7,532 1,568 1,064 35 29 23 15 228 10,493 

Customer deposits 6,941 6,395 10,392 833 288 452 617 1,633 27,551 

Debts represented by marketable . 

securities and subordinated liabilities 

2,545 3,527 1,530 3,824 1,420 0 30 421 13,298 

Other 2,046 689 358 0 0 0 0 0 3,093 

Other liabilities 443 0 0 0 0 0 0 2,204 2,647 

Equity 13 20 112 149 0 0 0 2,770 3,065 

Total Liabilities and Equity 19,519 12,286 13,817 5,439 1,917 555 662 7,454 61,650 

Off-balance sheet operations 2,411 1,740 -5,951 2,096 26 -45 -8 -269 0 

TOTAL INTEREST GAP 4,864 496 -3241 -163 -779 -45 -22 -1,112 0 

Figures as at 31/12/10 in € millions Up to 1 month 1 to 3 months 3 to 12 months 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years >5 years Total 

Total Assets 17,935 6,165 19,158 3,144 3,412 867 307 6,019 57,005 

Total Liabilities and Equity 14,297 13,358 10,536 3,675 5,955 1,995 46 7,144 57,005 

Off-balance sheet operations 9,026 -4,719 -8,115 1,467 1,079 1,230 -38 69 0 

TOTAL INTEREST GAP 12,664 -11,912 507 936 -1,463 102 223 -1,056 0 

DIFFERENCES Up to 1 month 1 to 3 months 3 to 12 months 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years >5 years Total 

Total Assets 4,038 4,879 -2,631 36 -2,299 -312 341 593 4,645 

Total Liabilities and Equity 5,222 -1,072 3,281 1,764 -4,037 -1,441 616 310 4,645 

Off-balance sheet operations -6,616 6,459 2,164 629 -1,053 -1,275 30 -338 0 

TOTAL INTEREST GAP -7,800 12,409 -3,748 -1,100 685 -147 -245 -56 0 

Note: Foreign-currency positions are not material and so have not been included in the breakdowns of the attached Gaps.


The items included in the Interest Rate Plan may be classified as follows, depending 

on their exposure to the interest rate risk. 

- With exposure to interest rate risk: These constitute the majority of the Bankinter 

Group’s Balance Sheet and are items comprising financial instruments that are 

sensitive to variations in interest rates. These in turn may be: 

- Items subject to fair value risk: These are financial instruments with a fixed rate 

of interest. The assets comprise practically the entire fixed income portfolio, 

deposits with credit institutions and an insignificant portion of customer 

loans. As regards the liabilities, the main items are the majority of customer 

and credit institution deposits, and the credit fixed income portfolio. Also 

included is the fixed income securities portfolio held by Línea Directa 

Aseguradora S.A. 

- Items subject to cash flow risks: These are financial instruments referenced to 

floating interest rates. The assets basically consist of the majority of customer 

loans, and the liabilities of the majority of debts represented by negotiable 

securities or own issues. 

- No exposure to interest rate risk: These represent an insignificant part of the 

Bankinter Group’s Balance Sheet and are the balances included in other assets 

and other liabilities. 

on the market and the commercial differentials estimated for each one of them are 

taken into account. These projections are made on the assumption that the balances 

remain constant during the time horizon in the simulation or by applying the growth 

expected by the Institution for the period to the various items. 

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 the Bankinter Group’s financial margin to parallel movements of +/- 

100 bps in market interest rates is approximately +/- 3.1% for a 12-month horizon. 

The sensitivity of the Group’s financial margin to changes in the slope of the curve for 

a 12-month horizon is +/- 5.6%. This scenario is built by maintaining the 6-month rate 

constant and varying the short (up to 3 months) rates and the 12-month rate by the 

same amount in opposite directions, to change the slope of the curve by +/- 25 basis 

points in the period under consideration. 

Financial Margin Sensitivity 2011 

100 bp parallel movements 3.1% 

25 bp slope variations 5.6% 

b) 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. 

For a calculation of the dynamic projections of the margin, use is made of the 

“Interest rate plan” that is obtained from the average monthly balances of items 

sensitive to interest rates and by making certain renewal or maturity assumptions. 

In repricing items that mature or are reviewed, the forward interest rate curves listed 

c) 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 for 12% of Equity. 

Sensitivity to this scenario is measured, controlled and submitted on a monthly basis 

at each ALCO meeting.


The exposure of the consolidated Group’s economic value is also quantified following 

the same criterion as described above. 

The sensitivity of the consolidated Group’s Economic Value to 200 bp parallel 

movements, obtained by means of the criterion described above, was, at the close 

of financial years 2011 and 2010, +/- 4.2% (*) and +/-1.1% of the Bankinter Group's 

Shareholder Equity, respectively. 

Economic Value Sensitivity 

2010 (*) 2011 (*) 

NPV Sensitivity +/- 1.1% +/- 4.2% 

(*) of equity 

To meet its requirements, the Group used short-term issue programmes both on the 

domestic market, with the commercial paper programmes, and on the international 

market, with the Euro commercial paper programme. The average balances during 

the year were €1.016 billion and €354 million respectively. 

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. 

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. 

Capital and liquidity requirements were covered by turning to the international 

medium and long-term debt markets. The Bank issued €5.63 billion of mortgage 

bonds, €1.5 billion of senior debt of which €1.4 billion guaranteed by the Kingdom of 

Spain, €47 million of subordinated debt and €405 million in mandatory convertible 

bonds


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. 

Included below are the liquidity plans or gaps at the closing dates of financial years 

2011 and 2010. 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. 

LIQUIDITY GAP 2011 (Group) 

Figures as at December 2011 in € millions Sight 1 day to 1 month 1 to 3 months 3 to 12 months 12 months to 5 years >5 TOTAL 

ASSETS 

Loan and receivables 2,675 1,674 6,176 11,264 29,071 50,861 

Deposits from credit institutions 684 116 382 0 0 1,182 

Loans and advances to customers 1,991 1,558 5,794 11,264 26,258 46,865 

Other 0 0 0 0 2814 2,814 

Fixed Income Portfolio 144 871 3,963 4,876 1,646 11,500 

Trading portfolio 39 12 798 625 416 1,890 

Available-for-Sale Portfolio 105 591 2,012 2,826 546 6,080 

Held-to-Maturity Portfolio 0 268 1,153 1,425 684 3,530 

Other Assets 691 44 354 0 2,526 3,615 

Total Assets 3,510 2,589 10,493 16,140 33,244 65,976 

LIABILITIES 

Fixed income portfolio 0 88 382 869 268 1,607 


Financial liabilities at Amortised Cost 9,667 2,069 3,048 9,355 13,424 19,729 57,292 

Deposits from credit institutions 404 6 52 598 9,527 10,587 

Customer deposits 9,667 1,665 1,853 7,356 2,368 5,548 28,457 

Marketable debt securities 0 1189 1,947 10,458 885 14,479 

Other 3,769 3,769 

Other liabilities 1189 0 34 0 0 1,223 

Equity 0 0 0 0 2,690 2,690 

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 

Figures as of December 2010 in millions of euros Sight 1 day to 1 month 1 to 3 months 3 to 12 months 12 months to 5 years >5 TOTAL 

Total Assets 4,622 2,303 8,647 17,783 27,253 60,608 



Note 1: Foreign-currency positions are not material and so have not been included in the attached breakdowns of Gaps. 

Note 2: The Entity has no non-listed positions


b) Analysis of finance needs, maturities and scenarios 

The business gap is analysed to predict the liquidity needs or surpluses arising from 

the difference between investment and customer resources and these are compared 

with the sources of funding that are anticipated and the assets that are available. Other 

stress scenarios that may affect these variables are also analysed. 

c) Monitoring of the specific situation relating to assets, concentration in issue 

maturities. In this regard, the Board of Directors lays down a number of maximum 

exposure ceilings. 

d) Contingency Plan 

The Institution has a Contingency Plan which identifies the general actions to be taken 

in different crisis scenarios, the internal and external communication channels and the 

bodies in charge of monitoring these situations. 

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 


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 Bankinter to measure and control exposure 

to market risks arising from interest rates, equities, exchange rates, volatility and credit 

on an integrated and global basis. 

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 which comprise 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 2011 

and 2010, both for the total and differentiated by portfolio:


million euros 

Total VaR 2011 

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 

Trading VaR 2011 

million euros 

Final 






0.91 

Available-for-sale VaR 2011 

million euros 

Final 





11.04 

million euros 

Total VaR 2010 

Final 






3.92 

Trading VaR 2010 

million euros 

Final 






0.95 

Available-for-sale VaR 2010 

million euros 

Final 





3.27 

2011 was marked by a high degree of volatility in the various risk factors and especially 

in interest rates on sovereign debt of peripheral euro zone countries. The position 

maintained in the Bankinter Group was defensive and cautious, which enabled it to keep 

market risk low in general terms. There was an increase in the interest rate VaR of the 

“Available-for Sale” portfolio as a result of an increase in the position together with high 

market volatility. 

The market risk (VaR) for the Línea Directa Aseguradora portfolio at the close of the 

financial years 2011 and 2010, was €0.88 million and €0.90 million respectively, calculated 

using the “Historical Simulation” method, with a level of confidence of 95% and a time 

horizon of one day. The market risk was similar in both years because of the correlation 

existing between the positions at risk in spite of the high market volatility. 

Stress Testing 

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 2010, the stress scenarios for Stock Market and Volatility were updated to adapt them 

to each product type and to the evolution of historical 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 2011 and 2010: 

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 

Stress Testing 2010 

million euros 

Final 






Total Stress 21.84


At year-end 2011 the total level of interest rate stress testing had increased relative to 

2010, as a consequence of an increase in the Available-for-Sale portfolio both in fixed 

income and in public debt. However, as can be seen in the foregoing table equity stress 

testing at year-end 2010 reduced due to a decline in the stock market position of the 

Available-for-Sale portfolio. 

The result of the calculation of the stress scenarios for the portfolio positions of Línea 

Directa Aseguradora at the end of 2011 amounted to €23.48 million compared with €22.75 

million in 2010. The increase was due to the stress testing of the fixed income position to 

the increased position. 

Operational risk 

The basic aim is to identify and preventively mitigate the greatest operational risks, 

seeking to minimise the possible losses associated therewith. 

The definition of operational risk adopted by the Group is established by the Basel Capital 

Accord (BIS II) 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, they are risks found in processes 

that are generated internally by persons and systems, or as a consequence of external 

agents, such as natural catastrophes. 

Our operational risk management model is inspired by the guidelines defined in the “Basel 

II” Capital framework agreement and complies with Bank of Spain Circular 3/2008 on 

calculating and controlling Equity. It also incorporates the best practices from the sector 

that 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 appropriate system for managing Operational Risk and in 

line with the best practices on the market, Bankinter has laid down the following basic 

governing principles: 

- The basic aim is to identify and preventively mitigate the greatest operational risks, 

seeking to minimise the possible losses associated therewith. 

- 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 unit’s 

risks and aggregating and consolidating them, the Bank’s total risks are obtained. 

- Of the possible systems for calculating capital requirements associated with Operational 

Risk in the framework of the Basel Accord, Bankinter has adopted the Standard Method. 

This method is reserved in Solvency Circular 2/2008 for institutions that carry out 

efficient, systematic management of operational risks. 

Operational Risk Management Framework 

In Bankinter, the Management Framework for Operational Risks revolves around the 

following main elements: 

- Identifying and assessing risks by developing a risk map for the institution, showing 

the frequency and severity levels of such risks, the control mechanisms in place and the 

action plans for mitigating them. 

- Keeping a record of the operational risk events that have occurred, with the management 

information associated therewith being ordered and classified in accordance with the 

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. 

Structure of Governance 

Bankinter applies a decentralised model in which final responsibility for managing 

operational risk falls to all 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: 

- To promote the implementation of active Operational Risk management 

policies. 

- To track significant operational risks and trends in mitigation plans. 

- To ensure that the assessment protocol for risks associated with the launch 

of new products is followed, and authorise that it be marketed, as applicable. 

Operational Risk: Reporting to the Risks Directorate, Operational Risk is responsible for 

the following 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 construction 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 main responsibilities: 

- 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 would be 

represented in the following graphs: 

80 

Insurance in managing operational risk 

Bankinter uses insurance as a key element in managing some operational risks, thus 

complementing the mitigation of risks where their nature makes this advisable. 

60 

40 

37% 

73% 

46% 

To this end, the Insurance Area and the various areas in Bankinter, taking into account 

both the operational risk assessments and the record of losses, assess whether or not to 

alter the coverage perimeter of the insurance policies for the Bank’s various operational 

risks. 

20 

0 

9% 

5% 

1% 

12% 12% 

4% 

1% 

Some examples are as follows: Insurance taken out with various companies of recognised 

solvency for contingencies affecting the Bank’s premises (earthquakes, fires, etc.), internal 

or external fraud (robbery, disloyalty, etc.), civil liability for employees, etc. 

80 

60 

40 

20 

0 

Commercial 

Banking 

%Incidents / % Amount 

79,9% 

5% 

Retail . 

Banking 

Asset . 

management 

9.8% 6% 8.8% 

26% 

1.6% 

Retail int. Trading . 

& sales 

25% 

100,000 

Credit risk 














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.






• Management based on the risk-return trade-off. 


• Diversification of risk by customers, sectors, counterparts and markets. 




Organisation and functions 

The Board of Directors establishes the strategy for each of the risks within the Framework 

Agreement on Risks, a document drawn up annually, and defines the Bank’s risk profile. 

It also has the executive function of approval and control regarding risks. 

The Risk Committee, which is chaired by the Chief Executive Officer, is the body to which 

the Board of Directors delegates implementation of the risk policy. The faculties delegated 

to this Committee include the authorisation of transactions and deciding on the level of 

powers to be assigned to Committees at subsequent levels. 

The next level of competence lies with the Credit Risk Committee, the Management of which 

comes directly under the Executive Vice-Chairman. The Risks Directorate is responsible for 

establishing 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: 

• The Private Individual Risks Unit. 

• The Corporate and 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. 

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. 

Structure and procedures 

The organisational structure of the risk function in the institution combines a hierarchical 

structure with the delegation of powers. This combination is perfectly delimited by a series 

of rules that establish competencies, specify functions and create areas of responsibility, 

thus enabling the same strategic line to be maintained. Decision-taking in the Risk 

Committees is on a collegiate basis, representing the various areas involved. 

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 the automatic authorisation of retail risks, in compliance with the objective of 

efficiency and the use of technology in authorisation. 

Risk Map 

Managing credit institution’s capital and solvency requires specific procedures to be 

established to control and manage risk-inducing factors that can lead to financial loss.


The Risk Map involves an exercise of 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. 

Diversification by sector, geographical location, product and security, as well as by 

customer concentration, are the factors taken into account. 

Maximum exposure to credit risk 

Concentration 

The current financial crisis and the requirements of the Basel Accords both led to 

increased monitoring of the policy on business concentration. 

The following table shows the maximum level of exposure to credit risk undertaken 

by the Group as at 31 December 2011 and 2010 for each class of financial instrument, 

without deducting from same tangible securities or other credit enhancements received 

to ensure borrower’s compliance: 


Types of instrument €000s 

Asset balances 

Financial assets at fair value 


Held for trading 

Other assets 


available for 

sale 

Loans and 

receivables 

Held-tomaturity 

investments 

Hedging 

derivatives 

Memorandum 

accounts 

Total 

Debt instruments - 

Loans and advances to credit institutions - - - 1,779,395 - - - 1,779,395 

Negotiable securities 1,870,612 31,377 4,776,069 - - - - 6,678,058 

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 - - - 53,845,425 

Contingent risks - 

Financial guarantees - - - - - - 590,143,00 590,143,00 

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 47,167,367 118,651 11,648,477 66,157,447



Types of instrument 




Other assets 


available for 

sale 


Loans and 

receivables 

€000s 

Held-tomaturity 

investments 

Hedging 

derivatives 

Memorandum 

accounts 


Loans and advances to credit institutions - - - 1,601,470 - - - 1,601,470 

Negotiable securities 1,363,259 35,727 3,100,215 - 3,241,573 - - 7,740,774 

Loans and advances to customers - - - 42,525,474 - - 42,525,474 

Total debt instruments 1,363,259 35,727 3,100,215 44,126,944 3,241,573 - - 51,867,718 


Financial guarantees - - - - - - 113,951 113,951 




Derivatives 512,575 - - - - 171,917 - 684,492 



MAXIMUM LEVEL OF EXPOSURE TO CREDIT RISK 1,875,834 35,727 3,100,215 44,126,944 3,241,573 171,917 11,619,567 64,171,777 

Total 

Trends in customer risk 

The year was once again characterised by a renewed resurgence in the crisis which had 

started in 2007, with a marked deterioration in macroeconomic variables. Although the 

first half of the year was better than that of the previous year, in the second half there was 

a sharp downturn which took us back to the darkest days of the crisis. 

In this environment, the total risk of the financial system declined by 2.5% (latest figures 

available from the Bank of Spain website, as at October 2011). 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 2010, 

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.


Over the course of the year new stress tests were carried out on bank’s solvency, with the 

expected loss on loan portfolios as one of the basic variables. In a scenario of very sharp 

contraction in the economy, Bankinter demonstrated the quality of its lending compared 

to that of its competitors. 

pointed out that in 2011 the private individuals business suffered the consequences of the 

persistence of the crisis. 

