Caja Laboral Popular Coop. de Crédito – Lan Kide Aurrezkia and

Transcription

Caja Laboral Popular Coop. de
Crédito – Lan Kide Aurrezkia
and subsidiaries (Consolidated Group )
Audit Report,
Consolidated annual accounts at 31 December 2009
and Directors’ Report for 2009
PricewaterhouseCoopers
Auditores, S.L.
Pº de Colón, 2 – 1º Dcha.
20002 San Sebastián
Tel. +34 943 560 600
Fax +34 943 288 177
www.pwc.com/es
(Free translation of the auditor’s report originally issued in Spanish on the consolidated annual accounts
prepared in accordance with International Financial Reporting Standards as adopted by the European
Union. In the event of a discrepancy, the Spanish language version prevails)
AUDIT REPORT
ON THE CONSOLIDATED ANNUAL ACCOUNTS
To the members of Caja Laboral Popular Coop. de Crédito – Lan Kide Aurrezkia
We have audited the consolidated annual accounts of Caja Laboral Coop. de Crédito – Lan Kide
Aurrezkia (the Parent Entity) and subsidiaries (the Group), consisting of the consolidated balance
sheet at 31 December 2009, the consolidated income statement, the consolidated statement of
recognize income and expenses, the consolidated statement of changes in equity, the consolidated
cash flow statement and the notes to the consolidated annual accounts for the year then ended, the
preparation of which is the responsibility of the Directors of the Parent Entity. Our responsibility is to
express an opinion on the consolidated annual accounts taken as a whole, based on the work carried
out in accordance with auditing standards generally accepted in Spain, which require the examination,
on a test basis, of evidence supporting the consolidated annual accounts and an evaluation of their
overall presentation, the accounting principles applied and the estimates made.
In accordance with Spanish Corporate Law, the Parent Entity’s Directors have presented, for
comparative purposes only, for each item in the consolidated balance sheet, consolidated income
statement, the consolidated statement of recognize income and expenses, consolidated statement of
changes in equity, consolidated cash-flow statement and notes to the consolidated annual accounts,
the corresponding amounts for the previous year as well as the amounts for 2009. Our opinion refers
solely to the 2009 consolidated annual accounts. On 11 February 2009 we issued our Audit Report on
the 2008 consolidated annual accounts, in which we expressed an unqualified opinion.
In our opinion, the accompanying consolidated annual accounts for 2009 present fairly, in all material
respects, the financial position of Caja Laboral Popular Coop. de Crédito – Lan Kide Aurrezkia and
subsidiaries at 31 December 2009 and the consolidated results of their operations, changes in
consolidated equity and consolidated cash flows for the year then ended and contain all the
information necessary for their interpretation and comprehension in accordance with International
Financial Reporting Standards adopted by the European Union which are consistent with those
applied in the previous year.
The accompanying consolidated Directors' Report for 2009 contains the information that the Parent
Entity’s Directors consider relevant to the Group's position, the development of its business and other
matters and does not form an integral part of the consolidated annual accounts. We have verified that
the financial information contained in the aforementioned Directors' Report coincides with that of the
consolidated annual accounts for 2009. Our work as auditors is limited to checking the consolidated
Directors' Report within the scope already mentioned in this paragraph and it does not include a
review of information other than that obtained from the accounting records of Caja Laboral Popular
Coop. de Crédito – Lan Kide Aurrezkia and subsidiaries.
PricewaterhouseCoopers Auditores, S.L.
Original in Spanish signed by Alejandro Esnal
Partner
18 February 2010
PricewaterhouseCoopers Auditores, S.L. – R. M. Madrid, hoja 87.250-1, folio 75, tomo 9.267, libro 8.054, sección 3ª
Inscrita en el R.O.A.C. con el número S0242 – CIF: B-79031290
Translation of the report and annual accounts issued in Spanish.
In the event of a discrepancy, the Spanish-language version prevails.
CAJA LABORAL POPULAR COOP. DE CRÉDITO – LAN KIDE AURREZKIA
CONSOLIDATED BALANCE SHEETS AT 31 DECEMBER 2009 AND 2008
(Expressed in €’000)
Note
ASSETS
2009
2008
Cash on hand and on deposit at central banks
22
332,778
786,614
Trading portfolio
Debt securities
Equity instruments
Derivatives held for trading
Memorandum-item: Loaned or pledged
23
48,461
22,705
25,756
867
33,703
21,322
500
11,881
770
Other financial assets at fair value thorugh profit and loss
Debt securities
Equity instruments
24
7,100
5,891
1,209
-
Available-for-sale financial assets
Debt securities
Equity instruments
25
3,220,207
2,383,869
836,338
829,915
2,792,930
1,985,851
807,079
440,455
Credit investments
Deposits at credit institutions
Customer loans
Debt securities
26
16,921,604
477,468
16,343,072
101,064
-
16,897,038
384,206
16,512,832
-
Held to maturity investments
27
210,622
111,675
-
Derivatives held for hedging
28
180,794
105,434
Non-current assets for sale
Property, plant and equipment
29
10,557
10,557
4,464
4,464
Shareholdings
Associates
Multigroup entities
30
24,390
6,231
18,159
32,898
5,801
27,097
Assets held for reinsurance
31
7,811
8,393
32
392,036
367,496
338,792
27,727
977
24,540
-
399,105
371,765
340,790
29,970
1,005
27,340
-
897
897
969
969
For own use
Assigned under operating lease
Associated with Community Projects
Investment properties
Memorandum-item: Acquired under finance lease
Intangible assets
Other intangible assets
Tax assets
Current
Deferred
33
104,547
21,231
83,316
131,203
17,268
113,935
Other assets
Inventories
Others
34
142,381
119,368
23,013
79,188
53,988
25,200
21,604,185
21,271,939
TOTAL ASSETS
1
CONSOLIDATED BALANCE SHEETS AT 31 DECEMBER 2009 AND 2008
LIABILITIES
Note
2009
2008
Trading portfolio
23
16,306
16,306
5,028
5,028
Financial liabilities at amortised cost
Deposits from central banks
Credit institution deposits
Customer funds
Marketable debt securities
Other financial liabilities
35
19,609,879
401,136
374,838
18,024,943
606,159
202,803
19,415,409
72,034
359,882
16,976,885
1,840,878
165,730
28
5,108
27,806
Insurance contract liabilities
36
430,451
422,162
Provisions
Retirement benefit obligations
Provisions for contingent risks and commitments
37
19,726
8,340
11,386
8,981
8,981
Tax liabilities
Current
Deferred
33
45,800
255
45,545
39,705
2,010
37,695
Community projects fund
38
3,065
7,632
Other liabilities
34
25,096
23,171
Capital repayable on demand
39
3,888
3,029
20,159,319
19,952,923
1,580,763
475,651
475,651
1,091,183
1,077,471
1,582,696
458,446
458,446
1,070,257
1,056,876
13,712
(523)
50,040
(35,588)
13,381
(500)
88,770
(34,277)
TOTAL LIABILITIES
EQUITY
Equity
Capital
Documented
Reserves
Accumulated (losses) reserves
Reserves (losses) for companies measured
under the equity method
Less: Treasury shares
Result attributed to the Parent Entity
Less: Dividends and remuneration
39
Measurement adjustments
Cash flow hedges
Entities measured under the equity method
40
(146,233)
(146,888)
(286)
941
(272,145)
(271,015)
(1,130)
Minority interests
Remainder
41
10,336
789
9,547
8,465
(934)
9,399
TOTAL EQUITY
1,444,866
1,319,016
TOTAL LIABILITIES AND EQUITY
21,604,185
21,271,939
MEMORANDUM-ITEM
Contingent risks
44
653,004
653,440
Contingent commitments
45
1,478,217
1,637,011
2
CONSOLIDATED INCOME STATEMENTS FOR THE YEARS ENDED 31 DECEMBER
2009 AND 2008
Note
2009
2008
Interest and similar revenue
46
729,225
986,627
Interest and similar charges
47
385,021
682,405
324
272
343,880
303,950
Compensation for capital repayable on demand
INTEREST MARGIN
Return on equity instruments
48
9,620
10,269
Results in entities carried under the equity method
49
(5,752)
890
Fees collected
50
91,221
97,513
Fees paid
51
7,356
8,722
Results of financial operations (net)
Trading portfolio
Financial instruments not stated at fair value with changes in income statement
Other
52
30,955
5,215
16,606
9,134
3,634
(1,457)
13,755
(8,664)
Exchange differences (net)
53
301
(689)
Other operating revenue
Revenues from insurance and reinsurance policies issued
Sales and revenues from non-financial services rendered
Other operating revenues
54
94,316
74,326
1,976
18,014
79,519
57,874
2,121
19,524
Other operating charges
Expenses for insurance and reinsurance policies
Other operating expenses
55
100,090
83,961
16,129
80,616
68,443
12,173
457,095
405,748
GROSS MARGIN
Administration expenses
Staff costs
Other general administration expenses
56
176,695
110,923
65,772
177,247
110,940
66,307
Amortization
57
26,327
24,938
Provisions (net)
58
13,156
(2,117)
Financial asset impairment losses (net)
Credits, loans and discounts
Other financial instruments not stated at fair value with changes in income statement
59
167,490
119,304
48,186
110,141
(31,497)
141,638
73,427
95,539
RESULTS FROM OPERATIONS
Other asset impairment losses (net)
60
23,657
-
Gain/(loss) on the disposal of assets not classified as non-current available-for-sale
61
(176)
1,603
-
-
(985)
704
48,609
97,846
Difference on business combinations
Gain/(loss) on non-current available-for-sale assets not classified as interrupted operations
62
SURPLUS BEFORE TAXES
Corporate income tax
42
(4,735)
1,443
Mandatory appropriation to community projects and social funds
63
2,088
6,627
RESULTS FROM CONTINUED OPERATIONS
51,256
89,776
Gain/ loss on discontinued operations (net)
-
-
CONSOLIDATED SURPLUS FOR THE YEAR
51,256
89,776
Results attributable to minority shareholders
64
1,216
1,006
Result attributed to the Parent Entity
39
50,040
88,770
1
CONSOLIDATED STATEMENTS OF RECOGNIZE OF INCOME AND EXPENSES
FOR THE YEARS ENDED 31 DECEMBER 2009 AND 2008
2009
2008
CONSOLIDATED SURPLUS FOR THE YEAR
51,256
89,776
OTHER RECOGNIZED INCOME AND EXPENSE
122,015
(281,460)
Measurement (losses) gains
166,983
(390,263)
166,983
(390,263)
Cash flow hedges
(397)
-
(397)
-
2,877
(652)
2,877
(652)
(47,448)
109,455
TOTAL RECOGNIZED INCOME AND EXPENSE
173,271
(191,684)
Attributed to the Parent Entity
170,332
(191,454)
Attributed to minority shareholdings
2,939
(230)
1
CONSOLIDATED STATEMENTS OF TOTAL CHANGES IN EQUITY FOR THE YEARS ENDED 31 DECEMBER 2009 AND 2008
At 31 December 2009
Reserves
Accumulated
reserves
(losses)
Capital
(Loss) reserve
in entities
carried under
the equity
method
Less:
Treasury
shares
Results for
the year
attributable to
the parent
entity
Less:
Dividends and
remuneration
Total capital
and
reserves
Measurement
adjustments
Total
Minority
shareholdings
Total
equity
Closing balance at 31 December 2008
458,446
1,056,876
13,381
(500)
88,770
(34,277)
1,582,696
(272,145)
1,310,551
8,465
1,319,016
Adjustments due to changes in accounting
standards
Adjustments due to errors
-
-
-
-
-
-
-
-
-
-
-
Adjusted opening balance
458,446
1,056,876
13,381
(500)
88,770
(34,277)
1,582,696
(272,145)
1,310,551
8,465
1,319,016
Total recognized income and expenses
-
-
-
-
50,040
-
50,040
120,292
170,332
2,939
173,271
17,205
-
122
-
-
-
(16,567)
(35,588)
17,327
(52,155)
-
17,327
(52,155)
(311)
17,327
(52,466)
-
28,578
(593)
(23)
-
(62,262)
34,277
(23)
-
-
(23)
-
-
(23)
-
-
(8,105)
924
-
(9,941)
-
-
(9,941)
(7,181)
5,620
(9,941)
(1,561)
(757)
(9,941)
(2,318)
Total other changes in equity
17,205
20,595
331
(23)
(88,770)
(1,311)
(51,973)
5,620
(46,353)
(1,068)
(47,421)
475,651
1,077,471
13,712
(523)
50,040
(35,588)
1,580,763
(146,233)
1,434,530
10,336
1,444,866
Other changes in equity
- Share capital increases
- Shareholder remuneration
- Transactions involving treasury shares
(net)
- Transfers among equity items
- Discretionary appropriation to community
projects and social funds
- Rest of equity increases (decreases)
1
CONSOLIDATED STATEMENTS OF TOTAL CHANGES IN EQUITY FOR THE YEARS ENDED 31 DECEMBER 2009 AND 2008
At 31 December 2008
Reserves
(Loss) reserve
in entities
carried under
the equity
method
Accumulated
reserves
(losses)
Capital
Less:
Treasury
shares
Results for
the year
attributable
to the parent
entity
Less:
Dividends
and
remuneration
Total
capital and
reserves
Measurement
adjustments
Total
Total
equity
Minority
shareholdings
standards
418,519
978,700
10,299
(449)
173,104
(31,276)
1,548,897
8,079
1,556,976
9,411
1,566,387
-
-
-
-
-
-
-
-
-
-
-
418,519
978,700
10,299
(449)
173,104
(31,276)
1,548,897
8,079
1,556,976
9,411
1,566,387
-
-
-
-
88,770
-
88,770
(280,224)
(191,454)
(230)
(191,684)
39,927
-
199
-
-
-
(38,360)
(34,277)
40,126
(72,637)
-
40,126
(72,637)
(712)
40,126
(73,349)
-
77,955
2,497
(51)
-
(111,728)
31,276
(51)
-
-
(51)
-
-
(51)
-
-
22
585
-
(23,016)
-
-
(23,016)
607
-
(23,016)
607
(4)
(23,016)
603
39,927
78,176
3,082
(51)
(173,104)
(3,001)
(54,971)
-
(54,971)
(716)
(55,687)
458,446
1,056,876
13,381
(500)
88,770
(34,277)
1,582,696
(272,145)
1,310,551
8,465
1,319,016
- Transactions involving treasury shares
(net)
- Rest of equity increases (decreases)
2
CONSOLIDATED CASH FLOW STATEMENTS FOR THE YEARS ENDED 31
DECEMBER 2009 AND 2008
Note
CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated surplus for the year
Adjustments made to obtain cash flows from operating activities
Amortization
57
Other adjustments
Net increase/ decrease in operating assets
Trading portfolio
Other financial assets at fair value through profit and loss
Other operating assets
Net increase/ decrease in operating liabilities
2009
2008
(169,484)
620,410
51,256
89,776
241,106
145,423
26,327
24,938
214,779
120,485
(599,478)
(1,258,049)
(14,758)
(7,100)
28,422
-
(306,291)
(208,831)
(395,192)
(698,944)
(62,498)
(192,335)
140,281
1,668,182
Trading portfolio
Financial liabilities at amortized cost
11,278
194,470
(14,074)
1,841,883
Other operating liabilities
(65,467)
(159,627)
(2,649)
(24,922)
(240,108)
(50,816)
Corporate income tax collection/(paid)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments
247,120
73,948
32
22,681
54,684
465
710
29
2,849
10,503
210,622
14,932
3,622
-
7,012
23,132
3,587
9,467
Intangible assets
Shareholdings
Non-current assets and associated liabilities available-for-sale
Collections
Intangible assets
-
-
3,425
12,385
1,280
-
-
(44,244)
(55,790)
Payments
46,590
59,241
Dividends
35,899
34,993
727
1,182
23
9,941
51
23,015
Shareholdings
Non-current assets and associated liabilities available-for-sale
Held-to-maturity investment portfolio
CASH FLOWS FROM FINANCING ACTIVITIES
Amortization of treasury shares
Purchase of treasury shares
Other payments related to financing activities
39
1
CONSOLIDATED CASH FLOW STATEMENTS FOR THE YEARS ENDED 31
DECEMBER 2009 AND 2008
Nota
Collections
2009
2008
2,346
3,451
2,346
3,451
EFFECT OF EXCHANGE RATE FLUCTUATIONS
-
-
NET INCREASE/DECREASE IN CASH AND CASH EQUIVALENTS
(453,836)
513,804
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR
786,614
272,810
CASH AND CASH EQUIVALENTS AT END OF THE YEAR
332,778
786,614
Cash on hand
Cash equivalent balances at central banks
91,016
241,762
93,357
693,257
Other financial assets
-
-
Less: Bank overdrafts repayable on demand
-
-
332,778
786,614
Issue of treasury shares
MEMORANDUM-ITEM
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
Total cash and cash equivalents at end of the year
22
2
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR ENDED
31 DECEMBER 2009
1. Nature of the Entity
Caja Laboral Popular Coop. de Crédito - Lan Kide Aurrezkia (hereafter the Parent Entity or
Caja Laboral), with registered office at Mondragón (Gipuzkoa) was set up as a credit
cooperative. Its first bylaws were approved on 16 July 1959 and it is considered a qualified
cooperative.
The Parent Entity’s bylaws lay down that its activity will not be limited to any specific territory
and its corporate objects consist of addressing the financial needs of its members and third
parties through the performance of operations pertaining to credit institutions. For such
purposes, it may carry out all kinds of borrowing and lending transactions and services
which other credit institutions are authorised to carry out, including those that serve to
promote and best comply with its cooperative aims, paying special attention to the financing
needs of its members and observing the legal limits for lending transactions with third
parties.
Credit cooperatives are affected by legislation that governs, inter alia, the following aspects:
a)
The maintaining of a minimum percentage of liquid assets on deposit at the Bank of
Spain in order to cover the minimum reserve coefficient.
b)
Contribution to the Deposit Guarantee Fund, the purpose of which is to guarantee
deposit- holders the recovery of a certain amount of their deposits.
c)
The appropriation of the net surplus for each year to the Promotion and Education
Fund and reserves.
d)
The maintaining of a minimum volume of equity, determined on the basis of the
investments made and risks assumed.
In accordance with the agreements of the III Cooperative Congress of December 1991,
amended by the resolution of the Governing Body of 27 March 2002 concerning its
arrangement, in relation to the regulation of the Central Intercooperation Fund (CIF), the
Parent Entity contributes to MCC Inversiones Sociedad de Promoción de Empresas, S.
Coop. (hereafter MCC Inversiones) and to Fundación MCC an annual amount equivalent to
20% of the surplus before tax for the preceding year, less interest on capital for the year in
which the contribution is made and less the grants relating to the contribution to the CIF.
The Parent Entity’s contributions are made on the basis of the following:
a)
By way of a grant, an amount equivalent to 14% of the Net Surplus is contributed
annually, which is deducted from the Inter-cooperative Social Fund.
b)
The remaining amount until the 20% of the Calculation Base for the contribution to the
CIF is appropriated to a line of risk in favour of the CIF, arranged through loans or
contributions to capital of the entities included in MCC. If covered by the provision for
bad debts by the Parent Entity, such amount is deducted from the grant to be made in
the year in which the need for such provision arises.
1
31 DECEMBER 2009
In accordance with the Parent Entity’s Statements, under the Resolution of the General
Assembly of 8 March 2002, the annual contribution to the CIF is channelled through the
distribution of the surplus for the year (Note 4) through the Inter-cooperative Social Fund.
The unused limit of contributions through direct investment amounts to €61,520k (€62,363k
in 2008).
On 30 December 2005 the Parent Entity’s Extraordinary General Assembly agreed to
change the criterion for distributing the available surplus (see Note 4), establishing the
maximum amount to be appropriated by a way of a grant to the Intercooperative Social Fund
was set.
The Entity is the Parent Entity of a Group of Investees that comprise the Caja Laboral
Popular Group and subsidiaries (hereafter the Caja Laboral Popular Group). Therefore, in
addition to preparing its own individual annual accounts, which are similarly subject to
mandatory audit, the Parent Entity is required to prepare the Group’s consolidated annual
accounts which, where appropriate, include the relevant shareholdings in Subsidiaries and
Multigroup entities and investments in Associates. The entities that make up the Group
engage in different activities.
At 31 December 2009 the Entity’s total assets, equity and surplus for the year account for
98.18%, 97.95% and 106.09%, respectively of the same items in the Group (97.81%,
98.02% and 105.80%, respectively at 31 December 2008).
Set out below is a summary of the Entity’s individual balance sheet, individual income
statement, individual statement of recognized income and expenses, individual statement of
changes in equity and individual cash flow statement for the years ended 31 December
2009 and 2008, which have been prepared in accordance with the same accounting
principles and standards as those applied in the Group’s present consolidated annual
accounts:
a)
Individual balance sheets at 31 December 2009 and 2008:
ASSETS
Trading portfolio
Shareholdings
Intangible assets
Tax assets
Other assets
Total assets
2009
2008
332,778
48,164
3,068,467
16,899,748
121,095
180,794
10,557
48,751
391,705
787
87,601
19,676
786,614
33,703
2,320,484
16,957,132
105,434
4,464
52,726
398,970
815
117,709
27,248
21,210,123
20,805,299
2
31 DECEMBER 2009
LIABILITIES AND EQUITY
2009
2008
24,001
19,675,087
5,108
19,726
43,269
3,065
20,691
3,888
12,325
19,393,949
27,806
8,981
37,835
7,632
20,827
3,029
19,794,835
19,512,384
1,564,960
475,651
1,070,520
54,377
(35,588)
(149,672)
1,560,972
458,446
1,042,883
93,920
(34,277)
(268,057)
Total equity
1,415,288
1,292,915
Total liabilities and equity
21,210,123
20,805,299
653,004
1,478,217
653,440
1,637,011
Trading portfolio
Provisions
Tax liabilities
Community projects fund
Other liabilities
Capital repayable on demand
Total liabilities
Equity:
Capital
Reserves
Surplus for the year
Less: Dividends and remuneration
MEMORANDUM-ITEM
Contingent risks
3
31 DECEMBER 2009
b)
Individual income statements for the years ended 31 December 2009 and 2008:
2009
Interest and similar revenue
Interest Margin
Fees collected
Fees paid
Gross margin
Amortization
Provisions (net)
Results from operations
Gain/(loss) on the disposal of assets not classified as non-current
available-for-sale
Gain/(loss) on non-current available-for-sale assets not classified as
interrupted operations
Surplus before taxes
Results from continuous operations
Gain/ loss on discontinued operations (net)
2008
697,913
377,133
324
958,116
678,305
272
320,456
279,539
11,738
95,050
8,776
29,291
301
20,569
15,709
18,308
102,377
10,001
5,232
(689)
22,195
12,173
452,920
404,788
171,479
26,279
13,156
186,434
171,941
24,911
(2,117)
110,141
55,572
99,912
4,413
-
(37)
571
(985)
704
50,137
101,187
(6,328)
2,088
640
6,627
54,377
93,920
-
-
54,377
93,920
4
31 DECEMBER 2009
c)
Individual statement of recognized income and expenses relating to the years ended
31 December 2009 and 2008:
2009
SURPLUS FOR THE YEAR
54,377
93,920
OTHER RECOGNIZED INCOME AND EXPENSE
112,765
(275,839)
Measurement gains / (losses)
157,015
157,015
(383,110)
(383,110)
(397)
(397)
-
(43,853)
107,271
TOTAL RECOGNIZED INCOME AND EXPENSE
167,142
(181,919)
Cash flow hedges
Measurement gains / (losses)
d)
2008
Statements of total changes in equity for the years ended 31 December 2009 and
2008:
Balance at 31 December 2009
Capital and
Reserves
Measurement
adjustments
Total equity
standards
1,560,972
(268,057)
1,292,915
-
-
-
1,560,972
(268,057)
1,292,915
54,377
112,765
167,142
17,327
(52,155)
-
-
17,327
(52,155)
-
(9,941)
(5,620)
5,620
(9,941)
-
(50,389)
5,620
(44,769)
1,564,960
(149,672)
1,415,288
- Other increases (decreases) in equity
5
31 DECEMBER 2009
Capital and
Reserves
Total equity
standards
1,522,579
7,782
1,530,361
-
-
-
1,522,579
7,782
1,530,361
93,920
(275,839)
(181,919)
40,126
(72,637)
-
-
40,126
(72,637)
-
(23,016)
-
(23,016)
(55,527)
-
(55,527)
1,560,972
(268,057)
1,292,915
e)
Measurement
adjustments
Individual cash flow statements for the years ended 31 December 2009 and 2008:
2009
2008
Net cash flows from operating activities:
Adjustments made to obtain cash flows from operating activities
Net increase/ decrease in operating assets
Net increase/ decrease in operating liabilities
Corporate income tax collection/(paid)
(262,264)
54,377
233,392
(766,874)
219,489
(2,648)
618,368
93,920
138,287
(1,328,573)
1,737,194
(22,460)
Net cash flows from investing activities:
Payments
Collections
(147,662)
154,810
7,148
(49,540)
72,673
23,133
Net cash flows from financing activities
(43,910)
(55,024)
Effect of exchange rate fluctuations
-
-
(453,836)
513,804
786,614
332,778
272,810
786,614
Net increase/ decrease in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
6
31 DECEMBER 2009
2.
Basis of presentation of the consolidated annual accounts
a)
Basis of presentation
On 1 January 2005 the obligation to prepare consolidated annual accounts in accordance
with International Financial Reporting Standards adopted by the European Union (IFRS-EU)
came into effect for those entities which at the balance sheet date were listed on a regulated
market in any Member State, in accordance with European Parliament and Commission
Regulation 1606/2002, of 19 July 2002. Furthermore, the consolidated annual accounts are
presented in accordance with the accounting principles and rules established by Bank of
Spain Circular 4/2004 (22 December) (hereinafter Circular 4/2004), and subsequent
amendments, regarding public and reserved financial information and model financial
statements. The application of Circular 4/2004 to the individual annual accounts of Spanish
credit institutions is mandatory.
As is established by the aforementioned Circular 4/2004, due to its very nature this Circular
embraces both the International Financial Reporting Standards as well as the Spanish
accounting framework and will be adapted as the overall framework evolves over time.
Since the approval of Circular 4/2004 there have been amendments to both Spanish law as
well as the IFRS-EU that affect accounting legislation. For this reason, the Bank of Spain
has considered it necessary to amend Circular 4/2004 and on 26 November 2008 it issued
Circular 6/2008. As is expressly indicated by Circular 6/2008, the main amendments to
Circular 4/2004 relate to the definition of credit institution groups; formats for public financial
statements, the treatment of financial instruments including guarantees, pension
commitments, equity-based payments and corporate income tax, as well as certain
information that must be disclosed in the statements. Circular 6/2008 also introduces minor
amendments arising due to changes made to regulations covering the calculation and
control of equity, European Central Bank information requirements, the mortgage market
and the national classification of economic activities (CNAE).
The accompanying consolidated annual accounts have therefore been prepared based on
the accounting records of the Group Entities and in accordance with International Financial
Reporting Standards (IFRS) adopted by the European Union (IFRS-EU) and Bank of Spain
Circular 4/2004 (22 December), which was partially amended by Bank of Spain Circular
6/2008 (26 November) and with the Commercial Code or other applicable Spanish
legislation, in order to present fairly the Group’s consolidated equity and consolidated
financial position at 31 December 2009 and the results of its operations, changes in
consolidated equity and consolidated cash flows for the year then ended.
7
31 DECEMBER 2009
All mandatory significant accounting principles or standards with a major effect have been
applied in their preparation, Note 13 sets out a summary of the most significant accounting
principals and standards applied in these consolidated annual accounts. The information
contained in these consolidated annual accounts is the responsibility of the Directors of the
Group’s Parent Entity.
The Group’s consolidated annual accounts for 2009 were issued by the Directors of the
Parent Entity during the meeting of the Governing Body of 5 February 2010 and have yet to
be approved by its General Assembly. They are expected to be approved without significant
changes.
Unless otherwise stated, these consolidated annual accounts are presented in €’000.
b)
Consolidation principles
The Group has been defined in accordance with International Financial Reporting Standards
(IFRS) adopted by the European Union. All subsidiaries, Multigroup entities and associates
are investee companies.
Those investees that constitute a decision-making unit with the Parent Entity, which are
those over which the Parent Entity has directly or indirectly, through another or other
investees, capacity to exercise control, are subsidiaries. This capacity to exercise control
generally, although not exclusively, takes the form of a shareholding held directly or
indirectly through another or other Investees of 50% or more of the investee’s voting rights.
Control is understood as power to direct an investee’s financial and operations policies in
order to obtain gains from its operations. Control may be exercised although the
aforementioned shareholding percentage is not held.
Significant information concerning the shareholdings in subsidiaries at 31 December 2009
and 2008 is set out in Appendix I.
The annual accounts of the Subsidiaries have been consolidated under the full consolidation
method. Therefore all significant balances and transactions between the consolidated
entities have been eliminated on consolidation. Similarly, third- party holdings in the Group’s
equity are presented under Minority Interests in the consolidated balance sheet and the part
of results for the year attributable to them is presented under Results attributed to minority
interests in the consolidated income statement.
The results generated by the entities acquired by the Group in the year are consolidated
taking into account only those results for the period running from the acquisition date to the
year end. Similarly, the results generated by the entities sold by the Group in the year are
consolidated taking into account only those results for the period running from the beginning
of the year to the date of sale.
8
31 DECEMBER 2009
In addition to the subsidiaries, the Parent Entity has included through the full consolidation
method the securitisation funds I.M. Caja Laboral 1, F.T.A. and I.M. Caja Laboral 2, FTA,
which were set up for the securitisation of mortgage loans and subsequent issue of
securitisation bonds.
Multigroup entities are investees which are not Subsidiaries but are controlled jointly by the
Group and another or other entities not related to the Group and joint ventures. Joint
ventures are contractual agreements under which two or more entities or members carry out
transactions or hold assets such that any strategic financial or operational decision that
affects them requires the unanimous consent of all members. Such transactions or assets
are not included in different financial structures from those of the members.
The equity method has been applied to consolidate the annual accounts of Multigroup
entities. This decision has been duly reported to the Bank of Spain.
The most significant effects which would have resulted from consolidation under the
proportionate method of those Multigroup entities on the consolidated balance sheet and
consolidated income statement for 2009 and 2008 are set out below:
Insurance activity
2009
2008
Consolidated balance sheet:
Total assets
Total liabilities
101,991
85,555
97,967
80,207
Consolidated income statement:
Gross margin
16,963
16,044
Property development activity
In recent years, a number of property development companies have been included in the
scope of consolidation, as analysed in Appendix I. At 31 December 2009, most of, these
companies are start-ups and, in general, are in the process of purchasing land, requesting
permits and performing other activities prior to the start of construction work. As a result,
and since a large part of their financing was obtained from Caja Laboral, had these
companies been consolidated under the proportionate method at 31 December 2009,
inventories would have increased by €90,000k (€109,000k in 2008) and credits, loans and
discounts would have decreased by approximately €71,000k (€77,000k in 2008).
Significant information concerning the shareholdings in Multigroup entities at 31 December
2009 and 2008 is set out in Appendix I.
9
31 DECEMBER 2009
Investees in which the Group has a significant influence are Associates. This significant
influence generally, although not exclusively, takes the form of a shareholding held directly
or indirectly through another or other Investees of 20% or more of the investee’s voting
rights.
Associates have been consolidated under the equity method. Therefore shareholdings in
Associates have been measured at the fraction that the Group’s shareholding represents,
after taking into account dividends received and eliminating other equity items. The gains/
losses on transactions with Associates are eliminated in the proportion represented by the
Group’s shareholding. If, as a result of losses incurred by an Associate, the Associate
records negative equity, the Group’s consolidated balance sheet records a zero balance
unless the Group is required to provide financial support.
Nonetheless, at 31 December 2009 and 2008 the Group owns shareholdings of more than
20% in certain companies which have not been classified as Associates. The Group
considers that it does not have a significant influence over those Companies as there is a
firm commitment to purchase such shareholdings on the part of MCC Inversiones for a set
price. The carrying value of those shareholdings at 31 December 2009 and 2008 amounts to
€8,830k.
Significant information concerning the shareholdings in Associates at 31 December 2009
and 2008 is set out in Appendix I.
Since the accounting principles and standards applied in the preparation of the Group’s
consolidated annual accounts for 2009 and 2008 may differ from those used by some of the
Subsidiaries, Multigroup entities and Associates included in the same, the necessary
significant adjustments and reclassification have been made on consolidation in order to
ensure consistency with respect to accounting principles and standards.
At 31 December 2009 and 2008, no Group entity held any shareholding in other domestic or
foreign credit institutions that was equal to or exceeded 5% of share capital or voting rights.
At 31 December 2009 and 2008 no domestic or foreign credit institution or group within the
meaning of Article 4 of the Securities Market Law, which is formed by a domestic or foreign
credit institution, owns a shareholding or 5% or more in the capital or voting rights of any
credit institution that should be regarded as a Group entity.
10
31 DECEMBER 2009
3.
Changes and errors in accounting policies and estimates
The information contained in these consolidated annual accounts is the responsibility of the
Directors of the Parent Entity. Estimates have been used, where appropriate, in these
consolidated annual accounts, in the measurement of certain assets, liabilities, income,
expenses and commitments, which have been made by the Senior Management of the
Parent Entity and Investees and ratified by the Directors. These estimates relate to:
-
Impairment losses on certain assets (Note 13.h)
The useful lives of Property, Plant and Equipment and Intangible Assets (Notes 13.r
and 13.s).
The fair value of certain unlisted assets (Note 13.e).
The cost and expected development of provisions and contingent liabilities (Note 13.v).
Assumptions used in the calculation of insurance liabilities (Note 13.u).
The updated assumptions used in the calculation of liabilities and commitments in
respect of post-employment remuneration (Note 13.p).
Since these estimates have been made based on the best information available at 31
December 2009 concerning the items involved, future events may require changing them in
some respect in subsequent years. Such changes will, if appropriate, be made on a
prospective basis and the effects of the estimate change will be recognised in the relevant
consolidated income statement.
a)
Changes in accounting criteria
Changes in accounting policies, either because they amend an accounting regulation that
governs a certain transaction or event or because the Governing Council at the Parent
Entity decides to change the accounting policy for justified reasons, are applied retroactively
unless:
•
It is impractical to determine the effect in each specific year deriving from a change in
an accounting policy regarding comparative information from a preceding year, in
which case the new accounting policy is applied at the start of the oldest year so that
retroactive application becomes practicable. When it is impractical to determine the
accumulated effect, at the start of the current year, deriving from the application of a
new accounting policy to all preceding years the new accounting policy is applied on a
prospective basis as from the oldest date on which it is practical to do so or,
•
The accounting rule or regulation changes or establishes the application date.
11
31 DECEMBER 2009
During 2009 there have been changes in the accounting regulations applicable to the Group
compared with those applied last year. A list of the changes that may be considered to be most
relevant is provided below:
(i) Rules, amendments and interpretations of rules entering into force in 2009

IFRS 7 – (Revised) “Financial Instruments: Disclosures" (in force as from 1 January 2009).
This revision requires further disclosures regarding the measurement of fair value and
liquidity risk. Specifically, the revision requires that fair value measurements be
disclosed in accordance with a hierarchical order of fair value parameters. Since the
change in the accounting policy only involves additional disclosures, there is no impact
on the Group's consolidated income statement. Although during the first year this
amendment is applied there is no requirement to present comparative information, the
Group has already presented such information in its 2008 annual accounts and,
therefore, the relevant notes include the required information at 31 December 2009
compared with the figures for the preceding year.

IFRS 8 “Operating segments” (in force as from 1 January 2009).
IFRS 8 replaces IAS 14 and unifies the requirements for presenting financial
information by segments with the US standard SFAS 131 “Disclosures about
segments of an enterprise and related information”. The new standard requires a
management approach under which segment information is presented on the same
basis as which it is used for internal purposes. The application of this standard has not
given rise to an increase in the number of segment reports. In addition, the manner in
which the information is presented is in line with the internal information prepared and
supplied to decision-taking bodies.

IAS 1 (Revised), “Presentation of financial statements" (in force as from 1 January 2009).
The revised standard prohibits the presentation of income and expense items (i.e.,
“changes in equity with non-owners”) in the statement of changes in equity, and
requires them to be broken out separately in an overall income statement. As a result,
the Group presents all changes in equity deriving from transactions with owners in the
consolidated statement of total changes in equity, such that all changes in equity
deriving from transactions with non-owners are broken out in the consolidated public
statement of recognized income and expense.
12
31 DECEMBER 2009

IAS 23 (Revised), “Borrowing costs” (in force as from 1 January 2009).
Starting on 1 January 2009 the Group capitalizes borrowing costs relating to qualifying
assets that are directly attributable to the acquisition, construction or production of that
asset and are considered to increase its cost. The Group previously recognized the
interest directly as an expense. This change in accounting policy is due to the
application of IAS 23 "Borrowing costs" (2007) in accordance with the transitional
provisions established in the standard and comparative figures have not been
restated. The change in accounting policy does not have a material effect on the
Group's consolidated income statement.

Improvement project published by the IASB in May 2008, which affects the following
standards and interpretations:
− IAS
1 (Revised), “Presentation of financial statements" (in force as from 1 January
2009).
− IAS
19 (Revised), “Employee compensation” (in force as from 1 January 2009).

This revision clarifies that improvements to a plan that give rise to a change
to the extent that the promised benefits will be affected by future salary
increases and be considered a reduction, whereas revisions that give rise to
a change in benefits attributable to past services give rise to a negative past
service costs, provided that there is a decrease in the present value of the
defined benefit obligation.

The definition for yields given by assets linked to the plan has been modified
to indicate that plan administration costs are deducted from the calculation of
the yield from linked assets only to the extent that those costs have been
excluded from the measurement of the defined benefit obligation.

The distinction between short and long-term employee benefits is based on
whether or not the benefits will be settled within 12 months following the date
on which the services have been rendered, or after that time.

IAS 37 “Provisions, contingent assets and liabilities" requires that contingent
liabilities be broken down, and not only recognized, in the financial
statements. IAS 19 has been revised in line with this standard.
The Group has applied IAS 19 (Revised) on a prospective basis as from 1 January
2009.
13
31 DECEMBER 2009
−
IAS 23 (Revised), “Borrowing costs” (in force as from 1 January 2009). The
definition of borrowing costs has been revised so that interest is calculated in
accordance with the effective interest rate defined under IAS 39 (Financial
Instruments: Recognition and measurement". The terminological inconsistency
between IAS 39 and IAS 23 is therefore eliminated.
−
IAS 28 (Revised) "Investments in associates" (and the relevant amendments to IAS
32 "Financial instruments: Presentation" and IFRS 7: “Financial instruments:
Disclosures") (in force as from 1 January 2009). An investment in an associate is
considered to be a separate asset for the purposes of calculating value impairment.
Any impairment loss is not attributed to specific assets included under the
investment, for example, goodwill. Any reversal of impairment losses are
recognized as an adjustment to the investment balance to the extent that the
recoverable amount of the investment has increased. The Group has applied IAS
28 (Revised) to the impairment test for investments in subsidiaries and related
impairment losses as from 1 January 2009. The prospective application of this
revision is allowed.
−
IAS 39 – (Revised) “Financial Instruments: Recognition and measurement" (in force
as from 1 January 2009):

This revision clarifies that it is possible that there may be movements towards
and from the category of financial assets at fair value through changes in
profit and loss in cases in which a derivative starts (or ends) being classified
as a hedging instrument in a hedge for cash flow or net investments.

The definition of a financial asset or liability at fair value through changes in
profit and loss also changes, to the extent that they refer to items held for
trading. A financial asset or liability that forms part of a financial instrument
portfolio that is managed together, and for which there is evidence of a recent
short-term profit, is included in that portfolio as from initial recognition.

The current guidelines for designating and documenting hedging relationships
stipulate that a hedging instrument must involve a third-party outside the unit
that is presenting financial information and uses as an example a company
segment. This means that in order to apply hedge accounting at the segment
level, the segment must meet hedge accounting requirements. The revision
eliminates examples of segments to make them coherent with IFRS 8
"Operating segments" which requires that segment reporting be based on the
information presented to the members of management responsible for taking
decisions.

