BBVA - Aiaf

Transcription

BBVA - Aiaf

Dated 13 May, 2003
PROSPECTUS
EUR 3,000,000,000 CEDULAS HIPOTECARIAS DUE 2013
BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
PROSPECTUS COMPRISED OF:
•
CONTINUOUS FIXED INCOME SECURITIES
CONTINUADO) APPROVED ON 26 JUNE 2002
•
SUMMARISED FIXED INCOME SECURITIES ISSUE PROGRAMME (FOLLETO REDUCIDO)
APPROVED ON 16 JULY 2002
•
ADDITIONAL INFORMATION (INFORMACION COMPLEMENTARIA) APPROVED ON 17
JANUARY 2003
•
LUXEMBOURG SUPPLEMENT DATED 15 APRIL TO THE EUR 3,000,000,000 CEDULAS
HIPOTECARIAS ADDITIONAL INFORMATION DATED 17 JANUARY 2003 FOR THE
PURPOSES OF THE LISTING OF THE BONDS ON THE LUXEMBOURG STOCK
EXCHANGE
ISSUE
PROGRAMME
(FOLLETO
BBVA
ÁNGEL CANO FERNÁNDEZ, General Manager and Financial Area Director of the entity Banco
Bilbao Vizcaya Argentaria, S.A., with registered offices in Bilbao, Plaza San Nicolás, 4,
With regard to the so-called “Continued Prospectus” of Banco Bilbao Vizcaya Argentaria, S.A. and
before the SPANISH SECURITIES MARKET COMMISSION,
CERTIFIES
1.- That the contents of the attached disc correspond to the contents of the Continued Prospectus
presented to the Spanish Securities Market Commission that was verified on 26 June 2002.
2.- That the Spanish Securities Market Commission is authorised to diffuse the disc on its website.
And so that it may be recorded, this certificate is issued in Bilbao on the twenty-sixth day of June,
two thousand and two.
BBVA
CONTINUED PROSPECTUS
REGISTERED AT THE SPANISH
SECURITIES MARKET COMMISSION
on 26 June 2002
INDEX
CHAPTER 0
RELEVANT CIRCUMSTANCES
CHAPTER I
PERSONS WHO ASSUME RESPONSIBILITY FOR THE CONTENTS OF
THIS PROSPECTUS AND THE SUPERVISORY ORGANISATIONS OF THE
SAME
1.1.
1.2.
PERSONS WHO ASSUME RESPONSIBILITY FOR THE CONTENTS
OF THIS PROSPECTUS
I/1
SUPERVISORY ORGANISATIONS OF THE PROSPECTUS
I/1
1.2.1.
1.2.2.
1.3.
Registration of the Informative Prospectus in the Spanish
Securities and Investments Board
I/1
Prior administrative authorisation
I/1
VERIFICATION AND AUDITING OF ANNUAL ACCOUNTS
I/2
CHAPTER III
THE COMPANY AND ITS CAPITAL
3.1.
IDENTITY AND CORPORATE PURPOSE
III/1
3.1.1.
Company name and Registered Offices
3.1.2.
Corporate Purpose
III/1
III/1
3.2.
LEGAL INFORMATION
3.2.1.
3.2.2.
3.3.
Details of constitution and registration
Legal form and special legislation
III/1
III/1
III/2
INFORMACION ON THE CAPITAL
III/3
3.3.1.
Par sum
III/3
3.3.2.
Not applicable
III/3
3.3.3.
Classes and series of shares
III/3
3.3.4.
Capital stock operations during the last three years
III/3
3.3.5.
Revertible or exchangeable bonds or with warrants.
Preference shares
III/5
3.3.6.
Not applicable
III/7
3.3.7.
Agreements made at the General Meeting
III/7
3.3.8.
Statutory conditions for capital modifications
III/9
3.4.
TREASURY STOCK
III/9
3.5.
EARNING PER SHARE
III/12
3.6.
CONSOLIDABLE COMPANIES
III/12
3.7.
INVESTEE COMPANIES
III/18
CHAPTER IV
PRINCIPAL ACTIVITIES OF THE COMPANY
4.1.
4.1.1.
4.1.2.
4.1.3.
4.2.
4.3.
4.4.
Description of the principal activities and business of the
BBVA Group
Relative position of the company or Group inside the
banking sector
Financial information on the principal banks in the Group
IV/1
IV/1
IV/24
IV/25
RESULTS ADMINISTRATION
IV/29
4.2.1.
4.2.2.
4.2.3.
4.2.4.
4.2.5.
4.2.6.
4.2.7.
IV/30
IV/35
IV/39
IV/40
IV/44
IV/47
IV/48
Profit and Loss Account of the Consolidated Group
Gross Margin
Ordinary profit
Operating profit
Restructuring and Extraordinary Provisions
Results and resources generated
Geographic distribution
BALANCE ADMINISTRATION
IV/49
4.3.1.
4.3.2.
4.3.3.
4.3.4.
4.3.5.
4.3.6.
4.3.7.
4.3.8.
4.3.9.
IV/49
IV/53
IV/56
IV/60
IV/68
IV/77
IV/83
IV/87
IV/93
Balance of the BBVA
Treasury and credit entities
Loans
Securities portfolio
Administered client resources
Others asset accounts
Other liability accounts
Shareholders’ equity
Memorandum accounts
RISK MANAGEMENT
IV/100
4.4.1.
4.4.2.
4.4.3.
The organisation of the risks function
Global risk map
The New Basle II capital regulation
IV/100
IV/101
4.4.4.
4.4.5.
4.4.6.
Credit risk management
Market risk management
Operational Risks Management
IV/102
IV/103
IV/115
IV/123
4.5.
CONDITIONING FACTORS
IV/125
4.5.1.
Degree of seasonality in the COMPANY’S business
IV/125
4.5.2.
COMPANY’S dependency on patents, brands and other
external factors
IV/125
Research and development policy for new products
and processes
IV/127
4.5.3.
4.5.4.
4.5.5.
4.6.
4.7.
Litigation and Arbitration
Interruptions in COMPANY activity that may have, or have
had in the recent past, an important effect on the
financial situation
IV/127
IV/130
LABOUR INFORMATION
IV/130
4.6.1.
Staff
IV/130
4.6.2.
Working conditions
IV/131
4.6.3.
Pension commitments
IV/132
4.6.4
Indemnizaciones por despido
IV/136
INVESTMENT POLICY
IV/136
4.7.1.
Methodology
IV/136
4.7.2.
Developments in Latin America and Europe
IV/138
4.7.3.
Developments related to the new economy
IV/138
4.7.4.
Other operations
IV/141
4.7.5.
Project Euro
IV/141
CHAPTER V
ASSETS, FINANCIAL SITUATION AND RESULTS
INTRODUCTION
V/1
5.1.
INDIVIDUAL FINANCIAL STATEMENTS
V/2
5.1.1.
5.1.2.
5.1.3.
V/2
V/3
V/4
5.2.
5.3
BBVA individual balance sheets
BBVA Individual income statements
BBVA individual funds flow statements
CONSOLIDATED GROUP FINANCIAL STATEMENTS
V/5
5.2.1.
5.2.2.
5.2.3.
5.2.4.
V/5
V/6
V/7
V/8
BBVA consolidated Balances
BBVA consolidated income statements
Consolidated funds flow statements
Consolidated cash flows
PRESENTATION AND ACCOUNTANCY PRINCIPLES APPLIED
V/9
5.3.1.
5.3.2.
V/9
5.3.3.
5.3.4.
Presentation principles
Statement of financial position and income statement
(“proforma” for 1999) V/10
Sociedades que componen el Grupo BBVA
Accounting principles applied
V/11
V/12
CHAPTER VI
COMPANY MANAGEMENT, GOVERNANCE AND CONTROL
6.1.
6.2.
6.3.
MANAGEMENT STRUCTURES AND EXECUTIVE MANAGEMENT
VI/1
6.1.1.
6.1.2.
6.1.3.
6.1.4.
6.1.5.
VI/1
VI/6
VI/7
VI/7
VI/9
The Board of Directors
The Permanent Representative Committee
The Chairman
Board Committees and Commissions
Executive Committee
TOTAL HOLDINGS OF THE DIRECTORS AND EXECUTIVE MANAGEMENT
VI/9
NATURAL PERSONS OR LEGAL ENTITIES DIRECTLY OR
INDIRECTLY, OPERATING JOINTLY OR SEVERALLY, EXERCISING
OR IN A POSITION TO EXERCISE CONTROL OVER THE COMPANY
6.4.
VI/14
STATUTORY PRECEPTS WHICH ASSUME OR COULD LEAD
TO THE ASSUMPTION OF A RESTRICTION OR LIMITATION
6.5.
6.6.
OF THE ACQUISITION OF MAJOR INTERESTS IN THE COMPANY
BY OUTSIDE BUYERS
VI/14
MAJOR INTERESTS IN THE COMPANY’S CAPITAL, WITH
REGARD TO THE ROYAL DECREE 377/1991, OF 15TH MARCH,
MENTIONING THE SHAREHOLDERS
VI/14
STRUCTURAL DISTRIBUTION OF THE BBVA SHAREHOLDERS
VI/15
6.7.
6.8.
IDENTIFICATION OF PERSONS OR ENTITIES TO WHOM THE
COMPANY IS INDEBTED
VI/15
EXISTENCE OF CUSTOMERS OR SUPPLIERS WITH
SIGNIFICANT BUSINESS TRANSACTIONS WITH THE COMPANY
VI/15
6.9.
PERSONNEL INVESTMENT SCHEMES IN THE COMPANY’S CAPITAL
VI/15
6.10.
OTHER PAYMENTS IN YEAR 2001 TO ARTHUR ANDERSEN GROUP
VI/18
CHAPTER VII
BUSINESS OUTLOOK AND FUTURE PLANS
7.1.
7.2.
7.3.
THE BBVA’s POSITION
VII/1
7.1.1. First Quarter 2002 Results
7.1.2. Finalisation of two integration processes
VII/1
VII/5
COMPANY OUTLOOK
VII/6
7.2.1.
7.2.2.
7.2.3.
7.2.4.
VII/6
VII/6
VII/7
VII/8
Latest events: ARGENTINA and other determining factors
New organisational structure
BBVA Repositioning Plan
A new way of seeing the BBVA Group
MEDIUM AND SHORT-TERM PLANS
VII/9
7.3.1.
7.3.2.
7.3.3.
VII/9
VII/9
European Expansion
American Expansion
Development of strategic alliances
VII/10
7.4.
BUSINESS AREA PLANS
VII/11
7.4.1.
7.4.2.
Business areas
Business Support Areas
VII/11
VII/19
7.5.
SHAREHOLDER REMUNERATION
VII/21
7.6.
CAPITAL STRUCTURE
VII/21
7.7.
GENERAL MEETING OF SHAREHOLDERS’ AGREEMENTS
VII/21
APPENDIX
Reports from the External Audit of Annual Account
0/1
CHAPTER
0
RELEVANT CIRCUMSTANCES TO BE TAKEN INTO
CONSIDERATION REGARDING THE ISSUER
0.1. Circumstances related to the administrative proceedings initiated by Banco de España
(Bank of Spain)
On 22 March 2002, BBVA proceeded to notify the supervisors of the stock markets on which it
lists, of the relevant fact of the initiation of administrative proceedings on the part of Banco de
España related to this entity and 24 of its former board members and directors in consequence of
the existence of some unaccounted funds that were regularised at the end of the year 2000. The
initiation of these proceedings, together with the subsequent judicial investigation, make it
advisable to describe these events and BBVA’s attitude to the same in this introductory chapter,
notwithstanding more detailed comments on this matter in the corresponding sections of this
prospectus.
?
Under the concept of Extraordinary Income and Loss for the year 2000, Banco Bilbao
Vizcaya Argentaria recorded income to the total sum of 37,343 million Ptas. (approx.
225 million euro).
This extraordinary income corresponds to the inclusion on the Profit and Loss
Account of Assets based abroad, belonging to the Bank, but not reflected in the
Balance Sheet. These assets mainly consisted of capital gains resulting from the sale
of Banco de Vizcaya and Banco Bilbao Vizcaya shares, first by Jersey companies
Abreveux, Ballintrae, Coriander and Darjon, and later by the Liechtenstein entity
Amelan Foundation (formerly Candiac Foundation until February 1995), between
1987 and 1992, and the sale of Argentaria shares in 1997 and 1998.
?
At the end of 2000, Banco Bilbao Vizcaya Argentaria, S.A., took the initiative to
appropriately regularise the accounting of these assets, and therefore Amelan
Foundation was wound up, and the resulting balance of 203.46 million euro was
deposited in the Bank. 21.47 million euro were also deposited in the Bank,
corresponding to the return of the funds established in America Life Insurance
Company, paying the corresponding corporate tax in 2000 on this income allocated to
extraordinary profit or loss.
?
At the beginning of 2001, precisely on 19 January 2001, BBVA informed the
supervisor of financial entities, Bank of Spain, and its own external auditors of these
facts.
BBVA collaborated with Banco de España’s inspection department in an exhaustive
0/2
investigation of the facts and of persons involved, as described in chapter 4.5.4. of
this prospectus. On 22 March 2002, Banco de España informed the entity that it was
initiating penal proceedings with regard to the existence of 225 million euro in capital
gains, obtained from the sale of Banco de Vizcaya and Argentaria shares, that was
not reflected in accounts until 2000.
On 9 April 2002, Trial Court number five of the National Court decided to extend the
investigation in course under Proceeding 161/2000, in accordance with that detailed
in part 4.5.4, to events referred to in the report drawn up by the Inspection
Department of Banco de España. On the same day, the said Court notified Banco de
España that it should suspend the course of the administrative proceedings until
criminal liability derived from the facts was established, where appropriate. BBVA is
collaborating with this judicial investigation to clarify the facts, and does not expect
the investigation to result in material damage to the entity, as stated in chapter 4.5.4
of this prospectus.
?
Furthermore, by virtue of an agreement made on 22 May 2002, the Spanish
Securities Market Commission (CNMV), initiated penal proceedings against BBVA,
S.A. regarding a possible infringement of the Stock Market Act (provided under Article
99 ñ of said Act) for the very events that BBVA, S.A. had informed Banco de España
at its own initiative. CNMV has requested the Trial Judge’s opinion as to whether or
not proceedings should be suspended until resolution of the criminal proceedings. No
opinion had been received when this prospectus was presented.
On the date of this prospectus, none of the persons who are being investigated or charged with the
aforementioned facts are Board Members, Directors or executives of this entity.
0.2. Circumstances derived from the situation in Argentina
Meanwhile, in view of the economic situation in Argentina, and in order to safeguard criteria of
prudence and true image, on 31 December 2001, a series of provisions and restructuring was
effected, as described below:
The financial statements at 31 December 2001 of Group entities based in Argentina were
converted into euro using the official exchange rate at the close of the financial year: parity
between the Argentinean peso and the dollar. However, the fact that this parity was broken during
2002 was of such significance that the effect of incorporating the equity of companies whose share
capital was held in pesos was included at an exchange rate of 1 US dollar per 1.7 Argentinean
pesos. The difference that arose from this devaluation, which ascended to 469,090,000 euro, was
charged under the concepts titled, “Reserves – Exchange rate differences” and “Minority interests”,
and charged to sections titled, “Other liabilities” (440,235,000 euro) and “Shareholdings”
(28,855,000 euro) in the consolidated balance sheet, for those companies consolidated using the
global integration method and those companies consolidated using the equity method,
respectively.
Furthermore, a specific fund was set up, equivalent to the theoretical book value of the Banco
Francés group, with prior consideration for the aforementioned exchange rate differences and the
value of fixed income securities issued by Banco Francés in the Bank books (447,435,000 and
170,201,000 euro respectively). This fund was charged under the “Extraordinary Losses” item of
the consolidated profit and loss account, and credited to the “Provisions for Risks and Debits –
Other provisions” section of the consolidated financial statement.
In addition, a total redemption was effected of the commercial consolidation funds that were
pending redemption from investments in Argentina: 13,998,000 and 109,030,000 euro,
corresponding to BBVA Banco Francés, S.A. and Consolidar AFJP, S.A., respectively.
0/3
Furthermore, details are given of other impacts derived from the situation in Argentina that were
recorded in the Bank’s consolidated annual accounts for 2001:
1.
Profits from globally integrated companies were reduced by 71,677,000 euro following
an adjustment for lower profits expected from investee companies with interests in
Argentina. Also, consideration was given to the effect of devaluation on these
companies, resulting in 213,696,000 euro being charged to the “Consolidated company
losses – from foreign exchange differences” item.
2.
A provision of 34,065 euro was made for country risk.
3.
Potential profit derived from the foreign currency structural position of Argentinean
entities was not recorded as income.
4.
Furthermore, an extraordinary provision for bad debts was made to the sum of
415,741,000 euro in local accounts.
0/4
Provisions and restructuring effected for investments in Argentina
Financial year 2001
Concepts
Conversion differences from the devaluation of the Argentinean peso
In millions of euro
Charged to year’s
Charged to
results
accumulated reserves
-
1
469
Establishment of a specific fund equivalent to the theoretical book value of BBVA Banco Francés, S.A.
447
-
Establishment of a specific fund equivalent to the value of fixed income securities issued by BBVA
Banco Francés, S.A. in the Bank’s accounts
170
-
14
-
109
-
Effect caused by the conversion of the Argentinean bonds
92
-
Specific provision for risk country effects
34
-
Reduction of profits generated by globally integrated companies with interests in Argentina
72
-
-
214
416
-
Redemption of goodwill in operation at 31 December 2001 by BBVA Banco Francés, S.A.
Redemption of goodwill in operation at 31 December 2001 by Consolidar AFJP, S.A.
Effect of the devaluation of the Argentinean peso on globally integrated companies with interests in
Argentina
Establishment of an extraordinary provision for bad debts in the BBVA Banco Francés group
Total
1.354
Imputable Group results
743
Financial year 2002 (figures at 31-5-2002)
Concepts
Establishment of a specific provision fund for bad debts arising from the granting of credit to the sum of
159 million dollars
Reduction of profits generated by globally integrated companies with interests in Argentina
Millones de euro
Charged to year’s
Charged to
results
accumulated reserves
171
-
104
75
80
114
Total
195
189
Imputable Group results
161
Conversion differences from the devaluation of the Argentinean peso
1
This includes 111 million euros that corresponds to “Minority Interests”.
0/5
After making these adjustments, the Group’s directors believe that the provisions established at the
close of the 2001 financial year reasonably cover the maximum losses that the Group will incur as
a result of the situation described above.
BBVA has completely restructured the book value of its investments in Argentina and as a result,
the reduced contribution of profits from operations in Argentina does not now affect consolidated
profit and loss account of the BBVA Group.
In April 2002, BBVA awarded BBVA Banco Francés, S.A. credit to a total sum of 159 million USD,
derived from an agreement made between BBVA and BBVA Banco Francés to ensure the liquidity
of the latter. This loan was backed with the pignorative guarantee of the credit rights derived from
the loans guaranteed for an original par sum of 185 million USD. loan. Furthermore, in the same
month, BBVA awarded BBVA Banco Francés, S.A. two credits for a total sum of 80 million dollars
intended to cancel debts and pay interests on liabilities. This operation was backed with the
pignorative guarantee of clients’ loans for the sum of 120 million USD. The total of the
aforementioned loans has been 100% provided for by BBVA and charged to the 2002 profit and
loss account.
Subsequently, in May 2002, BBVA informed of its intention to proceed to capitalise its subordinated
debt with Argentina for a sum of 130 million USD, and the loan granted on 4 April for a sum of 79
million USD. This capitalisation process must be approved and authorised in accordance with the
Companies Act and Spanish Securities Market Commission of Argentina, the Buenos Aires Stock
Exchange and SEC, and it must be approved by Banco de España. This capitalisation process
forms part of a plan to ease the net worth and liquidity of BBVA Banco Francés in view of the
situation faced by the Argentinean financial system.
Moreover, the acute crisis that persists in Argentina may also have a negative impact on results of
companies that operate there and in which BBVA has a significant shareholding, such as Repsol
Group and Telefónica Group. This, in itself, would affect the results generated by BBVA through
the application of the equity method of these shareholdings.
In any event, it cannot be foreseen which legislative changes may come into force in the future in
Argentina as a result of present-day events, and whether these changes may have a negative
effect on BBVA’s activity and results. BBVA continues to follow the situation in Argentina very
closely, and, providing there is suitable progress, in the future it may consider the possibility of
offering additional liquidity to its subsidiaries in Argentina.
I/1
CHAPTER I
PERSONS WHO ASSUME RESPONSIBILITY FOR THE
CONTENTS OF THIS PROSPECTUS AND THE SUPERVISORY
ORGANISATIONS OF THE SAME
I.1.
PERSONS WHO ASSUME RESPONSIBILITY FOR THE CONTENTS OF THIS
PROSPECTUS
I.1.1.
Mr. Angel CANO FERNÁNDEZ, holder of National Identity Document / Fiscal Identity
Number 13.735.761T, in his capacity as General Manager of BANCO BILBAO VIZCAYA
ARGENTARIA, S.A., with registered offices in Bilbao, Plaza San Nicolás nº 4 and with
Fiscal Identity Code A-48265169, on behalf of BANCO BILBAO VIZCAYA ARGENTARIA,
S.A., assumes responsibility for the contents of this Prospectus.
Any communication in order to clarify the details contained in this prospectus may be
made through Ms. Josune Basabe Puntox, Accountancy and Consolidation attorney,
telephone number 94 4876872.
I.1.2.
Mr. Angel CANO FERNÁNDEZ, confirms the veracity of the contents of this Continued
prospectus and of all data contained in the same, and declares that no relevant details
have been omitted and that no details lead to an error.
I.2.
SUPERVISORY ORGANISATIONS OF THE PROSPECTUS
I.2.1.
Registration of the Informative Prospectus in the Spanish Securities Market
Commission
This Continued Informative Prospectus was registered at the official registers of the
Spanish Securities Market Commission (hereinafter, the “CNMV”) on 26 June 2002.
The registration of this Prospectus on the part of the Spanish Securities Market
Commission does not imply a recommendation to subscribe or purchase the shares of the
Company to which the same refers, nor does it imply any pronouncement on the solvency
of the company or the profitability of shares that this Company may issue or offer, where
applicable.
I.2.2.
Prior administrative authorisation
n.a.
I/2
I.3.
VERIFICATION AND AUDITING OF ANNUAL ACCOUNTS
The Annual Accounts of BANCO BILBAO VIZCAYA ARGENTARIA, S.A. and of its
Consolidated Group, corresponding to the financial years closed at 31 December 2001
and 2000; and the Annual Accounts of BANCO BILBAO VIZCAYA, S.A., of
ARGENTARIA, CAJA POSTAL Y BANCO HIPOTECARIO, S.A., and of their respective
Consolidated Groups, corresponding to the financial year closed at 31 December 1999,
have been audited by the company Arthur Andersen y Cía., S. Com., with registered
offices in Madrid, calle Raimundo Fernández Villaverde, nº 65, and with Fiscal Identity
Code D-79104469, registered in the Official List of Registered Auditors (OLRA), under
entry number S-0692.
Said Annual Accounts corresponding to financial years 2001, 2000 and 1999, together
with their respective Management Reports and Audit Reports, are held at the N.S.M.C.
Individual Annual Accounts
BANCO BILBAO VIZCAYA ARGENTARIA, S.A. (financial years 2001 and 2000): the
respective Audit Reports do not contain any qualifications.
BANCO BILBAO VIZCAYA, S.A. (financial year 1999): the Audit Report does not contain
any qualifications.
ARGENTARIA, CAJA POSTAL Y BANCO HIPOTECARIO, S.A. (financial year 1999): the
Audit Report contains one qualification that is reproduced below:
Qualification on Financial Year 1999:
“During the financial year 1998, a subsidiary effected early amortization of goodwill
resulting from the purchase of shares in companies’ capital effected in 1998 and 1997.
This redemption was only based on the application of the principle of valorative prudence
since a negative evolution of the corresponding investments was not estimated. The effect
on the net worth of this subsidiary was reflected by the Bank through the constitution of a
security fluctuation fund. If the redemption of goodwill corresponding to the investments
that, according to information available, will contribute to obtaining income for said
Company, had been effected after five years, the amortization expense of goodwill in the
subsidiary and, in consequence, the cost of restructuring financial fixed assets in the
Bank, would have been higher than 12,500 million pesetas, which was registered in 1999,
after tax considerations. The accumulated effect at 31 December 1999 from the excess
redemption of goodwill (9,000 million pesetas, after tax considerations) and, in
consequence, of the security fluctuation fund which had been set up, should, in
accordance with regulations in force, have been registered, as it corresponded to
previous years, by increasing the “Extraordinary profits” item of the attached 1999 profit
and loss account and, therefore increasing the year’s results.”
I/3
Consolidated Annual Accounts
BANCO BILBAO VIZCAYA ARGENTARIA, S.A. and its Consolidated Group.
It is hereby recorded that the Audit Report corresponding to financial year 2001 does not
contain any qualifications.
The Audit Report corresponding to financial year 2000 contains a qualification regarding
the early amortization of certain goodwill, and it is reproduced in full below:
Qualification on Financial Year 2000
“In previous years, the Group effected early amortization of certain goodwill resulting
from the purchase of Latin American banks and companies. This redemption was not
based on the negative evolution of the corresponding investments, but only on the
application of cautionary criteria. If the redemption of said goodwill had been effected
over a five year period, which, under current circumstances, we believe is the minimum
period in which the funds’ effect is maintained thus contributing to Group income, the
amortization expense of the consolidated goodwill in the year 2000 would have been
higher than the approximately 43,000 million pesetas that was registered. The
accumulated effect at 31 December 2000 from the excess redemption of goodwill,
which stands at 86,000 million pesetas and proceeds from previous years, would
increase the Group’s results for the year 2000, in accordance with regulations in force”.
BANCO BILBAO VIZCAYA, S.A. and its Consolidated Group.
the early amortization of certain goodwill, and it is reproduced in full below:
“In financial years 1999 and 1998 and in previous years, the Group effected early
amortization of certain goodwill resulting from the purchase of Latin American banks
and companies. This redemption was not based on the negative evolution of the
corresponding investments, but only on the application of cautionary criteria. If the
redemption of said goodwill had been effected over a five year period, which, under
current circumstances, we believe is the minimum period in which the funds’ effect is
maintained, thus contributing to Group income, the amortization expense of the
consolidated goodwill in the years 1999 and 1998 would have been lower than the
34,000 million pesetas and the 47,000 million pesetas that were registered
respectively. As a result, the accumulated effect at 31 December 1999 from this excess
redemption of goodwill, which stands at 129,000 million pesetas(95,000 million pesetas
of which corresponds to previous years), would increase the Group’s results for the
year 1999, in accordance with regulations in force”.
ARGENTARIA, CAJA POSTAL Y BANCO HIPOTECARIO, S.A. and its Consolidated
Group.
the early amortization of goodwill set up as a result of the purchase of shares in company
capital in previous years:
I/4
“In the financial year 1998, the Group effected early amortization of goodwill which
were constituted as a result of purchasing shares in companies’ capital in 1998 and
1997. This redemption was only based on the application of the principle of valorative
prudence , since a negative evolution of the corresponding investments was not
estimated. If the redemption of goodwill corresponding to the investments that,
according to information available, will contribute to obtaining Group income, had been
effected after five years, the amortization expense of the consolidated goodwill in 1999
would have been higher than the 8,000 million pesetas which was registered, after tax
considerations. The accumulated effect at 31 December 1999 from the excess
redemption of goodwill which stands at 9,000 million pesetas after tax considerations,
should, in accordance with regulations in force, have been registered, as it
corresponded to previous years, by increasing the “Extraordinary Profits” item of the
attached 1999 consolidated profit and loss account and, therefore increasing the
Group’s year results.”
III/1
CHAPTER III
THE COMPANY AND ITS CAPITAL
3.1.
IDENTITY AND CORPORATE PURPOSE
3.1.1. Name and registered offices
Company name:
Banco Bilbao Vizcaya Argentaria, S.A.
Registered offices: San Nicolás, 4 - 48005-Bilbao
Fiscal Identity Code: A-48265169
Nat. Ind. Classification:
No. 65121
3.1.2. Corporate Purpose
In accordance with Article 3 of its by-laws, the corporate purpose of Banco Bilbao Vizcaya
Argentaria, S.A., is as follows:
“The Bank’s object is to effect all types of activities, operations, acts, contracts and
services inherent to Banking business, whether directly or indirectly related, permitted
or not prohibited by provisions in force, and complementary activities.
Its corporate purpose also includes the purchase, holding, use of and disposition of
equity shares, public offer of the sale and purchase of shares, and all types of holding
in any Company or concern”.
3.2.
LEGAL INFORMATION
3.2.1. Details of constitution and registration
Banco Bilbao Vizcaya Argentaria, S.A. resulted from the merger between Banco Bilbao
Vizcaya, S.A. and Argentaria, Caja Postal y Banco Hipotecario, S.A.:
Banco Bilbao Vizcaya, S.A., was constituted by virtue of public deed granted before
Bilbao Notary, Mr. José María Arriola Arana on 1 October 1988, under number
4.350 of his protocol, and the company by-laws were adapted to the Companies Act
in force by virtue of the deed granted before the same Notary on 22 March 1990 and
registered in the Business Register of Biscay, general volume 2227, folio 49, page
number BI-17, entry 156. The company’s registered offices are in Bilbao, Plaza de
San Nicolás número 4. The company’s Fiscal Identity Code is A-48/265169.
III/2
Argentaria, Caja Postal y Banco Hipotecario, S.A., was constituted under the name
of Corporación Bancaria de España, S.A., by virtue of public deed granted before
Madrid Notary, Mr. Emilio Garrido Cerdá, on 27 May 1991, under number 1.119 of
his protocol, and registered in the Madrid Business Register in volume 1116, folio 1,
page 21.228, entry 1. The Company’s registered offices were in Madrid, Paseo de
Recoletos, número 10, with Fiscal Identity Code number A-80-041106. By virtue of
Corporación Bancaria de España, S.A.’s take-over of Banco Exterior de España,
S.A., Banco Hipotecario de España, S.A. and Caja Postal, S.A., as recorded in the
deed granted before Madrid Notary Mr. José Luis Martínez Gil on 30 September
1998, under number 3363 of his protocol, it changed its company name to
Argentaria, Caja Postal y Banco Hipotecario, S.A., which was registered in the
Madrid Business Register in volume 12.221, folio 178, section 8, page number
21.228, entries 157 and 158.
The merger between Banco Bilbao Vizcaya, S.A. and Argentaria, Caja Postal y Banco
Hipotecario, S.A., was effected by the former taking over the latter, with a block transfer of
all the latter’s Assets and Liabilities. The former purchased and assumed the latter
company by means of universal succession, and subrogated all its rights and obligations.
The company being taken over was dissolved and extinguished without being wound up.
The take-over company subrogated all legal and de facto relations of the company being
taken-over and such relations are continued by the take-over company in the same
position as the company being taken-over. The take-over company is transferred all types
of rights and obligations and de facto relations held by the dissolved company, and this is
respected for all purposes with regard to third parties, with the only documentary evidence
of the registration of the merger deed, authorised copy of the same, partial witness of the
public merger deed, or Business Register certificate.
The merger deed was granted on 25 January 2000 by Bilbao Notary, Mr. José Mª Arriola y
Arana, registered in the Business Register of Biscay on 28 January 2000 in volume 3858,
folio 1, Page number BI-17 A, Entry 1035, Companies General Section.
A certified copy of the aforementioned take-over merger deed was delivered to the
Spanish Securities Market Commission for opportune effects.
Banco Bilbao Vizcaya Argentaria, S.A., is registered in the Special Register of Banks and
Bankers of Banco de España under number 3, code number 182.
The duration of its corporate life is considered as indefinite, in accordance with Article 4 of
the Company By-laws, which is reproduced as follows: “The duration of the Company
shall be indefinite, and operations may be initiated on the date the public deed of
incorporation is signed”.
The Company By-laws are available to the public and may be consulted at the company’s
registered offices in Bilbao, Plaza de San Nicolás, 4, and at the Spanish Securities Market
Commission, where they have been registered.
3.2.2. Legal form and special legislation
Banco Bilbao Vizcaya Argentaria was founded under the legal form of a joint-stock
company, and corresponding legislation is therefore of application, together with Banco de
España regulations, because of the nature of its activity.
III/3
3.3.
INFORMACION ON THE CAPITAL
3.3.1. Par sum
At the time of writing this prospectus, the capital stock of Banco Bilbao Vizcaya
Argentaria, S.A., stands at 1,565,967,501.07 euro, totally subscribed and disbursed.
3.3.2. Not applicable
3.3.3. Classes and series of shares
At the time of writing this prospectus, the capital stock of Banco Bilbao Vizcaya
Argentaria, S.A. is represented by 3,195,852,043 nominative shares, totally disbursed, at
a par value of 0.49 euro each. All shares belongs to the same class and series, and have
the same political and economic rights.
In accordance with legislation in force, the Company shares are recorded in account
entries, and there is a base level accounting record at the Share Clearing and Settlement
Service, with address in Madrid, calle Orense, 34, and an individualised accountancy
register in each Depositary Entity adhered to the account entry system.
All the shares that make up the capital stock may be listed on the four Spanish stock
exchanges (Madrid, Bilbao, Barcelona and Valencia), through the Stock Exchange Linking
System (Continuous Market). The shares of Banco Bilbao Vizcaya Argentaria, S.A. are
also listed on Frankfurt, Zurich, London, Milan and Buenos Aires international stock
exchanges.
Also, BBVA shares may be listed on the New York Stock Exchange, represented as ADSs
(American Depositary Shares).
Each ADS represents one BBVA share. The Bank of New York acts as Depositary Bank
and issues ADRs (American Depositary Receipts), in representation of the ADS.
Each ADR justifies or provides proof of one or more ADS, i.e. one or more BBVA shares.
Any security that is issued by a person who is not a US resident may only be traded on
the New York stock exchange through the ADR system.
3.3.4. Capital stock operations during the last three years
The table below details modifications in stock capital that have been effected by the
Company during the last three years:
III/4
No. shares
Par value
(euro)
Capital (euro)
2.043.276.034
0,54
1.103.369.058,36
2.076.147.335
0,54
1.121.119.560,90
Capital increase of 1,817,109.72 euro, by means of the issue of
30.4.99 3,365,018 shares with a par value of 0.54 euro, in order to revert
17,390 “Series A” Bonds (issued in $ US, on 26-6-1996).
2.079.512.353
0,54
1.122.936.670,62
Capital increase of 38,139.12 euro, by means of the issue of
31.5.99 70,628 shares with a par value of 0.54 euro, in order to revert 365
“Series A” Bonds (issued in $ US, on 26-6-1996).
2.079.582.981
0,54
1.122.974.809,74
2.099.363.089
0,54
1.133.656.068,06
2.113.008.608
0,54
1.141.024.648,32
2.113.008.608
0,52
1.098.764.476,16
Capital increase of 117,726.96 euro, by means of the issue of
30.9.99 226,398 shares with a par value of 0.52 euro, in order to revert
“Series A” Bonds (issued in $ US, on 26-6-1996).
2.113.235.006
0,52
1.098.882.203,12
28.1.00 817,279,573 shares with a par value of 0.52 euro, in order to
provide for the take-over of Argentaria.
2.930.514.579
0,52
1.523.867.581,08
Capital increase: 13,080.60 euro, by means of the issue of 25,155
shares with a value of 0.52 euro in order to revert “Series A”
31.3.00 subordinated bonds (issued in $ US, on 26-6-1996).
2.930.539.734
0,52
1.523.880.661,68
shares with a value of 0.52 euro in order to revert “Series A”
31.3.00 Bonds (issued in euro, on 30-7-99).
2.930.598.062
0,52
1.523.910.992,24
2.930.598.062
0,49
1.435.993.050,38
23.5.00 Public offering for the subscription of 200,000,000 shares.
3.130.598.062
0,49
1.533.993.050,38
31.5.00 shares with a value of 0.49 euro in order to revert “Series A”
subordinated bonds (issued in euro, on 30-7-99).
3.130.619.631
0,49
1.534.003.619,19
Date
Operation
Redenomination in euro of capital and adjustment of the same to
the nearest cent, in accordance with Law 46/1998 of 17
18.1.99 December on the introduction of the Euro, in such a way that the
par value of each share stands at 0.54 euro, and an unavailable
reserve of 1,861,207.77 euro (309,678,916.019241 pesetas) is
constituted.
Capital increase of 17,750,502.54 euro to comply with
undertakings with the workforce, by means of the issue of
30.3.99 32,871,301 common shares, with a par value of 0.54 euro. The
new shares were issued at 2.14 euro, 0.54 euro of which
represented their par value and 1.60 euro of which was the issue
premium. This issue was subscribed and totally disbursed by LA
CAIXA, with the undertaking not to use the political rights attached
to these shares.
1.7.99
1.7.99
19,780,108 shares with a par value of 0.54 euro, allocated to
provide for the consideration arising from the indirect taking of
power on the part of BBV, of 41.17% of the capital of AFP
Provida, S.A.
13,645,519 shares with a par value of 0.54 euro allocated to
provide for the consideration arising from the indirect taking of
power on the part of BBV, of 100% of the companies Consolidar
Administradora de Fondos de Jubilación y Pensiones, S.A.,
Consolidar Cia. De Seguros de Vida, S.A. and Consolidar
Seguros de Retiro, S.A.
Capital stock reduction of 42,640,172.16 €, through the reduction
14.7.99 of 2 cents of a euro, of the par value of the 2,113,008,608 shares
that form the capital stock.
Capital stock reduction of 87,917,941.86 €, through the reduction
of 3 cents of a euro, of the par value of the 2,930,598,062 shares
24.4.00 that form the capital stock.
III/5
Date
Operation
No. shares
Par value
(euro)
Capital (euro)
6.6.00
Capital increase: 9,800,000 euro, by means of the issue of 20
million shares with a par value of 0.49 euro each (green shoe).
3.150.619.631
0,49
1.543.803.619,19
9.6.00
Capital increase: 952,299.32 euro, by means of the issue of
1,943,468 shares with a par value of 0.49 euro each, in order to
provide for the take-over of Banca Catalana and Banco de
Alicante.
3.152.563.099
0,49
1.544.755.918,51
27.7.00
shares with a value of 0.49 euro, in order to revert “Series A”
subordinated bonds (issued in euro, on 30-7-99).
3.152.609.580
0,49
1.544.778.694,20
8.9.00
Capital increase: 40,070.24 euro, by means of the issue of
81,776 shares with a par value of 0.49 euro each, in order to
provide for the take-over of Banco del Comercio and Banco de
Negocios Argentaria.
3.152.691.356
0,49
1.544.818.764,44
Capital increase: 1,034,277.30 euro, by means of the issue of
31.10.00 2,110,770 shares with a par value of 0.49 euro each, in order to
revert “Series A” subordinated bonds (issued in euro, on 30-799).
3.154.802.126
0,49
1.545.853.041,74
Capital increase: 20,114,459.33 euro, by means of the issue of
30.11.00 41,049,917 shares with a par value of 0.49 euro each, in order to
revert “Series A” subordinated bonds (issued in euro, on 30-7-99)
(*).
3.195.852.043
0,49
1.565.967.501,07
(*) As reflected in this table, from 31 March to 30 November 2000, there have been several capital increases in order to revert series A bonds in euro,
dated 30-7-1999. This issue was totally redeemed in November 2000.
3.3.5. Revertible or exchangeable bonds or with warrants. Preference shares
Revertible and/or exchangeable bonds
At the time of presenting this prospectus, Banco Bilbao Vizcaya Argentaria, S.A. does not
hold any revertible or exchangeable bonds. The only issue of “Series A” BBV Revertible
and/or Exchangeable Subordinated Debentures that it had in circulation was totally
redeemed on 14 January 2002.
The issue, for a sum of 250 million US$, was effected by Banco Bilbao Vizcaya, S.A.,
on 26 June 1996, based on an agreement made at the General Shareholders
Meeting held on 24 February 1996, for a maximum sum equivalent to 50,000 million
pesetas (300.51 million euro), and for exclusive use in the Netherlands. These Bonds
were not issued, traded or negotiated on national territory.
For the above reasons, “Series A” was excluded from the scope of application of the
Stock Exchange Market Law 24/1988 of 28 July, and the legislation of the
Netherlands was of application, except for that referring to subordination, conversion
and the Bondholders Union, which was governed by Spanish law. (Additional
information on this issue is provided in chapter IV, page 73).
The exchange/reversion operations effected on this issue are indicated below:
III/6
Redeemed
Date
No. of bonds
Delivered shares
Sum in US$
Old
23-05-97
19-06-97
30-07-97
26-09-97
27-10-97
24-11-97
22-12-97
22-01-98
26-02-98
31-03-98
30-04-98
30-05-98
30-06-98
30-07-98
30-09-98
30-10-98
30-11-98
30-12-98
28-02-99
31-03-99
30-04-99
31-05-99
30-09-99
30-11-99
31-03-00
30-04-00
30-09-00
31-10-00
31-07-01
14-01-02
14-01-02
50
50
138.054
42.511
10.765
2.548
1.308
1.810
2.320
3.220
630
4.278
2.000
2.500
4.707
760
2.230
30
110
10
17.390
365
1.170
1.710
130
400
970
125
5.420
1.950
479
50.000
50.000
138.054.000
42.511.000
10.765.000
2.548.000
1.308.000
1.810.000
2.320.000
3.220.000
630.000
4.278.000
2.000.000
2.500.000
4.707.000
760.000
2.230.000
30.000
110.000
10.000
17.390.000
365.000
1.170.000
1.710.000
130.000
400.000
970.000
125.000
5.420.000
1.950.000
479.000
77.401
187.697
24.187
1.048.787
377.330
(in cash)
TOTALS
250.000
250.000.000
6.023.759
New
1.071
1.071
8.893.008
2.738.425
693.446
164.134
84.256
116.593
149.447
207.421
40.582
275.575
128.833
483.757
910.817
147.061
431.511
5.805
21.285
1.935
3.365.018
70.628
226.398
330.889
25.155
15.205.764
At the end of these operations, the aforementioned issue had been totally redeemed.
III/7
Preference shares
At the date of this Prospectus, the BBVA Group has the following emissions of
preference shares in circulation, guaranteed by Banco Bilbao Vizcaya Argentaria, S.A.
Issuer
BBVA Privanza International (Gibraltar) Ltd
BBVA International Limited
BBVA Capital Funding Limited
BBVA Capital Funding Limited
BBVA Preferred Capital Limited
BBVA Preferred Capital Limited
Country
Series
Date
Gibraltar
Gibraltar
Gibraltar
Gibraltar
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
B
C
D
E
A
B
C
D
E
Class C
Class D
Series A
Series B
Dec 1992
Jun 1993
Jun 1997
Jun 1997
Mar 1998
Nov 1998
Feb 1999
Apr 2001
Mar 2002
Apr 1998
Apr 1998
Jun 1997
Jun 2001
Currenc Annualized
y sum Dividend
(in
millions)
USD
USD
USD
USD
USD
EUR
EUR
EUR
EUR
USD
DEM
USD
USD
100
248,25
70
250
350
700
1.000
340
500
200
500
250
240
9,00%
8,00%
7,76%
8,00%
7,20%
6,24%
5,76%
7,01%
*3,94%
7,20%
6,35%
7,80%
7,75%
* From 21/3/2002 to 30/9/2002 3.94% will be paid annually. From 1/10/2002 to 30/3/2007 EURIBOR (3m) will be paid + 2
p.b., with a minimum 3.52% and a maximum 6.17%. From 1/4/2007 thereafter, the rate will be EURIBOR (3m) + 2 p.b.
Note: The payment of dividends on preference shares is reflected in the minority interests item in part 4.3.7 – Other
liability accounts.
3.3.6. Not applicable
3.3.7. Agreements made at the General Meeting
At the Shareholders’ General Meeting of Bilbao Vizcaya Argentaria , S.A. held on 9 March
2002, it was agreed, amongst other points, that it would be possible to issue:
Type of security
?
BBVA shares
?
Fixed Income Securities that are exchangeable but not revertible into BBVA shares
?
Shares with warrants, that are exchangeable or revertible into BBVA shares
In millions
of euro
1.565
20.000
1.500
?
Debentures that are revertible and/or exchangeable with BBVA shares, with preemptive subscription right
1.500
1.500
?
4.000
Debentures that are revertible and/or exchangeable with BBVA shares, without preemptive subscription right
Agreed Capital. To increase the capital stock by a par amount of 782,983,750 euro,
by means of the issue of new common shares, delegating the Board of Directors the
authority for the legal period of one year, to indicate the date, type of issue, amount of
premium, and other conditions not foreseen at the General Meeting, and the Board
may refrain from putting this into effect, in accordance with Article 153, part 1a), of the
Companies Act (C.A.).
III/8
Authorised capital. To delegate the Board of Directors, in accordance with Article
153, part 1b), of the C.A., the authority to increase the capital stock, within the legal
five year period, once or several times, up to a maximum par amount of 782,983,750
euro, either by increasing the par value of existing shares, or by means of the issue of
new common shares in the form of preferred or redeemable stock, or any other type
permitted by law, with or without the right to vote, and with or without preemptive
subscription rights. In the latter case, the type of shares issued shall correspond to
the real value, in accordance with legal requisites and in anticipation of that provided
in Article 161.1 of the Companies Act.
Based upon these agreements, the Bank may issue common shares to a total sum of
1,565,967,500 euro.
To delegate the Board of Directors the authority within the legal five year period, to
issue fixed income securities of any class or nature, including exchangeable bonds
that cannot be reverted into shares, up to a maximum sum of TWENTY THOUSAND
(20,000) million euro.
To delegate the Board of Directors the authority within the legal five year period, to
issue up to a maximum sum of ONE THOUSAND FIVE HUNDRED (1,500) million
euro, securities with warrants on company shares, in such a way that these may be
exchanged in whole or part or reverted into company shares, likewise authorising the
Board to decide whether to exclude the preemptive subscription right on these
securities, and issuing, in the latter case, shares as required in order to assume the
obligations derived from the same, through a fixed or variable emission, providing that
said value is not less that the real value, in accordance with legal requisites, and in
anticipation of that provided in Article 161.1 of the Companies Act, and likewise
authorising the Board, in order to determine the requirements and modalities of the
conversion or exchange, where applicable, and the amount of capital increase
required, and the corresponding modification to Article 5 of the Company By-Laws,
the revertible and/or exchangeable fixed income securities into Banco Bilbao Vizcaya
Argentaria, S.A. shares, with exclusion of preemptive subscription rights.
To delegate in the Board of Directors the issue of debentures that can be reverted
and/or exchanged into company shares, up to a maximum of ONE THOUSAND FIVE
HUNDRED (1,500) million euro, with preemptive subscription right; determination of
the requirements and modalities for the conversion and capital increase of the sum
required.
To authorise the Board of Directors to issue debentures that can be reverted and/or
exchanged into company shares, up to a maximum sum of FOUR THOUSAND
(4,000) euro, with exclusion of preemptive subscription rights, approving the rules for
placement of the same and delegating performance in the Board of Directors;
determination of the requirements and modalities for the conversion and capital
increase of the sum required, where the type of issue of the debentures shall be at
par and the type of issue of the shares shall be, for the purpose of conversion or
exchange, at a minimum the greatest out of the average exchange rate on the
continuous market of the Spanish stock exchanges, as per closing prices during the
thirty calendar days before the day the Meeting is held, and the closing price one day
before the debenture issue is launched, and under no circumstances may they be
issued at less than their par value.
At the time of writing this prospectus, the Board of Directors has not made use of any of
the powers that it has been granted.
III/9
3.3.8. Statutory conditions for capital modifications
Article 6 of the Company By-Laws of Banco Bilbao Vizcaya Argentaria, S.A. provides that:
"The Bank’s capital may be increased or reduced through the agreement of the General
Shareholders’ Meeting, notwithstanding that provided in Article 30, part C) of these ByLaws.
An increase in Capital Stock may be effected through the issue of new shares or by
raising the par value of existing ones. In both cases, the countervalue of the capital
increase may consist of new monetary or non-monetary investment in company equity,
including clearing of credits against the company, or it may consist of transforming
reserves or profits that already form part of such equity.
In the case of a capital stock increase through the issue of new common or preferred
shares, present shareholders and revertible debenture holders may exercise the right to
subscribe a certain number of shares in proportion to the par value of shares already held,
or to shares that would correspond to revertible debenture holders if their conversion right
were used at that moment. This right to subscription shall be exercised within the period
designated for this purpose by the Company Board, and shall be no less that fifteen days
after publication of the notification of the application for the new shares in the Business
Register Official Bulletin.
Preemptive subscription rights shall be transferable under the same conditions as the
shares from which they are derived. In capital increases that are charged to reserves, the
same rule shall apply to the right to free assignation of the new shares.
There shall be no preemptive subscription rights if the capital increase arises from the
conversion of debentures into shares, or from a take-over of another Company or of part
of a spin-off from the equity of another Company, or in the case of non-monetary
investment, including credit clearing.
In the event that Company interests so demand, an agreement may be made at the
General Meeting when the capital increase decision is made, to annul preemptive
subscription rights in full or in part, in accordance with the legal provisions laid down in
article 159 of the Companies Act”.
3.4.
TREASURY STOCK
At 31 December 2001, the Bank and some consolidated intermediate companies, held
6,101,296 shares in order to cover certain obligations (representing 0.19% of the capital
stock in circulation of Banco Bilbao Vizcaya Argentaria S. A.), and at that date the book
value stood at 76 million euro. The annual average treasury stock in 2001 was 8,432,432
shares, i.e., 0.26 % of the capital.
Other subsidiary companies held 0.007% of the capital, as investment.
2 million euro were obtained as net profit from operations with the group’s own shares in
2001.
At 31.5.2002, BBVA’s treasury stock figure stood at 18,491,355 shares, accounting for
0.58% of capital stock, as detailed in the table below:
III/10
COMPOSITION BBVA’S TREASURY STOCK
Date
BBVA
Company
No. shares
BBVA
% Treasury stock
282.946
0,01
Corporación General Financiera
8.933.866
0,28
Otros
1.333.464
0,04
10.550.276
0,33
31.12.00
Total
Others
31.12.01
Total
BBVA
Others
31.5.02
Total
5.823.830
0,18
277.466
0,01
6.101.296
0,19
4.705.696
0,15
13.550.437
0,42
235.222
0,01
18.491.355
0,58
Operations and net profits from the treasury stock of BBVA (the Bank and its intermediate
companies) in 2000, 2001, and up to 31 May 2002, are given in the table below:
BBVA
l 31.12.00
Item
No. shares
Average
price
Purchases
124.776.609
15,25
Sales
126.051.728
14,75
Purchases
226.008.163
14,73
Capital
gains
(In millions of euro)
Capital
Results
losses
25
11
14
34
32
2
17
7
10
At 31.12.01
At 31.5.02
Sales
230.457.143
14,77
Purchases
183.958.637
13,08
Sales
171.568.578
13,23
At the Shareholders’ General Meeting of Banco Bilbao Vizcaya Argentaria, S.A. held on 9
March 2002, an agreement was made, amongst others, to authorise the Company
directly, or through any of its subsidiary companies, during a maximum period of 18
months from the date of the aforementioned Meeting, to purchase Banco Bilbao Vizcaya
Argentaria, S.A. shares at any time and as often as deemed opportune, by any legitimate
means, even charging the year’s profits and/or free reserves, and subsequently to dispose
of or redeem the same, in accordance with article 75 and concordant of the Companies
Act.
III/11
The limits or requisites for these purchases shall be as follows:
That the par value of shares purchased, in addition to those already held by the Bank
and its subsidiaries, shall not at any time exceed 5% of the capital stock of Banco
Bilbao Vizcaya Argentaria, S.A., complying at all times with limits established for the
effects of the group’s own shares by regulatory authorities of the markets on which
Banco Bilbao Vizcaya lists its shares.
That an unavailable reserve may be provided in the Company’s liabilities, equivalent
to the sum of the group’s own shares calculated in the asset.
This reserve shall be maintained until the shares are disposed of or amortized.
That shares purchased shall be fully disbursed.
That the purchase price shall not be less than the par value and not more than 20%
of the listed value or any method for valuing the shares at the time of purchase.
Operations regarding purchase of the group’s own shares shall comply with the
regulations and use of the stock markets.
The aforementioned General Meeting also authorized that shares purchased by the Bank
or its subsidiaries may be allocated in full or in part to company workers, employees or
directors, where there is an acknowledged right to the same, either directly or as a
consequence of the exercising of share option rights on shares held, to the effects
provided in the last paragraph of article 75, part 1, Companies Act, introduced in the
Nineteenth Additional Provision, part 1 of Law 55/1999 of 29 November on Fiscal,
administrative and company measures.
Finally, in order to amortize the Bank’s own shares that it may hold on its Balance sheet,
the capital stock may also be reduced by charging to profit or free reserves, to the sum
that is desired or required at any time, up to the maximum of the group’s own shares held
at any time.
III/12
3.5.
EARNING PER SHARE (consolidated data)
Below is the BBVA earnings per share table, with reference to 2001, 2000 and 1999.
Year 2001
Capital stock (in millions of euro)
Number of shares
Year 1999
1.566
1.566
1.524
3.195.852.043
3.195.852.043
2.930.514.579
1.746
Profit attributed to the Group (in millions of euro)
2.363
2.232
Total dividends distributed (in millions of euro)
1.222
1.123
854
Earning per share (euro)
0,74
0,73
0,60
Gross dividend per share (euro)
0,38
0,36
0,27
2,88
Book value (euro per share)
4,17
4,15
Pay-out (Total dividend/ Attributed profit; %)
51,7
50,3
48,9
13,90
15,85
14,14
Price at close of year (euro)
P.E.R. (price/profits; no. of times)
3.6.
Year 2000
18,8
21,8
23,5
Price/book value (no. of times)
3,3
3,8
4,9
Profit per dividend (dividend/price; %)
2,8
2,3
2,1
CONSOLIDABLE COMPANIES
Banco Bilbao Vizcaya Argentaria, S.A. is the parent company of a group of companies.
Details of the consolidated subsidiaries belonging to the BBVA Group at 31 December
2001 are given below.
With reference to companies affected by the proceedings initiated by Banco de España
(Abreveux, Ballintrae, Coriander, Amelan Foundation, etc.), part 4.5.4. shows their
evolution up to the settlement date.
III/13
ADDITIONAL INFORMATION ON CONSOLIDATED SUBSIDIARIES WHICH MAKE UP BANCO BILBAO VIZCAYA ARGENTARIA
(data at 31.12.2001)
% of Capital held (1)
Company
ADMINISTRAD. DE FONDOS PARA
EL RETIRO-BANCOMER,S.A DE C.V.
ADMINISTRADORA DE FONDOS DE
PENSIONES
PROVIDA
(AFP
PROVIDA)
AEROCER, S.A. DE C.V.
AFP CRECER, S.A.
AFP GENESIS ADMINISTRADORA DE
FONDOS, S.A.
AFP HORIZONTE, S.A.
AFP
PREVISION
BBV-ADM.DE
FONDOS DE PENSIONES S.A.
AHORRO INTERCONTINENTAL, S.A.
ALGORTA, S.A.
ALIMENTACION, S.A. DE
ALMACENES
GENERALES
DE
DEPOSITO, S.A.E. DE
ALTA
VENTURES
SOC.GEST.DE
FONDOS CAPITAL RIESGO, S.A.
ALTURA MARKETS, A.V., S.A.
ANCLA INVESTMENTS, S.A.
APOYO MERCANTIL S.A. DE C.V.
AQUANETUN, S.A.
ARAGON HOLDINGS LIMITED
ARGENTARIA
PORTFOLIO
DE
INVERSION, SIMCAV
ARGENTARIA
GESTION
DE
INVERSIONES, A.I.E.
ARGENTARIA INTERNACIONAL DE
PANAMA, S.A
ARGENTARIA
PARTICIPACIONES
FINANCIERAS, S.A.
ARGENTARIA SERVICIOS, S.A.
ARGENTARIA, S.A.
AZELER AUTOMOCION, S.A.
BANC INTERNACIONAL D'ANDORRA,
S.A.
BANC
INTERNACIONAL
OF
ANDORRA (CAYMAN) LTD.
BANCA MORA, S.A.(2)
BANCO
BILBAO
VIZCAYA
(DEUTSCHLAND), A.G.
BANCO
BILBAO
VIZCAYA
ARGENTARIA (PANAMA), S.A.
BANCO
BILBAO
VIZCAYA
ARGENTARIA (PORTUGAL), S.A.
BANCO
BILBAO
VIZCAYA
ARGENTARIA BRASIL, S.A.
BANCO
BILBAO
VIZCAYA
ARGENTARIA PUERTO RICO, S.A.
BANCO
BILBAO
VIZCAYA
ARGENTARIA URUGUAY, S.A.
BANCO CONTINENTAL, S.A.
BANCO DE CREDITO LOCAL, S.A.
BANCO
DE
PROMOCION
DE
NEGOCIOS, S.A.
BANCO DEPOSITARIO BBVA, S.A.
BANCO FRANCES (CAYMAN), LTD
BANCO FRANCES INTERNACIONAL
(BRASIL), S.A.
BANCO INDUSTRIAL DE BILBAO, S.A.
BANCO OCCIDENTAL, S.A.
BANCO PROVINCIAL OVERSEAS
N.V.
BANCO PROVINCIAL S.A. - BANCO
UNIVERSAL
BANCO UNO-E BRASIL, S.A.
BANCOMER ASESORA DE FONDOS,
S.A. DE C.V.
BANCOMER ASSET MANAGEMENT
INC.
BANCOMER FINANCIAL SERVICES
INC.
BANCOMER FOREIGN EXCHANGE
INC.
BANCOMER
HOLDING
CORPORATION
BANCOMER PAYMENT SERVICES
INC.
BANCOMER
SECURITIES
INTERNATIONAL, INC.
BANCOMER TRANSFER SERVICE
BANINBAO DE INVERSIONES, S.A.
BBV
ADMINISTRADORA
DE
CARTOES LTDA.
Address
Activity
Direct
Indirect
Total
In thousands of Euro ( ** )
Capital
31.12.01
Reserves
31.12.01
Net
profit
2001
Book
value
Net
Investment
Economic
Group
MEXICO
FIN. SERVICES.
17,50
82,50
100,00
19.449
101.673
101.679
222.801
549.439
CHILE
FIN. SERVICES.
12,70
51,62
64,32
129.176
104.985
56.808
187.151
293.450
MEXICO
EL SALVADOR
ECUADOR
SERVICES
FIN. SERVICES.
FIN. SERVICES.
0,00
0,00
0,00
100,00
62,08
100,00
100,00
62,08
100,00
6.413
35.664
4.556
-313
-10.031
-3.318
-2.338
3.564
319
3.762
18.126
1.557
15.194
16.402
1.430
PERU
BOLIVIA
FIN. SERVICES.
FIN. SERVICES.
24,85
75,00
75,15
5,00
100,00
80,00
6.022
4.958
3.750
1.250
17.357
902
27.130
5.688
97.202
3.961
MADRID
BILBAO
BILBAO
BILBAO
INST. ASSETS.
PORTFOLIO
PORTFOLIO
PORTFOLIO
0,00
100,00
0,00
83,90
100,00
0,00
100,00
16,10
100,00
100,00
100,00
100,00
60
3.011
26.505
14.935
-66
3.246
30.556
-3.155
24
192
619
17.057
18
6.449
57.679
28.837
12
6.196
57.673
12.651
MADRID
FIN. SERVICES.
99,98
0,02
100,00
301
523
12
835
301
MADRID
BROKERING
COMPANY
PORTFOLIO
INST. ASSETS.
PORTFOLIO
FIN. SERVICES.
PORTFOLIO
50,00
0,00
50,00
10.001
0
3.149
6.575
5.000
0,00
0,00
100,00
99,90
100,00
100,00
100,00
0,00
0,00
0,00
100,00
100,00
100,00
99,90
100,00
12
902
6.659
2
41.885
118.640
-853
3.065
31.739
63.064
33.368
6
1.737
1.208
-1.575
152.020
54
11.461
32.916
103.374
8.144
0
7.585
43.585
46.879
PANAMA
MEXICO
MADRID
GUERNSEY
MADRID
MADRID
SERVICES
0,00
100,00
100,00
1.671
0
0
1.671
1.671
. PANAMA
FIN. SERVICES.
0,00
100,00
100,00
1.430
-156
162
1.436
1.256
MADRID
PORTFOLIO
100,00
0,00
100,00
3.907
-421
-11.515
-8.030
0
CHILE
MADRID
MADRID
ANDORRA
SERVICES
PORTFOLIO
SERVICES
BANKING
100,00
100,00
0,00
0,00
0,00
0,00
50,00
51,00
100,00
100,00
50,00
51,00
1.382
60
1.797
42.407
-84
0
6.623
200.299
192
0
-2.837
113.573
1.491
60
2.792
181.703
673
60
2.218
15.530
CAYMAN
ISLANDS
ANDORRA
GERMANY
BANKING
0,00
100,00
100,00
5.674
2.338
228
8.240
5.686
BANKING
BANKING
0,00
0,00
100,00
100,00
100,00
100,00
30.051
258
0
8.787
0
96
30.051
9.141
0
276
PANAMA
BANKING
53,95
44,81
98,76
32.563
75.265
12.886
119.216
24.984
PORTUGAL
BANKING
9,52
90,48
100,00
124.999
42.089
11.822
178.909
263.466
BRAZIL
BANKING
100,00
0,00
100,00
569.237
-158.385
9.791
420.642
542.389
PUERTO RICO
BANKING
0,00
100,00
100,00
157.429
192.504
39.000
388.933
157.429
URUGUAY
BANKING
39,12
60,88
100,00
105.724
745
9.364
(*)
111.416
PERU
MADRID
VALENCIA
BANKING
BANKING
BANKING
0,00
100,00
0,00
81,78
0,00
99,70
81,78
100,00
99,70
254.907
151.046
14.040
35.249
123.706
17.802
22.147
48.351
1.166
255.402
323.104
32.909
279.344
509.610
15.073
MADRID
CAYMAN
ISLANDS
BRAZIL
BANKING
BANKING
0,00
0,00
100,00
100,00
100,00
100,00
5.409
93.367
11.491
89.599
46.122
-45.917
63.022
(*)
1.593
136.424
BANKING
0,00
100,00
100,00
12.207
138
2.242
(*)
16.973
BILBAO
MADRID
DUTCH
ANTILLES
VENEZUELA
BANKING
BANKING
BANKING
0,00
49,43
0,00
99,92
50,57
100,00
99,92
100,00
100,00
32.773
11.630
45.388
127.811
2.218
2.657
38.248
343
30
198.674
14.190
48.075
97.208
14.058
47.756
BANKING
0,40
54,61
55,01
132.523
379.209
154.526
366.509
406.675
BRAZIL
MEXICO
BANKING
FIN. SERVICES.
100,00
0,00
0,00
100,00
100,00
100,00
22.165
6
-349
24
1.070
-12
22.887
18
26.979
18
USA
FIN. SERVICES.
0,00
100,00
100,00
6
0
0
6
6
USA
FIN. SERVICES.
0,00
100,00
100,00
5.151
0
144
5.295
5.301
USA
FIN. SERVICES.
0,00
100,00
100,00
2.272
541
493
3.306
3.306
USA
PORTFOLIO
0,00
100,00
100,00
3.053
679
2.717
6.449
6.497
USA
FIN. SERVICES
0,00
100,00
100,00
54
0
12
66
66
USA
FIN. SERVICES
0,00
100,00
100,00
7.945
-3.804
3.017
7.158
7.200
USA
MADRID
BRAZIL
FIN. SERVICES.
PORTFOLIO
FIN. SERVICES.
0,00
0,00
0,00
100,00
100,00
100,00
100,00
100,00
100,00
3.402
733
2.068
3.865
817
0
8.126
-72
1.010
15.392
1.479
3.077
15.548
1.484
3.107
III/14
(data at 31.12.2001)
Company
BBV AMERICA FUND MANAGER LTD
BBV AMERICA, S.L.
BBV BANCO DE FINANCIACION S.A.
BBV BRASIL CIA. SECURITIZADORA
DE CREDITOS FINANCEIROS
BBV CORRETORA DE CAMBIO E
VALORES MOBILIARIOS LTDA.
BBV DERIVADOS MEXICO, S.A. DE
C.V.
BBV FUNDOS
BBV GEST
BBV GESTION DE CAPITALES, S.A.
S.G.C.
BBV
LATINVEST
PRINCIPAL
TRADING (JERSEY) LTD.
BBV
LEASING
BRASIL
S.A.
ARRENDAMENTO MERCANTIL
BBV LEASING SOC. LOCACAO
FINANCEIRA (PORTUGAL)
BBV
PRIVANZA
SERVICIOS
PATRIMONIALES, S.L.
BBV SECURITIES HOLDINGS, S.A.
BBV SERVIÇOS E NEGOCIOS LTDA.
BBV TRUST COMPANY (CAYMAN),
LTD
BBVA & PARTNERS, S.A.
BBVA AREA INMOBILIARIA, S.L.
BBVA BANCO BHIF, S.A.
BBVA BANCO FRANCES, S.A.
BBVA BANCO GANADERO, S.A.
BBVA BANCOMER GESTION, S.A. DE
C.V.
BBVA
BANCOMER
SERVICIOS
ADMINISTRATIVOS, S.A. DE C.V.
BBVA BANCOMER SERVICIOS, S.A.
BBVA BANCOMER, S.A. DE C.V.
Address
BBVA
PRIVANZA
(PORTUGAL),SOCIEDADE GESTORA
DE PATRIMO.,S.A
BBVA PRIVANZA BANCO, S.A.
BBVA PRIVANZA BANK (JERSEY),
LTD.
BBVA
PRIVANZA
BANK
(SWITZERLAND) LTD.
Net
Investment
Economic
Group
100,00
100,00
547
3.528
9.027
13.102
445
PORTFOLIO
BANKING
FIN. SERVICES.
100,00
0,00
0,00
0,00
100,00
100,00
100,00
100,00
100,00
583.126
58.298
18.415
1.022.141
6.046
192
-682.017
1.545
18
923.251
65.889
18.625
540.809
64.200
18.619
BRAZIL
SERVICES
0,00
100,00
100,00
9.821
1.310
355
11.485
11.467
MEXICO
FIN. SERVICES.
0,00
100,00
100,00
2.723
655
-102
3.276
3.270
PORTUGAL
PORTUGAL
MADRID
FIN. SERVICES.
FIN. SERVICES.
FIN. SERVICES.
0,00
0,00
100,00
100,00
100,00
0,00
100,00
100,00
100,00
998
998
902
2.104
3.215
1.557
649
1.100
1.418
3.750
5.313
3.877
998
998
1.274
UNITED
KINGDOM
BRAZIL
FIN. SERVICES.
0,00
100,00
100,00
1.364
5.187
240
6.791
6.797
FIN. SERVICES.
0,00
100,00
100,00
14.653
-2.518
3.468
15.602
15.704
PORTUGAL
FIN. SERVICES.
0,00
100,00
100,00
7.501
1.881
-1.587
7.795
8.018
MADRID
FIN. SERVICES.
0,00
100,00
100,00
6
295
24
325
0
BILBAO
BRAZIL
CAYMAN
ISLANDS
MADRID
MADRID
CHILE
ARGENTINA
COLOMBIA
MEXICO
PORTFOLIO
SERVICES
FIN. SERVICES.
99,86
0,00
0,00
0,14
100,00
100,00
100,00
100,00
100,00
15.572
14.058
565
23.115
216
18
-9.604
-968
12
29.083
13.307
595
29.083
13.276
559
FIN. SERVICES.
INST. ASSETS.
BANKING
BANKING
BANKING
FIN. SERVICES.
63,84
100,00
55,98
0,00
76,13
0,00
0,00
0,00
6,92
68,28
19,22
99,99
63,84
100,00
62,90
68,28
95,35
99,99
908
72.476
253.315
238.079
37.497
126
6
39.649
140.120
811.036
252.089
0
-72
17.393
28.224
20.092
-6.785
703
537
129.518
265.223
(*)
269.650
829
902
109.540
323.825
227.291
691.188
853
MEXICO
FIN. SERVICES.
0,00
100,00
100,00
6
-6
42
42
48
MEXICO
MEXICO
BANKING
BANKING
0,00
0,00
100,00
100,00
100,00
100,00
448.247
470.430
28.049
67.133
602.803
543.429
3.956.469
545.893
3.958.398
89,97
10,03
100,00
6.894
2.883.235
143.359
39.120
189.373
39.697
100,00
0,00
100,00
0
246
41.554
41.800
1.286
FIN. SERVICES.
100,00
0,00
100,00
914
6.545 –
222
7.236
9.766
FIN. SERVICES.
100,00
0,00
100,00
12
0
0
12
12
SERVICES
FIN. SERVICES.
FIN. SERVICES.
FIN. SERVICES.
FIN. SERVICES.
100,00
0,00
0,00
100,00
0,00
0,00
100,00
99,98
0,00
100,00
100,00
100,00
99,98
100,00
100,00
59.999
14.983
3.847
168
3.696
-523
75.686
2.182
469
8.120
-4.297
1.100
150
18
751
55.179
91.769
6.177
655
12.567
55.179
72.446
6.479
168
3.324
FIN. SERVICES.
FIN. SERVICES.
100,00
100,00
0,00
0,00
100,00
100,00
4.646
12.080
523
2.416
3.185
2.969
8.354
17.465
4.646
11.119
MADRID
FIN. SERVICES.
17,00
83,00
100,00
2.140
79.027
174.979
256.145
11.437
CAYMAN
ISLANDS
COLOMBIA
FIN. SERVICES.
100,00
0,00
100,00
1
3.185
301
3.487
0
FIN. SERVICES.
78,52
1,76
80,28
17.207
10.728
11.762
31.869
103.753
PUERTO RICO
FIN. SERVICES.
100,00
0,00
100,00
3.101.812
3.045.833
CAYMAN
ISLANDS
PUERTO RICO
BBVA IRELAND PUBLIC LIMITED
COMPANY
BBVA
MIDAS
SOCIEDADE
FINANCEIRA DE CORRETAGEM, S.A.
BBVA
MIDAS,
SOCIEDADE
GESTORA
DE
PARTICIPACOES
SOCIAIS, SA
BBVA PARAGUAY, S.A.
BBVA
PARTICIPACIONES
INTERNACIONAL, S.L.
BBVA PENSIONES CHILE, S.A.
BBVA PENSIONES, SA, ENTIDAD
GESTORA
DE
FONDOS
DE
PENSIONES
BBVA PR HOLDING CORPORATION
BBVA PREFERRED CAPITAL
Reserves
Net
Book
31.12.01
profit
value
2001
0,00
BILBAO
BBVA HORIZONTE PENSIONES Y
CESANTIAS, S.A.
BBVA
INTERNATIONAL
INVESTMENT CORPORATION
BBVA INTERNATIONAL LIMITED
Capital
31.12.01
FIN. SERVICES.
BBVA BOLSA S.V., S.A.
BBVA FINANCE SPA.
BBVA GESTINOVA CAPITAL S.G.I.I.C.
,S.A
BBVA
GESTION,SOCIEDAD
ANONIMA, S.G.I.I.C., S.A.
BBVA GLOBAL FINANCE LTD.
Direct
Indirect
Total
CAYMAN
ISLANDS
BILBAO
BILBAO
BRAZIL
BBVA CAPITAL FUNDING, LTD.
BBVA
CAPITAL
MARKETS
OF
PUERTO RICO, INC
BBVA
COMMERCIAL
PAPER,
LIMITED
BBVA E-COMMERCE, S.A.
BBVA FACTORING E.F.C., S.A.
BBVA FIDUCIARIA , S.A.
BBVA FINANCE (DELAWARE) INC.
BBVA FINANCE (UK), LTD.
Activity
CAYMAN
ISLANDS
BILBAO
MADRID
COLOMBIA
USA
UNITED
KINGDOM
ITALY
MADRID
BROKERING
COMPANY
FIN. SERVICES.
-170.982
3.011
CAYMAN
ISLANDS
IRELAND
FIN. SERVICES.
100,00
0,00
100,00
3.269.782
1
2.438.054
144.748
FIN. SERVICES.
100,00
0,00
100,00
313
199.975
20.561
2.582.803
220.848
180.382
PORTUGAL
FIN. SERVICES.
11,11
88,89
100,00
2.813
18.541
385
21.739
10.680
PORTUGAL
BROKERING
COMPANY
0,00
100,00
100,00
5.998
6.689
114
12.802
37.161
PARAGUAY
MADRID
BANKING
FIN. SERVICES.
99,99
92,69
0,00
7,31
99,99
100,00
8.102
53.310
9.087
277.079
5.818
27.911
23.004
358.299
21.949
276.213
CHILE
MADRID
FIN. SERVICES.
FIN. SERVICES.
32,23
100,00
67,77
0,00
100,00
100,00
413.256
12.922
34.258
52.186
24.101
56.964
471.614
122.072
262.787
12.922
USA
CAYMAN
ISLANDS
PORTUGAL
PORTFOLIO
FIN. SERVICES.
100,00
100,00
0,00
0,00
100,00
100,00
157.429
1
283
0
0
32.280
157.712
32.282
392.088
0
FIN. SERVICES.
0,00
100,00
100,00
499
72
283
853
2.308
MADRID
CHANNEL
ISLANDS
SWITZERLAND
BANKING
BANKING
76,69
0,00
23,31
100,00
100,00
100,00
18.319
10.692
27.665
79.153
37.191
6.082
83.174
95.928
24.161
20.609
BANKING
39,72
60,28
100,00
48.892
74.790
23.379
147.062
57.559
0
III/15
(data at 31.12.2001)
Company
BBVA PRIVANZA GESTORA SGIIC,
S.A.
BBVA PRIVANZA INTERNATIONAL
(GIBRALTAR),LTD GIBRALTAR
BBVA PROMOCIONES, S.A.
BBVA RENTING, S.A.
BBVA SECURITIES HOLDINGS (UK)
LIMITED
BBVA SECURITIES INC.
BBVA SECURITIES LTD.
BBVA
SOCIEDAD
LEASING
HABITACIONAL BHIF
BBVA VALORES GANADERO, S.A.
COMISIONISTA DE BOLSA
BBVA-BANCOMER CAPITAL TRUST I.
BCL INTNAL. FINC. LTD.
BCL PARTICIPACIONES, S.L.
BERMEO, S.A.
BEX
AMERICA
FINANCE
INCORPORATED
BEX CARTERA, S.I.M., S.A.
BHIF ADMINISTRADORA DE FONDOS
DE INVERSION, S.A.
MUTUOS, S.A.
PARA LA VIVIENDA, S.A.
BHIF ASESORIAS Y SERVICIOS
FINANCIEROS, S.A.
BHIF CORREDORES DE BOLSA, S.A.
BI-BM GESTIO D'ACTIUS, S.A.
BILBAO VIZCAYA AMERICA B.V.
BILBAO VIZCAYA HOLDING, S.A.
BILBAO
VIZCAYA
INVESTMENT
ADVISORY COMPANY
BILBAO VIZCAYA INVESTMENTS, BV
BROOK LINE INVESTMENT LTD.
BRUNARA SIMCAV, S.A.
CANAL INTERNATIONAL HOLDING
(NETHERLANDS) BV.
CANAL INTERNATIONAL HOLDING,
S.A.
CANAL REAL ESTATE, S.A.
PORTFOLIO E INVERSIONES S.A., CIA
DE
CASA DE BOLSA BBV - PROBURSA,
S.A. DE C.V.
CASA DE CAMBIO PROBURSA, S.A.
DE C.V.
CIDESSA DOS, S.L.
CIDESSA UNO, S.L.
CIERVANA, S.L.
COMPAÑIA
DE
COBRANZA
Y
SERVICIOS, S.A.
CONSOLIDAR A.F.J.P., S.A.
CONSULTORES DE PENSIONES BBV,
S.A.
CONTABILIDAD Y ADMINISTRACION
DE NEGOCIOS, S.A. DE C.V.
CONTIDATA, S.A.
CONTINENTAL
BOLSA,
SDAD.
AGENTE DE BOLSA S.A.
CONTINENTAL
S.A.
SOCIEDAD
ADMINISTRADORA DE FONDOS
CORBEMA, S.A. DE C.V.
CORPORACION AREA INMOBILIARIA
BBVA, S.L.
CORPORACION DE ALIMENTACION Y
BEBIDAS, S.A.
CORPORACION
DE
SERVICIOS
LOGISTICOS, S.A.
CORPORACION
GENERAL
FINANCIERA, S.A.
CORPORACION IBV SERVICIOS Y
TECNOLOGIAS, S.A.
CORPORACION INDUSTRIAL Y DE
SERVICIOS, S.L.
CREDILOGROS
COMPAÑIA
FINANCIERA, S.A.
CREDIPRONTO
CREDITO
FINANCIAMENTO E INVESTIMENTO,
S.A.
CREDIPRONTO
PROMOTORA
DE
VENDAS S/C LTDA.
DESARROLLO OMEGA, S.A.
Address
MADRID
Activity
FIN. SERVICES.
BANKING
MADRID
MADRID
UNITED
KINGDOM
USA
UNITED
KINGDOM
CHILE
Direct
0,00
Indirect
100,00
Reserves
31.12.01
100,00
3.907
10.608
17.562
32.076
3.907
Total
Net
profit
2001
Net
Investment
Economic
Group
Capital
31.12.01
Book
value
0,00
100,00
100,00
3.288
779.068
101.216
883.572
8.522
PORTFOLIO
FIN. SERVICES.
FIN. SERVICES.
0,00
0,00
0,00
100,00
100,00
100,00
100,00
100,00
100,00
283
47.119
37.816
72
3.859
-37.365
12
5.740
-258
367
56.718
192
355
18.313
1.599
FIN. SERVICES.
FIN. SERVICES.
0,00
0,00
100,00
100,00
100,00
100,00
0
44.198
50.064
-39.402
-4.411
799
45.653
5.595
45.581
3.696
FIN. SERVICES.
0,00
97,17
97,17
3.005
433
1.214
4.520
4.496
COLOMBIA
FIN. SERVICES.
0,00
100,00
100,00
5.541
1.533
481
7.555
8.180
CAYMAN
ISLANDS
CAYMAN
ISLANDS
MADRID
BILBAO
USA
FIN. SERVICES.
0,00
100,00
100,00
17.550
0
0
17.550
17.574
FIN. SERVICES.
0,00
100,00
100,00
0
–18
349
331
0
PORTFOLIO
PORTFOLIO
FIN. SERVICES.
0,00
100,00
100,00
100,00
0,00
0,00
100,00
100,00
100,00
3.720
3.011
1
0
1.160
0
-655
84
0
3.065
4.255
1
3.065
4.249
0
MADRID
CHILE
PORTFOLIO
FIN. SERVICES.
0,00
0,00
79,70
100,00
79,70
100,00
4.177
2.092
11.960
216
-1.082
150
11.999
2.458
8.510
2.452
CHILE
FIN. SERVICES.
0,00
100,00
100,00
2.512
2.344
2.110
6.966
6.918
CHILE
FIN. SERVICES.
0,00
100,00
100,00
757
-307
18
469
463
CHILE
FIN. SERVICES.
0,00
98,60
98,60
277
505
361
1.126
1.118
CHILE
BROKERING
COMPANY
FIN. SERVICES.
FIN. SERVICES.
PORTFOLIO
FIN. SERVICES.
0,00
100,00
100,00
10.764
60
992
11.816
11.780
0,00
0,00
89,00
100,00
30,30
100,00
11,00
0,00
30,30
100,00
100,00
100,00
301
24
35.550
72
962
1.911.958
21.035
9.628
10.169
-972.714
13.781
505
3.464
939.268
70.367
10.205
156
923.401
34.769
78
HOLLAND
CAYMAN
ISLANDS
BILBAO
HOLLAND
FIN. SERVICES.
PORTFOLIO
100,00
100,00
0,00
0,00
100,00
100,00
18
26.691
439
3.185
-24
2.572
433
32.449
18
33.969
PORTFOLIO
PORTFOLIO
0,39
0,00
12,71
100,00
13,10
100,00
22.688
150
374.611
523
-23.476
18
48.971
691
14.136
493
LUXEMBURG
PORTFOLIO
36,00
64,00
100,00
149.892
500.006
128.400
778.299
255.851
PANAMA
MADRID
FIN. SERVICES.
PORTFOLIO
0,00
100,00
100,00
0,00
100,00
100,00
0
132
6.046
131.694
-192
76.425
5.854
208.251
7.615
60.540
MEXICO
FIN. SERVICES.
0,00
100,00
100,00
74.279
2.771
14.160
91.210
91.732
MEXICO
INSTR. ASSETS
0,00
89,56
89,56
12
12
0
21
18
BILBAO
BILBAO
BILBAO
ARGENTINA
PORTFOLIO
PORTFOLIO
PORTFOLIO
FIN. SERVICES.
0,00
0,00
100,00
0,00
100,00
100,00
0,00
84,99
100,00
100,00
100,00
84,99
72
60
6.028
12
9.388
34.606 41.506
108
283
17.778
2.254
0
9.742
16.889
49.788
(*)
9.742
4.754
49.788
2.308
ARGENTINA
MADRID
FIN. SERVICES.
FIN. SERVICES.
46,11
0,00
53,89
100,00
100,00
100,00
4.003
60
99.197
727
35.442
156
138.641
944
186.969
174
MEXICO
SERVICES
0,00
96,00
96,00
0
12
0
12
12
PERU
PERU
0,00
0,00
100,00
100,00
100,00
100,00
1.671
1.827
517
–24
48
132
2.236
1.935
1.707
1.785
PERU
SERVICES
BROKERING
COMPANY
FIN. SERVICES.
0,00
100,00
100,00
2.969
–42
204
3.131
2.903
MEXICO
MADRID
INSTR. ASSETS
PORTFOLIO
0,00
0,00
100,00
100,00
100,00
100,00
1.280
97.454
8.703
54.969
-3.059
71.593
6.924
224.015
6.809
164.701
BILBAO
PORTFOLIO
0,00
100,00
100,00
54.091
119.331
78.618
252.041
138.503
ANDORRA
HOLLAND
BILBAO
LUXEMBURG
MADRID
PORTFOLIO
87,64
12,36
100,00
2.013
-866
–144
1.004
992
MADRID
PORTFOLIO
100,00
0,00
100,00
149.153
856.478
607.647
1.613.279
541.259
BILBAO
PORTFOLIO
0,00
50,00
50,00
265.647
212.758
117.582
297.994
137.355
BILBAO
PORTFOLIO
0,00
100,00
100,00
60
168.482
-41.380
127.162
1.250
ARGENTINA
FIN. SERVICES
0,00
100,00
100,00
64.849
8.246
1.905
(*)
77.525
BRAZIL
BANKING
0,00
100,00
100,00
15.350
-6.094
-4.592
4.664
4.520
BRAZIL
SERVICES
0,00
100,00
100,00
60
–6
126
180
186
PANAMA
PORTFOLIO
0,00
100,00
100,00
12
331
198
541
12
III/16
(data at 31.12.2001)
Company
Address
Activity
Direct
Indirect
Total
Capital
31.12.01
Reserves
31.12.01
Net
profit
2001
Net
Investment
Economic
Group
Book
value
DESITEL TECNOLOGIA Y SISTEMAS,
S.A. DE C.V.
DEUSTO,
S.A.
DE
INVERSION
MOBILIARIA
E-VENTURES CAPITAL INTERNET, S.A.
MEXICO
SERVICES
0,00
100,00
100,00
373
1.527
-6
1.893
1.893
BILBAO
PORTFOLIO
0,00
100,00
100,00
3.618
5.199
2.759
11.576
11.575
BILBAO
EFISA FINANCIAMENTO SFAC, S.A.
PORTUGAL
ELANCHOVE, S.A.
EUROPEA DE TITULIZACION, S.A.,
SDAD.GEST.DE FDOS.DE TITUL.
EXCEL BANCO DE INVESTIMENTO, S.A.
EXCEL
ECONOMICO,
S.A.
DISTRIBUID.DE TITULOS E VALORES
MOB.
EZIBRAS
IMOVEIS
E
REPRESENTAÇOES LTDA.
FACTOR MULTIBA, S.A. DE C.V.
BILBAO
MADRID
BRAZIL
BRAZIL
FIN.
SERVICES.
FIN.
SERVICES.
PORTFOLIO
FIN.
SERVICES.
BANKING
SERVICES
BRAZIL
MEXICO
FACTORAJE PROBURSA, S.A. DE C.V.
MEXICO
FIDEICOMISO BANCOMER ESQUEMA
DE RENTAS
FINANCIERA ESPAÑOLA, S.A.
FINANZIA RENTING, S.A.
MEXICO
MADRID
MADRID
FINANZIA TRUCKS, EFC, S.A.
MADRID
FINANZIA, BANCO DE CREDITO, S.A.
FINIDES SDAD. COMANDITARIA POR
ACCIONES
FRANCES
ADMINISTRADORA
DE
INVERSIONES, S.A. G.F.C.INVERS.
FRANCES VALORES SOCIEDAD DE
BOLSA, S.A.
FRECCIA HOLDING, S.A.
MADRID
FRANCE
FRONARINA, S.A.
PANAMA
GENERAL DE PARTICIPACIONES E
INVERSIONES, S.A. SDAD.
GESCA, S.A.
GESTION DE PREVISION Y PENSIONES,
S.A.
GFB SERVICIOS, S.A. DE C.V.
GRAN JORGE JUAN, S.A.
MADRID
GRELAR GALICIA, S.A.
GRUPO
FINANCIERO
BBVA
BANCOMER, S.A. DE C.V.
GRUPO VAMSA, S.A.DE C.V.
HOLDING CONTINENTAL, S.A.
HOLDING
DE
CENTRALES
INTEGRADAS DE MERCANCIAS, S.A.
HORIZONTE,
ADM.DE
INVERSIONES,FONDOS DE PENSIONES
Y CESANT
INMOBILIARIA ASUDI, S.A.
ARGENTINA
ARGENTINA
PANAMA
100,00
100,00
3.011
24.467
-1.340
26.138
26.138
100,00
100,00
7.501
222
186
7.909
19.869
100,00
82,97
0,00
0,00
100,00
82,97
1.202
1.803
1.094
1.064
271
926
2.566
3.147
1.503
1.509
0,00
0,00
100,00
100,00
100,00
100,00
6.671
1.623
234
12
475
60
7.380
1.695
7.392
1.701
SERVICES
0,00
100,00
100,00
12.735
198
-3.396
9.538
9.442
FIN.
SERVICES.
INSTR.
ASSETS
FIN.
SERVICES.
PORTFOLIO
FIN.
SERVICES.
FIN.
SERVICES.
BANKING
PORTFOLIO
0,00
100,00
100,00
2.494
-2.452
0
42
0
FIN.
SERVICES.
FIN.
SERVICES.
INSTR.
ASSETS
INSTR.
ASSETS
PORTFOLIO
0,00
100,00
100,00
4.099
-3.095
0
1.004
1.004
0,00
100,00
100,00
0
0
0
0
0
85,85
0,00
14,15
100,00
100,00
100,00
4.496
60
932
1.671
313
385
5.740
2.116
4.994
60
0,00
100,00
100,00
5.415
1.875
295
7.585
7.945
0,00
0,00
100,00
100,00
100,00
100,00
14.983
6
64.537
0
14.190
0
93.710
6
56.201
132
0,00
100,00
100,00
114
14.755
9.490
(*)
5.830
0,00
100,00
100,00
1.815
-258
–289
(*)
1.262
0,00
100,00
100,00
12
-24
-24
-36
12
0,00
100,00
100,00
12
-36
–54
–78
12
100,00
0,00
100,00
156
36
6
198
192
PORTFOLIO
FIN.
SERVICES.
SERVICES
ESTATE
AGENT
PORTFOLIO
FIN.
SERVICES.
SERVICES
PORTFOLIO
PORTFOLIO
100,00
70,0
0,00
0 0,00
100,00
70,00
1.202
12.597
–12
2.945
-252
1.581
938
11.986
944
8.829
0,00
100,00
100,00
0,00
100,00
100,00
811
13.222
1.394
-3.035
252
0
2.458
10.187
2.470
10.187
0,00
0,65
100,00
48,11
100,00
48,76
3.089
125.726
84
727.916
3.937
2.549.401
3.937
3.128.190
0,00
50,00
0,00
100,00
0,00
100,00
100,00
50,00
100,00
319
326.734
5.788
763
4.374.
827
956
-6.317
-252
-252
-43.555
96
1.022
138.431
5.632
517
139.303
4.460
PANAMA
FIN.
SERVICES.
90,00
0,00
90,00
5.674
0
523
5.577
5.109
BILBAO
INSTR.
ASSETS
INSTR.
ASSETS
PORTFOLIO
PORTFOLIO
FIN.
SERVICES.
FIN.
SERVICES.
PORTFOLIO
PORTFOLIO
PORTFOLIO
99,99
0,01
100,00
84
3.330
–571
2.843
2.843
51,22
48,78
100,00
739
3.390
120
4.249
2.771
0,00
100,00
53,80
99,14
0,00
0,00
99,14
100,00
53,80
7.783
60
12.591
-4.886
391
3.185
-3.919
12
5.115
-1.013
463
11.239
0
463
0
47,91
0,00
47,91
53.328
2.921
6.984
30.295
31.156
0,00
100,00
0,00
100,00
0,00
100,00
100,00
100,00
100,00
150
487
3.011
24
102
0
367
24
0
541
613
3.011
517
619
3.011
0,00
0,00
0,00
99,91
100,00
100,00
99,91
100,00
100,00
72
2.861
2
228.042
24
2.350
-1.364
12
84
(*)
2.897
2.436
709
3.077
1.869
99,99
0,00
0,01
100,00
100,00
100,00
60
7.501
5.920
7.380
–427
847
5.553
15.728
601
11.575
0,00
100,00
0,00
100,00
337
-12
6
331
337
100,00
100,00
12
-1.184
361
–811
0
0,00
0,00
100,00
100,00
100,00
100,00
12
14.887
26.096
-4.634
0
-264
26.108
9.989
12.507
9.977
0,00
0,00
99,98
100,00
99,98
100,00
1.412
4.748
-240
12.038
–150
1.587
1.021
18.373
1.016
18.421
0,00
100,00
100,00
48
138
30
216
48
0,00
100,00
100,00
78
24
–6
96
96
BILBAO
MADRID
MEXICO
MADRID
BILBAO
MEXICO
MEXICO
PERU
MADRID
INMOBILIARIA BERNARDO, S.A.
