6-K 1 u07522e6vk.htm FORM 6-K e6vk
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 or 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
October 5, 2009
Commission File Number: 001-10110
BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
(Exact name of Registrant as specified in its charter)
BANK BILBAO VIZCAYA ARGENTARIA, S.A.
(Translation of Registrant’s name into English)
Plaza de San Nicolás 4
48005 Bilbao
Spain

(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F þ          Form 40-F o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes o          No þ
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes o          No þ
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes o          No þ
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A.
 
 

 


 

BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
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Unaudited Interim Consolidated Financial Statements
  F-1
Exhibit I: U.S. GAAP Reconciliation
  E-1
     This Form 6-K is incorporated by reference into BBVA’s Registration Statement on Form F-3 (File No. 333-144784) filed with the Securities and Exchange Commission.

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CERTAIN TERMS AND CONVENTIONS
     The terms below are used as follows throughout this report:
    BBVA”, “Bank” or “Group” means Banco Bilbao Vizcaya Argentaria, S.A. and its consolidated subsidiaries unless otherwise indicated or the context otherwise requires. BBVA was formed by the merger of Banco Bilbao Vizcaya, S.A. (“BBV”) and Argentaria, Caja Postal y Banco Hipotecario, S.A. (“Argentaria”), which was approved by the shareholders of each institution on December 18, 1999.
 
    BBVA Compass” means Compass Bancshares, Inc. and its consolidated subsidiaries, unless otherwise indicated or the context otherwise requires.
 
    Interim Consolidated Financial Statements” means BBVA’s unaudited interim consolidated financial statements as of June 30, 2009 and for the six months ended June 30, 2009 and 2008 prepared in accordance with the International Financial Reporting Standards adopted by the European Union (“EU-IFRS”) required to be applied under the Bank of Spain’s Circular 4/2004 of December 22, 2004 on Public and Confidential Financial Reporting Rules and Formats (the “Circular” or “Circular 4/2004”).
 
    Latin America” refers to Mexico and the countries in which we operate in South America and Central America.
     First person personal pronouns used in this report, such as “we”, “us”, or “our”, mean BBVA.
     In this report, “$”, “U.S. dollars”, and “dollars” refer to United States Dollars and “” and “euro” refer to Euro.
FORWARD-LOOKING STATEMENTS
     This report contains statements that constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the U.S. Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include words such as “believe”, “expect”, “estimate”, “project”, “anticipate”, “should”, “intend”, “probability”, “risk”, “VaR”, “target”, “goal”, “objective” and similar expressions or variations on such expressions. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those in the forward-looking statements as a result of various factors. The accompanying information in this report, including, without limitation, the information under
    “Business Overview”,
 
    “Selected Statistical Information” and
 
    “Operating and Financial Review and Prospects”
identifies important factors that could cause such differences.
     Other important factors that could cause actual results to differ materially from those in forward-looking statements include, among others:
    general political, economic and business conditions in Spain, the European Union (“EU”), Latin America, the United States and other regions, countries or territories in which we operate;
 
    changes in applicable laws and regulations, including taxes;
 
    the monetary, interest rate and other policies of central banks in Spain, the EU, the United States and elsewhere;
 
    changes or volatility in interest rates, foreign exchange rates (including the euro to U.S. dollar exchange rate), asset prices, equity markets, commodity prices, inflation or deflation;
 
    ongoing market adjustments in the real estate sectors in Spain and the United States;
 
    the effects of competition in the markets in which we operate, which may be influenced by regulation or deregulation;
 
    changes in consumer spending and savings habits, including changes in government policies which may influence investment decisions;
 
    our ability to hedge certain risks economically;

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    our success in managing the risks involved in the foregoing, which depends, among other things, on our ability to anticipate events that cannot be captured by the statistical models we use; and
 
    force majeure and other events beyond our control.
     Readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. We undertake no obligation to release publicly the result of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof, including, without limitation, changes in our business or acquisition strategy or planned capital expenditures, or to reflect the occurrence of unanticipated events.
PRESENTATION OF FINANCIAL INFORMATION
Accounting Principles
     Our Interim Consolidated Financial Statements have been prepared in accordance with the International Financial Reporting Standards adopted by the European Union (“EU-IFRS”) required to be applied under the Bank of Spain’s Circular 4/2004. The Interim Consolidated Financial Statements are unaudited and they should be read in conjunction with the consolidated financial statements and related notes (the “Consolidated Financial Statements”) included in BBVA’s 2008 Annual Report on Form 20-F filed with the United States Securities and Exchange Commission (the “SEC” or “Commission”) on April 2, 2009 (the “2008 Form 20-F”).
     The financial information included in this Report as of and for the six months ended June 30, 2008 is not directly comparable with the financial information as of and for the six months ended June 30, 2008 included in our Report on Form 6-K as filed with the SEC on November 10, 2008 (the “First Half 2008 6-K”), due to the application of the financial statements formats set forth in Bank of Spain Circular 6/2008 issued in November 2008 (“Circular 6/2008”). The application of the financial statements formats set forth in Circular 6/2008 to the financial statements included in the First Half 2008 6-K would not have affected the amounts recorded under the line items “stockholders’ equity” and “net income” as of and for the six months ended June 30, 2008, respectively. For information on the main differences in our annual consolidated financial statements as a result of the application of the financial statements formats set forth in Circular 6/2008, see Appendix VIII of the Consolidated Financial Statements included in our 2008 Form 20-F.
     The Interim Consolidated Financial Statements have been presented in the same format as that used in the Consolidated Financial Statements included in the 2008 Form 20-F. This format differs from that required by the SEC for the consolidated financial statements of bank holding companies.
     See “Exhibit I: U.S. GAAP Reconciliation” for an unaudited quantitative reconciliation of net income attributed to parent company for the period and shareholders’ equity from EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 to generally accepted accounting principles in the United States (“U.S. GAAP”).
Business Areas
     We have maintained the criteria we applied in 2008 to the composition of our business areas for 2009, with only a few insignificant changes. These changes do not affect the Group-level information and their impact on the figures for our different business units and areas is immaterial. Nonetheless, the 2008 data in this Report has been reformatted to include these marginal changes to ensure like-for-like comparisons.
Factors Affecting the Comparability of Our Results of Operations and Financial Condition
     We are exposed to foreign exchange rate risk in that our reporting currency is the euro, whereas certain of our subsidiaries keep their accounts in other currencies, principally Mexican pesos, U.S. dollars, Argentine pesos, Chilean pesos, Colombian pesos, Venezuelan bolivars and Peruvian nuevos soles. For example, if Latin American currencies and the U.S. dollar depreciate against the euro, when the results of operations of our subsidiaries in the countries using these currencies are included in our consolidated financial statements, the euro value of their results declines, even if, in local currency terms, their results of operations and financial condition have remained the same or improved relative to the prior period. Accordingly, declining exchange rates may limit the ability of our results of operations, stated in euro, to fully describe the performance in local currency terms of our subsidiaries. By contrast, the appreciation of Latin American currencies and the U.S. dollar against the euro would have a positive impact on the results of operations of our subsidiaries in the countries, using these currencies when their results of operations are included in our consolidated financial statements.

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     The assets and liabilities of our subsidiaries which maintain their accounts in currencies other than the euro have been converted to the euro at the period-end exchange rates for inclusion in our Interim Consolidated Financial Statements. Income statement items have been converted at the average exchange rates for the period. The following table sets forth the exchange rates of several Latin American currencies and the U.S. dollar against the euro, expressed in local currency per €1.00 for the six months ended June 30, 2009 and 2008 and as of June 30, 2009 and December 31, 2008 according to the European Central Bank (“ECB”).
                                 
    Average exchange rates   Period-end exchange rates
    Six Months Ended   Six Months Ended           As of December 31,
Currencies   June 30, 2009   June 30, 2008   As of June 30, 2009   2008
Mexican peso
    18.4481       16.2398       18.5536       19.2334  
U.S. dollar
    1.3328       1.5304       1.4134       1.3917  
Venezuelan bolivar
    2.8619       3.2863       3.0350       2.9884  
Colombian peso
    3,095.9800       2,808.9900       3,048.7800       3,125.0000  
Chilean peso
    781.2500       714.8000       747.9400       885.7400  
New Peruvian Sol
    4.1357       4.3619       4.2572       4.3678  
Argentine peso
    4.9342       4.8667       5.4133       4.9197  
Statistical and Financial Information
     The following principles should be noted in reviewing the statistical and financial information contained herein:
    Average balances, when used, are based on the beginning and the month-end balances during each year. We do not believe that such monthly averages present trends that are materially different from those that would be presented by daily averages.
 
    The book value of BBVA’s ordinary shares held by its consolidated subsidiaries has been deducted from stockholders’ equity.
 
    Unless otherwise stated, any reference to loans refers to both loans and leases.
 
    Interest income figures include interest income on non-accruing loans to the extent that cash payments have been received in the period in which they are due.
 
    Financial information with respect to subsidiaries may not reflect consolidation adjustments.
 
    Certain numerical information in this Report may not sum due to rounding. In addition, percentage data regarding period-to-period changes is based on numbers which have not been rounded.

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SELECTED FINANCIAL DATA
     The historical financial information set forth below has been selected from, and should be read together with, the Interim Consolidated Financial Statements included herein. For information concerning the preparation and presentation of financial information contained herein, see “Presentation of Financial Information”. Also see “Exhibit I: U.S. GAAP Reconciliation” for a presentation of our stockholders’ equity and net income reconciled to U.S. GAAP.
EU-IFRS (*)
                 
    Six months ended June 30,
    2009   2008
    (in millions of euros, except per share/
    ADS data (in euros)
Consolidated income statement data
               
 
               
Interest and similar income
    12,911       14,782  
Interest expense and similar charges
    (6,053 )     (9,227 )
 
               
Net interest income
    6,858       5,555  
Dividend income
    248       241  
Share of profit or loss of entities accounted for using the equity method
    27       173  
Fee and commission income
    2,638       2,778  
Fee and commission expenses
    (457 )     (494 )
Net gains (losses) on financial assets and liabilities
    446       1,018  
Net exchange differences
    352       142  
Other operating income
    1,755       1,931  
Other operating expenses
    (1,487 )     (1,718 )
 
               
Gross income
    10,380       9,626  
Administration costs
    (3,734 )     (3,816 )
Depreciation and amortization
    (354 )     (338 )
Provisions (net)
    (152 )     (612 )
Impairment on financial assets (net)
    (1,945 )     (1,164 )
 
               
Net operating income
    4,195       3,696  
Impairment on other assets (net)
    (271 )     (6 )
Gains (losses) in written off assets not classified as non-current assets held for sale
    9       21  
Gains (losses) in non-current assets held for sale not classified as discontinued operations
    70       779  
 
               
Income before tax
    4,003       4,490  
Income tax
    (961 )     (1,213 )
 
               
Income from ordinary activities
    3,042       3,277  
Income from discontinued operations (net)
           
 
               
Net income
    3,042       3,277  
Net income attributed to parent company
    2,799       3,108  
Profit or loss attributed to minority interest
    243       169  
 
               
Per share/ADS(1) Data
               
Net operating income (2)
    1.12       0.99  
Numbers of shares outstanding (at period end)
    3,747,969,121       3,747,969,121  
Net income attributed to the parent company(2)
    0.75       0.83  
Dividends declared
    0.167       0.444  
 
(*)   EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004.
 
(1)   Each American Depositary Share (“ADS” or “ADSs”) represents the right to receive one ordinary share.
 
(2)   Calculated on the basis of the weighted average number of BBVA’s ordinary shares outstanding during the relevant period (3,748 million shares for each of the six months ended June 30, 2009 and 2008).

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EU-IFRS (*)
                 
    As of June 30,   As of December 31,
    2009   2008
    (in millions of euros, except %)
Consolidated balance sheet data
               
 
               
Total assets
    542,634       542,650  
Capital stock
    1,837       1,837  
Loans and receivables (net)
    352,905       369,494  
Deposits from customers
    249,096       255,236  
Marketable debt securities and subordinated liabilities
    119,489       121,144  
Minority interest
    1,219       1,049  
Stockholders’ funds (1)
    29,383       26,586  
Stockholders’ equity(1)
    29,901       26,705  
Consolidated ratios
               
Profitability ratios:
               
Net interest income(2)
    2.5 %     2.3 %
Return on average total assets(3)
    1.1 %     1.0 %
Return on average equity(4)
    21.5 %     21.5 %
Credit quality data
               
Loan loss reserve
    7,778       7,506  
Loan loss reserve as a percentage of total loans and receivables (net)
    2.2 %     2.0 %
Substandard loans
    11,625       8,540  
Substandard loans as a percentage of total loans and receivables (net)
    3.2 %     2.3 %
 
(*)   EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004.
 
(1)   As presented in our consolidated balance sheet.
 
(2)   Represents net interest income as a percentage of average total assets.
 
(3   Represents annualized net income for the period, which we calculate as our net income for the period multiplied by two, as a percentage of average total assets for the period.
 
(4)   Represents annualized net income attributed to parent company for the period, which we calculate as our net income attributed to parent company for the period multiplied by two, as a percentage of average stockholders’ funds for the period.
U.S. GAAP Information
                 
    Six months ended June 30,
    2009   2008
    (in millions of euros, except per share/
    ADS data (in euros) or as otherwise indicated)
Consolidated income statement data
               
 
               
Net income(1)
    2,935       2,939  
Net Income attributable to parent company
    2,692       2,770  
Net income attributable to the non controlling interest
    243       169  
Basic earnings per share/ADS(2)(3)
    0.783       0.739  
Diluted earnings per share/ADS(2)(3)
    0.783       0.739  
Dividends per share/ADS (in dollars) (2)(3)(4)
    0.223       0.686  
 
               
Consolidated balance sheet data(5)
               
 
               
Total assets
    549,839       513,017  
Shareholders’ equity(6)
    35,706       32,994  
Total equity(7)
    36,925       34,043  
Basic shareholders’ equity per share/ADS(2)(3)
    9.53       8.80  
Diluted shareholders’ equity per share/ADS(2)(3)
    9.53       8.80  
 
(1)   Includes “Net Income attributable to parent company” and “Net income attributable to the non controlling interest” as required by SFAS 160.
 
(2)   Calculated on the basis of the weighted average number of BBVA’s ordinary shares outstanding during the relevant period.
 
(3)   Each ADS represents the right to receive one ordinary share.
 
(4)   Dividends per share/ADS are converted into dollars at the average exchange rate for the relevant period, calculated based on the average of the noon buying rates for euro from the Federal Reserve Bank of New York on the last date in respect of which such information is published of each month during the relevant period.
 
(5)   At the end of the reported period.
 
(6)   Under U.S. GAAP “shareholders’ equity” is equivalent to “Total equity” net of “non controlling interest in subsidiaries” as required by SFAS 160.
 
(7)   Under U.S. GAAP “Total equity” is equivalent to “shareholders’ equity” and “non-controlling interests” as required by SFAS 160 (minority interests under EU-IFRS).

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Exchange Rates
     Spain’s currency is the euro. Unless otherwise indicated, the amounts that have been converted to euro in this Report have been done so at the corresponding exchange rate published by the ECB at the end of each relevant period.
     For convenience in the analysis of the information, the following tables describe, for the periods and dates indicated, information concerning the noon buying rate for euro, expressed in dollars per 1.00. The term “noon buying rate” refers to the rate of exchange for euros, expressed in U.S. dollars per euro, in the City of New York for cable transfers payable in foreign currencies as certified by the Federal Reserve Bank of New York for customs purposes.
         
Year ended December 31   Average(1)
2007
    1.3797  
2008
    1.4695  
2009 (through September 25)
    1.3715  
 
(1)   The average of the noon buying rates for the euro on the last published date in respect of which such information is in each month during the relevant period.
                 
Month ended   High   Low
June 30, 2008
    1.5749       1.5368  
July 31, 2008
    1.5923       1.5559  
August 31, 2008
    1.5569       1.4660  
September 30, 2008
    1.4737       1.3939  
October 31, 2008
    1.4058       1.2446  
November 30, 2008
    1.3039       1.2525  
December 31, 2008
    1.4358       1.2634  
January 31, 2009
    1.3946       1.2804  
February 28, 2009
    1.3064       1.2547  
March 31, 2009
    1.3730       1.2549  
April 30, 2009
    1.3458       1.2903  
May 31, 2009
    1.4126       1.3267  
June 30, 2009
    1.4270       1.3784  
July 31, 2009
    1.4279       1.3852  
August 31, 2009
    1.4416       1.4075  
September 25, 2009
    1.4795       1.4235  
     The noon buying rate for euro from the Federal Reserve Bank of New York, expressed in dollars per 1.00, on September 25, 2009, was $1.4682.
     As of June 30, 2009, approximately 33% of our assets and approximately 42% of our liabilities were denominated in currencies other than euro. See Note 2.2.4 to our Interim Consolidated Financial Statements.
BUSINESS OVERVIEW
     BBVA is a highly diversified international financial group, with strengths in the traditional banking businesses of retail banking, asset management, private banking and wholesale banking. We also have a portfolio of investments in some of Spain’s leading companies.
Business Areas
     The Group focuses its operations on six major business areas, as described below, which are further broken down into business units:
    Spain and Portugal;
 
    Wholesale Banking and Asset Management;
 
    Mexico;
 
    The United States;
 
    South America; and
 
    Corporate Activities
     The foregoing description of our business areas is consistent with our current internal organization. Unless otherwise indicated, the financial information provided below for each business area does not reflect the elimination of transactions between companies within one business area or between different business

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areas, since we consider these transactions to be an integral part of each business area’s activities. For the presentation and discussion of our consolidated operating results in the “Operating and Financial Review and Prospects” section, however, such intra- and inter-business area transactions are eliminated and the eliminations are generally reflected in the operating results of the Corporate Activities business area.
     The following table sets forth information relating to net income attributed to parent company for each of our business areas for the six months ended June 30, 2009 and 2008:
                                 
                    % of Income/(loss)
    Income/(loss) attributed   attributed to parent
    to parent company   company
    (in millions of euros, except %)
    Six months ended June 30,
    2009   2008   2009   2008
     
Spain and Portugal
    1,270       1,292       45 %     42 %
Wholesale Banking and Asset Management
    539       557       19 %     18 %
Mexico
    724       950       26 %     31 %
The United States
    85       164       3 %     5 %
South America
    463       351       17 %     11 %
     
Subtotal
    3,081       3,314       110 %     107 %
     
Corporate Activities
    (282 )     (206 )     (10 )%     (7 )%
     
Net income attributed to parent company
    2,799       3,108       100 %     100 %
     
     The following table sets forth information relating to net interest income for each of our business areas for the six months ended June 30, 2009 and 2008.
                 
    Net interest income
    (in millions of euros)
    Six months ended June 30,
    2009   2008
     
Spain and Portugal
    2,458       2,331  
Wholesale Banking and Asset Management
    573       259  
Mexico
    1,683       1,816  
The United States
    743       634  
South America
    1,210       999  
     
Subtotal
    6,667       6,039  
     
Corporate Activities
    191       (484 )
     
Net interest income
    6,858       5,555  
     
Spain and Portugal
     The Spain and Portugal business area focuses on providing banking services and consumer finance to private individuals and businesses in Spain and Portugal.
The business units included in the Spain and Portugal business area are:
    Spanish Retail Network: manages individual customers, high net-worth individuals and small companies and businesses in the Spanish market;
 
    Corporate and Business Banking: manages business with small and medium enterprises (“SMEs”), large companies, institutions and developers in the Spanish market;
 
    Consumer Finance: manages online banking, consumer finance, credit cards and leasing plans;
 
    European Insurance: manages the insurance business in Spain and Portugal;
 
    BBVA Portugal: manages the banking business in Portugal; and
 
    Dinero Express: specializes in the immigrant segment.
     The principal figures relating to this business area as of June 30, 2009 and December 31, 2008 were:
    Gross customer lending was 206,896 million, as of June 30, 2009 similar to the amount recorded as of December 31, 2008.
 
    Total customer deposits were 97,896 million as of June 30, 2009 compared to 100,893 million as of December 31, 2008, a decrease of 2.9%.

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    Mutual fund assets under management were 31,227 million as of June 30, 2009, a decrease of 0.1% from 31,270 million as of December 31, 2008.
 
    Pension fund assets under management were 9,758 million as of June 30, 2009, an increase of 1.6% from 9,603 million as of December 31, 2008.
Wholesale Banking and Asset Management
     The Wholesale Banking and Asset Management area focuses on providing services to large international companies and investment banking, capital markets and treasury management services to clients.
     The business units included in the Wholesale Banking and Asset Management area are:
    Corporate and Investment Banking: coordinates origination, distribution and management of a complete catalogue of corporate and investment banking products (corporate finance, structured finance, syndicated loans and debt capital markets) and provides global trade finance and global transaction services with coverage of large corporate customers specialized by sector (industry bankers);
 
    Global Markets: handles the origination, structuring, distribution and risk management of market products, which are placed through our trading floors in Europe, Asia and the Americas;
 
    Asset Management: designs and manages the products that are marketed through our different branch networks including traditional asset management, alternative asset management and Valanza (the Group’s private equity unit);
 
    Industrial and Real Estate Holdings: helps to diversify the area’s businesses with the aim of creating medium- and long-term value through active management of a portfolio of industrial holdings and real estate projects (Anida and the Duch Project); and
 
    Asia: represents our increased stakes in CITIC International Financial Holdings Ltd (“CIFH”) in Hong Kong (approximately 30%) and in China CITIC Bank (“CNCB”) (approximately 10%) and our commitment to China as demonstrated by aggregate investments that now exceed 2,000 million.
     The principal figures relating to this business area as of June 30, 2009 and December 31, 2008 were:
    Gross customer lending was 44,814 million, a decrease of 8.6% from 49,059 million as of December 31, 2008.
 
    Total customer deposits were 60,852 million as of June 30, 2009 compared to 62,568 million as of December 31, 2008, a decrease of 2.7%.
 
    Mutual fund assets under management were 3,548 million as of June 30, 2009, a decrease of 11.6% from 4,014 million as of December 31, 2008.
 
    Pension fund assets under management were 6,913 million as of June 30, 2009, an increase of 1.5% from 6,810 million as of December 31, 2008.
Mexico
     The business units included in the Mexico area are:
    Banking Businesses; and
 
    Pensions and Insurance Businesses
     The principal figures relating to this business area as of June 30, 2009 and December 31, 2008 were:
    Gross customer lending was 28,692 million, an increase of 0.2% from 28,644 million as of December 31, 2008.
 
    Total customer deposits were 30,372 million as of June 30, 2009 compared to 29,677 million as of December 31, 2008, an increase of 2.3%.
 
    Mutual fund assets under management were 10,524 million as of June 30, 2009, an increase of 14.6% from 9,180 million as of December 31, 2008.
 
    Pension fund assets under management were 8,659 million as of June 30, 2009, an increase of 20.3% from 7,196 million as of December 31, 2008.

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     The Mexican peso to euro exchange rate as of June 30, 2009 decreased compared to the exchange rate as of December 31, 2008, with a resulting positive impact on our consolidated balance sheet as of June 30, 2009. The average Mexican peso to euro exchange rate for the six months ended June 30, 2009 increased compared to the average exchange rate for the six months ended June 30, 2008, with a resulting negative impact on our consolidated income statement for the six months ended June 30, 2009. See “Presentation of Financial Information—Factors Affecting the Comparability of our Results of Operations and Financial Condition”.
The United States
     The business units included in the United States area are:
    BBVA Compass banking group; and
 
    Other units: BBVA Puerto Rico, BTS and BBVA Bancomer USA
     The principal figures relating to this business area as of June 30, 2009 and December 31, 2008 were:
    Gross customer lending was 30,223 million as of June 30, 2009, a decrease of 4.1% from 31,518 million as of December 31, 2008.
 
    Total customer deposits were 25,377 million as of June 30, 2009 compared to 26,240 million as of December 31, 2008, a decrease of 3.3%.
     The dollar to euro exchange rate as of June 30, 2009 increased compared to the exchange rate as of December 31, 2008, with a resulting negative impact on our consolidated balance sheet as of June 30, 2009. The average dollar to euro exchange rate for the six months ended June 30, 2009 decreased compared to the average exchange rate for the six months ended June 30, 2008, with a resulting positive impact on our consolidated income statement for the six months ended June 30, 2009. See “Presentation of Financial Information—Factors Affecting the Comparability of our Results of Operations and Financial Condition”.
South America
     The South America business area includes the banking, insurance and pension businesses of the Group in South America.
     The business units included in the South America business area are:
    Banking businesses, including banks in Argentina, Chile, Colombia, Panama, Paraguay, Peru, Uruguay and Venezuela;
 
    Pension businesses in Argentina, Bolivia, Chile, Colombia, Ecuador, Peru and the Dominican Republic; and
 
    Insurance businesses in Argentina, Chile, Colombia, the Dominican Republic and Venezuela.
     The principal figures relating to this business area as of June 30, 2009 and December 31, 2008 were:
    Gross customer lending was 25,268 million as of June 30, 2009, an increase of 0.1% from 25,255 million as of December 31, 2008.
 
    Total customer deposits were 30,941 million as of June 30, 2009, an increase of 5.3% from 29,382 million as of December 31, 2008.
 
    Mutual fund assets under management were 1,887 million as of June 30, 2009, an increase of 45.1% from 1,300 million as of December 31, 2008.
 
    Pension fund assets under management were 31,568 million as of June 30, 2009, an increase of 28.7% from 24,531 million as of December 31, 2008.
     Local currencies in South America generally fell against the euro in the six months ended June 30, 2009, with a resulting negative impact on our Interim Consolidated Financial Statements as of and for the six months ended June 30, 2009. See “Presentation of Financial Information—Factors Affecting the Comparability of our Results of Operations and Financial Condition”.
Corporate Activities
     The Corporate Activities area handles the Group’s general management functions. These mainly consist of structural positions for interest rates associated with the euro balance sheet and exchange rates, together with liquidity management and shareholders’ funds.

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     The business units included in the Corporate Activities business area are:
    Financial Planning, carried out by the Group’s Assets and Liabilities Committee (“ALCO”), which administers the Group’s interest- and exchange-rate structure as well as its overall liquidity and shareholders’ funds; and
 
    Holdings in Industrial and Financial Companies: manages the Group’s investment portfolio in industrial and financial companies applying strict criteria for risk control, economic capital consumption and return on investment, with diversification over different industries.

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SELECTED STATISTICAL INFORMATION
     The following is a presentation of selected statistical information for the periods indicated. Where required under Industry Guide 3, we have provided such selected statistical information separately for our domestic and foreign activities, pursuant to our calculation that our foreign operations are significant according to Rule 9-05 of Regulation S-X.
Average Balances and Rates
     The tables below set forth selected statistical information on our average balance sheets, which are based on the beginning and month-end balances in each year. We do not believe that monthly averages present trends materially different from those that would be presented by daily averages. Interest income figures, when used, include interest income on non-accruing loans to the extent that cash payments have been received. Loan fees are included in the computation of interest revenue.
                                                 
    Average Balance Sheet — Assets and Interest from Earning Assets
    Six months ended June 30, 2009   Six months ended June 30, 2008
    Average           Average   Average           Average
    Balance   Interest   Yield(1)   Balance   Interest   Yield(1)
    (in millions of euros, except percentages)
Assets
                                               
Cash and balances with central banks
    17,760       150       1.71 %     13,130       225       3.45 %
Debt securities, equity instruments and derivatives
    134,238       2,171       3.26 %     114,803       2,426       4.25 %
Loans and receivables
    361,153       10,520       5.87 %     341,252       12,002       7.09 %
Loans and advances to credit institutions
    27,569       440       3.22 %     28,966       690       4.79 %
In euro(2)
    16,466       264       3.23 %     20,446       468       4.61 %
In other currencies(3)
    11,103       176       3.19 %     8,520       222       5.24 %
Loans and advances to customers
    333,584       10,081       6.09 %     312,286       11,312       7.28 %
In euro(2)
    224,373       5,324       4.78 %     216,856       6,323       5.86 %
In other currencies(3)
    109,211       4,757       8.78 %     95,430       4,989       10.51 %
Other financial income
          69                   129        
Non-earning assets
    32,199                   30,273              
                         
Total average assets
    545,350       12,911       4.77 %     499,458       14,782       5.95 %
                         
 
(1)   Rates have been presented on a non-taxable equivalent basis.
 
(2)   Amounts reflected in euro correspond to predominantly domestic activities.
 
(3)   Amounts reflected in other currencies correspond to predominantly foreign activities.
                                                 
    Average Balance Sheet — Liabilities and Interest paid on interest bearing Liabilities  
    Six months ended June 30, 2009     Six months ended June 30, 2008  
    Average             Average     Average             Average  
    Balance     Interest     Yield(1)     Balance     Interest     Yield(1)  
    (in millions of euros, except percentages)  
Liabilities
                                               
Deposits from central banks and credit institutions
    72,081       1,316       3.68 %     73,905       1,883       5.12 %
In euro(2)
    30,854       572       3.74 %     31,528       799       5.10 %
In other currencies(3)
    41,227       744       3.64 %     42,377       1,084       5.14 %
Customer deposits
    248,261       2,546       2.07 %     227,863       3,779       3.34 %
In euro(2)
    116,854       899       1.55 %     114,453       1,699       2.99 %
In other currencies(3)
    131,407       1,647       2.53 %     113,410       2,080       3.69 %
Debt securities and subordinated liabilities
    123,203       1,920       3.14 %     118,548       3,176       5.39 %
In euro(2)
    94,067       1,482       3.18 %     99,078       2,716       5.51 %
In other currencies(3)
    29,136       438       3.02 %     19,470       460       4.75 %
Other financial costs
          271                   389        
Non-interest-bearing liabilities
    73,369                   51,911              
Stockholders’ equity
    28,436                   27,230              
                         
Total average liabilities
    545,350       6,053       2.24 %     499,458       9,227       3.72 %
                         
 
(1)   Rates have been presented on a non-taxable equivalent basis.
 
(2)   Amounts reflected in euro correspond to predominantly domestic activities.
 
(3)   Amounts reflected in other currencies correspond to predominantly foreign activities.

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Changes in Net Interest Income—Volume and Rate Analysis
     The following table allocates changes in our net interest income between changes in volume and changes in rate for the six months ended June 30, 2009 compared to the six months ended June 30, 2008. Volume and rate variance have been calculated based on movements in average balances over the period and changes in interest rates on average interest-earning assets and average interest-bearing liabilities. The only out-of-period items and adjustments excluded from the following table are interest payments on loans which are made in a period other than the period during which they are due. Loan fees were included in the computation of interest income.
                         
    Six months ended June 30, 2009/
    Six months ended June 30, 2008
    Increase (decrease) due to changes in
    Volume (1)   Rate(1) (2)   Net Change
    (in millions of euros)
Interest income
                       
Cash and balances with central bank
    78       (153 )     (75 )
Debt securities, equity instruments and derivatives
    395       (650 )     (255 )
Loans and advances to credit institutions
    (37 )     (214 )     (251 )
In euros
    (93 )     (111 )     (204 )
In other currencies
    66       (112 )     (46 )
Loans and advances to customers
    705       (1,937 )     (1,232 )
In euros
    183       (1,183 )     (1,000 )
In other currencies
    689       (921 )     (232 )
Other financial income
          (59 )     (59 )
 
                       
Total income
    1,270       (3,141 )     (1,871 )
Interest expense
                       
Deposits from central banks and credit institutions
    (57 )     (510 )     (567 )
In euros
    (21 )     (205 )     (227 )
In other currencies
    (35 )     (305 )     (340 )
Customer deposits
    316       (1,550 )     (1,234 )
In euros
    26       (826 )     (800 )
In other currencies
    317       (751 )     (434 )
Debt certificates and subordinated liabilities
    107       (1,363 )     (1,256 )
In euros
    (152 )     (1,083 )     (1,234 )
In other currencies
    225       (248 )     (23 )
Other financial costs
          (118 )     (118 )
 
                       
Total expense
    792       (3,967 )     (3,175 )
 
                       
Net interest income
    478       826       1,303  
 
                       
 
(1)   Variances caused by changes in both volume and rate have been allocated proportionally to volume and rate.
 
(2)   Rates have been presented on a non-taxable equivalent basis.
Interest Earning Assets—Margin and Spread
     The following table analyzes the levels of our average earning assets and illustrates the comparative gross and net yields and spread obtained for each of the periods indicated.
                 
    Six months ended June 30,
    2009(*)   2008(*)
    (in millions of euros, except %)
Average interest earning assets
    513,151       469,185  
Gross yield (1)
    2.47 %     3.10 %
Net yield (2)
    2.32 %     2.91 %
Net interest margin (3)
    1.34 %     1.18 %
Average effective rate paid on all interest-bearing liabilities
    1.11 %     1.85 %
Spread (4)
    1.36 %     1.25 %
 
(*)   Ratios are not annualized.
 
(1)   Gross yield represents total interest income divided by average interest earning assets.
 
(2)   Net yield represents total interest income divided by total average assets.
 
(3)   Net interest margin represents net interest income as percentage of average interest earning assets.
 
(4)   Spread is the difference between gross yield and the average cost of interest-bearing liabilities.

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ASSETS
Interest-Bearing Deposits in Other Banks
     As of June 30, 2009, interbank deposits represented 3.74% of our assets. Of such interbank deposits, 29.47% were held outside of Spain and 70.53% in Spain. We believe that our deposits are generally placed with highly rated banks and have a lower risk than many loans we could make in Spain. Such deposits, however, are subject to the risk that the deposit banks may fail or the banking system of certain of the countries in which a portion of our deposits are made may face liquidity or other problems.
Securities Portfolio
     As of June 30, 2009, our securities were carried on our consolidated balance sheet at a book value of 99,752 million, representing 18.38% of our assets compared to 15.74% of our assets as of December 31, 2008. 25,076 million or 25.14% of our securities consisted of Spanish Treasury bonds and Treasury bills. The average yield for the six months ended June 30, 2009 on investment securities that BBVA held was 3.95%, compared to an average yield of approximately 5.87% earned on loans and receivables for the six months ended June 30, 2009. The market or appraised value of our total securities portfolio as of June 30, 2009 was 99,733 million. See Notes 10, 12 and 14 to the Interim Consolidated Financial Statements. For a discussion of our investments in affiliates, see Note 17 to the Interim Consolidated Financial Statements. For a discussion of the manner in which we value our securities, see Notes 2.2.1.a and 8 to the Interim Consolidated Financial Statements. Our holdings of Spanish government debt increased significantly year-on-year as such debt had an attractive risk — return profile in the light of the financial crisis.
     The following table analyzes the book value and market value of our ownership of debt securities and equity securities as of June 30, 2009 and 2008. Trading portfolio and investments in affiliated companies consolidated under the equity method are not included in the tables below because the amortized costs and fair values of these items are the same. See Note 10 to the Interim Consolidated Financial Statements.
                                 
    As of June 30, 2009   As of June 30, 2008
    Amortized           Amortized    
    Cost   Fair Value(1)   Cost   Fair Value(1)
    (in millions of euros)
DEBT SECURITIES —
                               
 
                               
AVAILABLE FOR SALE PORTFOLIO
                               
Domestic—
    20,424       20,557       10,193       10,150  
Spanish Government
    14,520       14,645       4,456       4,457  
Other debt securities
    5,904       5,912       5,737       5,693  
International—
    29,502       29,062       26,969       26,687  
United States —
    7,534       7,262       8,372       8,270  
U.S. Treasury and other U.S. Government agencies
    455       423       81       82  
States and political subdivisions
    415       426       365       365  
Other debt securities
    6,664       6,413       7,926       7,823  
Other countries —
    21,968       21,800       18,597       18,417  
Securities of other foreign Governments
    14,257       14,255       11,026       10,940  
Other debt securities
    7,711       7,545       7,572       7,477  
 
                               
TOTAL AVAILABLE FOR SALE PORTFOLIO
    49,926       49,619       37,162       36,837  
 
                               
HELD TO MATURITY PORTFOLIO
                               
Domestic—
    2,279       2,240       2,374       2,180  
Spanish Government
    1,335       1,339       1,398       1,299  
Other debt securities
    944       901       976       881  
International—
    2,820       2,840       3,028       2,848  
 
                               
TOTAL HELD TO MATURITY PORTFOLIO
    5,099       5,080       5,402       5,028  
 
                               
TOTAL DEBT SECURITIES
    55,025       54,699       42,565       41,865  
 
                               
 
(1)   Fair values for listed securities are determined on the basis of their quoted values at the end of the period. Appraised values are used for unlisted securities based on our estimate or on unaudited financial statements, when available.

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    As of June 30, 2009   As of June 30, 2008
    Amortized           Amortized    
    Cost   Fair Value(1)   Cost   Fair Value(1)
    (in millions of euros)
EQUITY SECURITIES —
                               
AVAILABLE FOR SALE PORTFOLIO
                               
Domestic—
    3,319       4,618       4,119       6,203  
Equity listed
    3,287       4,586       4,076       6,165  
Equity unlisted
    32       32       43       38  
International—
    3,127       3,148       3,127       3,159  
United States—
    603       696       705       692  
Equity listed
    106       89       479       473  
Equity unlisted
    497       607       226       219  
Other countries—
    2,524       2,452       2,422       2,467  
Equity listed
    2,263       2,189       2,302       2,338  
Equity unlisted
    261       263       120       129  
 
                               
TOTAL AVAILABLE FOR SALE PORTFOLIO
    6,446       7,766       7,246       9,363  
 
                               
TOTAL EQUITY SECURITIES
    6,446       7,766       7,246       9,363  
 
                               
TOTAL INVESTMENT SECURITIES
    61,471       62,465       49,811       51,227  
 
                               
 
(1)   Fair values for listed securities are determined on the basis of their quoted values at the end of the period. Appraised values are used for unlisted securities based on our estimate or on unaudited financial statements, when available.
     The following table analyzes the maturities of our debt securities, excluding trading portfolio, by type and geographical area as of June 30, 2009.
                                                                         
    Maturing at one year or   Maturing after one year   Maturing after five   Maturing after ten    
    less   to five years   year to ten years   years    
    Amount   Yield %(1)   Amount   Yield %(1)   Amount   Yield %(1)   Amount   Yield %(1)   Total
    (in millions of euros, except %)
AVAILABLE FOR SALE PORTFOLIO
                                                                       
Domestic:
                                                                       
Spanish government
    119       5.74       6,694       4.24       4,003       4.28       3,829       5.56       14,645  
Other debt securities
    1,067       3.80       3,732       3.71       278       3.38       835       3.74       5,912  
 
                                                                       
Total Domestic
    1,186       3.97       10,426       4.04       4,281       4.21       4,664       5.16       20,557  
 
                                                                       
International:
                                                                       
United States:
    985       4.69       3,083       5.30       1,784       4.62       1,410       1.77       7,262  
U.S. Treasury and other U.S. government securities
    160       3.46       18       5.28                   245       0.96       423  
States and political subdivisions
    70       6.74       145       6.31       159       6.32       52       6.41       426  
Other debt securities
    755       4.85       2,920       5.27       1,625       4.51       1,113       1.82       6,413  
Other countries:
    2,603       3.93       9,799       5.37       5,438       5.40       3,960       4.85       21,800  
Securities of other foreign governments
    666       6.41       7,483       5.90       4,018       5.88       2,088       5.26       14,255  
Other debt securities
    1,937       3.25       2,316       3.67       1,420       4.25       1,872       4.46       7,545  
 
                                                                       
Total International
    3,588       4.16       12,882       5.35       7,222       5.19       5,370       3.80       29,062  
 
                                                                       
Total Available for sale
    4,774       4.10       23,308       4.70       11,503       4.78       10,034       4.44       49,619  
 
                                                                       
HELD TO MATURITY PORTFOLIO
                                                                       
Domestic:
    164       4.59       330       4.68       1,603       3.47       182       3.93       2,279  
Spanish government
    110       5.11       118       5.25       1,053       3.22       54       4.20       1,335  
Other debt securities
    54       3.47       212       4.35       550       3.96       128       3.81       944  
International:
    85       5.27       918       4.00       1,594       4.09       223       3.75       2,820  
 
                                                                       
Total held to maturity
    249       4.82       1,248       4.17       3,197       3.78       405       3.83       5,099  
 
                                                                       
TOTAL DEBT SECURITIES
    5,023       4.14       24,556       4.67       14,700       4.56       10,439       4.42       54,718  
 
                                                                       
 
(1)   Rates have been presented on a non-taxable equivalent basis.

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Loans and Advances to Credit Institutions
     As of June 30, 2009, our total loans and advances to credit institutions amounted to 24,513 million, or 4.52% of total assets compared to 6.21% of total assets as of December 31, 2008. Net of our valuation adjustments, loans and advances to credit institutions amounted to 24,533 million as of June 30, 2009, or 4.52% of our total assets.
Loans and Advances to Customers
     As of June 30, 2009, our total loans and leases amounted to 334,440 million, or 61.63% of total assets compared to 62.90% of total assets as of December 31, 2008. Net of our valuation adjustments, loans and leases amounted to 327,926 million as of June 30, 2009, or 60.43% of our total assets. As of June 30, 2009 our loans in Spain amounted to 206,731 million. Our foreign loans amounted to 127,709 million as of June 30, 2009.
      Loans by Geographic Area
     The following table analyzes, by domicile of the customer, our net loans and leases as of each of the dates indicated:
                         
            As of    
    As of June 30,   December 31,   As of June 30,
    2009   2008   2008
    (in millions of euros)
Domestic
    206,731       208,474       210,968  
Foreign
                       
Western Europe
    26,854       28,546       24,879  
Latin America
    60,693       61,978       58,478  
United States
    34,310       35,498       33,545  
Other
    5,852       6,826       4,871  
Total foreign
    127,709       132,848       121,773  
 
                       
Total loans and leases
    334,440       341,322       332,741  
 
                       
Valuation adjustments
    (6,514 )     (6,062 )     (6,810 )
 
                       
Total net lending
    327,926       335,260       325,931  
 
                       

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     Loans by Type of Customer
     The following table analyzes by domicile and type of customer our net loans and leases as of each of the dates indicated. The analyses by type of customer are based principally on the requirements of the regulatory authorities in each country.
                         
            As of        
    As of June 30,     December 31,     As of June 30,  
    2009     2008     2008  
    (in millions of euros)  
Domestic
                       
Government
    18,951       17,436       17,219  
Agriculture
    1,801       1,898       1,930  
Industrial
    17,613       17,976       18,773  
Real estate and construction
    37,755       38,632       37,440  
Commercial and financial
    18,750       17,165       15,607  
Loans to individuals
    88,454       88,712       92,450  
Lease financing
    7,087       7,702       8,009  
Other
    16,320       18,953       19,540  
 
                 
Total domestic
    206,731       208,474       210,968  
Foreign
                       
Government
    5,101       5,066       5,316  
Agriculture
    1,916       2,211       1,772  
Industrial
    29,184       28,600       24,736  
Real estate and construction
    15,787       15,890       10,872  
Commercial and financial
    26,097       27,720       30,074  
Loans to individuals
    37,332       39,178       37,080  
Lease financing
    1,632       1,683       1,443  
Other
    10,660       12,500       10,480  
 
                 
Total foreign
    127,709       132,848       121,773  
 
                 
Total loans and leases
    334,440       341,322       332,741  
Valuation adjustments
    (6,514 )     (6,062 )     (6,810 )
 
                 
Total net lending
    327,926       335,260       325,931  
 
                 
     The following table sets forth a breakdown, by currency, of our net loan portfolio as of each of the dates indicated:
                         
            As of        
    As of June 30,     December 31,     As of June 30,  
    2009     2008     2008  
    (in millions of euros)  
In euros
    221,901       226,855       227,446  
In other currencies
    106,026       108,405       98,485  
 
                 
Total net lending
    327,926       335,260       325,931  
 
                 
     As of June 30, 2009, loans by BBVA and its subsidiaries to associates and jointly controlled companies amounted to 638 million, compared to 507 million as of December 31, 2008. Loans outstanding to the Spanish government and its agencies amounted to 19,231 million, or 5.75% of our total loans and leases as of June 30, 2009, compared to 17,770 million, or 5.21% of our total loans and leases as of December 31, 2008. None of our loans to companies controlled by the Spanish government are guaranteed by the government and, accordingly, we apply normal credit criteria in extending credit to such entities. Moreover, we carefully monitor such loans because governmental policies necessarily affect such borrowers.
     Diversification in our loan portfolio is our principal means of reducing the risk of loan losses. We also carefully monitor our loans to borrowers in sectors or countries experiencing liquidity problems. Our exposure to our five largest borrowers as of June 30, 2009, excluding government-related loans, amounted to 14,636 million or approximately 4.38% of our total outstanding loans and leases.

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     Maturity and Interest Sensitivity
     The following table sets forth an analysis by maturity of our total loans and leases by domicile of the office that issued the loan and type of customer, disregarding valuation adjustment, as of June 30, 2009. The determination of maturities is based on contract terms.
                                 
    Maturity        
            Due After One              
    Due in One     Year Through     Due After        
    Year or Less     Five Years     Five Years     Total  
    (in millions of euros)  
Domestic:
                               
Government
    7,699       5,271       5,980       18,950  
Agriculture
    721       667       413       1,801  
Industrial
    13,091       3,128       1,394       17,613  
Real estate and construction
    14,628       9,481       13,646       37,755  
Commercial and financial
    10,230       5,365       3,155       18,750  
Loans to individuals
    10,972       16,826       60,656       88,454  
Lease financing
    581       2,860       3,646       7,087  
Other
    10,473       3,380       2,467       16,320  
 
                       
Total domestic
    68,395       46,978       91,357       206,730  
 
                       
Foreign:
                               
Government
    499       2,883       1,719       5,101  
Agriculture
    850       931       135       1,916  
Industrial
    9,673       15,695       3,816       29,184  
Real estate and construction
    7,700       5,323       2,764       15,787  
Commercial and financial
    12,589       9,757       3,750       26,096  
Loans to individuals
    2,657       10,453       24,223       37,333  
Lease financing
    430       1,025       177       1,632  
Other
    4,608       4,479       1,574       10,661  
 
                       
Total foreign
    39,006       50,546       38,158       127,710  
Total loans and leases
    107,401       97,524       129,515       334,440  
 
                       
     The following table sets forth a breakdown of our fixed and variable rate loans which had a maturity of one year or more as of June 30, 2009.
                         
    Interest Sensitivity of  
    Outstanding Loans and Leases  
    Maturing in More Than One  
    Year  
    Domestic     Foreign     Total  
    (in millions of euros)  
Fixed rate
    19,394       50,965       70,359  
Variable rate
    118,942       37,738       156,680  
 
                 
Total loans and leases
    138,336       88,703       227,039  
 
                 
Loan Loss Reserve for Loans and Advances
     For a discussion of loan loss reserves, as of June 30, 2009 and December 31, 2008, see “Item 5. Operating and Financial Review and Prospects—Critical accounting policies—Allowance for loan losses” in our 2008 Form 20-F and Note 2.2.1.b) to the Interim Consolidated Financial Statements included herein.
     The following table provides information, by domicile of customer, regarding our loan loss reserve and movements of loan charge-offs and recoveries for periods indicated.

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    Six months     Year ended     Six months  
    ended June 30     December 31     ended June 30  
    2009     2008     2008  
    (in millions of euros, except %)  
Loan loss reserve at beginning of period:
                       
Domestic
    3,766       3,459       3,459  
Foreign
    3,740       3,685       3,685  
 
                 
Total loan loss reserve at beginning of period
    7,506       7,144       7,144  
 
                 
Loans charged off:
                       
Domestic:
                       
Government and other Agencies
                 
Real estate and loans to individuals
    (323 )     (639 )     (252 )
Commercial and financial
    (9 )     (16 )     (7 )
Other
                 
Total Domestic
    (332 )     (655 )     (259 )
Foreign
    (1,050 )     (1,296 )     (523 )
 
                 
Total loans charged off
    (1,382 )     (1,951 )     (782 )
 
                 
Provision for loan losses:
                       
Domestic
    594       953       425  
Foreign
    1,356       2,035       810  
 
                 
Total provision for loan losses
    1,950       2,988       1,235  
Acquisition and disposition of subsidiaries
                 
Effect of foreign currency translation and other
    (294 )     (676 )     (189 )
 
                 
 
                       
Loan loss reserve at end of period:
                       
Domestic
    3,885       3,766       3,633  
Foreign
    3,893       3,740       3,775  
Total loan loss reserve at end of period
    7,778       7,506       7,408  
Loan loss reserve as a percentage of total loans and leases at end of period
    2.20 %     2.03 %     2.07 %
Net loan charge-offs as a percentage of total loans and leases at end of period
    0.39 %     0.53 %     0.22 %
     As of June 30, 2009, our loan loss reserves as a percentage of total loans and leases increased to 2.20% from 2.03% as of December 31, 2008, principally due to the increase in provisions and a decrease in total loans and leases.
     We do not maintain records allocating the amount of charge-offs and the amount of recoveries by loan category. Also, at the time that a loan is charged off in accordance with Bank of Spain guidelines, it will normally be substantially or fully reserved and, accordingly, such charge-off would have a very limited effect on our net income attributed to parent company or stockholders’ equity. Accordingly, we believe that information relating to domestic reserves and charge-offs by loan category is of less relevance than would be the case for a U.S. bank.
Substandard Loans
     We classify loans as substandard loans in accordance with the requirements under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 in respect of “impaired loans”. As we described in Note 2.2.1.b) to the Interim Consolidated Financial Statements, loans are considered to be impaired loans, and accrual of the interest thereon is suspended, when there are reasonable doubts that the loans will be recovered in full and/or the related interest will be collected for the amounts and on the dates initially agreed upon, taking into account the guarantees received by the consolidated entities to assure (in part or in full) the performance of transactions. In addition, all loans that are 90 days past due, even if well-collateralized and in the process of being collected are automatically considered non-accrual if they are classified as substandard loans.
     When the recovery of any recognized amount is considered to be remote, this amount is removed from the consolidated balance sheet, without prejudice to any actions taken by the consolidated entities in order to collect the amount until their rights extinguish in full through expiry, forgiveness or for other reasons.
     Interest on all of our substandard non-accrual loans is not credited to income until actually collected. The aggregated amount of gross interest income that would have been recorded in respect of our substandard loans for the six months ended June 30, 2009 and 2008 under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 was 1,257 million and 839 million, respectively.

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     Amounts collected in relation to impaired loans and receivables are used to recognize the related accrued interest and any excess amount is used to reduce the principal not yet repaid. The approximate amount of interest income on our substandard loans to customers which was included in net income attributed to parent company for the six months ended June 30, 2009 and 2008 under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 was 89 million and 73 million, respectively.
     The following table provides information regarding our substandard loans as of the dates indicated:
                 
    As of June 30,     As of December 31,  
    2009     2008  
    (in millions of euros, except %)  
Substandard loans:
               
Domestic
    8,156       5,700  
Public sector
    61       79  
Other resident sectors
    7,797       5,483  
Non-resident sector
    298       138  
Foreign
    3,469       2,840  
Public sector
    38       22  
Other resident sectors
           
Non-resident sector
    3,431       2,818  
 
           
Total substandard loans
    11,625       8,540  
 
           
Total loan loss reserve
    (7,778 )     (7,505 )
 
           
Substandard loans net of reserves
    3,847       1,035  
Substandard loans as a percentage of total loans and receivables (net)
    3.2 %     2.3 %
Substandard loans (net of reserves) as a percentage of total loans and receivables (net)
    1.1 %     0.3 %
     Our total substandard loans jumped to 11,625 million as of June 30, 2009, compared to 8,540 million as of December 31, 2008, principally due to an increase in substandard loans to customers in Spain generally due to a less favorable macroeconomic environment. As a result of the increase in total substandard loans described above, our substandard loans as a percentage of total loans and receivables (net) increased sharply from 2.3% as of December 31, 2008 to 3.2% as of June 30, 2009. Our loan loss reserves as a percentage of substandard loans as of June 30, 2009 declined to 67% from 88% as of December 31, 2008.
     Substandard loans to other resident sectors in Spain increased as of June 30, 2009 to 8,156 from 5,700 as of December 31, 2008 mainly due to the increase in substandard mortgage loans and real estate and construction loans. Substandard mortgage loans increased sharply to 2,867 million as of June 30, 2009 from 2,033 million as of December 31, 2008 and real estate and construction loans increased sharply to 3,411 million, as of June 30, 2009, from 2,176 million as of December 31, 2008.
     The following table provides information, by domicile and type of customer, regarding our substandard loans and the loan loss reserves to customers taken for each substandard loan category, as of June 30, 2009.
                         
                    Substandard  
                    Loans as a  
            Loan     percentage  
    Substandard     Loss     of Loans in  
    Loans     Reserve     Category  
    (in millions of euros, except %)  
Domestic:
                       
Government
    61       7       0.32 %
Agricultural
    68       23       3.79 %
Industrial
    470       161       2.67 %
Real estate and construction
    3,411       845       9.03 %
Commercial and financial
    653       204       3.48 %
Loans to individuals
    3,021       646       3.42 %
Other
    472       213       2.02 %
 
                   
Total domestic
    8,156       2,099       3.95 %
 
                   
Total foreign
    3,469       2,048       2.72 %
Unllocated reserve
          3,631          
 
                   
Total
    11,625       7,778       3.48 %
 
                   

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Foreign Country Outstandings
     The following tables set forth, as of the dates indicated, the aggregate amounts of our cross-border outstandings (which consist of loans, interest-bearing deposits with other banks, acceptances and other monetary assets denominated in a currency other than the home-country currency of the office where the item is booked) where outstandings in the borrower’s country exceeded 1% of our total assets as of June 30, 2009 and as of December 31, 2008. Cross-border outstandings do not include loans in local currency made by our subsidiary banks to customers in other countries to the extent that such loans are funded in the local currency or hedged. As a result, they do not include the vast majority of the loans made by our subsidiaries in South America, Mexico and United States.
                                 
    As of June 30,   As of December 31,
    2009   2008
            % of Total           % of Total
    Amount   Assets   Amount   Assets
    (in millions of euros, except percentages)
OECD
                               
United Kingdom
    6,576       1.21 %     7,542       1.39 %
Mexico
    4,056       0.75 %     4,644       0.86 %
Other OECD
    5,944       1.10 %     6,514       1.20 %
 
                               
Total OECD
    16,576       3.05 %     18,700       3.45 %
Central and South America
    3,606       0.66 %     4,092       0.75 %
Others
    4,960       0.91 %     5,676       1.05 %
 
                               
Total
    25,142       4.63 %     28,468       5.25 %
 
                               
     The following tables set forth the amounts of our cross-border outstandings as of as of June 30, 2009 and December 31, 2008 by type of borrower where outstandings in the borrower’s country exceeded 1% of our total assets.
                                 
            Banks and        
            Other   Commercial,    
            Financial   Industrial    
    Governments   Institutions   and Other   Total
    (in millions of euros)
As of June 30, 2009
                               
Mexico
    4       111       3,941       4,056  
United Kingdom
          4,763       1,813       6,576  
 
                               
Total
    4       4,874       5,754       10,632  
 
                               
 
                               
As of December 31, 2008
                               
Mexico
    4       228       4,412       4,644  
United Kingdom
          5,113       2,429       7,542  
 
                               
Total
    4       5,341       6,841       12,186  
 
                               
     The Bank of Spain requires that minimum reserves be maintained for cross-border risk arising with respect to loans and other outstandings to countries, or residents of countries, falling into certain categories established by the Bank of Spain on the basis of the level of perceived transfer risk. The category that a country falls into is determined by us, subject to review by the Bank of Spain.

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     The following table shows the minimum required reserves with respect to each category of country for BBVA’s level of coverage as of June 30, 2009.
         
    Minimum Percentage of
    Coverage (Outstandings
Categories(1)   Within Category)
Countries belonging to the OECD whose currencies are listed in the Spanish foreign exchange market
    0.0  
Countries with transitory difficulties(2)
    10.1  
Doubtful countries(2)
    22.8  
Very doubtful countries(2)(3)
    83.5  
Bankrupt countries(4)
    100.0  
 
(1)   Any outstanding which is guaranteed may be treated, for the purposes of the foregoing, as if it were an obligation of the guarantor.
 
(2)   Coverage for the aggregate of these three categories (countries with transitory difficulties, doubtful countries and very doubtful countries) must equal at least 35% of outstanding loans within the three categories. The Bank of Spain has recommended up to 50% aggregate coverage.
 
(3)   Outstandings to very doubtful countries are treated as substandard under Bank of Spain regulations.
 
(4)   Outstandings to bankrupt countries must be charged off immediately. As a result, no such outstandings are reflected on our consolidated balance sheet. Notwithstanding the foregoing minimum required reserves, certain interbank outstandings with an original maturity of three months or less have minimum required reserves of 50%. We met or exceeded the minimum percentage of required coverage with respect to each of the foregoing categories as of June 30, 2009.
     Our exposure to borrowers in countries with difficulties (the last 4 categories in the foregoing table), excluding our exposure to subsidiaries or companies we manage and trade-related debt, amounted to 1,562 million and 334 million as of June 30, 2009 and December 31, 2008, respectively, due to the categorization by the Bank of Spain of Brazil as a “country with transitory difficulties”. These figures do not reflect loan loss reserves of 12.02% and 14.07%, respectively, against the relevant amounts outstanding at such dates. Deposits with or loans to borrowers in all such countries as of June 30, 2009 did not in the aggregate exceed 0.29% of our total assets.
LIABILITIES
Deposits
     The principal components of our customer deposits are domestic demand and savings deposits and foreign time deposits. The following tables provide information regarding our deposits by principal geographic area for the dates indicated.
                                 
    As of June 30, 2009
            Bank of Spain and   Other    
    Customer   Other Central   Credit    
    Deposits   Banks   Institutions   Total
    (in millions of euros)
Total domestic
    96,576       17,644       8,416       122,636  
Foreign:
                               
Western Europe
    26,068       4,847       18,047       48,962  
Latin America
    61,719       831       13,273       75,823  
United States
    60,472       3,241       6,186       69,899  
Other
    3,234       388       3,831       7,453  
 
                               
Total foreign
    151,493       9,307       41,337       202,137  
 
                               
Total
    248,069       26,951       49,753       324,773  
 
                               

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    As of December 31, 2008
            Bank of Spain and   Other    
    Customer   Other Central   Credit    
    Deposits   Banks   Institutions   Total
    (in millions of euros)
Total domestic
    105,146       6,132       6,220       117,498  
Foreign:
                               
Western Europe
    26,341       5,524       20,293       52,158  
Latin America
    57,193       844       10,987       69,024  
United States
    56,185       4,061       9,297       69,543  
Other
    8,860       201       2,776       11,837  
 
                               
Total foreign
    148,579       10,630       43,353       202,562  
 
                               
Total
    253,725       16,762       49,573       320,061  
 
                               
     For an analysis of our deposits, including non-interest bearing demand deposits, interest-bearing demand deposits, saving deposits and time deposits, see Note 22 to the Interim Consolidated Financial Statements.
     As of June 30, 2009, the maturity of our time deposits (excluding interbank deposits) in denominations of $100,000 (approximately 70,751 considering the noon buying rate as of June 30, 2009) or greater was as follows:
                         
    As of June 30, 2009
    Domestic   Foreign   Total
    (in millions of euros)
3 months or under
    8,420       51,116       59,536  
Over 3 to 6 months
    5,458       12,005       17,463  
Over 6 to 12 months
    6,998       3,045       10,043  
Over 12 months
    9,165       3,111       12,276  
 
                       
Total
    30,041       69,277       99,318  
 
                       
     Time deposits from Spanish and foreign financial institutions amounted to 33,432 million as of June 30, 2009, substantially all of which were in excess of $100,000 (approximately 70,751 as of June 30, 2009).
     Large denomination deposits may be a less stable source of funds than demand and savings deposits because they are more sensitive to variations in interest rates. For a breakdown by currency of customer deposits as of June 30, 2009 and December 31, 2008, see Note 22 to the Interim Consolidated Financial Statements.

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Short-term Borrowings
     Securities sold under agreements to repurchase and promissory notes issued by us constituted the only categories of short-term borrowings that equaled or exceeded 30% of stockholders’ equity as of June 30, 2009, December 31, 2008 and June 30, 2008.
                 
    As of June 30, 2009
    Amount   Average rate
    (in millions of euros, except
percentages)
Securities sold under agreements to repurchase (principally Spanish Treasury bills):
               
As of June 30
    26,756       3.23 %
Average during first half year
    24,635       3.37 %
Maximum quarter-end balance
    29,421        
Bank promissory notes:
               
As of June 30
    28,384       1.23 %
Average during first half year
    28,351       1.75 %
Maximum quarter-end balance
    30,919        
Bonds and Subordinated debt:
               
As of June 30
    18,220       2.67 %
Average during first half year
    16,672       2.97 %
Maximum quarter-end balance
    16,186        
Total short-term borrowings as of June 30, 2009
    73,360       2.35 %
                 
    As of December 31, 2008
    Amount   Average rate
    (in millions of euros, except
percentages)
Securities sold under agreements to repurchase (principally Spanish Treasury bills):
               
As of December 31
    28,206       4.66 %
Average during year
    34,729       5.62 %
Maximum quarter-end balance
    34,202        
Bank promissory notes:
               
At December 31
    20,061       3.70 %
Average during year
    15,661       4.57 %
Maximum quarter-end balance
    20,061        
Bonds and Subordinated debt:
               
At December 31
    13,565       4.66 %
Average during year
    12,447       5.18 %
Maximum quarter-end balance
    15,822        
Total short-term borrowings as of December 31, 2008
    61,832       4.35 %
                 
    As of June 30, 2008
    Amount   Average rate
    (in millions of euros, except
percentages)
Securities sold under agreements to repurchase (principally Spanish Treasury bills):
               
As of June 30
    35,918       5.73 %
Average during first half year
    40,448       5.64 %
Maximum quarter-end balance
    35,737        
Bank promissory notes:
               
As of June 30
    15,518       4.63 %
Average during first half year
    10,741       4.50 %
Maximum quarter-end balance
    8,336        
Bonds and Subordinated debt:
               
As of June 30
    11,416       5.61 %
Average during first half year
    13,832       5.11 %
Maximum quarter-end balance
    15,615        
Total short-term borrowings as of June 30, 2008
    62,852       5.44 %

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Return on Equity
     The following table sets out our return on equity ratios:
                         
    As of June 30,   As of December 31,   As of June 30,
    2009   2008   2008
Return on equity (1)
    21.5       21.5       26.0  
Return on assets (2)
    1.12       1.04       1.28  
Equity to assets ratio(3)
    5.41       4.90       5.12  
 
(1)   Represents annualized net income attributed to parent company for the period, which we calculate as our net income attributed to parent company for the period multiplied by two, as a percentage of average stockholders’ funds for the period.
 
(2)   Represents annualized net income for the period, which we calculate as our net income for the period multiplied by two, as a percentage of average total assets for the period.
 
(3)   Represents total stockholders’ funds over total assets
UNRESOLVED STAFF COMMENTS
     As part of a periodic review of our 2008 Form 20-F by the Division of Corporation Finance of the SEC, we received on June 30, 2009 a comment letter from the SEC staff (the “Staff”). We have cooperated fully with the Staff in connection with their review in order to resolve all outstanding comments and provided our responses to the Staff on July, 15, 2009.
     The Staff’s comments focused principally on the level of disclosure in the 2008 Form 20-F related to IFRS 7 and the allowance for loan losses under both IFRS and U.S. GAAP. We believe that we have provided adequate responses to all the Staff’s comments and we have committed to enhance the disclosure regarding these issues in our future filings.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
Summary Economic Background to Results of Operations
     The six month period ended June 30, 2009 has been characterized by the continuation of the international economic crisis, which has not yet reached its conclusion. Financial markets have suffered strong disruptions during this period, with general declines in stock market levels in the first half of the period worldwide, which eventually recovered by the end of June 2009 to the levels reached at the end of 2008.
     In the first part of the year the international macroeconomic environment has continued deteriorating and, as mentioned above, financial markets have suffered important disruptions, although liquidity in the markets is recovering gradually. Despite this gradual recovery markets continue to show liquidity tensions and interbank markets are still not functioning normally. Therefore, market interest rates have remained high during the period, in particular in the short term. The period has also been characterized by additional increases in volatility.
     In the United States, where the financial crisis originated, economic indicators showed evidence of a continued slowdown of the economy, although they appeared to have stabilized albeit at very low levels. Real estate market adjustments continue, as reflected by data on home sales (new and existing), consumer confidence and unemployment applications. Moreover, economic indicators such as industrial production (which had decreased for nine consecutive months) and the ISM manufacturing index, reflect the recessionary process that the economy is still facing.
     In the euro area and Spain the latest economic indicators also generally reflected a continuing recession. In Europe economic activity continues falling: activity in industry and the service sector is at historical minimum levels, as reflected by the purchasing managers indices that were below 50 points (40.7 for manufacturing and 44.8 for services) in June, and also by the deterioration of confidence indicators. As is also happening in the United States, unemployment rates are increasing, confirming real gross domestic product, or “GDP”, deterioration. Therefore, the improvement showed by some leading indicators is still not translated into economic indicators.
     This downturn in the outlook for the world economy has resulted in an intensification of the adjustment process in the Spanish economy. The deterioration observed in employment indicators during the last months of 2008 and the first six months of 2009 has continued with unemployment reaching 17.9% at the end of the period, with very negative effects on consumer and business confidence. Moreover, during the first half of 2009 this contraction spread towards segments of the economy which had hitherto remained relatively unaffected by the recession, such as exports. Another factor to be taken into account is that the Spanish

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economy continues to be negatively affected by the shrinking of the real estate and construction sectors. The end of the recession will be relatively slow given the foreseeable long period of de-leveraging, the absence of a sufficiently dynamic environment abroad to boost growth in Spain, and the limited long-term effectiveness of fiscal stimulus packages to sustain economic growth. In addition, uncertainty over policy measures in the short term also pose some concerns in the outlook.
     Thus, governments in the United States and in several countries of the EU have continued implementing specific plans. Measures announced are intended to solve the liquidity and solvency problems of financial institutions, to restore confidence and to recover long-term funding mechanisms, in principle with a limited cost that can be recovered over time. In Spain, public aid has been implemented via the Financial Assets Acquisition Fund auctions (FAAF), a public guarantee for the issuance of securities by financial institutions and the Banking Organizing and Restructuring Fund (FROB).
     By the end of 2008, interest rates in the United States reached historical minimums at 0 to 0.25%. In 2009, the ECB and the Bank of England lowered rates again down to 1 % and 0.5% respectively. In addition, several central banks started implementing non-conventional monetary policy, like asset purchases, although in the case of the ECB in a more gradual way.
     Despite the international environment, the economic situation in Latin America continues to be generally relatively positive, due to internal demand growth and the strengths accumulated before the crisis. The exception is Mexico, which has been affected by three negative factors in the period. First there has been a steep decline in the demand for durable goods in the United States which has historically been the destination for approximately 80% of Mexico’s manufacturing exports. Second, the international financial crisis increased the cost of capital to finance Mexican businesses and the public sector. Finally, the Mexican economy was negatively affected by the public health emergency caused by the H1N1 influenza outbreak in the second quarter of the year, which had a significant negative impact on the tourism industry. Overall, the decline in real GDP in the first half of 2009 has been steeper than the adjustment observed in 1995, albeit this time with no inflation, and no domestic financial or banking crisis.
     In fact, similar to other Latin American countries with a much better economic performance, Mexico has also been able to implement countercyclical policies for the first time in a recession. Most of these countries have obtained generalized decreases in interest rates. In Mexico, for example, the interbank interest rate has decreased during the six months ended June 30, 2009, closing the period slightly above 5%.

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BBVA Group Results of Operations For The Six Months Ended June 30, 2009 Compared to the Six Months Ended June 30, 2008
     The changes in the Group’s consolidated income statements for the six months ended June 30, 2009 and 2008 were as follows:
EU-IFRS (*)
                         
    Six months ended June 30,     Change  
    2009   2008   2009/2008
 
    (Millions of euros)   %
Interest and similar income
    12,911       14,782       (12.66 )%
Interest expense and similar charges
    (6,053 )     (9,227 )     (34.40 )%
             
Net interest income
    6,858       5,555       23.46 %
Dividend income
    248       241       2.90 %
Share of profit or loss of entities accounted for using the equity method
    27       173       (84.39 )%
Fee and commission income
    2,638       2,778       (5.04 )%
Fee and commission expenses
    (457 )     (494 )     (7.49 )%
Net gains (losses) on financial assets and liabilities
    446       1,018       (56.19 )%
Net exchange differences
    352       142       147.89 %
Other operating income
    1,755       1,931       (9.11 )%
Other operating expenses
    (1,487 )     (1,718 )     (13.45 )%
             
Gross income
    10,380       9,626       7.83 %
Administration costs
    (3,734 )     (3,816 )     (2.15 )%
Personnel expenses
    (2,291 )     (2,343 )     (2.22 )%
General and administrative expenses
    (1,443 )     (1,473 )     (2.04 )%
Depreciation and amortization
    (354 )     (338 )     4.73 %
Provisions (net)
    (152 )     (612 )     (75.16 )%
Impairment on financial assets (net)
    (1,945 )     (1,164 )     67.08 %
             
Net operating income
    4,195       3,696       13.50 %
Impairment on other assets (net)
    (271 )     (6 )     n.m. (1)
 
                       
Gains (losses) in written off assets not classified as non-current assets held for sale
    9       21       (57.64 )%
 
                       
Gains (losses) in non-current assets held for sale not classified as discontinued operations
    70       779       (91.01 )%
             
Income before tax
    4,003       4,490       (10.85 )%
Income tax
    (961 )     (1,213 )     (20.80 )%
             
Net income
    3,042       3,277       (7.17 )%
Profit or loss attributed to minority interest
    (243 )     (169 )     43.79 %
             
Net income attributed to parent company
    2,799       3,108       (9.95 )%
 
(*)   EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004
 
(1)   Not meaningful
     Period-on-period comparisons of the BBVA Group’s results of operations for the six months ended June 30, 2009 compared to for the six months ended June 30, 2008 are affected by a series of one-off items during the first half of 2008:
  a before-tax credit of 727 million (509 million net of tax) on the sale of the Group’s investment in Bradesco which principally affected gains (losses) in non-current assets held for sale not classified as discontinued operations; and
 
  a before-tax charge of 470 million (329 million net of tax) in connection with a non-recurring early retirement scheme implemented in Spain as part of the Group’s Transformation Plan.
     The net impact in net income attributed to parent company of these items, was the recognition of additional non-recurring income in the amount of 180 million in the first half of 2008.

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     Net interest income
     The following table summarizes the principal components of net interest income for the six months ended June 30, 2009 compared to the six months ended June 30, 2008.
                         
    Six months ended June 30,   Change
    2009   2008   2009/2008
    (millions of euros)   (%)
Interest and similar income
    12,911       14,782       (12.66 )%
Interest expense and similar charges
    (6,053 )     (9,227 )     (34.40 )%
 
                       
Net interest income
    6,858       5,555       23.46 %
 
                       
     Net interest income for the six months ended June 30, 2009 was 6,858 million, a 23.46% increase over the 5,555 million recorded for the six months ended June 30, 2008. This growth, against a backdrop of slowing business volumes and declining interest rates, primarily reflects the widening in customer spreads and active balance sheet management.
     Dividend income
     Dividend income for the six months ended June 30, 2009 was 248 million, in line with the 241 million recorded for the six months ended June 30, 2008, due primarily to dividends received from Telefónica, S.A.
     Share of profit or loss of entities accounted for using the equity method
     Share of profit or loss of entities accounted for using the equity method for the six months ended June 30, 2009 was 27 million, a 84.39% decrease from the 173 million recorded for the six months ended June 30, 2008, due primarily to a significant decrease in the amount contributed by Corporación IBV (16 million for the six months ended June 30, 2009 compared to 145 million for the six months ended June 30, 2008), primarily as a result of our sale of our interest in Gamesa Corporación Tecnológica, S.A. in 2008.
     Fee and commission income
     The breakdown of fee and commission income for the six months ended June 30, 2009 and 2008 is as follows:
                         
    Six months ended June 30,     Change  
    2009   2008   2009/2008
    (millions of euros)   (%)
Commitment fees
    44       28       57.14 %
Contingent Liabilities
    130       118       10.17 %
Documentary credits
    21       21       n.m. (1)
Bank and other guarantees
    109       97       12.37 %
Arising from exchange of foreign currencies and banknotes
    6       11       (45.45 )%
Collection and payment services
    1,268       1,313       (3.43 )%
Securities services
    836       983       (14.95 )%
Counseling on and management of one-off transactions
    2       6       (66.67 )%
Financial and similar counseling services
    11       11       n.m. (1)
Factoring transactions
    6       14       (53.85 )%
Non-banking financial products sales
    46       52       (11.54 )%
Other fees and commissions
    289       242       19.42 %
 
                       
Fee and commission income
    2,638       2,778       (5.04 )%
 
                       
 
(1)   Not meaningful

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     Fee and commission income for the six months ended June 30, 2009 amounted to 2,638 million, a 5.04% decrease from 2,778 million for the six months ended June 30, 2008, due mainly to the decrease in fee and commission income from mutual funds. Fee and commission income from mutual funds, which is recorded under the heading “Securities services”, decreased as a result of a decrease in mutual fund assets under management for the six months ended June 30, 2009 compared to the six months ended June 30, 2008 as a result of the negative performance of equity markets for the six months ended June 30, 2009 compared to the six months ended June 30, 2008 and, in markets such as Spain, the transfer of customer funds out of mutual funds, the value of which decreased by 24.16% as of June 30, 2009 from June 30, 2008, into time deposits.
     Fee and commission expenses
     The breakdown of fee and commission expenses for the six months ended June 30, 2009 and 2008 is as follows:
                         
    Six months ended June 30,   Change
    2009   2008   2009/2008
    (millions of euros)   (%)
Brokerage fees on lending and deposit transactions
    3       5       (40.00 )%
Fees and commissions assigned to third parties
    335       302       10.93 %
Other fees and commissions
    119       187       (36.36 )%
             
Fee and commission expenses
    457       494       (7.49 )%
             
     Fee and commission expenses for the six months ended June 30, 2009 amounted to 457 million, a 7.49% decrease from 494 million for the six months ended June 30, 2008, mainly due to a 36.36% decrease in other fees and commissions to 119 million for the six months ended June 30, 2009 from 187 million for the six months ended June 30, 2008 due to a decrease in insurance fee and commission expenses.
     Net gains (losses) on financial assets and liabilities and exchange differences
     Net gains (losses) on financial assets and liabilities for the six months ended June 30, 2009 amounted to 446 million, a 56.19% decrease from 1,018 million for the six months ended June 30, 2008, due primarily to the lower results generated by the Global Markets unit as a result of lower activity given market volatility. In addition, net gains (losses) on financial assets and liabilities for the six months ended June 30, 2008 included non-recurring gains of 125 million from the receipt of proceeds from Visa Inc.’s equity offering. Net exchange differences amounted to 352 million, an increase of 147.89% from 142 million for the six months ended June 30, 2008.
      Other operating income and expenses
     Other operating income amounted to 1,755 million for the six months ended June 30, 2009, a 9.11% decrease compared with 1,931 million for the six months ended June 30, 2008 primarily due to the lower volume of insurance policies written. Other operating expenses for the six months ended June 30, 2009 amounted to 1,487 million, a 13.45% decrease compared with the 1,718 million recorded for the six months ended June 30, 2008 primarily due to a decrease in commissions payable to sales agents as a result of the decrease in activity described above. As a result of the fact that other operating income decreased at a slower pace than other operating expenses, the net variation in operating income and expenses was a 25.82% increase with respect to the six months ended June 30, 2008.
      Gross income
     As a result of the foregoing, gross income for the six months ended June 30, 2009 was 10,380 million, a 7.83% increase over the 9,626 million recorded for the six months ended June 30, 2008.
     Administration costs
     Administration costs for the six months ended June 30, 2009 were 3,734 million, a 2.15% decrease over 3,816 million recorded for the six months ended June 30, 2008, due primarily to cost controls derived from the transformation and restructuring plans initiated in 2006, which resulted in the number of employees of the Group declining to 103,656 as of June 30, 2009 from 112,059 as of June 30, 2008.

