January-March 2013

Asset/Liability Management

The Assets and Liabilities Management unit is responsible for managing structural interest-rate and foreign-exchange positions, as well as the Group’s overall liquidity and shareholders’ funds.

Earnings from the management of liquidity and the structural interest-rate positions in each balance sheet are registered in the corresponding areas.

With respect to the management of exchange-rate risk of BBVA’s long-term investments, their earnings are included in the Corporate Center and explained in the section on Risk Management, in the sub-section on “Structural Risks”.

The Bank’s capital management has a twofold aim: to maintain levels of capitalization appropriate to the business targets in all the countries in which it operates and, at the same time, to maximize return on shareholders’ funds through the efficient allocation of capital to the various units, good management of the balance sheet and proportionate use of the various instruments that comprise the Group’s equity: common stock, preferred shares and subordinated debt.

In the first quarter of 2013, BBVA materialized the capital gains from the completion of the sale of its pension business in Mexico. This will have a very positive effect on the Group’s capital, in terms of both quantity and quality.

In addition, BBVA Colombia has issued 365 billion Colombian pesos (around €155m) of subordinate debt, which will strengthen the Group’s Tier II capital.

In conclusion, the current levels of capitalization enable the Bank to fulfill all of its capital objectives.