When a debt instrument is again measured, once the hedge accounting at fair
value has ceased, the revision clarifies that the revised effective interest rate
method must be used.
14
31 DECEMBER 2009
The Group has applied IAS 39 (Revised) as from 1 January 2009 and it did not
have any effect on the Group’s income statement.
− Other minor changes to IFRS 7 “Financial instruments: Disclosures”, IAS 8
“Accounting policies, changes in accounting estimates and errors”, IAS 10 “Events
after the balance sheet date”, IAS 18 “Revenue” and IAS 34 “Interim financial
reporting”, that did not have any effect on the Group's consolidated annual
accounts.
(ii) Standards, amendments and interpretations entering into force in 2009 but whose
application has no effect on the Group's consolidated annual accounts
At the date these accounts were prepared, the IASB had published the amendments and
interpretations of international financial reporting standards listed below, which are
mandatory for all years starting as from 1 January 2009 but which are not relevant within the
context of the Group's activities:
− IFRS 1 (Revised) "First-time adoption of IFRS” and IAS 27 "Consolidated and separate
financial statements".
− IFRS 2 (Revised) “Share-based payments”.
− IAS 16 (Revised), “Property, plant and equipment”.
− IAS 27 (Revised) “Consolidated and separate financial statements”.
− IAS 28 (Revised), “Investments in associates”.
− IAS 29 (Revised), “Financial reporting in hyperinflationary economies".
− IAS 31 (Revised), “Interest in joint ventures”.
− IAS 32 – (Revised) “Financial Instruments: Presentation” and IAS 1 (Revised)
“Presentation of financial statements"-"Puttable instruments and obligations arising on
liquidation" (in force as from and January 2009).
− IAS 36 (Revised), “Impairment of assets”.
− IAS 38 (Revised), “Intangible assets”.
− IAS 40 (Revised), “Investment property”.
− IAS 41 (Revised), “Agriculture”.
− IAS 20 (Revised) “Accounting for government grants and disclosure of government
assistance”.
− IFRIC 9 (Revised) “Reassessment of embedded derivatives” and IAS 39 (Revised)
“Financial instruments: Recognition and measurement” (in force for all years ended after
30 June 2009).
− IFRIC 13, “Customer loyalty programs" (in force as from 1 July 2008).
− IFRIC 16 “Hedges of a net investment in a foreign operation" (in force as from 1 October
2008).
15
31 DECEMBER 2009
(iii) Rules, amendments and interpretations of existing standards that have not yet entered
into force and which the Group has not adopted early
 IFRS 1 (Revised) "First-time adoption of IFRS" (in force as from 1 January 2009).
 IFRS 3 (Revised) "Business combinations" (in force as from 1 July 2009).
 IFRS 5 (Revised) “Non-current assets held for sale and discontinued operations" (and
relating to the revision of IFRS 1 "First time adoption of IFRS") (in force as from 1 July
2009).
 IAS 27 (Revised), “Consolidated and separate financial statements" (in force as from 1
July 2009).
 IAS 32 (Revised) "Financial instrument presentation" (applicable to years commencing as
from 1 February 2010).
 IAS 39 (Revised) "Items that may be designated as hedges" (in force as from 1 July
2009).
 IFRIC 12 “Service concession arrangements” (effective as from 1 January 2009).
 IFRIC 17, "Distribution of non-cash assets to owners" (in force as from 1 July 2009).
 IAS 18 (Revised) "Revenue" (applicable to years commencing as from 1 July 2009)
In addition, at the date these consolidated annual accounts were prepared, the IASB had
published the standards indicated below, which have yet to be adopted by the European
Union:
 The 2009 Improvment Project, published in April 2009 by the IASB, which amends IFRS
2, 5 and 8 and IAS 1, 7, 17, 18, 36, 38 and 29, as well as IFRIC 9 and 16. The
amendments introduced by this improvement project are mandatory in years
commencing as from 1 January 2010, with the exception of the amendments to IFRS 2
and IAS 38, which apply to years commencing as from 1 July 2009.
 IFRS 2 (Revised) "Share based payments settled in cash" (applied to years commencing
as from 1 January 2010).
 IFRS 1 (Revised) "Additional exemptions for first-time adoption" (applicable to years
commencing as from 1 January 2010).
 IAS 24 (Revised) "Related party disclosures" (applicable to years commencing as from 1
January 2011).
16
31 DECEMBER 2009
 IFRS 9, “Financial Instruments” (applicable to years commencing as from 1 January
2013).
 IFRIC 19 "Extinguishing financial liabilities with equity instruments" (applicable to years
commencing as from 1 July 2010).
 IFRIC 14 (Revised) "Prepayments of a minimum funding requirement" (applicable to
years commencing as from 1 January 2011).
(iv) Standards and amendments and interpretations of existing standards which are not yet
effective and which are not relevant to the Group’s operations
 IFRIC 15 “Agreements for the construction of real estate" (in force as from 1 January
2010).
(v) Standards adopted early
At the date these consolidated annual accounts were prepared, the Group has not early
adopted any of the amendments allowed by current accounting legislation, as indicated
above
b)
Errors in accounting estimates
Errors in the preparation of prior-year consolidated financial statements are the result of
omissions or inaccuracies resulting from the failure to employ or use reliable information that
was available when the consolidated financial statements for those periods were prepared
and the Parent Entity should have used when preparing those consolidated financial
statements.
Errors relating to prior years are corrected retroactively in the first consolidated financial
statements that are prepared after discovery, as if the error had never taken place:
•
Re-expressing the amounts of the various financial consolidated financial statements
affected by the error, including the notes to the consolidated financial statements that
are published in the consolidated financial statements for the purposes of comparison,
which relate to that year and prior years, if applicable.
•
Re-expressing the consolidated opening balance for the oldest year for which
information is presented if the error took place before the first consolidated financial
statements that are presented for the purposes of comparison.
17
31 DECEMBER 2009
When it is impractical to determine the effects arising in each specific year from an error
involving comparative information from a preceding year, the opening balances for the
oldest years are re-expressed, where possible. In the event that it is not practical to
determine the accumulated effect, at the start of the current year, of an error involving all
prior years, the comparative information is re-expressed correcting the error on a
prospective basis as from the earliest date possible.
Errors from prior years that affect consolidated equity are corrected in the year discovered
using the relevant consolidated equity account. Under no circumstances are errors from
prior years corrected through the consolidated income statement for the year in which they
are discovered, unless they have no relative importance or it is impractical to determine the
effect of the error based on the provisions of the preceding paragraph.
Changes in accounting estimates
A change in an accounting estimate is an adjustment to the carrying value of an asset or
liability, or the regular consumption of assets, arising after an evaluation of the current
situation faced by the item concerned, as well as future expected benefits and the
obligations associated with the assets and liabilities concerned.
Changes in accounting estimates are the result of obtaining additional information or
knowledge about new events and therefore are not error corrections. These changes are
recorded on a prospective basis in the consolidated income statement for the year and in
future years affected by the change.
In 2009 and 2008 no significant prior year errors have been corrected. Nor have there been
any significant changes in accounting estimates that affect those years or which may affect
future years.
4.
Application of the surplus for the year
Law 13/1989 on Credit Cooperatives, amended by Law 20/1990 on the Tax Regime
applicable to Cooperatives, lays down that the amounts not appropriated to the Mandatory
Reserve Fund and Promotion and Education Fund will be made available to the General
Assembly, that may distribute it as follows:
-
Distribution or reimbursement to members
Appropriation to the Voluntary Reserve Fund
18
31 DECEMBER 2009
The Parent Entity’s bylaws, following the changes introduced in the criterion for distributing
the available surplus by the Extraordinary General Assembly of 30 December 2005,
establish that the available surplus, following compliance with the obligations that may
derive from the coverage of mandatory capital or the solvency coefficient, should be
appropriated to:
•
A minimum of 50% to the Mandatory Reserve Fund.
•
A maximum of 25% to cover social promotion and intercooperative needs. In
particular, a minimum of 10% will be appropriated to the Promotion and Education
Fund and a maximum of 15% will be appropriated to the Intercooperative Social Fund.
•
The remainder will be made available to the General Assembly, that may distribute it
as follows: reimbursement to members or appropriation to the voluntary reserve or
analogous funds.
The amount earmarked for reimbursement to cooperative members will be distributed
equally among all working members and other members.
According to the Parent Entity’s bylaws, the reimbursement to cooperative members shall
be distributed to the labor cooperative members in proportion of their payroll advances, and
to the remainder members in proportion of their operations with the Parent Entity.
The proposed distribution of the surplus for 2009 that the Governing Body will submit to the
General Assembly for approval, together with the approved distribution for 2008, is as
follows:
2009
Distribution:
- Gross interest, distributed on account of the application
of the gross surplus for the year due to contributions to
share capital (Note 39)
- Mandatory Reserve Fund
- Promotion and Education Fund (*)
- Return to cooperative members
- Intercooperative Social Fund
(*)
35,588
10,438
5,219
3,132
54,377
2008
34,277
33,135
16,567
9,941
93,920
The amounts appropriated to the Promotion and Education Fund relates to the obligatory minimum
totalling €2,088k in 2009 and €6,627k in 2008, which have already been recorded in the consolidated
income statements for each year (Note 63).
The results of the subsidiaries that comprise the Group will be applied as approved by their
respective General Shareholders’ Meetings/ General Assemblies.
19
31 DECEMBER 2009
5.
Information per business segment
The activity carried out by the Group largely consists of retail banking. There are no other
significant lines of business that require disclosure and detailed information on their
operation, as if each were a separate business and had separate equity, except for the
insurance business contributed by the subsidiary Seguros Lagun-Aro Vida, S.A. The most
significant contributions of Seguros Lagun-Aro Vida, S.A. to the consolidated balance sheet
and consolidated income statement, not taking into account the effect of transactions with
group companies for 2009 and 2008, are set out below:
2009
2008
Consolidated income statement:
Contribution to gross margin from insurance operations
9,782
(4,982)
2,890
10,968
(5,124)
3,185
Consolidated balance sheet:
Total assets
548,030
537,756
There are no geographical differences in the territory of operation of the Group
(Autonomous Region of the Basque Country and Navarra and the rest of Spain) which
would justify the reporting of operations on a segment basis.
6.
Minimum capital requirements
Bank of Spain Circular 3/2008 (22 May), regarding the establishment and monitoring of
minimum capital requirements for credit institutions regulates the minimum capital
requirements for credit institutions both individually and as consolidated groups, and
stipulates how this capital is measured. This includes the processes to be followed for the
self-evaluation of capital and the information to be made public. This Circular constitutes the
final development, within the scope of credit institutions, of legislation regarding equity and
supervision of consolidated financial entities enacted by Law 36/2007 (16 November), which
amends Law 13/1985 (25 May), investment coefficients, equity and disclosure obligations
for financial intermediaries and other rules governing the financial system, which also
includes Royal Decree 216/2008 (15 February) on Financial institution equity. This also
finalizes the process of adapting Spanish legislation governing credit institutions to EU
Directives 2006/48/CE, issued by the European Parliament and Council (14 June 2006)
relating to accessing and carrying out credit institution activities and 2006/49/CE issued by
the European Parliament and Council (14 June 2006) on the adequacy of investment
service company and credit institution capital. The two aforementioned Directives have
profoundly changed, in accordance with the equivalent Accord adopted by the Basel
Committee for Bank Supervision (known as Basel II), the minimum capital requirements for
credit institutions and their consolidated groups.
20
31 DECEMBER 2009
The new approach, which has two new pillars to support rules ensuring the solvency and
stability of institutions, is intended to, among other things, establish regulatory requirements
that are much more sensitive to the risks that are actually borne by entities during the
course of their business. This has not only increased the risk hedges deemed to be relevant,
as is the case with operational risk or the possibility of hedging, especially through internal
models measuring these aspects, the technical foundation and demands on which these
requirements are based have grown exponentially and their complexity is now much higher
than that deriving from the former Basel Committee Capital Accord. The technical
complexity and detail provided by the new rules made it advisable for the aforementioned
Law and Royal Decree, as is appropriate for legislation of their rank, to authorize the Bank
of Spain to supervise the effective transposition of the Directive to a very great extent. In
many cases those rules only cover basic principles and the Bank of Spain is responsible for
the complete development of the often very voluminous specifications included in the
Articles and, in particular, in the various appendices to the Directive.
In addition to the already necessary consolidated compliance with solvency requirements,
the new rules include compliance with individual level requirements both for parent entities
and Spanish subsidiaries. However, it is possible for the Bank of Spain to relieve them from
this obligation if a series of conditions are met which tend to guarantee that equity is
adequately distributed among the parent company and subsidiaries and flows and
commitments may circulate freely within the Group.
A novel development in Spain was the acceptance by credit institutions of subordinated
financing for less than five years as computable equity. This acceptance is only available, as
is established by Directive 2006/49, for the purpose of covering equity requirements to
hedge against trading portfolio risks.
Within the framework of the freedom of national authorities to remove certain elements of
equity that are not considered to be actually available to cover business losses, and even if
not a general practice among neighboring countries, the calculation of shareholdings, with
respect to Group equity, in subsidiaries that represent the minority shareholdings in them
has been limited, provided that certain magnitude thresholds are exceeded and they
originate from subsidiaries that are overcapitalized on an individual basis.
To develop the authority conferred by Royal Decree 216/2008, and in accordance with the
Basel II Accord, a strict limit in terms of being included as basic equity is introduced for
those preferred shares that include early redemption incentives, for example, “step-up”
clauses. Conversely, attending to their special quality, the possibility of including these types
of instruments in the calculation is extended when they contain factors that favor the
increased capitalization of the entity or consolidated group of credit institutions, such as
clauses covering mandatory conversion into ordinary shares. The aim is for capital and
reserves recorded by credit institutions and their groups be the predominating element of
basic equity.
21
31 DECEMBER 2009
Although the traditional 8% figure of assets weighted by risk is conserved with respect to
minimum equity requirements for credit risk, the main novelties originate from:
-
The possibility of using internal ratings and models to calculate weighted risk exposure
and, consequently, the resulting capital requirements. This is subject to the express
authorization of the Bank of Spain and a very detailed group of prudent and technical
requirements that are mainly related to risk management and the strength of the
entity’s internal controls.
-
For entities that do not use these models, and therefore follow the standard method,
the Circular determines the applicable weightings at the same time it establishes the
requirements that must be met by external rating agencies that are often used to
determine these weightings. These criteria are fundamentally based on objectivity,
independence, transparency, reputation and the continuous updating of the method
applied to determine the various risk ratings.
-
The extension of techniques to reduce admissible risks and, with extreme detail, their
possible effects, particularly when involving imperfect hedges.
-
Specific and very complex technical regulation of the equity requirements demanded
for securitization exposure, for the originating entity as well as for any other participant
in the securitization process.
It also establishes an additional weighting to mortgage loans where coverage is insufficient,
i.e., where the loan exceeds the value of home purchased using the loan. Excesses over
this amount are considered to be high risk.
In strict compliance with the Directive, Spanish regulation incorporates the requirements
established for operational risk equity, which has also been tightly regulated in order to
determine the various calculation methods and the requirements that entities must meet in
order to obtain the necessary authorization to use the most advanced risk measurement
methods.
New solvency regulations also include the establishment of a supervisory review system in
order to encourage improvements in the internal management of entity risks and to ensure
the effective matching of the risks assumed by the entity, including those not directly
covered by the regulations. This system includes, in addition to a self-evaluation subject to
Bank of Spain control of required financial capital, an express evaluation of the interest rate
risk affecting the balance sheet. This area also specifies the requirements and conditions
under which entities may delegate the rendering of services or the exercising of credit
institution duties, thereby ensuring consistent treatment by credit institutions and investment
service companies, which are subject to equivalent rules enacted under higher ranking
legislation.
22
31 DECEMBER 2009
With respect to Pillar 3 of the new Basel Accord, which is intended to standardize and
encourage market disclosure of relevant information so that the market may exercise its
discipline, the minimum content of the document "Prudent Information Disclosure" which
entities must publish on an annual basis in order to compare entities, and the principles on
which the policy of disclosing information by the entity must be based are established. The
disclosures focus on key aspects of their business profile, risk exposure and risk
management.
Finally, the Circular includes reserved prudent information that must be sent by entities and
groups subject to the legislation to the Bank of Spain. This information is uniform with that
which would be required within the framework of the single market, given that it is due to a
convergence process between the various countries making up the European Union.
The strategic objectives set by Group Management with respect to equity are as follows:
-
Total compliance, on an individual and consolidated level, with legislation regarding
minimum equity requirements.
-
Seek maximum efficiency when managing equity such that, together with other
variables concerning yields and risk, the consumption of equity is considered to be a
fundamental variable in the analyses associated with the taking of investment
decisions by the Group.
In order to attain these objectives the Group has a series of management policies and
processes concerning equity, the main guidelines of which are:
-
A Group has a unit which reports to the Entity's Control Management, and monitors
and controls the level of compliance with Bank of Spain regulations regarding equity.
-
The Group's strategic and sales planning considers the impact the taking of decisions
has on the Group’s computable equity and the consumption-yield-risk relationship to
be key factors when taking those decisions.
The Group’s management of equity meets the provisions of Bank of Spain Circular 3/2008,
with respect to conceptual definitions. Therefore, for the purposes of the Group's internal
management of equity, equity is defined as such. In this connection, the Group considers
computable equity to be the items indicated in Rule 8 of Bank of Spain Circular 3/2008.
23
31 DECEMBER 2009
Bank of Spain Circular 3/2008 stipulates what items must be considered to be equity for the
purposes of complying with the minimum requirements established by those regulations. In
accordance with those regulations equity is classified into basic equity and second-tier
equity in the different than the equity calculated in accordance with the provisions of IFRSEU, since the former allow certain items and impose the mandatory deduction of others that
are not included under IFRS-EU. The methods for consolidating and measuring investee
companies to be applied for the purpose of calculating the Group's minimum equity
requirements in accordance with current legislation differ from those applied when preparing
these consolidated financial statements, which also gives rise to the existence of differences
for the purposes of calculating equity under each set of rules.
At 31 December 2009 and 2008 the Entity's computable equity is calculated, if appropriate,
on a consolidated basis and exceeds the minimum requirements established by the
aforementioned regulations at each date.
7. Remuneration of the Parent Entity’s Directors and Senior Management
a)
Statutory remuneration
The Members of the Parent Entity’s Governing Body have received no remuneration as
such in 2009 and 2008.
b)
Other Governing Body and Senior Management Remuneration
For the purposes of preparing these consolidated annual accounts, the 19 people who make
up the Parent Entity’s Management Committee in 2009 (16 people in 2008) have been
regarded as senior management personnel, who have been regarded for such purposes as
key Parent Entity personnel. Similarly, the four directors of the Parent Entity (4 in 2008) who,
while working members of the same, form part of the Governing Body have also been
regarded as key Management personnel in 2009 and 2008.
The table below shows the remuneration accrued to Senior Management of the Parent
Entity, as defined here above:
Short-term
remuneration
2009
2008
Senior Management
2,182
2,182
1,983
1,983
Additionally, the remuneration on capital on account (interest) and remuneration received in
respect of the complementary distribution of the available surplus (reimbursement to
cooperative members) by the Entity’s Senior Management in 2009 and 2008 amounted to
€530k and €663k, respectively.
24
31 DECEMBER 2009
In addition to the amounts accrued during the year to the members of the Entity’s Governing
Body and Senior Management indicated here above, set out below is a breakdown of
income and expenses recorded in the consolidated income statement for 2009 and 2008 in
relation to the members of the Parent Entity’s Governing Body and Senior Management:
Interest revenue
2009
2008
Directors and Senior
Management
102
139
Interest expense
2009
2008
32
48
Other expenses
2009
2008
-
Fee revenue
2009
2008
-
4
9
The members of the Parent Entity’s Senior Management who act on behalf of the same on
the Board of Directors of entities in which the Group has a shareholding have received no
remuneration in respect of their positions as Directors of such Investees in 2009 and 2008.
c)
Loans, credits, fixed-term deposits and guarantees and commitments with members of
the Governing Body and Senior Management
Set out below is a breakdown of asset and liability balances in the consolidated balance
sheet that relate to transactions carried out with members of the Governing Body and Senior
Management of the Parent Entity at 31 December 2009 and 2008:
Assets- loans
granted (gross
amount)
2009
2008
Directors and Senior
Management
8.
2,686
2,787
Assets-credit
accounts (gross
amount)
2009
2008
-
-
Liabilities –
Fixed- term
deposits and
Demand deposits
2009
2008
2,059
2,091
Guarantees and
commitments
2009
2008
-
-
Agency contracts
At 31 December 2009 and 2008 the Parent Entity has no agency contracts with individual sor
legal entities for operations in limited geographical areas where the Entity does not have offices
of its own. The list of the same has been duly reported to the Bank of Spain.
9.
Environmental impact
The Group's global operations are governed, inter alia, by Laws on environmental protection
(Environmental laws) and on worker safety and health. The Group deems that it
substantially complies with these Laws and that the procedures it uses are designed to
encourage and ensure compliance with said Laws.
25
31 DECEMBER 2009
The Group considers that it has taken appropriate environmental protection and
improvement measures and for minimising, whenever applicable, the environmental impact,
and complies with the rules in force in this regard. In this respect, in 2001 the Parent Entity
obtained the Environmental Management Certification under ISO 14001 which is currently in
effect. During 2009 and 2008, the Group did not deem it necessary to record any provision
for risks and charges of an environmental nature as, in the opinion of the Governing Body of
the Parent Entity, there are no contingencies under this heading that are likely to have a
significant effect on these annual accounts
10.
Deposit Guarantee Fund
The Parent Entity is a member of the Deposit Guarantee Fund. The expense in 2009 and
2008 for the contributions made by the Group to the Deposit Guarantee Fund amounted to
approximately €9,409k and €8,186k, respectively (Note 55). They are included in Other
operating charges on the corresponding consolidated income statements.
11.
Audit fees
The cost for the Group of the external audit services in 2009 has amounted to €226k (€222k
in 2008). Additionally the cost for the Group of other services provided during 2009 has
amounted to €2k (€44k in 2008).
12.
Events after the balance sheet date
In the period 31 December 2009 to the date on which these consolidated annual accounts
have been prepared, no events have taken place that significantly affect the Group.
13.
Accounting principles and standards applied
The most significant accounting principles and standards applied in the preparation of these
consolidated annual accounts are described below:
a)
Going- concern
When drawing up the consolidated annual accounts it has been assumed that the
companies in the Group will continue to operate as going concerns in the foreseeable future.
Therefore the application of accounting standards does not aim to determine consolidated
assets and liabilities for the purposes of their overall or partial transfer or the amount that
would result in the event of liquidation.
26
31 DECEMBER 2009
b)
Accruals principle
These consolidated annual accounts, except with respect to the consolidated cash flow
statements, have been prepared on the basis of the real flow of goods and services,
irrespective of the date of payment or collection.
c)
Other general principles
The consolidated annual accounts have been drawn up using the historical cost method,
albeit modified by the restatement, wherever appropriate, of land and buildings, performed
on 1 January 2004, as described in Note 13.r, and of the fair value measurement of
Financial assets available for sale and financial assets and liabilities (including derivatives).
The preparation of the consolidated annual accounts requires the use of certain accounting
estimates. Similarly, Management is required to exercise judgement in the application of the
Group’s accounting policies. Estimates may affect the amount of assets and liabilities and
the breakdown of contingent assets and liabilities at the date of the consolidated annual
accounts and the amount of income and expenses over the period covered by the
consolidated annual accounts. Although the estimates are based on Management’s best
understanding of the current and foreseeable circumstances, the final results could differ
from such estimates.
d)
Nature and operation of Financial derivatives
Financial derivatives are instruments that in addition to providing a loss or a gain may
enable, under certain conditions, the offset of all or part of the credit and / or market risks
associated with balances and transactions, using as underlying interest rates, certain
indices, the prices of some securities, cross exchange rates or other similar references. The
Group uses financial derivatives traded on organised markets or traded bilaterally with
counterparties on an over the counter (OTC) basis.
Financial derivatives are used to trade with customers who request them in order to manage
the risks attaching to the Group’s own positions (derivatives held for hedging) or in order to
leverage changes in the relevant prices. Financial derivatives which may not be considered
hedges are regarded as derivatives held for trading. The conditions that enable them to be
accounted for as hedges are as follows:
i)
The financial derivative should cover the risk of changes in the value of assets
and liabilities due to fluctuations in the interest rate and / or exchange rate (fair
value hedge), the risk of changes in estimated cash flows resulting from financial
assets and liabilities, highly probable foreseeable commitments and transactions
(cash flow hedge) or the net investment risk in a foreign operation (hedging of net
investment in foreign operations).
ii)
The financial derivative should efficiently eliminate any risk attaching to the
element or position hedged over the entire expected hedging period. Therefore it
should have prospective efficiency, efficiency at the time the hedge is arranged
under normal conditions and retrospective efficiency and there should be
sufficient evidence that the efficiency of hedging will be maintained over the life
of the item or position hedged.
27
31 DECEMBER 2009
In order to ensure the prospective and retrospective efficiency of hedging, the Entity
conducts the relevant efficiency tests which evidence that the variation in the fair
value of the hedge is highly comparable to the variation in the fair value of the
hedged item. Therefore, in accordance with legislation in effect, it is assumed
that the hedge is efficient when the accumulated variation in fair value of the
hedging instrument varies from 80% to 125% of the accumulated variation in fair
value of the hedged item. If a derivative complies at inception with the efficiency
test and subsequently stops complying, it would thereafter be accounted for as a
derivative held for trading and the hedging interruption rule would be applied.
iii)
Proper documentary evidence must be kept to show that the Financial Derivative
was contracted specifically as a hedge for certain specific balances or
transactions, as well as of the way in which such efficient hedging was aimed to
be achieved and measured, as long as the method used is consistent with the
Group's management of its own risks.
Hedges may be applied to individual items or balances or financial asset and liability
portfolios. In this latter case, the set of financial assets or liabilities to be hedged should
share the same type of risk, this being understood to be the case when sensitivity to interest
rate fluctuations of the individual items hedged is similar.
The Parent Entity arranges hedging through different types of derivatives: interest rate,
equity instruments, currency derivatives etc, on the basis of the underlying risk of the item to
be hedged. The hedging instruments which may therefore be used are: Interest Rate Swaps
(IRS), Call Money Swaps (CMS), FRAs, interest rate futures, bond futures, equity index
futures, stock futures, foreign currency forwards, interest rate options, equity index options,
share options, Forex Options, interest rate structure options, equity structure options and
Equity swaps.
Hedging with derivative instruments arranged by the Group which generally speaking are
considered fair value hedges aim to totally or partly cover the risk of changes in the fair
value of certain liabilities or deposits issued by the Parent Entity with respect to changes in
interest rates or the fair value of certain equity instruments in the available-for-sale financial
asset portfolio.
The financial derivatives implicit in other financial instruments or other principal contracts are
carried separately as derivatives when their risks and characteristics do not relate closely to
the principal contracts and provided that such principal contracts are not classified under the
Trading Portfolio and Other financial assets or liabilities at fair value with changes in the
income statement.
Set out in section e) Financial assets of this Note is a description of the measurement rules
used for Financial derivatives.
28
31 DECEMBER 2009
e)
Financial assets
Classification
Financial assets are classified in the consolidated balance sheet as follows:
i)
Cash on hand and on deposits at central banks which relate to cash balances
and balances held at Bank of Spain and other central banks.
ii)
Trading portfolio which includes the financial assets that have been acquired in
order to realise them in the short term, they form part of a portfolio of financial
instruments identified and managed jointly for which actions have recently been
carried out to obtain short-term gains or they are derivatives not designated as
accounting hedges.
iii)
Other financial assets at fair value with changes in the income statement which
include the financial assets that, while not forming part of the trading portfolio, are
regarded as hybrids and are carried in full at fair value and those which are
managed jointly with insurance contract liabilities measured at fair value or with
financial derivatives the purpose or effect of which is to significantly reduce
exposure to variations in fair value or which are managed jointly with financial
liabilities and derivatives in order to significantly reduce interest rate exposure.
iv)
Available-for-sale financial assets which relate to debt securities not classified as
held-to-maturity investments, other financial assets at fair value with changes in
the income statement, credits, loans and discounts or trading portfolio and equity
instruments in companies which are not subsidiaries, associates or Multigroup
entities and which have not been included in trading portfolio categories and
other assets at fair value with changes in the income statement.
v)
Credits, loans and discounts which include the financial assets in respect of
which while not being traded on an active market or not being obligatorily
measured at fair value, cash flows involve a specific or determinable amount and
in which the Group’s entire outflow will be recovered, other than for reasons
attributable to debtor solvency. It records the investment arising out of the typical
credit activity, such as the cash amounts drawn down yet to be repaid by
customers on loans or the deposits placed with other institutions, regardless of
how they are instrumented legally, and unlisted debt securities, as well as the
debt contracted by buyers of goods or users of services, which are part of the
Group’s business.
vi)
Held-to-maturity investment portfolio which relates to debt securities with fixed
maturity and cash flows involving a specific amount, which the Group has
decided to hold to redemption largely on the understanding that it has the
financial capacity to do so or because it has related financing.
29
31 DECEMBER 2009
vii)
Adjustments to financial assets due to macro-hedging which relates to the
balancing entry of the amounts credited to the consolidated income statement
resulting from the measurement of the financial instrument portfolios which are
efficiently covered with respect to the interest rate risk through fair value hedging
derivatives.
viii) Derivatives held for hedging that include the financial derivatives purchased or
issued by the group which qualify for consideration as accounting hedges.
ix)
Non-current financial assets for sale relating to the carrying value of individual
items, included in a disposal group or which form part of a business unit which is
sought to sell (discontinued operations), the sale of which is likely to be effected
under the current conditions of such assets within one year of the date to which
these annual accounts refer. Therefore, the carrying value of these financial
items will presumably be recovered through the price obtained upon disposal.
There are other non-current non-financial assets for sale, the accounting
treatment of which is described in Note 13.w.
x)
Shareholdings which include equity instruments in Associates and Multigroup
entities.
xi)
Pension-linked insurance contracts that correspond to the rights to be
reimbursed by the insurance companies of part or all of the disbursement
required in order to cancel a defined-benefit obligation when the insurance
policies fail to meet the conditions to qualify as a Plan asset.
xii)
Assets held for reinsurance which include the amounts that the Group is entitled
to receive deriving from reinsurance contracts with third parties and, specifically,
the share of reinsurance in the technical reserves recorded by the Insurance
Companies included in the Group as subsidiaries.
Measurement and recording
Generally financial assets are initially carried at cost. They are subsequently measured at
the accounting close in accordance with the following criteria:
i)
Financial assets are measured at fair value except for credits, loans and
discounts, the held-to-maturity investment portfolio, equity instruments whose fair
value may not be determined in a sufficiently objective manner and financial
derivatives for which the underlying assets are such equity instruments and
which are settled through the delivery of the same.
30
31 DECEMBER 2009
ii)
The fair value of a financial asset is understood to be the amount at which it may
be delivered between duly informed interested parties in an arm’s length
transaction. The best evidence of fair value is the quote on an active market that
is an organised, transparent and deep market.
Where there is no market price for a specific financial asset, fair value is estimated on
the basis of the value established on recent transactions involving analogous
instruments and, alternatively, sufficiently verified valuation models. Similarly, the
specific characteristics of the asset to be measured are taken into account and in
particular, the different types of risks associated with the financial asset.
Nonetheless, the actual limitations of the measurement models developed and
the possible inaccuracies in the assumptions required by these models may
mean that the fair value thus estimated of a financial asset does not exactly
agree with the price at which it could be bought or sold at the measurement date.
iii)
The fair value of financial derivatives quoted on an active market is the daily price
and if for exceptional reasons, its price on a given date cannot be established,
similar measurement methods may be used to those employed to measure OTC
financial derivatives.
The fair value of OTC financial derivatives is the sum of future cash flows arising on
the instrument and discounted at the measurement date using methods
recognised by the financial markets.
iv)
Credits, loans and discounts and the held-to-maturity investment portfolio are
measured at amortised cost, using the effective interest rate method. Amortised
cost is understood to be the acquisition cost of a financial asset as adjusted for
the repayment of the principal and the part allocated to the income statement
through the effective interest rate method of the difference between the initial
cost and repayment value at maturity and less any impairment losses directly
recognised as a decrease in the amount of the asset or through a value
adjustment account. For Credits, loans and discounts that are hedged in fairvalue hedging operations, any changes that occur in their fair value relating to
the risk or the risks being hedged by said hedging operations are recorded.
The effective interest rate is the discount rate which brings the value of a
financial instrument exactly into line with estimated cash flows over the
instrument’s expected life on the basis of the relevant contractual conditions such
as early repayment options, not taking into account losses resulting from future
credit risks. For fixed- interest financial instruments, the effective interest rate
agrees with the contractual interest rate established at the time of acquisition
plus, if appropriate, the fees which, by nature, may be likened to an interest rate.
For variable interest rate financial instruments, the effective interest rate agrees
with the rate of return in effect for all items through to the first review of the
reference rate.
31
31 DECEMBER 2009
v)
Holdings in the capital of other companies where the fair value cannot be
calculated sufficiently objectively and the financial derivatives which have such
instruments as their underlying asset and are settled by delivery of said
instruments are stated at cost, corrected, as appropriate, to take into account any
losses for impairment that may have incurred.
Variations in the carrying value of financial assets are generally recorded with the balancing
entry in the consolidated income statement, differentiating between those arising on the
accrual of interest and similar items, which are recorded under Interest and similar revenue,
and those which relate to other causes, which are carried at net value under Results of
financial operations in the consolidated income statement.
Variations in carrying value of the instruments included under Available-for-sale financial
assets are recorded temporarily under Measurement Adjustments continue to form part of
consolidated equity until the relevant asset is written off the consolidated balance sheet at
which time they are written off againt the consolidated income statement.
For financial assets designated as hedged items and accounting hedges, measurement
differences are recorded taking into account the following:
i)
For fair value hedges, differences in hedges and hedged items, with respect to
the type of risk being hedged, are recognised directly in the consolidated income
statement.
ii)
Measurement differences relating to the inefficient part of cash-flow hedges and
net investment in foreign operation hedges are taken directly to the consolidated
income statement.
iii)
For cash flow hedges, measurement differences arising on the efficient part of
the cover of the hedges are temporarily recorded under Measurement
Adjustments to consolidated equity.
iv)
For net investment in foreign operation hedges, measurement differences arising
on the efficient part of hedge cover are temporarily recorded under Measurement
Adjustments to consolidated equity.
In these latter two cases, measurement differences are not recognised as results until the
gains or losses on the hedged item are recorded in the consolidated income statement or
until maturity.
32
31 DECEMBER 2009
Reclassification among financial instrument portfolios
Reclassifications among financial instrument portfolio only take place in the following cases:
i)
Except in the case of the exceptional circumstances indicated under paragraph
iv) above, financial instruments classified as "At fair value through changes in
profit and loss" cannot be reclassified either within or outside of this category of
financial instruments once acquired, issued or assumed.
ii)
If as a result of a change in the intention or the financial capacity a financial asset
ceases to be classified under the “Held-to-maturity investment portfolio” it is
reclassified to the category “Available-for-sale financial assets” In this case the
same treatment is applied to all financial instruments classified in the held-tomaturity investment portfolio, unless the reclassification falls under one of the
cases allowed by legislation (sale very close to the maturity date or once
practically all of the principal amount relating to the financial asset has been
collected, etc.).
During 2009 and 2008 no sale not allowed by legislation applicable to financial
assets classified as held-to-maturity was carried out.
iii)
As a result of a change in the Group’s intention or financial capacity or, once the
two year penalty period established by applicable legislation has elapsed in the
event of the sale of financial assets classified under the Held-to-maturity
investment portfolio, debt securities included under the category "Available-forsale financial assets” may be reclassified to be "Held-to-maturity investment
portfolio". In this case, the fair value of these financial instruments at the transfer
date becomes their new amortized cost and the difference between this amount
and the redemption value is taken to the profit and loss account by applying the
effective interest rate method over the residual life of the instrument concerned.
During 2009 and 2008 no reclassification defined in the preceding paragraph took
place.
iv)
A financial asset that is not a derivative financial instrument may be classified
outside of the trading portfolio if it ceases to be held for the purpose of being sold
or repurchased in the short-term, provided that one of the following
circumstances exists:
a. In rare and exceptional circumstances, unless concerning assets that could
have been included under the category of credit investments. For these
purposes, rare and exceptional circumstances are those that arise from a
particular event that is unusual and highly unlikely to be repeated in the
foreseeable future.
33
31 DECEMBER 2009
b. When the Group has the intention and financial capacity to maintain the
financial asset for the foreseeable future or until maturity, provided that at
initial recognition the definition of credit investment was met.
If these situations are in place the asset may be reclassified at its fair value on the
date of reclassification, without reversing results and considering this value to be
its amortized cost. Assets reclassified in this manner cannot be reclassified again
under the category of "Trading portfolio".
In 2009 and 2008 no financial assets included under the Trading portfolio were
reclassified.
f)
Financial liabilities
Financial liabilities are classified in the consolidated balance sheet as follows:
i)
Trading portfolio which includes the financial liabilities that have been issued for
the purpose of buying them back on a current-asset basis, are part of a portfolio
of financial instruments identified and managed jointly for which action has
recently been taken to make short-term gains or are derivatives not designated
as hedges in the accounts or originate in the firm sale of financial assets
acquired on a current-asset basis or received as a loan.
ii)
Other financial liabilities at fair value through changes in profit and loss that relate
to financial liabilities designated at initial recognition by the Group or when more
relevant information is obtained upon recognition due to the fact that:
-
They eliminate or significantly reduce incoherency in the recognition or
measurement that would arise by measuring assets or liabilities, or through
the recognition of gains or losses, using different criteria.
-
A group of financial liabilities or financial assets and liabilities is managed and
their yields are evaluated based on their fair value in accordance with a risk
management strategy or documented investment strategy and information
regarding the fair value of that group is disclosed to key members of
Management.
iii)
Financial liabilities at amortised cost that correspond to the financial liabilities that
do not fit into any of they other categories on the consolidated balance sheet
and relate to operations typically carried out by financial institutions to bring in
funds, regardless of how they are instrumented and their terms.
iv)
Adjustments to financial liabilities due to macro-hedging which relates to the
balancing entry of the amounts charged to the consolidated income statement
resulting from the measurement of the financial instrument portfolios which are
efficiently hedged against the interest rate risk through fair value hedging
derivatives.
34
31 DECEMBER 2009
v)
Derivatives held for hedging that include the financial derivatives purchased or
issued by the group which qualify for consideration as accounting hedges.
vi)
Liabilities associated with non-current assets for sale which relate to creditor
balances arising in Non-current assets for sale.
vii)
Insurance contract liabilities that relate to the technical reserves recorded by the
Group to cover claims deriving from the insurance contracts which are in force at
the year end.
viii) Capital repayable on demand, which includes the amount of the financial
instruments issued by the Group that, although regarded as capital from a legal
viewpoint, does not comply with the requirements to be regarded as Equity. They
are measured at amortised cost unless the Group has designated them as
Financial liabilities at fair value if they fulfil the relevant conditions.
In this connection, on 7 April 2006 the Parent Entity's General Assembly
approved a change in the bylaws that limits the amount of share capital that may
be unconditionally repaid to shareholders during the financial year to an amount
equivalent to 1% of the share capital at the end of the preceding year. The
Parent Entity's Governing Council retains the right to reject repayments
requested by shareholders that exceed this amount (Note 39). As a result, at 31
December 2009 and 2008 capital repayable on-demand is considered to be the
remaining balance for which shareholders have the right to request the
repayment of capital contributions without it being necessary to obtain the
approval of the Parent Entity's Governing Council.
Financial liabilities are recorded at amortised cost, as is defined for financial assets in Note
13.e, except in the following cases:
i)
Financial liabilities included under the headings Trading portfolio and Other
financial liabilities at fair value through changes in profit and loss are carried at
fair value, as is defined for financial assets under Note 13.e. Financial liabilities
hedged through fair value hedges are adjusted by recording those variations in
fair value in relation to the risk hedged in the hedging transaction, under the
account "Microhedge transactions" under the heading to which those financial
liabilities pertain.
ii)
Financial derivatives for which the underlying is an equity instrument whose fair
value cannot be determined in a sufficiently objective manner and which are
settled through their delivery are measured at cost.
Variations in the carrying value of financial liabilities are generally accounted for with the
balancing entry in the consolidated income statement, differentiating between those arising
on the accrual of interest and similar charges, which are carried under Interest and similar
charges, and those which relate to other causes, which are carried at net value under
Gains/ losses on financial transactions (net) in the consolidated income statement.
Valuation differences in financial liabilities designated as hedged items and accounting
hedges are recorded taking the criteria indicated for Financial assets in Note 13.e into
account.
35
31 DECEMBER 2009
g)
Transfer and write-off of financial instruments from the consolidated balance sheet
Transfers of financial instruments are recorded taking into account the manner in which the
transfer of the risks and benefits associated with the financial instruments are transferred,
on the basis of the following:
i)
If all the risks and benefits are substantially transferred to third parties, such as in
unconditional sales, sales under repos at fair value on the repurchase date, sales
of financial assets with a call option acquired or put option issued deeply out of
the money, asset securitisation in which the assignor retains no subordinated
financing and nor grants any type of credit improvement to the new holders etc,
the financial instrument transferred is written off the consolidated balance sheet
and at the same time any right or obligation retained or created as a result of the
transfer is recognised.
ii)
If all the risks and benefits associated with the financial instrument transferred
are retained, as in sales of financial assets under repos for a fixed price or the
selling price plus interest, security loan contracts in which the borrower is
required to return the same or similar assets etc, the financial instrument
transferred is not written off the consolidated balance sheet and continues to be
measured using the criteria used prior the transfer. Nonetheless, the associated
financial liability is recognised for accounting purposes for an amount equal to
the consideration received which is measured subsequently at amortised cost,
together with the revenue from the financial asset transferred but not written off
and the expenses relating to the new financial liability.
iii)
If the risks and benefits linked to the financial instrument being transferred are
neither substantially transferred nor substantially retained, as in the case of sales
of financial assets with call and put options issued not deeply in or out of the
money, securitisations of assets where the assignor assumes subordinate
financing or any other kind of credit enhancement for a part of the asset
transferred, etc., a distinction is made between:
-
If the Group does not retain control of the financial instrument transferred, in
which case it is written off the consolidated balance sheet and any right or
obligation retained or created as a result of the transfer is recognised.
36
31 DECEMBER 2009
-
If 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 any changes in value and a financial liability associated with
the financial asset transferred is recognised in an amount equal to the
compensation received. This liability will be subsequently measured at its
amortized cost, unless it meets the requirements to be classified as a
financial liability at fair value through changes in profit and loss. As this
does not constitute a present obligation, when calculating the amount of
this financial liability a deduction will be made in the amount of financial
instruments (such as securitization bonds and loans) owned by the Entity,
and which constitute financing for the Entity, to which financial assets have
been transferred, to the extent that these instruments specifically finance
the transferred assets. The net amount of the asset transferred and
associated liability will be the amortised cost of the rights and obligations
retained if the asset transferred is measured at amortised cost or the fair
value of the rights and obligations retained, if the asset transferred is
measured at fair value.
Financial assets are, therefore, only written off the consolidated balance sheet when the
cash flows they generate have been extinguished or when the risks and benefits they carry
implicit have been substantially transferred to third parties. Similarly, financial liabilities are
only written off the consolidated balance sheet when the obligations that they generate have
been extinguished or when they are purchased with a view to their cancellation or
replacement.
In the financial statements for 2009 and 2008 the Group includes the securitization funds
I.M. Caja Laboral 1, F.T.A. and I.M. Caja Laboral 2, F.T.A., using the full consolidation
method into which in 2006 and 2008 the Group transferred certain mortgage loans (Notes
26 and 35).
The Group has not, however, recognised, unless they are to be recorded as the result of a
post-balance-sheet event or transaction, any financial assets or liabilities for transactions
that took place prior to 1 January 2004, other than derivative instruments, written off the
consolidated balance sheet as a result of the rules previously in force. In particular, the
Group has kept on its books, as at 31 December 2009 and 2008, securitised assets written
off the consolidated balance sheet prior to 1 January 2004 under the rules previously in
force, amounting to €16,718k and €20,144k, respectively (Note 26).
h)
Financial asset impairment
The carrying value of financial assets is generally adjusted against the consolidated income
statement when there is objective evidence that there are impairment losses. This is the
case where:
i)
For debt instruments, understood as loans and debt securities, when, following
their initial recognition, there is an event or combined effect of various events
which have a negative impact on the relevant future cash flows.
37
31 DECEMBER 2009
ii)
For equity instruments, when following their initial recognition, there is an event
or the combined effect of various events, making it impossible to recover their
carrying value.
As a general rule, the carrying value of financial instruments due to impairment is adjusted
against the consolidated income statement for the period in which such impairment arises
and the recovery of previously recorded impairment losses, if any, is recognised in the
consolidated income statement for the period in which such impairment is eliminated or
reduced. In the event that the recovery of any amount in respect of the impairment recorded
is considered remote, such impairment is written off the consolidated balance sheet
although the Group may carry out the necessary actions to attempt to secure collection until
the definitive extinguishment of its debt claims due to lapsing, remission or other reasons.
For debt instruments measured at amortised cost, the amount of impairment losses incurred
is equal to the negative difference between their carrying value and the present value of
estimated future cash flows. For listed debt instruments market value may be used instead
of the present value of future cash flows provided that such market value is sufficiently
reliable to be considered representative of the value that the Group may recover.
Estimated future cash flows of a debt instrument are all the amounts, principal and interest,
that the Group considers it will obtain over the life of the instrument. This estimate takes into
account all significant information available at the date of preparation of the consolidated
financial statements concerning the possible future collection of contractual cash flows.
Similarly, the estimate of future cash flows from instruments secured by mortgage, takes
into account the flows that would be obtained on realisation, less the amount of the
necessary costs for their obtainment and subsequent sale, irrespective of the probable
enforcement of the guarantee.
When calculating the present value of estimated future cash flow, the original effective
interest rate of the instrument is used as the discount rate if the contractual rate is a fixed
rate. Alternatively, the effective interest rate at the date to which the consolidated financial
statements refer, determined in accordance with the contract terms, is used when a variable
rate is involved.
Debt instrument portfolios, contingent risks and contingent commitments, irrespective of the
holder, arrangement or guarantee, are analysed in order to determine the credit risk to
which the Group is exposed and estimate coverage requirements for impairment. In order to
draw up the consolidated financial statements, the Group classifies its transactions on the
basis of the credit risk, analysing separately the insolvency risk attributable to the customer
and the country-risk to which, if appropriate, they may be exposed.
Objective evidence of impairment will be determined individually for all debt instruments that
are significant and individually or collectively for the groups of debt instruments which are
not individually significant. When a specific instrument cannot be included in any group of
assets with similar risk characteristics, it will be analysed solely on an individual basis to
determine whether it is impaired and, if appropriate, estimate the impairment loss.
38
31 DECEMBER 2009
The collective assessment of a group of financial assets to estimate impairment losses is as
follows:
i)
Debt instruments are included in groups with similar credit risk characteristics,
indicative of debtor capacity to pay all amounts, principal and interest, in
accordance with contractual terms. The characteristics of credit risk which are
taken into account in order to group together assets are, inter alia, the type of
instrument, the debtor’s sector of activity, geographical area of activity, type of
guarantee, age of amounts overdue and any other factor that may be relevant
when estimating future cash flows.
ii)
Future cash flows in each group of debt instruments are estimated based on the
Group’s experience of historical losses for instruments with similar credit risk
characteristics to those of the respective group, following the necessary
adjustments to adapt historical data to current market conditions.
iii)
Impairment losses in each group are the difference between the carrying value of
all the group’s debt instruments and the present value of its estimated future
cash flows.
Debt instruments not measured at fair value with changes in the income statement are
classified on the basis of the insolvency risk attributable to the customer or transaction in the
following categories: ordinary risk, substandard risk, doubtful risk due to customer default,
doubtful risk due to reasons other than customer default and bad debt risk. For debt
instruments not classified as normal risk, the necessary coverage for impairment is
estimated taking into account the amounts not paid, the guarantees provided and the
financial position of the customer and, where appropriate, the guarantor. These estimates