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     The table below provides a breakdown of personnel expenses for the six months ended June 30, 2009 and 2008.
                         
    Six months ended June 30,   Change
    2009   2008   2009/2008
    (millions of euros)   (%)
Wages and salaries
    1,754       1,796       (2.34 )%
Social security costs
    276       288       (4.17 )%
Transfers to internal pension provisions
    22       31       (29.03 )%
Contributions to external pension funds
    34       33       3.03 %
Other personnel expenses
    205       195       5.13 %
 
                       
Personnel expenses
    2,291       2,343       (2.22 )%
 
                       
     The table below provides a breakdown of general and administrative expenses for the six months ended June 30, 2009 and 2008.
                         
    Six months ended June 30,   Change
    2009   2008   2009/2008
    (millions of euros)   (%)
Technology and systems
    279       290       (3.79 )%
Communications
    128       125       2.40 %
Advertising
    127       135       (5.93 )%
Property, fixtures and materials
    309       294       5.10 %
Taxes other than income tax
    129       169       (23.67 )%
Other expenses
    471       460       2.39 %
             
General and administrative expenses
    1,443       1,473       (2.04 )%
             
     Depreciation and amortization
     Depreciation and amortization for the six months ended June 30, 2009 amounted to 354 million, a 4.84% increase over the 338 million recorded for the six months ended June 30, 2008, due primarily to the increase in amortization of software and properties.
     Provisions (net)
     Provisions (net) for the six months ended June 30, 2009 were 152 million, with an important decrease compared with the 612 million recorded for the six months ended June 30, 2008, primarily due to the larger provisions for early retirement recorded in the first half of 2008.
     Impairment on financial assets (net)
     Impairment on financial assets (net) was 1,945 million for the six months ended June 30, 2009, a 67.08% increase over the 1,164 million recorded for the six months ended June 30, 2008, due primarily to an increase in provisions in connection with the significant increase in substandard loans from 8,728 million as of June 30, 2008 to 11,914 million as of June 30, 2009, due primarily to the deterioration of the economic environment. The Group’s non-performing loan ratio increased substantially to 3.2% as of June 30, 2009 from 2.3% as of June 30, 2008. In addition, the Group’s coverage ratio dropped significantly to 68% as of June 30, 2009 from 167% as of June 30, 2008 mainly due to the write-offs made during the six months ended June 30, 2009.
     Net operating income
     As a result of the foregoing, net operating income for the six months ended June 30, 2009 was 4,195 million, a 13.50% increase over the 3,696 million recorded for the six months ended June 30, 2008.
     Impairment on other assets (net)
     Impairment on other assets (net) for the six months ended June 30, 2009 amounted to 271 million, an increase from the 6 million recorded for the six months ended June 30, 2008, due primarily to impairment charges for investments in tangible assets and inventories from our real estate businesses.
     Gains (losses) in written off assets not classified as non-current assets held for sale
     Gains (losses) in written off assets not classified as non-current assets held for sale for the six months ended June 30, 2009 amounted to a gain of 9 million, a decrease from the 21 million gain recorded for the six months ended June 30, 2008.

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     Gains (losses) in non-current assets held for sale not classified as discontinued operations
     Gains (losses) in non-current assets held for sale not classified as discontinued operations for the six months ended June 30, 2009 amounted to a gain of 70 million, a 91.01% decrease from the 779 million gain recorded for the six months ended June 30, 2008. For the six months ended June 30, 2008 the gains (losses) in non-current assets held for sale not classified as discontinued operations, was primarily affected by a gross gain of 727 million from the sale of our stake in Bradesco.
     Income before tax
     As a result of the foregoing, income before tax for the six months ended June 30, 2009 was 4,003 million, a 10.85% decrease from the 4,490 million recorded for the six months ended June 30, 2008.
     Income tax
     Income tax for the six months ended June 30, 2009 amounted to 961 million, a 20.80% decrease from the 1,213 million recorded for the six months ended June 30, 2008, due to lower income before tax and higher income exempt from tax.
     Net income
     As a result of the foregoing net income for the six months ended June 30, 2009 was 3,042 million, a 7.17% decrease from the 3,277 million recorded for the six months ended June 30, 2008.
     Profit or loss attributable to minority interest
     Profit or loss attributable to minority interest for the six months ended June 30, 2009 was 243 million, a 44.05% increase over the 169 million recorded for the six months ended June 30, 2008, due primarily to greater profits obtained by certain of our Latin American subsidiaries, primarily in Venezuela, Peru and Chile, which have minority shareholders.
     Net income attributed to parent company
     Net income attributed to parent company for the six months ended June 30, 2009 was 2,799 million, a 9.95% decrease from the 3,108 million recorded for the six months ended June 30, 2008. Excluding the one-off items in the first half of 2008 described above, the net income attributed to parent company for the six months ended June 30, 2008 was 2,928 million.
Results of Operations by Business Areas for the Six Months Ended June 30, 2009 Compared to the Six Months Ended June 30, 2008
      Spain and Portugal
                         
    Six months ended June 30,   Change
    2009   2008   2009/2008
    (in millions of euros)   (%)
NET INTEREST INCOME
    2,458       2,331       5.45 %
Net fees and commissions
    756       825       (8.38 )%
Net gains (losses) on financial assets and liabilities and exchange differences
    110       136       (19.12 )%
Other operating income and expenses (net)
    234       222       5.70 %
GROSS INCOME
    3,558       3,514       1.26 %
Administration costs
    (1,170 )     (1,249 )     (6.33 )%
Depreciation and amortization
    (53 )     (59 )     (9.50 )%
Impairment on financial assets (net)
    (504 )     (351 )     43.30 %
Provisions (net) and other gains (losses)
    (21 )     8       n.m. (1)
INCOME BEFORE TAX
    1,810       1,863       (2.86 )%
Income tax
    (540 )     (571 )     (5.51 )%
NET INCOME
    1,270       1,292       (1.69 )%
Profit or loss attributed to minority interest
                n.m. (1)
NET INCOME ATTRIBUTED TO PARENT COMPANY
    1,270       1,292       (1.69 )%
 
(1)   Not meaningful

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     Net interest income
     Net interest income for the six months ended June 30, 2009 was 2,458 million, a 5.45% increase over the 2,331 million recorded for the six months ended June 30, 2008, due to a successful pricing policy. Interest rate cuts did not prevent the yield on loans to domestic customers in Spain from continuing its upward trend of the last two years. However, this was partially offset by an increase in the costs of deposits, mainly due to structural changes in customer funds, with time deposits playing an ever-increasing role.
     Net fees and commissions
     Net fees and commissions of this business area amounted to 756 million for the six months ended June 30, 2009, a 8.38% decrease from the 825 million recorded for the six months ended June 30, 2008, due primarily to the drop in fees from mutual and pension funds and other market-related products.
     Net gains (losses) on financial assets and liabilities and exchange differences
     Net gains on financial assets and liabilities and exchange differences of this business area for the six months ended June 30, 2009 was 110 million, a 19.12% decrease from the net gains of 136 million for the six months ended June 30, 2008, due primarily to lower activity levels given market volatility.
     Other operating income and expenses (net)
     Other operating income and expenses (net) of this business area for the six months ended June 30, 2009 was 234 million, a 5.70% increase over the 222 million recorded for the six months ended June 30, 2008, mainly due to decreased expenses related to this business area’s insurance businesses.
     Gross income
     As a result of the foregoing, gross income of this business area for the six months ended June 30, 2009 was 3,558 million, a 1.26% increase over the 3,514 million recorded for the six months ended June 30, 2008.
     Administration costs
     Administration costs of this business area for the six months ended June 30, 2009 was 1,170 million, a 6.33% decrease from the 1,249 million recorded for the six months ended June 30, 2008, due primarily to the Group’s transformation plan, which helped to reduce wages and salaries, and thorough continued streamlining of the branch network.
     Impairment on financial assets (net)
     Impairment on financial assets (net) of this business for the six months ended June 30, 2009 was 504 million, a 43.59% increase over the 351 million recorded for the six months ended June 30, 2008, due primarily to the significant increase in substandard loans as a result of the economic downturn. The business area’s non-performing loan ratio increased substantially to 3.7% as of June 30, 2009 from 1.2% as of June 30, 2008.
     Income before tax
     As a result of the foregoing, income before tax of this business area for the six months ended June 30, 2009 was 1,810 million, a 2.86% decrease from the 1,863 million recorded for the six months ended June 30, 2008.
     Income tax
     Income tax of this business area for the six months ended June 30, 2009 was 540 million, a 5.51% decrease from the 571 million recorded for the six months ended June 30, 2008, primarily as a result of the decrease in income before tax.
     Net income attributed to parent company
     As a result of the foregoing, net income attributed to parent company of this business area for the six months ended June 30, 2009 was 1,270 million, a 1.69% decrease from the 1,292 million recorded for the six months ended June 30, 2008.

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     Wholesale Banking and Asset Management
                         
    Six months ended June 30,   Change
    2009   2008   2009/2008
    (in millions of euros)   (%)
NET INTEREST INCOME
    573       259       120.84 %
Net fees and commissions
    262       210       24.45 %
Net gains (losses) on financial assets and liabilities and exchange differences
    49       294       (83.46 )%
Other operating income and expenses (net)
    139       257       (45.94 )%
GROSS INCOME
    1,022       1,020       0.18 %
Administration costs
    (259 )     (246 )     5.28 %
Depreciation and amortization
    (5 )     (4 )     25.00 %
Impairment on financial assets (net)
    (14 )     (78 )     (82.05 )%
Provisions (net) and other gains (losses)
          5       n.m. (1)
INCOME BEFORE TAX
    744       697       6.72 %
Income tax
    (203 )     (138 )     47.70 %
NET INCOME
    541       559       (3.34 )%
Profit or loss attributed to minority interest
    (2 )     (2 )     0.00 %
NET INCOME ATTRIBUTED TO PARENT COMPANY
    539       557       (3.35 )%
 
(1)   Not meaningful.
     Net interest income and net gains (losses) on financial assets and liabilities and exchange differences
     For internal management purposes, “net interest income” and “net gains (losses) on financial assets and liabilities and exchange differences” for this business area are analyzed together. Net interest income includes the cost of funding of the market operations whose revenues are accounted for in the heading “Net gains (losses) on financial assets and liabilities and exchange differences”.
     Net interest income amounted to 573 million for the six months ended June 30, 2009, compared to 259 million for the six months ended June 30, 2008. Net gains (losses) on financial assets and liabilities and exchange differences amounted to 49 million, compared to 294 million for the six months ended June 30, 2008. The sum of these heading for the six months ended June 30, 2009 was 622 million, a 12.48% increase over the 553 million recorded for the six months ended June 30, 2008, due primarily to active price management and an increase in the number of customer transactions.
     Net fees and commissions
     Net fees and commissions of this business area for the six months ended June 30, 2009 was 262 million, a 24.45% increase from 210 million recorded for the six months ended June 30, 2008, mainly due to the fact that the area has increased its strategic focus on customers with the potential to generate high business volumes.
     Other operating income and expenses (net)
     Other operating income and expenses (net) of this business area for the six months ended June 30, 2009 was 139 million, a decrease of 45.94% from the 257 million recorded for the six months ended June 30, 2008, primarily reflecting the gains recognized on the sale of ownership interests in Gamesa in 2008.
     Gross income
     As a result of the foregoing, gross income of this business area for the six months ended June 30, 2009 was 1,022 million, a 0.18% increase from the 1,020 million recorded for the six months ended June 30, 2008.
     Administration costs
     Administration costs of this business area for the six months ended June 30, 2009 were 259 million, a 5.28% increase over the 246 million recorded for the six months ended June 30, 2008, due primarily to an increase in the variable remuneration of the employees during the period in connection with growth of business in the area.
     Impairment on financial assets (net)
     Impairment on financial assets (net) of this business area for the six months ended June 30, 2009 was 14 million, an 82.05% decrease from the 78 million recorded for the six months ended June 30, 2008,

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mainly due to a lower risk profile with a focus on customers with higher credit quality and larger business potential. Despite this focus, the non-performing loan ratio of this business area was 0.7% as of June 30, 2009 compared to 0.0% as of June 30, 2008.
     Income before tax
     As a result of the foregoing, income before tax of this business area for the six months ended June 30, 2009 was 744 million, a 6.72% increase from the 697 million recorded for the six months ended June 30, 2008.
     Net income attributed to parent company
     Net income attributed to parent company of this business area for the six months ended June 30, 2009 was 539 million, a 3.35% decrease from the 557 million recorded for the six months ended June 30, 2008.
     Mexico
                         
    Six months ended June 30,     Change  
    2009     2008     2009/2008  
    (in millions of euros)     (%)  
NET INTEREST INCOME
    1,683       1,816       (7.36 )%
Net fees and commissions
    535       618       (13.44 )%
Net gains (losses) on financial assets and liabilities and exchange differences
    221       247       (10.22 )%
Other operating income and expenses (net)
    64       40       58.85 %
GROSS INCOME
    2,503       2,721       (8.01 )%
Administration costs
    (753 )     (847 )     (11.10 )%
Depreciation and amortization
    (33 )     (40 )     (19.60 )%
Impairment on financial assets (net)
    (740 )     (448 )     65.30 %
Provisions (net) and other gains (losses)
    (15 )     (64 )     (76.40 )%
INCOME BEFORE TAX
    962       1,322       (27.26 )%
Income tax
    (237 )     (372 )     (36.50 )%
NET INCOME
    725       950       (23.64 )%
Profit or loss attributed to minority interest
    (1 )           n.m. (1)
NET INCOME ATTRIBUTED TO PARENT COMPANY
    724       950       (23.70 )%
 
(1)   Not meaningful.
     As discussed above under “Presentation of Financial Information Factors Affecting the Comparability of our Results of Operations and Financial Condition”, the average Mexican peso to euro exchange rate for the six months ended June 30, 2009 increased compared to the average exchange rate for the six months ended June 30, 2008 resulting in a negative exchange rate effect on the income statement for the six months ended June 30, 2009.
     Net interest income
     Net interest income of this business area for the six months ended June 30, 2009 was 1,683 million, a 7.36% decrease from the 1,816 million recorded for the six months ended June 30, 2008. However, at constant exchange rates, net interest income actually climbed 5.2% year-on-year, due primarily to the strong performance in retail banking (where demand deposits and customer loans both registered growth), as well as an active pricing policy. Positive price management has helped the area offset the current product-portfolio’s lower contribution to net interest income. The percentage of higher-margin products held or used by the area’s customers has decreased (namely, consumer credit and cards), which has been partially offset by the increase in lower-margin products (lending to SMEs, corporations and mortgages) held by or used by the area’s customers. Despite the decrease for the six months ended June 30, 2009 compared to the same period in 2008, conditions in Mexico gradually improved as the first half of 2009 progressed. Interbank interest rates continued falling in the second quarter of 2009 (the average Interbank Equilibrium Interest Rate (TIIE) was 5.9%, compared to 8.0% in the first quarter of 2009). This decrease, together with the adjustment in business mix (less weight given to consumer finance and credit cards), was reflected in the yield on loans. The latter fell 88 basis points compared to the first quarter of 2009 and the cost of deposits retreated 74 basis points compared to the first quarter of 2009. This led to a slight narrowing of the customer spread, which was 11.82% in the second quarter of 2009 compared to 11.96% in the first of 2009.

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     Net fees and commissions
     Net fees and commissions of this business area for the six months ended June 30, 2009 was 535 million, a 13.44% decrease from the 618 million recorded for the six months ended June 30, 2008, due primarily to the lower pace of growth in credit cards.
     Net gains (losses) on financial assets and liabilities and exchange differences
     Net gains (losses) on financial assets and liabilities and exchange differences of this business area for the six months ended June 30, 2009 was 221 million, a 10.22% decrease from the 247 million for the six months ended June 30, 2008. The first half of 2008 included non-recurring gains from the sales of shares in the initial public offering of Visa Inc. and there was no comparable transaction in the first half of 2009.
     Other operating income and expenses (net)
     Other operating income and expenses (net) of this business area for the six months ended June 30, 2009 was 64 million a 58.85% increase over the 40 million recorded for the six months ended June 30, 2008, due primarily to an increase in income from the pension and insurance businesses.
     Gross income
     As a result of the foregoing, gross income of this business area for the six months ended June 30, 2009 was 2,503 million, a 8.01% decrease from the 2,721 million recorded for the six months ended June 30, 2008.
     Administration costs
     Administration costs of this business area for the six months ended June 30, 2009 were 753 million, a 11.10% decrease from the 847 million recorded for the six months ended June 30, 2008. In the latter part of 2008 we instituted certain cost-control programs to limit the rate of local currency growth in administration costs in this business area, whose effects began to be felt in the first half of 2009.
     Impairment on financial assets (net)
     Impairment on financial assets (net) of this business area for the six months ended June 30, 2009 was 740 million, a 65.30% increase over the 448 million recorded for the six months ended June 30, 2009 due primarily to increases from the consumer loan and credit card segments due to a general deterioration in economic conditions. As of June 30, 2009, the non-performing loan ratio stood at 3.9%, increasing significantly from 2.3% as of June 30, 2008.
     Income before tax
     As a result of the foregoing, income before tax of this business area for the six months ended June 30, 2009 was 962 million, a 27.26% decrease compared to the 1,322 million recorded for the six months ended June 30, 2008.
     Net income attributed to parent company
     Net income attributed to parent company of this business area for the six months ended June 30, 2009 was 724 million, a 23.70% decrease over the 950 million recorded for the six months ended June 30, 2008.

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United States
                         
    Six months ended June 30,   Change
    2009   2008   2009/2008
    (in millions of euros)   (%)
NET INTEREST INCOME
    743       634       17.21 %
Net fees and commissions
    279       269       3.68 %
Net gains (losses) on financial assets and liabilities and exchange differences
    75       80       (5.83 )%
Other operating income and expenses (net)
    (25 )     15       n.m. (1)
GROSS INCOME
    1,072       998       7.51 %
Administration costs
    (541 )     (518 )     4.44 %
Depreciation and amortization
    (106 )     (118 )     (10.17 )%
Impairment on financial assets (net)
    (277 )     (123 )     n.m. (1)
Provisions (net) and other gains (losses)
    (21 )     5       n.m. (1)
INCOME BEFORE TAX
    127       244       (47.99 )%
Income tax
    (42 )     (80 )     (47.84 )%
NET INCOME
    85       164       (48.06 )%
Profit or loss attributed to minority interest
                n.m. (1)
NET INCOME ATTRIBUTED TO PARENT COMPANY
    85       164       (48.06 )%
 
(1)   Not meaningful.
     As discussed above under “Presentation of Financial Information Factors Affecting the Comparability of our Results of Operations and Financial Condition”, the average dollar to euro exchange rate for the six months ended June 30, 2009 decreased compared to the average exchange rate for the six months ended June 30, 2008 resulting in a positive exchange-rate effect on the income statement for the six months ended June 30, 2009.
     Net interest income
     Net interest income of this business area for the six months ended June 30, 2009 was 743 million, a 17.21% increase (an increase of 2.1% at constant exchange rates) over the 634 million recorded for the six months ended June 30, 2008, due to increased volumes of activity, a lower average dollar/euro, exchange rate and our active pricing policy.
     Net fees and commissions
     Net fees and commissions of this business area for the six months ended June 30, 2009 was 279 million, a 3.68% increase over the 269 million recorded for the six months ended June 30, 2008.
     Net gains (losses) on financial assets and liabilities and exchange differences
     Net gains (losses) on financial assets and liabilities and exchange differences of this business area for the six months ended June 30, 2009 were 75 million, a 5.83% decrease compared to the 80 million recorded for the six months ended June 30, 2008.
     Other operating income and expenses (net)
     Other operating income and expenses (net) of this business area for the six months ended June 30, 2009 was a loss of 25 million, compared to a gain of 15 million recorded for the six months ended June 30, 2008, due primarily to higher contributions to the deposit guarantee fund, as a result of the one-off $28 million contribution made during the second quarter of 2009 to the Federal Deposit Insurance Corporation (FDIC).
     Gross income
     As a result of the foregoing, gross income of this business area for the six months ended June 30, 2009 was 1,072 million, a 7.51% increase over the 998 million recorded for the six months ended June 30, 2008.
     Administration costs
     Administration costs of this business area for the six months ended June 30, 2009 were 541 million, a 4.44% increase over the 518 million recorded for the six months ended June 30, 2008 primarily as a result of the exchange rate effects described above.
     Impairment on financial assets (net)
     Impairment on financial assets (net) for the six months ended June 30, 2009 was 277 million, compared with 123 million recorded for the six months ended June 30, 2008, due to the write off impaired

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assets in light of the country’s economic situation.The non-performing loans ratio was 4.5% as of June 30, 2009, increasing sharply from 2.4% as of June 30, 2008.
     Income before tax
     As a result of the foregoing, the income before tax of this business area for the six months ended June 30, 2009 was 127 million, a 47.99% decrease from the 244 million recorded for the six months ended June 30, 2008.
     Net income attributed to parent company
     Net income attributed to parent company of this business area for the six months ended June 30, 2009 was 85 million, a 48.06% decrease from the 164 million for the six months ended June 30, 2008.
South America
                         
    Six months ended June 30,   Change
    2009   2008   2009/2008
    (in millions of euros)   (%)
NET INTEREST INCOME
    1,210       999       21.18 %
Net fees and commissions
    410       369       11.08 %
Net gains (losses) on financial assets and liabilities and exchange differences
    265       138       92.26 %
Other operating income and expenses (net)
    (9 )     1       n.m. (1)
GROSS INCOME
    1,876       1,507       24.52 %
Administration costs
    (687 )     (622 )     10.45 %
Depreciation and amortization
    (57 )     (48 )     19.70 %
Impairment on financial assets (net)
    (212 )     (144 )     47.00 %
Provisions (net) and other gains (losses)
    (8 )     1       n.m. (1)
INCOME BEFORE TAX
    912       694       31.33 %
Income tax
    (202 )     (169 )     19.22 %
NET INCOME
    710       525       35.23 %
Profit or loss attributed to minority interest
    (247 )     (174 )     41.54 %
NET INCOME ATTRIBUTED TO PARENT COMPANY
    463       351       32.09 %
 
(1)   Not meaningful.
     As discussed above under “Factors Affecting the Comparability of our Results of Operations and Financial Condition”, in 2009, the depreciation of certain of the currencies in the countries in which we operate in South America against the euro negatively affected the results of operations of certain of our Latin American our subsidiaries in euro terms where the appreciation of certain currencies in other countries in which we operate in South America against the euro positively affected the results of operations of certain our Latin American subsidiaries in euro terms.
     Net interest income
     Net interest income of this business area for the six months ended June 30, 2009 was 1,210 million, a 21.18% increase over the 999 million recorded for the six months ended June 30, 2008, due primarily to the larger business volumes (as of June 30, 2009, lending increased 11.5% compared to the loan book as of June 30, 2008) and more favorable customers spreads.
     Net Fees and Commissions
     Net fees and commissions of this business area for the six months ended June 30, 2009 was 410 million, an 11.08% increase over the 369 million recorded for the six months ended June 30, 2009, mainly due to an increase in banking commissions due primarily a larger business volumes.
     Net gains (losses) on financial assets and liabilities and exchange differences
     Net gains (losses) on financial assets and liabilities and exchange differences of this business area for the six months ended June 30, 2009 was 265 million, a 92.26% increase over the 138 million recorded for the six months ended June 30, 2008, due to recovery in the financial markets, which enabled some entities to realize capital gains on their fixed income portfolios as well as higher returns on proprietary trading positions held by the pension fund managers and insurance providers.
     Gross income
     As a result of the foregoing, the gross income of this business area for the six months ended June 30, 2009 was 1,876 million, a 24.52% increase over the 1,507 million recorded for the six months ended June 30, 2008.

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     Administration costs
     Administration costs of this business area for the six months ended June 30, 2009 were 687 million, a 10.45% increase over the 622 million recorded for the six months ended June 30, 2008, due primarily to growth rates that were in line with average inflation in the region.
     Impairment on financial assets (net)
     Impairment on financial assets (net) of this business area for the six months ended June 30, 2009 was 212 million, a 47.00% increase over the 144 million recorded for the six months ended June 30, 2008, mainly due to generic provisions attributable to the rise in lending volume as under Bank of Spain rules recently-made loans require higher generic provisions than older loans in our portfolio. The business area’s non-performing loan ratio was 2.6% as of June 30, 2009 compared to 2.2% as of June 30, 2008.
     Income before tax
     As a result of the foregoing, income before tax of this business area for the six months ended June 30, 2009 was 912 million, a 31.33% increase over the 694 million recorded for the six months ended June 30, 2008.
     Net income attributed to parent company
     Net income attributed to parent company of this business area for the six months ended June 30, 2009 was 463 million, a 32.09% increase over the 351 million for the six months ended June 30, 2008.
Corporate Activities
                         
    Six months ended June 30,   Change
    2009   2008   2009/2008
    (in millions of euros)   (%)
NET INTEREST INCOME
    192       (484 )     n.m. (1)
Net fees and commissions
    (60 )     (7 )     n.m. (1)
Net gains (losses) on financial assets and liabilities and exchange differences
    78       265       (70.34 )%
Other operating income and expenses (net)
    139       93       50.08 %
GROSS INCOME
    349       (133 )     n.m. (1)
Administration costs
    (324 )     (335 )     (3.28 )%
Depreciation and amortization
    (99 )     (69 )     44.10 %
Impairment on financial assets (net)
    (199 )     (18 )     n.m. (1)
Provisions (net) and other gains (losses)
    (280 )     225       n.m. (1)
INCOME BEFORE TAX
    (552 )     (331 )     67.01 %
Income tax
    262       117       123.98 %
NET INCOME
    (290 )     (214 )     35.86 %
Profit or loss attributed to minority interest
    7       9       (16.91 )%
NET INCOME ATTRIBUTED TO PARENT COMPANY
    (283 )     (205 )     38.14 %
 
(1)   Not meaningful.
     Net interest income
     Net interest income of this business area for the six months ended June 30, 2009 was 192 million, compared to a loss of 484 million recorded for the six months ended June 30, 2008, due primarily to the favorable impact of lower interest rates and our strong balance sheet management.
     Net gains (losses) on financial assets and liabilities and exchange differences
     Net gains (losses) on financial assets and liabilities and exchange differences of this business area for the six months ended June 30, 2009 were 78 million, a 70.34% decrease from the 265 million recorded for the six months ended June 30, 2008. The first half of 2008 included 106 million of non-recurring gains from the sale of shares in the initial public offering of Visa Inc. and there was no comparable transaction in the first half of 2009.
     Other operating income and expense (net)
     Other income (net) of this business area for the six months ended June 30, 2009 was 139 million, a 50.08% increase over the 93 million recorded for the six months ended June 30, 2008, due to lower income from non-banking businesses.

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     Gross income
     As a result of the foregoing, gross income of this business area for the six months ended June 30, 2009 was 349 million, compared with a loss of 133 million recorded for the six months ended June 30, 2008.
     Administration costs
     Administration costs of this business area for the six months ended June 30, 2009 were 324 million, a 3.28% decrease from the 335 million recorded for the six months ended June 30, 2008, due to the effectiveness of cost controls derived from the transformation and restructuring plans in Group’s headquarters.
     Impairment on financial assets (net)
     Impairment on financial assets (net) for the six months ended June 30, 2009 came to 199 million, compared with the 18 million recorded in the same period in 2008, due primarily to the increase of country risk provisions related to Brazil due to the reclassification of Brazil as a “country with transitory difficulties” by the Bank of Spain.
     Provisions (net) and other gains (losses)
     Provisions (net) and other gains (losses) of this business area for the six months ended June 30, 2009 was a loss of 280 million, compared with a gain of 225 million recorded for the six months ended June 30, 2008, due primarily to impairments derived from investments in tangible assets and inventories from our real estate businesses in the first half of 2009; whereas, in the first half of 2008 the unit recognized one-off gains and losses relating to the sale of a stake in Bradesco and exceptional early employee retirements.
     Income before tax
     As a result of the foregoing, income before tax of this business area for the six months ended June 30, 2009 was a loss of 552 million, compared with a loss of 331 million recorded for the six months ended June 30, 2008.
     Net income attributed to parent company
     Net income attributed to parent company of this business area for the six months ended June 30, 2009 was a loss of 283 million, compared with a loss of 205 million for the six months ended June 30, 2008. Stripping out the aforementioned non-recurring gains in 2008, the loss for the six months ended June 30, 2008 would have been 385 million.
Material Differences between U.S. GAAP and EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004
     Our Interim Consolidated Financial Statements have been prepared in accordance with EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004, which differ in certain respects from U.S. GAAP. The tables included in Exhibit I: U.S. GAAP Reconciliation, give the effect that application of U.S. GAAP would have on net income for the period and stockholders’ equity as reported under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004.
Reconciliation to U.S. GAAP
     As of June 30, 2009, December 31, 2008 and June 30, 2008, shareholders’ equity attributable to parent company under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 was 28,682 million, 25,656 million and 25,094 million, respectively.
     As of June 30, 2009, December 31, 2008 and June 30, 2008, shareholders’ equity attributable to parent company in accordance with U.S. GAAP was 35,706 million, 32,744 million and 32,994 million, respectively.
     The increase in shareholders’ equity attributable to parent company under U.S. GAAP as of June 30, 2009, December 31, 2008 and June 30, 2008 as compared to shareholders’ equity attributable to parent company under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 at each of those dates is principally due to the goodwill that arose from the business combinations with Argentaria (2000) and BBVA Bancomer, S.A. de C.V. (2004).
     For the six months ended June 30, 2009, the year ended December 31, 2008 and for the six months ended June 30, 2008, net income attributed to parent company under the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 was 2,799 million, 5,020 million and 3,108 million, respectively.

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     For the six months ended June 30, 2009, the year ended December 31, 2008 and for the six months ended June 30, 2008, net income under U.S. GAAP was 2,692 million, 4,070 million and 2,770 million, respectively.
     The differences in net income for the six months ended June 30, 2009 under U.S. GAAP as compared with net income attributed to parent company for the six months ended June 30, 2009 under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 are principally due to the reconciliation item “Valuation of assets”.
     See Exhibit I: U.S. GAAP Reconciliation, for a quantitative reconciliation of net income attributed to parent company and stockholders’ equity from EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 to U.S. GAAP.
Liquidity and Capital Resources
     Our principal source of funds is our customer deposit base, which consists primarily of demand, savings and time deposits. In addition to relying on our customer deposits, we also access the interbank market (overnight and time deposits) and domestic and international capital markets for our additional liquidity requirements. To access the capital markets, we have in place a series of domestic and international programs for the issuance of commercial paper and medium- and long-term debt. We also generally maintain a diversified portfolio of liquid assets and securitized assets. Another source of liquidity is our generation of cash flow. Finally, we supplement our funding requirements, to a very limited extent, with borrowings from the Bank of Spain, mostly short-term and at market interest rates, which is a common practice in Spain.
     The following table shows the balances as of June 30, 2009 and December 31, 2008 of our principal sources of funds (including accrued interest, hedge transactions and issue expenses):
                 
    As of June 30,   As of December 31,
    2009   2008
    (in millions of euros)
Customer deposits
    249,096       255,236  
Due to credit entities
    76,919       66,805  
Debt securities in issue
    119,489       121,144  
Other financial liabilities
    6,985       7,420  
       
Total
    452,489       450,605  
       
     Customer deposits
     Customer deposits amounted to 249,096 million as of June 30, 2009, compared to 255,236 million as of December 31, 2008. Our customer deposits, excluding assets sold under repurchase agreements amounted to 236,792 million as of June 30, 2009, compared to 239,007 million as of December 31, 2008.
     Due to credit entities
     Amounts due to credit entities amounted to 76,919 million as of June 30, 2009 from 66,805 million as of December 31, 2008. The increase was primarily a result of our participation in an auction in the European Central Bank for an amount of 11,000 million.
     Capital markets
     We have increased debt issuances in the domestic and international capital markets in order to finance our activities and as of June 30, 2009 we had 102,486 million of senior debt outstanding, comprising 74,296 million in bonds and debentures and 28,190 million in promissory notes and other securities, compared to 104,157 million, 84,172 million and 19,985 million outstanding as of December 31, 2008, respectively. See Note 22.4 to the Interim Consolidated Financial Statements. In addition, we had a total of 10,826 million in subordinated debt and 5,506 million in preferred stock outstanding as of June 30, 2009, and included in the total of debt securities in issue, compared to 10,785 million and 5,464 million outstanding as of December 31, 2008, respectively. See Note 22.4 to the Interim Consolidated Financial Statements.
     The average maturity of our outstanding debt as of June 30, 2009 was the following:
         
Senior debt
  4.5 years
Subordinated debt (excluding preference shares)
  8.4 years

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     The cost and availability of debt financings are influenced by credit ratings. A reduction in these ratings could increase the cost of, and reduce our access to, debt financing. As of June 30, 2009, our credit ratings were as follows:
                                 
 
  Short   Long   Financial  
 
  Term   Term   Strength   Outlook
Moody’s
    P-1     Aa1     B     Stable
Fitch-IBCA
    F-1+     AA-     A/B     Positive
Standard & Poor’s
    A-1+     AA         Negative
     On July 31, 2009, Moody’s Investor Service lowered BBVA’s senior debt rating to “Aa2” with “negative outlook” from “Aa1” with “stable outlook” and affirmed BBVA’s short-term ratings at “P-1”. On the same date, Moody’s Investor Service also confirmed the ratings of BBVA’s covered bonds (Aaa), senior debt (Aa2) and subordinated debt (Aa3) and lowered the ratings of BBVA’s preferred shares from Aa3 to A2.
     Generation of Cash Flow
     We operate in Spain, Mexico, the United States and over 30 other countries, mainly in Europe and Latin America. Our banking subsidiaries around the world are subject to supervision and regulation by a variety of regulatory bodies relating to, among other things, the satisfaction of minimum capital requirements. The obligation to satisfy such capital requirements may affect the ability of our banking subsidiaries to transfer funds to our parent company in the form of cash dividends, loans or advances, capital repatriation or otherwise. In addition, under the laws of the various jurisdictions where our subsidiaries are incorporated, dividends may only be paid out of funds legally available therefor.
     Even where minimum capital requirements are met and funds are legally available therefor, the relevant regulator could advise against the transfer of funds to us in the form of cash dividends, loans or advances, for prudence reasons or otherwise.
     There is no assurance that in the future other similar restrictions will not be adopted or that, if adopted, they will not negatively affect our liquidity. The geographic diversification of our businesses, however, could help to limit the effect on the Group any restrictions that could be adopted in any given country.
     We believe that our working capital is sufficient for our present requirements and to pursue our planned business strategies.
     Capital
     Under the Bank of Spain’s capital adequacy regulations, as of June 30, 2009 and December 31, 2008, we were required to have a ratio of consolidated stockholders’ equity to risk-weighted assets and off-balance sheet items (net of certain amounts) of not less than 8%. As of June 30, 2009, this ratio was 11.33%, up from 11.17% as of December 31, 2008, and our stockholders’ equity exceeded the minimum level required by 41.6%, up from 39.7% as of December 31, 2008.
     Based on the framework of Basel II and using such additional assumptions as we consider appropriate, we have estimated that as of June 30, 2009 and December 31, 2008 our consolidated Tier I risk-based capital ratio was 8.2% and 7.9%, respectively, and our consolidated total risk-based capital ratio (consisting of both Tier I capital and Tier II capital) was as of each such date 12.2%. Basel II recommends that these ratios be at least 4% and 8%.

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Off-Balance Sheet Arrangements
     In addition to loans, we had outstanding the following contingent liabilities and commitments as of each of the dates indicated:
                 
    As of June 30,   As of December 31,
    2009   2008
    (in millions of euros)
Contingent liabilities:
               
Rediscounts, endorsements and acceptances
    42       81  
Guarantees and other sureties
    27,014       27,649  
Other contingent liabilities
    7,365       8,222  
 
               
Total contingent liabilities
    34,421       35,952  
 
               
Commitments:
               
Balances drawable by third parties:
               
Credit entities
    2,254       2,021  
Public authorities
    3,417       4,221  
Other domestic customers
    33,091       37,529  
Foreign customers
    46,378       48,892  
 
               
Total balances drawable by third parties
    85,140       92,663  
Other commitments
    7,583       6,234  
 
               
Total commitments
    92,723       98,897  
 
               
Total contingent liabilities and commitments
    127,144       134,849  
 
               
     In addition to the contingent liabilities and commitments described above, the following table provides information regarding off-balance-sheet funds managed by us as of June 30, 2009 and December 31, 2008:
                 
            As of
    As of June   December 31,
    30, 2009   2008
    (in millions of euros)
Mutual funds
    38,453       37,076  
Pension funds
    51,291       42,701  
Other managed assets
    25,636       24,582  
 
               
Total
    115,380       104,359  
 
               
     See Note 37 to the Interim Consolidated Financial Statements for additional information with respect to our off-balance sheet arrangements.
MAJOR SHAREHOLDERS
     As of June 30, 2009 to our knowledge, no person, corporation or government owned beneficially, directly or indirectly, five percent or more of BBVA’s shares. BBVA’s major shareholders do not have voting rights which are different from those held by the rest of its shareholders. To the extent known to us, BBVA is not controlled, directly or indirectly, by any other corporation, government or any other natural or legal person. As of June 30, 2009, there were 923,005 registered holders of BBVA’s shares, with 3,747,969,121 shares, of which 207 shareholders with registered addresses in the United States hold a total of 799,073,996 shares (including shares represented by American Depositary Receipts (“ADRs”)). Since certain of such shares and ADRs are held by nominees, the foregoing figures are not representative of the number of beneficial holders. BBVA’s directors and executive officers did not own any ADRs as of June 30, 2009.
SUBSEQUENT EVENTS
     Between July 1, 2009 and the date of this filing Form 6-K, other events have taken place as follows:
  On July 8, 2009, the BBVA Board of Directors approved the distribution, as the first gross interim dividend against 2009 results, of a dividend of 0.09 per issued and outstanding BBVA ordinary share. The dividend was paid on July 10, 2009, according to the regulations applicable to the depositary entities.
  On August 21, 2009, BBVA Compass announced that it acquired the banking operations of Guaranty Bank based in Austin, Texas from the Federal Deposit Insurance Corporation (FDIC), effective immediately. BBVA Compass acquired $12.0 billion of assets and assumed $11.5 billion of deposits and entered into a loss sharing agreement with the FDIC that covers all of the acquired loans, where

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    the FDIC will bear 80% of the first $2.3 billion of losses and 95% of the losses above that threshold. At the date of acquisition, Guaranty Bank operated 105 branches in Texas and 59 branches in California.
The acquisition results in BBVA Compass being the 15th largest U.S. commercial bank in terms of deposits with approximately $49 billion in deposits and operations in seven high growth markets in the Sunbelt: Texas, Alabama, Arizona, California, Florida, Colorado and New Mexico. This strategic acquisition significantly strengthens BBVA Compass’ existing presence in Texas, solidifying its ranking as the 4th largest bank in Texas based on its deposit market share, which increased from 4.9% to 6.4% as a result of the acquisition. The acquisition also extends BBVA Compass’ general banking business into the attractive, high growth California market.
The financial statements of the business acquired are not presented seperately because none of the conditions required by Rule 3-05 of Regulations S-X are satisfied.
  On September 25, 2009, BBVA sold 948 fixed assets (mainly branch offices and various individual properties) to a third-party real estate investor. At the same time, BBVA signed a sale and leaseback long-term contract with such investor, which includes an option to repurchase the properties at fair values, exercisable by the Group on the agreed dates (in most cases, the termination date of each lease agreement). The price of sale was 1,154 million, generating capital gains of approximately 830 million.
  On September 29, 2009, the BBVA Board of Directors approved the distribution, as the second gross interim dividend against 2009 results, of a dividend of 0.09 per issued and outstanding BBVA ordinary share. The dividend will be paid as of October 12, 2009, according to the regulations applicable to the depositary entities through which payment will be made.
  On September 29, 2009, the BBVA Board of Directors agreed to appoint D. Ángel Cano Fernández as President and Chief Operating Officer, in substitution of D. José Ignacio Goirigolzarri Tellaeche who leaves the Board.
  On September 30, 2009, BBVA issued bonds in an aggregate principal amount of 2,000 million mandatorily convertible into ordinary shares of BBVA on October 15, 2014. Before this date, the bonds are convertible into ordinary shares at BBVA’s option on the terms set forth in the corresponding prospectus, which was registered with the Spanish National Securities Market Commission on September 17, 2009.

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BANCO BILBAO VIZCAYA ARGENTARIA, S.A. AND
COMPANIES COMPOSING THE BANCO BILBAO VIZCAYA
ARGENTARIA GROUP
Unaudited Interim Consolidated Financial Statements and
Explanatory Notes for the six months ended June 30, 2009

 


Table of Contents

CONTENTS
         
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
       
 
    F-4  
 
    F-7  
 
    F-8  
 
    F-10  
 
    F-11  
 
       
 
    F-13  
 
    F-15  
 
    F-38  
 
    F-41  
 
    F-41  
 
    F-42  
 
    F-44  
 
    F-61  
 
    F-66  
 
    F-67  
 
    F-69  
 
    F-70  
 
    F-71  
 
    F-73  
 
    F-73  
 
    F-75  
 
    F-76  
 
    F-78  
 
    F-79  
 
    F-80  
 
    F-81  
 
    F-82  
 
    F-87  
 
    F-88  
 
    F-88  
 
    F-93  
 
    F-94  
 

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    F-95  
 
    F-95  
 
    F-98  
 
    F-99  
 
    F-99  
 
    F-101  
 
    F-101  
 
    F-101  
 
    F-101  
 
    F-102  
 
    F-103  
 
    F-106  
 
    F-106  
 
    F-106  
 
    F-107  
 
    F-107  
 
    F-108  
 
    F-108  
 
    F-111  
 
    F-111  
 
    F-112  
 
    F-112  
 
    F-112  
 
    F-112  
 
    F-113  
 
    F-114  
 
    F-115  
 
    F-119  
 
    F-119  
 
    F-120  
 

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APPENDIX
       
 
    F-121  
 
    F-130  
 
    F-143  
 
    F-145  
 
    F-146  
 
    F-148  
 
    F-152  
 
    F-153  
 
    F-156  
 

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BANCO BILBAO VIZCAYA ARGENTARIA, S.A. AND COMPANIES COMPOSING THE BANCO BILBAO
VIZCAYA ARGENTARIA GROUP
UNAUDITED CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2009 AND DECEMBER 31, 2008 (Notes 1 to 5)
                         
            Millions of euros
    Note   June-09   December-08(*)
 
ASSETS
                       
CASH AND BALANCES WITH CENTRAL BANKS
    9       23,053       14,659  
             
FINANCIAL ASSETS HELD FOR TRADING
    10       71,064       73,299  
             
Loans and advances to credit institutions
                   
             
Loans and advances to customers
                   
             
Debt securities
            32,618       26,556  
             
Other equity instruments
            4,650       5,797  
             
Trading derivatives
            33,796       40,946  
             
OTHER FINANCIAL ASSETS DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS
    11       2,088       1,754  
             
Loans and advances to credit institutions
                   
             
Loans and advances to customers
                   
             
Debt securities
            518       516  
             
Other equity instruments
            1,570       1,238  
             
AVAILABLE-FOR-SALE FINANCIAL ASSETS
    12       57,385       47,780  
             
Debt securities
            49,619       39,831  
             
Other equity instruments
            7,766       7,949  
             
LOANS AND RECEIVABLES
    13       352,905       369,494  
             
Loans and advances to credit institutions
            24,533       33,856  
             
Loans and advances to customers
            327,926       335,260  
             
Debt securities
            446       378  
             
HELD-TO-MATURITY INVESTMENTS
    14       5,099       5,282  
             
FAIR VALUE CHANGES OF THE HEDGED ITEMS IN PORTFOLIO HEDGES OF INTEREST RATE RISK
                   
             
HEDGING DERIVATIVES
    15       3,804       3,833  
             
NON-CURRENT ASSETS HELD FOR SALE
    16       1,023       444  
             
INVESTMENTS IN ENTITIES ACCOUNTED FOR USING THE EQUITY METHOD
    17       1,407       1,467  
             
Associates
            942       894  
             
Jointly controlled entities
            465       573  
             
INSURANCE CONTRACTS LINKED TO PENSIONS
                   
             
REINSURANCE ASSETS
    18       40       29  
             
TANGIBLE ASSETS
    19       6,502       6,908  
             
Property, plants and equipment
            4,818       5,174  
             
Own use
            4,127       4,442  
             
Other assets leased out under an operating lease
            691       732  
             
Investment properties
            1,684       1,734  
             
INTANGIBLE ASSETS
    20       8,363       8,439  
             
Goodwill
            7,609       7,659  
             
Other intangible assets
            754       780  
             
TAX ASSETS
    32       5,987       6,484  
             
Current
            1,155       1,266  
             
Deferred
            4,832       5,218  
             
OTHER ASSETS
    21       3,914       2,778  
             
Inventories
            1,636       1,066  
             
Other
            2,278       1,712  
             
TOTAL ASSETS
            542,634       542,650  
 
(*)   Presented for comparison purposes only.
The accompanying Notes 1 to 57 and Appendices I to IX are an integral part of the consolidated balance sheet as of June 30, 2009.

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BANCO BILBAO VIZCAYA ARGENTARIA, S.A. AND COMPANIES COMPOSING THE BANCO BILBAO
VIZCAYA ARGENTARIA GROUP
UNAUDITED CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2009 AND DECEMBER 31, 2008 (Notes 1 to 5)
                         
            Millions of euros
    Note   June-09   December-08(*)
 
LIABILITIES AND EQUITY
                       
FINANCIAL LIABILITIES HELD FOR TRADING
    10       37,529       43,009  
             
Deposits from central banks
                   
             
Deposits from credit institutions
                   
             
Deposits from customers
                   
             
Debt certificates
                   
             
Trading derivatives
            35,139       40,309  
             
Short positions
            2,390       2,700  
             
Other financial liabilities
                   
             
OTHER FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS
    11       1,295       1,033  
             
Deposits from central banks
                   
             
Deposits from credit institutions
                   
             
Deposits from customers
                   
             
Debt certificates
                   
             
Subordinated liabilities
                   
             
Other financial liabilities
            1,295       1,033  
             
FINANCIAL LIABILITIES AT AMORTISED COST
    22       452,489       450,605  
             
Deposits from central banks
            26,979       16,844  
             
Deposits from credit institutions
            49,940       49,961  
             
Deposits from customers
            249,096       255,236  
             
Debt certificates
            102,486       104,157  
             
Subordinated liabilities
            17,003       16,987  
             
Other financial liabilities
            6,985       7,420  
             
FAIR VALUE CHANGES OF THE HEDGED ITEMS IN PORTFOLIO HEDGES OF INTEREST RATE RISK
                   
             
HEDGING DERIVATIVES
    15       1,525       1,226  
             
LIABILITIES ASSOCIATED WITH NON-CURRENT ASSETS HELD FOR SALE
    16              
             
LIABILITIES UNDER INSURANCE CONTRACTS
    23       6,822       6,571  
             
PROVISIONS
    24       8,588       8,678  
             
Provisions for pensions and similar obligations
            6,296       6,359  
             
Provisions for taxes
            299       263  
             
Provisions for contingent exposures and commitments
            355       421  
             
Other provisions
            1,638       1,635  
             
TAX LIABILITIES
    32       1,726       2,266  
             
Current
            409       984  
             
Deferred
            1,317       1,282  
             
OTHER LIABILITIES
    21       2,759       2,557  
             
TOTAL LIABILITIES
            512,733       515,945  
 
(*)   Presented for comparison purposes only.

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Table of Contents

                         
            Millions of euros
    Note   June-09   December-08(*)
 
LIABILITIES AND EQUITY (Continuation)
                       
STOCKHOLDERS’ FUNDS
            29,383       26,586  
             
Capital
    27       1,837       1,837  
             
Issued
            1,837       1,837  
             
Unpaid and uncalled (-)
                   
             
Share premium
    28       12,453       12,770  
             
Reserves
    29       12,309       9,410  
             
Accumulated reserves (losses)
            11,866       8,801  
             
Reserves (losses) of entities accounted for using the equity method
            443       609  
             
Other equity instruments
            8       89  
             
Equity component of compound financial instruments
            1        
             
Other
            7       89  
             
Less: Treasury shares
    30       (23 )     (720 )
             
Income attributed to the Group
            2,799       5,020  
             
Less: Dividends and remuneration
                  (1,820 )
             
VALUATION ADJUSTMENTS
            (701 )     (930 )
             
Available-for-sale financial assets
    12       1,081       931  
             
Cash flow heges
            285       207  
             
Hedges of net investment in a foreign operations
            180       247  
             
Exchange differences
            (2,179 )     (2,231 )
             
Non-current assets helf for sale
                   
             
Entities accounted for using the equity method
            (68 )     (84 )
             
Other valuation adjustments
                   
             
MINORITY INTERESTS
    26       1,219       1,049  
             
Valuation adjustments
            (144 )     (175 )
             
Other
            1,363       1,224  
             
TOTAL STOCKHOLDERS’ EQUITY
            29,901       26,705  
             
TOTAL LIABILITIES AND EQUITY
            542,634       542,650  
 
                         
    Note   June-09   December-08(*)
 
CONTINGENT EXPOSURES
    33       34,421       35,952  
             
CONTINGENT COMMITMENTS
    33       92,723       98,897  
 
(*)   Presented for comparison purposes only.
The accompanying Notes 1 to 57 and Appendices I to IX are an integral part of the consolidated balance sheet as of June 30, 2009.

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BANCO BILBAO VIZCAYA ARGENTARIA, S.A. AND COMPANIES COMPOSING THE BANCO BILBAO
VIZCAYA ARGENTARIA GROUP
UNAUDITED CONSOLIDATED INCOME STATEMENTS FOR THE SIX MONTHS PERIODS ENDED JUNE 30, 2009
AND 2008 (Notes 1 to 5)
                         
            Millions of euros
    Notes   June-09   June-08(*)
 
INTEREST AND SIMILAR INCOME
    38       12,911       14,782  
             
INTEREST EXPENSE AND SIMILAR CHARGES
    38       (6,053 )     (9,227 )
             
NET INTEREST INCOME
            6,858       5,555  
             
DIVIDEND INCOME
    39       248       241  
             
SHARE OF PROFIT OR LOSS OF ENTITIES ACCOUNTED FOR USING THE EQUITY METHOD
    40       27       173  
             
FEE AND COMMISSION INCOME
    41       2,638       2,778  
             
FEE AND COMMISSION EXPENSES
    42       (457 )     (494 )
             
NET GAINS (LOSSES) ON FINANCIAL ASSETS AND LIABILITIES
    43       446       1,018  
             
Held for trading
            136       280  
             
Other financial instruments at fair value through profit or loss
            29       17  
             
Other financial instruments not at fair value through profit or loss
            281       721  
             
Other
                   
             
NET EXCHANGE DIFFERENCES
            352       142  
             
OTHER OPERATING INCOME
    44       1,755       1,931  
             
Income on insurance and reinsurance contracts
            1,313       1,518  
             
Financial income from non-financial services
            229       228  
             
Rest of other operating income
            213       185  
             
OTHER OPERATING EXPENSES
    44       (1,487 )     (1,718 )
             
Expenses on insurance and reinsurance contracts
            (936 )     (1,226 )
             
Changes in inventories
            (191 )     (195 )
             
Rest of other operating expenses
            (360 )     (297 )
             
GROSS INCOME
            10,380       9,626  
             
ADMINISTRATION COSTS
    45       (3,734 )     (3,816 )
             
Personnel expenses
            (2,291 )     (2,343 )
             
General and administrative expenses
            (1,443 )     (1,473 )
             
DEPRECIATION AND AMORTIZATION
            (354 )     (338 )
             
PROVISIONS (NET)
    46       (152 )     (612 )
             
IMPAIRMENT ON FINANCIAL ASSETS (NET)
    47       (1,945 )     (1,164 )
             
Loans and receivables
            (1,869 )     (1,141 )
             
Other financial instruments not at fair value through profit or loss
            (76 )     (23 )
             
NET OPERATING INCOME
            4,195       3,696  
             
IMPAIRMENT ON OTHER ASSETS (NET)
    48       (271 )     (6 )
             
Goodwill and other intangible assets
    20              
             
Other assets
            (271 )     (6 )
             
GAINS (LOSSES) IN WRITTEN OFF ASSETS NOT CLASSIFIED AS NON-CURRENT ASSETS HELD FOR SALE
    49       9       21  
             
NEGATIVE GOODWILL
                   
             
GAINS (LOSSES) IN NON-CURRENT ASSETS HELD FOR SALE NOT CLASSIFIED AS DISCONTINUED OPERATIONS
    50       70       779  
             
INCOME BEFORE TAX
            4,003       4,490  
             
INCOME TAX
    32       (961 )     (1,213 )
             
INCOME FROM ORDINARY ACTIVITIES
            3,042       3,277  
             
INCOME FROM DISCONTINUED OPERATIONS (NET)
                   
             
NET INCOME
            3,042       3,277  
             
Net Income attributed to parent company
            2,799       3,108  
             
Profit or loss attributable to minority interest
    26       243       169  
             
                         
            Units of euros
            June-09   June-08 (*)
             
EARNINGS PER SHARE FOR CONTINUING OPERATIONS
    5                  
             
Basic earnings per share
            0.76       0.84  
             
Diluted earnings per share
            0.76       0.84  
 
(*)   Presented for comparison purposes only. Income statement and income statement derived information for the six months ended June 30, 2008 have been restated as mentioned in Note 1.3 to consolidated financial statements.
The accompanying Notes 1 to 57 and Appendices I to IX are an integral part of the consolidated income statement for the six months period ended June 30, 2009.

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BANCO BILBAO VIZCAYA ARGENTARIA, S.A. AND COMPANIES COMPOSING THE BANCO BILBAO
VIZCAYA ARGENTARIA GROUP
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE SIX MONTHS PERIODS ENDED
JUNE 30, 2009 AND 2008 (Notes 1 to 5)
                                                                                                         
    Millions of euros
    Total equity attributed to the parent company        
    Stockholders’ funds                        
                    Reserves                                                    
                            Reserves                   Profit for                                
                            (losses           Less:   the   Less:                            
    Share                   entities           Treasur   period   dividends                            
    Capital           Reserves   accoun-ted           y shares   attributed   and   Total                   Minority   Total
    (Note   Share   (acumulated   for equity   Other equity   (Note   to parent   remune-   stockholders   Valuation           interest   Stockholders’
    27)   premium   losses)   method)   instruments   30)   company   rations   funds   adjustments   Total   (Note 26)   equity
 
Balances at January 1, 2009
    1,837       12,770       8,801       609       89       720       5,020       1,820       26,586       (930 )     25,656       1,049       26,705  
Effects of changes in accounting policies
                                                                             
Effect of correction of errors
                                                                             
Adjusted initial balance
    1,837       12,770       8,801       609       89       720       5,020       1,820       26,586       (930 )     25,656       1,049       26,705  
Total income/expense recognized
                                        2,799             2,799       229       3,028       275       3,303  
Other changes in equity
          (317 )     3,065       (166 )     (81 )     (697 )     (5,020 )     (1,820 )     (2 )           (2 )     (105 )     (107 )
Increased of capital
                                                                             
Capital reduction
                                                                             
Conversion of financial liabilities into capital
                                                                             
Increase of other equity instruments
                            6                         6             6             6  
Reclassification of financial liabilities to other equity instruments
                                                                             
Reclassification of other equity instruments to financial liabilities
                                                                             
Dividend distribution
                                                                      (102 )     (102 )
Transactions including treasury shares and other equity instruments (net)
                (305 )                 (697 )                 392             392             392  
Transfers between total equity entries
                3,359       (159 )                 (5,020 )     (1,820 )                              
Increase/Reduction in business combinations
                                                                             
Payments with equity instruments
          (317 )                 (87 )                       (404 )           (404 )           (404 )
Rest of increase/reductions in total equity
                11       (7 )                             4             4       (3 )     1  
     
Balances as of June 30, 2009
    1,837       12,453       11,866       443       8       23       2,799             29,383       (701 )     28,682       1,219       29,901  
 

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    Millions of euros
    Total equity attributed to the parent company        
    Stockholders’ funds            
                    Other           Profit for the            
    Share           equity           year attributed       Minority   Total
    Capital   Share   instru-   Less: Treasury   to parent   Valuation   interest   Stockholders’
    (Note 27)   premium   ments   shares (Note 30)   company   adjustments   (Note 26)   equity
 
Balances at January 1, 2008
    1,837       17,169       68       (389 )     6,126       2,252       880       27,943  
Effects of changes in accounting policies
                                               
Effect of correction of errors
                                               
Adjusted initial balance
    1,837       17,169       68       (389 )     6,126       2,252       880       27,943  
Total income/expense recognized
                            3,108       (3,008 )     115       215  
Other changes in equity
          4,321       19       (283 )     (6,126 )           (119 )     (2,188 )
Increased of capital
                                               
Capital reduction
                                               
Conversion of financial liabilities into capital
                                               
Increase of other equity instruments
                                               
Reclassification of financial liabilities to other equity instruments
                                               
Reclassification of other equity instruments to financial liabilities
                                               
Dividend distribution
          1,041                   (2,663 )           (114 )     (1,736 )
Transactions including treasury shares and other equity instruments (net)
          (129 )     19       (283 )                       (393 )
Transfers between total equity entries
          3,463                   (3,463 )                  
Increase/Reduction in business combinations
          (8 )                             (3 )     (11 )
Payments with equity instruments
                                               
Rest of increase/reductions in total equity
          (46 )                             (2 )     (48 )
     
Balances as of June 30, 2008
    1,837       21,490       87       (672 )     3,108       (756 )     876       25,970  
 
(*)   Presented for comparison purposes only.
The accompanying Notes 1 to 57 and Appendices I to IX are an integral part of the consolidated statement of changes in equity for the six months period ended June 30, 2009.

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BANCO BILBAO VIZCAYA ARGENTARIA, S.A. AND COMPANIES COMPOSING THE BANCO BILBAO VIZCAYA ARGENTARIA GROUP
UNAUDITED CONSOLIDATED STATEMENTS OF RECOGNIZED INCOME AND EXPENSE FOR THE SIX MONTHS PERIODS ENDED JUNE 30, 2009 AND 2008 (Notes 1 to 5)
                 
    Millions of euros
    June-09   June-08(*)
 
NET INCOME RECOGNISED DIRECTLY IN EQUITY
    3,042       3,277  
     
OTHER RECOGNIZED INCOME (EXPENSES)
    264       (3,062 )
     
Available-for-sale financial assets
    233       (3,117 )
     
Revaluation gains/losses
    478       (1,723 )
     
Amounts removed to income statement
    (245 )     (1,394 )
     
Reclassifications
           
     
Cash flow hedges
    117       (211 )
     
Revaluation gains/losses
    119       (211 )
     
Amounts removed to income statement
    (2 )      
     
Amounts removed to the initial carrying amount of the hedged items
           
     
Reclassifications
           
     
Hedges of net investment in foreign operations
    (64 )     166  
     
Revaluation gains/losses
    (64 )     166  
     
Amounts removed to income statement
           
     
Reclassifications
           
     
Exchange differences
    66       (899 )
     
Translation gains/losses
    66       (899 )
     
Amounts removed to income statement
           
     
Reclassifications
           
     
Non-current assets held for sale
           
     
Revaluation gains
           
     
Amounts removed to income statement
           
     
Reclassifications
           
     
Actuarial gains and losses in post-employment plans
           
     
Entities accounted for using the equity method
    23       3  
     
Valuation gains/losses
    23       3  
     
Amounts removed to income statement
           
     
Reclassifications
           
     
Rest of recognized income and expenses
           
     
Income tax
    (111 )     996  
     
TOTAL RECOGNIZED INCOME/EXPENSES
    3,301       215  
     
Attributed to the parent company
    3,026       100  
     
Attributed to minority interest
    275       115  
 
(*)   Presented for comparison purposes only.
The accompanying Notes 1 to 57 and Appendices I to IX are an integral part of the consolidated statement of recognized income and expenses for the six months period ended June 30, 2009.

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BANCO BILBAO VIZCAYA ARGENTARIA, S.A. AND COMPANIES COMPOSING THE BANCO BILBAO VIZCAYA ARGENTARIA GROUP
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS PERIODS ENDED JUNE 30, 2009 AND JUNE 30, 2008 (Notes 1 to 5)
                 
    Millions of euros
    June-09   June-08(*)
 
CASH FLOW FROM OPERATING ACTIVITIES (1)
    8,530       (8,765 )
     
Consolidated profit for the period
    3,042       3,277  
     
Adjustments to obtain the cash flow from operating activities:
    453       177  
     
Depreciation and amortization
    354       338  
     
Other adjustments
    99       (161 )
     
Net increase/decrease in operating assets
    7,485       (15,394 )
     
Financial assets held for trading
    2,235       3,474  
     
Other financial assets designated at fair value through profit or loss
    (334 )     59  
     
Available-for-sale financial assets
    (9,875 )     2,284  
     
Loans and receivables
    16,297       (19,891 )
     
Other operating assets
    (838 )     (1,320 )
     
Net increase/decrease in operating liabilities
    (3,410 )     1,962  
     
Financial liabilities held for trading
    (5,480 )     4,222  
     
Other financial liabilities designated at fair value through profit or loss
    262        
     
Financial liabilities at amortised cost
    1,885       (2,583 )
     
Other operating liabilities
    (77 )     323  
     
Collection/Payments for income tax
    960       1,213  
     
CASH FLOWS FROM INVESTING ACTIVITIES (2)
    75       1,144  
     
Investment
    (177 )     (194 )
     
Tangible assets
    (16 )      
     
Intangible assets
           
     
Investments
    (4 )     (40 )
     
Subsidiaries and other business units
    (7 )     (12 )
     
Non-current assets held for sale and associated liabilities
    (150 )     (142 )
     
Held-to-maturity investments
           
     
Other payments related to investing activities
           
     
Divestments
    252       1,338  
     
Tangible assets
          116  
     
Intangible assets
    27       101  
     
Investments
    14       65  
     
Subsidiaries and other business units
    27        
     
Non-current assets held for sale and associated liabilities
           
     
Held-to-maturity investments
    184       182  
     
Other collections related to investing activities
          874  
     
CASH FLOWS FROM FINANCING ACTIVITIES (3)
    (177 )     (1,667 )
     
Investment
    (3,583 )     (9,343 )
     
Dividends
    (625 )     (1,553 )
     
Subordinated liabilities
          151  
     
Amortization of own equity instruments
           
     
Acquisition of own equity instruments
    (2,774 )     (7,809 )
     
Other items relating to financing activities
    (184 )     (132 )
     
Divestments
    3,406       7,676  
     
Subordinated liabilities
    16        
     
Issuance of own equity instruments
           
     
Disposal of own equity instruments
    3,338       7,527  
     
Other items relating to financing activities
    52       149  
     
EFFECT OF EXCHANGE RATE CHANGES (4)
    (20 )     (888 )
     
NET INCREASE/DECREASE IN CASH OR CASH EQUIVALENTS (1+2+3+4)
    8,408       (10,176 )
     
CASH OR CASH EQUIVALENTS AT BEGINNING OF THE PERIOD
    14,642       22,561  
     
CASH OR CASH EQUIVALENTS AT END OF THE PERIOD
    23,050       12,385  
 

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    Millions of euros
    June-09   June-08(*)
 
COMPONENTS OF CASH AND EQUIVALENT AT END OF THE PERIOD
               
Cash
    3,069       2,723  
     
Balance of cash equivalent in central banks
    19,981       9,662  
     
Other financial assets
           
     
Less:bank overdraft refundable on demand
           
     
TOTAL CASH OR CASH EQUIVALENTS AT END OF THE PERIOD
    23,050       12,385  
     
Of which:
               
     
held by consolidated subsidiaries but not available for the Group
           
 
(*)   Presented for comparison purposes only. Cash flows and cash flows derived information for the six months ended June 30, 2008 have been restated as mentioned in Note 1.3 to consolidated financial statements.
The accompanying Notes 1 to 57 and Appendices I to IX are an integral part of the consolidated cash flow statement for the six months period ended June 30, 2009.

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BANCO BILBAO VIZCAYA ARGENTARIA, S.A. AND COMPANIES COMPOSING THE
BANCO BILBAO VIZCAYA ARGENTARIA GROUP
EXPLANATORY NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2009
1. INTRODUCTION, BASIS OF PRESENTATION OF THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS AND OTHER INFORMATION
1.1. INTRODUCTION
Banco Bilbao Vizcaya Argentaria, S.A. (“the Bank” or “BBVA”) is a private-law entity governed by the rules and regulations applicable to banks operating in Spain. The Bank leads its business through branches and offices located throughout Spain and abroad.
The bylaws of association and other public information on the Bank can be consulted both at its registered office (Plaza San Nicolás, 4, Bilbao) and on its official website, www.bbva.com.
In addition to the operations carried on directly by it, the Bank is the head of a group of subsidiaries, jointly controlled entities and associates that engage in various business activities and which compose, together with the Bank, the Banco Bilbao Vizcaya Argentaria Group (“the Group” or “BBVA Group”). Therefore, the Bank is obliged to prepare, in addition to its own financial statements the Group’s.
As of June 30, 2009 the Group was composed by 336 entities that were fully consolidated, 5 were consolidated by the proportionate method and 74 entities accounted for using the equity method (Notes 3 and 17 and appendix II to VI of the present interim consolidated financial statements).
The Group’s consolidated financial statements as of December 31, 2008 were approved by the shareholders at the Bank’s Annual General Meeting on March 13, 2009.
1.2. BASIS OF PRESENTATION OF THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
The Group’s interim consolidated financial statements are presented in accordance with the International Financial Reporting Standards endorsed by the European Union (“IFRS-EU”) applicable at six months ended June 30, 2009, and additionally considering Bank of Spain Circular 4/2004, of December 22, 2004 (and as amended thereafter). These Circular of the Bank of Spain are the legislation that enacts and adapts the IFRS-EU for Spanish banks.
The BBVA Group’s interim consolidated financial statements for the period from January, 1, 2009 and June 30, 2009 were prepared in accordance with the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004, and by applying the basis of consolidation, accounting policies and measurement bases described in Note 2, so that they present fairly the Group’s equity and financial position as of June 30, 2009 and the consolidated results of its operations, the changes in the consolidated equity, the changes in the consolidated recognized income and expenses and consolidated cash flows arising in the Group for the six months ended June 30, 2009. These interim consolidated financial statements and their explanatory notes were prepared on the basis of the accounting records kept by the Bank and by each of the other Group companies and include the adjustments and reclassifications required to unify the accounting policies and measurement bases used by the Group (Note 2.2).
All accounting policies and measurement bases with a significant effect on the consolidated financial statements were applied in their preparation.
Due to the fact that the numerical information contained in the annual consolidated financial statements is expressed in million of euros, except in certain cases where it is necessary to lower unit, certain captions that do not present any balance in the financial statements may present balance in euros. In addition, information regarding period-to-period changes is based on numbers not rounded.

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1.3. COMPARATIVE INFORMATION
The information contained in the interim consolidated financial statements and its explanatory notes referred to the year ended December 31, 2008 and the six months ended June 30, 2008 are presented solely for comparison purposes with respect to the information relating to the six months ended June 30, 2009.
The main differences between the information included in these consolidated interim financial statements for the six months ended June 30, 2008 and the previously disclosed interim information covering the same six-month period derive from the application of the financial statements formats laid down in Bank of Spain Circular 6/2008 issued in November 2008.
1.4. RESPONSIBILITY FOR THE INFORMATION AND FOR THE ESTIMATES MADE
The information in these BBVA Group consolidated financial statements is the responsibility of the Group’s directors.
In preparing these consolidated financial statements estimates were occasionally made by the Bank and the consolidated companies in order to quantify certain of the assets, liabilities, income, expenses and commitments reported herein. These estimates relate mainly to the following:
    The impairment losses on certain financial assets (Notes 7, 8, 11, 12, 13, 14 and 16).
 
    The assumptions used in the actuarial calculation of the post-employment benefit liabilities and commitments (Note 25).
 
    The useful life of tangible and intangible assets (Notes 19 and 20).
 
    The measurement of goodwill arising on consolidation (Notes 17 and 20).
 
    The fair value of certain unlisted assets (Note 7, 8, 10, 11, 12 and 15).
Although these estimates were made on the basis of the best information available as of June 30, 2009 on the events analysed, events that take place in the future might make it necessary to change these estimates (upwards or downwards) in coming periods.
1.5. ENVIRONMENTAL IMPACT
Given the activities in which the Group companies engage, the Group has no environmental liabilities, expenses, assets, provisions or contingencies that could have a significant effect on its consolidated equity, financial situation or performance. Consequently, there is no heading on the face of the Group’s consolidated interim financial statements at June 30, 2009 that requires disclosure in the environmental report stipulated under the Ministry of Economy Order of October 8, 2001 and the accompanying interim consolidated financial statements and explanatory notes do not include specific disclosures on environmental matters.
1.6. CAPITAL MANAGEMENT AND MINIMUM EQUITY REQUIRED
Capital requirements
Bank of Spain Circular 3/2008, of May 22, on the calculation and control of minimum capital requirements, regulates the minimum capital requirements for Spanish credit institutions –both as individual entities and as consolidated groups– and how to calculate them, as well as the various internal capital adequacy assessment processes they should have in place and the information they should disclose to the market.
This Circular is the final implementation, for credit institutions, of the Spanish legislation on capital and consolidated supervision of financial institutions, and the adaptation of Spanish legislation to corresponding directives of the European Union, based on the Accord adopted by the Basel Committee on Banking Supervision (“Basel II”) about the minimum capital requirements for credit institutions and their consolidable groups.
The minimum capital requirements established by the aforementioned Circular 3/2008 are calculated on the basis of the Group’s exposure to credit risk and dilution risk, to counterparty risk and position and settlement risk in the trading book, to foreign exchange risk and to operational risk.

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Additionally, the Group is subject to compliance with the risk concentration limits established in the aforementioned Circular and with the requirements concerning internal corporate governance, internal capital adequacy assessment, measurement of interest rate risk and information to be disclosed to the market also set forth therein.
With a view to guaranteeing compliance with the aforementioned objectives, the Group performs integrated management of these risks, in accordance with its internal policies (see Note 7).
As of June 30, 2009 and December 31, 2008 the eligible capital of the Group exceeded the minimum required under Circular 3/2008 (Note 31).
Capital management
New Basel Capital Accord — Basel II — Economic Capital
The Group’s capital management is performed at both regulatory and economic level.
Regulatory capital management is based on the analysis of the capital base and the capital ratios using the aforementioned Circular 3/2008 of Bank of Spain criteria (Note 31).
The aim is to achieve a capital structure that is as efficient as possible in terms of both cost and compliance with the requirements of regulators, ratings agencies and investors.
The Bank has obtained the approval by Bank of Spain of its internal model of capital estimation (IRB) in 2008 and the first semester 2009 for certain portfolios.
From an economic standpoint, capital management seeks to optimise value creation at the Group and at its different business units.
The Group allocates economic capital commensurate with the risks incurred by each business (CER). This is based on the concept of unexpected loss at a certain level of statistical confidence, depending on the Group’s targets in terms of capital adequacy. These targets are applied at two levels: the first is core equity, which determines the allocated capital. The Bank uses this amount as a basis for calculating the return generated on the equity in each business (ROE). The second level is total capital, which determines the additional allocation in terms of subordinate debt and preference shares. The CER calculation combines lending risk, market risk (including structural risk associated with the balance sheet and equity positions), operational risk and fixed asset and technical risks in the case of insurance companies.
Stockholders’ funds, as calculated under current regulation, are an extremely important reference to the entire Group. However, for the purpose of allocating capital to business areas the Bank prefers CeR (Note 6). It is risk-sensitive and thus linked to the management policies for the individual businesses and the business portfolio. This procedure, accord with Basel II rules on capital, provides an equitable basis for assigning capital to businesses according to the risks incurred and makes it easier to compare returns.
1.7. SEASONAL NATURE OF INCOME AND EXPENSES
The nature of the most significant activities and transactions carried out by the Group is mainly related to traditional activities carried out by financial institutions that are not affected by seasonal or cyclical factors.
2. BASIS OF CONSOLIDATION, ACCOUNTING POLICIES AND MEASUREMENT BASES APPLIED AND IFRS RECENT PRONOUNCEMENTS
Glossary (Appendix IX) to the accompanying interim consolidated financial statements includes the definition of financial and economic terms use in this Note 2 and subsequent explanatory notes.
2.1 BASIS OF CONSOLIDATION
The accounting policies and measurement bases used in preparing the Group’s interim consolidated financial statements as of June 30, 2009 may differ from those used by certain Group companies. For this reason, the required adjustments and reclassifications were made on consolidation to unify the policies and

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bases used and to make them compliant with EU-IFRSs required to be applied under the Bank of Spain’s Circular 4/2004.
The interim consolidated financial statements only include the results of companies acquired during the period for the period from the acquisition date until the balance sheet date.
In the Group there are three types of consolidated entities: subsidiaries, jointly controlled entities and associates.
Subsidiaries
The financial statements of the subsidiaries are fully consolidated with those of the Bank.
The share of minority shareholders of the subsidiaries in the Group’s net consolidated equity is presented under the heading “Minority Interests” in the consolidated balance sheet and their share in the profit or loss for the period is presented under the heading “Profit or loss attributed to minority interests” in the consolidated income statement (Note 26).
Note 3 contain information on the most significant investments and divestments in subsidiaries that took place as of June 30, 2009. Appendix II includes the most significant information on these companies.
Jointly controlled entities
Since the implementation of EU-IFRSs, the Group has pursued the following policy in relation to investments in jointly controlled entities:
- Jointly controlled financial entities. Since their corporate purpose is that of a financial entity, management considers that the best way of reflecting their activities within the Group’s consolidated financial statements is using the proportionate method of consolidation.
As of June 30, 2009, the contribution of jointly controlled financial entities to the principal magnitudes of the Group’s interim consolidated financial statements under the proportionate consolidation method and calculated on the basis of the interest held by the Group is depicted in the table below:
         
    Millions of euros
Group’s Asset
    380  
Group’s Liabilities
    255  
Group’s Equity
    26  
Group’s Consolidated profit
    7  
 
Additional disclosure is not provided as these investments are not material.
Appendix IV itemises the jointly controlled entities consolidated by the Group under the proportionate method, listing salient information for these companies.
- Jointly controlled non-financial entities. Management believes that the effect of breaking out the balance sheet and income statement headings of jointly controlled non-financial entities would distort the information provided to investors. For this reason, the equity method is considered the most appropriate way of recognising these investments.
Appendix V lists the main financial magnitudes for jointly controlled entities consolidated using the equity method. Note 17 discloses the impact that application of proportionate consolidation, would have had on the consolidated balance sheet and income statement.
Associates
Associates are companies in which the Group is able to exercise significant influence, without having control. Significant influence is deemed to exist when the Group owns 20% or more of the voting rights of an investee directly or indirectly.
However, certain entities in which the Group owns 20% or more of the voting rights are not included as Group associates, since it is considered that the Group does not have the capacity to exercise significant influence over these entities. The investments in these entities, which do not represent material amounts for the Group, are classified as available-for-sale investments.

