The new European legislation CRD IV entered into force on January 1, 2014 as a result of the Basel III accords. This involves including new criteria to calculate the capital base. One effect is increased capital requirements requiring higher quality. Another is modifications in the form of measuring the risks associated with certain assets. A new ratio has also been introduced to try to limit excessive leveraging by financial institutions. This ratio will in the future be accompanied by two further ratios related to liquidity levels: the liquidity coverage ratio (LCR) starting in 2015, and the net stable funding ratio (NSFR), starting in 2019, which will be used as a basis for maintaining adequate liquidity levels in the short and long term. The implementation of the new legislation will be phased-in so that it is fully loaded at the start of 2019.
BBVA has carried out active capital management, as demonstrated by the following figures:
- Comfortable compliance with the capital requirements. The Group ends the quarter with a phased-in core capital ratio of 10.8% and fully-loaded of 9.9%, which are at levels far above the minimum required (4.0% phased-in and 7.0% fully-loaded) and compares very positively with those of its peer group.
- Two successful debt issues that strengthen and optimize the Group’s capital base under CRD IV:
1. An issue of contingent convertible securities, eligible as additional Tier I, for €1.5 billion.
2. A subordinated bond issue, eligible as Tier II, also for €1.5 billion.
- It is also worth noting that BBVA Compass has passed the stress tests carried out in the United States and thus its capital plans have been approved by the Fed with no objections.
- In April a capital increase was executed against reserves to implement the system of shareholder remuneration called the “dividend option”. Owners of 89.2% of the free allotment rights opted to receive new shares.
In short, the BBVA Group continues to manage its solvency ratios and strong capital position appropriately. It is therefore prepared for the asset quality review (AQR) process that is being carried out by the European Central Bank (ECB) and the European Banking Authority (EBA).
Capital base
(Million euros)
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BIS III phased-in | BIS II | |||
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31-03-14 | 31-12-13 | 30-09-13 | 30-09-13 | 31-03-13 |
| Core capital | 35,995 | 37,492 | 37,102 | 37,293 | 36,721 |
| Capital (Tier I) | 38,494 | 39,611 | 37,300 | 37,531 | 36,721 |
| Other eligible capital (Tier II) | 4,905 | 8,695 | 7,019 | 7,026 | 7,584 |
| Capital base | 43,399 | 48,306 | 44,319 | 44,557 | 44,305 |
| Risk-weighted assets | 333,906 | 323,605 | 325,665 | 331,098 | 328,002 |
| BIS ratio (%) | 13.0 | 14.9 | 13.6 | 13.5 | 13.5 |
| Core capital (%) | 10.8 | 11.6 | 11.4 | 11.3 | 11.2 |
| Tier I (%) | 11.5 | 12.2 | 11.5 | 11.3 | 11.2 |
| Tier II (%) | 1.5 | 2.7 | 2.2 | 2.1 | 2.3 |
