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financial statements 2012

23. Financial liabilities at amortized cost

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The breakdown of the balance under these headings in the accompanying consolidated balance sheets is as follows:

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Financial Liabilities at Amortized Cost Notes Millions of Euros
2012 2011 2010
Deposits from Central Banks 9 46,790 33,147 11,010
Deposits from Credit Entities 23.1 59,722 59,356 57,170
Customer deposits 23.2 292,716 282,173 275,789
Debt certificates 23.3 87,212 81,930 85,179
Subordinated liabilities 23.4 11,831 15,419 17,420
Other financial liabilities 23.5 8,216 7,879 6,596
Total
506,487 479,904 453,164

23.1 Deposits from credit institutions

The breakdown of the balance under this heading in the consolidated balance sheets, according to the nature of the financial instruments, is as follows:

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Deposits from Credit Institutions Notes Millions of Euros
2012 2011 2010
Reciprocal accounts
280 298 140
Deposits with agreed maturity
32,684 32,859 38,265
Demand deposits
3,530 2,095 1,530
Other accounts
206 343 696
Repurchase agreements 37 22,759 23,452 16,314
Subtotal
59,459 59,047 56,945
Accrued interest until expiration
263 309 225
Total
59,722 59,356 57,170

The breakdown by geographical area and the nature of the related instruments of this heading in the accompanying consolidated balance sheets, disregarding interest accrued pending maturity, is as follows:

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Deposits from Credit Institutions 2012 Millions of Euros
Demand Deposits Deposits with Agreed Maturity Repos Total
Spain 2,078 8,412 1,157 11,647
Rest of Europe 373 14,002 8,043 22,418
Mexico 220 1,674 12,967 14,861
South America 477 3,455 376 4,308
The United States 630 4,916 216 5,762
Rest of the world 33 431 - 464
Total 3,811 32,890 22,759 59,459
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Deposits from Credit Institutions 2011 Millions of Euros
Demand Deposits Deposits with Agreed Maturity Repos Total
Spain 472 8,364 394 9,230
Rest of Europe 399 14,652 12,496 27,547
Mexico 359 1,430 9,531 11,320
South America 251 2,863 478 3,593
The United States 799 4,965 553 6,318
Rest of the world 112 928 - 1,040
Total 2,393 33,202 23,453 59,047
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Deposits from Credit Institutions 2010 Millions of Euros
Demand Deposits Deposits with Agreed Maturity Repos Total
Spain 961 7,566 340 8,867
Rest of Europe 151 16,160 6,315 22,626
Mexico 161 3,060 8,645 11,866
South America 195 2,349 349 2,892
The United States 147 6,028 665 6,840
Rest of the world 56 3,799 - 3,855
Total 1,671 38,961 16,314 56,945

23.2 Customer deposits

The breakdown of this heading in the accompanying consolidated balance sheets, by type of financial instrument, is as follows:

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Customer Deposits Notes Millions of Euros
2012 2011 2010
Government and other government agencies
32,515 40,602 30,983
Foreign
5,185 4,269 4,484
Repurchase agreements
10,687 12,289 13,563
Accrued interests 37 16,607 24,016 12,920
Foreign
36 28 16
Other resident sectors
119,362 108,217 116,218
Current accounts
28,654 28,212 18,705
Savings accounts
19,554 16,003 24,521
Fixed-term deposits
61,973 49,105 49,160
Repurchase agreements 37 8,443 14,154 23,197
Other accounts
53 35 46
Accrued interests
685 708 589
Non-resident sectors
140,839 133,355 128,590
Current accounts
54,031 45,742 39,567
Savings accounts
35,970 30,860 26,435
Fixed-term deposits
46,174 49,770 56,752
Repurchase agreements 37 4,003 6,317 5,370
Other accounts
236 210 122
Accrued interests
425 456 344
Total
292,716 282,173 275,789
Of which:



In euros
150,093 152,375 151,806
In foreign currency
142,623 129,799 123,983
Of which:



Deposits from other creditors without valuation adjustment
291,867 281,364 275,055
Accrued interests
849 809 734

The breakdown by geographical area of this heading in the accompanying consolidated balance sheets, by type of instrument and geographical area, disregarding valuation adjustments, is as follows:

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Customer Deposits
2012		 Millions of Euros
Demand Deposits Savings Deposits Deposits with Agreed Maturity Repos Total
Spain 32,665 19,729 63,025 21,594 137,013
Rest of Europe 3,499 1,441 13,228 4,639 22,807
Mexico 19,029 7,990 8,187 2,061 37,267
South America 22,381 14,423 17,207 759 54,770
The United States 15,416 13,947 9,626 - 38,989
Rest of the world 218 62 445 - 725
Total 93,208 57,592 111,718 29,053 291,570
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Customer Deposits
2011		 Millions of Euros
Demand Deposits Savings Deposits Deposits with Agreed Maturity Repos Total
Spain 31,264 16,160 39,334 38,170 124,928
Rest of Europe 4,602 1,310 29,569 1,656 37,137
Mexico 16,987 6,804 8,123 4,479 36,393
South America 16,247 11,429 15,541 182 43,399
The United States 14,845 12,768 9,586 - 37,199
Rest of the world 245 234 1,446 - 1,925
Total 84,190 48,705 103,599 44,487 280,981
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Customer Deposits
2010		 Millions of Euros
Demand Deposits Savings Deposits Deposits with Agreed Maturity Repos Total
Spain 21,867 24,707 50,341 36,117 133,032
Rest of Europe 3,786 482 18,243 1,609 24,120
Mexico 16,646 7,079 9,582 3,629 36,936
South America 12,141 8,765 14,040 132 35,078
The United States 13,991 11,363 17,141 - 42,495
Rest of the world 357 201 2,621 - 3,179
Total 68,788 52,597 111,968 41,487 274,840

23.3 Debt certificates (including bonds)

The breakdown of the balance under this heading in the accompanying consolidated balance sheets is as follows:

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Debt Certificates Millions of Euros
2012 2011 2010
Promissory notes and bills 11,183 7,501 13,215
Bonds and debentures 76,028 74,429 71,964
Total 87,212 81,930 85,180

The breakdown of the most significant outstanding issuances, repurchases or refunds of debt instruments issued by the consolidated companies as of December 31, 2012, 2011 and 2010 is shown in Appendix VIII.

The changes in the balances under this heading, together with the Subordinated Liabilities for 2012, 2011 and 2010 are included in Note 58.4.

23.3.1 Promissory notes and bills

The breakdown of the balance under this heading, by currency, is as follows:

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Promissory notes and bills Millions of Euros
2012 2011 2010
In euros 10,346 6,672 7,672
In other currencies 838 829 5,543
Total 11,183 7,501 13,215

These promissory notes were issued mainly by Banco Bilbao Vizcaya Argentaria, S.A. and BBVA Banco de Financiación, S.A.

23.3.2 Bonds and debentures issued

The breakdown of the balance under this heading, by financial instrument and currency, is as follows:

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Bonds and debentures issued Millions of Euros
2012 2011 2010
In Euros - 63,472 64,181 62,811
Non-convertible bonds and debentures at floating interest rates 3,142 6,539 9,771
Non-convertible bonds and debentures at fixed interest rates 14,429 13,199 10,804
Covered bonds 35,765 33,842 30,864
Hybrid financial instruments 248 288 373
Securitization bonds realized by the Group 5,599 6,755 8,047
Accrued interest and others (*) 4,288 3,557 2,952
In Foreign Currency - 12,556 10,248 9,152
Non-convertible bonds and debentures at floating interest rates 2,175 2,370 4,033
Non-convertible bonds and debentures at fixed interest rates 7,652 5,386 2,871
Covered bonds 225 289 315
Hybrid financial instruments 1,550 1,397 1,119
Other securities associated to financial activities - - -
Securitization bonds realized by the Group 891 755 799
Accrued interest and others (*) 63 51 15
Total 76,028 74,428 71,964
(*) Hedging operations and issuance costs.

Most of the foreign-currency issuances are denominated in US dollars.

The issues of bonds and debentures by BBVA Senior Finance, S.A.U., BBVA U.S. Senior, S.A.U. and BBVA Global Finance, Ltd. are guaranteed jointly, severally and irrevocably by the Bank.