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In addition, there are certain investments in entities in which the Group holds less than 20% of the voting rights are accounted for as Group associates based on the judgment that the Group has the power to exercise significant influence over these entities.
Investments in associates are accounted for using the equity method (Note 17). Appendix V includes the most significant information on these companies consolidated using the equity method.
2.2. ACCOUNTING POLICIES AND MEASUREMENT BASES APPLIED
The accounting policies and measurement bases used in preparing these interim consolidated financial statements were as follows:
2.2.1. FINANCIAL INSTRUMENTS
a) Measurement of financial instruments and recognition of changes arising from the measurement
All financial instruments are initially recognized at fair value which, in the absence of evidence to the contrary, shall be the transaction price. These instruments will subsequently be measured on the basis of their classification. The recognition of changes arising subsequent to the initial recognition is described below.
The change produced during the period, except in trading derivatives, arising in the period from the accrual of interests and similar items are recorded under the headings “Interest and Similar Income” or “Interest Expense and Similar Charges”, as appropriate, in the consolidated income statement of that period. The dividends accrued in the period are recorded under the heading “Dividend income” in the consolidated income statement of that period.
The changes in the measurements after the initial recognition, for reasons other than those of the preceding paragraph, are described below according to the categories of financial assets and liabilities:
- “Financial assets held for trading” and “Financial assets and liabilities designated at fair value through profit or loss”
Assets and liabilities recognized in these headings in the accompanying consolidated balance sheets are valued at fair value.
Changes arising from the valuation to fair value (gains or losses) are recognized, net amount, under the heading “Net gains (losses) on financial assets and liabilities” in the accompanying consolidated income statements. On the other hand, Valuation adjustments by changes in foreign exchange rates are recognized under the heading “Net exchange differences” in the accompanying consolidated income statements.
The fair value of the standard financial derivatives included in the held for trading portfolios is equal to their daily quoted price in an active market. If, under exceptional circumstances, their quoted price cannot be established on a given date, these derivatives are measured using methods similar to those used to measure over-the-counter (“OTC”) derivatives.
The fair value of OTC derivatives (“present value” or “theoretical close”) is equal to the sum of the future cash flows arising from the instrument, discounted at the measurement date; these derivatives are measured using methods recognized by the financial markets: net present value (NPV) method, option price calculation models, etc. (Note 8)
Financial derivatives that have as their underlying equity instruments, whose fair value cannot be determined in a sufficiently objective manner and are settled by delivery of those instruments, are measured at adquisition cost.
- “Available-for-Sale Financial Assets”
Assets and liabilities recognized in these headings in the accompanying consolidated balance sheets are valued at fair value.
Changes arising from the valuation to fair value (gains or losses) are recognized temporarily, net amount, under the heading “Valuation Adjustments — Available-for-Sale Financial Assets” in the accompanying consolidated balance sheets.

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Changes arising from non-monetary items by changes in foreign exchange rates are recognized temporarily under the heading “Valuation Adjustments — Exchange Differences” in the accompanying consolidated balance sheet. Valuation adjustments arising from monetary items by changes in foreign exchange rates are recognized under the heading “Net Exchange Differences” in accompanying the consolidated income statements.
The amounts recognized in the headings “Valuation Adjustments — Available-for-Sale Financial Assets” and “Valuation Adjustments — Exchange Differences” remain in the Group’s consolidated equity until the asset is derecognized from the consolidated balance sheet, at which time those amounts are recognized under the headings “Net gains (losses) on financial assets and liabilities” or “Net Exchange Differences” in the consolidated income statement of the period in which the asset is derecognized from the balance sheet.
The gains from sales of other equity instruments considered strategic investments accounted for as “Available-for-sale”, are registered on the heading “Gains (losses) in non-current assets held-for-sale not classified as discontinued operations” (Note 50) in the consolidated income statement, although they had not previously accounted for as non-current assets held-for-sale, as is indicated in Rule 56 of the Circular 4/2004 modified by the Circular 6/2008.
On the other hand, the impairment (net) losses in the available-for-sale financial assets arising in the period are recognized under the heading “Impairment of financial assets (net) – Other financial instruments not at fair value through profit or loss” in the consolidated income statements of that period.
- “Loans and receivables”, “Held-to-maturity investments” and “Financial liabilities at amortised cost”
Assets and liabilities recognized in these headings in the accompanying consolidated balance sheets are measured at “amortized cost” using the “effective interest rate” method, due to the fact that consolidated entities have the intention to hold them to maturity.
Impairment (net) losses in assets of these headings arising in the period are recognized under the headings “Impairment (net) – Loans and receivables” or “Impairment of financial assets (net) – Other financial instruments not at fair value through profit or loss” in the consolidated income statements of that period.
-“Hedging derivatives”
Assets and liabilities recognized in these headings in the accompanying consolidated balance sheets are valued at fair value.
Changes produced subsequent to the designation in the valuation of financial instruments designated as hedged items as well as financial instruments designated as hedging items are recognized based on the following criteria:
  §   In the fair value hedges, the changes in the fair value of the derivative and the hedged item attributable to the hedged risk are recognized directly in the heading “Net gains (losses) on financial assets and liabilities” in the consolidated income statement.
 
  §   In the cash flow hedges and net investments in a foreign operation hedges, the differences produced in the effective portions of hedging items are recognized temporarily under the heading “Valuation adjustments – Cash flow hedges” and “Valuation adjustments – Hedges of net investments in foreign operations”, respectively. These valuation changes are recognized in the heading “Net gains (losses) on financial assets and liabilities” in the consolidated income statement in the same period or periods during which the hedged instrument affects profit or loss, when forecast transaction occurs or at the maturity date of the item hedged.
Differences in valuation of the hedging item for ineffective portions of cash flow hedges and net investments in a foreign operation hedges are recognized directly in the heading “Net gains (losses) on financial assets and liabilities” in the consolidated income statement.
- “Other financial instruments”
In relation to the aforementioned general criteria, we must highlight the following exceptions:
  §   Equity instruments whose fair value cannot be determined in a sufficiently objective manner and financial derivatives that have those instruments as their underlying and are settled by delivery of

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      those instruments are measured at acquisition cost adjusted, where appropriate, by any related impairment loss.
 
  §   Valuation adjustments arising on financial instruments classified at Balance sheet date as non-current assets held for sale are recognized with a balancing entry under the heading “Valuation Adjustments — Non-Current Assets Held for Sale” of the consolidated balance sheet.
b) Impairment financial assets
Definition of impaired financial assets
A financial asset is considered to be impaired – and therefore its carrying amount is adjusted to reflect the effect of its impairment – when there is objective evidence that events have happened which:
  §   In the case of debt instruments (loans and debt securities), give rise to a negative impact on the future cash flows that were estimated at the time the transaction was arranged.
 
  §   In the case of equity instruments, mean that the carrying amount of these instruments cannot be recovered.
As a general rule, the carrying amount of impaired financial instruments is adjusted with a charge to the consolidated income statement of the period in which the impairment becomes known, and the recoveries of previously recognized impairment losses are recognized in the consolidated income statement for the period in which the impairment is reversed or reduced, with the exception that any recovery of previously recognized impairment losses for an investment in an equity instrument classified as available for sale which are not recognized through consolidated profit or loss but recognized under the heading “Valuation Adjustments – Available for sale Financial Assets” in the consolidated balance sheet.
Balances are considered to be impaired when there are reasonable doubts that the balances will be recovered in full and/or the related interest will be collected for the amounts and on the dates initially agreed upon, taking into account the guarantees received by the consolidated entities to assure (in part or in full) the performance of transactions. Amounts collected in relation to impaired loans and receivables are used to recognize the related accrued interest and any excess amount is used to reduce the principal not yet paid.
When the recovery of any recognized amount is considered to be remote, this amount is removed from the consolidated balance sheet, without prejudice to any actions taken by the consolidated entities in order to collect the amount until their rights extinguish in full through expiry, forgiveness or for other reasons.
Calculation of impairment on financial assets
The impairment on financial assets is determined by type of instrument and the category in which they are recognized. The BBVA Group recognizes impairment charges directly against the impaired asset when the likelihood of recovery is deemed remote, and uses an offsetting or allowance account when it records non-performing loan provisions.
The amount of impairment losses of debt securities at amortised cost is measured as a function of whether the impairment losses are determined individually or collectively.
Impairment losses determined individually
The quantification of impairment losses on assets classified as impaired is done on an individual basis in connection with customers whose operations are equal to or exceed €1 million.
The amount of the impairment losses incurred on these instruments relates to the positive difference between their respective carrying amounts and the present values of their expected future cash flows.
The following is to be taken into consideration when estimating the future cash flows of debt instruments:
    All the amounts that are expected to be obtained over the residual life of the instrument; including, where appropriate, those which may result from the collaterals and other credit enhancements provided for the instrument (after deducting the costs required for foreclosure and subsequent sale).
 
    The various types of risk to which each instrument is subject.
 
    The circumstances in which collections will foreseeably be made.

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These cash flows are discounted using the original effective interest rate. If a financial instrument has a variable interest rate, the discount rate for measuring any impairment loss is the current effective rate determined under the contract.
As an exception to the rule described above, the market value of quoted debt instruments is deemed to be a fair estimate of the present value of their future cash flows.
Impairment losses determined collectively
The quantification of impairment losses is determined on a collective basis in the following two cases:
    Assets classified as impaired of customers in which the amount of their operations is less than €1 million.
 
    Asset portfolio not impaired currently but which presents an inherent loss.
Inherent loss, calculated using statistical procedures, is deemed equivalent to the portion of losses incurred at the date of preparing the accompanying consolidated financial statements that has yet to be allocated to specific transactions.
The Group realizes the estimate collectively the inherent loss of credit risk corresponding to operations realized by Spanish financial entities of the Group (approximately 58.61% on Loans and receivables of the Group as of June 30, 2009), using the parameters set by Annex IX of the Circular 4/2004 from Bank of Spain on the base of its experience and the Spanish banking sector information.
Notwithstanding the above, the Group can avail of the proprietary historic records used in its internal ratings models, which were approved by the Bank of Spain for some portfolios in the year 2008, albeit only for the purposes of estimating regulatory capital under the new Basel Accord (BIS II). It uses these internal ratings models to calculate the economic capital required in its activities and uses the expected loss concept to quantify the cost of credit risk for incorporation into its calculation of the risk-adjusted return on capital of its operations.
The provisions required under Circular 4/2004 from Bank of Spain standards fall within the range of provisions calculated using the Group’s internal ratings models.
To estimate the collective loss of credit risk corresponding to operations with nonresident in Spain registered in foreign subsidiaries, are applied methods and similar criteria, taking like reference the Bank of Spain parameters but adapting the default’s calendars to the particular circumstances of the country. However, in Mexico for consumer loans, credit cards and mortgages portfolios, as well as for credit investment maintained by the Group in the United States are using internal models for calculating the impairment losses based on historical experience of the Group (approximately 13% of the Loans and Receivables of the Group as of June 30, 2009).
Following is a description of the methodology used to estimate the collective loss of credit risk corresponding to operations with resident in Spain:
1. Portfolio doubtful
The debt instruments, whoever the obligor and whatever the guarantee or collateral, that have past-due amounts with more than three months, taking into account the age of the past-due amounts, the guarantees or collateral provided and the economic situation of the customer and the guarantors.
In the case of unsecured transactions and taking into account the age of the past-due amounts, the allowance percentages are as follow:
         
         Age of the past-due amount   Allowance percentage
 
Up to 6 months
  between 4.5% and 5.3%
Over 6 months and up to 12 months
  between 27.4% and 27.8%
Over 12 months and up to 18 months
  between 60.5% and 65.1%
Over 18 months and up to 24 months
  between 93.3% and 95.8%
Over 24 months
    100 %
 

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In the case of transactions secured by completed houses when the total exposure is equal or inferior 80% of the value of the guarantee or collateral and taking into account the age of the past-due amounts, the allowance percentages are as follow:
         
     Age of the past-due amount   Allowance percentage
 
Less than 3 years
    2 %
Over 3 years and up to 4 years
    25 %
Over 4 years and up to 5 years
    50 %
Over 5 years and up to 6 years
    75 %
Over 6 years
    100 %
 
In the rest of transactions secured by real property in which the entity has began the process to take possession of the pledge and taking into account the age of the past-due amounts, the allowance percentages are as follow:
         
       Age of the past-due amount   Allowance percentage
 
Up to 6 months
  between 3.8% and 4.5%
Over 6 months and up to 12 months
  between 23.3% and 23.6%
Over 12 months and up to 18 months
  between 47.2% and 55.3%
Over 18 months and up to 24 months
  between 79.3% and 81.4%
Over 24 months
    100 %
 
Debt instruments for which, without qualifying as doubtful in terms of criteria for classification as past-due, there is reasonable doubt that they will be recovered on the initially agreed terms are analyzed individually.
2. Portfolio into force
The debt instruments, whoever the obligor and whatever the guarantee or collateral, that do not have individually objective of impairment are collectively assesses, including the assets in a group with similar credit risk characteristics, including sector of activity of the debtor or the type of guarantee.
The allowance percentages of hedge are as follows:
                 
    ALLOWANCE
          RISK   PERCENTAGE
 
Negligible risk   0%
Low risk
    0.06 %     0.75 %
Medium-low risk
    0.15 %     1.88 %
Medium risk
    0.18 %     2.25 %
Medium-high risk
    0.20 %     2.50 %
High risk
    0.25 %     3.13 %
 
3. Country Risk Allowance or Provision
Country risk is understood as the risk associated with customers resident in a specific country due to circumstances other than normal commercial risk. Country risk comprises sovereign risk, transfer risk and other risks arising from international financial activity. On the basis of the economic performance, political situation, regulatory and institutional framework, and payment capacity and record, the Group classifies the transactions in different groups, assigning to each group the provisions for insolvencies percentages, which are derived from those analyses.
However, due to the dimension Group, and to risk-country management, the provision levels are not significant in relation to the balance of the provisions by constituted insolvencies (As of June 30, 2009, this provision represents a 2.3% in the provision for insolvencies of the Group).

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Impairment on other debt instruments
The impairment losses on debt securities included in the “Available-for-sale financial asset” portfolio are equal to the positive difference between their acquisition cost (net of any principal repayment) and their fair value, after deducting any impairment loss previously recognized in the consolidated income statement.
When there is objective evidence that the negative differences arising on measurement of these assets are due to non-temporary impairment, they are no longer considered as “Valuation Adjustments - Available-for-Sale Financial Assets” and are recognized in the consolidated income statement. If all or part of the impairment losses is subsequently recovered, the amount is recognized in the consolidated income statement for the period in which the recovery occurred.
Impairment on equity instruments
The amount of the impairment in the equity instruments is determinated by the category where is recognized:
  Equity instruments measured at fair value: The criteria for quantifying and recognising impairment losses on equity instruments are similar to those for “Other debt instruments”, with the exception that any recovery of previously recognized impairment losses for an investment in an equity instrument classified as available for sale which are not recognized through profit or loss but recognized under the heading “Valuation Adjustments – Available for sale Financial Assets” in the consolidated balance sheet.
 
  Equity instruments measured at cost: The impairment losses on equity instruments measured at acquisition cost are equal to the difference between their carrying amount and the present value of expected future cash flows discounted at the market rate of return for similar securities. These impairment losses are determined taking into account the equity of the investee (except for valuation adjustments due to cash flow hedges) for the last approved (consolidated) balance sheet, adjusted for the unrealised gains at the measurement date.
Impairment losses are recognized in the consolidated income statement for the period in which they arise as a direct reduction of the cost of the instrument. These losses may only be reversed subsequently in the event of the sale of these assets.
2.2.2. RECOGNITION OF INCOME AND EXPENSES
The most significant criteria used by the Group to recognize its income and expenses are summarised as follows:
Interest income and expenses and similar items:
As a general rule, interest income and expenses and similar items are recognized on the basis of their period of accrual using the effective interest rate method. Specifically, the financial fees and commissions that arise on the arrangement of loans, basically origination and analysis fees must be deferred and recognized in the income statement over the expected life of the loan. The direct costs incurred in arranging these transactions can be deducted from the amount thus recognized. Also dividends received from other companies are recognized as income when the consolidated companies’ right to receive them arises.
However, when a debt instrument is deemed to be impaired individually or is included in the category of instruments that are impaired because of amounts more than three months past-due, the recognition of accrued interest in the consolidated income statement is interrupted. This interest is recognized as an income for accounting purposes when it is received, as recovery of impairment losses.
Commissions, fees and similar items:
Income and expenses relating to commissions and similar fees are recognized in the consolidated income statement using criteria that vary according to their nature. The most significant income and expense items in this connection are:
    Those relating to financial assets and liabilities measured at fair value through profit or loss they are recognized when collected.
 
    Those arising from transactions or services that are provided over a period of time. They are recognized over the life of these transactions or services.

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    Those relating to a single act. They are recognized when the single act is carried out.
Non-financial income and expenses:
These are recorded for accounting purposes on an accrual basis.
Deferred collections and payments:
These are recorded for accounting purposes at the amount resulting from discounting the expected cash flows at market rates.
2.2.3. POST-EMPLOYMENT BENEFITS AND OTHER LONG TERM COMMITMENTS TO EMPLOYEES
Following is a description of the most significant accounting criteria relating to the commitments to employees, related to post-employment benefits and other long term commitments, of certain Group companies in Spain and abroad (Note 25).
Commitments valuation: assumptions and gains/losses recognition
The present values of the commitments are quantified on a case-by-case basis. The valuation method used for current employees is the projected unit credit method, which views each year of service as giving rise to an additional unit of benefit entitlement and measures each unit separately.
In adopting the actuarial assumptions, it is taken into account that:
    They are unbiased, in that they are neither imprudent nor excessively conservative.
 
    They are mutually compatible, reflecting the economic relationships between factors such as inflation, rates of salary increase, discount rates and expected return of assets. The expected return of plan assets in the post-employment benefits is estimated taking into account the market expectations and the distribution of such assets in the different portfolios.
 
    The future levels of salaries and benefits are based on market expectations at the balance sheet date for the period over which the obligations are to be settled.
 
    The discount rate used is determined by reference to market yields at the balance sheet date on high quality corporate bonds.
The Group recognizes all actuarial differences under heading “Provisions” in the consolidated income statement for the period in which they arise in connection with commitments assumed by the Group in connection with personnel availing of early retirement schemes, disability benefits awarded as a function of years of employee service in the Group, and other similar concepts.
The Group recognizes the actuarial gains or losses arising on all other defined benefit post-employment commitments directly with charge in the heading ”Reserves” within the Group’s consolidated equity, in accordance with standard 35 of Bank of Spain Circular 4/2004 (as amended by Circular 6/2008).
Consequently, the Group does not apply the option of deferring actuarial gains and losses in equity using the so-called corridor approach in any commitment to employees.
Post-employment benefits
- Pensions
Post-employment benefits include defined contribution and defined obligation commitments.
Defined contribution commitments:
The amounts of these commitments are determined as a percentage of certain remuneration items and/or as a pre-established annual amount. The current contributions made by the Group’s companies for defined contribution retirement commitments, which are recognized with a charge to the heading “Personnel Expenses – Contributions to external pension funds” in the accompanying consolidated income statements (Notes 25 and 45).

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Defined benefit commitments
Certain Group’s companies have defined benefit commitments for permanent disability and death of current employees and early retirees; and defined-benefit retirement commitments applicable only to certain groups of serving employees, or early retired employees and of retired employees. Defined benefit commitments are funded by insurance contracts and internal provisions.
The amount recognized in the heading “Provisions — Funds for Pensions and Similar Obligations” (Note 24) is equal to the difference between the present value of the vested obligations for defined obligation retirement commitments at balance sheet date, adjusted by the prior service cost and the fair value of plan assets, if it the case, which are to be used directly to settle employee benefit obligations.
The provisions for defined obligation retirement commitments were charged to the heading “Provisions (net) – Provisions to pension commitments and similar obligations” in the accompanying consolidated income statements (Note 46).
The current contributions made by the Group’s companies for defined obligation retirement commitments covering current employees are charged to the heading “Personnel Expenses” in the accompanying consolidated income statements.
- Early retirements
During the six months period ended June 30, 2009 and in prior periods, the Group offered certain employees in Spain the possibility of taking early retirement before the age stipulated in the collective labor agreement in force. The corresponding provisions by the Group were recognized with a charge to the heading “Provision Expense (Net) — Transfers to Funds for Pensions and Similar Obligations—Early Retirements” in the accompanying consolidated income statements. The present values are quantified on a case-by-case basis and they are recognized in the heading “Provisions - Provisions for Pensions and Similar Obligations” in the accompanying consolidated balance sheets (Note 24).
The commitments to early retirees in Spain include the compensation and indemnities and contributions to external pension funds payable during the year of early retirement. The commitments relating to this group of employees after they have reached the age of effective retirement are included in the employee welfare system.
- Post-employment welfare benefits
Certain Group companies have welfare benefit commitments the effects of which extend beyond the retirement of the employees entitled to the benefits. These commitments relate to certain current employees and retirees, depending upon the employee group to which they belong.
The present value of the vested obligations for post-employment welfare benefits are quantified on a case-by-case basis. They are recognized in the heading “Provisions — Funds for Pensions and Similar Obligations” in the accompanying consolidated balance sheets (Note 24) and they are charged to the heading “Personnel expenses – Other personnel expenses” in the accompanying income statements (Note 45).
Other long term commitments to employees
Certain Group companies are obliged to deliver subsidised goods and services. The most significant employee welfare benefits granted, in terms of the type of compensation and the event giving rise to the commitments are: loans to employees, life insurance, study aid and long-service bonuses.
Part of these commitments is quantified on base to actuarial studies. For this reason, the present values of the vested obligations for commitments with personnel are quantified on a case-by-case basis. They are recognized in the heading “Provisions — Funds for Pensions and Similar Obligations” in the accompanying consolidated balance sheets (Note 24).
The post-employment welfare benefits delivered by the Spanish companies to active employees are recognized in the heading “Personnel expenses – Other personnel expenses” in the accompanying income statements (Note 45).
Other commitments for current employees accrue and are settled on a yearly basis, it is not necessary to record a provision in this connection.

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2.2.4. FOREIGN CURRENCY TRANSACTIONS AND EXCHANGE DIFFERENCES
The Group’s functional currency is the euro. Therefore, all balances and transactions denominated in currencies other than the euro are deemed to be denominated in “foreign currency”. The balances in the financial statements of consolidated entities whose functional currency is not the euro are translated to euros as follows:
    Assets and liabilities: at the average spot exchange rates as of June 30, 2009 and December 31, 2008.
 
    Income and expenses and cash flows: at the average exchange rates of the period.
 
    Equity items: at the historical exchange rates.
The exchange differences arising on the translation of foreign currency balances to the functional currency of the consolidated entities (or entities accounted for equity method) and their branches are generally recorded in the consolidated income statement. Exceptionally, the exchange differences arising on non-monetary items whose fair value is adjusted with a balancing item in equity are recorded under the heading “Valuation Adjustments — Exchange Differences” of the consolidated balance sheet.
The exchange differences arising on the translation to euros of balances in the functional currencies of the consolidated entities (or entities accounted for equity method) whose functional currency is not the euro are recorded under the heading “Valuation Adjustments — Exchange Differences” in the consolidated balance sheet until the item to which they relate is derecognized, at which time they are recorded in the income statement.
The breakdown of the balances in foreign currencies of the consolidated balance sheet as of June 30, 2009 and December 31, 2008, based on the most significant foreign currencies, are set forth in the following table:
                                 
    Millions of euros
            Mexican   Other foreign    
June-09   USD   Pesos   currencies   TOTAL
 
Assets -
    78,811       54,443       45,043       178,297  
Cash and balances with Central Banks
    5,538       4,827       3,653       14,018  
Financial assets held for trading
    2,865       13,140       2,805       18,810  
Available-for-sale financial assets
    8,930       5,563       6,021       20,514  
Loans and receivables
    58,387       27,929       29,191       115,507  
Investments in entities accounted for using the equity method
    5       112       524       641  
Tangible assets
    790       801       503       2,094  
Other
    2,296       2,071       2,346       6,713  
Liabilities-
    115,742       51,556       46,882       214,180  
Financial liabilities held for trading
    868       3,018       1,001       4,887  
Financial liabilities at amortised cost
    113,918       44,433       43,286       201,637  
Other
    956       4,105       2,595       7,656  
 
                                 
    Millions of euros
            Mexican   Other foreign    
December-08   USD   Pesos   currencies   TOTAL
 
Assets -
    86,074       52,819       42,215       181,108  
Cash and balances with Central Banks
    2,788       5,179       3,612       11,579  
Financial assets held for trading
    4,137       13,184       3,003       20,324  
Available-for-sale financial assets
    10,321       5,613       4,846       20,780  
Loans and receivables
    65,928       26,168       28,072       120,168  
Investments in entities accounted for using the equity method
    5       103       481       589  
Tangible assets
    802       729       485       2,016  
Other
    2,093       1,843       1,716       5,652  
Liabilities-
    119,107       50,103       45,719       214,929  
Financial liabilities held for trading
    1,192       3,919       1,057       6,168  
Financial liabilities at amortised cost
    116,910       42,288       42,097       201,295  
Other
    1,005       3,896       2,565       7,466  
 

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2.2.5. ENTITIES AND BRANCHES LOCATED IN COUNTRIES WITH HYPERINFLATIONARY ECONOMIES
None of the functional currencies of the consolidated subsidiaries and associates and their branches located abroad relate to hyperinflationary economies as defined by EU-IFRSs required to be applied under the Bank of Spain’s Circular 4/2004. Accordingly, as of June 30, 2009 and December 31, 2008, it was not necessary to adjust the financial statements of any of the consolidated subsidiaries or associates to correct for the effect of inflation.
2.2.6. NON-CURRENT ASSETS HELD FOR SALE AND LIABILITIES ASSOCIATED WITH NON-CURRENT ASSETS HELD FOR SALE
The heading “Non-current Assets Held for Sale” in the accompanying consolidated balance sheets reflects the carrying amount of the assets where an active program to locate a buyer and complete the plan has been initiated and approved at the appropriate level of management and it is highly probable they will be sold in their current condition within one year from the date on which are classified as such. Therefore, the carrying amount of these assets – which can be financial or non-financial but are not included in Group’s operating activities – will foreseeably be recovered through the price obtained on their sale.
Within this heading, a distinction is made between individual assets and groups of assets that are to be disposed of along with related liabilities (“disposal groups”) and disposal groups that form part of a major business unit and are being held for sale as part of a disposal plan (“discontinued operations”).
The individual headings include, the assets received by the consolidated entities from their debtors in full or partial settlement of the debtors’ payment obligations (assets foreclosed or donated in repayment of debt) are treated as non-current assets held for sale, unless the consolidated entities have decided to make continuing use of these assets.
Symmetrically, the heading “Liabilities Associated with Non-current Assets Held for Sale” in the accompanying consolidated balance sheets reflects the balances payable arising on disposal groups and discontinued operations.
Non-current assets held for sale are generally measured at the lower of fair value less costs to sell and their carrying amount upon classification within this category. Non-current assets held for sale are not depreciated while included under this heading.
As a general rule, gains and losses generated on the disposal of assets and liabilities classified as non-current held for sale, and related impairment losses and subsequent recoveries, where pertinent, are recognized in “Gains/(losses) in non-current assets held for sale not classified as discontinued operations” of the accompanying consolidated income statements. The remaining income and expense items associated with these assets and liabilities are classified within the corresponding consolidated income statement headings.
2.2.7. SALES AND INCOME FROM THE PROVISION OF NON-FINANCIAL SERVICES
The heading “Other operating income and expenses — Financial income from non-financial services ” of the accompanying consolidated income statement includes the carrying amount of the sales of assets and income from the services provided by the consolidated Group companies that are not financial institutions. In the case of the Group, these companies are mainly real estate and services companies.
2.2.8. INSURANCE AND REINSURANCE CONTRACTS
In accordance with standard accounting practice in the insurance industry, the consolidated insurance entities credit to the income statement the amounts of the premiums written and charge to income statement the cost of the claims incurred on final settlement thereof. Insurance entities are therefore required to accrue at period-end the unearned revenues credited to their income statements and the accrued costs not charged to income statements.

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The most significant accruals recorded by the consolidated entities in relation to direct insurance contracts arranged by them relate to the following (Note 23):
  Mathematical provisions, which include:
  -   Life insurance provisions: these represent the value of the life insurance obligations of the insurance companies at period-end, net of the obligations of the policyholder.
 
  -   Non-life insurance provisions: provisions for unearned premiums. These provisions are intended for the accrual, at the date of calculation, of the premiums written. Their balance reflects the portion of the premiums accrued in the period that has to be allocated to the period from the reporting date to the end of the policy period.
  Provision for claims: this reflects the total amount of the obligations outstanding arising from claims incurred prior to the reporting date. The insurance companies calculate this provision as the difference between the total estimated or certain cost of the claims not yet reported, settled or paid, and the total amounts already paid in relation to these claims.
 
  Provisions for unexpired risks and other provisions, which include:
  -   Non-life insurance provisions – unexpired risks: the provision for unexpired risks supplements the provision for unearned premiums by the amount by which that provision is not sufficient to reflect the assessed risks and expenses to be covered by the insurance companies in the policy period not elapsed at period-end.
 
  -   Technical provisions for reinsurance ceded: calculated by applying the criteria indicated above for direct insurance, taking account of the cession conditions established in the reinsurance contracts in force.
 
  -   Other technical provisions: the insurance companies have recognized provisions to cover the probable mismatches in the market reinvestment interest rates with respect to those used in the measurement of the technical provisions.
  Provision for bonuses and rebates: this provision includes the amount of the bonuses accruing to policyholders, insurees or beneficiaries and the premiums to be returned to policyholders or insurees, as the case may be, based on the behaviour of the risk insured, to the extent that such amounts have not been individually assigned to each of them.
The Group controls and monitors the exposure of the insurance companies to financial risk and, to this end, uses internal methods and tools that enable it to measure credit risk and market risk and to establish the limits for these risks.
Reinsurance assets and Liabilities under insurance contracts
The heading “Reinsurance Assets” in the accompanying consolidated balance sheets includes the amounts that the consolidated entities are entitled to receive under the reinsurance contracts entered into by them with third parties and, more specifically, the share of the reinsurer in the technical provisions recorded by the consolidated insurance entities (Note 18).
The heading “Liabilities under Insurance Contracts” in the accompanying consolidated balance sheets includes the technical reserves of direct insurance and inward reinsurance recorded by the consolidated entities to cover claims arising from insurance contracts in force at period-end (Note 23).
The income or loss reported by the Group’s insurance companies on their insurance activities is recorded, attending to it nature in the corresponding items of the accompanying consolidated income statement.
2.2.9. TANGIBLE ASSETS
Non-current tangible assets for own use
Non-Current Tangible Assets for own use relates to the assets, under ownership or acquired under finance leases, intended to the future or current use by the Group and that it is expected to be held for more than one year. It also includes tangible assets received by the consolidated entities in full or part settlement of

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financial assets representing receivables from third parties and those assets expected to be held for continuing use.
Non-Current tangible assets for own use are presented in the consolidated balance sheets at acquisition cost less any accumulated depreciation and, where appropriate, any estimated impairment losses (net carrying amount higher than fair value).
Depreciation is calculated, using the straight-line method, on the basis of the acquisition cost of the assets less their residual value; the land on which the buildings and other structures stand has an indefinite life and, therefore, is not depreciated.
The period tangible asset depreciation charge is recognized with a balancing entry in the consolidated income statement and is based on the application of the following depreciation rates (determined on the basis of the average years of estimated useful life of the various assets):
         
    Annual Percentage
 
Buildings for own use
  1.33% to 4%
Furniture
  8% to 10%
Fixtures
  6% to 12%
Office supplies and computerisation
  8% to 25%
 
At each close, the entities analyze whether there are internal or external indicators that a tangible asset may be impaired. When there is evidence of impairment, the entity then analyzes whether the indicated impairment actually exists by comparing the asset’s carrying amount with its recoverable amount. When the carrying amount exceeds the recoverable amount, the carrying amount is written down to the recoverable amount and depreciation charges going forward are adjusted to reflect the asset’s remaining useful life.
The BBVA Group’s criteria for determining the recoverable amount of these assets is based on up-to-date independent appraisals, performed within the last 3-5 years at most, absent other indications of impairment.
Similarly, if there is any indication that the value of a tangible asset has been recovered, the consolidated entities will estimate the recoverable amounts of the asset and recognised it in the consolidated income statement, recording the reversal of the impairment loss recorded in previous periods and, consequently, adjust the future depreciation charges. In no circumstances may the reversal of an impairment loss on an asset raise its carrying amount above that which it would have if no impairment losses had been recognized in prior periods.
Upkeep and maintenance expenses relating to tangible assets held for continued use are charged to the income statement for the period in which they are incurred.
Other assets leased out under an operating lease
The criteria used to recognize the acquisition cost of assets leased out under operating leases, to calculate their depreciation and their respective estimated useful lives and to record the impairment losses thereon are the same as those described in relation to tangible assets for continued use.
Investment property
The heading “Tangible assets — Investment Properties” in the consolidated balance sheet reflects the net values of the land, buildings and other structures held either to earn rentals or for capital appreciation at the disposal date and are neither expected to be sold off in the ordinary course of the business nor are destined for own use.
The criteria used by the BBVA Group to determine their recoverable value is based on updated independent appraisals, so that they are older than 1 year, absent other indications of impairment.
2.2.10. BUSINESS COMBINATIONS
A business combination is the bringing together of two or more separate entities or businesses into one single entity or group of entities.
The purchase method accounts for business combinations from the perspective of the acquirer. The acquirer must recognize the assets acquired and the liabilities and contingent liabilities assumed, including those not

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previously recognized by the acquired entity. This method measures the cost of the business combination and the assignation of it, at the date of acquisition, to the identifiable assets, liabilities and contingent liabilities measured at fair value.
In addition, any purchases of minority interests after the date on which the Group obtains control of the acquired are recorded as equity transactions, i.e. the difference between the price paid and the carrying amount of the percentage of minority interests acquired is charged directly to equity.
2.2.11 INTANGIBLE ASSETS
Goodwill
The positive differences between the cost of business combinations and the amount corresponding to the acquired percentage of the net fair value of the assets, liabilities and contingent liabilities of the acquired entity are recorded as goodwill on the asset side of the consolidated balance sheet. Goodwill represents the future economic benefits from assets that cannot be individually identified and separately recognized. Goodwill is not amortized and is subject periodically to an impairment analysis. Any impaired goodwill is written off.
For impairment testing purposes, each item of goodwill is allocated to one or more cash-generating units expected to benefit from the synergies arising from business combinations. The cash-generating units represent the Group’s smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Each unit or group of units to which good the will is allocated shall:
  -   represent the lowest level within the entity at which goodwill is monitored for internal management purposes,
 
  -   not be larger than an operating segment.
The cash-generating units to which goodwill has been allocated are tested for impairment based on the carrying amount of the unit including the allocated goodwill. Such testing is performed at least annually and, always, if there is an indication of impairment.
For the purpose of determining the impairment on a cash-generating unit to which a part of goodwill has been allocated, the carrying amount of that unit, adjusted by the theoretical amount of the goodwill attributable to the minority interest, shall be compared with its recoverable amount. If the carrying amount of the cash generating unit exceed the related recoverable amounts the entity will recognised an impairment loss; the resulting loss shall be apportioned by reducing, firstly, the carrying amount of the goodwill allocated to that unit and, secondly, if there are still impairment losses remaining to be recognized, the carrying amount of the rest of the assets. This shall be done by allocating the remaining loss in proportion to the carrying amount of each of the assets in the unit. It will be taken into account that no impairment on goodwill attributable to the minority interest may be recognized. In any case, impairment losses on goodwill can never be reversed.
Other intangible assets
These assets can have an “indefinite useful life” – when, based on an analysis of all relevant factors, it is concluded that there is no foreseeable limit to the period over which the asset is expected to generate net cash flows for the consolidated entities – or a “finite useful life”, in all other cases.
The Group has not recognized any intangible assets with indefinite useful life.
Intangible assets with finite useful life are amortized over those useful lives using methods similar to those used to depreciate tangible assets.
The consolidated entities recognize any impairment loss on the carrying amount of these assets with charge to the heading “Impairment on other intangible assets (net) – Other assets” in the accompayning consolidated income statement. The criteria used to recognize the impairment losses on these assets and, where applicable, the recovery of impairment losses recognized in prior periods are similar to those used for tangible assets.

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2.2.12. INVENTORIES
The heading “Other assets — Inventories” in the accompanying consolidated balance sheet reflects the land and other properties that Group real estate agencies hold for sale as part of their property development activities (Note 21).
Inventories are measured at the lower of cost and net realisable value, which is the estimated selling price of inventories in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
The amount of any write-down of inventories, such as that reflecting damage, obsolescence, and reduction of the sale price, to net realisable value and any other losses is recognized as an expense in the period in which the write-down or loss occurs. Subsequent reversal of any write-down is recognized in the consolidated income statement for the period in which it occurs.
When inventories are sold, the carrying amount of those inventories is derecognised and recorded as an expense in the period in which the related revenue is recognized. The expense is included in the heading “Other operating expenses – Changes in Inventories” of the accompanying consolidated income statement (Note 44).
2.2.13. TAX ASSETS AND LIABILITIES
The Spanish corporation tax expense and the expense for similar taxes applicable to the consolidated entities abroad are recognized in the consolidated income statement, except when they result from transactions the profits or losses on which are recognized directly in equity, in which case the related tax effect is also recognized in equity.
The current income tax expense is calculated by aggregating the current tax arising from the application of the related tax rate to the taxable profit (or tax loss) for the period (after deducting the tax credits allowable for tax purposes) and the change in deferred tax assets and liabilities recognized in the income statement.
Deferred tax assets and liabilities include temporary differences, measured at the amount expected to be payable or recoverable on future fiscal years for the differences between the carrying amounts of assets and liabilities and their tax bases, and tax loss and tax credit carry forwards. These amounts are measured applying to each temporary difference the tax rates that are expected to apply in the period when the asset is realised or the liability settled (Note 32).
Deferred tax assets are recognized to the extent that it is considered probable that the consolidated entities will have sufficient taxable profits in the future against which the deferred tax assets can be utilized.
The deferred tax assets and liabilities recognized are reassessed by the consolidated entities at each balance sheet date in order to ascertain whether they still exist, and the appropriate adjustments are made on the basis of the findings of the analyses performed.
The income and expenses directly recognized in equity that do not increase or decrease taxable income are accounted as temporary differences.
Deferred tax liabilities in relation to taxable temporary differences associated with investments in subsidiaries, associates or jointly controlled entities are recognized as such, except where the Group can control the timing of the reversal of the temporary difference and it is further unlikely that it will reverse in the foreseeable future.
2.2.14. FINANCIAL GUARANTEES
“Financial guarantees” are considered those contracts that oblige their issuer to make specific payments to reimburse the lender for a loss incurred when a specific borrower breaches its payment obligations on the terms — original or as modified – of a debt instrument, irrespective of its instrumentation. These guarantees may take the form of a deposit, financial endorsement, insurance contract or credit derivative.
Financial guarantees, irrespective of the guarantor, instrumentation or other circumstances, are reviewed periodically so as to determine the credit risk to which they are exposed and, if appropriate, to consider whether a provision is required. The credit risk is determined by application of criteria similar to those established for quantifying impairment losses on debt instruments measured at amortized cost (Note 2.2.1).

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The provisions made for financial guarantees classified as substandard are recognized under “Provisions — Provisions for Contingent Exposures and Commitments” on the liability side in the accompanying consolidated balance sheet (Note 24). These provisions are recognized and reversed to heading “Provisions Expense” in the accompanying consolidated income statement.
2.2.15. LEASES
Leases are classified as finance from the start of the transaction when they transfer substantially all the risks and rewards incidental to ownership of the asset forming the subject matter of the contract. Leases other than finance leases are classified as operating leases.
When the consolidated entities act as the lessor of an asset in finance leases, the aggregate present values of the lease payments receivable from the lessee plus the guaranteed residual value (normally the exercise price of the lessee’s purchase option on expiration of the lease agreement) are recorded as financing provided to third parties and, therefore, are included under the heading “Loans and Receivables” in the accompanying consolidated balance sheets.
When the consolidated entities act as the lessor of an asset in operating leases, the acquisition cost of the leased assets is recognized in “Tangible assets” in the accompanying consolidated balance sheets. These assets are depreciated in line with the criteria adopted for items of tangible assets for own use, while the income arising from the lease arrangements is recognized in the consolidated income statement on a straight line basis within heading “Other operating income”.
If a fair value sale and leaseback results in an operating lease, the profit or loss generated is recognized at the time of sale. If such a transaction gives rise to a finance lease, the corresponding gains or losses are amortized over the lease period.
Assets provided under operating leases to other Group entities are treated in the interim consolidated financial statements as assets held for continued use.
2.2.16. PROVISIONS, CONTINGENT ASSETS AND CONTINGENT LIABILITIES
The heading “Provisions” of the accompanying consolidated balance sheets include amounts recognized to cover the Group’s current obligations arising as a result of past events, certain in terms of nature but uncertain in terms of amount and/or cancellation date, settlement of which is deemed likely to entail an outflow of resources embodying economic benefits. The obligations may arise in connection with legal or contractual provisions, valid expectations formed by Group companies relative to third parties in relation to the assumption of certain responsibilities or virtually certain developments of particular aspects of applicable regulation, specifically draft legislation to which the Group will certainly be subject.
Provisions are recognized in the balance sheet when each and every one of the following requirements is met: the Group has an existing obligation resulting from a past event and, at the consolidated balance sheet date, it is more likely than not that the obligation will have to be settled; it is probable that to settle the obligation the entity will have to give up resources embodying economic benefits; and a reliable estimate can be made of the amount of the obligation. This heading includes provisions for restructuring charges and litigation, including tax litigation.
Contingent assets are possible assets that arise from past events and whose existence is conditional on, and will be confirmed only by the occurrence or non-occurrence of, events beyond the control of the Group. Contingent assets are not recognized in the balance sheet or in the income statement; however, they are disclosed in the notes to financial statements, provided that it is probable that these assets will give rise to an increase in resources embodying economic benefits.
Contingent liabilities are possible obligations of the Group that arise from past events and whose existence is conditional on the occurrence or non-occurrence of one or more future events beyond the control of the entity. Also, they include the existing obligations of the entity when it is not probable that an outflow of resources embodying economic benefits will be required to settle them or when, in extremely rare cases, their amount cannot be measured with sufficient reliability. Contingent liabilities are recognized neither in the balance sheet nor income statement.

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2.2.17. TRANSFERS OF FINANCIAL ASSETS AND DERECOGNITION OF FINANCIAL ASSETS AND LIABILITIES
The accounting treatment of transfers of financial assets depends on the extent to which the risks and rewards associated with the transferred assets are transferred to third parties.
The financial assets are derecognised from the consolidated balance sheet only if their cash flows are extinguished or the risks and rewards associated with the financial assets are subtantially transferred. Similarly, the financial liabilities are derecognised of the consolidated balance sheet only if their obligations are extinguised or acquired (with a view to subsequent cancellation or renewed placement)
If substantially all the risks and rewards associated with the transferred financial asset are transferred to third parties, the transferred financial asset is derecognised from the consolidated balance sheet and, at the same time, any right or obligation retained or created as a result of the transfer is recognized.
The Group is considered to have transferred substantially all the risks and rewards if such risks and rewards account for the majority of the risks and rewards incidental to ownership of the transferred assets.
If substantially all the risks and/or rewards associated with the transferred financial asset are retained:
    The transferred financial asset is not derecognized and continues to be measured using the same criteria as those used before the transfer in the consolidated balance sheet.
 
    A financial liability is recognized in the amount of compensation received, which is subsequently measured at amortized cost and included under the heading “Financial liabilities at amortized cost — Debt certificates” of the accompanying consolidated balance sheet. As these liabilities do not constitute a current obligation, when measuring such a financial liability the Group deducts those financial instruments owned by it which constitute financing for the entity to which the financial assets have been transferred, in so far as these instruments are deemed to specifically finance the assets transferred.
 
    Both the income generated on the transferred (but not derecognized) financial asset and the expenses of the new financial liability are recognized.
Securitizations
In the specific instance of the securitization funds to which the Group entities transfer their loan portfolios, the following indications of the existence of control are considered for the purpose of analyzing the need for consolidation:
    The securitization fund’s activities are undertaken in the name of the entity in accordance with that bank’s specific business requirements with a view to generating benefits or gains from the securitization funds’ operations.
 
    The bank retains decision-making power with a view to securing most of the gains derived from the securitization funds’ activities or has delegated this power in some kind of “auto-pilot” mechanism (the securitization funds are structured so that all the decisions and activities to be performed are pre-defined at their incorporation).
 
    The bank is entitled to receive the bulk of the securitization funds’ profits and is accordingly exposed to the risks inherent in their business activities. The entity retains the bulk of the securitization funds’ residual profit.
 
    The entity retains the bulk of the risk embodied by the assets in the securitization funds and the corresponding asset derecognition rules are applied.
If control is deemed to exist based on the aforementioned indicators, the securitization funds are consolidated within the Group. The Group is deemed to transfer substantially all risks and rewards if its exposure to the potential variation in the future net cash flows of the securitized assets following the transfer is not significative. In this instance, the consolidated Group may derecognize the securitized assets.
The BBVA Group has applied the most stringent prevailing criteria in determining whether or not it retains substantially all the risk and rewards incidental to ownership for all securitizations performed since January 1, 2004. As a result of this analysis, the Group has concluded that none of the securitizations undertaken since

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that date meet the prerequisites for derecognizing the underlying assets from the accompanying consolidated balance sheets (see Note 13.3 and Appendix III) as the Group retains substantially all the risks embodied by expected loan losses or associated with the possible variation in net cash flows, as it retains the subordinated loans extended by the BBVA Group to the same securitization funds.
2.2.18. OWN EQUITY INSTRUMENTS
The balance of the heading “Stockholders’ funds — Treasury Shares” in the accompanying consolidated balance sheets relates mainly to Bank shares held by certain consolidated companies as of June 30, 2009 and December 31, 2008. These shares are carried at acquisition cost, and the gains or losses arising on their disposal are credited or debited, respectively, as appropriate, to the heading “Stockholders’ funds-Reserves” in the accompanying consolidated balance sheets (Note 30).
2.2.19. EQUITY-SETTLED SHARE-BASED PAYMENT TRANSACTIONS
Equity-settled share-based payment transactions, when the instruments granted do not vest until the counterparty completes a specified period of service, shall be accounted for those services as they are rendered by the counterparty during the vesting period, with a corresponding increase in equity. The entity shall measure the goods or services received, and the corresponding increase in equity, directly, at the fair value of the goods or services received, unless that fair value cannot be estimated reliably. If the entity cannot estimate reliably the fair value of the goods or services received, the entity shall measure their value, and the corresponding increase in equity, indirectly, by reference to the fair value of the equity instruments granted, at grant date.
If the performance condition is a market condition, it is not recognized in the income statement as it was already taken into account in the measurement of initial fair value. Vesting conditions other than market conditions shall not be taken into account when estimating the fair value of the shares ath the measurement date. Instead, vesting conditions shall be taken into account when calculating the number of instruments to be granted, with this effect being recognized in the income statement along with the corresponding increase in equity.
2.2.20. TERMINATION BENEFITS
Termination benefits must be recognized when the Group is committed to severing its contractual relationship with its employees and, to this end, has a formal detailed redundancy plan. There were no redundancy plans in the Group entities, so it is not necessary to recognize a provision for this issue.
2.2.21. CONSOLIDATED STATEMENTS OF CASH FLOWS
For the preparation of the consolidated statement of cash flows has been used the indirect method. This method starts from the entity’s consolidated profit or loss and adjusts its amount for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of income or expense associated with investing or financing cash flows.
For these purposes, in addition to cash on hand, cash equivalents include very short term, highly liquid investments subject to very low risk of impairment.
The composition of component of cash and equivalents respect the headings of consolidated balance sheets is shown in the accompanying consolidated cash flow statements.
For the development of consolidated statement of cash flows is taken into consideration the following concepts:
  §   Cash flows: Inflows and outflows of cash and cash equivalents, the latter being short-term, highly liquid investments subject to a low risk of changes in value, such as balances with central banks, short-term Treasury bills and notes, and demand balances with other credit institutions.
 
  §   Operating activities: The typical activities of credit institutions and other activities that cannot be classified as investing or financing activities.

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  §   Investing activities: The acquisition, sale or other disposal of long-term assets and other investments not included in cash and cash equivalents.
 
  §   Financing activities: Activities that result in changes in the size and composition of equity and of liabilities that do not form part of operating activities
2.2.22. STATEMENT OF CHANGES IN CONSOLIDATED TOTAL EQUITY AND CONSOLIDATED STATEMENT OF RECOGNIZED INCOME AND EXPENSE
Statement of changes in total equity that reflects all the movements produced in every period in each of the headings of the consolidated equity included the proceeding ones from transactions realized with the shareholders when they act as such, and the due ones to changes in countable criteria and corrections of errors.
Consolidated statement of recognized income and expense that reflects the income and expenses generated in every period, distinguishing the recognized ones as “results“ in the consolidated income statement of the “other gains (losses) and recognized expenses” straight in equity.
The applicable regulations establish that certain categories of assets and liabilities are recognized by its fair value with charge to total equity. These charges, known as “valuation adjustments”, are included in the consolidated total equity of the Group net of tax effect, which has been recognized depending on the case, as deferred tax assets or liabilities.
Consolidated statement of recognized income and expense presents the changes occurred in the “valuation adjustments” for the period detailed by concepts, as well as earnings of the period plus/minus, if applicable, of the adjustments done by the change in accounting principles or by errors of previous periods. The sum of the changes occurred in the heading “valuation adjustments” of the consolidated total equity and the consolidated income of the period forms the “Incomes and expenses of the period”.
2.3 IFRS RECENT PRONOUNCEMENTS
a) STANDARDS AND INTERPRETATIONS IN EFFECT IN 2009
From January 1, 2009 to June 30, 2009, the following amendments to IFRS or interpretations of existing standards (“IFRIC”) came into effect. Their application by the Group did not have a significative impact on the accompanying consolidated financial statements:
IFRS 8 “Operating Segments”
This new standard replaces IAS 14 “Segment Reporting”. The main novelty is the adoption of an approach to management reporting business segments. The information reported will be that which management uses internally for evaluating the performance of operating segments and allocating resources to those segments. In the information to present, the segments identified and the criteria used to identify the segments, will be coincide with those used internally by the organization and the direction, but do not meet the criteria IFRS of the financial statements.
IAS 23 Revised “Borrowing Costs”
The revision to IAS 23 removes the option of immediately recognising as an expense borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset. A qualifying asset is one that takes a substantial period of time to get ready for use or sale. An entity is, therefore, required to capitalise such borrowing costs as part of the cost of the asset.
IFRIC 13 “Customer Loyalty Programmes”
This IFRIC establishes the accounting procedure for the customer loyalty programmes used by entities to provide customers with incentives to buy their goods or services. If a customer buys goods or services, the entity grants the customer award credits (often described as “points”). The customer can redeem the award credits for awards such as free or discounted goods or services. The entity may operate the customer loyalty programme itself or participate in a programme operated by a third party.

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The interpretation requires entities allocate part of incomes of initial sale to exchangeable bond, recognizing them as income only when they have fulfilled their obligations by providing such awards or paying third parties to do so.
IAS 1 Revised — Presentation of Financial Statements
The main changes from the previous version are to require that an entity must:
The “statement of changes in equity” will present the amounts of transactions with owners in their capacity as owners, such as equity contributions, reacquisition of the entity’s own equity instruments and dividends.
Present all non-owner changes in equity (that is, ‘comprehensive income’) either in one statement of comprehensive income or in two statements (a separate income statement and a statement of comprehensive income).
Also, introduce new disclosures requirements when the entity applies an accounting policy retrospectively, makes a restatement or reclassifies headings vis-à-vis the previous Financial Statement. The names of some Financial Statements are change to reflect more clearly its function. (i.e. the Balance Sheet is rename as Statement of Financial Position).
IFRS 2 Revised — Share-based Payment
The amendment to IFRS 2 clarifies that vesting conditions are service conditions and performance conditions only, and that all cancellations, whether by the entity or by other parties, should receive the same accounting treatment.
Amendments to IAS 32 “Financial Instruments: Presentation”
The amendments performed to IAS 32 have the objective of improving the accounting process for financial instruments who’s features are similar to the features of ordinary shares but that are at the present time classified as financial liabilities.
The amendment to IAS 32 requires that entities start to classify some instruments as equity, as long as they fulfill a series of particular requirements. Specifically, the following instruments will be classified as equity:
“Puttable instruments”: Financial instrument that gives the holder the right to put the instrument back to the issuer for cash or another financial asset or is automatically put back to the issuer on the occurrence of an uncertain future event or retirement of the instrument holder. Puttable instruments that are subordinate and that entitle the holder to a pro rata share of the entity’s net assets in the event of the entity’s liquidation will be classified as equity.
Instruments, or components of instruments, that are subordinate to all other classes of instruments and that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation.
Amendment to IAS 27 — Consolidated and separated financial statements; Cost of investments in subsidiaries, jointly controlled entities and associates
The main changes in IAS 27 are the following:
The elimination of the “cost method” from IAS 27.4, which implied that any return of the investment that corresponded to earnings not generated after the date of acquisition should be reduced in the separated financial statements, was due to problems that arose from this concept definition in some jurisdictions. In order to reduce the risk of overvaluation of the investments in subsidiaries, jointly controlled entities and associates, any dividend received by the investor from these entities will be recognised as an income and the related investment would be examined towards any impairment in accordance with IAS 36, as long as there is evidence of impairment on the investment (defining as such those cases in which: the book value of the investment in the separated financial statements is higher than the book value of the consolidated financial statements of the net assets of the investment, including goodwill; or when the dividend exceeds the valuation adjustments recognized in equity related with the investment in the period to which the distribution of dividends are charged.
When a new parent company is formed, it will value the cost of the investments in its separate financial statements the book value presented in the financial statements of the previous parent company as of the date in which the new parent company is created. This would be the case in which a new parent company is

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created when an existing entity decides to reorganize it operational structure and consequently becomes a subsidiary of the new parent company.
First annual Project of improvements of IFRS
This is the first annual project of improvements carried out by the IASB in which small changes that affect the presentation, recognition or assessment of the IFRS as well as changes in terminology and editing, that don’t have any significant effect on the accounting process.
The most significant changes affect the following standards:
IFRS 5 — Non-current Assets Held for Sale and Discontinued Operations
IAS 1 — Presentation of Financial Statements
IAS 16 — Property, Plant and Equipment
IAS 19 — Employee benefits
IAS 20 — Accounting for Government Grants and Disclosure of Government Assistance
IAS 27 — Consolidated and Separate Financial Statements
IAS 28 — Investments in Associates
IAS 38 — Intangible Assets
IAS 39 — Financial Instruments: Recognition and Measurement
IAS 40 — Investment property
IFRIC 14 IAS 19 — The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
IFRIC 14 provides detailed guidance on how entities should determine the limit placed by IAS 19 Employee Benefits on the amount of a surplus in a pension plan they can recognize as an asset. It also addresses how pension assets or liabilities can be affected by a legal stipulation or minimum funding requirement, determining the need to recognize an additional liability if the entity has a contractual obligation to make additional contributions to the plan and its ability to recoup these contributions is restricted. IFRIC standardizes practice and ensures that entities recognise an asset in relation to a surplus on a consistent basis.
IFRIC 15 — Agreements for the Construction of Real Estate
This Interpretation says that agreements for the construction of real estate shall only fall under the scope of IAS 11 “Construction Contracts” when the buyer is able to specify the major structural elements of the design of the real estate before construction begins and/or specify major structural changes once construction is in progress (even when the buyer does not exercise this power). To the contrary IAS 18 applies.
IFRIC 16 — Hedges of a Net Investment in a Foreign Operation
This Interpretation addresses the following aspects of hedging net investments in foreign operations:
    The risk hedged is the foreign currency exposure to the functional currencies of the foreign operation and the parent entity. Consequently, a parent entity may designate as a hedged risk only the foreign exchange differences arising from a difference between its own functional currency and that of its foreign operation, i.e. the presentation currency does not create an exposure to which an entity may apply hedge accounting.
 
    The hedging instrument(s) may be held by any entity or entities within the group, irrespective of their functional currencies (except the foreign operation the investment in which is hedged), so long as IAS 39 requirements are met.
Amendment to IFRS 7 — Improving Disclosures about Financial Instruments
The amendments introduce changes to disclosures with a view to enhance disclosures about fair value measurements of financial instruments and liquidity risk.

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b) STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE AS OF JUNE 30, 2009
At the date of elaboration of the consolidated financial statements new IFRS’s (International Financial and Reporting Standards) and interpretations (“IFRIC’s”) have been issued, which are not required to be applied as of June 30, 2009, although in some cases earlier application is encouraged. The Group has not yet applied any of the following Standards to its consolidated financial statements.
IFRS 3 Revised — Business Combinations — and modification of IAS 27 — Consolidated and Separate Financial Statements
These standards will be effective for annual periods beginning on or after July 1, 2009. An entity shall apply them prospectively from the period beginning after June 30, 2007.
IFRS 3 (Revised) and the modifications of IAS 27 represent some significant changes in various aspects related to the accounting for Business Combinations that, in general, making more emphasis on fair value. Some of the main changes are: the acquisition costs, which will be registered as expense compared to current treatment of increasing the cost of the business combination; acquisitions achieved in stages, in which at the time the acquirer held the control, re-measured at fair value the ownership interest; or the existence of the option to measure at fair value the minority interests in the acquired, compared to current treatment of measuring its proportional share at fair value of the net assets acquired.
Amendment to IAS 39 — Financial Instruments: Recognition and Measurement. Eligible Hedged Items
This amendment applies retrospectively for annual periods beginning on or after July 1, 2009. Earlier application is permitted.
The amendment stipulates that:
  §   Inflation may not be designated as a hedged item unless it is identifiable and the inflation portion is a contractually specified portion of cash flows and other cash flows of the financial instrument are not affected by the inflation portion.
 
  §   When changes in the cash flows or fair value of a hedged item above or below a specified price or other variable (a one-sided risk) are hedged via a purchased option, the intrinsic value and time value components must be separated and only the intrinsic value may be designated as a hedging instrument.
IFRIC 17 — Distribution of Non-cash Assets to Owners
The Interpretation is effective for annual periods beginning on or after July 1, 2009. Earlier application is permitted.
IFRIC 17 stipulates that all non-cash distributions to owners must be valued at fair value, clarifying that:
  §   A dividend payable should be recognized when the dividend is appropriately authorized and is no longer at the discretion of the entity.
 
  §   An entity should recognize the difference between the dividend paid and the carrying amount of the net assets distributed in profit or loss.
Amendments to IFRIC 9 and IAS 39 — Reassessment of Embedded Derivatives
The amendments will be applicable for annual periods ending on or after June 30, 2009.
The goal is to clarify the accounting treatment of embedded derivatives so as to prevent potential issues relating to the application of the latest amendments introduced to IAS 39.
The amendment to IAS 39 prohibits reclassification of hybrid financial instruments carried at fair value through profit and loss when said reclassification implies the separation of the embedded derivative from the host contract and the fair value of the embedded derivative cannot be measured reliably.
The amendment to IFRS 9 allows separation of embedded derivatives from a host contract when an entity reclassifies a hybrid financial asset out of the fair value through profit and loss category.
Group management considers that the effectiveness of this amendment will not have a material impact on its consolidated financial statements.

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Second IASB Annual IFRS Improvements Project
The IASB has published its second annual improvement project designed to make necessary, but non-urgent, amendments to IFRSs that will not be included in another project, most of which will be applicable for annual periods beginning on or after Janiary 1, 2010.
The amendments are primarily aimed at eliminating inconsistencies between certain IFRSs and at clarifying terminology.
Group management considers that the effectiveness of these improvements will not have a material effect on its consolidated financial statements.
3. BANCO BILBAO VIZCAYA ARGENTARIA GROUP
The BBVA Group is an international diversified financial group with a significant presence in the retail banking business, wholesale banking, assets management and private banking. Additionally, the Group maintains business activity in other sectors, such as the insurance, real estate and operational leasing sectors as well as other business activities.
The following table sets forth information relating to total assets as of June 30, 2009 and income attributed to the Group for the six months ended June 30, 2009 of the entities of the Group, based on the activity of the entity:
                                 
    Millions of euros
                    Total income    
    Total assets   % of the total   of the period   % of the total
    contributed   asset of the   contributed   income of the
    to the Group   Group   to the Group   Group
Banks
    503,977       92.88 %     2,566       91.69 %
Financial services
    8,521       1.57 %     135       4.82 %
Portfolio and funds managing company and dealers
    12,168       2.24 %     (252 )     (9.00 )%
Insurance and pension fund managing company
    15,346       2.83 %     373       13.31 %
Real Estate, services and other entities
    2,622       0.48 %     (23 )     (0.82 )%
           
Total
    542,634       100 %     2,799       100 %
 
The activity of the Group is mainly located in Spain, Mexico, United States, Latin American, maintaining as well as an active presence in Europe and Asia (see Note 17).
The total assets of the Group’s most significant subsidiaries, grouped by countries where Group has activity, as of June 30, 2009 and December 31, 2008 are as follows:
                 
    Millions of euros
COUNTRY   June-09   December-08
 
Spain
    380,018       380,532  
Mexico
    63,241       61,023  
USA & Puerto Rico
    46,703       49,698  
Chile
    10,104       9,389  
Venezuela
    10,603       9,652  
Colombia
    6,988       6,552  
Peru
    7,210       7,683  
Argentina
    4,934       5,137  
Other
    12,833       12,984  
       
Total
    542,634       542,650  
 

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The “Interest and similar income” of the Group’s most significant subsidiaries, grouped by countries where Group has activity, for the six months periods ended June 30, 2009 and 2008, are as follows:
                 
    Millions of euros
COUNTRY   June-09   June-08
 
Spain
    6,826       8,398  
Mexico
    2,863       3,213  
USA & Puerto Rico
    1,011       1,071  
Chile
    235       448  
Venezuela
    722       496  
Colombia
    401       375  
Peru
    305       229  
Argentina
    298       254  
Other
    250       298  
       
Total
    12,911       14,782  
 
Appendix II provides relevant information as of June 30, 2009 on the consolidated entities in the Group accounted for using the equity method.
Appendix IV provides relevant information as of June 30, 2009 on the consolidated jointly controlled entities accounted for using the proportionate consolidation method.
Appendix VI includes the changes in ownership interests held by the Group as of June 30, 2009.
Appendix VII includes a detail of the fully consolidated subsidiaries which, based on the information available, were more than 10% owned by non-Group shareholders as of June 30, 2009.
- Spain
The activity of the Group in Spain is carried out fundamentally through BBVA which is the Group’s parent company. Appendix I includes the BBVA individual financial statements as of June 30, 2009.
The following table sets forth information relating to total assets and income before tax of the Group over the total assets and consolidate income before tax of the Group, as of June 30, 2009 and December 31, 2008:
                 
    June-09   December-08
 
% BBVA Assets over Group Assets
    66 %     63 %
% BBVA Income before tax over Consolidated income before tax
    53 %     28 %
 
Additionally, there are other entities of the Group in Spain’s banking sector, insurance sector, real estate sector and entities of services and operating leases.
- Mexico
The Group presence in Mexico dates back to 1995. The activity is mainly developed through Grupo Financiero BBVA Bancomer, both in the banking sector through BBVA Bancomer, S.A. de C.V. as in the insurance and pensions business through Seguros Bancomer S.A. de C.V., Pensiones Bancomer S.A. de C.V., and Administradora de Fondos para el Retiro Bancomer, S.A. de C.V.
- United States and Puerto Rico
In recent years, the Group has expanded its presence in the United States through the acquisition of several financial groups operating in several southern states. In 2007 the Group acquired Compass Bancshares Inc. and State National Bancshares Inc. taking control of these entities and the companies of their groups. The merger between the three banks in Texas (Laredo National Bank, Inc., Texas National Bank, and State National Bank) and Compass Bank, Inc. took place along 2008.
The BBVA group has as well a significant presence in Puerto Rico through its subsidiary bank BBVA Puerto Rico, S.A.

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- Latin American Countries
The Group’s activity in the rest of the Latin American countries is mainly focused on the banking, insurance and/or pensions sectors in the following countries: Chile, Venezuela, Colombia, Peru, Argentina, Panama, Paraguay and Uruguay. In Bolivia and Ecuador the business activity is concentrated in the pensions sector.
The Group owns more than 50% of most of the companies in these countries, with the exception of certain companies based in Peru and Venezuela. Following is the detail of companies forming part of the BBVA Banco Continental (Peru) Group and BBVA Banco Provincial (Venezuela) which, although less than 50% owned by the Group, as of December 31, 2008, are fully consolidated because the agreements entered into with the other shareholders give the Group effective control (Note 2.1):
                 
    % Voting   %
COMPANY   Rights   Ownership
 
Banco Continental, S.A.
    92.08       46.04  
Continental Bolsa, Sociedad Agente de Bolsa, S.A.
    100       46.04  
Continental Sociedad Titulizadora, S.A.
    100       46.04  
Continental S.A. Sociedad Administradora de Fondos
    100       46.04  
Inmuebles y Recuperaciones Continental, S.A.
    100       46.04  
Continental DPR Finance Company
    100       46.04  
Comercializadora Corporativa SAC
    99.99       50.00  
Banco Provincial Overseas N.V.
    100       48.01  
 
Changes in the Group
The most noteworthy acquisitions and sales of subsidiaries for the six months ended June 30, 2009 and in the year 2008 were as follows:
Changes in the Group for the six months ended June 30, 2009
There were no significant changes to the Group’s structure between January 1 and June 30, 2009 other than the two Group companies which were merged into BBVA, S.A., as outlined below:
  Merger by absorption of Banco de Crédito Local and BBVA Factoring E.F.C., S.A.
 
    The directors of Group subsidiaries Banco de Crédito Local de España, S.A. (Sole Shareholder Company) and BBVA Factoring E.F.C., S.A. (Sole Shareholder Company), in their respective board meetings on January 26, 2009, and of Banco Bilbao Vizcaya Argentaria, S.A., in its board meeting on January 27, 2009, approved the merger of the two companies into BBVA, S.A and the corresponding en bloc universal transfer of all their assets and liabilities to BBVA, which acquired by universal succession the rights and obligations of the merged entities.
 
    The merger agreements were submitted to the companies’ respective shareholders for approval in general meeting during the first quarter of 2009.
 
    Both mergers were duly filed with the Business Register on June 5, 2009. Accordingly, as of that date of the merged the companies were effectively dissolved. For accounting purposes the mergers took effect from January 1, 2009.
Changes in the Group in 2008
During this period, there were no significant changes in the Group, except the previously mentioned fusion of three banks in Texas (Laredo National Bank, Inc., Texas National Bank, Inc., and State National Bank, Inc.) with Compass Bank, Inc.

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4. DIVIDENDS PAID BY THE BANK
The dividends paid in the six months periods ended June 30, 2009 and 2008 were as follows:
                                                 
    June-09   June-08
                    Amount                   Amount
    % over   Euros per   (millions   % over   Euros per   (millions of
    nominal   share   of euros)   Nominal   share   euros)
 
Ordinary shares
    34 %     0.167       626       87.6 %     0.429       1,608  
Rest of shares
                                   
Total dividends paid
    34 %     0.167       626       87.6 %     0.429       1,608  
Dividends with charge to income
    34 %     0.167       626       87.6 %     0.429       1,608  
Dividends with charge to reserve or share premium
                                   
Dividends in kind
                                   
             
On January 12, 2009, the third interim dividend for 2008 was paid for a gross amount of EUR 0.167 per share (net: EUR 0.13694 per share) on each of the 3,747,969,121 shares comprising share capital.
The own shares awarded to shareholders as part of supplementary remuneration to the 2008 dividend (Note 28), as ratified at the General Shareholders’ Meeting held on March 13, 2009, were delivered to shareholders on April 20, 2009.
After June 30, 2009, the Board of Directors of BBVA, at a meeting held on July 8, 2009, agreed on the first interim dividend payment for 2009, setting a gross payment of EUR 0.09 per share.
The provisional accounting statement elaborated by Banco Bilbao Vizcaya Argentaria, S.A. as of May 31, 2009 in accordance with legal requirements, highlights the existence of enough resources for the distribution of interim dividends, being as follows:
         
    Millions of euros
    First dividend of 2009
 
Interim dividend -
       
Profit at each of the dates indicated, after the provision for income tax
    1,232
Less -
       
Estimated provision for Legal Reserve
   
Interim dividends paid
   
 
   
Maximum amount distributable
    1,232
 
   
Amount of proposed interim dividend
    337
 
5. EARNINGS PER SHARE
The calculation of earnings per share for the six months periods ended June 30, 2009 and 2008 was as follow:
                 
EARNINGS PER SHARE FOR CONTINUING OPERATIONS   June-09   June-08
     
Numerator for basic earnings per share:
               
Income available to common stockholders (thousands of euros)
    2,799       3,108  
Numerator for diluted earnings per share:
               
Income available to common stockholders (thousands of euros)
    2,799       3,108  
Denominator for basic earnings per share (millions of shares)
    3,703       3,717  
Denominator for diluted earnings per share (millions of shares)
    3,703       3,717  
       
Basic earnings per share for continuing operations (euros)
    0.76       0.84  
       
Diluted earnings per share for continuing operations (euros)
    0.76       0.84  
 

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As of June 30, 2009 and 2008, the Group had no share-based instruments or payment commitments to employees that would have a significant dilutive effect on the earnings per share calculation for the periods presented or discontinued operations that would affect the calculation in either interim period.
6. BASIS AND METHODOLOGY INFORMATION FOR SEGMENT REPORTING
Segment reporting represents a basic tool in the oversight and management of the Group’s various businesses. The Group compiles reporting information on as disaggregated a level as possible, and all data relating to the businesses these units manage is recorded in full. These disaggregated units are then amalgamated in accordance with the organizational structure preordained by the Group into higher level units and, ultimately, the business segments themselves. Similarly, each of the legal entities making up the Group are assigned to the various business segments based on their core activities.
Once the composition of each business segment has been defined, certain management criteria are applied, noteworthy among which are the following:
  §   Economic capital: capital is allocated to each business based on capital at risk (CaR) criteria, in turn predicated on unexpected loss at a specific confidence level, determined as a function of the Group’s target solvency ratio. This target is in turn set at two levels: Tier 1 capital, which determines capital allocation and serves as the benchmark for determining each business’ return-on-equity (ROE); total capital, which determines additional allocations in relation to preferred shares and subordinated debt. The CaR calculation encompasses credit risk, market risk, structural balance sheet risk, shareholding risks, operational risk, risks to tangible assets and technical risks at insurance companies. These calculations are performed using internal models which have been designed following the guidelines and requirements stipulated in the Basel II capital accord, with economic criteria predominating over regulatory ones.
 
      CaR, due to its sensitivity to risk exposure, is an element that is intertwined with the businesses’ management policies, standardizing capital allocation across them in accordance with the risks assumed and facilitating comparison of returns across the various businesses. This means CaR is calculated on a uniform and consolidatable basis for all classes of risk and for every transaction, balance and exposure, enabling risk-adjusted assessments and aggregate performance data by customer, product, segment, unit or business area.
 
  §   Internal transfer prices: the calculation of the interest spreads at each business is performed using rates adjusted for maturities and rate reset clauses in effect on the various assets and liabilities making up each unit’s balance sheet. The allocation of profits across business generation and distribution units (e.g., in asset management products) is performed at market prices.
 
  §   Allocation of operating expenses: both direct and indirect expenses are allocated to the segments, except for those items for which there is no clearly defined or close link with the businesses, as they represent corporate/institutional expenses incurred on behalf of the overall Group.
 
  §   Cross-selling: on certain occasions, consolidation adjustments are made to eliminate certain overlap in two or more units’ results on account of cross-selling incentives.
Description of the Group’s operating segments
The Group determines the following business areas to be its operating segments for reporting purposes. Thus the present composition of the Group’s operating segments as of June 30, 2009, is as follows
  §   Spain and Portugal this includes: the Spanish retail branch network (individual customers, high networth individuals and small companies and businesses in the domestic market); the business & corporate banking unit (SMEs, large companies, institutions and developers in the domestic market); and the remaining units, in particular, consumer finance, BBVA Seguros and BBVA Portugal.
 
  §   Wholesale Banking & Asset Management (WB&AM) this consists of: Corporate and Investment Banking (including the activities of the European, Asian and New York offices with large corporate and business customers); Global Markets (trading floor business and distribution in Europe, Asia and New York); Asset Management, which includes traditional asset management (mutual and pension funds in Spain) as well as alternative funds and private equity; the Group’s own equity portfolios and long-term business projects (which spans the business development activity covering endeavours with long lead times and the private equity business conducted by Valanza S.C.R); and Asia

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      (through the Group’s holding in the Citic group). Wholesale Banking & Asset Management also operates in these businesses in Mexico and South America. However, this report covers its activities and earnings in those regions under the umbrella of the business areas there.
 
  §   Mexico: this area operates the banking, insurance and pension businesses in Mexico.
 
  §   The United States: this area operates the banking and insurance business in the United States, including those conducted in the Commonwealth of Puerto Rico.
 
  §   South America: this area operates the banking, insurance and pension businesses in South America.
 