are made generally on the basis of the default schedule based on the Group’s experience
and sector information.
Similarly, debt instruments not measured at fair value with changes in the income statement
and contingent risks, irrespective of the customer, are analysed to determine the credit risk
by reason of country risk. Country risk is understood as the risk attaching to customers
resident in a specific country due to circumstances other than the habitual business risk.
In addition to the specific covers for impairment indicated above, the Group covers against
the inherent losses incurred in debt instruments not stated at fair value with changes in the
income statement and in the contingent risks classified as normal risk using a bundled
cover. Such collective cover which relates to the statistical loss is made taking into account
historical experience of impairment and other circumstances known at the time of
assessment and relates to inherent losses incurred at the date of the financial statements,
calculated using statistical procedures, which have yet to be assigned to specific
transactions.
39
31 DECEMBER 2009
In this respect, the Group has used, since it does not have sufficient historical and statistical
experience of its own in this respect, the parameters established by the Bank of Spain,
based on its experience and information on the sector, which determine the method and
amount to be used to cover inherent impairment losses incurred in debt instruments and
contingent risks classified as normal risk, which are changed regularly on the basis of the
development of the data in question. This method for determining coverage of impairment
losses incurred in debt instruments is carried out through the application of percentages to
debt instruments not measured at fair value with changes in the income statement and
contingent risks classified as normal risk. The aforementioned percentages vary based on
the classification of those debt instruments under normal risk in the following subcategories:
With no appreciable risk, Low Risk, Medium –Low Risk, Medium Risk, Medium – high Risk
and High Risk.
The recognition in the consolidated income statement of the accrual of interest on the basis
of the contractual terms is interrupted for all debt instruments classified individually as
impaired and for those for which impairment losses have been calculated collectively
because the amounts involved are more than three months past due.
The amount of impairment losses incurred in debt securities and equity instruments included
under Available-for-sale financial assets is equal to the positive difference between their
acquisition cost, net of any repayment of the principal, and their fair value less any
impairment loss previously recognised in the consolidated income statement.
When there is objective evidence that the decline in fair value is attributable to impairment,
the latent losses recognised directly under Measurement adjustments to consolidated equity
are recorded immediately in the consolidated income statement. If subsequently all or part
of the impairment losses are recovered, the amount involved is recognised, in the case of
debt securities, in the consolidated income statement for the recovery period, and, in the
case of equity instruments, under Measurement adjustments to consolidated equity.
For debt and equity instruments classified under non-current assets for sale, the losses
recorded previously under consolidated equity are considered to be realised and are
recognised in the consolidated income statement at the date of their classification.
Impairment losses on equity instruments measured at cost relate to the difference between
their carrying value and present value of expected future cash flows, discounted at the
market rate of return for other similar securities. Such impairment losses are recorded in the
consolidated income statement for the period in which they arise by directly reducing the
cost of the financial asset. The amount involved may not be recorded except in the event of
a sale.
For shareholdings in Multigroup entities and Associates, the Group estimates impairment
losses by comparing the recoverable amount with their carrying value. Such impairment
losses are recorded in the consolidated income statement for the period in which they arise
while subsequent recoveries are recorded in the consolidated income statement for the
recovery period.
40
31 DECEMBER 2009
i)
Measurement of foreign currency accounts
The Group’s functional currency is the euro. Therefore all balances and transactions
denominated in currencies other than the euro are considered denominated in foreign
currency.
Set out below are the equivalent values in euro of the total assets and liabilities
denominated in foreign currency held by the Group as at 31 December 2009 and 2008:
2009
Assets
US Dollars
Pounds sterling
Japanese yen
Swiss franc
Other
Liabilities
Assets
2008
Liabilities
36,407
2,963
1,190
1,807
626
58,490
5,475
34
319
12
61,392
4,261
1,608
1,722
1,396
89,414
3,983
6,388
33
-
42,993
64,330
70,379
99,818
The equivalent value in €’000 of assets and liabilities denominated in foreign currency,
classified by nature, recorded by the Group at 31 December 2009 and 2008 is as follows:
2009
Assets
Available- for- sale financial assets
Liabilities
Assets
2008
Liabilities
1,432
27,656
13,905
-
64,330
2,057
25,940
42,382
-
71,855
27,963
42,993
64,330
70,379
99,818
When initially recognised, debtor and creditor balances denominated in foreign currency are
translated to the functional currency using the spot exchange rate at the date of recognition,
understood as the exchange rate for immediate delivery. After initial recognition, the
following rules are applied to translate balances denominated in foreign currency to the
functional currency:
i)
Monetary assets and liabilities are translated at the year end exchange rate,
understood as the average spot exchange rate at the date to which the financial
statements relate.
ii)
Non-monetary items measured at cost are translated at the exchange rate on the
date of acquisition.
Non-monetary items measured at fair value are translated at the exchange rate
on which fair value is determined.
iii)
41
31 DECEMBER 2009
iv)
Income and expense are translated by applying the exchange rate on the
transaction date. Nonetheless, the average exchange rate for the period is used
for all transactions carried out in that period, unless there have been significant
fluctuations. Depreciation/ amortisation is translated at the exchange rate applied
to the relevant asset.
Exchange differences arising on translation of debtor and creditor balances denominated in
foreign currency are generally recorded in the consolidated income statement. Nonetheless,
in the case of exchange differences that arise on non-monetary items measured at fair
value, for which the fair value adjustment is recorded under Measurement Adjustments to
consolidated Equity, the component of the exchange rate relating to the revaluation of the
non-monetary element is broken down.
Balances in the annual accounts of investees where the functional currency is not the euro
are translated to euro as follows:
i)
Assets and liabilities are translated through the application of the year-end
exchange rate.
ii)
Income and expenses and cash flows are translated at the average exchange
rates for the year.
iii)
Equity is translated at historical exchange rates.
Exchange differences resulting from the translation of the Investees’ annual accounts where
the functional currency is not the euro are recorded under Measurement adjustments to
consolidated equity.
None of the functional currencies of the Investees relates to economies deemed highly
inflationary according to the criteria established in this respect. Therefore, at the 2009 and
2008 accounting close, there has been no need to adjust the financial statements of any
Investee to correct them for the effects of inflation.
j)
Recognition of income and expense
Income and expense relating to interest and similar items are generally carried on an
accruals basis and under the effective interest rate method. Dividends received from other
companies are taken to income when the right to receive them vests.
Fees paid or collected for financial services, irrespective of their denomination under
contract, are classified in the following categories that determine the manner in which they
are allocated in the income statement:
42
31 DECEMBER 2009
i)
Financial fees are those that form an integral part of the return on or effective
cost of a financial transaction and are allocated to the consolidated income
statement over the expected life of the transaction as an adjustment to cost or
the effective return on the same. These include origination fees for asset
products, exceeded credit fees and overdraft fees in liability accounts. Accrued
financial fees in 2009 amounted to €11,807k (€7,199k in 2008).
Financial fees on operations formalised each year are deferred, as indicated above,
insofar as they do not offset the direct costs of the operations in question. Fees
taken to results in 2009 and 2008 to offset the direct costs of operations
formalised are included under “Other operating income” in the consolidated
income statement (Note 54).
ii)
Non-financial fees are those deriving from the provision of services and may
arise on the performance of a service carried out during a period of time and the
provision of a service carried out in a single act (See Notes 50 and 51).
Income and expense in respect of fees and similar items are recorded in the consolidated
income statement generally in accordance with the following:
i)
Those related to financial assets and liabilities measured at fair value with
changes in the income statement are recorded at the time of collection.
ii)
Those that relate to transactions or services which are carried out during a period
of time are recorded during the period in which such transactions or services take
place.
iii)
Those that relate to a transaction or service which is carried out in a single act
are recorded when the relevant act takes place.
Non-financial income and expense are recorded on an accruals basis. Collections and
payments deferred over more than one year are accounted for at the amount resulting from
financially discounting the expected cash flows at market rates.
k)
Offset of balances
Debtor and creditor balances arising on transactions which under contract or Legislation,
provide for possible offset and the intention is to liquidate them at their net amount or realise
the asset and pay the liability simultaneously, are presented in the consolidated balance
sheet at the net amount.
l)
Financial guarantees
A financial guarantee contract is an agreement that requires the issuer to make specific
payments to reimburse the creditor for any loss incurred when a specific debtor fails to
comply with repayment obligations in accordance with the original or amended conditions of
a debt instrument, regardless of their legal form, which may be, among others, a guarantee,
financial surety, insurance policy or credit derivative.
43
31 DECEMBER 2009
The entity issuing financial surety agreements recognizes them under “Other financial
liabilities” at their fair value plus transaction costs that are directly attributable to the issue of
the instrument, unless involving contracts issued by insurance companies.
Initially, unless evidence indicates otherwise, the fair value of a financial guarantee contract
issued to an unassociated third party within an isolated transaction under conditions of
mutual independence, is the premium received plus, if appropriate, the present value of
cash flows to be received, applying an interest rate that is similar to that applied to financial
assets granted by the Entity for similar terms and at similar risk levels. At the same time the
present value of the future cash flows yet to be received is recognized as a credit on the
asset side of the balance sheet, using the aforementioned interest rate.
After initial recognition the contracts are treated in accordance with the following criteria:
i)
The value of commissions or premiums to be received for financial guarantees is
updated by recording the differences in the consolidated income statement as
financial income.
ii)
The value of financial guarantee contracts that have not been classified as
doubtful is the amount initially recognized under liabilities less the portion
attributed to the consolidated income statement on a straight line basis over the
expected life of the guarantee, or in accordance with other criteria, provided that
they more adequately reflect the perception of the benefits and financial risks
deriving from the guarantee
The classification of a financial guarantee contract as doubtful means that it will be
reclassified to the heading “Provisions for contingent risks and commitments”, which is
measured by applying the provisions of Note 13.h, above.
m)
Leases
Lease contracts are presented on the basis of the economic substance of the transaction,
irrespective of its legal form, and are classified from inception as finance or operating
leases.
i)
A lease is considered a finance lease when substantially all the risks and benefits
attaching to the ownership of the assets subject to the contract are transferred.
Whenever the Group acts as a lessor of an asset, the sum of the present values of the
amount that will be received from the lessee plus the guaranteed residual value,
usually the purchase option price when the lease terminates, are recorded as
financing provided to third parties. It is therefore included in the caption Credits,
loans and discounts on the consolidated balance sheet, in accordance with the
nature of the lessee.
44
31 DECEMBER 2009
When the Group acts as the lessee, the cost of the leased assets is recorded in the
consolidated balance sheet, on the basis of the nature of the asset covered by
the contract, and at the same time, a liability is booked for the same amount,
which will be the lower of the fair value of the leased asset or the sum of the
present value of the amounts payable to the lessor, plus, if appropriate, the
purchase option exercise price. These assets are depreciated using similar rates
as those applied to property, plant and equipment for own use as a whole.
Financial income and expense arising on these contracts is credited and charged
respectively, to accounts in the consolidated income statement such that the
return is consistent over the contract term.
ii)
Lease contracts which are not considered finance leases are classified as
operating leases.
When the Group acts as the lessor, the acquisition cost of the leased assets is
recorded under Property, plant and equipment. Such assets are depreciated in
accordance with the policies adopted for similar property, plant and equipment
for own use and the income from lease contracts is recognised in the
consolidated income statement on a straight-line basis.
When the Group acts as the lessee, lease expenses, including the incentives granted,
if appropriate, by the lessor, are recorded on a straight-line basis in the
consolidated income statement.
n)
Equity managed
Equity managed by the Group which is owned by third parties is not included in the
consolidated balance sheet. Fees generated by this activity are recorded under Fees
collected in the consolidated income statement (Note 50).
o)
Investment funds and pension funds managed by the Group
Investment and pension funds managed by the Group are not recognised in it’s consolidated
balance sheet as the fund assets are owned by third parties (Note 66). Fees accrued during
the year for services rendered to the funds by the Group (asset management, portfolio
depository services, etc.) are recorded in “Fees collected” in the consolidated income
statement (Note 50).
45
31 DECEMBER 2009
p)
Staff costs and post-retirement remuneration
Remuneration paid to employees upon the termination of their employment is considered
post-employment remuneration. Post-employment remuneration, including remuneration
covered through internal or external pension funds, is classified as defined contribution
plans or defined benefit plans on the basis of the conditions attaching to the relevant
obligations, taking into account all the commitments taken on included in and excluded from
the terms formally agreed with employees.
Past service costs, resulting from changes in post-remuneration expenses that already exist
or when new benefits are introduced, are recognised, on a straight-line basis, over the
period between when the new commitments arise and the date the employee becomes
irrevocably entitled to receive the new benefits. Post-employment remuneration is recorded
in the income statement as follows:
i) The cost of the services of the current period, corresponding to the increase in the
present value of the obligations originating as a result of the services provided by
the employees in the year is recorded in Staff costs.
ii) The interest cost corresponding to the increase in the year in the present value of
the obligations as a result of the time elapsed is recorded in Interest and similar
charges. Whenever the obligations are presented, net of the assets of the plan,
under liabilities, the cost of the liabilities recorded in the income statement
corresponds entirely to the obligations recorded under liabilities.
iii) The expected return on the assets assigned to cover the commitments, less any
cost originated by their administration and the taxes levied thereon, is recorded in
Interest and similar revenue.
iv) The amortisation of the actuarial results is recorded in Provisions (net), applying the
treatment of the fluctuation band and unrecognised past service costs.
Caja Laboral's policy of depreciating actuarial losses and/or gains on post-employment
obligations consists of directly recognizing these items in the income statement at the time
they arise. Actuarial losses and/or gains arise due to changes in actuarial assumptions or
differences between the assumptions taken into consideration and reality.
Dynamic payroll plan
In 2009 the "Dynamic Payroll Plan" was implemented as approved by the Parent entity's
Governing Board that covers a certain group of members of Caja Laboral between 2009 and
2013. The plan is voluntary and only applicable to the defined group once a written request
to join the plan is received, in accordance with the conditions established in the plan's
regulations.
46
31 DECEMBER 2009
The main characteristics of the "Dynamic Payroll Plan" are described below:
i) members who are 60, 61 and 62 years of age and, exceptionally, those of 63 and 64
years of age in 2009 may take early retirement with the right to receive certain
compensation.
ii) members who reach an age between 57 and 61 in 2009 and have joined the plan
before 30 June 2009, may avail themselves of certain special employment conditions
and receive certain compensation, which will accrue up until the date on which
services cease to be rendered by the member.
The obligations assumed with respect to the members joining the plan as from the future
date on which services cease up until the date of effective retirement agreed with the Entity
and other similar issues have been treated for accounting purposes, as applicable, in
accordance with the standards for defined benefit post-employment plans.
The obligation accruing at the end of 2009 is recognized under the heading "Provisions –
Retirement benefit obligations" in the balance sheet at that date (Note 37)
Severance payments
Under current Spanish labour legislation, the Entity is required to make indemnity payments
to employees terminated without just cause. There are no labour force reduction plans
making it necessary to record a provision in this connection.
q)
Corporate income tax is considered to be an expense and is recorded under the heading
Corporate income tax in the consolidated income statement.
The corporate income tax expense is determined by tax payable calculated with respect to
the tax base for the year, taking into account the variations during that year deriving from
temporary differences, deductions and credits and tax losses. The tax base for the year may
differ from the consolidated net surplus for the year since it excludes income and expense
items which may be taxed or deducted in other years and items which are at no time taxed
or deducted.
Deferred tax assets and liabilities relate to those taxes which are expected to be payable or
recoverable in the differences between the carrying value of the assets and liabilities in the
financial statements and the relevant tax bases. They are recorded using the liability method
in the consolidated balance sheet and are quantified by applying to the temporary difference
or credit involved the tax rate at which it is expected to be recovered or assessed.
47
31 DECEMBER 2009
A deferred tax asset, such as deferred tax, a credit in respect of deductions and rebates and
a credit in respect of tax losses, is recognised provided that the Group is likely to obtain
sufficient taxable income in the future against which to realise it. It is considered probable
that the Group will obtain sufficient tax income when, inter alia:
i)
There are deferred tax liabilities which may be cancelled in the same year as that
in which the deferred tax asset may be realised or in a subsequent year in which
the existing tax loss or tax loss resulting from the amount advanced may be
offset.
ii)
Tax losses have arisen due to the reasons identified and are unlikely to arise
again.
Nonetheless, the deferred tax asset resulting from the recording of investments in
Subsidiaries, Multigroup entities or Associates is only recognised when its future realisation
is probable and sufficient tax income is expected to be obtained in the future against which
to apply it. Nor is a deferred tax asset recognised when an equity item is initially recorded
which is not a business combination, which at the time of recognition has not affected the
accounting or tax results.
Deferred tax liabilities are always recorded, except when goodwill is recognised or they arise
on recording investments in Subsidiaries, Multigroup entities or Associates if the Group is
able to control the time of reversal of the temporary difference and, moreover, such
temporary difference is unlikely to reverse in the foreseeable future. Nor is a deferred tax
liability recognised when an equity item is initially recorded which is not a business
combination, which at the time of recognition has not affected the accounting or tax results.
At each accounting close deferred tax assets and liabilities are reviewed in order to verify
that they are still valid and make the relevant adjustments.
r)
Property, plant and equipment for own use relate to tangible assets which are considered
will be used on an on-going basis by the group and tangible assets acquired under finance
lease. They are measured at acquisition cost less the relevant accumulated depreciation
and, if appropriate, any impairment loss resulting from comparing the net value of each
asset and the relevant recoverable amount. The acquisition cost of certain freely available
property, plant and equipment for own use includes their fair value measurement at 1
January 2004 in accordance with Transitional Provision One of Circular 4/2004. That fair
value at 1 January 2004 has been obtained based on independent expert valuations.
For foreclosure assets, the acquisition cost relates to the net amount of the financial assets
delivered in exchange.
48
31 DECEMBER 2009
Depreciation is calculated systematically on a straight-line basis, by applying the estimated
useful lives of the assets to cost less residual value. Land on which buildings and other
constructions stand is understood to have an indefinite life and therefore no depreciation is
charged. Annual depreciation charges in respect of property, plant and equity are recorded
against the consolidated income statement and are calculated on the basis of the following
average estimated useful lives of the different asset groups:
Estimated useful
life
Buildings and estates
Furniture
50
10
Installations
8 - 10
Machinery, electronic equipment and other
4-6
At each accounting close, the Group analyses whether there are any internal and external
indications that the net value of property, plant and equipment exceeds the relevant
recoverable amount. In this case, the Group reduces the carrying value of the relevant asset
to its recoverable amount and adjusts future depreciation charges in proportion to the
adjusted carrying value and new remaining useful life if it is necessary to re-estimate it.
Moreover, when there is an indication that the value of an asset has been recovered, the
Group records the reversal of the impairment loss recorded in prior periods and adjusts
future depreciation charges accordingly. The reversal of the impairment loss of an asset in
no event may entail an increase in its carrying value in excess of that which would be
obtained if such prior year impairment losses had not been recognised.
At least at the end of each year the Group reviews the estimated useful lives of property,
plant and equipment for own use in order to detect significant changes in the same which, if
any, are adjusted through the relevant adjustment to the amount recorded in future
consolidated income statements in respect of the depreciation charge in accordance with
the new estimated useful life.
Conservation and maintenance expenses of property, plant and equipment for own use are
recorded in the consolidated income statement in the year in which they are incurred.
Investment properties on property, plant and equipment correspond to the net values of the
land, buildings and other constructions the Group has to let out or to earn a capital gain on
their sale as a result of the increases in their respective market prices.
The criteria applied by the Group to recognise the acquisition cost of the assets assigned
under operating lease with respect to depreciation and the estimate of their respective
useful lives and the recording of impairment loses, agree with the those described for
property, plant and equipment for own use.
49
31 DECEMBER 2009
s)
Intangible assets
Intangible assets are non-monetary assets which are identifiable but have no physical
appearance. Intangible assets are considered identifiable when they may be separated from
other assets because they may be sold, leased or disposed of individually or they derive
from a contract or other type of legal business. An intangible asset is recognised when, in
addition to conforming to the above definition, the Group considers the flow of economic
benefits from that asset probable and its cost may be reliably estimated.
Intangible assets are recognised initially at acquisition or production cost and are
subsequently measured at cost less, if appropriate, accumulated amortisation and any
impairment loss.
Goodwill represents the advance payment made by the Group for future financial benefits
deriving from the assets of a company that has been acquired, which cannot be individually
and separately identified and recognised and is only recognised if it has been acquired for
valuable consideration in a business combination.
Positive differences between the cost of the shareholdings in the capital of Subsidiaries,
Multigroup entities and Associates with respect to the relevant carrying values acquired,
adjusted at the date of the first consolidation, are allocated as follows:
i)
If they are assignable to specific equity items of the entities acquired, they are
assigned by increasing the value of the assets or reducing the value of the liabilities,
the market value of which is higher or lower, respectively, than the net carrying values
in the predecessor balance sheets and whose accounting treatment is similar to that of
the Group’s same assets and liabilities, respectively.
ii)
If they are assignable to specific intangible assets, they are allocated through their
explicit recognition on the consolidated balance sheet provided that their fair value at
the acquisition date may be determined reliably.
iii)
Remaining differences which may not be allocated are recorded as goodwill which is
assigned to one or more specific cash generating units.
Negative differences between the cost of the shareholdings in the capital of Subsidiaries,
Multigroup entities and Associates with respect to the relevant carrying values acquired,
adjusted at the date of the first consolidation, are allocated as follows:
i)
If they are assignable to specific equity items of the entities acquired, they are
assigned by increasing the value of the liabilities or reducing the value of assets, the
market value of which is higher or lower, respectively, than the net carrying values in
the predecessor balance sheets and whose accounting treatment is similar to that of
the Group’s same liabilities and assets, respectively.
ii)
The remaining amounts which may not be allocated are recorded in the consolidated
income statement for the year in which capital is acquired.
50
31 DECEMBER 2009
The useful lives of other intangible assets may be indefinite when, on the basis of analyses
performed of the relevant factors, the conclusion is that there is no foreseeable limit to the
period during which net cash flows are expected to be generated in favour of the Group or of
the definite useful life. Intangible assets with an indefinite useful life are not amortised
although at each accounting close the Group reviews the remaining useful lives in order to
ensure that they are still indefinite or, alternatively, take the relevant action. Intangible
assets with a definite life are amortised at rates similar to those used for property, plant and
equipment.
In any event, the Group records for accounting purposes any impairment loss relating to
these assets with a balancing entry in the consolidated income statement. The criteria for
recognising impairment losses on these assets and, if appropriate, the recovery of the
impairment losses recorded in prior years are similar to those for property, plant and
equipment.
t)
Inventories
Inventories are non-financial assets held by the Group for sale in the ordinary course of
business, are going through the production, construction or development process with this
end in mind or are going to be consumed in the production process or when providing
services. Inventories include, therefore, land and other properties that are held by the Group
for sale as part of its property development business.
Inventories are stated at the lower of cost, which includes all the costs incurred in acquiring
and transforming them and any other direct and indirect costs, which have been incurred in
order to bring them to their present condition and location, and their net realisable value. Net
realisable value is defined as the estimate sale price of the inventories in the ordinary
course of business, less the estimated cost of completing their production and the costs
involved in selling them.
The cost of inventories that cannot ordinarily be exchanged for others and of
the assets and services produced and segregated for specific projects is calculated by
identifying their itemised costs under the FIFO method.
The amount of any restatement of inventories, for damage, obsolete items and decrease in
the sale value, to their net realisable value and any losses under any other headings is
charged to expense in the consolidated income statement for the year the impairment or
loss occurs. Any later recoveries in value are taken to the consolidated income statement for
the year in which they occur.
The carrying value of inventories is written off the consolidated balance sheet and is
charged to expense in the consolidated income statement in the year the income from their
sale is recognised. The indicated expenses are included under the heading Other operating
charges in the consolidated income statement.
51
31 DECEMBER 2009
u)
Insurance transactions
Subsidiaries which are insurance companies credit to the consolidated income statement
the amounts of the premiums written and charge to the consolidated income statement the
cost of the claims that they have to settle at the date of final settlement. Similarly, the
amounts credited to the consolidated income statement and not accrued at that date and the
costs incurred not charged in the consolidated income statement are accrued at the closing
each year.
The most significant technical reserves connected with direct insurance activity are as
follows:
i)
Unearned premium reserve which relates to the tariff premium collected in one
year attributable to future years following the deduction of the loading for
contingencies.
ii)
Unexpired risk reserve which complements the Unearned premium reserve when
the Unearned premium reserve is insufficient to reflect the measurement of the
risks and expenses to be covered that relate to the unexpired coverage period at
the year end.
iii)
Technical reserve for claims which relates to the estimated measurement of
outstanding obligations deriving from the claims occurred prior to the year end.
This technical reserve includes claims pending settlement or payment and claims
not yet reported. Outstanding obligations are calculated by deducting payments
on account and taking into account the internal and external claims settlement
expenses and, if appropriate, the additional provisions which may be needed to
cover deviations in the measurement of claims involving long processing periods.
iv)
Life insurance technical reserve:
-
For life insurance where the coverage period is equal to one year or less,
the unearned premium reserve relates to the tariff premium collected
assignable to future years. When that technical reserve is not sufficient, an
unexpired risk reserve is calculated which complements and covers the
measurement of forecast risks and expenses in the period which has not
expired at the year end date.
-
For life insurance for which the coverage period is more than one year, the
Mathematical reserve is calculated as the difference between the present
actuarial value of future obligations and those of the policyholder or insured,
taking as a basis for the calculation of the office premium accrued in the
year which comprises the risk premium plus the administration expense
loading according to the technical bases.
-
For life insurance where the investment risk is assumed by the policy
holder, the technical reserve is determined on the basis of the assets
specifically assigned in order to determine the value of the rights.
52
31 DECEMBER 2009
v)
Technical reserve for share in profit and returned premiums which relates to the
benefits accrued to policyholders, insured or beneficiaries of the insurance and
that for premiums that should be returned to policyholders or insured parties in
accordance with the performance of the insured risk until they have been
assigned individually to each of the former.
vi)
Claims equalisation reserve which relates to the amount provided each year in
respect of the specific loadings for contingencies for certain lines of insurance, up
to the limit envisaged in the technical bases and which is cumulative in nature.
The reserves for accepted reinsurance are calculated in accordance with criteria which are
similar to those applied in direct insurance and generally on the basis of the information
provided by the ceding entities.
Technical reserves for both direct and accepted reinsurance are included under Insurance
contract liabilities in the consolidated balance sheet. Nonetheless, technical reserves for
future possible claims which do not result from existing insurance contracts at the year end
date, such as the technical reserve for catastrophic risks and the claims equalisation reserve
are not recognised under insurance contract liabilities in the consolidated balance sheet.
The amounts that the Group is entitled to receive under reinsurance contracts are recorded
under Assets held for reinsurance in the consolidated balance sheet. The Group verifies
whether those assets are impaired in which case it recognises the relevant loss in the
consolidated income statement directly against that heading.
v)
Provisions and contingent liabilities
The Group’s present obligations resulting from past events are considered provisions when
their nature is clearly defined at the date of the financial statements but the amount or time
of settlement are not defined, and upon the maturity of which and in order to settle them the
Group expects an outflow of resources which include economic benefits. Such obligations
may arise due to the following:
i)
A legal or contractual provision.
ii)
An implicit or tacit obligation arising from a valid expectation created by the group
vis-à-vis third parties with respect to the assumption of certain types of liabilities.
Such expectations are created when the Group publicly accepts liabilities, and
derive from past performance or business policies that are in the public domain.
iii)
The virtually certain development of certain aspects of legislation, in particular,
legislative bills which the group will be unable to circumvent.
53
31 DECEMBER 2009
The Group’s possible obligations resulting from past events, the existence of which is
conditional on the occurrence or otherwise of one or more future events beyond the Group’s
control are contingent liabilities. Contingent liabilities include the Group’s present obligations
the settlement of which is unlikely to give rise to a decrease in resources that bring in
economic benefits or the amount of which, in extremely rare cases, cannot be sufficiently
reliably quantified.
Provisions and contingent liabilities are classified as probable when the likelihood of
occurrence is greater than that of not occurrence, possible when the likelihood of
occurrence is less than that of not occurrence, and remote when their occurrence is
extremely rare.
The Group includes in the consolidated annual accounts all significant provisions and
contingent liabilities with respect to which it considers that it is more likely than not to have
to fulfil the obligation. Contingent liabilities classified as possible are not recognised in the
consolidated accounts. Rather, they are disclosed unless the likelihood of a decrease in
resources that bring in financial gain occurring is deemed to be remote.
Provisions are quantified taking into account the best available information concerning the
consequences of the event that originated them and are estimated at each accounting
close. They are used to address the specific obligations for which they were recognised and
may be reversed in full or in part when such obligations no longer exist or decrease.
At 31 December 2009 and 2008 the Group may have to address certain litigations,
responsibilities and obligations deriving from the ordinary performance of its operations. The
Group’s legal advisors and the Parent Entity’s directors understand that the finalisation of
these proceedings and claims will not have a significant effect other than that provided for, if
appropriate, in the consolidated annual accounts for the years in which they finalise.
w)
Non-current assets for sale and liabilities associated with non-current assets for sale
The heading Non-current assets available-for-sale in the consolidated balance sheet
includes assets of any nature that, while not forming part of the Entity's operating activities,
include amounts that are expected to be realized or recovered in more than one year after
the date classified under this heading.
When on an exceptional basis the sale is expected to take place in more than one year, the
Group evaluates the selling costs in present terms and records the increase in value
deriving from the passage of time under the heading Gains/(losses) on non-current assets
available-for-sale not classified as interrupted operations in the consolidated income
statement.
Therefore the carrying value of these items, which may be financial and non-financial in
nature, will presumably be recovered through the price obtained on their disposal, instead of
on-going use.
54
31 DECEMBER 2009
Therefore, the fixed assets or other long-term assets received by the Group to pay off all or
part of the payment obligations of its debtors with regard to the Group are deemed noncurrent assets for sale, unless the Group has decided to use these assets on an ongoing
basis.
Furthermore, Liabilities associated with non-current assets for sale include the credit
balances associated with the disposal groups or the discontinued operations of the Group.
The assets classified as non-current assets for sale are generally measured at the lower of
the carrying value at the time they are considered such and fair value net of the estimated
selling costs of such assets., except those of a financial nature that are measured in
accordance with the provisions of Note 13.e.ix). While they are classed as non-current
assets for sale, property, plant and equipment and intangible assets which are depreciable/
amortizable by nature are not depreciated/ amortised.
In the event that the carrying value exceeds the fair value of the assets net of selling costs,
the Group adjusts the carrying value of the assets by that excess amount, charging the
heading Gains/(losses) on non-current assets available-for-sale not classified as interrupted
operations in the consolidated income statement. In the event that there are subsequent
increases in the fair value of the assets, the Group reverses the previously recorded losses
and increases the carrying value of the assets up to the limit of the amount just prior to
possible impairment, charging the heading Gains/(losses) on non-current assets availablefor-sale not classified as interrupted operations in the consolidated income statement.
The results generated in the year in respect of those components of the Entity that have
been considered discontinued operations are recorded under Gains/ losses on discontinued
operations (net) in the income statement, irrespective of whether the component has been
written off at the year end. If after being presented as interrupted operations they are
classified as continuous operations, the relevant revenues and expenses are presented
under the appropriate accounts based on their nature in both the income statement for the
year and in the income statement for the comparative year published in the financial
statements.
x)
Consolidated cash flow statement
The consolidated cash flow statement uses certain terms with the following definitions:
i)
Cash flows are inflows and outflows of cash and cash equivalents, understood as
short-term investments which are highly liquid and involve a low risk of changes
in value.
ii)
Operating activities which are the Group’s typical activities and other activities
which may not be classified as investing or financing and the interest paid for any
financing received, even if relating to financial liabilities classified as financing
activities.
55
31 DECEMBER 2009
iii)
Investing activities which are those activities relating to the acquisition, sale or
disposal through other means of long-term assets and other investments not
included in cash and cash equivalents, property, plant and equipment, intangible
assets, shareholdings, non-current assets and associated liabilities available-forsale, equity instruments classified as available-for-sale that relate to strategic
investments and financial assets included in the held-to-maturity investment
portfolio.
iv)
Financing activities are the activities that give rise to changes in the size and
composition of consolidated equity and the liabilities that do not form part of
operating activities.
The Group regards the balances included under “Cash and deposits at central banks” in the
consolidated balance sheets as cash and equivalents.
y)
Cooperative Training, Promotion and Education Fund (FEP)
The Promotion and Education Fund is recorded under “Community projects fund” in the
consolidated balance sheet.
Appropriations to that fund which, in accordance with the Law on Cooperatives and the
Parent Entity’s bylaws are mandatory, are accounted for as an expense for the year
although quantified on the basis of the surplus for the year. The additional amounts that may
be appropriated on a discretionary basis will be recognised as an application of the surplus
for the year.
Grants, donations and other assistance related to the Cooperative Training, Promotion and
Education Fund in accordance with the law or funds deriving from the levying of fines by the
cooperative to members which, under applicable legislation, are related to said fund, will be
recognised as cooperative income and an appropriation will be made to said fund for the
same amount.
The application of the Cooperative Training, Promotion and Education Fund for the purpose
for which it was set up will lead to its write-off normally by credit to cash accounts. When its
application is through activities typical of a credit institution, the amount of the Cooperative
Training, Promotion and Education Fund will be reduced and income will be simultaneously
recognised in the credit cooperative’s income statement in accordance with normal market
conditions for that type of activities.
The Fund’s property, plant and equipment is included under Property, plant and equipment
and is carried out at restated cost in accordance with the rules described in paragraph (r)
above, less the relevant accumulated depreciation.
Property, plant and equipment is depreciated based on cost or restated cost, as appropriate,
on a straight-line basis over the estimated useful lives of each asset group and using the
rates described in paragraph (r) above.
56
31 DECEMBER 2009
z)
Consolidated statement of changes in equity
The consolidated statement of changes in equity presented in these financial statements
shows all changes affecting equity during the year. In turn, this information is broken down
into two statements: Consolidated statement recognized income and expenses and
Statement of total changes in consolidated equity. The main characteristics of the
information contained in both parts of the statement is set out below:
i)
Statement of recognized income and expense.
This part of the Statement of changes in consolidated equity presents the
revenues and expenses generated by the Group as a result of its activities during
the year, making a distinction between those recorded as results in the
consolidated income statement for the year and other revenues and expenses
recorded, in accordance with the provisions of current legislation, directly under
Therefore, this statement presents:
a)
Consolidated results for the year.
b)
The net amount of revenues and expenses recognized on a transitional
basis as measurement adjustments under consolidated equity.
c)
The amount of revenues and expenses definitively recognized under
d)
Corporate income tax accrued for the reasons indicated in paragraphs b)
and c) above.
e)
Total recognized revenues and expenses, calculated as the sum of the
aforementioned paragraphs.
Changes in recognized revenues and expenses under consolidated equity as
measurement adjustments break down as follows:
a)
Measurement gains / (losses): Records the amount of revenues, net of
expenses originating during the year, recognized directly under
consolidated equity. The amounts recognized during the year under this
account are maintained there, even if during that year they are transferred
to the consolidated income statement at the initial value of other assets or
liabilities or are reclassified to another heading.
b)
Amounts transferred to the income statement: Records the amount of
measurement gains or losses previously recognized under consolidated
equity, even if during the same year, that are recorded in the consolidated
income statement.
57
31 DECEMBER 2009
c)
Amounts transferred to initial value of hedged items: Records the amount of
measurement gains or losses previously recognized under equity, even if
during the same year, at the initial value of the assets or liabilities as a
result of cash flow hedges.
d)
Other reclassifications: Records the amount of transfers made during the
year among measurement adjustment accounts in accordance with the
criteria established in current legislation.
The amounts of these headings are presented at gross, reflecting the relevant
tax effect under the heading "Corporate income tax" in that statement.
ii)
Consolidated statement of total changes in equity
This part of the Statement of changes in consolidated equity presents all
movements recorded under consolidated equity, including those that originate
from changes in accounting policies and error corrections. This statement
therefore shows a reconciliation of the carrying value at the start and end of the
year of all items that form part of consolidated equity, grouping movements
based on their nature under the following accounts:
14.
a)
Adjustments due to changes in accounting policies and Error adjustments:
This includes changes in equity that arise as a result of the retroactive
restatement of the balances in the financial statements originating from
changes in accounting policies or error corrections.
b)
Revenues and expenses recognized during the year: This records the
aggregate total of items recognized in the statement of consolidated
recognized revenues and expenses indicated above.
c)
Other changes in equity: This heading records all other items recorded
under consolidated equity, such as capital increases or decreases,
distribution of results, transactions involving treasury shares, payments
involving equity instruments, transfers between consolidated equity
accounts and any other increase or decrease affecting consolidated equity.
Customer ombudsman
This Department addresses queries, complaints and claims filed by customers through the
pertinent channels.
The department has officially two months to settle the written queries, complaints or claims
filed although the Entity has undertaken to address such matters with the utmost diligence,
before the end of that period.
58
31 DECEMBER 2009
During 2009 a total of 2,496 files have been opened (2,352 in 2008), of which 2,309 have
been processed (2,212 in 2008) and with respect to which the relevant reply has been
provided. During 2009 187 case files were not accepted for processing (140 in 2008) due to
motives included in the Costumer Ombudsman Rules as causes for rejection of claims or
complaints.
2009
No. files opened
- In writing: brochure / letter
- Internet
- Public bodies: OMIC / Regional Governments
No. case files processed
Nature of the Files
- Complaints
- Claims
- Queries
- Suggestions
- Letters of congratulations / gratitude
- Sundry petitions
2008
938
1,519
39
2,496
2,309
965
1,342
45
2,352
2,212
1,110
745
335
31
4
271
2,496
1,034
632
308
38
10
330
2,352
2009
Amounts claimed
- Amounts relating to cases for which the decision favoured the Entity
- Amounts relating to cases for which the decision favoured the Customer
.
Indemnities paid by the Entity
.
Indemnities paid by third parties
.
Amounts returned to customers, recovered by the Entity
2,453
50
28
6
16
2,503
2008
891
49
26
4
19
940
Noteworthy is the fact that the reasons for claims focused on the following:
2009
Centralised customer services
Fees and expenses
Financial Terms
Needs coverage
Lack or insufficient information
Branches for objective issues
Customer relations issues
Campaigns in general
Other
30%
15%
14%
11%
5%
5%
5%
3%
12%
2008
30%
16%
7%
9%
12%
2%
5%
3%
16%
With respect to Centralised Services, the most significant are queries about Caja Laboral
Net, the claims and complaints associated with the operation of cards and mailings.
59
31 DECEMBER 2009
With respect to the amounts claimed, the percentages are as follows:
2009
= < 10 €
> 10 < = 60 €
> 60 < = 100 €
> 100 < = 250 €
> 250 < = 1.000 €
> 1.000 €
2008
37%
29%
4%
6%
13%
11%
38%
23%
5%
7%
15%
12%
With respect to the Customer Ombudsman Department of Seguros Lagun Aro Vida, S.A., in
2009 it received 21 claims and complaints (18 in 2008), of which 18 have been processed.
With respect to the reasons for claims or complaints, they are basically due to
disagreements with indemnities and surrender. The outcome of the case files processed is
as follows:
2009
In favour of the customer
In favour of the Entity
Other
2008
4
13
1
9
9
-
18
18
The cost for the Entity of total complaints and claims favourable to customers has amounted
to €2 in 2009 (€1,281 in 2008). Complaints and claims have on average been addressed
within 12 days (13 days in 2008).
15. Credit risk
The credit risk is the risk of loss owing to default, in part or in full, by the counterparty on the
payments due to the Parent Entity, or late payment. From a management viewpoint, Caja
Laboral differentiates between the credit risk deriving from Treasury and Capital Market
operations (financial institutions and private equity), and the credit risk with Spanish Public
Administrations, Individuals and Companies deriving from traditional investment operations.
With respect to the latter, the Governing Body at the Parent Entity has delegated to the
General Management a risk assignment level. General Management, in turn, has
established various risk allocation levels: Office network, Regional management and Central
Departments. The penalty capacity at these three levels progressively rises and is based on
the level of risk and a system of filters that takes into account factors such as the volume of
risk, the type of product and the margin on the transaction.
In addition, from an organizational standpoint a new Risk Area was created at the start of
2009, which reports to the General Management and integrates the Risk Management,
Monitoring, Recovery and Control Departments, which is leading to an increase in the
efficiency of admission processes, monitoring and recoveries of credit risk and a deepening
of the integral control over the risks faced by the Entity.
60
31 DECEMBER 2009
The Risk Management Department is responsible for the process of admitting, the
Monitoring and Recovery Department is responsible for managing the protocols associated
with pre-default alerts such as maximizing recoveries in pre-dispute transactions, whereas
the Risk Control Department is responsible for preparing and maintaining internal models,
as well as controlling structural risks involving interest rates, liquidity, control over market
risks and operational risks.
In order to assess the credit risk associated with transactions, Caja Laboral has developed
internal rating and scoring models that enable customers to be rated and transactions
scored on the basis of the relevant risk level. The various mortgage and consumer loan
scoring models as well as the proactive rating models are fully integrated into the consumer
loan approval process and the results are binding. The admission procedures for company
segments apply rating models. These models are therefore a basic component in the
granting of the risk and moreover, enable the Entity to estimate both the expected loss and
regulatory capital assigned to each transaction.
These tools are therefore used in the decision-making processes and also in the building
and development of integrated databases that enable the calculation of severities, expected
losses, capital consumption etc within the framework of the requirements of the New Basel
Capital Accord.
The models have been prepared by the Risk Control Department, in accordance with Basel
requirements, and the Internal Audit Department has carried out the necessary tests to
validate the building process. In 2007, an internal validation function was formed and
assumed responsibility for the validation tests in accordance with the terms established by
the Bank of Spain in a document dated 25 July 2007 "Internal validation criteria for
advanced risk management models". Internal Audit is the final control layer. Through the
implementation of the internal models, the Entity mainly aims to manage the credit risk and
secondly, to access in the future the validation of said models for calculating regulatory
capital established by the Bank of Spain, for which the relevant request was made at the
end of 2008.
Is regards hedging and risk mitigation policies, most of the investment activity is related to
the financing of homes and involves mortgage guarantees, while hedges are obtained in the
form of guarantees, deposits of cash and financial assets for other operations considered to
be of a lower credit quality.
With respect to the risk with financial institutions and private fixed income in Treasury and
Capital Markets, limits are ordinarily established annually by counterparty. To do so, a
procedure for assigning limits has been established which is supported by both the ratings
as well as a series of filters.
The procedure for monitoring and controlling compliance with said risk limits is implemented
in real time.
61
31 DECEMBER 2009
In general the Group carries real estate guarantees at their appraised value as determined
by independent companies in accordance with the rules established by the Bank of Spain
for this purpose at the time of contracting.
A breakdown of the maximum credit risk covered by each of the primary guarantees and 31
December 2009 and 2008 is set out below:
Real estate
guarantee
Customer loans
Drawn down
Value of the guarantee
12,519,764
29,711,164
Real estate
guarantee
Customer loans
Drawn down
Value of the guarantee
16.
12,105,589
29,600,068
Pledge
guarantee
33,480
29,293
Pledge
guarantee
40,273
36,995
Other real
guarante
es
2009
Secured or
insured
Unsecured
personal
personal
guarantee
guarantee
Unclassifie
d
Measurem
ent
adjustment
s
953,419
2,658,512
1,040,044
1,040,044
6,365
-
(339,450)
-
Other real
guarante
es
2008
Secured or
insured
Unsecured
personal
personal
guarantee
guarantee
Unclassifie
d
Measurem
ent
adjustment
s
967,117
2,497,219
1,021,264
1,021,264
(18,862)
683
(180,372)
-
2,262,402
99,069
2,640,648
75,448
Total
16,476,024
33,538,082
Total
16,575,657
33,231,677
Liquidity risk
There are two definitions of liquidity risk:
• Fund liquidity risk: this is the risk that the Entity will not be able to cover its projected
and unexpected present and future cash flows in an efficient manner, or its guarantee
contributions resulting from its payment obligations without its daily operations or its
financial situation being affected.
62
31 DECEMBER 2009
•
Market liquidity risk: this is the risk that a financial institution will not be able to easily
offset or unwind a market price position due to the insufficient depth, or the distortion,
of the market.
The international liquidity crisis originating from subprime loans in the United States has
become one of the primary problems for financial institutions in 2008 and 2009 and required
the intervention of monetary authorities to inject necessary liquidity into markets by
discounting assets in short-term auctions while attempting to regain the confidence lost
between entities. In this context, Caja Laboral has maintained considerable liquidity levels
throughout the year and used European Central Bank Resources on occasion. In this
connection, the entity has available credit facilities from the European Central Bank (ECB)
secured by pledges assets totaling €410.9 million after the application of haircuts, to which
an additional €567.4 million in eligible assets at the ECB must be added as they may be
drawn down through pledges. In 2010 Caja Laboral intends to further increase its portfolio of
liquid assets that may be discounted at the ECB, maintaining its policy to generate liquid
assets in order to obtaion sufficient collateral to cover unforeseen contingencies. The
following table reflects the monthly development of the net interbank rate (positive) in 2008
and 2009 as a percentage of Customer Deposits.
63
31 DECEMBER 2009
Liquidity management has allowed those liquidity levels to be maintained, supported by a
control system that establishes monthly medium-term liquidity objectives and allows a
systematic monitoring of the extent to which those objectives are met. This cash
management plan includes provisions regarding the development of investable resources,
credit investments and wholesale financing and is systematically updated allowing COAP to
use continuously updated information regarding the foreseeable development of structural
liquidity over the medium term. This allows the COAP to establish advisable action
sufficiently in advance to correct possible imbalances affecting the development of the
aggregate figures affecting liquidity.
Over the past few years, growth in the residential construction sector has caused the
financial sector to increase credit investments focused on that sector, which notably
exceeded the increase in the recruitment of investable resources, and this gap was financed
using wholesale markets. Although to a lesser extent than others in the sector, Caja Laboral
has also obtained resources from wholesale markets, and the wholesale financiing/total
financing ratio is around 20%. The Entity's policy has been based on a diversification of the
sources of financing. At 31 December 2009 Caja Laboral has a mortgage bond issue
totaling €4,225 million (Note 35), €400 million in ECB eurodeposits obtained from liquidity
auctions €89 million in the Financial Asset Acquisition Fund (FAAF), and financing obtained
through the securitization of mortgages (discounting the tranches acquired by the entity)
totaling €537.9 million.
The Entity maintains a policy of maintaining a diversity of maturity dates within the heading
of wholesale financing. The ECB deposits mature in 2010, while the FAAF financing
matures in 2011 and the mortgage bonds start to mature as from 2013.
The following table analyzes the Entity’s assets and liabilities grouped by the residual
maturity dates established in accordance with the criteria set out in the statements sent to
the Bank of Spain:
Total
At sight
Up to 1
month
Liquidity gap (€’000)
Between
1 month
Between 3
and 3
months and
months
1 year
Between 1
and 5
years
More than 5
years
No set
maturity
2009
Assets
Liabilities
Net Liquidity Gap
20,150,875
19,394,794
756,081
420,081
2,447,149
(2,027,068)
665,518
6,616,834
(5,951,316)
378,955
1,056,998
(678,043)
1,336,243
2,552,180
(1,215,937)
3,210,067
1,979,986
1,230,081
13,964,615
4,741,647
9,222,968
175,396
175,396
2008
Assets
Liabilities
Net Liquidity Gap
19,609,939
19,106,545
503,394
350,901
2,487,352
(2,136,451)
1,316,352
5,152,943
(3,836,591)
481,678
1,410,848
(929,170)
837,408
4,930,167
(4,092,759)
2,787,517
815,866
1,971,651
13,737,735
4,309,369
9,428,366
98,348
98,348
64
31 DECEMBER 2009
17.
Interest rate risk
The interest rate risk relates to losses that may arise in the income statement and the
Group’s equity value as a result of adverse interest rate movements.
The Parent Entity’s Governing Body has delegated to the Asset and Liability Committee the
management and control of this risk within the limit set by that Body. This limit is established
in terms of the maximum acceptable loss between two interest rate scenarios: market and
an unfavourable scenario.