Trends in delinquency, System vs. Bankinter (%) 

Analysis of credit risk 

€000s 31/12/2011 31/12/2010 Change % Change 

“Computable risk” (total lending) 

excluding securitisation 46,802,151 46,291,139 511,012 1.10 

Doubtful debts 1,515,766 1,329,980 185,786 13.97 

Total provisions 786,081 883,478 -97,397 -11.02 

Required provisions 786,081 883,478 -97,397 -11.02 

General 114,769 156,971 -42,202 -26.89 

Specific 671,312 726,507 -55,195 -7.60 

Non-performing loans ratio 

excluding securitisation (%) 3.24 2.87 0.37 12.73 

NPL ratio (%) 3.33 2.97 0.36 12.12 

NPL ratio of the mortgage portfolio 

excl. securitisation (%) 3.51 2.37 1.15 48.42 

Non-performing loans coverage 

ratio (%) 51.86 66.43 -14.57 -21.93 

Non-performing loans coverage 

ratio without real guarantee (%) 98.61 93.72 4.89 5.21 

In this recession scenario Bankinter has demonstrated the strength of its lending built 

up over the years. As a consequence, and in contrast to the system as a whole, the credit 

risk grew by 1%, with most of the growth coming from lending to major corporates, which 

are less affected by the crisis, which will enable us to emerge further strengthened from 

this period. 

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 3,24% compared with 2,87% the year 

before. This compares very favourably with the system (Bank of Spain: 5.81% in December 

2010 and latest figure October 2011, 7.42%) as we are at less than half the average rate 

for the sector. As in 2010, SMEs were the worst affected segment, although it should be 

86 88 90 92 94 96 98 00 02 04 06 08 10 11* 

Sector / Bankinter 

The volume of problem and repossessed assets continues to be insignificant in view of the 

Bank’s size and in comparison with its competitors. 

The volume of risk collateralised by mortgage is very high (68%), which reflects the welljudged 

credit approval policy pursued during the expansion cycle. Furthermore the LTV 

(loan to value) ratio continues to be low enough (57%) to cushion the fall in prices being 

suffered by the property market. Moreover, a high percentage (82%) of the mortgage 

portfolio is secured by residential properties, which have held up relatively well in this 

crisis as regards arrears. 

One of the strengths of the portfolio is its very limited exposure to risk on developers (less 

than 3%). The restrictive policy pursued in approving loans to developers, and the virtual 

absence of financing of land are what sets us clearly apart. 

Although NPLs continued to increase in the SME segment, the monitoring policy aimed at 

greater reinforcement of collateral (56%) meant that the volume of specific provisioning 

required was actually lower. 

7.42 

3.24 

*Data for the Sector as at Oct. 2011


Private Individuals 

The excellent credit quality of the Bank’s Private Individuals portfolio remains unaltered, 

with a non-performing loans ratio of 2.35%. 

The most important product in the Private Individuals segment is the mortgage loan. In 

2003, anticipating the change in cycle, the approval policy for this product was adapted, 

selecting customers with the highest income and setting a maximum LTV ratio of 80%, 

which once again sets us apart from the sector. 

Arrears on residential mortgage loans to natural persons (%) 

Dec. BK 

1.64 

2.63 

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 (25%). 

1.50 

The breakdown of the portfolio by LTV is as follows: 

TOTAL BANK 

% OPERATIONS 

LTV 00 - 10% 16.38 

LTV 10 - 20 % 11.21 

LTV 20 - 30 % 11.55 

LTV 30 - 40 % 12.36 

LTV 40 - 50 % 13.02 

LTV 50 - 60 % 12.93 

LTV 60 - 70 % 11.21 

LTV 70 - 80 % 6.91 

LTV 80 - 90 % 2.03 

LTV 90 - 100% 2.39 

TOTAL LTV BRACKETS 100 

The NPL ratio (1.64% in December 2011) continues to be the best in the entire financial 

system, which in September 2011 (the latest information published by the Mortgage 

Association of Spain) had a ratio of 2.63% for this type of lending. 

D07 M08 J08 S08 D08 M09 J09 S09 D09 M10 J10 S10 D10 M11 J11 S11 

System / Bankinter 

Corporate Banking 

In line with the strategy established by the Board of Directors, aimed at making full use 

of the Bank’s competitive advantage in these years of crisis, this segment was the one 

with the most growth (14%). 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 rose to €11.449 

billion while total NPLs, at €221 million, was still well contained, ending the year with an 

NPL ratio of 1.9%, which was less than the year before. 

This growth continued on the basis of principles which remain fixed, notably: 

- Monitoring of current risks. 

(Data provided by the Spanish Mortgage Association) 

- 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 €7.085 billion, representing a 3% drop due to the economic slowdown. 

The non-performing loan ratio was 8.9% with a smaller increase than in the previous 

year. 

The Bank 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 among them all. 

It should be highlighted that 58% of the outstanding arrears balance for SMEs has 

mortgage guarantees with an LTV ratio of 41%. 

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. 

Bankinter has had automated systems in place for years for controlling and monitoring 

credit risk on a permanent basis. 

The year 2011 was characterised by an increase in non-performing loans similar to that 

of 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%, which greatly limited the increase to the final balance. 

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: 

• Support from technology (CRM). 

• Traceability. 

• Integration of all information from all parties involved, external and internal. 

• 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”. 

• Centre alert. 

• Back-testing. 

In 2011 the team’s wide experience and the excellent functioning of the processes and 

tools enabled us to optimise the level of recoveries.


Flows in non-performing loans in 2009 were as follows, with a total non-performing 

loans of €1.516 billion compared with €1.330 billion in 2010, which means there was an 

increase of €186 million in non-performing loans. 

NPL Flows (€ millions) 

Refinancing of customers with risk in excess of €0.5 million in 2011 was less than 1% 

of total credit risk, with refinancing being considered to mean any change in credit risk 

conditions. The majority of refinancing operations have additional guarantees. 

The flow of non-performing loan balances was as follows: 

(€000s) Dec 11 Dec 10 

Starting balance, current year 1,329,980 1,093,101 

1,330 

+583 

+20 

-235 

-182 

1,516 

+ (New cases - Recoveries D+B) 421,203 341,150 

- Written off 235,417 104,271 

Closing balance YTD current year 1,515,766 1,329,980 

Balance of Repossessed Assets 484,408 378,112 

Additions of real estate assets 

MD10 

Registrationscollections 

Delinquency trend (Balance D+B and NPL ratio) 

(Bal. in € millions) 

D. Subj. Written off Foreclosed/ 

repossessed 

2.87% 

1,330 

237 

2.46% 

1,093 

450 

1.34% 

607 

NPL11 

3.24% 

1,516 

186 

Net additions to assets in the Banking Group amounted to €106 million, with the current 

portfolio at €484 million in real estate assets (Note 12). 

Real estate assets are highly diversified in geographical terms and as regards property 

type, which makes them easier to sell. The volume of sales exceeded €90 million in the 

financial year. 

The coverage of repossessed assets stood at 36.3% in December 2011. 

In the real estate asset portfolio, we should highlight the 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 

157 

0.36% 

Solvency levels and asset coverage allow us to face the current situation in optimum 

conditions. 

2007 2008 2009 2010 2011 

The doubtful mortgage portfolio with mortgage guarantees presents an LTV ratio of 48% 

and given this fact, plus the excellent default ratio with mortgage guarantees, losses on 

the mortgage portfolio are insignificant.


Loan Provisions (% coverage) 

• To decide on the proposals put to the Committee on 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. 

45. Information by segments 

66% 

The Group is divided into Retail Banking, Corporate Banking and Línea Directa 

Aseguradora (LDA): 

52% 

- Retail Banking consists of the following: 

Dec. 

10 

Jan. 

11 

Feb. 

11 

Mar. 

11 

Apr. 

11 

May 

11 

Jun. 

11 

Jul. 

11 

Aug. 

11 

Sept. 

11 

Oct. 

11 

Nov. 

11 

Dec. 

11 

• Private Individual Banking includes products and services offered to households. 

• Personal Banking. 

Reputational Risk 

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. 

• To monitor actions taken to mitigate the most significant risks. 

• Private Banking the line of business that specialises in consulting and integral 

asset and investment management services. 

• Personal Finance: The Bank’s business division is aimed at the segment of 

customers with assets in excess of €1.80 million. 

• Obsidiana: Consumer financing. 

- Corporate Banking offers a specialised service demanded by big companies, the 

public sector and SMEs. 

- Línea Directa Aseguradora (LDA): Includes the business of the LDA subgroup. 

The structure of this information (Appendix II) is divided into Retail Banking, Corporate 

Banking and Línea Directa Aseguradora as if they were separate businesses with 

independent equity. Net income from interest and ordinary income of the segments are 

calculated by applying to the relevant assets and liabilities transfer prices that are in line 

with the market rates in force. The return on the equities portfolio is distributed among 

the lines of business in proportion to their participation.


Administrative expenses include both direct and indirect costs and are distributed among 

the segments depending on the internal use that is made of said services. The average 

assets distributed among the various business Organisations (retail and corporate 

banking) include the trading portfolio, the securities portfolio and loans to financial 

institutions and customers. 

The average liabilities and equity distributed among the various business Organisations 

include negotiable security debits, debts to financial institutions and to customers. The 

Gross Margin includes income from interest, fees charged for the various services and 

products offered and the earnings generated by financial transactions. 

On the other hand, financial costs include interest and fees paid, losses on financial 

transactions and general administration costs. Costs incurred in acquiring assets comprise 

the total cost incurred in the financial year to acquire assets in the segment whose 

expected duration is longer than one financial year. 

Information by business organisations is given in Appendix II which forms an integral 

part of this Note to the financial statements. 

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 

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% 

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 the 

% holding 

investment 

Crédit Agricole, S.A 24.52% 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 Board of Directors of Bankinter hereby declares that the Bank has express policies 

and procedures in place for all of the activities carried out in the scope of mortgage 

market security issues that guarantee compliance with the applicable regulations, for 

the purposes of the provisions of Royal Decree 716/2009 of 24 April implementing certain 

aspects of Law 2/1981 of 25 March on mortgage market regulation and other regulations 

that apply to the mortgage and financial system. 

The Policies regarding the granting of mortgage loans include, among others, the 


• The ratio between the amount of the loan and the appraisal value of the property 

being mortgaged, and the existence of other complementary 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. 

Given that residential mortgages are the product with the most exposure in the Bank’s 

balance sheet, the main lines of the risk policy for this product are: 

1. Automated approval with discrimination by rating. 

There is an internal rating model, developed and improved over the course of 

the last few years, based on statistical systems in accordance with the Basel 

II rules. Obtaining a rating for every transaction is associated with a given 

probability of default based on historical data, and is the main 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 this, the following information is needed: 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. 

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 in 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. 

On approval, the value of the security is determined by an official appraisal 

or by the purchase price as registered in the deed of conveyance. 

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. 

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, the Mortgage Centre, 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.


The appraiser assigned to each valuation is selected at random so as to ensure 

independence from the sales network and relations between customer and 

appraiser. The reports are delivered directly to the Mortgage Centre with no 

involvement from any other party. 

The appraisal firms are vetted, taking account of various considerations 

such as: 

• Long experience in the market. 

• Independence, i.e. that they are not wholly or partly owned by any 

financial institution or related to the property market. 

• Position in the national ranking: the greater the volume of 

transactions, and the greater the number of comparable properties, 

the more reliable the appraisal will tend to be. 

• Financial solvency. 

• Appraisers with centralised control and few branches. 

9. 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. 

Policy on sale of repossessed assets 

Prior to repossession, the team of specialised professionals forming the Real Estate Assets 

Unit has as its 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 market study of prices in the area. Selling prices are established 

centrally based on objective criteria and reviewed periodically to ensure that 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. 

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 land management aims to establish a 

control to prevent physical deterioration of the asset and carry out the necessary technical 

procedures to ensure a quick sale.


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 (less than 3% 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. 

As an issuer of mortgage bonds, we provide hereunder certain relevant information that 

is required to be given in the financial statements under the regulations governing the 

mortgage market. 

1. Information on the cover and the rights of holders of mortgage bonds issued by the 

Bank, which is the only Group entity to issue mortgage bonds and participating units. 

These mortgage bonds are securities whose principal and interest are specially guaranteed, 

without the need for registration, by a mortgage on all mortgages registered in the Bank’s 

favour and not assigned to the issue of mortgage debentures, without prejudice to the 

Bank’s universal liability. 

Mortgage bonds incorporate the holder’s credit entitlement against the Bank, guaranteed 

as described in the previous paragraphs. They include enforcement to claim payment 

from the issuer after maturity. The holders of such securities have the status of special 

preference creditors as indicated in item 3 of Article 1923 of the Civil Code over any 

other creditors, in relation to the totality of the loans and mortgage loans registered in 

the issuer’s favour. All holders of bonds, regardless of their issue date, have the same 

preference over the loans and credits that guarantee them and (if they exist) over the 

replacement assets and monetary flows generated by the derivative financial instruments 

linked to the issues. 

In the event of insolvency, the holders of mortgage bonds would enjoy the special privilege 

described in number 1, item 1 in Article 90 of the Insolvency Act 22/2003 of 9 July. 

Without prejudice to the foregoing, in accordance with number 7 of item 2 in Article 84 of 

the Insolvency Act 22/2003, of 9 July, repayments of principal and payments of interest on 

the mortgage bonds issued and pending amortisation on the date of filing for insolvency 

would be admitted during the insolvency proceedings as claims against the estate, up to 

the amount of the proceeds received by the insolvent party from the mortgage loans and 

credits and, if any, from the replacement assets that back the mortgage bonds and the 

monetary flows generated by the financial instruments linked to the issues. 

If due to a time gap the funds received by the insolvent party were to be insufficient to 

cover the payments mentioned in the previous paragraph, the insolvency administrators 

would have to meet them by liquidating the replacement assets associated with the issue 

and, if this should prove insufficient, by carrying out financing transactions to comply 

with the mandate to pay the bond holders, with the financier subrogating in their position. 

If it were necessary to proceed according to the terms of number 3 in Article 155 of the 

Insolvency Act 22/2003 of 9 June, payment to all of the holders of bonds issued by the 

issuer would be made on a pro-rata basis, regardless of the dates on which their securities 

were issued. If the same loan is associated to the payment of bonds and to a debenture 

issue, the bond holders would be paid first.


Holders of mortgage participation units issued by the Bank can take enforceable action 

against the Bank, provided the failure to comply with its obligations is not the consequence 

of a default by the borrower in whose loan the holder is participating. In this case, holders 

of participations will take part, with the same rights as the mortgage creditor, in the 

enforcement against such borrower, receiving on a pro-rata basis from their respective 

participation in the operation and without detriment to the issuing Bank receiving the 

possible difference between the interest agreed upon in the loan and that which was 

granted in the participation, when the latter is lower. 

The holder of the participation will be entitled to compel the Bank to initiate enforcement. 

If the Bank fails to initiative judicial enforcement within sixty days of being compelled to 

do so, the holder of the participation may subrogate said enforcement, for the amount of 

his/her respective participation. 

Any necessary notifications will be made by reliable means. 

In the event of the Bank being declared insolvent, the act of issuance of such bond will only 

be challengeable in the terms of Article 10 of Law 2/1981 of 25 March, and consequently, 

the holder of such participation will have the benefit of an absolute right of separation. 

They will be entitled to the same right of separation in the event of the Bank suspending 

payments or in similar situations. 