  §   The Corporate Activities area handles the Group’s general management functions. These mainly consist of structural positions for interest rates associated with the euro balance sheet and exchange rates, together with liquidity and shareholders’ funds. The management of structural risks related to interest rates in currencies other than the euro is handled by the corresponding areas. This area also includes the Group’s industrial portfolio management unit and financial shareholdings, along with its non-international real estate business.
BBVA has maintained the criteria it applied in 2008 to the composition of the business areas very much the same for 2009, with only a few insignificant changes. These do not affect the Group-level information and their impact on the figures for the different business units and areas is practically irrelevant. Nonetheless, the 2008 data have been reformatted to include these marginal changes to ensure like-for-like comparison.
The detail of the total assets of the Group for each operating segment as of June 30, 2009 and December 31, 2008, is as follows:
                 
    Millions of euros
    Total assets
    June-09   December-08
 
Spain and Portugal
    219,114       220,470  
WB&AM
    142,536       136,785  
Mexico
    63,327       60,704  
USA
    40,463       43,351  
South America
    42,821       41,600  
Corporate Activities
    34,373       39,740  
       
Total
    542,634       542,650  
 
The detail of the consolidated income for the six months ended June 30, 2009 and 2008 for each operating segment is as follows:
                 
    Millions of euros
    Consolidated income
    June-09   June-08
 
Spain and Portugal
    1,270       1,292  
WB&AM
    539       557  
Mexico
    724       950  
USA
    85       164  
South America
    463       351  
Corporate Activities
    (282 )     (206 )
     
Subtotal
    2,799       3,108  
       
Not assigned income
           
Elimination of interim income (between segments)
           
Other gains (losses)
    243       169  
Income tax and/or income from discontinued operations
    961       1,213  
       
INCOME BEFORE TAX
    4,003       4,490  
 

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The detail of the ordinary income of the Group for the periods between January, 1 and June 30, 2009 and 2008 for each operating segment, which is conformed by the interest income, equity instruments income, fee and commission income, net gains on financial assets and liabilities and other operating income, is as follows:
                 
    Millions of euros
    Total ordinary income
    June-09   June-08
 
Spain and Portugal
    5,586       6,433  
WB&AM
    2,112       2,903  
Mexico
    3,991       4,758  
USA
    1,373       1,430  
South America
    2,817       2,662  
Corporate Activities
    2,119       2,564  
Adjustments and eliminations of ordinary income between segments
           
       
TOTAL
    17,998       20,750  
 
7. RISK EXPOSURE
Dealing in financial instruments can entail the assumption or transfer of one or more classes of risk by financial institutions. The main risks inherent in financial instruments are:
    Market risk is defined as the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. There are three types of market risk:
  -   Currency risk: exposure to fluctuations in the exchange rate between currencies.
 
  -   Fair Value interest rate risk: exposure to fluctuations in market interest rates.
 
  -   Price risk: exposure to changes in market prices, whether those changes are caused by factors specific to the instrument itself, or by factors affecting all similar financial instruments traded in the market.
    Credit risk is defined as the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation due to the insolvency or inability to repay of the obliged natural persons or legal entities.
 
    Liquidity risk is defined as the risk that an entity will not be able to meet obligations associated with financial liabilities, or will be forced to secure funding on onerous conditions, or on conditions that could damage the entity’s image and/or reputation.
RISK GUIDELINES AND POLICIES
The general guiding principles followed by the BBVA Group to define and monitor its risk profile are set out below:
    The risks assumed must be aligned with the Group’s regulatory capital in accordance with its target solvency level.
 
    There are limits in place to curtail the concentration of exposures to specific risk factors that could jeopardize the Group’s objectives in terms of solvency, liquidity and earnings recurrence.
 
    The Group’s endeavours to generate profits must imply a high degree of repeat earnings.
 
    Business growth must be financed in accordance with prudent liquidity management.
 
    All risks must be identified, measured and evaluated and procedures must be in place to monitor and manage these risks.

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    Maintenance of robust tools for controlling and mitigating operational and reputational risks.
 
    The business divisions are held responsible for proposing and maintaining an adequate risk profile within their scope of activity and under the umbrella of the corporate risk management framework.
 
    The risk management infrastructure must be sufficient to lend dynamic support to the principles listed above in relation to tools, databases, IT systems, procedures and personnel.
Building on these principles, the Group has developed an integrated risk management system that is structured around three main components: a corporate risk governance regime, with segregation of duties and responsibilities; a set of tools, circuits and procedures that constitute the various discrete risk management regimes, and an internal risk control system.
In relation to the second mentioned principles -limiting risk concentrations-, specifically in the trading area, limits are approved each year by the Board’s Risk Committee on exposures to trading, structural interest rate, structural currency, equity and liquidity risk at the banking entities and in the asset management, pension and insurance businesses. These limits factor in many variables, including economic capital and earnings volatility criteria, and are reinforced with alert triggers and a stop-loss scheme.
In relation to credit risk, maximum exposure limits are set by customer and country; generic limits are also set for maximum exposure to specific deals and products. Upper limits are allocated based on iso-risk curves, determined as the sum of expected losses and economic capital, and its ratings-based equivalence in terms of gross nominal exposure.
An additional guideline in terms of oversight of maximum risk concentration up to and at the level of 10% of equity: stringent requirements in terms of in-depth knowledge of the counterparty, its operating markets and sectors.
For retail portfolios, potential concentrations of risk are analyzed by geography or by certain specific risk profiles in relation to overall risk and earnings volatility; where appropriate, the opportune measures are taken, imposing cut-offs using scoring tools, via recovery management and mitigating exposure using pricing strategy, among other approaches.
CORPORATE GOVERNANCE STRUCTURE
The Group has a corporate governance system which is in keeping with international recommendations and trends, adapted to its business environment and to the most advanced practices in the markets in which it pursues its business.
In the field of risk management, it is the board of directors that is responsible for approving the risk control and management policy, as well as periodically monitoring internal reporting and control systems.
To perform this function correctly the board is supported by the Executive Committee and a Risk Committee, the main mission of the latter being to assist the board in undertaking its functions associated with risk control and management.
As per Board Regulations, article 36, for these purposes, the Risk Committee is assigned the following functions:
    Analysing and assessing proposals for Group risk strategy and policies.
 
    Monitoring the degree to which the risks assumed are in line with the specified profile.
 
    To assess and approve, where applicable, any risks whose size could compromise the Group’s capital adequacy or recurrent earnings, or that present significant potential operational or reputational risks.
 
    Verification that the Group is provided with the means, systems, structures and resources in line with best practices, to enable it to implement its risk management strategy.
The Group’s risk management system is managed by Corporate Risks Area, which combines a view by risk type with a global view. The Corporate Area of Risks is formed by units specialized for every class of risk (credit, market and structural, operational and not bank risks) that work close to transverse units as Global Management of the Risk that integrates all the risks, the unit of Methodologies of evaluation of the risks and Transformation and Internal Control.

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Below this level there are risk teams with which it maintains flowing, continuous relations, and which examine the risks from each country or from specific business groups.
Using this structure, the risk management function assures firstly, the integration, control and management of all the Group’s risks; secondly, the application of standardised risk principles, policies and metrics throughout the entire Group; and thirdly, the necessary insight into each geographical region and each business.
This organisational lay-out is supplemented by regular running committees which may be exclusively from the Risk Area (the Global Risk Committee and the Technical Operations Committee) or they may comprise several areas (The New Products Committee; the Global Internal Control and Operational Risk Committee, the Assets and Liabilities Committee and the Liquidity Committee). Their scope is:
    The Global Risk Committee, made up of the corporate supervisors of risk management in the Group, is to develop and implement the Group’s risk management model in such a way as to ensure that the cost of risk is appropriately integrated into the different decision-making processes. It thus assesses the Group’s global risk profile and whether its risk management policies are consistent with its target risk profile; it identifies global risk concentrations and alternatives to mitigate these; it monitors the macroeconomic and competitor environment, quantifying global sensitivities and the foreseeable impact different scenarios will have on risk exposure.
 
    The Technical Operations Committee analyses and approves, if appropriate, transactions and financial programmes to the level of its competency, scaling up those beyond its scope of power to the Risks Committee.
 
    The task of the Global Internal Control and Operational Risk Committee is to undertake a review at Group-level and of each of its units, of the control environment and the running of the Internal Control and Operational Risk Models, and likewise to monitor and locate the main operational risks the Group has open, including those of a transversal nature. This Committee is therefore the highest operational risk management body in the Group.
 
    The functions of the New Products Committee are to assess, and if appropriate to approve, the introduction of new products before activities commence; to undertake subsequent control and monitoring for newly authorised products; and to foster business in an orderly way to enable it to develop in a controlled environment.
 
    The Assets and Liabilities Committee (ALCO) is responsible for actively managing structural liquidity, interest rate and exchange rate risks, together with the Group’s own funds base.
 
    The Liquidity Committee will undertake monitoring of the measures adopted and it will verify the disappearance of the trend signals which led to it being convened or, if it so deems necessary, it will proceed to convene the Crisis Committee.
TOOLS, CIRCUITS AND PROCEDURES
The Group has implemented an integrated risk management system designed to cater for the needs arising in relation to the various types of risk; this prompted it to equip the management processes for each risk with measurement tools for risk acceptance, assessment and monitoring and to define the appropriate circuits and procedures, which are reflected in manuals that also include management criteria.
Specifically, the main risk management activities performed are as follows: calculation of the risk exposures of the various portfolios, considering any related mitigating factors (netting, collateral, etc.); calculation of the probability of default (PD), loss severity and expected loss of each portfolio, and assignment of the PD to the new transactions (ratings and scorings); measurement of the values-at-risk of the portfolios based on various scenarios using historical simulations; establishment of limits to the potential losses based on the various risks incurred; determination of the possible impacts of the structural risks on the income statement; setting of limits and alerts to safeguard the Group’s liquidity; identification and quantification of operational risks by business line to enable the mitigation of these risks through corrective measures; and definition of efficient circuits and procedures which contribute to the achievement of the targets set.

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7.1 CREDIT RISK
Credit risk is defined as the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation due to the insolvency or incapacity of natural or legal persons.
Maximum exposure to credit risk
For the financial assets recognized on the face of the consolidated balance sheet, credit risk exposure is equivalent to these assets’ carrying amounts. The maximum exposure to credit risk on financial guarantees extended is the maximum that the Group is liable for if these guarantees are called in.
The Group’s maximum credit exposure (except for trading derivatives and hedging derivates) as of June 30, 2009 and December 31, 2008, without recognizing the availability of collateral or other credit enhancements, is broken down by sector in the table below:
                         
            Millions of euros
    Note   June-09   December-08
 
Financial asstest held for trading
    10       32,618       26,556  
Debt securities
            32,618       26,556  
Public sector
            28,100       20,778  
Credit institutions
            1,841       2,825  
Other sectors
            2,677       2,953  
Other financial assets designated at fair value through profit or loss
    11       518       516  
Debt securities
            518       516  
Public sector
            30       38  
Credit institutions
            43       24  
Other sectors
            445       454  
Availvable-for-sale financial assets
    12       49,622       39,961  
Debt securities
            49,622       39,961  
Public sector
            30,548       19,576  
Credit institutions
            12,905       13,377  
Other sectors
            6,169       7,008  
Loans and receivables
    13       359,413       375,387  
Loans and advances to credit institutions
            24,513       33,679  
Loans and advances to customers
            334,440       341,322  
Public Sector
            24,052       22,503  
Agriculture
            3,717       4,109  
Industry
            46,797       46,576  
Real estate and construction
            53,541       47,682  
Trade and finance
            44,847       51,725  
Loans to individuals
            125,786       127,890  
Leases
            8,719       9,385  
Other
            26,981       31,452  
Debt securities
            460       386  
Public sector
            356       290  
Credit institutions
            4       4  
Other sectors
            100       92  
Held-to-maturity investments
    14       5,101       5,285  
Public sector
            3,744       3,844  
Credit institutions
            749       800  
Other sectors
            608       641  
             
Subtotal
            447,272       447,705  
               
Valuation adjustments
            538       942  
             
Total Balance
            447,810       448,647  
               
Financial guarantees
    33       34,421       35,952  
Other contingent exposures
            7,583       6,234  
Drawable by third parties
    33       85,140       92,663  
Public sector
            3,417       4,221  
Credit institutions
            2,254       2,021  
Other sectors
            79,469       86,421  
             
Total off-balances
            127,144       134,849  
               
Total
            574,954       583,496  
 

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The BBVA Group’s maximum credit risk exposure on derivatives as of June 30, 2009 amounted to €46,324 million (As of December 31, 2008: €46,888 million). This figure is a better reflection of maximum credit risk exposure than the balance sheet amount, as it includes not only the fair value of the Group’s positions at the reporting date (which is all that the balance sheet figure reflects), but also an estimate of the potential risk exposure on these positions when they expire.
Mitigating credit risk: collateral and other credit enhancements, including hedging policies and risk mitigation
In most instances the maximum credit exposure is mitigated by collateral, credit enhancements and other measures devised to reduce BBVA’s ultimate exposure.
The Group applies a credit risk protection and mitigation policy deriving from the banking approach focused on relationship banking. On this basis, the provision of guarantees is a necessary instrument but one that is not sufficient when taking risks; therefore for the Group to assume risks, it needs to verify the payment or resource generation capacity to comply with repayment of the risk incurred.
The aforementioned is carried out through a prudent risk management policy which consists of analysing the financial risk in a transaction, based on the repayment or resource generation capacity of the credit receiver, the provision of guarantees in any of the generally accepted ways (monetary, collateral or personal guarantees and hedging) appropriate to the risk borne, and lastly on the recovery risk (the asset’s liquidity).
The procedures for the management and valuation of collaterals are set out in the internal Manual on Credit Risk Management Policies, which the Group actively uses in the arrangement of transactions and in the monitoring of both these and customers.
This Manual lays down the basic principles of credit risk management, which includes the management of the collaterals assigned in transactions with customers. Accordingly, the risk management model jointly values the existence of a suitable cash flow generation by the obligor that enables them to service the debt, together with the existence of suitable and sufficient guarantees that ensure the recovery of the credit when the obligor’s circumstances render them unable to meet their obligations.
The procedures used for the valuation of the collateral are consistent with the market’s best practices, which involve the use of appraisal for real estate guarantees, market price for shares, quoted value of shares in a mutual fund, etc.
All collaterals assigned are to be properly instrumented and recorded in the corresponding register, as well as receive the approval of the Group’s Legal Units.
Following is a description of the principal guarantees or credit enhancements, which are taken directky from the issuer or counterparty, for every class of financial instruments:
  §   Financial assets held for trading: Guarantees or credit enhancements, which are taken directly from the issuer or counterparty, are implied in the instruments’ contractual clauses. For trading derivatives credit risk is minimized via master netting agreements, whereby derivative financial assets and liabilities with the same counterparty can been settled net. Other types of guarantees may also be put in place, depending on the counterparty’s solvency and the nature of the transaction.
 
  §   Other financial assets designated at fair value through profit or loss: Guarantees or credit enhancements, which are taken directly from the issuer or counterparty, are implied in the instruments’ contractual clauses.
 
  §   Available-for-sale financial assets: Guarantees or credit enhancements, which are taken directly from the issuer or counterparty, are implicit to the instrument’s structuring.
 
  §   Loans and receivables:
  -   Loans and advances to credit institutions: They have personal guarantees from the counterparties and, on occasion, an additional guarantee from another credit entity with which a credit derivative has been written.
 
  -   Loans and advances to customers: Most of these operations are backed by personal guarantees extended by the counterparties. The collateral received to secure loans and advances to customers include mortgages, cash guarantees and other collateral such as pledged securities. Other kinds of credit enhancements may be put in place such as guarantees, credit derivatives, etc.

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  -   Debt securities: Guarantees or credit enhancements, which are taken directly from the issuer or counterparty, are implicit to the instrument’s structuring.
  §   Held-to-maturity investments: Guarantees or credit enhancements, which are taken directly from the issuer or counterparty, are implicit to the instrument’s structuring.
 
  §   Hedging derivatives: Credit risk is minimized via master netting agreements, whereby derivative financial assets and liabilities with the same counterparty can be settled net. Other types of guarantees may also be put in place, depending on the counterparty’s solvency and the nature of the transaction.
 
  §   Financial guarantees, other contingent exposures and drawable by third parties: They have personal guarantees from the counterparties and, on occasion, an additional guarantee from another credit entity with which a credit derivative has been written.
The Group’s collateralized credit risk as of June 30, 2009 and December 31, 2008, excluding balances deemed impaired, is broken down in the table below:
                 
    Millions of euros
    June-09   December-08
 
Mortgage loans
    127,210       125,540  
Operating assets mortgage loans
    4,038       3,896  
Home mortgages
    97,779       96,772  
Rest
    25,393       24,872  
Secured loans, except mortgage
    19,729       19,982  
Cash guarantees
    217       250  
Pledging of securities
    572       458  
Rest
    18,940       19,274  
       
Total
    146,939       145,522  
 
In addition, the derivatives carry contractual, legal compensation rights that have effectively reduced credit risk by €30,702 million as of June 30, 2009 and €29,377 million as of December 31, 2008.
Specifically in relation to mortgages, as of June 30, 2009 the average amount pending collection on the corresponding loans represented 55% of the fair value of the properties pledged (55% as of December 31, 2008)
Credit quality of financial assets that are neither past due nor impaired
BBVA has ratings tools that enable it to rank the credit quality of its operations and customers based on a scoring system and to map these ratings to probability of default (PD) scales. To analyze the performance of PD, the Bank has a series of historical databases that house the pertinent information generated internally.
The scoring tools vary by customer segment (companies, corporate clients, SMEs, public authorities, etc). For wholesale portfolios where the number of defaults is very low (sovereigns, corporates, financial entities) the internal ratings models are fleshed out by benchmarking the statistics maintained by the external rating agencies (Moody’s, Standard and Poor’s and Fitch Ibca). To this end, each year the Bank compares the PDs compiled by the agencies and allocated to each level of rating of risk, mapping the measurements compiled by the various agencies to the BBVA master ratings scale.
BBVA maintains a master ratings scale with a view to facilitating the uniform classification of the Group’s various risky asset portfolios. Following, as of June 30, 2009, is a 17-notch abridged scale which groups outstanding risk into 17 categories:

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    Probability of default (basic points)
            Minimum   Maximum
Rating   Average   from >=   until <
 
AAA
    1       0       2  
AA+
    2       2       3  
AA
    3       3       4  
AA-
    4       4       5  
A+
    5       5       6  
A
    8       6       9  
A-
    10       9       11  
BBB+
    14       11       17  
BBB
    20       17       24  
BBB-
    31       24       39  
BB+
    51       39       67  
BB
    88       67       116  
BB-
    150       116       194  
B+
    255       194       335  
B
    441       335       581  
B-
    785       581       1,061  
C
    2,122       1,061       4,243  
 
The external ratings agencies’ ratings schedules correlate directly to the Group’s aggregate master rating’s scale, as depicted in the following table:
                     
Equivalence between different agencies: Functional Criteria
Level   S&P Rating   Moody’s Rating   Fitch Rating   Aggregated Rating   Aggregated PD
 
1   AAA   Aaa   AAA   AAA   0.01%
2   AA+   Aa1   AA+   AA+   0.02%
3   AA   Aa2   AA   AA   0.03%
4   AA-   Aa3   AA-   AA-   0.04%
5   A+   A1   A+   A+   0.05%
6   A   A2   A   A   0.08%
7   A-   A3   A-   A-   0.10%
8   BBB+   Baa1   BBB+   BBB+   0.14%
9   BBB   Baa2   BBB   BBB   0.20%
10   BBB-   Baa3   BBB-   BBB-   0.31%
11   BB+   Ba1   BB+   BB+   0.51%
12   BB   Ba2   BB   BB   0.88%
13   BB-   Ba3   BB-   BB-   1.50%
14   B+   B1   B+   B+   2.55%
15   B   B2   B   B   4.41%
16   B-   B3   B-   B-   7.85%
17   CCC-C   Caa-C   CCC-C   CCC-C   21.22%

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The tables below outline the distribution of exposure by internal ratings including derivatives to companies, financial entities and public institutions (excluding sovereign risk) as of June 30, 2009 and December 31, 2008:
         
June-09
Rating   %
 
AAA/AA+/AA/AA-
    21.38 %
A+/A/A-
    29.41 %
BBB+
    8.80 %
BBB
    7.19 %
BBB-
    8.24 %
BB+
    6.55 %
BB
    7.22 %
BB-
    5.93 %
B+
    3.15 %
B
    1.64 %
B-
    0.35 %
CCC/CC
    0.14 %
   
Total
    100 %
 
         
December-08
Rating   %
 
AAA/AA
    23.78 %
A
    26.59 %
BBB+
    9.23 %
BBB
    5.76 %
BBB-
    9.48 %
BB+
    8.25 %
BB
    6.16 %
BB-
    5.91 %
B+
    3.08 %
B
    1.44 %
B-
    0.29 %
CCC/CC
    0.03 %
   
Total
    100 %
 
Policies for preventing excessive concentrations of risk
In order to prevent the build up of excessive concentrations of credit risk at the individual, country and sector levels, the Group oversees updated risk concentration indices at the individual and portfolio levels tied to the various observable variables within the field of credit risk management. The limit on the Group’s exposure or share of a customer’s financial business therefore depends on the customer’s credit rating, the nature of the facility, and the Group’s presence in a given market, based on the following guidelines:
    Striking a balance between the customer’s financing needs, broken down by type (trade/financial, short/long-term, etc.), and the degree to which its business is or is not attractive to BBVA. This approach drives a better operational mix that is still compatible with the needs of the bank’s clientele.
 
    Other determining factors relate to national legislation and the ratio between the size of the customer book and bank’s equity, to prevent risk from becoming overly concentrated among few customers. Additional factors taken into consideration include constraints related to market, customer, internal regulation and macroeconomic factors, etc.
 
    Meanwhile, correct portfolio management leads to identification of risk concentrations and enables the taking of appropriate action.
Operations with customers or groups that entail an expected loss plus economic capital of over €18 million are approved at the highest level, i.e., by the Board Risk Committee. As a reference point, this is equivalent in terms of exposure to 10% of eligible equity for an AAA and to 1% for a BB rating, implying oversight of the major individual risk concentrations by the highest-level risk governance bodies as a function of credit ratings.
An additional guideline in terms of oversight of maximum risk concentration up to and at the level of 10% of equity: stringent requirements in terms of in-depth knowledge of the counterparty, its operating markets and sectors.
Financial assets past due but not impaired
The table below provides disclosure on financial assets past due as of June 30, 2009 but not impaired, including any amount due to date, by class of financial instrument:
                                 
    Millions of euros
    Less than 1   1 to 2        
    month   months   2 to 3 months   Total
 
Loans and advances to customers
    3,270       561       599       4,430  
 

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Impaired assets and impairment losses
The table below breaks down the balance of impaired financial assets in the consolidated balance sheets and impaired contingent liabilities as of June 30, 2009 and December 31, 2008 by heading:
                 
    Millions of euros
    June-09   December-08
 
IMPAIRED RISKS ON BALANCE
               
Available-for-sale
    289       188  
Debt securities
    289       188  
Loans and receivables
    11,625       8,540  
Loans and advances to credit institutions
    98       95  
Loans and advances to customers
    11,509       8,437  
Debt securities
    18       8  
     
Total
    11,914       8,728  
       
Of which:
               
Public sector
    100       102  
Credit institutions
    175       165  
Collateralized financial assets with other sectors
    11,639       8,461  
Mortgage
    3,535       2,487  
Other collateralized financial assets
    1,298       941  
Non-collateralized financial assets with other sectors
    6,806       5,033  
 
               
IMPAIRED RISKS OFF BALANCE
               
Impaired contingent liabilities
    264       131  
       
Total
    12,178       8,859  
 
The changes for the six months periods ended June 30, 2009 and 2008 in the impaired financial assets and impaired contingent liabilities were as follow:
                 
    Millions of euros
    June-09   June-08
 
Balance at the beginning of the period
    8,859       3,408  
Additions
    7,617       3,806  
Recoveries
    (2,878 )     (1,528 )
Transfers to write-off
    (1,505 )     (882 )
Exchange differences and others
    85       (84 )
       
Balance at the end of the period
    12,178       4,720  
 
Following is a detail of the impaired financial assets considered as of June 30, 2009 and December 31, 2008 classified by geographical location of risk and by age of the oldest past-due amount:

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    Millions of euros
    Impaired assets of loans and advances to customers
    Amounts less                    
    than six                    
    months past-   6 to 12   12 to 18   18 to 24   More than 24    
jun-09   due   months   months   months   months   Total
 
Spain
    2,791       2,205       958       530       1,958       8,442  
Rest of Europe
    93       11       9       7       28       148  
Latin America
    1,252       144       26       16       451       1,889  
United States
    1,288                         142       1,430  
Rest
                            5       5  
               
Total
    5,424       2,360       993       553       2,584       11,914  
 
                                                 
    Millions of euros
    Impaired assets
    Amounts less                    
    than six                    
    months past-   6 to 12   12 to 18   18 to 24   More than 24    
Dec-08   due   months   months   months   months   Total
 
Spain
    2,405       1,904       595       87       975       5,966  
Rest of Europe
    55       10       6       5       16       92  
Latin America
    1,112       88       22       7       320       1,549  
United States
    221       869                   30       1,120  
Rest
                            1       1  
               
Total
    3,793       2,871       623       99       1,342       8,728  
 
The table below depicts the finance income accrued on impaired financial assets as of June 30, 2009 and December 31, 2008:
                 
    Millions of euros
    June-09   December-08
 
Financial income from impaired assets
    1,257       1,042  
 
This income is not recognized in the accompanying consolidated income statement due to the existence of doubts as to the collectibility of these assets.
The analysis of financial assets that are individually determined to be impaired as at the reporting date, including the factors the entity considered in determining that they are impaired and a description of collateral held by the entity as security and other credit enhancements, is provided in Note 2.2.1.b.
The changes for the six months periods ended June 30, 2009 and 2008 of the transfers to write-offs (financial impairment assets removed from balance because the recovery was considered remote) were as follow:
                 
    Millions of euros
    June-09   June-08
 
Balance at beginning of period
    6,872       5,622  
Increase:
               
Assets of remote collectability
    1,169       648  
Products overdue not collected
    285       251  
Decrease:
               
Cash recovery
    (80 )     (49 )
Foreclosed assets
    (9 )     (6 )
Other causes
    (260 )     (380 )
       
Net exchange differences
    32       (46 )
       
Balance at the end of period
    8,009       6,040  
 

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Derecognitions on other grounds in the table above include €250 million from sales of impaired assets from the Mexican loan book to non-Group third parties realized between January 1 and June 30, 2009.
Group’s NPL ratios of “Loans and advances to customers” for the six months ended June 30, 2009 and December 31, 2008 were:
                 
    June-09   December-08
 
NPL ratio
    3.2       2.3  
 
The breakdown of impairment losses by type of instrument registered in profit and loss and recoveries of written-off assets realized of financial assets for the period is provided in note 47.
The changes in the accumulated impairment losses for the six months periods ended June 30, 2009 and 2008 on the financial assets were as follow:
                 
    Millions of euros
    June-09   June-08
 
Balance at beginning of period
    7,711       7,194  
Increase in impairment losses charged to income
    3,403       1,611  
Decrease in impairment losses credited to income
    (1,378 )     (353 )
Transfers to written-off loans
    (1,505 )     (882 )
Exchange differences and other
    (103 )     (99 )
     
Balance at end of period
    8,128       7,471  
       
Of which:
               
For impaired portfolio
    4,497       2,073  
For current portfolio non impaired
    3,631       5,398  
Of which:
               
Available-for-sale
    348       66  
Loans and advances — Loans to customers
    7,682       7,379  
Loans and advances — Credit institutions
    83       16  
Loans and advances — Debt securities
    13       4  
Held-to-maturity
    2       6  
 
7.2 MARKET RISK
a) Market Risk
Market risk arises as a consequence of the Group’s market operations, specifically exposure via financial instruments the value of which could be affected by variations in market conditions, translating into changes in the various assets and financial risk factors. Market risk can be mitigated and even eliminated via hedges by contracting other products (assets/liabilities or derivatives), or by unwinding open positions/transactions.
Four major classes of risk can affect market prices: currency risk, interest rate risk, equity risk and commodities risk. In addition, for certain positions it is also necessary to consider other risks, such as spread, base, volatility or correlation risk.
    Interest rate risk: this is the risk resulting from variations in market interest rates.
 
    Exchange rate risk: this is the risk resulting from variations in FX exchange rates.
 
    Price risk: this is the risk resulting from variations in market prices
 
    Commodity risk: this is the risk resulting from variations in the value of commodities.

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    Vega risk: this is the risk resulting from variance in the above-listed market risk factors (foreign exchange, interest rates, price, commodities).
 
    In addition, for certain positions, other specific risks or sub-risks need to be factored in: spread risk, base risk, correlation risk, etc.
VaR Model
Value at Risk (VaR) is the basic variable for measuring and controlling the Group’s market risk. This risk metric estimates the maximum loss that may occur in a portfolio’s market positions for a particular time horizon and given confidence level. VaR is calculated in the Group at a 99% confidence level and a 1-day time horizon.
In addition, BBVA S.A. and BBVA Bancomer have obtained Bank of Spain authorization for the use of internal ratings based models (the IRB approach) to calculate their capital requirements for market risk. This authorization is effective since December 31, 2004 for BBVA S.A. and since December 31, 2007 for BBVA Bancomer.
In BBVA S.A and BBVA Bancomer VaR is estimated using the Historic Simulation methodology. This methodology consists of observing how the profits and losses of the current portfolio would perform if the market conditions from a particular historic period were in force, and from that information to infer the maximum loss at a certain confidence level. It offers the advantage of accurately reflecting the historical of the market variables and of not requiring any specific distribution assumption. The historic period used is one of two years.
VaR figures are estimated following two methodologies:
    VaR without smoothing, which awards equal weight to the daily information for the immediately preceding last two years. This is currently the official methodology for measuring market risks vis-à-vis limits compliance of the risk.
 
    VaR with smoothing, which weights more recent market information more heavily. This is a metric which supplements the previous one.
VaR with smoothing adapts itself more swiftly to the changes in financial market conditions, whereas VaR without smoothing is, in general, a more stable metric that will tend to exceed VaR with smoothing when the markets show less volatile trends, while it will tend to be lower when they present upturns in uncertainty.
With regard to market risk limit structure determines a scheme of VaR (Value at Risk) limits and an Economic Capital for market risk for each business unit and specific sublimits by type of risk, activity and desk. The VaR/CaR readings are complemented by sensitivity analysis to determine, and where necessary limit, exposure to changes in the various market risk variables. This indicators and alerts automatically activate procedures aimed at addressing any situations that might have a negative effect on the activities of the business area.
Stress testing
Complementing the risk measurements outlined previously, the Group performs stress tests to measure the impact of extreme market swings on open risk positions.
The Group is currently performing stress testing on crisis historical and economic crisis scenarios supplied by the Economic Research Department.
-   Historical crisis scenarios: Once the critical periods that are to be used have been defined, the development of the risk factors is applied to revalue the current portfolio in order to estimate the loss that would be incurred if this market situation were to be repeated.
 
-   Economic crisis scenarios: Economic stress scenarios are more dynamic. It is the Market Stress Committee which decides which are the scenarios to be taken into account. This committee’s ultimate aim is to enable the most significant market risk positions in the Group’s trading market activities to be identified, assessing the impact certain movements in their risk drivers will have on them, a task which is performed by the Market Risk areas in the various units in the Group. To do so, the Stress Committee must identify and quantify foreseeable crisis scenarios in the financial markets, and this is achieved thanks to quantification of the impacts on the financial variables by the Economic Research Department.

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Backtesting
The Group’s market risk measurement model needs to have a back-testing or selfvalidation programme, which assures that the risk measurements being made are suitable.
The Global Markets Risk Unit (UCRAM, after its Spanish initials) periodically approves the risk measurement models used to estimate the maximum loss that could be incurred in the positions assessed with a certain level of probability, given that the principles or assumptions on which they are based may become obsolete due to variations in market conditions.
The approval of the VaR measurement is performed by comparing the ex-ante risk levels provided daily by the model with the real, ex-post management results calculated by the Finance Department from the business units’ management systems. It is verified that the resulting risk level is consistent with the results obtained. In all of this the Group follows Basel II and Bank of Spain guidelines.
Trend in Market Risk for the six months ended June 30, 2009
The BBVA Group’s market risk was higher at June 30, 2009 than in prior years, namely €26.3 million on average throughout 1H09 (calculation based on VaR without smoothing). The backdrop of the slowdown and deterioration in the global economy, prompting sustained declines in inflation rates, has led central banks worldwide to successively cut their benchmark lending rates, contributing to ongoing financial market volatility and increased market risk exposure at certain South American entities in light of prevailing expectations for successive rate cuts. Market risk at June 30, 2009 and 2008 for non-smoothed VaR at a 99% confidence level and 1-day horizon was as follows:
TREND IN MARKET RISK
(MILLIONS OF EUROS)
(LINE GRAPH)
The market risks for risk factors are:
                 
    Millions of euros
    June-09   December-08
 
Interest/Spread risk
    27.1       24.2  
Currency risk
    5.8       7.4  
Stock-market risk
    1.1       1.1  
Vega/Correlation risk
    11.8       14.8  
 
b) Structural interest rate risk
The aim of on-balance-sheet interest rate risk management is to maintain the BBVA Group’s exposure to market interest rate fluctuations at levels in keeping with its risk strategy and profile. To this end, the ALCO actively manages the balance sheet through transactions intended to optimize the level of risk assumed in relation to the expected results, thus enabling the Group to comply with the tolerable risk limits.
The ALCO bases its activities on the interest rate risk measurements performed by the Risk Area. Acting as an independent unit, the Risk Area periodically quantifies the impact of interest rate fluctuations on the BBVA Group’s net interest income and economic value.

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In addition to measuring the sensitivity to 100-basis-point changes in market interest rates, the Group performs probability calculations that determine the “economic capital” and “risk margin” for structural interest rate risk in BBVA’s Group banking activity (excluding the Treasury Area) based on interest rate curve simulation models. The Group regularly performs stress tests and sensitivity analysis to complement its assessment of its interest rate risk profile.
All these risk measurements are subsequently analyzed and monitored, and levels of risk assumed and the degree of compliance with the limits authorized by the Standing Committee are reported to the various managing bodies of the Group.
Following is a detail in millions of euros of the average interest rate risk exposure levels of the main financial institutions of the BBVA Group for the six months ended June 30, 2009:
                                         
    Average Impact on Net Interest Income (Millions of euros)
                                    100 Basis-Point
    100 Basis-Point Increase   Decrease
ENTITIES   Euro   U.S. Dollar   Other   Total   Total
 
BBVA
    -162,1       -28,1       -1,3       -185,7       +184,6  
BBVA Bancomer
          +20,4       +30,0       +50,5       -53,7  
BBVA Puerto Rico
          +5,1             +5,1       -5,4  
BBVA Compass
          -6,3             -6,3       +22,0  
BBVA Chile
          +0,1       +0,5       +0,6       -0,9  
BBVA Colombia
          +0,3       +8,5       +8,8       -8,9  
BBVA Banco Continental
          +4,0       +3,2       +7,2       -7,3  
BBVA Banco Provincial
          +0,9       +5,3       +6,2       -6,3  
BBVA Banco Frances
          +0,0       +2,5       +2,5       -2,5  
 
                                         
    Average impact on economic value (Millions of euros)
                                    100 Basis-Point
    100 Basis-Point Increase   Decrease
ENTITIES   Euro   U.S. Dollar   Other   Total   Total
 
Europa
    +145,1       +6,7       -0,5       +153,1       -244,2  
BBVA Bancomer
          +70,1       -260,7       -190,6       +162,6  
BBVA Puerto Rico
          -4,3             -4,3       +3,6  
BBVA Compass
          -8,6             -8,6       -110,5  
BBVA Chile
          +1,7       -46,0       -44,3       +23,6  
BBVA Colombia
          +0,4       -13,8       -13,4       +14,7  
BBVA Banco Continental
          -7,6       -24,0       -31,5       +33,6  
BBVA Banco Provincial
          -2,0       -14,7       -16,7       +17,7  
BBVA Banco Frances
          -0,2       +2,0       +1,8       -2,0  
 
As part of the measurement process, the Group established the assumptions regarding the evolution and behaviour of certain items, such as those relating to products with no explicit or contractual maturity. These assumptions are based on studies that estimate the relationship between the interest rates on these products and market rates and enable specific balances to be classified into trend-based balances maturing at long term and seasonal or volatile balances with short-term residual maturity.
c) Structural currency risk
Structural currency risk derives mainly from exposure to exchange rate fluctuations arising in relation to the Group’s foreign subsidiaries and from the endowment funds of the branches abroad financed in currencies other than the investment currency.
The ALCO is responsible for arranging hedging transactions to limit the net worth impact of fluctuations in exchange rates, based on their projected trend, and to guarantee the equivalent euro value of the foreign currency earnings expected to be obtained from these investments.

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Structural currency risk management is based on the measurements performed by the Risk Area. These measurements use an exchange rate scenario simulation model which quantifies possible changes in value for a given confidence interval and a pre-established time horizon. The Standing Committee authorises the scheme of limits and alerts over this risk measurements which include a limit on the economic capital or unexpected loss arising from the currency risk of the foreign-currency investments.
As of June 30, 2009 the coverage of structural currency risk exposure stood at 36%. The aggregate figure of asset exposure sensitivity to 1% depreciation in exchange rates stood, as of June 30, 2009, at € 90 million, with the following concentration: 50% in the Mexican peso and 28% in other South American currencies.
d) Structural equity price risk
The BBVA Group’s exposure to structural equity price risk derives mainly from investments in industrial and financial companies with medium- to long-term investment horizons. It is reduced by the net short positions held in derivative instruments on the same underlyings in order to limit the sensitivity of the portfolio to possible falls in prices. As of June 30, 2009 the aggregate sensitivity of the Group’s equity positions to a 1% fall in the price of the shares amounted to €67 million, while the sensitivity of consolidated profit to the same percentage change in prices is estimated at €4 million, the latter being positive in case of falling prices in the case of net short positions in derivatives. This figure is determined by considering the exposure on shares measured at market price or, in the absence thereof, at fair value, including the net positions in equity swaps and options on the same underlying in delta equivalent terms. Treasury Area portfolio positions are not included in the calculation.
The Risk Area measures and effectively monitors the structural equity price risk. To this end, it estimates the sensitivity figures and the capital required to cover the possible unexpected losses arising from fluctuations in the value of the companies in the investment portfolio, with a confidence interval equal to the entity’s target rating, taking into account the liquidity of the positions and the statistical behaviour of the assets under consideration. These measurements are supplemented by periodic stress- and back-testing and scenario analyses.
7.3 LIQUIDITY RISK
The aim of liquidity risk management and control is to ensure that the payment commitments can be met on duly without having to resort to borrowing funds under onerous conditions, or damaging the image and reputation of the institution.
The Group’s liquidity risk is monitored using a dual approach: the short-term approach (90-day time horizon), which focuses basically on the management of payments and collections of Treasury and Markets, ascertains the Bank’s possible liquidity requirements; and the structural, medium- and long-term approach, which focuses on the financial management of the balance sheet as a whole, with a minimum monitoring time frame of one year.
The assessment of asset liquidity risk is based on whether or not they are eligible for rediscounting before the corresponding central bank. For normal situations, both in the short and medium term, those assets that are on the eligible list published by the European Central Bank (ECB) or the corresponding monetary authority are considered to be liquid. Non-eligible assets, quoted or non-quoted, are considered to represent a second line of liquidity for the entity when analysing crisis situations.
The Risk Area performs a control function and is totally independent of the management areas of each of the approaches and of the Group’s various units. Each of the risk areas, which are independent from each other, complies with the corporative principles of liquidity risk control that are established by the Market Risk Central Unit (UCRAM) — Structural Risks.
For each entity, the management areas request an outline of the quantitative and qualitative limits and alerts for short-medium- and medium-term liquidity risk, which is authorized by the Standing Committee. Also, the Risk Area performs periodic (daily and monthly) risk exposure measurements, develops the related valuation tools and models, conducts periodic stress tests, measures the degree of concentration on interbank counterparties, prepares the policies and procedures manual, and monitors the authorised limits and alerts, which are reviewed al least one time every year.

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The liquidity risk data are sent periodically to the Group’s ALCO and to the management areas involved. As established in the Contingency Plan, the Technical Liquidity Group (TLG), in the event of an alert of a possible crisis, conducts an initial analysis of the Bank’s short- and long-term liquidity situation. The TLG comprises personnel from the Short-Term Cash Desk, Financial Management and the Market Area Risk Unit (UCRAM-Structural Risk). If the alert is serious, the TLG reports the matter to the Liquidity Committee, which is composed of the managers of the related areas. The Liquidity Committee is responsible, in situations requiring urgent attention, for calling a meeting of the Crisis Committee.
The remaining contractual maturities of transactions of financial instruments in the consolidated balance sheets as of June 30, 2009 and December 31, 2008, disregarding valuation adjustments, were as follows:
                                                         
    Millions of euros
                    Up to 1   1 to 3   3 to 12   1 to 5   Over 5
June-09   Total   Demand   month   months   months   years   years
 
ASSETS -
                                                       
Cash and balances with central banks
    23,050       21,894       244       143       88       681        
Loans and advances to credit insititutions
    24,513       3,493       9,756       2,015       2,088       4,837       2,324  
Loans and advances to customers
    334,440       21,213       30,888       18,304       41,728       95,821       126,486  
Debt securities
    88,320       1,018       3,471       15,007       10,636       30,403       27,785  
Derivatives (trading and hedging)
    37,600             837       1,333       5,189       16,196       14,045  
LIABILITIES-
                                                       
Deposits from central banks
    26,951       1,940       7,729       1,817       3,390       12,075        
Deposits from credit institutions
    49,753       4,900       22,258       6,003       5,406       5,361       5,825  
Deposits from customers
    248,068       100,001       59,261       30,466       37,472       15,249       5,619  
Debt certificates (including bonds)
    99,588             10,153       12,394       18,348       37,872       20,821  
Subordinated liabilities
    16,332       69             1,351       1,469       1,638       11,805  
Other financial liabilities
    8,280       4,706       906       40       615       1,689       324  
Short positions
    2,390             95             29             2,266  
Derivatives (trading and hedging)
    36,664             1,511       1,623       5,663       15,117       12,750  
 
                                                         
    Millions of euros
                    Up to 1   1 to 3   3 to 12   1 to 5   Over 5
December-08   Total   Demand   month   months   months   years   years
 
ASSETS -
                                                       
Cash and balances with central banks
    14,642       13,487       476       296       181       202        
Loans and advances to credit insititutions
    33,679       6,198       16,216       1,621       2,221       4,109       3,314  
Loans and advances to customers
    341,322       13,905       36,049       23,973       45,320       91,030       131,045  
Debt securities
    72,704       716       1,701       12,230       9,483       24,640       23,934  
Derivatives (trading and hedging)
    44,779             3,739       2,206       5,442       16,965       16,427  
LIABILITIES-
                                                       
Deposits from central banks
    16,762       2,419       8,737       2,441       3,165              
Deposits from credit institutions
    49,573       4,906       22,412       4,090       5,975       6,581       5,609  
Deposits from customers
    253,723       101,141       68,804       27,025       35,176       16,440       5,137  
Debt certificates (including bonds)
    101,328             9,788       13,516       12,072       45,469       20,483  
Subordinated liabilities
    16,249       69       913       1       872       3,582       10,812  
Other financial liabilities
    8,453       5,000       1,152       385       203       1,371       342  
Short positions
    2,700             24             23             2,653  
Derivatives (trading and hedging)
    41,535             2,693       3,108       6,310       15,538       13,886  
 
In the wake of the exceptional circunstances unfolding in the international financial markets, notably from the second half of 2008, the European governments committed to taking the opportune measures to try to resolve the issues confronting bank funding and the ramifications of constrained funding on the real economy with a view to safeguarding the stability of the international financial system. The overriding goals underpinning these measures were to ensure sufficient liquidity to enable financial institutions to function

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correctly, to facilitate the funding of banks, to provide financial institutions with additional capital resources where needed so as to continue to ensure the proper financing of the economy, to ensure that applicable accounting standards are sufficiently flexible to take into consideration current exceptional market circumstances and to reinforce and improve cooperation among European nations.
Framed by this general philosophy, the following measures were passed into law in Spain during the fourth quarter of 2008:
  Royal Decree-Law 6/2008, of October 10, creating the Spanish Financial Asset Acquisition Fund, and Order EHA/3118/2008, dated October 31, enacting this Royal Decree.
 
  Royal Decree-Law 7/2008, of October 13, on Emergency Economic Measures in connection with the Concerted Euro Area Action Plan, and Order EHA/3364/2008, dated November 21.
The Bank is entitled to avail of the aforementioned measures under the umbrella of its risk management policy. However, at the date of preparation of the accompanying financial statements, the Group has not had to resort to using these facilities.
7.4 RISK CONCENTRATIONS
The table below depicts the Group’s financial instruments by classes and geographic markets, disregarding valuation adjustments, as of June 30, 2009 and December 31, 2008:
                                                 
June-09   Millions of euros
            Europe                    
            except           Latin        
RISKS ON BALANCE   Spain   Spain   USA   America   Rest   Total
 
Financial assets held for trading
    18,667       30,449       3,311       15,663       2,974       71,064  
Debt securities
    10,613       7,836       746       13,061       362       32,618  
Equity instruments
    2,456       852       15       997       330       4,650  
Derivatives
    5,598       21,761       2,550       1,605       2,282       33,796  
Other financial assets designated at fair value through profit or loss
    226       35       447       1,378       2       2,088  
Debt securities
    55       8       446       8       1       518  
Equity instruments
    171       27       1       1,370       1       1,570  
Available-for-sale portfolio
    24,068       10,986       8,524       9,665       3,062       56,305  
Debt securities
    20,633       10,650       7,819       9,472       1,048       49,622  
Equity instruments
    3,435       336       705       193       2,014       6,683  
Loans and receivables
    210,657       37,726       36,812       67,460       6,757       359,412  
Loans and advances to credit institutions
    3,926       10,869       2,157       6,667       894       24,513  
Loans and advances to customers
    206,731       26,854       34,310       60,693       5,852       334,440  
Debt securities
          3       345       100       11       459  
Held-to-maturity investments
    2,281       2,820                         5,101  
Hedging derivatives
    289       3,045       155       284       31       3,804  
     
Total
    256,188       85,061       49,249       94,450       12,826       497,774  
 
                                                 
            Europe                    
            except           Latin        
RISKS OFF-BALANCE   Spain   Spain   USA   America   Rest   Total
 
Financial guarantees
    16,297       8,019       3,437       4,771       1,897       34,421  
Other contingent exposures
    40,840       22,641       14,311       13,469       1,462       92,723  
     
Total
    57,137       30,660       17,748       18,240       3,359       127,144  
 

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December-08   Millions of euros
            Europe                    
            except           Latin        
RISKS ON BALANCE   Spain   Spain   USA   America   Rest   Total
 
Financial assets held for trading
    20,489       30,251       4,566       16,120       1,873       73,299  
Debt securities
    7,799       5,926       652       11,563       616       26,556  
Equity instruments
    2,332       1,376       80       1,071       938       5,797  
Derivatives
    10,358       22,949       3,834       3,486       319       40,946  
Other financial assets designated at fair value through profit or loss
    245       24       442       1,042       1       1,754  
Debt securities
    63             441       12             516  
Equity instruments
    182       24       1       1,030       1       1,238  
Available-for-sale portfolio
    15,233       10,460       9,633       8,449       2,999       46,774  
Debt securities
    11,811       9,970       8,889       8,368       924       39,962  
Equity instruments
    3,422       490       744       81       2,075       6,812  
Loans and receivables
    215,030       44,394       38,268       69,534       8,162       375,388  
Loans and advances to credit institutions
    6,556       15,848       2,479       7,466       1,330       33,679  
Loans and advances to customers
    208,474       28,546       35,498       61,978       6,826       341,322  
Debt securities
                291       90       6       387  
Held-to-maturity investments
    2,396       2,889                         5,285  
Hedging derivatives
    439       2,789       270       309       26       3,833  
     
Total
    253,832       90,807       53,179       95,454       13,061       506,333  
 
                                                 
            Europe                    
            except           Latin        
RISKS OFF-BALANCE   Spain   Spain   USA   America   Rest   Total
 
Financial guarantees
    16,843       8,969       3,456       4,721       1,963       35,952  
Other contingent exposures
    45,039       22,366       16,194       13,559       1,739       98,897  
               
Total
    61,882       31,335       19,650       18,280       3,702       134,849  
 
The breakdown of the main balances in the consolidated balance sheets as of June 30, 2009 and December 31, 2008 held in foreign currency are broken down into the main currencies of denomination in Note 2.2.4.
8. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of an asset or a liability on a given date is the amount for which it could be exchanged or settled, respectively, between two knowledgeable, willing parties in an arm’s length transaction. The most objective and common reference for the fair value of an asset or a liability is the price that would be paid for it on an organised, transparent and deep market (“quoted price” or “market price”).
If there is no market price for a given asset or liability, its fair value is estimated on the basis of the price established in recent transactions involving similar instruments and, in the absence thereof, by using mathematical measurement models sufficiently tried and trusted by the international financial community. The estimates used in such models take into consideration the specific features of the asset or liability to be measured and, in particular, the various types of risk associated with the asset or liability. However, the limitations inherent to the measurement models developed and the possible inaccuracies of the assumptions required by these models may signify that the fair value of an asset or liability that is estimated does not coincide exactly with the price for which the asset or liability could be exchanged or settled on the date of its measurement.
Determining the fair value of financial instruments
Following is a comparison of the carrying amounts of the Group’s financial assets and liabilities and their respective fair values as of June 30, 2009 and December 31, 2008:

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    Millions of euros
            June-09   December-08
            Book           Book    
    Note   value   Fair value   value   Fair value
 
Assets
                                       
Cash and balances with central banks
    9       23,053       23,053       14,659       14,659  
Financial assets held for trading
    10       71,064       71,064       73,299       73,299  
Other financial assets designated at fair value through profit or loss
    11       2,088       2,088       1,754       1,754  
Available-for-sale financial assets
    12       57,385       57,385       47,780       47,780  
Loans and receivables
    13       352,905       361,632       369,494       381,845  
Held-to-maturity investments
    14       5,099       5,080       5,282       5,221  
Hedging derivatives
    15       3,804       3,804       3,833       3,833  
Liabilities
                                       
Financial assets held for trading
    10       37,529       37,529       43,009       43,009  
Other financial liabilities designated at fair value through profit or loss
    11       1,295       1,295       1,033       1,033  
Financial liabilities at amortised cost
    22       452,489       450,962       450,605       447,722  
Hedging derivatives
    15       1,525       1,525       1,226       1,226  
 
For financial instruments that are not carried at fair value, fair value was calculated in the following manner:
  The fair value of “Cash and balances with central banks”, which are short term, is equivalent to their carrying amount.
 
  The fair value of “Held-to-maturity investments” is equivalent to their quoted price in active markets.
 
  The fair values of “Loans and receivables” and “Financial liabilities at amortized cost” was estimated by discounting estimated cash flows to present value using the market interest rates prevailing at each year-end.
For financial instruments which are carried at fair value, the measurement processes used are set forth below:
  Level 1: Measurement using market observable quoted prices for the financial instrument in question, secured from independent sources and linked to active markets. This level includes listed debt securities, other listed equity instruments, certain derivatives and mutual funds.
 
  Level 2: Measurement using valuation techniques the inputs for which are drawn from market observable data.
 
  Level 3: Measurement using valuation techniques, where some of the inputs are not taken from market observable data. Model selection and validation is undertaken at the independent business units.

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The following table depicts the main financial instruments carried at fair value as of June 30, 2009 and December 31, 2008, broken down by the valuation technique level used to determine fair value:
                                                         
    Millions of euros
            June-09   December-08
    Note   Level 1   Level 2   Level 3   Level 1   Level 2   Level 3
 
ASSETS
                                                       
Financial assets held for trading
    10       34,003       36,194       867       29,096       43,257       946  
Debt securities
    10.2       28,499       3,781       338       22,227       4,015       314  
Other equity instruments
    10.3       4,149       209       292       5,348       89       360  
Trading derivatives
    10.4       1,355       32,204       237       1,521       39,153       272  
Other financial assets designated at fair value through profit or loss
    11       712       1,376             923       831        
Debt securities
            465       53             515       1        
Other equity instruments
            247       1,323             408       830        
Available-for-sale financial assets
    12       42,323       11,570       2,954       24,640       19,679       2,905  
Debt securities
            37,838       11,026       755       19,274       19,384       1,173  
Other equity instruments
            4,485       544       2,199       5,366       295       1,732  
Hedging derivatives
    15             3,804             444       3,386       2  
 
                                                       
LIABILITIES
                                                       
Financial liabilities held for trading
    10       3,984       33,451       94       4,517       38,408       84  
Trading derivatives
    10.4       1,594       33,451       94       1,817       38,408       84  
Short positions
    10.1       2,390                   2,700              
Other financial liabilities designated at fair value through profit or loss
    11       288       1,007                   1,033        
Hedging derivatives
    15             1,525             564       662        
 
The following table sets forth the main valuation techniques used in the estimation of fair value in level 2 and level 3, based of the financial instruments:

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                June 2009
                Fair value
                (In millions of
LEVEL 2   Valuation techniques   Main assumptions   Main inputs used   euros)
 
                   
FINANCIAL ASSETS
 
                   
FINANCIAL ASSETS HELD FOR TRADING
                36,194  
    Debt securities
  Present value method.  
Calculation of present value of financial instruments as the current value of future cash-flows (discounted at market interest rate) taking into account:
 

    Spread curves.
    Market observable interest rates.
    3,781  
   
    estimated prepayments rates;
     
   
    credit risk of issuers; and
       
   
    current market interest rates.
       
    Equity instruments
   
Calculation of present value of financial instruments as the current value of future cash-flows (discounted at market interest rate) taking into account:
    estimated dividends; and
    current market interest rates.
 
    Estimate of dividends.
    Market observable interest rates.
    209  
 
                   
    Trading derivatives
 
    Analytic / Semi-analytic formulae
 
For derivatives whose underlying is Equity price, Currency and Commodities:
    Black-Scholes assumptions taking into account the possible convexity adjustments (e.g. quanto adjustments);

For derivatives whose underlying is Interest rates:
    Black-Scholes assumptions assuming a lognormal process for the forward rates and taking into account the possible convexity adjustments (e.g. arrears, time convexity adjustments); and

For derivatives whose underlying is Credit spread,
    Black-Scholes assumptions for the credit spread.
 




For derivatives whose underlying is Equity price, Currency and Commodities:
    Forward structure of the underlying.
    Volatility of options.
    Observable Correlations between underlying.

For derivatives whose underlying is Interest rates:
    Time structure of interest rate curve.
    Volatility of underlying.

For derivatives whose underlying is Credit spread:
    CDS quotations.
    32,204  
 
For derivatives whose underlying is Equity price, Currency and Commodities:
    Monte Carlo simulation
 
Assumptions of the local volatility model: assumes a continuous diffusion for the underlying with the volatility depending on the underlying value and time.
         
    This model assumes:          
  For derivatives whose underlying is Interest rates:
    Black-Derman-Toy
 
    Short term interest rate follows a lognormal process.
    Forwards rates in the term structure of the interest rate curve are perfectly correlated.
         
 
For derivatives whose underlying is Credit spread:
    Interest rate models.
  These models assume a continuous diffusion for the intensity of default.          
 
                   
OTHER ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS
            1,376  
 
                   
    Debt securities
  Present value method.   Same assumptions than Debt securities held for trading.   Same inputs than Debt securities held for trading.     53  
    Equity instruments
    Same assumptions than Equity instruments held for trading.   Same inputs than Equity instruments held for trading.     1,323  
 
                   
AVAILABLE FOR SALE
                11,570  
 
                   
    Debt securities
  Present value method.   Same assumptions than Debt securities held for trading.   Same inputs than Debt securities held for trading.     11,026  
    Equity instruments
    Same assumptions than Equity instruments held for trading.   Same inputs than Equity instruments held for trading.     544  
 
                   
HEDGING DERIVATIVES
  Same models than Derivatives held for trading.   Same assumptions than Derivatives held for trading.   Same inputs than Derivatives held for trading.     3,804  
 
                   
FINANCIAL LIABILITIES
 
                   
FINANCIAL LIABILITIES HELD FOR TRADING: Trading derivatives
  Same models than Derivatives held for trading (Assets).   Same assumptions than Derivatives held for trading (Assets).   Same inputs than Derivatives held for trading (Assets).     33,451  
 
                   
OTHER LIABILITIES AT FAIR VALUE THROUGH PROFIT AND LOSS
  Present value method.   Same assumptions than Debt securities held for trading (Assets).   Same inputs than Debt securities held for trading (Assets).     1,007  
 
                   
HEDGING DERIVATIVES
  Same models than Derivatives held for trading.   Same assumptions than Derivatives held for trading (Assets).   Same inputs than Derivatives held for trading (Assets).     1,525  


Table of Contents

     
                     
                June 2009
                Fair value
                (In millions of
LEVEL 3   Valuation techniques   Main assumptions   Main inputs used   euros)
 
FINANCIAL ASSETS
FINANCIAL ASSETS HELD FOR TRADING     867  
   Debt securities
 
   Present value method

   Time default method for Collateralized Debt Obligations (CDO’s)
  Calculation of present value of financial instruments as the current value of future cash-flows (discounted at market interest rate) taking into account:
   estimated prepayments rates;
   credit risk of issuers; and
   current market interest rates.
For the valuation of Assets Backed Securitites (ABSs) the future prepayments are calculated on the basis of conditional prepayment rates supplied by issuers.
The time to default model is based on a statistical Gaussian Copula as a measure of probability of default. One of the main variables used of the correlation input extrapolated from the correlation of the various tranches of the indices (ITRAXX and CDX) with the underlying portfolio of our CDOs, using the expected loss as the basis of realisation.
 
   Prepayment rates
   Correlation of defaults
   Credit Spread (1)
    338  
 
                   
   Equity instruments
 
   Present value method.

   Net asset value (NAV) for Hedge funds.
  Calculation of present value of financial instruments as the current value of future cash-flows (discounted at market interest rate) taking into account:
   estimated dividends; and
   current market interest rates.
 
   Credit Spread (1)
   NAV as supplied by fund manager.
    292  
 
                   
   Trading derivatives
  For interest rate futures and forwards:
   Present value method.
   Libor market method.
  The Libor Market model remedies the limitations of the Black Scholes model by modelling the full term structure of the rate curve, assuming a multidimensional lognormal CEV (constant elasticity of variance) process for forward interest rates. The lognormal CEV process is used to factor in the presence of volatility distortion.      For interest rate futures and forwards
   Correlation decay (2)
    237  
 
                   
 
  For equity and exchange rate options:
   Montecarlo
   Numerical integration functions
   Black-Scholes
  Options are measured using widely accepted valuation models, factoring in implied volatility observations.  
   Vol-of-vol (3)
   Rever factor (4)
   Volatility Spot Correlation (5)
       
 
             
 
  For interest rate options
   Black 76
   Hull
   Black-Derman-Toy
         
 
                   
AVAILABLE FOR SALE     2,954  
 
                   
   Debt securities
 
   Present value method.
  Same assumptions than Debt securities held for trading.   Same inputs than Debt securities held for trading.     755  
 
                   
   Equity instruments
      Same assumptions than Equity instruments held for trading.   Same inputs than Equity instruments held for trading.     2,199  
 
                   
FINANCIAL LIABILITIES
 
                   
FINANCIAL LIABILITIES HELD FOR TRADING: Trading
derivatives
  Same models than Derivatives held for trading (Assets).   Same assumptions than Derivatives held for trading (Assets).   Same inputs than Derivatives held for trading (Assets).     94  
 
(1)   Credit Spread: The spread between the yield of a free risk asset (e.g.Treasury securities) and the yield of any other security that are identical in all respects except for quality rating. Spreads are considered as level 3 inputs to fair value when referred to illiquid issues. Based on spread of similar entities.
 
(2)   Correlation decay: It is the factor that allows us to calculate how the correlation evolves between the different pairs of forward rates.
 
(3)   Vol-of-Vol: Volatility of implicit volatility of the spot. It is a statistical measure of the changes of the spot volatility.
 
(4)   Reversion Factor: it is the speed with the spot volatility reverts to its average value.
 
(5)   Volatility- Spot Correlation: is a statistical measure of the linear relationship (correlation) between the spot price of a security and its volatility.

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The amount of reclassified assets to Level 3 for the six months ended June 30, 2009 amounted to €123 millions, because certain financial instruments for which previously an active market existed have included in the Level 3 since, as a result of the changes in the economic conditions, they have turned in iliquid, being necessary to change method to determine its fair value. These instruments are mainly hedge funds and derivatives with underlyings that have become illiquid.
The amount of gains no realized recognized in the accompanying consolidated income statement of assets and liabilities classified in Level 3, for the six months ended June 30, 2009, amounted to a charge of €128 million.
The hypothetical effect at June 30, 2009 on the measurement of financial instruments of changing the main assumptions used for alternative feasible, reasonable and less favorable assumptions, taking the value at the bottom end of the estimated range of probability, is to decrease the value of assets or gains, or to increase losses, by €738 million, of which €639 million would be recognized in the consolidated income statement and €99 million in the consolidated equity. The impact of using feasible, reasonable, more favorable assumptions than those used, taking the upper end of the range deemed probable, would be to increase gains or decrease losses by €716 million, of which €609 million would be recognized in the consolidated income statement and €107 million would be recognized in the consolidated equity.
Financial instruments at cost
The Group had equity instruments, derivatives with equity instruments as the underlying and certain discretionary profit sharing arrangements that were recognized at cost in Group’s consolidated balance sheet as their fair value could not be reliably determined. As of June 30, 2009 and December 31, 2008, the balance of these financial instruments carried at cost amounted to €537 million and €556 million, respectively. These instruments are currently classified in the available-for-sale portfolio.
The fair value of these instruments could not be reliably estimated because they correspond to investments in companies that are not quoted on organized markets and any valuation technique employed would entail the use of a significant number of non-observable inputs.
The table below outlines the financial assets and liabilities carried at cost that were sold for de six months ended June 30, 2009:
                         
    Millions of euros
    Amount of   Carrying amount at    
    sale   sale date   Gains/Losses
 
Sale of instruments at cost
    15       10       5  
 
Loans and financial liabilities through profit or loss
As of June 30, 2009 and December 31, 2008, there are not registered loans and financial liabilities (different of indicated in the present consolidated statements) as through profit or loss in the accompanying consolidated balance sheets.
9. CASH AND BALANCES WITH CENTRAL BANKS
The breakdown of the balance of this heading in the consolidated balance sheets as of June 30, 2009 and December 31, 2008 was as follows:
                 
    Millions of euros
    June-09   December-08
 
Cash
    3,069       3,915  
Balances at the Bank of Spain
    8,260       2,391  
Balances at other central banks
    11,721       8,336  
     
Total gross
    23,050       14,642  
     
Accrued interests
    3       17  
     
Total
    23,053       14,659  
 

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10. FINANCIAL ASSETS AND LIABILITIES HELD FOR TRADING
10.1. BREAKDOWN OF THE BALANCE
The breakdown of the balances of these headings in the consolidated balance sheets as of June 30, 2009 and December 31, 2008 was as follows:
                 
    Millions of euros
    June-09   December-08
 
Assets -
               
Debt securities
    32,618       26,556  
Other equity instruments
    4,650       5,797  
Trading derivatives
    33,796       40,946  
     
Total
    71,064       73,299  
     
Liabilities -
               
Trading derivatives
    35,139       40,309  
Short positions
    2,390       2,700  
     
Total
    37,529       43,009  
 
10.2. DEBT SECURITIES
The breakdown by type of instrument of the balance of this heading in the consolidated balance sheets as of June 30, 2009 and December 31, 2008 was as follows:
                 
    Millions of euros
    June-09   December-08
 
Issued by central banks
    438       378  
Spanish government bonds
    9,117       6,453  
Foreign government bonds
    18,544       13,947  
Issued by Spanish financial institutions
    1,014       578  
Issued by foreign financial institutions
    828       2,247  
Other fixed debt securities
    2,677       2,953  
     
Total
    32,618       26,556  
 
10.3. OTHER EQUITY INSTRUMENTS
The breakdown of the balance of this heading in the consolidated balance sheets as of June 30, 2009 and December 31, 2008 was as follows:
                 
    Millions of euros
    June-09   December-08
 
Shares of Spanish companies
    2,455       2,332  
Credit institutions
    388       444  
Other
    2,067       1,888  
Shares of foreign companies
    2,195       3,465  
Credit institutions
    172       205  
Other
    2,023       3,260  
     
Total
    4,650       5,797  
 

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10.4. TRADING DERIVATIVES
The trading derivatives portfolio arises from the Group’s need to manage the risks incurred by it in the course of its normal business activity, mostly for the positions held with customers. Trading derivatives are principally contracted in non organized markets, with credit entities as counterpart and related to foreign currencies risk, interest risk and equity securities.
The detail, by transaction type and market, of the balances of this heading in the consolidated balance sheets as of June 30, 2009 and December 31, 2008, was as follows shown the organized markets and non organized markets:
                                                         
    Millions of euros
            Interest   Equity                
    Currency   Rate   Price   Commodities   Credit   Other    
June-09   Risk   Risk   Risk   Risk   Risk   Risks   Total
 
Organised markets
          5       (278 )     1             2       (270 )
Financial futures
          2       5                         7  
Options
          3       (283 )     1             2       (277 )
Other products
                                         
OTC markets
    (1,981 )     (433 )     1,016       33       290       2       (1,073 )
Credit institutions
    (2,202 )     (2,753 )     266       3       (99 )     2       (4,783 )
Forward transactions
    (1,584 )                                   (1,584 )
Future rate agreements (FRAs)
          50                               50  
Swaps
    (622 )     (2,087 )     131       14             2       (2,562 )
Options
    4       (716 )     135       (11 )                 (588 )
Other products
                            (99 )           (99 )
Other financial Institutions
    (17 )     620       (116 )     3       477             967  
Forward transactions
    (15 )                                   (15 )
Future rate agreements (FRAs)
                                         
Swaps
          566       51       3                   620  
Options
    (2 )     54       (167 )                       (115 )
Other products
                            477             477  
Other sectors
    238       1,700       866       27       (88 )           2,743  
Forward transactions
    233                                     233  
Future rate agreements (FRAs)
                                         
Swaps
    6       1,571       186       21                   1,784  
Options
    (1 )     112       702       6                   819  
Other products
          17       (22 )           (88 )           (93 )
     
Total
    (1,981 )     (428 )     738       34       290       4       (1,343 )
     
of which: Asset Trading Derivatives
    5,614       21,878       4,714       95       1,483       12       33,796  
     
of which: Liability Trading Derivatives
    7,595       22,306       3,976       61       1,193       8       35,139  
 

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    Millions of euros
            Interest   Equity                
    Currency   Rate   Price   Commodities   Credit   Other    
December-08   Risk   Risk   Risk   Risk   Risk   Risks   Total
 
Organised markets
          5       (228 )           2             (221 )
Financial futures
                4                         4  
Options
          5       (232 )           2             (225 )
OTC markets
    (1,491 )     1,288       674       93       294             858  
Credit institutions
    (1,676 )     (1,652 )     (165 )     15       (196 )           (3,674 )
Forward transactions
    (978 )                                   (978 )
Future rate agreements (FRAs)
          68                               68  
Swaps
    (672 )     (1,580 )     154       15       (196 )           (2,279 )
Options
    (26 )     (140 )     (319 )                       (485 )
Other financial Institutions
    (112 )     1,335       (151 )     27       580             1,679  
Forward transactions
    (110 )                                   (110 )
Swaps
          1,278       24       12       580             1,894  
Options
    (2 )     57       (175 )     15                   (105 )
Other sectors
    297       1,605       990       51       (90 )           2,853  
Forward transactions
    378                                     378  
Swaps
    10       1,482       49       63       (90 )           1,514  
Options
    (91 )     119       962       (12 )                 978  
Other products
          4       (21 )                       (17 )
     
Total
    (1,491 )     1,293       446       93       296             637  
     
of which: Asset Trading Derivatives
    10,940       22,574       5,082       174       2,174       2       40,946  
     
of which: Liability Trading Derivatives
    12,431       21,281       4,636       81       1,878       2       40,309  
 
11. OTHER FINANCIAL ASSETS AND LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS
The detail of the balance of this heading in the consolidated balance sheets as of June 30, 2009 and December 31, 2008, based on the nature of the related transactions, was as follows:
                 
    Millions of euros
    June-09   December-08
 
Assets
               
Debt securities
    518       516  
Unit-Linked products
    518       516  
Equity instruments
    1,570       1,238  
Unit-Linked products
    1,175       921  
Other securities
    395       317  
     
Total
    2,088       1,754  
     
Liabilities
               
Other financial liabilities
    1,295       1,033  
Unit-Linked products
    1,295       1,033  
     
Total
    1,295       1,033  
 

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12. AVAILABLE-FOR-SALE FINANCIAL ASSETS
The detail of the balance, by type of instruments, of this subheading “Available-for-sale financial assets — Debt securities” in the consolidated balance sheets as of June 30, 2009 and December 31, 2008, based on the nature of the related transactions, was as follows:
                 
    Millions of euros
    June-09   December-08
 
Debt instruments
               
Issued by central banks
    955       1,251  
Spanish government bonds
    14,624       6,315  
Foreign government bonds
    14,969       12,010  
Issued by credit institutions
    12,905       13,377  
Resident
    4,910       4,243  
Non resident
    7,995       9,134  
Other debt instruments
    6,169       7,008  
Resident
    1,000       1,209  
Non resident
    5,169       5,799  
 
Total gross
    49,622       39,961  
 
Impairment losses
    (229 )     (172 )
Accrued expenses and adjustments for hedging derivatives
    226       42  
 
Total net
    49,619       39,831  
 
The breakdown of the balance, by type of instruments, of the subheading “Available-for-Sale Financial Assets — equity instruments” as of June 30, 2009 and December 31, 2008 was as follows:
                 
    Millions of euros
    June-09   December-08
 
Equity instruments listed
    6,864       7,082  
Shares of Spanish companies
    4,586       4,639  
Credit institutions
          22  
Other institutions
    4,586       4,617  
Shares of foreign companies
    2,278       2,443  
Equity instruments unlisted
    902       867  
Shares of Spanish companies
    32       36  
Credit institutions
          1  
Other institutions
    32       35  
Shares of foreign companies
    870       831  
     
Total
    7,766       7,949  
 
As of June 30, 2009 and December 31, 2008 the accumulated amount of gains/losses net from tax recognized under the heading “Valuation Adjustments — Available-for-Sale Financial Assets” amounted to €1,081 million and €931 million, respectively. The changes in this heading were as follows:
                 
    Millions of euros
    June-09   December-08
 
Balance at beginning of the period
    931       3,546  
Revaluation gains and losses
    478       (2,065 )
Income tax
    (83 )     1,172  
Amounts removed to income statement
    (245 )     (1,722 )
     
Balance at end of the period
    1,081       931  
     
Of which:
               
Debt instruments
    (18 )     (116 )
Equity instruments
    1,099       1,047  
 

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As of June 30, 2009, most of our unrealised losses of “Available-for-sale assets” registered in equity correspond to “Debt instruments”. This unrealized are considered temporary because the majority of they have mainly arisen in a period shorter than one yea due to the increase of interest rates.
13. LOANS AND RECEIVABLES
13.1. BREAKDOWN OF THE BALANCE
The detail of the balance of this heading in the consolidated balance sheets as of June 30, 2009 and December 31, 2008, based on the nature of the related financial instrument, is as follows:
                 
    Millions of euros
    June-09   December-08
 
Loans and advances to credit institutions
    24,533       33,856  
Loans and advances to customers
    327,926       335,260  
Debt securities
    446       378  
     
Total
    352,905       369,494  
 
13.2. LOANS AND ADVANCES TO CREDIT INSTITUTIONS
The detail of the balance of this subheading in the consolidated balance sheets as of June 30, 2009 and December 31, 2008, based on the nature of the related financial instrument, was as follows:
                 
    Millions of euros
    June-09   December-08
 
Reciprocal accounts
    274       390  
Deposits with agreed maturity
    7,514       8,005  
Demand deposits
    3,979       6,433  
Other accounts
    7,896       9,250  
Reverse repurchase agreements
    4,850       9,601  
     
Total gross
    24,513       33,679  
     
Valuation adjustments
    20       177  
Impairment losses
    (83 )     (74 )
Accrued interest and fees
    103       223  
Hedging derivatives and others
          28  
     
Total
    24,533       33,856  
 

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13.3. LOANS AND ADVANCES TO CUSTOMERS
The detail of the balance of this subheading in the consolidated balance sheets as of June 30, 2009 and December 31, 2008, based on the nature of the related financial instruments, was as follows:
                 
    Millions of euros
    June-09   December-08
 
Financial paper
    665       587  
Commercial credit
    22,166       29,215  
Secured loans
    146,950       145,522  
Credit accounts
    21,462       21,593  
Other loans
    105,108       111,597  
Reverse repurchase agreements
    1,083       1,658  
Receivable on demand and other
    16,778       13,372  
Finance leases
    8,719       9,341  
Impaired assets
    11,509       8,437  
     
Total gross
    334,440       341,322  
     
Valuation adjustments
    (6,514 )     (6,062 )
Impairment losses
    (7,682 )     (7,431 )
Accrued interests and fees
    421       719  
Hedging derivatives and others
    747       650  
     
Total
    327,926       335,260  
 
The “Loans and advances to customers” subheading includes certain securitized loans that have not been derecognized since the Group has retained Group substantially all the related risks or rewards due to the fact that it has granted subordinated financing or other types of credit enhancements that absorb either substantially all expected credit losses on the asset transferred or the probable variation in attendant net cash flows.
The on-balance sheet amounts of said securitized loans not derecognized as of June 30, 2009 and December 31, 2008 are set forth below:
                 
    Millions of euros
    June-09   December-08
 
Securitised mortgage assets
    33,108       34,012  
Other securitised assets(*)
    11,032       10,341  
     
Total
    44,140       44,353  
     
Of which:
               
Liabilities associated to assets retained on the balance sheet (**)
    11,807       14,948  
 
(*)   Mainly consumer loans, business loans and leasing.
 
(**)   These liabilities are recognized under “Financial liabilities at amortized cost — Debt certificates” in the accompanying consolidated balance sheets. (Note 22.4).
Meanwhile, certain other securitized loans have been derecognized where substantially all attendant risks or benefits were effectively transferred.
As of June 30, 2009 and December 31, 2008, the outstanding balances of derecognized securitized loans were as follows:
                 
    Millions of euros
    June-09   December-08
 
Securitised mortgage assets
    131       132  
Other securitised assets
    360       413  
     
Total
    491       545  
 

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14. HELD-TO-MATURITY INVESTMENTS
As of June 30, 2009 and December 31, 2008, the detail of the balance of this heading in the consolidated balance sheets was as follows:
                 
    Millions of euros
    June-09   December-08
 
Quoted Spanish government bonds
    1,335       1,412  
Quoted foreign government bonds
    2,409       2,432  
Issued by Spanish credit institutions
    338       343  
Issued by foreign credit institutions
    411       457  
Issued by other resident sectors
    608       641  
     
Total gross
    5,101       5,285  
     
Impairment losses
    (2 )     (3 )
     
Total
    5,099       5,282  
 
The foreign securities by the Group as of June 30, 2009 and December 31, 2008 in the held to maturity portfolio corresponds to European issuers.
The gross changes for the six months ended June 30, 2009 and for the year 2008 in the balance of this heading in the consolidated balance sheets were summarised as follows:
                 
    Millions of euros
    June-09   December-08
 
Balance at beginning of the period
    5,285       5,589  
Acquisitions
           
Redemptions
    (140 )     (284 )
Other
    (44 )     (20 )
     
Balance at end of the period
    5,101       5,285  
 
In the six months ended June 30, 2009 there has been no sales of held to maturity investments of the Group, so there was no impact on results for this concept.
15. HEDGING DERIVATIVES (RECEIVABLE AND PAYABLE)
As of June 30, 2009 and December 31, 2008, the main positions hedged by the Group and the derivatives assigned to hedge those positions are:
  Fair value hedge:
  -   Available for sale fixed rate debt securities: this risk is hedged using interest-rate derivatives (fixed- variable swaps).
 