BILBAO
INMOBILIARIA GANADERA, S.A.
INVERAHORRO, S.L.
INVERSIONES BANPRO C.A.
COLOMBIA
BARCELONA
VENEZUELA
INVERSIONES
BANPRO
INTERNATIONAL INC. N.V.
INVERSIONES COPROVINCA, C.A.
INVERSIONES MOBILIARIAS, S.L.
INVERSIONS
I
SERVEIS
INTERNACIONALS, S.A. COMPANYIA DE
INVERSORA OTAR, S.A.
INVESTALTO, S.P.G.S.
KANTARA, S.A.
DUTCH
ANTILLES
VENEZUELA
MADRID
ANDORRA
ARGENTINA
PORTUGAL
PORTUGAL
LEADER MIX, S.A.
LEASIMO - SOCIEDADE DE LOCACAO
FINANCEIRA, S.A.
LEHKA
MADRID
PORTUGAL
LORENCO, S.A.
PANAMA
MAGUA HOLDINGS INC
MANO
DE
OBRA
PARA
CONSTRUCCION, S.A. DE C.V.
MAYUTA, S.A.
MERCURY BANK & TRUST LTD.
PANAMA
MEXICO
LA
0,00
0,00
PANAMA
MILANO GESTIONI, SRL.
BRAZIL
CAYMAN
ISLANDS
ITALY
MOBILIARIA MAT, S.A.
BARCELONA
PORTFOLIO
PORTFOLIO
INSTR.
ASSETS
SERVICES
FIN.
SERVICES.
INSTR.
ASSETS
INSTR.
ASSETS
PORTFOLIO
INSTR.
ASSETS
PORTFOLIO
BANKING
INSTR.
ASSETS
PORTFOLIO
III/17
(data at 31.12.2001)
Company
Address
NUEVA INMOBILIARIA, S.A. DE C.V.
MEXICO
OCCIVAL, S.A.
OLIMAR, S.A.
OPCION VOLCAN, S.A.
MADRID
BILBAO
MEXICO
PARTICIPACIONES ARENAL, S.L.
PARTIDES SDAD. COMANDITARIA POR
ACCIONES
PILOT INVEST.SECS CORP.
BILBAO
FRANCE
PRIVANZA 100, SIMCAV, S.A.
PROBURSA INVESTMENT LIMITED
PROCESOS OPERATIVOS, S.A.
PROMOCION EMPRESARIAL XX, S.A.
CAYMAN
ISLANDS
MADRID
CAYMAN
ISLANDS
MADRID
MADRID
Reserves
Net
Book
31.12.01
profit
value
2001
Net
Investment
Economic
Group
0,00
100,00
100,00
12
4.033
-2.074
1.971
1.893
100,00
100,00
0,00
0,00
0,00
100,00
100,00
100,00
100,00
3.143
619
32.118
2.446
1.653
66.214
150
607
-16.185
5.740
2.879
82.146
5.728
2.879
81.557
0,00
0,00
100,00
100,00
100,00
100,00
4.670
6
835
0
180
0
5.686
6
5.680
6
100,00
0,00
100,00
0
14.322
2.963
17.285
0
24,13
0,00
0,00
100,00
24,13
100,00
2.404
84
878
0
–583
517
651
601
649
613
SERVICES
FIN.
SERVICES.
INSTR.
ASSETS
INSTR.
ASSETS
INSTR.
ASSETS
FIN.
SERVICES.
FIN.
SERVICES.
BROKERING
COMPANY
FIN.
SERVICES.
FIN.
SERVICES.
FIN.
SERVICES.
0,00
100,00
100,00
0,00
100,00
100,00
1.503
1.599
1.587
325
1.623
234
4.712
2.158
1.515
1.521
0,00
100,00
100,00
72
859
102
1.034
1.040
100,00
0,00
100,00
1.202
295
78
1.575
1.208
0,02
99,98
100,00
66
24
0
90
84
0,00
100,00
100,00
66
-18
0
48
48
0,00
100,00
100,00
42.966
-8.799
17.676
51.843
51.471
0,00
100,00
100,00
72
-12
-12
48
48
0,00
90,00
90,00
4.442
1.178
2.963
7.724
7.765
0,00
100,00
100,00
1.923
271
763
2.957
3.083
0,00
100,00
100,00
1.400
595
421
2.416
2.356
FIN.
SERVICES.
PORTFOLIO
PORTFOLIO
FIN.
SERVICES.
0,00
50,00
50,00
3.005
144
144
1.647
1.503
0,00
0,00
77,20
100,00
100,00
0,00
100,00
100,00
77,20
2.861
12
150
24
40.460
733
18
0
18
2.903
40.472
696
3.330
25.345
138
0,00
0,00
0,00
100,00
100,00
100,00
100,00
100,00
100,00
1.370
3.083
6
-1.262
373
150
0
12
144
108
3.468
301
0
3.414
301
MEXICO
PORTFOLIO
PORTFOLIO
FIN.
SERVICES.
SERVICES
0,00
100,00
100,00
938
793
120
1.851
1.851
MADRID
PORTFOLIO
100,00
0,00
100,00
1.473
171.234
4.219
176.926
114.517
ANDORRA
PORTFOLIO
0,00
100,00
100,00
1
0
60
61
0
MOROCCO
PORTFOLIO
0,00
100,00
100,00
1.274
-198
0
1.076
817
MADRID
PANAMA
PORTFOLIO
INSTR.
ASSETS
FIN.
SERVICES.
BANKING
0,00
0,00
100,00
100,00
100,00
100,00
1.599
12
4.369
-72
-1.214
48
4.754
-12
5.193
12
100,00
0,00
100,00
126.441
33.218
13.956
173.614
231.474
PROVIDA INTERNACIONAL, S.A.
CHILE
PROVINCIAL CORREDOR DE BOLSA DE
PRODUCTOS AGRICOLAS, C.A.
PROVINCIAL DE VALORES CASA DE
BOLSA
PROVINCIAL
SDAD.ADMIN.DE
ENTIDADES DE INV.COLECTIVA, C.A.
PROVIVIENDA,
ENTIDAD
RECAUDADORA
Y
ADMIN.DE
APORTES, S.A.
PROYECTOS
INDUSTRIALES
CONJUNTOS, S.A. DE
R.G. PARTICIPAÇOES, LTD.
ROYDON ASSOCIATES INC
S.GESTORA
FONDO
PUBL.REGUL.MERCADO HIPOTECARIO,
S.A.
S.I.P.I.E.M.S.A.
SCALDIS FINANCE, S.A.
SERVICES
CORPORATIVOS
BANCOMER, S.A. DE C.V.
SERVICES EXTERNOS DE APOYO
EMPRESARIAL, S.A DE C.V.
SOCIEDAD DE ESTUDIOS Y ANALISIS
FINANC.,S.A.
SOCIETAT GENERAL D'INVERSIONS,
S.L.
SOCIETE HISPANO-MAROCAINE DE
SERVICES, S.A.
SPORT CLUB 18, S.A.
TRANSITORY CO
VENEZUELA
VENTAS A CREDITO BANKINGYA, S.A.
SDAD. DE
VIZCAYA INTERNATIONAL N.V.
Capital
31.12.01
PORTFOLIO
MADRID
INTERNATIONAL
INSTR.
ASSETS
PORTFOLIO
PORTFOLIO
INSTR.
ASSETS
PORTFOLIO
PORTFOLIO
Direct
Indirect
Total
PORTFOLIO
PORTFOLIO
PROMOCIONES
EDIFICIO
MIGUEL
ANGEL II, S.A.
PROMOCIONES
INMOBILIARIAS
ARJONA, S.A.
PROMOCIONES
INMOBILIARIAS
BANKINGYA, S.A.
PROMOTORA PROMEX, S.A. DE C.V.
TRIANA
HOLDING.LTD.
UNO-E BANK, S.A.
Activity
BILBAO
MADRID
MEXICO
VENEZUELA
VENEZUELA
BOLIVIA
BILBAO
PORTUGAL
PANAMA
MADRID
MOROCCO
BELGIUM
MEXICO
BERMUDA
MADRID
MADRID
HOLLAND
FIN.
SERVICES.
FIN.
SERVICES.
51,00
0,00
51,00
36.061
44.583
25.399
100,00
100,00
1.803
1.076
34.618
72
23.473
0,00
2.951
1.869
0,00
100,00
100,00
114
890
6
1.010
126
28.315.928
22.179.269
Total
DIRECT SHAREHOLDING BOOK VALUE TOTAL
Data of foreign companies at exchange rate on 31-12-01
(1) Book value, net of Security Fluctuation Reserve.
(2) Consolidated with Banc Internacional D'Andorra, S.A.
(*) At a consolidate level, provisions for the total have been effected.
(**) Unaudited data
8.490.081
III/18
3.7.
INVESTEE COMPANIES
Below are the details of the most significant companies in which BBVA had a
shareholding at 31.12.2001 with a minimum investment of 6 million euro and which
together accounted for 98% of the total of the corresponding item in the Balance Sheet,
differentiating between listed and non-listed companies.
Additional information is also provided on the most significant non-consolidable
companies in the Group, in which a minimum investment of 3 million euro has been
effected, and which together account for 92% of the total of the corresponding item in the
Group Balance Sheet.
III/19
ADDITIONAL INFORMATION ON SHAREHOLDINGS HELD BY BANCO BILBAO VIZCAYA
ARGENTARIA (data at 31.12.2001)
(the most significant companies are included, which together represent about 98% of the total investment in this group)
% of Capital held
Company
Address
Activity
Direct
Indirect
Total
A. GLOBALLY INTEGRATED COMPANIES
LISTED COMPANIES
ACERINOX, S.A.
AUTOPISTAS CONCESIONARIA ESPAÑOLA
BANKING NAZIONALE DEL LAVORO, S.P.A.
BANCO ATLANTICO, S.A.
BANQUE DE CREDIT LYONNAIS, S.A.
CEMENTOS LEMONA, S.A.
FDO. PARA EL FINANCIAM. DEL SECTOR AGROPECUARIO, S.A.
IBERDROLA, S.A.
IBERIA LINEAS AEREAS DE ESPAÑA, S.A.
METROVACESA, S.A.
REPSOL YPF Y EMPRESAS VINCULADAS
SOGECABLE, S.A.
TELEFONICA, S.A.
TERRA NETWORKS, S.A.
THE ARGENTINE INVESTMENT COMPANY
TUBOS REUNIDOS, S.A.
VIDRALA, S.A. LLODIOWAFABANK
MADRID
BARCELONA
ITALY
BARCELONA
FRANCE
BILBAO
COLOMBIA
BILBAO
MADRID
MADRID
MADRID
MADRID
MADRID
MADRID
ARGENTINA
BILBAO
ALAVA
MOROCCO
INDUSTRIAL
SERVICES
BANKING
BANKING
BANKING
INDUSTRIAL
BANKING
SERVICES
SERVICES
ESTATE AGENT
SERVICES
SERVICES
SERVICES
SERVICES
PORTFOLIO
INDUSTRIAL
INDUSTRIAL
BANKING
0,19
5,40
14,80
24,37
3,78
6,37
0,00
0,45
7,30
16,35
8,03
0,15
2,16
0,26
0,00
0,00
15,51
0,00
13,62
0,00
0,00
0,00
0,00
0,00
10,49
8,15
0,00
12,51
0,31
5,02
3,89
1,35
5,24
24,26
1,96
9,99
13,81 (4)
5,40 (5)
14,80
24,37
3,78
6,37
10,49
8,60 (6)
7,30
28,86 (7)
8,34 (8)
5,17 (9)
6,05 (10)
1,61 (11)
5,24
24,26
17,47 (12)
9,99
DIRECT SHAREHOLD
NON-LISTED COMPANIES
ALMAGRARIO, S.A.
AMRESCO MEXICO S.A. DE C.V.
AUREA, S.A. (CUBA)
BBV ADESLAS SALUD, S.A.
CIA.ESPAÑOLA DE FINANCIACION DEL DESARROLLO S.A.
COMPAÑIA MEXICANA DE PROCESAMIENTO, S.A. DE C.V.
CONCESION CARRETERAS NACIONALES DEL META S.A.
CONCESION SABANA DE OCCIDENTE, S.A.
CONSERVAS GARAVILLA, S.A.
GRUBARGES INVERSION HOTELERA, S.L.
HILO DIRECT SEGUROS Y REASEGUROS, S.A.
HOLDING DE PARTICIPACIONES INDUSTRIALES 2000, S.A.
HOTELES PRESIDENTE, S.A.DE C.V.
INICIATIVAS DE MERCADOS INTERACTIVOS, S.A.
MOBIPAY INTERNATIONAL, S.A.
ONEXA, S.A. DE C.V.
PROMOTORA METROVACESA, S.L.
PSA FINANCE ARGENTINA COMPAÑIA FINANCIERA, S.A.
COLOMBIA
MEXICO
CUBA
ARGENTINA
MADRID
MEXICO
COLOMBIA
COLOMBIA
BERMEO-VIZCAYA
MADRID
MADRID
BILBAO
MEXICO
MADRID
MADRID
MEXICO
MADRID
ARGENTINA
SERVICES
FIN. SERVICES.
ESTATE AGENT
INSURANCE
SERVICES
SERVICES
SERVICES
SERVICES
INDUSTRIAL
SERVICES
INSURANCE
PORTFOLIO
SERVICES
SERVICES
SERVICES
FIN. SERVICES.
ESTATE AGENT
FIN. SERVICES.
0,00
25,00
0,00
50,00
21,82
0,00
0,00
0,00
0,00
33,33
0,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
35,38
25,00
49,00
0,00
0,00
50,00
40,59
43,63
41,11
0,00
50,00
50,00
25,59
40,00
27,50
49,80
50,00
50,00
35,38
50,00
49,00
50,00
21,82
50,00
40,59
43,63
41,11
33,33
50,00
50,00
25,59
40,00
27,50
49,80
50,00
50,00
III/20
ADDITIONAL INFORMATION ON SHAREHOLDINGS HELD BY BANCO BILBAO VIZCAYA
ARGENTARIA (data at 31.12.2001)
(the most significant companies are included, which together represent about 98% of the total investment in this group)
% of Capital held
Company
Address
Activity
REPSOL YPF PERU, BV
HOLLAND
ROMBO COMPAÑIA FINANCIERA
SARRIA PARK, S.A.
SERVICES
ELECTRONICOS
GLOBALES, S.A. DE C.V.
SDAD ADMINISTRAD. DE PENSIONES
Y GARANTIAS PORVENIR
TECNICAS REUNIDAS, S.A.
In thousands of Euro
Direct
Indirect
Total
Capital
Reserves
Net
profit
Book
value
Consolidated
Cost*
PORTFOLIO
9,00
0,00
9,00
174.991
91.528
23.132
23.590
ARGENTINA
BARCELONA
MEXICO
FIN. SERVICES.
ESTATE AGENT
SERVICES
0,00
0,00
0,00
40,00
23,81
46,14
40,00
23,81
46,14
21.528
25.243
15.434
0
-2.272
-3.678
-9.502
(1)
-1.202
4.478
-1.166
8.130
6.536
4.886
8.390
7.609
6.281
COLOMBIA
FIN. SERVICES.
0,00
20,00
20,00
13.258
26.433
10.043
9.947
12.519
MADRID
SERVICES
0,00
25,00
25,00
5.686
86.726
12.525
(1)
26.234
24.720
TOTAL LISTED COMPANIES
465.329
DIRECT SHAREHOLDING BOOK VALUE TOTAL
136.202
OTHER COMPANIES
156.267
Direct shareholding in other companies
Non-listed total
621.596
VITORIA
INDUSTRIAL
21.564
B. OTHER SIGNIFICANT SHAREHOLDINGS
GRUPO AUXILIAR METALURGICO, S.A.
(GAMESA)
0,000
18,89
18,89
40.550
114.853
45.148
(1)
TOTAL
37.885
25.489
6.643.726
Data taken from the last annual accounts approved before 31.12.2001, which generally refers to the financial year 2000.
The rate of exchange on the date of reference is used for foreign companies.
* This is the book value plus (or minus) the Consolidation adjustments resulting from the equity method. The adjustments imply a valuation of the shareholding according to
shareholders’ equity and Company results of applying the equity method, i.e. setting the PORTFOLIO value to the book value.
(1) Consolidated data.
(2) Company founded in 2001
(3) Data at 30-06-99
(4) 13.61% of which corresponds to long-term criteria shareholdings
(10) 5.138% of which corresponds to long-term criteria shareholdings, including 1.385% that is not consolidated through the equity method as its market risk is covered by derivates
III/21
ADDITIONAL INFORMATION ON UNCONSOLIDATED GROUP COMPANIES IN THE BANCO
BILBAO VIZCAYA ARGENTARIA GROUP
(Data at 31.12.2001)
(The most significant companies are included, which together represent about 92% of the
total investment in this group)
% of Capital held
Company
NON-LISTED COMPANIES
ALMACENERA CONTINENTAL, S.A.
AUTOMERCANTIL-COMERCIO
E
ALUGER DE VEICULOS AUTOM., LDA.
BBV PARQUE ROZAS, S.A.
BBV PREVIDENCIA E SEGURADORA
BRASIL, S.A.
BBV
PROMOCIONES
DEL
NOROESTE, S.A.
BBV REALTY, S.A.
BBV SEGUROS, S.A.
BBV URDANIBIA, S.A.
BBVA
DESARROLLOS
INMOBILIARIOS, S.L.
BBVA SEGUROS DE VIDA, S.A.
BBVA
SEGUROS
GANADERO
COMPAÑIA DE SEGUROS, S.A.
BBVA SEGUROS, S.A.
BBVA TRADE, S.A.
CENTRO
LOGISTICO
DE
ABASTECIMIENTO, S.A.
CONSOLIDAR ASEGURADORA DE
RIESGOS DEL TRABAJO, S.A.
CONSOLIDAR CIA. DE SEGUROS DE
RETIRO, S.A.
CONSOLIDAR CIA. DE SEGUROS DE
VIDA, S.A.
DESARROLLO
URBANISTICO
DE
CHAMARTIN, S.A.
EDIFICIO LINARES, S.L.
EL ENCINAR METROPOLITANO, S.A.
Address
Activity
Direct
Indirect
Total
Capital
Reserves
Net
profit
Book
value
Consolidated
Cost
PERU
PORTUGAL
SERVICES
SERVICES
0,00
0,00
100,00
100,00
100,00
100,00
5.211
1.244
451
15.909
-889
457
4.773
17.610
5.259
17.213
MADRID
BRAZIL
ESTATE AGENT
INSURANCE
0,00
0,00
100,00
100,00
100,00
100,00
601
6.539
6.130
90
5.902
1.695
12.633
8.324
6.852
8.132
MADRID
ESTATE AGENT
0,00
100,00
100,00
5.710
3.035
5.896
14.641
10.650
MADRID
ARGENTINA
MADRID
MADRID
ESTATE AGENT
INSURANCE
ESTATE AGENT
ESTATE AGENT
0,79
87,78
0,00
0,00
99,21
12,22
69,50
100,00
100,00
100,00
69,50
100,00
3.907
4.844
1.202
31.319
276
823
5.103
4.351
5.992
5.517
721
26.517
10.175
11.184
4.883
62.187
4.856
12.976
5.018
55.624
CHILE
COLOMBIA
INSURANCE
INSURANCE
0,00
94,00
100,00
6,00
100,00
100,00
5.307
0
48
0
12
0
5.367
0
5.024
11.197
MADRID
MADRID
MADRID
INSURANCE
SERVICES
ESTATE AGENT
97,15
0,00
0,00
2,78
100,00
100,00
99,93
100,00
100,00
180.376
1.803
7.687
81.383
8.168
1.424
65.697
–589
7.410
327.227
9.382
16.521
320.700
22.646
12.814
ARGENTINA
INSURANCE
87,50
12,50
100,00
3.227
38.038
1.298
42.563
33.320
ARGENTINA
INSURANCE
33,33
66,67
100,00
3.227
26.829
799
30.855
23.187
ARGENTINA
INSURANCE
34,04
65,96
100,00
3.227
2.975
–709
5.493
22.628
MADRID
ESTATE AGENT
0,00
72,50
72,50
13.523
–234
-222
9.474
9.256
MADRID
MADRID
ESTATE AGENT
ESTATE AGENT
100,00
0,00
0,00
98,76
100,00
98,76
4.988
66
–30
7.603
4.880
8.767
4.694
12.784
FINANZIA AUTORENTING, S.A.
GRUPO CANADA
BARCELONA
MEXICO
SERVICES
COMMERCIAL
0,00
0,00
85,00
66,91
85,00
66,91
5.397
43.730
1.298
9.117
6.370
35.086
9.652
11.618
GRUPO CONSTRUCTORA RAM, S.A.
DE C.V.
GUP
GESTION
UNIFICADA
DE
PROYECTOS, S.A.
IBERTRADE, LTD.
INMOBILIARIA BILBAO, S.A.
INMOBILIARIA CONTINENTAL
INMOBILIARIA Y PROMOTORA RURAL
MEXIQUENSE, S.A DE C.V.
LARRABEZUA INMOBILIARIA, S.L.
MARQUES DE CUBAS 21, S.L.
MEDITERRANIA DE PROMOCIONS I
GESTIONS INMOBILIARIES, S.A.
PENSIONES BANCOMER, S.A. DE C.V.
PROMOCION
DE
NEGOCIOS
MOBILIARIOS E INMOB., S.A.
RESIDENCIAL O'DONNELL, S.A.
MEXICO
ESTATE AGENT
0,00
55,00
55,00
18.439
6.311
-78
1.208
(2)
799
-409
(1)
-932
13.100
14.058
BILBAO
SERVICES
0,00
72,50
72,50
601
3.600
156
3.159
3.516
JERSEY
MADRID
PERU
MEXICO
SERVICES
ESTATE AGENT
ESTATE AGENT
ESTATE AGENT
0,00
0,00
0,00
0,00
100,00
100,00
100,00
73,66
100,00
100,00
100,00
73,66
5.499
1.743
38.645
14.617
427
1.755
-5.295
17.261
3.125
–198
-3.113
-1.346
9.051
3.300
30.237
22.490
6.725
11.101
36.103
14.941
BILBAO
MADRID
BARCELONA
ESTATE AGENT
ESTATE AGENT
ESTATE AGENT
0,00
100,00
0,00
100,00
0,00
100,00
100,00
100,00
100,00
6
60
908
3.732
96
–144
156
331
-60
3.894
487
704
4.075
3.474
3.432
MEXICO
BILBAO
INSURANCE
ESTATE AGENT
0,00
100,00
100,00
0,00
100,00
100,00
24.816
3.251
-9.280
120
10.434
5.746
25.970
9.117
38.212
3.991
MADRID
ESTATE AGENT
0,00
75,00
75,00
4.808
96
535
4.079
3.804
III/22
ADDITIONAL INFORMATION ON UNCONSOLIDATED GROUP COMPANIES IN THE BANCO
BILBAO VIZCAYA ARGENTARIA GROUP
(Data at 31.12.2001)
(The most significant companies are included, which together represent about 92% of the
total investment in this group)
% of Capital held
Company
Address
Activity
SEGUROS BANCOMER, S.A. DE C.V.
SEGUROS PROVINCIAL, C.A.
SENORTE VIDA Y PENSIONES, S.A.
CIA.DE SEGUROS YREASEG.
SUERTES NUEVAS, S.A.
MEXICO
VENEZUELA
MADRID
INSURANCE
INSURANCE
INSURANCE
MADRID
UNITARIA INMOBILIARIA, S.L.
MADRID
URBANIZADORA TINERFEÑA, S.A.
MADRID
VALDEVIVAR, S.A.
MADRID
ESTATE
AGENT
ESTATE
AGENT
ESTATE
AGENT
ESTATE
AGENT
Direct
Indirect
Total
Capital
Reserves
Net
profit
Book
value
Consolidated
Cost
24,99
0,00
0,00
75,01
100,00
100,00
100,00
100,00
100,00
18.824
2.001
33.356
74.309
2.362
6.671
30.549
1.124
1.418
123.682
5.487
41.445
120.142
7.134
41.842
0,00
100,00
100,00
3.065
4.405
5.980
13.450
7.837
0,00 1
00,00
100,00
42.071
-3.792
20.837
59.116
57.835
0,00 1
00,00
100,00
6.990
859
198
8.047
10.572
0,00
100,00
100,00
4.568
1.124
775
6.467
5.842
TOTAL LISTED COMPANIES
1.020.736
DIRECT SHAREHOLDING BOOK VALUE
TOTAL
300.845
Direct shareholding in other companies
23.565
OTHER COMPANIES
93.408
TOTAL
Data taken from the last annual accounts approved before 31.12.2001, which generally refers to the financial year 2000.
The rate of exchange on the date of reference is used for foreign companies.
(1) Consolidated data
(2) Data at 30-09-01
1.114.144
III/23
Reconciliation of the net book cost in Investee and Associate companies of the BBVA Group, listed
individually from pages III/13 to III/22, with the corresponding values recorded in the BBVA
Consolidate Balance Sheet presented in Chapter V of this prospectus.
In thousands of euro
Net balance of the "Shareholdings" item
of BBVA Consolidated Balance Sheet at 31-12-01
?
Total stated on page III/20 corresponding to the
BBVA Group’s Investee Companies that are not listed
on the Stock Exchange, listed individually,
?
Other significant shareholdings
?
Total stated on page III/19 corresponding to Investee companies
with investments on the part of the BBVA Group of over 3%,
that are listed on the Stock Exchange
?
6.641.935
------------------------------->
465.329
25.489
5.996.641
Remaining shareholdings that are not listed individually .............................156.267
* Promemoria: Security fluctuation reserve ............................................. -1.791
6.641.935
Net balance of "Shareholdings in Group Companies"
----------------->
item in the BBVA Consolidate Balance Sheet at
31.12.01
1.114.144
?
Total shareholdings listed individually on page III/22 of the prospectus ... 1.020.736
?
Other shareholdings not listed individually .....................................................93.408
1.114.144
III/24
Reconciliation of the net book cost in Investee and Associate companies and Company
Shareholdings of the BBVA Group, listed individually, with the corresponding values recorded in
the BBVA Consolidate Balance Sheet presented in Chapter V of this prospectus.
Net balance of the "Shareholdings" item of
----------------->
BBVA’s Individual Balance Sheet at 31.12.01
4.306.431
?
Total stated on page III/19 of the prospectus
4.148.665
?
Total stated on page III/20 of the prospectus
136.202
?
Remaining shareholdings
21.564
4.306.431
Net balance of "Shareholdings in Group Companies"
----------------->
item of the Individual Balance Sheet at 31.12.01
*
*
*
8.814.491
Total stated on page III/22 corresponding to
unconsolidable BBVA Group Companies
300.845
Total stated on page III/17 corresponding to
consolidable BBVA Group Companies
8.490.081
Remaining “Shareholdings in Group Companies
23.565
8.814.491
III/25
SIGNIFICANT VARIATIONS IN THE GROUP
The most notable operations that brought about modifications within the scope of the
Consolidable Group in the financial year 2000 are described in the BBVA Continued
Prospectus registered at CNMV on 22 March 2001. Operations that refer more to financial
years 2001 and up to the date of presentation of this Prospectus in 2002, are described
below:
The following modifications have occurred during the present financial year, 2002:
?
On 25 January 2002, BBVA and Progreso Group, one of the principal financial groups
in the Dominican Republic, announced the launching of BBVA Crecer AFP, a new
pension fund manager for the Dominican market. BBVA Crecer AFP has very good
development prospects because of the imminent introduction of the New Social
Security Law. The opportunity is focused on a group of 1.2 million Dominicans who,
from November onwards, will start to make obligatory payments to pension funds in
anticipation of their retirement. BBVA Crecer AFP has the backing of its shareholders,
and has the possibility of acquiring a shareholding in the BBVA Pensiones América
franchise, which is currently present in 10 countries in Latin America, where it
administers 25,000 million US$ in savings for 12 million persons. BBVA and Progreso
Group have a 70% and 30% shareholding in the company, respectively. There is a
possibility planned to incorporate new shareholders. The total initial investment
planned stands at approximately 10 million US$, 7 million of which will be put forward
by BBVA.
?
On 30 January 2002, BBVA increased its shareholding in Banca Nazionale de
Lavoro (BNL) by 0.1%, attaining a 14.9% share, after receiving the corresponding
information from the supervisory authorities and from the bank’s directors. BNL is the
fifth largest banking group in Italy with regard to stock exchange capitalization, with a
network of 719 branches distributed throughout the country. The entity provides
universal banking services to companies, individual customers and institutions.
?
On 14 May 2002, with the prior authorisation of Banco Central de Uruguay (Uruguay
Central Bank), a contract was signed to sell the entire shareholding of BBVA Banco
Francés, S.A. in BBVA Uruguay, to BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
The shares that form the object of the sale represent 60.88% of the capital stock of
BBVA Uruguay, S.A.. The price was 55 million US dollars, which will be adjusted
later, depending on the results of the equity evaluation to be effected by an
international auditing firm.
?
On 15 May 2002, TERRA and BBVA signed a Protocol of Intent as a Principle of
Agreement to integrate UNOE BANK, S.A. and the area of private consumer goods
financing business developed by FINANZIA BANCO DE CRÉDITO, S.A., a 100%
subsidiary of BBVA. TERRA would have a 33% shareholding in UNOE BANK S.A..
This integration operation and TERRA’s 33% shareholding are subject to the results
of the corresponding review of the business involved, the signing of definitive
contracts and obtaining the corresponding authorisations. Likewise, a settlement
mechanism has also been drawn up, and this would be readjusted when the
integration operation comes into effect.
?
On 30 May 2002, BBVA Banco Francés reached an agreement with the Argentinean
authorities to effect a capital increase, for which BBVA will provide 209.3 million US$.
This figure will be made up of negotiable subordinated debentures in its power, to a
value of 130 million US$, and a financial loan for a further 79.3 million US$. This
capitalization operation does not involve any additional injection of funds on the part
of BBVA, nor will it have any impact on the parent company, since both debts are
100% provided for in its balance account. BBVA’s subscription of this capital increase
is subject to the necessary authorisation on the part of Banco de España. Through
this operation, there will be improved capital and solvency ratios at a local level.
III/26
?
On 4 June 2002, BBVA and BAMI SOCIEDAD ANOMINA INMOBILIARIA DE
CONSTRUCCIONES Y TERRENOS agreed to trade shares that represent 23.9% of
the capital stock of METROVACESA, S.A., for a total sum of 545.4 million euro and at
a price of 36.55 euro per share. The trading operation will take place when it is
authorised by the Competition Defence Authorities. After the sale, the BBVA Group
will then have a 1.13 % share of METROVACESA, S.A.
The following modifications took place during the year 2001:
?
In February 2000 the Group signed a strategic agreement with Telefónica, S.A., in
which it was agreed, amongst other aspects, that Telefónica Group would take over
49% of the capital stock of Uno-e Bank, S.A. This agreement was implemented on 2
August 2001, by which Banco Bilbao Vizcaya Argentaria, S.A., sold 49% of its share
of Uno-e Bank, S.A. to Terra Networks, S.A., with no resulting capital gains.
?
Sale of 100% of the capital of Asgard Estates Ltd., creating a profit of 8.5 million euro.
?
Sale of Banco Bilbao Vizcaya Argentaria Maroc, in which it was sole shareholder,
creating a profit of 5 million euro.
?
Sale of 80% of Futuro de Bolivia, S.A., AFP, creating a sales profit of 16 million euro.
?
In the first quarter of the financial year 2001, Axa-Aurora, S.A. was sold, resulting in
96 million euro in Group capital gains.
?
In March 2001 its shareholding in Finaxa was reduced by 2.92%, creating capital
gains for a sum of 121 million euro.
?
Furthermore, during the early months of the financial year 2001, the Group’s
shareholding in Profuturo GNP, S.A. de C.V., was sold, as a consequence of the
restructuring of activities undertaken in the Bancomer Group. This operation led to a
profit of 78 million euro.
?
During the financial year of 2001, the Group reduced its shareholding in the capital
stock of Iberdrola, S.A. by 0.83%, creating capital gains to the sum of 36 million euro.
?
In the financial year 2001 sales were effected to a total equivalent to 1.52% of the
capital of Repsol YPF, S.A., leading to a profit of 85 million euro.
III/27
?
During the financial year 2001, the Group reduced its shareholding in Telefónica de
España, S.A. and now has a permanent share of 5.14%, creating capital gains to the
sum of 353 million euro, fundamentally derived from the shareholding covered by
future operations.
?
In December 2001 the Group disposed of its entire shareholding of 39.07% in
Bodegas y Bebidas, S.A. with a sales profit of 51 million euro.
?
Also in December 2001, the total shareholding that the Group had in Seguros BBV
Probursa was sold, creating capital gains from the sale to the sum of 11 million euro.
?
During the financial year 2001 shares equivalent to 4.87% of Banca Nazionale del
Lavoro, S.p.A. were purchases, with a disbursement of 398 million euro.
?
In the last months of 2001, 0.18% of Repsol YPF, S.A. was purchased for the sum of
33 million euro.
?
During the last quarter of 2001, purchases equivalent to 1.88% of Wafabank, S.A.
were effected for a total of 9 million euro.
Below are the details of the evolution of different Latin American groups in which Banco
Bilbao Vizcaya Argentaria, S.A. has a shareholding, and their contribution to the assets
and financial income in the financial years 2001 and 2000.
BBVA Banco Ganadero Group (Colombia)
At 31 December 1999, the Group held 59.02% of the capital of BBVA Banco Ganadero,
S.A., which is the biggest bank in Colombia. In 2000, the entity underwent a major
restructuring and equity strengthening process, including a capital increase for the sum of
approximately 254 million dollars, which was almost entirely subscribed by the Group.
This increase, together with several additional purchases, involving disbursements for the
sum of 14 million dollars, brought the Group’s share of BBVA Banco Ganadero, S.A. up to
85.56% at 31 December 2000. On 23 January 2001, the Board of Directors of the Bank
agreed to make a Public Share Offering of all the shares of BBVA Banco Ganadero, S.A..
This was effected on 9 April 2001, and involved the disbursement of 44.4 million dollars
on the part of the Group, increasing its shareholding in BBVA Banco Ganadero, S.A. to
95.35%.
Companies in the Ganadero Group contributed 2,983 and 2,591 million euro to Group
assets at 31 December 2001 and 2000, respectively, and 292 and 306 million euro to
financial income in financial years 2001 and 2000, respectively.
BBVA Banco Francés (Argentina)
In December 1996, the Group purchased 30% of BBVA Banco Francés, S.A. (formerly
Banco Francés Río de la Plata, S.A.), taking over its management. From then on, until 31
December 2000, further purchases were made, and the Group’s shareholding in this entity
now stands at 68.25%. The total cost of this shareholding involved a disbursement of
1,179 million dollars. During the financial year 2001, there have been no further
investments.
III/28
The companies that make up this group contributed 11,333 and 11,995 million euro to the
Group’s total assets at 31 December 2001 and 2000; and 1,352 and 1,205 million euro to
financial income in financial years 2001 and 2000, respectively. At 31 December 2001, the
Group proceeded to effect an extraordinary redemption of goodwill pending amortization
at the same date, corresponding to BBVA Banco Francés, for the sum of 14 million euro.
Consolidar Group (Argentina)
At 31 December 2001, possessed 100% of the capital of Consolidar Administradora de
Fondos de Jubilación y Pensiones (AFJP), S.A., Consolidar Cía de Seguros de Vida, S.A.
and Consolidar Seguros de Retiro, S.A. (through Banco Francés, in percentages ranging
from 63.82% to 66.67%). On this date, the Group proceeded to effect an extraordinary
redemption of goodwill pending amortization, corresponding to Consolidar AFJP, for the
sum of 109 million euro.
Provincial Group (Venezuela)
In financial years 2001 and 2000 small purchases were effected, bringing the Bank’s
shareholding in the Provincial Group up to 52.64% at 31 December 2000 and to 54.98%
at 31 December 2001.
Total assets contributed to the Group by companies in the Provincial Group accounted for
6,043 and 6,055 million euro and financial income for 811 and 788 million euro in financial
years 2001 and 2000, respectively.
BBVA-Bancomer, S.A. Financial Group (Mexico)
The total direct and indirect shareholding in BBVA Bancomer S.A. de C.V. Financial
Group was 48.76% at 31 December 2001.
BBV-Probursa, S.A. de C.V. Financial Group and group companies, including Banco
Bilbao Vizcaya México, S.A. of particular note, joined the Group in July 1995.
In the first half of 2000 it was agreed to effect a merger between BBV-Probursa, S.A. de
C.V. Financial Group and BBVA Bancomer, S.A. de C.V. Financial Group (which holds
shares of note in BBVA Bancomer, S.A with a 100% shareholding, and in the Fund
Manager for Retiro Bancomer, S.A. de C.V. -AFORE Bancomer – with a 51%
shareholding). The merger was effected in July 2000, after the Group had subscribed a
capital increase in BBV-Probursa, S.A. de C.V. Financial Group in June 2000 for the sum
of 1,400 million dollars.
The BBVA Group had a 36.6% shareholding at 31 December 2000 in BBVA Bancomer,
S.A. de C.V. Financial Group, as a result of the merger and after share purchases on the
open market for a sum of approximately 325 million dollars.
As part of the restructuring process of the Mexican business, in the last quarter of the
financial year 2000, the entire traditional banking business of BBV México, S.A. de C.V.
was transferred to BBVA Bancomer, S.A., de C.V.. The former changed its name to
BBVA, Bancomer Servicios, S.A. de C.V., and focused its business on the provision of
services.
III/29
At the end of the financial year 2000, an agreement was made with Bank of Montreal to
purchase an additional 2.2% of the capital of BBVA Bancomer, S.A. de C.V. Financial
Group for the sum of approximately 125 million dollars. This operation was effected in
2001.
Also, on 4 April 2001, the Group made an agreement with Bank of Montreal to purchase
9% of its shareholding in BBVA Bancomer, S.A., de C.V. Financial Group - 812 million
shares- that resulted in an investment of 558 million dollars. The operation was effected in
two stages. First, 500 million shares were purchased on 5 April 2001, which brought the
shareholding up to 45%. And secondly, 312 million shares were purchased, bringing up
the shareholding in BBVA Bancomer, S.A. de C.V. Financial Group up to 48 %. In
addition, during the financial year 2001 other purchases were effected to the sum of 140
million dollars, bringing the total shareholding in BBVA Bancomer S.A. de C.V. Financial
Group up to 48.76% at 31 December 2001. Total goodwill recorded by BBVA Bancomer
S.A. de C.V. Financial Group in the financial year 2001 stood at 739 million euro.
In February 2001, BBVA Bancomer Capital Trust, of which BBVA Bancomer, S.A. de C.V.
has a 100% shareholding, issued “capital notes” to the sum of 500 million dollars, with an
annual yield of 10.5% and accrual at 10 years.
Assets and financial income contributed to the Group by companies that make up BBVABancomer stand at 71,080 and 7,473 million euro, respectively, for the financial year 2001
(61,842 and 5,436 million euro in 2000).
BBVA Brasil Group
In August 1998 the Group took over the control of Banco Excel Económico, S.A. (now,
Banco Bilbao Vizcaya Argentaria Brasil, S.A. - BBVA Brasil) and secured almost the entire
capital with the full subscription of a capital increase effected by the bank, for a sum of
853 million dollars.
In addition, as part of the capitalization plan authorised by Brazilian authorities, the Group
established a deposit in BBVA Brasil for the sum of 700 million dollars, in order to convert
this into capital in future financial years. 31 million dollars of this sum was converted in
December 2000. During the financial year 2001, 46 million dollars have been converted.
Companies belonging to the BBVA Brasil Group have contributed 6,390 million euro to
Group assets and 762 million euro to financial income in the financial year 2001 (5,443
and 756 million euro, respectively, in the financial year 2000).
BBVA Banco BHIF Group (Chile)
In September 1998 the Group purchased a 44% shareholding in the capital stock BBVA
Banco BHIF, S.A., taking over management of this group which is headed by the
aforementioned Chilean financial entity. In 1999, it purchased additional shares in this
entity, by 31 December 1999 it had a 53.3% shareholding, and in September 2000 the
Group completed the capital contribution subscribed in September 1998, for a sum of 108
million dollars, which brought the Group’s shareholding up to 62.6% in December 2000. At
31 December 2001 the shareholding in BBVA Banco BHIF, S.A. stood at about 62.89%.
Assets and financial income that this bank and its subsidiaries have contributed to the
Group in 2001 amounted to 4,181 and 364 million euro, respectively (4,281 and 423
million euro, respectively, in the financial year 2000).
III/30
AFP Provida, S.A. (Chile)
On 1 July 1999, the Group purchased 41.17% of the capital stock and took over the
management of the Pension Fund Manager of Provida, S.A.. The purchase was effected
by means of the issue of 19,780,108 new shares, agreed at the Extraordinary General
Shareholders Meeting held on 30 June 1999, and these new shares were exchanged for
all the shares representing the capital of the holding companies in this shareholding in
AFP Provida, S.A. (Corp Group Pensions Ltd and Brookline Investment Ltd).
In addition, the Group made further investments in AFP Provida, principally through the
majority subscription of a capital increase effected by the company in October 1999, that,
together with purchases effected on the market during financial years 2001 and 2000 for
11 and 51 million dollars, respectively, brought the Group’s shareholding to 64.32% and
61.89%, at 31 December 2001 and 2000, respectively.
Operating income contributed to the Group in 2001 and 2000 by AFP Provida, S.A,
basically from commission, amounted to 127 and 122 million euro, respectively.
IV/1
CHAPTER IV
4.1.
Comprehensive accounting and financial information of the BBVA Group referring to 31
December 2001, 2000 and 1999, which has been taken from the public financial statements
corresponding to the years 2001, 2000 and 1999, audited by Arthur Andersen and Cía., S.
Com. can be found below.
The data corresponding to the year 1999 are based on the pro forma financial statements of this
year.
4.1.1.
Description of the principal activities and business of the BBVA Group
BBVA is an internationally renowned diversified business group. Banking, insurance, investment
fund and pension fund administration, brokering, property developer, global custody, equity
management, and intermediation in the large treasury, capital and currency markets are just
some of the activities carried out by the Group.
As a business group, the aim of BBVA is to achieve synergy between the companies and areas
of business, which constitute it.
Banking activity is carried out through a network of offices distributed at follows:
Spain
BBVA America
Rest of the world
3.620
4.161
207
Total
7.988
The Group’s total assets at 31 December 2001 came to 309,246 million euro, with a network of
7,988 offices, a staff of 98,588 and an income before tax of 3,634 million euro. Its stock
exchange capitalization at the close of the year 2001 was 44,422 million euro.
IV/2
BUSINESS AREAS
The financial statements by area of business summarize the results of the Group’s different
areas of business and are obtained from the map of areas and business units that make up the
administrative structure of the Group itself. Each unit has its own financial statements, which are
drawn up in accordance with the concepts and scheduling of the accounting and administrative
criteria
In order to guarantee uniformity and homogeneity between the financial years 2001 and 2000,
the data corresponding to the financial year 2000 published in its time were modified by
applying the new criteria used in the model and, logically, the same areas of business were
aggregated. As a result, the business, which in the year 2000 figured in the areas of Europe and
America, was divided up between the remaining areas when these disappeared, chiefly
between Retail Banking and Corporate Banking.
The contribution of these areas of business to the attributed income during the financial year
2001 was as detailed below:
AREA
TOTAL ASSETS ATTRIBUTED
INCOME
R.O.A.
R.O.E.
200.897
1.482
0,89
21,6
Asset Administration and Private Banking
14.635
471
4,52
54,7
Corporate Banking
54.820
316
0,69
32,5
Investment Banking
93.134
201
0,21
50,1
Retail Banking
Industrial Group and other areas
Extraordinary Restructuring and others
Inter-area positions
TOTAL
10.537
1.004
8.39
31,2
-50.650
- 1.111
-
-
-14.127
-
-
-
309.246
2.363
0,99
18,0
The negative amounts included under the epigraph Extraordinary Restructuring and others
correspond to those concepts, which, due to their nature, cannot be assigned to any of the
business areas of the Group. Specifically, they include the expenses generated by business
support areas, which were not transferred to the specific areas of profit, as well as institutional
or corporate expenses; goodwill amortisation, extraordinary provisions and the balancing entry
of those synergic actions generated from induced business: income assigned to areas of
business as a result of its participation in the Group’s activities and whose cost cannot be
transferred to the clientele. With respect to the epigraph Inter-area positions, this includes
positions that cross into different areas of business.
The principal amounts and balances corresponding to the areas are detailed underneath:
IV/3
FINANCIAL STATEMENTS BY AREAS OF BUSINESS
RETAIL BANKING
BALANCE
%
Promemoria: Domestic Retail
Banking
2001
%
2000
ASSET ADMINISTRATION
AND PRIVATE BANKING
2001
%
2000
CORPORATE
BANKING
2001
2000
%
2001
2000
Credit investment
116.253
106.024
9,6%
69.907
64.526
8,3%
2.351
2.358
-0,3%
40.407
36.542
10,6%
38.185
39.052
-2,2%
60
67
-10,7%
1.468
1.304
12,6%
4.035
3.383
19,3%
Liquid assets
25.063
17.703
41,6%
282
589
-52,1%
10.012
6.587
52,0%
3.687
3.681
0,2%
7.819
10.355
-24,5%
7.158
8.816
-18,8%
175
418
-58,1%
6.237
3.765
65,6%
Fixed assets
4.882
4.951
-1,4%
781
750
4,1%
326
334
-2,2%
38
49
-24,0%
Other assets
8.695
7.285
19,4%
1.576
1.311
20,3%
303
445
-31,7%
416
603
-31,1%
TOTAL ASSETS
200.897
185.370
8,4%
79.764
76.059
4,9%
14.635
11.446
27,9%
54.820
48.023
14,1%
Creditors and loan stock
126.419
117.420
7,7%
45.575
45.239
0,7%
8.203
6.146
33,5%
17.926
14.948
19,9%
1.783
1.573
13,3%
1.206
1.049
15,0%
616
554
11,5%
346
307
12,8%
Results
Own funds apportioned
10.957
11.076
-1,1%
5.575
4.998
11,6%
1.470
1.682
-12,6%
1.948
1.849
5,3%
. Own strict funds
6.707
6.841
-2,0%
3.324
2.975
11,7%
762
812
-6,1%
1.080
951
13,5%
.
Other
resources
4.250
4.235
0,3%
2.251
2.023
11,3%
708
870
-18,7%
868
898
-3,3%
Liquid liabilities
24.631
20.227
21,8%
2.125
2.491
-14,7%
3.485
2.573
35,5%
11.476
11.035
4,0%
22.362
20.258
10,4%
22. 183
19.708
12,6%
397
0
n.s.
15.721
14.060
11,8%
Other liabilities
14.745
14.816
-0,5%
3.100
2.574
20,4%
464
491
-5,5%
7.403
5.824
27,1%
200.897
185.370
8,4%
79.764
76.059
4,9%
14.635
11.446
27,9%
54.820
48.023
14,1%
accountable
TOTAL LIABILITIES
2001
2000
%
2001
2000
%
2001
2000
%
2001
2000
%
GROSS MARGIN
7.865
6.214
26,6%
2.924
2.575
13,6%
171
177
-3,2%
485
462
4,8%
Commissions for services
2.891
2.308
25,3%
1.338
1.380
-3,0%
1.050
963
9,0%
105
95
10,0%
10.756
8.522
26,2%
4.262
3.955
7,8%
1.221
1.140
7,1%
590
557
5,7%
366
365
0,2%
58
54
6,2%
6
22
-73,3%
51
35
48,5%
PROFIT AND LOSS ACCOUNT
BASIC MARGIN
Results of financial
operations
OPERATING INCOME
11.122
8.887
25,1%
4.320
4.009
7,8%
1.227
1.162
5,6%
641
592
8,2%
Personnel expenses
-3.323
-2.954
12,5%
-1.364
-1.363
0,0%
-247
-234
5,4%
-100
-103
-2,6%
General expenses
-2.350
-2069
13,6%
-696
-695
0,2%
-192
-182
5,8%
-50
-50
0,5%
Amortisation
-554
-462
19,8%
-138
-123
12,3%
-44
-45
-3,9%
-7
-7
-7,0%
Other products and operating
charges
-147
-27
n.s.
-52
-42
24,5%
0
0
24,1%
-1
-3
-49,3%
4.748
3.375
40,7%
2.070
1.786
16,0%
744
701
6,3%
483
429
12,3%
Net results for equity
accounted earnings
38
-15
n.s.
18
7
153,7%
6
12
-47,4%
4
4
-2,1%
BUSINESS MARGIN
4.786
3.360
42,4%
2.088
1.793
16,5%
750
713
5,3%
487
433
12,2%
Capital gains and
extraordinary results
-743
-266
179,6%
14
11
22,0%
29
-12
n.s.0
39
-1.746
-954
83,0%
-395
-281
40,5%
-3
-10
-75,1%
-123
-95 29,8%
91
94
-3,0%
102
92
11,1%
24
14
77,0%
106
69 57,1%
2.388
2.234
6,9%
1.809
1.615
12,0%
800
705
13,7%
509
445 14,4%
-605
-661
-8,5%
-603
-566
6,6%
-184
-151
21,7%
-163
-138 18,1%
1.783
1.573
13,3%
1.206
1.049
15,0%
616
554
11,5%
346
307 12,8%
-301
-239
26,0%
-82
-78
5,8%
-145
-151
-4,1%
-30
-47 -37,3%
11,1%
15,7%
17,3%
OPERATING PROFIT
Loan reorganization
Other results
INCOME BEFORE TAX
Corporation tax
CONSOLIDATED NET
PROFIT
Minority interests
ATTRIBUTABLE PROFIT
316
38 2,2%
1.482
1.334
1.124
971
471
403
ROE
21,6%
21,0%
35,6%
33,3%
54,7%
52,7%
32,5%
28,5%
260 22,0%
COST-TO-INCOME RATIO (%)
51,0%
56,5%
47,7%
51,4%
35,8%
35,8%
23,4%
25,8%
IV/4
INVESTMENT BANKING
BALANCE
2001
Credit investment
%
2000
INDUSTRIAL GROUP AND
OTHER AREAS
2001
%
2000
EXTRAORDINARY
RESTRUCTURING AND OTHERS
2001
%
2000
665
371
79,2%
299
218
36,8%
2.760
4.253
-35,1%
20.334
21.452
-5,2%
6.783
6.917
-1,9%
17.453
12.953
34,8%
Liquid assets
21.087
29.138
-27,6%
483
618
-21,7%
17.541
27.154
-35,4%
45.787
37.718
21,4%
0
0
n.s.
0
0
n.s.
Fixed assets
30
42
-28,1%
854
1.101
-22,5%
5.606
5.213
7,6%
Other assets
5.231
6.049
-13,5%
2.118
1.297
63,3%
7.290
5.639
29,3%
TOTAL ASSETS
93.134
94.770
-1,7%
10.537
10.151
3,8%
50.650
55.212
-8,3%
Creditors and loan stock
6.937
10.390
-33,2%
821
320
156,5%
36.300
41.665
-12,9%
Results
211
188
12,5%
1.030
1.164
-11,5%
-977
-872
12,4%
Own funds apportioned
668
634
5,4%
5.003
3.665
36,5%
4.091
3.117
31,3%
. Own strict funds
394
367
7,3%
3.780
2.783
35,8%
-549
402
n.s.
. Other accountable resources
274
267
2,6%
1.223
882
38,8%
4.640
2.715
70,9%
Liquid liabilities
65.638
65.840
-0,3%
44
3
n.s.
3.761
7.526
-50,0%
12.955
11.917
8,7%
3.095
4.166
-25,7%
5.488
1.855
195,9%
6.725
5.801
15,9%
544
833
-34,8%
1.987
1.921
3,5%
93.134
94.770
-1,7%
10.537
10.151
3,8%
50.650
55.212
-8,3%
Other liabilities
TOTAL LIABILITIES
2001
%
2000
2001
%
2000
2001
%
2000
GROSS MARGIN
209
162
29,4%
51
-66
n.s.
46
51
-11,1%
Commissions for services
109
141
-22,9%
2
1
188,1%
-39
-56
-30,6%
BASIC MARGIN
318
303
5,0%
53
-65
n.s.
7
-5
n.s.
Results of financial operations
52
67
-22,3%
76
349
-78,4%
-61
-60
1,3%
OPERATING INCOME
370
370
0,1%
129
284
-54,7%
-54
-65
-16,4%
Personnel expenses
-95
-106
-11,0%
-26
-27
-1,8%
-447
-343
30,3%
General expenses
-73
-68
6,8%
-48
-35
38,0%
97
93
5,8%
-8
-9
-5,4%
-7
-8
-15,3%
-122
-121
1,5%
0
0
n.s.
-3
-4
-22,8%
-6
-3
58,0%
194
187
4,3%
45
210
-78,7%
-532
-439
20,9%
3
0
n.s.
261
448
-41,8%
-5
55
n.s.
197
187
5,9%
306
658
-53,6%
-537
-384
39,6%
-1
-5
-69,4%
828
1.028
-19,4%
79
-229
n.s.
Amortisation
Other products and operating charges
OPERATING PROFIT
Net results for equity accounted earnings
BUSINESS MARGIN
Capital gains and extraordinary results
Loan reorganization
-6
-8
-23,2%
-6
-1
n.s.
-36
95
n.s.
Other results
78
59
32,1%
-78
-389
-80,1%
-887
-519
71,9%
INCOME BEFORE TAX
268
233
15,0%
1.050
1.296
-18,9%
-1.381
-1.037
33,3%
Corporation tax
-57
-45
25,3%
-20
-132
-84,6%
404
165
143,6%
CONSOLIDATED NET PROFIT
211
188
12,5%
1.030
1.164
-11,5%
-977
-872
12,4%
Minority interests
-10
-12
-10,1%
-26
-39
-32,9%
-134
-194
-31,3%
14,0%
1.004
1.125
-10,7%
-1.111
-1.066
4,4%
ATTRIBUTABLE PROFIT
201
176
ROE
50,1%
39,3%
35,7%
COST-TO-INCOME RATIO (%)
45,2%
47,1%
21,7%
IV/5
The traditional activities of retail banking and corporate banking performed particularly well
during the financial year 2001, showing a considerable increase in the volume of loans and
resources administered, alongside the subsequent repercussion this had on the principal
margins of the profit and loss account. The business margin recorded an increase of 16.5% in
the domestic Retail Banking and one of 12.2% in Corporate Banking. Significant improvement
could be seen in the ROE of both areas as well as in the cost-to-income ratio in comparison
with that of the previous financial year.
The Asset Administration and Private Banking area, and that of Investment Banking, were
affected by the deceleration of the economies and the high level of unpredictability seen in the
financial markets this year; this situation restricted the growth of the business margin to 5-6%.
The profit levels reached in both of these areas are responsible for the high ROE levels.
On the other hand, the results of the Industrial Group showed a decrease, as a consequence of
a lower number of disposals carried out during the year 2001, and a reduction in the profit of the
equity accounted earnings of the companies in which BBVA has a shareholding with interests in
Argentina.
Retail Banking
During the financial year 2001, the Retail Banking area included the Group’s minority
businesses in Europe (including Spain) and America, as well as the company banking business
in the domestic market, the Finanzia Group, specialized in financing the sale of consumer and
industrial products, and insurance banking activity.
The evolution of the top part of the Profit and Loss account of the areas in 2001 was clearly
positive, showing a growth of over 25% in the gross margin and in commissions. On the other
hand, lower increase seen in expenses contributed to the fact that the business margin showed
a year-on-year increase of 42.4%, placing it at 4,786 million euro.
As a result, the cost-to-income ratio was 51%, showing an improvement of 550 basic points.
The Argentinean crisis made it necessary to carry out considerable restructuring which placed
the income before tax of the area at 2,388 million euro, showing an increase of 6.9% when
compared to the previous year.
Attributable income increased 11.1%, reached 1,482 million euro, while the ROE improved 6
decimal points reaching 21.6%.
Domestic retail banking, which basically included all the minority banks and company banks in
Spain, showed considerable growth in the most important profits. The increase in the gross
margin of 13.6% was thanks to the increase in investment and to a price policy that led to a
widening of the differential with the clientele. Maintaining the transformation costs at a level
similar to that of the year 2000 contributed to the fact that the operating profit rose to 2,070
million euro, showing a year-on-year increase of 16%. The cost-to-income ratio rose 370 basic
points, placing it at 47.7%.
Loan reorganization rose more than 40% during the financial year thanks to the provision of the
insolvency statistical coverage fund, after the third quarter of the year. As a result of all this, the
attributed profit, 1,124 million euro, showed a 15.7% improvement on the previous year. The
ROE increased 230 basic points reaching 35.6%.
IV/6
As far as the results of the Group’s banking business in Latin America is concerned, one point
worth special mention is the considerable growth taken place in the different lines of income,
influenced by the incorporation of Bancomer, since July 2000. The 35% increase in the gross
margin, the excellent performance of commissions, as well as the lower growth in operating
costs all contributed to the 66% rise undergone by the operating profit.
Nevertheless, the high number of restructurings that resulted from the situation in Argentina led
to a reduction of 4% of the attributed profit in comparison with the previous financial year.
Omitting the Argentinean contribution leaves us with an attributed profit that shows an increase
of more than 100%.
A detailed analysis of the most important aspects regarding the evolution and development of
the activity carried out by the Group’s banks in Latin America can be found in the section
specifically dedicated to this region. (Pages 19 and ss of this chapter).
The minority business in Europe continued to go well during 2001, with Portugal making an
excellent contribution. All principal profits of the unit had undergone considerable growth, above
all the operating profit, which showed an increase of 65%, due to how well the activity had
performed and to an efficient control of expenses. Attributed profit reached 13 million euro, well
above that of the previous financial year.
Banca Comercial España (Commercial Banking) administered the business coming from
sectors dealing with individuals, shops and small businesses, including two specialized units
with their own networks, Banca Personal and Banca Hipotecaria.
This business is supported by a large client base, over 13 million at the end of the year. At 31
December 2001, the unit managed an investment of 52,500 million euro and total resources of
85,400 million. During the financial year 2001, loans underwent an increase of 8.9%, while the
client resources of the resident sector rose 5.5%.
Banca Comercial occupies a position of considerable importance in the minority market, with a
22% share of the private individual market, 20% share of shops and 36% share of small
businesses (data obtained through a contrast with those published by FRS IBÉRICA Market
Researchers, on a stratified sample of made up of 8,000 private individuals, 1,600 small
companies and 1,200 shops).
The reorganization of the network of offices included the opening of new establishments in
areas of expansion and mergers where overlapping existed. This led to the configuration of a
network of 3,486 offices, supported by central and territorial structures, which were adapted to
facilitate the management process.
One of the most important aspects of the evolution of the distribution model is Plan emigr@,
aimed at promoting the use of alternative channels for ordinary transactions or those with no
commercial value. In 2001, 69% of cash drawdowns were carried out using the network of cash
dispensers and 81% of the transactions carried out to query balance or account movements
were made using self-service channels and other channels additional to the office itself.
The Banca Hipotecaria unit solely manages the property development business, by means of a
specialized network that attends to all its financial and technical requirements, including studies
and project development related to the property development sector.
Despite the fact that in the financial year 2001 the private housing market in Spain slowed down
after several years of growth, BBVA increased its investment volume in the mortgage
development sector by 25.1%, maintaining its prominent position.
Loan subrogation to development companies made it possible to formalize mortgage financing
transactions with private individuals to the tune of 2,194 million euro.
BBVA also occupies a prominent position in the consumer loans sector, with more than 1.3
million clients using this means of financing.
IV/7
With regard to payment means, at 31 December 2001 there were almost 7 million BBVA cards
in Spain, placing the Group as one of the most important on the market. With 2.3 million credit
cards in circulation, it holds a 14.6% share of the market, an improvement of 30 basic points
that year, meanwhile, with regard to the 4.6 million debit cards in circulation, its market share is
14.3%, showing a gain of 50 basic points in the financial year, and reinforcing its pre-eminent
position (Source: SEMP –Sociedad Española de Medios de Pago [The Spanish Company of
Payment Methods]).
BBVA launched the first pre-paid bankcard: the Tarjeta Regalo. An innovative product, which
allows a client to precharge the card with the amount of money they choose and then given it to
a friend or relative as a gift, without the beneficiary having to be a client of BBVA. This product,
which covers the needs of many clients when making a gift, was warmly received and more
than 20,000 cards were distributed during the month of December.
2.1 million clients have their salaries or pensions paid into BBVA by credit transfer, which
represents a market share for salaries of 11.1% and for pensions one of 8.7% (Source for
salaries: INE – Survey on the Active Population; for pensions: the Ministry of Work and Social
Services - Pensioners).
Regarding Prevision Plans, in 2001 the amount of contributions to individual pension plans
came to 739 million euro, and there was a total of 920,000 plans in the Banca Comercial
network by the end of the financial year, with a volume of business of 5,096 million euro. A
market share of 19% (Source: Inverco), places BBVA in a prominent position in this sector.
Banca de Empresas (Company Banking): this is the unit of the Group specialized in
administrating the sector dealing with small and medium-sized companies in Spain. It had a
network of 231 offices, which were dedicated to covering the financial and service needs of their
clients, aiming to offer these the highest level of quality possible. In this market sector, BBVA
possessed a market share of 34% and one of 16% as the most important supplier of financial
services (Source: FRS Ibérica 2000).
During this financial year, more than 14,000 small and medium-sized companies entered into a
financial relationship with BBVA, bringing this unit’s client base to over 95,000 businesses. Also
this year a process to tighten connections with clients and encourage loyalty was put underway.
At the close of 2001, Company Banking had administered 16,400 million euro of investment,
2,800 million of non-repayment risks and 6,900 million of resources. The gross margin saw a
increase of 17% thanks to a growth of 9.5% in investment and one of 15% in client resources,
as well as to the price policy applied. Commissions reached 180 million euro and expenses were contained, bringing
the operating profit up to 500 million euro, a growth of almost 24%. The continuous, and effective recovery
management helped achieve an attributed profit of 268 million euro.
BBVA Finanzia Banco de Crédito, S.A (BBVA Finanzia Credit Bank): this bank of the Group
was specialized in sales financing, and commercialised its products through collaboration
agreements with manufacturers and distributors in Spain and Portugal. It also acted as an
administrating unit for co-branded card products and the renting of industrial equipment and
vehicles.
Its commercial activity was structured in three different areas: consumer products, credit cards
and capital assets.
In the year 2001 the turnover for new business, not including inventory financing, reached 1,852
million euro and the loan portfolio 2,065 millions, which represents a year-on-year growth of
16% and 23%, respectively. The number of clients at the close of the financial year rose to 2.3
millions.
IV/8
Consumer and credit card activity had a turnover of 940 million euro, with 172,542 new Visa
cards and 278,579 private cards being issued. With regard to capital assets, outstanding
investment reached 431 million euro, showing an overall growth of 13%, although equipment
renting actually recorded an increase of 33%.
The vehicle division had a turnover of 502 million euro and an outstanding investment of 996
millions, representing a rise of 19%. New investment in car hire came to 216 million euro,
providing a fleet of 19,568 units by the end of the financial year, a 14 % increase as compared
to the previous financial year.
The Insurance Unit was responsible for the insurance business of the Group, which was
carried out through 33 companies (insurance companies, brokers and agencies) in Spain,
Andorra, Ireland and Latin America (Argentina, Brazil, Chile, Colombia, El Salvador, Mexico,
Puerto Rico and Venezuela). During the financial year, as part of the reorganization of the
insurance activity structure, the Group’s stockholding in La Seguridad (Venezuela) and Seguros
Probursa (Mexico) was sold. In addition, its stockholding in Finaxa was reduced.
The volume of premiums issued during the financial year added up to 2,720 million euro
(excluding unit linked) showing a year-on-year difference of 20.5%, which was aided by the
business consolidation of Bancomer in Mexico and by the externalisation of pension
commitments in Spain.
During the financial year 2001 Spain underwent consolidation after the 2000 merger between
BBVA Insurance and BBVA Life and Pensions. The Group provided insurance coverage to
more than 3,1 million people, administering resources worth 7,625 million euro and issued
premiums of 1,622 million euro.
Latin America is an area where the Group’s insurance activity is currently undergoing natural
expansion, showing a high level of synergy between the banking business and that of pensions.
The total volume of premiums issued in the region rose to 1,098 million euro, showing an yearon-year growth of 46%, influenced by the incorporation of Seguros Bancomer in Mexico, where
the Group held a market share of 42.5% in the insurance banking channel (Source: AMIS,
September 2001).
Asset Administration and Private Banking
This area covers all of the private banking business as well as that of the pension fund
administration carried out by the Group, it also includes investment fund administration in
Europe and the deposit and custody of securities. The most important perimeter changes in the
area took place in Mexico and included the acquisition of the pension fund manager Afore
Bancomer during the second half of the year 2000, and the sales of the agents Profuturo in
Mexico and Futuro in Bolivia, which occurred in 2001.
During the year 2001, this area was especially affected by the evolution of the markets, which
caused a drop in activity and a high level of unpredictability and made decisions regarding
investment difficult. In this environment, commissions rose 9%, chiefly based on the pensions
business, and the operating profit reached 744 million euro, representing a growth of 6.3%. The
attributed profit, 471 million euro, was 17.3% higher than the year before, creating a ROE of
54.7%, an increase of 200 basic points in the financial year.
IV/9
Investment Funds: The total equity of investment funds in Spain decreased by almost 3%
during the financial year 2001, and this reduction was chiefly a result of the adverse evolution of
the markets. The change is the composition of the total equity is worth noting, as it was the
more conservative families of funds, which are less exposed to market evolution, that gained
more relevance, above all FIAMM and guaranteed funds.
The volume of funds of the BBVA Group dropped slighted more than 6%. Notwithstanding, the
equity of the families of funds less exposed to market evolution performed extremely well. As a
result, the volume of FIAMM grew more than 50% reaching almost 10,400 million euro, and the
net worth of the guaranteed funds was even higher. The guaranteed funds are, perhaps, the
clearest example of the change in preferences of the contributors that was witnessed this
financial year. The BBVA Group responded to this demand by adapting itself to the needs of its
clientele, and, in this way, although the system underwent a drop of almost 2% in this category
of funds, the Group showed a growth of 6%.
The Group’s market share of investment funds in Spain was 20.53% (Source: Inverco) at the
close of the financial year, 78 basic points lower than the year before. The profitability obtained
from the different funds was, generally speaking, higher than the average seen in the system for
the corresponding families, and the level of commissions generated by the BBVA funds stayed
high.
The equity administered through the unit of special and international funds remained steady,
changing little in comparison with that of the previous year, reaching almost 1,350 million euro.
The funds administered through this unit (international funds, funds of funds and property funds)
showed up favourably in comparison with their competitors and in comparison with their
respective benchmarks. The results of the funds administered from Miami are worth special
attention as more than 70% of their net worth was included within the top quartiles of their
respective comparatives. In the same way, the equity of the Eurofondo Propiedad FII property
fund showed an increase of almost 17% during the year, and an annual profitability of almost
12%, 1 percentage point higher than that of its closest competitor.
Several projects were underway during the financial year and their aim was to streamline the
business and improve its efficiency. One of these projects was the fund merger process (which
changed the number of administered funds from 265 at 31 December 2000 to 188 by the end of
the financial year 2001), the implantation of a new catalogues of funds, the optimisation of
communication channels with clients and the improvement of the computer systems.
A decrease in the amount of equity administered by the investment fund units led to a drop in
commissions, which was partially offset by a very efficient administration of expenses that
showed an year-on-year reduction of 14%, bringing the cost-to-income ratio down to a
remarkable 18%. The attributed profit was 68 million euro, providing a ROE of 33%.
Pensiones España (Pensions Spain). This unit was in charge of administrating pension funds
in Spain, where the Group had two fund administration agencies and one consultancy firm. The
volume of equity administered in individual, employment and associated plans had increased to
10,682 million euro by the end of 31 December 2001, showing a year-on-year increase of 9.7%,
despite the adverse evolution of the financial markets. The number of contributors reached 1,13
million, 94,000 clients more than at the close of the previous year.
On 31 December 2001, BBVA controlled a market share of 22.4% of the pension fund business
in Spain. It administered an equity of 5,306 million euro in individual plans, controlling a market
chare of 18.7%, and a volume of 5,376 million euro in employed and associated plans,
representing a 27% share of the market. (Market share percentages were obtained from
Inverco).
IV/10
The growth of this business, the 14% increase in income from commissions, and the
containment of operating costs all led to a growth of 34.5% in operating profit and one of 26% in
attributed profit, which increased to 14 million euro after results were apportioned to other
areas, principally to Retail Banking. The cost-to-income ratio was 21.5% and the ROE 27.1%.
Pensiones América (Pensions America) In Latin America BBVA held a market share of
27.6% of the pensions business in terms of administered equity and one of 22.7% in terms of
the number of members. (Own source, drawn up based on the data obtained from the different
regulating bodies for the pensions sector in each country: in Argentina, Colombia, Chile,
Ecuador and El Salvador: Superintendencia de AFP (Pension Funds Regulatory Agency); in
Mexico, CONSAR (National Commission for Retirement Savings System); in Colombia and
Peru, Superintendencia de Banca y Seguros (Regulatory Agency for Banking and Insurance),
and in Bolivia and Panama, own sources).
During the financial year 2001, the process of restructuring the shareholding portfolio of pension
fund managers came to an end with the sale of shares in AFP Futuro in Bolivia and in Afore
Profuturo in Mexico. In addition, considerable savings were achieved in the merger of agents,
which had been carried out the previous financial year in Colombia and in El Salvador.
On the other hand, the Group is considering new opportunities in those countries were there is
a short-term plan to privatise pensions. In accordance with this strategy, 75% of the agent
Génesis in Ecuador was acquired through Provida, meaning 100% of the property was in their
hands, and in the year 2002 a new agent, BBVA Crecer, started up in the Dominican Republic.
Out of the results of the financial year, one worth particular attention was the how commissions
performed, undergoing an increase of 22.7%. On the other hand, maintaining costs at levels
similar to those of the previous financial year meant an increase in the operating profit of 46%,
at the same time as the efficiency improved considerably. This positive evolution and the
incorporation of 48 million euro from the sale of the interest in the agent Profuturo meant that
the attributed profit doubled in comparison with the one recorded in 2000, reaching 199 million
euro, which meant a ROE of 50.5%.
Private Banking. The private banking unit of the BBVA Group administered the portfolios and
equity of clients with a high net worth, offering a top quality service, based on comprehensive,
individualized administration carried out by highly specialised teams of professionals.
It included the activities of BBVA Privanza in Spain, Portugal, Switzerland and Jersey, as well
as those of the Group Banc Internacional-Banca Mora in Andorra and the branches in Miami
and Grand Cayman, forming an important network that managed more than 87,000 clients and
30,000 million euro in resources, providing BBVA with a strategic position in its natural markets
of Europe and Latin America.
Administered resources grew 6%, despite the negative impact produced by the lower value of
the portfolios associated with the crisis in the stock market, while the raising of new resources
increased 10%, with all units showing very positive evolution. Thanks to the increase in activity
it was possible to increase commissions 4.2%, and the attributed profit 167 million euro, slightly
higher than that of the previous financial year.
By the end of the financial year, the resources administered by BBVA Privanza were in excess
of 13,000 million euro, an increase of 8% on the balance of the same date one year previously
and 1,670 millions came from new clients that year. In this way, BBVA maintained its preeminent position in the high-equity Spanish market with a share of 28% in SIMCAVs (variable
income investment firms), according to the latest data published by the CNMV, which is double
that of its nearest competitor.
IV/11
Deposit and Custody: The deposit of securities belonging to collective investment institutions
and the custody of securities of non-resident institutional investors underwent considerable
growth this year, as a result of intensive effort inverted in the business dealings and its everincreasing efficiency of operation. The balances administered by this unit, not including those
from the investment funds of the Group itself, showed an increase of 8% and, by the end of the
year 2001, came to almost 100,000 million euro. The intermediate volume was twice that of the
previous year.
Corporate Banking
The Corporate Banking area included those activities the Group carried out with large
companies and institutions. This was done through two units that offered their clients
specialized and personalized attention: the Global Corporate Banking unit, which managed
large national and international business groups, and the Administrations Banking unit, which
managed institutions using two networks, Institutional Banking and the Banco de Crédito Local.
In the year 2001, the Banca Mayorista Global América (Global Majority Banking Unit) unit was
created to attend the needs of those Latin American businesses and corporations with offices
abroad, and which carried out activities around the world.
At the end of the financial year, the Corporate Banking area administered loans of over 40,400
million euro and balance sheet resources in excess of 17,900 millions, showing year-on-year
increases of 10.6% and 19.9%, respectively.
The results evolved very positively, thanks to the growth in activity and the adaptation of the
price policy to a scenario that offered a higher potential risk. Operating profit grew 8.2%, while
operating costs decreased 3% in comparison with the previous financial year, meaning an
improvement of 2.4 points in the cost-to-income ratio. As a result of this, operating profit grew
12.3% and attributed profit 22%, reaching 316 million euro. The ROE was 32.5%, an
improvement of 4 points in comparison with 2000.
Banca Corporativa Global (Global Corporate Banking). This included all activities connected
to relations with and services for large corporations. The central offices of these companies are
principally to be found in Spain, other European countries and the United States, and the vast
majority have offices around the world.
At 31 December 2001, loans administered totalled 26,200 million euro and the volume of
balance sheet resources 7,800 millions, showing increases of 13% and 49%, respectively.
The high level of penetration in the national market as well as the greater international presence
achieved through the globalisation strategy developed by the Global Clients unit, the expansion
of the business Global Trade Finance, as well as the competitive advantages provided by the
Group’s solid franchise in Latin America, all played a critical role in ensuring the increase in the
volumes that were administered.
These volumes of activity and the rising repreciation policy in margins and commissions led to
an increase in operating profit of11%, which, helped by cost containment, increased the cost-toincome ratio of the unit by 2 points, placing it at 21.2%. The operating profit rose 14.5%,
although domestic corporate banking evolved better than the international banking activity (the
former showed an increase of 22.4% and the latter one of 4%), as this was affected by the
macroeconomic climate to a greater extent. The attributed profit reached 238 million euro,
10.8% higher than the previous financial year.
IV/12
Administrations Banking. This was the Group’s specialised unit that administered activities
within the public administrations and private institutions sector, through BBVA Institutional
Banking and the Banco Crédito Local (BCL).
In 2001 loans underwent an increase of 8.4%, reaching 14,600 million euro. This evolution is
worth particular note taking into account that the breakdown of the BCL balance for the activity
including Dexia during March, which, in terms of loans, represented an expenditure of 1,028
million euro as well as other portfolio positions. The balance sheet resources also underwent an
increase, reaching 10,200 million euro by the end of the financial year.
The operating profit generated by the unit in 2001 grew more than 7% in comparison with that of
the previous financial year, thanks to the expansion of the business, the application of a price
policy more in keeping with the conditions of risk on the market and the control of operating
costs, which dropped 7%. Attributed profit was 87 million euro, showing a year-on-year increase
of 61%, which was partially influenced by the shareholding in BCL, as a result of the purchase
of the interest in the bank held by Dexia. Efficiency was 28.9% and the ROE 37%.
Institutional Banking. This was the unit specialised in the public administrations sector and it
also administered several groups belonging to the private sector (insurance companies,
professional associations, foundations, NGOs, medical institutions, associations, universities,
etc.).
In the year 2001, Institutional Banking took part in 23 tenders put out by the State General
Administration and was awarded a total of 21, which meant it was the exclusive provider of
several different financial services to bodies such as the National Institution of Public
Administration, the Ministry of the Presidency, General Judiciary Council, the Housing Institution
of the Armed Forces, the General Housing Department, the Spanish Agency for International
Cooperation, the Royal Disabilities Trust, and the Ombudsman, among others.
The volume of business administered by the Institutional Banking unit stood at 18,000 million
euro at 31 December 2001, with an investment of 7,000 million and 5,300 millions in balance
sheet resources, showing an annual growth of 36% and 2.2%, respectively. Attributed profit,
which was 46 million euro, was 17 million higher than that of the financial year 2000.
Banca de Crédito Local (BCL) - (Local Credit Bank). This entity specialised in providing longterm financing to National Public Administrations –autonomous communities, local corporations,
their organizations and subsidiaries–. By 31 December 2001, investment volume had reached
7,600 million euro, thanks to a high market penetration and the intensification of commercial
activity. Attributed profit grew 16 million euro reaching a total of 41 millions, which was due in
part to Dexia’s aforementioned expenditure.
BCL offered a broad spectrum of products with a high added value specifically directed at the
institutional sector, including both investment banking services and flow intermediation. During
this financial year, new products, such as renting and factoring, were added to this range, as
were distribution channels and technological products, electronic banking and internet banking
(www.bcl.es) service portals (Afina and Municipia).
BCL was rated individually by the principal credit reference agencies, and was awarded the
same levels as BBVA (Aa2 from Moody’s, AA- from S&P and AA- from Fitch), and in 2001 it
promoted the use of both short-term and long-term international financing programmes,
IV/13
Investment Banking
The Investment Banking area includes the Group’s activities in treasury, capital markets and
stock markets, both in Spain and abroad, as well as the brokerage company Altura and banking
relations with other international banks.
Market evolution in 2001 was extremely unpredictable and uncertain. However, this did little to
impede the growth of both the income in the Investment Banking area and the attributed profit,
thanks to the strategic orientation towards clients, which compensated the unpredictability of the
markets. Close collaboration between the Corporate Banking and Investment Banking areas led
to a high number of operations with clients.
The gross margin showed a year-on-year increase of 29.4%, which was principally a result of
the position adopted in the face of the successive interest rate reductions, affecting both the
euro and the dollar. On the other hand, commissions dropped almost 23% as a result of a lower
volume of intermediation in stock operations, partially offset by the higher results achieved from
the activities carried out in the capital markets. Hence, the operating profit remained at a level
similar to that of the previous financial year. The 4% reduction in operating costs, a
consequence of streamlining structures, led to an improvement in the cost-to-income ratio
(45.2% as compared to 47.1% in 2000) and a growth of 4.3% in the operating profit. An
improvement in the performance of the bottom part of the account upped the attributed profit by
14%, placing it at 201 million euro. The ROE reached 50.1%, almost 11 points higher than that
of the previous financial year.
Spanish Markets. The gross margin of this unit showed a year-on-year increase of 29%, which
was a result of good administration in the face of reductions in the interest rates and the
expectations of a rise in unpredictability, which were later confirmed by the market. On the
contrary, the commissions and results of the financial operations evolved negatively, in keeping
with the weak position of the fixed-income markets, which meant that the operating profit
increased 11%. The decrease in transformation costs meant a growth of 37% in the operating
profit, whilst the attributed profit increased 32%.
Global Markets. This evolution of this unit was rather similar, showing an increase of 50% in
the gross margin thanks to the position adopted in the face of reduced interest rates and the
increasing unpredictability recorded in the geographic areas, the decreases in the commissions
and results of financial operations. Operating profit stayed at similar levels to that of 2000. The
above, together with a strong reduction in operating costs, caused a growth of 40% in the
attributed profit.
Capital Markets. Through this unit the Group participated in several operations for both
residents and non-residents, leading to an increase in commissions of 82%. The lower results
from financial operations were offset by a reduction in transformation costs, meaning a growth
of 66% in the operating profit and one of 43% in the attributed profit.
BBVA became the number one Spanish bank in the insurance of bond issues, the third bank
worldwide in the issue of preference shares, and the only Spanish institution to make the top
thirty world banks in syndicated loan insurance (outside the United States), according to the
international rankings drawn up by Thomson Financial/IFR. In Latin America, BBVA held a preeminent position, occupying second place in the international League Tables for syndicated
financing.
IV/14
The Capital Markets unit, in collaboration with the Spanish Markets and Global Markets units,
launched bond issues such as those of Vodafone, 400 million euro and which was the first issue
for a foreign company in which a Spanish bank acted as sole lead manager and sole
bookrunner; Deutsche Telekom AG for 152 million euro, where it again acted as sole lead
manager; BBVA International Limited for 340 million euro; BBVA Preferred Capital Ltd. for 240
million dollars; the Telefónica S.A. issue for the amount of 2,000 million euro, where BBVA was
joint bookrunner; and the two Repsol-YPF issues for a total of 1,650 million euro, where BBVA
led the operation in the position of global coordinator. What is more, in 2001 BBVA remained in
the number one spot as market maker for the issues of the Generalitat de Catalunya (the
autonomous government of Catalunya).
Regarding operations dealing with Latin American issues, worth special note was the issue of
preferential stock of Bancomer for the amount of 500 million dollars, in which BBVA was joint
bookrunner. In addition, as joint lead manager, BBVA led the issue of the Republic of Colombia
for 200 million euro and was the out of order co-lead in the issue of the Republic of Brazil for the
amount of 1,000 million euro.
Other exceptional operations worth highlighting are: the financing of Energías Eólicas Europeas
(European Eolian Energy) for 914 million euro, where BBVA acted as the consultant bank,
insurer and agent, and which was the largest financing operation carried out in the renewable
energies sector worldwide and the highest amount of project financing carried out to date in
Spain; the securitization of future exportation receipts for Petrobras for the amount of 750
million dollars, where BBVA acted as joint lead manager and joint bookrunner; two preferential
stock issues for Repsol amounting to 3,000 million euro, where BBVA acted as joint lead
manager and joint bookrunner – in this case, the action of the Group’s commercial network
played a critical role in its placing; and the insurance of the purchase by two private equity
companies (Paribas Affaires Industrielles and Suala Capital Partners) of the business M IVISA
Envases, which was the largest leveraged buy out operation carried in Spain in 2001.
Corporate Finance Corporate Finance activity included advising, mergers and acquisitions as
well as the activity of variable income origination and equity capital markets in Latin America. In
Spain and the rest of Europe the rhythm of origination and securing of mandates was high,
despite the slowing down in activity seen worldwide. Interest in investment opportunities in
southern Europe remained high and a growing interest in Eastern Europe was also noted,
however, Latin America was affected by the temporary slowing down seen in investment. In the
United States activity was conditioned by the high level of competition in the sector and by the
cancellation or deferment of operations.
During 2001 the unit closed a total of 22 operations for an amount in excess of 21,000 million
euro, 3,000 of which corresponded to transactions involving mergers and acquisitions, and, in
addition, 50 mandates were signed. In Spain, the main operations closed during this year were
the preparation for floating Inditex onto the Stock Market (9,000 million euro), the acquisition of
several Sara Lee shares by Dogi, the sale of Hidronor to FCC-Vivendi, the incorporation of
Eutelsat as a member of Hispasat and the sale of CLH. It played a critical role in tender offers in
Spain (Uralita, Heineken and Superdiplo) and in Latin America (Chilectra, Río Maipo, Banco
Ganadero and Polar). What is more, it participated in ISA’s public share offering and in the
listing of Unefon and Kraft on the Stock Exchange.
Variable Income. The units connected to variable income operations and transactions (BBVA
Bolsa, Variable Income Origination and share companies located abroad) achieved lower
results this financial year as a result of the considerable reduction in the volume of contracts.
IV/15
Despite the bad market performance witnessed worldwide, BBVA Bolsa occupied important
positions: in Spain with regards volume of contracts, with a volume of 146,000 million euro and
a market share of 14.6% (Source: CNMV "Economic Information on Investment Service
Companies "- IV quarter 2001), and remained the second Spanish institution in terms of volume
of contracts on the continuous market, with 109,000 million euro and a market share of 12.4%
(Information provided by the Sociedad de Bolsas (Stock Exchange Company)). As far as results
are concerned, its decrease was less than that of the other firms operating in the market,
providing 22% of the total profit in the sector.
Some of its most remarkable operations were the listing on the Stock Exchange of Inditex (here
BBVA participated as the global coordinator, as well as director and co-lead depending on the
tranche), Iberia (BBVA lead manager), Orange (co-manager), the block trade of Gamesa (global
coordinator), as well as providing the insurance for part of the capital increase of the Banca
Popolare di Milano -**/–. It was also co-lead in Iberdrola’s issue of bonds exchangeable for
Repsol-YPF shares, which was the largest issue of an product indexed to an asset that has
been carried out to date in Spain (850 million euro) and the first exchangeable issue carried out
by a Spanish company.
On the other hand, another point of particular importance is that a company such as EXTEL,
which enjoys a high level of prestige among investors, nominated BBVA Bolsa as occupying
second place in Spain on the basis of the quality analysis it carried out. This meant that BBVA
Bolsa was the only analysis firm to figure among the top three positions in the three most
prestigious rankings (Institutional Investor, Reuter and Extel) during the entire year:
Industrial Group and other areas
This area includes the activities and results of the business corresponding to the industrial and
property Group, that of the e-business and e-banking units, as well as the business derived
from shareholdings in financial institutions in Europe.
The attributed profit of the area was 1,004 million euro, 10.7% less than that of the previous
year, as a result of a lower number of disposals carried out during 2001. Worth noting is the
contribution made by the industrial shareholding business, which provided more than 70% of
the attributed profit.
Strategic shareholdings in Europe (Banca Nazionale del Lavoro and Crédit Lyonnais) generated
an equity method net profit of 70 million euro, an amount that rises to 103 millions if the
dividends received from these shares are taken into account, all in all 15% more than in 2000.
Activity in the e-business and e-banking areas remained dynamic with the launching and
development of new initiatives. In spite of this, their results were negative (-31 million euro in
attributed profit), as a result of the high operating costs projects such as these entail.
The Industrial and Property Group. This area was responsible for administering the portfolio
of industrial and property shareholdings. At the end of the financial year 2001, the portfolio
administered by this area included 153 companies, and had a market value of 9,513 million
euro, 87% of which corresponded to the listed portfolio and the remaining 13% to the unlisted
portfolio. Latent surpluses came to 2,600 million euro.
The most important sector was that of telecommunications, which accounted for 41.6% of the
portfolio’s market value, followed by petrol, at 17.3%, the electricity sector at 16.0%, and then
the property and services sectors at 106% and 7.2%, respectively.
BBVA was the principal or reference shareholder of the most important companies in each
sector: Telefónica, Repsol YPF, Iberdrola, Acerinox, Corporación IBV, Metrovacesa, Iberia,
Hispasat, etc.
IV/16
Certain operations had a determining effect on the area’s results, such as the disposals of
Bodegas y Bebidas, Gamesa or Hispasat that were carried out, and, which, together with the
sale of unproductive fixed assets, ensured the results of the financial operations reached the
amount of 75 million euro and the extraordinary results 830 millions, 576 million of which came
from industrial portfolio rotation and 254 millions from the unproductive fixed assets.
The equity method net contribution rose to 194 million euro, once 234 million had been deduced
for dividends received, which were incorporated into the margin and after earmarking 72 million
euro for restructurings necessary after the impact of the crisis in Argentina in our participadas.
Attributed profit was 954 million euro, meaning a ROE of 34%.
During the financial year investments of 150 million euro were made, chiefly in industrial
shareholdings. As far as disinvestments are concerned, 1,531 millions worth of operations were
carried out, the most significant of which were the sale of the shareholdings in Bodegas y
Bebidas, Alimentos Naturales, Altadis, Áreas and Pridesa, as well as the 3% of Gamesa, the
6.6% of Hispasat and the 10.8% of Media Planning Group.
With regard to the property development activity, during the financial year 2001 a total of 235
million euro were invested in 60 projects. As part of the Plan de la Vivienda (Housing Plan), 428
homes were commercialised in 2001, with a total volume of sales of over 43 million euro. Since
it was launched in 1994 more than 3,800 homes have been sold – 700,000 m2 of total floor
area – which translates into a turnover of approximately 710 million euro. At 31 December 2001,
2,700 homes were being prepared to come on the market over the following months and these
represent a total floor area of 350,000 m2 and an expected volume of sales of 450 million euro.
In the non-residential sector, several assets were disinvested, creating a surplus of 25 million
euro.
The most important development shareholding was the 28.9% interest in Metrovacesa, an
important property development group in the country, with a turnover of more than 400 million
euro and fixed assets valued at 2,900 millions in the financial year 2001.
BBVA also held a 33.3% interest in the hotel group Grubarges, which ran 29 hotels (8 in Spain,
18 in the United States and 3 in Mexico) with a total of 7,850 rooms and a volume of turnover
that stood at 212 million euro.
Regarding the disposal of unproductive property (sold and released during the surface area
rationalization process), the Group took advantage of the property cycle to sell 4,464 assets for
the amount of 606 million euro in Spain, leading to a 92 million reduction in stock (30%) leaving
a final number of 4,141 units (2,759 less than during the previous financial year), with a book
value of 196 million euro and a provision level of approximately 46%. At 31 December 2001,
stock represented a minimal technical inventory for an institution the size of BBVA. In the last
four financial years, the sale of unproductive assets has netted in excess of 2,000 million euro.