Sections “a” and “b” below present consolidated information for the institutions in the Group 

that issue mortgage bonds and securities, as mentioned previously, as at 31 December 

2010, and which are included in the Special Accounting Register for such institutions 

referred to in Article 21 of Royal Decree 716/2009 of 24 April: 

a) Asset transactions 

We now go on to present, as at 31 December 2011, 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:


31 December 2011; 

31 December 2010; 

Nominal value 

NPV 

Nominal value 

NPV 

1 Total loans 31,260,157 

1 Total loans 32,116,299 

2 Mortgage participations issued 4,679,764 


Of which: Loans retained on the balance 

sheet 

3,566,032 


sheet 

5,299,635 

3 Mortgage transmission certificates 

issued 

5,397,235 

3 Mortgage transmission certificates 

issued 

9,150,923 


sheet 

5,254,655 


sheet 

8,993,880 

4 Mortgage loans assigned in guarantee 

of financing received 

5 Loans backing the issue of mortgage 

debentures and bonds 

21,183,158 

4 Mortgage loans assigned in guarantee 

of financing received 

5 Loans backing the issue of mortgage 


16,337,441 

5.1 Non-eligible loans 7,933,053 

5.1 Non-eligible loans 7,330,457 

5.1.1 They meet the eligibility 

requirements except for the limit of 

Article 5.1 of RD 716/2009 

5.1.1 They meet the eligibility 

requirements except for the limit of 

Article 5.1 of RD 716/2009 

5.1.2 Other 7,933,053 

5.1.2 Other 7,330,457 

5.2 Eligible loans 13,250,105 

5.2 Eligible loans 9,006,984 

5.2.1 Non-computable amounts 

5.2.1 Non-computable amounts 

5.2.2 Computable amounts 13,250,105 

5.2.2 Computable amounts 9,006,984 

5.2.2.1 Loans covering issues of 

mortgage debentures 

5.2.2.2 Loans suitable for covering issues 

of mortgage bonds 

13,250,105 

5.2.2.1 Loans covering issues of 

mortgage debentures 

5.2.2.2 Loans suitable for covering issues 

of mortgage bonds 

9,006,984



Loans backing the issue of mortgage 


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 10,858,547 

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



Loans backing the issue of mortgage 


Of which: Eligible loans 

TOTAL 16,337,441 9,006,984 

1 ORIGIN OF TRANSACTIONS 16,337,441 9,006,984 


1.2 Subrogated from other entities 1,417,974 970,725 

1.3. Other 

2 CURRENCY 16,337,441 9,006,984 

2.1 Euros 11,227,906 6,385,068 

2.2. Other currencies 5,109,535 2,621,916 

3 PAYMENT SITUATION 16,337,441 9,006,984 

3.1 Normal 15,949,614 9,006,142 

3.2 Other than normal 387,827 842 

4 AVERAGE REMAINING MATURITY 16,337,441 9,006,984 

4.1 Up to ten years 2,426,857 1,364,027 

4.2 From ten to twenty years 5,232,808 3,030,495 

4.3 From twenty to thirty years 6,985,380 3,528,927 

4.4 More than thirty years 1,692,396 1,083,535 

5 INTEREST RATES 16,337,441 9,006,984 

5.1 Fixed 62,836 57,607 

5.2 Variable 16,274,605 8,949,377 

5.3 Mixed 

6 BORROWERS 16,337,441 9,006,984 

6.1 Companies and entrepreneurs 4,887,559 1,717,167 

Of which: Property developers 832,558 - 

6.2 Other companies and ISFLSH (Private non-profit making institutions serving households) 11,449,882 7,289,817 

7 TYPE OF GUARANTEE 16,337,441 9,006,984 

7.1 Finished assets/buildings 14,700,158 9,006,984 

7.1.1 Residential 9,119,511 6,714,147 

Of which: State-subsidised housing 

7.1.2 Commercial 5,580,647 2,292,837 

7.1.3 Other 

7.2 Assets/buildings under construction 832,558 - 

7.2.1 Residential 749,302 - 

Of which: State-subsidised housing 

7.2.2 Commercial 83,256 - 

7.2.3 Other 

7.3 Plots of land 804,725 - 

7.3.1 Developed 609,414 - 

7.3.2 Other 195,311 -


The following is a breakdown of the nominal value of eligible mortgage loans and credits 

outstanding as at 31 December 2011 and 31 December 2010 by loan to value (LTV) based 

on the latest available appraisal of the mortgaged property: 


RISK AS % OF AMOUNT OF LATEST AVAILABLE APPRAISAL FOR MORTGAGE MARKET 

(loan to value) 

TYPE OF GUARANTEE 

Equal to or less From 40% to 60% 

From 60% to 80% 

More than 60% 

than 40% 

incl. 

incl. 

More than 80% 

TOTAL 

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 


TYPE OF GUARANTEE 

Equal to or less than 

40% 

RISK AS % OF AMOUNT OF LATEST AVAILABLE APPRAISAL FOR MORTGAGE MARKET 

(loan to value) 

From 40% to 60% 

incl. 

More than 60% 

From 60% to 80% 

incl. 

More than 80% 

Loans eligible for the issue of mortgage debentures and 

bonds 

2,392,776 3,473,316 - 3,140,892 - 9,006,984 

- On residential property 1,399,874 2,173,381 3,140,892 6,714,147 

- On other assets 992,902 1,299,935 2,292,837 

TOTAL


MOVEMENTS Eligible loans Non-eligible loans 


1 Opening balance at 31 December 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 

2.2 Pre-paid 289,872 339,836 

Nominal 

MORTGAGE-BACKED SECURITIES 

value 

1 Mortgage debentures issued and outstanding - 

2 Mortgage bonds issued 10,122,757 

Of which: Not recognised as liabilities in the balance 

- 

sheet 

2.1 Debt securities. Issued in a public offering 10,122,757 

2.2.1 Remaining maturity up to one year 323,200 

2.2.2 Remaining maturity from one to two years 4,269,557 

2.2.3 Remaining maturity from two to three years 2,930,000 

2.2.4 Remaining maturity from three to five years 2,400,000 

2.2.5 Remaining maturity from five to ten years 200,000 

2.2.6 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 


2.3 Deposits 








3.1 Issued by means of public offering 3,566,032 

3.2. Other issues - 

4 Mortgage transmission certificates issued 5,254,655 


4.2. Other issues - 

NPV 

Average 

remaining 

maturity 

2.3 Subrogated by other entities - - 

2.4. Other - - 

3 Additions in the period 5,058,557 1,311,644 


3.2 Subrogated from other entities 206,155 26,465 

3.3. Other 380,247 122,775 

4 Closing balance as at 31 December 2011 13,250,105 7,933,053 


Mortgage loans backing the issue of mortgage debentures and 

bonds 

Available balances. 

Nominal value 

Total 21,183,158 

– Potentially eligible 13,250,105 

– Non-eligible 7,933,053 


Mortgage loans backing the issue of mortgage debentures and 

bonds 

Available balances. 

Nominal value 

Total 16,337,441 

– Potentially eligible 9,006,984 

– Non-eligible 7,330457 

As at 31 December 2011 and 2010 there were no replacement assets in cover of issues of 

mortgage bonds or debentures in Bankinter. 

b) Liability operations 

We present hereunder the aggregate nominal value of the mortgage bonds outstanding 

as at 31 December 2011 and 2010 issued by the Group, listed by remaining maturity, as 

well as mortgage participations and mortgage transfer certificates outstanding as at 31 

December 2011 and 2010 issued by the Group listed by remaining maturity:



48. Exposure to the construction and property development sector 

MORTGAGE-BACKED SECURITIES 

Nominal 

value 

1 Mortgage debentures issued and outstanding 

2 Mortgage bonds issued 4,910,455 

Of which: Not recognised as liabilities in the balance 

- 

sheet 

2.1 Debt securities. Issued in a public offering 4,910,455 

2.2.1 Remaining maturity up to one year 419,900 

2.2.2 Remaining maturity from one to two years 323,200 

2.2.3 Remaining maturity from two to three years 2,567,355 

2.2.4 Remaining maturity from three to five years 1,200,000 

2.2.5 Remaining maturity from five to ten years 400,000 


2.2 Debt securities. Other issues 







2.3 Deposits 







3 Mortgage participations issued 


3.2. Other issues 5,299,635 

4 Mortgage transmission certificates issued 8,993,880 


4.2. Other issues 

NPV 

Average 

remaining 

maturity 

In compliance with the request made by Spain’s Central Bank for credit institutions 

to publish their exposure to the construction and development sector, Bankinter, S.A. 

published the following information as at 31 December 2010, increasing the level of detail 

and transparency requested: 

Table 1: Financing for property development and its coverage 

Figures as at 31 December 2011 

Gross amount 

Excess over 

guarantee value (1) 

Specific coverage 

1. Lending recorded by the 

group’s credit institutions 

1,075,156 43,006 68,226 

(businesses in Spain) 

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 


Gross amount 

Excess over 

guarantee value (1) 

Specific coverage 

1. Lending recorded by the 

group’s credit institutions 

1,081,894 43,817 100,200 

(businesses in Spain) 

1.1. Of which: Doubtful 162,000 6,561 85,400 

1.2. Of which: Substandard 85,000 3,443 14,800 

*Figures 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%)


Table 2: Breakdown of financing for property construction and development 


Financing of property 

construction and development. 

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 


Other 10,833 

Land 198,795 

Urban plots 177,821 

Other land 20,974 

TOTAL 1,075,156 


Financing of property 


construction and development. 

Gross amount 

Without a mortgage guarantee 113,586 

With a mortgage guarantee 968,308 

Finished buildings 700,000 


Other 70,000 

Buildings under construction 78,000 


Other 7,800 

Land 190,308 

Urban plots 171,308 

Other land 19,000 

TOTAL 1,081,894 


Memorandum items: 

- Total general 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 


Memorandum items: 

- Total general coverage (all businesses) 

156,971 

- Bad debts 4,020 

Memorandum items: Figures for the consolidated group 

Carrying amount 

1. Total lending to customers excluding Public Administrations 

(businesses in Spain). 42,410,502 

2. Total consolidated assets (all businesses) 54,151,977 

Table 3: Lending to households for purchase of residential property 


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 



Gross amount Of which: Doubtful 

Lending for the purchase of housing 25,712,752 302,278 

Without a mortgage guarantee - - 

With a mortgage guarantee 25,712,752 302,278 


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 


LTV brackets (10) 

LTV≤40% 40%



Carrying amount Of which: Coverage Initial cost Gross Debt 

1. Real estate assets from financing transactions for property construction and development 

companies 203,562 84,352 229,453 287,914 

1.1. Finished buildings 128,294 39,963 139,257 168,257 

1.1.1. Housing 111,171 34,511 118,603 145,682 

1.1.2. Other 17,123 5,452 20,655 22,575 

1.2. Buildings under construction 602 725 661 1,327 

1.2.1. Housing 602 725 661 1,327 

1.2.2. Other - - - - 

1.3. Land 74,666 43,664 89,534 118,330 

1.3.1. Urban plots 63,571 35,930 77,037 99,501 

1.3.2. Other land 11,095 7,734 12,497 18,829 

2. Real estate assets from mortgage financing operations to households for the purchase 

of housing 16,612 5,156 17,712 21,768 

3. Other real estate assets foreclosed 51,363 17,067 53,340 68,430 

4. Other equity instruments, securities and financing to non-consolidated companies holding 

said assets - - - - 


49. Subsequent events 

On 3 February 2012, Royal Decree-Law 2/2012 on the reform of the financial sector was 

approved. This Royal Decree-law imposes stricter provisioning and increased capital 

requirements to cover positions held by financial institutions for financing to property 

developers and the assets received in payment of debts. The requirements mentioned in 

the following paragraphs must be met by 31 December 2012. 

parameters which are established, stricter provisioning requirements for exposures to 

the property development sector that are classified as doubtful or sub-standard, and a 

provision of 7% of total outstanding finance of this nature classified as normal risk as at 

31 December 2011. 

The Royal Decree-Law also imposes an additional capital requirement to the core capital 

required by Royal Decree-Law 2/2011 of 18 February on the strengthening of the financial 

system. 

The main thrust of the balance sheet clean-up is through a new system of coverage for 

all financing relating to the property development sector and for assets repossessed or 

received in payment of debts related to the property development sector. This system 

involves an estimate of the specific impairment of these assets in accordance with certain 

Based on the positions maintained by the Bankinter Group as at 31 December 2011, an 

initial estimate has been made which shows that the amount of additional provisions to 

be set aside in order to comply with the requirements established in the Royal Decree-Law 

would be approximately €146 million, distributed as follows:


• €56 million relating to unimpaired exposures to the property development sector. 

• €30 million relating to land-related exposures classified as in arrears or substandard. 

• €7 million for exposures classed as in arrears or sub-standard relating to property 

developments in progress. 

• €8 million referring to the remaining exposure to property developers classed as 

in arrears or sub-standard. 

• €45 million in provisions for assets received in payment of debts. 

Since this figure for new provisioning requirements represents 32% of the Bankinter 

Group’s profit before provisions for 2011, the entity believes they will be absorbed easily 

and in their entirety by the results for 2012. 

Finally, the Bankinter Group complies with the additional core capital requirements 

imposed by the Royal Decree-Law. 

50. Explanation Added for Translation to English 

These financial statements are presented on the basis of accounting principles generally 

accepted in Spain. Certain accounting practices applied by the Company that conform 

with generally accepted accounting principles in Spain may not (do not) conform with 

generally accepted accounting principles in other countries.


APPENDIX I - Related Party Transactions 

€000s 


Related party income and expense 

Significant 

shareholders 

Directors and 

Managers 

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 - - - - - 

Revenues: 

20,482 16,860 - 663 547,149 

Financial revenues - - 12,679 - 12,679 



Dividends received - - - - - 

Leases - - - - - 

Provision of services - - - - - 

Sale of assets (finished or in progress) - - - - - 

Gains on cancellation or disposal of assets - - - - - 

Other income - - - - - 

- - 12,679 - 12,679


APPENDIX I (cont.) 

€000s 

31-12-11 

Other Transactions 

Significant . 

shareholders 

Directors and . 

Managers 




Total 

Purchases of tangible, intangible or other assets - - - - - 

Financing agreements: Loans and capital contributions (lender) - 26,023 - 28,923 54,946 

Financial lease contracts (lessor) - - - - - 

Repayment or cancellation of loans and leases (lessor) - - - - 

Sales of tangible, intangible or other assets - - - - 

Financing agreements: Loans and capital contributions (borrower) - - - 0 

Finance leases (lessee) - - - - 

Repayment or cancellation of loans and leases (lessor) - - - - - 

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



€000s 

2010 

Related party income and expense 

Significant . 

shareholders 


Managers 




Total 

Expenses: 

Financial expenses - 254 - 185 439 



Leases - - - - - 

Receipt of services - - - - - 

Purchase of assets (finished or in progress) - - - - - 

Value corrections for bad and doubtful debts - - - - - 

Dividends paid 32,696 22,873 - - 55,569 

Other expenses - - - - - 

32,696 23,127 - 185 56,008 

Revenues: 

Financial revenues - - 8,032 - 8,032 



Dividends received - - - - - 

Leases - - - - - 

Provision of services - - - - - 

Sale of assets (finished or in progress) - - - - - 

Gains on cancellation or disposal of assets - - - - - 

Other income - - - - - 

- - 8,032 - 8,032



€000s 

Other Transactions 

Significant . 

shareholders 


Managers 

31-12-2010 




Total 

Purchases of tangible, intangible or other assets - - - - - 

Financing agreements: Loans and capital contributions (lender) - 27,238 - 31,997 59,235 

Financial lease contracts (lessor) - - - - - 


Sales of tangible, intangible or other assets - - - - - 

Financing agreements: Loans and capital contributions (borrower) - - - - - 

Finance leases (lessee) - - - - - 


Guarantees issued 4,535 390 - 772 5,697 

Guarantees received - - - - - 

Commitments acquired - - - - - 

Commitments/guarantees cancelled - - - - - 

Dividends and other distributed profits - - - - - 

Other transactions - 8,002 - 83 -


APPENDIX II - Segmented Information 

2011 Retail Banking Corporate Banking LDA Other Businesses Total 

NET INTEREST INCOME 259,795 309,499 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 14,745 14,675 

Fees and Commissions 130,680 98,366 318 -30,480 198,883 

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 -21,948 233,916 

GROSS INCOME 423,562 434,895 272,816 -26,793 1,104,480 

Transformation costs 187,564 108,866 191,338 157,152 644,920 

Losses from asset impairment 35,645 104,341 - 18,243 158,229 

Provisions 28,175 28,175 

PROFIT FROM OPERATIONS 200,352 221,688 81,478 -230,363 273,156 

Other gains (net) 37,436 19,145 426 -24,000 33,008 

GROSS RESULT 162,916 202,543 81,052 -206,363 240,148 

Average assets for the segment 29,304,315 15,482,770 - - 44,787,084 

Average liabilities for the segment 13,645,268 7,849,164 - - 21,494,432 

Average off-balance sheet resources 6,069,759 724,786 - - 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 25,558 11,998 - -37,555 - 

Services received 123,181 60,467 - -183,647 -


APPENDIX II (cont.) 

€000s 

2010 

Primary Segment: Business lines 

Retail Banking Corporate Banking Línea Directa Other Businesses Total 

NET INTEREST INCOME 310,144 264,644 36,191 (61,025) 549,953 

Return on other equity instruments - - - 14,456 14,456 

Results for institutions valued according to the equity method - - 337 10,621 10,958 

Fees and Commissions 176,661 121,125 319 (102,602) 195,503 

Results from financial operations and exchange differences 10,493 10,493 2,730 96,755 120,471 

Other operating products/expenses - - 207,179 3,802 210,982 

GROSS INCOME 497,298 396,262 246,756 (37,992) 1,102,323 

Transformation costs 170,408 103,254 176,557 205,478 655,697 

Losses from asset impairment 117,987 315,743 - (217,064) 216,666 

Provisions - - - 815 815 

PROFIT FROM OPERATIONS 208,903 (22,735) 70,199 (27,222) 229,145 

Other gains (net) 18,173 5,758 - - 23,931 

GROSS RESULT 190,730 (28,493) 70,199 (27,222) 205,214 

Average assets for the segment 30,462,334 13,840,988 - - 44,303,322 

Average liabilities for the segment 10,803,426 7,095,199 - - 17,898,625 

Average off-balance sheet resources 6,874,233 890,787 - - 7,765,020 

Costs incurred in acquiring assets 5,060 2,952 - - 8,012 

Segment-to-segment net turnover (132,553) (46,212) - 178,765 - 

Services provided 19,235 19,235 - (38,469) - 

Services received 151,787 65,447 - (217,234) -


APPENDIX II (cont.) 