The Asset and Liability Committee systematically analyses exposure to the interest rate risk
and through active management, attempts to anticipate through its decisions any negative
medium-term impact on the income statement of unwanted variations in market interest
rates. Its decisions are based on the measurement of the Entity’s long-term results under
different interest rate scenarios, carried out through simulations that deal with balance sheet
and off-balance sheet structural positions.
The accompanying table sets out the static gap of interest rate sensitive items, which
represents an initial approximation to the Parent Entity’s exposure to interest rate
fluctuations. However, given the limitations that this entails, it should be noted that this is not
the measurement technique used by Caja Laboral to measure that risk, which has been
described above.
Million euro
Balance
sheet
balance at
31.12.09
Sensitive assets
Money market
Credit market
Securities market
Sensitive liabilities
Money market
Creditors
Simple GAP
% of total liabilities
Cumulative GAP
Betwee
n
3 and 4
years
Up to
1 month
Between
1 and 3
months
Between
3 months
and 1 year
Between
1 and 2
years
Between
2 and 3
years
Between
4 and 5
years
More
than 5
years
20,573
667
16,557
3,349
6,003
586
3,800
1,617
5,639
1
4,798
840
8,029
80
7,205
744
288
286
2
305
176
129
121
121
-
63
62
1
125
109
16
19,422
863
18,559
2,638
98
2,540
3,029
145
2,884
9,257
531
8,726
658
89
569
212
212
102
102
272
272
3,254
3,254
3,365
16%
3,365
16%
2,610
13%
5,975
29%
(1,228)
(6%)
4,747
23%
(370)
(2%)
4,377
21%
93
4,470
22%
19
4,489
22%
(209)
(1%)
4,280
21%
(3,129)
(15%)
1,151
6%
65
31 DECEMBER 2009
Million euro
Balance
sheet
balance at
31.12.08
Sensitive assets
Money market
Credit market
Securities market
Sensitive liabilities
Money market
Creditors
Simple GAP
Cumulative GAP
Betwee
n
3 and 4
years
Up to
1 month
Between
1 and 3
months
Between
3 months
and 1 year
Between
1 and 2
years
Between
2 and 3
years
Between
4 and 5
years
More
than 5
years
20,044
1,045
16,544
2,455
6,217
983
3,794
1,440
5,093
22
4,681
390
7,636
41
7,029
566
502
492
10
230
224
6
161
159
2
38
38
-
167
127
40
19,462
546
18,916
3,680
328
3,352
2,901
133
2,768
9,795
85
9,710
357
357
54
54
19
19
8
8
2,647
2,647
2,537
13.0%
2,537
13.0%
2,192
11.3%
4,729
24.3%
(2,159)
(11.1%)
2,570
13.2%
145
0.7%
2,715
14.0%
176
0.9%
2,890
14.9%
142
0.7%
3,032
15.6%
30
0.2%
3,061
15.7%
(2,480)
(12.7%)
581
3.0%
Those items with an associated contractual interest rate are considered interest rate
sensitive and are therefore included in the gap, Other items are excluded, namely
Measurement Adjustments, Non-classifiable Credit, Cash, Fixed Assets, Derivatives, Sundry
and Accrual Accounts, Community Projects, Special Funds, Capital and Reserves and
Results for the year.
In that gap items deemed sensitive are distributed in different timing tranches on the basis of
the following criteria: Variable interest rate products are located in the timing tranche relating
to the time when interest is revised (re-appreciated). Fixed interest rate items are distributed
on the basis of time remaining to maturity. For on-demand products, the Parent Entity has
established assumptions regarding behavior based on estimates of balance variances.
Econometric analyses have been performed on each type of account with no explicit
maturity date (interest-free, administered and indexed accounts) based on the evolution of
the interest rate applied to these accounts and the market interest rate.
In accordance with the impact analyses carried out by the Parent Entity, a fall of 100 base
points in interest rates would generate a decrease of approximately 8% in gross revenue
over the first year. These analyses are based on a simulation technique which is based on
the information concerning the transactions that form part of the current balance sheet and
the forecast information on balance sheet growth, the policy for arranging new transactions,
the margin policy and situations of early redemption. Forecasts are generated on the basis
of strategic and management plans and the monthly follow-up of the business.
This 100 basis point decline in interest rates would give rise to a €11 million decline in the
financial value of the Parent Company, i.e. around 0,8% of Equity. The criteria used to
calculate financial value are the same as those mentioned above in the section regarding
the interest rate gap.
66
31 DECEMBER 2009
18.
Other market risks
The market risk is the risk of incurring losses in the market value of balance sheet and offbalance sheet positions as a result of an adverse movement in risk factors (interest rates,
exchange rates, share prices, commodity prices and volatilities).
In 2009 two totally difference time periods have ocurred.
The first relates to the first quarter of the year. During this period the markets continued the
trend recorded in the fourth quarter of the preceding year, characterized by an aversion to
absolute risk (there were moments of general panic), total illiquidity in the markets and very
negative market behavior. The risk premiums for certain assets reached historic record
levels. In this context, equity markets experienced additional declines of around 20% and
credit markets continued to expand differencials.
As from that time, and coinciding with the publication of the first quarterly results obtained by
listed companies, markets began to rebound from their lows. The decided actions taken by
governments (through extraordinary assistance to financial systems and expansive tax
policies) and central banks (by carrying out long-term auctions and the assignment of
unlimited amounts) decisively contributed to the braking of the self-destructive spiral
affecting economies and world-wide financial markets. The systemic risk premium was
corrected (progressively at the beginning and more decidedly in the final months of the year)
and there was talk of "green shoots" in economies. This caused markets to experience a
sharp recovery allowing stock markets to end the year with gains exceeding 20% and credit
markets recorded one of the best years in history in terms of yields and issues.
Security prices included in the available-for-sale financial asset portfolios have recorded
movements in markets, allowing for the recovery of a substantial part of the latent capital
losses recognized at the end of the preceding year.
In any event and despite the recovery of the markets, at the year end there were still
considerable declines compared with the year end levels seen in 2007, which is reflected in
the latent capital losses still reflected in the portfolios at the end of 2009.
In this environment, the securities included in the Available-for-sale financial asset portfolio
(Note 25) were negatively affected by movements in the markets and reflect a net capital
loss totaling €147 million (€271 million in 2008) under the heading "Measurement
adjustments", which reduces equity by the same amount (Note 40).
67
31 DECEMBER 2009
The conclusions obtained from the analysis of these impacts carried out by the Entity are as
follows:
-
Debt securities: The Entity considers that market prices for underlying assets with
credit risk are due to abnormal and dysfunctional market circumstances in which an
excessive liquidity premium is applied.
-
Capital instruments: €42 million (€72 million in 2008) related to capital losses on
shares in fixed-income funds, for which the preceding comments are applicable. Of the
rest, €55 million (€77 million in 2008) related to the listed share portfolio. Equity market
values (in accordance with certain valuation parameters) mainly reflect the uncertainty
and generalized lack of confidence in the markets.
Finally, €21 million (€26 million in 2008) relates to shares in alternative funds,
underlying assets which offer excellent results under normal market situations.
The Parent Entity believes that the fair value of these investments will continue to be
recovered as markets return to normal.
At Caja Laboral market risks are managed by the Treasury Department, which is set up as a
profit centre, within the risk limits established by the Governing Body. These limits are
established in Value at Risk (VAR) terms and their control and monitoring takes place on a
daily basis by calculating the VAR through Montecarlo simulation as well as through a
variance and co-variance matrix that has been prepared internally. Although VAR
constitutes the primary risk control technique, other risk indicators are also used.
Within market risks, exposure to exchange rate risk is very moderate, with the average VAR
in 2009 totaled €51k (€45k in 2008). With respect to the remainder, noteworthy is the
exposure in equities (Available-for-sale portfolio) with an average VAR of €9,017k in 2009
and €10,561k in 2008 while the VAR risk of the unit that manages fixed income and its
derivatives has averaged €255k in 2009 and €359k in 2008. The average VAR of the unit
that manages money markets and its derivatives has amounted to €65k in 2009 and €57k in
2008.
Concerning country risk, Caja Laboral has established restrictive limits with respect to the
interbank risk with countries with low credit ratings, in general limiting operations with the
financial institutions of those countries to transactions linked to foreign trade.
19.
Operational risk
This is the risk of losses due to insufficient or failed procedures, personnel and internal
systems or external events.
Caja Laboral meets its regulatory reporting obligations using the standard method
established by Circular 3/2008.
At the qualitative level the Entity has risk maps for all Departments, as well as general and
specific risk indicators (KRIs). On an annual basis the Entity self-evaluates the risks in all
Departments and then launches action plans to mitigate the most critical risks.
68
31 DECEMBER 2009
The Parent Entity has a network of 62 coordinators and 25 operational risk validators who
perform the duties required by the system (self-evaluation, risk indicators and action plans).
In December 2009 the second self-evaluation is being completed, after which new action
plans will be launched.
On a quantitative level, the Parent Entity has an internal operational loss database since
2002. Each loss is assigned to a type of event and a line of business, as defined by Bank of
Spain Circular 3/2008.
Caja Laboral forms part of ORX, which is an international consortium made up of financial
institutions that are on the vanguard of operational risk management worldwide, and through
which information regarding operational losses incurred is exchanged. Furthermore, Caja
Laboral pertains to Grupo CERO (Consorcio Español de Riesgo Operacional), of which the
main financial institutions in Spain are members and through which operational risk
information and experiences are shared.
20.
Insurance operation risk
Risks relating to insurance policies include a number of variables that could significantly
affect future cash flows in terms of both amount and chronological distribution.
Mortality, disability and longevity tables are variables that affect the loss ratio and therefore
cash outflows due to claim payments. The Group periodically adjusts its technical bases for
mortality and survival tables using the most recent data supplied by national and
international insurance industry work groups and on statistics approved by the Directorate
General for Insurance and Pension Funds. Under applicable regulations, the GKM/F95
tables are currently applicable.
In the case of income insurance, longevity risk is a factor that could cause a significant rise
in losses due to increasing life expectancy, particularly in lifetime or long-term annuities. In
accordance with the regulations of the Directorate General for Insurance, the Group has
applied the PERM/F-2000 tables to new production since 15 October 2000. The shortfall in
the portfolio of policies in force at the date on which the tables were applied was absorbed in
2007, even though regulations stipulated a period of 15 years as from 1 January 1999.
With respect to policies carrying a guaranteed technical interest rate in force before the
Private Insurance Regulations (RD 2486/1998, 20 November) came into effect (the
Regulations), the Group applies the provisions of Transitional Provision Two of the
Regulations, verifying that the actual return on the investments linked to these policies is
higher than the technical interest rate stipulated in the policies.
69
31 DECEMBER 2009
For policies in force that were issued before the Regulations became applicable every year
the Group has used a technical interest rate to calculate the mathematical reserve that is
always equal to, or less than, the maximum interest rate established annually by the
Directorate General for Insurance. The Group has applied the provisions of Article 33.1 of
the Regulations and assigned a portfolio and financial investments to this type of asset and
verifies on an annual basis that the actual yield from the assets exceeds the average yield
established in the mathematical reserve.
Even though the Group does not apply the provisions of Article 33.2 of the Regulations, it
monitors asset and liability flow projections jointly, applying projections deriving from internal
assumptions to calculate mortality, disability, surrenders and expenses and using these
assumptions its determined the adequacy of the financial investments with respect to the
liability commitments.
In compliance with Spanish legislation, the Group’s contracts cover the consequences of
catastrophic risks assumed by the National Insurance Pool, which reports to the Ministry of
Economy and Finance.
Additionally, the Group uses reinsurance treaties to reduce the risk of losses on life risk
policies.
Risk concentration is not significant because the Group’s insurance business is based on
and assurance of personal risks for individuals and therefore, barring a catastrophic risk
covered by the National Insurance Pool, risk levels are low.
The IBNR reserve is calculated using the method stipulated in the Regulations.
21.
Risk concentration
In accordance with Bank of Spain Circular 3/2008 on equity, as it relates to large risks,
(defined as those which exceed 10% of equity) no exposure to a person or group may
exceed 25% of equity, except for those risks deducted from computable equity due to
exceeding the limits of large risks. Moreover, major risks taken as a whole may not exceed
an amount equal to eight times equity. The Group’s risk concentration policy takes the
aforementioned limits into account and risk limits have been established by counterparty
which are consistent with such requirements and procedures for controlling exceeded limits.
The following notes offer details concerning the Group’s risk concentration on the basis of
the type of operation, activity and geographical sector, currency, risk quality etc.
70
31 DECEMBER 2009
22. Cash on hand and on deposit at central banks
Set out below is a breakdown of this heading in the consolidated balance sheets at 31
December 2009 and 2008:
2009
Cash
2008
91,016
93,357
Deposits at Bank of Spain
Other deposits
241,605
241,605
692,886
692,886
Interest accrued
157
157
371
371
332,778
786,614
331,346
713
174
408
65
72
784,557
752
231
956
83
35
332,778
786,614
By currency:
In euro
In dollars
In Swiss francs
In pounds sterling
In Japanese yen
Other
The average rate of interest per annum in 2009 and 2008 on Deposits at the Bank of Spain
amounted to 1% and 2.82%, respectively.
In accordance with European Central Bank Regulation (EC) 1745/2008 Credit Institutions in
Member States of the European Union must comply with a minimum reserve coefficient of
2% of computable liabilities, as calculated in accordance with that Regulation. At 31
December 2009 and 2008, Caja Laboral met the minimum requirements established for this
coefficient by current legislation.
23.
Asset and liability trading portfolio
Set out below is a breakdown of these headings in the consolidated balance sheet at 31
Assets
2009
Debt securities
Equity instruments
Liabilities
2008
2009
2008
22,705
25,756
21,322
500
11,881
16,306
5,028
48,461
33,703
16,306
5,028
71
31 DECEMBER 2009
The fair value of the items included in the asset and liability trading portfolio at 31 December
2009 and 2008, as well as the measurement techniques applied, are set out in Note 43.
The effect on the consolidated income statements for the years ended 31 December 2009
and 2008 of changes in the fair value of items included in the Assets and liabilities trading
portfolio is as follows (Note 52):
Gains
2009
Debt securities
Equity instruments
Losses
2008
2009
2008
2,743
35,114
21,686
805
17,086
55,714
2,155
18,316
33,857
3,547
46,860
24,655
59,543
73,605
54,328
75,062
A breakdown based on the criterion for determining fair value of the effect on the
consolidated income statement for the years ended 31 December 2009 and 2008 resulting
from changes in fair value of the asset and liability trading portfolio is as follows:
Gains
2009
Items whose fair value is:
Calculated taking as a reference
Quotes (Level 1)
Estimated through a measurement
technique based on:
Data supplied by the market (Level 2)
Data not supplied by the market (Level 3)
Losses
2008
2009
2008
29,256
14,819
34,278
49,435
30,287
-
58,786
-
20,050
-
25,627
-
59,543
73,605
54,328
75,062
The breakdown by currency and maturity of the asset and liability trading portfolio headings
of the consolidated balance sheets at 31 December 2009 and 2008 is as follows:
Assets
2009
By currency:
In euro
In US dollars
By maturity:
Up to 1 month
Between 1 month and 3 months
Between 3 months and 1 year
Between 1 and 5 years
Over 5 years
No set maturity
Liabilities
2008
2009
2008
48,461
33,703
16,306
5,028
48,461
33,703
16,306
5,028
673
3,562
6,110
27,508
10,608
-
1,250
45
5,340
16,165
10,403
500
324
1,214
3,083
11,685
-
463
2,505
998
1,062
-
48,461
33,703
16,306
5,028
72
31 DECEMBER 2009
a)
Credit risk
Set out below is an analysis of credit risk concentrations by geographical sector in which the
risk is located, counterparty categories, and instrument types, indicating book value at the
dates in question:
2009
Amount
By geographical sector:
Spain
Other European Union countries
Rest of the world
By counterparty categories:
Credit institutions
Resident Public Administrations
Other resident sectors
Other non-resident sectors
By instrument types:
Listed bonds and debentures
Other fixed – income securities
Derivatives not traded on organised
Markets
Listed shares
2008
%
Amount
%
14,777
22,054
11,630
30.49%
45.51%
24.00%
11,777
12,497
9,429
34.94%
37.08%
27.98%
48,461
100.00%
33,703
100.00%
46,266
868
1,327
-
95.47%
1.79%
2.74%
-
31,283
775
1,645
-
92.82%
2.30%
4.88%
-
48,461
100.00%
33,703
100.00%
868
21,837
1.79%
45.06%
775
20,547
2.30%
60.97%
25,756
-
53.15%
-
11,881
500
35.25%
1.48%
48,461
100.00%
33,703
100.00%
A breakdown of the assets Trading portfolio based on external credit ratings assigned by the
main rating agencies is as follows:
2009
Amount
Risks rated A
Risks rated B
Amounts not rated
b)
2008
%
Amount
%
46,835
1,626
96.64%
3.36%
32,335
1,368
95.94%
4.06%
48,461
100.00%
33,703
100.00%
Debt securities
The Debt securities balance under assets on the balance sheet at 31 December 2009 and
2008 is as follows:
2009
Spanish government debt securities
Other fixed – income securities
2008
868
21,837
775
20,547
22,705
21,322
73
31 DECEMBER 2009
The average rate of interest per annum on debt securities during 2009 was 3.53% (4.08% in
2008).
c)
Equity instruments
At 31 December 2009 there were no equity instruments classified in the trading portfolio.
The consolidated balance at 31 December 2008 related to shareholdings in Spanish
companies.
d)
Derivatives held for trading under assets and liabilities on the consolidated balance sheets
at 31 December 2009 and 2008 break down as follows:
2009
Notional
value
Unmatured currency purchases-sales
Purchases
Sales
Financial and interest rate forwards
Purchased
Sold
Securities options
Purchased
Sold
Currency options
Purchased
Sold
Interest rate options
Purchased
Sold
Other interest rate operations
FRAs
Rate swaps
Call Money Swap (CMS)
Other
Assets
Fair value
Liabilities
83,409
77,644
2,256
1,101
493
493
-
-
-
94,100
229,861
2,670
-
3,453
-
-
-
358
358
1
-
359,992
98,100
10,198
9,530
2,471
9,396
25,756
16,306
74
31 DECEMBER 2009
2008
Notional
value
Unmatured currency purchases-sales
Purchases
Sales
Financial and interest rate forwards
Purchased
Sold
Securities options
Purchased
Sold
Currency options
Purchased
Sold
Interest-rate options
Purchased
Sold
FRAs
Rate swaps
Call Money Swaps (CMS)
Other
Assets
Fair value
Liabilities
61,121
34,969
421
1,046
3,072
1,009
-
-
-
77,235
135,276
1,940
-
-
-
-
-
1,685
1,685
13
5
-
274,000
100,000
109,410
7,328
1,711
(578)
942
-
11,881
5,028
The notional and/or contractual amount of contracts corresponding to Derivatives held for
trading does not imply a quantification of the risk assumed by the Group since its net
position is obtained from the offsetting and/or combination of these instruments.
24.
Other financial assets and liabilities at fair value through profit and loss
Assets
2009
Debt securities
Equity instruments
Liabilities
2008
2009
2008
5,891
1,209
-
-
-
7,100
-
-
-
The fair value of the items included in this category at 31 December 2009, as well as the
measurement techniques applied, are set out in Note 43.
75
31 DECEMBER 2009
The effect on the consolidated income statement for the years ended 31 December 2009
and 2008 resulting from changes in the the fair value of the items recorded as assets and
liabilities at fair value through changes in profit and loss, is as follows:
Gains
2009
Debt securities
Others equity instruments
Losses
2008
2009
2008
3,482
7
-
2,623
1
-
3,489
-
2,624
-
A breakdown based on the criterion for determining fair value of the effect on the
consolidated income statement for the years ended 31 December 2009 and 2008, resulting
from changes in the fair value of assets and liabilities at fair value through changes in profit
and loss is as follows:
Gains
2009
Items whose fair value is:
Calculated taking as a reference
Quotes (Level 1)
Estimated through a measurement
technique based on:
Data supplied by the market (Level 2)
Data not supplied by the market (Level 3)
Losses
2008
2009
2008
1,922
-
1,444
-
1,567
-
-
1,180
-
-
3,489
-
2,624
-
The breakdown of the headings Other assets and liabilities at fair value through changes in
profit and loss in the consolidated balance sheets at 31 December 2009 and 2008, by
currency and maturity date, is as follows:
Assets
2009
By currency:
In euro
By maturity:
Over 5 years
No set maturity
Liabilities
2008
2009
2008
7,100
-
-
-
7,100
-
-
-
3,559
2,332
1,209
-
-
-
7,100
-
-
-
76
31 DECEMBER 2009
a)
Credit risk
Set out below is an analysis of credit risk concentrations by the geographical sector in which
the risk is located, counterparty categories, and instrument types, indicating carrying value
at the dates in question:
2009
Amount
By geographical sector:
Spain
Rest of the world
By counterparty categories:
Credit institutions
Resident Public Administrations
By instrument types:
Listed bonds and debentures
Other fixed-income securities
Participation units in Investment Funds
2008
%
Amount
%
3,354
3,746
-
47.24%
52.76%
-
-
-
7,100
100.00%
-
-
2,332
3,354
1,414
32.85%
47.23%
19.92%
-
-
7,100
100.00%
-
-
3,034
2,857
1,209
42.73%
40.24%
17.03%
-
-
7,100
100.00%
-
-
The breakdown of other financial assets at fair value through changes in profit or loss based
on external credit ratings assigned by the main rating agencies is as follows:
2009
Amount
Risks rated A
Risks rated B
Amounts not rated
b)
2008
%
Amount
%
4,293
1,598
1,209
60.46%
22.51%
17.03%
-
-
7,100
100.00%
-
-
Debt securities
Debt securities on the asset side of the consolidated balance sheets at 31 December 2009
and 2008 break down as follows:
2009
Spanish public debt
2008
5,891
-
5,891
-
The average rate of interest per annum on debt securities in 2009 was 4.71%.
c)
Equity instruments
77
31 DECEMBER 2009
Equity instruments on the asset side of the consolidated balance sheet at 31 December
2009 relates to shares in mutual funds managed by the Group.
25.
2009
2008
Debt securities
Spanish public debt
Treasury Bills
Government bonds and debentures
Other debt securities traded by the book-entry system
Other Spanish Public Administrations debt
Foreign public debt
Issued by credit institutions
Resident sectors
Non-resident sectors
Issued by other resident sectors
Issued by other non-resident sectors
Doubtful asssets
Value adjustments for asset impairment
Microhedge transactions
2,383,869
600,653
552,340
29,694
18,619
444
2,613
426,887
98,885
328,002
1,292,193
1,060,657
231,536
255,379
(195,577)
1,277
1,985,851
488,336
225,279
130,269
132,788
1,986
16,855
572,611
100,088
472,523
806,672
557,550
249,122
245,675
(147,044)
760
Equity instruments
Holdings in Spanish entities
Holdings in foreign entities
Participation units in Investment Funds
Shares in venture capital companies
836,338
116,775
77,388
615,536
26,639
807,079
115,274
68,299
595,293
28,213
3,220,207
2,792,930
At 31 December 2009 and 2008 “Equity instruments” include €8,830k, which relates to
holdings in companies which the Group has agreed to sell at a specific date and at a price
equal to acquisition cost plus a euribor linked return.
The quantifiable fair value of the items included under the heading Available-for-sale
financial assets at 31 December 2009 and 2008, as well as the measurement techniques
applied, are set out in Note 43.
Note 40 provides a breakdown of the balance of the heading Equity - Measurement
adjustments at 31 December 2009 and 2008 owing to changes in the fair value of items
included under the heading Available-for-sale financial assets.
The eliminations from the heading Equity measurement adjustments in the years ended 31
December 2009 and 2008 recognized in the consolidated income statement totaled
€11,956k and €9,904k, respectively, both net of the tax effect.
78
31 DECEMBER 2009
The breakdown by currency and maturity of Available-for-sale Assets in the consolidated
balance sheets at 31 December 2009 and 2008 is as follows:
2009
By currency:
In euro
In US dollars
In pounds sterling
In Swiss francs
Remainder
2008
3,192,551
24,205
1,506
1,505
440
2,766,990
21,224
2,460
1,293
963
3,220,207
2,792,930
By maturity:
Up to 1 month
Over 5 years
No set maturity
120,930
167,462
899,760
719,538
664,074
842,743
158,529
143,704
240,062
764,735
804,233
827,951
(194,300)
(146,284)
3,220,207
2,792,930
Movements in 2009 and 2008 in Available-for-sale financial assets are set out below:
2009
2008
Balance at the beginning of the year
Additions due to purchases
Sales and redemptions
Movements owing to changes in fair value
Impairment losses (net) charged against results
Other
2,792,930
2,140,748
(1,809,555)
142,523
(48,186)
1,749
2,929,640
2,056,107
(1,665,441)
(376,508)
(141,638)
(9,230)
Balance at the end of the year
3,220,207
2,792,930
The average annual interest rate in 2009 and 2008 on debt securities has stood at 2.18%
and 5.10% respectively.
At 31 December 2009 “Debt Securities- Issued by non-resident credit institutions” include
five issues amounting to €203 million (five issues totaling €156 million at 31 December
2008), maturing between 2017 and 2018, the return on which is linked to interest rate
parameters that have been floored and capped.
79
31 DECEMBER 2009
At 31 December 2009 and 2008, the heading “Other fixed-income securities – Issued by
other residents” includes mortgage bonds generated by the securitization of mortgage loans
by the Parent Entity, of which a total of €3,301k is subordinate. In addition, at 31 December
2009 this heading included €1,004,194k (€487,687k at 31 December 2008), relating to all
mortgage instruments issued by the Parent Entity in 2007 and 2009 through the TDA9 Asset
Securitization Fund and TDA17 Asset Securitization Fund, respectively. The Parent Entity's
intention is to use these securities as collateral to obtain financing through rediscounted
lines from the European Central Bank (Note 35.c).
At 31 December 2009 the Group also maintains other subordinate debt instruments in the
portfolio of available-for-sale assets totaling €15,831k (€52,686k at 31 December 2008).
At 31 December 2009 the Parent Entity held shareholdings in certain unlisted companies for
which uncalled share capital existed totaling €4,221k at that date (€4,131k at 31 December
2008).
a)
Credit risk
Risk concentration by geographical sector in the debt securities portfolio is as follows:
2009
Amount
Spain
Rest of Europe
Rest of the world
2008
%
1,760,637
667,822
81,515
68,195
2,578,169
(194,300)
68.29%
25.90%
3.16%
2.65%
100.00%
2,383,869
Amount
%
1,114,600
656,798
71,078
289,659
2,132,135
(146,284)
52.28%
30.80%
3.33%
13.59%
100.00%
1,985,851
A breakdown of debt securities based on external credit ratings assigned by the main rating
agencies is as follows:
2009
Amount
Risks rated A
Risks rated B
Risks rated C
Unrated doubtful assets
Amounts not rated
2008
%
Amount
%
2,090,975
68,471
56,747
4,776
162,900
87.71%
2.87%
2.38%
0.21%
6.83%
1,694,475
107,692
55,647
46,085
81,952
85.33%
5.42%
2.8%
2.32%
4.13%
2,383,869
100.00%
1,985,851
100.00%
80
31 DECEMBER 2009
Mainly due to the expectation of recovering future flows from certain financial assets, the
development of stock markets, the liquidity situation affecting certain fixed-income issues
and increase in credit risk differentials in 2009 and 2008 the Entity has considered certain
debt instruments included in the Available-for-sale financial asset portfolio to be impaired.
At 31 December 2009 these assets totaled €255,379k (€245,675k in 2008) and are
recorded under the heading "Debt securities-doubtful assets". They mainly consist of bonds
issued by non-resident financial institutions that are suffering from serious financial
difficulties and, in any event, their redemption must be resolved through the courts. The
accumulated impairment provisions for these assets totaled €194,469k at 31 December
2009 (€143,499k in 2008). The Entity considers that these provisions reflect the amount of
expected losses involving these financial assets at the date these financial statements are
prepared, based on the best information available.
b)
Asset impairment losses
The breakdown of the balance under the heading "Impairment losses on financial assets
(net)- Other financial instruments not at fair value through changes in profit and loss" in the
consolidated income statement for the years ended 31 December 2009 and 2008 is set out
below (Note 59):
2009
Debt securities
Other equity instruments
Appropriations charged to income
Determined collectively
Determined individually
Appropriations recovered taken to income
2008
48,533
(347)
141,062
576
48,186
141,638
51,294
547
(3,655)
144,121
2,961
(5,444)
48,186
141,638
The movement in 2009 and 2008 in Value Adjustments due to asset impairment under
Available-for-sale financial assets is as follows:
2009
Net appropriations/(recoveries) charged/(taken) to income
2008
147,044
48,533
5,982
141,062
195,577
147,044
81
31 DECEMBER 2009
The breakdown by different criteria of the balance of Value Adjustments in respect of asset
impairment under Available-for-sale financial assets at 31 December 2009 and 2008 is as
follows:
2009
By manner of determination:
26.
2008
194,469
1,108
143,499
3,545
195,577
147,044
Customer loans
Debt securities
2009
2008
477,468
16,343,072
101,064
384,206
16,512,832
-
16,921,604
16,897,038
The breakdown by currency and maturity of Credits, loans and discounts in the consolidated
balance sheets at 31 December 2009 and 2008 is as follows:
2009
2008
By currency:
In euro
In US dollars
In pounds sterling
In Japanese yen
In Swiss francs
Other
17,209,029
11,489
1,049
1,125
128
114
17,026,334
39,416
845
1,525
198
398
(301,330)
(171,678)
16,921,604
16,897,038
By maturity:
Demand deposits
Up to 1 month
Over 5 years
No set maturity
78,735
605,489
234,055
545,466
2,393,025
13,211,640
154,524
14,895
757,250
347,147
713,501
2,115,344
13,043,104
77,475
(301,330)
(171,678)
16,921,604
16,897,038
82
31 DECEMBER 2009
The average rate of interest per annum in 2009 and 2008 on Deposits at credit institutions
amounted to 2.06% and 4.09% respectively.
Concerning the breakdown of credits, loans and discounts based on credit ratings assigned,
internally or externally, and the relevant default rate, as is detailed in the note on Credit
Risk, the Entity has developed internal scoring and rating models that rate customers or
score transactions based on risk level in order to improve risk management and secure the
validation of such internal models in order to calculate regulatory capital in accordance with
Basel requirements.
At 31 December 2009 and 2008 the Parent Entity has information concerning the scoring
models for mortgages and consumer transactions and the rating model for SMEs. However,
in order to present a complete information about the level of credit risk within the Group, it
has decided to include a breakdown of credits, loans and discounts based on the risk levels
used to cover the credit risk:
2009
Amount
With no appreciable risk
Low risk
Medium – low risk
Medium risk
Medium-high risk
High risk
Substandard risk
Doubtful assets
Amounts not rated
2008
%
1,047,899
7,895,767
3,656,115
3,126,274
317,667
97,157
551,836
487,253
42,966
(301,330)
6%
47%
21%
18%
2%
1%
4%
3%
16,921,604
Amount
%
(2%)
732,999
7,500,139
4,225,233
3,678,549
370,406
116,700
51,160
359,681
33,849
(171,678)
4%
44%
25%
22%
2%
1%
1%
2%
(1%)
100%
16,897,038
100%
-
Set out below is the default rate at the Parent Entity, calculated as the relation between
balances classed for accounting purposes as doubtful and the balance of customer loans,
not taking into account measurement adjustments:
2009
2008
2007
2.90%
2.15%
0.93%
83
31 DECEMBER 2009
a)
Customer loans
The breakdown by different criteria of the Customer loan balance under Credits, loans and
discounts at 31 December 2009 and 2008 is as follows:
By type and situation:
Spanish Public Administrations
Commercial loans
Loans secured by mortgage guarantee
Loans secured by other real property guarantees
Other term loans
Finance leases
Demand loans and other
Doubtful assets
Interest accrued
Fees
By sector of activity of borrower:
Other resident sectors:
Agriculture, farming, hunting, forestry and fisheries
Industries
Construction
Services
Commerce and hotel and catering
Transport and communications
Other services
Loans to individuals:
Home loans
Consumer and other
Not classified
By geographical area:
- Bizkaia
- Gipuzkoa
- Araba
- Navarra
- Expansion network
- Unclassified
Owing to interest rate applied
Fixed interest rate
Variable interest rate linked to Euribor
Variable interest rate linked to CECA
Variable interest rate linked to IRHH
Other
2009
2008
190,674
408,841
12,845,877
93,335
2,038,489
423,635
131,978
487,253
29,954
(306,964)
26,143
(318,247)
(14,860)
151,809
694,830
12,608,496
107,232
2,090,863
510,249
141,500
359,681
21,599
(173,427)
58,287
(212,454)
(19,260)
16,343,072
16,512,832
191,172
16,095,190
32,815
926,514
686,706
2,586,079
492,101
195,749
1,898,229
10,995,577
10,613,606
381,971
1,174,450
(306,951)
26,756
29,954
152,096
16,305,852
62,692
1,096,556
896,059
3,065,690
747,490
281,811
2,036,389
10,758,873
10,305,717
453,156
599,351
(173,369)
33,285
21,599
16,343,072
16,512,832
3,584,431
3,934,768
1,654,903
2,504,684
4,941,296
29,954
(306,964)
3,483,764
4,125,034
1,542,017
2,586,470
4,927,375
21,599
(173,427)
16,343,072
16,512,832
776,816
15,106,599
12,864
240,324
206,469
732,893
14,683,243
16,553
628,705
451,438
16,343,072
16,512,832
84
31 DECEMBER 2009
The breakdown by currency and maturity of Customer loans in the consolidated balance
sheets at 31 December 2009 and 2008 is as follows:
By currency:
In euro
In US dollars
In pounds sterling
In Japanese yen
In Swiss francs
By maturity:
On demand
Up to 1 month
Over 5 years
No set maturity
2009
2008
16,640,581
8,334
1,032
89,000
(306,964)
16,671,824
12,729
167,000
1,445
94,000
(173,427)
16,343,072
16,512,832
73,724
280,708
232,536
529,630
2,357,325
13,021,589
154,524
10,567
514,374
345,371
712,490
2,100,183
12,925,799
77,475
(306,964)
(173,427)
16,343,072
16,512,832
At 31 December 2009 the Group has granted subordinated loans amounting to €21,067k
(€23,980k at 31 December 2008).
At 31 December 2009 and 2008 the Group has finance leases with customers for property,
plant and equipment which are recorded as described in Note 13.m). The residual value of
these contracts, which corresponds to the amount of the last lease instalment, is secured by
the asset forming the object of the lease. At 31 December 2009 and 2008 the investment
outstanding and residual values by type of asset financed are as follows:
Principal
2009
2008
Capital goods
Computer hardware
Materials and transport vehicles
Cars
Other assets
107,315
2,340
93,578
35,808
29,394
133,387
3,539
123,584
42,901
32,127
Total moveable property
268,435
335,538
Real property
128,950
134,797
TOTAL
397,385
470,335
85
31 DECEMBER 2009
Residual value
2009
2008
Capital goods
Computer hardware
Materials and transport vehicles
Cars
Other assets
5,111
119
10,721
15,962
857
6,301
155
11,952
17,077
899
Total moveable property
32,770
36,384
Real state property
10,018
10,820
TOTAL
42,788
47,204
Of these balances a total of €16,538k and €7,290k at 31 December 2009 and 2008,
respectively, relates to impaired assets which are included under Doubtful assets.
A breakdown of securitisation and other asset transfers by the Parent Entity at 31 December
2009 and 2008 is as follows:
2009
Written off the balance sheets in their entirety:
Mortgage assets securitised through mortgage bond holdings
Memorandum item: Written off the balance sheet:
before 1 January 2004
Carried in the balance sheet in their entirety:
Mortgage assets securitised through mortgage transfer
certificates
2008
16,718
16,718
20,144
20,144
16,718
1,172,878
20,144
1,267,703
1,172,878
1,267,703
1,189,596
1,287,847
In 1999 the Group carried out an asset securitisation program through the issue of mortgage
bond holdings with a nominal value of €90,152k. These mortgage loans were transferred to
“TDA9, Mortgage Securitisation Fund”. At 31 December 2009 the outstanding balance on
these loans amounts to €16,718k (€20,144k at 31 December 2008). The Group granted the
fund subordinated loans, the balances of which at 31 December 2009 amount to €16k (€19k
at 31 December 2008). Securitised assets were written off the Group’s balance sheet and
this same criterion was used at 31 December 2009 and 2008, as mentioned in Note 13.g).
In 2006 the Group similarly carried out an asset securitisation program and transferred to
the special purpose entity “I.M. Caja Laboral 1, F.T.A.” mortgage loans amounting to
€900,000k for the issue of Securitisation Bonds for the same amount (Note 35.d). The
balance outstanding on these assets at 31 December 2009 amounts to €610,413k
(€681,598k at 31 December 2008).
86
31 DECEMBER 2009
In 2008 the Parent Entity created an asset securitization program and the securitzation fund
"I.M. Caja Laboral 2, F.T.A.” received mortgage loans totaling €600,000k. The active
balance of these assets at 31 December 2009 amounts to €562,465k (€586,105k in 2008)
and the securitization bonds have been totally subscribed by the Parent Entity. The Parent
Entity's intention is to use these securities as collateral to obtain credit from the Eurosystem.
b)
Asset impairment losses
The breakdown of Impairment losses on financial assets (net)- Credits, loans and discounts
in the consolidated income statement for the years ended 31 December 2009 and 2008 is
as follows:
2009
Loans
Appropriations
Doubtful loans recovered
Other loans recovered
Appropriations recovered taken to income
Suspense account items recovered
2008
119,304
257,459
(293)
(137,862)
(31,497)
118,564
(368)
(149,693)
119,304
(31,497)
257,459
241,555
15,904
(137,862)
(298)
118,564
81,965
36,599
(149,693)
(368)
119,304
(31,497)
The specific hedge balance at 31 December 2009, includes €85,292k (€5,170k at 31
December 2008) intended to adjust the value of certain customer credit transactions totaling
€551,836k (€51,160k at 31 December 2008). This hedge is in addition to that required by
the status of these transactions or the counterparties, which have been identified by the
Group as bearing a higher probability of impairment under certain economic scenarios.
87
31 DECEMBER 2009
The breakdown at 31 December 2009 and 2008 of the balance of Value Adjustments in
respect of asset impairment under Credits, loans and discounts, is as follows:
2009
By type of cover:
Specific cover
Complementary cover
By manner of determination:
By counterparty:
2008
285,633
32,614
97,792
114,662
318,247
212,454
285,633
32,614
97,792
114,662
318,247
212,454
318,029
218
212,147
307
318,247
212,454
The movement during 2009 and 2008 in the balance of Value Adjustments in respect of
asset impairment under Credits, loans and discounts, is as follows:
Specific cover
Complementary
cover
Total
210,320
36,599
(132,256)
(1)
252,100
118,564
(149,693)
(1,857)
(6,660)
Balance at beginning of 2008
Net appropriations against income
Recoveries
Transfer to doubtful loans against funds set up
Other
41,780
81,965
(17,437)
(1,857)
(6,659)
Balance at end of 2008
97,792
114,662
212,454
Recoveries
Transfer to doubtful assets against funds set up
Other
241,555
(39,910)
(7,478)
(6,326)
15,904
(97,952)
-
257,459
(137,862)
(7,478)
(6,326)
Balance at end of 2009
285,633
32,614
318,247
The amount of cumulative financial income not recognised in the consolidated income
statement relating to impaired financial assets totals €30,042k and €20,202k, at 31
December 2009 and 2008, respectively.
88
31 DECEMBER 2009
Set out below is a breakdown of the carrying value of impaired assets, without deduction of
value adjustments for impairment:
2009
By geographical area:
- Bizkaia
- Gipuzkoa
- Araba
- Expansion network
By counterparty:
- Spanish Public Administrations
- Other resident sectors
- Other non-resident sectors
By type of instrument:
- Commercial loans
- Loans and credits
- Finance leases
- Remainder
2008
88,725
66,206
26,091
306,231
65,199
34,537
17,764
242,181
487,253
359,681
298
486,497
458
97
358,993
591
487,253
359,681
10,817
427,864
28,465
20,107
12,754
319,908
11,138
15,881
487,253
359,681
Provided below is a breakdown of impaired assets by guarantees provided and age of the
amounts classed as impaired, without deduction of value adjustments for impairment:
2009
2008
Operations secured by real property guarantee on residential properties:
Up to 3 years
Over 6 years
104,128
100,078
3,482
320
129
119
77,027
76,277
469
219
62
Remainder
Up to 6 months
Over 2 years
383,125
146,427
84,381
125,524
26,793
282,654
163,507
72,979
33,817
12,351
487,253
359,681
89
31 DECEMBER 2009
The carrying value of financial assets which are past due and not impaired based on the
oldest maturity of each transaction is as follows:
2009
Up to 1 month
Between 2 months and 3 months
2008
10,744
14,997
6,301
12,757
18,896
2,490
32,042
34,143
A breakdown is provided below at 31 December 2009 and 2008 of balances under Credits,
loans and discounts written off the consolidated Group balance sheet based on the view that
the possibilities of their recovery are remote:
2009
Customer loans
2008
82,164
77,035
82,164
77,035
The movement in impaired financial assets written off because recovery is considered
remote is as follows:
2009
2008
77,035
75,546
Additions:
Value adjustment for asset impairment
7,478
7,478
1,857
1,857
Recoveries:
Due to collection in cash of principal
(298)
(298)
(368)
(368)
Definitive write-offs:
Condoned
(2,051)
(2,051)
-
82,164
77,035
c)
Financial assets renegotiated during the year
At 31 December 2009 and 2008 the breakdown of the balance of credit transactions
renegotiated with customers during the years, in which the term of the transaction and/or the
grace period has been extended, and the fair value of the collateral received for those
assets included under the heading “Credit Investments” is as follows:
Amount
2009
Mortgage Guarantee transactions
Transactions involving other real guarantees
Pledge guarantee transactions
Transactions involving personal guarantees
2008
Fair value of the collateral
received.
2009
2008
512,966
58,463
426
27,539
439,090
726
224
10,110
1,031,795
34,735
19,178
753,513
963
9,225
599,394
450,150
1,085,708
763,701
90
31 DECEMBER 2009
d)
Other transactions involving risks
In 2009 and 2008, in order to facilitate the management of loan recoveries, the Group
acquired certain real estate properties from several borrowers having difficulties complying
with the financing conditions. The main information regarding these transactions is:
2009
Risk to which group companies subrogated
Appraised value of the acquired assets
2008
162,853
166,822
53,143
60,027
The assets acquired in 2009 and 2008 appear under the heading "Other assets Inventories" in the consolidated balance sheet for a net amount of €118,104k (€53,143k at
31 December 2008) (see Note 34).
27.
Set out below is a breakdown of this heading in the balance sheets at 31 December 2009
and 2008:
2009
Spanish public debt
Treasury Bills
Other book-entry debt instruments
Other Spanish Public Administrations debt
Foreign public debt
Bonds and debentures
Issued by credit institutions
Residents
Non-residents
Measurement adjustments for asset impairment
2008
44,274
44,274
1,391
11,038
153,919
153,919
125,608
28,311
-
-
210,622
-
91
31 DECEMBER 2009
The breakdown by currency, maturity date in the listed price of the Held-to-maturity
investment portfolio in the balance sheets at 31 December 2009 and 2008, without taking
into consideration Measurement adjustments for asset impairment, is as follows:
2009
By currency:
In euros
By maturity:
More than 5 years
By ratings:
Risks rated A
Risks rated B
Amounts not assigned
2008
210,622
-
210,622
-
135,528
75,094
-
210,622
-
192,838
16,417
1,367
-
210,622
-
Movements in 2009 and 2008 in the Held-to-maturity investment portfolio are set out below:
2009
2008
Balance at beginning of the year
Additions due to purchases
Apportionment of interest
206,342
4,290
-
210,622
-
The average annual interest rate during the year in the Investment portfolio held to maturity
ranged between 3.06% and 4.10%.
The carrying value shown in the above tables represents the maximum exposure to credit
risk relating to the indicated financial instruments.
92
31 DECEMBER 2009
28.
Asset and liability hedging derivatives
Set out below is a breakdown of these headings in the consolidated balance sheets at 31
Assets
2009
Micro-hedges:
Fair value hedges
Cash flow hedges
Liabilities
2008
2009
2008
180,794
180,794
-
105,434
105,434
-
5,108
4,690
418
27,806
27,806
-
180,794
105,434
5,108
27,806
The breakdown by currency and maturity of asset and liability hedging derivatives in the
consolidated balance sheets at 31 December 2009 and 2008 is as follows:
Assets
2009
By currency:
In euro
By maturity:
Up to 1 month
Over 5 years
Liabilities
2008
2009
2008
180,794
105,434
5,108
27,806
180,794
105,434
5,108
27,806
85,091
95,703
63
310
74
15,983
89,004
2,873
2,235
10,633
17,173
180,794
105,434
5,108
27,806
The balance of hedging derivatives on the asset and liability sides of the consolidated
balance sheets at 31 December 2009 and 2008 breaks down as follows:
2009
Notional
value
Financial swaps
Other share operations
Financial swaps
Assets
Fair value
Liabilities
4,709,560
180,794
5,108
-
-
-
180,794
5,108
2008
Notional
value
Financial swaps
Other share operations
Financial swaps
Assets
Fair value
Liabilities
4,724,590
105,434
27,806
-
-
-
105,434
27,806
93
31 DECEMBER 2009
The notional and/ or contractual amount of asset and liability hedging derivatives does not
represent the risk assumed by the Group since its net position is obtained from the offset
and / or combination of such instruments.
At 31 December 2009 and 2008, the hedging instruments obtained up until that time were
intended to hedge interest rate risk to which certain financial liabilities at amortized cost are
subject, mainly mortgage bonds with a nominal value of €3,225,000k (Note 35).
The notional value of certain types of financial instrument provides a basis for comparison
with instruments recorded in the balance sheet but does not necessarily indicate the
amounts of future cash flows involved or the current fair value of the instruments and
therefore does not indicate the Group’s exposure to credit risk or price risk. Derivative
instruments become favourable (assets) or unfavourable (liabilities) as a result of
fluctuations in the market interest rates or exchange rates related to their terms.
The contractual or notional aggregate of available derivatives, the extent to which the
instruments are favourable or unfavourable and therefore the aggregate fair values of the
financial asset and liability derivatives may fluctuate significantly.
29. Non-current assets for sale
2009
Property, plant and equipment for own use
Property, plant and equipment foreclosed
2008
10,557
963
10,622
(1,028)
4,464
963
3,501
-
10,557
4,464
Movements during 2009 and 2008 under in Non-current assets for sale are as follows:
2009
Individualised items:
Additions
Disposals
Net appropiations charged to income for asset impairment
Transfers to PPE
2008
4,464
10,503
(3,382)
(1,028)
-
1,396
3,622
(576)
22
10,557
4,464
94
31 DECEMBER 2009
The balance of the heading Other asset impairment losses (net) – Non-current assets for
sale in the consolidated income statement for the years ended 31 December 2009 and 2008
breaks down as follows:
2009
Other assets
2008
1,057
-
-
1,057
-
1,057
-
1,057
-
The movement in 2009 and 2008 in Value Adjustments due to asset impairment under noncurrent available-for-sale assets is as follows:
2009
Other
2008
1,057
(29)
-
1,028
-
The movement in Measurement Adjustments for asset impairment under Non-current
available-for-sale assets at 31 December 2009 and 2008 is as follows:
2009
Individualized items
2008
1,028
-
1,028
-
95
31 DECEMBER 2009
30.
Shareholdings
2009
Associates:
Gross value
Unlisted
2008
6,231 5,801
6,434 5,801
(203) 6,231 5,801
Multigroup entities:
Gross value
Unlisted
18,159 27,097
22,200 27,097
(4,041) 18,159 27,097
24,390 32,898
Movements in 2009 and 2008 in the balance of Shareholdings are as follows:
2009
2008
Acquisitions
Disposals
Share in income
Share measurement gains (losses)
Payment of dividends
Adjustment of financial charges to associates
Other
32,898
269
(5,752)
2,077
(1,475)
(402)
(4,244)
1,019
37,326
14,966
(12,386)
890
(472)
(4,212)
(3,786)
572
24,390
32,898
Appendix I includes significant information on shareholdings in Multigroup entities and
Associates and Subsidiaries which have been consolidated under the full consolidation
method at 31 December 2009 and 2008.
In 2008 the Parent Entity transferred most direct equity stakes held in real estate companies
classified as multigroup companies to its multigroup company Fomenclar, S.L. (S.P.E.),
totaling €12,386k.
96
31 DECEMBER 2009
31.
Assets held for reinsurance
2009
Life insurance technical reserves
Technical reserves for claims
32.
2008
2,949
4,862
3,304
5,089
7,811
8,393
Set out below is a breakdown of these heading in the consolidated balance sheets at 31
2009
2008
367,496
371,765
For own use:
Data processing equipment and installations
Furnishings, vehicles and other installations
Buildings
Work in progress
Other
338,996
12,284
39,411
282,115
5,186
-
340,825
16,530
41,485
250,076
32,734
-
27,727
29,970
977
3
974
1,005
3
1,002
(204)
(35)
24,540
23,226
1,314
27,340
26,026
1,314
392,036
399,105
Assigned under operating lease
Associated with Community Projects
Furniture and installations
Buildings
Real estate investments
Buildings
Rural properties, land and plots
97
31 DECEMBER 2009
The movement in 2009 and 2008 in the balance of Property, plant and equipment is as
follows:
For own use
Associated
with
Community
Projects
Assets
assigned under
operating lease
Investment
properties
Total
Gross
Balance at 1 January 2008
505,457
37,943
2,135
38,639
584,174
37,626
(4,554)
5,406
17,058
(9,675)
-
-
(5,406)
54,684
(14,229)
-
(26)
-
-
-
(26)
543,909
45,326
2,135
33,233
624,603
Additions
Disposals
Transfers
Transfers to non-current assets for
sale
13,111
(30,141)
1,136
9,367
(10,666)
-
-
203
(1,136)
22,681
(40,807)
-
-
-
-
-
-
528,015
44,027
2,135
32,300
606,477
183,521
12,538
1,099
9,081
206,239
16,725
(548)
3,390
7,603
(4,785)
-
31
-
202
(3,390)
24,561
(5,333)
-
(4)
-
-
-
(4)
203,084
15,356
1,130
5,893
225,463
Charges
Disposals
Transfers
sale
17,508
(29,917)
(1,656)
8,071
(7,127)
-
28
-
211
1,656
25,818
(37,044)
-
-
-
-
-
-
189,019
16,300
1,158
7,760
214,237
(35)
-
-
-
(35)
Charges
(169)
-
-
-
(169)
(204)
-
-
-
(204)
340,790
29,970
1,005
27,340
399,105
338,792
27,727
977
24,540
392,036
Additions
Disposals
Transfers
sale
Accumulated amortization
Balance at 1 January 2008
Charges
Disposals
Transfers
sale
Value adjustments owing to
asset impairment
Net
98
31 DECEMBER 2009
Property, plant and equipment for own use in the consolidated balance sheets at 31
December 2009 and 2008 break down as follows:
Gross
Accumulated
amortization
Impairment
adjustments
Net
At 31 December 2009
Buildings
Work in progress
Other
48,618
161,267
312,944
5,186
-
(36,334)
(121,856)
(30,829)
-
(204)
12,284
39,411
282,115
5,186
(204)
528,015
(189,019)
(204)
338,792
75,813
156,576
278,782
32,734
4
-
(59,282)
(115,090)
(28,709)
(3)
-
(35)
16,531
41,486
250,073
32,734
1
(35)
543,909
(203,084)
(35)
340,790
At 31 December 2008
Buildings
Work in progress
Other
The fair value of Property, plant and equipment for own use and under construction is
included in Note 43 to the annual accounts.
The net balance at 31 December 2009 and 2008 of Property, plant and equipment for own
use does not include any amount in respect of property, plant and equipment not in use.
The gross value of fully-depreciated property, plant and equipment for own use still in use at
31 December 2009 and 2008 amounts to approximately €127,278k and €133,281k,
respectively.
The balance of Investment properties in the consolidated balance sheets at 31 December
2009 and 2008 breaks down as follows:
Gross
Accumulated
amortization
Net
At 31 December 2009
Buildings
30,986
1,314
(7,760)
-
23,226
1,314
32,300
(7,760)
24,540
31,919
1,314
(5,893)
-
26,026
1,314
33,233
(5,893)
27,340
At 31 December 2008
Buildings
99
31 DECEMBER 2009
The fair value of Investment properties is indicated in Note 43 to the annual accounts.
Net operating income from the Group’s Investment properties during 2009 and 2008
amounted to approximately €973 and €1,049k, respectively.
The most significant contracts under which the Group is the lessor are leases for modules or
premises located in landmark buildings, with indefinite maturities and clauses for termination
by either party.
When dealing with the lease of commercial premises or similar, contracts have a defined
maturity, the term being established in each specific case.
Set out below is a breakdown of the balance of Assets assigned under operating leases in
the consolidated balance sheets at 31 December 2009 and 2008:
Gross
At 31 December 2009
Machinery
Furnishings and fixtures
Buildings
Computer hardware
Medical equipment
Vehicles
Other
At 31 December 2008
Machinery
Furnishings and fixtures
Computer hardware
Medical equipment
Vehicles
Other
Otros
Accumulated
amortization
Net
15,693
5,435
13,509
43
9,248
99
(6,635)
(271)
(7,384)
(35)
(1,927)
(48)
9,058
5,164
6,125
8
7,321
51
44,027
(16,300)
27,727
14,695
9
5,435
15,970
43
9,073
101
(7,331)
(8)
(112)
(6,618)
(27)
(1,230)
(30)
7,364
1
5,323
9,352
16
7,843
71
45,326
(15,356)
29,970
Income from rent from Assets assigned under operating leases by the Group in 2009 and
2008 amounted to approximately €10,447k and €10,149k, respectively. Operating expenses
of all kinds corresponding to Assets assigned under operating leases by the Group in 2009
and 2008 amounted to approximately €821k and €862k, respectively. (Note 54).
100
31 DECEMBER 2009
At 31 December 2009 and 2008, the Group had the following commitments in relation to its
Property, plant and equipment:
-
The Group leases certain properties for which it has paid €7,525k and €7,199k, in
2009 and 2008, respectively in respect of rentals (Note 56,b). At 31 December 2009
and 2008 the time to maturity of these lease contracts stood at an average of 15 years.
33.
Tax assets and liabilities
Assets
2009
Liabilities
2008
2009
2008
Current taxes:
VAT
Withholdings refundable/payable
Other
21,231
16,233
4,998
-
17,268
11,945
3,521
1,802
255
255
-
2,010
1,968
12
30
Deferred taxes:
- Measurement adjustments available- for- sale
portfolio
- Fixed asset restatement
- Opening fees
Appropriations to bad debts provisions
Tax credits
Fixed asset reinvestment
Other items
83,316
113,935
45,545
37,695
74,369
867
6,272
1,808
112,299
1,572
64
15,668
29,844
33
-
7,573
30,032
90
-
104,547
131,203
45,800
39,705
As a result of current Corporate Income Tax legislation applicable to the Parent Entity and
the Investee Entities, certain differences have arisen in 2009 and 2008 between accounting
and tax criteria which have been recorded as Deferred tax assets and Deferred tax liabilities
upon calculation and recording of the corresponding Corporate Income Tax.
101
31 DECEMBER 2009
Movements in 2009 and 2008 in the deferred tax asset and liability balances are set out
below:
Assets
2009
Balance at 1 January
Increases/(Decreases)
Provisions for risks and impairment
Reinvestment
Measuremant adjustments
Revalorization of fixed assets
Opening fees
Tax credit
Others
Balance at 31 December
Liabilities
2008
2009
2008
113,935
29,294
37,695
61,830
(37,930)
(705)
6,272
1,744
85,517
(353)
(523)
(188)
8,095
(57)
-
(148)
(24,288)
(188)
489
83,316
113,935
45,545
37,695
The details of the Group’s fiscal situation are set out in Note 42.
34.
Other assets and liabilities
Assets
2009
Inventories
Time-apportionment of accrued fees
Other accrual items
Transactions in progress
Other items
Liabilities
2009
2008
2008
119,368
15,076
2,754
934
4,249
53,988
18,650
3,481
156
2,913
19,449
757
4,890
17,595
516
5,060
142,381
79,188
25,096
23,171
The inventories balance at 31 December 2009 and 2008 mainly relates to the acquisition of
real estate from borrowers, as is described under Note 26.
35.
Deposits from central bank
Deposits by credit institutions
Customer funds
Other financial liabilities
2009
2008
401,136
374,838
18,024,943
606,159
202,803
72,034
359,882
16,976,885
1,840,878
165,730
19,609,879
19,415,409
102
31 DECEMBER 2009
The breakdown by currency and maturity of financial liabilities at amortised cost in the
consolidated balance sheets at 31 December 2009 and 2008 is as follows:
By currency:
In euro
In US dollars
In pounds sterling
In Swiss francs
In Japanese yen
Other
By maturity:
Demand deposits
Up to 1 month
Over 5 years
No set maturity
a)
2009
2008
19,545,549
58,490
5,475
319
34
12
19,315,591
89,415
3,982
33
6,388
-
19,609,879
19,415,409
2,396,060
6,497,434
1,057,120
2,552,058
2,050,821
4,775,836
257
2,394,139
5,205,717
1,410,848
4,930,167
815,866
4,370,766
502
280,293
287,404
19,609,879
19,415,409
Central bank deposits
The balance of Deposits by central banks in the consolidated balance sheets at 31
December 2009 and 2008 breaks down as follows:
2009
Bank of Spain
2008
400,000
1,136
71,854
180
401,136
72,034
The average rates of interest per annum on Deposits by Central Banks in 2009 and in 2008
were 1.00% and 1.60% respectively.
The limits assigned by the Bank of Spain to the Parent Entity at 31 December 2009 within
the credit system secured by public funds totaled €810,873k (€462,500k at 31 December
2008).
103
31 DECEMBER 2009
b)
Deposits by credit institutions
The balance of Deposits by credit institutions in the consolidated balance sheets at 31
December 2009 and 2008 breaks down as follows:
2009
Fixed-term deposits
Repurchase agreements
Other accounts
2008
338,280
33,364
2,522
672
321,060
32,517
3,574
2,731
374,838
359,882
The average rates of interest per annum on Deposits by credit institutions in 2009 and in
2008 were 2.56% and 4.35% respectively.
At 31 December 2009, the heading "Fixed-term deposits" records a nominal amount of €100
million (€100 million at 31 December 2008) relating to the Parent Entity's issue of unique
mortgage bonds that were acquired by the European Investment Bank.
c)
Customer funds
Set out below is a breakdown of the balance of Customer funds in the consolidated balance
sheets at 31 December 2009 and 2008:
2009
2008
555,669
692,566
Other resident sectors:
17,431,222
16,243,207
6,794,919
1,918,822
4,848,388
27,709
9,542,603
4,214,978
5,327,625
819,894
273,806
124,998
148,808
5,036,311
1,659,208
3,334,264
42,839
10,533,848
5,851,611
4,682,237
407,824
265,224
179,150
86,074
38,052
41,112
18,024,943
16,976,885
Demand deposits
Current accounts
Savings deposits
Other
Fixed- term deposits:
Time deposits
Other
Interest accrued
Micro-hedging
Average rates of interest per annum during 2009 and 2008 on Customer funds may be
broken down by product as follows:
2009
Demand deposits
Fixed- term deposits
0.76%
3.29%
1.14%
2008
1.47%
4.17%
3.88%
104
31 DECEMBER 2009
At 31 December 2009 the Parent Entity records creditor balances with cooperatives, other
associates and investment funds managed by the Group amounting to €1,342,822k
(€720,729k in 2008).
At 31 December 2009, the balance sheet heading “Fixed-term deposits – Other” records
€4,225 million (€3,725 million at 31 December 2008) relating to the issue by the Parent
Entity of extraordinary mortgage bonds that have been subscribed by several asset
securitisation funds. The main characteristics are as follows:
Mortgage bond
(€’000)
Fund name
Cédulas TDA2, Fondo de Titulización de Activos
IM Cédulas 2, Fondo de Titulización de Activos
Intermoney Master Cédulas, Fondo de Titulización de
Activos
Disbursement
date
2009
2008
Maturity
date
26.11.03
03.03.04
11.06.04
19.11.04
29.11.04
15.06.05
300,000
300,000
500,000
200,000
100,000
500,000
300,000
300,000
500,000
200,000
100,000
500,000
22.11.13
01.03.16
11.06.14
19.11.14
27.11.19
15.06.20
02.12.05
31.03.06
09.06.06
30.11.07
23.09.09
500,000
525,000
300,000
500,000
500,000
500,000
525,000
300,000
500,000
02.12.15
31.03.21
09.06.16
30.11.10
- 23.09.13
4,225,000
3,725,000
It should be noted that the Parent Entity has fully subscribed all the shares issued by TDA9,
Asset Securitization Fund and TDA17, Asset Securitization Fund for a nominal amount of
€1,000 million (€500 million at 31 December 2008) (Note 25).
The annual nominal interest rate on the bonds issued at 31 December 2009 and 2008
amounts to between 0.573% and 4.51%. The heading “Other resident sectors Measurement adjustments” includes at 31 December 2009 an amount of -€148,808k (€86,074k at 31 December 2008) corresponding to fluctuations in the fair value of mortgage
bonds, attributable to the interest rate risk hedged for accounting purposes as described in
Note 28.
In accordance with the provisions of Royal Decree 716/2009 (24 April), which enables
certain aspects of Law 2/1981 (25 March) on mortgage market regulations and other rules
governing the financial mortgage system, the Governing Board of the Parent Entity states
that at 31 December 2009 the Bank has a set of policies and procedures to guarantee
compliance with mortgage market regulations.
105
31 DECEMBER 2009