IV/17
E-Business: This unit previously went under the name of E-Commerce, and its mission
consisted of acting as a reference for the Group in the New Economy. Its basic aim was to
direct and catalyse the evolution of BBVA in this area, adapting traditional business models and
coordinating the Group’s e-business initiatives.
The key actions taken by the unit during a year that proved difficult for the new technologies
sector are outlined underneath:
• The launching of e-commerce initiatives with the participation of first class partners:
Adquira (www.adquira.com): a virtual market for companies that offers comprehensive ecommerce solutions for the provision, purchase and trade of indirect services and
assets. Telefónica, Iberia, TPI and Repsol participated in the BBVA project.
Atrea (www.atrea.com): a property portal for both professionals of the sector and private
individuals. The company is formed by BBVA and Terra.
Azeler (www.azeler.es): a vertical portal for the automobile sector directed a
professionals and private individuals, and which allows the user to carry out the entire
purchasing process in just one session. BBVA, Finanzia and Terra participate in this
company.
BBVA Ticket (www.bbvaticket.com): this portal sells admission tickets to shows, and
BBVA participates in this along with Admira, a subsidiary of the Telefónica group.
Mobipay: the majority of banks and savings banks, together with mobile telephone
operators and payment processors, joined forces to create a standard system of
payment using the mobile telephone.
Municipia (www.municipia.es): a portal directed at countrywide and local administration.
It was created by BBVA and Banco de Crédito Local and offers a range of tools,
contents, and other items useful for public administration and which facilitate the
provision of services to citizens.
Portal Gas Natural (www.gasnatural.com): BBVA is participating in this initiative, which is
led by Gas Natural and is aimed at offering services to the clients of this company.
Solium: BBVA and Accenture take part in this project, whose main aim is to provide
ASP, hosting and housing services to Spanish small and medium-sized companies.
• An impulse to the alliance with Telefónica: the difficult situation the Internet sector underwent
during the year 2001 not only led to the deceleration of the alliance signed by BBVA and
Telefónica the previous year, but also provided both companies with the opportunity to
redirect their position in the sector.
Thus, the 14 original points of the alliance were developed over the financial year until the
final number of projects to be handled jointly reached a total of 30.
• Analysis of business opportunities: the e-business unit evaluated more than 170 projects
during the financial year, and in these the ever-increasing realism of the approaches
currently put forward by the entrepreneurs of the sector could be clearly seen.
• Actively present in specialized forums: the knowledge and experience accumulated by the
professionals of BBVA in the area of business were recognised by the sector, both in Spain
and abroad.
IV/18
E-Banking. Uno-e (www.uno-e.com), an internet bank, is a critically important part of the BBVA
strategy. Using this, the Group diversified its distribution capacity, supplementing the
commercial activities of the other areas of business, and achieved a pre-eminent position in
inactive banking in Spain, a business that offers considerable perspectives for growth.
In order to fully exploit the potential of internet, the Group admitted Terra into Uno-e’s
shareholding structure, and the latter now has a 49% interest in this, as agreed in the global
alliance signed by Telefónica during the financial year 2000.
During the financial year 2001, Uno-e made a new web available to its clients, and this has
made it substantially easier to surf through and access a growing range of products.
At 31 December 2001, in Spain Uno-e had more than 115,000 clients and administered some
700 million euro in client resources. These numbers indicate that there has been a 121%
increase in the number of clients in one year and that the amount of client resources has been
multiplied by 4.5. This growth was achieved in an environment marked by extreme competition
and decreasing interest rates.
In June 2001, Uno-e began to decrease remuneration of current accounts and achieved the
abovementioned growth with prices that were 250 basic points lower than those of the
competition.
Although in existence for less than two years, Uno-e has managed to sell more than two
products per account from an ever-increasing range that includes methods of payment, credit
cards, deposits, national and foreign investment funds, broker on line, pension funds, consumer
loans, mortgages, etc. In addition, Uno-e welcomes legal entities and minors as clients, and has
consultancy and tax planning services.
Recently, on 15 May 2002, the beginnings of an agreement between Terra Lycos and BBVA
were formalised to integrate Uno-e Bank and the Consumer Financing Division of BBVA
Finanzia. The resulting body, the new Uno-e Bank, will have 2,2 million clients and will
administer more than1, 400 million euro.
IV/19
LATIN AMERICA
The BBVA Group occupies a pre-eminent position in banking and asset management in Latin
America. It has eleven banks and nine pension fund managers spread out over 14 countries,
providing it with a magnificent competitive position in the region. The Group’s administration
model, homogenous systems and platforms and the image of a unified trademark have been
implanted in all these entities.
By the end of the year 2001, the Group had a base of 23 million clients in Latin America, where
it operated through a network of 4,161 branches with a staff of 64,835 employees. Total assets
rose to 13,000 million euro and administered client resources stood at 129,000 million, which
represents a global market share of 11.7% in the region (Source: drawn up by the Group based
on publications in each of the countries).
From a macroeconomic point of view, the financial year 2001 was not easy in Latin America. A
growth of 0.8% was estimated for the gross domestic product as compared to the 4.3% seen
the previous financial year. All of the countries underwent a lower growth rate than in 1999,
especially Argentina, whose gross domestic product showed an expected drop of 2.3%.
This deceleration was mirrored in the financial systems, where moderate volumes of activity
were witnessed together with a fall in differentials in all most all the countries resulting from the
low interest rates worldwide, which also affected the region. In spite of the above, thanks to
good price administration, the emphasis on plans to improve results and the strict expenses
policy it was possible to increase the operating profit the Group obtained in the region. With
controlled restructuring levels, had it not been for the levels of extraordinary provision required
as a result of the crisis in Argentina, 2001 would have yielded results greatly in excess of those
seen the year before.
The political, economic and social events that took place in Argentina led the authorities in this
country to devalue the exchange ratio between the Argentinean peso and the U.S. dollar at the
beginning of the year 2002 and to adopt other measures (restricting the availability of bank
deposits, maintaining the parity of 1 Argentinean peso to 1 U.S. dollar in specific bank balances,
etc.). The potential impact of these on the Group’s consolidated annual accounts, bearing in
mind the uncertainty that still exists as a result of the aforementioned situation, is as follows:
1.
The financial statements at 31 December 2001 of the Group’s entities in Argentina were
converted to euro using the exchange rate that was official at the end of the financial year:
Argentinean peso : dollar parity. Nonetheless, the fact that this parity was broken during the
financial year 2002 was of such relevance that the shareholders’ equity of companies with
an equity capital in pesos was included with an exchange rate of 1 U.S. dollar for 1.7
Argentinean pesos. The difference that arose as a result of this devaluation, a total of 469
million euro, was charged to the epigraphs “Reserves – Differences in Conversion” and
“Minority Interests”, and charged to the items “Other liabilities” (440 million euro) and
“Shareholdings” (29 million euro) in the consolidated balance sheet, for those companies
consolidated following the global integration method and those companies consolidated
using the equity method, respectively.
IV/20
Had the charge effected to the items “Other Liabilities” been assigned to the corresponding
consolidated balance sheet accounts, the effect would have been as follows:
Decrease
In millions of euro
ASSETS
Cash and deposits in central banks
Credit entities – Assets
Credits on clients
Fixed-Income portfolio
Other assets
311
259
3.093
295
412
4.370
Credit entities – Liabilities
Debits to clients
Debit represented by negotiable securities
Other liabilities
220
3.247
148
315
3.930
Equity Effect
440
2.
The constitution of a specific fund, equivalent to the theoretical book value of the Banco
Francés Group, once the abovementioned differences in conversion had been taken into
account and the value of the fixed-income securities issued by the Banco Francés in the
Bank books (447 and 170 million euro respectively) had been considered. Said fund was
recorded and charged to the item “Extraordinary Problems” in the consolidated Profit and
Loss account and abono to the epigraph “Provisions for Risks and Charges – Other
provisions” of the consolidated balance sheet.
3.
Full redemption of the consolidated goodwill still pending amortisation from the investments
in Argentina: 14 and 109 million euro corresponding top BBVA Banco Francés, S.A. and
Consolidar AFJP, S.A., respectively.
In the opinion of the Bank Administrators and in that of their legal advisors, the provisions
constituted at the end of the financial year 2001 provided reasonable coverage for the maximum
losses the Group would incur as a result of the above described situation, on the understanding
that said losses were limited to the cost of the investment in their subsidiaries and associate
companies in Argentina and to the amount of the fixed-income securities mentioned above.
In addition, there were other effects derived from the situation in Argentina and these were
recorded in the consolidated annual accounts of the financial year 2001:
1.
There was a drop of 72 million euro in the results generated by the equity method
companies, and this was a consequence of the reduction in results that the companies in
which BBVA has a shareholding and which have interests in Argentina were expected to
contribute. What is more, the effect devaluation would have on these companies was
considered, and for this reason the amount if 214 million euro was charged to the item
“Losses in consolidated companies – for differences in conversion”.
IV/21
2.
34 million euro where provided for the country risk.
3.
Potential profit derived from the structural position in currency of the Argentinean entities
was not entered as income.
4.
Likewise, an extraordinary bad debts provision was carried out in local books for the
amount of 416 million euro, recorded in the account “Bad debts fund”.
All in all, the impact of the measures taken in 2001 had an equity effect of 683 million euro, and,
as a consequence, results come to 847 million euro.
Chapter VII of the Prospectus explains how the situation has evolved during 2002.
In comparison to the situation in Argentina, by the end of the year Mexico had improved its
rating, as both Moody’s and Fitch awarded it the rating "investment grade". This placed it in the
level immediately above last year’s, and goes to prove that the strength and solvency of its
financial system have improved. In concrete, the activities carried out in Mexico are starting to
acquire capital importance for BBVA, as in 2001 17% of the Group’s total result was contributed
by Mexico.
This year saw another important event, which was the end of the integration process of BBVA
Probursa, Bancomer and Banca Promex (acquired by Bancomer in 2000), for the final
configuration of the new BBVA Bancomer Financial Group in Mexico. The work carried out
during the financial year 2001, placed Bancomer in an excellent situation to face the year 2002
from a very competitive position, with a market share of 28% in banking (Source: CNBV) and
one of 22% in pensions (Source: CONSAR), and in a position to use an integrated company as
leverage to improve its levels of cost-to-income and profitability.
The administrative efforts carried out during the year 2001 pivoted around four principal
aspects:
•
Improving Profits. At the end of the year 2000 a Profit Improvement Plan was launched,
which led to a growth of 29% in the volume of commissions as compared to the year
before.
•
Cost-to-Income and costs. Through the EFYCO programme, an effective control of costs
was carried out in all countries, which improved the cost-to-income ratio 620 basic points,
making it 51.4% by the end of the financial year.
•
Risk Administration. Work continued on improving the processes and administration tools,
admission and follow-up of risks. As a result, during the financial year 2001 the bad debt
ratio improved 91 basic points, reaching 3.73% by the end of the year, and, at the same,
time, coverage levels rose 46 percentage points, reaching a ratio of 252%.
•
Client Segmentation. During 2001 the unit Banca Mayorista Global America was created,
and it was charged with administering large companies and was made responsible for
corporate and investment banking activities, at a regional level and in each one of the
countries. The objective was to develop administration teams and plans, which would
provide a global response to the large companies with transnational needs operating in
Latin America.
IV/22
LOANS AND DEPOSITS AT 31 DECEMBER 2001
LOANS
DEPOSITS
Millions of
euro
Ranking
Market
Share
(%)
Millions of
euro
Ranking
Market
Share
(%)
Argentina(1)
Brazil(2)
Chile(3)
Colombia(4)
Mexico(5)
Panama(6)
Peru(7)
Puerto Rico(8)
Venezuela(9)
Others(10)
8.653
2.484
2.887
1.536
19.833
895
1.807
3.350
2.603
79
2º
11º
6º
4º
2º
5º
3º
4º
1º
n.a
6,2
1,4
5,7
6,8
26,2
6,3
15,3
9,4
16,7
5,7
7.883
2.161
2.712
1.333
48.684
503
2.997
3.099
4.240
110
2º
9º
6º
3º
1º
5º
2º
5º
1º
n.a
8,5
1,3
5,3
7,1
28,1
5,0
20,2
8,5
16,2
4,9
TOTAL
44.127
2º
8,7
73.722
1º
11,3
COUNTRIES
Source obtained from ranking data and market share:
(1) Central Bank of Argentina
(2) Central Bank of Brazil
(3) Superintendencia de Bancos (Banking Regulatory Agency)
(4) Superintendencia Bancaria de Colombia (Banking Regulatory Agency of Colombia)
(5) CNBV
(6) Superintendencia de Bancos
(7) Superintendencia de Banca y Seguros
(8) Comisionada de Instituciones Financieras (Financial institutions Commissioner).
(9) Superintendencia de Bancos
(10) Central bank in each country
CONTRIBUTION TO CONSOLIDATED RESULTS
OPERATING PROFIT
ATTRIBUTABLE PROFIT
COUNTRIES
2001
2000
%
Argentina
Brazil
Chile
Colombia
Mexico
Panama
Peru
Puerto Rico
Venezuel
Others
489
67
144
48
1.689
n.s.
126
79
266
8
430
122
141
19
658
n.s.
122
62
206
32
13,9
-44,6
1,8
151,4
156,9
n.s.
3,3
27,0
29,4
-76,3
TOTAL
2.918
1.793
62,8
2001
2000
%
-218
4
78
5
397
n.s.
53
36
91
-
144
46
47
-12
105
n.s.
11
30
81
20
n.s.
-91,7
66,9
n.s.
277,7
n.s.
n.s.
18,5
12,3
n.s.
446
473
-5,7
IV/23
The follwing chart includes the principal agents in which the BBVA Group participated at 31
December 2001:
Country
Argentina (1)
Bolivia (2)
Colombia (3)
Colombia (3)
Chile (4)
Ecuador (5)
El Salvador (6)
Mexico (7)
Panama (8)
Panama (8)
Peru (9)
Entity
Consolidar
Previsión
Horizonte
Porvenir
Provida
Génesis
Crecer
Bancomer
Horizonte
Progreso
Horizonte
Direct BBVA
shareholding
%
46,11
75,00
78,52
0,00
0,00
0,00
0,00
17,50
90,00
0,00
24,85
Shareholding in
companies
controlled by BBVA
(%)
Share of
members
(%)
53,89
5,00
1,76
20,00
100,00
100,00
62,08
82,50
0,00
25,00
75,15
16,9
53,3
21,2
25,7
41,0
80,4
55,1
14,1
20,0
20,0
26,4
Ranking
2ª
1ª
2ª
1ª
1ª
1ª
1ª
1ª
1ª
1ª
1ª
Share of
Equity
(%)
20,1
50,9
19,0
27,1
31,8
71,6
49,0
21,8
20,0
20,0
25,2
Ranking
2ª
1ª
3ª
1ª
1ª
1ª
2
1ª
2ª
4ª
3ª
(1) Superintendencia AFJP (Pension and Retirement Fund Regulatory Agency) - Ranking in equity takes into account the merger between Orígenes
and Previnter, effective from January 2001.
(2) Drawn up by BBVA and based on exchanges of information between the only two AFP of the system.
(3) Superintendencia Bancaria de Colombia / ASOFONDOS (Centre of Consolidated Information).
(4) Superintendencia AFP
(5) Information sent by GENESIS
(7) CONSAR (National Commission for Retirement Savings System).
(8) Exchanges of information between the AFP of the system
(9) Superintendencia de Banca y Seguros de Peru.
Underneath the details of the position of BBVA pension funds and investment funds at
December de 2001 can be found:
Pension funds by country
Equity
Countries
In
millions
of euro
Argentina(1)
Bolivia(2)
Colombia(3)
Chile(4)
Ecuador(5)
El Salvador(6)
Mexico(7)
Panama(8)
Peru(9)
4.755
1.436
3.423
12.557
11
419
6.671
145
1.025
Total
30.442
Market
share
(%)
20,1
50,9
46,1
31,8
71,6
49,0
21,8
40,0
25,2
Participants
Ranking
2º
1º
1º
1º
1º
2º
1º
1º
3º
Participants
(miles)
1.482
366
2.020
2.619
95
506
3.726
97
711
Market
share
(%)
Ranking
16,9
53,3
46,9
41,0
80,4
55,1
14,1
40,0
26,4
11.622
(1) Superintendencia AFJP -Ranking in equity takes into account the merger between Orígenes and Previnter, effective from January 2001.
(2) Drawn up by BBVA and based on exchanges of information between the only two AFP of the system.
(3) Superintendencia Bancaria de Colombia / ASOFONDOS (Centre of Consolidated Information).
(5) Information sent by GENESIS
(7) Superintendencia de Banca y Seguros of Peru.
(8) CONSAR (National Commission for Retirement Savings System).
2º
1º
1º
1º
1º
1º
1º
1º
1º
IV/24
(9) Exchange of information between the AFP s of the system
Investment Funds per country
Market
share (%)
13,20
0,79
5,74
10,31
19,13
25,59
33,17
Equity
(in millions of euro)
Argentina(1)
Brazil(2)
Chile(3)
Colombia(4)
Mexico(5)
Peru(6)
Venezuela(7)
Total
574
1.334
257
274
6.861
343
69
9.712
Participants (thousands)
30.495
97.352
9.517
29.186
91.991
11.670
26.278
296.489
Source obtained from market share:
(1) Central Bank of Argentina
(2) Mutual Funds Trust ANBID
(3) Association of Mutual Funds Administration
(4) Superintendencia Bancaria de Colombia
(5) CNBV
(6) National Supervisory Commission for companies and securities
(7) Venezuelan Association for Fund Administration
4.1.2.
Relative position of the company or Group inside the banking sector
The new BBVA Group, together with the SCH Group, are the two principal financial groups in
the Spanish banking sector.
BBVA
Group
SCH
Group
TOTAL ASSETS(1)
309.246
358.138
37.396
CREDTS ON CLIENTS (1) (2)
150.220
173.822
27.368
BALANCE SHEET CLIENT RESOURCES (1)
199.486
236.132
25.864
INVESTMENT FUNDS (1)
49.901
68.535
5.816
PENSION FUNDS (1)
41.249
18.842
2.351
OPERATING PROFIT (1)
5.599
5.944
1.157
INCOME BEFORE TAX (1)
3.634
4.237
852
98.588
114.927
12.309
2.144
Data at 31 December 2001 (*)
TOTAL STAFF
NUMBER OF OFFICES
Popular
Group
7.988
9.817
ROE
18,0
17,6
27,6
ROA
0,99
0,94
1,78
13.314
19.128
2.296
50,4
54,0
42,6
NET EQUITY AFTER RESULTS (1)
COST-TO-INCOME
(*) Source: Data Published by each entity in their annual report
(1) In millions of euro
(2) Net of bad debt provision funds.
IV/25
4.1.3. Financial information on the principal banks in the Group
Data relating to Banco Bilbao Vizcaya Argentaria S.A. can be found in section 5.1. and
5.2.
Banks in Spain and other European countries
Balance Sheet
Cash and deposits in
central banks
Credit Entities
Credits on clients
Portfolio
of
fixedincome securities
Portfolio of variableincome securities
Other assets
TOTAL ASSETS
BANCO DE CRÉDITO LOCAL
Variation %
2001
2000
1999
2001/00 2000/99
2001
BBVA PORTUGAL (2)
Variation %
2000
1999
2001/00
2000/99
BANC INTERNACIONAL D’ANDORRA
Variation %
2001
2000
1999 2001/00 2000/99
97
6
5
n.s.
14,6
49
38
66
28,9
-42,8
78
49
51
59,2
-3,9
209
7.599
3.582
535
8.333
2.929
464
9.361
1.995
-60,9
-8,8
22,3
15,4
-11,0
19,8
529
2.113
95
559
1.683
101
294
952
124
-5,4
25,5
-6,0
90,2
76,8
-18,8
1.685
599
61
1.610
620
59
1.436
523
129
4,7
-3,4
3,4
12,1
18,5
-54,3
3
-
-
-
-100,0
19
16
42
18,8
-62,2
49
59
63
-16,9
-6,3
250
295
12.098
276
12.101
-15,3
-3,0
6,7
-
154
2.959
139
2.536
197
1.676
10,8
16,7
-29,4
51,3
170
2.642
161
2.558
132
2.334
5,6
3,3
22,0
9,6
11.740
Credit Entities
Client balance sheet
resources
6.303
4.883
6.935
4.577
8.352
2.223
-9,1
6,7
-17,0
105,9
988
1.637
682
1.614
344
1.146
44,9
1,4
98,5
40,9
270
1.975
325
1.872
173
1.825
-16,9
5,5
87,9
2,6
Other liabilities
Consolidated profit of
the financial year
231
48
257
48
1.189
58
-10,1
-
-78,4
-16,8
134
12
77
8
80
7
74,0
50,0
-3,6
21,4
41
114
34
110
45
86
20,6
3,6
-24,4
27,9
275
11.740
281
12.098
279
12.101
-2,1
-3,0
0,7
-
188
2.959
155
2.536
100
1.676
21,3
16,7
54,4
51,3
242
2.642
217
2.558
205
2.334
11,5
3,3
5,9
9,6
2001
2000
1999
2001
2000
1999
Variation %
2001
2000
1999
GROSS MARGIN
87
90
103
Net commissions
BASIC MARGIN
transactions
ORDINARY PROFIT
General administration
expenses
87
90
103
3
3
5
Capital and reserves
TOTAL LIABILITIES
Profit and Loss
Accounts
Amortisations
Other products and
operating charges (net)
OPERATING PROFIT
Net loan reorganization
Other net results (1)
INCOME
BEFORE
TAX
Corporation tax
NET PROFIT
Variation %
Variation %
2001/00
2000/99
2001/00
2000/99
-3,3
-12,7
67
47
43
42,6
10,1
42
31
34
2001/00
35,5
2000/99
-8,8
-3,3
12,8
28
95
32
79
11
54
-12,5
20,3
190,3
47,1
110
152
112
143
84
118
-1,8
6,3
33,3
21,2
-
-
1
2
-1
-50,0
0,0
10
13
10
-23,1
-
90
93
108
96
81
53
18,5
52,7
162
156
128
3,8
21,9
-16
-16
-3,2
-
-14,1
-16
-200,1
-68
-61
-39
11,5
56,2
-42
-32
-30
31,3
6,7
-1
1
-1
-1
-1
1
-
-223,2
-
-10
-3
-9
5
-4
-1
11,1
-
129,0
-
-5
-
-4
-
-4
-
25,0-
-
74
75
92
-1,3
-18,3
15
16
9
-6,3
74,7
115
120
94
-4,2
27,7
2
-3
73
1
-2
74
-2
-2
88
100,0
n.s.
-1,4
-58,9
n.s.
-16,4
-13
13
15
-6
1
11
-3
7
116,7
n.s.
36,4
133,8
n.s.
66,8
-1
114
-6
-4
110
-1
-7
86
-100,0
n.s.
3,6
n.s.
n.s.
27,9
-25
48
-26
48
-30
58
-3,8
0,0
-15,7
-16,8
-3
12
-3
8
7
50,0
n.s.
21,4
114
110
86
3,6
27,9
(1) Net results using equity method, reorganization of long-term financial investments, and extraordinary net results.
(2) Consolidated groups
IV/26
Balance Sheet
Cash and deposits in
central banks
2001
BBVA PRIVANZA
Variation %
1999
2001/00 2000/99
2000
BBVA FINANZIA
Variation %
1999
2001/00
2000/99
2001
2000
UNO E-BANK (3)
Variation %
1999 2001/00 2000/99
2001
2000
3
3
5
-
-34,6
2
1
3
100,0
-67,0
12
1
n.s.
Credit Entities
Credits on clients
Portfolio of fixed-income
securities
Portfolio
of
variableincome securities
2.007
341
21
892
371
34
709
225
74
125,0
-8,1
-38,2
25,9
64,8
-54,0
16
1.526
-
94
1.329
-
19
895
-
-83,0
14,8
-
n.s.
48,5
-100,0
272
428
142
88
91,5
n.s.
6
6
6
-
4,8
72
46
-
56,5
n.s.
-
2
-100,0
Other assets
TOTAL ASSETS
71
2.449
77
1.383
42
1.060
-7,8
77,1
82,4
30,5
35
1.651
13
1.483
50
967
169,2
11,3
-73,9
53,4
48
760
24
257
100,0
195,7
196
2.142
261
1.023
55
920
-24,9
109,4
n.s.
11,2
1.460
17
1.336
12
845
8
9,3
41,7
58,1
42,9
35
657
154
n.s.
28
37
29
26
18
24
-3,4
42,3
63,2
9,9
79
15
64
6
43
10
23,7
150,0
49,9
-40,3
17
-31
22
-39
-22,7
-20,5
TOTAL LIABILITIES
46
2.449
44
1.383
43
1.060
4,5
77,1
1,5
30,5
80
1.651
65
1.483
61
967
23,1
11,3
7,2
53,4
82
760
120
257
-31,7
195,7
Profit and Loss
Accounts
2001
2000
1999
Variation %
2001
2000
1999
2001
2000
2001/00
2000/99
2001/00
2000/99
GROSS MARGIN
31
19
17
63,2
14,9
78
51
58
52,9
-12,8
1
1
Net commissions
BASIC MARGIN
Results
of
financial
transactions
ORDINARY PROFIT
General
administration
expenses
33
64
32
51
29
46
3,1
25,5
9,8
11,7
3
81
1
52
5
63
200,0
55,8
-77,9
-17,4
1
1
3
3
2
-
-
-
2
-
-100,0
-
-
-
Credit Entities
Client
balance
resources
sheet
Other liabilities
Consolidated profit of the
financial year
Variation %
1999
Variation %
2001/00
67
54
47
24,1
14,3
81
54
50,0
-14,3
1
1
-20
-16
-15
25,0
7,8
-43
-30
-29
43,3
4,8
-44
-35
100,0
-
-35,3
-
-1
-
-1
-
-2
-
-
-48,0
-
-4
-
-4
-
Amortisations
Other
products
and
operating charges (net)
OPERATING PROFIT
-2
-
-1
-1
-2
-
45
36
30
25,0
18,1
37
23
32
60,9
-28,8
-47
-38
INCOME BEFORE TAX
-2
2
45
-3
33
-1
29
-33,3
n.s.
36,4
102,9
n.s.
12,3
-17
2
22
-13
-1
9
-19
14
30,8
n.s.
144,4
-29,9
n.s.
-35,4
-1
-1
-49
-22
-60
Corporation tax
NET PROFIT
-8
37
-7
26
-6
24
14,3
42,3
22,1
9,9
-7
15
-3
6
-4
10
133,3
150,0
-22,6
-40,3
18
-31
21
-39
2000/99
(2) Consolidated groups
(3) The data for the year 2000 include the results since its incorporation into the Group, and, as such, the year-on-year comparison is
irrelevant.
IV/27
Banks in America (In millions of euro)
BBVA BANCOMER
BANKING GROUP
BBVA BANCO FRANCÉS
Balance Sheet
2001
2000
Var. %
2001
2000
1999
(Exchange rate applied)
0,12390
0,11206
2001/00
1,13570
1,07641
0,99554
BBVA BRASIL
Variation %
2001/00
2000/99
2001
2000
1999
0,48835
0,55112
0,55501
Variation %
2001/00
2000/99
Credit Entities
3.602
10.572
2.348
3.955
53,4
167,3
725
294
257
1.828
266
1.271
181,7
-83,9
-3,2
43,8
98
1.887
112
1.743
87
1.401
-12,7
8,3
29,8
24,4
Credits on clients
Portfolio of fixed-income securities
Portfolio of variable-income securities
Other assets
TOTAL ASSETS
14.350
34.048
1.342
7.202
71.116
10.233
32.521
2.756
5.044
56.856
40,2
4,7
-51,3
42,8
25,1
6.713
634
407
787
9.559
6.193
1.518
435
624
10.855
5.232
988
18
953
8.727
8,4
-58,2
-6,5
26,1
-11,9
18,4
53,6
2324,8
-34,5
24,4
2.327
1.297
97
351
6.057
1.503
1.483
147
385
5.374
623
1.821
137
332
4.400
54,8
-12,6
-34,3
-8,9
12,7
141,4
-18,6
7,4
16,2
22,1
Credit Entities
Client balance sheet resources
Other liabilities
Consolidated profit of the financial year
TOTAL LIABILITIES
21.499
41.281
3.812
695
3.830
71.116
14.690
35.025
3.669
121
3.352
56.856
46,3
17,9
3,9
n.s.
14,3
25,1
530
7.236
723
20
1.049
9.559
709
8.680
301
194
970
10.855
1.111
5.754
930
89
842
8.727
-25,2
-16,6
140,0
-89,4
8,2
-11,9
-36,2
50,8
-67,6
116,7
15,2
24,4
3.250
2.227
159
10
411
6.057
2.795
1.988
186
37
368
5.374
1.575
1.492
982
95
257
4.400
16,3
12,0
-14,3
-72,6
11,7
12,7
77,4
33,3
-81,1
-60,5
43,2
22,1
Profit and Loss Accounts
2001
2000
Var. %
2001
2000
1999
0,11951
0,11455
2001/00
1,11709
1,08359
0,93877
Variation %
2001/00
2000/99
2001
2000
1999
0,47418
0,59290
0,51638
Variation %
2001/00
2000/99
GROSS MARGIN
2.215
1.440
544
494
373
10,1
32,6
246
277
270
-11,5
2,9
Net commissions
BASIC MARGIN
999
3.214
391
1.831
268
812
223
717
179
552
20,1
13,2
24,6
30,0
56
302
49
327
47
316
14,7
-7,5
5,4
3,2
Results of financial transactions
ORDINARY PROFIT
229
3.443
-3
1.828
38
850
59
776
35
587
-35,1
9,6
68,0
32,3
34
336
46
372
62
379
-26,3
-9,8
-26,6
-1,7
-1.808
-150
-80
1.405
-1.172
-109
-68
479
-407
-69
-16
359
-405
-74
-12
285
-356
-57
-11
163
0,3
-6,0
31,2
25,8
14,0
29,9
6,2
74,9
-222
-32
-6
76
-226
-24
-5
117
-201
-11
-1
166
-1,8
34,0
6,6
-35,0
12,6
112,7
787,9
-29,4
-406
-130
-403
-78
-97
416,9
-20,0
-28
-29
-79
-5,3
-63,0
INCOME BEFORE TAX
-33
965
-206
143
-75
-120
38
245
39
105
-297,3
-148,8
-3,9
133,3
-28
21
-44
44
7
95
-38,2
-51,4
n.s.
-53,8
-295
670
-19
124
140
20
-50
195
-16
89
n.s.
-89,7
n.s.
118,1
-11
10
4
40
95
219,9
-75,3
n.s.
-57,5
General administration expenses
Amortisations
Other products and operating charges (net)
OPERATING PROFIT
Corporation tax
NET PROFIT
(2) The data for the year 2000 include the results of Bancomer and Promex since their integration in the Group, and, as such, the year-onyear comparison is irrelevant.
IV/28
BBVA BANCO PROVINCIAL
Balance Sheet
2001
2000
1999
0,00148
0,00153
0,00153
2001/00
BBVA BANCO CON
BBVA BANCO BHIF
Variation %
2001/00
2001
2000
1999
0,00171
0,00187
0,00187
Variation %
2001/00
2000/99
2001
2000
1999
0,32975
0,30492
0,28343
Credit Entities
Credits on clients
Portfolio of fixed-income securities
Portfolio of variable-income securities
Other assets
TOTAL ASSETS
1.117
50
2.394
1.111
7
492
5.171
1.116
105
2.230
1.253
14
589
5.307
1.003
65
1.494
757
8
553
3.880
-51,8
7,4
-11,3
-46,5
-16,5
-2,5
11,3
61,4
49,2
65,5
78,1
6,5
36,8
70
91
2.797
562
31
460
4.011
38
51
2.698
813
21
541
4.161
110
85
2.238
508
14
290
3.244
87,6
79,6
3,7
-30,9
49,7
-14,9
-3,6
-65,8
-40,3
20,6
60,2
48,2
86,4
28,3
833
219
1.656
606
51
207
3.572
800
221
1.569
266
47
203
3.105
800
94
1.445
133
29
176
2.677
Credit Entities
Other liabilities
TOTAL LIABILITIES
107
4.145
259
148
513
5.171
220
4.259
225
115
487
5.307
134
2.242
994
133
377
3.880
-51,5
-2,7
15,5
28,4
5,1
-2,5
63,9
89,9
-77,4
-13,4
29,4
36,8
292
3.166
134
27
392
4.011
357
3.166
195
26
417
4.161
174
2.175
590
16
289
3.244
-18,1
0,0
-31,4
4,6
-6,0
-3,6
104,7
45,6
-66,9
64,7
44,3
28,3
160
2.991
108
23
290
3.572
96
2.631
100
7
270
3.105
181
2.181
56
20
240
2.677
Profit and Loss Accounts
2001
2000
1999
0,00154
0,00159
0,00155
2001/00
2001
2000
1999
2000/00
0,00175
0,00201
0,00184
Variation %
2001
2000
1999
2000/99
0,31848
0,31062
0,27754
Variation %
2001/00
GROSS MARGIN
597
505
525
18,1
-3,7
146
143
38
2,0
275,0
157
167
130
Net commissions
BASIC MARGIN
125
722
108
614
80
605
15,3
17,6
35,4
1,5
23
169
16
159
4
42
41,8
6,1
269,3
274,4
63
220
57
224
45
175
ORDINARY PROFIT
19
740
21
634
23
628
-10,7
16,7
-9,5
1,1
14
183
12
171
4
46
16,4
6,8
237,9
271,5
12
232
11
235
27
202
-433
-42
-17
248
-411
-37
-11
175
-395
-34
-38
161
5,4
13,6
52,1
41,6
4,2
7,8
-70,9
9,0
-90
-14
79
-93
-12
66
-24
-3
19
-3,2
16,4
n.s.
19,0
280,6
351,0
n.s.
249,7
-105
-19
-6
103
-106
-19
-6
104
-97
-18
-8
79
INCOME BEFORE TAX
-52
-32
164
-16
-33
126
1
-19
143
229,0
-3,2
29,8
n.s.
75,2
-11,7
-39
-11
30
-42
-10
14
-12
-2
5
-8,6
4,7
112,0
240,9
533,4
181,4
-67
-8
29
-77
-20
7
-8
-46
25
Corporation tax
NET PROFIT
-9
154
-6
120
-9
133
45,1
29,0
-31,8
-10,3
-2
28
14
28
5
-112,5
-0,3
n.s.
464,3
-6
22
7
-5
20
Amortisations
OPERATING PROFIT
IV/29
Data of interest on the main banks in the Group
(In order of location (Europe and America); and within each continent by volume of assets)
(Data at 31 December 2001)
BCL
BBVA PORTUGAL
BANC INTERNACIONAL D’ANDORRA
BBVA PRIVANZA
FINANZIA
UNO-E BANK
BBVA BANCOMER
BANCO FRANCÉS
BBVA BRASIL
BBVA PUERTO RICO
BANCO PROVINCIAL
BANCO BHIF
BANCO CONTINENTAL
BANCO GANADERO
ROA (%)
ROE (%)
0,41
0,42
4,8
1,60
0,89
(-19,35)
1,50
0,17
0,18
0,69
2,67
0,61
0,64
(-0,26)
17,20
6,13
41,7
56,30
17,89
(-64,87)
16,20
1,81
2,80
10,62
25,69
6,53
7,69
(-2,28)
Nº STAFF
156
956
249
172
536
96
29.756
5.129
4.910
1.164
8.779
1.870
2.333
4.048
Nº BRANCHES
14
111
10
12
37
1
1.844
383
483
62
398
90
175
247
4.2. RESULTS ADMINISTRATION
The year 2001 was the second complete financial year for the Banco Bilbao Vizcaya
Argentaria Group, which resulted from the merger between BBV and Argentaria agreed to
by the shareholders in the corresponding General Meeting held 18 December 1999.
The Group’s configuration underwent considerable change as a result of a rapid
expansion in Latin America. At present (data from 31 March 2002), approximately on third
of the Group’s activity is carried out in this area. The business structure includes
conditioning factors that entail different evolutions, thus, it is advisable to differentiate
analytically between the contributions made by the Latin American businesses included in
the Group, i.e.: banking, pension fund administration, and insurance, all of which go
under the name of "BBVA America ". The rest of the Group is considered "BBVA without
America " and basically covers the business in Spain and in the rest of Europe.
Through a group of financial institutions BBVA operates in 14 Latin American countries:
Argentina, Bolivia, Brazil, Colombia, Chile, El Salvador, Guatemala, Mexico, Panama,
Paraguay, Peru, Puerto Rico, Uruguay and Venezuela.
It is worth noting that, after the integration of Bancomer on 1 July 2000, during the fourth
quarter of the year BBVA concluded the integration process in Mexico where it integrated
the operations of what was once Bancomer, BBV Probursa and the banking group
Promex (this institution had been acquired by Bancomer during the 2000 financial year,
which occurred at the same time as its merger with BBV Probursa) into a single
technological platform.
With regard to European business, the mission of the Group is to expand its presence in
the markets of southern Europe, basically those of Portugal, France and Italy. The Group
also has branches in Belgium, the United Kingdom, Switzerland, Jersey, Andorra and
Gibraltar.
Within the United States it can be found in New York and Miami, and it is also present in
the Caribbean (the Cayman Islands) through BBVA Privanza.
In addition to this financial information, section 4.1. of this Prospectus includes a detailed
analysis of activities in the Group’s areas of business, as well as individual or subconsolidated financial information on the most important banks in the Group. This
information is based on the audited financial statements for the 2001 financial years,
2000 and 1999, although those corresponding to the financial year 1999 are proforma.
IV/30
4.2.1. Profit and Loss Account of the Consolidated Group
Variation %
2001
2000
1999
2001/00
Financial products
2000/99
21.608
19.325
13.920
11,8
38,8
-13.279
-12.714
-8.534
4,4
49,0
495
384
374
28,9
2,7
GROSS MARGIN
8.824
6.995
5.760
26,2
21,4
Commissions
4.038
3.369
2.707
19,8
24,5
12.862
10.364
8.467
24,1
22,4
490
779
641
(-37,1)
21,5
Financial costs
Dividends
BASIC MARGIN
ORDINARY PROFIT
13.352
11.143
9.108
19,8
22,3
Personnel costs
(-4.243)
(-3.774)
(-3.207)
12,4
17,7
Other administrative costs
(-2.482)
(-2.163)
(-1.769)
14,7
22,3
GENERAL ADMINISTRTION COSTS
(-6.725)
(-5.937)
(-4.976)
13,3
19,3
Amortisations
(-742)
-653
-502
13,7
30,1
(-286)
-177
-173
62,0
2,3
OPERATING PROFIT
5.599
4.376
3.457
27,9
26,6
393
589
238
-33,3
147,5
(-379)
(-268)
(-294)
41,3
(-8,8)
BUSINESS MARGIN
5.992
4.965
3.695
20,7
34,4
Redemption of consolidated goodwill fund
(-623)
(-665)
(-697)
(-6,3)
(-4,6)
954
1.307
923
(-27,0)
41,6
(-1.919)
(-973)
(-750)
97,2
29,7
. Gross provision
(-2,424)
(-1.511)
(-1.366)
60,4
10,6
. Available funds
294
142
349
106,3
(-59,3)
Net results using equity method
. Promemoria:
Correction after collection of dividends
Net profit from Group operations
. Recovered assets in suspension
. Net provision to country risk
Reorganization
investments
of
long-term
financial
Net extraordinary results
288
274
250
5,4
9,6
(-77)
122
17
n.s.
n.s.
-43
(-7)
6
n.s.
n.s.
(-727)
(-751)
(-275)
(-3,3)
173,1
INCOME BEFORE TAX
3.634
3.876
2.902
(-6,2)
33,6
Corporation tax
(-625)
(-962)
(-734)
(-35,0)
31,1
CONSOLIDATED PROFIT OF THE FINANCIAL
YEAR
3.009
2.914
2.168
3,2
34,4
Result attributed to the minority
(-646)
(-682)
(-422)
(-5,4)
61,6
. Preferential shares
(-316)
(-288)
(-259)
9,5
11,2
. Minorities
(-330)
(-394)
(-163)
(-16,2
141,7
PROFIT ATTRIBUTED TO THE GROUP
2.363
2.232
1.746
5,9
27,8
IV/31
In an international environment marked by deceleration and a high level of uncertainty, the
most relevant aspects of the evolution of the BBVA Group’s results during the 2001
financial year were: solid growth in recurrent results, strict control of operating costs, and
lastly, a prudent restructuring policy.
Solid growth in both recurrent income and in the margins reflected the high increases
seen in the operating profit and business margin, a rise of 27.9% and 20.7%, respectively.
These increases would reach 42.0% and 31.4% if the results of those less recurrent
financial transactions that were affected by the lack of stability in the market and by
specific, extraordinary operations recorded in 2000 (the most important of these was the
sale of the shareholding in Carrefour, which yielded 270 million euro) had not been
included.
Strict control of operating costs, carried out in both domestic and Latin American
operations led to an increase of 13.3% in operating costs, or one of 1.2% in homogenous
terms, i.e.: without considering the effect of the change in the consolidation perimeter.
This determined a new improvement in the Group’s cost-to-income, which was 50.4% at
the close of the year 2001, as compared to the 53.3% seen at the end of the 2000
financial year, with noticeable advances made in all the Group’s areas of activity.
A prudent restructuring policy. Faced with worldwide economic deceleration and,
above all, the difficult situation in Argentina, in 2001 BBVA applied criteria of maximum
prudence, substantially increasing the restructurings in comparison with the previous
financial year. In this way, 1475 million euro where earmarked to cover Group’s exposure
in Argentina totally, both regarding the risks existing in BBVA Banco Francés (theoretical
book value, goodwill and subordinated debt), the goodwill of Consolidar AFJP, and the
impact of the situation in that country on the results of the industrial companies in which
the Group participated.
The increase in the number of restructurings carried out during the financial year likewise
contributed to the insolvency statistical coverage fund, launched during the second
quarter of the year 2000, and which in 2001, contained 251 million euro more than the
previous financial year. As a result, the total number of restructurings carried out by the
Group (including a 926 million euro provision to special funds that is included in “Net
extraordinary results”) rose to 3511 million euro that year, showing a 69.3% increase with
respect to the figure in 2000.
Worth noting is the considerable restructuring effort carried out with regard to the volume
of surpluses (reflected in “Net profit from Group operations” and in “Results of financial
transactions”) 353 million euro less than that of the previous financial year, leaving no
doubt about the Group’s ability to face up to unfavourable situations successfully by
generating an growing level of recurrent results.
IV/32
As a consequence of all the above, the attributed profit continued to grow reaching 2363
million euro, a 5.9% increase on the previous year. This number led to a return of equity
(ROE) of 18% during the 2001 financial year.
CONSOLIDATED PROFIT AND LOSS ACCOUNT (% of ATM)
2001
2000
1999
GROSS MARGIN
2,92
2,60
2,61
Net commissions
1,33
1,25
1,23
BASIC MARGIN
4,25
3,85
3,84
0,16
0,29
0,29
4,41
4,14
4,13
(-2,22)
(-2,21)
(-2,26)
(-0,34)
(-0,31)
(-0,30)
ORDINARY PROFIT
Other operating costs
1,85
1,63
1,57
OPERATING PROFIT
0,13
0,22
0,11
1,98
1,84
1,68
BUSINESS MARGIN
0,32
0,49
0,42
(-1,16)
(-0,77)
(-0,67)
Total net restructuring (*)
0,07
(-0,12)
(-0,11)
Other extraordinary results
1,20
1,44
1,32
(-0,21)
(-0,36)
(-0,34)
0,99
1,08
0,98
302.662
269.158
220.572
Profit from Group operations
INCOME BEFORE TAX
Corporation tax
CONSOLIDATED PROFIT OF THE
FINANCIAL YEAR
Promemoria:
Total average assets (million euro)
(*) Includes provisions to special funds.
IV/33
CONSOLIDATED PROFIT AND LOSS ACCOUNT: Quarterly evolution
2001
Financial products
Financial costs
Dividends
GROSS MARGIN
Net commissions
BASIC MARGIN
transactions
ORDINARY
PROFIT
Personnel costs
Other administrative
expenses
GENERAL
ADMINISTRATION
COSTS
Amortisations
Other products and
operating charges
(net)
Net results using
equity method
OPERATING
PROFIT
Promemoria:
correction
after
collection
of
dividends
BUSINESS
MARGIN
Redemption
of
consolidation
goodwill
Net
profit
from
Group operations
Net
loan
reorganization
. Gross provision
. Available funds
. Recovered asset in
suspension
. Net provision for
country risk
Reorganization
of
long-term financial
investments
Net
extraordinary
results
INCOME BEFORE
TAX
Corporation tax
CONSOLIDATED
PROFIT OF THE
FINANCIAL YEAR
Result attributed to
the minority
. Minorities
PROFIT
ATTRIBUTED TO
THE GROUP
2000
1999
4th
Quarter.
3rd
Quarter.
2nd
Quarter.
1st
Quarter.
4th
Quarter.
3rd
Quarter.
2nd
Quarter.
1st
Quarter.
4th
Quarter.
3rd
Quarter.
2nd
Quarter.
1st
Quarter.
4.828
-2.663
142
2.307
1.021
3.328
59
3.387
-1.061
-648
-1.709
-183
-65
1.430
-45
-92
1.385
-269
350
-942
-963
71
59
-109
-23
-374
127
358
485
62
-83
145
547
5.206
-3.023
66
2.249
1.016
3.265
204
3.469
-1.064
-628
-1.692
-185
-78
1.514
177
-47
1.691
-125
-36
-326
-489
74
55
34
-8
-165
1.031
-309
722
-186
-82
-104
536
5.736
-3.747
198
2.187
1.089
3.276
181
3.457
-1.106
-620
-1.726
-190
-83
1.458
93
-166
1.551
-123
368
-323
-492
67
76
26
-13
-131
1.329
-385
944
-217
-71
-146
727
5.838
-3.846
89
2.081
912
2.993
46
3.039
-1.012
-586
-1.598
-184
-60
1.197
168
-74
1.365
-106
272
-328
-480
82
98
-28
1
-57
1.147
-289
858
-305
-80
-225
553
6.276
-4.106
100
2.270
935
3.205
15
3.220
-1.057
-716
-1.773
-195
-70
1.182
103
-68
1.285
-464
401
-254
-402
27
72
49
-5
127
1.090
-236
854
-188
-71
-117
666
5.462
-3.744
51
1.769
941
2.710
298
3.008
-1.012
-623
-1.635
-185
-43
1.145
205
-24
1.350
-92
249
-362
-565
23
58
122
-162
983
-213
770
-236
-77
-159
534
3.975
-2.608
139
1.506
742
2.248
207
2.455
-865
-422
-1.287
-141
-34
993
116
-110
1.109
-59
59
-204
-280
14
77
-15
1
49
955
-250
705
-119
-71
-48
586
3.612
-2.256
94
1.450
751
2.201
259
2.460
-840
-402
-1.242
-132
-30
1.056
165
-66
1.221
-50
598
-153
-264
78
67
-34
-3
-765
848
-263
585
-139
-69
-70
446
3.423
-2.082
132
1.473
703
2.176
169
2.345
-805
-499
-1.304
-131
-52
858
9
-118
867
-242
328
-203
-377
84
80
10
49
-83
715
-96
619
-108
-68
-40
511
3.316
-1.982
54
1.388
696
2.084
103
2.187
-807
-410
-1.217
-129
-48
793
90
-31
883
-39
-39
-117
-280
69
55
39
-14
-33
641
-138
503
-98
-67
-31
405
3.655
-2.311
106
1.450
664
2.114
175
2.289
-809
-430
-1.239
-122
-39
889
53
-82
942
-22
120
-205
-358
82
59
12
-29
-16
790
-198
592
-121
-65
-56
471
3.526
-2.159
82
1.449
644
2.093
194
2.287
-786
-430
-1.216
-120
-34
917
86
-63
1.003
-394
514
-225
-351
114
56
-44
1
-143
756
-302
454
-95
-59
-36
359
IV/34
BREAKDOWN OF THE CONSOLIDATED PROFIT AND LOSS ACCOUNT
BBVA w/o America
2001
2000
Variation %
2001/00 2000/99
1999
Corporate line
items*
BBVA America
2001
2000
Variation %
2001/00 2000/99
1999
2001
GROSS MARGIN
4.475
3.974
3.758
12,6
5,7
4.841
3.583
2.319
35,1
54,5
Net commissions
1.860
1.950
1.807
-4,7
7,9
2.178
1.419
900
53,5
57,7
BASIC MARGIN
6.335
5.924
5.565
6,9
6,5
7.019
5.002
3.219
40,3
55,4
-492
245
450
382
-45,5
17,8
323
329
258
-1,8
27,5
-78
Results
of
transactions
financial
ORDINARY PROFIT
Personnel costs
GENERAL
COSTS
ADMINISTRTION
Amortisations
Other products and operating
charges (net)
OPERATING PROFIT
Net results using equity
method
Promemoria:
Correction after collection of
dividends
BUSINESS MARGIN
Redemption of consolidation
goodwill
Net
profit
operations
from
Group
-492
6.580
6.374
5.947
3,2
7,2
7.342
5.331
3.477
37,7
53,3
-570
-2.084
-2.058
-2.043
1,3
0,7
-2.107
-1.716
-1.164
22,8
47,4
-52
2000
BBVA
1999
-562
-562
-562
-317
-317
-317
2001
2000
Variation %
2001/00 2000/99
1999
8.824
6.995
5.760
26,2
21,4
4.038
3.369
2.707
19,9
24,5
12.862
10.364
8.467
24,1
22,4
490
779
641
-37,1
21,5
13.352
11.143
9.108
19,8
22,3
-4.243
-3.774
-3.207
12,4
17,7
-2.482
-2.163
-1.769
14,8
22,3
-6.725
-5.937
-4.976
13,3
19,3
-742
-653
-502
13,6
30,1
-286
-177
-173
61,6
2,3
5.599
4.376
3.457
28,0
26,6
393
589
238
-33,3
147,5
-814
-808
-823
0,7
-1,8
-1.668
-1.355
-946
23,1
43,2
-2.898
-2.866
-2.866
1,1
0,0
-3.775
-3.071
-2.110
22,9
45,5
-52
-310
-292
-271
6,1
7,7
-431
-360
-231
19,9
55,8
-1
-68
-70
-75
-2,4
-6,7
-218
-107
-97
103,9
10,3
3.304
3.146
2.735
5,0
15,0
2.918
1.793
1.039
62,8
72,6
-623
-563
409
587
232
-30,4
153,0
17
1
5
n.s.
-80,0
-33
1
-379
-268
-294
41,4
-8,8
-656
-562
-317
5.992
4.965
3.695
20,7
34,4
-460
-212
-623
-623
-665
-697
-6,3
-4,6
954
1.307
923
-27,0
41,6
-349
-265
-289
31,5
-8,3
-30
-3
-5
n.s.
-40,0
3.713
3.733
2.967
-0,5
25,8
2.935
1.794
1.044
63,6
71,8
50
-4
3
n.s.
-233,3
-163
-453
-74
-64,1
n.s.
904
1.311
920
-31,0
42,5
-1
-317
-559
-241
-119
131,6
102,5
-1.358
-636
-471
113,6
35,0
-2
-96
-160
-1.919
-973
-750
97,2
29,7
. Gross provision
-821
-692
-431
27,8
83,3
-1.585
-819
-708
93,6
15,7
-18
-
-227
-2.424
-1.511
-1.366
60,4
10,6
134
268
122
-50,0
119,7
68
42
132
62,3
-68,2
92
-168
95
294
142
349
107,0
-59,3
128
133
145
-3,5
-8,3
159
141
105
13,0
34,3
1
0
288
274
250
5,1
9,6
5050
45
-28
-77
122
17
-163,1
n.s.
-3
7
n.s.
-142,9
-23
-4
-
n.s.
n.s.
-43
-7
6
n.s.
n.s.
173,1
. Available funds
.
Recovered
suspension
asset
in
. Net provision for country risk
Reorganization of long-term
financial investments
-20
228,9
-
-77
72
88
-67
57
n.s.
-217,5
-768
-299
-219
157,1
36,5
-47
-385
-113
-727
-751
-275
-3,2
INCOME BEFORE TAX
3.963
4.280
3.758
-7,4
13,9
836
851
357
-1,8
138,4
1.165
1.255
1.213
3.634
3.876
2.902
-6,2
33,6
-689
-909
-891
-24,2
2,0
-84
-149
-15
-43,7
893,3
148
96
172
-625
-962
-734
-35,0
31,1
3.274
3.371
2.867
-2,9
n.s.
752
702
342
7,2
105,3
1.017
1.159
1.041
3.009
2.914
2.168
3,3
34,4
Corporation tax
CONSOLIDATED PROFIT
THE FINANCIAL YEAR
FOR
PROFIT ATTRIBUTED
THE GROUP
ATMs
TO
-346
-399
-372
-13,2
7,3
-306
-229
-79
33,6
189,9
6
-54
29
-646
-682
-422
-5,3
61,6
2.928
2.972
2.495
-1,5
19,1
446
473
263
-6
79,8
1.011
1.213
1.012-
2.363
2.232
1.746
5,9
27,8
198.837
194.129
180.331
2,4
7,7
103.825
75.029
40.241
38,4
86,4
302.662
269.158
220.572
12,4
22,0
* The negative amounts included in “Corporate line items” correspond to those concepts that, by their nature, cannot be assigned to any of the
Group’s business areas. Specifically, they include expenses generated by business support areas that have not been transferred to specific areas of
business, as well as institutional and corporate expenses; redemption of goodwill, extraordinary provisions and the market maker in combined
actions generated by induced business: income assigned to the areas of business for their participation in the Group’s activities and whose cost
cannot be transferred to the clientele.
IV/35
4.2.2. Gross Margin
In 2001, the gross margin of the BBVA Group reached 8824 million euro, showing an
increase of 26.2% as compared to the year before, and an upward curve throughout the
year that made it possible during the last quarter of the financial year to reach the highest
figure ever since BBVA had been created.
To this total, BBVA w/o America contributed 4475 million euro, a 12.6% increase on the
figure for the year 2000. 462 million euro of this total corresponded to dividends, which
were 22.9% higher than those collected during the previous financial year. The high level
of growth seen in the financial margin was a result of a recovery in the growth rates for
activity and good price administration in an environment marked by falling interest rates.
The increasing dynamism of the business throughout the year led to an increase of 8% in
BBVA w/o America loans and one of 10% in transactional liabilities (current and savings
accounts).
As a result of the growth in less demanding resource, together with the defence of the
yield on loans, it was possible for the client differential (yield on loans less cost of
deposits) in the domestic market to undergo an increase of 4 basic points during the
financial year as a whole in comparison with the year 2000, in the face of the
considerable drop in interest rates throughout 2001.
The gross margin of BBVA America showed a year-on-year rise of 35.1%, which was a
consequence of the balanced and selective growth in business, as well as clever price
administration in an environment marked by a generalized drop in interest rates in the
majority of countries of the region. As in the case of BBVA w/o America, the evolution of
this area in all of the Group’s Latin American activities was on the rise throughout the
whole year, and, as such, the financial margin of the second quarter was 10% higher than
that of the first.
Yields and Costs Structure
(Millions of euro and costs)
FINANCIAL PRODUCTS
Credit Entities
. UME currency
. Foreign currency
Loans
. UME currency
. Foreign currency
. Fixed-Income securities
UME currency
Foreign currency
. Variable-Income securities
Shareholding
using
equity
method
Other shareholdings
Other financial income
No-yield assets
FINANCIAL COSTS
Credit Entities
. UME currency
. Foreign currency
Client resources
Debits to clients
. UME currency
. Foreign currency
Negotiable securities
. UME currency
. Foreign currency
Other financial costs
Other liabilities w/o cost
GROSS MARGIN/ATM
2001
Average
balances
2000
Yields
and costs
Rate
%
Average
balances
1999
Yields
and costs
Rate
%
Average
balances
Yields
and costs
Rates
%
302.662
38.869
18.947
19.922
145.288
93.973
51.315
93.467
81.820
38.240
43.580
11.647
8.549
22.104
2.266
634
1.632
11.945
5.752
6.193
7.779
7.283
1.984
5.299
495
379
7,3
5,8
3,3
8,2
8,2
6,1
12,1
8,3
8,9
5,2
12,2
4,3
4,4
269.158
38.574
19.163
19.411
132.710
90.217
42.493
73.705
62.393
28.331
34.062
11.312
7.880
19.709
2.699
821
1.878
10.493
5.131
5.362
6.433
6.048
1.490
4.559
384
268
7,3
7,0
4,3
9,7
7,9
5,7
12,6
8,7
9,7
5,3
13,4
3,4
3,4
220.573
43.963
23.385
20.578
108.410
80.175
28.235
50.743
41.878
25.907
15.971
8.865
5.737
14.294
2.058
567
1.491
8.118
4.289
3.829
3.977
3.603
1.207
2.396
274
299
6,5
4,7
2,4
7,3
7,5
5,4
13,6
7,8
8,6
4,7
15,0
4,2
5,2
3.098
116
114
3,8
3.432
116
84
3,4
3.128
74
141
2,4
13.279
3.775
1.659
2.116
9.201
7.581
2.001
5.580
1.620
838
782
303
4,4
5,5
4,7
6,4
4,8
4,8
2,6
6,9
5,0
3,9
7,1
24.169
269.158
69.130
33.816
35.314
162.680
128.442
73.102
55.340
34.238
16.780
17.458
12.714
4.440
1.389
3.051
8.056
5.791
1.785
4.006
2.265
782
1.483
218
4,7
6,4
4,1
8,6
5,0
4,5
2,4
7,2
6,6
4,7
8,5
17.457
220.573
64.333
37.878
26.455
127.672
100.419
69.655
30.764
27.253
11.649
15.604
8.534
3.040
1.169
1.870
5.459
3.191
1.204
1.987
2.268
511
1.757
36
3,9
4,7
3,1
7,1
4,3
3,2
1,7
6,5
8,3
4,4
11,3
8.824
2,9
6.995
2,6
5.760
2,61
25.038
302.662
68.320
35.448
32.872
190.506
158.083
76.729
81.354
32.423
21.410
11.013
43.836
37.348
28.568
IV/36
Analysis of the Variation in the Gross Margins for 2001 and 2000
Effect of
volume (1)
Effect of
price (2)
Total
Effect
FINANCIAL PRODUCTS
3.182
-788
2.394
Credit Entities
. UME currency
. Foreign currency
Loans
. UME currency
. Foreign currency
. Fixed-income portfolio
- UME currency
- Foreign currency
. Variable-income portfolio
- Shareholdings using equity method
- Other shareholdings
No-yield assets
40
-9
50
1.333
220
1.113
1.806
1.795
521
1.274
12
23
-11
3
-474
-178
-296
119
402
-282
-460
-560
-26
-534
100
88
12
27
-434
-187
-246
1.452
621
831
1.346
1.235
495
740
111
-111
0
30
FINANCIAL COSTS
1.536
-971
565
Credit Entities
. UME currency
. Foreign currency
Client resources
. Debits to clients
- UME currency
. Resident deposits
. Other deposits
- Foreign currency
Negotiable securities
. UME currency
. Foreign currency
-144
67
-211
1.642
1.974
91
39 1
52
1.883
-332
216
-548
38
-521
203
-724
-498
-184
125
68
-43
-309
-314
-160
-154
48
-665
270
-935
1.144
1.790
216
207
9
1.574
-646
56
-701
85
GROSS MARGIN
1.646
183
1.829
(1) The effect of volume is the interest rate for the year 2000 by the difference between the average balances for 2001 and 2000
(2) The effect of price is the average balance for 2001 by the difference between the interest rates of 2001 and 2000.
IV/37
Analysis of the Variation in the Gross Margins for 2000 and 1999
Effect of
volume (1)
Effect of
price (2)
Total
Effect
FINANCIAL PRODUCTS
5.268
147
5.415
Credit Entities
. UME currency
. Foreign currency
Loans
. UME currency
- Residents
- Others
. Foreign currency
. Fixed-income portfolio
- UME currency
- Foreign currency
. Variable-income portfolio
- Shareholdings using equity method
- Other shareholdings
No-yield assets
-187
-102
-85
2.454
521
445
76
1.934
2.946
2.827
113
2.714
119
112
7
54
828
356
471
-79
322
268
54
-401
-490
-382
169
-551
-108
-143
34
-111
641
254
387
2.375
842
713
129
1.533
2.456
2.445
282
2.163
11
-31
42
-57
FINANCIAL COSTS
2.547
1.633
4.180
Credit Entities
. UME currency
. Foreign currency
Client resources
. Debits to clients
- UME currency
. Residents deposits
. Others
- Foreign currency
. Loan stock and other negotiable securities
- UME currency
- Foreign currency
501
-125
626
2.035
1.601
14
72
-58
1.588
434
225
209
11
900
345
555
562
999
567
192
375
432
-437
45
-482
171
1.401
220
1.181
2.598
2.600
581
265
317
2.019
-3
-271
-273
182
GROSS MARGIN
2.721
-1.486
1.235
(1) The effect of volume is the interest rate for the year 1999 by the difference between the average balances for 2000 and
1999
(2) The effect of price is the average balance for 2000 by the difference between the interest rates of for 2000 and 1999
IV/38
Basic margin
2000
GROSS MARGIN
8.824
6.995
5.760
26,2
21,4
NET COMMISSIONS
4.038
3.369
2.707
19,8
24,5
Collection and payment mediation
. Credit and debit cards
. Other collection and payment
services
Equity management
. Investment and pension funds
. Portfolios managed
Other commissions on securities
. Trading of securities
. Insurance and placing
. Administration and custody
Other commissions
1.487
557
930
1.064
354
710
767
270
497
39,7
57,2
31,0
38,7
31,1
42,9
1.465
1.348
117
631
180
155
296
455
1.458
1.340
118
512
250
59
203
335
1.189
1.125
64
420
173
97
150
331
0,4
0,5
-0,9
23,2
-28,2
166,6
45,4
35,9
22,6
19,1
84,4
21,9
44,5
-39,2
35,3
1,2
1.860
2.178
12.862
1.950
1.450
10.364
1.807
900
8.467
-4,7
53,5
24,1
7,9
61,1
22,4
PROMEMORIA:
In BBVA w/o America
In BBVA America
BASIC MARGIN
1999
Variation %
2001/00
2000/99
2001
The Group’s volume of net commissions reached 4038 million euro, a year-on-year
increase of 19.8%. It is worth noting that this remarkable rise was achieved within the
context of a negative evolution of the financial markets throughout the 2001 financial year,
which considerably jeopardized the commission derived from equity management and
trading of securities.
The evolution of the stock exchange markets had a greater impact on BBVA w/o America
than on any other area of the Group. Hence, its commissions, which totalled 1860 million
euro, show a drop of 4.7% in comparison with the previous financial year, despite the
increase in commissions more typical of banks. Nevertheless, the fourth quarter of the
year indicated a more favourable trajectory, thanks to the improved performance of
investment funds and the generalized rally of activity, which yielded the highest figure of
the financial year.
BBVA America had a volume of commissions of 2178 million euro, showing an increase of
53.5% on the year 2000. This remarkable evolution resulted from the plans to improve
profitability that were implanted in the banks of the region, as well as from the strength of
out franchise in the pension fund business.
The increase in commissions, together with the abovementioned evolution of the financial
margin, gave a basic margin of 12,862 million euro, 24.1% higher than the one for the
financial year 2000. This evolution increased throughout the year reaching maximum
levels during the fourth quarter, both in the total of the Group and in BBVA w/o America.
IV/39
4.2.3. Ordinary Profit
BASIC MARGIN
Promemoria:
Ordinary profit
BBVA w/o America
BBVA America
ORDINARY PROFIT
2001
Variation %
2001/00
2000/99
2000
1999
12.862
10.364
8.467
24,1
22,4
490
779
641
-37,1
21,5
6.580
7.342
6.374
5.331
5.948
3.477
3,2
37,7
7,2
53,3
13.352
11.143
9.108
19,8
22,3
Results from financial transactions reached 490 million euro showing a drop of 37.1% that
year. This drop is concentrated in BBVA w/o America, where the volume recorded was
205 million euro less than that of the previous year, and was basically down to the sale of
the shareholding in the Carrefour Group, which took place during the financial year 2000
yielding 270 million euro. On the other hand, the most important extraordinary operation
in 2001 was the sale of the 6.57% shareholding in Hispasat, which generated a surplus of
49 million euro.
After the incorporation of the results from financial transactions, the ordinary profit of the
Group was13,352 million euro, 19.8% more than that of the previous financial year,
showing a growth of 3.2% in BBVA w/o America and one of 37.7% in the Latin American
business.
RESULTS FOR FINANCIAL OPERATIONS
2001
2000
1999
Fixed-income portfolio
Variable-income portfolio
Differences in exchange rate
Reorganization of securities and others
115,7
47,2
329,9
-2,8
32,3
440,3
332,5
-26,4
490,1
PROMEMORIA
BBVA w/o America (*)
BBVA America
244,3
323,0
Variation %
2001/00
2000/99
-39,9
387,8
294,9
-2,1
258,2
-89,3
-0,8
89,4
180,9
13,5
12,8
n.s.
778,6
640,7
-37,1
21,5
448,9
329,7
382,6
258,1
-45,6
-2,0
17,3
27,7
(*) The line items between America and w/o America have not been eliminated.
IV/40
4.2.4. Operating Profit
Variation %
2001/2000
2000/1999
2001
2000
13.352
11.143
9.108
19,8
22,3
Personnel costs
Reorganization of securities and others
Contribution to the F.G.D.
Various problems
Other operating products
-4.243
-2.482
-742
-263
-74
51
-3.774
-2.163
-653
-180
-82
85
-3.207
-1.769
-502
-137
-122
86
12,4
14,7
13,7
46,1
-8,5
-40,0
17,7
22,3
30,1
31,4
-32,8
-1,2
TOTAL OPERATING COSTS AND
OTHERS
-7.753
-6.767
-5.651
14,6
19,8
OPERATING PROFIT
5.599
4.376
3.457
27,9
26,6
2,56
50,4
102.721
2,95
41,3
2,51
53,3
97.949
2,75
38,5
2,56
54,6
90.360
2,44
35,5
1,9
-5,5
4,9
7,2
7,2
-2,0
-2,4
8,4
12,7
8,5
54,7
55,8
56,8
-1,9
1,8
7.988
12,9
8.946
10,9
7.491
12,1
-10,7
17,4
19,4
-9,9
37,9
1,67
0,97
30,1
1,25
0,76
29,4
1,22
0,75
25,9
34,2
28,3
2,4
2,5
1,3
ORDINARY PROFIT
Operating costs and others / ATM (%)
Efficiency ratio (%)
Average number of employees
ATM per employee (million euro / person)
Average cost per person (thousand euro /
1999
person)
Personnel expenses / Operating costs and
others (%)
Nº of branches
Average number of employees per
branch
ATM per branch (million euro)
Ordinary profit per branch (million euro)
Operating costs and others per branch (million
euro)
Efficiency ratio = (Personnel costs + Other administrative costs/ Ordinary profit).
Details by areas
Personnel expenses
Operating Costs, Amortisation and others
Variation %
Promemoria:
2001
2000
1999
BBVA w/o America
2.084
2.058
2.043
1,3
BBVA AMERICA
2.107
1.716
1.164
22,8
01/00
Variation %
2001
2000
1999
0,7
3.276
3.228
3.212
1,5
0,5
47,4
4.424
3.538
2.438
25,0
45,1
00/99
01/00
00/99
Cost control was one of the most important points in the BBVA Group this financial year.
As a result of the success of this policy the 13.3% increase in general administrative
costs was considerably less than the increase seen in the ordinary profit. This led to an
improvement in the efficiency ratio of 290 basic points, going from 53.3% during the
financial year 2000 to 50.4% in 2001, placing the BBVA Group is one of the topmost
positions regarding cost-to-income in comparison with other large banks in the euro zone.
IV/41
GENERAL ADMINISTRATION COSTS
2001/2000
Variation %
2000/1999
3.207
2.405
2.111
294
540
88
262
12,4
12,5
7,1
42,8
8,7
11,7
18,6
17,7
18,7
14,7
47,7
11,1
25,0
22,1
2.163
514
356
303
182
105
524
179
1.769
398
367
225
160
104
385
130
14,7
11,2
35,8
11,1
1,1
-0,2
9,5
26,9
22,3
29,2
-3,0
34,7
13,8
1,0
36,1
37,7
6.725
5.937
4.976
13,3
19,3
2.898
3.775
2.866
3.071
2.866
2.110
1,1
22,9
45,6
2001
2000
1999
PERSONNEL EXPENSES
Wages and salaries
. Fixed earnings
. Variable earnings
Social security payments
. Of which refer to pension funds
Training costs and others
4.243
3.211
2.591
620
652
122
380
3.774
2.854
2.420
434
600
110
320
OTHER ADMINISTRATIVE COSTS
Property
Computer science
Communications
Publicity and propaganda
Representation costs
Other expenses
Contributions and taxes
2.482
572
483
337
184
104
574
228
TOTAL
COSTS
GENERAL
PROMEMORIA:
In BBVA w/o America
In BBVA America
ADMINISTRATION
In BBVA w/o America, general administration costs reached 2898 million euro, showing a
rather modest increase of 1.1%. This moderation could also be noted in personnel costs,
which increased 1.3%, and overheads, which rose 0.7%. The structure of the latter was
changed to favour those costs, which could ensure improvements in productivity and
efficiency in the future, such as those related to computer science, which increased 18%.
A reduction in staff of 2047 people and the close of 244 branches, as a result of the
restructuring process to unite the network after the merger, also contributed to this
generalized cost containment. Over the last two years, staff in Spain has been reduced
by over 5000 people and the network of branches by 716 offices, 14.5% and 16.5%
respectively. The efficiency ratio pf BBVA w/o America continued to advance along the
same lines as over the last few years, marking 44%, as opposed to the 45% of the
previous year and the 48.2% reached in 1999.
BBVA America showed an increase of 22.9% in the general administration costs, as a
result of the incorporation of Bancomer in July 2000. If this effect is deducted, costs
increased a mere 3.6%. All the Group’s Latin American entities contributed to this positive
evolution, above all Mexico, where the network integration process was completed will
ahead of the time previously predicted. During the 2001 financial year, the Group’s
network in Latin America was reduced by 704 branches and the staff by 7479 people,
14.5% and 10.3% respectively. All of this allowed BBVA America to greatly improve its
efficiency ratio, which went from 60.7% in 1999 and 57.6% in 2000 to 51.4% in 2001.
IV/42
OPERATING PROFIT
2001
2000
1999
s/ATMs (%)
5.599
1,85
4.376
1,62
3.457
1,57
OPERATING PROFIT BBVA W/O AMERICA
S/ATMs (%)
3.304
1,66
3.146
1,62
2.736
1,52
OPERATING PROFIT BBVA AMERICA
S/ATMs (%)
2.918
2,82
1.793
2,34
1.039
2,58
OPERATING PROFIT
The growth sustained by recurrent income, together with cost containment meant an
operating profit of 5599 million euro, showing an increase during the financial year of
27.9%, or one of 42% if the results from the financial transactions are not taken into
account.
In BBVA w/o America growth in the operating profit reached 5.0%, or 13.5% excluding the
results from financial transactions. BBVA America showed an increase of 62.8%.
Business margin
The business margin is the result of complements the operating profit with the results
from the companies that have been consolidated through the equity method. We have
borne in mind that the dividends provided to the Group have already been deducted from
these results, which is why the amount of these is indicated in the Promemoria, within the
consolidated Profit and Loss Account of the Group.
OPERATING PROFIT
BUSINESS MARGIN
2001
2000
Variation %
1999
2001/2000
2000/1999
5.599
4.376
3.457
27,93
26,6
393
589
238
-33,3
147,5
5.992
4.965
3.695
20,7
34,4
IV/43
Consequently, the total contribution of the companies that have been consolidated in the
way described above is the sum of the dividends provided plus the equity accounted
earnings.
Underneath are details of the total contribution of the shareholding portfolio, broken down
into three main categories: industrial shareholdings, financial institutions and insurance,
and lastly property and other.
2001
2000
1999
Variation %
2001/2000
2000/1999
Dividends
379
268
294
41,3
-8,8
393
589
238
-33,3
147,5
TOTAL EQUITY ACCOUNTED EARNINGS
772
857
532
-9,9
61,1
Industrial shareholdings
333
478
197
-30,4
142,6
Financial institutions and insurance
333
265
176
25,5
50,6
Property and other
106
114
159
-6,6
-28,3
In 2001, the BBVA group’s shareholdings portfolio contributed equity accounted earnings
of 772 million euro, 9.9% less than during the 2000 financial year, of which 379 million
were recorded as dividends and 393 millions as net results from equity accounted
earnings. The year-on-year decrease seen in this area was caused by two factors: a drop
in expectations as a consequence of the events that took place 11 September, reducing
the provisions of results for many companies and the estimated impact that the crisis in
Argentina may have on the results of specific companies in which the Group holds
shares, which meant a reduction of 72 million euro in the contribution of these companies
to the results of BBVA.
The decrease in the equity accounted earnings principally affected BBVA w/o America,
which is where the contribution from the majority of companies in which the Group has an
interest is recorded. This considerably limited the evolution of its business margin, which
reached 3713 million euro, a level very similar to that of the previous financial year.
Meanwhile, in BBVA America, where the negative effect on the equity accounted
earnings was much less, the business margin recorded an increase of 63.6%. For the
Group as a whole it was 5992 million euro, representing an increase of 20.7%.
IV/44
4.2.5. Reorganization and Extraordinary Provisions
REORGANIZATION
2001
2000
1999
Variation %
2001/2000
2000/1999
. Gross provision
. Available funds
. Recovered asset in suspension
. Net provision to country risk
Reorganization of long-term financial investments
Provision to special funds
-623
-1.919
-2.424
294
288
-77
-43
-926
-665
-973
-1.511
365
274
122
–7
-429
-697
-750
-1.366
349
250
17
6
-31
-6,3
97,2
60,4
-19,5
5,2
n.s.
n.s.
116,0
-4,6
29,7
10,6
4,6
9,6
n.s.
n.s.
n.s.
Total net restructuring
-3.511
-2.074
-1.472
69,3
40,9
PROMEMORIA:
Total net restructuring
In BBVA w/o America
In BBVA America
Corporate restructuring
739
2.290
482
847
833
394
133
535
804
-12,8
175,0
22,4
n.s.
55,7
-51,0
At the end of the month of December 2001, the situation in Argentina sparked a crisis
which led to certain measures being taken at the beginning of this financial year: the end
of parity between the Argentinean peso and the United Stated dollar, restrictions on the
availability of cash and the mandatory weighting of specific salaries. Faced with this
situation, in the year 2001, the BBVA Group decided to take certain precautionary steps,
carrying out restructuring that amounted to 1190 million euro, of which 123 million
corresponded to the early redemption of goodwill of BBVA Banco Francés and of
Consolidar AFJP. This restructuring not only covered the cost of the investment in BBVA
Banco Francés, but also the cost of the fixed-income assets, principally subordinated
debt, issued by said Bank and underwritten by the Group. In this way, during the 2001
financial year the maximum loss risk that the Group could experience as a result of
investments carried out in Argentina was covered.
These extraordinary provisions raised the total amount of net restructurings carried out by
the Group to 3511 million euro during the financial year 2001, which represented an
increase 69.3% on those carried out the previous year. Of this total, the amount
earmarked for loan reorganization was practically twice that of the year 2000, and this
was due to three reasons: the increase in the provision to the statistical coverage fund
(251 million euro more than that in 2000), the bad debt provisioning carried out in BBVA
Banco Francés, and the application of the traditional criteria of prudence followed by the
Group.
This considerable increase in loan reorganization reinforced the Group’s level of
solvency, raising the coverage rate of the bad debt assets to 221.6%, far above the
189.5% that existed 31 December 2000. In addition, this historically high level was
reached both in BBVA w/o America, whose coverage rose from 159.5% to 172,8%, and in
BBVA America, where the rise was from 205.7% to 252.0%.
IV/45
The surplus generated during the year was dedicated in its entirety to restructurings, and,
as such, the provisions carried out exceeded the net profit of the Group by more than
2500 million. This meant that the extraordinary restructuring carried out during the
financial year 2001 was charged to the year’s recurrent results.
EVOLUTION OF BAD DEBT PROVISIONING
Initial Balance
Plus
Provisioning for overdue loans
Provision for country risk
Variations in the composition of the consolidable group
and purchase of assets
Differences in exchange rate
Provision for the exchange of fixed income for
guaranteed loans in Argentina
Less
Cancellations due to the transfer of suspended loans
and sale of assets
Available funds
Application of the specific Promissory Notes Fund
FOBAPROA (*)
Other variations
Other
Final balance at the end of the period
2001
2000
Variation %
1999
2001/00
2000/99
8.155
3.050
2.978
167,3
2,4
2.217
77
12
1.452
81
5.396
1.186
60
8
52,6
-5,2
-99,8
22,4
35,0
n.s.
715
435
-
-
-
-
-1.872
-1.618
-1.011
15,7
60,0
-294
-3.259
-365
-349
-19,5
4,6
-47
181
158
-
178
-
-129,6
-
-11,2
6.320
8.155
3.050
-22,5
167,4
The promissory notes issued by the Savings Protection Banking Funs –FOBAPROA- of Mexico, currently the
Savings Protection Banking Institution –IPAB-, form part of and are recorded in the balance of “Ordinary Investment
Portfolio –Other non-resident sectors”,. These promissory notes resulted from the measures implanted by the
Mexican Government as a consequence of the banking crisis caused by the economic situation in Mexico late 1994
and during1995. By means of various regulations, the banks transferred part of the loans portfolio showing payment
problems. These transactions were structured as a cessation of future rights on the flow generated by the loans,
and, in exchange for these rights, the credit institutions received non-transferable promissory notes from
FOBAPROA for an amount equivalent to the net book value (discounting provisions) of the assets subject to the
scheme. At 31 December 2001 and 2000, the amount of these promissory notes came to 15,661 and 13,134 million
euro, respectively. These promissory notes accrue capitalised interest and are payable up until their maturity date in
2005. The interest associated with these promissory notes is recorded under the item “Interest and other
assimilated yield” of the consolidated profit and loss accounts. Under the conditions established in the agreements
with the FOBAPROA, the BBVA Bancomer Financial group is responsible for 25% of the losses resulting from: the
difference between the amount of the FOBAPROA promissory notes at the beginning of the transaction plus
accumulated accrued interest and the recovery of loans subject to this programme. This contingency is completely
covered by the constitution of a bad debt provisioning fund associated to these promissory notes. At 31 December
2001, this fund was applied and, as a consequence, the balance of the epigraph “Fixed Income Portfolio–Other
non-residential sectors” decreased by 3259 million euro.
Underneath are the details at 31 December 2001 and 2000 of the total risks with third
parties not related to the group, and which are in countries showing differing degrees of
difficulty ("country risk"), as well as the provisions constituted to cover these, including the
bad debt funds:
EVOLUTION OF THE COUNTRY-RISK PROVISION
Country risk
Constituted provision
Coverage (%)
2001
1.404,7
Million euro
2000
811,5
1999
1.904,9
Variation %
2001/00
2000/99
73,1
-57,4
493,9
185,1
402,6
166,8
-54,0
35,2
22,8
21,1
54,4
8,1
IV/46
RESULTS OF GROUP OPERATIONS
The lack of stability and negative behaviour of the stock exchange markets also limited
the opportunities for portfolio turnover, which the Group had traditionally carried out. As a
result, in 2001, the profit for group operations reached 954 million euro, showing a drop of
27.0% with respect to the previous year.
The disinvestment operations carried out during the financial year that are most worthy of
note are the sales of the Group’s shareholdings in Axa-Aurora (with a surplus of 96
million euro), Bodegas y Bebidas (51 million), Finaxa (121 million) and the pension fund
managers Profuturo in Mexico and Futuro de Bolivia (78 and 16 million, respectively),
together with a reduction of the Group’s position in Telefónica (353 million) and in Repsol
YPF, S.A. (84.8 million euro
Results of Group operations
LOSSES:
Disposal of shareholdings in companies consolidated using the global integration
method
Disposal of shareholdings following the equity method
Treasury stock
TOTAL LOSSES
PROFITS:
Disposal of shareholdings in companies consolidated using the global integration
method
Disposal of shareholdings following the equity method
Operations with shares of the dominant company and with financial liabilities issued by
the Group
TOTAL PROFITS
TOTAL NET RESULTS OF GROUP OPERATIONS
2001
2000
1999
Variation %
2001/00
2000/99
12
15
5
13,3
200,0
6
32
50
5
11
31
1
53
59
20,0
190,9
64,5
400,0
-79,3
-47,5
34
47
35
-27,7
34,3
896
74
1.165
126
725
222
-23,1
-41,3
60,7
-43,2
1.004
954
1.338
1.307
982
923
-25,0
-27,0
36,3
41,6
EXTRAORDINARY RESULTS
The extraordinary results epigraph of the financial year 2001 included considerable
amounts of a non-recurrent nature the highest of which were: the provision to the specific
fund for Argentina, more than 617 million euro and special fund provisioning to the
amount of 308 million euro.
In the financial year 2000, the “Extraordinary Results account – other extraordinary
results” recorded two incomes of 203.4 and 21.4 million euro each, and the origin of these
is explained in detail in chapter 0 of this Prospectus. In addition, these amounts are
included in the “Extraordinary profits and losses – Other extraordinary results, net” details
of which can be found in Note 28 G of the consolidated annual accounts of the financial
year 2001, which are included in the Annex.
Net provisions to special funds
Other losses due to pension commitments
Additional investment in issues of capital
Merger costs
Results of tangible and financial fixed asset disposal
Recovery of accrued interest from earlier financial years
Correction of results after monetary re-expression
Provision to specific fund for Argentina
Difference in Exchange rate in structural positions
Restructuring surplus
Other extraordinary results
TOTAL
2001
-308
-86
-44
253
272
69
-618
-16
-248
-726
2000
-326
-92
-102
-160
307
117
76
-183
-387
-751
1999
-75
-61
50
142
-88
-242
-275
Variation %
2001/00
2000/99
-5,5
-6,5
-72,5
-17,6
132,5
-9,2
-35,9
-3,3
-334,7
162,3
n.s.
-17,6
n.s.
59,9
173,1
IV/47
4.2.6. Results and resources generated
Profit attributed to the Group
2001
2000
1999
Variation %
2001/2000
Income before tax
Corporate tax
2000/1999
3.634
3.876
2.902
- 6,2
33,6
-625
-962
-734
-35,0
31,1
3.009
2.914
2.168
3,2
34,4
Result attributed to the minority shareholders
-646
-682
-422
-5,4
61,6
· Preferential shares
-316
-288
-259
9,5
11,2
· Minorities
-330
-394
-163
-16,2
141,7
2.363
2.232
1.746
5,9
27,8
Profit attributed to the Group
Dividend
1.222
1.123
854
8,9
31,5
Resources
1.141
1.109
892
2,9
24,3
Book value per share (euro)
Resources generated from operations (*)
4,17
4,15
2,88
0,5
44,1
5.798
4.453
2.574
30,2
73,0
(*) Calculated as Consolidated net profit + Amortisations + Restructuring of portfolio + Provisions
After the considerable number of restructurings carried out, the income before tax in 2001
reached 3,634 million euro, which meant a net profit of 3,009 million euro after the
corporate income tax for the financial year had been deducted, 3.2% higher than that of
the year 2000. The recent corporate tax reform in Spain meant a saving of 250 million
euro, lowering the tax pressure in comparison with that of the previous financial year.
The volume of results attributed to minority shareholders amounted to 646 million euro,
5.4% less than in 2000, due, amongst other reasons, to the increase of the Group’s
shareholding in BBVA Bancomer. However, once this is deducted from the minority
shareholders’ results, the Group’s attributed profit was 2,363 million euro, 5.9% higher
than that of 2000. When considering how the profit has evolved one must take into
account the large amount of extraordinary restructuring that was carried out and which
totally covers the possible future impact the situation in Argentina may have on the profit
and loss account.
Profit per share during the financial year 2001 was 0.74 euro, showing an increase of
1.7% on that of the previous year. The rate of return on equity (ROE = Attributed profit /
Average equity), reached 18%; the rate of return of total average assets (ROA = Net profit
/ Total average assets) was 0.99%; and the rate of return on risk weighted assets
(RORWA = Net profit / Average risk weighted assets, in accordance with the BIS
regulations) was 1.78%. The dividend approved by the General Shareholders’ Meeting
held 9 March 2002 was 0,383 euro per share, representing a growth of 5.5% in
comparison with the dividend distributed in 2000. With this amount of dividend per share,
the total volume distributed out to the BBVA shareholders was 1,222 million euro, 8.9% in
excess of the 1,123 million handed out after the financial year 2000, representing a pay
out of 51.7%.
IV/48
4.2.7. Geographic distribution.
Underneath is the geographic distribution at 31 December 2001, 2000 and 1999, of the
principal items of income in the profit and loss accounts, according to the country in which
the branches are located and the companies of the Group to which they belong:
Financial products
Spain
Rest of Europe
America
Others
2001
2000
1999
Variation %
2001/00
2000/99
7.846
1.715
11.878
169
7.435
1.559
9.455
876
6.327
1.056
6.309
229
5,5
10,0
25,6
-80,7
17,5
47,6
49,9
282,5
21.608
19.325
13.921
11,8
38,8
Dividends
Spain
Rest of Europe
America
459
2
34
373
3
8
357
8
8
23,1
n.s.
n.s.
4,5
n.s.
n.s.
Others
495
384
373
28,9
3,0
1.920
231
2.663
20
2.007
236
1.755
34
1.904
189
1.114
15
-4,3
-2,1
51,7
-41,2
5,4
24,9
57,5
126,7
4.834
4.032
3.222
19,9
25,1
180
13
295
2
144
302
330
3
342
12
283
4
25,0
-95,7
-10,6
n.s.
-57,9
n.s.
16,6
n.s.
490
779
641
-37,1
21,5
15
3
32
1
26
1
58
-
36
1
48
-42,3
n.s.
-44,8
-27,8
n.s.
20,8
51
85
85
-40,0
-
Commissions received
Spain
Rest of Europe
America
Others
Results of financial operations
Spain
Rest of Europe
America
Others
Other operating products
Spain
Rest of Europe
America
Others
Despite the fact that, at financial product level, the contribution from America represents
55% of the BBVA total, one must not forget that their high operating costs together with
the considerable provisions carried out as a result of the crisis in that area mean that, in
terms of contribution to profit, the American area represents 19%.
IV/49
4.3. BALANCE ADMINISTRATION
4.3.1. Balance of the BBVA
CONSOLIDATED BALANCE SHEET
Cash and deposits in Central Banks
. Cash
Bank of Spain
Other Central Banks
2001
2000
1999
Variation %
2001/00
2000/99
-10,4
9.240
7.198
8.035
28,4
2.403
2.185
1.707
10,0
28,0
1.828
1.619
3.910
12,9
-58,6
5.009
3.394
2.418
47,6
40,4
Government stock
20.165
14.735
12.027
36,9
22,5
Credit Entities
23.199
35.334
38.018
-34,3
-7,1
2.930
1.336
896
119,3
49,1
20.569
33.998
37.122
-39,5
-8,4
150.220
137.467
113.607
9,3
21,0
fixed-income
61.651
57.889
34.211
6,5
69,2
variable-income
3.674
3.038
3.088
20,9
-1,6
Shareholdings
6.642
7.453
6.216
-10,9
19,9
Shareholdings in companies belonging to
the Group
1.114
1.169
885
-4,7
32,1
542
597
358
-9,2
66,8
19
42
39
-54,8
7,7
523
555
319
-5,8
74,0
. At sight
. Other loans
Credits on clients
Debentures
securities
and
Shares
and
securities
other
other
Intangible assets
. Costs of constitution and establishment
. Other redeemable costs
Consolidation goodwill
4.617
4.075
1.990
13,3
104,8
. Through global and proportional integration
3.045
2.469
656
23,3
276,4
. Through equity method
1.572
1.606
1.334
-2,1
20,4
6.172
5.969
4.857
3,4
22,9
. Land and buildings for own use
2.531
2.960
2.367
-14,5
25,1
. Other property
1.424
699
700
103,7
-0,1
. Furniture, installations and other
2.217
2.310
1.791
-4,0
29,0
76
113
338
-32,7
-66,6
Tangible assets
Treasury stock
Other assets
12.000
11.935
8.220
0,5
45,2
Deferred accounts
7.049
6.466
3.947
9,0
63,8
Losses in consolidated companies
2.885
2.706
2.370
6,6
14,2
309.246
296.145
238.166
4,4
24,3
Average total assets
302.662
269.158
220.572
12,4
22,0
Average risk weighted assets
169.028
157.601
123.922
7,3
27,2
Average treasury stock
13.159
10.564
7.974
24,6
32,5
Net Equity (1)
13.315
13.265
8.432
0,4
57,3
Total Assets
Promemoria:
(1) After applying the results of the financial year.
IV/50
Credit entities
Variation %
2001/00
2000/99
2001
2000
1999
64.588
68.284
68.607
-5,4
-0,5
1.413
3.277
1.246
-56,9
163,0
63.175
65.007
67.361
-2,8
-3,5
Debits to clients
166.499
154.146
105.077
8,0
46,7
. Savings deposits
138.525
136.615
90.854
1,4
50,4
27.974
17.531
14.224
59,6
23,2
25.376
26.460
31.552
-4,1
-16,1
20.639
21.652
17.367
-4,7
24,7
4.737
4.808
14.186
-1,5
-66,1
. At sight
. Other debits
. Other debits
Debits represented by negotiable securities.