  -   Long term fixed rate debt issued by Group: this risk is hedged using interest-rate derivatives (fixed- variable swaps).
 
  -   Available for sale equity securities: this risk is hedged using equity swaps.
 
  -   Fixed rate loans: this risk is hedged using interest-rate derivatives (fixed- variable swaps).

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  Cash flow hedge: Most of the hedged items are floating interest rate loans: this risk is hedged using currency and interest rate swaps.
 
  Net investment in a foreign operation hedge: Most of risks hedged are investments in foreign currency in foreign subsidiaries. This risk is hedged mainly with exchange rate options and forward currency purchase.
The Note 7 analyses the nature of the main risks of the Group that are hedged by these financial instruments.
The detail, by type of hedge risk, of the fair value of the heading derivatives as of June 30, 2009 and December 31, 2008 recognized in the accompanying consolidated balance sheets was as follows:
                                 
    Millions of euros
    Exchange   Interest Rate        
June-09   Risk   Risk   Share Risk   Total
 
Non organised markets
                               
Credit institutions
    62       2,421       (94 )     2,389  
Fair value hedge
          2,043       (94 )     1,949  
Cash flow hedge
    60       401             461  
Net investment in a foreign operation hedge
    2       (23 )           (21 )
Other financial institutions
          35       (11 )     24  
Fair value hedge
          35       (11 )     24  
Cash flow hedge
                       
Other sectors
    4       (137 )           (133 )
Fair value hedge
          (137 )           (137 )
Cash flow hedge
    4                   4  
     
Total
    66       2,319       (105 )     2,280  
     
of which: Asset Hedging Derivatives
    70       3,714       20       3,804  
     
of which: Liability hedging Derivatives
    4       1,396       125       1,525  
 
                         
    Millions of euros
            Interest Rate    
December-08   Exchange Risk   Risk   Total
 
Non organised markets
                       
Credit institutions
    205       2,290       2,495  
Fair value hedge
          1,972       1,972  
Cash flow hedge
    106       338       444  
Net investment in a foreign operation hedge
    99       (20 )     79  
Other financial institutions
          100       100  
Fair value hedge
          68       68  
Cash flow hedge
          32       32  
Other sectors
    11       1       12  
Fair value hedge
          1       1  
Cash flow hedge
    11             11  
     
Total
    216       2,391       2,607  
     
of which: Asset Hedging Derivatives
    227       3,606       3,833  
     
of which: Liability hedging Derivatives
    11       1,215       1,226  
 

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As of June 30, 2009, the most significant forecasted cash flows that the Group has hedged, being its impact on the consolidated income statement expected in the following periods, was as follow:
                                 
    Millions of euros
            More than 3        
            months but less   From 1 to 5   More than 5
    3 months or less   than 1 year   years   years
 
Cash inflows from assets
    317       844       3,110       9,528  
Cash outflows from liabilities
    225       666       2,751       9,145  
 
The amounts previously recognized in equity from cash flow hedge that were removed from equity and included in consolidated income statement — in the heading “Gains or losses of financial assets and liabilities (net)” or in the heading “Net Exchange differences” — for the six months period ended June 30, 2009 amounted to €2 million and was null for the six months period ended June 30, 2008.
As of June 30, 2009 there were no hedges of highly probable forecast transaction in the Group.
16. NON-CURRENT ASSETS HELD FOR SALE AND LIABILITIES ASSOCIATED WITH NON-CURRENT ASSETS HELD FOR SALE
The detail of the balance of this heading in the accompanying consolidated balance sheet, depending on the origin of the assets, was as follow:
                 
    Millions of euros
    June-09   December-08
 
Tangible assets
    566       117  
Tangible assets awarded or recovered as loan guarantee
    546       391  
Tangible assets awarded as loan guarantee
    512       364  
Tangible assets recovered from Operating lease
    34       27  
Value correction due to assets impairment
    (89 )     (64 )
     
Total
    1,023       444  
 
The change in the heading “From property, plant and equipment — for own use” between January 1 and June 30, 2009 is due primarily to the reclassification to this heading of certain properties owned by the Bank in Spain which have been included in a disposal plan and which are considered highly likely to be sold in their current condition within one year from the reporting date.
The fair value of the items included in non current assets held for sale was determined by reference to appraisals performed by homologated companies as valuers in each of the geographical areas in which the assets are located.
In the case of Spain, the independent valuation and appraisal companies authorised by the Bank of Spain and entrusted with the appraisal of these assets were: Sociedad de Tasación, S.A., Valtecnic, S.A.,Krata, S.A., Gesvalt, S.A., Alia Tasaciones, S.A., Tasvalor, S.A. and Trinsa, S.A.
As of June 30, 2009 and December 31, 2008, there were no liabilities associated with non-current assets held for sale.

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17. INVESTMENTS IN ENTITIES ACCOUNTED FOR USING THE EQUITY METHOD
17.1. INVESTMENTS IN ASSOCIATES
The following table shows the detail of the book value of the most significant Group’s investments in associates as of June 30, 2009 and December 31, 2008:
                 
    Millions of euros
Investments in Associates   June-09   December-08
 
Citic Intemational Financial Holdings Limited CIFH
    574       541  
Occidental Hoteles Management, S.L.
    125       128  
Tubos Reunidos, S.A.
    55       54  
BBVA Elcano Empresarial II, S.C.R., S.A.
    54       39  
BBVA Elcano Empresarial, S.C.R., S.A.
    54       39  
Rest of companies
    80       93  
     
Total
    942       894  
 
The detail of the balance and gross changes for the six months ended June 30, 2009 and for the year 2008 in this heading of the consolidated balance sheets, were as follows:
                 
    Millions of euros
    June-09   December-08
 
Balance at beginning of year
    894       846  
Acquisitions:
    51       655  
Of which:
               
Citic International Financial Holdings Limited (CIFH)
    47       655  
Other
    4        
Disposals
    (1 )     (782 )
Of which:
               
Tubos Reunidos, S.A. (*)
          (41 )
Citic International Financial Holdings Limited (CIFH)
          (739 )
Transfers and others
    (2 )     175  
     
Balance at end of year
    942       894  
     
Of which:
               
Goodwill
    222       217  
CIFH
    218       214  
Other
    4       3  
 
(*)   Corresponds to the sale of the 0.853% of the capital stock in January 2008
The following tables show the book value and the fair value of listed associates accounted for using the equity method as of June 30, 2009 and December 31, 2008, calculated on the base of its official listed:
                                 
    Millions of euros
    June-09   December-08
COMPANY   Book value   Fair value   Book Value   Fair Value
 
Tubos Reunidos, S.A.
    55       83       54       85  
 
Appendix V shows associate entities as of June 30, 2009.

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Agreement with the CITIC Group
On November 2006 and June 2008 BBVA reached both agreements with the banking group CITIC Group (“CITIC”) to develop a strategic alliance in the Chinese market.
As of June 30, 2009, in accordance with these agreements, BBVA hold a 29.68% ownership interest in “Citic International Financial Holdings” (“CIFH”) which develops its activity in Hong Kong and a 10.07% ownership interest in “China Citic Bank” (CNCB).
BBVA also has an option to acquire an additional percentage, subject to certain conditions, during a two-year period, which could bring its interest in CNCB to 15%.
As of June 30, 2009 and December 31, 2008, BBVA’s interest in CNCB was included under “Available-for-sale financial assets” in the accompanying consolidated balance sheets (Note 12).
The Group considers that BBVA’s investment in CNCB is strategic, as it is the platform for developing its business in continental China and is also key to the development of international business initiatives together with CITIC. In addition, BBVA has the status of “sole strategic investor” at CNCB.
In addition, under the umbrella of its strategic commitment to CNCB, during the first semester of 2009, BBVA and CNCB reached new cooperation alliances under profit sharing regimes in the car financing and private banking segments.
17.2. INVESTMENTS IN JOINTLY CONTROLLED ENTITIES
The jointly controlled entities that the Group has considered, because reflect the economic reality of such holdings, must be accounted by the “equity method” (Note 2.1) are registered in this heading of accompanying consolidated balance sheet.
The following table shows the detail of the most significant Group’s investments in jointly controlled entities as of June 30, 2009 and December 31, 2008:
                 
    Millions of euros
Jointly controlled entities   June-09   December-08
 
Corporación IBV Participaciones Empresariales S.A.
    275       385  
Fideicomiso F/403853-5 BBVA Bancomer SºS ZIBAT
    21       20  
I+D Mexico, S.A.
    16       14  
Las Pedrazas Golf, S.L.
    14       16  
Fideicomiso Hares BBVA Bancomer F/47997-2
    14       12  
Dintransa Rentrucks, S.A.
    14       15  
Rest
    111       111  
     
Total
    465       573  
     
Of which
               
Goodwill
               
Grupo Profesional Planeación y Proyectos S.A. de C.V.
    4       4  
Dintransa Rentrucks, S.A.
    9       8  
Rest
    3       4  
     
 
    16       16  
 
If the jointly controlled entities accounted for equity method had been accounted for proportionate method, the Group had been increased as follow, as of June 30, 2009 and December 31, 2008:
         
    Millions of
    euros
    June-09
 
Group’s Asset
    394  
Group’s Liabilities
    859  
Operating expensives
    (13 )
 

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Appendix V show jointly controlled entities consolidated using the equity method as of June 30, 2009.
17.3. INFORMATION ABOUT ASSOCIATES AND JOINTLY CONTROLLED ENTITIES BY THE EQUITY METHOD
The following table provides relevant information of the balance sheet and income statement of associates and jointly controlled entities by the proportionate consolidation method as of June 30, 2009 and December 31, 2008, respectively (Appendix IV).
                                 
    Millions of euros
    June-09   December-08
            Jointly           Jointly
            controlled           controlled
ITEMS   Associates   entities   Associates   entities
 
Current Assets
    1,574       499       745       559  
Non-current Assets
    2,453       360       4,162       349  
Current Liabilities
    2,853       112       230       136  
Non-current Liabilities
    1,173       747       4,677       772  
 
Net sales
    82       37       210       102  
Operating Income
    32       1       99       17  
Net Income
    55             93       286  
 
17.4. NOTIFICATIONS ABOUT ACQUISITION OF HOLDINGS
The notifications on the acquisition and disposal of holdings in associates or jointly controlled, in compliance with Article 86 of the Spanish Corporations Law and Article 53 of the Securities Market Law 24/1988, are listed in Appendix VI.
17.5 IMPAIRMENT
For the six months ended June 30, 2009 and year ended December 31, 2008, the goodwill in associates and jointly controlled entities has not registered impairment.
18. REINSURANCE ASSETS
This heading of the accompanying consolidated balance sheets reflects the amounts to receive from consolidated entities whose origins are reinsurance contracts with third parties.
As of June 30, 2009 and December 31, 2008, the detail of the balance of the ownership of the reinsurance in the technical provisions was as follows:
                 
    Millions of euros
    June-09   December-08
 
Reinsurance asset
    40       29  
 

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19. TANGIBLE ASSETS
As of June 30, 2009 and December 31, 2008, the detail and the change of the balance of this heading in the consolidated balance sheets based on the nature of the related items, were as follows:
                 
    Millions of euros
    June-09   December-08
 
Properties, plants and equipment
               
  For own use
               
Land and Buildings
    2,467       3,030  
Construction in progress
    430       422  
Furniture, fixtures and vehicles
    4,977       4,866  
Accumulated depreciation
    (3,727 )     (3,857 )
Valuation adjustments
    (19 )     (19 )
  Assets Leased out under an Operating Lease
               
Assets leased out to Group entities under an operating lease
    976       996  
Accumulated depreciation
    (263 )     (259 )
Valuation adjustments
    (23 )     (5 )
     
Total properties, plants and equipments
    4,818       5,174  
     
Investment properties
               
  Properties leased to Group entities
    1,805       1,777  
  Rural land, land lots and buildable land
    1       1  
  Other
    7       8  
  Leases
    1       1  
  Accumulated depreciation
    (53 )     (45 )
  Valuation adjustments
    (77 )     (8 )
     
Total investment properties
    1,684       1,734  
     
Total tangible assets
    6,502       6,908  
 
“Investment properties” includes primarily the leased properties in the BBVA real estate fund which is fully consolidated (See Appendix II).
The decrease in the balance under “For own use — Land and buildings” between January 1 and June 30, 2009 primarily reflects the reclassification of certain of the Bank’s Spanish properties to “Non-current assets held for sale”, as outlined in Note 16.
The main activity of the Group is carried out through a network of banking offices located geographically as shown in the following table:
                 
    Number of branches
AREA   June - 09   December - 08
 
Spain
    3,151       3,375  
America
    4,162       4,267  
Rest of the world
    145       145  
     
Total
    7,458       7,787  
 
The table below breaks down tangible assets corresponding to Spanish and non-Spanish companies at June 30, 2009 and at December 31, 2008:
                 
    Millions of euros
    June - 09   December - 08
 
Foreign subsidiaries
    2,340       2,276  
BBVA and Spanish subsidiaries
    4,162       4,632  
     
Total
    6,502       6,908  
 

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20. INTANGIBLE ASSETS
20.1. GOODWILL
The detail, by entity, of the changes for the six months period ended June 30, 2009 and for the year ended December 31, 2008 in the balance of this subheading in the consolidated balance sheets is as follows:
                                 
    Millions of euros
    Balance at                
    beginning of   Exchange           Balance at
June-09   period   Differences   Other   end of period
 
BBVA Compass
    6,643       (102 )           6,541  
Grupo Financiero Bancomer, S.A. de C.V.
    406       14             420  
Hipotecaria Nacional S.A. C.V.
    178       7             185  
BBVA Colombia, S.A.
    193       5             198  
BBVA Inversiones Chile, S.A.
    71       13             84  
Maggiore Fleet, S.p.A.
    34                   34  
BBVA Chile, S.A.
    28       5             33  
BBVA Puerto Rico, S. A.
    33                   33  
FORUM Servicios Financieros,S.A.
    25       4             29  
AFP Provida, S.A.
    18       3             21  
BBVA Portugal,S.A.
    16                   16  
Finanzia, Banco de Crédito, S.A.
    5                   5  
BBVA Finanzia S.p.A.
    4                   4  
BBVA Bancomer USA
    4                   4  
FORUM Distribuidora, S.A.
    1       1             2  
     
FULLY CONSOLIDATED COMPANIES
    7,659       (50 )           7,609  
 
                                 
    Millions of euros
    Balance at                
    beginning of   Exchange           Balance at
December-08   year   Differences   Other   end of year
 
BBVA Compass (*)
    6,265       366       12       6,643  
Grupo Financiero Bancomer, S.A. de C.V.
    485       (79 )           406  
Hipotecaria Nacional S.A. C.V.
    213       (35 )           178  
BBVA Colombia, S.A.
    204       (11 )           193  
BBVA Inversiones Chile, S.A.
    87       (16 )           71  
Maggiore Fleet, S.p.A.
    34                   34  
BBVA Chile, S.A.
    34       (6 )           28  
BBVA Puerto Rico, S. A.
    31       2             33  
FORUM Servicios Financieros,S.A.
    28       (3 )           25  
AFP Provida, S.A.
    21       (3 )           18  
BBVA Portugal,S.A.
    16                   16  
Finanzia, Banco de Crédito, S.A.
    5                   5  
BBVA Finanzia S.p.A.
    4                   4  
BBVA Bancomer USA
    4                   4  
FORUM Distribuidora, S.A.
    2       (1 )           1  
BBVA Renting S.p.A.
    3             (3 )      
     
FULLY CONSOLIDATED COMPANIES
    7,436       214       9       7,659  
 
(*)   The goodwills of the four banks merged in 2008 are included (see Note 3)
At least once a year and whenever there are indications of impairment, an impairment test is carried out for each company that generates goodwill. This test compares the present value of future cash flows that are expected to be obtained by each company with its book value and goodwill, in order to determine whether or not its value is impaired.
As of June 30, 2009 and December 31, 2008, there were no losses due to impairments in the value of these companies.

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During the six months ended June 2009 and year 2008 there have not been effects of gains, losses, error corrections and other significant adjustments in relation with assets, liabilities and contingent liabilities in the acquired entities in 2008 o prior periods.
20.2. OTHER INTANGIBLE ASSETS
The detail of the balance of this heading in the consolidated balance sheets as of June 30, 2009 and December 31, 2008 was as follows:
                         
                    Average
                    Useful
    Millions of euros   Life
    June-09   December-08   (years)
 
Computer software acquisition expense
    372       259       5  
Other deferred charges
    39       113       5  
Other intangible assets
    344       409       5  
Impairment
    (1 )     (1 )        
             
Total
    754       780          
 
21. REST OF ASSETS AND LIABILITIES
The detail of the balance of these headings in the consolidated balance sheets as of June 30, 2009 and December 31, 2008 was as follows:
                 
    Millions of euros
    June-09   December-08
 
Assets -
               
Inventories
    1,636       1,066  
Transactions in transit
    233       33  
Accrued interest
    489       383  
Prepaid expenses
    283       206  
Other prepayments and accrued income
    206       177  
Other
    1,556       1,296  
     
Total
    3,914       2,778  
     
Liabilities -
               
Transactions in transit
    98       53  
Accrued interest
    2,038       1,918  
Unmatured accrued expenses
    1,192       1,321  
Other accrued expenses and deferred income
    846       597  
Other
    623       586  
     
Total
    2,759       2,557  
 
The heading “Inventories” includes the purchases of land and property that the Group real estate companies held for sale or in their development business.
The balance of the heading Inventories in the consolidated financial statements relates basically to the following companies: Anida Desarrollos Inmobiliarios, S.A., Inensur Brunete, S.L., Monasterio Desarrollo, S.L., Desarrollo Urbanístico Chamartín, S.A., Marina Llar, S.L., Montealiaga, S.A., Anida Desarrollo Singulares, S.L. y Anida Operaciones Singulares, S.L. y Anida Inmuebles España y Portugal, S.L.

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22. FINANCIAL LIABILITIES MEASURED AT AMORTISED COST
The detail of the items composing the balances of this heading in the accompanying consolidated balance sheets as of June 30, 2009 and December 31, 2008 was as follows:
                 
    Millions of euros
    June-09   December-08
 
Deposits from central banks
    26,979       16,844  
Deposits from credit institutions
    49,940       49,961  
Deposits from customers
    249,096       255,236  
Debt certificates (including bonds)
    102,486       104,157  
Subordinated liabilities
    17,003       16,987  
Other financial liabilities (*)
    6,985       7,420  
     
Total
    452,489       450,605  
 
     
*
  As of December 31, 2008, “Other financial liabilities” included the dividend approved and pending of payment (see Note 4) that corresponds to the third interim dividend paid as of January 12, 2009.
22.1. DEPOSITS FROM CENTRAL BANKS
The breakdown of the balance of this heading in the consolidated balance sheets as of June 30, 2009 and December 31, 2008 is as follows:
                 
    Millions of euros
    June-09   December-08
 
Bank of Spain
    13,128       4,036  
Credit account drawdowns
    10,999       37  
Other State debt and Treasury bills under repurchase agreement
          2,904  
Other assets under repurchase agreement
    2,129       1,095  
Other central banks
    13,823       12,726  
     
Total gross
    26,951       16,762  
     
Accrued interest until expiration
    28       82  
     
Total
    26,979       16,844  
 
As of June 30, 2009 and December 31, 2008, the financing limit assigned to the Group by the Bank of Spain and the rest of central banks and the one that it had been drawn down this one, was as follow:
                 
    Millions of euros
    June-09   December-08
 
Assigned
    19,384       16,049  
Drawn down
    2,442       125  
 

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22.2 DEPOSITS FROM CREDIT INSTITUTIONS
The breakdown of the balance of this subheading in the consolidated balance sheets, based on the nature of the related transactions, as of June 30, 2009 and December 31, 2008 was as follows:
                 
    Millions of euros
    June-09   December-08
 
Reciprocal accounts
    71       90  
Deposits with agreed maturity
    33,432       35,785  
Demand deposits
    1,944       1,228  
Other accounts
    543       547  
Repurchase agreements
    13,763       11,923  
     
Subtotal
    49,753       49,573  
     
Accrued interest until expiration
    187       388  
     
Total
    49,940       49,961  
 
The detail, by geographical area and on the nature of the related instruments, of this subheading as of June 30, 2009 and December 31, 2008 disregarding valuation adjustments was as follows:
                                 
    Millions of euros
                    Funds Received Under    
    Demand   Deposits with   Financial Asset    
June-09   Deposits   Agree Maturity   Transfers   Total
 
Spain
    1,124       5,922       1,370       8,416  
Rest of Europe
    443       16,574       1,030       18,047  
United States
    31       5,331       824       6,186  
Latin America
    394       2,340       10,539       13,273  
Rest of the world
    23       3,808             3,831  
     
Total
    2,015       33,975       13,763       49,753  
 
                                 
    Millions of euros
                    Funds Received Under    
    Demand   Deposits with   Financial Asset    
December-08   Deposits   Agree Maturity   Transfers   Total
 
Spain
    676       4,413       1,131       6,220  
Rest of Europe
    82       17,542       2,669       20,293  
United States
    40       8,164       1,093       9,297  
Latin America
    439       3,518       7,030       10,987  
Rest of the world
    80       2,696             2,776  
     
Total
    1,317       36,333       11,923       49,573  
 

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22.3 DEPOSITS FROM CUSTOMERS
The breakdown of the balance of this subheading in the accompanying consolidated balance sheets, based on the nature of the related transactions, as of June 30, 2009 and December 2008 was as follows:
                 
    Millions of euros
    June-09   December-08
 
General Government
    19,804       18,837  
Spanish
    4,075       6,320  
Foreign
    15,714       12,496  
Accrued interest
    15       21  
Other resident sectors -
    93,052       98,630  
Current accounts
    21,488       20,725  
Savings accounts
    26,260       23,863  
Fixed-term deposits
    37,241       43,829  
Reverse repos
    7,271       9,339  
Other accounts
    241       62  
Accrued interest
    551       812  
Non-resident sectors
    136,240       137,769  
Current accounts
    29,642       28,160  
Savings accounts
    20,267       22,840  
Fixed-term deposits
    80,668       79,094  
Repurchase agreements
    5,033       6,890  
Other accounts
    168       104  
Accrued interest
    462       681  
     
Total
    249,096       255,236  
     
Of which:
               
Deposits from customers without valuation adjustment
    116,303       121,895  
Accrued interest
    132,793       133,341  
Of which:
               
In euros
    248,242       254,075  
In foreign currency
    854       1,161  
 
The detail, by geographical area and on the nature of the related instruments, of this subheading as of June 30, 2009 and December 31, 2008 disregarding valuation adjustments was as follows:
                                         
    Millions of euros
                    Deposits with        
    Demand   Saving   Agreed        
June-09   Deposits   Deposits   Maturity   Repos   Total
 
Spain
    24,933       26,322       37,747       7,574       96,576  
Rest of Europe
    3,636       393       22,034       5       26,068  
United States
    9,526       8,815       42,131             60,472  
Latin America
    22,806       11,918       21,962       5,033       61,719  
Rest of the world
    356       47       2,831             3,234  
     
Total
    61,257       47,495       126,705       12,612       248,069  
 

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    Millions of euros
                    Deposits with        
    Demand   Saving   Agreed        
December-08   Deposits   Deposits   Maturity   Repos   Total
 
Spain
    26,208       23,892       45,299       9,746       105,145  
Rest of Europe
    3,214       360       22,733       34       26,341  
United States
    8,288       10,899       36,997             56,184  
Latin America
    20,219       9,911       20,195       6,868       57,193  
Rest of the world
    1,576       2,488       4,796             8,860  
     
Total
    59,505       47,550       130,020       16,648       253,723  
 
22.4 DEBT CERTIFICATES (INCLUDING BONDS) AND SUBORDINATED LIABILITIES
The breakdown of the balance of the subheading “Debt certificate (including Bonds)” in the accompanying consolidated balance sheets as of June 30, 2009 and December 31, 2008, by the nature of the transactions and currencies, was as follows:
                 
    Millions of euros
    June-09   December-08
 
Promissory notes and bills
               
In euros
    15,616       9,593  
In other currencies
    12,574       10,392  
     
Subtotal
    28,190       19,985  
     
Bonds and debentures issued
               
In euros -
               
Non-convertible bonds and debentures at floating interest rates
    7,241       11,577  
Non-convertible bonds and debentures at fixed interest rates
    6,244       4,736  
Covered bonds
    37,623       38,481  
Hybrid financial liabilities
    275        
Bonds from securitization realized by the Group
    10,648       13,783  
Accrued interest and other (*)
    2,817       2,668  
In foreign currencies -
               
Non-convertible bonds and debentures at floating interest rates
    4,593       8,980  
Non-convertible bonds and debentures at fixed interest rates
    1,983       1,601  
Covered bonds
    737       1,005  
Hybrid financial liabilities
    889        
Other securities associate to financial activities
    6       15  
Bonds from securitization realized by the Group
    1,159       1,165  
Accrued interest and other (*)
    81       161  
     
Subtotal
    74,296       84,172  
     
Total
    102,486       104,157  
 
(*) Hedge transactions and issue expenses
The breakdown by nature of the related instruments of the balance of the subheading “Subordinated liabilities” in the accompanying consolidated balance sheets, by the nature of the transactions, was as follows:

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    Millions of euros
    June-09   December-08
 
Subordinated debt
    10,826       10,785  
Preference shares
    5,506       5,464  
     
Total gross
    16,332       16,249  
     
Accrued interest and other
    671       738  
     
Total
    17,003       16,987  
 
The changes for the six months peridos ended June 30, 2009 and 2008 in the headings “Debt certificates (including Bonds)” and “Subordinated liabilities” were as follows:
                                         
    Millions of euros
    June-09
    Balance at                   Exchange   Balance at
    beginning of           Repurchase or   differences and   the end of
ISSUANCES OF THE ENTITY   period   Issuances   refund   others   period
 
Debt certificates issued in the European Union
    111,158       67,118       (64,420 )     (4,751 )     109,105  
With information brochure
    111,125       67,118       (64,420 )     (4,751 )     109,072  
Without information brochure
    33                         33  
Other debt certificates issued outside European Union
    9,986       5,333       (3,869 )     (1,066 )     10,384  
     
Total
    121,144       72,451       (68,289 )     (5,817 )     119,489  
 
                                         
    Millions of euros
    June-08
    Balance at                   Exchange   Balance at
    beginning of           Repurchase   differences and   the end of
ISSUANCES OF THE ENTITY   period   Issuances   or refund   others   period
 
Debt certificates issued in the European Union
    109,643       34,419       (35,377 )     (2,281 )     106,404  
With information brochure
    109,610       34,419       (35,377 )     (2,281 )     106,371  
Without information brochure
    33                         33  
Other debt certificates issued outside European Union
    8,745       19,528       (18,625 )     (422 )     9,226  
     
Total
    118,388       53,947       (54,002 )     (2,703 )     115,630  
 
22.4.1 PROMISSORY NOTES AND BILLS
These promissory notes were issued mainly by the Group’s subsidiary Banco de Financiación, S.A. and BBVA.
22.4.2. BONDS AND DEBENTURES ISSUED
Following the table shows the (weighted average) interest rate relating to fixed and floating rate bonds and debentures issued in euros and foreign currencies as of June 30, 2009 and December 31, 2008:
                                 
    June-09   December-08
            Foreign           Foreign
    Euros   currency   Euros   currency
 
Fixed rate
    3.90 %     4.10 %     3.86 %     4.79 %
Floating rate
    1.39 %     3.72 %     4.41 %     4.97 %
 
Most of the foreign-currency issuances are denominated in U.S. dollars.

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22.4.3. SUBORDINATED LIABILITIES
22.4.3.1. SUBORDINATED DEBT
These issuances are non-convertible subordinated debt and, accordingly, for debt seniority purposes, they rank behind ordinary debt.
The breakdown of this subheading in the accompanying consolidated balance sheets, without factoring in valuation adjustments, by currency of issuance and interest rate is disclosed in Appendix VIII.
22.4.3.2. PREFERENCE SHARES
The detail, by company, of this subheading in the consolidated balance sheets as of June 30, 2009 and December 31, 2008 was as follows:
                 
    Millions of euros
    June-09   December-08
 
BBVA Internacional, Ltd. (1)
    500       500  
BBVA Capital Finance, S.A.U.
    2,975       2,975  
Banco Provincial, S.A
    69       70  
BBVA International Preferred, S.A.U. (2)
    1,944       1,901  
Phoenix Loan Holdings, Inc.
    18       18  
     
Total
    5,506       5,464  
 
(1)   Listed on the Spanish AIAF market.
 
(2)   Listed in London Stock Exchange and New York Stock Exchange.
These issues were 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.
The issuances of BBVA International Ltd BBVA, BBVA Capital Finance, S.A.U. and BBVA International Preferred, S.A.U, are subordinately guaranteed by the Bank.
23. LIABILITIES UNDER INSURANCE CONTRACTS
The detail of the balance of this heading in the consolidated balance sheets as of June 30, 2009 and December 31, 2008 was as follows:
                 
    Millions of euros
    June-09   December-08
 
Technical provisions for:
               
Mathematical reserves
    5,623       5,503  
Provision for unpaid claims reported
    726       640  
Other insurance technical provisions
    473       428  
     
Total
    6,822       6,571  
 

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24. PROVISIONS
The detail of the balance of this heading in the consolidated balance sheets as of June 30, 2009 and December 31, 2008 was as follows:
                         
            Millions of euros
    Note   June-09   December-08
 
Provisions for pensions and similar obligations
    25       6,296       6,359  
Provisions for taxes and other legal contingents
            299       263  
Provisions for contingent exposures and commitments
            355       421  
Other provisions
            1,638       1,635  
             
Total
            8,588       8,678  
 
25. COMMITMENTS WITH PERSONNEL
As described in note 2.2.3, the Group holds both defined benefit and defined contribution post-employment commitments; the proportion of defined contribution benefits is gradually increasing, mainly due to new hires.
25.1. COMMITMENTS WITH PERSONNEL FOR POST-EMPLOYMENT DEFINED CONTRIBUTION PLANS
The commitments with personnel for post-employemnt defined contribution correspond to contributions on behalf of current employees made anually by the Group. These contributions are accrued and charged to the consolidated income statement in the corresponding financial period (see Note 2.2.3). No liability is therefore recognised in the accompanying consolidated balance sheets.
In the six months periods ended June 30, 2009 and 2008 the Group has made contributions to the defined contribution plans that amounted to €45 million and €33 million, respectively.
25.2 COMMITMENTS FOR POST-EMPLOYMENT DEFINED BENEFIT PLANS AND OTHER LONG-TERM POST-EMPLOYMENT BENEFITS
Defined benefit post-employment commitments accrue primarily to Group employees already retired or who have opted for early retirement schemes, to certain categories of serving employees upon retirement and to most of the active workforce in relation to permanent disability and life insurance obligations.
The detail of the commitments for defined contributions plans as well as the rest of long-term post-employment benefits in Spain and abroad were as follows:

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    Millions of euros
    Commitments in Spain   Commitments abroad   TOTAL
    June-09   December-08   June-09   December-08   June-09   December-08
 
Post-employment benefits
                                               
Pension commitments
    3,059       3,060       929       903       3,988       3,963  
Early retirement
    3,293       3,437                   3,293       3,437  
Post-employment welfare benefits
    216       221       394       364       610       585  
     
Total
    6,568       6,718       1,323       1,267       7,891       7,985  
 
Insurance contracts coverages
                                               
Pension commitments
    437       436                   437       436  
     
 
    437       436                   437       436  
 
                                               
Other plan assets
                                               
Pension commitments
                929       889       929       889  
Post-employment welfare benefits
                323       301       323       301  
     
 
                1,252       1,190       1,252       1,190  
 
Net commitments of plan assets
    6,131       6,282       71       77       6,202       6,359  
 
of which:
                                               
Net assets
                94             94        
Net liabilities (*)
    6,131       6,282       165       77       6,296       6,359  
 
(*)   Recognized under the heading “Provisions — Provisions for pensions and similar obligations” of the accompanying consolidated balance sheets.
The changes in the six months periods ended June 30, 2009 and 2008, by type of net commitment, were as follows:
                                                 
    Millions of euros
    Commitments in Spain   Commitments abroad        
                    Post-           Post-    
                    employment           employment    
    Pension   Early   welfare   Pension   welfare    
June-09   commitments   retirement   benefits   commitments   benefits   Total
 
Balance at beginning of period
    2,624       3,437       221       13       64       6,359  
Finance expenses
    57       71       5       33       19       185  
Finance income
                      (32 )     (15 )     (47 )
Current service cost
    7             1       11       6       25  
Current early retirements
    5       113                         118  
Prior service cost or changes in the plan
    7                               7  
Acquisitions or divestments made
                                   
Effect of reductions or settlement
                                   
Payments
    (87 )     (332 )     (14 )     (1 )           (434 )
Exchange difference
                            1       1  
Actuarial losses (gains)
    3       5       1       (1 )           8  
Contributions
                      (23 )     (4 )     (27 )
Other movements
    6       (1 )     2                   7  
     
Balance at end of period
    2,622       3,293       216             71       6,202  
 

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    Millions of euros
    Commitments in Spain   Commitments abroad        
                    Post-           Post-    
                    employment           employment    
    Pension   Early   welfare   Pension   welfare    
June-08   commitments   retirement   benefits   commitments   benefits   Total
 
Balance at beginning of period
    2,648       2,950       234       35       66       5,933  
Finance expenses
    58       61       5       37       18       179  
Finance income
                      (37 )     (15 )     (52 )
Current service cost/ Current early retirements
    11       533       1       12       7       564  
Prior service cost or changes in the plan
                      5             5  
Acquisitions or divestments made
                                   
Effect of reductions or settlement
                      (5 )     (5 )     (10 )
Payments
    (85 )     (325 )     (40 )                 (450 )
Exchange difference
                      1             1  
Actuarial losses (gains)
    (9 )     (5 )                       (14 )
Contributions
                      (51 )     (10 )     (61 )
Other movements
    2       (7 )     8       32       1       36  
     
Balance at end of period
    2,625       3,207       208       29       62       6,131  
 
Other commitments with personnel are long-service bonuses, that are recognized under the subheading “Provisions — Other provisions” of the accompanying consolidated balance sheet (Note 24) that amount to €33 million as of June 30, 2009 (€36 million as of December 31, 2008), of which €12 million correspond to entities in Spain and €21 million correspond to entities abroad (€11 and €25 millions, respectively, as of December 31, 2008).
25.2.1. Main Commitments in Spain:
The most significant actuarial assumptions used as of June 30, 2009 and December 31, 2008, were as follows:
     
Mortality tables
  PERM/F 2000P.
Discount rate (cumulative annual)
  4.5%/ AA corporate bond yield curve
Consumer price index (cumulative annual)
  2.0% 
Salary growth rate (cumulative annual)
  At least 3% (depending on employee)
Retirement ages
  First date at which the employees are entitied to retire or contractually agreed at the individual level in the case of early retirements
Pension commitments
To cover certain pension commitments, insurance contracts have been contracted with insurance companies not related to the group. These commitments are covered by assets and therefore are presented in the accompanying consolidated balance sheets for the net amount commitment less plan assets. As of June 30, 2009 and December 31, 2008, the amount of the plan assets to the mentioned insurance contracts equalled the amount of the commitments covered, therefore its net value was zero in the accompanying consolidated balance sheets.
On the other hand, the rest pension commitments include commitments by defined benefit for which insurance contracts have been contracted with BBVA Seguros, S.A. de Seguros y Reaseguros, which is 99.95% owned by the Group. The assets in which the insurance company has invested the amount of the contracts can not be considered plan assets according to IAS 19 and are presented in the accompanying consolidated balance sheets in different headings of Assets depending on the classification of financial instruments that corresponds. The commitments are recognized under the heading “Provisions — Provisions for pensions and similar obligations” of the accompanying consolidated balance sheets (see Note 24).

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Early retirements
During the first semester of 2009 the Group offered in Spain to certain employees the possibility of taking early retirement before the age stipulated in the collective labour agreement in force. This offer was accepted by 223 employees (993 employees during the first semester of 2008).
The early retirements commitments in Spain as of June 30, 2009 and December 31, 2008 were recognised as provisions in the subheading “Provisions — Provisions for Pensions and Similar Obligations” (see Note 23) in the accompanying consolidated balance sheets amounted to €3,293 million and €3,437 million, respectively.
The cost of the early retirements of the period were recognised in the subheading “Provision Expense (Net) — Transfers to funds for pensions and similar obligations — Early retirements” in the accompanying consolidated income statements.
Estimated of contribution payments
The annual estimated amount of contribution payments in Spain in million of euros for the next 10 years are as follows:
                         
    Commitments in Spain
                    Post-
                    employment
    Pension   Early   welfare
      Year   Commitments   retirement   benefits
 
2009
    173       606       20  
2010
    178       539       19  
2011
    178       498       18  
2012
    177       458       17  
2013
    176       415       17  
2014-2018
    850       1,293       81  
 
Impact in the consolidated income statements
Following is a summary of the charges on the accompanying consolidated income statements for post-employment benefits commitments of companies in Spain:
                 
    Millions of euros
    June-09   June-08
 
Interest expense and similar charges
               
Interes cost of pension funds
    133       124  
Personnel expenses
               
Transfers to pensions plans
    7       11  
Social attentions
    1       1  
Provision expense (net)
               
Transfers to fund for pensions and similar obligations
               
Pension funds
    18       (14 )
Early retirement
    113       533  
     
Total
    272       655  
 
25.2.2. Commitments abroad:
The main post-employment commitments with personnel abroad are related to Mexico, Portugal and United States, which jointly represent 95% of the total amount of commitments with personnel abroad as of June 30, 2009 and 16% of the total of the commitments with the whole personnel of BBVA Group as of June 30, 2009 (94% and 15%, respectively, as of December 31, 2008).
As of June 30, 2009 and December 31, 2008 the details by countries of the various commitments with personnel of Group BBVA abroad are as follows:

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    Millions de euros
    Commitments   Plan assets   Net Commitments
    June-09   December-08   June-09   December-08   June-09   December-08
 
Post-employment benefits
                                               
Mexico
    402       387       453       436       (51 )     (49 )
Portugal
    293       283       288       283       5        
United States
    168       167       145       133       23       34  
Rest
    66       66       43       37       23       29  
     
 
    929       903       929       889             14  
 
                                               
Post-employment welfare benefits
                                               
Mexico
    389       360       323       301       66       59  
Portugal
                                   
United States
                                   
Rest
    5       4                   5       4  
     
 
    394       364       323       301       71       63  
 
                                               
     
Total commitments
    1,323       1,267       1,252       1,190       71       77  
 
The portion pending transfer as of June 30, 2009 to the new defined contribution system within the balance of commitments and plan assets in Mexico corresponding to the employees that have accepted migration to the new scheme amounted to €29 million.
The plan assets are used directly to settle the vested obligations and which meet the following conditions: they are not owned by the Group entities; they are available only to pay post-employment benefits; and they cannot be returned to the Group entities.
Plan assets in Mexico and Portugal are virtually all invested in debt securities. Plan assets in the US are also invested in equities (around 50%).
The commitments net of the aforementioned plan assets were recognized in the subheading “Provisions - Provisions for pensions and similar obligations” in the accompanying consolidated balance sheets (see Note 24). The present value of the commitments is quantified using actuarial assumptions.
The main actuarial assumptions used in quantifying the commitments as of June 30, 2009 and December 31, 2008 in Mexico, Portugal and the United States, were as follows:
                         
ITEMS   Mexico   Portugal   United States
 
Mortality tables
  EMSSA 97   TV88/90   RP 2000 Projected
Discount rate (cumulative annual)
    10.3 %     5.9 %     6.9 %
Consumer price index (cumulative annual)
    3.8 %     2.0 %     2.5 %
Salary growth rate (cumulative annual)
    4.8 %     3.0 %     4.0 %
Expected rate of return on plan assets
    9.8 %     4.6 %     7.5 %
Medical cost trend rates
    6.8 %           n/a  
 
The estimated annual amount of commitments in million of euros for the next 10 years are as follows:
                         
    Commitments abroad
      Year   Mexico   Portugal   United States
 
2009
    30       15       7  
2010
    30       15       7  
2011
    30       16       8  
2012
    31       16       8  
2013
    31       16       9  
2014-2018
    174       80       61  
 

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An annual analysis as of June 30, 2009 of the sensitivity of annual cost and commitments to incremental changes in the growth in medical costs in Mexico is set forth below:
                 
    Millions of euros
    Mexico
    1% increase   1% decrease
 
Increase/Decrease in current services cost and interest cost
    11       (9 )
Increase/Decrease in commitments
    72       (57 )
 
The detail of the charges on the accompanying consolidated income statements for the six months periods ended June 30, 2009 and 2008 corresponding to the entities in Mexico, Portugal and the United States is as follows:
                                 
    Millions of euros
    Mexico   Portugal   USA
            Other        
June-09   Pensions   commitments   Pensions   Pensions
 
Interest expenses and similar charges
    (2 )     4       2        
Personnel expenses
    3       6       2       2  
Provision expense (net)
    11             3       (1 )
     
Total
    12       10       7       1  
 
                                 
    Millions of euros
    Mexico   Portugal   USA
            Other        
June-08   Pensions   commitments   Pensions   Pensions
 
Interest expenses and similar charges
    1       3       1       (1 )
Personnel expenses
    7       7       2       3  
Provision expense (net)
    (3 )     (5 )     6       (1 )
     
Total
    5       5       9       1  
 
26. MINORITY INTERESTS
The detail, by consolidated company, of the balance of the heading “Minority Interests” of consolidated equity as of June 30, 2009 and December 31, 2008 was as follows:
                 
    Millions of euros
    June-09   December-08
 
BBVA Colombia Group
    27       26  
BBVA Chile
    251       194  
BBVA Banco Continental Group
    314       278  
BBVA Banco Provincial Group
    477       413  
BBVA Banco Francés Group
    97       88  
Other companies
    53       50  
     
Total
    1,219       1,049  
 

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Following is the amount of the share of profit for the six months periods ended June 30, 2009 and June 30, 2008 of the minority group. These amounts are recognized in the heading “Minority interests” of the consolidated income statements:
                 
    Millions of euros
    June-09   June-08
 
BBVA Colombia Group
    3       3  
BBVA Chile
    34       22  
BBVA Banco Continental Group
    69       48  
BBVA Banco Provincial Group
    110       66  
BBVA Banco Francés Group
    22       24  
Other companies
    5       6  
     
Total
    243       169  
 
27. CAPITAL STOCK
As of June 30, 2009, the capital of Banco Bilbao Vizcaya Argentaria, S.A. amounted to €1,836,504,869.29, and consisted of 3,747,969,121 fully subscribed and paid registered shares of €0.49 par value each, all of the same class and series, all fully subscribed and paid in and represented by book entries.
All the shares of BBVA carry the same voting and dividend rights and no single shareholder enjoys special voting rights. There are no shares that are not representative of an interest in the Bank’s capital.
As of June 30, 2009, the shares of BBVA are quoted on the computerized trading system of the Spanish stock exchanges and on the Frankfurt, London, Zurich and Mexico stock market.
American Depositary Shares (ADSs) quoted in New York are also traded on the Lima (Peru) Stock Exchange, by virtue of an exchange agreement entered into between these two markets.
Also, as of June 30, 2009, the shares of BBVA Banco Continental, S.A., Banco Provincial S.A., BBVA Colombia, S.A., BBVA Chile, S.A., BBVA Banco Frances, S.A. and AFP Provida were quoted on their respective local stock markets, being the last two quoted as well on the New York Stock Exchange. As well, BBVA Banco Frances, S.A. is listed on the Latin-American market of the Madrid Stock Exchange.
As of June 30, 2009, BBVA was not aware of any shareholder holding a significant interest in its equity other than Mr. Manuel Jove Capellán who, at that date, owned 4.41% of BBVA through the following vehicles: Inveravante Inversiones Universales, S.L., Bourdet Inversiones, SICAV, S.A. and Doniños de Inversiones, SICAV, S.A. The reduction in Mr. Manuel Jové’s shareholding with respect to the 5.01% interest he held at year-end 2007 is the result of a securities loan (specifically the loan of 25,000,000 shares) undertaken in accordance with additional provision 18 of Law 62/2003, of December 30. The settlement of the loan in the future will ultimately restore Mr. Jové’s ownership stake to 5.01%.
Meanwhile, State Street Bank and Trust Co., Chase Nominees Ltd, The Bank of New York International Nominees and Clearstream AG, in their capacity as international custodian/depositary banks, held 4.95%, 6.85%, 3.35% and 3.21% of the share capital of BBVA, respectively, as of June 30, 2009.
BBVA is not aware of any direct or indirect interests through which ownership or control of the Bank may be exercised.
BBVA has not been notified of the existence of any side agreements that regulate the exercise of voting rights at the Bank’s General Meetings, or which restrict or place conditions upon the free transferability of BBVA shares. Neither is the Bank aware of any agreement that might result in changes in the control of the issuer.

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28. SHARE PREMIUM
As of June 30, 2009 and December 31, 2008, the balance of this heading in the consolidated balance sheet amounts to €12,453 million €12,770 million, respectively.
The change in this balance reflects the charge of €317 million corresponding to the remuneration paid to shareholders on April 20, 2009 as a supplement the 2008 cash dividend, as ratified at the General Shareholders’ Meeting on March 13, 2009.
This supplemental remuneration entailed the distribution of 60,451,115 own shares (Note 30) in the amount of one (1) share for every sixty-two (62) held by every shareholder at the close of trading on April 9, 2009. The shares were valued at €5.25 each (namely, the weighted average price of Banco Bilbao Vizcaya Argentaria, S.A. shares quoted on Spain’s continuous electronic market on March 12, 2009, the working day immediately preceeding the aforemented General Shareholders’ Meeting).
The revised Spanish Corporations Law expressly permits the use of the share premium balance to increase capital and establishes no specific restrictions as to its use.
29. RESERVES
The breakdown of the balance of this heading in the accompanying consolidated balance sheets as of June 30, 2009 and December 2008 is as follows:
                 
    Millions of euros
    June-09   December-08
 
Legal reserve
    367       367  
Restricted reserve for retired capital
    88       88  
Restricted reserve for Parent Company shares
    535       604  
Restricted reserve for redenomination of capital in euros
    2       2  
Revaluation Royal Decree-Law 7/1996
    78       82  
Voluntary reserves
    2,776       1,927  
Consolidation reserves attributed to the Bank and dependents consolidated companies
    8,463       6,340  
     
Total
    12,309       9,410  
 
29.1. LEGAL RESERVE
Under the revised Corporations Law, 10% of profit for each year must be transferred to the legal reserve until the balance of this reserve reaches 20% of capital. This limit had already been reached by Banco Bilbao Vizcaya Argentaria, S.A. as of June 30, 2009. The legal reserve can be used to increase capital provided that the remaining reserve balance does not fall below 10% of the increased capital amount.
Except as mentioned above, until the legal reserve exceeds 20% of capital, it can only be used to offset losses, provided that sufficient other reserves are not available for this purpose.
29.2. RESTRICTED RESERVES
Pursuant to the Consolidated Spanish Companies Law, the respective restricted reserves were recorded in relation to the reduction of the par value of each share in April 2000, the treasury shares held by the bank at each period-end, and the customer loans outstanding at those dates that were granted for the purchase of, or are secured by Bank shares.
Pursuant to Law 46/1998 on the introduction of the euro, the respective restricted reserves were recorded in relation to the redenomination of capital in euros.

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29.3. REVALUATION ROYAL DECREE-LAW 7/1996 (ASSET REVALUATIONS AND REGULARISATIONS)
Prior to the merger, Banco de Bilbao, S.A. and Banco de Vizcaya, S.A. availed themselves of the asset revaluations and regularisations provisions of the applicable enabling legislation. In addition, on December 31, 1996, the Banco Bilbao Vizcaya revalued its tangible assets pursuant to Royal Decree-Law 7/1996 by applying the maximum coefficients authorized, up to the limit of the market value arising from the existing measurements. The resulting increases in the cost and accumulated depreciation of tangible assets and, where appropriate, in the cost of equity securities, were allocated as follows:
         
    Millions of euros
    June-09
 
Legal revaluations and regularisations of tangible assets:
       
Cost
    187  
Less:
       
Single revaluation tax (3%)
    (6 )
Balance as of December 31, 1999
    181  
Adjustment as a result of review by the tax authorities in 2000
    (5 )
Transfer to voluntary reserves
    (98 )
 
       
Total
    78  
 
Following the review of the balance of the account Revaluation Reserve Royal Decree-Law 7/1996 of June 7, by the tax authorities in 2000, this balance can only be used, free of tax, to offset recorded losses and to increase capital until January 1, 2007. From that date, the remaining balance of this account can also be taken to unrestricted reserves, provided that the surplus has been depreciated or the revalue assets have been transferred or derecognised.

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29.4 RESERVES AND LOSSES AT CONSOLIDATED COMPANIES
The breakdown, by company or corporate group, of the balances of these headings in the accompanying consolidated balance sheets, as of June 30, 2009 and December 31, 2008, is as follows:
                 
    Millions of euros
    June-09   December-08
 
Fully and proportionately consolidated companies
               
BBVA Bancomer Group
    5,454       3,489  
Chile Group
    418       248  
BBVA Banco Provincial Group
    414       198  
BBVA Continental Group
    131       95  
BBVA Puerto Rico Group
    72       44  
BBVA USA Bancshares Group
    99       (84 )
BBVA Portugal Group
    (197 )     (220 )
BBVA Colombia Group
    (206 )     (264 )
BBVA Banco Francés Group
    (129 )     (305 )
BBVA Luxinvest, S.A.
    1,232       1,232  
Corporacion General Financiera, S.A.
    1,215       979  
BBVA Seguros, S.A.
    1,052       862  
Anida Grupo Inmobiliario, S.L.
    402       380  
Cidessa Uno, S.L.
    746       298  
BBVA Suiza, S.A.
    233       222  
Bilbao Vizcaya Holding, S.A.
    166       150  
Finanzia, Banco de Crédito, S.A.
    147       144  
Compañía de Cartera e Inversiones, S.A.
    123       121  
Banco Industrial de Bilbao, S.A.
    96       114  
BBVA Panama, S.A.
    135       108  
Banco de Crédito Local, S.A.
          (243 )
BBVA International Investment Corporation
    (418 )     (418 )
Other
    (33 )     135  
     
Subtotal
    11,152       7,285  
     
For using the equity method:
    443       609  
     
Corp. IBV Participaciones Empresariales, S.A.
    249       437  
Citic Intern.Final.Holding
    164       151  
Tubos Reunidos, S.A.
    51       53  
Other
    (21 )     (32 )
     
Total
    11,595       7,894  
 
For the purpose of allocating the reserves and accumulated losses at consolidated companies shown in the foregoing table, the transfers of reserves arising from the dividends paid and the writedowns or transactions between these companies are taken into account in the period in which they took place.
As of June 30, 2009 and December 31, 2008, the individual financial statements of the subsidiaries giving rise to the balances itemized in “Reserves and losses at consolidated companies — Fully and proportionately consolidated companies” in the table above included €1,950 million and €2,217 million, respectively, of restricted reserves, all of which are restricted for companies’ shares.

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30. TREASURY SHARES
For the six months periods ended June 30, 2009 and 2008 the Group companies performed the following transactions involving Bank shares:
                                 
    June-09   June-08
    Number of   Millions of   Number of   Millions of
    shares   euros   shares   euros
 
Balance at beginning of period
    61,539,883       720       15,836,692       389  
+ Purchases
    377,532,513       2,774       535,893,548       7,813  
- Sales and others
    (433,220,188 )     (3,337 )     (512,159,773 )     (7,527 )
+/- Derivatives over BBVA shares
          (134 )           (3 )
     
Balance at end of period
    5,852,208       23       39,570,467       672  
     
Of which:
                               
Held by the BBVA S.A.
    2,315,059       (8 )     1,312,163       139  
Held by Corporación General Financiera
    3,524,033       31       38,252,870       532  
Held by other entities of the Group
    13,116             5,434       1  
Average purchase price
    7.35               14.58          
Average selling price
    6.86               14.34          
Net gain or losses on transactions (Stockholders’funds-Reserves)
    (305 )           (128 )      
 
The “Sales and others” heading in the table above for the six-month period ended June 30, 2009 includes the share-based payment to shareholders to supplement the 2008 cash dividend (Note 28).
The percentages of treasury shares held by the Group during the six months period ended June 30, 2009 and the year 2008 were as follows:
                                 
    June-09   December-08
    Min   Max   Min   Max
 
% treasury shares
    0.074 %     2.695 %     0.318 %     3.935 %
 
The number of shares of Banco Bilbao Vizcaya Argentaria S.A., with nominal value per share 0.49, accepted in pledge as of June 30, 2009 and December 31, 2008 was as follow:
                 
    Millions of euros
    June-09   December-08
 
Number of shares in pledge
    106,204,680       98,228,254  
Nominal value
    0.49       0.49  
% of share capital
    2.83 %     2.62 %
 
The number of BBVA shares own by third parties but manage by entities of the Group as of June 30, 2009 and December 31, 2008 was as follow:
                 
    Millions of euros
    June-09   December-08
 
Number of shares property of third parties
    93,339,768       104,534,298  
Nominal value
    0.49       0.49  
% of share capital
    2.49 %     2.80 %
 

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31. CAPITAL RATIO
As of June 30, 2009 and December 31, 2008, the capital of the Group exceeded the minimum level required by the rules in force in every date (Note 1.6), as shown below:
                 
    Millions of euros
    June-09 (*)   December-08
 
Basic equity
    22,915       22,107  
Capital
    1,837       1,837  
Parent company reserves
    19,926       21,394  
Consolidated companies reserves
    2,933       (626 )
Minority interests
    1,151       928  
Other equity instruments
    5,433       5,391  
Deductions (Goodwill and others)
    (9,963 )     (9,998 )
Attributed net income (less dividends)
    1,598       3,181  
Additional equity
    11,897       12,543  
Other deductions
    (1,426 )     (957 )
Additional Capital due to mixed Group (**)
    1,191       1,129  
Total Stockholders’ equity
    34,577       34,822  
Minimum equity required
    23,667       24,124  
 
(*)   Provisionals data
 
(**)   Mainly Insurance entities of the Group.
32. TAX MATTERS
A) Consolidated tax group
Pursuant to current legislation, the Consolidated Tax Group includes Banco Bilbao Vizcaya Argentaria, S.A., as the Parent company, and, as subsidiaries, the Spanish subsidiaries that meet the requirements provided for in Spanish legislation regulating the taxation of the consolidated income of corporate groups.
The Group’s other banks and subsidiaries file individual tax returns in accordance with the tax legislation in force in each country.
B) Years open for review by the tax authorities
As of June 30, 2009, the Consolidated Tax Group had 2004 and subsequent years open for review by the tax authorities for the main taxes applicable to it.
In general, the other Spanish consolidated companies, except for those at which the statute-of-limitations year has been interrupted by the commencement of a tax audit, have the last four years open for review by the tax authorities for the main taxes applicable to them.
Until June 30, 2009 and as a result of the tax audit conducted by the tax authorities, tax assessments were issued against several Group companies for the years up to and including 2003, some of which were signed on a contested basis. After considering the temporary nature of certain of the items assessed, the amounts, if any, that might arise from these assessments were provisioned.
Also, in 2009, notification was received of the commencement of tax audits for 2004 to 2006 for the main taxes to which the Tax Group is subject. These tax audits had not been completed as of June 30, 2009.
In view of the varying interpretations that can be made of the applicable tax legislation, the outcome of the tax audits of the open years that could be conducted by the tax authorities in the future could give rise to contingent tax liabilities which cannot be objectively quantified at the present time. However, the Banks’ Board of Directors and its tax advisers consider that the possibility of these contingent liabilities becoming actual liabilities is remote and, in any case, the tax charge which might arise there from would not materially affect the accompanying Group’s interim consolidated financial statements.

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C) Reconciliation
The reconciliation of the corporation tax expense resulting from the application of the standard tax rate to the corporation tax expense recognized in the accompanying consolidated income statement was as follows:
                 
    Millions of euros
    June-09   June-08
 
Corporation tax
    1,201       1,347  
Decreases due to permanent differences:
               
Tax credits and tax relief at consolidated Companies
    (139 )     (255 )
Other items net
    (155 )     1  
Net increases (decreases) due to temporary differences
    (373 )     119  
Charge for income tax and other taxes
    534       1,212  
Deferred tax assets and liabilities recorded (utilised)
    373       (119 )
Income tax and other taxes accrued in the period
    907       1,093  
Adjustments to prior years’ income tax and other taxes
    54       120  
     
Income tax and other taxes
    961       1,213  
 
The effective tax rate was as follows:
                 
    Millions of euros
    June-09   June-08
 
Consolidated Tax Group
    2,023       2,030  
Other Spanish entities
    (51 )     68  
Foreign entities
    2,031       2,392  
     
 
    4,003       4,490  
     
Income tax
    961       1,213  
     
Effective tax rate
    24.00 %     27.02 %
 
D) Taxes recognized in equity
In addition to the income tax recognized in the consolidated income statement for the six months ended June 30, 2009 and 2008, the Group recognized the following amounts in equity, broken out into their component headings below:
                 
    Millions of euros
    June-09   June-08
 
Tax charges recognized in equity
    244       187  
Tax credits recognized in equity
    (65 )     (2 )
     
Total
    179       185  
 
E) Deferred taxes
The balance under “Tax assets” in the accompanying consolidated balance sheets includes balances receivable from the tax authorities that have been recognized as deferred tax assets. Meanwhile “Tax liabilities” in the accompanying consolidated balance sheets includes the various deferred tax liabilities recognized by the Group.
As of June 30, 2009, the deferred tax assets recognized by the Group companies correspond primarily to provisions taken to cover pension and similar employee commitments (in the amount of €28 million at June 30, 2009 at BBVA Bancomer, S.A. de C.V. and €1,438 million at BBVA) as well as non-performing loan provisions (€347 million at BBVA Bancomer, S.A. de C.V. and €896 million at BBVA).

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33. FINANCIAL GUARANTEES AND DRAWABLE BY THIRD PARTIES
The breakdown of the balances of these subheadings as of June 30, 2009 and December 31, 2008 was as follows:
                 
    Millions of euros
    June-09   December-08
 
Contingent exposures -
               
Collateral, bank guarantees and indemnities
    27,014       27,649  
Rediscounts, endorsements and acceptances
    42       81  
Other
    7,365       8,222  
     
 
    34,421       35,952  
     
Contingent commitments -
               
Drawable by third parties:
    85,140       92,663  
Credit institutions
    2,254       2,021  
General government sector
    3,417       4,221  
Other resident sectors
    33,091       37,529  
Non-resident sector
    46,378       48,892  
Other commitments
    7,583       6,234  
     
Total
    92,723       98,897  
 
Since a significant portion of these amounts will reach maturity without any payment obligation materializing for the consolidated companies, the aggregate balance of these commitments cannot be considered as an actual future requirement for financing or liquidity to be provided by the Group to third parties.
Income from the guarantee instruments is recorded under the heading “Fee and Commission Income” in the consolidated income statement and is calculated by applying the rate established in the related contract to the nominal amount of the guarantee (see Note 41).
During the six months ended June 30, 2009 and in the year 2008 no issuances of debt securities carried out by associate entities, jointly controlled entities (accounted for using the equity method) and non Group entities have been guaranteed.
34. ASSETS ASSIGNED TO OTHER OWN AND THIRD-PARTY OBLIGATIONS
As of June 30, 2009 and December 31, 2008, the face amount of the assets owned by the consolidated entities pledged as security for own transactions, amounted to €84,702 million and €76,259 million, respectively, and related basically to the pledge of certain assets as security for financing liabilities with the Bank of Spain (Note 22.4) which pursuant to the Mortgage Market Law are admitted as security for obligation to third parties.
As of June 30, 2009 and December 31, 2008, there were no additional assets assigned to own or third-party obligations to those described in the different headings of these interim consolidated financial statements.
35. OTHER CONTINGENT ASSETS
As of June 30, 2009 and December 31, 2008, there were no significant contingent assets.
36. PURCHASE AND SALE COMMITMENTS
The financial instruments sold with a commitment to subsequently repurchase them are not derecognized from the consolidated balance sheets and the amount received from the sale is considered financing from third parties.

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The financial instruments acquired with a commitment to subsequently resell them are not recognized in the consolidated balance sheets and the amount paid for the sale is considered credit given to third parties.
The breakdown of sale and purchase commitments of the Group BBVA as of June 30, 2009 and December 31, 2008, was as follow:
                 
    Millions of euros
    June-09   December-08
 
Financial instruments sales with repurchase commitments
    28,503       32,569  
Financial instruments purchase with resale commitments
    5,933       11,259  
 
Following is a breakdown of the maturity of other future payment obligations from June 30, 2009:
                                         
    Millions of euros
    Up to 1 year   1 to 3 year   3 to 5 year   Over 5 year   Total
 
Financial leases
                             
Operational leases
    340       84       125       222       771  
Purchase commitments
    86       21                   107  
Technology and systems projetcs
    33       18                   51  
Other projects
    53       3                   56  
     
Total
    426       105       125       222       878  
 
37. TRANSACTIONS FOR THE ACCOUNT OF THIRD PARTIES
As of June 30, 2009 and December 31, 2008, the detail of the most significant items composing this heading was as follows:
                 
    Millions of euros
    June-09   December-08
 
Financial instruments entrusted by third parties
    502,524       510,019  
Conditional bills and other securities received for collection
    4,292       5,208  
Securities received in credit
    114       71  
 
As of June 30, 2009 and December 31, 2008, the off balance sheet customer funds was as follows:
                 
    Millions of euros
    June-09   December-08
 
The off balanced sheet customer funds
    124,892       114,840  
- Commercialised by the Group
               
- Investment companies and mutual funds
    38,453       37,076  
- Pension funds
    51,291       42,701  
- Saving insurance contracts
    9,416       10,398  
- Customer portfolios managed on a discretionary basis
    25,636       24,582  
Of which:
               
Portfolios managed on a discretionary
    10,922       12,176  
- Commercialised by the Group managed by third parties outside the Group
               
- Investment companies and mutual funds
    71       59  
- Pension funds
    25       24  
- Saving insurance contracts
           
 

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38. INTEREST INCOME AND EXPENSE AND SIMILAR ITEMS
38.1. INTEREST AND SIMILAR INCOME
The breakdown of the most significant interest and similar income earned by the Group during the six months periods ended June 30, 2009 and 2008 was as follows:
                 
    Millions of euros
    June-09   June-08
 
Central banks
    150       225  
Loans and advances to credit institutions
    422       639  
Loans and advances to customers
    9,873       11,249  
General government
    262       365  
Resident sector
    4,549       5,416  
Non resident sector
    5,062       5,468  
Debt securities
    1,729       1,908  
Trading
    859       1,113  
Investment
    870       795  
Rectification of income as a result of hedging transactions
    106       111  
Insuranes activity income
    471       474  
Other income
    160       176  
     
Total
    12,911       14,782  
 
The amounts recognized in consolidated equity during the period in connection with fair value hedges and the amounts derecognized from consolidated equity and taken to the consolidated income statement during the period are disclosed in the accompanying consolidated statements of recognized income and expense.
The breakdown of the balance of this heading in the accompanying consolidated income statements by geographic area as of June 30, 2009 and 2008 was as follows:
                 
    Millions of euros
    June-09   June-08
 
Domestic
    6,310       7,685  
Foreign
    6,601       7,097  
European Union
    674       932  
OECD
    3,771       4,178  
Rest of countries
    2,156       1,987  
     
Total
    12,911       14,782  
     
Of which:
               
BBVA, S.A.
               
Domestic
    5,975       7,022  
Foreign
    535       743  
European Union
    352       459  
OECD
    40       88  
Rest of countries
    143       196  
     
Total
    6,510       7,765  
 

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38.2. INTEREST EXPENSE AND SIMILAR CHARGES
The breakdown of the balance of this heading in the accompanying consolidated income statements was as follows:
                 
    Millions of euros
    June-09   June-08
 
Bank of Spain and other central banks
    113       235  
Deposits from credit institutions
    922       1,535  
Desposits from customers
    2,618       4,442  
Debt certificates
    1,484       1,818  
Subordinated liabilities
    782       525  
Rectification of expenses as a result of hedging transactions
    (373 )     95  
Cost attributable to pension funds
    140       130  
Insurance
    339       363  
Other charges
    28       84  
     
Total
    6,053       9,227  
 
38.3. AVERAGES RETURN ON INVESTMENTS AND AVERAGE BORROWING COST
The detail of the average return on investments during the six months periods ended June 30, 2009 and 2008 was as follows:
                                                 
    Millions of euros
    June-09   June-08
    Average           Interest   Average           Interest
ASSETS   Balances   Income   Rates (%)   Balances   Income   Rates (%)
 
Cash and balances with central banks
    17,760       150       1.71       13,130       225       3.45  
Securities portfolio and derivatives
    134,238       2,171       3.26       114,803       2,426       4.25  
Loans and advances to credit institutions
    27,569       440       3.22       28,966       690       4.79  
Euros
    16,466       264       3.23       20,446       468       4.61  
Foreign currency
    11,103       176       3.19       8,520       222       5.24  
Loans and adavances to customers
    333,584       10,081       6.09       312,286       11,312       7.28  
Euros
    224,373       5,324       4.78       216,856       6,323       5.86  
Foreign currency
    109,211       4,757       8.78       95,430       4,989       10.51  
Other finance income
          69                   129        
Other assets
    32,199                   30,273              
     
ASSETS/FINANCE INCOME
    545,350       12,911       4.77       499,458       14,782       5.95  
 

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The average borrowing cost during the six months periods ended June 30, 2009 and 2008 was as follows:
                                                 
    Millions of euros
    June-09   June-08
    Average           Interest   Average           Interest
LIABILITIES   Balances   Expenses   Rates (%)   Balances   Expenses   Rates (%)
 
Deposits from central banks and credit institutions
    72,081       1,316       3.68       73,905       1,883       5.12  
Euros
    30,854       572       3.74       31,528       799       5.10  
Foreign currency
    41,227       744       3.64       42,377       1,084       5.14  
Customer deposits
    248,261       2,546       2.07       227,863       3,779       3.34  
Euros
    116,854       899       1.55       114,453       1,699       2.99  
Foreign currency
    131,407       1,647       2.53       113,410       2,080       3.69  
Marketable securities and subordinated liabilities
    123,203       1,920       3.14       118,548       3,176       5.39  
Euros
    94,067       1,482       3.18       99,078       2,716       5.51  
Foreign currency
    29,136       438       3.02       19,470       460       4.75  
Other finance expense
          271                   389        
Other liabilities
    73,369                   51,911              
Equity
    28,436                   27,230              
     
LIABILITIES+EQUITY FINANCE EXPENSE
    545,350       6,053       2.24       499,458       9,227       3.72  
 
The changes in “Interest and similar income” and “Interest expense and similar charges” in the accompanying consolidated income statements for the six months ended June 30, 2009 and 2008 were due to price changes (price effect) and changes in business volumes (volume effect), as detailed below:
                         
    Millions of euros
    Volume Price-Effect 2009/2008
    Volume   Price   Total
    Effect (1)   Effect (2)   Effect
 
Cash and balances with central banks
    78       (153 )     (75 )
Securities portfolio and derivatives
    395       (650 )     (255 )
Loans and advances to credit institutions
    (37 )     (214 )     (251 )
Euros
    (93 )     (111 )     (204 )
Foreign currency
    66       (112 )     (46 )
Loans and advances to customers
    705       (1,937 )     (1,232 )
Euros
    183       (1,183 )     (1,000 )
Foreign currency
    689       (921 )     (232 )
Other financial income
          (59 )     (59 )
     
FINANCE INCOME + INCOME FROM EQUITY INSTRUMENTS
    1,270       (3,141 )     (1,871 )
     
Deposits from central banks and credit institutions
    (57 )     (510 )     (567 )
Euros
    (21 )     (205 )     (227 )
Foreign currency
    (35 )     (305 )     (340 )
Customer deposits
    316       (1,550 )     (1,234 )
Euros
    26       (826 )     (800 )
Foreign currency
    317       (751 )     (434 )
Marketable securities and subordinated liabilities
    107       (1,363 )     (1,256 )
Euros
    (152 )     (1,083 )     (1,234 )
Foreign currency
    225       (248 )     (23 )
Other finance expense
          (118 )     (118 )
     
FINANCE EXPENSE
    792       (3,967 )     (3,175 )
     
NET INTEREST INCOME
                    1,303  
 
(1)   The volume effect is calculated by multiplying the interest rate for the first period by the difference between the average balances for the two periods.
 
(2)   The price effect is calculated by multiplying the average balance for the second period by the difference between the interest rates for the two periods.

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39. DIVIDEND INCOME
The amount recorded under this heading in the accompanying consolidated income statements relates in full to dividends from other shares and equity instruments other than dividends from investments in entities accounted for using the equity method (Note 40). The breakdown was as follows:
                 
    Millions of euros
    June-09   June-08
 
Dividends from other shares and other equity instrument
               
Financial assets held for trading
    62       66  
Available-for-sale financial assets
    186       175  
     
Total
    248       241  
 
40. SHARE OF PROFIT OR LOSS OF ENTITIES ACCOUNTED FOR USING THE EQUITY METHOD
The profit contributed by the entities accounted for using the equity method during the six months periods ended June 30, 2009 and 2008 was as follows:
                 
    Millions of euros
    June-09   June-08
 
Corporación IBV Participaciones Empresariales, S.A.
    16       145  
Servired Española de Medios de Pago, S.A.
    (4 )      
Tubos Reunidos, S.A.
    4       11  
CITIC International Financial Holding Limited CIFH
    2       22  
BBVA Elcano Empresarial, S.C.R.,S.A.
    5       (5 )
BBVA Elcano Empresarial II, S.C.R.,S.A.
    5       (5 )
Rest
    (1 )     5  
     
Total
    27       173  
 
41. FEE AND COMMISSION INCOME
The breakdown of the balance of this heading in the accompanying consolidated statements of income was as follows:
                 
    Millions of euros
    June-09   June-08
 
Commitment fees
    44       28  
Contingent liabilities
    130       118  
Documentary credits
    21       21  
Bank and other guarantees
    109       97  
Arising from exchange of foreign currencies and banknotes
    6       11  
Collection and payment services
    1,268       1,313  
Securities services
    836       983  
Counselling on and management of one-off transactions
    2       6  
Financial and similar counselling services
    11       11  
Factoring transactions
    6       14  
Non-banking financial products sales
    46       52  
Other fees and commissions
    289       242  
     
Total
    2,638       2,778  
 

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42. FEE AND COMMISSION EXPENSES
The breakdown of the balance of this heading in the accompanying consolidated income statements was as follows:
                 
    Millions of euros
    June-09   June-08
 
Brokerage fees on lending and deposit transactions
    3       5  
Fees and commissions assigned to third parties
    335       302  
Other fees and commssions
    119       187  
     
Total
    457       494  
 
43. NET GAINS (LOSSES) ON FINANCIAL ASSETS AND LIABILITIES
The detail of the balance of this heading in the accompanying consolidated income statements, broken down by its component sub-headings, was as follows:
                 
    Millions of euros
    June-09   June-08
 
Financial assets held for trading
    136       280  
Other financial assets designated at fair value through profit or loss
    29       17  
Other financial instruments not at fair value through profit or loss
    281       721  
Available-for-sale financial assets
    245       667  
Loans and receivables
    11       7  
Other
    25       47  
     
Total
    446       1,018  
 
The breakdown of the balance of this heading in the consolidated income statements, by the nature of financial instruments as of June 30, 2009 and 2008, was as follows:
                 
    Millions of euros
    June-09   June-08
 
Debt instruments
    356       (150 )
Equity instruments
    420       (266 )
Loans and advances to customers
    24       30  
Derivatives
    (409 )     1,326  
Deposits from customers
          12  
Other
    55       66  
     
Total
    446       1,018  
 
During the six months ended June 30, 2009 related to the most significant fair value hedges, were recorded in the consolidated income statement €171 million of gains for the hedging instruments and €174 million of losses for hedge instruments attributable to hedge risk.
As of June 30, 2009 and June 30, 2008 the amounts recognised in profit or loss by the ineffective portion of cash flow hedges and hedges of a net investment in a foreign operation are not significants.

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44. OTHER OPERATING INCOME AND EXPENSES
The detail of the heading “Other operating income” of the accompanying consolidated income statements as of June 30, 2009 and 2008 was as follows:
                 
    Millions of euros
    June-09   June-08
 
Income on insurance and reinsurance contracts
    1,313       1,518  
Financial income from non-financial services
    229       228  
Of which:
               
Real estate agencies
    5       12  
Rest of operating income
    213       185  
     
Total
    1,755       1,931  
 
The detail of the heading “Other operating expenses” of the accompanying consolidated income statements was as follows:
                 
    Millions of euros
    June-09   June-08
 
Expenses on insurance and reinsurance contracts
    936       1,226  
Change in inventories
    191       195  
Rest of operating expenses
    360       297  
Of which:
               
Fondo de garantía de depósitos
    169       118  
     
Total
    1,487       1,718  
 
45. ADMINISTRATION COSTS
45.1 PERSONNEL EXPENSES
The detail of the balance of this heading in the accompanying consolidated income statements was as follows:
                         
            Millions of euros
    Note   June-09   June-08
 
Wages and salaries
            1,754       1,796  
Social security costs
            276       288  
Transfers to internal pension provisions
    25       22       31  
Contributions to external pension funds
    25       34       33  
Other personnel expenses
            205       195  
             
Total
            2,291       2,343  
 
As of June 30, 2009, certain Group companies implemented corporate programs for the acquisition of shares with discount of Banco Bilbao Vizcaya Argentaria S.A. The cost of these programs is recognised under the subheading “Other personnel expenses”.
The detail, by professional category and by geographical area, of the average number of employees during six months periods ended June 30, 2009 and June 30, 2008, was as follows:

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    Average number of
    employees
    June-09   June-08
 
Spanish banks
               
Executives
    1,034       1,074  
Other line personnel
    20,767       21,517  
Clerical staff
    5,447       6,450  
Abroad branches
    670       751  
     
 
    27,918       29,792  
     
Companies abroad
               
Mexico
    26,857       27,222  
Venezuela
    6,053       6,025  
Argentina
    4,205       4,201  
Colombia
    4,263       4,395  
Peru
    4,200       3,635  
United States
    10,571       12,161  
Other
    4,868       4,872  
     
 
    61,017       62,511  
     
Pension fund managers
    5,899       8,577  
Other non-banking companies
    10,437       11,293  
     
Total
    105,271       112,173  
 
The detail, by professional category and by gender, of the average number of employees during six months periods ended June 30, 2009 and 2008, was as follows:
                                 
    June-09   June-08
    Average number   Average number
    Men   Women   Men   Women
 
Executives
    1,624       322       1,619       313  
Other line personnel
    28,211       24,271       26,342       17,561  
Clerical staff
    21,856       28,987       31,178       35,160  
     
Total
    51,691       53,580       59,139       53,034  
 
Of which:
                               
BBVA, S.A.
    16,072       11,282       17,172       11,909  
 
At June 30, 2009 The Group’s headcount totalled 103,655, which 50,791 were male and 52,864 female.
Equity-instrument-based employee remuneration —
Settlement of the 2006-2008 share-based remuneration plan
The parent company’s shareholders approved the settlement of the 2006-2008 share-based remuneration plan at the General Shareholders’ Meeting held on March 13, 2009.
As the Group ended ranked third among the 13 banks in its benchmark group, the total shareholder return (TSR) applied to the settlement of the plan entailed the application of a multiplier of 1.42, which applied to the theoretical number of shares granted to each beneficiary resulted in a total Group-wide grant of 13,677,226 shares. The final price of the shares delivered in consideration was set at €6.25 per share.
Multi-Year Share-based BBVA Management Remuneration Plan, 2009-2010
At the General Shareholders’ Meeting held on March 13, 2009, the Bank’s shareholders approved a long-term share-based remuneration plan for the members of the Group’s management team (“the Plan”). The Plan came into effect on April 15, 2009 and will run to December 31, 2010. The idea is to settle it on April 15, 2011.