At 31 December 2009 the nominal value of the mortgage bonds outstanding issued by the
Parent Entity totaled €4,325,000k, which were not issued via public bid. At that date the
outstanding nominal value of loans and mortgage credit backing the issue of the mortgage
bonds totaled €12,201,599k and the nominal value outstanding of loans and mortgage credit
eligible to back the issue of these mortgage bonds was €7,340,668k.
At 31 December 2009 the Group had not identified replacement assets for the issue of
active mortgage bonds due to the fact that it does not consider it necessary since the
percentage of issues compared with total eligible assets supporting those issues was
58.92%, compared with the maximum rate of 80% established by Law 2/1981 (25 March),
on the Regulation of the Mortgage Market.
Set out below is a breakdown by currency and maturity of the balance of Customer funds in
the consolidated balance sheets at 31 December 2009 and 2008:
By currency:
In euro
In US dollars
In pounds sterling
In Swiss francs
In Japanese yen
Remainder
By maturity:
Demand deposits
Up to 1 month
Over 5 years
d)
2009
2008
18,002,336
17,443
4,799
319
34
12
16,959,669
14,911
1,830
33
442
-
18,024,943
16,976,885
2,274,138
6,362,756
957,741
2,139,706
1,755,590
4,256,676
17,746,607
278,336
2,371,898
4,458,098
1,276,450
4,261,552
588,198
3,747,527
16,703,723
273,162
18,024,943
16,976,885
Set out below is a breakdown of the balance of debt securities in the consolidated balance
sheets at 31 December 2009 and 2008:
2009
Promissory notes and bills
Other unconvertible securities
Mortgage- backed securities
2008
82,087
523,923
149
696,842
499,780
632,924
11,332
606,159
1,840,878
106
31 DECEMBER 2009
At 31 December 2009 and 2008 this heading records the amortised cost subscribed relating
to Promissory Note Issue Program 01/2009 and Promissory Note Issue Program 01/2008,
respectively. Promissory notes issued at a discount under these programs have a nominal
value of €50.000 and are accepted for trading on the AIAF Organised Secondary Market. At
31 December 2009 and 2008 the programs lay down a maximum issue amount of €750
million and €1,250 million, respectively.
At 31 December 2009 the Parent Entity records creditor balances with cooperatives, other
associates and investments funds managed by the Group amounting to €27,987k
(€470,805k in 2008).
A breakdown is provided below by period remaining to maturity, indicating interest rates at
the end of each year:
Up to 1
month
Between 1
month
and 3
months
Between 3
months
and
6 months
At 31 December 2009
58,727
16,553
4,782
At 31 December 2008
434,339
102,250
129,914
Between 6
months
and
1 year
Between 1
year and 5
years
2,025
-
82,087
2.30% and
0.07%
30,339
-
696,842
5.47% and
1.89%
Total
Interest
rate
Other unconvertible securities
At 31 December 2008 this heading records the Issue of simple Debentures carried out by
the Parent Entity on 13 July 2006 and which matures on 13 July 2009. These debentures
with a nominal value of €500,000k (10,000 securities with a unit nominal value of € 50k)
have been issued at 99.956% of their nominal value and are listed on the AIAF Organized
Secondary Market. The annual nominal interest rate on these debentures is Euribor at 3
months plus 0.125% and interest is paid on a quarterly basis.
Mortgage- backed securities
In 2006 the Group contributed certain mortgage loans to the securitization fund “I.M. Caja
Laboral 1, F.T.A.” for the issue of securitization bonds. In 2008 the Group contributed certain
mortgage loans to the securitization fund “I.M. Caja Laboral 2, F.T.A.” for the issue of
securitization bonds. The Parent Entity's intention is to use these bonds in the future as
collateral to potentially obtain credit from the Eurosystem (Note 25).
107
31 DECEMBER 2009
At 31 December 2009 the cash value of the securitization bonds issued through those
securitization funds and subscribed by third parties outside the Group totals €523,923k
(€632,924k at 31 December 2008). These bonds mature due in October 2049 and January
2051 for the securitization fund “I.M. Caja Laboral 1, F.T.A.” and “I.M. Caja laboral 2,
F.T.A.”, respectively, and bear interest at euribor plus differentials that range between
0.16% and 0.21%, in the first case and 1% and 0.3%, in the second case.
Movements in 2009 and 2008 in Marketable debt securities are set out below:
2009
2008
Issues
Amortisation
1,840,878
12,605,818
(13,840,537)
1,701,347
5,414,068
(5,274,537)
606,159
1,840,878
The breakdown of interest accruing on debts represented by Group securities at 31
December 2009 and 2008 is as follows:
2009
Debts represented by negotiable securities
Other convertible securities
Mortgage securities
36.
2008
29,849
8,001
6,431
15,417
85,729
26,660
25,627
33,442
29,849
85,729
Insurance contract liabilities
2009
Life insurance technical reserves:
Unearned premium and unexpired risk reserves:
Direct insurance
Mathematical reserves
Direct insurance
Technical reserves for life insurance when the investment risk
is assumed by policyholders:
Direct insurance
Technical reserves for claims:
Direct insurance
Technical reserves for share in gains and returned premiums:
Direct insurance
Deposits received in respect of ceded reinsurance
2008
416,929
401,023
8,536
8,536
408,393
408,393
8,233
8,233
392,790
392,790
1,045
1,045
1,004
1,004
12,456
12,456
12,887
12,887
21
21
42
42
-
7,206
430,451
422,162
108
31 DECEMBER 2009
37.
Provisions
Set out below is a breakdown of this heading in the balance sheets at 31 December 2009
and 2008:
2009
2008
Other pension provisions
8,340
8,340
-
Provisions for contingent exposures and commitments
Provisions for contingent exposures
11,386
11,386
8,981
8,981
19,726
8,981
Movements in 2009 and 2008 in Provisions are set out below:
Contingent
exposures and
commitments
Provisions for
taxes
Total
At 31 December 2008
Appropriation against income:
Appropriations to provisions
Available provisions
Recoveries
Utilisation of funds
Other movements
-
11,418
11,418
-
11,140
(7,047)
(6,210)
(320)
-
11,140
(7,047)
(6,210)
(320)
-
-
8,981
8,981
-
8,981
8,981
10,806
(2,466)
-
9,474
(1,148)
(5,976)
55
20,280
(1,148)
(5,976)
(2,466)
55
8,340
11,386
19,726
At 31 December 2009
Net appropriation against income:
Appropriations to provisions
Available provisions
Recoveries
Applications
Other movements
a)
The Parent Entity has entered into future commitments with some of its members deriving
from the voluntary Dynamic Payroll Plan. As a result, the Parent Entity has created funds to
cover the commitments relating to active personnel, accruing from the time the plan was
created until the time they cease to render services to the Parent Entity, to cover salary
supplements and other welfare expenses that they will recieve until the employee effectively
retires.
109
31 DECEMBER 2009
The present value of the commitments entered into by the Parent Entity relating to postemployment remuneration and the way in which these commitments were covered are as
set out below:
2009
Commitments entered into
Serving employees
Retired employees
Other
Hedges
Internal funds
2008
8,340
-
-
8,340
-
8,340
-
8,340
-
On 31 December 2009 future flows of benefits were measured regarding the cover of the
commitments for post-employment compensation using the projected credit unit method of
calculation and taking the retirement age of each employee to be the earliest date on which
he becomes entitled to retire. Assumptions for future salary growth and annual adjustments
of pensions included in the calculation were 1.8% and 1.5%, respectively.
38. Community projects fund
2009
Promotion and Education Fund
Appropriation:
Applied to Property, plant and equipment
Expenses committed during the year
Current year maintenance expenses
Amount not committed
Revaluation reserves
2008
3,065
7,632
2,686
598
6,627
(6,627)
2,088
379
7,253
626
15,344
(15,344)
6,627
379
3,065
7,632
Movements during 2009 and 2008 in the balance of the Community Projects Fund are as
follows:
2009
Appropriation against the surplus for the year
Maintenance expenses for the year
Fixed asset depreciation
2008
7,632
2,088
(6,627)
(28)
16,380
6,627
(15,344)
(31)
3,065
7,632
110
31 DECEMBER 2009
Law 13/1989 on Credit Cooperatives, amended by Law 20/1990 concerning the Tax Regime
applicable to Cooperatives, maintains the distribution criteria contained in Royal Decree
2860/1978, of 3 November 1987, under which 10% of the net surplus, at least, should be
appropriated to the Promotion and Education Fund (Note 4).
The appropriations to this fund should be allocated, inter alia, to the development of
cooperatives and the social and cultural needs of the community or invested in fixed assets
that address such purposes. In this respect, the mandatory appropriation for 2008
amounting to €6,627k has been applied in 2009 in an amount of €1,657k and €2,850k to
the financing of MCC cooperative institutions and the Inter-cooperative Promotion and
Education Fund, respectively, (€3,836k and €6,598k, respectively, in 2008, out of a total of
€15,344k).
39.
Equity
2009
Share capital
Reserves
Less: Treasury shares
Income for the year attributed to Group
Less: Dividends and remuneration (Note 4)
2008
475,651
1,091,183
(523)
50,040
(35,588)
458,446
1,070,257
(500)
88,770
(34,277)
1,580,763
1,582,696
Share capital
The Parent Entity’s share capital is made up of contributions made and paid by working
members, collaborating members and Associate Cooperatives. In accordance with the
Parent Entity’s Bylaws (Note 1), the total amount of contributions by each member may not
exceed 20% of share capital, for legal entities, and 2.5% of share capital, for individuals.
Members’ liability for the entity’s debts is equal to the value of their contributions.
For each year, the General Assembly, at the proposal of the Governing Body, approves,
where appropriate, the remuneration on account applicable to these contributions, which, in
accordance with the Regulations concerning the Credit Cooperative Law, may not exceed
the legal interest rate increased by six points. The rate applied in 2009 and 2008 stood at
7.5% a year.
111
31 DECEMBER 2009
Movements in 2009 and 2008 in the Parent Entity’s capital balance are set out below:
In €`000
2009
2008
Balances at the beginning of the year
Cooperative returns from the distribution of
previous year’s surplus
Capitalised remuneration of contributions
to share capital in the present year
Contributions to share capital
- Associate cooperatives
- Members and other
Less, liquidation of contributions owing to departures
- Associate cooperatives
- Members and other
Transfers to capital classed as financial liabilities
458,446
418,519
16,567
38,360
-
-
1,541
683
2,009
1,243
(1,586)
(1,685)
Balances at the end of the year
475,651
458,446
At 31 December 2009, the only entity that directly or indirectly has a shareholding of 10% or
more in the share capital of the Entity is Lagun-Aro, Entidad de Previsión Social Voluntaria,
which owns 17.47% (17.88% in 2008).
Contributions (parts in the Entity) are transferable "inter vivos" only to other members and to
parties wishing to acquire such status, in accordance with the terms and conditions
contained in the Parent Entity’s Bylaws, and by succession "mortis causa", if the successor
is a member or acquires member status within six months. In the event of departure, the
member or his successors are entitled to request the reimbursement of the contributions to
share capital, the value of which, following the relevant reduction, where appropriate, by a
percentage determined by the Governing Body on the basis of the reason for the forfeiture
of member status, will be estimated based on the balance sheet approved by the General
Assembly following the definitive departure date. The reimbursement period will be set by
the Governing Body and may not exceed five years following the date of departure or one
year from the member’s death, where appropriate.
Final Provision Six of Royal Decree 1309/2005, of 4 November 2005, introduced certain
changes that affect Article 10 of Royal Decree 84/1993 whereby the Regulations on credit
cooperatives are approved, which enable credit cooperatives to establish restrictions in their
bylaws to the reimbursement of members’ capital contributions. Therefore the Parent
Entity’s General Assembly in the meeting of 7 April 2006 agreed to amend Article 21 of the
Parent Entity’s bylaws, governing the contribution reimbursement regime, such that when in
one financial year, the amount of the refund of contributions exceeds 1% of share capital at
the previous year end, any further reimbursements would be conditional on the Governing
Body’s favourable decision. As a result, at 31 December 2009 and 2008, 99% of share
capital at the previous year end complies with the requirements to be considered equity
while the remaining 1%, net of reimbursements for the year, is classed as Capital repayable
on demand (Note 13.f.viii).
112
31 DECEMBER 2009
Movements in 2009 and 2008 in the balance of capital repayable on demand are set out
below:
2009
2008
Transfer of capital
Reimbursement due to departures
3,029
1,586
(727)
2,526
1,685
(1,182)
3,888
3,029
In accordance with the Parent Entity’s bylaws, minimum share capital, which must be fully
paid, amounts to €10,000k.
At 31 December 2009 and 2008, the capital of Subsidiaries owned 10% or more by other
entities external to the Group, either directly or through their subsidiaries, is as follows:
% shareholding
2009
2008
Seguros Lagun Aro Vida, S.A.:
- Lagun Aro, E.P.S.V.
24%
24%
At 31 December 2009 and 2008 equity instruments held by the Parent Entity of Subsidiaries
and the nominal value of each together with the payments pending at that date are as
follows:
Number of
shares
Seguros Lagun Aro Vida, S.A.
Caja Laboral Gestión, SGIIC, S.A.
Caja Laboral Pensiones, G.F.P., S.A.
2009
Nominal
value
(euro)
285,000
1,045,000
200,000
90,15
6,01
10
2008
Payments
pending
8,564
-
Number of
Nominal
shares
value (euro)
285,000
1,045,000
200,000
Payments
pending
90,15
6,01
10
8,564
-
Reserves
Set out below is a breakdown of the balance of reserves in the consolidated balance sheets
at 31 December 2009 and 2008:
2009
Accumulated reserves (losses):
Restatement reserves:
Parent entity
Reserves (losses) attributed to Parent Entity:
Other reserves
Reserves (losses) attributed to Subsidiaries
Reserves (losses) in companies measured under
the equity method
Multigroup entities
Associates
2008
1,077,471
1,056,876
76,739
76,739
991,479
991,479
9,253
77,224
77,224
971,740
971,740
7,912
13,712
3,319
10,393
13,381
3,040
10,341
1,091,183
1,070,257
113
31 DECEMBER 2009
Movements in 2009 and 2008 in the balance under Reserves are as follows:
2009
2008
Saldo al inicio del ejercicio
Distribución del resultado del ejercicio anterior
Aportaciones netas de socios
Otros
1,070,257
27,985
122
(7,181)
988,999
80,452
199
607
Saldo al cierre del ejercicio
1,091,183
1,070,257
Law 13/1989, of 26 May 1989, on Credit Cooperatives, partially amended by Law 20/1990,
of 19 December 1990 on the Tax Regime applicable to Cooperatives, established new
bases for arranging credit in relation to these entities. In 1993 Royal Decree 84/1993, of 22
January 1993, was published which approves the enabling regulations of Law 13/1989, of
26 May 1989, on Credit Cooperatives. The criteria for distributing the available surplus for
the year (Note 4) are set out below:
a)
Mandatory Reserve Fund
At 31 December 2009 and 2008 Other reserves attributed to the Parent Entity include
€978,497k and €945,239k, respectively which relate to the Mandatory Reserve Fund. Law
13/1989 established that at least 50% of the available surplus for the year should be
appropriated to this Mandatory Reserve Fund. Law 20/1990 amended previous legislation
and established that at least 20% of the available surplus for the year should be
appropriated to the Mandatory Reserve Fund. Under the Parent Entity’s current bylaws,
50%, at least, of the available surplus for the year should be distributed. A breakdown is
included in Note 4.
b)
Reserve for insolvency risks
Similarly, at 31 December 2009 and 2008 Other reserves attributed to the Parent Entity
record €15,212k in respect of reserves for insolvency risks. Until the entry into force of Law
13/1989, qualified credit cooperatives had to appropriate at least 15% of the available
surplus for the year to this Reserve. Law 13/1989 and Law 20/1990 do not specifically
establish the appropriation to be made to the Reserve for Insolvency Risks under the criteria
for the distribution of the available surplus for the year.
Revaluation reserve
The Parent Entity availed itself of Transitional Provision 1 of Bank of Spain Circular 4/2004,
concerning the revaluation of property, plant and equipment, under which entities may
measure at 1 January 2004 any asset included under property, plant and equipment at fair
value, on condition that the assets are freely available. The amounts of such restatement
are reclassified under Other reserves as and when the assets are written off the balance
sheet, owing to their depreciation, impairment or disposal, in the proportion corresponding to
the restatement made.
114
31 DECEMBER 2009
The breakdown by entity of the balance of (loss) reserves at 31 December 2009 and 2008 is
as follows:
2009
Seguros Lagun-Aro, Vida, S.A.
Caja Laboral Gestión, SGIIC, S.A.
2008
6,633
2,194
426
6,830
873
209
9,253
7,912
The breakdown of the balance of reserves/(losses) in entities measured under the equity
method at 31 December 2009 and 2008 is as follows:
2009
Associates:
International Capital Research, S.A.
Sharpe Asset Management Ireland Limited
Bazkideak, S.C.P.
ICR Institutional Investment Management, S.G.I.I.C., S.A.
Professional Future Materials, S.L.
Seguros Lagun-Aro, S.A.
Fomenclar, S.L.
Sociedades de Promoción Inmobiliaria (ver Anexo I)
2008
3,319
926
2,537
(74)
(70)
3,040
968
2,190
(41)
(77)
10,393
11,011
(516)
(102)
10,341
10,385
(23)
(21)
13,712
13,381
Provided below is a breakdown by Entities of the contribution to Income attributed to the
Group at 31 December 2009 and 2008:
2009
Parent entity
Subsidiaries:
Caja Laboral Gestión S.G.I.I.C., S.A.
Caja Labora Pensiones, G.F.P., S.A.
Clarim Alava, S.L.
Clarim Navarra, S.L.
Clarim Valladolid, S.L.
Clarim Bizkaia, S.L.
Associates:
Bazkideak, S.C.P.
ICR Institutional Investment Management, S.G.I.I.C., S.A.
Seguros Lagun Aro, S.A.
Fomenclar, S.L.
Real State Promotion Entities (Appendix I)
2008
51,857
83,157
3,935
3,850
644
151
(30)
(120)
(476)
(84)
4,723
3,185
1,321
217
-
(5,752)
890
(402)
(459)
196
(176)
37
(27)
(42)
224
(176)
(33)
(5,350)
1,579
(5,824)
(1,105)
917
1,601
(611)
(73)
50,040
88,770
115
31 DECEMBER 2009
40.
Measurement adjustments to equity
2009
Available-for-sale financial assets:
- Debt securities
- Equity instruments
Cash flow hedges
2008
(146,888)
(29,174)
(117,714)
(286)
(271,015)
(93,022)
(177,993)
-
941
(1,130)
(146,233)
(272,145)
The balance included under Equity measurement adjustments - Available-for-sale financial
assets relates to the net amount of the tax effect of the variations in the fair value
attributable to the Group relating to financial instruments that should be classified as an
integral part of the Group’s equity. At the time of the sale of financial assets, variations are
recorded in the consolidated income statement. Movements during 2009 and 2008 are as
follows:
2009
Net movement charged /(credited) to income
Sales and redemptions
Impairment losses (net) charged against income statement
Net Restatements / (capital losses)
Others
2008
(271,015)
22,738
(11,956)
34,694
95,769
5,620
8,739
92,075
(9,904)
101,979
(371,829)
-
(146,888)
(271,015)
In order to adequately evaluate the evolution of this heading, the exceptional circumstances
in the financial markets during the 2008 and 2009 must be taken into consideration, as
explained in Note 18.
The amount recorded under Equity measurement adjustments at 31 December 2009 and
2008 may be broken down by Entities as follows:
2009
Parent Entity
Subsidiaries:
- Seguros Lagun-Aro Vida, S.A.
Associates and Multigroup companies:
- Seguros Lagun Aro, S.A.
- Bazkideak, S.C.P.
2008
(149,672)
2,498
2,498
941
829
112
(268,057)
(2,958)
(2,958)
(1,130)
(990)
(140)
(146,233)
(272,145)
116
31 DECEMBER 2009
41.
Minority interests
The balance under this heading on the consolidated balance sheets at 31 December 2009
and 2008 relates to the minority shareholders’ holding in the share capital of Seguros
Lagun Aro Vida, S.A.
2009
Minority interests
Measurment
adjustments
Remainder
2008
Results
attributable to
minority
shareholders
Minority interests
Measurment
adjustments
Remainder
Results
attributable to
minority
shareholders
789
9,547
1,216
(934)
9,399
1,006
789
9,547
1,216
(934)
9,399
1,006
Movements in 2009 and 2008 in Minority interests are set out below:
2009
Share in income
Variation measurement adjustments
Dividends paid
Other
42.
2008
8,465
1,216
1,723
(311)
(757)
9,411
1,006
(1,236)
(712)
(4)
10,336
8,465
Tax situation
The Parent Entity and Investees file individual corporate income tax returns in accordance
with tax legislation applicable to each.
In accordance with Provincial Regulation 2/97 of the Tax Regime applicable to Cooperatives
in Guipuzcoa, there is a single tax rate of 28% applicable to tax protected cooperatives. For
other national financial subsidiaries, the applicable tax rate is set at 28% in 2008 and 2009.
Applicable legislation governing the settlement of corporate income tax for 2009 for the main
investee entities is Regional Regulation 7/1996 (4 July), as amended by Regional
Regulation 8/2008 (23 December), and Regional Regulation 4/2009 (23 December).
Regional Regulation 8/2008 definitively reduced the corporate income tax rate for entities
domiciled in Gipuzkoa to 28%.
The Directors of the Parent and investee entities have calculated the amounts associated
with this tax in 2009, as well as those open to inspection in accordance with regional
legislation in force at the end of each year.
117
31 DECEMBER 2009
The reconciliation for the Parent Entity of accounting income for 2009 and 2008 to the
corporate income tax base is as follows::
€’000
2009
Accounting income for the year before taxes
Permanent differences:
Increases
- Non-deductible expenses
- Other items
Decreases
- Mandatory appropriation to the Promotion and Education Fund
- Appropriation to the Inter-cooperative Social Fund
- Deductible gross interest paid on account
in respect of share capital contributions
- 50% of the mandatory appropriation to the Mandatory Reserve Fund
- Reinvested capital gains on the sale of properties associated with
operations
- Other items
Accounting base of the tax
Temporary differences
- Arising in the present year
- Arising in previous years
Tax base
2008
50,137
101,187
426
50,563
655
101,842
(2,088)
(9,941)
(6,627)
(23,016)
(28,915)
(5,220)
(34,277)
(16,567)
1
4,400
(431)
12
20,936
-
(1,637)
71
2,763
21,007
Gross tax payable (28%)
Deductions and allowances
Net tax payable
774
(7,046)
(6,272)
5,882
(4,658)
1,224
Withholdings and payments on account
(3,100)
(3,040)
Corporate income tax payable / (refundable)
(9,372)
(1,816)
118
31 DECEMBER 2009
In 2008 the Parent Entity applied a reinvestment exemption totaling €431k and in this
respect it must reinvest €995k over the following three years.
The breakdown of corporate income tax in the consolidated income statement for 2009 and
2008 is as follows:
2009
2008
Accounting base at the applicable rate
Deductions and allowances
Other items
1,232
(7,046)
(514)
5,862
(4,658)
(564)
Parent Entity Corporate Income Tax
(6,328)
640
1,753
(160)
1,866
(1,063)
(4,735)
1,443
Investee Entities’ Corporate Income Tax:
Accounting base at the applicable rate
Other items
In addition to the Corporate Income Tax shown in the consolidated income statement, deferred
taxes have been generated or reversed as a result of measurement adjustments in respect of
Equity for the years 2009 and 2008. The items and amounts in question are shown below:
2009
Measurement adjustments:
2008
46,642
(109,272)
46,642
(109,272)
According to current legislation, taxes may not be considered definitively settled until the
returns filed have been inspected by the tax authorities or the four year lapsing period has
elapsed.
At 31 December 2009 the Parent Entity was open to the inspection of all taxes to which it is
liable in 2006, 2007, 2008 and 2009 (except for corporate income tax, which is open as from
1 January 2005 and value added tax, for which the entity was partially inspection for the
years 2005-2008).
Subsidiaries are open to inspection of 2006, 2007, 2008 and 2009 (except for corporate
income tax, which is open as from 1 January 2005).
The Directors of the Parent Entity believe any liabilities that could arise from the years open
to inspection would not have a significant effect on the Group's annual accounts for 2009.
Due to the different possible interpretations of tax regulations applicable to the Group’s
operations, in the years open to inspection there could be certain contingent tax liabilities.
However, in the opinion of the Parent Entity’s Directors, the possibility that such contingent
liabilities may arise is remote and, in any event, the additional tax debt that could result
would not significantly affect the Group’s consolidated annual accounts taken as a whole.
119
31 DECEMBER 2009
43.
Fair value of balance sheet assets and liabilities
i)
Fair value of financial assets and liabilities.
As mentioned in Note 13, the Group’s financial assets are recorded in the consolidated
balance sheet at their fair value, with the exception of Credits, loans and discounts, the
Held-to-maturity investment portfolio and Equity instruments of which its market value
cannot be reliability estimated. Similarly, the Group's financial liabilities are recorded in the
accompanying consolidated balance sheet at their fair value, with the exception of Capital
repayable on demand and Financial liabilities at amortized cost, which are not covered by
accounting provisions.
The following table summarizes the fair values at the end of 2009 and 2008 assigned to the
following financial assets and liabilities, classified in accordance with the various
measurement methods applied by the Group:
2009
Total
Balance
Fair
Value
Level 1
Fair value hierarchy
Level 2
Level 3
Cash on hand and on deposits at central banks
Trading portfolio
Other financial assets at fair value through profit
and loss
Credit investments
Held-to-maturity investments
332,778
48,461
332,778
48,461
868
47,593
332,778
-
7,100
3,188,868
16,921,604
210,622
180,794
7,100
3,188,868
16,921,604
210,889
180,794
4,243
1,425,210
185,601
-
2,857
245,317
25,288
180,794
1,518,341
16,921,604
-
TOTAL FINANCIAL ASSETS
20,890,227
20,890,494
1,615,922
501,849
18,772,723
Trading portfolio
16,306
16,609,879
5,108
16,306
16,609,879
5,108
972
-
15,220
5,108
114
16,609,879
-
TOTAL FINANCIAL LIABILITIES
16,631,293
16,631,293
972
20,328
16,609,993
Total
Balance
Fair
value
Level 1
Cash on hand and on deposits at central banks
Trading portfolio
Credit investments
786,614
33,703
2,730,657
16,897,038
105,434
786,614
33,703
2,730,657
16,897,038
105,434
3,201
1,418,105
-
30,502
260,826
105,434
786,614
1,051,726
16,897,038
-
TOTAL FINANCIAL ASSETS
20,553,446
20,553,446
1,421,306
396,762
18,735,378
Trading portfolio
5,028
19,415,409
27,806
5,028
19,415,409
27,806
-
5,028
27,806
19,415,409
-
TOTAL FINANCIAL LIABILITIES
19,448,243
19,448,243
-
32,834
19,415,409
2008
Fair value hierarchy
Level 2
Level 3
120
31 DECEMBER 2009
The criteria used to determine fair value are as follows:
Level 1: using listed prices on active markets for the same financial instruments.
Level 2: using listed prices on active markets for similar instruments or other measuring
techniques in which all significant inputs are based on market data that is observable either
directly or indirectly.
Level 3: using measurement techniques in which some significant inputs are not based on
observable market data.
The measurement techniques used, and the assumptions applied to determine fair value,
were as follows:
•
Cash on hand and on deposits at central banks Fair value is considered to coincide
with the carrying value as these consist of on demand deposits or amounts that can be
realized in the short-term.
•
Debt securities: Government debt and certain fixed income securities issued by credit
institutions have been measured at the listed price on active markets (Tier 1). Certain
fixed income securities whose yield is linked to interest rates have been measured
using methods based on the discounting of flows by applying the interest rate curve
and the market spread for similar instruments (Tier 2). All other debt securities have
been measured using the prices calculated by authorized external agents (Tier 3). Tier
3 also includes €1,004,194k at 31 December 2009 (€487,687k at 31 December 2008),
which relates to mortgage bonds issued by the Parent Entity through TDA9, Asset
Securitization Fund and TDA17, Asset Securitization Fund, respectively (Note 25).
•
Additionally, at 31 December 2008 there are certain debt securities, for which the
return is linked to a market interest rate curve amounting to €14,873, respectively,
which are carried at amortized cost since the Group considers that amortized cost
does not differ substantially from fair value.
•
Equity instruments: The listed price on active markets (Tier 1) has been used, except
for certain mutual funds and venture capital funds, for which the prices calculated by
external appraisers (Tier 3).
•
In addition, there are unlisted equity instruments classified in the portfolio of Available
for sale Assets that are recognized at historic cost totaling €31,339k (€47,400 at 31
December 2008), which have therefore not taken into consideration in the above table.
•
Customer loans (Credit investments): No significant differences are deemed to exist
between their carrying value and fair value due to the fact that most of the loans
granted by the Group are indexed to a variable interest rate and/or, if this is not the
case, they mature within 12 months. The level of credit risk provisions have been
quantified for the credit risk portfolio in accordance with applicable accounting rules
and is considered to be sufficient to cover that credit risk.
121
31 DECEMBER 2009
However, in a financial and economic scenarios such as the current situation, and
given that there is no market for those financial assets, the amount by which they may
be exchanged between interested parties could be less that their recognized net value
since the potential buyer could not only discount the losses incurred and recognized in
accordance with applicable accounting rules, but also the losses that could be incurred
in the future in the case of a prolonged existence of the current economic situation,
exceptional in terms of its length and effects.
•
Financial liabilities at amortized cost: No significant differences are deemed to exist
between their carrying value and fair value due to the fact that most are indexed to a
variable interest rate and/or, if this is not the case, they mature within 12 months.
The reasons why there may be differences between fair value and the carrying value of
financial instruments are as follows:
•
For fixed rate instruments, the fair value varies based on market interest rates. The
variance is higher the longer the instrument's residual life.
•
For variable rate instruments, fair value may differ from carrying value if the margins
relating to the interest rate of reference have changed since the instrument was
issued. If the margins remain constant the fair value coincides with the carrying value
only on the repricing dates. At all other dates there is interest rate risk for flows that
have already been calculated.
ii)
Fair value of non-financial assets.
The comparison at 31 December 2009 and 2008 between the carrying value in the balance
sheet of the Group’s non-financial assets which are measured other than at fair value
together with the pertinent fair value is as follows:
2009
Value
recorded
Fair value
Assets
For own use and investment properties
Inventories
363,332
10,557
119,368
401,415
10,557
119,368
2008
Value
recorded
368,130
4,464
53,988
Fair value
406,054
4,464
53,988
The fair value of these assets has been determined as follows:
-
The fair value of the real estate included under Property, plant and equipment for own
use and investments properties at 31 December 2009 has been calculated, for 43% of
the carrying value (36% at 31 December 2008), using the appraised value as
determined by an independent company in 2008 and 2009 in accordance with Bank of
Spain regulations. An individual internal appraisal from 2007 has been applied for all
other properties since this estimate does not significantly differ from fair value at 31
December 2009 and 2008.
At 31 December 2007 the fair value of the properties included under the headings
Property, plant and equipment for own use and investments properties was calculated
based on individual appraisals using internal estimates prepared during the second
half of 2007 for all properties.
122
31 DECEMBER 2009
For all other items under property, plant and equipment the carrying value has been
taken as the most reliable estimate of market value at both dates.
-
The fair value of Non-current assets for sale and Inventories at 31 December 2009 and
2008 has been calculated based on their appraised value determined by an
independent appraiser, less a discount as a illiquidity premium for those assets
ranging between 10%-20% of their value.
44.
Contingent exposures
The breakdown of this heading at 31 December 2009 and 2008 which relates to the
amounts that the Group should pay on behalf of third parties in the event of default by the
parties originally required to effect payment, as a result of the commitments assumed by the
Group in the ordinary course of business is as follows:
2009
Financial guarantees:
Other guarantees and sureties
Irrevocable documentary credits
45.
2008
107,699
483,600
61,705
104,514
493,456
55,470
653,004
653,440
A breakdown of this heading at 31 December 2009 and 2008 is as follows:
2009
Balances drawable by third parties:
Credit institutions
The Public Administrations sector
Non-residents
Securities subscribed pending disbursement
Other contingent commitments:
Documents handed over to Clearing Houses
2008
1,358,563
1,006
85,354
1,272,100
103
12,786
106,868
106,868
1,478,188
1,500
100,977
1,375,624
87
12,696
146,127
146,127
1,478,217
1,637,011
123
31 DECEMBER 2009
46. Interest and similar revenue
A breakdown of this heading in the consolidated income statement for the years ended 31
2009
Deposits at central banks
Customer loans
Debt securities
Doubtful assets
Financial income from insurance activities
Rectification of revenues owing to hedging operations
Other interest
2008
4,051
10,253
634,437
47,887
31,874
34
689
11,613
33,095
841,707
67,897
31,991
(57)
381
729,225
986,627
The distribution by geographical area of the number of the Group’s bank branches at 31
2009
Bizkaia
Gipuzkoa
Araba
Navarra
Expansion network
47.
2008
92
79
37
48
138
92
79
37
48
145
394
401
2009
Deposits from central banks
Credit institution deposits
Customer funds
Rectification of expenses owing to hedging operations
Financial expense from insurance activities
Other interest
2008
1,497
7,167
391,815
29,849
(53,722)
8,378
37
306
18,602
541,285
85,729
31,841
4,642
-
385,021
682,405
The rectification of expenses owing to hedging operations mainly refers to financial Swaps
arranged to hedge the fair value of certain mortgage bond issues (Notes 35 and 28).
124
31 DECEMBER 2009
48.
2009
Other equity instruments:
Shares
49.
2008
9,620
9,620
10,269
10,269
9,620
10,269
Results in Entities carried under the equity method:
2009
Associates
Multigroup entities
50.
2008
(402)
(5,350)
(27)
917
(5,752)
890
Fees collected
2009
For contingent exposures
For contingent commitments
For currency and foreign bank notes exchange
For collection and payment services
For securities services:
Underwriting and placement of securities
Purchase-sale of securities
Administration and custody
Asset management
For marketing of non-bank financial products:
Investment funds
Pension funds
Insurance
Other fees
2008
5,363
695
76
46,378
15,073
157
959
1,243
12,714
16,973
956
11,472
4,545
6,663
5,699
646
76
45,411
21,701
3,094
890
1,317
16,400
19,305
1,240
13,774
4,291
4,675
91,221
97,513
125
31 DECEMBER 2009
51.
Fees paid
2009
Brokerage in asset and liability transactions
Fees assigned to other correspondent entities:
For collection or return of bills
For other items
Fees paid on securities operations
With market intermediaries
Other
Other fees
52.
2008
261
5,512
325
5,187
729
724
5
854
295
7,607
286
7,321
855
830
25
(35)
7,356
8,722
2009
Trading portfolio
Hedging derivatives
Other
Gains
Losses
2008
5,215
16,606
(101,589)
110,723
(1,457)
13,755
(117,447)
108,783
30,995
3,634
213,554
(182,599)
206,657
(203,023)
30,955
3,634
“Results of financial operations (net) – Hedging derivatives” refers to the measurement
adjustments of the hedging derivatives for fair values hedges, for the years 2009 and 2008.
As “Results of financial operations (net) – Other” refers to the measurement adjustments of
the hedge item designated as hedge for fair value (Note 13.e).
126
31 DECEMBER 2009
53.
2009
Gains
Losses
54.
2008
214,064
(213,763)
3,761,992
(3,762,681)
301
(689)
Other operating revenue
2009
Revenues from insurance and reinsurance policies issued
Sales and revenues from non-financial services rendered
Financial fees offsetting costs
Revenues from other operating leases (net)
Other
55.
2008
74,326
1,976
18,014
6,859
9,626
1,529
57,874
2,121
19,524
4,528
9,287
5,709
94,316
79,519
The breakdown of this heading in the consolidated income statements for the years ended
31 December 2009 and 2008 and is as follows:
2009
Expenses for insurance and reinsurance policies
Other operating expenses
Contribution to Deposits Guarantee Fund (Note 10)
Other
2008
83,961
16,129
9,409
6,720
68,443
12,173
8,186
3,987
100,090
80,616
127
31 DECEMBER 2009
56.
a)
Staff costs
2009
Salaries and bonuses paid to serving employees
Social security contributions
Severance payments
Staff training expenses
Other staff costs
2008
106,087
2,758
1,310
768
106,359
2,949
847
785
110,923
110,940
There is remuneration relating to the delivery of services corresponding to the Parent
Entity’s activity. A breakdown is provided below:
2009
Market
interest
Subsidised
interest
Low interest rate loans
376
Difference
417
2008
Market
interest
Subsidised
interest
41
2,910
Difference
3,838
928
The average number of employees in the Group in 2009 and 2008, by category and
location, was as follows:
2009
Directors
Managers
Specialists
Administrative personnel
2008
40
504
697
767
35
505
686
734
2,008
1,960
At 31 December 2009 and 2008 the Group’s personnel fell into the following categories, by
gender and location:
Number of employees
2009
Men
Women
Directors
Managers
Specialists
Administrative personnel
Parent Entity
All other Investee Entities
Subsidiaries
Total
2008
Men
Women
Total
2
101
341
425
39
400
331
359
41
501
672
784
1
97
330
410
34
408
357
348
35
505
687
758
869
1,129
1,998
838
1,147
1,985
862
1,128
1,990
834
1,141
1,975
7
1
8
4
6
10
869
1,129
1,998
838
1,147
1,985
128
31 DECEMBER 2009
The breakdown of the number of members of the Governing Body of the Parent Entity by
gender, at 31 December 2009 and 2008, was as follows:
Number of members
2009
Men
Women
Members of Governing
Body
b)
3
9
Total
12
2008
Men
Women
1
11
Total
12
Other general administration expenses
2009
For buildings, installations and materials:
Rentals
Maintenance of fixed assets
Lighting, water and heating
Forms and office materials
Data processing
Communications
Advertising and publicity
Legal costs and lawyers’ fees
Technical reports
Surveillance and transfer of funds services
Insurance and self-insurance premiums
By Governing and Control Bodies
Entertainment and staff travel expenses
Association charges
Administrative services subcontracted
Rates and taxes
Other expenses
2008
23,685
7,525
11,447
2,789
1,924
5,463
7,762
9,080
1,030
6,386
1,960
892
210
1,917
151
5,494
1,210
532
23,939
7,199
11,700
2,768
2,272
5,940
7,940
8,975
407
6,870
1,880
798
269
2,037
162
5,264
1,309
517
65,772
66,307
The leases under which the Group is the lessee largely refer to business premises used as
branches by the Parent Entity’s commercial network and which are formalised through
contracts for specific terms which generally exceed 20 years.
57.
Amortization
2009
For own use
Assigned under operating leases
Investment properties
Intangible assets
2008
25,790
25,579
17,508
8,071
211
537
24,530
24,328
16,725
7,603
202
418
26,327
24,938
129
31 DECEMBER 2009
58.
Provisions (net)
2009
Allocations to pension funds and similar obligations:
Early retirement (Note 37)
Provisions for taxes
Provisions for contingent exposures and commitments:
Contingent exposures (Note 37)
59.
2008
10,806
10,806
2,350
2,350
(2,117)
(2,117)
13,156
(2,117)
2009
Credits, loans and discounts (Note 26)
Loans
Other financial instruments not stated at fair value with changes in income
statement
Available-for-sale financial assets (Note 25)
Debt securities
Equity instruments
60.
2008
119,304
119,304
(31,497)
(31,497)
48,186
48,186
48,533
(347)
141,638
141,638
141,062
576
167,490
110,141
2009
Other asset
Associates (Note 30)
Multigroup entities (Note 30)
Inventories
Property, plant and equipment (Note 32)
Others
2008
23,657
203
4,041
18,944
169
300
-
23,657
-
130
31 DECEMBER 2009
61. Gain/(loss) on the disposal of assets not classified as non-current available-forsale
The breakdown of this heading in the consolidated income statement for the years ended 31
December 2009 at 2008 is as follows:
2009
Net gains/ losses on the sale of property, plant and equipment
Other items
62.
2008
(176)
-
570
1,033
(176)
1,603
Gain/(loss) on non-current available-for-sale assets not classified as interrupted
operations
2009
Net gains/(losses) on sale of non-current assets
63.
2008
(985)
704
(985)
704
The amounts recorded under this heading of the consolidated income statements for the
years ended 31 December 2009 and 2008 totalling €2,088k and €6,627k, respectively relate
to the mandatory appropriation to the Promotion and Education Fund in accordance with the
Law on Cooperatives and the Parent Entity’s by-laws (Note 4),
64.
Result attributed to minority shareholders
The balance of this heading in the consolidated income statement for the years ended 31
December 2009 and 2008 corresponds to the participation of minority shareholders in the
results of the subsidiary Seguros Lagun-Aro Vida, S.A. (Note 41).
131
31 DECEMBER 2009
65.
Transactions with Subsidiaries, Multigroup entities and Associates
The significant balances recorded at 31 December 2009 and 2008 between the Parent
Entity and Subsidiaries and the effect of the transactions between them during the years
then ended have been eliminated on consolidation. Balances at 31 December 2009 and
2008 relating to asset and liability transactions with Multigroup entities and Associates may
be summarised as follows:
2009
Balances
Customer funds
Guarantees
2008
4,012
451,159
26,935
5,921
339,329
20,279
The most significant transactions carried out in 2009 and 2008 with Multigroup entities and
Associates are as follows:
2009
Fees collected
Interest and similar income
2008
22
323
99
3,141
7,892
16,318
During 2008 the Parent Entity transfrerred most of the shares totaling €12,386 held in real
estate development companies owned by Caja Laboral to a group company (Note 30).
66.
Other information
A breakdown of customer funds off the Group’s consolidated balance sheet at 31 December
2009 and 2008 is as follows:
2009
Managed by the Entity’s Group:
Investment Funds and companies
Pension funds
Insurance contract saving
Customer portfolios managed on a discretionary basis
Marketed but not managed by the Entity’s Group
2008
2,481,071
1,090,466
1,002,090
388,515
67,552
2,398,900
1,079,648
928,818
390,434
44,449
2,548,623
2,443,349
132
31 DECEMBER 2009
In 2009 and 2008 the Group has carried out the following investment services on account of
third parties:
2009
Brokering in securities market transactions
Deposit of securities owned by third parties
1,724,209
3,190,652
2008
781,976
3,264,298
The total amount of debt securities assigned by the Group at 31 December 2009 and 2008
is €942,457k and €441,225k, respectively, of which €909,093k and €357,836k, respectively,
had been assigned to third parties and are recognized under the heading “Financial
liabilities at amortized cost - Customer funds” in the consolidated balance sheet. The rest of
the balance at the year-end is recorded under the heading “Financial liabilities at amortized
cost by credit institutions Deposits” in the consolidated balance sheet totaling €33,364k and
€83,389k at 31 December 2009 and 2008, respectively.
133
APPENDIX I
INDIVIDUAL BREAKDOWN OF GROUP COMPANIES AND OTHER SHAREHOLDINGS AT 31 DECEMBER 2009
(€’000)
2009
% Holding
Company
Domicile
Activity
Direct
Indirect
Assets
Investee data (*)
Revenues for
services/sales
Equity
Net income
Subsidiaries:
Seguros Lagun-Aro Vida, S.A. (a)
Caja Laboral Gestión, S.G.I.I.C, S.A.
Clarim Alava, S.L.
Clarim Bizkaia, S.L.
Bilbao
Mondragón (Gipuzkoa)
Vitoria
Pamplona
Valladolid
Bilbao
Insurance
Investment fund manager
Pension fund manager
Real Estate Promotion
76%
100%
100%
100%
100%
100%
100%
-
548,030
11,746
3,217
5,746
39,364
43,246
77,883
41,572
9,119
2,577
Bilbao
Barcelona
Barcelona
Madrid
Valladolid
Valladolid
Zaragoza
Barcelona
Navarra
Salamanca
Cantabria
Insurance
36.05%
2.45%
0.5%
25%
25%
0.5%
0.5%
20%
0.5%
4.88%
25%
24.5%
25%
25%
25%
25%
25%
25%
25%
25%
249,183
16,347
15,912
14,406
13,398
10,694
10,152
492
41,212
41,729
8,562
49,929
1,631
2,423
2,271
1,100
Barcelona
Zaragoza
Huesca
Gorraiz (Navarra)
Valladolid
Valladolid
Beasain (Gipuzkoa)
Huesca
Madrid
0.5%
0.5%
0.5%
0.5%
9.38%
9.38%
0.5%
0.5%
25%
25%
25%
25%
25%
25%
25%
25%
25%
14,859
5,842
4,041
34,598
9,764
12,237
8,923
8,542
2,286
2,408
Madrid
Santander
0.5%
0.51%
25%
24.49%
16,289
26,217
2,371
5,214
-
Vitoria
Oviedo
Zaragoza
0.51%
50%
0.5%
24.49%
25%
25%
12,981
10,092
32,347
7,533
2,174
1,402
26,900
1,037
-
(134)
(864)
(744)
(2,755)
70,315
9,878
2,462
-
3,287
651
151
(137)
(866)
(747)
650
-
(2,758)
Multigroup entities
Seguros Lagun-Aro, S.A. (b)
Copesa Montecerrao, S.L.
Copesa Valdecilla, S.L.
Guimel Aragón, S.L.
Capitol Promociones XXI, S.L.
Capitol León, S.L.
Promociones Royal Almazarro, S.L.
Copesa Ciempozuelos, S.L.
Promociones Flores Alfiden, S.L.
Capitol los Valles, S.L.
Nuevos Desarrollos Residenciales M3
Torrelavega, S.L.
Eco Moncayo Azul, S.L.
Promociones Royal La Sagrada, S.L.
Fuster Yequeda, S.L.
Flores Astillero, S.L.
Nuevas Promociones Sector 53, S.L.
Nuevas Promociones La Galera, S.L.
Urbialde Deba, S.L.
Residencial Almudevar, S.L.
Interpartners Promoción Inmobiliaria Castilla y
León, S.L.
Guimel Burgo, S.L.
Nuevos Desarrollos Residenciales La Albericia,
S.L.
Promociones Iturmendi 2010, S.L.
Vial La Florida, S.L.
Fomenclar, S.L.
Promociones Maralema, S.L.
130,608
4,026
564
324
979
493
3,148
3,286
759
665
373
4,785
2,721
4,478
3,557
624
188
-
(522)
(379)
(231)
(468)
(245)
(314)
(853)
(937)
-
-
(7)
(207)
(97)
(11)
(185)
(324)
1
(160)
24
(461)
(3,096)
(955)
1
APPENDIX I
(€’000)
2009
% Holding
Company
Associates
Bazkideak SCP (b)
ICR Institutional Investment Management
SGIIC, S.A.
(a)
(b)
(*)
Domicile
Dublín
Bilbao
Madrid
Activity
Company holding and administering
shares
Imports
Direct
Indirect
Assets
Investee data (*)
Revenues for
Equity
services/sales
Net income
23.81%
16.58%
-
5,835
7,686
4,679
7,684
298
703
274
687
28.50%
23.57%
-
1,153
2,296
1,080
1,051
541
2,613
(618)
157
At 31 December 2009 the Parent Entity has an uncalled share capital, for the share holdings in Seguros Lagun-Aro Vida, S.A. amounting to €8.564 k.
In 2004 the entity subscribed a capital increase at a premium in Seguros Lagun-Aro, S.A. amounting to €1,271k and assigned the voting and dividends rights attaching to the shares subscribed in that increase to
Bazkideak, SCP for an indefinite period. These shares represented 5.83% of the share capital of Seguros Lagun Aro, S.A. That assignment was formalised as a non-cash contribution of the entity to the capital of
Bazkideak, SCP measured at the same amount of €1,271k.
The above figures for equity relate to the standardised financial statements of the investee entities at 31 December 2009. In certain instances where they relate to prior closings, in no event more than three months
previously, the Parent Entity considers that they do not differ significantly from the forecast definitive financial statements at 31 December 2009.
This appendix forms an integrated part of Note 30 to the consolidated annual accounts and should be read together with it.
.
2
APPENDIX I
(€’000)
2008
% Holding
Company
Domicile
Activity
Direct
Indirect
Assets
Investee data (*)
Revenues for
services/sales
Equity
Net income
Subsidiaries:
Seguros Lagun-Aro Vida, S.A. (a)
Caja Laboral Gestión, S.G.I.I.C, S.A.
Clarim Alava, S.L.
Ardelean Inmuebles, S.L.
Bilbao
Vitoria
Pamplona
Valladolid
Bilbao
Insurance
Pension fund manager
Bilbao
Barcelona
Barcelona
Madrid
Valladolid
Valladolid
Zaragoza
Barcelona
Navarra
Salamanca
Cantabria
76%
100%
100%
100%
100%
100%
100%
-
537,756
11,437
226
3
3
303
69,649
46,540
8,475
2,208
3
3
3
3
52,181
13,219
2,624
-
4,191
1,321
217
-
Insurance
36.05%
0.5%
0.5%
25%
25%
0.5%
0.5%
20%
0.5%
5.06%
25%
24.5%
25%
25%
25%
25%
25%
25%
25%
25%
239,446
17,087
15,388
14,762
12,799
10,178
10,534
493
43,083
43,491
9,073
43,201
1,866
2,372
2,926
1,791
1,168
1,798
493
6,123
6,035
1,342
355
-
8,159
(943)
(31)
(215)
1
(21)
-
Barcelona
Zaragoza
Huesca
Gorraiz (Navarra)
Valladolid
Valladolid
Beasain (Gipuzkoa)
Huesca
Madrid
0.5%
0.5%
0.5%
0.5%
9.38%
9.38%
0.5%
0.5%
25%
25%
25%
25%
25%
25%
25%
25%
24.5%
14,217
6,093
3,924
31,384
9,935
17,165
8,923
7,661
2,310
2,415
1,100
601
4,710
2,906
4,802
3,558
1,005
209
-
(3)
(1)
(86)
(25)
(74)
(1)
(2)
(91)
Madrid
Santander
0.5%
0.51%
25%
24.49%
15,917
27,346
3,054
7,009
-
(1)
9
Vitoria
Oviedo
Holding Entity
0.51%
50%
24.49%
25%
-
12,178
9,683
35,443
2,167
2,000
29,996
-
(7)
(376)
Multigroup entities
Seguros Lagun-Aro, S.A. (b)
Copesa Montecerrao, S.L. (c)
Copesa Valdecilla, S.L. (c)
Guimel Aragón, S.L. (c)
Capitol Promociones XXI, S.L. (c)
Capitol León, S.L. (c)
Promociones Royal Almazarro, S.L. (c)
Copesa Ciempozuelos, S.L. (c)
Promociones Flores Alfiden, S.L. (c)
Capitol los Valles, S.L. (c)
Nuevos Desarrollos Residenciales M3
Torrelavega, S.L. (c)
Eco Moncayo Azul, S.L. (c)
Promociones Royal La Sagrada, S.L. (c)
Fuster Yequeda, S.L. (c)
Flores Astillero, S.L. (c)
Nuevas Promociones Sector 53, S.L. (c)
Nuevas Promociones La Galera, S.L. (c)
Urbialde Deba, S.L. (c)
Residencial Almudevar, S.L. (c)
Interpartners Promoción Inmobiliaria Castilla y
León, S.L. (c)
Guimel Burgo, S.L. (c)
Nuevos Desarrollos Residenciales La Albericia,
S.L. (c)
Promociones Iturmendi 2010, S.L. (c)
Vial La Florida, S.L. (c)
Fomenclar, S.L.
3
APPENDIX I
(€’000)
2008
% Holding
Company
Associates
Bazkideak SCP (b)
ICR Institutional Investment Management
SGIIC, S.A.
(a)
(b)
(c)
(*)
Domicile
Dublín
Bilbao
Madrid
Activity
Company holding and administering
shares
Imports
Direct
Indirect
Assets
Investee data (*)
Revenues for
Equity
services/sales
Net income
23.81%
26.06%
-
11,370
11,931
4,187
11,931
10,616
2,006
(178)
(414)
28.50%
23.57%
-
611
2,005
311
886
129
2,729
(612)
(141)
At 31 December 2008 the Entity has yet to pay €8,564 for its shareholding in Seguros Lagun-Aro Vida. S.A.
In 2004 the entity subscribed a capital increase at a premium in Seguros Lagun-Aro, S.A. amounting to €1,271k and assigned the voting and dividends rights attaching to the shares subscribed in that increase to
Bazkideak, SCP for an indefinite period. These shares represented 5.83% of the share capital of Seguros Lagun Aro, S.A. That assignment was formalised as a non-cash contribution of the entity to the capital of
Bazkideak, SCP measured at the same amount of €1,271k.
During 2008 the Parent Entity has transferred most of its direct shareholdings in these real estate development companies to the multigroup company Fomenclar, S.L. (S.P.E.)
The above figures for equity relate to the standardised financial statements of the investee entities at 31 December 2008. In certain instances where they relate to prior closings, in no event more than three months
previously, the Parent Entity considers that they do not differ significantly from the forecast definitive financial statements at 31 December 2008.
This appendix forms an integrated part of Note 30 to the consolidated annual accounts and should be read together with it.
4
DIRECTORS’ CONSOLIDATED REPORT FOR 2009
The evolution of Caja Laboral and its group, whose consolidation perimeter has not
undergone significant variations during 2009, has been conditioned by the spread and
deepening of the crisis in the real economy that began in 2008 and has been demonstrated,
among other aspects, in the slowing down of business volume and the deterioration of the
quality of credit facilities awarded to companies and families, particularly in the property
sector. This negative evolution has been compensated by remarkable recovery from the
financial markets, both set income and variable income.
Within this context, the consolidated result after tax and before endowing social funds has
risen to 53.3 million Euros.
This has practically covered the planned growth target for creditor resources and the
balance of credit and loans has been maintained in relation to the balance at the close of the
previous exercise, as can be seen below in the evolution of the basic business parameters.
The balance has risen to 21,604.2 million Euros, with an increase of 1.6% in relative terms
on the close of the previous year. Customer deposits rose to 18,024.9 million Euros, which
is 6.2% higher than registered at the close of 2008, highlighting the evolution of call deposits
and specifically savings accounts.
On the other hand, customer credit rose on 31st December 2009 to 16,343 million Euros,
which is slightly lower than at the close of the previous exercise.
These parameters are a reflection of Caja Laboral's strategy to maintain high levels of
financing for companies and families in a difficult economic environment.
Assessment of securities included in the investment portfolios available for sale have
benefited from movements in the markets. On 31st December 2009, the balance of
adjustments due to assessment reflects net drops in value of 146 million Euros compared to
272 million recorded on 31st December 2008.
The productivity and liquidity indicators remain within comfortable parameters, both in
absolute and relative terms.
Regarding solvency, own resources that can be assigned to the Entity, calculated on a
consolidated base on 31st December 2009, widely exceed the minimum requirements
required by the standards in force.
The delinquency rate calculated as the ratio of the balances classified as suspicious and the
credit to customers balance, without considering assessment adjustments rose to 2.90%,
higher than 2008, but lower than the sector average, according to the latest data published.
1
DIRECTORS’ CONSOLIDATED REPORT FOR 2009
From the income and spending chapters, given in detail in the income statement, the
following should be highlighted:
The interest margin rose to 343.9 million Euros, 13.1% higher than in 2008.
The combination of dividends, net commissions, results from financial operations and other
exploitation results contribute an amount of 113.2 million Euros in 2009, raising the gross
margin figure to 457.1 million Euros, representing year on year growth of 12.7%.
In the costs section, administration costs have risen to 176.7 million Euros, which is 0.3%
down on the previous year.
However it is the evolution of the losses due to the deterioration of financial assets and other
provisions that detract 180.6 million Euros from the income statement, 72.6 million Euros
more than in 2008, which explains the 44.7% drop in the results after tax compared to the
previous year.
With a view to 2010, it is hoped to continue with the boost in growth of mortgages for
Domestic Economies, although tempered by the adjustment phase that the property market
is experiencing. Strong growth is also anticipated for competition in capturing intermediate
liquid resources, resulting in significant deterioration of the interest margin, fundamentally
caused by adapting the yield from the mortgage portfolio to a scenario with unusually low
interest rates.
Within this context, Caja Laboral administrators understand that objectives during 2010 will
involve maintaining profitability in absolute terms that will go hand in hand with appropriate
management of credit risk and delinquency and strengthening the capital base.
Below, in accordance with the standards in force, the Annual Caja Laboral Popular
Corporate Government Report is attached as an annex to the Management Report.
2
ANEXO II
APPENDIX II
OTHER ENTITIES ISSUING SHARES ADMITTED TO NEGOTIATION IN OFFICIAL
SECONDARY MARKETS THAT ARE NOT SAVING BANKS
DATA IDENTIFYING THE ISSUER
EXERCISE
C.I.F. F20022109
Corporate Name:
CAJA LABORAL POPULAR COOP. DE CRÉDITO
Headquarters:
PASEO JOSÉ MARÍA ARIZMENDIARRIETA S/N
MONDRAGÓN
GIPUZKOA
20500
SPAIN
2009
2
MODEL FOR ANNUAL REPORT FROM CORPORATE GOVERNMENT
OF LISTED LIMITED COMPANIES
For better understanding of the model and its subsequent writing, it is necessary to read the
instructions on how to fill it in which appear at the end of this report.
A.
OWNERSHIP STRUCTURE
A.1. Details of the most significant shareholders or participants in your entity at
the close of exercise:
Name or corporate name of the
shareholder or participant
LAGUN-ARO, EPSV
% of registered capital
17,469
A.2. Indicate, when appropriate, any family, commercial, contractual or company
relations that exist between the significant shareholders or participants, as
far as they are known by the entity, unless they are barely relevant or derive
from ordinary commercial directions or traffic:
Related names or corporations
MONDRAGÓN CORPORACIÓN
COOPERATIVA
Type of relationship
Company
Brief description
COOPERATIVES AND THEIR MERCANTILE
COMPANIES THAT ARE MEMBERS OF
CAJA LABORAL POPULAR IN TURN FORM
PART, AS A GENERAL RULE, OF
MONDRAGÓN CORPORACIÓN
COOPERATIVA (MCC). MCC, OF WHICH
CAJA LABORAL POPULAR IS A MEMBER,
IS A GROUP OF FREELY ASSOCIATED
COOPERATIVES THAT SHARE
COOPERATIVE VALUES AND THAT AIM TO
ACHIEVE COMPETITIVE ADVANTAGES
DERIVED FROM WORKING TOGETHER IN
THE BUSINESS FIELD.
A.3. Indicate, when appropriate, any commercial, contractual or company
relations that exist between the significant shareholders or participants and
the entity, unless they are barely relevant or derive from ordinary
commercial directions or traffic:
Related names or corporations
MCC INVERSIONES SPE, S.
COOP.
Type of relationship
Company
Brief description
CAJA LABORAL POPULAR CONTRIBUTES
TO MCC INVERSIONES SPE, S.COOP. AND
FUNDACIÓN MCC (ENTITIES BELONGING
TO OR JOINTLY FORMED BY THE
ASSOCIATED COOPERATIVES IN MCC) AN
ANNUAL AMOUNT EQUIVALENT TO 20%
OF SURPLUS BEFORE TAX FROM THE
PREVIOUS EXERCISE, MINUS INTEREST
3
ON THE CAPITAL AND SUBSIDIES
CORRESPONDING TO THE CONTRIBUTION
TO MCC'S INTER-COOPERATIVE CENTRAL
FUND (FCI). THESE CONTRIBUTIONS ARE
MADE ACCORDING TO THE FOLLOWING
CRITERIA:
A) IN THE SUBSIDY CONCEPT, AN
AMOUNT IS CONTRIBUTED ANNUALLY
EQUIVALENT TO 14% OF THEIR NET
SURPLUS THAT IS DEDUCTED FROM THE
INTER-COOPERATIVE SOCIAL FUND.
B) THE REMAINING QUANTITY UP TO 20%
OF THE BASIS FOR CALCULATING THE
CONTRIBUTION TO THE FCI, APPEARING
AS LOANS OR CONTRIBUTIONS TO
CAPITAL OF MCC CORPORATION
ENTITIES, IN THE EVENT OF BEING
SUBJECT TO PROVISION DUE TO
INSOLVENCIES FROM THE CAJA LABORAL
POPULAR, THIS AMOUNT IS REDUCED BY
THE SUBSIDY TO BE MADE IN THE
EXERCISE WHEN THE NEED AROSE FOR
THE AFOREMENTIONED PROVISION.
B
STRUCTURE OF THE ENTITY'S ADMINISTRATION
B.1 Board or Administration Body
B.1.1. Give details of the maximum and minimum number of board
members or members of the administration body laid down in the
statutes:
Maximum number of board/body members
Minimum number of board/body members
12
12
B.1.2. Complete the following table on the board/body members and their
different conditions:
BOARD / ADMINISTRATION BODY MEMBERS
board/administration body member
TXOMIN GARCIA HERNANDEZ
Representative
Date last appointed
6-03.2009
JULIO GALLASTEGUI ZUBIZARRETA
6-03-2009
VALENTÍN TOLEDO GONZÁLEZ
23-03-2007
MARÍA BELÉN CORTABARRIA ACHA
6-03-2009
Condition
OTHER EXTERNAL
BOARD MEMBER
OTHER EXTERNAL
BOARD MEMBER
OTHER EXTERNAL
BOARD MEMBER
OTHER EXTERNAL
BOARD MEMBER
4
MARIA CARMEN URRUTIA
URIBECHEBARRIA
VICTOR ANGEL ARANZABAL
BALZATEGUI
CARMEN AMAYA CECIAGA
EZCURRA
FCO. JAVIER GORROÑOGOITIA
ITURBE
JOSE IGNACIO ESNAOLA ZALDUA
6-03-2009
IGNACIO GABILONDO MUGARZA
23-03-2007
FRANCISCO JAVIER ALVAREZ
ROCHA
JUAN LUIS IRAZABAL IBARGUEN
23-03-2007
23-03-2007
6-03-2009
6-3-2009
23-03-2007
23-03-2007
OTHER EXTERNAL
BOARD MEMBER
OTHER EXTERNAL
BOARD MEMBER
OTHER EXTERNAL
BOARD MEMBER
OTHER EXTERNAL
BOARD MEMBER
OTHER EXTERNAL
BOARD MEMBER
OTHER EXTERNAL
BOARD MEMBER
OTHER EXTERNAL
BOARD MEMBER
OTHER EXTERNAL
BOARD MEMBER
B.1.3. Identify, when appropriate, the board/administration body members that
take on administrator or management roles in other entities within the
entity's group:
board/administration body
member
Corporate name of the group's
entity
SEGUROS LAGUN ARO, S.A.
SEGUROS LAGUN ARO VIDA,
S.A.
Position
PRESIDENT OF THE BOARD OF
DIRECTORS
PRESIDENT OF THE BOARD OF
DIRECTORS
B.1.4. Complete the following table regarding the aggregate salary of the
board/administration body members, paid over the exercise:
Salary concept
Individual
(000 Euros)
Fixed salary
Variable salary
Expenses
Other payments
229
24
11
Total:
264
Group
(000 Euros)
5
B.1.5. Identify the top management members that are not in turn members of the
board or administration body and indicate the total payment made to them
in the exercise:
Name or corporate name
ELÍAS ATUCHA ARESTI
IÑAKI GORROÑO AREITIO-AURTENA
JOSU ARRAIZA MARTÍNEZ DE LAGRAN
XABIER EGUIBAR GAINZA
PEDRO MARIA GUEREÑO MARZOL
YOLANDA LECUONA ERCIBENGOA
CARLOS UGARTE MAIZTEGUI
JOSÉ ANTONIO UNANUE ETXEBERRIA
ROMAN AGUIRRE BEITIA
ALFREDO ZABALETA BARREDO
JUAN RAMÓN MELGOSA ESPINOSA
JUAN CARLOS BENAVENTE MIGUEL
LUIS MIGUEL AIZPURUA ESNAL
ALFONSO GARCIA LIBERAL
PEDRO M. UGALDE AYERBE
IÑAKI URTASUN DE MIGUEL
JAVIER GAZTELU BARRENA
JOSE M. NARVAIZA FERNANDEZ
JUAN MANUEL SINDE OYARZABAL
Position
MANAGING DIRECTOR
DEPUTY MANAGING DIRECTOR
TRADITIONAL NETWORK COMMERCIAL AREA DIRECTOR
BUSINESS DEVELOPMENT AREA DIRECTOR
EXPANSION NETWORK COMMERCIAL AREA DIRECTOR
RESOURCES AREA DIRECTOR
DIRECTOR OF THE TECHNOLOGY AND INFORMATION
SYSTEMS AREA
CONTROL AREA DIRECTOR
INVESTMENT AREA DIRECTOR
RISK AREA DIRECTOR
ALAVA REGIONAL DIRECTOR
BIZKAIA REGIONAL DIRECTOR
GIPUZKOA REGIONAL DIRECTOR
NAVARRA REGIONAL DIRECTOR
CASTILLA Y LEÓN REGIONAL DIRECTOR
RIOJA AND ARAGON REGIONAL DIRECTOR
INTERNAL AUDIT DIRECTOR
INNOVATION DIRECTOR
INSTITUTIONAL BUSINESS DIRECTOR
Total top management payments (in 000 Euros)
1.918
B.1.6. Indicate whether the board's statutes or regulations establish a limited
mandate for the members of the board/administrative body.
YES