The following table shows the weighted average interest rates of fixed and floating rate bonds and debentures issued in euros and foreign currencies in effect in 2012, 2011 and 2010:

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Interests Rates of Promissory Notes and Bills Issued 2012 2011 2010
Euros Foreign Currency Euros Foreign Currency Euros Foreign Currency
Fixed rate 3.89% 5.92% 3.81% 5.13% 3.75% 5.31%
Floating rate 3.78% 4.25% 2.38% 4.88% 1.30% 3.00%

The change in the balance under this heading of the consolidated balance sheet for 2012 is basically due to the following transactions:

  • Repurchase of securitization bonds in June 2012

On June 20, 2012, BBVA invited all securitization bond holders of specific issues to tender their bonds for purchase. The term for presenting the tenders ended on June 27, 2012.

After the deadline, in accordance with the terms established by the Tender Offer Memorandum, BBVA accepted the purchase of securitization bonds for a total nominal amount of €638,221,693.07. The purchase was carried out through an unmodified Dutch auction procedure. No pro-rata factor was applied to the bonds subject to the repurchase by BBVA.

The settlement of the securitization bond purchase generated gross capital gains of around €250 million, which have been registered under the heading “Gains/losses on financial assets and liabilities (net)" (Note 44) in the consolidated income statement for 2012.

This transaction was carried out in order to improve the management of liabilities and strengthen the BBVA Group’s balance sheet, as well as to offer liquidity to the holders of securitization bonds.

23.4 Subordinated liabilities

The breakdown of this heading in the accompanying consolidated balance sheets, by type of financial instrument, is as follows:

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Subordinated Liabilities Notes Millions of Euros
2012 2011 2010
Subordinated debt
9,275 12,781 11,569
Preferred Stock
1,847 1,760 5,202
Subtotal
11,122 14,541 16,771
Valuation adjustments and other concepts (*)
709 878 649
Total 23 11,831 15,419 17,420
(*) Includes accrued interest payable and corrections valuation of hedging derivatives.

Of the above, the issuances of BBVA International, Ltd., BBVA Capital Finance, S.A.U., BBVA International Preferred, S.A.U., BBVA Subordinated Capital, S.A.U. and BBVA Global Finance, Ltd. are jointly, severally and irrevocably guaranteed by the Bank.

Subordinated debt

These issuances are non-convertible subordinated debt and accordingly, for debt seniority purposes, they rank behind ordinary debt, but ahead of the Bank’s shareholders, without prejudice to any different seniority that may exist between the different types of subordinated debt instruments according to the terms and conditions of each issue. The breakdown of this heading in the accompanying consolidated balance sheets, disregarding valuation adjustments, by currency of issuance and interest rate is shown in Appendix VIII. The variations in the balance are mainly the result of the following transactions:

  • Repurchase of subordinated bonds in November 2012

On October 11, 2012, BBVA invited all subordinated bond holders of specific Spanish and international issues to tender their bonds for purchase. Within the Spanish subordinated bonds there were two series for which acceptance of the purchase offers by BBVA depended on prior approval by the bondholder syndicates of the possibility of BBVA buying those bonds. The term for presenting the tenders ended on October 26, 2012.

After the deadline, in accordance with the terms established in the Tender Offer Memorandum, BBVA decided to present tenders for the subordinated bonds with consent and, following approval by the bondholder syndicates, accept the purchase of subordinated bonds with consent for a total nominal amount of approximately €410 million. Moreover, in accordance with the terms established in the Tender Offer Memorandum for the subordinated bonds without consent, BBVA agreed to buy subordinated bonds without consent for a total nominal amount of approximately €692 million. The purchase of both subordinated bonds with consent and subordinated bonds without consent was completed through an unmodified Dutch auction procedure and no pro-rata factor was applied to the bonds repurchased by BBVA.

The settlement of both subordinated bond purchases generated gross capital gains of around €192 million, which have been registered under the heading “Gains/losses on financial assets and liabilities (net)" (Note 44) in the consolidated income statement for 2012.

  • Conversion of subordinated bond issues

At its meeting on November 22, 2011, making use of the powers delegated to it under Point Six of the Agenda of the Bank’s Annual General Meeting of Shareholders held on March 14, 2008, the Board of Directors of BBVA agreed to issue convertible bonds in December 2011 (the “Issue” or “Convertible Bonds-December 2011” or the “Bonds”) for a maximum amount of €3,475 million, excluding a preemptive subscription right.

