January-March 2013

Main highlights

The most important deals carried out by the different CIB departments and the highlights of the first quarter of 2013 are summarized below.

In the corporate finance business, BBVA maintained its position in the first quarter of 2013 as leading financial advisor in the mergers and acquisitions (M&A) market in Spain, with a total of 69 deals since 2009, according to Thomson Reuters. One of the most important transactions it took part in during this period was its advisory services for the sale of the Veolia water business in Portugal to Beijing Enterprises Water Group, the first transaction in the water sector in the Iberian Peninsula in which a Chinese company was involved; advisory services to the Board of Directors of Vueling Airlines in relation to the takeover bid made by IAG, launched on February 28, 2013; the acquisition of Progenika Biopharma by Grifols to bolster its diagnosis division; and the exchange of assets between Cementos Portland Valderrivas and CRH, the Irish construction materials company. Also specially noteworthy was the good performance of the Corporate Finance unit in Mexico, which made a significant contribution to the income statement.

Turning to the equity capital markets business, in Spain BBVA acted as the agent bank in the share capital increases of Zardoya Otis and Urbar Ingenieros, and in the allocation of Grifols shares arising from the acquisition of Progenika. In Chile, BBVA participated as joint bookrunner in the share capital increase with rights of Enersis, the second-largest equity transaction worldwide so far this year. In Mexico, BBVA acted as bookrunner in the share capital increases of Fibra Uno and Cultiba, and in the initial public offering of Ienova, the Mexican subsidiary of the US company Sempra.

In the corporate lending business, the Desigual and Gestaamp Automoción deals were particularly important, helping these companies in their plans to expand to Eastern Europe and Asia. There was steady business in revolving credit facilities (RCF) in Europe, with transactions with Merck, BASF and Anglo American. In Latin America, a 5-year loan was arranged with Aeropuerto Turístico de Cancún to finance a concession payment. Lastly, in the United States, BBVA Compass has improved its status as lead arranger through three transactions: International-Matex Tank Terminals, Dallas Sports & Entertainment and a RCF with Avon.

The project finance unit has consolidated its leading position in Spain with the completion of the Bahía de Bizkaia Gas regasification plant project, the financial advisory service mandate in the A66 highway, a loan to Hispasat for the development of the Amazonas 3 satellite or the syndicated collateral facility for Astilleros Gondán. In Latin America, BBVA continues to be very active. A particularly striking project is the financing of the Ancoa – Alto Jahuel transmission line in Chile (BBVA has acted as advisor and structured financier for Elecnor). Lastly, in the US, BBVA has acted as advisor in its first project bond transaction for the Sabine Pass liquefaction plant.

The highlights of the global transaction banking department’s activities in the first quarter of 2013 have been: increased share of the acquirer business (assignment of POS terminals, cards and other businesses with merchants) in Europe, Mexico and the United States, due to a complete range of cross-border solutions, financing operations for wind energy projects in Brazil and Mexico, managing the swap of preference shares of the leading telecommunications company in Spain, financing the construction of a steel plant in Venezuela and issuance of guarantees with SACE cover for Etileno XXI, the largest financing project of the petrochemicals industry in Mexico. In Argentina, the “Avisos y Mensajes” (“Warnings and Messages”) service has been launched for companies, enabling them to monitor their operations through cell phones and/or PCs. In Peru, BBVA has developed the “Interconexión en Línea” (“Online Interconnection”) service designed to help in the automatic reconciliation of accounts of collection companies.

Global markets delivered a very positive balance at the end of the quarter, having managed to generate gross income of €439m during the period, up 50.8% year-on-year. This is a very significant figure, taking into account the particularly challenging environment in which it was generated, with increased volatility in the euro zone. This performance is underpinned by several factors: the geographical diversification of activity, the development of leading franchises in the Group’s target markets, the implementation of a business model constantly focused on the customer and management based on prudence and anticipation. The success of the business approach adopted by Global Markets has been acknowledged through a number of awards granted by specialized media, such as Bloomberg, Reuters or Risk.

Spain, despite its adverse economic situation, is the country which contributed most to the quarterly earnings of Global Markets. BBVA continues to lead the ranking of the Spanish Stock Exchange, for the fifth year in a row, with a market share of 14.8% at the close of March 2013. It also has a high profile in the debt market, taking part in the most important placements.

In the rest of Europe and Asia, the growth in the London franchise (up 42% year-on-year in terms of profit) and the revenue from customers in Milan (up 10%) are particularly worthy of note.

In Mexico, earnings have increased 47.3%. There has been stronger activity with SMEs and retail customers as a result of the unit’s collaboration with the commercial network.

In South America, Global Markets continues to make the most of the region’s growth opportunities, securing increases in market share and reinforcing its competitive position. Revenue from customers is up 51%. All countries have performed well.

Lastly, in the United States the New York franchise has secured remarkable growth in revenue from interest rates (up 40% year-on-year).