. Bonds and debentures in circulation
. Promissory notes and other securities
Other liabilities
9.143
8.185
5.960
11,7
37,3
Deferred accounts
6.665
6.686
3.507
-0,3
90,6
Provisions for risks and charges
4.784
3.033
2.375
57,7
27,7
2.358
1.823
1.191
29,4
53,1
-
-
-
2.426
1.210
1.184
100,5
2,2
-
-
-
. Pension funds
. Provisions for tax
. Other provisions
Fund for general banking risks
Negative consolidation difference
42
48
34
-12,5
41,2
3.008
2.914
2.168
3,2
34,4
2.363
2.232
1.746
5,9
27,8
645
682
423
-5,4
61,2
Subordinate liabilities
7.611
5.111
3.305
48,9
54,6
Minority interests
6.394
6.304
5.333
1,4
18,2
Underwritten capital
1.566
1.566
1.524
0,0
2,8
Issue premium
6.835
6.874
3.322
-0,6
106,9
Reserves
1.419
1.027
1.267
38,2
-18,9
176
176
181
0,0
-2,8
5.138
5.331
3.954
-3,6
34,8
309.246
296.145
238.166
4,4
24,3
. Of the Group
. Of the minority shareholders
Revaluation reserves
Reserves in consolidated companies
Total Liabilities
IV/51
The significant deterioration in world economic activity at the end of 2000 worsened
considerably throughout the whole of the financial year 2001, above all after the events of
11 September, negatively affecting both the principal world economies and those of
developing countries. The United States economy showed almost zero growth during the
last quarters of 2001, as a consequence of contracting investment and consumption, the
basic elements of expansion in that economy during the last decade. Evolution in the
European Union was slightly better as consumption was rather more favourable, although
it was also evident that the growth rate was slowing down. Less developing economies
were affected by the contracting world trade and the drop in price of raw materials, as well
as by the drastic reduction in financing available as a result of worsening expectations and
increasing uncertainty.
Faced with this change in the macroeconomic and financial environment, the policy
adopted by BBVA during the financial year 2001 was based on three fundamental lines:
maintaining a cautious rhythm in the increase of activity, defending the differentials in
business with clients by correctly managing asset and liability prices and maintaining a
strict control on risk modalities; which, as far as loans were concerned, meant a new NPL
ratio of 1.71%, showing a 25 basic point improvement on that at the end of 2002, and a
strong increase in the coverage for doubtful balances, which reached 221.6% in
comparison with the 189.5% in December of the previous financial year.
Caution in the growth in activity determined the
million euro at 31 December 2001, a figure that
year before. Of this amount, 204,682 million
European business, grouped together in BBVA
thirds of the Group’s total assets.
BBVA Group’s total assets at 309,246
indicates a rise of 4.4% on that of the
euro corresponded to domestic and
w/o America, which represented two-
Looking at the evolution of the business related to the Group during the financial year
2001, one area that is particularly worth highlighting is the increase in the weight of
activities with clients. Hence, the volume of business, an area that includes loans and the
total resources administered, was in excess of 480,130 million euro by the end of 2001,
showing an increase of 7.3% during the financial year. Loans performed especially well
reaching a total of 156,148 million euro, 9.4% more than in December 2000.
On the other hand, client balance sheet resources were 199,486 million euro, showing a
year-on-year growth of 7.4% and a slightly less exacting system.
In addition, at 31 December 2001, BBVA administered 124,496 million euro of client
resources outside the balance sheet, 4.8% more than for the same date in 2000.
As opposed to other previous financial years, a year-on-year comparison shows that the
magnitude of the Group’s business has been little affected by changes to the
consolidation perimeter, which, in fact, is confined solely to the disinvestments of the
pension fund managers Profuturo in Mexico and the end of the third quarter in the year
and Futuro de Bolivia in June. On the other hand, the evolution of the exchange rates
during the financial year, above all the depreciation of the currency of a large part of Latin
American countries, did have a negative effect when the balances of the Group’s
companies located in this area were expressed in euro.
The following chart shows the distribution of the balance sheet line items between BBVA
w/o America and BBVA America.
IV/52
BREAKDOWN OF THE BBVA GROUP’S BALANCE SHEET
BBVA w/o America
(In millions of
euro)
BBVA America
Variation %
2001
2000
1999
Unassigned line items
2001/00
2000/99
2001
2000
1999
2001/00
2000/99
2001
2000
Cash
and
deposits
in
Central Banks
2.581
2.305
4.864
12,0
-52,6
6.659
4.893
3.171
36,1
54,3
Credit entities
15.993
32.302
35.734
-50,5
-9,6
12.625
7.865
6.344
60,5
24,0
-5.419
4.833
94.404
*8,0
8,2
40.036
35.605
19.646
12,4
81,2
-58
Credits
clients
on
110.242
BBVA Consolidated Group
Variation %
1999
2001
2000
1999
9.240
7.198
8.035
4.060
23.199
35.334
38.018
-245
-443
150.220
137.467
113.607
102.107
Fixed-income
securities
portfolio
45.997
38.777
36.015
18,6
7,7
36.016
34.248
10.535
5,2
225,1
-197
-401
-312
81.816
72.624
46.238
- Government
stock
20.165
14.735
12.027
36,8
22,6
-
-
-
-
-
-
-
-
20.165
14.735
12.027
- Debentures
and
other
fixed-income
securities
25.832
24.042
23.988
7,5
0,2
36.016
34.248
10.535
5,2
225,1
-197
–401
-312
61.651
57.889
34.211
Variableincome
securities
portfolio
9.841
9.831
9.669
0,1
1,7
1.589
1.829
520
-13,1
251,7
11.430
11.660
10.189
Consolidation
goodwill
1.668
1.389
1.333
20,1
4,2
2.949
2.686
657
9,8
308,8
4.617
4.075
1.990
Tangible
assets
2.542
2.778
2.989
-8,5
-7,1
3.638
3.191
1.839
14,0
73,5
-8
29
6.172
5.969
4.857
15.818
16.217
11.645
-2,5
39,3
9.442
7.381
2.654
27,9
178,1
-2.708
1.780
933
22.552
21.818
15.232
204.682
205.706
196.653
-0,5
4,6
112.954
97.698
15,6
115,4
-8.390
7.259
3.853
296.145
238.166
309.246
68.607
Other assets
TOTAL
ASSETS
45.366
Credit entities
44.447
51.436
61.038
-13,6
-15,7
16.712
12.748
6.768
31,1
88,4
3.429
4.100
801
64.588
68.284
Client balance
sheet
resources
122.061
117.186
108.944
4,2
7,6
78.211
69.883
31.181
11,9
124,1
-786
1.352
-191
199.486
185.717
-957
-11
. Debits
clients
to
92.835
90.308
81.188
2,8
11,2
74.253
64.795
23.900
14,6
171,1
.
Debits
represented
by negotiable
securities.
23.246
22.998
24.675
1,1
-6,8
2.130
3.480
6.877
-38,8
-49,4
. Subordinate
liabilities
5.980
3.880
3.081
54,1
25,9
1.828
1.608
404
13,7
298,0
Other liabilities
14.419
13.005
10.539
10,9
23,4
6.504
Consolidated
profit of the
financial year
3.274
3.372
2.867
-2,9
17,6
Minority
interests
4.450
4.254
4.179
4,6
1,8
16.031
16.453
9.086
-2,6
204.682
205.706
196.653
-0,5
Capital
reserves
and
TOTAL
LIABILITIES
-589
139.934
-18
166.499
154.146
105.077
25.376
26.460
31.552
-197
-377
-180
7.611
5. 111
3.305
5.270
2.143
23,4
145,9
-289
–323
–806
20.634
17.952
11.876
752702
342
7,1
105,3
-1.017
1.160
1.041
3.009
2.914
2.168
427
592
220
-27,9
169,1
1.517
1.458
934
6.394
6.304
5.333
81,1
10.348
8.503
4.712
21,7
80,5
11.244
9.982
3.350
15.135
14.974
10.248
4,6
112.954
97.698
45.366
15,6
115,4
-8.390
7.259
3.853
309.246
296.145
238.166
* The increase has a slightly downward trend due to the cancellation of balances with Dexia,
after the close of the BCL operation
IV/53
4.3.2. Treasury and credit entities
2001
2000
1999
2.403
2.185
1.707
Variation %
2001/00
2000/99
10,0
28,0
Cash
Bank of Spain
1.828
1.619
3.910
12,9
-58,6
Other Central Banks
5.009
3.394
2.418
47,6
40,4
Total cash and Deposits in Central Banks
9.240
7.198
8.035
28,4
-10,4
2,99
2,43
3,36
23,0
-27,7
Over Total Assets (%)
In line with the criterion maintained in previous financial years, liquidity remained low, at
the minimum levels technically possible, but without losing, as a result of this, the ability to
respond to market demands. Nevertheless, this did rally above all in the positions
maintained in other Central Banks.
INTERBANKING BUSINESS- AVERAGE BALANCES
Variation %
2001/00
2000/99
2001
2000
1999
Credit entities in euro – assets
18.947
19.163
23.385
-1,1
-18,1
Credit entities in euro – liabilities
35.448
33.816
37.878
-4,8
-10,7
-16.501
-14.653
-14.493
-12,6
1,1
Credit entities in currency – assets
19.922
19.411
20.578
2,6
-5,7
Credit entities in currency – liabilities
32.872
35.314
26.455
-6,9 33,5
NET POSITION IN CURRENCY
-12.950
-15.903
-5.877
18,6
270,6
TOTAL NET POSITION
-29.451
-30.556
-20.370
3,6
50,0
NET POSITION IN EURO
INTERBANKING BUSINESS- FINAL BALANCES
Credit entities in euro – assets
2001
2000
1999
Variation %
2001/00
2000/99
8.752
19.838
20.040
-55,9
-1,0
36.509
35.461
39.419
3,0
-10,0
-27.757
-15.623
-19.379
77,7
-19,4
Credit entities in currency – assets
14.447
15.496
17.977
-6,8
-13,8
Credit entities in currency – liabilities
28.079
32.823
29.187
-14,5
12,5
NET POSITION IN CURRENCY
-13.632
-17.327
-11.210
-21,3
54,6
TOTAL NET POSITION
-41.389
-32.950
-30.589
25,6
7,7
Credit entities in euro – liabilities
NET POSITION IN EURO
IV/54
Regarding the interbanking situation, the final figure at the close of the financial year 2001
increased the overall deficit position by 8,439 million euro in comparison with that of 31
December 2000, when the net position exceeded that of the previous year by 7.7%. The
biggest difference at the end of the financial year 2001 with respect to the year before,
occurred in loans in euro granted to other institutions, as these dropped more than 11,000
million euro, as a consequence of the downward tendency experienced by the
interbanking interest rates during said financial year.
Underneath is a detailed breakdown of the final positions, of assets and liabilities, in
accordance with their nature (data in millions of euro).
ASSETS
2001
2000
1999
Variation %
2001/00
2000/99
At sight
Mutual Accounts
Other Accounts
285
2.358
2.643
351
985
1.336
373
523
896
-18,8
139,4
97,8
-5,9
88,3
49,1
9.648
10.694
352
-138
18.296
12.954
2.894
–146
19.643
14.815
2.816
-152
-47,3
-17,5
-87,8
-5,5
-6,9
-12,6
2,8
-4,0
Total
20.556
33.998
37.122
-39,5
-8,4
TOTAL
23.199
35.334
38.018
-34,3
-7,1
LIABILITIES
2001
2000
1999
52
1.361
96
3.181
116
1.130
-45,8
-57,2
-17,2
181,5
1.413
3.277
1.246
-56,9
163,0
3.022
1.687
-
1.386
2.391
-
1.020
4.692
600
118,0
-29,4
35,9
-49,0
34.760
20.659
2.353
694
39.322
19.284
1.829
795
42.836
16.610
281
1.322
-11,6
7,1
28,7
-12,7
-8,2
16,1
n.s.
-39,9
Total
63.175
65.007
67.361
-2,8
-3,5
TOTAL
64.588
68.284
68.607
-5,4
-0,5
Total
Other loans
Deposits in credit entities and financial institutions
Acquisition of temporary assets
Other Accounts
Less: bad debt funds
At sight
Mutual Accounts
Other Accounts
Total
Variation %
2001/00
2000/99
Other debits
Bank of Spain:
. Available in credit account
. Temporary transfer of assets
. Other Accounts
Credit entities:
. Deposit accounts
. Temporary transfer of assets
. Security creditors
. Other Accounts
IV/55
Underneath is a breakdown by due date, as well as the average interest rates for each
financial year of the epigraph “Other loans ” – with the exception of “Other Accounts” of
this item in the consolidated balance sheets, without taking into account the bad debt
funds:
Concepts
Balances at 31 December 2001
Of up to 3
months
Between 1
Between 3
year and 5
months and
years
1 year
More than 5
years
Average
Interest rate
of the
financial
year
7.464
10.575
18.039
1.909
119
2.028
218
218
57
57
5,3%
5,4%
15.073
12.834
27.907
2.331
112
2.443
629
629
263
8
271
7,1%
6,4%
13.537
14.487
28.024
4.054
327
4.381
1.473
1.473
580
580
4,1%
4,1%
The breakdown by due date of the balance of the epigraph “Other debits” of this item in
the consolidated balance sheets, as well as the average interest rates for each financial
year, are indicated below:
CONCEPTS
Of up to 3
months
(Millions of euro)
Between 3
Between 1
months and
year and 5
1 year
years
More than 5
years
Average
Interest rate
of the
financial
year
Bank of Spain
Credit entities:
Deposit accounts
Temporary transfer of assets
Other Accounts
4.708
-
-
-
5,7%
22.406
19.017
792
46.923
4.920
1.486
120
6.526
4.635
157
1.353
6.145
2.800
782
3.582
5,3%
6,2%
2,7%
3.776
-
-
-
4,6%
22.554
16.950
796
44.076
6.634
1.989
21
8.644
7.345
345
962
8.652
2.789
846
3.635
7,0%
9,1%
1,8%
6.311
1
-
-
2,9%
25.531
14.893
719
47.454
7.973
1.659
224
9.857
5.787
58
363
6.208
3.545
297
3.842
4,7%
5,2%
2,5%
Bank of Spain
Credit entities:
Deposit accounts
Other Accounts
Bank of Spain
Credit entities:
Deposit accounts
Other Accounts
IV/56
4.3.3. Loans
CREDITS ON CLIENTS
2001
2000
1999
Variation %
2001/00
2000/99
Public Administration
12.155
11.096
12.087
9,5
Other resident sectors
82.259
77.432
70.994
6,2
9,1
· With real guarantee
39.077
35.262
31.192
10,8
13,1
-5,3
· Commercial loans
· Other deposit debtors
· Credit card debtors
-8,2
7.242
6.751
7.131
7,3
30.502
30.407
28.337
0,3
7,3
900
860
741
4,7
16,1
31,4
· Other at sight debtors and various
1.700
1.628
1.239
4,4
· Financial leases
2.838
2.524
2.354
12,4
7,2
Non-resident
59.059
51.444
31.245
14,8
64,7
· With real guarantee
16.877
15.352
6.568
9,9
133,7
· Other loans
42.182
36.092
24.677
16,9
46,3
2.675
2.799
2.047
-4,4
36,7
156.148
142.771
116.373
9,4
22,7
Doubtful assets
Credits on clients (gross)
Bad debt funds
Credits on clients
-5.928
-5.304
-2.766
11,8
91,8
150.220
137.467
113.607
9,3
21,0
110.242
102.101
94.404
8,0
8,2
40.036
35.605
19.646
12,4
81,2
Promemoria (*):
· BBVA w/o America
· BBVA America
(*) The line items between BBVA w/o America and BBVA America have not been eliminated.
After getting through the first quarter, marked by a certain level of deceleration due to the
network integration process that took place in Spain, the later slow, steady recovery
meant that, by 31 December 2001, the loans from BBVA w/o America reached 110,242
million euro, 8% more than the same date the year before, representing 73.4% of the
Group’s total credits on clients.
The recovery of resident sector loans was especially intense in the minority businesses,
more specifically in the real guarantee and credit card modalities. Hence, the balance of
loans with real guarantees stood at 39,077 million euro, showing a year-on-year growth of
10.8%, despite the 3% reduction in financing to the Vivienda de Protección Oficial (State
Subsidized Housing) during the financial year 2001. The loans to companies sector
behaved more moderately, although financial leasing operations did evolve rather
positively, showing an increase of 12.5% in 2001. Loans to Public Administration reached
12,155 million euro, but this area was negatively affected by the cancellation of financing
awarded to Dexia during the first quarter of the year. If this negative effect is not taken into
account, the year-on-year growth in this area was 17.9%. Finally, BBVA w/o America’s
non-residents loans totalled 17,265 million euro, 17.7% more than in December 2000, as
a result of the increase in the business carried out by the international corporate banking
unit. Correctly administering the clientele differential – the margin between how the
investment performs and the costs of deposits – in the domestic market led to an
improvement in this ratio of 4 basic points during the financial year, despite a significant
reduction in interbanking rates during 2001. This goes a long way to explaining the
positive annual performance of BBVA w/o America’s financial margin.
IV/57
During the second quarter of 2001, there was considerable deterioration in the Latin
American economies, the clearest example of which was the intensifying financial crisis in
Argentina, which took place in late December. Neither were the other two important
economies in this region, Brazil and Mexico, unaffected by this process of economic
deceleration, showing vastly reduced, or even negative, growth rates. Faced with this
situation, BBVA decided to maintain a high level of prudence and liquidity in these
countries, applying a policy of selective loan concession, which gave priority to the needs
of the more solvent sectors and the modalities entailing lower risks.
A breakdown of the net loans by guarantees and by countries can be found underneath:
LOANS PER GUARANTEE
Variation %
20001/00
2000/99
2001
2000
1999
Loans to the Public Sector
12.196
11.154
12.149
9,34
-8,96
Loans with real guarantees
55.954
50.615
37.760
10,55
39,55
Total Guaranteed Loans
68.150
61.769
49.909
10,33
27,44
% of Net Loan investment
45,37%
44,93%
43,93%
0,98
2,32
82.070
75.698
63.698
8,42
21,17
% of Net Loan investment
54,63%
55,07%
56,07%
-0,80
-1,77
Total Net Loan investment
150.220
137.467
113.607
9,28
23,88
Loans without specific guarantee
LOANS PER CURRENCY
2001
2000
1999
Variation %
2001/00
2000/99
In euro
98.982
91.469
84.564
8,2
8,2
In foreign currency
51.238
45.998
29.043
11,4
58,4
150.220
137.467
113.607
9,3
21,0
Total Net Loan investment
Underneath is a breakdown of gross loans, not including provision made to the Bad Debt
Fund, in accordance with due date and modality.
LOANS BROKEN DOWN BY DUE DATE
Variation %
2001/00
2000/99
2001
2000
1999
Up to 3 months
45.470
43.533
31.805
4,5
Between 3 months and 1 year
25.519
24.076
19.926
6,0
20,8
Between 1 year and 5 years
34.912
34.678
25.104
0,7
38,1
More than 5 years
36,9
50.246
40.484
39.538
24,1
2,4
156.147
142.771
116.373
9,4
22,7
IV/58
LOANS BROKEN DOWN BY MODALITY
Commercial portfolio
Financial effects
Debtors with real guarantees
Temporary acquisition of assets
Other deposit debtors
At sight debtors and various others
Variation %
2001/00
2000/99
2001
2000
1999
11.052
11.325
10.134
-2,4
56
187
8
-70,1
n.s.
56.485
50.844
36.886
11,1
37,8
172,9
11,8
407
412
151
-1,2
74.465
66.437
60.578
12,1
9,7
7.350
7.646
4.058
-3,9
88,4
24,3
Financial leases
3.657
3.121
2.511
17,2
Doubtful assets
2.675
2.799
2.047
-4,4
36,7
156.147
142.771
116.373
9,4
22,7
DOUBTFUL RISKS AND COVERAGE FUNDS
Variation %
2001/00
2000/99
2001
2000
1999
TOTAL DOUBTFUL RISKS
2.767
2.868
2.124
-3,5
35,0
Doubtful assets
2.675
2.799
2.047
-4,4
36,7
. Public Administration
41
58
62
-30,4
-6,5
. Other resident sectors
786
805
777
-2,3
3,6
1.848
1.936
1.208
-4,5
60,3
92
69
77
33,3
-10,4
. Non-resident
Doubtful risks of non-repayment
TOTAL RISKS
172.624
157.899
131.254
9,3
20,3
Credits on clients (gross)
156.148
142.771
116.373
9,4
22,7
Risks without investment
16.476
15.128
14.881
8,9
1,7
COVERAGE FUNDS
6.113
5.451
2.961
12,1
84,1
Bad debt funds
5.928
5.304
2.766
11,8
91,8
185
147
195
25,9
-24,6
Funds for risk of non-payment
PROMEMORIA:
Doubtful assets
- In BBVA w/o America
1.027
980
1.133
4,8
-13,5
- In BBVA America
1.648
1.819
914
-9,4
99,0
Bad debt funds
1.776
1.563
1.394
13,6
12,1
- In BBVA America
4.152
3.741
1.372
11,0
172,7
Allocated assets
856
926
548
-7,5
69,0
Allocation funds
338
932
283
-63,7
229,3
Coverage (%)
39,5
100,7
51,7
PROMEMORIA:
Correctly administering the credit risk meant that BBVA w/o America’s bad debt ratio
remained at historically low levels, finishing the financial year 2001 at 0.92%, with a
coverage level of 172.8%, well in excess of the 159.5% that existed one year previously.
IV/59
EVOLUTION OF DOUBTFUL ASSETS
Initial balance
+ Income
Variation %
2001/00
2000/99
2001
2000
1999
2.799
2.047
2.382
36,7
-14,1
22,9
3.830
2.440
1.985
56,2
- Expenditure
-2.109
-1.587
-1.255
32,8
26,5
- Transfers to bad debts
-1.845
-1.185
-1.065
54,2
11,3
-
1.084
n.s.
n.s.
2.675
2.799
2.047
-4,4
+ Net incorporations America
Balance at the end of the period
36,7
The application of this policy meant that, on 31 December 3001, BBVA America’s loans
totalled 40,036 million euro, 12,4% more than at 31 December 2000.
Bearing in mind how local currency evolved, the following increases are worth noting:
Brazil (73.2%), Chile (13.3%), Venezuela (12.9%) and Puerto Rico (9.5%). On the other
hand, the growth seen in Colombia (2.2%) and Mexico (1.6%) was a good deal lower,
while Peru underwent a slight drop (-4.2%) as a result of the situation in the country at the
time. The level of growth seen in Argentina (6.3%) was of no importance, as it was
affected by the Public Debt exchange process carried out during the month of December.
If one excludes this effect, it is clear that the volume of loans had diminished 35%. The
administration criteria that were applied to loan expansion in America meant a significant
improvement in the quality of assets, which led to a drop in BBVA America’s bad debt
ratio of 3.73%, 91 basic points less that at 31 December 2000, and caused the coverage
level to reach 252%, well above that which existed 12 months beforehand (205.7%).
BAD DEBT RATIO AND COVERAGE RATES
2001
2000
1999
BAD DEBT RATIO (%):
Doubtful assets / Credits on clients (gross)
1,71
1,96
1,76
Doubtful risks / Total risks
1,60
1,82
1,62
COVERAGE RATES (%):
Coverage rate of doubtful assets
221,6
189,5
135,1
Coverage rate of total risks
220,9
190,1
139,4
Coverage rates with real guarantees
249,0
214,7
160,1
PROMEMORIA:
Doubtful assets / Credits on clients (gross)
0,92
0,95
1,18
- In BBVA America
3,73
4,64
4,43
172,8
159,5
123,0
- In BBVA America
252,0
205,7
150,1
Coverage rate of doubtful assets
IV/60
Circular 9/1999 from the Bank of Spain
With regard to risks, Circular 9/1999, dated 17 December, introduced various
modifications to Circular 4/1991, and these came into effect 1 July 2000. The most
important of these modifications was the incorporation of an additional provisions
requirement, through the creation of the insolvency statistical coverage fund, which meant
a net provision of 251 million euro during the financial year 2001 and one of 110 million
euro during the second quarter of 2000. In addition, another modification included in this
Circular regarding the conditions for recognising mortgage coverage meant an additional
provision of approximately 48 million euro during the financial year 2000.
This fund was constituted and charged to the results of each year, as a complement,
where appropriate, of the specific bad debt provisions carried out in accordance with the
abovementioned criteria, until an estimation of latent global bad debts was reached,
calculated by applying certain weighting coefficients to the credit risks. The total amount of
this additional fund is to be three times said risk weighting. At 31 December 2001 and
2000, it reached 361 and 110 million euro, respectively.
4.3.4. Securities portfolio (Government Stock; Debentures and other fixed income
securities; Shares and other variable income securities; Shareholdings and
Shareholdings in companies of the Group).
The securities portfolio as a whole ( fixed income and variable income securities), reached
a volume of 93,246 million euro at 31 December 2001, showing an increase of 10.6% with
respects that of the previous year.
The securities that make up the Group’s fixed income portfolio are presented, in
accordance with their classification, following the criteria described underneath:
1)
Trading portfolio: This includes listed securities, which are held with the intention of
making a profit in the short-term from the variations in market prices. The securities
that make up the trading portfolio are valued according to their market price at the
end of each financial year. The net differences that result from the variations in
valuations, except those caused by the accrual of interest, are recorded under the
item “Results of financial operations” in the consolidated profit and loss accounts.
2) Maturity investment portfolio: this includes the securities that the Group has decided to
hold onto until they mature, provided it has the financial capacity to do so or can
adequately cover the value of the investments against variations in interest rates.
Securities assigned to the maturity investment portfolio are valued according to their
acquisition price, which is corrected by the amount resulting from financially deferring
the negative or positive difference between the redemption value and the acquisition
price during the remaining life of the security.
3)
Ordinary investment portfolio: this includes all other securities not categorized in the
abovementioned portfolios. The fixed income securities that make up the ordinary
investment portfolio are valued individually according to their acquisition price, which
is corrected by the amount accrued from the difference between this and the
redemption value.
In the case of listed securities, a security fluctuation fund is constituted for the net
difference between the market value of the portfolio as a whole, should this be lower,
which is determined in accordance with the trading price of the last day of the financial
year. The surplus corresponding to those securities transferred to third parties with a
repurchase commitment is restructured by the proportional part of the period of time
between the predicted repurchase date and the maturity date. Likewise, those securities
that have been acquired as coverage for other operations with equivalent periods of time
and a fixed rate of interest, and, as such, are not subject to the risk of interest rate
fluctuation, are recorded at their acquisition price.
IV/61
Restructuring the listed fixed-income portfolio is done by charging the deferred accounts
of the asset, presented along with the securities affected in the corresponding items of the
consolidated balance sheets. At 31 December 2001, 2000 and 1999, said deferred
accounts had no balance.
In addition, Circular 4/1991 establishes that an additional securities fluctuation fund is to
be set up for the amount of the benefits obtained from the disposal of fixed income
securities belonging to the ordinary investment portfolio, which is applied to the deferred
account mentioned in the above paragraph until the balance calculated for this is reached.
During the financial years 2001, 2000 and 1999, no charges have been made to said
account for this concept.
In the chart below, the fixed income balances, included in points 1 and 2, are worth
special attention as they come to the lofty total of 81,816 million euro.
The abovementioned balances are the principal component of the Group’s total securities
at 31 December 2001, as is the case with the previous financial years (72,623 and 46,238
million euro in 2000 and 1999, respectively).
1. GOVERNMENT STOCK
Bank of Spain certificates
Fixed maturity investment portfolio
Fixed-income ordinary investment portfolio
Fixed-income trading portfolio
2.DEBENTURESAND OTHERFIXED INCOMESECURITIES
Variation %
2001/00
2000/99
2001
2000
1999
20.165
14.735
12.027
36,9
--
--
456
-
-
2.272
2.295
2.317
-1,0
-1,0
22,5
15.491
9.066
6.406
70,9
41,5
2.402
3.374
2.848
-28,8
18,5
69,2
61.651
57.888
34.211
6,5
Maturity investment
597
619
639
-3,6
-3,1
Ordinary investment
41.805
52.161
31.730
-19,9
64,4
Trading
19.249
5.108
1.842
276,8
177,3
3. SHAREHOLDINGS IN COMPANIES
7.756
8.623
7.101
-10,1
21,4
Shareholdings in associated companies
6.642
7.453
6.216
-10,9
19,9
Shareholdings in non-consolidated companies of the Group
1.114
1.170
885
-4,8
32,2
4. SHARES AND OTHER VARIABLE INCOME SECURITIES
3.674
3.039
3.088
20,9
1,6
Listed
2.436
1.702
1.968
43,1
-13,5
Not listed
1.392
1.452
1.232
-4,1
17,9
(-) Fluctuation fund
–154
–115
–112
33,9
2,7
93.246
84.285
56.427
10,6
49,4
TOTAL SECURITIES
As can be seen, the 36.9% year-on-year growth (financial year 2001 compared with 2000)
of the Government Stock portfolio is particularly noteworthy. This growth is a result of a
policy, which was implemented at the beginning of the financial year in the face of falling
interest rates, whereby BBVA w/o America’s net interest income was supported. On the
contrary, the variable income portfolio shows a decrease, which was a consequence of
the Group’s shareholding turnover. Underneath is an analysis of the behaviour of each of
the components in the same order as these appear in the balance sheet.
IV/62
GOVERNMENT STOCK
The accounting epigraph Government Stock shows a balance of 20,165 million euro at 31
December 2001, recording a rise of 36.9% in comparison with that of the same date the
year before, which was basically as a result of a better positioning of the ordinary
investment portfolio: Treasury Bills and listed debt security issues.
Market value rose to a 20,478 million euro at the end of the financial year 2001, showing a
difference with the amount recorded of 313 million euro (at the end of the previous
financial year, this amount stood at 251 million euro).
In compliance with the provisions laid down in the Bank of Spain’s Circular 2/1990
regarding the cash coefficients of the dealers, in 1990 the Group acquired deposit
certificated issued by the Bank of Spain to an amount in excess of 2,400 million euro
(400,000 million pesetas). These assets accrue an annual interest rate of 6% and were
redeemed on a quarterly basis from March 1993 until September 2000. Consequently, by
the end of the financial year 2000 they had been fully amortised.
CONCEPTS
Certificates of the Bank of Spain
2001
2000
1999
Variation %
2001/00
2000/99
--
--
456
n.s.
n.s.
2.272
2.295
2.317
-1,0
-0,9
Treasury Bills
6.502
3.526
1.941
84,4
81,7
Other listed debt securities
8.914
5.162
3.901
72,7
32,3
75
378
205
-80,2
84,4
--
--
359
n.s.
n.s.
15.491
9.066
6.406
70,9
41,5
Maturity investment
Listed Government Stock
Ordinary investment
Other listed securities
Other unlisted debt securities
Less: Securities fluctuation fund
--
--
--
-
-
15.491
9.066
6.406
70,9
41,5
3
13
1.967
-76,9
-99,3
2.399
3.361
881
-28,6
281,5
Trading
Treasury Bills
Other debt securities
TOTAL
2.402
3.374
2.848
-28,8
18,5
20.165
14.735
12.027
36,9
22,5
The average annual interest rate for Treasury Bills during the financial year 2001 was
4.58% (3.2% during the financial year 2000). Of these assets and of those acquired on a
temporary basis, at 31 December 2001 and 2000, the Group had transferred the amount
of 5,317 and 3,752 million euro respectively to other brokers and clients.
IV/63
The nominal interest rate of Listed Government Stock at the close of the financial years
2001 and 2000 varied between 3% and 11,30%. Of these securities, and those
temporarily acquired from credit entities and clients, at 31 December 2001, the Group had
transferred 15,864 million euro to Bank of Spain and to other brokers and clients (14,756
million euro at 31 December 2000).
The breakdown of the item “Government Stock” maturity at 31 December 2001, 2000 and
1999, without including the securities fluctuation fund, was as follows:
CONCEPTS
Fixed income portfolio:
Maturity investment
Ordinary investment
Trading
Maturity investment
Ordinary investment
Trading
Certificates of the Bank of Spain
Maturity investment
Ordinary investment
Trading
Of up to 3 months
Between 3 months
and 1 year
Between 1 year and
5 years
More than 5 years
377
1.329
581
3.070
184
1.277
6.427
635
618
4.666
1.001
2.287
3.254
8.339
6.285
126
1.341
2.573
23 773
1.675
4.099
1.237
620
2.268
1.467
2.596
6.547
4.125
162
293
-
-
1.149
573
1.123
1.018
1.695
1.949
904
622
2.185
354
1.884
2.434
4.548
3.161
Securities Fluctuation Fund
The securities fluctuation fund contained insignificant securities (6 and 18 thousand euro
at 31 December 2001 and 2000, respectively).
IV/64
DEBENTURES AND OTHER FIXED INCOME SECURITIES
“Debentures and other fixed income securities” stood at 61,651 million euro at 31
December 2001, showing an increase of 6.5% on the 57,888 million euro at 31 December
2000.
Below is a breakdown of the balance of this balance sheet item by currency, nature,
sectors of activity and where they are listed or not listed:
Variation %
2001/00
2000/99
2001
2000
1999
By currency:
In euro
In foreign currency
61.651
22.570
39.081
57.888
17.733
40.155
34.211
16.027
18.184
6,5
27,3
-2,7
69,2
10,6
120,8
By nature:
Maturity investment
Ordinary investment
Trading
61.651
597
41.805
19.249
57.888
619
52.161
5.108
34.211
639
31.730
1.842
6,5
-3,6
-19,9
276,1
69,2
-3,1
64,4
177,3
By sector:
Resident Public Administration
Resident credit entities
Other resident sectors*
Other non-resident sectors
Less:
Securities fluctuation fund
Bad debt fund at country risk
61.651
1.352
459
2.468
57.629
57.888
2.636
366
1.640
56.000
34.211
1.335
515
1.458
31.051
6,5
-48,7
25,4
50,5
2,9
69,2
97,5
-28,9
12,48
80,35
-3
-254
-49
-2.705
-16
-16
-93,9
-90,6
n.s.
n.s.
By listing:
Listed
Not listed
61.651
45.145
16.506
57.888
44.191
13.697
34.211
30.577
3.634
6,5
2,2
20,5
69,2
44,5
276,9
The promissory notes issued by the Savings Protection Banking Funds –FOBAPROA- of Mexico, currently the Savings Protection
Banking Institution –IPAB-, form part of and are recorded in the balance of “Ordinary Investment Portfolio –Other non-resident
sectors”,. These promissory notes resulted from the measures implanted by the Mexican Government as a consequence of the
banking crisis caused by the economic situation in Mexico late 1994 and during 1995.
By means of various regulations, the banks transferred part of the loans portfolio showing payment problems to the Government of
Mexico. These transactions were structured as a cessation of future rights on the flow generated by the loans, and, in exchange for
these rights, the credit institutions received non-transferable promissory notes from FOBAPROA for an amount equivalent to the net
book value (discounting provisions) of the assets subject to the scheme. At 31 December 2001 and 2000, the amount of these
promissory notes came to 15,661 and 13,134 million euro, respectively. These promissory notes accrue capitalised interest and are
payable up until their maturity date in 2005. The interest associated with these promissory notes is recorded under the item “Interest
and other assimilated yield” of the consolidated profit and loss accounts. Under the conditions established in the agreements with the
FOBAPROA, the BBVA Bancomer Financial group is responsible for 25% of the losses resulting from: the difference between the
amount of the FOBAPROA promissory notes at the beginning of the transaction plus accumulated accrued interest and the recovery
of loans subject to this programme.
This contingency is completely covered by the constitution of a bad debt provisioning fund associated to these promissory notes. At
31 December 2001, this fund was applied and, as a consequence, the balance of the epigraph “Fixed Income Portfolio–Other nonresidential sectors” decreased by 3,259 million euro.
At 31 December 2001 and 2000, the market value of the securities assigned to the
ordinary investment portfolio, and which form part of the item “Debentures and other fixed
income securities” in the consolidated balance sheets, came to 41,774 and 52,130 million
euro, respectively. The market value of the securities assigned to the maturity investment
portfolio amounted to 648 and 681 million euro, at 31 December 2001 and 2000,
respectively.
Part of the portfolio securities at 31 December 2001 and 2000 was temporarily transferred
to creditors in the private sector. This was recorded in the epigraph “Debits to clients Other debits” of the consolidated balance sheets.
IV/65
Underneath are details of the evolution of the securities fluctuation fund:
Balance at the beginning of the financial year
2001
2000
1999
49
16
21
Available funds
-
-
-4
Transfers to bad debt fund -44
-
-
-2
33
-1
3
49
16
Use of funds and other activities
Balance at the end of the financial year
VARIABLE INCOME PORTFOLIO
At 31 December 2001, the variable income portfolio amounted to 11,430 million euro, in
comparison with the 11,664 million on the same date the previous financial year. It
includes three epigraphs from the consolidated balance sheet: “Shares and other variable
income securities”; Shareholdings”; and “Shareholdings in Companies of the Group”,
which are dealt with below.
SHARES AND OTHER VARIABLE INCOME SECURITIES
This item of the balance sheet deals with those companies in which the Group has a
shareholding that is generally less than 20% (3% if listed on the Stock Exchange), it also
includes shareholdings in portfolio investment funds. The breakdown of the balance of this
item, based on the trading currency and whether they are listed or not is as follows for 31
December 2001, 2000 and 1999:
2001
2000
1999
Variation %
2001/00
2000/99
By currency:
3.674
3.039
3.088
20,9
-1,6
In euro
2.357
1.932
2.451
22,0
-21,2
In foreign currency
1.317
1.107
637
19,0
73,8
By listing:
3.674
3.039
3.088
20,9
-1,6
Listed
2.436
1.702
1.968
43,1
-13,5
Not listed
1.392
1.452
1.232
-4,1
17,9
-154
–115
-112
33,9
2,68
IV/66
Underneath are details of how the securities fluctuation fund has developed:
2001
2000
1999
115
112
77
Net provision for the financial year
- 17
26
33
56
- 23
2
154
115
112
Other activity
During the year 2001, the BBVA Group disposed of part of their investment in Hispasat,
S.A. (19,123 shares, equivalent to 6.57% of the equity capital), generating a profit of 49
million euro, which was recorded in the item “Results of financial operations” of the
consolidated profit and loss account.
SHAREHOLDINGS
This item of the balance sheet includes shareholdings in other companies, generally
between 20% (3% if listed on the Stock Exchange) and 50%. Despite not forming a unit of
decision, the Group has maintained lasting connections with these companies, in
accordance with section 2 of article 185 of the Public Limited Company Law and with
Circular 4/1991 of the Bank of Spain.
The breakdown of the balance of this item, based on the trading currency and whether
they are listed or not is as follows for 31 December 2001, 2000 and 1999, respectively:
2001
2000
1999
Variation %
2001/00
2000/99
By currency:
6.642
7.453
6.216
-10,9
19,9
In euro
6.334
6.572
5.941
-3,6
10,6
308
881
275
-65,0
220,4
By listing:
6.642
7.453
6.216
-10,9
19,9
Listed
6.049
6.516
5.373
-7,2
21,3
595
952
844
-37,5
12,8
-2
- 15
-1
-86,7
n.s.
By the nature of the investment:
6.642
7.453
6.216
-10,9
19,9
Permanent shareholdings
5.606
6.504
5.578
-13,8
16,6
1.036
949
638
9,2
48,8
In foreign currency
Not listed
Other shareholdings
companies
in
associated
IV/67
Underneath are details of how the securities fluctuation fund has developed:
2001
2000
1999
15
1
3
Net provision for the financial year
- Provision recorded
21
8
3
- Available funds
-1
-1
-3
Used in sales, transfers and others
20
77
--
– 33
7
-2
2
15
1
The Group had traditionally maintained a portfolio of shareholdings it has held onto for a
long period of time. Most important are the investments in the financial,
telecommunications, petrol and electrical sectors: Banca Nazionale del Lavoro, Crédit
Lyonnais, Wafabank, Telefónica, Repsol YPF, Iberdrola, etc. More details on the most
important shareholdings can be found in chapter III of this Prospectus.
Evaluating these shareholdings using the equity method means that the Group is
attributed a proportional part of the results obtained by these companies each year. Only
the part of the result that is paid out in dividends is recorded in the Group’s net interest
income, and the rest is incorporated under the operating profit and together these form
what is known as the business margin.
At the end of the financial year 2001, the portfolio of industrial and property shareholdings
included 153 companies, and had a market value of 9,513 million euro, at 31 December
2001. Of these, 87% corresponded to the listed portfolio and the remaining 13% to the
non-listed portfolio. Latent surplus came to 2,600 million euro.
SHAREHOLDINGS IN COMPANIES OF THE GROUP
This item of the balance sheet includes investments, generally shareholdings of over 50%,
in dependent companies, which are not consolidated using the global integration method
as their activity is not directly related to that of the Group. Examples of these would be the
BBVA’s insurance activity, which in Spain is chiefly carried out through its subsidiary
BBVA Seguros, as well as other companies located in Latin America, which are dedicated
to similar activities.
At 31 December 2001, no capital increases were underway in the non-consolidated
dependent companies.
This item is detailed underneath in accordance with trading currency and whether they are
listed or not:
By currency:
2001
1.114
2000
1.170
1999
885
Variation %
2001/00
2000/99
-4,8
32,2
In euro
732
748
683
-2,1
9,5
In foreign currency
382
422
202
-9,5
108,9
1.114
1.170
885
-4,8
32,2
3
1
1
n.s.
n.s.
1.111
1.169
884
-5,0
32,2
By listing:
Listed
Not listed
IV/68
Securities Fluctuation Fund
Given the reduced number of listed securities, the Fluctuation fund is not significant.
More relevant information of the companies included in this chapter can be found in
section 3.7 if chapter III of this prospectus.
4.3.5. Administered client resources
The resources administered by the Group, including those contained in the balance sheet
as well as investment funds, pension funds and the administered client portfolios come to
a total of 324,000 million euro, 6.4% more than at the end of the previous financial year.
ADMINISTERED CLIENT RESOURCES
Variation %
2001/00
2000/99
2001
2000
1999
166.499
154.146
105.077
8,0
46,7
6.638
6.836
7.030
-2,9
-2,8
Resident sector creditors
65.502
61.476
58.895
6,5
4,4
· Current accounts
20.480
18.585
19.610
10,2
-5,2
· Savings accounts
14.173
12.911
12.710
9,8
1,6
· Fixed term deposits
17.008
18.513
15.400
-8,1
20,2
· Temporary transfer of assets
13.841
11.467
11.175
20,7
2,6
Non-resident sector creditors
94.359
85.834
39.152
9,9
119,2
In millions of euro
Debits to clients
Public Administration Creditors
· Transactional liabilities
33.308
26.758
13.301
24,5
101,2
· Fixed term deposits
49.793
55.023
24.716
-9,5
122,6
· Temporary transfer of assets and other
accounts
11.258
4.053
1.135
177,8
257,1
Debits represented
securities
25.376
26.460
31.552
-4,1
-16,1
6.083
6.838
5.779
-11,0
18,3
19.293
19.622
25.773
-1,7
-23,9
7.611
5.112
3.305
48,9
54,7
199.486
185.718
139.934
7,4
32,7
Investment funds
49.901
50.035
50.066
-0,3
-0,1
Pension funds
41.249
38.319
29.897
7,6
28,2
by
negotiable
Mortgage securities
Other negotiable securities
Client portfolios
33.346
30.477
22.714
9,4
34,2
Other client resources
124.496
118.831
102.677
4,8
15,7
TOTAL ADMINISTERED RESOURCES
323.982
304.549
242.611
6,4
25,5
Promemoria (*):
· BBVA w/o America
195.365
190.414
182.707
2,6
4,2
· BBVA America
129.403
115.480
60.094
12,1
92,2
(*) The line items between BBVA w/o America and BBVA America had not been eliminated.
During the financial year, the Group decided to optimise the deposit structure, and, as a
result, did not take part in aggressive price wars, opting instead to promote the
commercialisation of less exacting products. As a consequence of this policy, the
transactional liabilities (current accounts and savings accounts) became more important
until they represented 67.1% of all deposits in the resident sector, 410 basic points more
than at the end of 2000. Current accounts were in excess of 20,000 million euro, showing
a year-on-year growth of 10.2%, while savings accounts showed a balance of 14,000
million euro at the end of the financial year, an increase of 9.8%, which, to a large extent,
reflected the success of the “savings campaign” that had been carried out throughout the
year.
Throughout the financial year the evolution of the fixed term deposits, which had a volume
of 17,000 million euro at 31 December 2001, showing a year-on-year decrease of 8.1%,
IV/69
greatly influenced the maturity of high-cost products that had been issued during previous
financial years, and, in line with the abovementioned policy of reducing the cost structure
of the resources, the Group decided not to renew these.
On the contrary, the area of negotiable securities issued by the Group showed a year-onyear decrease, as the volume of maturities exceeded the balance of issues carried out
that year. Hence, the mortgage securities stood at 6,000 million euro, while the
outstanding volume of promissory notes and bonds were over 19,000 million euro, 11%
and 1.7% less than for the same date the year before, respectively.
Finally, at the end of last December, the Group carried out an issue of subordinate debt to
the amount of 1,500 million euro.
In BBVA America, the client balance sheet resources were 78,000 million euro, showing a
year-on-year growth of 11.9%. The less exacting modalities (current accounts and savings
accounts) contributed greatly to this increase, as they represented 45.3% of total deposits,
770 basic points more than at the end of the year 2000. Debits to clients evolved
positively in all countries, although this was especially remarkable in Brazil (28.3%),
Venezuela (24.4%), Puerto Rico (11.1%) and Colombia (10.1%); although somewhat less
so in Mexico (8.5%) and Peru (5.2%). The 8.9% decrease in debits seen in Argentina in
comparison with December 2000 was much lower than that registered by the rest of the
financial sector in this country.
In 2001 one of the Group’s objectives in Latin America was to maintain its high level of
liquidity in the face of the progressively worsening macroeconomic situation in that region.
Significant growth in client resources, together with prudence in the concession of loans
ensured that the whole of BBVA America reached a high level of liquidity, measured by
the quotient between client resources and loans, which was 194%, over 100% in all of the
Group’s Latin American institutions.
DEBITS TO CLIENTS
The breakdown by nature of debits to clients at the end of the last three quarters is as
follows:
2001
2000
1999
Variation %
2001/00
2000/99
Savings deposits
At sight
71.013
62.427
50.294
13,8
24,1
Fixed term
67.512
74.188
40.560
-9,0
82,9
Other debits
At sight
Fixed term
-
-
16
-
n.s.
27.974
17.531
14.208
59,6
23,4
166.499
154.146
105.078
8,0
46,7
IV/70
SAVINGS DEPOSITS AND FIXED-TERM DEBIT
2001
2000
1999
2001/00
Variation %
2000/99
Savings deposits - Fixed term
Up to 3 months
40.081
51.202
5.970
-21,7
97,2
12.770
11.663
7.571
9,5
54,1
10.830
6.136
5.130
76,5
19,6
3.831
5.187
1.889
-26,1
174,6
67.512
74.188
40.560
-9,0
82,9
27.593
17.276
13.264
59,7
30,3
380
255
532
49,0
-52,1
More than 5 years
Other debits - Fixed term
Up to 3 months
1
-
140
n.s.
n.s.
More than 5 years
-
-
272
-
n.s.
27.974
17.531
14.208
59,6
23,4
DEBITS REPRESENTED BY NEGOTIABLE SECURITIES
The breakdown of "Bonds and debentures in circulation", depending on type of loan
stock and currency of issue, is given in the following chart:
2001
2000
1999
Variation %
2001/00
2000/99
In euro :
Non-revertible bonds and debentures with a variable interest rate
7.884
6.259
2.978
26,0
110,2
Non-revertible bonds and debentures with a variable weighted
interest rate of 5.79%
2.238
1.737
3.063
28,8
-43,3
Revertible debentures
Mortgage securities with a fixed weighted interest rate of 5.83% (*)
8
-
600
n.s.
n.s.
5.656
6.358
5.311
-11,0
19,7
15.786
14.354
11.952
10,0
20,1
In foreign currency :
Non-revertible bonds and debentures with a variable interest rate
2.612
4.657
3.233
-43,9
44,1
Non-revertible bonds and debentures with a variable weighted
interest rate of 4.51%
1.815
2.161
1.714
-16,0
26,1
426
480
467
-11,3
2,8
4.853
7.298
5.414
-33,5
34,8
20.639
21.652
17.366
-4,7
24,7
Mortgage securities with a variable interest rate
(*) Guaranteed by the mortgages registered in favour of the Bank.
IV/71
During the financial years 2001 and 2000, BBVA Global Finance Ltd. (the result of the
merger between BBV International Finance, Ltd. and Argentaria Global Finance, Ltd.),
carried out several issues for the amounts of 5,595 and 5,415 million euro, respectively,
as part of a medium-term eurodebenture issue programme in currency with a limit of
20,000 million euro. These issues are carried out in euro, dollars, and yen as well as in
other currencies; their profitability was fixed and variable, in the last case, this was
determined by the annual floating yield plus an issue or redemption premium that varies
according to certain parameters. Likewise, during the financial years 2001 and 2000,
several bond and debenture issues were redeemed for a total volume of over 8,000
million euro.
The expected maturity of the bonds and debentures in circulation balance at 31 December
2001, without including the possibility of the early amortisation of certain issues, is as
follows:
Maturity year
Million euro
2002
7.610
2003
2.777
2004
2.538
2005
414
2006
1.030
After 2006
6.270
20.639
PROMISSORY NOTES AND OTHER SECURITIES
Details of “Promissory notes and other securities” of the consolidated balance sheets
are given below by period of time,:
Variation %
2001/00
2000/99
2001
2000
1999
Up to 3 months
3.254
2.844
12.641
14,4
1.190
1.825
1.025
-34,8
78,0
293
139
495
110,8
-71,9
-1,5
-66,1
By period of time:
More than 5 years
--
--
25
4.737
4.808
14.186
-77,5
By currency:
In euro
3.244
2.316
6.958
40,1
-66,7
In other currencies
1.493
2.492
7.228
-40,1
-66,5
4.737
4.808
14.186
-1,5
-66,1
IV/72
BBVA SUBORDINATE LIABILITIES
At 31 December 2001, 2000 and 1999, the details of the balance of this item was as
follows:
Issuing Entity
2001
In millions of euro
2000
Interest rate in
effect 31 December
2001
Maturity date
1999
Issues In euro BANCO BILBAO VIZCAYA ARGENTARIA, S.A.:
September 1990
July 1991
December 1991
March 1994
-
105
18
82
-
105
19
82
290
4%
(a)
Mibor 6m+0.25%
-
January 2001
July 2001
January 2001
March 2000
84
28
60
36
1.500
84
28
60
36
-
84
28
60
36
-
9,33%
9,37%
6,97%
6,65%
3,92%
December 2006
December 2016
December 2007
December 2007
January 2017
–
6
4
6
4
3,04%
3,51%
December 2005
July 2004
14
46
77
14
46
77
14
46
77
Aibor 6m+0.9%
Pibor 3m+0.22%
Libor 3m+0.19%
September 2005
March 2007
October 2007
229
73
500
750
500
60
40
50
55
56
229
73
500
750
-
229
73
-
6%
6,35%
6,38%
Euribor 3m+0.6%
5,5%
5,73%
6,08%
4,21%
4,22%
4,05%
December 2009
October 2015
February 2010
December 2010
July 2011
October 2011
October 2016
October 2016
November 2016
December 2016
July 1995
July 1995
December 1995
December 1995
December 1995
BILBAO VIZCAYA INVESTMENTS BV:
July 1996
BBVA BANCO BHIF, S.A.
BBVA BANCO FRANCES, S.A.
BBVA CAPITAL FUNDING, LTD.:
July 1995 (b)
August 1995 (c)
August 1995
170
57
85
85
227
161
54
81
81
215
149
50
75
75
199
6,875%
Libor 6m+0.5%
Libor 3m+0,185%
Libor 3m+0,185%
7%
July 2005
January 2005
May 2005
May 2005
December 2025
1
53
89
10
56
112
13
59
110
3,50%
Various
Various
July 2006
113
26
107
28
100
274
29
Libor 6m+0.4%
3,45%
September 2004
August 2005
August 2010
September 1995
October 1995
October 1995 (b)
February 1996
November 1996 (b)
December 1996 (2)
February 1997
BBVA BANCOMER:
Revertible debentures - December 1996
Revertible debentures - April 1995 (3)
Non-revertible debentures – Nov. 1998
Bancomer Gran Cayman (Various)
113
87
170
284
227
–
170
107
94
161
269
215
54
161
100
97
149
249
199
50
149
Libor 3m+0.375%
5,40%
6,88%
6,38%
Libor 6m+0.3125%
Libor 3m+0.35%
Libor 3m+0.25%
September 2007
October 2015
October 2005
February 2006
November 2006
December 2006
February 2007
34
310
398
32
82
280
377
48
6,35%
25,12%
20,36%
10,44% (Average)
Years 2002 and
2003
December 2006
May 2002
September 2006
Year 2004
33
30
21,85%
(Average)
155
133
-
8,50%
March 2002
–
82
-
23,19%
May 2002
10,5%
December 2010
July 1996
July 1996
February 1997
September 1997
December 2001
BANCO DE CREDITO LOCAL, S.A.:
December 1995 (1)
July 1998 (1)
BBVA CAPITAL FUNDING, LTD.:
September 1995
March 1997
October 1997 (b)
October 1997 (b)
July 1999
February 2000
December 2000
July 2001
October 2001
October 2001
October 2001
November 2001
December 2001
Issues in foreign currency BBVA GLOBAL FINANCE, LTD.:
BBVA Bancomer (c)
Bancomer UDIS - December 1996
GRUPO FINANCIERO BBVA BANCOMER:
April 1995 (3)
BBVA BANCOMER CAPITAL TRUST:
February 2001
567
-
-
7.612
5.112
3.309
(a) During the first ten years of the issue, the yield is determined by capitalizing the issue capital to an annual MIBOR rate 17 July each year, increasing it by 0,25%.
(b) Issues included n the eurodebenture programme.
(c) From the merger with Banca Promex in August 2000.
(1) Transferred along with other operations to Banco DEXIA 20 March 2001.
(2) Amortised early 10 December 2001.
(3) These are connected (BBVA BANCOMER FINANCIAL GROUP carried out an issue underwritten by BBVA BANCOMER, which, in turn, carried out a separate
issue. They were amortised early, part in May 2001 and the rest in August 2001).
IV/73
The issues of BBVA Capital Funding, Ltd., BBVA Global Finance, Ltd. and Bilbao Vizcaya
Investment BV are backed subordinately by the Bank.
Last 14 January 2002, the outstanding balance of the issue carried out by BBV in 1996
was totally redeemed. (This had been completely underwritten by Bilbao Vizcaya
Investments BV, which, in turn, issued bonds that were exchangeable for the bonds from
the aforesaid BBV issue).
The amount of 250 million dollars of initial par value was exchangeable or revertible for
Bank shares, which were valued at 663.4 pesetas (3.987 euro) per share, adjusted by the
effect of the anti-dilution clauses, at any time up to maturity. The conditions of the issue
stated that, in the event that the holders of the bonds did not exercise their right to
exchange or convert these, on maturity or on early amortisation they would receive an
increasing premium of between 15.548% for the first possible date of redemption and
36.646% for the final maturity date. During the financial year 2001, bonds with a par value
of 5.42 million dollars were exchanged for the equivalent of 1,048,787 shares already
issued by the Bank without these operations generating any significant profit. At 31
December 2001, the par value of the bonds in circulation came to 2.4 million dollars and
at 14 January 2002 these were exchanged for 377,330 shares already issued by the
Bank, leaving the issue in question completely redeemed. (The details of the successive
amortisations and exchanges of this issue can be found in chapter III, pages 4 and 5).
These are subordinate debt issues, and, as such, for the purposes of loan priority, they
are placed behind common creditors.
The interest accrued for subordinate financing during the financial years 2001 and 2000
came to 430 and 316 million euro, respectively.
OTHER RESOURCES ADMINISTERED BY THE GROUP
At 31 December 2001, the volume of resources administered outside the balance sheet in
BBVA America exceeded 51,000 million euro, representing an increase of 12.3% in
comparison with the previous year. The investment funds, with an administered equity of
10,000 million euro, showed the most positive evolution, with a year-on-year growth of
25.9%.
The pension funds administered by BBVA in America stood at 30,000 million euro, which
represents a growth of 7%. The volume administered consolidated the Group’s position as
the biggest pension fund manager in Latin America, with a market share of 27.6% (data
drawn up from the information published in each country by the corresponding regulatory
bodies).
Lastly, the client portfolios amounted to 11,000 million euro, an increase of 17.2% during
the financial year.
The unstable situation of the markets during the year also had a negative impact of the
volume of investment funds administered in the domestic market. In BBVA w/o America
the investment fund equity administered stood at 40,000 million euro, showing a year-onyear decrease of 5%, additionally influenced by the redemption of 1,800 million euro of
SEPI (Spanish State Industrial-holding Company) funds carried out during the first
quarter, although if this had not taken into consideration the decrease would have been
only 2.2%. After March there was an intense commercial effort put underway, which
ensured 42 basic points of the share were obtained during the last three quarters (Source:
Inverco). However, the pension fund equity saw an increase of 9.6% during the financial
year, reaching an administered volume of 11,000 million euro. Finally, client portfolios
amounted to 22,000 million euro, with a growth of 5.9% in comparison with the close of
2000.
IV/74
BUSINESS IN BBVA W/O AMERICA:
INVESTMENT FUNDS
Portfolio investment funds
.Monetary funds
.Fixed income
Of which are: Guaranteed fixed income
.Mixed
Of which are: International funds
·Variable income
Of which are: Guaranteed variable income
International funds
.Global
Property investment funds
PENSION FUNDS
.Individual pension funds
.Employment and associated funds
CLIENT PORTFOLIOS
Total
BUSINESS IN BBVA AMERICA:
Investment funds
Pension funds
Client portfolios
Total
OTHER CLIENT RESOURCES ADMINISTERED
Variation %
2001/00
2000/99
2001
2000
1999
40.189
40.015
10.897
12.263
5.810
5.758
4.781
10.493
4.629
3.922
604
174
10.806
5.345
5.461
22.309
42.322
42.174
7.221
13.880
5.916
8.479
5.165
12.468
4.080
6.082
126
148
9.858
5.175
4.683
21.058
46.173
46.066
8.229
15.895
7.714
9.624
4.973
12.198
5.544
4.631
120
107
8.673
4.741
3.932
18.918
-5,0
-5,1
50,9
-11,7
-1,8
-32,1
-7,4
-15,8
13,5
-35,5
379,4
17,6
9,6
3,3
16,6
5,9
-8,3
-8,5
-12,3
-12,7
-23,3
-11,9
3,9
2,2
-26,4
31,3
5,0
38,3
13,7
9,2
19,1
11,3
73.304
73.238
73.764
0,1
-0,7
9.712
30.443
11.037
51.192
7.713
28.461
9.419
45.593
3.893
21.224
3.796
28.913
25,9
7,0
17,2
12,3
98,1
34,1
148,1
57,7
124.496
118.831
102.677
4,8
15,7
INVESTMENT FUNDS
The total equity of investment funds during the financial year 2001 was almost identical to
that of the previous financial year, despite the adverse evolution of the markets. In
administered funds in Spain, the change in composition of total equity is worth noting, as
those families of funds that are more conservative and less exposed to market evolution
have gained in importance, especially FIAMM and guaranteed funds. In Latin America the
tendency for growth was maintained(+26% on the figures for the financial year 2000).
Among the actions carried out during the financial year 2001, we would like to highlight
the rationalization process, which led to the fusion of many different funds: dropping from
a total of 265 funds administered at 31 December 2000 to 188 at the end of the financial
year 2001. This made it possible to measure the portfolios administered more effectively,
making the most of the economies of scale.
PENSION FUNDS
In Spain, the volume of equity administered by the Group in individual, employment and
associated plans, rose to 10,682 million euro by 31 December 2001, showing a year-onyear growth of 9.7%, despite the adverse evolution of the markets. The number of people
involved in these plans increased to 1,13 million, 94,000 more than at the close of the
previous year.
In individual plans the equity administered increased to 5,306 million euro, a market share
of 18.7%, while in employment and associated plans the volume came to 5,376 million
euro, with a market share of 27% (Source: Inverco).
IV/75
In Latin America, the market share for administered equity was 27.6% and for subsidiaries
it was 22.7% (Source: drawn up by the Group based on official data published in each
country by the corresponding regulatory organisms).
Pensions Spain: Administered Equity
2001
2000
Variation %
2001/00
2000/99
1999
Individual
5.306
5.084
4.741
4,4
7,2
Associated and employment
5.376
4.655
3.932
15,5
18,4
10.682
9.739
8.673
9,7
12,3
TOTAL
Underneath is information regarding the principal pension fund managers of BBVA in Latin
America, at 31 December 2001, 2000 and 1999:
CHILE
AFP Provida
2001
0,001756
2000
0,002011
1999
0,001845
ADMINISTERED EQUITY
12.831
13.010
10.703
-1,4
NET INTEREST INCOME
-2
-2
-2
0,0
8,4
Net commissions
109
123
57
-11,4
115,0
78,9
Rate applied
Variation %
2001/00
2000/99
21,6
–60
–66
-37
-9,1
6
0
0
0,0
0,0
OPERATING PROFIT
53
55
18
-3,6
198,1
Other results and restructurings
5
5
-6
0,0
n.s.
INCOME BEFORE TAX
58
60
13
-3,3
n.s.
NET PROFIT
56
60
13
-6,7
n.s.
ARGENTINA
Consolidar AFJP
Rate applied
2001
1,117098
2000
1,083596
1999
0,938779
Variation %
2001/00
2000/99
ADMINISTERED EQUITY
4.677
4.302
2.994
8,7
43,7
NET INTEREST INCOME
17
10
3
70,0
202,2
Net commissions
163
179
148
-8,9
20,7
-112
-115
–102
-2,6
12,4
-19
-12
-2
58,3
n.s.
OPERATING PROFIT
49
62
48
-21,0
29,5
1
1
-2
0,0
n.s.
INCOME BEFORE TAX
50
63
46
-20,6
37,0
NET PROFIT
36
38
26
-5,3
44,6
IV/76
MEXICO
(In millions of euros)
Afore Bancomer(1)
Rate applied
ADMINISTERED EQUITY
2001
2000
Variation %
0,119513
0,114554
2001/000
6.435
4.263
51,0
GROSS MARGIN
13
1
1.200,0
Net commissions
254
113
124,8
General administration costs
-96
-48
100,0
-8
-5
60,0
163
61
167,2
-433,3
OPERATING PROFIT
-10
3
INCOME BEFORE TAX
153
64
139,1
NET INCOME
102
41
148,8
(1) The data for 2000 includes the results since its incorporation into the Group in June 2000, and, as such, the year-on-year comparison is
irrelevant.
CLIENT PORTFOLIOS
Underneath are the details of the composition of client portfolios administered, broken
down into the two large geographic areas: BBVA America and the rest. The latter is taken
up almost entirely by Spain. As can be seen in the chart underneath, in the face of the
larger volume of portfolios administered in Spain, representing two-thirds of the total, the
American area has become more dynamic and growth has been affected by the increase
in companies that make up the BBVA Group.
2001
2000
1999
Variation %
2001/00
2000/99
Client portfolios
BBV w/o America
22.309
21.058
18.918
5,9
11,3
BBV America
11.037
9.419
3.796
17,2
148,1
TOTAL
33.346
30.477
22.714
9,4
34,2
IV/77
4.3.6. Other asset accounts
TANGIBLE ASSETS
Underneath are the details regarding the amounts, in millions of euro, of the components
of the tangible property assets (a breakdown of which is included in the annual accounts,
both in chapter V and in the Annex).
2001
2000
Variation %
1999
2001/00
2000/99
Land and property for own use
2.531
2.960
2.366
-14,5
Other property
1.424
699
700
103,7
25,1
-0,1
Fittings, installations and others
2.217
2.310
1.791
-4,0
29,0
TOTAL
6.172
5.969
4.857
3,4
22,9
TANGIBLE PROPERTY
Under the epigraph “Land and property for own use”, a considerable reduction can be
seen, which resulted from the decrease in the tangible property of BBVA w/o America,
due to the balance sheet optimisation and surface area rationalisation policy.
The activity that took place during the financial years 2000 and 2001 in the tangible assets
accounts was as follows:
CONCEPTS
Land and property
for Group’s own use
Other property
Fittings,
installations and
others
TOTAL
Regularised and updated cost
Balance at the
financial year
beginning
of
the
3.865
1.700
5.393
10.958
Additions
686
1.107
936
2.729
Disposals
-754
-1.354
-548
-2.656
Transfers and others
–341
341
-
-
3.456
1.794
5.781
11.031
871
32
3.067
3.970
Accumulated amortisation:
Balance at the
financial year
beginning
of
the
Additions
99
6
763
868
Disposals
–24
-71
-276
-371
-61
61
-
-
885
28
3.554
4.467
34
969
16
1.019
15
177
8
200
Disposals
-8
-806
–13
-827
–1
1
-
-
40
341
11
392
2.531
1.425
2.216
6.172
Coverage fund for tangible assets
Balance at the
financial year
beginning
of
the
Additions
Property, net Balance at 31 December 2001
Details of awarded fixed assets and other property:
2001
2000
1999
Variation %
2001/00
2000/99
Rented buildings
24
46
218
-48,3
-78,9
Construction underway
18
31
14
-41,1
125,4
IV/78
Awarded and disaffected property
1.382
622
468
122,3
32,9
TOTAL
1.424
699
700
103,8
-0,2
Amortisation policy
As the objective of awarded assets and disaffected property is to remove them from the
balance sheet in the short term, they are not subject to an amortisation plan.
On the other hand, property employed for own use is amortised using the straight-line
method based on the estimated years of useful life of the elements. The annual provisions
carried out are equal to the amortisation percentages laid out below:
Annual amortisation
percentage
Concepts
Property
2%
Fittings
8% a 10%
Installations
6% a 12%
Office and mechanization equipment
10% a 25%
INTANGIBLE ASSETS AND CONSOLIDATION GOODWILL
The figure of these assets is made up of:
2001
2000
1999
Variation %
2001/00
Constitution and establishment costs
Other amortisable costs
Consolidated goodwill
2000/99
19
42
39
-54,8
7,7
523
555
319
-5,8
74,0
4.617
4.075
1.990
13,3
104,8
5.159
4.672
2.348
10,4
99,0
IV/79
The increase in goodwill is fundamentally a result of the increase of the Group’s
shareholding in Bancomer, now 48.8%, and in BCL, now 100%.
Underneath is a breakdown of the item "Consolidated goodwill" at 31 December 2001,
2000 and 1999.
CONSOLIDATED GOODWILL
The details by Companies of the consolidated goodwill of the BBVA Group, at 31
December 2001, 2000 and 1999, can be found underneath (in millions of euro):
CONCEPTS
2001
2000
1999
Average pending
amortisation period
(years)
Companies consolidated using the global and proportional
integration method
Grupo Provida
Consolidar AFJP, S.A.
BBVA Banco BHIF, S.A.
Banco Bilbao Vizcaya Argentaria Puerto Rico, S.A.
Horizonte, S.A. – Colombia
Grupo Midas (Portugal)
Banco Bilbao Vizcaya Argentaria (Portugal), S.A.
Grupo Banco Provincial
Finanzia, Banco de Crédito, S.A.
Banco de Alicante, S.A.
AFP Horizonte, S.A. – Peru
BBVA Banco Francés, S.A.
Grupo Financiero BBVA Bancomer, S.A.
AFORE Bancomer
Banco de Crédito Local, S.A.
BBVA Banco Ganadero, S.A.
Otras sociedades
245
–
75
73
69
18
5
9
29
1.861
364
271
4
22
3.045
278
124
85
78
78
20
5
10
31
20
1.317
408
15
2.469
274
140
81
48
31
23
14
13
9
7
4
12
656
5,6
7,3
7,5
7,6
7,1
7,4
5,0
8,2
9,5
8,9
9,9
14,5
425
316
338
77
59
–
37
47
23
–
20
15
196
19
1.572
509
357
164
84
62
39
40
54
24
17
19
19
205
13
1.606
499
303
181
75
66
43
42
28
26
18
16
9
28
1.334
16,5
14,9
10,5
7,9
17,4
17,9
17,7
14,0
8,5
9,4
9,3
4.617
4.075
1.990
Companies consolidated using the equity method
Telefónica, S.A.
Repsol YPF, S.A. and associated companies
Banca Nazionale del Lavoro, S.p.A.
Crédit Lyonnais, S.A.
Autopistas Concesionaria Española, S.A.
Profuturo GNP, S.A. de C.V.
Iberia, S.A.
Iberdrola, S.A.
Acerinox, S.A.
Finaxa, S.A.
Wafabank, S.A.
Consolidar Cía. Seguros de Vida, S.A.
Pensiones Bancomer, S.A. de C.V.
Seguros Bancomer, S.A. de C.V.
Other companies
IV/80
Activity carried out in consolidated goodwill during the financial year 2001, can be found
underneath (in millions of euro):
CONCEPTS
Companies consolidated using the global
and proportional integration method
Grupo Provida
Banco Bilbao Vizcaya Argentaria Puerto Rico,
S.A.
Horizonte, S.A. – Colombia
Grupo Midas Portugal 21
Banco Bilbao Vizcaya Argentaria (Portugal),
S.A.
Finanzia, Banco de Crédito, S.A. 11
AFP Horizonte, S.A. – Perú
Grupo Financiero BBVA Bancomer, S.A. de
C.V.
AFORE Bancomer
BBVA, Banco Ganadero, S.A.
Other companies
Companies consolidated using the equity
method
Telefónica, S.A.
Repsol YPF, S.A. and associated companies
Banca Nazionale del Lavoro, S.p.A.
Crédit Lyonnais, S.A.
Autopistas Concesionaria Española, S.A.
Profuturo GNP, S.A. de C.V.
Iberia, S.A.
Iberdrola, S.A.
Acerinox, S.A.
Finaxa, S.A.
Wafabank, S.A.
Pensiones Bancomer, S.A. de C.V.
Seguros Bancomer, S.A. de C.V.
Other companies
Balance at
31
December
2000
Additions
Disposals
Amortizations
Differences
in exchange
rates and
others
Balance at
31
December
2001
279
123
84
78
8
1
-
-
-41
-123
-10
-10
–1
5
245
75
73
77
5
-
-3
-
-9
-
1
18
-
69
31
20
1.317
1
739
-2
-4
-
-3
–16
-195
9
-
29
1.861
408
15
2.469
- 298
5
9
1.061
-4
-41
-27
-1
-2
-483
–3
2
364
271
4
22
3.045
509
357
163
85
63
39
39
54
24
17
19
19
205
13
1.606
26
3
207
2
1
3
15
257
-70
-25
-38
-5
-17
-4
-5
-164
-40
–19
-32
-10
-4
–1
-2
-2
-2
-2
-2
-21
-3
–140
2
12
-1
13
425
316
338
77
59
37
47
23
20
15
196
19
1.572
4.075
1.318
-168
-623
15
4.617
5
From the amortisation balance charged to the results of the financial year 2001 of the
above chart, 123 million euros corresponded to an extraordinary amortisation of the
consolidated goodwill of BBVA Banco Francés, S.A. and Consolidar AFJP, S.A.
In accordance with information available, and applying hypotheses and conservative
scenarios, the prediction for future income attributable to the Group for each one of the
investments generating goodwill, in the residual amortisation period left to each, greatly
exceeds the corresponding balances pending amortisation at 31 December 2001.
IV/81
TREASURY STOCK
The balance of this item in the consolidated balance sheet at 31 December 2001, 76
million euros, corresponded to Banco Bilbao Vizcaya Argentaria, S.A. shares, property of
consolidated subsidiaries, that reflected the acquisition cost net the necessary provision
determined in each case, based on the lowest value between the theoretical consolidated
book value or the market price.
The abovementioned provision is recorded and charged to the item “Losses from group
operations” in the consolidated profit and loss accounts. The results produced from the
disposal of Bank shares were recorded in the items “Losses from group operations” or
“Profit from group operations” in the consolidated profit and loss accounts.
Treasury stock and shares in companies belonging to the Group and in associated
companies, which are acquired as a result of covering futures operations related to the
evolution of specific stock exchange indexes, are valued at market price. In accordance
with the Adapted Text of the Public Limited Company Law, the unavailable reserve
corresponding to the abovementioned treasury stock was set up.
The total amount of Bank shares in the hands of consolidated companies represented
0.19% of the capital issued by the Bank 31 December 2001. Its amount, on this same
date, came to 76 million euros, and corresponded to 6,101,296 shares of the Banco
Bilbao Vizcaya Argentaria, S.A.
Applying the abovementioned evaluation criterion, a securities fluctuation fund was set up
to cover treasury stock for the amount of 9 and 47 million euros at 31 December 2001 and
2000, respectively. Net recovery on the securities fluctuation fund through the disposal of
treasury stock during the financial years 2001 and 2000, reached 41 and 101 million
euros, respectively, and is included in the item “Profit from group operations” of the
consolidated profit and loss accounts.
The positive and negative results derived from operations with treasury stock are included
in the items “Profit from group operations” and “Losses from Group operations” in the
consolidated profit and loss accounts, for the amount of 34 and 32 million euros during the
financial year 2001, respectively, and 25 and 11 million euros during the financial year
2000, respectively.
In epigraph 3.4 of chapter III more details are available regarding the evolution and
situation of treasury stock.
IV/82
OTHER ASSETS
The evolution of the balance of this item between 1999 and 2001 was as follows:
2001
2000
1999
Variation %
2001/00
2000/99
286,9
Other assetsPublic Funds
Advance corporate tax
3.574
3.130
809
14,2
Tax loans and other concepts
1.822
1.530
842
19,1
81,7
814
769
854
5,9
-10,0
Active account dividends
Cheques charged to credit entities
689
414
442
66,4
-6,3
Clearing house
761
972
351
-21,7
176,9
-62,2
Operations underway
44
70
185
-37,1
Acquired options
879
682
380
28,9
79,5
Differences in exchange rate for fixed term operations
471
1.030
385
-54,3
167,5
1.333
1.260
1.800
5,8
-30,0
25
335
379
-92,5
-11,6
468
47
-
n.s.
n.s.
1.120
1.696
1.794
-34,0
-5,5
12.000
11.935
8.221
0,5
45,2
Line items to be regularised to cover futures operations
Financial operations pending liquidation
Differences in pension funds - Deferred contributions
Other concepts
DEFERRED ACCOUNTS
The composition and evolution of this item of assets in the consolidated balance sheet
was as follows:
Uncollected interest of discounted resources
2001
2000
1999
Variation %
2001/00
2000/99
418
441
655
-5,2
-32,7
4.725
5.267
2.644
-10,3
99,2
Uncollected costs paid
249
226
171
10,2
32,2
Deferred financial costs
57
63
79
-9,5
-20,3
Accrued income from unmatured investment
products that were not discounted
Other deferrals
1.600
469
398
241,2
17,8
7.049
6.466
3.947
9,0
63,8
IV/83
4.3.7. Other liability accounts
Underneath are the details, in millions of euro, of the amounts included in other liability
accounts. The most important epigraphs are described within these and correspond to the
breakdown of the annual Accounts included in the Annex:
2001
2000
1999
Variation %
2001/00
2000/99
Other liabilities
9.143
8.185
5.960
11,7
37,3
Deferred accounts
6.665
6.686
3.507
-0,3
90,7
Provisions for risks and charges
4.784
3.033
2.375
57,7
27,7
43
48
34
-10,4
41,2
6.394
6.304
5.333
1,4
18,2
27.029
24.256
17.209
11,4
41,0
Negative consolidation differences
Minority interests
DEFERRED ACCOUNTS
The composition and evolution of this item of the liabilities in the consolidated balance
sheet during the last three financial years was as follows:
Uncollected products of discounted operations
Accrual of unmatured costs that were not discounted
Accrued unmatured expenses
Other deferrals
2001
2000
1999
Variation %
2001/00
2000/99
170
149
216
14,1
-31,0
4.279
5.157
2.566
-17,0
101,0
917
891
482
2,9
84,9
1.299
489
243
165,6
101,2
6.665
6.686
3.507
-0,3
90,7
PROVISIONS FOR RISKS AND CHARGES
Underneath are the details on the funds included in the item “Other provisions” during the
financial years 2001, 2000 and 1999.
Variation %
2001/00
2000/99
2001
2000
1999
For coverage of other commitments with personnel
125
149
229
-16,1
For contingencies
624
420
281
48,6
49,5
Funds to cover risk of non-repayment
185
147
195
25,9
-24,6
Provisions for futures operations
Other funds
-34,9
168
165
180
1,8
-8,3
1.323
330
405
300,9
-18,5
2.425
1.210
1.289
100,4
- 6,1
IV/84
The activity that occurred in the balance of the epigraphs "Pension fund" and "Other
provisions" of this item during 2001, 2000 and 1999 was as follows:
2001
Balances at the beginning of the financial year
2000
1999
Variation %
2001/00
2000/99
3.033
2.375
1.928
27,7
23,2
71,4
Plus
Provision charged to the results of the financial year
1.134
540
315
110,0
Provision charged to the reserves
732
808
592
-9,4
36,5
Incorporation of companies into the Group and other
activity
520
689
174
-24,5
296,0
Less
Available funds
-155
-117
-106
32,5
10,4
Payments to early retirement employees
-348
-836
-179
-58,4
367,0
Use of funds and other activity
-131
-426
-348
-69,3
22,4
Balances at the close of the financial year
4.784
3.033
2.375
57,7
27,7
Pension fund
2.359
1.823
1.086
29,4
67,9
Other provisions
2.425
1.210
1.289
100,4
6,1
NEGATIVE CONSOLIDATION DIFFERENCES
2001
2000
Variation %
2001/00
2000/99
1999
Balances at the beginning of the financial
year
48
34
91
Additions 14 22
14
-34,2
58,3
–19
-8
43
48
Disposals
Balances at the close of the financial year
41,1
-62,6
-71
154,1
-89,3
34
-10,6
41,1
MINORITY INTERESTS
The activity that took place during 2001, 2000 and 1999, in the balance of this item of the
consolidated balance sheets, can be found underneath.
Balance sheet at the beginning of the financial year
Capital increases and decreases
Net income of the previous financial year
Dividends paid to minorities
2001
2000
1999
Variation %
2001/00
2000/99
6.304
5.333
3.951
18,2
35,0
226
166
1.005
36,1
-83,5
682
422
361
61,6
16,9
–502
-393
-386
27,7
1,8
Variations in the composition of the Group
and in the shareholding %
Differences in exchange rates
Other activity
Balance sheet at the end of the financial year
Shareholding in profits of the financial year
TOTAL
-440
631
-60
-169,7
n.s.
173
127
434
36,2
-70,7
-35,7
–49
18
28
n.s.
6.394
6.304
5.333
1,4
18,2
645
682
423
-5,4
61,2
7.039
6.986
5.756
0,8
21,4
IV/85
The breakdown by companies of “Minority interests (plus the shareholding in profits of the
financial year)”, can be found underneath:
Preferential sharesBBVA International, Ltd.
BBVA Preferred Capital, Ltd.
BBVA Privanza International (Gibraltar), Ltd
BBVA Capital Funding, Ltd.
By companiesGrupo BBVA Bancomer
Grupo BBVA Banco Francés
Grupo BBVA Banco Ganadero
Grupo BBVA Banco BHIF 1
Grupo BBVA Banco Continental
Grupo BBVA Banco Provincial
Banc Internacional d’Andorra, S.A.
Brunara, SIMCAV, S.A.
Other companies
2001
2000
Variation %
2001/00
2000/99
1999
2.443
556
. 758
592
4.349
2.076
269
1.089
581
4.015
2.049
268
1.008
598
3.923
17,7
106,7
-30,4
1,9
8,3
1,3
0,4
8,0
-2,8
2,3
1.507
0
19
54
144
335
0
130
263
138
2.690
1.214
371
43
166
147
332
131
119
320
128
2.971
75
326
167
137
138
301
134
109
326
120
1.833
24,1
n.s.
-55,8
-7,2
-2,0
0,9
n.s.
9,2
-17,8
7,8
-9,5
n.s.
13,8
-74,2
21,2
6,5
10,3
-2,2
9,2
-1,8
6,7
62,1
7.039
6.986
5.756
0,8
21,4
The above balances include various unaccumulated preferential share issues, which did
not award the right to vote, and which were guaranteed by the Banco Bilbao Vizcaya
Argentaria, S.A., in accordance with the details indicted below. However, chapter III
contains detailed information regarding each issue carried out, by entity, currency and
year of issue, and the total amount issued and the dividends of each are also given.
Issues
(at 31 December 2001)
Amount issued
(Millions)
Fixed Annual
Dividend
BBVA Privanza International (Gibraltar), Ltd.
December 1992
June 1993
June 1997
June 1997
US$
US$
US$
US$
100
248,25
70
250
9,00%
8,00%
7,76%
8,00%
BBVA International, Ltd.
March 1998
November 1998
February 1999
April 2001
US$
€
€
€
350
700
1.000
340
7,20%
6,24%
5,76%
7,01%
BBVA Capital Funding Ltd.
April 1995
April 1998
April 1998
DM
US$
DM
200
200
500
9,00%
7,20%
6,35%
BBVA Preferred Capital Ltd.
June 1997
June 2001
US$
US$
250
240
7,80%
7,75%
IV/86
In June 1997, Banco Bilbao Vizcaya International (Gibraltar), Ltd. – now, BBVA Privanza
International (Gibraltar), Ltd. -, carried out issues of 250 and 70 million dollars in
unaccumulated preferential shares, which did not award the right to vote. These issues
were guaranteed by the Banco Bilbao Vizcaya, S.A. and had a fixed annual dividend of
8% and 7.76%, respectively. During previous financial years, the same company carried
out three similar issues of 248, 100 and 345 million dollars with annual dividends of 8%,
9% and 9.75%, respectively. Regarding this last issue, which took place in 1991, in
November 2001 the early cancellation option was exercised, and, as such, this has been
totally redeemed.
In March and November 1998, Bilbao Vizcaya International, Ltd. (now, BBVA
International, Ltd.) carried out two issues in preferential shares amounting to 350 million
dollars and 700 million ECUs, the latter contained a clause for the obligatory conversion to
euros. These issues were similar to those described above, and had a fixed annual
dividend of 7.2% and 6.24%, respectively. In February 1999 it brought out a new issue of
1,000 million euros in preferential shares, with a fixed annual dividend of 5.76%, and in
April 2001 it issued preferential shares for the amount of 340 million euros, with a fixed
annual dividend of 7.01%. What is more, in March 2002 it once again launched an issue
of 500 million euros in preferential shares, with a variable annual dividend: from 21 March
to 30 September 2002 3.94% will be paid annually; from 1 October 2002 to 30 March
2007 the EURIBOR (3m) + 2 basic points will be paid, with a minimum of 3.52% and a
maximum of 6.17%; and from 1 April 2007 onwards, the rate will be EURIBOR (3m) + 2
basic points.
During the financial year 1995 Argentaria Capital Funding Limited (now, BBVA Capital
Funding Limited) launched an issue of 200 million deutschmarks in unaccumulated
preferential shares, with no right to vote, guaranteed by the Bank and with a fixed annual
dividend of 9%. The issue was redeemed last 12 April 2002 and on 17 April 1998 two new
issues of 2,000,000 and 5,000,000 unaccumulated preferential shares were carried out,
for the amount of 200 million U.S. dollars and 500 million deutschmarks, respectively,
These did not award the right to vote, were guaranteed by the Bank and had a fixed
annual dividend of 7.20% and 6.35%, respectively.
On 19 June 1997 Argentaria Preferred Capital Limited (now BBVA Preferred Capital Ltd.)
launched an issue of 10,000,000 unaccumulated preferential shares, for the amount of
250 million U.S. dollars. These did not award the right to vote, were guaranteed by the
Bank and had a fixed annual dividend of 7.80%. In June 2001 another issue of
unaccumulated preferential shares was carried out for the amount of 240 million U.S.
dollars, These did not award the right to vote, were guaranteed by the Bank and had a
fixed annual dividend of 7.75%.
All of these issues were acquired by third parties not related to the Group and are subject
to early amortisation under certain conditions at the decision of the issuing entity: five
years after the issue has taken place (or 7 years in the case of the 1995 issue).
IV/87
4.3.8. Shareholders’ equity
Underneath are the details of the composition of shareholders’ equity during the financial
years 2001, 2000 and 1999. Total net equity and equivalent per share are also listed. The
latter is expressed in euros while the rest of the concepts are expressed in millions of
euro.
2001
2000
1999
Variation %
2001/00
Underwritten capital
1.566
1.566
1.524
2000/99
-
2,8
Reserves
Issue premiums
6.835
6.874
3.322
-0,6
106,9
Reserves
1.419
1.027
1.267
38,2
-18,9
176
176
181
-
2,8
5.138
5.331
3.954
-3,6
34,8
Revaluation reserves
Reserves in consolidated companies
Losses in consolidated companies
-2.884
-2.705
-2.370
6,6
14,1
10.684
10.703
6.354
-0,2
68,4
2.363
2.232
1.746
5,9
27,8
Paid
–542
-565
–488
-4,1
15,8
Pending payment
-272
-204
-366
33,3
-44,3
Plus:
Consolidated income of the financial year- Of the Group
Less:
Active account dividends
Treasury stock
Net book equity
-814
-769
-854
5,9
-10,0
–76
-113
–338
-32,7
-66,6
13.723
13.619
8.432
0,8
61,5
-408
–354
-
15,3
-
13.315
13.265
8.432
0,4
57,3
4,17
4,15
2,88
0,5
38,3
Less:
Complementary dividend
Net equity, after applying the
results of the financial year
NET EQUITY PER SHARE
(euros/share)
IV/88
RESERVES AND LOSSES OF CONSOLIDATED COMPANIES DURING PREVIOUS
FINANCIAL YEARS
RESERVES IN CONSOLIDATED COMPANIES
A breakdown by companies of these items of the consolidated balance sheets can be
found underneath:
Variation %
Using global or proportional integration:
BBVA International Investments Co.
Holding Continental, S.A.
Ancla Investments, S.A.
Banc Internacional d’Andorra, S.A.
BBVA Puerto Rico, S.A.
Banco Industrial de Bilbao, S.A.
Banco del Comercio, S.A.
Banco Provincial, S.A.
BBVA Privanza Bank (Jersey), Ltd.
Canal International Holding, S.A.
Cía. de Cartera e Inversiones, S.A.
Corporación General Financiera, S.A.
Argentaria Cartera de Inversión SIMCAV
Grupo Financiero BBVA Bancomer, S.A. de C.V.
Triana International Holding
Gesinar, S.L.
BBVA Bancomer Servicios, S.A.
BBVA Bolsa, S.V., S.A.
Sdad. de Estudios y Análisis Financieros, S.A.
BBV America, S.L.
BBVA Privanza Bank (Switzerland) Ltd.
Banco Francés (Cayman) Ltd.
Bilbao Vizcaya Holding, S.A.
Corporación Industrial y de Servicios, S.L.
Bilbao Vizcaya America B.V.
Casa de Bolsa BBV Probursa, S.A. de C.V.
Corporación IBV Servicios y Tecnologías, S.A.
BBVA Participaciones Internacionales, S.L.
Other companies
Total
Using the equity method:
Iberdrola, S.A.
Senorte Vida y Pensiones, S.A.
Grupo Telefónica
Repsol YPF, S.A.
Grupo Banco Atlántico
Other companies
Total
FROM DIFFERENCES IN CONVERSION:
Using global or porportional integration:
Grupo BBVA Banco Continental
Grupo BBVA Banco Ganadero
Grupo BBVA Banco BHIF
Rest of America
Rest
Total
Using the equity method
TOTAL
2001
2000
1999
2001/00
2000/99
–
90
79
59
161
67
114
49
400
107
419
57
62
57
5
118
197
75
58
318
52
86
46
162
108
52
91
55
575
3.719
163
127
79
54
138
49
79
43
299
135
470
64
87
56
108
138
52
123
208
87
408
28
19
29
57
40
27
617
3.784
166
105
58
54
14
83
172
219
39
253
202
489
20
87
52
188
38
163
26
49
733
3.210
-100,0
-29,1
9,3
16,7
36,7
n.s.
n.s.
44,3
14,0
33,8
-20,7
-10,9
-10,9
-28,7
1,8
-95,4
-14,5
-100,0
60,2
-63,9
-33,3
-22,1
85,7
n.s.
58,6
n.s.
n.s.
92,6
n.s.
n.s.
-6,8
-1,7
-1,8
21,0
36,2
0,0
n.s.
-41,0
-100,0
-100,0
n.s.
10,3
18,2
-33,2
-3,9
n.s.
7,7
n.s.
-26,6
36,8
n.s.
27,6
n.s.
n.s.
n.s.
n.s.
n.s.
n.s.
n.s.
n.s.
n.s.
n.s.
-15,8
17,9
131
33
195
233
53
406
1.051
147
32
512
67
42
427
1.227
142
33
119
36
39
363
732
-10,9
3,1
-61,9
n.s.
26,2
-4,9
-14,3
3,5
-3,0
n.s.
86,1
7,7
17,6
67,6
20
20
–
225
78
343
28
1
17
37
135
218
12
12
-28,6
n.s.
n.s.
n.s.
-42,2
57,3
n.s.
n.s.
n.s.
n.s.
n.s.
n.s.
25
5.138
102
5.331
3.954
-75,5
-3,6
n.s.
34,8
IV/89
LOSSES IN CONSOLIDATED COMPANIES
2001
2000
1999
268
104
78
309
61
53
19
73
64
70
156
130
281
1.666
250
122
79
43
67
47
52
134
128
63
67
112
106
117
217
112
428
2.144
224
Variation %
2001/00
2000/99
174
106
112
52
14
36
2
39
24
275
134
68
68
60
115
226
243
1.748
7,2
-14,8
-1,3
n.s.
n.s.
n.s.
n.s.