Ordinary 

income 

Profit (loss) 

before tax 

Average total 

assets 

Andalusia 54,921 14,275 5,359,827 

2010 Ordinary income 

€000s 

Profit (loss) 

before tax 

Average total 

assets 

Balearic Islands 9,527 3,169 1,113,628 

Castile 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 5,184,878 

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 25,569 2,023 

Total 542,675 240,148 44,411,809 

Andalusia 60,757 (152) 5,162,041 

Balearic Islands 11,303 1,550 1,086,718 

Castilla La Mancha-Extremadura 15,960 (1,520) 1,382,232 

Catalonia 63,181 (18,194) 5,483,894 

Las Palmas 13,219 (862) 1,113,060 

Levante (Eastern Spain) 71,084 (33,667) 5,361,489 

Madrid Corporate Banking 42,268 28,684 2,761,210 

Madrid - East 41,932 (3,296) 4,220,305 

Madrid - West 66,916 14,553 6,402,758 

Navarre - Aragon - Rioja 31,776 (586) 2,294,363 

North-Western Spain 41,740 (8,823) 3,367,664 

Northern Spain 42,654 17,978 3,403,909 

Tenerife 11,052 2,818 790,009 

Remote networks 7,270 6,889 1,094,708 

Consumer financing 53,673 (2,295) 378,963 

Other business (24,833) 202,136 

549,953 205,214 44,303,322


APPENDIX III.- Financial statements of Bankinter, S.A. for the years ended 31 December 2011 and 2010. BALANCE SHEETS AS AT 31 DECEMBER 2011 AND 2010 (€000s) 

ASSETS Note 31-12-11 31-12-10 LIABILITIES AND EQUITY Note 31-12-11 31-12-10 

CASH AND BALANCES WITH CENTRAL BANKS 6 412,791 196,395 LIABILITIES: 

FINANCIAL ASSETS HELD FOR TRADING: 7 2,353,904 1,935,685 

FINANCIAL ASSETS HELD FOR TRADING: 7 2,415,506 1,875,834 Trading derivatives 850,593 846,382 

Debt instruments 1,768,879 1,275,490 Short positions in securities 1,503,311 1,089,303 

Equity instruments 101,733 87,769 Other financial liabilities - - 


Memorandum items: Loaned or advanced as collateral 1,768,879 984,898 

OTHER FINANCIAL LIABILITIES CARRIED AT FAIR VALUE THROUGH PROFIT OR LOSS 7 - 88,745 

OTHER FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS Customer deposits - 88,745 

Equity instruments 7 31,377 35,727 

Memorandum items: Loaned or advanced as collateral 31,377 35,727 FINANCIAL LIABILITIES AT AMORTISED COST 18 54,892,745 51,138,284 

- - Deposits from central banks 7,006,897 3,301,646 


FINANCIAL ASSETS AVAILABLE FOR SALE: 8 5,608,126 4,747,738 Customer deposits 30,644,630 30,577,410 

Debt instruments 5,552,595 4,695,042 Marketable debt securities 12,341,848 13,134,165 

Equity instruments 55,531 52,696 Subordinated liabilities 955,701 1,113,451 

Memorandum items: Loaned or advanced as collateral 4,686,364 3,325,553 Other financial liabilities 665,663 528,854 

LOANS AND RECEIVABLES: 10 47,312,980 44,222,413 MACRO-HEDGING ADJUSTMENTS TO FINANCIAL LIABILITIES 

Deposits with credit institutions 1,167,570 1,238,464 - - 

Loans and advances to customers 46,145,410 42,983,949 HEDGING DERIVATIVES 11 68,677 40,441 

Memorandum items: Loaned or advanced as collateral - - 

LIABILITIES LINKED TO NON-CURRENT ASSETS HELD FOR SALE - - 

HELD TO MATURITY INVESTMENTS 9 3,150,931 3,241,573 

Memorandum items: Loaned or advanced as collateral - 1,770,513 LIABILITIES UNDER INSURANCE CONTRACTS - - 

PROVISIONS: 19 61,336 70,798 

ADJUSTMENTS TO FINANCIAL ASSETS BY MACRO-HEDGING 11 11,463 1,308 Pension funds and similar obligations 5,245 7,836 

Allowances for taxes and other legal contingencies - - 

HEDGING DERIVATIVES 11 118,651 171,917 Provisions for contingent risks and commitments 20,626 22,268 


NON-CURRENT ASSETS HELD FOR SALE 12 36,214 22,489 

TAX LIABILITIES 16 113,350 65,499 

INVESTMENTS 13 559,271 541,968 Current 54,615 8,971 

Associates 3,412 3,412 Deferred 58,735 56,528 

Jointly controlled entities 162 162 

Group Companies 555,697 538,394 OTHER LIABILITIES 17 121,567 125,353 

PENSION-LINKED INSURANCE AGREEMENTS 5,140 7,690 TOTAL LIABILITIES 57,611,579 53,464,805 

REINSURANCE ASSETS - - EQUITY: 

TANGIBLE ASSETS: 14 385,722 376,924 EQUITY: 21 2,710,008 2,223,559 

Property, plant and equipment 385,722 376,924 Capital - 143,076 142,034 

For internal use 354,175 364,751 Registered 143,076 142,034 

Assigned on lease 31,547 12,173 Less- uncalled capital - - 

Real estate investments - - Issue premium 737,079 737,079 

Memorandum items: Acquired under finance lease - - Reserves 1,330,449 1,341,827 

Other equity instruments 404,812 - 

INTANGIBLE ASSETS: 15 - - Of compound financial instruments - 

Goodwill - - Other equity instruments 404,812 - 

Other intangible assets - - Less - Treasury shares (308) - 

Profit (loss) for the year 153,416 77,131 

TAX ASSETS: 16 236,711 202,955 Less - Dividends and remunerations (58,516) (74,512) 

Current 71,000 52,395 

Deferred 165,711 150,560 VALUATION ADJUSTMENTS: 20 (16,650) (23,382) 

Financial assets available for sale (16,856) (23,583) 

OTHER ASSETS 17 20,054 20,051 Exchange differences 206 201 

TOTAL ASSETS 60,304,937 55,664,982 TOTAL LIABILITIES AND EQUITY 60,304,937 55,664,982 

MEMORANDUM ITEMS: 22 4,163,136 4,242,772 

CONTINGENT RISKS 22 4,163,136 4,242,772 

CONTINGENT COMMITMENTS 8,220,466 8,350,162


APPENDIX III (CONTINUED). INCOME STATEMENT FOR THE YEARS ENDED 31 DECEMBER 2011 AND 2010 (€000s) 

(Debit) Credit 

Note 2011 2010 

INTEREST AND SIMILAR INCOME 27 1,578,754 1,163,595 

INTEREST EXPENSE AND SIMILAR CHARGES 27 (1,165,778) (794,967) 

NET INTEREST INCOME 412,976 368,628 

INCOME FROM EQUITY INSTRUMENTS 72,445 45,526 

FEES AND COMMISSIONS INCOME 26 238,991 234,622 

FEES AND COMMISSIONS EXPENSE 26 (70,763) (70,153) 

GAINS / LOSSES ON FINANCIAL ASSETS AND LIABILITIES: 28 86,188 154,417 

Held for trading 42,319 102,669 

Other financial assets at fair value through profit and loss account 97 10,835 

Financial instruments not measured at fair value through profit and loss account 42,604 43,962 

Other 1,168 (3,049) 

EXCHANGE DIFFERENCES (net) 29 38,678 49,319 

OTHER OPERATING INCOME: 31 31,580 30,747 

Other operating income 31,580 30,747 

OTHER OPERATING EXPENSES: 31 (26,050) (22,491) 

Other operating expenses (26,050) (22,491) 

GROSS INCOME 784,045 790,615 

ADMINISTRATIVE COSTS: (413,896) (432,119) 

Personnel expenses 25 (193,581) (236,650) 

Other general administrative expenses 30 (220,315) (195,469) 

DEPRECIATION AND AMORTISATION 14/15 (26,064) (28,507) 

PROVISIONS (NET) 19 (28,380) (1,170) 

IMPAIRMENT LOSSES ON FINANCIAL ASSETS (NET): (162,679) (250,295) 

Loans and receivables 10 (161,623) (250,295) 

Other financial instruments not measured at fair value through profit and loss account (1,056) - 

PROFIT FROM OPERATIONS 153,026 78,524 

IMPAIRMENT LOSSES ON OTHER ASSETS (net): 3,406 (501) 

Goodwill and other intangible assets 15 - - 

Other assets 13 3,406 (501) 

PROFIT (LOSS) ON THE CANCELLATION OF ASSETS NOT CLASSIFIED AS 

NON-CURRENT FOR SALE 32 30,647 13,630 

GAINS / LOSSES ON NON-CURRENT ASSETS HELD FOR SALE NOT CLASSIFIED AS DISCONTINUED OPERATIONS 32 188 264 

PROFIT BEFORE TAX 187,267 91,917 

INCOME TAX 40 (33,851) (14,786) 

PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS 153,416 77,131 

PROFIT (LOSS) FROM DISCONTINUED OPERATIONS (net) - - 

RESULT FOR THE FINANCIAL YEAR 153,416 77,131 

EARNINGS PER SHARE: 0.32 0.16 

Basic earnings (euros) 0.32 0.16 

Diluted earnings (euros) 0.29 0.16


APPENDIX III (CONTINUED). COMPREHENSIVE STATEMENTS OF INCOME FOR THE YEARS ENDED 31 DECEMBER 2011 AND 2010 (€000s) 

Financial 

year 

Financial 

year 


RESULT FOR THE FINANCIAL YEAR 153,416 77,131 

OTHER COMPREHENSIVE INCOME 6,732 (47,680) 

Financial assets available for sale- 9,610 (68,239) 

Gains (losses) on valuation 15,112 (38,266) 

Amounts transferred to profit and loss (5,502) (29,973) 


Cash flow hedging - - 



Amounts transferred to the initial value of hedged items - - 


Hedging of net investments in foreign operations- - - 





Gains (losses) on valuation 71 124 

Amounts transferred to profit and loss (64) - 


Non-current assets for sale- - - 




Actuarial gains (losses) on pension plans - - 

Statement of comprehensive income - - 

Income tax (2,885) 20,435 

TOTAL COMPREHENSIVE INCOME 160,148 29,451


APPENDIX III (CONTINUED). COMPREHENSIVE STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED 31 DECEMBER 2011 AND 2010 

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) 


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


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 2009 142,034 737,079 1,208,980 - (537) 260,289 (104,464) 2,243,381 24,298 2,267,679 

Adjustments due to changes in accounting criteria 

Adjustments due to errors 

ADJUSTED OPENING BALANCE 142,034 737,079 1,208,980 - (537) 260,289 (104,464) 2,243,381 24,298 2,267,679 

Total comprehensive income - - - - - 77,131 - 77,131 (47,680) 29,451 

Other changes in equity: 132,847 - 537 (260,289) 29,952 (96,953) - (96,953) 

Capital increases - - - - - 

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 - - - - - - (97,250) (97,250) - (97,250) 

Transactions with own equity instruments (net) - - (240) - 537 - - 297 - 297 

Transfer between net worth entries - - 133,087 - - (260,289) 127,202 - - - 

Increases (reductions) due to business combinations - - - - - - - - - - 

Payments with equity instruments - - - - - - - - - - 


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


APPENDIX III (cont.) STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED 31 DECEMBER 2011 AND 2010 (€000s) 


NET CASH FLOWS FROM OPERATIONS 234,285 1,529,913 

Profit (loss) for the year 153,416 77,131 

Adjustments to obtain cash flow from operating activities - 256,861 327,009 

Other adjustments 230,797 298,500 

Depreciation and Amortisation 26,064 28,507 

Net increase/decrease in operating assets - (4,448,235) (664,018) 

Held for trading (539,672) (1,709,007) 

Other financial assets at fair value through profit or loss 4,350 19,366 

Financial assets available for sale (851,834) 149,567 

Loans and receivables (3,070,098) 978,383 

Other operating assets 9,019 (102,327) 

Net increase/decrease in operating liabilities - 4,237,850 419,317 

Held for trading 418,219 473,897 

Other financial assets at fair value through profit or loss (88,745) (189,982) 

Financial liabilities at amortised cost 3,857,920 180,842 

Other operating liabilities 50,456 (45,441) 

Corporation tax collections/payments 34,393 42,439 

NET CASH FLOWS FROM INVESTING ACTIVITIES: 23,259 (1,718,802) 

Payments - (99,200) (1,812,331) 

Tangible assets (64,462) (107,029) 

Intangible assets (8,062) (17,589) 

Investments (26,676) (42,988) 

Non-current assets held for sale and associated liabilities - (24,822) 

Held to maturity investments - (1,619,904) 

Collections - 122,459 93,529 


Intangible assets - 24 

Investments 2,100 - 

Subsidiaries and other business units 

Non-current assets held for sale 5,028 11,789 

Held to maturity investments 88,642 - 

NET CASH FLOWS FROM FINANCING ACTIVITIES 170,968 (119,975) 

Payments - (63,669) (165,915) 

Dividends (58,352) (110,273) 

Subordinated liabilities - (50,000) 

Amortisation of equity instruments - - 

Acquisition of own shares (capital contributions) (other than savings banks) (5,317) (5,641) 

Other payments linked to financing activities - - 

Collections - 234,638 45,939 

Subordinated liabilities - 40,000 

Issuance of equity instruments 229,812- - 

Disposal of own shares/capital contributions (other than savings banks) 4,826 5,939 

Other inflows linked to financing activities - - 

EFFECT OF EXCHANGE-RATE VARIATIONS - - 

EFFECT OF CHANGES IN CASH AND CASH EQUIVALENTS 428,512 (308,865) 

CASH AND CASH EQUIVALENTS AT START OF PERIOD 196,395 505,260 

CASH AND CASH EQUIVALENTS AT END OF PERIOD 624,907 196,395 


BREAKDOWN OF CASH AND CASH EQUIVALENTS 

Cash 114,747 105,486 

Balances equivalent to cash at central banks 298,044 90,909 

Other financial assets 212,116 - 

Total cash and cash equivalents at end of period 624,907 196,395


APPENDIX IV.- Individualised information on certain issues, buybacks or redemptions of debt securities 

Name 

Details of the Issuing Institution Details of Issues carried out in 2011 (a) 

Relation to 

the Bank 

Country 

Credit 

rating of 

Issuer or 

Issue 

ISIN code 

Bankinter TDA 19 Subsidiary SPAIN Aaa/AAA ES0315945008 

Bankinter 20 FTA Subsidiary SPAIN Aaa/AA- ES0313438006 

Bankinter 19 FTA Subsidiary SPAIN Aaa/AA- ES0313533004 

Bankinter 19 FTA Subsidiary SPAIN A1 ES0313533012 

Bankinter 19 FTA Subsidiary SPAIN Baa3 ES0313533020 

Bankinter 16 FTA Subsidiary SPAIN Aaa/A+ ES0313480008 

Bankinter 16 FTA Subsidiary SPAIN Aa2/A+ ES0313480016 

Bankinter 16 FTA Subsidiary SPAIN A3/BBB ES0313480024 

Bankinter 16 FTA Subsidiary SPAIN Ba2/BB ES0313480032 

Bankinter S.A. 







Parent 

company 

Parent 

company 

Parent 

company 

Parent 

company 

Parent 

company 

Parent 

company 

Parent 

company 

Type of 

Security 

Mortgage 

portfolio 

Mortgage 

portfolio 

Mortgage 

portfolio 

Mortgage 

portfolio 

Mortgage 

portfolio 

Mortgage 

portfolio 

Mortgage 

portfolio 

Mortgage 

portfolio 

Mortgage 

portfolio 

Rate 

Transaction 

Depreciation 

and 

Amortisation 

Depreciation 

and 

Amortisation 

Depreciation 

and 

Amortisation 

Depreciation 

and 

Amortisation 

Depreciation 

and 

Amortisation 

Depreciation 

and 

Amortisation 

Depreciation 

and 

Amortisation 

Depreciation 

and 

Amortisation 

Depreciation 

and 

Amortisation 

Date of 

Transaction 

Amount of 

the Issue, 

Buy-back or 

Redemption 

(€000s) 

Outstanding 

balance as at 

31 Dec, 2011 

(€000s) 

Type of 

Rate 

04/05/2011 1,200,000 - 2.25% 

09/08/2011 1,531,954 - 

20/06/2011 1,354,799 - 

20/06/2011 20,700 - 

20/06/2011 31,400 - 

16/12/2011 1,431,066 - 

16/12/2011 46,000 - 

16/12/2011 38,000 - 

16/12/2011 34,000 - 

SPAIN A2/A: ES0313679625 Senior Debt Issue 13/07/2011 100,000 100,000 

Eur 

3m+0.30% 

Eur 

3m+0.30% 

Eur 

3m+0.50% 

Eur 

3m+0.70% 

Eur 

3m+0.30% 

Eur 

3m+0.40% 

Eur 

3m+0.50% 

Eur 

3m+2.50% 

EURIBOR 

3m+0.50% 

SPAIN A1/AA- ES0313679765 Senior Debt Issue 29/12/2011 1,400,000 1,400,000 4.625% 

SPAIN A2/A- ES0213679196 

SPAIN Aaa ES0413679111 




Subordinated 

Debt 

Mortgage 

bond 

Mortgage 

bond 

Mortgage 

bond 

Mortgage 

bond 

Issue 10/02/2011 47,250 47,250 6.375% 





Market on which traded 

AIAF secondary fixedincome 

market 


market 


market 


market 


market 


market 


market 


market 


market 


market 


market 


market 


market 


market 


market 


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 


Credit 


Credit 


Credit 


Credit 


Credit 


Credit 


Credit 


Credit 


Amounts in foreign currency have been converted into euros at the closing exchange rate for the financial year.


APPENDIX IV (cont.) 

