January-June 2013

Main highlights

The most important transactions carried out by the different CIB departments and the highlights of the second quarter of 2013 are:

The Corporate Finance unit has maintained its leading position in Spain as M&A financial advisor. Of note in the quarter was the advice given on the sale of 50% of Proactiva Medio Ambiente (FCC’s waste and water business in Latin America), and for the French company Veolia; the loan to the Spanish company Renovalia to extend its strategic alliance with the US company First Reserve for the incorporation of wind generation assets in Mexico (the most important within the wind power sector in Latin America since 2010); and the assistance to the Mexican company Alsea for the acquisition of 18% of the Starbucks Coffee International business in Mexico.

In the equity capital markets business, BBVA has executed the sale in Spain of IAG shares by El Corte Inglés and has acted as an agent bank in the repurchase of Repsol preferred securities. In Europe, the Group has participated as co-manager in the share capital increase of Commerzbank. In Mexico it has been global coordinator of the capital increase of OHL Mexico and FibraHotel. In Colombia, the Bank has participated as a broker in the capital increase of Cementos Argos.

With respect to the project finance business in Spain, the financing of the concession of the Gerediaga-Elorrio section of the N-636 highway in Vizcaya has been concluded successfully, as has the extension of BBVA’s share in the loan for the acquisition of Endesa Gas and the renewal of the Portman Baela margin loan. Two operations have been closed in Mexico: the financing of two tankers for transporting oil by-products (the sponsor and borrower is PMI, the Pemex subsidiary) and the financing of the Nejo project, promoted by ACS and consisting of a discount on the accounts receivable by ACS due to the work carried out for Pemex in gas exploration activities.

The Leveraged Finance unit team has signed several leveraged buy-outs in Spain, including the acquisition of Iberchem by Magnum Capital.

In Corporate Lending, the Bank has been mandated lead arranger and bookrunner for AXA and Schneider Electric, which have closed their revolving credit facilities in France. In Italy it has also acted as mandated lead arranger and bookrunner for Fiat Industrial, Enel, S.p.A., Telecom Italia S.p.A, A2A S.p.A. and Astaldi S.p.A. In Latin America loans have been arranged with Gruma in Mexico and Ecopetrol in Colombia, in which BBVA has acted as bookrunner and mandated lead arranger, respectively. Lastly, in the United States, through BBVA Compass it has acted in three operations as bookrunner and lead arranger: Bacardi Limited, Waste Connections and National Basket Association.

Of note in Global Transactional Banking is the significant increase in funds under management by the unit, which have returned to levels before the downgrades in Spain’s rating in the first half of 2012. The most significant commercial operations have been the following: in Europe factoring contracts have been concluded with one of the most important companies in the communication sector; a short-term financing agreement has been closed for the import of oil with a leading Turkish company; and there has been an increase in new payment channel business, mainly through virtual POS terminals and credit cards. In Mexico a major working capital credit line has been granted for a leading firm in the telecommunications sector. In new products, there was the launch in Argentina of the new “Comunidades On-line” (On-line communities) platform for non-customers, the application in Chile of “BBVA Net Cash Móvil” and in the U.S. the “Spend Net Payable” service as a new payment solution. With respect to awards and recognitions, BBVA has been named “Best Trade Bank” by Global Trade Review and “Best Sub-Custody Bank” by the Global Finance magazine.

Global Markets has closed the first half of 2013 with gross income of €720m, a year-on-year rise of 41.1%. In an adverse economic environment with high volatility, this increase in revenue is based on a strategy of geographical diversification of the businesses, a customer-centric business model, strict risk control and proper handling of liquidity and solvency. The success of this strategy of the Global Markets business is reflected in the consistent recognition it receives from prestigious media such as Risk, Mtn-i, FX-Week and Structured Products.

By geographical areas, Spain increased its cumulative gross income for the first six months of the year by 10.1% year-on-year to €234m, despite the difficult situation. BBVA once more leads the ranking of the Spanish stock exchange and has increased its market share in the last quarter to 15.6%. In addition, the BBVA Research department has received recognition from Thomson-Reuters as the “Best Stock-Market Analysis” in Spain.

In the rest of Europe and Asia, gross income for the half-year was €121m (up 136.8% year-on-year), thanks to the customer franchises in Germany, the United Kingdom and Asia. By products there was a notable improvement in fixed-income.

In Mexico, Global Markets has strengthened its leading position in the country, with a year-on-year rise in gross income of 42.6% to €189m. Revenue has increased in all customer segments as a result of the synergies generated with the branch networks. By product, there has been a significant performance in equity and interest rates.

In South America gross income has posted double-digit growth in all the countries, with a particularly positive performance in Colombia and Venezuela. Gross income for the region as a whole totaled €192m (up 75.9% year-on-year).

In the United States, cumulative gross income for the half-year amounted to €37m, thanks to improved activity with corporates and revenue from interest-rate products in New York.