29,8
1,9
-85,8
-43,0
n.s.
-4,5
n.s.
n.s.
n.s.
39,3
22,6
n.s.
n.s.
n.s.
n.s.
-34,3
-22,3
43,7
15,1
-29,5
n.s.
n.s.
n.s.
n.s.
20,5
116,7
-51,3
-4,5
-7,4
-1,5
-100,0
-100,0
n.s.
n.s.
n.s.
n.s.
-4,0
n.s.
n.s.
76,1
22,7
210
165
6,7
27,3
35
12
153
408
88
1
697
33
108
99
78
318
163
171
129
-6
457
6,1
n.s.
41,7
312,1
12,8
n.s.
119,2
-79,8
n.s.
-36,8
n.s.
-39,5
n.s.
-30,4
298
34
-
776,5
n.s.
2.885
2.706
2.370
6,6
14,2
Using global or proportional integration:
Inversora Otar, S.A.
BBVA Banco Continental, S.A.
BBVA Gestión, S.A. SGIIC
BBVA Banco de Servicios, S.A. (antes BBV México, S.A.)
BBVA Portugal, S.A.
AFP Horizonte, S.A.
BBVA Brasil, S.A.
AFP Provida, S.A.
Finides
BBVA Global Finance, Ltd.
Banco de Alicante, S.A.
Corporación Industrial y de Servicios, S.L.
BBVA International Investment Corporation
BBVA Puerto Rico Holding Corporation
Cidessa Uno, S.L.
BBVA Participaciones Internacionales, S.L.
BBVA P.R. Holding Corp.
Partides
Other companies
Total
From negative differences in the consolidation rate:
Using global or porportional integration
Grupo BBVA Bancomer
Grupo Provida
Grupo BBVA Brasil
Grupo BBVA Banco Francés
Grupo BBVA Banco Provincial
Rest
Total
TOTAL
The amounts due to differences in consolidation exchange rates include the accumulated
net effect of the differences produced in the conversion and, as a result, also include the
effect of devaluation.
For the purposes of assigning reserves and losses in the consolidated companies of the
above chart from previous financial years, the transfer of reserves generated by paid
dividends and the restructurings or transactions carried out between these companies
were considered in the financial year they took place.
In the subsidiaries’ individual annual accounts, which provided the balances recorded in
the epigraphs “Reserves” and “Losses in consolidated companies - Using global or
proportional integration” in the above list, at 31 December 2001 and 2000, 2,249 and
2,172 million euros were considered restricted reserves and included 85 and 155 million
euros, respectively, of unavailable reserves for shares of the dominant company.
IV/90
Consolidated Shareholders’ Equity
Circular 5/1993 dated 26 March of the Bank of Spain, which develops Law 13/1992, dated
1 June, regarding shareholders’ equity and supervision of the Financial Entities, states
that consolidable groups of credit entities are to maintain, at all times, a solvency
coefficient of no less than 8% of the weighted credit risk of the equity accounts,
commitments and other memorandum accounts, as well as of the exchange rate risk of
the net global position in currency and of the weighted positions in the trading portfolio
and derived instruments.
Underneath is the solvency coefficient in accordance with the regulations of the Bank of
Spain (the details of each different concept correspond to the demands set by the Bank of
Spain in the abovementioned Circular), at 31 December 2001, 2000 and 1999:
1.- BASIC SHAREHOLDERS’ EQUITY
1.1. CAPITAL
1.2. CASH RESERVES
. Parent
. Minorities
2001
2000
Variation %
1999
2001/00
2000/99
14.804
1.566
16.385
8.254
6.394
15.026
1.566
15.914
7.901
6.304
11.400
1.524
11.125
4.589
5.333
-1,5
3,0
4,5
1,4
31,8
2,8
43,0
72,2
18,2
1.737
1.709
1.203
1,6
42,1
5.139
23.090
5.011
22.491
3.942
16.590
2,6
2,7
27,1
35,6
5.159
76
143
23
2.885
8.286
4.672
113
271
24
2.386
7.465
2.348
338
115
20
2.370
5.191
10,4
-32,6
-47,3
-3,1
20,9
11,0
98,9
-66,6
136,6
18,9
0,7
43,8
2.- SECOND TIER RESOURCES
5.746
3.739
2.799
53,7
33,6
2.1. ASSET REVALUATION RESERVES
2.5. SUBORDINATE FINANCING
176
5.570
176
3.563
193
2.605
-0,2
56,3
-8,8
36,8
(-) OTHER DEDUCTIONS
819
206
142
298,5
44,2
. Shareholdings in unconsolidated FRAs entities. >10%
. Other assets or risks deducted
819
-
206
-
142
-
298,5
n.s.
44,2
n.s.
TOTAL ACCOUNTABLE SHAREHOLDERS’ EQUITY
19.731
18.559
14.056
6,3
32,0
427
867
- 431
-9
-
266
836
-558
–12
-
275
693
- 417
-
60,7
3,7
- 22,8
-27,2
-
-3,3
20,7
33,8
n.s.
n.s.
TOTAL ACCOUNTABLE SHAREHOLDERS’ EQUITY
20.158
18.825
14.331
7,1
31,4
Minimum resources required acc. to Bank of Spain.
SURPLUS
16.032
4.126
15.305
3.519
11.970
2.361
4,7
17,2
27,9
49,1
26%
23%
20%
13,1
16,6
. Income for the financial year
1.3. GENERIC FUNDS 1.4. CONSOLIDATION RESERVES
(-) To be deducted
1. 7. INTANGIBLE ASSETS
1. 8. TREASURY STOCK
1. 9. FINANCING OF SHARE PURCHASES
1.10. RESOURCES IN HANDS OF ECON. GROUP
1.11. CONSOLIDATED LOSSES
ADDITIONAL RESOURCES PER MIXED GROUP
Uncommitted insurance company equity
Shareholdings of the Financial Group in insurance companies
Shareholdings of insurance companies in the Financial Group
Uncommitted insurance company equity not accountable in
Group
SURPLUS In %acc. to minimum resources
IV/91
The minimum resources required at 31 December 2001 in accordance with the Bank of
Spain criterion, reached 16.032 million euros. BBVA’s accountable shareholders’ equity
on that date stood at 20,158 million euros. Thus, the surplus increased, at the close of the
financial year 2001, to 4,126 million euros, which represented 2.33% of weighted credit
risk mentioned in the paragraph above, or, what comes to the same thing: the surplus
represented 26 % of the minimum resources necessary.
BASE CAPITAL (BIS Regulation)
BASIC SHAREHOLDERS’ EQUITY (TIER I)
2001
2000
1999
Variation %
2001/00
2000/99
32,2
14.872
15.117
11.438
-1,6
1.566
1.566
1.524
-
2,8
11.649
11.635
7.052
0,1
65,0
Minorities:
6.990
6.904
5.644
1,3
22,3
· Preferential shares
4.349
4.006
3.805
8,5
5,3
· Rest
2.641
2.898
1.839
-8,8
57,6
Deductions:
-5.333
-4.988
-2.782
6,9
79,3
. Goodwill
-4.617
-4.075
-1.990
13,3
104,8
-716
-913
-792
-21,6
15,3
7.229
4.978
3.800
45,2
31,0
Capital
Reserves (after application of results) (1)
. Rest
OTHER ACCOUNTABLE RESOURCES (TIER II)
Subordinate financing
5.569
3.563
2.605
56,3
36,8
Revaluation reserves and others
2.479
1.621
1.337
52,9
21,2
-819
-206
-142
298,5
45,1
BASE CAPITAL
22.101
20.095
15.238
10,0
31,9
Minimum demandable shareholders’ equity
15.783
15.305
11.848
3,1
29,2
6.318
4.790
3.390
31,9
41,3
174.927
169.527
134.684
3,2
25,9
12,6
11,9
11,3
Deductions
SURPLUS OF RESOURCES
PROMEMORIA
Risk weighted assets
BIS RATIO (%)
TIER I (%)
8,5
8,9
8,5
TIER II (%)
4,1
3,0
2,8
(1) Does not include the revaluation reserves as these are entered according to TIER II.
The base capital of the BBVA Group at 31 December 2001 rose to 22,101 million euros,
which represented a surplus of 6,318 millions in accordance with the criteria of the Bank
of International Settlements (BIS), a 31.9% increase of that of the previous year, and
which reflected how well the capital was administered throughout the financial year. The
capital ratio grew from 11.9% in December 2000 to 12.6% by the close of 2001, with a
Tier I of 8.5% and a core capital (which is the equivalent of the percentage of TIER less
preferential minorities of the risk weighted assets) of 6.0%.
IV/92
With regard to capital operations during the financial year 2001, as opposed to previous
financial years no capital increase was carried out, not even for the conversion of the July
1996 bond issue. In all the conversions carried out in 2001, bonds were exchanged for
shares already in circulation and, in January 2002, the pending balance of said issue was
amortised early.
In April and June 2001 two preferential share issues were launched for the amount of 340
million euros and 240 million U.S. dollars, respectively. In November the early cancellation
option of the 1991 issue was exercised, with a coupon of 9.75% and a par value of 345
million dollars. At the close of the financial year 2001, the preferential shares in circulation,
4,034 million euros, represented less than 30% of the basic shareholders’ equity, 29.4%
to be precise.
Second tier shareholders’ equity underwent an increase during the financial year, which
was principally a result of the subordinate debt issue. There were a total of eight issues for
the amount of 2,828 million euros, and, out of these, the December issue of 1,500 million
euros, which was aimed at the minority market, is particularly noteworthy.
The BBVA share
The stock exchange capitalisation of BBVA stood at 44,422 million euros at 31 December
2001. Thanks to its market value, BBVA was third out of all the European banks included
in the Euro Stoxx 50 –a representative index of the general market average in the
Monetary Union–.
The BBVA share closed the financial year 2001 with a price of 13.90 euros, showing a
12.3% drop on that of the previous years. During this same period of time, the Euro Stoxx
50 fell 20.25% and the Euro Stoxx Banking sector index – a representative index of sector
in the Monetary Union – showed a decrease of 18.51%. Likewise, the drop in the BBVA
share price is less than that seen in the Ibex Financial index (where the Bank has
considerable weight), which lost 13.87%, and less than the drop in share price
experienced by our main domestic competitor.
In 2001 the deceleration seen in Europe and in the United States worsened. Bad
company results and a reduction in estimates were the norm and, in addition, the sharp
drop in the technological sector that had begun in 2000 showed no sign of stopping.
The evolution of world markets was also marked by the events of 11 September, which
led to sharp decreases. The unforeseeable medium- and long-term repercussions of this
day greatly increased unpredictability, as a result of the high level of uncertainty
generated. Afterwards, the markets started to slowly recover, although they continued to
behave somewhat erratically, and the representative stock exchange indexes from the
most important economic areas finished the year marking higher levels than they had
done the day before the attacks. The BBVA share was not unaffected by market
behaviour but, after a period of instability, it once again continued on its earlier trajectory.
Another component affecting the share in 2001 was the progressive deterioration of the
political, social and economic situation in Argentina, which greatly affected Spanish
banking, given its economic expansion throughout the region, and differential impact that
this crisis had on in the financial sector (the Ibex Financial index dropped 13.87%, as
opposed to the 7.82% reduction in the Ibex 35).
IV/93
At 31 December 2001, the price/profit ratio of the BBVA shares was 18.8, reflecting the
excellent expectations that both investors and analysts had regarding the Group’s profit
growth over the next few years. On the other hand, the book value per share was 4.2
euros, with a book value/price multiplier of 3.3. Profit per share rose to 0.74 euros during
the financial year, showing an increase of 1.7%.
BBVA securities were quoted on the continuous Spanish market, as well as on the New
York Stock Exchange as ADSs represented by ADRs, and on the stock exchanges of
Frankfurt, London, Milan, Zurich and Buenos Aires. BBVA shares are included in the
reference indexes Ibex 35 and Euro Stoxx 50, with a weighting of 15.0% and 2.5%,
respectively.
BBVA shareholders were paid through the distribution of three dividends of 0.085 euros
from the financial year 2001, in the months of July and October 2001 and in January
2002. If the complementary dividend for the amount of 0,128 euros, approved by the
General Shareholders’ Meeting held 9 March 2002, is added to these, the total dividend
paid out to the shareholders from the results of the financial year 2001 comes to 0.383
euro per share, a 5,5% increase on the one distributed from the financial year 2000. The
pay out was 51.7% and the dividend yield, at the share value at the close of the financial
year, stood at 2.76%.
The number of BBVA shareholders came to 1,203,828 at 31 December 2001. There were
no individual shareholdings equal to or more than 5% of the Bank’s share capital. 96.1%
of the shareholders hold less than 4,501 securities, representing 15.55% of the capital,
and the average investment per shareholder was 2,659 shares, which translates into an
average volume, at the share value at the close of the financial year, of 36.960 euros.
47% of the capital is in the hands of private investors and the remaining 53% belongs to
institutional investors, while non-resident shareholders as a whole possess 45.4% of the
share capital.
The BBVA share is characterised by a high level of liquidity. During the financial year
2001, 3,800 million shares were traded on the continuous market, representing 118.9% of
the capital. The average daily volume of share trading was 15.2 million securities, 0.48%
of the Bank’s capital, which, in money terms, represents a daily average of 214 million
euros. Out of this average daily volume, 19.4% corresponded to special operations and to
the upstairs market (the market for institutional investors who require a minimum volume
to trade) and the remaining 80.6% was traded on the ordinary market, through more than
3,700 operations per day.
4.3.9. Memorandum accounts
In accordance with the regulations of the Bank of Spain, derived products and other
futures operations are to be included in the memorandum accounts. These instruments
include, among others, trading of unmatured currencies, trading of unmatured securities,
financial futures on securities, currencies and interest rates, forward rates agreements,
options on currency, securities or interest rates and the different types of financial swap.
These are contracted to globally cover and administer the financial risks to which the
Group is exposed.
These operations are reflected in the memorandum accounts, either through future
commitments or duties that may have repercussions on the equity, or through the
balances necessary to reflect the operations when there have been no repercussions on
the capital of the Group. As a result, the notional and/or contractual value of these
products does not express the total credit risk or total market risk assumed by the Group.
IV/94
On the other hand, the premiums that have been paid out and collected as a result of
options bought and sold respectively, are counted as an equity asset by the buyer and as
a liability by the issuer and are included in the items “Other assets” and “Other Liabilities”
in the consolidated balance sheets, respectively, up to the date of the financial year or
their date of maturity.
Operations that are aimed at eliminating or significantly reducing the risks related to
exchange rates, interest rates or prices that exist in equity positions or in other operations,
and, which in addition, are explicitly identified as a group with the cover element from the
very beginning of the operation, are considered to be cover operations.
Likewise, all those operations that may not be explicitly associated with any specific cover
element but which form part of a global coverage, or a macrocoverage, used to reduce the
risk to which the Group is exposed as a consequence of the global administration of
correlated asset masses, liabilities or other operations are also considered to be cover
operations.
At 31 December 2001, the Group had constituted macrocoverage for exchange rate risk,
share price risk and interest rate risk, created by operations in currencies belonging to the
countries of the OECD, securities quoted on the principal international stock markets and
long term deposit operations, respectively. The operations corresponding to the
macrocoverage of share price risk and exchange rate risk have been valued at their
market price. In the operations corresponding to the macrocoverage of interest rate risk,
the corresponding liquidations have been recorded following the accrual principle. These
operations are permanently subject to an integrated, prudent system that is consistent in
measuring, control and administration of the risks and results, and which makes it
possible to follow up on and identify these operations. For each global coverage, the
system includes the constitution of credit risk provisioning, market risk provisioning and
operational risk provisioning, in keeping with the banking practices for these types of
operation.
The profit or loss that is generated from this type of cover operation is symmetrically
entered to the profit or cost of the element covered, and the collections or payments of the
liquidations that have been carried out are recorded with balancing entries in the items
“Other Assets” and “Other Liabilities” of the consolidated balance sheets. In deposit
operations with currencies considered coverage, these have been converted into euros
using the average exchange rates at the close of each financial year in the Spanish cash
currency market (using the value of the dollar in local markets for currencies which are not
listed on the Spanish markets).
Operations which are not coverage, also known as trading operations, are valued in
accordance with the regulations of the Bank of Spain, based on the contracting market:
-
-
Operations contracted in organised markets are valued at their quotation price in their
respective markets, and the results generated from variations in this price are wholly
recorded in the profit and loss account.
For operations contracted outside organised markets, at least once a month there is a
theoretical close of futures operations on securities and interest rates, and the
potential net loss for each type of risk and currency, which, where applicable, may
arise from these evaluations, is taken at charged to results. Potential profits, which
reached 8,848 and 69,363 thousand euros at 31 December 2001 and 2000,
respectively, are not included in the consolidated profit and loss accounts until they
have become effective. This procedure is also applied to the options of currencies
contracted outside organised markets.
The analysis of the percentage of the volume of coverage operations with respect to the
total, increasing this number with the purely speculative operations, is carried out on a
yearly basis, as is how the portfolio redemption value is determined.
The notional or contractual value of the futures operations that were not redeemed by the
close of the financial years 2001, 2000 and 1999, and were not included in the
consolidated balance sheets, was as follows:
IV/95
NOTIONAL VALUE OF DERIVED PRODUCTS
Operations (In millions of euros)
a) On interest rates and securities:
Financial swaps
Forward rates agreements
Options and futures
Trading of unmatured financial assets
b) On exchange rate:
Trading of foreign currency forwards, currency futures
and financial swaps
Options on currencies
Other operations
Variation %
2001/00
2000/99
2001
2000
1999
714.146
467.253
111.360
132.781
2.752
61.067
40.771
415.839
301.944
24.719
85.376
3.800
50.144
45.975
294.040
177.520
30.414
81.211
4.895
74.540
69.412
71,7
54,8
n.s.
55,5
-27,6
21,8
-11,3
41,4
70,1
-18,7
5,1
-22,4
-32,7
-33,8
19.477
819
775.213
3.457
712
465.983
4.732
396
368.580
n.s.
15,0
66,4
-26,9
79,8
26,4
A breakdown of these operations by maturity date at 31 December 2001, 2000 and 1999, can be
found underneath:
CONCEPTS (In millions of euros)
Operations on interest rates and securities
Financial swaps
Financial futures
Options on securities and interest rates
Operations on exchange rate
Trading of foreign currency forwards and financial swaps
Options and currency futures
Other operations
Financial swaps
Financial futures
Other operations
Financial swaps
Financial futures
Other operations
Up to 1 year
From 1 to 5
years
From 5 to 10
years
More than 10
years
364.213
103.827
36.775
2.752
31.272
538.839
50.607
7.533
6.354
28.437
92.931
30.695
7
18.751
49.453
21.737
11.185
32.922
26.674
21.499
818
48.991
587.830
1.231
845
2.076
95.007
49.453
32.922
213.605
21.166
1.043
3.800
23.754
263.368
45.716
3.554
16.770
25.779
91.819
26.834
4.762
8.272
39.868 2
15.789
6
4.989
0.784
35.802
5.100
713
41.615
304.983
4.857
377
5.234
97.053
2.755
2.755
42.623
540
540
21.324
112.234
17.368
17.904
3.863
25.079
176.448
32.468
13.046
1.382
1.032
24.556
72.484
20.498
6.870
27.368
12.320
125
5.296
17.741
46.114
4.520
396
51.030
227.478
18.221
262
18.483
90.967
3.622
3.622
30.990
1.405
1.405
19.146
IV/96
The details by maturity date and currency of the financial swaps on interest rates as well
as those of the forward rates agreements at 31 December 2001 and 2000, and the
interest rates charged and paid, are as follows:
CONCEPTS
Financial swaps
In euros:
Charging a fixed interest rate
Notional value
Average interest rate charged
Average interest rate paid
Paying a fixed interest rate
Notional value
Variable on variable
Notional value
In foreign currency:
Notional value
Notional value
Notional value
Million euros (except percentages)
Up to 1 year
Notional value
Notional value
From 5 to 10
years
More than 10
years
113.803
3,55%
3,60%
12.933
4,98%
3,78%
12.303
5,47%
3,75%
7.343
5,82%
3,70%
131.489
3,60%
3,57%
10.260
3,72%
5.23%
7.562
3,75%
5,44%
5.221
3,74%
6,29%
126
3,27%
3,47%
245.418
492
3,89%
3,75%
23.685
1.448
3,87%
3,65%
21.313
3.960
4,52%
4,34%
16.524
50.059
4,44%
2,74%
9.698
5,91%
2,75%
3.990
5,62%
3,09%
3.370
6,27%
2,96%
64.445
3,00%
4,02%
17.055
3,63%
5,40%
5.301
3,24%
4,36%
1.833
5,12%
5,44%
442
4,25%
2,46%
114.946
169
5,45%
2,60%
26.922
91
4,65%
4,77%
9.382
10
4,25%
4,25%
5.213
360.364
50.607
30.695
21.737
Up to
3 months
In euros:
Notional value
Notional value
From 1 to 5 years
From 3
to 6 months
From 6 to 12
months
More than
1 year
30.400
3,27%
3,33%
15.853
3,16%
3,12%
100
3,31%
3,38%
1.020
3,38%
3,80%
31.900
3,27%
3,33%
62.300
8.550
3,19%
3,31%
24.403
6.200
3,17%
3,07%
6.300
2.400
3,90%
3,48%
3.420
2.583
4,10%
3,71%
498
6,53%
5,62%
615
3,38%
3,44%
2.592
4,48%
3,55%
4.465
4,10%
3,84%
7.048
2.322
3,95%
4,14%
2.820
341
2.46%
5,80%
956
1.521
3,85%
5,02%
4.113
69.348
27.223
7.256
7.533
IV/97
CONCEPTS
Million euros (except percentages)
Up to
1 year
Financial swaps
In euros:
Charging a fixed interest rateNotional value
Notional value
Average interest rate charged 3,56%
Notional value
Notional value
Notional value
Notional value
In euros:
Notional value
Notional value
Notional value
Notional value
From 1
to 5 years
From 5
to 10 years
More than
10 years
67.416
5,16%
4,66%
13.276
9,61%
3,99%
12.495
5,41%
4,92%
6.144
4,95%
4,45%
74.299
3,46%
4,82%
13.923
4,85%
4,94%
8.233
4,72%
5,87%
4.521
5,00%
669
4,21%
4,13%
142.384
4.901
3,94%
4,03%
32.100
2.803
4,57%
4,93%
23.531
3.296
4,59%
5,03%
13.961
23.576
6,06%
3,97%
3.772
6,24%
6,28%
1.749
6,05%
5,81%
1.487
6,01%
5,68%
47.492
3,54%
5,66%
9.588
5,72%
6,67%
1.437
5,19%
4,91%
341
5,28%
5,86%
153
4,26%
5,51%
71.221
213.605
256
7,15%
5,38%
13.616
45.716
117
5,48%
5,40%
3.303
26.834
1.828
15.789
Up to 3
months
From 3 to 6
months
From 6 to 12
months
More than 1
year
-
5.141
4,21%
4,79%
924
3,04%
5,03%
977
4,54%
5,27%
987
4,82%
4,75%
987
2.030
4,93%
4,04%
7.171
388
5,00%
4,62%
1.312
1.431
5,28%
4,18%
2.408
-
4.296
13,65%
11,67%
2.397
4,33%
4,43%
470
5,14%
5,81%
987
3.664
15,99%
13,53%
7.960
15.131
1.339
4,04%
3,67%
3.736
5.048
676
5,85%
5,56%
1.146
3.554
IV/98
Information regarding whether the operations of derived financial products belonged to
organised markets or unorganised markets (Over The Counter - OTC) can be found
below:
Concept
Trading and financial swaps in currencies
Financial asset trading
Forward rates agreements (FRAs)
Financial swaps of interest rates
Financial swaps on securities
Financial futures on interest rates
Financial futures on securities
Options on interest rates
Options on interest rates
Options on securities
Options on securities
Options and financial futures on currencies
Other risks
Type of market
Unorganised
Organised
Unorganised
Unorganised
Unorganised
Organised
Organised
Organised
Unorganised
Organised
Unorganised
Unorganised
Unorganised
2001
2000
37.905
43.954
2.752
111.360
463.404
3.849
42.078
1.057
1.517
67.766
419
19.944
22.343
819
775.213
3.800
24.719
299.845
2.098
21.579
1.002
11.236
27.553
1.249
22.758
5.477
713
465.983
At 31 December 2001, the Group had constituted macrocoverage for exchange rate risk,
share price risk and interest rate risk, created by operations in currencies belonging to the
countries of the OECD, securities quoted on the principal international stock markets and
long term deposit operations, respectively.
Underneath are the details of the notional value of the futures operations, according to
whether they are covered or traded, at 31 December 2001 and 2000:
CONCEPTS
NOTIONAL VALUE
COVERAGE
TRADING
TOTAL
Financial swaps
Options and futures
Trading of foreign currency forwards, futures
On currency and financial swaps
Other operations
Financial swaps
Options and futures
On currency and financial swaps
Other operations
54.176
39.660
13.627
889
11.586
659.970
427.593
111.360
119.155
1.862
49.481
714.146
467.253
111.360
132.782
2.751
61.067
9.811
956
819
65.762
30.961
18.520
709.451
40.772
19.476
819
775.213
55.238
39.835
4.595
10.538
270
10.884
360.601
262.108
20.125
74.838
3.530
39.260
415.839
301.943
24.720
85.376
3.800
50.144.044
9.038
1.133
713
66.122
36.936
2.324
399.861
45.974
3.457
713
465.983
IV/99
Underneath is a classification of the notional balances of operations derived from
coverage on interest rates, securities and exchange rates at 31 December 2001 and
2000, based on the different items of the balance sheet they cover:
CONCEPTS COVERED
AMOUNT
Credits on clients
Credit entities
Debits to clients
Other assets and liabilities
Credits on clients
Credit entities
Debits to clients
Other assets and liabilities
NOTIONAL VALUE
FINANCIAL
SWAPS
FORWARD
INTEREST
RATE
AGREEMENTS
OPTIONS
AND
FUTURES
OTHERS
3.786
3.704
29.924
11.062
17.287
65.763
2.681
2.772
20.259
5.326
8.622
39.660
-
887
932
8.137
959
3.798
14.713
219
1.527
4.777
4.867
11.390
2.923
4.954
32.539
7.994
6.828
55.238
2.808
2.426
22.326
6.588
5.687
39.835
–
1.707
2.888
4.595
115
820
7.287
1.403
913 228
10.538
39
2
269
The market value of the trading futures operations, which correspond to the notional
balances of the underlying assets in the above chart at 31 December 2001 and 2000, can
be found underneath:
In millions of euros
CONCEPTS
2001
Operations on interest rates and securities:
Financial swaps
Options and futures
On currencies and financial swaps
Other operations
2000
–170
-14
149
10
-25
-66
99
-3
30
–86
17
-69
-37
3.534
-33
At 31 December 2001 and 2000, the provisions in coverage for the depreciation in the trading
futures operations on interest rates and securities stood at 168 and 83 million euros approximately.
IV/100
4.4. RISK MANAGEMENT
4.4.1. The organisation of the risks function
In BBVA risk is understood to be the exposure to uncertainty regarding the result of the
operations and activities carried out by the Bank. Starting from this premise, the mediumand long-term maintainability of the Bank’s business requires that the risks inherent in all
activities carried out by the Bank be correctly managed. Risk management is a key
element of the Group’s competitive advantage. In essence, it is an in-depth knowledge of
risk exposure, based on the availability of advanced measuring and follow-up tools that
are administered by highly qualified personnel.
Risk management must identify, measure, integrate and evaluate all the risks, so that the
risk profile of the institution is the one it wishes to have. In a financial group as
international and diversified as BBVA, risk management must ensure that the tools,
organizational structures, processes and systems are homogenous in order to facilitate
global management of all the risks assumed by the Group regardless of activity or
geographical area.
In addition, the risk function is responsible for providing the precise methodology
necessary to establish a desirable balance between the risk assumption and the expected
profitability of the business, in order to maximize the shareholders’ earnings and to raise
the value.
To make headway in this direction, throughout the year 2001 the BBVA Group continued
to develop the methodology and tools necessary to reach said objectives. At the same
time, it has been consolidating a homogenous, organizational structure that is
independent but closely connected to the business areas, throughout the entire Group to
carry out global, comprehensive, risk management. In this way, the risk function is centred
on a central risk area, and all personnel in charge of risks throughout the Group depend
functionally on this. In this way it is possible to ensure:
The listing and risk profile of the portfolios are in keeping with the strategic objectives of the Group.
That BBVA’s risk policies, which vary depending on type of business, geographical area and type of
risk, are known throughout the company.
That homogenous methods of management, systems and procedures are used throughout the Group.
Another essential aspect of risk management is the human resources, the people who
actually carry out this function. To ensure that the Group avails of the best skills when
following the established risk management model, in the year 2001, with the help of
Human Resources, an administrative skills model was implanted, which will contribute to
the systemisation and management of the knowledge that an advanced risks function
needs.
If, after the creation of BBVA, the year 2000 was basically the year the risk function was
integrated, then 2001 was the year the correct tools, methodologies and systems were
developed and implanted throughout the Group.
In early 2001, The Basle Committee published an extensive, consultative document
regarding a new venture capital agreement (Basle II), which, as can be seen below, will
mean a substantial advance in the differentiation of capital requirements in accordance
with the risk profiles, generating incentives to continue improving the processes and
systems that make up risk management.
Since it was first created, the BBVA Group has been working in that direction, as can be
seen in the Annual Reports from previous financial years, and, as such, the publication of
this regulation confirmed and underlined the usefulness of the approach followed.
The following sections deal with the risk profile of the Group, firstly as a whole, and then
by different type of risk and portfolio.
IV/101
4.4.2. Global risk map
Within the described BBVA risk module, the global vision and quantification of these risks
in homogenous terms is of critical importance.
The economic capital or venture capital, which is the measurement used to homogenously
quantify the risks in BBVA, is the calculation of the unexpected losses that may occur in
the different activities at risk, bearing in mind the interrelations that exist between these, in
extreme scenarios that are improbable and unlikely to occur.
The definition of an extreme scenario depends on the level of confidence with which the
institution wishes to operate, which is linked to its level of solvency or its objective rating.
This level of confidence is applied equally to all activities, businesses and geographical
areas, thus guaranteeing the homogeneity of the calculation.
In the case of the BBVA Group, and defining the capital in terms of its most basic
components -capital and reserves-, the level of confidence used to calculate the capital at
risk is 99.9%. This is the same as saying that the volume of capital, calculated in this way,
is expected to provide sufficient coverage for potential losses in 999 out of every 1,000
cases.
The concept of economic capital is essential, if the global risk profile of the Group is to be
evaluated. It allows the capital of the entity to be attributed to businesses and activities,
based on the risks incurred, as well as making it possible to know the profitability adjusted
to the risk more precisely, as it provides a ratio of the profits obtained and the capital
consumed.
The calculations of the economic capital in the Group, within the framework of the
advances in the implantation of BBVA risks model, are refined and completed
dynamically, as new tools and systems are implanted and as new information is made
available to the historical risks databases.
The following table shows the distribution of the economic capital of the Group by area of
business at 31 December 2001, in attributable terms - net minorities-. Retail banking
represented 57% of the Group’s consumption. Within this area, domestic business
represented 42% of the total, and Other Areas included shareholdings in European banks,
insurance, property for own use, e-business, e-banking and the structural risk of the
balance sheet.
Economic Capital of the BBVA Group.
Distribution by area
Economic Capital of the BBVA Group.
Distribution by type of risk
2001
Retail Banking
Asset Administration
Banking
2001
57,0%
4,5%
Credit
52,3%
Corporate Banking
8,2%
Market
29,7%
Investment Banking
2,6%
Operational
18,0%
and
Industrial Group and Infittings
Other areas
TOTAL
Private
9,3%
18,4%
100,0%
TOTAL
100,0%
By type of risk, the credit risk represented the largest part of the consumption of venture
capital, typical of an entity with an important commercial banking weight. On the other
hand, market risk –which includes the structural risk of the balance sheet associated with
the variations in interest rates and exchange rates, as well as the shares and property
portfolio— represented approximately 30% of the total capital, while operational risk was
estimated to be 18%. In this classification, the concept of operational risk is wider that that
considered in the new Basle II capital proposal. Likewise, this epigraph includes all the
risks that do not fit into the credit or market categories, including, for example, business
risk, reputation risk and insurance risk.
IV/102
4.4.3. The New Basle II capital regulation
In January 2001, the Basle Banking Supervisory Committee (Basle Committee) issued a
detailed consultative document in order to establish a new international agreement on the
capital requirements in banking institutions (Basle II), which substituted the one currently
in use, and which goes back 1988.
The most important new items introduced by the new agreement are the following:
I t establishes a greater ratio between the capital requirement and the risks incurred.
I t includes the possibility of using specific parameters estimated internally by the
entities themselves to calculate the capital.
I t includes a new capital charge for operational risk.
I t established two new pillars to complement and reinforce the minimum capital
requirements: pillar II (Supervision) and pillar III (Transparency).
The new proposal brings the concept of regulatory capital closer to that of economic
capital or venture capital, although there would still be differences between these two. In
this way, the regulatory capital is the minimum standard that can be demanded from any
entity subject to the corresponding legislation, while venture capital is intrinsic to each
institution and reflects the objective or desired level of capital to ensure a specific level of
solvency. On the other hand, regulatory capital does not include all risks, and it does not
take into account all aspects of an element that is critical to risk management, which is
diversification.
However, the new proposal is a very positive step forward, as it sets new capital
requirements that are more sensitive to risk, reducing or eliminating certain incentives to
regulatory arbitration linked to the current regulations.
2001 saw a constructive debate between the supervisors and the sector, and BBVA was
an active participant in this, drawing up documents that were then sent to the Basle
Committee and the Bank of Spain.
About halfway through 2001, 138 entities from 25 countries took part in the regulation
impact test, at the request of the Basle Committee. BBVA was one of the 22 institutions
worldwide that was able to evaluate the impact in all the possibilities included in the
proposal, from the standard model to the advanced internal model. In all cases, the results
for BBVA were close to the average of all the entities analysed.
During the year 2001 there were some modifications made to the initial proposal, although
some important aspects have still been left open. With the situation of the proposal in
December 2001, it is possible to extract the following conclusions for a typical institution
with a universal banking profile:
U
se of the standard model would be penalised with respect to the current capital
requirements.
F
or entities using the basic internal model, the capital requirement would be in line with
the current situation.
T
he entities opting to use the advanced internal model, owing to the development level
of their models, would, in general, be favoured. The savings in capital would be limited
for the first two years to 90% of the capital that results from applying the basic internal
model.
It is thought that during the year 2002 the new regulation will be closed, making it possible
to know the final impact more precisely. The new agreement is expected to become
effective in 2005.
IV/103
4.4.4. Credit risk management
Evolution of the exposure and quality of the credit risk
At the close of the financial year 2001, the global exposure of the BBVA Group to credit
risk, taking into consideration loan investment with clients, the potential exposure to credit
risk in market activities, the risk of non-payment and risks available through third parties,
came to a total of 344,000 million euros.
Global exposure to credit risk
2001
Loan investment
45%
Retail Banking
33%
Corporate Banking
11%
Other areas
1%
Market activity
35%
Available through third parties
15%
Contingent liabilities
5%
TOTAL
100%
Of this number, 156,000 million euros, corresponded to loan investment with clients, and
this was basically distributed as follows: 25% for Corporate Banking and 72% in Retail
Banking. Within this, the majority of business corresponded to the Group in Spain, where
60% of the investment in the area was concentrated; Bancomer (Mexico) had 17% and
the rest of the countries in Latin America 21%, completing the total investment in this
area.
Global exposure to credit risk by areas of business
2001
Retail Banking
72%
Spain
43%
Bancomer
12%
Rest of America
15%
Others
2%
Corporate Banking
25%
Other areas
3%
TOTAL
100%
The BBVA Group closed the financial year 2001 with a NPL rate of 1.71%, 25 basic points
lower than that of the previous year. The area with the largest proportion of investment,
minority Spain, closed at a rate of 1.09%, majority banking closed at 0.51%, the
Bancomer Group at 3.36% and the rest of Latin America at 4.01%.
IV/104
NPL rate: distribution by area of business
NPL rate
(%)
Areas
Investment at
31 December 2001
(%)
Retail Banking:
43
Spain
1,09
Rest of Europe
1,10
2
Bancomer
3,36
12
Rest of America
4,01
15
Corporate Banking
0,51
25
Remaining areas
0,58
3
TOTAL BBVA GROUP
1,71
100
43
The reduction in the NPL rate was a result of both the performance of the National
Banking Group, which reduced the NPL rate 3 basic points to 0.88%, and the effort
carried out in Latin America, where the rate was reduced from 4.64% to 3.73%, and,
above all, due to Bancomer which reduced its rate 210 basic points to 3.36%.
The positive evolution of the Groups NPL rate was the result of a rigorous policy of listing
and follow-up on risks, which mean that the default rate over investment went from 3.19%
by the close of 2000, strongly influenced by the recent acquisition of Bancomer, to 2.44%
by the end of 2001. This reduction in defaults, together with the recovery policy that was
maintained, made it possible to reduce the balance of doubtful risks, including risk of nonpayment, 4.4% bringing it down to 2,675 million euros.
In line with the Group’s traditional criteria of prudence, the coverage rate increased in
2001 reaching 221.6%, 32 percentage points higher than that at the close of the previous
financial year. This policy of prudence was determined both by the National Banking
Group, whose coverage went from 165% to 193%, and by Latin America, whose rose
from 206% to 252%. The coverage reached in Mexico, 320%, is worth particular attention
as it went up 60 percentage points from the coverage at the end of the year 2000, also
worth highlighting is the case of Argentina where, with a fund of 1,141 million euros (283
million euros at the close of the previous financial year), coverage of 326% was recorded.
Countries
Spain
Mexico
Argentina
Rest of Europe
Puerto Rico
Chile
Venezuela
Brazil
Peru
Colombia
Panama
Paraguay
TOTAL
Loan
investment
Doubtful
debtors
Default
69%
12%
5%
3%
2%
2%
2%
2%
1%
1%
1%
n.s.
37%
25%
13%
2%
3%
2%
6%
3%
5%
3%
1%
n.s.
0,8%
3,4%
4,1%
0,9%
2,7%
2,2%
5,9%
3,1%
6,8%
5,3%
2,6%
1,6%
100%
100%
1,7%
IV/105
By countries, 69% of the loan investment corresponded to the Group in Spain and 12% to
Mexico. A much lower percentage of the Group’s investment, 5%, corresponded to
Argentina, 3% to Europe, and Puerto Rico, Chile, Venezuela and Brazil had 2% each.
On the other hand, 37% of loan defaults corresponded to the Group in Spain, 25% to
Mexico and 13% to Argentina.
As a result, the NPL rate was distributed between Spain and Europe, both with 0.86%,
Mexico, which followed a downward trend during the financial year, had 3.36% and
Argentina 4.07%.
The portfolio was fairly diversified and had very little exposure to the sectors most affected
by the economic deceleration and by the terrible events that took place last September.
EVOLUTION OF LOAN INVESTMENT AND QUALITY OF INVESTMENT
2001
2000
1999
TOTAL DOUBTFUL RISKS
BBVA w/o America
BBVA America
DOUBTFUL LOAN ASSETS
Resident sector
Non-resident sector
Pro memoria:
BBVA w/o America
BBVA w/o Mexico
BBVA America
BBVA America w/o Mexico
With 100% coverage in BBVA S.A.
DOUBTFUL CONTINGENT LIABILITIES
BBVA w/o America
BBVA America
2.767
1.119
1.648
2.675
827
1.848
2.868
1.049
1.819
2.799
863
1.936
1.027
2.007
1.648
980
247
92
92
0
TOTAL COVERAGE FUND
BBVA w/o America
BBVA America
LOAN INSOLVENCY FUND
Of which:
Resident sector
BBVA w/o America
BBVA w/o Mexico
BBVA America
PROVISIONS FOR RISK OF NON-PAYMENT(*)
BBVA w/o America
BBVA America
(Absolute figures in millions of euro)
RISK TOTAL
BBVA w/o America
BBVA America
Variation %
2001/00
2000/99
2.124
1.208
916
2.047
839
1.208
-3,5
6,7
-9,4
-4,4
-4,2
-4,5
35,0
-13,2
98,6
36,7
2,9
60,3
980
1.779
1.819
799
244
69
69
0
1.133
1.937
914
804
189
77
75
2
4,8
12,8
-9,4
22,7
1,2
33,3
33,3
-
-13,5
-8,2
99,0
-0,6
29,1
-10,4
-8,0
n.s.
6.113
1.938
4.175
5.928
5.451
1.710
3.741
5.304
2.961
1.588
1.373
2.766
12,1
13,3
11,6
11,8
84,1
7,7
172,5
91,8
1.585
1.776
3.794
4.152
2.018
185
163
22
1.501
1.563
2.651
3.741
1.087
147
146
1
1.350
1.394
2.458
1.372
1.063
195
193
2
5,6
13,6
43,1
11,0
85,6
25,9
11,6
n.s.
11,2
12,1
7,9
172,7
2,3
-24,6
-24,4
n.s.
172.624
125.821
46.803
157.899
115.900
41.999
131.254
108.216
23.038
9,3
8,6
11,4
20,3
7,1
82,3
(*) During the financial year 1999, in Argentaria, 68 million euros were included in "provision for risk of non-payment" and this corresponded to the generic risk of nonpayment that was not included in the loan insolvency provision.
IV/106
2001
(Absolute figures in millions of euro)
2000
1999
Variation %
2001/00
GROSS LOAN INVESTMENT
2000/99
156.148
142.771
116.373
9,4
Resident sector
95.241
89.391
83.919
6,5
22,7
6,5
Non-resident sector
60.907
53.380
32.454
14,1
64,5
BBVA w/o America
112.020
103.543
95.610
8,2
8,3
BBVA w/o Mexico
136.315
124.361
113.065
9,6
10,0
BBVA America
44.127
39.228
20.763 1
2,5
88,9
24.294
20.817
17.455
16,7
19,3
16.476
15.128
14.881
8,9
1,7
13.800
12.357
12.606
11,7
-2,0
2.676
2.771
2.275
-3,4
21,8
1,60%
1,8%
1,6%
-12,1
12,4
Pro memoria:
RISKS WITHOUT INVESTMENT
BBVA w/o America
BBVA America
DOUBTFUL RISK/ RISK TOTAL
BBVA w/o America
0,9%
0,9%
1,1%
-1,1
-19,6
BBVA America
3,5%
4,3%
4,0%
-18,7
8,8
11,4
PAYMENT DEFAULT INDEX
1,7%
2,0%
1,8%
-12,8
Resident sector
0,9%
1,0%
1,0%
-10,3
-3,0
BBVA w/o America
0,9%
1,0%
1,2%
-3,2
-19,5
-16,4
BBVA w/o Mexico
1,5%
1,4%
1,7%
2,8
BBVA America
3,7%
4,6%
4,4%
-19,6
5,5
4,0%
3,8%
4,6%
5,0
-16,7
220,9%
190,1%
139,4%
16,2
36,4
COVERAGE RATE ON TOTAL RISKS
BBVA w/o America
173,1%
163,0%
131,4%
6,2
24,1
BBVA America
253,3%
205,7%
150,0%
23,1
37,1
40,3
COVERAGE RATE ON DOUBTFUL ASSETS
221,6%
189,5%
135,1%
16,9
Resident sector
191,7%
173,9%
161,1%
10,2
8,0
BBVA w/o America
172,8%
159,5%
123,0%
8,3
29,7
BBVA w/o Mexico
189,0%
149,0%
126,9%
26,9
17,4
BBVA America
252,0%
205,7%
150,1%
22,5
37,0
205,9%
136,1%
132,3%
51,3
2,9
249,0%
214,7%
160,1%
16,0
34,1
733
706
512
3,9
37,8
1.828
2.895
1.065
-36,8
171,8
-102,3
Pro memoria:
With mortgage guarantees
Doubtful assets with a Mortgage Guarantee
DOUBTFUL LOANS
FINANCIAL YEAR
AMORTISED
NET AWARDED ASSETS
DURING
THE
518
-6
264
n.s.
Awarded assets (gross)
856
926
547
-7,6
69,3
Awarding funds
338
932
283
-63,7
229,3
39,5%
100,7%
51,7%
-60,8
94,8
Awarded asset coverage rate
IV/107
Contingencies contracted during the normal course of banking operations
Contingent liabilitiesSureties, pledges and guarantees
Assets belonging to third party debentures
Rediscounts, endorsements and acceptances
Others
CommitmentsAvailable through third parties:
- Through credit entities
- Through the Public Administration sector
- Through other resident sectors
- Through non-resident sectors
Other commitments
Variation %
2001/00
2000/99
2001
2000
1999
13.714
62
2.700
16.476
11.874
126
359
2.622
14.981
12.694
53
164
1.857
14.768
15,5
-82,7
3,0
10,0
-6,5
137,7
118,9
41,2
1,4
2.350
2.995
26.184
21.388
52.917
2.372
55.289
2.172
3.588
23.202
19.257
48.219
3.059
51.278
2.019
3.358
22.898
9.704
37.979
2.814
40.793
8,2
-16,5
12,9
11,1
9,7
-22,5
7,8
7,6
6,8
1,3
98,4
27,0
8,7
25,7
71.765
66.259
55.561
8,3
19,3
Credit risk profile
The objective of the BBVA Group consists of making available the early credit risk
measurements of the entity. Within this scope, the main measurements used are
expected loss and the venture capital. Expected loss, as a percentage of the total
exposure to risk, can be basically divided up into the following components:
Expected
Loss
(%)
=
Probability
of Breach
(%)
x
Severity
(%)
Probability of breach
In this context, breach is understood to be the definition of non-payment that figures in the
Spanish banking regulation, which is very similar to that included in the Basle II
consultative document. The time period for the calculation of the probability of breach is
one year.
The probability of breach associated with different operations and/or clients is obtained
using the rating and scoring tools.
Each tool includes the relevant risk factors for the segment in question, and when these
are correctly combined they give the credit quality result of the client –when using the
rating tool- and of the operation –when using the scoring tool-.
Lastly, the result is associated with a probability of breach using the statistical process
known as gauging. In this way, the result given by each tool is linked to a rating on
BBVA’s master scale, which is merely a grade given to each part of the probability of
breach.
IV/108
BBVA’s master scale, in its reduced version, categorized the outstanding risk portfolio into
13 categories. In 2001, and for internal administration purposes, the scale was extended
from 13 to 34 grades, so that it could be adapted to the level of diversification of the
Group’s activities, avoiding concentrations at particular grades and thus availing of
sufficient specificity in all businesses and countries.
The implantation process of the rating and scoring tools, once finalised for the activities of
the parent and subsidiary companies in Spain, allows us to give estimations of the risk
distribution in this area, as will be explained over the following pages.
The objective is to finalise the implantation of the homogenous throughout the whole
Group during 2002. In this line, the scoring tools for minority banking are already in
operation in American subsidiaries. It is expected that the homogenous gauging process
for these tools will be finished by the end of 2001, in accordance with the corporate
criteria.
The table below gives an estimation of the distribution by ratings – weighted by exposure
– of the risks with companies, financial entities, institutions and sovereign risks, within the
scope defined. As can be seen, 78% of the exposure to credit risk is concentrated in the
rating BBB- or higher, and 59% in ratings A or higher.
Distribution by Ratings*
2001
AAA/AA
43,0%
A
15,8%
BBB+
7,8%
BBB
5,3%
BBB-
6,4%
BB+
5,1%
BB
6,4%
BB-
4,6%
B+
3,0%
B
1,8%
B-
0,7%
CCC
0,1%
TOTAL
100,0%
* Activities of the parent and subsidiary companies in Spain, financial entities, institutions and sovereign risks.
Within this process, and in keeping with the future requirements of regulators within the
framework of the new Basle II capital agreement, the Group began to validate the rating
tools using regulators and independent experts. These latter have already validated the
company rating, which is completely integrated into the decision making process, and
which complies with the most demanding criteria regarding predictive capacity and
discriminating capacity.
IV/109
IV/109
Excluding sovereign risks, 73% of the exposure still has a rating of BBB- or higher, and
46% can be found in level A or higher.
Distribution by Ratings.*
Excluding sovereign risks
2001
AAA/AA
25,5%
A
20,5%
BBB+
10,6%
BBB
7,2%
BBB-
8,7%
BB+
6,9%
BB
8,3%
BB-
5,6%
B+
3,5%
B
2,5%
B-
0,6%
CCC
TOTAL
0,1%
100,0%
* Activities of the parent and subsidiary companies in Spain, financial entities and institutions.
In the minority sector –mortgages and consumer loans-, one relevant question is how
instalments affect the probability of breach. This can be clearly seen in the following
graph, where historic information regarding the risk of BBVA’s consumer loans portfolio in
Spain is shown following two criteria:
T
he corresponding scoring grade (this is divided up into 5 groups, group 1 are the
highest graded loans and group 5 the lowest).
T
he years that have paced since the loan was conceded.
Probability of breach of consumer loans
Operations corresponding to the period 1994-2000
0,0%
0,5%
1,0%
1,5%
2,0%
2,5%
3,0%
3,5%
4,0%
4,5%
5,0%
0123456
Years since concession
Probability of breach
Group 1
Group 2
Group 3
Group 4
Group 5
IV/110
Firstly, the above graph shows the capacity of predicting a breach through the scoring
grade, as the higher the grade awarded to a loan the lower the probability of default, and
vice versa. It is also possible to see that there is a growing probability of breach for all
groups of loans until the second year, which then decreases.
Regarding the rating tools, work teams were put together in each different country and
these were coordinated from Spain, so that they could be developed and/or homogenised
according to corporate criteria. This process has already advanced greatly and it is
expected to finish in 2002.
As a result of all the above, by the end of 2002 practically all the BBVA Group’s activity,
which is subject to credit risk will be evaluated using rating or scoring tools and, as a
result, each operation will be associated to a consistent and homogenous probability of
breach in line with corporate requirements.
While the development and adaptation of these tools is being finalised, and in the light of
the global risk maps, the probability of breach for the different activities carried out by the
subsidiaries in Latin America will be estimated using historical data on average portfolio
behaviour.
Severity
Severity is the early estimation of the final credit losses in the event of a breach, and this
basically depends on the type of product in question, guarantees attached to the
operation, and on the effectiveness of the recovery process itself.
A database is currently being developed for a historical analysis of the recoveries carried
out by the whole BBVA Group, which will make it possible to divide the severity
information regarding all potential relevant axes (type of product, guarantee, client rating
prior to breach, client segment, business area, country, company, time passed since the
breach, etc.). The results of this database, which go from 1995 up to the present, will be
made available during the year 2002.
Until these results are made available, the Group is estimating severity at portfolio level,
based according to the cases included in sample recovery files, a dynamic analysis of the
default and bad debt recoveries, and expert opinions.
Expected losses
The estimations for expected losses in the BBVA Group can be found underneath. All the
information regarding exposure to credit risk and estimations regarding the probability of
breach and severity corresponding to the different portfolios are also laid out. These
measurements are adapted as the different rating and scoring tools are updated and
when new information from the database on historical risks becomes available.
IV/111
Expected losses in the BBVA Group
(percentage of exposure, 31 December 2001)
Details by areas
0,06% 0,05%
0,20%
0,05%
0,93%
Retail Banking
Asset Management and Private Banking
Corporate Banking
Investment Banking
Other areas
Weight of exposure over that of total Group
Expected loss (% Exposure)
46% 3% 11% 31% 9%
Expected losses in the BBVA Group
(percentage of exposure, 31 December 2001)
Details America – w/o America
1,52%
0,23%
21% 79%
Weight of exposure over that of total Group
Expected loss (% Exposure)
America
W/o America
The above graphs present the breakdown of the Group’s expected losses, in percentage
of exposure. By areas, the highest percentage of expected losses (0.93%) is that of Retail
Banking, followed by Corporate Banking, with a rate of 0.20%. The percentage of
expected losses for the remaining areas are not significant.
By geographical areas, the Group’s expected loss in Latin America is 1.52%, while that of
the rest of the Group is 0.23%.
IV/112
Credit risk in market activities
Credit risk management in market activities is divided into three lines of actions.
1)
Current follow-up of credit risk OTC financial instruments with market makers is
carried out in terms of a market evaluation of contracted positions plus a maximum
potential.
OTC DERIVED PRODUCTS. NOTIONAL AMOUNT, DISTRIBUTION BY PERIODS OF
TIME
(data al 31 December 2001)
Up to 3
months
From 3 to
6 months
From 6 to
12 months
From 1 to
5 years
From 5 to
10 years
More than
10 years
TOTAL
IRIS
254.398
65.129
31.809
62.177
29.303
4.561
447.377
FRAs
59.114
27.243
7.627
7.891
-
-
101.875
2.680
386
1.191
7.155
6.289
4.245
21.946
316.192
92.758
40.627
77.223
35.592
8.806
571.198
Options interest rate
TOTAL OTC INTEREST RATE
FX instalment
22.765
5.212
7.673
992
323
-
36.965
Swaps exchange rate
1.786
473
1.080
6.037
971
50
10.397
Options exchange rate
6.627
482
1.170
354
-
-
8.633
TOTAL OTC EXCHANGE RATE
31.178
6.167
9.923
7.383
1.294
50
55.995
Fixed income instalments
27.084
307
705
243
-
-
28.339
TOTAL OTC FIXED INCOME
27.084
307
705
243
-
-
28.339
Options variable income
91
87
163
514
5
-
860
TOTAL OTC VARIABLE INCOME
91
87
163
514
5
-
860
374.545
99.319
51.418
85.363
36.891
8.856
656.392
57,1%
15,1%
7,8%
12,0%
5,6%
1,4%
100,0%
TOTAL
At 31 December 2001, the equivalent maximum figure of global exposure in credit risk
with market makers was 22,664 million euros recording an increase of 13.2% on the
previous year.
The net market value of all portfolio operations on this date was 1,844 million euros, with
an average remaining period of 23.74 months. The average surrender value in gross
terms was 5,434 million.
IV/113
OTC DERIVED PRODUCTS. NOTIONAL AMOUNT, RISKS AND AVERAGE PERIODS
(data at 31 December 2001)
Notional
amount
Gross
surrender
value
Net
surrender
value
Equivalent
maximum
exposure
Average
period
(months)
IRIS
FRAs
Options interest rate
447.377
101.875
21.946
3.128
27
230
863
16
161
10.883
172
1.551
41
7
61
TOTAL OTC INTEREST RATE
571.198
3.385
1.040
12.606
41
FX instalment
Swaps exchange rate
Options exchange rate
36.965
10.397
8.633
636
866
171
170
318
167
4.172
3.117
1.353
4
37
5
TOTAL OTC EXCHANGE RATE
55.995
1.673
655
8.642
5
Fixed income instalments
28.339
271
186
808
1
TOTAL OTC FIXED INCOME
28.339
271
186
808
1
Options variable income
860
105
-38
608
14
TOTAL OTC VARIABLE INCOME
860
105
-38
608
14
656.392
5.434
1.843
22.664
24
TOTAL
During the year 2001, a more in-depth development and implantation of techniques to
mitigate the risk of derived products was carried out. Of the measures taken, the following
are the most noteworthy:
Construction of an infrastructure to facilitate administration of the collateralisation
agreements, periodically evaluating the global portfolio with each market maker to
mutually interchange the guarantees adjusted in the periods of time agreed.
21% of the operations with non-resident financial institutions in the portfolio were
administered according to the terms underwritten in each collateral agreement.
Consideration
of netting (contractual compensation agreements) during the
implementation of all operations that permitted this. There was a wide base of market
makers used to underwrite ad hoc contracts, legally contrasted with each one of the
jurisdictions.
Regarding the quality of the market makers, the risk assumed in operations with OTC
financial instruments was done through entities boasting a higher credit quality, above Ain 91.7% of the cases.
Exposure was centred on financial institutions (85.7%), and the remainder (14.3%) around
corporations and clients, and was adequately diversified.
By geographic areas the majority of the risk was in Europe and the United States, which
together represented 84.9% of the total. The percentage in Latin America came to
14.93%, 9.18% of which corresponded to Mexico.
IV/114
Distribution by geographical areas of
the equivalent maximum exposure
2001
The European Union
41,1%
The United States
27,3%
Spain
12,3%
Mexico
9,2%
Rest of America
5,8%
Rest of Europe
4,1%
Oceania
0,1%
Japan
0,1%
TOTAL
2)
100,0%
A tool to measure credit risk in market activities has been developed, which provides
a measurement of the risk consumption in terms of expected loss plus economic
capital, for those activities carried out through a market maker and/or an issuer.
The methodology requires that internal ratings be assigned to each of the market makers
and issuers with which the company wishes to work, thus obtaining a map of risks that
makes it possible to homogenously compare the risks assumed in terms of product,
period of time and market maker or issuer.
Distribution of expected loss +
economic capital
2001
Issuer risk
Amortisable derived products
Increasing profile of derived products
Deposits
TOTAL
42%
39%
127%
2%
100,0%
In addition, it is possible to effect coherent aggregations in different administration levels,
simplify the treatment of the mitigation techniques and avail of a measurement of
profitability adjusted to risk.
3)
Finally, The New Risks Platform, already under development for the ,market areas,
allows us to make a comprehensive analysis of the market risk and credit risk derived
from the positions maintained, meaning that it is possible to carry out analyses of the
economic capital of the portfolio and an evaluation of the operations in terms of
profitability adjusted to risk.
IV/115
4.4.5. Market risk management
Market risk, which is understood to be a possible loss in value occurring in the positions
maintained as a consequence of movements in market variables (interest rates, exchange
rates and share prices), is an inherent part of financial activity, and more specifically, of
trading activities of the parent company and each of the subsidiary banks carried out in
the markets.
The BBVA Group manages the market risk derived from its activities with the basic aim of
limiting possible losses, quantifying the economic capital necessary to carry out its activity
in the market areas, and optimising the ratio between the level of exposure assumed and
the results in accordance with the objectives that have been set. In order to do this with as
many guarantees as possible, the Group has a series of policies and organizational
systems for the identification, measuring, information and control of market risks.
The Market Risk Global Administration Unit, which is a central unit, independent from the
market areas which originate risk, is responsible for developing procedures designed to
measure and control risks, ensure that the business units comply with the limits and risk
policies in effect, and report to the senior management.
Follow-up on market risk is based on the “value at risk” (VaR) methodology. The corporate
calculation tool follows a parametric model based on a matrix of co-variances, which is
estimated from an analysis of the historical behaviour of the main factors in market risk,
and these are, interest rates, exchange rates, variable income prices and the implicit
unpredictability of options. Assuming that, from a statistical point of view, the future
evolution of market variables will be similar to in the past, the model obtains the maximum
loss the may be obtained in market positions, with a confidence level of 99% and for the
period of one day.
To facilitate operational diversity and the continuous incorporation of new products,
specific specialised units have been established sub-limits in terms of VaR at table or
business line level and for risk factors of low liquidity and high unpredictability. In addition,
provisions are given for market risk, liquidity risk and model risk for the principal positions
that exist in products of low liquidity, bearing in mind the existing risks and the width of the
price band with which these products are listed. Complementary limits have also been
established in terms of open positions and sensitivities. The objective of these limits is to
provide a more detailed control of the risk, and they are coherent with the limits
established in VaR terms.
Based on the measurements carried out, there is a daily control of the consumption levels
of the limits that have been approved for the different units of business by the Standing
Executive Committee, which, along with Management Committee, is regularly informed
regarding compliance with these limits. The follow-up process on market risks is
complemented by the control of alarm signals, such as a sharp increase in market
unpredictability or an accumulation of losses (stop-loss) that will lead to a series of steps
being taken in order to limit the negative impact.
In addition, in order to verify the precision and sufficiency of the risk follow-up systems,
validation tests are carried out on the models on a regular basis (backtesting) and an
analysis is effected to discover the impact of critical situations on the profit and loss
account (stresstesting).
IV/116
Backtesting is a statistical test used to verify that the predictions made by the model are
consistently in line with the daily results observed afterwards, or, on the contrary, whether
there are considerable discrepancies, meaning the model used would have to be rejected.
Following the two validity criteria of the Basle Committee, based on the number of days
that losses have exceeded VaR predictions, three bands have been established to
indicate whether the model is valid, doubtful or erroneous. This verification is carried out
by taking the data on the risks and results from the different units on a daily basis for the
historical period of one calendar year.
Also, as a complement to the risk measurement carried out under normal market
conditions, there are also periodic estimations of the losses that may be incurred by the
Group in the event of a crisis in the markets. It is a case of subjecting the positions
maintained to sharp hypothetical market oscillations, based on historical situations or any
others, by creating scenarios, and then quantifying the effect of the results of the Group
and the different business units, in order to identify possible impacts that may potentially
arise and which are adverse to and higher than the VaR figure. The aim is then to design
contingency plans that are to be put immediately into effect should a situation similar to
those described take place.
On the other hand, market risk management in market areas is carried out in accordance
with the administration model of BBVA, from which the Group has initiated a set of
projects to adapt policies, procedures, systems and structures to said model.
In the area of managing those risks derived from business other than that which the Bank
carries out in the market areas, the projects underway, within the framework of the global
administration objectives of the risks, the aim is:
To establish new risk management principles, emphasizing concepts such as yield
over capital and creating value for the client, exactly as stated in the new approaches
to the measurement of profitability adjusted to risk.
To have a greater knowledge of exposure to market, credit and operational risk,
which means availing of advanced techniques that facilitate their identification and
quantification, bearing in mind aspects such as the correlations produced between
the risks themselves.
To develop a consistent, homogenous management framework of all risks regardless
of the product traded.
To manage the risks by transferring them to venture capital, the last resource at the
disposal of each business area.
To act as support for the business areas, giving them a greater knowledge of the
profit/risk ratio.
To integrate the analysis of the market and credit risk derived from the positions
maintained in the market areas in one single risks platform.
IV/117
Market risk in the year 2001
The joint risk of the different market units, in terms of daily VaR with a confidence level of
99%, was 26,035 thousand euros at 31 December 2001.
Market risk by unit
2001
Market
59,9%
Sala Madrid
41,9%
External Network
18,0%
Banks in Latin America
39,5%
Others
0,6%
TOTAL
100,0%
The risk was centred above all in the Liquid Assets of Madrid and in the external network.
The risk of the market units of the banks in Latin America represented 39% of the total,
although none of these exceeded 10.1 million euros, which represented 24% of the VaR
Total of the different units by the close of 2001.
Profile of market risk
2001
Interest risk
67%
Market risk
14%
Exchange rate risk
10%
Stock exchange risk
9%
TOTAL
100,0%
The majority of the market risk was derived from the possible variations in the interest
rates (67% of the total at 31 December 2001), and the unpredictability risk of optional
products was the second most important factor at 14%. The exchange rate and stock
exchange risks represented 10% and 9% of the total risk, respectively.
Market risk
Daily VAR
2001
Interest
Exchange
Variable income
Vega
TOTAL RISK (*)
20
3
3
4
26
Average
19
5
4
4
24
Maximum
26
8
7
5
30
Minimum
14
1
1
2
18
(*) The total risk is lower than the Total risks by factors due to the diversification effect of the positions and the correlation that exists between the different factors
considered.
Despite the intense activity in the markets that took place in 2001, which was centred
round sharp drops in stock exchanges securities and increases in the implicit
unpredictability of the options over variable income and the interest rates of the euro and
the dollar, no significant losses were recorded as a result of this in the BBVA liquid assets
thanks to its conservative positioning in the products affected by those risk factors. In
addition, the sharp drops in the short-term interest rates in euros and dollars, together with
the considerable activity regarding distribution to clients, made it possible for this business
to achieve good results.
IV/118
Evolution of market risk (in thousands of euros)
20.000
40.000
jan
feb
mar
apr
may
jun
jul
aug
sep
oct
nov
dec
2001
The average risk of the market units during the year was 24 million euros, and a maximum
and minimum of 30 and 18 million euros, respectively.
Unit
BBVA Market Areas
Mexico
Argentina
Venezuela
Brazil
Rest
CONSUMPTION
%
CONSUMPTION
REMAINDER
40.510
18.242
6.504 75
43
44
4.910
17.310
8.009
1.594
23.200
10.233
4.649
3.724
7.936
55
65
37
2.561
2.405
2.912
2.087
1.320
5.024
LIMIT
As included in the policies and procedures manual, the Standing Executive Committee
annually establishes a limit on market risk for each of the Group’s liquid assets. The chart
below reflects how these limits, which increased an average of 51%, are used.
Average limit consumption year 2001 (thousands of euros)
- Principal business units CONSUMPTION
REMAINDER
BBVA Market Areas
M exico
A rgentina
Venezuela
B razil
Rest
1 5.000
3 0.000
In accordance with the abovementioned model, the backtesting verification, which
compares the actual losses with the maximum losses predicted by the risks system used
IV/119
by the BBVA Group, placed the internal model, according to 2001 data, in the same area
of acceptance and with a confidence level of 99%.
Backtesting BBVA Group
-50.000
-40.000
-30.000
-20.000
-10.000
0
+10.000
+20.000
+30.000
+40.000
+50.000
jfmamjjasond
In thousands of euros
Daily VaR
Loss
Profit
Interest and exchange rate structural risk
The interest rate structural risk refers to the impact that variations in the interest rates may
have on the gross margin and on the economic value of the unit.
In the BBVA Group this double approach is taken into account, as, on the one hand, from
the results perspective, the measurements calculate the impact that the changes in the
interest rates have on the gross margin projected over a time period of 12 months, and on
the other hand, from the economic value perspective, the sensibility analysis refers to the
impact that the changes in the interest rates have on the current value of all future flows.
The measurement model developed in BBVA dynamically projects the risk positions and
their repreciation interest rates. In addition, the model incorporates the growth plan
planned by the Bank in equity mass, as well as certain prepayment suppositions regarding
loans. On the hand, another point considered is the behaviour of certain accounts, which
do not have explicit maturity, and periodic verifications are carried out to adapt the model
to the market conditions and obtain, in this way, a measure of the risk in accordance with
the actual behaviour of the equity mass and derived products.
In BBVA, management of the interest rate risk corresponds to the Assets and Liabilities
Committee, which establishes the policies for managing the balance sheet and proposes
more suitable coverage strategies to mitigate the negative impact of the interest rates, on
both the financial margin and on the economic value. This Committee meets on a monthly
basis, unless there are exceptional market conditions.
IV/120
The Standing Executive Committee also employs this double approach regarding the
sensitivity of the gross margin and economic value when authorising BBVA’s limits on
interest rate risk. In accordance with this authorisation, there is a limit to the sensitivity of
the gross margin in the face of variations of over 200 basic points in the market interest
rates.
In the same way, alterations in the economic value should not go over a certain
percentage of the base capital.
As can be seen in the following chart, average use of the limits was moderate.
Interest rate structural risk.
Average consumption of limits
Limits-impact
2001
Over Economic value
42%
Over Gross margin
27%
The gaps chart that can be found underneath (data at 31 December 2001): Sensitivity of
the consolidated balance sheet in euros (Interest rate structural risk), reflects the equity
mass sensitive to the variations in interest rates, differentiated by types of market: money,
credit and fixed income in the assets, and money market, debits to clients and securities
in the liabilities. These equity masses, grouped together in time sections defined in
accordance with their maturity dates and repreciation, determine the gaps in the products
within the balance sheet (on balance sheet) which, together with the gaps generated by
derived products (off balance sheet) taken as coverage for the balance sheet risk, form
the total gaps of the balance sheet (banking book) of BBVA.
Sensitivity of the consolidated balance sheet in euros* (Interest rate structural risk)
Balance
ASSETS
Money market
Loan investment
Rest of sensitive assets
TOTAL SENSITIVE ASSETS
1–6
months
6 –12
months
1–3
years
3 – 10
years
More than
10 years
16.433
86.479
21.539
-22.457
101.994
15.327
44.756
1.385
-21.404
40.064
1.042
23.311
517
–445
24.425
63
11.165
12.114
-234
23.108
1
5.924
5.288
–296
10.917
n.s.
1.322
2.236
-78
3.480
2.384
34.075
19.942
93.395
2.159
3.217
7.442
43.676
102
2.974
1.941
5.260
50
30.803
2.253
5.277
72
n.s.
7.918
38.793
389
389
GAPS ON BALANCE SHEET
8.599
-3.612
19.165
17.831
-27.876
3.091
GAPS OFF BALANCE SHEET
-2.899
-11.610
1.023
1.296
6.016
376
5.700
-15.222
20.188
19.127
-21.860
3.467
LIABILITIES
Money market
Debits to clients 71.069
Securities
TOTAL SENSITIVE LIABILITIES
TOTAL GAPS
* Not including liquid assets
IV/121
Along with calculating the sensitivity of the economic value, and as a basic reference
index of this sensitivity, the average duration of the balance sheet as well as that of the
different masses that compose this are calculated. The average duration of shareholders’
equity is very short. As a result of the short duration of the balance sheet, and faced with
increases of 100 basic points, the sensitivity of BBVA’s average economic value was less
than 2% of the base capital.
In addition, the balance sheet in euros is subjected to a process of scenario simulation to
estimate the potential effect on its economic value, in the face of non-parallel variations in
the interest rates (changes in the curvature and in the slope of the curve). In accordance
with said methodology, and for a confidence level of 99.9%, average sensitivity was less
than 3.5% of the base capital.
Measurement and control of exchange rate risk is included within asset and liability
management, together with that of the interest rate risk and the liquidity risk. The
procedures used by BBVA to measure the exchange rate risk, before the financial year
1994, included unpredictability and correlations between currencies, a system coincident
with that described in Circular 12/93 of the Bank of Spain, which came into effect in 1994.
RESOURCES AND OPERATIONS IN FOREIGN CURRENCY
Variation %
2001/00
2000/99
2001
2000
1999
14.447
51.238
41.088
24.342
15.496
45.999
47.157
20.073
17.975
29.030
18.577
10.715
-6,8
11,4
-12,9
21,3
-13,8
58,5
153,9
87,3
OPERATIONS IN FOREIGN CURRENCY
% over Total Assets
131.115
42,4%
128.725
43,5%
76.297
31,9%
1,9
68,7
Credit entities
Debits to clients
Debits represented by negotiable securities
Other resources in foreign currency
28.079
85.531
6.346
3.454
14.310
39.937
59.734
26.124
3.001
12.370
29.124
34.158
13.502
2.057
6.232
-29,7
43,2
-75,7
15,1
15,7
37,1
74,9
93,5
45,9
98,5
137.720
44,5%
141.166
47,7%
85.073
35,6%
-2,4
65,9
Credit entities
Credits on clients
Other operations in foreign currency
RESOURCES IN FOREIGN CURRENCY
% over Total liabilities
Variations in exchange rates have an effect on both the equity value of the entity and on
its results, as BBVA is exposed to the exchange rate risk as a consequence of the
structural investments it carries out, which entail the denomination of determined assets in
currencies different to those in which they are financed. The Assets and Liabilities Committee
periodically evaluates the risk assumed and then decides to carry out, or not carry out, cover operations to
mitigate the negative impact of the alterations in the exchange rates. During the year 2001, this Committee
decided to carry out new operations to reduce the exposure of the profit and loss account to losses resulting
from unfavourable activity in the exchange rates.
IV/122
Liquidity Risk
Financial entities and regulatory organizations have been giving increasingly more
importance to liquidity risk management, this being the potential risks faced by said
entities, when they cannot handle their payment commitments, due to their inability to
access markets with sufficient amounts and at reasonable costs. In 2001, the Standing
Executive Committee approved new steering policies for the management of liquidity
risks, establishing several alert signals for said risks for normal daily activity.
Furthermore, a specific organizational structure was approved for the management of
liquidity risks, assuming that the alert signals mentioned in the previous paragraph are
activated, while establishing the Liquidity Committees and, when appropriate, the
Emergency Committee, to take preventive measures to deal with those situations that
may affect the ability to meet the payment schedule when faced with unforeseen events.
At the same time the interbanking operation in Europe was centralized (Euro and Dollar).
Measuring liquidity and, therefore, identifying its risk profile is done daily through the
liquidity status, which contains the basic liquidity (flows foreseen for a given time period),
as well as the lines available to meet the payment obligations. Within the lines available,
the liquid assets portfolio constitutes an essential element for the management of the
Bank’s liquidity, especially when dealing with the activity carried out in markets, which
provides the full ability to transfer them, either through the market itself or through
transactions with the respective Central Bank.
To round out the aforementioned plans, the basic aspects of the Liquidity Contingency
Plan was developed, establishing certain premises related to the performance of assets,
liabilities and other contingent flows in given scenarios, considered to be very unlikely.
Said plan considers the indicators that will activate the implementation of measures to be
taken for each case, and the role to be played by each of the Group’s departments.
Finally, it must be pointed out the important role played by the Assets and Liabilities
Committees of the parent company and its subsidiaries in liquidity management, where
the mid-term liquidity forecasts for the main currencies (12 months) are analysed in detail,
as well as the liquidity gaps per business area (credit and market gaps) and its financing,
forming the issuing policies in their different modalities (EMTN, issuance of mortgage
bonds, securitisation of assets and capital instruments), according to the market
conditions and keeping in mind the objective to maintain an adequate diversification.
IV/123
4.4.6. Operational Risks Management
In 2001, the Operational Risks Global Management Unit was very busy, working on two
fronts. On one hand, the implementation process regarding the corporate management
tools (Ev-Ro and TransVaR) and, on the other, it worked intensely on the new capital
agreement project proposed by the Basle Committee. In 2002 this project will become a
definitive text, which will set the groundwork for the minimum capital provision for
operational risks which the various local regulators, the Bank of Spain being among them,
will adopt in 2005 for all the banks and savings banks located in Spain.
The new Basle agreement aims to create, for the first time in history, a capital allowance
for operational risks. The exact amount has not been determined, but it is known that it will
depend on the management model used by each entity. There are three possibilities
(basic, intermediate and advanced level, and the capital allowance required will be
proportionately reduced the higher the level of the management model used).
The management tools developed by BBVA, Ev-Ro and TransVaR, completed with a
database log of losses caused by operational risks, are in line with the qualification criteria
proposed by the Basle Committee to reach the advanced level. All the steps taken in 2001
are directed toward the new regulation.
The objective of the Operational Risks Global Management Unit is to implement a
management framework within the Group, which makes it possible to identify, quantify
and track these risks, in order to finally minimize them.
Another of the Group’s main objectives is to reach the highest possible levels of the new
Basle agreement and, therefore, reduce the minimum regulatory capital required.
To do so, we are following an ambitious Ev- Ro and TransVaR tool implementation
programme. The former, consisting of a methodology for identifying and quantifying
operational risks, we used in Investment Banking, Finanzia, Uno-e and Assets
Administration. The latter, which consists of an advanced tracking tool based on the use
of risks indicators, was rolled out in Investment Banking and Uno-e.
In 2001, several advances were made in the implementation of the corporate operational
risks management model in America, creating ad-hoc units and appointing people in
charge of all the banks in Latin America. This will guarantee the use of said tools,
evaluation criteria and tracking of this type of risk in the entire Group.
At BBVA we continue to internally define operational risks as those that cannot be
catalogued as credit or market risk; therefore, it must be considered a loose definition.
The Basle Committee has established a more restricted definition: “operational risks is
that which may cause losses as the result of human error, failures or inadequate internal
processes, system failures, or due to external factors”. The definition relates operational
risks with their causes: human resources processes, systems and external factors.
IV/124
Internally, we distinguish between various types of operational risks:
P
rocesses: risks due to operational errors, deficiencies in controls or documentation.
F
rauds: risks stemming from the criminal or unauthorized activities.
T
echnological: occurrences related to the loss of continuity in activity due to
technological failure or that related to computer applications.
H
uman Resources: stemming from human resources policies, amongst which the risks
of losing talent stand out.
B
usiness practices: risk of bankruptcy caused by the fact that products sold due not
satisfy the customers’ expectations.
E
xternal: risk of disasters (natural or provoked), from contracts breached by providers
or due to changes in the regulatory framework in which we undertake our banking
activities.
The operational risk management tools have a two-fold use for the Group. On one hand,
they are used to know the degree to which each business area is exposed to this type of
risk and, therefore, they help to make appropriate mitigation plans, as well as tracking of
their effectiveness.
Investment Banking
Distribution of Operational Risk
By Units
2001
Madrid Treasury
Capital market
Company securities
New York Treasury
London Treasury
Milan Treasury
42%
23%
14%
8%
7%
6%
TOTAL
100%
By types of risk
Processes
Fraud
Technologies
Human Resources
Commercial Practices
External
TOTAL
2001
60%
12%
9%
12%
3%
4%
100%
IV/125
4.5. Conditioning Factors
4.5.1. Degree of seasonality in the COMPANY’S business
The COMPANY undertakes its business in a stable manner. Therefore, BBVA’s banking
business is not especially subject to quarterly variations, as can be seen in the following
graph, which shows the trend of BBVA’s quarterly results in 2001-2000.
Closed quarters (In millions of euros)
Gross margin
Basic margin
Ordinary margin
OPERATING PROFIT
INCOME BEFORE
TAX
Consolidated profit
Profit attributable to Group
IV T 01
III T 01
II T 01
I T 01
IV T 00
III T 00
II T 00
I T 00
2.307
3.328
3.387
1.430
127
2.249
3.265
3.469
1.514
1.031
2.187
3.276
3.457
1.458
1.329
2.081
2.993
3.039
1.197
1.147
2.270
3.205
3.220
1.182
1.090
1.769
2.710
3.008
1.145
983
1.506
2.248
2.455
993
955
1.450
2.201
2.460
1.056
848
485
547
722
536
944
727
858
553
854
666
770
534
705
586
585
446
4.5.2. COMPANY’S dependency on patents, brands and other external factors
The activity, due to its nature, does not depend on patents, brands, technical assistance,
exclusive contracts, etc, in order to be carried out. Nevertheless, it is subject to the
regulations that govern banking activities. In this sense, it undertakes its activity under the
supervision of the Bank of Spain and currently it must comply with cash and solvency
ratios.
Brand names
The unification of all the networks under the single BBVA brand name, well known only a
few months after being launched, the rapid integration of their systems into a single
platform, the integration of 2,200 offices of the retail banking network and the
implementation of the new corporate image in 3,600 offices in Spain, the integration of the
global businesses and the reorganization of the company, with more than 500 companies
analysed, the integration of human resources and the restructuring of the buildings, with
more than 100,000 meters freed up in three years, etc., are some of the most noteworthy
features of the BBVA Group’s integration process. Consequently, 2001 represented the
culmination of two processes of enormous scope: the integration of commercial networks
in Spain and Mexico.
The complex integration process in Spain was considered closed in February, in
less than 14 months. Furthermore, the choice of technological platform was set after
only 34 days and the single brand in 90 days. The optimisation of the personnel and
the network of offices or the program to free up space, along with a strict restructuring
of the company, concluded the integration process.
IV/126
In the fourth quarter of the year, BBVA also finalized another integration process in
Mexico where, two months ahead of schedule, the Group integrated the operation of
the former Bancomer, BBV Probursa and Promex into a single technological platform.
In total, the process affected 2,354 offices and resulted in the 25% reduction of the
personnel. The integration of BBVA Bancomer closed the chapter regarding the
implementation of infrastructures in the Group’s Latin American banking operations.
The joint technological platform and the single model and brand image are two basic
elements in BBVA’s future approach.
2001 also meant the consolidation of the Group’s transformation process through the
Programa Transform@. The implementation and development of initiatives such as Ips@
plan for the coordination of client access channels, the emigr@ plan for the migration of
inefficient transactions towards alternative channels or the Office 2000 to increase the
network’s commercial capacity, made evident BBVA’s progress towards the configuration
of truly multi-channel banking.
At the end of 2001 BBVA gave itself a more agile organizational structure, based on six
main business areas:
Spain and Portuguese Retail Banking: includes business with private individuals
and small and medium businesses.
Corporate and Investment Banking.
BBVA Bancomer, which covers Mexico.
American Retail Banking: rest of America.
Asset Management and Private Banking: joins together the activities related to the
administration of assets, pensions and insurance.
Industrial and Infittings Group, which managed, at the close of 2001, a portfolio of
affiliates, with a market value of over 9,500 million euros and implicit surpluses of
2,600 million.
Bank of Spain Circular 4/2001
On 24 September 2001 the Bank of Spain published a new Circular 4/2001 (which
derogates no. 1/1997), regulating the information on balances that make up the base of
the calculations for the contributions to funds that guarantee deposits and the scope of the
amounts guaranteed.
The main addition is that they are integrated into said base and, therefore, are included
with those that can be guaranteed, the amounts of the securities deposits and other
financial instruments, as well as the deposits received for providing investment services
and the accounts representative of the custodial activity.
In the Ministerial Order ECO/318/2002 the Ministry of Economy decided to reduce, based
on the proposal by the Bank of Spain, the contributions to the Guaranteed Deposits Fund
of the Banking Entities of the 1 (one) per thousand to 0.6 per thousand for the
contributions disbursed as of 1 January, 2002.
IV/127
The minimum reserve ratio (cash ratio)
The minimum reserve ratio is calculated according to that which is stipulated in Regulation
(CE) nº 2818/1998, of the 1 December 1998, from the European Central Bank, according
to said regulation the ratio is set at 2% for computable liabilities.
Solvency ratio
Finally the risk concession policy and, in general, the one for the investment of all kinds
banking is directly influenced by the existence of a regulation regarding minimum
resources needed by credit entities.
The solvency ratio is regulated by “Law 13/1992 of the 1 June, regarding Personal
Resources and supervision of a consolidated of the Financial Entities”, which went into
effect, in general, on 1 January 1993 and undertaken by Royal Decree 1343/1992, on 6
November, the Ministerial Order of December 29th 1992 and the Bank of Spain report
5/93.
The ratio is defined as the relation between personal computable resources and the sum
of the asset balances, commitments and other order accounts, net provisions,
amortizations and compensating balances and net currency positions, considered as
regards the counterpart and the guarantees and characteristics of the assets and risks
stemming from the negotiation portfolio, which cannot be less than 8%.
On 31 December 2001, the BBVA Group exceeded the minimum solvency ratio
requirements required by Report 5/1993, on March 26th, which is covered by Law
13/1992, on 1 June, concerning personal resources and supervision on a consolidated
base of the Financial Entities.
Likewise, the BBVA Group complied, on 31 December, 2001, with the limits established in
the aforementioned Report on tangible net assets, on the combined risks of a single
person or economic group and on currency positions.
4.5.3. Research and development policy for new products and processes
Depending on the sector, the BBVA's investments in commercial research and
development focus on two basic points. The first is to optimise the number of products
and services available to the client. The second is to increase levels of productivity using
a series of computerized organizational systems. This topic is discussed in more detail in
epigraph 4.7.
4.5.4. Litigation and Arbitration
By order of the Central Court of First Instance nº 5 of the Spanish High Court,
Proceedings 161/2000 were initiated, of which Banco Bilbao Vizcaya, S.A. was informed
on July 13, 2001. These Proceedings investigate the possible involvement of certain
employees of BBVA Privanza Banco in alleged crimes against Government tax
authorities, as a consequence of the commercialisation of Financial Products of BBVA
Privanza Jersey, as well as a suspected tax offence by Banco Bilbao Vizcaya Argentaria,
S.A., for not including in its Balance Sheets the Net Equity of Sociedad Canal Trust
Company, a wholly owned subsidiary of BBVA Privanza Jersey.
Likewise on March 1, 2002, it was communicated to Banco Bilbao Vizcaya Argentaria,
S.A. that under the framework of these same Proceedings, the investigation had been
amplified to include the crimes of Money Laundering and Bribery in the acquisitions
realized in Peru (Banco Continental), Colombia (Banco Ganadero) and Mexico (Probursa)
and instrumented through BBVIIC Puerto Rico.
IV/128
Said investigation was started as a result of declarations made by a witness, an ex-employee
of the bank in Puerto Rico, who was sentenced by the North American Judicial Authorities for
embezzlement of Bank funds, and who made the accusations about the activities mentioned
above.
BBVA, S.A. has started to present all the documentation requested by the Court, and has not
found, in its judgement, any evidence in the documentation provided or analysed, that could
justify the accusation.
In any case, in the ruling issued by the Court on April 25, 2002 the Court decided not to
charge any person for actions undertaken during the acquisitions realized by BBVA in Peru,
Colombia, and Mexico, instrumented through BBVIIC Puerto Rico, until the documentation
presented by the Bank is analysed and the documentation and information requested by the
various Investigation Teams that have been sent to different countries. This ruling was ratified
in the decision of May 24, 2002, in which the preliminary appeal to the Financial Ministry, of
the decision made on 25 April was resolved.
Finally, by virtue of the decision of April 9, 2002, the investigation was widened, in said
Proceedings, to include the events referred to in the report produced during Bank of Spain’s
Investigation of BBVA, S.A., that relate to the 37,343 million pesetas (approximately 225
million euros) of extraordinary deposits recorded in the year 2000, at which point the director
of the Bank of Spain was requested to suspend the sanctioning procedures initiated against
BBVA S.A. and 24 of its former Board Members and Directors.
The above mentioned Ruling of April 25, 2002, accused the former Board Members and
Directors of the Bank for the events documented in the report by the Bank of Spain. In Ruling
of May 7, 2002 it was decided that, in order to simplify and streamline the proceedings, the
investigation, proceedings, and trials for the alleged actions would be divided and given a new
Preliminary Proceedings number; on 7 June, these new proceedings were given the number
251/02-D.
In June of 2002, the Court decided to separate the proceedings and gave the case regarding
BBV-Ganadero bank and Mercantile Probursa bank, the Proceedings number 253/02. The
allegations involving BBVIIC Puerto Rico and BBV Holding Continental de Peru were given
case number 252/02 for the investigation and the separate trial.
The report of the Bank of Spain can be summarized as follows :
Banco Bilbao Vizcaya Argentaria reported extraordinary results for the year 2000, with
deposits totalling 37,343 million pesetas (approximately 225 million euros)
These results correspond to the integration in the Profit and Loss Account of overseas assets,
that while belonging to the Bank were not reflected in its account balance, and that date back
to 1987 when Banco Vizcaya, S.A.(B.V.) commissioned UBS to create a financial structure
that would allow them to buy their own shares from third parties who were trying to acquire
important shareholding positions in the bank. To this end, they created four companies
(Abreveux, Ballintrae, Coriander, and Darjon) in Jersey. These companies bought shares in
Banco Vizcaya, S.A. with financing from UBS and SBS. In November 30, 1988, after the
merger between Banco Bilbao, S.A. and Banco Vizcaya, S.A., these companies owned
4,494.031 shares, that represented 4.01% of the capital of Banco Bilbao Vizcaya S.A.
Between this date and December of 1991 these companies began selling the shares in order
to meet interest payments and amortization of the financing. Once paid, at the beginning of
1992, the liquidation of the above companies started and 1,473.5 million pesetas
(approximately 9 million euros) and 2,465,000 shares of Banco Bilbao Vizcaya, S.A. were
transferred to Amelan Foundation (Candiac Foundation until February 1995), a foundation
based in Vaduz (Liechtenstein), of which Banco Bilbao Vizcaya,S.A. was a beneficiary, and
which was created in 1991 for the purpose of receiving the mentioned amount and shares.
On May 7, 1992, Amelan Foundation transferred to Almacenes Generales de Depósito,a
company wholly owned by BBVA, all the shares of Banco Bilbao Vizcaya, S.A. it had received
(2,465,000),and this entity, on this same date, transferred all the shares to General Electric
Capital. This transaction earned Amelan 7,115.2 million pesetas (approximately 42.76 million
euros) in commissions.
IV/129
A From this moment until June of 1999 the equity of Amelan Foundation was managed and
invested in different currencies, trading in stocks and derivatives on interest rates. Since June
of 1999 and until its liquidation at the end of 2000, UBS has managed foundation under a
contract from Discretional Portfolio Management. During this time and in conjunction with the
management of the equity there were at least three notable inflows and one notable outflow of
capital :
a) Two of the inflows relate to the reception of assets originating from Banco Vizcaya, S.A. that
operated outside of the accounting and control of the Bank ; In December 1996 and originating
from UBS Zurich, 29,519489 German Marks and 6,160,114 U.S. dollars were transferred from
an account opened in UBS Zurich by Banco Vizcaya, S.A in 1950. These funds were, from all
appearances, from currency transactions executed in Tangiers in the post-war period.
Likewise, in September of 1997 and in March of 1998 there were two inflows for the sums of
158,493 and 1,161,117 Swiss Francs, originating from the liquidation of Sociedad
Soparetchimie, S.A. based in Geneva. This company was acquired by Banco Vizcaya,S.A. in
1968 for 3,461,949 pesetas (20.81 million euros) and that was used to deposit the profits
generated by the Tangier branch of Banco Vizcaya, S.A. which, due to Moroccan legislation,
could not be repatriated at that point in time.
b) The third inflow occurred in April of 2000 and was for 123,358,685 U.S. dollars originating from
the liquidation of trust T.532 and of the company Sharington Company, Inc., to which we will
later refer.
c) Regarding the outflow, there was a payment of 47,630,758 U.S. dollars to Crédit Suisse
Financial Products on June 28, 1995 for losses incurred by Banco Bilbao Vizcaya, S.A. in
three cash management operations.
