Annual accounts, management report and report of the

Transcription

Bankia, S.A.
__________________
Financial statements for the year
ended 31 December 2012
Translation of a report originally issued in Spanish based on our work performed in accordance with the audit regulations in force in
Spain and of financial statements originally issued in Spanish and prepared in accordance with the regulatory financial reporting
framework applicable to the Company (see Notes 1-3 and 45). In the event of a discrepancy, the Spanish-language version prevails.
Contents
Page
Bankia, S.A.
Balance sheet at 31 December 2012 and 2011
1
Bankia, S.A.
Income statement for the years ended 31 December 2012 and 2011
2
Bankia, S.A.
Statement of recognised income and expense for the years ended 31
December 2012 and 2011
3
Bankia, S.A.
Statement of changes in total equity for the years ended 31 December
2012 and 2011
4
Bankia, S.A.
Statement of cash flows for the years ended 31 December 2012 and
2011
6
Bankia, S.A.
Notes to the financial statements for the year ended 31 December 2012
7 to 192
Translation of financial statements originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to the Company (see Notes 1-3 and 45). In the event of a discrepancy, the Spanish-language version prevails.
Bankia, S.A.
(Thousands of euros)
ASSETS
1. Cash and balances with central banks (Note 7)
31/12/12
31/12/11 (*)
4,563,082
6,117,225
35,733,950
28,573
314,632
4,420
35,386,325
282,966
29,061,767
16,248
1,320,295
19,191
27,706,033
1,320,295
16,486
16,486
-
76,643
62,873
13,770
-
4. Available-for-sale financial assets (Note 10)
4.1. Debt securities
4.2. Equity instruments
Memorandum item: loaned or advanced as collateral
39,997,793
39,997,793
8,963,941
24,649,186
23,621,050
1,028,136
16,474,553
5. Loans and receivables (Note 11)
5.1. Loans and advances to credit institutions
5.2. Loans and advances to customers
146,602,130
9,024,397
135,358,378
2,219,355
109,407,069
208,238,766
19,628,806
182,609,312
6,000,648
90,276,140
6. Held-to-maturity investments (Note 12)
29,006,962
4,456,923
10,250,976
10,019,034
2. Financial assets held for trading (Note 8)
2.5. Trading derivatives
3. Other financial assets at fair value through profit or loss (Note 9)
7. Changes in the fair value of hedged items in portfolio hedges of interest rate risk
-
-
8. Hedging derivatives (Note 13)
6,174,395
5,266,481
9. Non-current assets held for sale (Note 14)
2,925,162
2,063,025
10. Investments (Note 15)
10.1. Associates
10.2. Jointly-controlled entities
10.3. Group entities
2,446,442
54,740
2,391,702
4,167,554
692,509
84,862
3,390,183
397,686
226,055
1,688,299
1,574,179
1,574,081
98
114,120
-
2,064,589
1,758,207
1,758,074
133
306,382
-
59,466
59,466
111,933
111,933
8,655,370
34,246
8,621,124
5,652,600
84,531
5,568,069
975,794
279,243,017
419,896
298,366,696
11. Insurance contracts linked to pensions (Note 36)
13. Tangible assets (Note 16)
13.1. Property, plant and equipment
13.1.1 For own use
13.1.2 Leased out under an operating lease
13.1.3 Assigned to welfare projects
13.2. Investment property
Memorandum item: acquired under a finance lease
14. Intangible assets (Note 17)
14.1. Goodwill
14.2. Other intangible assets
15. Tax assets
15.1. Current
15.2. Deferred (Note 25)
16. Other assets (Note 18)
TOTAL ASSETS
LIABILITIES AND EQUITY
LIABILITIES
1. Financial liabilities held for trading (Note 8)
1.1. Deposits from central banks
1.2. Deposits from credit institutions
1.3. Customer deposits
1.4. Marketable debt securities
1.6. Short positions
1.7. Other financial liabilities
2. Other financial liabilities at fair value through profit or loss
2.5. Subordinated liabilities
3. Financial liabilities at amortised cost (Note 19)
6. Liabilities associated with non-current assets held for sale
8. Provisions
8.1. Provisions for pensions and similar obligations (Note 20)
8.2. Provisions for taxes and other legal contingencies (Note 20)
8.3. Provisions for contingent liabilities and commitments (Note 20)
8.4. Other provisions (Note 20)
9. Tax liabilities
9.1. Current
10. Welfare Fund
11. Other liabilities (Note 21)
12. Capital having the nature of a financial liability
TOTAL LIABILITIES
31/12/12
31/12/11 (*)
33,610,393
33,610,393
245,230,619
51,954,778
26,114,761
117,916,947
31,152,398
15,641,800
2,449,935
2,726,923
2,434,089
486,376
36,721
603,072
1,307,920
876,936
8,319
868,617
551,875
285,430,835
26,815,001
26,303,249
511,752
255,247,298
22,431,191
22,434,278
161,384,387
47,607,382
318,283
1,071,777
1,961,164
1,283,242
539,860
51,766
473,763
217,853
968,586
41,397
927,189
594,749
286,870,040
EQUITY
1. Own funds (Note 23)
1.1. Capital
1.1.1. Issued
1.1.2. Less: Uncalled capital
1.2. Share premium
1.3. Reserves
1.4. Other equity instruments
1.4.1. Equity component of compound financial instruments
1.4.2. Non-voting equity units and associated funds
1.4.3. Other equity instruments
1.5. Less: treasury shares
1.6. Profit/(loss) for the year
1.7. Less: dividends and remuneration
2. Valuation adjustments
2.1. Available-for-sale financial assets (Note 22)
2.2. Cash flow hedges (Note 22)
2.3. Hedges of net investments in foreign operations
2.4. Exchange differences
2.5. Non-current assets held for sale
2.7. Other valuation adjustments
TOTAL EQUITY
(5,408,822)
3,987,927
3,987,927
11,986,494
(3,075,618)
(1,182)
(18,306,443)
(778,996)
(792,359)
4,926
(70)
8,507
(6,187,818)
12,078,096
3,465,145
3,465,145
11,643,001
28,150
(27,649)
(3,030,551)
(581,440)
(548,145)
(33,387)
92
11,496,656
TOTAL LIABILITIES AND EQUITY
MEMORANDUM ITEM
1. Contingent exposures (Note 26.2)
2. Contingent commitments (Note 26.3)
279,243,017
31,533,760
10,313,773
21,219,987
298,366,696
43,888,250
11,871,986
32,016,264
(*) Presented solely and exclusively for comparison purposes.
The accompanying Notes 1 to 45 and Appendices I to VII are an integral part of the balance sheet at 31 December 2012.
1
Translation of financial statements originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to the Company (see Notes 1-3 and 45). In
the event of a discrepancy, the Spanish-language version prevails.
Bankia, S.A.
Income statement for the years ended 31 December 2012 and 2011
2011(*)
2012
1. Interest and similar income (Note 27)
2. Interest expense and similar charges (Note 28)
3. Remuneration of capital having the nature of a financial liability
A. NET INTEREST INCOME
7,260,244
7,680,574
(4,510,056)
(5,199,347)
-
-
2,750,188
2,481,227
4. Return on equity instruments (Note 29)
77,758
129,514
6. Fees and commission income (Note 30)
1,065,180
1,143,947
7. Fees and commission expenses (Note 31)
(130,351)
(145,920)
8. Gains and losses on financial assets and liabilities (net) (Note 32)
8.1. Held for trading
8.2. Other financial instruments at fair value through profit or loss
386,778
339,719
(39,142)
157,598
2,910
(18,149)
384,432
188,115
38,578
12,155
9. Exchange differences (net) (Note 33)
39,211
22,791
10. Other operating income (Note 34)
43,809
65,216
8.3. Financial instruments not measured at fair value through profit or loss
8.4. Other
11. Other operating expenses (Note 35)
(530,480)
(250,028)
B. GROSS INCOME
3,702,093
3,786,466
12. Administrative expenses
(1,821,196)
(1,920,296)
12.1. Staff costs (Note 36)
(1,240,318)
(1,289,827)
(580,878)
(630,469)
(227,992)
(246,250)
12.2. Other general administrative expenses (Note 37)
13. Depreciation and amortisation charge (Note 38)
14. Provisions (net) (Note 39)
15. Impairment losses on financial assets (net)
15.1. Loans and receivables (Note 40)
15.2. Other financial instruments not measured at fair value through profit or loss (Note 40)
(1,424,123)
(156,722)
(18,116,330)
(3,953,707)
(17,476,901)
(3,865,313)
(639,429)
(88,394)
(17,887,548)
(2,490,509)
16. Impairment losses on other assets (net)
(2,953,645)
(304,276)
16.1. Goodwill and other intangible assets
(5,434)
-
(2,948,211)
(304,276)
492
(4,186)
-
-
C. NET OPERATING INCOME/(EXPENSE)
16.2. Other assets (Note 41)
17. Gains/(losses) on disposal of assets not classified as non-current assets held for sale (Note 42)
18. Negative goodwill on business combinations
19. Gains/(losses) on non-current assets held for sale not classified as discontinued operations (Note 43)
D. PROFIT/(LOSS) BEFORE TAX
20. Income tax
21. Mandatory transfer to welfare funds
E. PROFIT/(LOSS) FOR THE YEAR FROM CONTINUING OPERATIONS
22. Profit/(loss) from discontinued operations (net)
(704,487)
(1,570,888)
(21,545,188)
(4,369,859)
3,238,745
1,339,308
-
-
(18,306,443)
(3,030,551)
-
-
F. PROFIT/(LOSS) FOR THE YEAR
(18,306,443)
The accompanying Notes 1 to 45 and Appendices I to VII are an integral part of the income statement for the year ended 31 December 2012.
(3,030,551)
2
Translation of financial statements originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to the Company (see Notes 1-3 and 45). In
BANKIA, S.A.
Statement of recognised income and expense for the years ended 31 December 2012 and 2011
31/12/12
A) PROFIT/(LOSS) FOR THE YEAR
31/12/11 (*)
(18,306,443)
(3,030,551)
B) OTHER RECOGNISED INCOME AND EXPENSE
(197,556)
(579,798)
1. Available-for-sale financial assets
(348,878)
(780,719)
1.1. Revaluation gains/(losses)
(158,963)
(697,422)
1.2. Amounts transferred to income statement
(177,762)
(83,297)
(12,153)
-
1.3. Other reclassifications
2. Cash flow hedges
54,733
(47,697)
25,730
(49,680)
29,003
1,983
2.3. Amounts transferred to initial carrying amount of hedged items
-
-
-
-
-
-
-
-
-
-
-
-
(231)
132
3. Hedges of net investments in foreign operations
4. Exchange differences
(231)
132
-
-
-
-
5. Non-current assets held for sale
12,153
-
-
-
-
-
12,153
-
6. Actuarial gains/(losses) on pension plans
-
-
8. Other recognised income and expense
-
-
84,667
248,486
9. Income tax
C) TOTAL RECOGNISED INCOME AND EXPENSE (A+B)
(18,503,999)
(3,610,349)
The accompanying Notes 1 to 45 and Appendices I to VII are an integral part of the statement of recognised income and expense for the year ended 31 December
2012.
3
Bankia, S.A.
Statements of changes in equity:
Statement of changes in total equity for the year ended 31 December 2012
OWN FUNDS
Share capital
1. Balance at 1 January 2012
Profit/(loss) for
the year
Less: Dividends
and
remuneration
Total own funds
VALUATION
ADJUSTMENTS
TOTAL EQUITY
28,150
-
(27,649)
(3,030,551)
-
12,078,096
(581,440)
-
-
-
-
-
-
-
-
-
1.2. Error adjustments
-
-
-
-
-
-
-
-
-
28,150
-
(27,649)
(3.030.551)
-
12,078,096
(581,440)
11,496,656
-
-
-
3. Total recognised income and expense
3,465,145
11,643,001
-
(18,306,443)
-
(18,306,443)
(197,556)
(18,503,999)
343,493
(3,103,768)
-
26,467
3,030,551
-
819,525
-
819,525
522,782
343,493
(1,075)
-
-
-
-
866,275
-
866,275
4.2 Capital reductions
-
-
-
-
-
-
-
(1,075)
-
(1,075)
4.3 Conversion of financial liabilities into equity
-
-
-
-
-
-
-
-
-
-
4.4 Increase in other equity instruments
-
-
-
-
-
-
-
-
-
-
4.5 Reclassification of financial liabilities to other equity instruments
-
-
-
-
-
-
-
-
-
-
4.6 Reclassification of other equity instruments to financial liabilities
-
-
-
-
-
-
-
-
-
-
4.7 Remuneration to members
-
-
-
-
-
-
-
-
-
-
4.8 Treasury share transactions (net)
-
-
(72,142)
-
26,467
-
-
(45,675)
-
(45,675)
4.9 Transfers between equity accounts
-
-
(3,030,551)
-
-
3,030,551
-
-
-
-
4.10 Increases/(decreases) due to business combinations
-
-
-
-
-
-
-
-
-
-
4.11 Discretionary transfer to welfare projects and funds
-
-
-
-
-
-
-
-
-
-
4.12 Equity instrument-based payments
-
-
-
-
-
-
-
-
-
-
4.13 Other increases/(decreases) in equity
-
-
-
-
-
-
-
-
-
-
3,987,927
11,986,494
(3,075,618)
-
(1,182)
(18,306,443)
-
(5,408,822)
(778,996)
(6,187,818)
4.1 Capital increases
5. Balance at 31 December 2012
-
11,496,656
522,782
4. Other changes in equity
-
11,643,001
Less:
treasury
shares
Other equity
instruments
Reserves
1.1. Adjustments due to accounting policy change
2. Adjusted opening balance
3,465,145
Share
premium
The accompanying Notes 1 to 45 and Appendices I to VII are an integral part of the statement of changes in total equity for the year ended 31 December 2012.
4
Bankia, S.A.
Statement of changes in total equity for the year ended 31 December 2011 (*)
OWN FUNDS
Share capital
Share
premium
Less:
treasury
shares
Other equity
instruments
Reserves
Less: Dividends
and
remuneration
Profit/(loss)
for the year
VALUATION
ADJUSTMENTS
Total own
funds
TOTAL EQUITY
18,040
-
11,372
-
-
934
(419)
29,927
(1,642)
28,285
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,040
-
11,372
-
-
934
(419)
29,927
(1,642)
28,285
-
-
-
-
-
(3,030,551)
-
(3,030,551)
(579,798)
(3,610,349)
3,447,105
11,643,001
16,778
-
(27,649)
(934)
419
15,078,720
-
15,078,720
3,449,145
11,643,001
(23,400)
-
-
-
-
15,068,746
-
15,068,746
(2,040)
-
2,040
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,507
-
(27,649)
-
-
(26,142)
-
(26,142)
-
-
374
-
-
(934)
560
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
36,257
-
-
-
(141)
36,116
-
36,116
3,465,145
11,643,001
28,150
-
(27,649)
(3,030,551)
-
12,078,096
(581,440)
11,496,656
5
Translation of financial statements originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to the Company (see
Notes 1-3 and 45). In the event of a discrepancy, the Spanish-language version prevails.
Bankia, S.A.
Statement of cash flows for the years ended 31 December 2012 and 2011
A) CASH FLOWS USED IN OPERATING ACTIVITIES
1. Profit/(loss) for the year
2. Adjustments made to obtain the cash flows from operating activities
2.1. Depreciation and amortisation
2.2. Other
3. Net increase/(decrease) in operating assets
3.1. Financial assets held for trading
3.2. Other financial assets at fair value through profit or loss
3.3. Available-for-sale financial assets
3.4. Loans and receivables
3.5. Other operating assets
4. Net increase/(decrease) in operating liabilities
4.1. Financial liabilities held for trading
4.2. Other financial liabilities at fair value through profit or loss
4.3. Financial liabilities at amortised cost
4.4. Other operating liabilities
5. Income tax receipts/(payments)
B) CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES
6. Payments
6.1. Tangible assets
6.2. Intangible assets
6.3. Investments
6.4. Subsidiaries and other business units
6.5. Non-current assets held for sale and associated liabilities
6.6. Held-to-maturity investments
6.7. Other payments related to investing activities
7. Proceeds
7.3. Investments
7.7. Other proceeds related to investing activities
C) CASH FLOWS FROM FINANCING ACTIVITIES
8. Payments
8.1. Dividends
8.3. Redemption of own equity instruments
8.4. Acquisition of own equity instruments
8.5. Other payments related to financing activities
9. Proceeds
9.2. Issuance of own equity instruments
9.3. Disposal of own equity instruments
9.4. Other proceeds related to financing activities
D) EFFECT OF EXCHANGE RATE DIFFERENCES
31/12/12
31/12/11 (*)
(7,390,261)
(18,306,443)
29,349,111
227,992
29,121,119
6,813,635
634,961
60,157
(5,131,508)
11,651,743
(401,718)
(25,246,564)
(511,752)
(24,920,227)
185,415
417,371
737,482
26,836
710,314
332
1,154,853
106,792
9,537
378,583
659,941
5,418,723
280,418
255,023
25,395
5,699,141
4,623,517
866,275
209,349
24
(1,358,492)
(3,030,551)
4,702,021
246,250
4,455,771
(12,643,069)
(370,201)
28,089
(9,849,646)
3,763,610
(6,214,921)
9,613,107
755,763
5,210,712
3,646,632
(1,477,574)
2,528,377
92,977
70,354
1,148,950
1,216,096
1,050,803
448,266
393,965
204,028
4,544
2,874,630
584,483
511,331
73,152
3,459,113
318,283
3,092,146
47,010
1,674
43
(1,554,143)
38,607
F) CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR
6,117,225
6,078,618
G) CASH AND CASH EQUIVALENTS AT END OF THE YEAR
4,563,082
6,117,225
MEMORANDUM ITEM
COMPONENTS OF CASH AND CASH EQUIVALENTS AT END OF YEAR
1.1. Cash
1.2. Cash equivalents at central banks
1.3. Other financial assets
1.4. Less: Bank overdrafts refundable on demand
Total cash and cash equivalents at end of year
794,364
3,768,718
4,563,082
803,532
5,313,693
6,117,225
E) NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (A+B+C+D)
The accompanying Notes 1 to 45 and Appendices I to VII are an integral part of the cash flow statement for the year ended 31 December 2012.
6
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012
Page
(1) Description of Bankia, beginnings of the incorporation of Bankia, reporting framework applied to draw up the financial statements and other
information
7
(1.1) Description of Bankia
7
(1.2) Beginnings of the incorporation of Bankia
7
(1.3) Reporting framework applied to draw up the financial statements
11
(1.4) Responsibility for the information and estimates made
13
(1.5) Comparative information
14
(1.6) Agency agreements
14
(1.7) Investments in the capital of credit institutions
14
(1.8) Environmental impact
14
(1.9) Minimum reserve ratio
14
(1.10) Deposit Guarantee Fund
14
(1.11) Events after the reporting period
15
(1.12) Customer care service
16
(1.13) Information on deferred payments to suppliers. Third additional provision. “Disclosure requirement" set out in Law 15/2010 of 5 July
17
(1.14) Information on the mortgage market
18
(1.15) Segment reporting and distribution of revenue from ordinary Bank activities, by categories of activities and geographic markets
24
(1.16) Society of Asset Management from the Banking Restructuring (SAREB)
26
(2) Accounting policies and measurement bases
28
(2.1) BFA-Bankia Group Restructuring Plan
28
(2.2) Subsidiaries
28
(2.3) Joint ventures
29
(2.4) Associates
29
(2.5) Financial instruments: initial recognition, derecognition of financial instruments, fair value and amortised cost of financial instruments,
classification and measurement and reclassification among categories
30
(2.6) Hedge accounting and mitigation of risk
35
(2.7) Foreign currency transactions
37
(2.8) Recognition of income and expenses
38
(2.9) Offsetting
39
(2.10) Transfers of financial assets
39
(2.11) Exchanges of assets
40
(2.12) Impairment of financial assets
40
(2.13) Financial guarantees and provisions for financial guarantees
42
(2.14) Accounting for leases
43
(2.15) Staff costs
44
(2.16) Income tax
50
(2.17) Tangible assets
51
(2.18) Intangible assets
53
(2.19) Inventories
54
(2.20) Non-financial guarantees provided
55
(2.21) Provisions and contingent liabilities
55
(2.22) Non-current assets held for sale
56
(2.23) Statement of cash flows
57
(2.24) Share-based payment transactions
58
(2.25) Transactions with treasury shares
59
(2.26) Statement of recognised income and expense and statement of total changes in equity
59
(3) Risk management
61
(3.1) Exposure to credit risk and risk concentration
61
(3.2) Liquidity risk of financial instruments
73
(3.3) Exposure to interest rate risk
76
(3.4) Exposure to other market risks
77
(3.5) Exposure to property and construction risk (transactions in Spain)
78
(4) Capital management
82
(4.1) Capital requirements established by Bank of Spain Circular 3/2008
82
(4.2) Principal capital requirements
83
(5) Remuneration of Board members and senior executives
84
(5.1) Remuneration of Board members
84
(5.2) Remuneration of the Bank's senior executives (Management Committee)
89
(5.3) Disclosures on Bank directors’ holdings and business activities
90
(6) Proposed distribution of loss of Bankia, S.A.
91
(7) Cash and balances with central banks
91
(8) Financial assets and liabilities held for trading
91
(9) Other financial assets at fair value through profit or loss
93
(10) Available-for-sale financial assets
94
(11) Loans and receivables
97
(12) Held-to-maturity investments
103
(13) Hedging derivatives (debtors and creditors)
104
(14) Non-current assets held for sale
107
(15) Investments
111
(16) Tangible assets
115
(17) Intangible assets - Other intangible assets
116
(18) Other assets
117
(19) Financial liabilities at amortised cost
119
(20) Provisions
124
(21) Other liabilities
125
(22) Valuation adjustments
126
(23) Equity - Share capital and share premium, treasury share transactions, reserves and other information
127
(24) Fair value
130
(25) Tax matters
138
(26) Other significant disclosures
153
(27) Interest and similar income
157
(28) Interest expense and similar charges
157
(29) Return on equity instruments
158
(30) Fee and commission income
158
(31) Fee and commission expense
158
(32) Gains and losses on financial assets and liabilities (net)
159
(33) Exchange differences (net)
159
(34) Other operating income
159
(35) Other operating expenses
159
(36) Administrative expenses – Staff costs
160
(37) Administrative expenses - Other general administrative expenses
167
(38) Depreciation and amortisation
167
(39) Provisions (net)
168
(40) Impairment losses on financial assets (net)
168
(41) Impairment losses on other assets (net)
168
(42) Gains/(losses) on disposal of financial assets not classified as non-current assets held for sale
169
(43) Gains (losses) on non-current assets held for sale not classified as discontinued operations
169
(44) Related parties
169
(45) Explanation added for translatio to English
171
Appendices
172
Translation of financial statements originally issued in Spanish and prepared in accordance with the regulatory financial
reporting framework applicable to the Company (see Notes 1-3 and 45). In the event of a discrepancy, the Spanish-language
version prevails.
BANKIA, S.A.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31
DECEMBER 2012
(1) Description of Bankia, beginnings of the incorporation of Bankia, reporting framework
applied to draw up the financial statements and other information
(1.1) Description of Bankia
Bankia, S.A. ("the Bank" or “Bankia”) is a financial institution incorporated under the name Altae Banco,
S.A. (initially under code 0099 in the Bank of Spain's financial institution register) and on record with the
companies register (Registro Mercantil). In the first half of 2011, the Bank was assigned code 2038 in the
Bank of Spain's financial institutions register. As a credit institution, the Bank is subject to the supervisory
authority of the Bank of Spain. On 16 June 2011, Bankia's registered office was transferred to calle Pintor
Sorolla, 8, Valencia. The company bylaws may be consulted, together with other relevant legal
information, at Bankia's registered office and on its website (www.bankia.com).
Bankia’s bylaws stipulate the activities it may engage in, which are those commonly carried on by credit
institutions and, in particular, satisfy the requirements of Law 26/1988, of 29 July, on the Discipline and
Intervention in Credit Institutions.
On 30 July 2010, Caja de Ahorros y Monte de Piedad de Madrid (until that date, the majority shareholder
of Altae Banco, S.A.), Caja de Ahorros de Valencia, Castellón y Alicante (Bancaja), Caja Insular de
Ahorros de Canarias, Caja de Ahorros y Monte de Piedad de Ávila, Caixa d’Estalvis Laietana, Caja de
Ahorros y Monte de Piedad de Segovia and Caja de Ahorros de La Rioja (referred to collectively as “the
Cajas”) signed an integration agreement (the “Integration Agreement”) calling for the incorporation of a
contractually-based consolidable group of credit institutions. The Integration Agreement made provision
for the creation of a group comprising the “Cajas” and implemented as an Institutional Protection Scheme
(“IPS”) in accordance with the requirements and conditions set out in Directive 2006/48/EC (implemented
in Spanish law under Article 26.7 of Royal Decree 216/2008 and rule 15 of Bank of Spain Circular 3/2008
to Credit Institutions on the calculation and control of minimum capital requirements) and in Law 13/1985
of 25 May on the investment ratios, capital and reporting requirements of financial intermediaries).
The Integration Agreement originally sought to arrange the Group arising from the Integration Agreement
as an integrated organisation that qualifies as a consolidable group for accounting and regulatory
purposes and as a concentration vehicle for the purposes of competition law. The Agreement set out
integrated management and ownership – within the confines of law and without prejudice to the rights of
the owners of non-controlling interests – of the Group’s business investments (barring certain exceptions
established in the Agreement itself) and therefore centralises the decision-making process in respect of
existing and future portfolio investments and divestments.
On 3 December 2010, the Central Body of the IPS was incorporated under the name Banco Financiero y
de Ahorros, S.A. (“BFA”). The entity was entered in the Valencia Companies Register on 7 December
2010 and placed on the Bank of Spain Savings Banks Register on 13 December 2010. Also on 13
December 2010, the Board of Directors of BFA ratified its adhesion to the Integration Agreement as the
parent of the group arising from the Integration Agreement. On the same date, the “Cajas” contributed to
BFA the right to receive 100% of the results of all their businesses, carried out in all regions as from 1
January 2011 (the “Mutuality Right”), subject to a statement from the Bank of Spain indicating that no
objections are made to the arrangement.
At the Annual General Meeting held on 3 December 2010, the shareholders of BFA approved the issue of
convertible preference shares amounting to EUR 4,465 million, which were subscribed and paid
exclusively by the Fund for Orderly Bank Restructuring (FROB).
On 30 December 2010, the “Cajas” and BFA signed an addendum to the Integration Agreement whereby
the “Cajas” undertook to assign the voting rights in their subsidiaries, so that the policies through which
BFA will exercise control over the entities, as established in the Integration Agreement, could be
designed and implemented. For accounting purposes, the Integration Agreement sets up BFA as the
parent of the Banco Financiero y de Ahorros Group, whereas the “Cajas” and their subsidiaries are
7
Group subsidiaries, insofar as BFA had the power to oversee the financial and operational policies of the
other Group entities.
On 28 January 2011, the “Cajas” and BFA signed a second addendum to the Integration Agreement,
whereby the “Cajas” assigned all the assets and liabilities of their retail banking businesses to BFA. The
“Cajas” will continue to manage the retail banking businesses in their native territory, to the extent of the
powers delegated to them by BFA.
Subsequently, between 14 February 2011 and 17 February 2011, the boards of directors of the “Cajas”
and of BFA approved the projects to de-merge the banking and banking-related assets and liabilities of
the “Cajas” for integration in BFA (the "De-Merger Projects" or the "First De-Merger Project"). These
projects were duly filed in the corresponding Companies Registers. Under the De-Merger Projects, the
contribution of the “Cajas” de-merged assets and liabilities to BFA would be compensated through the
aforementioned Mutuality Right. Accordingly, the “Cajas” will not receive any compensation for the
contribution other than the obligations set out under the Mutuality Right. The balance sheets of the
“Cajas” at 31 December 2010 were deemed to be the de-merger balance sheets, with the exceptions set
out in the De-Merger Projects of assets and liabilities other than those stipulated above which were not
de-merged. The de-merger is effective for accounting purposes as of 1 January 2011.
On 17 February 2011, the “Cajas” and BFA signed a third addendum to the Integration Agreement in
order to allow BFA to adopt the most appropriate structure for its flotation. On 18 February 2011, the
Spanish Cabinet approved Royal Decree-Law 2/2011 of 18 February 2011 to strengthen the financial
system (“RDL 2/2011”). This decree-law introduced and defined a new solvency requirement to be met
by the institutions ("principal capital") and, among other provisions, established that: (i) credit institutions
must have a principal core capital ratio of at least 8% of their total risk-weighted exposures, calculated in
accordance with Law 13/1985 of 25 May, on the investment ratios, capital and reporting requirements of
financial intermediaries and the related implementing regulations; and (ii) those credit institutions that
have secured over 20% of funding from the wholesale market and that have placed less than 20% of
capital or voting rights with third parties must have a principal core capital ratio of 10%.
On 5 April 2011, the board of directors and the shareholders of BFA, in their general meeting, approved a
second de-merger project for the contribution by BFA to its subsidiary Bankia of a significant portion of
BFA’s banking and financial businesses received from the “Cajas” in the course of the de-mergers carried
out previously (the "Second De-Merger Project"). This Second De-Merger Project was likewise approved
on 6 April 2011 by the Board of Directors and the shareholders of Bankia, a BFA Group company, at the
general meeting (attended by all shareholders).
On 29 April 2011, the “Cajas” and BFA signed a novation to the Integration Agreement to adapt it to
Royal Decree-Law 2/2011 of 18 February, to strengthen the financial system, approving, with effect from
1 January 2011, the mutual support system and the mutual profit-sharing system set out under the
Integration Agreement.
In connection with the flotation, on 16 June 2011, BFA agreed to apply for admission to trading on the
Madrid, Barcelona, Bilbao and Valencia Stock Exchanges and inclusion on the Stock Exchange
Interconnection System (Continuous Market) of all outstanding shares representing the share capital of
Bankia.
On 28 June 2011, the General Meeting of Shareholders and Board of Directors of BFA and,
subsequently, the General Meeting of Shareholders and Board of Directors of Bankia, adopted the
necessary agreements to implement Bankia's market listing by means of a public share offering and
admission to trading (IPO). The related prospectus was registered with the Spanish Securities Market
Commission ("CNMV") on 29 June 2011. Among the agreements implemented, Banco Financiero y de
Ahorros, S.A. resolved to increase Bankia's share capital by EUR 1,649,144,506 through the issue of
824,572,253 new shares, and to authorise the Board of Directors, in the event of an incomplete
subscription, to declare share capital increased by the amount of the subscriptions actually made during
the public share offering. BFA waived its preferential subscription rights with regard to the shares
associated with the capital increase.
Following approval of Bankia's market listing prospectus, on 20 July 2011, the Bank completed the IPO
and the new shares were officially admitted for trading. The initial share price was EUR 3.75. Pursuant to
the IPO, the Bank issued 824,572,253 new shares at a par value of EUR 2 each, with an issue premium
per share of EUR 1.75, producing a total share capital increase of EUR 1,649,145 thousand, and an
issue premium of EUR 1,443,001 thousand.
On 10 February 2012, the Bank's Board of Directors decided to carry out a monetary capital increase
excluding preferential subscription rights, through the issue and circulation of a maximum of four hundred
and fifty-four million ordinary Bankia, S.A. shares (454,000,000). The capital increase forms part of the
8
Repurchase Offer of certain preference shares and subordinated debt by BFA (the parent entity), the
results of which, following expiry of the acceptance period on 23 March 2012, were as follows:

the total nominal amount of the securities repurchased in the Repurchase Offer was EUR 1,155
million;

the total amount of initial payments (totalling 75% of the aforementioned repurchase amounts) made
on 30 March 2012 was EUR 866 million;

the latter amount was applied to the subscription of the Bank's shares circulated pursuant to the
aforementioned share capital increase. A total of 261,391,101 shares were issued, at a price of EUR
3.3141.

lastly, under the framework of the Loyalty Plan linked to the Repurchase Offer, the deferred
payments for 15 June and 14 December 2012, which were paid by BFA to the investors, amounted to
EUR 92 million and EUR 91 million, respectively. These amounts were reinvested automatically and
simultaneously in 43,797,889 and 45,341,616 additional shares of Bankia from its treasury shares, at
prices of EUR 2.101 and EUR 2.000, respectively.
At year-end 2012, as a result of the aforementioned share capital increases, the Bank's share capital
amounted to EUR 3,987,927 thousand, represented by 1,993,963,354 fully subscribed and paid up
registered shares (see Note 23).
Bankia's main shareholder is Banco Financiero y de Ahorros, S.A.U., which at the date of authorisation
for issue of these financial statements held 48.056% of its share capital including the impact of treasury
shares. On 9 May 2012, the board of directors of Banco Financiero y de Ahorros, S.A.U. unanimously
resolved to submit a share conversion request to the Fund for Orderly Bank Restructuring ("FROB")
through the Bank of Spain to convert the EUR 4,465 million of convertible preference shares issued by
BFA and subscribed by the FROB into shares of BFA, which would be issued on executing the capital
issue agreement permitting this conversion. At its meeting on 14 May 2012, the FROB board resolved to
accept the request.
On 23 May 2012, Banco Financiero y de Ahorros, S.A.U. sent communiqués to the Bank of Spain and
the FROB notifying them of its intention of requesting a capital contribution from the FROB of EUR
19,000 million. On 24 May 2012, both institutions indicated that they were prepared to immediately
provide the said financial support pursuant to compliance with the requirements set forth in their
regulations.
The European Commission temporarily authorised, in accordance with EU State aid rules, the conversion
of convertible preference shares held by the Spanish government for an amount of EUR 4,465 million,
and the possibility of issuing liabilities with a guarantee by the Spanish government amounting to EUR
19,000 million in favour of the BFA Group and its subsidiary Bankia.
On 27 June 2012, after conversion of the convertible preference shares (which, inter alia, led to the prior
reduction of BFA’s share capital to zero following the redemption of the 27,040,000 shares held prior to
the conversion process by the “Cajas”), the FROB became the sole shareholder of Banco Financiero y de
Ahorros, S.A.U., as it controlled 100% of its share capital, warranting disclosure of BFA’s single member
status. In addition, as a result of the above and under the framework of the conversion process
mentioned previously, the “Cajas” did not belong to the BFA Group at 31 December 2012.
In June 2012, the results of the stress test of the Spanish banking system carried out by two international
consulting firms that assessed the system’s capital deficit under a severely adverse stress scenario were
released. Under this scenario, the system-wide capital buffer requirement estimated by the consultants
was between EUR 51,000 million and EUR 62,000 million.
Subsequently, based on the analysis of the credit portfolios of 14 Spanish banks, including BFA-Bankia,
performed by four auditing firms, one of the international consultants conducted a final stress test in
which it estimated the expected losses of these banks, including those of BFA-Bankia. The result of this
stress test was released on 28 September 2012, showing capital needs for the BFA–Bankia Group of
EUR 13,230 million in the baseline scenario and EUR 24,743 million in the adverse scenario.
On 12 September 2012, while the restructuring process was being completed, the FROB agreed to the
capital increase of BFA through the non-monetary contribution of EUR 4,500 million through the issue of
4,500 million registered ordinary shares with a par value of EUR 1 each, fully subscribed and paid in, in
order to strengthen the BFA-Bankia Group's regulatory capital. On the same date, BFA granted Bankia,
S.A. a subordinated loan in the amount of EUR 4,500 million with an unspecified maturity and an interest
rate of 8% (see Note 19).
9
Lastly, on 28 November 2012, the BFA–Bankia Group received approval by the European Commission,
the Bank of Spain and the FROB for the Bank's 2012-2017 Restructuring Plan (the “Restructuring Plan”).
This final approval marked the completion of the joint analysis and work by the entities, the European
Commission, the FROB and the Bank of Spain begun last July and concluded when the results of the
stress test were released on 28 September 2012. The capital requirements identified in the stress tests
were reduced by EUR 24,552 million due to the impact of the transfer of real estate assets to the asset
management company created for the bank restructuring (SAREB) (see Note 1.16).
The estimates of public assistance required by the BFA Group set out in the Restructuring Plan to comply
with regulatory capital and cash adequacy requirements in applicable regulations include approximately
EUR 6,500 million related to the positive impact estimated for certain management actions with the BFA
Group's hybrid instruments (preference shares and subordinated debt) to be carried out within the scope
of the principles and targets regarding the burden-sharing of bank restructuring costs set out in Law
9/2012, of 14 November, on the restructuring and resolution of credit institutions (“Law 9/2012”). As of the
date of authorisation for issue of these financial statements for 2012, management actions entailing the
conversion of hybrid instruments to capital provided for in the Restructuring Plan had yet to begin. As a
result, the amount of public assistance required by the BFA Group in the Restructuring Plan was finally
estimated at EUR 17,959 million.
The Bankia Group's capital requirements, which should be considered as part of the BFA Group's
requirements indicated above, were estimated at EUR 15,500 million. Of this amount, approximately EUR
4,800 million is expected to be covered through the conversion of hybrid instruments mentioned above
and EUR 10,700 million through contributions by the Bank's shareholders, with Bankia's capital increase
fully guaranteed by BFA.
In this respect, on 26 December 2012, as part of the aforementioned Restructuring Plan, the FROB
adopted the following agreements:

The capital increase at Banco Financiero y de Ahorros, S.A.U. amounting to EUR 13,459 million,
subscribed by the FROB and paid by that entity through the non-monetary contribution of securities
of the European Stability Mechanism (EMS). The increase comes in addition to that of EUR 4,500
million carried out on 12 September 2012 through the non-monetary payment of treasury bills. These
bills were also swapped for securities of the ESM.

As indicated previously, the issue by Bankia of convertible contingent bonds (CoCos) without
preferential subscription rights in an amount of EUR 10,700 million subscribed in full by BFA through
the contribution of fixed-income securities issued by the ESM.
The BFA Group's Restructuring Plan defines the framework that will allow the BFA–Bankia Group to
implement a Strategic Plan for the 2012-2015 period. This plan establishes the measures that will be
adopted during the period within the framework of the limitations imposed and commitments assumed by
the BFA Group with EU and Spanish authorities in the Restructuring Plan that will enable the BFA Group
to meet all the commitments assumed with them by 2017. As a result, from the end of the Strategic Plan
until 2017, additional measures to those considered initially for the 2012-2015 period will likely be
adopted with the overriding goal of strengthening the Bank's competitive position, rebalancing its balance
sheet, improving efficiency and reducing the risk premium. The main measures included in the 20122015 Strategic Plan are as follows:

The disposal of non-earning assets and non-strategic equity investments. Between the transfer of
assets to the SAREB, the sale of investees and other portfolios and the disposal of loan portfolios,
Bankia expects to shed EUR 50,000 million (down from EUR 90,000 million to EUR 40,000 million).

A change in the composition of the loan portfolio, resulting in a greater proportion of lending to
businesses and practically zero exposure to the real estate business.

Reduction in the Bank's capacity, both in terms of its branch network and in terms of its workforce, to
ensure its future viability. The number of branches will be reduced by approximately 39%, from 3,117
to around 1,900-2,000.

The workforce will be cut by 28%, from 20,589 to around 14,500 employees. This retrenchment will
guarantee the Bank's viability and the preservation of 72% of existing jobs. In this respect, on 8
February 2013 a labour agreement was entered into with the majority of the Bank's union
representatives (see Note 1.11).
Efficiency will also be improved by streamlining the intermediate structures of the branch network and
optimising central services.
Elsewhere, the commitments agreed with the authorities in the framework of the Restructuring Plan
include the adoption, by BFA, of the following measures by 31 December 2013:
10

its merger, into a single entity, with Bankia, S.A., or

its transformation into a holding company without a banking license
At the date of authorisation for issue of these financial statements, the directors had yet to take a decision
in this respect. Nevertheless, the potential impact of any decision would not be material for the Bankia
Group's equity and, in any case, neutral for the BFA Group.
As a result, Bankia is a subsidiary of the Banco Financiero y de Ahorros Group and, in turn, the parent of
a business group (the "Group" or “Bankia Group”). At 31 December 2012, the scope of consolidation of
the Bankia Group encompassed 330 companies, including subsidiaries, associates and jointly-controlled
entities. These companies engage in a range of activities, including among others insurance, asset
management, financing, services, and property development and management.
Appendices I and II list the entities that form part of the scope of consolidation of the Bankia Group at 31
December 2012 (subsidiaries controlled by the Bank and jointly-controlled entities). Appendix III list the
entities that form part of the scope of consolidation of the Bankia Group at 31 December 2012 that were
reclassified to "Non-current assets held for sale" (subsidiaries controlled by the Bank, jointly-controlled
entities and associates over which Bankia directly or indirectly exercises significant influence, see Note
2.1), and specifying the percentage of voting rights controlled by Bankia in each company.
Bankia’s 2012 financial statements were authorised for issue by Bankia's Board of Directors at the
meeting held on 20 March 2013.
In addition to these separate financial statements, Bankia's Board of Directors authorised for issue the
Bankia Group's consolidated financial statements for the year ended 31 December 2012, prepared in
accordance with the International Financial Reporting Standards as adopted by the European Union.
(1.3) Reporting framework applied to draw up the financial statements
In accordance with Regulation (EC) No. 1606/2002 of the European Parliament and of the Council of 19
July 2002, all companies governed by the laws of a member state of the European Union and whose
securities are traded on a regulated market in any European Union country must file consolidated
financial statements for periods beginning on or after 1 January 2005 in accordance with the International
Financial Reporting Standards as adopted by the European Union (“IFRS-EU”).
Bankia's financial statements for the year ended 31 December 2012 are presented in accordance with
the provisions of Bank of Spain Circular 4/2004 of 22 December on public and confidential financial
reporting rules and formats for credit institutions ("Circular 4/2004") and subsequent amendments
thereto, which implements and adapts the International Financial Reporting Standards endorsed by the
European Union to Spanish credit institutions. The other general Spanish business and accounting
standards and other applicable Bank of Spain Circulars and standards were used in the preparation of
these financial statements, including, where appropriate, the disclosures required by these standards in
these notes to the financial statements.
Bankia's financial statements for the year ended 31 December 2012 were prepared taking into account all
accounting principles and standards and mandatory measurement criteria applicable in order to give a
true and fair view, in all material respects, of the equity and financial position of Bankia, S.A. at 31
December 2012 and of the results of its operations and cash flows during the year then ended, pursuant
to the aforementioned applicable financial information reporting framework, and in particular to the
accounting principles and criteria therein.
The principal accounting policies and measurement bases applied in preparing the Bank’s financial
statements for the year ended 31 December 2012 are summarised in Note 2.
Main regulatory changes during the period from 1 January to 31 December 2012
The main changes arising in 2012 in the laws and regulations applicable to Bankia, which were applied in
the preparation of these financial statements, are as follows:
Bank of Spain Circular 2/2012 of 29 February amending Circular 4/2004 of 22 December on public
and confidential financial reporting rules and formats for credit institutions.
Bank of Spain Circular 2/2012 of 29 February was published on 6 March 2012. The primary objective of
this Circular is to adapt Circular 4/2004 to Royal Decree-Law 2/2012, of 3 February, on the reorganisation
of the financial sector.
The main modifications to this Circular are:
-
It adapts loan loss reserve (provisions) requirements for financing and assets foreclosed or
assets received as payment of debts in connection with land for development and with property
construction or development for credit institutions in Spain existing at 31 December 2011 and
11
those arising from refinancing subsequent to that date, as set out in the aforementioned Royal
Decree-Law.
-
It amends the general rules regarding the accounting of foreclosed assets or assets received as
payment of debts, determining the value at which these real estate assets should be initially
recognised and subsequently measured.
In terms of subsequent measurement, the percentage cover increases to 20%, 30% and 40% in
accordance with the date of inclusion of the assets in the balance sheet (over 1, 2 and 3 years,
respectively).
The measures established in Royal Decree-Law 2/2012 of 3 February on the reorganisation of the
financial sector and those included in this Circular were met prior to 31 December 2012.
Bank of Spain Circular 6/2012, of 28 September, for credit institutions amending Circular 4/2004 of
22 December, on public and confidential financial reporting rules and formats.
On 2 October, Bank of Spain Circular 6/2012, of 28 September, on credit institutions was published in the
Spanish National Gazette (Boletín Oficial del Estado). The main purpose is to adapt Circular 4/2004 to
Royal Decree-Law 18/2012, of 11 May, on the reorganisation and sale of real estate assets in the
financial sector with respect to additional provisioning requirements for assets related to the real estate
activity.
-
It establishes, in the same vein as Royal Decree-Law 2/2012, additional provisioning
requirements for the impairment of loans to the real estate sector classified as "Non-troubled". As
with the previous regulations, these new requirements are stipulated separately for one time only,
depending on the different classes of finance.
-
It introduces new disclosure requirements for credit institutions in their separate and consolidated
annual financial statements regarding refinancing and restructuring operations, and industry and
geographic risk concentration.
-
It adds transparency requirements regarding exposures to real estate construction and
development, with disclosure of assets foreclosed or received in payment of debts transferred to
companies for management of these assets.
The impacts of these two regulations (Circulars 2/2012 and 6/2012) were recognised fully in 2012, both
with respect to assets remaining on the Bank's balance sheet at 31 December 2012 and those
transferred to the SAREB (see Note 1.16) which, prior to their transfer, were measured, through the
additional charges required, at the transfer price.
Royal Decree-Law 24/2012 of 31 August on the restructuring and resolution of credit institutions
On 31 August 2012, the Spanish cabinet approved a Royal Decree-Law on the restructuring and
resolution of credit institutions, designed to safeguard the stability of the financial system as a whole. It
includes six types of measures:
-
An enhanced framework for the management of crisis situations at banks.
-
New regulation of the FROB which defines its powers and significantly enhances the tools for
intervention.
-
Stronger protection for retail investors, introducing restrictions on the sale of investment products.
-
A legal framework for the creation of an Asset Management Company (AMC), that can take the
status of a public limited company (sociedad anónima) or a trust fund, pursuant to the pending
implementing regulations.
-
A burden-sharing system for restructuring costs between the public and private sector, whereby
holders of hybrid capital instruments, preference shares and subordinated debt may be obliged to
bear part of the losses of a bank in a crisis situation.
-
Other aspects, such as:

exemption from the grounds for mandatory winding-up set out in Section 363, 1. e) of the
Spanish Corporate Enterprises Act (Ley de Sociedades de Capital) for credit institutions
in which the FROB holds a controlling interest or those whose governing body is
controlled by the FROB. Likewise, the aforementioned institutions and directors thereof
are exempt from the system provided for in Section 2 of Title X of the Spanish Corporate
Enterprises Act.
12

exemption from Section 327 of the Spanish Corporate Enterprises Act on the mandatory
reduction of capital when losses incurred lower equity to below two-thirds of capital for
the aforementioned entities. However, these sections of the Corporate Enterprises Act
will become applicable, as appropriate, once the FROB ceases to hold a controlling
position or control of the governing body of the subject entity, at which time the periods
set out in Sections 327 and 365.1 of the Corporate Enterprises Act, respectively, will be
opened.

strengthening of principal capital requirements, to 9%, for all banks as from 1 January
2013, with changes in the definition of principal capital to adapt to the definition of the
EBA.

new limits on director compensation of banks receiving assistance, with a cap on fixed
compensation for all items of EUR 500,000;

transfer of authorisation and sanctioning competencies from the Ministry of Finance and
Competitiveness to the Bank of Spain.
This Royal Decree was transposed into law with Law 9/2012 of 14 November on the restructuring and
resolution of credit institutions.
Lastly, on 16 November 2012, Royal Decree 1559/2012, of 15 November, establishing the legal regime
applicable for asset management companies and implementing Law 9/2012, of 14 November, on the
restructuring and resolution of credit institutions, was published. The purpose of this Royal Decree is to
develop the framework for the organisation and functioning of asset management companies, as well as
the powers of the FROB and the Bank of Spain with respect to them.
It is also designed to implement additional provisions seven to ten of the law regulating the legal
framework for the SAREB, the assets to be transferred to it, the institutions required to transfer assets,
and the groupings of assets and liabilities (see Note 1.16).
The information contained in these financial statements is the responsibility of Bankia’s directors.
In the Bank’s financial statements for the year ended 31 December 2012, estimates were made in order
to quantify certain of the assets, liabilities, income, expenses and obligations reported therein. These
estimates relate basically to the following:
-
The fair value of certain financial and non-financial assets and liabilities (see Notes 2.5 and 2.22).
-
Impairment losses on certain financial and non-financial assets (chiefly property) (see Notes 2.12,
2.17, 2.18, 2.19 and 2.22).
-
The assumptions used in the actuarial calculation of the post-employment benefit liabilities and
obligations and other long-term commitments (see Note 2.15).
-
Estimate of the costs to sell and of the recoverable amount of non-current assets held for sale,
investment property and inventories based on their nature, state of use and purpose for which they
are intended, acquired by the Bank as payment of debts, regardless of the legal format pursuant to
which they were acquired, applied on a consistent basis in accordance with Bank of Spain Circular
4/2004 (see Notes 2.17, 2.19 and 2.22).
-
The recoverability of deferred tax assets recognised (see Note 25).
-
The useful life, fair value and recoverable amount of tangible and intangible assets (see Notes 2.17
and 2.18).
-
The probability of occurrence of certain losses to which the Bank is exposed due to its activity.
Although these estimates were made on the basis of the best information available at 31 December 2012
and at the date of authorisation for issue of these financial statements on the events analysed, future
events may make it necessary to change these estimates (upwards or downwards) in the years ahead.
Changes to accounting estimates would be applied prospectively in accordance with the applicable
standards, recognising the effects of the change in estimates in the related income statement in the
future financial years concerned.
13
In compliance with current legislation, the information relating to 2011 contained in these financial
statements is presented solely for comparison with the information relating to 2012 and, accordingly,
does not constitute the Bank's financial statements for 2011.
A list at 31 December 2012 of Bankia's Agents which meet the conditions established in Article 22 of
Royal Decree 1245/1995 of 14 July is provided in Appendix VI, attached.
Bankia’s ownership interests of 5% or more in the capital or voting rights of other Spanish or foreign
credit institutions at 31 December 2012 are listed in Appendices I, II and III.
In addition to the stake in Bankia held by BFA (see Note 23), the breakdown of ownership interests of
more than 5% held by non-Group Spanish or foreign credit institutions in the share capital or voting rights
of credit institutions forming part of the Bankia Group at 31 December 2012 and 2011 is as follows :
Shareholding institution
Banco Popular de Ahorro de Cuba
Investee
Corporación Financiera Habana, S.A.
Ownership interest
40%
In view of the business activities carried on by Bankia (see Note 1.1), it does not have any environmental
liabilities, expenses, assets, provisions or contingencies that might be material with respect to its equity,
financial position and results. Therefore, no specific disclosures relating to environmental issues are
included in these notes to the financial statements.
At 31 December 2012 and throughout 2012 Bankia met the minimum reserve ratio requirements
stipulated by Spanish legislation.
Pursuant to the Ministry of Economy and Finance Order 3515/2009 of 29 December establishing the
contributions to be made by banks and savings banks to the Deposit Guarantee Fund (Spanish "FGD"),
and at the proposal of the Bank of Spain, the amount of the contributions by credit institutions was set at
1 per mille of the deposits covered by the guarantee.
The following regulations were published in 2012 and 2011 in amendment to the system for contributions
to the Deposit Guarantee Fund:
-
Royal Decree-Law 16/2011 of 14 October creating the Credit Institutions' Deposit Guarantee
Fund, merging the three deposit guarantee funds that had existed hitherto (the Savings Banks'
Deposit Guarantee Fund, the Banking Establishments' Deposit Guarantee Fund and the Credit
Cooperatives' Deposit Guarantee Fund) into a single fund termed the Fondo de Garantía de
Depósitos de Entidades de Crédito (Credit Institution Deposit Guarantee Fund), which continues
the role of its three predecessor funds – to guarantee deposits with credit institutions - and is
designed, in addition, to support a further purpose: reinforcement of banks' solvency and
operational effectiveness, also known as the "resolving role", to ensure that the new
comprehensive Fund can operate flexibly.
-
Royal Decree-Law 19/2011 of 2 December to amend Royal Decree-Law 16/2011 of 14 October
creating the Credit Institution Deposit Guarantee Fund. This Royal Decree-Law completes and
enhances the reform of the system conducted by Royal Decree-Law 16/2011, with a review of
the legal threshold for the annual contributions that must be made to the fund by entities, raising
it from 2 per mille to 3 per mille in order to guarantee a maximum operating capacity for the Fund.
Additionally, provision is made for the express derogation of ministerial orders which, pursuant to
the prevailing system, established a circumstantial optional reduction of contributions by entities,
including Ministry of Economy and Finance Order 3515/2009 of 29 December setting the
contributions by the Bank at 1 per mille of the deposits covered by the guarantee. The result of
both these changes is the establishment, within a regulation considered as law, of a threshold of
3 per mille of contributions of guaranteed deposits and the establishment of an actual
contribution of 2 per mille instead of the aforementioned percentages.
-
Royal Decree 771/2011 was introduced on 4 June 2011 and amended, among others, Royal
Decree 2606/1996 governing deposit guarantee funds at credit institutions. The new regulation
14
created a new system of additional contributions to the funds based on remuneration from the
deposits themselves. Meanwhile, Bank of Spain Circular 3/2011 of 30 June was published and
entered into force on 4 July 2011. It implemented the new system of contributions to deposit
guarantee funds, requiring additional contributions (payable quarterly) from entities which
arrange term deposits or settle demand accounts with remuneration that exceeds certain interest
rates published by the Bank of Spain, depending on term or demand status.
-
On 31 August 2012, Royal Decree-Law 24/2012, of 31 August, on the restructuring and
resolution of credit institutions took effect, repealing Sections 2 bis and 2 ter of Article 3 of Royal
Decree 2606/1996, of 20 December, on the credit institution deposit guarantee fund, governing
additional quarterly contributions by the banks involved that had taken deposits or settled current
accounts at rates above the official benchmark rates published by the Bank of Spain (see
previous paragraph).
-
Lastly, on 30 July 2012, the governing body of the deposit guarantee fund (FGDEC for its initials
in Spanish) agreed to an extraordinary contribution by member entities payable by each in ten
equal annual instalments on the same day that the entities must make their ordinary annual
contributions, over the next ten years. The contribution to be deposited by each member may be
deducted from the annual contribution which, as appropriate, is paid by the entity on the same
date, and up to the amount of the ordinary contribution.
The Bank's contributions to the Deposit Guarantee Fund amounted to EUR 420,067 thousand in 2012
(EUR 124,648 thousand in 2011) and were recognised under "Other operating expenses" in the
accompanying income statement (see Note 35).
On 8 February 2013, an agreement was signed with the majority of the Bank's union representatives
(CCOO, UGT, ACCAM, SATE and CSICA, which combined represent 97.86% of represented
employees) regarding a series of measures on redundancies, changes to working conditions, and
functional and geographic mobility, which are intended to help ensure the future viability of the Bank while
complying with the requirements of the Strategic Plan and the Recapitalisation Plan approved by the
European Commission on 28 November 2012.
This agreement includes the following measures that will remain in place until 31 December 2015:

Redundancies for a maximum of 4,500 employees, with redundancy packages depending on the age
of those affected.

Changes to the working conditions of employees that continue to work at the Bank, through
measures to eliminate or reduce fixed remuneration conditions, variable remuneration conditions,
pension plan contributions, entitlements for risk and promotion measures.
The agreement encourages voluntary redundancies and employability with the creation of an
employment pool for those affected, while also enabling the Bank to move towards an efficiency ratio
below 50%.
The commitments derived from these agreements are adequately covered with provisions recognised for
this purpose at 31 December 2012 (see Note 20).
On 1 March 2013, within the framework of the active management of its debt issues, Bankia, S.A.
announced a tender offer to all holders of certain mortgage-covered bonds (cédulas hipotecarias) under
the following terms:

The tender offer securities were purchased pursuant to an unmodified Dutch auction procedure. The
purchase price paid by the Bank to holders of the tender offer securities whose offers were accepted
was equal to the price specified by the holders in their tender instructions.

Holders of tender offer securities whose tenders were accepted received, together with the purchase
price described above, an amount equal to the accrued unpaid interest on the tender offer securities
from the last interest payment date (inclusive) until the date of settlement of the offer (exclusive).

The deadline for submitted tender instructions was 12 March 2013, with acceptances to purchase
securities for a nominal amount of EUR 1,217,650,000.
The objective of the tender offer was to optimise the Bank's funding structure in the wholesale market, as
well as the duration and cost of future debt, and to strengthen its balance sheet, all this in a context of
prudent liquidity management.
15
No other significant events took places between 31 December 2012 and the date of authorisation for
issue of these financial statements other than those mentioned above in these financial statements.
At its meeting on 16 June 2011, the Bank's Board of Directors approved the "Customer Protection
Regulations of Bankia, S.A. and its Group", which was subsequently updated at its meeting of 25 July
2012. Among other aspects, the Regulations stipulate that the Bankia, S.A. Customer Care Service must
handle and resolve any complaints or claims submitted by those in receipt of financial services from all
BFA Group finance companies – one of which is the Bank – covered by the scope of the service (Bankia,
S.A. and Group entities subject to Order ECO/734/2004 of 11 March governing Customer Care
Departments and Services and Customer Ombudsmen of Financial Institutions).
Pursuant to Order ECO/734/2004 of 11 March governing Customer Care Departments and Services and
Customer Ombudsmen of Financial Institutions, the following BFA Group entities are subject to the
obligations and duties required by the Order in this connection, with claim procedures and solutions
centralised through the Bankia, S.A. Customer Care Service:
Company
Bankia, S.A.
Banco Financiero y de Ahorros, S.A.U.
Bankia Fondos, S.G.I.I.C., S.A.
Bankia Banca Privada, S.A.
Bancofar, S.A.
Bankia Bolsa, S.V., S.A.
Caja de Madrid de Pensiones, S.A. E.G.F.P.
Finanmadrid, S.A.U., E.F.C.
Madrid Leasing Corporación, S.A.U., E.F.C.
Bankia Banca Privada Gestión S.G.I.I.C., S.A.
Laietana Generales, Compañía de Seguros de la Caja de Ahorros Laietana, S.A.U.
Laietana Vida, Compañía de Seguros de la Caja de Ahorros Laietana, S.A.U.
Segurcaja, S.A., Correduría de Seguros
The Bank fulfils these obligations and duties in accordance with Law 44/2002, of 22 November, on
Financial System Reform Measures, and with Ministry of Economy Order ECO/734/2004, of 11 March,
on Customer Care Departments and Services and Customer Ombudsmen of Financial Institutions.
The main data concerning Bank customer claims in 2012 and 2011 are as follows:
Company
No. of claims
received
Bankia, S.A.
28,226
No. of claims
admitted for
processing
27,539
No. of claims
dismissed
687
No. of claims resolved
against the customer
10,153
No. of claims
resolved in favour
of the customer
5,760
31 December 2011
Company
Bankia, S.A.
No. of claims
received
18,061
No. of claims
admitted for
processing
16,154
No. of claims
dismissed
1,907
No. of claims resolved
against the customer
7,663
No. of claims
resolved in favour
of the customer
6,878
16
The breakdown by type of all claims resolved and dismissed in 2012 and 2011 is as follows:
Number of claims
Type of claim
31/12/12
31/12/11
1,510
1,823
190
358
69
329
Current accounts
1,166
1,828
Other deposit transactions
7,726
2,883
Cards, ATMs and POS terminals
Mortgage loans and credits
Other loans and credits
Other lending transactions
1,760
2,644
Other banking products
203
503
Direct debits
374
572
Transfers
341
495
Bills and cheques
173
293
Other collection and payment services
378
739
35
32
396
554
Relations with collective investment institutions
Other investment services
Life insurance
77
96
161
277
48
64
136
285
1,857
2,673
16,600
16,448
Damage insurance
Pension funds
Other insurance
Miscellaneous
Total
Claims pending resolution by Bankia at 31 December 2012 and 2011 are as follows:
Number of claims pending resolution
Company
Bankia, S.A.
31/12/12
31/12/11
13,564
1,938
(1.13) Information on deferred payments to suppliers. Third additional provision. “Disclosure
requirement" set out in Law 15/2010 of 5 July
In compliance with the provisions of Law 15/2010, of 5 July, amending Law 3/2004, of 29 December,
establishing measures to combat late payment on commercial transactions, implemented by Spanish
Accounting and Audit Institute (Spanish “ICAC”) Resolution of 29 December 2010, on the information to
be included in the notes to financial statements with regard to deferred payments to suppliers in
commercial transactions, it is disclosed that:
-
Due to the nature of Bankia's core business (finance), the information in this Note concerning
deferred payments exclusively concerns payments to suppliers for the provision of miscellaneous
services and utilities other than payments to depositors and holders of securities issued by the
Bank, which have in all cases been made in strict compliance with the contractual and statutory
time limits prescribed for each, whether payable on demand or after a given period. Nor is any
information provided concerning payments to suppliers excluded from the scope of this
mandatory disclosure pursuant to the provisions of the aforementioned ICAC Resolution, such as
suppliers of fixed assets that are not considered to be trade creditors.
-
In connection with the information required by Law 15/2010 of 5 July in relation to Bankia's
commercial and service providers, and in due consideration of the third additional provision of the
ICAC Resolution of 29 December 2010, there follows the information required by this regulation,
to the scope defined in the preceding paragraph:
17
Payments made in 2012 and
outstanding at 31 December
2012
Amount
Within the statutory period (2)
Other
Total payments in the year
outstanding at 31 December
2011
%(1)
Amount
%(1)
673,446
100.00%
720,634
100.00%
-
-
-
-
673,446
100.00%
720,634
100.00%
Weighted average late payment days
-
-
-
-
Deferrals beyond the statutory period at 31 December
-
-
-
-
(1) Percentage of total
(2) The statutory payment period is, in each case, that corresponding to the nature of the goods or services received by Bankia
in accordance with the provisions of Law 3/2004, of 29 December, establishing measures to combat late payment in
commercial transactions.
Mortgage-backed securities, marketable and non-marketable, issued by Bankia and outstanding at 31
December 2012 are recognised under "Financial liabilities at amortised cost" on the accompanying
balance sheet (Note 19). It has no mortgage-backed debentures in issue. These mortgage securities are
governed chiefly by Mortgage Market Law 2/1981, of 25 March, as amended by Law 41/2007, of 7
December, and by Royal Decree 716/2009, of 24 April, implementing certain provisions of the
aforementioned Law.
Declarations by the Board of Directors of Bankia, S.A. concerning the existence of policies and
procedures required by applicable regulations
In compliance with the requirements of applicable regulations, Bankia's Board of Directors declares that
this entity has express policies and procedures in relation to its mortgage market business, and that the
Board of Directors is responsible for compliance with mortgage market regulations applicable to this
business. These policies and procedures include, inter alia, (i) the criteria applied concerning the
relationship that must exist between the amount of the loan and the appraisal value of the mortgaged
property, and the influence of the existence of other additional collateral and the criteria applied in the
selection of the appraisers; (ii) the relationship between the debt and the income of the borrower and the
existence of procedures aimed at assuring the information supplied by the borrower and the borrower's
solvency; (iii) the prevention of imbalances between flows from the hedging portfolio and those arising
from making the payments owed on the securities.
Regarding mortgage market laws and regulations, Bankia has in place suitable mortgage risk policies
and procedures in the two major areas – assets and liabilities – to monitor and quantify the mortgage
portfolio and the related borrowing limits.
In terms of assets, mortgage risk exposure policy takes the form of multilevel decision-making in the
Bank by means of a system of authorities and delegated powers.
Credit risk policies were approved by Bankia's Board of Directors on 24 March 2011 to stabilise the
general approval criteria, including specific criteria by segments, such as portfolios associated with the
mortgage market.
General approval criteria include those associated with borrower risk, mainly the ability of the borrower to
repay, with no reliance on guarantors or assets delivered as collateral, which are considered as
alternative methods of collection.
Consideration is also given to criteria associated with the transaction, mainly the suitability of financing in
accordance with the customer's risk profile and adaptation of the product to the intended purpose.
Specific policies for the mortgage portfolio establish considerations concerning the appraisal value
associated with the loan as a cut-off point for the approval proposal.
Risk management of this portfolio is based on a mandatory scoring methodology approved by the
Supervisor, with specific monitoring of the cut-off points associated with the decision-making structure.
Other basic criteria are the maximum timelines of the transactions and the type of products sold by the
Bank.
18
The guidelines laid out in the credit risk policies acknowledge property-based collateral subject to certain
requirements, such as a first-charge requirement, and compliance with measurement criteria in
accordance with the stipulations of prevailing regulations.
Any imbalance between mortgage portfolio flows and issued securities is managed by a regular review of
key portfolio parameters followed by a report to credit rating agencies for the purpose of monitoring
issued securities.
IT systems are in place to record, monitor and quantify these elements and to assess the degree of
compliance with mortgage market requirements for the purposes of portfolio eligibility for covering the
Bank's related borrowings.
In terms of liabilities, in line with its financing strategy in place at each given time in the light of the
outstanding mortgage portfolio, the Bank makes mortgage-backed security issuance decisions on the
basis of records that enable it to keep its issued securities within the bounds of eligibility for covering
borrowings in compliance with mortgage market laws and regulations.
Disclosures on the security and privileges enjoyed by holders of mortgage-backed instruments
issued by Bankia
Pursuant to current legislation, the principal and interest of the mortgage-backed bonds issued by Bankia
are specially secured (entry in the Property Register is not required) by mortgages on all the mortgagebacked bonds that are registered in Bankia's name at any time, without prejudice to its unlimited liability.
The mortgage-backed bonds entitle the holders not only to the aforementioned guaranteed financial claim
but also to claim payment from the issuer after maturity, and confer on the holders the status of special
preferential creditors vis-à-vis all other creditors in relation to all the mortgage loans and credits
registered in the issuer’s name.
In the event of insolvency, the holders of these bonds will enjoy the special privilege established in Article
90(1)(1) of Insolvency Law 22/2003 of 9 July. Without prejudice to the foregoing, in accordance with
Article 84(2)(7) of Insolvency Law 22/2003, during the solvency proceedings the payments relating to the
repayment of the principal and interest of the mortgage-backed securities issued and outstanding at the
date of the insolvency filing will be settled, as preferred claims, up to the amount of the income received
by the insolvent party from the mortgage loans and credits and, where appropriate, from the replacement
assets backing the securities and from the cash flows generated by the financial instruments associated
with the issues.
If, due to a timing mismatch, the income received by the insolvent party is insufficient to meet the
payments described in the preceding paragraph, the administrative receivers must settle them by
realising the replacement assets, if any, identified to cover the issue and, if this is not sufficient, they must
obtain financing to meet the mandated payments to the holders of the mortgage-backed securities, and
the finance provider must be subrogated to the position of the security-holders.
In the event that the measure indicated in Article 155(3) of Insolvency Law 22/2003 is required, the
payments to all holders of the mortgage-backed bonds issued would be made on a pro rata basis,
irrespective of the issue dates of the bonds.
Disclosures on mortgage market security issues
Note 19 discloses the outstanding balances of non-marketable (one-off) mortgage-backed securities
issued by Bankia. In addition, Appendix IV individually itemises the outstanding balances of marketable
mortgage-backed securities issued by Bankia, with their maturities, currencies and reference rates.
The following table itemises the aggregate nominal value of marketable and non-marketable mortgagebacked securities outstanding at 31 December 2012 and 2011 issued by Bankia, regardless of whether
or not they are recognised as liabilities of the Bank (in the latter case, due to the fact that they were not
placed with third parties or because they were repurchased by Bankia), based on their residual maturity
period, with a distinction made, in the case of those recognised by Bankia as debt securities, between
those issued through a public offering and with no public offering, along with the aggregate nominal
values of mortgage participation certificates and mortgage transfer certificates issued by Bankia and
outstanding at 31 December 2012 and 2011, with their average residual maturity period.
19
NOMINAL VALUE OF MORTGAGE-BACKED SECURITIES
31/12/12
31/12/11
Average residual
maturity period
Nominal value
(months)
Nominal value
Average
residual
maturity period
(months)
1. Mortgage-backed securities issued
48,453,828
69
54,169,050
71
Of which: not recognised on the liability side of the balance sheet
16,253,800
65
15,378,000
62
1.1 Debt securities. Issued through a public offering (1)
23,010,000
73
24,285,550
80
Residual maturity up to one year
2,600,000
3
1,455,000
2
Residual maturity over one year but not more than two years
3,850,000
21
2,524,000
15
Residual maturity over two years but not more than three years
2,250,000
35
3,850,000
33
Residual maturity over three years but not more than five years
5,250,000
44
7,500,000
53
Residual maturity over five years but not more than ten years
5,060,000
84
3,560,000
84
Residual maturity over ten years
4,000,000
215
5,396,550
198
14,789,050
58
14,799,500
53
285,000
3
1,131,000
2
650,000
16
1,861,000
15
-
3,150,000
27
1.2 Debt securities. Other issues (1)
-
8,644,050
52
3,144,050
59
5,100,000
71
5,300,000
79
110,000
309
213,450
308
10,654,778
77
15,084,000
73
1.3 Deposits (2)
1,266,613
8
1,229,222
9
1,455,415
19
2,416,613
17
1,276,736
32
1,605,464
30
2,092,222
47
3,453,911
49
1,996,395
85
3,655,799
83
2,567,397
187
2,722,991
195
10,254
14
11,733
18,840,508
24
21,248,746
2. Mortgage participation certificates issued
3. Mortgage transfer certificates issued
-
(1)
These securities are recognised under "Financial liabilities at amortised cost - Marketable debt securities" in the
accompanying balance sheet at 31 December 2012 and 2011 (see Note 19).
(2)
These securities are recognised under "Financial liabilities at amortised cost - Deposits from credit institutions" and
"Financial liabilities at amortised cost - Customer deposits" in the accompanying balance sheet at 31 December 2012
and 2011.
20
The nominal value at 31 December 2012 and 2011 of the amounts available (committed amounts not
drawn down) of all mortgage loans and credits, with a distinction made between those potentially eligible
and those that are not eligible, is shown in the table below:
Undrawn balances (nominal value) (2)
Mortgage loans that back the issuance of mortgage-backed securities (1)
Of which:
Potentially eligible (3)
Not eligible
31/12/12
31/12/11
878,962
4,365,549
681,443
197,519
2,828,478
1,537,071
(1) At 31 December 2012, Bankia had not issued any mortgage bonds.
(2) Committed amounts (limit) less amounts drawn down on all loans with mortgage collateral, irrespective of the
percentage of total risk on the amount of the last appraisal (Loan to Value), not transferred to third parties or relating to
financing received. Also includes balances that are only delivered to developers when the dwellings are sold.
(3) Loans potentially eligible for issuance of mortgage-backed securities under Article 3 of Royal Decree 716/2009.
With regard to lending operations, the table below shows the breakdown at 31 December 2012 and 2011
of the nominal value of mortgage loans and credits that secure the issue of mortgage-backed securities
issued by Bankia (as already mentioned, as at the reporting date Bankia had no mortgage bonds in
issue), indicating the total eligible loans and credits, without regard to the limits under Article 12 of Royal
Decree 716/2009 of 24 April, and those that are eligible which, pursuant to the criteria of the
aforementioned Article 12 of Royal Decree 716/2009, are eligible for issuance of mortgage securities.
This amount is presented, as required by applicable regulations, as the difference between the nominal
value of the entire portfolio of loans and credits guaranteed by mortgages registered in favour of Bankia
and pending collection (including, where applicable, those acquired through mortgage participation
certificates and mortgage transfer certificates), even if they have been derecognised from the balance
sheet, irrespective of the proportion of the risk of the loan to the last available appraisal for purposes of
the mortgage market, less the mortgage loans and credits transferred through mortgage participation
certificates or mortgage transfer certificates, regardless of whether or not they have been derecognised
from the balance sheet, and those designated as security for financing received (for the mortgage loans
and credits transferred, the amount recognised as assets on the balance sheet is also stated):
Nominal value
31/12/12
31/12/11
104,336,650
136,281,722
690,246
1,184,683
10,254
11,733
19,256,962
21,351,830
Of which: loans maintained on the balance sheet
18,840,508
21,248,746
-
-
5. Loans that back the issue of mortgage-backed securities (1-2-3-4)
84,389,442
113,745,209
5.1 Loans not eligible
21,162,196
36,509,104
5.1.1 Loans that meet the requirements to be eligible except for the limit established in Article 5.1 of RD 716/2009
10,476,620
15,593,764
5.1.2 Other
10,685,576
20,915,340
5.2 Eligible loans
63,227,246
77,236,105
1. Total loans
4. Mortgage loans pledged as security for financing received
5.2.1 Ineligible amounts (1)
5.2.2 Eligible amounts (loans eligible to cover mortgage-backed security issues)
239,589
1,670,416
62,987,657
75,565,689
(1) Amount of the eligible loans which, pursuant to the criteria laid down in Article 12 of Royal Decree 716/2009, are not eligible to
cover issuance of mortgage bonds and mortgage-backed securities.
21
The reconciliation of eligible loans to mortgage-backed securities issued, along with issuance capacity
and percentage of overcollateralization, is as follows:
Nominal value
31/12/12
31/12/11
Mortgage loans and credits which, pursuant to the criteria laid down in Article 12
of RD 716/2009, are eligible to cover issuance of mortgage-backed securities.
62,987,657
75,565,689
Issue limit = 80% of eligible mortgage loans and credits
50,390,126
60,452,551
Mortgage-backed securities issued
48,453,828
54,169,050
1,936,298
6,283,501
Mortgage-backed securities issuance capacity (1)
Memorandum item:
Percentage of overcollateralization of the portfolio
174%
210%
Percentage of overcollateralization of the eligible portfolio
130%
139%
(1) At 31 December 2012, EUR 16,253,800 thousand of mortgage-backed securities remained on the balance sheet. Therefore, the issuance
capacity would be EUR 18,190,098 thousand.
The table below shows the detail at 31 December 2012 and 2011 of the nominal value of the loans and
credits that back mortgage-backed securities issued by Bankia and of those loans and credits that are
eligible, without taking into consideration the restrictions on their eligibility established in Article 12 of
Royal Decree 716/2009, based on (i) whether they arose from Bankia or from creditor subrogations and
other cases; (ii) if they are denominated in euros or in other currencies; (iii) if they have a normal payment
situation and other cases; (iv) their average residual maturity; (v) if the interest rate is fixed, floating or
mixed; (vi) if the transactions are aimed at legal entities or individuals that are to use the loan proceeds
for the purpose of their business activity (with a disclosure of the portion related to property development)
and transactions aimed at households; (vii) if the guarantee consists of assets/completed buildings (with
a distinction made between those used for residential, commercial and other purposes), assets/buildings
under construction (with a disclosure similar to that of the finished buildings) or land (with a distinction
made between developed land and other land), indicating the transactions that are secured by
government-subsidised housing, even that under development:
22
Loans that back mortgage-backed
securities
Total
Of which: eligible loans
31/12/12
31/12/11
31/12/12
1. Origin of operations
84,389,442
113,745,209
63,227,246
77,236,105
1.1 Originated by Bankia
78,845,086
104,446,728
58,087,661
70,056,704
1.2. Subrogated to other entities
1,145,534
1,274,640
1,104,563
1,234,563
1.3 Other
4,398,822
8,023,841
4,035,022
5,944,838
2. Currency
84,389,442
113,745,209
63,227,246
77,236,105
2.1 Euro
83,690,231
113,261,100
63,227,246
77,236,105
699,211
484,109
-
-
3. Payment situation
84,389,442
113,745,209
63,227,246
77,236,105
3.1 Normal payment situation
73,277,691
98,871,101
59,897,475
73,339,020
3.2 Other situations
11,111,751
14,874,108
3,329,771
3,897,085
4. Average residual maturity
84,389,442
113,745,209
63,227,246
77,236,105
4.1 Up to ten years
12,515,225
27,237,052
6,653,905
11,352,470
4.2 More than ten years and up to 20 years
23,599,166
27,826,454
19,344,522
22,206,597
4.3 More than 20 years and up to 30 years
29,818,777
38,331,355
24,679,782
29,981,337
4.4 More than 30 years
18,456,274
20,350,348
12,549,037
13,695,701
5. Interest rates
84,389,442
113,745,209
63,227,246
77,236,105
2.2 Other currencies
5.1 Fixed
31/12/11
2,004,067
3,143,476
1,195,342
963,426
73,849,402
103,630,232
55,376,208
70,689,393
5.3 Mixed
8,535,973
6,971,501
6,655,696
5,583,286
6. Owners
84,389,442
113,745,209
63,227,246
77,236,105
6.1 Legal entities and natural person entrepreneurs
29,649,745
56,692,178
17,189,042
29,248,814
4,463,106
19,901,593
2,213,774
9,493,893
6.2 Other individuals and non-profit institutions serving households (NPISH)
54,739,697
57,053,031
46,038,204
47,987,291
7. Type of collateral
84,389,442
113,745,209
63,227,246
77,236,105
7.1 Assets/completed buildings
82,789,860
92,389,853
62,740,288
67,889,175
7.1.1 Residential
66,406,464
74,039,769
56,379,583
61,137,730
2,392,562
3,774,211
1,365,051
2,479,135
5.2 Floating
Of which: property developments
Of which: government-subsidised housing
7.1.2 Commercial
413,308
5,241,756
246,787
2,706,972
15,970,088
13,108,328
6,113,918
4,044,473
7.2 Assets/buildings under construction
548,225
12,993,289
406,349
8,343,581
7.2.1 Residential
7.1.3 Other
459,292
12,282,888
378,733
7,934,346
24,588
1,233
24,133
1,153
7.2.2 Commercial
20,127
256,823
13,364
96,249
7.2.3 Other
68,806
453,578
14,252
312,986
7.3 Land
1,051,357
8,362,067
80,609
1,003,349
7.3.1 Developed
109,653
5,156,927
46,975
782,168
7.3.2 Other
941,704
3,205,140
33,634
221,181
23
The nominal value of eligible mortgage loans and credits at 31 December 2012 and 2011, broken down
by the ratios of the amount of the transactions to the last available appraisal of the mortgaged assets
(Loan to Value), is shown in the table below:
31 December 2012
Risk in relation to the last available appraisal for the mortgage market (Loan to
Value)
More than
60% and
less than or
equal to
80%
Less than
or equal to
40%
More than
40% and
less than
60%
Loans eligible for issuance of mortgagebacked securities and mortgage bonds
14,490,881
21,423,112
79,304
27,157,258
76,691
63,227,246
Housing
11,350,885
18,173,482
-
27,157,258
76,691
56,758,316
3,139,996
3,249,630
79,304
-
-
6,468,930
Other assets
More than
60%
More than
80%
Total
31 December 2011
Risk in relation to the last available appraisal for the mortgage market (Loan to
Value)
More than
60% and
less than or
equal to
80%
Less than
or equal to
40%
More than
40% and
less than
60%
Loans eligible for issuance of mortgagebacked securities and mortgage bonds
17,595,455
25,151,122
772,522
33,373,102
343,904
77,236,105
Housing
14,250,761
21,104,308
-
33,373,102
343,904
69,072,075
3,344,694
4,046,814
772,522
-
-
8,164,030
Other assets
More than
60%
More than
80%
Total
Finally, at 31 December 2012 and 2011 there were no replacement assets backing the Bank's
mortgaged-backed issues.
(1.15) Segment reporting and distribution of revenue from ordinary Bank activities, by categories
of activities and geographic markets
The itemised segments on which the information in these financial statements is presented at 31
December 2012 and 2011 refer to the following business areas:
-
Personal Banking
Business Banking
Corporate Centre
Personal Banking includes retail banking with legal and natural persons (with annual income of less than
EUR 6 million), distributed through a large multi-channel network in Spain and operating a customercentric business model.
Business Banking targets legal entities with annual income in excess of EUR 6 million. Other customers,
legal entities or self-employed professionals with income below this figure fall into the Personal Banking
category.
Finally, the Corporate Centre deals with any areas other than those already mentioned, including the
Capital Markets, Private Banking, Asset Management and Bancassurance, and Investees areas.
24
Geographical segment reporting regarding interest and similar income for the years ended 31 December
2012 and 2011 is as follows:
MARKET
Domestic market
Distribution of interest and similar income by
geographic areas
2012
2011
7,181,554
7,583,937
78,690
96,637
European Union
43,331
49,862
Other OECD countries
35,359
46,775
Export:
Other countries
Total
-
-
7,260,244
7,680,574
The table below shows the Bank's ordinary income by business segments for the years ended 31
December 2012 and 2011:
Total ordinary income (1)
SEGMENT
2012
2011 (2)
Personal Banking
4,514,554
4,923,002
Business Banking
1,579,999
1,718,535
Corporate Centre
2,739,216
2,717,433
Total
8,833,769
9,358,970
(1)
In the table above, "Ordinary income" is understood as the balances under "Interest and similar income", "Return on equity
instruments", "Fee and commission income", "Gains or losses on financial assets and liabilities (net)" and "Other operating income"
in the accompanying income statement for the years ended 31 December 2012 and 2011, which can be regarded as comparable to
the Bank's revenue from ordinary business.
(2)
Minor inter-segment adjustments were made to the 2011 figures to make them consistent with the criteria applied in 2012.
The table below shows information by segment in relation to "Profit before tax" in the income statement
for the years ended 31 December 2012 and 2011:
PROFIT BY SEGMENT
2012
2011 (2)
Personal Banking
1,585,060
1,222,457
Business Banking
749,973
719,395
Corporate Centre
(682,128)
(321,932)
-
-
1,652,905
1,619,920
(22,494,098)
(4,414,705)
(703,995)
(1,575,074)
(21,545,188)
(4,369,859)
Adjustments and eliminations between segments
Adjusted net operating income (1)
(+/-) Impairment losses and provisions
(+/-) Other income (loss)
PROFIT/(LOSS) BEFORE TAX
(1)
Earnings from operating activity for the years ended 31 December 2012 and 2011, excluding impairment losses and provisions on
the income statement.
(2)
25
As indicated in Note 1.2, on 28 November 2012 the BFA–Bankia Group received approval by the
European Commission, the Bank of Spain and the FROB for the Bank's 2012-2017 Restructuring Plan.
Additional provision nine of Law 9/2012, of 14 November, on the restructuring and resolution of credit
institutions, which transposes into law Royal Decree-Law 24/2012, of 31 August, on the restructuring and
resolution of credit institutions, requires credit institutions that at the date of entry into force of said Royal
Decree-Law are majority owned by the FROB, which is the case of the BFA–Bankia Group (see Note 1)
to transfer certain assets to the Society of Asset Management from the Banking Restructuring (SAREB).
The third section of Chapter IV of Royal Decree 1559/2012, of 15 November, establishes the set of
assets to be transferred to the SAREB, which can be summarised as follows:
a) Real estate assets appearing in the separate or consolidated balance sheet at 30 June 2012
foreclosed or acquired as payment of debts with a net carrying amount (after application of the
coverage required in prevailing legislation) that exceeds EUR 100,000.
b) Credit rights held on the balance sheet at 30 June 2012 or arising from refinancing at a
subsequent date with a net carrying amount (after application of the coverage required in
prevailing legislation) that exceeds EUR 250,000.
1. Loans or credits granted to finance the acquisition of land for real estate development or to
finance the construction and development of real estate properties in Spain in progress or
finished, regardless of their age on the balance sheet and their accounting classification,
except for suspended assets recovered.
2. Participating loans granted to real estate or related companies regardless of their age on the
balance sheet and accounting classification.
3. Other loans and credits granted to the holders in section 1 above when the FROB considers
they should be transferred to the SAREB.
c) Properties and credit rights meeting the requirements above from real estate or related
companies in which the entity exercises control.
d) Equity instruments of real estate or related companies which, directly or indirectly, grant the entity
or any group entity joint control or significant influence when the FROB considers they should be
transferred because (i) the company or companies hold a large volume of assets described in a);
or (ii) they represent the vehicle through which the entity carries out its construction/property
development activity in Spain.
e) Lastly, the FROB may impose mandatory transfer of other loans or assets not included above
that are particularly impaired or where their continued recognition on the balance sheet would be
detrimental to the viability of the entity.
Therefore, excluded from the scope of transfer, in general, are assets of amounts below the
aforementioned thresholds, those for which full provision is made at the date of transfer and businesses
with an underlying activity located abroad.
The assets indicated in d) above will be analysed and, as appropriate, transferred to the SAREB in the
first half of 2013.
The transfer price of these assets, to be determined by the Bank of Spain, was based on the real
economic value of the assets calculated using conventional valuation techniques with any additional
haircuts or valuation adjustments required of the credit institution for each asset class, and in no case
less than the required coverage as provided for in Bank of Spain circulars on accounting of credit
institutions (although it may be greater) or the amount that could be applicable in accordance with Royal
Decree-Law 2/2012, of 3 February, on the reorganisation of the financial sector, Royal Decree-Law
18/2012, of 11 May, on the reorganisation and sale of real estate assets in the financial sector and Law
8/2012, of 30 October, on the write-down and sale of real estate assets in the financial sector.
The consideration received for the assets transferred consisted of debt securities issued by the SAREB
and backed by the Spanish State, considered low-risk, highly liquid assets for the purposes of Law
2/1981 (the Mortgage Market Law).
In November and December 2012, under Bank of Spain and FROB supervision, the scope of assets
eligible for transfer to the SAREB was determined. On 21 December 2012, the transfer by the BFA Group
to the SAREB of a first set of assets related to categories a), b) and c) indicated above was executed in a
26
notarial instrument. The asset transfer agreement was entered into between the SAREB, BFA and
Bankia with effect from 31 December 2012.
The asset transfer price for the BFA Group was set at EUR 22,317 million, calculated applying the
aforementioned criteria to the estimated carrying amount of the assets at 31 December 2012 (the date of
transfer) based on the information provided by the entities.
The price was paid through the delivery of debt securities issued by the SAREB and guaranteed by the
Spanish State in amounts of: EUR 2,850 million to Banco Financiero y de Ahorros, S.A.U. in proportion to
the assets owned by BFA and its subsidiaries, and EUR 19,467 million to Bankia in proportion to the
assets owned by Bankia and its subsidiaries.
The securities received by Bankia and recognised under "Held-to-maturity investments" in the
accompanying balance sheet at 31 December 2012 (see Note 12) were as follows:
(Thousands of euros and %)
Amount
Maturity
Interest rate
5,840,100
31/12/13
2.37%
8,760,300
31/12/14
2.74%
4,866,800
31/12/15
3.14%
The securities grant an annual rollover option to the issuer, although the estimated value of the option
does not result in any material differences between the fair value of the securities and their nominal
amount.
The amount received for assets transferred by Bankia’s subsidiaries, EUR 1,580,430 thousand at 31
December 2012 (see Note 19), was recognised under "Financial liabilities at amortised cost - Other
financial liabilities".
The table below provides a breakdown of Bank's assets transferred, distinguishing between the gross
amount and the discount applied, by nature of the transferred assets:
Gross
amount
Discount
Transfer price
Financing transactions
29,664,844
(13,361,262)
16,303,582
Real estate assets
2,749,897
(1,166,513)
1,583,384
ITEM
Adjustments may be made to the transfer price, as derived from the demarcation of the scope of assets
and price setting, although the directors estimate that any such adjustments would not imply a material
change.
The Bank, BFA and the SAREB have signed an asset management and administration agreement under
which Bankia and BFA will oversee the administration and management of the transferred assets.
27
A summary of the main accounting policies and measurement bases applied to prepare Bankia's financial
statements for the year ended 31 December 2012 is as follows:
(2.1) BFA-Bankia Group Restructuring Plan
The Restructuring Plan includes, inter alia, the start-up of a disposal plan for non-strategic holdings.
Following the roll-out of the disposal plan and in accordance with applicable regulations (see Note 2.22),
the Bank reclassified certain equity investments to "Non-current assets held for sale". The classification,
recognition and measurement criteria applied by the Bank in these separate financial statements based
on the type of investments put up for sale were as follows:
-
Investments in group companies, jointly-controlled entities and associates: pursuant to
prevailing legislation, investments in group, jointly-controlled entities and associates that meet the
criteria for classification under "Non-current assets held for sale" are presented and measured as
"Non-current assets held for sale", that is, at the lower of fair value less costs to sell and carrying
amount at the classification date in accordance with applicable standards (see Note 2.22). The gains
and losses arising on their disposal, and impairment losses and recovery, where appropriate, are
recognised under "Gains/(losses) on non-current assets held for sale not classified as discontinued
operations". The remaining income and expenses are classified under the related income statement
items according to their nature.
Note 14 details the amounts at which the investments are recognised and the related impairment.
Appendix III contains significant information on these entities.
-
Available-for-sale financial assets: as indicated in Note 2.22, as these are financial assets, they
are not measured using the general criteria for non-current assets held for sale, but rather the
measurement criteria for financial assets (see Note 2.5). Previously recognises losses in "Equity Valuation adjustments" are considered realised and recognised in the income statement at the date
of classification. Remaining valuation adjustments recognised in equity are classified, as appropriate,
under "Valuation adjustments - Non-current assets held for sale”.
As a result of the Restructuring Plan described previously, all the investments recognised under
"Available-for-sale financial assets - Equity instruments" were reclassified to “Non-current assets held
for sale" on the accompanying balance sheet at 31 December 2012. Note 14 to the financial
statements details the amounts at which the investments are recognised and the related impairment.
(2.2) Subsidiaries
“Subsidiaries” are defined as entities over which the Bank has the capacity to exercise control; control is,
in general but not exclusively, presumed to exist when the parent owns directly or indirectly half or more
of the voting rights of the investee or, even if this percentage is lower or zero, when, for example, there
are other circumstances or agreements that give the Bank control.
In accordance with the provisions of Bank of Spain Circular 4/2004, control is the power to govern the
financial and operating policies of an entity so as to obtain benefits from its operations.
Appendices I and III contain significant information on Bankia's subsidiaries.
28
The following table provides a breakdown of investees in which Bankia holds a direct or indirect stake
and which, despite ownership of more than half their capital or voting rights, are not under its control
since joint management agreements exist and thus have not been considered as subsidiaries for the
purposes of these financial statements:
Company
Ownership interest (direct + indirect)
Ged See Opportunity I, S.A.
52.17%
Montis Locare, S.L.
52.27%
Investments in Group entities are shown in these financial statements under the balance sheet caption
"Investments - Group entities", and are measured at cost less any impairment losses (see Note 15),
except for those classified as "Non-current assets held for sale", which are recognised and measured as
explained in Note 2.1.
Dividends accrued in the year on these investments are recognised under “Return on equity instruments”
in the income statement.
At 31 December 2012, there were no major restrictions on the transfer of funds from subsidiaries to the
parent, either as dividends or repayment of loans or advances.
(2.3) Joint ventures
A joint venture is a contractual arrangement whereby two or more entities, called venturers, undertake a
economic activity which is subject to joint control, i.e. the contractually agreed sharing of the power to
govern the financial and operating policies of an entity, or other economic activity, so as to benefit from its
operations, the strategic financial and operating decisions requiring the unanimous consent of all the
venturers.
The assets and liabilities assigned to jointly-controlled operations and the assets controlled jointly with
other venturers are recognised in the balance sheet, classified according to their specific nature.
Investments in entities that are not subsidiaries but which are jointly controlled by two or more unrelated
companies, of which the Group is one (“jointly-controlled entities”), are also considered “joint ventures”.
Investments in jointly-controlled entities are shown in these financial statements under the balance sheet
caption "Investments - Jointly-controlled entities" and are measured at cost less any impairment losses
(see Note 15), except for those classified as "Non-current assets held for sale", which are recognised and
measured as explained in Note 2.1.
Appendices II and III contain significant information on these companies.
(2.4) Associates
“Associates” are entities over which the Bank has significant influence, but not control or joint control.
This influence is usually evidenced by a direct or indirect holding of 20% or more of the investee’s voting
rights.
Investments in associates are shown under "Investments - Associates" on the balance sheet, and are
measured at cost less any impairment losses (see Note 15), except for those classified as "Non-current
assets held for sale", which are recognised and measured as explained in Note 2.1.
At 31 December 2012, all associates were classified under "Non-current assets held for sale". Appendix
III provides relevant information on these companies. The Appendix also lists entities considered
associates in which Bankia holds less than 20% of share capital, as it considers that it has significant
influence over their financial and operating policies.
The table below shows details of these entities considered to be associates by Bankia, even though it
does not have a direct or indirect holding of 20% of their capital or voting rights:
29
Ownership interest
Investee
Concesiones Aereoportuarias S.A.
15.00%
Deoleo, S.A.
18.37%
Grupo Inmobiliario Ferrocarril, S.A.
19.40%
Haciendas Marqués de la Concordia, S.A.
16.16%
International Consolidated Airlines Group, S.A. (IAG)
12.09%
Inversiones Ahorro 2000, S.A.
20.00%
NH Hoteles, S.A.
10.04%
Numzaan, S.L.
14.13%
Promociones Parcela H1 Dominicana, S.L.
19.79%
Sacyr Vallehermoso, S.A.
1.92%
The following is a list of companies in which Bankia holds a direct or indirect interest exceeding 20% of
capital but that are not treated as associates by Bankia at 31 December 2012, since it is considered that
the Bank does not exercise significant influence over them, given the specific features of the investments:
either Bankia has no significant representation on those companies’ governing bodies, or has no effective
ability to influence their strategic and operating policies:
Investee
Ownership interest
Promociones y Gestiones Patrimoniales 1997, S.L.
48.66%
Desafío de Inversiones, SICAV, S.A.
42.70%
Naviera Koala, A.I.E.
34.78%
Desarrollo y Tecnología del Automóvil, S.A. (in liquidation)
33.41%
Vinos Y Bodegas de Pardilla, S.L.
30.00%
Compania de Terminal Multimodal, S.L.
25.04%
Aviones Carraixet Crj-200 II, A.I.E.
25.00%
Aviones Turia Crj-200 I, A.I.E.
25.00%
Aviones Portacoli Crj-200 III, A.I.E.
24.90%
The aggregate of investments in such companies was not a significant item in Bankia's financial
statements for the year ended 31 December 2012.
(2.5) Financial instruments: initial recognition, derecognition of financial instruments, fair value
and amortised cost of financial instruments, classification and measurement and reclassification
among categories
(2.5.1) Initial recognition of financial instruments
Financial instruments are initially recognised on the balance sheet when Bankia becomes a party to the
contract in accordance with the provisions thereof. Specifically, debt instruments, such as loans and cash
deposits, are recognised from the date on which the legal right to receive or the legal obligation to pay
cash arises. Derivative financial instruments are generally recognised from the trade date.
A regular way purchase or sale of financial assets, defined as one in which the parties' reciprocal
obligations must be discharged within a time frame established by regulation or convention in the
marketplace and that may not be settled net, such as stock market and forward currency purchase and
sale contracts, is recognised on the date from which the rewards, risks, rights and duties attaching to all
owners are for the purchaser, which, depending on the type of financial asset purchased or sold, may be
the trade date or the settlement or delivery date. In particular, transactions performed in the spot currency
market are recognised on the settlement date; equity instruments traded in Spanish secondary securities
markets are recognised on the trade date, and debt instruments traded in these markets are recognised
on the settlement date.
(2.5.2) Derecognition of financial instruments
A financial asset is derecognised when:

The contractual rights to the cash flows from the financial asset expire; or
30

The financial asset is transferred and substantially all its risks and rewards or, although these are
not substantially transferred or retained, it transfers control over the financial asset (see Note
2.10).
Financial liabilities are derecognised from the balance sheet when the obligations are extinguished or
when they are repurchased by Bankia with the intention either to resell them or to cancel them.
(2.5.3) Fair value and amortised cost of financial instruments
The fair value of a financial instrument on a specific date is the amount at which it could be delivered or
settled on that date between knowledgeable, willing parties in an arm’s length transaction. The most
objective and common reference for the fair value of a financial instrument is the price that would be paid
for it on an organised, transparent and deep market (“quoted price” or “market price”).
Bankia measures daily all the positions that must be recognised at fair value based either on available
market prices for the same instrument, or on valuation techniques supported by observable market inputs
or, if appropriate, on the best available information.
Note 24 provides information on the fair value of Bankia's main assets and liabilities at 31 December
2012 and 2011.
Amortised cost is understood to be the acquisition cost of a financial asset or liability plus or minus, as
appropriate, the principal repayments and interest payments and the cumulative amortisation (as
reflected in the income statement using the effective interest method) of any difference between the initial
cost and the maturity amount of the financial instruments. In the case of financial assets, amortised cost
furthermore includes any reductions for impairment or uncollectibility.
The effective interest rate is the discount rate that exactly matches the carrying amount of a financial
instrument to the present value of all its estimated cash flows of all kinds over its remaining life, but
disregarding future credit losses. For fixed rate financial instruments, the effective interest rate coincides
with the contractual interest rate established on the acquisition date adjusted, where applicable, for the
fees and transaction costs that, pursuant to Bank of Spain Circular 4/2004, must be included in the
calculation of the effective interest rate. In the case of floating rate financial instruments, the effective
interest rate is determined in a similar fashion to fixed rate transactions and is recalculated on the date of
every revision of the contractual interest rate of the transaction, taking into account any changes in the
future cash flows.
(2.5.4) Classification and measurement of financial assets and liabilities
Financial instruments are classified on the balance sheet as follows:
-
Financial assets and liabilities at fair value through profit or loss: this category includes
financial instruments classified as held for trading and other financial assets and liabilities classified
as at fair value through profit or loss:

Financial assets held for trading include those acquired with the intention of selling
them in the near term or which are part of a portfolio of identified financial instruments
that are managed together and for which there is evidence of a recent pattern of shortterm profit taking, and derivatives not designated as hedging instruments, including those
separated from hybrid financial instruments pursuant to Bank of Spain Circular 4/2004.

Financial liabilities held for trading include those that have been issued with an
intention to repurchase them in the near term or that form part of a portfolio of identified
financial instruments that are managed together and for which there is evidence of a
recent pattern of short-term profit taking; short positions arising from financial asset sales
under non-optional repurchase agreements or borrowed securities, and derivatives other
than hedging instruments, including those separated from hybrid financial instruments
pursuant to Bank of Spain Circular 4/2004.

Other financial assets at fair value through profit or loss are considered as financial
assets designated as such from initial recognition, the fair value of which may be
determined reliably, which meet one of the following conditions:

In the case of hybrid financial instruments in which the embedded derivative(s)
must be accounted for separately from the host contract, the fair value of the
embedded derivative(s) cannot be estimated reliably.
31


In the case of hybrid financial instruments for which it is compulsory to separate
the embedded derivative(s), the Group has elected to classify the entire hybrid
financial instrument in this category from initial recognition, since the
requirements established by current regulations are met in the sense that the
embedded derivative(s) significantly modify/modifies the cash flows that the host
contract would have had if it had been considered separately from the embedded
derivative(s) and that there is an obligation to separate the embedded
derivative(s) from the host contract for accounting purposes.

When the classification of a financial asset in this category results in more
relevant information, because it eliminates or significantly reduces a
measurement or recognition inconsistency (also referred to as an “accounting
mismatch”) that would otherwise arise from measuring assets or liabilities or
recognising the gains or losses on them on different bases.

relevant information, because a group of financial assets, liabilities or both is
managed and its performance is evaluated on a fair value basis, in accordance
with a documented risk management or investment strategy, and information
about the group is provided on that basis to the Bank’s key management
personnel.
Other financial liabilities at fair value through profit or loss are considered as
financial liabilities designated as such from initial recognition, the fair value of which may
be determined reliably, which meet one of the following conditions:


derivative(s) and that, pursuant to prevailing regulations, there is an obligation to
separate the embedded derivative(s) from the host contract for accounting
purposes.