This issue was aimed exclusively at holders of preferred securities issued by BBVA Capital Finance, S.A. Unipersonal (series A, B, C and D) or BBVA International Limited (series F), all guaranteed by BBVA, S.A., who accepted BBVA’s purchase offer for these preferred securities.

Thus, those who accepted the purchase offer made by BBVA made an unconditional and irrevocable undertaking to subscribe a nominal amount of Convertible Bonds-December 2011 equivalent to 100% of the total nominal or cash amount for the preferred securities they owned and that would be acquired by BBVA.

On December 30, 2011, when this introductory period had ended, orders were received for the subscription of 34,300,002 Convertible Bonds with a nominal value of €100 each, giving a total of €3,430 million, compared with the initially planned €3,475 million. This means that holders of 98.71% of the preferred securities to be repurchased accepted the repurchase offer made by BBVA. The Convertible Bonds were recognized as financial liabilities since the number of Bank shares to be delivered can vary.

The terms and conditions of the Convertible Bonds established a voluntary conversion mechanism for the holders on March 30, 2012. Following this date, orders were received for the voluntary conversion of a total of €955 million, corresponding to 9,547,559 Convertible Bonds, or 27.84% of the original amount of the issue of Convertible Bonds-December 2011. To pay for this conversion, 157,875,375 new ordinary BBVA shares were issued at a par value of €0.49 each (see Note 27).

Also, in accordance with the terms and conditions of the Convertible Bonds, on June 30, 2012 a partial mandatory conversion took place of 50% of the nominal value of the issue through the corresponding reduction of the nominal value of each and every one of the Convertible Bonds outstanding on that date, whose value then fell from a nominal €100 to €50. A total of 238,682,213 new ordinary BBVA shares were issued at a par value of €0.49 each to pay for this conversion (see Note 27).

As of December 31, 2012, the nominal amount of outstanding Convertible Bonds is €1,238 million.

Without prejudice to the capacity of the issuer to convert Convertible Bonds on any payment date, the terms and conditions of the issue lay down that on June 30, 2013, the maturity date of the issue, the Convertible Bonds outstanding on that date will be subject to mandatory conversion.

Preferred securities

The breakdown by issuer of the balance under this heading in the accompanying consolidated balance sheets is as follows:

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Preferred Securities by Issuer Millions of Euros
2012 2011 2010
BBVA International Preferred, S.A.U. (*) 1,695 1,696 1,671
Unnim Group (**) 95 - -
BBVA Capital Finance, S.A.U. (***) 32 36 1,847
Phoenix Loan Holdings, Inc. 16 19 19
BBVA International, Ltd. (***) 9 9 500
Banco Provincial, S.A. - - 36
Total 1,847 1,760 5,202
(*) Issues traded on the AIAF market in Spain. As of December 31, 2012, the outstanding balances of these issues correspond to the holders of preferred securities who in December 2011 did not take part in the exchange of those preferred security issues for subordinated bonds, as mentioned in the above section. (**) Unnim Group: Issues prior to the acquisition by BBVA. The outstanding balance of these issues after the exchange of certain issues of preferred securities for BBVA shares is shown as of December 31, 2012. (***) Listed on the London and New York stock markets.

These issues were fully subscribed by third parties outside the Group and are wholly or partially redeemable at the issuer company’s option after five or ten years from the issue date, depending on the terms of each issue and with prior consent from the Bank of Spain.

The breakdown of the issues of preferred securities in the accompanying consolidated balance sheets, disregarding valuation adjustments, by currency of issuance and interest rate of the issues, is disclosed in Appendix VIII.

23.5 Other financial liabilities

The breakdown of the balance under this heading in the accompanying consolidated balance sheets is as follows:

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Other financial liabilities Millions of Euros
2012 2011 2010
Creditors for other financial liabilities 2,288 2,223 2,295
Collection accounts 2,343 2,239 2,068
Creditors for other payment obligations 3,040 2,927 1,829
Dividend payable but pending payment (Note 4) 545 490 404
Total 8,216 7,879 6,596

As of December 31, 2012, 2011 and 2010, the “Interim dividend pending payment” from the table above corresponds to the interim dividend against 2012, 2011 and 2010 earnings, paid in January of the following years (see Note 4).

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