In regards to the aforementioned trust T. 532, it was created in October of 1998 to receive the profits that had
been made as a result of trading in shares of Argentaria by Banco Bilbao Vizcaya, S.A. between 1996 and
1998. The profits of these trading operations, 134,447,030 U.S. dollars were not noted in the accounting
records of the bank and deposited in the accounts of Sharington Company Inc., which was the company that
managed the trust T. 532 in Jersey and whose beneficiary was Banco Bilbao Vizcaya, S.A. Between
November of 1998 and April of 2000 there were three significant charges in the account of Sharington
Company Inc.(in addition to the final transfer to Amelan Foundation) : 525,586 U.S. dollars on December 1,
1998, and 1,000,000 U.S. dollars on July 7, 1999. Both charges correspond to money transfers made to
Concertina N.V. that were for the purpose of contributing to Venezuelan election campaigns. The third charge
was for 19,267,721 U.S. dollars that was transferred on March 27, 2000 to American Life Insurance Company
for the purpose of creating 22 separate accounts for 22 former board members and advisors of Banco Bilbao
Vizcaya.
April 2000 saw the liquidation of the trust T. 532 and Sharington Company Inc., thereby
transferring a balance of 123,358, 685 dollars to the Amelan Foundation.
At the end of 2000, Banco Bilbao Vizcaya Argentaria, S.A. took the initiative of properly
recording these assets and consequently proceeded with the liquidation of the Amelan
Foundation and the resulting balance of the same, equalling 203.46 million euros, was
deposited in the bank. Likewise, 21.47 million euros corresponding to return the amount of the
funds constituted in the America Life Insurance Company, paying the tax on the companies
corresponding to the 2000 fiscal year for said deposits in the concept of extraordinary results.
Furthermore, as agreed on 22 May 2002, the Spanish Securities and Market Commission
(CNMV) instituted proceedings to penalize BBVA, S.A. for a possible infraction of the
Securities Market Law (covered in article 99 ñ) of the SML), for the same events that BBVA,
S.A., of its own volition, brought to the attention of the Bank of Spain. The CNMV has
petitioned the opinion of the Ruling Judge as to whether or not the move to suspend the
inquiry until the criminal proceedings were completed, but no final decision had been made by
the date this prospectus was presented.
Neither the inquiry initiated by Bank of Spain, nor those brought by the CNMV, have
presented, as of the date of this report, charges, and therefore any assessment would be
premature. Nevertheless, in light of the events and circumstances surrounding the
proceedings and the stance taken by BBVA regarding the same, it is not expected, in the
moment in which said proceedings are taken up again, once the penal process has been
completed, to have a significant material effect on the Entity.
Likewise, the aforementioned proceedings are still in the final phase of the investigative stage,
without any charges having been formally made, but it is foreseen that it will not have any
significant material effects on the Entity.
IV/130
4.5.5. Interruptions in COMPANY activity that may have, or have had in the recent
past, an important effect on the financial situation.
There have been no unusual circumstances interrupting the activities carried out by Banco
Bilbao Vizcaya Argentaria, S.A..
4.6.
LABOUR INFORMATION
4.6.1. Staff
The average total number of employees of the BBVA Group during the financial years
2001, 2000 and 1999, distributed into professional groups, was as follows:
2001
SENIOR MANAGEMENT
TECHNICIANS
ADMINISTRATIVE STAFF
GENERAL SERVICES
FOREIGN
SUBTOTAL
OTHER COMPANIES
TOTAL FOR CONSOLIDATED GROUP
2000
1999
Variation %
2001/00
2000/99
169
154
130
9,7
18,5
20.686
11.303
174
69.383
21.295
12.421
232
62.527
20.686
15.158
297
52.050
-6,0
-9,0
-25,0
12,1
2,9
-18,1
-21,9
20,1
101.715
96.629
88.321
5,3
9,4
1.006
1.320
2.039
-23,8
-35,3
102.721
97.949
90.360
4,9
8,4
The average total number of employees of the BBVA Group during the financial year 2001
was 102,721 employees, which is a 4.9% increase on the average of the previous year.
This variation can be basically attributed to the acquisition of the Bancomer Group
(Mexico) during the second quarter of 2000.
The average number of staff in Spain dropped 7.8%.
Personnel costs in the BBVA Group increased 12.4% in 2001, reaching 4,243 million
euros. Nevertheless, if we exclude Latin America, the variation drops to 1.3%. The
increase was a result of the strong impetus given to the Variable Yield programmes,
linked to the extraordinary securing of objectives. If this effect had not been included in the
calculation, the expenditure account (w/o America) would have closed showing a
decrease of over 1%.
IV/131
Underneath is a chart with the breakdown of personnel costs at the close of the last three
years. The data are expressed in millions of euro.
2001
WAGES AND SALARIES
SOCIAL SECURITY
PROVISIONS TO INTERNAL PENSION FUNDS
PROVISIONS TO EXTERNAL PENSION FUNDS
OTHER EXPENSES
TOTAL PERSONNEL EXPENSES
PERSONNEL EXPENSES /FINANCIAL PRODUCTS (%)
2000
1999
Variation %
2001/00
2000/99
18,7
3.211
2.854
2.405
12,5
530
490
452
8,2
8,4
32
25
64
28,0
-60,9
90
85
24
5,9
254,2
380
320
262
18,8
22,1
4.243
3.774
3.207
12,4
17,7
19,63
19,53
22,44
The improvement in the ratio of personnel expenses to financial products was due to the
integration of Bancomer in 2000, and to reduction in staff carried out in Spain and in the
rest of the units in America, with the exception of Mexico, obviously.
4.6.2. Working conditions
The bank’s working conditions are determined by the specifications in the Collective
Agreement of the Spanish bank.
The last Collective Agreement was signed on 22 October 1999, between the Trade
Unions and the representatives of the Spanish Private Banking Association. Ministry of
Work settlement dated 5 November 1999 published in the Official State Gazette, dated 26
November 1999.
This agreement is valid from 1 January 1999 to 31 December 2002 and it must be applied
to all labour relations between private banking and the people working in this.
In accordance with the Collective Agreement currently in effect, Spanish banking is
obliged to complement the Social Security payments its employees, or their rightful heirs,
receive on retirement (except in the case of staff hired after 8 March 1980), permanent
incapacity, widowhood or orphanage.
Since the financial year 2000, and by virtue of the collective agreement on the Social
Prevision System of 14 November 2000, all those commitments corresponding to the
active and passive personnel of the Group’s Spanish banks have been externalised and
are carried out through external pension plans and insurance contracts. This Social
Prevision System covers all employees, including those hired after 8 March 1980. It also
includes the commitments and obligations contracted as regards pensions corresponding
to the ex-members of the Board of Directors of the Bank that have executive functions, for
the amount of 83 million euros at 31 December 2001.
IV/132
4.6.3. Pension commitments
Circular 5/2000
Circular 5/2000, dated 19 September, of the Bank of Spain modifies Circular 4/1991 and
changes the form in which coverage for the pension commitments of credit entities is
accounted, adapting to the Royal Decree 1588/1999, dated 15 October, which approves
the Regulation regarding the implementation of the pension commitments of companies
with their workers.
Said Regulation governs the way in which these commitments can be covered, their
valuation criteria, and the regime to be applied to any coverage deficit that may exist when
this regulation comes into effect.
Internal pension funds
Companies in Spain
During the financial years 2001 and 2000, the Group offered specific employees the
possibility of early retirement before they had reached the retirement age established in
the Collective Agreement currently in effect. This offer was accepted by 1,888 and 2,807
employees during the financial years 2001 and 2000, respectively. The total cost of these
agreements came to 732 and 808 million euros in 2001 and 2000, respectively, and
included severance pay, deferred earnings and future contributions to external pensions.
The corresponding provisioning was set up to cover these commitments, taking into
account the tax impact, and this was charged to the reserves items of the consolidated
balance sheets at 31 December 2001 and 2000, based on the authorizations granted at
the corresponding General Shareholders’ Meetings and with the express authorization of
the Bank of Spain, in accordance with the provisions laid out in point 13 of the 13th
Regulation included in Circular 4/1991. The commitments corresponding to this collective,
after retirement age, are included in the Social Prevision System.
The payments pending for early retirement, including the current value of earnings and
severance pay pending payment as well as that of the future contributions to external
pension funds corresponding to the personnel that accepted early retirement during the
financial year 2001 and during previous financial years, until the date of their retirement,
reached 1,715 million euros (1,286 million euros at 31 December 2000), once the
payments effected during the financial year 2001 for the amount of 346 million euros (236
million euros during the financial year 2000) had been deducted and were reflected under
the epigraph “Provisions for risks and charges - Pension fund” of the consolidated balance
sheets.
Apart from the abovementioned funds, there are other completely internal pension funds
amounting to 21 million euros.
Foreign Companies
Specific foreign companies belonging to the Group have pension commitments and other
commitments with their personnel, and their accrued liability, for the amount of 622 and
517 million euros at 31 December 2001 and 2000, respectively, was included under the
epigraph “Provisions for risks and charges – Pension fund” of the consolidated balance
sheets. Of these amounts, 556 and 469 million euros at 31 December 2001 and 2000,
respectively, corresponded to the funds constituted by BBVA Bancomer, S.A. to cover
accrued pension commitments and commitments regarding seniority benefits on the date
of retirement. The actuarial studies used to evaluate this were carried out individually and
quantified following the method of the projected credit unit, to which the updating rate,
death rate and disability rate authorised by the National Banking Committee of Mexico
had been previously applied. In 2001, net charges were applied to the profit and loss
account for the amount of 25 million euros corresponding to the normal accrued cost
during the financial year.
IV/133
External pension funds
As indicated above, the Social Prevision System included defined contribution
commitments, the amounts of which were determined, in accordance with each case, as a
percentage of certain retributive concepts and/or a pre-set annual amount, and defined
provision commitments covered by the insurance contracts. To evaluate these last
commitments, at 31 December 2001 and 2000, in accordance with the externalising
contracts signed between the Spanish banks in the Group and the insurance companies,
the latter used PEM/F 2000 death rate tables (GRM/F 95 for insurance contracts between
External Pension Plans and the insurance companies) and updating rates lower than the
internal profitability rates of the investments assigned as coverage.
A summary of the situation of the commitments covered by external pension funds at 31
December 2001 and 2000 can be found underneath:
2001
2000
1999
Variation %
2001/00
2000/99
Commitments for pensions generated (*)
In external pension funds 378 361 -- 4,7 With insurance contracts:
- With insurance companies linked to the Group
- With insurance companies not linked to the Group
1.342
2.039
--
-34,2
-
548
-
-
-
-
2.268
2.400
--
-5,5
-
507
519
--
-2,3
-
Accrued risks for pensions not generated
In external pension funds
- Collectives with full coverage of accrued and nonaccrued risks (*)
- Rest of collectives (**)
With insurance contracts with insurance companies
Linked to the Group (*)
1.180
1.118
1.118
5,5
-
1.687
1.637
1.118
3,1
46,5
258
196
--
31,6
-
1.945
1.833
1.118
6,1
64,0
4.213
4.233
1.118
-0,5
278,6
(*) Commitments implemented in defined provisions systems
(**)Commitments implemented in defined contribution systems
IV/134
Differences in pension funds
As a consequence of the externalisation process, which included the use of new
evaluation hypotheses, it became clear that there were certain differences, which
represented the current value of the contributions to the external pension funds that were
still pending for the pensions risk accrued at 31 December 2000. These amounts were
calculated using updating rates of 3.15% and 5.64% in the case of insurance contracts
and external pension plans, respectively. The differences that arose initially were recorded
and charged to the deferred accounts and will be amortised in a maximum period of 14
years for those corresponding to external pension plans, and in a period of 9 years, for
those corresponding to insurance contracts, after the financial year 2000 inclusive, in
accordance the provisions laid down in Circular 5/2000 and in accordance with the
provisional regime stipulated in the regulations in effect. A the same time, the initial
differences are charged to the item "Debits to clients" in the liabilities of the consolidated
balance sheets, decreasing the balance as a result of the payments carried out. For the
purposes of presentation, the balances for both concepts at 31 December 2001 were
included by net amount in the item “Other assets” of the consolidated balance sheet on
said date. Activity for the financial year 2001 can be found underneath:
CONCEPTS (In millions of euros)
Other assets - Differences in the pension fund
Record of differences
External pension plan
Insurance contracts
Less:
Amortisation carried out during the financial year 2000
Insurance contracts
Amortisation carried out during the financial year 2001
Insurance contracts
Balance sheet at 31 December 2001
Debits to clients - Deferred contributions
Record of differences
Transfer from Pensioners’ Fund
Plus:
Apportionable cost from interest:
Of the financial year 2000
Of the financial year 2001
Less:
Payments made:
During the financial year 2000
Reduction for assignation of investments:
Balance sheet at 31 December 2001
Net balance at 31 December 2001
Pensions
generated
Risks accrued for
pensions not
generated
Total
–
254
254
705
154
859
705
408
1.113
-21
-21
-63
-24
-87
-63
-45
-108
-26
-26
207
-56
-43
-99
673
-56
-69
-125
880
-254
-34
-288
-859
-859
-1.113
-34
-1.147
-10
-10
–30
-30
-40
-40
8
30
38
87
631
718
95
661
756
3
3
-257
-50
16
16
–155
518
19
19
-412
468
IV/135
Profit and loss account
The charges made to the profit and loss account during the financial years 2000 and 2001
to cover commitments are indicated below:
CONCEPT (In millions of euros)
Detail by concepts
Apportionable cost for interest of deferred contributions
Expenses from apportionment carried out during the financial year by the Spanish banks of the Group to
external pension funds and insurance companies:
. From accrued income of the financial year
. Extraordinary
Expenses from apportionment carried out the rest of the entities in the Group
Expenses from provisions to internal pension funds of the Spanish banks of the Group
Expenses from provisions to internal pension funds of the rest of the entities in the Group
Detail by accounts
Assimilated interest and charges: From credits
Assimilated interest and charges: Cost apportionable to constituted pension funds
General administration costs: Personnel:
. Provisions to the internal pension funds
. Contributions to the external pension funds
Extraordinary losses:
Extraordinary provisions to the internal pension funds, net
Other losses
2001
2000
40
-
72
86
198
18
42
33
62
92
154
23
75
22
291
274
40
42
42
32
91
25
85
n.s.
86
30
92
291
274
Lastly, one of the decisions taken at the General Shareholders’ Meeting held last 9 March
2002 was to transfer, once the legally established procedures and requirements have
been complied with, the amount of free available reserves of the Banco Bilbao Vizcaya
Argentaria, S.A. authorised by the Bank of Spain to a special fund earmarked to cover the
costs derived from early retirements carried out during the financial year 2002. All of the
above is included in the special plan designed by the Board of Directors and is in
accordance with the authorization granted by the Bank of Spain, to charge the cost
derived from this to the abovementioned voluntary reserves.
IV/136
4.6.4. Severance pay for dismissals
In accordance with the legislation currently in effect, it is mandatory to pay severance pay
to those employees who have been dismissed through no fault of their own. At the
moment, there is no plan to reduce personnel and so there is no need to create a
provision for this concept. Nevertheless, in accordance with the stipulations included in
Circular 5/2000, of the Bank of Spain, during the financial years 2001 and 2000 the Group
made provisions to an internal fund to cover, following the calendar established in said
Circular, the contractual severance pay corresponding to other dismissals additional to the
general type established by the legislation in effect. On 31 December 2001 and 2000, this
fund amounted to 20 and 26 million euros, respectively and is recorded under the
epigraph “Provisions for risks and charges – Other funds” of the consolidated balance
sheets.
4.7. INVESTMENT POLICY
4.7.1. Methodology
Prior to beginning a new investment it is necessary to carry out an in-depth study. This
study includes two different phases:
Evaluation of the company
Due diligence
In order to evaluate, the information on the country, sector and the company itself must be
analysed. Public economic information, from our studies service and from external
sources such as EIU (Economic Intelligence United), IMF (the International Monetary
Fund), etc. is used.
Underneath is an analysis of the information specific to the company, principally audited
statements and other relevant information.
All of the above is included in out evaluation models, and projections of five or six years
are carried out in the case of banks and ones of more the eight years in the case of
insurance companies.
A price for dividend discount and residual securities is obtained, and this is then checked
against the market, transactions, etc. It is assumed that this price does not accurately
reflect the value of the company analysed.
Due diligence is a review of the accounting statements, property securities, etc. and this is
normally carried out by both internal and external auditors. Apart from said evaluation of
the audited accounting statements, this review includes other aspects such as interviews
with administrators (if possible), etc.
From the conclusions made we can obtain price corrections, so that the global evaluation
is more precise.
Underneath are the details on principal investments carried out by BBVA over the last
three financial years.
IV/137
PRINCIPAL INVESTMENTS OF THE BBVA GROUP IN 1999, 2000 and 2001 (In
millions of euros)
Financial
year.
1999
Company in which the Group has a
shareholding
Accumulated
Goodwill
275
190
41,17
100,00
BBV Banco Francés, S.A.
123
-
BBV Banco Francés, S.A.
16
64,46
362
BBV Banco Ganadero, S.A.
15
59,03
253
334
135
Theoretical
book value
at 31
December
2001
Net result
187 5
137
26
270
-7
72
97
13
53,97
90
367
44
53,26
449
265
325
3,75
79
313
9
(1)
13
(1)
Autopista Concesionaria Española
159
5,36
66
96
Repsol, S.A.
452
9,54
303
1.282
Telefónica, S.A.
569
9,17
499
1.569
Iberia, Líneas Areas de España, S.A.
194
7,30
42
85
Iberdrola, S.A.
278
9,02
28
683
60
8
191
83
114
(1)
23
15
85,56
270
-
BBVA Banco Francés, S.A
59
68,20
20
133
1.504
36,60
1.317
3.956
41
116
62,64
85
265
18
278
187
Grupo Financiero BBVA Bancomer, S.A. de C.V.
Provida Pension Funds Manager (A.F.P. Provida)
55
61,90
Terra Networks, S.A.
492
1,75
Telefónica, S.A.
Iberdrola, S.A.
373
104
6,36
9,05
509
54
1.569
683
(1)
53
9,85
357
1.282
(1)
934
48,76
1.861
3.956
(1)
50
95,35 4
270
-7
Repsol-YPF, S.A.
2001
Shareholding
% Total
Provida Pension Funds Manager (A.F.P. Provida)
Consolidar Group
Banque de Credit Lyonnais, S.A.
2000
Investment
Cost
BBVA Bancomer Financial Group, S.A. de C.V.
Banco Bilbao Vizcaya Argentaria Brasil, S.A.
38
(1)-
8
100
603
35
100
- 421
10
429
100
271
323
Banca Nazionale del Lavoro, S.P.A.
398
14,80
338
554
Repsol-YPF, S.A.
33
8,34
316
1.282
(1)
Telefónica, S.A.
58
6,05
425
1.569
(1)
9
9,99
20
36
Wafabank
1
115
(1)
66
48
(1)
475
2.429
2.505
(1)
37
Note: Under the epigraph 3.7 of chapter III more information can be found regarding these investments.
(1) Consolidated Data.
Shareholding investment underwent a change in direction in the year 2001, strengthening
the Group’s reorganization. The shareholding in Banca Nazionale del Lavoro, S.p.A.,
increased slightly while positions in Repsol, Iberdrola and Finaxa all dropped slightly. The
portfolio turnover policy, once this has reached its point maturity and investments have
been equity accounted, made it advisable to carry out certain disinvestments, the most
important of which were Axa-Aurora and Bodegas y Bebidas.
In general, a considerable surplus was obtained, to the tune of 954 million euros, details
of which can be found under the epigraph 4.2.4. of this chapter). In addition, the position
in companies assimilated as a result of Bancomer’s incorporation into the BBVA Group
was consolidated, and positions in Latin America were reorganised.
The abovementioned acquisitions of shareholdings and, above all, the incorporation of
Bancomer into the Group, caused a sharp increase in goodwill, which was contained by
the early cancellation of funds that BBVA traditionally, and also in the year 2001, carried
out.
IV/138
4.7.2. Developments in Latin America and Europe
In America, after acquiring Bancomer in April 2000 and since the consolidation of the
Group, the investment plan is considered to be all but concluded, although selective
acquisitions have not been ruled out.
In Europe, the strategy of the financial sector has still to be defined. Although there are
two principal conditioning factors: 1) the resistance of the national authorities to merger
processes, and 2) the strong local character of minority banking. As a result, BBVA
continues to study the different alternatives available in the market, although, for the time
being, no conclusive guidelines have been defined. BBVA’s European strategy over the
next few years is included in the following options:
Increase its presence in the activities and/or geographical markets where BBVA is
currently not involved, or where it has a limited presence, through the development of
new technologies and multi-channel banking.
Strengthen alliances.
Identify opportunities in new markets.
4.7.3. Developments related to the new economy
BBVA has known from the beginning that internet would make it necessary to rethink all
areas of business. The Group saw that it was necessary to keep one step ahead and
adapt itself to this new on-line environment as a way of creating value. It considered
internet to be a lever for transformation and not just another channel of distribution.
The continuing transformation of the banking model remains one of the group’s priorities,
as it believes that transforming companies so that they are “interconnected” (in the
internet environment) but remain dedicated to their core business is the ideal way to
create value.
BBVA’s Transform@ programme includes initiatives in all the areas of the Group. An “eagenda” has been defined to deal with the transformation of all the elements in the value
chain through the intensive use of new technology. Its main activities carried out during
the year 2001 are as follows.
E-enable (technological infrastructure and tools)
Significant progress has been made in the development of the technological infrastructure
necessary to support the transformation process:
A new off-site banking architecture that supports the new banking service channels
(internet, mobile telephones, digital TV, etc.)
In 2001 the programme New Architecture of Remote Access Channels came to an
end, and its objective was to provide BBVA with a modern technological Java-based
infrastructure, which would allow the Group to make the software of the distribution
channels independent from each other (branch network, internet, mobile telephone,
Línea BBVA, digital TV, etc.), regardless of the computer system in which these
operated. This modern technical architecture was designed for use both in Spain and
in Latin America and implantation began in 2002.
IV/139
Development of corporate internet (e-spacio BBVA), which is accessible to all of the
Group’s employees in Spain and available in the Group’s principal offices abroad.
A telecommunications infrastructure, with frame relay lines implanted through the
entire branch network in Spain, a homogenous local network infrastructure and a
high-speed ring in specific offices.
An architecture of security, common for all services provided over the internet and
intranet, used to authenticate users and access controls.
E-learn (employee knowledge management)
C@mpus BBVA was started as a virtual training centre. Likewise, advances have been
made in knowledge management, with the creation of communities in e-spacio, aimed at
establishing virtual networks of experts in matters important to the organization.
E-buy (electronic relationship with suppliers)
Within the framework of the ACOGE project, the mySAP.com platform was chosen as a
base for a comprehensive system to manage general expenses and investments.
Implantation began late 2001 and will finish in January 2003. This system includes a
specific e-procurement model (Enterprise Buyer Professional).
E-make (transformation of internal processes)
The e-spacio BBVA intranet is one of the pillars of the transformation currently being
carried out by BBVA. Its objectives are:
To increase efficiency by reducing paperwork, physical post and the time dedicated to
tasks with no added value.
To facilitate the commercial activity, improving the information available at the sales
points.
To manage knowledge by making documentation available and improving practises
for different areas and products
To do all this, specific B2E (business to employee) programmes have been developed
and these are aimed at improving employee efficiency when carrying out daily tasks, selfservice in their relations with the company and providing a better service to the client.
As far as the above is concerned, a process intranetization project has been launched,
aimed at automating BBVA’s internal processes using a workflow engine. More than thirty
of these processes were successfully implanted in 2001.
Likewise, all training and tools areas were given a self-service plan to deal with the
massive amounts of paperwork to be carried out.
IV/140
E-serve (provision of financial services to clients)
During the year 2001, there were many initiatives underway:
The internet banking service for private individuals (BBVA net) was remodelled and
boosted by the incorporation of new services such as life insurance on-line
contracting and brokerage on-line for the trading of national and foreign securities in
real time, as well as intraday operations. These brokerage services were also
included in BBVA net plus, which, in addition, provided a broad spectrum of financial
operations and advice in markets. Thanks to all of this BBVA net became the most
valued on-line service on the market, according to the results of a study carried out by
Aqmetrix during the last quarter of 2001.
BBVA e-set, a set of complete, comprehensive solutions that allows companies and
institutions to carry out their activities on internet, was also launched. It is formed by
three packets of solutions, covering all types of needs:
BBVA net c@sh is a complete, virtual internet office that includes functions to
send and recieve files with orders for collections and payments, and interactive
consultation in real time. It was developed with three options for instalment, thus
allowing each company to adapt it to its own needs.
BBVA e-selling offers a wide range of on-line products and services: e-passport
(digital certificates), e-payment (on-line
payment methods such as etransferencia, @utoclic, e-purchasing and TPV Virtual) and e-financing/econfirming (financing of purchases carried out through internet and payment to
suppliers).
BBVA e-access makes it possible to acquire computer systems under very
advantageous conditions.
Various initiatives were launched through internet: a service for BBVA Privanza (an
innovation in this sector of clientele), Finanzia net (extranet that allows the
commercialisation of credit products at sales points, both in consumer and automobile
divisions, as well as the commercialisation of private cards), BBVA Gestión (extranet
that allows the sale of investment funds through the Group’s administration agency),
BBVA Blue Joven, Web Trade, as well as opening web sites for different areas in the
Group (Insurance, Funds, etc.).
Other new services were also started through interactive channels other than internet,
such as BBVA Móvil and BBVA TV Digital.
E-sell (knowing our clients)
Two different lines where followed in an effort to increase our knowledge regarding our
clients using e-CRM:
In the analytic e-CRM environment, significant advances were made in the SINFODBM project, which is building the Data Warehouse infrastructure for commercial
investigation.
In the operational e-CRM environment, Gestion@ Banca Corporativa Global (Global
Corporate Banking) was launched. This is an advanced system to administrate
relations with clients and incorporates the know-how of this unit. In addition, a
detailed, conceptual, model was drawn up for the personnel financial services
environment.
IV/141
4.7.4. Other operations
In line with the new scenario defined by the Basle Capital Agreement, during the year
2001, BBVA implanted new risk management computer systems, one of the most
important of which was the paralleling of the new credit risk modality, which uses the
market maker rating and, therefore also the probability of breaching obligations, to
calculate the credit risk. In addition, new netting and collateral systems were implanted,
which made it possible to automate the bilateral agreements that BBVA has with other
entities in order to minimize risks.
Along these same lines new computer projects for risk management were launched. Out
of all these, one worth special attention is the new risks platform, whose design was
completed during 2001, and which is directed at the orientation of credit risk and market
risk management and the control of economic capital consumption.
In Investment Banking the integration of the London and Milan treasury markets in Madrid
was a particularly noteworthy event, as this made it possible to unite the front office, and
the credit risk operations, which is centralised administration for liquidity and management
plans for operations in these two important centres. On the same lines, the expected plan
is to integrate New York during the first half of the year 2002.
On the one hand, Sistemas America centred its activity around the consolidation of its
Platform, above all in those countries where it had been implanted only recently (Chile
and Brazil), and on the other hand, on the optimisation of processes through projects such
as Exchange Administration, Transformation of Operations, Unloading administration from
branches and the Digitalisation of processes, the majority of which have just been
implanted in 2002.
In Mexico, the process of integrating the branches of what used to be the Bancomer
network during phase 1 of the BBVA Unified Platform was successfully completed. More
than 9 million clients and 1,096 branches were incorporated, so that the system now
covers the entire network.
In addition, BBVA’s Puerto Rico Data Processing Centre was transferred that of BBVA
Bancomer in Mexico, and the centralised accounts system was implanted in Peru, as a
test case before being introduced into the rest of America.
4.7.5. Project Euro
The publication in December 1997 of the National Plan for the transition to the euro was
the frame of reference for the banks currently forming the BBVA Group to allow them to
carry out any operation in euros after 1 January 1999.
The adaptations effected during the first phase made it possible to carry out dual
operations, and, as a consequence, the contracting and operating ability of products and
services, in both pesetas and euros.
1 January 2002 saw the beginning of the cash exchange phase, which will last till 30
June. In BBVA, 4,080 ATMs were adapted in order to fulfil the internal commitment that at
0:01 a.m. of 1 January 2002, the big bang process would kick off and the entire network
would dispense euro notes exclusively. On the same line, more than 3,000 modules inside
the branches were also adapted.
IV/142
On 28 February 2002 the double circulation period came to an end, and the peseta was
no considered valid currency to effect cash payments and deposits, while after 30 June
2002 banking entities will no longer exchange pesetas. After this date, this can be only
carried out in the Bank of Spain.
PROJECT EURO FIGURES
1,200 million euros predistributed during the last quarter of 2001
7,400 cash dispensing machines adapted:
4,100 cash desks
2,600 dispensers
700 recyclers
67,100 TPVs were adapted
12,400 coin holders adapted and reinstalled
150,000 man hours spent in computer development
300 people directly involved in the project
19,000 people trained in person
30,000 self-teaching CD-roms were distributed among the staff
400 daily and weekly communications directed at 35,000 employees
2,250,000 euroconverters distributed
1,500,000 brochures published
14 million communications to specific clients
71 million client contracts changes to euros
900 people hired to deal with exchange operations
Cost of Project Euro: 28 million euros (7,700 euros per branch)
V/1
CHAPTER V
ASSETS, FINANCIAL SITUATION AND RESULTS
INTRODUCTION
The BBVA’s financial statements, both at an individual level and consolidated, are
presented below.
First of all, they present the BBVA’s individual balance sheets and income statements for
the past three completed financial years, 2001, 2000 and 1999, along with the BBVA fund
flow statements, which is also individual. The statements for the 1999 financial year are
“proforma”.
Secondly, the audited financial statements for the BBVA consolidated group on 31st
December 2001, 2000 and 1999 are presented, with the corresponding explanation of
how they have been prepared. The BBVA’s consolidated cash flows over the three years
are also shown. The financial statements for 2001, 2000 and 1999 have been audited,
and the statements concerning the 1999 financial year are “proforma”.
Finally, this chapter is supplemented by the accounting presentation and principles used,
in which the information concerning the consolidation goodwill are highlighted.
All of the figures shown in the tables in this chapter are expressed in thousands of euro.
V/2
5.1. INDIVIDUAL FINANCIAL STATEMENTS
5.1.1. BBVA individual balance sheets
ASSETS (thousands of euro)
CASH AND DEPOSITS IN CENTRAL BANKS
2001
2000
1999 (*)
2.281.075
2.166.278
4.691.392
580.916
1.655.806
44.353
555.222
1.571.001
40.055
715.637
3.859.219
116.536
TREASURY BORROWING
19.273.261
14.384.829
11.442.171
CREDIT INSTITUTIONS
Demand
Other amounts receivable
18.728.729
623.510
18.105.219
34.413.959
3.129.484
31.284.475
38.331.049
2.208.455
36.122.594
CUSTOMER LOANS
99.509.141
91.895.926
84.983.262
BONDS AND OTHER FIXED-YIELD SECURITIES
Public issuers
Other issuers
22.505.543
15.150.143
7.355.400
21.516.891
13.393.730
8.123.161
22.058.605
13.754.192
8.304.413
SHARES AND OTHER VARIABLE-YIELD SECURITIES
2.164.087
1.713.328
1.589.791
INTERESTS
In credit entities
Other interests
4.306.431
1.371.549
2.934.882
3.903.774
973.495
2.930.279
3.957.761
922.457
3.035.304
INTERESTS IN GROUP COMPANIES
In credit entities
Other
8.814.491
4.789.729
4.024.762
8.952.736
4.041.185
4.911.551
6.054.470
1.905.353
4.149.117
165.209
150.785
49.289
165.209
150.785
49.289
2.357.723
1.202.465
133.356
1.021.902
2.548.842
1.394.577
109.261
1.045.004
2.614.860
1.422.175
139.507
1.053.178
Cash
Banco de España
Other Central Banks
INTANGIBLE ASSETS
Incorporation and preliminary expenses
Other redeemable expenses
GENERAL BANKING RISK FUND
TANGIBLE ASSETS
Land and buildings for own use
Other real assets
Furniture and fixtures
LIABILITIES (thousands of euro)
CREDIT INSTITUTIONS
Demand
Term or advance notice
CUSTOMER ACCOUNTS
Savings Accounts:
Demand
Term
Other debts:
Demand
Term
DEBTS IN NEGOTIABLE
SECURITIES
Floating bonds and debentures
Promissory notes and other securities
OTHER LIABILITIES
PREPAYMENTS AND ACCRUED INCOME
PROVISIONS FOR RISKS AND CHARGES
Pension fund
Provision for Income Taxes
Other provisions
ANNUAL PROFITS
SUBORDINATED LIABILITIES
UNCALLED CAPITAL
CAPITAL AND RESERVES
EQUITY SHARES
Promemoria: nominal
OTHER ASSETS
PREPAYMENTS AND ACCRUED INCOME
LOSS RETAINED
TOTAL ASSETS
MEMORANDUM ACCOUNT
(*)Proforma statements
7
4.589
142
7.263.368
5.497.436
6.539.388
5.378.451
5.579.754
3.082.669
192.866.501
193.569.776
184.435.073
77.512.135
72.730.441
71.955.026
RESULTS OF PREVIOUS FINANCIAL YEARS
TOTAL LIABILITIES
V/3
5.1.2. BBVA Individual income statements
(thousands of euro)
INTEREST RECEIVABLE AND SIMILAR INCOME
2001
2000
1999 (*)
7.651.720
9.476.865
9.360.394
2.179.581
2.011.081
1.590.981
-6.675.315
-6.857.781
-5.028.230
1.400.194
1.342.029
585.632
95.170
88.385
15.542
108.033
94.396
61.057
1.196.991
1.159.248
509.033
FINANCIAL INTERMEDIATION
4.201.744
3.844.642
3.209.122
COMMISSIONS RECEIVED
1.386.039
1.298.584
1.257.672
-290.044
-271.685
-249.150
-71.877
86.600
175.911
5.225.862
4.958.141
4.393.555
8.306
10.087
19.298
-2.684.797
-2.586.074
-2.664.058
-1.959.269
-1.838.233
-1.842.685
-1.508.359
-1.395.971
-1.381.078
-370.309
-362.947
-369.917
-71.239
-65.997
-69.176
-725.528
-747.841
-821.373
-270.627
-236.283
-214.688
-81.321
-77.729
-65.420
1.468.687
Of which: fixed-yield portfolio
INTEREST PAYABLE AND SIMILAR CHARGES
INCOME FROM THE VARIABLE-YIELD PORTFOLIO
Shares and other variable-yield securities
From interests
From group interests
COMMISSIONS PAID
RESULTS OF FINANCIAL TRANSACTIONS
PROFIT ON ORDINARY ACTIVITIES
OTHER OPERATING INCOME
GENERAL ADMINISTRATIVE EXPENSES
For personnel
Of which:
Salaries and Wages
Employer’s contributions
Of which: pensions
Other administrative expenses
AMORT. AND RESTRUC. OF TANGIBLE AND INTANGIBLE ASSETS
OTHER OPERATING COSTS
OPERATING MARGIN
2.197.423
2.068.142
AMORTIZATION AND PROVISIONS FOR INSOLVENCY (NET)
-531.856
-197.193
-186.614
RESTRUCTURING OF PERMANENT FINANCIAL INVESTMENTS (NET)
-976.812
-356.518
-505.860
TRANSFER TO GENERAL BANKING RISKS FUND
EXTRAORDINARY GAINS
EXTRAORDINARY LOSSES
PRE-TAX RESULT
TAXES ON PROFIT
OTHER TAXES
ANNUAL RESULT
(*)proforma statements
1.439
998.855
653.749
899.577
-536.053
-686.364
-272.679
1.152.996
1.481.816
1.403.111
272.526
92.397
-240.345
-113.961
-193.639
-63.665
1.311.561
1.380.574
1.099.101
V/4
5.1.3. BBVA individual funds flow statements
(thousands of euro)
2001
2000
1999 (*)
APPLICATIONS
Paid-out dividends
1.102.572
965.159
630.011
33.597
External investment:
Reduction of capital and reserves
-
87.916
Redeemed shares, net
3.178
4.592
-
Subordinated liabilities
204.927
289.502
16.744
Net inter-bank position
-
-
7.832.678
Loan capital
8.156.795
54.078.997
7.243.855
Fixed-yield securities
5.872.794
15.532.947
9.953.259
Variable-yield securities
458.615
1.142.698
1.070.968
Debts in negotiable securities
785.762
-
-
5.894.598
5.349.939
4.703.611
485.799
392.930
218.973
-
1.545.802
1.439.555
22.965.040
79.390.482
33.143.251
1.311.561
1.380.574
951.979
Acquisition of permanent investments:
Interests
Tangible and intangible fixed assets
Other assets minus liabilities
TOTAL APPLICATIONS
SOURCES
Resources generated from transactions
Annual results
Plus:
Amortizations
270.627
236.283
191.765
Net provisions
1.667.620
849.080
693.814
82.972
73.750
53.941
Losses on disposals
Minus:
Profit on disposals
Sub-total
-821.205
-461.149
-415.678
2.511.575
2.078.538
1.475.821
Funds originating from the merger with Argentaria and the absorption of various
Group entities
Increase of capital and reserves
Net inter-bank position
Creditors
2.751.049
104.056
3.014.436
551.801
2.626.376
1.379.521
112.738
10.306.688
12.443.992
12.992.505
1.435.466
49.196.531
10.965.989
-
5.592.382
5.776.003
5.166.983
2.780.733
1.120.208
553.355
153.300
148.186
260.541
-
-
22.965.040
79.390.482
33.143.251
Sale of permanent investments:
Interests
Tangible fixed assets
Other liabilities minus assets
TOTAL SOURCES
V/5
5.2.
CONSOLIDATED GROUP FINANCIAL STATEMENTS
BBVA financial statements
For the purposes of comparison, the financial statements for the past three completed financial
years are presented, which include removals of internal transactions, not making any adjustment
related to acquired shares and reciprocal shareholdings, nor dividends for the absorbed company.
5.2.1. BBVA consolidated Balances
ASSETS (thousands of euro)
CASH AND DEPOSITS IN CENTRAL BANKS:
Cash
Banco de España
Other Central Banks
2001
2000
1999 (*)
2.402.894
1.828.490
5.008.840
2.184.571
1.618.880
3.394.282
1.706.790
3.910.221
2.417.625
9.240.224
7.197.733
8.034.636
TREASURY BORROWINGS
20.165.369
14.735.194
12.027.340
CREDIT INSTITUTIONS:
Demand
Other loans
2.629.808
20.568.948
1.335.847
33.998.071
895.815
37.121.687
23.198.756
35.333.918
38.017.502
150.219.820
137.467.096
113.607.184
61.650.938
57.888.441
34.211.220
SHARES AND OTHER VARIABLE-YIELD SECURITIES
3.673.699
3.038.699
3.087.573
INTERESTS
6.641.935
7.453.296
6.216.034
INTERESTS IN GROUP COMPANIES
1.114.144
1.169.684
884.540
CUSTOMER LOANS
BONDS AND OTHER FIXED-YIELD SECURITIES
INTANGIBLE ASSETS:
Incorporation and primary expenses
18.770
42.125
39.444
523.313
554.799
318.843
542.083
596.924
358.287
3.044.907
1.572.235
2.469.119
1.605.513
655.764
1.334.127
4.617.142
4.074.632
1.989.891
2.530.935
1.424.146
2.216.809
2.959.835
698.659
2.310.495
2.366.533
699.927
1.790.884
6.171.890
5.968.989
4.857.344
-
-
-
75.944
112.708
337.835
12.000.115
11.934.980
8.220.000
Prepayments and accrued income
7.049.067
6.466.440
3.946.913
CONSOLIDATED COMPANY LOSSES
2.884.756
2.705.750
2.369.947
309.245.882
296.144.484
238.166.246
71.764.775
66.259.331
55.560.600
Other amortizable expenses
CONSOLIDATION GOODWILL:
Global and proportional integration
Equity method
TANGIBLE ASSETS:
Land and buildings for own use
Other real assets
Furniture and fixtures
UNCALLED CAPITAL
EQUITY SHARES
OTHER ASSETS
TOTAL ASSETS
MEMORANDUM ACCOUNT
V/6
LIABILITIES (thousands of euro)
2001
2000
1999 (*)
1.412.818
63.175.177
3.276.796
65.006.828
1.245.886
67.361.088
64.587.995
68.283.624
68.606.974
71.012.969
67.512.171
62.426.906
74.188.467
50.293.829
40.559.975
27.974.294
17.530.820
15.530
14.207.878
166.499.434
154.146.193
105.077.212
20.639.098
4.736.576
21.651.558
4.808.127
17.366.551
14.185.533
25.375.674
26.459.685
31.552.084
OTHER LIABILITIES
9.142.645
8.184.563
5.959.835
DEFERRED CHARGES
6.665.074
6.685.959
3.506.731
PROVISIONS FOR RISKS AND CHARGES:
Pension fund
Provision for income tax
Other provisions
2.358.552
2.425.588
1.823.098
1.209.736
1.191.344
1.184.042
4.784.140
3.032.834
2.375.386
-
-
-
42.744
47.828
33.897
CONSOLIDATED ANNUAL PROFITS:
From the Group
From minority interests
2.363.336
645.223
2.232.087
681.800
1.745.826
422.548
3.008.559
2.913.887
2.168.374
SUBORDINATED LIABILITIES
7.610.791
5.111.536
3.304.797
MINORITY INTERESTS
6.394.029
6.304.286
5.333.273
SUBSCRIBED CAPITAL
1.565.968
1.565.968
1.523.872
PREMIUMS
6.834.941
6.873.827
3.321.872
RESERVES
1.419.218
1.027.258
1.267.030
176.281
176.281
181.091
5.138.389
5.330.755
3.953.818
309.245.882
296.144.484
238.166.246
CREDIT INSTITUTIONS:
Demand
Other debts
CUSTOMER ACCOUNTS:
Savings accounts:
Demand
Term
Other debts:
Demand
Term
DEBTS IN NEGOTIABLE SECURITIES:
Floating debentures and bonds
GENERAL BANKING RISKS FUND
NEGATIVE CONSOLIDATION DIFFERENCE
APPRAISAL INCREASE CREDIT
RESERVES IN CONSOLIDATED COMPANIES
TOTAL LIABILITIES
V/7
5.2.2. BBVA consolidated income statements
(thousands of euro)
2001
INTEREST RECEIVABLE AND SIMILAR INCOME
2000
1999 (*)
21.608.104
19.324.828
7.283.233
6.048.422
3.615.082
-13.279.446
-12.714.418
-8.534.456
495.444
384.228
373.529
116.037
115.779
74.255
From interests
177.774
158.493
134.224
From group interests
201.633
109.956
165.050
8.824.102
6.994.638
5.759.968
COMMISSIONS RECEIVABLE
4.833.617
4.031.661
3.222.374
-795.994
-662.099
-515.482
490.095
778.625
640.667
13.351.820
11.142.825
9.107.527
51.345
85.327
85.566
-6.724.760
-5.937.080
-4.976.200
-4.243.374
-3.774.265
-3.206.971
Of which: fixed-yield portfolio
INTEREST PAYABLE AND SIMILAR CHARGES
INCOME FROM THE VARIABLE-YIELD PORTFOLIO
From shares and other variable-yield securities
COMMISSIONS PAYABLE
INCOME FROM FINANCIAL TRANSACTIONS
PROFIT ON ORDINARY ACTIVITIES
OTHER OPERATING INCOME
GENERAL ADMINISTRATIVE EXPENSES:
Staff costs
13.920.895
Of which:
Salaries and wages
-3.211.099
-2.854.086
-2.405.238
Social security
-652.454
-600.020
-523.932
Of which: pensions
-112.474
-109.606
-88.042
-2.481.386
-2.162.815
-1.769.229
-741.817
-652.461
-501.605
AMORTIZATION AND RESTRUCTURING OF TANGIBLE
AND INTANGIBLE FIXED ASSETS
OTHER OPERATING EXPENSES
OPERATING PROFIT
NET PROFIT GENERATED BY COMPANIES, EQUITY
METHOD:
Interests in profits of companies, equity method
-337.763
-262.145
-258.501
5.598.825
4.376.466
3.456.787
392.671
588.631
237.550
558.076
876.131
936.593
Interest in losses of companies, equity method
-104.306
-79.544
-26.481
Valuation allowances from collection of dividends
-379.154
-268.418
-294.045
AMORTIZATION OF GOODWILL FROM CONSOLIDATION
-623.111
-664.815
-696.753
PROFIT ON GROUP ACTIVITIES:
Profit on disposal of interests in consolidated entities,
global and proportional integration
Profit on disposal of interests, equity method
1.004.525
1.337.391
982.847
33.957
47.150
35.358
896.186
1.164.624
725.464
Profit from transactions using controlling company shares
and financial liabilities issued by the Group
Reversal of negative consolidation differences
74.382
125.617
222.026
-
-
-
LOSSES ON GROUP ACTIVITIES:
Losses on disposal of interests in consolidated entities,
global and proportional integration
Losses on disposal of interests, equity method
-50.538
-30.550
-59.446
-12.699
-15.326
-5.427
-5.980
-4.694
-1.172
Losses from transactions using controlling company
shares and financial liabilities issued by the Group
AMORTIZATION AND PROVISIONS FOR INSOLVENCIES
(NET)
-31.859
-10.530
-52.847
-1.919.230
-973.357
-750.814
-42.792
-6.870
RESTRUCTURING
OF
INVESTMENTS (NET)
PERMANENT
FINANCIAL
PROVISION TO THE GENERAL BANKING RISKS FUND
6.305
-
-
-
1.294.983
924.670
451.060
-2.021.253
-1.675.933
-725.836
3.634.080
3.875.633
2.901.698
TAX ON PROFIT
-60.462
-404.770
-686.722
OTHER TAXES
-565.059
-556.976
-46.602
3.008.559
2.913.887
2.168.374
EXTRAORDINARY GAINS
EXTRAORDINARY LOSSES
PROFIT BEFORE TAXES
CONSOLIDATED PROFIT FOR THE
FINANCIAL YEAR
PROFIT ATTRIBUTED TO MINORITY INTERESTS
645.223
681.800
2.363.336
2.232.087
422.548
1.745.826
V/8
5.2.3. Consolidated funds flow statements
The consolidated funds statements for the financial years 2001, 2000 and 1999 are
presented below.
ITEMS
APPLICATIONS
Dividends paid
Incorporation of companies into the Group
Reduction of capital
Purchase of net shares
Thousands of euro
2001
2000
1999 (*)
1.100.240
-
926.478
2.302.543
625.365
617.143
-
87.916
42.257
3.407
197.913
-
Minority interests, net
Loan capital
Fixed-yield securities
Variable-yield securities
Floating-rate securities
Acquisition of permanent investments:
Purchase of interests in Group companies and associated companies
Purchase of items of tangible and intangible fixed assets
1.025.062
474.849
15.218.935
9.423.564
656.853
1.084.011
563.245
70.073.354
45.598.368
1.817.016
-
378.596
8.595.230
11.313.633
691.434
-
2.718.113
2.824.121
2.027.046
1.944.701
2.994.735
1.306.612
Other asset items minus liabilities
TOTAL APPLICATIONS
34.529.155
3.650.311
129.188.891
246.319
26.811.324
2.363.336
2.232.087
1.230.067
1.641.663
2.490.035
1.317.274
2.214.081
1.075.914
971.404
258.434
645.223
45.406
681.800
84.845
341.808
-305.290
-511.912
-138.095
-1.295.853
5.797.548
-1.526.030
4.452.706
-991.976
2.573.967
-
3.259.523
-
260.484
3.253.057
6.404.308
12.353.241
-
3.614.270
340.215
1.250.003
26.730.037
56.417.751
28.611.128
551.801
422.926
387.575
396.355
11.548.784
2.721.816
6.232.700
3.603.288
2.531.180
326.049
34.529.155
2.788.257
1.725.001
129.188.891 2
1.228.793
746.607
6.811.324
SOURCES
Resources generated from transactions
Results from the financial year
Plus:
- Amortizations
other special funds
- Losses from the disposal of equity shares,
interests and fixed assets
- Results from minority interests
Minus:
- Profits from companies, equity method, nets of taxation
- Profits from the disposal of equity capital, interests
and fixed assets
Sub-total
Funds originating from the merger with Argentaria
Capital increase
Disposal of equity capital, net
Minority interests, net
Financing les investment in credit institutions
Creditors
Disposal of permanent investments:
Disposal of interests in Group companies and
associated companies
Disposal of items of tangible and intangible fixed assets
Other liabilities minus assets
TOTAL SOURCES
(*)Proforma statements
V/9
5.2.4. Consolidated cash flows
(thousands of euro)
CASH FLOW FROM OPERATING ACTIVITIES
INCOME ATTRIBUTED TO GROUP TRANSACTIONS
AMORTIZATIONS
PROVISIONS FOR INSOLVENCY
PROVISIONS FOR SPECIAL FUNDS
(GAINS) / LOSSES FROM DISPOSAL OF TANGIBLE FIXED ASSETS
(GAINS) / LOSSES FROM PORTFOLIO DISPOSALS
INCOME ATTRIBUTED TO MINORITY INTERESTS
VARIATION IN TAX PAYABLE
TIMING VARIATIONS
INCOME, EQUITY METHOD
2001
2000
1999 (*)
2.363.336
1.641.663
2.000.037
489.998
-253.915
-783.504
645.223
1.088.7822
-603.512
-305.290
6.282.818
2.232.087
1.317.274
1.246.992
967.089
-79.237
-2.414.536
681.800
94.033
-906.711
3.338.791
1.745.826
1.184.643
1.000.745
302.303
-50.491
-1.541.428
422.548
-113.038
1.539.967
4.491.075
12.142.428
-15.218.935
-5.072.687.479
-15.656.407
5.063.263.915
14.999.554
-2.718.113
3.603.288
-292.942
515.672
13.080.363
5.319.660
-10.928.588
-1.164.999.519
-14.220.535
1.163.053.490
15.889.354
-2.027.046
2.788.257
-219.700
-2.611.866
2.659.166
10.615.659
4.099.299
-14.480.527
748.470.827
-12.692.330
736.058.418
12.043.603
-2.710.577
898.369
-437.699
-152.477
2.668.853
28.513.601
-3.695.629
12.353.241
-1.084.011
-3.407
-764.578
3.253.057
-474.849
-1.100.240
356.452
8.840.036
-8.645.457
11.688.093
-1.504.784
3.614.270
-87.916
340.215
-197.913
1.250.003
-563.245
-926.478
1.473.177
6.439.965
9.343.827
5.404.433
13.989.308
70.342
-42.257
440.247
650.992
406.573
-378.596
-883.506
-1.377.789
27.623.574
2.042.491
-836.903
3.601.048
7.197.733
2.042.491
9.240.224
8.034.636
-836.903
7.197.733
4.433.588
3.601.048
8.034.636
CASH FLOW ORIGINATING FROM INVESTING
ACTIVITIES
CREDIT INSTITUTION VARIATION
LOAN CAPITAL VARIATION
FIXED-YIELD PORTFOLIO PURCHASE
VARIABLE-YIELD PORTFOLIO PURCHASE
FIXED-YIELD PORTFOLIO DISPOSAL
VARIABLE-YIELD PORTFOLIO DISPOSAL
ACQUISITION OF INTERESTS
DISPOSAL OF INTERESTS
PURCHASE/SALE OF TANGIBLE FIXED ASSETS
INCORPORATION OF COMPANIES INTO THE GROUP
OTHER
C. FLOW ORIGINATING FROM FINANCING ACTIVITIES
FINANC. VARIATION OF CREDIT INSTITUTIONS
VARIATION IN DEPOSITS
VARIATION IN NEGOTIABLE SECURITIES
CAPITAL INCREASES
CAPITAL REDUCTIONS
PURCHASE/SALE OF EQUITY CAPITAL
MINORITY INTERESTS
CONTRIB. SUBORDINATED LIABILITIES
REDUC. SUBORDINATED LIABILITIES
DIVIDEND PAYMENT
OTHER
NET TOTAL CASH FLOWS (equivalent to the CASH AND
CENTRAL BANK VARIATION)
CASH AND CENTRAL BANK MOVEMENT
INITIAL BALANCE
VARIATION
FINAL BALANCE
V/10
From the BBVA group cash flow statement considered as a whole, it can be seen that in
2001 there was a net increase in customer-related business of 2,866 million euro, arising
from the increase in loan capital (outlay of 15,219 million euro), and the increase in
deposits (entry of 12,353 million euro).
Likewise, with regard to investment activities, an outlay can be seen for acquisitions of
fixed-income securities, net of receipts from the sale of such securities, of 9,424 million
euro, mainly brought about through the acquisition of Treasury Borrowings. In contrast,
the sale of Interests and variable-yield securities, net of investment, created income of
228 million euro.
As a consequence, the result of the aforementioned flows signified a modification of the
BBVA Group’s inter-bank position, whose variation in the 2001 financial year reduced to
3,696 million euro, compared with the variation experienced in borrowings and
subordinated financing (net receipts of 1,694 million euro).
As a result of its operating activities, the BBVA Group achieved earnings of 3,919 million
euro, 1,100 million euro of which were paid out in dividends. Finally, the cash and central
bank deposit balance increased by 2,042 million euro.
5.3. PRESENTATION AND ACCOUNTANCY PRINCIPLES APPLIED
5.3.1. Presentation principles
The annual consolidated accounts of the Bank and companies that make up the Banco
Bilbao Vizcaya Argentaria Group are presented in accordance with the layouts
established by the Banco de España Circular 4/1991, of 14th June, and its subsequent
amendments, such that they present a true and fair view of the Group’s assets, financial
situation and results. The said annual consolidated accounts have been prepared from the
individual books of the Banco Bilbao Vizcaya Argentaria, S.A. and each of the companies
in the Group, including the adjustments and reclassifications required to harmonise the
accounting and presentation criteria followed by the dependent companies with those
used by the Bank.
The consolidated annual accounts for the 2000 and 2001 financial years were approved
by General Meetings of Shareholders, held on 10th March 2001 and 9th March 2002
respectively and in accordance with the established layouts, are appended in the Annex,
both as concerns the individual BBVA and the Consolidated Group.
In accordance with the Royal Decree 2814/1998, of 23rd December, by which the
Standards for Accountancy Aspects of the Introduction of the Euro were approved, the
Bank’s Board of Directors has expressed the consolidated annual accounts for the 2001
financial year in euro; thus, for the purposes of comparison, the figures corresponding to
the 2000 financial year have been converted into the said currency at a fixed conversion
rate of 166.386 pesetas per euro.
For the preparation of the consolidated annual accounts herein, generally accepted
accounting principles have been followed. All obligatory accounting principles that have a
significant impact in the preparation of the consolidated annual accounts have been
applied.
In accordance with the Act 13/1985 and Banco de España Circular 4/1991, the Banco
Bilbao Vizcaya Argentaria Group includes all of the companies whose activity is directly
related with that of the Bank and together with it form a decision-making unit. These
companies have been consolidated using the global integration method, in accordance
with the standards given in the aforementioned Circular, with the necessary adjustments
and reclassifications made for the harmonisation of accountancy and presentation criteria
used by the dependent companies. All of the accounts and significant transactions
between the consolidated companies have been removed through the consolidation
process. In accordance with the stipulations in the Banco de España Circular 4/1991, the
V/11
consolidated annual accounts maintain the provisions for country risk constituted by the
Bank and other Group companies for assets and off balance-sheet exposure with regard
to the Group’s entities domiciled in countries in difficulty. On 31st December 2001, these
funds totalled 99 million euro.
Likewise, the proportional integration criterion is applied, which involves incorporating the
companies property, rights and obligations and income and expenditure proportionately to
the percentage of the Group’s interest in them, for companies whose activity is related to
that of the Bank and in which, with a minimum stake of 20%, management is shared
between another or other shareholders. On 31st December 2001, this consolidation
method was applied to the Corporación IBV, S.A., Azeler Automoción, S.A., Altura
Markets, A.V., S.A. y Proyectos Industriales Conjuntos, S.A.
In addition, permanent investments in the capital of dependent companies that can not be
consolidated as their activity is not directly related to that of the Bank and other
companies with which a long-term bond is maintained, in which it generally holds an
interest of at least 20% (3% if it is listed on the Stock Exchange), are evaluated according
to the fraction of the net assets that these interests represent, having taken into account
the dividends received from them and other asset eliminations (equity method). Any other
interests in the capital of the said companies that is not of a permanent nature or for which
forward cover operations have been conducted is evaluated separately in accordance with
the criteria described in epigraph 5.3.3.
The remaining investments in securities representing capital are presented in the
consolidated statement of the financial position in accordance with the criteria indicated in
the said epigraph.
In accordance with habitual practice, the consolidated annual accounts do not include the
fiscal effect of the incorporation of accumulated, undistributed reserves into the Bank from
consolidated companies by means of global or proportional integration or the equity
method, as it is considered that transfers of resources shall not be made as they will be
used as a source of funding in each of the said companies.
5.3.2. Statement of financial position and income statement (“proforma” for 1999)
In order to have a more meaningful comparison of the consolidated statements of financial
position on 31st December 2001, 2000 and 1999, as well as for the consolidated income
statements for the financial years ending on the said dates, together with the financial
statements and throughout Chapter IV of this Brochure, proforma consolidated data is
included for informative purposes for the 1999 financial year. This proforma consolidated
information has been prepared through the aggregation of the audited consolidated
financial statements of the Banco Bilbao Vizcaya and Argentaria Groups on 31st
December 1999 and includes proforma adjustments derived from the following
hypotheses:
1. The merger was assumed to take place on 1st January 1999.
2. The elimination of assets from the investment in Argentaria was carried out in
accordance with its assets, as reflected in its consolidated financial statements audited
on 31st December 1999.
3. The Argentaria shares in the Banco Bilbao Vizcaya Group portfolio and the Bank
shares in the Argentaria Group, on 31st December 1999, have been classified as
equity shares.
V/12
4.
All of the inter-group balances maintained by both groups which can be consolidated
on the said date and the results generated from these transactions during the
financial year which ended on 31st December 1999.
5.3.3. Accounting principles applied
In the preparation of the consolidated annual accounts included in this Brochure, the
generally accepted accounting principles have been applied, details of which are to be
found in Note (3) of the Annual Accounts (in the Appendix). However, a few of them are
detailed below, owing to their special significance and impact.
*) Transactions in foreign currency
As from 1st January 1999, inclusive, the currency of the national monetary system is the
euro, as this currency is defined in the Council Regulation (CE) 974/98 of 3rd May 1998.
The euro follows on with no interruption and wholly from the peseta as the currency of the
national monetary system. Consequently, the details in currencies of various accounts
and epigraphs in this report include, under the denomination in euro, pesetas and the
other currencies of the Monetary Union States, together with the euro.
Inflation
Some of the BBVA Group companies are subject to adjustments for inflation in
accordance with local rules (Mexico, Uruguay, Chile and Peru) and as a consequence,
record charges and gains in the income statements in order to preserve their assets from
the theoretical depreciation derived from the said inflation. These accounting entries are
included in the sections “Extraordinary gains” and “Extraordinary losses” in the
consolidated income statements. Details of the amount of this item are indicated below:
Items
Extraordinary gains
Extraordinary losses
Million euro
2001
2000
83
-14
69
102
-26
76
*) Intangible assets
This item includes, amongst other things, payments made for the acquisition of IT
applications, which are amortized over a maximum period of three years through charges
under the heading “General Administrative Expenses – Other administrative expenses” in
the consolidated income statement.
V/13
In addition, this chapter includes the cost of the increase in capital of the Bank and
dependent companies and the costs of issuing bonds and other financial instruments
which still remain to be amortized. These costs are amortized over a maximum period of
five years, except for the costs of issuing financial instruments, which are amortized over
the lifetime of each issue. The charges on the consolidated income statement for the
amortization of these costs during the 2001, 2000 and 1999 financial years amounted to
150, 122 and 141 million euro, respectively, and are recorded in the section “Amortization
and restructuring of tangible and intangible assets” in the consolidated income
statements.
*) Equity shares
The balance of this section of the consolidated balance sheet on 31st December 2001
referred to Banco Bilbao Vizcaya Argentaria, S.A., shares belonging to the consolidated
dependent companies, which are reflected in their acquisition cost net of the specified
requisite provision, where appropriate, according to the lower of either the theoretical
consolidated accounting value or the share price.
The aforementioned provision is recorded as a charge in the section “Losses on group
transactions” in the consolidated income statement. The gains produced from disposals of
the Bank’s shares are recorded under the section “Losses for group transactions” or
“Gains from group transactions” in the consolidated income statement.
The share capital of the Bank and Group and associated companies acquired as a
consequence of future cover operations related to the evolution of specific stock market
indices, is valued at its market price. In accordance with the Revised Text of the Public
Limited Companies’ Act, the restricted reserve corresponding to the said equity shares
has been created.
The total Bank’s shares held by consolidated companies represented 0.19% of the Bank’s
issued capital on 31st December 2001.
*) Pension commitments and other commitments to personnel
The criteria applied for pension commitments, along with severance pay, are detailed in
Chapter IV (page 135).
V/14
Other commitments to personnel
A summary of the situation concerning incentive shares for the achievement of objectives
is presented below, operating on 31st December 2001 and the transactions which took
place during the 2001 financial year:
Items
Number of shares
Schemes running on 31st December 2000
32.574.100
Options exercised at the end of the Scheme
Options exercised for early retirement and other transactions
-4.716.666
-1.118.798
Exercise price (in
euro)
Exercise date
1,32
20/02/2001
2,00
3,67
6,01
10,65
12,02
20/02/2002
20/02/2003
1/06/03-31/07/04
1/06/03-31/07/04
1/06/03-31/07/04
-5.835.464
Schemes running on 31st December 2001
corresponding to bonuses for the achievement
of annual objectives:
1996
1997
1998
1999
2000
26.738.636
4.200.729
3.509.418
4.248.031
5.785.077
8.995.381
During the 2001 financial year, upon maturity, the extraordinary bonuses for the accomplishment
of objectives in 1995 were sold.
In March 1999, in accordance with the agreement of the Bank’s General Meeting of Shareholders
held on 27th February 1999, 32,871,301 new shares were issued at a price of 2.14 euro per
share, similar to the average reference price for existing commitments at that time with the
Group’s employees, part of whose cover was assigned to and included commitments for bonuses
for the financial years 1995 to 1998 and part of the commitment paid for seniority bonuses. These
shares were subscribed and paid up in full by a company external to the Group and at the same
time, the Bank acquired a purchase option for them which can be exercised at any time, or in
several instalments, before 31st December 2011, at an exercise price equal to the share issue
price, corrected on the basis of the corresponding anti-dilution clauses. On several occasions
since 1999, the purchase option has been partially exercised, in order to fulfil the commitments to
the Group’s personnel, for a total of 14,608,956 shares, such that on 31st December 2001 an
option is held for a total of 18,262,345 shares (25,609,521 shares on 31st December 2000), at a
price of 2.09 euro per share, after adjustment of the issue price as a result of nominal valuation
allowances undertaken in July 1999 and April 2000.
On the other hand, on 31st December 2001, the bonuses for the years 1999 and 2000, consisting
of a cash payment for a sum in relation to the share price of 5,785,077 and 8,995,381 Bank
shares respectively, as well as the other commitments paid for seniority bonuses (1,311,451
shares), are entirely covered by purchase options and other futures transactions.
VI/1
CHAPTER VI
COMPANY MANAGEMENT,
GOVERNANCE AND CONTROL
6.1.MANAGEMENT STRUCTURES AND EXECUTIVE MANAGEMENT
The 18th December 2001 marked the end of the transition period, as defined by the
Merger Plan for the entities Bank Bilbao Vizcaya and Argentaria and by the BBVA
Company Statutes, in which certain provisions are established concerning the Company’s
management system, in particular those concerning the joint presidency of the Entity.
As stipulated in the aforementioned provisions, the transition period was to end when the
Ordinary General Meeting of the Company’s Shareholders took place, which approved the
Annual Accounts for the financial year ending on 31st December 2001, as well as in the
event of, amongst other circumstances, the resignation of either of the Chairmen during
the transition period. This occurred when the former joint chairman, Mr. Emilio de Ybarra y
Churruca, handed over his resignation on the said date, thereby signalling the end of the
stated transition period, leaving the other joint president, Mr. Francisco González
Rodríguez as the sole Chairman of the Entity from that date onwards, and thus also of the
Board of Directors and other company bodies.
In this way, the stipulations envisaged for the aforementioned transition period were no
longer operational, except those in Articles 7 and 8 of the Transitional Provision in the
Company Statutes regarding the aspects included in the following sections of this chapter
in terms of the Chairman and Directors designated in the Merger Committee and during
the transition period and the requirements necessary for their modification, i.e. a quorum
of 70% of the shareholders and capital, and the agreement by a majority of at least 70%
of the votes.
6.1.1 The Board of Directors
In accordance with the Company Statutes, the Board of Directors of Bank Bilbao Vizcaya
Argentaria, S.A. is the natural structure for the representation, governance, management
and surveillance of the Company.
In pursuance of this function, the Board acts as the company body, through regular
meetings in which the most relevant subjects affecting the Entity are discussed.
During the 2001 financial year, the Board of Directors held 14 meetings and 7 have also
been held during the 2002 financial year so far.
In accordance with the currently applicable Company Statutes, the Board of Directors of
the Bank Bilbao Vizcaya Argentaria, S.A. is composed of a minimum of twelve and a
maximum of thirty-three members. The Ordinary General Meeting held on 9th March 2002
agreed to fix the number of directors at 21.
The mandate of a Board Member shall last for five years. The members will be renewed
annually by one fifth, and can be re-elected indefinitely.
VI/2
In accordance with the provisions in Article 41 of the Company Statutes, agreements of
the Board of Directors are to be reached by an absolute majority of votes, either present
or represented, except for the creation of the Permanent Representative Committee and
the appointment of its members and the nomination of Managing Directors, for which the
approval of 2/3 of its members is required, with no casting vote in the event of a draw.
When this brochure was published, the Board of Directors was composed of the following
members:
BOARD
Date
Appointment
Executive
Committee
Outside
Director(*)
Chairman:
Mr. Francisco González Rodríguez
18.12.99
YES
Managing Director:
Mr. José Ignacio GoIrigolzarri Tellaeche
20.12.01
YES
Deputy chairman:
Mr. Jesús María Caínzos Fernández
18.12.99
YES
18.12.99
18.12.99
18.12.99
28.05.02
28.05.02
YES
YES
YES
YES
YES
Board Members:
Mr. Juan Carlos Álvarez Mezquiriz
Mr. Ramón Bustamante y de la Mora
Mr. Ignacio Ferrero Jordi
Mr. Román Knörr Borrás
Mr. Ricardo Lacasa Suárez
Mr. José Maldonado Ramos
(Board Secretary)
Mr. Gregorio Marañón and Beltrán de Lis
Mr. Enrique Medina Fernández
Ms. Susana Rodríguez Vidarte
Mr. José María San Martín Espinós
Mr. Jaume Tomás Sabaté
Telefónica de España, S.A. (1)
18.12.99
18.12.99
18.12.99
28.05.02
18.12.99
18.12.99
17.04.00
Board Member
Dominical
YES
YES
YES
YES
YES
YES
YES
(*)Persons who do not have executive functions in the Company, nor who can attribute their capacity to their shareholding in the company.
(1)Telefónica de España, S.A., sole proprietorship, which was appointed member of the Board of Directors by virtue of the agreement made in the year 2000
between Telefónica and BBVA, accepted its function on 7th march 2001 and appointed Mr. Angel Vilá Boix as its representative.
Note: On 18th December 2001, the following members of the Board of Directors resigned their posts, along with the functions held in the Bank’s management:
the Chairman, Mr. Emilio de Ybarra y Churruca and the Deputy Chairman and Managing Director, Mr. Pedro Luis Uriarte Santamarina. At the end of the 2001
financial year and until the date of this Brochure, the following persons have resigned as members of the Board of Directors and from their other functions in the
BBVA’s management: Mr. Eduardo de Aguirre y Alonso Allende, Mr. José Domingo Ampuero Osma, Mr. Plácido Arango Arias, Mr. Francisco Javier Aresti and
Victoria de Lecea, Mr. José Caparrós Pérez, Mr. Gervasio Collar Zabaleta, Mr. Alfonso Cortina de Alcocer, Mr. Juan Entrecanales de Azcárate, D. Oscar Fanjul
Martín, D. Javier Gálvez Montes, D. Ramón de Icaza y Zabálburu, Mr. Luis Lezama-Leguizamón Dolagaray, Mr. José Lladó y Fernández-Urrutia, Mr. José
Madina Loidi, Mr. Ricardo Muguruza Garteizgogeascoa, Mr. Antonio Patrón Pedrera, Mr. Alejandro Royo-Villanova Payá, Mr. Juan Urrutia Elejalde, Mr. Andrés
Vilariño Maura and Mr. Luis María de Ybarra y Zubiría.
Article 35 of the Company Statutes stipulates the following requirements to become a
member of the Board of Directors:
VI/3
a)
To be a shareholder for at least two years, possessing no less than eight thousand
shares in the said Entity, which can not be transferred during the financial year when
the post is held, although this requirement does not apply to people who are bound to
the Company through employment or for services at the time of their appointment, or
to Members appointed to the General Merger Committee or during the Transition
Period. For these purposes, both the number of shares in their name and those
belonging to companies controlled by the Member will be taken into account.
With the approval of at least two-thirds of its members, the Board of Directors can
dispense with the required two-year period referred to in the previous
paragraph, where circumstances make it advisable.
b)
Not have any outstanding debts to the Bank.
c)
Not be in any situation of prohibition or incompatibility established by any legal
provision.
Furthermore, to be appointed Chairman or Deputy Chairman of the Board, Article 38
establishes the requirement of having held the post of Board Member for at least three
years prior to their nomination, except when their nomination is unanimously approved by
the Board Members. Exceptionally however, this requirement shall not be necessary, for
those Members appointed to the General Merger Committee or during the Transition
Period.
The Board is delegated all of the capacities for governance, except for the issues that are
essentially associated by legal or statutory stipulations with the Permanent Representative
Committee, which is composed of members of the Board of Directors.
Furthermore, the Board of Directors has appointed Mr. José Ignacio Goirigolzarri
Tellaeche as Managing Director and has assigned him the corresponding capacities
inherent to the said post, as immediate superior to the Directors General of the Areas of
Business and the Areas of Business Support.
The BBVA Board of Directors has likewise established other Committees and
Commissions made up of Board Members, which fulfil specific entrusted functions, within
the scope of the Company Statutes, on behalf of the Board of Directors.
In the meeting held on 7th May 2002, the Bank’s Board of Directors decided to form a
special committee to analyse the system of corporate governance in order to prepare a
proposal to be made to the Board to establish the principles which will form the basis of
the corporate system for the entity and the determination of the nature and functions of
the various Board Commissions and Committees. The BBVA will communicate the
decisions adopted by the bank’s administrative bodies in this respect by means of the
appropriate method.
Board Member Statute
Drawn up in the form of a code of ethics, in line with the principles of good corporate
governance as reflected in the recommendations given for listed companies, the statute
was adopted by the BBVA Board of Directors, for the purposes of supplementing the legal
and statutory rules that govern the Board Member’s activities, by establishing rules of
conduct, with regard to safeguarding the interests of the Bank, its shareholders,
customers and employees.
VI/4
The Statute comprises a description of the Board Member’s functions, by means of
activities subject to the rules currently in force, along with the provisions contained in the
Statute itself, which are carried out through attendance at the meetings of the company
bodies to which they belong and taking part in deliberations, discussions and debates that
contribute to the formulation of the overall direction.
The Board Member Statute contains XIV rules that can be broken down into three broad
headings:
A.-
Governance and Management Rules
Election and re-election of Board Members:
The election of Board Members is basically carried out by considering their personal
and professional qualities and their capacity as shareholder.
Vacancies owing to death will not be filled until six months after the event, except
where departmental requirements make it otherwise advisable.
The re-election of the Board Members is decided after weighing up the
circumstances or factors which make it advisable or otherwise and is conducted
annually by fifths. Members can be re-elected indefinitely.
Rights and Obligations of the Board Member:
?
Fulfilling their role diligently as a company regulator and legal representative.
?
Attending the meetings of the company bodies.
?
Taking part in deliberations to contribute to the formation of the general will.
?
Having as much information as considered necessary to exercise their
responsibilities.
?
Keeping the deliberations in the company bodies secret, along with information
and details that are known by them owing to their function and which are not
public knowledge.
?
Notifying the Bank of any situations, facts or news which may influence the
development of the BBVA’s activity.
?
Receiving remuneration basically in proportion to the time devoted to the Bank
through their attendance at the meetings of the company bodies to which they
belong.
?
Taking part in a prospective system financed by the statutory remuneration
assigned to the Board Members.
Dismissal of Board Members:
?
Board Members shall retire at the age of 70.
VI/5
B.-
?
The Chairman and Deputy Chairman shall retire at the age of 65, which does
not prevent them from continuing as Board Members.
?
The Managing Director shall retire at the age of 62 years, which does not
prevent him from continuing as Board Members.
?
If a Board Member is prosecuted or accused of a supposedly criminal act, or is
punished for gross misconduct related to financial or stock market activity, he
should hand in his resignation to the Board of Directors and undertake to accept
the decision which it takes.
?
Any Board Member who for whatever cause, no longer belongs to the Bank’s
Board of Directors can not work for another financial institution for a period of
two years as from their leaving the Board, unless they are given express
authorisation.
Ethical Rules
The Statute includes a series of ethical rules which apply not only to the Board Members,
but also to their spouse, minor and dependent children and companies in which they have
majority interests. They include the following main rules:
?
Not to take part in meetings of company bodies involving issues in which he
may have a direct or indirect interest.
?
Not influence issues which may be related to business dealings, companies or
activities in which he takes part or holds a stake.
?
Not take part, either directly or indirectly, in business dealings or companies in
which the BBVA or the Group’s entities have an interest, except if he was
known to do so prior to the BBVA Group’s involvement or if the companies are
quoted on the stock market.
?
Have no contractual relations with the BBVA nor the companies it promotes or
in which the Bank or companies within the Group have majority interests,
except where this arose from auctions or competitions, or are expressly
authorised by the Chairman of the Bank, and the Board of Directors have been
informed.
?
Communicate to the Bank any transaction in relation to the shares of any of the
companies in the BBVA Group that he may have undertaken, on his own behalf
or for a third party.
?
Consult the Bank before taking a decision, if he intends to accept a political post
or be appointed director, employee or auditor of a company.
?
Manage his portfolios of listed securities, preferably through portfolio
management companies.
?
Report on the Stock Market expenditures or private investments involving
shares of the BBVA or companies within the Group, stating the securities
acquired, on its own behalf or for a third party, and undertake to hold such
securities in their portfolio for a minimum period of six months.
?
Notify the Bank of any BBVA shares which he holds, along with any loans
VI/6
?
C.-
and guarantees that he may have sought from financial institutions belonging to
the BBVA Group.
Rules concerning privileged or confidential information
These rules apply to the Board Member, his spouse, minor and dependent children
and companies in which they have a majority interest. They basically include:
?
The Board Member who holds privileged information can not undertake, either
on his own behalf or for a third party, directly or indirectly, any transaction
involving securities to which the said information refers.
?
Neither can the Board Member who holds such privileged information
communicate it to third parties, nor recommend a third party to acquire or sell
such securities based on the said privileged information.
?
The Board Member should safeguard any kind of data or information to which
he has access owing to his responsibility or functions.
?
He should take all the requisite measures available to him to prevent or avoid
the abusive or disloyal use of data or information to which he has access owing
to his responsibility, and report any unjustified use of it.
6.1.2 The Permanent Representative Committee
Article 45 of the Company Statutes requires that for anyone to be appointed a member of
the Permanent Representative Committee, they first have to have been a Board Member
for at least the three years prior to their date of appointment, except when the
appointment is made with the approval of at least two-thirds of the Board Members.
This requirement will be waived however for any Board Members who are appointed to
the General Merger Committee or during the Transition Period.
The Permanent Representative Committee is currently composed of seven members:
Mr. Jesús María Cainzos Fernández
Mr. José Ignacio Goirigolzarri Tellaeche
Chairman
Deputy Chairman
Managing Director
Member
Member
Member
Member
The Permanent Representative Committee formulates and proposes the general policy
lines and criteria to follow in the development of objective programmes and assignments,
examining the proposals made to it in this respect, comparing and judging the actions and
results in whatever
VI/7
activities it exercises, either direct or indirectly, on behalf of the Entity; it determines the
volume of investments for each of them; approves or refuses transactions, fixes their
terms and conditions; promotes the conducting of checks and internal or external audits,
for each area in which the Entity operates, given that the Board has delegated all of the
capacities it requires to do so, except those which can not be legally delegated.
During the 2001 financial year, the Permanent Representative Committee held 43
meetings, and 16 have taken place to date during the 2002 financial year.
6.1.3 The Chairman
The Company has a sole Chairman, Mr. Francisco González Rodríguez, who has all of
the powers and functions stipulated by the Law and the Statutes and as a result, is the
Chairman of the General Meeting of Shareholders, the Board of Directors, the Permanent
Representative Committee and all the other Board committees and groups.
When the first five-years of Mr. Francisco González Rodríguez’s appointment as a
company Board Member comes to an end, his re-election as a board member will
necessarily be proposed by the Board at the first General Meeting held thereafter.
During a five-year period as from the end of the Transition Period, a three-quarters
majority of the members of the Board is required to approve the Chairman’s removal and
the privation or limitation of his executive faculties, as well as to appoint a new Company
Chairman.
6.1.4 Board Committees and Commissions
In accordance with the Company Statutes, the Company’s Board of Directors can
constitute Committees or Commissions, other than the Permanent Representative
Committee, including a Control Commission, one or several Working Committees and one
or several Commissions that oversee all the aspects of the different areas of the Bank’s
business and activity.
Currently, without prejudice to the agreements reached by the Board of Directors relating
to changes in the Bank’s corporate governance as a consequence of the result of work by
the special committee set up for this purpose, it is planned to create the following over the
coming weeks:
Control Commission
In accordance with Article 48 of the Bank’s Company Statutes, this Commission is an
advisory body with no executive functions and which is currently governed by the
Regulation approved by the Board of Directors.
In accordance with its Regulation, this Commission, made up of Advisors with no
executive functions, is intended to assist the Board of Directors in supervising the control
function within the BBVA financial group, and in establishing and maintaining suitable
systems for internal control. It proposes the appointment of the Company’s and
consolidated group’s external auditors, examines the annual audit plan, oversees the
activities of the regulatory and supervisory authorities and supervises the observance of
the rules of the system for the Group’s governance, assessing it for compliance with the
rules and annually assessing the quality of the Board’s work, through the drafting of a
report
which
is
presented
to
the
Board
of
Directors.
VI/8
Among its specific functions, this Commission is responsible for supervising all of the
Bank’s and Group’s financial statements before they are approved by the Board of
Directors.
During the 2001 financial year, the Control Commission held 8 meetings and 4 have been
held so far in the 2002 financial year.
The Board of Directors has agreed to change the name of this Commission, which will
now be called the Audit and Compliance Commission, appointing Mr. Ricardo Lacasa
Suárez, as a member who has extensive experience in the sector, to be its Chairman.
Following the reduction in its members as a result of their resignation from the Board of
Directors, the remainder of its members still have to be appointed at the time of this
publication, but this should take place over the next few weeks.
Remuneration Committee
The Board of Directors’ Remuneration Committee is currently invested with the power to
give information about the remuneration of the members of the Board of Directors and the
Bank’s executive management.
The Board of Directors has appointed its member, Mr. Ignacio Ferrero Jordi, as Chairman
of the Remuneration Committee, leaving its remaining members to be appointed, at the
time of this publication, from the Board Members who do not hold executive functions.
During the 2001 financial year, the Remuneration Committee held 4 meetings and it has
also held 2 meetings since the start of the 2002 financial year.
Working Committee
Its function is to analyse and take decisions concerning risk transactions, and it is
composed of Board Members, who submit to it all of the transactions whose quantity or
special significance, could be important for the performance of the Bank’s business. It also
operates occasionally as a supervisory and approval body, and at other times takes a
preliminary look at any decision to be submitted to the Permanent Representative
Committee.
This committee is composed of all of the Board Members and is chaired in rotation by all
of them. Its meetings are normally held twice a week, although the Chairman and the
Managing Director do not often attend them.
This Committee will be replaced by the new Risk Committee, whose functions will be
decided by the Board of Directors, and will be chaired by Mr. Jesús Mª Caínzos.
Other Board Committees
Answering directly to the Board of Directors and all composed of Board Members, other
Committees of an informative nature also exist, covering the different activities in the
Bank’s areas of business and support. All of the members of the Board of Directors are
entitled to participate in them.
VI/9
Code of Conduct in the area of Securities Markets
On 19th December 2000, the BBVA’s Board of Directors approved a Code of Conduct for
the area of Securities Markets, which set out the rules for behaviour and privileged or
confidential information management procedures in the said area. This Code also sets out
a series of guidelines to control activities in the securities markets by the directors,
executives and other persons within the Group whose activity is related to such markets
and to regulate the way in which all of the people covered by the Code have to operate in
the securities markets; likewise, the Code establishes measures to promote transparency
in the markets and correct price formation, as well as to preserve investors’ interests at all
times and effectively warn them of all the possible conflicts of interest that may arise in
terms of group interests, as well as for customers or employees.
6.1.5. Executive Committee
The Bank has an Executive Committee which includes senior executives, who are
responsible for the areas mentioned below.
This Committee does not have any specifically assigned functions, and is made up of the
following members:
Chairman
Managing Director
Mr. José Ignacio Goirigolzarri Tellaeche
Other Executive Committee Members
Mr. José María Abril Pérez
Mr. Eduardo Arbizu Lostao
Mr. Angel Cano Fernández
Mr. José Antonio Fernández Rivero
Mr. José Fonollosa García
Mr. Julio López Gómez
Mr. Manuel Méndez del Río
Mr. Vitalino Nafría Aznar
Mr. Antonio Ortega Parra
Mr. Ignacio Sánchez-Asiaín Sanz
Mr. Gregorio Villalabeitia Galarraga
Merchant and Investment Banking
Legal Issues
Financial Management
Media
Banking America
Retail Banking Spain and Portugal
Secretary General
Risks
BBVA Bancomer
Human Resources
Grupo Industrial e Inmobiliario
6.2.
TOTAL HOLDINGS OF THE DIRECTORS AND EXECUTIVE MANAGEMENT.
6.2.1
The members of the Banco Bilbao Vizcaya Argentaria, S.A. Board of Directors
hold 38,192,464 BBVA shares to date, as detailed in the
VI/10
following table, which indicates the shares held either directly or indirectly by
each Board Member:
BOARD MEMBER
Chairman:
Deputy Chairman:
Mr. Jesús Mª Cainzos Fernández
Managing Director:
Mr. José Ignacio GoIrigolzarri Tellaeche
Board Members:
Mr. Juan Carlos Alvarez Mezquiriz
Mr. Ricardo Lacasa Suárez
Mr. Gregorio Marañón y Bertrán de Lis
Mr. José Mª San Martín Espinos
Mr. Jaume Tomás Sabate
Telefónica de España, S.A. (*)
TOTAL
Direct
shares
Indirect
shares
Total
Shares
%of share
capital
666
1.267.500
1.268.166
0,0397
60.886
1.168
62.054
0.0019
117.252
281.819
399.071
0,0125
30.530
8.139
2.243
8.188
8.050
49.147
27.281
24.681
18.490
9.607
2.483
0
0
150
7.000
1774
0
0
27.100
0
33.087
0
0
30.530
8.289
9.243
9.962
8.050
49.147
54.381
24.681
51.577
9.607
2.483
0
0,0010
0,0003
0,0003
0,0002
0,0000
0,0015
0,0017
0,0008
0,0016
0,0000
0,0001
0
367.643
1.619.598
1.987.241
0,0616
*TELEFONICA, S.A., the parent company of Telefónica de España, S.A., holds 36.205.223 BBVA shares, which represent 1.1329% of the share capital.
The shares represented by all of the Board of Directors in the BBVA General
Meeting of Shareholders, held on 9th March 2002, totalled 1,259,315,863 shares,
representing 39.40% of the share capital.
The members of the Board of Directors do not permanently represent other
BBVA shares over and above those indicated in the above table.
On 01/06 /2002, the entire Executive Management and its family groups held a
total of 9,354,732 shares, representing 0.29% of the share capital.
On 01/06 /2002, 43,413 employees held a total of 85,211,959 shares,
representing 2.67% of the capital. The figures do not include Executive
Management.
Additional information on employee share schemes in the Bank’s capital is
provided in point 6.9. of this Brochure.
The BBVA Foundation, on 1.06.2002, held 34,365,852 shares, representing
1.08% of the capital. The Foundation’s shares were represented at the last
General meeting of Shareholders by the Chairman of the Meeting.
VI/11
6.2.2
Directors’ and senior executives’ interests in the COMPANY’s unusual and
extraordinary transactions during the course of the previous and current
financial year
No member or person represented on the Board, either directly or indirectly or
through an intermediary, or through concerted action has taken part in any type
of unusual or extraordinary transaction during the 2001 financial year nor during
the present financial year to date.
As detailed in section 6.1.1 above, the Board Member Statute established the
ethical rules regulating the situations in which conflicts of interest may arise
between the board members and people connected with them and the BBVA
Group.
6.2.3
Salaries, allowances and remunerations of all kinds earned by the directors
and senior executives during the previous financial year, for whatever
purpose
Art. 53 of the BBVA Company Statutes, Allocation of results, paragraph two,
section c) establishes that after allocations to the legal reserves and
shareholders’ dividend, the resulting profit each year should be distributed, “four
per cent of which should be used as remuneration for the services of the Board of
Directors and Permanent Representative Committee, except where the Board
itself agrees to reduce this share percentage for the years it considers
appropriate. The resulting amount shall remain at the Board of Directors’
disposal, to be distributed between its members at the time, in the fashion and
proportion that the Board itself shall determine. This sum can only be removed
after having acknowledged to the shareholders the minimum 4 per cent dividend
as indicated in the above section”. The remuneration of the Board members is
basically proportionate to the amount of time that each Board Member works for
the Bank.
Article 50bis establishes that the Directors who are appointed executive functions
in the Company, whatever the nature of their legal relation to it, are entitled to
receive remuneration for carrying out such functions, which consist of a fixed
sum, appropriate for the services and responsibilities assumed, plus an
additional, variable amount and incentives which are established generally by the
Bank’s senior executives, which may include the offer of shares or purchase
options for them or remuneration related to the value of the shares, subject to the
requirements stipulated in the current legislation at any time. Part of it shall also
cover welfare factors, including prospective reserves, appropriate insurance and
social security. In the event of dismissal not related to the non-fulfilment of their
functions, they shall be entitled to indemnification.
Members of the Board of Directors received the following remunerations during
the 2001 financial year, indicated by item:
VI/12
?
?
?
?
1.785.000 €
7.567.000 €
3.354.000 €
7.771.000 €
Fixed remunerations for members of the Board of Directors (nº 33):
Allowances and variable remuneration of the members of the Board of Directors (nº 33):
Fixed remuneration of the executive committee members, for this capacity (nº 4):
Variable remuneration of the executive committee members, for this capacity (nº 4):
TOTAL:
20.477.000 €
With regard to the remunerations of Board Members, it should be noted that the
aforementioned figures include 577,000 € corresponding to allowances from Group
companies, and that no other remuneration exists apart from that indicated for this item.
When this brochure went to print, the members of the Board of Directors had not earned
any amount corresponding to remunerations for the 2002 financial year. On the other
hand, between 1st January and 31 May 2002, the Bank’s Executive Committee Members
earned, in this capacity, the sum of 956,411 Euro itemised as fixed remuneration.
The Senior executives’ remuneration policy basically consists of placing greater emphasis
on variable remuneration, which is basically related to the results obtained by the Group
during each financial year and the specific objectives fixed for each of the members of the
Executive Management.
During the 2001 financial year, the senior executives who are currently Management Committee
members, excluding the Executive Committee Members, earned fixed and variable remuneration
totalling 10,664,036 euro. Furthermore, this group also earned fixed and variable remuneration
between 1st January and 31st May 2002 totalling 1,714,955 euro.
Senior executives in the Management Committee have not been paid any allowances by
the Bank or any remuneration from companies within the BBVA Group.
The reduction in the numbers of Executive Committee Members and senior executive
members of the Management Committee during the financial years 2001 and 2002 did not
result in any additional charges in the income statement.
6.2.4
Amounts contracted in obligations with regard to pensions and life
assurance for the founders, former and current members of the governing
bodies and current and former executives
The consolidated benefits of former and current members of the Bank’s Board of Directors
on 31st December 2000 and on 31st December 2001 amounted to 27,894,069 and
84,939,548 euro respectively. The increase in the figure for 31st December 2001 is the
consequence of the retirement and early retirement of Executive Committee Members
during the year, who have now become part of the group of former members of the Board
of Directors.
The consolidated benefits of the Executive Committee Members on 31st December 2000
and on 31st December 2001 amounted to 27,698,009 and 25,394,672 euro respectively.
Expenditure for obligations as a result of the constitution of pensions paid out of the
results of the 2000 and 2001 financial years for the Bank’s Executive Committee Members
in place at the end of each financial year amounted to 17,958,000 euro and 7,374,000
euro and allocations to the Board Members’ prospective fund amounted to 1,238,000 euro
and 1,358,000 euro respectively.
VI/13
On 31st December 2001, the financing of obligations for pension commitments for the
current senior executives who are members of the Bank’s Management Committee,
excluding Executive Committee Members, amounted to 24,639,031 Euro, with allocations
for this group paid out of the results for the 2001 financial year totalling 7,372,043 Euro.
6.2.5
Advances, loans granted and current guarantees provided by the
COMPANY to directors and senior executives.
The advances and loans granted on 31st December 2001 to all of the members of the
Bank’s Board of Directors amounted to 6,091,000 euro which earned annual interest of
between 4.2 % and 6.6%.The figure quoted includes the amount of loans granted to
Executive Committee Members, intended for the acquisition of BBVA shares, in
accordance with the agreement made by the General Meeting of Shareholders on 17th
April 2000, details of which are included in section 6.9 of this brochure.