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Under this Plan the Bank promises to deliver ordinary shares of BBVA to the members of the Group’s management team (including executive directors and management committee members of BBVA).
At the beginning of the Plan, a number of “units” will be allocated to the beneficiaries. The specific number of BBVA shares to be delivered to each beneficiary on expiry of the Plan will be calculated by multiplying the number of “units” allocated by a coefficient ranging from 0 to 2. The value of the coefficient established by comparing the performance of the Total Shareholder Return (TSR) — share appreciation plus dividends — of the Bank over the term of the Plan with the performance of the same indicator for 18 leading European and U.S. banks.
The amount of the obligation that will be registered in the consolidated financial statements will be determined by multiplying the number of “units” by the estimated average price at the moment of the liquidation of the Plan.
As of June 30, 2009, the estimated number of “units” for the Group as a whole, including executive directors and BBVA’s Management Committee members (Note 54), was 6,939,407.
Plan costs will be accrued throughout the life of the scheme. For the year period between April 15, 2009 and June 30, 2009 the expense amounted to €3 million and was recognized under the heading “Personnel Expenses — Other personnel expenses” in the accompanying consolidated income statement with charge to “Equity-Other equity instrument-Rest” in the consolidated balance sheet as of June 30, 2009, net of tax effect.
Compass long term incentive plan -
The board of directors of Compass Bancshares (“Compass”) approved a long term restricted share plan to provide incentives to certain officers and key employees of Compass Bancshares and its subsidiaries. This plan enters into effect in 2008 and duration of three years.
The plan represents an obligation to deliver an equivalent number of BBVA American Depository Shares that are not permitted to be sold, transferred, pledged or assigned during a designated restriction period, and/or the assignation of restricted share units, representing each of these units the obligation of Compass to deliver an equivalent number of ADS once the restriction period has ended assuming the compliance with certain requirements.
The initial maximum number of BBVA American Depository Shares available for distribution under this Plan is 1,320,911 (1 ADS is equivalent to one BBVA ordinary share) representing a 0.035% of the share capital of the bank.
As of June 30, 2009 only “restricted share units” have been assigned. As of June 30, 2009 931,267 restricted share units have been assigned to 320 employees and have restriction periods that will lapse during 2009, 2010, and 2011, representing 0.025% of the banks share capital.
The amount of expense associated with the above-described awards that has been accrued and recognized under the heading “Personnel expenses — Other personnel expenses” of the consolidated income statement for the six months ended June 30, 2009 amounted to $4.2 million (€3.1 million), been recognized net of the correspondent tax effect in the heading “Stockholder’s equity — Other equity instruments” of the consolidated balance sheet as of June 30, 2009.

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45.2 GENERAL AND ADMINISTRATIVE EXPENSES
The breakdown of the balance of this heading in the consolidated income statements was as follows:
                 
    Millions of euros
    June-09   June-08
 
Technology and systems
    279       290  
Communications
    128       125  
Advertising
    127       135  
Property, fixtures and materials
    309       294  
Of which:
               
Rents expenses (*)
    141       130  
Taxes other than income tax
    129       169  
Other expenses
    471       460  
     
Total
    1,443       1,473  
 
(*)   The consolidated companies do not expect to terminate the lease contracts early.
46. PROVISIONS (NET)
The net allowances charged to the income statement in connection with the headings “Pension Commitments and similar obligations”, “Provisions to risks and contingent commitments”, “Tax provisions” and “Other provisions” during the six months periods ended June 30, 2009 and 2008 were as follow:
                 
    Millions of euros
    June-09   June-08
 
Provisions to Pension Commitments and similar obligations
    146       512  
Provisions to risks and contingent commitments
    (67 )     (47 )
Provisions to tax and other provisions
    73       147  
     
Total
    152       612  
 
47. IMPAIRMENT ON FINANCIAL ASSETS (NET)
The detail of impairment on financial assets by nature of these assets as of June 30, 2009 and 2008 was as follow:
                         
            Millions of euros
    Note   June-09   June-08
 
Available-for-sale financial assets
    12       77       22  
Debt securities
            74       21  
Other equity instruments
            3       1  
Loans and receivables
    14       (1 )     1  
Held-to-maturity investments
            1,869       1,141  
Of which:
                       
Recovery of written-off assets
    7       (80 )     (94 )
             
Total
            1,945       1,164  
 

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48. IMPAIRMENT ON OTHER ASSETS (NET)
The detail of impairment on non-financial assets by nature of these assets as of June 30, 2009 and 2008 was as follow:
                         
            Millions of euros
    Note   June-09   June-08
 
Tangible assets
            (100 )      
Inventories
            (145 )      
Rest
            (26 )     (6 )
             
Total
            (271 )     (6 )
 
49. GAINS (LOSSES) IN WRITTEN OFF ASSETS NOT CLASSIFIED AS NON-CURRENT ASSETS HELD FOR SALE
The breakdown of the balances of these headings in the accompanying consolidated income statements was as follows:
                 
    Millions of euros
    June-09   June-08
 
Gains:
               
Disposal of tangible assets
    3       9  
Disposal of intangible assets and other
    14       19  
Losses:
               
Disposal of tangible assets
    (1 )      
Disposal of intangible assets and other
    (7 )     (7 )
     
Total
    9       21  
 
50. GAINS AND LOSSES IN NON-CURRENT ASSETS HELD FOR SALE NOT CLASSIFIED AS DISCONTINUED OPERATIONS
The detail of the heading “Gains and losses in non-current assets held for sale not classified as discontinued operations” of the accompanying consolidated income statement was as follow:
                         
            Millions of euros
    Note   June-09   June-08
 
Gains for real estate
            110       67  
Impairment of non-current assets held for sale
            (40 )     (15 )
Gains for sale of avilable-for-sale assets
    2.2.1.a             727  
Of which:
                       
Bradesco
                  727  
             
Total
            70       779  
 
51. CONSOLIDATED STATEMENT OF CASH FLOWS
Cash flows from operating activities have increased for the six months ended June 30, 2009 to €8,530 million, compared to decrease of €8,765 million for the six months ended June 30, 2008. The most significant changes occurred in “Loans and receivables” and “Available-for-sale financial assets”.

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Cash flows from investing activities have increased for the six months ended June 30, 2009 to €75 million, compared to €1,144 million for the six months ended June 30, 2008. The most significant changes occurred in “Other collections related to investing activities”.
Cash flows from financing activities have decreased for the six months ended June 30, 2009 to €177 million as of June 30, 2009, compared to decrease of €1,667 million for the six months ended June 30, 2008. The most significant movements are shown in the line “Acquisition and disposal of own equity instruments”.
The table below breaks down the main cash flows from and used in investing activities as of June 30, 2009 and 2008:
                 
    June-09
    Cash flow of investment activities
    Investments (-)   Desinvestments (+)
 
Tangible assets
    (16 )      
Intangible assets
          27  
Investments
    (4 )     14  
Subsidiaries and other business units
    (7 )     27  
Non-current assets and liabilities associated held for sale
    (150 )      
Held-to-maturity investments
          184  
Other settlements related with investment activities
           
 
                 
    June-08
    Cash flow of investment activities
    Investments (-)   Desinvestments (+)
 
Tangible assets
          116  
Intangible assets
          101  
Investments
    (40 )     65  
Subsidiaries and other business units
    (12 )      
Non-current assets and liabilities associated held for sale
    (142 )      
Held-to-maturity investments
          182  
Other settlements related with investment activities
          874  
 
52. ACCOUNTANTS FEES AND SERVICES
The detail of the fees for the services provided to the Group companies by their respective accountants during the six months ended June 30, 2009 was as follows:
         
    Millions of euros
 
Audits of the companies audited by firms belonging to the Deloitte worldwide organisation
    7.9  
Fees for audits conducted by other firms
    0.1  
Other reports required pursuant to applicable legislation and tax regulations issued by the national supervisory bodies of the countries in which the Group operates, reviewed by firms belonging to the Deloitte worldwide organisation
    2.6  
 
The detail of the other services provided to the various Group companies as of June 30, 2009 was as follows:
         
    Millions of euros
 
Firms belonging to the Deloitte worldwide organisation
    0.6  
Other firms
    2.1  
 

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The services provided by our accountants meet the independence requirements established in Law 44/2002, of 22 November, on Measures Reforming the Financial System and in the Sarbanes-Oxley Act of 2002 adopted by the Securities and Exchange Commission (SEC), and accordingly they did not include the performance of any work that is incompatible with the auditing function.
53. RELATED PARTY TRANSACTIONS
BBVA and other entities of the Group in their condition of financial entities maintain transactions with related parties in the normal course of their business. All these transactions are of no relevance and are performed in market conditions.
53.1 TRANSACTIONS WITH SIGNIFICANT SHAREHOLDERS
As of June 30, 2009 the balance of the transactions maintained with significant shareholder’s (see Note 27) correspond to “Deposits from customers” for an amount of €31 million and “Contingent risks” for an amount of €14 million, all of them under normal market conditions.
As of December 31, 2008 the balance of the transactions maintained with significant shareholder’s (see Note 27) correspond to “Deposits from customers” for an amount of €40 million and “Contingent risks” for an amount of €11 million, all of them under normal market conditions.
53.2 TRANSACTIONS WITH BBVA GROUP
The balances of the main aggregates in the consolidated financial statements arising from the transactions carried out by the Group with associated and jointly controlled companies accounted for using the equity method (Note 2.1), as of June 30, 2009 and December 31, 2009 were as follows:
                 
    Millions of euros
    June-09   December-08
 
Assets:
               
Due from credit institutions
    21       27  
Total net lending
    638       507  
Liabilities:
               
Due to credit institutions
    1       1  
Deposits
    102       23  
Debt certificates
    292       344  
Memorandum accounts:
               
Contingent risks
    39       37  
Commitments contingents
    380       415  
 
The balances of the main aggregates in the accompanying consolidated income statements resulting from transactions with associated and jointly controlled entities that consolidated by the equity method were as follows:
                 
    Millions of euros
    June-09   June-08
 
Statement of income:
               
Financial revenues
    8       16  
Financial expenses
    4       9  
 
There are no other material effects on the consolidated financial statements of the Group arising from dealings with these companies, other than the effects arising from using the equity method (Note 2.1), and from the insurance policies to cover pension or similar commitments (Note 24).

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As of June 30, 2009 and December 31, 2008, the notional amount of the futures transactions arranged by the Group with the main related companies amounted to approximately €120 million and €101 million, respectively.
In addition, as part of its normal activity, the Group has entered into agreements and commitments of various types with shareholders of subsidiaries and associates, which have no material effects on the consolidated financial statements.
53.3 TRANSACTIONS WITH KEY ENTITY PERSONNEL
The information on the remuneration of key personnel (members of the Board of Directors of BBVA and of the Management Committee) is included in Note 54.
The amount disposed of the loans granted to members of Board of Directors as of June 30, 2009 and 2008 totalled €35 thousand and €63 thousand, respectively.
The amount disposed of the loans granted as of June 30, 2009 and 2008, to the Management Committee, excluding the executive directors, amounted to €3,575 thousand and €3,123 thousand, respectively. As of June 30, 2009, there were no guarantees provided on behalf of members of the Management Committee. As of June 30, 2008 the guarantees amounted €13 thousand.
As of June 30, 2009 and 2008, the amount disposed of the loans granted to parties related to key personnel (the aforementioned members of the Board of Directors of BBVA and of the Management Committee) totalled €51,172 thousand and €24,399 thousand, respectively. As of June 30, 2009 and 2008, the other exposure to parties related to key personnel (guarantees, finance leases and commercial loans) amounted to €24,123 thousand and €17,237 thousand, respectively.
53.4 TRANSACTIONS WITH OTHER RELATED PARTIES
As of June 30, 2009, the company does not present any transaction with other related parties that does not belong to the normal course of their business, that is not under market conditions and that is relevant for the equity and income of the entity and for the presentation of the financial situation of this.
54. REMUNERATION OF THE MEMBERS OF BOARD OF DIRECTORS AND THE MANAGEMENT COMMITTEE
Remunerations of the members of the Board of Directors and the members of the Management Committee of the Bank are as follow:

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  Remuneration of non-executive directors
The remuneration paid to the non-executive members of the Board of Directors during the six months ended June 30, 2009 is indicated below. The figures are given individually for each non-executive director:
                                                 
    Thousands of euros
            Standing                   Appointments    
    Board   Committee   Audit   Risk   and Compensation   Total
 
Tomás Alfaro Drake
    64             36                   100  
Juan Carlos Álvarez Mezquíriz
    64       83                   22       169  
Rafael Bermejo Blanco
    64             89       54             207  
Ramón Bustamante y de La Mora
    64             36       54             154  
José Antonio Fernández Rivero (*)
    64                   107             171  
Ignacio Ferrero Jordi
    64       83                   22       169  
Román Knörr Borrás
    64       83                         147  
Carlos Loring Martínez de Irujo
    64             36             54       154  
Enrique Medina Fernández
    64       83             54             201  
Susana Rodríguez Vidarte
    64             36             22       122  
     
Total (**)
    640       332       233       269       120       1,594  
 
(*)   Mr José Antonio Fernández Rivero, apart from the amounts detailed above, also received a total of €326 thousand during the six months ended June 30, 2009 in early retirement payments as a former member of the BBVA management.
 
(**)   In addition, Mr. Richard C. Breeden, who stepped down as director on March 13, 2009, received total compensation for Board membership during the first six months of 2009 in the amount of €87 thousand.
  Remuneration of executive directors
The remuneration paid to the non-executive members of the Board of Directors during the six months ended June 30, 2009 is indicated below. The figures are given individually for each non-executive director:
                         
    Thousands of euros
    Fixed   Variable    
    remuneration   remunerations (*)   Total (**)
 
Chairman & CEO
    964       3,416       4,379  
President & COO
    713       2,861       3,574  
Company Secretary
    333       815       1,147  
     
Total
    2,009       7,091       9,101  
 
(*)   Figures relating to variable remuneration for 2008 paid in 2009.
 
(**)   In addition, the executive directors received remuneration in kind during the six month ended June 30, 2009 totalling €28 thousand, of which €8 thousand relates to Chairman & CEO, €11 thousand relates to President & COO and €9 thousand to Company Secretary.
  Remuneration of the members of the management committee
The remuneration paid during the six months ended June 30, 2009 to the members of BBVA’s Management Committee, excluding executive directors, comprised €3,167 thousand in fixed remuneration and €11,936 thousand in variable remuneration accrued in 2008 and paid in 2009.
In addition, the members of the Management Committee, excluding executive directors, received remuneration in kind totalling €155 thousand during the six months ended June 30, 2009.
(*)    This paragraph includes information on the members of the Management committee as of June 30, 2009, excluding the executive directors.
  Pension commitments
The provisions recorded as of June 30, 2009 to cover the commitments assumed in relation to executive director pensions, including the allowances recorded for the six months ended June 30, 2009, amounted to €7,781 thousand, broken down as follows:

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    Thousands
    of euros
 
Chairman & CEO
    77,027  
President & COO
    54,455  
Company Secretary
    9,175  
 
       
Total
    140,657  
 
Insurance premiums amounting to €76 thousand were paid on behalf of the non-executive directors on the Board of Directors.
The provisions charged as of June 30, 2009 for post-employment commitments for the Management committee members, excluding executive directors, amounted to €47,297 thousand. Of these, €2,557 thousand were charged during the six months ended June 30, 2009.
  settlement of the long-term share-based remuneration scheme (2006-2008) for executive directors and members of the management committee
In general meeting on March 13, 2009, BBVA’s shareholders ratified the proposed settlement of the Long-Term Share-Based Remuneration Scheme (2006-2008) (hereinafter, the “Plan”), on the terms established at the outset, determining the number of BBVA shares to be granted to the executive directors and the other members of the Management Committee.
The Plan was liquidated and the corresponding share grant executed on March 30, 2009.
The total number of Banco Bilbao Vizcaya Argentaria, S.A. shares granted to the three executive directors, on aggregate, as a result of settlement of the Plan, was 979,800, as detailed below:
                         
    Nº assigned theoretical           Number of
    shares   Multiplier ratio   shares
 
Chairman & CEO
    320,000       1.42       454,400  
President & COO
    270,000       1.42       383,400  
Company Secretary
    100,000       1.42       142,000  
 
Meanwhile, the total number of shares allocated to Management Committee members upon settlement of the Plan was 1,369,116.
  Multi-year share-based remuneration scheme (2009-2010) for executive directors and members of the management committee
At the General Shareholders’ Meeting of March 13, 2009, the Bank’s shareholders approved a multi-year share-based remuneration scheme for the period 2009 — 2010 targeted at members of the Group’s executive management team, including its executive directors and the members of the Management Committee.
The plan allocated each beneficiary a certain number of theoretical shares as a function of their variable pay and their level of responsibility. At the end of the plan, the theoretical shares are used as a basis to allocate BBVA shares to the beneficiaries, should the initial requirements be met.
The number of shares to be delivered to each beneficiary is determined by multiplying the number of theoretical shares allocated to them by a coefficient of between 0 and 2. This coefficient reflects the relative performance of BBVA’s total shareholder value (TSR) during the period 2009-20010 compared against the TSR of its European peer group.
The number of theoretical shares allocated to executive directors, in accordance with the plan ratified at the shareholders’ meeting, was 215,000 for the Chairman & CEO, 180,000 for the President & COO and 70,000 for the Board Secretary.

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The total number of theoretical shares allocated to Management Committee members at June 30, 2009, excluding executive directors, was 830,000.
  Scheme for remuneration of non-executive directors with deferred delivery of shares
The Annual General Meeting, March 18th, 2006, under agenda item eight, resolved to establish a remuneration scheme using deferred delivery of shares to the Bank’s non-executive directors, to substitute the earlier scheme that had covered these directors.
The new plan assigns theoretical shares each year to non-executive director beneficiaries equivalent to 20% of the total remuneration paid to each in the previous year, using the average of BBVA stock closing prices from the sixty trading sessions prior to the annual general meeting that approve the financial statements. These shares, where applicable, are to be delivered when the beneficiaries cease to be directors on any grounds other than serious dereliction of duties.
The number of theoretical shares allocated to non-executive director beneficiaries under the deferred share delivery scheme during the year 2009, corresponding to 20% of the total remuneration paid to each in 2008, and the accumulated theoretical shares, are set forth below:
                 
            Accumulated
    Theoretical   theoretical
DIRECTORS   shares   shares
 
Tomás Alfaro Drake
    5,645       9,707  
 
Juan Carlos Álvarez Mezquíriz
    9,543       33,511  
 
Rafael Bermejo Blanco
    11,683       15,989  
 
Ramón Bustamante y de la Mora
    8,661       32,648  
 
José Antonio Fernández Rivero
    9,663       24,115  
 
Ignacio Ferrero Jordi
    9,543       34,083  
 
Román Knörr Borrás
    8,335       27,838  
 
Carlos Loring Martínez de Irujo
    8,667       20,418  
 
Enrique Medina Fernández
    11,351       44,708  
 
Susana Rodríguez Vidarte
    6,854       20,450  
 
Total
    89,945       263,467  
 
  Severance payments
The Chairman of the board will be entitled to retire as an executive director at any time after his 65th birthday and the President & COO and the Company Secretary after their 62nd birthday. They will all be entitled to the maximum percentage established under their contracts for retirement pension, and vesting their right to the pension once they reach said ages will render the indemnity agreed under their contracts null and void.
The contracts of the Bank’s executive directors (Chairman & CEO, President & COO, and Company Secretary) recognise their entitlement to be compensated should they leave their post for grounds other than their own decision, retirement, disablement or serious dereliction of duty. Had this occurred during the year 2009, they would have received the following amounts: €93,705 thousand for the Chairman & CEO; €68,674 thousand for the President & COO, and €15,057 thousand for the Company Secretary.
In order to receive such compensation, directors must place their directorships at the disposal of the board, resign from any posts that they may hold as representatives of the Bank in other companies, and waive prior employment agreements with the Bank, including any senior management positions and any right to obtain compensation other than that already indicated.
On standing down, they will be rendered unable to provide services to other financial institutions in competition with the Bank or its subsidiaries for two years, as established in the board regulations.

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55. DETAIL OF THE DIRECTORS’ HOLDINGS IN COMPANIES WITH SIMILAR BUSINESS ACTIVITIES
As of December 31, 2008 pursuant to Article 127 third section of the Spanish Corporations Law, introduced by Law 26/2003 of 17 July amending Securities Market Law 24/1988 of July 28, and the revised Corporations Law, in order to reinforce the transparency of listed companies, set forth below are the companies engaging in an activity that is identical, similar or complementary to that which constitutes the corporate purpose of BBVA, in which the members of the Board of Directors have a direct or indirect ownership interest. None of the directors discharge executive or administrative functions at these companies.
                 
        Number of    
Surname (s) and First Name   Company   shares   Type of Ownership Interest
 
Alfaro Drake, Tomás
         
 
Alvarez Mezquiriz, Juan Carlos
         
 
Bermejo Blanco, Rafael
 
Banco Santander
    7,400     Direct
 
               
 
  Banco Popular Español     14,180     Direct
 
Bustamante y de la Mora, Ramón
         
 
Fernández Rivero, José Antonio
         
 
Ferrero Jordi, Ignacio
 
Allianz
    550     Indirect
 
Goirigolzarri Tellaeche, José Ignacio
         
 
González Rodríguez, Francisco
 
RBC Dexia Investors Services España, S.A.
    76,040     Indirect
 
Knörr Borrás, Román
         
 
Loring Martínez de Irujo, Carlos
         
 
Maldonado Ramos, José
         
 
Medina Fernández, Enrique
         
 
Rodríguez Vidarte, Susana
         
 
56. OTHER INFORMATION
On March 15, 2002, the Bank of Spain initiated a proceeding against BBVA and 16 of its former directors and executives, as a result of the existence of funds (approximately €225 million) belonging to BBV that were not included in the entity’s financial statements until they were voluntarily regularized by being recorded in the 2000 consolidated income statement as extraordinary income, for which the related corporation tax was recorded and paid. BBVA notified the Bank of Spain of these matters on January 19, 2001.
On May 22, 2002, the Council of the Spanish Securities and Exchange Commission (CNMV) commenced a proceeding against BBVA for possible contravention of the Securities Market Law (under Article 99 ñ) thereof) owing to the same events as those which gave rise to the Bank of Spain’s proceeding.
The commencement of proceedings to determine an eventual criminal liability of the individuals involved in those events triggered the suspension of the above mentioned proceedings until a definitive criminal resolution was issued. These criminal proceedings finished by definitive court resolutions on 2007 without criminal liability for any person involved in them. The end of these criminal proceedings has allowed the re-opening of the proceedings: on 13 June, 2007 the Bank of Spain, and on 26 July 2007 the Spanish National Securities Market Commission (CNMV), notified the end of the proceeding development suspension.
On July 18, 2008, the board of the Bank of Spain sanctioned BBVA with a fine of one million euros for a serious breach as typified in article 5.p) of the “Ley de Disciplina e Intervención de las Entidades de Crédito” (Law regulating the conduct of financial entities) and also imposed various sanctions on the managers and executives responsible for such conduct none of whom are presently members of the Board of Directors, or hold executive office at BBVA.
On July 18, 2008, the Ministry of Economy and Finance sanctioned the entity with a fine of two million euros, as a result of the proceeding initiated by the Spanish Securities and Exchange Commission, for a very serious breach as typified in Article 99, ñ) of the “Ley del Mercado de Valores” (law regulating securities markets).
Both sanctions have been ratified by the Ministry of Economy and Finance when it decided on the appeals lodged against the administrative decisions.

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57. SUBSEQUENT EVENTS
Between July 1, 2009 and the date of this filing Form 6-K, other events have taken place as follows:
    On July 8, 2009, the BBVA Board of Directors approved the distribution, as the first gross interim dividend against 2009 results, of a dividend of 0.09 per issued and outstanding BBVA ordinary share. The dividend was paid on July 10, 2009, according to the regulations applicable to the depositary entities.
 
    On August 21, 2009, BBVA Compass announced that it acquired the banking operations of Guaranty Bank based in Austin, Texas from the Federal Deposit Insurance Corporation (FDIC), effective immediately. BBVA Compass acquired $12.0 billion of assets and assumed $11.5 billion of deposits and entered into a loss sharing agreement with the FDIC that covers all of the acquired loans, where the FDIC will bear 80% of the first $2.3 billion of losses and 95% of the losses above that threshold. At the date of acquisition, Guaranty Bank operated 105 branches in Texas and 59 branches in California.
 
      The acquisition results in BBVA Compass being the 15th largest U.S. commercial bank in terms of deposits with approximately $49 billion in deposits and operations in seven high growth markets in the Sunbelt: Texas, Alabama, Arizona, California, Florida, Colorado and New Mexico. This strategic acquisition significantly strengthens BBVA Compass’ existing presence in Texas, solidifying its ranking as the 4th largest bank in Texas based on its deposit market share, which increased from 4.9% to 6.4% as a result of the acquisition. The acquisition also extends BBVA Compass’ general banking business into the attractive, high growth California market.
 
    On September 25, 2009, BBVA sold 948 fixed assets (mainly branch offices and various individual properties) to a third-party real estate investor. At the same time, BBVA signed a sale and leaseback long-term contract with such investor, which includes an option to repurchase the properties at fair values, exercisable by the Group on the agreed dates (in most cases, the termination date of each lease agreement). The price of sale was €1,154 million, generating capital gains of approximately €830 million.
    On September 29, 2009, the BBVA Board of Directors approved the distribution, as the second gross interim dividend against 2009 results, of a dividend of 0.09 per issued and outstanding BBVA ordinary share. The dividend will be paid as of October 12, 2009, according to the regulations applicable to the depositary entities through which payment will be made.
    On September 29, 2009, the BBVA Board of Directors agreed to appoint D. Ángel Cano Fernández as President and Chief Operating Officer, in substitution of D. José Ignacio Goirigolzarri Tellaeche who leaves the Board.
    On September 30, 2009, BBVA issued bonds in an aggregate principal amount of 2,000 million mandatorily convertible into ordinary shares of BBVA on October 15, 2014. Before this date, the bonds are convertible into ordinary shares at BBVA’s option on the terms set forth in the corresponding prospectus, which was registered with the Spanish National Securities Market Commission on September 17, 2009.

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APPENDIX I FINANCIAL STATEMENTS OF BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
UNAUDITED BALANCE SHEETS AS OF JUNE 30, 2009 AND DECEMBER 31, 2008
                 
    Millions of euros
ASSETS   June-09   December-08(*)
 
CASH AND BALANCES WITH CENTRAL BANKS
    9,092       2,687  
     
FINANCIAL ASSETS HELD FOR TRADING
    57,095       59,987  
     
Loans and advances to credit institutions
           
     
Money market operations through counterparties
           
     
Debt securities
    19,392       14,953  
     
Other equity instruments
    4,244       5,605  
     
Trading derivatives
    33,459       39,429  
     
OTHER FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
           
     
Loans and advances to credit institutions
           
     
Money market operations through counterparties
           
     
Debt securities
           
     
Other equity instruments
           
     
AVAILABLE-FOR-SALE FINANCIAL ASSETS
    31,587       18,726  
     
Debt securities
    25,365       11,873  
     
Other equity instruments
    6,222       6,853  
     
LOANS AND RECEIVABLES
    264,385       272,114  
     
Loans and advances to credit institutions
    27,447       45,274  
     
Loans and advances to other debtors
    236,931       226,836  
     
Debt securities
    7       4  
     
HELD-TO-MATURITY INVESTMENTS
    5,099       5,282  
     
CHANGES IN THE FAIR VALUE OF THE HEDGED ITEMS IN THE PORTFOLIO HEDGES OF INTESREST RATE RISK
           
     
HEDGING DERIVATIVES
    3,263       3,047  
     
 
               
NON-CURRENT ASSETS HELD FOR SALE
    694       149  
     
INVESTMENTS
    21,251       21,668  
     
Associates
    492       452  
     
Jointly controlled entities
    4       4  
     
Group entities
    20,755       21,212  
     
INSURANCE CONTRACTS LINKED TO PENSIONS
    2,003       1,996  
     
TANGIBLE ASSETS
    1,513       1,895  
     
Property, plants and equipment
    1,503       1,884  
     
For own use
    1,503       1,884  
     
Other assets leased out under an operating lease
           
     
Investment properties
    10       11  
     
INTANGIBLE ASSETS
    197       166  
     
Goodwill
           
     
Other intangible assets
    197       166  
     
TAX ASSETS
    3,407       3,568  
     
Current
    353       320  
     
Deferred
    3,054       3,248  
     
OTHER ASSETS
    946       735  
     
TOTAL ASSETS
    400,532       392,020  
 
(*)   Presented for comparison purposes only.

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    Millions of euros
LIABILITIES AND EQUITY   June-09   December-08(*)
 
FINANCIAL LIABILITIES HELD FOR TRADING
    36,531       40,538  
     
Deposits from central banks
           
     
Deposits from credit institutions
           
     
Deposits from other creditors
           
     
Debt certificates
           
     
Trading derivatives
    34,265       37,885  
     
Short positions
    2,266       2,653  
     
Other financial liabilities
           
     
OTHER FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
           
     
Deposits from central banks
           
     
Deposits from credit institutions
           
     
Deposits from other creditors
           
     
Debt certificates
           
     
Subordinated liabilities
           
     
Other financial liabilities
           
     
FINANCIAL LIABILITIES AT AMORTISED COST
    332,960       322,197  
     
Deposits from central banks
    23,979       13,697  
     
Deposits from credit institutions
    41,521       43,972  
     
Deposits from other creditors
    181,291       188,311  
     
Debt certificates
    68,665       58,837  
     
Subordinated liabilities
    13,472       13,332  
     
Other financial liabilities
    4,032       4,048  
     
CHANGES IN THE FAIR VALUE OF THE HEDGED ITEMS IN THE PORTFOLIO HEDGES OF INTESREST RATE RISK
           
     
HEDGING DERIVATIVES
    1,133       824  
     
LIABILITIES ASSOCIATED WITH NON-CURRENT ASSETS HELD FOR SALE
           
     
PROVISIONS
    6,931       7,071  
     
Provisions for pensions and similar obligations
    5,530       5,651  
     
Provisions for taxes
           
     
Provisions for contingent exposures and commitments
    328       387  
     
Other provisions
    1,073       1,033  
     
TAX LIABILITIES
    727       633  
     
Current
           
     
Deferred
    727       633  
     
OTHER LIABILITIES
    1,129       1,044  
     
TOTAL LIABILITIES
    379,411       372,307  
 
(*) Presented for comparison purposes only.

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    Millions of euros
LIABILITIES AND EQUITY (Continuation)   June-09   December-08(*)
 
STOCKHOLDER’S EQUITY
    19,988       18,562  
     
Capital
    1,837       1,837  
     
Issued
    1,837       1,837  
     
Unpaid and uncalled (-)
           
     
Share premium
    12,453       12,770  
     
Reserves
    3,846       3,070  
     
Other equity instruments
    6       71  
     
Equity component of compound financial instruments
           
     
Other
    6       71  
     
Less: Treasury shares
    8       (143 )
     
Income
    1,838       2,835  
     
Less: Dividends and remuneration
          (1,878 )
     
VALUATON ADJUSTMENTS
    1,133       1,151  
     
Available-for-sale financial assets
    953       937  
     
Cash flow hedges
    158       141  
     
Hedges of net investments in foreign operations
           
     
Exchange differences
    22       73  
     
Non-current liabilities held-for-sale
           
     
Other valuation adjustments
           
     
TOTAL EQUITY
    21,121       19,713  
     
TOTAL LIABILITIES AND EQUITY
    400,532       392,020  
 
                 
    Millions of euros
    June-09   December-08(*)
 
CONTINGENT EXPOSURES
    60,661       64,729  
     
CONTINGENT COMMITMENTS
    65,999       69,671  
 
(*)   Presented for comparison purposes only.

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UNAUDITED INCOME STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008
                 
    Millions of euros
    June-09   June-08(*)
 
INTEREST AND SIMILAR INCOME
    6,509       7,765  
     
INTEREST EXPENSE AND SIMILAR CHARGES
    (3,505 )     (6,045 )
     
NET INTEREST INCOME
    3,004       1,720  
     
INCOME FROM EQUITY INSTRUMENTS
    667       2,015  
     
FEE AND COMMISSION INCOME
    979       1,029  
     
FEE AND COMMISSION EXPENSES
    (152 )     (177 )
     
GAINS OR LOSSES ON FINANCIAL ASSETS AND LIABILITIES (NET)
    45       479  
     
Held for trading
    (105 )     66  
     
Other financial instruments at fair value through profit or loss
           
     
Other financial instruments not at fair value through profit or loss
    150       413  
     
Other
           
     
EXCHANGE DIFFERENCES (NET)
    114       48  
     
OTHER OPERATING INCOME
    31       45  
     
OTHER OPERATING EXPENSES
    (46 )     (47 )
     
GROSS INCOME
    4,642       5,112  
     
ADMINISTRATIVE EXPENSES
    (1,630 )     (1,682 )
     
Personnel expenses
    (1,090 )     (1,146 )
     
Other administrative expenses
    (540 )     (536 )
     
AMORTISATION
    (120 )     (105 )
     
PROVISION EXPENSE (NET)
    (72 )     (496 )
     
IMPAIRMENT LOSSES (NET)
    (569 )     (412 )
     
Loans and receivables
    (511 )     (400 )
     
Other financial instruments not at fair value through profit or loss
    (58 )     (12 )
     
NET OPERATING INCOME
    2,251       2,417  
     
IMPAIRMENT LOSSES OF OTHER ASSETS (NET)
    (29 )     (3 )
     
Goodwill and other intangible asset
           
     
Other assets
    (29 )     (3 )
     
GAINS (LOSSES) IN WRITTEN OF ASSETS NOT CLASSIFIED AS NON-CURRENT ASSETS HELD FOR SALE
    2        
     
NEGATIVE GOODWILL
           
     
GAINS (LOSSES) IN NON-CURRENT ASSETS HELD FOR SALE NOT CLASSIFIED AS DISCONTINUED OPERATIONS
    77       729  
     
INCOME BEFORE TAX
    2,301       3,143  
     
TAX EXPENSE (INCOME)
    (463 )     (397 )
     
INCOME FROM CONTINUED OPERATIONS
    1,838       2,746  
     
INCOME FROM DISCONTINUED OPERATIONS (NET)
           
     
INCOME FOR THE PERIOD
    1,838       2,746  
 
(*)   Presented for comparison purposes only.

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UNAUDITED CHANGES IN TOTAL EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008
                                                                                 
    Millions of euros        
    Total equity        
    Stockholder’s equity        
                                    Less:   Profit   Less: dividend   Total        
    Share   Share           Other equity   Treasury   for the   and   Stockholder’s   Valuation   Total
    Capital   premium   Reserves   instruments   shares   period   remunerations   equity   adjstments   equity
 
Balances at January 1, 2009
    1,837       12,770       3,070       71       143       2,835       1,878       18,562       1,151       19,713  
Effects of changes in accounting policies
                                                           
Effect of correction of errors
                                                           
Adjusted initial balance
    1,837       12,770       3,070       71       143       2,835       1,878       18,562       1,151       19,713  
Total income/expense recognized
                                  1,838             1,838       (18 )     1,820  
Other changes in equity
          (317 )     776       (65 )     (151 )     (2,835 )     (1,878 )     (412 )           (412 )
Increased of capital
                                                           
Capital reduction
                                                           
Conversion of financial liabilities into capital
                                                           
Increase of other equity instruments
                      2                         2             2  
Reclassification of financial liabilities to other equity instruments
                                                           
Reclassification of other equity instruments to financial liabilities
                                                           
Dividend distribution
                                                           
Transactions including treasury shares and other equity instruments (net)
                (151 )           (151 )                              
Transfers between total equity entries
                989       (32 )           (2,835 )     (1,878 )                  
Increase/Reduction in business combinations
                                                           
Payments with equity instruments
          (317 )           (63 )                       (380 )           (380 )
Rest of increase/reductions in total equity
                (62 )     28                         (34 )           (34 )
     
Balance at June 30, 2009
    1,837       12,453       3,846       6       (8 )     1,838             19,988       1,133       21,121  
 
(*)   Presented for comparison purposes only.

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    Millions of euros
    Total equity        
    Stockholder’s equity        
            Share premium,   Other   Less:            
            reserves and   equity   Treasury   Profit for the   Valuation    
    Share Capital   dividends   instruments   shares   period   adjstments   Total equity
 
Balance at January 1, 2008
    1,837       13,348       49       (129 )     3,612       2,888       21,605  
Effects of changes in accounting policies
                                         
Effect of correction of errors
                                         
Adjusted initial balance
    1,837       13,348       49       (129 )     3,612       2,888       21,605  
Total income/expense recognized
                            2,746       (2,116 )     630  
Other changes in equity
          1,895       10       (10 )     (3,612 )           (1,717 )
Increased of capital
                                         
Capital reduction
                                         
Conversion of financial liabilities into capital
                                         
Increase of other equity instruments
                10                          
Reclassification of financial liabilities to other equity instruments
                                         
Reclassification of other equity instruments to financial instruments
                                         
Dividend distribution
          1,053                   (2,717 )           (1,664 )
Transactions including treasury shares and other equity instruments (net)
          (53 )           (10 )                 (63 )
Transfers between total equity entries
          895                   (895 )            
Increase/Reduction in business combinations
                                         
Payments with equity instruments
                                         
Rest of increase/reductions in total equity
                                         
     
Balance at June 30, 2008
    1,837       15,243       59       (139 )     2,746       772       20,518  
 
(*)   Presented for comparison purposes only.

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UNAUDITED CHANGES IN TOTAL EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008
                 
    Millions of euros
CHANGES IN TOTAL EQUITY   June-09   June-08(*)
 
INCOME FOR THE PERIOD
    1,838       2,746  
       
 
               
OTHER RECOGNIZED INCOME (EXPENSES)
    (18 )     (2,116 )
       
 
               
Available-for-sale financial assets
    98       (2,568 )
       
 
               
Revaluation gains/losses
    107       (1,756 )
       
 
               
Amounts transferred to income statement
    (9 )     (812 )
       
Reclassifications
           
       
 
               
Cash flow hedges
    25       (91 )
       
 
               
Revaluation gains/losses
    27       (102 )
       
 
               
Amounts transferred to income statement
    (2 )     11  
       
Amounts transferred to the initial carrying amount of the hedged items
           
       
Reclassifications
           
       
Hedges of net investment in foreign operations
           
       
Revaluation gains/losses
           
       
Amounts transferred to income statement
           
       
Reclassifications
           
       
 
               
Exchange differences
    (72 )     (16 )
       
 
               
Revaluation gains/losses
    (72 )     (9 )
       
 
               
Amounts transferred to income statement
          (7 )
       
Reclassifications
           
       
Non-current assets held for sale
           
       
Revaluation gains/losses
           
       
Amounts transferred to income statement
           
       
Reclassifications
           
       
Actuarial gains and losses in post-employment plans
           
       
Rest of recognized income and expenses
           
       
 
               
Income tax
    (69 )     559  
       
 
               
TOTAL INCOME AND EXPENSES FOR THE PERIOD
    1,820       630  
 
(*)   Presented for comparison purposes only.

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UNAUDITED CASH FLOW STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008
                 
    Millions of euros
    June-09   June-08(*)
 
CASH FLOW FROM OPERATING ACTIVITIES (1)
    7,664       (8,516 )
     
 
               
Profit for the year
    1,838       2,746  
     
 
               
Adjustments to obtain the cash flow from operating activities:
    478       (2,931 )
     
 
               
Amortisation
    119       105  
     
 
               
Other adjustments
    359       (3,036 )
     
 
               
Net increase/decrease in operating assets
    1,871       17,127  
     
 
               
Financial assets held for traiding
    (2,891 )     2,535  
     
Other financial assets at fair value through profit or loss
           
     
 
               
Available-for-sale financial assets
    12,861       (2,971 )
     
 
               
Loans and receivables
    (7,730 )     17,310  
     
 
               
Other operating assets
    (369 )     253  
     
 
               
Net increase/decrease in operating liabilities
    6,756       8,399  
     
 
               
Financial liabilities
    (4,006 )     3,950  
     
Other financial liabilities at fair value through profit or loss
           
     
 
               
Financial liabilities measured at amortised cost
    11,248       3,926  
     
 
               
Other operating liabilities
    (486 )     523  
     
 
               
Collection/Payments for income tax
    463       397  
     
 
               
CASH FLOWS FROM INVESTING ACTIVITIES (2)
    (330 )     806  
     
 
               
Investment
    629       232  
     
 
               
Tangible assets
    174       143  
     
 
               
Intangible assets
    57       32  
     
 
               
Investments
    197       7  
     
Subsidiaries and other business units
           
     
 
               
Non-current assets held for sale and associated liabilities
    201       50  
     
Held-to-maturity investments
           
     
Other payments related to investing activities
           
     
 
               
Divestments
    299       1,038  
     
 
               
Tangible assets
          4  
     
Intangible assets
           
     
 
               
Investments
    2        
     
Subsidiaries and other business units
           
     
 
               
Non-current assets held for sale and associated liabilities
    157       897  
     

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    Millions of euros
    June-09   June-08(*)
 
Held-to-maturity investments
    140       137  
     
Other collections related to investing activities
           
     
 
               
CASH FLOWS FROM FINANCING ACTIVITIES (3)
    (932 )     (1,825 )
     
 
               
Investment
    2,695       6,784  
     
 
               
Dividends
    626       1,608  
     
Subordinated liabilities
           
     
Amortisation of own equity instruments
           
     
 
               
Acquisition of own equity instruments
    2,069       4,847  
     
 
               
Other items relating to financing activities
          329  
     
 
               
Divestments
    1,763       4,959  
     
 
               
Subordinated liabilities
          175  
     
Issuance of own equity instruments
           
     
 
               
Disposal of own equity instruments
    1,617       4,784  
     
 
               
Other items relating to financing activities
    146        
     
 
               
EFFECT OF EXCHANGE RATE CHANGES ON CASH OR CASH EQUIVALENTS (4)
    3       4  
     
 
               
NET INCREASE/DECREASE IN CASH OR CASH EQUIVALENTS (1+2+3+4)
    6,405       (9,531 )
     
 
               
CASH OR CASH EQUIVALENTS AT BEGINNING OF PERIOD
    2,687       12,216  
     
 
               
CASH OR CASH EQUIVALENTS AT END OF PERIOD
    9,092       2,685  
 
                 
COMPONENTS OF CASH AND EQUIVALENT AT END OF PERIOD   June-09   June-08(*)
 
Cash
    538       560  
     
 
               
Balance of cash equivalent in central banks
    8,553       2,126  
     
Other financial assets
           
     
Less:bank overdraft refundable on demand
           
     
 
               
TOTAL CASH OR CASH EQUIVALENTS AT END OF PERIOD
    9,091       2,686  
 
(*)   Presented for comparison purposes only.

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APPENDIX II
ADDITIONAL INFORMATION ON CONSOLIDATED SUBSIDIARIES
COMPOSING THE BANCO BILBAO VIZCAYA ARGENTARIA GROUP
                                                                         
            %of Voting Rights   Thousands of Euros (*)
            controlled by the Bank           Investee Data
                                                                    Profit
                                                                    (Loss) for
                                    Net   Assets as   Liabilities           the Period
                                    Carrying   of   as of   Equity   ended
Company   Location   Activity   Direct   Indirect   Total   Amount   30.06.09   30.06.09   30.06.09   30.06.09
 
ADMINISTRAD. DE FONDOS PARA EL RETIRO-BANCOMER,S.A DE C.V.
  MEXICO   PENSIONS     17.50       82.50       100.00       301,042       170,130       54,103       96,892       19,135  
ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA, S.A. (AFP PROVIDA)
  CHILE   PENSIONS     12.70       51.62       64.32       241,101       418,243       58,414       304,389       55,440  
AFP GENESIS ADMINISTRADORA DE FONDOS, S.A.
  ECUADOR   PENSIONS           100.00       100.00       2,517       4,399       1,854       1,032       1,513  
AFP HORIZONTE, S.A.
  PERU   PENSIONS     24.85       75.15       100.00       36,648       60,054       19,281       30,038       10,735  
AFP PREVISION BBV-ADM.DE FONDOS DE PENSIONES S.A.
  BOLIVIA   PENSIONS     75.00       5.00       80.00       2,063       10,249       5,654       3,566       1,029  
ALMACENES GENERALES DE DEPOSITO, S.A.E. DE
  SPAIN   PORTFOLIO     83.90       16.10       100.00       12,649       120,005       4,293       110,134       5,578  
ALTITUDE INVESTMENTS LIMITED
  UNITED KINGDOM   FINANCIAL SERV.     51.00             51.00       615       1,065       451       1,298       (684 )
ALTURA MARKETS, SOCIEDAD DE VALORES, S.A.
  SPAIN   SECURITIES     50.00             50.00       5,000       1,214,333       1,185,122       23,397       5,814  
ANIDA CARTERA SINGULAR, S.L.
  SPAIN   PORTFOLIO           100.00       100.00             3,112       2,868       260       (16 )
ANIDA DESARROLLOS INMOBILIARIOS, S.L.
  SPAIN   REAL ESTATE           100.00       100.00       112,477       246,434       84,910       165,943       (4,419 )
ANIDA DESARROLLOS SINGULARES, S.L.
  SPAIN   REAL ESTATE INSTR.           100.00       100.00             1,203,423       1,357,404       (16,234 )     (137,747 )
ANIDA GERMANIA IMMOBILIEN ONE, GMBH
  GERMANY   REAL ESTATE INSTR.           100.00       100.00       4,099       19,678       15,382       4,336       (40 )
ANIDA GRUPO INMOBILIARIO, S.L.
  SPAIN   PORTFOLIO     100.00             100.00       198,357       686,244       108,988       572,941       4,315  
ANIDA INMOBILIARIA, S.A. DE C.V.
  MEXICO   PORTFOLIO           100.00       100.00       91,316       75,222       70       75,566       (414 )
ANIDA INMUEBLES ESPAÑA Y PORTUGAL, S.L.
  SPAIN   REAL ESTATE INSTR.           100.00       100.00       3       42,194       44,432       3       (2,241 )
ANIDA OPERACIONES SINGULARES, S.L.
  SPAIN   REAL ESTATE INSTR.           100.00       100.00       3       2,134,508       2,265,422       (2,183 )     (128,731 )
ANIDA PROYECTOS INMOBILIARIOS, S.A. DE C.V.
  MEXICO   REAL ESTATE INSTR.           100.00       100.00       74,725       109,764       35,038       74,651       75  
ANIDA SERVICIOS INMOBILIARIOS, S.A. DE C.V.
  MEXICO   REAL ESTATE INSTR.           100.00       100.00       339       899       561       831       (493 )
APLICA SOLUCIONES ARGENTINAS, S.A.
  ARGENTINA   SERVICES           100.00       100.00       1,525       3,507       1,815       1,544       148  
APLICA SOLUCIONES GLOBALES, S.L.
  SPAIN   SERVICES     94.98       5.02       100.00       60       63,406       64,561       810       (1,965 )
APLICA TECNOLOGIA AVANZADA, S.A. DE C.V.
  MEXICO   SERVICES     100.00             100.00       4       43,936       37,823       711       5,402  
APOYO MERCANTIL S.A. DE C.V.
  MEXICO   SERVICES           100.00       100.00       750       129,765       128,939       807       19  
ARAGON CAPITAL, S.L.
  SPAIN   PORTFOLIO     99.90       0.10       100.00       37,925       32,962       116       32,803       43  
ARIZONA FINANCIAL PRODUCTS, INC
  UNITED STATES   FINANCIAL SERV.           100.00       100.00       663,202       669,046       5,845       650,840       12,361  
ATREA HOMES IN SPAIN LTD
  UNITED KINGDOM   NO ACTIVITY           100.00       100.00             11       351       (340 )      
ATUEL FIDEICOMISOS, S.A.
  ARGENTINA   SERVICES           100.00       100.00       6,054       6,082       29       5,662       391  

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            %of Voting Rights   Thousands of Euros (*)
            controlled by the Bank           Investee Data
                                                                    Profit
                                                                    (Loss) for
                                    Net   Assets as   Liabilities           the Period
                                    Carrying   of   as of   Equity   ended
Company   Location   Activity   Direct   Indirect   Total   Amount   30.06.09   30.06.09   30.06.09   30.06.09
 
AUTOMERCANTIL-COMERCIO E ALUGER DE VEICULOS AUTOM.,LDA
  PORTUGAL   FINANCIAL SERV.           100.00       100.00       7,209       57,148       48,604       9,373       (829 )
BAHIA SUR RESORT, S.C.
  SPAIN   NO ACTIVITY     99.95             99.95       1,436       1,438       15       1,423        
BANCO BILBAO VIZCAYA ARGENTARIA (PANAMA), S.A.
  PANAMA   BANKING     54.11       44.81       98.92       19,464       1,259,059       1,090,521       153,634       14,904  
BANCO BILBAO VIZCAYA ARGENTARIA (PORTUGAL), S.A.
  PORTUGAL   BANKING     9.52       90.48       100.00       278,916       7,044,069       6,791,571       243,559       8,939  
BANCO BILBAO VIZCAYA ARGENTARIA CHILE, S.A.
  CHILE   BANKING           68.18       68.18       419,253       8,986,232       8,370,811       565,946       49,475  
BANCO BILBAO VIZCAYA ARGENTARIA PUERTO RICO, S.A.
  PUERTO RICO   BANKING           100.00       100.00       98,163       4,084,410       3,719,698       364,689       23  
BANCO BILBAO VIZCAYA ARGENTARIA URUGUAY, S.A.
  URUGUAY   BANKING     100.00             100.00       17,049       574,282       531,891       41,827       564  
BANCO CONTINENTAL, S.A.
  PERU   BANKING           92.08       92.08       531,965       7,200,800       6,623,099       452,114       125,587  
BANCO DE PROMOCION DE NEGOCIOS, S.A.
  SPAIN   BANKING           99.82       99.82       15,152       33,239       490       32,523       226  
BANCO DEPOSITARIO BBVA, S.A.
  SPAIN   BANKING           100.00       100.00       1,595       1,631,916       1,561,908       52,989       17,019  
BANCO INDUSTRIAL DE BILBAO, S.A.
  SPAIN   BANKING           99.93       99.93       97,220       284,714       27,379       232,252       25,083  
BANCO OCCIDENTAL, S.A.
  SPAIN   BANKING     49.43       50.57       100.00       15,812       17,587       388       17,058       141  
BANCO PROVINCIAL OVERSEAS N.V.
  NETHERLANDS ANTILLES   BANKING           100.00       100.00       27,353       344,629       316,908       22,477       5,244  
BANCO PROVINCIAL S.A. — BANCO UNIVERSAL
  VENEZUELA   BANKING     1.85       53.75       55.60       151,606       10,556,328       9,508,843       812,332       235,153  
BANCOMER FINANCIAL SERVICES INC.
  UNITED STATES   FINANCIAL SERV.           100.00       100.00       1,844       615       (1,232 )     1,878       (31 )
BANCOMER FOREIGN EXCHANGE INC.
  UNITED STATES   FINANCIAL SERV.           100.00       100.00       4,958       6,598       1,640       4,087       871  
BANCOMER PAYMENT SERVICES INC.
  UNITED STATES   FINANCIAL SERV.           100.00       100.00       36       26       (10 )     38       (2 )
BANCOMER TRANSFER SERVICES, INC.
  UNITED STATES   FINANCIAL SERV.           100.00       100.00       19,817       73,389       53,573       13,982       5,834  
BBV AMERICA, S.L.
  SPAIN   PORTFOLIO     100.00             100.00       479,328       890,176       56,339       833,057       780  
BBVA & PARTNERS ALTERNATIVE INVESTMENT A.V., S.A.
  SPAIN   SECURITIES     70.00             70.00       1,331       16,127       10,139       6,014       (26 )
BBVA ADMINISTRADORA GENERAL DE FONDOS S.A.
  CHILE   FINANCIAL SERV.           100,00       100,00       24.194       25.636       1.441       21.851       2.344  
BBVA ASESORIAS FINANCIERAS, S.A.
  CHILE   FINANCIAL SERV.           98,60       98,60       18.020       18.719       443       17.065       1.211  
BBVA ASSET MANAGEMENT, S.A., SGIIC
  SPAIN   FINANCIAL SERV.     17,00       83,00       100,00       11.436       209.521       124.202       67.645       17.674  
BBVA AutoRenting SPA
  ITALY   SERVICES           100,00       100,00       67.785       231.457       201.283       29.687       487  
BBVA BANCO DE FINANCIACION S.A.
  SPAIN   BANKING           100,00       100,00       64.200       4.919.447       4.847.268       72.277       (98 )
BBVA BANCO FRANCES, S.A.
  ARGENTINA   BANKING     45,65       30,36       76,01       39.322       4.281.122       3.866.317       384.866       29.939  
BBVA BANCOMER ASSET MANAGEMENT INC.
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       1       1             1        
BBVA BANCOMER FINANCIAL HOLDINGS, INC.
  UNITED STATES   PORTFOLIO           100,00       100,00       43.399       38.820       (4.429 )     39.720       3.529  
BBVA BANCOMER GESTION, S.A. DE C.V.
  MEXICO   FINANCIAL SERV.           99,99       99,99       16.639       49.388       32.746       9.549       7.093  
BBVA BANCOMER HOLDINGS CORPORATION
  UNITED STATES   PORTFOLIO           100,00       100,00       10.403       10.404             9.641       763  
BBVA BANCOMER OPERADORA, S.A. DE C.V.
  MEXICO   SERVICES           100,00       100,00       118.781       253.100       134.317       112.166       6.617  
BBVA BANCOMER SERVICIOS ADMINISTRATIVOS, S.A. DE C.V.
  MEXICO   SERVICES           100,00       100,00       1.477       8.164       6.688       985       491  

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            %of Voting Rights     Thousands of Euros (*)
            controlled by the Bank           Investee Data
                                                                    Profit
                                                                    (Loss) for
                                    Net   Assets as   Liabilities           the Period
                                    Carrying   of   as of   Equity   ended
Company   Location   Activity   Direct   Indirect   Total   Amount   30.06.09   30.06.09   30.06.09   30.06.09
 
BBVA BANCOMER SERVICIOS, S.A.
  MEXICO   BANKING           100,00       100,00       514.830       537.332       22.504       469.649       45.179  
BBVA BANCOMER USA
  UNITED STATES   BANKING           100,00       100,00       6.936       98.575       91.638       10.047       (3.110 )
BBVA BANCOMER, S.A. DE C.V.
  MEXICO   BANKING           100,00       100,00       4.957.124       60.748.283       55.789.524       4.445.630       513.129  
BBVA BRASIL BANCO DE INVESTIMENTO, S.A.
  BRAZIL   BANKING     100,00             100,00       16.166       35.669       4.631       30.649       389  
BBVA BROKER, CORREDURIA DE SEGUROS Y REASEGUROS, S.A.
  SPAIN   FINANCIAL SERV.     99,94       0,06       100,00       297       29.193       5.685       20.559       2.949  
BBVA CAPITAL FINANCE, S.A.
  SPAIN   FINANCIAL SERV.     100,00             100,00       60       2.990.930       2.990.699       222       9  
BBVA CAPITAL FUNDING, LTD.
  CAYMAN ISLANDS   FINANCIAL SERV.     100,00             100,00             1.170.850       1.169.179       1.654       17  
BBVA CARTERA DE INVERSIONES,SICAV,S.A.
  SPAIN   VARIABLE CAPITAL COMP.     100,00             100,00       118.447       115.538       137       111.541       3.860  
BBVA COLOMBIA, S.A.
  COLOMBIA   BANKING     76,20       19,23       95,43       263.429       6.989.010       6.394.272       529.007       65.731  
BBVA COMERCIALIZADORA LTDA.
  CHILE   FINANCIAL SERV.           100,00       100,00       (535 )     231       766       (336 )     (199 )
BBVA COMPASS CONSULTING & BENEFITS, INC
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       12.125       12.367       243       11.922       202  
BBVA CONSOLIDAR SEGUROS, S.A.
  ARGENTINA   INSURANCES     87,78       12,22       100,00       6.442       40.333       22.722       14.839       2.772  
BBVA CONSULTING ( BEIJING) LIMITED
  CHINA   FINANCIAL SERV.           100,00       100,00       400       395       25       392       (22 )
BBVA CONSULTORIA, S.A.
  SPAIN   SERVICES           100,00       100,00       2.227       2.255       179       2.148       (72 )
BBVA CORREDORA TECNICA DE SEGUROS LIMITADA
  CHILE   FINANCIAL SERV.           100,00       100,00       28.560       29.916       1.354       26.559       2.003  
BBVA CORREDORES DE BOLSA, S.A.
  CHILE   SECURITIES           100,00       100,00       32.434       265.617       233.185       27.121       5.311  
BBVA DINERO EXPRESS, S.A.U
  SPAIN   FINANCIAL SERV.     100,00             100,00       2.186       9.412       4.889       4.153       370  
BBVA E-COMMERCE, S.A.
  SPAIN   SERVICES     100,00             100,00       30.879       35.554             35.217       337  
BBVA FACTORING LIMITADA (CHILE)
  CHILE   FINANCIAL SERV.           100,00       100,00       4.055       14.503       10.448       3.354       701  
BBVA FIDUCIARIA , S.A.
  COLOMBIA   FINANCIAL SERV.           99,99       99,99       11.153       13.493       2.324       9.097       2.072  
BBVA FINANCE (UK), LTD.
  UNITED KINGDOM   FINANCIAL SERV.           100,00       100,00       3.324       24.174       12.954       11.203       17  
BBVA FINANCE SPA.
  ITALY   FINANCIAL SERV.     100,00             100,00       4.648       5.474       70       5.334       70  
BBVA FINANCIAMIENTO AUTOMOTRIZ, S.A.
  CHILE   PORTFOLIO           100,00       100,00       105.799       105.842       42       99.309       6.491  
BBVA FINANZIA, S.p.A
  ITALY   FINANCIAL SERV.     50,00       50,00       100,00       41.465       364.499       344.862       18.115       1.522  
BBVA FUNDOS, S.Gestora Fundos Pensoes,S.A.
  PORTUGAL   FINANCIAL SERV.           100,00       100,00       998       6.460       772       4.954       734  
BBVA GEST, S.G.DE FUNDOS DE INVESTIMENTO MOBILIARIO, S.A.
  PORTUGAL   FINANCIAL SERV.           100,00       100,00       998       7.281       638       6.314       329  
BBVA GLOBAL FINANCE LTD.
  CAYMAN ISLANDS   FINANCIAL SERV.     100,00             100,00             537.134       533.571       3.554       9  
BBVA GLOBAL MARKETS RESEARCH, S.A.
  SPAIN   FINANCIAL SERV.     99,99       0,01       100,00       501       4.425       2.227       2.087       111  
BBVA HORIZONTE PENSIONES Y CESANTIAS, S.A.
  COLOMBIA   PENSIONS     78,52       21,43       99,95       36.879       89.055       27.927       53.616       7.512  
BBVA INMOBILIARIA E INVERSIONES, S.A.
  CHILE   REAL ESTATE INSTR.           68,11       68,11       4.024       23.624       17.716       6.583       (675 )
BBVA INSERVEX, S.A.
  SPAIN   SERVICES     100,00             100,00       1.205       2.512       240       2.185       87  
BBVA INSTITUIÇAO FINANCEIRA DE CREDITO, S.A.
  PORTUGAL   FINANCIAL SERV.           100,00       100,00       43.626       442.028       403.520       36.402       2.106  

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            %of Voting Rights     Thousands of Euros (*)
            controlled by the Bank           Investee Data
                                                                    Profit
                                                                    (Loss) for
                                    Net   Assets as   Liabilities           the Period
                                    Carrying   of   as of   Equity   ended
Company   Location   Activity   Direct   Indirect   Total   Amount   30.06.09   30.06.09   30.06.09   30.06.09
 
BBVA INTERNATIONAL INVESTMENT CORPORATION
  PUERTO RICO   FINANCIAL SERV.     100,00             100,00       2.769.952       2.111.020       16       2.111.049       (45 )
BBVA INTERNATIONAL LIMITED
  CAYMAN ISLANDS   FINANCIAL SERV.     100,00             100,00       1       504.466       501.900       2.519       47  
BBVA INTERNATIONAL PREFERRED, S.A.U.
  SPAIN   FINANCIAL SERV.     100,00             100,00       60       1.997.031       1.996.753       226       52  
BBVA INVERSIONES CHILE, S.A.
  CHILE   FINANCIAL SERV.     61,22       38,78       100,00       580.584       862.908       7.187       792.137       63.584  
BBVA INVESTMENTS, INC.
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       11.553       12.961       1.406       10.706       849  
BBVA IRELAND PUBLIC LIMITED COMPANY
  IRELAND   FINANCIAL SERV.     100,00             100,00       180.381       1.733.493       1.401.158       322.089       10.246  
BBVA LEASIMO — SOCIEDADE DE LOCAÇAO FINANCEIRA, S.A.
  PORTUGAL   FINANCIAL SERV.           100,00       100,00       11.576       38.304       27.795       10.333       176  
BBVA LEASING S.A. COMPAÑÍA DE FINANCIAMIENTO COMERCIAL (COLOMBIA)
  COLOMBIA   FINANCIAL SERV.           100,00       100,00       17.628       89.397       71.700       16.610       1.087  
BBVA LUXINVEST, S.A.
  LUXEMBOURG   PORTFOLIO     36,00       64,00       100,00       255.843       1.500.787       86.913       1.408.179       5.695  
BBVA MEDIACION OPERADOR DE BANCA-SEGUROS VINCULADO, S.A.
  SPAIN   FINANCIAL SERV.           100,00       100,00       60       124.233       115.716       6.060       2.457  
BBVA NOMINEES LIMITED
  UNITED KINGDOM   SERVICES     100,00             100,00             1             1        
BBVA PARAGUAY, S.A.
  PARAGUAY   BANKING     100,00             100,00       22.598       670.155       612.299       44.864       12.992  
BBVA PARTICIPACIONES INTERNACIONAL, S.L.
  SPAIN   PORTFOLIO     92,69       7,31       100,00       273.365       347.595       3.397       342.426       1.772  
BBVA PATRIMONIOS GESTORA SGIIC, S.A.
  SPAIN   FINANCIAL SERV.     99,98       0,02       100,00       3.907       27.923       5.129       20.141       2.653  
BBVA PENSIONES, SA, ENTIDAD GESTORA DE FONDOS DE PENSIONES
  SPAIN   PENSIONS     100,00             100,00       12.922       70.486       37.450       25.939       7.097  
BBVA PLANIFICACION PATRIMONIAL, S.L.
  SPAIN   FINANCIAL SERV.     80,00       20,00       100,00       1       508       10       504       (6 )
BBVA PRIVANZA (JERSEY), LTD.
  JERSEY   NO ACTIVITY           100,00       100,00       20.610       22.815       2       24.240       (1.427 )
BBVA PROPIEDAD F.I.I.
  SPAIN   OTHER INVEST. COMP           95,67       95,67       1.522.719       1.587.374       71.943       1.574.913       (59.482 )
BBVA PUERTO RICO HOLDING CORPORATION
  PUERTO RICO   PORTFOLIO     100,00             100,00       255.804       98.618       7       98.631       (20 )
BBVA RE LIMITED
  IRELAND   INSURANCES           100,00       100,00       656       58.122       37.781       17.714       2.627  
BBVA RENTING, S.A.
  SPAIN   FINANCIAL SERV.           100,00       100,00       20.976       789.357       693.034       93.802       2.521  
BBVA RENTING, SPA
  ITALY   SERVICES           100,00       100,00       8.925       40.946       32.974       8.277       (305 )
BBVA SECURITIES HOLDINGS, S.A.
  SPAIN   PORTFOLIO     99,86       0,14       100,00       13.327       50.078       32.181       18.292       (395 )
BBVA SECURITIES INC.
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       30.267       24.723       3.418       21.124       181  
BBVA SECURITIES OF PUERTO RICO, INC.
  PUERTO RICO   FINANCIAL SERV.     100,00             100,00       4.726       6.121       680       5.238       203  
BBVA SEGUROS COLOMBIA, S.A.
  COLOMBIA   INSURANCES     94,00       6,00       100,00       9.259       33.965       22.171       11.189       605  
BBVA SEGUROS DE VIDA COLOMBIA, S.A.
  COLOMBIA   INSURANCES     94,00       6,00       100,00       13.242       215.244       182.138       30.849       2.257  
BBVA SEGUROS DE VIDA, S.A.
  CHILE   INSURANCES           100,00       100,00       32.029       392.863       360.833       28.883       3.147  
BBVA SEGUROS INC.
  PUERTO RICO   FINANCIAL SERV.           100,00       100,00       177       3.580       555       2.660       365  

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            %of Voting Rights           Thousands of Euros (*)
            controlled by the Bank                   Investee Data
                                                                    Profit
                                                                    (Loss) for
                                    Net           Liabilities as           the Period
                                    Carrying   Assets as of   of   Equity   ended
Company   Location   Activity   Direct   Indirect   Total   Amount   30.06.09   30.06.09   30.06.09   30.06.09
 
BBVA SEGUROS, S.A., DE SEGUROS Y REASEGUROS
  SPAIN   INSURANCES     94,30       5,65       99,95       414.658       11.675.661       10.785.212       743.532       146.917  
BBVA SENIOR FINANCE, S.A.U.
  SPAIN   FINANCIAL SERV.     100,00             100,00       60       12.644.857       12.644.605       283       (31 )
BBVA SERVICIOS, S.A.
  SPAIN   SERVICES           100,00       100,00       354       16.222       5.418       8.535       2.269  
BBVA SOCIEDAD DE LEASING INMOBILIARIO, S.A.
  CHILE   FINANCIAL SERV.           97,49       97,49       10.987       52.708       41.436       11.012       260  
BBVA SUBORDINATED CAPITAL S.A.U.
  SPAIN   FINANCIAL SERV.     100,00       0,00       100,00       130       3.986.213       3.985.881       233       99  
BBVA SUIZA, S.A. (BBVA SWITZERLAND)
  SWITZERLAND   BANKING     39,72       60,28       100,00       55.795       1.128.113       828.940       289.789       9.384  
BBVA TRADE, S.A.
  SPAIN   PORTFOLIO           100,00       100,00       6.379       19.191       11.051       8.123       17  
BBVA U.S. SENIOR S.A.U.
  SPAIN   FINANCIAL SERV.     100,00             100,00       132       1.416.004       1.415.869       176       (41 )
BBVA USA BANCSHARES, INC
  UNITED STATES   PORTFOLIO     100,00             100,00       9.425.622       9.048.056       8.470       8.965.899       73.687  
BBVA VALORES COLOMBIA, S.A. COMISIONISTA DE BOLSA
  COLOMBIA   SECURITIES           100,00       100,00       3.456       4.610       1.109       2.759       742  
BBVA(SUIZA) S.A. OFICINA DE REPRESENTACION
  URUGUAY   FINANCIAL SERV.           100,00       100,00       10       1.461       1.451       18       (8 )
BCL INTERNATIONAL FINANCE. LTD.
  CAYMAN ISLANDS   FINANCIAL SERV.     100,00             100,00             102.396       102.396       4       (4 )
BIBJ MANAGEMENT, LTD.
  JERSEY   NO ACTIVITY           100,00       100,00                                
BIBJ NOMINEES, LTD.
  JERSEY   NO ACTIVITY           100,00       100,00                                
BILBAO VIZCAYA AMERICA B.V.
  NETHERLANDS   PORTFOLIO           100,00       100,00       756.000       522.499       164       472.935       49.400  
BILBAO VIZCAYA HOLDING, S.A.
  SPAIN   PORTFOLIO     89,00       11,00       100,00       34.771       225.806       13.260       207.340       5.206  
BLUE INDICO INVESTMENTS, S.L.
  SPAIN   PORTFOLIO     99,99       0,01       100,00       18.221       50.994       20       50.934       40  
BROOKLINE INVESTMENTS,S.L.
  SPAIN   PORTFOLIO     100,00             100,00       33.969       32.395       531       31.871       (7 )
C B TRANSPORT ,INC.
  UNITED STATES   SERVICES           100,00       100,00       13.141       15.333       2.190       14.295       (1.152 )
CANAL COMPANY, LTD.
  JERSEY   NO ACTIVITY           100,00       100,00       29       877             877        
CAPITAL INVESTMENT COUNSEL, INC.
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       19.433       20.872       1.440       19.122       310  
CARTERA E INVERSIONES S.A., CIA DE
  SPAIN   PORTFOLIO     100,00             100,00       60.541       222.324       61.926       172.597       (12.199 )
CASA DE BOLSA BBVA BANCOMER , S.A. DE C.V.
  MEXICO   FINANCIAL SERV.           100,00       100,00       34.702       80.619       45.916       24.787       9.916  
CASA de CAMBIO MULTIDIVISAS, SA DE CV
  MEXICO   NO ACTIVITY           100,00       100,00       151       152             151       1  
CENTRAL BANK OF THE SOUTH
  UNITED STATES   BANKING           100,00       100,00       1.151       3.639       2.487       1.159       (7 )
CIA. GLOBAL DE MANDATOS Y REPRESENTACIONES, S.A.
  URUGUAY   NO ACTIVITY           100,00       100,00       108       177       2       175        
CIDESSA DOS, S.L.
  SPAIN   PORTFOLIO           100,00       100,00       11.602       11.925       118       11.799       8  

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Table of Contents

                                                                         
            %of Voting Rights     Thousands of Euros (*)
            controlled by the Bank           Investee Data
                                                                    Profit
                                                                    (Loss) for
                                    Net           Liabilities as           the Period
                                    Carrying   Assets as of   of   Equity   ended
Company   Location   Activity   Direct   Indirect   Total   Amount   30.06.09   30.06.09   30.06.09   30.06.09
 
CIDESSA UNO, S.L.
  SPAIN   PORTFOLIO           100,00       100,00       4.754       826.727       108       693.251       133.368  
CIERVANA, S.L.
  SPAIN   PORTFOLIO     100,00             100,00       53.164       70.011       2.802       66.788       421  
COMERCIALIZADORA CORPORATIVA SAC
  PERU   FINANCIAL SERV.           99,99       99,99       (126 )     333       459       131       (257 )
COMERCIALIZADORA DE SERVICIOS FINANCIEROS, S.A.
  COLOMBIA   SERVICES           99,98       99,98       98       444       318       95       31  
COMPAÑIA CHILENA DE INVERSIONES, S.L.
  SPAIN   PORTFOLIO     100,00             100,00       232.976       173.294       2.327       171.000       (33 )
COMPASS ASSET ACCEPTANCE COMPANY, LLC
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       340.021       340.022             335.780       4.242  
COMPASS AUTO RECEIVABLES CORPORATION
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       2.956       2.957       1       2.956        
COMPASS BANCSHARES, INC.
  UNITED STATES   PORTFOLIO           100,00       100,00       9.032.585       9.840.841       808.256       8.958.438       74.147  
COMPASS BANK
  UNITED STATES   BANKING           100,00       100,00       9.467.272       44.589.393       35.122.118       9.384.414       82.861  
COMPASS BROKERAGE, INC.
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       23.611       24.942       1.332       22.503       1.107  
COMPASS CAPITAL MARKETS, INC.
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       5.155.006       5.155.006       (1 )     5.083.289       71.718  
COMPASS CUSTODIAL SERVICES, INC.
  UNITED STATES   NO ACTIVITY           100,00       100,00       1       1             1        
COMPASS FINANCIAL CORPORATION
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       6.426       50.941       44.513       6.413       15  
COMPASS GP,INC.
  UNITED STATES   PORTFOLIO           100,00       100,00       32.242       40.732       8.490       31.943       299  
COMPASS INSURANCE AGENCY, INC
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       121.494       131.844       10.350       117.045       4.449  
COMPASS INVESTMENTS, INC.
  UNITED STATES   NO ACTIVITY           100,00       100,00       1       1             1        
COMPASS LIMITED PARTNER, INC.
  UNITED STATES   PORTFOLIO           100,00       100,00       4.459.561       4.459.791       230       4.400.504       59.057  
COMPASS LOAN HOLDINGS TRS, INC.
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       54.931       56.764       1.833       54.911       20  
COMPASS MORTGAGE CORPORATION
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       1.813.229       1.814.207       976       1.801.193       12.038  
COMPASS MORTGAGE FINANCING, INC.
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       25       25             25        
COMPASS MULTISTATE SERVICES CORPORATION
  UNITED STATES   SERVICES           100,00       100,00       2.654       2.702       47       2.655        
COMPASS SOUTHWEST, LP
  UNITED STATES   BANKING           100,00       100,00       3.652.411       3.653.804       1.392       3.597.815       54.597  
COMPASS TEXAS ACQUISITION CORPORATION
  UNITED STATES   NO ACTIVITY           100,00       100,00       1.601       1.618       16       1.603       (1 )
COMPASS TEXAS MORTGAGE FINANCING, INC
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       25       25             25        
COMPASS TRUST II
  UNITED STATES   NO ACTIVITY           100,00       100,00             1             1        

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Table of Contents

                                                                         
                    %of Voting Rights     Thousands of Euros (*)
                    controlled by the Bank           Investee Data
                                                                    Profit
                                                                    (Loss) for
                                    Net           Liabilities as           the Period
                                    Carrying   Assets as of   of   Equity   ended
Company   Location   Activity   Direct   Indirect   Total   Amount   30.06.09   30.06.09   30.06.09   30.06.09
 