When the classification of a financial liability in this category results in more

relevant information, because a group of financial liabilities, assets or both is
with a documented risk management or investment strategy and information
about the group is provided on that basis to the Bank’s key management
personnel.
Financial instruments at fair value through profit or loss are initially recognised at their fair value.
They are subsequently measured at their fair value at each reporting date, with any changes
recognised in the income statement under “Gains or losses on financial assets and liabilities (net)",
except for changes in the fair value attributable to income accrued on the financial instrument other
than trading derivatives, which is recognised in the income statement under either “Interest and
similar income”, “Interest expense and similar charges”, or “Return on equity instruments”,
depending on their nature. The accrued returns on debt instruments included in this category are
calculated using the effective interest method.
32
Notwithstanding the above, financial derivatives whose underlying assets are equity instruments
whose fair value cannot be measured reliably and which are settled by delivery of the underlying
are measured in these financial statements at cost.
-
Held-to-maturity investments: this category includes debt securities traded on active markets
with fixed maturities and fixed or determinable cash flows for which the Bank has, from inception
and any subsequent date, both the positive intention and the demonstrated financial ability to hold
to maturity.
Debt securities included in this category are initially measured at fair value adjusted by the amount
of the transaction costs that are directly attributable to the acquisition of the financial asset, which
are recognised in the income statement using the effective interest method as defined in Bank of
Spain Circular 4/2004. Subsequent to acquisition, debt securities included in this category are
measured at amortised cost calculated using the effective interest method.
The interest accrued on these securities, calculated using the effective interest method, is
recognised under “Interest and similar income” in the income statement. Exchange differences on
securities included in this portfolio denominated in currencies other than the euro are recognised
as explained in Note 2.7. Any impairment losses on these securities are recognised as set forth in
Note 2.12.
-
Loans and receivables: this category includes unquoted debt securities, financing granted to third
parties in connection with ordinary lending activities carried out by Bankia and receivables from
purchasers of its goods and the users of its services. This category also includes finance lease
transactions in which Bankia acts as the lessor.
The financial assets included in this category are initially measured at fair value adjusted by the
amount of the fees and transaction costs that are directly attributable to the acquisition of the
financial asset and which, in accordance with the provisions of the regulations applicable, must be
allocated to the income statement by the effective interest method through maturity. Subsequent to
acquisition, assets included in this category are measured at amortised cost.
Assets acquired at a discount are measured at the cash amount paid and the difference between
their repayment value and the amount paid is recognised as finance income using the effective
interest method during the remaining term to maturity.
The Bank generally intends to hold the loans and credits granted by it until their final maturity and,
therefore, they are presented in the balance sheet, subsequent to initial recognition, at their
amortised cost.
The interest accrued on these assets from their initial recognition, calculated using the effective
interest method, is recognised under “Interest and similar income” in the income statement.
Exchange differences on securities included in this portfolio denominated in currencies other than
the euro are recorded as set forth in Note 2.7. Any impairment losses on these assets are
recognised as described in Note 2.12. Debt securities included in fair value hedges are recognised
as explained in Note 2.6.
-
Available-for-sale financial assets: This category includes debt securities not classified as heldto-maturity investments, as loans and receivables or as financial assets at fair value through profit
or loss owned by Bankia and equity instruments owned by Bankia relating to entities other than
subsidiaries, joint ventures or associates that are not classified as at fair value through profit or
loss.
The instruments included in this category are initially measured at fair value adjusted by the
transaction costs that are directly attributable to the acquisition of the financial asset, which are
recognised, through maturity, in the income statement by the effective interest method (as defined
in the current regulations), except for those of financial assets with no fixed maturity, which are
recognised in the income statement when these assets become impaired or are derecognised.
Subsequent to acquisition, financial assets included in this category are measured at fair value.
However, equity instruments whose fair value cannot be determined in a sufficiently objective
manner are measured in these financial statements at cost less any impairment losses calculated
as detailed in Note 2.12.
33
Changes in the fair value of available-for-sale financial assets relating to accrued interest or
dividends since their initial recognition are recognised in “Interest and similar income" (calculated
using the effective interest method) and “Return on equity instruments” in the income statement,
respectively. Any impairment losses on these instruments are recognised as described in Note
2.12. Exchange differences on financial assets denominated in currencies other than the euro are
recognised as explained in Note 2.7. Changes in the fair value of financial assets hedged in fair
value hedges are recognised as explained in Note 2.6.
Other changes in the fair value of available-for-sale financial assets from the acquisition date are
recognised in Bankia's equity under “Valuation adjustments - Available-for-sale financial assets”
until the financial asset is derecognised, at which time the balance recorded under this item is
recognised under “Gains or losses on financial assets and liabilities (net)” in the income statement
or, in the case of equity instruments considered to be strategic investments for Bankia, under
“Gains/(losses) on non-current assets held for sale not classified as discontinued operations”.
-
Financial liabilities at amortised cost: this category includes financial liabilities not included in
any of the preceding categories.
Financial liabilities included in this category are initially measured at fair value adjusted by the
amount of the transaction costs that are directly attributable to the issuance or trading of the
financial liability, which are recognised in the income statement by the effective interest method
defined in Bank of Spain Circular 4/2004 until maturity. Subsequently, these financial liabilities are
measured at amortised cost calculated using the effective interest method defined in Bank of Spain
Circular 4/2004.
The interest accrued on these liabilities since their initial recognition, calculated using the effective
interest method, is recognised under “Interest expenses and similar charges” in the income
statement. Exchange differences on liabilities included in this portfolio denominated in currencies
other than the euro are recognised as explained in Note 2.7. Financial liabilities included in fair
value hedges are recognised as explained in Note 2.6.
Nevertheless, financial instruments that should be considered as non-current assets held for sale in
accordance with Bank of Spain Circular 4/2004 are recognised in the financial statements as explained in
Note 2.22.
(2.5.5) Reclassification of financial instruments between portfolios
Reclassifications between financial instrument portfolios can only be made, where appropriate, as
follows:
a) Except in rare circumstances, set out in d) below, financial instruments classified as “at fair value
through profit or loss” cannot be reclassified into or out of this financial instrument category once
purchased, issued or assumed.
b) If, as a result of a change in intention or financial ability, it is no longer appropriate to classify a
financial asset as held to maturity, it is reclassified into the “available-for-sale financial assets”
category. In this case, the same treatment shall be applied to all the financial instruments
classified as held-to-maturity investments, unless the reclassification is made in any of the
circumstances permitted under the applicable regulations (sales very close to maturity,
substantially all of the financial asset's original principal has been collected, etc.).
In 2012 and 2011, Bankia did not make any significant sale or reclassification of financial assets
classified as held-to-maturity investments.
c) If there is a change in the Bank's intention or financial ability, or if the two-year tainting period
established by the regulations applicable to the sale of financial assets classified in the held-tomaturity investment category has elapsed, the financial assets (debt instruments) included in the
“available-for-sale financial assets” category can be reclassified into the “held-to-maturity
investments” category. In this case, the fair value of these financial instruments on the date of
reclassification becomes their new amortised cost and the difference between this amount and
the redemption value is allocated to the income statement over the remaining life of the
instrument using the effective interest method.
34
No reclassifications of the type described in the preceding paragraph were made by Bankia in
2012 or 2011.
d) A non-derivative financial asset may be reclassified out of the held-for-trading category if it is no
longer held for the purpose of selling or repurchasing it in the near term, provided that one of the
following circumstances occurs:
a. In rare and exceptional circumstances, unless the assets could have been included in
the loans and receivables category. For these purposes, rare and exceptional
circumstances are those arising from a particular event, which is unusual and highly
unlikely to recur in the foreseeable future.
b. When the entity has the intention and financial ability to hold the financial asset for the
foreseeable future or until maturity, provided that the asset had met the definition of
loans and receivables at initial recognition.
In these circumstances, the financial asset is reclassified at its fair value on the day of
reclassification, any gain or loss already recognised in profit or loss is not reversed, and this fair
value becomes its amortised cost. Financial assets thus reclassified cannot under any
circumstances be reclassified again into the held-for-trading category.
No financial assets included in the held-for-trading category were reclassified in 2012 or 2011.
The Bank uses financial derivatives as part of its strategy to reduce its exposure to interest rate, credit,
foreign exchange risk and other risks. When these transactions meet certain requirements stipulated in
Bank of Spain Circular 4/2004, they qualify for hedge accounting.
When the Bank designates a transaction as a hedge, it does so from the initial date of the transactions or
instruments included in the hedge, and the hedging transaction is documented appropriately. The hedge
accounting documentation includes identification of the hedged item(s) and the hedging instrument(s),
the nature of the risk to be hedged and the criteria or methods used by the Bank to assess the
effectiveness of the hedge over its entire life, taking into account the risk to be hedged.
The Bank only applies hedge accounting for hedges that are considered highly effective over their entire
lives. A hedge is considered to be highly effective if, during its expected life, the changes in fair value or
cash flows of the hedged item that are attributable to the risk hedged in the hedging of the financial
instrument(s) are almost completely offset by changes in the fair value or cash flows, as appropriate, of
the hedging instrument(s).
To measure the effectiveness of hedges designated as such, the Bank analyses whether, from the
beginning to the end of the term defined for the hedge, it can expect, prospectively, that the changes in
the fair value or cash flows of the hedged item that are attributable to the hedged risk will be almost fully
offset by changes in the fair value or cash flows, as appropriate, of the hedging instrument and,
retrospectively, that the actual results of the hedge will have been within a range of 80% to 125% of the
results of the hedged item.
Hedging transactions performed by the Bank are classified as follows:
-
Fair value hedges: hedge of the exposure to changes in fair value of financial assets or liabilities
or unrecognised firm commitments, or of an identified portion of such assets, liabilities or firm
commitments, that is attributable to a particular risk, provided that it affects the income statement.
-
Cash flow hedges: hedge of the exposure to variability in cash flows that is attributable to a
particular risk associated with a financial asset or liability or a highly probable forecast
transaction, provided that it could affect the income statement.
-
Hedge of a net investment in foreign operations: hedge of the currency risk on investments in
subsidiaries, associates, joint ventures and branches of the Bank whose activities are based or
conducted in another country or in a functional currency than the euro.
In the specific case of financial instruments designated as hedged items or qualifying for hedge
accounting, gains and losses are recognised as follows:
-
In fair value hedges, the gains or losses arising on both the hedging instruments and the
hedged items (associated with the hedged risk) are recognised directly in the income statement.
35
-
In cash flow hedges, the gains or losses attributable to the portion of the hedging instruments
that qualifies as an effective hedge are recognised temporarily in equity under "Valuation
adjustments - Cash flow hedges". Financial instruments hedged in this type of hedging
transaction are recognised as explained in Note 2.5, with no change made to the recognition
criteria due to their consideration as hedged items.
-
In hedges of net investments in foreign operations, the gains or losses attributable to the
portion of the hedging instruments qualifying as an effective hedge are recognised temporarily in
equity under "Valuation adjustments - Hedges of net investments in foreign operations". Financial
instruments hedged in this type of hedging transaction are recognised as explained in Note 2.5,
with no change made to the recognition criteria due to their consideration as hedged items.
As a general rule, in cash flow hedges, the gains or losses attributable to the effective portion of the
hedging instruments are not recognised in the income statement until the gains or losses on the hedged
item are recognised in the income statement or, if the hedge relates to a highly probable forecast
transaction that will lead to the recognition of a non-financial asset or liability, they will be recognised as
part of the acquisition or issue cost when the asset is acquired or the liability is assumed.
In the case of hedges of net investments in foreign operations, the amounts recognised as valuation
adjustments in equity in accordance with the aforementioned criteria are recognised in the income
statement when they are disposed of or derecognised.
In cash flow hedges and hedges of net investments in foreign operations, the gains or losses on the
ineffective portion of the hedging instruments are recognised directly under “Gains or losses on financial
assets and liabilities (net)” in the income statement.
The Bank discontinues hedge accounting when the hedging instrument expires or is sold, when the
hedge no longer meets the requirements for hedge accounting or it revokes the designation as a hedge.
When, as explained in the preceding paragraph, hedge accounting is discontinued for a fair value hedge,
in the case of hedged items carried at amortised cost, the value adjustments made as a result of the
hedge accounting described above are recognised in the income statement through maturity of the
hedged items, using the effective interest rate recalculated as at the date of discontinuation of hedge
accounting.
If hedge accounting is discontinued for a cash flow hedge or a hedge of a net investment in a foreign
operation, the cumulative gain or loss on the hedging instrument recognised in equity under “Valuation
adjustments” in the balance sheet will continue to be recognised under that heading until the forecast
hedged transaction occurs, when it will be reclassified into the income statement or it will correct the
acquisition cost of the asset or liability to be recorded, if the hedged item is a forecast transaction that
results in the recognition of a non-financial asset or liability.
The Bank enters into hedges on a transaction-by-transaction basis pursuant to the aforementioned
criteria by assessing the hedging instrument and the hedged item on an individual basis and continually
monitoring the effectiveness of each hedge, to ensure that changes in the value of the hedging
instrument and the hedged item offset each other.
The Bank's main hedged positions and the financial hedging instruments used are as follows:
Fair value hedges
– Available-for-sale financial assets:
–
o
Fixed-rate debt securities, whose risk is hedged with interest rate derivatives (basically
swaps). The Bank also hedges certain positions against credit risk with credit derivatives
(basically credit default swaps).
o
Equity instruments, whose market risk is hedged with equity swaps and futures arranged
in active markets.
Loans and receivables:
o
–
Fixed-rate loans, whose risk is hedged with interest rate derivatives (basically swaps).
The Bank also hedges certain positions against credit risk with credit derivatives
Financial liabilities at amortised cost:
o
Long-term fixed-rate deposits and marketable debt securities issued by the Bank, whose
risk is hedged with interest rate derivatives (basically swaps).
36
Cash flow hedges
– Available-for-sale financial assets:
o
–
o
–
Floating-rate debt securities, whose risk is hedged with interest rate derivatives (basically
swaps).
Floating-rate loans, whose risk is hedged with interest rate derivatives (basically swaps).
o
Marketable debt securities issued by the Bank, whose risk is hedged with interest rate
derivatives (basically swaps).
(2.7.1) Functional currency
The Bank’s functional currency is the euro. Consequently, all balances and transactions denominated in
currencies other than the euro are considered to be denominated in “foreign currency”.
The detail, by currency and item, of the equivalent euro value of the main asset and liability balances in
the balance sheet at 31 December 2012 and 2011 denominated in foreign currency is as follows:
31/12/12
ITEM
Assets
31/12/11
Liabilities
Assets
Liabilities
Balances in US dollars
Cash and balances with central banks
103,234
-
43,747
-
Financial assets and liabilities held for trading
976,368
1,043,272
1,055,015
1,111,350
2,827,772
-
3,718,438
-
2,593
-
13,663
-
-
697,675
-
938,418
-
-
24,091
-
3,857
-
3,163
-
Loans and receivables
Investments
Financial liabilities at amortised cost
Available-for-sale financial assets
Held-to-maturity investments
Other
28,264
32,280
38,425
38,195
Subtotal
3,942,088
1,773,227
4,896,542
2,087,963
Balances in pounds sterling
1,043
-
4,322
-
202,407
203,630
222,885
223,176
92,742
-
382,678
92,801
-
48,348
-
2,047
-
3,427
-
Other
992
206
164
238
Subtotal
299,231
252,184
613,476
316,215
612
-
11,447
-
49,056
48,796
45,818
42,227
Balances in other currencies
425,589
-
717,037
2
-
133,095
-
200,273
-
-
2,083
-
Other
29,971
33,544
21,478
18,865
Subtotal
505,228
215,435
797,863
261,367
4,746,547
2,240,846
6,307,881
2,665,545
Total foreign currency balances
37
(2.7.2) Translation of foreign currency balances
Balances in foreign currencies are translated to euros as follows, depending on type of asset:
-
Non-monetary items measured at historical cost are translated to the functional currency at the
exchange rate at the date of acquisition.
-
Non-monetary items measured at fair value are translated to the functional currency at the
exchange rate at the date when the fair value was determined.
-
Monetary items denominated in a foreign currency are translated to euros applying the spot rate at
the reporting date.
(2.7.3) Exchange rates applied
The exchange rates used by the Bank in translating the foreign currency balances to euros for the
purpose of preparing the financial statements, taking into account the methods mentioned above, were
the official rates published by the European Central Bank.
(2.7.4) Recognition of exchange differences
Exchange differences arising on translating foreign currency balances into euros are generally
recognised at their net value in the income statement under "Exchange differences (net)". As an
exception to this rule, exchange differences affecting the value of financial instruments measured at fair
value through profit or loss are recognised in the income statement together with all other changes that
may affect the fair value of the instrument, under "Gains or losses on financial assets and liabilities (net)".
However, exchange differences arising on non-monetary items measured at fair value through equity are
recognised in equity under “Valuation adjustments – Exchange differences” on the balance sheet until
they are realised.
(2.7.5) Entities and branches located in hyperinflationary economies
None of the functional currencies of Bankia's branches located abroad relate to hyperinflationary
economies as defined by Bank of Spain Circular 4/2004. Accordingly, at the 2012 year-end it was not
necessary to adjust the financial statements to correct for the effect of inflation.
The most significant accounting criteria used by the Bank to recognise its income and expenses are
summarised as follows:
(2.8.1) Interest income, interest expense, dividends and similar items
As a general rule, interest income, interest expenses and similar items are recognised on the basis of
their period of accrual using the effective interest method defined in Bank of Spain Circular 4/2004.
Dividends received from other companies are recognised as income on the date when Bankia's right to
receive payment is declared.
(2.8.2) Commissions, fees and similar items
Fee and commission income and expenses that are not to be included in the calculation of the effective
interest rate of transactions and/or are not included in the cost of financial assets or liabilities other than
those classified as at fair value through profit or loss are recognised in the income statement using
criteria that vary according to their nature. The most significant fee and commission items are as follows:
-
Fees and commissions linked to the acquisition of financial assets and liabilities carried at fair
value through profit or loss, which are recognised in the income statement at the settlement date.
-
Those arising from transactions or services that are performed over a period of time, which are
recognised in the income statement over the life of these transactions or services.
-
Those relating to services provided in a single act, which are recognised in the income statement
when the single act is carried out.
38
(2.8.3) Non-financial income and expenses
Non-financial income and expenses are recognised on an accrual basis.
(2.8.4) Deferred income and accrued expenses
These are recognised for accounting purposes at the present value of the estimated cash flows
discounted at market rates.
(2.9) Offsetting
Asset and liability balances are offset; i.e. reported in the balance sheet at their net amount, only if the
Bank has a contractual or legally enforceable right to set off the recognised amounts and it intends to
settle them on a net basis, or to realise the asset and settle the liability simultaneously.
In this regard, presentation in these financial statements in accordance with Bank of Spain Circular
4/2004 of financial assets subject to valuation adjustments for decline in value or impairment, net of these
adjustments, is not considered as "offsetting".
The accounting treatment of transfers of financial assets depends on the extent to which the risks and
rewards associated with the transferred assets are transferred to third parties:
-
If substantially all the risks and rewards of the assets transferred are transferred to third parties –
unconditional sale of financial assets, sale of financial assets under an agreement to repurchase
them at their fair value at the date of repurchase, sale of financial assets with a purchased call
option or written put option that is deeply out of the money, securitisation of assets in which the
transferor does not retain a subordinated debt or grant any credit enhancement to the new
holders, and other similar cases – the transferred financial asset is derecognised and any rights
or obligations retained or created in the transfer are recognised simultaneously.
-
If substantially all the risks and rewards associated with the financial asset transferred are
retained - sale of financial assets under an agreement to repurchase them at a fixed price or at
the sale price plus interest, a securities lending agreement in which the borrower undertakes to
return the same or similar assets, securitisation of financial assets in which a subordinated debt
or another type of credit enhancement is retained that absorbs substantially all the expected
credit losses on the securitised assets, and other similar cases – the transferred financial asset is
not derecognised and continues to be measured by the same criteria as those used prior to the
transfer. However, the following items are recognised with no offsetting:
-

An associated financial liability, for an amount equal to the consideration received; this
liability is subsequently measured at amortised cost, or, if the aforementioned
requirements for classification as other financial liabilities at fair value through profit or
loss are met, at fair value, in accordance with the aforementioned criteria for this type of
financial liability.

The income from the financial asset transferred but not derecognised and any expense
incurred on the new financial liability.
If the Group neither transfers nor retains substantially all the risks and rewards associated with
the financial asset transferred – sale of financial assets with a purchased call option or written put
option that is not deeply in or out of the money, securitisation of financial assets in which the
transferor retains a subordinated debt or other type of credit enhancement for a portion of the
transferred asset, and other similar cases – the following distinction is made:

If Bankia does not retain control of the transferred financial asset, the transferred
financial asset is derecognised and any right or obligation retained or created as a result
of the transfer is recognised.

If Bankia retains control of the transferred financial asset, it continues to recognise it in
the balance sheet for an amount equal to its exposure to changes in value and
recognises a financial liability associated with the transferred financial asset. The net
amount of the asset transferred and the associated liability is the amortised cost of the
rights and obligations retained, if the asset transferred is measured at amortised cost, or
39
the fair value of the rights and obligations retained, if the asset transferred is measured
at fair value.
Accordingly, financial assets are only derecognised when the cash flows they generate have been
extinguished or when substantially all the inherent risks and rewards have been transferred to third
parties.
Note 26 contains a summary of the main circumstances of the principal transfers of assets outstanding at
31 December 2012 and 2011 which did not lead to the derecognition of the related assets.
Exchanges of assets entail the acquisition of tangible or intangible assets in exchange for other nonmonetary assets or a combination of monetary and non-monetary assets. For the purposes of these
financial statements, the foreclosure of assets to recover amounts owed to Bankia by third parties is not
considered an exchange of assets.
The assets received in an exchange of assets are recognised at fair value, provided that the transaction
can be deemed to have commercial substance, as defined in Bank of Spain Circular 4/2004, and that the
fair value of the asset received or, failing this, of the asset given up, can be estimated reliably. The fair
value of the instrument received is determined as the fair value of the asset given up plus, where
applicable, the fair value of any monetary consideration given up in exchange, unless there is clearer
evidence of the fair value of the asset received.
If the exchanges of assets do not meet the above requirements, the asset received is recognised at the
carrying amount of the asset given up plus the monetary consideration given up or assumed in the
acquisition.
A financial asset is considered to be impaired – and therefore its carrying amount is adjusted to reflect
the effect of impairment – when there is objective evidence that events have occurred which:
-
In the case of debt instruments (loans and debt securities), give rise to an adverse impact on the
future cash flows that were estimated at the transaction date.
-
In the case of equity instruments, mean that their carrying amount may not be fully recovered.
As a general rule, the carrying amount of impaired financial instruments is adjusted with a charge to the
income statement for the period in which the impairment becomes evident, and the reversal, if any, of
previously recognised impairment losses is recognised in the income statement for the period in which
the impairment is reversed or reduced.
When the recovery of any recognised amount is considered unlikely, the amount is written off, without
prejudice to any actions that the Bank may initiate to seek collection until its contractual rights are
extinguished due to expiry of the statute-of-limitations period, forgiveness or any other cause.
The criteria applied by the Bank to determine possible impairment losses in each of the various financial
instrument categories and the method used to calculate and recognise such impairment losses are as
follows:
Debt instruments carried at amortised cost
The amount of an impairment loss incurred on a debt instrument carried at amortised cost is equal to the
negative difference between its carrying amount and the present value of its estimated future cash flows.
In estimating the future cash flows of debt instruments the following factors are taken into account:
- All the amounts that are expected to be obtained over the remaining life of the instrument;
including, where appropriate, those which may result from the collateral provided for the instrument
(less the costs for obtaining and subsequently selling the collateral). The impairment loss takes into
account the likelihood of collecting accrued past-due interest receivable.
- The different types of risk to which each instrument is exposed.
- The circumstances in which collections will foreseeably be made.
These cash flows are subsequently discounted using the instrument's effective interest rate (if its
contractual rate is fixed) or the effective contractual rate at the discount date (if it is floating).
40
Specifically as regards impairment losses resulting from materialisation of the insolvency risk of the
obligors (credit risk), a debt instrument is impaired due to insolvency:
- When there is evidence of a deterioration of the obligor’s ability to pay, either because it is in
arrears or for other reasons, and/or
- When country risk materialises; country risk is defined as the risk that is associated with debtors
resident in a given country due to circumstances other than normal commercial risk.
Impairment losses on these assets are assessed as follows:
- Individually, for all significant debt instruments and for instruments which, although not significant,
cannot be included in any group of assets with similar risk characteristics: instrument type, debtor's
industry and geographical location, type of guarantee or collateral, age of past-due amounts etc.
- Collectively: the Bank classifies transactions on the basis of the nature of the obligors, the
conditions of the countries in which they reside, transaction status, type of guarantee or collateral,
age of past-due amounts, etc. For each risk group it establishes the impairment losses that must
be recognised in the financial statements. Additionally, the Bank recognises a loss for inherent
impairments not specifically identified. This impairment is the loss inherent to any portfolio of
assets incurred at the date of the financial statements and is quantified by application of the
parameters established by the Bank of Spain based on experience and on the information
available to it concerning the Spanish banking sector.
Debt instruments classified as available for sale
The amount of the impairment losses on debt securities included in the available-for-sale financial asset
portfolio is the full or partial negative difference, if any, between their fair value and their acquisition cost
(net of any principal repayment or amortisation), less any impairment loss previously recognised in the
income statement.
In the case of impairment losses arising due to the insolvency of the issuer of the debt instruments
classified as available for sale, the procedure followed by the Bank for calculating such losses is the
same as the method used for debt instruments carried at amortised cost explained in the preceding
section.
When there is objective evidence that the losses arising on measurement of these assets are due to
impairment, they are removed from the equity item “Valuation adjustments – Available-for-sale financial
assets” on the Bank's balance sheet and are recognised, for their cumulative amount, in the income
statement. If all or part of the impairment losses are subsequently recovered, the amount is recognised in
the income statement for the period in which the recovery occurs. In particular, the main events that
might indicate evidence of impairment include the following:
-
The issuer has been declared or will probably be declared bankrupt or in significant financial difficulty.
-
A breach of the contract governing the instruments, such as default on principal or interest, occurs.
-
The issuer is granted financing or arranges debt restructuring because it is in financial difficulty,
unless there is reasonable certainty that the customer will be able to settle its debt in the envisaged
period or new effective collateral is provided.
Similarly, any impairment losses arising on measurement of debt instruments classified as “Non-Current
assets held for sale” which are recorded in the Bank's equity are considered to be realised and are
therefore recognised in the income statement when the assets are classified as “Non-current assets held
for sale”.
Equity instruments classified as available for sale
The criteria for recognising impairment losses on equity instruments classified as available for sale are
similar to those for debt instruments explained in the preceding section, with the exception that any
recovery of these losses is recognised in equity under “Valuation adjustments – Available-for-sale
financial assets” in the balance sheet.
The main events that might constitute evidence of impairment of equity instruments include the following:
-
-
Significant changes in the technological, market, economic or legal environment in which the issuer
operates may have adverse effects on the recovery of the investment.
41
-
A significant or prolonged decline in the fair value of an equity instrument below its carrying amount.
In this regard, the objective evidence of the impairment of instruments quoted in active markets is
more pronounced in the event of a 40% fall in its market price over a period of one-and-a-half years.
Equity instruments measured at cost
The amount of the impairment losses on equity instruments carried at cost is the difference between their
carrying amount and the present value of the expected future cash flows discounted at the market rate of
return for similar securities.
Impairment losses are recognised in the income statement for the period in which they arise as a direct
reduction to the cost of the instrument. These losses can only be reversed subsequently if the related
assets are sold.
Investments in subsidiaries, associates and jointly-controlled entities
Impairment losses on investments in subsidiaries, associates and jointly-controlled entities which, for the
purpose of the preparation of these financial statements, are not deemed to be “financial instruments”,
are estimated and recorded by the Bank as follows: pursuant to the provisions of Circular 4/2004, when
there is evidence of impairment of these investments, the amount of the impairment is estimated as the
negative difference between the recoverable amount (calculated as the higher of fair value of the
investment less costs to sell and value in use; value in use is defined as the present value of the cash
flows expected to be received on the investment in the form of dividends and those from its sale or other
disposal) and the carrying amount.
Impairment losses on these investments and reversals thereof are debited or credited, respectively, to
“Impairment losses on other assets (net) – Other assets” in the income statement.
“Financial guarantees” are defined as contracts whereby an entity undertakes to make specific payments
on behalf of a third party if the latter fails to do so, irrespective of the various legal forms they may take:
deposits, financial guarantees, irrevocable documentary credits issued or confirmed by the entity, etc.
Pursuant to the provisions of Bank of Spain Circular 4/2004, the Bank generally treats financial
guarantees provided to third parties as financial instruments.
To determine whether a derivative sold is recognised as a financial guarantee or a trading derivative, a
financial instrument is considered a derivative financial instrument when it meets the following conditions:
-
Its value changes in response to the changes in an observable market variable, sometimes called
the "underlying", such as an interest rate, financial instrument and commodity price, foreign
exchange rate, a credit rating or credit index, where this involves non-financial variables that are
not specific to one of the parties to the contract.
-
It requires no initial investment or one that is much smaller than would be required for other
financial instruments that would be expected to have a similar response to changes in market
factors.
-
It is settled at a future date, except where it relates to a regular way purchase or sale of financial
assets in conventional agreements, defined as one in which the parties' reciprocal obligations
must be discharged within a time frame established by regulation or convention in the market
place and that may not be settled net.
Financial guarantees are considered contracts that require or may require Bankia to make specific
payments to reimburse the creditor for the loss incurred when a specific debtor fails to meet its payment
obligations under the original or amended terms of a debt instrument, regardless of its legal form, which
may be, inter alia, a deposit, financial guarantee, insurance contract or credit derivative.
Specifically, guarantee contracts related to credit risk where execution of the guarantee does not require,
as a necessary condition for payment, that the creditor is exposed to and has incurred a loss due to a
debtor's failure to pay as required under the terms of the financial asset guaranteed, as well as in
contracts where execution of the guarantee depends on changes in a specific credit rating or credit index,
are considered derivative financial instruments.
The Bank initially recognises the financial guarantees provided on the liability side of the balance sheet at
fair value, plus the directly attributable transaction costs, which is generally the amount of the premium
received plus, where applicable, the present value of the fees, commissions and interest receivable from
these contracts over the term thereof, and it simultaneously recognises, on the asset side of the balance
42
sheet, the amount of the fees, commissions and similar amounts received at the start of the transactions
and the amounts receivable at the present value of the fees, commissions and interest receivable.
Subsequently, these contracts are recognised on the liability side of the balance sheet at the higher of the
following two amounts:
-
The amount determined pursuant to the provisions of Annex IX to Bank of Spain Circular 4/2004. In
this regard, financial guarantees, regardless of the guarantor, instrumentation or other circumstances,
are reviewed periodically so as to determine the credit risk to which they are exposed and, if
appropriate, to consider whether a provision is required. The credit risk is determined by application
of criteria similar to those established for quantifying impairment losses on debt instruments carried at
amortised cost, which are described in Note 2.12 above.
-
The amount initially recognised for these instruments, less the related amortisation which, in
accordance with Bank of Spain Circular 4/2004, is charged to the income statement on a straight-line
basis over the contract term.
The provisions made, if applicable, for these instruments are recognised under “Provisions - Provisions
for contingent liabilities and commitments” on the liability side of the balance sheet. These provisions are
recognised and reversed with a charge or credit, respectively, to “Provisions (net)” in the income
statement.
If, in accordance with the foregoing, a provision is required for these financial guarantees, the unearned
commissions on these transactions, which are recognised under “Financial liabilities at amortised cost –
Other financial liabilities” on the liability side of the balance sheet, are reclassified to the appropriate
provision.
(2.14.1) Finance leases
Finance leases are leases that transfer substantially all the risks and rewards incidental to ownership of
the leased asset to the lessee.
The factors considered by the Bank to determine whether a lease agreement is a finance lease include,
inter alia, the following:
-
Whether the lease agreement covers the major part of the useful life of the asset.
-
Whether the exercise price of the purchase option is lower than the fair value of the residual value of
the asset at the end of the lease term.
-
Whether the present value of minimum lease payments at the inception of the lease is equal to
substantially all the fair value of the leased asset,
-
Whether use of the asset is restricted to the lessee.
When the Bank acts as the lessor of an asset in a finance lease transaction, the sum of the present
values of the lease payments receivable from the lessee plus the guaranteed residual value (which is
generally the exercise price of the lessee's purchase option at the end of the lease term) is recognised as
lending to third parties and is therefore included under “Loans and receivables” in the balance sheet
based on the type of lessee.
When the Bank acts as the lessee in a finance lease transaction, it presents the cost of the leased assets
in the balance sheet, based on the nature of the leased asset, and, simultaneously, recognises a liability
for the same amount (which is the lower of the fair value of the leased asset and the sum of the present
values of the lease payments payable to the lessor plus, if appropriate, the exercise price of the purchase
option). The depreciation policy for these assets is consistent with that for the Bank’s property, plant and
equipment for own use (see Note 2.17).
In both cases, the finance income and finance charges arising under finance lease agreements are
credited and debited, respectively, to “Interest and similar income” and “Interest expense and similar
charges”, respectively, in the income statement, and the accrued interest is estimated using the effective
interest method as defined in Bank of Spain Circular 4/2004.
(2.14.2) Operating leases
In operating leases, the ownership of the leased asset and substantially all the risks and rewards relating
to the leased asset remain with the lessor.
43
When the Bank acts as lessor in operating leases, it recognises the acquisition cost of the leased assets
under “Tangible assets” as “Investment property” or as “Property, plant and equipment leased out under
an operating lease”, depending on the type of assets leased. The depreciation policy for these assets is
consistent with that for similar items of property, plant and equipment for own use, and income from
operating leases is recognised on a straight-line basis under “Other operating income” in the income
statement.
When the Bank acts as the lessee in operating leases, lease expenses, including any incentives granted
by the lessor, are charged to “Administrative expenses - Other general administrative expenses” in the
income statement on a straight-line basis (or using another method, if applicable).
(2.14.3) Asset sale and leaseback transactions
Where transactions involve the sale to a third party of an asset owned by the Bank that is subsequently
leased back by the Bank selling the asset, the terms and conditions of the lease agreement are analysed
by the Bank to determine whether it should be considered a finance lease or an operating lease, in
accordance with the criteria stipulated in Notes 2.14.1 and 2.14.2 above.
In this regard, if a sale and leaseback transaction by the Bank results in a finance lease, any possible
excess of sales proceeds over the carrying amount of the asset sold will not be immediately recognised
as income by the Bank. The excess, if any, is deferred by the Bank and apportioned over the term of the
lease.
However, if a sale and leaseback transaction by the Bank results in an operating lease, and the
transaction was established at fair value, any profit or loss from the sale will be recognised immediately in
the income statement. If the sale price is below fair value of the asset sold by the Bank, any profit or loss
will be recognised immediately in the income statement, except if the loss is offset by future lease
payments at below market price, whereupon it will be deferred and recognised in proportion to the lease
payments over the period for which the asset is expected to be used. If the sale price of the asset sold is
above fair value, the excess over fair value will be deferred and recognised over the period for which the
asset is expected to be used by the Bank.
(2.15) Staff costs
(2.15.1) Post-employment benefits
(2.15.1.1) Types of commitments
Post-employment benefits are forms of compensation payable after completion of employment. The Bank
has undertaken to pay post-employment benefits to certain employees and to their beneficiary right
holders.
Under current law, post-employment obligations are classified as defined-contribution or defined-benefit
obligations, depending on the terms of the commitments assumed in each specific case. The Bank’s
post-employment obligations to its employees are deemed to be “defined-contribution plan obligations”
wherever the Bank makes predetermined contributions and will have no legal or effective obligation to
make further contributions if the employee benefits relating to the service rendered in the current and
prior periods cannot be paid. Post-employment obligations that do not meet the aforementioned
conditions are considered as defined-benefit obligations.
All pension obligations to current and former employees of the Bank are funded by pension plans,
insurance policies and the internal fund.
All pension obligations to current and former employees of the Bank are covered by pension plans in
Spain, with residual commitments of similar characteristics in other countries (USA, Portugal and
Austria), all defined-contribution obligations.
(2.15.1.2) Description of the post-employment obligations undertaken by the Bank
The nature of the obligations assumed by the Bank with its employees described below were set out in
the agreement to harmonise working terms and conditions signed on 26 November 2012, which differ
depending on the Caja from which they arise.
44
Obligations undertaken with Bankia employees who did not come from the “Cajas” or Group companies
with pension commitments

Non-accrued pensions:
A system is in place whereby Bankia makes an annual and individual contribution equivalent
to 3% of fixed compensation plus 2% of variable compensation earned, respecting the
minimums stipulated in the collective wage agreement.

Accrued pensions:
There are no accrued pension commitments for these employees.
Obligations undertaken with employees of Caja de Ahorros y Monte de Piedad de Madrid

Since 1999, contributions have been made to an external pension fund ("Plan de Pensiones
de empleados del Grupo Caja Madrid"), run by Caja de Madrid de Pensiones, S.A. E.G.F.P.,
to cover commitments arising from the defined-contribution system applicable, consisting of a
contribution of 10% of fixed remuneration and 4% of variable remuneration earned.
In relation to defined-benefit obligations with current non-participating employees (3
employees), policies have been taken out with Mapfre Caja Madrid Vida, S.A. to cover all
actuarial liabilities accrued at 31 December 2012.

Accrued pensions:
In 2000, accrued pension commitments to retired employees were outsourced on a policy
with Caja Madrid Vida, S.A. de Seguros y Reaseguros (now Mapfre Caja Madrid Vida, S.A.).
Obligations undertaken with employees from Caja de Ahorros de Valencia, Castellón y Alicante, Bancaja

Since 1998, contributions have been made to an external employee pensions plan for staff at
Caja de Ahorros de Valencia, Castellón y Alicante – Bancaja. This plan is integrated in
Futurcaval, Fondo de Pensiones and managed by Aseguradora Valenciana, S.A. de Seguros
y Reaseguros, and entails a contribution of 8.75% of employees’ pensionable salary.
In relation to defined-benefit obligations with current employees (2 employees), policies have
been taken out with Aseguradora Valenciana S.A. de Seguros y Reaseguros to cover all

Accrued pensions:
Obligations with retired employees are covered through the external pensions plan and
insurance policies.
Obligations undertaken with employees from Caja Insular de Ahorros de Canarias

Since 2002, contributions have been made to an external employment pensions plan (Plan
de Pensiones de Empleados de la Caja Insular de Canarias), managed by Caser Pensiones,
EGFP, S.A., and entailing a contribution of 5% of employees’ pensionable salary.
As a result of the corporate agreement signed on 15 November 2002 and subsequent
agreements in 2003 and 2007, the amounts recognised as entitlements through past services
not covered by internal funds generated a deficit contributed annually to the pensions plan
over a period of 15 years, with decreasing payments at 2% and an interest rate of 4%.
At 31 December 2012, Bankia had EUR 9,132 thousand outstanding on the plan, which
expires in 2016. A provision is recognised for this commitment on the accompanying balance
sheet.

Accrued pensions:
The only defined-benefit commitments are with retired employees. These obligations are
covered through the external pensions plan and insurance policies.
45
Obligations undertaken with employees of Caja de Ahorros y Monte de Piedad de Ávila
 Non-accrued pensions:
de Pensiones “Avilacaja”), managed by Caser Pensiones EGFP, S.A., and entailing a
contribution of 5% of employees’ pensionable salary.
At 31 December 2012, there were seven employees with defined-benefit commitments who
had not subscribed to the agreement and who are covered by the pensions plan.

Accrued pensions:
insurance policies.
Obligations undertaken with employees of Caixa d’Estalvis Laietana

de Empleo Laietana), managed by Caja de Madrid and Pensiones, S.A. E.G.F.P. The plan
entails a contribution that is the greater of 3.25% of an employee’s real salary or 10% of the
difference between the real salary and the Social Security contribution.
At 31 December, there were 23 employees with defined-benefit commitments (of which 19
have early retirement status) not covered by the scheme and partially covered by an internal
fund.

Accrued pensions:
Obligations with retired employees are covered through the external pension plan and
insurance policies, and partially covered by an internal fund.
Obligations undertaken with employees of Caja de Ahorros y Monte de Piedad de Segovia

de Pensiones de Empleados de la Caja Segovia), managed by Caser Pensiones EGFP, S.A.
and entailing a contribution of 5% of the pensionable salary.

Accrued pensions:
Obligations with retired employees, those taking early retirement and beneficiaries at that
date are covered by an insurance policy.
Obligations undertaken with employees of Caja de Ahorros de la Rioja

de Pensiones de Empleados de la Caja de Ahorro de Rioja "PERIOJA"), managed by Caser
Pensiones EGFP, S.A. and entailing a contribution of 4.5% of the pensionable salary.
have early retirement status and eight are partially retired) who had not subscribed to the
pension scheme called "FERIOJA II, Fondo de Pensiones".

Accrued pensions:
Some of the beneficiaries of defined-benefit schemes are covered by the pension plan and
the remainder by an internal fund.
In addition to these commitments, Note 6 describes the obligations with members of the Board of
Directors and senior executives of Bankia, S.A.
46
The percentage distribution of employees at 31 December 2012 by the groups described above is as
follows:
GROUP
% Staff 31/12/12
Employees from Caja Madrid
59.7%
Employees from Bancaja
24.4%
Employees from Caja Canarias
4.4%
Employees from Caja de Avila
2.6%
Employees from Caixa Laietana
4.2%
Employees from Caja Segovia
2.3%
Employees from Caja Rioja
2.1%
Hired by Bankia
0.3%
TOTAL
100.0%
(2.15.1.3) Actuarial assumptions applied in calculation of post-employment benefits
As a rule, the Bank measures its obligations and commitments and cover and determines coverage
evenly based on:

the projected credit unit method (which treats each year of service as giving rise to an additional
unit of benefit entitlement);

actuarial assumptions based on GRMF95 mortality tables, discount rates of between 4% and
4.32%, salary growth rates of 3% and inflation of 2%.
Irrespective of these assumptions, the Bank performed a sensitivity analysis to estimate the impact of a
change in the discount rate used on the actuarial calculations of the defined-benefit commitments. The
following assumptions were used for the sensitivity analysis:

average duration of the group in question of around 12.5 years

discount rate of 3.5%
Provisions recognised by the Bank for defined-benefit commitments at 31 December 2012 cover the
estimated impact based on the aforementioned assumptions in the scope of the sensitivity analysis (see
Note 36.3).
For early-retirement and other long-term commitments, the sensitivity analysis does not have a significant
impact as the assumption regarding the discount rate used in calculating the commitments is lower and,
therefore, admits a lower range of variation.
(2.15.1.4) Accounting criteria for post-employment commitments
The Bank classifies post-employment obligations for accounting purposes as follows:

Defined-contribution plans. The Bank's contributions to defined-contribution plans are recognised
under “Administrative expenses – Staff costs” in the income statement.
If at year-end there are any outstanding contributions to be made to the external plan funding the
post-employment benefit obligations, the related amount is recognised at its present value under
“Provisions - Provisions for pensions and similar obligations". At 31 December 2012 and 2011, there
were no outstanding contributions to be made to external defined-contribution plans.

Defined-benefit plans. Under the heading “Provisions – Provisions for pensions and similar
obligations” on the liability side of the balance sheet, the Bank recognises the present value of
obligations assumed net of the fair value of assets qualifying as “plan assets” (or under “Other assets
– Other” on the asset side of the balance sheet, depending on whether the resulting difference is
positive or negative and on whether or not the conditions for recognition are satisfied).
“Plan assets” are defined as those that are related to certain defined benefit obligations, that will be
used directly to settle such obligations, and that meet the following conditions:

they are not owned by the Bank, but by a legally separate third party that is not a related
party
47

they are only available to pay or fund post-employment benefits for employees

they cannot be returned to the Bank unless the assets remaining in the plan are sufficient to
meet all the benefit obligations of the plan or of the Bank to current and former employees, or
they are returned to reimburse employee benefits already paid by the Bank

they may not be non-transferable financial instruments issued by the Bank if held by a longterm post-employment benefits fund or entity.
If the Bank has recourse to an insurer to pay part or all of the expenditure required to settle a definedbenefit obligation, and it is practically certain that the insurer will reimburse some or all of the
expenditure required to settle that obligation, but the insurance policy does not qualify as a plan
asset, the Bank recognises its right to reimbursement, which in all other respects is treated as a plan
asset, under “Insurance contracts linked to pensions” on the asset side of the balance sheet.
Pursuant to applicable regulations, the Bank recognised in its financial statements the liabilities (or,
as the case may be, and/or the assets) related to post-employment benefit obligations of the “Cajas”
and the other entities acquired at the present value of the obligations, less the fair value of any plan
assets.
Post-employment benefits are recognised in the income statement as follows:

Current service cost, i.e., the increase in the present value of the obligations resulting from
employee service in the current period, under “Administrative expenses – Staff costs”.

Interest cost, i.e., the increase during the year in the present value of the obligations as a result
of the passage of time, under “Interest expense and similar charges”. Where obligations are
presented on the liability side net of plan assets, the cost of liabilities taken to the income
statement relates exclusively to obligations recognised in liabilities.

The expected return on any plan asset recognised as an asset is taken to “Interest and similar
income” in the income statement.

Actuarial gains and losses (defined as gains and losses arising from differences between prior
actuarial assumptions and the actual gains and losses and from changes in the actuarial
assumptions used) are amortised under “Provisions (net)” in the income statement.
(2.15.2) Other long-term employee benefits
“Other long-term employee benefits” mainly comprises the early-retirement commitments assumed by the
Bank to employees who no longer render services but, not being retirees for legal purposes, continue to
hold economic rights against their employers until they become legal retirees. It also comprises any other
long-term or similar commitments to employees.
These long-term commitments are recognised under the same caption as defined-benefit postemployment plans, with the special features disclosed below for each specific case.
(2.15.2.1) Pre-retirements and partial retirements
Certain employees have been offered the possibility of taking pre-retirement in several years. These
commitments are summarised below for the “Cajas” concerned:
Caja de Ahorros y Monte de Piedad de Madrid
In 1999, the Caja offered certain employees the possibility of taking pre-retirement. To this end, it
took out an insurance policy with Caja Madrid Vida, S.A. de Seguros y Reaseguros (now Mapfre
Caja Madrid Vida, S.A.) to cover all the economic commitments undertaken vis-à-vis these
employees from pre-retirement to retirement age, since retirement obligations for the group are
covered by the schemes described above.
In 2000, the Caja also decided to take out insurance on all its remaining pre-retirement
commitments on a policy with Caja Madrid Vida, S.A. de Seguros y Reaseguros (now Mapfre
Caja Madrid Vida, S.A.).
By virtue of a new trade union agreement, in 2008 the Caja carried out a Generation Handover
Plan to enable certain employees to take up pre-retirement or partial retirement. These
commitments are covered by insurance policies for those opting for the plan.
Caja de Ahorros de Valencia, Castellón y Alicante, Bancaja
Pre- and early-retirement plans were carried out in 1998, 2000 and 2004 pursuant to agreements
reached with trade unions.
48
The total cost of commitments to the pre-retirements described in the preceding paragraph is
covered by a specific fund recognised under "Provisions - Provisions for pensions and similar
obligations".
Caja Insular de Ahorros de Canarias
The obligations with partially-retired employees are covered by internal funds.
Caja de Ahorros y Monte de Piedad de Ávila
The obligations with pre-retired and partially-retired employees are covered by internal funds.
Caixa d’Estalvis Laietana
Caja de Ahorros y Monte de Piedad de Segovia
In 2000, 2002, 2005, 2006, 2007 and 2008, the Caja offered some employees the possibility of
retirement before reaching the age stipulated in the collective wage agreement. Accordingly, in
these years internal funds were set up to cover commitments to pre-retirees - in terms of both
salaries and other employee welfare costs - from the time of pre-retirement to the date of
effective retirement.
In addition, the obligations with partially-retired employees are covered by internal funds.
Caja de Ahorros de la Rioja
Pursuant to Law 40/2007 of 4 December concerning social security measures, the Caja has
accepted requests by some of its employees to comply with the mandatory conditions
established for partial retirement with replacement contracts, before reaching the age stipulated
in the collective wage agreement. There are also a number of employees who are entitled to take
early retirement on the strength of an agreement by the Board of Directors. Thus, funds exist for
both these groups to cover the obligations with the employees, entailing voluntary pension
enhancements from the time of partial retirement and early retirement until the effective date of
their retirement.
In addition, at that date the Bank had covered those liabilities by arranging insurance policies and
recognising provisions on the balance sheet, in accordance with current laws and regulations.
Commitments assumed by the “Cajas” under the Labour Agreement adopted as a result of creation of the
Banco Financiero y de Ahorros Group (see Note 1.2)
On 14 December 2010, the “Cajas” and a majority of labour union representatives at the “Cajas” entered
into an agreement titled "Labour Agreement in the Framework of the Process of Integration under an IPS
entered into by Caja Madrid, Bancaja, Caja Insular de Canarias, Caja Ávila, Caixa Laietana, Caja
Segovia and Caja Rioja" (the "Labour Agreement") and as a result of the integration of the “Cajas” and
the creation of Banco Financiero y de Ahorros, S.A. (the central body of the ISP) set out in the Integration
Agreement approved by the Boards of Directors and ratified by the General Meetings of the “Cajas”.
The Labour Agreement set forth an array of measures offered to the “Cajas” employees on an elective
basis until 31 December 2012 so that the necessary staff restructuring could be carried out, with staff
reduced by approximately 4,594 employees. The array of measures included pre-retirements, relocation,
indemnified redundancies, contract suspension and shorter working time.
At 31 December 2012, the Bank had covered its liabilities under the aforementioned Labour Agreement
in terms of outstanding settlements to employees already on the scheme with insurance policies and
provisions under “Provisions – Provisions for pensions and similar obligations” (to cover pre-retirement
commitments) and “Provisions – Other provisions” (for the remaining commitments) on the balance sheet
(see Note 20).
Notwithstanding the information in the preceding paragraphs, pre-retirement obligations up to the
effective age of retirement are accounted for in all areas applicable, following the same criteria as
explained for the Bank's defined-benefit post-employment compensation.
(2.15.2.2) Death and disability
Commitments to cover the death or disability of current employees, covered by insurance policies and an
external fund, are recognised in the income statement for the amount of the insurance policy premiums
accrued in each year and the contributions made to the fund.
The amount accruing on insurance premiums and external funds, paid out in 2012 to cover these
commitments, totalled EUR 15,070 thousand (EUR 25,719 thousand at 31 December 2011), recognised
under "Administrative expenses - Staff costs" in the 2012 income statement.
49
(2.15.3) Financial aid for employees
The financial aid for employees is stipulated in the Savings Banks' collective wage agreement. The
various internal agreements are maintained under the same conditions as at the original “Cajas”, for
those transactions outstanding at 31 December 2012.
The general breakdown of the scheme is as follows:
a) Advance payments
This type of assistance is available to full-time employees who have undergone a trial period of
employment. The maximum sum offered is six months' gross salary with no interest accruing.
b) Welfare loan for miscellaneous purposes
This type of assistance is available to full-time employees. The maximum sum varies between
EUR 18,000 and EUR 36,000. It may be requested for any purpose, and the interest rate
applicable is Euribor to the legal interest threshold.
c) Main home loan
This type of assistance is available to full-time employees. The maximum sum offered depends
on annual gross fixed remuneration and appraisal/purchase value. It may be requested for
purchasing, building, extending or refurbishing the employee's normal and permanent residence,
and the maximum repayment period is 35 - 40 years, up to the age of 70. The interest rate
applicable varies between 70% and 55% of Euribor, with a ceiling of 5.25% and a floor of 1.50%.
The difference between arm’s length terms and the interest rates applied for each type of loan
mentioned above is recognised as an increase in staff costs with a balancing entry under
"Interest and similar income" in the income statement.
On 26 November 2012, a labour agreement was reached to unify, among other labour-related issues, the
terms and conditions of financing provided to employees applicable to transactions requested by Bankia
employees from 1 January 2013.
(2.15.4) Termination benefits
Under current legislation, the Bank is required to pay termination benefits to employees made redundant
without just cause. Termination benefits must be recognised when the Bank is committed to terminate the
employment contracts of its employees and has a detailed formal termination plan. In addition to the
commitments described in Note 2.15.2 and as explained in Note 1.2., the Bank signed a labour
agreement whose related commitments are adequately covered with provisions recognised at 31
December 2012 (see Note 20).
(2.15.5) Long-service bonuses
Pursuant to the Labour Agreement of 26 November 2012 unifying the labour conditions at Bankia, longservice bonuses no longer existed at 31 December 2012, having been replaced by the Career
Development and Promotion System.
(2.16) Income tax
Income tax expense is recognised in the income statement, except when it results from a transaction
recognised directly in equity, in which case the income tax is also recognised in the Bank's equity.
Income tax expense is calculated as the tax payable on taxable profit for the year, after adjusting for
variations in assets and liabilities due to temporary differences, tax credits for tax deductions and
benefits, and tax losses (see Note 25).
The Bank considers that a temporary difference exists when there is a difference between the carrying
amount of an asset or liability and its tax base. The tax base of an asset or liability is the amount
attributed to that asset or liability for tax purposes. A taxable temporary difference is one that will
generate a future obligation for the Bank to make a payment to the relevant tax authorities. A deductible
temporary difference is one that will generate a right for the Bank to a rebate or a reduction in the amount
payable to the related tax authorities in the future.
Tax credit and tax loss carryforwards are amounts that, after performance of the activity or obtainment of
the profit or loss giving entitlement to them, are not used for tax purposes in the related tax return until
the conditions for doing so established in the tax regulations are met and the Bank considers it probable
that they will be used in future periods.
Current tax assets and liabilities are the taxes that are expected to be recoverable from or payable to,
50
respectively, the related tax authorities within 12 months of the reporting date. Deferred tax assets and
liabilities are the taxes that are expected to be recoverable from or payable to the related tax authorities
more than 12 months from the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences. In this connection, a deferred
tax liability is recognised for taxable temporary differences arising from investments in subsidiaries and
associates and from interests in joint ventures, except when the Bank is in a position to control the
reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future.
Nor is there any recognition of deferred tax liabilities arising from accounting for goodwill.
The Bank only recognises deferred tax assets arising from deductible temporary differences and from tax
credit and tax loss carryforwards when the following conditions are met:
-
Deferred tax assets are only recognised when it is considered likely that the consolidated entities will
have sufficient future taxable profit to make these effective; and, in the case of deferred tax assets
arising from tax loss carryforwards, when the carryforwards have arisen for identified reasons that are
unlikely to be repeated.
-
No deferred tax assets or liabilities are recognised if they arise from the initial recognition of an asset
or liability (except in the case of a business combination) that at the time of recognition affects neither
accounting profit nor taxable profit.
Deferred tax assets and liabilities are reviewed at the end of each reporting period to ascertain that they
remain in force, and the appropriate adjustments are made on the basis of the results of the review.
Departure of Bankia, S.A. and its subsidiaries from the Banco Financiero y de Ahorros tax group
and incorporation of the Bankia tax group
As a result of the share capital increase carried out as part of the aforementioned IPO and the addition of
new shareholders of Bankia, pursuant to prevailing regulations, Bankia and its subsidiaries no longer
form part of the tax consolidation group headed by Banco Financiero y de Ahorros, S.A.U., with tax effect
as of 1 January 2011.
Note 25 provides information on the various adjustments made as a result, affecting the tax assets and
liabilities recognised by the Bank and the tax effects arising from the incorporation of a new tax group
headed by Bankia, S.A. as of 1 January 2011 under "Loans and advances to credit institutions", thus not
affecting either the equity or results of Bankia shown in these financial statements.
As a result of the above, in 2011 the Bankia Group opted to pay taxes under the special tax consolidation
scheme regulated by Chapter VIII, Title VII of the Revised Text of the Corporate Income Tax Law
approved by Royal Decree-Law 4/2004 of 5 March, from the tax period commencing on 1 January 2011,
and informed the tax authorities of this decision.
Note 25 also provides a breakdown of the companies making up the tax consolidation group headed by
Bankia, S.A.
(2.17.1) Property, plant and equipment for own use
Property, plant and equipment for own use include assets, owned by the Bank or held under a finance
lease, for present or future administrative use or for the production or supply of goods and services that
are expected to be used for more than one economic period. This category includes, inter alia, tangible
assets received by the Bank in full or partial satisfaction of financial assets representing receivables from
third parties which are intended to be held for continuing own use. Property, plant and equipment for own
use are presented in the balance sheet at acquisition cost, which is the fair value of any consideration
given for the asset plus any monetary amounts paid or committed, less:
-
the corresponding accumulated depreciation; and
-
any estimated impairment losses (carrying amount higher than recoverable amount).
Depreciation is calculated using the straight-line method on the basis of the acquisition cost of the assets
less their residual value. The land on which the buildings and other structures stand has an indefinite life
and, therefore, is not depreciated.
51
The tangible asset depreciation charge for the period is recognised under “Depreciation and amortisation
charge” in the income statement and is calculated basically using the following depreciation rates (based
on the average years of estimated useful life of the various assets):
Buildings for own use
Furniture and fixtures
Computer hardware
Annual rate
2%
10% to 25%
25%
The Bank assesses at the reporting date whether there is any internal or external indication that an asset
may be impaired (i.e. that its carrying amount may exceed its recoverable amount). If this is the case, the
carrying amount of the asset is reduced to its recoverable amount and future depreciation charges are
adjusted in proportion to the revised carrying amount and to the new remaining useful life (if the useful life
has to be re-estimated). When necessary, the carrying amount of property, plant and equipment for own
use is reduced with a charge to "Impairment losses on other assets (net) - Other assets"” in the income
statement.
Similarly, if there is an indication of a recovery in the value of an impaired tangible asset, the Bank
recognises the reversal of the impairment loss recognised in prior periods with the related credit to
"Impairment losses on other assets (net) - Other assets" in the income statement and adjusts the future
depreciation charges accordingly. Under no circumstances may the reversal of an impairment loss on an
asset raise its carrying amount above that which it would have if no impairment losses had been
recognised in prior years.
The estimated useful lives of property, plant and equipment for own use are reviewed at least once a
year with a view to detecting significant changes therein. If changes are detected, the useful lives of the
assets are adjusted by correcting the depreciation charge to be recognised in the income statement in
future years on the basis of the new useful lives.
Upkeep and maintenance expenses relating to property, plant and equipment for own use are recognised
as an expense in the period in which they are incurred.
Financial assets that require more than twelve months to be readied for use include as part of their
acquisition or production cost the borrowing costs which have been incurred before the assets are ready
for use and which have been charged by the supplier or relate to loans or other types of borrowings
directly attributable to their acquisition, production or construction. Capitalisation of borrowing costs is
suspended, if appropriate, during periods in which the development of the assets is interrupted, and
ceases when substantially all the activities necessary to prepare the asset for its intended use have been
completed.
Foreclosed assets as payment of debts which, based on their nature and intended purpose, are classified
as property, plant and equipment for own use, are recognised in accordance with the criteria indicated
below in Note 2.17.2 for assets of this type.
(2.17.2) Investment property
"Investment property" on the balance sheet reflects the net values of the land, buildings and other
structures held either to earn rentals or for potential capital appreciation in the event of sale through
potential increases in their market value.
The criteria used to recognise the acquisition cost of investment property, to calculate its depreciation
and its estimated useful life and to recognise any impairment losses thereon are consistent with those
described in relation to property, plant and equipment for own use (Note 2.17.1).
Assets foreclosed by the Bank, understood as assets which the Bank receives from borrowers or other
debtors as total or partial payment of financial assets representing collection rights against those which,
regardless of the way in which the properties are acquired and, in accordance with their nature and the
use to which they are put, are classified as investment properties, are initially recognised at their
estimated cost as the lower of the carrying amount of the financial assets applied, i.e. their amortised
cost, net of any impairment losses recognised and, in any case, a minimum of 10%, and the appraised
fair value of the asset received in its current condition less the estimated costs to sell, which under no
circumstances are estimated at less than 10% of the appraisal value in its current condition.
All court costs are recognised immediately in the income statement for the period of foreclosure. Registry
costs and taxes paid may be added to the value initially recognised provided that, as a result, this does
not exceed the appraisal value less the estimated costs to sell mentioned in the preceding paragraph.
52
All costs incurred between the date of foreclosure and the date of sale as a result of maintaining and
protecting the asset, such as insurance, security services, etc., are recognised in the income statement
for the period in which they are incurred.
The age of the assets received in payment of debt on the balance sheet is considered by the Bank as an
unequivocal indication of impairment. Unless the offers received indicate a greater amount, the
impairment recognised on these assets is not less than the result of raising the percentage from the
aforementioned 10% to 20% if the period for acquiring the asset exceeds 12 months, to 30% if this
acquisition period exceeds 24 months and to 40% if it exceeds 36 months.
Note 3.5.3 provides further information concerning foreclosed property assets and assets received by the
Bank in settlement of debts and classified under this balance sheet heading on the basis of ultimate
purpose, as referred to above.
(2.17.3) Property, plant and equipment leased out under an operating lease
"Property, plant and equipment - Leased out under an operating lease" reflects the net values of the
tangible assets, other than land and buildings, leased out by the Bank under an operating lease.
The criteria used to recognise the acquisition cost of assets leased out under operating leases, to
calculate their depreciation and their respective estimated useful lives and to recognise any impairment
losses thereon are consistent with those described in relation to property, plant and equipment for own
use (see Note 2.17.1).
Foreclosed assets which, based on their nature and intended purpose, are classified as property, plant
and equipment leased out under an operating lease, are generally recognised in accordance with the
criteria indicated for assets of this type in Note 2.17.2 above, taking into account for impairment purposes
the effect arising from the rent expected to be received from their lease.
Intangible assets are identifiable, non-monetary assets with no physical substance, arising as a result of
a legal transaction or which have been developed internally by the Bank. Only intangible assets whose
cost can be estimated reasonably objectively and from which the Bank considers it probable that future
economic benefits will be generated are recognised.
Intangible assets are recognised initially at acquisition or production cost and are subsequently measured
at cost less any accumulated amortisation and any accumulated impairment losses.
(2.18.1) Goodwill
Any differences between the cost of investments in business units acquired by the Bank, other than
combinations carried out with no transfer of consideration and acquisition of holdings in other entities,
carried out with respect to the net fair values of the assets and liabilities acquired, adjusted by the
acquired percentage holding of the net assets and liabilities in the event of purchase of business units, at
the date of their acquisition, are recognised as follows:
-
If the acquisition price exceeds the aforementioned fair
Goodwill" on the asset side of the balance sheet.
subsidiaries, associates or jointly-controlled entities or
from the acquisition is recognised as forming part of
individual item under "Intangible assets - Goodwill".
value, as goodwill under "Intangible assets In the case of acquisition of holdings in
other holdings, any goodwill that may arise
the value of the investment and not as an
-
Any negative differences between the cost of acquisition less the aforementioned fair value are
recognised, once the valuation process has been completed, as income on the income statement.
Positive goodwill (excess between the acquisition price of a business and the net fair value of the assets,
liabilities and contingent liabilities acquired from the business) - which is only recognised on the balance
sheet when acquired for consideration - thus represents advance payments made by the Bank for future
economic benefits arising from the business acquired that are not individually and separately identifiable
and recognisable.
Positive goodwill acquired by the Bank is measured at acquisition cost. Goodwill is tested for impairment
at the end of each reporting period to assess whether the recoverable amount has fallen below the
carrying amount and, if this is the case, it is written down accordingly with a charge to the income
statement.
Impairment losses on goodwill recognised under "Intangible assets - Goodwill" pursuant to the preceding
paragraph are not reversed subsequently.
53
In general, the Bank uses methods based on the following assumptions to estimate the recoverable
amounts for subsequent comparison with the carrying amounts of these assets:
-
The recoverable amount is the value in use of the investment or business assessed, obtained from
the present value of the cash flows that are expected to be obtained from the cash-generating unit,
from its ordinary activities (adjusted for extraordinary items) or from the possible disposal thereof.
-
Estimated cash flow projections usually have a maximum time horizon of five years and include
cyclical growth rates based on various factors such as the economic situation at the time the
assessment is performed, growth in the industry, historical rates etc. At 31 December 2012, no
estimates had been made with cash flows for longer periods.
-
The cash flows are discounted using specific discount rates for each asset, on the basis of a risk-free
interest rate which is increased by a risk premium for each investment based on various capitalweighting factors (ratings, internal scorings, etc.).
(2.18.2) Other intangible assets
Intangible assets other than goodwill are recognised on the balance sheet at cost of acquisition or
production, net of accumulated amortisation and any impairment losses.
Intangible assets may have an indefinite useful life - when, based on an analysis of all the relevant
factors, it is concluded that there is no foreseeable limit to the period over which the asset is expected to
generate net cash inflows for the Bank - or a finite useful life, in all other cases.
Intangible assets with an indefinite useful life are not amortised. At the end of each reporting period, the
Bank reviews the remaining useful life of each asset to confirm that it is still indefinite and, if this is not the
case, appropriate action is taken.
Intangible assets with finite useful lives are amortised over the useful lives using methods similar to those
used to depreciate tangible assets. The annual amortisation of intangible assets with a finite useful life is
recognised under "Depreciation and amortisation charge" in the income statement. None of the Bank’s
significant intangible assets have an indefinite useful life. These intangible assets, which were not
developed by the Bank, have an average useful life of three years.
The Bank recognises any impairment loss on the carrying amount of these assets with a charge to
"Impairment losses on other assets (net) – Goodwill and Other intangible assets" in the income
statement. Criteria for recognising impairment losses on these assets and any recovery of impairment
losses recognised in past years are similar to those used for property, plant and equipment for own use
(Note 2.17.1).
(2.19) Inventories
"Other assets" in the accompanying balance sheet includes, inter alia, non-financial assets:
-
Held for sale in the ordinary course of business,
-
In the process of production, construction or development for such sale, or
-
To be consumed in the production process or in the rendering of services.
Consequently, inventories include land and other property (other than investment properties) held for sale
or for inclusion in a property development.
Inventories are measured at the lower of cost (which comprises all costs of purchase, costs of conversion
and direct and indirect costs incurred in bringing the inventories to their present location and condition, as
well as the directly attributable borrowing costs, provided that the inventories require more than one year
to be sold, taking into account the criteria set forth above for the capitalisation of borrowing costs relating
to property, plant and equipment for own use) and net realisable value. Net realisable value is the
estimated selling price of inventories in the ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the sale.
The cost of inventory items that are not normally exchangeable and the cost of goods and services
produced and reserved for specific projects are determined individually for each case.
Any write-downs of inventories to net realisable value and any subsequent reversals of write-downs to
below their carrying amount are recognised under "Impairment losses on other assets (net) - Other
assets" in the income statement.
The carrying amount of inventories sold is derecognised and recognised as an expense under "Other
operating expenses - Change in inventories" in the income statement.
For this purpose, the acquisition cost of foreclosed inventories or inventories otherwise acquired in
payment of debts is estimated as the lower of:
54
–
Gross debt, less any associated provision, with a minimum of 10%.
–
Appraisal value decreased by 10%.
Bank in settlement of debts and classified under this heading of the accompanying balance sheet on the
basis of ultimate purpose, as referred to above.
The above percentages are increased to 20% as from 12 months after initial recognition, 30% after 24
months and 40% after 36 months.
Net realisable value is the estimated selling price of inventories in the ordinary course of business less
the estimated costs of completion and the estimated costs necessary to make the sale.
(2.20) Non-financial guarantees provided
The guarantees or guarantee agreements in which the Bank undertakes to compensate an obligee in the
event of non-compliance with a specific obligation other than a payment obligation by a particular debtor
of the obligee, such as deposits given to ensure participation in auctions or tender processes, surety
bonds, irrevocable promises to provide surety and guarantee letters which are claimable by law, are
considered, for the purposes of accounting in these financial statements, as insurance contracts.
When the Bank provides the guarantees or sureties indicated in the preceding paragraph, it recognises
them under "Other liabilities" in the balance sheet at fair value plus the related transaction costs, which,
unless there is evidence to the contrary, is the same as the value of the premiums received plus, if
applicable, the present value of cash flows to be received for the guarantee or surety provided, and an
asset is recognised simultaneously for the present value of the cash flows to be received. Subsequently,
the present value of the fees or premiums to be received is discounted, and the differences are
recognised under "Interest and similar income" in the income statement; and the value of the amounts
initially recognised in liabilities is allocated on a straight-line basis to the income statement. In the event
that, in accordance with Bank of Spain Circular 4/2004, a provision is required for the surety which
exceeds the liability recognised, the provision is recognised using criteria similar to those described for
the recognition of impairment of financial assets and the amount recorded is reclassified as an integral
part of this provision.
When preparing the financial statements, the Bank’s directors made a distinction between:
-
Provisions: credit balances covering present obligations at the reporting date arising from past events
which could give rise to a loss for the Bank, which is considered to be likely to occur and certain as to
its nature, but uncertain as to its amount and/or timing, and
-
Contingent liabilities: possible obligations arising from past events, whose existence will be confirmed
by the occurrence or non-occurrence of one or more future events not wholly within the control of the
Bank.
The Bank's financial statements include all significant provisions with respect to which is considered that
it is more likely than not that the obligation will have to be settled. Contingent liabilities other than those
initially recognised in the Second De-Merger described in Note 1.2 above are not recognised in the
financial statements, but rather are disclosed in accordance with the requirements of Bank of Spain
Circular 4/2004.
Provisions are measured based on the best information available on the consequences of the events
giving rise to them and remeasured at the end of each reporting period. They are used to meet the
specific obligations for which they were originally recognised. They may be wholly or partly reversed if
these obligations cease to exist or diminish.
The recognition and reversal of provisions considered necessary pursuant to the foregoing criteria are
recognised with a charge or credit, respectively, to “Provisions (net)” in the income statement.
Litigation and/or claims in process
At the end of 2012, certain litigation and claims were in process against the Bank arising from the
ordinary course of its operations. The Bank's legal advisers and its directors consider that, in view of the
provisions made by the Bank in this connection, the outcome of litigation and claims will not have a
material effect on the financial statements for the years in which they are settled.
The main claims against the Bank, along with their current status and possible outcomes considered by
the directors, are as follows:
55

Aviva. Bancaja and Aviva drew up a bancassurance agreement in a number of contracts signed in
May 2000 for the creation, marketing and distribution through the banking sector of personal
insurance policies and pension plans on the Bancaja system, instrumented through the purchase by
Aviva of 50% of the share capital of Aseval. On 15 December 2011, Aviva submitted a request for
arbitration against Bankia and Bancaja, claiming that the de-merging of Bancaja's banking and
banking-related businesses in favour of Banco Financiero y de Ahorros, S.A.U. constitutes a breach
of the contracts, pursuant to which Bancaja is obliged to purchase Aviva's stake in Aseval, and
requesting a total amount for all items ranging between EUR 818,000 thousand and EUR 1,129,000
thousand (plus interest in both cases). On 18 December 2012, the Bank reached an agreement with
Aviva Europe S.E. regarding the arbitration proceedings which they submitted to the Arbitration Court
of Madrid's Official Chamber of Commerce and Industry, whereby both parties, jointly with Caja de
Ahorros de Valencia, Castellón y Alicante (Bancaja), requested a decision on the terms agreed by
the parties. The agreement consists of the sale to Bankia, S.A. by Aviva Europe SE of all the shares
held by Aviva Europe SE in Aseguradora Valenciana, S.A. de Seguros y Reaseguros (Aseval)
representing 50% of its share capital, for a total price of EUR 608,172 thousand. The shares will be
transferred once authorisation is obtained by the regulators and anti-trust authorities.

Gescartera. On 13 October 2009, Spain's Supreme Court ruled partially in favour of the appeal for
cassation filed by Bankia Bolsa (formerly Caja Madrid Bolsa), limiting its joint civil liability exclusively
to the unlawful appropriation by responsible parties at Gescartera of (i) the funds managed by Caja
Madrid Bolsa and (ii) subject to the temporal scope of the term of validity of the subcustody contract
drawn up with Gescartera, and not to the full amount of the investments not recovered by
Gescartera's clientele. On 9 January 2012, the Audiencia Nacional (National Court) issued a
judgment that adopted the view advanced in the expert report filed on the motion of Bankia Bolsa (a
Group subsidiary) to the effect that the liability of that company arising from the proceedings
surrounding the Gescartera matter is EUR 12.2 million, plus interest at the legal rate, i.e., EUR 18.8
million. This amount was fully covered by existing provisions at Group level at 31 December 2011,
and therefore does not imply any loss with respect to the amounts recognised at 31 December 2011
in the financial statements. It was paid into the National Court on 19 January 2012.

Ribertierra, S.L. This company filed proceedings against Caja Madrid and Altae Banco S.A. in a claim
for EUR 25.2 million for deficient advice in relation to bank finance with a Landsbanki bond
guarantee. The outcome of the proceedings was a favourable ruling in the first instance rejecting the
claim, and the plaintiff appealed against the ruling.

Rounding-off clause. On 10 October 2002, the Madrid Provincial Court ruled full confirmation of the
sentence handed down by Court No. 50. Caja Madrid submitted an appeal for cassation against this
ruling, and the Supreme Court agreed to submit a pre-judicial issue to the Court of Justice of the
European Communities (Luxemburg) in relation to the transposition of the consumer directive
93/13/EEC into Spanish law. At this stage of the proceedings, a decision was handed down on 3
June 2010 recognizing the ability of national law to extend its control of abusive practices to essential
elements of a contract. Following this ruling, on 23 June 2010 Caja Madrid thus declared a waiver on
the appeal for cassation, and this was favourably received by the Court, which declared the
termination of proceedings.
On 15 May 2007, the Barcelona No. 36 Court of First Instance ruled the upward rounding-off clause
used by Caixa d’Estalvis Laietana null and void, with return of funds; on 22 September 2008, Section
No. 15 of the Barcelona Provincial Court issued a ruling with partial acceptance of the appeal for
cassation submitted by the entity, conforming the previous two rulings. The appeal for cassation
submitted by Caixa Laietana was not accepted due to matters of form, and thus the ruling by the
Provincial Court stands. Individual claims by customers are being processed, in due consideration of
the fact that the upward rounding-off agreement was eliminated in 2002 in respect of future
operations. The hearing has been scheduled for 4 March 2013.
"Non-current assets held for sale" includes the carrying amount of individual items, disposal groups or
items forming part of a business unit earmarked for sale ("discontinued operations"), whose sale in their
present condition is highly likely to be completed within a year from the reporting date.
Investments in subsidiaries, associates or joint ventures meeting the conditions set forth in the foregoing
paragraph are also considered non-current assets held for sale.
Therefore, the carrying amount of these items, which can be of a financial nature or otherwise, will
foreseeably be recovered from sale rather than continuing use.
56
Specifically, property or other non-current assets received by the Bank as total or partial settlement of its
debtors' payment obligations to it are deemed to be non-current assets held for sale, unless the Bank has
decided to make continuing use of these assets or to hold them to earn rentals or for future capital
appreciation.
Non-current assets held for sale arising from foreclosure or otherwise acquired in settlement of debts are
initially recognised as the lower of:
–
–
Bank in settlement of debts and classified under this balance sheet heading on the basis of ultimate
purpose, as referred to above.
In general, non-current assets classified as held for sale are measured at the lower of their carrying
amount calculated as at the classification date and their fair value less estimated costs to sell. Tangible
and intangible assets which by their nature would otherwise be depreciable and amortisable are not
depreciated or amortised as long as they are classified as held for sale.
If the carrying amount of the assets exceeds their fair value less costs to sell, the Bank adjusts the
carrying amount of the assets by the amount of the excess with a charge to "Gains (losses) on noncurrent assets held for sale not classified as discontinued operations" in the income statement. If the fair
value of such assets subsequently increases, the Bank reverses the losses previously recognised and
increases the carrying amount of the assets without exceeding the carrying amount prior to the
impairment, with a credit to "Gains (losses) on non-current assets held for sale not classified as
discontinued operations" in the income statement.
Similarly, "Liabilities associated with non-current assets held for sale" includes the balances payable
associated with disposal groups or with the Bank's discontinued operations.
All court costs associated with the claims and foreclosure of these assets are recognised immediately in
the income statement covering the foreclosure period. Registry costs and taxes paid may be added to the
value initially recognised provided that, as a result, such value does not exceed the appraisal value less
the estimated costs to sell mentioned in the preceding paragraphs.
The gains or losses arising on the sale of non-current assets held for sale are presented under
“Gains/(losses) on non-current assets held for sale not classified as discontinued operations” in the
income statement.
However, financial assets, assets arising from employee remuneration, deferred tax assets and assets
under insurance contracts that are part of a disposal group or of a discontinued operation are not
measured as described in the preceding paragraphs, but rather in accordance with the accounting
policies and rules applicable to these items, which were explained in previous sections of Note 2.
(2.23) Statement of cash flows
The following terms are used in the statement of cash flows with the meanings specified:
-
Cash flows: inflows and outflows of cash and cash equivalents. Cash equivalents are short-term,
highly liquid investments that are subject to an insignificant risk of changes in value (where
applicable: and, exclusively, since they form part of cash management, bank overdrafts repayable on
demand, which reduce the amount of cash and cash equivalents).
-
Operating activities: the principal revenue-producing activities of credit institutions and other activities
that are not investing or financing activities. Operating activities also include interest paid on any
financing received, even if this financing is considered to be a financing activity. Activities performed
with the various financial instrument categories stipulated in Note 2.5 above are classified, for the
purpose of this statement, as operating activities, except for held-to-maturity investments,
subordinated financial liabilities and investments in equity instruments classified as available for sale
which are strategic investments. For these purposes, a strategic investment is that made with the
intention of establishing or maintaining a long-term operating relationship with the investee, since,
inter alia, one of the circumstances that could determine the existence of significant influence
prevails, even though this influence does not actually exist.
57
-
Investing activities: the acquisition and disposal of long-term assets and other investments not
included in cash and cash equivalents, such as tangible assets, intangible assets, investments, noncurrent assets held for sale and associated liabilities, equity instruments classified as available for
sale which are strategic investments and debt instruments included in held-to-maturity investments.
-
Financing activities: activities that result in changes in the size and composition of equity and
liabilities that are not operating activities, such as subordinated liabilities.
In preparing the statement of cash flows, "Cash and cash equivalents" were considered to be the shortterm, highly liquid investments that are subject to a low risk of changes in value. Thus, for the purposes of
drawing up the subject statement, the balance of "Cash and balances with central banks" on the asset
side of the balance sheet was considered as cash and cash equivalents.
Share-based remuneration of senior executives and Board members
When the Bank immediately delivers shares to eligible employees with no requirement of a certain period
of time before the employee becomes the unconditional owner of the shares, the total services received
are expensed under "Staff costs" in the income statement, with a balancing entry of the corresponding
increase in equity.
When the shares are delivered to employees after a certain period of service, the expense is recognised
under "Staff costs" in the income statement, along with the corresponding increase in the equity of the
company making the payment.
At the grant date on which the employee is entitled to receive share-based payments (the grant date is
understood as the date on which employees and the Bank agree to the share remuneration format, its
periods and conditions), the amount of the remuneration to be paid, i.e. the amount of the increase in the
equity of the company making the payment, is measured at the fair value of the shares committed. If fair
value cannot be reliably estimated, the shares are measured at their intrinsic value. Changes in the fair
value of shares between the grant date and the date on which they are delivered are not recognised. If
the shares are measured at their intrinsic value, the variation in this value between the grant date and the
date on which they are delivered is recognised with a balancing entry in the income statement.
On 27 July 2011, the Bank's Board of Directors approved the director remuneration policy in accordance
with the best corporate governance practices and pursuant to European regulations concerning
remuneration policies at credit institutions and also to the provisions of Royal Decree 771/2011 of 3 June,
making particular reference to variable remuneration.
The new system establishes a specific format for payment of variable remuneration for directors carrying
out control functions or whose activity significantly affects the Bank's risk profile:

At least 50% of variable remuneration must be paid in Bankia shares.

At least 40% of variable remuneration, in either shares or cash, must be deferred over a period of
three years.
Thus, 50% of annual variable remuneration will be paid in shares (30% of the total will be paid following
assessment of the year's objectives, and the remaining 20% deferred in portions of one-third, over a
period of three years).
The share price will be the average quoted price over the three months prior to the accrual date.
All shares delivered to directors on the aforementioned scheme as part of their annual variable
remuneration will be unavailable during the year immediately following the date on which they are
delivered. In any case, no shares were delivered in 2012 as no amounts of variable compensation were
paid.
58
(2.25.1) Authorisation for purchase of treasury shares
In June 2011 (prior to the entity's market listing mentioned in Note 1.2 above, and thus before Bankia lost
single-member company status) the Sole Shareholder of Bankia, S.A. resolved to authorise Bankia's
Board of Directors to carry out derivative acquisition of treasury shares under the following terms:
-
This acquisition could take place as an outright purchase, swap or transfer on payment, on one or
several occasions, provided the shares acquired, added to those already owned by Bankia, do not
exceed 10% of the share capital.
-
The price or equivalent will fluctuate between a minimum, equal to the nominal value, and a
maximum, equal to the closing price of Bankia's shares on the Continuous Market at the time of
acquisition.
-
This authorisation is valid for five years.
The shares acquired pursuant to this authorisation may be sold or redeemed and used in share option
schemes such as those indicated in the third paragraph of Section 146.1 a) of the Corporate Enterprises
Act.
(2.25.2) Accounting policies applied
Business transactions conducted with treasury shares are recognised directly against equity, as are any
expenses and possible income that may arise from such transactions.
"Equity - Less: treasury shares", in equity, shows the value of Bankia, S.A. treasury shares acquired by
the Bank as at 31 December 2012 and 2011.
Note 23.2 sets out the information required by the regulations applicable to transactions with treasury
shares.
(2.26) Statement of recognised income and expense and statement of total changes in equity
The statement of changes in equity presented in these financial statements shows all changes in equity
during the year. This information is in turn presented in two separate statements: the statement of
recognised income and expense and the statement of total changes in equity. The main features of the
information presented on both parts of the statement are set out below:
Statement of recognised income and expense
This statement presents the income and expenses generated by the Bank as a result of its business
activity in the year, distinguishing between the income and expenses recognised in the income statement
and other income and expenses recognised, in accordance with current regulations, directly in equity.
Accordingly, this statement presents:
a) The profit or loss of the related years.
b) The revenue or expenses temporarily recognised in equity as valuation adjustments.
c) The revenue or expenses definitively recognised in equity.
d) Income tax accrued on the items indicated in b) and c) above.
e) The total consolidated recognised income and expense, calculated as the sum of the above.
The changes in income and expenses recognised in equity as valuation adjustments, subject to the
constraints set out above, are as follows:
-
Revaluation gains/(losses): includes the amount of the income, net of the expenses incurred in the
year, recognised directly in equity. The amounts recognised in the year for this item are maintained in
this heading, but in the same year are transferred to the income statement, where they are added to
the initial value of other assets and liabilities or are reclassified to another item.
-
Amounts transferred to the income statement: includes valuation gains and losses previously
recognised in equity, even in the same year, which are taken to the income statement.
-
Amount transferred to the initial carrying amount of hedged items: comprises the valuation gains and
losses previously recognised in equity, even in the same year, which are recognised at the initial
carrying amount of the assets and liabilities as a result of cash flow hedges.
59
-
Other reclassifications: includes the amount of the transfers made in the year between valuation
adjustment items in accordance with current regulations.
The amounts of these items are presented gross, with the related tax effect recognised in this statement
under “Income tax”.
Statement of changes in total equity
This statement includes all the changes in equity, including the effects of any changes in accounting
policies and corrections of errors. This statement accordingly presents a reconciliation between the
carrying amount of each component of equity at the beginning and end of the period, separately
disclosing each change in the following headings:
-
"Adjustments due to accounting policy change" and "Error adjustments": includes changes in equity
as a result of the retrospective restatement of financial statement balances on account of changes in
accounting policies or for correction of errors, if any.
-
Income and expense recognised in the year: represents the aggregate of all items of recognised
income and expense, as outlined above.
-
Other changes in equity: includes the remaining items recognised in equity such as capital increases
or decreases, distribution of results, treasury share transactions, equity-based payments, transfers
between equity items, and any other increase or decrease in equity.
60
(3) Risk management
Risk management is a strategic pillar in Bankia. The primary objective of risk management is to
safeguard the financial stability and asset base of the Bank, maximising the risk-return ratio in
accordance with the risk tolerance levels set by the governing bodies while providing tools for controlling
and monitoring the authorised levels of risk.
Risk management is guided by the principles of independence, commitment of senior management, a
global vision of risk management, early management of doubtful receivables, thorough analysis,
delegation of powers, monitoring and control of positions, and standardised and coherent methodology
and measurement practices. Bankia continually improves the body of parameters and tools associated
with each type of risk. This provides a key support for the teams entrusted with decision-making, both in
the risk areas and in the rest of the organisational structure, and with the ongoing control and monitoring
of the different risks assumed. These functions are undertaken by the Office of Chairman.
In view of the activity carried on by the Bank, the main risks to which it is exposed are as follows:
-
Credit risk (including concentration risk), arising primarily from the business activity performed by
the Individual, Business, Corporate Finance, and Treasury and Capital Markets business areas,
as well as from certain investments held by the Bank.
-
Financial instrument liquidity risk, which relates to the possibility that the funds needed to settle
the Bank's commitments in a timely manner and to allow its lending activity to grow will not be
available at reasonable prices.
-
Structural balance sheet interest rate risk, which relates to potential losses in the event of
adverse trends in market interest rates.
-
Market risk and foreign currency risk, which relate to potential losses due to adverse changes in
the market prices of financial instruments with which the Bank operates, primarily through the
Treasury and Capital Markets area.
-
Operational risk, which relates to possible losses arising from failures or shortcomings in
processes, personnel or internal systems, or from external events.
The Board of Directors is the highest governing body entrusted with determining and approving general
internal control strategies and procedures, as well as the policies for assuming, managing, controlling and
reducing the risks to which the Bank is exposed. In addition, as per the authorisations delegated by the
Board of Directors, the Management Committee, the Finance Committee and the Assets and Liabilities
Committee (ALCO) also perform risk management duties.
The Internal Audit Unit, supervised by the Audit and Compliance Committee, is responsible for
overseeing the efficiency of operating processes and internal control systems and for verifying
compliance with all applicable regulations.
(3.1.1) Credit risk management objectives, policies and processes
Credit risk, understood as the risk that the Bank will assume losses in the regular course of its banking
business if its customers or counterparties fail to comply with their contractual payment obligations, is
overseen by the Risk Management Department (under the Office of Chairman), in accordance with the
policies, methods and procedures approved by the Bank's Board of Directors.
In that regard, specific credit risk management policies have been established for the different client
segments, based on the following:





stable general criteria for approving and monitoring transactions
segment-specific criteria and risk concentration thresholds
appropriate risk/price matching
powers delegated without relevant changes
solid policies for hedging impairment due to credit risk
In addition, the Bank has defined procedures for identifying, analysing and admitting, measuring, valuing,
monitoring and recovering specific risks. These procedures, which cover the entire life span of risks
(from initial grant to extinction), are independently overseen by the Risk Management Department.
The risk concentration policies set out both individual and sector-based limits. Individual limits are fixed at
up to 25% of eligible equity and take into account an internally-assigned rating, the size and financial
61
structure of the company, and the incorporation of the limit in the overall threshold for the "Large risks"
group. Sector-based limits are established in accordance with the size of the sector and mitigate the
cyclical effects in certain sectors.
(3.1.2) Exposure to credit risk by segment and activity
The maximum credit risk exposure for financial assets recognised in the accompanying balance sheet is
their carrying amount. The maximum credit risk exposure for financial guarantees extended by the Bank
is the maximum amount the Bank would have to pay if the guarantee were executed.
At 31 December 2012 and 2011, the original credit risk exposure, without deducting collateral or any
other credit enhancements received, as defined in Bank of Spain Circular 3/2008, and grouped according
to the main segments and activities determined by the Bank, is as follows:
31 December 2012
31/12/12
SEGMENT AND ACTIVITY
Financial
assets held for
trading and
financial
assets at fair
value through
profit or loss
Institutions: Government agencies
Availablefor-sale
financial
assets
Trading
derivatives
Held-tomaturity
investments
Loans and
receivables
Hedging
derivatives
Off-balance sheet
items and others
275,848
-
18,130,364
8,631,248
7,170,041
-
641,319
Institutions: Credit institutions and others
21,057
20,779,511
18,712,516
9,024,400
20,429,246
5,937,357
4,096,791
Companies
46,300
459,095
3,154,913
40,970,414
1,407,675
221,630
19,210,518
-
12,676,635
-
87,976,067
-
-
4,525,817
Consumer
-
192
-
2,154,285
-
-
159,223
Mortgage - SMEs
-
-
-
-
-
-
Mortgage - Other
-
288
-
77,172,453
-
-
571,992
Retail - SMEs
-
19,392
-
7,599,317
-
-
1,161,097
Cards
-
-
-
1,050,012
-
-
2,633,505
Derivatives
-
12,656,763
-
-
-
-
20,906
-
-
-
-
-
Retail customers
Equity
Other
Total
Memorandum item: Breakdown by country of the public
agency
Spanish government agencies
364,111
-
-
1,471,084
-
1
-
15,408
2
35,386,325
39,997,793
146,602,130
29,006,962
6,174,395
28,474,447
8,579,535
5,066,663
-
641,319
-
-
-
-
-
-
275,848
-
17,992,514
Greek government agencies
-
-
-
-
Italian government agencies
-
-
-
-
Portuguese government agencies
-
-
-
-
Other government agencies
TOTAL
980,981
-
-
137,850
51,713
1,122,397
-
-
275,848
-
18,130,364
8,631,248
7,170,041
-
641,319
62
No impairment losses were recognised on investments in sovereign risk at 31 December 2012 and 2011.
31 December 2011
31/12/11
Financial
assets held
for trading
and financial
assets at fair
value
through
profit or loss
Available-forsale financial
assets
Trading
derivatives
Loans and
receivables
Held-tomaturity
investments
Hedging
derivatives
Off-balance
sheet items
and others
1,184,529
-
13,740,420
6,282,278
7,491,503
-
1,184,273
96,192
16,269,499
5,918,534
19,629,749
1,096,404
5,064,298
3,665,630
118,695
359,453
3,962,096
61,045,101
1,663,069
189,040
26,809,935
Retail customers
-
9,925,282
-
119,769,082
-
-
5,171,391
Consumer
-
150
-
5,459,577
-
-
358,601,6
Mortgage - SMEs
-
-
-
12,523,277
-
-
214,334,7
Mortgage - Other
-
226
-
85,276,338
-
-
791,341,3
Retail - SMEs
-
15,183
-
15,324,834
-
-
919,861,1
Cards
-
-
-
1,185,056
-
-
2,887,252
Derivatives
-
9,909,723
-
-
-
-
-
32,961
-
1,028,136
-
-
-
-
Other
-
1,151,799
-
1,512,556
-
13,143
442,068
Total
1,432,377
27,706,033
24,649,186
208,238,766
10,250,976
5,266,481
37,273,297
Companies
Equity
Memorandum item: Breakdown by country of the public agency
1,184,529
-
13,601,434
6,172,978
5,077,303
-
1,159,273
-
-
-
31,078
-
-
-
-
-
-
-
972,932
-
-
-
-
-
-
-
-
-
-
-
138,986
78,222
1,441,268
-
25,,000
1,184,529
-
13,740,420
6,282,278
7,491,503
-
1,184,273
TOTAL
(3.1.3) Breakdown of original exposure by product
Original credit risk exposure at 31 December 2012 and 2011, by product (excluding equity products), is
shown in the table below. Loans and credits reflect the highest customer demand, accounting for 54% at
31 December 2012 (66% at 31 December 2011). Fixed income products represent the second-highest
customer demand, accounting for 25% at 31 December 2012 (13% at 31 December 2011).
63
The breakdown at 31 December 2012 is as follows:
PRODUCT
Loans and credits
Fixed income
Interbank deposits
Guarantees and
credits
31/12/12
Financial
assets held for
trading and
financial assets
at fair value
through profit or
loss
Availablefor-sale
financial
assets
Trading
derivatives
Loans and
receivables
Held-tomaturity
investments
Hedging
derivative
s
Off-balance
sheet items
and others
28,573
-
-
135,358,378
-
-
18,160,674
314,632
-
39,997,793
2,219,355
29,006,962
-
-
-
-
-
9,024,397
-
-
-
-
-
-
-
-
-
10,313,773
-
35,386,325
-
-
-
6,174,395
-
343,205
35,386,325
39,997,793
146,602,130
29,006,962
6,174,395
28,474,447
Held-tomaturity
investments
Hedging
derivative
s
documentary
Derivatives
Total
PRODUCT
Loans and credits
16,248
Fixed income
Interbank deposits
Guarantees and
credits
31/12/11
Financial
assets held for
trading and
financial assets
at fair value
through profit or
loss
1,383,168
documentary
Derivatives
Total
Availablefor-sale
financial
assets
Trading
derivatives
-
Loans and
receivables
Off-balance
sheet items
and others
-
182,609,312
-
-
25,401,312
23,621,050
6,000,648
10,250,976
-
-
-
19,628,806
-
-
-
-
-
-
-
-
-
11,871,986
-
27,706,033
-
-
-
5,266,481
-
1,399,416
27,706,033
23,621,050
208,238,766
10,250,976
5,266,481
37,273,298
(3.1.4) Credit quality
The Bank uses advanced systems to measure the credit risk inherent in certain credit portfolios. As a
result of the Integration Agreement entered into by the “Cajas”, as referred to in Note 1.2, which creates a
consolidable group, the Bank measures its credit risk exposure at 31 December 2012 both by the
standard approach and by the internal ratings-based (IRB) approach.
Thus, at 31 December 2012, the internal ratings-based approached is used to assess approximately
53.2% of the Bank's portfolio. This segment comprises both part of the corporate client portfolio
(measured using internal rating systems), and part of the retail portfolio (individual customers, microcompanies, i.e., companies with revenue under EUR 1 million per year, and self-employed professionals:
measured using points-based or scorings). The Bank's remaining portfolio (approximately 46.8% of the
original exposure) is assessed by the standard approach.
A roll-out plan is in place to extend advanced IRB models.
All ratings appearing in this section reflect the definitions given by the Standard & Poor’s scale.
The rating system designed by the Bank primarily covers two dimensions:
 Risk of default by the borrower: reflected in the probability of default (PD) by the borrower or rating.
 Specific factors in transactions: reflected in loss given default (LGD), such as guarantees or
interests in various tranches of leveraged financing. The term also constitutes a major factor
The rating system used makes a distinction between the following:
 Exposure to risk with companies, governments, institutions and banks: each exposure vis-à-vis the
same borrower is given the same credit quality grading (known as borrower grade), regardless of
the nature of the exposures. This is known as the borrower rating.
 Retail exposures: the systems focus both on borrower risk and the characteristics of the
transactions. This is known as scoring.
64
The rating system has grading models for banks, large companies, companies, public institutions and
special financing. There are three different types of rating:
 External rating: this refers to the ratings issued by external rating agencies (S&P’s, Moody’s and
Fitch).
 Automatic rating: these ratings are obtained through internal models, depending on the segment
to which the customer belongs.
 Internal rating: these are the final ratings assigned to customers when all the available information
has been examined. The internal rating may be the external rating , the automatic rating or the
rating determined by the Rating Committee from all the information analysed.
Customers of the entities that now make up Bankia now form part of the new rating system, i.e. when
financial information has been added to the NOS corporate system the rating is automatically produced
by the appropriate model.
Credit quality. Original exposure and average rating/scoring, by segment
The breakdown by segment of the Bank's credit risk exposure at 31 December 2012 and 2011, excluding
trading derivatives, with the average ratings per segment (excluding default), is as follows:
Breakdown at 31 December 2012
IRB
Standard
SEGMENT
Amount
Average rating
Amount
Average rating
Institutions
26,062,112
BB
70,164,074
BBB-
Companies
31,081,864
B+
8,504,768
B
Retail customers
57,001,416
B+
28,659,934
B+
1,240,866
B
869,188
B
49,691,670
BB-
22,814,631
BB-
Retail - SMEs
3,283,542
B
4,157,853
B
Cards
2,785,338
BB-
818,262
B+
114,145,392
BB-
107,328,776
BB
Consumer
Mortgage - Other
Total
IRB
Standard
SEGMENT
Amount
Average rating
Amount
Average rating
Institutions
31,057,972
BB+
34,801,147
BBB
Companies
51,356,566
B+
35,051,119
B-
Retail customers
60,505,980
B+
40,963,849
B+
Consumer
3,069,655
B
1,456,410
B-
Mortgage - Other
52,093,820
BB-
31,974,708
BB-
Retail - SMEs
2,494,671
B
6,436,654
B-
Cards
2,847,834
BB-
1,096,077
B+
142,920,518
B+
110,816,115
B+
Total
65
Credit quality. Rating distribution for exposures
The distribution of the original exposure by credit ratings, differentiating between rating-based exposures
whose capital requirements are determined using the internal ratings method (excluding special
financing) and exposures using the standard method, is shown in the table below:
31/12/12
RATING
AAA to ABBB+ to BBB+ to BCCC+ to C
Default
Total
IRB
31/12/11
Standard
IRB
Standard
7,455,664
12,936,668
18,495,615
29,851,239
39,924,047
60,157,018
44,835,147
17,091,240
8,836,997
4,925,402
15,154,782
17,349,896
927,268
649,754
3,928,994
5,559,891
5,768,732
5,314,772
6,388,580
8,642,713
62,912,708
83,983,614
88,803,118
78,494,979
Credit quality. Rating distribution for exposures for the corporate portfolio
The distribution of the original exposure by credit ratings at 31 December 2012 and 2011, differentiating
between rating-based exposures whose capital requirements are determined using the internal ratings
method (excluding special financing) and exposures under the standard method, is shown in the table
below:
31/12/12
RATING
Default
Total
IRB
31/12/11
Standard
IRB
Standard
1,688,207
10,302
7,140,065
245,891
22,478,838
4,365,303
25,283,746
11,951,685
6,014,528
3,480,125
15,021,306
17,296,998
5,556,544
900,291
649,038
3,911,449
5,622,858
5,248,775
6,344,244
8,568,808
36,704,722
13,753,543
57,700,810
43,619,926
Credit quality. Distribution of retail exposures
The distribution of the original exposure by credit ratings at 31 December 2012 and 2011 for scoringbased exposures whose capital requirements are determined using the internal ratings method and
exposures under the standard method, is shown in the table below:
31/12/12
RATING
AAA to A-
IRB
31/12/11
Standard
IRB
Standard
6,419,269
366,882
7,002,346
393,908
BBB+ to BB-
33,904,503
18,309,855
35,920,924
22,709,713
B+ to B-
15,546,627
9,947,889
17,098,360
17,860,191
CCC+ to C
1,131,017
35,308
484,350
37
Default
3,172,839
3,750,472
2,404,010
2,371,766
60,174,255
32,410,406
62,909,990
43,335,615
Total
Credit quality. Historical default rates
The Bank's default rate, understood as the ratio between default risks at any given time and total Bank
credit risks, was 12.50% at 31 December 2012 (7.46% at 31 December 2011).
66
(3.1.5) Concentration of risks
The table below shows information concerning the sector and geographic concentration risk, by
autonomous community, at 31 December 2012
31/12/12
SECTOR
TOTAL (*)
Spain
Rest of the EU
America
ROW
Credit institutions
55,178,533
27,503,984
24,164,928
3,297,045
212,576
Government agencies
33,847,078
31,553,457
2,237,367
49,695
6,559
27,390,454
25,097,493
2,237,367
49,695
5,899
Central administration
6,456,624
6,455,964
-
-
660
Other financial institutions
Other
23,209,736
10,253,942
12,795,217
148,077
12,500
Non-financial institutions and sole proprietors
74,231,779
68,000,909
3,912,027
1,886,881
431,962
6,999,784
6,798,142
44,234
134,981
22,427
Construction and real estate development
Civil engineering construction
4,072,295
3,564,124
482,256
25,915
-
63,159,700
57,638,643
3,385,537
1,725,985
409,535
Large enterprises
31,919,055
27,149,319
2,954,408
1,428,426
386,902
SMEs and sole proprietors
31,240,645
30,489,324
431,129
297,559
22,633
84,278,061
82,756,791
1,102,565
89,757
328,948
77,202,322
75,730,610
1,065,447
85,683
320,582
Consumer
3,117,719
3,102,538
6,752
4,074
4,355
Other
3,958,020
3,923,643
30,366
-
4,011
Subtotal
Less: Valuation adjustments due to impairment of assets not
attributable to specific transactions
270,745,187
220,069,083
44,212,104
5,471,455
992,545
TOTAL
270,291,931
Other
Other households and NPISH
Housing
(*)
(453,256)
The definition of risk includes the following items of the public balance sheet: "Loans and advances to credit institutions", "Loans and advances to customers", "Debt
securities", "Equity instruments", "Trading derivatives", "Hedging derivatives", "Investments" and "Contingent exposures". The amounts included in the table are net of
impairment losses.
Autonomous communities
Canary
Islands
Castilla y
León
Item
Total (*)
Credit institutions
27,503,984
364,352
3,374
1
75
26,071,031
278,580
-
786,571
Government agencies
31,553,457
199,290
86,395
71,554
163,200
4,676,425
797,996
33,074
428,030
25,097,493
-
-
-
-
-
-
-
-
6,455,964
199,290
86,395
71,554
163,200
4,676,425
797,996
33,074
428,030
10,253,942
2,147
563
698
234
9,599,399
641,144
6
9,751
68,000,909
1,715,008
382,351
1,148,041
956,725
55,094,016
5,144,579
64,681
3,495,508
Construction and real estate development
6,798,142
277,748
38,203
318,133
237,583
3,672,903
1,787,109
2,997
463,466
3,564,124
79,408
3,798
19,847
94,198
3,077,168
47,521
945
241,239
57,638,643
1,357,852
340,350
810,061
624,944
48,343,945
3,309,949
60,739
2,790,803
Large enterprises
27,149,319
538,450
104,559
202,145
338,846
22,888,034
2,172,606
4,592
900,087
30,489,324
819,402
235,791
607,916
286,098
25,455,911
1,137,343
56,147
1,890,716
82,756,791
6,325,975
1,486,835
2,316,935
2,846,284
47,454,726
11,723,314
195,838
10,406,884
75,730,610
6,037,511
1,406,071
2,170,931
2,651,390
43,263,745
10,152,178
188,639
9,860,145
Consumer
3,102,538
130,293
35,386
68,535
135,143
1,860,305
600,394
3,735
268,747
Other
3,923,643
158,171
45,378
77,469
59,751
2,330,676
970,742
3,464
277,992
220,069,083
8,606,772
1,959,518
3,537,229
3,966,518
142,895,597
18,585,613
293,599
15,126,744
Other
Other
Housing
SUBTOTAL
Less: valuation adjustments due to impairment
of assets not attributable to specific
transactions (**)
Andalusia
Catalonia
Madrid
Valencia
La Rioja
Other
(453,256)
TOTAL
219,615,827
(*) The definition of risk includes the following items of the public balance sheet: "Loans and advances to credit institutions", "Loans and advances to customers", "Debt
impairment losses.
(**) Includes the total amount of valuation adjustments for impairment of assets not attributable to specific transactions
67
The table below shows information concerning the diversification of risks by business sectors, measured
as credit risk, excluding equity income and trading derivatives, in accordance with the borrower's CNAE
activity code and regardless of the purpose of the financing at 31 December 2012 and 2011:
SECTOR
31/12/12
Foodstuffs
31/12/11
1,324,708
1,607,962
583,800
3,188,044
Automotive and auto services
1,234,281
2,426,882
Wholesale
4,628,316
4,968,162
Retail
3,191,669
3,711,293
22,047,266
61,149,588
Machinery and equipment manufacturing
3,141,830
4,188,110
Manufacturing of intermediate products
3,745,433
4,896,872
35,846,500
49,667,792
Catering and tour operators
4,363,008
5,062,981
Food, beverages and tobacco industry
1,926,609
2,252,942
Basic manufacturing, textiles, furniture
881,461
1,107,583
6,948,103
6,479,160
Public sector
40,963,516
26,249,214
Company services
26,805,601
9,313,876
Leisure, culture, health and education
6,667,447
6,753,498
Supplies: electricity, gas, steam, water
7,820,375
9,255,941
Telecommunications
1,416,743
2,210,787
Transport
2,451,752
2,781,543
72,725,940
84,724,041
248,714,358
291,996,271
Associations
Construction and development (*)
Finance
Mining, energy and infrastructures
Other sectors
TOTAL
(*) Included financing not related to real estate development
The Bank regularly monitors major customer risk, and these are periodically reported to the Bank of
Spain.
(3.1.6) Netting agreements and collateral agreements
At 31 December 2012, there were 267 netting agreements and 167 collateral agreements (168 and 169,
respectively, at 31 December 2011). The effect of these agreements at 31 December 2012 was a 92.04%
reduction in the credit risk of derivative transactions (91.12% at 31 December 2011).
The effect of netting agreements and collateral agreements on the credit risk of derivative transactions at
31 December 2012 was as follows:
(Millions of euros)
Credit risk exposure (utilisation of
lines)
Exposure (utilisation of
lines) with netting
agreements
Exposure (utilisation of lines) with netting
agreements and collateral agreements
47,406
11,523
3,775
100.0%
24.3%
8.0%
68
31 December 2011 was as follows:
(Millions of euros)
Credit risk exposure (utilisation of
lines)
Exposure (utilisation of
lines) with netting
agreements
40,928
11,145
3,636
100.0%
27.2%
8.9%
(3.1.7) Collateral received and other credit enhancements
At 31 December 2012, the distribution by segments of original exposure, excluding equities and trading
derivatives, with collateral and other credit enhancements was as follows:
SEGMENT
Mortgage
collateral
Unsecured
guarantees
Other collateral
Other guarantees
TOTAL
Standard Approach
37,100,477
966,715
78,158,018
177,898
116,403,108
IRB Approach
58,373,524
10,195,611
63,379,021
363,094
132,311,250
Institutions
576,380
97,362
25,531,738
2,506
26,207,986
Companies
4,289,797
9,907,777
31,573,890
157,545
45,929,009
53,507,347
190,472
6,273,393
203,043
60,174,255
54,621
57,917
1,240,149
240
1,352,927
51,535,470
-
703,342
-
52,238,812
1,917,256
132,555
1,490,351
202,803
3,742,965
-
-
2,839,551
-
2,839,551
95,474,001
11,162,326
141,537,039
540,992
248,714,358
Retail customers
Consumer
Mortgage - Other
Retail - SMEs
Cards
TOTAL
At 31 December 2011, the distribution by segments of exposure, excluding equities and trading
derivatives, with collateral and other credit enhancements, was as follows:
SEGMENT
Mortgage
collateral
Other collateral
Unsecured
guarantees
Other guarantees
TOTAL
Standard Approach
67,716,918
2,036,611
59,712,970
1,361,298
130,827,797
IRB Approach
69,868,495
13,411,247
77,276,320
612,412
161,168,474
Institutions
646,730
125,808
30,314,557
15,212
31,102,307
Companies
13,802,497
12,990,136
40,000,972
362,572
67,156,177
Retail customers
55,419,268
295,303
6,960,791
234,628
62,909,990
-
209,999
2,873,507
100,659
3,184,165
54,195,938
-
90
-
54,196,028
1,223,330
85,304
1,202,841
133,969
2,645,444
-
-
2,884,353
-
2,884,353
137,585,413
15,447,858
136,989,290
1,973,710
291,996,271
Consumer
Mortgage - Other
Retail - SMEs
Cards
TOTAL
69
For the purposes envisaged in the tables above, the following are explained:
-
Transactions with mortgage collateral: property mortgage, concession mortgage, chattel
mortgage, shipping mortgage and aircraft mortgage.
-
Other collateral: equity securities, fixed-income securities and other types of securities,
government securities, term deposits and other account deposits, goods and receipts,
investment funds, bills of exchange, deposit certificates, mortgage-backed securities, etc.
-
Personal guarantees: with or without guarantor, joint guarantee and insurance policy.
-
Other guarantees: endorsement by a reciprocal guarantee association, CESCE credit insurance
policy, bank guarantee and comfort letter.
From the legal viewpoint, a guarantee is a contract which provides greater security towards compliance
with an obligation or payment of a debt in such a way that, in the event of default by the borrower, the
guarantee reduces the losses arising from the transaction.
Pursuant to Circular 3/2008, guarantees will enjoy legal certainty so that all contracts contain the
conditions legally stipulated to make them fully valid, and so they are fully documented in such a way as
to establish a clear effective procedure to enable the guarantee to be executed rapidly.
These are the principles inspiring the functional definition of the Corporate Guarantee System currently
deployed, the Corporate Transactions Module of which is now operational.
Guidelines have been drawn up and approved with detailed procedures for the treatment of certain
guarantees such as mortgage collateral or securities pledges.
The Credit Policy Manual also has a specific chapter relating to the valuation of real estate assets and
foreclosed assets. This sets out the conditions that must be met by a property to serve as collateral, and
regulates admissible appraisals and their review frequency. Finally, it establishes the conditions for
measurement of property assets foreclosed or received in payment of debts.
The table below shows financing granted to customers, broken down by type of counterparty. The
amounts shown are the carrying amounts of the transactions; i.e. after deducting valuation adjustments
attributable to specific transactions. The valuation adjustments for impairment of a set of assets not
attributable to specific transactions are shown under “Valuation adjustments for impairment of assets not
attributable to specific transactions”.
70
Also included is the total amount of secured financing based on the percentages of the carrying amount
of the financing over the latest available appraisal or valuation of the guarantee (loan to value).
TOTAL
Of which:
Mortgage
loans
Of which:
Other
secured
loans
Less than
or equal to
40%
ITEM
Secured loans. Loan to value
More than
More than
More than
40% and
60% and
80% and
less than or
less than or less than or
equal to
equal to
equal to
60%
80%
100%
More than
100%
Government agencies
8,595,757
110,721
1,359
19,232
21,696
63,617
767
6,768
Non-financial institutions and sole
proprietors
Construction and real estate
development
5,399,357
32,420
1,608
15,089
11,625
4,798
423
2,093
38,099,624
13,680,316
3,743,174
5,717,490
4,333,522
2,464,511
619,650
4,288,317
4,944,113
3,136,025
53,789
1,305,966
712,205
751,360
190,761
229,522
4,072,295
3,461,914
86,154
1,562,527
1,312,227
334,932
35,063
303,319
Other
29,083,216
7,082,377
3,603,231
2,848,997
2,309,090
1,378,219
393,826
3,755,476
Large enterprises
14,088,333
665,808
3,049,780
289,487
275,457
356,282
162,640
2,631,722
14,994,883
6,416,569
553,451
2,559,510
2,033,633
1,021,937
231,186
1,123,754
83,739,611
79,810,564
216,718
13,181,144
23,286,602
31,284,778
9,767,822
2,506,936
Housing
77,202,322
76,578,830
-
12,359,035
22,173,840
30,435,117
9,537,407
2,073,431
Consumer
3,117,719
109,285
189,967
28,538
14,217
20,301
86,832
149,364
Other
3,419,570
3,122,449
26,751
793,571
1,098,545
829,360
143,583
284,141
Subtotal
Less: Valuation adjustments due to
impairment of assets not attributable to
specific transactions
135,834,349
TOTAL
135,386,951
MEMORANDUM ITEM
Refinancing, refinanced and
restructured operations
15,115,514
93,634,021
3,962,859
18,932,955
27,653,445
33,817,704
10,388,662
6,804,114
1,122,160
1,920,935
3,411,844
3,400,108
2,305,542
1,993,706
(447,398)
11,909,975
(3.1.8) Renegotiated financial assets
In 2012, the Bank carried out renegotiations of assets, modifying the conditions originally agreed with
borrowers in terms of repayment deadlines, interest rates, collateral given, etc.
The purpose of asset renegotiation is to give the borrower financial stability so as to ensure continuity of
its business, adapting operations to its repayment capacity revealed, in the case of legal entities, in
business plans approved by experts, and in the case of individuals by the existence of a proven ability to
pay and/or compliance with its payment obligations during previous periods.
The debt restructuring and refinancing policy distinguishes between legal and natural persons.
The criteria for legal persons have certain common features, the most important of which are:
• Existence of standstill agreements, under which the debts are not enforced and maturities are not
extended, to guarantee funding of companies' working capital so they can continue to operate as
usual.
• Submission of business plans verified by independent experts and showing repayment capacity.
• Potential existence of disposal plans for non-earning assets to repay debt.
• Inclusion of new guarantees or modification of existing guarantees.
For natural persons the policy is limited to a single restructuring and whether there is a proven willingness
to pay. Approval criteria vary between mortgage and consumer loan renegotiations.
Criteria applied to mortgage renegotiations include:
• Extension of maturities and amendment to repayment system to adapt to customers' payment
capacity.
• Update of appraisals, under current regulations, where collateral is received as cover.
71
For transactions with personal guarantees, negotiations in general seek an overall solution, consolidating
the customers' debts with the Bank and extending the maturity as far as possible for the product at all
times.
The following tables show the gross amounts of refinancing operations according to their classification as
transactions that call for special monitoring, substandard or doubtful risks, along with the respective credit
risk cover:
Normal (1)
Full mortgage guarantee
No. of transactions
Government agencies
Other collateral (2)
Gross amount
No. of transactions
Without collateral
Gross amount
No. of transactions
Gross amount
77
13,152
-
-
35
62,710
1,649
604,627
238
356,046
1,697
465,741
845
399,187
87
61,586
590
132,958
Other natural persons
38,865
5,484,119
3,684
544,679
5,031
36,212
Total
40,591
6,101,898
3,922
900,725
6,763
564,663
Other legal persons and sole proprietors
Of which: Financing for construction and property development
Substandard
No. of
Gross
transactions
amount
Government agencies
No. of
Gross
transactions
amount
Without collateral
No. of
Gross
transactions
amount
Specific
allowanc
e
-
-
-
-
1
8,000
(1,200)
Of which: Financing for construction and property
development
3,404
1,102,197
836
992,048
5,375
769,422
(660,346)
613
355,423
71
88,044
409
252,788
(232,214)
2,980
503,850
494
55,294
24,482
179,683
(54,455)
Total
6,384
1,606,047
1,330
1,047,342
29,858
957,105
(716,001)
Doubtful
No. of transactions
Government agencies
Gross amount
No. of transactions
Without collateral
Gross amount
No. of transactions
Gross amount
Specific
allowance
-
-
-
-
10
11,498
(5,368)
3,995
2,175,073
1,361
1,522,760
6,487
1,996,991
(2,938,110)
1,598
402,257
541
136,750
2,256
555,287
(681,177)
15,860
2,609,094
3,376
509,266
6,199
65,101
(1,248,676)
Total
19,855
4,784,167
4,737
2,032,026
12,696
2,073,590
(4,192,154)
development
Total
(Tho
usa
nds
of
Government agencies
development
No. of
transactions
Gross
amount
No. of
transactions
Without collateral
Gross
amount
No. of
transactions
Gross
amount
Specific
allowance
No. of
transactions
Gross
amount
Specific
allowance
77
13,152
-
-
46
82,208
(6,568)
123
95,360
(6,568)
9,048
3,881,897
2,435
2,870,854
13,559
3,232,154
(3,598,456)
25,042
9,984,905
(3,598,456)
3,056
1,156,867
699
286,380
3,255
941,033
(913,391)
7,010
2,384,280
(913,391)
57,705
8,597,063
7,554
1,109,239
35,712
280,996
(1,303,131)
100,971
9,987,298
(1,303,131)
Total
66,830
12,492,112
9,989
3,980,093
49,317
3,595,358
(4,908,155)
126,136
20,067,563
(4,908,155)
(1) Normal risks classified as transactions that call for special monitoring as per section 7 of Appendix IX of Circular 4/2004
(2) Includes transactions with partial mortgage collateral; i.e. with an LTV of over 1, and other transactions with collateral other than a mortgage,
regardless of the LTV.
For refinanced transactions, the Group maintains all doubtful renegotiated mortgage and consumer loans
classified in this category until there is a period of continued payments of the instalments that ensures the
effectiveness of the measures adopted. Renegotiated operations that were not classified as doubtful at
the time of the refinancing are classified as substandard, recognising a minimum provision of 10%. The
provision for insolvency maintained or increased on these operations offsets any potential loss arising
from the difference between the carrying amount of the financial assets before and after the
72
renegotiation. The Group does not generally offer relief from or lower interest rates in renegotiating this
type of asset.
The potential reversal of impairment losses recognised on refinanced operations is made, as appropriate,
after a prudential period of time between the time of refinancing and when the new conditions of the
refinancing provide evidence of the effectiveness of the measures adopted by the Group, and providing
the borrower meets its obligations.
(3.1.9) Assets impaired and derecognised
The table below shows the changes in 2012 and 2011 in the Bank’s impaired financial assets that were
not recognised on the face of the balance sheet because their recovery was considered unlikely,
although the Bank had not discontinued actions to recover the amounts owed (“written-off assets”).
Assets impaired and derecognised
ITEM
31/12/12
31/12/11
Balance at 1 January
936,737
-
Additions from:
Assets unlikely to be recovered (*)
Uncollected past-due amounts
Subtotal
14,956,043
1,580,891
128,856
108,755
15,084,899
1,689,646
182,706
70,499
14,550,147
686,781
14,732,853
757,280
(867)
4,371
1,287,916
936,737
Derecognition through:
Cash collection
Foreclosure of assets and other causes(*)
Subtotal
Net change due to exchange differences
Balance at 31 December
(*) The balance of these items for 2012 includes EUR 13,361,513 thousand related to losses incurred in the transfer of loans to the SAREB (see
Note 1.16).
The Assets and Liabilities Committee (ALCO) is the body responsible for monitoring and managing
liquidity risk in accordance with the decisions and criteria approved by the Board of Directors. The
Committee approves procedures for action to be taken to secure financing through instruments and
maturities with a view to guaranteeing at all times the availability of funds at reasonable prices, to enable
the Bank to meet the obligations undertaken and finance the growth of investment business.
73
The Bank's liquidity gap is shown below, classifying capital outstanding on financial assets and liabilities
by due dates, using the reference of the periods to run between the date referred to and their contractual
due dates. The liquidity gap at 31 December 2012 was as follows:
ITEM
On demand
Up to 1 month
3 months to 1
year
1 to 3 months
1 to 5 years
More than 5 years
Total
Assets
4,563,082
-
-
-
-
-
Loans and advances to credit institutions
-
7,369,545
953,992
469,469
228,366
3,025
9,024,397
Loans and advances to customers
-
3,801,423
3,675,929
10,176,366
30,512,560
87,220,673
135,386,951
Financial assets held for trading and financial
assets at fair value through profit or loss
-
24,920
199,404
5,085
10,800
74,423
314,632
Other portfolios - Debt securities
-
133,715
216,576
8,566,887
48,190,938
14,115,994
71,224,110
4,563,082
11,329,603
5,045,901
19,217,807
78,942,664
101,414,115
220,513,172
Subtotal
4,563,082
Liabilities
Deposits from
institutions
central
banks
and
credit
5,115,243
40,201,260
1,141,403
578,118
29,913,599
1,119,916
78,069,539
38,392,741
13,585,378
6,626,813
29,020,615
18,676,898
11,614,502
117,916,947
Marketable debt securities
-
264,756
2,400,655
3,364,713
14,709,254
10,413,020
31,152,398
Subordinated liabilities
-
-
-
-
-
15,641,800
15,641,800
43,507,984
54,051,394
10,168,871
32,963,446
63,299,751
38,789,238
242,780,684
(38,944,902)
(42,721,791)
(5,122,970)
(13,745,639)
15,642,913
62,624,877
(22,267,512)
Customer deposits
Subtotal
TOTAL GAP
The liquidity gap at 31 December 2011 was as follows:
ITEM
On demand
Up to 1 month
3 months to 1
year
1 to 3 months
1 to 5 years
More than 5 years
Total
Assets
6,117,225
-
-
-
-
-
6,117,225
-
11,924,921
2,885,747
831,591
506,763
3,479,784
19,628,806
-
7,664,164
5,955,347
17,272,028
40,946,979
110,787,042
182,625,560
-
1,018,068
-
-
168,550
196,550
1,383,168
-
18,177,649
183,321
1,560,609
11,085,755
8,865,340
39,872,674
6,117,225
38,784,802
9,024,415
19,664,228
52,708,047
123,328,716
249,627,433
Subtotal
Liabilities
Deposits from
institutions
central
banks
and
credit
1,510,706
16,516,268
3,081,923
1,108,565
20,264,715
2,383,292
44,865,469
44,976,321
34,435,315
8,321,449
27,272,823
31,273,712
15,104,767
161,384,387
-
2,439,175
7,479,036
9,150,331
17,877,200
10,661,640
47,607,382
-
-
-
-
-
318,283
318,283
46,487,027
53,390,758
18,882,408
37,531,719
69,415,627
28,467,982
254,175,521
(40,369,802)
(14,605,956)
(9,857,993)
(17,867,491)
(16,707,580)
94,860,734
(4,548,088)
Customer deposits
Subtotal
TOTAL GAP
Pursuant to applicable regulations, “Liabilities at amortised cost – Other financial liabilities” is a residual
item which, in general, includes temporary items or those with no contractual maturity. Therefore, it is not
included in the preceding table, because it is not possible to reliably attribute the amounts recognised
therein by maturity.
In addition, regarding derivatives entered into by the Bank, as fair value is estimated and as the
operations have regular maturity schedules in many cases, it is not possible to reliably attribute the
amount to specific maturities. As a result, the derivative financial instruments used by the Bank, both
trading or hedging, are not material and in no case essential for understanding its exposure to liquidity
risk.
Valuation adjustments and accrued interest are included.
This gap is the result of grouping financial assets and liabilities together by contractual maturity dates at
31 December 2012 and 2011, disregarding possible renewals. It is, therefore, an extremely prudent
analysis of liquidity risk, given the historical performance of the Bank’s financial liabilities, especially
customer deposits (retail liabilities). Therefore, in terms of liquidity risk, the balances of customer demand
deposits have historically remained stable over time, although legally they are payable on demand. It
74
must also be remembered that most of the assets in the securities portfolio are eligible for use as
collateral for short-term financing operations in the market and for financing with the European Central
Bank (ECB) with strong possibilities of being rolled over.
Maturities of issues
The following table provides information on the term to maturities of the Bank's issues at 31 December
2012 and 2011, by type of financial instrument, including promissory notes and issues placed via the
network.
31 December 2012
Thousands of euros
ITEM
2013
2014
2015
> 2015
Mortgage-backed bonds and securities
3,294,819
5,796,163
2,874,289
18,302,262
Territorial bonds
-
1,442,300
-
-
1,710,150
765,200
459,604
1,724,916
300,000
-
-
-
Subordinate, preference and convertible securities (*)
-
-
-
15,498,427
Other medium-term and long-term financial instruments
-
-
-
-
Securitisations sold to third parties
-
-
-
6,236,381
Senior debt
State-guaranteed issues
Commercial paper
1,636,574
-
-
-
Total maturities of issues (**)
6,941,543
8,003,663
3,333,893
41,761,986
(*) Includes the EUR 4,500,000 thousand subordinated loan granted by Banco Financiero y de Ahorros, S.A.U. in September 2012 and the EUR
10,700,000 thousand of convertible bonds subscribed by Banco Financiero de Ahorros under Bankia's Recapitalisation Plan. The remaining EUR
298,427 thousand are subject to execution of the burden-sharing exercise among the commitments of the Recapitalisation Plan.
(**) Figures shown in nominal amounts less treasury shares and issues withheld.
In the first four months of 2012, the Bank covered maturities through a reduction in the commercial gap
and participation in the ECB's long-term auction. In May, borrowing from the ECB increased due to the
escalation of the sovereign crisis in EU peripheral countries, rating actions on sovereign debt and
Spanish financial institutions, and the restructuring of the Spanish banking sector, which virtually closed
off long-term wholesale markets for Spain's credit institutions and made it more difficult to raise shortterm finance on the market through reverse repos.
31 December 2011
Thousands of euros
ITEM
Territorial bonds
2012
2013
3,000,722
2014
> 2014
3,082,142
5,433,563
21,776,635
20,000
-
1,489,550
-
Senior debt
5,135,772
1,595,638
772,100
2,236,285
9,046,150
300,000
-
-
Subordinate, preference and convertible securities
-
-
-
297,736
-
-
-
-
-
-
-
8,204,314
Commercial paper
Total maturities of issues (*)
2,459,987
2,000
-
-
19,662,631
4,979,780
7,695,213
32,521,956
(*) Figures shown in nominal amounts less treasury shares and issues withheld.
Liquid assets
In managing its liquidity gap, and in order to cater for future funding maturities, the Bank has certain
liquid assets available to guarantee the commitments acquired in its lending activities.
Thousands of euros
31/12/12
Liquid assets (nominal value)
24,453,710
19,083,570
Liquid assets (market value and ECB haircut)
24,111,696
13,354,373
4,675,605
1,333,293
of which: Central government debt
31/12/11
75
The Bank has EUR 24,112 million of effective liquid assets, all eligible for ECB financing operations. Of
these, EUR 3,922,229 thousand were undrawn at 31 December 2012 (EUR 10,231,897 at 31 December
2011). In December 2012, due to the Bank's capitalisation and the transfer of assets to the SAREB,
assets were received that are eligible for ECB financing, leading to an increase in the level of liquid
assets from the year before.
In addition, the balance of the Eurosystem deposit facility at 31 December 2012 amounted to EUR 2,800
million (EUR 4,100 million at 31 December 2011).
Issuance capacity
31/12/12
31/12/11
Mortgage-backed securities issuance capacity
1,936,298
6,283,501
503,249
367,788
Territorial bond issuance capacity
Responsibility for monitoring and managing the Bank's global balance sheet interest rate risk is formally
allocated to the Assets and Liabilities Committee (ALCO), the Institution's most senior executive body,
which operates in accordance with the determinations and criteria approved by the Board of Directors.
In light of current circumstances and market forecasts for interest rates, the ALCO should act in line with
the Bank's risk strategy and profile. Interest rate risk is managed with a view to achieving a stable net
interest margin and preserving the Bank's economic value. To achieve this, it arranges additional hedges
to natural hedges for its assets and liabilities.
The ALCO uses measurements of sensitivities of interest rates and equity to movements in interest rates
and different sensitivity scenarios based on implied market rates, comparing non-parallel shifts in yield
curves that alter the trend slope of different balance sheet aggregates.
The interest rate gap shows the maturity distribution or asset repricing, whichever is closer in time. The
sensitivity of items with no fixed maturity, such as transactional demand deposits from customers, to
movements in interest rates is assessed with respect to their historical stability in different market interest
rate scenarios. Balance-sheet items not sensitive to interest rates, mainly valuation adjustments,
provisions and doubtful assets, are included in the period for over five years.
The interest rate gap at 31 December 2012 is as follows:
ITEM
Assets
Up to 1
month
1 to 3 months
3 months to
1 year
1 to 2 years
2 to 3 years
3 to 4 years
More than 5
years
4 to 5 years
Total
2,920,825
-
-
-
-
-
-
1,642,257
6,995,412
1,110,680
454,726
135
22
-
7,339
456,083
9,024,397
25,963,552
35,972,225
59,722,547
2,000,167
447,315
143,471
217,026
10,920,648
135,386,951
Financial assets held for trading and financial assets at
fair value through profit or loss
4,563,082
12,467
200,004
5,110
2,000
5,500
300
2,400
86,851
314,632
6,603,283
25,686,366
18,354,150
2,019,798
4,480,420
8,033,599
2,577,041
3,469,453
71,224,110
42,495,539
62,969,275
78,536,533
4,022,100
4,933,257
8,177,370
2,803,806
16,575,292
220,513,172
Deposits from central banks and credit institutions
75,504,213
1,964,131
475,252
3,214
129
38
37
122,525
78,069,539
Customer deposits, marketable debt securities and
subordinated liabilities
10,703,272
966,266
420,225
59,934
48,362,806
164,711,145
Subtotal
Liabilities
33,599,140
31,184,120
39,415,382
Subtotal
109,103,353
33,148,251
39,890,634
10,706,486
966,395
420,263
59,971
48,485,331
242,780,684
TOTAL GAP
(66,607,814)
29,821,024
38,645,899
(6,684,386)
3,966,862
7,757,107
2,743,835
(31,910,039)
(22,267,512)
(66,607,814)
(36,786,790)
1,859,109
(4,825,277)
(858,415)
6,898,692
9,642,527
(22,267,512)
(23.85%)
(13.17%)
0.67%
(1.73%)
(0.31%)
2.47%
3.45%
(7.97%)
CUMULATIVE GAP
% of balance sheet total
76
The sensitivity gap analysis at 31 December 2011 is as follows:
Up to 1
month
ITEM
Assets
1 to 3 months
3 months to
1 year
1 to 2 years
2 to 3 years
3 to 4 years
More than 5
years
4 to 5 years
Total
4,058,355
-
-
-
-
-
-
2,058,870
6,117,225
12,637,463
3,004,203
828,725
6,340
23
22
-
3,152,030
19,628,806
39,547,992
48,237,833
76,891,572
2,756,318
1,360,685
561,575
232,738
13,036,847
182,625,560
215,696
58,977
476,522
106,992
43,600
101,300
48,700
331,381
1,383,168
6,970,578
6,594,664
8,557,757
2,736,273
2,101,374
2,943,252
5,234,779
4,733,997
39,872,674
63,430,084
57,895,677
86,754,576
5,605,923
3,505,682
3,606,149
5,516,217
23,313,125
249,627,433
37,067,021
4,139,571
1,938,004
583,628
212,964
135,596
49,587
739,098
44,865,469
63,248,325
45,787,842
38,863,752
12,175,169
10,375,861
1,279,813
611,105
36,968,185
209,310,052
Subtotal
Liabilities
Subtotal
TOTAL GAP
CUMULATIVE GAP
100,315,346
49,927,413
40,801,756
12,758,797
10,588,825
1,415,409
660,692
37,707,283
254,175,521
(36,885,262)
7,968,264
45,952,820
(7,152,874)
(7,083,143)
2,190,740
4,855,525
(14,394,158)
(4,548,088)
(36,885,262)
(28,916,998)
17,035,822
9,882,948
2,799,805
4,990,545
9,846,070
(4,548,088)
(12.36%)
(9.69%)
5.71%
3.31%
0.94%
1.67%
3.30%
(1.52%)
In keeping with Bank of Spain regulations, the structural interest rate risk was analysed using two
complementary approaches:
o
Simulations of the performance of net interest income. At 31 December 2012, the sensitivity of
the net interest margin, excluding the trading portfolio and financial activity not denominated in
euros, to a parallel increase of 200 b.p. in the yield curve, with a time horizon of one year and a
scenario of a stable balance sheet, was -28.69%.
o
Exposure of equity, defined as the net present value of expected future cash flows from the
various balance sheet aggregates. At 31 December 2012, the sensitivity of equity, excluding the
trading portfolio and financial activity not denominated in euros, to a parallel increase of 200 b.p.
in the yield curve, with a time horizon of one year and a scenario of a stable balance sheet, was
-1.32% of the Bank's economic value.
The sensitivity analysis was carried out assuming that the subordinated loans granted by BFA to Bankia
would be repaid and the contingent convertible bonds would be converted into Bankia shares in 2013.
The effect on the income statement and equity of reasonable future changes in the various market risk
factors at 31 December 2012 and 2011 is as follows:
Sensitivity analysis at 31 December 2012
Interest rate
Equity instruments
Exchange rate
Credit spreads
(1,746)
160
(483)
7,743
Interest rate
Equity instruments
Exchange rate
Credit spreads
(63,558)
12,363
(27)
(34)
77
The assumptions used in the calculation of sensitivity were as follows:




Interest rates: 100 bp increase
Equities: 20% fall
Exchange rates: 10% fluctuation
Credit spreads: increase consistent with credit rating, as follows:
AAA
AA
A
BBB
<BBB
5 bp
10 bp
20 bp
50 bp
150 bp
In addition, at 31 December 2012 there was a long-term portfolio of debt instruments including held-tomaturity investments with a nominal amount of EUR 75,732,174 thousand and an overall sensitivity of
EUR 1,751,841 thousand.
The disclosures of information in compliance with the Bank of Spain's requirements with regard to the
Bank's exposure on transactions in the Spanish property and construction industries at 31 December
2012 are as follows:
(3.5.1) Disclosures on exposure to property development and construction
The table below shows cumulative figures on the financing granted by the Bank at 31 December 2012
and 2011 for the purposes of construction and property development and the respective credit risk
coverage in place at that date (1):
31 December 2012
Total, gross
Excess over
value of
collateral (2)
Impairment losses.
Specific coverage
1. Construction and property financing (transactions in Spain) (3)
3,836,873
1,193,759
1,611,575
1.1. Of which: Doubtful
1,179,026
226,041
606,562
1.2. Of which: Substandard
1,532,111
390,089
703,013
Memorandum item:
Assets written off (4)
441,637
Memorandum item:
Item
Carrying amount
1. Total loans and advances to customers, excluding the public sector (transactions in Spain) (5)
124,991,146
2. Total assets (all transactions)
279,243,017
3. Valuation adjustments and provisions for credit risk. Total general coverage (all transactions)
152,518
(1) For the purposes of this table, credits are classified by purpose rather than the borrower's CNAE code. If the borrower is a
property company but uses the financing received for a purpose other than construction or property development, the
transaction is excluded from this table. Conversely, if the borrower is a company whose core business is not construction or
property-related but uses the financing received for property development purposes, the transaction is included in this table.
(2) The excess of the gross amount of the financing over the value of any property rights received as collateral, calculated pursuant
to Annex IX of Circular 4/2004. Thus the value of such property rights is the lower of the cost of the asset and its appraised value
in its present condition, weighted by a percentage ranging from 70% to 50%, in accordance with the nature of the mortgaged
asset.
(3) Includes all financing as loans and credits, with or without mortgage collateral and debt instruments, for the Spanish construction
and property industries (transactions in Spain).
(4) Gross amount of financing for the purpose of construction and property development granted by the Bank (transactions in Spain)
and assets written off.
(5) The carrying amount is the value at which the assets are recognised on the balance sheet after deduction of any amount
allocated to cover such assets.
78
31 December 2011
Total, gross
1. Construction and property financing (transactions in Spain) (3)
Excess over
value of
collateral (2)
Impairment losses.
Specific coverage
33,817,106
8,628,554
4,707,793
7,743,510
2,397,356
2,396,930
15,354,309
4,189,394
2,310,863
Memorandum item:
342,167
Memorandum item:
Item
Carrying amount
170,636,526
2. Total assets (all transactions)
298,366,696
3. Valuation adjustments and provisions for credit risk. Total general coverage (all transactions)
1,174,700
property-related but uses the financing received for property development purposes, the transaction is included in this table.
asset.
(3) Includes all financing as loans and credits, with or without mortgage collateral and debt instruments, for the Spanish construction
and property industries (transactions in Spain).
(4) Gross amount of financing for the purpose of construction and property development granted by the Bank (transactions in Spain)
and assets written off.
The table below breaks down construction and property development financing granted by the Bank at 31
Finance intended for construction and property development: Total, gross
31/12/12
1. Not mortgage-secured
31/12/11
300,510
7,561,176
2. Mortgage-secured (1)
3,536,363
26,507,988
2.1. Finished buildings (2)
2,302,463
15,162,480
2.1.1. Housing
1,218,693
11,138,085
2.1.2. Other
1,083,770
4,024,395
2.2. Buildings under construction (2)
334,528
4,775,856
2.2.1. Housing
184,789
4,025,625
2.2.2. Other
149,739
750,231
899,372
6,569,652
2.3.1. Urban land
663,372
5,472,833
2.3.2. Other land
236,000
1,096,819
2.3. Land
Total
3,836,873
34,069,164
(1) Includes all mortgage-secured transactions regardless of ratio of outstanding amount to the latest appraised value.
(2) If a building is used for both residential (housing) and commercial (offices and/or premises) purposes, the related financing is
classified under the category of the predominant purpose.
79
(3.5.2) Loans to households for home purchases (transactions in Spain)
The table below presents the detail at 31 December 2012 and 2011 of financing granted by the Bank for
the purpose of home purchases (transactions in Spain):
Total, gross
Of which: Doubtful
Total, gross
31/12/12
Loans for home purchases
Non-mortgage-secured
Mortgage-secured
Of which: Doubtful
31/12/11
83,246,463
6,612,829
83,958,913
3,449,696
879,627
4,673
900,713
1,302
82,366,836
6,608,156
83,058,200
3,448,394
The table below presents the detail of mortgage-secured loans to households for home purchases at 31
December 2012 and 2011, classified by the ratio of the outstanding amount to the latest available
appraised value (LTV) in respect of transactions recognised by the Bank (transactions in Spain):
31 December 2012
LTV ranges
Less than or equal
to 40%
Total gross
Of which: doubtful
More than 40% and
less than or equal to
60%
More than 60% and
80%
More than 80% and
100%
More than
100%
Total
14,865,410
21,579,378
32,698,042
11,764,232
1,459,774
82,366,836
567,006
923,968
2,479,343
2,034,674
603,165
6,608,156
(1) LTV (loan-to-value) is the ratio of the amount outstanding at the reporting date to the latest available appraised value.
31 December 2011
LTV ranges
Less than or equal
to 40%
Total gross
Of which: doubtful
More than 40% and
60%
More than 60% and
80%
More than 80% and
100%
More than
100%
Total
12,730,725
20,231,970
35,059,288
13,485,101
1,551,187
83,058,271
151,572
311,093
1,115,450
1,344,507
525,772
3,448,394
(3.5.3) Information concerning property assets foreclosed or received in payment of debts
(transactions in Spain)
In order to dispose of its foreclosed assets with the smallest possible impact on the income statement,
Bankia has Property Asset Management Areas to manage, administer and sell the Group's foreclosed
assets.
In order to maintain assets in the best possible conditions for sale and ensure efficient control of the
expenditure incurred in the process, technical maintenance procedures are deployed along with control
and management of turnover arising from the assets remaining on the portfolio. Consideration is also
given to maintaining lease contracts on assets in the portfolio and management of occupancy situations
concerning the assets. For construction in progress, each specific project is assessed in order to
determine its technical and commercial feasibility, making investment necessary to provide liquidity to the
project.
Attention is also paid to activities arising from the marketing process: customer care, review of the assets
published and management of offers through various sales channels: branch network, brokers, web,
events and trade fairs, etc. There is a specific financing product for the purchase of property assets
(housing and commercial premises).
Specific property assets (land, ongoing development, finished projects, etc.) placed on the Bank's
balance sheet are given priority for disposal, and may be managed through direct sales to a
development company, sales to cooperatives and community associations through structured
demand or contributions and exchanges which enable them to be removed from the Bank's balance
80
sheet in the medium term, and a low-liquidity product (land) may be exchanged for another with higher
liquidity (housing).
The Group's general policies for managing its foreclosed assets are summarised as follows:
 The volume of foreclosed assets, irrespective of how they are managed (on the balance sheets of
entities, in companies created for this purpose, in vehicles etc.) makes it necessary at the outset to
address the necessary measures for management purposes with the single aim of disposal of
assets at the least possible detriment to the income statement.
 Disposal mechanisms focus on sale and also rentals with or without a purchase option. In the case
of unique assets (specific buildings, offices, commercial premises, industrial buildings and land),
the general policy adopted is to sell these assets.
 Policy of transparency in all transactions to guarantee public offering of the asset.
 Policies to set prices for assets and delegated powers. Sales in accordance with an authorisation
system valid at all times for Bankia and BFA.
 General policy of non-exclusivity in mediation on sales of assets.
 Assessment of asset sale offers in any situation.
 The marketing process will be carried out through all the channels established: network branches,
web, auctions through Reser, Subastas y Servicios Inmobiliarios, S.A., property sales desks at
certain branches, brokers with or without keys, trade fairs and events, etc.
The pricing policies and principles for the property portfolio may be summarised as follows:

Transparency: all assets available for sale are published exclusively on the Real Estate Portal
with their retail prices.

References to set prices: the price references will be those of comparable assets, the appraisal
value of each asset, reports by mediators and ordinary costs (taxes and community expenses)
up to the estimated time of sale.

Unique assets: the primary reference of unique assets will be the latest appraisal value,
although the complex nature of sales of these assets will require individual negotiations, using
the same references as cited above.

Adaptation to changes in the housing market: dynamic adaptation and review of prices in
accordance with changes on the property market. Prices will be reviewed regularly, with updates
of appraisals and observance of regulations and consideration of changes to the official housing
market indexes.

Special events: at trade fairs, real estate fairs or other temporary events, more attractive prices
may be published for that period only.

Auctions by the specialist auctioneer RESER.

Leases: property assets will be leased with a rent approved by the appropriate committee, which
will at all times contemplate a minimum return in accordance with the value of the asset to be
leased. Lessor purchase options may also be considered for the asset leased.

Employees of the Bank: employees will have the benefits agreed on each occasion.
81
The table below presents the detail of assets acquired by the Bank through foreclosure (transactions in
Spain) at 31 December 2012 and 2011, classified by type (1):
Carrying
amount
Of which:
impairment
allowances
31/12/12
1.
Carrying
amount
Of which:
impairment
allowances
31/12/11
Property assets from financing intended for construction and property
development
388,343
83,198
939,145
545,975
1.1. Finished buildings
360,081
59,800
656,850
460,470
1.1.1. Housing
305,244
47,256
508,271
427,869
54,837
12,544
148,579
32,601
12,994
9,836
161,689
37,711
9,362
8,305
154,769
36,228
1.1.2. Other
1.2. Buildings under construction
1.2.1. Housing
1.2.2. Other
1.3. Land
1.3.1 Urban land
1.3.1 Other land
2. Property assets from mortgage-secured financing granted to households for
home purchases
3. Other property assets received in settlement of debt (2)
4. Equity instruments, investments and financing to companies holding such
assets (3).
3,632
1,531
6,920
1,483
15,268
13,562
120,606
47,794
5,361
7,406
42,723
3,534
9,907
6,156
77,883
44,260
1,263,360
628,771
1,188,166
1,244,557
156,762
57,970
54,251
212,669
1,225,562
3,790,558
1,676,021
1,450,983
(1) Includes foreclosed assets and assets acquired, purchased or exchanged for debt in connection with financing granted by the
Bank (transactions in Spain), as well as investments in and financing to entities holding these assets.
(2) Includes property assets not arising in connection with loans to construction and property development companies, regardless
of the economic sector to which the company or entrepreneur belongs, or to households for home purchases.
(3) Includes all assets of this type, such as equity instruments, investments in and financing to entities holding the property assets
referred to in lines 1 to 3 of this table and equity instruments of and investments in construction or property companies accepted
in settlement of debts.
The above tables include property assets acquired through foreclosure or in settlement of debts, other
than the exception referred to in point (1), and classified by the Bank on the basis of ultimate purpose,
mainly under “Non-current assets held for sale” and “Property, plant and equipment – Investment
property” and, to a lesser extent, under “Other assets” in the balance sheet for those dates.
Bank of Spain Circular 3/2008 on the calculation and control of minimum capital requirements ("Circular
3/2008"), contained in Law 36/2007, of 16 November, in turn amending Law 13/1985, of 25 May, on the
investment ratios, capital and reporting requirements of financial intermediaries, was approved and came
into force in 2008.
Bank of Spain Circular 3/2008 adapts Spanish legislation on capital requirements to the Community
Directives, which stem, in turn, from the Basel Capital Accord (Basel II), and is structured around three
core pillars: minimum capital requirements (Pillar I), the internal capital adequacy assessment process
(Pillar II) and market disclosures (Pillar III).
Since it came into force, Circular 3/2008 has undergone a number of amendments adapting it to changes
in capital adequacy made in European regulation. The most recent amendment reflects the changes
introduced by Bank of Spain Circular 4/2011 which transposes into Spanish law Directive 2010/76/EU as
regards capital requirements for instruments held for trading and for re-securitisations, as well as the
supervisory review of remuneration policies, for the purposes of further adaptation to Basel III.
In this respect, at its 12 September 2010 meeting, the Group of Governors and Heads of Supervision, the
oversight body of the Basel Committee on Banking Supervision, announced a substantial strengthening
of existing capital requirements and fully endorsed its resolutions of 26 July 2010 (Basel III). The Basel III
accord will take effect from 1 January 2014 and will be phased-in gradually, with full implementation
slated for 1 January 2019.
82
With respect to minimum capital requirements (Pillar I), after obtaining explicit authorisation from the
Bank of Spain, the Group applied advanced IRB approaches to assess its credit risk for certain risk
exposures – institutional, corporate and retail (including micro companies, mortgages, cards and other
retail transactions) – in the Caja Madrid portfolio, as well as for new investments, and the standardised
approach for such exposures at the remaining Group entities. The Group uses the standardised
approach to measure other exposures in order to calculate the capital requirements for credit risk.
The minimum capital requirements for risks related to instruments held for trading (currency risk and
market risk) and consumer leading for credit risk exposures of equity securities are calculated by applying
internal models.
Additionally, as regards the calculation of capital requirements for operational risk, the Group uses the
basic indicator approach.
Following is a detail, classified into Tier 1 and Tier 2 capital, of the Bankia Group's capital at 31
December 2012 and 2011, and of the capital requirements for each type of risk, calculated as required by
Bank of Spain Circular 3/2008:
31/12/12
31/12/11
ITEM
Amount
Tier 1 capital (1)
5,215,253
5.0%
%
12,557,836
Amount
8.1%
%
5,382,356
5.2%
12,936,398
8.3%
Of which:
Core capital
Tier 2 capital (2)
Total Group eligible capital
Total minimum capital requirements
5,017,089
4.8%
679,423
0.4%
10,232,342
9.8%
13,237,259
8.5%
8,345,387
8.0%
12,442,778
8.0%
(1) Tier 1 includes share capital, reserves, contingent convertible bonds subscribed by BRA, net profit/(loss) for the year to be
appropriated to reserves and non-controlling interests, net, among other items, of treasury shares, the Group's other intangible
assets, unrealised net losses on capital instruments, 50% of the total deduction arising from the expected loss on the equity
portfolio, investments of more than 10% in financial institutions and of more than 20% in insurance companies and the firstloss tranches of securitisations.
(2)
Tier 2 capital mainly includes subordinated debt, any excess of provisions relating to exposures calculated using the IRB
approach with respect to the expected losses, the balance of the general coverage associated with portfolios subject to the
standardised approach, less 50% of the total deduction arising from the expected loss on the equity portfolio, investments of
more than 10% in financial institutions and of more than 20% in insurance companies and the first-loss tranches of
securitisations.
At 31 December 2012, the Bankia Group showed a capital cushion of EUR 1,887 million above the
minimum regulatory BIS II requirement of 8%.
RD 2/2011, of 18 February, for the reinforcement of the financial system, introduces the concept of
principal capital as a new regulatory capital adequacy requirement.
With this RDL, subsequently amended by RDL 24/2012 of 31 August and implemented and repealed by
Law 9/2012, the definition of principal capital includes, inter alia, the following items of equity: share
capital of public limited companies, paid-in share premium, disclosed and undisclosed reserves, retained
profit, holdings representing non-controlling interests that correspond to ordinary shares of consolidable
group companies, eligible instruments subscribed by the FROB and instruments that are convertible into
ordinary shares classified by the Bank of Spain as eligible for calculating principal capital. Deducted from
this amount are prior year losses, current year losses including loss attributable to non-controlling
interests, debt balances in equity accounts, intangible assets including goodwill arising from business
combinations, consolidation or application of the equity method and 50% of the sum of the following
assets: investments in financial institutions that are consolidable for their activity but not included in the
consolidable group where the investment exceeds 10% of the investee's capital, investments in insurance
companies that exceed 20%, subordinated finance or other securities eligible for calculation as own
equity issued by these companies, investments of 10% or greater in the capital of entities that are
consolidable for their activity but not included in the consolidated group, and subordinate financing or
other eligible secures such as equity issued by such entities, investees or otherwise and acquired by the
entity or group that holds the investment in proportion to the excess of 10% of certain equity items, the
amount of exposures to securitisations that receive a risk weighting of 1.250%, except where the amount
has been included in the calculation of risk-weighted assets for the purpose of calculating the capital
requirements for securitised assets, whether or not they are included in the held-for-trading portfolio, in
entities using IRB model of calculating the provision shortfall for expected losses; and the amounts of
83
expected losses on equities where exposure is calculated based on probability of default and loss given
default (PD/LGD method) or the simple method for available-for-sale financial assets.
RD 2/2011 established a minimum principal capital requirement, which for the Bankia Group is 8% of its
risk-weighted assets.
Subsequently, the Bank of Spain issued Circular 7/2012 of 30 November on minimum principal capital
requirements, including a new definition based on the amendments introduced by RDL 24/2012 to equate
it to Core Tier I as defined by the European Banking Authority (EBA), setting a new minimum requirement
of 9% as from 1 January 2013. The Circular also establishes that banks electing the alternative provided
for in Bank of Spain Circular 3/2008 of not including capital gains and losses on available-for-sale fixedincome securities, could continue to do so.
The Bankia Group's principal capital at 31 December 2012 amounted to EUR 4,590,455 thousand, with a
ratio of 4.4%, below the minimum 8% required at that date. The Group has adopted measures to comply
with all capital requirements, through the Recapitalisation Plan approved by the European Commission in
November 2012.
Among the main measures, at the end of 2012 the BFA Group had already received public assistance in
the form of an additional capital injection and then subscribed to Bankia's issue of contingent convertible
bonds in an amount of EUR 10,700 million.
In addition, a large portion of real estate assets have already been transferred to the SAREB.
At the 2012 year end, the conversion of the hybrid instruments (preference shares and subordinated
debt) had yet to be carried out, which will generate up to EUR 4,800 million of additional capital for the
Bankia Group. Once the conversion is carried out, the Group expects to amply surpass the minimum 9%
capital ratio required as from 1 January 2013.
Objectives, policies and procedures in respect of capital are determined at consolidated level for the BFA
Group and for the Bankia Group.
a) Remuneration accrued at the Bank
Regarding remuneration of directors for the performance of their duties as members of the Board of
Directors, the Bank applies the provisions of Royal Decree-Law 2/2012 of 3 February, on the
reorganisation of the financial sector and Order ECC/1762/2012, of 3 August. In this respect,
remuneration at Bankia, S.A. for all items of members of the various boards of directors other than
executive chairmen, CEOs and executives of the companies is capped at EUR 100,000 per year. The
limit for executive directors is EUR 500,000.
i) Gross remuneration in cash (in thousands of euros)
Salaries
Attendance fees
Short-term
variable
remuneration
Long-term
variable
remuneration
Remuneration
for
membership
on Board
committees
Termination
benefits
Other
items
2012
Total
José Ignacio Goirigolzarri Tellaeche
334
-
-
-
-
-
-
334
José Sevilla Álvarez
342
-
-
-
-
-
-
342
Joaquín Ayuso García (1)
-
60
-
-
-
-
-
60
Francisco Javier Campo García
-
60
-
-
-
-
-
60
Eva Castillo Sanz (1)
-
60
-
-
-
-
-
60
Jorge Cosmen Menéndez-Castañedo
-
60
-
-
-
-
-
60
José Luis Feito Higueruela (1)
-
60
-
-
-
-
-
60
Name
Fernando
Andés (1)
Fernández
Méndez
de
-
60
-
-
-
-
-
60
Alfredo Lafita Pardo
-
56
-
-
-
-
-
56
Álvaro Rengifo Abbad (1)
-
56
-
-
-
-
-
56
(1)
The 2012 remuneration of these directors was adjusted in February 2013 in accordance with the degree of attendance to board meetings in
2012. As a result, remuneration in 2012 paid to Ms. Castillo and Mr. Feito amounted to EUR 55 thousand, to Mr. Ayuso and Mr. Fernández to
EUR 57 thousand and to Mr. Rengifo to EUR 54 thousand.
84
Members that left the Board between January and July 2012
Long-term
variable
remuneration
Remuneration
for
membership
on Board
committees
Termination
benefits
Other
items
2012 Total
Salaries
Attendance fees (A)
Short-term
variable
remuneration
Rodrigo de Rato Figaredo
288
16
-
-
6
-
-
310
Francisco Pons Alcoy
209
10
-
-
2
-
-
221
Francisco Verdú Pons
451
3
-
-
-
-
-
454
José Manuel Fernández Norniella
137
21
-
-
9
-
-
167
Claudio Aguirre Pemán
-
50
-
-
3
-
-
53
Carmen Cavero Mestre
-
50
-
-
3
-
-
53
Arturo Fernandez Álvarez
-
48
-
-
-
-
-
48
Alberto Ibáñez González
-
50
-
-
5
-
-
55
Josep Ibern Gallart (B)
-
45
-
-
2
-
-
47
Javier López Madrid
-
50
-
-
3
-
-
53
Juan Llopart Pérez
-
50
-
-
5
-
-
55
Juan Martín Queralt
-
50
-
-
-
-
-
50
Araceli Mora Enguídanos
-
47
-
-
3
-
-
50
José Antonio Moral Santín
-
45
-
-
5
-
-
50
Francisco Juan Ros García
-
50
-
-
3
-
-
53
José Manuel Serra Peris
-
50
-
-
4
-
-
54
Atilano Soto Rábanos
-
5
-
-
1
-
-
6
Antonio Tirado Jiménez
-
48
-
-
6
-
-
54
Álvaro de Ulloa Suelves
-
50
-
-
3
-
-
53
Virgilio Zapatero Gómez
-
50
-
-
3
-
-
53
José Wahnón Levy
-
5
-
-
-
-
-
5
Name
(A) "Attendance fees" includes directors' fees for attending Board meetings and fixed remuneration for Board membership.
(B) Fixed remuneration and attendance fees accruing to Mr. Ibern were deposited at Caixa Laietana.
Remuneration for membership on the Board of Directors of Bankia, S.A. is incompatible with
remuneration for membership on the Board of Banco Financiero y de Ahorros, S.A.U.
ii) Golden parachute clauses in senior executive contracts
Pursuant to additional provision seven of Law 3/2012, Bankia may not pay "compensation for termination
of contract" for employment contracts of directors of Bankia in excess of the lower of the following
amounts:
EUR 1,000,000 or
Two years of the fixed compensation stipulated.
"Compensation for termination of contract" includes any amount of a compensatory nature that the
director may receive as a consequence of termination of contract, whatever the reason, origin or purpose,
so that the sum of all the amounts that may be received may not exceed the established limits.
The contracts of two executive directors contain a termination benefit of one year of fixed remuneration if
the Company decides to terminate their employment unilaterally or in the event of a change of control of
the Company. The contracts also contain a post-contractual non-compete clause for one year of fixed
remuneration. Pursuant to prevailing legislation, Bankia has amended these contracts, establishing that
any compensation and/or amounts received by these executive directors must comply with Royal
Decree-Law 2/2012 and Law 3/2012.
iii) Share-based payment schemes
No shares were delivered as no amounts of variable compensation were paid in 2012.
85
iv) Long-term saving schemes (thousands of euros)
Name/period
Contribution in the year by the entity (thousands of euros)
-
-
-
Joaquín Ayuso García
-
-
Eva Castillo Sanz
-
-
José Luis Feito Higueruela
-
Fernando Fernández Méndez de Andés
-
-
Álvaro Rengifo Abbad
Name/period
12
38
12
33
12
12
12
12
Josep Ibern Gallart
6
12
Juan Llopart Pérez
12
12
12
12
12
12
6
12
12
12
José Wahnón Levy
-
86
b) Remuneration accrued for membership on the Boards of other Group companies or investees
On 7 June 2012, the Company reported, in a material disclosure to the National Securities Market
Commission, a review of its policy for remunerating directors in Group companies and investees. In this
filing, it stated that the Bank's Board of Directors had decided that directors representing it in investees
would receive no remuneration and that the per diems to which they are entitled would be paid by the
Group.
i) Gross remuneration in cash (thousands of euros)
Salaries
Attendance fees (1)
Short-term
variable
remuneration
Long-term
variable
remuneration
Remuneration
for membership
on Board
committees
Termination
benefits
Other
items
2012
Total
-
20
-
-
-
-
-
20
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Eva Castillo Sanz
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Name
Fernando
Andés
Fernández
Méndez
de
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1)
Mapfre, S.A. paid José Ignacio Goirigolzarri Tellaeche EUR 20 thousand for his service on the Board of Directors. This amount was deducted
from the remuneration paid to this director by Bankia, so that his total fixed remuneration complies with the limit stipulated in RDL 2/2012.
Salaries
Attendance fees
Short-term
variable
remuneration
Long-term
variable
remuneration
Remuneration for
membership on
Board committees
Termination
benefits
Other
items (A)
2012
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6
-
-
-
-
12
18
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3
-
-
-
-
2
5
-
-
-
-
-
-
-
-
Josep Ibern Gallart
-
2
-
-
-
-
-
2
-
3
-
-
-
-
2
5
Juan Llopart Pérez
-
18
-
-
-
-
-
18
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
28
-
-
-
-
10
38
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11
11
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3
-
-
-
-
10
13
José Wahnón Levy
-
-
-
-
-
-
-
-
Name
(A)
Remuneration received as natural person representative of a legal entity on the Board.
This table includes remuneration accrued by directors for membership on the boards in other Group
companies, as well as those of investees not forming part of the Group.
ii) Share-based payment schemes
None.
iii) Long-term saving systems
None.
87
iv) Other benefits (thousands of euros)
None.
c) Remuneration summary:
Total remuneration in the entity
Total remuneration in the Group (1)
2012 Total
Name
334
20
354
342
-
342
60
-
60
60
-
60
60
-
60
60
-
60
60
-
60
Fernando Fernández Méndez de Andés (2)
60
-
60
56
-
56
56
-
56
(1) Mapfre, S.A. paid José Ignacio Goirigolzarri Tellaeche EUR 20 thousand for his service on the Board of Directors. This amount was deducted
(2) The 2012 remuneration of these directors was adjusted in February 2013 in accordance with the degree of attendance to board meetings in 2012.
As a result, remuneration in 2012 paid to Ms. Castillo and Mr. Feito amounted to EUR 55 thousand, to Mr. Ayuso and Mr. Fernández to EUR 57
thousand and to Mr. Rengifo to EUR 54 thousand.
2012 Total
Name
322
-
322
259
-
259
466
-
466
200
18
218
65
-
65
65
-
65
60
5
65
67
-
67
Josep Ibern Gallart (2)
53
2
55
65
5
70
Juan Llopart Pérez
67
18
85
62
-
62
62
-
62
62
38
100
65
-
65
66
11
77
12
-
12
66
-
66
65
-
65
65
13
78
José Wahnón Levy
5
-
5
(1)
Also includes remuneration earned at investees that do not form part of the Group.
(2)
Of the total remuneration in the entity, EUR 47 thousand was deposited in favour of Caixa Laietana
88
For the purposes of these financial statements, the members of the Management Committee, without
taking into consideration the executive directors, were considered as senior executives. A total of five
people were classified for these purposes as key personnel for the Bank up until 16 May 2012 and three
people thereafter.
The following table shows the remuneration received by the senior executives, as defined above:
Short-term
remuneration
Post-employment
benefits
Termination
benefits
Total
Senior executives (01/01/12 to 16/05/12)
732
280
1,483
2,495
738
7
-
745
1,470
287
1,483
3,240
Total
of contract" for employment contracts of senior executives of Bankia in excess of the lower of the
following amounts:
EUR 1,000,000 or
As of 31 December 2012, the contracts of three senior executives included clauses that set
compensation for all items if they are dismissed for legal reasons, except for disciplinary reasons
considered legally valid, equivalent to two years' fixed compensation. Pursuant to prevailing legislation,
Bankia has amended these contracts, establishing that any compensation and/or amounts received by
senior executives must comply with Royal Decree-Law 2/2012 and Law 3/2012.
89
In accordance with the disclosure requirements under Section 229 of Royal Legislative Decree 1/2010, of
2 July, enacting the Consolidated Text of the Spanish Enterprises Act, the following table presents the
positions and duties performed by Bank directors at 31 December 2012 on account of others in
companies with the same, analogous or similar corporate purpose as that of the Bank, and the direct or
indirect stakes they have in these entities.
Name or corporate name of director
Company
Position, duty or involvement
Natural person representative
Chairman
FROB
Ceca
Vice Chairman
Cecabank
Vice Chairman
Director
Banco Santander
1 share
BBVA
163 shares
Banco Popular
1,100 shares
BBVA
640 shares
BBVA
28,000 shares
Banco Santander
30,000 shares
Bankinter, S.A.
780 shares
Banco Santander, S.A.
1,227 shares
Director
Fernando Fernández Mendes de Andes
Banco Finantia, S.A. (Portugal)
BBVA
Banco Santander
Banco Sabadell
Corporación Financiera Alba, S.A.
COMMERZBANK AG
AGEAS
Mercapital Spanish Buy -Out Fund III
Deya Capital II, SCR de Régimen Común, S.A.
Indirect shareholding, together with other
related parties of the director of 3.68%.
related parties of the director of 29,702 shares
Citibank
Activity of a relative
Torrenova de Inversiones SICAV
Insignificant stake held by relatives
ERST BANK
ING GROUP N.V.
TURKIYE VAKIFLAR BANKASI
90
The allocation of the individual loss of Bankia, S.A. for the financial year ended 31 December 2012
proposed by the Board of Directors of Bankia, S.A., to be submitted for approval at the General Meeting
of Shareholders (with data for 2011 presented for purposes of comparison), is as follows:
2012
2011
To accumulated reserves (losses)
(18,306,443)
(3,030,551)
Net loss for the year
(18,306,443)
(3,030,551)
The detail of "Cash and balances with central banks" in the accompanying balance sheet is as follows:
ITEM
31/12/12
31/12/11
Cash
Balances with the Bank of Spain
Balances with other central banks
Valuation adjustments
Total
794,364
3,658,586
109,816
316
4,563,082
803,532
5,224,275
88,829
589
6,117,225
Breakdown
The detail, by counterparty and type of instrument, of these items in the accompanying balance sheet at
31 December 2012 and 2011, showing the carrying amounts at those dates, is as follows:
31/12/12
ITEM
Asset
positions
31/12/11
Asset
Liability
positions
positions
Liability
positions
By counterparty
Credit institutions
Resident public sector
Non-resident public sector
Other resident sectors
Other non-resident sectors
Total
31,868,547
32,571,581
24,627,267
25,963,325
442,081
1,153
1,299,818
2,190
-
-
-
-
2,453,495
941,692
2,276,906
730,828
969,827
95,967
857,776
118,658
35,733,950
33,610,393
29,061,767
26,815,001
28,573
-
16,248
-
314,632
-
1,320,295
-
4,420
-
19,191
-
35,386,325
33,610,393
27,706,033
26,303,249
-
-
-
511,752
35,733,950
33,610,393
29,061,767
26,815,001
By type of instrument
Debt securities
Other equity instruments
Trading derivatives
Short positions
Total
Note 3 contains information on the credit risk assumed by the Bank in relation to these financial assets.
Notes 3.2 and 3.3 contain, respectively, information relating to the liquidity risk and interest rate risk
assumed by the Bank in relation to the financial assets included in this category.
91
Note 24 contains certain information on the fair value of these financial assets, while Note 3.1.5 discloses
certain information on the risk concentration of, inter alia, certain assets included in this category of
financial instruments.
Financial assets held for trading. Debt securities
The breakdown of the balances under this heading in the accompanying balance sheet is as follows:
ITEM
31/12/12
31/12/11
Debt securities
Spanish government debt securities
Issued by financial institutions
Other foreign fixed-income securities
Other Spanish fixed-income securities
275,848
21,057
15,450
2,277
1,184,529
96,192
5,226
34,348
Total
314,632
1,320,295
Financial assets held for trading. Equity instruments
The breakdown of this item in the accompanying balance sheet is as follows:
ITEM
31/12/12
31/12/11
Equity instruments
Shares of resident companies
Shares of non-resident foreign companies
3,635
785
8,116
11,075
Total
4,420
19,191
Financial assets held for trading. Trading derivatives
The breakdown, by type of derivative, of the fair value of the Bank's trading derivatives at 31 December
31/12/12
ITEM
Unmatured foreign currency purchases
and sales
Securities derivatives
Interest rate derivatives
Credit derivatives
31/12/11
Debit balances
Credit balances
Debit balances
Credit balances
Fair value
Fair value
Fair value
Fair value
183,720
59,589
35,082,456
38,358
95,225
49,335
33,405,482
33,184
161,386
87,793
27,369,291
41,735
502,605
55,473
25,649,234
45,658
Other
22,202
27,167
45,828
50,279
Total
35,386,325
33,610,393
27,706,033
26,303,249
92
The detail, by maturity, of the notional amount of the trading derivatives at 31 December 2012 is as
follows:
ITEM
Unmatured foreign currency purchases and sales
Credit derivatives
0 to 3 years
More than 10
years
3 to 10 years
Total
12,983,680
616,265
-
13,599,945
6,241,261
1,888,545
-
8,129,806
294,558,994
191,092,092
121,419,692
607,070,778
50,464
856,408
-
906,872
Other
462,384
-
-
462,384
Total
314,296,783
194,453,310
121,419,692
630,169,785
The detail, by maturity, of the notional amount of the trading derivatives at 31 December 2011 was as
follows:
ITEM
0 to 3 years
More than 10
years
3 to 10 years
Total
20,954,016
462,191
157,927
21,574,134
3,846,724
4,588,805
-
8,435,529
406,365,570
239,724,724
129,976,313
776,066,607
74,231
369,327
-
443,558
Other
951,335
-
1,251
952,586
Total
432,191,876
245,145,047
130,135,491
807,472,414
Credit derivatives
The notional amount of derivatives is the amount that is used as a basis for estimating the results
associated therewith, although, bearing in mind that a highly significant portion of these positions offset
each other, thus hedging the risks assumed, the notional amount cannot be understood to represent a
reasonable measure of the Bank’s exposure to the risks associated with these products.
The detail, by type, of the financial assets included in this category at 31 December 2012 and 2011, is as
follows:
ITEM
31/12/12
31/12/11
By type
Debt securities
-
62,873
Equity instruments
16,486
13,770
Total
16,486
76,643
93
Breakdown
The detail of this item, by type of counterparty and type of financial instrument in the accompanying
balance sheet, is as follows:
ITEM
By counterparty
Credit institutions
Other non-resident sectors (*)
Doubtful assets
Impairment losses and fair value adjustments due to credit risk
31/12/12
31/12/11
8,002,567
17,992,514
137,850
1,504,042
12,405,674
54,376
(99,230)
5,927,032
13,601,434
138,986
2,630,671
2,380,870
54,282
(51,424)
-
(32,665)
Total
39,997,793
24,649,186
Debt securities
Treasury bills
Government bonds
Regional administrations
Foreign government debt securities
Other fixed-income securities (*)
Equity instruments
Shares of listed companies
Shares of unlisted companies
Valuation adjustments (micro-hedges)
Total
39,997,793
17,992,514
81,813
16,939,243
971,458
137,850
8,012,516
13,954,143
(99,230)
39,997,793
23,621,050
13,601,434
387,582
11,534,796
1,679,056
138,986
5,918,534
4,013,520
(51,424)
1,028,136
390,477
670,324
(32,665)
24,649,186
Other valuation adjustments (micro-hedges)
(*) Includes, inter alia, securities issued by the ESM (see Note 1.2).
Note 22 provides details of the gains and losses on these financial instruments recognised under
“Valuation adjustments – Available-for-sale financial assets” in the accompanying balance sheet.
Past-due and impaired assets
At 31 December 2012 and 2011, no asset recognised under "Available-for-sale financial assets" was
past-due but not impaired.
The detail of those assets recognised under "Available-for-sale financial assets" considered to be
impaired at 31 December 2012 and 2011 is as follows:
94
Impaired assets at 31 December 2012 and 2011
ITEM
By counterparty
Credit institutions
31/12/12
9,949
4,082
-
-
200
200
44,227
54,376
50,000
54,282
Public sector
Total
31/12/11
Changes for the year in impairment losses recognised and fair value adjustments due to credit
risk
A summary of the changes in relation to impairment losses and fair value adjustments due to credit risk of
debt securities included in this portfolio for the year ended 31 December 2012 and 2011 are as follows:
ITEM
Balances at 31 December 2011
Impairment losses for the year charged to income
Individually
assessed
25,000
Collectively
assessed
26,424
Total
51,424
7,050
53,978
61,028
(2,887)
(10,190)
(13,077)
4,163
43,788
47,951
Amounts used for depreciated assets and other net movements
-
(155)
(155)
Other changes
-
-
-
Exchange differences
-
10
10
29,163
70,067
99,230
29,163
70,067
99,230
Entities resident in Spain
7,050
36,700
43,750
Entities resident abroad
22,113
33,367
55,480
Available credit loss allowance
Net provision/(release) charged/(credited) to income statement
Of which:
Type of counterparty:
95
31 December 2011
ITEM
Balances at 1 January 2011
Effect of the Second De-Merger
Individually
assessed
Collectively
assessed
Total
-
2,141
2,141
25,000
46,151
71,151
-
41,875
41,875
-
(46,044)
(46,044)
-
(4,169)
(4,169)
-
-
-
Other changes
-
(17,723)
(17,723)
-
24
24
25,000
26,424
51,424
25,000
26,424
51,424
Of which:
-
538
538
25,000
25,886
50,886
In 2012, the Bank recognised EUR 538,448 thousand (EUR 89,439 thousandat 31 December 2011) in
the income statement for impairment losses on equity instruments recognised directly under “Availablefor-sale financial assets” in the accompanying balance sheet. In 2012, these primarily related to
instruments that were reclassified to "Non-current assets held for sale" in the accompanying balance
sheet (see Notes 2.1 and 14).
Following is a detail of impairment losses on equity instruments classified as available-for-sale financial
assets by the type of instrument impaired:
Nature of impaired assets
Impairment
31/12/12
31/12/11
Equity interests in real estate companies and a real estate investment trust (REIT)
-
86,001
Other securities
-
3,438
Total
-
89,439
96
Breakdown
The detail, by type of financial instrument, of "Loans and receivables" on the asset side of the balance
sheet is as follows:
ITEM
31/12/12
31/12/11
Debt securities
Subtotal
Other valuation adjustments
Total
9,143,344
147,774,101
2,252,394
19,596,885
192,055,486
6,032,255
159,169,839
217,684,626
(12,694,424)
126,715
(9,889,089)
443,229
146,602,130
208,238,766
Loans and receivables. Loans and advances to credit institutions
The detail, by transaction counterparty type, of this caption on the accompanying balance sheet is as
follows:
ITEM
31/12/12
31/12/11
By counterparty
Reciprocal accounts
Time deposits
Hybrid financial assets
Repurchase agreements
Other financial assets
Doubtful assets
Subtotal
448,539
3,595,005
42,009
825,785
4,204,528
27,478
9,143,344
84,599
5,497,868
42,819
9,786,356
4,174,998
10,245
19,596,885
(126,458)
7,511
(5,239)
37,160
9,024,397
19,628,806
Total
97
Loans and receivables - Loans and advances to customers
The detail, by loan type, credit status and counterparty, of this caption on the accompanying balance
sheet is as follows:
ITEM
By loan type and status
Commercial credit
Secured loans
Reverse repurchase agreements
Other term loans
Receivable on demand and other
Doubtful assets
31/12/12
31/12/11
1,832,833
88,369,943
9,700
34,968,276
2,670,232
1,331,669
18,591,448
3,055,596
121,053,137
790,681
46,505,567
3,858,921
2,134,317
14,657,267
Subtotal
147,774,101
192,055,486
Total
(12,534,927)
119,204
135,358,378
(9,852,243)
406,069
182,609,312
By counterparty
Total
8,579,535
51,713
131,112,313
6,698,871
1,331,669
(12,534,927)
119,204
135,358,378
6,172,978
109,300
175,462,650
8,176,241
2,134,317
(9,852,243)
406,069
182,609,312
The carrying amount recorded in the foregoing table, disregarding the portion relating to “Other valuation
adjustments”, represents the Bank's maximum level of credit risk exposure in relation to the financial
instruments included therein.
As indicated in Note 1.16, assets classified under this item in the balance sheet were transferred to the
SAREB in 2012 for a gross amount of EUR 29,664,844 thousand.
Other securitised loans were derecognised from the accompanying balance sheet as the Bank did not
retain substantially either the risks or rewards, as follows:
Securitised loans
Securitised mortgage-backed assets
Other securitised assets
Total securitised assets
31/12/12
1,096,267
92
1,096,359
31/12/11
1,275,484
528
1,276,012
98
“Loans and receivables - Loans and advances to customers” in the accompanying balance sheet
includes certain loans with mortgage collateral which, as indicated in Note 1.14 and under the Mortgage
Market Law are considered eligible to guarantee the issue of long-term mortgage-backed securities. This
item also includes certain securitised loans that have not been derecognised from the balance sheet (see
Note 2.5.2). The amounts shown in the accompanying balance sheet related to securitised loans are:
Securitised loans
31/12/12
31/12/11
18,850,762
21,260,479
Of which:
7,383
11,664
Doubtful assets
1,753,857
924,620
4,278,319
6,393,036
23,129,081
27,653,515
Of which:
Liabilities associated with assets kept on the balance sheet (*)
6,236,381
8,204,314
(*) Recognised under "Financial liabilities at amortised cost - Customer deposits" in the accompanying balance sheet
Loans and receivables. Loans and advances to credit institutions and loans and advances to
customers. Past-due and impaired assets (doubtful)
Following is a detail of assets classified as "Loans and receivables - Loans and advances to credit
institutions" and "Loans and receivables - Loans and advances to customers" that were considered to be
impaired at 31 December 2012 and 2011, and of the assets which, although not considered to be
impaired, include any past-due amounts as at those dates, by counterparty:
ITEM
By counterparty
31/12/12
31/12/11
Credit institutions
27,415
10,218
Public sector
21,190
579
17,403,400
14,347,880
1,109,806
18,561,811
259,463
14,618,140
Total
Assets including past-due amounts not considered to be impaired at 31 December 2012 and 2011
ITEM
By counterparty
Credit institutions
31/12/12
31/12/11
180
456
Public sector
188,602
45,123
303,396
1,315,842
51,918
544,096
32,005
1,393,426
Total
Virtually all of the assets are less than three months past due. Therefore, at that date no impairment
losses had been estimated.
99
Movements in the year ended 31 December 2012 in the balance of impairment losses and valuation
adjustments for credit risk is as follows:
Country
risk
allowance
General
allowance
ITEM
Specific allowance
Total
1,173,246
25,745
8,658,491
9,857,482
Individually assessed
33,809
-
2,316,805
2,350,614
Collectively assessed
1,139,437
25,745
6,341,686
7,506,868
-
14,129
24,754,281
24,768,410
(1,036,104)
(19,242)
(6,063,378)
(7,118,724)
(1,036,104)
(5,113)
18,690,904
17,649,687
-
-
(1,734,498)
(1,734,498)
(26)
-
(12,520,930)
(12,520,956)
-
(357)
(589,973)
(590,330)
137,116
20,275
12,503,994
12,661,385
-
-
7,672,900
7,672,900
137,116
20,275
4,831,094
4,988,485
137,116
20,275
12,503,994
12,661,385
128,053
-
11,676,080
11,804,133
9,063
20,275
827,914
857,252
Other changes (1)
Of which:
(1) Mainly assets transferred to the SAREB
Movements in the year ended 31 December 2011 in the balance of impairment losses and valuation
adjustments for credit risk were as follows:
Country
risk
allowance
General
allowance
ITEM
Specific
allowance
Total
695
-
-
-
-
-
695
-
4
699
1,439,159
31,485
5,988,339
7,458,983
183,352
323
7,514,235
7,697,910
(1,290,656)
(7,971)
(2,497,481)
(3,796,108)
(1,107,304)
(7,648)
5,016,754
3,901,802
-
-
(1,382,193)
(1,382,193)
840,696
-
(963,504)
(122,808)
-
1,908
(909)
999
Other changes
4
699
1,173,246
25,745
8,658,491
9,857,482
33,809
-
2,316,805
2,350,614
1,139,437
25,745
6,341,686
7,506,868
1,173,246
25,745
8,658,491
9,857,482
1,170,091
-
8,541,853
9,711,944
3,155
25,745
116,638
145,538
Of which:
100
The various items recognised in 2012 and 2011 under “Impairment losses on financial assets (net) Loans and receivables” on the income statement for those years are summarised below:
ITEM
Net charge for the year
Written-off assets recovered
31/12/12
31/12/11
17,659,473
3,930,732
(182,572)
(65,419)
17,476,901
3,865,313
Loans and receivables. Debt securities
The detail, by counterparty, of this balance sheet heading at 31 December 2012 and 2011 is as follows:
ITEM
31/12/12
31/12/11
By counterparty
Credit institutions
Doubtful assets
Total
-
943
1,928,471
5,409,116
254,813
577,464
7,687
2,700
(33,039)
(31,607)
61,422
42,032
2,219,355
6,000,648
Loans and receivables. Debt securities. Past-due and impaired assets (doubtful)
The detail of assets recognised under "Loans and receivables - Debt securities" considered impaired at
31 December 2012 and 2011 is shown below.
At 31 December 2012 and 2011, no assets recognised under "Loans and receivables – Debt securities"
were past-due.
ITEM
By counterparty
Credit institutions
Public sector
Total
31/12/12
31/12/11
2,700
2,700
-
-
4,987
-
7,687
2,700
101
A summary of the changes in impairment losses due to credit risk on debt securities recognised under
"Loans and receivables" for the years ended 31 December 2012 and 2011 are as follows:
ITEM
Individually
assessed
-
31,607
2,700
16,600
-
(9,514)
Collectively
assessed
2,700
7,086
-
(8,353)
Other changes
-
-
-
(1)
2,700
30,339
2,700
30,339
-
17,502
2,700
12,837
Of which:
31 December 2011
ITEM
Individually
assessed
Collectively
assessed
-
-
-
3,842
-
32,971
-
(4,041)
-
28,930
-
(10)
Other changes
-
(1,157)
-
2
-
31,607
Of which:
-
31,607
-
11,266
-
20,341
102
Breakdown
The breakdown of this heading of this item in the accompanying balance sheet by type of counterparty
and financial instrument is as follows:
ITEM
31/12/12
31/12/11
By counterparty
Credit institutions
962,046
1,096,404
5,066,663
5,077,303
2,103,378
2,414,200
Other resident sectors (*)
20,188,341
900,918
775,951
799,117
579
-
(89,996)
(36,966)
29,006,962
10,250,976
5,066,663
5,077,303
Doubtful assets
Total
Bonds (*)
Total
2,103,378
2,414,200
21,926,917
2,796,439
(89,996)
(36,966)
29,006,962
10,250,976
(*) The balance at 31 December 2012 includes debt securities received as consideration for assets transferred to the
SAREB, recognised at nominal value (see Note 1.16).
A summary of the changes in relation to impairment losses and fair value adjustments due to credit risk in
this portfolio for the years ended 31 December 2012 and 2011 is as follows:
ITEM
Individually
assessed
Collectively
assessed
-
36,966
-
53,941
-
(911)
-
53,030
-
-
Other changes
-
-
-
-
-
89,996
-
89,996
Of which:
-
3,395
-
86,601
103
31 December 2011
ITEM
Individually
assessed
Collectively
assessed
-
-
-
38,017
-
3,444
-
(320)
-
3,124
-
-
Other changes
-
(4,159)
-
(16)
-
36,966
Of which:
36,966
-
93
-
36,873
Held-to-maturity investments. Past-due and impaired assets
A breakdown of assets recognised under "Held-to-maturity investments" that were considered to be
impaired at 31 December 2012 and 2011 are as shown below.
The Bank did not have any assets classified as held to maturity at 31 December 2012 and 2011 with any
past-due amount.
ITEM
By counterparty
Total
31/12/12
579
579
31/12/11
-
At 31 December 2012 and 2011, Bankia had entered into financial derivative hedging arrangements with
counterparties of recognised creditworthiness as the basis of an improved management of the risks
inherent to its business (see Note 3).
The Bank enters into hedges on a transaction-by-transaction basis by assessing the hedging instrument
and the hedged item on an individual basis and continually monitoring the effectiveness of each hedge, to
ensure that changes in the value of the hedging instrument and the hedged item offset each other.
The Bank's main hedged positions and the financial hedging instruments used are as follows:

Fair value hedges
–
–
Available-for-sale financial assets:
o
swaps). The Bank also hedges certain positions against credit risk with credit derivatives
o
in active markets.
o
The Bank also hedges certain positions against credit risk with credit derivatives
104
–
o

Cash flow hedges
–
o
–
–
swaps).
o
o

Long-term fixed-rate deposits and marketable debt securities issued by the Bank, whose
risk is hedged with interest rate derivatives (basically swaps).
Marketable debt securities issued by the Bank, whose risk is hedged with interest rate
Hedges of net investments in foreign operations
–
Investments and branches:
o
Forward currency (USD) transactions to hedge future exchange rate fluctuations.
The following table provides a breakdown, by type of derivative and for each type of hedge, of
the fair value of derivatives designated as hedging instruments at 31 December 2012 and 2011:
31/12/12
ITEM
Debit balances
31/12/11
Credit balances
Debit balances
Credit balances
Fair value hedges
6,159,488
2,697,786
5,162,627
1,825,671
Cash flow hedges
14,907
29,137
103,854
135,493
6,174,395
2,726,923
5,266,481
1,961,164
Total
Fair value hedges:
31/12/12
ITEM
Debit balances
31/12/11
Credit balances
Debit balances
Credit balances
7,264
-
12,524
3,967
6,144,081
2,696,968
5,135,184
1,821,583
959
34,193
1,504
40,629
19,786
2,119,327
62,178
1,343,451
6,123,336
543,448
5,071,502
437,503
Other
8,143
818
14,919
121
Total
6,159,488
2,697,786
5,162,627
1,825,671
105
Cash flow hedges:
31/12/12
ITEM
Debit balances
31/12/11
Credit balances
Debit balances
Credit balances
14,907
28,814
103,089
135,493
9,282
11,467
16,811
19,322
5,522
977
52,441
108,368
103
16,370
33,837
7,803
Other
-
323
765
-
Total
14,907
29,137
103,854
135,493
The detail of the periods after 31 December 2012 and 2011 at which it is estimated that the amounts
recognised in equity under "Valuation adjustments - Cash flow hedges" at that date will be recognised in
future income statements is as follows:
Remaining term to maturity as of 31 December 2012
Less than 1 year
Losses (*)
1 to 3 years
More than 5
years
3 to 5 years
TOTAL
(4,629)
(400)
-
(8,231)
(13,260)
-
256
36
17,894
18,186
Total
(4,629)
(*) Taking into consideration the related tax effect
(144)
36
9,663
4,926
Gains (*)
Losses (*)
Less than 1 year
1 to 3 years
3 to 5 years
More than 5
years
TOTAL
(1,306)
(690)
(190)
(108,260)
(110,446)
330
496
167
76,066
77,059
Total
(976)
(194)
(23)
(32,194)
(33,387)
Gains (*)
The table below presents an estimate at 31 December 2012 and 2011 of future receipts and payments
hedged with cash flow hedges, classified by the time as from that date that the hedges are expected to
take effect in the form of receipt or payment:
Less than 1 year
Receipts
Payments
1 to 3 years
3 to 5 years
More than 5 years
341,092
87,561
37,458
652,679
(355,603)
(88,879)
(49,883)
(664,559)
(14,511)
(1,318)
(12,425)
(11,880)
Total
Receipts
Payments
Total
Less than 1 year
1 to 3 years
3 to 5 years
More than 5 years
278,679
69,022
78,051
531,491
(283,615)
(81,272)
(88,012)
(512,910)
(4,936)
(12,250)
(9,961)
18,581
106
The detail, by maturity, of the notional amount of the derivatives classified as hedging derivatives at 31
December 2012 is as follows:
ITEM
0 to 3 years
3 to 10 years
More than 10 years
Total
15,196
-
-
15,196
4,526,194
45,840,832
16,415,260
66,782,286
Other
-
242,000
7,000
249,000
Total
4,541,390
46,082,832
16,422,260
67,046,482
The detail, by maturity, of the notional amount of the derivatives classified as hedging derivatives at 31
December 2011 is as follows:
ITEM
0 to 3 years
3 to 10 years
More than 10 years
Total
329,174
76,029
-
405,203
6,266,871
42,944,991
33,188,562
82,400,424
Other
-
144,920
29,500
174,420
Total
6,596,045
43,165,940
33,218,062
82,980,047
(14) Non-current assets held for sale
Breakdown
The detail of “Non-current assets held for sale” on the accompanying balance sheet at 31 December
Impairment
losses
ITEM
Cost
Property, plant and equipment for own use
306,468
(76,127)
230,341
4,647
-
4,647
405,042
-
405,042
Investments
1,377,098
(869,957)
507,141
Foreclosed tangible assets
2,533,479
(755,488)
1,777,991
Total
4,626,734
(1,701,572)
2,925,162
ITEM
Cost
Impairment
losses (1)
Carrying amount
Property, plant and equipment for own use
192,502
(7,916)
184,586
7,206
-
7,206
Foreclosed tangible assets
3,800,980
(1,929,747)
1,871,233
Total
4,000,688
(1,937,663)
2,063,025
Investment property
Carrying amount
31 December 2011
Investment property
(1)
Net impairment losses on foreclosed tangible assets include additional charges on foreclosed tangible assets held by the Bank
through subsidiaries.
Non-current assets held for sale. Property, plant and equipment for own use
At 31 December 2012, this item basically comprises certain buildings for the Bank's own use which have
ceased to form part of its branch network and which, pursuant to current regulations, satisfy the
107
requirements for recognition as non-current assets held for sale given the existence of a detailed plan for
their immediate sale.
As described in Note 2.22, the Bank recognises these assets at the lower of their carrying amount and
fair value less cost to sell.
As a result of the sale of buildings by the Bank in previous periods, at 31 December 2012 it was a party to
operating lease contracts with the purchasers of the buildings (investors). These contracts have
mandatory durations of 25 to 30 years, extendable for additional periods of 5 to 10 years. The present
value of the minimum future payments to be made by the Bank throughout the mandatory duration is
EUR 26,097 thousand within one year, EUR 102,954 thousand within two to five years, and EUR 197,534
thousand after five years.
Other significant features common to all the operating leases referred to above include the following:
 Rent was agreed on an arm's-length basis (similar to comparable transactions).
 For the purposes of analysing the accounting treatment of these transactions, it was at no point
assumed that the transfer of ownership of the properties to the Bank was reasonably assured.
 Each lease carries an option whereby the Bank may, on expiry of each lease, purchase the
property at fair value as determined by independent appraisers at that expiry date.
The Bank has given no undertaking to assure or redress the purchasers for any gain or loss arising from
fluctuations in the residual fair value of the properties.
Non-current assets held for sale. Foreclosed tangible assets. Breakdown
The breakdown of assets foreclosed in settlement of debts recognised on the balance sheet at 31
December 2012 and 2011 is as follows:
ITEM
31/12/12 (1)
31/12/11 (1)
Property assets
Finished dwellings - borrower's primary residence
Managed rural property and offices, commercial and industrial premises
Building plots, plots and other property assets
Other
1,581,223
84,398
110,965
1,405
1,308,008
33,077
380,263
149,885
Total
1,777,991
1,871,233
(1) Net of impairment losses
Significant changes
The changes recognised in foreclosed assets in the years ended 31 December 2012 and 2011 are as
follows:
ITEM
31/12/12
Accounting balance at beginning of year
Additions during the year
Disposals during the year
Net impairment losses (see Note 43)
Other changes (1)
1,871,233
1,734,889
(518,444)
(275,886)
(1,033,800)
1,648,083
1,869,086
(261,842)
(1,588,825)
204,731
1,777,991
1,871,233
Accounting balance at 31 December
31/12/11
(1) Due mainly to the transfer of assets to the SAREB.
Sales of foreclosed assets are made on an arm's length basis. Financing was granted for an amount of
approximately EUR 223,209 thousand in 2012. On average, 85.59% of the sales amount was financed.
108
Proceeds on disposals of this type of asset, by type, in the years ended 31 December 2012 and 2011
were as follows:
31/12/12
Asset
disposals
31/12/11
Gain/(loss)
recognised on
disposal (*)
ITEM
Asset
disposals
Gain/(loss)
recognised on
disposal (*)
Property assets
Finished dwellings - borrower's primary residence
389,747
Managed rural property and offices, commercial and industrial premises
Building plots, plots and other property assets
(5,218)
170,145
99
1,922
1,451
3,445
1,079
126,775
(6,596)
84,644
(459)
Other
-
-
3,608
19
Total
518,444
(10,363)
261,842
738
(*) Excludes fees paid to intermediaries.
Note 3.5 provides further details on Bankia's property assets at 31 December 2012, including the
foreclosed assets referred to in the preceding paragraph.
The table below shows the net value of the foreclosed assets at 31 December 2012 and 2011, by their
estimated ages as of the date of acquisition:
Age of foreclosed assets
31/12/12
31/12/11
Less than 12 months
925,514
820,502
12 months to 24 months
391,978
512,963
More than 24 months
460,499
537,768
1,777,991
1,871,233
TOTAL
Non-current assets held for sale. Other equity instruments and investments
This includes balances related to investments in group entities, jointly-controlled entities and associates,
and other investments initially recognised under "Available-for-sale financial assets" that the Bank
reclassified, pursuant to prevailing legislation, to "Non-current assets held for sale" (see Note 2.1). The
following table shows a breakdown of the balance by item under which the investment was recognised
before its classification under "Non-current assets held for sale":
ITEM
Cost
Investments - Group entities
Investments - Jointly-controlled entities
Investments - Associates
405,042
464,111
100,476
812,511
(464,111)
(89,568)
(316,278)
405,042
10,908
496,233
1,782,140
(869,957)
912,183
TOTAL
Impairment losses
Carrying amount
Impairment losses on investments in group entities, jointly-controlled entities and associates amounting
to EUR 356,376 thousand were recognised under "Gains/(losses) on non-current assets held for sale not
classified as discontinued operations" following the reclassification of these assets to "Non-current assets
held for sale". Changes in the impairment of these investments were as follows:
109
ITEM
Jointlycontrolled
entities
Group entities
Balances at 1 January
Associates
TOTAL
-
-
-
-
Provision charged to income
114,106
9,367
232,903
356,376
Net provision (Note 43)
114,106
9,367
232,903
356,376
-
-
(12)
(12)
Valuation adjustments from investees (Note 15)
350,005
80,201
83,387
513,593
Total
464,111
89,568
316,278
869,957
Amounts used due to losses on sales
Impairment losses on other equity instruments following their reclassification to "Non-current assets held
for sale" amounted to EUR 471,352 thousand, recognised under "Impairment losses on financial assets
(net) – Other financial instruments not measured at fair value through profit or loss" in the accompanying
income statement.
Non-current assets held for sale. Other assets
In addition to the foreclosed tangible assets and property, plant and equipment for own use referred to in
the foregoing sections, in accordance with current regulations the Bank has classified as non-current
assets held for sale a number of other assets which it also plans to sell or dispose of immediately.
110
(15) Investments
(15.1) Investments - Group entities
The detail of the main investments under "Investments - Group entities" in the accompanying balance
sheet at 31 December 2012 and 2011 is as follows:
COMPANY
Accionariado y Gestión, S.L.
31/12/12
31/12/11
5,004
5,004
Aliancia Inversiones en Inmuebles Dos, S.L.
11,369
11,369
Aliancia Zero S.L.
25,255
25,255
Arrendadora Aeronáutica, A.I.E.
62,057
62,538
Arrendadora de Equipamientos Ferroviarios, S.A.
10,812
10,812
Bancaja Gestion de Activos S.L.
Bankia Habitat, S.L.
Bancaja Participaciones, S.L.
Bancofar, S.A. (1)
Caja Madrid Cibeles S.A.
45,106
45,106
2,579,604
414,376
129,974
129,974
-
114,106
2,235,732
2,235,732
Corporación Empresarial Caja Rioja, S.A.U.
20,031
20,031
Corporación Financiera Caja de Madrid, S.A.
652,143
652,143
Desarrollos Urbanísticos de Segovia S.A. (2)
-
17,550
Edificios Singulares de Canarias, S.A.U. (2)
-
36,424
Finanmadrid Entidad de Financiación, S.A.U.
28,275
28,275
Inversión en alquiler de Viviendas S.L.
11,819
11,819
8,067
8,067
-
10,206
Inversiones y Desarrollos 2069 Madrid, S.L.
Inversiones y Desarrollos 2069 Valladolid, S.L. (2)
Inversora Burriac, S.L.U. (2)
-
88,000
27,000
13,020
150,000
150,000
Mediación y Diagnósticos, S.A.
20,344
20,344
Pagumar, A.I.E.
57,894
57,894
Promociones El Pedrazo, S.A.U.
-
20,348
Promociones Llanos de Maspalomas, S.A.U.
-
14,919
6,052
6,052
-
350,005
83,466
83,466
6,214
6,214
Vallenava Inversiones S.L. (2)
-
34,403
Vehículo de Tenencia y Gestión nº 4, S.L (2)
-
7,019
50,455
53,154
6,226,673
4,743,625
(3,834,971)
(1,353,442)
2,391,702
3,390,183
Laietana Vida, Cia. Seguros de la Caja de Ahorros Laietana, S.A.U.
Renlovi, S.L.
Torre Caja Madrid, S.A. (1)
Urbapinar S.L.
Valenciana de Inversiones Mobiliarias, S.L.
Others
Subtotal
Valuation adjustments – impairment losses
Total
(1) Transfers of non-current assets held for sale to investments
(2) Companies merged into Bankia Habitat, S.L.
111
Changes in this balance sheet heading in 2012 and 2011 were as follows:
ITEM
Acquisitions
Disposals
Transfers to non-current assets held for sale
Net change in impairment losses
Total
31/12/12
31/12/11
3,390,183
1
-
2,960,748
1,984,351
560,967
(37,191)
(1,123)
(464,111)
-
(2,481,529)
(130,410)
2,391,702
3,390,183
In addition to the information disclosed in other notes herein, the only relevant transaction involving
investments in subsidiaries carried out by the Bank in the year ended 31 December 2012 took place in
October with the reorganisation of the Group's real estate activity. This reorganisation entailed the
merger by absorption into Bankia Habitat, S.L. (a subsidiary of the Group and direct investee of the
Bank) of another 23 companies in which it held 100% stakes.
(15.2) Investments - Jointly-controlled entities
The detail of the main investments included under "Investments - Jointly-controlled entities" in the
accompanying balance sheet at 31 December 2012 and 2011 were as follows:
COMPANY
Anira Inversiones, S.L.
Aseguradora Valenciana, S.A. de Seguros y Reaseguros
31/12/12
31/12/11
-
8,300
54,740
45,988
Asentis Promoción S.A.
-
5,125
Asociación Técnica de Cajas de Ahorro, A.I.E.
-
2,631
Desarrollos Inmobiliarios Campotejar S.L
-
1,840
Desarrollos Inmobiliarios los Castaños S.L.
-
6,500
Europea de Desarrollos Urbanos, S.A.
-
12,000
-
4,027
Leaderman Investment Group S.L.
-
7,252
Madrid Deporte Audiovisual, S.A.
-
17,100
Mego Inversiones S.L.
-
2,400
NH Segovia S.L.
-
2,075
Oncisa, Iniciativas de Desarrollo S.L.
-
9,500
Participaciones Agrupadas, S.R.L.
-
21,750
Pinargés, S.L.
-
2,504
Other
-
1,173
54,740
150,165
-
(65,303)
54,740
84,862
Subtotal
Total
112
ITEM
31/12/12
31/12/11
84,862
-
-
130,758
9,078
8,150
Disposals
-
(6,454)
Transfers
(4,027)
-
(14,898)
(47,592)
Transfers of non-current assets held for sale to investments (see Note 14)
(20,275)
-
54,740
84,862
Acquisitions
Total
(15.3) Investments - Associates
The detail of the main investments included under "Investments - Associates" in the accompanying
balance sheet at 31 December 2012 and 2011 is as follows:
COMPANY
31/12/12
31/12/11
Alter Inmuebles S.L.
-
8,171
Avalmadrid, S.G.R.
-
29,577
Concessia, Cartera y Gestión de Infraestructuras, S.A.
-
6,785
Corporación Interamericana para el Financiamiento de Infraestructura, S.A.
-
11,070
Desarrollos Inmobiliarios Salamanca S.L.
-
3,725
Entradas See Tickets, S.A.
-
3,233
Ferromóvil 3000, S.L.
-
9,542
Ferromóvil 9000, S.L.
-
6,235
-
24,694
International Consolidated Airlines Group, S.A.
-
601,194
Julián Martín, S.A.
-
4,910
Numzaan, SL.
-
7,066
Plan Azul 07, S.L.
-
8,393
Promociones Parcelas H1 Dominicana, S.L.
-
3,850
Segóbrida del Eresma S.A.
-
3,750
Soto Once S.L.
-
3,363
Vehículo de Tenencia y Gestión nº 9, S.L
-
5,916
Others
-
9,902
Subtotal
-
751,376
-
(58,867)
Total
-
692,509
113
ITEM
31/12/12
692,509
-
-
670,421
Acquisitions
31/12/11
55,043
579,925
Disposals
(12)
(540,799)
Transfers
6,104
-
(24,508)
(17,038)
Transfers of non-current assets held for sale to investments (see Note 14)
(729,136)
-
-
692,509
Total
(15.4) Investments - Impairment losses
A summary of the changes in impairment losses and other fair value adjustments of these items in the
years ended 31 December 2012 and 2011 is as follows:
ITEM
Jointly-controlled
entities
Group entities
Associates
TOTAL
1,353,442
65,303
58,867
1,477,612
2,854,234
26,845
11,136
2,892,215
(3,193)
-
(300)
(3,493)
2,851,041
26,845
10,836
2,888,722
(25,728)
-
-
(25,728)
(350,005)
(80,201)
(83,387)
(513,593)
6,221
(11,947)
13,684
7,958
3,834,971
-
-
3,834,971
Recovery of provisions with a credit to income
Transfers to non-current assets held for sale (Note 14)
Other changes
Total
31/12/2011
ITEM
Jointly-controlled
entities
Group entities
Associates
TOTAL
-
-
-
-
1,223,032
17,711
41,829
1,282,572
123,105
43,970
25,944
193,019
-
-
(200)
(200)
123,105
43,970
25,744
192,819
-
3,622
(8,875)
(5,253)
Transfers between provision accounts
7,045
-
-
7,045
260
-
169
429
1,353,442
65,303
58,867
1,477,612
Other changes
Total
In order to ascertain whether there are impairment losses on ownership interests, the Bank compares
their carrying amount with their recoverable amount, which is deemed to be the higher of its market price
and the present value of the future cash flows expected to be generated from continuing to hold the
investment (dividends, profit/loss from ordinary activities excluding extraordinary items, gains/losses on
disposal of assets etc.).
114
At 31 December 2011, the fair value of the Bank's investments in listed associates - based on prices
quoted on active markets on that date - amounted to EUR 389,381 thousand.
The Bank issued the mandatory notifications required by current regulations for each purchase.
The detail of this caption in the accompanying balance sheet and changes in 2012 and 2011 are as
follows:
ITEM
Cost
Balance at 1 January 2011
Effect of the Second De-Merger (1)
Additions/disposals (net)
Transfers to non-current assets held for sale and other changes
Balance at 31 December 2011
Transfers to non-current assets held for sale and other changes (2)
Accumulated depreciation
Depreciation during the year
Depreciation during the year
Impairment losses
For own use
Other
assets
leased
out under
an
operating
lease
Investment
property
Total
9,573
4,745,593
(201,081)
(218,159)
4,335,926
(79,501)
(149,976)
4,106,449
665
(45)
620
(220)
(63)
337
1,567
802,028
41,710
(445,976)
399,329
(116,805)
(126,109)
156,415
11,140
5,548,286
(159,416)
(664,135)
4,735,875
(196,526)
(276,148)
4,263,201
(6,233)
(2,666,656)
122,528
(168,682)
142,177
(2,576,866)
105,886
(147,691)
86,303
(2,532,368)
(456)
(31)
(487)
209
(24)
63
(239)
(253)
(33,693)
433
(10,931)
14,770
(29,674)
520
(6,750)
14,531
(21,373)
(6,486)
(2,700,805)
122,961
(179,644)
156,947
(2,607,027)
106,615
(154,465)
100,897
(2,553,980)
-
-
-
-
(22,315)
(839)
22,168
-
(145,166)
(99,724)
181,617
(167,481)
(100,563)
203,785
(986)
-
(63,273)
(64,259)
993
(7)
-
(47,918)
90,269
(46,925)
90,262
-
-
(20,922)
(20,922)
Total at 31 December 2011
1,758,074
133
306,382
2,064,589
Total at 31 December 2012
1,574,081
98
114,120
1,688,299
(1) Amounts broken down exclusively for information purposes, as acquired during the Second De-Merger (see Note 1).
(2) Assets for own use relate mainly to the transfer of properties and fixtures eligible for disposal to "Non-current assets held for sale".
Investment properties relate mainly to asset transfers to the SAREB.
The depreciation charge for tangible assets in the year ended 31 December 2012 amounted to EUR
154,465 thousand (EUR 179,644 thousand at 31 December 2011), which was recognised under
"Depreciation and amortisation charge" on the accompanying income statement for the year (see Note
38).
Impairment losses on property, plant and equipment for own use and investment property in the year
ended 31 December 2012 amounted to a release of EUR 993 thousand and a charge of EUR 47,918
thousand, respectively (EUR 839 thousand and EUR 99,724 thousand, respectively, at 31 December
2011) recognised under "Impairment losses on other assets (net) - Other assets" in the accompanying
income statement for the year (see Note 41).
115
(16.1) Property, plant and equipment for own use
The detail, by type of asset, of the balance of "Property, plant and equipment for own use" in the
accompanying balance sheet is as follows:
At 31 December 2012
ITEM
Accumulated
depreciation
Cost
Buildings and other structures
Furniture and vehicles
Fixtures
Office and IT equipment
1,648,685
219,370
1,258,997
978,307
Net balance
(365,735)
(186,561)
(1,032,862)
(946,331)
-
211
-
-
211
4,105,570
(2,531,489)
-
1,574,081
Investment property under construction
Impairment
losses
1,282,950
32,809
226,135
31,976
At 31 December 2011:
ITEM
Cost
Accumulated
depreciation
Impairment losses
Net balance
Buildings and other structures
Furniture and vehicles
Fixtures
Office and IT equipment
Investment property under construction
1,726,211
228,753
1,286,135
1,065,164
29,663
(384,043)
(187,626)
(1,010,999)
(994,198)
-
(5)
(981)
-
1,342,163
41,127
275,136
69,985
29,663
4,335,926
(2,576,866)
(986)
1,758,074
At 31 December 2012 and 2011, there were no items of property, plant and equipment for own use of
significant amounts which were:
-
Temporarily idle;
-
Fully depreciated but still in use; or
-
Retired from active use but not classified as non-current assets held for sale
(16.2) Investment property
"Investment property" includes land, buildings and other structures, held either to earn rentals or for
capital appreciation.
At 31 December 2012 and 2011, the Bank did not have any significant contractual obligations in
connection with the future operation of the investment property included in the balance sheet, and there
were no relevant restrictions thereon, other than those inherent to the current conditions of the property
market.
Net income from the Bank's investment property in the year ended 31 December 2012 totalled EUR
12,769 thousand (EUR 14,876 thousand for the year ended 31 December 2011) (see Note 34).
(17) Intangible assets - Other intangible assets
The breakdown of assets under this heading in the accompanying balance sheet is as follows:
ITEM
Cost
Computer software
Other
Balances at the end of the year
Accumulated amortisation
Impairment losses
Total
31/12/12
31/12/11
654,668
13,071
667,739
(602,839)
675,404
6,237
681,641
(569,708)
111,933
(5,434)
59,466
116
Net changes in this item on the accompanying balance sheet during the years ended 31 December 2012
and 201 were as follows:
ITEM
31/12/12
31/12/11
111,933
1,925
-
107,026
78,551
70,354
Impairment losses charged to income
(78,961)
(66,606)
Other changes
(52,057)
(766)
59,466
111,933
Other additions
Amortization of intangible assets with a finite useful life:
The charge for amortisation of intangible assets for the years ended 31 December 2012 and 2011 was
EUR 78,961 thousand and EUR 66,606 thousand respectively, recognised under "Depreciation and
amortisation charge" in the accompanying income statement for those years.
(18) Other assets
The detail of the most significant items under this heading in the accompanying balance sheet at 31
ITEM
Inventories
31/12/12
31/12/11
351
150,226
Other items (1)
975,443
269,670
Total
975,794
419,896
(1) Includes, inter alia, transactions in transit, accruals associated with operating income, and unaccrued prepayments.
117
Inventories
The Bank's most significant inventories at 31 December 2012 and 2011 were classified as follows:
ITEM
31/12/12
31/12/11
Raw materials and goods held for conversion (land)
-
66,275
Of which: acquired in payment of debt
-
23,051
Other
-
43,224
-
108,455
-
107,730
Work in progress (property developments under construction)
Other
-
725
351
22,902
-
20,667
351
2,235
351
197,632
Less: impairment losses:
-
(47,406)
Raw materials and goods held for conversion (land)
-
(5,713)
-
(2,267)
Other
-
(3,446)
-
(38,562)
-
(38,562)
Other
-
-
Finished products (completed property developments)
Other
Total, gross (1)
Work in progress (property developments under construction)
Finished products (completed property developments)
-
(3,131)
-
(2,832)
Other
-
(299)
351
150,226
Total, net (1)
(1)
The change in balances between 2012 and 2011 is due primarily to the transfer of assets to the SAREB.
The changes affecting the impairment losses of these items, which include the adjustments necessary to
reduce their cost to net realisable value, in the years ended 31 December 2012 and 2011 are as follows:
ITEM
Impairment losses charged to income
Net provisions charged against/(credited to) profit for the year (Note 41)
Transfers from/to non-current assets held for sale and other changes
31/12/12
31/12/11
47,406
-
-
8,484
13,055
10,728
(491)
-
12,564
10,728
(59,970)
28,194
-
47,406
Note 3 contains information concerning foreclosed assets or assets acquired in settlement of debts
classified as inventories, as required by applicable regulations.
In 2012, there were no significant sales of assets classified under this heading on the accompanying
balance sheet.
118
Financial liabilities at amortised cost - Deposits from central banks
The detail of this heading in the balance sheet at 31 December 2012 and 2011 is as follows:
ITEM
31/12/12
Bank of Spain
51,710,663
Other central banks
Subtotal
-
-
51,710,663
22,410,204
Total
31/12/11
22,410,204
244,115
20,987
51,954,778
22,431,191
Financial liabilities at amortised cost – Deposits from credit institutions
The detail, by type of transaction, of "Deposits from credit institutions" in the accompanying balance sheet
at 31 December 2012 and 2011 is as follows:
ITEM
31/12/12
Reciprocal accounts
Time deposits
Repos
Other accounts
88,853
7,491,903
6,854,397
11,566,652
276,939
8,771,655
5,772,235
7,510,715
Subtotal
26,001,805
22,331,544
Total
31/12/11
112,956
102,734
26,114,761
22,434,278
This balance sheet item includes one-off non-marketable mortgage-backed securities issued by the Bank
amounting to EUR 97,000 thousand at 31 December 2012 (EUR 447,000 thousand at 31 December
2011) (see Note 1.14).
Financial liabilities at amortised cost - Customer deposits
The detail, by type of transaction, of "Customer deposits" in the accompanying balance sheet at 31
ITEM
31/12/12
31/12/11
Public sector
Current accounts
Savings accounts
Fixed-term deposits
Repos and other accounts
Non-residents
Repos and counterparties
Other accounts
6,763,124
105,635,272
11,875,228
23,687,483
62,539,151
7,533,410
3,431,483
2,087,107
1,344,376
4,828,409
128,100,500
14,610,072
27,905,324
74,672,377
10,912,727
26,624,047
25,019,090
1,604,957
Subtotal
115,829,879
159,552,956
Total
2,087,068
1,831,431
117,916,947
161,384,387
119
This balance sheet item also includes one-off non-marketable mortgage-backed securities issued by the
Bank amounting to EUR 10,557,778 thousand at 31 December 2012 (EUR 14,637,000 thousand at 31
December 2011) (see Note 1.14).
Liabilities at amortised cost - Marketable debt securities
The detail of issues recognised under "Marketable debt securities" in the balance sheet at 31 December
2012 and 2011 is set out in Appendix IV.
The detail of issues recognised under "Subordinated liabilities" in the balance sheet at 31 December
2012 and 2011 is provided in Appendix V.
The detail, by type of transaction, of "Subordinated liabilities" in the accompanying balance sheet at 31
ITEM
31/12/12
Subordinated loans (1)
31/12/11
4,500,000
-
Subordinated issues (see Appendix V) (2)
10,997,736
297,736
Subtotal
15,497,736
297,736
144,064
20,547
15,641,800
318,283
Total
(1) Amount corresponding to the loan granted by BFA in the framework of the restructuring process (see Note 1.2).
(2) The balance at 31 December 2012 includes EUR 10,700 million related to the contingent convertible bonds fully subscribed by BFA in the
framework of the BFA-Bankia Group's restructuring (see Note 1.2).
These are subordinated issues and, in terms of payment priority, they rank junior to all general creditors
of the Bank.
Interest accrued on subordinated liabilities amounted to EUR 123,323 thousand in the year ended 31
December 2012 (EUR 14,094 thousand at 31 December 2011), recognised under "Interest expense and
similar charges" in the income statement for the year.
Issues, repurchases and repayments of debt securities and subordinated liabilities
The table below shows information on the total issues, repurchases and repayments of debt securities and
subordinated liabilities between 31 December 2011 and 31 December 2012:
TYPE OF ISSUE
31/12/11
Issues
Repurchases or
repayments
Valuation,
treasury shares
and other
adjustments (*)
(39,881,090)
931,098
31/12/12
Debt securities issued in an EU Member State requiring a
prospectus to be registered
47,925,665
Debt securities issued in an EU Member State not
requiring a prospectus to be registered
-
-
-
-
-
Other debt securities issued outside the EU
-
-
-
-
-
Total
47,925,665
33,209,377
33,2209,377
(39,881,090)
931,098
42,185,050
42,185,050
120
The table below shows information on the total issuances, repurchases and repayments of debt securities
and subordinated liabilities between 1 January and 31 December 2011:
Repurchases
or repayments
Exchange
rate and
other
adjustments
31/12/11
16,807,500
(21,684,224)
(395,039)
47,925,665
-
-
-
-
-
-
-
-
-
-
-
-
53,197,428
16,807,500
(21,684,224)
(395,039)
47,925,665
1/1/11
Effect of the
Second DeMerger
Issues
Debt securities issued in an EU Member State
-
53,197,428
Debt securities issued in an EU Member State not
-
Other debt securities issued outside the EU
Total
TYPE OF ISSUE
Appendices IV and V show details of the balances under "Marketable debt securities" and "Subordinated
liabilities".
Individual details of issues, repurchases and repayments of debt securities in 2012 and 2011 by the
Bank are shown below.
121
(Millions of euros)
Issuer information
Data concerning issuances, repurchases or repayments in 2012
Amount of issue /
repurchase or
repayment
Balance
outstanding
Coupon
Type of guarantee issued
Euro
20
-
3M Euribor+1.75%
Bankia Personal Guarantee
Euro
200
-
3M Euribor+0.20%
AIAF
Euro
150
-
3M Euribor+1% (1)
Spanish Treasury Guarantee
25/01/12
AIAF
Euro
358
-
2.902% (1)
09/02/12
AIAF
Euro
826
-
3M Euribor+0.125%
20/02/09
20/02/12
AIAF
Euro
2,000
-
3.125% (1)
BN CM GGB 16/4/2012
16/04/09
16/04/12
AIAF
Euro
2,500
-
2.875% (1)
BN BANCAJA 21/3/2012
21/03/07
21/03/12
AIAF
Euro
300
-
3M Euribor+0.15%
ES0314977283
BN BANCAJA GGB 18/3/2012
18/03/09
16/03/12
AIAF
Euro
100
-
3M Euribor+1% (1)
BBB
ES0314977259
24/01/07
24/01/12
AIAF
Euro
1,500
-
3M Euribor+0.15%
A-
ES0314977275
12/03/09
12/03/12
AIAF
Euro
1,500
-
3% (1)
Repayment
A-
ES0314977325
11/05/09
11/05/12
AIAF
Euro
1,500
-
3% (1)
Repayment
A-
ES0314977317
27/04/09
27/04/12
AIAF
Euro
250
-
3.375% (1)
Spain
Repayment
BBB+
ES0414950735
CH CM 10/1/2012
01/09/08
10/01/12
AIAF
Euro
25
-
5.13%
Mortgage Portfolio - Mortgage Law
Spain
Repayment
BBB+
ES0414950768
CH CM 17/2/2012
17/02/09
17/02/12
AIAF
Euro
533
-
3.50%
Spain
Repayment
BBB+
ES0414950586
CH CM 01/3/2012
01/03/02
01/03/12
AIAF
Euro
1,445
-
5.25%
Spain
Repayment
BBB+
ES0414977324
CH BANCAJA 17/2/2012
17/02/09
17/02/12
AIAF
Euro
463
-
3.50%
Spain
Repayment
BBB+
ES0414977332
23/02/09
23/02/12
AIAF
Euro
100
-
3.25%
Spain
Repayment
BBB+
ES0414950792
CH CM 01/2/2018
01/02/10
09/05/12
AIAF
Euro
200
-
3M Euribor+0.70%
Spain
Repayment
BBB
ES0314950645
V HIBRIDOS C GARANTIZADO CM 30/4/2012
25/08/10
30/04/12
AIAF
Euro
5
-
4.90%
Spain
Repayment
BBB
ES0214950133
BN CM 01/6/2012
01/06/05
01/06/12
AIAF
Euro
1,307
-
3M Euribor+0.125%
Spain
Repayment
BBB
ES0214977086
06/06/05
06/06/12
AIAF
Euro
1,200
-
3M Euribor+0.15%
Spain
Repayment
A-
ES0314983067
BN INSULAR GGB 19/06/12
22/06/09
19/06/12
AIAF
Euro
150
-
3.125% (1)
Spain
Repayment
A-
ES0314846041
BN LAIETANA GGB 05/6/2012
05/06/09
05/06/12
AIAF
Euro
100
-
2.910% (1)
Spain
Repayment
A-
ES0314846033
23/06/09
19/06/12
AIAF
Euro
230
-
3.125% (1)
Spain
Repayment
A-
ES0314910052
BN AVILA GGB 19/06/12
19/06/09
19/06/12
AIAF
Euro
110
-
3.125% (1)
Spain
Repayment
A-
ES0314959067
BN SEGOVIA GGB 19/6/2012
19/06/09
19/06/12
AIAF
Euro
100
-
3.125% (1)
Spain
Repayment
BBB+
ES0414983215
CH INSULAR 12/06/12
12/06/09
12/06/12
AIAF
Euro
20
-
3.87%
Spain
Repayment
BBB+
ES0414977373
CH. BANCAJA 26/06/13
04/06/10
26/06/13
AIAF
Euro
500
-
2.63%
Spain
Repayment
BBB+
ES0414950834
Mortgage-backed securities
17/02/11
17/02/14
AIAF
Euro
2,000
-
1M Euribor+2.50%
Spain
Repayment
BBB+
ES0414977399
CH BANCAJA
31/03/11
31/03/14
AIAF
Euro
1,000
-
4.88%
Spain
Repayment
BBB+
ES0314959075
26/10/09
26/10/12
AIAF
Euro
61
-
2.50% (1)
Spain
Repayment
BBB+
ES0414977381
CH BANCAJA 18 EM
21/02/11
21/02/13
AIAF
Euro
1,000
-
4.63%
Spain
Repayment
A-
ES0314977341
Spain
Issue
-
ESCOCOS27121190
CONVERTIBLE BONDS
Spain
Issue
BBB+
ES0413307051
CH BANKIA 2012-5
Spain
Issue
BBB+
ES0413307028
CH BANKIA 280214
Spain
Issue
BBB+
ES0413307036
CH BANKIA 2012-3
Spain
Issue
BBB+
ES0413307010
CH BANKIA 2012-1
Spain
Repayment
BBB+
ES0413307036
Spain
Repayment
BBB+
Spain
Issue
BBB+
Spain
Issue
F2
Country of residence
Transaction
Credit rating issuer/issue
(1)
Spain
Repayment
BBB
ES0314950595
Spain
Repayment
BBB
ES0315530040
Spain
Repayment
A-
Spain
Repayment
Spain
Repayment
Spain
Repayment
Spain
Spain
ISIN code
Type of security
Transaction date
Maturity date
Market where listed
Issue currency
BN CM 30/3/2012
30/03/10
30/03/12
AIAF
BN RIOJA 22/02/12
22/02/07
22/02/12
AIAF
ES0314910045
30/04/09
30/04/12
A-
ES0314950462
BN CM GGB 25/1/2012
02/04/09
BBB
ES0214950158
BN CM 09/2/2012
09/06/06
A-
ES0314950454
BN CM GGB 20/2/2012
Repayment
A-
ES0314950470
Repayment
BBB
ES0314977267
Spain
Repayment
A-
Spain
Repayment
Spain
Repayment
Spain
Spain
18/09/09
18/09/12
AIAF
Euro
796
-
2.375% (1)
27/12/2012
Perpetual
Physical securities
Euro
10,700
10,700
Zero coupon
15/06/12
15/06/18
AIAF
Euro
2,000
2,000
1M EUR +3.50%
29/02/12
28/02/14
AIAF
Euro
500
500
4.00%
16/03/2012
16/03/2015
AIAF
Euro
3,000
-
1M Euribor+3%
13/01/2012
13/01/2017
AIAF
Euro
2,000
-
1M Euribor+2.85%
CH BANKIA 2012-3
16/03/2012
16/03/2015
AIAF
Euro
3,000
-
1M Euribor+3%
ES0413307010
CH BANKIA 2012-1
13/01/2012
13/01/2017
AIAF
Euro
2,000
-
1M Euribor+2.85%
ES0413307044
CH BANKIA 2012-4
31/05/12
31/05/17
AIAF
Euro
3,500
3,500
1M Euribor+3.50%
Promissory notes and ECPs
Miscellaneous
Miscellaneous
Miscellaneous
Miscellaneous
11,509
1,637
Miscellaneous
Spain
Repayment
F2
Miscellaneous
(1) All GGB issues are backed by the Spanish government. The latest rating assigned by DBRS was 8 August 2012.
(2) Ratings of mortgage-backed securities by S&P on 18 October 2012
Ratings of other issues by Fitch Ratings on 12 June 2012
Miscellaneous
Miscellaneous
Miscellaneous
Miscellaneous
12,333
-
Miscellaneous
Miscellaneous
122
(Millions of euros)
Issuer information
Data concerning issuances, repurchases or repayments in 2011
Country of residence
Transaction
Credit rating issuer/issue (1)
Transaction date
Spain
Issue
AAA
ES0414950842
Maturity date
Market where listed
Issue currency
Coupon
31/03/2011
31/03/2014
AIAF
Euros
Amount of issue / repurchase or
repayment
750
Balance outstanding
Mortgage-backed security
750
4.88%
Spain
Issue
AAA
Spain
Repayment
A-
ES0414950834
17/02/2011
17/02/2014
AIAF
Euros
2,000
2,000
1M Euribor+2.50%
ES0314950348
Bond
11/04/2008
11/04/2011
AIAF
Euros
15
-
5.13%
Spain
Repayment
A-
ES0214950117
Bond
07/04/2004
31/03/2011
AIAF
Euros
100
-
3.76%
Spain
Repayment
A-
ES0214950109
Bond
02/03/2004
02/03/2011
AIAF
Euros
100
-
4.00%
Spain
Repayment
A-
ES0314950496
Bond
14/04/2009
14/04/2011
AIAF
Euros
214
-
3.80%
Spain
Repayment
A-
ES0314950538
Bond
29/06/2009
29/06/2011
AIAF
Euros
1,000
-
3.63%
Spain
Repayment
A-
ES0314950348
Bond
11/04/2008
11/04/2011
AIAF
Euros
1,250
-
5.13%
Spain
Repayment
A-
ES0314950587
Bond
16/03/2010
16/09/20111
AIAF
Euros
1,000
-
2.25%
Spain
Repayment
A-
ES0314950595
Bond
30/03/2010
30/03/2012
AIAF
Euros
113
21
3M Euribor+0.35%
Spain
Repayment
A-
ES0314950652
Bond
29/10/2010
29/104/2013
AIAF
Euros
100
-
3M Euribor+0.20%
Spain
Repayment
AAA
ES0414950727
08/08/2008
08/05/2011
AIAF
Euros
200
-
3M Euribor+0.40%
Spain
Repayment
AAA
ES0414950610
25/03/2004
25/03/2011
AIAF
Euros
2,000
-
3.50%
Spain
Repayment
AAA
ES0414950750
29/12/2008
29/12/2011
AIAF
Euros
789
-
4.00%
Spain
Issue
AAA
ES0414950826
13/05/2011
14/03/2013
AIAF
Euros
75
1,325
1M Euribor
Spain
Issue
AAA
ES0414950859
10/05/2011
10/05/2017
AIAF
Euros
1,000
1,000
1M EUR + 2.50%
Spain
Issue
AAA
ES0414950867
10/05/2011
10/11/2017
AIAF
Euros
1,000
1,000
1M EUR + 2.50%
Spain
Issue
AAA
ES0413307002
24/11/2011
24/11/2016
AIAF
Euros
3,000
3,000
1M EUR + 2.85%
Spain
Repayment
B
XS0205497778
Subordinated debt
16/11/2004
17/11/2014
AIAF
Euros
3
-
4.625% fixed annual
Spain
Repayment
A-
XS0283643939
Senior debt
02/02/2007
02/02/2011
London SE
GBP
175
-
Libor 3M + 0.125
Spain
Repayment
A-
ES0314977291
Non-convertible bonds
18/03/2009
18/03/2011
AIAF
Euros
200
-
2.807% fixed annual
Spain
Repayment
A-
ES0314977309
25/03/2009
25/03/2011
AIAF
Euros
75
-
3M EUR + 0.76
Spain
Repayment
A-
ES0314977101
01/03/1999
30/04/2011
AIAF
Euros
120
-
3M EUR + 0.76
Spain
Repayment
A-
ES0314977119
01/05/1999
01/06/2011
AIAF
Euros
120
-
-
Spain
Issue
A-
ES0214977086
Various
06/06/2012
AIAF
Euros
3
1,175
3M EUR + 0.150
Spain
Repayment
A-
ES0314977242
10/05/2006
10/05/2011
AIAF
Euros
686
-
-
Spain
Issue
A-
ES0214977136
Various
23/09/2013
AIAF
Euros
1
650
3M EUR + 0.200
Spain
Issue
A-
ES0214977151
Miscellaneous
23/04/2014
AIAF
Euros
4
843
3M EUR + 0.175
Spain
Issue
A-
ES0414977357
Miscellaneous
15/04/2013
AIAF
Euros
70
869
3.00%
Spain
Repayment
AAA
ES0414977316
29/12/2008
29/12/2011
AIAF
Euros
604
-
4.00%
Spain
Repayment
AAA
ES0414977308
05/11/2008
05/11/2011
AIAF
Euros
220
-
5.50%
Spain
Repayment
AAA
ES0414983199
28/04/2008
21/04/2011
AIAF
Euros
25
-
6M EUR + 0.35
Spain
Repayment
A-
ES0314983059
18/05/2009
18/05/2011
AIAF
Euros
150
-
3M EUR + 0.90
Spain
Repayment
A-
ES0214983126
Bond
05/10/2005
05/10/2011
AIAF
Euros
115
-
2.37%
Spain
Repayment
A-
ES0314983075
Bond
09/06/2009
09/12/2011
AIAF
Euros
50
-
6M EUR + 0.95
Spain
Repayment
A-
ES0314910078
Bond
09/10/2009
09/10/2011
AIAF
Euros
20
-
3M EUR + 1.80
Spain
Repayment
A-
ES0314846025
Bond
04/05/2009
04/11/2011
AIAF
Euros
50
-
3.06%
Spain
Repayment
AA
ES0314959042
2nd issue of N/C secured bonds
18/05/2009
18/05/2011
AIAF
Euros
40
-
3.76%
Spain
Repayment
AA
ES0314959059
3rd issue of N/C secured bonds
18/05/2009
18/05/2011
AIAF
Euros
30
-
3M EUR + 204.8
Issue
A-2
Miscellaneous
Miscellaneous
Miscellaneous
Miscellaneous
Miscellaneous
8,833
-
Miscellaneous
Repayment
A-2
Miscellaneous
Miscellaneous
Miscellaneous
Miscellaneous
Miscellaneous
7,545
-
Miscellaneous
Spain
Spain
ISIN code
Type of security
Type of guarantee issued
(1) Bankia ratings assigned by Fitch after 14 July 2011. Ratings for backed securities assigned by S&P, on 3 June.
123
Other information
Mortgage-backed securities were issued in accordance with Mortgage Market Law 2/1981, of 25 March
and the related implementing provisions.
The Bank has various registration documents on record in the Official Registers of the Spanish
Securities Market Commission (CNMV) for non-participating securities, to be instrumented in mortgagebacked securities, territorial bonds, non-convertible bonds and debentures, subordinated bonds and
debentures, and special perpetual subordinated debentures.
Similarly, the Bank has registration documents on record in the Official Registers of the CNMV for the
issuance of promissory notes.
A detail, by maturity, of the balances of the Bank's main balance sheet headings is provided in Note 3.2,
"Liquidity risk of financial instruments".
Financial liabilities at amortised cost - Other financial liabilities
The detail, by type of transaction, of "Other financial liabilities" in the accompanying balance sheet at 31
ITEM
Obligations payable
Collateral received
Tax collection accounts
Special accounts and other items (*)
Financial guarantees
Total
31/12/12
31/12/11
20,173
1,582
158,194
2,228,984
41,002
86,919
6,613
184,616
729,782
63,847
2,449,935
1,071,777
(*) The balance at 31 December 2012 includes EUR 1,580,430 thousand related to the amount received from the SAREB for the asset transferred by the
Bank's subsidiaries.
(20) Provisions
The detail of this heading in the accompanying balance sheet at 31 December 2012 and 2011 is as
follows:
ITEM
31/12/12
Provisions for pensions and similar obligations
Provisions for taxes and other legal contingencies
Provisions for contingent liabilities and commitments
Other provisions
Total
486,376
36,721
603,072
1,307,920
2,434,089
31/12/11
539,860
51,766
473,763
217,853
1,283,242
124
The changes in the provisions recognised in the balance sheet in 2012 and 2011 and the purposes
thereof are as follows:
Provisions
for pensions
and similar
obligations
Provisions for
taxes and
other legal
contingencies
Provisions for
contingent
liabilities and
commitments
-
114
171
-
285
1,636,220
78,827
302,569
486,969
2,504,585
Provision charged to the income statement
21,922
7,002
362,174
106,705
497,803
ITEM
Other
provisions
Total
Reversals debited to the income statement
(172,813)
(1,027)
(132,728)
(34,513)
(341,081)
Net provisions/(reversals) charged
against/(credited to) profit recognised for the year
(Note 39)
(150,891)
5,975
229,446
72,192
156,722
Amounts used
(945,469)
(33,150)
(58,423)
(341,308)
(1,378,350)
539,860
51,766
473,763
217,853
1,283,242
42,641
-
780,971
1,185,353
2,008,965
(33,366)
-
(346,445)
(205,031)
(584,842)
Provisions charged to the income statement
Reversals debited to the income statement
Net provisions/(reversals) charged
against/(credited to) profit recognised for the year
(Note 39)
9,275
-
434,526
980,322
1,424,123
Amounts used
(103,729)
(1,795)
-
(142,876)
(248,400)
Other changes
40,970
(13,250)
(305,217)
252,621
(24,876)
486,376
36,721
603,072
1,307,920
2,434,089
The detail of items of "Provisions - Other provisions" in the accompanying balance sheet at 31 December
ITEM
Provision for restructuring costs (*)
31/12/12
709,600
62,712
62,256
71,910
536,064
83,231
1,307,920
217,853
Unrecognised gains on intra-group transactions
Other (**)
Total
31/12/11
(*) Includes provisions estimated to implement the measures included in the Restructuring Plan described in Note 1.2, including headcount reduction,
branch closures, contract cancellation, litigation and penalties.
(**) Figures at 31 December 2012 include, inter alia, the estimated coverage required for the definitive resolution of the agreement entered into with
Aviva Europe SE ending the arbitration procedure described in Note 2.21, an estimate of the Bank's present obligations related to real estate assets
whose timing at the date of authorisation for issue of these financial statements is uncertain, and coverage of other potential contingencies.
The detail of this heading in the accompanying balance sheet at 31 December 2012 and 2011 is as
follows:
ITEM
Transactions in transit
31/12/12
31/12/11
88,573
150,870
Other items (1)
463,302
443,879
Total
551,875
594,749
(1) Includes, inter alia, accruals associated with operating expenses.
125
This item in the accompanying balance sheet includes the net amount of the changes in fair value of
available-for-sale financial assets which must be recognised in the Bank's equity. These changes are
recognised in the income statement when the assets which gave rise to them are sold or become
impaired.
The following table provides details of the gains and losses by type of financial instrument at 31
31 December 2012
AMOUNT (Thousands of euros)
TOTAL, GROSS
AMOUNTS NET OF TAX EFFECT
Gains
Losses
Quoted debt securities
246,556
(1,388,442)
Unquoted debt securities
15,479
(5,534)
Quoted equity instruments
AMOUNT (Thousands of
euros)
Gains
Losses
172,589
(971,909)
10,835
(3,874)
183,424
(975,783)
Unquoted equity instruments
TOTAL
262,035
TOTAL LOSSES (GROSS)
(1,393,976)
TOTAL
(1,131,941)
TOTAL LOSSES (NET)
(792,359)
31 December 2011
AMOUNT (Thousands of euros)
TOTAL, GROSS
AMOUNTS NET OF TAX EFFECT
Gains
Losses
215,642
(1,061,501)
76,794
-
275
(8,389)
8,987
(14,871)
301,698
(1,084,761)
TOTAL
TOTAL LOSSES (GROSS)
(783,063)
AMOUNT (Thousands of
euros)
Gains
Losses
150,949
(743,051)
53,756
-
192
(5,872)
TOTAL
TOTAL LOSSES (NET)
6,291
(10,410)
211,188
(759,333)
-
(548,145)
Cash flow hedges
This item in the accompanying balance sheet includes the effective portion of the net gain or loss on
financial derivatives designated as hedging instruments in cash flow hedges.
This item in the accompanying balance sheet includes the effective portion of the net gain or loss on
hedging instruments in hedges of net investments in foreign operations (see Note 2.6).
This item in the accompanying balance sheet shows the amount of the exchange differences arising from
monetary items whose fair value is adjusted against equity.
This item on the balance sheet shows the cumulative amount of valuation adjustments recognised in
equity.
The statement of recognised income and expense for 2012 and 2011 shows the changes in this item in
the accompanying balance sheet for those years.
126
(23) Equity - Share capital and share premium, treasury share transactions, reserves and other
information
(23.1) Capital and share premium
At 31 December 2010, prior to the de-merger processes described in Note 1.2, the Bank's share capital
stood at EUR 18,040 thousand. By virtue of the resolutions taken by the Bank's Board of Directors and
the shareholders at their general meeting of 6 April 2011, and in accordance with the BFA banking and
financial services de-merger deed for the purposes of integration with Bankia, the following events took
place simultaneously:
i.
share capital was reduced by EUR 2,040 thousand, with a credit to reserves, by decreasing the par
value of each share from EUR 4.51 to EUR 4.
ii.
the number of outstanding shares was doubled by splitting each share having a par value of EUR 4
into two shares, each having a par value of EUR 2, with no change to the Bank's total share capital.
iii.
the Bank's share capital was increased to reflect the non-pecuniary transfers represented by the
de-merged business assets valued at EUR 12,000,000 thousand, corresponding to a par value of
EUR 1,800,000 thousand plus a share premium of EUR 10,200,000 thousand. The par value of the
shares issued (900,000,000 shares) and the related share premium were fully paid in as a result of
the en bloc transfer of BFA's business assets to Bankia (Second De-Merger). The effective date for
accounting purposes as from which the transactions relating to de-merged corporate assets were
treated as having been completed by the Bank is 1 January 2011.
As a result of the de-mergers, the Bank's share capital stood at EUR 1,816,000 thousand, composed of
908,000,000 fully subscribed and paid up shares with a par value of EUR 2 each.
Following the de-mergers described above, in July 2011 the Bankia IPO was carried through whereby, as
explained in Note 1.2, a deed was drawn up to increase share capital and remove the Bank's status as a
single-member company on 19 July 2011. During the IPO, carried out through a public share offering,
824,572,253 shares were issued with a par value of EUR 2 each, and a share premium of EUR 1.75 per
share, all of the same class and characteristics as those already in circulation, fully subscribed and paid
up.
excluding preferential subscription rights, through the issue and circulation of up to four hundred and fiftyfour million (454,000,000) ordinary Bankia, S.A. shares. The capital increase forms part of BFA’s
Repurchase Offer for certain preference shares and subordinated debt (see Note 1.2). Following expiry of
the acceptance period on 23 March 2012, a total of 261,391,101 shares of EUR 2 par value each, with a
share premium of EUR 1.3141 per share, were put into circulation to make the initial payment of the
repurchase.
As a result of the foregoing transactions, at 31 December 2012 the Bank's share capital amounted to
EUR 3,987,927 thousand, represented by 1,993,963,354 fully subscribed and paid up registered shares
(EUR 3,465,145 thousand and 1,732,572,253 shares at 31 December 2011).
Bankia, S.A.'s main individual shareholders at 31 December 2012 were as follows:
Shareholder
Number of shares
Ownership interest
958,000,000
48.05%
As explained in Note 1.2, on 27 June 2012, the FROB became the sole shareholder of BFA (the parent
company of the Banco Financiero y de Ahorros Group, of which Bankia forms part).
127
In the years ended 31 December 2012 and 2011, changes to "Equity - Less: Treasury shares" on the
balance sheet, showing the amount of Bankia's equity instruments held by the Bank, were as follows:
31/12/12
ITEM
Amount
(thousands
of euros)
No. shares
31/12/11
Amount
(thousands of
No. shares
euros)
8,048,703
27,649
-
-
96,483,997
255,023
20,881,340
73,152
- Sales and other changes
(104,082,700)
(281,490)
(12,832,637)
(45,503)
450,000
1,182
8,048,703
27,649
-
(72,142)
-
1,507
+ Purchases during the year
Net gain/(loss) on transactions with treasury
shares (reserves)
In accordance with prevailing regulations, treasury share transactions are recognised directly in equity; no
gain or loss may be recognised in respect of such transactions in the consolidated income statement.
In 2012, none of the Bankia Group entities carried out any transactions involving the purchase or sale or
any other type of transactions with Banco Financiero y de Ahorros, S.A.U. shares, nor were any
transactions carried out with shares of Bankia, S.A. or Banco Financiero y de Ahorros, S.A.U. through
third parties acting on behalf of the Group.
Certain disclosures required by the applicable regulations in connection with transactions involving
treasury shares of Bankia, S.A. by the Group in 2012 follow:
Acquisitions of treasury shares:
-
Number of treasury shares acquired in 2012: 96,483,997 (20,881,340 shares at 31 December
2011).
-
Par value of treasury shares acquired in 2012: EUR 192,968 thousand (EUR 41,763 thousand at
31 December 2011).
-
Average price of treasury shares acquired in 2012: EUR 2.643 (EUR 3.503 at 31 December
2011).
-
Total amount charged to equity in 2012: EUR 255,023 thousand (EUR 73,152 thousand at 31
December 2011).
Disposals of treasury shares:
-
Number of treasury shares sold in 2012: 104,082,700 (12,832,637 shares at 31 December 2011).
-
Par value of treasury shares sold in 2012: EUR 208,165 thousand (EUR 25,665 thousand at 31
December 2011).
-
Average selling price of treasury shares sold in 2012: EUR 2.011 (EUR 3.663 at 31 December
2011).
-
Amount charged to equity for sales in 2012: EUR 281,490 thousand (EUR 45,503 thousand at 31
December 2011).
-
Gain/(loss) recognised with a (debit)/credit to reserves for sales in 2012: EUR (72,142) thousand
(EUR 1,507 thousand at 31 December 2011).
128
Treasury shares held at 31 December 2012 and 2011:
-
Number of treasury shares held: 450,000 (8,048,703 shares at 31 December 2011).
-
Par value of treasury shares held: EUR 900 thousand (EUR 16,097 thousand at 31 December
2011).
-
Average acquisition price of treasury shares held: EUR 2.627 (EUR 3.435 at 31 December 2011).
-
Amount charged to equity for acquisition of treasury shares: EUR 1,182 thousand (EUR 27,649
thousand at 31 December 2011).
(23.3) Reserves
The Bank's statement of total changes in equity for the years ended 31 December 2012 and 2011 shows
the changes to equity for this item during those years.
(23.3.1) Restricted reserves
The information on the Bank’s restricted reserves is disclosed below:
Legal reserve
Pursuant to the Consolidated Text of the Spanish Corporate Enterprises Act, companies must earmark an
amount at least 10% of profit for the legal reserve until such reserve represents 20% of the capital. The
legal reserve may be used to increase capital to the extent that it exceeds 10% of the increased capital
figure. Other than for this purpose, the legal reserve may be used to set off losses if no other sufficient
reserves are available for such purpose.
The amount of this reserve recognised under "Equity - Reserves" on the balance sheet at 31 December
2012 was EUR 3,608 thousand (EUR 3,608 thousand at 31 December 2011), less than the 20%
mentioned in the preceding paragraph.
(23.4) Other disclosures
Pursuant to Royal Legislative-Decree 1/2010, of 2 July, approving the Consolidated Text of the Spanish
Enterprises Act, public limited companies are required to reduce capital when their losses lower their
equity to under two-thirds of their capital and no recovery in equity is forthcoming for one full financial
year. In addition, public limited companies shall be wound up due to losses that reduce equity to an
amount lower than one half of the capital. At 31 December 2011, Bankia, S.A.'s equity was less than half
its capital due to cumulative losses at that time.
In accordance with Royal Decree-Law 24/2012, the causes for obligatory winding-up or reducing capital
due to losses, set out in the Corporate Enterprises Act, are not applicable to credit institutions in which
the FROB has control or where it controls their governing bodies (see Note 1.3).
The BFA Group's capital requirement contained in the Recapitalisation Plan was finally estimated at EUR
24,552 million, of which approximately EUR 15,500 million corresponds to the estimated requirement of
the Bankia Group. Following approval of the Recapitalisation Plan and prior to 31 December 2012,
Bankia held a EUR 10,700 million issue of contingent convertible bonds, fully subscribed by Banco
Financiero y de Ahorros, S.A.U., the main shareholder of Bankia. Pursuant to applicable regulations,
these were included in the calculation of the Bankia Group's capital adequacy at 31 December 2012,
enabling it to comply with the minimum capital requirement of Bank of Spain Circular 3/2008 (see Notes 1
and 4). Nevertheless, in accordance with additional provision eleven of Royal Decree-Law 24/2012, of 31
August, on the restructuring and resolution of credit institutions (“RDL 24/2012”), the Bank's equity at 31
December 2012 leaves the Bankia Group's principle capital ratio at 4.4%, below the legal minimum
capital requirement. The Bank's directors estimate that the capital shortfall will be covered, as envisaged
in the Recapitalisation Plan, with the capital increase to be carried out by the Bank and entailing the
conversion of hybrid instruments issued by the BFA Group in an amount of approximately EUR 4,800
million will be carried out in accordance with the principles and objectives of the burden-sharing of the
bank restructuring costs provided for in Law 9/2012, of 14 November, on the reorganisation and
resolution of credit institutions (“Law 9/2012”) and RDL 24/2012, whereby the holders of hybrid
instruments or subordinated debt will absorb losses after their conversion to capital. In addition, as per
RDL 24/2012 and the Recapitalisation Plan, the FROB has announced that the par value of Bankia's
shares existing at 31 December 2012 will have to be reduced significantly (although it does not know by
exactly how much yet) in order to carry out the planned capital increases, implying the assumption of
losses for the potential dilution of existing shares at 31 December 2012. As of the date of authorisation for
129
issue of these financial statements, the conversion of hybrid instruments and the reduction in the par
value of Bankia's shares had yet to take place. Accordingly, it is impossible to know the exact impact on
the breakdown of the Bank's equity between the various items at 31 December 2012.
(24) Fair value
(24.1) Fair value of financial instruments
The fair value of a financial asset or liability on a specific date is the amount at which it could be delivered
or settled, respectively, on that date between knowledgeable, willing parties acting freely and prudently in
an arm’s length transaction. The Bank generally uses the following methods to estimate the fair value of
financial instruments:
-
When the market publishes closing prices, these prices are used to determine the fair value.
-
When the market publishes both bid and asking prices for the same instrument, the market price for a
purchased asset or a liability to be issued is the bid price and that for an asset to be purchased or an
issued liability is the asking price. If there is significant market-making activity or it can be
demonstrated that the positions can be closed – settled or hedged – at the average price, the average
price is used.
-
If there is no market price for a given financial instrument or for scantly active markets, its fair value is
estimated on the basis of the price established in recent transactions involving similar instruments
and, in the absence thereof, of valuation techniques sufficiently used by the international financial
community, taking into account the specific features of the instrument to be measured and,
particularly, the various types of risk associated with the instrument.
-
The valuation techniques used to estimate the fair value of a financial instrument meet the following
requirements:

The techniques used are based on the most consistent and appropriate economic and financial
methods, which have been demonstrated to provide the most realistic estimate of the financial
instrument's price.

They are those which are customarily used by market participants to measure this type of
financial instrument, such as discounting of cash flows, condition-based or non-arbitrage option
pricing models, etc.

They maximise the use of available information, in relation to both observable data and recent
transactions of similar characteristics, and limit the use of non-observable data and estimates as
far as possible.

They are sufficiently and amply documented, including the reasons why they were chosen in
preference to other possible alternatives.

They are applied consistently over time so long as the reasons for choosing them do not
change.

The validity of the models is examined periodically using recent transactions and current market
data.

They take into account the following factors: the time value of money, credit risk, exchange
rates, commodity prices, equity prices, volatility, liquidity, prepayment risk and servicing costs.
-
For financial instruments with no market or with a scantly active market, on initial recognition, the fair
value is obtained either on the basis of the most recent transaction price, unless another value can
be demonstrated through comparison with other recent market transactions in the same instrument,
or by using a valuation technique in which all the variables are taken solely from observable market
data.
-
The fair value of derivatives is determined as follows:
130

Financial derivatives included in the held-for-trading portfolios which are traded in organised,
transparent and deep markets: the fair value is deemed to be their daily quoted price and if, for
exceptional reasons, the quoted price at a given date cannot be determined, these financial
derivatives are measured using methods similar to those used to measure OTC derivatives.

OTC derivatives or derivatives traded in scantly deep or transparent organised markets: the fair
value is taken to be the sum of the future cash flows arising from the instrument, discounted to
present value at the date of measurement (“present value” or “theoretical close”) using valuation
techniques accepted by the financial markets: “net present value” (NPV), option pricing models,
etc.
Determination of fair value of financial instruments
The following table compares the amounts at which the Bank's financial assets and financial liabilities are
recognised in the accompanying balance sheet and their related fair value:
31/12/12
BALANCE
SHEET TOTAL
ITEM
31/12/11
FAIR VALUE
BALANCE
SHEET TOTAL
FAIR VALUE
ASSETS
Financial assets held for trading
Hedging derivatives
4,563,082
4,563,082
6,117,225
6,117,225
35,733,950
35,733,950
29,061,767
29,061,767
39,997,793
39,997,793
24,649,186
24,649,186
146,602,130
146,602,130
208,238,766
208,238,766
29,006,962
29,261,375
10,250,976
10,308,107
6,174,395
6,174,395
5,266,481
5,266,481
33,610,393
33,610,393
26,815,001
26,815,001
245,230,619
245,230,619
255,247,298
255,247,298
2,726,923
2,726,923
1,961,164
1,961,164
LIABILITIES
Financial liabilities held for trading
Hedging derivatives
For financial instruments whose carrying amount differs from their theoretical fair value, this latter value
was calculated as follows:
-
The fair value of “Cash and balances with central banks” is measured at carrying amount, as the
balances are short term.
-
The fair value of “Held-to-maturity investments" is considered to be the quoted value of the
investments in active markets.
-
The best estimate of the fair value of “Loans and receivables” and “Financial liabilities at amortised
cost” is the carrying amount, given the maturity and interest-rate structure of these types of financial
instruments.
Financial instruments whose carrying amount coincides with their fair value, were measured as follows:
 Level 1: Financial instruments whose fair value was determined by reference to their quoted price
in active markets, without making any change to these prices.
 Level 2: Financial instruments whose fair value was estimated by reference to quoted prices on
organised markets for similar instruments or using other valuation techniques in which all the
significant inputs are based on directly or indirectly observable market data.
 Level 3: Instruments whose fair value was estimated by using valuation techniques in which one
or another significant input is not based on observable market data. An input is deemed to be
significant when it is important for determining the fair value as a whole.
The following table presents the main financial instruments measured at fair value in the accompanying
balance sheet by measurement method used to estimate fair value:
131
2012
ITEM
Level 1
2011
Level 2
Level 3
Level 1
Level 2
Level 3
ASSETS
Debt securities
325,476
35,408,268
206
1,352,359
27,702,498
6,910
-
28,573
-
-
16,248
-
314,632
-
-
1,318,591
-
1,704
Equity instruments
4,420
-
-
19,191
-
-
Trading derivatives
6,424
35,379,695
206
14,577
27,686,250
5,206
16,486
-
-
76,6435
-
-
Other financial assets at fair value through
profit or loss
Debt securities
-
-
-
62,873
-
-
16,486
-
-
13,770
-
-
39,647,879
-
349,914
23,908,495
15,877
655,713
39,647,879
-
349,914
23,066,705
2,430
551,915
-
-
-
841,790
13,447
103,798
-
6,174,395
-
-
5,262,483
3,998
2,272
33,607,256
865-
538,271
26,276,730
-
2,272
33,607,256
865-
26,519
26,276,730
-
Short positions
-
-
-
511,752
-
-
Hedging derivatives
-
2,726,923
-
-
1,961,164
-
Equity instruments
Debt securities
Equity instruments
Hedging derivatives
LIABILITIES
Trading derivatives
“Available-for-sale financial assets" in the accompanying balance sheet at 31 December 2011 also
included EUR 69,101 thousand, respectively, measured at cost, as indicated in Note 2.12.
Below are the amounts recognised in the income statement for 2012 and 2011 due to changes in the fair
value of the Bank's financial instruments. The changes relate to unrealised gains and losses, with a
distinction made between financial instruments whose fair value is determined by reference to published
price quotations in an active market (Level 1) or using a measurement technique with inputs based on
observable market data (Level 2) and all other financial instruments (Level 3), together with the
unrealised cumulative changes in value at 31 December 2012 and 2011.
132
CUMULATIVE CHANGES IN FAIR
VALUE RECOGNISED IN THE
BALANCE SHEET AT 31 DECEMBER
2012
UNREALISED GAINS AND LOSSES
RECOGNISED IN THE 2012 INCOME
STATEMENT
ASSETS
Level 2
Level 3
Total
Level 2
Level 3
Total
-
-
-
-
-
-
11,836,084
38
11,836,122
31,391,959
109
31,392,068
344
-
344
344
-
344
Debt securities
-
-
-
-
-
-
Equity instruments
-
-
-
-
-
-
Trading derivatives
11,835,740
38
11,835,778
31,391,615
109
31,391,724
-
-
-
-
-
-
-
-
-
- (31,358)
(31,358)
Debt securities
-
-
-
- (31,358)
(31,358)
Equity instruments at fair value
-
-
-
-
-
-
Equity instruments carried at cost
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Debt securities
-
-
-
-
-
-
-
-
-
-
-
-
5,644,295
-
5,644,295
37,036,254 (31,249)
37,005,005
through profit or loss
at
fair
value
Hedging derivatives
TOTAL ASSETS
1,101,981
-
1,101,981
12,938,065
38
12,938,103
2012
STATEMENT
LIABILITIES
Trading derivatives
Level 2
Level 3
Total
Level 2
Level 3
Total
(11,819,765)
88 (11,819,677)
29,979,882
(3)
29,979,879
(11,819,765)
88 (11,819,677)
29,979,882
(3)
29,979,879
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Customer deposits
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Other financial liabilities
-
-
-
-
-
-
(841,665)
-
(841,665)
2,389,750
-
2,389,750
88 (12,661,342)
32,369,632
(3)
32,369,629
Short positions
Other financial liabilities at fair
value through profit or loss
Financial liabilities at amortised
cost
Deposits from central banks
Deposits from credit institutions
Hedging derivatives
TOTAL LIABILITIES
(12,661,430)
133
2011
STATEMENT
ASSETS
Level 2
Level 3
-
12,296,560
Total
-
Level 2
-
-
Level 3
-
Total
-
(162)
12,296,398
23,371,752
(2,764)
-
(2,764)
396
-
396
-
(252)
(252)
-
(252)
(252)
Debt securities
3,533
23,375,285
Equity instruments
-
-
-
-
-
-
Trading derivatives
12,299,324
90
12,299,414
23,371,356
3,785
23,375,141
through profit or loss
at
fair
value
-
-
-
-
-
-
-
-
9,934
33,232
43,166
Debt securities
-
-
-
(2)
34,228
34,226
Equity instruments at fair value
-
-
-
Equity instruments carried at cost
-
-
-
9,936
-
(996)
-
8,940
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Debt securities
TOTAL ASSETS
-
-
Hedging derivatives
-
-
-
-
1,125,092
-
1,125,092
4,608,463
3,999
4,612,462
13,421,652
(162)
13,421,490
27,990,149
40,764
28,030,913
STATEMENT
LIABILITIES
Level 2
Level 3
VALUE RECOGNISED IN THE BALANCE
SHEET AT 31 DECEMBER 2011
Total
Level 2
Level 3
Total
(11,646,723)
102 (11,646,621)
22,024,596
3,036
22,027,632
Trading derivatives
(11,646,723)
102 (11,646,621)
22,024,596
3,036
22,027,632
Short positions
(11,646,723)
102 (11,646,621)
22,024,596
3,036
22,027,632
Other financial liabilities at fair
value through profit or loss
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Customer deposits
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(942,106)
-
(942,106)
1,725,860
3,505
1,729,365
23,750,456
6,541
23,756,997
Financial liabilities at amortised
cost
Hedging derivatives
TOTAL LIABILITIES
(12,588,829)
102 (12,588,727)
134
The following table presents the main methods, assumptions and inputs used to measure the fair value of
Level 2 and 3 financial instruments and the related balances at 31 December 2012:
Level 2 financial
instruments:
Valuation techniques
Main assumptions
Inputs
Calculation of the present value of
future cash flows. Considering:
Debt securities
Present value method
(discounted cash flows
or DCF)
Equity instruments
Interest rate
derivatives: Black 76




Issuer credit spreads
Prepayment rates
Yield curves
Risk neutrality, non-arbitrage


Yield curves
Credit spreads
For measurement of widely traded
instruments, e.g. caps, floors,
European swaptions, etc. This
model is widely used in the
marketplace.
For equity, inflation, currency or
commodity derivatives:
For equity, currency or
commodity derivatives:
Black Scholes.
For measurement of widely traded
instruments, e.g. call, put, straddle,
etc.



Forward structure of the
underlying
Option volatility
Observable
correlations
among underlyings
For interest rate derivatives:
Derivatives

For inflation
derivatives: analytical
formula
Absence of correlation between
interest rates and inflation
Risk neutrality, absence of arbitrage
opportunities

For credit derivatives:


For credit derivatives:
analytical formula
Term structure of interest
rates
Volatility of the underlying
Quoted
Credit
Default
Swaps (CDS) prices
Historical CDS volatility
Calculation of probability of default
(PD) levels to ensure compliance with
the risk neutrality and non-arbitrage
assumptions
135
Level 3 financial
instruments:
Valuation techniques
Main assumptions
Debt securities
Copula Gaussiana
model
Calculation of the present value of
financial instruments as the present
value of the future cash flows
(discounted at market interest rates),
bearing in mind: Estimation of
prepayment rates, issuer credit risk
and current market interest rates. To
measure asset backed securities
(ABS),
future
prepayments are
calculated based on conditional
prepayment rates provided by the
issuers.
The "time-to-default"
model is used to measure probability
of default. One of the main variables
used is the correlation between default
extrapolated to several index tranches
(ITRAXX and CDX) and the portfolio of
underlyings of our CDOs.
Equity instruments
Net asset value (NAV) for unquoted
securities
Non-observable inputs



Prepayment rates
Correlation of default
Credit spread


Credit spread
NAV provided by the issuer
of the securities and/or
internal estimates
The HW model will be used provided
the volatility smile does not affect the
value of the derivative. The inclusion
of stochastic volatilities in the LMM
allows for modelling the entire volatility
surface, making it the most widely
using model for measuring exotic
derivatives.


Correlation
Volatility structure based on
the underlying
For equity and
currency options:
Dupire, Heston, solved
through numerical
methods
Options are measured using generally
accepted measurement models, which
include observed implied volatility



Correlation
Volatility structure
Dividends
Inflation options
Approach proposed by Jarrow and
Yildirim for modelling inflation and
nominal interest rates. This approach
is based on the inflation and foreign
currency analogy.

Inflation curve and nominal
interest rate correlation
Credit baskets: Copula
Gaussiana
The Copula Gaussiana measurement
approach, which is widely accept in
financial markets for its ease of use.


Default correlation
Historical CDS volatility
Both model the future performance of
short-term interest rates, enabling a
replication of the yield curve and
volatility surface.
For interest rate
options: Libor Market,
Hull-White models
Trading derivatives
Any reasonably possible changes in one or more variable or other assumptions would not result in a
significant change in the fair value of Level 3 financial instruments relative to the total portfolio of financial
instruments.
136
The table below shows, for measurements of the fair value of Level 3 instruments in the fair value
hierarchy, recognised on the balance sheet, a reconciliation of balances recognised at 31 December
2012 and 2011:
ASSETS
31/12/12
Opening balance
31/12/11
551,915
-
-
5,674,561
(17,645)
207,964
50,675
175,277
(68,320)
32,687
Gains or losses
To profit and loss
To equity valuation adjustments
Purchases
Settlements
29,805
176,483
(214,161)
(2,841,534)
-
(2,665,559)
349,914
551,915
(2,348)
120,144
Transfers
Closing balance
Total gain or loss in the year on instruments held at the end of the year
There were no significant transfers between Levels 1 and 2 in the fair value hierarchy in 2012 and 2011.
(24.2) Fair value of tangible assets
Following is a detail, by category, of the fair value of certain of the Bank’s tangible assets at 31 December
2012 and 2011, together with their related carrying amounts at that date:
31/12/12
ITEM
Tangible assets
Property, plant and equipment for
own use
Investment property
Inventories
Carrying amount
31/12/11
Fair value
Carrying amount
Fair value
1,688,299
1,920,670
2,064,589
2,965,872
1,574,179
1,774,473
1,758,207
2,556,341
114,120
146,197
306,382
409,531
351
351
150,226
196,675
For tangible assets classified under "Non-current assets held for sale", mostly arising from foreclosures,
the differences between fair value and carrying amount are not significant. The carrying amounts are
adjusted for the recognition of impairment losses in accordance with how long they have remained on the
balance sheet, adjusting the appraisal and asset values as required by Bank of Spain Circular 4/2004 and
taking into account the current situation of the real estate market.
137
(25) Tax matters
(25.1) Consolidated tax group
The Company is the parent of Tax Consolidation Group number 559/11 created on 1 January 2012,
comprising the following Group subsidiaries:
ABITARIA CONSULTORIA Y GESTION, S.A.
AVANZA INVERSIONES EMPRESARIALES, SGECR, S.A.
CAJA MADRID CIBELES, S.A.
CORPORACIÓN FINANCIERA CAJA DE MADRID, S.A.
ESTRATEGIA INVERSIONES EMPRESARIALES, SCR, S.A.
INMOGESTION Y PATRIMONIOS, S.A.
INTERMEDIACIÓN Y PATRIMONIOS, S.L.
MEDIACIÓN Y DIAGNOSTICOS, S.A.
PARTICIPACIONES Y CARTERA DE INVERSIÓN, S.L. (PACIN)
PLURIMED, S.A.
SOCIEDAD DE PROMOCIÓN Y PARTICIPACIÓN EMPRESARIAL CAJA MADRID, S.A. (S.P.P.E.)
VALORACION Y CONTROL, S.L.
ACCIONARIADO Y GESTION, S.L.
GARANAIR, S.L.
NAVIERA CATA,S.A.
SECTOR DE PARTICIPACIONES INTEGRALES, S.L.
TORRE CAJA MADRID, S.A.
ARRENDADORA DE EQUIPAMIENTOS FERROVIARIOS, S.A.
SALA RETIRO, S.A.
BANKIA BOLSA SOCIEDAD DE VALORES, S.A.
ADAMAR SECTORS, S.L.
ADQUIRENT IMMOBLES, S.L.
ANÁLISIS Y VERIFICACIÓN, CONTROL TÉCNICO DE EDIFICACIÓN, S.L.
BANCAJA HABITAT S.L
BENIDORM COMPLEJO VIDA & GOLF UNIPERSONAL S.L.UNIPERSONAL
CIVITAS INMUEBLES, S.L.
COMPLEJO CAPRI GAVA MAR, S.A.
COSTA EBORIS S.L
DICUMAR BALEAR, S.L.
ENCINA LOS MONTEROS S.L
HABITAT RESORTS S.L UNIPERSONAL
HABITAT VIDA & RESORTS S.L. UNIPERSONAL
HOTEL ALAMEDA VALENCIA, S.L
ICONO MEDITERRANEO S.L UNIPERSONAL
INVERSORA BURRIAC, S.L.U.
MAS DE PEIRON, S.L UNIPERSONAL
MOVIOLA ASOCIADOS 21, S.L.
OCIO LOS MONTEROS S.L. UNIPERSONAL
SANTA POLA LIFE RESORTS, S.L.UNIPERSONAL
TREBOL HABITAT SLU
URBILAND INVERSORA, S.L.
XADAY PROYECTOS Y APLICACIONES, S.L.
ACTIVOS 26001, S.L.U.
138
ALQUILER PARA JOVENES VIVIENDAS COLMENAR VIEJO S.L.
ARRENDAMIENTOS 26001, S.L.U.
COBIMANSA PROMOCIONES INMOBILIARIAS, S.L.
COLMENAR DESARROLLOS RESIDENCIALES, S.L.
DESARROLLOS URBANISTICOS DE SEGOVIA S.A.
EDIFICIOS SINGULARES DE CANARIAS, S.A.U.
FINCAS Y GESTIÓN INMOBILIARIA 26001, S.L.U.
GESTORA CASTELLANA DEL SUELO S.A.
INMOVEMU, S.L.
INVERÁVILA, S.A.
INVERSIÓN EN ALQUILER VIVIENDAS S.L.
INVERSIONES Y DESARROLLOS 2069 MADRID, S.L.
INVERSIONES Y DESARROLLOS 2069 VALLADOLID, S.L.
PROMOCIONES DE OBRAS 26001, S.L.U.
SEGOVIANA DE GESTION 2007 S.A.
SUELOS 26001, S.L.U.
SUELOS 26002, S.L.U.
URBAPINAR S.L.
VALLENAVA INVERSIONES S.L.
VEHÍCULO DE TENENCIA Y GESTIÓN Nº 4, S.L
VIVIENDAS ALQUILER MOSTOLES S.L.
CAMÍ LA MAR DE SAGUNTO, S.L.
GES LAYETANA DE PENSIONES S.A., ENTIDAD GESTORA DE FONDOS DE PENSIONES
LAIETANA GENERALES, CÍA. SEGUROS DE LA CAJA DE AHORROS LAIETANA, S.A.U.
LAIETANA MEDIACIÓN OPERADOR DE BANCA-SEGUROS VINCULADO, S.A.U.
LAIETANA VIDA, CIA. SEGUROS DE LA CAJA DE AHORROS LAIETANA, S.A.U.
EDICTA SERVICIOS S.A.
CAJA SEGOVIA OPERADOR DE BANCA SEGUROS, S.A.
BANKIA BANCA PRIVADA GESTION SGIIC SA (formerly ARCALIA INVERSIONES SGIIC, S.A)
ARCALIA SERVICIOS, S.A
BANKIA BANCA PRIVADA
CAJA DE MADRID PENSIONES, S.A. E.G.F.P.
BANKIA FONDOS S.G.I.I.C., S.A.
LA CAJA DE CANARIAS MEDIACIÓN OPERADOR DE BANCA-SEGUROS VINCULADO, S.A.U.
MONDRASOL 1, S.L.
MONDRASOL 10, S.L.
MONDRASOL 11, S.L.
MONDRASOL 12, S.L.
MONDRASOL 13, S.L.
MONDRASOL 14, S.L.
MONDRASOL 15, S.L.
MONDRASOL 2, S.L.
MONDRASOL 3, S.L.
MONDRASOL 4, S.L.
MONDRASOL 5, S.L.
MONDRASOL 6, S.L.
MONDRASOL 7, S.L.
139
MONDRASOL 8, S.L.
MONDRASOL 9, S.L.
PARKIA CANARIAS, S.L.
VOLTPRO I, S.L.
VOLTPRO II, S.L.
VOLTPRO III, S.L.
VOLTPRO IV, S.L.
VOLTPRO IX, S.L.
VOLTPRO V, S.L.
VOLTPRO VI, S.L.
VOLTPRO VII, S.L.
VOLTPRO VIII, S.L.
VOLTPRO X, S.L.
VOLTPRO XI, S.L.
VOLTPRO XII, S.L.
VOLTPRO XIII, S.L.
VOLTPRO XIV, S.L.
VOLTPRO XIX, S.L.
VOLTPRO XV, S.L.
VOLTPRO XVI, S.L.
VOLTPRO XVII, S.L.
VOLTPRO XVIII, S.L.
VOLTPRO XX, S.L.
INVERSIONES TURÍSTICAS DE ÁVILA, S.A.
BANCAJA CONSULTORA DE RIESGOS, S.L.
BANCAJA EMISIONES, S.A UNIPERSONAL
BANCAJA GESTION ACTIVOS, S.L
BANCAJA PARTICIPACIONES S.L
BANCAJA US DEBT
GRUPO BANCAJA CENTRO DE ESTUDIOS, S.A.
INVERCALIA GESTIÓN PRIVADA S.A
OPERADOR DE BANCA SEGUROS VINCULADO A GRUPO BANCAJA, S.A
VALENCIANA DE INVERSIONES MOBILIARIAS, S.L
SEGURÁVILA, OPERADOR DE BANCA-SEGUROS VINCULADO DE CAJA DE AHORROS DE ÁVILA, S.L.
PARQUE BIOLÓGICO DE MADRID, S.A.
FINANMADRID ENTIDAD DE FINANCIACIÓN, S.A.
MADRID LEASING CORPORACIÓN, S.A., E.F.C.
AUTO RENTING RIOJA, S.A.U.
CAJARIOJA MEDIACIÓN DE SEGUROS O.B.S., S.A.U.
CORPORACIÓN EMPRESARIAL CAJARIOJA, S.A.U.
GESTIÓN DE INICIATIVAS RIOJANAS, S.A.U.
SEGURCAJA, S.A., CORREDURÍA DE SEGUROS VINCULADA AL GRUPO CAJA MADRID
ARCALIA PATRIMONIOS, SOCIEDAD DE VALORES S.A
PLURITEL COMUNICACIONES, S.A.
140
(25.2) Years open for review by the tax authorities and provisions recognised
At 31 December 2012, the Bank had the last four years open for review by the tax inspection authorities
for all taxes applicable to it.
In 2009, the tax authorities performed an inspection of the main sections of the tax return by Altae Banco,
S.A. (the entity which changed its corporate name in 2011 to Bankia, S.A. and carried out the private
banking business demerged in July 2011 in favour of Banco de Servicios Financieros Caja Madrid –
Mapfre, S.A.) for the years 2005 and 2006 (with the exception of corporate income tax, in respect of
which an inspection was carried out for the years 2004 to 2006). Following the inspection, the authorities
raised a tax assessment for a total amount of EUR 307 thousand, which was signed in agreement. An
amount of EUR 42 thousand was paid in 2011 on assessments signed in acceptance. Pursuant to the demerger of the private banking business by Bankia, S.A. in favour of Banco de Servicios Financieros Caja
Madrid – Mapfre, S.A. (now Bankia Banca Privada, S.A.) and the acquisition by this Bank by succession
of the rights and obligations relating thereto, as stipulated in the regulations applicable, the effect on
expenditure in 2011 and the provision recorded was recognised in the accounts of Bankia Banca Privada,
S.A.
In relation to the “Cajas” which transferred their financial business on 16 May 2011 in the terms set out in
Note 1.1 to these financial statements, firstly to Banco Financiero y de Ahorros, S.A.U. and subsequently
to the Bank, the information is as follows:
On 24 July 2009, inspections were performed at Caja de Ahorros y Monte de Piedad de Madrid in order
to ascertain compliance with tax obligations and duties in respect of the following items and periods:
ITEM
Income tax
PERIOD
2004 to 2006
Value added tax
07/2005 to 2006
Withholdings / Payments on account of earned income
07/2005 to 2006
Withholdings / Payments on account for investment income
07/2005 to 2006
Withholdings / Payments on account for leases
07/2005 to 2006
Withholdings on account on non-resident income
07/2005 to 2006
Annual statement of operations
2005 and 2006
Summarised statement - intracommunity provision and acquisition of goods
2005 and 2006
On 19 October 2012, an assessment for withholdings/prepayment on investment income of EUR 370
thousand was signed in disagreement and appealed before the Central Economic Administrative Court.
On 31 October 2012, a provisional penalty was received totalling EUR 175 thousand against
withholding/prepayment on investment income, which has not yet been paid.
Verification and inspection activities are still ongoing to date with respect to income tax for the period from
2004 to 2006, and no noteworthy aspects have been singled out.
On 7 June 2011, inspections were performed at Caja de Ahorros y Monte de Piedad de Segovia in order
to ascertain compliance with tax obligations and duties in respect of the following items and periods:
ITEM
PERIOD
Income tax
2007 to 2009
Value added tax
2008 to 2010
Withholdings/prepayments on investment income
2008 to 2010
Verification and inspection activities are still ongoing to date, and no noteworthy aspects have been
singled out.
On 8 July 2010, inspections were performed at Caja Insular de Ahorros de Canarias in order to ascertain
compliance with tax obligations and duties in respect of the following items and periods:
141
ITEM
PERIOD
Income tax
2005 to 2008
Value added tax
06/2006 to 2009
06/2006 to 2009
06/2006 to 2009
06/2006 to 2009
06/2006 to 2009
On 12 December 2012, tax assessments were signed in disagreement for the following:
ITEM
Thousands of euros
Income tax
848
Value added tax
891
55
55
482
These amounts, for a combined total of EUR 2,331 thousand, will be paid in February 2013, within the
voluntary payment period.
On 15 February 2012, inspections began at Bancaja in order to ascertain compliance with tax obligations
and duties in respect of the following items and periods:
ITEM
PERIOD
Income tax
2008 to 2010
Value added tax
2008 to 2010
2008 to 2010
2008 to 2010
2008 to 2010
2008 to 2010
On 12 June 2012, inspections were performed at Caja de Ahorros y Monte de Piedad de Avila in order to
ascertain compliance with tax obligations and duties in respect of the following items and periods:
ITEM
Income tax
PERIOD
2008 to 2010
Value added tax
05/2008 to 12/2010
05/2008 to 12/2010
05/2008 to 12/2010
05/2008 to 12/2010
singled out.
142
On 20 June 2012, inspections were performed at Caja Insular de Ahorros de Rioja in order to ascertain
ITEM
PERIOD
Income tax
2008 to 2010
Value added tax
05/2008 to 12/2010
05/2008 to 12/2010
05/2008 to 12/2010
05/2008 to 12/2010
singled out.
Meanwhile, on 18 December 2012, inspections began at Caixa D'Estalvis Laietana in order to ascertain
ITEM
PERIOD
Income tax
2008 to 2010
Value added tax
11/2008 to 12/2010
11/2008 to 12/2010
11/2008 to 12/2010
11/2008 to 12/2010
singled out.
As the result of tax assessments appealed by these “Cajas” in previous years, and due to the various
interpretations that may arise from fiscal regulations, the outcome of inspections by the authorities may
give rise to tax liabilities that cannot be objectively quantified at the present time. However, it is estimated
that if any contingent liabilities were to arise that were not reasonably covered (see Note 20), this would
not significantly affect the true and fair view of the Bank's financial position and results.
(25.3) Detail of income tax expense
The table below shows a breakdown of income tax expense recognised in the accompanying income
statement for 2012 and 2011:
ITEM
Income tax expense for the year (Note 25.4)
Adjustments for prior years
Other (tax expenses from foreign branches)
TOTAL
2012
(3,247,307)
2011
(1,339,771)
164
-
8,398
463
(3,238,745)
(1,339,308)
143
(25.4) Reconciliation of accounting profit/(loss) to taxable profit (tax loss)
The following table shows a reconciliation of the income tax figure in 2012 and 2011 recognised in the
corresponding income statement to profit/(loss) before tax for those years multiplied by the tax rate
applicable in Spain:
ITEM
Accounting profit/(loss) before tax
31/12/12
(21,545,188)
31/12/11
(4,369,859)
Applicable tax rate
30%
30%
Income tax at 30%
(6,463,556)
(1,310,957)
Impact of permanent differences
862,965
(8,334)
Tax credits and tax relief
(18,297)
(20,017)
Income tax not recognised in the income statement
2,380,147
-
Current income tax expense recognised in the income statement
3,238,745
1,339,308
(25.5) Tax recognised directly in equity
In addition to the income tax recognised in the consolidated income statement for 2012 and 2011, the
Bank recognises in equity the taxes relating basically to “Valuation Adjustments" (which includes
available-for-sale financial assets, cash flow hedges, hedges of net investments in foreign operations,
and exchange differences) and to "Equity – Reserves" on the accompanying balance sheet, amounting to
EUR 84,667 thousand and EUR 248,486 thousand, respectively.
(25.6) Deferred tax assets and liabilities
Pursuant to the tax legislation in force, certain temporary differences arose that must be taken into
account when quantifying the related income tax expense. The deferred taxes recognised in the balance
sheet at 31 December 2012 and 2011 were as follows:
DEFERRED TAX ASSETS ARISING FROM:
Pre-paid taxes arising from temporary differences in the recognition of accounting and taxable income
and expense:
Investments in subsidiaries, branches, associates and joint ventures.
Credit losses
31/12/12
31/12/11
3,450,053
3,704,579
513,001
300,252
1,985,535
1,716,857
Impairment losses recognised on financial assets
307,733
586,034
Impairment losses on tangible and intangible assets
405,600
409,956
Other impairment losses
45,107
82,361
Loan origination fees
13,028
14,964
Accelerated depreciation and amortisation
11,263
5,149
Additions to provisions for pensions
79,686
438,778
89,100
150,228
294,351
236,911
Recognised provisions
Tax assets relating to unused tax credits and tax relief
Losses on available-for-sale financial assets
Recognised unused tax losses
Other items
Total
427,321
385,049
4,428,462
1,236,698
20,937
4,832
8,621,124
5,568,069
144
DEFERRED TAX LIABILITIES ARISING FROM:
31/12/12
Unrealised gains on available-for-sale financial assets
567,732
Unrealised gains on cash flow hedges
Unrealised gains on properties
Other items
Total
31/12/11
626,993
11,067
12,553
190,029
193,989
99,789
93,654
868,617
927,189
The detail of recognised tax loss carryforwards of the Bank at 31 December 2012, including their year of
origin and expiry date in accordance with applicable tax legislation, is as follows:
ITEM
Year giving rise to the tax
loss
Years remaining at 31
December 2012 until their
use
Amount of the tax loss available
for offset
Amount of the deferred tax
asset recognised (tax credit)
Recognised amounts
2009
15
7,076
2,123
2010
16
615,298
184,589
2011
17
3,314,811
994,443
2012
18
10,824,355
3,247,307
14,761,540
4,428,462
TOTAL
To date, EUR 10,824,355 thousand of tax losses related to 2012 have been capitalised on the balance
sheet. This amount may differ from the tax loss subsequently accredited in the 2012 income statement,
although this would not have any impact on the Bank's results or equity.
The detail at 31 December 2012 of both unused deductions and deductions available for offset by the
Bank, recognised and unrecognised, including their year of origin and expiry date in accordance with
applicable tax legislation, is as follows:
ITEM
31/12/12
Year giving rise to the tax credits
Years remaining at 31
December 2012 until
their use
2005 - Deduction for international double taxation
2005 - Other deductions
Amount of the tax credits or
tax relief available for offset
Amount of the deferred tax asset
recognised
85
85
553
553
2008 - Deduction for reinvestment
6
65,890
65,890
2008 - Deduction for R&D
11
405
405
7
67,402
67,402
2009 - Deduction for internal double taxation
4
1,430
1,430
12
2,319
2,319
7
2,813
2,813
8
35,433
35,433
5
41,711
41,711
8
3,034
3,034
13
1,872
1,872
8
2,022
2,022
6
65,982
65,982
9
1,748
1,748
14
1,202
1,202
9
450
450
294,351
294,351
TOTAL
To assess the recoverability of net tax assets recognised by the Bank, the directors have analysed, based
on the nature of the tax assets, the estimated ability to generate sufficient taxable profit against which
these can be utilised according to the terms, conditions and estimates contained in the Restructuring Plan
approved by the authorities (see Note 1.2).
145
(25.7) Transactions carried out in 2012 and previous years pursuant to Chapter VIII Title VII of the
Revised Corporate Income Tax Law approved by Royal Legislative Decree 4/2004 of 5 March
(TRLIS).
In 2012, the Bank was not involved in any corporate restructuring transaction subject to the special tax
neutrality regime regulated in Chapter VIII Title VII of the Revised Corporate Income Tax Law (TRLIS)
approved by Royal Legislative Decree 4/2004 of 5 March.
In previous years, the Bank was involved in corporate restructuring transactions subject the special tax
neutrality regime regulated in Chapter VIII Title VII of the Revised Corporate Income Tax Law approved
by Royal Legislative Decree 4/2004 of 5 March. The disclosure requirements provided for in this
legislation are explained in the notes to the financial statements for the years in which they took place.
Tax credit for impairment of equity investments in subsidiaries, jointly-controlled entities and
associates
For the purposes of the provisions of the last paragraph of Article 12.3 of the TRLIS, the Bank states that
application of this regulation with respect to the tax year 2012 will be disclosed in the 2013 financial
statements when the tax return for 2012 has been filed.
However, it further states that the sum of EUR 2,888,722 thousand was recognised at 31 December 2012
as an accounting impairment loss on equity investments in Group entities, jointly-controlled entities and
associates.
Deduction for reinvestment of extraordinary gains
At the 2012 reporting date, the directors estimate that there is no material taxable income that is eligible
to claim deductions in this respect by the Bank. Nor were reinvestments in 2012 considered to meet the
requirements in relation to deductions for reinvestment.
In any case, both the deduction for reinvestment of extraordinary gains posted in taxable income for 2012
and the materialisation of reinvestment actually carried out in 2012 will be determined in 2013 in the
official tax return in respect of corporate income tax for 2012.
Caja de Ahorros y Monte de Piedad de Madrid opted for the deduction for reinvestment of extraordinary
gains regulated by Article 42 of the TRLIS, obtained in the transfer for consideration of intangible assets,
tangible assets and equity securities representing interests of at least 5% in share capital. Acquisitions of
intangible assets, tangible assets and securities representing at least 5% of share capital in each of the
years by Caja de Ahorros y Monte de Piedad de Madrid and by the entities comprising the tax
consolidation group No. 38/90 headed by Caja de Ahorros y Monte de Piedad de Madrid (until 2010)
were made in compliance with the reinvestment commitments for this deduction.
The table below shows the taxable income eligible for this deduction in the tax year 2004 and following
years:
YEAR
Income eligible Income accredited
Deduction
Tax group No. 38/90
Income eligible
Income accredited
Deduction
2004
15,451
15,451
3,090
15,607
15,607
3,121
2005
7,891
7,891
1,578
21,180
21,180
4,236
2006
1,124
1,124
225
48,030
48,030
9,606
2007
2,474,114
2,370,110
122,931
2,527,300
2,423,296
130,642
2008
483
483
108,095
289,258
289,258
142,747
2009
-
-
77,462
-
-
77,462
2010
-
-
35,236
-
-
35,236
146
In 2007, the taxable income obtained by Caja de Ahorros y Monte de Piedad de Madrid eligible for
deductions for reinvestment amounted to EUR 2,474,114 thousand. Specifically, taxable income arising
from the sale of the 9.9245% stake in Endesa amounted to EUR 2,277,353 thousand. Of this amount,
EUR 847,797 thousand, EUR 745,081 thousand, EUR 534,218 thousand and EUR 243,014 thousand
were effectively materialised in the years 2007, 2008, 2009 and 2010, respectively, for this deduction,
through acquisitions of stakes representing at least 5% of the share capital of companies and acquisitions
of intangible assets and tangible assets by tax group No. 38/90 of which Caja de Ahorros y Monte de
Piedad de Madrid was the parent.
With respect to 2008, the consolidated tax payable presented in the corporate income tax statement filed
by tax group No. 38/90, of which Caja de Ahorros y Monte de Piedad de Madrid was the parent, did not
permit the application of deduction for accredited reinvestment of the sum of EUR 142,748 thousand. This
sum was partially applied in the consolidated tax statement for the tax year 2009 (EUR 66,463 thousand),
and it was not possible to apply the remainder in tax years 2009 and 2010. With respect to 2009 and
2010, the consolidated tax payable presented in the corporate income tax statement filed by tax group
No. 38/90, of which Caja de Ahorros y Monte de Piedad de Madrid was the parent, did not permit the
application of deduction for accredited reinvestment of the sums of EUR 77,462 thousand and EUR
35,237 thousand, respectively.
In accordance with Article 93 of the TRLIS and the criteria of the Tax Authorities, the Bank may avail itself
of the amounts corresponding to deductions for accredited reinvestment between 2008 and 2010, as may
the companies forming part of tax group No. 38/90 in proportion to their contributions in 2011 and
subsequent years, as permitted by the Bank's full tax expense over the period stipulated in Article 44.1 of
the TRLIS. Specifically, the Bank may avail itself of deductions for accredited reinvestment in 2008, 2009
and 2010 totalling EUR 41,632 thousand, EUR 65,818 thousand and EUR 34,527 thousand respectively.
For tax year 2004, Bancaja included, as part of its taxable income, income eligible for the 20% deduction
for reinvestment of extraordinary profit as regulated in Article 42 of the TRLIS amounting to EUR 10,863
thousand, producing a tax asset of EUR 2,173 thousand. The required reinvestment, which amounted to
EUR 51,425 thousand, was partially carried out in 2003 between 26 July and 31 December, accounting
for EUR 42,257 thousand. The remainder was realised in 2004, amounting to EUR 10,092 thousand. This
generated entitlement to deduction of the aforementioned tax asset. This information was stated in
greater detail by the taxpayer as a margin note on the tax return, also quantifying reinvestment actually
materialised in 2004 as EUR 89,381 thousand, generating a reinvestment surplus of EUR 79,289
thousand, which could be accredited as compliance with the reinvestment requirement for transfers made
within one year of each investment.
In 2005, taxable income included income eligible for the 20% deduction for reinvestment of extraordinary
profit as regulated in Article 42 of the TRLIS amounting to EUR 7,291 thousand, producing a tax asset of
EUR 1,458 thousand. The deduction was applied to the full tax liability for fiscal year 2005, since the
amount of the required reinvestment, which totalled EUR 13,993 thousand, was carried out entirely in
2004, within the period of one year prior to the date of each transfer. All the reinvestment actually carried
out in 2005 represented a reinvestment surplus, which could be accredited as compliance with the
reinvestment requirement for transfers made in 2006 within one year of each investment. The
reinvestment surplus finally amounted to EUR 81,821 thousand, broken down into 251 purchases of
tangible and intangible assets for a total amount of EUR 44,297 thousand, and 20 purchases of financial
investment, each representing equity interests of more than 5%, for a total amount of EUR 37,524
thousand.
In 2006, taxable income included income eligible for the 20% deduction for reinvestment of extraordinary
profit as regulated in Article 42 of the TRLIS amounting to EUR 775 thousand, producing a tax asset of
EUR 155 thousand. The deduction was applied to the full tax liability for fiscal year 2006, since the
amount of the required reinvestment, which totalled EUR 2,074 thousand, was carried out entirely in
2005, within the period of one year prior to the date of each transfer. In the calculation of accreditation of
the reinvestment surplus and the same period of the year prior to the transfer, a reinvestment also carried
out in 2005 was taken into account in compliance with the reinvestment requirement of a transfer of
financial assets, for an amount of EUR 162 thousand. This led to a failure to comply with the holding
period for the investment.
147
In that year, the following were included in respect to transfers of financial assets:

A transfer with income of EUR 82 thousand, producing a tax asset of EUR 16 thousand. This
deduction was applied to the full tax liability for fiscal year 2006, since the amount of the required
reinvestment, of EUR 544 thousand, was materialised completely in 2005, within the period of the
year prior to the date of each transfer.

In 2006, income of EUR 28,098 thousand was recognised, consisting of the receipt of part of the
contingent price on the transfer of a holding in the tax group in 2000, which was determined in
March 2006 since it could not be determined at the time of the transfer. This amount was also
reinvested in full with the 2005 reinvestment surplus, within the period of the year prior to the date of
determination of the contingent price, pursuant to the Tax Authorities' binding ruling V1992-06 of 10
October 2006, giving rise to a credit of EUR 5,620 thousand.

Finally, the remaining transfers of financial investments, the income from which formed the basis of
this credit, entailed a shareholding transferred for EUR 702,274 thousand, generating income of
EUR 495,070 thousand (this was accredited through the 2006 corporate income tax declaration
mechanism), total reinvestments for that year of EUR 224,466 thousand of proceeds from the
shareholding transferred, generating a credit of EUR 31,648 thousand, with an unused credit of
EUR 67,366 thousand, depending on the reinvestment. This unused tax credit could be applied to
the 2007, 2008 and 2009 tax statements, depending on the reinvestments carried out during those
years, pursuant to the system stipulated in the aforementioned Article 42 or, according to its
provisions at 31 December 2006, in any period in which the credit is taken.
The aforementioned reinvestments, which were materialised in 2006, amounted to EUR 224,466
thousand. They were accredited in full as complying with the reinvestment requirements of transfer to an
investee for a total of EUR 702,274 thousand. Therefore, in that year there were no reinvestment
surpluses that could be accredited as complying with the reinvestment requirements of transfer to an
investee for transfers carried out in subsequent years. The detailed list of the 2006 investments
contained 2,682 purchases of intangible and tangible assets, for a total of EUR 148,977 thousand, and
21 purchases of equity investments, all representing stakes of more than 5%, for a total of EUR 75,489
thousand.
In 2007, taxable income included income eligible for the 14.5% deduction for reinvestment of
extraordinary profit as regulated in Article 42 of the TRLIS, for transfers of tangible assets amounting to
EUR 393 thousand, producing a potential tax asset of EUR 57 thousand. This asset was not generated
since the amount of the reinvestment required for this deduction, of EUR 1,490 thousand, was not
reinvested in 2007. Future accreditation of this credit was carried over for subsequent years, depending
on compliance with the reinvestment within the deadline.
Of the total amounts reinvested in 2007 in tangible, intangible and financial assets of EUR 271,245
thousand, the following were applied:

A portion to meet the requirement of reinvestment of a transfer of financial assets totalling EUR
1,251 thousand, arising for failure to comply with the investment holding period.

Also, investments in tangible, intangible and financial assets actually made in 2007 to comply with
the reinvestment requirement in the 2006 transfer of an investee for EUR 702,274 thousand,
generating income of EUR 495,070 thousand, accredited through the 2007 corporate income tax
declaration mechanism, total reinvestments for that year of EUR 268,351 thousand for the
shareholding transferred, generating a credit of EUR 37,835 thousand, with an unused credit of
EUR 29,532 thousand, depending on the reinvestment. This unused tax credit could be applied to
the 2008 and 2009 tax statements, depending on the reinvestments carried out during those years,
pursuant to the system stipulated in the aforementioned Article 42, although, according to its
provisions at 31 December 2006, in any period in which the deduction is made.

Finally, a number of reinvestments made in 2007 amounting to a total of EUR 1,643 thousand were
not considered as reinvestment since they consisted of properties under construction not delivered
by the contractor at the end of that fiscal year. Therefore, they will be accredited for compliance with
the reinvestment requirement in subsequent years depending on when the reinvested item is
available.
The total details of this investments in 2007 contains 3,424 purchases of intangible and tangible assets,
for a total of EUR 47,840 thousand, and 45 acquisitions of financial assets, all representing stakes of
more than 5%, for a total of EUR 223,405 thousand.
In 2008, taxable income included earnings eligible for the 12% deduction for reinvestment of
extraordinary profit as regulated in Article 42 of the TRLIS, transfers of tangible assets amounting to EUR
148
366 thousand, and financial assets, all representing stakes of more than 5%, for EUR 16,479 thousand,
producing a potential tax asset of EUR 2,021 thousand. This asset was finally not generated since the
amount of the reinvestment required for this credit, of EUR 18,670 thousand, was not reinvested in 2008,
and future accreditation was carried over for subsequent years, depending on compliance with the
reinvestment within the stipulated timeline.
Of the total amounts reinvested in 2008 in tangible, intangible and financial assets, amounting to EUR
254,793 thousand, the following were applied:

A portion to meet the requirement of reinvestment of three transfers of financial assets for EUR
15,402 thousand, arising for failure to comply with the investment holding period.

Certain investments in financial shareholdings actually materialised in 2008, for EUR 40,423
thousand, to comply with the reinvestment requirements for the transfer that year of financial assets
representing stakes of more than 5%.

In addition, investments in tangible, intangible assets and financial assets actually carried out in
2008 to comply with the reinvestment requirements in the 2006 transfer of an investee for EUR
702,274 thousand, generating income of EUR 495,070 thousand, were accredited through the 2008
corporate income tax declaration mechanism, a reinvestment total for that year of EUR 198,968
thousand for the investee transferred, generating a credit of EUR 28,053 thousand, with an unused
credit of EUR 1,479 thousand, depending on the reinvestment. This outstanding tax credit could be
applied to the 2009 tax statement, depending on the reinvestments carried out in that year or,
pursuant to the system stipulated in the aforementioned Article 42, although, according to its
provisions at 31 December 2006, to in any period in which the deduction is made.
Of the investments in tangible assets, amounting to EUR 3,278 thousand, 27.42% related to
investments made in 2007 and 2008 on the refurbishment of the Bancaja building at calle Pintor
Sorolla no. 8 in Valencia, amounting to EUR 1,643 thousand and EUR 10,313 thousand,
respectively. This percentage relates to the surface area of the second, third and fourth floors
relative to the total surface area of the building, which had already become available in 2008,
according to calculations and certificates by the architects involved in the project, on 30 December
2008.

Finally, a number of reinvestments carried out in 2007 and 2008, totalling EUR 1,193 thousand and
EUR 7,485 thousand, respectively, were not considered reinvestment since they consisted of
construction in progress not delivered by the contractor at the end of the fiscal year and, therefore,
to be accredited in compliance with the reinvestment requirement in subsequent years, depending
on when the reinvested item is available.
The detailed list of these investments in 2008 includes 2,730 acquisitions of intangible and tangible
assets, for a total of EUR 17,281 thousand, and 36 acquisitions of financial assets, all representing
stakes of more than 5%, for a total of EUR 237,512 thousand.
In 2009, taxable income included income eligible for the 12% credit for reinvestment of extraordinary
profit as regulated in Article 42 of the TRLIS, for transfers of financial assets representing stakes of more
than 5%, for a total of EUR 39,100 thousand, producing a tax asset of EUR 4,692 thousand.
The amount of the deduction generated by the tax group was EUR 8,270 thousand.
149
The table below shows capital gains by the Entity and by the other entities within the tax group eligible
for deductions for reinvestment of extraordinary profit in 2009 (in thousands of euros):
Entity obtaining
extraordinary profit
Assets
transferred
Year
Reinvestment
requirement
Deductible
income
Deduction
accredited
Deduction
applied
Deduction
pending
Bancaja
Financial
2006
10,490
12,325
1,479
-
1,479
Bancaja
Tangible
2007
1,490
393
57
-
57
Bancaja
Tangible
2007
-
34
4
-
4
Bancaja
Tangible
2008
1,525
365
44
-
44
Bancaja
Financial
2008
121
3
-
-
-
Other group entities
Tangible
2007
-
130
16
16
-
Financial
2008
17,024
16,476
1,977
1,977
-
Financial
2009
55,871
39,100
4,692
4,692
-
86,521
68,826
8,270
6,685
1,584
Total
Reinvestment by the tax group in 2009 was as follows:
2009
Tangible assets
48,167
Financial assets
308,062
Total
356,229
Of the total amounts reinvested in 2009 among tangible, intangible and financial assets, of EUR 356,229

A portion to comply with the reinvestment requirement pending for transfers of tangible assets in
2007, totalling EUR 1,490 thousand, the deduction of which was pending accreditation, depending
on compliance with the reinvestment, within the stipulated timeline. With this reinvestment, a
deduction was accredited as a result of the 2007 transfers, amounting to EUR 57 thousand.

Another portion to comply with the reinvestment requirement pending for transfers of tangible assets
in 2008, totalling EUR 1,525 thousand, the deduction of which was pending accreditation,
depending on compliance with the reinvestment within the stipulated timeline. With this
reinvestment, a deduction was accredited as a result of the 2008 transfers, amounting to EUR 44
thousand.

In addition, an amount of EUR 122 thousand to comply with the reinvestment requirement pending
for transfers of financial assets in 2008, the deduction of which was pending accreditation,
reinvestment, a deduction was accredited as a result of the 2008 transfers of financial assets,
amounting to EUR 1 thousand.

Similarly, an amount of EUR 17,024 thousand to comply with the reinvestment requirement pending
for transfers of financial assets in 2008, the deduction of which was pending accreditation,
reinvestment, a deduction was accredited as a result of the 2008 transfers of financial assets,
amounting to EUR 1,977 thousand.

Finally, investments in financial assets actually materialised in 2009 were made to comply with the
reinvestment requirements in the 2006 transfer of an investee for EUR 702,274 thousand,
generating income of EUR 495,070 thousand, accredited through the 2009 corporate income tax
declaration mechanism, a reinvestment total for that year of EUR 10,490 thousand for the
shareholding transferred, generating a deduction of EUR 1,479 thousand, pursuant to the system
stipulated in the aforementioned Article 42, although, according to its provisions at 31 December
2006, in any period in which the deduction is made.
The remaining investments in intangible, tangible and financial assets in 2009, applied to the rest of the
companies in the tax group for accreditation of the reinvestment deduction, show an investment surplus
150
of EUR 253,510 thousand, which could be accredited as compliance with the reinvestment requisite for
transfers made in 2010 within one year of each investment, and also as reinvestment during the period
on income obtained in the transfer for consideration of securities in 2008 to another company in the tax
group, whereupon this income was eliminated from the group's taxable income. Therefore, this deduction
for reinvestment may be accredited on the addition of the taxable income eliminated in this year, since
the reinvestment was carried out during the period established by regulations based on the date of
transfer, irrespective of the period of time elapsing up to the year in which this elimination is added to the
tax group's taxable income.
The detailed list of these investments in 2009 includes 3,166 acquisitions of intangible and tangible for a
total of EUR 48,167 thousand, and 41 acquisitions of financial assets, all representing stakes of more
than 5%, for a total of EUR 308,062 thousand.
In 2010, Bancaja took a credit for reinvestment of extraordinary profit in relation to the capital gains
during the period and also during previous periods, since the reinvestment requirements stipulated in
regulations at both individual and consolidated level had been met, as the tax consolidation system
allows reinvestment to be carried out by the company that obtained the extraordinary profit or by any
other company within the tax group.
The amount of the deduction generated by the tax group was EUR 754 thousand.
The table below shows capital gains by Bancaja and the rest of the entities within the tax group eligible to
apply deductions for reinvestment of extraordinary profit in 2010 (in thousands of euros):
Entity obtaining extraordinary profit
Assets
transferred
Year
Reinvestment Deductible
requirement
income
Deduction
accredited
Deduction
applied
Deduction
pending
Bancaja
Finance
2010
6,637
6,204
744
-
744
Bancaja
Tangible
2007
-
17
2
-
2
Tangible
2007
-
65
8
-
8
6,637
6,286
754
-
754
Total
Reinvestment by the tax group in 2010 was as follows:
2010
Tangible assets
70,041
Financial assets
6,558
Total
76,599
The 2010 corporate income tax statement was filed in 2011, and taxable income included income eligible
for the 12% credit for reinvestment of extraordinary profit as regulated in Article 42 of the TRLIS, for
transfer of financial assets representing stakes of more than 5%, amounting to EUR 6,204 thousand,
producing a tax asset of EUR 744 thousand.
Of the total amounts reinvested in 2010 in tangible, intangible and financial assets, totalling EUR 76,599

A portion to meet the reinvestment requirement of a transfer of financial assets totalling EUR 6,637
thousand, generating an entitlement to accredit a deduction of EUR 744 thousand.

Another portion to meet the requirement of reinvestment of a transfer of financial assets totalling
EUR 2,000 thousand, arising for failure to comply with the investment holding period.
The remaining investments in intangible, tangible and financial assets in 2010 show an investment
surplus of EUR 67,962 thousand, which could be accredited as compliance with the reinvestment
requirement for transfers made in 2011 within one year of each investment, and also as reinvestment
during the period on income obtained in the transfer for consideration of securities in 2010 to another
company in the tax group, whereupon this income was eliminated from the group's taxable income.
Therefore, this deduction for reinvestment may be accredited on the addition of the taxable income
eliminated in this year, since the reinvestment was carried out during the period established by
regulations depending on the date of transfer, irrespective of the period of time elapsing up to the year in
which this elimination is added to the tax group's taxable income.
151
The detailed list of these investments in 2010 includes 2,865 acquisitions of intangible and tangible
assets for a total of EUR 70,041 thousand, and six acquisitions of financial assets, all representing
stakes of more than 5%, for a total of EUR 6,558 thousand.
Canary Island investment reserve
As provided for in Law 19/1994, Caja Insular de Ahorros de Canarias was entitled to reduce its taxable
income by the amounts which, in relation to its permanent facilities in the Canary Islands, it allocated from
its profits to this investment reserve. The assets in which the reserve invests must remain operational with
the entity for the shorter of least five years or their useful life. The investments by Caja Insular de Ahorros
de Canarias in the Canary Island investment reserve, by year, are as follows:
Investments made
Reserves
1995-2005
2006
2007
2008
2009
2010
Investment
pending
2011
1994-96
79,322
79,322
-
-
-
-
-
-
-
1997
42,203
42,203
-
-
-
-
-
-
-
1998
42,990
42,990
-
-
-
-
-
-
-
1999
28
28
-
-
-
-
-
-
-
2000
4,560
4,560
-
-
-
-
-
-
-
2001
5,280
5,280
-
-
-
-
-
-
-
2002
11,079
11,079
-
-
-
-
-
-
-
2003
18,000
3,994
13,649
357
-
-
-
-
-
2004
6,735
-
-
5,108
1,627
-
-
-
-
2005
18,000
-
-
-
15,000
3,000
-
-
-
2006
24,000
-
-
-
9,830
2,072
12,098
2007
8,300
-
-
-
7,213
-
-
353
-
2008
20,000
-
-
-
-
-
-
-
20,000
2009
9,000
-
-
-
-
-
-
-
9,000
289,497
189,456
13,649
5,465
33,670
5,072
12,098
353
29,000
Total
-
Since the investments made were transferred to Bankia, S.A. with the non-monetary contribution by Caja
Insular de Ahorros de Canarias to Banco Financiero y de Ahorros, S.A.U. and, subsequently, by this
entity to the Bank, it is the Bank that must meet the aforementioned holding period requirement, and the
obligation to materialise the investments assumed in previous years by Caja Insular de Ahorros de
Canarias. Caja Insular de Ahorros de Canarias may not avail itself of the Canary Island Reserve in a
manner other than that stipulated in the Royal Decree-Law. In this regard, readers should consult the
notes to the 2012 individual financial statements of Caja Insular de Ahorros de Canarias.
The Bank has planned sufficient investment to materialise the committed amounts outstanding within the
stipulated timelines.
152
(26.1) Asset transfers
(26.1.1) Securitisation
The Bank performed various securitisation transactions whereby it transferred loans and credits from its
portfolio to several securitisation special-purpose vehicles. When substantially all the associated risks and
rewards were transferred, the assets are no longer recognised on the balance sheet. The securitised
assets are recognised in the balance sheet when all the associated risks were not substantially
transferred.
"Loans and advances to customers" includes, inter alia, loans transferred to third parties through
securitisation for which risk is retained, if only partially, which in accordance with applicable accounting
standards cannot be derecognised from the balance sheet. The detail of securitised loans by nature of
the underlying financial instrument and the securitised loans that meet the requirements for derecognition
from the balance sheet (see Note 2.5.2) are shown in the table below.
Derecognised
Of which mortgage assets securitised through:
Mortgage participations
Mortgage transfer certificates
31/12/12
1,096,359
1,096,267
679,992
416,275
92
31/12/11
1,276,012
1,275,484
1,172,950
102,534
528
On balance sheet
Of which mortgage assets securitised through:
Mortgage participations
Mortgage transfer certificates
Foreclosed assets from securitised mortgage assets
23,362,263
18,850,762
10,254
18,840,508
4,278,319
233,182
27,826,567
21,260,479
11,733
21,248,746
6,393,036
173,052
The detail of securitisation transactions at 31 December 2012 and 2011 is as follows:
ITEM
CIBELES III
AyT 2 loan securitisation
31/12/12
41,127
31/12/11
57,821
6,783
9,429
BANCAJA 3 loan securitisation
154,705
191,443
175,461
200,948
202,740
228,970
FTPYME BANCAJA 2 loan securitisation
AyT HIPOTECARIO IV loan securitisation
AYT 1 TIT FONDO TIT HIPOTECARIA mortgage securitisation SPV
Total derecognised
34,085
44,666
459,663
516,453
20,346
24,273
1,449
2,009
1,096,359
1,276,012
AyT VPO II loan securitisation
46,106
50,659
AyT COLATERALES GLOBAL loan securitisations
93,361
119,841
AyT FTPYME II loan securitisation
FTPYME II loan securitisation
FTPYME I loan securitisation
38,879
46,576
657,805
981,416
629,717
858,423
RMBS I loan securitisation
1,041,414
1,141,226
RMBS II loan securitisation
925,726
1,015,639
RMBS III loan securitisation
1,743,554
1,889,260
RMBS IV loan securitisation
1,373,321
1,515,549
ICO-FTVPO I loan securitisation
190,898
211,431
MADRID CONSUMO I loan securitisation
185,527
321,931
MADRID CONSUMO II loan securitisation
-
385,183
MADRID RESIDENCIAL I loan securitisation
590,210
636,420
MADRID RESIDENCIAL II loan securitisation
525,839
562,949
153
ITEM
CORPORATIVOS I loan securitisation
31/12/12
31/12/11
-
608,986
CORPORATIVOS III loan securitisation
621,210
772,419
CORPORATIVOS IV loan securitisation
631,705
814,773
1,077,481
1,256,936
MBS BANCAJA 1 loan securitisation
110,880
133,848
565,599
626,545
CORPORATIVOS II loan securitisation
62,111
78,787
616,128
670,088
248,130
277,711
72,615
90,669
920,130
1,006,422
340,101
376,066
63,998
102,008
CM BANCAJA 1 mortgage loan securitisation
CONSUMO BANCAJA 1 loan securitisation
PYME BANCAJA 5 loan securitisation
135,133
174,535
1,588,264
1,719,480
966,817
1,070,612
1,333,287
1,440,341
202,216
252,423
PYME BANCAJA 7 loan securitisation
380,507
454,207
2,363,009
2,475,887
750,609
821,232
BANCAJA-BVA VPO 1 loan securitisation
255,827
277,501
FTGENVAL BANCAJA 1 loan securitisation
251,261
267,359
BANCAJA LEASING 1 loan securitisation
476,640
541,228
778,583
832,242
409,273
432,256
FINANCIACIÓN BANCAJA 1 loan securitisation
-
129,201
-
278,476
AYT HIPOTECARIO MIXTO II
14,640
16,628
AYT ICO-TFVVPO III FTA
83,752
91,198
Total on balance sheet
23,362,263
27,826,567
Total
24,458,622
29,102,579
154
Repurchase and resale agreements
At 31 December 2012 and 2011, the Bank had sold financial assets under outstanding repurchase
agreements amounting to EUR 13,432,390 thousand (EUR 35,537,295 thousand at 31 December), and
had purchased financial assets under outstanding resale agreements amounting to EUR 835,484
thousand (EUR 10,577,037 thousand at 31 December 2011), as follows:
2012
ITEM
Repurchase
agreement
2011
Resale
agreement
Repurchase
agreement
Resale
agreement
9,050,927
9,700
23,625,892
9,840,089
Other debt securities
4,381,463
825,784
11,911,403
736,948
13,432,390
835,484
35,537,295
10,577,037
Total
(26.2) Guarantees provided
Financial guarantees are amounts the Bank will be obliged to pay on account of third parties if the original
debtors were to default on payments pursuant to commitments assumed in the course of its ordinary
business activities.
The detail of these financial and non-financial guarantees provided at 31 December 2012 and 2011 is as
follows:
ITEM
31/12/12
31/12/11
Financial guarantees
1,764,978
8,380,920
25,602
136,946
5,327
1,685,542
9,865,712
42,851
269,868
8,013
10,313,773
11,871,986
Other guarantees and indemnities and other contingent liabilities
Credit derivatives sold
Irrevocable documentary credits issued
Irrevocable documentary credits confirmed
Total
Note 3.1.2 shows the maximum credit risk assumed by the Bank in relation to these instruments at 31
December 2012 and 2011, and contains other information relating to the credit risk assumed by the Bank
in this connection.
A significant portion of these guarantees will expire without any payment obligation materialising for the
Bank. Therefore, the aggregate balance of these commitments cannot be considered as an actual future
need for financing or liquidity to be provided by the Bank to third parties.
The income generated on guarantee instruments is recognised in the income statement under "Fee and
commission income" and "Interest and similar income" (in amounts corresponding to the present value of
the fees), calculated by applying the interest rate on the underlying contract to the face value of the
guarantee.
The provisions established to cover these guarantees, which are calculated by applying similar criteria to
those used to calculate the impairment of financial assets at amortised cost, are recognised in the
accompanying balance sheet under "Provisions - Provisions for contingent liabilities and commitments"
(see Note 20).
155
(26.3) Drawable by third parties
At 31 December 2012 and 2011, the limits of the financing contracts granted and the amounts drawn
down thereon in relation to which the Bank had assumed a credit commitment which was higher than the
amount recognised on the asset side of the balance sheet at that date were as follows:
ITEM
Drawable by third parties
Immediately drawable
Conditionally drawable
Other commitments
Total
31/12/12
18,160,675
14,603,662
3,557,013
3,059,312
21,219,987
31/12/11
25,401,312
18,067,458
7,333,854
6,614,952
32,016,264
(26.4) Third party funds managed and marketed by the Bank
The breakdown of off-balance sheet funds marketed by the Bank at 31 December 2012 and 2011 is as
follows:
ITEM
Investment companies and funds
Pension funds
Savings insurance
Discretionally managed customer portfolio
Total
31/12/12
4,652,231
4,144,038
4,345,854
13,142,123
31/12/11
5,275,529
5,394,715
6,841,532
661,941
18,173,717
(26.5) Leases
In the normal course of its business, the Bank acts as lessor in transactions which, pursuant to the
provisions of the regulations applicable, are classified as finance leases. Arrangements drawn up in this
regard are performed in accordance with general market practices for such transactions.
Finance leases granted by the Bank amounted to EUR 1,150,982 thousand at 31 December 2012 (EUR
1,230,922 thousand at 31 December 2011), recognised under "Loans and receivables - Loans and
advances to customers" in the balance sheet at that date. Impairment losses recognised on these
transactions amounted to EUR 109,827 thousand at 31 December 2012 (EUR 37,982 thousand at 31
December 2011).
The table below shows certain information concerning finance leases at 31 December 2012 and 2011 in
which the Bank acted as lessor, pursuant to the regulations applicable:
ITEM
Present value of the outstanding finance lease payments (in which the Bank acts as the
lessor) (1)
Undiscounted value of the outstanding receivables from the Bank's finance leases (in
which it acts as the lessor) (2)
31/12/12
31/12/11
1,011,537
1,096,233
915,477
1,222,985
Unearned finance income from the Bank's finance leases
75,218
2,419
Residual values (purchase options at the end of finance lease agreements), collection of
105,549
129,316
which is not guaranteed for the Bank
(1) Includes the value of purchase options whose collection is guaranteed for the Bank.
(2) Includes the value of purchase options at the end of the agreements, regardless of whether or not collection is guaranteed for
the Bank.
The Bank does not act as lessee in finance lease transactions.
156
(26.5.2) Operating leases
In relation to lease transactions which, pursuant to the provisions of prevailing regulations, must be
considered as operating leases, in which the Bank acts as lessee, the amounts of the leases and
subleases recognised as expenses in the income statement for the years ended 31 December 2012 and
2011 were EUR 111,640 thousand and EUR 124,425 thousand, respectively.
In the years ended 31 December 2012 and 2011, the Bank did not carry out any significant exchanges of
assets. In this regard, the acquisition by any means of tangible assets in payment of debts arising with
Bank debtors is not considered an exchange of assets. Information concerning this type of transaction is
shown in Note 2.11 above.
The breakdown of this item in the accompanying income statement for the years ended 31 December
ITEM
Loans and advances to central banks
(Expenses) / Income
31/12/12
31/12/11
12,477
30,445
113,333
264,397
5,229,592
5,747,298
282,255
184,013
4,741,629
5,330,845
205,708
232,440
Debt securities
1,906,609
1,569,851
Doubtful assets
226,825
(330,203)
169,850
(170,129)
101,611
68,862
7,260,244
7,680,574
Public sector
Resident sector
Non-resident sector
Rectification of income as a result of hedging transactions
Other interest
Total
ITEM
(Expenses) / Income
31/12/12
31/12/11
(377,320)
(180,355)
(384,450)
(542,049)
(3,118,572)
(3,373,197)
(80,201)
(99,708)
(3,001,962)
(3,226,619)
(36,409)
(46,870)
(1,393,877)
(1,879,272)
(123,323)
(14,094)
967,360
1,005,091
(79,874)
(4,510,056)
(215,471)
(5,199,347)
Customer deposits
Public sector
Resident sector
Non-resident sector
Rectification of expenses as a result of hedging transactions
Other interest
Total
157
ITEM
Revenue
31/12/12
Investments in Group entities
Investments in jointly-controlled companies
Investments in associates
Other equity income
Total
31/12/11
32,379
79,202
8,825
28,682
540
460
21,170
36,014
77,758
129,514
ITEM
Revenue
31/12/12
31/12/11
Contingent liabilities
90,441
102,795
Contingent commitments
52,275
50,553
466,928
477,434
45,643
65,711
132,227
143,430
277,666
1,065,180
304,024
1,143,947
Collection and payment services
Securities services
Non-banking financial product sales
Other fees and commissions
Total
ITEM
Fees and commissions assigned to other entities and correspondents
Fee and commission expenses on securities transactions
Other fees and commissions
Total
31/12/12
(Expenses)
31/12/11
(70,077)
(91,314)
(8,165)
(13,285)
(52,109)
(130,351)
(41,321)
(145,920)
158
2012 and 2011, by financial instrument portfolio, is as follows:
ITEM
(Expenses) / Income
31/12/12
31/12/11
Held for trading
(39,142)
157,598
Other financial instruments designated at fair value through profit or loss
2,910
(18,149)
177,762
160,022
(20,896)
(1,293)
4,286
3,013
223,280
85,575
Results of hedging instruments
298,422
309,485
Results of hedged items
(260,082) (357,990)
Other
Total
238
1,458
386,778
339,719
ITEM
Note purchases/sales
(Expenses) / Income
31/12/12
31/12/11
2,400
2,403
Commercial transactions
12,055
11,181
Other
24,756
9,207
Total
39,211
22,791
ITEM
Income from investment property (Note 16.2)
Sales and income from the rendering of non-financial services
Financial fees and commissions offsetting direct costs
Income on insurance contracts
Other items
Total
Revenue
31/12/12
31/12/11
12,769
14,876
25
67
12,192
16,550
18
137
18,805
43,809
33,586
65,216
(35) Other operating expenses
ITEM
(Expenses)
31/12/11
Expenses from investment property
31/12/12
(1,039)
Contribution to deposit guarantee fund (Note 1.10)
(420,067)
(124,648)
Other operating expenses
(109,374)
(124,256)
Total
(530,480)
(250,028)
(1,124)
159
The detail of this item in the accompanying income statement for the years ended 31 December 2012 and
2011, by type of cost, is as follows:
(Expenses) / Income
31/12/12
31/12/11
ITEM
Wages and salaries
Social security costs
(949,956)
(931,848)
(210,991)
(231,108)
(906)
(5,007)
(39,461)
(87,151)
(4,764)
(4,672)
(11,466)
(12,910)
(22,774)
(17,131)
Contributions to defined benefit pension plans
Contributions to defined contribution pension plans
Termination benefits
Training costs
Other staff costs
Total
(1,240,318) (1,289,827)
(36.1) Composition and distribution by gender of employees
The number of Bank employees, by gender and professional category (including executive directors and
senior executives at the Bank) at 31 December 2012 and 2011, and the average headcount for the years
ended 31 December 2012 and 2011, are as follows:
Headcount at 31 December 2012
Men
Women
Year-end headcount
Average headcount for
2012
Directors
2
-
2
3
Senior executives
2
1
3
3
9,115
9,434
18,549
18,774
175
12
187
195
Level II
727
112
839
869
Level III
1,156
301
1,457
1,488
Level IV
1,368
721
2,089
2,123
Level V
1,158
1,025
2,183
2,197
Level VI
1,459
1,843
3,302
3,353
Level VII
520
656
1,176
1,180
Level VIII
431
803
1,234
1,238
Level IX
301
546
847
842
Level X
315
631
946
948
Level XI
1,291
2,499
3,790
3,810
Level XII
179
262
441
463
Level XIII
-
-
Group 2 and others
35
23
58
68
Total Bankia, S.A.
9,119
9,435
18,554
18,780
Other employees by remuneration level
Level I
-
160
31 December 2011
Headcount at 31 December 2011
Men
Year-end
headcount
Average headcount
for 2011
3
2
5
3
Directors
3
Senior executives
4
Women
1
9,500
9,685
19,185
20,707
Level I
166
12
178
246
Level II
769
107
876
1,069
Level III
1,126
292
1,418
1,599
Level IV
1,370
635
2,005
2,187
Level V
1,265
1,090
2,355
2,464
Level VI
1,524
1,850
3,374
3,909
Level VII
491
562
1,053
1,101
Level VIII
425
759
1,184
1,237
Level IX
345
669
1,014
1,040
Level X
373
702
1,075
1,091
Level XI
1,068
2,095
3,163
3,193
Level XII
513
875
1,388
1,442
Level XIII
6
7
13
29
Group 2 and others
59
30
89
100
Total Bankia, S.A.
9,507
9,686
19,193
20,712
Other employees by remuneration level
(36.2) Provisions for pensions and similar obligations (obligations to employees) and insurance
contracts linked to pensions
As described in Note 2.15, the Bank has defined-benefit post-employment obligations with certain
employees. Following is a detail of these pension obligations and long-term commitments, which are
recognised in the accompanying balance sheet:
ITEM
Post-employment benefits
Other long-term employee benefits
Obligations assumed from the labour agreement entered into as a result of incorporation of
the Banco Financiero y de Ahorros Group (see Note 2.15)
Other long-term benefits
(Less) Plan assets
Total obligations net of associated assets
Other obligations
31/12/12
31/12/11
610,235
266,603
646,009
384,441
164,797
101,806
222,604
161,837
(406,995)
(505,579)
469,843
524,871
-
14,989
Total obligations for pension funds and similar obligations (1)
469,843
539,860
Insurance contracts linked to pensions (defined-benefit)
265,633
109,912
Insurance contracts linked to other long-term obligations
132,053
116,143
Total insurance contracts (2)
397,686
226,055
(1)
(2)
Recognised under "Provisions – Provisions for pensions and similar obligations" in the accompanying balance sheet.
The Bank has taken out a range of insurance policies covering the portion of the liabilities shown in the table that do not satisfy the conditions for
classification as plan assets, irrespective of the provisions included in the balance sheet in accordance with current legislation, which were
recognised under "Insurance contracts linked to pensions" on the asset side of the balance sheet.
161
(36.3) Post-employment benefits
Details of the various post-employment benefit obligations, under both the defined-benefit and definedcontribution plans, assumed by the Bank are as follows:
Defined-contribution plans
As indicated in Note 2.15 above, the Bank has an obligation to its employees to pay certain contributions
into external pension schemes that qualify as "defined-contribution" plans under applicable law.
The Bank made contributions to external pension funds in the amount of EUR 37,871 thousand in 2012
(EUR 87,114 thousand at 31 December 2011), recognised under "Administrative expenses – Staff costs"
in the income statement for that year. As a result of the labour agreement reached on 18 July 2012, the
contributions to pension plans were suspended in the second half of 2012.
Defined-benefit plans
The table below shows the reconciliation between the present value of defined-benefit pension
obligations assumed by the Bank with its employees at 31 December 2012 and 2011, the fair value of
plan assets and the fair value of reimbursement rights that do not qualify as plan assets, in all cases
within Spain, along with the amounts recognised on the balance sheet at those dates:
ITEM
31/12/12
31/12/11
Present value of obligations
610,235
646,009
Obligations covered by plan assets
344,602
536,097
Obligations covered by non-qualifying assets
265,633
109,912
(318,285)
(498,224)
291,950
147,785
265,633
109,912
Less - Fair value of plan assets
Recognised under "Provisions – Provisions for pensions and similar obligations" in the
balance sheet
Fair value of non-qualifying assets
"Fair value of non-qualifying assets" in the above table includes the fair value of insurance arranged with
AVIVA (EUR 105,001 thousand) and MAPFRE (EUR 160,632 thousand) to cover employee obligations
arising originally at Caja de Ahorros de Valencia, Castellón y Alicante, Bancaja and Caja de Ahorros y
Monte de Piedad de Madrid (see Note 2.15). Pursuant to rule 35, paragraph 13 of Bank of Spain
Circulars 4/2004 and 6/2008, the fair value of the insurance was taken to be the present value of the
insured pensions. Pursuant to rule 35, indent 10 c) of Bank of Spain Circular 4/2004, the expected return
on the insurance was calculated as 4.32%.
The fair value of plan assets stated in the above table is presented on the balance sheet as a reduction of
the present value of the Bank's obligations.
The present value of the obligations was determined by qualified actuaries using the following techniques:

Valuation method: projected unit credit method, which sees each period of service as giving rise
to an additional unit of benefit entitlement and measures each unit separately.

Actuarial assumptions used:

The estimated retirement age of each employee is the earliest at which the employee is entitled
to retire.
162
Actuarial assumptions
2012
Technical interest rate
4% / 4.32% (1) (4)
Mortality tables
GRMF95
Estimated return on reimbursement rights recognised as assets
4.32% (4)
Expected return on plan assets
4% / 4.32% (2) (4)
Annual pension increase
2%
Cumulative inflation
2%
Annual salary increases
3% or 2% (3)
Healthcare cost increase
(1)
(2)
(3)
(4)
N/A
A rate of 4% will be applied to uninsured pension plan obligations, 4.32% to obligations insured by matched policies.
A rate of 4% for pension obligations. A rate of 4.32% for commitments in the form of matched insurance policies.
2% for early retirees not entitled to length of service bonuses.
Irrespective of these assumptions, the Bank performed a sensitivity analysis to estimate the impact of a change in the
discount rate used on the actuarial calculations of the defined-benefit commitments. The following assumptions were used for
the sensitivity analysis:

average duration of the group in question of around 12.5 years;

discount rate of 3.5%.
At 31 December 2012, in the scope of the sensitivity analysis carried out, the Bank recognised an additional provision, under
“Provisions – Provisions for pensions and similar obligations” for EUR 13,250 thousand for defined-benefit commitments to
cover the estimated impact based on aforementioned assumptions.
Reconciliation of the balances recognised at 31 December 2012 and 31 December 2011 for the present
value of the Bank's defined-benefit obligations is as follows:
ITEM
31/12/12
646,009
31/12/11
-
-
646,304
2,230
2,824
26,678
26,685
Actuarial gains and losses
(17,654)
7,986
Benefits paid
(38,032)
(37,788)
(3)
-
(8,993)
(2)
610,235
646,009
Current service cost
Interest cost
Risk premium
Plan settlements
The reconciliation of the fair value at 31 December 2012 and 2011 of plan assets in defined-benefit
obligations is as follows:
ITEM
Fair value at 1 January
Contributions by entity
Benefits paid
Other changes (1)
Plan settlements
Fair value at 31 December
(1)
31/12/12
31/12/11
498,224
-
-
490,637
13,930
20,449
(12,551)
(2,736)
9,571
18,010
(20,701)
(28,134)
(161,195)
-
(8,993)
(2)
318,285
498,224
The amount for 2012 relates to the transfer of the fair value of plan assets of policies taken out with Mapfre for defined-benefit
commitments assumed with Caja Madrid employees at 31 December 2011 that were recognised at the end of 2012 at the fair
value of the assets recognised as “Insurance contracts linked to pensions”.
163
The reconciliation of the fair value at 1 January and 31 December 2012 of reimbursement rights
recognised on the balance sheet at 31 December 2012 as assets under "Insurance contracts linked to
pensions" is as follows:
ITEM
31/12/12
31/12/11
109,912
-
-
101,132
11,360
16,016
(3,760)
-
2,682
843
Benefits paid
(15,753)
(8,079)
Other changes (1)
161,195
-
(3)
-
265,633
109,912
Risk premium
(1)
The amount for 2012 relates to the transfer of the fair value of plan assets of policies taken out with Mapfre for defined-benefit
commitments assumed with Caja Madrid employees at 31 December 2011 that were recognised at the end of 2012 at the fair
value of the assets recognised as “Insurance contracts linked to pensions”.
The detail of the fair values of the main plan assets at 31 December 2012 and 2011 is as follows:
ITEM
31/12/12
Insurance policies
Other assets
31/12/11
42,074
212,375
276,211
285,847
The expected rate of total return on assets, including the effect of the main types of plan assets, is
determined on the following basis:

The expected rate of total return on assets forming part of commitments in the form of matched
insurance policies (4.32%) was calculated on the basis of the assumptions specified in applicable
Spanish legislation, as required by Bank of Spain Circular 4/2004, rule 35, indent 10 c). Surveys
dated 31 December 2012 considered a rate of 4.32% (the ceiling established by Royal Legislated
Decree 1/2002, enacting the Pensions Act, is 5.62%). The same rate of 4.32% was applied for the
purposes of surveys at 31 December 2011.