In addition, on 31st December 2001 guarantees provided on their behalf amounted to
142,000 euro.
Loans granted to the Bank’s Senior executives who were members of the Management
Committee on 31st December 2001, excluding Executive Committee Members, amounted
to 8,615,000 €. Furthermore, guarantees given on behalf of the Bank’s senior executives
who were Executive Committee members on the same date amounted to 6,000 €.
6.2.6
Details of the main activities undertaken by the directors and senior
executives outside the COMPANY, when these activities were significant to
the said company
The members of the BBVA Board of Directors are also members of the governing bodies
of other companies.
The most significant activities undertaken by certain members of the Board of Directors
were as follows:
Mr. Juan Carlos Álvarez Mezquíriz
Deputy Chairman of the Grupo Eulen
Board Member of Bodegas Vega Sicilia, S.A.
S.A.
Board Member of Ctra. Inmo. Urba. Vasco-Aragonesa,
Chairman of Nutrexpa, S.A.
Mr. J. Ignacio Goirigolzarri Tellaeche
Deputy Chairman of Telefónica, S.A.
Deputy Chairman of Repsol, S.A.
Chairman of Carbónicas Alavesas, S.A.
Board Member of Aguas de San Martín de Veri, S.A.
Board Member of Mediasal 2000, S.A.
Chairman of Confebask.
Board Member of Telefónica, S.A.
Mr. Gregorio Marañón y Bertrán de Lis
Chairman of Productos Roche, S.A.
VI/14
Board Member
Board Member
Board Member
Board Member
of Promotora Informaciones, S.A.
of Asland, S.A.
of Viscofán, S.A.
of Sogecable, S.A.
Board Member and Secretary to the
Inspecciones Técnicas Internacionales, S.A.
Board
of
Dean of the Faculty of Management Science and
Business Studies “La Comercial” at the University of
Deusto.
Professor of Management Science and Management
Managing Director of Construcciones San Martín.
Chairman of Arbora Holding, S.A.
Board Member of Corporación Agrolimen, S.A.
6.3. Natural persons or legal entities directly or indirectly, operating jointly or
severally, exercising or in a position to exercise control over the COMPANY
There are no natural persons or legal entities which directly or indirectly, jointly or
severally, exercise or are in a position to control the Bank.
6.4. Statutory precepts which assume or could lead to the assumption of a
restriction or limitation of the acquisition of major interests in the COMPANY
by outside buyers
No statutory precepts exist which assume or could assume a restriction or limitation in the
acquisition of major interests in the Company by outside buyers.
BBVA shares offer entitlement to attend and vote at General Meetings and to challenge
company agreements.
The Company Statutes require a minimum of 500 shares to be held in order to attend
General Meetings although they also envisage the possibility for shareholders with less
than the requisite number to group together in order to make up the minimum
requirement, and to appoint a representative.
Each share has one voting right attached to it, although no single shareholder can place a
number of votes higher than the number corresponding to shares representing 10% of the
share capital. This restriction does not affect votes corresponding to represented shares,
but continues to apply with regard to the number of voting rights attached to the shares of
individual shareholders represented.
6.5
Major interests in the COMPANY’s capital, with regard to the Royal Decree
377/1991, of 15th March, mentioning the shareholders
On 31.12.01, no individual interests in the BBVA’s capital amounted to 5% of the total.
VI/15
Likewise, on 31.05.02, Chase Manhattan Bank N.A., as the Global Custody Bank, was the
intermediary holder of 6.25% of the Bank’s share capital.
6.6. Structural distribution of the BBVA shareholders
The structural distribution of the shareholders of the BANCO BILBAO VIZCAYA
ARGENTARIA, S.A., on 31st May 2002, is shown in the following table:
SHAREHOLDERS
Up to 150
From 151 to 450
From 451 to 1.800
From 1.801 to 4.500
From 4.501 to 9.000
From 9.001 to 45.000
From 45.001 to 500.000
From 500.001 to 2.500.000
From 2.500.001 to 25.000.000
From 25.000.001 to 50.000.000
From 50.000.001 upwards
TOTALS
SHARES
Number
485.685
361.744
226.692
59.651
23.078
20.290
3.780
249
80
9
6
1.181.264
%
41,12
30,62
19,19
5,05
1,95
1,72
0,324
0,02
0,01
0,00
0,00
100
RANGES
Number
39.671.565
94.014.007
192.407.121
167.164.457
145.051.268
365.872.959
11.597.649
253.655.212
609.885.175
343.787.915
572.744.715
3.195.852.043
%
1,24
2,94
6,02
5,23
4,54
11,45
12,88
7,94
19,08
10,76
17,92
100
6.7. Identification of persons or entities to whom the COMPANY is indebted
No persons or entities who have lent money to the Bank account for over 20% of the longterm debts.
6.8. Existence of customers or suppliers with significant business transactions
with the COMPANY
There are no customers whose business transactions account for more than 25% of the
total of the Bank’s business.
6.9. Personnel investment schemes in the COMPANY’s capital
The Banco Bilbao Vizcaya Argentaria does not currently have a general policy for granting
loans to its employees, nor to third parties not in its employment, for the acquisition of its
shares.
VI/16
As a result of the execution of extraordinary incentive schemes for BBV personnel, the
Bank has made the following commitments to its employees:
Within the BBV “Programa 1000 Días”, the right to acquire BBVA shares at a price of 1.32
euro per share for 1995 incentives distributed in 1996, 2 euro per share for 1996
incentives distributed in 1997 and 3.67 euro per share for 1997 incentives distributed in
1998. These rewards are financed by variations compared with average exchange rate on
the different markets for the month of January in 2001, 2002 and 2003 respectively. This
difference includes a cash incentive, whose net value is necessarily and simultaneously
used for the acquisition of BBVA shares on the Stock Market at the Market price, and
which personnel are entirely free to dispose of as they wish.
On 31.12.01 the total hypothetical shares involved in this scheme amounted to 7,710,147.
The Directors and Senior Executives voluntarily declined to take part in the “Programa
1000 días” award scheme over the three years, for the benefit of the other employees.
In the “DOS MIL” Programme, the right was granted to acquire BBVA shares at a price of
6.01 euro per share for the 1998 awards and 10.65 euro per share for the 1999 awards.
These shares will be paid up in 2003 under a similar system to the one described above.
The number of shares involved in this scheme on 31.12.01 amounted to 10,033,108.
The Bank’s current Managing Director, Mr. José Ignacio Goirigolzarri Tellaeche, has been
granted 8,332 options, half of which are to be converted at 6.01 euro per share and the
other half at 10.65 euro per share.
In addition, the Bank’s Directors General and similar functions were granted total options
of 18,786 to be converted at 6.01 euro per share and 18,786 options to be converted at
10.65 euro per share, broken down as follows:
SURNAMES AND FIRST NAME
OPTIONS 98
FIN.YEAR
OPTIONS
ABRIL PEREZ, JOSÉ MARÍA
2.719
2.719
BASAGOITI ZABALA, ALFONSO
2.393
2.393
FONOLLOSA GARCÍA, JOSÉ
3.758
3.758
LÓPEZ GÓMEZ, JULIO
2.462
2.462
NAFRÍA AZNAR, VITALINO
2.416
2.416
ORTEGA PARRA, ANTONIO
2.614
2.614
SANCHEZ-ASIAÍN SANZ, IGNACIO
1.864
1.864
560
560
SEVILLA ALVAREZ, JOSE
Similarly, within the CREA program in 2001 the Group’s employees, excluding the
Directors General and similar functions defined according to the Act 55/1999, who fulfilled
certain conditions related to the accomplishment of their function, were granted the right to
acquire BBVA shares at a price of 12.02 euro per share, which can be exercised between
the years 2003 and 2004, after which the acquired shares can be freely disposed of by the
employee. The number of shares involved in this scheme amounted to 8,995,381.
VI/17
The BBVA, in execution of the agreements adopted by the General Meeting of
Shareholders held on 17th April 2000, decided to apply a remuneration system in relation
to the value of the BBVA shares to executive directors and senior members of the Bank’s
executive management, which would entitle them, where appropriate, to receive a cash
sum in the event that the value of the BBVA share price increased over the duration of the
programme, which will end on 31st December 2002.
This sum is to be calculated by the difference between the share value at the start of the
programme, which was established for the purpose at 15 € plus 10% (initial value), and
the average price quoted during the last seventy stock market sessions prior to the date
when the programme ends (final value), according to the number of options that are
hypothetically assigned to each person in line with the conditions specified above, where
each hypothetical option is equivalent to one share.
In order to be entitled to receive the amounts resulting from the programme, it is essential
to invest in BBVA shares, for 60, 45, 30, 20, 10 and 5 million pesetas, depending on the
tier in which each director taking part in the programme has been placed, which has to
remain the same for the duration of the programme.
Each of these tiers has been assigned a hypothetical number of options which will serve
as a basis to determine, in each case, the total remuneration for each person taking part
in the programme.
Thus the chairman, with a minimum investment of 60 million pesetas in BBVA shares, is allocated
180,000 hypothetical options; each of the remaining members of the Executive Committee,
including the Secretary General to the Committee, with a minimum investment of 30 million, has
90,000 hypothetical options; each of the Area Directors General, Assistants to the Chairman,
Deputy Directors General and similar functions, with a minimum investment of 20 million, are
allocated 65,000 hypothetical options; each of the Sub-directors General and similar functions, with
a minimum investment of 10 million, are allocated 42,000 hypothetical options; each of the
Assistant Sub-directors General, similar functions and other executive management posts, with a
minimum investment of 5 million, are allocated 30,000 hypothetical options.
Notwithstanding the above, the Bank has reserved a total of 4,180,500 options in order to
be able to include them in the remuneration programme, over its duration, to anyone who
may become an Executive Director or Senior Executive in the company, as well as to be
able to assign a higher number of shares to anyone in the various tiers indicated, in line
with their dedication to the Bank and the evaluation of the responsibilities assumed.
The total number of hypothetical options included in the programme amounted to
15,476,500, and of these, 1,437,000 hypothetical options have been initially assigned to
the Bank’s 19 current Executive Committee Members, Directors General and similar
functions.
Despite having established the completion date of the programme as mentioned above,
the payment of the amount which may be due from it shall take place one year after this
date, it being a requisite condition to consolidate the entitlements resulting from the
programme that they remain within the Bank during this time, except in the eventualities of
retirement, early retirement, invalidity or death.
The net quantity which is finally allocated to each of the participants in the programme will
be invested, after the corresponding deductions for Income Tax for natural persons for the
acquisition of BBVA shares, which they are then free to dispose of as they wish.
VI/18
The Bank has contracted the appropriate external cover for the cost of the programme by
subscribing the corresponding contract with the “Bank AIG, London Branch”, whose total
cost for the Bank amounts to 36,601,992.50 euro.
In addition to the aforementioned remuneration system, the General Meeting of
Shareholders which met on 17th April 2000 agreed to authorise the granting of loans or
credits to the Bank’s executive directors and members of its executive management, for
the purposes of acquiring BBVA shares on the stock market, and contracted external
insurance cover, the cost of which shall be sustained by the Bank, guaranteeing loss in
the share value of more than 5%, until 31st December 2002.
The amount of the loan necessarily has to be invested in BBVA shares, which have to be
held until 31st December 2002, the programme completion date, although there is an
option for the directors to sell part of the shares acquired on certain dates, with the
obligation to repay the loan for the corresponding amount, by applying the product of the
sale of shares to the repayment of the loan capital.
If the Directors leave the Company for whatever reason, except retirement or early
retirement, they should refund the loan, for which they are entitled to sell the shares.
Under these conditions, BBVA shares will be acquired on the stock market at a total value
of 85,890,370 euro, for a total of 215 Directors, 11,479,331 euro of which is for the Bank’s
19 Executive Committee Members, Directors General and similar functions.
As a consequence of the loans granted to the Executive Committee Members and
members of the Bank’s Management Committee, in execution of the agreement decided
in the General Meeting of Shareholders of 17th April 2000, which were intended for the
acquisition of BBVA shares on the market, the cost of the Bank’s contribution amounted to
283,901 euro for the amounts granted to the Executive Committee Members and 948,486
euro for the loans granted to the Bank’s Directors General and similar functions.
On 10th December 2001, the Permanent Representative Committee, by virtue of the
capacities delegated to it by the Bank’s Board of Directors, agreed to authorise the
possibility of early repayment of the loan capital, either totally or partially, through the sale
of shares acquired with the said funding on any of the dates initially stated for this
purpose, i.e. 31st December 2001 or 30th June 2002 or the date envisaged for the
completion of the programme, 31st December 2002, as they so choose.
6.10. The total remuneration paid during the 2001 financial year by the BBVA and its
Group entities to Arthur Andersen amounted to 14.483 million Euro, 9.1 million of
which was for auditing activities and 5.383 million for other additional work not
related to auditing services for the BBVA Group entities.
VII/1
CHAPTER VII
BUSINESS OUTLOOK
AND FUTURE PLANS
7.1.
THE BBVA’s POSITION
7.1.1. First Quarter 2002 Results
During the first quarter of 2002 the BBVA Group obtained imputed profits of 587 million
euro, representing an increase of over 6.0% compared with the same period in the
previous year. Profit per share amounted to 0.18 euro and is growing at the same rate.
Profitability of equity capital currently stands at 18.1%, slightly higher that the level in
2001.
Quarterly results demonstrate above all the excellent activity in recurrent income, as
reflected by the inter-year increase in operating profits of 23.7% (30.1% including
Argentina, using the equity method).
In order to have a clearer understanding of the evolution in the first quarter of 2002, the statements
of financial position and consolidated income statements for the first quarter of 2002 and 2001 are
presented, along with an inter-year comparison.
VII/2
FINANCIAL STATEMENTS AS ON 31st MARCH 2002
Consolidated statement of financial position
Credit institutions
Customer loans
Fixed-yield securities portfolio
. Treasury borrowing
. Bonds and other fixed-yield securities
Variable-yield securities portfolio
. Equity method
. Remaining interest
Consolidation goodwill
Tangible assets
Equity shares
Losses of previous financial years in
consolidated companies
Other assets
TOTAL ASSETS
Credit institutions
Customer resources balance
. Customer accounts
. Debts represented by negotiable securities
. Subordinated liabilities
Other liabilities
Consolidated profits for the financial year
Minority interests
Capital
Reserves
TOTAL LIABILITIES
31-03-02
Variation %
31-03-01
8.394
21.625
147.043
83.167
20.535
62.632
10.727
7.205
3.522
4.492
5.928
88
16,0
-49,0
5,4
6,6
36,8
-0,6
-6,3
-15,4
20,2
1,5
-11,9
-29,5
7.235
42.371
139.469
78.013
15.013
63.000
11.448
8.517
2.931
4.426
6.728
125
2.675
19.193
303.332
63.358
195.607
161.982
26.342
7.283
19.873
803
7.301
1.566
14.824
303.332
20,4
-0,2
-2,5
-18,5
3,4 1
3,5
-4,8
43,6
-1,6
-6,4
-4,2
5,4
-2,5
2.223
19.230
311.268
77.730
89.223
156.468
27.683
5.072
20.200
858
7.623
1.566
14.068
311.268
Other resources managed for customers
. Investment funds
. Pension funds
. Customer portfolios
126.144
50.518
40.447
35.179
6,2
5,3
3,9
10,3
118.800
47.987
38.916
31.897
PROMEMORIA(1) :
Average total assets
Average assets weighted for risk
Average equity
303.907
170.268
13.243
7,1
3,4
12,8
283.712
164.619
11.742
(1) Calculated using data from the last four quarters.
VII/3
Consolidated income statements
Financial revenue
Financial expenses
Dividends
31-03-02
Variation %
31-03-01
4.519
-2.489
84
2.114
971
-22,6
-35,3
-5,6
1,6
6,4
5.838
-3.846
89
2.081
912
3.085
206
3,1
n.s.
2.993
46
PROFIT ON ORDINARY ACTIVITY
Personnel costs
3.291
-1.002
–550
8,3
-0,9
-6,2
3.039
-1.012
-586
Amortizations
Other operating profits and charges (net)
-1.552
-177
–80
-2,9
-3,2
33,4
-1.598
-184
-60
OPERATING PROFIT
Net Profits, equity method
Promemoria: correction for dividend payments
Amortization of consolidation goodwill
1.482
139
-59
-136
23,7
-16,8
-19,6
29,0
1.197
168
-74
-106
Net Profits from Group operations
Net loan restructuring
. Gross provision
. Free reserves
. Recovered suspended assets
Restructuring of financial fixed assets
Net extraordinary profits
112
–437
-630
145
48
3
-86
-58,9
33,3
24,1
77,1
-50,9
n.s.
48,8
272
-328
-508
82
98
1
-57
PROFIT BEFORE TAX
Tax on profits
1.077
-274
-6,1
-5,2
1.147
-289
CONSOLIDATED PROFIT FOR THE YEAR
Result imputed to minority holdings
. Preference shares
. Minority interests
803
–216
-76
–140
-6,4
-28,9
-4,7
-37,4
858
-305
-80
-225
587
6,0
553
Net commissions
BASIC MARGIN
Profit from financial operations
PROFIT IMPUTED TO THE GROUP
VII/4
Consolidated income statement including Argentina, equity method
31-03-02
Financial products
Financial costs
Dividends
GROSS MARGIN
Net commissions
Variation %
31-03-01
4.257
-2.336
84
2..005
926
-22,9
-36,8
-3,3
4,6
14,4
5.523
-3.694
87
1.916
810
BASIC MARGIN
2.931
168
7,5
n.s.
2.726
12
ORDINARY PROFIT
Personnel costs
3.099
-959
-524
13,2
3,3
-2,1
2.738
-928
-536
-1.483
–167
-77
1,4
2,0
36,9
-1.464
-163
-56
1.372
132
-59
30,1
-40,5
-19,6
1.055
222
-74
-136
112
-393
-579
140
46
3
-15
29,0
-58,9
29,7
22,2
73,1
-48,9
315,1
-66,6
-106
272
-303
-474
81
90
1
-45
1.075
–270
-1,9
3,7
1.096
-261
805
-3,6
835
-218
-76
–142
-22,6
-4,7
- 29,6
-282
-80
-202
587
6,0
553
Amortizations
OPERATING PROFIT
Promemoria: correction after collection
dividends
of
. Gross provision
. Available funds
INCOME BEFORE TAX
Corporation tax
CONSOLIDATED PROFIT OF THE FINANCIAL
YEAR
. Minorities
VII/5
Consolidated income statements: quarterly evolution
2002
1st
Quarter.
Financial products
Financial costs
Dividends
2001
4th
Quarter.
3rd
Quarter.
2nd
Quarter.
1st
Quarter.
4.519
4.828
5.206
5.736
5.838
-2.489
-2.663
-3.023
-3.747
-3.846
84
142
66
198
89
GROSS MARGIN
2.114
2.307
2.249
2.187
2.081
Net commissions
971
1.021
1.016
1.089
912
BASIC MARGIN
3.085
3.328
3.265
3.276
2.993
206
59
204
181
46
ORDINARY PROFIT
Personnel costs
Amortizations
OPERATING PROFIT
3.291
3.387
3.469
3.457
3.039
-1.002
-1.061
-1.064
-1.106
-1.012
-550
-648
-628
–620
-586
-1.552
-1.709
-1.692
-1.726
-1.598
–177
-183
-185
-190
-184
-80
-65
-78
-83
-60
1.482
1.430
1.514
1.458
1.197
168
139
-45
177
93
Promemoria: correction after collection of dividends
–59
–92
–47
-166
-74
-136
-269
-125
-123
-106
1123
50
-36
368
272
Net loan reorganisation
-437
-942
-326
-323
-328
. Gross provision
-630
-1.072
-455
-466
-508
. Available funds
145
71
74
67
82
48
59
55
76
98
3
–23
-8
-13
1
-86
–374
-165
–131
-57
INCOME BEFORE TAX
1.077
127
1.031
1.329
1.147
-274
358
–309
–385
-289
Corporation tax
CONSOLIDATED PROFIT OF THE FINANCIAL YEAR
. Minorities
803
485
722
944
858
–216
62
–186
-217
-305
-76
–83
–82
- 71
-80
–140
145
–104
-146
-225
587
547
536
727
553
VII/6
Consolidated Income Statements including Argentina, equity method: quarterly
evolution
Financial products
Financial costs
Dividends
GROSS MARGIN
2002
1st
Quarter.
2001
4th
Quarter.
3rd
Quarter.
2nd
Quarter.
1st
Quarter.
4.257
4.513
4.838
5.399
5.523
-2.336
-2.483
-2.839
-3.591
-3.694
84
143
66
199
87
2.005
2.173
2.065
2.007
1.916
Net commissions
926
923
912
958
810
BASIC MARGIN
2.931
3.096
2.977
2.965
2.726
ORDINARY PROFIT
168
59
195
184
12
3.099
3.155
3.172
3.149
2.738
-928
Personnel costs
-959
-967
-975
-1.020
–524
–597
-576
-565
-536
-1.483
-1.564
-1.551
-1.585
-1.464
–167
-166
-167
-173
-163
–77
–61
-74
-79
-56
1.372
1.364
1.380
1.312
1.055
132
-400
205
140
222
Promemoria: correction after collection of dividends
-59
-92
-47
-166
-74
-136
-270
-125
-123
-106
1123
50
-36
368
272
-393
-519
-279
–287
-303
. Gross provision
-579
-635
-393
-415
-474
. Available funds
140
68
66
65
81
46
48
48
63
90
3
–23
-8
-13
1
-15
296
–128
-98
-45
INCOME BEFORE TAX
1.075
798
1.009
1.299
1.096
-270
-58
-299
–364
-261
Amortizations
OPERATING PROFIT
Corporation tax
CONSOLIDATED PROFIT OF THE FINANCIAL YEAR
. Minorities
PROFIT IMPUTED TO THE GROUP
805
740
710
935
835
-218
–193
-174
-208
-282
–76
–83
–82
- 71
-80
–142
-110
–92
–137
-202
587
547
536
727
553
VII/7
The significant increase in financial intermediation generated by the banking business in
Spain and Banking America, more than offset the effect of falling interest rates in Mexico
and brought about an increase of 1.6% in financial intermediation profit for the entire
Group (4.6% with Argentina, equity method). Commissions are also evolving favourably
and recorded an increase of 6.4%, 14.4% without Argentina, especially those generated
on the Group’s operations in Latin America and in Mexico in particular, where its increase
offset the fall in the financial intermediation.
The profit on ordinary activities contains improved results of financial transactions
compared with the first quarter of 2001 and registered an increase of 8.3% (13.2% with
Argentina, equity method). In the face of this growth, operating expenses fell by 2.9%
owing to the devaluation in Argentina. However, not including the costs resulting from this
country, they only increased by 1.4%, with general contention both for businesses and
cost items. This management of income and costs is reflected in a further improvement in
efficiency, which stands at around 47.9% for the quarter, compared with 53.5% for the
same period in the last financial year, excluding Argentina, with improvements in all areas
of business.
The generation of an increasing volume of recurrent results has made it possible to offset
the 58.9% fall in profits for Group transactions and 16.8% of the results using the equity
method, and a total allocation to reorganisation of more than 26% higher than the first
quarter of last year, in line with the usual criteria for due care currently applied within the
Group.
With the high level of loan restructuring achieved in the quarter, coverage for bad and
doubtful debts increased to 217.7%, higher than the 207.4% on 31-3-01, whilst the default
rate stands at the new all-time low of 1.53% in both cases, excluding Argentina. Including
Argentina, coverage for bad and doubtful debts stands at 219.4% (197.0% on 31-3-01),
and the default rate is 1.59% (1.91% on the same date for the year 2001).
Goodwill amortization amounted to 136 million euro, a 29% rise, owing to the increased
holdings of the Group Bancomer and in the Banca Nazionale del Lavoro.
Likewise during the quarter, the Group’s assets strengthened, achieving a capital ratio
according to the BIS standard of 13.1% at the end of the period, compared with 12.6%
and 11.8% of December and March 2001 respectively. Basic equity or Tier I resources
alone represent 9.0% of the risk-weighted assets. The capital ratio, according to the Bank
of Spain standard, has also increased and stands at 11.8% on 31-3-02.
7.1.2.
Finalisation of two integration processes
2001 was the second full financial year for the BBVA, and witnessed the finalisation of two
massive processes in terms of scale and significance for the future of the Group: the
integration of the commercial networks in Spain and Mexico.
BBVA completely finalised a complex integration process for the BBV and Argentaria
networks in Spain, during the month of February, in less than 14 months. Decisions such
as the choice of technological platform on day 34 of the merger, or the single brand after
90 days were major targets for the integration. The optimization of the workforce and the
commercial network or the space liberation programme, together with a strict company
reorganisation, completed the integration process.
VII/8
In the last quarter of 2001, two months ahead of the initially planned schedule, BBVA
integrated the operations of three entities in Mexico (former Bancomer, BBV Probursa and
Promex) on a single technological platform. The total process affected 2,354 offices, with
their 9 million customers, and involved the closure of 592 offices and a 25% reduction in
the workforce. The integration of BBVA Bancomer completed the infrastructure
implantation section in the Latin American banking operations.
7.2.
COMPANY OUTLOOK
7.2.1.
Latest events: ARGENTINA and other determining factors
For the BBVA, the deterioration of the situation in Argentina made it advisable to cover the
total of its investments in the country with provisions, bringing their book value down to
zero, which is reflected in the balance for the 2001 financial year. The worst possible
scenario was thus envisaged here. Since the end of 2001, the complex situation has
altered little and remains serious, and the most important effect, which also applies to the
rest of the foreign financial institutions was having to deal with the massive devaluation of
the Argentine peso compared with the dollar, which moved from parity to an exchange
rate approaching 2.80 pesos per dollar at the end of March, thereby creating an additional
negative effect on reserves in the results for the first quarter of 2002 amounting to 116
million euro.
When this Brochure was published, Argentina continued to face a difficult situation. In
spite of this, the BBVA hopes that the Argentine authorities will be able to reach the
necessary agreements with the main International Organisations. As a result, the financial
activity continues to be supported. Thus in April 2002, BBVA granted the BBVA Banco
Francés, S.A. loans totalling 159 million USD. On the one hand, on 4th April 2002 an
agreement was signed by virtue of which the BBVA handed over to the BBVA Banco
Francés, S.A. a total of 79 million USD, as a result of a commitment undertaken by the
BBVA and the BBVA Banco Francés to maintain the solvency of the latter. This loan
depended on the pignorative guarantee of loan rights derived from loans guaranteed for
an original nominal sum of 185 million USD. On the other hand, in the same month, the
BBVA granted the BBVA Banco Francés, S.A. two loans for a total of 80 million dollars in
order to cancel debts and bond interest payments, which made use of the pignorative
guarantee from customer loans of 120 million USD. The total of the aforementioned loans
has been allocated a 100% provision by the BBVA charged to the income statement for
the 2002 financial year.
Subsequently, in May 2002, the BBVA made known its intention to undertake the
capitalization of its subordinated debt with Argentina for a total of 130 million USD, along
with the loan granted on 4th April for 79 million USD. This capitalization process should
meet with the approval and authorisations provided in the Companies Act and Regulations
of the National Securities Commission in Argentina, Securities Market in Buenos Aires
and SEC, along with the approval of the Bank of Spain. This capitalization process forms
part of a plan to reinforce the assets and liquidity of the BBVA Banco Francés faced with
the situation affecting the Argentine financial system.
Furthermore, the acute crisis which is continuing in Argentina may also have a negative
impact on the results of the companies operating in these countries in which the BBVA
has a significant interest, such as the Repsol Group and the Telefónica Group, which will
similarly affect the results generated by the BBVA through the equity method evaluation of
these holdings.
VII/9
In any case, there is no certainty about the legislative changes which will take place in the
future in Argentina which is at the root of the current events there and whether such
changes will have a negative impact on the BBVA’s activities and results. The BBVA
continues to monitor the situation in Argentina very closely and, subject to a favourable
evolution, may in future consider the possibility of providing additional funding to its
subsidiaries there.
With regard to the disciplinary proceedings concerning the existence of certain accounts,
on 22nd March 2002, the BBVA undertook to notify as a relevant fact to the securities
market supervisors in which it is listed the said administrative proceedings by the Bank of
Spain against the entity and 24 of its former board members and directors as a
consequence of the accounting regularization of certain funds which took place at the end
of the 2000 financial year. More detailed comments are to be found in Chapter 0 and
section 5.4. of Chapter IV. The BBVA has undergone changes in its governing and
management bodies during the years 2001 and 2002 with the result that, to date, none of
the persons being investigated or accused of the aforementioned events are members of
the Board of Directors or on the Executive Committee or undertake executive functions in
the entity. Furthermore, in order to adapt to more advanced practices in terms of good
corporate governance, significant changes have been introduced in the operational
methods of the company’s bodies, control, risk and remuneration committees and a
specific committee has been created in the Board to study the adoption of subsequent
measures to improve the company’s governance.
These modifications are described in greater detail in Chapter 6 of this Brochure.
7.2.2.
New organisational structure
On 20th December 2001 the Group’s new organisation chart was revealed. With it began
a new chapter in the history of the BBVA which marked the end of the joint-chairmanship
transition period.
The pillars of the new structure are:
? Value creation in each of the Group’s businesses (grouped in the 6 major areas of
business)
? Simplification to increase autonomy in decision-making
? Pragmatism. Totally down to earth and growth oriented
The recently established organisational structure offers the Group enormous flexibility for
operations and capacity for decentralisation, and will enable the BBVA to manage its
businesses from the point of view of value creation.
The Group’s main executive body is the Managing Committee, which replaces the Group
Committee and Management Committee, the two bodies on which the BBVA depended
before this reorganization.
The new structure promotes maximum efficiency and speed in decision making, given that
it considerably reduces the number of directives in its initial levels. At the same time, the
first tier of the Senior Management has been significantly rejuvenated, with an average
age of 48 years.
De-bureaucratisation, decentralisation in decision making and in the centralisation of
information flows have forged ahead.
VII/10
Above all, the new organisational structure has a basic objective: to retain the customer at
the centre of the Group’s activity. The better we know our customers and serve them
more efficiently and with greater quality, the greater the value we provide to our
shareholders.
7.2.3.
BBVA Repositioning Plan
The early completion of the integration processes, combined with the high degree of
development in the lines of activity in each Area of Business, have lead the BBVA
management team to conclude the Cre@ strategic plan one year in advance. Through its
finalisation and presented with a totally new perspective, in early 2002 the BBVA launched
a new repositioning plan for its businesses with a medium to long-term view. The objective
is to create, but create profitably and continue to improve in order to turn the BBVA into a
genuine solution provider for its customers.
Profitable growth is achieved through the sum of profitable growth on each of the BBVA’s
businesses. The 6 new areas of business (Retail Banking Spain and Portugal, BBVA
Bancomer, Banking America, Asset Management and Private Banking, Merchant and
Investment banking and Grupo Industrial), in spite of their common objective, require
different approximations, in order to rely on increasing autonomy and adaptability within
the strong vision of the group. Within this unconventional vision of business created by the
BBVA, this repositioning plan is being launched to give impetus to efficiency, profitability
and growth with a single approach to the customer, technology and risk.
The BBVA clearly understands that value creation means providing its customers more
value and extracting greater value from them. BBVA is creating a culture of "passion" for
the customer, with the objective of long-term, profitable service.
The BBVA sees technology as a lever to transform its business model and so that nothing
is discontinuous but progressive and continuous. Risk management is innate in this
business and in fact crucial to its future profitability. This is why in the world of risk, the
BBVA is working towards maintaining a vision, procedures and harmonised information at
the Group level.
This plan involves common elements for the entire Group, with individual strategies for the
various businesses and an understanding of teams as a key factor of success.
Within the repositioning plan framework and in the face of 2002, the BBVA is proposing to
accomplish four financial objectives:
?
Growth in profit per share of 10%
?
Rate of return of equity (ROE) of over 19%
?
Efficiency ratio below 50%
?
Zero growth in operating costs
VII/11
7.2.4. A new way of seeing the BBVA Group
The repositioning plan in which the BBVA is immersed implies a new way of looking at the
Group by the management team. There are four aspects which sum up this new way of
seeing the Group:
1.-
Growth in Profit per Share as a value creation factor:
In the long term, the BBVA realises that sustained growth involves a high correlation
with value creation, which implies the revalorization de la action. But the BBVA is
simply aiming for profitable growth, i.e. in terms of profit per action and alignment
with the desired risk profile. The BBVA is continuing to bank on organic growth but
also non-organic growth. The achievement of the latter involves basic ingredients:
market credibility, a clear business model, proven capacity for operational
integration and an organisation which focuses on implementation. The non-organic
growth strategy should combine the right balance of profitability and risk in all of the
geographical areas in which we want to maintain a presence: Europe, the USA and
Latin America. But non-organic growth is and should be the complement to true
BBVA growth, i.e. organic or natural growth.
2.-
The BBVA as a diversified Group
The BBVA is a highly diversified Group and sees diversity as a source of value
creation. Its diversification is both geographic and in terms of its businesses.
Currently in Spain, Europe and the USA account for 6/9 of total assets, Mexico for
2/9 and the remaining 1/9 is accounted for by the rest of Latin America. Business
diversity is clearly shown in the information in the results of areas of business
found in this report.
3.-
Presence in markets and high growth business
The Group is present in markets and high potential growth businesses and does not
have a reductionist vision of them but aspires to offer the greatest possible agility
and dynamism so that it can spread over time the maximisation of value creation for
the Group.
4.-
Management based on value contribution
From the business point of view, the BBVA manages its businesses like a portfolio,
which implies investment decisions in businesses that contribute the most value to
the Group.
Furthermore, the BBVA is aware that not all customers have the same value, and it
is dedicating efforts to those who generate greater profitability for the entity.
7.2.5.
Financing prospects
The structure of BBVA merchant financing maturities and the new needs generated
through the growth of activity and balance sheet assets determine the financing
requirements and approximate timing of issues.
VII/12
The two following tables give details in terms of instalments and type of instrument of the
maturity of issues in the short (less than one year) and long term, both in euro and dollars:
MATURITY OF LONG-TERM MERCHANT FINANCING (Excluding Promissory Notes)
Active balance to
date 01-Jun-02
MATURITIES IN
MILLIONS EUR
<1 YEAR
1-2 Y.
2-3 Y.
3-4 Y.
4-5 Y.
5-10 Y.
Y
627
263
1
0
0
9
355
MORTGAGE BONDS
5.300
300
0
1.500
0
0
3.500
ISSUE
9.618
3.657
3.957
67
599
106
1.094
SUBORDINATED
4.492
73
0
0
985
686
770
PREFERENCE
3.016
220
1.700
0
0
500
0
OTHER
6.030
709
902
1.117
390
468
2.035
BORROWING
TOTAL (THOUSANDS EUR)
29.084
Active balance to
date 01-Jun-02
MATURITIES IN
MILLIONS USD
5.221
6.560
<1 YEAR
1-2 Y.
2.684
2-3 Y.
1.974
1.768
3-4 Y.
7.754
4-5 Y.
5-10 Y.
Y
ISSUE
2.571
1.519
493
22
320
3
101
SUBORDINATED
1.011
0
0
225
375
200
211
PREFERENCE
OTHER
1.458
550
248
0
0
70
0
382
0
0
126
195
0
60
TOTAL (THOUSANDS USD)
5.421
2.069
741
373
890
273
372
5.775
2.204
789
397
949
291
396
MATURITY OF SHORT-TERM MERCHANT FINANCING
Amortizations
Sep-02
Oct-02
Active
balance
on 01-Jun-02
ANNUAL
AMORT.
Jun-02
Jul-02
Aug-02
PROMISSORY NOTES
BORROWING
1.515
627
1.512
263
2182
126
89
5
185
36
MORTGAGE BONDS
5.300
300
0
0
0
0
0
0
0
300
ISSUE
9.618
3.657
0
300
750
1.016
51
0
813
726
SUBORDINATED
4.492
73
0
0
0
73
0
0
0
0
PREFERENCE
3.016
220
220
0
0
0
0
0
0
0
OTHER
6.030
709
0
143
0
242
53
0
271
0
30.599
6.734
563
737
972
1.459
232
128
1.558
1.084
ISSUE
2.571
1.519
25
92
0
47
25
110
1.091
129
SUBORDINATE
1.011
0
0
0
0
0
0
0
0
0
PREFERENCE
1.458
550
250
0
0
0
0
0
100
200
382
0
0
0
0
0
0
0
0
0
5.421
5.775
2.069
2.204
275
293
92
98
0
0
47
50
25
27
110
117
1.191
1.269
329
350
36.374
8.938
856
835
972
1.509
259
246
2.827
1.435
FIGURES IN
MILLIONS EUR
TOTAL (THOUSAND EUR)
127
0
1281
0
Nov-02
28
0
6-9
months
397
7818
9-12
months
40
FIGURES IN MILLIONS USD
OTHER
TOTAL (THOUSANDS USD)
TOTAL
(THOUSANDS EUR)
EUR+USD
VII/13
During the 2002 financial year and in accordance with requirements estimated by the
BBVA, it will be necessary to issue financing instruments for a total of 5,950 million euro.
Share Issue Plan Situation 2002
2002 PLAN (data in million euro)
Price
Maturs.
New
Total to
Issue
Issued in
May 2002
500
Unissued
TIER I (1)
703
-
500
TIER II (1)
200
500
700
-
500
-
3.000
3.000
300
2.700
Senior Debt (2)
6.334
337
6.671
3.921
2.750
TOTAL
7.237
3.837
10.371
4.721
5.950
Mortgage bonds
(1) Alternative Type of issue depending on capitalization requirements.
(2) Issues of debentures and bonds that are not considered as capital.
In the current market conditions, these issues mainly consist of 500 million euro of
preference shares, 2,500 million euro of senior debt and around 3,000 million euro in
mortgage bonds.
On the other hand, it is not possible in the current situation to envisage undertaking any
equity share issue, given the capital basis situation, although approval was given by the
last General Meeting, on 9th March 2002, to do so if necessary.
7.3. MEDIUM AND SHORT-TERM PLANS
7.3.1. European Expansion
BBVA assumes that following the introduction of the euro, the European banking sector is
going to experience a succession of profound changes. However, it is aware of the
difficulties which already exist for the formation of pan-European financial groups either
through takeovers or as a result of transnational mergers. Whatever the case may be, the
BBVA considers this process to be inevitable, and has take a political decision to take part
in this process insofar as circumstances so permit, assessing with due care any
investment possibility, always ensuring that any transaction undertaken makes economic
and strategic sense.
In accordance with this criterion, during the course of 2001, the BBVA increased its
shareholding in the Banca Nazionale del Lavoro by 4.87%, bringing it to 14.8%, at an
approximate cost of 398.1 million euro, thereby generating goodwill through this
transaction of approximately 206.6 million euro. On 30th January 2002 it also increased its
stake to 14.9%, after having duly informed of the supervisory authorities and the Italian
bank’s management. Subsequently, on 23rd April, an agreement was reached with
Generali, Banca Monte dei Paschi di Siena and Banca Popolare di Vicenza, by which the
BBVA will appoint the person proposed by one of the Deputy Chairmen and four
representatives in the Board of Directors, which is composed of 13 members. In this way,
the BBVA will increase its representation in the BNL’s Board. The agreement also
envisages the re-election of the entity’s current Chairman and Managing Director as
Board Members, along with the continued representation of the rest of the main
shareholders: two Board Members from Generali, one from the BMPS and one from the
BP Vicenza. The remaining three Board Members are reserved by the statutes for the lists
of minority interests which may be presented.
VII/14
Furthermore, on 4th July 2002 an agreement was signed with BAMI SOCIEDAD
ANOMINA INMOBILIARIA DE CONSTRUCTIONS Y TERRENOS for the sale of shares
representing 23.9% of the equity capital of METROVACESA, S.A. for a total price of 545.4
million euro and a share price of 36.55 euro. The sale will become effective once
authorisation has been obtained from the Competition Authorities. After this sale, the
BBVA Group will hold an interest of 1.13% in METROVACESA, S.A.
7.3.2. American Expansion
The BBVA commitment in Latin America is stable and long-term, based on confidence in
the continued potential of this region. With the perception of Latin American capacities to
contribute value to the Group, the BBVA has taken significant steps in 2001 to strengthen
its presence in this geographic zone.
It should be highlighted in this respect that the interest in the Grupo Financiero BBVA
Bancomer has been increased from 36.46% to 48.76%, through a series of transactions
undertaken in the 2001 financial year, which assume an investment of approximately
822.8 million dollars, consequently generating goodwill of 739 million euro. Also on 20th
June, during the BANCOMER share investment undertaken by the Mexican Government,
the BBVA was assigned the corresponding 3% of the capital, at a closing price of 8.10
Mexican pesos per share. With this assignment, the BBVA’s interest in Bancomer
exceeds 51% of its capital, for which it previously obtained the compulsory authorisation
from the Mexican Secretary of the Treasury Department and Public Borrowing.
Likewise, during the month of January 2001 the launch of various takeover bids was
announced for 14.88% of the capital of Banco Ganadero and 32% of the capital of Banco
Francés in order to acquire 100% of the capital in these entities. The first of these
transactions was carried out on 9th April 2001, which involved the payment of 44.4 million
dollars and increased the Group’s interest in BBVA Banco Ganadero to 95.35%. The
takeover bid for BBVA Banco Francés’ shares was suspended owing to the adverse
conditions in the financial market. Now in 2002, on 30th May, the BBVA Banco Francés
has signed an agreement with the Argentine authorities to increase its capital, for which
the BBVA will assist through the capitalisation of US $ 209.3 million corresponding to
subordinated negotiable securities held by the BBVA for the sum of US $ 130 million and
a financing loan from the BBVA for another US $ 79.3 million. This capitalisation operation
will not involve any additional injection of funds from the BBVA, nor have any impact on
the parent company, as both debts are 100% covered by provisions in its balance sheet.
The BBVA’s subscription to this increase in capital is subject to the prior authorisation
from the Bank of Spain. This transaction will bring about an improvement in the capital
ratios and solvency at a local level.
Likewise, the BBVA Group has strengthened its position in the area of pensions in Latin
America with a view to making the most of opportunities offered by the privatisation
processes of the pension systems in various countries. Thus in January 2002, it acquired
75% of the Génesis fund manager in Ecuador through Provida and this year, the new
BBVA Crecer fund manager has begun its activity in the Dominican Republic, in which the
BBVA has a 70% interest.
VII/15
7.3.3.
Development of strategic alliances
On 15th May 2002, TERRA and BBVA formalised a Statement of Intent as the basis
of an Agreement for the integration of UNOE BANK, S.A. and the area of activity of
private consumption finance undertaken by FINANZIA BANCO DE CRÉDITO, S.A.,
100% subsidiary of the BBVA. The TERRA interest in UNOE BANK S.A. will be 33%.
The integration operation described, along with the aforementioned TERRA
percentage interest, remains subject to the completion of the corresponding review of
the business that will be generated, formalisation of definitive contracts and obtention
of the relevant authorisations. Likewise, a liquidity mechanism has been formalised
which will be readjusted with on completion of the integration operation. This
agreement is a further step in the alliance signed on 11th February 2000 between
BBVA and Telefónica for the development and promotion of business in the area of
internet, electronic commerce, mobile services platform and payment media, an
agreement which incorporates the one signed by BBVA and Terra Networks on 4th
January 2000 for the development and promotion of joint business on the internet.
The alliance with Telefónica envisaged that the BBVA could acquire an interest of up
to 10% of this company, which currently stands at 5.14%.
Within the context of this Strategic Alliance, in April 2001 three initiatives were begun
focusing on the sectors of e-banking, telephone assistance and customer service and
electronic contracting of leisure services.
?
For the first of these, in August 2001 Terra acquired 49% of the capital of Uno-e, a
financial entity launched in Spain at the end of March 2000 and which operates a
financial supermarket strategy by offering not only its own products but also those
developed by other entities, with a 52,000 customer base.
Its short and medium-term objectives include the increase in functionalities and
products to be offered to customers; increasing the level of concentration in Spain
and achieving an efficient income statement through systematic cost control.
All of this is aimed at reaching a profitability threshold in 2003.
?
In the area of telephone assistance, the BBVA and Telefónica signed an agreement
on 4th December 2001 for integration in Atento, a Telefónica Group subsidiary, for all
of their "call center" activities that the BBVA holds both in Spain and in other
countries.
As a result of this integration, the BBVA will gain a 9% interest in the capital of Atento,
through its contribution from the companies Procesos Operativos S.A. (POSA) and
Leader Line, which undertook the activities of telemarketing, customer telephone
assistance, telepayment collections and "call center" activities both for the BBVA
Group and a wide range of clients.
The aforementioned agreement envisages the creation of a joint activities centre to
offer its customers global support, both in Europe and Latin America, along with the
entities belonging to the BBVA and Telefónica Groups, and will turn Atento into one of
the world leaders in its sector, and supports the company’s international expansion
process.
?
Finally, in the area of electronic contracting of leisure services, the Telefónica Group,
through Telefónica Media, has become a shareholder of BBVA Ticket with a 47.5%
interest.
BBVA Ticket operates in the sector of management and distribution of musical
events, offering entry sales services for concerts, by means of the Internet, telephone
and shops. It is owned by BBVA and ADMIRA.
It uses its own technology, which enables it to operate an active, multi-channel,
distribution model strategy.
VII/16
Details can be found below of other projects developed in the context of the
aforementioned agreements:
Mobipay is a payment activation service via mobile telephony, which is noted for its
simplicity, security and speed. Although it arose from the alliance between the BBVA
and Telefónica, most of the financial entities, Telecommunications and payment
processing companies operating in Spain now hold interests in its capital.
Mobipay Internacional: This company, owned by the BBVA, Telefónica Móviles,
SCH and Vodafone, aims to establish Mobipay technology in other countries.
HotelnetB2B: Information and negotiation platform between companies in the hotel
sector and their suppliers, whose basic objectives are: cost savings, increase in
efficiency and increased market alternatives. Various hotel groups have interests in
it.
7.4. BUSINESS AREA PLANS
7.4.1. Business areas
Within the new structure which was put in place in 2002 and orientated towards value
creation in each of the areas of business, the publication of the results for the first quarter
of 2002 which will offer the first presentation of them by area of business. This significant
improvement in information will also make it possible to see the contribution of each of
them in the generation of the Group’s results and provide an exact measurement of the
risk-adjusted profitability, in order to measure and identify the results of plans for each of
the areas of business with greater precision.
Retail banking Spain and Portugal
Development of new models and consolidation de la recuperation in 2001
(increase in market share)
The latest data published for the first quarter of 2002 indicate a Retail Banking
contribution for Spain and Portugal of 274 of the 587 million Euro of the profit attributed to
the Group and reflect a 23% increase compared with the first quarter of 2001.
Furthermore, the ROE increased from 27.1% to 32.9% and area efficiency improved from
50.8% in the first quarter of 2001 to 47.7% in the first quarter of 2002.
Retail Banking Spain and Portugal played a leading role in mid-May 2002 in another
strategic rationalisation movement through which the BBVA and Terra agreed to integrate
Uno-e and the consumer activity of BBVA Financia.
Retail Banking Spain and Portugal is the area responsible for managing relations with
private customers, companies and businesses in the geographic area of the Iberian
peninsula, and aims to optimise the development of the BBVA’s business in each of these
segments and in each of the local markets of which it is composed.
This new area incorporates under single management the former structures of Retail
Banking Spain, Professional Banking, BBVA Portugal, Finanzia and Uno-e; all of them
provide a high degree of affinity both in their business approach and their market
relations.
VII/17
On the one hand, it includes business which is developed through network criteria,
focusing on ‘retail’ management, and through the distribution of a wide range of products
and services, and on the other hand, they share a single market which should be
approached with a common strategy.
In order to develop its activity, the area is divided into four main units:
Retail Banking Spain: This unit is dedicated to the management of private customers,
businesses and shops in the Spanish retail market for which it manages a trade volume of
over 130,000M €, which offers it a significant position with market shares of 22% for
private individuals, 20% in shops and 36% in companies. It provides services to more than
12 million customers, whom it approaches via a multi-channel strategy –as a basis for its
accessibility-, and with physical networks (around 3,500 branches) which combine a
generalist vision –traditional network-, with a specialist vision such as the Personal
Banking and Mortgage Banking networks.
Company banking: Specialist unit for management and relations with SMEs in Spain,
where it holds a significant position, with a market share of 34%. Through its network of
231 branches, it provides services to around 100,000 customers, for whom it manages a
trade volume of over 26,000M €.
Retail Banking Portugal: Network of 116 branches in Portugal through which the BBVA
conducts banking business in this country in all segments: private customers, companies
and institutions, operating a multi-channel strategy in line with the expectations of each of
them. The trade volume managed is in excess of 2,300M €.
Finanzia: Unit specialising in the financing of sales in the consumer, automobile and
industrial equipment sectors, through agreements with major distributors in each sector. In
addition, it is responsible for issuing co-branded cards through agreements with major
distribution chains.
BBVA Finanzia has been operating two areas of business simultaneously since mid-May
2002: Unoe Finanzas personal finance, the result of the merger of Uno-e and the
consumer financing activity of Finanzia; and the financing activity for industrial equipment
and automobiles. This optimisation move combines two complementary capacities and
means that the new Uno-e has 2.2 million customers and now manages over 1,400 million
euro.
BBVA Bancomer
Commercial relaunch and economies of scale
The latest information published for the first quarter of 2002 reveals a BBVA Bancomer
contribution of 100 million euro of the 587 million Euro of profit attributed to the Group and
reflects negative growth of 9.9% compared with the first quarter of 2001. On the other
hand, the ROE has moved from 20.3% to 13.8% and area efficiency has improved from
48.0% in the first quarter of 2001 to 47.7% in the first quarter of 2002.
BBVA Bancomer is a group with local and global capacity, which reaches a large number
of Mexicans (9 million), and since the merger has positioned itself very satisfactorily in
Latin America. Bancomer has 1,756 branches and 3.712 automatic teller machines, the
largest commercial network in the country, which offers it significant coverage, greater
market penetration and enables it to make use of its distributive capacity to capitalise on
synergies and develop new business, with a share in the main market segments of around
30%.
VII/18
Group BBVA Bancomer is a reality with a future project focusing on value creation. It
offers specialist financial services with a customer-centred business structure. It proposes
the optimisation of operating profitability, consolidation of a balanced business portfolio
and innovation of high potential products and businesses.
The goal is to optimise the Group profitability through three objectives: efficiency, growth
and a balanced business portfolio. The aim is to sustainably improve efficiency in
customer transactions. To do so and in order to reduce costs, it has undertaken the
integration of distribution networks, brought together on a unified IT platform, promoting
banking services and products online to undertake transactions at a lower cost.
Bancomer’s franchise value enables it to capitalise on the growth opportunities in the
national banking system and continue to offer added-value products and services in the
loans and capitation segments. Furthermore, the banking unit promotes and
commercialises high-growth financial products and services generated by the business
subsidiaries in the network, whose contribution to Group results amounts to 24%.
BBVA Bancomer has a significant business portfolio which offers potential for growth and
profitability. Its diversification plan has been managed to capitalise on the opportunities
offered by the country’s meagre banking infrastructure, combined with its distribution
capacity.
The broadly structured strategies are put into practice by the business and support units,
which assist the Group’s activity in its commercial and administrative management.
Banking America
Regional franchising but approximation by country
Recent data published for the first quarter of 2002 shows a contribution excluding
Argentina by Banking America of 60 of the 587 million Euro of profit attributed to the group
and has increased 17.6% compared with the first quarter of 2001. Furthermore, the ROE
fell from 8.6% to 7.7% and area efficiency improved from 58.4% in the first quarter of 2001
to 49.3% in the first quarter of 2002.
The Banking America business area includes the banking entities which the BBVA
manages in ten countries in the region, except Mexico (BBVA Bancomer) which, owing to
its size, forms a separate business area.
In just a few years, it has changed from a heterogeneous group of investments in different
countries to an ordered block with common systems, procedures and approaches,
generically referred to as “the model”.
The model is being adapted in each of the countries and this can only be achieved
through a major decentralisation effort. Although of course this has to remain compatible
with the maintenance of economies of scale and the other advantages derived from
belonging to a large multinational group.
In order to respond to these two opposing requirements, it is also necessary to adapt the
corporate centre, giving it a more lightweight structure which should combine the direct
supervision of specific uniformly designed functions, such as for example Risks or
Financial Management, with the indirect control of other functions which, although they
are uniform in design, are “subcontracted” to the Group’s specialist areas, as is the case
with Systems, Human Resources and Internal Auditing.
VII/19
By contrast, the functions associated with the business should offer direct support from
this central structure based on the principle that decentralisation should be of the essence
here and should therefore be concentrated on the generation of locally utilisable added
value.
Anticipating the break in the value chain
Recent data published for the first quarter of 2002 reveal a contribution by asset
Management and Private Banking of 103 of the 587 million Euro of profit attributed to the
group and reflect negative growth of 2.8% compared with the first quarter of 2001.
Furthermore, the ROE fell from 62.6% to 55.0% and area efficiency improved from 30.6%
for the first quarter of 2001 to 30.5% in the first quarter of 2002.
The organisation of the area of Asset Management and Private Banking is facing the
impending break in the value chain of financial services and products offered to its
customers. In this sense, all of the Group’s activities in each of the links in this chain, from
production to the last distribution operation, contribute individually to global value creation
for the BBVA.
Following this value creation objective for the Group, the uniting of the various production
businesses (“factories”) with Private Banking under a single, global General Directorate,
enables the Group to approach this concept of Asset Gathering in a broad sense.
To do this, the area activity focuses on Asset Management and Private banking goes
beyond the achievement of improved efficiency levels in production, a major objective in
itself, focusing on enhanced service quality and consultancy provided as a business area
to distribution. Its mission is to be the best financial services/products provider both for
distributors and customers, by producing a range of products/services which is better
adapted and adapts flexibly to the needs of all the customer segments in the BBVA
Group.
The area structure of Asset Management and Private Banking includes five lines of
business which are Asset Management, Private Banking, Insurance Spain/Europe,
Insurance and Pensions America and a support unit, Strategy and Finance.
The total volume of assets managed by the Group currently stands at 120,000 million
euro, which includes investment, pension, insurance, private banking funds and other
customer portfolios, and is the leading pension entity in both the national and Latin
American markets, and is second in the investment funds market.
Merchant and Investment Banking
Global vision of the customer (a single unit)
Recent data published for the first quarter of 2002 reveals a contribution by Merchant and
Investment Banking of 99 of the 587 million Euro of profit attributed to the group and
reflects negative growth of 4.8% compared with the first quarter of 2001. Furthermore, the
ROE fell from 30.8% to 27.1% and area efficiency improved from 33.3% in the first quarter
of 2001 to 30.4% in the first quarter of 2002.
VII/20
The area of Merchant and Investment Banking specialises in the management of
“genuinely” wholesale business, which takes care of the bank’s large customers, i.e.
companies, institutions or financial institutions.
It is structured in five business units. On the one hand, businesses related to major
customers: Merchant Banking (Global Corporate Banking, Administration Banking, and
the recently created unit, Merchant Banking America) and International Financial
Institutions, and on the other, global product and support businesses for the banking
networks: Global Markets and Distribution.
These units form the foundation of the BBVA’s merchant franchising, which is based on
the Group’s strengths: longstanding, extensive relations with major customers combined
with experience in traditional banking products, from those which are purely transactional
to sophisticated, high added-value products, which effectively respond to their needs.
Owing to the developed franchising and the fully relational business model, the BBVA is
satisfactorily positioned in the businesses and markets in which it operates. In the Spanish
merchant banking market, it is one of two banks working with 67% of the major companies
and one of the five bankers for 91%. Its penetration is highly evident in the public sector,
with an investment banking market share of over 60%. It also holds an outstanding
position for products: in factoring, with a share of 36%; export credit, with a share of over
40%; and in foreign collections and payments. This is combined with its excellent position
for electronic banking and Cash Management.
In terms of currency and investment banking, the BBVA is the reference among Spanish
banks in this business. The BBVA stands in strong positions in the private, fixed-yield
AIAF and currency markets in Spain. In terms of variable-yield, the BBVA Bolsa holds
notable positions in share issues and trading in the continuous market. The BBVA has
also forged itself good positions as a Spanish bank in the international euro bond
insurance, syndicated loans and preference share rankings. Furthermore, it is the most
active Spanish bank in structured financing operations.
We should finally point out that the globalisation trend of merchant business has caused
the BBVA to expand the merchant franchise to Latin America, where it holds a notable
position –second place in the international rankings for syndicated financing and seventh
in the Top bookrunners for bonds of Latin American issuers- and it aspires to become the
reference for all companies that operate or intend to operate in Latin America.
Grupo Industrial e Inmobiliario
Active management for value creation
In spite of the situation on the stock markets and the slow-down in the property market,
the Grupo Industrial e Inmobiliario ended the first quarter of 2002 with attributed profits of
163 million euro, 28.3% more than the previous year. The ROE stands at 22% and is an
inter-year improvement of 320 basic points.
The Grupo Industrial e Inmobiliario is the area responsible for the management of the
Group’s portfolios of industrial and real asset interests. Its basic objective focuses on
achieving consistent profitability over time, given the multi-annual nature of its activity, and
with comparable levels to other value creation areas.
The criteria followed in the management of industrial and real asset interests are:
presence in companies in sectors with future relevance; seeking appropriate and
renowned partners with proven management capacities; liquid investments which facilitate
the materialisation of added value on completion of the industrial project in the company;
investment
rotation
and
participation in a sufficient number of companies to enable the reconciliation of a
satisfactory diversification and the generation of banking business that accompanies it.
VII/21
On 31st December 2001 the portfolio of interests managed by the area included 153
companies, with a market value of 9,513 million euro –87% of which are in listed
companies-. The most significant sector is that of telecommunications, which represented
1.6% of the portfolio’s market value at the end of the year, followed by oil, with 17.3% and
electricity with 16.0%. These are followed by the less significant real assets and services
with 10.6% and 7.2% respectively.
The BBVA is the principal or reference shareholder of companies in the most relevant,
vital sectors of the economy: Telefónica, Repsol, Iberdrola, Acerinox, Corporation IBV,
Iberia, Hispasat, etc.
Activity in terms of industrial interests over the coming years is based on the following
objectives:
?
Focusing on value creation, through the permanent search for new business
opportunities, which may replace mature investments or balance the current
concentration of investments.
?
Active management of interests, ensuring the size of the portfolio corresponds to its
potential space within the Group.
?
Making the most of our abilities in the real asset business, increasing production,
improving efficiency and taking advantage of the present moment of the cycle to
disinvest in unproductive assets.
The Grupo Industrial e Inmobiliario manages the Group’s interests in companies in
sectors other than finance. The main permanent investments in entities other than
financial institutions are detailed below:
GRUPO INDUSTRIAL E INMOBILIARIO BBVA:
PRINCIPAL PERMANENT INTERESTS
(as on 31-5-2002)
SECTORS
Energy
Communications
INTEREST (%)
Total
ENTITY
Permanent*
Iberdrola
Endesa
Repsol-YPF
GasNatural
6,48
2,40
8,08
2,88
6,68
3,57
8,24
2,93
Telefónica
Terra
Sogecable
Hispasat
5,08
1,35
5,02
11,91
5,58
1,49
5,17
11,91
VII/22
Real assets
Corpor. Área Inmob. BBVA, S.L.
GRUBARGES
Metrovacesa (1)
100
33,33
1,13
100
33,33
25,03
Consumer goods
Vidrala
Conservas Garavilla
17,03
41,17
17,47
41,17
Investment and
intermediary goods
Acerinox
Tubos Reunidos
Cementos Lemona
Técnicas Reunidas
10,01
24,26
6,48
25,00
10,15
24,26
6,48
25,00
Acesa
5,20
7,30
5,35
7,42
50,00
50,00
50,00
50,00
Market services
Iberia
Other
Holding de Participations Industriales 2000, S.A.
IBV Corporation
* The interest maintained with permanency criteria.
(1) As indicated in the section “7.3.1. European Expansion”, BBVA has signed an agreement with BAMI for the sale of 23.9% of the
capital of METROVACESA.
These companies represent 96% of the Grupo Industrial’s portfolio.
The interests shown in the table which feature in the previous section are maintained with
a permanent nature and therefore, there are currently no plans to significantly alter them.
This does not however exclude the possibility of partial disinvestments which can be
achieved through the principle of portfolio rotation in the management of its industrial
portfolio.
(i)
Energy
BBVA holds interests in Iberdrola (8.14%), Endesa (2.40%) and Repsol-YPF (8.08%).
The interest in all of them does not permit the BBVA, either singly or jointly with
other shareholders, to exercise any type of influence (and in any case no decisive
influence1 over this company).
(ii)
Communications
BBVA has no direct interest in any company with a licence for open channel
television. With regard to pay television, BBVA has a 5.02% stake in Sogecable,
S.A. and this interest offers it no control whatsoever, nor the possibility to exercise
any decisive influence over the said company.
Telefónica, through ADMIRA, is present in the content sector in order to
supplement its value-added services (broadband, internet, etc.) but the BBVA
Group has no direct interest in ADMIRA.
(iii)
Telecommunications
Neither the BBVA interest in the capital of Telefónica nor the interest derived from
the fulfilment of the terms of the alliance enable the BBVA to exercise any decisive
influence
over
the
company (i.e. to control it). Within the strategic alliance signed by BBVA and
Telefónica, the Telefónica Board of Directors has appointed a representative on the
BBVA Board of Directors.
1
The concept of “decisive influence” was adopted in Community law on the control of concentrations as equivalent to the exercising of control over the subsidiary
company (cf. art.3.1 CEE Regulation nº 4064/89, of 21st December, and paragraph 12 of the European Commission Paper, of 2nd March 1998, on the concept of
concentration). The concept of “decisive influence” was expressly chosen in the Agreement of the Council of Ministers of 16th July 1999, for the authorisation of the
merger between BANCO SANTANDER and BANCO CENTRAL HISPANOAMERICANO.
VII/23
The agreement with Telefónica focuses on the development of E-Business-related
projects which are detailed throughout this Continued Brochure.
(iv)
Real assets
There are currently no specific plans with regard to the potential integration of the
companies mentioned in the above table in this section. It should be borne in mind
that the companies in which the BBVA has interests are specialist companies in
certain property sectors or specific promotions. Although there are currently no
plans, as stated above, this clearly does not prevent the promotion of any future
project in this area, should favourable circumstances arise.
VII/24
7.4.2. Business Support Areas
Media
Two basic points focus all activities in the area of Media: efficiency and quality. The
overriding principle is to achieve the best results at the right cost. This is why the BBVA is
particularly satisfied with the evolution of the Group’s efficiency –in Spain and in Americaover recent years and with the improvement in quality that is beginning to appear in the
countries where integration processes have recently been introduced.
Quality, efficiency and transformation as a means of accelerating the pace of greater
successes in the former two, solidarity with the business and professionalism –shorthand
for rigour, transparency, integrity, high standards, teamwork, compromise, etc.- sum up
the management principles in this area. In this way and with a quality team, our aim is to
organise the area of Media as a real competitive advantage for the BBVA Group.
Risks
The main objective of risk management in the BBVA is to build itself up as another of the
Group’s competitive advantages. This is based on active management of exposure to
uncertain results, optimising the risk-adjusted earnings and maintaining the institution’s
long-term solvency, whilst maintaining the desired risk profile.
This objective requires all of the risks to be duly identified, measured and evaluated.
Likewise, the management of the various types of credit, market and operational risks,
should be achieved globally based on harmonised measurement systems.
In order to facilitate the construction of the risk model defined by the group, an
organisational structure has been designed which preserves the function’s independence,
whilst maintaining proximity with the areas of business in which the risks arise and are
accepted. The structure is made up of two clearly specialised blocks.
On the one hand, Global Risk Management, in each of its credit, market and operational
modules, involves the construction of precise management tools and offering a global
vision of all the risks. Likewise, this is the level at which policies, procedures and systems
are defined which make it possible to align the global risk strategy with the group’s
strategic objectives. Finally, an essential factor in a multinational group such as the BBVA,
it is responsible for taking all the risks into consideration and drawing up risk and financial
capital maps which make it easier to take decisions.
The second block, the Central Risk Unit, is responsible for the function’s development,
establishing the risk policies and day-to-day management, in coordination with the
business areas. The primary responsibility of this function is to maintain the risk profile
within the established parameters, through the admission and risk monitoring policies, and
the management of limits.
Alongside this, an internal Strategic Analysis department has been created whose
fundamental objective is to contribute to understanding the strategic positioning of the
various business and functional units.
To do this, it is developing a common methodology to evaluate key aspects in the strategy
pursued by each unit, assisting in the identification of the critical factors in its contribution
to value creation for the Group, and assisting with its monitoring.
VII/25
Human Resources and Quality
The financial sector is undergoing substantial changes, brought about by concentration or
incorporation of new professions supported by new technologies, which have to bring
about a new, more global horizon, in the near future. In this context, the companies which
want to continue offering value to their shareholders will have to change in order to
become more efficient, as only this efficiency will guarantee the service quality necessary
to succeed in such a competitive market.
In this context, the task of Human Resources is to facilitate the organization of the best
teams in order to succeed in the Group’s strategy. In a market such as we have
described, the most relevant differentiating value is and will be people’s talent. This is
therefore the first main objective in this area, the management of talent, a concept which
in turn involves three critical elements: capacities, compromise and action, and which
involves a series of programmes closely related to training and career development.
As a second objective, Human Resources sets out to promote a greater multinational feel
to the Group. With almost 100,000 employees, more than two-thirds are from Latin
American companies. This diversity of markets, origins and cultures is a competitive
advantage which has to be used, offering a corporate dimension to the management of all
the directorates in the Group and encouraging transnational movements.
The third major objective is the definition and establishment of a corporate culture, in
accordance with the needs of the sphere. It is not simply a matter of defining a theoretical
ideal of values, but working within structures, processes and policies, such that the
desired culture is a culture that is actually experienced. Human Resources contributes in
this task in all the areas of business and support, as it is a corporate objective.
In order to meet these challenges, an organisational structure has been developed based
on holding units with functional responsibilities at the Group level and units with capacities
to implement corporate policies, programmes and plans in the various spheres.
This structure is pursued beyond the actual transformation of the function, in order to
dedicate itself to the activities of greater added value, with a service quality commitment
expressed through agreements with the business and support units.
The other two main tasks in this area are quality and internal communication. In the
BBVA, quality is not an element of simple improvement, but a factor that contributes to the
consolidation of sustainable competitive advantages. Quality is not an objective in itself,
but a commitment to customers, shareholders, the people who belong to the organisation
and the companies in which the Group develops its activities. To do this, the Quality unit
has been assigned the task of promoting and supporting ongoing adaptation to the
requirements of new management methods and customer service and the various
scenarios and channels that increase the levels of interaction with them, which requires
the directing of efforts into simpler and more focused initiatives and methods to satisfy
customer expectations, both externally and internally. All of this is based on the corporate
quality model which is the operating framework for all the Group’s units throughout the
world, and is given practical expression through specific plans in each of them.
The internal communication objectives are oriented in order to align all of the organization
with the corporate strategy, policies and plans, in order to contribute to increasing levels of
integration, motivation and commitment of people, in order to contribute to the
transmission of corporate culture, in order to improve the organisational efficiency through
the knowledge of the projects and activities conducted in the various spheres and in order
to guarantee all of the organization and necessary information to understand the
organisational context in which they interact. All of this takes place through two basic
channels: the guideline, communication which is produced within each area/unit, and the
corporate channels for internal communication.
VII/26
7.5.
SHAREHOLDER REMUNERATION
The BBVA, in accordance with the agreement of the General Meeting of Shareholders on
9th March 2002, granted an additional dividend on 10th April 2002 for the 2001 financial
year of 0.128 euro. Together with the 3 dividends already distributed so far for the 2001
financial year, the total dividend paid out to shareholders using profits generated in the
2001 financial year 0.383 euro, 5.5% higher than for the previous year.
7.6.
CAPITAL STRUCTURE
The BBVA is continuing to improve its capital structure, and in the 2001 financial year
achieved a minimum equity ratio of 12.6%, compared with 11.9% in 2000 and 11.3% in
1999.
7.7.
GENERAL MEETING OF SHAREHOLDERS’ AGREEMENTS
The General Meeting of shareholders, held after a second convocation, on 9th March
2002, apart from approving the annual accounts, adopted a series of agreements.
These included the increase in capital for a nominal sum of 782.983.750 euro, delegating
to the Board the capacity to set the conditions (instalment, price, etc.) of the issue.
In addition, it approved the granting of the authorisation for the Company to undertake the
acquisition of equity shares directly or through companies within its Group, in accordance
with the provisions in art. 75 of the Revised Act on Limited Companies, and with the
express capacity to reduce the company’s capital to amortise equity shares.
It also agreed to the re-election of the Auditors. In accordance with art. 34 of the Company
Statutes, it fixed the number of board members at 21. It also approved the creation of a
special early retirement fund paid out of the unrestricted reserves.
The Banco Bilbao Vizcaya Argentaria, S.A. presents this Continued Brochure for its inscription in
the Official Register of the National Securities Market Commission. So that this may be officially
recorded,
BANCO
BILBAO
ARGENTARIA, S.A.
Signed:
Angel CANO FERNÁNDEZ
Director General
BBVA
FIXED-INCOME SECURITIES ISSUE PROGRAMME
MAXIMUM AMOUNT = 6,000 million euro
SUMMARIZED ISSUE PROSPECTUS MODEL RED4 REGISTERED IN THE
OFFICIAL REGISTRIES OF THE CNMV ON 16 JULY 2002.
SUMMARIZED ISSUE PROSPECTUS IS SUPPLEMENTED BY THE
CONTINUED PROSPECTUS REGISTERED IN THE OFFICIAL REGISTRIES
OF THE CNMV ON 26 JUNE 2002.
1
CHAPTER I
PEOPLE WHO ARE RESPONSIBLE FOR
SUPERVISING BODIES OF THE PROSPECTUS
THE
CONTENT
AND
I.1. People who are responsible for the content of the prospectus.
I.1.1. and I.1.2. Mr Luis Domínguez de Posada de Miguel, with National Identity
No. 1494105W, Head of Trade Finance of BANCO BILBAO VIZCAYA
ARGENTARIA, S.A. is responsible for the content of this summarized
issue prospectus and confirms the reliability of the content of the
prospectus and that no relevant data has been omitted that may lead to
error.
I.2. Supervising bodies.
I.2.1. Verification and registry by the Comisión Nacional del Mercado de
Valores (CNMV).
This summarized issue prospectus model Red4 has been registered in
the Official Registries of the CNMV (Spanish Securities Market
Commission) on 16 July 2002.
"Registry of the prospectus by the CNMV does not imply a
recommendation to subscribe or purchase the securities that it refers to,
nor any kind of declaration on the solvency of the issuing entity or the
yield of the securities issued or offered."
This summarized issue prospectus model Red4 is supplemented by the
continued prospectus registered in the Official Registries of the CNMV on 26 June
2002.
I.2.2. Prior authorisation.
No authorisation or prior administrative declaration other than the
verification and registry of this prospectus in the CNMV is required.
I.3. Verification and audit of the annual accounts.
I.3.1 BANCO BILBAO VIZCAYA
The Annual Accounts of BANCO BILBAO VIZCAYA, S.A., and the Annual
Accounts of its Consolidated Group of the Financial Year ending on 31
December 1999 were audited by the company Arthur Andersen y Cía., S.
Com., with registered office in Madrid, calle Raimundo Fernández
Villaverde, 65, and Tax Identification No. D-79104469, which is registered
2
in the Registro Oficial de Auditores de Cuentas (ROAC - Official List of
Registered Auditors) with the registration number S-0692.
The Annual Accounts of the abovementioned Financial Year, together with
their respective Management Reports and Auditors’ Reports, are
deposited in the CNMV.
In the case of BANCO BILBAO VIZCAYA, S.A., the Auditors’ Report of the
abovementioned Financial Year is recorded as favourable.
In the case of BANCO BILBAO VIZCAYA, S.A., and its Consolidated
Group, the Auditors’ Report of the Financial Year 1999 contains
qualifications relating to the early amortisation of certain goodwill, which is
reproduced entirely below:
Qualification for the Financial Year 1999
“In the financial years 1999 and 1998, as well as in previous financial years, the
Group amortised certain goodwill early, which originated from the acquisition of
Latin American banks and companies (Notes 3.g and 13). The amortisation thus
made is not based on negative developments of the corresponding investments,
but only on the application of prudence criteria. If the amortisation of this goodwill
had been carried out on the basis of a period of five years, which, in current
circumstances, we consider to be the minimum period in which they maintain
their effectiveness and contribute to obtaining income for the Group, the
amortisation expenses of the consolidated goodwill of the financial years 1999
and 1998 would have been less than the one recorded by 34,000 and 47,000
million pesetas respectively. Consequently, the accumulated effect at 31
December 1999 of this amortisation excess, which comes to 129,000 million
pesetas (of which 95,000 million corresponds to previous financial years), would
increase the result attributable to the Group in the financial year 1999 in
accordance with current legislation in force.”
I.3.2
ARGENTARIA, CAJA POSTAL Y BANCO HIPOTECARIO
The Annual Accounts of ARGENTARIA, CAJA POSTAL Y BANCO
HIPOTECARIO, S.A., and the Annual Accounts of its Consolidated Group
of the Financial Year ending on 31 December 1999 were also audited by
the company Arthur Andersen y Cía., S. Com., with address in Madrid,
calle Raimundo Fernández Villaverde, 65, and Tax Identification No. D79104469, which is registered in the ROAC with the registration number S0692.
The Annual Accounts mentioned in the previous paragraph, together with
their respective Management Reports and Auditors’ Reports, are
deposited in the CNMV.
3
The Auditors’ Report that refers to the Financial Year 1999 of Argentaria
and its Consolidated Group contains a qualification relating to the Goodwill
originating from the acquisition of holdings in the capital of companies
effected in previous Financial Years.
Qualification for the Financial Year 1999:
“In the financial year 1998, the group amortised goodwill early originating
from the acquisition of holdings in the capital of companies effected during
this year and the previous one. The amortisation thus made is only based
on the application of an assessment prudence principle, as no negative
development of the corresponding investments is foreseen. If the
amortisation of the goodwill corresponding to the investments, which, on
the basis of the information available, would contribute to obtaining income
for the Group, had been made over five years, the amortisation expenses
of the consolidated goodwill in 1999 would have been more than the one
recorded by 8,000 million pesetas, after the tax impact had been
considered. The accumulated effect at 31 December 1999 of the excess of
the amortisation of the goodwill, which comes to, net the tax impact, 9,000
million pesetas, should be recorded in accordance with current legislation
in force, as it corresponds to previous financial years, thus increasing the
item “Extraordinary Profit” of the attached consolidated profit and loss
account of the financial year 1999, and also, therefore, the result of the
financial year attributed to the Group.”
I.3.3 BBVA
The Annual Accounts of Banco Bilbao Vizcaya Argentaria, S.A. and the
Annual Accounts of its Consolidated Group corresponding to the Financial
Years ended 31 December 2000 and 2001 have also been audited by the
company Arthur Andersen y Cía, S. Com., registered office in Madrid,
Calle Raimundo Fernández Villaverde, 65, and Tax Identification No. D79104469, registered in the Registro Oficial de Auditores de Cuentas
(ROAC - Official List of Registered Auditors) registration number S-0692.
The Annual Accounts of the Financial Years ended 31 December 2000
and 2001, together with their respective Management Reports and
Auditors’ Reports, have been deposited in the CNMV.
In the case of BANCO BILBAO VIZCAYA, S.A., the Auditors’ Report
corresponding to the abovementioned Financial Years are recorded being
as favourable and containing no qualifications.
Group, the Auditors’ Report of the Financial Year 2000 contains
qualifications relating to the early amortisation of certain goodwill, which is
reproduced entirely below:
Qualification for the Financial Year 2000:
4
“During previous financial years, the group amortised early certain goodwill
that had originated from the acquisition of Latin American banks and
companies. The amortisation thus made was not based on the negative
development of the corresponding investments, but on the application of
prudence principles. If the amortisation of aforesaid goodwill had been
made over five years, which, under the current circumstances, we believe
to be the minimum period for these to remain effective and to contribute to
securing income for the Group, the amortisation expense of the
consolidated goodwill in 2000 would have exceeded that recorded by
some 43,000 million pesetas, approximately. The accumulated effect at 31
December 2000 of the excess of the amortisation of goodwill, which
comes to 86,000 million pesetas and corresponds to previous financial
years, would increase the result attributed to the Group for the financial
year 2000, in accordance with legislation currently in force.”
Group the Auditors’ Report corresponding to the Financial Year 2001 is
recorded as favourable containing no qualifications.
The auditors’ opinion with respect to the consolidated accounts at 31
December 2001 is transcribed below:
“ To the shareholders of Banco Bilbao Vizcaya Argentaria, S.A.:
1. We have audited the annual consolidated accounts of BANCO BILBAO
VIZCAYA ARGENTARIA, S.A. and the COMPANIES that make up the
BANCO BILBAO VIZCAYA ARGENTARIA Group (hereinafter referred
to as the Group – see note 4), which cover the consolidated balance
sheet on 31 December 2001 and the consolidated profit and loss
account and report corresponding to the financial year ending on the
aforesaid date, the formulation of which is the responsibility of the Bank
Administrators as the dominant company. Our responsibility is to
express an opinion on the abovementioned consolidated annual
accounts as a whole, based on the work carried out in accordance with
the generally accepted auditing norms, which require the examination,
by means of selective tests, of the legal evidence of the consolidated
annual accounts as well as an evaluation of their presentation, the
accounting principles applied and the estimations carried out.
2. In accordance with the mercantile legislation, the Bank Administrators
present with each of the items of the consolidated balance sheet, profit
and loss account, and financing schedule, the figures for the financial
year 2001 as well as those for the previous year for the purposes of
comparison. Our opinion is solely in reference to the annual accounts
of the financial year 2001. On 20 February 2001, we issued our
auditors’ report regarding the consolidated annual accounts of the
financial year 2000, which contained a qualification as a result of
effecting an early amortisation of specific goodwill; which would, in our
opinion, result in an increase in the consolidated goodwill and the
result attributed to the Group (in the concept of Extraordinary Profit)
5
and that appeared in the consolidated annual accounts for the financial
year 2000 to the amount of 517 million euro, approximately.
The overall effect of the qualification, taking into account the
amortisation which, during this financial year, would have
corresponded to the goodwill amortised early during other previous
financial years (258 million euro approximately) - and other assessed
corrections made to the goodwill shown in the consolidated balance
sheet on 31 December 2001, would mean an increase in the region of
64 million euro in both the consolidated goodwill and in the result
attributed to the Group in the consolidated annual accounts for the
financial year 2001. This amount is of little import when the
abovementioned consolidated annual accounts are taken as a whole.
3.
As indicated in note 2b, during the financial year 2001 the Group has
charged to reserves the estimated costs of the severance payments,
deferred salaries and future pensions derived from the early retirement
of certain employees who effectively formalized their early retirement
during this financial year, for an amount, net the corresponding tax
impact of 479 million euro. In doing this they had the express
authorization of the Bank of Spain, under the protection of its Circular
4/1991, and that of the corresponding General Shareholders’ Meetings.
4. In our opinion, the consolidated annual accounts attached represent, in
all significant aspects, a true picture of the net worth and financial
situation of Banco Bilbao Vizcaya Argentaria on 31 December 2001
and of the results of their operations and of the resources obtained and
applied during the course of the financial year that ended on said date
and they contain the sufficient information necessary to be interpreted
and understood correctly, in accordance with the generally accepted
accounting principles and norms which have remained unchanged
since applied the previous financial year.
5. The attached consolidated management report corresponding to the
financial year 2001 contains the explanations that the Administrators of
the dominant company deem appropriate with regard to the situation of
the Group, the evolution of its business and regarding other matters
and does not form an integral part of the consolidated annual accounts.
We have checked that the accounting information said consolidated
management report contains coincides with the consolidated annual
accounts of the 2001 financial year. Our work as auditors is limited to
verifying the consolidated management report to the degree described
above and does not include reviewing information that differs to that
obtained from the accounting records of the consolidated companies.”
Below is transcribed the auditors’ opinion with respect to the individual
accounts at 31 December 2001:
“To the shareholders of Banco Bilbao Vizcaya Argentaria, S.A.:
6
1. We have audited the annual accounts of BANCO BILBAO VIZCAYA
ARGENTARIA, S.A. (hereinafter referred to as the Bank) that cover the
balance sheet on 31 December 2001 and the profit and loss account and
report corresponding to the financial year ending on the aforesaid date,
the formulation of which is the responsibility of the Bank Administrators.
Our responsibility is to express an opinion on the abovementioned
annual accounts as a whole, based on the work carried out in
accordance with the generally accepted auditing norms, which require
the examination, by means of selective tests, of the legal evidence of the
annual accounts as well as an evaluation of their presentation, the
accounting principles applied and the estimations carried out.
2. In accordance with the mercantile legislation, the Bank Administrators
present with each of the items of the balance sheet, profit and loss
account, and financing schedule, the figures for the financial year 2001
and those for the previous year for the purposes of comparison. Our
opinion is solely in reference to the annual accounts of the financial year
2001. On 20 February 2001, we issued our auditors’ report regarding the
annual accounts of the financial year 2000, which expressed a
favourable opinion.
3. As indicated in note 1.j., during the financial year 2001 the Group
charged to reserves the estimated costs of the severance payments,
deferred salaries and future pensions derived from the early retirement of
certain employees who effectively formalized their early retirement during
this financial year, for an amount, net the corresponding tax impact of
472 million euro. In doing this they had the express authorization of the
Bank of Spain, under the protection of its Circular 4/1991, and that of the
corresponding General Shareholders’ Meetings of the Bank
4. The attached annual accounts are presented in compliance with the
mercantile regulations currently in force, nevertheless the management
of the Bank’s operations and those of the companies in the Group are
carried out on a consolidated base, independently of the individual
apportionment of the corresponding equity effect and the results related
to these. As a result, the individual accounts of the Bank (which also acts
as a holding company of shares) do not reflect the financial-net worth
variations caused by the application of criteria of consolidation, nor the
financial investments in the dependant and associated companies, nor
the operations carried out by either the bank or by these companies
themselves, some of which reflect the global strategies of the Group
(differences in the exchange rate, dividends, secured loans, etc.).
However, these variations are reflected in the consolidated annual
accounts regarding which we issued a favourable auditors’ report on 14
February 2002. The effect of consolidation (Note 1), carried out based
on the accounting entries of the companies that make up the Banco
Bilbao Vizcaya Argentaria Group, in comparison with the attached
individual annual accounts, represent a increase in the reserves and in
the result of the 2001 financial year to the amount of 3,232 and 1,052
million euro, as well as an increase in assets of 116,379 million euro.
7
5. In our opinion, the annual accounts attached represent, in all significant
aspects, a true picture of the net worth and financial situation of the
Banco Bilbao Vizcaya Argentaria, S.A- on 31 December 2001 and of the
results of their operations and of the resources obtained and applied
during the course of the financial year that ended on said date and they
contain the sufficient information necessary to be interpreted and
understood correctly, in accordance with the generally accepted
accounting principles and norms which have remained unchanged since
applied the previous financial year.
6. The attached management report corresponding to the financial year
2001 contains the explanations that the Administrators deem appropriate
with regard to the situation of the Group, the evolution of its business and
regarding other matters and does not form an integral part of the annual
accounts. We have checked that the accounting information contained in
said management report coincides with the annual accounts of the 2001
financial year. Our work as auditors is limited to verifying the
management report to the degree described above and does not include
reviewing information that differs to that obtained from the accounting
records of the Bank.”
I.4. Significant events after the registration of the Continued Prospectus
No significant related events have occurred since the registration of the
Continued Prospectus, which have not been included in the information
contained within the prospectus or in the financial statements audited on 31
December 2001, and which may have a considerable impact on the financial
statements of the Bank.
8
CHAPTER II
THE ISSUE PROGRAMME OR OFFER OF NEGOTIABLE FIXED-INCOME
SECURITIES
II.1. Financial conditions and characteristics of the securities in the issue
or offer that form the programme of loan stock.
II.1.1. and II.1.2.- Par amount of all the loan stock. Nature and name of the
securities
The Issue Programme that is the purpose of this summarized issue
prospectus is formed by different issues of unsecured fixed-income
securities, whose issue, indistinctly for each type of security, shall take
place in the next twelve months counting from the registration of the
programme in the Comisión Nacional del Mercado de Valores (CNMV Spanish Securities Market Commission). The par total of the different
issues that shall form this Issue Programme cannot exceed 6,000 million
euro, which can be represented by straight bonds, unsecured or
subordinated debentures and mortgage bonds.
Straight bonds and debentures: Securities that accrue interest, repayable
on redemption (early or at maturity) or by ballot, issued with the company’s
guarantee and which may or may not be traded in Spanish and/or foreign
markets.
Subordinated debentures: Securities as above, only that on the basis of
their subordinated issue, they are after all the common creditors for the
purposes of order of priority.
Mortgage bonds: Securities that are issued with the guarantee of the
portfolio of loans granted with real estate security by the issuing company.
II.1.3.- Par amount per security.
The par amount for each security shall depend on the type of fixed-income
issue, with a minimum of 100 euro for issues aimed an minority investors
and a minimum of 100,000 euro for issues aimed at institutional investors.
Tranches shall be established for those issues aimed at both types of
investor, and the total amount of said tranches shall be detailed in the
corresponding “Additional Information”. In this case the minimum amount
for each security shall be of 100 euro for the minority tranche and 100,000
euro for the institutional tranche.
Likewise the par amount of each security in issues aimed at both minority
and majority shareholders shall be a minimum of 100 euro when no
tranche has been established.
9
II.1.4.- Commissions and expenses.
No subscriber expenses for the subscription of these securities will be
charged, without prejudice to the expenses that the Institutions Attached to
the Servicio de Compensación y Liquidación de Valores (SCLV - Share
Clearing and Settlement Service) may charge for their deposit or other
legally applicable commissions they charge. Likewise, the issuing entity
shall not charge any expenses for their redemption.
II.1.5.- Entity in charge of the accounting record.
The different kinds of issue covered by this programme shall be
represented by securities or by account entries and the general Spanish
legal system shall be applied to them. In the case of issues whose listing is
requested in the AIAF Fixed-Income Market, or in any of the four Spanish
Stock Exchanges, the entity in charge of the accounting record of the
account entries shall be the SCLV, which has its registered office in
Madrid, calle Orense 34.
The entity in charge of the accounting record of the account entries of the
issues that are not going to be traded on any market shall be the Servicio
de Compensación y Liquidación de Valores (SCLV - Share Clearing and
Settlement Service) or a brokering company, which shall be appointed for
this function in the “Additional Information” of the corresponding issue.
In addition to listing in the abovementioned Spanish market, listing for these
issues can be requested in foreign secondary organised markets, which in all
cases shall be stated in the respective “Additional Information” for each Issue
under this programme.
II.1.6.- Interest clause.
This prospectus is the Fixed-Income Securities Issues Programme. The
different issues of fixed-income securities that are agreed under this
programme by means of the corresponding “Additional Information”
(whose model is attached as appendix II to this prospectus), shall be
understood as integrated in the purpose of this issue programme, whose
provisions shall apply to them, without prejudice to the specific conditions
that the Additional Information may contain, which shall be registered in
the CNMV, together with the corresponding agreements.
The different issues may have, depending on their return, the
consideration of issues with implicit, explicit or mixed yields.
•
Implicit yields: these are those that are generated by the difference
between the amount paid in the issue, first placing or endorsement, and
the amount committed to be returned at maturity in those transactions
whose return is fixed, in whole or in part, implicitly, by any of the
marketable securities used to raise loan capital.
10
•
Explicit yield: this category includes interest and any other form of
earnings agreed as a consideration to the transfer to third parties of own
capital and which are not included in the concept of implicit yields defined
above.
•
Mixed yields: they shall follow the system of the financial assets with
explicit yields, when the effective annual interest rate produced by this
type is equal or greater than the interest rate of reference at the time of
the issue, even if another additional implicit yield had been established in
the issue, redemption or repayment conditions. For the duration of each
natural quarter, the interest rate of reference shall be 80% of the effective
rate that corresponds to the rounded weighted average price which
would have resulted from the final auction of the previous quarter
corresponding to three-year Government Bonds, in the case of financial
assets with a duration equal to or less than four years, that
corresponding to five-year Government Bonds, in the case of financial
assets with a duration of over four years but equal to or less than seven,
and to ten-, fifteen- or thirty-year Government Bonds, in the case of
financial assets of a longer duration. In the event that it is not possible to
establish the interest rate of reference for a specific period, the interest
rate for the period closest in time to the planned issue shall be applied.
For the purposes of the provisions in this paragraph, with respect to the
issue of financial assets with a variable or floating yield, the internal rate
of return shall be taken and applied as the effective interest rate of the
operation, taking into account only the explicit yields, and calculated,
where applicable, with reference to the initial assessment of the
parameter used to periodically establish the definitive amount of accrued
returns.
The issue of these securities does not preclude the provisions in
mandatory regulations and complies with Law 24/1988 of 28 July of the
Securities Exchange, with Royal Decree 291/1992, of 27 March on
issues and offers for sale of securities and the Order of 12 July 1993 on
issue prospectuses and other developments of the abovementioned
Royal Decree, with Law 37/1998 of 16 November, with Royal Decree
2590/1998 of 7 December and with the Circular 2/1999 of 22 April of the
CNMV.
II.1.6.1.- Nominal interest rate
It shall be established for every Issue made under this programme in its
respective “Additional Information”.