Name 




















Bankinter 1 

FTH 

Bankinter 1 

FTH 

Details of the Issuing Institution Details of Issues carried out in 2011 (a) 

Relation to 

the Bank 

Parent 

company 

Parent 

company 

Parent 

company 

Parent 

company 

Parent 

company 

Parent 

company 

Parent 

company 

Parent 

company 

Parent 

company 

Parent 

company 

Parent 

company 

Parent 

company 

Parent 

company 

Parent 

company 

Parent 

company 

Parent 

company 

Parent 

company 

Parent 

company 

Parent 

company 

Country 

Credit 

rating of 

Issuer or 

Issue 

ISIN code 

Type of 

Security 

SPAIN Aaa ES0413679111 Mortgage 

bond 


bond 


bond 


bond 


bond 

SPAIN A1/A- ES0213679139 Subordinated 

Debt 


Debt 


Debt 

SPAIN Aaa/A+ ES0313679450 Senior Debt 




SPAIN A1/A ES0313679518 Senior Debt 



SPAIN Aaa/AAA ES0413679012 Mortgage 

bond 

Rate 

Transaction 

Date of 

Transaction 

Amount of the 

Issue, Buy-back 

or Redemption 

(€000s) 

Outstanding 

balance as at 

31 Dec. 2011 

(€000s) 

Type of 

Rate 


Issue 28/09/2011 1,000,000 1,000,000 4.25% 




Depreciation and 

Amortisation 


Amortisation 


Amortisation 


Amortisation 


Amortisation 


Amortisation 


Amortisation 


Amortisation 


Amortisation 


Amortisation 

10/02/2011 42,200 - 

10/02/2011 11,000 - 

10/02/2011 600 - 

Eur 

3m+0.50% 

Eur 

3m+0.80% 

Eur 

3m+0.32% 

08/06/2011 300,000 - 3.00% 

27/10/2011 130,500 - 3.00% 

15/11/2011 51,900 - 3.00% 

01/12/2011 127,800 - 3.00% 

17/06/2011 100 - 

19/09/2011 120,000 - 

19/09/2011 119,900 - 

Redemption 14/04/2011 25,000 - 

SPAIN Aa3/A ES0313679435 Senior Debt Redemption 01/06/2011 1,000,000 - 

SPAIN Aaa/AAA ES0413679046 Mortgage 

bond 

SPAIN Aa3/A ES0313679443 Senior Debt 

Subsidiary SPAIN Aaa ES0313799001 Mortgage 

portfolio 

Subsidiary SPAIN A2 ES0313799019 Mortgage 

portfolio 

Average 

EURIBOR 

3m + 1.1% 

Average 

EURIBOR 

3m + 1.1% 

Average 

EURIBOR 

3m + 1.1% 

Eur 6m + 

0.30% 

Eur 3m + 

0.125% 

Redemption 28/09/2011 419,900 - 4,00% 


Amortisation 


Amortisation 


Amortisation 

28/12/2011 100,000 - 

26/04/2011 51,766,430,94 - 

26/04/2011 6,000,000,66 - 

Eur 3m + 

0.14% 

EURIBOR 

6m + 0.25% 

EURIBOR 

6m + 0.50% 



market 


market 


market 


market 


market 


market 


market 


market 


market 


market 


market 


market 


market 


market 


market 


market 


market 


market 


market 


market 


market 

Type of 

Guarantee 

Granted 

Mortgage 

portfolio 

Mortgage 

portfolio 

Mortgage 

portfolio 

Mortgage 

portfolio 

Mortgage 

portfolio 

Mortgage 

portfolio 

Mortgage 

portfolio 

Mortgage 

portfolio 

Mortgage 

portfolio 





Credit 


Credit 


Credit 


Credit 


Credit 


Credit 


Credit 


Credit 


Credit 

Enhancement (0%)


APPENDIX IV (cont.) 

Name 

Details of the Issuing Institution Details of Issues carried out in 2010 (a) 

Relation to 

the Bank 

Country 

Credit 

rating of 

Issuer or 

Issue 

ISIN code 

Bankinter . 

TDA 19 Subsidiary SPAIN Aaa/AAA ES0315945008 

Bankinter . 

20 FTA Subsidiary SPAIN Aaa/AAA ES0313438006 

Type of 

Security 

Rate 

Transaction 

Date of 

Transaction 

Amount of the 

Issue, Buy-back 

or Redemption 

(€000s) 

Outstanding 

balance as at 

31 Dec. 2010 

(€000s) 

Type of 

Rate 

Mortgage 

portfolio Issue 18/06/2010 1,500,000 1,500,000 2.25% 

Mortgage 

portfolio Issue 14/07/2010 1,650,000 1,650,000 Eur 3m+0.30% 



market 


market 

Type of 

Guarantee 

Granted 

Mortgage 

portfolio 

Mortgage 

portfolio 





Credit 


Credit enhancement 


Parent 

company SPAIN Aaa/AAA ES0413679079 

Mortgage 

bond Issue 09/04/2010 1,000,000 1,000,000 2.625% 


market 

Mortgage 

portfolio 

Credit 
















Parent 

company SPAIN Aaa/AAA Nominative 

Parent 


Parent 


Parent 


Mortgage 

bond Issue 21/06/2010 1,500,000 1,500,000 2.25% 

Mortgage 

bond Issue 07/07/2010 200,000 200,000 Eur 3m+1.90% 

Mortgage 

bond Issue 26/07/2010 400,000 400,000 2.625% 

Mortgage 

bond Issue 23/09/2010 750,000 750,000 3.75% 

Parent 

company SPAIN A1/A ES0313679484 Senior Debt Issue 15/01/2010 900,000 900,000 Eur 3m+0.95% 

Parent 

company SPAIN A1/A ES0313679492 Senior Debt Issue 21/01/2010 78,800 78,800 3% 

Parent 

company SPAIN A1/A ES0313679518 Senior Debt Issue 17/09/2010 120,000 120,000 

Parent 

company SPAIN A1/A ES0313679526 Senior Debt Issue 17/09/2010 120,000 120,000 

Average 

EURIBOR 

3m+1.1% 

Average 

EURIBOR 

3m+1.1% 

Parent 

company SPAIN A1/A ES0213679212 Senior Debt Issue 22/10/2010 30,000 30,000 4.27% 

Parent 

company SPAIN A1/A- ES0213679113 

Parent 


Parent 


Parent 

company SPAIN Aaa/AAA Nominative 

Subordinated 

Debt 

Mortgage 

bond 

Mortgage 

bond 

Mortgage 

bond 

Parent 

company SPAIN Aa3/A ES0313679427 Senior Debt 


Amortisation 29/03/2010 50,000 - 

EURIBOR 

3m+0.33% 


Amortisation 14/05/2010 1,500,000 - 5% 


Amortisation 14/05/2010 150,000 - 5% 


Amortisation 01/06/2010 1,000,000 - 


Amortisation 18/11/2010 1,000,000 - 

EURIBOR 

1m+0.10% 

EURIBOR 

3m+0.11% 


market 


market 


market 


market 


market 


market 


market 


market 


market 


market 


market 


market 


market 


market 

Mortgage 

portfolio 

Mortgage 

portfolio 

Mortgage 

portfolio 

Mortgage 

portfolio 

Mortgage 

portfolio 

Mortgage 

portfolio 

Mortgage 

portfolio 

Credit 


Credit 


Credit 


Credit 


Credit 


Credit 


Credit 


Credit 


Credit 


Amounts in foreign currency have been converted into euros at the closing exchange rate for the financial year.



Consolidated Management Report for the year ended 31 December 2010 

1. Group’s Performance for the year 

Company Activity 

During 2011, Canarias Excelencia en SIM, S.L., which had ceased trading, was wound up. 

During the fourth quarter of 2011 Bankinter Servicios de Consultoría, S.A. increased 

its capital by €10 million. This company also changed its name to Bankinter Seguros 

Generales S.A. de Seguros y Reaseguros. The Bank subsequently sold 10% of the capital 

of Seguros Generales S.A. de Seguros y Reaseguros. 

During 2011 Bankinter Capital Riesgo I Fondo de Capital increased its capital by €5 million. 

In June 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. 

Results 

The Bankinter Group made a net profit of €181.2 million for the year ended 31 December 

2011, representing an increase of 20,2% relative to 2010, which demonstrates the 

profitability of the business and the strength of its strategy in a difficult environment. 

The Bankinter Group could have achieved considerably greater profit, but decided 

to strengthen its provisions for repossessed assets in anticipation of new regulatory 

requirements that might be imposed in 2012. Thus repossessed land is now 75% provisioned. 

Once again, the quality of the bank’s assets was much better than that of the market as a 

whole, as can be seen from its delinquency ratio, which stands at 3.24% (less than half the 

average for the banking system). The bank also had a portfolio of troubled assets which 

is significantly lower than other banks and amongst the highest levels of coverage in the 

sector: 52% of delinquency, against 45% in the case of comparable banks; 36% foreclosed 

asset coverage compared to 28% in similar banks; and 45% of coverage of troubled assets, 

as opposed to 31% at comparable banks. 

The Bankinter Group has a portfolio of repossessed real estate assets for a gross amount 

of €484 million which as well as being small in comparison with the sector as a whole, is 

well diversified. 

Solvency was notably reinforced during the year, particularly following the successfulissue 

of convertible bonds. Thus, the bank’s core capital ratio, under the terms of Royal Decree- 

Law No. 2/2011, stood at 9.47% at year end. 

The bank also continued to improve its financing structure, maintaining the positive 

trend in its deposit to loan ratio, which stood at 59.8% at the close of 2011 compared with 

56.6% at year-end 2010. Mention should also be made of the advances the bank has made 

in terms of confronting all medium- and long-term wholesale funding maturities without 

problems. 

The results presented by the Bankinter Group are based on a positive evolution of 

net interest income, which continued to grow throughout 2011, due to substantial 

improvements in efficiency and productivity, ongoing strengthening of provisions, the 

solidity of commission revenue despite the difficult economic environment, and the 

consistency of the Group’s insurance business. 

Bankinter’s net interest income reached €542.67 million at the close of 2011, barely 1.32% 

down on the previous year’s figure; gross profit amounted to €1.104 billion for the year, 

0.20% up on 2010. 

However, net interest income for the fourth quarter looked at in isolation (€149.2 million) 

was 35.4% up on the same quarter of 2010 and higher than the last five quarters, which 

points to sustained growth. Income before provisions showed a similar trend over the 

year, with the 4Q 2011 figure (€129.7 million) 98.2% up on the last quarter of 2010.


As far as the Bankinter Group’s balance sheet is concerned, total assets stood at €59.491 

billion (9.9% up on 2010) while lending to customers was €42.605 billion, an increase of 

1.8%, demonstrating that the Bank managed to increase its level of private and business 

loans slightly, despite the difficult environment of 2011. 

In this regard we should add that the Bank continues to change its lending portfolio mix, 

with a shift towards greater emphasis on non-mortgage loans. There was an increase of 

20% in Corporate Banking lending (reaching €8.481 billion) and 146.4% (to €951 million) 

in ICO funding. 

As regards customer resources, there was a notable increase (8.2%) in retail deposits 

(accounts, terms deposits, retail negotiable securities) over the course of the year. 

The Bank devoted particular efforts to attracting new customers in the target segments. 

In 2011, customer acquisition figures were considerably better than the preceding year: a 

total of 95,711 new customers were brought to the bank during the year, 55% more than 

in 2010. Of these customers, 25,968 were from the high income segments, a group of 

special relevance to the Bank’s business strategy. 

The insurance distribution business consolidated its growth trend, with a significant 

contribution to results representing 30% of the total ordinary margin. 

In terms of turnover, life insurance policy premiums were up 29.4% on 2010 levels, 

reaching €73.3 million, while non-life insurance policy premiums were up 1.7% in the 

same period, reaching €37.2 million. As far as pension funds are concerned, the year 

closed with managed assets of €1.253 billion, 0.5% more than in December 2010. 

Línea Directa consolidated its sustained growth dynamic, despite stagnating numbers 

of new vehicle registrations. The number of motor policies sold in 2011 was 1.4% up on 

2010, at 1.71 million. The number of home insurance policies grew by 41.4% to reach 

161,000 at year-end. 

All these achievements were based on customer service of a quality that continues to 

lead the way in the industry and which constitutes one of the values setting the entity 

apart. Bankinter’s Net Satisfaction Index closed the year at 74.6. In terms of quality, the 

bank put further distance between itself and the market, reaching 5.3 NSI points above 

the market average. As far as the churn rate was concerned, this was reduced to 5.69%, 

compared with 6.64% in 2010. 

CORPORATE BANKING 

Small and Medium Enterprise Segment 

A major effort was made in 2011 to increase the level of relations with these types of 

customers, offering them products and services which, by providing new solutions for their 

day-to-day operating requirements, enable us to boost the perceived value contribution in 

these two segments. And all this without neglecting growth in the number of customers, 

with 9,390 new customers attracted over the course of the year. 

This growth strategy enabled us to generate 9.8% more revenue than in 2010, while at the 

same time increasing customer deposits (by 8.6% relative to 2010) and managing lending 

appropriately, although lending shrank by 3.5% compared with the previous year as a 

result of lower investment activity by SMEs. 

The balance sheet for the SME business is still based on very solid credit risk assessment, 

with high-quality and diversified investments. A high percentage of the finance granted 

is still with a mortgage guarantee, and the strategy of maintaining a low concentration in 

the sectors that are most severely affected by the economic downturn continues. 

In 2011, Bankinter’s value proposition for this customer segment, which is unique and 

highly competitive, continued to focus on global customer management, service quality 

and multi-channelling. 

As in previous financial years, the increase in customer activity was managed through the 

most efficient channels. It should be highlighted here that 84% of transactions completed 

in 2011 were performed through remote channels.


Corporate Banking Segment 

The year 2011 was marked by the accentuation of problems already existing in a number 

of euro zone economies and by the uncertainty caused by the contagion effect on tight 

liquidity and rising risk premiums of the countries involved. 

In Spain’s case and for the Spanish business sector, this general situation was exacerbated 

by the further decline in activity in the real estate market and the relative weight of the 

construction sector in the country’s economy, which has led to a general slide in company 

business volumes and a deterioration in rates of arrears and insolvencies in the market. 

Despite this general situation, the Corporate Banking sector continued with its growth 

strategy, managing to end the year with a 33% increase in gross income. This is due on 

the one hand to an increase in the financial margin thanks to appropriate management 

of interest rate differentials, where an increase of 42.44% was achieved, and on the other 

to the constant improvement in commission revenue, which was up by 16.33% on the 

previous year. All of which enabled it to arrive at a final pre-tax profit figure of €149.99 

million. 

As regards the balance sheet, despite the climate of recession referred to above, average 

loans and advances grew by 13.52%, reaching €7,676.83 million in December. This growth 

was matched by an increase of €495.1 million on the other side of the balance sheet, with 

average resources reaching €4.7 billion. 

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 79.99 points, 1.12 

points more than in December 2010. 

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 94% 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 satisfactory levels, with a gross ROA of 2.94% and an 

excellent cost/income ratio of 20.27%. 

To summarise, Corporate Banking continued to focus on quality and innovation, and 

managed to end a difficult year in brilliant fashion, maintaining the main business 

management ratios and above all the solidity of its lending portfolio, all of which are 

variables that characterise the business of Bankinter. 

COMMERCIAL BANKING 

Private Individuals Segment: 

The private individuals banking segment reached a total of 432,524 active customers in 

2011. Average total assets for the year were €15.82 billion. 

As regards the balance sheet, the Bank ended the year with average total funds of €2,733 

million, representing an increase of €307 million. It should also be pointed out that 82% 

(€2.24 billion) of these total funds were normal customer deposits. 

Loans and advances stood at €16.08 billion at year end. 

During 2011 a total of 2,841 mortgage loans were signed for an amount of €329 million. 

This mortgage portfolio continues to maintain its excellent risk quality, with a delinquency 

rate of 1.74%, a figure that remains one of the lowest in the sector. This is particularly 

worthy of mention in a year that saw a substantial increase in non-performing loans in 

the financial sector. 

During 2011 a substantial sales effort was made, focused on strengthening existing ties 

with these customers by offering them products such as payroll accounts, of which some 

29,000 were opened by both new and existing customers. The power of this product in 

attracting new customers was shown by the 8,500 people who became customers in the 

last nine months of the year by opening a payroll account.


Also noteworthy were the efforts made in selling strategic products such as life insurance, 

as well in stimulating the equities business, where customers carried out 290,580 

transactions, 20% more than in the previous year. 

In pure life assurance, a total of 20,000 policies were sold to customers in this segment, 

for an insured capital of 1 billion. 

Lastly, in terms of quality, this customer segment closed the year with a cumulative NSI 

of 71.55. 

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, which is run as a sub-segment within that of Private Individuals, ended 

2011 with 24,283 active customers. 

Average total assets in 2011 were €738 million, compared with €800 million in 2010, 

representing a decrease of 7.7%. 

In balance sheet terms, the year ended with average customer resources of €218 million, 

of which 90.9% were conventional accounts and deposits and 9.1% intermediation. 

Mortgage activity once again declined during the year. However, the cumulative price 

adjustment to date, together with the appreciation of sterling as an alternative safe 

haven and the UK’s improved growth prospects justify a certain degree of optimism in 

the speedy recovery of this activity, given that British citizens are the main customers in 

the segment. 

Loans and advances at the end of 2011 stood at €734 million, with a total of 172 mortgage 

loans having been signed during the year for a total volume of €19 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 80.48 at year-end. 

Private Banking Sector 

During 2011, which was a very difficult one due to the debt crisis and the highly volatile 

markets, Private Banking continued to work on intensifying its relations with customers, 

seeking a proximity which is more necessary than ever in this difficult environment. 