The expected rate of total return of assets forming part of commitments in the form of pension plans
(4%) was determined pursuant to Ministry of Economy and Finance Order EHA/407/2008, as follows:
 (A) is the weighted average real return of the pension plan over the three years prior to the
measurement date. The return in the year of measurement is weighted at 50%, the
previous year is weighted at 30%, and the year previous to that is weighted at 20%.
 (A) is compared to the rate applicable to the pension plan, set out in the Technical Terms
(4%).
 The interest rate applicable to the valuation will be 4%, justified as follows:
 (A) < pension plan rate (4%)
 Since the pension plan rate (4%) is less than the regulatory maximum rate
(5.62%)

The total expected rate of return for any reimbursements recognised as assets (4.32%) was
determined following the criteria of rule 35, 14) of Bank of Spain Circular 4/2004, mandating the use
of actuarial assumptions contained in applicable Spanish legislation. Surveys dated 31 December
2012 considered a rate of 4.32%, since the commitments are in the form of matched insurance
policies (the ceiling established by Royal Legislated Decree 1/2002, enacting the Pensions Act, is
5.62%). The rate of 4.32% was applied for the purposes of the surveys at 31 December 2011.
164
(36.4) Pre-retirement commitments and other long-term commitments
The table below shows the reconciliation between the present value of pre-retirement commitments and
other long-term obligations assumed by the Bank with its employees at 31 December 2012 and 2011, the
fair value of plan assets and the fair value of reimbursement rights that do not qualify as plan assets, in all
cases within Spain, along with the amounts recognised on the accompanying balance sheet at those
dates:
ITEM
Present value of obligations
Less - Fair value of plan assets
Recognised under "Provisions – Provisions for pensions and similar obligations" in the
balance sheet
31/12/12
266,603
(88,710)
31/12/11
384,441
(7,355)
177,893
377,086
132,053
116,143
Fair value of assets covering pre-retirement and other long-term obligations
The present value of the obligations was determined by qualified actuaries using the following techniques:



Valuation method: projected unit credit method, which sees each period of service as giving rise
to an additional unit of benefit entitlement and measures each unit separately.
The estimated retirement age of each employee is the earliest at which the employee is entitled
to retire.
Actuarial assumptions used:
Actuarial assumptions
2012
Technical interest rate
1.4%
Mortality tables
GRMF95
Estimated return on reimbursement rights recognised as assets
1.4%
1.4%
Annual pension increase
2%
Cumulative inflation
2%
Annual salary increases
2%
Healthcare cost increase
2%
Reconciliation of the balances recognised at 31 December 2012 and 2011 for the present value of
obligations relating to pre-retirements and other long-term obligations assumed by the Bank is as follows:
ITEM
Interest cost
31/12/12
31/12/11
384,441
-
-
1,499,699
5,613
8,952
2,322
(191,955)
(129,878)
(932,679)
New obligations
11,974
424
Plan settlements
(7,869)
-
266,603
384,441
Benefits paid
165
Reconciliation of the fair values at 1 January and 31 December 2012 for plan assets of defined-benefit
obligations (all for Spanish entities) is as follows:
ITEM
Plan assets
31/12/12
31/12/11
7,355
-
-
7,401
667
185
7,998
46
80,045
499
-
(776)
Plan settlements
(7,355)
-
88,710
7,355
Benefits paid
The table below shows the reconciliation between 1 January and 31 December 2012 of the fair value of
reimbursement rights recognised as assets under "Insurance contracts linked to pensions" in the
corresponding balance sheet for early-retirement and other long-term obligations (all corresponding to the
Bank's Spanish entities):
ITEM
Insurance contracts
31/12/12
31/12/11
116,143
-
-
129,293
2,363
2,296
4,294
-
63,437
37,553
Benefits paid
(54,184)
(52,999)
132,053
116,143
The table below shows the fair values of the main plan assets at 31 December 2012 and 2011 for earlyretirement and similar obligations:
ITEM
Insurance policies
31/12/12
88,710
31/12/11
7,355
(36.5) Remuneration in kind
The Bank's remuneration policy includes certain remuneration in kind, mainly financial assistance and life
and health insurance policies, taxed, as appropriate, in accordance with prevailing regulations.
166
The detail, by item, of this item in the accompanying income statement for the financial years ended 31
ITEM
(Expenses)
31/12/12
31/12/11
From property, fixtures and supplies
(190,971)
(211,043)
IT and communications
(157,199)
(170,384)
Advertising and publicity
(52,863)
(83,725)
Technical reports
(39,385)
(44,935)
Surveillance and security courier services
(22,974)
(25,537)
(3,398)
(4,285)
Levies and taxes
(59,025)
(28,830)
Other expenses
(55,063)
(580,878)
(61,730)
Insurance and self-insurance premiums
Total
(630,469)
The detail of the fees paid by Bankia, S.A. to firms belonging to the worldwide organisation of Deloitte
(the Bank's auditors) in 2012 is as follows:
-For the audit of the annual financial statements of Bankia, S.A. and of the consolidated interim and
annual financial statements of the Bankia Group for 2012: EUR 1,973 thousand.
-For the audit and review of the financial statements of foreign subsidiaries of Bankia, all for 2012:
EUR 135 thousand.
-For other assurance and services similar to auditing required by regulations or supervisory
authorities: EUR 400 thousand.
-For other professional services rendered: EUR 1,396 thousand, of which EUR 104 thousand related
to tax advice.
The services engaged by Bankia, S.A. meet the requirements of independence stipulated in Royal
Legislative Decree 1/2011 of 1 July approving the Consolidated Tax of the Audit Law and do not include
any work that is incompatible with the auditing function.
2011 is as follows:
ITEM
Depreciation of tangible assets (Note 16)
Amortisation of intangible assets (Note 17)
Total
(Expenses)
31/12/12
(154,465)
31/12/11
(179,644)
(73,527)
(66,606)
(227,992)
(246,250)
167
2011, by type, is as follows:
ITEM
Provision for contingent liabilities (Note 20)
Provision for pension commitments and similar obligations (Note 20)
(Expenses) / Income
31/12/12
(434,526)
(229,446)
(9,275)
150,891
-
(5,975)
(980,322)
(72,192)
(1,424,123)
(156,722)
Provision for tax contingencies and other legal contingencies (Note 20)
Other provisions (see Note 20)
Total
31/12/11
The net provision recognised for this item of the income statement for the years ended 31 December
2012 and 2011 relates to the following financial instruments, by category:
ITEM
Loans and receivables (Note 11)
Held-to-maturity investments (Note 12)
Available-for-sale financial assets (Note 10)
Total
(Expenses) / Income
31/12/12
31/12/11
(17,476,901)
(3,865,313)
(53,030)
(3,124)
(586,399)
(85,270)
(18,116,330)
(3,953,707)
2011 is as follows:
(Expenses) / Income
ITEM
31/12/12
Impairment losses on investment property (net) (Note 16)
Impairment (net) on property, plant and equipment for own use (Note 16)
Impairment losses (net) on investments (Note 15)
31/12/11
(47,918)
(99,724)
993
(839)
(2,888,722)
(192,819)
Other
(12,564)
(10,894)
Total
(2,948,211)
(304,276)
168
(42) Gains/(losses) on disposal of financial assets not classified as non-current assets held for
sale
2011 is as follows:
ITEM
Gain/(loss) on disposal of tangible assets
Gain/(loss) on disposal of investments
Other items
Total
(Expenses) / Income (Expenses) / Income
31/12/12
31/12/11
441
(3,913)
51
(516)
243
492
(4,186)
2011 is as follows:
ITEM
Impairment losses
Of which:
Foreclosed tangible assets (Note 14)
Investments (Note 14)
Other gains (losses)
Total
(Expenses) / Income (Expenses) / Income
31/12/12
31/12/11
(695,158)
(1,588,825)
(275,886)
(356,376)
(9,329)
(704,487)
(1,588,825)
17,937
(1,570,888)
In addition to the disclosures made in Note 5 regarding the remuneration earned by members of the
Board of Directors and senior executives of the Bank, following is a detail of the balances recognised in
the balance sheet at 31 December 2012 and the gains and losses recognised in the income statement
for the year ended 31 December 2012 arising from transactions with related parties:
ITEM
Subsidiaries
Associates
Jointly-controlled
entities
Significant
shareholders
ASSETS
Board of
Directors and
senior
executives
Other related
parties
Credit institutions
3,076,150
3,844
237
1,392,052
-
-
Other assets
3,227,905
533,010
242,547
-
670
1,794
-
-
-
1,949,137
-
-
Total
6,304,055
536,854
242,784
3,341,189
670
1,794
LIABILITIES
Credit institutions
492,353
41,039
-
5,681,418
-
-
1,782,904
224,591
620,963
-
853
60,835
77,352
-
12,121
-
-
1,098
815
-
-
15,309,148
-
-
Other liabilities
1,580,430
-
-
595,093
-
-
Total
OTHER
3,933,854
265,630
633,084
21,585,658
853
61,933
1,146,958
144,765
31,922
-
-
20
Commitments
1,053,303
43,616
6,712
-
40
42
Total
PROFIT OR LOSS
2,200,261
188,381
38,634
-
40
62
Finance income(*)
112,930
55,989
28,537
67,196
13
105
(Finance expense)(*)
Customer deposits
Debt securities
(59,413)
(5,120)
(19,007)
(222,783)
(4)
(1,817)
Return on equity securities
32,379
540
8,825
-
-
Net fee and commission income
77,519
4,896
24,321
65,848
2
(49)
(*) Finance income and expenses shown at their gross amounts.
169
In addition to the disclosures made in Note 5 regarding the remuneration of members of the Board of
Directors and senior executives of the Bank, details of the balances recognised in the balance sheet at 31
December 2011 and in the income statement for the year ended 31 December 2011 arising from
transactions with related parties as defined in applicable legislation are as follows:
ITEM
Jointlycontrolled
entities
Significant
shareholders
Subsidiaries
Associates
Credit institutions
3,854,065
4,036
885
Other assets
6,327,257
2,049,756
343,626
14,680
10,524,948
ASSETS
Board of
Directors and
Senior
Executives
Other related
parties
10,127,563
-
11,218
1,192,690
-
797
157,497
31,534
1,254,455
-
5,713
2,068,472
1,225,109
11,382,018
797
174,428
305,900
43,173
-
2,157,266
-
471,373
1,812,097
215,504
896,405
-
6,233
103,633
183,417
27,203
-
-
1,980
22,213
-
-
-
-
140
676
1,797
1,937
690
-
-
-
2,303,211
287,817
897,095
2,157,266
8,353
597,895
678,542
191,259
29,269
-
-
63,650
Commitments
708,346
104,895
175,626
9
155
42,929
1,386,888
296,154
204,895
9
155
106,579
Finance income(*)
171,383
71,134
32,570
105,392
36
5,610
(Finance expense)(*)
(2,076)
Total
LIABILITIES
Credit institutions
Customer deposits
Debt securities
Other liabilities
Total
OTHER
Total
PROFIT OR LOSS
(47,024)
(2,698)
(39,085)
(155,454)
(270)
Return on equity securities
79,202
460
28,682
-
-
-
Net fee and commission income
78,800
3,918
27,849
96,852
2,935
1,974
(*) Finance income and expenses shown at their gross amounts.
Appendices I, II and III to these financial statements show the details of subsidiaries, associates and
jointly-controlled entities, respectively. “Other related parties” includes balances held by close family
relations of Bank directors (inter alia, directors' spouses and their own and their spouses' ancestors,
descendants and siblings) and by entities which the Bank is aware are related to such persons.
All transactions between the Bank and its related parties were performed on an arm's-length basis.
Transactions carried out, balances held and contracts entered into with Banco Financiero y de
Ahorros, S.A.U.
The main balances held by the Bank with BFA (significant shareholder) at 31 December 2012 include:

"Credit institutions" on the asset side of the balance sheet mainly includes the amount
corresponding to reverse repurchase agreements with BFA (see Note 11); the balance arising from
guarantees provided as collateral under the master agreement entered into with the main
shareholder to cover operations involving derivatives and fixed-income repo agreements, all at arm's
length prices, for EUR 20 million; the balance payable on the mutual account held with BFA of EUR
427 million; and the balance payable to BFA as a result of the adjustments made following the
Bank's departure from the tax consolidation group headed by BFA;

"Credit institutions" on the liability side of the balance sheet includes the amount arising from the
guarantees received from BFA as collateral in connection with the transactions mentioned in the
preceding paragraph, totalling EUR 565 million. This item also includes a demand deposit (interestbearing) made by BFA for EUR 5,155 million;

“Other assets” includes mainly debt securities issued by BFA and subscribed by the Bank for EUR
596 million and receivables related to transactions with derivatives entered into by it, as well as the
balance related to the accrual of fees and commissions explained below;
170

“Subordinated liabilities” comprises securities issued by the Bank under the Recapitalisation Plan
and subscribed by BFA (see Note 19), as well as the interest accrued thereon;

“Other liabilities” includes mainly payables related to transactions with derivatives entered into by
BFA;

"Net fee and commission income" in the income statement includes income from services rendered
by the Bank to recover BFA assets written off, calculated in accordance with the total amount
recovered;

The table above showing related party figures at 31 December 2011 includes finance costs and
income, respectively, in connection with the loan and deposit transactions mentioned under the
above headings.
Bankia and BFA have also entered into the following contracts and agreements:
-
A framework agreement governing relations between the two institutions.
A Service Level Agreement that enables BFA to correctly perform its activity by using Bankia's
human and material resources, while avoiding redundancies.
A CMOF (Contrato Marco de Operaciones Financieras) Master Agreement on derivatives trading
between the two institutions.
A Global Master Repurchase Agreement (GMRA) and a Collateral Assignment Agreement linked
to fixed-income asset sale and repurchase transactions.
(45) Explanation added for translation to English
These financial statements are presented on the basis of the regulatory financial reporting framework
applicable to the Company (see Note 1-3). Certain accounting practices applied by the Company that
conform with that regulatory framework may not conform with other generally accepted accounting
principles and rules.
171
Appendix I
The key details on subsidiaries at 31 December 2012 are as follows:
Company
890 HARBOR DRIVE, LLC
ABITARIA CONSULTORIA Y GESTION, S.A.
ACCIONARIADO Y GESTION, S.L.
ADAMAR SECTORS, S.L.
ALIANCIA INVERSION EN INMUEBLES DOS, S.L.
ALIANCIA ZERO, S.L.
ALQUILER PARA JOVENES VIVIENDAS EN COLMENAR VIEJO, S.L.
ARCALIA SERVICIOS, S.A.
ARRENDADORA AERONÁUTICA, A.I.E.
ARRENDADORA DE EQUIPAMIENTOS FERROVIARIOS, S.A.
AUTO RENTING RIOJA, S.A.U.
AVANZA INVERSIONES EMPRESARIALES, SGECR, S.A.
BANCAJA CONSULTORA DE RIESGOS, S.L.
BANCAJA EMISIONES, S.A.U.
BANCAJA GESTION ACTIVOS, S.L.
BANCAJA PARTICIPACIONES, S.L.
BANCAJA US DEBT
BANKIA BANCA PRIVADA, S.A.
BANKIA BOLSA, S.V., S.A.
BANKIA FONDOS, S.G.I.I.C., S.A.
BANKIA HABITAT, S.L.
BEIMAD INVESTMENT SERVICES CO., LTD.
BANKIA BANCA PRIVADA GESTIÓN, SGIIC, S.A.
CAJA DE MADRID PENSIONES, S.A.U., E.G.F.P.
CAJA MADRID CIBELES, S.A.
CAJA MADRID, S.D. FINANCE BV
Business activity
Real estate leases
Technical building inspection
Other independent services
Real estate development
Real estate
Real estate
Investment fund management and other
Purchase and lease of aircraft
Purchase and lease of trains
Vehicle leases
Venture capital fund management
Brokerage / insurance
Special purpose vehicle
Investment fund management and other
Corporate management
Bank
Securities company
Manager of collective investment
undertakings
Real estate
Business management advisory services
Manager of collective investment
undertakings
Pension fund management
Location
Ownership interest owned by the
Group (%)
Total
Current interest (%)
ownership
Direct
Indirect
interest
Florida – UNITED STATES
Madrid - SPAIN
Madrid - SPAIN
Mataró (Barcelona) - SPAIN
Las Rozas (Madrid) - SPAIN
Las Rozas (Madrid) - SPAIN
Madrid - SPAIN
Madrid - SPAIN
Madrid - SPAIN
Barcelona - SPAIN
Logroño (La Rioja) - SPAIN
Madrid - SPAIN
Valencia - SPAIN
Castellón - SPAIN
Valencia - SPAIN
Castellón - SPAIN
Castellón - SPAIN
Madrid - SPAIN
Madrid - SPAIN
100.00
100.00
48.32
28.69
68.17
85.00
99.00
100.00
99.91
99.99
100.00
-
100.00
82.00
25.92
31.05
80.80
100.00
100.00
100.00
1.00
0.09
0.01
100.00
100.00
100.00
100.00
100.00
82.00
74.24
59.74
80.80
100.00
68.17
85.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Madrid - SPAIN
Valencia - SPAIN
Beijing - CHINA
4.70
100.00
100.00
95.30
-
100.00
100.00
100.00
Madrid - SPAIN
Madrid - SPAIN
Madrid - SPAIN
Amsterdam - NETHERLANDS
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
172
Company
CAJA RIOJA, MEDIACIÓN DE SEGUROS, OPERADOR DE BANCASEGUROS, S.A.U.
CAJA SEGOVIA OPERADOR DE BANCA SEGUROS VINCULADO, S.A.
BENIDORM COMPLEJO VIDA & GOLF U. S.L.U.
CAVALTOUR, AGENCIA DE VIAJES, S.A.
CAYMADRID INTERNACIONAL, LTD.
CAMI LA MAR DE SAGUNTO, S.L.
COLMENAR DESARROLLOS RESIDENCIALES, S.L.
CORPORACIÓN EMPRESARIAL CAJA RIOJA, S.A.U.
CORPORACIÓN FINANCIERA CAJA DE MADRID, S.A.
CORPORACIÓN FINANCIERA HABANA, S.A.
CIVITAS INMUEBLES S.L.
COBIMANSA PROMOCIONES INMOBILIARIAS, S.L.
COMPLEJO CAPRI GAVA MAR, S.A.
COSTA EBORIS, S.L.U.
ESTRATEGIA INVERSIONES EMPRESARIALES, SCR, S.A.
FINANMADRID ENTIDAD DE FINANCIACIÓN, S.A.U.
FINCAS Y GESTIÓN INMOBILIARIA 26001, S.L.U.
GARANAIR, S.L.
EDICTA SERVICIOS, S.A.
GESTIÓN DE INICIATIVAS RIOJANAS, S.A.U.
EE SPAIN LIMITED
GESTORA DE SUELO DE LEVANTE, S.L.
GRUPO BANCAJA CENTRO DE ESTUDIOS, S.A.
EMERALD PLACE LLC
ENCINA LOS MONTEROS, S.L.U.
GEOPORTUGAL - IMOBILIARIA, LDA.
GESTORA DE DESARROLLOS Y ARRENDAMIENTOS, S.L.
HABITAT RESORTS, S.L.U.
INMOGESTIÓN Y PATRIMONIOS, S.A.
HABITAT USA CORPORATION
HOTEL ALAMEDA VALENCIA, S.L.U.
Business activity
Real estate
Travel agent
Real estate
Financial services
Industry, commerce and services financing
Real estate
Hotel operations
Real estate
Venture capital
Financing firm
Real estate
Real estate appraisals, services and
brokerage
Services
Real estate
Real estate
Real estate
Real estate
Real estate
Real estate
Real estate
Real estate
Location
Group (%)
Total
ownership
Direct
Indirect
interest
Segovia - SPAIN
Valencia - SPAIN
Valencia - SPAIN
Grand Cayman – CAYMAN
ISLANDS
Valencia - SPAIN
Madrid - SPAIN
Madrid - SPAIN
Havana - REPUBLIC OF CUBA
Valencia - SPAIN
Madrid - SPAIN
Barcelona - SPAIN
Valencia - SPAIN
Madrid - SPAIN
Madrid - SPAIN
Madrid - SPAIN
100.00
100.00
50.00
100.00
-
100.00
100.00
100.00
50.00
100.00
100.00
100.00
60.00
100.00
100.00
87.00
96.67
100.00
80.00
83.30
97.62
100.00
100.00
-
100.00
96.67
100.00
100.00
100.00
60.00
80.00
83.30
97.62
100.00
100.00
100.00
100.00
87.00
Segovia - SPAIN
London - UNITED KINGDOM
Madrid - SPAIN
Valencia - SPAIN
Valencia - SPAIN
Povoa du Varzim - PORTUGAL
Alicante-Spain
Valencia - SPAIN
Madrid - SPAIN
Valencia - SPAIN
100.00
99.83
0.10
-
100.00
100.00
60.05
0.17
76.70
100.00
78.81
100.00
100.00
99.90
100.00
100.00
100.00
100.00
100.00
60.05
100.00
76.70
100.00
78.81
100.00
100.00
100.00
100.00
100.00
173
Company
Business activity
INVERÁVILA, S.A.
IB INVESTMENTS GMBH
INVERSIÓN EN ALQUILER VIVIENDAS, S.L.
INVERSIONES TURÍSTICAS DE ÁVILA, S.A.
INVERSIONES Y DESARROLLOS 2069 MADRID, S.L.
INICIATIVAS GESTIOMAT, S.L.
LA CAJA DE CANARIAS MEDIACIÓN OPERADOR DE BANCASEGUROS VINCULADO, S.A.U.
Real estate
Real estate
Real estate
LA CAJA TOURS, S.A.
LAIETANA GENERALES, CÍA. SEGUROS DE LA CAJA DE AHORROS
LAIETANA, S.A.U.
LAIETANA MEDIACIÓN OPERADOR DE BANCA-SEGUROS
VINCULADO, S.A.U.
LAIETANA VIDA, CIA. SEGUROS DE LA CAJA DE AHORROS
LAIETANA, S.A.U.
INMOVEMU, S.L.
MADRID LEASING CORPORACIÓN, S.A.U., E.F.C.
INTERMEDIACIÓN Y PATRIMONIOS, S.L.
MEDIACIÓN Y DIAGNOSTICOS, S.A.
MONDRASOL 1, S.L.U.
Photovoltaic energy
MONDRASOL 10, S.L.U.
Photovoltaic energy
Photovoltaic energy
Photovoltaic energy
Photovoltaic energy
Photovoltaic energy
Photovoltaic energy
MONDRASOL 2, S.L.U.
Photovoltaic energy
MONDRASOL 3, S.L.U.
Photovoltaic energy
Location
Group (%)
Total
ownership
Direct
Indirect
interest
100.00
100.00
100.00
100.00
-
94.50
57.15
100.00
94.50
100.00
100.00
100.00
57.15
100.00
-
100.00
Travel agent
Ávila - SPAIN
Berlin - GERMANY
Segovia - SPAIN
Ávila - SPAIN
Madrid - SPAIN
Las Palmas de Gran Canaria SPAIN
70.21
-
70.21
Life assurance and ancillary activities
100.00
-
100.00
100.00
-
100.00
Life assurance and ancillary activities
Finance leases
Avila-SPAIN
Madrid - SPAIN
Madrid - SPAIN
Madrid - SPAIN
100.00
100.00
100.00
95.22
100.00
-
100.00
95.22
100.00
100.00
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
174
Company
Business activity
MONDRASOL 4, S.L.U.
Photovoltaic energy
MONDRASOL 5, S.L.U.
Photovoltaic energy
MONDRASOL 6, S.L.U.
Photovoltaic energy
MONDRASOL 7, S.L.U.
Photovoltaic energy
MONDRASOL 8, S.L.U.
Photovoltaic energy
MONDRASOL 9, S.L.U.
Photovoltaic energy
NAVIERA CATA, S.A.
Acquisition, leases and operation of ships
INVERCALIA GESTIÓN PRIVADA, S.A.
Business management consulting
OPERADOR DE BANCA SEGUROS VINCULADO A GRUPO BANCAJA,
S.A.
PAGUMAR, AIE
Acquisition, leases and operation of ships
PARKIA CANARIAS, S.L.
Car park management
Biological park operation, concession,
management and use
Healthcare centre management
Real estate auctions
Moveable goods brokerage
Real estate
PARQUE BIOLÓGICO DE MADRID, S.A.
PARTICIPACIONES Y CARTERA DE INVERSIÓN, S.L.
PLURIMED, S.A.
JARDI RESIDENCIAL LA GARRIGA, S.L.
MACLA 2005, S.L.
RENLOVI, S.L.
RESER, SUBASTAS Y SERVICIOS INMOBILIARIOS, S.A.
MARATON GARDENS SP. ZO.O
SALA RETIRO, S.A.
OCIO LOS MONTEROS, S.L.U.
SECTOR DE PARTICIPACIONES INTEGRALES, S.L.
SEGURÁVILA, OPERADOR DE BANCA-SEGUROS VINCULADO DE
CAJA DE AHORROS DE ÁVILA, S.L.
SEGURCAJA, S.A., CORREDURÍA DE SEGUROS VINCULADA AL
GRUPO CAJA MADRID
SOCIEDAD DE PROMOCIÓN Y PARTICIPACIÓN EMPRESARIAL CAJA Corporate management
Location
Valencia - SPAIN
Group (%)
Total
ownership
Direct
Indirect
interest
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
100.00
99.92
0.08
100.00
Valencia - SPAIN
85.45
-
85.45
100.00
-
100.00
Madrid - SPAIN
Madrid - SPAIN
Madrid - SPAIN
Madrid - SPAIN
Warsaw - POLAND
Madrid - SPAIN
Valencia - SPAIN
Madrid - SPAIN
0.01
51.00
55.00
0.01
100.00
91.57
99.99
92.48
51.00
52.73
71.83
99.99
100.00
-
91.57
100.00
92.48
51.00
52.73
51.00
55.00
71.83
100.00
100.00
100.00
Ávila - SPAIN
100.00
-
100.00
0.02
-
99.98
100.00
100.00
100.00
Madrid - SPAIN
Madrid - SPAIN
175
Company
Business activity
Location
Group (%)
Total
ownership
Direct
Indirect
interest
MADRID, S.A.
URBAPINAR, S.L.
VALENCIANA DE INVERSIONES MOBILIARIAS, S.L.
VALORACION Y CONTROL, S.L.
VIAJES CAJA DE ÁVILA, S.A.
VIAJES HIDALGO, S.A.
VIVIENDAS EN ALQUILER DE MOSTOLES S.L.
Real estate
Travel agent and tour operator
Travel agent and tour operator
VOLTPRO I, S.L.U.
Photovoltaic energy
VOLTPRO II, S.L.U.
Photovoltaic energy
VOLTPRO III, S.L.U.
Photovoltaic energy
VOLTPRO IV, S.L.U.
Photovoltaic energy
VOLTPRO IX, S.L.U.
Photovoltaic energy
VOLTPRO V, S.L.U.
Photovoltaic energy
VOLTPRO VI, S.L.U.
Photovoltaic energy
VOLTPRO VII, S.L.U.
Photovoltaic energy
VOLTPRO VIII, S.L.U.
Photovoltaic energy
VOLTPRO X, S.L.U.
Photovoltaic energy
VOLTPRO XI, S.L.U.
Photovoltaic energy
VOLTPRO XII, S.L.U.
Photovoltaic energy
VOLTPRO XIII, S.L.U.
Photovoltaic energy
VOLTPRO XIV, S.L.U.
Photovoltaic energy
VOLTPRO XIX, S.L.U.
Photovoltaic energy
VOLTPRO XV, S.L.U.
Photovoltaic energy
Madrid - SPAIN
Valencia - SPAIN
Madrid - SPAIN
Ávila - SPAIN
Ávila - SPAIN
Madrid - SPAIN
90.07
100.00
0.01
70.00
-
99.99
52.48
100.00
90.07
100.00
100.00
70.00
52.48
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
176
Company
Business activity
VOLTPRO XVI, S.L.U.
Photovoltaic energy
VOLTPRO XVII, S.L.U.
Photovoltaic energy
VOLTPRO XVIII, S.L.U.
Photovoltaic energy
VOLTPRO XX, S.L.U.
PROYECTO INMOBILIARIO VALIANT, S.L.
REALES ATARAZANAS, S.L.
RESTAURA NOWOGROZKA, SP. ZO.O
SANTA POLA LIFE RESORTS, S.L.U.
XADAY PROYECTOS Y APLICACIONES, S.L.
Photovoltaic energy
Real estate
Real estate
Real estate
Location
Valencia - SPAIN
Warsaw - POLAND
Valencia - SPAIN
Group (%)
Total
ownership
Direct
Indirect
interest
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
51.00
70.00
51.00
100.00
94.86
100.00
51.00
70.00
51.00
100.00
94.86
177
Appendix II
The key details on jointly-controlled entities at 31 December 2012 are as follows:
Ownership interest owned by the Group (%)
Company
ASEGURADORA VALENCIA, S.A. DE SEGUROS Y REASEGUROS
Business activity
MAPFRE CAJA MADRID VIDA, S.A., DE SEGUROS Y REASEGUROS Life insurance
Location
Valencia - SPAIN
Madrid - SPAIN
Direct
Total ownership
interest
Indirect
50.00
-
50.00
-
49.00
49.00
178
Appendix III
The key details on subsidiaries, jointly-controlled entities and associates classified under "Non-current assets held for sale" at 31
December 2012 are as follows:
Company
Business activity
Location
Ownership interest owned by
the Group (%)
Current interest
Total
(%)
ownership
Direct
interest
Indirect
Subsidiaries
BANCOFAR, S.A.
Bank
Madrid - SPAIN
CITY NATIONAL BANK OF FLORIDA
Bank
CITY NATIONAL TITLE INSURANCE AGENCY INC.
CM FLORIDA HOLDINGS, INC.
70.21
-
70.21
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
100.00
-
100.00
Real estate
Madrid - SPAIN
ANIRA INVERSIONES, S.L.
Holding company activities
Madrid - SPAIN
20.00
-
20.00
ASENTIS PROMOCIÓN, S.A.
Real estate
Leganés (Madrid) - SPAIN
50.00
-
50.00
ASOCIACIÓN TÉCNICA DE CAJAS DE AHORROS, A.I.E.
CARTERA DE PARTICIPACIONES EMPRESARIALES DE LA
COMUNIDAD VALENCIANA, S.L.
IT services
Zaragoza - SPAIN
38.00
-
38.00
Holding company
Valencia - SPAIN
-
50.00
50.00
COSTA VERDE HABITAT, S.L.
Valencia - SPAIN
-
50.00
50.00
CSJ DESARROLLOS RESIDENCIALES, S.L.
Real estate
Madrid - SPAIN
50.00
-
50.00
DESARROLLOS INMOBILIARIOS CAMPOTEJAR, S.L.
Real estate
Madrid - SPAIN
50.00
-
50.00
DESARROLLOS INMOBILIARIOS LOS CASTAÑOS, S.L.
Real estate
Madrid - SPAIN
50.00
-
50.00
DESARROLLOS URBANISTICOS VALDEAVERUELO, S.L.
Real estate
Madrid - SPAIN
-
37.50
37.50
EUROPEA DE DESARROLLOS URBANOS, S.A.
Madrid - SPAIN
20.00
-
20.00
FONDO C.P.E CAPITAL CV, F.C.R.
Holding company
Madrid - SPAIN
-
50.00
50.00
GED OPORTUNITY, S.A.
Investment management
Madrid - SPAIN
-
50.00
50.00
GED SEE OPORTUNITY I, S.A.
Investment property
Comprehensive building management
services
Madrid - SPAIN
-
52.17
52.17
Madrid - SPAIN
-
50.00
50.00
Jointly-controlled entity
GESNOVA GESTIÓN INMOBILIARIA INTEGRAL, S.L.
179
Company
Location
the Group (%)
Current interest
Total
(%)
ownership
Direct
interest
Indirect
GLOBAL VIA INFRAESTRUCTURAS, S.A.
Business activity
Development and operation of public
infrastructure
Madrid - SPAIN
-
50.00
50.00
GRUPO LAR DESARROLLOS URBANÍSTICOS, S.L.
Madrid - SPAIN
-
50.00
50.00
IB OPCO HOLDING, S.L.
Madrid - SPAIN
-
43.59
43.59
LARCAVILLA PROMOCIONES, S.L.
Madrid - SPAIN
-
50.00
50.00
LEADERMAN INVESTMENT GROUP, S.L.
Real estate
Madrid - SPAIN
50.00
-
50.00
MADRID DEPORTE AUDIOVISUAL, S.A.
Madrid - SPAIN
47.50
-
47.50
MEGO INVERSIONES, S.L.
Real estate
Plasencia (Cáceres) - SPAIN
50.00
-
50.00
MONTIS LOCARE, S.L.
Residential leasing
Zaragoza - SPAIN
-
52.27
52.27
NAVICOAS ASTURIAS, S.L.
Real estate
Madrid - SPAIN
-
50.00
50.00
NH SEGOVIA, S.L.
Hotel and catering
Segovia - SPAIN
46.74
-
46.74
ONCISA INICIATIVAS DE DESARROLLO, S.L.
Real estate
Madrid - SPAIN
50.00
-
50.00
PARTICIPACIONES AGRUPADAS, S.R.L.
Madrid - SPAIN
25.00
-
25.00
PINARGES, S.L.
Real estate
Madrid - SPAIN
50.00
-
50.00
PROMOTORA DE VIVIENDAS LAMIRA, S.L.
Madrid - SPAIN
-
50.00
50.00
REALIA BUSINESS, S.A.
Real estate
Madrid - SPAIN
-
27.65
27.65
VALDECARRIZO, S.L.
Real estate
Majadahonda (Madrid) - SPAIN
20.00
-
20.00
ACINELAV INVERSIONES 2006, S.L.
Real estate
Valencia - SPAIN
-
25.40
25.40
ALAZOR INVERSIONES, S.A.
Other activities related to road transport
Villaviciosa de Odon (Madrid)- SPAIN
-
20.00
20.00
ALIANZA LOGISTICA MAFORT-HABITAT S.L.
Real estate
Valencia - SPAIN
-
50.00
50.00
ALTAFULLA LIFE RESORTS, S.L.
Real estate
Torredembarra (Tarragona) - SPAIN
-
50.00
50.00
ALTER INMUEBLES, S.L.
Real estate
Madrid - SPAIN
32.57
-
32.57
APARCAMIENTOS ESPOLÓN, S.A.
Car park operation
-
25.00
25.00
ARRENDADORA FERROVIARIA, S.A.
Purchase and lease of trains
Barcelona - SPAIN
29.07
-
29.07
ASESOR INFORMACIÓN Y COBRO, S.A.
Other activities
Las Palmas de Gran Canaria - SPAIN
20.00
-
20.00
ASSETS FOUND, S.L.
Real estate
Valencia - SPAIN
-
50.00
50.00
AUDET PROMOCIONS, S.A.
Cabrera de Mar (Barcelona) - SPAIN
-
49.73
49.73
AUSECO, S.A.
Other activities
Madrid - SPAIN
-
20.00
20.00
AUXILIAR DE COBROS E INFORMACIÓN, S.A.
Other activities
Valencia - SPAIN
23.18
-
23.18
Associates
180
Company
Business activity
Location
the Group (%)
Current interest
Total
(%)
ownership
Direct
interest
Indirect
AVALMADRID, S.G.R.
SME financing
Madrid - SPAIN
30.25
-
30.25
AVANZA MADRID VIVIENDA JOVEN, S.L.
Real estate
Madrid - SPAIN
-
40.00
40.00
B2B SALUD, S.L.
Healthcare
Avd. Maisonnave 19, 5º D 03003 Alicante (Alicante)
-
33.33
33.33
BAJA CALIFORNIA INVESTMENTS, B.V.
Real estate
NETHERLANDS
-
40.00
40.00
BANCO INVERSIS NET, S.A.
Bank
Madrid - SPAIN
-
38.48
38.48
BENETESA, S.A.
Hotel property holdings
Barcelona - SPAIN
-
20.00
20.00
CAPITAL RIESGO DE LA COMUNIDAD DE MADRID, S.A., S.C.R.
Venture capital
Madrid - SPAIN
-
35.11
35.11
CENTRO SOCIO SANITARIO DE LOGROÑO, S.L.
Social care services
-
50.00
50.00
CISTERCAM ALQUILERES PROTEGIDOS, S.L.
Real estate
Valladolid - SPAIN
-
45.00
45.00
COMTAL ESTRUC, S.L.
Real estate dealing on its own behalf
Madrid - SPAIN
31.51
-
31.51
CONCESIONES AEREOPORTUARIAS S.A.
Other activities related with air transport
Castellón - SPAIN
-
15.00
15.00
CONCESSIA, CARTERA Y GESTIÓN DE INFRAESTRUCTURAS, S.A.
CORPORACIÓN INTERAMERICANA PARA EL FINANCIAMIENTO DE
INFRAESTRUCTURA, S.A.
Holding company
Infrastructure finance in Latin America
and the Caribbean
Madrid - SPAIN
14.59
7.29
21.88
San Jose - COSTA RICA
20.37
-
20.37
COSTA BELLVER, S.A.
Real estate
Castellón - SPAIN
-
46.40
46.40
CREACION SUELO E INFRAESTRUCTURAS, S.L.
Real estate
Madrid - SPAIN
-
25.00
25.00
D.U. MIRAPLANA, S.L.
Borriol (Castellón) - SPAIN
-
50.00
50.00
DEDIR CLÍNICA, S.L.
Real estate
Construction and operation of healthcare
centres
Palma de Mallorca - SPAIN
-
32.37
32.37
DEOLEO, S.A.
Foodstuffs
Madrid - SPAIN
18.37
18.37
DESARROLLOS INMOBILIARIOS SALAMANCA, S.L.
Real estate
Alcalá de Henares (Madrid) - SPAIN
25.00
-
25.00
EBROSA PARTICIPACIONES, S.L.
Real estate
Zaragoza - SPAIN
-
50.00
50.00
EGICAM PLAN JOVEN, S.L.
Real estate
Madrid - SPAIN
-
40.00
40.00
ENSATEC, S.L.
Engineering
Online ticket sales for cinema and
entertainment
Navarrete (La Rioja) - SPAIN
-
20.00
20.00
Madrid - SPAIN
34.56
-
34.56
Madrid - SPAIN
-
47.00
47.00
Madrid - SPAIN
49.99
-
49.99
EUROFORUM TORREALTA, S.A.
Real estate
Business process computerisation and
outsourcing
Acquisition and holding of urban and
rustic land
Madrid - SPAIN
26.78
-
26.78
FERROCARRIL INTERMEDIACIÓN Y PATRIMONIOS, S.L.
Real estate
Madrid - SPAIN
-
35.00
35.00
FERROMOVIL 3000, S.L.
Purchase and lease of railway stock
Madrid - SPAIN
30.00
-
30.00
ENTRADAS SEE TICKETS, S.A.
ESPACIO JOVEN HOGARES, S.L.
EUROBITS TECHNOLOGIES, S.L.
181
Company
Business activity
Location
the Group (%)
Current interest
Total
(%)
ownership
Direct
interest
Indirect
FERROMOVIL 9000, S.L.
Madrid - SPAIN
30.00
-
30.00
FERULEN, S.L.
Real estate
Alzira (Valencia) - SPAIN
-
30.00
30.00
FIBEL 2005, S.L.
Real estate
La Vall Dúixo (Castellón) - SPAIN
-
33.33
33.33
FIRSA II, INVERSIONES RIOJANAS, S.A.
Holding company
-
25.53
25.53
FISSER INVERSIONES 2007, S.L.
Holding company
-
50.00
50.00
FOMENTO DE INVERSIONES RIOJANAS, S.A.
Holding company
-
40.00
40.00
FROZEN ASSETS, S.L.
Other professional, scientific activities
Madrid - SPAIN
-
41.96
41.96
GEBER URBANA S.L.
Valencia - SPAIN
-
50.00
50.00
GENERA ENERGÍAS NATURALES, S.L.
Real estate
Power generation, transmission and
distribution
35.00
-
35.00
GEOINVERS, S.A.
Barcelona - SPAIN
-
49.81
49.81
GESTECAM VIVIENDA JOVEN, S.L.
Real estate
Madrid - SPAIN
-
49.00
49.00
GRUPO INMOBILIARIO FERROCARRIL, S.A.
Rivas Vaciamadrid (Madrid) - SPAIN
19.40
-
19.40
GRUPO VALENCIANO DE ALQUILER PROTEGIDO, S.L.
Real estate
Valencia - SPAIN
-
33.33
33.33
HABITAT SON VALENTI, S.L.
Real estate
Valencia - SPAIN
-
50.00
50.00
HACIENDAS MARQUÉS DE LA CONCORDIA, S.A.
Winemaking
Alfaro (La Rioja) - SPAIN
-
16.16
16.16
HERCECAM VIVIENDA JOVEN, S.L.
Real estate
Guadalajara - SPAIN
-
40.00
40.00
HERCECAM VIVIENDA TORREJÓN, S.L.
Real estate
Guadalajara - SPAIN
-
49.00
49.00
HERCESA INTERMEDIACIÓN Y PATRIMONIOS, S.L.
Real estate
Guadalajara - SPAIN
-
30.00
30.00
HOGAR Y PATRIMONIO VIVIENDA JOVEN, S.L.
Real estate
Castellón - SPAIN
-
30.00
30.00
HOSPIMAR 2000, S.L.
Healthcare
Madrid - SPAIN
-
31.60
31.60
IAF CHEQUIA S.R.O.
Real estate
Prague – CZECH REPUBLIC
-
30.00
30.00
IMASINTER VIVIENDA JOVEN, S.L.
Real estate
Madrid - SPAIN
-
37.99
37.99
INDUSTRIA MANUFACTURERA ABULENSE, S.L.
Manufacturing industries
Ávila - SPAIN
20.00
-
20.00
INFOSERVICIOS, S.A.
IT services
Madrid - SPAIN
-
25.00
25.00
INFRAESTRUCTURAS Y SERVICIOS ALZIRA, S.A.
Other activities
Alzira (Valencia) - SPAIN
-
30.00
30.00
INMO-CAM VIVIENDA JOVEN, S.L.
Real estate
Alicante - SPAIN
-
47.00
47.00
INPAFER VIVIENDA JOVEN, S.L.
Real estate
Madrid - SPAIN
-
30.00
30.00
INTERISOLUX ALCORCON VIVIENDA JOVEN, S.L.
Real estate
Madrid - SPAIN
-
20.00
20.00
INTERNATIONAL CONSOLIDATED AIRLINES GROUP, S.A. (IAG)
Air transport
Madrid - SPAIN
12.09
-
12.09
INTERNOVA VIVIENDA JOVEN, S.L.
Real estate
Madrid - SPAIN
-
49.00
49.00
Ávila - SPAIN
182
Company
Business activity
Location
the Group (%)
Current interest
Total
(%)
ownership
Direct
interest
Indirect
INURBE IBERICA, S.A. DE C.V.
Real estate
Coahuila de Zaragoza - MEXICO
-
50.00
50.00
INVERSIONES AHORRO 2000, S.A.
Vigo (Pontevedra) - SPAIN
20.00
-
20.00
INVERSIONES VALIX - 6 SICAV S.A.
Madrid - SPAIN
49.97
-
49.97
-
25.00
25.00
JULIÁN MARTÍN, S.A.
Mutual fund manager
Tourism-related property development
and construction
Meat processing and storage, meat
product manufacturing
20.00
-
20.00
JUVIGOLF S.A.
Real estate
Valencia - SPAIN
-
50.00
50.00
L'AGORA UNIVERSITARIA, S.L.
Other activities
Castellón - SPAIN
34.00
-
34.00
LAVARALDA, S.L.
Real estate
Madrid - SPAIN
-
50.00
50.00
LOGIS URBA, S.L.
Real estate
Valencia - SPAIN
-
50.00
50.00
LOIDA INVERSIONES SICAV, S.A.
Mutual fund manager
Madrid - SPAIN
20.16
-
20.16
MAQUAVIT INMUEBLES, S.L.
Property holdings
Madrid - SPAIN
-
43.16
43.16
MATARÓ LLAR, S.L.
-
50.00
50.00
MECALUX, S.A.
Metal structure manufacturing
Barcelona - SPAIN
-
20.00
20.00
MERCAVALOR, SOCIEDAD DE VALORES Y BOLSA S.A.
Other activities
Madrid - SPAIN
24.99
-
24.99
MULTIPARK MADRID, S.A.
Telecommunications
Madrid - SPAIN
-
30.00
30.00
NESCAM 2006, S.L.
Real estate
Madrid - SPAIN
-
25.00
25.00
NEWCOVAL, S.L.
Real estate
Valencia - SPAIN
-
50.00
50.00
NH HOTELES, S.A.
Hotels
Madrid - SPAIN
-
10.04
10.04
NORDIC RESIDENTIAL, S.L.
Real estate
Valencia - SPAIN
-
50.00
50.00
NORDIC SOL COMERCIAL, S.L.
Real estate
Valencia - SPAIN
-
50.00
50.00
NOVA PANORÁMICA, S.L.
Real estate
Valencia - SPAIN
-
50.00
50.00
NUEVAS ACTIVIDADES URBANAS, S.L.
Real estate
Valencia - SPAIN
-
48.62
48.62
NUMZAAN, S.L.
Real estate
Zaragoza - SPAIN
14.13
-
14.13
OLESA BLAVA, S.L.
Real estate
Barcelona - SPAIN
29.07
-
29.07
ORCHID COSTA PRIVATE, LTD
Real estate
Singapore - SINGAPORE
-
25.00
25.00
ORCHID INVESTMENT B.V.
Real estate
Amsterdam - NETHERLANDS
-
45.90
45.90
PINAR HABITAT, S.L.
Real estate
Madrid - SPAIN
-
50.00
50.00
PINARCAM VIVIENDA JOVEN, S.L.
Real estate
Madrid - SPAIN
-
30.00
30.00
PLAN AZUL 07, S.L.
Madrid - SPAIN
31.60
-
31.60
INVERSORA DE HOTELES VACACIONALES, S.A.
Guijuelo (Salamanca) - SPAIN
183
Company
Business activity
Location
the Group (%)
Current interest
Total
(%)
ownership
Direct
interest
Indirect
PLAYA CARACOL, S.L.
Real estate
Llucmajor (Palma de Mallorca) - SPAIN
-
20.00
20.00
POLSAR CORPORATION, S.L.
Cabrera de Mar (Barcelona) - SPAIN
-
49.61
49.61
PORTUNA INVESTMENT, B.V.
Real estate
NETHERLANDS
-
40.00
40.00
PRISOLES MEDITERRANEO, S.A.
Barcelona - SPAIN
-
37.50
37.50
PROMOCIONES AL DESARROLLO BUMARI, S.L.
Real estate
Casa del Cordon (Burgos) - SPAIN
-
40.00
40.00
PROMOCIONES GUADÁVILA, S.L.
Madrid - SPAIN
30.00
-
30.00
PROMOCIONES PARCELA H1 DOMINICANA, S.L.
Pontevedra - SPAIN
19.79
-
19.79
PROMOCIONES Y PROPIEDADES ESPACIO-HABITAT S.L.
Real estate
Valencia - SPAIN
-
50.00
50.00
PROMOPUERTO 2006, S.L.
El Puerto de Santa María (Cádiz) - SPAIN
-
42.86
42.86
PROMO-SERVEIS DAMSEL, S.L.
Lloret de Mar (Girona) - SPAIN
-
50.00
50.00
PRYGECAM ARROYOMOLINOS VIVIENDA JOVEN, S.L.
Real estate
Madrid - SPAIN
-
20.00
20.00
PRYGECAM MOSTOLES VIVIENDA JOVEN, S.L.
Real estate
Madrid - SPAIN
-
20.00
20.00
RADION IBERKAT, S.L.
Barcelona - SPAIN
-
38.14
38.14
RENOVABLES SAMCA, S.A.
Power production
Badajoz - SPAIN
-
33.33
33.33
RESIDENCIA FONTSANA, S.L.
Property - nursing homes
-
49.24
49.24
RESIDENCIAL CAN MARTORELL, S.L.
Barcelona - SPAIN
-
49.85
49.85
RESIDENCIAL PARC CAN RATÉS, S.L.
Madrid - SPAIN
-
35.37
35.37
RESIDENCIAL NAQUERA GOLF, S.A.
Real estate
Valencia - SPAIN
-
23.75
23.75
RESTAURA WISLANA, SP Z.O.O.
Warsaw - POLAND
-
50.00
50.00
RESTAURA INVERSIONES, S.L.
Real estate
-
20.00
20.00
RIBERA SALUD, S.A.
Healthcare
Madrid - SPAIN
Avd Cortes Valencianes 58, Ed Sorolla Center 46015 Valencia (Valencia)
RICARI, DESARROLLO DE INVERSIONES RIOJANAS, S.A.
Private equity company
RIOJA ARAGÓN DESARROLLOS URBANÍSTICOS, S.A.
Real estate
RIVIERA MAYA INVESTMENT, B.V.
-
50.00
50.00
22.83
-
22.83
La Muela (Zaragoza) - SPAIN
-
40.00
40.00
Real estate
NETHERLANDS
-
40.00
40.00
ROYACTURA, S.L.
Real estate
Las Rozas de Madrid (Madrid) - SPAIN
-
45.00
45.00
SACYR VALLEHERMOSO, S.A.
Madrid - SPAIN
1.92
-
1.92
SAN MIGUEL URBANIZADORA, S.L.
Real estate
Valencia - SPAIN
-
33.33
33.33
SEGOBRIDA DEL ERESMA, S.A.
Real estate
Burgos - Spain
32.26
-
32.26
SERALICAN, S.L.
Foodstuffs
Ingenio (Las Palmas de Gran Canarias) - SPAIN
40.00
-
40.00
SHARE CAPITAL, S.L.
Real estate
Paterna (Valencia) - SPAIN
-
43.02
43.02
184
Company
Business activity
Location
the Group (%)
Current interest
Total
(%)
ownership
Direct
interest
Indirect
SISTEMAS ENERGETICOS DE LEVANTE, S.A.
SOCIEDAD DE INVERSIONES Y PARTICIPACIONES COMSA EMTE,
S.L.
Other activities
Valencia - SPAIN
-
40.00
40.00
Equity investments
Barcelona - SPAIN
-
20.00
20.00
SOCIETE CASA MADRID DEVELOPMENT
Equity investments
Casablanca - MOROCCO
-
50.00
50.00
SOTO ONCE, S.L.
Real estate
Majadahonda (Madrid) - SPAIN
24.50
-
24.50
SUELÁBULA, S.A.
TEPEYAC ASESORES, S.A. DE CAPITAL VARIABLE EN
LIQUIDACIÓN
Madrid - SPAIN
-
22.74
22.74
Administration and marketing services
Mexico City - MEXICO
-
33.00
33.00
TERRENYS BEGUDA ALTA, S.L.
Real estate
Sant Esteve Sesrovires (Barcelona) - SPAIN
-
20.00
20.00
TEULAVER, S.L.
-
50.00
50.00
TORRE LUGANO, S.L.
Real estate
Alcobendas (Madrid) - Spain
-
50.00
50.00
TORRENTO CAN GELAT, S.A.
Barcelona - SPAIN
-
35.73
35.73
UNCRO, S.L.
Services
Madrid - SPAIN
-
25.00
25.00
URABITAT RESIDENCIAL, S.L.
Real estate
Valencia - SPAIN
-
50.00
50.00
URBANIKA, PROYECTOS URBANOS, S.L.
Real estate
Alicante - SPAIN
-
32.91
32.91
URBANISMO NUEVO SIGLO, S.L.
Real estate
Valencia - SPAIN
-
29.00
29.00
URBANIZADORA LA VIÑA DEL MAR, S.L.
Real estate
Valencia - SPAIN
-
47.50
47.50
URBANIZADORA MARINA COPE, S.L.
Real estate
Madrid - SPAIN
-
20.00
20.00
VALDEMONTE PROYECTOS, S.L.
Residential leasing
-
50.00
50.00
VALDEMONTE RENTAS, S.L.
Residential leasing
-
50.00
50.00
VALLE Y PAISAJE, S.L.
Real estate
Valencia - SPAIN
-
50.00
50.00
VALLEMAR RESIDENCIAL, S.L.
-
50.00
50.00
VARAMITRA REAL ESTATES, B.V.
Real estate
NETHERLANDS
-
40.00
40.00
VECTRINSA GESTIÓN, S.L.
Real estate dealing on its own behalf
Madrid - SPAIN
49.00
-
49.00
VEHÍCULO DE TENENCIA Y GESTION Nº 9, S.L.
VILADECAVALLS PARK, CENTRO INDUSTRIAL, LOGÍSITICO Y
COMERCIAL, S.A.
Madrid - SPAIN
22.87
19.79
42.66
Barcelona - SPAIN
-
46.43
46.43
VISSUM CORPORACIÓN, S.L.
Healthcare
Alicante - SPAIN
-
24.69
24.69
VIVIENDA JOVEN INTERBIGECO II, S.L.
Real estate
Madrid - SPAIN
-
49.00
49.00
VIVIENDA JOVEN INTERBIGECO, S.L.
Real estate
Madrid - SPAIN
-
45.00
45.00
185
APPENDIX IV
MARKETABLE DEBT SECURITIES
The detail of this heading in the accompanying balance sheet at 31 December 2012 and 2011 is as follows:
2012
TYPE OF DEBT SECURITY
Nominal amount
2011
Currency
Latest maturity
Annual nominal interest rate
Nominal amount
BN CM 30/3/2012
Euro
2012
-
3M Euribor+1.75%
20,000
BN CM GGB 25/1/2012
Euro
2012
-
2.902% (1)
358,100
BN CM 09/2/2012
Euro
2012
-
3M Euribor+0.125%
825,600
BN CM 01/6/2012
Euro
2012
-
3M Euribor+0.125%
1,306,600
BN CM GGB 20/2/2012
Euro
2012
-
3.125% (1)
2,000,000
BN CM GGB 16/4/2012
Euro
2012
-
2.875% (1)
2,500,000
BN RIOJA 22/02/12
Euro
2012
-
3M Euribor+0.20%
200,000
BN INSULAR GGB 19/06/12
Euro
2012
-
3.125% (1)
150,000
Euro
2012
-
3.125% (1)
100,000
Euro
2012
-
2.5% (1)
61,000
Euro
2012
-
2.910% (1)
100,000
Euro
2012
-
3.125% (1)
230,000
Euro
2012
-
3M Euribor+1% (1)
150,000
Euro
2012
-
3.125% (1)
110,000
Euro
2012
-
3M Euribor+0.15%
300,000
Euro
2012
-
3M Euribor+1% (1)
Euro
2012
-
3% (1)
Euro
2012
-
2.375% (1)
Euro
2012
-
3M Euribor+0.15%
1,500,000
Euro
2012
-
3% (1)
1,500,000
Euro
2012
-
3.375% (1)
Euro
2012
-
3M Euribor+0.15%
BN CM GGB 30/12/13
Euro
2013
300,000
3M Euribor+0.60% (1)
BN CM 25/6/2013
Euro
2013
20,000
CMS10Y (min 5.63% and max 8%)
20,000
BN CM 18/2/2013
Euro
2013
200,000
MIN(CMS5Y+0.0575%) ; 5.1575%
200,000
BN CM 30/11/2013
Euro
2013
300,000
3M Euribor+2.75%
300,000
BN CM 26/7/2013
Euro
2013
300,000
1M Euribor+0.125%
300,000
Euro
2013
650,000
3M Euribor+0.20%
650,000
Euro
2013
500,000
4.25%
500,000
Euro
2014
850,000
3M Euribor+0.175%
850,000
100,000
1,500,000
796,000
250,000
1,200,000
300,000
186
2012
Currency
Latest maturity
Euro
2015
210,000
3.94%
BN CM 27/7/2016
Euro
2016
32,000
3M Euribor+0.20%
32,000
Euro
2016
500,000
3M Euribor+0.20%
500,000
Euro
2017
500,000
4.38%
500,000
BN CM 14/5/2018
Euro
2018
25,000
3M Euribor+0.98%
25,000
BN BANCAJA 22/05/18
Euro
2018
50,000
1.50%
50,000
BN CM 16/6/2023
Euro
2023
172,000
5.75%
172,000
BN CM 29/12/28
Euro
2028
65,000
4.76%
Nominal amount
2011
37,799,050
Nominal amount
210,000
65,000
39,085,050
CH CM 10/1/2012
Euro
2012
-
5.13%
25,000
CH CM 17/2/2012
Euro
2012
-
3.50%
532,900
CH CM 01/3/2012
Euro
2012
-
5.25%
1,445,000
Euro
2012
-
3.50%
463,100
Euro
2012
-
3.25%
100,000
CH INSULAR 12/06/12
Euro
2012
-
3.87%
20,000
CH CM 14/3/2013
Euro
2013
1,325,000
3.50%
1,325,000
Euro
2013
-
4.625%
1,000,000
Euro
2013
210,000
4.50%
210,000
Euro
2013
1,350,000
3.00%
1,350,000
Euro
2013
-
2.625%
500,000
CH CM 13/11/2014
Euro
2014
150,000
3.50%
150,000
CH CM 13/11/2014
Euro
2014
600,000
3.50%
600,000
CH CM 13/11/2014
Euro
2014
1,000,000
3.50%
1,000,000
CH CM 30/10/2014
Euro
2014
1,500,000
5.00%
1,500,000
CH CM 31/3/2014
Euro
2014
750,000
4.88%
CH CM 17/2/2014
Euro
2014
-
1M Euribor+2.50%
2,000,000
Euro
2014
-
4.875%
1,000,000
CH BANKIA 280214
Euro
2014
500,000
4.00%
-
CH CM 14/12/2015
Euro
2015
2,000,000
3.50%
2,000,000
Euro
2015
250,000
4.375%
250,000
CH CM 05/7/2016
Euro
2016
124,050
4.25%
124,050
CH CM 29/6/2016
Euro
2016
1,000,000
5.75%
1,000,000
CH CM 05/10/2016
Euro
2016
1,750,000
3.625%
1,750,000
CH BANKIA 24/11/16
Euro
2016
3,000,000
1M Euribor+2.85%
3,000,000
CH CM 05/7/2016
Euro
2016
2,520,000
4.25%
2,520,000
CH CM 10/5/2017
Euro
2017
1,000,000
1M Euribor+2.50%
1,000,000
750,000
187
2012
Nominal amount
2011
Currency
Latest maturity
CH CM 10/11/2017
Euro
2017
1,000,000
1M Euribor+2.50%
Nominal amount
CH BANKIA 2012-4
Euro
2017
3,500,000
1M Euribor+3.50%
-
CH CM 01/2/2018
Euro
2018
-
3M Euribor+0.70%
200,000
CH CM 25/5/2018
Euro
2018
2,060,000
4.25%
CH BANKIA 2012-5
Euro
2018
2,000,000
1M Euribor+3.50%
CH CM 28/6/2019
Euro
2019
1,600,000
5.00%
1,600,000
CH BANCAJA 10/01/19
Euro
2019
3,000,000
1M Euribor+2.50%
3,000,000
CH CM 26/4/2022
Euro
2022
1,500,000
4.50%
1,500,000
CH CM 03/2/2025
Euro
2025
2,000,000
4.00%
2,000,000
CH CM 24/3/1936
Euro
2036
2,000,000
4.13%
2,000,000
CH CM 26/2/1938
Euro
2038
50,000
5.02%
50,000
CH CM 21/07/38
Euro
2038
60,000
5.41%
60,000
C TERRITORIALES CM 21/02/14
Euro
2014
1,250,000
4.25%
1,250,000
C TERRITORIALES CM 21/02/14
Euro
2014
275,000
4.25%
Corporate promissory notes
Euro
2012
-
(2)
1,214,295
Euro
2012
-
(3)
328,000
Euro
2012
3,309
(4)
891,734
Euro
2012
1,633,265
(5)
25,958
Corporate promissory notes-Rioja
Euro
2012
-
2.83%
1,000
Corporate promissory notes-Rioja
Euro
2012
-
3.18%
1,000
Euro
2012
-
4.90%
5,000
Euro
2015
20,000
Zero coupon
20,000
Euro
2015
20,000
Zero coupon
20,000
Euro
2014
52,000
Zero coupon
52,000
Euro
2014
50,000
Zero coupon
50,000
Euro
2015
70,000
Zero coupon
70,000
Subtotal
Own shares
Valuation adjustments and other
Balances at the end of the year (amortised cost)
Euro
2015
70,000
45,916,624
(17,198,336)
2,434,110
31,152,398
Zero coupon
70,000
63,290,337
(17,614,838)
1,931,883
47,607,382
1,000,000
2,060,000
-
275,000
(1) Issue backed by the Spanish government.
(2) Commercial paper issued with an IRR of between 0% and 1%.
(6) The total nominal value relating to mortgaged-backed securities classified as held for trading and listed in Appendix IV amounted to EUR 37,799 million at 31 December 2012 (EUR 39,085 million at 31 December 2011). At 31 December 2012, the Bank also held
one-off non-marketable, mortgage-backed securities amounting to EUR 10,558 million (EUR 14,637 million at 31 December 2011) under “Financial liabilities at amortised cost - Customer deposits” and one-off non-marketable, mortgage-backed securities
amounting to EUR 97 million (EUR 447 million at 31 December 2011) recognised under “Financial liabilities at amortised cost - Deposits from credit institutions” on the balance sheet (see Note 19). Therefore, the total nominal value of mortgage-backed securities
issued by the Bank was EUR 48,454 million at 31 December 2012 (EUR 54,169 million at 31 December 2011) (see Note 1.14).
188
APPENDIX V
SUBORDINATED LIABILITIES ISSUED
The detail of this heading in the accompanying balance sheet at 31 December 2012 and 2011 is as follows:
2012
Currency
Latest maturity
-Bancaja issues
Euros
(a)
CONVERTIBLE BONDS
Euros
Perpetual
Subtotal
Valuation adjustments and other
Balances at the end of the year (amortised cost)
(a) Perpetual, but callable on 17/11/2014 (Bancaja Emisiones).
Nominal amount
297,736
10,700,000
2011
Annual nominal
interest rate
Nominal amount
4.63
297,736
Zero coupon
-
10,997,736
297,736
34,916
20,547
11,032,652
318,283
189
APPENDIX VI
Detail of the Bank's agents and disclosures required by Article 22 of Royal Decree 1245/1995, of 14 July. Information at 31 December
2012.
Name or corporate name of
Location
Bankia, S.A. agents authorised to enter into and/or negotiate transactions on behalf of the entity (under Bank of Spain Circular 4/2010, rule 1, section 1)
Mecanización y Gestión, S.L.
C/ Méndez Núñez, 5 – 13250 – Daimiel
Seguros Ramos Reinaldo, S.L.
C/ Generalísimo, 2 – 45211 – Recas (Toledo)
Mapfre Familiar, Compañía de Seguros y Reaseguros S.A.
Ctra. Pozuelo a Majadahonda, 52 – 28220 – Majadahonda (Madrid)
Bankia, S.A. agents authorised only to market products and services; not authorised to enter into and/or negotiate transactions on behalf of the entity (under Bank of Spain Circular
4/2010, rule 1, section 2)
David Martín Matesanz
C/ Gloria Fuertes, 18 – 19200 (Azuqueca de Henares - Guadalajara)
Ramón Mayordomo Rebollo
C/ Velázquez, 15 – 24005 (León)
Miguel Illueca Ribes
C/ Maestro Aguilar, 5 – 46006 (Valencia)
Laura Fabra Verge
Av. Nostra Senyora L´Assumpci, 170 – 43580 (Deltebre – Tarragona)
Raquel Sempere Pau
Plaza del Carbón, 7 – 46600 (Alzira – Valencia)
Cristina Bonilla Arjona
C/ Doctor Fleming, 15 C – 10001 (Cáceres)
Estela Rivas Leal
C/ Caballero de los Espejos, 4 – 13600 (Alcázar de San Juan – Ciudad Real)
Víctor Javier Escors Medina
C/ Divina Pastora, 38 – 41700 (Dos Hermanas – Seville)
Fernando Linares Toribio
C/ Grazia Deleda, 9 – 28909 (Perales del Río – Madrid)
Begoña Barbero Valverde
C/ Maestranza, 8 – 29016 (Málaga)
Juan Carlos Castro Balsera
C/ Berenguer de Marquina, 16 – 03004 (Alicante)
Juan Pedro Leon Mateos
C/ Sant Felip Neri, 1 – 08740 (Sant Andreu de la Barca – Barcelona)
Enrique Gorin Martínez
C/ Santiago Rusinol, 31 – 08950 (Espluges de Llobregat – Barcelona)
Sergio Muñoz Gimenez
C/ Dalies, 7 – 08338 (Premiá de Dalt – Barcelona)
María Andrés Villas
C/ Gonzalo de Berceo, 118 – 41704 (Dos Hermanas – Seville)
Reyes Saiz Burgaleta
Prl Virgen del Puerto, 13 – 39740 (Santoña – Cantabria)
Emilio García Riesco
C/ Tolosa Latour, 21 – 11007 (Cádiz)
Miguel Ruiz Castillo
C/ Burgos, 76 – 08100 (Mollet – Barcelona)
Moises Espi Belda
C/ Parque de la Cruz, 1 – 46890 (Agullent – Valencia)
Maria del Carmen Manzana Mondragón
Av. País Valencia, 7 – 12528 (Eslida – Castellón)
Maria José Carne Sales
C/ Godofredo Buenos Aires, 6 – 12005 (Castellón)
Elena Montes Descalzo
C/ Pilar, 11 – 12410 (Altura – Castellón)
Sergio Vicente Copete Raga
C/ Naturalista Arévalo Bava, 17 – 46010 (Valencia)
Magalie Ortiz Recio
Pº Marítimo, 166 – 17250 (Platja de Haro – Girona)
Antonio Flores Benitez
C/ Marcel Menéndez y Pelayo, 27 – 08940 (Cornellá – Barcelona)
Soraya Caballero Lerones
C/ Jardines, 7 – 34004 (Palencia)
190
Name or corporate name of
Mari Trini García Esteve
Maria Josefa de la Cruz Rodriguez
Santiago García Pérez
José María Colas Matero
Moises Sánchez Expósito
Juan José Gonzaga Hernández
Jorge Iglesias Pastor
Lidia Alonso Menica
Carles Xavier Planas Pons
Manuel Antonio Gaspar Baute
Jesús Ricardo Serrano Tasende
Francisco de Borja Rodriguez Martin
Antonio Aguilar Rincón
José Antonio Dianez García
Fidela Palomares Fernández
Juan José Martínez Romero
Mónica Garrido Perez
María Dolores Valverde Leon
Alejandro López Leon
Angel Rodriguez Rodriguez
Francisco Gambero Bernal
José María Simon Pizarra
Guillermo Alonso Puig
Ramón Martínez Rus
Diego Perea Atienza
Alberto Monton Pérez
Pablo Blat Cuesta
Miguel Ángel Cespon Fandiño
Vicente Rios Ripolles
Jorge Jaime Gonzalez Díaz - Malaguilla
Desire Vera Hernández
Eva Mora Aguilera
Lucas Jhon Mayo
Location
C/ Guillermo Roch, 53 – 46185 (Pobla de Valbona – Valencia)
C/ Publio Galerio, 6 – 23710 (Bailén – Jaén)
C/ Rua do Vilar, 65 – 15950 (Palmeira – A Coruña)
C/ Al Este del Edén, 19 - 50019
Av. Pais Valencia, 40 – 12500 (Vinarós – Castellón)
Av. Orihuela, 3 – 03006 (Alicante)
C/ Industria, 38 – 08570 (Torrelló – Barcelona)
C/ Maspe, 2 – 48215 (Urreta – Vizcaya)
C/ Gloria, 121 – 07300 (Inca – Balearic Islands)
Av. de las Palmeras, 55 – 38205 (San Cristobal de la Laguna – Tenerife)
C/ Carballo Calero, 17 – 15100 (Carballo – A Coruña)
C/ Francisco Díaz Cardona, 2 – 18600 (Motril – Granada)
C/ Reina Fabiola, 16 – 50008 (Zaragoza)
C/ Pstg. Serra D´Ancosa, 30 – 08720 (Vilafranca del Penedés – Barcelona)
Av. del Arte, 74 – 02006 (Albacete)
C/ Acera del Darro, 78 – 18005 (Granada)
C/ Mallorca, 74 – 04738 (Vicar – Almería)
C/ Maestro Barbieri, 22 – 04720 (Aguadulce – Almería)
C/ Rueda Dona Elvira, 38 – 29640 (Fuengirola – Málaga)
C/ San Francisco, 22 – 14900 (Lucena – Córdoba)
C/ Loma de los Riscos, 32 – 29620 (Málaga)
C/ Vivaldi, 6 – 29130 (Alhaurin de la Torre – Málaga)
C/ Mariano Benlliure, 16 – 46980 (Paterna – Valencia)
C/ Felipe Oya Rodríguez, 2 – 23009 (Jaén)
C/ Botica, 12 – 11650 (Villamartín – Cádiz)
C/ La Solana, 20 – 50200 (Ateca – Zaragoza)
C/ Fuerteventura, 1 – 46011 (Valencia)
Plaza Curro Enrique, 1 – 36002 (Pontevedra)
C/ María Teresa de Calcuta, 18 – 12530 (Burriana – Castellón)
C/ Palos, 13 – 21003 (Huelva)
Urb. Anaza Cien Viviendas, 7 – 38109 (Santa Cruz de Tenerife)
Av. San Francisco Javier, 24 – 41018 (Seville)
C/ Málaga, 8 – 04638 (Mojacar – Almería)
191
Appendix VII
The detail of the number and par values of, and payments yet to be made on, shares
issued by Group entities and held by the Bank at 31 December 2012, by share class
(where applicable) is as follows:
COMPANY
Number of
shares held by
Bankia, S.A.
Par value of
each share
(EUR)
Capital
payments
payable
LAIETANA GENERALES COMPAÑIA DE SEGUROS DE LA CAJA DE
AHORROS LAIETANA, S.A.
1,000
9,020.00
4,510.00
LAIETANA VIDA COMPANIA DE SEGUROS DE LA CAJA DE
AHORROS LAIETANA, S.A.
1,000
27,000.00
13,980.00
192
BANKIA, S.A.
DIRECTORS’ REPORT
DECEMBER 2012
Translation of a report originally issued in Spanish. In the event of a discrepancy, the Spanish-language version prevails.
DIRECTORS' REPORT FOR 2012
1.- CHANGES IN GROUP ACTIVITY AND FINANCIAL POSITION
(i) Acquisition of interest in BFA by the FROB and request for public aid
On 23 May 2012, Banco Financiero y de Ahorros (“BFA”), the parent of Bankia, sent
communiqués to the Bank of Spain and the Ministry of Economy and Competitiveness
notifying them of its intention to request a capital contribution from the Fund for Orderly
Bank Restructuring ("FROB") of EUR 19,000 million, in order to clean up its asset portfolio
and comply with the new capital and provisioning requirements arising from Royal DecreeLaws 2/2012 and 18/2012. On 24 May 2012, the Group received replies from the Bank of
Spain and the FROB expressing their willingness to provide the financial support pursuant to
compliance with the requirements set forth in their regulations, which, inter alia, included
presentation of a Restructuring and Recapitalisation Plan to the Bank of Spain for its
approval. This plan was submitted in June 2012 and approved by the Bank of Spain and the
European Commission on 27 and 28 November 2012, respectively.
BFA indicated that once the funds from the FROB were received, it would carry out a
capital increase at Bankia, which it would subscribe in full. Before carrying out the
recapitalisation, on 9 May 2012 BFA submitted a request to the FROB to convert the EUR
4,465 million of convertible preference shares (CPS) issued by BFA and subscribed by the
FROB into BFA shares.
After receiving authorisation by the European Commission on 27 June 2012, the
conversion was completed, making the FROB the sole shareholder of BFA. It currently
controls, through BFA, an indirect stake of 48.05% in Bankia's share capital.
(ii) BFA capital increase and subordinated loan to Bankia
On 31 August 2012, BFA and Bankia presented their separate and consolidated financial
statements for the first half of 2012, showing an attributable loss due to the write-downs
made in line with the BFA-Bankia Group's Restructuring and Reorganisation Plan.
In addition, in September 2012, the results of the bottom-up stress test carried out by
Oliver Wyman to estimate the expected losses on the loan portfolios of 14 Spanish banks,
including BFA-Bankia, and to evaluate their capital requirements, were released. The stress
test indicated capital needs for the BFA-Bankia Group of EUR 13,230 million in the baseline
scenario and EUR 24,743 million in the adverse scenario. The latter amount was reduced to
EUR 24,552 million after including the impact of the transfer of real estate assets to the
SAREB, as explained below.
1
On 3 September 2012, the FROB decided to inject capital of EUR 4,500 million into the
BFA-Bankia Group in order to restore its regulatory capital levels. This capital injection was
made on 12 September 2012 through subscription by the FROB to a capital increase of EUR
4,500 million carried out by BFA. As consideration for the contribution, BFA issued
4,500,000,000 new registered ordinary shares with a par value of EUR 1 each, of the same
class and series as the shares currently outstanding.
That same day, in order to continue the process of reinforcing regulatory capital in
Bankia, BFA and Bankia signed a subordinated loan agreement in the amount of EUR 4,500
million, thereby executing the capital contribution from BFA to Bankia indicated above.
(iii) Restructuring Plan
Within the scope of BFA-Bankia's recapitalisation and restructuring, the Bank of Spain
and the European Commission approved the Group's Restructuring Plan on 27 and 28
November 2012, respectively. This approval marked the completion of the joint analysis and
work by the two entities, the European Commission, the FROB and the Bank of Spain, begun
in July and concluded with the results of the stress test released in September. The plan
provided for an injection of EUR 15,500 million in public funds in the Bankia Group, of which
approximately EUR 4,800 million would come from the conversion of hybrid instruments and
EUR 10,700 million would be contributed by BFA.
Subsequently, on 26 December 2012 the FROB adopted a series of agreements under the
framework of the Restructuring Plan, including the grant of EUR 13,459 million of public aid
to the BFA Group. This aid was authorised based on the commitments assumed in the
Group's Restructuring Plan, the priority objective of which is to make the institution more
solvent, profitable and efficient. These commitments were basically the following:

Reduction of the balance sheet and reduction of real estate risk through the transfer
of certain assets to the SAREB

Reduction of capacity (branches and human resources), so that by 2015 the number
of branches would be around 1,950 and the workforce close to 14,500 employees
Focus on the retail banking business, implying the sale or liquidation of certain
subsidiaries and investees not considered strategic for the Group's business


Measures relating to the conversion and management of hybrid capital instruments
(preference shares, perpetual subordinated debt and dated subordinated debt)

Restrictions on the payment of dividends by the BFA-Bankia Group until 31
December 2014 and, in the interim period until then, compliance with certain
economic and financial covenants regarding asset volume, RWAs, lending, branch
offices and employees.
Moreover, the commitments agreed with the authorities within the framework of the
Restructuring Plan included the merger between BFA and Bankia, S.A. into a single entity or
2
the transformation of BFA into a holding company without a banking license. At the date of
authorisation for issue of these financial statements, the directors had yet to take a decision
in this respect. Nevertheless, the potential impact of any decision would not be material for
the Bankia Group's equity and, in any case, would be neutral for the BFA Group.
(iv) Transfer of assets to the SAREB
Pursuant to the provisions of the Restructuring Plan and the legal duty to transfer assets
as established in additional provisions eight and nine of Law 9/2012, Royal Decree 1559/2012
and the resolution of the FROB dated 14 December 2012 determining the classes of assets to
be transferred to the SAREB by the BFA-Bankia Groups and the terms and conditions thereof,
on 31 December 2012 the BFA Group transferred assets with a net value of EUR 22,317.7
million to the SAREB, broken down as follows:

Loans and credits to companies, mainly for construction and property development:
EUR 18,267.3 million

Other real estate assets, mainly foreclosed properties: EUR 4,050.4 million
The price was calculated by applying the criteria and percentages set by the Bank of
Spain, as provided for in Law 9/2012 and Royal Decree 1559/2012, to the estimated carrying
amounts of the assets at 31 December 2012. The breakdown is as follows:

EUR 2,850.3 million related to assets owned by BFA and its subsidiaries excluding the
Bankia subgroup

EUR 19,467.4 million related to assets owned by Bankia and its subsidiaries
As consideration for these assets, BFA and Bankia have received fixed-income securities
issued by the SAREB with an irrevocable guarantee of the Spanish State.
The transfer of these real estate assets to the SAREB had a positive impact for the Group
in three specific respects:

Composition of the loan portfolio, reducing distressed assets and decreasing, to
minimum levels, exposure to the real estate sector, thereby helping to lower the cost
of capital

Liquidity, as the estimated cash flows derived from maturities and disposals of the
subject assets are replaced with instruments eligible for discount or included in the
ECB facility

Profitability, with a better outlook for the Group's earnings and ability to organically
generate capital for shareholders
3
(v) Increase in BFA and Bankia capital
As indicated previously, in May 2012 BFA requested public assistance in the amount of
EUR 19,000 million. In September 2012, it received an advance of EUR 4,500 million via
subscription by the FROB to a capital increase. In addition, in November 2012, the Bank of
Spain and European Commission approved the Restructuring Plan, which called for an
additional capital injection in BFA of EUR 13,459 million.
This capital injection was carried out on 27 December 2012 through the EUR 13,459
million subscription by the FROB to a capital increase in BFA, paid through the non-monetary
contribution of European Stability Mechanism (ESM) securities. This increase comes in
addition to the EUR 4,500 million increase carried out in September. Combined, these
operations strengthened the BFA-Bankia Group's capital by EUR 17,959 million.
After the Group’s recapitalisation, on the same date (27 December 2012), BFA subscribed
to an issue of contingent convertible bonds issued by Bankia and amounting to EUR 10,700
million, through the non-monetary contribution of ESM securities for the same amount. The
issue will be converted into capital in the early months of 2013.
With these transactions and once the measures regarding the hybrid capital instruments
set out in the Restructuring Plan have been executed, both the BFA Group’s and Bankia's
capital ratios will be above the minimum requirement, making BFA-Bankia one of the most
solvent banks in Spain.
4
2.- ECONOMIC BACKDROP
World economic growth in 2012 was disappointing. The worsening of the sovereign crisis
in the euro area and fiscal uncertainty in the US, prolonged by the presidential elections in
November, had a negative impact on economic activity. The world economy grew only
modestly (an estimated 2.4%), less than in 2011 (3.1%), and with very uneven performance
among different regions. Austerity measures, the tightening of credit conditions and
structural weaknesses had a depressive effect on the peripheral eurozone economies,
weakening the region as a whole, so that it failed to grow in 2012 (-0.6% in the quarter, the
worst since the first half of 2009).
Tensions in Spanish and Italian debt markets became more acute in the spring and
reached a new critical point in July, necessitating a more effective response to the crisis. The
most decisive factor was the about-turn in ECB strategy. The ECB president's declaration in
July that the bank would “do whatever it takes to preserve the euro" and the announcement
in September of an unlimited bond-buying programme reduced the likelihood of the most
adverse scenarios. The approval of the new European rescue mechanism and, in the last few
weeks of 2012, the agreements to unblock aid to Greece (reducing the risk of a Greek exit
from the euro) and to create a common banking supervisor further contributed to an
improvement in markets. In that regard, Spain's 10-year risk premium fell by 2.45pp from its
peak in July to 3.95pp at the end of the year, while the one-year Euribor rate dropped 1.4pp
to 0.54%, assisted by the 25bp cut in the ECB rate in July.
In 2012, the Spanish economy continued along the recessionary path to which it had
returned in the second half of the previous year. Although forecasts pointed to a gradual
improvement in activity, the scenario deteriorated further from spring onwards, due to the
increase in credit strains, private sector deleveraging and fiscal consolidation, which curbed
domestic demand. In fact, the last quarter was the worst since mid-2009, with negative GDP
growth of 0.7% per quarter, so that over the year as a whole GDP contracted by 1.4%,
following the slight expansion seen in 2011 (+0.4%).
2012 was a key year in the restructuring of the Spanish banking industry, with major
write-downs in balance sheets and the recapitalisation of virtually the entire sector. These
efforts helped answer questions regarding transparency and the valuation of bank assets
and, by extension, the banks' solvency.
To enhance the credibility of the banking system, the government enacted Royal DecreeLaw (RDL) 2/2012 and Royal Decree-Law 18/2012, which called for greater provisioning for
real estate risk, and requested financial assistance for the sector recapitalisation from the
Eurogroup. This assistance came in the form of a credit facility of up to EUR 100,000 million
contingent on compliance with certain conditions by 30 June 2013. These conditions
required, inter alia, that banks with capital shortfalls transfer distressed assets to an asset
management company (SAREB), that holders of hybrid instruments and subordinated debt
assume losses, and that entities significantly reduce their capacity. The final amount of public
aid was less than EUR 40,000 million, far below the EUR 100,000 million requested. By the
5
end of 2012, around 90% of the capital needs had been covered and the assets of
nationalised banks had been transferred to the SAREB.
3.- BUSINESS PERFORMANCE IN 2012
3.1.- Comparative information
The following must be taken into account to understand Bankia's earnings performance
in 2012:
1. Under the commitments assumed in the BFA-Bankia Group's Restructuring Plan, the
institution will sell or liquidate certain subsidiaries and investees not considered strategic
for the Group's business. Following implementation of the plan, in December 2012,
Bankia reclassified certain equity investments to "Non-current assets held for sale".
Specifically, among investments in Group entities, it reclassified the holdings in Bancofar,
S.A. and Torre Caja Madrid, S.A. It also reclassified all the investments in associates and
jointly-controlled entities except for Aseguradora Valenciana, S.A. de Seguros y
Reaseguros to "Non-current assets held for sale", as well as all the equity interests
included under "Available-for-sale financial assets".
2. On 31 December 2012, assets of Bankia, S.A. and its subsidiaries with a net carrying
amount of EUR 19,467 million were transferred to the SAREB. Of this amount, EUR
17,887 million related to assets owned by Bankia, S.A. and EUR 1,580 million to assets
owned by subsidiaries. The transfer resulted in a decrease of EUR 16,304 million in
Bankia, S.A.'s net loans and advances and of EUR 1,583 million in real estate assets,
mostly of which are included under "Non-current assets held for sale".
The transfer price of the assets was paid through the delivery of debt securities for the
same amount, issued by the SAREB and backed by the Spanish State. These securities
were recognised under "Held-to-maturity investments". The amount received for assets
transferred by its subsidiaries, EUR 1,580 million, was recognised under "Financial
liabilities at amortised cost".
6
3.2.- Highlights of the balance sheet
BANKIA, S.A. BALANCE SHEET
Change on Dec. 2011
(Millions of euros)
Of which: Loans and advances to customers
Debt securities
Equity instruments
Other
Dec-12
Dec-11
Amount
%
4.563
6.117
(1.554)
(25,4%)
35.734
29.062
6.672
23,0%
29
16
12
75,9%
39.998
24.649
15.349
62,3%
39.998
23.621
16.377
69,3%
0
1.028
(1.028)
-
146.602
208.239
(61.637)
(29,6%)
9.024
19.629
(10.604)
(54,0%)
135.358
182.609
(47.251)
(25,9%)
2.219
6.001
(3.781)
(63,0%)
29.007
10.251
18.756
183,0%
Hedging derivatives
6.174
5.266
908
17,2%
Non-current assets held for sale
2.925
2.063
862
41,8%
Investments
2.446
4.168
(1.721)
(41,3%)
Tangible and intangible assets
1.748
2.177
(429)
(19,7%)
10.045
6.375
3.670
57,6%
279.243
298.367
(19.124)
(6,4%)
33.610
26.815
6.795
25,3%
245.231
255.247
(10.017)
(3,9%)
51.955
22.431
29.524
131,6%
26.115
22.434
3.680
16,4%
117.917
161.384
(43.467)
(26,9%)
31.152
47.607
(16.455)
(34,6%)
15.642
318
15.324
-
Other assets, prepayments and accrued income, and tax assets
TOTAL ASSETS
Customer deposits
2.450
1.072
1.378
128,6%
Hedging derivatives
2.727
1.961
766
39,0%
Provisions
2.434
1.283
1.151
89,7%
Other liabilities, accrued expenses and deferred income, and tax liabilities
1.429
1.563
(135)
(8,6%)
285.431
286.870
(1.439)
(0,5%)
TOTAL LIABILITIES
(779)
(581)
(198)
34,0%
Own funds
(5.409)
12.078
(17.487)
(144,8%)
TOTAL EQUITY
(6.188)
11.497
(17.684)
(153,8%)
279.243
298.367
(19.124)
(6,4%)
7
Bankia's activity in 2012 took place in a challenging environment for banks, with the
weakness of the Spanish economy and the restructuring and recapitalisation of the banking
sector gearing management’s efforts toward improving the quality of assets and reinforcing
the Bank's capital. Against this backdrop, Bankia ended 2012 with total assets of around EUR
279,243 million, down 6.4% on the previous year. This reduction reflects mainly the decrease
in loans and receivables during the year as a result of the reduced demand for credit and the
provisions and write-downs of assets called for in the BFA-Bankia Group's Recapitalisation
Plan.
The held-for-trading portfolio, composed mainly of trading derivatives, included EUR
35,734 million of assets held for trading and EUR 33,610 million of liabilities held for trading,
with similar increases in the two compared to 2011 (up EUR 6,672 million and EUR 6,795
million, respectively). This growth was the result of the mark-to-market of trading derivatives
for interest-rate sensitivity, as yield curves had sustained sharp decreases in all maturities
since the beginning of the year.
The balance of available-for-sale financial assets increased by EUR 15,349 million to EUR
39,998 million as a result of the acquisition of public debt in the first half of the year and the
inclusion of EUR 10,700 million of ESM securities received by BFA as payment for subscription
to the issue of contingent convertible bonds by Bankia in December. By type of instrument,
debt securities increased by EUR 16,377 million and, at 31 December 2012, comprised the
entire portfolio, as the capital instruments included under "Available-for-sale financial
assets" were reclassified to "Non-current assets held for sale".
Under "Loans and receivables", "Loans and advances to customers", the main
component of assets, amounted to EUR 135,358 million net (EUR 147,893 million gross; i.e.
before impairment losses and including valuation adjustments) compared to EUR 182,609
million at 31 December 2011, a decrease of EUR 47,251 million or 25.9%. This reduction was
the result of the sector-wide drop in credit volumes and Bankia's strategy to clean up its
asset portfolios, improve the composition of its risk and balance loans with customer
deposits in an environment of increased risk and a liquidity crunch in the markets, all of
which affected the trend in this balance sheet item in 2012. Particularly important was the
transfer to the SAREB of loans with a total net carrying amount of EUR 16,304 million (EUR
29,665 million gross), mainly for construction and real estate development.
By sector, the sharpest decrease (-25.3% to EUR 131,112 million) was in loans and
advances to the private resident sector in Spain, which account for virtually all of the assets
transferred to the SAREB. The decrease primarily related to secured loan transactions. Loans
and advances to non-residents ended 2012 at EUR 6,699 million, down EUR 1,477 million or
18% from the year earlier. Lastly, loans and advances to the Spanish public sector increased
by EUR 2,407 million to EUR 8,580 million, reflecting the drawdown of the syndicated facility
arranged in May with the Fund for Financing Payments to Suppliers (“Fondo para la
8
Financiación de Pago a Proveedores”) created by the Spanish government and backed by the
Spanish Treasury.
In a scenario of continued financial imbalances for households and businesses, the
balance of doubtful assets in customer loans and advances rose by 26.8% to EUR 18,591
million in 2012, EUR 3,934 million more than at 31 December 2011.
Bankia, S.A.'s non-performing loan ratio at year-end 2012, including loans and advances
to customers and contingent liabilities, was 12.5% (12.99% for the Group), with NPL coverage
at 67.04% at 31 December.
"Held-to-maturity investments" totalled EUR 29,007 million, an increase of EUR 18,756
million from the year before, due to the inclusion of the fixed-income securities issued by the
SAREB and received by Bankia as consideration for the real estate loans and assets
transferred at the end of the year.
Meanwhile, "Non-current assets held for sale" stood at EUR 2,925 million at 31
December 2012, compared to EUR 2,063 million at the end of 2011. The increase reflects the
inclusion under this heading of the equity investments in Group companies, jointly-controlled
entities and associations, and other investments originally accounted for under "Availablefor-sale financial assets" that were reclassified to "Non-current assets held for sale" within
the framework of the commitments assumed in the BFA-Bankia Group's Restructuring Plan.
In terms of liabilities, on-balance-sheet managed customer funds (comprising customer
deposits, marketable debt securities and subordinated liabilities) totalled EUR 164,711
million, 21.3% less than the figure at 31 December 2011.
This performance was due primarily to the redemption and maturity of several wholesale
issues, the buy-back of securitisation bonds issued and lower customer deposits. The decline
in deposits was due to a number of reasons, including the reduction in financing through
counterparties and the fall in retail customer deposits in the second half of the year.
Resident private sector deposits fell by EUR 22,465 million to EUR 105,635 million. This
performance was due to the redemption of EUR 4,079 million of singular bonds, the decrease
of EUR 3,379 million in repurchase agreements, the fall of EUR 6,953 million in demand
deposits (current and savings accounts) and a decline of EUR 8,054 million in other retail
term deposits, of which EUR 1,968 million related to a decline in securitisation issued mostly
due to the buy-back of securitisation bonds by the Bank in March for a nominal amount of
EUR 1,373 million.
Non-resident deposits totalled EUR 3,431 million at 31 December 2012, down EUR
23,193 million from the year before, due to reduced lending through European trading
9
platforms and central counterparties (CCPs). Spanish public sector deposits increased by EUR
1,935 million to EUR 6,763 million at the end of 2012.
Including the retail tranche of promissory notes issued by Bankia (EUR 1,569 million in
2012 and EUR 1,947 million 2011) and excluding singular bonds and private resident and
non-resident sector repurchase agreements, strict customer deposits after valuation
adjustments amounted to EUR 99,307 million at 31 December 2012, compared to EUR
112,763 million at 31 December 2011.
At 31 December 2012, debt and other marketable securities totalled EUR 31,152 million,
EUR 16,455 million less than at 31 December 2011. This trend reflects the maturity of several
wholesale issues last year in an extremely difficult scenario for the Bank and financial
markets in general which restricted Bankia's access to wholesale funding markets.
Subordinated liabilities increased by EUR 15,324 million after recognition of the EUR 4,500
million subordinated loan extended by BFA in September and the issue of convertible
contingent bonds by Bankia in December 2012 for EUR 10,700 million, which was fully
subscribed by BFA.
Lastly, "Own funds" and "Total equity" were negative in the amounts of EUR 5,409
million and EUR 6,188 million, respectively, at 31 December 2012 as a result of cumulative
losses in 2011 and the loss reported by Bankia in 2012 after the strong provisioning efforts
made in both years.
10
3.3.- Highlights of the income statement
Bankia's activity in 2012 was carried out in an adverse economic environment, with
strong pressures in markets and economic downturn in Spain, coupled with the strong
provisioning effort made by the Bank to strengthen its balance sheet and comply with the
commitments in the BFA-Bankia Group's Recapitalisation Plan.
The most important items on Bankia's income statement are discussed below.
BANKIA, S.A. INCOME STATEMENT
Change on Dec. 2011
(Millions of euros)
Net interest income
Dec-12
Dec-11
Amount
%
2.750
2.481
269
10,8%
78
130
(52)
(40,0%)
Total net fees and commissions
935
998
(63)
(6,3%)
Gains or losses on financial assets and liabilities (net)
387
340
47
13,9%
39
23
16
72,0%
(487)
(185)
(302)
163,3%
Dividends
Other operating income and expenses
Gross income
Operating expenses
Administrative expenses
Staff costs
Other general administrative expenses
Depreciation and amortisation charge
Provisions (net)
3.702
3.786
(84)
(2,2%)
(2.049)
(2.167)
117
(5,4%)
(1.821)
(1.920)
99
(5,2%)
(1.240)
(1.290)
50
(3,8%)
(581)
(630)
50
(7,9%)
(228)
(246)
18
(7,4%)
(1.424)
(157)
(1.267)
-
Impairment losses on financial assets (net)
(18.116)
(3.954)
(14.163)
-
Net operating loss
(17.888)
(2.491)
(15.397)
-
(2.954)
(304)
(2.649)
-
(704)
(1.575)
871
-
(21.545)
(4.370)
(17.175)
-
Impairment losses on non-financial assets (net)
Other gains and losses
Loss before tax
Income tax
Loss for the year from continuing operations
Profit or loss from discontinued operations (net)
Loss after tax
3.239
1.339
1.899
-
(18.306)
(3.031)
(15.276)
-
0
0
0
-
(18.306)
(3.031)
(15.276)
-
11
Net interest income totalled EUR 2,750 million in 2012, drawing primarily from loans to
the resident private sector. This marked an increase of EUR 269 million from net interest
income in 2011, reflecting the rising spreads on new loans and deposits since the second half
of 2011, the larger contribution of interest from the fixed-income portfolio and the reduction
in finance costs resulting from the large volume of wholesale maturities and lower deposit
costs. All these factors offset the negative impact on mortgages of the fall in interest rates
and lower lending volumes in 2012 compared to the year before.
Despite the prevailing economic situation and the drop in business volumes, total net
fees and commissions performed well during the year, adding EUR 935 million to the income
statement, slightly below the EUR 998 million in 2011 (-6.3%). As for the recurring banking
business, banking fees on collection/payment services, fees from contingent liabilities and
contingent commitments and from the sale of non-banking financial products, mainly
pension funds, all performed well in 2012 compared to the year before despite the reduced
volume of business in the markets.
Gains/(losses) on financial assets and liabilities amounted to EUR 387 million in 2012,
down slightly from EUR 340 million in 2011. This item was affected by the complex situation
of financial markets, marked by the escalation of the debt crisis, the fall in asset values and
the decline in customer activity in these products, leading to lower income from trading on
behalf of customers and from portfolio management in the second half of the year. However,
the year-end total of this item at 31 December 2012 was EUR 47 million higher than in 2011
due to the repurchase of own securitisation bonds (approximately EUR 229 million) and the
sale of available-for-sale financial assets, mainly fixed-income securities, in the first half of
the year.
The balance of other operating income and expenses in 2012 was less than figure for
2011, as it included most of the cost of the contributions to the Deposit Guarantee Fund
pursuant to the new regulations introduced by RDL 19/2011 and RD 771/2011, which called
for a higher weighting on deposits and, as a result, a higher cost for the purposes of the
Deposit Guarantee Fund. Nevertheless, as the changes brought about by RD 771/2011 were
subsequently repealed by RDL 24/2012, the cost of the contribution to the Deposit
Guarantee Fund will decrease in future periods.
The above, coupled with dividends from investees, left Bankia with gross income of EUR
3,702 million in 2012, a decrease of EUR 84 million from 2011.
Administrative expenses, including staff costs and general administrative expenses,
amounted to EUR 1,821 million in 2012, EUR 99 million less than 2011. The Integration Plan
for the banks comprising Bankia progressed in a highly satisfactory manner this year. Hence,
savings in staff costs and other synergies arising from the process of group restructuring had
a significant effect on the income statement. That said, the impact should be even greater in
2013 once the Group's efficiency policies are fully implemented.
12
To further strengthen its balance sheet and comply with the commitments of the BFABankia Group's Recapitalisation Plan, the Bank continued to make large provisions and writedowns in 2012. Total provisions, including provisions for the impairment of financial assets,
non-financial assets, non-current assets held for sale (included in "Other gains and losses")
and other net charges, were slightly over EUR 23,100 million. "Impairment losses on financial
assets (net)" amounted to EUR 18,116 million and reflected extraordinary write-downs on
real estate assets, including those transferred to the SAREB, and other loans and advances to
customers and businesses in order to raise coverage levels in these portfolios.
The strong provisioning effort led Bankia to report a pre-tax loss for 2012 of EUR 21,545
million. After deduction of income tax, the loss for the year of Bankia, S.A. amounted to EUR
18,306 million.
4. SOLVENCY AND CAPITAL
As indicated previously, a series of measures were adopted in 2012 aimed at
recapitalising, restructuring and reinforcing the Spanish banking system in order to shore up
confidence in the system and enable it to fulfil its mission of channelling credit to the real
economy. These measures had a considerable impact on the Bankia Group's capital adequacy
in 2012.
During the year, the Spanish government enacted Royal Decree-Laws 2/2012 (amended
by Laws 8/2012 and 9/2012) and 18/2012 (substituted and completed by Law 8/2012). These
regulations, coupled with mandatory write-downs of assets prior to transfer to the SAREB
(Law 8/2012 and RD 1559/2012), required considerable effort by the Bankia Group in terms
of provisions for impairment of real estate and related assets. Additionally, Law 9/2012 and
Bank of Spain Circular 7/2012 changed both the definition and requirements of "Principal
Capital" introduced in 2011 by Royal Decree-Law 2/2011 to make it equivalent to Core Tier I
according to the European Banking Authority (EBA). As a result, from 1 January 2013, the
Bankia Group's principal capital must amount to at least 9% of its risk-weighted exposures,
compared to the previous 8% level required since the Bank's listing on the stock exchange.
On top of these regulatory developments, the Basel Committee on Banking Supervision,
in light of the conclusions drawn from the ongoing financial crisis, developed a set of reforms
known as BIS III designed to make the banking industry more resilient. These rules, which are
stricter than BIS II in terms of capital adequacy and liquidity, are expected to be adopted
gradually between the date they become effective, on 1 January 2014, until they are fully
embraced by 1 January 2019. The EBA expects that BIS III will help the financial sector meet
the new capital, liquidity and leverage requirements while achieving reasonable levels of
profits and capital.
13
The measures adopted by the Bankia Group to meet the capital adequacy requirements
fall under the Recapitalisation Plan approved by the European Commission in November
2012. Targets of this plan include a considerable reduction in the size of the balance sheet
over the coming years and an efficiency plan to boost earnings, as well as the following:

Reinforcement of capital, through a capital injection by the FROB of EUR 13,459
million, in addition to the advance of EUR 4,500 million injected by the FROB in
September, and the issue of EUR 10,700 million of instruments convertible into
capital of Bankia underwritten by BFA.

Transfer to SAREB of a large part of the assets related to its real estate activity.

Conversion of hybrid instruments as per the terms set out in the Memorandum of
Understanding on Financial-Sector Policy and Law 9/2012, which could generate
around EUR 4,800 million of capital for the Bankia Group.
The first two measures were already adopted by the end of 2012. The conversion of the
hybrid instruments into newly issued Bankia shares is expected to take place sometime in the
early months of 2013. Nevertheless, the final amount of the capital increase will depend on
the outcome of the arbitration proceedings, currently awaiting a ruling.
The Bankia Group's BIS II ratio at 31 December 2012 was 9.8%, with a capital cushion of
EUR 1,887 million above the minimum regulatory requirement of 8%.
5.- KEY RISK FACTORS FACING THE BUSINESS
Information concerning Bankia's risk factors is provided in Note 3 to the accompanying
consolidated financial statements.
6.- TREASURY SHARES
At year-end 2012, the Bank held slightly over EUR 1 million in treasury shares.
7.- EVENTS AFTER THE REPORTING PERIOD
1. On 8 February 2013, Bankia signed an agreement with the majority of its union
representatives (CCOO, UGT, ACCAM, SATE and CSICA, which combined represent
97.86% of represented employees) regarding a series of measures on redundancies,
changes to working conditions, and functional and geographic mobility, which are
intended to help ensure the future viability of the Bank while complying with the
requirements of the Strategic Plan and the Recapitalisation Plan approved by the
14
Under this agreement, the following measures will remain in place until 31 December
2015:
(i)
Redundancies for a maximum of 4,500 employees, with redundancy
packages depending on the age of those affected.
(ii)
Changes to the working conditions of employees that continue to work at
the Bank, through measures to eliminate or reduce fixed remuneration
conditions, variable remuneration conditions, pension plan contributions,
entitlements for risk and promotion measures
The agreement encourages voluntary redundancies and employability with the creation
of an employment pool for those affected, while also enabling Bankia to move towards
an efficiency ratio below 50%.
The commitments derived from these agreements are adequately covered with
provisions recognised for this purpose at 31 December 2012.
2. On 1 March 2013, within the framework of the active management of its debt issues,
Bankia, S.A. announced a tender offer to all holders of certain mortgaged covered bonds
under the following terms:
(i)
The tender offer securities were purchased pursuant to an unmodified
Dutch auction procedure. The purchase price paid by Bankia to holders of
the tender offer securities whose offers were accepted was equal to the
price specified by the holders in their tender instructions.
(ii)
Holders of tender offer securities whose tenders were accepted received,
together with the purchase price described above, an amount equal to the
accrued unpaid interest on the tender offer securities from the last interest
payment date (inclusive) until the date of settlement of the offer
(exclusive).
(iii)
The deadline for submitting tender instructions was 12 March 2013, with
acceptances to purchase securities for a nominal amount of EUR
1,217,650,000.
The objective of the tender offer was to optimise the Bank's funding structure in the
wholesale market, as well as the duration and cost of future debt, and strengthen its
balance sheet, all in a context of prudent liquidity management.
No other significant events took places between 31 December 2012 and the date of
authorisation for issue of these financial statements other than those mentioned above.
15
8.- RESEARCH, DEVELOPMENT AND TECHNOLOGY
Bankia continued to carry out a number of R&D projects and developed systems to
enhance its commercial, business and risk management activities in 2012. The main projects
and activities were as follows:

External valuation model: research applied to valuation models (price and risk) of exotic
products (which have no analytical solution) through calculation of the yield curve. The
model is able to value products such as fixed-income securities, equities or hybrid
instruments. This project was designed to generate new models enabling Bankia to
measure prices and risks in the financial environment. The cost of this project in 2012
was EUR 395 thousand, representing 9% of the total estimated cost of the project.

Digital signature system: product designed to enhance the efficiency of the branch
network by substituting manual signatures on paper forms with digitiser tablets for all
customer transactions with the Bank. The branches that incorporate the digital signature
system stand to achieve substantial cost savings with this project. In 2012, the Bank
acquired 3,000 digital tablets at a cost of EUR 506 thousand, representing approximately
8% of the total project cost.

Contactless card: a project to include contactless payment in bank cards in addition to
traditional payment (Europay, MasterCard, VISA or EMV), allowing for fast, easy and
secure purchases. In 2012, work was carried out on developing a potential pilot with the
Madrid Regional Transport Consortium (Consorcio de Transportes de Madrid) for
recharging transportation passes using contactless cards at automatic machines and
ATMs. The cost of the pilot programme was EUR 700 thousand, representing 72% of the
total project cost.

Signage model: a project consisting of installing larger lighting devices outside the branch
offices using low-consumption LED technology and, inside, a series of dynamic devices
based on LCD monitors and projection allowing for centralised distribution of marketing
content. EUR 432 thousand was invested in this project in 2012, representing 14% of the
total estimated cost.
The Bank is also carrying out the following technological innovation projects:

New commercial model: a process engineering project designed to transform the
traditional financial terminal into a single branch office desk standardising all office
processes (e.g. commercial, operations, and internal management) and integrating all
commercial tools available. This model promotes the feedback of data to the Marketing
department and the structuring of a comprehensive commercial process, providing
customer loyalty or product penetration scorecards and facilitating commercial activity
to customers. In 2012, the Bank embarked on the "Commercial Model Evolution" project,
incurring a cost of EUR 420 thousand, representing approximately 7% of the total project
cost.
16

Management of foreclosed assets: this consists of the development of a system for
managing, administering, marketing and selling the assets foreclosed by Bankia through
judicial proceedings in execution of unpaid debts or assets received in payment of debts.
This management system includes features such as integration with accounting tools,
automation of purchase-sale proposals to committees and electronic signature and
digitalisation of files. In addition, a management information system and an internet
portal were developed whereby users can consult and contract properties for rent or
sale. The cost of this project in 2012 was EUR 606 thousand, representing approximately
24% of the total estimated cost of the project.

Corporate guarantee systems (CGS): allows for comprehensive control of guarantees
provided by customers, providing more accurate calculation of the risk of each lending
transaction and, accordingly, mitigation and savings in the use of regulatory capital in the
related transactions. This system marks a considerable technological advance relative to
previously existing systems, which did not entail any unified or automated applications to
manage the full life cycle of guarantees provided by customers to the Bank. The cost of
this project in 2012 was EUR 819 thousand, representing approximately 33% of the total
estimated cost of the project.

Re-engineering of Bankia's operational platform: development of a new operational
platform for Bankia. This project affects all the Bank's operations and processes, linking
them to current functionalities without losing any data on the various entities comprising
the Group. Once fully developed, this system will enable Bankia to operate in the same
way with all customers, increasing existing technological infrastructures only slightly,
enhancing the efficiency of the systems and creating new, faster and more efficient
processes. Work carried out included technological infrastructure work, alignment of
systems, product certification and adaptations. The cost of this project in 2012 was EUR
6,062 thousand, representing approximately 35% of the total estimated cost of the
project.
9.- HUMAN RESOURCES
Information concerning the Bankia Group's personnel is provided in Notes 2.15 and 36 to
the accompanying financial statements.
10.- ENVIRONMENTAL IMPACT
In view of the business activities carried on by Bankia, it does not have any
environmental responsibilities, expenses, assets, provisions or contingencies that might be
material with respect to its equity, financial position or results.
17
11.- BUSINESS OUTLOOK
The economic and financial scenario for 2013 will again be particularly complex. Global
economic growth looks set to remain modest, in line with 2012, and below the long-run
average for the second year in a row. Differences between developed and emerging
economies should persist, with Europe lagging among the developed economies. The year
should see China, along with the main emerging economies, achieve a soft landing, the EMU
and Japan emerge from recession (more gradual in the case of the EMU) and the US
economy weaken due to fiscal consolidation.
Tension in the debt markets of peripheral euro area countries has eased, but there is a
threat that it could flare up again after spring if growth disappoints, deficit targets are missed
widely or political and social instability escalates. In any case, the start-up of the ECB bondbuying programme should help normalise markets. Regardless of how the sovereign crisis
unfolds, the ECB's key intervention rate will probably be held steady in 2013, unless
expectations of recovery for the area are not met.
The Spanish economy is likely to remain weak in 2013, at least in the early part of the
year. On top of the worse outlook for activity in Europe, internally Spain is faced with a
struggling labour market, tax hikes and the need for further fiscal adjustment and the
correction of imbalances. These factors will delay the emergence from the crisis and the
return to growth. Accordingly, analysts forecast a slightly larger contraction in GDP (-1.5%)
than in 2012. The Spanish economy should start to recover slightly in 2013, driven by exports
in line with the improvement in external demand and gains in competitiveness, while
domestic demand should bottom out. Meanwhile, as the European debt crisis is resolved and
financial stress eases, the uncertainty that has kept agents from adopting spending decisions
will be removed.
In the foregoing economic and financial scenario, Bankia will face another complicated
year in 2013, which will be marked by continued weakness of activity in markets, strict
regulatory requirements and a highly competitive environment. Nevertheless, the changes
adopted within the framework of the Group's Restructuring Plan will leave the Bank in a
strong starting position for 2013. It has significantly shored up the risk profile of the balance
sheet by reducing exposure to the real estate risk to virtually negligible levels and through
the provisioning efforts and write-downs, and strengthened the main liquidity and solvency
metrics considerably after implementing all the measures set out in the Recapitalisation Plan.
In this setting, Bankia has laid the groundwork to becoming a solvent, profitable and efficient
Bank. To achieve this, the top priority is to boost profitability based on the commitments
assumed in the Restructuring Plan, focusing efforts on the following:

Disposal of non-strategic assets to focus on the retail banking business with a greater
weight of business lending, resulting in the sale or liquidation of certain subsidiaries and
investees not considered strategic for the Bank's business.
18

Improved competitive position with a view to raising its market shares, growing the
customer base and customer loyalty, and increasing the volume of the products
marketed.