COMPASS TRUST IV
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       8       495.435       495.427       7       1  
COMPASS WEALTH MANAGERS COMPANY
  UNITED STATES   NO ACTIVITY           100,00       100,00       1       1             1        
COMUNIDAD FINANCIERA ÍNDICO, S.L.
  SPAIN   SERVICES           100,00       100,00       349       322       33       369       (80 )
CONSOLIDAR A.F.J.P., S.A.
  ARGENTINA   PENSIONS     46,11       53,89       100,00       50.068       51.132       6.952       44.806       (626 )
CONSOLIDAR ASEGURADORA DE RIESGOS DEL TRABAJO, S.A.
  ARGENTINA   INSURANCES     87,50       12,50       100,00       32.407       172.070       138.237       31.972       1.861  
CONSOLIDAR CIA. DE SEGUROS DE RETIRO, S.A.
  ARGENTINA   INSURANCES     33,79       66,21       100,00       43.373       561.370       495.863       57.954       7.553  
CONSOLIDAR COMERCIALIZADORA, S.A.
  ARGENTINA   FINANCIAL SERV.           100,00       100,00       1.772       3.538       1.766       1.952       (180 )
CONTINENTAL BOLSA, SDAD. AGENTE DE BOLSA, S.A.
  PERU   SECURITIES           100,00       100,00       2.659       6.023       3.363       2.318       342  
CONTINENTAL DPR FINANCE COMPANY
  CAYMAN ISLANDS   FINANCIAL SERV.           100,00       100,00             179.957       179.957              
CONTINENTAL S.A. SOCIEDAD .ADMINISTRADORA DE FONDOS
  PERU   FINANCIAL SERV.           100,00       100,00       5.756       6.580       824       5.636       120  
CONTINENTAL SOCIEDAD TITULIZADORA, S.A.
  PERU   FINANCIAL SERV.           100,00       100,00       394       469       77       387       5  
CONTRATACION DE PERSONAL, S.A. DE C.V.
  MEXICO   SERVICES           100,00       100,00       1.673       6.971       5.299       1.322       350  
CORPORACION DE ALIMENTACION Y BEBIDAS, S.A.
  SPAIN   PORTFOLIO           100,00       100,00       138.508       165.492       2.697       162.122       673  
CORPORACION GENERAL FINANCIERA, S.A.
  SPAIN   PORTFOLIO     100,00             100,00       452.431       1.499.918       5.214       1.420.370       74.334  
CORPORACION INDUSTRIAL Y DE SERVICIOS, S
  SPAIN   PORTFOLIO           100,00       100,00       1.251       6.322       1.536       4.998       (212 )
DESARROLLADORA Y VENDEDORA DE CASAS, S.A
  MEXICO   REAL ESTATE INSTR.           100,00       100,00       16       16             18       (2 )
DESARROLLO URBANISTICO DE CHAMARTIN, S.A.
  SPAIN   REAL ESTATE           72,50       72,50       40.224       74.787       17.658       57.211       (82 )
DESITEL TECNOLOGIA Y SISTEMAS, S.A. DE C.V.
  MEXICO   SERVICES           100,00       100,00       1.375       1.383       8       1.347       28  
DEUSTO, S.A. DE INVERSION MOBILIARIA
  SPAIN   PORTFOLIO           100,00       100,00       14.122       17.593       1.544       15.997       52  
DINERO EXPRESS SERVICIOS GLOBALES, S.A.
  SPAIN   FINANCIAL SERV.     100,00             100,00       28.421       1.076       1.841       1.957       (2.722 )
EL ENCINAR METROPOLITANO, S.A.
  SPAIN   REAL ESTATE           98,93       98,93       5.642       7.333       1.983       5.326       24  
EL OASIS DE LAS RAMBLAS, S.L.
  SPAIN   REAL ESTATE           70,00       70,00       167       491       336       153       2  
ELANCHOVE, S.A.
  SPAIN   PORTFOLIO     100,00             100,00       1.500       3.878       1.563       2.337       (22 )
EMPRESA INSTANT CREDIT, C.A.
  VENEZUELA   NO ACTIVITY           100,00       100,00                                
ESPANHOLA COMERCIAL E SERVIÇOS, LTDA.
  BRAZIL   FINANCIAL SERV.     100,00             100,00             621       601       3.025       (3.005 )
ESTACION DE AUTOBUSES CHAMARTIN, S.A.
  SPAIN   SERVICES           51,00       51,00       31       31             31        

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                    %of Voting Rights     Thousands of Euros (*)
                    controlled by the Bank           Investee Data
                                                                    Profit
                                                                    (Loss) for
                                    Net           Liabilities as           the Period
                                    Carrying   Assets as of   of   Equity   ended
Company   Location   Activity   Direct   Indirect   Total   Amount   30.06.09   30.06.09   30.06.09   30.06.09
 
EUROPEA DE TITULIZACION, S.A., S.G.F.T.
  SPAIN   FINANCIAL SERV.     87,50             87,50       1.974       15.697       2.541       10.262       2.894  
EXPLOTACIONES AGROPECUARIAS VALDELAYEGUA, S.A.
  SPAIN   REAL ESTATE           100,00       100,00       9.121       8.691       8       9.112       (429 )
FIDEIC. Nº.711, EN BANCO INVEX, S.A. INSTITUCION DE BANCA MÚLTIPLE, INVEX GRUPO FINANCIERO, FIDUCIARIO ANTES(FIDEICOMISO INVEX 1a EMISION)
  MEXICO   FINANCIAL SERV.           100,00       100,00             121.537       117.686       2.839       1.012  
FIDEICOMISO 28991-8 TRADING EN LOS MCADOS FINANCIEROS
  MEXICO   FINANCIAL SERV.           100,00       100,00       1.389       1.389             1.367       22  
FIDEICOMISO 29764-8 SOCIO LIQUIDADOR POSICION DE TERCEROS
  MEXICO   FINANCIAL SERV.           100,00       100,00       22.814       23.479       665       21.447       1.367  
FIDEICOMISO 474031 MANEJO DE GARANTIAS
  MEXICO   FINANCIAL SERV.           100,00       100,00       2       2             2        
FIDEICOMISO BBVA BANCOMER SERVICIOS Nº F/47433-8, S.A.
  MEXICO   FINANCIAL SERV.           100,00       100,00       32.113       56.507       24.393       33.640       (1.526 )
FIDEICOMISO N.847 EN BANCO INVEX, S.A.,INSTITUCION DE BANCA MULTIPLE, INVEX GRUPO FINANCIERO, FIDUCIARIO (FIDEIC. 4 EMISION)
  MEXICO   FINANCIAL SERV.           100,00       100,00       26       292.018       294.252       (4.383 )     2.149  
FIDEICOMISO Nº.402900-5 ADMINISTRACION DE INMUEBLES
  MEXICO   FINANCIAL SERV.           100,00       100,00       2.399       2.585       190       2.395        
FIDEICOMISO Nº.752 EN BANCO INVEX, S.A.,INSTITUCION DE BANCA MULTIPLE, INVEX GRUPO FINANCIERO, FIDUCIARIO(FIDEIC.INVEX 2a EMISION)
  MEXICO   FINANCIAL SERV.           100,00       100,00             55.208       53.804       966       438  
FIDEICOMISO Nº.781en BANCO INVEX, S.A.,INSTITUCION DE BANCA MULTIPLE, INVEX GRUPO FINANCIERO, FIDUCIARIO (FIDEIC. 3ra EMISION)
  MEXICO   FINANCIAL SERV.           100,00       100,00             297.290       298.285       (9.530 )     8.535  
FIDEICOMISO SOCIO LIQUIDADOR DE OP.FINANC.DERIVADAS
  MEXICO   FINANCIAL SERV.           100,00       100,00       14.682       15.070       387       14.176       507  
FINANCEIRA DO COMERCIO EXTERIOR S.A.R.
  PORTUGAL   NO ACTIVITY     100,00             100,00       51       37             37        
FINANCIERA AYUDAMOS S.A. DE C.V., SOFOMER
  MEXICO   FINANCIAL SERV.           100,00       100,00       4.900       5.521       620       4.785       116  
FINANCIERA ESPAÑOLA, S.A.
  SPAIN   PORTFOLIO     85,85       14,15       100,00       4.522       6.835       1       6.810       24  
FINANZIA AUTORENTING, S.A.
  SPAIN   SERVICES           100,00       100,00       13.561       602.026       613.874       8.282       (20.130 )
FINANZIA, BANCO DE CREDITO, S.A.
  SPAIN   BANKING           100,00       100,00       96.201       7.082.364       6.948.477       194.457       (60.570 )
FRANCES ADMINISTRADORA DE INVERSIONES, S.A.
  ARGENTINA   FINANCIAL SERV.           100,00       100,00       5.759       8.805       3.047       5.335       423  

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Table of Contents

                                                                         
            %of Voting Rights     Thousands of Euros (*)
            controlled by the Bank           Investee Data
                                                                    Profit
                                                                    (Loss) for
                                    Net           Liabilities as           the Period
                                    Carrying   Assets as of   of   Equity   ended
Company   Location   Activity   Direct   Indirect   Total   Amount   30.06.09   30.06.09   30.06.09   30.06.09
 
FRANCES VALORES SOCIEDAD DE BOLSA, S.A.
  ARGENTINA   FINANCIAL SERV.           100,00       100,00       1.369       2.342       974       1.734       (366 )
FUTURO FAMILIAR, S.A. DE C.V.
  MEXICO   SERVICES           100,00       100,00       292       829       539       196       94  
GENTE BBVA, S.A.
  CHILE   FINANCIAL SERV.           100,00       100,00       (112 )     7.052       7.164       (275 )     163  
GESTION DE PREVISION Y PENSIONES, S.A.
  SPAIN   PENSIONS     60,00             60,00       8.830       24.823       2.603       20.873       1.347  
GESTION Y ADMINISTRACION DE RECIBOS, S.A.
  SPAIN   SERVICES           100,00       100,00       150       3.353       1.055       1.887       411  
GOBERNALIA GLOBAL NET, S.A.
  SPAIN   SERVICES           100,00       100,00       947       2.915       1.549       1.303       63  
GRAN JORGE JUAN, S.A.
  SPAIN   REAL ESTATE     100,00             100,00       110.115       480.239       407.673       82.803       (10.237 )
GRANFIDUCIARIA
  COLOMBIA   FINANCIAL SERV.           90,00       90,00             239       108       141       (10 )
GRELAR GALICIA, S.A.
  SPAIN   PORTFOLIO           100,00       100,00       4.500       4.713             4.687       26  
GRUPO FINANCIERO BBVA BANCOMER, S.A. DE
  MEXICO   FINANCIAL SERV.     48,97       51,00       99,97       6.018.136       6.566.181       841       5.894.881       670.459  
HIPOTECARIA NACIONAL MEXICANA INCORPORAT
  UNITED STATES   REAL ESTATE INSTR.           100,00       100,00       179       272       104       206       (38 )
HIPOTECARIA NACIONAL, S.A. DE C.V.
  MEXICO   FINANCIAL SERV.           100,00       100,00       137.314       225.926       66.258       154.773       4.895  
HOLDING CONTINENTAL, S.A.
  PERU   PORTFOLIO     50,00             50,00       123.678       564.233       7       442.903       121.323  
HOLDING DE PARTICIPACIONES INDUSTRIALES 2000, S.A.
  SPAIN   PORTFOLIO           100,00       100,00       3.618       4.483             4.470       13  
HOMEOWNERS LOAN CORPORATION
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       7.482       7.967       485       7.571       (89 )
HUMAN RESOURCES PROVIDER
  UNITED STATES   SERVICES           100,00       100,00       953.807       953.844       37       948.851       4.956  
HUMAN RESOURCES SUPPORT, INC
  UNITED STATES   SERVICES           100,00       100,00       952.407       952.438       31       947.529       4.878  
HYDROX HOLDINGS, INC.
  UNITED STATES   NO ACTIVITY           100,00       100,00                                
IBERDROLA SERVICIOS FINANCIEROS, E.F.C., S.A.
  SPAIN   FINANCIAL SERV.           84,00       84,00       7.290       9.665       87       9.567       11  

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            %of Voting Rights     Thousands of Euros (*)
            controlled by the Bank           Investee Data
                                                                    Profit
                                                                    (Loss) for
                                    Net   Assets as   Liabilities           the Period
                                    Carrying   of   as of   Equity   ended
Company   Location   Activity   Direct   Indirect   Total   Amount   30.06.09   30.06.09   30.06.09   30.06.09
 
IBERNEGOCIO DE TRADE (before IBERTRADE, LTD.)
  SPAIN   SERVICES           100,00       100,00       1.586       1.688       105       1.587       (4 )
INENSUR BRUNETE, S.L.
  SPAIN   REAL ESTATE           100,00       100,00       48.715       105.962       83.936       22.468       (442 )
INGENIERIA EMPRESARIAL MULTIBA, S.A. DE C.V.
  MEXICO   SERVICES           99,99       99,99                                
INMOBILIARIA BILBAO, S.A.
  SPAIN   REAL ESTATE INSTR.           100,00       100,00       3.657       3.838       1       3.810       27  
INMUEBLES Y RECUPERACION.CONTINENTAL,S.A
  PERU   REAL ESTATE INSTR.           100,00       100,00       892       4.479       3.586       287       606  
INVERAHORRO, S.L.
  SPAIN   PORTFOLIO     100,00             100,00       474       522       4       516       2  
INVERSIONES ALDAMA, C.A.
  VENEZUELA   NO ACTIVITY           100,00       100,00                                
INVERSIONES BANPRO INTERNATIONAL INC. N.V.
  NETHERLANDS ANTILLES   PORTFOLIO     48,00             48,00       11.390       29.708       1.008       23.456       5.244  
INVERSIONES BAPROBA, C.A.
  VENEZUELA   FINANCIAL SERV.     100,00             100,00       1.307       1.311       135       900       276  
INVERSIONES P.H.R.4, C.A.
  VENEZUELA   NO ACTIVITY           60,46       60,46             49             49        
INVERSIONES T, C.A.
  VENEZUELA   NO ACTIVITY           100,00       100,00                                
INVERSORA OTAR, S.A.
  ARGENTINA   PORTFOLIO           99,96       99,96       2.156       40.766       503       36.314       3.949  
INVESCO MANAGEMENT Nº 1, S.A.
  LUXEMBOURG   FINANCIAL SERV.           100,00       100,00       10.016       10.836       513       9.986       337  
INVESCO MANAGEMENT Nº 2, S.A.
  LUXEMBOURG   FINANCIAL SERV.           100,00       100,00             11.238       19.306       (7.687 )     (381 )
JARDINES DE SARRIENA, S.L.
  SPAIN   REAL ESTATE           85,00       85,00       255       501       162       338       1  
LIQUIDITY ADVISORS, L.P
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       842.094       844.786       2.694       837.715       4.377  
MARINA LLAR, S.L.
  SPAIN   REAL ESTATE           100,00       100,00       19.071       53.557       39.970       19.071       (5.484 )
MARQUES DE CUBAS 21, S.L.
  SPAIN   REAL ESTATE     100,00             100,00       2.869       7.561       5.786       1.838       (63 )
MEDITERRANIA DE PROMOCIONS I GESTIONS INMOBILIARIES, S.A.
  SPAIN   NO ACTIVITY           100,00       100,00       779       1.388       205       1.197       (14 )
MERCURY TRUST LIMITED
  CAYMAN ISLANDS   FINANCIAL SERV.           100,00       100,00       3.671       3.710       51       3.729       (70 )
MIRADOR DE LA CARRASCOSA, S.L.
  SPAIN   REAL ESTATE           65,77       65,77       14.724       34.877       17.820       17.057        
MISAPRE, S.A. DE C.V.
  MEXICO   FINANCIAL SERV.           100,00       100,00       9.793       18.795       8.923       9.774       98  
MONESTERIO DESARROLLOS, S.L.
  SPAIN   REAL ESTATE           100,00       100,00       20.000       56.734       36.956       19.781       (3 )
MONTEALIAGA, S.A.
  SPAIN   REAL ESTATE           100,00       100,00       21.154       97.490       69.808       27.702       (20 )
MULTIASISTENCIA OPERADORA S.A. DE C.V.
  MEXICO   SERVICES           100,00       100,00       51       719       666       35       18  
MULTIASISTENCIA SERVICIOS S.A. DE C.V.
  MEXICO   SERVICES           100,00       100,00       135       1.565       1.430       18       117  
MULTIASISTENCIA, S.A. DE C.V.
  MEXICO   SERVICES           100,00       100,00       9.843       20.581       9.635       9.697       1.249  
MULTIVAL, S.A.
  SPAIN   PORTFOLIO           100,00       100,00       67       233       137       98       (2 )
OCCIVAL, S.A.
  SPAIN   NO ACTIVITY     100,00             100,00       8.211       10.011       145       9.818       48  
OPCION VOLCAN, S.A.
  MEXICO   REAL ESTATE INSTR.           100,00       100,00       53.235       56.791       3.558       50.939       2.294  
OPPLUS OPERACIONES Y SERVICIOS, S.A. (before STURGES)
  SPAIN   SERVICES     100,00             100,00       1.067       15.702       11.728       2.920       1.054  

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            %of Voting Rights     Thousands of Euros (*)
            controlled by the Bank           Investee Data
                                                                    Profit
                                                                    (Loss) for
                                    Net   Assets as   Liabilities           the Period
                                    Carrying   of   as of   Equity   ended
Company   Location   Activity   Direct   Indirect   Total   Amount   30.06.09   30.06.09   30.06.09   30.06.09
 
OPPLUS S.A.C
  PERU   SERVICES           100,00       100,00       196       1.260       1.007       181       72  
PARTICIPACIONES ARENAL, S.L.
  SPAIN   NO ACTIVITY           100,00       100,00       6.458       7.964       421       6.683       860  
PENSIONES BANCOMER, S.A. DE C.V.
  MEXICO   INSURANCES           100,00       100,00       75.262       1.639.546       1.564.285       42.938       32.323  
PERI 5.1 SOCIEDAD LIMITADA
  SPAIN   REAL ESTATE           54,99       54,99       1                          
PHOENIX LOAN HOLDINGS, INC.
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       488.174       506.245       18.072       479.921       8.252  
PI HOLDINGS NO. 1, INC.
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       29.163       29.174       11       29.584       (421 )
PI HOLDINGS NO. 3, INC.
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       8.717       8.902       185       8.845       (128 )
PI HOLDINGS NO. 4, INC.
  UNITED STATES   NO ACTIVITY           100,00       100,00       1       1             1        
PORT ARTHUR ABSTRACT & TITLE COMPANY
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       1.830       2.198       367       2.129       (298 )
PREMEXSA, S.A. DE C.V.
  MEXICO   FINANCIAL SERV.           100,00       100,00       375       620       245       345       30  
PRESTACIONES ADMINISTRATIVAS LIMITADA — PROEX LIMITADA
  CHILE   FINANCIAL SERV.           100,00       100,00       (74 )     617       773       3       (159 )
PREVENTIS, S.A.
  MEXICO   INSURANCES           90,27       90,27       5.755       12.645       6.359       4.109       2.177  
PROMOCION EMPRESARIAL XX, S.A.
  SPAIN   PORTFOLIO     100,00             100,00       1.522       12.740       10.939       1.930       (129 )
PROMOTORA DE RECURSOS AGRARIOS, S.A.
  SPAIN   SERVICES     100,00             100,00       139       125             125        
PROMOTORA RESIDENCIAL GRAN EUROPA, S.L.
  SPAIN   REAL ESTATE           58,50       58,50       254       430       2       426       2  
PRO-SALUD, C.A.
  VENEZUELA   SERVICES           58,86       58,86                                
PROVIDA INTERNACIONAL, S.A.
  CHILE   PENSIONS           100,00       100,00       34.501       34.339       4       27.872       6.463  
PROVINCIAL DE VALORES CASA DE BOLSA, C.A.
  VENEZUELA   FINANCIAL SERV.           90,00       90,00       2.559       10.976       7.409       3.523       44  
PROVINCIAL SDAD.ADMIN.DE ENTIDADES DE INV.COLECTIVA, C.A.
  VENEZUELA   FINANCIAL SERV.           100,00       100,00       1.970       2.026       174       1.706       146  
PROVIVIENDA, ENTIDAD RECAUDADORA Y ADMIN.DE APORTES, S.A.
  BOLIVIA   PENSIONS           100,00       100,00       542       2.441       1.856       515       70  

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            %of Voting Rights     Thousands of Euros (*)
            controlled by the Bank           Investee Data
                                                                    Profit
                                                                    (Loss) for
                                    Net           Liabilities           the Period
                                    Carrying   Assets as of   as of   Equity   ended
Company   Location   Activity   Direct   Indirect   Total   Amount   30.06.09   30.06.09   30.06.09   30.06.09
 
PROXIMA ALFA INVESTMENTS (IRELAND) LIMITED
  IRELAND   FINANCIAL SERV.           100,00       100,00       125       403       51       353       (1 )
PROXIMA ALFA INVESTMENTS (UK) LLP
  UNITED KINGDOM   FINANCIAL SERV.           51,00       51,00             1.330       1.560       158       (388 )
PROXIMA ALFA INVESTMENTS (USA) LLC
  UNITED STATES   FINANCIAL SERV.           100,00       100,00             17.231       27.708       (8.848 )     (1.629 )
PROXIMA ALFA INVESTMENTS HOLDINGS (USA) II INC.
  UNITED STATES   PORTFOLIO           100,00       100,00             4       4              
PROXIMA ALFA INVESTMENTS HOLDINGS (USA) INC.
  UNITED STATES   PORTFOLIO           100,00       100,00       2.472       2.507             2.507        
PROXIMA ALFA INVESTMENTS, SGIIC, S.A.
  SPAIN   FINANCIAL SERV.     100,00             100,00       16.785       10.367       3.129       11.144       (3.906 )
PROXIMA ALFA MANAGING MEMBER LLC
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       2       1       1              
PROXIMA ALFA SERVICES LTD.
  UNITED KINGDOM   FINANCIAL SERV.           100,00       100,00       2.292       1.922       269       1.652       1  
PROYECTO MUNDO AGUILON, S.L
  SPAIN   REAL ESTATE           100,00       100,00       9.317       24.538       1.967       23.002       (431 )
PROYECTOS EMPRESARIALES CAPITAL RIESGO I, S.C.R, SIMP. S.A.
  SPAIN   VENTURE CAPITAL     100,00             100,00       138.522       136.803       877       132.114       3.812  
PROYECTOS INDUSTRIALES CONJUNTOS, S.A. D
  SPAIN   PORTFOLIO           100,00       100,00       3.148       6.503       3.255       3.297       (49 )
RESIDENCIAL CUMBRES DE SANTA FE, S.A. DE
  MEXICO   REAL ESTATE           100,00       100,00       9.053       10.814       2.164       8.782       (132 )
RIVER OAKS BANK BUILDING, INC.
  UNITED STATES   REAL ESTATE INSTR.           100,00       100,00       15.025       15.749       724       14.730       295  
RIVER OAKS TRUST CORPORATION
  UNITED STATES   NO ACTIVITY           100,00       100,00       1       1             1        
RIVERWAY HOLDINGS CAPITAL TRUST I
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       221       7.340       7.120       207       13  
S.GESTORA FONDO PUBL.REGUL.MERCADO HIPOT
  SPAIN   FINANCIAL SERV.     77,20             77,20       138       213       67       146        
SCALDIS FINANCE, S.A.
  BELGIUM   PORTFOLIO           100,00       100,00       3.416       3.656       137       3.519        
SEGUROS BANCOMER, S.A. DE C.V.
  MEXICO   INSURANCES     24,99       75,01       100,00       281.821       1.842.151       1.667.576       111.021       63.554  
SEGUROS PROVINCIAL, C.A.
  VENEZUELA   INSURANCES           100,00       100,00       26.256       50.224       23.960       14.320       11.944  
SERVICIOS CORPORATIVOS BANCOMER, S.A. DE
  MEXICO   SERVICES           100,00       100,00       (716 )     1.519       2.245       95       (821 )
SERVICIOS CORPORATIVOS DE SEGUROS, S.A. DE C.V.
  MEXICO   SERVICES           100,00       100,00       690       3.235       2.545       453       237  
SERVICIOS EXTERNOS DE APOYO EMPRESARIAL, S.A DE C.V.
  MEXICO   SERVICES           100,00       100,00       2.754       5.443       2.690       2.392       361  
SERVICIOS TECNOLOGICOS SINGULARES, S.A.
  SPAIN   SERVICES           100,00       100,00       103       9.977       9.919       502       (444 )
SMARTSPREAD LIMITED (UK)
  UNITED KINGDOM   SERVICES           63,52       63,52             102       18       95       (11 )
SOCIEDAD DE ESTUDIOS Y ANALISIS FINANC.,S.A.
  SPAIN   COMERCIAL     100,00             100,00       114.518       195.684       1.124       194.467       93  
SOCIETE INMOBILIERE BBV D’ILBARRIZ
  FRANCE   REAL ESTATE           100,00       100,00       1.589       1.744       33       1.739       (28 )
SOUTHEAST TEXAS TITLE COMPANY
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       504       674       170       700       (196 )
SPORT CLUB 18, S.A.
  SPAIN   PORTFOLIO     100,00             100,00       21.923       38.299       17.043       21.788       (532 )
ST. JOHNS INVESTMENTS MANAGMENT CO.
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       3.547       3.661       114       3.600       (53 )
STATE NATIONAL CAPITAL TRUST I
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       333       10.944       10.612       325       7  
STATE NATIONAL STATUTORY TRUST II
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       220       7.304       7.084       215       5  

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            %of Voting Rights           Thousands of Euros (*)
            controlled by the Bank                   Investee Data
                                                                    Profit
                                                                    (Loss) for
                                    Net   Assets as   Liabilities           the Period
                                    Carrying   of   as of   Equity   ended
Company   Location   Activity   Direct   Indirect   Total   Amount   30.06.09   30.06.09   30.06.09   30.06.09
 
STAVIS MARGOLIS ADVISORY SERVICES, INC.
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       20.212       20.634       422       20.041       171  
TEXAS LOAN SERVICES, LP.
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       834.486       835.001       516       829.456       5.029  
TEXAS REGIONAL STATUTORY TRUST I
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       1.096       36.518       35.422       1.072       24  
TEXASBANC CAPITAL TRUST I
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       552       18.364       17.813       539       12  
TRAINER PRO GESTION DE ACTIVIDADES, S.A.
  SPAIN   REAL ESTATE INSTR.           100,00       100,00       2.886       3.256             3.238       18  
TRANSITORY CO
  PANAMA   REAL ESTATE INSTR.           100,00       100,00       147       1.741       1.593       148        
TUCSON LOAN HOLDINGS, INC.
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       454.658       454.736       79       455.463       (806 )
TWOENC, INC
  UNITED STATES   FINANCIAL SERV.           100,00       100,00       (1.101 )     1.056       2.158       (1.101 )     (1 )
UNICOM TELECOMUNICACIONES S.DE R.L. DE C.V.
  MEXICO   SERVICES           99,98       99,98             3       3              
UNIDAD DE AVALUOS MEXICO, SA DE CV
  MEXICO   FINANCIAL SERV.           100,00       100,00       1.332       1.707       689       891       127  
UNITARIA GESTION DE PATRIMONIOS INMOBILIARIOS
  SPAIN   SERVICES           100,00       100,00       2.410       2.642       25       2.601       16  
UNIVERSALIDAD — BANCO GRANAHORRAR
  COLOMBIA   FINANCIAL SERV.           100,00       100,00             3.769       3.331       (337 )     775  
UNIVERSALIDAD “E5”
  COLOMBIA   FINANCIAL SERV.           100,00       100,00             4.489       3.018       1.402       69  
UNIVERSALIDAD TIPS PESOS E-9
  COLOMBIA   FINANCIAL SERV.           100,00       100,00             84.126       83.091       (524 )     1.559  
UNO-E BANK, S.A.
  SPAIN   BANKING     67,35       32,65       100,00       174.751       1.418.278       1.296.403       134.199       (12.324 )
URBANIZADORA SANT LLORENC, S.A.
  SPAIN   NO ACTIVITY     60,60             60,60             108             108        
VALANZA CAPITAL RIESGO S.G.E.C.R. S.A. UNIPERSONAL
  SPAIN   VENTURE CAPITAL     100,00             100,00       1.200       18.371       4.196       7.171       7.004  
VIRTUAL DOC, S.L.
  SPAIN   SERVICES           70,00       70,00       467       750       369       504       (123 )
VISACOM, S.A. DE C.V.
  MEXICO   SERVICES           100,00       100,00       952       953       2       886       65  

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APPENDIX III. BBVA Group’s securitization funds
                             
                    (thousands of euros)
                TOTAL SECURITIZED    
        ORIGINATION DATE   EXPOSURES AT THE   SECURITIZED EXPOSURES
SECURITIZATION   COMPANY   (month/year)   ORIGINATION DATE   TOTAL
 
BBVA AUTOS I FTA
  BBVA, S.A.     10/2004       1.000.000       263.137  
BBVA-3 FTPYME FTA
  BBVA, S.A.     11/2004       1.000.000       196.971  
BBVA HIPOTECARIO 3 FTA
  BBVA, S.A.     06/2005       1.450.000       541.290  
BBVA-4 PYME FTA
  BBVA, S.A.     09/2005       1.250.000       265.329  
BBVA AUTOS 2 FTA
  BBVA, S.A.     12/2005       1.000.000       560.188  
GAT FTGENCAT 2005 FTA
  BBVA, S.A.     12/2005       700.000       77.160  
BBVA CONSUMO 1 FTA
  BBVA, S.A.     05/2006       1.500.000       875.788  
BBVA-5 FTPYME FTA
  BBVA, S.A.     10/2006       1.900.000       787.073  
BBVA CONSUMO 2 FTA
  BBVA, S.A.     11/2006       1.500.000       1.112.321  
BBVA RMBS 1 FTA
  BBVA, S.A.     02/2007       2.500.000       1.987.565  
BBVA RMBS 2 FTA
  BBVA, S.A.     03/2007       5.000.000       3.962.810  
BBVA LEASING 1 FTA
  BBVA, S.A.     06/2007       2.500.000       1.855.457  
BBVA-6 FTPYME FTA
  BBVA, S.A.     06/2007       1.500.000       811.254  
BBVA RMBS 3 FTA
  BBVA, S.A.     07/2007       3.000.000       2.584.356  
BBVA EMPRESAS 1 FTA
  BBVA, S.A.     11/2007       1.450.000       817.503  
BBVA RMBS 4 FTA
  BBVA, S.A.     11/2007       4.900.000       4.084.922  
BBVA-7 FTGENCAT FTA
  BBVA, S.A.     02/2008       250.000       165.165  
BBVA CONSUMO 3 FTA
  BBVA, S.A.     04/2008       975.000       260.669  
BBVA RMBS 5 FTA
  BBVA, S.A.     05/2008       5.000.000       4.564.105  
BBVA-8 FTPYME FTA
  BBVA, S.A.     07/2008       1.100.000       873.011  
BBVA RMBS 6 FTA
  BBVA, S.A.     11/2008       4.995.000       4.705.067  
BBVA RMBS 7 FTA
  BBVA, S.A.     11/2008       8.500.000       7.824.930  
BBVA-FINANZIA AUTOS 1 FTA
 
FINANZIA BANCO DE CREDITO, S.A.
    04/2007       800.000       569.007  
BBVA CONSUMO 3 FTA
 
FINANZIA BANCO DE CREDITO, S.A.
    04/2008       975.000       565.363  
BCL MUNICIPIOS I FTA
  BBVA, S.A.     06/2000       1.205.000       237.240  
HIPOTECARIO 2 FTH
  BBVA, S.A.     12/1998       1.051.771       104.765  
BBVA-2 FTPYME ICO FTA
  BBVA, S.A.     12/2000       900.000       31.821  
GC GENCAT II FTA
  BBVA, S.A.     03/2003       950.000       19.300  
BBVA-1 F.T.A.
  BBVA, S.A.     02/2000       1.112.800       73.698  
BBVA EMPRESAS 2 FTA
  BBVA, S.A.     03/2009       2.850.000       2.631.844  
2 PS Interamericana
  BBVA CHILE     09/2004       17.178       6.358  
2 PS Interamericana
  BBVA SDAD. LEASING HABITACIONAL BHIF     09/2004       11.552       8.599  
1 PS Security
  BBVA SDAD. LEASING HABITACIONAL BHIF     03/2000       8.687        
2 PS RBS (ex ABN)
  BBVA SDAD. LEASING HABITACIONAL BHIF     09/2001       7.510       4.291  
11 PS BICE
  FORUM SERVICIOS FINANCIEROS (*)     03/2005       30.384        

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                    (thousands of euros)
                TOTAL SECURITIZED        
        ORIGINATION DATE   EXPOSURES AT THE   SECURITIZED EXPOSURES
SECURITIZATION   COMPANY   (month/year)   ORIGINATION DATE   TOTAL
 
23 PS BICE
  FORUM SERVICIOS FINANCIEROS (*)     02/2006       11.587       1.482  
4 PS Itau
  FORUM SERVICIOS FINANCIEROS (*)     09/2006       11.607       1.876  
FannieMae- Lender No. 227300000
  COMPASS BANK     12/2001       174.060       26.437  
Home Equity - 2003-HE1
  COMPASS BANK     05/2003       533.769       56.358  
Fannie Mae — Lender No. 227300027
  COMPASS BANK     12/2003       264.097       106.260  
Mortgages — LLC 2004-R1
  COMPASS BANK     03/2004       418.117       114.025  
PEP80040F110
  BBVA BANCO CONTINENTAL     12/2007       17.688       12.535  
BACOMCB 07
  BANCOMER     12/2007       142.482       121.271  
BACOMCB 08
  BANCOMER     03/2008       62.238       55.644  
BACOMCB 08U
  BANCOMER     08/2008       306.982       339.721  
BACOMCB 08-2
  BANCOMER     12/2008       313.874       307.321  
BBVA UNIVERSALIDAD E9
  BBVA COLOMBIA     12/2008       46.181       41.378  
BBVA UNIVERSALIDAD E10
  BBVA COLOMBIA     03/2009       24.355       23.235  
BBVA UNIVERSALIDAD E11
  BBVA COLOMBIA     05/2009       16.078       15.718  
 
(*)   Proportionate consolidation method

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APPENDIX IV
ADDITIONAL INFORMATION ON JOINTLY CONTROLLED COMPANIES PROPORTIONATELY
CONSOLIDATED IN THE BANCO BILBAO VIZCAYA ARGENTARIA GROUP
                                                                         
            % of voting rights    
            controlled by the   Thousands of Euros (*)
            Bank           Investee Data
                                                                    Profit
                                                                    (Loss)
                                                                    for the
                                    Net                           period
                                    carrying   Assets   Liabilities   Equity   ended
Company   Location   Activity   Direct   Indirect   Total   amount   30.06.09   30.06.09   30.06.09   30.06.09
     
ECASA, S.A.
  CHILE   FINANCIAL SERV.           51,00       51,00       2.036       2.657       622       11       2.024  
FORUM DISTRIBUIDORA, S.A.
  CHILE   FINANCIAL SERV.           51,04       51,04       5.430       25.062       19.021       5.716       325  
FORUM SERVICIOS FINANCIEROS, S.A.
  CHILE   FINANCIAL SERV.           51,00       51,00       45.510       556.923       495.927       47.728       13.268  
INVERSIONES PLATCO, C.A.
  VENEZUELA   FINANCIAL SERV.           50,00       50,00       13.765       29.813       2.281       26.910       622  
PSA FINANCE ARGENTINA COMPAÑIA FINANCIERA, S.A.
  ARGENTINA   FINANCIAL SERV.           50,00       50,00       8.038       78.365       62.287       12.253       3.825  

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APPENDIX V
ADDITIONAL INFORMATION ON INVESTMENTS AND JOINTLY CONTROLLED
COMPANIES ACCOUNTED FOR USING THE EQUITY METHOD IN THE BANCO BILBAO VIZCAYA ARGENTARIA GROUP
                                                                         
            % of voting rights   Thousands of euros
            controllend by the Bank           Investee Data
                                    Net                            
                                    Carrying                           Profit
Company   Location   Activity   Direct   Indirect   Total   amount   Assets   Liabilities   Equity   (loss)
 
ADQUIRA ESPAÑA, S.A.
  SPAIN   SERVICES           40.00       40.00       3,928       20,609       11,181       8,401       1,027 (2)
ALMAGRARIO, S.A.
  COLOMBIA   SERVICES           35.38       35.38       4,013       26,494       5,200       18,126       3,168 (3)
AUREA, S.A. (CUBA)
  CUBA   REAL STATE           49.00       49.00       4,014       8,859       484       8,336       39 (2)
BBVA ELCANO EMPRESARIAL II, S.C.R., S.A.
  SPAIN   VENTURE CAPITAL     45.00             45.00       53,604       84,607       423       88,622       (4,438) (2)
BBVA ELCANO EMPRESARIAL, S.C.R., S.A.
  SPAIN   VENTURE CAPITAL     45.00             45.00       53,595       84,603       423       88,617       (4,437) (3)
CAMARATE GOLF, S.A.(*)
  SPAIN   REAL STATE           26.00       26.00       5,174       79,603       61,767       17,881       (46) (2)
CITIC INTERNATIONAL FINANCIAL HOLDINGS LIMITED CIFH
  HONG-KONG   FINANCIAL SERV.     29.68             29.68       573,565       13,911,177       10,366,544       2,436,101       1,108,532 (1) (2)
COMPAÑIA ESPAÑOLA DE FINANCIACION DEL DESARROLLO S.A.
  SPAIN   FINANCIAL SERV.     21.82             21.82       11,724       63,052       12,600       48,248       2,204 (3)
COMPAÑIA MEXICANA DE PROCESAMIENTO, S.A. DE C.V.
  MEXICO   SERVICES           50.00       50.00       3,555       8,338       1,875       5,416       1,047 (2)
CORPORACION IBV PARTICIPACIONES EMPRESARIALES, S.A.(*)
  SPAIN   PORTFOLIO           50.00       50.00       274,823       1,196,635       298,600       317,025       581,010 (1) (2)
DISTRANSA RENTRUCKS, S.A.(*)
  SPAIN   SERVICES           50.00       50.00       13,640       16,305       15,069       806       430 (3)
ECONTA GESTION INTEGRAL, S.L.(*)
  SPAIN   SERVICES           70.08       70.08       3,517       2,492       443       3,981       (1,932) (2)
FERROMOVIL 3000, S.L.(*)
  SPAIN   SERVICES           20.00       20.00       5,089       632,971       603,297       29,977       (303) (3)
FERROMOVIL 9000, S.L.(*)
  SPAIN   SERVICES           20.00       20.00       3,453       366,389       347,594       18,773       22 (3)
FIDEIC. F 404015 0 BBVA BANCOMER LOMAS III
  MEXICO   REAL STATE           25.00       25.00       2,689                         (4)
FIDEICOMISO F/70191-2 PUEBLA (*)
  MEXICO   REAL STATE           25.00       25.00       7,784       44,360       11,668       28,189       4,503 (2)
FIDEICOMISO F/403853-5 BBVA BANCOMER SERVICIOS ZIBATA (*)
  MEXICO   REAL STATE           30.00       30.00       20,530                         (4)
FIDEICOMISO F/401555-8 CUATRO BOSQUES (*)
  MEXICO   REAL STATE           50.00       50.00       4,188       8,072       14       8,055       3 (2)
FIDEICOMISO HARES BBVA BANCOMER F/47997-2 (*)
  MEXICO   REAL STATE           50.00       50.00       14,104       29,076       388       27,669       1,019 (2)
GRUPO PROFESIONAL PLANEACION Y PROYECTOS, S.A. DE C.V.(*)
  MEXICO   SERVICES           44.39       44.39       7,409       25,201       16,671       7,468       1,062 (1) (2)
HESTENAR, S.L.(*)
  SPAIN   REAL STATE           43.34       43.34       6,226       27,644       23,351       5,866       (1,573) (3)

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            % of voting rights   Thousands of euros
            controllend by the Bank           Investee Data
                                    Net                            
                                    Carrying                           Profit
Company   Location   Activity   Direct   Indirect   Total   amount   Assets   Liabilities   Equity   (loss)
 
I+D MEXICO, S.A. DE C.V.(*)
  MEXICO   SERVICES           50.00       50.00       16,037       68,938       40,625       23,434       4,879 (2)
IMOBILIARIA DUQUE D’AVILA, S.A. (*)
  PORTUGAL   REAL STATE           50.00       50.00       5,122       26,138       16,504       9,848       (214) (5)
INMUEBLES MADARIAGA PROMOCIONES, S.L.(*)
  SPAIN   REAL STATE     50.00             50.00       3,707       18,717       4,055       6,313       8,349 (3)
JARDINES DEL RUBIN, S.A.(*)
  SPAIN   REAL STATE           50.00       50.00       2,563       15,579       2,320       9,623       3,636 (2)
LA ESMERALDA DESARROLLOS, S.L.(*)
  SPAIN   REAL STATE           25.00       25.00       4,998       74,563       57,113       20,100       (2,650) (3)
LAS PEDRAZAS GOLF, S.L.(*)
  SPAIN   REAL STATE           50.00       50.00       14,399       74,949       45,204       31,837       (2,092) (3)
MONTEALMENARA GOLF, S.L.(*)
  SPAIN   REAL STATE           50.00       50.00       2,620       86,561       51,518       15,606       19,437 (5)
OCCIDENTAL HOTELES MANAGEMENT, S.L.
  SPAIN   SERVICES           38.53       38.53       125,319       917,019       543,599       387,477       (14,057) (1) (3)
PARQUE REFORMA SANTA FE, S.A. DE C.V.
  MEXICO   REAL STATE           30.00       30.00       4,387       66,363       55,103       9,923       1,337 (2)
PROMOTORA METROVACESA, S.L.
  SPAIN   REAL STATE           50.00       50.00       8,819       76,015       61,525       16,486       (1,995) (3)
ROMBO COMPAÑIA FINANCIERA, S.A.
  ARGENTINA   FINANCIAL SERV.           40.00       40.00       8,130       121,179       101,955       15,472       3,752 (2)
SERVICIOS DE ADMINISTRACION PREVISIONAL, S.A.
  CHILE   PENSIONS           37.87       37.87       2,244       7,977       2,824       7,871       (2,718) (2)
SERVICIOS ELECTRONICOS GLOBALES, S.A. DE C.V.
  MEXICO   SERVICES           46.14       46.14       4,242       12,571       3,902       7,964       705 (2)
SERVICIOS ON LINE PARA USUARIOS MULTIPLES, S.A. (SOLIUM)(*)
  SPAIN   SERVICES           66.67       66.67       3,554       7,842       4,941       2,699       203 (2)
SERVIRED SOCIEDAD ESPAÑOLA DE MEDIOS DE PAGO, S.A.
  SPAIN   FINANCIAL SERV.     20.50       0.93       21.43       22,466       54,138       4,512       49,394       232 (3)
TELEFONICA FACTORING, S.A.
  SPAIN   FINANCIAL SERV.     30.00             30.00       2,651       76,165       65,833       6,848       3,484 (2)
TUBOS REUNIDOS, S.A.
  SPAIN   INDUSTRIAL           23.87       23.87       54,827       762,413       405,924       271,388       85,101 (1) (3)
VITAMEDICA S.A DE C.V.(*)
  MEXICO   INSURANCE           50.99       50.99       2,452       9,794       4,221       5,491       82 (3)
 
                                                                       
OTHER COMPANIES
                                    42,022                                  
 
                                                                       
 
                          TOTAL     1,407,183       19,113,409       13,249,268       4,065,331       1,798,810  
 
Data relating to the lastest financial statements approved at the date of preparation of these notes to the consolidated financial statements.
For the companies abroad the exchange rates rulig at the reference date are applied.
 
(1)   Consolidated Data
 
(2)   Financial statements as of December 31, 2008
 
(3)   Financial statements as of December 31, 2007
 
(4)   New incorporation
 
(5)   Financial statements as of December 31, 2006
 
(*)   Jointly controlled entities accounted for using the equity method

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APPENDIX VI. Changes and notification of investments in the BBVA Group for the six months ended June 30, 2009
APPENDIX VI. Changes and notification of investments in the BBVA Group in 2008
thousands of euros
BUSINESS COMBINATIONS AND OTHER ACQUISITIONS OR INCREASE OF INTEREST OWNERSHIP IN CONSOLIDATED SUBSIDIARIES AND JOINTLY CONTROLLED COMPANIES ACCOUNTED FOR USIN THE PROPORTIONATE METHOD
                                                 
            Price paid in   Fair value        
            the   of equity        
            transaction   instruments   %Voting rights    
            + expenses   issued for           Voting    
            directly   the   Acquired   rights    
            attributable   acquisition   in the   controlled    
    Type of       to the   of the   period   after the   Effective date (or
Company   transaction   Activity   acquisition   company   (net)   acquisition   notification date)
FIDEICOMISO 28991-8 TRADING EN LOS MCADOS FINANCIEROS
  ACQUISITION   FINANCIAL SERV.     1.212               100,000 %     100,000 %     28/01/2009  
UNIVERSALIDAD TIPS PESOS E-9
  FOUNDING   FINANCIAL SERV.                   100,000 %     100,000 %     29/01/2009  
EUROPEA DE TITULIZACION, S.A. S.G.F.T.
  ACQUISITION   FINANCIAL SERV.     159               1,516 %     87,504 %     28/02/2009  
ANIDA INMUEBLES ESPAÑA Y PORTUGAL, S.L.
  FOUNDING   REAL ESTATE     3               100,000 %     100,000 %     17/03/2009  
COMPASS TRUST IV
  FOUNDING   FINANCIAL SERV.     8               100,000 %     100,000 %     27/03/2009  
BBVA CONSULTING(BEIJING) LIMITED
  FOUNDING   FINANCIAL SERV.     400               100,000 %     100,000 %     28/05/2009  
MIRADOR DE LA CARRASCOSA, S.L.*
  ACQUISITION   REAL ESTATE     5.000               9,865 %     65,769 %     30/06/2009  
 
*   Notifications

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APPENDIX VI. Changes and notification of investments in the BBVA Group for the six months ended June 30, 2009
BUSINESS COMBINATIONS AND OTHER ACQUISITIONS OR INCREASE OF INTEREST OWNERSHIP IN ASSOCIATED AND JOINTLY CONTROLLED COMPANIES ACCOUNTED FOR USING THE EQUITY METHOD
                                                 
            Price paid in   Fair value        
            the   of equity        
            transaction   instruments   %Voting rights    
            + expenses   issued for           Voting    
            directly   the   Acquired   rights    
            attributable   acquisition   in the   controlled    
    Type of       to the   of the   period   after the   Effective date (or
Company   transaction   Activity   acquisition   company   (net)   acquisition   notification date)
FIDEIC.F/404015-0 BBVA BANCOMER LOMAS III
  FOUNDING   REAL ESTATE     2.689               25,000 %     25,000 %     18/06/2009  
OPERADORA ZIBATA S.DE RL.L. DE C.V.
  FOUNDING   REAL ESTATE     1               30,000 %     25,000 %     30/06/2009  
CORPORACION SUICHE 7B, C.A.
  ACQUISITION   FINANCIAL SERV.     497               19,795 %     19,795 %     30/06/2009  
CAJA VENEZOLANA DE VALORES, S.A.
  ACQUISITION   FINANCIAL SERV.     192               16,093 %     16,093 %     30/06/2009  
ECONTA GESTION INTEGRAL, S.L.*
  ACQUISITION   SERVICES     822               6,864 %     70,085 %     30/06/2009  
 
*   Notifications

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APPENDIX VI. Changes and notification of investments in the BBVA Group for the six months ended June 30, 2009
DISPOSAL OF INTEREST OWNERSHIP IN ASSOCIATES AND JOINTLY CONTROLLED COMPANIES ACCOUNTED FOR USING THE EQUITY METHOD
                                         
                                    EFFECTIVE
            PROFIT/LOSS IN   %VOTING RIGHTS   DATE (OR
    TYPE OF       THE           TOTALLY CONTROLLED   NOTIFICATION
COMPANY   TRANSACTION   ACTIVITY   TRANSACTION   %SOLD   AFTER THE DISPOSAL   DATE)
AIR MILES ESPAÑA, S.A.
  DISPOSAL   COMERCIAL     1.313       22,999 %     0,000 %     23/02/2009  
UNITARIA PINAR, S.L.
  NO ACTIVITY   REAL ESTATE     (2 )     50,000 %     0,000 %     19/02/2009  
 
*   Notifications

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     APPENDIX VI. Changes and notification of investments in the BBVA Group for the six months ended June 30, 2009
COMPLEMENT APPENDIX VI REST OF QUOTED SUBSIDIARIES AND JOINTLY CONTROLLED COMPANIES
                                 
            % Voting rights    
    Type of       Net acquired in   Totally controlled   Effective date (or
COMPANY   transaction   Activity   the year   after acquisition   notification date)
METROVACESA, S.A.
  ACQUISITION   REAL ESTATE     10,920 %     10,920 %     24/02/2009  
 
*   Notifications

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APPENDIX VII. Subsidiaries fully consolidated with more than 10% owned by non-Group shareholders
                             
        % of voting rights
        Controlled by the bank
Company   Activity   Direct   Indirect   Total
 
ALTITUDE INVESTMENTS LIMITED
  FINANCIAL SERVICES     51.00             51.00  
ALTURA MARKETS, SOCIEDAD DE VALORES, S.A.
  BROKERING     50.00             50.00  
BANCO BILBAO VIZCAYA ARGENTARIA CHILE, S.A.
  BANKING           68.18       68.18  
BANCO PROVINCIAL S.A. — BANCO UNIVERSAL
  BANKING     1.85       53.75       55.60  
BBVA & PARTNERS ALTERNATIVE INVESTMENT A.V., S.A.
  BROKERING     70.00       0.00       70.00  
BBVA INMOBILIARIA E INVERSIONES, S.A.
  REAL STATE INST.           68.11       68.11  
DESARROLLO URBANISTICO DE CHAMARTIN, S.A.
  REAL STATE           72.50       72.50  
EL OASIS DE LAS RAMBLAS, S.L.
  REAL STATE           70.00       70.00  
ESTACION DE AUTOBUSES CHAMARTIN, S.A.
  SERVICES           51.00       51.00  
GESTION DE PREVISION Y PENSIONES, S.A.
  PENSIONS     60.00             60.00  
HOLDING CONTINENTAL, S.A.
  PORTFOLIO     50.00             50.00  
IBERDROLA SERVICIOS FINANCIEROS, E.F.C., S.A.
  FINANCIAL SERVICES           84.00       84.00  
INVERSIONES BANPRO INTERNATIONAL INC. N.V.
  PORTFOLIO     48.00             48.00  
INVERSIONES P.H.R.4, C.A.
  REAL STATE           60.46       60.46  
JARDINES DE SARRIENA, S.L.
  REAL STATE           85.00       85.00  
MIRADOR DE LA CARRASCOSA, S.L.
  REAL STATE           65.77       65.77  
PERI 5.1 SOCIEDAD LIMITADA
  REAL STATE           54.99       54.99  
PROMOTORA RESIDENCIAL GRAN EUROPA, S.L.
  REAL STATE           58.50       58.50  
PRO-SALUD, C.A.
  SERVICES           58.86       58.86  
PROVINCIAL DE VALORES CASA DE BOLSA, C.A.
  FINANCIAL SERVICES           90.00       90.00  
SMARTSPREAD LIMITED
  SERVICES           63.52       63.52  
VIRTUAL DOC, S.L.
  SERVICES           70.00       70.00  

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APPENDIX VIII. Detail of the most significant issuances, repurchases or refunds of debt instruments issued by the bank or entities of the Group as of June 30, 2009 and December 31, 2008
                                         
            Millions of euros        
                            Prevailing    
                            interest rate    
ISSUER   Currency   June-09   December-08   June 30, 2009   Maturity date
 
ISSUES IN EUROS
                                       
BBVA
                                       
july-96
  EUR     27       27       9,37 %   22-Dec
november-03
  EUR     750       750       4,50 %   12-Nov
october-04
  EUR     992       992       4,37 %   20-Oct
february-07
  EUR     297       297       4,50 %   16-Feb
may-08
  EUR     125       125       6,03 %   3-Mar
july-08
  EUR     100       100       6,20 %   4-Jul
BBVA CAPITAL FUNDING, LTD. (*)
                                       
october-97
  EUR     229       229       6,00 %   24-Dec
july-99
  EUR     73       73       6,35 %   16-Oct
february-00
  EUR     442       442       6,38 %   25-Feb
october-01
  EUR     60       60       5,73 %   10-Oct
october-01
  EUR     40       40       6,08 %   10-Oct
october-01
  EUR     50       50       2,03 %   15-Oct
november-01
  EUR     55       55       2,07 %   2-Nov
december-01
  EUR     56       56       1,94 %   20-Dec
BBVA SUBORDINATED CAPITAL, S.A.U. (*)
                                       
may-05
  EUR     495       484       1,55 %   23-May
october-05
  EUR     150       150       1,75 %   13-Oct
october-05
  EUR     250       250       1,66 %   20-Oct
october-06
  EUR     955       1.000       1,70 %   24-Oct
april-07
  EUR     750       750       1,72 %   3-Apr
april-07
  EUR     100       100       3,43 %   4-Apr
may-08
  EUR     50       50       4,75 %   19-May
july-08
  EUR     20       20       6,11 %   22-Jul
BBVA BANCOMER, S.A. de C.V.
                                       
may-07
  EUR     589       610       4,80 %   17-May
ALTURA MARKETS A.V., S.A.
                                       
november-07
  EUR     3       3       3,27 %   29-Nov
EMISIONES EN MONEDA EXTRANJERA
                                       
BBVA PUERTO RICO, S.A.
                                       
september-04
  USD     35       36       4,20 %   23-Sep
september-06
  USD     26       27       5,76 %   29-Sep
september-06
  USD     21       22       1,16 %   29-Sep
BBVA GLOBAL FINANCE, LTD. (*)
                                       
december-95
  USD     142       144       7,00 %   1-Dec
december-95
  USD                       9-May
BANCO BILBAO VIZCAYA ARGENTARIA, CHILE
  CLP     330       287     Several   Several
BBVA BANCOMER, S.A. de C.V.
                                       
july-05
  USD     283       360       5,38 %   22-Jul
september-06
  MXN     135       130       6,04 %   18-Sep
may-07
  USD     354       360       6,01 %   17-May
july-08
  MXN     65       62       5,91 %   16-Jul
october-08
  MXN     163       156       6,16 %   24-Sep
december-08
  MXN     148       1       6,35 %   26-Nov
january-09
  MXN     2       142       6,35 %   26-Nov
february-09
  MXN     2             6,35 %   26-Nov
march-09
  MXN     1             6,35 %   26-Nov
april-09
  MXN     1             6,35 %   26-Nov
june-09
  MXN     141             6,70 %   7-Jun

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            Millions of euros        
                            Prevailing interest    
ISSUER   Currency   June-09   December-08   rate June 30, 2009   Maturity date
 
BBVA CAPITAL FUNDING, LTD.
                                       
october-95
  JPY     74       79       6,00 %   26-Oct
BBVA SUBORDINATED CAPITAL, S.A.U.
                                       
october-05
  JPY     148       159       2,75 %   22-Oct
october-05
  GBP     320       315       1,70 %   21-Oct
march-06
  GBP     352       315       5,00 %   31-Mar
march-07
  GBP     293       262       5,75 %   11-Mar
RIVERWAY HOLDING CAPITAL TRUST I
                                       
march-01
  USD     7       7       10,18 %   8-Jun
TEXAS REGIONAL STATUTORY TRUST I
                                       
february-04
  USD     35       36       3,46 %   17-Mar
STATE NATIONAL CAPITAL TRUST I
                                       
july-03
  USD     11       11       4,28 %   30-Sep
STATE NATIONAL STATUTORY TRUST II
                                       
march-04
  USD     7       7       3,40 %   17-Mar
TEXASBANC CAPITAL TRUST I
                                       
july-04
  USD     18       18       3,70 %   23-Jul
COMPASS BANK
                                       
august-99
  USD     124       128       8,10 %   15-Aug
april-99
  USD           72       6,45 %   1-May
march-05
  USD     198       201       5,50 %   1-Apr
march-06
  USD     183       186       5,90 %   1-Apr
september-07
  USD     246       250       6,40 %   1-Oct
BBVA COLOMBIA, S.A.
                                       
august-06
  COP     131       128       11,86 %   28-Aug
BBVA PARAGUAY, S.A.
                                       
Several
  PYG     2       2     Several   Several
Several
  USD     6       6     Several   Several
BANCO CONTINENTAL, S.A.
                                       
december-06
  USD     21       22       2,97 %   15-Feb
may-07
  PEN     9       9       5,85 %   7-May
may-07
  USD     14       14       6,00 %   14-May
june-07
  PEN     14       14       3,47 %   18-Jun
september-07
  USD     14       14       2,91 %   24-Sep
november-07
  PEN     13       12       3,56 %   19-Nov
february-08
  USD     14       14       6,47 %   28-Feb
june-08
  USD     21       22       4,97 %   15-Jun
july-08
  PEN     11       11       3,06 %   8-Jul
september-08
  PEN     12       12       3,09 %   9-Sep
november-08
  USD     14       14       4,02 %   15-Feb
december-08
  PEN     7       7       4,19 %   15-Dec
             
TOTAL
            10.826       10.785                  
 
 
(*)   Issues of BBVA Capital Funding, Ltd., BBVA Subordinate Capital, S.A.U and BBVA Global Finance, Ltd., are supported, as a subordinate, by the Bank.

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    June-09   December-08
            Amount           Amount
            issued           issued
ISSUER   Currency   (millions)   Currency   (millions)
 
BBVA International, Ltd.
                               
Diciembre 2002
  EUR     500     EUR     500  
BBVA Capital Finance, S.A.U.
                               
Diciembre 2003
  EUR     350     EUR     350  
Julio 2004
  EUR     500     EUR     500  
Diciembre 2004
  EUR     1.125     EUR     1.125  
Diciembre 2008
  EUR     1.000     EUR     1.000  
BBVA International Preferred, S.A.U.
                               
Septiembre 2005
  EUR     550     EUR     550  
Septiembre 2006
  EUR     500     EUR     500  
Abril 2007
  USD     600     USD     600  
Julio 2007
  GBP     400     GBP     400  
Banco Provincial, S.A. — Banco Universal
                               
Octubre 2007
  VEF     150     BS     150  
Noviembre 2007
  VEF     58     BS     58  
Phoenix Loan Holdings Inc.
                               
Noviembre 2007
  USD         USD      
Enero 2008
  USD     25     USD     25  
 

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APPENDIX IX. GLOSSARY OF TERMS
     
Adjusted acquisition cost
  The acquisition cost of the securities less accumulated amortizations, plus interest accrued, but not net of any other valuation adjustments.
 
   
Amortized cost
  The amortized cost of a financial asset is the amount at which it was measured at initial recognition minus principal repayments, plus or minus, as warranted, the cumulative amount taken to profit or loss using the effective interest rate method of any di
 
   
Assets leased out under operating lease
  Lease arrangements that are not finance leases are designated operating leases.
 
   
Associates
  Companies in which the Group is able to exercise significant influence, without having control. Significant influence is deemed to exist when the Group owns 20% or more of the voting rights of an investee directly or indirectly.
 
   
Available-for-sale financial assets
  Available-for-sale (AFS) financial assets are debt securities that are not classified as held-to-maturity investments or as financial assets designated at fair value through profit or loss (FVTPL) and equity instruments that are not subsidiaries, associat
 
   
Basic earnings per share
  Calculated by dividing profit or loss attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period
 
   
Business combination
  The merger of two or more entities or independent businesses into a single entity or group of entities.
 
   
Cash flow hedges
  Derivatives that hedge the exposure to variability in cash flows attributable to a particular risk associated with a recognized asset or liability or a highly probable forecast transaction and could effect profit or loss.
 
   
Commissions and fees
  Income and expenses relating to commissions and similar fees are recognized in the consolidated income statement using criteria that vary according to their nature. The most significant income and expense items in this connection are:
 
   
 
  Feed and commissions relating linked to financial assets and liabilities measured at fair value through profit or loss, which are recognized when collected.
 
   
 
  Fees and commissions arising from transactions or services that are provided over a period of time, which are recognized over the life of these transactions or services.
 
   
 
  Fees and commissions generated by a single act are accrued upon execution of that act.
 
   
Contingencies
  Current obligations arising as a result of past events, certain in terms of nature at the balance sheet date but uncertain in terms of amount and/or cancellation date, settlement of which is deemed likely to entail an outflow of resources embodying econom
 
   
Contingent commitments
  Possible obligations that arise from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.
 
   
Contingent risks
  Transactions through which the entity guarantees commitments assumed by third parties in respect of financial guarantees granted or other types of contracts.
 
   
Current tax assets
  Taxes recoverable over the next twelve months.
 
   
Current tax liabilities
  Corporate income tax payable on taxable profit for the year and other taxes payable in the next twelve months.
 
   
Debt obligations/certificates
  Obligations and other interest-bearing securities that create or evidence a debt on the part of their issuer, including debt securities issued for trading among an open group of investors, that accrue interest, implied or explicit, whose rate, fixed or be
 
   
Deferred tax assets
  Taxes recoverable in future years, including loss carryforwards or tax credits for deductions and tax rebates pending application.
 
   
Deferred tax liabilities
  Income taxes payable in subsequent years.
 
   
Defined benefit commitments
  Post-employment obligation under which the entity, directly or indirectly via the plan, retains the contractual or implicit obligation to pay remuneration directly to employees when required or to pay additional amounts if the insurer, or other entity req
 
   

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Defined contribution commitments
  Defined contribution plans are retirement benefit plans under which amounts to be paid as retirement benefits are determined by contributions to a fund together with investment earnings thereon. The employer’s obligations in respect of its employees curre
 
   
Deposits from central banks
  Deposits of all classes, including loans and money market operations, received from the Bank of Spain and other central banks.
 
   
Deposits from credit institutions
  Deposits of all classes, including loans and money market operations received, from credit entities.
 
   
Deposits from customers
  Redeemable cash balances received by the entity, with the exception of debt certificates, money market operations through counterparties and subordinated liabilities, that are not received from either central banks or credit entities. This category also i
 
   
Diluted earnings per share
  This calculation is similar to that used to measure basic earnings per share, except that the weighted average number of shares outstanding is adjusted to reflect the potential dilutive effect of any stock options, warrants and convertible debt instrument
 
   
Early retirements
  Employees that no longer render their services to the entity but which, without being legally retired, remain entitled to make economic claims on the entity until they formally retire.
 
   
Economic capital
  Eligible capital for regulatory capital adequacy calculations.
 
   
Equity
  The residual interest in an entity’s assets after deducting its liabilities. It includes owner or venturer contributions to the entity, at incorporation and subsequently, unless they meet the definition of liabilities, and accumulated net profits or losse
 
   
Equity instruments
  An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
 
   
Equity method
  The equity method is a method of accounting whereby the investment is initially recognized at cost and adjusted thereafter for the post-acquisition change in the Group’s share of net assets of the investee, adjusted for dividends received and other equity
 
   
Exchange/translation differences
  Gains and losses generated by currency trading and the differences arising on translating monetary items denominated in foreign currency to the functional currency, exchange differences on foreign currency non-monetary assets accumulated in equity and tak
 
   
Fair value
  The amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.
 
   
Fair value hedges
  Derivatives that hedge the exposure of the fair value of assets and liabilities to movements in interest rates and/or exchange rates designated as a hedged risk.
 
   
Fees
  See Commissions, fees and similar items
 
   
Financial guarantees
  A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a
 
   
Financial liabilities at amortized cost
  Financial liabilities that do not meet the definition of financial liabilities designated at fair value through profit or loss and arise from the financial entities’ ordinary activities to capture funds, regardless of their instrumentation or maturity.
 
   
Full consolidation
  In preparing consolidated financial statements, an entity combines the balance sheets of the parent and its subsidiaries line by line by adding together like items of assets, liabilities and equity. Intragroup balances and transactions, including amou
 
   
 
  Group entity income statement income and expense headings are similarly combined line by line into the consolidated income statement, having made the following consolidation eliminations: a) income and expenses in respect of intragroup transactions ar
 
   
 
  The carrying amount of the parent’s investment and the parent’s share of equity in each subsidiary are eliminated.

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Gains or losses on financial assets and liabilities, net
  This heading reflects fair value changes in financial instruments - except for changes attributable to accrued interest upon application of the interest rate method and asset impairment losses (net) recognized in the income statement — as well as gains or
 
   
Goodwill
  Goodwill acquired in a business combination represents a payment made by the acquirer in anticipation of future economic benefits from assets that are not able to be individually identified and separately recognized.
 
   
Hedges of net investments in foreign operations
  Foreign currency hedge of a net investment in a foreign operation .
 
   
Held-to-maturity investments
  Held-to-maturity investments are financial assets with fixed or determinable payments and fixed maturity that an entity has the positive intention and ability to hold to maturity.
 
   
Held for trading (assets and liabilities)
  Financial assets and liabilities acquired or incurred principally for the purpose of selling or repurchasing them in the near term with a view to profiting from variations in their prices or by exploiting existing differences between their bid and ask pri
 
   
 
  This category also includes financial derivatives not qualifying for hedge accounting, and in the case of borrowed securities, financial liabilities originated by the firm sale of financial assets acquired under repurchase agreements or received on loan (
 
   
Impaired/doubtful/non-performing portfolio
  Financial assets whose carrying amount is higher than their recoverable value, prompting the entity to recognize the corresponding impairment loss
 
   
Impaired financial assets
  A financial asset is deemed impaired, and accordingly restated to fair value, when there is objective evidence of impairment as a result of one or more events that give rise to:
 
   
 
  1. A measurable decrease in the estimated future cash flows since the initial recognition of those assets in the case of debt instruments (loans and receivables and debt securities).
 
   
 
  2. A significant or prolonged drop in fair value below cost in the case of equity instruments.
 
   
Income from equity instruments
  Dividends and income on equity instruments collected or announced during the year corresponding to profits generated by investees after the ownership interest is acquired. Income is recognized gross, i.e., without deducting any withholdings made, if any.
 
   
Insurance contracts linked to pensions
  The fair value of insurance contracts written to cover pension commitments.
 
   
Inventories
  Assets, other than financial instruments, under production, construction or development, held for sale during the normal course of business, or to be consumed in the production process or during the rendering of services. Inventories include land and othe
 
   
Investment properties
  Investment property is property (land or a building—or part of a building—or both) held (by the owner or by the lessee under a finance lease) to earn rentals or for capital appreciation or both, rather than for own use or sale in the ordinary course of bu
 
   
Jointly controlled entities
  Companies over which the entity exercises control but are not subsidiaries are designated “jointly controlled entities”. Joint control is the contractually agreed sharing of control over an economic activity or undertaking by two or more entities, or cont
 
   
Leases
  A lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time, a stream of cash flows that is essentially equivalent to the combination of principal an

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Liabilities associated with non-current assets held for sale
  The balance of liabilities directly associated with assets classified as non-current assets held for sale, including those recognized under liabilities in the entity’s balance sheet at the balance sheet date corresponding to discontinued operations.
 
   
Liabilities under insurance contracts
  The technical reserves of direct insurance and inward reinsurance recorded by the consolidated entities to cover claims arising from insurance contracts in force at period-end.
 
   
Loans and advances to customers
  Loans and receivables, irrespective of their type, granted to third parties that are not credit entities and that are not classified as money market operations through counterparties.
 
   
Loans and receivables
  Financing extended to third parties, classified according to their nature, irrespective of the borrower type and the instrumentation of the financing extended, including finance lease arrangements where the consolidated subsidiaries act as lessors.
 
   
Minority interests
  Minority interest is that portion of the profit or loss and net assets of a subsidiary attributable to equity interests that are not owned, directly or indirectly through subsidiaries, by the parent, including minority interests in the profit or loss of c
 
   
Non-current assets held for sale
  A non-current asset or disposal group, whose carrying amount is expected to be realized through a sale transaction, rather than through continuing use, and which meets the following requirements:
 
   
Other equity instruments
  This heading reflects the increase in equity resulting from various forms of owner contributions, retained earnings, restatements of the financial statements and valuation adjustments.
 
   
Other financial assets/liabilities at fair value through profit or loss
  Assets and liabilities that are deemed hybrid financial assets and liabilities and for which the fair value of the embedded derivatives cannot be reliably determined.
 
   
 
  These are financial assets managed jointly with “Liabilities under insurance contracts” valued at fair value, in combination with derivatives written with a view to significantly mitigating exposure to changes in these contracts’ fair value, or
 
   
 
  These headings include customer loans and deposits effected via so-called unit-linked life insurance contracts, in which the policyholder assumes the investment risk.
 
   
Own/treasury shares
  The amount of own equity instruments held by the entity.
 
   
Personnel expenses
  All compensation accrued during the year in respect of personnel on the payroll, under permanent or temporary contracts, irrespective of their jobs or functions, irrespective of the concept, including the current costs of servicing pension plans, own shar
 
   
Post-employment benefits
  Retirement benefit plans are arrangements whereby an enterprise provides benefits for its employees on or after termination of service.
 
   
Property, plant and equipment/tangible assets
  Buildings, land, fixtures, vehicles, computer equipment and other facilities owned by the entity or acquired under finance leases.
 
   
Proportionate consolidation method
  The venturer combines and subsequently eliminates its interests in jointly controlled entities’ balances and transactions in proportion to its ownership stake in these entities.
 
   
 
  The venturer combines its interest in the assets and liabilities assigned to the jointly controlled operations and the assets that are jointly controlled together with other joint venturers line by line in the consolidated balance sheet. Similarly, it com
 
   
Provisions
  Provisions include amounts recognized to cover the Group’s current obligations arising as a result of past events, certain in terms of nature but uncertain in terms of amount and/or cancellation date.
 
   
Provision expenses
  Provisions recognized during the year, net of recoveries on amounts provisioned in prior years, with the exception of provisions for pensions and contributions to pension funds which constitute current or interest expense.

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Provisions for contingent exposures and commitments
  Provisions recorded to cover exposures arising as a result of transactions through which the entity guarantees commitments assumed by third parties in respect of financial guarantees granted or other types of contracts, and provisions for contingent commi
 
   
Provisions for pensions and similar obligation
  Constitutes all provisions recognized to cover retirement benefits, including commitments assumed vis-à-vis beneficiaries of early retirement and analogous schemes.
 
   
Reserves
  Accumulated net profits or losses recognized in the income statement in prior years and retained in equity upon distribution. Reserves also include the cumulative effect of adjustments recognized directly in equity as a result of the retroactive restateme
 
   
Share premium
  The amount paid in by owners for issued equity at a premium to the shares’ nominal value.
 
   
Short positions
  Financial liabilities arising as a result of the final sale of financial assets acquired under repurchase agreements or received on loan.
 
   
Subordinated liabilities
  Financing received, regardless of its instrumentation, which ranks after the common creditors in the event of a liquidation.
 
   
Subsidiaries
  Companies which the Group has the power to control. Control is presumed to exist when the parent owns, directly or indirectly through subsidiaries, more than one half of an entity’s voting power, unless, exceptionally, it can be clearly demonstrated that
 
   
 
  an agreement that gives the parent the right to control the votes of other shareholders;
 
   
 
  power to govern the financial and operating policies of the entity under a statute or an agreement; power to appoint or remove the majority of the members of the board of directors or equivalent governing body and control of the entity is by that board
 
   
 
  power to cast the majority of votes at meetings of the board of directors or equivalent governing body and control of the entity is by that board or body.
 
   
Tax liabilities
  All tax related liabilities except for provisions for taxes.
 
   
Trading derivatives
  The fair value in favor of the entity of derivatives not designated as accounting hedges.

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EXHIBIT I: U.S. GAAP RECONCILIATION
DIFFERENCES BETWEEN EU-IFRS REQUIRED TO BE APPLIED UNDER THE BANK OF SPAIN’S CIRCULAR 4/2004 AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND OTHER REQUIRED DISCLOSURES.
As described in Note 1, the accompanying Unaudited Interim Consolidated Financial Statements of the BBVA Group are presented in the formats stipulated by the Bank of Spain’s Circular and were prepared by applying the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004. Such formats and accounting principles vary in certain respects from those generally accepted in the United States (“U.S. GAAP”).
Following is a summary of the main differences between EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 and U.S. GAAP:
    Net income attributable to parent company and Shareholders’ Equity reconciliation between EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 and U.S. GAAP A
 
    Main disclosures required by U.S. accounting regulations for banks and additional disclosures required under U.S. GAAP B
The preparation of these Unaudited Interim Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts and allocations of assets and liabilities and disclosures of contingent assets and liabilities and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimated but any difference should not be material.
IFRS 1 First-time adoption provides a number of exemptions and exceptions from full retrospective application. Net income attributable to parent company, shareholders’ equity and the reconciliation to U.S. GAAP shown below would have been different if the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 had been applied fully retrospectively.
A) NET INCOME ATTRIBUTABLE TO PARENT COMPANY AND SHAREHOLDERS’ EQUITY RECONCILIATION BETWEEN EU-IFRS REQUIRED TO BE APPLIED UNDER THE BANK OF SPAIN’S CIRCULAR 4/2004 AND U.S. GAAP.
Accounting practices used by the Bank in preparing the Interim Consolidated Financial Statements conform to EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004, but do not conform to U.S. GAAP. A summarized reconciliation of shareholders’ equity as of June 30, 2009, December 31, 2008 and June 30, 2008 and net income attributable to parent company for the six months ended June 30, 2009 and 2008 to U.S. GAAP is set forth below.
As required SFAS 160, in the reconciliation to US GAAP presented below “Net income attributed to parent company” and “Shareholders’ equity” is equivalent to “Net income” and “Stockholders’ equity”, respectively, presented in the reconciliation to US GAAP included in the 2008 form 20-F.

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The following tables set forth the adjustments to consolidated net income attributed to parent company and to consolidated shareholders’ equity which would be required if U.S. GAAP had been applied to the accompanying Interim Consolidated Financial Statements:
                         
            Increase (Decrease)
            Six months ended June 30,
    Item #   2009   2008
            (Unaudited)
            (Millions of Euros, except per share data)
 
                       
Net income under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004
            3,042       3,277  
Profit attributable to minority interest under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004
            (243 )     (169 )
Net Income attributed to parent company under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004
            2,799       3,108  
Adjustments to conform to U.S. GAAP:
                       
Business combination with Argentaria
    1       (11 )     (18 )
Valuation of assets
    2       (79 )     3  
Valuation of financial instruments
    3              
Accounting of goodwill
    4       (1 )     18  
Translation of financial statements in high-inflation countries
    5             128  
Impact of SFAS 133
    6       (28 )     14  
Loans adjustments
    7             (706 )
Tax effect of U.S. GAAP adjustments and deferred taxation under SFAS 109
    8       12       223  
 
                       
 
                       
Net income attributable to parent company in accordance with U.S. GAAP
            2,692       2,770  
Other comprehensive income, (loss) net of tax:
                       
Foreign currency translation adjustments
            108       (954 )
Unrealized gains on securities
            160       (2,183 )
Derivative instruments and hedging activities
            17       45  
 
                       
Comprehensive income (losses) attributable to parent company in accordance with U.S. GAAP
    9       2,977       (322 )
Net income attributable to parent company per share (Euros)
            0.794       0.739  

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            Increase (Decrease)
            As of June 30,   As of December 31,   As of June 30,
    Item #   2009   2008   2008
            (Millions of Euros)
 
                               
Total stockholders’ equity under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004(*)
            29,901       26,705       25,970  
Minority interest under IFRS (**)
            (1,219 )     (1,049 )     (876 )
Total stockholders’ equity without minority interest under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004
            28,682       25,656       25,094  
Adjustments to conform to U.S. GAAP:
                               
Business combination with Argentaria
    1       5,457       5,469       5,487  
Valuation of assets
    2       (152 )     (74 )     (38 )
Valuation of financial instruments
    3       25       36       45  
Accounting of goodwill
    4       2,653       2,573       2,838  
Translation of financial statements in high-inflation countries
    5       (199 )     (192 )     (90 )
Impact of SFAS 133
    6       5       35       160  
Loans adjustments
    7             36       470  
Tax effect of U.S. GAAP adjustments and deferred taxation under SFAS 109
    8       (765 )     (795 )     (973 )
                                 
Total shareholders’ equity in accordance with U.S. GAAP(***)
            35,706       32,744       32,994  
 
(*)   “Stockholders’ equity” under EU-IFRS is equivalent to “Total equity” under US GAAP as required by SFAS 160.
 