This being so, CRM (Customer Relationship Management) plays an ever more vital role 

in the way we work, helping to ensure that all customers receive a personalised, quality 

service. 

At the end of the year, Bankinter decided to tighten the selection criterion for customers 

in this segment, in order to concentrate on those that really need and properly appreciate 

the specialised professional advisory services offered by the account executives. As a 

result the number of customers handled in Private Banking fell to 46,278 at year-end 

after a large number were transferred to the Personal banking segment. 

The product most in demand this past year was the so-called ‘super-deposit’, which led to 

total customer deposits increasing by 27.53% compared with the previous year. 

Loans and advances grew by 10.4% relative to 2010, reaching €2.58 billion at year-end. 

Also, as part of the policy of comprehensive advice to customers, we continued to push 

sales of pure life assurance. 

As in 2010, advisory service sessions were once again held with existing and potential 

customers in several Spanish cities, in view of how much they are appreciated by those 

attending them, who value highly the advice offered on the situation in the markets and 

the economy in general by the specialists whom the Bank makes available to them. 

This year a total of 26 sessions were held, with an average of 200 existing and potential 

customers attending each. These sessions benefited from the collaboration of specialists 

from the Bank’s Analysts, from Bankinter Asset Management and from other international 

managers who, as well as analysing the market situation, also spoke of the most attractive 

investment opportunities.


In a repeat of the previous year’s highly successful initiative featuring the Czech National 

Symphony Orchestra conducted by Inma Shara, in 2011 Bankinter once again organised 

a series of charity concerts to raise funds for Cáritas. 

This time Inma Shara, one of the most brilliant representatives of the new generation of 

Spanish conductors, took her music to seven Spanish cities with a series of concerts which 

customers of the bank attended as special guests. 

Lastly, we should mention the good results once again obtained by the segment in terms 

of quality of service, with an NSI for the year of 76.38. 

Personal Finance Segment 

2011 constituted a new challenge for Personal Finance. On top of the risks deriving from 

an economic slowdown bordering on recession came the euro crisis, at the centre of which 

were the peripheral euro zone countries. 

In this difficult environment, Bankinter fell back on the strengths inherent in its balance 

sheet and business model, as well as its commitment to service and proximity in offering 

advice to its customers which have always characterised the Bank in general and the 

Personal Finance segment in particular. In this regard the results of the quality surveys 

carried out with customers showed high levels of customer satisfaction, despite an 

environment in which distrust and apathy had taken hold in investors’ minds. 

For Personal Finance 2011 was another year of increased revenues (up 21%) as regards 

both interest margin and commissions, which increased by 6%. 

It was also an excellent year in terms of attracting new customers, with the number of 

active customers increasing by 21%. 

The Personal Finance area’s value proposition is based on comprehensive advisory and 

management services for customers’ assets. Consequently, the Wealth Services and Legal 

and Tax Advice departments, as well as the Wealth Management unit, seek to attend to 

the complex needs of the Bank’s HNW customers, showing a high degree of involvement 

in their approach. 

The number of SICAVs (open-ended collective investment companies) managed by 

Bankinter Asset Management rose by three (new companies) over the course of the year. 

Bankinter continues to be the fastest-growing institution in the Spanish financial system 

as regards this type of investment vehicle designed specifically for HNW customers, 

consolidating its position, with 253 SICAVs at the end of December, as the third biggest 

institution in terms of the number of collective investment companies managed, according 

to Inverco’s ranking. 

Personal Banking Segment 

This past year was one of consolidation for this customer segment, which in effect had 

been created the year before in order to provide a differentiated sales treatment to certain 

customers who in view of their level of income or assets need and demand a personalised 

service. Until 2010 these customers had been handled by Private Individuals Banking. 

The following were the major milestones for 2011: 

1. Attracting new customers. A total of 14,322 new customers were signed up, a 

percentage well in advance of 2010. 

2. Growth in the number of active customers. The segment ended 2011 with 133,240 

active customers, representing an increase of 27% on 2010. These figures are 

partly influenced by customers being transferred from other segments, although 

even if that effect is eliminated the percentage is still very positive: a 17% 

increase. 

3. Churn rate. The customer churn rate in Personal Banking fell from 4.04% in 

December 2010 to 3.78% in December 2011. 

4. Growth in Resources. In 2011 normal customer resources deposits increased by 

17.5%, mainly due to the decisive influence on this section of the increase in term 

deposits. 

5. Sales activity. This past year was very positive in terms of selling products, the 

focus being mainly on equities, insurance and deposits, in line with customer 

demand.


In organising the sales activity of this segment, CRM continues to play a fundamentally 

important role, enabling frequency of customer contact to be maintained and facilitating 

the adaptation of the range of products and services to their needs, preferences and risk 

profile. 

With the aim of offering a better service, we continued to focus on training, specialisation 

and advisory skills for the team of account executives dedicated to providing sales service 

to the customers in this segment. In this regard special attention was given to training 

on products such as equities, investment funds and the specific advisory tools such as 

Investment Adviser and Personal Financial Planning. 

As for customers’ opinions as expressed through the quality surveys, overall satisfaction 

as measured by the NSI came in at 74.93, while satisfaction with the personal account 

executive scored 80.50 NSI points. 

Obsidiana 

Satisfaction levels among the more than 400,000 customers continued to improve in 

2011, this being a key factor in making the business profitable. 

Bankinter Consumer Finance is consolidating its position in the consumer finance sector, 

strengthening its distribution of revolving cards and loans through its strategic alliances. 

In 2011 we increased our investment in marketing in order to drive the growth of the 

business, following a policy focused on the risk/return trade-off and adjusting the price of 

each offer in line with the customer profile so as to ensure its profitability. 

During this past year Bankinter Consumer Finance saw its customer base grow by 2% 

compared with 2010, reaching a total of 424,232 cards issued at year-end. 

The progress made in attracting new customers was accompanied by good results for nonperforming 

loans, which continued in their downward trend thanks mainly to the work 

done by the in-house recoveries unit. 

Average lending and advances to customers this year came to €326 million, representing 

a decrease of 14% compared with the previous year, but with a notable improvement in 

the quality of the portfolio. 

In terms of results, 2011 was positive, with the consumer finance business making a solid 

contribution to group profits. 

Obsidiana’s mission is to attend to customers’ financing needs, providing them with the 

most appropriate financial product or service at any given time but above all facilitating 

flexible payment for managing their day-to-day finances. 

LDA 

Despite the climate of crisis which prevailed in all sectors of the Spanish economy during 

2011, LDA attained reinsurance premiums of €680 million for the year, a 1% increase on 

the previous year. 

The number of policies increased by 4% compared with 2010, reaching a total of 1,869,491. 

The non-life technical account showed a profit of €103.9 million, representing an increase 

of 10,3% compared with that of 2010, due essentially to the good performance of the 

claims rate and the policy of containing expenses implemented by the Company. In 2011 

the net reinsurance claims rate was 75.15%,compared with 78.34% in 2010. 

In 2011, the fourth year of activity, the home insurance branch wrote premiums totalling 

€27,258,405.76 for a 47% increase on the previous year. 

The average return from fixed income securities and deposits with credit institutions 

during the year was 3.5%, while that on the Equities portfolio was a negative 7.30%. 

The LDA group continued with its investment policy aimed at ensuring the safety, 

liquidity and profitability of its investments, the principles of dispersion, diversification 

and matching of terms to the technical liabilities to be covered, in order to cushion market, 

credit, liquidity and cash flow risks.


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 2011 the Group applied this Circular as updated by Circular 4/2011 which came 

into force on December 2011. 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 establishes which elements are to be counted as 

equity for the purposes of complying with the minimum requirements laid down in said 

regulation. 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 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.


As at 31 December 2011 and 2010 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 in question. 

Consolidated equity as at 31 December 2011 and 2010 and the corresponding capital 

ratios are shown in the following table: 

€000s 

31-12-2011 (*) 31-12-2010 (*) 

Capital and Reserves 2,554,154 2,435,576 

Other equity instruments 404,812 


Treasury shares (742) (1,753) 

Intangible and other assets (296,820) (339,044) 


Tier 1 2,663,833 2,263,286 


Subordinated financing 658,232 706,354 

Generic insolvency funds 54,678 76,852 


Tier 2 656,665 707,246 

Total Equity 3,320,498 2,970,529 

Risk-weighted assets 28,454,731 30,963,938 

Tier 1 (%) 9.36 7.31 

Tier 2 (%) 2.31 2.28 

Capital ratio (%) 11.67 9.59 

(*) 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. 

In January 2011 the Ministry of the Treasury published its draft “Reinforcement Plan 

for the Financial Sector” which, among other targets, proposed to bring forward the 

solvency requirements laid down in Basel III, establishing certain minimum core capital 

requirements to be met before the autumn of 2011. 

On 18 February 2011 the Council of Ministers approved Royal Decree Law 2/2011 on the 

reinforcement of the financial system (hereinafter RDL 2/2011), which had two priority 

objectives: to strongly reinforce the solvency of credit institutions and their ability to 

withstand even the most adverse and unlikely of scenarios, and to facilitate funding 

for them, thereby guaranteeing that credit will be channelled to the real economy and 

therefore, towards growth and employment. 

This Royal Decree Law complements actions carried out in 2011 in the field of finance, 

such as the reform of savings banks’ governing bodies and the stress tests performed by 

the European Banking Authority, and facilitated the restructuring of Spain's financial 

sector. 

The Board of Directors of Bankinter, SA, in its extraordinary meeting of 7 March 2011, 

resolved, by virtue of the authorisation granted by the General Meeting of Shareholders 

of 23 April 2009, to issue Subordinated Bonds Mandatorily Convertible into newly issued 

Bankinter, SA shares in two series, Series I and Series II, for a total combined value of 

€406 million at three years from the date of issuance and disbursement.


The issue was fully subscribed by 27 April 2011, the first tranche of €175 million by means 

of exchange of preferred shares, and the second one, for €229.81 million, giving a total of 

€404.81 million issued and subscribed. 

The entire amount of the issue counts for purposes of the Bankinter Group’s core capital 

ratio, enabling it to reach 9.02% as at 30 September 2011, in accordance with the 

requirements of RDL 2/2011 which imposes a minimum core capital ratio of 8% with effect 

from that date. The core capital ratio was 9.47% as at 31 December 2011. For the purposes 

of the provisions of Bank of Spain Circular 3/2008 as updated by Circular 4/2011, the issue 

counts as Tier I capital and is reported under “Other equity instruments”. 

2. Principal business risks 

Economic Environment and International Markets 

After showing some signs of recovery in 2010, the global economy again had to contend 

with a highly complex environment in 2011. During the past year the shift in the epicentre 

of the crisis away from the private sector towards states was confirmed, and it eventually 

became clear that to overcome this crisis will involve a process of deleveraging that will 

probably take several years. 

The most serious problems of indebtedness continued to be concentrated in the euro 

zone, as in 2010. Following the 2010 rescues of Greece and Ireland in May and November 

respectively, Portugal joined the list in April 2011, with a financial assistance package of 

approximately €78 billion being assigned to the country. 

However the most difficult period was probably the summer, which saw a resurgence of 

distrust in the economic cycle and in investment in practically any type of asset, however 

small the implicit risk. In this context the very survival of the euro was openly questioned, 

and at the time of writing this issue has still not been completely resolved, although the 

tensions have eased appreciably. As a consequence of this, the economies of the euro zone 

started to be classified informally into two groups - peripheral and core. While initially 

the peripheral group comprised a small number of countries, Spain among them, as time 

went by circumstances showed that more and more members of the “core” group were 

moving into the peripheral group. 

Italy was the first economy to join the group of peripherals, with the fact becoming 

immediately clear that it presented a worse risk profile than Spain, to the point where 

subsequently it has become increasingly apparent that the “core” group is very small, 

if indeed it exists at all. It eventually became clear over the course of 2011 that the 

indebtedness of the euro zone states is the principal obstacle to global economic recovery, 

and that the deterioration in the perception of the solvency of the euro zone is something 

that directly affects and involves all member states without exception. This change of 

perspective was made particularly clear towards the end of the year when Germany 

encountered serious, albeit short-lived, difficulty in refinancing its borrowing. Moreover, 

other states’ risk profile also deteriorated over the course of the year as events unfolded. 

Austria, initially considered informally as part of the “core”, lost this status when Hungary, 

to which Austria has significant exposure, especially in its financial sector, suffered new 

financing problems. 

In spite of the foregoing, in the last quarter of the year two singular events laid the 

bases for an incipient stabilisation: the coordinated action of the main central banks of 

the advanced economies in September and a much more proactive focus on the part of 

the ECB since Mario Draghi took charge of the institution in November. Additionally, a 

positive decoupling of the US economy seems to be setting in, confirmation of which will 

be seen, if indeed this is the case, as 2012 progresses.


Interest and currency rates 

2011 was characterised by an environment of ever lower central bank director rates and 

the appreciation of currencies considered as safe havens. 

The persistent weakening of the world economy led to growth being given priority, 

even at the risk of producing some resurgence in inflationary stresses, so central banks 

again reduced their key lending rates, as in the case of the ECB and of the Brazilian 

Central Bank. The push for growth came to take precedence over practically all other 

considerations, and a useful tool for this, which (usually) brings about immediate results, 

is monetary policy. 

Policy rates (%) 

2007 2008 2009 2010 2011 

Euro Zone 4.00 2.50 1.00 1.00 1.00 

USA 4.25 0.25 0.0/0.25 0.0/0.25 0.0/0.25 

UK 5.50 2.00 0.50 0.50 0.50 

Japan 0.50 0.10 0.10 0.0/0.1 0.0/0.1 

Note: at the end of each financial year 

Source: Quarterly Analysis Report “Strategy Report: Q1 2012” 

Deep uncertainty about the euro’s survival, together with a highly unstable market 

environment, led to capital outflows into currencies considered more reliable and 

regarded as safe havens, such as the Swiss franc and the yen. In the case of the former, 

with the Swiss franc having reached virtual parity with the euro, the Swiss economy 

began to experience a rapid slowdown, giving rise to an internal situation ripe for the 

Swiss National Bank to be asked to formally intervene in order to devalue the currency. 

This course of action showed that, given a situation as complex as this from a global point 

of view, even the central banks of developed countries can find themselves forced from 

within to adopt protectionist measures to safeguard their own economies, as was the case 

with the forced devaluation of the Swiss franc in order to reactivate exports. 

In the case of the yen, its appreciation is the result of a combination of two factors: the 

search for a currency with a very low risk profile and the fact that Japan is one of the few 

first-tier economies currently offering positive real rates (although its intervention rate is 

zero or close to zero, it continues to suffer deflation). 

Major currencies (%) 

2007 2008 2009 2010 2011 

Euro 1.32 1.40 1.43 1.34 1.30 

Sterling 0.67 0.95 0.89 0.86 0.83 

Swiss franc 1.61 1.49 1.48 1.25 1.22 

Yen 157.1 126.7 133.2 108.5 99.7 

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: Report of the Information Centre “Table of market closings” 

International stock markets 

While on the stock markets 2010 was a year that could be described as mixed from an 

overall point of view, 2011 was mostly negative. The only exception among the major 

stock markets was that of the United States, where indices closed either flat, like the S&P 

500, or with modest gains, like the NASDAQ 100. 

Events are largely explained by the return of high volatility, increased solvency risk and 

great uncertainty about corporate earnings and the direction of the economic cycle itself. 

The ultimate causes of the losses on the stock markets in 2011 were the accentuation 

of the solvency crisis in the euro zone and the export of its effects on the cycle even to 

emerging economies, and the earthquake in Japan. It was not until indications emerged 

towards year-end of a possible positive de-linkage of the US economy that its stock market 

indices started to perform better.


The following table shows the changes in the major stock markets in 2011 and 2010, all 

in local currency: 

References 2010 (%) 2011 (%) 

Spain Ibex 35 -17.4 -13.1 

United States S&P 500 12.8 -0.0 

United States NASDAQ 100 19.2 2.7 

Europe EuroStoxx 50 -5.8 -17.1 

UK FTSE 100 9.0 -5.6 

Germany DAX 16.1 -14.7 

France CAC -3.3 -17.0 

Japan Nikkei -3.0 -17.3 

China Shanghai (B) 20.6 -29.3 

Brazil Bovespa 1.0 -18.1 

India Sensex 17.4 -24.6 

Source: “Invertia” 

3. Risk policies and management 














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. 





• Management based on the risk-return trade-off 


• Diversification of the risk by customers, sectors, counterparts, and markets. 




Management policies for 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 sovereign debt crisis continued to overshadow the situation in 2011. The euro zone 

has been suffering violent speculative attacks on public bonds of various member states, 

turbulence in the financial and stock markets and a decline in the value of its currency, 

in a context moreover of uncertainty and difficulty in reaching collective agreement. The 

loss of confidence has been reflected in the way that risk premiums, especially those 

of the peripheral euro zone countries have developed, and in the returns on their debt. 

The wholesale markets have been practically closed to banks, which have had to seek 

other sources of financing. Towards the end of November 2011 there was a concerted 

action among central banks to inject additional liquidity into the markets and contain the 

debt crisis and its consequences. All of these facts illustrate the importance of managing 

interest and liquidity risks in financial institutions. Bankinter has continued with its 

prudent policy in managing and controlling these risks, so as to minimise their impact. 

