17. Investments in entities accounted for using the equity method
The breakdown of the balances of “Investments in entities accounted for using the equity method” in the accompanying consolidated balance sheets is as follows:
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| Investments in Entities Accounted for Using the Equity Method | Millions of Euros | ||
|---|---|---|---|
| 2013 | 2012 | 2011 | |
| Associate entities | 1,272 | 6,469 | 5,567 |
| Joint venture entities | 3,470 | 4,313 | 3,732 |
| Total | 4,742 | 10,782 | 9,299 |
17.1 Associates
The following table shows the carrying amount of the most significant of the Group’s investments in associates:
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| Associate Entities | Millions of Euros | ||
|---|---|---|---|
| 2013 | 2012 | 2011 | |
| China Citic Bank Corp Ltd (CNCB) | - | 5,372 | 4,840 |
| Citic International Financial Holdings Ltd (CIFH) | 631 | 593 | 547 |
| Metrovacesa (*) | 315 | 317 | - |
| Occidental Hoteles Management, S.L. (**) | 98 | - | - |
| Tubos Reunidos, S.A. | 53 | 54 | 51 |
| Brunara SICAV, S.A. (***) | 48 | - | - |
| Others | 127 | 133 | 129 |
| Total | 1,272 | 6,469 | 5,567 |
Appendix II shows the details of the associates as of December 31, 2013.
The following is a summary of the changes in 2013, 2012 and in 2011 under this heading in the accompanying consolidated balance sheets:
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| Associates Entities. Changes in the Year | Associates Entities. Changes in the Year | ||
|---|---|---|---|
| 2013 | 2012 | 2011 | |
| Balance at the beginning | 6,469 | 5,567 | 4,247 |
| Acquisitions and capital increases | 65 | 10 | 425 |
| Disposals | (4) | (16) | (20) |
| Transfers | (5,453) | 353 | (6) |
| Earnings | 425 | 721 | 611 |
| Exchange differences | (71) | (53) | 411 |
| Others | (159) | (113) | (102) |
| Balance at the end | 1,272 | 6,469 | 5,567 |
The changes in 2013 correspond mainly to the sale and reclassification of the remaining stake in CNCB as of December 31, 2013 to the heading “Available-for-sale financial assets” as it is mentioned in the Notes 3 and 12.
17.2 Investments in joint venture entities
The breakdown of the balance under this heading in the accompanying consolidated balance sheets is as follows:
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| Joint ventures | Millions of Euros | ||
|---|---|---|---|
| 2013 | 2012 | 2011 | |
| Garanti Group (Nota 3) | 3,245 | 3,991 | 3,456 |
| Corporación IBV Participaciones Empresariales S.A. (*) | - | 135 | 78 |
| Occidental Hoteles Management, S.L. (**) | - | 67 | 68 |
| Others | 225 | 120 | 130 |
| Total | 3,470 | 4,313 | 3,732 |
Details of the joint ventures accounted for using the equity method as of 31 December, 2013 are shown in Appendix II.
The following is a summary of the changes in 2013, 2012 and in 2011 under this heading in the accompanying consolidated balance sheets:
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| Joint ventures. Changes in the Year | Millions of Euros | ||
|---|---|---|---|
| 2013 | 2012 | 2011 | |
| Balance at the beginning | 4,313 | 3,732 | 300 |
| Acquisitions and capital increases | 70 | 4 | 3,655 |
| Disposals | (11) | (1) | (5) |
| Transfers | (155) | (7) | 5 |
| Earnings | 269 | 318 | 176 |
| Exchange differences | (818) | 134 | (336) |
| Others | (198) | 133 | (63) |
| Balance at the end | 3,470 | 4,313 | 3,732 |
17.3 Other information about associates and joint ventures
The following table provides relevant information of the balance sheets and income statements of Garanti Group as of December 31, 2013, 2012 and 2011, respectively.
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| Garanti: Financial Main figures (*) | Millions of Euros | ||
|---|---|---|---|
| 2013 (*) | 2012 (*) | 2011 (*) | |
| Total assets | 17,575 | 18,850 | 16,522 |
| Of which: |
|
|
|
| Loans and advances to customers | 10,483 | 10,860 | 9,485 |
| Total liabilities | 15,634 | 16,520 | 14,664 |
| Of which: |
|
|
|
| Customer deposits | 9,573 | 9,790 | 9,227 |
| Net interest margin | 534 | 693 | 560 |
| Gross income | 819 | 1,041 | 934 |
| Net operating income | 375 | 463 | 437 |
| Net income attributes to Garanti Group | 295 | 364 | 361 |
The main adjustments made to the financial statements of Garanti to properly register it under the equity method are related to the purchase price allocation (PPA) and the accounting consolidation process. None of these adjustments is material.
The following table provides relevant information of the balance sheets and income statements of associates and joint ventures, excluding Garanti, as of December 31, 2013, 2012 and 2011, respectively.
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|
|
Millions of Euros | |||||
|---|---|---|---|---|---|---|
| 2013 (*) | 2012 (*) | 2011 (*) | ||||
| Associates and Joint ventures Financial Main figures (*) |
Associates | Joint-ventures | Associates | Joint-ventures | Associates | Joint-ventures |
| Interest Margin | 73 | 26 | 1,424 | 14 | 1,230 | 17 |
| Gross income | 305 | 78 | 1,940 | 48 | 2,189 | 65 |
| Profit from continuing operations | 82 | (23) | 783 | (46) | 737 | 23 |
| Profit from discontinued operations (net) | - | - | - | - | (1) | - |
| Total | 77 | (23) | 596 | (46) | 552 | 23 |
As of December 31 2013 there was no financial support agreement or other contractual commitment to associated entities and joint ventures entities from the holding or the subsidiaries that are not recognized in the financial statements (see Note 55.2).
As of December 31, 2013 there was no contingent liability in connection with the investments in joint ventures and associated entities (See note 55.2).
17.4 Notifications about acquisition of holdings
Appendix III provides notifications on acquisitions and disposals of holdings in associates or joint ventures, in compliance with Article 155 of the Corporations Act and Article 53 of the Securities Market Act 24/1988.
17.5 Impairment
As described in IAS 36 the book value of the associate entities and joint venture entities has been compared with their recoverable amount, being the latter calculated as the largest between the value in use and the fair value minus the cost of sale. For the year ended December 31, 2013, €5 million have been recording due to impairment. The valuations of the most relevant investments are reviewed by independent experts.