NO
Max number of mandate years
X
0
B.1.7. Indicate whether the individual and consolidated annual accounts that are
presented for their approval to the board / administrative body have been
previously certified.
YES

NO
Identify, when appropriate, the person or persons that have certified the
individual and consolidated annual accounts for the entity, for their
formulation by the board or administration body:
Position
B.1.8. Explain, if they exist, the mechanisms established by the board or
administration body to prevent the individual and consolidated accounts
they have formulated being presented in the General Council or
equivalent body with exceptions in the audit report
X
6
B.1.9. Is the secretary of the board or administration body also a member of the
board?
NO
YES X
B.1.10. Indicate, if they exist, the mechanisms established to maintain the
independence of the auditor, the financial analyses, the investment banks
and the classification agencies.
B.2.
Council or Administration Body
B.2.1. List the administration bodies:
No of members
3
AUDIT COMMITTEE
Functions
GIVEN IN POINT B.2.3
B.2.2. Give details of all the commissions from the council or administration
body and its members:
EXECUTIVE OR DELEGATE COMMISSION
Position
AUDIT COMMITTEE
JULIO GALLASTEGUI ZUBIZARRETA
MARÍA BELÉN CORTABARRIA ACHA
VALENTÍN TOLEDO GONZÁLEZ
Position
PRESIDENT
VOICE
VOICE
APPOINTMENT AND SALARIES COMMISSION
Position
STRATEGY AND INVESTMENTS COMMISSION
Position