Greater efficiency in both the short and medium terms. This goal is reflected in the
agreement signed on 8 February 2013 with the majority of the Bank's union
representatives, which will reduce capacity in terms of branches and human resources.

Reduction of the risk premium by applying best risk management practices, which
includes action in all stages: authorisation of transactions, monitoring and alerts to
detect future defaults and curtail non-performing loans, and the recovery activity.
12.- CORPORATE GOVERNANCE REPORT
Attached hereto as an appendix.
19
Bankia, S.A.
Financial Statements and Directors’ Report for
the year ended 31 December 2012, together
with Auditors’ Report
Translation of a report originally issued in Spanish based on our
work performed in accordance with the audit regulations in force
in Spain and of financial statements originally issued in Spanish
and prepared in accordance with the regulatory financial reporting
framework applicable to the Company (see Notes 1 and 45). In
the event of a discrepancy, the Spanish-language version
prevails.
Translation of a report originally issued in Spanish based on our work performed in accordance with the audit regulations in
force in Spain and of financial statements originally issued in Spanish and prepared in accordance with the regulatory
financial reporting framework applicable to the Company (see Notes 1 and 45). In the event of a discrepancy, the Spanishlanguage version prevails.
Auditors’ report on financial statements
To the Shareholders of Bankia, S.A.:
1.
We have audited the financial statements of Bankia, S.A. (“Bankia” or “the Bank”), which comprise the balance
sheet at 31 December 2012 and the related income statement, statement of recognised income and expense,
statement of changes in total equity, statement of cash flows and notes to the financial statements for the year then
ended. The directors are responsible for the preparation of Bankia’s financial statements in accordance with the
regulatory financial reporting framework applicable to the Bank (identified in Note 1 to the accompanying
financial statements) and, in particular, with the accounting principles and rules contained therein. Our
responsibility is to express an opinion on the financial statements taken as a whole based on our audit work
performed in accordance with the audit regulations in force in Spain, which require examination, by means of
selective tests, of the evidence supporting the financial statements and evaluation of whether their presentation, the
accounting principles and policies applied and the estimates made comply with the applicable regulatory financial
reporting framework.
2.
In our opinion, the accompanying financial statements for 2012 present fairly, in all material respects, the equity
and financial position of Bankia at 31 December 2012, and the results of its operations and its cash flows for the
year then ended, in conformity with the regulatory financial reporting framework applicable to the Bank and, in
particular, with the accounting principles and rules contained therein.
3.
Without qualifying our audit opinion, we draw attention to the disclosures made in Note 1 to the accompanying
financial statements in relation to the approval on 28 November 2012 by the European Commission, the Bank of
Spain and the Fund for Orderly Bank Restructuring (“FROB”) of the Recapitalisation Plan of the Banco
Financiero y de Ahorros Group (“the BFA Group”), of which the Bank is a subsidiary, for the period 2012-2017
(“the Recapitalisation Plan”). This Plan, prepared within the framework of the content of the Memorandum of
Understanding (“MoU”) signed in July 2012 by the Spanish authorities and the euro zone countries, defines the
fundamental guidelines for the recapitalisation and restructuring of the BFA Group in the light of the results of the
stress tests conducted in 2012.
The BFA Group’s capital requirement contained in the Recapitalisation Plan was finally estimated at EUR 24,552
million, of which approximately EUR 15,500 million relate to the estimated requirement of the Bankia Group.
Following the approval of the Recapitalisation Plan, prior to 2012 year-end, Bankia launched an issue of
contingent convertible bonds for an amount of EUR 10,700 million, which were subscribed in full by Banco
Financiero y de Ahorros, S.A.U., Bankia’s main shareholder, and which have already been included, pursuant to
the applicable legislation, for the purposes of calculating the Bankia Group’s capital adequacy at 31 December
2012, thus enabling the Group to achieve the minimum ratio required by Bank of Spain Circular 3/2008 (see Notes
1, 4 and 23 to the accompanying financial statements). Without prejudice to the above and to the stipulations of
Additional Provision Eleven of Royal Decree-Law 24/2012, of 31 August, on restructuring and resolution of credit
institutions (“RD-Law 24/2012”), it must be stated that as a result of the Bank’s equity position at 31 December
2012 the Bankia Group’s principal capital ratio stood at 4.4%, which is below the minimum required by the
legislation regulating this capital requirement. The Bank’s directors consider that this capital shortfall will be
covered, as stipulated in the Recapitalisation Plan, once the capital increase to be performed by the Bank has taken
place, in which hybrid financial instruments issued by the BFA Group amounting to approximately EUR 4,800
million will be exchanged. These exchanges will be made within the framework of the principles and objectives
relating to the distribution of the restructuring costs of financial institutions established in Law 9/2012, of 14
November, on restructuring and resolution of credit institutions (“Law 9/2012”) and in RD-Law 24/2012, whereby
the holders of hybrids or subordinated debt, following the conversion thereof into capital, will absorb losses. Also,
it must be stated that, in compliance with Royal Decree-Law 24/2012 and the Recapitalisation Plan, the FROB has
publicly announced that, although it has not yet specified the exact amount by which the par value of the Bankia
shares existing at 31 December 2012 will have to be reduced, it expects that this amount will have to be significant
in order to enable the projected capital increases to be performed with the consequent assumption of losses due to
the possible dilution of the shares existing at 31 December 2012 (see Note 23 to the accompanying financial
statements). At the date of issue of our report, the exchange of the hybrid financial instruments and the reduction
of the par value of the Bankia shares had not yet taken place and, accordingly, it was not possible to ascertain the
precise impact that these processes will have on the distribution of the equity of the Bank among the various items
forming it at 31 December 2012.
Furthermore, in relation to the commitments assumed by the BFA Group in the Recapitalisation Plan and pursuant
to Additional Provision Nine of Law 9/2012, which obliges credit institutions meeting certain conditions to
transfer the assets included in Additional Provision Eight of Law 9/2012 to the Bank Restructuring Asset
Management Company (“SAREB”), in December 2012 the transfer from Bankia to the SAREB of certain property
assets and real estate industry financing transactions with a total gross value of EUR 32,415 million, for a total
transfer price of EUR 17,887 million, was executed in a public deed. The price of these transferred assets was paid
to the Bank through the delivery of debt instruments issued by the SAREB and guaranteed by the Spanish state,
which are classified under “Held-to-Maturity Investments” in the accompanying balance sheet at 31 December
2012 (see Note 1 to the accompanying financial statements).
4.
The accompanying directors’ report for 2012 contains the explanations which the directors consider appropriate
about Bankia’s situation, the evolution of its business and other matters, but is not an integral part of the financial
statements. We have checked that the accounting information in the directors’ report is consistent with that
contained in the financial statements for 2012. Our work as auditors was confined to checking the directors’ report
with the aforementioned scope, and did not include a review of any information other than that drawn from
Bankia’s accounting records.
Deloitte, S.L.
Registered in ROAC under no. S0692
Francisco Celma
20 March 2013
3
Bankia, S.A. and subsidiaries forming the
Bankia Group
__________________
Consolidated financial statements for the year ended
31 December 2012
Translation of a report originally issued in Spanish based on our work performed in accordance with the audit regulations in force in
Spain and of consolidated financial statements originally issued in Spanish and prepared in accordance with the regulatory financial
reporting framework applicable to the Group (see Notes 1-3 and 50). In the event of a discrepancy, the Spanish-language version prevails.
Contents
Page
Bankia Group
Consolidated balance sheet at 31 December 2012 and 2011
1
Bankia Group
Consolidated income statement for the years ended 31 December 2012
and 2011
2
Bankia Group
Consolidated statement of recognised income and expense for the years
ended 31 December 2012 and 2011
3
Bankia Group
Statement of changes in total equity for the years ended 31 December
2012 and 2011
4
Bankia Group
Consolidated statement of cash flows for the years ended 31 December
2012 and 2011
6
Bankia Group
Notes to the consolidated financial statements for the year ended 31
December 2012
9 to 223
Translation of consolidated financial statements originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to the Group (see Notes 1-3 and 50). In the event of a discrepancy, the Spanish-language version prevails.
BANKIA, S.A. AND SUBSIDIARIES FORMING THE BANKIA GROUP
Consolidated balance sheet at 31 December 2012 and 2011
ASSETS
31/12/12
31/12/11 (*)
31/12/12
LIABILITIES
1. Cash and balances with central banks (Note 8)
4,569,525
6,279,840
2. Financial assets held for trading (Note 9)
35,772,072
39,874
323,863
22,951
35,385,384
282,966
29,082,670
16,248
1,329,442
38,866
27,698,114
1,320,297
16,486
16,486
-
76,643
62,873
13,770
-
4. Available-for-sale financial assets (Note 11)
39,686,164
39,686,164
8,963,941
25,269,226
23,922,208
1,347,018
16,474,553
5. Loans and receivables (Note 12)
144,340,771
7,988,290
134,137,132
2,215,349
109,345,404
207,790,562
18,189,989
184,093,819
5,506,754
90,275,397
29,159,493
4,456,923
10,893,609
10,019,034
3. Other financial assets at fair value through profit or loss (Note 10)
6. Held-to-maturity investments (Note 13)
-
-
6,174,397
5,266,487
9. Non-current assets held for sale (Note 15)
9,506,341
3,898,136
10. Investments (Note 16)
10.1. Associates
300,007
300,007
2,349,406
1,397,327
952,079
11. Insurance contracts linked to pensions
405,804
226,947
12. Reinsurance assets
13. Tangible assets (Note 17)
13.1.1. For own use
13.1.2. Leased out under an operating lease
14. Intangible assets (Note 18)
14.1 Goodwill
14.2 Other intangible assets
15. Tax assets
15.1 Current
15.2 Deferred (Note 28)
16. Other assets (Note 19)
16.1 Inventories
16.2 Other
TOTAL ASSETS
1,325
1,100
1,850,402
1,637,987
1,634,183
3,804
212,415
-
3,349,554
2,735,486
2,722,466
13,020
614,068
-
69,407
69,407
222,093
40,804
181,289
9,018,452
109,228
8,909,224
6,380,222
130,345
6,249,877
1,439,711
262,261
1,177,450
282,310,357
1,759,664
1,345,339
414,325
302,846,159
1. Financial liabilities held for trading (Note 9)
3. Financial liabilities at amortised cost (Note 20)
6. Liabilities associated with non-current assets held for sale (Note 15)
7. Liabilities under insurance contracts
8. Provisions (Note 22)
8.1. Provisions for pensions and similar obligations
8.2. Provisions for taxes and legal contingencies
8.3. Provisions for contingent liabilities and commitments
8.4. Other provisions
9. Tax liabilities
9.1. Current
10. Other liabilities (Note 23)
TOTAL LIABILITIES
EQUITY
1. Own funds (Note 26)
1.1. Capital
1.1.1 Issued
1.1.2 Less: Uncalled capital
1.2. Share premium
1.3. Reserves
1.3.1 Accumulated reserves (losses)
1.3.2 Reserves (losses) of entities accounted for using the equity method
1.6. Profit/(loss) for the year attributable to the parent
2. Valuation adjustments (Note 25)
2.2. Cash flow hedges
2.6. Entities accounted for using the equity method
3. Non-controlling interests (Note 24)
3.1. Valuation adjustments
3.2. Other
TOTAL EQUITY
MEMORANDUM ITEM
1. Contingent exposures (Note 29)
2. Contingent commitments (Note 29)
31/12/11 (*)
33,655,117
243,722,867
51,954,777
26,080,618
110,904,200
37,334,769
15,640,909
1,807,594
2,790,218
3,401,085
262,414
2,869,192
494,503
78,314
635,899
1,660,476
1,059,423
42,879
1,016,544
606,032
26,878,859
26,366,718
512,141
257,951,009
22,431,616
22,522,463
155,337,878
55,714,147
325,799
1,619,106
2,025,156
2,627
355,928
1,284,496
540,902
85,260
468,805
189,529
1,170,718
106,420
1,064,298
684,290
288,366,348
290,353,083
(5,204,345)
3,987,927
3,987,927
11,986,494
(2,121,180)
(2,070,087)
(51,093)
(1,182)
(19,056,404)
(803,688)
(785,510)
(26,755)
13,686
3,919
8,791
(17,819)
(47,958)
(301)
(47,657)
(6,055,991)
282,310,357
29,632,049
8,458,946
21,173,103
13,068,328
3,465,145
3,465,145
11,643,001
966,504
990,325
(23,821)
(27,649)
(2,978,673)
(703,459)
(527,814)
(71,221)
13,686
13,080
(131,190)
128,207
(95)
128,302
12,493,076
302,846,159
42,153,223
10,373,376
31,779,847
-
33,655,117
-
The accompanying Notes 1 to 50 and Appendices I to VII are an integral part of the consolidated balance sheet at 31 December 2012.
(*) Presented solely and exclusively for comparison purposes. Unaudited.
1
Translation of consolidated financial statements originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to the Group (see Notes 1-3 and 50). In
Consolidated income statement for the years ended 31 December 2012 and 2011
2012
1. Interest and similar income (Note 31)
2. Interest expense and similar charges (Note 32)
4. Return on equity instruments (Note 33)
5. Share of profit/(loss) of companies accounted for using the equity method (Note 34)
6. Fees and commission income (Note 35)
7. Fees and commission expenses (Note 36)
8. Gains and losses on financial assets and liabilities (net) (Note 37)
8.4. Other
9. Exchange differences (net) (Note 38)
10. Other operating income (Note 39)
10.1. Income from insurance and reinsurance contracts issued
10.2. Sales and income from the rendering of non-financial services
10.3. Other operating income
11. Other operating expenses (Note 40)
11.1. Expenses of insurance and reinsurance contracts
11.2. Change in inventories
11.3. Other operating expenses
2011 (*)
7,500,815
7,601,993
(4,411,752)
-
(4,965,188)
-
3,089,063
2,636,805
38,384
(32,404)
31,640
85,741
1,155,121
(163,088)
1,226,940
(165,674)
347,739
360,732
(93,841)
64,132
2,824
(18,004)
399,716
39,040
281,032
33,572
39,066
23,612
376,364
360,609
30,741
258,778
70,588
161,933
86,845
(840,446)
128,088
(461,710)
(37,964)
(212,068)
(78,120)
(108,450)
(590,414)
(275,140)
4,009,799
4,098,695
(2,017,276)
(2,141,922)
12.1. Staff costs (Note 41)
12.2. Other general administrative expenses (Note 42)
13. Depreciation and amortisation charge (Note 43)
(1,353,452)
(663,824)
(275,608)
(1,416,351)
(725,571)
(297,948)
B. GROSS INCOME
14. Provisions (net) (Note 44)
15. Impairment losses on financial assets (net) (Note 45)
15.2. Other financial instruments not measured at fair value through profit or loss
(1,831,704)
(152,937)
(18,931,886)
(3,373,369)
(18,181,736)
(3,114,049)
(750,150)
(259,320)
(19,046,675)
(1,867,481)
16. Impairment losses on other assets (net) (Note 46)
(781,968)
(865,102)
16.2. Other assets
17. Gains/(losses) on disposal of assets not classified as non-current assets held for sale (Note 47)
(57,324)
(724,644)
18,489
(2,553)
(862,549)
(2,350)
19. Gains/(losses) on non-current assets held for sale not classified as discontinued operations (Note 48)
20. Income tax
F. CONSOLIDATED PROFIT/(LOSS) FOR THE YEAR
F.1) Attributable to the parent
F.2) Attributable to non-controlling interests
-
-
(2,379,071)
(1,571,885)
(22,189,225)
(4,306,818)
2,996,614
-
1,330,097
-
(19,192,611)
(2,976,721)
(5)
(86)
(19,192,616)
(2,976,807)
(19,056,404)
(2,978,673)
(136,212)
1,866
Earnings per share (Note 5)
For continuing and discontinued operations
Basic earnings/(loss) per share (euros)
(10.14)
(2.34)
Diluted earnings/(loss) per share (euros)
(**)
(2.34)
For continuing operations
Basic earnings/(loss) per share (euros)
(10.14)
(2.34)
Diluted earnings/(loss) per share (euros)
(2.34)
(**) Note 5 to the accompanying consolidated financial statements includes the figure for diluted loss per share based on the potential fluctuation range for the
conversion of the Bank's convertible bonds.
The accompanying Notes 1 to 50 and Appendices I to VII are an integral part of the consolidated income statement for the year ended 31 December 2012.
2
Consolidated statement of recognised income and expense for the years ended 31 December 2012 and 2011
A) CONSOLIDATED PROFIT/(LOSS) FOR THE YEAR
2012
2011 (*)
(19,192,616)
(2,976,807)
(100,435)
(703,554)
(368,137)
(744,431)
(172,131)
(791,430)
(183,447)
46,999
(12,559)
-
63,523
(111,223)
2. Cash flow hedges
15,046
(113,206)
48,477
1,983
-
-
-
-
-
19,551
-
19,551
-
-
-
-
(9,367)
12,908
(9,367)
12,908
-
-
-
-
12,559
-
-
-
7. Entities accounted for using the equity method
-
-
12,559
-
-
-
113,371
(131,190)
113,371
(131,190)
-
-
-
-
-
-
87,616
250,831
(19,293,051)
(3,680,361)
(19,156,633)
(3,682,132)
(136,418)
1,771
9. Income tax
C 1) Attributable to the parent
C 2) Attributable to non-controlling interests
The accompanying Notes 1 to 50 and Appendices I to VII are an integral part of the consolidated statement of recognised income and expense for the year
ended 31 December 2012.
3
Consolidated statement of changes in total equity for the year ended 31 December 2012
EQUITY ATTRIBUTABLE TO THE PARENT
OWN FUNDS
RESERVES
Share capital
1.1 Adjustments due to accounting policy change
1.2 Error adjustments
Accumulated
reserves (losses)
Share premium
Reserves
(losses) of
entities
accounted for
using the
equity
method
Other
equity
instruments
Less:
treasury
shares
Less:
Dividends
and
remuneration
Profit/(loss) for the
year attributable to
the parent
VALUATION
ADJUSTMENTS
Total own funds
NONCONTROLLING
INTERESTS
TOTAL
TOTAL EQUITY
3,465,145
11,643,001
990,325
(23,821)
-
27,649
(2,978,673)
-
13,068,328
(703,459)
12,364,869
128,207
12,493,076
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,465,145
11,643,001
990,325
(23,821)
-
27,649
(2,978,673)
-
13,068,328
(703,459)
12,364,869
128,207
12,493,076
-
-
-
-
-
-
(19,056,404)
-
(19,056,404)
(100,229)
(19,156,633)
(136,418)
(19,293,051)
522,782
343,493
(3,060,412)
(27,272)
-
(26,467)
2,978,673
-
783,731
-
783,731
(39,747)
743,984
865,200
522,782
343,493
(1,075)
-
-
-
-
-
865,200
-
865,200
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4.5 Reclassification of financial liabilities to other
equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
4.6 Reclassification of other equity instruments to
financial liabilities
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(72,142)
-
-
(26,467)
-
-
(45,675)
-
(45,675)
-
(45,675)
-
-
-
(2,978,673)
-
-
-
2,978,673
-
-
-
-
-
4.10 Increases/(decreases) due to business
combinations
-
-
-
-
-
-
-
-
-
-
-
-
-
4.11 Discretionary transfer to welfare projects
and funds
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(75,541)
(6,055,991)
-
-
(8,522)
(27,272)
-
-
-
-
(35,794)
-
(35,794)
(39,747)
3,987,927
11,986,494
(2,070,087)
(51,093)
-
1,182
(19,056,404)
-
(5,204,345)
(803,688)
(6,008,033)
(47,958)
The accompanying Notes 1 to 50 and Appendices I to VII are an integral part of the consolidated statement of changes in total equity for the year ended 31 December 2012.
4
Consolidated statement of changes in total equity for the year ended 31 December 2011 (*)
EQUITY ATTRIBUTABLE TO THE PARENT
OWN FUNDS
RESERVES
1.1 Adjustments due to accounting policy change
1.2 Error adjustments
Accumulated
reserves
(losses)
Share
premium
Share capital
Reserves (losses)
of entities
accounted for
using the equity
method
Other equity
instruments
Less:
treasury
shares
Profit/(loss)
for the year
attributable
to the parent
Less:
Dividends and
remuneration
Total own
funds
VALUATION
ADJUSTMENTS
NONCONTROLLING
INTERESTS
TOTAL
TOTAL
EQUITY
1,818,040
10,200,000
992,219
-
-
(34,054)
-
-
12,976,205
-
12,976,205
728,116
13,704,321
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,818,040
10,200,000
992,219
-
-
(34,054)
-
-
12,976,205
-
12,976,205
728,116
13,704,321
-
-
-
-
-
-
(2,978,673)
-
(2,978,673)
(703,459)
(3,682,132)
1,771
(3,680,361)
1,647,105
1,443,001
(1,894)
(23,821)
-
6,405
-
-
3,070,796
-
3,070,796
(601,680)
2,469,116
3,068,746
1,649,145
1,443,001
(23,400)
-
-
-
-
-
3,068,746
-
3,068,746
-
(2,040)
-
2,040
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,507
-
-
6,405
-
-
7,912
-
7,912
-
7,912
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17,959
(23,821)
-
-
-
-
(5,862)
-
(5,862)
(601,680)
(607,542)
3,465,145
11,643,001
990,325
(23,821)
-
(27,649)
(2,978,673)
-
13,068,328
(703,459)
12,364,869
128,207
12,493,076
5
Consolidated statement of cash flows for the years ended 31 December 2012 and 2011
1. Consolidated profit/(loss) for the year
2.2. Other
5. Income tax receipts/(payments)
2012
(8,294,103)
(19,192,616)
31,944,563
275,608
31,668,955
5,168,605
598,997
60,157
(5,664,503)
13,909,433
(3,735,479)
(26,214,655)
(512,141)
(25,920,405)
217,891
2011 (*)
(2,968,305)
(2,976,807)
4,553,584
297,948
4,255,636
(13,340,572)
(575,374)
7,654
(12,081,635)
4,427,373
(5,118,590)
8,795,490
968,826
7,696,901
129,763
-
B) CASH FLOWS FROM INVESTING ACTIVITIES
6. Payments
6.3. Investments
7. Proceeds
7.3. Investments
1,297,044
43,114
42,959
155
1,340,158
148,867
100
351,894
812,830
26,467
18,060
2,421,737
92,977
75,660
16,228
428,063
1,808,809
2,439,797
230,967
1,630,831
577,999
-
8. Payments
8.1. Dividends
9. Proceeds
5,286,744
403,990
255,026
148,964
5,690,734
4,615,110
866,275
209,349
-
2,724,843
479,001
73,152
405,849
3,203,844
24,762
3,092,146
81,064
5,872
-
-
(1,710,315)
(225,402)
6,279,840
6,505,242
4,569,525
6,279,840
MEMORANDUM ITEM
1.1. Cash
of which: held by consolidated entities but not drawable by the Group
794,792
3,774,733
4,569,525
-
837,712
5,442,128
6,279,840
-
The accompanying Notes 1 to 50 and Appendices I to VII are an integral part of the consolidated statement of cash flows for the year ended
31 December 2012.
6
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31
DECEMBER 2012
Page
(1) Description of the Group, beginnings of the incorporation of Bankia, reporting framework applied to draw up the consolidated financial
statements and other information
(1.1) Group description
(1.3) Reporting framework applied to draw up the consolidated financial statements
(1.13) Information on deferred payments to suppliers. Third additional provision. “Disclosure requirement" in Law 15/2010 of 5 July (1.14) Information on the mortgage market
(1.15) Segment reporting and distribution of revenue from ordinary Group activities, by categories of activities and geographic markets
(2.1) Business combinations and consolidation
(2.2) Financial instruments: initial recognition, derecognition of financial instruments, fair value and amortised cost of financial instruments,
classification and measurement and reclassification among categories
(2.6) Offsetting
(2.12) Investment funds, pension funds, assets under management and savings insurance policies marketed and/or managed by the Group
(2.13) Staff costs
(2.14) Income tax
(2.17) Inventories
(2.18) Insurance transactions
(2.21) Consolidated statement of cash flows
(2.24) Consolidated statement of recognised income and expense
(2.25) Statement of changes in equity
(3) Risk management
(4.3) Capital management objectives, policies and processes
(5) Earnings per share
7
9
9
9
21
26
27
27
27
27
27
27
28
29
32
33
38
40
42
42
46
51
53
55
56
56
57
57
59
60
61
61
67
68
70
71
72
73
74
75
76
76
77
78
79
79
92
94
96
96
101
101
102
102
103
105
105
(15) Non-current assets held for sale and Liabilities associated with non-current assets held for sale
(16) Investments
(18) Intangible assets
(19) Other assets
(21) Liabilities under insurance contracts
(22) Provisions
(24) Non-controlling interests
(26) Equity - Share capital and share premium, treasury share transactions, reserves and other information
(27) Fair value
(28) Tax matters
(30) Contribution to consolidated profit or loss by company
(34) Share of profit/loss of entities accounted for using the equity method
(40) Other operating expenses - Other operating expenses
(47) Gains/(losses) on disposal of financial assets not classified as non-current assets held for sale
(50) Explanation added for translation to English
109
110
111
111
111
113
114
116
122
124
127
131
135
137
138
140
145
145
147
147
151
153
157
167
176
181
181
182
182
182
183
183
183
184
184
184
185
192
193
193
193
194
194
194
195
197
Appendix I
Appendix II
Appendix III
Appendix IV
Appendix V
Appendix VI
Appendix VII
198
205
206
215
219
220
223
8
Translation of consolidated financial statements originally issued in Spanish and prepared in accordance with the
regulatory financial reporting framework applicable to the Group (see Notes 1-3 and 50). In the event of a discrepancy,
the Spanish-language version prevails.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2012
(1) Description of the Group, beginnings of the incorporation of Bankia, reporting framework
applied to draw up the consolidated financial statements and other information
(1.1) Group description
Bankia, S.A. (the “Bank” or “Bankia”) is a financial institution incorporated under the name Altae
Banco, S.A. (initially under code 0099 in the Bank of Spain's financial institutions register). In 2011, it
changed its corporate name to the current name of Bankia, S.A. and was assigned code 2038 in the
Bank of Spain’s financial institutions register. As a credit institution, the Bank is subject to the
supervisory authority of the Bank of Spain. On 16 June 2011, Bankia's registered office was
transferred to calle Pintor Sorolla, 8, Valencia. The company bylaws may be consulted, together with
other relevant legal information, at Bankia's registered office and on its website (www.bankia.com).
Bankia’s bylaws stipulate the activities it may engage in, which are those commonly carried on by
credit institutions and, in particular, satisfy the requirements of Law 26/1988, of 29 July, on the
Discipline and Intervention in Credit Institutions.
On 30 July 2010, Caja de Ahorros y Monte de Piedad de Madrid (until that date, the majority
shareholder of Altae Banco, S.A.), Caja de Ahorros de Valencia, Castellón y Alicante (Bancaja), Caja
Insular de Ahorros de Canarias, Caja de Ahorros y Monte de Piedad de Ávila, Caixa d’Estalvis
Laietana, Caja de Ahorros y Monte de Piedad de Segovia and Caja de Ahorros de La Rioja (referred
to collectively as “the Cajas”) signed an integration agreement (the “Integration Agreement”) calling for
the incorporation of a contractually-based consolidable group of credit institutions. The Integration
Agreement made provision for the creation of a group comprising “the Cajas” and implemented as an
Institutional Protection Scheme (“IPS”) in accordance with the requirements and conditions set out in
Directive 2006/48/EC (implemented in Spanish law under Article 26.7 of Royal Decree 216/2008 and
rule 15 of Bank of Spain Circular 3/2008 to Credit Institutions on the calculation and control of
minimum capital requirements) and in Law 13/1985 of 25 May on the investment ratios, capital and
reporting requirements of financial intermediaries).
The Integration Agreement originally sought to arrange the Group arising from the Integration
Agreement as an integrated organisation that qualifies as a consolidable group for accounting and
regulatory purposes and as a concentration vehicle for the purposes of competition law. The
Agreement set out integrated management and ownership – within the confines of law and without
prejudice to the rights of the owners of non-controlling interests – of the Group’s business investments
(barring certain exceptions established in the Agreement itself) and therefore centralises the decisionmaking process in respect of existing and future portfolio investments and divestments.
On 3 December 2010, the Central Body of the IPS was incorporated under the name Banco
Financiero y de Ahorros, S.A. (“BFA”). The entity was entered in the Valencia Companies Register on
7 December 2010 and placed on the Bank of Spain Savings Banks Register on 13 December 2010.
Also on 13 December 2010, the Board of Directors of BFA ratified its adhesion to the Integration
Agreement as the parent of the group arising from the Integration Agreement. On the same date, the
“Cajas” contributed to BFA the right to receive 100% of the results of all their businesses, carried out
in all regions as from 1 January 2011 (the “Mutuality Right”), subject to a statement from the Bank of
Spain indicating that no objections are made to the arrangement.
9
At the Annual General Meeting held on 3 December 2010, the shareholders of BFA approved the
issue of convertible preference shares amounting to EUR 4,465 million, which were subscribed and
paid exclusively by the Fund for Orderly Bank Restructuring (FROB).
On 30 December 2010, the “Cajas” and BFA signed an addendum to the Integration Agreement
whereby the “Cajas” undertook to assign the voting rights in their subsidiaries, so that the policies
through which BFA will exercise control over the entities, as established in the Integration Agreement,
could be designed and implemented. For accounting purposes, the Integration Agreement sets up
BFA as the parent of the Banco Financiero y de Ahorros Group, whereas the “Cajas” and their
subsidiaries are Group subsidiaries, insofar as BFA had the power to oversee the financial and
operational policies of the other Group entities.
On 28 January 2011, the “Cajas” and BFA signed a second addendum to the Integration Agreement,
whereby the “Cajas” assigned all the assets and liabilities of their retail banking businesses to BFA.
The “Cajas” will continue to manage the retail banking businesses in their native territory, to the extent
of the powers delegated to them by BFA.
Subsequently, between 14 February 2011 and 17 February 2011, the boards of directors of the
“Cajas” and of BFA approved the projects to de-merge the banking and banking-related assets and
liabilities of the “Cajas” for integration in BFA (the "De-Merger Projects" or the "First De-Merger
Project"). These projects were duly filed in the corresponding Companies Registers. Under the DeMerger Projects, the contribution of the “Cajas” de-merged assets and liabilities to BFA would be
compensated through the aforementioned Mutuality Right. Accordingly, the “Cajas” will not receive
any compensation for the contribution other than the obligations set out under the Mutuality Right. The
balance sheets of the “Cajas” at 31 December 2010 were deemed to be the de-merger balance
sheets, with the exceptions set out in the De-Merger Projects of assets and liabilities other than those
stipulated above which were not de-merged. The de-merger is effective for accounting purposes as of
1 January 2011.
On 17 February 2011, the “Cajas” and BFA signed a third addendum to the Integration Agreement in
order to allow BFA to adopt the most appropriate structure for its flotation. On 18 February 2011, the
Spanish Cabinet approved Royal Decree-Law 2/2011 of 18 February 2011 to strengthen the financial
system (“RDL 2/2011”). This decree-law introduced and defined a new solvency requirement to be
met by the institutions ("principal capital") and, among other provisions, established that: (i) credit
institutions must have a principal core capital ratio of at least 8% of their total risk-weighted exposures,
calculated in accordance with Law 13/1985 of 25 May, on the investment ratios, capital and reporting
requirements of financial intermediaries and the related implementing regulations; and (ii) those credit
institutions that have secured over 20% of funding from the wholesale market and that have placed
less than 20% of capital or voting rights with third parties must have a principal core capital ratio of
10%. On 5 April 2011, the board of directors and the shareholders of BFA, in their general meeting,
approved a second de-merger project for the contribution by BFA to its subsidiary Bankia of a
significant portion of BFA’s banking and financial businesses received from the “Cajas” in the course
of the aforementioned de-mergers (the "Second De-Merger Project"). This Second De-Merger Project
was likewise approved on 6 April 2011 by the Board of Directors and the shareholders of Bankia, a
BFA Group company, at the general meeting (attended by all shareholders).
On 29 April 2011, the “Cajas” and BFA signed a novation to the Integration Agreement to adapt it to
Royal Decree-Law 2/2011 of 18 February, to strengthen the financial system, approving, with effect
from 1 January 2011, the mutual support system and the mutual profit-sharing system set out under
the Integration Agreement.
In connection with the flotation, on 16 June 2011, BFA agreed to apply for admission to trading on the
Madrid, Barcelona, Bilbao and Valencia Stock Exchanges and inclusion on the Stock Exchange
Interconnection System (Continuous Market) of all outstanding shares representing the share capital
of Bankia.
10
On 28 June 2011, the General Meeting of Shareholders and Board of Directors of BFA and,
subsequently, the General Meeting of Shareholders and Board of Directors of Bankia, adopted the
necessary agreements to implement Bankia's market listing by means of a public share offering and
admission to trading (IPO). The related prospectus was registered with the Spanish Securities Market
Commission ("CNMV") on 29 June 2011. Among the agreements implemented, Banco Financiero y
de Ahorros, S.A. resolved to increase Bankia's share capital by EUR 1,649,144,506 through the issue
of 824,572,253 new shares, and to authorise the Board of Directors, in the event of an incomplete
subscription, to declare share capital increased by the amount of the subscriptions actually made
during the public share offering. BFA waived its preferential subscription rights with regard to the
shares associated with the capital increase.
Following approval of Bankia's market listing prospectus, on 20 July 2011, the Bank completed the
IPO and the new shares were officially admitted for trading. The initial share price was EUR 3.75.
Pursuant to the IPO, the Bank issued 824,572,253 new shares at a par value of EUR 2 each, with an
issue premium per share of EUR 1.75, producing a total share capital increase of EUR 1,649,145
thousand, and an issue premium of EUR 1,443,001 thousand.
excluding preferential subscription rights, through the issue and circulation of a maximum of four
hundred and fifty-four million ordinary Bankia, S.A. shares (454,000,000). The capital increase forms
part of the Repurchase Offer for certain preference shares and subordinated debt by BFA (the parent
entity), the results of which, following expiry of the acceptance period on 23 March 2012, were as
follows:

the total nominal amount of the securities repurchased in the Repurchase Offer was EUR 1,155
million;

the total amount of initial payments (totalling 75% of the aforementioned repurchase amounts)
made on 30 March 2012 was EUR 866 million;

the latter amount was applied to the subscription of the Bank’s shares circulated pursuant to the
aforementioned share capital increase. A total of 261,391,101 shares were issued, at a price of
EUR 3.3141.

lastly, under the framework of the Loyalty Plan linked to the Repurchase Offer, the deferred
payments for 15 June and 14 December 2012, which were paid by BFA to the investors,
amounted to EUR 92 million and EUR 91 million, respectively. These amounts were reinvested
automatically and simultaneously in 43,797,889 and 45,341,616 additional shares of Bankia from
its treasury shares, at prices of EUR 2.101 and EUR 2.000, respectively.
Following these increases, the Bank's share capital stood at EUR 3,987,927 thousand, represented by
1,993,963,354 fully subscribed and paid up registered shares.
Bankia's main shareholder is Banco Financiero y de Ahorros, S.A.U., which at the date of
authorisation for issue of the consolidated financial statements held 48.056% of its share capital
including the impact of treasury shares. On 9 May 2012, the board of directors of Banco Financiero y
de Ahorros, S.A.U. unanimously resolved to submit a share conversion request to the Fund for
Orderly Bank Restructuring ("FROB") through the Bank of Spain to convert the EUR 4,465 million of
convertible preference shares issued by BFA and subscribed by the FROB into shares of BFA, which
would be issued on executing the capital issue agreement permitting this conversion. At its meeting on
14 May 2012, the FROB board resolved to accept the request.
On 23 May 2012, BFA sent communiqués to the Bank of Spain and the FROB notifying them of its
intention of requesting a capital contribution from the FROB of EUR 19,000 million. On 24 May 2012,
both institutions indicated that they were prepared to immediately provide the said financial support
pursuant to compliance with the requirements set forth in their regulations.
The European Commission temporarily authorised, in accordance with EU State aid rules, the
conversion of convertible preference shares held by the Spanish government for an amount of EUR
4,465 million, and the possibility of issuing liabilities with a guarantee by the Spanish government
amounting to EUR 19,000 million in favour of the BFA Group and its subsidiary Bankia.
On 27 June 2012, after conversion of the convertible preference shares (which, inter alia, led to the
prior reduction of BFA’s share capital to zero following the redemption of the 27,040,000 shares held
prior to the conversion process by the Cajas), the FROB became the sole shareholder of Banco
11
Financiero y de Ahorros, S.A.U., as it controlled 100% of its share capital, warranting disclosure of its
single member status. In addition, as a result of the above and under the framework of the conversion
process mentioned previously, the “Cajas” did not belong to the BFA Group at 31 December 2012.
In June 2012, the results of the stress test of the Spanish banking system carried out by two
international consulting firms that assessed the system’s capital deficit under a severely adverse
stress scenario were released. Under this scenario, the system-wide capital buffer requirement
estimated by the consultants was between EUR 51,000 million and EUR 62,000 million.
Subsequently, based on the analysis of the credit portfolios of 14 Spanish banks, including BFABankia, performed by four auditing firms, one of the international consultants conducted a final stress
test in which it estimated the expected losses of these banks, including those of BFA-Bankia. The
result of this stress test was released on 28 September 2012, showing capital needs for the BFA–
Bankia Group of EUR 13,230 million in the baseline scenario and EUR 24,743 million in the adverse
scenario.
On 12 September 2012, while the restructuring process was being completed, the FROB agreed to
the capital increase of BFA through the non-monetary contribution of EUR 4,500 million through the
issue of 4,500 million registered ordinary shares with a par value of EUR 1 each, fully subscribed and
paid in, in order to strengthen the BFA-Bankia Group's regulatory capital. On the same date, BFA
granted Bankia, S.A. a subordinated loan in the amount of EUR 4,500 million with an unspecified
maturity and an interest rate of 8% (see Note 20).
Lastly, on 28 November 2012, the BFA–Bankia Group received approval by the European
Commission, the Bank of Spain and the FROB for the Bank's 2012-2017 Restructuring Plan (the
“Restructuring Plan”). This final approval marked the completion of the joint analysis and work by the
entities, the European Commission, the FROB and the Bank of Spain begun last July and concluded
when the results of the stress test were released on 28 September 2012. The capital requirements
identified in the stress tests were reduced by EUR 24,552 million due to the impact of the transfer of
real estate assets to the asset management company created for the bank restructuring (SAREB)
(see Note 1.16).
The estimates of public assistance required by the BFA Group set out in the Restructuring Plan to
comply with regulatory capital and cash adequacy requirements in applicable regulations (see Note 4)
include approximately EUR 6,500 million related to the positive impact estimated for certain
management actions with the BFA Group's hybrid instruments (preference shares and subordinated
debt) to be carried out within the scope of the principles and targets regarding the burden-sharing of
bank restructuring costs set out in Law 9/2012, of 14 November, on the restructuring and resolution of
credit institutions (“Law 9/2012”). As of the date of authorisation for issue of these financial statements
for 2012, management actions entailing the conversion of hybrid instruments to capital provided for in
the Restructuring Plan had yet to begin. As a result, the amount of public assistance required by the
BFA Group in the Restructuring Plan was finally estimated at EUR 17,959 million.
The Bankia Group's capital requirements, which should be considered as part of the BFA Group's
requirements indicated above, were estimated at EUR 15,500 million. Of this amount, approximately
EUR 4,800 million is expected to be covered through the conversion of hybrid instruments mentioned
above and EUR 10,700 million through contributions by the Bank's shareholders, with Bankia's capital
increase fully guaranteed by BFA.
In this respect, on 26 December 2012, as part of the aforementioned Restructuring Plan, the FROB
adopted the following agreements:

The capital increase at Banco Financiero y de Ahorros, S.A.U. amounting to EUR 13,459 million,
subscribed by the FROB and paid through the non-monetary contribution of securities of the
European Stability Mechanism (EMS). The increase comes in addition to that of EUR 4,500 million
carried out on 12 September 2012 through the non-monetary payment of treasury bills. These bills
were also swapped for securities of the ESM.

The issue by Bankia of convertible contingent bonds without preferential subscription rights in an
amount of EUR 10,700 million subscribed in full by BFA through the contribution of fixed-income
securities issued by the ESM.
The BFA Group's Restructuring Plan defines the framework that will allow the BFA–Bankia Group to
implement a Strategic Plan for the 2012-2015 period. This plan establishes the measures that will be
adopted during the period within the framework of the limitations imposed and commitments assumed
12
by the BFA Group with EU and Spanish authorities in the Restructuring Plan that will enable the BFA
Group to meet all the commitments assumed with them by 2017. As a result, from the end of the
Strategic Plan until 2017, additional measures to those considered initially for the 2012-2015 period
will likely be adopted with the overriding goal of strengthening the Bank's competitive position,
rebalancing its balance sheet, improving efficiency and reducing the risk premium. The main
measures included in the 2012-2015 Strategic Plan are as follows:

The disposal of non-earning assets and non-strategic equity investments. Between the transfer of
assets to the SAREB, the sale of investees and other portfolios and the disposal of loan portfolios,
Bankia expects to shed EUR 50,000 million (down from EUR 90,000 million to EUR 40,000
million).

A change in the composition of the loan portfolio, resulting in a greater proportion of lending to
businesses and practically zero exposure to the real estate business.

Reduction in the Bank's capacity, both in terms of its branch network and in terms of its workforce,
to ensure its future viability. The number of branches will be reduced by approximately 39%, from
3,117 to around 1,900-2,000.

The workforce will be cut by 28%, from 20,589 to around 14,500 employees. This retrenchment
will guarantee the Bank's viability and the preservation of 72% of existing jobs. In this respect, on
8 February 2013 a labour agreement was entered into with the majority of the Bank's union
representatives (see Note 1.11).
Efficiency will also be improved by streamlining the intermediate structures of the branch network
and optimising central services.
Elsewhere, the commitments agreed with the authorities in the framework of the Restructuring Plan
include the adoption, by BFA, of the following measures by 31 December 2013:

its merger, into a single entity, with Bankia, S.A., or

its transformation into a holding company without a banking license
At the date of authorisation for issue of these financial statements, the directors had yet to take a
decision in this respect. Nevertheless, the potential impact of any decision would not be material for
the Bankia Group's equity and, in any case, neutral for the BFA Group.
As a result, Bankia is a subsidiary of the Banco Financiero y de Ahorros Group and, in turn, the parent
of a business group (the "Group" or “Bankia Group”). At 31 December 2012, the scope of
consolidation of the Bankia Group encompassed 330 companies, including subsidiaries, associates
and jointly-controlled entities. These companies engage in a range of activities, including among
others insurance, asset management, financing, services, and property development and
management.
Appendices I, II and III list the entities that form part of the scope of consolidation of the Bankia Group
at 31 December 2012 (subsidiaries controlled by the Bank, jointly-controlled entities and associates
over which Bankia, directly or indirectly, exercises significant influence, distinguishing those classified
under "Non-current assets held for sale", see Note 2.1), and specifying the percentage of voting rights
controlled by Bankia in each company.
The Bankia Group's consolidated financial statements for 2012 were authorised for issue by Bankia's
directors at the Board meeting held on 20 March 2013. The Bankia Group's consolidated financial
statements for 2011 were approved by the shareholders at the general meeting held on 29 June 2012.
The tables below show the Bank’s balance sheet at 31 December 2012, the income statement, the
statement of recognised income and expense, the statement of total changes in equity and the
statement of cash flows for the year then ended (separate financial statements of Bankia, S.A.),
together with the Bank's separate financial statements for 2011 for purposes of comparison:
13
Bankia, S.A.
ASSETS
1. Cash and balances with central banks
31/12/12
4,563,082
31/12/11
6,117,225
2. Financial assets held for trading
35,733,950
28,573
314,632
4,420
35,386,325
282,966
29,061,767
16,248
1,320,295
19,191
27,706,033
1,320,295
3. Other financial assets at fair value through profit or loss
16,486
16,486
-
76,643
62,873
13,770
-
39,997,793
39,997,793
8,963,941
24,649,186
23,621,050
1,028,136
16,474,553
5. Loans and receivables
146,602,130
9,024,397
135,358,378
2,219,355
109,407,069
208,238,766
19,628,806
182,609,312
6,000,648
90,276,140
6. Held-to-maturity investments
29,006,962
4,456,923
10,250,976
10,019,034
-
-
8. Hedging derivatives
6,174,395
5,266,481
2,925,162
2,063,025
10. Investments
10.1. Associates
10.3. Group entities
2,446,442
54,740
2,391,702
4,167,554
692,509
84,862
3,390,183
11. Insurance contracts linked to pensions
13. Tangible assets
13.1.1 For own use
13.1.2 Leased out under an operating lease
13.1.3 Assigned to welfare projects
14. Intangible assets
14.1. Goodwill
14.2. Other intangible assets
15. Tax assets
15.1. Current
15.2. Deferred
16. Other assets
TOTAL ASSETS
397,686
226,055
1,688,299
1,574,179
1,574,081
98
114,120
-
2,064,589
1,758,207
1,758,074
133
306,382
-
59,466
59,466
111,933
111,933
8,655,370
34,246
8,621,124
975,794
279,243,017
5,652,600
84,531
5,568,069
419,896
298,366,696
LIABILITIES
1. Financial liabilities held for trading
3. Financial liabilities at amortised cost
5. Hedging derivatives
6. Liabilities associated with non-current assets held for sale
8. Provisions
8.1. Provisions for pensions and similar obligations
8.2. Provisions for taxes and legal contingencies
8.3. Provisions for contingent liabilities and commitments
8.4. Other provisions
9. Tax liabilities
9.1. Current
9.2. Deferred
10. Welfare Fund
11. Other liabilities
12. Capital having the nature of a financial liability
TOTAL LIABILITIES
EQUITY
1. Equity
1.1. Capital
1.1.1. Issued
1.1.2. Less: Uncalled capital
1.2. Share premium
1.3. Reserves
1.4.1. Equity component of compound financial instruments
1.4.2. Non-voting equity units and associated funds
1.4.3. Other equity instruments
1.6. Profit for the year
2. Valuation adjustments
2.2. Cash flow hedges
TOTAL EQUITY
MEMORANDUM ITEM
1. Contingent exposures
2. Contingent commitments
31/12/12
31/12/11
33,610,393
33,610,393
245,230,619
51,954,778
26,114,761
117,916,947
31,152,398
15,641,800
2,449,935
2,726,923
2,434,089
486,376
36,721
603,072
1,307,920
876,936
8,319
868,617
551,875
285,430,835
26,815,001
26,303,249
511,752
255,247,298
22,431,191
22,434,278
161,384,387
47,607,382
318,283
1,071,777
1,961,164
1,283,242
539,860
51,766
473,763
217,853
968,586
41,397
927,189
594,749
286,870,040
(5,408,822)
3,987,927
3,987,927
11,986,494
(3,075,618)
(1,182)
(18,306,443)
(778,996)
(792,359)
4,926
(70)
8,507
(6,187,818)
279,243,017
31,533,760
10,313,773
21,219,987
12,078,096
3,465,145
3,465,145
11,643,001
28,150
(27,649)
(3,030,551)
(581,440)
(548,145)
(33,387)
92
11,496,656
298,366,696
43,888,250
11,871,986
32,016,264
15
Bankia, S.A.
Income statements for the years ended 31 December 2012 and 2011
31/12/12
1. Interest and similar income
2. Interest expense and similar charges
4. Income from equity instruments
31/12/11
7,260,244
7,680,574
(4,510,056)
(5,199,347)
-
-
2,750,188
2,481,227
77,758
129,514
6. Fee and commission income
1,065,180
1,143,947
7. Fee and commission expense
(130,351)
(145,920)
8. Gains and losses on financial assets and liabilities (net)
386,778
339,719
(39,142)
157,598
2,910
(18,149)
384,432
188,115
8.4. Other
38,578
12,155
9. Exchange differences (net)
39,211
22,791
10. Other operating income
11. Other operating expenses
B. GROSS INCOME
43,809
65,216
(530,480)
(250,028)
3,702,093
3,786,466
(1,821,196)
(1,920,296)
12.1. Staff costs
(1,240,318)
(1,289,827)
(580,878)
(630,469)
(227,992)
(246,250)
12.2. Other general administrative expenses
13. Depreciation and amortisation charge
14. Provisions (net)
(1,424,123)
(156,722)
15. Impairment losses on financial assets (net)
(18,116,330)
(3,953,707)
(17,476,901)
(3,865,313)
15.2. Other financial instruments not measured at fair value through profit or loss
16. Impairment losses on other assets (net)
16.2. Other assets
17. Gains/(losses) on disposal of assets not classified as non-current assets held for sale
19. Gains (losses) on non-current assets held for sale not classified as discontinued operations
20. Income tax
F. PROFIT/(LOSS) FOR THE YEAR
(639,429)
(88,394)
(17,887,548)
(2,490,509)
(2,953,645)
(304,276)
(5,434)
-
(2,948,211)
(304,276)
492
(4,186)
-
-
(704,487)
(1,570,888)
(21,545,188)
(4,369,859)
3,238,745
(1,339,308)
-
-
(18,306,443)
(3,030,551)
-
-
(18,306,443)
(3,030,551)
16
BANKIA, S.A.
Statement of recognised income and expense for the years ended 31 December 2012 and 2011
31/12/12
A) PROFIT/(LOSS) FOR THE YEAR
(18,306,443)
(3,030,551)
(197,556)
(579,798)
(348,878)
(780,719)
(158,963)
(697,442)
(177,762)
(83,297)
(12,153)
-
54,733
(47,697)
25,730
(49,680)
29,003
1,983
-
-
-
-
-
-
-
-
-
-
-
-
(231)
132
(231)
132
-
-
-
-
12,153
-
-
-
-
-
12,153
-
-
-
-
-
84,667
248,486
(18,503,999)
(3,610,349)
2. Cash flow hedges
9. Income tax
31/12/11
17
Bankia, S.A.
OWN FUNDS
Share capital
Share
premium
Less:
treasury
shares
Other equity
instruments
Reserves
Less: Dividends
and
remuneration
Profit/(loss)
for the year
VALUATION
ADJUSTMENTS
Total own
funds
TOTAL EQUITY
3,465,145
11,643,001
28,150
-
(27,649)
(3,030,551)
-
12,078,096
(581,440)
11,496,656
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,465,145
11,643,001
28,150
-
(27,649)
(3,030,551)
-
12,078,096
(581,440)
11,496,656
-
-
-
-
-
(18,306,443)
-
(18,306,443)
(197,556)
(18,503,999)
522,782
343,493
(3,103,768)
-
26,467
3,030,551
-
819,525
-
819,525
522,782
343,493
-
-
-
-
-
866,275
-
866,275
-
-
(1,075)
-
-
-
-
(1,075)
-
(1,075)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(72,142)
-
26,467
-
-
(45,675)
-
(45,675)
-
-
(3,030,551)
-
-
3,030,551
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,987,927
11,986,494
(3,075,618)
-
(1,182)
(18,306,443)
-
(5,408,822)
(778,996)
(6,187,818)
18
Bankia, S.A.
OWN FUNDS
Share capital
Share
premium
Less:
treasury
shares
Other equity
instruments
Reserves
Less: Dividends
and
remuneration
Profit/(loss)
for the year
VALUATION
ADJUSTMENTS
Total own
funds
TOTAL EQUITY
18,040
-
11,372
-
-
934
(419)
29,927
(1,642)
28,285
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,040
-
11,372
-
-
934
(419)
29,927
(1,642)
28,285
-
-
-
-
-
(3,030,551)
-
(3,030,551)
(579,798)
(3,610,349)
3,447,105
11,643,001
16,778
-
(27,649)
(934)
419
15,078,720
-
15,078,720
3,449,145
11,643,001
(23,400)
-
-
-
-
15,068,746
-
15,068,746
(2,040)
-
2,040
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,507
-
(27,649)
-
-
(26,142)
-
(26,142)
-
-
374
-
-
(934)
560
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
36,257
-
-
-
(141)
36,116
-
36,116
3,465,145
11,643,001
28,150
-
(27,649)
(3,030,551)
-
12,078,096
(581,440)
11,496,656
19
Bankia, S.A.
Statement of cash flows for the years ended 31 December 2012 and 2011
1. Consolidated profit/(loss) for the year
2.2. Other
5. Income tax receipts (payments)
B) CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES
31/12/12
31/12/11
(7,390,261)
(1,358,492)
(18,306,443)
29,349,111
227,992
29,121,119
6,813,635
634,961
60,157
(5,131,508)
11,651,743
(401,718)
(25,246,564)
(511,752)
(24,920,227)
185,415
-
(3,030,551)
4,702,021
246,250
4,455,771
(12,643,069)
(370,201)
28,089
(9,849,646)
3,763,610
(6,214,921)
9,613,107
755,763
5,210,712
3,646,632
-
417,371
(1,477,574)
6. Payments
6.3. Investments
7. Proceeds
7.3. Investments
737,482
26,836
710,314
332
1,154,853
106,792
9,537
378,583
659,941
-
2,528,377
92,977
70,354
1,148,950
1,216,096
1,050,803
448,266
393,965
204,028
4,544
5,418,723
2,874,630
8. Payments
8.1. Dividends
9. Proceeds
280,418
255,023
25,395
5,699,141
4,623,517
866,275
209,349
-
584,483
511,331
73,152
3,459,113
318,283
3,092,146
47,010
1,674
24
43
(1,554,143)
38,607
6,117,225
6,078,618
4,563,082
6,117,225
1.1. Cash
794,364
3,768,718
-
803,532
5,313,693
-
4,563,082
6,117,225
MEMORANDUM ITEM
20
(1.3) Reporting framework applied to draw up the consolidated financial statements
The Bankia Group's consolidated financial statements for 2012 were authorised for issue by Bankia's
directors at the Board meeting held on 21 March 2013.
In accordance with Regulation (EC) No. 1606/2002 of the European Parliament and of the Council of 19
July 2002, all companies governed by the laws of a member state of the European Union and whose
securities are traded on a regulated market in any European Union country must file consolidated
financial statements for periods beginning on or after 1 January 2005 in accordance with the International
Financial Reporting Standards as adopted by the European Union (“IFRS-EU”).
The Bankia Group’s consolidated financial statements for 2012 are presented in accordance with IFRSEU, taking into account Bank of Spain Circular 4/2004, of 22 December, on public and confidential
financial reporting rules and formats for credit institutions (“Circular 4/2004”), and subsequent
amendments thereto, which implements and adapts IFRS-EU for Spanish credit institutions.
The Group's consolidated financial statements for the year ended 31 December 2012 were prepared
taking into account all accounting principles and standards and mandatory measurement criteria
applicable in order to give a true and fair view, in all material respects, of the consolidated equity and
consolidated financial position of Bankia, S.A. and subsidiaries forming the Bankia Group at 31
December 2012 and of the consolidated results of its operations and consolidated cash flows during the
financial year then ended, pursuant to the aforementioned applicable financial information reporting
framework, and in particular to the accounting principles and criteria therein.
The consolidated financial statements of the Bankia Group were prepared from the accounting records of
Bankia and of the other Group entities. However, since the accounting policies and measurement bases
used in preparing these consolidated financial statements may differ from those used by certain Group
entities, the required adjustments and reclassifications were made on consolidation to unify such policies
and criteria and to make them compliant with the IFRS-EU used by the Bank.
The principal accounting policies and measurement bases applied in preparing the Group's consolidated
financial statements for 2012 are summarised in Note 2.
(1.3.1) Main regulatory changes during the period from 1 January to 31 December 2012
The main changes arising in 2012 in the laws and regulations applicable to the Bankia Group, which were
applied in the preparation of these consolidated financial statements, are as follows:
(1.3.1.1) New Circulars issued by the Bank of Spain
Bank of Spain Circular 2/2012 of 29 February amending Circular 4/2004 of 22 December on public
and confidential financial reporting rules and formats for credit institutions.
Bank of Spain Circular 2/2012 of 29 February amending Circular 4/2004 of 22 December on public and
confidential financial reporting rules and formats for credit institutions was published on 6 March 2012,
entering into force the day after its publication. The primary objective of this Circular is to adapt Circular
4/2004 to Royal Decree-Law 2/2012, of 3 February, on the reorganisation of the financial sector.
-
It adapts loan loss reserve (provisions) requirements for financing and assets foreclosed or
assets received as payment of debts in connection with land for development and with property
construction or development for credit institutions in Spain existing at 31 December 2011 and
those arising from refinancing subsequent to that date, as set out in the aforementioned Royal
Decree-Law.
-
It amends the general rules regarding the accounting of foreclosed assets or assets received as
payment of debts, determining the value at which these real estate assets should be initially
recognised and subsequently measured.
In terms of subsequent measurement, the percentage cover increases to 20%, 30% and 40% in
accordance with the date of inclusion of the assets in the balance sheet (over 1, 2 and 3 years,
respectively).
The measures established in Royal Decree-Law 2/2012 of 3 February on the reorganisation of the
financial sector and those included in this Circular were met prior to 31 December 2012.
21
Bank of Spain Circular 6/2012, of 28 September, for credit institutions amending Circular 4/2004 of
22 December, on public and confidential financial reporting rules and formats.
On 2 October, Bank of Spain Circular 6/2012, of 28 September, on credit institutions, amending Circular
4/2004, of 22 December on public and confidential financial reporting rules and formats, was published in
the Spanish National Gazette (Boletín Oficial del Estado). The main purpose is to adapt Circular 4/2004
to Royal Decree-Law 18/2012, of 11 May, on the reorganisation and sale of real estate assets in the
financial sector with respect to additional provisioning requirements for assets related to the real estate
activity.
-
It establishes, in the same vein as Royal Decree-Law 2/2012, additional provisioning
requirements for the impairment of loans to the real estate sector classified as "Non-troubled". As
with the previous regulations, these new requirements are stipulated separately for one time only,
depending on the different classes of finance.
-
It introduces new disclosure requirements for credit institutions in their separate and consolidated
annual financial statements regarding refinancing and restructuring operations, and industry and
geographic risk concentration.
-
It adds transparency requirements regarding exposures to real estate construction and
development, with disclosure of assets foreclosed or received in payment of debts transferred to
companies for management of these assets.
The impacts of these two regulations (Circulars 2/2012 and 6/2012) were recognised fully in 2012, both
with respect to assets remaining on the Group's consolidated balance sheet at 31 December 2012 and
those transferred to the SAREB (see Note 1.16) which, prior to their transfer, were measured, through the
additional charges required, at the transfer price.
Royal Decree-Law 24/2012 of 31 August on the restructuring and resolution of credit institutions
On 31 August 2012, the Spanish cabinet approved a Royal Decree-Law on the restructuring and
resolution of credit institutions, designed to safeguard the stability of the financial system as a whole. It
includes six types of measures:
-
An enhanced framework for the management of crisis situations at banks.
-
New regulation of the FROB which defines its powers and significantly enhances the tools for
intervention.
-
Stronger protection for retail investors, introducing restrictions on the sale of investment products.
-
A legal framework for the creation of an Asset Management Company (AMC), that can take the
status of a public limited company (sociedad anónima) or a trust fund, pursuant to the pending
implementing regulations.
-
A burden-sharing system for restructuring costs between the public and private sector, whereby
holders of hybrid capital instruments, preference shares and subordinated debt may be obliged to
bear part of the losses of a bank in a crisis situation.
-
Other aspects, such as:

exemption from the grounds for mandatory winding-up set out in Section 363, 1. e) of the
Spanish Corporate Enterprises Act (Ley de Sociedades de Capital) for credit institutions
in which the FROB holds a controlling interest or those whose governing body is
controlled by the FROB. Likewise, the aforementioned institutions and directors thereof
are exempt from the system provided for in Section 2 of Title X of the Spanish Corporate
Enterprises Act.

exemption from Section 327 of the Spanish Corporate Enterprises Act on the mandatory
reduction of capital when losses incurred lower equity to below two-thirds of capital for
the aforementioned entities. However, these sections of the Corporate Enterprises Act
will become applicable, as appropriate, once the FROB ceases to hold a controlling
position or control of the governing body of the subject entity, at which time the periods
set out in Sections 327 and 365.1 of the Corporate Enterprises Act, respectively, will be
opened.
22

strengthening of principal capital requirements, to 9%, for all banks as from 1 January
2013, with changes in the definition of principal capital to adapt to the definition of the
EBA;

new limits on director compensation of banks receiving assistance, with a cap on fixed
compensation for all items of EUR 500,000;

transfer of authorisation and sanctioning competencies from the Ministry of Finance and
Competitiveness to the Bank of Spain.
This Royal Decree was transposed into law with Law 9/2012 of 14 November on the restructuring and
resolution of credit institutions.
Lastly, on 16 November 2012, Royal Decree 1559/2012, of 15 November, establishing the legal regime
applicable for asset management companies and implementing Law 9/2012, of 14 November, on the
restructuring and resolution of credit institutions, was published in the Official Gazette. The purpose of
this Royal Decree is to develop the framework for the organisation and functioning of asset management
companies, as well as the powers of the FROB and the Bank of Spain with respect to them.
It is also designed to implement additional provisions seven to ten of the law regulating the legal
framework for the SAREB, the assets to be transferred to it, the institutions required to transfer assets,
and the groupings of assets and liabilities (see Note 1.16).
(1.3.1.2) Modifications to International Financial Reporting Standards
The main standards or amendments to IFRSs adopted by the EU that came into force and became
mandatory in the year beginning 1 January 2012, the effects of which, if any, were included in these
consolidated financial statements, were as follows:
A) New mandatory standards, amendments and interpretations applicable in the calendar year
beginning 1 January 2012
The adoption of the following standards has had no material impact on either the presentation and
disclosure of the consolidated financial statements or the figures reported therein:
-
Amendment to IFRS 7: Transfers of Financial Assets: Disclosures
Improves the disclosure requirements to enables users to evaluate the risk exposures relating to
the transfer of financial assets and the effect of such risks on the entity’s financial position and
promotes transparency in the reporting of transfer transactions of financial assets, especially
securitisations.
This amendment is applicable to financial periods beginning on or after 1 July 2011, with early
adoption permitted. The Group applies this amendment as from 2012, in accordance with
Regulation (EU) 1205/2011, adopting the amendment.
B) New mandatory standards, amendments and interpretations applicable in the years
subsequent to the calendar year beginning 1 January 2012 (applicable as of 2013 or thereafter)
approved by the European Union
Following is a list of standards, amendments and interpretations issued by the International Accounting
Standard Board (“IASB”) and adopted by the European Union:
-
Amendment to IAS 19 Employee Benefits
[Applicable to financial periods beginning on or after 1 July 2013, with early adoption permitted]
This amendment removes the option of deferring recognition of actuarial gains and losses, known
as the 'corridor method'. It also establishes that remeasurement impacts on defined-benefit plans
be recognised in "Other comprehensive income" ("OCI"), but maintains the current accounting
recognition of interest income or expense and service costs in the income statement. The
disclosure requirements are also enhanced for these types of plans.
The Group will apply this amendment as of 2013, pursuant to Regulation (EU) 475/2012 adopting
this amendment.
-
Amendment to IAS 1 – (Presentation of Financial Statements): Presentation of Items of
Other Comprehensive Income
[Applicable to financial periods beginning on or after 1 July 2012, with early adoption permitted]
23
The objective of the amendments to IAS 1 is to clarify the presentation of the increasing number
of items of other comprehensive income and help users of financial statements to distinguish
between items that could be reclassified to profit or loss at a future point and items that will never
be reclassified.
The Group will apply this amendment as of 2013, pursuant to Regulation (EU) 475/2012 adopting
this amendment.
-
IFRS 13: Fair Value Measurement
[Applicable to financial periods beginning on or after 1 January 2013, with early adoption
permitted]
IFRS 13, issued by the IASB in May 2011, establishes a single source of guidance for all fair
value measurements under IFRS. The new standard will accordingly provide guidance on how to
measure fair value of financial as well as non-financial assets and liabilities. IFRS 13 also
introduces consistent requirements for itemised disclosure of all these elements measured at fair
value.
The Group will apply IFRS 13 from 2013, pursuant to Regulation (EU) 1255/2012 adopting this
standard.
-
IFRS 10: Consolidated Financial Statements
permitted]
IFRS, which replaces SIC 12 Consolidation - Special Purpose Entities and certain sections of IAS
27 Consolidated and Separate Financial Statements, establishes the concept of control for the
purposes of assessing whether an entity ought to be included in the consolidated financial
statements of the parent, and also issues guidelines to be used in certain cases where
measurement proves difficult.
The Group will apply this standard from 2014 at the latest, pursuant to Regulation (EU)
1254/2012 adopting this standard.
-
IFRS 11: Joint Arrangements
permitted]
This standard, which replaces IAS 31 Interests in Joint Ventures and SIC 13 Jointly-Controlled
Entities - Non-Monetary Contributions by Venturers, analyses the inconsistencies of reporting in
relation to joint ventures, and establishes a single method to account for investments or interests
in jointly-controlled entities.
-
IFRS 12: Disclosure of Interests in Other Entities
permitted]
The standard determines the disclosure requirements for all forms of investment in other entities,
including joint arrangements, associates, SPEs (Special-Purpose Entities) or SPVs, or other offbalance sheet vehicles.
-
Amendment to IAS 27: Consolidated and Separate Financial Statements
permitted]
This amends the previous IAS 27 (Consolidated and Separate Financial Statements). IFRS 10
(Consolidated Financial Statements), the origin of this amendment, referred to above, becomes
applicable to consolidated financial statements, and the current guidelines of IAS 27 to separate
financial statements.
24
-
Amendment to IAS 28: Investments in Associates and Joint Ventures
permitted]
This amends the previous IAS 28 (Accounting for Investments in Associates), pursuant to the
changes made through issuance of IFRS 10 and IFRS 11 mentioned above. The standard set
outs, subject to certain requirements, application of the equity method when accounting for
investments in associates and joint ventures.
-
Amendment to IAS 32: Offsetting Financial Assets and Liabilities and amendment of IFRS
7: Disclosures — Offsetting Financial Assets and Financial Liabilities
[Applicable to financial periods beginning on or after 1 January 2014 and 1 January 2013,
respectively, with early adoption permitted]
The changes further clarify the requirements under the standard for offsetting financial assets
and financial liabilities for the purpose of presentation on the balance sheet. In addition, the
amendment introduces new disclosure requirements for financial assets and liabilities presented
net on the balance sheet, or those subject to a legally enforceable right to offset or similar,
whether or not they are presented net.
The Group will apply the amendment to IFRS 7 from 2013 and the amendment to IAS 32 from
2014 at the latest in accordance to Regulation (EU) 1256/2012 adopting this standard.
-
Amendment to IFRS 12: Income Tax - Deferred Tax: Recovery of Underlying Assets
permitted]
The amendment introduces an exception to the general principles set out in IAS 12. This
exception affects deferred taxes in connection with investment properties valued using the fair
value model set out in IAS 40 Investment Property. In these cases, the amendment introduces a
presumption that recovery of the carrying amount will normally be through sale.
The Group will apply the amendment to IAS 12 from 2013 in accordance to Regulation (EU)
1255/2012 adopting this amendment.
C) New mandatory standards, amendments and interpretations applicable in the years
subsequent to the calendar year beginning 1 January 2012 (applicable as of 2013) pending
adoption by the European Union
Following is a list of the main standards, amendments and interpretations issued by the International
Accounting Standards Board ("IASB") that have yet to be adopted by the European Union and therefore
not applied in the preparation of these consolidated financial statements:
-
IFRS 9: Financial Instruments
[Applicable to years beginning on or after 1 January 2015, after the application date deferral
proposed by the IASB, with early adoption permitted]
This is the first of three standards that are to replace the current IAS 39. The first new standard
amends the criteria for classifying and measuring financial instruments. At the date of writing, this
amendment had yet to be definitively adopted.
-
Fourth annual IFRS improvements project (2009-2011 cycle)
permitted]
This document is a collection of changes to IFRS, in response to six issues considered during the
2009-2011 cycle. The IASB uses the annual improvements process to make necessary, but nonurgent, amendments to IFRSs that will not be included as part of any other project. The most
significant amendments affect IAS 1, IAS 16, IAS 32 and IAS 34.
25
-
Amendments to IFRS 10, IFRS 11 and IFRS 12: Consolidated Financial Statements, Joint
Arrangements and Disclosure of Interests in Other Entities: Transition guidance
permitted]
The amendments clarify the transition guidance for IFRS 10 Consolidated Financial Statements.
In addition, they provide transition relief for IFRS 10, IFRS 11 (Joint Arrangements) and IFRS 12
(Disclosure of Interests in Other Entities), limiting the requirements to provide adjusted
comparative information to the immediately preceding period only. The effective date of the
amendments is for annual periods beginning on or after 1 January 2013, which is aligned with the
effective date for IFRS 10, 11 and 12.
-
Amendments to IFRS 10, IFRS 12 and IAS 27: Investment Entities
permitted]
The amendments apply to a particular class of business that qualify as investment entities. The
IASB uses the term 'investment entity' to refer to an entity whose business purpose is to invest
funds solely for returns from capital appreciation, investment income or both. Such entities could
include private equity organisations, venture capital organisations, pension funds, sovereign
wealth funds and other investment funds.
These amendments provide an exception to the consolidation requirements in IFRS 10 and
require investment entities to measure particular subsidiaries at fair value through profit or loss,
rather than consolidate them. The amendments also set out disclosure requirements for
investment entities.
Early adoption of the accounting standards described in letters B and C, already endorsed by the
European Union, is permitted. However, the Group has elected not to adopt for these consolidated
financial statements. Adoption of some of these standards is not expected to have any material impact for
the Group. However, their potential impact is being considered by Group management. A reliable
estimate of their potential impact is not possible yet; this will depend on the content of the text finally
adopted by the European Union and on the composition of the Group and its assets at the time of
application.
The information in these consolidated financial statements is the responsibility of Bankia's directors.
In the Group's consolidated financial statements for the year ended 31 December 2012, estimates were
made in order to quantify certain of the assets, liabilities, income, expenses and obligations reported
therein. These estimates relate basically to the following:
–
The fair value of certain financial and non-financial assets and liabilities (see Notes 2.2 and 2.20).
–
Impairment losses on certain financial and non-financial assets (chiefly property) (see Notes 2.9,
2.15, 2.16, 2.17 and 2.20).
–
The assumptions used in the actuarial calculation of the post-employment benefit liabilities and
obligations and other long-term commitments (see Note 2.13).
–
Estimate of the costs to sell and of the recoverable amount of non-current assets held for sale,
investment property and inventories based on their nature, state of use and purpose for which
they are intended, acquired by the Group as payment of debts, regardless of the legal format
pursuant to which they were acquired, applied on a consistent basis in accordance with Bank of
Spain Circular 4/2004 (see Notes 2.15, 2.17 and 2.20).
–
The recoverability of deferred tax assets recognised (see Note 28).
–
The useful life and fair value of tangible and intangible assets.
–
The probability of occurrence of certain losses to which the Group is exposed due to its activity.
Although these estimates were made on the basis of the best information available at 31 December 2012
and at the date of authorisation for issue of these consolidated financial statements on the events
analysed, future events may make it necessary to change these estimates (upwards or downwards) in
the years ahead. Changes to accounting estimates would be applied prospectively in accordance with the
applicable standards, recognising the effects of the change in estimates in the related consolidated
income statement in the future financial years concerned.
26
In compliance with current legislation, the information relating to 2011 contained in these consolidated
financial statements is presented solely for comparison with the information relating to 2012 and,
accordingly, does not constitute the Group's consolidated financial statements for 2011.
A list at 31 December 2012 of the Group’s agents which meet the conditions established in Article 22 of
Royal Decree 1245/1995, of 14 July, is provided in Appendix VI, attached.
The Group’s ownership interests of 5% or more in the capital or voting rights of other Spanish or foreign
credit institutions at 31 December 2012 are listed in Appendices I, II and III.
In addition to the stake in Bankia held by BFA (see Note 26), the breakdown of ownership interests of
more than 5% held by non-Group Spanish or foreign credit institutions in the share capital or voting rights
of credit institutions forming part of the Bankia Group at 31 December 2012 and 2011 is as follows :
Shareholding institution
Banco Popular de Ahorro de Cuba
Investee
Corporación Financiera Habana, S.A.
Ownership interest
40%
In view of the business activities carried on by the Group (see Note 1.2), it does not have any
environmental liability, expenses, assets, provisions or contingencies that might be material with respect
to the Group’s consolidated equity, financial position and results. Therefore, no specific disclosures
relating to environmental issues are included in these notes to the financial statements.
At 31 December 2012, and throughout 2012, Bankia itself and the credit institutions included in the Group
to which the ratio is applicable met the minimum reserve ratio required by applicable Spanish legislation.
Pursuant to the Ministry of Economy and Finance Order 3515/2009 of 29 December, establishing the
contributions to be made by savings banks to the Deposit Guarantee Fund (Spanish “FGD”), and at the
proposal of the Bank of Spain, the amount of the contributions by the “Cajas” was set at 1 per mille of the
deposits covered by the guarantee.
The following regulations were published in 2011 and 2012 in amendment to the system for contributions
to the Deposit Guarantee Fund:
-
Royal Decree-Law 16/2011 of 14 October creating the Credit Institutions' Deposit Guarantee
Fund, merging the three deposit guarantee funds that had existed hitherto (the Savings Banks'
Deposit Guarantee Fund, the Banking Establishments' Deposit Guarantee Fund and the Credit
Cooperatives' Deposit Guarantee Fund) into a single fund termed the Fondo de Garantía de
Depósitos de Entidades de Crédito (Credit Institution Deposit Guarantee Fund), which continues
the role of its three predecessor funds – to guarantee deposits with credit institutions - and is
designed, in addition, to support a further purpose: reinforcement of banks' solvency and
operational effectiveness, also known as the "resolving role", to ensure that the new
comprehensive Fund can operate flexibly.
-
Royal Decree-Law 19/2011 of 2 December to amend Royal Decree-Law 16/2011 of 14 October
creating the Credit Institution Deposit Guarantee Fund. This Royal Decree-Law completes and
enhances the reform of the system conducted by Royal Decree-Law 16/2011, with a review of
the legal threshold for the annual contributions that must be made to the fund by entities, raising
it from 2 per mille to 3 per mille in order to guarantee a maximum operating capacity for the Fund.
Additionally, provision is made for the express derogation of ministerial orders which, pursuant to
the prevailing system, established a circumstantial optional reduction of contributions by entities,
27
including Ministry of Economy and Finance Order 3515/2009 of 29 December setting the
contributions by the Bank at 1 per mille of the deposits covered by the guarantee. The result of
both these changes is the establishment, within a regulation considered as law, of a threshold of
3 per mille of contributions of guaranteed deposits and the establishment of an actual
contribution of 2 per mille instead of the aforementioned percentages.
-
Royal Decree 771/2011 was introduced on 4 June 2011 and amended, among others, Royal
Decree 2606/1996 governing deposit guarantee funds at credit institutions. The new regulation
created a new system of additional contributions to the funds based on remuneration from the
deposits themselves. Meanwhile, Bank of Spain Circular 3/2011 of 30 June was published and
entered into force on 4 July 2011. It implemented the new system of contributions to deposit
guarantee funds, requiring additional contributions (payable quarterly) from entities which
arrange term deposits or settle demand accounts with remuneration that exceeds certain interest
rates published by the Bank of Spain, depending on term or demand status.
-
On 31 August 2012, Royal Decree-Law 24/2012, of 31 August, on the restructuring and
resolution of credit institutions took effect, repealing Sections 2 bis and 2 ter of Article 3 of Royal
Decree 2606/1996, of 20 December, on the credit institution deposit guarantee fund, governing
additional quarterly contributions by the banks involved that had taken deposits or settled current
accounts at rates above the official benchmark rates published by the Bank of Spain (see
previous paragraph).
-
Lastly, on 30 July 2012, the governing body of the deposit guarantee fund (FGDEC for its initials
in Spanish) agreed to an extraordinary contribution by member entities payable by each in ten
equal annual instalments on the same day that the entities must make their ordinary annual
contributions, over the next ten years. The contribution to be deposited by each member may be
deducted from the annual contribution which, as appropriate, is paid by the entity on the same
date, and up to the amount of the ordinary contribution.
The contributions to the Deposit Guarantee Fund made by the Bank and Group entities under an
obligation to do so amounted to EUR 426,189 thousand in 2012 (EUR 125,652 thousand in 2011) and
were recognised under "Other operating expenses – Other operating expenses" in the accompanying
consolidated income statement (see Note 40).
On 8 February 2013, an agreement was signed with the majority of the Bank's union representatives
(CCOO, UGT, ACCAM, SATE and CSICA, which combined represent 97.86% of represented
employees) regarding a series of measures on redundancies, changes to working conditions, and
functional and geographic mobility, which are intended to help ensure the future viability of the Bank while
complying with the requirements of the Strategic Plan and the Recapitalisation Plan approved by the
This agreement includes the following measures that will remain in place until 31 December 2015:

Redundancies for a maximum of 4,500 employees, with redundancy packages depending on the age
of those affected.

Changes to the working conditions of employees that continue to work at the Bank, through
measures to eliminate or reduce fixed remuneration conditions, variable remuneration conditions,
pension plan contributions, entitlements for risk and promotion measures.
The agreement encourages voluntary redundancies and employability with the creation of an
employment pool for those affected, while also enabling the Bank to move towards an efficiency ratio
below 50%.
The commitments derived from these agreements are adequately covered with provisions recognised for
this purpose at 31 December 2012 (see Note 22).
On 1 March 2013, within the framework of the active management of its debt issues, Bankia, S.A.
announced a tender offer to all holders of certain mortgage-covered bonds (cédulas hipotecarias) under
the following terms:

The tender offer securities were purchased pursuant to an unmodified Dutch auction procedure. The
purchase price paid by the Bank to holders of the tender offer securities whose offers were accepted
was equal to the price specified by the holders in their tender instructions.
28

Holders of tender offer securities whose tenders were accepted received, together with the purchase
price described above, an amount equal to the accrued unpaid interest on the tender offer securities
from the last interest payment date (inclusive) until the date of settlement of the offer (exclusive).

The deadline for submitted tender instructions was 12 March 2013, with acceptances to purchase
securities for a nominal amount of EUR 1,217,650,000.
The objective of the tender offer was to optimise the Bank's funding structure in the wholesale market, as
well as the duration and cost of future debt, and to strengthen its balance sheet, all this in a context of
prudent liquidity management.
No other significant events took places between 31 December 2012 and the date of authorisation for
issue of these financial statements other than those mentioned above in these financial statements.
At its meeting on 16 June 2011, the Board of Directors of Bankia, S.A. approved the "Customer
Protection Regulations of Bankia, S.A. and its Group", which was subsequently updated at its meeting of
25 July 2012. Among other aspects, the Regulations stipulate that the Bankia, S.A. Customer Care
Service must handle and resolve any complaints or claims submitted by those in receipt of financial
services from all BFA Group finance companies – one of which is the Bank – covered by the scope of
the service (Bankia, S.A. and Group entities subject to Order ECO/734/2004 of 11 March governing
Customer Care Departments and Services and Customer Ombudsmen of Financial Institutions).
Pursuant to Order ECO/734/2004 of 11 March governing Customer Care Departments and Services and
Customer Ombudsmen of Financial Institutions, the following BFA Group entities are subject to the
obligations and duties required by the Order in this connection, with claim procedures and solutions
centralised through the Bankia, S.A. Customer Care Service:
Company
Bankia, S.A.
Bancofar, S.A.
Caja de Madrid de Pensiones, S.A., E.G.F.P.
Bankia Banca Privada Gestión S.G.I.I.C., S.A.
Laietana Generales, Compañía de Seguros de la Caja de Ahorros Laietana, S.A.U.
Laietana Vida, Compañía de Seguros de la Caja de Ahorros Laietana, S.A.U.
Segurcaja, S.A., Correduría de Seguros
The Bankia Group fulfils these obligations and duties in accordance with Law 44/2002, of 22 November,
on Financial System Reform Measures, and with Ministry of Economy Order ECO/734/2004, of 11
March, on Customer Care Departments and Services and Customer Ombudsmen of Financial
Institutions.
29
The main data on customer claims in 2012 for Group entities subject to these duties and obligations are
as follows:
Company
Bankia, S.A.
Bancofar, S.A.
No. of claims
received
No. of claims
admitted for
processing
No. of claims
resolved in
favour of the
customer
No. of claims
resolved against
the customer
No. of claims
dismissed
28,226
1
27,539
1
687
-
10,153
1
5,760
-
50
48
2
24
12
2
2
-
1
1
71
70
1
59
13
9
8
1
5
2
Caja de Madrid de Pensiones, E.G.F.P., S.A.
196
195
1
176
24
118
114
4
52
54
18
17
1
6
5
Laietana Vida, Cía. de Seguros de la C. de A. Laietana, S.A.U.
2
2
-
1
-
Tasaciones Madrid, S.A. (1)
3
3
-
4
-
(1) Sold in 2012
The breakdown by type of all claims resolved and dismissed in 2012 is as follows:
Type of claim
Number of claims
1,517
288
88
Current accounts
1,169
7,743
1,760
203
Direct debits
374
Transfers
341
Bills and cheques
174
378
109
404
Life insurance
78
Damage insurance
163
Pension funds
248
Other insurance
143
Miscellaneous
Total
1,870
17,050
30
Claims pending resolution by Group entities subject to these obligations at 31 December 2012 are as
follows:
Company
Number of claims pending resolution
Bankia, S.A.
13,564
16
9
Bancofar, S.A.
1
Caja de Madrid de Pensiones, E.G.F.P., S.A.
4
15
7
Laietana Vida, Cía. de Seguros de la C. de A. Laietana, S.A.U.
1
The main data on customer claims in 2011 for Group entities subject to these duties and obligations was
as follows:
Company
No. of claims
received
Bankia, S.A.
Bancofar, S.A.
Caja de Madrid de Pensiones,
E.G.F.P., S.A.
Madrid Leasing Corporación,
S.A.U., E.F.C.
Tasaciones Madrid, S.A.
No. of claims
admitted for
processing
No. of claims
resolved against the
customer
No. of claims
dismissed
No. of claims
resolved in
favour of the
customer
Compensatio
n paid
(amounts in
euros)
18,061
16,154
1,907
7,663
6,878
704,016
32
31
1
27
4
-
7
7
-
5
2
-
98
16
98
16
-
68
12
30
6
11,621
2,056
107
104
3
77
23
10,035
135
128
7
62
67
499
16
14
2
13
3
2,074
21
21
-
11
11
9,730
The breakdown by type of all claims resolved and dismissed in 2011 was as follows:
Type of claim
Number of claims
Amount (in euros)
1,856
76,469
445
29,539
398
5,523
Current accounts
1,830
54,027
2,885
145,445
2,644
230,191
503
35,963
Direct debits
572
7,649
Transfers
497
37,515
Bills and cheques
295
10,936
739
16,658
133
16,373
573
21,661
96
1,236
Life insurance
Damage insurance
277
5,079
Pension funds
167
10,672
Other insurance
Miscellaneous
Total
285
6,327
2,687
28,768
16,882
740,031
31
Claims pending resolution by Group entities subject to these obligations at 31 December 2011:
Number of claims pending
resolution
1,938
Company
Bankia, S.A.
Amount claimed (in euros)
179,831
4
11
-
Caja de Madrid de Pensiones, S.A., E.G.F.P.
9
-
7
-
1
-
Tasaciones Madrid, S.A.
1
-
(1.13) Information on deferred payments to suppliers. Third additional provision. “Disclosure
requirement" in Law 15/2010 of 5 July In compliance with the provisions of Law 15/2010, of 5 July, amending Law 3/2004, of 29 December,
establishing measures to combat late payment on commercial transactions, implemented by Spanish
Accounting and Audit Institute (ICAC) Resolution of 29 December 2010, on the information to be included
in the notes to financial statements with regard to deferred payments to suppliers in commercial
transactions, it is disclosed that:
-
Due to the nature the business activities in which the Group mainly engages (financial activities),
the information provided in this Note concerning deferred payments exclusively concerns
payments to suppliers for the provision of various services and supplies to the Group’s entities
resident in Spain and to payments to suppliers made by Spanish Group entities that carry out
non-financial activities, other than payments to depositors and holding companies of securities
issued by Group entities, which were made, in all cases, in strict compliance with the contractual
and legal periods established in each case, irrespective of whether or not they were payable in
cash or by instalment. Nor is any information provided concerning payments to suppliers
excluded from the scope of this mandatory disclosure pursuant to the provisions of the
aforementioned ICAC Resolution, such as suppliers of fixed assets that are not considered to be
trade creditors.
-
In connection with the information required by Law 15/2010 of 5 July in relation to Group's
commercial and service providers, and in due consideration of the third additional provision of the
ICAC Resolution of 29 December, 2010, there follows the information required by this regulation,
to the scope defined in the preceding paragraph:
outstanding at 31 December 2012
Amount
Within the statutory period (2)
% (1)
outstanding at 31 December 2011
Amount
% (1)
1,056,317
100 %
827,075
100 %
-
-
-
-
1,056,317
100 %
827,075
100 %
Weighted average late payment
days
-
-
-
-
Deferrals beyond the statutory
period at 31 December
-
-
-
-
Other
Total payments in the year
(1) Percentage of total
(2) The statutory payment period is, in each case, that corresponding to the nature of the goods or services received by Bankia
in accordance with the provisions of Law 3/2004, of 29 December, establishing measures to combat late payment in
commercial transactions.
Payments for payables and receivables among Spanish entities of the Bankia Group have been
excluded from the above data.
32
Mortgage-backed securities bonds, marketable and non-marketable, issued by the Group and
outstanding at 31 December 2012 and 2011 are recognised in the consolidated balance sheet under
"Financial liabilities at amortised cost" (Note 20). The Group has no mortgage-backed debentures in
issue. These mortgage securities are governed chiefly by Mortgage Market Law 2/1981, of 25 March, as
amended by Law 41/2007, of 7 December, and by Royal Decree 716/2009, of 24 April, implementing
certain provisions of the aforementioned Law.
Declarations by the Board of Directors of Bankia, S.A. concerning the existence of policies and
procedures required by applicable regulations
In compliance with the requirements of applicable regulations, Bankia's Board of Directors declares that
the Group has express policies and procedures in relation to its mortgage market business, and that the
Board of Directors is responsible for compliance with mortgage market regulations applicable to this
business. These policies and procedures include, inter alia, (i) the criteria applied concerning the
relationship that must exist between the amount of the loan and the appraisal value of the mortgaged
property, and the influence of the existence of other additional collateral and the criteria applied in the
selection of the appraisers; (ii) the relationship between the debt and the income of the borrower and the
existence of procedures aimed at assuring the information supplied by the borrower and the borrower's
solvency; (iii) the prevention of imbalances between flows from the hedging portfolio and those arising
from making the payments owed on the securities.
Regarding mortgage market laws and regulations, Bankia has in place suitable mortgage risk policies
and procedures in the two major areas – assets and liabilities – to monitor and quantify the mortgage
portfolio and the related borrowing limits.
In terms of assets, mortgage risk exposure policy takes the form of multilevel decision-making in the
Bank by means of a system of authorities and delegated powers.
Credit risk policies were approved by the entity's Board of Directors on 24 March 2011 to stabilise the
general approval criteria, including specific criteria by segments, such as portfolios associated with the
mortgage market.
General approval criteria include those associated with borrower risk, mainly the ability of the borrower to
repay, with no reliance on guarantors or assets delivered as collateral, which are considered as
alternative methods of collection.
Consideration is also given to criteria associated with the transaction, mainly the suitability of financing in
accordance with the customer's risk profile and adaptation of the product to the intended purpose.
Specific policies for the mortgage portfolio establish considerations concerning the appraisal value
associated with the loan as a cut-off point for the approval proposal.
Risk management of this portfolio is based on a mandatory scoring methodology approved by the
Supervisor, with specific monitoring of the cut-off points associated with the decision-making structure.
Other basic criteria are the maximum timelines of the transactions and the type of products sold by the
Group.
The guidelines laid out in the credit risk policies acknowledge property-based collateral subject to certain
requirements, such as a first-charge requirement, and compliance with measurement criteria in
accordance with the stipulations of prevailing regulations.
Any imbalance between mortgage portfolio flows and issued securities is managed by a regular review of
key portfolio parameters followed by a report to credit rating agencies for the purpose of monitoring
issued securities.
IT systems are in place to record, monitor and quantify these elements and to assess the degree of
compliance with mortgage market requirements for the purposes of portfolio eligibility for covering the
Bank's related borrowings.
In terms of liabilities, in line with its financing strategy in place at each given time in the light of the
outstanding mortgage portfolio, the Bank makes mortgage-backed security issuance decisions on the
33
basis of records that enable it to keep its issued securities within the bounds of eligibility for covering
borrowings in compliance with mortgage market laws and regulations.
Disclosures on the security and privileges enjoyed by holders of mortgage-backed instruments
issued by the Group
Pursuant to current legislation, the principal and interest of the mortgage-backed bonds issued by the
Group are specially secured (entry in the Property Register is not required) by mortgages on all the
mortgage-backed bonds that are registered in the Group's name at any time, without prejudice to its
unlimited liability. The mortgage-backed bonds entitle the holders not only to the aforementioned
guaranteed financial claim but also to claim payment from the issuer after maturity, and confer on the
holders the status of special preferential creditors vis-à-vis all other creditors in relation to all the
mortgage loans and credits registered in the issuer’s name.
In the event of insolvency, the holders of these bonds will enjoy the special privilege established in Article
90(1)(1) of Insolvency Law 22/2003 of 9 July. Without prejudice to the foregoing, in accordance with
Article 84(2)(7) of Insolvency Law 22/2003, during the solvency proceedings the payments relating to the
repayment of the principal and interest of the mortgage-backed securities issued and outstanding at the
date of the insolvency filing will be settled, as preferred claims, up to the amount of the income received
by the insolvent party from the mortgage loans and credits and, where appropriate, from the replacement
assets backing the securities and from the cash flows generated by the financial instruments associated
with the issues.
If, due to a timing mismatch, the income received by the insolvent party is insufficient to meet the
payments described in the preceding paragraph, the administrative receivers must settle them by
realising the replacement assets, if any, identified to cover the issue and, if this is not sufficient, they must
obtain financing to meet the mandated payments to the holders of the mortgage-backed securities, and
the finance provider must be subrogated to the position of the security-holders.
In the event that the measure indicated in Article 155(3) of Insolvency Law 22/2003, of 9 July, is required,
the payments to all holders of the mortgage-backed bonds issued would be made on a pro rata basis,
irrespective of the issue dates of the bonds.
Disclosures on mortgage market security issues
Note 20 discloses the outstanding balances of non-marketable (one-off) mortgage-backed securities
issued by the Group. In addition, Appendix IV individually itemises the outstanding balances of
marketable mortgage-backed securities issued by the Group, with their maturities, currencies and
reference rates.
The following table itemises the aggregate nominal value of marketable and non-marketable mortgagebacked securities outstanding at 31 December 2012 and 2011 issued by the Group, regardless of
whether or not they are recognised as consolidated liabilities of the Group (in the latter case, due to the
fact that they were not placed with third parties or because they were repurchased by the Group), based
on their residual maturity period, with a distinction made, in the case of those recognised by the Group as
debt securities, between those issued through a public offering and with no public offering, along with the
aggregate nominal values of mortgage participation certificates and mortgage transfer certificates issued
by the Group and outstanding at 31 December 2012 and 2011, with their average residual maturity
period:
34
NOMINAL VALUE OF MORTGAGE-BACKED SECURITIES
31/12/12
31/12/11
Average
Average
residual
residual
Nominal value
Nominal value
maturity period
maturity period
(months)
(months)
1. Mortgage-backed securities issued
48,453,828
69
54,169,050
71
Of which: not recognised on the liability side of the balance sheet
16,253,800
65
15,378,000
62
1.1 Debt securities. Issued through a public offering (1)
23,010,000
73
24,285,550
80
2,600,000
3
1,455,000
2
3,850,000
21
2,524,000
15
2,250,000
35
3,850,000
33
5,250,000
44
7,500,000
53
5,060,000
84
3,560,000
84
4,000,000
215
5,396,550
198
1.2 Debt securities. Other issues (1)
53
14,789,050
58
14,799,500
285,000
3
1,131,000
2
650,000
16
1,861,000
15
-
-
3,150,000
27
8,644,050
52
3,144,050
59
5,100,000
71
5,300,000
79
110,000
309
213,450
308
73
1.3 Deposits (2)
10,654,778
77
15,084,000
1,266,613
8
1,229,222
9
1,455,415
19
2,416,613
17
1,276,736
32
1,605,464
30
2,092,222
47
3,453,911
49
1,996,395
85
3,655,799
83
2,567,397
187
2,722,991
195
10,254
14
11,733
-
18,840,508
24
21,248,746
-
(1) These securities are recognised under "Financial liabilities at amortised cost - Marketable debt securities" in the accompanying consolidated
balance sheet at 31 December 2012 and 2011 (see Note 20 and Appendix IV).
(2) These securities are recognised under "Financial liabilities at amortised cost - Deposits from credit institutions" and "Financial liabilities at
amortised cost - Customer deposits" in the accompanying consolidated balance sheet at 31 December 2012 and 2011 (see Note 20).
The nominal value at 31 December 2012 and 2011 of the amounts available (committed amounts not
drawn down) of all mortgage loans and credits, with a distinction made between those potentially eligible
and those that are not eligible, is shown in the table below:
Undrawn balances (nominal value) (2)
31/12/12
31/12/11
Mortgage loans that back the issuance of mortgage-backed
securities (1)
878,962
4,365,549
Of which:
Potentially eligible (3)
Not eligible
681,443
197,519
2,828,478
1,537,071
(1) At 31 December 2012 and 2011, the Group had no mortgage bonds in issue.
(2) Committed amounts (limit) less amounts drawn down on all loans with mortgage collateral, irrespective of the percentage of
total risk on the amount of the last appraisal (Loan to Value), not transferred to third parties or relating to financing received. Also
includes balances that are only delivered to developers when the dwellings are sold.
(3) Loans potentially eligible for issuance of mortgage-backed securities under Article 3 of Royal Decree 716/2009.
With regard to lending operations, the table below shows the breakdown at 31 December 2012 and 2011
of the nominal value of mortgage loans and credit facilities that back the issue of mortgage-backed
securities issued by the Group (as already mentioned, as at the reporting date the Group had no
mortgage bonds in issue), indicating the total eligible loans and credit facilities, without regard to the limits
under Article 12 of Royal Decree 716/2009 of 24 April, and those that are eligible which, pursuant to the
criteria of the aforementioned Article 12 of Royal Decree 716/2009, are eligible for issuance of mortgage
securities.
35
This amount is presented, as required by applicable legislation, as the difference between the nominal
value of the entire portfolio of loans and credits secured through mortgages registered in favour of the
Group and pending collection (including, where applicable, those acquired through mortgage participation
certificates and mortgage transfer certificates), even if they have been derecognised, irrespective of the
proportion of the risk of the loan to the last available appraisal for purposes of the mortgage market, less
the mortgage loans and credits transferred through mortgage participation certificates and mortgage
transfer certificates, regardless of whether or not they were derecognised from the balance sheet, and
those designated as security for financing received (the amount recognised on the asset side of the
consolidated balance sheet is also indicated for mortgage loans and credits transferred):
Nominal value
31/12/12
1. Total loans
31/12/11
104,336,650
136,281,722
690,246
1,184,683
10,254
11,733
19,256,962
21,351,830
18,840,508
21,248,746
4. Mortgage loans pledged as security for financing received
-
-
5. Loans that back the issue of mortgage-backed securities (1-2-3-4)
84,389,442
113,745,209
5.1 Loans not eligible
5.1.1 Loans that meet the requirements to be eligible except for the limit established in Article 5.1
of Royal Decree 716/2009
21,162,196
36,509,104
10,476,620
15,593,764
5.1.2 Other
10,685,576
20,915,340
5.2 Eligible loans
63,227,246
77,236,105
239,589
1,670,416
62,987,657
75,565,689
5.2.1 Ineligible amounts (1)
5.2.2 Eligible amounts (loans eligible to cover mortgage-backed security issues)
(1)
Amount of the eligible loans which, pursuant to the criteria laid down in Article 12 of Royal Decree 716/2009, are not eligible to
cover issuance of mortgage bonds and mortgage-backed securities.
The reconciliation of eligible loans to mortgage-backed securities issued, along with issuance capacity and
percentage of overcollateralization, is as follows:
Nominal value
31/12/12
31/12/11
Mortgage loans and credits which, pursuant to the criteria laid down in Article 12 of RD
716/2009, are eligible to cover issuance of mortgage-backed securities.
62,987,657
75,565,689
Issue limit = 80% of eligible mortgage loans and credits
50,390,126
60,452,551
Mortgage-backed securities issued
48,453,828
54,169,050
1,936,298
6,283,501
174%
130%
210%
139%
Mortgage-backed securities issuance capacity (1) (Note 3.2)
Memorandum item:
Percentage of overcollateralization of the portfolio
Percentage of overcollateralization of the eligible portfolio
(1)
At 31 December 2012, EUR 16,253,800 thousand of mortgage-backed securities remained on the balance sheet. Therefore, the issuance
capacity would be EUR 18,190,098 thousand.
36
The table below shows the detail at 31 December 2012 and 2011 of the nominal value of the loans and
credits that back mortgage-backed securities issued by the Group and of those loans and credits that are
eligible, without taking into consideration the restrictions on their eligibility established in Article 12 of
Royal Decree 716/2009, based on (i) if they arose from the Group or from creditor subrogations and other
cases; (ii) if they are denominated in euros or in other currencies; (iii) if they have a normal payment
situation and other cases; (iv) their average residual maturity; (v) if the interest rate is fixed, floating or
mixed; (vi) if the transactions are aimed at legal entities or individuals that are to use the loan proceeds
for the purpose of their business activity (with a disclosure of the portion related to property development)
and transactions aimed at households; (vii) if the guarantee consists of assets/completed buildings (with
a distinction made between those used for residential, commercial and other purposes), assets/buildings
under construction (with a disclosure similar to that of the finished buildings) or land (with a distinction
made between developed land and other land), indicating the transactions that are secured by
government-subsidised housing, even that under development:
1. Origin of operations
1.1 Originated by Bankia
1.2. Subrogated to other entities
1.3 Other
Loans that back mortgage-backed
securities
31/12/12
31/12/11
84,389,442
113,745,209
78,845,086
104,446,728
1,145,534
1,274,640
4,398,822
8,023,841
Of which: eligible loans
31/12/12
63,227,246
58,087,661
1,104,563
4,035,022
31/12/11
77,236,105
70,056,704
1,234,563
5,944,838
2. Currency
2.1 Euro
2.2 Other currencies
84,389,442
83,690,231
699,211
113,745,209
113,261,100
484,109
63,227,246
63,227,246
-
77,236,105
77,236,105
-
3. Payment situation
3.1 Normal payment situation
3.2 Other situations
84,389,442
73,277,691
11,111,751
113,745,209
98,871,101
14,874,108
63,227,246
59,897,475
3,329,771
77,236,105
73,339,020
3,897,085
4. Average residual maturity
4.1 Up to ten years
4.2 More than ten years and up to 20 years
4.3 More than 20 years and up to 30 years
4.4 More than 30 years
84,389,442
12,515,225
23,599,166
29,818,777
18,456,274
113,745,209
27,237,052
27,826,454
38,331,355
20,350,348
63,227,246
6,653,905
19,344,522
24,679,782
12,549,037
77,236,105
11,352,470
22,206,597
29,981,337
13,695,701
5. Interest rates
5.1 Fixed
5.2 Floating
5.3 Mixed
84,389,442
2,004,067
73,849,402
8,535,973
113,745,209
3,143,476
103,630,232
6,971,501
63,227,246
1,195,342
55,376,208
6,655,696
77,236,105
963,426
70,689,393
5,583,286
6. Owners
6.1 Legal entities and natural person entrepreneurs
Of which: property developments
84,389,442
29,649,745
4,463,106
113,745,209
56,692,178
19,901,593
63,227,246
17,189,042
2,213,774
77,236,105
29,248,814
9,493,893
6.2 Other individuals and non-profit institutions
serving households (NPISH)
54,739,697
57,053,031
46,038,204
47,987,291
7. Type of collateral
7.1 Assets/completed buildings
7.1.1 Residential
7.1.2 Commercial
7.1.3 Other
7.2 Assets/buildings under construction
7.2.1 Residential
7.2.2 Commercial
7.2.3 Other
7.3 Land
7.3.1 Developed
7.3.2 Other
84,389,442
82,789,860
66,406,464
2,392,562
413,308
15,970,088
548,225
459,292
24,588
20,127
68,806
1,051,357
109,653
941,704
113,745,209
92,389,853
74,039,769
3,774,211
5,241,756
13,108,328
12,993,289
12,282,888
1,233
256,823
453,578
8,362,067
5,156,927
3,205,140
63,227,246
62,740,288
56,379,583
1,365,051
246,787
6,113,918
406,349
378,733
24,133
13,364
14,252
80,609
46,975
33,634
77,236,105
67,889,175
61,137,730
2,479,135
2,706,972
4,044,473
8,343,581
7,934,346
1,153
96,249
312,986
1,003,349
782,168
221,181
37
The nominal value of eligible mortgage loans and credits at 31 December 2012 and 2011, broken down
by the ratios of the amount of the transactions to the last available appraisal of the mortgaged assets
(Loan to Value), is shown in the table below:
31 December 2012
Risk in relation to the last available appraisal for the mortgage market (Loan to Value)
Less than or
equal to 40%
More than
40% and
less than
60%
More than
60% and
less than or
equal to
80%
Over 60%
More
than 80%
Total
Loans eligible for issuance of
mortgage-backed securities and
mortgage bonds
14,490,881
21,423,112
79,304
27,157,258
76,691
63,227,246
Housing
11,350,885
18,173,482
-
27,157,258
76,691
56,758,316
3,139,996
3,249,630
79,304
-
-
6,468,930
Other assets
31 December 2011
Risk in relation to the last available appraisal for the mortgage market (Loan to Value)
Less than or
equal to 40%
More than
40% and
less than
60%
More than
60%
More than
60% and
less than or
equal to
80%
More
than 80%
Total
Loans eligible for issuance of
mortgage-backed securities and
mortgage bonds
17,595,455
25,151,122
772,522
33,373,102
343,904
77,236,105
Housing
14,250,761
21,104,308
-
33,373,102
343,904
69,072,075
3,344,694
4,046,814
772,522
-
Other assets
8,164,030
Finally, at 31 December 2012 and 2011 there were no replacement assets backing the Bank's
mortgaged-backed issues.
(1.15) Segment reporting and distribution of revenue from ordinary Group activities, by categories
of activities and geographic markets
The itemised segments on which the information in these consolidated financial statements is presented
at 31 December 2012 and 2011 refer to the following business areas:
-
Personal Banking
Business Banking
Corporate Centre
Personal Banking includes retail banking with legal and natural persons (with annual income of less than
EUR 6 million), distributed through a large multi-channel network in Spain and operating a customercentric business model.
Business Banking targets legal entities with annual income in excess of EUR 6 million. Other customers,
legal entities or self-employed professionals with income below this figure fall into the Personal Banking
category.
Finally, the Corporate Centre deals with any areas other than those already mentioned, including the
Capital Markets, Private Banking, Asset Management and Bancassurance, and Investees areas.
Geographical segment reporting regarding interest and similar income for the years ended 31 December
38
Distribution of interest and similar income by geographic areas
2012
MARKET
Domestic market
Export:
European Union
Other OECD countries
Other countries
Total
Bank
7,181,554
78,690
43,331
35,359
7,260,244
2011
Group
7,313,202
187,613
44,254
134,350
9,009
7,500,815
Bank
7,583,937
96,637
49,862
46,775
7,680,574
Group
7,407,816
194,177
49,862
135,198
9,117
7,601,993
The table below shows the Group's ordinary income by business segments for the years ended 31
Total ordinary income (1)
SEGMENT
2012
2011 (2)
Personal Banking
4,514,554
4,923,002
Business Banking
1,579,999
1,718,535
Corporate Centre
3,323,870
2,940,377
-
-
9,418,423
9,581,914
Adjustments and eliminations between segments
Total
(1)
In the table above, "Ordinary income" is understood as the balances under "Interest and similar income", "Return on equity
instruments", "Fee and commission income", "Gains and losses on financial transactions (net)" and "Other operating income" in the
accompanying consolidated income statement for the years ended 31 December 2012 and 2011, which can be regarded as
comparable to the Group's revenue from ordinary business.
(2)
The table below shows information by segment in relation to "Profit before tax" in the consolidated
income statements for the financial years ended 31 December 2012 and 2011:
INCOME BY SEGMENT
2012
2011 (2)
Personal Banking
1,585,060
Business Banking
749,973
719,395
Corporate Centre and other adjustments
(618,118)
(283,027)
Adjusted net operating income (1)
1,716,915
1,658,825
(21,545,558)
(4,391,408)
(2,360,582)
(1,574,235)
(22,189,225)
(4,306,818)
(+/-) Impairment losses and provisions
(+/-) Other income (loss)
PROFIT/(LOSS) BEFORE TAX
1,222,457
(1)
Earnings from operating activity for the years ended 31 December 2012 and 2011, excluding impairment losses and provisions on
the consolidated income statement.
(2)
39
Additional provision nine of Law 9/2012, of 14 November, on the restructuring and resolution of credit
institutions, which transposes into law Royal Decree-Law 24/2012, of 31 August, on the restructuring and
resolution of credit institutions, requires credit institutions that at the date of entry into force of said Royal
Decree-Law are majority owned by the FROB, which is the case of the BFA–Bankia Group (see Note 1)
to transfer certain assets to the Society of Asset Management from the Banking Restructuring (SAREB).
The third section of Chapter IV of Royal Decree 1559/2012, of 15 November, establishes the set of
assets to be transferred to the SAREB, which can be summarised as follows:
a) Real estate assets appearing in the separate or consolidated balance sheet at 30 June 2012
foreclosed or acquired as payment of debts with a net carrying amount (after application of the
coverage required in prevailing legislation) that exceeds EUR 100,000
b) Credit rights held on the balance sheet at 30 June 2012 or arising from refinancing at a
subsequent date with a net carrying amount (after application of the coverage required in
prevailing legislation) that exceeds EUR 250,000
1. Loans or credits granted to finance the acquisition of land for real estate development or to
finance the construction and development of real estate properties in Spain in progress or
finished, regardless of their age on the balance sheet and their accounting classification,
except for suspended assets recovered.
2. Participating loans granted to real estate or related companies regardless of their age on the
balance sheet and accounting classification.
3. Other loans and credits granted to the holders in section 1 above when the FROB considers
they should be transferred to the SAREB.
c) Properties and credit rights meeting the requirements above from real estate or related
companies in which the entity exercises control
d) Equity instruments of real estate or related companies which, directly or indirectly, grant the entity
or any group entity joint control or significant influence when the FROB considers they should be
transferred because (i) the company or companies hold a large volume of assets described in a);
or (ii) they represent the vehicle through which the entity carries out its construction/property
development activity in Spain
e) Lastly, the FROB may impose mandatory transfer of other loans or assets not included above
that are particularly impaired or where their continued recognition on the balance sheet would be
detrimental to the viability of the entity.
Therefore, excluded from the scope of transfer, in general, are assets of amounts below the
aforementioned thresholds, those for which full provision is made at the date of transfer and businesses
with an underlying activity located abroad.
The assets indicated in d) above will be analysed and, as appropriate, transferred to the SAREB in the
first half of 2013.
The transfer price of these assets, to be determined by the Bank of Spain, was based on the real
economic value of the assets calculated using conventional valuation techniques with any additional
haircuts or valuation adjustments required of the credit institution for each asset class, and in no case
less than the required coverage as provided for in Bank of Spain circulars on accounting of credit
institutions (although it may be greater) or the amount that could be applicable in accordance with Royal
Decree-Law 2/2012, of 3 February, on the reorganisation of the financial sector, Royal Decree-Law
18/2012, of 11 May, on the reorganisation and sale of real estate assets in the financial sector and Law
8/2012, of 30 October, on the write-down and sale of real estate assets in the financial sector.
The consideration received for the assets transferred consisted of debt securities issued by the SAREB
and backed by the Spanish State, considered low-risk, highly liquid assets for the purposes of Law
2/1981 (the Mortgage Market Law).
In November and December 2012, under Bank of Spain and FROB supervision, the scope of assets
eligible for transfer to the SAREB was determined. On 21 December 2012, the transfer by the BFA Group
to the SAREB of a first set of assets related to categories a), b) and c) indicated above was executed in a
40
notarial instrument. The asset transfer agreement was entered into between the SAREB, BFA and
Bankia with effect from 31 December 2012.
The asset transfer price for the BFA Group was set at EUR 22,317 million, calculated applying the
aforementioned criteria to the estimated carrying amount of the assets at 31 December 2012 (the date of
transfer) based on the information provided by the entities.
The price was paid through the delivery of debt securities issued by the SAREB and guaranteed by the
Spanish State in amounts of: EUR 2,850 million to Banco Financiero y de Ahorros in proportion to the
assets owned by BFA and its subsidiaries, and EUR 19,467 million to Bankia in proportion to the assets
owned by Bankia and its subsidiaries.
The securities received by the Group and recognised under "Held-to-maturity investments" in the
consolidated balance sheet at 31 December 2012 were as follows:
(Thousands of euros and %)
Amount
Maturity
Interest rate
5,840,100
31/12/13
2.37%
8,760,300
31/12/14
2.74%
4,866,800
31/12/15
3.14%
The securities grant an annual rollover option to the issuer, although the estimated value of the option
does not result in any material differences between the fair value of the securities and their nominal
amount.
The table below provides a breakdown of the Bankia Group assets transferred, distinguishing between
the gross amount and the discount applied, by nature of the transferred assets:
ITEM
Gross amount
Discount
Transfer price
Financing transactions
29,915,467
(13,510,188)
16,405,279
Real estate assets
6,729,303
(3,667,185)
3,062,118
Adjustments may be made to the transfer price, as derived from the demarcation of the scope of assets
and price setting, although the directors estimate that any such adjustments would not imply a material
change.
Bankia, BFA and the SAREB have signed an asset management and administration agreement under
which Bankia and BFA will oversee the administration and management of the transferred assets.
41
A summary of the main accounting policies and measurement bases applied to prepare the Bankia
Group's consolidated financial statements for the year ended 31 December 2012 is as follows:
(2.1) Business combinations and consolidation
(2.1.1) BFA-Bankia Group Restructuring Plan
The Restructuring Plan includes, inter alia, the start-up of a disposal plan for non-strategic holdings.
Following the roll-out of the disposal plan and in accordance with applicable regulations (see Note 2.20),
the Group reclassified certain equity investments to "Non-current assets held for sale". The classification,
recognition and measurement criteria applied based on the type of investments put up for sale were as
follows:
-
Investments in Group companies: subsidiaries that based on the foregoing criteria meet the
requirement for recognition as "Non-current assets held for sale" were fully consolidated, and all their
assets and liabilities were presented and measured in accordance with the criteria established for
“Disposal groups”. Assets and liabilities of disposal groups are measured following the criteria
established for non-current assets held for sale (Note 2.20).
The assets are presented separately on the balance sheet under "Non-current assets held for sale"
and the liabilities under "Liabilities associated with non-current assets held for sale". Valuation
adjustments to equity related to these items were classified, where appropriate, under "Valuation
adjustments - Non-current assets held for sale". Gains and losses on these assets and liabilities, and
impairment losses and recovery, where applicable, were recognised under "Gains/(losses) on noncurrent assets held for sale not classified as discontinued operations", except in the case of financial
assets, assets arising from employee remuneration, deferred tax assets and assets under insurance
contracts, which are measured in accordance with the general measurement criteria for this type of
asset.
The table below provides a detail of the subsidiaries meeting the criteria for recognition as disposal
groups and whose assets and liabilities are therefore presented under "Non-current assets held for
sale" and "Liabilities associated with non-current assets held for sale", respectively. Note 15 provides
details of the amounts of these assets and liabilities.
Company
BANCOFAR, S.A.
% shareholding
70.21
CITY NATIONAL BANK OF FLORIDA
100.00
CITY NATIONAL TITLE INSURANCE AGENCY INC.
100.00
CM FLORIDA HOLDINGS, INC.
100.00
100.00
Appendix I contains significant information on these entities.
-
Investments in jointly-controlled entities and associates: pursuant to prevailing legislation, the
equity method of accounting is no longer applied to investments in jointly-controlled entities and
associates classified under "Non-current assets held for sale"; instead, the investments are
presented and measured as "Non-current assets held for sale", that is, at the lower of fair value less
costs to sell and carrying amount at the classification date in accordance with applicable standards
(see Note 2.20). The gains and losses arising on their disposal, and impairment losses and recovery,
where appropriate, are recognised under "Gains/(losses) on non-current assets held for sale not
classified as discontinued operations". The remaining income and expenses are classified under the
related income statement items according to their nature.
42
All investments in jointly-controlled entities and associates at 31 December 2012 were reclassified to
"Non-current assets held for sale" except the following:
Company
% shareholding
ASEGURADORA VALENCIA, S.A. DE SEGUROS Y REASEGUROS
50.00
MAPFRE CAJA MADRID VIDA, S.A., DE SEGUROS Y REASEGUROS
49.00
Note 15 details the amount of investments in jointly-controlled entities and associates that were
reclassified to "Non-current assets held for sale" and the related impairment.
Relevant information on these companies is provided in Appendix III.
-
Available-for-sale financial assets: as indicated in Note 2.20, as these are financial assets, they
are not measured using the general criteria for non-current assets held for sale, but rather applying
the measurement criteria for financial assets (see Note 2.2). Previously recognises losses in "Equity Valuation adjustments" are considered realised and recognised in the income statement at the date
of classification. Remaining valuation adjustments recognised in equity are classified, as appropriate,
under "Valuation adjustments - Non-current assets held for sale”.
As a result of the Restructuring Plan described previously, all the investments recognised under
"Available-for-sale financial assets - Equity instruments" were reclassified to “Non-current assets held
for sale" on the accompanying consolidated balance sheet at 31 December 2012. Note 15 to the
consolidated financial statements details the amounts at which the investments are recognised and
the related impairment.
(2.1.2) Business combinations
A business combination is a transaction or another event in which the acquirer obtains control over one
or more businesses. For these purposes, an entity controls another entity when it has the power to
govern its financial and operating policies, as stipulated by law, the bylaws or agreement, so as to obtain
economic benefits from its activities.
Accordingly, a business is defined as an integrated set of activities and assets which can be controlled
and managed for the purpose of providing a return in the form of dividends, less costs and other
economic benefits, directly to the investors or other owners, members or venturers.
In particular, the acquisition of control over an entity is considered a business combination.
The business combinations through which the Group acquired control of an entity or economic unit are
recognised for accounting purposes using the acquisition method, the main phases of which are
-
Identify the acquirer;
-
Determine the acquisition date;
-
Recognise and measure the identifiable acquired assets, the liabilities assumed and any noncontrolling interest in the acquiree. Other than the exceptions mentioned in IFRS 3, in general the
identified assets, liabilities and contingent liabilities of the entity of business acquired are measured at
fair value when control is acquired.
-
Recognise and measure goodwill or the gain from a bargain purchase in the consolidated income
statement comparing the price paid in the business combination and the initial value of the identified
assets, liabilities and contingent liabilities of the acquired business.
In situations in which the Group obtained control of an acquiree, in which it holds equity interest
immediately prior to the acquisition date (a business combination achieved in stages), its equity interests
in the acquiree previously held at fair value at the acquisition date are remeasured and the resulting gains
or losses, if any, are recognised in the consolidated income statement.
In the case of business combinations carried out without transferring consideration, such as business
combinations achieved by contract alone, the Group recognises, where applicable, the amount of the net
assets and liabilities of the acquiree applying the policies and bases contained in IFRS 3 (in general and
with the exceptions established in IFRS 3 at fair value) in the Group’s equity, such that any goodwill or
gains arising from the purchase are not recognised in business combinations of this type.
There were no transactions or other events resulting in significant business combinations in 2012.
43
(2.1.3) Subsidiaries
“Subsidiaries” are defined as entities over which the Bank has the capacity to exercise control; control is,
in general but not exclusively, presumed to exist when the parent owns directly or indirectly half or more
of the voting rights of the investee or, even if this percentage is lower or zero, when, for example, there
are other circumstances or agreements that give the Bank control.
In accordance with IAS 27, control is the power to govern the financial and operating policies of an entity
so as to obtain benefits from its activities.
The following tables provides a breakdown of investees in which the Group holds a direct or indirect
stake and which, despite ownership of more than half their capital or voting rights, are not under its
control, and they have not been considered as subsidiaries for the purposes of these consolidated
financial statements:
Company
Ownership interest (direct + indirect)
Ged See Opportunity I, S.A.
52.17%
Montis Locare, S.L.
52.27%
The financial statements of the subsidiaries are fully consolidated with those of the Bank using the
method defined in IAS 27, except those classified under "Non-current assets held for sale", which are
recognised and measured as explained in Note 2.1.1.
Accordingly, all material balances of the transactions between fully consolidated entities are eliminated
on consolidation. Also, the share of third parties of:
-
The Group’s equity is presented under “Equity - Non-controlling interests” in the consolidated
balance sheet (see Note 24);
-
Consolidated profit/(loss) for the year: is recognised under “Profit/(loss) attributable to noncontrolling interests” in the consolidated income statement.
The results of subsidiaries acquired during the period are included in the consolidated income statement
from the date of acquisition to period end.
Similarly, the results of subsidiaries disposed of during the year are included in the consolidated income
statement from the beginning of the year to the date of disposal.
Appendix I contains significant information on these entities.
(2.1.4) Joint ventures
A joint venture is a contractual arrangement whereby two or more entities, called venturers, undertake a
economic activity which is subject to joint control, i.e. the contractually agreed sharing of the power to
govern the financial and operating policies of an entity, or other economic activity, so as to benefit from its
operations, the strategic financial and operating decisions requiring the unanimous consent of all the
venturers.
The assets and liabilities assigned to jointly-controlled operations and the assets controlled jointly with
other venturers are recognised in the consolidated balance sheet, classified according to their specific
nature. Similarly, the Group's share of the income and expenses of joint ventures is recognised in the
consolidated income statement on the basis of the nature of the related items.
Investments in entities that are not subsidiaries but which are jointly controlled by two or more unrelated
companies, of which the Group is one (“jointly-controlled entities”), are also considered “joint ventures”.
Pursuant to current regulations, the Bank opted to measure its interests in jointly-controlled entities using
the "equity method" since it considered that this method presents faithfully the economic substance and
reality of the jointly-controlled entities’ relations in the framework of the contractual arrangements in force
with the other venturers (see Note 16), except those classified under "Non-current assets held for sale",
which are recognised and measured as explained in Note 2.1.1.
If investments in jointly-controlled entities had been consolidated proportionately, it is estimated that the
following consolidated balance sheet figures at 31 December 2012 and 2011 would have differed as
follows:
44
31/12/12
ITEM
31/12/11
Consolidated balance sheet
Assets
3,198,407
5,254,485
3,165,687
3,696,682
13,326
35,572
495
656,643
18,899
865,588
3,198,407
5,254,485
Tangible assets
Other assets
Liabilities
(312,649)
828,419
Liabilities under insurance contracts
3,467,145
3,686,929
43,911
739,137
Other liabilities
Moreover, if interests in jointly-controlled entities had been consolidated proportionately, it is estimated
that the following figures on the consolidated income statement for the years ended 31 December 2012
and 2011 would have differed as follows:
ITEM
31/12/12
31/12/11
Consolidated income statement:
Net interest income
53,211
37,872
Gross income
33,735
161,912
Net operating income
17,287
67,356
Appendix II contains significant information on these entities.
(2.1.5) Associates
“Associates” are entities over which the Bank has significant influence, but not control or joint control.
The influence is usually evidenced by a direct or indirect holding of 20% or more of the investee's voting
rights.
In the consolidated financial statements, investments in associates are accounted for using the equity
method, as defined by IAS 28. However, as indicated in Note 2.1.1., all the associates were reclassified
to "Non-current assets held for sale" in 2012, and presented and measured from then as explained in that
Note.
Relevant information on associates is provided in Appendix III. The Appendix lists entities in which the
Group holds less than 20% of share capital as it considers that it has significant influence over their
financial and operating policies.
The table below shows a breakdown of these entities which, despite not holding 20% of their capital or
voting rights and despite their classification under "Non-current assets held for sale", the Group
considered to be associates as it exercises significant influence (due to significant representation on the
companies' governing bodies, or the effective ability to influence their strategic and operating policies):
45
Investee
Ownership interest
Concesiones Aereoportuarias S.A.
15.00%
Deoleo, S.A.
18.37%
19.40%
Haciendas Marqués de la Concordia, S.A.
16.16%
International Consolidated Airlines Group, S.A. (IAG)
12.09%
20.00%
NH Hoteles, S.A.
10.04%
Numzaan, S.L.
14.13%
Promociones Parcela H1 Dominicana, S.L.
19.79%
Sacyr Vallehermoso, S.A.
1.92%
The following is a list of companies in which the Group holds an interest exceeding 20% of capital but not
treated as associates in the Group's consolidated balance sheet at 31 December 2012, since it is
considered that the Group does not exercise significant influence over them, given the specific features of
those investments: either the Group has no significant representation on those companies’ governing
bodies, or it has no effective ability to influence their strategic and operating policies:
Investee
Ownership interest
Promociones y Gestiones Patrimoniales 1997, S.L.
48.66%
Desafío de Inversiones, SICAV, S.A.
42.70%
Naviera Koala, A.I.E.
34.78%
Desarrollo y Tecnología del Automóvil, S.A. (in liquidation)
33.41%
Vinos Y Bodegas de Pardilla, S.L.
30.00%
Compania de Terminal Multimodal, S.L.
25.04%
Aviones Carraixet Crj-200 II, A.I.E.
25.00%
Aviones Turia Crj-200 I, A.I.E.
25.00%
Aviones Portacoli Crj-200 III, A.I.E.
24.90%
The aggregate of investments in such companies was not a significant item in the Group's consolidated
financial statements for the year ended 31 December 2012.
(2.2) Financial instruments: initial recognition, derecognition of financial instruments, fair value
and amortised cost of financial instruments, classification and measurement and reclassification
among categories
(2.2.1) Initial recognition of financial instruments
Financial instruments are initially recognised on the consolidated balance sheet when the Group
becomes a party to the contract in accordance with the provisions thereof. Specifically, debt instruments,
such as loans and cash deposits, are recognised from the date on which the legal right to receive or the
legal obligation to pay cash arises. Derivative financial instruments are generally recognised from the
trade date.
A regular way purchase or sale of financial assets, defined as one in which the parties' reciprocal
obligations must be discharged within a time frame established by regulation or convention in the
marketplace and that may not be settled net, such as stock market and forward currency purchase and
sale contracts, is recognised on the date from which the rewards, risks, rights and duties attaching to all
owners are for the purchaser, which, depending on the type of financial asset purchased or sold, may be
the trade date or the settlement or delivery date. In particular, transactions performed in the spot currency
market are recognised on the settlement date; equity instruments traded in Spanish secondary securities
markets are recognised on the trade date, and debt instruments traded in these markets are recognised
on the settlement date.
46
(2.2.2) Derecognition of financial instruments
A financial asset is derecognised when:

The contractual rights to the cash flows from the financial asset expire; or

The financial asset is transferred and substantially all its risks and rewards or, although these are
not substantially transferred or retained, it transfers control over the financial asset (see Note
2.7).
Financial liabilities are derecognised from the consolidated balance sheet when the obligations are
extinguished or when they are repurchased by the Group with the intention either to resell them or to
cancel them.
(2.2.3) Fair value and amortised cost of financial instruments
The fair value of a financial instrument on a specific date is the amount at which it could be delivered or
settled on that date between knowledgeable, willing parties in an arm’s length transaction. The most
objective and common reference for the fair value of a financial instrument is the price that would be paid
for it on an organised, transparent and deep market (“quoted price” or “market price”).
The Group measures daily all the positions that must be recognised at fair value based either on
available market prices for the same instrument, or on valuation techniques supported by observable
market inputs or, if appropriate, on the best available information.
Note 27 provides information on the fair value of the Group's main assets and liabilities at 31 December
2012 and 2011.
Amortised cost is understood to be the acquisition cost of a financial asset or liability plus or minus, as
appropriate, the principal repayments and interest payments and the cumulative amortisation (as
reflected in the consolidated income statement) using the effective interest method) of any difference
between the initial cost and the maturity amount of the financial instruments. In the case of financial
assets, amortised cost furthermore includes any reductions for impairment or uncollectibility.
The effective interest rate is the discount rate that exactly matches the carrying amount of a financial
instrument to the present value of all its estimated cash flows of all kinds over its remaining life, but
disregarding future credit losses. For fixed rate financial instruments, the effective interest rate coincides
with the contractual interest rate established on the acquisition date adjusted, where applicable, for the
fees and transaction costs that, pursuant to IAS 39, must be included in the calculation of the effective
interest rate. In the case of floating rate financial instruments, the effective interest rate is determined in a
similar fashion to fixed rate transactions and is recalculated on the date of every revision of the
contractual interest rate of the transaction, taking into account any changes in the future cash flows.
(2.2.4) Classification and measurement of financial assets and liabilities
Financial instruments are classified in the Group’s consolidated balance sheet as follows:
-
Financial assets and liabilities at fair value through profit or loss: this category includes
financial instruments classified as held for trading and other financial assets and liabilities classified
as at fair value through profit or loss:

Financial assets held for trading include those acquired with the intention of selling
them in the near term or which are part of a portfolio of identified financial instruments
that are managed together and for which there is evidence of a recent pattern of shortterm profit taking, and derivatives not designated as hedging instruments, including those
separated from hybrid financial instruments pursuant to IAS 39.

Financial liabilities held for trading include those that have been issued with an
intention to repurchase them in the near term or that form part of a portfolio of identified
financial instruments that are managed together and for which there is evidence of a
recent pattern of short-term profit taking; short positions arising from financial asset sales
under non-optional repurchase agreements or borrowed securities, and derivatives other
than as hedging instruments, including those separated from hybrid financial instruments
pursuant to IAS 39.
47


Other financial assets at fair value through profit or loss are considered as financial
assets designated as such from initial recognition, the fair value of which may be


derivative(s) and that there is an obligation to separate the embedded
derivative(s) from the host contract for accounting purposes.


relevant information, because a group of financial assets, liabilities or both, is
with a documented risk management or investment strategy, and information
about the group is provided on that basis to the Group’s key management
personnel.
Other financial liabilities at fair value through profit or loss are considered as financial
liabilities designated as such from initial recognition, the fair value of which may be


derivative(s) and that, pursuant to prevailing regulations, there is an obligation to
separate the embedded derivative(s) from the host contract for accounting
purposes.


relevant information, because a group of financial liabilities, assets or both is
with a documented risk management or investment strategy and information
about the group is provided on that basis to the Group’s key management
personnel.
48
Financial instruments at fair value through profit or loss are initially measured at their fair
value. Later changes to the fair value are recognised in the consolidated income statement
under “Gains or losses on financial assets and liabilities (net)", except for changes in the fair
value attributable to income accrued on the financial instrument other than trading
derivatives, which is recognised in the consolidated income statement under either “Interest
and similar income”, “Interest expense and similar charges”, or “Return on equity
instruments”, depending on their nature. The accrued returns on debt instruments included in
this category are calculated using the effective interest method.
Notwithstanding the above, financial derivatives whose underlying assets are equity
instruments whose fair value cannot be measured reliably and which are settled by delivery
of the underlying, are measured in these consolidated financial statements at cost.
-
Held-to-maturity investments: this category includes debt securities traded on active markets
with fixed maturities and fixed or determinable cash flows for which the Group has, from inception
and any subsequent date, both the positive intention and demonstrated financial ability to hold to
maturity.
Debt securities included in this category are initially measured at fair value adjusted by the amount
of the transaction costs that are directly attributable to the acquisition of the financial asset, which
are recognised in the consolidated income statement by the effective interest method as defined in
IAS 39. Subsequent to acquisition, debt securities included in this category are measured at
amortised cost calculated using the effective interest method.
The interest accrued on these securities, calculated using the effective interest method, is
recognised under “Interest and similar income” in the consolidated income statement. Exchange
differences on securities included in this portfolio denominated in currencies other than the euro
are recognised as explained in Note 2.4. Any impairment losses on these securities are recognised
as set forth in Note 2.9.
-
Loans and receivables: this category includes unquoted debt securities, financing granted to third
parties in connection with ordinary lending activities carried out by the consolidated entities and
receivables from purchasers of their goods and the users of their services. This category also
includes finance lease transactions in which the consolidated entities act as the lessor.
The financial assets included in this category are initially measured at fair value adjusted by the
amount of the fees and transaction costs that are directly attributable to the acquisition of the
financial asset and which, in accordance with the provisions of the regulations applicable, must be
allocated to the consolidated income statement by the effective interest method through maturity.
Subsequent to acquisition, assets included in this category are measured at amortised cost.
Assets acquired at a discount are measured at the cash amount paid and the difference between
their repayment value and the amount paid is recognised as finance income using the effective
interest method during the remaining term to maturity.
The consolidated entities generally intend to hold the loans and credits granted by them until their
final maturity and, therefore, they are presented in the consolidated balance sheet, subsequent to
initial recognition, at their amortised cost.
The interest accrued on these assets from their initial recognition, calculated using the effective
interest method, is recognised under “Interest and similar income” in the consolidated income
statement. Exchange differences on securities included in this portfolio denominated in currencies
other than the euro are recorded as set forth in Note 2.4. Any impairment losses on these assets
are recognised as described in Note 2.9. Debt securities included in fair value hedges are
recognised as explained in Note 2.3.
-
Available-for-sale financial assets: This category includes debt securities not classified as heldto-maturity investments, as loans and receivables or as financial assets at fair value through profit
or loss owned by the Group and equity instruments owned by the Group relating to entities other
than subsidiaries, joint ventures or associates that are not classified as at fair value through profit
or loss.
49
The instruments included in this category are initially measured at fair value adjusted by the
transaction costs that are directly attributable to the acquisition of the financial asset, which are
recognised, through maturity, in the consolidated income statement by the effective interest
method (as defined in the current regulations), except for those of financial assets with no fixed
maturity, which are recognised in the income statement when these assets become impaired or
are derecognised. Subsequent to acquisition, financial assets included in this category are
measured at fair value.
However, equity instruments whose fair value cannot be determined in a sufficiently objective
manner are measured in these consolidated financial statements at cost less any impairment
losses calculated as detailed in Note 2.9.
Changes in the fair value of available-for-sale financial assets relating to accrued interest or
dividends since their initial recognition are recognised in “Interest and similar income" (calculated
using the effective interest method) and “Return on equity instruments” in the consolidated income
statement, respectively. Any impairment losses on these instruments are recognised as described
in Note 2.9. Exchange differences on financial assets denominated in currencies other than the
euro are recognised as explained in Note 2.4. Changes in the fair value of financial assets hedged
in fair value hedges are recognised as explained in Note 2.3.
Other changes in the fair value of available-for-sale financial assets from the acquisition date are
recognised in Group's equity under “Valuation adjustments - Available-for-sale financial assets”
until the financial asset is derecognised, at which time the balance recorded under this item is
recognised under “Gains or losses on financial assets and liabilities (net)” in the consolidated
income statement or, in the case of equity instruments considered to be strategic investments for
Group, under “Gains/(losses) on non-current assets held for sale not classified as discontinued
operations”.
-
Financial liabilities at amortised cost: this category includes financial liabilities not included in
any of the preceding categories.
The liabilities issued by the consolidated entities which, although capital for legal purposes, do not
meet the requirements for classification as equity in accordance with IAS 32, basically the shares
issued by the consolidated entities that do not carry any voting rights but entitle their holders to
receive dividends if certain conditions are met, are classified as financial liabilities at amortised
cost, unless the Group has designated them as financial liabilities at fair value through profit or
loss, if they qualify as such.
The financial liabilities included in this category are initially measured at fair value adjusted by the
amount of the transaction costs that are directly attributable to the issuance or trading of the
financial liability, which are recognised in the consolidated income statement by the effective
interest method defined in IAS 39 until maturity. Subsequently, these financial liabilities are
measured at amortised cost calculated using the effective interest method defined in IAS 39.
The interest accrued on these liabilities since their initial recognition, calculated using the effective
interest method, is recognised under “Interest expense and similar charges” in the consolidated
income statement. Exchange differences on liabilities included in this portfolio denominated in
currencies other than the euro are recognised as explained in Note 2.4. Financial liabilities
included in fair value hedges are recognised as explained in Note 2.3.
Nevertheless, financial instruments that should be considered as non-current assets held for sale in
accordance with IFRS 5 are recognised in the consolidated financial statements as explained in Note
2.20.
(2.2.5) Reclassification of financial instruments between portfolios
Reclassifications between financial instrument portfolios can only be made, where appropriate, as
follows:
a) Except in rare circumstances, set out in d) below, financial instruments classified as “at fair value
through profit or loss” cannot be reclassified into or out of this financial instrument category once
purchased, issued or assumed.
50
b) If, as a result of a change in intention or financial ability, it is no longer appropriate to classify a
financial asset as held to maturity, it is reclassified into the “available-for-sale financial assets”
category. In this case, the same treatment shall be applied to all the financial instruments
classified as held-to-maturity investments, unless the reclassification is made in any of the
circumstances permitted under the applicable regulations (sales very close to maturity,
substantially all of the financial asset's original principal has been collected, etc.).
In 2012, the Group did not make any sale or reclassification of financial assets classified as heldto-maturity investments.
c) If there is a change in the Group's intention or financial ability, or if the two-year tainting period
established by the regulations applicable to the sale of financial assets classified in the held-tomaturity investment category has elapsed, the financial assets (debt instruments) included in the
“available-for-sale financial assets” category can be reclassified into the “held-to-maturity
investments” category. In this case, the fair value of these financial instruments on the date of
reclassification becomes their new amortised cost and the difference between this amount and
the redemption value is allocated to the consolidated income statement over the remaining life of
the instrument using the effective interest method.
No significant reclassifications of the type described in the preceding paragraph were made by
the Group in 2012.
d) A non-derivative financial asset may be reclassified out of the held-for-trading category if it is no
longer held for the purpose of selling or repurchasing it in the near term, provided that one of the
following circumstances occurs:
a. In rare and exceptional circumstances, unless the assets could have been included in
the loans and receivables category. For these purposes, rare and exceptional
circumstances are those arising from a particular event, which is unusual and highly
unlikely to recur in the foreseeable future.
b. When the entity has the intention and financial ability to hold the financial asset for the
foreseeable future or until maturity, provided that the asset had met the definition of
loans and receivables at initial recognition.
In these circumstances, the financial asset is reclassified at its fair value on the day of
reclassification, any gain or loss already recognised in profit or loss is not reversed, and this fair
value becomes its amortised cost. Financial assets thus reclassified cannot under any
circumstances be reclassified again into the held-for-trading category.
No financial assets included in the held-for-trading category were reclassified in 2012.
The Group uses financial derivatives as part of its strategy to reduce its exposure to interest rate, credit,
foreign exchange risk and other risks. When these transactions meet certain requirements stipulated in
IAS 39, they qualify for hedge accounting.
When the Group designates a transaction as a hedge, it does so from the initial date of the transactions
or instruments included in the hedge, and the hedging transaction is documented appropriately. The
hedge accounting documentation includes identification of the hedged item(s) and the hedging
instrument(s), the nature of the risk to be hedged and the criteria or methods used by the Group to
assess the effectiveness of the hedge over its entire life, taking into account the risk to be hedged.
The Group only applies hedge accounting for hedges that are considered highly effective over their entire
lives. A hedge is considered to be highly effective if, during its expected life, the changes in fair value or
cash flows of the hedged item that are attributable to the risk hedged in the hedging of the financial
instrument(s) are almost completely offset by changes in the fair value or cash flows, as appropriate, of
the hedging instrument(s).
To measure the effectiveness of hedges designated as such, the Group analyses whether, from the
beginning to the end of the term defined for the hedge, it can expect, prospectively, that the changes in
the fair value or cash flows of the hedged item that are attributable to the hedged risk will be almost fully
51
offset by changes in the fair value or cash flows, as appropriate, of the hedging instrument and,
retrospectively, that the actual results of the hedge will have been within a range of 80% to 125% of the
results of the hedged item.
Hedging transactions performed by the Group are classified as follows:
-
Fair value hedges: hedge of the exposure to changes in fair value of financial assets or liabilities
or unrecognised firm commitments, or of an identified portion of such assets, liabilities or firm
commitments, that is attributable to a particular risk, provided that it affects the consolidated
income statement.
-
Cash flow hedges: hedge of the exposure to variability in cash flows that is attributable to a
particular risk associated with a financial asset or liability or a highly probable forecast
transaction, provided that it could affect the consolidated income statement.
-
Hedge of a net investment in foreign operations: hedge of the currency risk on investments in
subsidiaries, associates, joint ventures and branches of the Group whose activities are based on
or conducted in another country or in a functional currency than the euro.
In the specific case of financial instruments designated as hedged items or qualifying for hedge
accounting, gains and losses are recognised as follows:
-
In fair value hedges, the gains or losses arising on both the hedging instruments and the
hedged items are recognised directly in the consolidated income statement.
-
In cash flow hedges, the gains or losses attributable to the portion of the hedging instruments
that qualifies as an effective hedge are recognised temporarily in consolidated equity under
"Valuation adjustments - Cash flow hedges". Financial instruments hedged in this type of hedging
transaction are recognised as explained in Note 2.2, with no change made to the recognition
criteria due to their consideration as hedged items.
-
In hedges of net investments in foreign operations, the gains or losses attributable to the
portion of the hedging instruments qualifying as an effective hedge are recognised temporarily in
consolidated equity under "Valuation adjustments - Hedges of net investments in foreign
operations". Financial instruments hedged in this type of hedging transaction are recognised as
explained in Note 2.2, with no change made to the recognition criteria due to their consideration
as hedged items.
As a general rule, in cash flow hedges, the gains or losses attributable to the effective portion of the
hedging instruments are not recognised in the consolidated income statement until the gains or losses on
the hedged item are recognised in the consolidated income statement or, if the hedge relates to a highly
probable forecast transaction that will lead to the recognition of a non-financial asset or liability, they will
be recognised as part of the acquisition or issue cost when the asset is acquired or the liability is
assumed.
In the case of hedges of net investments in foreign operations, the amounts recognised as valuation
adjustments in equity in accordance with the aforementioned criteria are recognised in the consolidated
income statement when they are disposed of or derecognised.
In cash flow hedges and hedges of net investments in foreign operations, the gains or losses on the
ineffective portion of the hedging instruments are recognised directly under “Gains or losses on financial
assets and liabilities (net)” in the consolidated income statement.
The Group discontinues hedge accounting when the hedging instrument expires or is sold, when the
hedge no longer meets the requirements for hedge accounting or it revokes the designation as a hedge.
When, as explained in the preceding paragraph, hedge accounting is discontinued for a fair value hedge,
in the case of hedged items carried at amortised cost, the value adjustments made as a result of the
hedge accounting described above are recognised in the consolidated income statement through
maturity of the hedged items, using the effective interest rate recalculated as at the date of
discontinuation of hedge accounting.
52
If hedge accounting is discontinued for a cash flow hedge or a hedge of a net investment in a foreign
operation, the cumulative gain or loss on the hedging instrument recognised in equity under “Valuation
adjustments” in the consolidated balance sheet will continue to be recognised under that heading until the
forecast hedged transaction occurs, when it will be reclassified into the income statement or it will correct
the acquisition cost of the asset or liability to be recorded, if the hedged item is a forecast transaction that
results in the recognition of a non-financial asset or liability.
The Group enters into hedges on a transaction-by-transaction basis pursuant to the aforementioned
criteria by assessing the hedging instrument and the hedged item on an individual basis and continually
monitoring the effectiveness of each hedge, to ensure that changes in the value of the hedging
instrument and the hedged item offset each other.
The Group's main hedged positions and the financial hedging instruments used are as follows:
Fair value hedges
–
–
o
swaps). The Group also hedges certain positions against credit risk with credit
derivatives (basically credit default swaps.
o
in active markets.
o
–
The Group also hedges certain positions against credit risk with credit derivatives
o
Long-term fixed-rate deposits and marketable debt securities issued by the Group,
whose risk is hedged with interest rate derivatives (basically swaps).
Cash flow hedges
–
o
swaps).
–
–
o Floating-rate loans, whose risk is hedged with interest rate derivatives (basically swaps).
o
Marketable debt securities issued by the Group, whose risk is hedged with interest rate
–
o
(2.4.1) Functional currency
The Group’s functional currency is the euro. Consequently, all balances and transactions denominated in
currencies other than the euro are considered to be denominated in “foreign currency”.
The detail, by currency and item, of the equivalent euro value of the main asset and liability balances in
the consolidated balance sheet at 31 December 2012 and 2011 denominated in foreign currency is as
follows:
53
31/12/12
ITEM
Assets
31/12/11
Liabilities
Assets
Liabilities
Balances in US dollars
Investments
Other
Total
103,172
976,368
2,858,673
11,083
3,475,875
1,043,272
709,247
2,907,014
183,273
1,055,015
5,266,635
570,219
505,113
349,554
1,111,350
3,381,096
57,574
7,425,171
4,659,533
7,929,809
4,550,020
942
202,407
92,855
2,047
993
203,630
48,359
206
4,322
222,885
382,679
3,427
164
223,176
92,801
238
299,244
252,195
613,477
316,215
503
49,056
425,989
72,853
48,796
289,512
-
11,446
45,818
910,913
67,313
2,083
6
54,170
42,227
261,046
32,156
548,401
371,942
5,283,670
1,091,749
335,429
9,635,035
5,201,664
Balances in pounds sterling
Other
Total
Balances in other currencies
Investments
Other
Total
Total foreign currency balances
8,272,816
33,634
(2.4.2) Translation of foreign currency balances
Balances in foreign currencies are translated to euros in two consecutive phases:
-
Translation of foreign currency to the functional currency of the Group entities, joint ventures and
entities accounted for using the equity method; and
-
Translation to euros of the balances of consolidated companies or companies accounted for using
the equity method whose reporting currency is not the euro.
The functional currencies of all the Group entities or entities accounted for using the equity method in the
consolidated financial statements are the same as their respective reporting currencies.
Translation of foreign currency to the functional currency: Foreign currency transactions performed by
consolidated entities or entities accounted for using the equity method are initially recognised in their
respective financial statements at the equivalent value in their functional currencies, translated using the
exchange rates prevailing at the transaction date. Subsequently, the consolidated entities translate the
foreign currency monetary items to their functional currencies using the exchange rates at year end.
Furthermore:
-
Non-monetary items measured at historical cost are translated to the functional currency at the
exchange rate at the date of acquisition.
54
-
on-monetary items measured at fair value are translated to the functional currency at the exchange
rate at the date when the fair value was determined.
Entities whose functional currency is not the euro: The balances in the financial statements of the
consolidated entities and entities accounted for using the equity method whose functional currency is not
the euro are translated to euros as follows:
-
Assets and liabilities, at the closing rates.
-
Income and expenses and cash flows, at the average exchange rates for the year.
-
Equity items, at the historical exchange rates.
(2.4.3) Exchange rates applied
The exchange rates used by the Group in translating the foreign currency balances to euros for the
purpose of preparing the consolidated financial statements, taking into account the methods mentioned
above, were the official rates published by the European Central Bank.
(2.4.4) Recognition of exchange differences
Exchange differences arising on translating foreign currency balances into the functional currency of
consolidated entities and their branch offices are generally recognised at their net value in the
consolidated income statement under "Exchange differences (net)". As an exception to this rule,
exchange differences affecting the value of financial instruments measured at fair value through profit or
loss are recognised in the consolidated income statement together with all other changes that may affect
the fair value of the instrument, under "Gains or losses on financial assets and liabilities (net)".
However, exchange differences arising on non-monetary items measured at fair value through equity are
recognised in consolidated equity under “Valuation adjustments – Exchange differences” in the
consolidated balance sheet until they are realised.
The exchange differences arising on the translation to euros of the financial statements in the functional
currencies of the consolidated entities, whose functional currency is not the euro, are recognised in
consolidated equity under “Valuation adjustments – Exchange differences” in the consolidated balance
sheet, whereas those translated to euros of the financial statements of entities accounted for using the
equity method are recognised under “Valuation adjustments – Entities accounted for using the equity
method”.
(2.4.5) Entities and branches located in hyperinflationary economies
None of the functional currencies of the consolidated subsidiaries and associates and of their branches
located abroad relate to hyperinflationary economies as defined by IFRS-EU. Accordingly, at the 2012
year-end it was not necessary to adjust the financial statements of any consolidated entity or associate to
correct for the effect of inflation.
The most significant accounting criteria used by the Group to recognise its income and expenses are
(2.5.1) Interest income, interest expense, dividends and similar items
As a general rule, interest income, interest expenses and similar items are recognised on the basis of
their period of accrual using the effective interest method defined in IAS 39. Dividends received from
companies other than those within the scope of consolidation of the Group are recognised as income
when the consolidated entities' right to receive them arises.
(2.5.2) Commissions, fees and similar items
Fee and commission income and expenses that are not to be included in the calculation of the effective
interest rate of transactions and/or are not included in the cost of financial assets or liabilities other than
those classified as at fair value through profit or loss are recognised in the consolidated income
statement using criteria that vary according to their nature. The most significant fee and commission
items are as follows:
55
-
Fees and commissions linked to the acquisition of financial assets and liabilities carried at fair
value through profit or loss, which are recognised in the income statement at the settlement date.
-
Those arising from transactions or services that are performed over a period of time, which are
recognised in the consolidated income statement over the life of these transactions or services.
-
Those relating to services provided in a single act, which are recognised in the income statement
when the single act is carried out.
(2.5.3) Non-finance income and expenses
Non-financial income and expenses are recognised on an accrual basis.
(2.5.4) Deferred income and accrued expenses
These are recognised for accounting purposes at the present value of the estimated cash flows
discounted at market rates.
(2.6) Offsetting
Asset and liability balances are offset, i.e. reported in the consolidated balance sheet at their net amount,
when, and only when, they arise from transactions in which a contractual or legal right of set-off exists
and the Group intends to settle them on a net basis, or to realise the asset and settle the liability
simultaneously.
In this regard, “offsetting" is not considered when presenting the financial assets subject to valuation
adjustments for decline in value or impairment, i.e. net of these adjustments, in the consolidated financial
statements under IFRS-EU.
The accounting treatment of transfers of financial assets depends on the extent to which the risks and
rewards associated with the transferred assets are transferred to third parties:
-
If substantially all the risks and rewards of the assets transferred are transferred to third parties –
unconditional sale of financial assets, sale of financial assets under an agreement to repurchase
them at their fair value at the date of repurchase, sale of financial assets with a purchased call
option or written put option that is deeply out of the money, securitisation of assets in which the
transferor does not retain a subordinated debt or grant any credit enhancement to the new
holders, and other similar cases – the transferred financial asset is derecognised and any rights
or obligations retained or created in the transfer are recognised simultaneously.
-
If substantially all the risks and rewards associated with the financial asset transferred are
retained - sale of financial assets under an agreement to repurchase them at a fixed price or at
the sale price plus interest, a securities lending agreement in which the borrower undertakes to
return the same or similar assets, securitisation of financial assets in which a subordinated debt
or another type of credit enhancement is retained that absorbs substantially all the expected
credit losses on the securitised assets, and other similar cases – the transferred financial asset is
not derecognised and continues to be measured by the same criteria as those used prior to the
transfer. However, the following items are recognised with no offsetting:
-

An associated financial liability, for an amount equal to the consideration received; this
liability is subsequently measured at amortised cost, or, if the aforementioned
requirements for classification as other financial liabilities at fair value through profit or
loss are met, at fair value, in accordance with the aforementioned criteria for this type of
financial liability.

The income from the financial asset transferred but not derecognised and any expense
incurred on the new financial liability.
If the Group neither transfers nor retains substantially all the risks and rewards associated with
the financial asset transferred – sale of financial assets with a purchased call option or written put
option that is not deeply in or out of the money, securitisation of financial assets in which the
transferor retains a subordinated debt or other type of credit enhancement for a portion of the
transferred asset, and other similar cases – the following distinction is made:
56

If the seller does not retain control of the transferred financial asset, the transferred
financial assets is derecognised and any right or obligation retained or created as a
result of the transfer is recognised.

If the seller retains control of the transferred financial asset, it continues to recognise it in
the consolidated balance sheet for an amount equal to its exposure to changes in value
and recognises a financial liability associated with the transferred financial asset. The net
amount of the transferred asset and associated liability is the amortised cost of the rights
and obligations retained, if the transferred asset is measured at amortised cost, or the
fair value of the rights and obligations retained, if the transferred asset is measured at
fair value.
Accordingly, financial assets are only derecognised when the cash flows they generate have been
extinguished or when substantially all the inherent risks and rewards have been transferred to third
parties.
Note 29.1 contains a summary of the main circumstances of the principal transfers of assets outstanding
at 2012 year end which did not lead to the derecognition of the related assets.
Exchanges of assets entail the acquisition of tangible or intangible assets in exchange for other nonmonetary assets or a combination of monetary and non-monetary assets. For the purposes of these
consolidated financial statements, the foreclosure of assets to recover amounts owed to consolidated
entities by third parties is not considered an exchange of assets.
The assets received in an exchange of assets are recognised at fair value, provided that the transaction
can be deemed to have commercial substance, as defined in IAS 16 and IAS 38, and that the fair value
of the asset received or, failing this, of the asset given up, can be estimated reliably. The fair value of the
instrument received is determined as the fair value of the asset given up plus, where applicable, the fair
value of any monetary consideration given up in exchange, unless there is clearer evidence of the fair
value of the asset received.
If the exchanges of assets do not meet the above requirements, the asset received is recognised at the
carrying amount of the asset given up plus the monetary consideration given up or assumed in the
acquisition.
A financial asset is considered to be impaired – and therefore its carrying amount is adjusted to reflect
the effect of impairment – when there is objective evidence that events have occurred which:
-
In the case of debt instruments (loans and debt securities), give rise to an adverse impact on the
future cash flows that were estimated at the transaction date.
-
In the case of equity instruments, mean that their carrying amount may not be fully recovered.
As a general rule, the carrying amount of impaired financial instruments is adjusted with a charge to the
consolidated income statement for the period in which the impairment becomes evident, and the reversal,
if any, of previously recognised impairment losses is recognised in the consolidated income statement for
the period in which the impairment is reversed or reduced.
When the recovery of any recognised amount is considered unlikely, the amount is written off, without
prejudice to any actions that the consolidated entities may initiate to seek collection until their contractual
rights are extinguished due to expiry of the statute-of-limitations period, forgiveness or any other cause.
The criteria applied by the Group to determine possible impairment losses in each of the various financial
instrument categories and the method used to calculate and recognise such impairment losses are as
follows:
Debt instruments carried at amortised cost
The amount of an impairment loss incurred on a debt instrument carried at amortised cost is equal to the
negative difference between its carrying amount and the present value of its estimated future cash flows.
In estimating the future cash flows of debt instruments the following factors are taken into account:
57
- All the amounts that are expected to be obtained over the remaining life of the instrument;
including, where appropriate, those which may result from the collateral provided for the instrument
(less the costs for obtaining and subsequently selling the collateral). The impairment loss takes into
account the likelihood of collecting accrued past-due interest receivable.
- The different types of risk to which each instrument is exposed.
- The circumstances in which collections will foreseeably be made.
These cash flows are subsequently discounted using the instrument's effective interest rate (if its
contractual rate is fixed) or the effective contractual rate at the discount date (if it is floating).
Specifically as regards impairment losses resulting from materialisation of the insolvency risk of the
obligors (credit risk), a debt instrument is impaired due to insolvency:
- When there is evidence of a deterioration of the obligor’s ability to pay, either because it is in
arrears or for other reasons, and/or
- When country risk materialises; country risk is defined as the risk that is associated with debtors
resident in a given country due to circumstances other than normal commercial risk.
Impairment losses on these assets are assessed as follows:
- Individually, for all significant debt instruments and for instruments which, although not significant,
cannot be included in any group of assets with similar risk characteristics: instrument type, debtor's
industry and geographical location, type of guarantee or collateral, age of past-due amounts etc.
- Collectively, the Group classifies transactions on the basis of the nature of the obligors, the
conditions of the countries in which they reside, transaction status, type of guarantee or collateral,
age of past-due amounts, etc. For each risk group it establishes the impairment losses that must
be recognised in the consolidated financial statements. Additionally, the Group recognises a loss
for inherent impairments not specifically identified. This impairment is the loss inherent to any
portfolio of assets incurred at the date of the financial statements and is quantified by application of
the parameters established by the Bank of Spain based on experience and on the information
available to it concerning the Spanish banking sector.
Debt instruments classified as available for sale
The amount of the impairment losses on debt securities included in the available-for-sale financial asset
portfolio is the full or partial negative difference, if any, between their fair value and their acquisition cost
(net of any principal repayment or amortisation), less any impairment loss previously recognised in the
consolidated income statement.
In the case of impairment losses arising due to the insolvency of the issuer of the debt instruments
classified as available for sale, the procedure followed by the Group for calculating such losses is the
same as the method used for debt instruments carried at amortised cost explained in the preceding
section.
When there is objective evidence that the losses arising on measurement of these assets are due to
impairment, they are removed from the equity item “Valuation adjustments – Available-for-sale financial
assets” on the Group’s consolidated balance sheet and are recognised, for their cumulative amount, in
the consolidated income statement. If all or part of the impairment losses are subsequently recovered,
the amount is recognised in the consolidated income statement for the period in which the recovery
occurs. In particular, the main events that might indicate evidence of impairment include the following:
-
-
A breach of the contract governing the instruments, such as default on principal or interest, occurs.
-
The issuer is granted financing or arranges debt restructuring because it is in financial difficulty,
unless there is reasonable certainty that the customer will be able to settle its debt in the envisaged
period or new effective collateral is provided.
Similarly, any impairment losses arising on measurement of debt instruments classified as “Non-current
assets held for sale” which are recorded in the Group’s consolidated equity are considered to be realised
and are therefore recognised in the consolidated income statement when the assets are classified as
“Non-current assets held for sale”.
58
Equity instruments classified as available for sale
The criteria for recognising impairment losses on equity instruments classified as available for sale are
similar to those for debt instruments explained in the preceding section, with the exception that any
recovery of these losses is recognised in equity under “Valuation adjustments – Available-for-sale
financial assets” in the consolidated balance sheet.
The main events that might constitute evidence of impairment of equity instruments include the following:
-
-
Significant changes in the technological, market, economic or legal environment in which the issuer
operates may have adverse effects on the recovery of the investment.
-
A significant or prolonged decline in the fair value of an equity instrument below its carrying amount.
In this regard, the objective evidence of the impairment of instruments quoted in active markets is
more pronounced in the event of a 40% fall in its market price over a period of one-and-a-half years.
Equity instruments measured at cost
The amount of the impairment losses on equity instruments carried at cost is the difference between their
carrying amount and the present value of the expected future cash flows discounted at the market rate of
return for similar securities.
Impairment losses are recognised in the consolidated income statement for the period in which they arise
as a direct reduction of the cost of the instrument. These losses can only be reversed subsequently if the
related assets are sold.
“Financial guarantees” are defined as contracts whereby an entity undertakes to make specific payments
on behalf of a third party if the latter fails to do so, irrespective of the various legal forms they may take:
deposits, financial guarantees, irrevocable documentary credits issued or confirmed by the entity, etc.
In accordance with IFRS-EU, the Group generally treats financial guarantees provided to third parties as
financial instruments within the scope of IAS 39.
To determine whether a derivative sold is recognised as a financial guarantee or a trading derivative, a
financial instrument is considered a derivative financial instrument when it meets the following conditions:
-
Its value changes in response to the changes in an observable market variable, sometimes called
the "underlying", such as an interest rate, financial instrument and commodity price, foreign
exchange rate, a credit rating or credit index, where this involves non-financial variables that are
not specific to one of the parties to the contract.
-
It requires no initial investment or one that is much smaller than would be required for other
financial instruments that would be expected to have a similar response to changes in market
factors.
-
It is settled at a future date, except where it relates to a regular way purchase or sale of financial
assets in conventional agreements, defined as one in which the parties' reciprocal obligations
must be discharged within a time frame established by regulation or convention in the market
place and that may not be settled net.
Financial guarantees are considered contracts that require or may require Bankia to make specific
payments to reimburse the creditor for the loss incurred when a specific debtor fails to meet its payment
obligations under the original or amended terms of a debt instrument, regardless of its legal form, which
may be, inter alia, a deposit, financial guarantee, insurance contract or credit derivative.
Specifically, guarantee contracts related to credit risk where execution of the guarantee does not require,
as a necessary condition for payment, that the creditor is exposed to and has incurred a loss due to a
debtor's failure to pay as required under the terms of the financial asset guaranteed, as well as in
contracts where execution of the guarantee depends on changes in a specific credit rating or credit index,
are considered derivative financial instruments.
The Group initially recognises the financial guarantees provided on the liabilities side of the consolidated
balance sheet at fair value, plus the directly attributable transaction costs, which is generally the amount
of the premium received plus, where applicable, the present value of the fees, commissions and interest
receivable from these contracts over the term thereof, and it simultaneously recognises, on the asset side
of the consolidated balance sheet, the amount of the fees, commissions and similar amounts received at
59
the start of the transactions and the amounts receivable at the present value of the fees, commissions
and interest receivable. Subsequently, these contracts are recognised on the liabilities side of the
consolidated balance sheet at the higher of the following two amounts:
-
The amount determined in accordance with IAS 37, taking into account that set forth in Annex IX
of Bank of Spain Circular 4/2004 in this estimate. In this regard, financial guarantees, regardless
of the guarantor, instrumentation or other circumstances, are reviewed periodically so as to
determine the credit risk to which they are exposed and, if appropriate, to consider whether a
provision is required. The credit risk is determined by application of criteria similar to those
established for quantifying impairment losses on debt instruments carried at amortised cost,
which are described in Note 2.9 above.
-
The amount initially recognised for these instruments, less the related amortisation which, in
accordance with IAS 18, is charged to the consolidated income statement on a straight-line basis
over the contract term.
The provisions made, if applicable, for these instruments are recognised under “Provisions - Provisions
for contingent liabilities and commitments” on the liability side of the consolidated balance sheet. These
provisions are recognised and reversed with a charge or credit, respectively, to “Provisions (net)” in the
If, in accordance with the foregoing, a provision is required for these financial guarantees, the unearned
commissions on these transactions, which are recognised under “Financial liabilities at amortised cost –
Other financial liabilities” on the liabilities side of the consolidated balance sheet, are reclassified to the
appropriate provision.
Finance leases are leases that transfer substantially all the risks and rewards incidental to ownership of
the leased asset to the lessee.
The factors considered by the Group to determine whether a lease agreement is a finance lease include,
inter alia, the following:
-
Whether the lease agreement covers the major part of the useful life of the asset.
-
Whether the exercise price of the purchase option is lower than the fair value of the residual value of
the asset at the end of the lease term.
-
Whether the present value of minimum lease payments at the inception of the lease is equal to
substantially all the fair value of the leased asset;
-
Whether use of the asset is restricted to the lessee.
When the consolidated entities act as lessors of an asset in a finance lease transaction, the sum of the
present values of the lease payments receivable from the lessee plus the guaranteed residual value
(which is generally the exercise price of the lessee's purchase option at the end of the lease term) is
recognised as lending to third parties and is therefore included under “Loans and receivables” in the
consolidated balance sheet based on the type of lessee.
When the consolidated entities act as the lessees in a finance lease transaction, they present the cost of
the leased assets in the consolidated balance sheet, based on the nature of the leased asset, and,
simultaneously, recognise a liability for the same amount (which is the lower of the fair value of the
leased asset and the sum of the present values of the lease payments payable to the lessor plus, if
appropriate, the exercise price of the purchase option). The depreciation policy for these assets is
consistent with that for the Group’s property, plant and equipment for own use (see Note 2.15).
In both cases, the finance income and finance charges arising under finance lease agreements are
credited and debited, respectively, to “Interest and similar income” and “Interest expense and similar
charges”, respectively, in the consolidated income statement and the accrued interest is estimated using
the effective interest method as defined in IAS 39.
(2.11.2). Operating leases
In operating leases, the ownership of the leased asset and substantially all the risks and rewards relating
to the leased asset remain with the lessor.
60
When the consolidated entities act as lessors in operating leases, they present the acquisition cost of the
leased assets under “Tangible assets” as “Investment property” or as “Property, plant and equipment
leased out under an operating lease”, depending on the type of assets leased. The depreciation policy for
these assets is consistent with that for similar items of property, plant and equipment for own use, and
income from operating leases is recognised on a straight-line basis under “Other operating income Sales and income from the provision of non-financial services” in the consolidated income statement.
When the consolidated entities act as the lessees in operating leases, lease expenses, including any
incentives granted by the lessor, are charged to “Administrative expenses - Other general administrative
expenses” in the consolidated income statement on a straight-line basis (or using another method, if
applicable).
(2.11.3) Asset sale and leaseback transactions
Where transactions involve the sale to a third party of an asset owned by the Group that is subsequently
leased back by the Group selling the asset, the terms and conditions of the lease agreement are
analysed by the Group to determine whether it should be considered a finance lease or an operating
lease, in accordance with the criteria stipulated in Notes 2.11.1 and 2.11.2 above.
In this regard, if a sale and leaseback transaction results in a finance lease, any possible excess of sales
proceeds over the carrying amount of the sold asset shall not be immediately recognised as income by
the Group. The excess, if any, is deferred by the Group and apportioned over the lease term.
However, if a sale and leaseback transaction by the Group results in an operating lease, and the
transaction was established at fair value, any profit or loss from the sale will be recognised immediately in
the consolidated income statement. If the sale price is below fair value of the asset sold by the Group,
any profit or loss shall be recognised immediately in the consolidated income statement, except that, if
the loss is offset by future lease payments at below market price, it shall be deferred and recognised in
proportion to the lease payments over the period for which the asset is expected to be used. If the sale
price of the asset sold is above fair value, the excess over fair value will be deferred and recognised over
the period for which the asset is expected to be used by the Group.
(2.12) Investment funds, pension funds, assets under management and savings insurance
policies marketed and/or managed by the Group
Assets owned by third parties and managed by the consolidated entities are not presented on the face of
the consolidated balance sheet. Management fees are included in “Fee and commission income” in the
consolidated income statement. Details of third-party assets managed by the Group at 31 December
2012 and 2011 are disclosed in Note 29.
The investment funds and pension funds managed and savings insurance policies marketed and
managed by the Group are not recognised on the Group's consolidated balance sheet since the related
assets are owned by third parties (see Note 29.4). The fees and commissions earned in the year for the
services rendered by the Group entities to these funds (asset management and custody services, etc.)
are recognised under “Fee and commission income” in the consolidated income statement.
(2.13) Staff costs
(2.13.1) Post-employment benefits
(2.13.1.1) Types of commitments
Post-employment benefits are forms of compensation payable after completion of employment. The
Group has undertaken to pay post-employment benefits to certain employees and to their beneficiary
right holders.
Under current law, post-employment obligations are classified as defined-contribution or defined-benefit
obligations, depending on the terms of the commitments assumed in each specific case. The Group’s
post-employment obligations to its employees are deemed to be “defined contribution plan obligations”
wherever the Group makes predetermined contributions to a separate entity and will have no legal or
effective obligation to pay further contributions if the separate entity cannot pay the employee benefits
relating to the service rendered in the current and prior periods. Post-employment obligations that do not
meet the aforementioned conditions are considered as defined-benefit obligations.
All pension obligations to current and former employees of the Group are funded by pension plans,
insurance policies and the internal fund.
61
All pension obligations to current and former employees of the Group are covered by pension plans in
Spain, with residual commitments of similar characteristics in other countries (USA, Portugal and
Austria), all defined-contribution obligations.
(2.13.1.2) Description of the post-employment obligations undertaken by the Group
There are differences among the characteristics and obligations undertaken by the Group vis-à-vis its
employees, described below, depending on the “Cajas” that were their original employers:
Obligations undertaken with Bankia employees who did not come from the “Cajas” or Group companies
with pension commitments

A system is in place whereby Bankia makes an annual and individual contribution equivalent
to 3% of fixed compensation plus 2% of variable compensation earned, respecting the
minimums stipulated in the “Cajas” collective wage agreement.

Accrued pensions:
There are no accrued pension commitments for these employees.
Obligations undertaken with employees of Caja de Ahorros y Monte de Piedad de Madrid

Since 1999, contributions have been made to a pension fund external to the employment
system run by Caja de Madrid de Pensiones, S.A. E.G.F.P., to cover commitments arising
from the defined-contribution system applicable, consisting of a contribution of 10% of fixed
remuneration and 4% of variable remuneration earned.
In relation to defined-benefit obligations with current non-participating employees (3
employees), policies have been taken out with Mapfre Caja Madrid Vida, S.A. to cover all

Accrued pensions:
In 2000, accrued pension commitments to retired employees were outsourced on a policy
with Caja Madrid Vida, S.A. de Seguros y Reaseguros (now Mapfre Caja Madrid Vida, S.A.).
Obligations undertaken with employees from Caja de Ahorros de Valencia, Castellón y Alicante, Bancaja

Since 1998, contributions have been made to an external employee pensions plan for staff at
Caja de Ahorros de Valencia, Castellón y Alicante – Bancaja. This plan is integrated in
Futurcaval, Fondo de Pensiones and managed by Aseguradora Valenciana, S.A. de Seguros
y Reaseguros, and entails a contribution of 8.75% of employees’ pensionable salary.
In relation to defined-benefit obligations with current employees (2 employees), policies have
been taken out with Aseguradora Valenciana S.A. de Seguros y Reaseguros to cover all

Accrued pensions:
insurance policies.
Obligations undertaken with employees from Caja Insular de Ahorros de Canarias

de Pensiones de Empleados de la Caja Insular de Canarias), managed by Caser Pensiones
EGFP, S.A. and entailing a contribution of 5% of employees’ pensionable salary.
As a result of the corporate agreement signed on 15 November 2002 and subsequent
agreements in 2003 and 2007, the amounts recognised as entitlements through past services
not covered by internal funds generated a deficit contributed annually to the pensions plan
over a period of 15 years, with decreasing payments at 2% and an interest rate of 4%.
At 31 December 2012, the Group had EUR 9,132 thousand outstanding on the plan, which
expires in 2016. A provision is recognised for this commitment on the accompanying
consolidated balance sheet.
62

Accrued pensions:
The only defined-benefit commitments are with retired employees. These obligations are
covered through the external pensions plan and insurance policies.
Obligations undertaken with employees of Caja de Ahorros y Monte de Piedad de Ávila

de Pensiones “Avilacaja”), managed by Caser Pensiones EGFP, S.A. and entailing a
contribution of 5% of employees’ pensionable salary.
At 31 December 2012, there were seven employees with defined-benefit commitments who
had not subscribed to the agreement and who are covered by the pensions plan.

Accrued pensions:
insurance policies.
Obligations undertaken with employees of Caixa d’Estalvis Laietana

de Empleo Layetana), managed by Caja de Madrid and Pensiones, S.A. E.G.F.P. The plan
entails a contribution that is the greater of 3.25% of an employee’s real salary or 10% of the
difference between the real salary and the Social Security contribution.
have early retirement status) not covered by the scheme and partially covered by an internal
fund.

Accrued pensions:
Obligations with retired employees are covered through the external pension plan and
insurance policies, and partially covered by an internal fund.
Obligations undertaken with employees of Caja de Ahorros y Monte de Piedad de Segovia

de Pensiones de Empleados de la Caja Segovia), managed by Caser Pensiones EGFP, S.A.
and entailing a contribution of 5% of the pensionable salary.

Accrued pensions:
Obligations with retired employees, those taking early retirement and beneficiaries at that
date are covered by an insurance policy.
Obligations undertaken with employees of Caja de Ahorros de la Rioja

de Pensiones de Empleados de la Caja de Ahorro de Rioja "PERIOJA"), managed by Caser
Pensiones EGFP, S.A. and entailing a contribution of 4.5% of the pensionable salary.
have early retirement status and eight are partially retired) who had not subscribed to the
pension scheme called "FERIOJA II, Fondo de Pensiones".

Accrued pensions:
Some of the beneficiaries of defined-benefit schemes are covered by the pension plan and
the remainder by an internal fund.
In addition to these commitments, Note 6 describes the obligations with members of the Board of
Directors and senior executives of Bankia, S.A.
63
The percentage distribution of Bank employees at 31 December 2012 by the groups described above is
as follows:
GROUP
% Staff 31/12/12
Employees from Caja Madrid
Employees from Bancaja
Employees from Caja Canarias
Employees from Caja de Avila
Employees from Caixa Laietana
Employees from Caja Segovia
Employees from Caja Rioja
Hired by Bankia
59.7%
24.4%
4.4%
2.6%
4.2%
2.3%
2.1%
0.3%
TOTAL
100.0%
(2.13.1.3) Actuarial assumptions applied in calculation of post-employment benefits
As a rule, the Group measures its obligations and commitments and cover and determines coverage
evenly based on:

the projected credit unit method (which treats each year of service as giving rise to an additional
unit of benefit entitlement);

actuarial assumptions based on GRMF95 mortality tables, discount rates of between 4% and
4.32%, salary growth rates of 3% and inflation of 2%.
Irrespective of these assumptions, the Bank performed a sensitivity analysis to estimate the impact of a
change in the discount rate used on the actuarial calculations of the defined-benefit commitments. The
following assumptions were used for the sensitivity analysis:


average duration of the group in question of around 12.5 years
discount rate of 3.5%
Provisions recognised by the Bank for defined-benefit commitments at 31 December 2012 cover the
estimated impact based on the aforementioned assumptions in the scope of the sensitivity analysis (see
Note 41.3).
For early-retirement and other long-term commitments, the sensitivity analysis does not have a significant
impact as the assumption regarding the discount rate used in calculating the commitments is lower and,
therefore, admits a lower range of variation.
(2.13.1.4) Accounting criteria for post-employment commitments
The Group classifies post-employment obligations for accounting purposes as follows:

Defined-contribution plans. Group contributions to defined contribution plans are recognised under
“Administrative expenses – Staff costs” in the consolidated income statement.
If at year-end there are any outstanding contributions to be made to the external plan funding the
post-employment benefit obligations, the related amount is recognised at its present value under
“Provisions - Provisions for pensions and similar obligations". At 31 December 2012, there were no
outstanding contributions to be made to external defined-contribution plans.

Defined-benefit plans. Under the caption “Provisions – Provisions for pensions and similar
obligations” on the liability side of the consolidated balance sheet, the Group recognises the present
value of obligations assumed net of the fair value of assets qualifying as “plan assets” (or under
“Other assets – Other” on the asset side of the consolidated balance sheet, depending on whether
the resulting difference is positive or negative and on whether or not the conditions for recognition are
satisfied).
“Plan assets” are defined as those that are related to certain defined benefit obligations, that will be
used directly to settle such obligations, and that meet the following conditions:

they are not owned by the Group, but by a legally separate third party that is not a related
party
64

they are only available to pay or fund post-employment benefits for employees

they cannot be returned to the Group unless the assets remaining in the plan are sufficient to
meet all the benefit obligations of the plan or of the Group to current and former employees,
or they are returned to reimburse employee benefits already paid by the Group

they may not be non-transferable financial instruments issued by the Group if held by a longterm post-employment benefits fund or entity.
If the Group has recourse to an insurer to pay part or all of the expenditure required to settle a
defined benefit obligation, and it is practically certain that the insurer will reimburse some or all of the
expenditure required to settle that obligation, but the insurance policy does not qualify as a plan
asset, the Group recognises its right to reimbursement, which in all other respects is treated as a plan
asset, under “Insurance contracts linked to pensions” on the asset side of the balance sheet.
Pursuant to the provisions of IAS 19, the Bankia Group recognised in its consolidated financial
statements the liabilities (or, as the case may be, and/or the assets) related to post-employment
benefit obligations at the present value of the obligations, less the fair value of any plan assets.
Post-employment benefits are recognised in the consolidated income statement as follows:

Current service cost, i.e., the increase in the present value of the obligations resulting from
employee service in the current period, under “Administrative expenses – Staff costs”.

Interest cost, i.e., the increase during the year in the present value of the obligations as a result
of the passage of time, under “Interest expense and similar charges”. Where obligations are
presented on the liability side net of plan assets, the cost of liabilities taken to the income
statement relates exclusively to obligations recognised in liabilities.

The expected return on any plan asset recognised as an asset is taken to “Interest and similar
income” in the consolidated income statement.

Actuarial gains and losses (defined as gains and losses arising from differences between prior
actuarial assumptions and the actual gains and losses and from changes in the actuarial
assumptions used) are amortised under “Provisions (net)” in the consolidated income statement.
(2.13.2) Other long-term employee benefits
“Other long-term employee benefits” mainly comprises the early-retirement commitments to employees
who no longer render services but, not being retirees for legal purposes, continue to hold economic rights
against their employers until they become legal retirees. It also comprises any other long-term or similar
commitments to employees.
These long-term commitments are recognised under the same caption as defined-benefit postemployment plans, with the special features disclosed below for each specific case.
(2.13.2.1) Pre-retirements and partial retirements
Certain employees have been offered the possibility of taking pre-retirement in several years. These
commitments are set out below for the “Cajas” concerned:
In 1999, the Caja offered certain employees the possibility of taking pre-retirement. To this end, it
took out an insurance policy with Caja Madrid Vida, S.A. de Seguros y Reaseguros (now Mapfre
Caja Madrid Vida, S.A.) to cover all the economic commitments undertaken vis-à-vis these
employees from pre-retirement to retirement age, since retirement obligations for the group are
covered by the schemes described above.
In 2000, the Caja also decided to take out insurance on all its remaining pre-retirement
commitments on a policy with Caja Madrid Vida, S.A. de Seguros y Reaseguros (now Mapfre
Caja Madrid Vida, S.A.).
By virtue of a new trade union agreement, in 2008 the Caja carried out a Generation Handover
Plan to enable certain employees to take up pre-retirement or partial retirement. These
commitments are covered by insurance policies for those opting for the plan.
Caja de Ahorros de Valencia, Castellón y Alicante, Bancaja
Pre- and early-retirement plans were carried out in 1998, 2000 and 2004 pursuant to agreements
reached with trade unions.
65
The total cost of commitments to the pre-retirements described in the preceding paragraph is
covered by a specific fund recognised under "Provisions - Provisions for pensions and similar
obligations".
Caja Insular de Ahorros de Canarias
Caja de Ahorros y Monte de Piedad de Ávila
The obligations with pre-retired and partially-retired employees are covered by internal funds.
Caixa d’Estalvis Laietana
Caja de Ahorros y Monte de Piedad de Segovia
In 2000, 2002, 2005, 2006, 2007 and 2008, the Caja offered some employees the possibility of
retirement before reaching the age stipulated in the collective wage agreement. Accordingly, in
these years internal funds were set up to cover commitments to pre-retirees - in terms of both
salaries and other employee welfare costs - from the time of pre-retirement to the date of
effective retirement.
In addition, the obligations with partially-retired employees are covered by internal funds.
Caja de Ahorros de la Rioja
Pursuant to Law 40/2007 of 4 December concerning social security measures, the Caja has
accepted requests by some of its employees to comply with the mandatory conditions
established for partial retirement with replacement contracts, before reaching the age stipulated
in the collective wage agreement. There are also a number of employees who are entitled to take
early retirement on the strength of an agreement by the Board of Directors. Thus, funds exist for
both these groups to cover the obligations with the employees, entailing voluntary pension
enhancements from the time of partial retirement and early retirement until the effective date of
their retirement.
Pre-retirement plans were agreed in certain Group companies in 2012. Insurance policies were arranged
to cover the related commitments.
At the date of incorporation the Group had covered those liabilities by arranging insurance policies and
making provisions on the consolidated balance sheet, in accordance with current laws and regulations.
Commitments assumed by the “Cajas” under the Labour Agreement adopted as a result of creation of the
Banco Financiero y de Ahorros Group (see Note 1.2)
On 14 December 2010, the “Cajas” and a majority of labour union representatives at the “Cajas” entered
into an agreement titled "Labour Agreement in the Framework of the Process of Integration under an IPS
entered into by Caja Madrid, Bancaja, Caja Insular de Canarias, Caja Ávila, Caixa Laietana, Caja
Segovia and Caja Rioja" (the "Labour Agreement") and as a result of the integration of the “Cajas” and
the creation of Banco Financiero y de Ahorros, S.A. (the central body of the ISP) set out in the Integration
Agreement approved by the Boards of Directors and ratified by the General Meetings of the “Cajas”.
The Labour Agreement set forth an array of measures offered to the “Cajas” employees on an elective
basis until 31 December 2012 so that the necessary staff restructuring could be carried out, with staff
reduced by approximately 4,594 employees. The array of measures included pre-retirements, relocation,
indemnified redundancies, contract suspension and shorter working time.
At 31 December 2012, the Group had covered its liabilities under the aforementioned Labour Agreement
in terms of outstanding settlements to employees already on the scheme with insurance policies and
provisions under “Provisions – Provisions for pensions and similar obligations” (to cover pre-retirement
commitments) and “Provisions – Other provisions” (for the remaining commitments) on the balance sheet
(see Note 22).
Notwithstanding the information in the preceding paragraphs, pre-retirement obligations up to the
effective age of retirement are accounted for in all areas applicable, following the same criteria as
explained for the Group's defined-benefit post-employment compensation.
66
(2.13.2.2) Death and disability
Commitments to cover the death or disability of current employees, covered by insurance policies and an
external fund, are recognised in the income statement for the amount of the insurance policy premiums
accrued in each year and the contributions made to the fund.
The amount accruing on insurance premiums and external funds, paid out in 2012 to cover these
commitments, totalled EUR 15,120 thousand (EUR 25,719 thousand at 31 December 2011), recognised
under "Administrative expenses - Staff costs" in the 2012 consolidated income statement.
(2.13.3) Financial aid for employees
The financial aid for employees is stipulated in the Savings Banks' collective wage agreement. The
various internal agreements are maintained under the same conditions as at the original “Cajas”, for
those transactions outstanding at 31 December 2012.
The general breakdown of the scheme is as follows:
2.13.3 a) Advance payments
This type of assistance is available to full-time employees who have undergone a trial period of
employment. The maximum sum offered is six months' gross salary with no interest accruing.
2.13.3 b) Welfare loan for miscellaneous purposes
This type of assistance is available to full-time employees. The maximum sum varies between
EUR 18,000 and EUR 36,000. It may be requested for any purpose, and the interest rate
applicable is Euribor to the legal interest threshold.
2.13.3 c) Main home loan
This type of assistance is available to full-time employees. The maximum sum offered depends
on annual gross fixed remuneration and appraisal/purchase value. It may be requested for
purchasing, building, extending or refurbishing the employee's normal and permanent residence,
and the maximum repayment period is 35 - 40 years, up to the age of 70. The interest rate
applicable varies between 70% and 55% of Euribor, with a ceiling of 5.25% and a floor of 1.50%.
The difference between arm’s length terms and the interest rates applied for each type of loan
mentioned above is recognised as an increase in staff costs with a balancing entry under
"Interest and similar income" in the income statement.
On 26 November 2012, a labour agreement was reached to unify, among other labour-related issues, the
terms and conditions of financing provided to employees applicable to transactions requested by Bankia
employees from 1 January 2013.
(2.13.4) Termination benefits
Under current legislation, Spanish consolidated companies and certain foreign companies are required to
pay termination benefits to employees made redundant without just cause. Termination benefits must be
recognised when the Group is committed to terminate the employment contracts of its employees and
has a detailed formal termination plan. In addition to the commitments described in Note 2.13.2 and as
explained in Note 1.2., the Bank signed a labour agreement whose related commitments are adequately
covered with provisions recognised at 31 December 2012 (see Note 22).
(2.13.5) Long-service bonuses
Pursuant to the Labour Agreement of 26 November 2012 unifying the labour conditions at Bankia, longservice bonuses no longer existed at 31 December 2012, having been replaced and compensated for by
the Career Development and Promotion System.
(2.14) Income tax
Expenses for Spanish corporate income tax and similar taxes levied on foreign consolidated subsidiaries
are recognised in the consolidated income statement, except when it results from a transaction
recognised directly in equity. In this case, the income tax is also recognised in the Group's equity.
Income tax expense is calculated as the tax payable on taxable profit for the year, after adjusting for
variations in assets and liabilities due to temporary differences, tax credits for tax deductions and
benefits, and tax losses (see Note 28).
The Group considers that a temporary difference exists when there is a difference between the carrying
amount of an asset or liability and its tax base. The tax base of an asset or liability is the amount
attributed to that asset or liability for tax purposes. A taxable temporary difference is one that will
67
generate a future obligation for the Group to make a payment to the relevant tax authorities. A deductible
temporary difference is one that will generate a right for the Group to a rebate or a reduction in the
amount payable to the related tax authorities in the future.
Tax credit and tax loss carryforwards are amounts that, after performance of the activity or obtainment of
the profit or loss giving entitlement to them, are not used for tax purposes in the related tax return until
the conditions for doing so established in the tax regulations are met and the Group considers it probable
that they will be used in future periods.
Current tax assets and liabilities are the taxes that are expected to be recoverable from or payable to,
respectively, the related tax authorities within 12 months of the reporting date. Deferred tax assets and
liabilities are the taxes that are expected to be recoverable from or payable to the related tax authorities
more than 12 months from the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences. In this connection, a deferred
tax liability is recognised for taxable temporary differences arising from investments in subsidiaries and
associates and from interests in joint ventures, except when the Group is in a position to control the
reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future.
Nor is there any recognition of deferred tax liabilities arising from accounting for goodwill.
The Group only recognises deferred tax assets arising from deductible temporary differences and from
tax credit and tax loss carryforwards when the following conditions are met:

Deferred tax assets are only recognised when it is considered likely that the consolidated entities
will have sufficient future taxable profit to make these effective; and, in the case of deferred tax
assets arising from tax loss carryforwards, when the carryforwards have arisen for identified
reasons that are unlikely to be repeated.

No deferred tax assets or liabilities are recognised if they arise from the initial recognition of an
asset or liability (except in the case of a business combination) that at the time of recognition
affects neither accounting profit nor taxable profit.
Deferred tax assets and liabilities are reviewed at the end of each reporting period to ascertain that they
remain in force, and the appropriate adjustments are made on the basis of the results of the review.
Departure of Bankia, S.A. and its subsidiaries from the Banco Financiero y de Ahorros tax group
and incorporation of the Bankia tax group
As a result of the share capital increase carried out as part of the aforementioned IPO and the addition of
new shareholders of Bankia, pursuant to prevailing regulations, Bankia and its subsidiaries no longer
form part of the tax consolidation group headed by Banco Financiero y de Ahorros, S.A., with tax effect
as of 1 January 2011.
Note 28 provides information on the various adjustments made as a result, affecting the tax assets and
liabilities recognised by the Bankia Group and the tax effects arising from the incorporation of a new tax
group headed by Bankia, S.A. as of 1 January 2011 under "Loans and advances to credit institutions",
thus not affecting either the consolidated equity or results shown in these consolidated financial
statements.
As a result of the above, in 2011 the Bankia Group opted to pay taxes under the special tax consolidation
scheme regulated by Chapter VIII, Title VII of the Revised Text of the Corporate Income Tax Law
approved by Royal Decree-Law 4/2004 of 5 March, from the tax period commencing on 1 January 2011,
and informed the tax authorities of this decision.
Note 28 also provides a breakdown of the companies making up the new tax consolidation group headed
by Bankia, S.A.
(2.15.1) Property, plant and equipment for own use
Property, plant and equipment for own use include assets, owned by the Group or held under a finance
lease, for present or future administrative use or for the production or supply of goods and services that
are expected to be used for more than one economic period. This category includes, inter alia, tangible
assets received by the consolidated entities in full or partial satisfaction of financial assets representing
receivables from third parties which are intended to be held for continuing use. Property, plant and
equipment for own use are presented in the consolidated balance sheet at acquisition cost, which is the
fair value of any consideration given for the asset plus any monetary amounts paid or committed, less:
68
-
the corresponding accumulated depreciation; and
any estimated impairment losses (carrying amount higher than recoverable amount).
Depreciation is calculated using the straight-line method on the basis of the acquisition cost of the assets
less their residual value. The land on which the buildings and other structures stand has an indefinite life
and, therefore, is not depreciated.
The tangible asset depreciation charge for the period is recognised under “Depreciation and amortisation
charge” in the consolidated income statement and is calculated basically using the following depreciation
rates (based on the average years of estimated useful life of the various assets):
Annual rate
Buildings for own use
2%
Furniture and fixtures
Computer hardware
10% to 25%
25%
The consolidated entities assess at the reporting date whether there is any internal or external indication
that an asset may be impaired (i.e. that its carrying amount may exceed its recoverable amount). If this is
the case, the carrying amount of the asset is reduced to its recoverable amount and future depreciation
charges are adjusted in proportion to the revised carrying amount and to the new remaining useful life (if
the useful life has to be re-estimated). When necessary, the carrying amount of tangible assets for own
use is reduced with a charge to "Impairment losses on other assets (net) - Other assets"” in the
Similarly, if there is an indication of a recovery in the value of an impaired tangible asset, the consolidated
entities recognise the reversal of the impairment loss recognised in prior periods with the related credit to
“Impairment losses on other assets (net) - Other assets” in the consolidated income statement, and
adjust the future depreciation charges accordingly. Under no circumstances may the reversal of an
impairment loss on an asset raise its carrying amount above that which it would have if no impairment
losses had been recognised in prior years.
The estimated useful lives of property, plant and equipment for own use are reviewed at least once a
year with a view to detecting significant changes therein. If changes are detected, the useful lives of the
assets are adjusted by correcting the depreciation charge to be recognised in the consolidated income
statement in future years on the basis of the new useful lives.
Upkeep and maintenance expenses on property, plant and equipment for own use are recognised as an
expense in the consolidated income statement in the period in which they are incurred.
Financial assets that require more than twelve months to be readied for use include as part of their
acquisition or production cost the borrowing costs which have been incurred before the assets are ready
for use and which have been charged by the supplier or relate to loans or other types of borrowings
directly attributable to their acquisition, production or construction. Capitalisation of borrowing costs is
suspended, if appropriate, during periods in which the development of the assets is interrupted, and
ceases when substantially all the activities necessary to prepare the asset for its intended use have been
completed.
Foreclosed assets as payment of debts which, based on their nature and intended purpose, are classified
as property, plant and equipment for own use, are recognised in accordance with the criteria indicated
below in Note 2.15.2 for assets of this type.
(2.15.2) Investment property
"Investment property" on the consolidated balance sheet reflects the net values of the land, buildings and
other structures held to earn rentals or for potential capital appreciation the event of sale, through
potential increases in their market value.
The criteria used to recognise the acquisition cost of investment property, to calculate its depreciation
and its respective estimated useful life and to recognise the possible impairment losses thereon are
consistent with those described in relation to property, plant and equipment for own use (Note 2.15.1).
Assets foreclosed by the Group, understood as assets which the Group receives from borrowers or other
debtors as total or partial payment of financial assets representing collection rights against those which,
regardless of the way in which the properties are acquired and, in accordance with their nature and the
use to which they are put, are classified as investment properties, are initially recognised at their
estimated cost as the lower of the carrying amount of the financial assets applied, i.e. their amortised
cost, net of any impairment losses recognised and, in any case, a minimum of 10%, and the appraised
69
fair value of the asset received in its current condition less the estimated costs to sell, which under no
circumstances are estimated as less than 10% of the appraisal value in its current condition.
The age of the assets received in payment of debt on the balance sheet is considered by the Group as
an unequivocal indication of impairment. Unless the offers received indicate a greater amount, the
impairment recognised on these assets is not less than the result of raising the percentage from the
aforementioned 10% to 20% if the period for acquiring the asset exceeds 12 months, to 30% if this
acquisition period exceeds 24 months and to 40% if it exceeds 36 months.
All court costs are recognised immediately in the consolidated income statement for the period of
foreclosure. Registry costs and taxes paid may be added to the value initially recognised provided that,
as a result, this does not exceed the appraisal value less the estimated costs to sell mentioned in the
preceding paragraph.
All costs incurred between the date of foreclosure and the date of sale as a result of maintaining and
protecting the asset, such as insurance, security services, etc., are recognised in the income statement
for the period in which they are incurred.
Note 3.5.3 provides further information about foreclosed property assets and assets received by the
Group in settlement of debts and classified under this consolidated balance sheet heading on the basis of
ultimate purpose, as referred to above.
(2.15.3) Property, plant and equipment leased out under an operating lease
"Property, plant and equipment - Leased out under an operating lease" on the consolidated balance
sheet reflects the net values of the tangible assets, other than land and buildings, leased out by the
Group under an operating lease.
The criteria used to recognise the acquisition cost of assets leased out under operating leases, to
calculate their depreciation and their respective estimated useful lives and to recognise any impairment
losses thereon are consistent with those described in relation to property, plant and equipment for own
use (see Note 2.15.1).
Foreclosed assets which, based on their nature and intended purpose, are classified as property, plant
and equipment leased out under an operating lease, are generally recognised in accordance with the
criteria indicated for assets of this type in Note 2.15.2 above, taking into account for impairment purposes
the effect arising from the rent expected to be received from their lease.
Intangible assets are identifiable non-monetary assets without physical substance which arise as a result
of a legal transaction or which are developed internally by the consolidated entities. Only intangible
assets whose cost can be estimated reasonably objectively and from which the consolidated entities
consider it probable that future economic benefits will be generated are recognised.
Intangible assets are recognised initially at acquisition or production cost and are subsequently measured
at cost less any accumulated amortisation and any accumulated impairment losses.
(2.16.1) Goodwill
Any differences between the cost of investments in consolidated entities accounted for by the equity
method and other forms of business combinations other than those carried out with no transfer of
consideration, carried out with respect to the net fair values of the assets and liabilities acquired, adjusted
by the acquired percentage holding of the net assets and liabilities in the event of purchase of
shareholdings, at the date of acquisition, are recognised as follows:
-
If the acquisition price exceeds the aforementioned fair value, as goodwill under "Intangible assets Goodwill" on the asset side of the consolidated balance sheet. In the case of acquisition of holdings
in associates or jointly-controlled entities accounted for using the equity method, any goodwill that
may arise from the acquisition is recognised as forming part of the value of the investment and not as
an individual item under "Intangible assets - Goodwill".
-
Any negative differences between the cost of acquisition less the aforementioned fair value are
recognised, once the valuation process has been completed, as income in the consolidated income
statement under "Negative goodwill on business combinations".
Positive goodwill (excess between the acquisition price of an investee or business and the net fair value
of the assets, liabilities and contingent liabilities acquired from this entity or business) - which is only
recognised on the consolidated balance sheet when acquired for consideration - thus represents advance
payments made by the acquiring entity for future economic benefits arising from the assets of the entity
or business acquired that are not individually and separately identifiable and recognisable.
70
Positive goodwill acquired by the Group is measured at acquisition cost. An impairment test is carried out
at end of each reporting period to assess whether goodwill has suffered any impairment loss that would
reduce its recoverable amount to below its recognised net cost. If so, the appropriate deduction is made
with a balancing entry under “Impairment losses on other assets (net) - Goodwill and other intangible
assets” in the consolidated income statement.
Impairment losses on goodwill recognised under "Intangible assets - Goodwill" pursuant to the preceding
paragraph are not reversed subsequently.
In general, the Group uses methods based on the following assumptions to estimate the recoverable
amounts for subsequent comparison with the carrying amounts of the aforementioned assets:
-
The recoverable value is the value in use of the investment, obtained from the present value of the
cash flows that are expected to be obtained from the cash-generating unit, from its ordinary activities
(adjusted for extraordinary items) or from the possible disposal thereof.
-
Estimated cash flow projections usually have a maximum time horizon of five years and include
cyclical growth rates based on various factors such as the economic situation at the time the
assessment is performed, growth in the industry, historical rates etc. At 31 December 2012, no
estimates had been made with cash flows for longer periods.
-
The cash flows are discounted using specific discount rates for each asset, on the basis of a risk-free
interest rate which is increased by a risk premium for each investment based on various capitalweighting factors (ratings, internal scorings, etc.).
(2.16.2) Other intangible assets
Intangible assets other than goodwill are recorded on the consolidated balance sheet at cost of
acquisition or production, net of accumulated amortisation and any impairment losses.
Intangible assets can have an indefinite useful life – when, based on an analysis of all the relevant
factors, it is concluded that there is no foreseeable limit to the period over which the asset is expected to
generate net cash inflows for the consolidated entities – or a finite useful life, in all other cases.
Intangible assets with an indefinite useful life are not amortised. At the end of each reporting period,
however, consolidated entities review the remaining useful life of each asset to confirm that it is still
indefinite and, if this is not the case, appropriate action is taken.
Intangible assets with finite useful lives are amortised over the useful lives using methods similar to those
used to depreciate tangible assets. The annual amortisation of intangible assets with a finite useful life is
recognised under "Depreciation and amortisation" in the consolidated income statement. None of the
Group’s significant intangible assets have an indefinite useful life. These intangible assets, which were
developed by non-Group companies, have an average useful life of three years.
Consolidated entities recognise any impairment loss on the carrying amount of these assets with a
charge to "Impairment losses on other assets (net) – Goodwill and other intangible assets" in the
consolidated income statement. Criteria for recognising impairment losses on these assets and any
recovery of impairment losses recognised in past years are similar to those used for property, plant and
equipment for own use (Note 2.15.1).
(2.17) Inventories
“Inventories” in the consolidated balance sheet includes non-financial assets:
-
Held for sale in the ordinary course of business,
In the process of production, construction or development for such sale, or
To be consumed in the production process or in the rendering of services.
Consequently, inventories include land and other property (other than investment properties) held for sale
or for inclusion in a property development.
Inventories are measured at the lower of cost (which comprises all costs of purchase, costs of conversion
and direct and indirect costs incurred in bringing the inventories to their present location and condition, as
well as the directly attributable borrowing costs, provided that the inventories require more than one year
to be sold, taking into account the criteria set forth above for the capitalisation of borrowing costs relating
to property, plant and equipment for own use) and net realisable value. Net realisable value is the
estimated selling price of inventories in the ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the sale.
71
The cost of inventory items that are not normally exchangeable and the cost of goods and services
produced and reserved for specific projects are determined individually for each case.
Any write-downs of inventories to net realisable value and any subsequent reversals of write-downs to
below their carrying amount are recognised under "Impairment losses on other assets (net) - Other
assets" in the consolidated income statement.
The carrying amount of inventories sold is derecognised and recognised as an expense under “Other
operating expenses - Changes in inventories” in the consolidated income statement.
For this purpose, the acquisition cost of foreclosed inventories or inventories otherwise acquired in
payment of debts is estimated as the lower of:
–
–
(2.18) Insurance transactions
In accordance with standard accounting practice in the insurance industry, the consolidated insurance
entities credit the amounts of premiums to income when the related insurance policy is issued and charge
the cost of the claims incurred upon settlement thereof to the consolidated income statement. Insurance
entities are therefore required to accrue at period end the unearned revenues credited to their income
statements and the accrued costs not charged to the aforementioned consolidated income statement.
The most significant accruals recorded by the consolidated entities in relation to direct insurance
contracts arranged by them are included in the following technical provisions:
-
Provision for unearned premiums, which reflects the gross premium written in a year allocable to
future years, less the loading for contingencies.
-
Unexpired risks, which supplement the provision for unearned premiums by the amount by which that
provision is not sufficient to reflect the assessed risks and expenses to be covered in the coverage
period not elapsed at the reporting date.
-
Provision for claims outstanding, which reflects the estimated obligations outstanding arising from
claims incurred prior to the reporting date – both unsettled or unpaid claims and claims not yet
reported – less payments made on account, taking into consideration the internal and external claim
settlement expenses and, where appropriate, any additional provisions required for variances in
assessments of claims involving long handling periods.
-
Life insurance: in life insurance where the period of coverage is a year or less, the unearned premium
provision reflects premiums issued in the year attributable to future years. If this provision is
insufficient, a supplemental provision is calculated for unexpired risks which covers the assessed
risks and expenses expected to arise in the policy period not elapsed at the reporting date.
-
In life insurance policies whose coverage period is more than one year, the mathematical provision is
calculated as the difference between the present actuarial value of the future obligations of the
consolidated entities operating in this line of insurance and those of the policyholder or the insured,
taking as a basis for calculation the "inventory" premium accrued during the year (i.e., pure premium
plus a loading for administrative expenses per the technical bases).
-
Provision for life insurance policies where the investment risk is borne by the policyholders: this
provision is determined on the basis of the assets specifically assigned to determine the value of the
rights.
-
Share in profits and return premiums: this provision includes the amount of the bonuses accruing to
policyholders, insured parties or beneficiaries and the premiums to be returned to policyholders or
insured parties, based on the behaviour of the risk insured, to the extent that such amounts have not
been assigned.
The individually applicable technical provisions for inward reinsurance are determined using criteria
similar to those applied for direct insurance and are generally calculated on the basis of the information
provided by the cedants.
72
The technical provisions for direct insurance and inward reinsurance are presented in the consolidated
balance sheet under “Liabilities under insurance contracts” (see Note 21).
The technical provisions for reinsurance ceded - which are calculated on the basis of the reinsurance
contracts entered into and by applying the same criteria as those used for direct insurance - are
presented in the consolidated balance sheet under “Reinsurance assets”.
The deposit component of the life insurance policies linked to investment funds is included under “Other
financial liabilities at fair value through profit or loss — Other financial liabilities” when the financial assets
to which they are linked are also measured at fair value through profit and loss.
The guarantees or guarantee agreements in which the Group undertakes to compensate an obligee in
the event of non-compliance with a specific obligation other than a payment obligation by a particular
debtor of the obligee, such as deposits given to ensure participation in auctions or tender processes,
surety bonds, irrevocable promises to provide surety and guarantee letters which are claimable by law,
are considered, for the purpose of preparing these consolidated financial statements, to be insurance
contracts.
When the Group provides the guarantees or sureties indicated in the preceding paragraph, it recognises
them under “Liabilities under insurance contracts” in the consolidated balance sheet at fair value plus the
related transaction costs, which, unless there is evidence to the contrary, is the same as the value of the
premiums received plus, if applicable, the present value of cash flows to be received for the guarantee or
surety provided, and an asset is recognised simultaneously for the present value of the cash flows to be
received. Subsequently, the present value of the fees or premiums to be received is discounted, and the
differences are recognised under “Interest and similar income” in the consolidated income statement; and
the value of the amounts initially recognised in liabilities is allocated on a straight-line basis to the
consolidated income statement (or, if applicable, using another method which must be indicated). In the
event that, in accordance with IAS 37, a provision is required for the surety which exceeds the liability
recognised, the provision is recognised using criteria similar to those described for the recognition of
impairment of financial assets and the amount recorded is reclassified as an integral part of the
aforementioned provision.
When preparing the consolidated financial statements, the Group's directors made a distinction between:
-
Provisions: credit balances covering present obligations at the reporting date arising from past events
which could give rise to a loss for the Group, which is considered to be likely to occur and certain as
to its nature, but uncertain as to its amount and/or timing, and
-
Contingent liabilities: possible obligations arising from past events, whose existence will be confirmed
by the occurrence or non-occurrence of one or more future events not wholly within the control of the
consolidated entities.
The Group's consolidated financial statements include all significant provisions with respect to which it is
considered more likely than not that the obligation will have to be settled. Contingent liabilities, other than
those initially recognised as a result of the transaction giving rise to the Bankia Group, referred to in Note
1.2 above, are not recognised in the consolidated financial statements, but rather are disclosed in
accordance with the requirements of IAS 37.
Provisions are measured based on the best information available on the consequences of the events
giving rise to them and remeasured at the end of each reporting period. They are used to meet the
specific obligations for which they were originally recognised. They may be wholly or partly reversed if
these obligations cease to exist or diminish.
The recognition and reversal of provisions considered necessary pursuant to the foregoing criteria are
recognised with a charge or credit, respectively, to “Provisions (net)” in the consolidated income
statement.
(2.19.1) Litigation and/or claims in process
At the end of 2012, certain litigation and claims were in process against the Group arising from the
ordinary course of its operations. The Group's legal advisers and its directors consider that, in view of the
provisions made by the Group in this connection, the outcome of litigation and claims will not have a
material effect on the financial statements for the years in which they are settled.
The main claims against the Bank, along with their current status and possible outcomes considered by
the directors, are as follows:
73

Aviva. Bancaja and Aviva drew up a bancassurance agreement in a number of contracts signed in
May 2000 for the creation, marketing and distribution through the banking sector of personal
insurance policies and pension plans on the Bancaja system, instrumented through the purchase by
Aviva of 50% of the share capital of Aseval. On 15 December 2011, Aviva submitted a request for
arbitration against Bankia and Bancaja, claiming that the de-merging of Bancaja's banking and
banking-related businesses in favour of Banco Financiero y de Ahorros constitutes a breach of the
contracts, pursuant to which Bancaja is obliged to purchase Aviva's stake in Aseval, and requesting a
total amount for all items ranging between EUR 818,000 thousand and EUR 1,129,000 thousand
(plus interest in both cases). On 18 December 2012, the Bank reached an agreement with Aviva
Europe S.E. regarding the arbitration proceedings which they submitted to the Arbitration Court of
Madrid's Official Chamber of Commerce and Industry, whereby both parties, jointly with Caja de
Ahorros de Valencia, Castellón y Alicante (Bancaja), requested a decision on the terms agreed by
the parties. The agreement consists of the sale to Bankia, S.A. by Aviva Europe SE of all the shares
held by Aviva Europe SE in Aseguradora Valenciana, S.A. de Seguros y Reaseguros (Aseval)
representing 50% of its share capital, for a total price of EUR 608,172 thousand. The shares will be
transferred once authorisation is obtained by the regulators and anti-trust authorities.

Gescartera. On 13 October 2009, Spain's Supreme Court ruled partially in favour of the appeal for
cassation filed by Bankia Bolsa (formerly Caja Madrid Bolsa), limiting its joint civil liability exclusively
to the unlawful appropriation by responsible parties at Gescartera of (i) the funds managed by Caja
Madrid Bolsa and (ii) subject to the temporal scope of the term of validity of the subcustody contract
drawn up with Gescartera, and not to the full amount of the investments not recovered by
Gescartera's clientele. On 9 January 2012, the Audiencia Nacional (National Court) issued a
judgment that adopted the view advanced in the expert report filed on the motion of Bankia Bolsa (a
Group subsidiary) to the effect that the liability of that company arising from the proceedings
surrounding the Gescartera matter is EUR 12.2 million, plus interest at the legal rate, i.e., EUR 18.8
million. This amount was fully covered by existing provisions at Group level at 31 December 2011,
and therefore does not imply any loss with respect to the amounts recognised at 31 December 2011
in the financial statements. It was paid into the National Court on 19 January 2012.

Ribertierra, S.L. This company filed proceedings against Caja Madrid and Altae Banco S.A. in a claim
for EUR 25.2 million for deficient advice in relation to bank finance with a Landsbanki bond
guarantee. The outcome of the proceedings was a favourable ruling in the first instance rejecting the
claim, and the plaintiff appealed against the ruling.

Rounding-off clause. On 10 October 2002, the Madrid Provincial Court ruled full confirmation of the
sentence handed down by Court No. 50. Caja Madrid submitted an appeal for cassation against this
ruling, and the Supreme Court agreed to submit a pre-judicial issue to the Court of Justice of the
European Communities (Luxemburg) in relation to the transposition of the consumer directive
93/13/EEC into Spanish law. At this stage of the proceedings, a decision was handed down on 3
June 2010 recognizing the ability of national law to extend its control of abusive practices to essential
elements of a contract. Following this ruling, on 23 June 2010 Caja Madrid thus declared a waiver on
the appeal for cassation, and this was favourably received by the Court, which declared the
termination of proceedings.
On 15 May 2007, the Barcelona No. 36 Court of First Instance ruled the upward rounding-off clause
used by Caixa d’Estalvis Laietana null and void, with return of funds; on 22 September 2008, Section
No. 15 of the Barcelona Provincial Court issued a ruling with partial acceptance of the appeal for
cassation submitted by the entity, conforming the previous two rulings. The appeal for cassation
submitted by Caixa Laietana was not accepted due to matters of form, and thus the ruling by the
Provincial Court stands. Individual claims by customers are being processed, in due consideration of
the fact that the upward rounding-off agreement was eliminated in 2002 in respect of future
operations. The hearing has been scheduled for 4 March 2013.
"Non-current assets held for sale" includes the carrying amount of individual items, disposal groups or
items forming part of a business unit earmarked for sale ("discontinued operations"), whose sale in their
present condition is highly likely to be completed within a year from the reporting date.
Investments in associates and joint ventures meeting the conditions set forth in the foregoing paragraph
also qualify as non-current assets held for sale.
Therefore, the carrying amount of these items, which can be of a financial nature or otherwise, will
foreseeably be recovered from sale rather than continuing use.
74
Specifically, property or other non-current assets received by the Group as total or partial settlement of its
debtors' payment obligations to it are deemed to be non-current assets held for sale, unless the Group
has decided to make continuing use of these assets or to hold them to earn rentals or for future capital
appreciation.
Non-current assets held for sale arising from foreclosure or otherwise acquired in settlement of debts are
initially recognised as the lower of:
–
–
months and 40% after 36 months,
All court costs associated with the claiming and foreclosure of these assets are recognised immediately
in the consolidated income statement for the foreclosure period. Registry costs and taxes paid may be
added to the value initially recognised provided that, as a result, such value does not exceed the
appraisal value less the estimated costs to sell mentioned in the paragraph above.
In general, non-current assets classified as held for sale are measured at the lower of their carrying
amount calculated as at the classification date and their fair value less estimated costs to sell. Tangible
and intangible assets which by their nature would otherwise be depreciable and amortisable are not
depreciated or amortised as long as they are classified as held for sale.
Similarly, “Liabilities associated with non-current assets held for sale” includes the balances payable
associated with disposal groups and the Group's discontinued operations.
If the carrying amount of the assets exceeds their fair value less costs to sell, the Group adjusts the
carrying amount of the assets by the amount of the excess with a charge to “Gains/(losses) on noncurrent assets held for sale not classified as discontinued operations” in the consolidated income
statement. If the fair value of such assets subsequently increases, the Group reverses the losses
previously recognised and increases the carrying amount of the assets without exceeding the carrying
amount prior to the impairment, with a credit to “Gains/(losses) on non-current assets held for sale not
classified as discontinued operations” in the consolidated income statement.
The gains or losses arising on the sale of non-current assets held for sale are presented under
“Gains/(losses) on non-current assets held for sale not classified as discontinued operations” in the
However, financial assets, assets arising from employee remuneration, deferred tax assets and assets
under insurance contracts that are part of a disposal group or of a discontinued operation are not
measured as described in the preceding paragraphs, but rather in accordance with the accounting
policies and rules applicable to these items, which were explained in previous sections of Note 2.
(2.21) Consolidated statement of cash flows
The following terms are used in the consolidated cash flow statement with the meanings specified:
-
Cash flows: inflows and outflows of cash and cash equivalents. Cash equivalents are short-term,
highly liquid investments that are subject to an insignificant risk of changes in value (where
applicable: and, exclusively, since they form part of cash management, bank overdrafts repayable on
demand, which reduce the amount of cash and cash equivalents).
-
Operating activities: the principal revenue-producing activities of credit institutions and other activities
that are not investing or financing activities. Operating activities also include interest paid on any
financing received, even if this financing is considered to be a financing activity. Activities performed
with the various financial instrument categories stipulated in Note 2.2 above are classified, for the
purpose of this statement, as operating activities, except for held-to-maturity investments,
subordinated financial liabilities and investments in equity instruments classified as available for sale
which are strategic investments. For these purposes, a strategic investment is that made with the
intention of establishing or maintaining a long-term operating relationship with the investee, since,
inter alia, one of the circumstances that could determine the existence of significant influence
prevails, even though this influence does not actually exist.
-
Investing activities: the acquisition and disposal of long-term assets and other investments not
included in cash and cash equivalents, such as tangible assets, intangible assets, investments, non75
current assets held for sale and associated liabilities, equity instruments classified as available for
sale which are strategic investments and debt instruments included in held-to-maturity investments.
-
Financing activities: activities that result in changes in the size and composition of equity and
liabilities that are not operating activities, such as subordinated liabilities.
As a result of the de-merger process undertaken in 2011 and effective for accounting purposes as from 1
January (Note 1.2), cash flows shown in the statement in connection with the Group's operating, investing
and financing activities were determined on the basis of assets and liabilities on its balance sheet as at 1
January 2011, after the de-merger process was completed.
In preparing the consolidated cash flow statement, "Cash and cash equivalents" were considered to be
short-term, highly liquid investments that are subject to a low risk of changes in value. Thus, for the
purposes of drawing up the cash flow statement, the balance of "Cash and balances with central banks"
on the asset side of the consolidated balance sheet was considered as cash and cash equivalents.
Share-based remuneration of senior executives and Board members
When the entity immediately delivers shares to eligible employees with no requirement of a certain period
of time before the employee becomes the unconditional owner of the shares, the total services received
are expensed under "Staff costs" in the consolidated income statement, with a balancing entry of
corresponding increase in consolidated equity.
When the shares are delivered to employees after a certain period of service, the expense is recognised
under "Staff costs" in the consolidated income statement, along with the corresponding increase in the
equity of the company making the payment.
At the grant date on which the employee is entitled to receive share-based payments (the grant date is
understood as the date on which employees and the entity agree to the share remuneration format, its
periods and conditions), the amount of the remuneration to be paid, i.e. the amount of the increase in the
equity of the company making the payment, is measured at the fair value of the shares committed. If fair
value cannot be reliably estimated, the shares are measured at their intrinsic value. Changes in the fair
value of shares between the grant date and the date on which they are delivered are not recognised. If
the shares are measured at their intrinsic value, the variation in this value between the grant date and the
date on which they are delivered is recognised with a balancing entry in the consolidated income
statement.
On 27 July 2011, the Bank's Board of Directors approved the director remuneration policy in accordance
with the best corporate governance practices and pursuant to European regulations concerning
remuneration policies at credit institutions and also to the provisions of Royal Decree 771/2011 of 3 June,
making particular reference to variable remuneration.
The new system establishes a specific format for payment of variable remuneration for directors carrying
out control functions or whose activity significantly affects the Bank's risk profile:

At least 50% of variable remuneration must be paid in Bankia shares.