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 


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 

The structural interest rate risk is the Institution’s exposure to fluctuations in market 

interest rates deriving from the different timing structure (mismatch) of maturities and 

revaluations in the overall balance sheet. The Bankinter Group actively manages this risk 

in order to protect the financial margin and protect the economic value of the Group from 

the effects of interest rate fluctuations. 

In order to control exposure to the interest rate structural risk, the Group has established 

a structure of limits that is reviewed and approved on an annual basis by the Board of 

Directors, in accordance with the Group’s strategies and policies in this regard. 

In addition, Market Risk performs sensitivity analyses on financial margin and economic 

value, for both the Bank and the Subsidiaries that are associated with these risks and the 

impact that they have on the Consolidated Group. 

The Group has tools to monitor and control the structural interest rate risk. The following 

are the main measurements used by the Bank to manage and control the interest rate 

risk profile approved by the Board of Directors: 

Interest Rate Gap or Plan 

Shows the exposure to the interest rate risk on the basis of the structure of maturities 

and/or repricing of the Institution’s on- and off-balance sheet items. This measurement 

is obtained automatically, at least on a weekly basis, and it constitutes the basic


tool that provides static information on interest rate concentrations in the various 

terms and which also serves as the basis for analysing the possible impacts that the 

variations in the interest rates may have on the Institution’s Financial Margin and 

Net Asset Value. 

The interest rate gap is obtained by distributing the positions and balances of the 

on- and off-balance sheet items according to time terms depending on their nature. 

Therefore, items that are sensitive to interest rates and for which the maturity or 

interest rate review date is known are classified in the plan according to these criteria, 

depending on whether they are referenced to a fixed or variable rate. Items with no 

fixed maturity date, whether or not they are sensitive to interest rates, are distributed 

according to certain assumptions on historical behaviour which are reviewed on a 

regular basis by Market Risk, with a view to adjusting the measurement model to 

their historical performance. 

Maximum references applicable to this measurement are defined as maximum 

opening figures or the difference between the total amount of the asset and liability 

positions (gap) that may be maintained in each time bracket in the interest rate risk 

plan. 

The interest rate risk plans for the Bankinter Group at the close of 2011 and 2010 are 

shown below:


INTEREST GAP DEC. 2011 (GROUP) 

Figures as at 31 December 2011 in € millions Up to 1 month 1 to 3 months 3 to 12 months 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years >5 years Total 

ASSETS 

Loans and receivables 21,061 10,297 12,663 407 86 116 95 2,100 46,736 

Deposits from credit institutions 663 368 42 0 0 0 0 211 1284 

Loans and advances to customers 17,616 9,839 12,621 407 86 116 95 1,888 42,669 

Other 2,782 0 0 0 0 0 0 1 2,783 

Fixed Income Portfolio 214 835 3,864 2,773 1,027 439 553 1,413 11,117 


Available-for-Sale Portfolio 178 570 2,070 1,879 464 251 357 428 6,197 

Held-to-Maturity Portfolio 0 262 1,023 657 380 151 73 606 3,151 

Other Assets 698 0 0 0 0 0 0 3,099 3,797 

Total Assets 21,973 11,043 16,527 3,180 1,113 555 648 6,612 61,650 

LIABILITIES 

Fixed income portfolio 0 87 361 598 180 80 0 197 1,503 


Financial liabilities at Amortised Cost 19,064 12,179 13,344 4,692 1,738 474 662 2,282 54,435 

Deposits from credit institutions 7,532 1,568 1,064 35 29 23 15 228 10,493 

Customer deposits 6,941 6,395 10,392 833 288 452 617 1,633 27,551 

Marketable debt securities and subordinated 

liabilities 

2,545 3,527 1,530 3,824 1,420 0 30 421 13,298 

Other 2,046 689 358 0 0 0 0 0 3,093 

Other liabilities 443 0 0 0 0 0 0 2,204 2,647 

Equity 13 20 112 149 0 0 0 2,770 3,065 

Total Liabilities and Equity 19,519 12,286 13,817 5,439 1,917 555 662 7,454 61,650 

Off-balance sheet operations 2,411 1,740 -5,951 2,096 26 -45 -8 -269 0 

TOTAL INTEREST GAP 4,864 496 -3241 -163 -779 -45 -22 -1,112 0 

Figures as at 31 December 2010 in € millions Up to 1 month 1 to 3 months 3 to 12 months 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years >5 years Total 

Total Assets 17,935 6,165 19,158 3,144 3,412 867 307 6,019 57,005 

Total Liabilities and Equity 14,297 13,358 10,536 3,675 5,955 1,995 46 7,144 57,005 

Off-balance sheet operations 9,026 -4,719 -8,115 1,467 1,079 1,230 -38 69 0 

TOTAL INTEREST GAP 12,664 -11,912 507 936 -1,463 102 223 -1,056 0 

DIFFERENCES Up to 1 month 1 to 3 months 3 to 12 months 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years >5 years Total 

Total Assets 4,038 4,879 -2,631 36 -2,299 -312 341 593 4,645 

Total Liabilities and Equity 5,222 -1,072 3,281 1,764 -4,037 -1,441 616 310 4,645 

Off-balance sheet operations -6,616 6,459 2,164 629 -1,053 -1,275 30 -338 0 

TOTAL INTEREST GAP -7,800 12,409 -3,748 -1,100 685 -147 -245 -56 0 

Note: Foreign-currency positions are not material and so have not been included in the breakdowns of the attached Gaps.


The items included in the Interest Rate Plan may be classified as follows, depending on 

their exposure to the interest rate risk. 

• Exposure to interest rate risk: They constitute the majority of the Bankinter 

Group’s Balance Sheet and are items comprising financial instruments that are 

sensitive to variations in interest rates. These in turn may be: 

• Items subject to fair value risk: Which are those financial instruments with a 

fixed rate of interest. The assets comprise practically the entire fixed income 

portfolio, deposits with credit institutions and an insignificant portion of 

customer loans. As regards the liabilities, the main items are the majority 

of customer and credit institution deposits, and the credit fixed income 

portfolio. Also included is the fixed income securities portfolio held by Línea 

Directa Aseguradora S.A. 

• Items subject to cash flow risks: Which are those financial instruments 

referenced to floating interest rates. The assets basically consist of the 

majority of customer loans, and the liabilities of the majority of debts 

represented by negotiable securities or own issues. 

• No exposure to interest rate risk: Which represent an insignificant part of the 

Bankinter Group’s Balance Sheet and are the balances included in other assets 

and other liabilities. 

To calculate the dynamic projections of the Banking Group's margin, use is made 

of the “Interest rate plan” obtained from the average monthly balances of items 

sensitive to interest rates and by making certain renewal or maturity assumptions. 

In repricing items that mature or are reviewed, the forward interest rate curves 

listed on the market and the commercial differentials estimated for each one of 

them are taken into account. These projections are made on the assumption that 

the balances remain constant during the time horizon in the simulation or by 

applying the growth expected by the Institution for the period to the various items. 

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 the Bankinter Group’s financial margin to interest rate risk in the 

event of +/- 100 bp parallel movements in market interest rates is approximately 

+/- 1% for a 12-month horizon. 

The sensitivity of the Group's financial margin to changes in the slope of the 

curve for a 12-month horizon is +/- 5.6%. This scenario is built by maintaining 

the 6-month rate constant and varying the short (up to 3 months) rates and the 

12-month rate by the same amount in opposite directions, to change the slope of 

the curve by +/- 25 basis points in the period under consideration. 

e) 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. 

Financial Margin Sensitivity 2011 

100 bp parallel movements 3.1% 

25 bp slope variations 5.6%


f) Sensitivity of Economic Value: 

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 interestrate 

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 for 12% of 

Equity. Sensitivity to this scenario is measured, controlled and submitted on a 

monthly basis at each ALCO meeting. 

The exposure of the consolidated Group’s economic value is also quantified 

following the same criterion as described above. 

The sensitivity of the consolidated Group’s Economic Value to 200 bp parallel 

movements, obtained by means of the criterion described above, was, at the close 

of financial years 2011 and 2010, +/- 4.2% (*) and +/-1.1% respectively of the 

Bankinter Group's Equity. 

Management of this risk is the responsibility of the ALCO committee, delegated by the 

Board of Directors. 

Capital and liquidity requirements were covered by turning to the international mediumand 

long-term debt markets. The Bank issued €5.63 billion of mortgage bonds, €1.5 billion 

of senior debt of which €1.4 billion guaranteed by the Kingdom of Spain, €47 million of 

subordinated debt and €405 million in mandatory convertible bonds 

To meet its requirements, the Bank used short-term issue programmes both on the 

domestic market, with the commercial paper programmes, and on the international 

market, with the Euro commercial paper programme. The average balances during the 

year were €1,016 million and €354 million respectively. 

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 

Economic Value Sensitivity 

2010 (*) 2011 (*) 

NPV Sensitivity +/- 1.1% +/- 4.2% 

(*) of equity 

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. 

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. 

Included below are the liquidity plans or gaps at the closing dates of financial years 

2011 and 2010. 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.


LIQUIDITY GAP 2011 (Group) 

Figures as at December 2011 in € millions Sight 1 day to 1 month 1 to 3 months 3 to 12 months 12 months to 5 years >5 TOTAL 

ASSETS 

Loans and receivables 2,675 1,674 6,176 11,264 29,071 50,861 

Deposits from credit institutions 684 116 382 0 0 1,182 

Loans and advances to customers 1,991 1,558 5,794 11,264 26,258 46,865 

Other 0 0 0 0 2814 2814 

Fixed Income Portfolio 144 871 3,963 4,876 1,646 11,500 


Available-for-Sale Portfolio 105 591 2,012 2,826 546 6,080 

Held-to-Maturity Portfolio 0 268 1,153 1,425 684 3,530 

Other Assets 691 44 354 0 2,526 3,615 

Total Assets 3,510 2,589 10,493 16,140 33,244 65,976 

LIABILITIES 

Fixed income portfolio 0 88 382 869 268 1,607 


Financial liabilities at Amortised Cost 9,667 2,069 3,048 9,355 13,424 19,729 57,292 

Deposits from credit institutions 404 6 52 598 9,527 10,587 

Customer deposits 9,667 1,665 1,853 7,356 2,368 5,548 28,457 

Marketable debt securities 0 1189 1,947 10,458 885 14,479 

Other 3,769 3,769 

Other liabilities 1189 0 34 0 0 1,223 

Equity 0 0 0 0 2,690 2,690 



Figures as of December 2010 in millions of euros Sight 1 day to 1 month 1 to 3 months 3 to 12 months 12 months to 5 years >5 TOTAL 

Total Assets 4,622 2,303 8,647 17,783 27,253 60,608 



Note 1: Foreign-currency positions are not material and so have not been included in the attached breakdowns of Gaps. 

Note 2: The Entity has no non-listed positions


b) Analysis of finance needs, maturities and scenarios 

The business gap is analysed to predict the liquidity needs or surpluses arising from 

the difference between investment and customer resources and these are compared 

with the sources of funding that are anticipated and the assets that are available. 

Other stress scenarios that may affect these variables are also analysed. 

c)Monitoring of the specific situation relating to assets, concentration in maturities. 

In this regard, the Board of Directors lays down a number of maximum exposure 

ceilings. 

d) Contingency Plan 

The Institution has a Contingency Plan which identifies the general actions to be 

taken in different crisis scenarios, the internal and external communication channels 

and the bodies in charge of monitoring these situations. 

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 


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 Bankinter 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 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 2011 

and 2010, both for the total and differentiated by portfolio:


Total VaR 2011 

million euros 

Final 






11.96 

Trading VaR 2011 

million euros 

Final 






0.91 

Available-for-sale VaR 2011 

million euros 

Final 





11.04 

Total VaR 2010 

million euros 

Final 






3.92 

Trading VaR 2010 

million euros 

Final 






0.95 

Available-for-sale VaR 2010 

million euros 

Final 

Interest Rate VaR 3,10 

Equities VaR 0,49 

Exchange Rate VaR 0,00 

Credit VaR 0,00 

3,27 

2011 was marked by a high degree of volatility in the various risk factors and especially 

in interest rates on sovereign debt of peripheral euro zone countries. The position 

maintained in the Bankinter Group was defensive and cautious, which enabled it to keep 

market risk low in general terms. There was an increase in the interest rate VaR of the 

“Available-for Sale” portfolio as a result of an increase in the position together with high 

market volatility. 

The market risk (VaR) for the Línea Directa Aseguradora portfolio at the close of the 

financial years 2011 and 2010, was €0.88 million and €0.90 million respectively, calculated 

using the “Historical Simulation” method, with a level of confidence of 95% and a time 

horizon of one day. The market risk was similar in both years because of the correlation 

existing between the positions at risk in spite of the high market volatility. 

Stress Testing 

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 2010, the stress scenarios for Stock Market and Volatility were updated to adapt them 

to each product type and to the evolution of historical events observed in the market for 

this type of risk factors. 

The following information shows the results of one of the most extreme stress scenarios 

for the Bank in financial years 2011 and 2010: 

Stress Testing 2011 

million euros 

Final 






Total Stress 57.82 

Stress Testing 2010 

million euros 

Final 






Total Stress 21.84


At year-end 2011 the total level of interest rate stress testing had increased relative to 

2010, as a consequence of an increase in the Available-for-Sale portfolio both in fixed 

income and in public debt. However, as can be seen in the foregoing table equity stress 

testing at year-end 2010 reduced due to a decline in the stock market position of the 

Available-for-Sale portfolio. 

The result of the calculation of the stress scenarios for the portfolio positions of Línea 

Directa Aseguradora at the end of 2011 amounted to €23.48 million compared with €22.75 

million in 2010. The increase was due to the stress testing of the fixed income position to 

the increased position. 

Credit Risk 

Organisation and functions 

The Board of Directors establishes the strategy for each of the risks within the Framework 

Agreement on Risks, a document drawn up annually, and defines the Bank’s risk profile. 

It also has the executive function of approving and controlling risks. The Risk Committee, 

chaired by the Executive Vice-chairman, is the body to which the Board of Directors has 

delegated the development of the risks policy. The faculties delegated to this Committee 

include the authorisation of transactions and deciding on the level of powers to be 

assigned to Committees at subsequent levels. 

The next level of competence lies with the Credit Risk Committee, the Management of which 

comes directly under the Executive Vice-Chairman. The Risks Directorate is responsible for 

establishing 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: 

• The Private Individual Risks Unit. 

• The Corporate and 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. 

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. 

Structure and procedures 

The organisational structure of the risk function in the institution combines a hierarchical 

structure with the delegation of powers. This combination is perfectly delimited by a series 

of rules that establish competencies, specify functions and create areas of responsibility, 

thus enabling the same strategic line to be maintained. Decision-taking in the Risk 

Committees is on a collegiate basis, representing the various areas involved. 

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 the automatic authorisation of retail risks, in compliance with the objective of 

efficiency and the use of technology in authorisation. 

Risk Map 

Managing credit institutions’ capital and solvency requires specific procedures to be 

established to control and manage risk-inducing factors that can lead to financial loss. 

The Risk Map involves an exercise of 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. 

Concentration 

The current financial crisis and the requirements of the Basel Accords both led to increased 

monitoring of the policy on business concentration. 

Diversification by sector, geographical location, product and security, as well as by 

customer concentration, are the factors taken into account.


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 2011 and 2010 for each class of financial instrument, without 

deducting from same tangible securities or other credit enhancements received to ensure 

borrowers’ compliance: 


Types of instrument €000s 





Other assets 


available for 

sale 

Loans and 

receivables 

Held to 

maturity 

investments 

Hedging 

derivatives 

Memorandum 

accounts 

Total 


Deposits with credit institutions - - - 1,779,395 - - - 1,779,395 

Negotiable securities 1,870,612 31,377 4,776,069 - - - - 6,678,058 

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 - - - 53,845,425 


Financial guarantees - - - - - - 590,143,00 590,143,00 




Derivatives 544,894 - - - - - - 544,894 


Other exposure - - - - - 118,651 - 118,651 


MAXIMUM LEVEL OF EXPOSURE TO CREDIT RISK 2,415,506 31,377 4,776,069 47,167,367 118,651 11,648,477 66,157,447



Types of instrument 




Other assets 


available for 

sale 


Loans and 

receivables 

€000s 

Held to 

maturity 

investments 

Hedging 

derivatives 

Memorandum 

accounts 

Total 

Debt instruments- 

Deposits with credit institutions - - - 1,601,470 - - - 1,601,470 

Negotiable securities 1,363,259 35,727 3,100,215 - 3,241,573 - - 7,740,774 

Loans and advances to customers - - - 42,525,474 - - 42,525,474 

Total debt instruments 1,363,259 35,727 3,100,215 44,126,944 3,241,573 - - 51,867,718 


Financial guarantees - - - - - - 113,951 113,951 




Derivatives 512,575 - - - - 171,917 - 684,492 



MAXIMUM LEVEL OF EXPOSURE TO CREDIT RISK 1,875,834 35,727 3,100,215 44,126,944 3,241,573 171,917 11,619,567 64,171,777


Trends in customer risk 

The year was once again characterised by a renewed resurgence in the crisis which had 

started in 2007, with a marked deterioration in macroeconomic variables. Although the 

first half of the year was better than that of the previous year, in the second half there was 

a sharp downturn which took us back to the darkest days of the crisis. 

In this environment, the total risk of the financial system declined by 2.5% (latest figures 

available from the Bank of Spain website, as at October 2011). 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 2010, 

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. 