7
B.2.3. Describe the organisation and operation rules, plus the responsibilities
attributed to each of the board's commissions or members of the
administration body. When appropriate, the faculties of the Managing
Director should be described.
THE AUDIT COMMITTEE HAS THE SPECIFIC FUNCTIONS APPEARING IN
THE STATUTES (ART. 36.NINE), MEANING:
A) INFORM THE GENERAL ASSEMBLY ABOUT THE QUESTIONS THAT
THE PARTNERS ASK IN IT REGARDING THEIR COMPETENCE.
B) PROPOSE TO THE GOVERNING BODY, TO BE SUBMITTED TO THE
GENERAL
ASSEMBLY,
THE
APPOINTMENT,
EXTENSION
OR
RESIGNATION OF THE EXTERNAL ACCOUNTS AUDITORS.
C) SUPERVISE THE INTERNAL AUDIT SERVICES.
D) KNOW ABOUT THE FINANCIAL INFORMATION PROCESS AND THE
COMPANY'S INTERNAL CONTROL SYSTEMS.
E) COMMUNICATE WITH THE EXTERNAL AUDITORS TO RECEIVE
INFORMATION ON MATTERS THAT COULD PUT THEIR INDEPENDENCE
AT RISK AND ANY OTHER INFORMATION RELATED TO THE ACCOUNTS
AUDIT PROCESS, PLUS ANY OTHER COMMUNICATION REQUIRED BY
THE ACCOUNTING AUDITING LEGISLATION AND THE TECHNICAL AUDIT
STANDARDS.
B.2.4. Indicate the number of meetings that the auditing committee has held
over the exercise:
Number of meetings
3
B.2.5. If there is an appointment commission, indicate if all its members are
board members or members of the external administration body.
YES
C