At least 40% of variable remuneration, in either shares or cash, must be deferred over a period of
three years.
Thus, 50% of annual variable remuneration will be paid in shares (30% of the total will be paid following
assessment of the year's objectives, and the remaining 20% deferred in portions of one-third, over a
period of three years).
The share price will be the average quoted price over the three months prior to the accrual date.
All shares delivered to directors on the aforementioned scheme as part of their annual variable
remuneration will be unavailable during the year immediately following the date on which they are
delivered. In any case, no shares were delivered in 2012 as no amounts of variable compensation were
paid.
(2.23.1) Authorisation for purchase of treasury shares
In June 2011 (prior to the entity's market listing mentioned in Note 1.2 above, and thus before Bankia lost
single-member company status) the Sole Shareholder of Bankia, S.A. resolved to authorise Bankia's
Board of Directors to carry out derivative acquisition of treasury shares under the following terms:
76
-
This acquisition could take place as an outright purchase, swap or transfer on payment, on one or
several occasions, provided the shares acquired, added to those already owned by Bankia, do not
exceed 10% of the share capital.
-
The price or equivalent will fluctuate between a minimum, equal to the nominal value, and a
maximum, equal to the closing price of Bankia's shares on the Continuous Market at the time of
acquisition.
-
This authorisation is valid for five years.
The shares acquired pursuant to this authorisation may be sold or redeemed and used in share option
schemes such as those indicated in the third paragraph of Section 146.1 a) of the Corporate Enterprises
Act.
(2.23.2) Accounting policies applied
Business transactions conducted with treasury shares are recognised directly against equity, as are any
expenses and possible income that may arise from such transactions.
"Equity - Less: treasury shares", in consolidated equity, shows the value of Bankia, S.A. treasury shares
held by the Group as at 31 December 2012 and 2011.
Note 26.2 sets out the information required by the regulations applicable to transactions with treasury
shares.
(2.24) Consolidated statement of recognised income and expense
As indicated above, according to the options available under IAS 1, the Group has elected to present
separately, first, a statement displaying the components of consolidated profit or loss ("Consolidated
income statement") and, secondly, a statement that begins with profit or loss for the year and displays the
components of other comprehensive income for the year, which in these consolidated financial
statements, in accordance with the terminology of Bank of Spain Circular 4/2004, is termed the
"Consolidated statement of recognised income and expense".
The consolidated statement of recognised income and expense presents the income and expenses
generated by the Group as a result of its business activity in the year. A distinction is made between
income and expenses recognised in the consolidated income statement, on one hand, and, on the other,
income and expenses recognised directly in consolidated equity pursuant to prevailing laws and
regulations.
Accordingly, this statement presents:
-
Consolidated profit or loss for the years ended 31 December 2012 and 2011.
-
The revenue or expenses temporarily recognised in consolidated equity as valuation adjustments.
-
The revenue or expenses definitively recognised in consolidated equity.
-
The tax accrued on the items referred to in the preceding two subparagraphs, except in relation to
impairment losses on investments in entities consolidated using the equity method, which are
presented on a net basis.
-
Total recognised consolidated income and expense for the year (calculated as the sum of four
previous amounts, showing separately the total amounts attributable to equity holders of the parent
and to non-controlling interests.
-
The amount of the income and expenses relating to entities accounted for using the equity method
recognised directly in equity is presented in this statement, irrespective of the nature of the related
items, under “Entities accounted for using the equity method”.
The changes in consolidated income and expenses recognised in consolidated equity under “Valuation
adjustments” are broken down – subject to the constraints set out above – as follows:
-
Revaluation gains/(losses): includes the amount of the income, net of the expenses incurred in the
year, recognised directly in consolidated equity. The amounts recognised in the year under this item
are maintained in this line, but in the same year are transferred to the consolidated income
statement, where they are added to the initial value of other assets and liabilities or are reclassified to
another item.
-
Amounts transferred to the income statement: includes valuation gains and losses previously
recognised in consolidated equity, even in the same year, which are taken to the consolidated
income statement.
77
-
Amount transferred to the initial carrying amount of hedged items: comprises the valuation gains and
losses previously recognised in consolidated equity, even in the same year, which are recognised at
the initial carrying amount of the assets and liabilities as a result of cash flow hedges.
-
Other reclassifications: includes the amount of the transfers made in the year between valuation
adjustment items in accordance with current regulations.
The amounts of these items are presented gross and, except as indicated above for the items relating to
valuation adjustments of entities accounted for using the equity method, the related tax effect is
recognised in this statement under “Income tax”.
(2.25) Statement of changes in equity
The statement of changes in equity (which appears in these consolidated financial statements as
"Statement of changes in total equity" in accordance with the terminology used by Bank of Spain Circular
4/2004) reflects all the changes in consolidated equity, including those due to accounting policy changes
and error corrections. This statement accordingly presents a reconciliation between the carrying amount
of each component of consolidated equity at the beginning and the end of the period, separately
disclosing each change into the following headings:
-
"Adjustments due to accounting policy change" and "Error adjustments": includes changes in Group
equity as a result of the retrospective restatement of financial statement balances on account of
changes in accounting policies or for correction of errors, if any.
-
Income and expense recognised in the year: represents the aggregate of all items of recognised
income and expense, as outlined above.
-
Other changes in equity: includes the remaining items recognised in equity such as capital increases
or decreases, distribution of results, treasury share transactions, equity-based payments, transfers
between equity items, and any other increase or decrease in consolidated equity.
78
(3) Risk management
Risk management is a strategic pillar in the Bankia Group. The primary objective of risk management is
to safeguard the financial stability and asset base of the Entity, maximising the risk-return ratio in
accordance with the risk tolerance levels set by the governing bodies while providing tools for controlling
and monitoring the authorised levels of risk.
Risk management is guided by the principles of independence, commitment of senior management, a
global vision of risk management, early management of doubtful receivables, thorough analysis,
delegation of powers, monitoring and control of positions, and standardised and coherent methodology
and measurement practices. The Bankia Group continually improves the body of parameters and tools
associated with each type of risk. This provides a key support for the teams entrusted with decisionmaking, both in the risk areas and in the rest of the organisational structure, and with the ongoing control
and monitoring of the different risks assumed. These functions are undertaken by the Office of Chairman.
In view of the activity carried on by the Group, the main risks to which it is exposed are as follows:
-
Credit risk (including concentration risk), arising primarily from the business activity performed by
the Individual, Business, Corporate Finance, and Treasury and Capital Markets business areas,
as well as from certain investments held by the Group.
-
Financial instrument liquidity risk, which relates to the possibility that the funds needed to settle
the Group's commitments in a timely manner and to allow its lending activity to grow will not be
available at reasonable prices.
-
Structural balance sheet interest rate risk, which relates to potential losses in the event of
adverse trends in market interest rates.
-
Market risk and foreign currency risk, which relates to the potential losses due to adverse
changes in the market prices of financial instruments with which the Group operates, primarily
through the Treasury and Capital Markets area.
-
Operational risk, which relates to possible losses arising from failures or shortcomings in
processes, personnel or internal systems, or from external events.
The Board of Directors is the highest governing body entrusted with determining and approving general
internal control strategies and procedures, as well as the policies for assuming, managing, controlling and
reducing the risks to which the entity is exposed. In addition, as per the authorisations delegated by the
Board of Directors, the Management Committee, the Finance Committee and the Assets and Liabilities
Committee (ALCO) also perform risk management duties.
The Internal Audit Unit, supervised by the Audit and Compliance Committee, is responsible for
overseeing the efficiency of operating processes and internal control systems and for verifying
compliance with all applicable regulations.
(3.1.1) Credit risk management objectives, policies and processes
Credit risk, understood as the risk that the Group will assume losses in the regular course of its banking
business if its customers or counterparties fail to comply with their contractual payment obligations, is
overseen by the Risk Management Department (under the Office of Chairman), in accordance with the
policies, methods and procedures approved by the Bank's Board of Directors.
In that regard, specific credit risk management policies have been established for the different client
segments, based on the following:





Stable general criteria for approving and monitoring transactions
Segment-specific criteria and risk concentration thresholds
Appropriate risk/price matching
Powers delegated without relevant changes
Solid policies for hedging impairment due to credit risk
In addition, the Group has defined procedures for identifying, analysing and admitting, measuring,
valuing, monitoring and recovering specific risks. These procedures, which cover the entire life span of
risks (from initial grant to extinction), are independently overseen by the Risk Management Department.
79
The risk concentration policies set out both individual and sector-based limits. Individual limits are fixed at
up to 25% of eligible equity and take into account an internally-assigned rating, the size and financial
structure of the company, and the incorporation of the limit in the overall threshold for the "Large risks"
group. Sector-based limits are established in accordance with the size of the sector and mitigate the
cyclical effects in certain sectors.
(3.1.2) Exposure to credit risk by segment and activity
The maximum credit risk exposure for financial assets recognised in the accompanying consolidated
balance sheet is their carrying amount. The maximum credit risk exposure for financial guarantees
extended by the Group is the maximum amount the Group would have to pay if the guarantee were
executed.
At 31 December 2012 and 2011, the original credit risk exposure, without deducting collateral or any
other credit enhancements received, as defined in Bank of Spain Circular 3/2008, and grouped according
to the main segments and activities determined by the Group, is as follows:
31 December 2012
31/12/12
Financial
assets held
for trading
and financial
assets at fair
value through
profit or loss
assets
Trading
derivatives
Held-tomaturity
investments
Loans and
receivables
Off-balance
sheet items
and others
Hedging
derivatives
275,848
-
18,155,001
9,078,746
7,234,643
-
21,057
20,779,511
18,721,522
7,988,838
20,434,809
5,937,357
665,833
Companies
66,832
459,095
2,809,641
39,297,119
1,500,041
221,630
20,647,117
-
12,676,635
-
87,976,067
-
-
4,525,817
Consumer
-
192
-
2,154,286
-
-
159,223
Mortgage - SMEs
-
-
-
-
-
-
-
Mortgage - Other
-
288
-
77,172,452
-
-
571,992
Retail - SMEs
-
19,392
-
7,599,317
-
-
1,161,097
Cards
-
-
-
1,050,012
-
-
2,633,505
Derivatives
-
12,656,763
-
-
-
-
-
39,437
-
-
-
-
-
-
-
1,470,143
-
1
-
15,410
2
403,174
35,385,384
39,686,164
144,340,771
29,159,493
6,174,397
26, 480,088
5,131,265
-
641,319
-
-
Retail customers
Equity
Other
Total
Memorandum item: Breakdown by country of
the public agency
18,017,151
9,027,033
-
-
-
-
-
-
-
-
980,981
-
-
-
-
-
-
-
-
-
TOTAL
275,848
641,319
-
-
137,850
51,713
1,122,397
-
-
275,848
-
18,155,001
9,078,746
7,234,643
-
641,319
80
31 December 2011
31/12/11
Financial assets
held for trading
and financial
assets at fair
value through
profit or loss
1,184,529
-
13,767,040
6,710,609
7,599,114
-
1,184,273
96,192
16,265,282
5,936,396
18,214,651
1,107,039
5,082,075
1,048,523
127,842
359,360
4,218,772
61,359,246
2,187,456
172,422
26,730,848
Retail customers
-
9,922,709
-
119,695,187
-
-
6,032,895
Consumer
-
150
-
5,459,577
-
-
426,899
Mortgage - SMEs
-
-
-
12,494,605
-
-
288,996
Mortgage - Other
-
226
-
85,276,338
-
-
1,039,413
Retail - SMEs
-
15,179
-
15,279,611
-
-
1,121,068
Cards
-
-
-
1,185,056
-
-
3,156,519
-
-
Companies
Trading
derivatives
Available-for-sale
financial assets
Loans and
receivables
Held-to-maturity
investments
9,907,154
Derivatives
Off-balance
sheet items and
others
Hedging
derivatives
52,636
-
1,347,018
-
-
-
-
Other
-
1,150,763
-
1,810,869
-
11,990
442,069
Total
1,461,199
27,698,114
25,269,226
207,790,562
10,893,609
5,266,487
35,438,608
1,184,529
-
13,609,342
6,601,309
5,122,761
-
1,159,273
-
-
-
31,078
-
-
-
Equity
Memorandum item: Breakdown by country of
the public agency
-
-
-
-
972,932
-
-
-
-
-
-
-
-
-
-
157,698
78,222
1,503,421
-
25,000
1,184,529
-
13,767,040
6,710,609
7,599,114
-
1,184,273
TOTAL
No impairment losses were recognised on investments in sovereign risk at 31 December 2012 and 2011.
81
(3.1.3) Breakdown of original exposure by product
Original credit risk exposure at 31 December 2012 and 2011, by product (excluding equity products), is
shown in the table below. Loans and credits reflect the highest customer demand, accounting for 54% at
31 December 2012 (67% at 31 December 2011). Fixed income products represent the second-highest
customer demand, accounting for 25% at 31 December 2012 (13% at 31 December 2011).
31/12/12
PRODUCT
Financial assets held
for trading and
financial assets at fair
value through profit or
loss
Loans and credits
assets
Trading
derivatives
Held-tomaturity
investments
Loans and
receivables
Hedging
derivatives
Off-balance
sheet items and
others
39,874
-
-
134,137,132
-
-
18,021,142
323,863
-
39,686,164
2,215,349
29,159,493
-
-
Interbank deposits
Guarantees and
documentary credits
-
-
-
7,988,290
-
-
-
-
-
-
-
-
-
8,458,946
Derivatives
-
35,385,384
-
-
-
6,174,397
-
363,737
35,385,384
39,686,164
144,340,771
29,159,493
6,174,397
26,480,088
Fixed income
Total
31/12/11
PRODUCT
Financial assets held
for trading and
financial assets at fair
value through profit or
loss
Loans and credits
Fixed income
Interbank deposits
Guarantees and
documentary credits
Derivatives
Total
assets
Trading
derivatives
Held-tomaturity
investments
Loans and
receivables
Off-balance
sheet items
and others
Hedging
derivatives
16,248
-
-
184,093,819
-
-
25,065,232
1,392,315
-
23,922,208
5,506,754
10,893,609
-
-
-
-
-
18,189,989
-
-
-
-
-
-
-
-
-
10,373,376
-
27,698,114
-
-
-
5,266,487
-
1,408,563
27,698,114
23,922,208
207,790,562
10,893,609
5,266,487
35,438,608
(3.1.4) Credit quality
The Group uses advanced systems to measure the credit risk inherent in certain credit portfolios. As a
result of the Integration Agreement entered into by the “Cajas”, as referred to in Note 1.2, which creates a
consolidable group, the Group measures its credit risk exposure at 31 December 2012 both by the
standard approach and by the internal ratings-based (IRB) approach.
Thus, at 31 December 2012, the internal ratings-based approached is used to assess approximately
51.4% of the Group's portfolio. This segment comprises both part of the corporate client portfolio
(measured using internal rating systems), and part of the retail portfolio (individual customers, microcompanies, i.e., companies with revenue under EUR 1 million per year, and self-employed professionals:
measured using points-based or scorings). The Group's remaining portfolio (approximately 48.6% of the
original exposure) is assessed by the standard approach.
A roll-out plan is in place to extend advanced IRB models.
All ratings appearing in this section reflect the definitions given by the Standard & Poor’s scale.
The rating system designed by the Group primarily covers two dimensions:
 Risk of default by the borrower: reflected in the probability of default (PD) by the borrower or rating.
 Specific factors in transactions: reflected in loss given default (LGD), such as guarantees or
interests in various tranches of leveraged financing. The term also constitutes a major factor.
82
The rating system used makes a distinction between the following:
 Exposure to risk with companies, governments, institutions and banks: each exposure vis-à-vis the
same borrower is given the same credit quality grading (known as borrower grade), regardless of
the nature of the exposures. This is known as the borrower rating.
 Retail exposures: the systems focus both on borrower risk and the characteristics of the
transactions. This is known as scoring.
The rating system has grading models for banks, large companies, companies, public institutions and
special financing. There are three different types of rating:
 External rating: this refers to the ratings issued by external rating agencies (S&P's, Moody’s and
Fitch).
 Automatic rating: these ratings are obtained through internal models, depending on the segment
to which the customer belongs.
 Internal rating: these are the final ratings assigned to customers when all the available information
has been examined. The internal rating may be the external rating, the automatic rating or the
rating determined by the Rating Committee from all the information analysed.
Customers of the entities that now make up the Group now form part of the new rating system, i.e. when
financial information has been added to the NOS corporate system the rating is automatically produced
by the appropriate model.
Credit quality. Original exposure and average rating/scoring, by segment
The breakdown by segment of the Group's credit risk exposure at 31 December 2012 and 2011,
excluding trading derivatives, with the average ratings per segment (excluding default), is as follows:
IRB
SEGMENT
Amount
Standard
Average rating
BBB-
Amount
Institutions
16,721,302
Companies
28,874,507
B+
7,161,237
B
57,001,417
B+
28,659,934
B+
Retail customers
Consumer
Mortgage - Other
1,240,867
49,691,670
B
BB-
69,563,733
Average rating
869,188
22,814,631
BBB-
B
BB-
Retail - SMEs
3,283,542
B
Cards
2,785,338
BB-
818,262
B+
102,597,226
BB-
105,384,904
BB
Total
4,157,853
B
83
IRB
Standard
SEGMENT
Amount
Institutions
26,566,109
BB+
34,269,316
BBB
Companies
51,292,226
B+
30,637,274
B-
Retail customers
60,505,977
B+
40,963,814
B+
1,456,410
B-
Consumer
Average rating
3,069,655
Mortgage - Other
B
52,093,820
BB-
Amount
Average rating
31,974,709
BB-
Retail - SMEs
2,494,668
B
6,436,618
B-
Cards
2,847,834
BB-
1,096,077
B+
105,870,404
B+
Total
138,364,312
B+
Credit quality. Rating distribution for exposures
The distribution of the original exposure by credit ratings, differentiating between rating-based exposures
whose capital requirements are determined using the internal ratings method (excluding special
financing) and exposures using the standard method, is shown in the table below:
31/12/12
RATING
Default
Total
IRB
31/12/11
Standard
IRB
Standard
7,455,664
12,936,668
18,495,615
29,853,687
30,693,673
58,831,629
40,284,747
12,150,445
6,519,203
4,306,920
15,148,978
17,342,568
927,268
649,754
3,928,994
5,559,891
5,768,732
5,311,537
6,388,580
8,642,717
51,364,540
82,036,508
84,246,914
73,549,308
Credit quality. Rating distribution for exposures for the corporate portfolio
The distribution of the original exposure by credit ratings at 31 December 2012 and 2011, differentiating
between rating-based exposures whose capital requirements are determined using the internal ratings
method (excluding special financing) and exposures under the standard method, is shown in the table
below:
31/12/12
RATING
Default
Total
IRB
31/12/11
Standard
IRB
Standard
1,688,207
10,302
7,140,065
247,081
20,273,267
3,039,917
25,225,209
7,542,722
6,012,742
3,461,980
15,015,503
17,290,928
900,292
649,038
3,911,449
5,556,544
5,622,858
5,245,540
6,344,244
8,568,807
34,497,366
12,406,777
57,636,470
39,206,082
84
Credit quality. Distribution of retail exposures
The distribution of the original exposure by credit ratings at 31 December 2012 and 2011 for scoringbased exposures whose capital requirements are determined using the internal ratings method and
exposures under the standard method, is shown in the table below:
31/12/12
RATING
AAA to A-
IRB
31/12/11
Standard
IRB
Standard
6,419,268
366,882
7,002,346
393,908
BBB+ to BB-
33,904,503
18,309,855
35,920,921
22,709,713
B+ to B-
15,546,627
9,947,889
17,098,360
17,860,155
CCC+ to C
1,131,017
35,308
484,350
37
Default
3,172,839
3,750,472
2,404,010
2,371,766
60,174,254
32,410,406
62,909,987
43,335,579
Total
Credit quality. Historical default rates
The Group's default rate, understood as the ratio between default risks at any given time and total Group
credit risks, was 12.99% at 31 December 2012 (7.63% at 31 December 2011).
(3.1.5) Concentration of risks
The table below shows information concerning the sector and geographic concentration risk at 31
December 2012:
SECTOR
31/12/12
TOTAL (*)
Spain
Rest of the EU
America
ROW
Credit institutions
56,237,855
28,563,306
24,164,928
3,297,045
212,576
Government agencies
34,235,772
31,942,151
2,237,367
49,695
6,559
27,418,625
25,125,664
2,237,367
49,695
5,899
6,817,147
6,816,487
-
-
660
24,573,342
11,649,865
12,795,217
115,760
12,500
Other
64,388,824
58,167,434
3,901,348
1,888,080
431,962
Construction and real estate development (b)
4,831,437
4,639,275
33,555
136,180
22,427
4,072,295
3,564,124
482,256
25,915
-
55,485,092
49,964,035
3,385,537
1,725,985
409,535
Large enterprises
33,118,446
28,348,710
2,954,408
1,428,426
386,902
22,366,646
21,615,325
431,129
297,559
22,633
84,952,508
83,431,214
1,102,581
89,757
328,956
77,210,995
75,739,283
1,065,447
85,683
320,582
Consumer
3,484,412
3,469,231
6,752
4,074
4,355
Other
4,257,101
4,222,700
30,382
-
4,019
264,388,301
213,753,970
44,201,441
5,440,337
992,553
Other
Housing
Subtotal
Less: Valuation adjustments due to impairment of assets not
attributable to specific transactions
TOTAL
(479,965)
263,908,336
(*) The definition of risk includes the following items of the public balance sheet: “Loans and advances to credit institutions", "Loans and advances to customers", "Debt
impairment losses.
85
Autonomous communities
Canary
Islands
Castilla y
León
Item
Total (*)
Credit institutions
28,563,306
364,352
3,374
1
75
26,235,866
1,173,067
-
786,571
Government agencies
31,942,151
202,493
86,444
75,555
167,109
4,982,964
839,790
33,074
429,058
25,125,664
-
-
Other
Andalusia
Catalonia
Madrid
Valencia
La Rioja
Other
6,816,487
202,493
86,444
75,555
167,109
4,982,964
839,790
33,074
429,058
11,649,865
2,147
563
503
-
9,721,165
1,915,778
6
9,703
583185,767
1,841,011
384,550
1,036,587
853,356
44,851,187
5,452,649
46,382
3,720,045
4,639,275
277,748
16,914
166,273
-
1,786,889
1,968,921
-
422,530
3,564,124
79,408
3,798
19,847
94,198
3,077,168
47,521
945
241,239
49,964,035
1,483,855
363,838
850,467
759,158
39,968,797
3,436,207
45,437
3,058,276
Large enterprises
28,348,710
648,654
127,394
236,795
451,090
23,460,933
2,286,082
6,643
1,131,119
21,615,325
835,201
236,444
613,672
308,068
16,507,864
1,150,125
38,794
1,925,157
83,431,214
6,495,695
1,524,203
2,345,655
2,935,947
47,614,898
11,772,094
198,152
10,544,570
Non-financial institutions and sole
proprietors
development
Other
Housing
75,739,283
6,039,540
1,406,071
2,171,257
2,651,892
43,267,808
10,153,425
188,639
9,860,651
Consumer
3,469,231
228,960
60,481
80,572
186,746
1,910,599
626,840
5,733
369,300
Other
4,222,700
227,195
57,651
93,826
97,309
2,436,491
991,829
3,780
314,619
213,753,970
8,905,698
1,999,134
3,458,301
3,956,487
133,387,747
21,153,378
277,614
15,489,247
SUBTOTAL
Less: valuation adjustments due to
impairment of assets not attributable to
specific transactions (**)
TOTAL
(479,965)
213,274,005
(*) The definition of risk includes the following items of the public balance sheet: “Loans and advances to credit institutions", "Loans and advances to customers", "Debt
impairment losses.
(**) Includes the total amount of valuation adjustments for impairment of assets not attributable to specific transactions
The table below shows information concerning the diversification of risks by business sectors, measured
as credit risk, excluding equity income and trading derivatives, in accordance with the borrower's CNAE
activity code and regardless of the purpose of the financing at 31 December 2012 and 2011:
SECTOR
Foodstuffs
31/12/12
31/12/11
1,324,708
1,607,962
583,800
3,188,044
Automotive and auto services
1,234,281
2,426,882
Wholesale
4,628,316
4,968,162
Retail
3,191,669
3,711,293
Associations
Construction and development (*)
18,919,791
56,588,318
Machinery and equipment manufacturing
3,029,361
4,179,143
Manufacturing of intermediate products
3,745,433
4,896,872
25,499,842
43,989,434
Catering and tour operators
4,363,008
5,062,981
Food, beverages and tobacco industry
1,926,609
2,252,942
Basic manufacturing, textiles, furniture
881,461
1,107,584
Finance
Mining, energy and infrastructures
6,948,102
6,479,160
Public sector
40,963,516
26,249,214
Company services
26,805,601
9,245,601
Leisure, culture, health and education
6,652,442
6,753,495
Supplies: electricity, gas, steam, water
7,820,375
9,255,941
Telecommunications
1,416,742
2,210,787
Transport
2,451,752
2,781,543
Other sectors
TOTAL
72,725,941
84,708,756
235,112,750
281,664,114
(*) Included financing not related to real estate development
86
The Group regularly monitors major customer risk, and these are periodically reported to the Bank of
Spain.
(3.1.6) Netting agreements and collateral agreements
At 31 December 2012, there were 267 netting agreements and 167 collateral agreements (168 and 169,
respectively, at 31 December 2011). The effect of these agreements at 31 December 2012 was a 92.04%
reduction in the credit risk of derivative transactions (91.12% at 31 December 2011).
31 December 2012 and 2011 was as follows:
31 December 2012
(Millions of euros)
Credit risk exposure (utilisation of lines)
Exposure (utilisation of lines)
with netting agreements
47,406
11,523
3,775
100.0%
24.3%
8.0%
Credit risk exposure (utilisation of lines)
Exposure (utilisation of lines)
with netting agreements
40,928
11,145
3,636
100.0%
27.2%
8.9%
31 December 2011
(Millions of euros)
(3.1.7) Collateral received and other credit enhancements
At 31 December 2012, the distribution by segments of original exposure, excluding equities and trading
derivatives, with collateral and other credit enhancements was as follows:
SEGMENT
Mortgage
collateral
Standard Approach
35,782,499
966,715
77,528,890
177,898
114,456,002
IRB Approach
57,926,988
10,073,746
52,293,151
362,863
120,656,748
576,380
27,708
16,260,812
2,276
16,867,176
Institutions
Companies
Retail customers
Consumer
Mortgage - Other
Retail - SMEs
Cards
TOTAL
Other collateral
Unsecured
guarantees
Other
guarantees
TOTAL
3,843,261
9,855,566
29,758,946
157,544
43,615,317
53,507,347
190,472
6,273,393
203,043
60,174,255
54,621
57,917
1,240,149
239
1,352,926
51,535,470
-
703,342
-
52,238,812
1,917,256
132,555
1,490,351
202,804
3,742,966
-
-
2,839,551
-
2,839,551
93,709,487
11,040,461
129,822,041
540,761
235,112,750
87
At 31 December 2011, the distribution by segments of exposure, excluding equities and trading
derivatives, with collateral and other credit enhancements, was as follows:
SEGMENT
Mortgage
collateral
Standard Approach
65,550,269
1,923,508
56,321,532
1,256,537
125,051,846
IRB Approach
Other collateral
Unsecured
guarantees
Other guarantees
TOTAL
69,868,495
13,333,006
72,798,354
612,413
156,612,268
Institutions
646,730
47,567
25,900,934
15,213
26,610,444
Companies
13,802,497
12,990,136
39,936,632
362,572
67,091,837
Retail customers
55,419,268
295,303
6,960,788
234,628
62,909,987
Consumer
Mortgage - Other
Retail - SMEs
Cards
TOTAL
-
209,999
2,873,507
100,660
3,184,166
54,195,938
-
90
-
54,196,028
1,223,330
85,304
1,202,838
133,968
2,645,440
-
-
2,884,353
-
2,884,353
135,418,764
15,256,514
129,119,886
1,868,950
281,664,114
For the purposes envisaged in the tables above, the following are explained:
-
Transactions with mortgage collateral: property mortgage, concession mortgage, chattel
mortgage, shipping mortgage and aircraft mortgage.
-
Other collateral: equity securities, fixed-income securities and other types of securities,
government securities, term deposits and other account deposits, goods and receipts,
investment funds, bills of exchange, deposit certificates, mortgage-backed securities, etc.
-
Personal guarantees: with or without guarantor, joint guarantee and insurance policy.
-
Other guarantees: endorsement by a reciprocal guarantee association, CESCE credit insurance
policy, bank guarantee and comfort letter.
From the legal viewpoint, a guarantee is a contract which provides greater security towards compliance
with an obligation or payment of a debt in such a way that, in the event of default by the borrower, the
guarantee reduces the losses arising from the transaction.
Pursuant to Circular 3/2008, guarantees will enjoy legal certainty so that all contracts contain the
conditions legally stipulated to make them fully valid, and so they are fully documented in such a way as
to establish a clear effective procedure to enable the guarantee to be executed rapidly.
These are the principles inspiring the functional definition of the Corporate Guarantee System currently
deployed, the Corporate Transactions Module of which is now operational.
Guidelines have been drawn up and approved with detailed procedures for the treatment of certain
guarantees such as mortgage collateral or securities pledges.
The Bank also has a Credit Policy Manual with, inter alia, a specific chapter concerning the
measurement of property assets and foreclosed assets. This sets out the conditions that must be met by
a property to serve as collateral, and regulates admissible appraisals and their review frequency.
Finally, it establishes the conditions for measurement of property assets foreclosed or received in
payment of debts.
The table below shows financing granted to customers, broken down by type of counterparty. The
amounts shown are the carrying amounts of the transactions; i.e. after deducting valuation adjustments
attributable to specific transactions. The valuation adjustments for impairment of a set of assets not
attributable to specific transactions are shown under “Valuation adjustments for impairment of assets not
attributable to specific transactions”.
Also included is the total amount of secured financing based on the percentages of the carrying amount
of the financing over the latest available appraisal or valuation of the guarantee (loan to value).
88
Secured loans. Loan to value
ITEM
TOTAL
Of which:
Mortgage
loans
Of which:
Other
secured
loans
Less than
or equal to
40%
More than
40% and
less than or
equal to
60%
More than
60% and
less than or
equal to
80%
More than
80% and
less than or
equal to
100%
More than
100%
Government agencies
8,964,812
110,721
1,359
19,232
21,696
63,617
767
6,768
6,700,837
28,048
1,608
15,089
8,762
3,289
423
2,093
Non-financial institutions and
sole proprietors
34,578,269
12,440,698
3,788,959
5,253,418
4,176,426
2,037,632
481,102
4,281,079
development
2,636,759
1,891,071
53,789
835,180
538,582
321,998
47,769
201,331
Civil
construction
4,072,295
3,461,914
86,154
1,562,527
1,312,227
334,932
35,063
303,319
27,869,215
7,087,713
3,649,016
2,855,711
2,325,617
1,380,702
398,270
3,776,429
15,274,858
671,144
3,095,565
296,201
291,984
358,765
167,084
2,652,675
12,594,357
6,416,569
553,451
2,559,510
2,033,633
1,021,937
231,186
1,123,754
84,407,177
79,812,955
273,350
13,195,457
23,287,315
31,285,846
9,767,907
2,549,780
Housing
77,210,259
76,581,221
5,345
12,364,654
22,173,840
30,435,243
9,537,448
2,075,381
Consumer
3,484,412
109,285
190,042
28,613
14,217
20,301
86,832
149,364
Other
3,712,506
3,122,449
77,963
802,190
1,099,258
830,302
143,627
325,035
Subtotal
Less: Valuation adjustments
due to impairment of assets
not attributable to specific
transactions
134,651,095
92,392,422
4,065,276
18,483,196
27,494,199
33,390,384
10,250,199
6,839,720
TOTAL
134,177,006
11,403,347
1,122,160
1,875,427
3,271,975
3,152,707
2,256,201
1,969,197
engineering
Other
Large enterprises
SMEs
and
proprietors
sole
(474,089)
MEMORANDUM ITEM
Refinancing, refinanced and
restructured operations
14,476,128
(3.1.8) Renegotiated financial assets
In 2012, the Group carried out renegotiations of assets, modifying the conditions originally agreed with
borrowers in terms of repayment deadlines, interest rates, collateral given, etc.
The purpose of asset renegotiation is to give the borrower financial stability so as to ensure continuity of
its business, adapting operations to its repayment capacity revealed, in the case of legal entities, in
business plans approved by experts, and in the case of individuals by the existence of a proven ability to
pay and/or compliance with its payment obligations during previous periods.
The debt restructuring and refinancing policy distinguishes between legal and natural persons.
The criteria for legal persons have certain common features, the most important of which are:
• Existence of standstill agreements, under which the debts are not enforced and maturities are not
extended, to guarantee funding of companies' working capital so they can continue to operate as
usual.
• Submission of business plans verified by independent experts and showing repayment capacity.
• Potential existence of disposal plans for non-earning assets to repay debt.
• Inclusion of new guarantees or modification of existing guarantees.
For natural persons the policy is limited to a single restructuring and whether there is a proven willingness
to pay. Approval criteria vary between mortgage and consumer loan renegotiations.
Criteria applied to mortgage renegotiations include:
89
• Extension of maturities and amendment to repayment system to adapt to customers' payment
capacity.
• Update of appraisals, under current regulations, where collateral is received as cover.
For transactions with personal guarantees, negotiations in general seek an overall solution, consolidating
the customers' debts with the Bank and extending the maturity as far as possible for the product at all
times.
The following tables show the gross amounts of refinancing operations according to their classification as
transactions that call for special monitoring, substandard or doubtful risks, along with the respective credit
risk cover:
Normal (1)
No. of
transactions
Government agencies
development
Gross
amount
No. of
transactions
Without collateral
Gross
amount
No. of
transactions
Gross
amount
77
13,152
-
-
35
62,710
1,391
319,655
201
337,949
1,703
373,105
552
98,296
47
43,289
557
41,721
39,030
5,499,759
3,684
544,679
6,512
48,456
Total
40,498
5,832,566
3,885
882,628
8,250
484,271
Substandard
No. of
transactions
Government agencies
No. of
transactions
Gross amount
Without collateral
No. of
transactions
Gross amount
Gross amount
Specific
allowance
-
-
-
-
2
8,000
(1,200)
3,312
894,523
834
974,181
5,378
668,025
(562,017)
518
144,736
69
70,177
382
149,005
(133,476)
2,980
503,850
494
55,294
24,846
182,751
(54,764)
Total
6,292
1,398,373
1,328
1,029,475
30,226
858,776
(617,981)
Doubtful
No. of
transactions
Government agencies
Gross amount
No. of
transactions
Without collateral
Gross amount
No. of
transactions
Gross amount
Specific
allowance
-
-
-
-
10
11,498
(5,368)
4,012
2,142,434
1,361
1,522,760
7,242
2,003,813
(2,931,371)
1,586
354,307
541
136,750
2,245
534,786
(657,289)
15,863
2,609,536
3,376
509,266
10,057
101,125
(1,268,745)
Total
19,875
4,751,970
4,737
2,032,026
17,309
2,116,436
(4,205,484)
Total
No. of
transactions
Government agencies
development
Gross
amount
No. of
transactions
Without collateral
Gross
amount
No. of
transactions
Gross
amount
Specific
allowance
No. of
transactions
Gross
amount
Specific
allowance
77
13,152
-
-
47
82,208
(6,568)
124
95,360
(6,568)
8,715
3,356,612
2,396
2,834,890
14,323
3,044,943
(3,493,388)
25,434
9,236,445
(3,493,388)
2,656
597,339
657
250,216
3,184
725,512
(790,765)
6,497
1,573,067
(790,765)
57,873
8,613,145
7,554
1,109,239
41,415
332,332
(1,323,509)
106,842
10,054,716
(1,323,509)
Total
66,665
11,982,909
9,950
3,944,129
55,785
3,459,483
(4,823,465)
132,400
19,386,521
(4,823,465)
(1) Normal risks classified as transactions that call for special monitoring as per Section 7 of Appendix IX of Circular 4/2004
(2) Includes transactions with partial mortgage collateral; i.e. with an LTV of over 1, and other transactions with collateral other than a mortgage,
regardless of the LTV.
90
For refinanced transactions, the Group maintains all doubtful renegotiated mortgage and consumer loans
classified in this category until there is a period of continued payments of the instalments that ensures the
effectiveness of the measures adopted. Renegotiated operations that were not classified as doubtful at
the time of the refinancing are classified as substandard, recognising a minimum provision of 10%. The
provision for insolvency maintained or increased on these operations offsets any potential loss arising
from the difference between the carrying amount of the financial assets before and after the
renegotiation. The Group does not generally offer relief from or lower interest rates in renegotiating this
type of asset.
The potential reversal of impairment losses recognised on refinanced operations is made, as appropriate,
after a prudential period of time between the time of refinancing and when the new conditions of the
refinancing provide evidence of the effectiveness of the measures adopted by the Group, and providing
the borrower meets its obligations.
(3.1.9) Assets impaired and derecognised
Following are the changes in 2012 and 2011 in the Group’s impaired financial assets that were not
recognised on the face of the consolidated balance sheet because their recovery was considered
unlikely, although the Group had not discontinued actions to recover the amounts owed (“written-off
assets”).
ITEM
Additions from:
Assets unlikely to be recovered
Uncollected past-due amounts
Other causes
Total
Derecognition through:
Cash collection
Foreclosure of assets and other causes (*)
Total
Net change due to exchange differences
Balances at 31 December
2012
2011
1,384,610
-
15,047,757
132,401
6,596
1,991,185
121,415
55,719
16,571,364
2,168,319
(239,645)
(14,757,335)
(86,051)
(702,029)
(788,080)
(14,996,980)
(868)
4,371
1,573,516
1,384,610
(*) The balance of these items for 2012 includes EUR 13,510,188 thousand related to losses incurred in the transfer of loans to the SAREB (see Note
1.16).
91
The Assets and Liabilities Committee (ALCO) is the body responsible for monitoring and managing
liquidity risk in accordance with the decisions and criteria approved by the Board of Directors. The
Committee approves procedures for action to be taken to secure financing through instruments and
maturities with a view to guaranteeing at all times the availability of funds at reasonable prices, to enable
the Bank to meet the obligations undertaken and finance the growth of investment business.
The Group's liquidity gap is shown below, classifying capital outstanding on financial assets and liabilities
by due dates, using the reference of the periods to run between the date referred to and their contractual
due dates. The liquidity gap at 31 December 2012 is as follows:
ITEM
On demand
Up to 1 month
3 months to 1
year
1 to 3 months
More than 5
years
1 to 5 years
Total
Assets
4,569,525
-
-
-
-
-
4,569,525
2,112,750
5,060,645
253,992
219,854
228,366
112,683
7,988,290
-
4,103,243
4,107,660
10,267,871
31,157,707
84,540,525
134,177,006
-
24,920
199,404
5,085
10,800
83,654
323,863
-
133,715
216,576
8,561,687
48,010,938
14,138,090
71,061,006
6,682,275
9,322,523
4,777,632
19,054,497
79,407,811
98,874,952
218,119,690
5,115,243
40,214,658
1,088,143
496,283
29,991,436
1,129,632
78,035,395
38,392,741
13,118,676
6,557,261
28,824,441
16,924,433
7,086,648
110,904,200
-
263,779
2,480,759
3,663,080
16,429,505
14,497,646
37,334,769
-
-
-
-
-
15,640,909
15,640,909
43,507,984
53,597,113
10,126,163
32,983,804
63,345,374
38,354,835
241,915,273
(36,825,709)
(44,274,590)
(5,348,531)
(13,929,307)
16,062,437
60,520,117
(23,795,583)
Total
Liabilities
Customer deposits
Total
TOTAL GAP
The liquidity gap at 31 December 2011 was as follows:
ITEM
On demand
Up to 1 month
3 months to 1
year
1 to 3 months
More than 5
years
1 to 5 years
Total
Assets
6,279,840
-
-
-
-
-
6,279,840
2,672,723
9,515,097
1,537,148
478,474
506,763
3,479,784
18,189,989
-
7,332,572
6,023,725
17,420,507
41,632,541
111,700,722
184,110,067
-
138,653
56,276
476,497
301,192
419,697
1,392,315
-
473,889
288,872
2,159,277
20,184,708
17,215,825
40,322,571
8,952,563
17,460,211
7,906,021
20,534,755
62,625,204
132,816,028
250,294,782
1,510,706
16,604,278
3,081,923
1,108,565
20,264,715
2,383,892
44,954,079
45,817,899
35,799,349
8,129,597
26,852,456
28,867,071
9,871,506
155,337,878
-
2,439,175
7,670,888
9,689,922
20,339,766
15,574,396
55,714,147
-
-
-
-
-
325,799
325,799
47,328,605
54,842,802
18,882,408
37,650,943
69,471,552
28,155,593
256,331,903
(38,376,042)
(37,382,591)
(10,976,387)
(17,116,188)
(6,846,348)
104,660,435
(6,037,121)
Total
Liabilities
Customer deposits
Total
TOTAL GAP
92
Pursuant to applicable regulations, “Liabilities at amortised cost – Other financial liabilities” is a residual
item which, in general, includes temporary items or those with no contractual maturity. Therefore, it is not
included in the preceding table, because it is not possible to reliably attribute the amounts recognised
therein by maturity.
In addition, regarding derivatives entered into by the Bank, as fair value is estimated and as the
operations have regular maturity schedules in many cases, it is not possible to reliably attribute the
amount to specific maturities. As a result, the derivative financial instruments used by the Bank, both
trading or hedging, are not material and in no case essential for understanding its exposure to liquidity
risk.
Valuation adjustments and accrued interest are included.
The gap does not include transactions of investees City National Bank of Florida and Bancofar at 31
December 2012 as these were reclassified to "Non-current assets held for sale" and "Liabilities
associated with non-current assets held for sale".
This gap is the result of grouping financial assets and liabilities together by contractual maturity dates at
31 December 2012 and 2011, disregarding possible renewals. It is, therefore, an extremely prudent
analysis of liquidity risk, given the historical performance of the Group’s financial liabilities, especially
customer deposits (retail liabilities). Therefore, in terms of liquidity risk, the balances of customer demand
deposits have historically remained stable over time, although legally they are payable on demand. It
must also be remembered that most of the assets in the securities portfolio are eligible for use as
collateral for short-term financing operations in the market and for financing with the European Central
Bank (ECB) with strong possibilities of being rolled over.
Maturities of issues
The following table provides information on the term to maturities of the Group's issues at 31 December
2012 and 2011, by type of financial instrument, including promissory notes and issues placed via the
network.
31 December 2012
Thousands of euros
ITEM
2013
2014
3,294,819
5,773,913
Territorial bonds
Senior debt
Subordinate, preference and convertible
securities (*)
Other medium-term and long-term financial
instruments
Commercial paper
Total maturities of issues (**)
1,687,150
300,000
2015
1,442,300
750,850
> 2015
2,849,489
459,604
-
-
-
-
-
-
-
-
-
-
-
-
-
1,519,657
6,801,626
7,967,063
3,309,093
18,281,612
1,684,216
15,498,427
6,016,475
41,284,040
(*) Includes the EUR 4,500,000 thousand subordinated loan granted by Banco Financiero y de Ahorros in September 2012 and the EUR 10,700,000
thousand of convertible bonds subscribed by Banco Financiero de Ahorros under Bankia's Recapitalisation Plan. The remaining EUR 298,427
thousand are subject to the execution of the burden-sharing exercise among the commitments of the Recapitalisation Plan.
(**) Figures shown in nominal amounts less treasury shares and issues withheld.
In the first four months of 2012, the Group covered maturities through a reduction in the commercial gap
and participation in the ECB's long-term auction. In May, borrowing from the ECB increased due to the
escalation of the sovereign crisis in EU peripheral countries, rating actions on sovereign debt and
Spanish financial institutions, and the restructuring of the Spanish banking sector, which virtually closed
off long-term wholesale markets for Spain's credit institutions and made it more difficult to raise shortterm finance on the market through reverse repos.
93
31 December 2011
ITEM
2012
2013
2014
> 2014
3,000,722
3,082,142
5,433,563
20,000
-
1,489,550
-
Senior debt
5,135,772
1,595,638
772,100
2,236,285
Territorial bonds
21,776,635
9,046,150
300,000
-
-
Subordinate, preference and convertible securities
-
-
-
298,427
-
-
-
-
Commercial paper
Total maturities of issues
-
-
-
8,067,976
2,459,987
2,000
-
-
19,662,631
4,979,780
7,695,213
32,379,323
Liquid assets
In managing its liquidity gap, and in order to cater for future funding maturities, the Group has certain
liquid assets available to guarantee the commitments acquired in its lending activities.
31/12/12
31/12/11
Liquid assets (nominal value)
24,453,710
19,083,570
Liquid assets (market value and ECB haircut)
24,111,696
13,354,372
4,675,605
1,333,293
of which: Central government debt
The Group has EUR 24,112 million of effective liquid assets, all eligible for ECB financing operations. Of
these, EUR 3,922,229 thousand were undrawn at 31 December 2012 (EUR 10,231,897 at 31 December
2011). In December 2012, due to the Bank's capitalisation and the transfer of assets to the SAREB,
assets were received that are eligible for ECB financing, leading to an increase in the level of liquid
assets from the year before.
In addition, the balance of the Eurosystem deposit facility at 31 December 2012 amounted to EUR 2,800
million (EUR 4,100 million at 31 December 2011).
Issuance capacity
31/12/12
31/12/11
Mortgage-backed securities issuance capacity (Note 1.14)
1,936,298
6,283,501
503,249
367,789
Territorial bond issuance capacity
Responsibility for monitoring and managing the Group's global balance sheet interest rate risk is formally
allocated to the Assets and Liabilities Committee (ALCO), the Institution's most senior executive body,
which operates in accordance with the determinations and criteria approved by the Board of Directors.
In light of current circumstances and market forecasts for interest rates, the ALCO should act in line with
the Bank's risk strategy and profile. Interest rate risk is managed with a view to achieving a stable net
interest margin and preserving the Bank's economic value. To achieve this, it arranges additional hedges
to natural hedges for its assets and liabilities.
The ALCO uses measurements of sensitivities of interest rates and equity to movements in interest rates
and different sensitivity scenarios based on implied market rates, comparing non-parallel shifts in yield
curves that alter the trend slope of different balance sheet aggregates.
The interest rate gap shows the maturity distribution or asset repricing, whichever is closer in time. The
sensitivity of items with no fixed maturity, such as transactional demand deposits from customers, to
movements in interest rates is assessed with respect to their historical stability in different market interest
rate scenarios. Balance-sheet items not sensitive to interest rates, mainly valuation adjustments,
provisions and doubtful assets, are included in the period for over five years.
94
The interest rate gap at 31 December 2012 is as follows:
Up to 1
month
ITEM
1 to 3
months
3 months to
1 year
1 to 2 years
2 to 3 years
-
-
-
3 to 4
years
4 to 5
years
More than 5
years
Total
Assets
2,892,579
-
-
-
1,676,946
4,569,525
6,773,292
410,680
205,111
135
22
-
7,339
591,711
7,988,290
25,127,739
34,945,750
60,304,013
2,280,230
621,559
334,896
217,026
10,345,793
134,177,006
21,698
200,004
5,110
2,000
5,500
300
2,400
86,851
323,863
6,603,283
25,506,366
18,348,950
2,019,798
4,480,420
8,033,599
2,577,041
3,491,549
71,061,006
41,418,591
61,062,800
78,863,184
4,302,163
5,107,501
8,368,795
2,803,806
16,192,850
218,119,690
75,302,844
1,910,871
393,417
43,170
22,862
15,186
37
347,008
78,035,395
Customer deposits, marketable debt securities
and subordinated liabilities
33,131,461
30,992,671
39,539,574
10,685,648
958,476
413,425
59,934
48,098,689
163,879,878
Total
108,434,305
32,903,542
39,932,991
10,728,818
981,338
428,611
59,971
48,445,697
241,915,273
TOTAL GAP
(67,015,714)
28,159,258
38,930,193
(6,426,655)
4,126,163
7,940,184
2,743,835
(32,252,847)
(23,795,583)
CUMULATIVE GAP
(67,015,714)
(38,856,456)
73,737
(6,352,918)
(2,226,755)
5,713,429
8,457,264
(23,795,583)
(23.74%)
(13.76%)
0.03%
(2.25%)
(0.79%)
2.02%
3.00%
(8.43%)
Total
Liabilities
The gap does not include transactions of investees City National Bank of Florida and Bancofar at 31
December 2012 as these were reclassified to "Non-current assets held for sale" and "Liabilities
associated with non-current assets held for sale".
The sensitivity gap analysis at 31 December 2011 was as follows:
ITEM
Up to 1
month
1 to 3
months
3 months
to 1 year
1 to 2
years
2 to 3 years
3 to 4
years
4 to 5
years
More than 5
years
Total
Assets
4,058,355
-
-
-
-
-
-
2,221,485
6,279,840
15,573,085
1,655,604
475,608
6,340
23
22
-
479,307
18,189,989
38,816,400
48,306,211
77,610,887
2,837,027
1,441,395
642,285
313,447
14,142,415
184,110,067
215,696
58,977
476,522
106,992
43,600
101,300
48,700
340,528
1,392,315
6,970,578
6,594,664
8,557,757
2,736,273
2,101,374
2,943,252
5,234,779
5,183,894
40,322,571
65,634,114
56,615,456
87,120,774
5,686,632
3,586,392
3,686,859
5,596,926
22,367,629
250,294,782
37,155,631
4,139,571
1,938,004
583,628
212,964
135,596
49,587
739,098
44,954,079
64,612,359
45,787,842
38,982,976
12,231,094
10,375,861
1,279,813
611,105
37,496,774
211,377,824
Total
101,767,990
49,927,413
40,920,980
12,814,722
10,588,825
1,415,409
660,692
38,235,872
256,331,903
TOTAL GAP
(36,133,876)
6,688,043
46,199,794
(7,128,090)
(7,002,433)
2,271,450
4,936,234
(15,868,243)
(6,037,121)
CUMULATIVE GAP
(36,133,876)
(29,445,833)
16,753,961
9,625,871
2,623,438
4,894,888
9,831,122
(6,037,121)
(11.93%)
(9.72%)
5.53%
3.18%
0.87%
1.62%
3.25%
(1.99%)
Total
Liabilities
95
The effect on the accompanying consolidated income statement of reasonable future changes in the
various market risk factors at 31 December 2012 and 2011, determined on the basis of the Group's
portfolio, is as follows:
Interest rate
Equity instruments
(1,746)
160
Exchange rate
Credit spreads
7,743
(483)
Interest rate
Equity instruments
(63,558)
12,363
Exchange rate
Credit spreads
(34)
(27)
The assumptions used in the calculation of sensitivity were as follows:




Interest rates: 100 bp increase
Equities: 20% fall
Exchange rates: 10% fluctuation
Credit spreads: increase consistent with credit rating, as follows:
AAA
AA
A
BBB
<BBB
5 bp
10 bp
20 bp
50 bp
150 bp
In addition, at 31 December 2012 there was a long-term portfolio of debt instruments including held-tomaturity investments with a nominal amount of EUR 75,732,174 thousand and an overall sensitivity of
EUR 1,751,841 thousand.
(3.5.1) Disclosures on exposure to property development and construction
The table below shows cumulative figures on the financing granted by the Group's credit institutions at 31
December 2012 and 2011 for the purposes of construction and property development and the respective
credit risk coverage in place at that date (1):
31 December 2012
Total, gross
1. Loans recognised by credit institutions comprising the Group
Excess over value of
collateral (2)
Specific coverage
3,052,841
845,112
1,298,303
1,369,394
484,793
963,377
757,688
220,667
334,926
Memorandum item:
441,637
Memorandum item (Consolidated Group figures):
Item
Carrying amount
123,256,665
2. Total consolidated assets (all transactions)
282,310,357
3. Total general coverage (all transactions) (3)
187,577
96
property development-related but uses the financing received for property development purposes, the transaction is included in
this table.
asset.
(3) The total amount of collective coverage put in place in any form whatsoever, by the consolidated Group (all transactions).
(4) Gross amount of financial for the purpose of construction and property development granted by Group credit institutions
(transactions in Spain) and assets written off.
31 December 2011
1. Loans recognised by credit institutions comprising the Group
Total, gross
Excess over value of
collateral (2)
Specific coverage
32,489,562
10,424,910
4,535,798
7,877,563
3,340,384
2,429,242
14,382,442
4,633,555
2,106,556
Memorandum item:
342,167
Memorandum item (Consolidated Group figures):
Item
Carrying amount
177,134,991
2. Total consolidated assets (all transactions)
302,846,159
3. Total general coverage (all transactions) (3)
1,273,641
property development-related but uses the financing received for property development purposes, the transaction is included in
this table.
asset.
(3) The total amount of collective coverage put in place in any form whatsoever, by the consolidated Group (all transactions).
(4) Gross amount of financial for the purpose of construction and property development granted by Group credit institutions
(transactions in Spain) and assets written off.
97
The table below breaks down construction and property development financing granted by Group credit
entities at 31 December 2012 and 2011:
Finance intended for construction and property development (gross):
31/12/12
31/12/11
205,232
6,659,422
2. Mortgage-secured (1)
2,847,610
26,082,198
2.1. Finished buildings (2)
1,652,948
15,102,170
2.1.1. Housing
691,526
10,846,941
2.1.2. Other
961,422
4,255,229
295,568
4,659,903
2.2.1. Housing
152,811
3,908,644
2.2.2. Other
142,757
751,259
899,094
6,320,125
2.3.1. Urban land
692,387
5,268,050
2.3.2. Other land
206,707
1,052,075
3,052,842
32,741,620
1. Not mortgage-secured
2.2. Buildings under construction (2)
2.3. Land
Total
(1) Includes all mortgage-secured transactions regardless of ratio of outstanding amount to the latest appraised value.
(2) If a building is used for both residential (housing) and commercial (offices and/or premises) purposes, the related financing is
classified under the category of the predominant purpose.
(3.5.2) Loans to households for home purchases. Transactions recognised by credit institutions
The table below presents the detail at 31 December 2012 and 2011 of financing granted by the credit
institutions comprising the Group for the purpose of home purchases:
Total, gross
Of which: Doubtful
Total, gross
31/12/12
Loans for home purchases
Non-mortgage-secured
Mortgage-secured
82,980,960
Of which:
Doubtful
31/12/11
6,212,023
85,111,141
3,509,781
879,627
4,673
900,713
1,302
82,101,333
6,207,350
84,210,428
3,508,479
The table below presents the detail of mortgage-secured loans to households for home purchases at 31
December 2012 and 2011, classified by the ratio of the outstanding amount to the latest available
appraised value (LTV) in respect of transactions recognised by Group credit institutions (transactions in
Spain):
31 December 2012
LTV ranges (1)
Total, gross
Of which: doubtful
Less than or
equal to 40%
More than 40%
and less than or
equal to 60%
14,853,602
21,529,022
533,429
836,788
More than 60%
and less than or
equal to 80%
More than 80%
and less than or
equal to 100%
More than
100%
32,605,521
11,670,342
1,442,846
82,101,333
2,322,832
1,928,064
586,237
6,207,350
Total
98
31 December 2011
LTV ranges (1)
Total, gross
Of which: doubtful
Less than or
equal to 40%
More than 40%
and less than or
equal to 60%
12,859,147
20,699,239
153,570
324,725
More than 60%
and less than or
equal to 80%
More than 80%
and less than or
equal to 100%
More than
100%
35,601,230
13,499,177
1,551,635
84,210,428
1,155,777
1,348,539
525,868
3,508,479
Total
(3.5.3) Information concerning property assets foreclosed or received in payment of debts
In order to dispose of its foreclosed assets with the smallest possible impact on the income statement,
the Group has Property Asset Management Areas to manage, administer and sell the Group's foreclosed
assets.
In order to maintain assets in the best possible conditions for sale and ensure efficient control of the
expenditure incurred in the process, technical maintenance procedures are deployed along with control
and management of turnover arising from the assets remaining on the portfolio. Consideration is also
given to maintaining lease contracts on assets in the portfolio and management of occupancy situations
concerning the assets. For construction in progress, each specific project is assessed in order to
determine its technical and commercial feasibility, making investment necessary to provide liquidity to the
project.
Attention is also paid to activities arising from the marketing process: customer care, review of the assets
published and management of offers through various sales channels: branch network, brokers, web,
events and trade fairs, etc. There is a specific financing product for the purchase of property assets
(housing and commercial premises).
Specific property assets (land, ongoing development, finished projects etc.) placed on the Group's
balance sheet are given priority for disposal, and may be managed through direct sales to a
development company, sales to cooperatives and community associations through structured
demand or contributions and exchanges which enable them to be removed from the Group's balance
sheet in the medium term, and a low-liquidity product (land) may be exchanged for another with higher
liquidity (housing).
The Group's general policies for managing its foreclosed assets are summarised as follows:
 The volume of foreclosed assets, irrespective of how they are managed (on the balance sheets of
entities, in companies created for this purpose, in vehicles etc.) makes it necessary at the outset to
address the necessary measures for management purposes with the single aim of disposal of
assets at the least possible detriment to the income statement.
 Disposal mechanisms focus on sale and also rentals with or without a purchase option. In the case
of unique assets (specific buildings, offices, commercial premises, industrial buildings and land),
the general policy adopted is to sell these assets.
 Policy of transparency in all transactions to guarantee public offering of the asset.
 Policies to set prices for assets and delegated powers. Sales in accordance with an authorisation
system valid at all times for Bankia and BFA.
 General policy of non-exclusivity in mediation on sales of assets.
 Assessment of asset sale offers in any situation.
 The marketing process will be carried out through all the channels established: network branches,
web, auctions through Reser, Subastas y Servicios Inmobiliarios, S.A., property sales desks at
certain branches, brokers with or without keys, trade fairs and events, etc.
The pricing policies and principles for the property portfolio may be summarised as follows:

Transparency: all assets available for sale are published exclusively on the Real Estate Portal
with their retail prices.
99

References to set prices: the price references will be those of comparable assets, the appraisal
value of each asset, reports by mediators and ordinary costs (taxes and community expenses)
up to the estimated time of sale.

Unique assets: the primary reference of unique assets will be the latest appraisal value,
although the complex nature of sales of these assets will require individual negotiations, using
the same references as cited above.

Adaptation to changes in the housing market: dynamic adaptation and review of prices in
accordance with changes on the property market. Prices will be reviewed regularly, with updates
of appraisals and observance of regulations and consideration of changes to the official housing
market indexes.

Special events: at trade fairs, real estate fairs or other temporary events, more attractive prices
may be published for that period only.

Auctions by the specialist auctioneer RESER.

Leases: property assets will be leased with a rent approved by the appropriate committee, which
will at all times contemplate a minimum return in accordance with the value of the asset to be
leased. Lessor purchase options may also be considered for the asset leased.

Employees of the Bank: employees will have the benefits agreed on each occasion.
The table below presents the detail of assets acquired by the Group through foreclosure (transactions in
Spain) at 31 December 2012 and 2011, classified by type (1):
Of which:
impairment
allowance
Carrying
amount
31/12/12
1. Property assets from financing intended for construction and property
development
Of which:
impairment
allowances
Carrying
amount
31/12/11
522,796
288,434
2,690,649
1,039,187
1.1. Finished buildings
423,524
88,731
1,490,836
803,398
1.1.1. Housing
348,220
64,049
1,117,821
675,476
75,304
24,682
373,015
127,922
44,710
54,506
383,131
90,269
40,673
52,570
364,936
84,685
4,037
1,936
18,195
5,584
54,562
145,197
816,682
145,520
1.3.1 Urban land
26,604
75,959
341,008
63,484
1.3.1 Other land
27,958
69,238
475,674
82,036
1,624,045
863,873
1,855,743
1,636,657
3. Other property assets received in settlement of debt (2)
175,600
72,526
170,701
255,891
4. Equity instruments, investments and financing to companies holding such
assets (3).
103,012
777,055
749,345
292,469
1.1.2. Other
1.2. Buildings under construction
1.2.1. Housing
1.2.2. Other
1.3. Land
2. Property assets from mortgage-secured financing granted to households
for home purchases
(1) Includes foreclosed assets and assets acquired, purchased or exchanged for debt in connection with financing granted by
Group entities (transactions in Spain), as well as investments in and financing to non-consolidated entities holding these assets.
(2) Includes property assets not arising in connection with loans to construction and property development companies, regardless
of the economic sector to which the company or entrepreneur belongs, or to households for home purchases.
(3) Includes all assets of this type, such as equity instruments, investments in and financing to entities holding the property assets
referred to in lines 1 to 3 of this table and equity instruments of and investments in construction or property companies accepted
in settlement of debts.
The above tables set out property assets acquired through foreclosure or in settlement of debts, other
than the exception referred to in the foregoing sub-paragraph, and classified by the Group on the basis of
ultimate purpose, mainly under “Non-current assets held for sale” and “Property, plant and equipment –
Investment property” and, to a lesser extent, under “Other assets - Inventories” in the accompanying
consolidated balance sheet for those dates.
100
Bank of Spain Circular 3/2008 on the calculation and control of minimum capital requirements ("Circular
3/2008"), contained in Law 36/2007, of 16 November, in turn amending Law 13/1985, of 25 May, on the
investment ratios, capital and reporting requirements of financial intermediaries, was approved and came
into force in 2008.
Bank of Spain Circular 3/2008 adapts Spanish legislation on capital requirements to the Community
Directives, which stem, in turn, from the Basel Capital Accord (Basel II), and is structured around three
core pillars: minimum capital requirements (Pillar I), the internal capital adequacy assessment process
(Pillar II) and market disclosures (Pillar III).
Since it came into force, Circular 3/2008 has undergone a number of amendments adapting it to changes
in capital adequacy made in European regulation. The most recent amendment reflects the changes
introduced by Bank of Spain Circular 4/2011 which transposes into Spanish law Directive 2010/76/EU as
regards capital requirements for instruments held for trading and for re-securitisations, as well as the
supervisory review of remuneration policies, for the purposes of further adaptation to Basel III.
In this respect, at its 12 September 2010 meeting, the Group of Governors and Heads of Supervision, the
oversight body of the Basel Committee on Banking Supervision, announced a substantial strengthening
of existing capital requirements and fully endorsed its resolutions of 26 July 2010 (Basel III). The Basel III
accord will take effect from 1 January 2014 and will be phased-in gradually, with full implementation
slated for 1 January 2019.
With respect to minimum capital requirements (Pillar I), after obtaining explicit authorisation from the
Bank of Spain, the Group applied advanced IRB approaches to assess its credit risk for certain risk
exposures – institutional, corporate and retail (including micro companies, mortgages, cards and other
retail transactions) – in the Caja Madrid portfolio, as well as for new investments, and the standardised
approach for such exposures at the remaining Group entities. The Group uses the standardised
approach to measure other exposures in order to calculate the capital requirements for credit risk.
The minimum capital requirements for risks related to instruments held for trading (currency risk and
market risk) and consumer leading for credit risk exposures of equity securities are calculated by applying
internal models.
Additionally, as regards the calculation of capital requirements for operational risk, the Group uses the
basic indicator approach.
Following is a detail, classified into Tier 1 and Tier 2 capital, of the Bankia Group's capital at 31
December 2012 and 2011, and of the capital requirements for each type of risk, calculated as required by
Bank of Spain Circular 3/2008:
31/12/12
ITEM
Tier 1 capital (1)
Of which:
Core capital
Tier 2 capital (2)
Total Group eligible capital
Total minimum capital requirements
31/12/11
Amount
5,215,253
%
5.0%
Amount
12,557,836
%
8.1%
5,382,356
5,017,089
10,232,342
5.2%
4.8%
9.8%
12,936,398
679,423
13,237,259
8.3%
0.4%
8.5%
8,345,387
8.0%
12,442,778
8.0%
(1) Tier 1 includes share capital, reserves, contingent convertible bonds subscribed by BRA, net profit/(loss) for the year to be appropriated to
reserves and non-controlling interests, net, among other items, of treasury shares, the Group's other intangible assets, unrealised net losses on
capital instruments, 50% of the total deduction arising from the expected loss on the equity portfolio, investments of more than 10% in financial
institutions and of more than 20% in insurance companies and the first-loss tranches of securitisations.
(2) Tier 2 capital mainly includes subordinated debt, any excess of provisions relating to exposures calculated using the IRB approach with respect to
the expected losses, the balance of the general coverage associated with portfolios subject to the standardised approach, less 50% of the total
deduction arising from the expected loss on the equity portfolio, investments of more than 10% in financial institutions and of more than 20% in
insurance companies and the first-loss tranches of securitisations.
At 31 December 2012, the Bankia Group showed a capital cushion of EUR 1,887 million above the
minimum regulatory BIS II requirement of 8%.
101
RD 2/2011, of 18 February, for the reinforcement of the financial system, introduces the concept of
principal capital as a new regulatory capital adequacy requirement.
With this RDL, subsequently amended by RDL 24/2012 of 31 August and implemented and repealed by
Law 9/2012, the definition of principal capital includes, inter alia, the following items of equity: share
capital of public limited companies, paid-in share premium, disclosed and undisclosed reserves, retained
profit, holdings representing non-controlling interests that correspond to ordinary shares of consolidable
group companies, eligible instruments subscribed by the FROB and instruments that are convertible into
ordinary shares classified by the Bank of Spain as eligible for calculating principal capital. Deducted from
this amount are prior year losses, current year losses including loss attributable to non-controlling
interests, debt balances in equity accounts, intangible assets including goodwill arising from business
combinations, consolidation or application of the equity method and 50% of the sum of the following
assets: investments in financial institutions that are consolidable for their activity but not included in the
consolidable group where the investment exceeds 10% of the investee's capital, investments in insurance
companies that exceed 20%, subordinated finance or other securities eligible for calculation as own
equity issued by these companies, investments of 10% or greater in the capital of entities that are
consolidable for their activity but not included in the consolidated group, and subordinate financing or
other eligible secures such as equity issued by such entities, investees or otherwise and acquired by the
entity or group that holds the investment in proportion to the excess of 10% of certain equity items, the
amount of exposures to securitisations that receive a risk weighting of 1.250%, except where the amount
has been included in the calculation of risk-weighted assets for the purpose of calculating the capital
requirements for securitised assets, whether or not they are included in the held-for-trading portfolio, in
entities using IRB model of calculating the provision shortfall for expected losses; and the amounts of
expected losses on equities where exposure is calculated based on probability of default and loss given
default (PD/LGD method) or the simple method for available-for-sale financial assets.
RD 2/2011 established a minimum principal capital requirement, which for the Bankia Group is 8% of its
risk-weighted assets.
Subsequently, the Bank of Spain issued Circular 7/2012 of 30 November on minimum principal capital
requirements, including a new definition based on the amendments introduced by RDL 24/2012 to equate
it to Core Tier I as defined by the European Banking Authority (EBA), setting a new minimum requirement
of 9% as from 1 January 2013. The Circular also establishes that banks electing the alternative provided
for in Bank of Spain Circular 3/2008 of not including capital gains and losses on available-for-sale fixedincome securities, could continue to do so.
The Bankia Group's principal capital at 31 December 2012 amounted to EUR 4,590,455 thousand, with a
ratio of 4.4%, below the minimum 8% required at that date. The Group has adopted measures to comply
with all capital requirements, through the Recapitalisation Plan approved by the European Commission in
November 2012.
Among the main measures, at the end of 2012 the BFA Group had already received public assistance in
the form of an additional capital injection and then subscribed to Bankia's issue of contingent convertible
bonds in an amount of EUR 10,700 million.
In addition, a large portion of real estate assets have already been transferred to the SAREB.
At the 2012 year end, the conversion of the hybrid instruments (preference shares and subordinated
debt) had yet to be carried out, which will generate approximately EUR 4,800 million of additional capital
for the Bankia Group. Once the conversion is carried out, the Group expects to surpass the minimum 9%
capital ratio required as from 1 January 2013.
(4.3) Capital management objectives, policies and processes
The capital target is established at the BFA Group level. The aim is to maintain levels of capital that
amply satisfy minimum regulatory requirements and that enable the Group to preserve its financial
robustness and solvency, optimising the risk/return ratio and complying with the risk tolerance levels
defined by its governing bodies.
In pursuance of new capital requirement guidelines, the Group attaches greater significance to the
achievement of the core capital target since it considers it to be of strategic importance in guaranteeing
solvency and protecting against the assumed risks inherent in financial activities, given its permanent
nature, availability and capacity to absorb losses.
102
The total capital adequacy objective was established in line with the analysis and evaluation of the
different risks incurred by the Group, i.e. from a credit, market, interest rate, liquidity and operational risk
perspective.
To achieve these objectives, the Group applies a series of capital management policies and processes,
the main cornerstones of which are as follows:

Planning its future capital requirements on the basis of the risk assumed at short term (six-month
to one-year time horizon) and at medium term (time horizon of one to three years).

During the financial planning process, the ordinary generation of capital is assessed through the
projection of profit attributable to reserves. The capital planning process begins with financial
planning, and the outlook for eligible capital and capital requirements resulting from business
development are estimated on the basis of projected organic growth of exposure at default
(EAD), taking into account any variations in the risk profile that might arise from changes in the
business conducted and from changes in the economic cycle.

In addition to ordinary capital generation, the Group systematically considers a range of
alternative means of capital generation to raise its capital adequacy.

Periodically management will monitor the achievement of the capital targets set and analyse any
variances in order to determine if their causes relate to one-off events or if they are structural in
nature. In the latter case, management will review and adopt the measures required to adjust the
level of capital to the targets set, and assess the need to resort to potential alternative sources of
capital, evaluating in each case how best to cover the existing requirements.
(5) Earnings per share
Basic and diluted earnings per share are calculated in accordance with the criteria stipulated in IAS 33:
-
Basic earnings per share are calculated by dividing profit for the year attributable to equity
holders of the parent by the weighted average number of shares outstanding during the period,
excluding the average number of treasury shares held in the period.
-
Diluted earnings per share are determined using a method similar to that used to calculate basic
earnings per share, by adjusting the weighted average number of shares in circulation and,
where applicable, the profit for the year attributable to equity holders of the parent, in order to
take into account the potential dilutive effect of certain financial instruments that could generate
the issue of new Bank shares (share option commitments with employees, warrants on parent
company shares, convertible debt instruments) or for discontinued operations.
The table below shows loss per share for the years ended 31 December 2012 and 2011:
ITEM
Net loss attributed to the Group (thousands of euros)
31/12/12
31/12/11
(19,056,404)
(2,978,673)
(5)
(86)
Of which:
Loss for the year from discontinued operations (net) (thousands of euros)
Loss from ordinary business (thousands of euros)
Weighted average number of shares outstanding
Basic earnings/(loss) per share (in euros)
Basic earnings/(loss) per share for discontinued operations (in euros)
Basic earnings/(loss) per share for continuing operations (in euros)
(19,056,399)
(2,978,587)
1,879,242,894
1,272,054,477
(10.14)
(2.34)
-
-
(10.14)
(2.34)
Dilutive effect
Entitlement to receive shares
-
Adjusted average number of shares for the calculation
Diluted earnings/(loss) per share (in euros)
Diluted earnings/(loss) per share for discontinued operations (in euros)
Diluted earnings/(loss) per share for continuing operations (in euros)
(2.34)
(2.34)
103
As explained in Note 1, on 26 December 2012, the FROB agreed to the issue by the Bank of contingent
convertible bonds without preferential subscription rights in an amount of EUR 10,700 million subscribed
in fully by BFA. A total of 107,000 bonds were issued, represented by collective certificates with a
nominal value of EUR 100,000 each. The conversion rate of the bonds into ordinary Bankia shares will be
the result of dividing the nominal unit value of the bonds at each time and the value attributed to ordinary
Bank shares for the purposes of the conversion, equivalent to their nominal amount at the conversion
date, by the Bank's economic value.
As a result and bearing in mind the uncertainties regarding the value attributed to the Bank's shares, as
of the date of authorisation for issue of these consolidated financial statements, the directors have
decided to disclose diluted loss per share as required in prevailing legislation based on the potential
fluctuation range for the value attributed to Bankia shares as stipulated in the conversion bases and types
in the issue agreement approved by the FROB:
31/12/12
Attributed value of EUR
Attributed value of EUR 2
0.39
(par value of the Bank's
(quoted value of the
shares at 31 December Bank's share price at 31
2012)
December 2012)
Attributed value of EUR
0.01
Diluted loss per share (in euros)
Entitlement to receive shares (through conversion)
Adjusted average number of shares for the
calculation
Diluted earnings/(loss) per share (in euros)
Diluted earnings/(loss) per share for discontinued
operations (in euros)
Diluted earnings/(loss) per share for continuing
operations (in euros)
5,350,000,000
27,365,728,900
1,070,000,000,000
1,899,899,265
1,984,902,079
6,010,517,025
(10.03)
(9.60)
(3.17)
-
-
-
(10.03)
(9.60)
(3.17)
At 31 December 2011, the Group had no issues outstanding that were convertible into Bankia shares or
that carried any privilege or right amounting to convertibility into shares, such that there was no potential
dilutive effect.
104
Regarding remuneration of directors for the performance of their duties as members of the Board of
Directors, the Bank applies the provisions of Royal Decree-Law 2/2012 of 3 February, on the
reorganisation of the financial sector and Order ECC/1762/2012, of 3 August. In this respect,
remuneration at Bankia, S.A. for all items of members of the various boards of directors other than
executive chairmen, CEOs and executives of the companies is capped at EUR 100,000 per year. The
limit for executive directors is EUR 500,000.
i) Gross remuneration in cash (in thousands of euros)
Salaries
Attenda
nce fees
Short-term
variable
remuneration
Long-term
variable
remuneration
Remuneration
for
membership
on Board
committees
Termination
benefits
Other
items
2012 Total
334
-
-
-
-
-
-
334
342
-
-
-
-
-
-
342
-
60
-
-
-
-
-
60
-
60
-
-
-
-
-
60
-
60
-
-
-
-
-
60
-
60
-
-
-
-
-
60
-
60
-
-
-
-
-
60
-
-
Name
(1)
Fernando Fernández Méndez de
Andés (1)
-
-
-
60
-
60
-
-
56
-
-
-
-
-
56
56
-
-
-
-
-
56
The 2012 remuneration of these directors was adjusted in February 2013 in accordance with the degree of attendance to board meetings in 2012.
As a result, remuneration in 2012 paid to Ms. Castillo and Mr. Feito amounted to EUR 55 thousand, to Mr. Ayuso and Mr. Fernández to EUR 57
thousand and to Mr. Rengifo to EUR 54 thousand.
Long-term
variable
remuneration
Remuneration
for
membership
on Board
committees
Termination
benefits
Other
items
2012 Total
Salaries
Attendance fees (A)
Short-term
variable
remuneration
288
16
-
-
6
-
-
310
209
10
-
-
2
-
-
221
451
3
-
-
-
-
-
454
137
21
-
-
9
-
-
167
-
50
-
-
3
-
-
53
-
50
-
-
3
-
-
53
-
48
-
-
-
-
-
48
-
50
-
-
5
-
-
55
Josep Ibern Gallart (B)
-
45
-
-
2
-
-
47
-
50
-
-
3
-
-
53
Juan Llopart Pérez
-
50
-
-
5
-
-
55
-
50
-
-
-
-
-
50
-
47
-
-
3
-
-
50
-
45
-
-
5
-
-
50
-
50
-
-
3
-
-
53
-
50
-
-
4
-
-
54
-
5
-
-
1
-
-
6
-
48
-
-
6
-
-
54
-
50
-
-
3
-
-
53
-
50
-
-
3
-
-
53
José Wahnón Levy
-
5
-
-
-
-
-
5
Name
(A) "Attendance fees" includes directors' fees for attending Board meetings and fixed remuneration for Board membership.
(B) Fixed remuneration and attendance fees accruing to Mr. Ibern were deposited at Caixa Laietana.
105
Remuneration for membership on the Board of Directors of Bankia, S.A. is incompatible with
remuneration for membership on the Board of Banco Financiero y de Ahorros, S.A.U.
of contract" for employment contracts of directors of Bankia in excess of the lower of the following
amounts:
EUR 1,000,000 or
The contracts of two executive directors contain a termination benefit of one year of fixed remuneration if
the Company decides to terminate their employment unilaterally or in the event of a change of control of
the Company. The contracts also contain a post-contractual non-compete clause for the one year of fixed
remuneration. Pursuant to prevailing legislation, Bankia has amended these contracts, establishing that
any compensation and/or amounts received by these executive directors must comply with Royal
Decree-Law 2/2012 and Law 3/2012.
iv) Long-term saving schemes (thousands of euros)
Name/period
-
-
-
-
Eva Castillo Sanz
-
-
-
Fernando Fernández Méndez de Andés
-
-
-
Name/period
12
38
12
33
12
12
12
12
Josep Ibern Gallart
6
12
Juan Llopart Pérez
12
12
12
12
12
12
6
12
12
12
José Wahnón Levy
-
106
b) Remuneration accrued for membership on the Boards of other Group companies or investees
On 7 June 2012, the Company reported, in a material disclosure to the National Securities Market
Commission, a review of its policy for remunerating directors in Group companies and investees. In this
filing, it stated that the Bank's Board of Directors had decided that directors representing it in investees
would receive no remuneration and that the per diems to which they are entitled would be paid by the
Group.
Salaries
Attendance fees (1)
Short-term
variable
remuneration
Long-term
variable
remuneration
Remuneration
for membership
on Board
committees
Termination
benefits
Other
items
2012
Total
-
20
-
-
-
-
-
20
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Eva Castillo Sanz
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Fernando Fernández Méndez de
Andés
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Name
(1)
Mapfre, S.A. paid José Ignacio Goirigolzarri Tellaeche EUR 20 thousand for his service on the Board of Directors. This amount was deducted from
the remuneration paid to this director by Bankia, so that his total fixed remuneration complies with the limit stipulated in RDL 2/2012.
Salaries
Attendance fees
Short-term
variable
remuneration
Long-term
variable
remuneration
Remuneration for
membership on
Board committees
Termination
benefits
Other
items (A)
2012
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6
-
-
-
-
12
18
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3
-
-
-
-
2
5
-
-
-
-
-
-
-
-
Josep Ibern Gallart
-
2
-
-
-
-
-
2
-
3
-
-
-
-
2
5
Juan Llopart Pérez
-
18
-
-
-
-
-
18
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
28
-
-
-
-
10
38
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11
11
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3
-
-
-
-
10
13
José Wahnón Levy
-
-
-
-
-
-
-
-
Name
(A)
-
Remuneration received as natural person representative of a legal entity on the Board.
This table includes remuneration accrued by directors for membership on the boards in other Group
companies, as well as those of investees not forming part of the Group.
107
ii) Share-based payment schemes
None.
iii) Long-term saving systems
None.
iv) Other benefits (thousands of euros)
None.
c) Remuneration summary:
2012 Total
Name
334
20
354
342
-
342
60
-
60
60
-
60
60
-
60
60
-
60
60
-
60
Fernando Fernández Méndez de Andés (2)
60
-
60
56
-
56
56
-
56
(1)
Mapfre, S.A. paid José Ignacio Goirigolzarri Tellaeche EUR 20 thousand for his service on the Board of Directors. This amount was deducted
(2)
The 2012 remuneration of these directors was adjusted in February 2013 in accordance with the degree of attendance to board meetings in
2012. As a result, remuneration in 2012 paid to Ms. Castillo and Mr. Feito amounted to EUR 55 thousand, to Mr. Ayuso and Mr. Fernández to
EUR 57 thousand and to Mr. Rengifo to EUR 54 thousand.
2012 Total
Name
322
-
322
259
-
259
466
-
466
200
18
218
65
-
65
65
-
65
60
5
65
67
-
67
Josep Ibern Gallart (2)
53
2
55
65
5
70
Juan Llopart Pérez
67
18
85
62
-
62
62
-
62
62
38
100
65
-
65
66
11
77
12
-
12
66
-
66
65
-
65
65
13
78
José Wahnón Levy
5
-
5
(1)
Also includes remuneration earned at investees that do not form part of the Group.
(2)
Of the total remuneration in the entity, EUR 47 thousand was deposited in favour of Caixa Laietana
108
For the purposes of these financial statements, the members of the Management Committee, without
taking into consideration the executive directors, were considered as senior executives. A total of five
people were classified for these purposes as key personnel for the Bank up until 16 May 2012, and three
people thereafter.
The following table shows the remuneration received by the senior executives, as defined above:
Short-term
remuneration
Post-employment
benefits
Termination
benefits
Total
732
280
1,483
2,495
738
7
-
745
1,470
287
1,483
3,240
Total
of contract" for employment contracts of senior executives of Bankia in excess of the lower of the
following amounts:
EUR 1,000,000 or
As of 31 December 2012, the contracts of three senior executives included clauses that set
compensation for all items if they are dismissed for legal reasons, except for disciplinary reasons
considered legally valid, equivalent to two years' fixed compensation. Pursuant to prevailing legislation,
Bankia has amended these contracts, establishing that any compensation and/or amounts received by
senior executives must comply with Royal Decree-Law 2/2012 and Law 3/2012.
109
In accordance with the disclosure requirements under Section 229 of Royal Legislative Decree 1/2010, of
2 July, enacting the Consolidated Text of the Spanish Enterprises Act, the following table presents the
positions and duties performed by Bank directors at 31 December 2012 on account of others in
companies with the same, analogous or similar corporate purpose as that of the Bank, and the direct or
indirect stakes they have in these entities:
Name or corporate name of director
Company
Position, duty or involvement
Natural person representative
Chairman
FROB
Ceca
Vice Chairman
Cecabank
Vice Chairman
Director
Banco Santander
1 share
BBVA
163 shares
Banco Popular
1,100 shares
BBVA
640 shares
BBVA
28,000 shares
Banco Santander
30,000 shares
Bankinter, S.A.
780 shares
Banco Santander, S.A.
1,227 shares
Director
Banco Finantia, S.A. (Portugal)
Indirect shareholding, together with other related
parties of the director of 3.68%.
BBVA
parties of the director of 29,702 shares
Banco Santander
Banco Sabadell
Corporación Financiera Alba, S.A.
COMMERZBANK AG
AGEAS
Mercapital Spanish Buy -Out Fund III
parties of the director of 0.06%.
Deya Capital II, SCR de Régimen Común, S.A.
parties of the director of 10.87 %.
Citibank
Activity of a relative
Torrenova de Inversiones SICAV
ERST BANK
ING GROUP N.V.
TURKIYE VAKIFLAR BANKASI
Fernando Fernández Mendes de Andes
110
The allocation of the individual loss of Bankia, S.A. for the financial year ended 31 December 2012
proposed by the Board of Directors of Bankia, S.A., to be submitted for approval at the General Meeting
of Shareholders (with data for 2011 presented for purposes of comparison), is as follows:
2012
2011
To accumulated reserves (losses)
(18,306,443)
(3,030,551)
Net loss for the year
(18,306,443)
(3,030,551)
The detail of “Cash and balances with central banks” in the accompanying consolidated balance sheet is
as follows:
ITEM
31/12/12
Cash
Balances with the Bank of Spain
794,792
837,712
3,664,601
5,246,944
109,816
194,572
316
612
4,569,525
6,279,840
Balances with other central banks
Total
31/12/11
Breakdown
The detail, by counterparty and type of instrument, of these items in the consolidated balance sheet at 31
December 2012 and 2011, showing the carrying amounts at that date, is as follows:
31/12/12
COMPANY
Asset positions
31/12/11
Liability positions
Asset positions
Liability positions
By counterparty
Credit institutions
Total
31,867,590
32,616,306
24,626,630
25,962,304
442,081
1,153
1,299,818
2,190
-
-
-
-
2,492,321
941,691
2,298,446
795,707
970,080
95,967
857,776
118,658
35,772,072
33,655,117
29,082,670
26,878,859
39,874
-
16,248
-
323,863
-
1,329,442
-
22,951
-
38,866
-
35,385,384
33,655,117
27,698,114
26,366,718
-
-
-
512,141
35,772,072
33,655,117
29,082,670
26,878,859
Debt securities
Trading derivatives
Short positions
Total
111
Note 3.1 contains information on the credit risk assumed by the Group in relation to these financial
assets. Notes 3.2 and 3.3 contain, respectively, information relating to the liquidity risk and interest rate
risk assumed by the Group in relation to the financial assets included in this category.
Financial assets held for trading. Debt securities
The breakdown of the balances under this heading in the accompanying consolidated balance sheet is as
follows:
ITEM
31/12/12
275,848
31/12/11
1,184,529
-
-
21,057
96,192
15,450
5,226
11,508
43,495
323,863
1,329,442
Other foreign fixed-income securities
Other Spanish fixed-income securities
Total
Financial assets held for trading. Equity instruments
The breakdown of the balances under this heading in the accompanying consolidated balance sheet is as
follows:
ITEM
Shares of resident companies
31/12/12
21,929
31/12/11
27,054
1,022
11,812
22,951
38,866
Shares of non-resident foreign companies
Total
Financial assets held for trading. Trading derivatives
The breakdown, by type of derivative, of the fair value of the Group's trading derivatives at 31 December
31/12/12
ITEM
Credit derivatives
Debit balances
31/12/11
Credit balances
Debit balances
Credit balances
183,720
95,225
161,386
502,604
59,589
49,335
87,793
55,473
35,081,499
33,450,206
27,382,705
25,712,745
38,358
33,184
41,735
45,658
Other
22,218
27,167
24,495
50,238
Total
35,385,384
33,655,117
27,698,114
26,366,718
112
follows:
ITEM
0 to 3 years
Unmatured foreign currency
purchases and sales
12,983,680
616,265
-
13,599,945
6,241,261
1,888,545
-
8,129,806
294,558,994
191,092,092
131,257,697
616,908,783
50,464
856,408
-
906,872
Other
463,838
(1,451)
-
462,387
Total
314,298,237
194,451,859
131,257,697
640,007,793
Credit derivatives
3 to 10 years
More than 10 years
Total
follows:
ITEM
Credit derivatives
3 to 10 years
More than 10
years
20,954,016
462,191
157,927
21,574,134
3,827,366
4,573,484
-
8,400,850
405,960,379
239,694,083
144,584,776
790,239,238
74,231
369,327
-
443,558
0 to 3 years
Total
Other
949,001
-
1,251
950,252
Total
431,764,993
245,099,085
144,743,954
821,608,032
The notional amount of derivatives is the amount that is used as a basis for estimating the results
associated therewith, although, bearing in mind that a highly significant portion of these positions offset
each other, thus hedging the risks assumed, the notional amount cannot be understood to represent a
reasonable measure of the Group’s exposure to the risks associated with these products.
The detail, by type, of the financial assets included in this category at 31 December 2012 and 2011 is as
follows:
ITEM
By type
Debt securities
Equity instruments
Total
31/12/12
16,486
16,486
31/12/11
62,873
13,770
76,643
113
Breakdown
The detail of this item, by type of counterparty and type of financial instrument in the accompanying
consolidated balance sheet, is as follows:
ITEM
31/12/12
31/12/11
By counterparty
Credit institutions
8,021,522
5,960,445
18,017,151
13,609,342
137,850
157,698
1,148,925
2,762,886
12,405,650
2,808,877
57,656
54,282
(102,590)
(51,639)
-
(32,665)
39,686,164
25,269,226
39,686,164
23,922,208
18,017,151
13,609,342
86,811
1,081,189
16,958,884
10,904,342
971,456
1,623,811
137,850
157,698
8,021,522
5,936,396
13,612,231
4,270,411
(102,590)
(51,639)
-
-
-
1,347,018
Shares of listed companies
-
382,635
Shares of unlisted companies
-
997,048
Valuation adjustments (micro-hedges)
-
(32,665)
39,686,164
25,269,226
Other non-resident sectors (*)
Doubtful assets
Total
Debt securities
Treasury bills
Government bonds
Regional administrations
Other fixed-income securities (*)
Equity instruments
Total
(*) Includes, inter alia, securities issued by the ESM (see Note 1.2).
Note 25 provides details of the gains and losses on these financial instruments recognised under
“Valuation adjustments – Available-for-sale financial assets” in the accompanying consolidated balance
sheet.
114
Past-due and/or impaired assets
At 31 December 2012 and 2011, no asset recognised under "Available-for-sale financial assets" was
past-due but not impaired.
The detail of those assets recognised under "Available-for-sale financial assets – Debt securities", that
were considered to be impaired at 31 December 2012 and 2011, is as follows:
Impaired assets
ITEM
31/12/12
31/12/11
By counterparty
Credit institutions
Public sector
Total
9,949
4,082
-
-
200
200
47,507
50,000
57,656
54,282
Changes for the year in impairment losses and fair value adjustments due to credit risk
A summary of the changes in relation to impairment losses and fair value adjustments due to credit risk of
debt securities included in this portfolio for the year ended 31 December 2012 and 2011 are as follows:
31 December 2012
ITEM
Individually
assessed
25,189
Collectively
assessed
26,450
Total
51,639
9,747
53,978
63,725
(2,887)
(10,190)
(13,077)
6,860
43,788
50,648
448
(145)
303
32,497
70,093
102,590
32,497
70,093
102,590
7,153
36,700
43,853
25,344
33,393
58,737
Other changes
Of which:
115
31 December 2011
Individually
assessed
ITEM
Collectively
assessed
25,000
Other changes
Total
46,171
71,171
144
40,993
41,137
45
(45,235)
(45,190)
189
(4,242)
(4,053)
-
(15,479)
(15,479)
25,189
26,450
51,639
25,189
26,450
51,639
25,000
25,909
50,909
189
541
730
Of which:
At 31 December 2012, the Group recognised EUR 646,475 thousand (EUR 258,216 thousand at 31
December 2011) in the consolidated income statement for impairment losses on equity instruments
recognised directly under “Available-for-sale financial assets” in the accompanying consolidated balance
sheet. In 2012, these related entirely to instruments that were reclassified to "Non-current assets held for
sale" in the accompanying balance sheet (see Note 15).
Following is a detail of impairment losses on equity instruments classified as available-for-sale financial
assets by the type of instrument impaired:
Impairment
Nature of impaired asset
31/12/12
31/12/11
Equity interests in real estate companies and a real estate investment trust (REIT)
-
Other securities
-
240,693
17,523
Total
-
258,216
Breakdown
The detail, by type of financial instrument, of “Loans and receivables” on the asset side of the
consolidated balance sheet is as follows:
ITEM
31/12/12
31/12/11
Debt securities
Total
Total
8,002,105
18,165,732
145,697,229
192,507,377
2,190,318
5,496,329
155,889,652
216,169,438
(11,659,706)
(8,781,788)
110,825
402,912
144,340,771
207,790,562
116
Loans and receivables. Loans and advances to credit institutions
The detail, by transaction counterparty type, of this caption on the consolidated balance sheet is as
follows:
ITEM
31/12/12
31/12/11
By counterparty
Reciprocal accounts
442,821
65,880
Time deposits
381,506
1,615,790
42,009
42,819
860,684
9,794,519
6,247,607
6,636,479
27,478
10,245
8,002,105
18,165,732
(16,800)
(5,239)
2,985
29,496
7,988,290
18,189,989
Hybrid financial assets
Doubtful assets
Total
Total
Loans and receivables. Loans and advances to customers
The detail, by loan type, status and counterparty, of this caption on the accompanying consolidated
balance sheet is as follows:
ITEM
31/12/12
31/12/11
By loan type and status
Commercial credit
2,761,774
3,957,521
86,401,243
122,111,233
9,700
791,015
33,239,992
44,392,353
2,826,679
4,035,669
1,654,378
2,298,669
18,803,463
14,920,917
145,697,229
192,507,377
(11,606,515)
(8,744,942)
46,418
331,384
134,137,132
184,093,819
9,027,033
6,601,309
51,713
109,300
128,255,603
173,683,638
6,708,502
9,814,461
1,654,378
2,298,669
(11,606,515)
(8,744,942)
46,418
331,384
134,137,132
184,093,819
Secured loans
Other term loans
Doubtful assets
Subtotal
Total
By counterparty
Total
117
The carrying amount recorded in the foregoing table, disregarding the portion relating to “Other valuation
adjustments”, represents the Group's maximum level of credit risk exposure in relation to the financial
instruments included therein.
“Loans and receivables - Loans and advances to customers” in the accompanying consolidated balance
sheet includes certain loans with mortgage collateral which, as indicated in Note 1.14 and under the
Mortgage Market Law are considered eligible to guarantee the issue of long-term mortgage-backed
securities. This item also includes certain securitised loans that have not been derecognised from the
consolidated balance sheet (see Note 2.2.2). The amounts shown in the accompanying consolidated
balance sheet related to securitised loans are:
Securitised loans
31/12/12
31/12/11
18,850,762
21,260,479
Of which:
7,383
11,664
Doubtful assets
1,753,857
924,620
4,278,319
6,393,036
23,129,081
27,653,515
Of which:
Liabilities associated with assets kept on the balance sheet (*)
6,016,475
8,067,976
(*) Recognised under "Financial liabilities at amortised cost - Marketable debt securities" in the accompanying consolidated
balance sheet
As indicated in Note 1.16, in 2012 assets classified under this consolidated balance sheet heading were
transferred to the SAREB for a gross amount of EUR 29,915,467 thousand.
Other securitised loans were derecognised from the accompanying consolidated balance sheet as the
Group did not retain substantially either the risks or rewards, as follows:
Securitised loans
31/12/12
1,096,267
1,275,484
92
528
1,096,359
1,276,012
31/12/11
Loans and receivables. Loans and advances to credit institutions and loans and advances to
customers. Past-due and impaired assets (doubtful)
Following is a detail of assets classified as "Loans and receivables - Loans and advances to credit
institutions" and "Loans and receivables - Loans and advances to customers", considered to be impaired
at 31 December 2012 and 2011, and of the assets which, although not considered to be impaired, include
any past-due amounts as at those dates, by counterparty.
ITEM
31/12/12
31/12/11
By counterparty
Credit institutions
27,478
10,245
Public sector
49,039
6,453
17,644,071
14,625,963
1,110,353
288,501
18,830,941
14,931,162
Total
118
Assets including past-due amounts not considered to be impaired at 31 December 2012 and 2011
ITEM
31/12/12
31/12/11
By counterparty
Credit institutions
180
-
Public sector
188,602
32,264
324,184
615,599
51,918
29,447
564,884
677,310
Total
The table below shows the changes for the years ended 31 December 2012 and 2011 in provisions for
impairment losses and fair value adjustments due to credit risk in relation to assets in "Loans and
advances to credit institutions" and "Loans and advances to customers" under "Loans and receivables"
on the accompanying consolidated balance sheet:
31 December 2012
ITEM
General
allowance
Country risk
allowance
1,273,641
Specific
allowance
Total
23,901
7,452,639
8,750,181
-
-
2,439,110
2,439,110
1,273,641
23,901
5,013,529
6,311,071
Amounts used for depreciated assets
Other changes (1)
2,641
14,129
25,521,740
25,538,510
(738,226)
(19,241)
(6,403,084)
(7,160,551)
(735,585)
(5,112)
19,118,657
18,377,960
-
-
(1,830,774)
(1,830,774)
(63,949)
1,843
(13,600,170)
(13,662,276)
-
(357)
(11,419)
(11,776)
474,107
20,275
11,128,933
11,623,315
-
-
6,297,839
6,297,839
474,107
20,275
4,831,094
5,325,476
474,107
20,275
11,128,933
11,623,315
464,970
-
10,270,354
10,735,324
9,137
20,275
858,579
887,991
Of which:
(1) Mainly assets transferred to the SAREB
119
31 December 2011
ITEM
General
allowance
Country risk
allowance
Specific
allowance
Total
1,310,316
31,495
5,967,314
7,309,125
-
-
2,539,969
2,539,969
1,310,316
31,495
3,427,345
4,769,156
182,865
323
6,890,454
7,073,642
(1,283,354)
(7,917)
(2,617,555)
(3,908,826)
(1,100,489)
(7,594)
4,272,899
3,164,816
Amounts used for depreciated assets
Other changes
3,653
-
(1,500,914)
(1,497,261)
1,060,161
-
(1,286,660)
(226,499)
1,273,641
23,901
7,452,639
8,750,181
-
-
2,439,110
2,439,110
1,273,641
23,901
5,013,529
6,311,071
1,273,641
23,901
7,452,639
8,750,181
1,270,695
-
7,260,166
8,530,861
2,946
23,901
192,473
219,320
Of which:
The various items recognised in 2012 and 2011 under “Impairment losses on financial assets (net) Loans and receivables” on the income statements for those years are summarised below:
ITEM
Net charge for the year
Written-off assets recovered
Impairment losses on financial assets (net) - Loans and receivables (Note 45)
31/12/12
31/12/11
18,387,746
3,193,746
(206,010)
(79,697)
18,181,736
3,114,049
Loans and receivables. Debt securities
The detail, by counterparty, of this consolidated balance sheet heading at 31 December 2012 and 2011 is
as follows:
ITEM
31/12/12
31/12/11
By counterparty
Credit institutions
Doubtful assets
Total
Total
548
24,662
1,927,267
5,163,066
254,816
305,901
7,687
2,700
2,190,318
5,496,329
(36,391)
(31,607)
61,422
42,032
2,215,349
5,506,754
120
Loans and receivables. Debt securities. Past-due and impaired assets (doubtful)
The detail of assets recognised under "Loans and receivables - Debt securities" considered impaired at
31 December 2012 and 2011 is as shown below.
At 31 December 2012 and 2011, no assets recognised under "Loans and receivables – Debt securities"
were past-due.
ITEM
31/12/12
31/12/11
By counterparty
Credit institutions
Public sector
Total
2,700
2,700
-
-
4,987
-
-
-
7,687
2,700
A summary of the changes in impairment losses, due to credit risk, on debt securities recognised under
"Loans and receivables" for the years ended 31 December 2012 and 2011 are as follows:
31 December 2012
ITEM
Individually
assessed
Collectively
assessed
-
31,607
2,700
16,600
-
(9,514)
2,700
7,086
-
(8,353)
Other changes
-
3,351
2,700
33,691
2,700
33,691
-
20,854
2,700
12,837
Of which:
121
31 December 2011
COMPANY
Individually
assessed
Collectively
assessed
-
3,842
-
32,971
-
(4,041)
-
28,930
-
(10)
Other changes
-
(1,155)
-
31,607
-
31,607
-
11,266
-
20,341
Of which:
Breakdown
The breakdown of this heading in the accompanying consolidated balance sheet is as follows:
ITEM
31/12/12
31/12/11
By counterparty
Credit institutions
957,609
1,107,039
5,131,265
5,122,761
2,103,378
2,476,353
Other resident sectors (*)
20,262,858
980,777
793,800
1,243,645
579
-
(89,996)
(36,966)
29,159,493
10,893,609
5,131,265
5,122,761
2,102,793
2,476,353
88,514
90,177
21,926,917
3,241,284
(89,996)
(36,966)
29,159,493
10,893,609
Doubtful assets
Total
Other fixed-income securities
Bonds (*)
Total
(*) The balance at 31 December 2012 includes debt securities received as consideration for assets transferred to the
SAREB, recognised at nominal value (see Note 1.16).
assets.
122
A summary of the changes in relation to impairment losses and fair value adjustments due to credit risk in
this portfolio for the years ended 31 December 2012 and 2011 is as follows:
31 December 2012
Individually
assessed
Collectively
assessed
-
36,966
-
53,941
-
(911)
Net provision/(release) charged/(credited) to income statement (Note 45)
-
53,030
-
-
Other changes
-
-
-
-
-
89,996
-
89,996
-
3,395
-
86,601
ITEM
Of which:
31 December 2011
ITEM
Individually
assessed
Collectively
assessed
5,205
38,152
-
3,443
-
1,714
(5,205)
-
Other changes
-
(6,327)
-
(16)
-
36,966
-
36,966
-
93
-
36,873
Net provision/(release) charged/(credited) to income statement (Note 45)
5,157
Of which:
Held-to-maturity investments. Past-due and impaired assets
A breakdown of assets recognised under "Held-to-maturity investments" that were considered to be
impaired at 31 December 2012 and 2011 are as shown below.
The Bank did not have any assets classified as held to maturity at 31 December 2012 and 2011 with any
past-due amount.
123
ITEM
31/12/12
31/12/11
By counterparty
Total
579
-
579
-
At 31 December 2012, the Group had entered into financial derivative hedging arrangements with
counterparties of recognised creditworthiness as the basis of an improved management of the risks
inherent to its business (see Note 3).
The Group enters into hedges on a transaction-by-transaction basis by assessing the hedging instrument
and the hedged item on an individual basis and continually monitoring the effectiveness of each hedge, to
ensure that changes in the value of the hedging instrument and the hedged item offset each other.
The Group's main hedged positions and the financial hedging instruments used are as follows:

Fair value hedges
–
–
o
swaps). The Group also hedges certain positions against credit risk with credit
derivatives (basically credit default swaps).
o
in active markets.
o
–
o

The Group also hedges certain positions against credit risk with credit derivatives
Long-term fixed-rate deposits and marketable debt securities issued by the Group,
whose risk is hedged with interest rate derivatives (basically swaps).
Cash flow hedges
–
o
–
o
–
swaps).
o
Marketable debt securities issued by the Group, whose risk is hedged with interest rate
124

–
o
Following is a breakdown, by type of derivative and for each type of hedge, of the fair value of derivatives
designated as hedging instruments at 31 December 2012 and 2011:
31/12/12
ITEM
Debit balances
31/12/11
Credit balances
Debit balances
Credit balances
Fair value hedges
6,159,488
2,697,951
5,162,627
1,825,838
Cash flow hedges
14,909
92,267
103,860
199,318
6,174,397
2,790,218
5,266,487
2,025,156
Total
Fair value hedges:
31/12/12
ITEM
31/12/11
Debit balances
Credit balances
Debit balances
Credit balances
7,264
-
12,524
4,245
6,144,081
2,697,133
5,135,184
1,821,472
959
34,193
1,504
40,629
19,786
2,119,327
62,178
1,343,451
6,123,336
543,613
5,071,502
437,392
Other
8,143
818
14,919
121
Total
6,159,488
2,697,951
5,162,627
1,825,838
Cash flow hedges:
31/12/12
ITEM
Debit balances
31/12/11
Credit balances
Debit balances
Credit balances
14,909
91,944
103,095
199,318
9,284
11,467
16,812
19,322
5,522
977
52,446
172,140
103
79,500
33,837
7,856
Other
-
323
765
-
Total
14,909
92,267
103,860
199,318
125
The detail of the periods after 31 December 2012 at which it is estimated that the amounts recognised in
consolidated equity under "Valuation adjustments – Cash flow hedges" at that date will be recognised in
future consolidated income statements is as follows (figures for 31 December 2011 are presented for
comparison purposes):
Losses (*)
Less than 1 year
3 to 5 years
More than 5
years
TOTAL
(5,779)
(30,607)
-
(8,555)
(44,941)
-
256
36
17,894
18,186
(5,779)
(30,351)
36
9,339
(26,755)
Gains (*)
Total
1 to 3 years
Losses (*)
Less than 1 year
3 to 5 years
More than 5
years
TOTAL
(4,38

Annual accounts, management report and report of the

Transcription

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