Over the course of the year new stress tests were carried out on banks’ solvency, with the 

expected loss on loan portfolios as one of the basic variables. In a scenario of very sharp 

contraction in the economy, Bankinter demonstrated the quality of its lending compared 

to that of its competitors. 

Analysis of credit risk 

€000s 31/12/2011 31/12/2010 Change % Change 

“Computable risk” (total lending) 

excluding securitisation 

46,802,151 46,291,139 511,012 1.10 

Doubtful debts 1,515,766 1,329,980 185,786 13.97 

Total provisions 786,080 883,477 -97,397 -11.02 

Required provisions 786,080 883,477 -97,397 -11.02 

General 114,769 156,971 -42,202 -26.89 

Specific 671,312 726,507 -55,195 -7.60 

Non-performing loans ratio excluding 

securitisation (%) 

3.24 2.87 0.37 12.73 

NPL ratio (%) 3.33 2.97 0.36 12.12 

NPL ratio of the mortgage portfolio 

excl. securitisation (%) 

3.51 2.37 1.15 48.42 

Non-performing loans coverage ratio (%) 51.86 66.43 -14.57 -21.93 

Non-performing loans coverage ratio 

without real guarantee (%) 

98.61 93.72 4.89 5.21 

In this recession scenario Bankinter has demonstrated the strength of its lending built 

up over the years. As a consequence, and in contrast to the system as a whole, the credit 

risk grew by 1%, with most of the growth coming from lending to major corporates, which 

are less affected by the crisis, which will enable us to emerge further strengthened from 

this period. 

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 3.24% compared with 2.87% the year 

before. This compares very favourably with the system (Bank of Spain: 5.81% in December 

2010 and latest figure October 2011, 7.42%) as we are at less than half the average rate 

for the sector. As in 2010, SMEs were the worst affected segment, although it should be 

pointed out that in 2011 the private individuals business suffered the consequences of the 

persistence of the crisis.


Trends in delinquency, System vs. Bankinter (%) 

Private Individuals 

The excellent credit quality of the Bank’s Private Individuals portfolio remains unaltered, 

with a non-performing loans ratio of 2.35%. 

7.42 

3.24 

The most important product in the Private Individuals segment is the mortgage loan. In 

2003, anticipating the change in cycle, the approval policy for this product was adapted, 

selecting customers with the highest income and setting a maximum LTV ratio of 80%, 

which once again sets us apart from the sector. 

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 (25%). 

86 88 90 92 94 96 98 00 02 04 06 08 10 11* 

Sector / Bankinter 

*Data for the Sector as at Oct. 2011 

The volume of problem and repossessed assets continues to be insignificant in view of the 

Bank’s size and in comparison with its competitors. 

The volume of risk collateralised by mortgage is very high (68%), which reflects the welljudged 

credit approval policy pursued during the expansion cycle. Furthermore the LTV 

(loan to value) ratio continues to be low enough (57%) to cushion the fall in prices being 

suffered by the property market. Moreover, a high percentage (82%) of the mortgage 

portfolio is secured by residential properties, which have held up relatively well in this 

crisis as regards arrears. 

One of the strengths of the portfolio is its very limited exposure to risk on developers 

(less than 3%). The restrictive policy pursued in approving loans to developers, and the 

absence of financing of land are what sets us clearly apart. 

The breakdown of the portfolio by LTV is as follows: 

TOTAL BANK 

% OPERATIONS 

LTV 00 - 10% 16.38 

LTV 10 - 20% 11.21 

LTV 20 - 30% 11.55 

LTV 30 - 40% 12.36 

LTV 40 - 50% 13.02 

LTV 50 - 60% 12.93 

LTV 60 - 70% 11.21 

LTV 70 - 80% 6.91 

LTV 80 - 90% 2.03 

LTV 90 - 100% 2.39 

TOTAL LTV BRACKETS 100 

The NPL ratio (1.64% in December 2011) continues to be the best in the entire financial 

system, which in September 2011 (the latest information published by the Mortgage 

Association of Spain) had a ratio of 2.63% for this type of lending. 

Although NPLs continued to increase in the SME segment, the monitoring policy aimed at 

greater reinforcement of collateral (56%) meant that the volume of specific provisioning 

required was actually lower.


Arrears on residential mortgage loans to natural persons (%) 

- Conservative customer portfolio management. 

- Optimisation of the risk-return trade-off. 

Dec. BK 

1.64 

- Long-term investment, with the aim of a long-term relationship with the 

customer. 

2.63 

- Diversification of sectors and terms. 

Small and medium-sized enterprises 

1.50 

D07 M08 J08 S08 D08 M09 J09 S09 D09 M10 J10 S10 D10 M11 J11 S11 

System / Bankinter (Data provided by the Spanish Mortgage Association) 

Credit risk totalled €7,085 million, representing a 3% drop due to the economic slowdown. 

The non-performing loan ratio was 8.9% with a smaller increase than in the previous 

year. 

The Bank has automatic decision models for risk management and teams of highly 

experienced risk analysts. 

Corporate Banking 

In line with the strategy established by the Board of Directors, aimed at making full use 

of the Bank’s competitive advantage in these years of crisis, this segment was the one 

with the most growth (14%). 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 rose to €11,449 

million while total NPLs, at €221 million, was still well contained, ending the year with 

an NPL ratio of 1.9%, which was less than the year before. 

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. 

Diversification by sectors, which allows management by portfolios and greater dilution of 

the risk among them all. 

It should be highlighted that 58% of the outstanding arrears balance for SMEs has 

mortgage guarantees with an LTV ratio of 41%. 

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 2011 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. 

NPL Flows (€ millions) 

The year 2011 was characterised by an increase in non-performing loans similar to that 

of 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%, which greatly limited the increase to the final balance. 

1,330 

+583 

+20 

-235 

-182 

1,516 

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: 

• Support from technology (CRM). 

MD10 

Registrationscollections 

D. Subj. Written off Foreclosed/ 

repossessed 

MD11 

• Traceability. 

• Integration of all information from all parties involved, external and internal. 

• Behavioural models (Basel II). 

The Bank has various applications for monitoring loans and advances. 

• Statistical customer alert. 

Delinquency trend (Balance D+B and NPL ratio) 

(Bal. in € millions) 

2.87% 

1,330 

237 

2.46% 

1,093 

450 

1.34% 

607 

3.24% 

1,516 

186 

• Risk rating: “special watch” and “risk to be eliminated”. 

• Centre alert. 

0.36% 

157 

• Back-testing. 

2007 2008 2009 2010 2011 

Flows in non-performing loans in 2009 were as follows, with a total non-performing 

loans of €1.516 billion compared with €1.330 billion in 2010, which means there was an 

increase of €186 million in non-performing loans.


Refinancing of customers with risk in excess of €0.5 million in 2011 was less than 1% 

of total credit risk, with refinancing being considered to mean any change in credit risk 

conditions. The majority of refinancing operations have additional guarantees. 

Loan Provisions (% coverage) 

The flow of non-performing loan balances was as follows: 

(€000s) Dec. 11 Dec. 10 

Starting balance, current year 1,329,980 1,093,101 

+ (New cases - Recoveries D+B) 421,203 341,150 

- Written off 235,417 104,271 

Closing balance YTD current year 1,515,766 1,329,980 

Balance of Repossessed Assets 484,408 378,112 

66% 

52% 

Purchase of real estate assets 

Dec. 

10 

Jan. 

11 

Feb. 

11 

Mar. 

11 

Apr. 

11 

May 

11 

Jun. 

11 

Jul. 

11 

Aug. 

11 

Sept. 

11 

Oct. 

11 

Nov. 

11 

Dec. 

11 

Net acquisitions of assets in the Banking Group amounted to €106 million, with the 

current portfolio being €484 million in real estate assets. 

Real estate assets are highly diversified in geographical terms and as regards property 

type, which makes them easier to sell. The volume of sales exceeded €90 million in the 

financial year. 

The coverage of repossessed assets stood at 36.3% in December 2011. 

In the real estate asset portfolio, we should highlight the 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 48% 

and given this fact, plus the excellent default ratio with mortgage guarantees, losses on 

the mortgage portfolio are insignificant. 

Reputational Risk 

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. 

• To monitor actions taken to mitigate the most significant risks. 

• To decide on the proposals put to the Committee on 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 2011, the Group held hedging derivatives in the amount of €118.65 

million recognised on the assets side of the balance sheet and €68.68 million recognised 

on the liabilities side (€171.92 million and €40.44 million on the assets and liabilities 

sides respectively as at 31 December 2010). Net derivatives amounted to €49.97 million 

and €131.48 million at 31 December 2011 and 2010 respectively. 

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 

Individual hedges or 

Micro-hedges: 

Financial assets - 

Public Debt 

Financial liabilities - 

Subordinated Debt 


Micro-hedges: 


Micro-hedges: 

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) 

31-12-11 31-12-10 31-12-11 31-12-10 

Interest-rate swaps 150 Interest Rate 25,499 23,212 (24,948) (22,476) 

Interest-rate swaps 370 Interest Rate (58,257) (30,794) 59,330 31,436 

Senior Debt 

Individual Hedges or 

Micro-hedges: 

Interest-rate swaps 79 Interest Rate (677) (1,007) 656 999 

Customer Deposits 


Micro-hedges: 

Interest-rate swaps 7 Interest Rate (1,978) (41,545) 1,977 41,627 

Backed issue 


Micro-hedges: 

Interest-rate swaps 745 Interest Rate (621) (16,715) 597 15,302 

FAAF bonds 


Micro-hedges: 

Interest-rate swaps 323 Interest Rate (299) (11,577) 285 11,631 

Mortgage Bond 

Issues 


Micro-hedges: 

Interest-rate swaps 2,650 Interest Rate (19,972) (26,229) 19,842 25,208 

Macro-hedging - 

Mortgage Loans Macro-hedging Interest-rate swaps 6,900 Interest Rate 11,463 1,308 (11,336) (1,210) 

(44,842) (103,347) 46,403 102,517


The following is a comparison of the interest and ex-interest hedging instruments as at 

31 December 2011 and 2010: 

€000s 

31-12-11 31-12-10 

With interest Ex-interest With interest Ex-interest 

Public Debt (26,916) (24,948) (27,124) (22,476) 

Subordinated Debt 60,520 59,330 33,094 31,436 

Customer Deposits 1,677 656 41,666 41,627 

Senior debt 1,330 1,977 2,268 999 

Backed issue 10,476 597 38,385 15,302 

FAAF bonds 5,228 285 17,345 11,631 

Mortgage Bond Issue 39,266 19,842 38,231 25,208 

Macro-hedging - Mortgage loans (41,607) (11,336) (12,389) (1,210) 

Other 

49,974 46,403 131,476 102,517 

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 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 hedging maintained by 

the institution as at 31 December 2011. 

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 19. The risk hedged is the 


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 5.70%, 6.00% and 6.375% for a total amount of €370 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 at a 3% fixed interest 

rate for a total amount of €79 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. 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 €7 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 backed issue 

The instrument hedged is issue ES0313679450 for €745 million. The risk hedged is the 



exposure to a variable interest rate. The amount hedged is 100%. 

6.- Hedging of FAAF bonds 

The instrument hedged is bond ES0413679053 for a combined nominal value of €323 

million. 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%. 

7.- Hedging of mortgage-backed bond issues 

The instruments hedged are issues ES0413679079 (€1,000 million), ES0413679095 (€500 

million), ES0413679095 (€250 million), ES0413679079 (€400 million) and ES0413679111 

(€500 million) of mortgage bonds for a total nominal value of €2,650 million. 

The risk being 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. 

8.- 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 will be understood to correspond to the variable 

interest rates of call money swaps (CMS) and interest rate swaps (IRS). 

The instruments used to hedge the various mortgage loan amounts are CMS and 

IRS contracted on a monthly basis depending on the decisions that are adopted on 

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. 

5. New products 

In line with the previous year’s sales policy, in 2011 Bankinter maintained its personalised 

offering of deposits at attractive rate of interest adaptable to all customers with the aim of 

increasing both the number of customers and their total balances while at the same time 

retaining existing ones. As part of this effort we launched new products at different terms 

as well as staggered interest rate deposits and deposits in foreign currencies. 

Structured products, both bonds and deposits, were also consolidated as a stable offering. 

24 different proposals in this range to a value of over €300 million were marketed during 

the year. 

With regard to current accounts, a salient point was the launch of the payroll account 

campaign aimed at attracting new customers and offering what are possibly some of the 

best terms available in the market.


In 2011, Bankinter made further progress with management services for portfolios of 

investment funds, pension plans/EPSVs (Entidades de Previsión Social Voluntaria or 

“Voluntary Social Welfare Entities”) and securities, as an attractive alternative for 

customers seeking to delegate the management of part of their assets to Bankinter. This 

business, launched in 2010 under the name Delegated Investment, makes two kinds of 

management available to customers: Risk management and fundamental management. 

In the first case, the aim is to obtain the maximum profitability while controlling risk; and 

in the second, the aim is to obtain the maximum profitability without specified risk control. 

As regards loans and advances, in a very tough economic and credit environment, 

Bankinter increased its customer lending while tightening diversification and profitability 

criteria. These factors, together with appropriate policies for risk approval and control, 

have enabled Bankinter to post one of the lowest non-performing loan ratios on the 

market. 

The growth trend in corporate financing was confirmed in 2011. This sector is establishing 

itself as a key component in the development of the Entity’s lending business. Activity with 

ICO lines was very significant in absolute terms, with a share in excess of our proportional 

size, and in terms of growth, for which we were the market leaders. 

In 2011 we revalidated our International Business model in response to the requirements 

and needs of our customers in a key part of corporate activity. 

• International Business Specialists our call-centre specialising in advisory services 

and monitoring international operations, which handled a total of 35,000 calls from 

customers. 

• Online Currency Broker: This is the leading channel for contracting currency 

transactions both spot and future. 

• International Operations Centre: This is the technical support unit for International 

Business operations, maintaining commitments on terms and first-class service 

quality which are crucial to the growth of this business. 

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. 

There was also continuing demand for businesses needing very little management, 

relatively unaffected by the crisis, with predictable positive cash flows from the outset 

and long-term contracts in place. Among these types of assets the most notable feature 

was the demand for short-stay car parks. 

Apart from this, in the world of energy from renewable sources, there is growing interest 

in mature energy sources such as mini-hydroelectric stations and wind farms, preferably 

already in operation and with financing and project guarantee. 

It is important also to point out the demands for both investment and disinvestment in 

unlisted companies. Above all investors were looking for businesses with an international 

dimension, stable turnover and solid financial situation. 

During 2011 the Bank continued to expand its range of equity products, enabling access to 

the major international futures markets (CME, NYMEX, CBOT, NYSE Liffe and NYSE Liffe 

US), thus covering underlying assets not only of stock market indices but also interest 

rates, currencies and commodities. 

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 investing in a broad range of ETFs, exchange traded funds, which 

enable 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 for better risk management, such as the possibility of selecting the type of order to 

be sent to the stock market: stop, dynamic, referenced and linked orders, with conditions 

and restrictions etc. 

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.


7. Subsequent events 

On 3 February 2012, Royal Decree-Law 2/2012 on the reform of the financial sector was 

approved. This Royal Decree-law imposes stricter provisioning and increased capital 

requirements to cover positions held by financial institutions for financing to property 

developers and the assets received in payment of debts. The requirements mentioned in 

the following paragraphs must be met by 31 December 2012. 

The main thrust of the balance sheet clean-up is through a new system of coverage for 

all financing relating to the property development sector and for assets repossessed or 

received in payment of debts related to the property development sector. This system 

involves an estimate of the specific impairment of these assets in accordance with certain 

parameters which are established, stricter provisioning requirements for exposures to 

the property development sector that are classified as doubtful or sub-standard, and a 

provision of 7% of total outstanding finance of this nature classified as normal risk as at 

31 December 2011. 

The Royal Decree-Law also imposes an additional capital requirement to the core capital 

required by Royal Decree-Law 2/2011 of 18 February on the strengthening of the financial 

system. 

Based on the positions maintained by the Bankinter Group as at 31 December 2011, an 

initial estimate has been made which shows that the amount of additional provisions to 

be set aside in order to comply with the requirements established in the Royal Decree-Law 

would be approximately €146 million, distributed as follows: 

• €56 million relating to unimpaired exposures to the property development sector. 

• €30 million relating to land-related exposures classified as in arrears or substandard. 

• €7 million for exposures classed as in arrears or sub-standard relating to property 

developments in progress. 

• €8 million referring to the remaining exposure to property developers classed as 

in arrears or sub-standard. 

• €45 million in provisions for assets received in payment of debts. 

Since this figure for new provisioning requirements represents 32% of the Bankinter 

Group’s profit before provisions for 2011, the entity believes they will be absorbed easily 

and in their entirety by the results for 2012. 

Finally, the Bankinter Group complies with the additional core capital requirements 

imposed by the Royal Decree-Law. 

8. Research and development activities. 

At the close of financial year 2011, the bank was not engaged in any significant research 

and development activities. 

9. Dependence on patents and licences. 

At the close of financial year 2011, the Bankinter Group was not affected by any significant 

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.

The 2011 Bankinter Report is available on CD-ROM. 

Copies can be obtained from the Bankinter External Communication Department . 

or by sending an e-mail to: comunicacion@bankinter.es . 

The list of Bankinter Branches and Agents is published as an offprint of this Report. 

Published by 

Bankinter Department of External Communication 

Designed and developed by 

gosban consultora de comunicación

Bankinter Group Consolidated Financial Statements 2011

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