NO

ASSOCIATED OPERATIONS
C.1. Give details of the relevant operations that represent transferring resources
or obligations between the entity or entities in your group, and the entity's
most significant shareholders or participants:
Name or corporate
name of the most
significant
shareholder or
participant
Name or corporate
name of the entity
of entity from your
group
Nature of the
relationship
Type of operation
Amount (000
Euros)
8
C.2. Give details of the relevant operations that represent transferring resources
or obligations between the entity or entities in your group, and the
administrators or members of the administration body, or entity directors:
Name or corporate
name of the
administrators or
members of the
administration
body or directors
Name or corporate
name of the entity
of entity from your
group
Nature of the
relationship
Type of
relationship
Amount (000
Euros)
C.3. Give details of relevant operations carried out with other entities belonging
to the same group, whenever they are not eliminated in the process of
drawing up consolidated financial statuses and they do not form part of
the entity's usual traffic in terms of its subject and conditions:
Entity corporate name of your
group's entity
Brief description of the
operation
Amount (000 Euros)
C.4. Identify, when appropriate, the conflict of interest situation for the entity's
board / administration body members, as given in article 127 bis of the
LSA.
C.5. Give details of the mechanisms established to detect determine and resolve
possible conflicts of interest between the entity or its group and its board
/ administration body members or directors.
IN ADDITION TO THE LEGALLY ESTABLISHED POSSIBILITY OF
CHALLENGING THE AGREEMENTS MADE IN THE GENERAL ASSEMBLY
AND THE GOVERNING BODY THAT HARM THE INTERESTS OF CAJA
LABORAL POPULAR, TO THE BENEFIT OF ONE OR SEVERAL PARTNERS
OR THIRD PARTY, THE FOLLOWING SPECIFIC REGULATIONS CAN BE
APPLIED, REFERRING TO POSSIBLE CONFLICTS OF INTEREST:
A) THE DUTY TO ABSTAIN FROM VOTING IN THE GENERAL ASSEMBLY
BY AFFECTED PARTNERS WHEN THE GENERAL ASSEMBLY'S
AUTHORISATION IS REQUIRED TO BE BOUND TO ANY MEMBER OF THE
GOVERNING BOARD AND INTERVENERS OR TO THE DIRECTOR OR ONE
OF THEIR FAMILY MEMBERS TO THE SECOND LEVEL OF BLOOD OR
MARRIAGE
RELATIONS,
EXCEPT
WHEN
THIS
REFERS
TO
RELATIONSHIPS REFERRING TO THE CONDITION OF PARTNER.
B) THE NEED TO COVER THE REQUIREMENTS THAT ARE THEN GIVEN
FOR THE GOVERNING BODY'S AGREEMENTS ON COOPERATIVE
OPERATIONS OR SERVICES IN FAVOUR OF THE MEMBERS OF THE
GOVERNING BODY AND THE REMAINING STATUTORY CORPORATE
BODIES, FROM THE GENERAL MANAGEMENT OR THE FAMILY MEMBERS
OF ANY OF THEM UP TO THE SECOND DEGREE OF FAMILY
MEMBERSHIP. THE REQUIREMENTS ARE AS FOLLOWS:
9
- THE AGREEMENT MUST BE ADOPTED BY SECRET VOTE, AFTER
HAVING CLEARLY INCLUDED THE MATTER IN THE AGENDA.
- THE AGREEMENT MUST BE ADOPTED BY A MAJORITY OF NO LESS
THAN TWO THIRDS OF ALL THE BOARD MEMBERS.
IF THE
BENEFICIARY OF THE OPERATION OR SERVICE IS A BOARD MEMBER
OR A MEMBER OF THEIR FAMILY AS PREVIOUSLY MENTIONED, THEY
WILL BE CONSIDERED TO HAVE A CONFLICT OF INTERESTS AND WILL
NOT BE ABLE TO PARTICIPATE IN THE VOTING.
- ONCE THE SECRET VOTE HAS BEEN HELD AND PROCLAIMED, THE
RESULT WILL BE VALID AND ANY RESERVATIONS OR DISCREPANCIES
CORRESPONDING TO THE AGREEMENT ADOPTED WILL APPEAR IN THE
MINUTES.
THESE SAME REQUIREMENTS MUST BE COVERED WHEN THIS IS A
MATTER OF CONSTITUTING, SUSPENDING, MODIFYING, RENEWING OR
TERMINATING CAJA LABORAL POPULAR'S OBLIGATIONS OR RIGHTS
WITH ENTITIES IN WHICH THESE PEOPLE OR THEIR AFOREMENTIONED
FAMILY
MEMBERS
ARE
IN
CHARGE,
BOARD
MEMBERS,
ADMINISTRATORS, TOP MANAGEMENT, CONSULTANTS OR BASIC
MEMBERS WITH A CAPITAL SHARE THAT IS EQUAL TO OR GREATER
THAN 5%.
D
RISK CONTROL SYSTEMS
D.1. General description of the company and/or its group's risk policy, giving
details and evaluating the risks covered by the system, plus justification
of how well these systems match the profile of each type of risk.
CAJA LABORAL CONSIDERS RISK MANAGEMENT TO BE A
FUNDAMENTAL ASPECT OF ITS ACTIVITY AND A DECISIVE COMPETITIVE
ADVANTAGE FACTOR THAT HAS BECOME PARTICULARLY RELEVANT IN
THE CURRENT CRISIS SITUATION. FROM AN ORGANISATIONAL POINT
OF VIEW, THE ENTITY HAS IMPROVED RISK MANAGEMENT PROCESSES
BY CREATING A RISK AREA AT THE START OF 2009 INCLUDING A
DEPARTMENT THAT CENTRALISES THE RESPONSIBILITY OF ADMITTING
CREDIT RISK FOR INDIVIDUALS AND COMPANIES IN THE WIDEST
SENSE, A DEPARTMENT THAT CENTRALISES THE RESPONSIBILITY FOR
MONITORING AND RECOVERING THESE SEGMENTS AND A
DEPARTMENT FOR OVERALL RISK MANAGEMENT THAT INCLUDES
BUILDING AND MAINTAINING INTERNAL CREDIT RISKS MODELS AND
THE LIQUIDITY , INTEREST RATE, MARKET AND OPERATION RISK
CONTROL
UNITS.
CONCENTRATING
RISK
MANAGEMENT
RESPONSIBILITY INTO JUST ONE AREA IS GENERATING SYNERGIES
AND OPERATIVE AGILITY IN TERMS OF TRANSMITTING POLICY
DIRECTION FOR RISKS, AND GREATER KNOWLEDGE AND BETTER
CONTROL OF ALL RISKS.
RISKS THAT ARE MANAGED AND CONTROLLED IN CAJA LABORAL ARE
BASICALLY: CREDIT RISK, MARKET RISKS, OPERATIONAL RISKS,
INTEREST RATE RISK AND LIQUIDITY RISK.
10
CREDIT RISK IS THE RISK OF LOSS THAT CAN OCCUR DUE TO NOT
MEETING THE PAYMENTS DUE TO THE ENTITY. TO EVALUATE THE
CREDIT RISK ASSOCIATED WITH THE DIFFERENT OPERATIONS, CAJA
LABORAL HAS DEVELOPED INTERNAL RATING AND SCORING MODELS
THAT CAN DISCRIMINATE CLIENTS (RATING) OR OPERATIONS
(SCORING) DEPENDING ON THEIR RISK LEVEL. IN THE INDIVIDUALS
SEGMENT, RISK ADMISSION IS SUPPORTED IN SCORINGS (REACTIVE
ADMISSION) AND RATINGS (PROACTIVE ADMISSION IN CONSUMPTION
OPERATIVE). ON THE OTHER HAND, RATINGS ARE APPLIED IN THE
BUSINESS AND FINANCIAL ENTITY SEGMENTS.
MARKET RISK IS THE RISK OF CAUSING LOSSES IN THE MARKET VALUE
OF THE POSITIONS AS A CONSEQUENCE OF ADVERSE MOVEMENTS OF
RISK FACTORS (INTEREST RATES, EXCHANGE RATES, SHARE PRICES
AND COMMODITIES PRICES).TO EVALUATE MARKET RISK, CAJA
LABORAL USES VALUE AT RISK (VAR) AS THEIR BASIC TECHNIQUE
ALTHOUGH OTHER RISK INDICATORS ARE ALSO USED SUCH AS
SENSITIVITY AND NOMINAL EXPOSURE.
OPERATION RISK REFERS TO LOSSES THAT MIGHT BE CAUSED TO THE
ENTITY DUE TO INTERNAL PROCESSES, EMPLOYEES, INAPPROPRIATE
SYSTEMS OR EXTERNAL FACTORS. CAJA LABORAL HAS CHOSEN TO
CONTROL AND MANAGE THIS RISK BY MEANS OF INTERNAL MODELS,
WITH A MANAGEMENT MODEL BASED ON A CONTINUOUS
IMPROVEMENT SYSTEMATIC ON THE PROCESSES AND THE CONTROL
ENVIRONMENT, REDUCING THE RECURRING LOSSES AND PREVENTING
POTENTIAL SEVERE LOSSES IN THE FUTURE. ON THE OTHER HAND,
THE ENTITY CURRENTLY CALCULATES ITS REGULATORY CAPITAL IN
ACCORDANCE WITH THE STANDARD METHOD.
THE INTEREST RATE RISK REFERS TO LOSSES THAT CAN ORIGINATE
FROM THE INCOME STATEMENT AND THE PATRIMONIAL VALUE OF THE
ENTITY AS A CONSEQUENCE OF AN ADVERSE MOVEMENT IN THE
INTEREST RATES. TO EVALUATE THIS BALANCE RISK, THE ENTITY
USES SIMULATION AS A BASIC TOOL TO ESTIMATE LOSSES THAT
MIGHT OCCUR IN THE MID TERM IN THE DIFFERENT INTEREST RATE
SCENARIOS. IT ALSO ESTIMATES THE IMPACT THAT A VARIATION IN
INTEREST RATES MIGHT HAVE ON THE ECONOMIC VALUE OF THE
ENTITY.
LIQUIDITY RISK IS THE RISK OF NOT BEING ABLE TO COVER THE
PAYMENTS AND WITHDRAWALS OF THE ENTITY'S FUNDS, OR WHEN
APPROPRIATE, AT THE COST OF RESORTING TO OBTAINING LIQUID
RESOURCES AT OVER THE MARKET PRICE. THIS ALSO REFERS TO THE
CAPACITY TO GENERATE FINANCING NEEDS IN THE MID AND LONG
TERM TO BE ABLE TO MEET THE DEMAND FOR INVESTMENT.
11
D.2. Indicate the control systems set up to evaluate, mitigate or reduce the main
risks for the company or its group.
THE GOVERNING BODY, CAJA LABORAL'S TOP ADMINISTRATION BODY,
IS ULTIMATELY RESPONSIBLE FOR MONITORING AND SUPERVISING
THE RISKS INCURRED BY THE ENTITY. THE BOARD DELEGATES THE
FUNCTION OF RISK CONTROL TO DIFFERENT COMMITTEES, WITHIN A
GENERAL ACTION FRAMEWORK, THAT IS GIVEN BY THE BOTH
STANDARD FROM THE BANK OF SPAIN AND BY THE BOUNDARIES
ESTABLISHED BY THE GOVERNING BODY ITSELF AND THE GUIDELINES
FROM THE NEW BASILEA CAPITAL AGREEMENT.
THE GOVERNING BODY IS INFORMED ABOUT MANAGEMENT AND
CONTROL OF THE DIFFERENT RISKS THROUGH BOTH THE DIRECT
PRESENCE OF ITS MEMBERS IN SOME COMMISSIONS AND THE
MONTHLY DOWNLOAD FROM THE GENERAL MANAGEMENT.
AT A GENERAL MANAGEMENT LEVEL, THE PROFIT AND LOSS
COMMITTEE (COAP), A BODY MADE UP OF THE PRESIDENT, VICEPRESIDENT, MANAGING DIRECTOR, DEPUTY TO THE MANAGING
DIRECTOR, FIVE AREA DIRECTORS AND TWO DEPARTMENT
DIRECTORS, HAS BEEN SET UP AS THE BODY TO WHICH ALL
INFORMATION IS REPORTED ON CONTROLLING RISKS.
THE RISK AREA AND SPECIFICALLY THE RISK CONTROL DEPARTMENT
REPORTS MONTHLY TO THE COAP ALL THE INFORMATION RELATING
TO THE DIFFERENT RISKS.
ON THE OTHER HAND, THE INTERNAL VALIDATION UNIT IS DEVELOPING
ITS FUNCTIONS, ISSUING A FOUNDED AND UPDATED OPINION ON
WHETHER THE INTERNAL MODELS WORK AS PLANNED AND WHETHER
THE RESULTS OBTAINED ARE APPROPRIATE FOR THE DIFFERENT
USES TO WHICH THEY ARE APPLIED, BOTH INTERNALLY AND
REGULATORY. DURING 2008 AND 2009 IT PRODUCED REPORTS ON
VALIDATING REACTIVE AND PROACTIVE MODELS FOR INDIVIDUALS
AND SMEs. IN THE NEW ORGANISATIONAL STRUCTURE, THE INTERNAL
VALIDATION FUNCTION IS INCLUDED IN THE CONTROL AREA,
INDEPENDENT THEREFORE FROM THE MODEL CONSTRUCTION UNIT
THAT IS IN THE RISK AREA, SPECIFICALLY IN THE RISK CONTROL
DEPARTMENT.
STARTING WITH THE CREDIT RISK, CAJA LABORAL DIFFERENTIATES
BETWEEN RISKS DERIVED FROM THE TREASURY AND CAPITAL
MARKET ACTIVITY (FINANCIAL ENTITIES AND MAJOR CORPORATIONS)
AND RISKS DERIVED FROM THE TRADITIONAL INVESTMENT ACTIVITY
WITH INDIVIDUALS AND COMPANIES.
IN RELATION TO THE LATTER, THE GOVERNING BODY DELEGATES A
LEVEL OF RISK ATTRIBUTIONS TO THE GENERAL MANAGEMENT. THERE
ARE DIFFERENT FIXED LEVELS OF RISK ATTRIBUTION IN THE NETWORK
AND IN THE CENTRAL DEPARTMENTS, DEPENDING ON FACTORS SUCH
AS THE RISK LEVEL, THE RISK VOLUME, THE TYPE OF PRODUCT AND
THE OPERATION PRICE.
12
TO EVALUATE THE CREDIT RISK ASSOCIATED WITH THE DIFFERENT
OPERATIONS, CAJA LABORAL HAS DEVELOPED INTERNAL RATING AND
SCORING MODELS THAT CAN DISCRIMINATE CLIENTS (RATING) OR
OPERATIONS (SCORING) DEPENDING ON THEIR RISK LEVEL. SO FOR
INDIVIDUALS THE PROCESS OF REACTIVE RISK ADMISSION IS RELIES
ON LINKED SCORINGS, COMPLEMENTED BY PRECONCESSION, BASED
ON RATING MODELS, LOANS FOR CONSUMPTION THAT ARE
AUTOMATICALLY AVAILABLE FOR THE CLIENT IN THE DIFFERENT
CHANNELS. FOR COMPANIES HOWEVER, THE ADMISSION PROCESSES
WORK WITH A BINOMIAL SCHEME BETWEEN ANALYST/ADMINISTRATOR,
WITH A CUSTOMER/ANALYST CHARACTERISATION, MAKING USE OF
THE ANALYSTS TO MAKE DECISIONS TO SUPPORT INTERNAL RATINGS.
THESE TOOLS ARE THEREFORE USED IN THE DECISION PROCESSES
AND ALSO TO BUILD AND DEVELOP INTEGRATED DATABASES THAT
ALLOW CALCULATIONS TO BE RUN ON SEVERITIES, EXPECTED
LOSSES, CAPITAL CONSUMPTION, ETC. WITHIN THE FRAMEWORK OF
REQUIREMENTS FROM THE NEW BASILEA CAPITAL AGREEMENT. ON
THE OTHER HAND, BOTH THE SCORING AND RATING MODELS PERMIT
THE ENTITY TO ESTIMATE THE EXPECTED LOSS AND THE PRICING OF
THE DIFFERENT INDIVIDUAL AND BUSINESS OPERATIONS.
THE ENTITY HAS SET UP WHAT IS KNOWN AS THE "BASILEA
COMMITTEE", TOP MANAGEMENT BODY MADE UP OF 10 PEOPLE
INCLUDING THE MANAGING DIRECTOR, 2 AREA DIRECTORS AND 4
DEPARTMENT DIRECTORS WHO MONITOR THE BASILEA PROJECT,
WHICH AIMS TO IMPLANT THE INTERNAL MODELS IN THE MANAGEMENT
AND GET THEM VALIDATED BY THE SUPERVISOR. THE SCORING AND
RATING MODELS HAVE BEEN DRAWN UP BY THE RISK CONTROL
DEPARTMENT, WHICH IS ALSO RESPONSIBLE FOR MAINTAINING THESE
MODELS (REFINING, RECALIBRATING, ETC.), WHILST THE VALIDATION
TESTS (BACK TESTING, STRESS TESTING, USAGE TEST/INTEGRATION
IN THE MANAGEMENT, ETC.) CORRESPOND TO THE INTERNAL
VALIDATION UNIT AND THE INTERNAL AUDIT MAKES UP THE FINAL
CONTROL LAYER.
IN TERMS OF MONITORING, THE ENTITY USES A SYSTEM OF ALARMS IN
ORDER TO ANTICIPATE ANY POSSIBLE NON PAYMENTS.
REGARDING RECOVERIES, A PROCEDURE HAS BEEN SET UP THAT
INVOLVES DIFFERENT AGENTS INTERVENE TO RECOVER THE DEBT,
DEPENDING ON THE TIME PHASE OF THE NON PAYMENT OPERATION.
WITHIN THIS CONTEXT, IT SHOULD BE POINTED OUT THAT BOTH
INTERNAL (OFFICE, REMOTE BANKING, PRE-CONTENTIOUS AND
CONTENTIOUS) AND EXTERNAL AGENTS INTERVENE IN RECOVERY
MANAGEMENT.
ON THE OTHER HAND, THE MANAGEMENT PROPOSES THE LIST OF
DELINQUENT RISKS THAT MUST BE MOVED TO BANKRUPTCY TO THE
GOVERNING BODY FOR APPROVAL.
THE COAP IS INFORMED ABOUT THE EVOLUTION OF THE RISK WITH
COMPANIES AND INDIVIDUALS EVERY MONTH.
13
AS FAR AS CREDIT RISK IS CONCERNED WITH FINANCIAL ENTITIES AND
LARGE CORPORATIONS IN THE FIELD OF TREASURY AND CAPITAL
MARKET, THE CONTROL ROLE IS DELEGATED IN THE COAP THAT SETS
LIMITS PER COUNTERPART AND COUNTRY. TO DO SO, IT RELIES ON
INTERNAL AND EXTERNAL RATING MODELS THAT CLASSIFY
COUNTERPARTS BY THEIR RISK, SETTING THE LIMITS ACCORDINGLY.
THIS SYSTEM IS COMPLETED WITH A SYSTEM OF ALARMS THAT CAN
CORRECT THE LIMITS AS FAST AS REQUIRED.
THE PROCEDURE TO MONITOR AND CHECK THAT THESE RISK LIMITS
ARE FOLLOWED IS DONE IN REAL TIME BY THE RISK CONTROL
DEPARTMENT, MAINTAINING THE NECESSARY SEGREGATION OF
ROLES, AND A PROCEDURE HAS BEEN ESTABLISHED TO AUTHORISE
EXCESS. THE MANAGING DIRECTOR IS IMMEDIATELY INFORMED
ABOUT THE EXCESS, AUTHORISED OR NOT AND ON THE OTHER HAND,
RISK CONSUMPTIONS BY COUNTERPART AND EXCESSES IN THE
MONTH ARE REPORTED MONTHLY TO THE COAP. ALSO QUARTERLY
THE GOVERNING BODY IS INFORMED ON HOW FAR THESE LIMITS ARE
BEING MET.
REGARDING MARKET RISKS, THE GOVERNING BODY HAS SET RISK
LIMITS, FORMULATED IN TERMS OF VALUE AT RISK (VAR), DELEGATING
THE CONTROL OF THESE LIMITS TO THE COAP. THESE RISKS ARE
MANAGED BY THE TREASURY DEPARTMENT WHOSE DIFFERENT
MANAGEMENT UNITS HAVE SET THEIR OWN VAR LIMIT. CONTROL AND
MONITORING IS DONE EVERYDAY BY THE RISK CONTROL
DEPARTMENT, INFORMING THE COAP MONTHLY ABOUT THE RISK
LEVELS ASSUMED AND THE POSSIBLE EXCESSES.
QUARTERLY, THE GOVERNING BODY IS INFORMED ABOUT THE
EVOLUTION OF THESE RISKS AND HOW FAR THE LIMITS ARE BEING
MET.
AS FAR AS THE OPERATIONAL RISK IS CONCERNED, IN SEPTEMBER
2008 CAJA LABORAL PRESENTED BY STANDARD METHOD THE FIRST
CALCULATION OF REGULATORY CAPITAL RELATING TO OPERATIONAL
RISK, IN ACCORDANCE WITH THE NEW SOLVENCY CIRCULAR (3/2008).
DURING 2009, THE ENTITY HAS CONSOLIDATED OPERATION RISK
MANAGEMENT, MOVING FORWARD IN THE INTERNAL MODEL FOCUS, IN
BOTH THE QUANTITATIVE AND QUALITATIVE SECTION.
IN THE QUANTITATIVE SECTION, THE ENTITY PLANS TO HAVE
REGULATORY CAPITAL ESTIMATIONS BY AMA METHOD DURING THE
FIRST QUARTER OF 2010. TO DO SO, IT HAS AN INTERNAL DATABASE
OF LOSS EVENTS, SINCE 2002 AND WITH EXTERNAL INFORMATION
THROUGH ITS PARTICIPATION IN THE INTERNATIONAL ORX DATABASE.
ON THE OTHER HAND, THE ENTITY HAS BEEN PARTICIPATING IN THE
CERO GROUP (CONSORCIO ESPAÑOL DE RIESGO OPERACIONAL)
SINCE 2006, IN ORDER TO MAKE QUALITATIVE PROGRESS IN
OPERATIONAL RISK.
14
HOWEVER, IN THE QUALITATIVE PART, CAJA LABORAL IS MAKING THE
THIRD REVIEW OF THE SELF-ASSESSMENTS, CONTROLS, KRIS AND
LAUNCH OF ACTION PLANS. TO DO SO THE ENTITY HAS A NETWORK
OF 62 COORDINATORS AND 25 OPERATIONAL RISK VALIDATORS
CORRESPONDING TO THE DIFFERENCE AREAS.
AS FAR AS RECOVERIES ARE CONCERNED, THEY ARE MANAGED BOTH
THROUGH INSURANCE CONTRACTS AND INTERNAL PROCESSES.
REGARDING THE INTEREST RATE RISK, THE GOVERNING BODY
DELEGATES THE ROLE OF MANAGING AND CONTROLLING THIS RISK TO
THE PROFIT AND LOSS COMMITTEE, WITHIN THE LIMIT SET BY THIS
BODY. THIS LIMIT IS SET IN TERMS OF MAXIMUM ADMISSIBLE LOSS
BETWEEN TWO SCENARIOS: THE MARKET SCENARIO AND A LESS
FAVOURABLE SCENARIO.
THE COAP SYSTEMATICALLY ANALYSES EXPOSURE TO THE RISK IN
QUESTION AND BY MEANS OF ACTIVE MANAGEMENT, IT ATTEMPTS TO
USE ITS DECISIONS TO ANTICIPATE THE NEGATIVE EFFECT
UNPREDICTED CHANGES IN THE MARKET INTEREST RATES MIGHT
HAVE ON THE INCOME STATEMENT IN THE MID TERM. ITS DECISIONS
RELY ON MEASURING THE BUILDING SOCIETY'S RESULTS IN THE LONG
TERM AGAINST DIFFERENT INTEREST RATE SCENARIOS, BY MEANS OF
SIMULATIONS THAT LOOK AT THE STRUCTURAL POSITIONS OF
BALANCE AND OFF-BALANCE.
QUARTERLY, THE MANAGEMENT INFORMS THE GOVERNING BODY
ABOUT THE EXPOSURE TO THE RISK IN QUESTION AND HOW FAR THE
LIMIT IS MET AND ON THE DECISIONS THAT HAVE BEEN ADOPTED IN
THE COAP IN THIS PERIOD.
FINALLY, MANAGEMENT AND CONTROL OF THE LIQUIDITY RISK IS ALSO
DELEGATED TO THE COAP. THIS RISK IS SEEN IN CAJA LABORAL FROM
THE POINT OF VIEW OF STRUCTURAL LIQUIDITY, HAVING SET MINIMUM
LIQUIDITY THAT ACTS AS A REFERENCE IN THE MID AND LONG TERM.
WITH THIS PERSPECTIVE, LIQUIDITY OBJECTIVES ARE SET WITHIN A
MIDTERM TREASURY PLAN, RUNNING SYSTEMATIC MONITORING ON
HOW FAR THESE OBJECTIVES ARE BEING MET. THIS TREASURY PLAN
COMPILES FORECASTS ON EVOLUTIONS OF INVESTIBLE RESOURCES,
CREDIT INVESTMENT AND WHOLESALE FINANCING AND IT IS
SYSTEMATICALLY UPDATED GIVING THE COAP CONTINUOUSLY
UPDATED INFORMATION ON THE PROBABLY EVOLUTION OF THE
STRUCTURAL LIQUIDITY IN THE MIDTERM. THIS ALLOWS THE COAP TO
ESTABLISH, SUFFICIENTLY FAR IN ADVANCE, OPPORTUNE ACTIONS
AIMED AT CORRECTING POSSIBLE IMBALANCES IN THE EVOLUTION OF
AGGREGATES THAT AFFECT LIQUIDITY.
AS FAR AS FINANCING IN WHOLESALE MARKETS IS CONCERNED, CAJA
LABORAL HAS THE BCE POLICY, WITH FUNDS FROM THE FFAA, ISSUING
THEIR OWN PROMISSORY NOTES, ISSUING MORTGAGE CERTIFICATES
AND FINANCING BY MEANS OF SECURITISING ASSETS.
QUARTERLY, THE GOVERNING BODY IS INFORMED ON HOW LIQUIDITY
IS EVOLVING PLUS EXPECTATIONS FOR FURTHER CHANGE.
15
D.3. In the event that a risk has emerged affecting the company and/or its group,
indicate the circumstances that caused it and whether the established
control systems worked.
REGARDING THE INTEREST RATE RISK, THE LIMIT SET BY THE
GOVERNING BODY CONTROLLED BY THE COAP HAS NEVER BEEN
EXCEEDED.
IN MARKET RISK, THE HIGH VOLATILITY OF THE VARIABLE INCOME
MARKETS HAS GENERATED SOME EXCESSES THAT WERE NOTIFIED TO
THE GOVERNING BODY FOLLOWING THE PROCEDURES SET FOR THIS
PURPOSE.
REGARDING LIQUIDITY RISK, THE ENTITY IS SATISFACTORILY
MANAGING THE SITUATION CAUSED BY THE INTERNATIONAL LIQUIDITY
CRISIS GENERATED BY SUBPRIME LOANS AS SYSTEMATIC
MONITORING OF THE ENTITY'S LIQUIDITY AND ANALYSIS OF ITS
DEVIATIONS FROM THE FORECASTS AND THE MONTHLY TREASURY
PLANS ARE ALLOWING SUFFICIENT TIME TO ANTICIPATE POSSIBLE
MID-TERM IMPACTS, GENERATING THE NECESSARY CORRECTIVE
ACTIONS IN ENOUGH TIME. IN ADDITION, THE ENTITY HAS DRAWN UP A
LIQUIDITY CONTINGENCY PLAN THAT SETS STRATEGIES FOR
EMERGENCY LIQUIDITY SITUATIONS.
RELATING TO THE CREDIT RISK AND REGARDING THE OPERATIVE WITH
THE INDIVIDUAL AND COMPANY SEGMENTS, WHEN THE RISK WITH A
CREDITOR EXCEEDS THE ATTRIBUTIONS IN AN ORGANISATION, THE
RULING IS TAKEN TO THE ORGANISATION WITH AN IMMEDIATELY
HIGHER LEVEL OF ATTRIBUTIONS. WHEN OPERATING WITH FINANCIAL
ENTITIES AND LARGE CORPORATIONS, THE EXCESSES, AUTHORISED
OR NOT, HAVE BEEN DULY NOTIFIED TO THE DIFFERENT BODIES
ACCORDING TO THE PROCEDURES ESTABLISHED.
D.4. Indicate whether there are any commissions or other governing body in
charge of establishing and supervising these control devices and give
details of their functions.
THE RISK CONTROL UNITS AND THE CONTROL PROCEDURES FOR THE
DIFFERENT RISKS ARE SUPERVISED BY THE INTERNAL AUDIT
DEPARTMENT, WITHIN ITS DAILY WORK.
ON THE OTHER HAND, IN JUNE 2003 THE AUDIT COMMITTEE WAS SET
UP, FORMED BY THREE MEMBERS OF THE GOVERNING BODY, WITH A
MAJORITY OF NON EXECUTIVE MEMBERS. THE COMPETENCES OF THIS
COMMITTEE INCLUDE SUPERVISING INTERNAL AUDIT SERVICES AND
FINDING OUT ABOUT THE FINANCIAL INFORMATION PROCESS AND THE
COMPANY'S INTERNAL CONTROL SYSTEMS. IN THIS RESPECT, THE
AUDITING COMMITTEE IS NOTIFIED BY MEANS OF A QUARTERLY
REPORT ABOUT THE DIFFERENT INTERNAL AUDITING SERVICES
PERFORMED IN THE PERIOD INCLUDING, WHEN APPROPRIATE, THE
AUDITS ON THE RISK CONTROL PROCEDURES. THE COMMITTEE'S
COMPETENCES INCLUDE PROPOSING TO THE GENERAL ASSEMBLY
THE APPOINTMENT, EXTENSION OR RESIGNATION OF THE EXTERNAL
AUDITORS AND REQUIRING INFORMATION FROM THEM ON THE
ACCOUNTS AUDIT AND IN GENERAL ON THE RISK CONTROL.
16
E
GENERAL COUNCIL OR EQUIVALENT BODY
E.1.
List the constitution quorum for the general council or equivalent organ
established in the statutes. Describe how it differs from the minimum member
regime given in the Limited Companies Law (LSA) or the standard applied to it.
IN ACCORDANCE WITH WHAT APPEARS IN THE COOPERATIVE LEGISLATION,
THE GENERAL ASSEMBLY, REGARDLESS OF THE AGREEMENT TO ADOPT, IS
CONSIDERED TO BE VALIDLY CONSTITUTED, IN ITS FIRST CALL, WHEN MORE
THAN HALF OF THE PARTNERS ARE PRESENT OR REPRESENTED AND IN THE
SECOND CALL, WHEN AT LEAST 5% OF THE PARTNERS OR 100 PARTNERS
ATTEND.
E.2.
Explain the regime for adopting social agreements. Describe how it is different
from the regime given in the LSA or the standard applied to it.
APPLYING COOPERATIVE LEGISLATION, AGREEMENTS MUST BE ADOPTED, AS
A GENERAL RULE, BY MORE THAN HALF THE VALIDLY ISSUED VOTES. IN THE
EVENT OF FUSIONS, DEMERGERS, ISSUES OF OBLIGATIONS AND OTHER
SHARES, AS WELL AS TO MODIFY THE STATUTES, A FAVOURABLE MAJORITY
IS REQUIRED OF NO LESS THAN TWO THIRDS OF THE VOTES PRESENT OR
REPRESENTED.
E.3.
List the rights of the shareholders or participants in relation to the council or
equivalent body.
IN RELATION TO THE
FOLLOWING RIGHTS:
GENERAL
ASSEMBLIES,
PARTNERS
HAVE
THE
A) ATTENDING ALL THE GENERAL ASSEMBLIES, TO WHICH THEY WILL BE
CALLED JUST FOR BEING A PARTNER OF THE ENTITY.
B) FORMULATING PROPOSALS AND PARTICIPATING WITH VOICE AND VOTE IN
ADOPTING THEIR AGREEMENTS.
C) RECEIVING THE NECESSARY INFORMATION TO EXERCISE THEIR RIGHTS
AND MEET THEIR OBLIGATIONS.
SPECIFICALLY, IN RELATION TO THE
GENERAL ASSEMBLY, THEY CAN:
- EXAMINE DOCUMENTATION RELATING TO THE ANNUAL ACCOUNTS, THE
DISTRIBUTION OF EXCESSES AND HOW MANY ECONOMIC ISSUES ARE GOING
TO BE DEBATED IN THE ASSEMBLY.
- REQUEST IN WRITING, ON THE AFOREMENTIONED DOCUMENTATION,
EXPLANATIONS OR CLARIFICATIONS THAT THEY BELIEVE TO BE RELEVANT SO
THAT THEY CAN BE ANSWERED IN THE ASSEMBLY MINUTES, AS LONG AS
THEY ARE DULY REQUESTED FIVE DAYS BEFORE IT IS HELD.
- REQUEST IN WRITING THE CLARIFICATIONS AND REPORTS THAT THEY
CONSIDER NECESSARY ON ANY ASPECT OF THE ENTITY TO BE ANSWERED BY
THE GOVERNING BODY IN THE FIRST GENERAL ASSEMBLY THAT IS HELD
EIGHT DAYS OR MORE AFTER PRESENTING THIS IN WRITING.
17
E.4.
Indicate briefly the agreements adopted in the general councils or equivalent
bodies held in the exercise corresponding to this report and the percentage of
votes with which agreements were adopted.
DURING THE EXERCISE THE AGREEMENTS ADOPTED BY THE GENERAL
ASSEMBLY, HELD ON 6TH MARCH 2009, WITH THEIR RESPECTIVE VOTING
PERCENTAGES WERE AS FOLLOWS:
- DESIGNATING THREE PARTNERS TO APPROVE THE MINUTES FOR THE
RESPECTIVE ASSEMBLY (UNANIMOUS).
- APPROVING THE ANNUAL ACCOUNTS AND THE MANAGEMENT REPORT,
REFERRING TO THE ENTITY AND TO ITS CONSOLIDATED GROUP
(UNANIMOUS).
- EXTENDING THE APPOINTMENT OF PRICEWATERHOUSECOOPERS AS
AUDITORS OF THE ANNUAL ACCOUNTS FOR THE 2009 EXERCISE
(UNANIMOUS).
- DISTRIBUTING NET SURPLUS FROM THE EXERCISE, ATTRIBUTING 10% TO
THE EDUCATION AND PROMOTION FUND, 15% TO THE INTER-COOPERATIVE
SOCIAL FUND, 25% TO COOPERATIVE RETURNS AND 50% TO THE OBLIGATORY
RESERVE FUND (UNANIMOUS).
- FROM THE EDUCATION AND PROMOTION FUND: ALLOCATING 15% FOR
LOCAL DISTRIBUTION, 17% FOR GENERAL DISTRIBUTION AND 68% TO
FINANCING MCC'S COOPERATIVE INSTITUTIONS AND TO CONTRIBUTIONS TO
THE INTER-COOPERATIVE EDUCATION AND PROMOTION FUND, AUTHORISING
THE GOVERNING BODY TO TAKE FROM THE INCOME STATEMENT AN AMOUNT
UP TO THE EQUIVALENT TO 0.5% OF THE SURPLUS AVAILABLE FROM THE
EXERCISE TO ACTIVITIES THAT MEET THE FEP'S OWN PURPOSES
(UNANIMOUS).
- APPROVING INCOME QUOTAS AND CONTRIBUTIONS TO REGISTERED
CAPITAL FROM NEW PARTNERS (UNANIMOUS)
- PAYING GROSS ANNUAL INTEREST OF 7.5% TO CONTRIBUTIONS TO THE
REGISTERED CAPITAL DURING THE 2009 EXERCISE (UNANIMOUS).
- RENEWING HALF OF THE MEMBERS OF THE GOVERNING BODY (BY RELATIVE
MAJORITY).
E.5.
Indicate the address and how to access the corporate government content on its
website.
THE ENTITY'S WEBSITE IS WWW.CAJALABORAL.COM AND TO ACCESS THE
CORPORATE GOVERNMENT CONTENT YOU HAVE TO CLICK ON INSTITUTIONAL
INFORMATION AND THEN CORPORATE GOVERNMENT. IT IS ALSO POSSIBLE TO
GO
DIRECTLY
TO
THIS
INFORMATION
AT
THIS
ADDRESS:
WWW.CAJALABORAL.COM/GOBIERNO CORPORATIVO.
E.6.
State whether meetings have been held for the different syndicates that might
exist, for holders of shares issued by the entity, the subject of the meetings held
in the exercise referred to in this report and main agreements adopted.
THERE ARE NO SYNDICATES FOR HOLDERS OF SHARES ISSUED BY THE
ENTITY.
18
F
DEGREE OF MONITORING GOOD GOVERNMENT (ADAPTING TO THE UNIFIED
CODE)
Indicate how far the entity meets the existing corporate government recommendations
or, when appropriate, the non assumption of these recommendations.
In the event of not meeting one or any of them, explain the recommendations, standards,
practices or criteria that the entity actually applies.
If the single document referred to in the ORDEN ECO/3722/2003, dated 26th December, is
not drawn up, the recommendations from the Olivencia Report and the Aldama Report
should be taken as a reference to complete this section, to the extent that they can be
applied to your entity.
CAJA LABORAL POPULAR IS A CREDIT COOPERATIVE THAT IS REGULATED, AS FAR AS
ITS COMPANY-BASED OPERATION IS CONCERNED, BY THE CREDIT COOPERATIVES
LAW (LAW 13/1989, DATED 26TH MAY), THE REGULATION OF THIS LAW (ROYAL
DECREE 84/1993, DATED 22TH JANUARY) AND THE COOPERATIVE LAW (LAW 27/1999,
DATED 16TH JULY) THAT WORK FROM WHAT ARE KNOWN AS THE COOPERATIVE
PRINCIPLES, FORMULATED BY THE INTERNATIONAL COOPERATIVE ALLIANCE.
THESE PRINCIPLES AND THEIR LEGISLATIVE DEVELOPMENT CONFIGURE DIFFERENT
OPERATING RULES FROM THE RULES IN THE CONTRIBUTING COMPANIES.
THE UNIFIED GOOD GOVERNMENT CODE, APPROVED BY THE CNMV COUNCIL AS A
SINGLE DOCUMENT ON 22/05/2006, IS AIMED AT WHAT ARE KNOWN AS LISTED
COMPANIES.
FOR THIS FINAL REASON, BELOW WE WILL GIVE THE LEVEL OF COMPLIANCE TO
THESE RECOMMENDATIONS WITHIN WHAT IS KNOWN AS THE UNIFIED CODE THAT, IN
ONE WAY OR ANOTHER, ARE CONSIDERED TO BE APPLICABLE TO THE NATURE AND
COOPERATIVE PRINCIPLES OF OUR ORGANISATION, COOPERATIVE (NON LISTED
COMPANY).
OBVIOUSLY, IT SHOULD BE STATED THAT THESE RECOMMENDATIONS, DUE TO
THEIR ORIENTATION, ARE NOT APPLICABLE TO OUR NATURE, PRINCIPLES OR THE
PECULIARITIES OF THE ENTITY.
STATUTES AND GENERAL ASSEMBLY
STATUTORY LIMITATIONS. RECOMMENDATION 1
THE UNIFIED CODE RECOMMENDATION IS NOT APPLICABLE TO CAJA LABORAL GIVEN
ITS COOPERATIVE NATURE, ITS PRINCIPLES AND NOT BEING LISTED IN CAPITAL
MARKETS.
19
CONTRIBUTION OF COMPANIES INCLUDED IN GROUPS. RECOMMENDATION 2
MARKETS.
COUNCIL COMPETENCES. RECOMMENDATION 3
IN LINE WITH THE RECOMMENDATION ESTABLISHED IN THE UNIFIED CODE, THE
STATUTES ESTABLISH THAT THE GENERAL ASSEMBLY, AS THE RULING BODY, HAS
DIVERSE EXCLUSIVE COMPETENCES INCLUDING THE OPERATIONS THAT LEAD TO A
STRUCTURAL MODIFICATION:
-
FUSION, DEMERGER, TRANSFORMATION AND DISSOLUTION OF THE COMPANY.
-
ANY OTHER DECISION THAT REPRESENTS A SUBSTANTIAL MODIFICATION TO
THE ECONOMIC, SOCIAL, ORGANISATIONAL OR FUNCTIONAL STRUCTURE OF
THE COOPERATIVE, CONSIDERING A SUBSTANTIAL MODIFICATION TO AFFECT
25%, AT LEAST, OF OWN RESOURCES, OF THE INCOME FROM THE EXERCISE
OR THE LEVEL OF EMPLOYMENT FOR THE WORK PARTNERS.
PRIOR INFORMATION ON AGREEMENT PROPOSALS. RECOMMENDATION 4
IN LINE WITH THE RECOMMENDATION ESTABLISHED IN THE UNIFIED CODE, THE
PROPOSALS FOR AGREEMENTS TO BE ADOPTED IN THE GENERAL ASSEMBLY ARE
NOTIFIED ON THE SAME DAY AS THE CALL, IN SUFFICIENT DETAIL AND WITH ENOUGH
NOTICE (AT LEAST FIFTEEN DAYS). THESE ASPECTS ARE BASICALLY REGULATED BY
ARTICLE 28 OF THE COMPANY STATUTES.
SEPARATE VOTING ON MATTERS. RECOMMENDATION 5
SUBSTANTIAL INDEPENDENT MATTERS ARE, FOR VOTING PURPOSES, TREATED
SEPARATELY AND EXCLUSIVELY, BOTH REFERRING TO ECONOMIC MATTERS AND
MATTERS THAT AFFECT THE ENTITY POLICY SUCH AS, SPECIFICALLY, APPOINTING
NEW BOARD MEMBERS OR STATUTORY MODIFICATIONS.
SPLITTING THE VOTE. RECOMMENDATION 6
MARKETS.
GOVERNING BODY
SOCIAL INTEREST. RECOMMENDATION 7
THE COOPERATIVE'S OWN PHILOSOPHY, ITS MISSION, PRINCIPLES AND VALUES AS
WELL AS THE HISTORY OF ITS ACTIVITY, ARE IMPREGNATED WITH COMMITMENT AND
SOCIAL INTEREST.
THE CORPORATE SOCIAL RESPONSIBILITY REPORT, DRAWN UP IN COMPLIANCE WITH
THE 2006 GUIDE ON THE GLOBAL REPORTING INITIATIVE (GRI), TRANSFERS
TRANSPARENTLY TO THE DIFFERENT INTEREST GROUPS THE ACTIONS AND
COMMITMENT OF THE ENTITY TO SOCIETY IN THREE ASPECTS: ECONOMIC, SOCIAL
AND ENVIRONMENTAL .
20
BOARD COMPETENCES. RECOMMENDATION 8
THE GOVERNING BODY, AS ESTABLISHED IN ARTICLE 35 OF THE STATUTES, IS A
COLLEGIATE BODY THAT IS IN CHARGE OF SUPERVISING THE MANAGEMENT AND
MAKING SURE THAT CAJA LABORAL COMPLIES WITH THE LAW, THE STATUTES AND
THE POLICIES FIXED BY THE GENERAL ASSEMBLY.
THIS BODY, IN LINE WITH THE UNIFIED CODE, HAS WIDE RANGING FACULTIES TO
DEVELOP ITS CORE MISSION, SUCH AS CONTROLLING GOOD GOVERNMENT OF THE
COMPANY.
THIS BODY HAS A SERIES OF EXCLUSIVE FACULTIES REFERRING TO:
-
APPROVAL OF GENERAL POLICIES AND STRATEGIES FOR THE ENTITY,
STRATEGIC PLAN AND ANNUAL MANAGEMENT PLAN, CORPORATE
GOVERNMENT POLICY AND CORPORATE SOCIAL RESPONSIBILITY POLICY,
RISK MANAGEMENT AND CONTROL POLICIES, INVESTMENT AND FINANCING
POLICY PLUS THE FORMULATION OF ANNUAL ACCOUNTS AND PROPOSAL TO
DISTRIBUTE THE SURPLUS.
-
DECISIONS ON APPOINTMENTS OR REMOVAL OF TOP MANAGERS, SETTING
THEIR FACULTIES, DUTIES AND THEIR SALARY LEVEL, DECISIONS, ON
CERTAIN INVESTMENTS OR RISK OPERATIONS INVOLVING HIGH AMOUNTS,
ACQUISITIONS OR BUYING SHARES IN CERTAIN COMPANIES AND CERTAIN
FINANCIAL ISSUING TO OBTAIN FINANCING IN WHOLESALE MARKETS.
-
CONCESSION OF POWERS TO CERTAIN PEOPLE AND APPROVAL OF
PROFESSIONAL CODES OF CONDUCT IN GENERAL AND IN MATTERS RELATING
TO LINKED OPERATIONS IN PARTICULAR.
SIZE. RECOMMENDATION 9
A MINIMUM AND MAXIMUM NUMBER HAS NOT BEEN ESTABLISHED ALTHOUGH THERE
IS A SET NUMBER OF MEMBERS IN THE GOVERNING BODY.
THIS NUMBER HAS BEEN ESTABLISHED AS A TOTAL OF 12 MEMBERS AND IT IS
CONSIDERED REASONABLE AND REPRESENTATIVE REGARDING THE WORK
PARTNERS (4) AND REMAINING PARTNERS (8).
FUNCTIONAL STRUCTURE. RECOMMENDATION 10
GIVEN THAT THE ENTITY IS A COOPERATIVE, OUT OF THE TWELVE MEMBERS
MAKING UP THE GOVERNING BODY, EIGHT COME FROM OUTSIDE THE ENTITY TO THE
EXTENT THAT THEY ARE NOT WORK PARTNERS.
THE OTHER FOUR ARE INTERNAL, MEANING THAT THEY ARE WORK PARTNERS FOR
THE ENTITY ALTHOUGH, IN NO CASE, HOLDING TOP EXECUTIVE MANAGEMENT
POSITIONS (BOARD OF DIRECTORS) IN THE COOPERATIVE.
OTHER BOARD MEMBERS. RECOMMENDATION 11
THE UNIFIED CODE RECOMMENDATION IS NOT CONSIDERED TO BE APPLICABLE TO
CAJA LABORAL GIVEN ITS COOPERATIVE NATURE.
21
PROPORTION BETWEEN INDEPENDENT AND DOMINICAL BOARD MEMBERS.
RECOMMENDATION 12
SUFFICIENT NUMBER OF INDEPENDENT BOARD MEMBERS. RECOMMENDATION 13
EXPLANATION OF THE CHARACTER OF THE BOARD MEMBERS. RECOMMENDATION
14
GENDER DIVERSITY. RECOMMENDATION 15
THE PROCESS OF APPOINTING CANDIDATES FOR THE GOVERNING BODY IS
DEMOCRATIC, BASED ON THE ONE PERSON ONE VOTE CONFIGURATION AND DOES
NOT CREATE OBSTACLES TO SELECT FEMALE BOARD MEMBERS.
THE PROCESS ITSELF AND THE VERY COOPERATIVE NATURE OF THE ENTITY
PREVENTS ANY DISCRIMINATION IN EITHER DIRECTION.
PRESIDENT. RECOMMENDATION 16 AND 17
THE STATUTES FORMALLY RECOGNISE THE BOARD MEMBERS' RIGHT, AS PARTNERS,
TO RECEIVE THE NECESSARY INFORMATION TO EXERCISE THEIR RIGHTS AND MEET
THEIR OBLIGATIONS AS WELL AS THE RIGHT TO OPINION AND DEBATE
(RECOMMENDATION 16).
RECOMMENDATION 17 IN THE UNIFIED CODE IS NOT CONSIDERED AS APPLICABLE TO
CAJA LABORAL, GIVEN THE COMPANY'S NATURE AND THE TYPOLOGY OF THE
GOVERNING BODY'S MEMBERS.
SECRETARY. RECOMMENDATION 18
IN ADDITION TO BEING A MEMBER OF THE GOVERNING BODY AND TAKING CARE OF
THE ASPECTS OF FORMAL AND MATERIAL LEGALITY FOR THE BOARD'S ACTION, THE
SECRETARY PARTICIPATES IN ONE OF THE DELEGATED CONTROL COMMISSIONS
(AUDITING COMMITTEE) WHICH GUARANTEES AND REINFORCES THEIR ROLE WITHIN
THE GOVERNING BODY.
THE SECRETARY IS APPOINTED AND REMOVED ON THE DECISION OF THE
GOVERNING BODY'S MEMBERS (ES.36.4).
RUNNING THE SESSIONS. RECOMMENDATION 19, 20 AND 21
THERE IS AN ANNUAL CALENDAR OF PRE-SET SESSIONS AND, ACCORDING TO THE
STATUTES (E.S 38), MONTHLY MEETINGS ARE ORGANISED FOR THE GOVERNING
BODY IN ORDINARY CALLS.
22
ALSO, THE BOARD CAN MEET EXTRAORDINARILY ON THE REQUEST OF AT LEAST
TWO OF ITS MEMBERS, THE MANAGING DIRECTOR OR THE SOCIAL COUNCIL OR ON
REQUEST FROM THE MAJORITY OF ITS COMPONENTS.
NON ATTENDANCE IS QUANTIFIED BY BOARD MEMBERS' ESSENTIAL CASES AND THIS
IS STATED IN THE MINUTES OF THE MEETING (RECOMMENDATION 20).
THE MINUTES SHOULD ALSO INCLUDE ANY CONCERNS FROM BOARD MEMBERS
ABOUT THE COMPANY'S PROGRESS (RECOMMENDATION 21).
PERIODIC EVALUATION. RECOMMENDATION 22
WITHOUT ANY PRE-SET FREQUENCY, THE BOARD EVALUATES THE QUALITY AND
EFFICIENCY OF ITS WORK.
INFORMATION TO THE BOARD MEMBERS. RECOMMENDATION 23, 24 AND 25
PRIOR TO THE MEETING, BOARD MEMBERS ARE GIVEN SUFFICIENT INFORMATION.
PROVISION IS ALSO MADE FOR REQUESTING, BY MEANS OF MEETINGS,
CLARIFICATIONS PRIOR TO THE SESSION WHEN THIS INVOLVES TOPICS THAT ARE
TECHNICALLY COMPLEX.(RECOMMENDATION 23).
BOARD MEMBERS HAVE THE RIGHT TO OBTAIN FROM THE COMPANY THE
ASSESSMENT OF COMPLIANCE FOR ITS FUNCTIONS (RECOMMENDATION 24).
THE ENTITY HAS AN ANNUAL PROGRAMME THAT GUIDES AND PROVIDES NEW BOARD
MEMBERS WITH SUFFICIENT KNOWLEDGE IN THE FUNDAMENTAL ACTIVITIES AND
AREAS OF THE COMPANY PLUS REGARDING MEETING THEIR FUNCTIONS
BOARD MEMBERS' DEDICATION. RECOMMENDATION 26
THE ORGANISATION REQUIRES SUFFICIENT DEDICATION OF TIME AND EFFORT FROM
ITS BOARD MEMBERS TO FULFIL THEIR ROLE EFFECTIVELY, AND WHEN
APPROPRIATE, THEY SHOULD NOTIFY ANY INTERFERENCE TO THEIR DEDICATION
(OTHER BOARDS OR PROFESSIONAL OBLIGATIONS) AND THERE ARE RULES ON THE
NUMBER OF BOARDS THAT ITS BOARD MEMBERS CAN JOIN.
ON THE OTHER HAND, PARTICIPATION AS A BOARD MEMBER IN OTHER CREDIT
ENTITIES IS ESTABLISHED AS INCOMPATIBLE BY THE STATUTES (ES 37).
BOARD MEMBERS.
RECRUITMENT, APPOINTMENT AND RE-ELECTION. RECOMMENDATION 27
ELECTING GOVERNING BODY BOARD MEMBERS, ELECTED FOR A PERIOD OF FOUR
YEARS, RENEWING 50% EVERY TWO YEARS, FOLLOWS A FORMAL PROCESS THAT IS
OPEN AND DEMOCRATIC INVOLVING PRESENTING AND SELECTING CANDIDATES
(ONE PARTNER ONE VOTE).
FINALLY, IT IS THE GENERAL ASSEMBLY THAT BY MEANS OF THE ONE PARTNER ONE
VOTE PROCEDURE ALSO CHOOSES MEMBERS FROM AMONG THE FINALIST
CANDIDATES FROM THE PREVIOUS PROCESS, AS LONG AS THERE ARE NO
INCOMPATIBILITIES AS GIVEN IN THE ENTITY'S STATUTES (ART. 37).
23
PUBLIC INFORMATION ON BOARD MEMBERS. RECOMMENDATION 28
INFORMATION IS NOT HELD ON THE WEBSITE ON THE PROFESSIONAL PROFILE OR
BIOGRAPHY OF THE BOARD MEMBERS. SOME PUBLISHABLE CONTENTS THAT ARE
COMPILED IN THE RECOMMENDATION (SHARES THEY HOLD IN THE COMPANY,
INDICATION OF THE BOARD MEMBER CATEGORY, ETC.) ARE NOT APPLICABLE TO
CAJA LABORAL BECAUSE IT IS A COOPERATIVE.
ROTATION OF INDEPENDENT BOARD MEMBERS. RECOMMENDATION 29
CAJA LABORAL GIVEN ITS COOPERATIVE NATURE AND THE CONTEXT AND
DEFINITION THAT APPEARS IN THE INDEPENDENT BOARD MEMBERS' CODE.
CANCELLATION AND RESIGNATION. RECOMMENDATION 30,31,32,33 AND 34
THE STATUTES ESTABLISH (ARTICLE 37) A SERIES OF INCOMPATIBILITIES TO BE A
MEMBER OF THE GOVERNING BODY AND DISLOYAL CONDUCT WILL LEAD TO
IMMEDIATE DISMISSAL, ON THE REQUEST OF ANY PARTNER, WITHOUT TAKING
RESPONSIBILITY.
IN LINE WITH RECOMMENDATION 32 OF THE UNIFIED CODE, THESE
INCOMPATIBILITIES INCLUDE BEING INVOLVED IN A COURT, PENAL OR DISCIPLINARY
HEARING THAT MIGHT AFFECT THE COMPANY'S REPUTATION.
OTHER RECOMMENDATIONS (30, 31, 33), AIMED AT CERTAIN BOARD MEMBER
PROFILES (DOMINICAL AND INDEPENDENT), ARE NOT APPLICABLE TO CAJA LABORAL
GIVEN THAT IT IS A COOPERATIVE.
PAYMENT. RECOMMENDATION 35, 36, 37, 38 AND 39
ALTHOUGH IT IS LAID DOWN IN THE STATUTES THAT THE GOVERNING BODY BOARD
MEMBERS WILL BE PAID WHEN THEY CARRY OUT DIRECT MANAGEMENT TASKS,
ADAPTING PAYMENT TO THE LEVELS ESTABLISHED FOR WORK PARTNERS, IN
PRACTICE THIS SITUATION DOES NOT OCCUR, WITHOUT PREJUDICING
COMPENSATION FOR EXPENSES ORIGINATING FROM THEIR ROLE.
THERE ARE THEREFORE NO PAYMENTS TO BOARD MEMBERS FOR DOING THEIR JOB,
NEITHER FIXED NOR WITH VARIABLE COMPONENTS, NOR BASED ON COMPANY
RESULTS, SO THAT IN LINE WITH RECOMMENDATIONS 37-38-39, THE PAYMENT
SYSTEM DOES NOT COMPROMISE THEIR INDEPENDENCE.
OTHER RECOMMENDATIONS FROM THE CODE (35, 36) AIMED AT OTHER
COMPONENTS OR PAYMENT SYSTEMS MORE SUITED TO LIMITED COMPANIES
(SHARES, OPTIONS, PENSION SCHEMES, OTHER VARIABLE COMPONENTS, ETC.) ARE
NOT APPLICABLE TO THE ENTITY AS IT IS A COOPERATIVE.
24
CONSULTING VOTE BY THE GENERAL COUNCIL. RECOMMENDATION 40
THE CODE'S RECOMMENDATION BASICALLY AIMED AT THE BOARD MEMBERS'
PAYMENT POLICY IS NOT APPLICABLE TO THE COOPERATIVE DUE TO ITS NATURE
AND PAYMENT POLICY.
INDIVIDUAL PAYMENT TRANSPARENCY. RECOMMENDATION 41
THE CODE RECOMMENDATION AIMED BASICALLY AT PUBLISHING, IN DETAIL AND
INDIVIDUALLY, THE TYPE AND QUANTITY OF THE BOARD MEMBERS' PAYMENTS IS
NOT APPLICABLE TO THE COOPERATIVE GIVEN THAT NO TYPE OF PAYMENTS ARE
MADE (MONEY OR KIND) FOR FULFILLING THE POST OF GOVERNING BODY BOARD
MEMBER.
REGARDING THE CONTENTS OF THIS RECOMMENDATION, IT IS NOT POSSIBLE TO BE
PART OF THE TOP MANAGEMENT AND A MEMBER OF THE GOVERNING BODY.
COMMISSIONS.
DELEGATE COMMISSION. RECOMMENDATION 42 AND 43
THE CODE RECOMMENDATIONS ARE NOT APPLICABLE DUE TO THE FACT THAT
THERE IS NO DELEGATE COMMISSION FOR THE GOVERNING BODY.
HOWEVER, IT SHOULD BE INDICATED THAT THE PRESIDENT OF THE GOVERNING
BODY TAKES PART IN DIFFERENT EXECUTIVE COMMISSIONS (BOARD OF DIRECTORS,
MANAGEMENT COUNCIL) AND SOCIAL BODIES (SOCIAL COUNCIL) IN ORDER TO
STRENGTHEN THE GOVERNING BODY'S SUPERVISION ROLE.
SUPERVISION AND CONTROL COMMISSIONS. RECOMMENDATION 44 AND 45
THERE IS NEITHER AN APPOINTMENT AND SALARY COMMISSION, NOR A COMPLIANCE
OR CORPORATE GOVERNMENT COMMISSION.
THERE IS AN AUDITING COMMITTING MADE UP OF THREE MEMBERS OF THE
GOVERNING BODY, FROM WHOSE SESSIONS THE RELEVANT MINUTES ARE TAKEN
IN RELATION TO RECOMMENDATION 45 OF THE UNIFIED CODE, MONITORING THE
PROFESSIONAL CONDUCT CODE, APPROVED BY THE GOVERNING BODY, IS NOT
ENTRUSTED TO THE AUDIT COMMITTEE BUT TO A BODY COMPOSED OF PEOPLE WITH
POSITIONS IN THE EXECUTIVE LINE OF THE COOPERATIVE.
THIS CODE AFFECTS EVERYONE DEVELOPING PROFESSIONAL ACTIVITIES AND
ANYONE OCCUPYING SOCIAL POSITIONS IN THE ENTITY. IT INSPIRES ETHICAL
ACTION PRINCIPLES IN THE ASPECTS OF INDEPENDENCE, PROFESSIONALISM,
RESPONSIBILITY AND CONFIDENTIALITY.
ON THE OTHER HAND, THE INTERNAL RULING ON CONDUCT WITHIN CAJA LABORAL,
IN THE FIELD OF THE STOCK MARKET, IN ADDITION TO THE FIELD OF THE SPECIFIC
ACTIVITY, IS TO BE APPLIED TO THE MEMBERS OF THE GOVERNING BODY.
25
AUDIT COMMITTEE. RECOMMENDATION 46, 47, 48, 49, 50, 51, 52 AND 53
THE GOVERNING BODY HAS A SERIE OF FACULTIES THAT CANNOT BE DELEGATED
RELATED TO SUPERVISION ROLE.
WITHIN FINANCIAL LAW, THE AUDIT COMMITTEE IS SET UP WITHIN THE HEART OF THE
GOVERNING BODY ITSELF.
THE PEOPLE MAKING UP THE COMMITTEE HAVE BEEN DESIGNATED TAKING INTO
ACCOUNT THEIR KNOWLEDGE AND EXPERIENCE IN FINANCIAL MATTERS
THE ENTITY HAS AN INTERNAL AUDIT FUNCTION (RECOMMENDATION
47), AT THE TOP MANAGEMENT LEVEL OF THE COOPERATIVE THAT REPORTS
REGULARLY TO THE AUDIT COMMITTEE.
THIS GIVES THE AUDIT COMMITTEE ELEMENTS OF JUDGEMENT AND CONTRAST.
AT THE END OF EVERY EXERCISE, INFORMATION IS PROVIDED ON THE ACTIVITIES
CARRIED OUT BY THIS FUNCTION (RECOMMENDATION 48).
THE RISK CONTROL AND MANAGEMENT POLICY (RECOMMENDATION 49), IS WIDE AND
COVERS THE CREDIT, OPERATIONAL, MARKET, LEGAL AND REPUTATIONAL RISKS.
THE ENTITY IS ALSO INVOLVED IN PROCESSES OF IMPLANTING AND HOMOLOGISING
ADVANCED RISK METHODS (BIS II).
THE AUDIT COMMITTEE HAS BEEN WORKING AS A DELEGATE COMMISSION FOR THE
GOVERNING BODY SINCE 2003, WITH THREE MEMBERS FROM THIS BODY, TWO OF
THEM EXTERNAL AND ONE INTERNAL AND ALL INDEPENDENT OF THE EXECUTIVE
LINE.
THEIR ROLES COVER
EVERYTHING
LAID
DOWN
IN
THE
FINANCIAL
LAW
IT IS LAID DOWN, AND IS BEING PRACTISED, THAT THE AUDIT COMMITTEE CAN CALL
ANY EMPLOYEE OR MANAGER FROM THE COOPERATIVE (RECOMMENDATION 51).
THE AUDIT COMMITTEE IS BASIC IN THE PROCESS OF FORMULATING THE ANNUAL
ACCOUNTS THAT ARE PRESENTED IN THE AUDIT COMMITTEE, BEFORE BEING TAKEN
TO THE GOVERNING BODY FOR APPROVAL.
THE GOVERNING BODY MUST MAKE SURE THAT THEY ARE FORMULATED WITHOUT
RESERVATIONS OR EXCEPTIONS IN THE AUDIT REPORT (RECOMMENDATION 53).
HOWEVER, WHEN THE BOARD CONSIDERS THAT ITS CRITERIA MUST BE MAINTAINED,
IT WILL EXPLAIN THE CONTENT PUBLICLY AND THE SCOPE OF THE DISCREPANCY.
26
APPOINTMENT AND SALARIES COMMISSION. RECOMMENDATION 54, 55
56, 57 AND 58
THERE IS NO APPOINTMENT COMMISSION OR SALARIES COMMISSION. MATTERS
RELATED TO THESE RECOMMENDATIONS, SUCH AS THE CASE OF SETTING BOARD
MEMBERS' SALARIES, ARE NOT APPLICABLE BECAUSE THIS IS NOT CONTEMPLATED
BY THE COMPANY'S COOPERATIVE NATURE.
G
OTHER INFORMATION OF INTEREST
If you consider that there are any principles or relevant aspect relating to the corporate
government applied by your entity that has not been covered by this report, please
mention this and explain its content below.
Within this section, you can include any other information, clarification or nuance
relating to the previous sections of the report, as long as this is relevant or not repeating
information.
Specifically, indicate whether the entity is submitted to legislation other than the Spanish
law in terms of corporate government and, in this case, include any information that you
are obliged to supply that is different to what is required in this report.
--------------------------------------------------------------------------------------------------------------This annual corporate government report has been approved by the entity's board or
administration body in its session on 5-2-2010.
Indicate the Board or Administrative Body Members that have voted against or have
abstained from voting to approve this Report.
The Members of the Parent Entity’s Governing Council declare that to the best of their
knowledge the attached financial statements have been prepared in accordance with
aplicable accounting principles and provide a true and fair view of the consolidated equity
and consolidated results of the Parent Entity and its investee companies, and that the
attached Directors’ report includes a achúrate análisis of the development and results
obtained by the Group during the year ended 31 December 2009.
As a result, the members of the Governing Council of Caja Laboral Popular Coop. de Crédito
– Lan Kide Aurrezkia (Parent Entity) hereby prepare the Consolidated Directors’ Report and
consolidated financial statements on 5 February 2010, including the notes to the
consolidated annual accounts, Consolidated balance sheet, Consolidated income statement,
Statement of changes in consolidated equity and statement of consolidated cash flows for
the year ended 31 December 2009. All members have signed this page in witness of their
agreement and the Secretary to the Governing Council has signed each page of the
documents mentioned above for the purposes of their identification.
Mr. Txomin García Hernández
Mrs. María Belén Cortabarría Acha
Mr. Valentín Toledo González
(Chairman)
(Vice-Chairman)
(Secretary)
Mr. Francisco Javier Gorroñogoitia
Iturbe
Mrs. Carmen Amaya Ceciaga
Ezcurra
Mr. Javier Oleaga Mendiarach
(Member)
(Member)
Mr. Francisco Javier Álvarez
Rocha
Mrs. María Carmen Urrutia
Uribechebarria
Mr. Víctor Ángel Aranzabal
Balzategui
(Member)
(Member)
(Member)
Mr. José Ignacio Esnaola Zaldua
Mr. Ignacio Gabilondo Mugarza
Mr. Juan Luis Irazabal Ibarguen
(Member)
(Member)
(Member)
(Member)
1

Caja Laboral Popular Coop. de Crédito – Lan Kide Aurrezkia and

Transcription

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