The possible interest rates shall be in line with the definitions established
for explicit, implicit and mixed rates in section II.1.6 above, accepting any
casuistry in them, among which we specify by way of example the fixed,
variable, zero coupon, etc. interest rates. In all cases, reimbursement of
the nominal amount of the issue shall be guaranteed.
11
Interest shall be accrued from the date corresponding to the disbursement
of each issue.
It will be possible to carry out issues where a provision of funds is
required. The amount of this shall be specified in the corresponding
”Additional Information.”
For those Issues with explicit interest rates, the frequency in the payment
of the coupons shall be established in the corresponding “Additional
Information”. The amount to pay for interest shall be calculated by applying
the following formula:
N*i*d
C = -----------36,500
Where,
C = gross amount of the periodic coupon
N = par value of the security
d = number of days since the start date of each interest period until the
redemption date of the coupon
i = nominal interest rate
Save as otherwise indicated in the corresponding Additional Information,
the basis to be used to calculate the interest for each coupon shall be 365
days per year, except in the case of mortgage bonds, for which the actual
number of days in the year shall be taken, in other words 365 or 366 in the
case of leap years.
For those issues with implicit interest rates, there shall be no payment of
coupons. The investor shall obtain the whole of the yield together with the
repayment of the nominal when it is redeemed. The formula to calculate
the yields to be obtained on maturity shall depend on the yield rate agreed
in the corresponding “Additional Information”. It shall therefore be stated in
this confirmation.
If the maturity date coincides with a public holiday, the payment shall be
effected on the next working day, although this shall not be a reason to
accrue any interest.
For those issues that are listed, the financial service of the payment of
coupons and redemptions shall be effected by the Institutions Attached to
the SCLV. For the rest of the issues, the institution in charge of the
financial service shall be stated in the “Additional Information”.
II.1.6.2.- Dates, place, institutions and procedure for the payment of coupons.
The frequency in the accrual and payment of coupons shall be established
at the time of the issue and shall be stated in its corresponding “Additional
Information”.
12
II.1.7.- Fiscal information.
The general tax system in force at all times for the issue of securities shall
apply to these issues. Specifically, as far as Income Tax and Corporation
Tax are concerned, the amount of the coupons and/or the difference
between the asset’s subscription value or purchase value, and its transfer
or redemption value shall be considered as capital gains.
Likewise, in accordance with the provisions in Article 69, and following, of
Royal Decree 214/1999, of 5 February, by which the Regulation on
Income Tax is approved, and Article 56, and following, of Royal Decree
537/1997, of 14 April, and later modifications, by which the regulations on
Corporation Tax are approved, the capital gains obtained from these
securities are subject to withholding tax.
As a result, the payments of the coupons and/or the difference between the
security’s subscription value or purchase value and its transfer or redemption
value must be subject to a tax deduction at the rate in force at all times, currently
18%, by the issuing entity or the financial institution in charge of the transaction
or, if applicable, by the commissioner for oaths who must take part in the
transaction.
In spite of the general system described in the previous paragraphs, article
57 of Royal Decree 537/1997, of 14 April, establishes the withholding tax
exemption, with respect to those issues taking place after 1 January 1999,
for income obtained by legal persons resident in Spain when they come
from financial assets that fulfil the conditions of being represented by
account entries and are traded in an official Spanish secondary market.
The abovementioned article 70 of Royal Decree 214/1999 also establishes
the withholding tax exemption for income obtained by natural persons
resident in Spain derived from the transfer or redemption of financial
assets with explicit yield, as long as they are represented by account
entries and are traded in an official Spanish secondary market.
Non-resident investors in Spain
In the event of the holders being non-resident natural or legal persons in
Spain, taxation for the interest made shall be determined by Law 41/1998,
of 9 December, on Income of Non-residents and Taxation Regulations,
without prejudice to the provisions in the Agreements to avoid Double
Taxation in the event of these being applicable.
In accordance with article 13 of Law 41/1998, the yields derived from
these securities shall be exempt from taxation in Spain when they are
obtained by natural or legal persons resident in other member States of
the European Union, which do not operate in Spain with permanent
premises. In all other cases they shall be subject to taxation.
13
Likewise, this article establishes the exemption for income derived from
the transfer of securities made in official Spanish secondary markets
obtained by non-resident natural or legal persons without permanent
premises in Spanish territory, who are residents in a State that has signed
an agreement with Spain to avoid double taxation with an information
exchange clause.
In the event of the interest being obtained by residents in a country with
which Spain has signed an Agreement to avoid Double Taxation, the
regulations and reduced tax rates established in the Agreements shall be
applied.
In these cases, the deduction shall be made at the current rate in force,
currently 18%, unless this rate is less due to the application of Spanish
Law or an Agreement to avoid Double Taxation, and may only be effected
when this circumstance has been duly proved by the corresponding tax
residency certificate issued by the taxation authorities of the country of the
non-resident investor.
II.1.8.- Redemption of securities.
The securities of the different issues can be redeemed at par or at a
premium on the nominal, in all cases, reimbursement of the nominal
amount of the issue shall be guaranteed. This redemption price shall be
established for each Issue in its corresponding “Additional Information”.
The redemption method shall be determined for each Issue in its
corresponding “Additional Information”, where the maturity and the
existence, if applicable, of early redemption options shall be indicated. The
life of the issues covered in this programme shall be a minimum of 1 year
and a maximum of 30 years.
In the event of the redemption payment day being a bank holiday in
Madrid, payment shall be effected on the next working day, without the
subscriber having the right to receive interest for this delay.
The issues covered in this programme may or may not have several early
redemption options, to be chosen by the issuer, for its par value or with a
redemption discount. These shall be established in all cases in the
“Additional Information” of the issue.
In the case of issues of mortgage bonds and in accordance with the
provisions of article 59 of Royal Decree 685/1982, of 17 March, modified
by Royal Decree 1289/1991, of 2 August, the volume of these bonds
issued by the Institution, and not redeemed, may not exceed 90% of a
calculation basis formed by the total of the unredeemed capitals of all the
mortgages in the Institution’s portfolio that are suitable to serve as cover.
Nonetheless, in the event that this limit is exceeded as a result of
increases in the redemption of affected loans, or for any other cause, the
Issuing Entity is to re-establish the balance in accordance with the
14
provisions in article 60 of Royal Decree 685/1982, modified by Royal
Decree 1289/1991. In the event this balance is restored through the
redemption of mortgage bonds and bonds for the excess amount, if
necessary, this redemption is to be early and by ballot, provided this is
possible and can be carried out in the presence of a notary public. The
date and the place that the ballot takes place shall be made public in a
period of seven days in the offices of Banco Bilbao Vizcaya Argentaria,
S.A. and in the BORME, and the result of the ballot shall also be made
public in the period of seven days from the date of the ballot in the
abovementioned offices and in the BORME.
II.1.9.- Financial Institutions that shall perform the Financial Service of the loan
stock.
The Financial Institutions that shall perform the financial service of the loan
stock shall be specified in the corresponding “Additional Information”.
II.1.10.- Currency that the securities are issued in.
The issues may be issued in any legal currency of countries in the OECD.
II.1.11.- Financial Service.
The schedule of the financial service for each type of issue shall be stated
in its corresponding “Additional Information”.
II.1.12.- Effective interest rate predicted for the holder (final investor).
The effective interest rate for the subscriber of each Issue shall be
specified in its corresponding “Additional Information”, and shall be the
rate that results from applying the specific conditions of that issue. The
flows that the investor shall receive shall also be specified in the
“Additional Information”.
For those issues with an explicit interest rate that are made as part of this
programme, the internal rate of return for the subscriber shall be
calculated by means of the following formula:
-N+ F1
(1+r)
+
F2 + ……+ Fn = 0
(1+r)2
(1+r)n
Where:
N= Amount disbursed.
n= Duration periods of the security.
F= Cash flows.
r= Internal rate of return.
15
For those issues with an implicit interest rate that are made as part of this
programme, the internal rate of return for the subscriber shall be
calculated by the following formula:
N=
R
(1+r)n
Where:
N= Amount disbursed.
n= Duration periods of the security.
R= Redemption value of the security.
r= Internal rate of return.
II.1.13.- Effective interest rate predicted for the Issuer.
The effective cost in each issue shall be specified in its corresponding
“Additional Information” and shall be the result of applying the specific
conditions of that issue. The effective interest predicted for the issuer
shall be calculated by equalising the net income flows with the payment
flows.
The net income flows respond to the nominal amount of the corresponding
issues, minus the amount of the issue expenses (among others, CNMV
rates, secondary markets, advertising, placing commissions, etc.). In all
cases, the expenses that occur shall be detailed in the “Additional
Information”.
II.1.14.- Risk assessment.
No assessment of the credit risk has been specifically requested for this
programme from any rating institution. Nevertheless, this assessment of
the credit risk can be requested for each specific issue. If such is the
case, this circumstance shall be stated in “Additional Information”.
Without prejudice to the above, Banco Bilbao Vizcaya Argentaria, S.A.
has credit ratings assigned for its fixed-income issues from different
credit-reference agencies, as shown in the following table:
Short
Long
P-1
F1+
A-1+
Aa2
AA
AA-
Moody’s
FITCH
Standard & Poor’s
The rating scales for long-term debt used by the agencies are as follows:
Moody’s
16
FITCH
Standard &
Poor’s
Investment category
Speculation category
Aaa
Aa
A
Baa
Ba
B
Caa
Ca
C
AAA
AA
A
BBB
BB
B
CCC
CC
C
AAA
AA
A
BBB
BB
B
CCC
CC
C
Moody’s applies numerical modifiers 1, 2 and 3 to each generic rating category
from Aa to B. Modifier 1 indicates that the debenture is located in the upper
band of each generic rating category; modifier 2 indicates a medium band and
modifier 3 indicates the lower band of each generic category.
Standard & Poor’s applies a plus (+) or a minus (-) sign in the categories AA to
CCC, which indicates the relative position within each category. FITCH applies
the same signs from category AAA.
The rating scales of short-term debt used by these agencies are as follows:
Moody’s
FITCH
Prime-1
Prime-2
Prime-3
F1
F2
F3
B
C
Standard & Poor’s
A-1
A-2
A-3
B
C
Standard & Poor’s and FITCH apply a plus (+) sign in the category A-1 and F1.
These credit ratings are not a recommendation to buy, sell or be holders of
securities. The credit rating can be revised, cancelled, or withdrawn at any time
by the credit-reference agency.
The abovementioned credit rating is only an estimate and does not mean that
potential investors should not make their own analysis of the issuer or the
securities to be acquired.
II.2.-
Placing and allocation procedure of the securities that form the
issue programme.
II.2.1.- Subscription requests.
II. 2.1.1.- The securities of the Issues covered in this Programme may be aimed
at minority and/or institutional investors.
II.2.1.2.- Those issues listed in the AIAF, the Official Stock Exchanges of
Madrid, Barcelona, Bilbao and Valencia, or in the foreign organised
market that is established, shall be suitable to cover the legal investment
requirements that a certain type of institutions are subject to, in particular:
Collective Investment Undertakings, Underwriting Companies, Pension
17
Funds and Plans, as well as any other Institutions or Commercial
Companies, which must comply with administrative obligations of
investment in securities traded in secondary organised markets.
II.2.1.3.- The duration period of this programme shall be one year from its
registration date in the Official Registries of the CNMV, as long as there
is a Continued Prospectus that covers it.
The subscription period for each issue shall be specified in its
corresponding “Additional Information”.
Issues made as part of this programme may or may not be insured. This
shall be defined in its corresponding “Additional Information”. If the issue
is insured, the Underwriting Companies shall subscribe the amount not
placed at the end of the subscription period on the last day of the period.
In the event of the issue not being insured, the total amount of the issue
shall be decreased to the total volume of the funds requested.
II.2.1.4.- Investors may make their subscription requests in the offices and
branches of the Financial Institutions that are specified in the
II.2.1.5.- The manner and date to make the disbursement effective shall be
established for each Issue in its corresponding “Additional Information”.
II.2.1.6.- The Issuing Houses shall provide the subscriber with documentary
proof of the purchase made, which shall be the usual document in
purchases of securities for the type of subscriber involved (minority or
institutional).
II.2.2. Placing and allocation of the securities.
II.2.2.1.
Institution or institutions that take part in the placing.
For each issue made as part of this programme the list of Issuing
Houses, as well as the global amount of the commissions agreed
between them and the Issuer, if any, shall be specified in its
II.2.2.2. Management or Coordinating Institution.
For each issue made as part of this programme the Management
Institution, and the total amount of commissions agreed between said
Institution and the Issuer, if applicable, shall be specified in its
18
II.2.2.3. Underwriting Companies.
For each issue made as part of this programme the Underwriting
Companies, if applicable, shall be specified in its corresponding
“Additional Information”, as well as the nature of the insurance (joint and
several or joint) and the commission that they shall receive for that
service.
II.2.2.4 and II.2.2.5. Placing procedure.
For those issues aimed exclusively at institutional investors or to access
the tranche reserved for institutional investors of any issue of this
programme, the minimum application per investor shall be 100,000 euro.
The minimum application for those aimed at minority investors shall be
1,000 euro.
In the case of an institutional placing, when the total of the applications
exceeds the offer, they shall be allocated at the discretion of the Issuing
Houses, which shall ensure, in all cases, that there is no discriminatory
treatment among applications with similar characteristics.
The method of communicating the allocation of the securities shall be by
any of the normal methods used in communications between the issuing
houses and their institutional clients.
Account entries on behalf of the holders shall be effected in accordance
with the operating standards established by the SCLV for listed issues
and by the institution that performs the accounting record for the rest of
the issues, as stated above. After the subscription has been closed, the
Issuing Houses shall provide the subscribers with the definitive
acquisition certificate.
For issues aimed at the minority market, the procedure shall be indicated
in the “Additional Information”.
II.2.4.
Syndicate of Debenture Holders.
If due to the nature of the issue, it were necessary to form a Syndicate of
Debenture Holders, its formation shall be specified in the issue’s
corresponding “Additional Information”. If such is the case, the Syndicate
of Debenture Holders shall be formed within the periods and in the
manner established in legislation on this matter, and its operating
standards shall be in line with the provisions in articles 295, and
following, of the current Law on Public Limited Companies.
II.3.- Legal information and company agreements.
II.3.1.- Reference to the issue agreements.
19
This prospectus refers to a fixed-income securities issue programme for
a maximum nominal of 6,000 million euro.
The issues of fixed-income securities made as part of the programme
that this prospectus refers to shall be effected pursuant to the following
agreements:
-
-
Agreements of the Shareholders’ Ordinary General Meeting on 9
March 2002, during which the Board of Directors was awarded the
authority to effect fixed income security issues.
Agreement of the Board of Directors on 28 May 2002, during which
specific people were awarded the authority to determine the specific
characteristics of each issue.
A copy of the certificates of these agreements are attached as Appendix
1 and form part of this prospectus.
After the nominal amounts to be issued have been exhausted in
accordance with this programme, 14,000 million euro shall be available
for issue on the basis of the agreement adopted by the Shareholders’
Ordinary General Meeting on 9 March 2002 and in accordance to .what
is deemed appropriate by the Board of Directors at that time.
II.3.2.- Agreements to conduct an offer for sale.
This is not applicable, as this is an issue programme and not an offer for
sale.
II.3.3.- This is not applicable
II.3.4.- Prior administrative authorisation.
This issue programme does not require prior administrative authorisation.
However, when this authorisation is necessary for certain specific issues
it shall be requested.
II.3.5.- Typical legal system of the securities.
The securities of the issues that are covered by this programme are
negotiable securities, in the precise manner this term is described in
article 2.1 of the Royal Decree 291/1992 regarding issues and offers for
sale of securities. Thus the general legal system, which is applicable to
negotiable securities shall be applied.
II.3.6.- Guarantees.
For the issue of mortgage bonds:
The capital and the interest of these issues shall be especially guaranteed,
without the need for registration, by a mortgage on all those which, at any time,
have
been
registered
in
favour
of
Banco
Bilbao
20
Vizcaya Argentaria, S.A., without prejudice to the equity liability of the bank.
The mortgages that cover these mortgage bonds issue are guaranteed
with first mortgage on the fee simple absolute in possession.
The registration of mortgaged estates subject to the loans that cover
these issues of mortgage bonds are in force, are without any conditions
and are not subject to limitations as a result of the original entry or as
they are registrations effected under article 298 of the Mortgage
Regulations.
The guaranteed mortgages that cover these mortgage bond issues are
not in excess of 70% of the appraisal value of the mortgaged property,
nor 80% in the case of mortgages used for the construction, renovation
or purchase of a dwelling.
The value of the real estate in which the mortgages are vested, and
which covers the mortgage bond issues, was assessed before the
securities were issued and was insured under the conditions established
in article 30 of Royal Decree 685/1982, dated 17 March.
At no time may the volume of mortgage bonds to be issued by the Banco
Bilbao Vizcaya Argentaria, S.A. be in excess of 90% of the amount of the
non-amortised capitals of the portfolio mortgages, which can be used to
serve as cover.
Issues of subordinated debentures:
These issues shall be governed by the provisions laid down in the
Second Title of Law 13/1985, regarding the investment coefficients,
shareholders’ equity and obligations of information of dealers as
described by Law 13/1992, dated 1 June, and in article 20, section 1.g)
and article 22, section 3 of Royal Decree 1343/1992, dated 6 November,
which develops the aforementioned Law 13/1992, of shareholders’ equity
and supervision of the financial institutions on a consolidated basis.
Based on its condition of a subordinated issue, as far as the order of
priority is concerned, this shall be placed after all common creditors.
Neither the issuer, entities belonging to its consolidated group, nor other
entities or people with funding from either the Issuing Entity or the
Consolidated Group may acquire the securities included in this type of
subordinated issue.
Without prejudice to the above, should the legislation now applicable to
the subordinated debt issues be changed, in reference to the
subordination clause, these shall be adapted to conform to the new
regulations. Should a modification take place, the proceedings necessary
21
for its effectiveness must be carried out before said modification is
effected.
These issues shall not receive preference within the Bank’s Subordinated
Debt, regardless of the implementation and date of said debt.
For the rest of the fixed-income issues:
The remaining issues shall be covered by the general equity guarantee
of the issuing company.
II.3.7.- Representation of the securities.
These securities shall be represented by means of securities or by
means of account entries, under the terms set out in section II.1.5.
above.
II.3.8. Legislation governing the creation of the securities and indication of the
competent courts in the case of litigation.
The securities of the issues carried out under this programme shall be
subject to Spanish legislation, and the courts of Madrid have competence
in the event of litigation with regard to those investments directed at
institutional investors, by the same token, the courts established within
the country shall have competence in the case of those investments
directed at minority investors.
II.3.9. Circulation law of the securities. Limitations to their free transferral.
There are no specific restrictions regarding the free circulation of
mortgage bond issues, under Law 2/1981, of 25 March, and Royal
Decree 685/1982, of 17 March, which develops the regulations of the
Mortgage Market, and is modified by Royal Decree 1289/1991. These
can be freely transferred without a need for the intervention of a
commissioner of oaths in accordance with the provisions for article 80 of
the abovementioned Royal Decree 685/1982.
Neither are there any specific restrictions regarding the free circulation of
the fixed-income securities of any other issues carried out as part of this
Programme.
II.3.10. Information regarding the requirements and agreements prior to
requesting or not requesting listing on the Stock Exchange or on a
secondary organised market.
A request for listing of the issues effected as part of the programme
referred to in this issue prospectus can be carried out at the Official Stock
Exchanges of Madrid, Barcelona, Bilbao and Valencia, or in the AIAF
fixed-income market, pursuant to the decision of the representatives of
the Board of Directors of the Bank, exercising the agreements mentioned
in sections II.3.1 of this prospectus and which are attached as Annex I.
22
Apart from the listing of issues in the national market mentioned above, it
shall also be possible to request their listing in foreign organised
secondary markets. In all cases, this shall be specified in the “Additional
Information” that corresponds to each Issue carried out under this
programme.
II.4.- Information on the listing or non-listing of the securities that make
up the loan stock on a Stock Exchange or on any official organised
secondary market.
II.4.1.- Secondary markets where listing shall be requested.
Regarding listed issues, the Issuing Entity undertakes to handle the
listing of the securities included in the Issues carried out under this
Programme. The request for listing shall be carried out based on the
criteria of the issuing company and for each individual issue, whether in
the AIAF Fixed-Income market, in a maximum period of 45 days since
the last disbursement of the corresponding issue, or in the Official Stock
Exchanges of Madrid, Barcelona, Bilbao or Valencia, in a maximum
period of 90 days after the closing date of the subscription period for the
corresponding issue.
The reason for any non-compliance of these periods shall be publicly
announced in a national newspaper.
We hereby state that we know and agree to comply with the
requirements and conditions for the listing, continuance and exclusion of
the securities traded on these markets, in accordance with legislation in
effect and the requirements of its committees. The reason for any noncompliance of these periods shall be publicly announced in a national
newspaper.
II.4.2.- Fixed-income issues carried out by the issuer to date.
II.4.2.1. Details of the fixed-income issues of the Issuer, which are listed in secondary
markets, can be found in Annex III of this prospectus.
II.4.2.2. Market makers
Any entity empowered to carry out the functions of a market maker may
be requested to do so.
The “Additional Information” that corresponds to each Issue effected
under this programme shall specify the Market Maker, should this exist,
and the main characteristics of the Liquidity Contract signed between this
Institution and the Issuer
23
II.5.- The aim of this operation and its effect on the expenses and service of the
external financing of the issuing entity.
II.5.1.- Aim of the issue programme.
The net amounts of each issue shall be used to provide the issuing entity
with financing for the development of its credit activity.
24
II.5.2.- Expenses and service of the external financing of the issuing entity.
Banco Bilbao Vizcaya Argentaria, S.A. is not insolvent and it is up-to-date
on the payment of dividends, interest and principal of the loan stock
issued.
The data shown below corresponds to the consolidated accounts of the
BBV Group and the ARGENTARIA Group at 31 December 1999,
respectively.
Millions of pesetas
BBV Group
DEBIT REPRESENTED BY
NEGOTIABLE SECURITIES
Bonds and Debentures in circulation
In pesetas and/or euro
In foreign currency
In euro
In foreign currency
SUBORDINATE LIABILITIES
Issues in euro and/or pesetas
Issues in foreign currency
TOTAL VOLUME OF FIXED INCOME
SECURITIES
ARGENTARIA
Group
782,649
2,106,902
481,014
760,880
301,635
1,346,022
1,577,051
783,223
630,354
563,034
946,697
220,189
314,300
235,572
62,747
68,014
251,553
167,558
2,674,000
3,125,697
Millions of pesetas
BBV Group
ARGENTARIA
Group
FINANCIAL COSTS
Loan Stock and other negotiable securities
Subordinated Liabilities
259,595
18,875
119,566
12,975
TOTAL FINANCIAL COSTS
278,470
132,541
FINAL VOLUME OF GUARANTEES, SURETIES AND OTHER COMMITMENTS OF
THE BBV GROUP:
25
Year
1999
Sureties,
Pledges
and
Guarantees
Final Volume
1,249,014
Remaining
Contingent
Liabilities
Commitments
TOTAL
Final Volume
Final Volume
Final Volume
292,433
4,645,624
6,187,071
The total volume of the principal commitments and contingencies contracted by
the ARGENTARIA Group during the normal course of bank transactions for the
year ended 31 December 1999 are included below:
(Million of pesetas)
1999
Contingent liabilitiesRediscounts, endorsements and acceptances
Assets subject to different obligations
Sureties, guarantees and securities
Other contingent liabilities
Commitments
Disposable by third parties
Other commitments
863,107
52,556
915,663
2,013,465
128,307
2,141,772
3,057,435
The consolidated data for loan stock in circulation of the BANCO BILBAO
VIZCAYA ARGENTARIA Group, for the years ending 31 December 2000
and 2001 are as follows:
Thousands of euro
DEBIT REPRESENTED BY NEGOTIABLE
SECURITIES
Bonds and Debentures in Circulation
In euro
- Non-convertible bonds and debentures at a
variable interest rate
Non-convertible bonds and debentures at a
weighted fixed interest rate of 5.79%
Convertible bonds
Mortgage Bonds at a weighted fixed interest
rate of 5.83%
In foreign currency-
variable interest rate
weighted fixed interest rate of 4.51%
Mortgage Bonds at a variable interest rate
26
2001
2000
20,639,098 21,651,558
7,883,268 6,258,682
2,238,299 1,736,570
7,879
5,656,161 6,358,299
15,785,607 14,353,551
2,611,650 4,656,828
1,815,471 2,161,474
426,370 479,705
4,853,491
7,298,007
In euro
In foreign currency
4,736,576
4,808,127
SUBORDINATE LIABILITIES
Issues in euro
Issues in foreign currency
7,610,791
5,111,536
3,243,740 2,315,730
1,492,836 2,492,397
4,156,162 2,111,111
3,454,629 3,000,426
TOTAL VOLUME OF FIXED-INCOME ISSUES 32,986,465 31,571,221
Thousands of euro
2001
Financial costs
Loan stock and other negotiable securities
Subordinate Liabilities
2000
1,189,925 1,949,299
429,694 315,916
TOTAL FINANCIAL COSTS
32,986,465 31,571,221
The total volume of the principal commitments and contingencies contracted
during the normal course of bank transactions for the year ended 31
December 200 and 2001 are included below
In thousands of euro
2001
Contingent Liabilities
Pledges, sureties and guarantees
Assets subject to third party obligations
Rediscounts, endorsements and acceptances
Other
13,713,924 11,873,607
- 126,375
62,097 358,888
2,699,583 2,622,510
16,475,604 14,981,380
Commitments
Available through third parties:
- Credit institutions
- Public Administration sector
- Other resident sectors
- Non-residents
Other commitments
-
2000
2,349,633
2,994,873
26,183,898
21,388,686
52,917,090
2,372,081
2,172,136
3,588,271
23,201,754
19,257,077
48,219,238
3,058,713
55,289,171 51,277,951
71.764.775 66.259.331
Estimated redemptions and financial expenses of the BBVA Group for the next 3
years, by loan stock and negotiable securities:
2002
27
2003
2004
Redemptions
9,935,070
3,571,085
3,680,859
Estimated financial expenses
1,414,486
1,129,669
974,339
Signed: José Luis Domínguez de Posada de Miguel
BBVA Head of Trade Finance
28
Translated from the Spanish
APPENDIX 1
CERTIFICATES OF AGREEMENTS
1
JOSE MALDONADO RAMOS, COMPANY SECRETARY OF THE BOARD OF DIRECTORS OF BANCO BILBAO
VIZCAYA ARGENTARIA, S.A., WITH REGISTERED OFFICE AT PLAZA DE SAN NICOLÁS, 4, BILBAO AND TAX
IDENTIFICATION NO. A-48265169,
CERTIFIES:
That in the General Shareholders’ Meeting of Banco Bilbao Vizcaya Argentaria, S.A, held, upon second calling, at Palacio
Euskalduna, C/ Abandoibarra, 4 in Bilbao on 9 March 2002, called by means of advertisements in Official Gazette of the
Mercantile Register and in the newspapers “El País” of Madrid and “El Correo Español – El Pueblo Vasco” of Bilbao, on 18
February 2002, under the acting Chairmanship of Mr Francisco Gonzalez Rodriguez and with Mr José Maldonaldo Ramos as
acting Secretary, and with the attendance of 1,561 shareholders, according to the computer-prepared list of shareholders present,
representing 27,455,156 shares, or 0.86% of the share capital, and 208,131 shareholders represented by proxy, holding
1,749,736,068 shares, or 54.75% of the share capital, thus the total number of shareholders attending the meeting or represented
by proxy came to 209,692, a total of 1,777,191,224 shares or 55.61% of the share capital, and whose minutes where approved at
the end of the session by 98.37% of the votes issued, and in which the following figures as the fourth item on the Agenda
"Withdraw the part that was not applied of the authorization granted during the BBV General Shareholders’ Meeting held 27
February 1999 as the twelfth item on the Agenda and its later extension through the agreement adopted by the General
Shareholders’ Meeting held 17 April 2000 as the eighth item of the Agenda, whereby the Board of Directors were delegated the
power to issue fixed-income securities, of any type and nature, including exchangeable securities, which cannot be converted into
shares, for a maximum par amount of 20,000 million euro”, the following agreements, among others, were adopted with a
majority of 97.87% of the votes issued
"Withdraw the part that was not applied of the authorization granted during the BBV General Shareholders’ Meeting held 27
February 1999 as the twelfth item on the Agenda and its later extension through the agreement adopted by the General
Shareholders’ Meeting held 17 April 2000 as the eighth item of the Agenda, whereby the Board of Directors were delegated the
authority, subject to the applicable legal requirements, and once prior necessary authorisation has been received, in a maximum
legal period of five years, once or on various occasions, to issue debt, documented as debentures, any type of bonds, promissory
notes, certificates, mortgage bonds, warrants that are totally or partially exchangeable for shares already issued of the company
itself or another company, or that may be settled for differences, directly or through affiliate companies, or any other type of
fixed-income securities, in euro or in another currency, that can be subscribed in cash or in kind, registered or bearer, unsecured
or with any type of guarantee, including mortgage, that may or may nor include rights (warrants), subordinate or not subordinate,
temporary or of indefinite duration, totally or partially exchangeable for shares already issued of the Company or another
Company to the amount of TWENTY BILLION (20,000,000,000) EURO.
The Board of Directors is likewise delegated authority to establish and determine, however they deem appropriate, the inherent
conditions of the issue, with regard to interest rates, fixed, variable or linked, the issue price, par value of each security, its
representation by means of straight or multiple bonds, book entries, method and date of redemption or any other aspect related to
said issue, and may also request from the Official Trade Markets and other competent organisms, that the securities issued be
listed, subject to the rules of admission, or, when appropriate, excluded, providing any type of guarantees or commitments that
may be required through the legal stipulations currently in force, as well as determining any other question not included in this
document.
The Board of Directors is likewise delegated authority to, in accordance with the provisions laid down in article 141 of the Public
Limited Company Law, substitute the authority conceded at the General Shareholders’ Meeting with respect to the
abovementioned agreements in favour of the Standing Executive Committee, with express substitution powers, the Chairman of
the Board of Directors, the Chief Executive Officer or any other Director or Company representative.
HE LIKEWISE CERTIFIES
That the abovementioned agreements are valid on this date, and have not been revoked or modified by any later agreements.
2
And so that this may be officially recorded, for the purposes of its presentation to the Spanish Securities Market Commission, this
document is issued with the approval of the Chairman on the eighth of July, Two Thousand and Two.
Signed
THE CHAIRMAN
3
JOSE MALDONADO RAMOS, COMPANY SECRETARY OF THE BOARD OF DIRECTORS OF BANCO BILBAO
VIZCAYA ARGENTARIA, S.A., WITH REGISTERED OFFICE AT PLAZA DE SAN NICOLÁS, 4, BILBAO AND TAX
IDENTIFICATION NO. A-48265169,
CERTIFIES:
That the validly constituted Board of Directors of the Banco Bilbao Vizcaya Argentaria, S.A, during a meeting held in Bilbao,
Gran Vía, 1 on 28 May 2002, under the Chairmanship of Mr Francisco González Rodríguez, and with the attendance of the
following Board Members: Mr Jesús María Caínzos Fernández, Mr José Ignacio Goirigolzarri Tellaeche, Mr Juan Carlos Alvarez
Mezquiriz, Mr Ramón Bustamante y de la Mora, Mr Ignacio Ferrero Jordí, Mr José Maldonado Ramos, Mr Gregorio Marañón y
Bertrán de Lis, Mr Enrique Medina Fernández, Mr José María San Martín Espinós, Mr Jaume Tomás Sabaté, and Telefónica
Spain represented by Mr Angel Vilá Boix, making up the twelve members of the Board of Directors, with Mr José Maldonado
Ramos acting as Secretary, unanimously adopted the following agreements, among others:
FIRST – Using the authority delegated at the General Shareholders’ Meeting held on 9 March 2002, and withdrawing the part that
was not applied of the agreement regarding the issue of fixed-income securities adopted by the Board of Directors at their meeting
held on 22 May 2001, they agreed to proceed with the issue, within the maximum legal period of five years since the date of said
delegation, once or several times, of debt, represented by fixed-income securities, for a maximum amount of six billion euro,
under an issue programme of fixed-income securities with the following conditions:
Nature of the
securities to be issued:
Amount:
Period:
Early redemption:
Par value:
Interest:
Issue date:
Effective placing rate:
Representation of the securities:
Trading in a secondary market:
Bonds, Debentures, Mortgage Bonds and others with similar characteristics, which
can be unsecured or subordinated, registered, order or bearer.
6 billion euro, in one or several issues.
The life of the issues shall be a minimum of one year with an undetermined
maximum, including the possibility of issuing perpetual subordinated debt.
These issues may or may not have one or more early redemption options, which
shall be decided by the issuer, for their par value or with a redemption premium,
which shall be established in each case at the time of issue. In the event of
subordinated debt, prior authorisation from the Bank of Spain shall be necessary, if
this is to be exercised.
The par amount of each security shall depend on the type of fixed-income issue
launched, with a minimum of 100 euro (16,638.6 pesetas).
The rate, which may be fixed or variable or be referenced to any index, and the
coupon accrual periods shall be established at the time of each issue by the people
authorised to do so. The possibility of launching zero coupon issues is also
included.
The date that is established at the time of each issue.
The securities corresponding to each issue may be placed at a price other than their
par value, reflecting the market conditions at the time these are put into circulation.
The securities can be represented by certificates or by book entries.
A request can be made for the listing of these issues in any official or unofficial
organised secondary market
4
Guarantees:
Subscription:
Limits on Issues:
Each issue shall be guaranteed by the issuing entity’s corporate assets, in
accordance with the Law (which may be subordinated, unsecured or mortgage).
The issues carried out as part of this agreement may be aimed at institutional or
minority investors, and the subscription price will be determined at the time of each
issue.
At all times, the outstanding total for mortgage bond issues must be within the
global coverage limit established by article 59 of the Mortgage Market Regulation,
so that this does not exceed 90% of the total non-amortised capital of all mortgage
loans in the Bank’s portfolio, which may be used as coverage.
SECOND – Using the authority delegated to the Board of Directors at the General Shareholders’ Meeting held on 9 March 2002,
they agreed to award the Standing Executive Committee, with express powers of substitution, all the powers they, the Board, had
been awarded at the General Shareholders’ Meeting, and, likewise they agreed that joint authority, in the broadest sense, would
be given to the General Manager, Mr Angel Cano Fernandez, with National Identity No. 13735761-T, Mr José Luis Domínguez
de Posada y de Miguel, with National Identity No. 1494105-W, and Mr Rafael Salinas Martínez de Lecea, with National Identity
No. 24189928-T, who are all Spanish nationals, have reached majority of age, are married, and whose residence for these
purposes is Castellana 81, Madrid, so that, within the limits established by this agreement, and after the proceedings stated in
Article 26 of Law 24/1988 of 28 July of the Securities Exchange, and once all other authorisations necessary have been obtained,
they may proceed to determine the nature of the securities to be issued and the definitive amount of the programme that is to be
recorded in the Spanish Securities Market Commission, the date of each issue and the amount issued, the rate of interest and
accrual periods, they may also establish the date, the placing system and, if applicable, the effective placing rate, the redemption
date of each issue, as well as deciding whether there shall or shall not be early redemption options, whether or not listing on a
secondary market shall be requested, and any other questions not established by this Board regarding each one of the issues,
establishing, if applicable, the placing and insurance commissions, as well as the total amount for which each one of the issues
shall be definitively closed and determine any other question related to each of these issues, if necessary, so that these can be
successfully concluded; expressing the amount available with regard to the limit of the delegation effected by the General
Shareholders’ Meeting and the amount that is left for disposal; as well as proceeding with the constitution of the Syndicate of
Debenture Holders, establishing its characteristics and operating standards, and appointing its Temporary Trustee and the
fundamental regulations that are to govern relations between the Company and the Syndicate. They may also, if they deem
suitable, abstain from issuing the debt that is the object of the abovementioned agreement.
Each one of the abovementioned people are also authorised to execute as many public or private documents that are required, as
well as to formulate the declaration that Article 318 of the Regulations of the Companies Register refers to in order to comply
with the proceedings stated in Article 26 of Law 24/1988 of 28 July of the Securities Exchange, should this be mandatory, appear
before a Notary Public and enter the preceding agreements into record, including deeds of correction, amendment and
clarification and deeds of total or partial subscription of the issue, as well as the deeds of total or partial redemption, and, if
applicable, others that may have preceded them or that may be agreed in the future. They are likewise authorised to formalise or
register the documents in which each one of the issues is formalised before the CNMV (Spanish Securities Market Commission),
the Bank of Spain, the Companies Register, Madrid Stock Exchange Council and the AIAF Fixed-Income Market.
Lastly, and for the purposes of applicable regulations on securities issues, it is agreed to appoint Mr Angel Cano Fernandez, Mr
José Luis Domínguez de Posada y de Miguel, and Mr Rafael Salinas Martínez de Lecea jointly and severally as representatives of
the entity before any public or private body. They shall be responsible for the content of the issue prospectus and are likewise
authorised to sign as many contracts and additional public or private documents that are required for the successful conclusion of
the transaction.”
For the purposes of the provisions in the Regulations of the Companies Register, the Minutes of the meeting were unanimously
approved at the end of the same.
5
HE LIKEWISE CERTIFIES
That the abovementioned agreements are valid on this date, and have not been revoked or modified by any later agreements by the
company's Board of Directors.
And so that this may be officially recorded, for the purposes of its presentation to the Spanish Securities Market Commission, this
document is issued with the approval of the Chairman on the twenty fifth of June, Two Thousand and Two.
Signed
THE CHAIRMAN
6
APPENDIX II
MODEL OF ADDITIONAL INFORMATION OF THE ISSUES COVERED IN
THE FIXED-INCOME ISSUE PROGRAMME OF BANCO BILBAO VIZCAYA
ARGENTARIA, S.A.
7
ADDITIONAL INFORMATION ON THE ISSUE OF
(NATURE AND TITLE …) -02 COVERED IN THE
FIXED-INCOME SECURITIES ISSUE PROGRAMME OF
… JULY 2002
The object of this document is to confirm, for the purposes established in the Prospectus of the
Fixed-Income Securities Issue Programme of “Banco Bilbao Vizcaya Argentaria, S.A.” for the
amount of 6 billion euro, … July 2002, the Basic Conditions of issue number … -02 covered by
said Programme:
AMOUNT:
----------------- euro
NUMBER OF SECURITIES:
---------- extendable to ----------
NOMINAL PER SECURITY:
---------- euro
REPRESENTATION OF
THE SECURITIES:
Certificates and book entries.
ISSUE PRICE
PER SECURITY:
CURRENCY:
INTEREST RATE:
FREQUENCY OF THE
INTEREST PAYMENTS:
FORMULA TO BE APPLIED
FOR THE PAYMENT OF
INTEREST PER SECURITY:
PERIOD:
...% of the Nominal per security, with no charges for the
subscriber.
------.
....% of the fixed nominal on the basis of Act/Act or
indicated.
Yearly, half-yearly, quarterly, etc, every (DAY) of
(MONTH), starting on X-X-2001, until X-X-X, inclusive.
The interest to be applied shall be calculated in accordance
with the following formula: Gross amount of the COUPON
equals NOMINAL PER SECURITY multiplied by RATE OF
INTEREST.
… years.
8
MATURITY DATE:
REDEMPTION
SCHEDULE:
REDEMPTION PRICE
PER SECURITY:
REDEMPTION
METHODS:
FINANCIAL SERVICE
SCHEDULE PER
SECURITY:
X-X-XXXX.
Redemption shall be total on the maturity date. In the case of
early redemption options, indicate dates and explain
redemption procedure.
XX % of the nominal of the security, with no charges for the
subscriber.
Total redemption on the maturity date, or, if applicable, early
redemption options.
- X-X-2002: Disbursement equals ISSUE PRICE PER
SECURITY.
- Every (DAY) of (MONTH), starting on X.- X- 2002 until
X-X-… inclusive, payment of gross coupon equals
INTEREST RATE multiplied by NOMINAL PER
SECURITY.
- X-X-XXXX: Repayment equals REDEMPTION PRICE
PER SECURITY.
REFERENCE IRR:
...% , IRR corresponding to ……… taken at ..:.. on the day
the conditions are established, in accordance with the
quotation taken from the … Reuters screen.
ISSUER’S IRR:
Reference IRR plus a margin of .…%
TAKER’S IRR:
Reference IRR plus a margin of .…%
RISK ASSESSMENT:
Rating institution, grade given and date of the assessment.
ISSUE EXPENSES:
TRADING IN
SECONDARY MARKETS:
The issuing company shall request listing on any Spanish
secondary market, in a period of not more than -- months.
The right is reserved to list the issue referred to in foreign
stock exchanges.
9
CLEARING AND
SETTLEMENT SYSTEM:
GROUP OF POTENTIAL
INVESTORS:
SCLV. The existence of another institution for the cases in
which the issue is also listed in a foreign market shall be
indicated.
The issue shall be aimed exclusively at institutional or
minority investors or both in each case.
PLACING
SYSTEM:
PRO RATA:
SUBSCRIPTION
PERIOD:
The subscription period shall extend from the publication of
the issue in the BORME until X days before the disbursement
date.
DISBURSEMENT
PLACE AND DATE:
Madrid, .. …… 2002
PLACING ENTITIES:
….., …, …, …
MANAGEMENT AND
INSURING COMMISSIONS:
PLACING
COMMISSIONS:
UNDERWRITING
COMPANIES:
...% on the AMOUNT of the issue, payable once on the
DISBURSEMENT DATE.
...% on the AMOUNT of the issue, payable once on the
DISBURSEMENT DATE.
….
NATURE OF THE
UNDERWRITING:
UNDERWRITING
CONTRACT:
The UNDERWRITING COMPANY/COMPANIES and the
ISSUING COMPANY shall sign an UNDERWRITING
CONTRACT.
LEAD
MANAGER:
……
PRINCIPAL ISSUING AND
PAYING AGENT:
…
10
SUB PAYING
AGENT:
SYNDICATE OF
DEBENTURE HOLDERS:
……
If this has been formed, the most important characteristics of
its operation
Madrid, .. ……… 2002
Signed: …..
11
APPENDIX III
ISSUES OF FIXED-INCOME SECURITIES MADE BY THE ISSUER TO DATE
12
DATA RELATED TO THE TRADING OF FIXED-INCOME SECURITIES LISTED ON THE MADRID
STOCK EXCHANGE
BHE MORTGAGE BONDS 4% EG
Issue
Redemption
MONTH
YEAR
April
July
January
25/11/1946
01/01/2006
TRADED
VOLUME
NO. OF DAYS
LISTED
LAST
DATE
MAXIMUM
PRICE
MINIMUM
PRICE
MAXIMUM
IRR
MINIMUM
IRR
2000
10
1
12 Apr 00
88.00
88.00
n/a
n/a
2000
13,390
2
24 Jul 00
98.49
94.00
n/a
n/a
2002
0.03
1
21 Jan 02
89.00
89.00
n/a
n/a
BHE MORTGAGE BONDS 4% EP
Issue
Redemption
22/12/1943
01/07/2005
MONTH
YEAR
TRADED
VOLUME
NO. OF
DAYS
LISTED
LAST
DATE
MAXIMUM
PRICE
MINIMUM
PRICE
MAXIMUM
IRR
MINIMUM
IRR
n/a
January
2000
3,498
5
23 Jan 00
96.00
92.00
n/a
February
2000
32
2
25 Feb 00
92.50
92.25
n/a
n/a
April
2000
16
1
10 Apr 00
92.50
92.50
n/a
n/a
May
2000
35
1
04 May 00
93
93
n/a
n/a
June
2000
48
2
21 Jun 00
92
91
n/a
n/a
n/a
July
2000
4,240
3
20 Jul 00
97.87
91
n/a
August
2000
463
1
23 Aug 00
91.01
91.01
n/a
n/a
October
2000
14
2
25 Oct 00
91.00
91.00
n/a
n/a
November
2000
145
2
15 Nov 00
96.00
91.50
n/a
n/a
December
2000
12
1
05 Dec 00
91.00
91.00
n/a
n/a
n/a
January
2001
39
4
29 Jan 01
91.00
91.00
n/a
February
2001
90
5
28 Feb 01
92.00
91.00
n/a
n/a
March
2001
10
4
29 Mar 01
91.50
91.00
n/a
n/a
May
2001
2
1
08 May 01
91.00
91.00
n/a
n/a
June
2001
3
2
11 Jun 01
91.00
91.00
n/a
n/a
BHE MORTGAGE BONDS 4.5 % EPG
Issue
Redemption
23/03/1955
01/10/2009
MONTH
YEAR
TRADED
VOLUME
NO. OF DAYS
LISTED
LAST
DATE
MAXIMUM
PRICE
MINIMUM
PRICE
MAXIMUM
IRR
MINIMUM
IRR
n/a
July
2000
56,560
1
24 Jul 00
99.35
99.35
n/a
August
2000
4,630
1
23 Aug 00
89.42
89.42
n/a
n/a
April
2002
12
1
05 Apr 02
83.00
83.00
n/a
n/a
DATA RELATED TO THE TRADING OF FIXED-INCOME SECURITIES LISTED ON THE
MADRID STOCK EXCHANGE
BHE MORTGAGE BONDS 4.5 % EPP
Issue
Redemption
MONTH
23/03/1955
01/04/2007
YEAR
TRADED
VOLUME
NO. OF DAYS
LISTED
LAST
DATE
February
2000
July
2000
October
2000
July
2001
MAXIMUM
PRICE
MINIMUM
PRICE
MAXIMUM
IRR
MINIMUM
IRR
67
1
29 Feb 00
80.00
80.00
n/a
n/a
5
1
13 Jul 00
80.00
80.00
n/a
n/a
13,365
3
18 Oct 00
88.70
80.00
n/a
n/a
1
1
17 Jul 01
80.00
80.00
n/a
n/a
LAST
DATE
MAXIMUM
PRICE
MINIMUM
PRICE
MAXIMUM
IRR
MINIMUM
IRR
n/a
BHE MORTGAGE BONDS 4.5 % ENPG
Issue
Redemption
23/03/1955
01/10/2009
MONTH
YEAR
TRADED
VOLUME
NO. OF DAYS
LISTED
July
2000
45,185
1
24 Jul 00
99.3
99.3
n/a
August
2000
2,860
1
24 Aug 00
89.37
89.37
n/a
n/a
June
2001
695
1
11 Jun 00
89
89
n/a
n/a
LAST
DATE
MAXIMUM
PRICE
MINIMUM
PRICE
MAXIMUM
IRR
MINIMUM
IRR
BHE MORTGAGE BONDS 4.5 % ENPP
Issue
Redemption
23/03/1953
01/04/2007
MONTH
YEAR
TRADED
VOLUME
NO. OF DAYS
LISTED
July
2000
6,490
1
24 Jul 00
99.48
99.48
n/a
n/a
September
2000
5
1
20 Sep 00
90
90
n/a
n/a
BHE MORTGAGE BONDS 5 % ENPP
Issue
Redemption
29/03/1955
01/11/2005
MONTH
YEAR
TRADED
VOLUME
NO. OF DAYS
LISTED
LAST
DATE
MAXIMUM
PRICE
MINIMUM
PRICE
MAXIMUM
IRR
MINIMUM
IRR
August
2000
151
1
23 Aug 00
78.01
78.01
n/a
n/a
STOCK EXCHANGE
BHE MORTGAGE BONDS 5 % EXE.P
Issue
Redemption
23/03/1955
01/11/2005
MONTH
YEAR
TRADED
VOLUME
NO. OF DAYS
LISTED
LAST
DATE
MAXIMUM
PRICE
MINIMUM
PRICE
MAXIMUM
IRR
MINIMUM
IRR
October
2000
49
1
17 Oct 00
87.00
87.00
n/a
n/a
1986 BANCO BILBAO ISSUE (NV)
Issue
Redemption
MONTH
YEAR
TRADED
VOLUME (*)
NO. OF
DAYS
LISTED
LAST
DATE
MAXIMUM
PRICE
MINIMUM
PRICE
MAXIMUM
IRR
MINIMUM
IRR
n/a
January
2000
16,380
6
28 Jan 00
100.45
100.45
n/a
February
2000
17,380
11
29 Feb 00
100.60
100.60
n/a
n/a
March
2000
9,610
8
29 Mar 00
100.75
100.75
n/a
n/a
(*) Data in millions of pesetas. Referent to the contracted nominal amount
1990 BANCO BILBAO VIZCAYA ISSUE (SP)
Issue
Redemption
MONTH
YEAR
TRADED
VOLUME (*)
NO. OF
DAYS
LISTED
LAST
DATE
MAXIMUM
PRICE
MINIMUM
PRICE
MAXIMUM
IRR
MINIMUM
IRR
n/a
January
2000
204,500
8
31 Jan 00
100.00
99.96
n/a
February
2000
138,300
11
29 Feb 00
100.00
98.50
n/a
n/a
March
2000
87,000
8
31 Mar 00
100.00
98.00
n/a
n/a
April
2000
49,200
9
27 Apr 00
100.00
99.97
n/a
n/a
May
2000
49,500
8
31 May 00
100.00
99.94
n/a
n/a
June
2000
52,200
8
30 Jun 00
100.00
99.97
n/a
n/a
n/a
July
2000
163,100
7
28 Jul 00
100.00
99.97
n/a
August
2000
89,000
9
31 Aug 00
100.00
100.00
n/a
n/a
September
2000
207,200
7
27 Sep 00
100.00
100.00
n/a
n/a
n/a
October
2000
196,200
12
31 Oct 00
100.35
100.00
n/a
November
2000
39,800
6
30 Nov 00
100.00
100.00
n/a
n/a
December
2000
55,900
5
28 Dec 00
100.00
100.00
n/a
n/a
STOCK EXCHANGE
1999 BANCO BILBAO VIZCAYA ISSUE (JL)
Issue
Redemption
MONTH
YEAR
TRADED
VOLUME (*)
NO. OF
DAYS
LISTED
LAST
DATE
MAXIMUM
PRICE
MINIMUM
PRICE
MAXIMUM
IRR
MINIMUM
IRR
n/a
January
2000
24,019
13
31 Jan 00
104.00
99.35
n/a
February
2000
17,066
13
28 Feb 00
113.50
100.00
n/a
n/a
March
2000
36,368
13
31 Mar 00
113.00
105.00
n/a
n/a
April
2000
10,052
6
28 Apr 00
117.00
111.00
n/a
n/a
May
2000
55
5
31 May 00
111.50
103.00
n/a
n/a
June
2000
643
11
29 Jun 00
115.75
103.15
n/a
n/a
n/a
July
2000
2,735
6
27 Jul 00
114.75
110.00
n/a
August
2000
4,658
11
31 Aug 00
123.50
115.00
n/a
n/a
September
2000
949
4
19 Sep 00
123.50
120.00
n/a
n/a
October
2000
34,478
6
25 Oct 00
119.50
105.30
n/a
n/a
November
2000
3,055
3
09 Nov 00
117.75
106.00
n/a
n/a
APPENDIX IV
BALANCE SHEETS AND PROFIT AND LOSS ACCOUNTS AT 31 MARCH 2002 – PARENT
AND CONSOLIDATED.
BILBAO VIZCAYA ARGENTARIA, S.A.
ASSETS
1. CASH AND DEPOSITS IN CENTRAL BANKS
1.1. Cash
1.2. Bank of Spain
1.3. Other central banks
2. GOVERNMENT STOCK
3. CREDIT ENTITIES
3.1. On sight
3.2. Other loans
4. CREDITS ON CLIENTS
5. DEBENTURES AND OTHER FIXED-INTEREST SECURITIES
5.1. Public issues
5.2. Other issues
Promemoria: own securities
6. SHARES AND OTHER VARIABLE-INTEREST SECURITIES
7. SHAREHOLDINGS
7.1. In credit entities
7.2. Other shareholdings
8. SHAREHOLDINGS IN COMPANIES BELONGING TO THE GROUP
9. INTANGIBLE ASSETS
9.1. Constitution and setting-up costs
9.2. Other amortisable costs
10. TANGIBLE ASSETS
10.1. Land and buildings for own use
10.2. Other property
10.3. Furniture, installations and other
11. SUBSCRIBED CAPITAL NOT DISBURSED
11.1. Claimed passive dividends not disbursed
11.2. Rest
12. TREASURY STOCK
Promemoria: nominal
13. OTHER ASSETS
14. DEFERRED ACCOUNTS
15. LOSSES OF THE FINANCIAL YEAR
TOTAL ASSETS
31/03/2002
(in thousands of euro)
2,416,770
796,865
1,592,319
27,586
19,363,758
16,217,259
1,507,325
14,709,934
100,281,649
22,278,794
15,029,506
7,249,288
133,603
2,174,693
3,896,610
1,373,845
2,522,765
9,444,829
5,731,093
3,713,736
176,810
0
176,810
2,308,695
1,194,953
107,722
1,006,020
0
0
0
88,439
3,175
6,168,461
4,144,849
0
188,961,616
LIABILITIES
1. CREDIT ENTITIES
1.1. On sight
1.2. Fixed term or with notice
2. DEBITS TO CLIENTS
2.1. Savings deposits
2.2. On sight
2.2.1. Fixed term
2.2.2. Other debits
2.2.3. On sight
2.2.4. Fixed term
3. DEBITS REPRESENTED BY NEGOTIABLE SECURITIES
3.1. Bonds and debentures in circulation
3.2. Promissory notes and other securities
4. OTHER LIABILITIES
6. PROVISIONS FOR RISKS AND CHARGES
6.1. Pension fund
6.2. Tax provision
6.3. Other provisions
6. bis FUND FOR GENERAL BANKING RISKS
7. PROFITS OF THE FINANCIAL YEAR
8. SUBORDINATE LIABILITIES
9. SUBSCRIBED CAPITAL
10. ISSUE PREMIUMS
11. RESERVES
12. REVALUATION RESERVES
13. RESULTS OF PREVIOUS FINANCIAL YEARS
TOTAL LIABILITIES
MEMORANDUM ACCOUNTS
1. CONTINGENT LIABILITIES
1.1. Rediscounts, endorsements and acceptances
1.2. Assets linked to several debentures
1.3. Sureties, pledges and guarantees
1.4. Other contingent liabilities
2. COMMITMENTS
2.1. Temporary transfer with a repurchase option
2.2. Available through third parties
2.3. Other commitments
TOTAL MEMORANDUM ACCOUNTS
31/03/2002
52,630,577
1,632,045
50,998,532
97,475,678
82,539,660
40,083,545
42,456,115
14,918,018
13,659
14,904,359
6,043,236
6,010,554
32,682
5,714,839
4,744,564
2,568,389
1,546,104
0
1,022,285
0
103,964
10,593,180
1,585,968
6,834,195
528,745
176,281
0
188,961,616
39,310,120
0
0
37,764,858
1,545,262
40,898,972
0
38,649,523
2,249,449
80,209,092
1. Assimilated interest and earnings
Of which are: fixed-income portfolio
2. Assimilated interest and charges
3. Variable-income portfolio yield
3.1. Of shares and other variable-income securities
3.2. Of shareholdings
3.3. Of shareholdings in the Group
A) GROSS MARGIN
4. Commissions received
5. Commissions paid
6. Results of financial operations
B) ORDINARY PROFIT
7. Other products of operations
8. General administration expenses
8.1. Personnel costs of which correspond to:
Wages and salaries
Social charges
Of which correspond to pensions
8.2. Other administrative costs
9. Amortisation and restructuring of tangible and intangible assets
10. Other operating costs
C) OPERATING PROFIT
11. Amortis. and bad debt provisioning (net)
12. Restructuring of fixed assets (net)
13. Provisions to general banking risk fund
14. Extraordinary profit
15. Extraordinary loss
D) INCOME BEFORE TAX
16. Corporate tax
17. Other taxes
E) RESULT OF THE FINANCIAL YEAR
31/03/2002
1,952,649
475,772
1,203,894
63,216
21,265
5,071
36,880
811,971
374,005
74,422
-64,375
1,047,179
2,291
655,710
469,563
353,964
94,664
18,587
186,147
62,797
27,302
303,661
175,489
91,878
0
153,689
44,882
145,101
23,253
17,884
103,964
CREDIT
1. CASH AND DEPOSITS IN CENTRAL BANKS
1.1. Cash
1.2. Bank of Spain
1.3. Other central banks
2.
3.
GOVERNMENT STOCK
CREDIT ENTITIES
3.1. On sight
3.2. Other loans
4. CREDITS ON CLIENTS
5. DEBENTURES AND OTHER FIXED-INTEREST SECURITIES
5.1. Public issues
5.2. Other issues
Promemoria: own securities
6. SHARES AND OTHER VARIABLE-INTEREST SECURITIES
7. SHAREHOLDINGS
8. SHAREHOLDINGS IN COMPANIES BELONGING TO THE GROUP
9. INTANGIBLE ASSETS
9.1. Constitution and setting-up costs
9.2. Other amortisable costs
9.bis GOODWILL IN CONSOLIDATION
9.bis1. Using the global and proportional integration, method
9.bis.2. Using the equity method
10. TANGIBLE ASSETS
10.1. Land and buildings for own use
10.2. Other property
10.3. Furniture, installations and other
11. SUBSCRIBED CAPITAL NOT DISBURSED
11.1.
Claimed passive dividends not disbursed
11.2.
Rest
12. TREASURY STOCK
Promemoria: nominal
13. OTHER ASSETS
15. LOSSES IN CONSOLIDATED SOCIETIES
15.1. Using the global and proportional integration ,method
15.2. Using the equity method
15.3. Conversion differences
16. CONSOLIDATED LOSSES OF THE FINANCIAL YEAR
16.1. Of the Group
16.2. Of minorities
TOTAL CREDIT
31/03/2002
8,393,788
2,278,103
1,740,195
4,375,490
20,534,931
21,435,587
1,510,297
19,925,290
147,043,559
62,632,387
47,557,166
15,075,221
176,775
3,522,648
6,192,193
1,141,030
5,051,163
1,012,813
-
1,012,813
524,649
18,994
505,655
4,491,583
2,955,835
1,535,748
5,927,667
2,385,829
1,373,632
2,168,206
-
88,488
17
12,027,441
6,640,578
2,675,003
1,474,779
106,224
1,094,000
-
303,143,315
LIABILITIES
1. CREDIT ENTITIES
1.1. On sight
1.2. Fixed term or with notice
2. DEBITS TO CLIENTS
2.1. Savings deposits
2.1.1. On sight
2.1.2. Fixed term
2.2. Other debits
2.2.1. On sight
2.2.2. Fixed term
3. DEBITS REPRESENTED BY NEGOTIABLE SECURITIES
3.1. Bonds and debentures in circulation
3.2. Promissory notes and other securities
4. OTHER LIABILITIES
6. PROVISIONS FOR RISKS AND CHARGES
6.1. Pension fund
6.2. Tax provision
6.3. Other provisions
6.bis FUND FOR GENERAL BANKING RISKS
6.ter NEGATIVE CONSOLIDATION DIFFERENCE
6.ter.1. Using the global and proportional integration method
6.ter.2. Using the equity method
7. CONSOLIDATED PROFITS OF THE FINANCIAL YEAR
7.1. Of the Group
7.2. Of the minorities
8. SUBORDINATE LIABILITIES
8.bis MINORITY INTERESTS
9. SUBSCRIBED CAPITAL
10. ISSUE PREMIUMS
11. RESERVES
12. REVALUATION RESERVES
12.bis. RESERVES IN CONSOLIDATED COMPANIES
12.bis.1. Using the global and proportional integration method
12.bis.2. Using the equity method
12.bis.3. Conversion differences
13. RESULTS OF PREVIOUS FINANCIAL YEARS
TOTAL LIABILITIES
1. CONTINGENT LIABILITIES
1.1. Rediscounts, endorsements and acceptances
1.2. Assets linked to several debentures
1.3. Sureties, pledges and guarantees
1.4. Other contingent liabilities
2. COMMITMENTS
2.1. Temporary transfer with a repurchase option
2.2. Available through third parties
2.3. Other commitments
TOTAL MEMORANDUM ACCOUNTS
31/03/2002
63,821,517
2,035,815
61,785,702
161,982,519
135,561,300
68,799,399
68,761,901
26,421,219
26,421,219
26,341,551
21,527,389
4,814,162
8,415,598
6,230,086
4,533,592
2,210,882
2,322,710
41,573
20,785
20,788
803,099
588,611
216,488
7,282,885
7,301,350
1,565,968
6,834,195
388, 958
176,281
7,424,143
5,510,511
1,516,739
396,893
303,143,315
16,454,470
18,026
96,140
13,755,678
2,584,626
55,960,609
40,354
53,647,079
2,273,176
72,415,079
CUENTA DE PERDIDAS Y GANANCIAS
1. Assimilated interest and earnings
of which are: income-income portfolio
2. Assimilated interest and charges
3. Variable-income portfolio yield
3.1. Of shares and other variable-income securities
3.2. Of shareholdings
3.3. Of shareholdings in the Group
a) GROSS MARGIN
4. Commissions received
5. Commissions paid
6. Results of financial operations
b) ORDINARY PROFIT
7. Other products of operations
8. General administration expenses
8.1. Personnel costs
Wages and salaries
Social charges
Of which correspond to pensions
8.2. Other administrative costs
9. Amortisation and restructuring of tangible and intangible assets
10. Other operating costs
c) OPERATING PROFIT
11. Net earnings generated by companies consolidated using equity method
11.1. Shareholding in profits of companies consolidated using equity method
11.2. Shareholding in losses companies consolidated using equity method
11.3. Corrections on value due to collection of dividends
12. Amortisation of goodwill in consolidation
13. Profits from group operations
13.1. Profits, disposals, shareholdings in entities cons. using global and proportional
integration method
13.2. Profits, disposals, shareholdings in entities cons. using equity method
13.3. Oper. profits, treasury stock, fin. liabilities of the Group
13.4. Rev. of negative consolidation differences
14. Losses of Group operations
14.1. Losses, disposals, shareholdings in entities
cons. using global and proportional
integration method
14.2. Losses, disposals, shareholdings in entities
cons. using equity method
14.3. Oper. loss, treasury stock, fin. liabilities of
the Group
15. Amortis. and bad debt provisioning (net)
16. Restructuring of fixed assets (net)
17. Provisions to general banking risk fund
18. Extraordinary profit
19. Extraordinary loss
d) INCOME BEFORE TAX
20. Corporate tax
21. Other taxes
e) Consolidated Result of the financial year
1) Result attributed to the minority
2)Result attributed to the Group
31/03/2002
4,518,592
1,382,253
2,489,020
84,211
23,281
7,880
53,050
2,113,783
1,154,277
183,393
205,892
3,290,559
11,628
1,551,846
1,002,158
751,161
169,577
34,328
549,688
177,325
91,309
1,481,707
139,643
213,572
14,616
59,313
136,333
119,925
3,495
91,173
25,257
8,116
3,017
4,697
402
437,049
3,167
257,704
343,204
1,077,444
274,059
286
803,099
216,488
586,611
The Spanish text of these documents is legally binding . The English translation is
for convenience only.
ADDITIONAL INFORMATION ON THE ISSUE OF
MORTGAGE BONDS COVERED IN THE
FIXED-INCOME SECURITIES ISSUE PROGRAMME
OF BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
16 JULY, 2002
D. José Luis Domínguez de Posada de Miguel, Director of BBVA issues by virtue of the powers
granted in the agreement of the Board of Directors dated 28 May 2002, and to the effects set out in
the Brochure on the “Banco Bilbao Vizcaya Argentaria, S.A.” Fixed Interest Securities Issue
Programme in the amount of 6,000 million euros, of 16 July 2002, communicates by this note the
Basic Conditions of the issue of protected property bonds under the said Programme.
AMOUNT:
Euro 3,000,000,000
NUMBER OF SECURITIES
30,000
NOMINAL VALUE PER SECURITY:
Euro 100,000
FORM OF
REPRESENTATION OF
THE SECURITIES:
Account entries.
ISSUE PRICE PER
SECURITY:
98.296% of the nominal value per security, free of
charges to the subscriber.
CURRENCY:
Euro
RATE OF INTEREST:
4.25% nominal fixed on an Act / Act basis.
WHEN INTEREST IS PAID
Annually, every 29 January, starting on 29-1-2004,
until 29-1-2013 inclusive.
FORMULA TO BE APPLIED
FOR PAYMENT OF
INTEREST
PER SECURITY:
PERIOD:
The interest to be applied will be calculated according
to the following formula: Gross amount of the
VOUCHER equal to the NOMINAL VALUE PER
SECURITY multiplied by the RATE OF INTEREST.
10 years.
MATURITY DATE:
29-1-2013
AMORTIZATION
TIMETABLE:
REPAYMENT PRICE PER
SECURITY:
Total amortization at the maturity date
TYPE OF
Total amortization at the maturity date.
100% of the nominal value of the security, free of
charges to the subscriber.
AMORTIZATION:
FINANCIAL SERVICE
Repayment equal to 100,000 euros.
Every 29 January, starting on 29-1-2004 and until 29-1
2013 inclusive, payment of the gross voucher equal to
4,250 euros.
29-1-2013: Repayment equal to 100,000 euros.
ISSUER’S RoI:
4.48%
TAKER’S RoI:
4.46%
FISCAL INFORMATION:
This issue will be subject to application of the general
tax system in force at any time for the issue of
securities. In particular, as regards Income Tax on
Natural Persons and Company Tax, the amount of the
vouchers and/or the difference between the value of the
asset at subscription or acquisition and its value at
transfer or repayment will be regarded as yield on
capital.
Similarly, in accordance with the provisions of art. 69
ff of the Regulation on Income Tax on Natural Persons,
approved by R.D. 214/1999 of 5 February, amended by
R.D. 27/2003 of 10 January, and article 56 ff of the
Regulation on Company Tax approved by Royal
Decree 537/1997 of 14 April, and subsequent
amendments, the yield on capital obtained from these
securities will be subject to retention of tax.
Consequently, the voucher payments and/or the
difference between the value of the title at subscription
or acquisition and its value at transfer or repayment
should be subject to retention at the rate in force at any
time, currently 15%, on the part of the issuing
institution handling the operation or, if appropriate, by
the public regulator should there be obligatory
intervention in the operation.
Notwithstanding the general system set out in the
preceding paragraphs, article 57 of the Regulation on
Companies Tax provides, in the case of issues
subsequent to 1 January 1999, for exemption from
retention for income obtained by artificial persons
domiciled in Spain, when they arise from financial
assets which fulfil the conditions of being represented
by account entries and of being traded in an official
secondary market for Spanish securities.
In addition, article 70 of the Regulation on Income Tax
on Natural Persons provides for exemption from
retention for income obtained by natural persons
resident in Spain, derived from transfer or repayment of
financial assets with explicit yield, as long as these are
represented by account entries and traded in an official
secondary market for Spanish securities.
Investors not resident in Spain
Where the holders are natural or artificial persons not
resident in Spain, the taxation on interest produced will
be determined by Law 41/1998, of 9 December, on the
Income of non-residents and Taxation Rules, without
prejudice to the provisions of the Agreements to
prevent Double Taxation where these apply.
In accordance with article 13 of Law 41/1998, the
yields derived from these titles will be exempt from
taxation in Spain when they are obtained by natural or
artificial persons resident in other Member States of the
European Union, which do not operate in Spain by
means of a permanent establishment, being subject to
taxation under any other hypothesis.
Similarly, this article provides for the exemption of
income arising from dealings in securities in official
secondary markets for Spanish securities obtained by
non-resident natural persons or entities without a
permanent establishment on Spanish territory, who are
resident in a country which has signed an agreement
with Spain to prevent double taxation with an
information exchange clause.
Where interest is obtained by residents of countries
with which Spain has signed an Agreement to prevent
Double Taxation, the rules and reduced rates of tax
established in those countries will be applicable.
Under these circumstances, retention will be applied at
the rate in force, currently 15%, except where by
application of Spanish regulations or an Agreement to
prevent Double Taxation the said rate is lower, and
always assuming that circumstance is duly accredited
by the certificate of tax residence issued by the fiscal
authorities of the country of the non-resident investor.
EVALUATION OF THE RISK:
Moody’s rating agency has been asked for a grading of
this issue. However, if on the Disbursement Date, the
Bonds have not obtained AAA rating or equivalent
from the said agency, the guarantee and placement
contract may be annulled and the issue cancelled. Once
the said rating has been obtained it will be
communicated to CNMV.
COSTS OF ISSUE:
3,940,000 euros (includes AIAF and CNMV admission
costs, solicitors’ charges and pro rata charges for
producing the Short Brochure on the Fixed Interest
Issue Programme).
DEALING ON
SECONDARY MARKETS:
The issuing company will seek, within the time limits
laid down in the Short Information Brochure on the
Fixed Interest Issue Programme, admission to quotation
on AIAF. Similarly, it is planned to seek its admission
to dealings on the Luxemburg Stock Exchange during
the 45 days following the disbursement date.
SETTLEMENT
COMMITMENT:
The Guarantee and Placement Institutions will provide
settlement for the Issue through the quotation of buying
and selling prices, during normal market hours, with a
price differential between offer and demand of 10 basic
points for a sum of up to EUR 15 million per order. The
above differential will take account of the residual
maturity of the issue (5 basic points up to 4 years, 6
basic points up to 6 years, 8 basic points up to 8 years,
10 basic points up to 10 years), always assuming that
no exceptional market circumstances exist which make
it impossible to maintain the said differentials. The
prices will be quoted through the usual information
systems. The Institutions undertake the quotation
commitments described above, always assuming that
the Issue presents sufficient trade on secondary markets
to support that quotation. In the case of Banco Bilbao
Vizcaya Argentaria, S.A., the commitment described
above will be subject to the permitted limits under
Spanish law and regulations. This Settlement
Commitment will remain in force for a maximum
period equal to the life of the issue.
The issuer may consider the Settlement Commitment
with any Guarantee and Placement Institution annulled
before its maturity, if it has failed to fulfil the
commitments undertaken by virtue of this Settlement
Commitment or when it considers this appropriate,
always assuming that it gives the said Guarantee and
Placement Institution at least 30 days notice. However,
the issuer may not make use of this facility unless it
already has a credit institution to substitute for the
Guarantee and Placement Institution. The appointment
of the new institution will be communicated to the
CNMV.
In the case of cancellation on the initiative of a
Guarantee and Placement Institution, notwithstanding
the period of notice provided for above, the said
Guarantee and Placement Institution will not be
relieved of the obligations undertaken in the Settlement
Commitment until the Issuer has found another credit
institution to replace it with. The Issuer undertakes to
make every effort to locate, within a period of 30 days,
a credit institution prepared to take over the functions
of the withdrawing Guarantee and Placement Institution
covering this Settlement Commitment. If this time limit
expires without the Issuer finding a substitute for the
said Institution, the latter may present to the Issuer a
credit institution which will take its place under the
same terms in the Settlement Commitment, which the
Issuer may not reject except for lack of the necessary
capacity to fulfil what is agreed here and the
appointment of the new institution will be
communicated to the CNMV.
The cancellation of the Settlement Commitment and the
replacement of the Guarantee and Placement Institution
will be notified by the Issuer to the holders of the
Property Bonds through the publication of the
corresponding announcement in a national newspaper
and in the A.I.A.F Quotation Bulletin. Again, the
cancellation will be communicated to the CNMV.
There are no commitments additional to the Settlement
Commitment described above.
COMPENSATION AND
SETTLEMENT SYSTEM
S.C.L.V. In addition, its inclusion on Euroclear and / or
Luxemburg Clearstream may be sought.
FUNGIBILITY:
This issue will be fungible with any other issues of
Property Bonds which are issued subsequently and
coincide with it in nominal unitary value, rate of
interest, date of payment of vouchers and maturity
dates.
GROUP OF POTENTIAL
INVESTORS:
PLACEMENT SYSTEM:
The issue is aimed exclusively at institutional investors.
It will be placed by placement bodies, from amongst
their clients’ applications, in a discretionary manner,
ensuring, in any case, that there is no discrimination
between applications with similar characteristics.
SUBSCRIPTION PERIOD:
The subscription period will run from 8:30 a.m. on the
day of publication of the issue in the B.O.R.M.E. until
2:30 a.m. on 27 January, both dates inclusive.
DATE AND PLACE OF
DISBURSEMENT:
PLACEMENT BODIES:
Madrid, 29 January 2003
GUARANTEE AND
ABN AMRO Bank N.V., Branch in Spain, Banco
Bilbao Vizcaya Argentaria, S.A., Barclays Bank PLC,
Bayerische Hypovereinsbank Und Vereins Bank AG,
CDC Ixis Capital Markets, CCF, Credit Agricole
Indosuez, Deutsche Bank Aktiengesellschaft and
Societe Generale, Branch in Spain.
However, those bodies not recognized in Spain may not
place these securities on the national market.
0.15% on the AMOUNT of the issue insured, payable
PLACEMENT
COMMISSION
GUARANTEE
BODIES:
NATURE OF THE
GUARANTEE:
GUARANTEE
CONTRACT:
PAYMENT AGENT:
in a single payment on the DISBURSEMENT DATE.
ABN AMRO Bank N.V., Branch in Spain, Barclays
Bank PLC, Bayerische Hypovereinsbank Und Vereins
Bank AG, CDC Ixis Capital Markets, CCF, Credit
Agricole Indosuez, Deutsche Bank Aktiengesellschaft
and Societe Generale, Branch in Spain. These bodies
will guarantee 82.00% of the issue, that is, an amount
of 2,460,000,000 euros.
The total amount of this issue may be reduced as a
function of the part not guaranteed, that is, it may be
reduced by an amount of up to 540,000,000 euros.
Joint.
The GUARANTEE BODY/IES and the ISSUING
COMPANY will sign a GUARANTEE CONTRACT.
Banco Bilbao Vizcaya Argentaria, S.A.,
Madrid, 17 January 2003
13 May, 2003
PROSPECTUS
PROSPECTUS COMPRISED OF:
•
CONTINUOUS FIXED INCOME SECURITIES
CONTINUADO) APPROVED ON 26 JUNE 2002
•
SUMMARISED FIXED INCOME SECURITIES ISSUE PROGRAMME (FOLLETO REDUCIDO)
APPROVED ON 16 JULY 2002
•
ADDITIONAL INFORMATION (INFORMACION COMPLEMENTARIA) APPROVED ON 17
JANUARY 2003
•
LUXEMBOURG SUPPLEMENT DATED 13 MAY TO THE EUR 3,000,000,000 CEDULAS
HIPOTECARIAS ADDITIONAL INFORMATION DATED 17 JANUARY 2003 FOR THE
PURPOSES OF THE LISTING OF THE BONDS ON THE LUXEMBOURG STOCK
EXCHANGE
ISSUE
PROGRAMME
(FOLLETO
LUXEMBOURG SUPPLEMENT DATED 13 MAY 2003 TO THE EUR 3,000,000,000
CEDULAS HIPOTECARIAS ADDITIONAL INFORMATION DATED 17 JANUARY
2003 FOR THE PURPOSES OF THE LISTING ON THE LUXEMBOURG STOCK
EXCHANGE
LUXEMBOURG SUPPLEMENT DATED 13 MAY 2003 TO THE EUR 3,000,000,000
CEDULAS HIPOTECARIAS ADDITIONAL INFORMATION DATED 17 JANUARY
2003 FOR THE PURPOSES OF THE LISTING ON THE LUXEMBOURG STOCK
EXCHANGE
The English translations of the Folleto Continuado, Folleto Reducido and the Informacion Complementaria
are for information purposes only. In the event of any inconsistency, ambiguity or conflict between the original
Spanish versions and the English translations, the Spanish versions shall prevail. The Issuer has put in place
all the necessary means to translate these documents and guarantees the accuracy of such translations.
The Issuer takes responsibility for the contents of this Luxembourg Supplement.
GENERAL INFORMATION
1
Mutual recognition of the mortgage bonds by the Luxembourg Stock Exchange
Banco Bilbao Vizcaya Argentaria, S.A. (“BBVA” or the “Issuer”) issued on 17 January 2003, EUR
3,000,000,000 cedulas hipotecarias (mortgage bonds) due 2013 (the “Bonds”).
The Bonds are fixed income securities subject to Spanish law, of which principal and interest are
guaranteed (without the need of registration of such guarantee) by the whole portfolio of mortgages
of the Issuer. These Bonds incorporate a credit right of the holder over the Issuer. The terms and
conditions of the Bonds are described in the Additional Information.
Pursuant to the terms of the Additional Information, the Issuer has requested the listing of the Bonds
on the AIAF Mercado de Renta Fija (Spanish private fixed income securities market) in Spain.
In addition, and pursuant to the terms of the Additional Information, the Issuer has agreed to apply for
the listing of the Bonds on the Luxembourg Stock Exchange.
1.1
Net proceeds of the issue
The net proceeds of the issue amounts to EUR 2,994,380,000.
1.2
Form of the Bonds
The Bonds will be in registered form (au nominatif). The Bonds have been accepted for clearance
through the Clearstream, Luxembourg and Euroclear systems with a Common Code of 041321103.
The International Securities Identification Number for the Bonds is ES0413211030.
1.3
Prescription
There is no prescription.
1.4
Delivery of Bonds and certificates
The Bonds are evidenced by book entries and therefore no physical evidence (i.e. certificates) has
been or will be issued.
The Bonds were deposited in the S.C.L.V., clearing system on 28 January, 2003.
The Bonds obtained a rating of AAA at the Disbursement Date.
1.5
Registration of the legal notice, by-laws and other corporate documents of the Issuer
In connection with the application to list the Bonds on the Luxembourg Stock Exchange, a legal
notice relating to the issue of the Bonds and copies of the statutes of the Issuer have been registered
by Deutsche Bank Luxembourg S.A., with the “Registre de Commerce et des Societes au
Luxembourg”. A copy of such notice and of the Issuer’s by-laws has been made available to the
public.
1.6
Luxembourg Listing Agent
Deutsche Bank Luxembourg S.A. will act as Luxembourg Listing Agent.
1.7
Luxembourg Paying Agent
The financial service of the issue will be provided by Deutsche Bank Luxembourg S.A. as Paying
Agent. The Paying Agent will be in charge of payments of interest and principal.
A copy of the Paying Agency Agreement may be reviewed, and copies of the annual, semi-annual
and quarterly accounts of the Issuer may be obtained, at the registered office of the Paying Agent as
long as there are any outstanding Bonds.
For so long as the Bonds are listed on the Luxembourg Stock Exchange, a Paying Agent will be
maintained in Luxembourg.
1.8
Notices
For so long as the Luxembourg Stock Exchange rules so require, any notice or information targeted
at investors will be published in the Luxemburger Wort or in any other newspaper having general
circulation in Luxembourg and chosen by the Issuer if publication in such newspaper is not possible
at such time.
1.9
Documents incorporated by reference
The General Shareholders Meeting approved the annual accounts for the fiscal year ended 31
December, 2002, these accounts are hereby incorporated by reference and may be obtained free of
charge at the registered office of the Paying Agent in Luxembourg. The annual accounts for the
fiscal year ended 31 December, 2002 have been extracted from the 2002 Annual Report and have
been sent to the Luxembourg Stock Exchange.
1.10
Governing Law
The Bonds are governed by, and shall be construed in accordance with, Spanish law.
2
Significant information/developments as from the date of registration of the
prospectus with the Spanish Securities Market Commission
st
On March 1 2003, General Shareholders Meeting of BBVA has approved the amendments of
Articles 31, 34 and 48 of its By-laws. These amendments have been notified to the Spanish Stock
Exchange Commission (“CNMV”) but are still awaiting authorisation from the relevant Spanish
administrative authority, which is the Bank of Spain, and registration with the relevant Commercial
Registry is still pending.
Article 31 has been amended in order to cease limiting the exercise of voting rights to 10% of the
total share capital, therefore, new wording states the principle of one share one vote; Article 34 has
been amended in order to adjust the maximum and minimum number of seats on the Board of
Directors (minimum of 9 and a maximum of 18 members) and; Article 48 has been amended in order
to comply with a recent Law issued by the Spanish authorities in November 2002 (Financial Law)
regulating the Audit Committee of the company.
Additionally, BBVA has changed the organisational structure of its Group in January 2003, in order to
get a more agile and compact one with better integration and greater autonomy for the different
business units.
Business areas have been reduced to three: Retail Banking, Latin American Area and Wholesale and
Investment Banking. Financial Department has assumed more competencies and two new
Departments has been incorporated which are: Human Resources and Services and Organisation
and Systems.
The above mentioned three areas depends on the Managing Director and are supported by the
following Departments (Supports Areas): Operating Resources, Risk Control, Human Resources and
General Services, Chief Financial Officer and Business development.
Four additional units depending on the Chairman of BBVA complete the structure: General
Secretariat, Legal Affairs, Chairman’s Office and Corporate Communications.
3
Litigation proceeding opened at the Juzgado de Instrucción nº 5 de la Audiencia
Nacional against BBVA referred to the existence of capital gains for an amount of
EURO 225,000,000 derived from the sale by the former BBV of shares in Banco de
Vizcaya and Argentaria that had not been reflected in BBVA’s accounts until the year
2000 and to the existence in their Jersey subsidiaries of structures belonging to the
group that had not been consolidated is still pending.
Capitalisation Table
HIGHER QUALITY CAPITAL (TIER I)
Capital
Reserves2
Minority interests
Preference shares
Other
Deductions
Goodwill
Other
Attributable profit
Dividends
OTHER ELIGIBLE FUNDS (TIER II)
Subordinated debt
Revaluation reserves and other
Deductions
CAPITAL BASE
Minimum equity required
CAPITAL BASE SURPLUS
1
2
(Millions of Euro)
31/03/20031
(Millions of Euro)
31/12/2002
13,727
1,566
10,483
5,931
3,994
1,937
(4,767)
(4,296)
(471)
514
-
13,680
1,566
10,099
6,120
4,075
2,045
(4,715)
(4,257)
(458)
1,719
(1,109)
6,573
4,764
2,522
(713)
6,665
4,867
2,583
(785)
20,300
15,192
20,345
14,786
5,108
5,559
Considering the Brazilian transaction as closed. If not, the ratios would be: Core Capital 6.0%, TIER 1 8.5%, TIER II
3.6% & BIS Ratio 12.1%.
Does not include revaluation reserves as these are considered TIER II.
MEMORANDUM ITEM
Risk-weighted assets
BIS RATIO %
TIER I %
TIER II %
161,650
163,110
12.6
8.5
4.1
12.5
8.4
4.1
CAPITAL RATIO (Bank of Spain
regulation)
11.2
Save as disclosed above, there has been no material change in the capitalisation of the Issuer since 31
March 2003.
4
BBVA consolidated Balance Sheet as of 31 December 2002.
Consolidated Balance Sheet
Cash on hand on deposit at
Central Banks
Due from credit entities
Total net lending
Fixed-income portfolio
Government debt securities
Other debt securities
Equities portfolio
Companies carried by the
equity method
Other holdings
Goodwill in consolidation
Property and equipment
Treasury Stock
Prior years' losses at
consolidated companies
Other assets
TOTAL ASSETS
Due to credit entities
Customer funds
Deposits
Marketable debt securities
Subordinated debt
Other liabilities
Net income
Minority interests
Capital
Reserves
TOTAL LIABILITIES
5
(Millions of Euro)
31/12/2002
8,050
21,476
141,315
68,901
19,768
49,133
10,071
7,064
3,007
4,257
4,634
98
3,650
17,090
279,542
56,119
180,570
146,560
27,523
6,487
19,221
2,466
5,674
1,566
13,926
279,542
BBVA consolidated Profit and Loss Table as of 31 December 2002.
Financial revenues
Financial expenses
Dividends
NET INTEREST INCOME
Net fee income
31/12/2002
17,234
9,784
358
7,808
3,668
BASIC MARGIN
Market operations
11,476
765
ORDINARY REVENUE
Personal costs
General expenses
12,241
3,698
2,074
Depreciation and amortization
Other operating revenues and expenses (net)
5,772
631
261
OPERATING INCOME
Net income from comp. Carried by the eq.
Method
Memorandum item: dividends received
Amortization of goodwill in consolidation
Net income on Group transactions
Net loan loss provisions
*Gross provisions
*Reversals
*Recoveries
Net securities writedowns
Extraordinary items (net)
5,577
33
PRE-TAX PROFIT
Corporate income tax
3,119
653
NET INCOME
Minority interests
*Preference shares
*Others
2,466
747
276
471
NET ATTRIBUTABLE PROFIT
1,719
242
679
361
1,743
2,385
434
208
3
433
TAX
1
Luxembourg Taxation
The following is a summary of the Luxembourg tax consequences to potential purchasers or holders
of the Bonds, based on current law and practice in Luxembourg. This discussion is for general
information purposes only and does not purport to be a comprehensive description of all possible tax
consequences that may be relevant. Potential purchasers of the Bonds should consult their own
professional advisers as to the consequences of making an investment in, holding or disposing of the
Bonds and the receipt of any amount in connection with the Bonds.
1.1
Withholding Tax
Under Luxembourg tax laws currently in effect, there will be no withholding tax on interest paid by the
Issuer.
1.2
Taxes on Income and Capital Gains
Holders of the Bonds will not become residents, or be deemed to be resident in Luxembourg by
reason only of the holding of the Bonds.
Holders of the Bonds who are non-residents in Luxembourg and who do not hold the Bonds through
a permanent establishment in Luxembourg are not subject to Luxembourg income tax on (i)
payments of principal or interest, (ii) accrued but unpaid interest, (iii) payments received upon
redemption, repurchase or exchange of the Bonds, or (iv) capital gains on sale of any Bonds.
Holders of the Bonds who are resident in Luxembourg, or holders of the Bonds who have a
permanent establishment in Luxembourg with which the holding of the Bonds is connected, must for
income tax purposes include any interest received in their taxable income. They will not be liable for
any Luxembourg income tax on repayment of principal upon repurchase, redemption or exchange of
the Bonds.
Corporate entities, including financial institutions, banks, insurance companies etc, should report
income on an accrual basis. They are entitled to credit foreign income tax, if any, on the interest
received. Foreign income tax credit is, however, subject to certain limits provided for in the domestic
tax law or in the applicable double taxation treaty.
Holders of the Bonds resident in Luxembourg who are holding companies subject to the law of 31
July 1929 or undertakings for collective investment or pension funds are tax exempt entities in
Luxembourg, and are thus not subject to any Luxembourg tax (i.e., corporate income tax, municipal
business tax and net wealth tax).
1.3
Other Taxes
There is no Luxembourg registration tax, stamp duty or any other similar tax or duty payable in
Luxembourg by a holder of the Bonds as a consequence of the issuance of the Bonds, nor will any of
these taxes be payable as a consequence of a subsequent transfer or redemption or repurchase of
the Bonds.
Luxembourg net wealth tax will not be levied on a holder of the Bonds, unless (i) such holder of the
Bonds is resident in Luxembourg for the purpose of the relevant legal provisions and fully taxable in
Luxembourg; or (ii) the Bonds are attributable to an enterprise or part thereof which is carried on
through a permanent establishment or a permanent representative in Luxembourg.
No gift, estate or inheritance taxes are levied on the transfer of the Bonds upon the death of a holder
of the Bonds in cases where the deceased was not resident in Luxembourg for inheritance tax
purposes.
2
Proposed European Union (“EU”) Directive on Taxation of Savings Income
On 21 January 2003, the European Council of Economics and Finance Ministers (“ECOFIN”) agreed
on proposals under which, with effect from 1 January 2004, Member States will be required to
provide to the tax authorities of another Member State details of payment of interest (or similar
income) paid by a person within its jurisdiction to an individual resident in that other Member State,
except that, for a transitional period, Belgium, Luxembourg and Austria will instead be required to
operate a withholding system in relation to such payments (the ending of such transitional period
being dependent upon the conclusion of certain other agreements relating to information exchange
with certain other countries). Additionally, it was agreed by ECOFIN that the adoption of the proposal
by the European Union would require certain other non-Member State countries to adopt a similar
withholding system in relation to such payments. It is expected that the final test of a directive to
implementthe proposals shall be decided at the ECOFIN meeting in March.
3
Withholding tax in Spain
Pursuant to article 13.1b of Law 41/1998, of 9 November 1998 on Non-Resident Income Tax, any
interest obtained by an EU resident not acting in Spain through a permanent establishment will be
exempt from taxation in Spain (i.e. there will not be Spanish withholding tax on such interest)
provided that:
(i)
the EU resident company/individual (i.e. the Luxembourg company/individual entitled to
receive such interest) provides to the Spanish company/payer a tax certificate issued by the
Luxembourg Tax Authorities stating that the Luxembourg company/individual is resident in
such State for tax purposes; and
(ii)
the relevant income is not obtained through a territory considered as a tax haven for Spanish
Tax purposes. In this regard, pursuant to the Luxembourg-Spanish Tax Treaty, there are
specific types of Luxembourg companies which are regarded as resident in a tax haven for
Spanish tax purposes (i.e. the so-called "holding company" regulated in Luxembourg law 31
July 1929).
Accordingly, if the aforementioned requirements are met, interests obtained by a Luxembourg
individual/company not acting in Spain through a permanent establishment would be exempt from
taxation in Spain.
REGISTERED OFFICE OF THE ISSUER
Banco Bilbao Vizcaya Argentaria, S.A.
Plaza San Nicolas N° 4
48005 Bilbao
Spain
LUXEMBOURG PAYING AGENT
Deutsche Bank Luxembourg S.A.
2 Boulevard Konrad Adenauer
L-1115 Luxembourg
LUXEMBOURG LISTING AGENT
Deutsche Bank Luxembourg S.A.
2 Boulevard Konrad Adenauer
L-1115 Luxembourg
27

BBVA - Aiaf

Transcription

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