(**)   “Minority interest” under EU-IFRS is equivalent to “non controlling interest in subsidiaries” under US GAAP as required by SFAS 160.
 
(***)   Under US GAAP “shareholders’ equity” is equivalent to “Total equity” net of “non controlling interest in subsidiaries” as required by SFAS 160.
The differences included in the tables above are explained in the following items:
1. Business Combination with Argentaria-
Banco Bilbao Vizcaya, S.A. and Argentaria, Caja Postal y Banco Hipotecario, S.A. (Argentaria) merged, being January 28, 2000 the date from which such merger was legally effective. According to Spanish GAAP at that date, this business combination was accounted for using the method of pooling of interest and therefore no goodwill was accounted. IFRS 1 First-time adoption of International Reporting Standards grants an exemption to apply IFRS 3 Business Combinations prospectively and thus not to restate business combinations that occurred before the date of transition to IFRS, which is January 1, 2004. Therefore, this merger has been accounted for using the method of pooling of interest and no goodwill was recorded. Since the transaction did not comply with the requirements of APB 16 for pooling of interest method, under U.S. GAAP this business combination was accounted for using the purchase method. The excess of the fair value of the new shares issued in exchange for the Argentaria shares over the net worth of Argentaria under U.S. GAAP as of the date of the merger, was approximately 6,316 million and was calculated considering the necessary adjustments to the net worth of Argentaria as of January 28, 2000 under Spanish GAAP, as described below:
         
    (Millions of euros)
Approximate Argentaria net worth as of January 28, 2000 under Spanish GAAP
    3,454  
 
       
(i) Reversal of the net effect of the restatement of fixed assets and equity securities
    (129 )
(ii) Reduction for employees and third party loans issued to purchase shares of capital stock
    (123 )
(iii) Goodwill amortization adjustments
    101  
(iv) Up-front premium reversal
    108  
(v) Valuation of investment securities
    1,926  
(vi) Effect of adjustments to conform to U.S. GAAP for investments in affiliated Companies
    (87 )
(vii) Tax effect of above mentioned adjustments
    (608 )
(viii) Other adjustments
    35  
 
       
Subtotal
    1,223  
 
       
Approximate Argentaria net worth as of January 28, 2000 under U.S. GAAP
    4,677  

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     i. Revaluation of property and equity securities
     Certain of the Spanish and foreign consolidated companies had stepped up (increased) the cost and accumulated depreciation of property and equipment and, where appropriate, the carrying values of their equity investment securities pursuant to the relevant local legislation. Also, the buildings and equity securities owned by certain of the companies in the Group, whose shareholders’ meetings adopted merger resolutions in 1991, were stepped up. Under U.S. GAAP these step ups are not permitted to be reflected in the financial statements.
     ii. — Employee and other third party loans
     Certain Group banks granted loans to shareholders, employees and customers for the acquisition of Argentaria, Caja Postal y Banco Hipotecario, S.A. shares. Under Spanish GAAP, these loans were recorded in the Consolidated Financial Statements under the caption “Credit, Loans and Discounts”. Under U.S. GAAP, these loans should be recorded as a reduction of total shareholders’ equity because the only recourse for collection is the shares themselves.
     iii. — Goodwill
     Under Spanish GAAP, the general policy of the Group was to amortize goodwill over a maximum period of 10 years. However, a different period was used to amortize goodwill in some of the subsidiaries acquired. Until 2001, for purposes of calculating the effect of applying U.S. GAAP, goodwill arising on acquisitions was amortized in 10 years. Since July 2001, as required by SFAS 142, goodwill is no longer amortized.
     Additionally, in 1998 and as a result of the merger, goodwill from Banco Exterior de España, S.A. was fully written off for Spanish GAAP purposes. Until June 2001, under U.S. GAAP this goodwill was amortized over the estimated economic life as there was no economic or fair value basis for the impairment made under Spanish GAAP. Since July 2001, as required by SFAS 142, goodwill is no longer amortized.
     iv. — Up-front premium reversal
     In 1998 the Bank arranged hedging transactions for which it paid a premium, which was recorded under the “Extraordinary Losses” caption in the income statement for 1998, to mitigate the adverse effect of the negative spread that arose between the average return on the mortgage loans financed by certain mortgage bonds and the fixed interest rates of such mortgage bonds. Under U.S. GAAP, the premium was recognized at inception as an asset, amortized over the life of the hedging transaction under SFAS 80 and then upon adoption of SFAS 133 the derivative has been recorded at fair value through income, as it does not qualify for hedge accounting under U.S. GAAP.
     v. — Valuation of investment securities
     Under SFAS 115, available-for-sale securities must be recorded at market value in total shareholders’ equity.
     vi. — Investments in affiliated Companies
     Under Spanish GAAP, investments in non-consolidated listed affiliated companies owned over 3% and in non-consolidated unlisted affiliated companies owned over 20% were recorded by the equity method. Under U.S. GAAP investments in affiliated companies over 20% but less than 50% are accounted for by the equity method and those exceeding 50% by the global integration method. Listed investments of less than 20% are accounted for at market value.
     The excess of the fair value of the new shares issued in exchange for the Argentaria shares over the net worth of Argentaria, was allocated to the following specific items:
         
2000   Millions of euros
Net Lending
    611  
Investment Securities-Held to Maturity
    306  
Premises and Equipment
    129  
Other assets and liabilities
    (113 )
Long Term Debt
    (173 )
Tax Effect
    (220 )
Goodwill
    5,776  
 
       
 
    6,316  
 
       
     For U.S. GAAP purposes, BBVA amortizes the excess of the fair value assigned to the specific items over their remaining economic life. The amortization of the excess allocated to specific remaining assets and

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liabilities was €11 million (net of tax) and €18 million (net of tax) for the six months ended June 30, 2009 and 2008, respectively.
     Until December 31, 2001 BBVA amortized the goodwill on a straight line basis over a period of 25 years. Since January, 2002 BBVA stopped the amortization of the remaining goodwill pursuant to SFAS 142 and it has been assigned to different Reporting Units and tested for impairment as described in Note 2.2.11 of the Interim Consolidated Financial Statements as of June 30, 2009. As of June 30, 2009 goodwill was €5,333 million.
     The adjustment to total shareholders’ equity was €5,457 million, €5,469 million and €5,487 million as of June 30, 2009, December 31, 2008 and June 30, 2008, respectively.
2. Valuation of assets-
     This adjustment basically relates to the following:
  Revaluation of property
     As described in Note 29.3. of the Unaudited Interim Consolidated Financial Statements as of June 30, 2009, certain of the Spanish and foreign consolidated companies restated the cost and accumulated depreciation of property and equipment pursuant to the relevant legislation.
     Fixed asset depreciation is computed on the restated value and the total amount charged to income is deductible for corporate income tax purposes. In addition, results on sales or dispositions of fixed assets are determined as the difference between the selling price and the net restated value.
     Under U.S. GAAP these revaluations are not permitted to be reflected in the financial statements.
     The amounts of the adjustments indicated below have been calculated to reflect the reversal of the additional depreciation on the revalued property and equipment (€2 million, €5 million and €4 million as of June 30, 2009, December 31, 2008 and June 30, 2008, respectively) and the additional income that would have resulted if the Group had not restated the fixed assets that have been sold (€4 million and €2 million as of June 30, 2009 and as of June 30, 2008, respectively). The adjustment to total shareholders’ equity reflects the reversal of the unamortized revaluation surplus (a decrease of €142 million, €148 million and €153 million as of June 30, 2009, December 31, 2008 and June 30, 2008, respectively).
  Valuation of property
     In accordance with the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004, certain property and equipment items were revalued and, therefore, this value was used as deemed cost on January 1, 2004 taking into consideration that, at the date of the revaluation, this deemed cost was comparable to fair value.
     Under U.S. GAAP, these adjustments to the deemed cost are not permitted due to the fact that they do not reflect an actual impairment.
     Consequently, there is an adjustment in the reconciliation to U.S. GAAP to reflect in the income statement the additional depreciation on the revalued property and equipment (€2 million and €2 million for the six months ended June 30, 2009 and 2008, respectively). The adjustment to total shareholders’ equity reflects the reversal of the adjustments to the attributed cost (an increase of €66 million, €67 million and €108 million as of June 30, 2009, December 31, 2008 and June 30, 2008, respectively).
  Sale and leaseback of fixed assets
     During the first semester 2009, the Group has sold 22 fixed assets (singular properties and branch offices) and, at the same time, entered into operating lease agreements with the buyers which include an option to repurchase the properties at fair values, exercisable by the Group on the agreed dates (mostly the final expiry date of each lease agreement). The price of sale was €107 million, generating capital gains of approximately €82 million.
Under IFRS (IAS 17), we accounted for this transaction as a sale and lease-back because of:
    We considered that there is no reasonable certainty that the repurchase option will be exercised, because it is at fair value, and there are no other indicators that we expect would economically force us to exercise the repurchase option; and
 
    We completed an analysis of the other main factors of the transaction and concluded that the lease agreements had the characteristics of operating leases, the sale price and lease payments were at fair value so, in effect, there had been a normal sale transaction and the gain on the sale of the properties was recognized immediately in the statement of income for the six month period ended June 30, 2009.

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Under US GAAP (SFAS 98 par 11) this transaction does not qualify as a sale and lease-back because the existence of a repurchase option of the properties at fair values implies a continuing involvement of the seller-lessee and, consequently, the transaction cannot be considered as a sale.
     Accordingly, in order to account for the transaction in conformity with the financing method under SFAS 98, we have made an adjustment to:
    undo the sale, place the properties back in the accounting books (20 million) and continue to depreciate them for the six month period ended June 30, 2009;
 
    eliminate the profit on sale (82 million of income as of the date of the transaction) and create a liability for the total amount of the cash received; and
 
    reclassify the operating leases rental payments incurred by the Group (3 million for the six month period ended June 30, 2009) as interest expense.
3. Valuation of financial instruments-
     The group’s criteria of accounting for such securities are described in Note 2.2.1 of the Interim Consolidated Financial Statements as of June 30, 2009. The recognition, measurement and disclosure criteria included in IAS 32 and 39, were applied retrospectively to January 1, 2004 (the date of transition to the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004). Certain Debt securities were recognized at fair value of that date under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 through total shareholders’ equity. Therefore, there is an adjustment in the reconciliation of shareholders’ equity to U.S. GAAP to reflect the reversal of the adjustments to the fair value (an increase of 25 million, 32 million and 39 million as of June 30, 2009, December 31, 2008 and June 30, 2008, respectively).
4. Accounting of goodwill-
     The breakdown of this adjustment is as follows:
                                         
    Millions of euros
                            Net income attributable to
    Shareholders’ equity   parent company
    As of June 30,   As of December 31,   As of June 30,   As of June 30,   As of June 30,
    2009   2008   2008   2009   2008
                     
Goodwill charged to reserves in 1998 and 1999
    65       65       65              
Different period of amortization of goodwill reversed
    99       99       99              
Amortization under Spanish GAAP not reversed under U.S. GAAP
    (154 )     (154 )     (154 )            
Reversal of amortization
    970       970       970              
Reversal of Step Acquisition
    2,381       2,310       2,582              
Step Acquisition of BBVA Bancomer
    (1,176 )     (1,170 )     (1,197 )     (1 )     2  
Acquisition of Compass
    404       405       425             18  
Others
    64       48       47             (2 )
                     
Adjustment 4 in reconciliation to U.S. GAAP
    2,653       2,573       2,838       (1 )     18  
                     
     The main reasons that generate a difference between EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 and U.S. GAAP in goodwill are the following:
Adjustments related to goodwill previous to IFRS 1
     The items included in the table above mentioned as “Goodwill charged to reserves in 1998 and 1999”, “Different period of amortization of goodwill reverse”, “Amortization under Spanish GAAP not reversed under U.S. GAAP” and “Reversal of amortization”, refer to certain impairments or amortizations of goodwill accounted for under Spanish GAAP previous to the date of adoption of IFRS-1. These impairments or amortizations were not acceptable under U.S. GAAP because they did not satisfy the SFAS 142 requirements. Therefore, there is an adjustment in the reconciliation of shareholders’ equity to U.S. GAAP to reflect the reversal of these impairments and amortizations of goodwill recorded prior to January 1, 2004.
Reversal of step acquisition
     Investments acquired subsequent to obtaining control over a company (i.e. transactions involving the purchase of equity interests from minority shareholders) were treated as “equity transactions”. The amount of

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goodwill recorded under prior GAAP, at January 1, 2004, transition date to the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004, was recorded on the transactions performed after control was obtained. These amounts were charged to “minority interest” and the surplus amount was charged to total shareholders’ equity.
     Under U.S. GAAP, these acquisitions are accounted for using the “purchase method” and, consequently, there is an adjustment in the reconciliation to U.S. GAAP to reflect the reversal of goodwill recorded prior to January 1, 2004, and the increase of shareholders’ equity.
Step Acquisition of BBVA Bancomer
     On March 20, 2004, BBVA completed the tender offer on 40.6% of the capital stock of Grupo Financiero BBVA Bancomer, S.A. de C.V. (“Bancomer”). The final number of shares presented in the offer and accepted by BBVA was 3,660,295,210, which represent 39.45% of the capital stock of Bancomer. Following the acquisition of these shares through the tender offer, the ownership interest held by BBVA in the capital of Bancomer was 98.88%. Lastly, as of December 31, 2006, as a result of the purchase of shares subsisting in the market, BBVA’s holding in Bancomer increased to 99.96%.
     BBVA Bancomer, S.A. de C.V. has been consolidated by Group BBVA since July 2000, when the merger of Grupo Financiero BBV-Probursa, S.A. de C.V. (a wholly-owned subsidiary of BBVA) and Grupo Financiero BBVA Bancomer, S.A. de C.V. was carried out.
     Since March 20, 2004 the BBVA Group’s consolidated income statement reflected a decrease in “Minority Interest” caption related to the business combination described above while the rest of consolidated the income statement’s captions did not change because Bancomer was already a fully consolidated company before the acquisition of minority interest.
     The cash paid for the acquired entity was €3,324 million. In connection with this business combination there are no contingent payments, options, or commitments specified in the acquisition agreement.
     Under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004, the business combination is registered as equity transaction and no amounts were allocated to assets or liabilities of the company acquired.
     Under U.S. GAAP, after allocating the purchase price to all adquired assets and assumed liabilities of the company acquired, the goodwill was €1,060.2 million. The entire amount of goodwill was allocated to the Mexico reporting unit in the “Mexico and the United States” segment (now “Mexico” as explained in Note 6 of the Interim Consolidated Financial Statements as of June 30, 2009). The reconciliation of the net worth acquired and the fair value of the assets and liabilities acquired for purposes of U.S. GAAP was as follows:
         
    Millions of
    Euros
Net worth acquired
    1,207  
Investment securities
    (32 )
Net loans and leases
    622  
Premises and equipment
    (28 )
Intangible assets
    970  
Other Assets
    189  
Time Deposits
    (124 )
Long term debt
    (50 )
Other liabilities
    (490 )
 
       
Fair value under U.S. GAAP
    2,264  
 
       
     The identified intangible assets are related to “core deposits”, which were calculated according to the purchase method and were amortized over a period of 40 months, as of June 30, 2009 all core deposits are amortized. Additionally, the allocated amount of net loans and leases are amortized over a weighted-average period of 3 years. Under U.S. GAAP, the adjustment (net of tax) in the income statement was a decrease €1 million and an increase €2 million for the six months ended June 30, 2009 and 2008 respectively, mainly related to the additional amortization expenses of assets and liabilities subject to amortization.
     The effect in the shareholders’ equity was a decrease of €1,176 million, €1,170 million and €1,197 million as of June 30, 2009, December 31, 2008 and June 30 2008, respectively.
     The “Other liabilities” caption includes basically temporary differences arising from different accounting and tax values of assets and liabilities allocated in the acquisition. Because the amounts allocated to certain

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assets are non deductible under Spanish Tax Law, additional goodwill and the corresponding deferred tax liabilities have been considered under U.S. GAAP.
     Since Bancomer was consolidated by Group BBVA at July 1, 2000, there are no purchased research and development assets that were acquired and written off.
Acquisition of Compass
     On February 16, 2007 BBVA entered into a definitive agreement to acquire 100% of the share capital of Compass. On September 7, 2007 BBVA completed the acquisition.
     Under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004, the amount of goodwill was calculated at the date in which BBVA obtained the control (September 7, 2007). Under US GAAP, EITF Issue No. 99-12, Determination of the Measurement Date for the Market Price of Acquirer Securities Issued in a Purchase Business Combination provides guidance on the measurement date to be used in a business combination. EITF 99-12 specifies that the value of acquirer’s marketable equity securities issued to effect a purchase business combination should be determinated, pursuant to the guidance in paragraph 22 of FASB Statement No. 141, Business Combinations, based on the market price of the securities over a reasonable period of time before and after the terms of the acquisition are agreed to and announced. The date of measurement of the value of the acquirer’s marketable equity securities should not be influenced by the need to obtain shareholder or regulatory approvals. In addition, paragraph 7 of Issue 2 of EITF 99-12 states that the measurement date is the earliest date, from the date the terms of the acquisition are agreed to and announced to the date of financial applications of the formula do not result in a change in the number of shares or the amount of other consideration. According to this BBVA considered the announcement date (February 16, 2007) as the measurement date under US GAAP. Consequently, there is an adjustment in the reconciliation to U.S. GAAP to reflect the different amount of goodwill.
     This difference resulted in a reconciling item to shareholders’ equity (an increase of €404 milliom, €405 million and €425 million as of June 30, 2009, December 31, 2008 and June 30, 2008, respectively) and to net income attributable to parent company (an increase of €18 million as of June 30, 2008) in the reconciliation to U.S. GAAP.
Impairment
     A discounted cash flow model was selected as the main method to determine the fair value of our Reporting Units; although other methodologies such as using quoted market values and market multiples were also used. Cash flow estimates require judgment and the Bank believes that the assumptions used in determining the cash flows are consistent with assumptions marketplace participants would use in their estimates of their fair value.
     The principal BBVA Group’s goodwill assigned to each Reporting Unit as of June 30, 2009 and 2008 for annual impairment test purposes are the following:
                 
    Millions of Euros
    Six months ended June 30,
    2009   2008
Spain and Portugal
    4,286       4,359  
Mexico
    2,347       2,683  
Global Businesses
    1,489       1,410  
United States and Puerto Rico
    6,989       6,289  
Pensions in South America
    246       224  
Colombia
    198       199  
Chile
    101       93  
     Expected cash flows have been calculated using the “maximum payable dividend” for each period, considering net income and excess of minimum capital required. For financial statements and macroeconomics scenarios, a five year horizon was used to determine fair value. The risk free rate, the market risk premium and the country risk premium (when applicable) were considered to determine the discount rate used for each Reporting Unit.
     At least once a year and whenever there are indications of impairment, an impairment test is carried out for each company that generates goodwill. This test compares the present value of future cash flows that are expected to be obtained by each company with its book value and goodwill, in order to determine whether or not its value is impaired.
     As of June 30, 2009 and December 31, 2008, there were no losses due to impairments in the value of these companies.

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5. Translation of financial statements in high-inflation countries-
     As indicated in Note 2.2.5 of the Unaudited Interim Consolidated Financial Statements as of June 30, 2009, after the transition date to the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004, which is January 1, 2004, none of the functional currencies of the consolidated subsidiaries and associates and their branches located abroad relate to hyperinflationary economies. Accordingly, as of June 30, 2009 and December 31, 2008 it was not necessary to adjust the financial statements of any of the consolidated subsidiaries or associates to correct for the effect of inflation.
     In accordance to the exemption provided by IFRS 1 First-time Adoption of International Financial Reporting Standards, the cumulative effect of inflation recorded prior to January 1, 2004 (transition date to EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004) mainly relating to items of property, plant and equipment has not been removed. Therefore, the previous GAAP restated amounts have been used as deemed cost of property, plant and equipment as of the transition date.
     Under U.S. GAAP, in prior years the financial statements of operating units in a highly inflationary economy were remeasured as if the functional currency of the operating unit were the same as that of the parent reporting currency. For the purposes of this requirement, a highly inflationary economy is one that has cumulative inflation of approximately 100 percent or more over a 3 year period. None of the countries where BBVA owned subsidiaries are highly inflationary countries.
     The adjustment reflects the reversal of the charges to shareholders’ equity arising from inflation registered in dependent companies established in “non highly inflationary economies” (€199 million, €192 million and €218 million as of June 30, 2009, December 31, 2008 and June 30, 2008, respectively). As of June 30, 2008, the adjustment reflects an increase to net income attributable to parent company of €128 million due to the inflationary effect of the disposal of the BBVA Bancomer, S.A de C.V’s corporate headquarters.
6. Impact of SFAS 133
     As of June 30, 2009, the main differences between IAS 39 and SFAS 133 that have resulted in reconciling items to net income attributable to parent company and shareholders’ equity between IFRS and U.S. GAAP were as follows:
Fair value option
     The EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 allows for the designation of a financial asset or a financial liability as held at fair value through the profit or loss if one of the criteria described in IAS 39 is met.
     SFAS 115 allowed for the designation of a financial asset or a financial liability as held for trading only if these were acquired and held primarily for resale in the near term to make a profit from short-term movements in market prices.
     As of June 30, 2009, December 31, 2008 and June 30, 2008, we maintained certain financial assets and financial liabilities registered at fair value through the profit or loss under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 which did not meet the conditions to be designated as financial asset or financial liability held for trading under SFAS 115. With the adoption of SFAS 155 those financial assets and financial liabilities meet the conditions to be designated as financial asset or financial liability held for trading. However, SFAS 155 not allow retrospective application and for that reason we maintain an adjustment in the reconciliation to U.S. GAAP to reflect in the net income attributable to parent company (a decrease of €12 million and an increase of €20 million for the six months ended June 30, 2009 and 2008, respectively) and shareholders’ equity (a decrease of €82 million, an increase of €70 million and an increase of €58 million as of June 30, 2009, December 31, 2008 and June 30, 2008, respectively).
Retrospective application
     As of December 31, 2003, in accordance with Spanish GAAP, certain fair value hedges of fixed income securities and cash flow hedges of exchange rate risk were considered to be speculative in our U.S. GAAP reconciliation adjustment, since the required documentation was not available at the date on which the aforementioned hedges were designated as such.
     As of January 1, 2004, the transition date to the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004, these transactions continued to be designated as hedges, since they met all the requirements for hedge accounting.

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     As of December 31, 2004, in accordance with U.S. GAAP the Group maintained the criteria established in prior years and considered these transactions to be speculative, which accounted for a portion of the reconciliation adjustment for derivatives and hedges.
     Consequently, there is an adjustment in the reconciliation to U.S. GAAP to reflect in the net income attributable to parent company (a decrease of €22 million and €6 million for the six months ended June 30, 2009 and 2008, respectively) and in shareholders’ equity (an increase of €72 million, €96 million and €101 million as of June 30, 2009, December 31, 2008 and June 30, 2008, respectively) the speculative nature of these transactions under U.S. GAAP.
Methods used to assess hedge effectiveness
     Even though the methodology to assess the hedge effectiveness is the same under both GAAPs, there are certain adjustments made in order to validate the hedge effectiveness that is permitted under the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 and not under U.S. GAAP.
     The EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 allows to designate a hedging instrument as hedging only a portion of the time period to maturity, and therefore adjust the effectiveness test to comply with the hedging objective. Under U.S. GAAP such hedges are not allowed.
     Consequently, there is an adjustment to reverse these partial hedging transactions under U.S. GAAP. This difference resulted in a reconciling item to net income attributable to parent company (an increase of €6 million and an increase of €0.4 million for the six months ended June 30, 2009 and 2008, respectively) and shareholders’ equity (an increase of €14 million, €9 million and €11 million as of June 30, 2009, December 31, 2008 and June 30, 2008, respectively) in the reconciliation to U.S. GAAP.
     The fair value of derivatives that afforded hedge accounting treatment under the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 that did not qualify as hedges under U.S. GAAP as of June 30, 2009, December 31, 2008 and June 30, 2008 amounted positive to €11 million, negative to €8 million and €128 million, respectively.
     The fair value of derivatives that afforded hedge accounting treatment under the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 and qualified as hedges under U.S. GAAP as of June 30, 2009, December 31, 2008 and June 30, 2008 amounted positive to €2,267 million, €2,615 million and negative to €1,729 million, respectively.
7. Loans adjustments
     We described in Note 2.2.1.b of the Unaudited Interim Consolidated Financial Statements as of June 30, 2009, our methodology to estimate the “Allowance for loan losses” under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004. The “Allowance for loan losses” under U.S. GAAP is calculated by using our internal risk models based on our historical experience.
     For this reason, we have included an adjustment in the reconciliation of net income attributable to parent company as of June 30, 2008 which resulted in a decrease of €706 million, in net income attributable to parent company in accordance with U.S. GAAP.
     Given the increase in past-due loans beginning in mid-2007 as a result of the economic crisis, during 2008 our best estimate for the impairment of the loan portfolio required a provision for loan losses under U.S. GAAP of €3,956 million, which was €1,152 million higher than the provision required to be recorded under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004.
     As a result of the foregoing, as of December 31, 2008, the “Allowance for loan losses” under U.S. GAAP was very similar to the “Allowance for loan losses” under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004: €7,412 million under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 versus €7,384 million under U.S. GAAP.
     For this reason, we have included an adjustment in the reconciliation of net income attributable to parent company as of December 31, 2008 which resulted in a decrease of €1,152 million, in net income attributable to parent company in accordance with U.S. GAAP.
     As of June 30, 2009, there is no difference in the “Allowance for loan losses” under the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 and US GAAP, for that reason there is no adjustment in the reconciliation to US GAAP that affected net income attributable to parent company statement and shareholders’ equity for that concept.

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8. Tax effect of U.S. GAAP adjustments and deferred taxation under SFAS No. 109-
     The previous adjustments to net income attributable to parent company and shareholders’ equity do not include their related effects on corporate tax (except for the adjustments mentioned in Item 1, Item 4 and Item 5, which are disclosed under “Tax effect of above mentioned adjustments” item in the respective reconciliation statements.
     As described in Note 2.2.13 of the Unaudited Interim Consolidated Financial Statements as of June 30, 2009 deferred tax assets and liabilities include temporary differences measured at the amount expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities and their tax bases, and tax loss and tax credit carryforwards. These amounts are measured at the tax rates that are expected to apply in the year when the asset will be realized or the liability settled.
     As a result of the application of Statement of Financial Accounting Standards No. 109 (“SFAS 109”), Accounting for Income Taxes, the timing differences originated by the revaluation of property and equity securities and by certain provision for coverage of loan losses have been reversed.
     On July 13, 2006, the FASB issued Interpretation No. 48 “Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109” (FIN 48). This statement was issued to provide additional guidance and clarification on accounting for uncertainty in income tax positions. The interpretation prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of tax positions, as well as increased disclosure requirements with regards to uncertain tax positions.
     This interpretation of FASB Statement No. 109 uses a two-step approach wherein a tax benefit is recognized if a position is more likely than not to be sustained. The amount of the benefit is then measured to be the highest tax benefit which is greater than fifty percent likely to be realized. FIN 48 also sets out disclosure requirements to enhance transparency of an entity’s tax reserves.
     As a result of the application of FIN 48, the Group recorded a 59 million and 66 million reducted in retained earnings as of June 30, 2009 and December 31, 2008, respectively and a decrease of 20 million and an increase 18 million in net income attributable to parent company as of June 30, 2009 and 2008, respectively. Consequently, FIN 48 provokes a decrease of 78 million and 59 million in shareholders’ equity as of as of June 30, 2009 and December 31, 2008, respectively.
     The Group is currently under audit by taxing authorities in major taxing jurisdictions around the world. It is thus reasonably possible that changes in the gross balance of unrecognized tax benefits may occur within the next 12 months (an estimate of the range of such gross changes cannot be made), but the Group does not expect such audits to result in amounts that would cause a significant change to its effective tax rate.
     In the reconciliation to U.S. GAAP, the Group has recorded deferred tax assets of negative 624 million, 601 million and 732 million as of June 30, 2009, as of December 31, 2008 and as of June 30, 2008 and deferred tax liabilities of negative 82 million, 106 million and 164 million as of June 30, 2009, as of December 31, 2008 and as of June 30, 2008, respectively.
     SFAS 109 requires providing a valuation allowance when it is more likely than not that some portion of the deferred tax asset will not be realized. As of June 30, 2009 and 2008 the valuation allowance was 21 million and 22 million, respectively.
     As required by SFAS 109, the effects of the change in Spanish tax laws were included in income (see Note 32.c of the Interim Consolidated Financial Statements as of June 30, 2009)
     The following is a reconciliation of the income tax provision under IFRS to that under U.S. GAAP:
                 
    Six months ended June 30,
    2009   2008
    Millions of Euros
Income tax provision under IFRS
    961       1,213  
Tax effect of U.S. GAAP adjustments and deferred taxation under SFAS 109
    4       (215 )
 
               
Income tax provision under U.S. GAAP
    965       998  

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     The following is a reconciliation of the deferred tax assets and liabilities recorded under the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 and those that should be recorded under SFAS 109:
                                                 
    As of June 30, 2009   As of December 31, 2008   As of June 30, 2008
    Deferred                    
    tax   Deferred tax   Deferred tax   Deferred tax   Deferred tax   Deferred tax
    assets   liabilities   assets   liabilities   assets   liabilities
                    Millions of Euros                
As reported under the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004
    4,744       (1,318 )     5,055       (1,282 )     4,642       (1,620 )
Less-
                                               
Timing differences recorded under the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 and reversed in the reconciliation to U.S. GAAP
    (707 )           (719 )           (853 )      
Tax effect of the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 to U.S. GAAP reconciliation adjustments
                (1 )           (5 )      
Plus-
                                               
Tax effect of the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 to U.S. GAAP reconciliation adjustments
    83       (82 )     119       (106 )     126       (164 )
               
As reported under SFAS 109 (gross)
    4,120       (1,400 )     4,454       (1,388 )     3,910       (1,784 )
               
Valuation allowance
    (21)             (22)             (22)        
           
As reported under SFAS 109 (net)
    4,099       (1,400 )     4,432       (1,388 )     3,888       (1,784 )
     The following is an analysis of deferred tax assets and liabilities as of June 30, 2009, December 31, 2008 and June 30, 2008 estimated in accordance with U.S. GAAP:
                         
    As of June 30,   As of December 31,   As of June 30,
    2009   2008   2008
    (Millions of euros)
Deferred Tax assets
                       
Loan loss reserves
    1,441       1,440       1,386  
Unrealized losses on securities pension liability
    1,526       1,684       1,588  
Fixed assets
    66       44       46  
Net operating loss carryforward
    21       38       52  
Investments and derivatives
    206       359       89  
Goodwill
    (178 )     (150 )     (130 )
Other
    1,038       1,039       879  
Total deferred tax assets
    4,120       4,454       3,910  
Valuation allowance
    (21 )     (22 )     (22 )  
Net tax asset
    4,099       4,432       3,888  
Deferred tax liabilities
                       
Unrealized gains on securities pension liability
    (1 )     (1 )     (1 )
Unrealized gains on investments and other
    (9 )     (220 )     (1,547 )
Gains on sales of investments
    (193 )     (115 )     (131 )
Fixed assets
    (15 )     (11 )     (29 )
Goodwill
    (58 )     (67 )     (76 )
Other
    (1,124 )     (974 )      
Total deferred tax liabilities
    (1,400 )     (1,388 )     (1,784 )

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     Reconciliation between the federal statutory tax rate and the effective income tax rate is as follows:
                 
    As of June 30,   As of June 30,
    2009   2008
    % percentages
Corporate income tax at the standard rate
    30.00       30.00  
Decrease arising from permanent differences
    (7.35 )     (5.67 )
Adjustments to the provision for prior years’ corporate income tax and other taxes
    1.35       2.69  
Income tax provision under the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004
    24.00       27.02  
Tax effect of U.S. GAAP adjustments and deferred taxation under SFAS 109
    10.93       (5.46 )
Income tax provision under U.S. GAAP
    34.93       21.56  
9. Other Comprehensive Income
     SFAS No. 130, Reporting Comprehensive Income establishes standards for disclosing information related to comprehensive income and its components in a full set of general-purpose financial statements.
     Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.
     The accumulated balances of other comprehensive income as of June 30, 2009, as of December 31, 2008 and as of June 30, 2008 were as follows:
                                 
    Foreign            
    currency   Unrealized   Gains on   Other
    translation   gains on   Derivative   Comprehensive
    adjustments   securities   Instruments   income
    Millions of Euros
Changes in the first half 2008
    (954 )     (2,183 )     45       (3,092 )
Balance as of June 30, 2008
    (6,119 )     1,544       347       (4,228 )
Changes in the second half 2008
    (46 )     (474 )     130       (390 )
Balance as of December 31, 2008
    (6,165 )     1,070       477       (4,618 )
Changes in the first half 2009
    108       160       17       285  
Balance as of June 30, 2009
    (6,057 )     1,230       494       (4,333 )
     Taxes allocated to each component of other comprehensive income as of June 30, 2009 and 2008 were as follows:
                                                 
    Millions of Euros
    Six months ended June 30,
    2009   2008
            Tax                   Tax    
    Before Tax   expense   Net of tax   Before Tax   expense   Net of tax
    Amount   or benefit   amount   Amount   or benefit   amount
Foreign currency translations adjustment
    108             108       (954 )           (954 )
Unrealized gains/(losses) on securities
    208       (48 )     160       (2,838 )     655       (2,183 )
Derivatives Instruments and Hedging Activities
    22       (5 )     17       59       (14 )     45  
 
                                               
Other comprehensive income
    338       (53 )     285       (3,733 )     641       (3,092 )
 
                                               
10. Earnings per share
     SFAS No. 128, Earnings per Share, specifies the computation, presentation and disclosure requirements for earnings per share (EPS).
     Basic earnings per share is computed by dividing income available to common shareholders (the numerator) by the weighted-average number of common shares outstanding (the denominator), which may include contingently issuable shares where all necessary conditions for issuance have been satisfied. Diluted earnings per share include the determinants of basic earnings per share and, in addition, give effect to dilutive potential common shares that were outstanding during the period.

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     The computation of basic and diluted earnings per share for the six months ended June 30, 2009 and 2008 is presented in the following table:
                 
    Millions of Euros, except per share data
    Six months ended June 30,
    2009   2008
Numerator for basic earnings per share:
               
Income available to common shareholders (IFRS) (*)
    2,799       3,108  
Income available to common shareholders (U.S. GAAP):
    2,692       2,770  
Numerator for diluted earnings per share:
               
Income available to common shareholders (IFRS) (*)
    2,799       3,108  
Income available to common shareholders (U.S. GAAP):
    2,692       2,770  
Denominator for basic earnings per share
    3,747,969,121       3,747,969,121  
Denominator for diluted earnings per share
    3,747,969,121       3,747,969,121  
IFRS (*)
               
Basic earnings per share (Euros)
    0.747       0.829  
Diluted earnings per share (Euros)
    0.747       0.829  
U.S. GAAP
               
Basic earnings per share (Euros)
    0.718       0.739  
Diluted earnings per share (Euros)
    0.718       0.739  
 
(*)   EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004
11. FIN 46-R
     We arranged the issuance of preferred shares using special purpose vehicles (See Note 22.4.3.2 of the Unaudited Interim Consolidated Financial Statements as of June 30, 2009). Our preferred security transactions are based on the following model:
    We are the sponsor in the issuance of certain debentures by special purpose vehicles (SPEs) (the issuer of preference shares) that we incorporated and for which we hold 100% of the common stock and voting rights.
     The SPEs issue preferred securities to 3rd party investors. The terms of the preferred securities are issued in perpetuity with fixed dividend coupon and can be called by the SPEs.
    The SPEs lend both the proceeds raised from the preferred securities and the common stock back to us through intercompany loans with fixed maturities and fixed interest rate similar to that the dividend coupon on the preferred securities issued by the SPEs. Consequently, the SPEs use the cash received from interest payments on BBVA loans to pay dividends to the preferred securities holders.
 
    We guarantee the dividend payments on the preferred securities.
     We consolidated the SPEs under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 according to SIC 12 as we controlled them. However, under U.S. GAAP, BBVA does not consolidate the special purpose vehicle (issuer) as we have concluded that we are not the primary beneficiary as considered by FIN 46-R for the reasons described below.
     We as sponsor of the issuer of the preference shares neither have a significant residual interest held since our common shares are not viewed as equity at risk as our investment is returned back to us through the intercompany loan, nor the loan payable to the special purpose vehicle would be considered variable interests since they assume variability. Additionally, the fact that BBVA unconditionally guarantees the trust preferred securities is not relevant, since BBVA is guaranteeing its own obligations.
     Under U.S. GAAP we consider the investments in the common stock of this class of special purpose vehicles as equity-method investees according to APB Opinion No. 18.
     As a result of the deconsolidation of the SPEs, the loans received from the SPEs are presented as financial liabilities under U.S. GAAP.
     Consequently, the deconsolidation of the entities described in Note 22.4.3.2 of the Interim Consolidated Financial Statements as of June 30, 2009, has no impact on shareholdersequity or net income attributable to parent company under U.S. GAAP.
12. Statement of Financial Accounting Standards No. 157: “Fair Value Measurement”
     In September 2006, the FASB issued this Statement that defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair

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value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. The disclosure about fair value measurements is presented in Notes 7 and 8 of the Unaudited Interim Consolidated Financial Statements as of June 30, 2009.
13. Other Accounting Standards
Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51
     This Statement was issued in December 2007, and is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008 (that is, January 1, 2009, for entities with calendar year-ends). Earlier adoption is prohibited. It amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Before this Statement was issued, limited guidance existed for reporting noncontrolling interests. As a result, considerable diversity in practice existed. So-called minority interests were reported in the consolidated statement of financial position as liabilities or in the mezzanine section between liabilities and equity. This Statement improves comparability by eliminating that diversity.
Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities
     In March 2008 the FASB issued FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities. The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. The new standard also improves transparency about the location and amounts of derivative instruments in an entity’s financial statements; how derivative instruments and related hedged items are accounted for under Statement 133; and how derivative instruments and related hedged items affect its financial position, financial performance, and cash flows.
     FASB Statement No. 161 achieves these improvements by requiring disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. It also provides more information about an entity’s liquidity by requiring disclosure of derivative features that are credit risk—related. Finally, it requires cross-referencing within footnotes to enable financial statement users to locate important information about derivative instruments.
     This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged.
     The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.
Statement of Financial Accounting Standards No. 141 (revised 2007), Business Combinations
     This revision was issued in December 2007, and is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. This Statement replaces FASB Statement No. 141, Business Combinations and establishes principles and requirements for how the acquirer:
1.   Recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree
 
2.   Recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase
 
3.   Determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination.
     This Statement retains the fundamental requirements in Statement 141 that the acquisition method of accounting (which Statement 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.

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Statement of Financial Accounting Standards No. 163, “Accounting for Financial Guarantee Insurance Contracts—an interpretation of FASB Statement No. 60”
     Diversity exists in practice in accounting for financial guarantee insurance contracts by insurance enterprises under FASB Statement No. 60, Accounting and Reporting by Insurance Enterprises. That diversity results in inconsistencies in the recognition and measurement of claim liabilities because of differing views about when a loss has been incurred under FASB Statement No. 5, Accounting for Contingencies. This Statement requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This Statement also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities. Those clarifications will increase comparability in financial reporting of financial guarantee insurance contracts by insurance enterprises. This Statement requires expanded disclosures about financial guarantee insurance contracts. The accounting and disclosure requirements of the Statement will improve the quality of information provided to users of financial statements.
     This Statement is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years, except for some disclosures about the insurance enterprise’s risk-management activities. This Statement requires that disclosures about the risk-management activities of the insurance enterprise be effective for the first period (including interim periods) beginning after issuance of this Statement. Except for those disclosures, earlier application is not permitted.
     The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.
Statement of Financial Accounting Standards No. 165 — Subsequent Events
     The objective of this Statement, issued in May 2009, is to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, this Statement sets forth:
  1.   The period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements
 
  2.   The circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements
 
  3.   The disclosures that an entity should make about events or transactions that occurred after the balance sheet date.
     In accordance with this Statement, an entity should apply the requirements to interim or annual financial periods ending after June 15, 2009. The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.
FASB Staff Position No. FAS 157-2 “Effective Date of FASB Statement No. 157”
     In February 2008, the FASB released a proposed FASB Staff Position (FSP SFAS 157-2 — Effective Date of FASB Statement No. 157) which, delayed the effective date of SFAS No. 157 until fiscal years beginning after November 15, 2008, and interim periods within those fiscal years, for all non-financial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The adoption of this new statement at the required effective date did not have a significant effect in our results of operations, financial position or cash flows.
FSP FAS 141(R)-1 — Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies
     This FASB Staff Position, issued in April 2009, amends and clarifies FASB Statement No. 141 (revised 2007), Business Combinations, to address application issues raised by preparers, auditors, and members of the legal profession on initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. Application issues included:
  a.   Determining the acquisition-date fair value of a litigation-related contingency
 
  b.   Supporting the recognition and measurement of liabilities arising from legal contingencies when supporting information may be subject to attorney-client privilege
 
  c.   Distinguishing between a contractual and noncontractual contingency
 
  d.   Dealing with situations in which a target entity may have determined that a loss contingency should be recognized in accordance with Statement 5 because the entity intends to settle out of court but the liability does not meet the more-likely-than-not threshold for recognition of a noncontractual contingency

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  e.   Derecognizing a liability arising from a contingency recognized as of the acquisition date
 
  f.   Disclosing potentially prejudicial information in financial statements
 
  g.   Determining whether to account for contingent consideration arrangements of an acquiree assumed by the acquirer in a business combination in accordance with the guidance for contingent consideration or in accordance with the guidance for other assets and liabilities arising from contingencies.
This FSP is effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.
FSP FAS 140-3, “Accounting for Transfers of Financial Assets and Repurchase Financing Transactions”
     This standard was issued in February 2008, and is effective for financial statements issued for fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. Earlier application is not permitted. The objective of this FSP is to provide guidance on accounting for a transfer of a financial asset and a repurchase financing. This FSP presumes that an initial transfer of a financial asset and a repurchase financing are considered part of the same arrangement (linked transaction) under Statement 140. However, if certain criteria are met, the initial transfer and repurchase financing shall not be evaluated as a linked transaction and shall be evaluated separately under Statement 140. The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.
FSP FAS 142-3, “Determination of the Useful Life of Intangible Assets”
     This standard was issued in April 2008, and is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Earlier application is not permitted. The objective of this FSP is to amend the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, Goodwill and Other Intangible Assets. The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under Statement 142 and the period of expected cash flows used to measure the fair value of the asset under FASB Statement No. 141 (revised 2007), Business Combinations, and other U.S. generally accepted accounting principles (GAAP).
Under paragraph 11 of FASB Statement No. 142, the determination of the useful life would include consideration of any legal, regulatory, or contractual provisions that enable renewal or extension of the asset’s legal or contractual life without substantial cost.
     This FSP states that in developing assumptions about renewal or extension used to determine the useful life of a recognized intangible asset, an entity shall consider its own historical experience in renewing or extending similar arrangements; however, these assumptions should be adjusted for the entity-specific factors in paragraph 11 of Statement 142. In the absence of that experience, an entity shall consider the assumptions that market participants would use about renewal or extension (consistent with the highest and best use of the asset by market participants), adjusted for the entity-specific factors in paragraph 11 of Statement 142.
     The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.
FSP FAS 133-1 and FIN 45-4Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161
     This FSP, issued in September 2008, amends FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, to require disclosures by sellers of credit derivatives, including credit derivatives embedded in a hybrid instrument. This FSP also amends FASB Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, to require an additional disclosure about the current status of the payment/performance risk of a guarantee. Further, this FSP clarifies the Board’s intent about the effective date of FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities.
     The provisions of this FSP, that amends Statement 133 and Interpretation 45, shall be effective for reporting periods (annual or interim) ending after November 15, 2008. The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.
FSP FAS 140-4 and FIN 46(R)-8Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities

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     This FASB Staff Position, issued in December 2008, amends FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, to require public entities to provide additional disclosures about transfers of financial assets. It also amends FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, to require public enterprises, including sponsors that have a variable interest in a variable interest entity, to provide additional disclosures about their involvement with variable interest entities.
     Additionally, this FSP requires certain disclosures to be provided by a public enterprise that is a sponsor of a qualifying special-purpose entity (SPE) that holds a variable interest in the qualifying SPE but was not the transferor of financial assets to the qualifying SPE, and a servicer of a qualifying SPE that holds a significant variable interest in the qualifying SPE but was not the transferor of financial assets to the qualifying SPE. The disclosures required by this FSP are intended to provide greater transparency to financial statement users about a transferor’s continuing involvement with transferred financial assets and an enterprise’s involvement with variable interest entities and qualifying SPEs.
     This FSP is effective for the first reporting period (interim or annual) ending after December 15, 2008, with earlier application encouraged. The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.
FSP FAS 107-1 y APB 28-1 — Interim Disclosures about Fair Value of Financial Instruments
     This FASB Staff Position, issued in April 2009, amends FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This FSP also amends APB Opinion No. 28, Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting periods.
     This FSP is effective for interim reporting periods ending after June 15, 2009. The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.
FSP No. FAS 115-2 and FAS 124-2 — Recognition and Presentation of Other-Than-Temporary Impairments
     This FASB Staff Position, issued in April 2009, amends the other-than-temporary impairment guidance in U.S. GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. This FSP does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities.
     The FSP is effective for interim and annual reporting periods ending after June 15 2009. The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.
FSP FAS 157-4—Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly
     This FASB Staff Position, issued in April 2009, provides additional guidance for estimating fair value in accordance with FASB Statement No. 157, Fair Value Measurements, when the volume and level of activity for the asset or liability have significantly decreased. This FSP also includes guidance on identifying circumstances that indicate a transaction is not orderly. It emphasizes that, even if there has been a significant decrease in the volume and level of activity for the asset or liability and regardless of the valuation technique(s) used, the objective of a fair value measurement remains the same. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions.
     This FSP is effective for interim and annual reporting periods ending after June 15, 2009. The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.
FSP APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)”
     This FSP applies to convertible debt instruments that, by their stated terms, may be settled in cash (or other assets) upon conversion, including partial cash settlement, unless the embedded conversion option is required to be separately accounted for as a derivative under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. It clarifies that convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) are not addressed by paragraph 12 of APB

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Opinion No. 14, Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants. Additionally, this FSP specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entity’s nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. This FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.
FSP EITF 99-20-1Amendments to the Impairment Guidance of EITF Issue No. 99-20.
     This FASB Staff Position, issued in January 2009, amends the impairment guidance in EITF Issue No. 99-20, “Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests That Continue to Be Held by a Transferor in Securitized Financial Assets,” to achieve more consistent determination of whether an other-than-temporary impairment has occurred. The FSP also retains and emphasizes the objective of an other than- temporary impairment assessment and the related disclosure requirements in FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities, and other related guidance.
     The FSP is effective for interim and annual reporting periods ending after December 15, 2008, and shall be applied prospectively. Retrospective application to a prior interim or annual reporting period is not permitted. The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.
FSP EITF 03-6-1Determining Whether Instruments Granted in Share-Based Payment transactions Are Participating Securities
     This FASB Staff Position, issued in June 2008, addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share (EPS) under the two-class method described in paragraphs 60 and 61 of FASB Statement No. 128, Earnings per Share.
     This FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those years. All prior-period EPS data presented shall be adjusted retrospectively (including interim financial statements, summaries of earnings, and selected financial data) to conform with the provisions of this FSP. The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.
14. New Accounting Standards
Statement of Financial Accounting Standards No. 168 (SFAS 168) “Accounting Standards CodificationTM
and the Hierarchy of Generally Accepted Accounting Principles”
     In June, 2009, the FASB issued Statement of Financial Accounting Standards No. 168 (SFAS 168) “Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles” — a replacement of FASB Statement No. 162. SFAS 168 establishes the FASB Accounting Standards CodificationTM as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with US GAAP. FAS 168 will be effective for financial statements issued for interim and annual periods ending after September 15, 2009, for most entities. On the effective date, all non-SEC accounting and reporting standards will be superseded.
Statement of Financial Accounting Standards No. 166 — Accounting for Transfers of Financial Assets—an amendment of FASB Statement No. 140
     The Board’s objective in issuing this Statement is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement, if any, in transferred financial assets. The Board undertook this project to address (1) practices that have developed since the issuance of FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, that are not consistent with the original intent and key requirements of that Statement and (2) concerns of financial statement users that many of the financial assets (and related obligations) that have been derecognized should continue to be reported in the financial statements of transferors.
     On and after the effective date of this SFAS, the concept of a qualifying special-purpose entity is no longer relevant for accounting purposes. Therefore, formerly qualifying special-purpose entities (as defined under previous accounting standards) should be evaluated for consolidation by reporting entities on and after the effective date in accordance with the applicable consolidation guidance. If the evaluation on the effective date results in consolidation, the reporting entity should apply the transition guidance provided in the pronouncement that requires consolidation.

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     This Statement must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. Earlier application is prohibited. This Statement must be applied to transfers occurring on or after the effective date. The Company does not anticipate that the adoption of this new statement at the required effective date will have a significant effect in its results of operations, financial position or cash flows.
Statement of Financial Accounting Standards No. 167 — Amendments to FASB Interpretation No. 46(R)
     This Statement, issued in June 2009, amends Interpretation 46(R) to require an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a variable interest entity. This analysis identifies the primary beneficiary of a variable interest entity as the enterprise that has both of the following characteristics:
  a.   The power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance
 
  b.   The obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity.
     The Board undertook this project to address (1) the effects on certain provisions of FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, as a result of the elimination of the qualifying special-purpose entity concept in FASB Statement No. 166, Accounting for Transfers of Financial Assets, and (2) constituent concerns about the application of certain key provisions of Interpretation 46(R), including those in which the accounting and disclosures under the Interpretation do not always provide timely and useful information about an enterprise’s involvement in a variable interest entity.
     This Statement shall be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. The Company does not anticipate that the adoption of this new statement at the required effective date will have a significant effect in its results of operations, financial position or cash flows.
FSP FAS 132(R)-1 Employers’ Disclosures about Postretirement Benefit Plan Assets
     This FASB Staff Position, issued in December 2008, amends FASB Statement No. 132 (revised 2003), Employers’ Disclosures about Pensions and Other Postretirement Benefits, to provide guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. It also includes a technical amendment to Statement 132(R) that requires a nonpublic entity to disclose net periodic benefit cost for each annual period for which a statement of income is presented.
     The disclosures about plan assets required by this FSP shall be provided for fiscal years ending after December 15, 2009. Upon initial application, the provisions of this FSP are not required for earlier periods that are presented for comparative purposes. Earlier application of the provisions of this FSP is permitted. The technical amendment to Statement 132(R) is effective upon issuance of this FSP.
     The Company does not anticipate that the adoption of this new statement at the required effective date will have a significant effect in its results of operations, financial position or cash flows.

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B) MAIN DISCLOSURES REQUIRED BY U.S. ACCOUNTING REGULATIONS FOR BANKS AND ADDITIONAL DISCLOSURES REQUIRED UNDER U.S. GAAP
1. Investment Securities-
     The breakdown of the Group’s investment securities portfolio by issuer is as follows:
                                                                 
    As of June 30, 2009   As of June 30, 2008
    Amortized           Unrealized   Unrealized   Amortized           Unrealized   Unrealized
    Cost   Fair Value   Gains   Losses   Cost   Fair Value   Gains   Losses
         
    (Millions of euros)
DEBT SECURITIES —
                                                               
AVAILABLE FOR SALE PORTFOLIO
Domestic—
    20,424       20,557       404       (173 )     10,193       10,150       145       (187 )
Spanish Government
    14,520       14,645       258       (34 )     4,456       4,457       60       (59 )
Other debt securities
    5,904       5,912       146       (139 )     5,737       5,693       85       (128 )
International—
    29,502       29,062       868       (1,094 )     26,969       26,687       544       (827 )
United States —
    7,534       7,262       183       (266 )     8,372       8,270       64       (166 )
U.S. Treasury and other U.S. Government agencies
    455       423       1       (32 )     81       82       1        
States and political subdivisions
    415       426       12       (2 )     365       365       3       (2 )
Other debt securities
    6,664       6,413       170       (232 )     7,926       7,823       61       (163 )
Other countries —
    21,968       21,800       685       (828 )     18,597       18,417       480       (661 )
Securities of other foreign Governments
    14,257       14,255       469       (490 )     11,026       10,940       347       (433 )
Other debt securities
    7,711       7,545       216       (338 )     7,572       7,477       133       (228 )
                         
TOTAL AVAILABLE FOR SALE PORTFOLIO
    49,926       49,619       1,272       (1,267 )     37,162       36,837       689       (1,014 )
                         
HELD TO MATURITY PORTFOLIO
                                                               
Domestic—
    2,279       2,240       13       (52 )     2,374       2,180             (194 )
Spanish Government
    1,335       1,339       11       (8 )     1,398       1,299             (99 )
Other debt securities
    944       901       2       (44 )     976       881             (95 )
International—
    2,820       2,840       51       (30 )     3,028       2,848             (181 )
                         
TOTAL HELD TO MATURITY PORTFOLIO
    5,099       5,080       64       (82 )     5,402       5,028             (375 )
                         
TOTAL DEBT SECURITIES
    55,025       54,699       1,336       (1,349 )     42,565       41,865       689       (1,389 )
                         

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    As of June 30, 2009   As of June 30, 2008
    Amortized           Unrealized   Unrealized   Amortized           Unrealized   Unrealized
    Cost   Fair Value (1)   Gains   Losses   Cost   Fair Value (1)   Gains   Losses
    (Millions of euros)
EQUITY SECURITIES
                                                               
AVAILABLE FOR SALE PORTFOLIO
                                                               
Domestic
    3,319       4,618       1,321       (22 )     4,119       6,203       2,093       (8 )
Equity listed
    3,287       4,586       1,321       (22 )     4,076       6,165       2,093       (4 )
Equity Unlisted
    32       32                   43       38             (4 )
International
    3,127       3,148       137       (116 )     3,127       3,159       123       (91 )
United States
    603       696       110       (17 )     705       692       7       (20 )
Equity listed
    106       89             (17 )     479       473             (6 )
Equity Unlisted
    497       607       110             226       219       7       (14 )
Other countries
    2,524       2,452       27       (99 )     2,422       2,467       116       (71 )
Equity listed
    2,263       2,189       23       (97 )     2,302       2,338       103       (67 )
Equity Unlisted
    261       263       4       (2 )     120       129       13       (4 )
 
                                                               
TOTAL AVAILABLE FOR SALE PORTFOLIO
    6,446       7,766       1,458       (138 )     7,246       9,363       2,217       (100 )
 
                                                               
TOTAL EQUITY SECURITIES
    6,446       7,766       1,458       (138 )     7,246       9,363       2,217       (100 )
 
                                                               
TOTAL INVESTMENT SECURITIES
    61,471       62,465       2,794       (1,487 )     49,811       51,227       2,905       (1,489 )
 
                                                               
 
(1)   The Fair Values are determined based on period-end quoted market prices for listed securities and on management’s estimate for unlisted securities.

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     The total amount of losses amounted to €1,835 million, €1,368 million and €1,560 million as of June 30, 2009, December 31, 2008 and June 30, 2008, respectively.
                         
    Millions of euros
            As of    
    As of June   December   As of June
    30, 2009   31, 2008   30, 2008
Equity securities
    (119 )     (26 )     (26 )
Debt securities
    (231 )     (176 )     (45 )
(1) Total impairments other-than-temporary (charged to income under both GAAP)
    (351 )     (202 )     (71 )
Equity securities
    (138 )     (237 )     (100 )
Debt securities
    (1,349 )     (929 )     (1,389 )
(2) Total temporary unrealized losses
    (1,487 )     (1,166 )     (1,489 )
                         
(1)+(2) Total losses
    (1,838 )     (1,368 )     (1,560 )
                         
     As of June 30, 2009, December 31, 2008 and June 30, 2008, most of our unrealized losses correspond to other debt securities (both Available-for-Sale and Held-to-Maturity securities).
     As of June 30, 2009, the fair value of the debt securities is below its amortized cost. We have evaluated this decline in fair value to determine whether it is other than temporary and we have not recognized any other-than-temporary impairment for these securities the six months ended June 30, 2009 related to the following reasons:
    The principal and interest payments have been made as scheduled, and there is no evidence that the debtor will not continue to do so;
 
    The future principal payments will be sufficient to recover the current amortized cost of the security;
 
    We have the intent to hold the security until maturity or at least until the fair value of the security recovers to a level that exceeds the security’s amortized cost;
 
    They have mainly arisen in a periods shorter than one year and, after our analysis, those which have arisen in periods longer than one year are not significant.
     As of June 30, 2009, the unrealized losses that correspond to equity securities have been considered temporary and we have not recognized any other-than-temporary impairment for those investments because the unrealized losses related to they have mainly arisen due to the negative evolution of the markets affected by the economic situation.
     An analysis of the book value of investments, exclusive of valuation reserves, by contractual maturity and fair value of the debt securities portfolio is shown below:
                                         
    As of June 30, 2009
    Book Value
            Due after one   Due after five        
    Due in one   year to five   years to ten   Due after ten    
    year or less   years   years   years   Total
    (Millions of euros)
AVAILABLE-FOR-SALE PORTFOLIO(*)
                                       
Domestic
                                       
Spanish government
    119       6,694       4,003       3,829       14,645  
Other debt securities
    1,067       3,732       278       835       5,912  
 
                                       
Total Domestic
    1,186       10,426       4,281       4,664       20,557  
 
                                       
International
                                       
United States
    985       3,083       1,784       1,410       7,262  
U.S. Treasury and other U.S. government agencies
    160       18             245       423  
States and political subdivisions
    70       145       159       52       426  
Other U.S. securities
    755       2,920       1,625       1,113       6,413  
Other countries
    2,603       9,799       5,438       3,960       21,800  
Securities of other foreign governments
    666       7,483       4,018       2,088       14,255  
Other debt securities of other countries
    1,937       2,316       1,420       1,872       7,545  
 
                                       
Total International
    3,588       12,882       7,222       5,370       29,062  
 
                                       
TOTAL AVAILABLE-FOR-SALE
    4,774       23,308       11,503       10,034       49,619  
 
                                       
HELD-TO-MATURITY PORTFOLIO
                                       

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    As of June 30, 2009
    Book Value
            Due after one   Due after five        
    Due in one   year to five   years to ten   Due after ten    
    year or less   years   years   years   Total
    (Millions of euros)
Domestic
                                       
Spanish government
    110       118       1,053       54       1,335  
Other debt securities
    54       212       550       128       944  
 
                                       
Total Domestic
    164       330       1,603       182       2,279  
 
                                       
Total International
    85       918       1,594       223       2,820  
 
                                       
TOTAL HELD-TO-MATURITY
    249       1,248       3,197       405       5,099  
 
                                       
TOTAL DEBT SECURITIES
    5,023       24,556       14,700       10,439       54,718  
 
                                       
                                         
    As of June 30, 2009
    Market Value
            Due after one   Due after five        
    Due in one   year to five   years to ten   Due after ten    
    year or less   years   years   years   Total
    (Millions of euros)
HELD-TO-MATURITY PORTFOLIO
                                       
Domestic
                                       
Spanish government
    110       119       1,055       54       1,338  
Other debt securities
    52       203       525       122       902  
 
                                       
Total Domestic
    162       322       1,580       176       2,240  
 
                                       
Total International
    83       924       1,607       226       2,840  
 
                                       
TOTAL HELD-TO-MATURITY
    245       1,246       3,187       402       5,080  
 
                                       
                                         
    As of June 30, 2008
    Book Value
            Due after one   Due after five        
    Due in one   year to five   years to ten   Due after ten    
    year or less   years   years   years   Total
    (Millions of euros)
AVAILABLE-FOR-SALE PORTFOLIO(*)
                                       
Domestic
                                       
Spanish government
    317       442       949       2,749       4,457  
Other debt securities
    847       3,337       213       1,295       5,693  
 
                                       
Total Domestic
    1,164       3,779       1,163       4,044       10,150  
 
                                       
International
                                       
United States
    850       3,051       2,884       1,484       8,270  
U.S. Treasury and other U.S. government agencies
    10       69             2       82  
States and political subdivisions
    59       105       134       66       365  
Other U.S. securities
    781       2,877       2,750       1,416       7,823  
Other countries
    2,301       3,849       3,654       8,612       18,417  
Securities of other foreign governments
    581       1,439       2,431       6,490       10,940  
Other debt securities of other countries
    1,720       2,411       1,223       2,122       7,477  
 
                                       
Total International
    3,151       6,900       6,538       10,096       26,687  
 
                                       
TOTAL AVAILABLE-FOR-SALE
    4,315       10,679       7,702       14,140       36,837  
 
                                       
HELD-TO-MATURITY PORTFOLIO
                                       
Domestic
                                       
Spanish government
    63       232       1,050       54       1,398  
Other debt securities
    27       234       586       128       976  
 
                                       
Total Domestic
    90       466       1,636       182       2,374  
 
                                       
Total International
    197       900       1,708       223       3,028  
 
                                       
TOTAL HELD-TO-MATURITY
    287       1,366       3,344       405       5,402  
 
                                       
TOTAL DEBT SECURITIES
    4,602       12,045       11,046       14,545       42,239  
 
                                       

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    As of June 30, 2008
    Market Value
            Due after one   Due after five        
    Due in one   year to five   years to ten   Due after ten    
    year or less   years   years   years   Total
    (Millions of euros)
HELD-TO-MATURITY PORTFOLIO
                                       
Domestic
                                       
Spanish government
    59       215       975       50       1,299  
Other debt securities
    24       212       529       115       881  
 
                                       
Total Domestic
    83       427       1,504       165       2,180  
 
                                       
Total International
    187       847       1,605       209       2,848  
 
                                       
TOTAL HELD-TO-MATURITY
    270       1,274       3,109       374       5,028  
 
                                       
 
(*)   As we describe in Note 2.2.1 of the Interim Consolidated Financial Statements as of June 30, 2009 the book value and market value are the same for “Trading portfolio” and “Available for sale portfolio”
     Under both EU-IFRS and U.S. GAAP, the methodology used to estimate the fair value of non-traded or unlisted securities is as follows (see Note 2.2.1.b):
    Debt securities: fair value is considered to be the present value of the cash flows, using market interest rates (discounted cash flows).
 
    Equity securities: in the cases of equity instruments whose fair value cannot be determined in a sufficiently objective manner are measured at acquisition cost. In some cases in which trigger events indicate that a specific investment could be impaired, a specific valuation of fair value is used and all available factors are considered by management to determine the fair value under both GAAP. If it is available a valuation of the company, it is used as a better measure of fair value under both GAAP.
     These methodologies include an evaluation of credit risk, market conditions (volatility, interest rate evolution, macroeconomic variables, etc...) or future expectations.
     As of June 30, 2009 and 2008 the net gains from sales of available-for-sale securities amounted to €245 million and €667 million, respectively (see Notes 43 and 50 of the Unaudited Interim Consolidated Financial Statements as of June 30, 2009). As of June 30, 2009 and 2008 the gross realized gains on those sales amounted to €322 million and €1,459 million, respectively. As of June 30, 2009 and 2008 the gross realized losses on those sales amounted to €77 million and €793 million, respectively.
2. Loans and Accounting by Creditors for Impairment of a Loan-
     The balance of the recorded investment in impaired loans (substandard loans) and of the related valuation allowance as of June 30, 2009 is as follows:
         
    As of June 30,
    2009
    Millions of
    euros
Impaired loans requiring no reserve
    70  
Impaired loans requiring valuation allowance
    11,440  
 
       
Total impaired loans
    11,510  
 
       
Valuation allowance on impaired loans
    3,393  
 
       
     The roll-forward allowance is shown in Note 7.1 of the Interim Consolidated Financial Statements as of June 30, 2009.

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     The related amount of interest income recognized during the time within that period that the loans were impaired was:
         
    Six months ended
    June 30, 2009
    Millions
    of euros
Interest revenue that would have been recorded if accruing
    1,257  
Net interest revenue recorded
    89  
3. Investments in and Indebtedness of and to Affiliates-
     For aggregated summarized financial information with respect to significant affiliated companies for the six months ended June 30, 2009 see Note 17 and Appendix V of the Interim Consolidated Financial Statements as of June 30, 2009 for detailed information of investments in associates.
4. Deposits-
     The breakdowns of deposits from credit entities and customers as of June 30, 2009, by domicile and type are included in Note 22 of the Interim Consolidated Financial Statements as of June 30, 2009.
     As of June 30, 2009, December 31, 2008 and June 30, 2008, the time deposits, both domestic and international, (other than interbank deposits) in denominations of €70,751 thousand (approximately US$100 thousand) or more were €99.32 billion, €97.92 and €96.98 billion, respectively.
5. Short-Term Borrowings-
     The information about “Short-Term borrowings” required under S-X Regulations is as follows:
                 
    As of June 30, 2009
    Amount   Average rate
    (in millions of euro, except percentages)
Securities sold under agreements to repurchase (principally Spanish Treasury bills):
               
As of June 30
    26,756       3.23 %
Average during first half year
    24,635       3.37 %
Maximum quarter-end balance
    29,421        
Bank promissory notes:
               
As of June 30
    28,384       1.23 %
Average during first half year
    28,351       1.75 %
Maximum quarter-end balance
    30,919        
Bonds and Subordinated debt:
               
As of June 30
    18,220       2.67 %
Average during first half year
    16,672       2.97 %
Maximum quarter-end balance
    18,220        
Total short-term borrowings as of June 30
    73,360       2.32 %
                 
    As of December 31,
    2008
    Amount   Average rate
    (in millions of euro, except percentages)
Securities sold under agreements to repurchase (principally Spanish Treasury bills):
               
As of December 31
    28,206       4.66 %
Average during year
    34,729       5.62 %
Maximum quarter-end balance
    34,202        
Bank promissory notes:
               
As of December 31
    20,061       3.70 %
Average during year
    15,661       4.57 %
Maximum quarter-end balance
    20,061        
Bonds and Subordinated debt:
               
As of December 31
    13,565       4.66 %
Average during year
    12,447       5.18 %
Maximum quarter-end balance
    15,822        
Total short-term borrowings as of December 31
    61,832       4.35 %

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     As of June 30, 2009 and December 31, 2008, short-term borrowings include €15,909 million and €13,018 million, respectively, of securities sold under agreements to repurchase from Bank of Spain and other Spanish and foreign financial institutions.
6. Long Term Debt-
     See Note 22 of the Interim Consolidated Financial Statements as of June 30, 2009.
7. Derivative Financial Instruments and Hedging Activities-
     The breakdown of the Derivative Financial Instruments is shown in Notes 10 and 15 of the Interim Consolidated Financial Statements as of June 30, 2009.
7.1. Objectives for the holding of positions in derivatives and strategies for the achievement of these objectives
     See Note 15 of the Interim Consolidated Financial Statements as of June 30, 2009.
7.1.1. Risk Management Policies
     See Note 7 of the Interim Consolidated Financial Statements as of June 30, 2009.
7.1.2. Transactions whose risks are hedged for U.S. GAAP purposes
     U.S. GAAP (SFAS 133) is more restrictive than IAS 39, Financial Instruments: recognition and measurement, on the types of risks that may be hedged and therefore certain hedging relationships have been discontinued under U.S. GAAP.
     Paragraph 21.f. of SFAS 133 defines the risks that may be hedged as only one of (or a combination of) the following:
     (a) the risk of changes in the overall fair value of the entire hedged item,
     (b) the risk of changes in its fair value attributable to changes in the designated benchmark interest rate (referred to as interest rate risk),
     (c) the risk of changes in its fair value attributable to changes in the related foreign currency exchange rates (referred to as foreign exchange risk) and
     (d) the risk of changes in its fair value attributable to both changes in the obligor’s creditworthiness and changes in the spread over the benchmark interest rate with respect to the hedged item’s credit sector at inception of the hedge (referred to as credit risk).
     The same paragraph states that an entity may not simply designate prepayment risk as the risk being hedged for a financial asset unless it is represented by an embedded option in the hedged instrument.
     Transactions whose risks are hedged for U.S. GAAP purposes are:
  1.   Available for sale fixed rate debt securities: this risk is hedged using interest-rate derivatives (interest-rate swaps through which the fixed-coupon of the bond is exchanged for a variable return).
 
  2.   Long term fixed rate debt issued: this risk is hedged using interest-rate derivatives (interest-rate swaps which replicate, on the collection leg, the payment resulting from the issue and transform it into a variable cost for the Bank).
 
  3.   Foreign currency of a net investment in a foreign subsidiary: the risk of a net investment in a foreign operation is exchanged for the currency in which the investment is denominated.
 
  4.   Available for sale equity securities: this risk is hedged using equity swaps through which the risk of variation in the price per books of the portfolio is transferred to the counterparty.
 
  5.   Fixed rate loans: this risk is hedged using interest-rate derivatives (interest-rate swaps through which the fixed-coupon of the loans is exchanged for a variable return).
 
  6.   Floating interest rate loans in foreign currencies: this risk is hedged using currency swaps.

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7.2. Accounting for Derivative Instruments and Hedging Activities
     Under SFAS 133 the accounting for changes in fair value of a derivative instrument depends on its intended use and the resulting designation.
     If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and the hedged item attributable to the hedged risk are recognized in earnings.
     If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative are recorded in Other Comprehensive Income and are recognized in the income statement when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash flow hedges are recognized in earnings.
     The gain or loss on a hedging derivative instrument that is designated as, and is effective as, an economic hedge of the net investment in a foreign operation is reported in the same way as a translation adjustment to the extent it is effective as a hedge. The ineffective portion of net investment hedges is reported in earnings.
     Hedging transactions must be formally documented, designated and the company must describe the way the effectiveness is going to be assessed.
     On the other hand when the derivative is designated as a trading transaction the changes in the fair value must be recognized in earnings.
7.3. Additional disclosures required by U.S. GAAP: Fair Value Methods
     The methods used by the Group in estimating the fair value of its derivative instruments are as follows:
     Forward purchases/sales of foreign currency
     Estimated fair value of these financial instruments is based on quoted market prices.
     Forward purchases/sales of government debt securities
     Estimated fair value of these financial instruments is based on quoted market prices, since they are mostly traded in organised markets.
     Options and financial futures
     Derivatives traded in organised markets are valued based on quoted market prices.
     For options and futures traded in OTC markets, the fair value is estimated based on theoretical year-end closing prices. These year-end closing prices are calculated according to generally accepted models estimating the amounts the Group would receive or pay based upon the yield curve/ volatilities prevailing at year-end or prices.
     Forward rate agreements and interest rate swaps
     Fair values of these contracts are estimated based on the discounted future cash flows related to the interest rates to be collected or paid, using for this purpose the yield curve prevailing at year-end.
8. Pension liabilities-
     See Notes 2.2.3 and 25 of the Interim Consolidated Financial Statements as of June 30, 2009 for a detail of the pension commitments under the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004.
9. Disclosures about Fair Value of Financial Instruments (SFAS 107)-
     See Note 8 of the Interim Consolidated Financial Statements as of June 30, 2009 for disclosures about Fair Value of Financial Instruments, as required by SFAS No. 107.
10. Segment Information-
     See Note 6 of the Interim Consolidated Financial Statements as of June 30, 2009, for a detail of the segment information under the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004.

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11. FIN 48-
     As of June 30, 2009 and December 31, 2008, the Group’s unrecognized tax benefits, including related interest expense and penalties was 1,029 million and 1,136 million, respectively, of which 535 million, if recognized, would reduce the annual effective tax rate. As the Group is presently under audit by number of tax authorities, it is reasonably possible that unrecognized tax benefits could change significantly over the next 12 months. The Group does not expect that any such changes would have a material impact on its annual effective tax rate.
     Due to the inherent complexities arising from the nature of the Group’s businesses, and from conducting business are being taxed in a substantial number of jurisdictions, significant judgements and estimates are required to be made. Agreement of tax liabilities between BBVA and the many tax jurisdictions in which Group files tax returns may not be finalized for several years. Thus, the Group’s final tax-related assets and liabilities may ultimately be different than those currently reported.
     The following is a roll-forward of the Company’s FIN 48 unrecognized tax benefits from December 31, 2008 to June 30, 2009.
         
    In millions of
    euros
Total unrecognized tax benefits as of December 31, 2008
    1,136  
Net amount of increases for current year’s tax positions
     
Gross amount of increases for prior years’ tax positions
    82  
Gross amount of decreases for prior years’ tax positions
    (2 )
Foreign exchange and acquisitions
    (187 )
Total unrecognized tax benefits as of June 30, 2009
    1,029  
     The Group classifies interests as interest expenses but penalties are classified as tax expense. During the first half 2009, the Group recognized approximately €29 million in interests and penalties. The Group had approximately €284 million for the payment of interests and penalties accrued as of June 30, 2009.
     The following are the major tax jurisdictions in which the Company and its affiliates operate and the earliest tax year subject to examination:
         
Jurisdiction   Tax year
Spain
    2004-2008  
United States
    2005-2008  
Puerto Rico
    2003-2008  
Peru
    2006-2008  
Colombia
    2003-2008  
Argentina
    2004-2008  
Venezuela
    2003-2008  
Mexico
    2006-2008  
12. Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered-
     In accordance with Reg. S-X Rule 3-10, Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered, BBVA International Preferred, S.A. (Unipersonal) — issuer of registered preferred securities guaranteed by Banco Bilbao Vizcaya Argentaria, S.A. — do not file the financial statements required for a registrant by Regulation S-X as BBVA International Preferred, S.A. (Unipersonal) is 100% owned finance subsidiary of Banco Bilbao Vizcaya Argentaria, S.A. who fully and unconditionally guarantees the preferred securities (Serie C is listed in the United States). No other subsidiary of the Bank guarantees such securities. We are not aware of any legal or economic restrictions on the ability of this subsidiary to transfer funds to our parent company in the form of cash dividends, loans or advances, capital repatriation or otherwise. There is no assurance that in the future such restrictions will not be adopted.

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SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
         
  Banco Bilbao Vizcaya Argentaria, S.A.
 
 
Date: October 5, 2009  By:   /s/ Javier Malagón Navas    
    Name:   Javier Malagón Navas   
    Title:   Chief accounting officer